 It's France, it's theCUBE, covering Got Next Conference 2017 Europe, brought to you by Nutanix. Welcome back, I'm Stu Miniman and this is theCUBE. Happy to welcome to the program, first time guest, going to help me with some analysis of what's been happening here at the show. Keith Humphries, who is the managing consultant at Euroland Research, thanks so much for joining us. My pleasure, Stu. All right, so Keith, yeah, you and I were the only analysts at the Vienna show. Last year, they've grown the analyst program a little bit, as most of us in the community have been watching Nutanix for many years. Tell us a little bit about your background and what specifically you focus on. Okay, so Euroland is an industry analyst company focused on helping vendors optimize roots to market in Europe. So we're a channel analyst company, founded in 93 in Paris, France. I was employee number five and we're still about five consultants and as I say, we're very friend and focused on channels. Yeah, well, it goes without saying, in our industry, things are changing a lot, but boy, has the channel been changing massively, everything from the impact of service providers to the public cloud. So let's start kind of at the macro level a little bit. What are some of the big issues? The channel's always, you know, we say they're coin-operated, but where do they make money? Where are they concerned about? What's exciting them these days? I think at a macro level, what's really exciting, if you look at the book B4B, it describes the risk having gone from the corporate back to the vendor. So before the enterprise used to buy kit, buy stuff, buy products and have to integrate them themselves. They'd take 18 months before they actually got a working product. But in the meantime, the vendors had produced the invoice, maybe not even shipped the kit before they could recognize the revenue. Now with as a service, that's totally changed. The risk has gone from the customer right the way back to the vendor. It's a fascinating point. And the channel's stuck in between here, trying to be the good guys, still trying to integrate that stuff, still trying to produce those solutions, but only getting paid at a annuity revenue model. It's very different. Yeah, I mean, I was involved in some of the early conversion infrastructure solutions and you go to some companies, they're like, we make tons of money racking and stacking and cabling, we're like, come on, that's not huge value add, let's help you add more value, get more involved, be more consultative, solution selling and the like. We've only seen that accelerate with the like of hyper-converged infrastructure and solutions as a service, as you said, where sometimes it's just frictionless, I just acquire what I need when I need it. How's the channel doing? I think the channel's doing okay, but they're in denial because of this issue. I think if you look at the way Nutanix started as a box provider and now moving to software, some of the channel is really railing against that and saying, we still want to do it this way, they're not learning the lesson, but they must move to a annuity model basis, because it's a huge business transformation. We jointly run a workshop with IDC to help system integrators make that transition across and we've only put through a half a dozen companies or you know, they should be knocking our door down to go through this, but they're finding it really hard. Yeah, all right, so how's Nutanix doing in the channel? So I think interestingly, I think it was Chad Sacka of VMware said that they're having to bring out a proof of concept box for Feesphere, so they can put that box into customers so they can try it out. Interesting that for a software vendor, you're having to package something, so they've gone in that direction whereas Nutanix are moving in the other direction going to software only from the box. That's fascinating, but they're trying to drag that channel with them. Are CDW really happy that they're moving to a software only model? Maybe not. Look, even, we've been discussing this week that the software only model, of course, there's still got to be an appliance somewhere, so I mean, from a channel standpoint, if tomorrow Nutanix says, hey, we're only going to do the software and you're going to do, does that have a significant impact on the channel? If they now get it from, if it's a distributor or some other piece, how much will that impact the channel? I think it's going back to the old model of digital days where the channel partners going back to integrating stuff which I think is great news for them because they can add value, but have they still got the skills? A lot of them have lost those skills that have been de-franchised or they've de-franchised themselves. We'll see how that plays out as to whether it comes in a similar form factor. I don't expect that they're going to be getting Lego pieces and putting together. It's still mostly going to be pieces. How about Nutanix has been going in a lot of new directions trying to expand as software only isn't just about saying kind of the base stack in HV, but XI and Calm and some of these other pieces. The channel ready for these kind of things Nutanix have to then do way more of it and the channel's just fulfilling it. How does that dynamic work? I think Nutanix have got to go out and create the market. They've got to make end customers aware of this and then the enterprise customers will be asking their channel partners for it so they'll have to get up to speed. It's a push and poodle mold with the channel. You can't just push through the channel. I heard someone from Nutanix describe the channel as an extension of their sales force. It's just not. Computer center go out and sell computer center. They don't sell Nutanix. They sell their customer benefit and Nutanix is a small part of that solution. Every project is software based. It's around SAP, it's around Oracle and there's some infrastructure to run it on. It's a small part. Yeah, it's interesting. I got to interview a service provider that has then become a reseller of Nutanix solutions. We sometimes say service riders are the new channel. How's that dynamic playing out? Well, if I was to want infrastructure in our office, I wouldn't phone British telecom for it. Fair enough. We're talking kind of about multi-cloud world. I found there's some systems integrators out there that are offering Azure services. Some are engaging AWS has been really building out their channel. How's that in Europe these days? How much is the channel engaged in kind of the public cloud? We're seeing Amazon with AWS starting to reach out to the channel long-last with channel programs, channel recruitment. They're not going to get rich reselling that but they'll get rich by putting the professional services on there. What should I run on here? Is it good for computers? Is it good for scaling? Is it good for additional workloads? They've got to add professional services. But even as we run our workshops, we see exactly the same thing as they move to, as a service, it might be profitable to a degree but it takes you four or five years to get there. So you've got to be adding professional services on top of that revenue to maintain it. Well, I have to think there's good opportunity there because while there was this promise, well the future's going to be simple, right? Public cloud, it's nice and easy, swipe the credit card and good. There's so many features out there. SaaS, anybody that used SaaS providers when I really want to use it, there's requirements there. So is the channel stepping up to fill some of that gap or will the, you know, Accentures and, you know, those kind of consulting kind of come in and take that revenue? I think it depends on the company size. We profiled in our newsletter, a small UK company who get digital transformation, you know. And this quarter we profiled Accenture. They're both doing the same things, just addressing different parts of the market. I think the other interesting thing is you mentioned the difficulty, obviously AWS uses its own terminology and it looks very complicated. But what I do like is the Nutanix one click based around machine learning. That's really exciting. Siddhe Sinear was just talking about DeepMind's AlphaGo Zero and how it's learned the Chinese Go program. It's self-learned that. No one taught that, it actually self-learned it. And there was an article on the FT which was trying to say this is frightening. Well, it's not frightening. If we're going to move into an IoT age, if we're going to move into an autonomous car age, we're going to need software that's written to Sigma-9, not Sigma-6. And I think only machines can do that. We're not very good at writing software. All right, Keith, what more should Nutanix be doing? What advice do you give them on what they can do to engage even more with the channel? They've got to ramp up the marketing. They've got to provide the air cover for the channel. They've got to go out and create the demand, create the awareness. The channel will follow through on that. All right, last question I have for you. What advice do you give to the channel today for them to, you know, stay profitable, stay relevant in this, you know, ever-changing future? It's professional services and annuity revenue. Days of selling boxes are gone. There'll always be boxes, you say, but, you know, it's pure commodity now. Maybe they should invest in super micro. All right, well, Keith Humphries, pleasure to talk with you again and thank you much for joining us. Thank you, Stu. All right, we'll be back with lots more coverage here from Nutanix.next in Nice, France. You're watching theCUBE.