 Hi everybody, this is Dave Vellante. Welcome to the special Wikibon community event. VMware, VMworld 2018. Strong momentum, but still choppy waters. How can you say that, Dave? How can you say strong momentum, but still choppy waters? The data center is on fire. We just came back from VMworld 2018. The ecosystem is exploding. Revenues are up. Profits are up. All looks good. Well, we agree in general, but theCUBE was there, we had two sets. We interviewed over a hundred guests, 75 segments on theCUBE. And right now what we want to do in this special community event is share with you our community and hear from you what you thought of the event, what we thought of the event, and let's collaborate and come up with some conclusions. So, what were the key points made on theCUBE by Michael Dell, Pat Gelsinger, Ray O'Farrell, Andy Bechtelstein, and a number of other folks, customers, practitioners, technologists, and ecosystem partners on theCUBE. What did they say, and what does it mean for users? AWS and VMware, a big theme on theCUBE last week, was is the AWS VMware partnership a one-way trip to the hotel, Cloudifornia, or is it a boon for the data center? What about AWS with RDS, the database on-prem? What does that mean? How effective will it be? What does it say about AWS' strategy and what does it mean for VMware and the ecosystem? What's VMware's play at the edge? What about containers? Containers are supposedly going to kill VMware or hurt VMware's momentum. What is the community? Think about that. And what about Dell's new capital structure? Dell is going public again. It's taking an $11 billion dividend out of VMware's $13 billion of cash. Is that the best use of VMware's cash? And is VMware constrained in terms of its R&D going forward? We're going to address these and other items with the following format. We're going to show you now highlights from VMware, VMworld 2018 from theCUBE, and then we're going to come back in the crowd chat and discuss, so thanks for watching everybody. Take a look at these video clips and these statements from senior leaders, and then we'll go into the crowd chat. Welcome back to theCUBE, I'm Lisa Martin with Dave Vellante, John Furrier, Stu Miniman, at the end of day two of our continuing coverage guys of the VMworld 2018 huge event, 25,000 plus people here, 100,000 plus expected to and be engaging with the on-demand and the live experiences, our biggest show, right? 94 interviews over the next three days, two of them down. Been evolving over the years, I mean at VMworld's core, it is a technical complex, right? So I would say the base, the volume of the program is still catered towards a real hands-on technical, you know, practitioner and middle management. But we are seeing more business executives come, they want to know what their teams are exploring, they want to understand vision, and I think VMware's value proposition to enterprises is growing, and therefore it's starting to be more of a business conversation. So that is a segment of the audience that is growing. Good question, I think first of all, the Amazon news already gets on VMware on-premises, is earth-shattering news at many levels. One, Amazon's never done it before. Two, I think people are going to start to understand this downstream a little bit later, but it's going to have a significant impact on the opportunities in multiclouds. So, you know, I think Amazon's relationship with VMware is very deep at the level of technology and stakeholders at the top of both companies. Andy Jassy and Pat Gelsinger are both in this to win it together, it's obvious, and anyone who says otherwise really isn't really informed. They're deep in the technical side, they have management at the top approving this, they're going to market together in the field, there is legit synergy and they're going to win the long game. Gelsinger's making the big bet, and remember, three years ago Pat Gelsinger was under the gun, you know, what his role is going to be, people were, you know, nervous about their cloud. Look at VMware botched the cloud, okay? And they're kicking ass right now with cloud. So they made the right moves, they steered the ship away from the rocks, they're out in the clear sailing, love their strategy. Kino with Gelsinger was very specifically around the generational shift around VMware and the industry. He went through the bridging, and I love the cleverness of the storytelling. Bridging tech trends have been of VMware ethos. He talked about the history, servers, ESX, BYOD, workspace, network, NSX, cloud migration. That was their kind of initial private cloud, but right now it's multi-cloud and profit and people doing tech for good. So I think Gelsinger is laying down the generational shift that VMware is going for, and they're making the huge bet on AWS. So it begs the question, what about Azure? What about Google? Is VMware going to be a one cloud game? Are they going to bridge to other clouds? That's going to be a very interesting tell sign because the relationship on stage with Andy Jassy and Pat Gelsinger is pretty significant. I think it's going to be a hard thing to go in to other clouds saying, I want to date you too. Yeah, that was very interesting. Last year, Pat said that networking has the potential to be the next decade bigger than what virtualization was for the Wave, and we are seeing good movement. I think I said it on our intro this morning, but when NYSERA was acquired, the promise that we as a networking industry felt that they could be that interweaving kind of glue for multi-cloud, and it kind of got hidden for a few years while they built out NSX. They made it really enterprise ready. They did really well with adoption, but now that vision is kind of back in full and that is what VMware can ride to not just be virtualization. vSphere's great, they'll drive that for a while, right, the networking and security pieces is why VMware has the right to sit at the table in this multi-cloud discussion. Now, it was funny, I interviewed Keith Townsend and he said, VMware, he's now a VMware employee. VMware is the best position to help customers through that transformation. I said, hey Keith, I hear you. I saw the tweet from two weeks ago. But Microsoft and Amazon and a whole bunch of other management people might kind of step up and say, hey, we've got a right to be at the table too. All of course, all the legacy guys are trying to figure out, okay, they're cloud strategists, but now all the major cloud guys are betting on-prem. We saw at Google Next, the on-prem strategy was certainly Azure with Azure Stack. Oracle has bets in cloud and with cloud customers got bets for on-prem. Now AWS throws a sat in the ring. Jim Kobielus, you sat in the analyst sessions all day. What did you learn? What were your big takeaways? What do we need to know? Well, first of all, it's clear that the AWS partnership VMware is all in with that. Look at the past year since they announced in terms of customer adoption, partner enablement, the sheer variety and depth of the integrations that these partners have put together, including today, it's pretty serious in terms of VMware's investment in that relationship deepening that to the point where there were no splashy Google partnership announcements or IBM or Oracle or anybody else. It's clear that they're really, they're each other's hybrid cloud partner, par excellence. I don't think either of them is, I don't think the VMware is going to go anywhere near as deep with the other public club providers anytime soon. But really my takeaway today from the analyst session was that VMware is going seriously to the edge and it's really interesting. They're building an appliance to take their entire stack and bring it down to edge deployments and then distribute that around and then manage that for customers on a global basis with automation. There's going to be AI and machine learning built in so that VMware will be able as a managed service to drive the software defined data center all the way out to the edges for its clients. And they're putting themselves in a position where they can actually, that could be their next major revenue producing business as the traditional hypervisor VM world begins to wane in terms of putting CUBE and serverless and so forth on an appliance, putting it on the client site, managing it for them and then white boxing it potentially to other cloud providers to provide to their customers. This could be in the future, coming in the next year or two, something that can propel VMware to the next stage where they are, everybody's preferred, multi-cloud management, edge management partner. Provide a slightly different version of one of the things you said. I definitely agree. I think what VMware hopes to do and I think they're not alone is to have AWS look like an appliance to their console, to have Azure look like an appliance to their console. So through VMware, you can get access to whatever services you need, including your VMware machines, your VMs inside those clouds, but that increasingly their goal is to be that control point, that management point for all of these different resources that are building. And it is very compelling. I think that there's one area that I still think we need more from. As analysts, we always got to look through and what is more required. And I hear what you say about project dimension, but I think that the edge story still requires a fair amount of work. It's a project in place, but that's going to be an increasingly important locus of how architectures get laid out, how people think about applications in the future, how design happens, how methodologies for building software work. David, what do you think? When you look at what is more is needed for you? So I think there are two things that give me a concern. The edge, that's a long term view, so they got time to get that right. But the edge view is very much an IT view top down. And they are looking to put in place everything that they think the OT people should fit in with. I think that is personally not going to be a winning strategy. You have to take it from the bottom up. The world is going to go towards devices, very rich devices and sensors, lots of software, right on that device, the inference work on those devices. And the job of IT will be to integrate those devices. It won't be those devices taking on the standards of IT. It'll be IT that has to shape itself to look after all those devices there. So that's the main viewpoint, I think that needs adjustment. And it will come, I'm sure, at the time. But as you said, there's a lot of computer science, there's going to be an enormous amount of new partnerships that are going to be fabricated. Exactly. What to make this happen? I want to see their roadmap for Kubernetes and serverless. There wasn't, last year they made an announcement of a serverless project. I forgot what the code name is. Didn't hear a whole lot about it this year, but they're going up the app stack. They got a distribution. They need a developer story. I mean, developers are building functional apps and so forth and they also containerize. They need a developer story and they need a serverless story. And they need to bring us up to speed of where they're going in that regard. Because AWS, they're a predominant partner. I mean, they got Lambda functions and all that stuff. That's the development platform of the present and future. And I'm not hearing an intersection of that story with VMware as a story yet. Actually, before VMware was serverless, it was workstation. That's right. And we were an investor of VMware and we thought that was cool. Anyway, so fast forward to 2013, we go private. 2014, Joe Tucci and I restart the discussion that we'd had earlier back in 2009 about combining together. 2015, we announced it. And we thought that if we could combine everything together that customers would really like it. And thankfully, as we found, that's been true. It's just been more true than we thought. And the innovation engines are cranking on high, 12.8 billion dollars in R&D invested in the last three years. And you see here at VMworld and at Dell Technologies World the strength of the roadmaps. And so every turn of the crank, we're just getting stronger and stronger. We never believed that everything was gonna go one place or the other, okay? It's actually great that the edge is booming. Now, if you said, did you know that five or 10 years ago? No, I didn't really know. But you could kind of see some things starting to happen. But look, distributed computing will be even more distributed in the future. For your commentary, people, the conventional wisdom on that deal was it was a one-way trip to the hotel cloud of Fornia. And it's become a boon for the data center. Why the misconceptions? Why are you confident that it continues to be a boon for both companies? Yeah, and hey, we got to go prove it. At the end of the day, we have to go prove it. But the analysts were sort of viewing, hey, there's this big sucking sound in the public cloud where everything congregates, point one. And three years ago, that was the prevailing wisdom, that that was going to be the case. Now, everybody, like I had the big CIO who basically said, hey, I got 200 apps. I tried to move them to the public cloud. I got two done. I can build new things there, but this moving was really hard until we had the VMC service. So this ability to move things to the cloud from the cloud, there's what I call the three laws. The laws of physics, the laws of economics, and the laws of the land. The laws of physics. Hey, if I need 500 millisecond round trip to the cloud and the robotic arm needs a decision in 200 milliseconds, ah, physics, economics. I'm not going to send every surveillance picture of the cat to the cloud, bandwidth still costs. And then laws of the land, where people say, governance issues, GDPR, other things. So because of that, we see this hybrid world, and particularly as edge and IoT becomes more prominent, we fully expect that there's going to be more of that, not less. And as I showed in my keynote last year, this pendulum of centralization and decentralization has been swinging through the industry for 40 years. And we don't see that stopping. And edge will be a force of more data and compute pushing to the edge. And that's obviously part of our keynote as well. John, we sat here analyzing this VMware-AWS relationship. Is this a one-way move to the public cloud? Is Amazon just going to take those 500,000 VMware customers and get them all to migrate? Even in the start of Andy and Pat up on stage, Andy goes, the number one use case is migrating your applications to the public cloud. And Pat's like, and the number two use case is bursting and on demand and things like that. So it's an interesting dynamic between what we call, you got the gorilla in the data center of VMware and you've got the 800-pound gorilla in the cloud, fast as a cheetah as Dave Vellante says in AWS. But RDS on-premises, this is a big deal. I tell you, I'm surprised. Most people here are surprised. There'd been discussion. We were at some shows recently when they're expanding the snowball use case. Snowball's great. It's edge. It's helping to migrate things to the data center. This is an Amazon service running in VMware on-premises, didn't think that we would be seeing this from Amazon, whose goal was we thought to get 100% of things in the public cloud. Decisions on cloud, Andy, Jassy comes on stage. You're personally involved with Andy on the Amazon announcement, which is, I think people don't know how big that's going to be, but VMware and Amazon are seriously deep in a partnership. This is a big deal. This feels like a little wind-tell kind of easy synergies across the board. Well, in some ways, we'll say number one in public coming together with number one in private, that's a big deal. And yesterday's announcement of RDS on-premise, to me sort of finishes the strategic picture that we were trying to paint, where it really is a hybrid world, where we're taking workloads and giving people the access to this phenomenal, rapidly growing public cloud, but we're also demonstrating that we can seamlessly connect it to the private cloud, and now we're bringing services back from the public cloud onto the private and your own data center. And that's so profound because now customers can say, oh, I like the RDS APIs. I like the RDS management model. I can now put the data wherever I need it for my business purpose. And that hybrid bi-directional highway is something that we're uniquely building with Amazon. And hey, obviously we're working with other cloud providers, but they are our preferred partner and we're pretty thrilled. Customer's going to deal with the multiple clouds. I mean, is there an interoperability framework coming? Do you see a real disruptive technology enable that'll have that kind of impact that TCP spawn massive opportunity in wealth creation and startups and functionality? Is there a moment coming? So TCP, of course, was the proper layering of a network between the physical layer, layer one, layer two, and the routing or the internet layer, which is layer three. And without that, you know, this is a back to the old end-to-end argument. You know, we wouldn't have what we have today on the internet. That was the only rational way to build an architecture that could actually, and I'm not sure if people had a notion, you know, in 1979 when TCP was invented that it would become that big. They probably would have picked a bit bigger address space, you know, but it was not just the longevity, but the impact it had was just phenomenal, right? Now, and that applied in terms of connectivity and how many things you can understand about network to talk from point A to B. The NSX level of network management is a little different because it's much higher level. It's really a management plane, back to the point I made earlier about management planes, that allows you to integrate a cloud on your premise with one at Amazon or at IBM or in the future Google and so on in a way that you can have full visibility and you see exactly what's going on, all the security policies, like, this has been a dream for people to deliver, but it requires to actually have a reasonable amount of code in each of these places, both on your server, it's not just a protocol, it's an implementation of a capability, right? And VMware NSX is the best solution that's available today and that I can see for that use case, which is going to be very important to a large number of enterprises, many of which want to have a smooth connection between on-premise and off-premise and in the future to Edge, Telco and other things that won't even run a VM environment today, but that will allow them to be fully securely linked. I think so we are seeing a lot of customer energy around what we're doing in storage a little bit here. You know, there is huge momentum behind product like VCEN and our customers are truly embracing HCI in very mainstream use cases and we've seen customer after customer have gone all in, meaning they're taking HCI and made a determination to run that for all of their virtualized workload. So very exciting time, but what's more interesting is their expanded view on what HCI is about. You know, certainly we started with virtualizing compute and storage together on servers, but we're seeing rapid expansion of that definition. You know, we've been a believer that HCI is fundamentally a software-led architecture. I think now there is more recognition that. And it's also going from just compute and storage to the full stack of the entire software-defined data center. It's expanding into the cloud, as you've seen from VMCI AWS, it's expanding to the Edge, it's expanding from just traditional apps to cloud native apps. You know, we've announced beta for, you know, VCEN to become the storage platform for Kubernetes in a vSphere environment. So a lot of exciting expansion around how customers want to see HCI. And if you look at HCI, hybrid cloud, SDDC, the boundary among these three is not very, very clear. I think they're all converging to work something that's very common. That's been proposed. Dell came out a while ago and sort of floated this idea of a reverse merger, street-puped all over it. And then all of a sudden they came up with this other idea of, I call it the independence vig. Okay, VMware is having to pay an $11 billion dividend, $9 billion of that, is going to go to DVMT shareholders to clean that up. And you're going to get cash or pro-rata shares in the new Dell. Okay, so the question on the table is, will that constrict VMware in any way in terms of its ability to fund R&D? My quick thoughts are, short-term, no, long-term, Dell has to walk a fine line between taking VMware cash, paying down its debt, and funding the future. Your thoughts? Yeah, so here are my thoughts on this. So I think that, first, let's explain to the people what you just talked about. I'll translate. What you just described is Michael Dell's going private, $60 billion, whatever the number was, debt deal he did to buy Dell EMC, so he has all this debt. Debt is like heroin. You get addicted to it, it's hard to get straight from that. So you got to pay the down the debt. He's been knocking down the debt and big bag of money called VMware's sitting there. As long as VMware's throwing off cash flow, that's going to be a key consideration. So the independent VIG, as long as there's cash flow coming in, I think it's fine. It's not going to really hurt it. But I think Dell has been brilliant in this because he's been essentially land grabbing the computer industry and the infrastructure side and he's going to make more money than ever before. He's going to pull it off and the only thing that could hurt him is either some sort of force major downturn or revenue not coming in from some of his sources, whether either it's a public offering acquisitions he's trying to sell off and or VMware sputters, which I don't think it will, not with the Amazon, even if they just go all in on Amazon and blow off all the other clouds, they'll still make a boatload of cash. I think it goes down in history as one of the greatest trades ever. I mean, it's just phenomenal. Look, I mean, Dave, we talked about when EMC bought VMware, it was one of the greatest acquisitions of all time. 635 million, now $60 billion valuation. Dell buying EMC, most people were like, I'm not sure what's going to happen but Michael will make a lot of money. VMware is doing so well that they can now fund Dell going public again based on this deal. So it's been one of the most fascinating financial orchestration pieces to be out there, but. You ever feel constrained writing a $11 billion dividend? You ever feel constrained in terms of your ability to fund the R&D necessary to do some of those things? No. Great. Ray O'Farrill said the same thing off camera. We'll ask you on camera. Yeah, and generally, you know, I mean, am I constrained in how much R&D I can do? Well, hey, I got a budget. You know, we build a P&L, we communicate it to the street, and every day possible, you know, I'm pushing to grow the business faster so I can shove more dollars into one of two places. More dollars into R&D or more dollars into sales and customer facing, right? You know, and if Robin Matlock is here, you know, I keep giving her the, you know, the table scraps at the end of those things, but, you know, build products that are innovative, radical, and breakthrough, sell products and support our customers using them. That's the two thing. It's coming. And I think it's a really interesting point that after a lot of conversations with a lot of folks saying, oh, AWS, it's all going to go up to the cloud and wondering whether that also is a one-way street for VMware customers, that now we're seeing it's much more of a bilateral relationship. It's a moving it to the right place. And that's the second thing, the embracing of multi-cloud by everybody. One cloud is not going to do everything. They're going to be SaaS clouds. They're going to be multiple places where people are going to put certain workloads because that's the best strategic fit for it. And the acceptance in the marketplace that that is where it's going to go. I think that again is a major change. So hybrid cloud and multi-cloud environments. And then the third thing is, I think the richness of the ecosystem is amazing. The going on the floor and the number of people that have come to talk to us with new ideas, really fascinating ideas is something I haven't seen at all for the last three, four years. All right, we've heard from some of our guests on theCUBE and you've heard our team's initial analysis of the news from VMworld. Now we want to hear from you. Please hop into the crowd chat below, give us your feedback, want a community discussion and let's hear what everybody thinks about VMware and VMworld 2018. Once again, thanks so much for joining us and look forward to the conversation.