 Live from Copenhagen, Denmark, it's theCUBE. Covering Nutanix.next 2019, brought to you by Nutanix. Got Morgan Cubanators, we are here in Copenhagen, Nutanix.next, I'm your host, Rebecca Knight, along with my co-host, Stu Miniman. What a beautiful day in Copenhagen, it's such a pleasure to be co-hosting.next with you. This is a company that you have really been watching for a long time. We're here celebrating 10 years of this company. I'd love to just get your first off-the-cuff thoughts. What do you think about this company? How has it changed since its inception 10 years ago? TAC, Rebecca, which unfortunately is the only Danish that I know, so hopefully you'll bring that. But super excited, it's the ninth.next that we've had theCUBE at, which is all of them. It's the eighth one I've had the pleasure of attending. And Rebecca, as you said, I've watched this company since early, early days. First time, I went to Nutanix's office. The paint was drying on the wall there. And Dheeraj, actually the CEO, founder of the company, showed me, here's actually, from a real estate standpoint, we're going to expand here and move here. And if things go well, like we think, we will move across the street and we can really build out a corporate headquarters. And actually all of that has happened. So 10 years of celebration here, over 5,000 employees. There are some things that have not changed at all from the very first interview that John Furrier and I had with Dheeraj. It was talking about the complexity of building distributed architectures and software. What Nutanix has learned from the hyperscale players absolutely impacts what they're doing. But this landscape has changed so greatly. This was originally, everybody thought about it. That term hyper-converged infrastructure came out. It was about appliances and how many boxes you have. But at the core, it always was software. And today, we've heard them talking about how you live in that hybrid and multi-cloud world, all of these software pieces, many of which seem to have, they're loosely coupled with the core AOS software, which itself has gone through a complete revision to be ready for cloud native, the latest databases, all of the new things. So we know there's so much change going on in our industry. But I saw what was built here is a culture and a company, not just a product. And so it is a celebration. I loved that they started with some of their early customers and partners, especially here in Europe. So very international flavor, of course, over 50 countries represented at this show. We can see the energy behind us with the X-Ball hall here. And yeah, Nutanix have been public now for about three years, going through a lot of transitions and lots of stuff for us to dig into over the next few days. Absolutely, we're going to get into all of that. One of your tweets from this morning was where you were watching the main stage and you said, Nutanix is finally starting to answer that question. What is the value of Nutanix in the data center? You have a devoted Twitter followings due, so we are all dying to hear what, how do you see them answering that question? And is it enough? Well, it's actually how they fit into the hyperscale data centers because we know where Nutanix fits in the on-premises data center. That's where they've lived, but as customers are figuring out and the thing that gets talked about a bunch here is the technology that most of the customers use here is virtualization and VMware, of course, has still has a dominant position in this environment while almost half of all Nutanix nodes that shipped in the last year use AHV, the Acropolis hypervisor, which is free. It's by Nutanix, it's based off of the KVM open source. The rest of them are using predominantly VMware, a little bit of Hyper-V in there, but when you go to that cloud environment, I want some of the same software stack I want to be able to be able to put there. So right, there's one of the nuggets that they showed towards the end of the keynote today and they've teased it out a little bit over the last year, it's what they call Zyclusters. So that is their stack or what they call X in some of those clouds. The first one, interestingly enough, is AWS and I say interestingly, because Google has been a solution that Nutanix has been working on, but AWS is actually opening up bare metal instances. So it doesn't mean we take our stack and we put it on the side and we have specialized hardware, it's the EC2 bare metal instances that we're going to be able to run the Nutanix software. And we've seen a number of companies out there, Pure Storage has won, Dave Vellante and Lisa Martin were at that show not that long ago, talking about if I am truly software and I'm independent of location, how can I integrate into some of these environments? So that's where we see Nutanix looking to go. It's in tech preview with AWS, GCP is something they can do for demo environments, but it's not yet open to be able to put in production environments. The hope from Nutanix and others is that Google will open that up. Google is positioning themselves in the open cloud and then Azure will be there too. So other clouds, so when customers choose their environments and their own data centers, their hosted environment, the public clouds, we know there's going to be a lot of moves and changes and it's not going to be a one way or a one time thing. So I want to get a solutions that give flexibility and allow me to place where I want to and then move things as my strategy needs to adjust. So really interesting stuff, definitely something we'll geek out with here at the show. Well, talking about the competitive landscape, this is a company that is a solid number two. You've talked about this a lot in your analysts reports and at these various shows to VMware. This is a two horse race, there's a lot of money to be made in this market. Where do you see, this is a company somewhat under pressure, but where do you see Nutanix strengths and where do you see its biggest obstacles to overcome, especially as it goes head to head with VMware? Yeah, so from the early discussion about hyper-converged infrastructure, it is down to two companies and it doesn't get talked as much as it might have a couple of years ago. There were some of my peers in the industry, three, four years ago, there were like 30 companies out there. There were a few acquisitions, Cisco made an acquisition, HPE made an acquisition. VMware has their offerings out there, but really it is two lead horses out there. If you talk from a revenue and a dollar standpoint, it is VMware and their partnerships there. Dell of course has the leading offering from VMware and then Nutanix is strong and Nutanix is growing customers. They've got over 14,000 customers. They added over 3,500 in the last 12 months. So growing strong, good growth. The transition from being both, softwares at the core, but really kind of ridding themselves of the hardware, going to full subscription and software model has been increasing their gross margin. They're up to about 80 points of gross margin up. If I remember right, about three, three and a half from a year ago, it has moderated their revenue because if you look traditionally and say, okay, what's their bookings and what's their billings? It is flat to even down a little bit, but that is because you're shifting from, well, I'm pulling along a whole bunch of stuff that I'm really not taking margin on to pure software. So they believe they're past the toughest piece of that transition and I'm sure Deerich will be talking about that they've done the fastest transition of any company that's done this. He sits on the board of Adobe. Adobe went to that subscription model from just software subscription, so they're doing that. But the big change is really if you talk about, okay, Nutanix is number two. Well, that's the hyperconverge market. That's what we were talking about a couple of years ago. When we're talking the multi-cloud market, you're talking about companies like Microsoft and Google and Cisco and of course, VMware competing there. And Nutanix would not be one of the first ones that I would mention, but they do have their well positioned to help their customers. And what we need in cloud is the simplicity that hyperconverge solutions like Nutanix brought to the data center. So Nutanix has that opportunity to reach a much broader audience and a much broader market to go from the 14,000 customers they have to literally hundreds of thousands of companies out there that need these types of solutions. And if they are to be 10 years from now at their 20 years, looking back and saying, where do they fit in cloud? Where are they as a true technology software company for businesses? That is the market that they will need to make. And what you're saying about the simplicity, that is the message that we are given here today is that this is all about simplicity, choice and delight, make computing invisible. And do you think, I mean, so that's their message. That's the marketing gambit here, all together now. Do you think that, is it going to work? I mean, it is clearly what you say that the market needs, but does Nutanix have the staying power in your mind? So Rebecca, I think you'll agree, what's nice is when you hear the customers out on stage, you know, they actually give you the reality. And it is, you know, in the early days of these shows, it was, I love Nutanix, it gave me my weekends back. The quote that I had from a customer that I spoke to getting ready for this show is what I loved about this, they actually had a customer that the main IT staff was not really in favor of going Nutanix. They were certified and knew how to use the existing hardware and software, and it spent years working on that, and they followed the rules. And he said, I don't want IT to follow the rules, I want them to try things, I want them to break things. You know, I want them to be able to get ahead of the business and not just meet the requirements. So he said, we're ramping up our spending on training and education and sending them to events like this, and Nutanix is an enabler because it doesn't just work, it exceeds their expectations. It is better performance. They have headroom to be able to try things and throw things at it, and that is exciting. So it's not just, as I said, oh, this interesting box that I stick in a corner and I don't worry about it, it is changing that culture. Something I've been looking at, you know, can some of these technologies actually drive some of that cultural changes? Because traditionally, it's executive mandate, you put something new in and everybody fights against it. So some of this can actually be from the ground level up is I get into these tools and solutions, and it changes my workflow, it changes how I work between groups, how do I get the developers involved? There's a lot of talk about the applications. The messaging that they unveiled here all together now that resonates with, I can't just have my database and my apps and my data itself in siloed as to who can access it and who can use it and have to worry about, oh, I need nine months and hundreds of thousands of dollars to do anything. I want to be able to, IT needs to be not no or slow, but go. Shout out to Cube alum, Alan Cohen, who actually interviewed at thefirst.next. So he was early supporter of Nutanix and that's what the kind of the developer driven mantra is IT very much working with the business and if it can drive innovation. I mean, Rebecca, we've been talking about that from a cultural standpoint. You are stepping into my realize to quote another very important female leader at the moment, but exactly, talking about how technology can drive cultural change within a large organization because Nutanix is a large organization now, it's only 10 years old, but it is not a startup, it is a large, complex, exceedingly complicated organization and so how do you drive innovation, creativity, change, collaboration, communication between different silos? These are all topics that we're going to delve into today. Another word we keep hearing, sort of a cultural buzzword at this conference is resilience. And we're going to, on the main stage, we're going to hear from Caroline Wozniaki, who is a very famous tennis player. We're going to hear from the CEO of NOMA, who is of course, Copenhagen's famous culinary delight, and of course, Kit Harrington. Yeah, so anybody that watched Game of Thrones, John Snow was definitely resilient to be able to last the eight seasons and everything that happened across it. And Dirich, one thing we really respect, we've watched him since the early days. He is very thoughtful as to how he goes and what he actually said to me yesterday is that, Stu, you're going to hear some of the same words that some of the other vendors, but the why and the how underneath that for us is different. And that's very important. And especially in the technology space, that nuance and the, really how's that work? And how does that put together, and not just that we can do it, but is this the right way and doesn't make sense? So they are thoughtful about how they do it and they're moving forward. So they definitely believe their position well for the next phase of their journey. And always it's been a pleasure to watch this and talk to all the builders, the dreamers, and... The disruptors. Yeah, dreamers, believers, and builders is what they came out this morning, so. Well, we're going to be, we have a lot of great guests on the show today. I'm so excited to be hosting here with you in Copenhagen at this next dot, dot next. So we have Dearage Pandy coming up next. I'm Rebecca Knight for Stu Miniman. Please keep tuned to theCUBE, you're watching theCUBE.