 Live from San Francisco, California, it's the Cube at VMworld 2014 brought to you by VMware, Cisco, EMC, HP, and Nutanix. Now here are your hosts, John Furrier and Dave Vellante. Hey, welcome back everyone live in San Francisco, California. This is the Cube VMworld 2014 our 50-year covering VMworld. I'm John Furrier, my co-st Dave Vellante. I'm Sanjay Poonan, the EVP and general manager of end-user computing. A friend of the Cube, he's been on throughout his career at SAP, then he moves right across the street to VMware last year. And great to see you. Great to see you back on the Cube. Thank you John, it's a pleasure to be here. What a year, right? So last year you came on board, Guns Blur and Pat was really excited. You accomplished some of your goals. I think you laid out, I said, what's your goals for next year? You laid out some goals and then big acquisition, airwatch, security's hot, mobile is booming. We are living in a multi-cloud, mobile infrastructure demand. Tell us, what happened over the past year? Obviously big M&A, give us the details. You know, John and Dave, I was like on day, like point five, day one when I came on your Cube and I was actually watching the replay and I'm like, I actually said that and it made sense. You know, it's been a great year and it's really been a team effort. So the first thing that I did was, I said, you know, well before we decide the what and the how, I really want to figure out who's on the bus. So we really both kind of promoted a couple of key people within the company, like Kit Colbert, you remember Kit was like the star of last year's show, he's now our CTO and user computing. We hired a couple of rock stars from the industry like Sumit DeLan and a few others who've really come in and shaped us. And then as the team started to gel, we then began to ask our customers what was the key missing part in our strategy and it was mobile. It's very clear. And we began to then ask ourselves, listen, if we're going to get into the mobile space, you know, do we build? Do we buy? Do we partner? And we were winning deals in the desktop space primarily against Citrix. We compete in there, getting a lot of market share, but the mobile space, we'd lose deals. And I go and ask our customers who you pick in and 80, 90% of the time was AirWatch. Same time, our CIO was doing an evaluation internally. We were running on an SMB tool, Fiberlink that then since got bought by IBM were running out of steam with it because it was an SMB tool. And I said, listen, you evaluate the market, look at all the options and based on what you pick will probably influence our acquisition decision. They love AirWatch too. So, you know, those were two or three key moments. It's the franchise player in the team, right? I mean, ultimately, you know, mobile is today kind of that sizzle point. If you're talking mobile cloud, it is the sizzle point. John Marshall and Alan DeBerry came in. They've added a lot. So, you know, I talked to my keynote about three core pillars, desktop, mobile, content, collaboration. We really feel like today when I was looking back, we had a 10th of the portfolio last year this time. And I think, you know, lots of good vision, but now we actually have vision and substance, which I think is pretty powerful. So is it the LeBron James? Is it the Tom Brady? Is it the Ray Allen? You know, the key role player? I love basketball. All those teams are great. I think some of my favorite are all the Phil Jackson teams. My role is really to be the coach and to bring into the construct the Michael Jordan, the Scotty Pippins, you know, all that construct so that when you put together a world-class team, I really believe we have the best end user computing team in the industry, Barnard. And this team really is now packed with people and process and product innovation. And that's what you've seen the last 12 months. It's a real tribute to this fantastic end user computing team. Saajid, talk about the news this morning around SAP. We didn't catch the details of where we were on the cube here. Can you just take us through some of those key highlights? I mean, clearly I have a soft corner for SAP as you'd expect. I was there for seven years and I have a tremendous respect. They are the leader in business applications, a tremendous player, you know, hundreds of thousands of customers. And what we felt was if you could marry the best-of-breed aspects of what SAP does well. Applications, mobile applications, cloud applications, on-premise applications, all of that. But what we do very well, which is management and security for mobile, and that's what our customers have. Among the 13,000 customers of AirWatch, probably the biggest base in the enterprise are SAP customers. And they've been longing for better integration between AirWatch. You know a little bit about what's going on over there. We've got you. I mean, listen, at the end of the day, we want to do what's best for customers. So Pat, Bill McDermott, myself, talk, Kevin Chakrani, who was on stage, and we felt that we could build integration between the mobile apps and the mobile platform of SAP, where SAP is very good, with the management and security of AirWatch, where we're very good. You get the combination of two best-of-breed. And I think the customer quote in that press release put it well. Silji Abraham basically said, he was a CIO of Sigma Aldrich. We love the fact that you're bringing together the best-of-breed aspects of mobile security from AirWatch with mobile apps and mobile platform in SAP. And that's an essence of what you're doing. So App Store for the enterprise becomes a reality because the challenge people were having is it was too hard. It was taken too long. So how does that change now with this integration? I mean, in essence, what AirWatch provides is an elegant, simple, cloud-centric, mobile management security solution for much more than MDM, device management, app management, and quantum management. And, you know, in every ranking by the analysts, they are the undisputed gold medal. Now you can basically use that solution and make sure that your applications also work. So let's say you're bringing up, we showed in the demo an example of SAP medical records or maybe SAP Fiori or Cyclo, whatever have you. You can now bring that up on a device that's secure and the posture is checked with AirWatch. And that's the best combination of both. And this could just apply to any application. It could be a box. It could be our own content locker. SAP is clearly the leader in business applications. I saw a tweet recently and said VMware working with Apple and United Airlines to bring mobility to airplanes all secured by AirWatch. Obviously, United Airlines, big customer GE, and other things. So the interface to pretty much everything, whether it's big data, is going to be some mobile or edge device. Is that the number one requirement that you're hearing from customers that it's not just mobile users? Is the Internet of Things part of this? How do you see that? I mean, that's an interesting piece. Is that, is that true? No, absolutely. I think I talked about the United Airlines case study. In fact, it's right off the website of Apple. If you go to Apple and look at the business case studies they have, United Airlines is one of those case studies. And the case study is actually pretty simple. You know, you've got these pilots that are lugging around 30, 40 pound bags. It's lots of paper manuals, their flight landing instructions. Now those are being digitized with iPads in the cockpit. So as you think about what the future is, everything goes digital. That first invades the cockpit, then the flight attendants have it so they can check to make sure they have a list of the passengers and they can serve their passengers better. And that's the way the world is moving. But then you take that same concept and you extend this now to machines where every single potential machine that is on the Internet can be tracked, can be managed and secured. And our proposition there is to manage and secure every possible machine and thing and then analyze the data coming out of that. And we think that's a huge opportunity. I hosted a panel with Jeff Emelt in Chicago last year and the chairman of United told me a 1% savings inefficiency just on gas is billions of dollars of real savings. So this brings back down to the whole concept. It's not just an IT thing. It's a business process thing. So how far along are you seeing the customer base on things like this? Is it where IT, okay IT got workers out there, bring your own device to work. Okay. But outside of that, what is the uptake if you will on really connected intelligence? I think it's and when we have 13,000 customers that we've had their watch, 50,000 on customers with Horizon, 500,000 customers that we have at VMware, many of them start speaking and we're finding a couple of industries in consumer package goods and retail industries. People are looking at things like for example, smart bending. In devices, medical devices, the future of us protected. Metronics was on stage and they are an air watch customer. They were talking about the fact that their vision is well beyond just the mobile devices. Every medical device being protected potentially by air watch. You look at oil and gas customers, practically almost every oil and gas customers an air watch customer. There's going to be embedded intelligence inside a lot of the oil and gas machinery and infrastructure that protects people from potential damage. We expect to be able to secure that. So our proposition in that equation is the management and security of every machine and everything. And then the beautiful part of it is beyond just management and security, I think the analytics of data coming out of that is a treasure trove of incredible valuable places for big data. You know, we spoke with Bill McDermott when you were also at SAP and they had a very vertical approach and when we go talk about the big data conferences with the queue, everyone's oh this vertical, you have to have a vertical niche to kind of be a major player or even a differentiated niche player. But how does that affect your business? Is it verticalized? You mentioned oil and gas, talking about you know airlines. Is there a horizontal platform that can work across the industries or is it specifically verticals? Do you see at your levels? Now you're at a different you're the edge of the network. What's your take on that? Do you have to be a vertical player or a zero horizontal player? That's a great question, John. I think that as the world's fastest growing and biggest infrastructure software company, VMware, that's what we've been growing from zero to you know roughly run rate six billion in 15 years, there is fundamentally first off a horizontal play that goes across and cuts across many industries. But very quickly we find as we are able to package solutions by industries. So I talked for example at the keynote about the healthcare industry and how we were you imagine a doctor walking into their office moving from their office to the ward from their desktop to an iPad to potentially getting into the room and they then have a thin terminal client terminal and then they collaborate with their other doctor that has you know an iPad too. Healthcare is one example. State and local public sector is a different example we're being successful. Education, retail, manufacture. We pick four or five verticals. I've been fortunate in the fact that much of my experience at SAP was running the industries at SAP. So I have a good amount of experience at industry solutions. We're certainly not an applications player like SAP where we're going to verticalize in a vertical stack applications, but you're going to see us drive solutions. And when you drive industry solutions and let's say five or ten industries where we're relevant, you're going to see our average selling price grow. So the differentiation is application specific, it sends to be vertical, but as a platform product player you're this way. Yeah that way fundamentally you start with but then you start creating solutions which are scenarios that work in a particular industry. To enable those guys. Exactly. And we've picked the five or ten industries where we think we're going to go focus and we're starting to see as we do that our average selling price grows. The other thing that happens is that you actually start becoming relevant to a line of business buyer beyond just IT and that's very important. How about some of the performance metrics. Give us some data. Can you share some of that? Pat was glowing with oh that's really performing well. So can you share some numbers? Yeah I'll tell you what we did the last three quarters and broke. This is the fastest growing, one of the fastest growing business units. In Q4 last year we grew 30 percent, north of 30 percent. In Q1 we announced we grew north of 30 percent again and then in Q2 we said we grew north of 50 percent. Right. And now some of that was also the contribution of AirWatch. But organic or inorganic we are growing and it's not a small business you can grow from one to two and that's 100 percent. This is a sizable part of VMware's revenue and a growing part of it. What's on hundreds of millions of here? Is that fair? Oh yeah no it's fair. I mean it's well over 10 percent of the company's revenue and growing percentage of the total company's revenue. I think that this is going to become an increasing part of VMware's total revenue, total relevance to the CIO and it's because of mobile cloud and a big part of the brand appeal of VMware. I mean listen VMware is well known as an infrastructure company done very well in the data center but the moment you start talking mobile and cloud you're appealing to the CIO and that's a very different type of conversation. We want to raise the appeal of VMware and a brand appeal to the CIO and we think mobile and cloud helps us get to that. It's a big market you guys do the TAM analysis Pat I probably has you doing that or whoever maybe it's Jonathan but it's a big chunk of it there's EUC you guys call it. A sizable part and bigger than it was before and we just have to kind of grow into that TAM and then grow the TAM further and that's you start with that kind of growth that sounds like getting the flywheel effect going and the problem with VDI was always you know cost cost cost and you know so it was a narrow niche just mobile seems to change that whole discussion from cost to value. You know David's a very good point first off mobile for us means more than just a device it means being on the move and on the move means you could be on the move and you're using a laptop here we got to think about the relevance of how you get solutions onto your laptop and desktop. I think part of the reason VDI kind of hit a little bit of a bump and some of our competitors have been stalling and declining is it's just too complex and too costly and we fundamentally now reinvented a modern stack for desktop virtualization that runs on top of all the great innovation that we have in the software to find data center like virtual sand like vSphere and a lot of the things we're doing so all of a sudden the cost of VDI we can show we take down by at least 30 to 40 percent that's a game changer now you add mobile to say listen when you go from a desktop or a laptop to a tablet or phone you've got the leader in mobile security and management airwatch integrated to horizon which is what we announced with the workspace suite and the final pillar is being able to share that content in a very simple yet secure way so think sort of Dropbox but all of the security at SharePoint brought you that's the third pillar all three of those desktop mobile and content extremely powerful. So you're saying Sajji the tipping point is the asset leverage that you're getting out of the infrastructure as you move toward this sort of software defined thing that enables this type of decline in cost and accelerated growth. Absolutely and that's you know the the the whole aspect of how software has been done is you integrate things so your lower cost and you make it much much easier to be able to palette and buy now either this could be bottom premise or in the cloud so we're seeing that connection of you know the head and the body think of the body being the traditional software defined data center the head being engines are computing all the connective tissue muscle fiber blood vessels and so on so forth making that connected now makes us a lot more appealing than telling a customer listen buy your data center infrastructure from VMware your desktop infrastructure from Citrix your mobile infrastructure from mobile iron and your you know content collaboration solution from like 10 different startups right increasingly we think that that's not the way in which people are going to be buying software. Sanjay just some highlights from the keynote looking here on Twitter through our little listening tool great reviews by the way electrifying speech he's going to be CEO someday Pat heads up on that that was coming from the I didn't say that I had one limiting move on stage when I said fat ought to be thinking about an ice bucket challenge so anyway great speaker amazing executive really get really great reviews on the Twittersphere besides challenging Pat Gelsinger the ice bucket challenge which Joe Tucci already challenged him so let's see how he responds to that all fun and all seriousness two quotes I want to pull out from the Twittersphere you said software in the modern car is more than the NASA spacecrafts awesome comment I want to pivot on that in a second the other one was Sanjay's emphasizing the importance of world-class infrastructure so first define world-class infrastructure from your perspective given your industry experience and vision for the future and to talk about how it relates to the the modern car was NASA and the change of speed of technology you know John when I gave my keynote I put this beautiful picture of this incredible modern architecture in Singapore called the marine marina-based sands tower it's three big towers I think 40 50 60 floors and a fantastic infinity swimming pool at the top of it not been to Singapore you got to go there and check out the swimming pool at the top of it but the only way in which you could make those three towers work was world-class foundational infrastructure the three towers by the way was a metaphor to desktop mobile content collaboration and of course the beautiful workspace for you at the top of it so the for us the infrastructure well all of that stuff right to us the software defined data center is the de facto infrastructure that makes a lot of that happen we feel very very fortunate and blessed to have the world's best infrastructure that makes that happen virtual server storage networking management all of that put together allows me to be able to build world-class towers on top of that and the end of the day it's not just solid it's lower cost of ownership than the opportunity now to my comment about the the 1970 spacecraft and so just to say that today we live in a software economy it's not to say that hardware is not important but someone joked that softwares like the wine and hardware is like the bottle bottles are important but the software glue really ties the hardware together in a very special way and that's really the genius of what's making everything whether it's a device whether it's a machine even more relevant and that clearly was defined in the 1970s as a spacecraft but today you can see this invading automobile thermostat refrigerator vending machine that we believe is the future so I got to ask you to shoot the arrow forward what are you getting excited about I'll see the accelerated pace of change from the spacecraft to the car as you mentioned the United Airlines and Apple it's a well documented it's an end user environment certainly the interface is everything and that seems to be the focus area what's your view what is exciting where's the inflection point enabling technology that you're watching from the foundation all the way to the top I mean listen I spent seven years at SAP primarily in the analytics and big data space and then prior that another five years at companies like Informatic and I'm just all my life has been about end users and whereas we came in here we coined this phrase which is our big broad vision we want to allow end users to work at the speed of life so if you think about your life in the consumer world you don't lug around 300 CDs into your car you have an iPod you have an iPhone you connect to the iCloud and it's all seamlessly there you watch a movie you start off on Netflix you go from San Francisco to New York to Barcelona you may start and then stop you know some place else and you can you can start exactly where you stop house of cards or whatever have you watching enterprise software has been unfortunately hard to use complex hard to implement and the more that we can make enterprise software simple simple and secure we tend to do the security part of it pretty good we tend to do the simplicity part so I think enterprise software companies can actually take a page out of the book of consumer software companies on the simplicity now the consumer companies could take a lesson out of the book from us in security and but when you put simplicity and security together you get magic when you could put together control and choice together you get magic so it's not the consumerization of I.T. which we all love it's the I.T. of consumerization you could really flip that around like dev-opt-opt step I mean there's so many different plays and words that you could do but that's exactly the way we think about it I think that's a great point Sanjay thanks so much for coming on theCUBE congratulations on a great keynote and thanks for coming and spending your valuable time with us here on theCUBE appreciate it live here in San Francisco we'll be right back with our next guest after this short break thanks John