On this episode of The Six Five – Insiders Edition podcast hosts Patrick Moorhead and Daniel Newman talk to Chris Koopmans, the CMO of Marvell, about the company’s rebranding efforts, their transformation initiatives and the product lines and services that Marvell is focusing on for the future.
In our conversation, Chris, Patrick and I explored Marvell’s recent pivot to focus on data infrastructure. Marvell used to build ethernet technology, hard drives and other technology, but Chris shared their belief that economies will be built on data infrastructure moving forward — which makes sense, especially for where we are right now. We often forget all of the networks and heavy infrastructure pieces that enable our smart devices. These would all be useless without massive compute power and information storage in the cloud. Marvell started to focus on delivering the right technology at the right time for the key infrastructure providers in the world. They offer storage, networking, compute and security — the four main pieces of fundamental technology required to build infrastructure.
Mergers and acquisitions are hugely important in the semiconductor industry. Chris shared that as Marvell pivoted to data infrastructure, the company had to figure out which existing product lines and services fit within the new strategy and where the gaps were. The ability to scale and scale quickly matters. They divested a number of businesses like their multimedia business which no longer fit. Marvell then acquired a few companies like Cavium and Avera Semi to help build the solutions and products that customers wanted. Chris talked about the unique position Marvell was in for all of these changes. They started with their strategy first and then made moves that aligned with the strategy — a smart move that has paid off.
The play for 5G. Chris, Patrick and I discussed the move to 5G networks and the need for more compute power. Base station vendors all over the world need a lot of new things to make 5G work including a massive amount of raw compute power. They need a partner that can offer higher core count and higher processing capabilities with acceleration capabilities directly connected through a coherent interconnect that enables the most advanced solutions — which is what Marvell offers.
Moving to cloud and data center. It’s no secret that data and computing have been moving to the cloud for some time — which is where the future is headed at Marvell too. We discussed Marvell’s OCTEON product line that has been coined as the data processing unit or DPU. It is the most widely deployed DPU in the world which is creating a very large opportunity for Marvell in the future.
The automotive revolution. Chris shared a little bit about Marvell’s journey into the automotive space. For years, cars were built piece by piece, all disconnected units coming together but still working separately. What we are seeing now is the need for ethernet-based wiring technology to be the high-speed backbone of the car with an ARM-based compute engine to deliver the necessary compute power to make sensors and other technologies in the car work. Marvell is focusing on building the internet technology in your car which is the next big piece of edge infrastructure.
Lastly, we talked a little bit about Marvell’s enterprise portfolio. In today’s environment — especially in the wake of COVID-19 — every enterprise is truly borderless. With cloud and mobile technologies employees can connect from wherever they are. Companies need to secure their networks and applications with intrusion detection and prevention which takes a lot of data. This requires the right storage, processing, high-speed networking, and security all of which are Marvell’s key intellectual property, so this is something they do really well.
Marvell’s transformation and growth over the last few years has been impressive to watch and they’re not slowing down anytime soon. If you’d like to learn more about Marvell and their initiatives check out their website. Also, Marvell is a keynote sponsor of the upcoming Six Five Summit. Be sure to register for that so you don’t miss any more exciting news from Marvell and the other amazing line up of speakers.
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Disclaimer: The Six Five Insiders Podcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.
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Daniel Newman: Welcome to the Six Five Podcast, Insider’s Edition. I’m Daniel Newman, your host today joined by my esteemed colleague and co-host and analyst extraordinaire, Patrick Moorhead.
And you see me leaning and looking because this is a completely different experience today. I’m in Austin, Texas. Four months in quarantine and for the first time, I put my N95 on, my safety glasses, my hat, my shield, my visor. I got a lot of wipes, and I got on a plane and I went down to Austin, Pat, to come here and join you to do this awesome podcast today, which we have a really exciting guest today. But how are you doing, Pat? Let’s just start with that.
Patrick Moorhead: Well, first off, when I see you, I feel better and you literally did the bubble boy for me to come down to Austin and it’s 104 degrees down here. So there must be a great reason to do this. We must have a really special guest. But it was a little different seeing you for the first time in the lobby with your mask. It’s like, do we hug? Do we do one of these?
Daniel Newman: Elbow bump.
Patrick Moorhead: Do we fist bump, elbow bump? We’ve both been tested, so we’re good. So I’m feeling pretty good about this, but it is so much better seeing you in person.
Daniel Newman: It’s a little surreal getting back out, getting on an airplane again. We did this 47 weeks a year. Our mantra when we started the Six Five Podcast we’d always, where are you? Because we were recording this anywhere and everywhere in the world. And very rarely was it in our offices. For four months now we’ve been in our offices, but yeah, we’ve got a couple of exciting things going on. First of all, we’ve got an awesome guest today.
We’ve got the CMO of Marvell, and we’ll introduce him in a minute. He’s in the green room. But we also have the upcoming Six Five Summit. And that’s another big reason why I’m down here. And by the way, Marvell will be involved in that along with a list of really awesome customers and I might be moving here. So there’s another reason I wanted to come down here because Austin may be home for me very soon. But let’s get at it today.
Patrick Moorhead: Let’s do that.
Daniel Newman: The Insider Editions are some of my favorite, Pat. I love getting on with executive leadership from companies that are doing really special things. And earlier this year… Both of us work with Marvell, and we both had the chance to hear from Chris Koopmans, the CMO of Marvell about the company’s big rebranding and kind of the rebirthing of the company. And it was pretty cool and pretty exciting. And you and I both agreed that we really need to get him on the show.
Patrick Moorhead: Absolutely. I love turnaround stories. So let’s get Chris in here.
Daniel Newman: Well Chris, welcome to the Six Five on the Insider Edition, Chris. Excited to have you here. Excited to have you on the podcast for those of you listening and exciting to have you in the room and on video. As you’ve seen, we’ve added this element over the last few months, and it’s great to see. Great room by the way. You can tell he’s a CMO. That’s some good branding you’ve got going on.
Patrick Moorhead: It really is. He’s got two going, maybe three if we zoom in on his books back there.
Chris Koopmans: I have more, but Stacy told me to put them away.
Patrick Moorhead: Now we’re just so glad to have you on Chris. Maybe the first place to start is to talk about what you do for Marvell.
Chris Koopmans: Sure. I’ve been with Marvell for four years. So just as we had a management change… Marvell is 25 years old this year. And in 2016, a new management team came into the company and we really transformed the company. I want to say that the enterprise value was something like three and a half billion at the time and today it’s over 26 billion. So it’s been a pretty significant change in the company and transformation.
But in the meantime, we’ve changed pretty significantly the markets and the end focus, and I’ve had a multitude of roles. The main thing I think of myself as is as a partner in that transformation and all the different things that I’ve done along the way. The most recent for the past year has been the marketing side, which I think one of the things that we did very carefully was we decided to transform the company first and make all the changes and make all of that happen and then rebrand the company last so that actually, this was sort of the last step that now puts an exclamation point on the changes that we’ve made at the company.
And so today I’m responsible for all of our transformation initiatives, as well as integration and marketing.
Patrick Moorhead: Well, it’s quite an awesome list. In a company that’s transforming to be in charge of transformation. I think it’s a big deal. And I think Daniel and I both acknowledged that in our write-ups of your brand, which was, hey, most people change the brand first. They make it aspirational and then they fit into their shoes and you took a little bit of a different tact, but I digress.
I think a great place to start is to talk about the strategy that you have, the pivot from where you were and maybe talk a little bit about how you transformed the company that gave you the permission to claim this brand promise.
Chris Koopmans: When I joined Marvell, it was pretty clear Marvell was an iconic engineering company. Had just amazing technical capabilities and could pretty much build anything we decided to build. So we looked at it when we came in is how do we direct this incredible engineering talent towards a place that can deliver the most value?
If you think about it at the time Marvell literally was one of only two companies building ethernet technology, building hard drives, read channel technology and all these other types of things. And so when we took a step back and looked at where the future was, we decided to pivot the company to focus on data infrastructure. And our belief was and is that that’s really what the economies will be built on going forward.
And of course, we didn’t predict a pandemic, but I think nobody would argue now that we’re all connected through and our entire businesses are kept running and everything else through the data infrastructure that exists out there today. And so really the last four years, our focus has been on how do we build the right portfolio with scale to address data infrastructure?
And data infrastructure often gets forgotten. This is the sort of cellular networks, service provider networks, enterprise networks, data centers, all these types of heavy infrastructure that actually enable all the smart devices and all these great things that we get to use every day. Those would all be useless if they weren’t all connected to massive compute power and information storage of the cloud.
And so ultimately that infrastructure has been under tremendous stress and ultimately has been when you think about… Remember when you had an ISDN line and you were really happy to get a hundred kilobits per second. Now you-
Patrick Moorhead: Unfortunately, yes, I do remember that.
Chris Koopmans: And now you have hundreds of megabits and you’re still not happy and everybody wants gigabits. Well, what’s been enabling that to happen is dramatic improvement in the underlying silicon. And so ultimately just as the ability to deliver more speed and performance and throughput at lower power and cost is starting to slow down and become more difficult and take longer and require more engineering effort to get there. We’re seeing demands just accelerate.
And so we looked at it as an opportunity to be a company that could actually become a pure-play in infrastructure and focus on delivering the right technology at the right time for the key infrastructure providers in the world. That’s really what we’ve done. And now today we have storage, networking, compute and security. The four main pieces of fundamental essential technology that’s needed to build infrastructure. And so that’s what we focus on.
Daniel Newman: But there were some moments there. Pat mentioned and alluded to the giant jump in the valuation, which has been significant. The pandemic, as you mentioned, has caused an acceleration across transformation where Marvell may not be the first name often brought up, but in terms of building a lot of those technologies that have enabled that, there was a very big role for the company to play.
And by the way, Pat, we probably should say, this show is for information entertainment purposes. Just reminding everyone out there. So we aren’t talking about the stock. Do not buy the stock strictly because of anything we said on this show. This is not a stock-picking show. Sorry. We always like to just throw that out there so that nobody says, hey, we bought it. Because they’re never going to tell you they got rich, Chris. They’re going to tell when they went the wrong way.
But speaking of going the right way though, you guys made some big moves. It wasn’t you’ve had the strategy then the brand followed, but there was also some really significant moves. There was some acquisitions. There was some divestitures. Share a little bit about that because I think those were also fundamental to getting the company to where it is today.
Chris Koopmans: That’s absolutely right. It was pretty clear… First of all, M&A is a strategic consideration in the semiconductor industry today. And the reason for that is the need for scale. I mean the cost of a tape-out and the years and costs of doing development of the core essential technology required for chips today is so high that you really need to be able to spread that investment across a multitude of end markets and products. And so that’s why you’re seeing so much M&A in this industry.
So we knew that was always going to be a part of our strategy. And once we made the decision to pivot towards infrastructure, the first thing that we had to do was decide which of our product lines fit that strategy and which ones didn’t and the ones that didn’t we divested. And so we’ve divested of a number of businesses. At the time I was running our networking and connectivity division, which included things like our WiFi that we sold last year, as well as our multimedia business and a number of other businesses that we decided it didn’t fit.
So that was sort of step one. Step two was let’s take a look at all the businesses that do fit and let’s pivot hard towards data infrastructure. So as an example, our storage business at the time was more heavily levered towards PCs. So building hard drive and SSD controllers for PCs, and we pivoted that hard towards nearline hard drives and data center storage solutions for the cloud. I mean, at the end of the day, 90 plus percent of the bits and bytes in the cloud today are still stored on hard drives. 16, 18, soon 20 terabyte hard drives that are being used in the cloud and Marvell is at the core of that technology. So we pivoted our existing businesses hard towards that infrastructure.
And then the next step was to figure out how to gain more scale and Marvell had strong storage and networking assets, and we really needed to get bigger in compute. The first acquisition we did, we acquired a company called Cavium, which was really the leading innovator in embedded processing or infrastructure processors. We’re talking about multi-core, 24, 32-core processors that sit in firewalls and 5G base stations and routers and switches. Core infrastructure that powers the internet. And so that really added our processing and security lag to our networking and storage to really round out the four pieces.
As we engaged customers with those products, what we started finding was that they loved the technology, but everybody wanted it a little different. They needed a little bit more of this or a little bit more of that, or they needed some sort of customization capability to really reach what they wanted to accomplish while utilizing all the core — Like utilizing our multi-core ARM processor or our ethernet technology, but then adding maybe some of their DSP technology or special capabilities for their particular application.
And so we acquired Avera Semi, which was a part of GlobalFoundries at the time, which was originally part of the IBM Microelectronics ASIC division. So they have a 30-year history of building custom products, custom chips for this industry. Cavium brought a new set of product technologies. That brought a new development technology so that now we can offer our complete portfolio to customers, however they want it. Whether it’s off the shelf standard product, or whether it’s full custom work. More often what we’re seeing in order to really leverage their investments is part standard Marvell IP and part their custom IP packaged together into a solution as they specify it.
So yeah, we’ve done a number of divestitures that didn’t fit our strategy and a number of acquisitions. And what I think is unique about the way we went about it is that we picked our strategy first and then every deal we did was a hundred percent aligned to reaching our strategy and our goal versus hey, scale matters. So let’s just go find a way to do M&A and get bigger. Of course, we needed to get bigger. But the main thing we were trying to do was to get a hundred percent aligned to our strategy. And today we feel really good about our position and our core bits of technology and our development capabilities and our alignment towards the key end markets that we play in.
Patrick Moorhead: I really like the focus in on data infrastructure. There’s not too many companies that can say they specialize this. And when I look at the size and the valuation of those companies, they’re the biggest companies out there. And what I found most interesting as you laid out the top 20 semiconductor companies you’re a player by revenue already.
What I’d like to do is let’s take another cut at… I’d love to learn more about your markets that you’re going after. We talked about compute, storage, networking and security, but maybe we start off with 5G. 5G is hot in more ways than one and it’s so big that it’s even hard for COVID to slow it down. How are you approaching that market, Chris?
Chris Koopmans: Absolutely. Great question. So if you look at our key end markets, we’re focused on four key end markets. One being carrier, which is where 5G is playing. Two being enterprise, which is our traditional market. And then we focus on cloud data centers and the new infrastructure or edge infrastructure of which automotive is a key part of it.
So let’s start with 5G. What we’re seeing in 5G is that really you need more compute power than ever before. If you look at most of the base station vendors of the world for all the decades that they’ve been building cellular base stations, there was a lot of custom silicon involved. A lot of custom silicon and a lot of programmable FPGA type silicon that was put together to build the solutions that they needed. And as you move forward now with massive MIMO processing and a lot of the new things that are needed in 5G the amount of raw compute needed to deliver that capability is so high that they find themselves needing to become processor experts.
And of course, that’s what Cavium did and now Marvell for decades. That’s not something you just pick up and replicate. And ultimately we’re able to deliver higher core count, higher processing capabilities with all the offload and acceleration capabilities directly connected through a coherent interconnect that enables the most advanced solutions.
And so now what we’re seeing is that a lot of those base station vendors are coming to Marvell and wanting to partner with us to get our processing capability in their baseband processing and their transport processing, but really to get our processing capability typically, as I mentioned earlier, in some customized fashion. They need to add their RF technology or their special baseband technology married together with Marvell’s processing and ethernet capabilities to deliver the world-class capabilities that are needed for 5G networking. And so it’s a huge opportunity for Marvell and it’s a right technology, right place, right time.
Daniel Newman: Yeah. It’s a really big indicator too of the type of partners and relationships that Marvell has because you talk about it because you listen and you say, we have to customize and make small changes. Well, that need is very specific in that there aren’t a lot of players, Chris, there aren’t a lot of companies that these big providers, these big partner customers and I won’t name your customers, but I know who some of them are. Maybe you will. I don’t know that’s up to you.
But the point is that they really need a partner that can accelerate this. That can build to their specs but also that allows you Marvell not to be pigeonholed and forced to be small by becoming overly custom in terms of each and every one of your customers. You’ve kind of had to deal with that balance as you’re accelerating 5G, building them the tech they need, each company needs, and yet doing it in a way that you can scale and deliver in big volumes so that Marvell can grow.
Patrick Moorhead: Well, this is why I love the whole… If you want the ultimate flexibility in programming, you have a CPU. If you want to put your own special IP, which is just so important to these partners, you can go in there with an FPGA or an ASIC. So it’s that whole continuum that I liked they can provide to customers like a Samsung.
Daniel Newman: But it’s also really important though, to point this out. Marvell, your company is really driving the innovation of some very big names. You just mentioned one. And sometimes the… I always remember the we don’t make most of the things you make. We make most of the things you make better. And Marvell has for a long time been one of those companies. That was also by the way, part of the rebrand was Marvell is really trying to get more front and center. Let more people hear about the impact Marvell was making. And by the way, we’re very excited to have Marvell at our summit and to be involved in some upcoming things that are going on and talk more about that. No more secrets during our show, though.
Patrick Moorhead: I know.
Daniel Newman: We can’t keep that to ourselves. But I want to pivot to your most recent earnings call. So your CEO talked a little bit about cloud data center. You’ve alluded to cloud data center. The company, as you said, pivoted off of personal computing some time ago and has really come to recognize the cloud and the data center as a next big frontier. So 5G, cloud and data center, take us there next.
Chris Koopmans: Sure. It’s no secret that a lot of computing has been moving into the cloud for a long time now. It’s really going to be even more and more so in the future and at Marvell, if you think about the core bits of technology we have, storage, networking, processing, and security, they’re all needed in the data center. But it’s very different in a broad enterprise data center where Marvell has a very large business today versus what’s needed in the cloud data center.
In the cloud, you tend to have very specific workloads, and you want optimized content for those workloads or optimized architectures for those workloads. And so what we’ve been doing is, again, part of our pivot has been towards the cloud data center and building optimized technology and capabilities. And a good example is I talked about our processing capability, which is our OCTEON product line that came to us with Cavium that’s being used in 5G base stations. It’s being used in very similar ways in cloud data centers.
So for example, LiquidIO is our Smart NIC technology built on the back of OCTEON that’s accelerating cloud. Actually one of the first Smart NICs ever deployed in the industry was based on OCTEON and LiquidIO. We also have LiquidSecurity, which is again taking an OCTEON and then making a hardware security module out of it for key management in the cloud. And it’s been adopted by all the key cloud vendors out there today. And I already mentioned nearline hard drives.
And then ultimately what we see is OCTEON as this… It’s been coined as the DPU or data processing unit as a third pillar of computing and cloud data centers. As you start to think of data center scale computing, where you have the CPU and the GPU, and now you have the DPU and OCTEON is literally designed as the most optimal possible DPU and the most widely deployed DPU in the world. And so, we see all of these coming together and creating between storage and networking and data processing, a very large opportunity for Marvell that will be the same size as 5G, which is I think what was mentioned in the earnings call.
Patrick Moorhead: Yeah. And you’re already in a ton of security appliances out there with name brands that we would all know. And I always forget if I’m allowed to talk about them or if I’m not. So as Daniel said, we’ll let you talk about it. But it’s a very interesting play for sure. And also it’s funny, people used to be really stuck on the whole X86 thing. And now it’s kind of a who cares. I see in major public cloud data centers, they’re leading with ARM-based processors for general purpose and I would posit that it never really mattered inside of storage and networking anyways. And it’s interesting how we just gloss over that.
Daniel Newman: I think what we’re seeing though is its transition. X86 certainly has its market, and we’re seeing a shift. We are seeing a real shift away and then what I love is that the shift is driving innovation. It’s forcing the X86 folks to push and seeing these new types of compute, these ARM-based processors, these ASICs being built for purposes. Purpose-built.
I think it’s great because I think the… While you talked about some of the things that have slowed and then it became harder in that particular area that you’re seeing a lot of innovation and I think it’s forcing all the compute, the AI companies to build really some special products that are, ultimately for us, going to build us things that we use, whether it’s… Maybe vehicles would be something we could talk about. That’s a vehicle to the market for Marvell too is vehicles are a vehicle. But no and serious the automotive industry.
So we’ve kind of hit on 5G. We’ve hit on the data center. But there’s a lot of investment and a lot of focus for the company in automotive. So while we go point-to-point, indulge us. Tell us where the shift is that’s going on for automotive.
Chris Koopmans: Just before I dig in on automotive, just to comment on what you mentioned a minute ago between X86 and ARM, I think ultimately X86 really fits in the one size fits all category, where you have a very broad software ecosystem, which is in PCs and it’s in enterprise data centers and things like that, that we talked about. ARM is really designed and perfectly optimized for places where you have a specific workload or a specific capability that you need. And as Pat said, in networking and storage and things like that, it’s always been king. And so we just see that the new cloud data center is another perfect opportunity for it.
But then moving on to automotive. Yeah, we see a revolution happening in automotive. We see a sea change really happening in the architecture of a car. We have car companies who for decades and decades have been squeezing out another mile per gallon or another bit of horsepower or adding a new feature over here. Automatic door locks and windows and all these kinds of capabilities into the car. And now really all that has been upended. You have an electric motor, you have all the horsepower and miles per gallon and everything that you ever need.
And so the opportunity now is to invest in software and building this amazing experience inside of a vehicle that can be controlled by software. Where the car knows not to turn the air conditioner on in the backseat when there’s nobody sitting in the backseat or when the car knows to turn the blinker on when you’re turning, because your nav system is going to do that and so there’s this ability… Not to mention autonomous driving and assisted driving capabilities that are going to come together when all of these sensors are connected together through an amazing brain inside the car.
The problem is, is that the current architecture of the car needs to change dramatically. It’s been built up as every little feature was added to the car. Maybe it was the power door locks to start and the power windows second, and then the new radio and the new nav system and all those pieces. Those were all actually built into the car as separate electronic control units that were developed and delivered with a separate piece of software and a separate supplier. And so you have now potentially hundreds of ECUs connected with proprietary or old, outdated standard bus technology. And you have no ability to actually connect all those things, which is why I find myself in daylight savings having to change three or four different clocks in my car because there’s three or four different subsystems.
In the new car, it’s going to look more like a data center where you’re going to have a powerful compute engine, a high-speed optimized network, and then sensors and devices all around the car. And so ultimately what we see is a need for an ethernet-based wired technology to be the high-speed backbone of the car and an ARM-based compute engine to deliver that centralized compute power that’s needed in the car. And so we think that’s a big opportunity for the future and we’re starting with ethernet.
Four years ago, we were the first company in the world to deliver a gigabit capability over a single twisted pair in the harsh environments of a car. And when we acquired Aquantia, the first company to do multiple gigabits in the same environment. And so we’re really investing to be the leader in high-speed networking in the car, and we have all the compute capabilities for the future as well. And we think that that’s a huge opportunity, but of course, it is the automotive industry and it takes time.
This isn’t an industry that moves in six months. It’s going to take multiple years, but Marvell has more than a dozen of the key OEMs in the world today, growing out Marvell’s internet technology in your car and so we think that the future is really bright in automotive as well. And we think it’s really the next piece of edge infrastructure.
Patrick Moorhead: But I think we’re starting to experience that in most of our vehicles. If you have a vehicle that’s been built within the last three, four years, whether it’s your tech or the specific. We’re seeing the larger compute panels, the more single interface to control everything. We’re starting to become more like an iPad. Of course, Tesla did that with the big video screen, and I think that is going to become the only way.
Chris, you mentioned it takes time, but I can’t imagine in three or four years, whether it’s a smaller, more basic cars all the way up to the top of the line. Because these things, these phones, these devices, we want our experience in our vehicles to mirror the experiences that we have on our phone. And why does CarPlay work so easy for most people? Like you said, why am I changing four clocks? So it sounds like you guys really are taking advantage of the pivot that people are going to really want.
Chris Koopmans: I think that’s right. And ultimately, when you think about it. You talked about Tesla. The Model S came out in 2012. It’s eight years ago, and it’s still fundamentally looks very similar. I think one of the main things that needs to happen to get that smartphone experience that you mentioned is a complete software stack that’s over the air upgradable.
I go down every week and I’m like, oh, software upgrade. What do I have now? And it’s material things that are related to driving. It’s not just some new bell or whistle. It tends to be a really… One day dashcam was added at another day something else was added around the nav system. Whereas in your other car, even though you do have the nice screen and things like that, it tends to look… I just got an email from my other car company that said, hey, go on here and for $150, we’ll mail you a CD-ROM with an updated maps. What are you talking about? This is 2020.
So ultimately yes, I agree with you that that’s the direction it will go. No question. It’s got to be there. That’s what consumers expect. That’s what we demand. And it does take time, but that is the way that it’s going and when it does, they will use modern technology. They’ll drop a lot of this old automotive technology, and they’ll use ethernet, they’ll use ARM and they’ll use all the modern data center type technologies.
Patrick Moorhead: Yeah, Chris and I especially appreciated your opening comment which talks about the architecture and the architecture is software-defined. It’s virtualized. And we can debate on whether it has containers or it’s virtualized. That’s exactly where it’s moving and business models are completely shifting and those car companies who are making fun of Tesla are no longer making fun of Tesla. And have done a sharp 180 degree we need to get there quickly and we’ve even seen CEOs get replaced at the car companies because they were laggers on the tech side.
So let’s take a hard left here to a final, very strategic market for you and that’s the enterprise. Not to be confused with the cloud data centers. These are the Fortune 500, Fortune 1000 companies. And even for that matter, small businesses who have on-premises infrastructure.
Chris Koopmans: Absolutely. And you could be talking universities. You could be talking stores. Any place that has a physical campus. When we talk about our enterprise portfolio, we talk about the borderless enterprise. And, of course, we talked about that before COVID-19. I think everybody would recognize how borderless our enterprises are now. I mean, we’re all sitting in our homes or other places connected to our network. So the borderless enterprise really is different. It used to be that you built an enterprise where you protected the perimeter.
And now with the advent of cloud and mobile, it’s just not the case anymore. The enterprise is truly global, and it’s truly borderless and you need to secure and network and optimize your capabilities for your employees, wherever they are, and to whatever applications they need to access. And so you need high-speed networking. You need security. You need intrusion detection and prevention, and you need telemetry. You need a lot of data.
If you look at a lot of the intrusion detection and prevention systems, what they really need is a lot of data that they can then process to identify things when they’re happening. So where you used to just want your wired infrastructure to just go real fast and be real cheap. Now you need it to be real intelligent, and you need it to have the ability to deliver a lot of data so that you can actually detect what’s going on and manage what’s going on in your network.
So once again, you need storage, you need processing, you need high-speed networking and you need security. And those are Marvell’s key bits of intellectual property. And we’re privileged, as you mentioned earlier, nine of the top 10 firewall companies or security appliance companies in the world, for example, you use Marvell silicon in them and similarly switch companies and router companies… We’re focused on this market, not just taking what we built for the cloud and just redeploying it across the enterprise. We’re building optimized solutions designed for what our customers and what their customers are looking for in their networks today.
So it’s an extremely important… I know people don’t talk about campus so much right now, because not very many people are on the campus, but guess what, you used to maybe assume X percent of your employees will be on the VPN at once. Now it’s a hundred percent. You used to assume X were using Zoom at once, now it’s a hundred percent. So there are upgrades that are going on in enterprise right now. And Marvell’s happy to be part of that.
Patrick Moorhead: The campus became the globe anywhere and everywhere.
Daniel Newman: Well, and the other way is that it doesn’t matter if… You can do compute in the cloud. You can do storage in the cloud. Trying to do client computing in the cloud and I know we’ve tried that time and time again, whether it’s VDI or Chrome, but you ultimately need something to get through the network to get to that cloud, even if you’re doing cloud computing versus on-prem.
So, Chris, I feel like… Well, first off I love turnaround stories and I love incredible growth in, especially after big risks, because I’ll be honest when I saw the acquisitions that you made and that divestitures it’s hard to do. I’ve joked with you. I had a real job once working at big companies and that amount of change at once is tough. If nothing else, from a cultural standpoint, we have all these different brands coming in.
So I have nothing but admiration for what you and the leadership team have been able to do. I think the good news is, is that you’ve got a lot more, if I look at your market share in some of these areas, it’s respectable in a few of the areas, but you’ve got a lot more room to go. I think that’s super exciting. And I think you peeled back the onion with some veiled words of a to be continued. So I’m hoping you can come back on when you’re ready to spill the beans.
Patrick Moorhead: I have a feeling there’s going to be more, but I think the spaces, Chris, you picked to be in. 5G, automotive, enterprise data center, all the right spaces. And I think one of the big themes, I think everyone out there listening, we really hope the gravity of this conversation is Marvell’s a key player in the silicone space.
Remember in the MarketWatch piece I wrote early in the year, I said semiconductors will eat the world. Right now in every single one of these spaces, semiconductors are driving… The whole shift and acceleration in digital transformation we’ve seen during COVID-19 has been powered by semiconductors. So, Chris, we’re going to have to let you run, but we’ll give you 30 seconds. Any last things you want to say before we send you on your way?
Chris Koopmans: I appreciated the recognition. Of course, I agree with you that the future is in front of us, and the future is bright. I am pleased and proud for what you mentioned that the semiconductors are being recognized for the importance that they are really on the national stage right now. Probably more than I can remember in any time recently. We’ve been talking about software is eating the world and all of this. Software is super important, but let’s not lose track of the fact that it all runs on chips. All the innovation that we have in the internet, in the iPhone, in the cloud, in Amazon webs… You name it, it’s all at the end of the day, built on the back of the world’s best semiconductor industry. And Marvell is proud to be part of that.
Daniel Newman: It’s a big building and it’s being held up by the foundation, which is semiconductors. Chris Koopmans. Marvell. Thank you so much for tuning in. We’re going to let you go here. We’ll see you and we’ll talk to you really soon.
Chris Koopmans: Thanks guys.
Daniel Newman: So, Pat, that was a heck of a conversation. Marvell. We talk to a lot of big tech companies, a lot of executives from big tech and sometimes they’re companies that are household names. You heard him throw out Apple at the end or Tesla at the end, but there are some really important companies doing really important things. And I think if you didn’t register that by the end of that conversation, you missed the whole point.
Patrick Moorhead: Yeah, it did. I really like the focus. It’s so easy for chip companies to hold on to that consumer business that’s low margins and it’s not very sticky at all. And you’re probably going to get designed out anyways if that consumer provider does their own silicon, but pulling it all together and whether it’s CPUs, FPGAs, accelerators, ASICs, and putting that together as a true solution, and then mapping it against markets that you’d have to be a fool to say isn’t exploding. I think it’s going to be pretty fun to watch.
Daniel Newman: Absolutely. Having written seven books and studied deeply a lot of companies, behind every great company were some really big risks and it’s going to be really interesting to see if some of those big risks that have taken Marvell from what was it, five to 26 billion market cap aren’t going to be the big risks that take it from 26 to 50.
Patrick Moorhead: We have to caveat. We all do. It’s not going to be a cakewalk. If I look at the companies they need to motor through. They’re big and…
Daniel Newman: It’s going to be fun to watch.
Patrick Moorhead: It is, and I have to tell you, I think if somebody’s going to lose, it’s probably going to be Broadcom in this whole thing. That’s my final comment.
Daniel Newman: I’ll let you have that one. I’ll let you hang that one out there and we’ll leave that for everyone out there.
But hey, thanks everyone for tuning into this episode of the Six Five Podcast Insider’s Edition. Thank you Marvell for offering Chris Koopmans up and being part of the show.
You heard me talk about it earlier. Check out thesixfivesummit.com. Big summit. You’ll see more from Marvell. A number of big, important, exciting speakers are going to be there.
Hit that subscribe button. Join us for more episodes like this one and our regular weekly episode, where we talk about six topics. Five minutes of deep analysis. But for the Six Five, for the Insider Edition, for Patrick, for me, from Austin live, we’re going to have to say goodbye. We will see you all really soon.
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