“The big flagship data point is that in 2022, US hyperscalers are going to grow their spending towards data center infrastructure by about 23 percent. What makes this such a critical number is that when we were reviewing the same metric just three months ago, they were only going to grow this amount of spending by about 10 percent. In a two or three-month period, this number has been revised dramatically.
[10:05] Sami Badri: I would describe it as like a double step-up in the demand we’re typically seeing. ... If we go back five years, there was just a general slowdown in the rate of decision making happening at enterprise institutions because they were distracted, they were presented with too many options, and when COVID happened, it presented ONE formidable option, which was: Move your stuff to the public cloud, test it out, this is your trial, this is the experiment.
... now it’s just accelerate, accelerate, accelerate, because in the world we have chip shortages, we have shortages of basically everything, and if you want to make a decision ot basically get your network where you want it to be, you have to make you decision now. And now for the next two, three, and four years. And this is the explanation for why, all of a sudden, you’re seeing this double step up in demand from hyperscale and from enterprise customers.
[12:00] Sami Badri: In the networking equipment, and even the IT hardware sector specifically, a lot of these companies would only really present maybe three, maybe six months' worth of guidance in terms of where the revenues were going to go and where the profitability was going to be. But then, in the last three months, we heard from major technology companies like Cisco, Arista, Dell ... all of a sudden, we started seeing multi-year guidance, timeframes, and parameters. So for example, Cisco historically would only guide every other quarter with three months of visibility — they presented guidance all the way through 2025. ...
The big question for me was, how are all these comm. equipment companies, which for the last five to ten years have been unable to give us multi-year guidance, are now capable of issuing it? What was the fundamental change? That change, is enterprises have changed the way that they're communicating their plans for shifting from a three to six month type needs basis ...