 Live from Boston, Massachusetts, extracting the signal from the noise, it's theCUBE, covering Red Hat Summit 2015. Brought to you by Red Hat. Now your hosts, Dave Vellante and Stu Miniman. Welcome to Back Bay of Boston, everybody. This is Dave Vellante of Wikibon with Stu Miniman. This is Red Hat Summit, and we are here, wall-to-wall coverage for two days. This is Silicon Angle, Wikibon's theCUBE. The Cube goes out to the events. We extract the signal from the noise. This is our 39th event so far this year, Stu. It's been rocking. It's nice to be home in Boston for a change. Yeah, Dave, you know, you said how many events we've done. It's our third this week. So we said leading into what's basically the last week of our spring tour here, and a nice short drive for you and me to come into Boston, except for the fact that we swung through San Francisco on the way. You were at the Oracle Paz announcement. I was at DockerCon, but yeah, excited to be back home. It's definitely Paz week here. You know, Stu, I've been trying to squint through, and you know, we've talked about a lot at Wikibon, this whole Paz trend. Is it infrastructure as a service? Plus, like what Amazon's doing? Is it SaaS minus? What Salesforce is doing? You got Cloud Foundry in there. Now of course you got Red Hat coming in a big way. And this week we have Oracle going all in on Paz. IBM with BlueMix. And Dave, you got all those distinctions, and if containerization in Docker takes off like we think, might that Paz discussion all be Paz, if you will. We will just take over and not really need a full Paz layer because containerization and microservices, maybe I don't need a full Paz layer. Really, is that the discussion that was going on at DockerCon? There are definitely certain companies that are pitching that whole discussion that we can have the modern applications, we can go there, but I don't necessarily need it because one of the early things, what does Paz give me is I write my software once and can use it on a lot of different infrastructure environments. Well, containers give us that piece. Where did Docker come from? Docker came from DotCloud, which was a Paz company. It was just kind of a little feature that they were using that turned into Docker. So Red Hat's talking about how Docker and Kubernetes fit into what they're doing to OpenShift. So we're still real early here, Dave, and it's going to take a few years. Well, but so much of Paz is application integration and integration all throughout the stack. And I think that's a big theme that we certainly heard yesterday in the keynotes. Your recent guest was talking a lot about convergence within industries and also about integration. We certainly heard a lot about that this week in California. What are your thoughts on that, Stu? I mean, if you've got to have integration as Docker and containers and we got to talk about OCP, are they going to be able to deliver that sort of end-to-end integration? Yeah, that's a great point, Dave, because Docker is a tool here and building up the stacks and having the real knowledge to help build those applications a lot of work. I mean, look at Cloud Foundry and they bought Pivotal Labs that's helping customers work through that nod-haul of how to build distributed apps, cloud-native applications, that's really where the work is. What's happening? We were just talking to Samsung and Red Hat and how are they making applications that are mobile? You've got SAP here to try and help real business applications move to this new world. So the big air gap I've seen for the last bunch of years, Dave, I've got my old apps that have been running for way too long. I think the number I hear from you usually is 15 plus years is the average enterprise application and what we need to get is more agile and we need to do that by re-architecting, retooling, re-platforming what we're doing. Let's talk about OCP, not to be confused with the other OCP, open container platform, right? Is it basically core OS and Docker kind of making up but shaking hands and saying, all right, let's come together. You're making faces. What's the real scoop around OCP? Yeah, so if we talk about, you know, the original OCP was the open compute project, which is a hardware project that says, let's create, you know, a standard so that I can just take, you know, standard commodity hardware, build it in a certain way and work for, you know, across, you know, lots of, you know, cloud-scalable environments. So this open container OCP is the software OCP, as I've said, and what that does is at the most basic level, the runtime of containers, I want to have something that is going to work across multiple environments. So as you said, you know, core OS and Docker are two of the main players, about six months ago when core OS launched Rocket, there was kind of a ripple in the container space and I said, oh wait, we thought Docker was the thing and now we have, you know, competing, you know, projects out there, so if I can start with that kind of basic, you know, fundamental building block and then on top of that have, you know, Rocker and some of the other Docker projects and everything like that, at least if I, you know, standardize, you know, that first piece, I'm not going to get, you know, I mean, these are all open source projects, Dave, but there's that worry being locked in or making the wrong decisions. I don't want to have a VHS versus Betamax decision. I want to have something that is going to work across multiple platforms. Well, we had core OS on a couple of weeks ago down in Miami at the Nutanix event and essentially my takeaway was, at the time, I felt like, okay, this is competition for Docker, is that right, and I guess they're going to standardize at the core level, no pun intended, and then compete higher up in the stack, is that right? Yeah, you're absolutely right, Dave, you know, core OS and Docker, I think, have similar emissions. You know, Docker is helping to build this platform and the ecosystem and there's lots of projects that make up, you know, there's Docker machine, Docker compose, Docker engine, you know, Docker network is going to be coming out soon and most of these are plug-alaw architectures that work with, you know, very broad and amazingly growing ecosystem. I mean, Dave, 2,000 people in San Francisco, everybody kind of tripping over each other to try to say that I'm more Docker and more integrated with Docker. I mean, Amazon, Microsoft, you know, all big guys there, you know, throwing a ton of resources there. So, you know, core OS says they want to create a bunch of open source tools and allow people to build with them. So, they've got their tectonic platform that they're looking to pull together their pieces and absolutely core OS and Docker will compete in this space but we had a good handshake between Solomon Hikes, the founder of Docker and Alex Povey, who's the CEO. Actually, I got to talk to Alex briefly off camera. I talked to the Docker guys and, you know, I don't think it's all, you know, unicorns and rainbows just yet that, you know, there is going to be competition there but in many ways, Dave, we know competition is good for, you know, the industry. So, you know, it's really early days. Docker is by far, you know, the clear leader in this space. So, let's talk about OpenStack, let's talk about Red Hat, and we'll sort of talk about Red Hat. It's going to lead to a discussion about OpenStack but let's break down the company a little bit. It took a long time for Red Hat to bake. The industry allowed it to bake, you know, way, way, way back in the mid-90s, people talked about Linux potentially threatening Microsoft's dominance and that's exactly what happened and Red Hat sort of bumped along and did its commit or thing and, you know, just eight glass for a long, long time and the industry supported it. Obviously, IBM pouring a lot of money into Linux and into open source but now, fast forward to 2015, you've got a company that has a $15 billion market valuation. They'll surpass $2 billion this year, my estimation. They're growing it easily at 15%, typically at a 20 plus percent clip. Now, the only thing that could halt that is currency headwinds. You know, they would do a fair amount of business overseas but they've got a very, very strong business in Red Hat Enterprise, Linux, what's known as REL. It's probably 75 to 80% of its business. It's growing, however, more slowly than the other parts of its business, particularly OpenShift, which is its PAS layer and its cloud platform. It's also made some other acquisitions to diversify, expand its TAM and grow as a company. So let's break that down, Stu. How do you look at Red Hat as a company, its core offering, REL and its new piece parts which include PAS, includes storage, includes cloud? Yeah, so Dave, there's really the two sides of the business, there's the enterprise side where I tend to spend a little more time and really that application focus which is majorly important. We'll spend a lot of time talking about that too. But on the enterprise side, they started to kind of build up the stack and build out. So you talked great about Red Hat Enterprise, Linux. I love it, we're going to have Paul Cormier on later today. He was great in the keynote. And yeah, he was there in the early days of Linux when I think Red Hat was making as much money off t-shirts as they were off of their subscription there. So we were joking this week at DockerCon. I mean, all the geeks were grabbing tons of t-shirts, hugely exciting. I remember back in the late 90s, early 2000s, I had Penguin stuff everywhere, Dave, because you'd go get the Linux stuff. I've got a Red Hat hat probably from 15 years ago. I had little Penguin squishies that I'd get from every vendor because everybody was trying to do Linux. But so as we went about Red Hat Enterprise Linux, VMware, Red Hat admitted they kind of had a bump in the road. VMware came in with the proprietary stack of virtualization and allowed customers to take their Microsoft apps and the Linux apps and virtualize it. And that was great. So Red Hat's play is RHEV, Red Hat Enterprise Virtualization, which is built off KVM. And for Red Hat customers that love Red Hat Linux and have a lot of Linux apps, it was a great way to kind of expand into virtualization. But as we know, KVM tends to live in the service providers. Some pretty big enterprises are using it, but in the Enterprise data center, VMware is still dominant in that space. And so Red Hat does need to expand there. Where Red Hat has had a huge move over the last couple of years is in OpenStack. So they've made a bunch of acquisitions. On the storage side, they had bought Gluster a few years back, really before the OpenStack. They bought Ink Tank, which is the company, the kind of leader in the CEPH project. They bought Even-Ovance. There was another management company. They bought CentOS, which is like another Linux that kind of fits it in the space. And they launched Atomic last year at Red Hat Summit. So they're really helping, if you look at what I think of OpenStack is, there's a whole bunch of different projects and it's trying to almost take that Linux capability and mentality and bringing it to the entire stack. So storage, compute, networking, management, orchestration, put all this piece together. Red Hat is a major contributor in that space. And we had lots of coverage with them back at OpenStack Summit in Vancouver, actually the joint segment between Red Hat and Cisco talking about how those two are working together. So Red Hat is a strong player in OpenStack. My critique would be there is that I think OpenStack will become majorly important throughout IT over the next five plus years, just like Linux did. But other than Red Hat, not too many companies made lots of money off of Linux. They use Linux. They built companies like Google. They launched solutions like the whole Hadoop marketplace leverages what's happening in this space. Or they got sold, like Jboss, all Rob Bearden's companies got sold. Yeah, yeah, right. I mean, one of my favorite memorable lines from last year is I asked Jim Whitehurst. They said, hey Jim, why aren't there more billion dollar open source companies? He said, well, selling free is really hard. So, as you look at it, I think OpenStack, I'm starting to see a lot of solutions coming out in the marketplace that are powered by OpenStack or maybe don't even mention OpenStack but leverage some of the technologies built into it. Storage guys are kind of getting on it. The networking people are getting into this space. And I don't know if there's another billion dollars of revenue on a yearly basis for Red Hat to make an OpenStack, but it's important that they're in this space and they definitely are a leader in this and partnering with a broad ecosystem to make sure that they can ride this next wave. Well, and Red Hat is, as I said, sort of growing up, but it's sticking to its dogma of open source, right? So everything that Red Hat does goes into the open source community. So it's free software, free to make improvements, et cetera. And then they sell subscription services on top of that. They are a pure open source player from that standpoint, much like the Hortonworks model. So, okay, that's fine, but they package in their chosen modules, right? They're not allowing you to necessarily mix and match. They'll support certain mixes and matches, but they determine what that mix and matches that they will support. Is that correct? Yeah, so I mean, Dave, I think that the nuance we're looking at here is, when Red Hat came out with their OpenStack distribution, they're going to fully support that and it's open and you can plug in lots of other software, but underneath that, you need to be running the Linux operating systems that they support, which are the ones that sit in the Red Hat portfolio, not the ones that come from Canonical, not the ones that come from Oracle necessarily, even though even Oracle might have the necessary bits that are in there. So Red Hat absolutely is open, Dave, but the devil's in the details as to some of those pieces and how much do you need to be kind of under the Red Hat umbrella? Well, it has to limit, I've talked to Red Hat about this, they've indicated, look, we have to limit the choices of what we offer to customers that we will support. I mean, customers are free to do whatever they want, because it's open source software, but for us to say that we're going to provide a service and we're going to charge customers on an SLA, we can't support an infinite number of combinations. There was a little rift between sort of HP and Red Hat at that time, but I think the fact is that HP just didn't have enough of a momentum and a large enough base at this point in time for Red Hat to say, okay, we will certify that package that you guys talk about. Now, if HP gets big enough, maybe it will, but that's something that as the subscription provider, you've got to pick your spots. Yeah, so Dave, one of the things I know we're going to be poking into this week is CloudForms, which is kind of the umbrella that pulls together, it's the open stack, the open shift, the Linux and the virtualization all under one umbrella, so Red Hat's expanding their solution set, definitely going to dig much more into the past space, as we talked about at the beginning of this segment. So Red Hat definitely expanding greatly. I wouldn't be surprised that I tell you Dave, I was back in the valley and people were whispering, oh wait, maybe Red Hat's going to make this acquisition, that acquisition, and one of the things I look at in that discussion is, is it going to fit from a culture standpoint and is it open? So there's still a couple of players in the open stack world that might be a fit or not for Red Hat, but as Jim Whitehurst actually wrote in his book, they've made an acquisition before where it was like, oh, we'll get to it be fully open sourced in a year or so, and boy did that cause some trouble internally. They ended up admitting that it was a bad decision, the way that they rolled it out, they should have bought it, got it fully open, and then released it, so it caused pain and trouble in there. The open source message is not window dressing at Red Hat at all, they are fully committed to keeping it, it's organizationally built into the company, it's how they do all their partnerships, and it's a very different way of doing business, and it's a different show Dave, I mean the vibe here, some shows they're all banging their chest as to how many people come, here it's about 5,000 people here, the show was 4500 last year, they're not looking to be a 50,000 person show, these are people contributing, part of the community, and excited to be part of it. But it's interesting what you say about culture, Jim Whitehurst last night quoted Peter Drucker saying that culture beats strategy every time, and also I'd like to hear you're saying about these companies built on open source software, Facebook is one of them, Jim Whitehurst used Walmart as an example, Walmart, GE and Ford as examples of companies that were opening up, ironically I noted sort of as an aside in Twitter last night, Facebook's valuation yesterday surpassed that of Walmart, Walmart employs two million people, Facebook, actually Walmart more than two million people, Facebook 10,000, so we're seeing what we talked about in London and April stew, the second machine age, machines eating away at the jobs, the middle class jobs and the economy, it's creating more wealth, creating GDP, but that middle class is under a major, major shift as a result of cognitive, essentially replacing human functions. You go back to the digital economy, second machine age, Red Hat is a great example of the network effect, it's how much Red Hat can do, which is still a relatively small company. I mean Dave, how much does Linux in general and Red Hat specifically get talked about when they didn't even do two billion dollars worth of revenue last year? So they are a huge player, very important and it's because they helped catalyze the work in the industry and all of the open source, so it's exciting to be here, lots going on and we've got lots of good guests to dig in over the next few days. Well and like you said, it is dogma, it's hardcore open source, if you're not open source, if you smell like proprietary, Red Hat and this community is going to come after you, they believe in the open source world, they believe, not only that Stu, they believe that open source can move faster, can be more reliable, can obviously deliver more agility and more value and that's something that we're going to unpack here because conventional wisdom says that well, if you own the stack, like VMware does and like Oracle does, you can actually do some things and stay ahead of the open source curve. I guarantee when we poke at that here, we're going to hear a different story from this crowd. Dave, Paul Moritz asked him about open source a couple of years ago and he said, when they were looking at what they were going to build for Pivotal, he said, you have no choice but to use open source, standards aren't going to do it and even your traditional development life cycle, you need the community to help, you need to be able to release faster or release often. The discussion we had at Docker this week is, typical enterprise software, what's it, every 12 to 18 months you release, open stack was like let's move forward and do every six months. Docker, open source, every two months they're doing a release, so definitely go faster, update more, add more features in and allow the users to help co-create is pretty powerful stuff and something that we've always believed when you launched Wikibon, Dave. Absolutely, open source content. Okay, Stu and I will be here all week, Paz week, Stu, we'll be talking about this and other topics, a number of great guests coming on, red hat executives, we've got customers coming on, we've got analysts coming on, so keep it right there, buddy, this is theCUBE, we're live at Red Hat Summit in Boston, we'll be right back.