 Extracting the signal from the noise, it's the Cube. Covering VMworld 2015, brought to you by VMware and its ecosystem sponsors. Now, your hosts, John Furrier and Dave Vellante. Okay, welcome everyone. We are here live in San Francisco for VMworld 2015. This is Silicon Angles theCUBE, our flagship program. We go out to the events and extract the signal noise. I'm John Furrier, my co-host Dave Vellante, our sixth year covering VMworld with the Cube and a lot of action happening. Certainly awesome first day kickoff last night and this weekend, a lot of things going on. DevOps conference, a lot of people coming in early. Very social scene, Dave. And we got a packed lineup of two sets here at VMworld and we got going on here with the main cube desk here. We have our director set to our left and we're gonna have lots of coverage acquiring all the content we possibly can sharing that with everyone watching. Go to the Twitter hashtag VMworld or join the conversation, crowdchat.net slash VMworld. We're looking for questions and bringing that to you but the big news here obviously is VMworld's kicking off. The VMworld ecosystem, the VMworld ecosystem Dave is under massive transformation. A lot of news about EMC Federation, the role of VMware and also obviously a slew of product announcements and obviously revenue with NSX and a bunch of other great stuff here. But again, six years now looking back, is there anything that you see in terms of the patterns around this whole marketplace? Obviously we've been covering a variety of the tech events throughout the world and certainly there's a huge amount of change. What's your take on this? Is it the underlying infrastructure? Is it virtualization? Is it containerization? All this is happening around developers and infrastructure and certainly the enterprises is totally under massive transformation. Well John, let me just say first say it's our sixth year now at VMworld and at Moscone, actually one year in Vegas but the customers are streaming in. The summer ends here. The fall starts, the season starts now and this is just an amazing show for VMworld or VMware and we've seen a huge transformation. When we first started the show back in 2010 it was all about the ecosystem. It was all about a dollar spent on VMware licenses turns into eight, 10, 15, 20 dollars for the ecosystem. Now it's really about diversifying beyond the hypervisor, management, cloud, containers. VMware now is a six and a half billion dollar company growing at about 10%. Amazon really wasn't a factor back in 2010 John when we started doing this. Amazon's growing at 70, 80% a year and it's about the same size, maybe even a little bit bigger. Huge dynamic there. You've got the whole Elliott management, EMC ownership thing. Pat Gelsinger was on CNBC this morning. No comments, I don't know what to make of that. But you've got a core set of customers that are now looking at many more options. The other thing I'll add, back then John in the pre 2010, it was all about I had poor server utilization, I can virtualize my infrastructure and it's a no brainer from an ROI standpoint. Now it's much more about management, other business value, deeper business integration. Little fuzzier and a lot more options. Open stack, Docker, Amazon, Azure. So a completely different competitive environment and for customers, they got to make some bets. One of the things that we always talk about is the cloud impact on VMware. And the thing that's coming up over and over again is this notion of hybrid cloud. And hybrid cloud, Dave, is really changing the game and forcing people's hands. We're seeing the growth of Docker containers. Certainly putting a new stake in the ground around how people are developing in the enterprise. One is more lightweight type applications. But also hybrid cloud, really as we found out from asking everyone who comes on the cube what the hell is hybrid cloud? And the answer seems to be consistent. It's not a product, it's not a category. It's an outcome of two clouds. Private, on-premise infrastructure and software, private cloud, and then public cloud. Together, the tooling has to work across both sets of environments. This seems to be the mega trend. And if you remember in 2010 when Paul Moritz laid out the original architecture of the VMware ecosystem, it was really much the stack that we're kind of seeing today. Again, playing out with different elements. But this has changed the game for a lot of the players. And Amazon has come on the scene with producing numbers. They're going to do seven billion. We sometimes speculate more. Wikibon research has put out new public cloud market share. What does all this mean for the customers out there who are trying to squint through all the details on the vendor hype around who's got what? I mean, do people actually have the products? Do they have the solutions? And is it still about storage? Is it still about virtualization or has the battlefield shifted, Dave? Well, I think we're gone from a world of purpose-built application silos to silos of cloud. If you look at how many SaaS products are out there, you've got your HR cloud, you've got your marketing cloud, you've got your sales cloud, and you've got infrastructure as a service, people struggling to figure out, okay, do I go stay on-premises? Do I go off-premises? Do I go public cloud? It's really expensive. So we're starting to see a huge fragmentation. You know who the number one cloud vendor is in our latest study? Other. So it's a very international. I've never heard of other. Yes, other. And what would it be in the other business? So the point is it's a highly fragmented market even though Amazon is the big gorilla and interestingly enough, Microsoft, if you add up, infrastructure as a service, platform as a service and software as a service, Microsoft is number one, Amazon's number two, Amazon's number one and infrastructure as a service. So customers have a lot of choices to make and fragmentation unfortunately seems to be the new watchword and then you have all this innovation coming in with things like containers. I think the bottom line for me, John, it's all about the developers. So my question back to you is, what's VMware doing about the developer ecosystem and the whole DevOps meme? Well, I think the DevOps thing has become so explosive right now and I think VMware is trying to grope for an answer there. I think one of the things that's clear is VMware as a company sees DevOps as definitely the future for development. No doubt about it. And DevOps is kind of the word that's kind of evolving from hardcore early days, web-scale companies that essentially had to do the development and the ops kind of in parallel and we all know who they are. It's Netflix, it's Yahoo, it's Google, it's Facebook. These are the leaders that have essentially been cloud native. Okay, the word cloud native and DevOps are going hand in hand and what's very clear to me is that cloud native is the path of the future. The problem is is that for enterprises out there, Dave, to implement DevOps requires a complete mindset shift and the fact that they have legacy investments ultimately is driving this whole hybrid cloud. What is hybrid cloud conversation? So you can't just bolt in DevOps because you got to deal with legacy. If you're born in the cloud, as they say, if you're a box, if you're a drop box and you're an emerging startup, this is the new way people are developing. It's no problem for them but if you're a large enterprise that has two decades of investment in infrastructure servers and all the good stuff that's been involved in the legacy side, that's under transformation. That is the quote transformation message. So for me, DevOps is about a new style of development and this is definitely the future for the enterprise. So VMware is fighting battles on multiple fronts. Obviously we talked about Amazon and Azure and the cloud. You've got the traditional enterprise IT, IBM and HP in particular going hard after OpenStack, even though they have a huge presence at this show, they can't just walk away from the VMware ecosystem but as I said before, to me, John, for VMware from a strategic standpoint, it's all about diversifying beyond the hypervisor which is becoming commoditized. Pat Gelsinger probably punch us if we say the C word on set in front of them but that's a fact and really Microsoft has perpetuated that but it's all about V cloud air, it's about VSAN, NSX, AirWatch, management. Try to find new revenue streams and add new value beyond the hypervisor itself. Yeah and to me the big thing for customers that are here at the show is where is the risk? Because there's now a new dynamic going on with this transformation is that if you're in the financial services, you might have exposure if you don't implement properly in the DevOps way. If you're in say healthcare, there's certainly a cost driver and in any other enterprise, there are factors now that are on the table that are substantive and real around getting off, sitting on the sidelines with respect to DevOps and cloud native. So I'm seeing a huge conversation around, okay I need a path beyond hybrid public cloud, I need to start deploying in production. We certainly saw that in the world, the big data with Hadoop, it's not just the end all be all silver bullet for the enterprises, it's one feature of an overall architectural shift. And I think the thing that I'm looking for in this show is what are those architectural shifts and what's the product market look like and ultimately from a customer standpoint, they don't really care as long as it works, right? So we're seeing things like integrated systems back on the table again, engineered systems, appliances. At the end of the day, that is okay for customers if they can bring in an appliance in, that essentially does a lot of things. So NSX is something we're going to watch. We're going to also look at the DevOps integrated stack. So if you're a customer, you've got to look at this and saying, okay I have risk, I got to manage that. If I'm not deploying a certain kind of cloud native baseline, that's going to be a problem. The second thing we're looking at right now is what does the cloud look like? Is it heavy? Is it lightweight? And this is where the Kubernetes, this is where the container conversation comes in. With the Kubernetes and containers, that kind of teases out a lightweight cloud, almost like service-oriented architectures and web services back in the day. When you had to look at things and say, I want to deploy a lightweight infrastructure that's almost service catalog based, this is ultimately going to be some of the things that we're going to talk about as, okay this is cloud but it's really kind of a bloated and or somewhat not lightweight. Let's also talk about the strategy and how that's evolved since we first started doing theCUBE here in 2010. With Sun's acquisition of Oracle, Larry Ellison trying to become the iPhone of the data center, VMware and EMC's approach is always the ecosystem. Leverage that ecosystem but now you're having all kinds of interesting discussions about VMware acquiring EMC or EMC acquiring VMware. Amazon is really trying to build out an end-to-end data management strategy. Packaged as services so is there a trend now coming back to that vertically integrated structure? What does that mean for VMware? Can it leverage its ecosystem? What about its partnership strategy? We're going to have D. Raj on here from Nutri antics, right? They started sort of really VMware strong, strong affinity. We were at .next earlier this year. Talking about, okay how do I diversify in multi-cloud? What about open stack? So all those things have changed. What's your take on, does VMware have to become more vertically integrated? Clearly we're seeing some of that with vSAN, you're certainly seeing that with NSX. Is that the trend? Is that the direction? Yeah, a couple things on that. There's a couple things happening in parallel right now that's the perfect storm of innovation. One is the all-flash market is certainly disrupting some of the SLA requirements for customers. Two, the scale-out distributed storage architecture with public cloud is another one. So these are kind of under the hood, kind of dynamics at the engine of innovation. On top of that you have market forces. And I said last year on theCUBE that, with respect to EMC and their fight in the marketplace, certainly with Elliott Capital, I call the Gordon Gecko of hedge funds, trying to decimate an established company. But that speaks to the market, right? So you have under the hood changes. Then you have macro factors. And I said last year on theCUBE that EMC shouldn't be worried about pure storage, nibbling away kind of at the vSAN market. Certainly they're going to go public. They're going to do okay. I'm not sure it's worth $4 billion in my opinion. But pure storage doesn't put EMC out of business. Amazon can actually put EMC out of business. So to me, the big thing is Amazon. What Amazon is showing is that end-to-end integrated stack works. If you look at Oracle and some of these other companies are coming out, engineered systems are not a bad word. Now what VMware has to do, and this is what's interesting about the Elliott Capital thing, it might force VMware to take the lead dog position to be an end-to-end play. End-to-end meaning from data center to the chip at the edge of the network. To me, that play does not exist. It's kind of awkward right now with VMware. So to me, that is a big deal. Okay, what about cloud? We met with Dave Donatello. You and I had a one-on-one with him in June and he made a very strong statement. If you don't have a public cloud strategy, you're toast. Now, VMware's cloud strategy, public cloud strategy is vCloud Air. vCloud Air, a lot of rumors floating around about how much traction it has or doesn't have. We've sat down with some of the principles of vCloud Air. Is vCloud Air in your view getting it done? That's a definitely interesting question. What is getting it done mean? I think right now the winds are shifting. So I look at vCloud as a boat that's out there right now. If the winds are shifting, which I think they are on an end-to-end basis, vCloud could shift in the wrong direction. Ultimately, VMware has to make the call on that. They're stuck right now in the middle between these shifts. And ultimately, I think VMware has to have a cloud. There's no doubt in my mind that they have to have a cloud position in here, public cloud and have the private cloud. vCloud seems to be a fit form, but I just don't see the traction on the market side. So I want to get more data on that, but I just don't see it. I don't see people saying, hey, I'm rolling out tons of vCloud. Let me give you my take. I think right now it's a tweener. I think to compete in the cloud, you either have to have massive volume, drive down marginal economics like Amazon and Microsoft are doing, or you have to have differentiable advantage up the stack, whether it's database or the middleware layer. I think that VMware's got to figure that out. So that's something that I'm going to be watching for at the show, along with a lot of other announcements, SDDC, everything, right? What's going on with Evo, Rack and Evo Rails and NSX traction? I want to talk to some customers and see what they're doing with software defined networking. And we're going to be covering it. Yeah, and the other thing we're going to be covering is this whole startup ecosystem. We're going to have on tomorrow here on the director set to our left is going to be a VC, a bunch of VCs coming on. We got Jerry Chen coming in from Greylock, Pete Sancini from NEA, Steve Herrod's going to be on, all our VMware alum. We're going to have some announcements for some other folks that are turning into VCs, X Cisco, X VMware. So you're seeing the V-Mafia start to move into the investment realm and what you're going to start to see in my opinion is a slew of startups. Because I think this is going to be a huge opportunity in the enterprise. There's certainly a bubble going on on the consumer side, but in the enterprise side, there's so much opportunity. You're going to see some new startups be born and we're going to talk to a lot of startups that are already out there and certainly pre-IPO companies. This is the white space. The question right now for me on the startup side is, what's the white space? Where are the opportunities for the startups to innovate? How long can they get up and running with this cloud? It's pretty easy to get into the business, but then the scale from there will be a whole different ball game. So again, we're going to talk to the VCs. We're going to talk to some of the startups. And again, I want to get that kind of perspective because ultimately that's the kind of the canary in the coal mine is what the startups are doing. So again, the Cube is here live in San Francisco, Dave. We're going to kick it off with, you know, three days of live coverage from two sets to our left is our director set. Here's the main Cube anchor desk and we're going to bring you all the action. Again, join the conversation. The hashtag is VMworld. Go to crowdchat.net. It's our new engagement app. We're going to be taking questions there. Crowdchat.net slash VMworld. Join the conversation. This is the Cube. We'll be right back with more coverage here in the lobby of Moscone North in San Francisco. This is the Cube. I'm John Furrier with Dave Vellante. We'll be right back.