 Live from Las Vegas, it's theCUBE. Covering VMworld 2017, brought to you by VMware and it's ecosystem partner. Welcome back to VMworld 2017 everybody. My name is Dave Vellante and this is our day one wrap. I'm here with Peter Burris and David Floyer who have been inside the analyst meeting all day. Peter I want to start with you. The premise that we wanted to test coming into this show was the following question that we wanted answered. Is VMware's momentum a function of people realizing, experience the data realities of cloud? In other words, as you phrased it, the reality that they must bring the cloud model to their data versus trying to force fit their business model into the cloud. Is that a reality that customers have now come to see or is this really just kind of an end user or an enterprise license agreement product cycle for VMware? Is that what the momentum is behind? I don't think it's a ladder but I think there's elements to it. So I don't think customers have fully grok the idea, fully conceived of the idea that their data is the most important asset, not their hardware. And the goal is not to get rid of hardware, the goal is to get more value out of your data and that means bringing cloud and cloud experience to your data. But I think also that VMware is interesting because they do have this enormous install base, you know, 500,000 plus customers, many of whom are vitally dependent upon VMware as a technology. And for many years it looked as though VMware was just going to sit on that and milk it. But in the last two years, it's become very, very evident that they're not. There have not been a lot of really hugely successful industry or company transformations in this industry. You can look it back at IBM in the 90s, Microsoft has done it a couple of times, but there aren't that many companies that have done a really great, hugely successful transformation. VMware may be one of them. So they're able to build on that notion that what's going to matter is where is your data and bringing function and capabilities to that data. Number one, but leveraging their install base and providing the chops to help their customers move forward from where they are. Is, in many respects, the core story of what's happening here. So David, let me bring you to the conversation. About a year ago, VMware and AWS announced a partnership. We're just starting to see the initial pieces of that. There's obviously a lot of engineering work having to be done and heavy lifting. But the other piece that might be a tailwind for VMware was their cloud strategy was all over the place for years. For the better part of a decade, it was vCloud Air and then, you know, sort of shifting that strategy, owning their own cloud. They had no cloud strategy. Well, they tried a lot of different things and none of them worked. And then basically they said, okay, look, we're going to partner with IBM, we're going to partner with Microsoft, we're going to partner with AWS in particular, the AWS partnership. It seems like brought a lot of clarity. Do you think that made customers feel more comfortable that entering into long-term relationship with VMware, now that they had a clearer cloud strategy, both for the customers and the partners, gave VMware a boost over this past year? Absolutely. And in particular, the knock-on effect of the agreement with AWS gave confidence, I believe, to VMware customers that they knew, they had a path forward. They had a clear path forward. And the same with AWS and they've extended that now with Rackspace and I hear that even Google is in the mix as well. So they've announced firm relationships with other clouds. They've announced their foundation, which is again part of making the cloud aspects part of the overall platform. Well, they really have to make sure it doesn't just become a marketing or a market texture. Sure, absolutely. But I'm impressed with the confidence they have. I think their story of any device, any application on any cloud, the little piece of intrinsic security maybe that needs a lot of work on that area. But the first three things I think is a strong, positive, confident story. They've been talking about that for a while, but two years ago they had negative license growth. And now it's significant. I mean, double-digit license growth, I think 13% last quarter. We think we've had three quarters of substantive revenue growth. So do we feel as though this is a semi-permanent on a near to midterm trend? There are three platforms, aren't there? There's AWS, there's Linux, and there's Azure. And at one stage, there was sort of feeling that everything might go to Linux. I think there are three firm platforms that will, in my opinion, survive. At least for the next decade. Certainly in the US, the global market has to weigh in. There may be some things that happen elsewhere, but certainly in the US. No, David's right. At the, you know, where we are right now, kind of as I said, VMware is going through a transformation. It looks like it's going to succeed. It's going to remain relevant, and it's going to be in a position to bring its customers forward and show them a direction that where they can put their money where they're going to get value, as opposed to putting their money where somebody else is going to get value. If they carry on with the transformation they're in and the commitments that they're making, this is going to be, this is going to remain one of the top five or eight technologies in the enterprise for the foreseeable future. Yeah, and I think people underestimate the power of the ecosystem. And that's really kicked in, and I really do feel like it's some of that clarity with the cloud strategy. Now, the other interesting thing is, you know, VMware at one point wanted to own its own data centers and manage its own data centers. They just raised $4 billion in debt. They're going to spend maybe a couple of hundred million on CapEx this year. That's it, right? I guarantee Google and Microsoft and the hyper scale guys are going to spend a lot more than that. So very efficient operating model, you know, from that standpoint, they raised a bunch of cheap debt. You know, they're buying back stock. Many people feel like the stock is underpriced. You know, the cash flow is really strong. Operating cash flow with $3 billion. So things are pretty good right now. The data center is on fire. What did you guys learn today in terms of, that was of interest in terms of product announcements, innovations, other things that were of interest are exciting to you? Well, the first thing I think I learned, and David, you and I were talking about this a bit, is that when you peel back every major commitment that they're making right now, every new effort that they're undertaking, buried inside it is NSX. You know, somewhere in there is NSX. And it looks like they're really going to bet heavily on NSX and that makes some good sense. You know, it's going to be a multi-cloud world. One of the biggest challenges that customers are going to have are, how are they going to weave multiple clouds together so that you have a coherent application or a set of workloads that you can manage. So that's probably the first thing is that the last year, NSX started to come to the fore. This year, you know, any conversation you have, blah, blah, blah, NSX, and then not NSX. So it's, NSX has replaced vSphere as the primary, that core technology. Because of that multi-cloud imperative. Right. I would pick another area as perhaps also being very, very important. And that was the success they've had with the vSAN. They've had really- vSAN? Oh yeah, totally. They have essentially reducing the cost. Straightforwardly reducing the cost of running a vSphere environment by being able to put in vSAN. And they didn't have- EMC's finally out of the way. Exactly. Go ahead, I'll say it. I mean, let's face it. EMC held back VMware for years. Years and years. When we first started coming to VMworld and we said, wow, this company's in an amazing position to really innovate in storage. And storage is the real mess. Absolutely. But they didn't have the resources to do that. And they were sort of publishing these APIs saying you guys all figure it out. Finally, under the Gelsinger era, he was able to, I don't know, fight, beg, borrow, so who knows how it all went down internally. But they've really taken the handcuffs off. And it's good. I mean, they're aggressive. But there's another thing. That is the EMC's transformation to Flash absolutely facilitated the emergence of vSAN as a platform for how you're going to handle storage. So it was a combination of things. I'm not sure vSAN would have worked as well if EMC was still driving storage arrays with this. Exactly. In fact, they gave some interesting numbers. They did. 60% of vSAN is Flash and of the VxRail, 71% is Flash. And the reason they give, and I think that's right, is that it's so much simpler for the VMware, sorry, for the VMware operators to manage. And that's Flash inside of what, a Dell server or an HPE server? It doesn't matter. But the key thing is that, you know- Not an array. Not an array. Not an array. It might very well have been that EMC was holding things back, but I think there's also very practical technical reality here that the amazing potential of vSAN has become unlocked by the market's adoption of Flash. Which, you know, David was one of the guys that helped move the market many years ago. So it's coming together for them in ways that perhaps they planned from the beginning, but they're taking advantage of the opportunities as they emerge. And you know, I'll say one other thing. Pat Galsinger took some serious hits over the last 18 months in the rumor mill, and he's still here, and this company's doing pretty well. So- Two years ago it was like, oh, Pat's on his way out, and then he gave a really strong keynote. I thought his keynote today was very crisp, and evidently he was a little bit under the weather, so I think he did a good job fighting through that. But last thing, any announcements that were exciting to you or things that you expect, big announcements coming tomorrow, we're hearing about some super secret stuff that's kind of leaking out. Yeah, I got to be a little bit careful about that. But what did you hear today, David, that made you go, hmm. Well, I actually want to focus on one thing that I think is one of their biggest issues, and that is security. They were very open today, very, very open today, about what a mess security was. And they came up with something called, what was it, absence, which is a good idea. Now you make me go to my notes. App defense, app defense. Which is an idea, but it's just the start. These are huge amount of greater investment in security. From Dell, from EMC, and from VMware, all together, they have to step up in a much bigger way. We said in this keynote today that the industry, as an industry, we have let you down. Several years ago, one of the early years when we interviewed Pat in theCUBE, I had asked him, is security a do-over? Unequivocally, he said yes. And that was years ago, and we're still doing it over. All right, guys, we got a wrap. Thanks very much for coming on and the close. Look forward to more analysis from you guys tomorrow and throughout the week. This is, day one will be, well, we launched tomorrow. We start at 10.30 local time. So- That's Pacific time. Yes, which is Pacific time. Yeah, we're in Las Vegas. Watch siliconangle.tv, siliconangle.com, for all the news, check out wiki.com. For all the research, we're out. This is day one. This is theCUBE. We'll see you tomorrow.