 Live, from the Mandalay Bay Convention Center in Las Vegas. It's theCUBE, covering VMworld 2016. Brought to you by VMware and its ecosystem sponsors. And welcome back to theCUBE, SiliconANGLE TV's flagship broadcast for providing exclusive coverage here at VMworld and Mandalay Bay, continuing here day three. Been here since Monday. Great lineup of guests and that continues today. I'm John Walls along with Keith Townsend. Keith, good to see you this morning. Good to be back. Pleasure. We're joined by Dom Delfino, who's a cube regular SVP of worldwide sales and systems engineers for VMware's networking and security business unit. Dom, that's a mouthful. It is a mouthful. Yeah, thanks for being with us again. Hey, thanks John. Good to see you. Good to see you, man. Tell us about your thoughts first off, just about the vibe of the show, what's going on and how it's been for you so far on the business side of things. Yeah, you know, I think obviously we've had a lot going on as a company over the past year. Our parent company being acquired by Dell. Obviously, now that most of that's behind that and people start to see the strategy with Dell Technologies, VMware remaining an independent company. There was always a lot of questions and speculation about what's really going to happen here and what's not. It's like, okay, everybody calm down. Not much has changed. So, and then when you look at the vibe of the show, I think we're really solidifying what act two of VMware is and where we're going in terms of, you know, hear about our cross cloud strategy. You hear about our software defined data centers of service strategy. You hear about the cloud foundations. You hear about what we're doing in hyperconverged. And obviously you see where, you know, NSX plays a role in many of these bigger VMware strategies. So I think people, you know, there's been these ups and downs with what should my strategy be? Where is software defined, networking fit in? What's the right cloud strategy? Is it go all in on public? Is it hybrid? Is it private? And I think you're starting to see people finally see the technology catch up to a lot of the hype cycle that's gone on in the past three years and say, hey, okay, I get it now, right? And I think we're very well positioned to be a significant player in many of these strategies that have been hyped up a little last three or four years and are now really coming to fruition. And you brought this up earlier, talking about, you know, the news of the acquisition. Still hadn't closed yet, you know, like any day now. But how much of that is a consideration when you talk with media, when you talk with your customers? You want to talk about what you're doing going forward. And they want to talk a little bit about, well, when's this thing going to get done? And is it become a distraction that you can't totally focus on what you want to do? You know, it really hasn't. I think the feeding frenzy becomes more of a distraction of the reality of what is going on. You know, we've had a parent company, we've been 80% owned by a parent company called EMC for the last 10 years, right? And now we don't have that parent company, we have a different parent company, right? So, and I think there's so much M&A in the technology space and even our customers go through so much M&A if you look at banking and retail and so on and so forth. They sort of expect it. And I think, you know, people want to be, hear the reiteration that they're going to be taken care of and, you know, products aren't going away and roadmaps are staying there and investments are staying there. And, you know, they want to hear it from people that they have relationships with and they trust because they know, you know, you're putting yourself on the line with them when you go out and talk to them. So, I think probably in the past 100 customers I've gone to see out in the field, maybe three or four have asked me and it's been a real simple conversation and we've been able to move it forward with it really fast. And so then moving on, what are they talking about from the business side of things then? What do you talk to them about, about your 12 and 18 month roadmap and what you're going to be bringing to the table for them? Yeah, and I think, you know, the reality is that, you know, we as a company have really been one of the key players in the industry who over the past 10 to 12 years has provided massive transformation for our customers. When you took a look at the two waves of virtualization, the first one being server consolidation, right? I used to buy 10 servers, now I buy one and put 10 VMs on it, right? And then the second one being workload mobility, the ability to pick up a VM and move it to another host in the data center, across data centers and now ultimately into the cloud, and arguably the precursor is in the foundation of what cloud computing has become, right? So now we talk about, you know, how do we take the next layer of complexities out of that equation with, I want to move my workloads into the cloud, I want to burst into the cloud. How do I deal with it from a networking perspective? How do I do it? And these are lower level problems that affect everything sitting on top of them. So you know, the infrastructure affects the application, the application affects the business, the business affects the revenue and the success of a company. So you know, a lot of times we don't like to think about the lower level things, but we have to upfront and particularly at the architect level and the administrator level and the engineer level, we need to be thinking about that. So when you look at our cross-cloud strategy, it's about, I want to be able to take advantage of infrastructure as a service or platform as a service, but I want to manage it like it's an on-prem. I don't want to take on another operational model just for those workloads sitting into that specific cloud provider. And I think that's what VMware is bringing to the table today, right? And if you look at the ability to run the VMware stack, what are SDDC as a service strategy inside IBM soft layer, right? Well, now you can have the same operational on-prem and in the cloud and you can have it with the assistance of IBM and VMware as well. So as we talk through this with customers, they're really starting to see, hey, this is starting to not be bleeding edge, but I'm starting to get into the real production maturation phase of the life cycle of these technologies that we've been talking about for the last three or four years. So, Don, as we talk about the maturity of network virtualization, SDN in general, our customers really getting that concept down. It was really hard a couple of years ago. How's the conversations now versus a couple of years ago? Yeah, you know, I'm going to say no. Okay, which might be surprising coming from me. And, you know, we tend, if you look at the evolution of computing that we just talked through, and you look at the evolution of networking over the same time period, you know, 15 or 20 years ago, we converge everything onto ethernet and IP and we haven't really done much since then, right? There's been these iterative little things that have come along. And what happens is you get out of phase, right? When one element of infrastructure advances faster than the other elements. So, if you're not somebody who's been working on these things on the forefront of them, it looks a little bit scary. So, how you get around that is you have to find a problem, a smaller, more finite problem that you can solve and prove out, right? And so, you know, a lot of our customers have huge security concerns today and it's become the leading use case for NSX, right? In terms of volume of customers, volume of footprint. You say, hey, I've got this DMZ issue or this PCI issue or this HIPAA issue. Okay, great, let's go talk, attack that problem. We'll do the proof of concept. We'll move it into production. Now, you've seen that we can solve this big, hairy, ugly, complex problem in a very simplistic fashion. Then customers go into phase two and either expand the footprint of that use case or start to expand the footprint of that use case and layer additional use cases on top of that. Hey, now I can deal with network automation and identity firewall and disaster recovery and business continuance and how to move workloads into the cloud, right? So when you break that down into a much smaller problems and much more focused problems for the customers, that's how they get to understanding because it is a big, complex thing. When you talk about it, how do we transform the architecture of networks for the next 15 or 20 years? So, half cloud, I'm sorry, interesting technology. Taking NSX, putting it inside of AWS Azure makes you able to take your legacy network, move it into the cloud. Big bet is that the right way to go versus cloud native type of applications. Where should customers go? Should they rely on something like an NSX in the cloud or should they embrace AWS Azure specifically? You know, I think it very much depends on the customer, the type of applications they have and the legacy applications or the ability of new applications to scratch. And you know, I remember talking to a customer three years ago on this and he said, hey, I don't want to ever be locked into a cloud provider, right? So I want you to give me something that makes it easier for me to move a workload back to my private cloud and into other cloud providers. And I thought about that and I said, why would the cloud vendors want that? Because effectively you're creating a weapons war, right? Or a price war between them because if I make it really easy for you to get out of my cloud, but from a cloud provider perspective, they're also looking at this as an opportunity of, hey, there's 65, 70% of the workloads are trapped in the private cloud. How do I gain access to them as well? So there's a little bit of give and take on both ends here from both the cloud providers, the vendors who have been traditionally inside the private data centers and the customers themselves here. And you know, ultimately the customers will vote with their dollars in terms of who wins, right? But you got to play in order to win. So, and we think that we bring some relevance there where you can still have control of your network attribute, your address in space, your security policies. And they follow that workload, whether you choose to take it, move it into the cloud, move it back and move it into a different cloud provider as well, providing more simplistic operations and making it transparent to the application owners, right? From their perspective, that infrastructure is all transparent to them. I don't know whether it's in the cloud or it's in AWS or Google or SoftLayer or Azure or on-prem, looks like it's on-prem. So it's about making things simpler for them. So speaking of the value, 1700 customers, amazing growth over the past few months. Right. One of the consistent themes I've heard from customers, not NSX customers, is that NSX is expensive. What has been the value for those 1700 customers beyond the micro-secretation? What are some of the use cases they found for NSX? So, and I think, you know, at the end of the day, customers vote with their dollars, right? If something's too expensive, they're certainly going to take their dollars and go somewhere else. I think, you know, one of the challenges that we had, not so much anymore, is I'm not walking into a customer and saying, hey, buy my switch, it's cheaper, it's faster, it has lower latency, deeper buffers, it uses less power, right? This is a new market area. And one of the reasons we've been successful is we have product market fit, meaning there's a desperate need in the market and we've got a product that suits that need, solves those problems. So, when you look at this collectively, right, there's, you know, an ROI from implementing micro-segmentation. There's CAPEX savings, there's OPEX savings, there's operational efficiencies, there's time to market. And there's really a well-rounded ROI that we put together around, and we make the business case for every engagement that we have with our customers. There's, okay, I have a dedicated, separate environment for my PCI applications, for my HIPLA applications, for my financial applications, for my credit card processing. Are you really taking, go back to the early waves of VMware of Wave 2, where we talked about asset consolidation and utilization. You're not taking advantage of those benefits that you can get from further asset consolidation and utilization because your current security architecture doesn't allow you to do that. But the new generation of security architecture with micro-segmentation makes those lines transparent, right? So it allows you to take advantage, I can co-mingle regulated environments with non-regulated environments. You know, I don't need physical, separate, dedicated infrastructure that has very, very low utilization rates. Then you talk about the software that runs on top of that. Now there's cost savings from our own software, right? Because we can consolidate our own devices and you know, many software vendors charge per socket, per host, per VCPU and things of that. What about the software stack running about that? Does that become more cost effective? So when you have an objective customer who's looking at this objectively, it's always a win for us. My biggest competitor is do nothing, right? I'm just gonna keep doing what I do. You know, there's really nobody else in the market who does what we do. There's some other players who do pieces of what we do and we do pieces of what they do, but nobody collectively does what we do. And when you have somebody who's looking at it objectively, they always see it. And that's what we have to grow that we have, you know? So compute, network, security, you guys have sold NSX into 1700 organizations so far. What advice can you give to the VMware customer? Or specifically the vSphere customer that's trying to talk to these other groups? You guys have asked, how do they get these other groups to take a look at something like NSX? Yeah, and you know, it's a great question. And I've been meeting here with customers all week and most of the customers showing up to meet with us with NSX, you have a cross-functional team in the room, right? You've got, you now got the vSphere guys and then gals and the networking guys and gals are already talking to each other, right? Think about it from a networking person's perspective. You know, virtualization was one of the biggest pain points for them. I had a physical workload, I had a network interface, there was a one-to-one correlation, life was easy, right? That server was born there, I applied a policy to it, it stayed there and it died there and nothing changed the whole time. So those things were easy to deal with. Well, what happened when I had 10 workloads coming in over that same physical interface? A little more complex, right? Oh, these workloads now move around my data center and the subsequent fallout of that was we taught everybody to build these large flat layer two networks, right? Well, what's the biggest security risk we have right now? Those large flat layer two networks. So, and we did that to customers. We, VMware, Cisco, other players in the industry, poor application design, the customers, the partners, the integrators. So there's almost a responsibility that I personally feel like, hey, I've got to help you transform this because I don't want to leave you in the state because every breach that we work on, we see the network used as this massive attack surface for horizontal movement once the threat is inside the perimeter, right? So how do we transform that? How do we change that? Network virtualization plays a key role in that right now. So as you head back to Raleigh, your big takeaway from here is going to be what? What's your sense of what you're hearing from people and what you're going to be communicating to your folks back in the home office? You know, I think my big takeaway from here is that as we've evolved our strategy as time has gone on, and I think you learn from your customers, right? They're very good at giving you feedback, both positive and negative, by the way, right? When you take that feedback, if it's not a constant closed loop cycle where you adjust your strategy based on the feedback you're giving your customers and you saw here, we had 36 customers specifically talking about their NSX implementation, their experiences, their return on investment, how it's transformed their life. You know, so to me, that's the most valuable thing we do at VMworld is connect customers with other customers to share their stories, share their successes, share their pitfalls, and it allows us to alter our strategy as we approach new customers as well, right? Hey, what about this? Oh yes, we worked with Columbia Sportswear or Nike and they're doing this, and guess what? Don't believe me, believe them. They were up on stage at VMworld and here's the story they told, right? And I think this is why you start to see the momentum we have. People are seeing their peers in the industry, pick a winner and deploy a successful strategy and they're saying, hey, you know what? Enough people have done that now that I feel comfortable getting on board. Yeah, proofs in the pudding, right? Right, proofs in the pudding. And that's what you're seeing here. Dom, good to see you. Great to see you, John. Thanks for being with us, appreciate the time. It was a pleasure. Thanks for having us. All righty. All right, we continue our coverage here on theCUBE at VMworld from Mandalay Bay in just a moment.