 Live from Las Vegas, it's theCUBE, covering AWS re-invent 2017, presented by AWS, Intel, and our ecosystem of partners. Hello, and welcome to theCUBE's exclusive coverage here in Las Vegas for AWS, Amazon Web Services re-invent 2017. 45,000 people, it's theCUBE's fifth year in covering AWS five years ago. I think 7,000 people attended this year, close to 45,000 developers and industry participants. And of course, this is theCUBE. I'm John Furrier with my co-host Keith Townsend, and we're excited to have CUBE alumni, Sanjay Poonan, who's the Chief Operating Officer for VMware. Sanjay, great to see you. Of course, good friend with Andy Jassy. You went to Harvard Business School together, both Mavericks, welcome to theCUBE. Thank you, and you know what? I loved about the keynote this morning. Andy and I both love music, and he had all these musical stuff. Vandy and Tom Feddy and Eric Clapton. I don't know, I liked all of his picks, but at least those two, loved it, man. The music thing really speaks to the artists, artists inside of this industry. And we were talking on theCUBE earlier that we're in a time now where, and I think Tom Siebel said it when he was on, that there's going to be a mass, just extinction of companies that don't make it on the digital transformation, and he cited some. So you're at VMware, you guys are transforming and continuing to do well. You have a relationship with Amazon Web Services. Talk about the challenge that's in front of business executives right now around this transformation, because possibly looking at extinction for some big brands, potentially big companies in IT. It's interesting that Tom Siebel would say that in terms of where Siebel ended up and where Salesforce is now, I respect him. He's obviously doing good things at C3. But listen, that's, I think what every company has got to ask yourself, how do you build longevity? How do you make yourself sustainable? Next year will be our 20 year anniversary of VMware's founding. And the story could have been written about VMware that you were the last good company and then you were a legacy company because you were relevant to yesterday's part of the world, which was the data center. And I think the key thing that kept us awake the last two or three years was, how do you make them relevant to the other side of history, which is the public cloud? And what we've really been able to do over the last two or three years is build a story of the company that's not just relevant to the data center and private cloud, which is not going away guys, as you know, but build a bridge into the public cloud. And this partnership has been a key part of that. And then of course the third part of that is our end user computing story. So I think cloud, mobile security have become the pillars of the new VMware. And we're very excited about that in this show. I mean, if you combine the momentum of this show and VMworld, collectively at VMworld, we have probably about 70, 80,000 people come to VMworld and V-forums. There's 45,000 people here with all the other summits. They probably have another 40,000 people. This is collectively about 150,000 people are coming to the largest infrastructure shows on the planet, great momentum. And it's an infrastructure show but it's turning into a developer show. So I'm getting your thoughts. And I want to just clarify something because we pointed this out at VMworld this year because it was pretty obvious what happened. The announcement that you guys did that Raghu and your team did with Raghu with AWS was instrumental. The proof was at VMworld. Well, you saw clarity in the messaging. Everyone could see what's going on. I now know what's happening. My operations are going to be secure. I can run vSphere and the cloud are on-prem. Everything can be called what it is. But the reality was is that you guys have the operators, IT operations, and Amazon has a robust cloud native developer community. Not that they're conflicting in any way, they're coming together. So it was a smart move. So I got to ask you, as you guys continue your relationship with AWS, how are you guys tying the new ops role, ops teams with the dev teams, because with IoT, this is where it's coming together. You can see it right there. Your thoughts. I mean, listen, the partnership is going great. I just saw Andy Jassy after his exec summit session, gave him a hug. We're very excited about it. And I think of any of the technology vendors he mentioned on stage, we were on several slides there, mentioned a few times. We, I think we're probably one of the top tech partners of his. And reality is there's two aspects to the story. One is the developer and operations come together which you eloquently articulated. The other aspect is we're the king of the private cloud and they're the king of the public cloud. When you can bring these together, you don't have to make it a choice between one or the other. We want to make sure that the private cloud is maximized to its full extent and then you build a bridge in the public cloud. I think those two factors, bringing developer and operations together, and marrying the private and public cloud, what we'd call hybrid cloud computing, a term we coined. And now, of course, many others are on top of that term. Well, whoever did. I think HP might have coined it. But nonetheless, we feel very good about the future, about developer and operations and hybrid cloud computing being a good part of the world's future. So Sanjay, I actually interviewed you, 2016, VMworld, and you said something very interesting that now I look back on it. I'm like, oh, of course, which is that you gave your developers the tools they needed to do their jobs. At the time included AWS before the announcement of VMware and AWS partnership. AWS doesn't change their data center for anyone. So the value that obviously you guys are bringing to them and their customer speaks values. AWS has also said, Andy on the stage says he's trying to go out and talk to customers every week. I joked that before the start of this that every LinkedIn request I get, you're already a connection of that LinkedIn request. How important is it for you to talk to your internal staff as well as your external customers to get the pulse of this operations and dev and developer movement going and infused into the culture of VMware? Well, Keith, I appreciate the kind words. Listen, when we decided who to partner with and how to partner with when we had made the announcement last year, we went and talked to our customers. We're very customer and client focused as are they. And we began to hear very proportional to the market share stats, AWS, most prominently. And every one of our customers were telling us the same thing that both Andy and us were asking, which is why couldn't you get the best of both worlds? You're making a choice. Now, we had a little bit of an impediment in the sense that we had tried to build a public cloud with vCloud Air, but once we made the decision that we were getting out of that business, divested it, took care of those clients, the door really opened up. And we started a test pulse with a couple of customers under NDA. What if you were to imagine a partnership between us and Amazon? What would you think? And man, I can tell you a couple of these customers, some of who were on stage at the time of the announcement fell off their chair. This would be huge. This is going to be like a, one customer said it's going to be like a Berlin Wall moment, the US and the Soviet Union getting together. I mean, the momentum building up to it. So now what we've got to do, it's been a year later, we've shipped the release, the momentum still is pretty high there. We've got to now start to really make this actionable, get customers excited. Most of my meetings here have been with customers, system integrators, I came from one of the largest S-sites in the world. They're seeing this as a big part of the momentum. Our booth here is pretty crowded. We've got to make sure now that this, the customers can start realizing the value of what VMware and AWS have built. The other thing that, as you mentioned, that both sides did very explicitly in the design of this was to ensure that each other's engineering teams were closely embedded. So it's almost like having an engineering team of VMware embedded inside Amazon and an engineering team of Amazon embedded inside VMware. That's how closely we work together, never done before in the history of both companies. I don't think they've ever done that with anybody else. Certainly the level of try, and that represents the trust we had with each other. Sonic, I got to ask you, we were talking to some folks last night saying that you were coming on theCUBE, and I said, what should I ask Sanjay? You know, I want to get him a zinger, I want to get him off his messaging. Hard to do, but we'll try. They said, ask him about security. So I had to ask you, because security's been Amazon's kryptonite for many years. They've done the work in the public sector, they've done the work in the cloud with security, and it's paying off of them. Security still needs to get solved. It's a solvable problem. What is your stance on security now that you've got the private and hybrid going on with the public? So anything changed? I know you got the air watch, you're proud of that, but what else is going on? Listen, I think quietly VMware has become one of the prominent brands that have been talked about in security. We had a CIO survey that I saw recently in network security where increasingly customers are talking about VMware because of NSX. When I go to the air watch conference, I look at the business cards of people and they're all in the security domain of end point security. So what we're finding is that security requires a new view of it where it can't be 6,000 vendors. It feels like a strip mall where every little shop has got its boutique little thing that you ought to buy. And when you buy a car, you expect a lot of the things to be solved in the core aspects of the car as opposed to buying a lot of add-ons. So our point of view first off is that security needs to be baked into the infrastructure and we're going to do that with products like NSX that bake it into the data center, with products like air watch and workspace one that bake it into the end point and with products like app defense that even take it deeper into the core of the hypervisor. Given that, we've begun to also really focus our education of customers on higher level terms. I was talking to a CIO yesterday who was educating his board on what are some of the key things in cybersecurity they need to worry about. And the CIO said this to me, the magic word that he is training all of his board members on is segmentation. Now, micro segmentation, segmentation is a very simple concept that NSX sort of pioneered. We'll find that now to become very relevant. Same. So that's paying off. Paying off big time. Wanna cry and pet you, I taught us that patching probably is a very important aspect of what people need to do. Encryption, you could argue a lot of what happened in the Equifax may have been mitigated if the data had been encrypted. Identity, multi-factor authentication. So we're seeing a couple of these key things being hygiene that we can educate people better on in security, it really is becoming a key part to our story now. You can see yourself top tier security provider. I mean, listen, we are part of an ecosystem. But our point of view in security now is very well informed in helping people on the data center, to the endpoint, to the cloud and helping them with some of these key areas. And because we're so customer focused, we don't come in at this from the way a traditional security player is providing access to, you know, and we don't necessarily have a brand there, but increasingly we're finding with the success of NSX, Workspace One and the introduction of new products like AppDefense, we're building a point of security that's highly differentiated and unique. So Sanjay, big acquisition in SD WAN space. Tell us how does that postures as a security player and this acquisition in SD WAN, the edge, the cloud plays into VMware, which is traditionally a data center company, SD WAN, help us understand that acquisition. Good question. So as we saw the data center and the cloud starting to develop, right, that people understand pretty well. We began to also hear and see another aspect of what people were starting to see happen, which was the edge and increasingly IOT is one driver of that and our customer started to say to us, listen, if you're driving NSX and its success in the data center, wouldn't it be good to also have a software defined wide area network strategy that allows us to take that benefit of networking, software defined networking to the branch, to the edge. So increasingly we had a choice. Do we build that ourselves on top of NSX and build out an SD WAN capability, which we could have done, or do we go and look at our customers? We're going to start to talk, for example, we're going to talk to telcos like AT&T and they said the best solution out there is a company, the fellow cloud. We started to talk to customers who were using them and we analyzed the space and we felt it would be much faster for us to buy rather than build a story of a software defined networking story that goes from the data center to the branch and fellow cloud was well regarded. I would view this, it's early and we haven't closed the acquisitions yet, but once we close this, this has all the potential to have the type of transformative effect like an air watch or a NYSERA hat in a different way at the edge. And we think the idea of edge core, which is the data center and cloud become very key aspects of where infrastructure play and it becomes a partnership opportunity, fellow cloud will become a partnership opportunity with the telcos, with the AWS's of the world and with the traditional enterprises. So bring it all together for us. Data center, NSX, Edge, SD-WAN, air watch capability. IOT, how does all of that connect together? You should look at IOT and Edge being kind of related topics. Data center and the core being related topics. Cloud being a third and then of course the end user landscape and the endpoint being where it is. Those would be the four areas. Data center being the core of where VMware started. That's always going to be up and our stick there so to speak is that we're going to take what was done in hardware and do it in software significantly cheaper, less complex and make a lot of money then. But then we will help people bridge into the cloud and bridge into the edge. That's the core part of our strategy. Data center first, cloud edge. And then the end user world sits on top of all of that because every device today is either a phone, a tablet or a laptop. And there's no vendor that can manage the heterogeneous landscape today of Apple devices, Google devices, Apple being iOS, Mac, Android, Chrome in the case of Google or Windows 10 in the case of Microsoft. That heterogeneous landscape, managing and securing that which is what AirWatch and Workspace One does is uniquely ours. So we think this proposition of data center, cloud, edge, and end user computing, huge opportunity for VMware. So can we expect to see NSX as the core of that? Absolutely, NSX becomes to us as important as ESX was. In fact, that's kind of why we like the name. It becomes the backbone and platform for everything we do that connects the data center to the cloud. It's a key part of BMC for example. It connects the data center to the edge, hence what we're done with SD-WAN. And it's also a key part to what connects to the end user world. When you connect network security with what we're doing with AirWatch which we announced two years ago, you get magic. So we think NSX becomes a fundamental and we're only in the first or second or third inning of software-defined networking. You know, we have a few thousand customers of NSX. That's a fraction of the 500,000 customers of VMware. We think we can take that in and the networking market's an $80 billion market ripe for a lot of innovation. Sanjay, I want to get your perspective on the industry landscape. Amazon, obviously the results, I laid it out on my Forbes story and in SiliconANGLE, all the coverage, just go check it out. But basically is Amazon's going so fast, the developers are voting with their workloads. So their cloud thing is the elastic cloud, they check, they're winning and winning. You guys own the enterprise data center operating model which is private cloud, I buy that. But it's all still one cloud, IOT, I like that. The question is, how do you explain it to the people that don't know what's going on? I mean, share your color on what's happening here because this is a historic moment. There's a renaissance in software. When I'm describing this to my wife, or to my mother, or somebody who's not, and I say, listen, there's a world of tech companies that applies to the consumer. In fact, when I look at my ticker list, I divide them on consumer and enterprise. These are companies like Apple and Google and Facebook. They may have aspirations in the enterprise, but they're primarily consumer companies and those are actually what most people can relate to. And those are now some of the biggest market cap companies in the world. When you look at the enterprise, typically you can divide them into applications companies, companies like Salesforce, SAP, and parts of Oracle and others, Workday, and then companies in infrastructure, which is where companies like VMware and AWS and so on fit. I think what's happening is there's a significant shift because of the cloud to a whole new avenue of spending where every company has to think about themselves as a technology company. And the same thing's happening with mobile devices. So cloud, mobile security ties many of those conversations together. And there are companies that are innovators and there are companies like you described earlier, John, at the start of this show, it's going to become extinct. All right, so my thesis is this, I want to get your reaction to this. I believe a software renaissance is coming and it's going to be operated differently and you guys are already kind of telegraphing your move. So if that's the case, then a whole new guard is going to be developing. He calls it the new guard. Old guard, he refers to kind of the older guards. So my criticism of him was is that he put a Gartner slide up there. That is as old guard as you get. So Andy's promoting this whole new guard thing, yet he puts up the Gartner Magic Quadrant for infrastructure as a service. That's irrelevant to his entire presentation. Hold on, hold on, the question is, you want me to talk about Gartner? Because they're old guard. They're old guard. Don't defend them too fast. I know the buyers see it, they trust Gartner, maybe not. The point is, what are the new metrics? We need new metrics because the cloud is horizontally scalable. This integrated, you got software driving decision making. It's not about a category, it's about a fabric. Listen, I'm not here to, I'm a friend of Andy. I love what he's talked about and I'm not here to defend or criticize Gartner. But what I liked about his presentation was he showed the Gartner slide probably about 20 minutes into the presentation. He started off by his metrics of revenue and number of customers. So listen, I mean. I get that, show in momentum. Gartner gives you the number one. The number of customers is what counts the most. The most important metric is adoption. And last year he said there was about a million customers. This year he said several million. And if it's true that both startups and enterprises are adopting this, adopting, I don't mean just buying, there is momentum here. Now, irrespective, the analysts talking about this should be hopefully. All right, so I buy the customer thing and I've said that one in the queue before. Of course, Microsoft could say, we listen to customers too when we have a zillion customers running Office 365. Is that really cloud or fake cloud? I mean, listen, at the end of the day, I'm not, you know, at the end of the day, it's not a winner take all market to one player. I think all of these companies will be successful. They have different strategies. Microsoft strategy is driven from Office 365 and some of what they can do in Windows into Azure. These folks have come up from the bottom up. Oracle's trying to come at it from a different angle. Google's trying to come at it from a different angle. And the good news is all of these companies have deep pockets and will invest. Amazon does have a head start. They are number one in the market. I'm going to give you phrases. Modern applications could be, so I'll buy the customer workload argument if it's defined as a modern app. Because Oracle could say I got a zillion customers too and they win on that. Those numbers are pretty strong, so is Microsoft. But to me, the cloud is showing a new model. Absolutely. So what is in your mind good metric to saying that's a modern app, that is not? I think when you can look at the modern companies like the Airbnb, the Pinterest, the Slacks, and whoever, some of them are going to make a decision to do their own infrastructure. Facebook does not put their IaaS on top of AWS or Azure or Google, they built their own data so they can afford to do it and want to do it. That's their competitive advantage. But for companies who can't, if they are building their apps on these platforms, that's one element. And then the traditional enterprises, they think about their evolution. If they're starting to adopt these platforms, and not just to migrate old applications to new ones where VMware fits in, all building new cloud native applications on there, I think that momentum is clear. When was the last time you saw a company go from zero to 18 billion in 10 years? Okay, 10, 12 years that he's been around. Or VMware or Salesforce go from zero to eight billion in the last 18 years. This phenomenon of companies like Salesforce, VMware, and AWS. It's all a scale, guys. You got to get the scale. You got to have value. This is unprecedented in the last five to 10 years. Unprecedented. These companies, I believe, are going to be the companies of the tech future. I'm not saying that the old guard, but if they don't change, they won't be the companies that people talk about. I think if you, you know, I mean, listen, the phenomenon of AWS, just going from zero to 18 is, I personally think- And growing 40% on that baseline. I mean, Andy's probably one of the greatest leaders of our modern time for his role in making that happen. But I think these are the companies that we watch carefully. These companies are growing rapidly that our customers are adopting them in the hundreds of thousands, if not millions. There is true momentum there. So Sanjay, data has gravity. Data is also the new oil. When you look at what Andy has in his arsenal, all of the data that's in S3 that he can run, all his MI and AI services against, has, that's some great honey for this audience. When I look at VMware, there's not much of a data strategy. There's a securing the data in transit, but there's not a data strategy. What is VMware's data strategy to help customers take advantage of that oil? I mean, listen, we've talked about it in terms of our data analytics, what we're doing machine learning and AI. We felt this year given so much of what we had to announce around security, software defined networking, the branch, the edge, putting more of that into VMworld, which is usually our big event where we announced this stuff, would have just crowded out people. But we began to lay the seeds of what you'll start to hear a lot more in 2018, okay? So not trying to make a spoiler alert for, but we acquired this company Wavefront that does next generation cloud native metrics and analytics. Think of it as like, you did that with AppDynamics in the old world, you're doing this with Wavefront in the new world of cloud native. We have really rethought through how all the data that we collect, whether it's on the data center or in the endpoint could be mined and become a telemetry that we actually use. We bought another company, AppTelegent, formerly called Criticism, that's allowing us to do that type of analytics on the endpoint. You're going to see a couple of these moves that are the breadcrumbs of what we'll start announcing a lot more of a comprehensive analytics strategy in 2018, which I think would be very exciting. I think the other thing we've been cautious to do is not AI wash, you know, there's a lot of cloud washing and machine learning washing that happen to companies. Now it's authentic, now I think it's authentic. When Andy talks about all they're doing in AI and machine learning, there's an authenticity to it. We want to be in the same way, have a measured, careful strategy, and you will absolutely hear from us a lot more. Thank you for bringing it up because it's something that's on our radar. Sonjay, we got to go, but thanks for coming and stopping by the queue. I know you're super busy and great to drop and see you. Always a pleasure to have you. Congratulations, Keith. It's good to talk to you again. Congratulations on all the success you're having with this show. Well, we're doing our work, getting the reports out there, reporting here on theCUBE. We've got two sets, 45,000 people, exclusive coverage on SiliconANGLE.com. More data coming every day. We've got a whole other day tomorrow, big night tonight, the pub crawl, meetings, VCs, I'll be out there, we'll be out there grinding it out ear to the ground, go get those stories and bring it to you. This is theCUBE live coverage from AWS re-invent 2017. We'll be back with more after this short break.