 Hey everyone, welcome back. It's theCUBE live at HPE Discover 23, day one of our three days of coverage. Lisa Martin here with Dave Vellante. We're at the Venetian Expo. Dave, I think we're going to be talking about one of your favorite topics next. Super cloud? Super cloud and I wrote a piece recently, desperately seeking repatriation. So maybe these guys can help. Maybe they can. One of our alumni is back with us. Ricky Cooper had a worldwide partner in commercial sales at VMware. And Dave McGrath, Vice President Office of the CTO at VMware joins us as well. Great to have you both. Thank you so much for joining us. Thank you. Great to be here. Hey guys. So Ricky, you've been on before. It's great to have you back at Discover again, back in person. You've been in your position for what, about a year or so now? Yeah. Talk a little bit about what you've gleaned from the HPE VMware partnership in that time. Well, first and foremost, a big thank you to HPE. We won another partner at the year award last night which is fantastic. Congratulations. So I'm here with the team. We got the picked up last evening in a big ceremony. So fantastic news there. So we've been working together. You know, I came here last year. You'll remember. And as I looked around, I heard more and more about GreenLake. And I'm like, okay, we really need to be a part of this. You know, as they were presenting the whole solution, they were talking about, you know, the infrastructure layer, virtualization layer, application layer. They weren't really naming the players in these areas. So I spent a lot of time with the team last year. And I promised them that, hey, we'll really start leaning in here. And I think you saw some great evidence of that during this past year. We signed the GreenLake contract with HPE just recently. We're now working on that whole go-to-market. And then today, great to see you, Ragu, stand on stage with Antonio. Really great for the, you know, the partnership as a whole. And I think that sends a really strong message for the two organizations. Dave, oh. Go ahead. Go ahead, I was just kidding. Dave, you mentioned, Ricky, Antonio, Ragu on stage this morning, talking about GreenLake for VCF. Great to see both of them on stage. How do you see the new solution helping customers on their digital transformation journey, on really trying to figure out what workload belongs where? Cloud, private, hybrid, et cetera. Yeah, I think, you know, for VMware, we understand that customers are on a journey. And that journey started with go cloud first. That became a very chaotic situation for customers. We call it cloud chaos. And fundamentally where we are today is customers are transitioning to a cloud smart strategy. And this really becomes part of a super cloud strategy, ultimately. And for us with HPE, being able to deliver an integrated solution with VMware Cloud Foundation and GreenLake, we can offer customers a performant, secure and economical solution on premises. So delivering local cloud services, supporting infrastructures as a service, and also application development on premises as well. So it becomes a very important component of a super cloud strategy going forward. You know, we get a lot of heat for that term, but I think you understand that it's something more than just multi cloud. And I know you guys have leaned into it pretty heavily. Where for the audience, I mean, multi cloud really was just sort of happened. It was really multi vendor. It's like, okay, we work on this cloud and we work on this cloud. And we also work on this cloud, but it didn't work together. And it was a different experience across clouds. VMware has said, you know, we're going to go solve that problem. We are the glue in the whole, you know, in that whole multi cloud piece, if you like, you know? So that's very much where we position ourselves. Well, right. And Tanzu has been, you know, the underpinning of that. I know you guys can't talk about the Broadcom acquisition, but Hoctan has been very vocal about, look, I really believe in this multi cloud strategy, this cross cloud strategy, and if you can convince him, you know, that's not an easy sell. So anyway, it's a real customer problem, right? And so how do they see this manifesting over the next several years? How do they want to actually, now they got to worry about AI, right? Because everything's AI, AI, AI, AI, but they still have the basic plumbing that they got to solve across clouds. They're worried about, you know, their exit strategies for certain clouds, they want best of breed. So what's their journey look like? Dave even talked earlier on about, you know, the journey to the cloud. We still estimate there's 80% of the companies out there that haven't even begun very much of that journey. Certainly don't have four or five instances, like some of the mature companies out there. So that's even the starting point for us, is that, you know, just to bring people on board to that whole cloud strategy and to give them options, you know, to build out your applications cloud native, if you wish, on premise, if you wish to have that choice is what we're trying to achieve here. And we're bringing more and more of our customers as they come through the mid-market onto this kind of, you know, thinking, this way of thinking that we're designing. So that's the starting point, I would say, Dave. Yeah, I absolutely agree with that. And I would say that VMware strategy to have a consistent approach, whether you're on a local cloud, you know, private cloud, or whether you're at the hyperscale or with a VMware cloud, you ultimately have consistent skills required. So an infrastructure admin, a cloud admin, doesn't have to reskill, number one. Number two, when you look to develop applications, we've reset on Tanzu, it's persona-based outcome focused. So for the infrastructure admin, we provide Tanzu for Kubernetes operations. So we give them everything they need to run a development operation. For the developer, we provide them with Tanzu application platform. That gives them the tools they need to run a secure, compliant, and very performant and efficient application factory from a development perspective. And so at HPE, what's in it for them to be able to offer their customer base through GreenLake, the ability for VCF, you know, to have that multi-cloud option, that's exactly what they were looking for. And for us, you're now starting to see a little bit of a swing, which is our largest global partners. They're all now talking about multi-cloud and what their multi-cloud strategy is. And you know, going back a few years, you'd expect it from the public cloud, from AWS, from Microsoft. You wouldn't necessarily expect it from HPE and from Adele, and now it's becoming their mantra as well. They're going on this journey with us. Well, you can see it in the numbers too. I know you guys have some IDC data. I'm dying to hear it. But you see it in the numbers. I mean, obviously VMware cloud and AWS has done very, very well. But we saw the VCF, the VMware cloud, the sort of hybrid cloud pick up. We definitely is now seeing GreenLake, you know, pick up, well, the HPE cloud, right? The customers, they think of it as a cloud increasingly. And then the other, back to some of the hybrid stats, our partner, our survey partner, ETR, 61% of respondents, this is 1700 in a drill down, said the majority of the workloads are still on-prem today, but not the 90% that you hear. And that drops to, let's say, 42% in three years. But here's the key number. Only 14% of organizations are all in on the public cloud, just 14%. And when you ask them, what's that going to be in three years? The number's flat at 14%. So hybrid is the norm. Everybody's been saying that for a while. But so what are the IDC numbers saying? I think what you're seeing is, you're starting to see stabilization. The numbers you just quoted show stabilization in customer strategy. And to us, that's supporting a cloud smart strategy. Now, when you look at repatriation, data we're hearing from IDC says 60% of customers that they surveyed are looking to repatriate some of their workloads. So- Are already repatriation. It's already happening. It's already happening for multiple reasons. So I think you're looking at an environment where customers are saying, what's the right place for me to place an application workload? And what are the drivers? Performance, data sovereignty, governance risk and compliance issues. You go right down the line, economics, right? What's the right place to place that workload? And do they have the flexibility to do it seamlessly to move those applications around as they need to? Why are they moving back? What is, you said, for a variety of reasons? What are some of those reasons? Yeah, I think it's going to be cost. It's going to be governance, risk and compliance. It's going to be around data sovereignty and maintaining control of their data. Those are big drivers. And let me give you a few reasons as to how. You're now seeing this whole explosion of MSPs. Before we didn't have that ability to host in a different way, to come up with alternatives. It's not just on-prem and it's not just our public cloud. It's also the MSPs now, the co-location providers. They've all matured a great deal. So we're starting to see that. The other piece that we're beginning to discover ourselves at VMware is you look at a product like ARIA and Cloud Health that's given you that transparency, that single pane of glass to see where your applications sit, how much it's costing you, as Dave was saying, the security link to that, everything else, giving you the data to make informed decisions. And I think it's been a surprise to actually go down and drill into the cost of what it's costing you to run on the public cloud. But it all comes back to, there isn't a right or wrong answer, it's choice. Yeah, so I don't, for our audience, anybody who follows Breaking Analysis knows I've been a real skeptic on repatriation. So I'm not trying to gaslight you, but I'm open-minded. Up until recently, we never could really see it in the numbers. In the simplest metric, we were talking about this before, is Charles Fitzgerald, we call him Fitz. He's an amazing guy, he does the platform economics blog, he has this thing called a repatriation index, and it's broken a three-year trend. It's a very simple, it basically takes the revenues of equinics and digital realty and divides it by those of AWS, and it broke a 10-quarter trend or more, actually a three-year trend, it just popped up. Now, of course, he's tongue in cheek, you know, cynic, so he showed a lake with flat, or an ocean with flat, you know, surface. It surfs up, you know, like he's joking, like. Sure. Seeing evidence where people are, I agree with you. I call it the equilibrium. Hot water and cold water come together, you get sort of room temperature, and that's kind of what's happening, I think. Yeah, and the maturity of, you know, I was at digital realty for many years, and the maturity of those types of organizations, the Equinex, they're really now beginning to understand much more about the data, much more about the customer drivers, rather than just power space calling, let's sell real estate here. This whole piece is matured, you know? As we are seeing maturation, evolution, customers, you know, evolving their businesses, also the partner and vendor landscape are as well. You talked a little bit about the MSPs. Yeah. Talk about some of the changes that you're seeing with DISTYs, with GSIs, what does that look like? Well, it's huge, I mean, so we're going from, we're going through this right at this very time, you know, going from a perpetual motion into more of a SAS motion, you know? This has been a transition at VMware for a period of time, making our products available via that SAS motion. And our partners have been through this for many years with Microsoft, with Adobe, 10 years back, 12 years back. So they're already, we're learning a lot from them. Partners are the star of the show in this piece, you know? So they're now looking for, okay, I was earning good margin on some of these perpetual deals, the larger the deal, the more rebates I was getting. How do I now look at my profitability? How do I get involved in areas like services in customer life cycle management? This kind of stuff. How do we, VMware, start putting more of the business into the hands of the partners? So we've just opened up our commercial division to be partner-led, and therefore increasing the rebates and the incentives that we're giving to our partners to take over that piece for us. We're selling software. These guys are really very well-equipped with the customers to offer, you know, a bigger solution. And we're, you know, our estimation is you get a five-time strag with some of the hardware vendors that we work with. So their profitability is what's of interest to us. We've got a solution, or we've got a part of a solution that they're trying to sell. With the distis, they're now aggregators. They want to be an extension of yourselves for. So, you know, you're opening up in new countries. They'll give you the manpower. They will train everybody. They will make sure everyone's certified. They're taking on a lot of that strain. They've been doing that again, you know, for many years with the likes of Microsoft, et cetera. So, there are lots of different things happening in marketplaces opening up, not just with the, you know, the web scale, Amazon's and Microsoft's, but also now with the likes of TD Cinex and with Arrow and Insight. And, you know, a lot of those guys, Ingram, they're all growing in very different ways. I want to read a quote from you from a head of IT at a U.S. city. And I want to get your reaction as to how VMware and HPE, you know, might help solve this conundrum. And the conundrum is this. He said, this individual said, we made sure that we adopted a multi-cloud, you know, strategy. So, they've got number of players. They got Azure, AWS, Google and Oracle. So, we have the ability to use any of those pretty much for anything that we need to based on a set of requirements. So, he's talking about best of breed. Then later on, he says, but if you look at the balance of people that we have to apply to this, we can't have experts and senior people in every one of these clouds. So, we got to pick one or two that we want to focus on. And so, his conundrum was, I want best of breed. I want to reduce my risk, but it's too complicated for me. How do you guys with HPE solve that problem? It's a common problem, by the way. And what we do on-premises, you know, when we combine VMware's cloud foundation with HPE GreenLake, we offer customers a consistent standard that in many cases they're very familiar with. Managing a VMware environment. We extend that into the hyperscalers with VMware cloud on AWS, Google, Azure, Alibaba, Oracle. So, we give customers choice, they use the same skills. So, he doesn't have to reskill people four, five different times. He can basically, and we give them the mobility for the workloads. We give them automation tools that allow them to move the workloads around. And as Ricky said, we give them the visibility on cost, on observability of the application workloads, down to logs and traces, to be able to root cause performance issues with the application. So, what we're doing, Dave, is we're giving them all the tools they need, combining HPE GreenLake with their model, with VMware cloud foundation, and that can now extend into a multi-cloud environment and really reduce the amount of reskilling that that customer would need to do. The other thing that's worth mentioning, and Ragu told me this, before we even coined the term super cloud, it was during COVID, we were doing a remote VMware explorer, VM world, I guess it was at the time. And we were talking about the abstraction layer. Again, before we talked about super cloud, and he said, yes, we're doing that, but he said, if they want to go deep, and they want to get into the primitives of each of the individual clouds, we let them. So, basically, it's like, Vittorio says, have your cake, eat it too, and don't lose weight. I'm like, that's pretty good, or don't gain weight. So, yeah, but that's the choice. It goes back to our earlier point around the choice as well. You've got a GreenLake experience, and what makes that so very different from the competition is, it's the customers like the public cloud experience when it comes to how they pay for that experience, the fact that you can have an SLA, and pass off the SLA, you don't get involved in the choice of what service it runs on, what storage it runs on. It takes the complexity out of all that. GreenLake is turning up and saying, hey, you can have that experience on-premise, and I think that makes a very big difference that our customers, our joint customers, really have been looking for. Talk a little bit about outcomes. You've talked about the need to not rescale, which is huge for organizations on so many different levels, but what are some of the outcomes that businesses can expect with this consistent experience that will allow them to, I imagine, faster times of market, identifying new revenue streams, what do you think some of the big impacts are going to be? A huge part of it is time to value. So, you know, the half billion applications that have been developed in the last decade, another half billion more coming in the next decade, you need to be able to rapidly deploy and achieve customer value as quickly as possible. So if I'm able to deploy basically wherever I need to to meet the performance, compliance, economics for my application workload, and do that seamlessly, and then decide, well, I need to burst over to this cloud, I need to make movement, this is a case to say, I need an abstraction layer that's consistent, versus saying I've used local data services, and now, or whatever those services are, and now I need to actually refactor the application, right? So our strategy is abstract be consistent. You have less need for heterogeneous skills, you can have consistent skills, you can run more efficiently, and you have the ability to have more mobility and more flexibility. Big impact there, and I'm also hearing cost dialing down. Absolutely, yeah. Because it will give you the ability to look at the data, you know, and assess that data, and if the data is low importance, okay, we can put that in a cost effective environment, if it's a great deal, more value, then okay, we can look at how we, what's the best, most optimal place to run that? So it's a big deal having VMware, that stack inside of GreenLake, and we saw the success it had inside of the AWS, you know, VMware cloud on AWS. What kind of uptake do you expect here? Could you just give us a general sense as to how you see that curve, like the timing, is it going to be sort of midterm, you know, near term, midterm, long term? What does that trajectory look like? I'm expecting rapid growth here, and I'll tell you why. We have a mature, resilient solution, combining that with GreenLake's model. I think, you know, essentially we're a position now with HPE's GreenLake ecosystem to really move quickly and deploy together very rapidly. So I'm very confident in what we have on the truck today, and that that's going to enable us to really move quickly and see that become a real growth vector for both HPE and VMware. Yeah, a new couple that with the sales organization at HPE and how we can leverage that and gain that scale, and the partner ecosystem that they have. You know, so there's partners we coexist with, I think there's around 100,000, but equally there's new partners for us to go together, hand in hand, to address those partners. And I think as well, you know, the take up, we've got a 20 year partnership plus that we've been talking about for many, many years, very in depth with, you know, areas like vSphere, which gives you that base, now to really start to ingrain ourselves in their solution, where they're succeeding very well. I think it's a, you know, a privilege, certainly for us, VMware to be a part of that motion. What's been some of the feedback since Raghu and Antonio were on stage this morning? I'm sure you guys have had customer meetings, partner meetings, but just give us some of that feedback. I'm sure there was a lot of excitement. Very positive. You know, it's been quite a few years since VMware CEO has been on stage here, and it is a, I think, a bellwether event, and it's announcing a very significant capability. And so, nothing but excitement. We've been with customers and partners all day today. We've seen it on social media all day today. We had a discussion with you earlier. I looked afterwards and there's a real buzz, real excitement, because it sets a statement, you know? And I think they're coming together of the two great organizations. In a new year, there's a lot of excitement in a new area, really, for us to go and explore together. This sends a really great message. And how are customers engaging? Either side, HPE, VMware, from a sales partnership perspective? From a sales partnership perspective, how are customers engaging? Well, this is all just brand new to us. So, you know, we're building out that go-to-market now. You're going to hear more and more about that over the coming months. So, you know, very excited about the announcement. Now they want to see it available. Okay, when can we get moving on this? So, that's going to fall to us to make sure that we get this up and running as quickly as possible. Might we hear more at VMware Explorer in August? You can count on it. All right. We'll be there. We will be there. Yeah, yeah, yeah. Excellent. Ricky, Dave, thanks so much for joining Dave and me on the program today. Thank you for having me. Congratulations on the moment and the excitement, the announcement, and we look forward to seeing you at VMware Explorer in just a couple of months. Absolutely. Thank you very much. You will be at VMware Explorer as you probably already know. For our guests and for Dave Vellante, I'm Lisa Martin. Stick around our next segment up next with Dave and Rob. Be right back.