 Live from San Francisco, celebrating 10 years of high-tech coverage, it's theCUBE. Covering VMworld 2019. Brought to you by VMware and its ecosystem partners. Hello everyone, welcome to our live coverage here at Moscone North Lobby of VMworld 2019. I'm John Furrier, Stu Miniman, Dave Vellante, celebrating our 10th VMworld, our 10 years of covering VMworld. Dave, Stu, what a run, been to go back across Moscone South 10 years ago with the green set. This is 10 years later, 10th VMworld, VMC World no longer as a show, so that kind of folds into Dell Technologies. Man, the world's changed, Pat Gelsinger just delivered his keynote as CEO, Sanjay Poonan as CEO, came on to talk to customers. Stu, a lot of acquisitions, a lot of cloud native, a lot of cloud 2.0. This is turning into VMware 2.0, where VMs are kind of only one part of the equation. So let's jump into the analysis, Dave. I mean, you put out some killer research on siliconangle.com and wikibon.com around customer spend. Stu, we put out a lot of analysis on all the key trends that VMware's playing into. Cloud 2.0 is what we're calling it. It's enterprise cloud at price scale. Dave, what's your analysis of the keynote? Well, John, when you go back to 10 VMworlds ago, it was all about virtualization and completely changing the deployment dynamics. When I first saw a VM deployed, I went, oh my God, this is going to change everything. And it did, but wow, compare it to now. What's happening with cloud and AI? We heard so much about 5G. It was also the big difference in the ecosystem. Back when EMC owned VMware in 2010, there was that sort of Chinese wall. Stu, you were working there just before that. And there wasn't a lot of swapping of IP, if you will. They were sort of treating them as an equal player to NetApp and everybody else out there. Todd Nielsen used to say, for every dollar spent on a VMware license, 15 is spent in the ecosystem. You don't hear that kind of narrative anymore. You hear, we're crushing the HCI vendor. We're number one, basically a sort of backhand to Nutanix we heard on the keynote. Very tight integration, VxRail project dimension. So much, much tighter integration since Pat Gelsinger joined VMware from EMC. So lots has changed. Stu, we had a lot of research and reporting leading up to the show around cloud 2.0, obviously DevOps is moving to a whole another dimension on enterprise scale. The number of acquisitions VMware has made and then boom, they dropped two monsters on the table over the 11th hour, Pivotal for 2.7 billion, Carbon Black for 2.1 billion. Lot of stories in those other acquisitions. Your analysis and how that played out today on the keynote. As Dave said, when we started coming to this event back in 2010, the virtual machine was the center of the universe. What were the servers that it lived on? How does storage and networking get fixed to be able to live in that environment and the keynote? It was a lot of cloud, you know, John, we brought in a lot of the cloud camp people that first year and some people were like, why are we talking about cloud? This is VMworld and we're like, well, this is the future and today, we're not talking about VMs at the center. We're talking about containers. We're talking about cloud native applications. That multi-cloud world, absolutely something that Pat Gelsinger did front and center. Actually felt it almost glossed over a little bit of the HCI and NSX and all these wonderful things. Sure, there were some big Dell pieces in there. VMware cloud on Dell EMC. The Dell DR, data protection, power protect into the VMware piece, something that you definitely would not have seen under the old EMC Federation model. So Michael Dell absolutely having his strong footprint here. Dave's done a lot of analysis talking about things like Pivotal getting pulled in and the like. So many different acquisitions. You know, Pivotal came out of VMware and Carbon Black, Boston based company. So many different pieces here to get them talking about applications and where VMware, the company, sits in this multi-cloud world where they're trying to be, you know, maintain their relationship with their customers. Let's get into the analysis on the whole ecosystem. I really want to dig into the work Dave, you did and the team did. But let's just go through the keynote first. So my personal opinion was it felt like, I'll give them a C plus Pat because it just didn't, it didn't have a lot of meat in my opinion. It felt like there was too much tech for good. Although super important to have that mission-driven I think it's really valuable as the market tends to look at tech as bad actors. I thought that was addressing that was a positive thing. But it felt too much. I didn't see a lot of specifics. It felt stew is, and Dave is, if they were hiding something, they weren't putting a lot of, it didn't see like there was a lot of substance coming out specifically around how Kubernetes was going to be impacted. Specifically how Kubernetes is going to sit within the VMware ecosystem product specifically. I just didn't feel like the product side was there. Well, you know, what I'll say is, John, in general, I agree with you because day one usually is here's the company vision. And if the vision is Kubernetes, well, we've been hearing Kubernetes for a bunch of years now. Kubernetes is not the answer. Kubernetes is an enabling technology. Joe Beta, who we have on stage, you know, we hit him on the cube and he's like, look, Kubernetes is not a magic layer. It's this thin layer that's going to help us go between clouds. You know, getting into some of their future projects is something I usually would expect on day two. The vision of VMware as a company, it feels like we're in that transition from who do we want to be? Yeah, tech for good, that's great stuff. You know, Pat has a long history of talking about, you know, that moral compass that he has and wants the company to live that, which is a good change from many of the Silicon Valley companies, but you know, I didn't get a strong feel for their vision and it was not deep on the product. It's like they were conservative. They didn't want to actually put a position down there because I think everyone in the hallway that I talked to wants to know how Kubernetes is going to impact vSphere, for instance. Is it going to change the makeup of vSphere and what's the impact on the product side? They had that stat about bare metal being 8% in VMs. I was like, okay, a little bit biased maybe there. I mean, so are they tiptoeing, Dave, you think? I mean, the spend numbers show that if they can just hold the line for 24 months, then the new trends won't take away some of that license. I mean, is it a technical thing or is it that you think they don't have there? Here's the thing, I want to go back. I do want to give VMware props on one thing. And you've used this term too. If you go back to 2008, 2009, Paul Moritz talked about we are building the software mainframe. And Pat's been pretty consistent about that. They used it, they said any workload, any app, what's different today than back then is you said any workload, any app, any cloud. Really, cloud wasn't as much of a factor back then, but that vision has been fairly consistent. And to answer your question, VMware spending remains strong. You know, the spending data that we shared with ETR on SiliconANGLE yesterday and today is that 41% of the VMware install base is going to spend more in the second half of 2019 and only 7% are going to spend less. Okay, that's a real positive. But at the same time, the data clearly shows that cloud is negatively impacting VMware spend. And so that's a real threat. So multi-cloud, Pat said today, technologists who master multi-cloud will own the next decade. He's talking to his audience. I'm not sure I agree with that. I'm not sure mastering multi-cloud is what's going to be the determining factor to own the next decade. Well, I mean, I'm sticking with my position that multi-cloud is not a reality. I think it's really more overhyped. And actually just started to be hyped and probably will be then overhyped. And then seven years from now, we'll start seeing multiple clouds truly interoperable. But I think multi-cloud, as we've been finding on theCUBE, is simply enterprises have multiple vendors or multiple environments that happen to be those vendors that have cloud. So I don't think it actually is an operating model yet. But again, just like on theCUBE, 2012 stew, we talked about hybrid cloud. I called, I asked Pat Gesselin, was it a halfway house of the way station? He had a conniption. So John, here's what I'd say. Number one is customers today absolutely have multiple clouds. But for multi-cloud to be a reality, multi-cloud must be greater than the sum of just the pieces that it's made up today. And absolutely we're not there today. VMware has a strong reason why it should be at the center of that discussion, but they're going to be right at loggerheads with Red Hat and Microsoft and Google and Cisco in that kind of debate at the multi-cloud. And we had a story on our special report on SiliconANGLE.com, check it out. It's called coping with multi-cloud where coping was by design. Coping is a mechanism used to deal with uncertainty, coping strategies is what CIOs are going to deal with. But read that post. But in it, I kind of see, I mean, I kind of agree and disagree. We have two perspectives, Dave developing and I want to get your thoughts with stew on this. CIOs that come from a traditional IT background tend to like multi-vendor things because they know they don't want lock and they're afraid. If you then swing to the progressive side, CIOs for instance, who have a gun to their head in terms of security, they're all saying no, we're betting on one cloud and we'll have backup clouds but our development staff is going to build stacks, have APIs and we're going to share those APIs to our suppliers, cloud vendors are saying, support our specs. So two spectrums. The old school IT guy saying multi-vendor equals multi-cloud and then on the other end, CIOs are going to say I'm going to build technology, I'm going to build a stack, expose APIs and let the cloud support my tooling and not the other way around. Your thoughts? I pulled a quote in my piece that's on SiliconANGLE as well from David Floyer and he was defining kind of hybrid multi-cloud. He said any application service can run on any note of the hybrid cloud without rewriting, recompiling or retesting. My argument would be you're never going to have that North Star without a high degree of homogeneity and there's three examples of high degrees of homogeneity in hybrid cloud today. It's Azure Stack, it's clouded customer and it's outposts, right? So this idea that we're going to have this diverse set of clouds and yet they're all going to run as one, to me, I ask, is it technically feasible and is it practical? Well Stu, Steve Herrod was on with his, he had an announcement, Signal FX, his portfolio company sold on a big deal to Splunk when he was on theCUBE with me last week and he said, one of them looking back on the 10 years, one of them made VMware great, was virtualization allowed for massive efficiencies and improvements without rewriting the apps. The question today's point is, is that a reality? Can we, what's next so that next gain that's not going to require people to rewrite their apps? Well, and that actually not rewriting the apps is where VMware has its strength because I made a joke during the keynote, it was like, you have a VM, insert magic, congratulations, you now have a cloud workload because I just did VMware cloud and it's the same app. But on the other hand, that's actually and my biggest dig on VMware is the long pole and the tent in modernization is modernizing your apps and that is that Tanzu that VMware announced, they're taking Bitnami and Pivotal because we do need to modernize the application. If you have an application you've been running long enough that your users are complaining about it, we need to modernize that. VMware has not been much of an enabler of that, Pivotal? Yes, absolutely, that's what the cloud foundry labs, the Pivotal labs has been doing for years, it is a tough thing to do. That's what the developers we hear at Amazon, they're building new apps. I don't hear modern building new apps at VMware but they are moving in that direction. I have a question for you guys, in John, you in particular but also you, Stu as well, followed AWS probably more closely than any two people I know. Pat said, strength lies and difference is not similarities. I've noted many differences in philosophy between AWS and VMware. They're both winning in the marketplace, we know AWS is growing much faster but AWS doesn't believe in multi-cloud, AWS doesn't believe security is broken, that's VMware's narrative. VMware says it wants to be the best infrastructure and developer software company. It's kind of like AWS is the platform for that. They both want to be the security cloud and VMware said today they have 10,000 cloud data centers and I'm guessing that Andy Jassy wouldn't think that many of those data centers are cloud data centers. Your thoughts on the differences between AWS's philosophy and VMware's narrative and can they both, is there enough market for them both to win? Well, it's strikingly different. I mean, AWS is just in a breed of its own. VMware is hedging and playing their bets. They're kind of putting bets on each horse, right? Interesting enough in the cloud thing, there was no mention of Google cloud. I didn't see the mention there and there was kind of speculation. Wouldn't Oracle be great partnering with Google? That's not a rumor, I'm just kind of putting it out there that would be a good combination partnership given that Oracle's cloud is failing miserably. I think VMware because of the operating leverage in the enterprise has that operational layer down. To me, Amazon is the model of the future because they are clearly born with a DevOps mindset. They have an environment where developers can build applications and they can operate at scale with all the efficiencies of operations. So I think Cloud 2.0 as we're calling it is all about having developers and operational excellence without a lot of disruption or replatforming. So I think that's where the differences are. You have companies that have to work with this world of legacy applications and that requires first lift and shift which doesn't become attractive. Then you add containers and the game changes. So I think containerization really was, I think the seminal moment in the shift where you've got Kubernetes and containers to let the enterprise cloud native guys get in and have an operational framework that takes advantage of the horsepower of public cloud which is compute and storage which is why we think networking and security will be the absolute focus areas for Cloud 2.0 and Amazon is just dominating the dev and the ops and I don't think anyone is coming close. I'd love to hear your thoughts too but I just got to call you out. I don't think Oracle's cloud is failing miserably. I think it's, I wouldn't say it that way. I think their infrastructures and services are relevant and their cloud is all about SaaS but they're just, you know, that's what I think. So go ahead. You know, when I talk, we can debate that some by the time. It's doing great for the Oracle customers but in terms of all metrics, in terms of public and enterprise cloud with multiple environments, non-starter. So there's a bit of a schism out there. If you talk to customers, there are many customers when they deploy in public cloud, all they'll use is, you know, compute, storage and like the identity management and that's it and they'll stop and I talked to KubeCon, many customers that are using Kubernetes so that if they want to hit the eject button but they're all on Amazon today so it's not like they're all fleeing Amazon or doing it but we talked to lots of developers that are deep in AWS, they're using those services, they're using Lambda and they're building it. So how deep will they go? And you know, that's where I look at this VMware offering and it's, if I'm going to take vSphere and extend that with Kubernetes, I saw KubeLum actually in the Twitter stream said, it is, you know, cloud lock-in 2.0 is what we get if we do that because the whole reason VMware originally created Cloud Foundry so that I didn't have to take that entire vSphere kernel and put it everywhere. So it's a nice bridge that VMware has, the partnership they have with AWS is a great strategy, but I still think it is a bridge to an ultimate solution where they'll still use VMware, VMware's not going any way, but that shift of where my applications live and what services I do is going to change a lot over the next three to five years. Let's not lose sight, Dave, of where we are in the industry. I mean, we are at VMworld 2019, we go to re-invent, it's coming up. We kind of live in a tech bubble in the sense that all this stuff is all kind of great skating to where the puck is going to be but if the reality is in most IT shops and again, I use CISOS as a proxy in my mind because they're in the cutting edge of all the real critical nature of security and the impact that harm that could happen to a company. So I look at CISOS as more of a canary in the coal mine for trends than a traditional CIO at this point. Most enterprises are just trying to rationalize Kubernetes generally speaking, like never mind making a centerpiece of their entire architecture. They're looking at their existing environment saying, hey, I got VMs, that did great for me. Server consolidation enabled more efficiencies in that rewriting code. Now what, I got to do Kubernetes and do all this other stuff? How do I spec my VM with Kubernetes? Is it on bare metal? So I think we're way ahead right now on the narrative. I think the reality is that people catch up. That's where we're going to prove is going to come into. That's why the customer survey numbers are interesting. Yeah, let me share. Well, as Keith Townsend has said on theCUBE, VMworld moves at the speed of the CIO. So they're not moving too far ahead of them but they are keeping up with that. Well, let me share some data. Let me share some data. So if you go to SiliconANGLE, look at the VMworld 2019 IT spending survey, containers, cloud, NSX and Pivotal. It's data from enterprise technology research that we analyzed. There's no evidence right now that containers are hurting VMware but then that was the narrative. That containers are going to kill VMware. But long-term, there's real threats there. So that's what the Pivotal acquisition, at least in part, was about. I want to address the Pivotal acquisition because we haven't dug into it a little bit as much as I'd like to see. There's really three things there. One, Pivotal was struggling. You look at the stock price, you look at their buying patterns. You know, the stock was down. Not even close to their original IPO price. So they wanted to get out of the public eye, right? Not be on that 30-day shot clock. The second is it's a hedge on containers. And the third is it's a financial scheme. I mean, I'll call it that. VMware is paying $800 million in cash for an asset that's worth $4 billion. How can that be? Well, they already own 15% of Pivotal. They're exchanging stock, so they're trading paper to Dell in exchange for Dell's 70% ownership in Pivotal, so they pick up this asset. And it's basically a forced migration by Michael Dell, who controls 96% of the voting share. So there's all kinds of inside nuance going on there that nobody's really talked about in the price. It was a great deal for VMware and Michael Dell. It's a very good deal for VMware and Michael Dell. It's brilliant. Let's unpack that on our wrap-up segment. Just with the one piece on that right, because Kubernetes, it was the elephant in the room that was damaging what Pivotal was doing. VMware made a couple of acquisitions. VMware needs to react to that, so it made sense to pull that back in, even if it does go against some of the original mission that Cloud Foundry and Pivotal had to be able to be that cloud native without that full strong tide of VMware. But it's all about building apps, right? It's all about enabling developers. Let's, on that note, let's go around the horn and talk about what we expect from VMworld this year, and then we'll kick off three days of wall-to-wall coverage. I'll start. I expect, and I'm looking for, how VMware and its ecosystem, and who's really deep in the ecosystem, who's kind of independent and neutral, what they're doing with their containers and Kubernetes play, because I think the container revolution that was started with Docker absolutely is very relevant to the CIO and the CISOS, and then how they're using data in their application. So, you know, how VMware wants to position themselves on the control plane, how that fits into NSX. I think containers and the containerization is going to change. I think bare metal's going to be a super important topic in the next couple of years, too. I'm kind of swinging back to my feeling that, you know, hyperconvergence, what it did for server storage and networking, back when you were calling those moves, I think that kind of hyperconvergence mentality is coming up the stack, and I think containers and the Kubernetes chessboard will play out. I think if you, my feeling is, if you don't own a public cloud, you better convince your customers and your ecosystem that the future is in our definition of cloud, which is multi-cloud, and that's what this VM world to me is all about. Yeah, you know, VMware is taking their software state and trying to live in all of those cloud worlds. So, you know, VMware has 600,000 customers, and they want to be the ones to educate them on the Kubernetes containers, you know, your app modernization, but there's a lot of other places customers can learn about this. So, I want to understand where VMware really adds value beyond all of those pieces because all the cloud platforms have their Kubernetes. Right, a lot of other places like the public cloud. I mean, that's where all the action is. It comes back down to Cloud 2.0, dev and ops, developers and operations all coming together with software. It's the queue breaking it down. We're here for three days wall-to-wall coverage here in Moscone North, two sets celebrating our 10th year covering VM world. Thanks for watching. Stay with us for more action after this short break.