 From San Francisco, it's theCUBE, covering VMware Radio 2019, brought to you by VMware. Welcome to theCUBE, Lisa Martin with John Furrier and our exclusive coverage of VMware Radio 2019 in San Francisco. John and I are pleased to welcome back to theCUBE, Rajiv Ramaswamy, COO of Products and Cloud Services. Rajiv, welcome back. Oh, thank you, glad to be here as always. 15th annual radio, a lot of research, a lot of innovation. Give our viewers an idea of some of the historical products and services that have come out of the radio and the innovation programs that VMware has been doing for a long time. Yeah, I mean, you know, I'm excited about radio, right? I mean, many of our key innovations came out of radio. Very early back in the days, the fundamental concepts of vSphere replication and disaster recovery came out of radio papers a long time ago. Some of the innovations within vSAN were showcased at radio many, many years ago. So across the board, I would say many of the products, you know, key portions of the products were deployed, I mean, in the form of radio papers over the years. And if you look at this year, for example, you know, we can see how things have changed with the times as VMware has evolved, so does radio along the way. So this year, I was struck by the number of papers on machine learning and AI, right? It's forward-looking, of course, everything we do here and it's just now, ML is now across many of our products and that's being seen in radio. And of course, you know, what we see at radio is always more forward-looking than what's actually in the products. So that's an area I see a lot of work on and another area I see a lot of work on is in Kubernetes and the cloud native. And then of course, the traditional areas of how to optimize storage, networking, and even when it comes to networking and so forth, papers on cloud networking and how, you know, we can optimize for networking in the cloud. So in general, I mean, the trend here is a reflection of what we're probably likely to do in the next several years. One of your jobs as chief operating officers, obviously, to operate on the product side of the business, generate that kind of enablement for the sales team and ultimately customers, right? So you've got to kind of mine the farm here, right? Kind of cultivate and see what's organically growing out of VMware from the top engineering and stuff, top papers. What's the process? How do you go attack all the action? Because there's a lot of forward-looking stuff, there's a lot of pie in the sky, there's a lot of cool, different stuff that looks weird. But sometimes that weird stuff looks, is actually going to be the future. So you've got to have a broad perspective. How do you attack this? I would say one of our biggest jobs is portfolio management, you know? And we have to look at balance our investments across this range that you talked about, right? So at any point in time, we will have a set of technologies and products that we're incubating. These are relatively new, sometimes new areas for us, sometimes extensions to existing areas that we're incubating, and these are, of course, businesses that don't drive much revenue right now, but over time, yes, hopefully will, right? And then there are businesses, I'll give you examples of each of these, then there are businesses that are in growth mode, where we've already established a good product market fit. We know that we can scale this business and it's a different set of investments and in that growth category. And then there are relatively mature businesses that we know we need to run efficiently. In fact, they need to generate cash that we can go back and invest into these others, right? And then there are things that we want to get out of and diverse. So we look at our R&D portfolio along those, and at any point in time, there's stuff in every one of these buckets to give you some examples of what's in each of these today. Obviously, we have a big focus in cloud native. Most of that is incubational at that point, right? Not substantial revenue yet. Big, you know, we've acquired Heptio, for example, last year to bolster our own internal efforts. So a lot of work, a lot of effort being put into that with the idea of building a future business in a significant way. Some of our more recent growth businesses are now very much in the scale category. You look at VSAN, you look at NSX, you look at VeloCloud as part of the overall networking portfolio. These are all in the scale category, right? They all have substantial revenue. They're growing very nicely, they're investing. Some of our other bigger businesses like VSphere, which is our classic, you know, foundation for everything we do, is I would say in the mature, you know, category. And then, by and large, we've reduced investments in some small businesses. I mean, if you want to look at historically, VCloud Air, that's the business we got out of, right? So these we do along the way. Good call, by the way, it was a great call. Yeah, so that's, and in fact, one of Raghu's and my biggest jobs really is to figure out how much we put in each of these buckets. Make sure you're placing enough in the future bets category, while also making sure you're delivering on the numbers for the day. I love that. That's exactly what I was going at. It's about the future bets. Yeah. What, as on the business side, one of us, I asked Pat Gelsinger, I'll ask you the same thing, but in different contexts is, you know, this is an engineering celebration as well as kind of competition internally, I guess. Kind of proud to be, people are proud to be here. Kind of an elite status. But engineers want to work for a company that's solving hard problems. Yeah, it's also retention, attraction thing. What are some of the hard problems that you're trying to do on the business side? You're operating some of the core products. And it sounds easy to say, abstraction layer, make things look easy. But what are the hard problems that you're solving that need to come out of this world? Yeah, and some of these are, by the way, not just product. They cut across every aspect of the company. So, for example, we as a company are trying to move towards more of a cloud-oriented business model. All right, so that's why our group is called products and cloud services. And those are combined in the sense that everything that we build as a product over time, most of it gets offered also as a service. And the underlying code base and the technologies are all the same. Great example, for example, is VMware cloud offerings, right? They're all built on VMware cloud foundation, which is offered as a software package for our customers who want to build private clouds. It's also available as a service from us as well as familiar for our partners. Now for us, the notion of transforming our company to be able to do both, right, just products from moving from products to also to being delivering cloud services has a profound impact across every function. R&D for sure. Go-to-market in terms of how you align the Salesforce to sell that. All our systems that are necessary to transact that business. So that's a pretty big transformation that we are going through right now. That's a lot of software that needs to be coded. Automation's not easy. Yeah. That's why machine learning's probably not here, right? Absolutely, yes. What is that balance when you're looking at innovations that come out of, not just radio, but the other innovation programs that VMware has about managing the balance between the R&D investment and the investment that's going to be needed on the sales and marketing side to get the product or service solution out on the market to start really dialing up this as a big revenue contributor. How do you look at that as you talked about that portfolio a minute ago? And when something becomes, like, say it comes out of radio and it's, well, this is a really good idea, but how are you looking at balancing the R&D investment versus what you know you're going to have to do to get it to market? Yeah. And by the way, that's a great point there because too often engineers think about, hey, I've got the coolest product, let me go build it. They don't think about how it needs to be sold. And how it needs to be sold is equally important if not more important than how you build it, right? So in our world, so when we do planning on an annual basis, for example, we look at a holistic plan that covers the entire gamut, right? Which means R&D, sales and marketing, right? And within sales and marketing, investment across what our core sales team needs to do, what our specialist sales teams, for example, some of these newer products will require specialists to sell. They might be targeting different buyers within the customer base, right? So we have to align our R&D and go to market investments together to create a full plan for the year. And we do that for pretty much every product in our portfolio. Rajiv, I want to ask you a business question. I know R&D is going to be key. You guys did a great job, so congratulations. But one of the things that we're seeing in the market is new shifts in the landscape of either tech enablement or trends like Kubernetes or 5G gives companies an opportunity to reset their architecture. Yes. And obviously with virtualization, some of the things that you guys are doing, we're seeing a couple pivot points for customers now. One, cloud-native Kubernetes. Yes. Software-defined or on-premise cloud operations, obviously private cloud, hybrid cloud. And then like 5G. Yeah. So a little bit of networking. These are major trends. Yes. How should companies start thinking, okay, I have an opportunity as a catalyst to shift. What's your take on that trend, advice to those customers? Because they might be able to do either wholesale changes or migration. Yeah, look, from a customer perspective, every one of them is going through this transformational journey. And depending on where they are at. So if you take telcos, for example, that's where the 5G applies primarily. I mean, they go through these big capital cycles of investment that are geared towards massive technology generations. So last generation was 4G LTE. And now the next thing is 5G. And that's a big new capital cycle. And there's an opportunity at that time for them to fundamentally re-architect how they deploy their infrastructure. And that's what they're doing with network function virtualization in 5G. And so 5G and NFE kind of go hand-in-hand together. And it's an opportunity for them to go deploy a new infrastructure that is much more virtualized, much more using standard hardware, running everything in virtualized applications, virtualized network functions than they could before. So the edge now is more dynamic than it was years ago. So we look at 4G, we get what year that was. But I mean, even with LTE, that's many, many years ago, the edge was not built out. Now you have a programmable, intelligent edge market. How is 5G going to impact the telcos? Because this might be the right time for them to actually have a real business model. Yeah, well, look, I think 5G offers them to try out many different models. For example, given that many of the 5G radios are much more shorter range, so you're going to deploy more smaller cell sizes. That means, for example, there's a new business model possible where you deploy a radio. Multiple operators are sharing that radio. Whereas traditionally today, your base stations, OK, AT&T has their own, Verizon has their own. Tomorrow you could be, OK, you could have a bunch of base stations in this building. Radio service provider. Yeah, in this building, right here. And that could be shared by all the providers. So it's a completely different business model. So those are the kind of things that 5G enables. Are there any projects that are being featured here that you've talked about here at Radio 2019 along the spirit of NFV, 5G? Oh yeah, there's a bunch of projects on the floor, right? You can go, in fact, even in the posters that you're sitting around here, you'll see a lot of projects in Telco, you'll see a lot of projects in 5G. We have some nascent efforts on this, what we call network slicing, for example. And what is that? So the ability again to share the network, right? You deploy a single network infrastructure and you're able to slice that into chunks and have different people use those chunks. I think that points out the trend that we've been reporting least on theCUBE is people say, don't move data around, move compute to the edge or software, in case of virtualization, you're putting basically virtualization on the radios. And software at the edge. So when you look at the marketplace, when you say, okay, VMware's got to transfer over, one of the things that's come up a lot, we've heard on theCUBE is, ah, VMware's great, they don't know networking though. Of course, NSX is doing well now, we know where that comes from, multiple competitors, but talk about the networking aspect of what you're doing, the investment in this year as the first real SDN company, there's been some SDN around before, but you guys not only do SDN, you got networking, you got compute, security, talk about networking and the innovations there. Yeah, let me talk about the vision for networking and then also how it's part of all the solutions, right? Not necessarily just a standalone sale. So networking fundamentally, it used to be about, for example, it used to be about connecting in the campus, your laptops and desktops into the network, right? It was called workgroups and then campus networking or your LAN, campus LAN, then became Wi-Fi came in there, right? And then in the data center, it was about connecting servers to storage and servers to other servers, right? All about this box mentality. In the branch, it was about putting in a branch router and providing a network connection through that, right? But if you look at fundamentally what networking is evolved to now, it's about connecting what? Connecting users, applications and data, and these could be anywhere, right? Users could be anywhere. You could be sitting in a Starbucks shop accessing your applications that are sitting in a cloud someplace, not even running through your enterprise network. So the notion of a classic network has changed completely. So the network now is much more, it's really a virtual network because you don't, you know, it's not physical plumbing anymore that matters. Yes, you need the physical plumbing. The physical plumbing is going to be provided by multiple people that you as an enterprise don't even necessarily control. You might control your campus LAN, you might control your data center, but you don't control the cloud, right? You don't control running over a service provider network into the edge of the branch. And so fundamentally now the new networking layer has to be a layer of software that really delivers and connects and secures these applications, users and data. And that's really this concept of SDN that's evolved into what we call the virtual cloud network. And that fundamentally is our focus. And for us, we're not really burdened by the fact that we have an underlying physical network business that we have to go protect and we have to go build on top. You're a software company. We're a software company. So you're not like Cisco. You flick at switches and routers. That's right. We don't have to worry about that. It doesn't matter what you have underneath, right? Everything runs on top. And so that's the fundamental philosophy. Now, when you look at how this is now starting to get deployed, of course, and you're seeing, we started out with the data center and we started out focusing on virtual machines, connecting virtual machines. Now we've now extended that to connecting containers. You need to network containers, right? The applications running in containers, they need to be networked. You need to network bare metal machines because you still have some of those leftovers, right? So you've got to network those and then you have to network applications running. This is the software question I want to ask because this is a trend we're seeing. Hyperconvergence has proven that you can class multiple things into one thing and reduces one footprint and it's easier to manage. The 5G and these shifts in technologies cause people to re-set their architecture. A lot of people say, okay, Cisco's got gear. They got UCS and other things. So how do I collapse that in? Well, they want me to not do that. You guys are kind of a different approach or do you than Cisco? No, we don't know. So this is exactly what we do, right? So now you take the networking that we've got with virtual cloud networking and you actually integrate that as part of a solution with our VMware Cloud Foundation, okay? And now, while you have a full solution, that can be deployed on any hardware, right? It can be Cisco UCS hardware, it can be Dell hardware, it can be HP hardware. So you essentially have a software foundation that includes compute storage, networking, automation, all put together in a solution that you can deploy on-prem and you can deploy in the cloud. That's like super hyper-convergence. Yes, and in fact, hyper-converged now is not just about storage and compute anymore, right? That's how it started out. It's our compute storage, networking, all put together, available not just on-prem in a hardware appliance, software that can be run on anything and extended into the cloud. That's really the new hyper-converged. And that's Nutanix's plan actually. They are moving from a hardware trying to do software. Yeah, we've always been there, right? We started out with software and we've expanded that to the hybrid cloud, right? Think about where we're at. Now, we've got VMware Cloud and AWS. We've got our 4,000 plus VMware Cloud provider partners and increasingly more and more hyper-convergence. So you're saying Nutanix copied you guys, basically? Absolutely. Okay. Imitation is the highest form of fluttering. Hey. Hey. Question for you, in terms of customers, I'm sure going to hear from some phenomenal successful customers at VMworld, which is just around the corner, how are customers going to benefit from the innovation? And this is, we talked about the competition, competitive nature of radio, but also the fact that a lot of these guys and gals are doing this in their spare times. This is really deep-rooted, passionate projects. How can we expect customers in any industry to be able to benefit from this in the next nine to 12 months? So I'm going to come in, at the end of the day, these are complex systems and software that we provide and deploy. And a lot of the innovations are under the covers and we have to translate that into value propositions that resonate with the customer that they can go deploy. So what's a customer trying to do? So think about it from a customer lens in. So the customer is trying to say, well, okay, I'm on this journey. I've got to, for example, figure out how to have a completely dynamic infrastructure where I can run my applications. And those could be my existing applications, modern applications that I'm building, and they need to be able to be able to run flexibly anywhere. I want to be able to run them on-prem. I want to be able to run them in the cloud. Give me an infrastructure that can solve that problem. And that's really what we do with our hybrid cloud solution. So we help solve that problem for the customer. Then the customer's next problem is going to be around saying, well, I want that flexibility. I want to use AWS. I want to use Azure. I want to use Google. And every one of these is a silo by itself. I've got to retrain all my people to go manage every one of these separately. VMware, can you help us with that? And we provide a consistent operations and management control plane that works across every one of these clouds. Loving them to solve that problem easily. And networking and security we already talked about, right? There's notion of being able to connect the absence users and data. So converting all these innovations into solutions that customers can use is really what we do. Well, you know, we like to put pressure on you guys and that's a tough question is what I got to say. You guys have done a great job over the past couple of years on the product tech side. Lot of clarity on vCloud air. Get that out of the way. Amazon relationship. Now you've got vCloud foundation. Kind of things are coming together. Numbers are up. Pass happy. Everyone's happy. What's next? What's the big next journey chapter in Wave you're riding? Look, I think we're still early days when it comes to the two big transformation themes we're on, right? Cloud and containers. I think we've got all our solutions in the market now. We have to scale and build them. Pat's talked about this mission of how to, you know, make these cloud deliver services a bigger and bigger chunk of our portfolio going forward. And then containers and Kubernetes, I think is a big, big cloud native is a big new area for us. Lot more to go over when it comes to networking and transforming networking and security. I do expect us to be doing more and more there in that front. And on the end user, I think on there which we didn't cover much about here, there's a fundamentally massive opportunity for us with modern management on Windows, right? Our partnership with Dell and taking really workspace one into every Windows machine that's out there. And you also saw the partnership announcement with Microsoft last week at Dell Tech World a couple of weeks ago. So all of that, I think there's a lot for us to execute on. I told Michael, I just want an alien way or monitor or the curve monitors are so good. I want one of those. Oh yeah, those are beautiful monitors. Each of those monitors are amazing. Indeed. Well, an impressive trajectory that you have no doubt the queue will be following closely. Rajiv, thank you so much for joining John and me on theCUBE at VMware Radio 2019. We appreciate your time. Oh, thank you, Lisa. Thank you, John. Glad to be here again. Thank you. Our pleasure. For John Furrier, I'm Lisa Martin coming to you from San Francisco at VMware Radio 2019. Thanks for watching.