 Red Hat Summit that's coming up next week, as well as DockerCon. Stu, it's open source season. And we're excited. The Cube is going to be at both of those events. Gosh, you know, I've had on my schedule on the white board a list of all the shows we've been going to. And at the bottom of it, it says, is it July yet? And we've got like one more week, Dave, where we've got a lot of events. We've been doing almost two a week with the Cube. It's been exhilarating and a ton of open sources, as you said. So let's talk about Red Hat. We were talking off camera today. Red Hat is a company they've, they're almost $2 billion, about $1.8 billion last year. They'll do $2 billion this year, everybody's forecasting. They've got over a $14 billion market cap to throw in off, very, very profitable company. They throw up $600 million in free cash flow a year. 94% gross margins on their subscription business is a very attractive business. The stock has been acting beautifully. What's going on with Red Hat? Yeah, Dave, I mean, a fascinating company to talk to, I'm excited we're going to have Jim Whitehurst on the Cube again. We were at Red Hat Summit, their 10th anniversary event last year in San Francisco. And we're back here in Boston, local to us. So, you know, we asked Jim Whitehurst last year, you know, why aren't there more billion dollar open source companies? And Jim's answer was, you know, selling free is tough. So, you know, Red Hat has really pushed far into cloud. Last year, we talked a lot about Docker. We're going to go into that more in this segment. But, you know, Red Hat's, you know, a major player in OpenStack, interviewed a bunch of their executives, some of their customers at the OpenStack Summit in Vancouver, and want to make sure that no matter where customers go with cloud, whether it be the on-premises or public cloud, that Linux is going to be an important part of that, and Red Hat's going to find places that they can monetize that. So, for people who don't understand, so most of Red Hat's business is around what they call their infrastructure business, Red Hat Enterprise Linux and sort of related stuff. And what they do is they have a free version and then they sell support services, essentially a model of support. It's a software model, but it's a software support model for pay, and that's the bulk of their business, right? And now, they've been branching out. They've still got almost $2 billion in cash on the balance sheet, and they've made some acquisitions that we'll talk about, but you see them broadening their business. So, talk a little bit about Red Hat's business, its core, and where they're broadening into. Yeah, so Dave, most of the revenue falls under what are called subscription services. So, absolutely, that means I'm buying an open source product, but Red Hat, make sure that they've tested and give you a distribution that I can trust and I can put in my stack and I'm not gonna break things. And as new releases come out, I know I have a train I can follow and I've got somebody I can call if anything goes wrong or any issues, and they've tested out a bunch of it. As we always talk about, Dave, in the stack, what piece do I have to test in-house? What piece does somebody else does? Red Hat, make sure that they've done a lot of that work to make sure it is trusted. I mean, I tell you Dave, 15 years ago, when I worked for a big storage company and we were trying to figure out how Linux worked, it was just crazy to try to figure out, you know, as the kernel.org just kept changing, they tried to test a configuration and then figure out what customers have. Red Hat really provided that adult supervision and made what was originally Red Hat advanced server, now Red Hat Enterprise Linux, so that they could wrap their arms around it and it knew it was something that as the enterprise I could trust it and reduce my risk, and that's one of the big drivers in IT is always as to how do I take that risk out of that environment so I know it's going to work and it's not going to just fall down off. Well, security's a big deal. Everybody's using Red Hat Linux. The free version is not going to get the support if there's some virus or malware that comes out. Red Hat's all over it. They put out some kind of patch. If you're a paid for customer, you get the patch, you get the fix within hours, most likely the free guys are pretty much on their own. So it's a sort of a no-brainer for large enterprises and many, many large enterprises, of course, use Red Hat, Red Hat Enterprise Linux now, but they're also branching into new areas, which subscription, but it's sort of application related. It's Paz, it's middleware, it's OpenStack. It's storage as well. Absolutely, so OpenShift is a big area that Red Hat is pushing. That's their platform as a service initiative, trying to help foster the next generation of applications. Of course, you've got Pivotal and the Cloud Foundry Foundation as kind of enemy number one in that space. And Red Hat being really the poster child for open source, it's interesting to see Red Hat with OpenShift. You've got the Cloud Foundry Foundation on one side and even some of the other Paz players, Apprenda is actually going to be at the Red Hat event and it's really an alternative for Paz. So how does Red Hat drive revenue, but still say open, contribute to various projects? It's really a fascinating space. So OpenShift, we should think of OpenShift essentially as Red Hat's cloud play, is that right? It's their Paz layer, so really it sits above a cloud because the real value of Paz is that it can sit on any type of infrastructure, whether that be a public cloud, whether that be OpenStack, which Red Hat's a major contributor to, or just my on-prem version. Now as well, Red Hat has its own OpenStack distro, correct? Yes, that's right, that was launched last year and it was one that the community felt that almost, you know, is Red Hat being open or are they doing the same thing that they did for Linux, which makes, say, I take the pieces, I put it together, I test it and then I say, here's it worked. But some in the community felt that, well, Red Hat's trying to block out some of the other players because they say, oh, well, here's my OpenStack distro, but what if I want to use Ubuntu? No, no, no, we're not going to let you use it. What if I use something that's outside of the Red Hat family? And you mentioned kind of some expansion from a storage standpoint. Red Hat has bought both Gluster and they bought Ink Tank, which was kind of one of the main drivers on the staff. So people that were looking to use OpenStack, Red Hat's been buying up some of those pieces in addition to some of the storage ones. They bought some of the major contributors from CentOS, which was a popular open source Linux built for kind of these type of cloud environments. So when Red Hats do buys like an Ink Tank or a Gluster, what are they actually buying? So the main thing they're buying are the contributors, Dave. So if you've got an open source project and you've got a community, I might have the people that are putting it together, all the customer support people, but a main thing is who's contributing and driving that initiative. So I just finished reading Jim Whitehurst's book on the Open Organization and what Jim really talked about in the book, a lot of different things, but he says, you know, how do you really, you know, incent and engage a broader community so that more people come in and more people contribute? It's not just about communicating to them, it's about, you know, being a rallying point and being the person leading the charge, but not being the whole mission. And that's kind of a new way that Red Hat's been pushing it. They're really a poster child for open source, as we said. And you're seeing lots of other new companies that are leveraging open source, but none that are fully, you know, built around open source like Red Hat. So you came back after last year's Red Hat Summit, you know, really enthused about containers, a lot of talk about Docker, a lot of talk about microservices, then Kubernetes enters the fray. So that was really sort of the launchpad of the Docker momentum. What's going on with containers and Red Hat? What's the fit and what you're taking all that? Yeah, so first of all, last year with the major release of Red Hat Enterprise Linux, I actually treat Docker as a first class citizen. So for those that aren't familiar, Docker was taking the containers which had already existed. So it's something called LXC or Lexi, which are Linux containers which sit on top of the operating system, specifically Linux. And it allows me to have a simple way to instantiate, use and, you know, really get rid of when I'm done. A single application, that's what Docker does is a single application, it has the libraries and the binaries either tied directly per application or shared, but it sits on top of the operating system as opposed to say, traditional virtualization like VMware, which sits on the bare metal and the operating system goes in each VM. So it's lighter weight, it's much quicker. Talking about something that can be, you know, spun up in seconds, rather than typically, you know, a minute or more. And companies like Google and Yahoo and Facebook have all been using these Linux containers for a bunch of years when they have millions of these apps that they need to spin up, things like web services, typically today, stateless applications, but really starting to see the developer community rallying around this. What I got super excited about, Dave, is for so long it's been the infrastructure has been that boat anchor that stopped me from moving forward on my applications and even server virtualization hasn't helped move that needle. Containers and specifically Docker really gives a vision for freeing that creation of new applications from the infrastructure. Just like we talked about platform as a service, it's kind of that top use case of platform as a service. Docker does it in a lightweight way. And, you know, one of the questions, I don't know how anybody's going to make money on containers, but it's a super exciting space. Well, presumably it'll drive demand for, you know, new application development platforms and paths. And of course Red Hat's play here is presumably to make those containers enterprise ready and secure and the like. So that leads to a discussion of Docker and DockerCon. We're going to be at DockerCon next week, Monday and Tuesday broadcasting, Wednesday, Thursday for Red Hat Summit. So give us a DockerCon preview. All right, so last year I went to DockerCon in person. It was by far my favorite show of the year. I mean, who doesn't like, it's a 400 person show, very intimate where you get to hear directly from the architects of, you know, Google and Yahoo and Facebook and say, this is how we're building, you know, the best data centers in the world and really the applications that are driving kind of the hyper scale, web scale world. And it wasn't a Docker show, it was a container show. And they're saying, this is how this technology helps us to really deliver on our vision. This year the show is supposed to hold 2,000 people. It's at the San Francisco, what's it, the Marriott Marquis in San Francisco. 2,000 people. I heard the wait list last I heard was over 500 people. So everybody wants to be at this show. Partners are all tripping over each other to be there. You've got big companies like, you know, IBM and Intel and Red Hat and EMC that are all having a major presence there. Google also has a big presence with like what they're doing with Kubernetes. And this really robust ecosystem, all the VCs are showing up. So it is a majorly exciting show really at the center of DevOps, at the center of this kind of cloud native revolution. And, you know, boy, I mean, I think Dave that just containers in general and Docker as a leader have the opportunity to really help transform that next generation of applications that we've been talking about for years. Just why all of a sudden are containers? So I mean, containers are not new. They've been around for a long time. They're fundamental to the Linux platform. Essentially, you know, you can put stuff in containers and have been able to do that for years with Linux. Why all of a sudden is Docker taken off? Yeah, so just actually, you know, VMware didn't invent the idea of server virtualization and Docker didn't create the container. It's like, you know, Ford didn't invent the car and Apple didn't invite the invent the MP3 player. These are the ones that are helping to really bring it to the market as a whole. One of the things that Docker did that made it really easy is each Docker container is for a single application, which really simplifies it. We always talk to Dave that trade-off between kind of, you know, give me one thing versus be really flexible. Sometimes starting out, it helps to not give too much choice. And secondly, they really made it easy to start with containers for the developer. There's the Docker Hub now and there's other companies that are creating enterprise versions of the Hub where if I want to start with an image and then build off of it, I can get that. There's tons of templates out there. So I have a good starting point. I can build what I need on it. And the developers just frigging love it. I mean, it really, the echo to me is back in like the early 2000s when I talked to all the engineers that were using like VMware desktop. It was just like everybody's using it. Everybody's doing cool new things with it. Now getting it into production and having it, you know, it's not like people are running their mission critical, you know, traditional database workloads on it today, but it's, we see the revolution and, you know, Docker can help. So the, what you're saying is the contents and the processes that I put into the container are application specific. So I can have my little application, you know, fence in my party and my quality of service, but I don't need infrastructure stovepipes to support that. Yeah, absolutely. So the first time I talked to Ben Golube, who's the CEO of the company, I said, you know, what is this Ben? Come on, give me the elevator pitch. And he says, what we're going to do is we're going to separate my application management from my infrastructure management. And that's really powerful because when I, you know, when I talked to all the people last year at Red Hat Summit, I said, explain to me what's different. I said, well, when I build that software stack, I need to worry about what sits underneath it. You know, David Floyer, when we talked to him, our CTO, and said, well, you know, what was the problem with database architecture? He's like, well, database expects that it had a spinning disc underneath it. So the way I do the commits and how many things I can queue up, it just fundamentally are hard coded into the application. And if I want to take advantage of Flash, I have to rewrite the application. So if I write something that's going to live in a container, I don't need to think about what operating sits underneath it. It's a standard service. Today, it happens to be Linux. Microsoft is also working on containers in partnership with Docker so that I can use Windows. You can have things like .NET that are going to be part of this whole container revolution. But it really simplifies that. And by the way, that Linux stuff, Dave, I mean, where can Linux live? Linux can live anywhere. So I don't care whether that's sitting on, you know, my HP DL380 G3 or it's sitting in the Amazon cloud or it's sitting on both. It can be anywhere. It can be OpenStack. It can be Azure. It can be Rackspace. It can live anywhere. And it's really going to reduce the amount of developer time to be able to create an application that can be broadly used. And there's the potential for portability, but I don't know that that's necessarily the early use case, because we know people tend to use something and they don't move around at all. Well, it sounds like the early use case is just simplifying, like you said, application management. Whereas virtualization separated the physical infrastructure layer from the logical pools and allowed me to create and share those logical pools that didn't attack my application management problem. And it's still a very complex problem. You're saying Docker and other container technologies attack that directly. Yeah, and one of the things it also does, Dave, is virtualization didn't change my dependence on the operating system. And as I said, you know, one of the early use cases was let me take my old legacy application, running in that old operating system. Heck, 2002, it was like Windows NT's going into support. Let's shove it into VM. Let's leave it there for another five years today. It's, I'm sitting on some kind of Linux and whether that be Ubuntu or Atomic from Red Hat or CoreOS Linux or RancherOS just came out, there's all of these options now for really kind of lightweight Linux for containers. So the operating system is going to matter a little bit less. The application becomes the center of the universe, which is where it always should have been when you're talking about infrastructure. So Red Hat Summit, some keynote speakers, Jim Gontier from Dell, now at Dell, formerly HP, CubeAlum, Doug Balog, another CubeAlum, another one of the keynote speakers, both of those gentlemen are coming on theCUBE. Of course, you mentioned Jim Whitehurst, a number of other folks from Red Hat, I presume we're going to have customers and bloggers and the whole scene. What about DockerCon? Yeah, so this is the last piece to tie those two together. Red Hat has this cool little event called DevNation to help really drive some of the developers and we're going to have Sarah Navotny on who will be speaking actually at DockerCon and Red Hat Summit. So doing the West Coast to East Coast trip, just like we'll be doing, Dave, to be able to do that. Last year, we had Gene Kim on from DevNation. It was a phenomenal interview. He wrote the Phoenix Project book. If you haven't read that and you don't know about developers, it's actually a fiction book that helps explain to you what's going on with the whole developer world. So that was a great interview and at DockerCon, so starting with the Docker team itself, we're going to have Solomon Hikeson who's the founder of the company, Ben's the CEO, Adrienne Cockroft, everybody knows from his Netflix days now over at Battery Venture, I've got a bunch of users going to be on. It's orbit, lift, big web companies mostly and a couple more enterprise companies there, some really good thought leaders in the space and really exciting lineup at both shows. I mean, if you talk about the impact that Linux has had over the last two decades and where the really early days of where Docker is, so you were saying, Dave, what's Red Hat's? Market caps are up 14 billion and Docker's listed as a brand new unicorn at a valuation of over a billion dollars. So revenue of less than 10 million dollars in Docker. So absolutely it's really early, early, early days but boy, it's nice to be sitting at the ground for that. Tech valuations are like major league baseball salaries, Stu. They just keep going up and up and up, it seems. Although I guess major league baseball salaries, there's never a bubble, they never burst. Tech every now and then they burst but they keep going north. Stu, great lineup for DockerCon, really excited about that. Like you said, Red Hat Summit 2. I'm excited to be doing Red Hat Summit with you. Enjoy your time at DockerCon and thanks for setting up the two shows with us. All right, we'll be there on the ground, the Cube, SiliconANGLE, Wikibon. Thanks for watching everybody. We'll see you next week at Red Hat Summit and DockerCon. See you then.