Alan Fagan:Hi everyone. I'm delighted today to be joined by Matt Roman, who is Senior Director of Product Line Management at Celestica. So, welcome, Matt. 

Today we're going to follow up on my recent chat with Don Evans and take a deeper dive into Celestica's Portfolio Systems Group and its strategy. We'll learn about some of the advantages of open networking, how EPS Global and Celestica can help with some of the challenges, how Celestica's supply chain expertise is a competitive advantage, the convergence of storage and networking, and finally, how Celestica can help companies achieve ESG goals. 

So, Matt, we've known each other for quite a while, and I know you've been in the networking industry for many years now. So, tell us a little bit about your background and experience in networking. 

Matt Roman:Sure, thank you, Alan for having me. Pleasure to be here. I lead the product and solutions marketing team for Celestica, and specifically for the Celestica portfolio products or the Celestica branded products. 

Prior to that, my whole career has been at networking OEM companies—Extreme Networks, Enterasys. You can see by my gray hair, I've been doing this for a long time, going all the way back to Cabletron Systems a very long time ago in the early days of networking. 

The Portfolio Systems Group then was founded on the principle of rapid delivery for the channel and for Enterprise. How has that been going? As the group matures, is the strategy evolving beyond just the speed of delivery? 

It is for sure. We've made a big investment, certainly in people, to form a dedicated sales team, establishing relationships with vendors like EPS Global - channel partners that have value-added capabilities, not just distribution, but have technical capabilities. 

I think one of the other big areas that we've found to be a big competitive advantage is our investment in product and inventory. So having products on the shelves available, whether that's Celestica product or whether that's through partners like EPS Global. 

I would say the other thing is an investment in manufacturing capabilities. We've got a brand new dedicated manufacturing facility in Kulim, Malaysia. 

In open networking, a core tenet of Celestica's, and in general in open networking, is providing customers with choice in hardware and software. And while it's great to have that choice, it sometimes creates what we call the tyranny of choice, particularly for enterprises that are new to disaggregation. How is Celestica helping customers navigate that landscape? 

That's a great question because the cross-section of customers varies greatly. Certainly some of the early adopters, very technically-savvy customers, they know open-source software, they know networking, they have a very clear vision of how they want to put those pieces together, what their use case is, what problem they're trying to solve. In some of those cases, we may just be providing basic hardware and some basic support and firmware. 

And then there are other customers that want a bit more of an integrated solution, so something more turnkey, but they still want to avoid proprietary lock-in. The customers are quite different, but we pride ourselves on being flexible. Listen to the customer and provide options that ultimately satisfy the strategic goals for these companies. 

I think that really speaks to the evolution of open networking, where it started with the hyperscalers, and the hyperscalers have their own technical teams and their own engineers. I think a lot of the value that I see EPS Global bringing is helping those Tier 2, Tier 3 and Enterprises figure out the open networking piece. Because the choice piece is great until you give somebody an AVL with 40 different switches on it, 100 different optics, and tell them, "You figure out which ones you want." 

Exactly. We've seen some customers that start with very ambitious goals. They want to do it all, whether it's SONiC or pre-loading or integration, and some of them come to the realization that they're not ready for it or they just don't want to do that. We can provide a more tailored or turnkey solution through partners like EPS Global. So the value proposition for us is we create a switch, we use off-the-shelf chips from Broadcom, Marvell, and we work with our Celestica SONiC, Broadcom SONiC, or with other versions of operating systems to create an opportunity for the customer to select what they want to use. It's their choice. It's an opportunity to create that choice in the market. 

Just moving on to cost then, the total cost of ownership or the TCO benefits of open networking. They're a key driver for adoption. But moving beyond the initial hardware savings, which are substantial, where are you seeing customers achieve the most significant operational savings and long-term value when they adopt the open model? 

I would say a lot of it ties back to automation. That's also one of the things that, for some customers, can be a bit of a challenge. A lot of these networks are run by traditional network engineers that are very much Cisco CLI, kind of hands-on in that type. Really where the hyperscalers found success or the more advanced enterprises found success is using automation tools: Ansible playbooks, Puppet, Chef, those sorts of things. 

The customers that we've worked with that have adopted that sort of DevOps toolset have great savings. They can automate everything from what happens when you plug in a box, it can image the system properly, it can do a site-specific configuration, monitoring, management, inventory, all of those sorts of things. So I would say definitely on the operational side, that automation is really key. 

We know that your go-to-market strategy relies on strong partnerships. You mentioned the partnership with us, and those partnerships help you to deliver complete solutions. From your perspective, what's the most critical value a partner like EPS Global brings, especially in guiding an enterprise through the first steps that they take into open networking? 

We've had a very conscious effort in terms of who we're partnering with. And for some, there's an immediate reaction to go after the biggest and largest integrators or distributors. But that doesn't really align with the state of open disaggregated networking. As you said earlier, customers need help, they need assistance. 

So, really, the partners need to have a technical capability, they need to be consultative, and in a lot of cases, provide value-added services. We kind of refer to it as "second touch." If somebody needs certain software loads installed, or if it's a multi-site or a branch location, you want that product to arrive pre-configured with the right software, ready to go. So that an unskilled person or technician can just rack it, power it, plug in the cables, and go. It's really that technical capability, the logistical capability and the worldwide reach that EPS Global has that makes you a great partner. 

Yeah, it's something that we're very proud of actually, and I've mentioned it many times, and I think when I spoke with Don Evans, (Sales Director of Channels at Celestica) as well we're very proud of the fact that Celestica would choose to work with us. We've done a lot of work over the last decade in the open networking space, and I think we've come across each other over that decade. It's great to be at a point where when a company with the stature of Celestica wants to enter this market, it's us that they choose to enter it with, so we thank you for that. 

Looking at future data center trends then, power consumption and advanced cooling are clearly extremely important. How is Celestica innovating in these areas? Can you discuss any specific design philosophies or technologies that you're implementing to help customers build sustainable infrastructure? 

That is definitely a hot topic for almost every customer we talk to. There's a few things – firstly, as optimized a design as possible, whether it's power systems, PCB layout, optimized thermal, airflow, that sort of thing. 

Certainly, the newest piece where we're seeing advances is with alternative cooling. Liquid cooling, whether that's pump-to-phase or immersion. We've already designed and manufactured three generations of liquid cooling for some of the large hyperscalers we work with.  

It's really interesting seeing the liquid cooling stuff in the flesh. I've seen it many times now at exhibitions, and it feels like there's going to be a need for plumbers soon, right?! 

Oh, absolutely. You look at these large integrated racks, you need to have leak detection sensors. What happens if you get a leak in the fluid? And even when you're removing components from a rack, how can you ensure that you can disconnect without any of the fluid coming out? So yeah, it's a whole plumbing situation...  

It's amazing looking stuff. Very good. So talking about software then, when you guys provide the open hardware platform, the software integration and long-term support are critical to build confidence for enterprises. How deep does Celestica's involvement go with network operating systems like SONiC? And do you contribute directly to the open-source community, and what is your validation and testing process like? 

Yeah, great question. We have a few different models that we use. We've got some customers that are very sophisticated that use pure community SONiC. They go to GitHub, they get the software themselves, or in some cases, we have advanced customers that have their own network operating system based on open-source or even their own proprietary. 

Another model on the NOS side is Celestica has a big investment in community SONiC. We test, validate, bug fix, and upstream into the SONiC community. Then the other offering is we work closely with Broadcom, so we resell the Broadcom enterprise distribution of SONiC as well. So we try to help guide customers to understand what their needs are, their use cases, what problems are they trying to solve, and help them choose the best solution for them. 

We do have a big investment in automated test. There's just a lot of feature development, there's new releases coming. Sometimes people may think of Celestica as more hardware focused, but we've got a very large software team that's testing and validating this stuff. 

Great. As open networking is maturing and as the market is getting bigger and bigger, like any market, it starts to get crowded. We're seeing more and more hardware vendors enter this market. Beyond Celestica's well-known manufacturing excellence, what would you say is your biggest technical or strategic differentiator in the market? 

So there's a few things that come to mind. First, a lot of Celestica's growth is being fueled by our hyperscale customers, their investments in AI. We've just got a fantastic track record of winning joint design wins and the manufacturing. The top five or 10 of the world's largest hyperscalers are awarding us business for latest generation technologies. And that's because of our technical capabilities, our ability to move fast, to have agility, to deliver on time, with high quality, and provide the logistics. 

That's one piece, and sometimes when I'm talking to customers, I like to use the phrase, "You can network like a hyperscaler," because you've got access to the technologies and the teams that are building these super advanced systems.  

Then the other piece is just the strength and stability of Celestica. We're a $10 billion company, we're headquartered here in North America, we've got global reach. we've got a pretty broad capability: logistics, supply chain, and even after-market, the ITAD capability, and decommissioning those products.  

I think that's a really important message because having been around this space for quite a while, some people feel like they're taking a bit of a leap of faith if they're going to enter into open networking. They have a level of comfort around like a Cisco or a Juniper, and feel like there's a lot of risk involved in open networking. There's really not. The apps that we all use every day, and the top hyperscalers, they're using this right now. It’s not like we're looking for guinea pigs here, this is proven technology that is working. 

Exactly right. We're talking to customers every day whose strategic direction is to move away from proprietary, closed systems for any number of reasons. But there is definitely movement there. 

A key barrier to open networking, again in the Enterprise—and unlike the hyperscalers, because the hyperscalers have the resources to make this work—is an often a perceived skills gap. How are Celestica, along with partners like us, working to productize open networking to make it more accessible to those customers and less of an operational challenge for a traditional IT team? 

There's a few things. Just in terms of how you receive the product. So for some companies, there’s a notion of, "Here's a white box, if you will, and then there's some software, and then I need to get a management stack on top of that." Us being able to provide a turnkey solution ready to plug and play is certainly one benefit, and obviously EPS Global has the capabilities to do that as well. 

And then back to the sort of off-box software suite, the automation that I mentioned previously. The DevOps tools really make it much easier to operate. And again, that's really how the hyperscalers had success and made all this work. It'll definitely take some time for a more traditional enterprise to get that skill set. But certainly what we've seen and when we're talking to customers, a lot of these enterprises are recruiting and hiring from either hyperscalers or Tier 2 or Tier 3 cloud operators that have that expertise. 

Yeah, it's funny. I've had conversations over the last while, there's that old saying that people talk about, "No one ever got fired for buying IBM." And people use it now in networking, "Oh, no one ever got fired for buying Cisco." That's changed. People are getting fired now for buying Cisco or for being reluctant to embrace the change to open networking. I think there's so much at stake if we look at large enterprises like a Walmart, who have done exactly that. They've taken in expertise from people who have been working in open networking for a while. So, if you're a CTO and you're determined not to embrace open networking, you'd better be looking over your shoulder, because it's coming! 

Getting back to Celestica's manufacturing expertise, it goes back a long, long time. That supply chain expertise was a huge advantage during the recent component shortages. The supply chain has become a little bit more stable now. How has that strategy evolved and how do you continue to leverage your manufacturing depth to provide resilience and predictability? 

We're so fortunate to have a world-class supply chain team. Certainly, COVID and all of those shortages changed the landscape and how vendors operate and how suppliers operate. 

We saw that a lot. We had numerous examples where potential customers that we've been trying to get into for years, they were happy enough doing what they were doing. COVID opened up opportunities. That supply chain crunch, because the lead times from the traditional vendors got pushed out so far, they were willing to take a look at open networking, and they really saw the advantages. While it was lead time that got us in the door, once they saw all the advantages of open networking, there was no turning back. 

And the other thing is, certainly a number of different components, the lead times have relaxed considerably. But some of the strategic silicon that's powering our platforms, some of those vendors, their lead times are still 52 weeks. So it certainly takes a lot of good communication with our partners, with end users to understand what that is, but it also takes an investment on Celestica's part as a system builder, to go drive that material. We try to run as lean and optimally as possible, but in some cases, you still need to make some bets and some predictions and tune your model.  

We've seen Celestica's success with high-performance storage, and we actually had a recent win ourselves here in partnership with you in the financial sector. As data-intensive workloads grow, how do you see the relationship between high-performance networking and high-performance storage evolving? Are you seeing more customer demand for integrated storage and networking solutions? 

For sure, yes. Certainly at a rack level, for that type of requirement or for that use case. I'll say the other trend we're seeing is the need or the requirement to have acceleration in a storage platform. So instead of just being PCI connected, they want it network connected. And for platforms like a JBOD or a JBOF, which was always kind of thought of as just a dumb box with a bunch of drives, there's a need to be able to support a platform like DPU, accelerator cards. In some cases, you don't necessarily need a traditional x86 server or controller built into the storage array. You can use these accelerator cards to offload that and do advanced packet processing or whatever the use case is. We're seeing PCI, Ethernet, with accelerator cards being integrated into JBOD and JBOF platforms. 

We touched a little bit earlier on sustainability, and I just want to get a little bit deeper into that. Sustainability is really a board-level conversation now in most enterprises. Beyond raw power efficiency, how do Celestica's hardware designs and manufacturing process contribute to broader environmental, social, and governance goals? 

That's a really hot topic, a few things that come to mind. Within our worldwide manufacturing locations, we have a definite focus and specific targets on reduction in greenhouse gas emissions, water reuse, and water management, and then sustainable products and services. So we have a very capable offering where we work with large hyperscalers, large enterprises to work with them when a product is nearing its end of life. In some cases this means decommissioning, refurbishing, reselling into secondary markets, or in some cases, component harvesting and reuse, or in some cases, responsibly disposing of the product. As you said, this is top of mind for many large corporations, and they've got specific targets and goals and activities like carbon credit programs. 

Even in the day-to-day operationally, we've seen ourselves, when we put in open networking solutions, very often they outperform significantly the traditional, monolithic solutions that were out there so that contributes. 

This was a great conversation, Matt. I really appreciate you taking the time, and hopefully it's beneficial to our listeners. Thanks again. 

Yeah, thank you for having me. Appreciate it.