 Live from Vancouver, Canada. It's theCUBE. Covering OpenStack Summit North America 2018. Brought to you by Red Hat, the OpenStack Foundation, and its ecosystem partners. Welcome back. I'm Stu Miniman here with my co-host John Troyer and you're watching the CUBE's exclusive coverage of OpenStack Summit 2018 in Vancouver. Happy to welcome back to the program. Off the keynote stage this morning, Mark Shuddleworth, the founder of Canonical. Thank you so much for joining us. Stu, thanks for the invitation. All right, so you've been involved in this OpenStack stuff for quite a bit. I remember three years ago we were down in the other hall talking about the maturity of the platform. I think three years ago it was like this container thing was kind of new and the basic infrastructure stuff was starting to get in a nice term boring because that meant we could go go about business and beyond the buzz of, oh there's this cool new thing and we're going to kill Amazon, kill VMware, whatever else things that people thought that had a misconceived notion. So bring us forward to where we are 2018, what you're hearing from customers as you look at OpenStack in this community. Well, I think you pretty much called it. OpenStack very much now is about solving a real business problem, which is the automation of the data center and the cost parity of private data centers with public data centers. So I think we're at a time now where people understand the public cloud is a really good thing. It's great that you have these giant companies dueling it out to deliver better quality infrastructure at a better price, but that at the same time, having your own private infrastructure, that runs cost effectively is important. And OpenStack really is the only approach to that that exists today. And it's important to us that the conversation is increasingly about what we think really matters, which is the economics of owning it, the economics of running it, and how people can essentially keep that in line with what they get from the public cloud providers. Yeah, one of the barometer that I use for vendors these days is, in this multi-cloud world, where do you sit? Do you play with the hyperscalers? Are you a public cloud denier or like most people are somewhere in between? In your keynote this morning, you were talking a bit about all of the hyperscalers that use your products as well as the hyperscalers. Ubuntu's at the heart of all of the major public cloud operations at multiple levels. So we see them as great drivers of innovation, great drivers of exposure of Ubuntu into the enterprise. We are still by far the number one platform used in public cloud by enterprises. It's hard to argue that public cloud is test and dev now. It really, really isn't, right? And so most of that is still Ubuntu. And now we're seeing that pendulum swing, all of those best practices, that consumption of Ubuntu, that understanding of what a leaner, meaner enterprise Linux looks like, bringing that back to the data center is exciting, right? For us, it's an opportunity to help enterprises rethink the data center to make it fully automated from the ground up. OpenStack is part of that. Kubernetes is part of that. And now the cherry on top is really AI, where people understand they have to be able to do it on public cloud, on private infrastructure, and at the edge. I wanted to talk about open source and marketing open source for a minute. We're obviously here, we're part of an open source community. Open source, de facto, has won the cloud technology stack wars, right? So there's one way of selling open stack where you pound on open a lot. And you, you, you, you... I'm always a bit nervous about projects that put open. You focus, it sounds like they're sort of trying to gloss over something or wash over something or prove a point they shouldn't have to. There's one about the philosophy of open source, which certainly has to stay there, right? Because that's what drove the innovation. But what I was kind of impressed on the stage today, you talked about the benefits. You didn't say, well, open source is open. You said, well, no, we're facilitating these benefits, speed to market, cost, et cetera. Can you talk about, you know, your approach, Canonical's approach to talking about this open source product in terms of its benefits? Sure, look, open source is a license. With, under that license, there's room for a huge spectrum of interest in opinions and approaches. And I'd say that, you know, we certainly see an enormous amount of value in what I would call the passion-based open source story. Now, open stack is not that, right? It's too big, too complicated to be one person's deep passion. It really isn't, right? But there's still a ton of innovation that happens in our world across the full spectrum of what we see with open source, which is really experts trying to do something beautiful and elegant. And I still think that's really important in open source. You also have a new kind of dimension, which is almost like industrial trench warfare with open source, right? Which is huge organizations leveraging effectively the ability to get something widely adopted quickly and efficiently by essentially publishing it as open source. And often people get confused between these two ends of the spectrum, there's a bunch in between. What I like about open stack is that I think it's over the industrial trench warfare phase. You know, you just don't see a ton of people showing up here to throw parties and prove to everyone how cool they are, right? They've moved on to other open source projects. The people who are here are people who essentially have the real problem of I want to automate my data center. I want to have essentially a cloud that runs cost effectively in my data center that I can use as part of a multi-cloud strategy. And so now I think we're into that sort of, that a more mature place with open stack. We're not either sort of artisan or craftsman oriented nor are we kind of a guns blazing brand oriented. It's kind of now just solving the problems. Yeah. Mark, there's still some naysayers out in the marketplace. Either they say that this never matured. There's a certain analyst firm that put out a report a couple of months ago that kind of denigrated what's happening here. And then there's others that, as you said, off chasing that next big wave of open source. What are you hearing from your customers? You've got good footprint around the globe, so. So that report is nonsense for a start. They're always wrong, right? Whether if they're hyping something they're wrong and if they sort of dissing something then they're usually wrong too. They have a cycle for that, I believe. Exactly. It's like selling gold at the bottom, right? Here's how I see it. I think that enterprises have a real problem which is how do they create private cloud infrastructure? OpenStack had a real problem that it had too many opinions, too many promises. Essentially a governance structure, not a leadership structure, right? Our position on this has always been focus on the stuff that is really necessary. There was a ton of nonsense in OpenStack, right? And that stuff is all failing, and so what? It was never essential to the mission. The mission is stand up a data center in an automated way, provide it essentially as resources as a service to everybody who you think is authorized to be there effectively, segment and operate that efficiently. And it's only a small part of OpenStack that was ever really focused on that. That's the stuff that's succeeding. That's the stuff we deliver. That's the stuff we think very carefully about how to automate it so that essentially anybody can consume it at reasonable prices. Now we have learned that it's better for us to do the operations almost. It's better for us actually to take it to people as a solution. Say look, explain your requirements to us, then let us architect that cloud with you, then let us build that cloud, then let us operate that cloud, right? Until it's all stable and the economics are good, then you can take over, right? I think what we have seen is that if you ask every single different company to build OpenStack, they will make a bunch of mistakes and then they'll say OpenStack is the problem. OpenStack's not the problem, right? Because we do it again and again and again, because we do it in many different data centers, because we do it with many different industries, we're able to essentially put it on rails. And when you consume OpenStack that way, it's super cheap. We would, analysts have, these aren't my numbers, analysts have studied the cost of public infrastructure, the cost of the established incumbent enterprise sort of virtualization solutions and so on. And they found that when you consume OpenStack from Canonical, it is much, much cheaper than any of your other options in your own private data center. And I think that's a success that OpenStack should be proud of. All right, you've always done a good job at poking at some of the discussions happening in the industry. I wouldn't say it was surprised, but you were highlighting AI as something that was showing a lot of promise. People have been a little hot and cold, depending on what part of the market you're at. Tell us about AI and I'd love to hear your thoughts in general, it's kind of Kubernetes, serverless and as you talk about some of those new trends that are out there. Sure, the big problem with data science was always finding the right person to ask the right question. So you could get all the data in the world in a data lake, but now you have to hire somebody who instinctively has to ask the right question that you can test out of that data. And that's a really hard problem. What machine learning does is kind of inverts the problem. It says, well, why don't we put all that data through a pattern matching sort of system and then we'll end up with something that reflects the underlying patterns even if we don't know what they are. Now we can essentially say, if you saw this, what would you expect? And that turns out to be a very powerful way to deal with huge amounts of data that previously had to kind of have this magical intuition to kind of get to the bottom of. So I think machine learning is real. It's valuable in almost every industry and the challenges now are really about standardizing the underlying operations so that the people who focused on the business problems can essentially use them. And so that's really what I wanted to show today is us working with, in that case it was Google, but you can generalize that, to standardize the experience for an institution who wants to hire developers, have them effectively build machine driven models effectively and then put those into production. There's a bunch of stuff I didn't show that's interesting. You really want to take the learnings from machine learning and you want to put those at the edge. You want to react to what's happening as close to where it's happening as possible. So there's a bunch of stuff that we're working on with various companies. That's all about taking that AI outcome right to the edge, to IoT, to Edge Cloud. But we didn't have time to get into it. And Ubuntu is at the edge, it's in all their mobile platforms. So we're in the great position that we're on the cloud. Now you see what we're doing in the data center for enterprise. It's effectively recrafting the data center as a much leaner, more automated machine, really driving down the cost of the data center. And yes, we're on the higher end things, right? We're never going to be on the light bulb. We're a full general purpose operating system. But you can run Ubuntu on a $10 board now. And that means that people are taking it everywhere. Amazon, for example, put Ubuntu on the deep lens. So that's a great example of AI at the edge. And it's super exciting. So the Kubernetes serverless type applications, what are your thinking around there? Serverless is a lovely kind of way to think about the flow of code in a distributed system. It's a really nice way to solve certain problems. What we haven't yet seen is we haven't seen a serverless framework that you can port, right? We've seen great serverless experiences being built inside the various public clouds, but there's nothing consistent about them. Everything that you invest in a particular place is very useful there, but you can't imagine taking that anywhere else. I think that's fine, right? Every day it's primarily Lambda, so. Right. And I think the other clouds have done a credible job of getting there quickly, but kudos to Amazon for kind of pioneering that. I do think we'll see generalized serverless. It just doesn't exist at the moment. And as soon as it does, we'll be itching to kind of get it into people's hands. Okay. Well, I just wanted to pull out something that you had said, but so in case people miss it, you talked about managed open stack. And that, I think managed Kubernetes has been a trend over the last year. Absolutely, yeah. Managed open stack now, has been a trend as well. It's complex pieces of infrastructure. And you could easily drown in learning it all. And if you're only ever going to do one, maybe it makes sense to have somebody else do it for a while. You can always take it over later. So we're unusual in that we will essentially stand up something complex like an open stack or a Kubernetes, operate it as long as people want, and then train them to take over, right? So we're not exclusively managed, and we're not exclusively kind of arm's length. We're happy to start the one way and then handle it. I think that's an important development though, that's been developing as these systems get more complicated. One Unix admin needs a whole new skill set or broader skill set now that we're orchestrating a whole cloud. So I think that's great. And it's interesting. Do you have anything else that you're looking forward to in terms of operation models? I guess we've said Ubuntu everywhere from the edge to the center and now managed as well. Anything else we're looking at in terms of operator should be looking at? Well, I think Edge is going to stave sort of murky for a while, simply because each different group inside a large institution has a boundary of their kind of authority, and to them that's the edge. And so the term is sort of heavily overloaded. But I would say ultimately there are a couple of underlying problems that have to be solved, and if you look at their reference architectures that the various large institutions are putting out, they all show you how they're trying to attack these patterns using Ubuntu. One is physical provisioning. Like the one thing that's true of every edge deployment is there are no humans there. So you can't kind of bandaid over the idea that when something breaks, you need to completely be able to reset it from the ground up, right? So Maz, middle as a service, shows up in their reference architectures from AT&T and from SoftBank and from Deutsche Telekom and a bunch of others because it solves that problem, right? It's the smallest piece of software you can use to take one server or 10 servers or 100 servers and just reflash them with Windows or CentOS or Ubuntu, whatever you need. That's one thing. The other thing that I think is consistently true in all these different edge cloud permutations or combinations is that overhead's really toxic. If you need three nodes of overhead for a hundred node open stack, it's 3%. For a thousand node open stack, it's 0.3%, right? It's nothing, you won't notice it. If you need three nodes of open stack for a nine node edge cloud, then that's 30% of your infrastructure costs. So really thinking through how to get the overhead down is kind of a key for us. And in all the projects with telcos in particular that we're working, that's really what we bring is that underlying understanding and some of those really lightweight tools to solve those problems. On top of that, they're all different, right? Kubernetes here, LXD there, open stack on the next one, you know, AI everywhere, but those two problems I think are the consistent things we see as a pattern in edge. So Mark, last question I have for you, company update. So last year we talked a little bit about focusing, you know, where the company's going, talked a bit about the business model and you know, you said to me, developers should never have to pay for anything. It's the governance people and everything like that. Give us the company update, everything from rumors from, you know, hey, maybe you're IPOing to, you know, what's happening, what can you share? Right, so the twin areas of focus, IoT and cloud infrastructure, IoT continues to be an area of R&D for us. So we're still essentially underwriting an IoT investment. I'm very excited about that. I think it's the right thing to be doing at the moment. I think IoT is the next wave effectively and we're in a special position. We really can get down both economically and operationally into that, that sort of small edge kind of scenario. Cloud for us is a growth story. We, I talked a little bit about taking Ubuntu and Canonical into the finance sector in one year. We close deals with 20% of the top 20 banks in the world to build Ubuntu-based open infrastructure. So that's a huge shift from their traditional kind of dependence exclusively on VMware Red Hat. Now suddenly Ubuntu's in there, Canonical's in there. I think everybody understands that telcos really love Ubuntu and so that continues to grow for us commercially. We're expanding both in EMEA and here in the Americas. I won't talk more about our sort of corporate plans other than to say I see no reason for us to sort of scramble to cover any other areas. I think cloud infrastructure and IoT is plenty for one company. And for me, it's a privilege to combine that kind of business with what happens in the Ubuntu community, right? I'm still very passionate about the fact that we enable people to consume free software and innovate and we do that without any friction. We don't have an enterprise version of Ubuntu, right? We don't need an enterprise version of Ubuntu, the whole thing's enterprise, right? Even if you're a one-person startup. Mark Shudderworth, always a pleasure to catch up. Thank you so much for joining us. Thank you, Stu. For John Troyer, I'm Stu Miniman, back with lots more coverage here from OpenStack Summit 2018 in Vancouver. Thanks for watching theCUBE.