 Live from San Francisco, California, it's theCUBE at VMworld 2014. Brought to you by VMware. Cisco, EMC, HP, and Nutanix. Now, here are your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone here live in San Francisco, California. This is theCUBE. We are at VMworld 2014. It's our fifth year doing the show here at Silicon Angles theCUBE with Wikibon analysts. I'm John Furrier, the founder of Silicon Angles like Coach Dave Vellante, co-founder of Wikibon.org. And analysts, do minimum on the ground, getting all the stories. Guys, we're kicking off day three, day one, kind of a high level set in the stage. Day two, getting under the hood. Day three, filling the blanks. Certainly we're going to hear a lot about, you know, mobile, some ecosystem announcements. Certainly the Sanjay Poonan show with the end user computing kind of hitting the stage here. Kind of like, put a bow on the show. This will be our last day here. Guys, want to just jump right in. We've got a great lineup of guests. We've got Chris Wolf, CTO, VM, we're coming on. We have Bill Fathers, big time guy here at VMWare. We've got Eric Nielsen who runs Social for VMWare, Frank Artali from Ignition Partners. But Dave, last night was, I call, VC night. It was VC night last night. All the VCs were out, so, you know, but what's missing, I don't see Sequoia Capital anywhere, they're like invisible, but we had, you know, certainly we saw Highland Capital, Lightspeed, Norwest is here, Greylock is here. NEA. NEA today, Excel Partners, Ignition. You know, they're out scouring the deals and certainly from an opportunity standpoint we're seeing a slew of great investment opportunities but also breakout companies. So I want to get your take, Dave. Where is the opportunities from your standpoint? Obviously, hyperconverge is the buzzword, basically purpose-built infrastructure. You're seeing essentially self-defined data centers start to fill in. Startups, growing companies, what's your take? Well, I think that hyperconverge is a big theme here. We saw it with the announcement of Evo Rails and we saw D. Raj last night from Nutanix. They let the East Coast in on the Nutanix deal last night. Fidelity in Wellington came in for another 140 million, was just announced today. So, you know, I think that's, it's interesting. A lot of people say, you said it perfectly, John. Steve Herrod hit the shot right down the middle when asked about Evo Rails and he said, well, you know, a lot of people are questioning, you know, the impact on existing players and yet at the same time, it's validation. Is Evo Rails off the rails or on the rails? What's your take on that? Well, I think it's, you know, Gelsinger is clearly as we had predicted when he took over bringing hardware and software together. This is the light playbook out of Larry Ellison but doing it with an ecosystem. So, I don't think it's off the rails. It's a classic VMware move, right? VMware loves to lay out, hang out the architecture. Even going back to our original Cube 2010, Dave, Paul Meritz is the CEO. He laid out the original vision which still isn't played today, although it has taken shape in a different form. It is the stack, it is the full software stack, it is the cloud mainframe if you want to call it that. And you're seeing all of it play out almost to the tee as he laid it out on a high level. So, you know, VMware likes to hang that mannequin up on Nord Streams, it all hangs together, the jacket goes with the tie. And I think Rails points to the mega trend and I think we'll see if that comes home or not but ultimately it is the hyperconverge. You're seeing workloads and applications dominating the conversation now. And if you remember, Dave, EMC, where I think it was 2011, I asked Pat Gelsinger then the president of EMC, what leaves the conversation? Infrastructure or applications? The old days it was infrastructure, dictates what goes on in the application layer. Now he's seeing almost a reverse. And I don't know if you remember his answer, but... Oh, no, he said applications are the gate, really, is what he said. Yeah, and this is actually a perfect setup if you look at what we're going to be covering on theCUBE today. The end user computing group is one of the key use cases for VSAN and Evo Rail coming out of the gate. So, we've seen over the last year, Sanjay Poonan came in, he's built his team, Chris Wolf's going to be our first guest on there, talking about how they've really transformed that end user computing group. It's not just a little VDI niche thing, but the air watch acquisition, cloud volumes acquisition, lots going on in this space. So, Stu, let's take an election. Do we call the winner yet? I mean, basically the apps are dominating. I think it's safe to call, Dave, that is the play with DevOps and cloud and certainly the economic shift. When you look at Flash, now some of the stuff going on under the hood, apps and workloads are now having that dynamic provisioning, dynamic standing up in seconds, minutes, hours, versus the old days. Days and weeks to stand up infrastructure. So, I think infrastructure as code is a theme we've heard before, and that's coming home. The other thing I want to get your perspective on, Dave, we teased this out yesterday. We're going to ask the guests here, certainly Chris, when he comes on CTO VMware. Docker is interesting, right? Docker and OpenStack have certainly been validated 100% in my mind, great move by VMware. But the world is, if you look about operating systems and kind of the mainframe model of the cloud, there's really two types of applications, stateless applications and stateful applications. Both work well together, but stateless applications are really the service oriented, the API economy. That's REST APIs, et cetera. That's great. That is kicking ass, taking names. I love the Docker play there, but in the enterprise, stateful applications also are a criteria. What's your take on that? And do you see VMware basically endorsing the open source ethos and then putting their position in on those stateful applications? Well, a couple of things. One is, yeah, I think that's a smart move by VMware, saying, okay, we've got the state applications covered. We've got a, there's a big move around so-called stateless applications. Let's sort of embrace that and bring it to the fold. And where they ultimately will need the sort of security and the robustness, we can bring that to the table. The second point is, you made this point yesterday, when you go back to the mainframe world and COBOL, everybody was doing development internally because it drove differentiation. It was a source of competitive advantage. That went away largely with client-server. Everything was outsourced to Anderson consulting and Accenture and SSAP implementations and then off-the-shelf stuff, commercial off-the-shelf with the desktop. That's coming back, this whole citizen-developer movement that you mentioned yesterday is really back-involved. It's a new source of competitive advantage to throw in analytics and big data and voila. Well, I think that the battle here is the developers. I just tweeted out to quote Steve Ballmer, who's a former CEO of Microsoft, now out at Microsoft, developers, developer, developers. I would add that it's about apps, apps and apps. And I think this notion of vertically integrated apps and workloads into infrastructure on demand is really the key. But it's interesting shift, Dave, right? I mean, you're talking about VMware putting out the stake in the ground across the board from lower in the stack up to the high in the stack. Do you think that the developer market will evolve as an open, or will it be a hybrid mix between some closed architectures? No, it's going to be open. I mean, I think open source is the big wildcard here. And I think it's a blind spot for many companies. Like VMware, frankly. I mean, VMware's sort of putting their toe in the water of open source, I think. Its parent, EMC, has never been known for open source. Pivotal, on the other hand, that's their open source play. John, I'm actually a little surprised I haven't heard more DevOps at the show here, much of the developer community in general. I expected to see it more. And one of the things at the show I'm a little worried about is that the VMware administrators were great at driving that revolution, starting to break down silos and brace some of the change. And when I'm talking to some of the people in the community, they're like, oh, that Docker thing, that scares me a little bit. I don't know, Pivotal and new applications, you know? No, I don't know. We're not comfortable with it. I'm not sure how to get trained on it. It reminds me, you know, it's just that the people that helped drove this last revolution, I'm not sure that they're ready to look at another revolution. Stu, I want to pivot on that because that's a really great point. So like Dave, we heard Carl Asherbach say that VMware is a data center automation company. And if you look at all the successes in the wealth creation and the major inflation points and tech trends, it's been the players like Intel and Microsoft and the big guys who have abstracted away complexity, right? So automation is a key part of that. One thing we haven't heard much at this show is orchestration. Is that the quiet battleground going on behind the scenes, Dave, the orchestration piece, Stu? What's your take on that? Because at the end of the day, orchestration is the control plane, orchestration is a key part. Automation certainly has to be there. And Stu, you could talk this better than I can, but you guys are, you and Floyer are doing a study now and that's sort of the next battleground beyond the whole, you know, the integration battle. Now it's about orchestration. And let's face it, the server orchestration is looking good, right? The other pieces, not so mature. Yeah, absolutely. So we have a report that went out at the beginning of the week on wikibond.org, really digging into the VMware ecosystem. We're actually going to do one of our scorecards over the next couple of months. So, you know, look for that research and you've got the VMware ecosystem, you've got OpenStack, and of course VMware's, you know, looking to embrace that. And we want to dig into that a little bit more. Amazon and what's going on there. So lots of different ecosystems and orchestration is the next battleground, absolutely. So I got to ask you guys about Bill Fathers. He's coming on theCUBE. I want to ask you what you're going to ask. We didn't talk about VCloud Air much. Obviously the brand name, I love the name. Not being confused with my MacBook Air, sitting here on the table, but just, it's a great branding. And I thought, I like the Air brand name. I got to say, I do, it works for me. It has a good feeling to it. But what do you think about overall student VCloud and what Bill Fathers? And what are you going to ask Bill when he comes on? So, you know, the real challenge I think is, you know, can they find a way for service providers to add value and make money? Because that's been the challenge. You know, VMware of course, you know, has such a huge presence in data centers and wants to be able to extend that. They had a original program that was just partnering and then they built their own cloud because it wasn't getting as much traction. So, it's how much does VMware do themselves versus partner and how can they grow that ecosystem? And I do see that rebranding as a renewed effort to really, you know, push those various channels and get their partners to help them. And you know me, John, I'm like a broken record on, you know, marginal economics and volume and, you know, can they be cost competitive? So that's my line of questioning. Well, we are here live. Day three, wall-to-wall coverage. Go to our crowd chat. We're having a group chat on this, crowdchat.net-slash-vmworld. It's our new engagement container. This summer saying it's the docker of social media. Dave, we'll be on there all week. If you're watching, go to crowdchat.net-slash-vmworld. We're having a threaded conversation, fully recorded in our container. Stu, great analysis. Go out and get some data for us. And obviously, Dave, we're going to still drill into Newtonics. Big news today, $140 million in financing at a $2 billion valuation. D. Raj says last night that he's on a $200 million run rate, that we put him at a 10x valuation on projected run rate revenues. He's a little bit lower. I think he could have gotten more. Don't you think he's 15x? People are saying that Merck says that they're on track to become the next Oracle or the next VMware. I don't know, but okay. Certainly that software stack model has proven out, certainly financially, it's not hype. They got some meat on the bone. They got some revenues there. So a new world order is being shaped out here at VMworld as usual. Great conversations. We'll be right back with our next guest here, live in San Francisco after this short break.