 Live from the Computer History Museum in the heart of Silicon Valley, it's theCUBE. Covering OpenStack Silicon Valley 2016. Brought to you by Morantis. Now, here are your hosts, John Furrier and Lisa Martin. Hey, welcome back here. When we are live in Silicon Valley, this is Silicon Angle Media's theCUBE, our flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier with my co-host, Lisa Martin. Live at Silicon Valley for OpenStack, Silicon Valley, our next guest is James Staten, who's the Chief Strategist for Cloud and Enterprise at Microsoft, welcome to theCUBE. Thanks for having me, good to be here. Great keynote up there talking about obviously hybrid cloud like Microsoft, got to believe hybrid, VMware, Microsoft. It's important because the data center is where everything lives in Microsoft, customer base, but the cloud is big. Azure's been doing very well. It's coming up on the radar. It's pretty, obviously well known. The success it's been having. What is the success of Azure? Describe for a minute why it's being successful and how's Microsoft bridging, moving their customers into either the Azure public cloud and or hybrid because you guys got to do both. You got the trains running on the traditional business on prem and the growth of the cloud. Talk about. Sure, well the big attraction to Azure has been that it provides you with something you can't normally get on your own, which is the ability to have access to thousands of resources on a per hour basis to drive the applications you're looking for. But more importantly, it's not about just IaaS, it's actually about the collection of additional application services on top plus our SaaS applications. And so like Office 365, which most people are moving to now in some degree, that also runs on Azure. It ties into our platform as a service, makes it easy to extend and add new capabilities to that. And then the Dynamics family adds a series of back office applications that also run out there. And so it's really about empowering everybody in the organization. Someone who just wants to consume SaaS, someone who wants to just write code, someone who wants to configure the operating system below. And of course people who want to use Linux and want to use open source and everything in that architecture. So that's why Azure is having so much success because it's not just IaaS, it's not public only. It does a lot of connections to the resource you have on premise. And we also let you move to the cloud at your pace. So if I want to move certain applications but a bunch is going to stay on premise for whatever reason, we want to empower the connections between the two and so that you can get the value from both. And that's a huge part of our strategy, which is also why we didn't kill Office on premise. Because a lot of customers want certain parts of Office on premise and they want all of Office in some cases, we should not be forcing them into the decision that they're not ready for. Satya Nattella, a CUBE alumni by the way who was on the CUBE before he became CEO, obviously has a cloud DNA, loves the cloud. Pretty obvious when he came on board as CEO was there to move to the cloud. So it's been great to see the run there. You had mentioned a tweet earlier about how legacy code isn't the only reason why hybrid clouds viable. And then you, there was a tweet here that says apps we are building, you said apps we are building need to have compute capability everywhere, said you. Hybrid clouds about the apps you're designing. So this is kind of like the new normal. You've got some legacy, but that's not the only reason it's some underlying probably economics and infrastructure challenges that can be solved. But it's about the new apps. It is, it's about the new apps and putting the right functionality in the right location to give the customer the appropriate experience. And if you think about the IoT and even in the consumer space, there's certain functionality I want in that end device. And I don't want to be beholden to my wifi connection working all the time in order to get that functionality. In other cases, we've got places like healthcare organizations who have to have certain data in the hospital. They also can't rely on, I'm sorry that you're having cancer problems, our wifi's down, I hope you survive for the next hour until it comes back. I mean, that would be a horrible circumstance. And so it's really about putting the right functionality in the right places and meeting the needs of the end customer. So Microsoft is making a big effort to integrate into the open service world. In your keynote, you talked about Microsoft being different than other public cloud companies. Can you share with us your strategy behind being a customer-focused approach and what is Microsoft doing in this open cloud world? Sure, yep. So the big thing for us is to empower all employees to be successful, which means employees with technical skills, with non-technical skills, employees who didn't come with the Microsoft mindset, who came in with their Apple device and running open source and wanted to stay 100% open source. That was sort of like a line that people just didn't do business with us on. And we've been aggressively working to address that problem. And now we're starting to see, we now have on Azure, 40% of the workloads are Linux workloads and are running open source technologies. And so we're starting to really embrace everybody to be empowered in the platform. The other thing about this is, what capabilities can we give to them that they don't have to write themselves? And you've probably heard with modern apps, there's a focus on write as little code as possible, call the APIs of the services that give you what you want. That's another huge part of our strategy. And we believe that it shouldn't be us alone who provides all these services, but it should be the overall ecosystem that does this. And that's why when we talk about connectors and APIs, we're going to expose the APIs to Twilio, to all of the other services that you would want out there so that you can connect to this greater ecosystem. So as you, as the strategist for Cloud, we were talking before we went live that you spend a lot of time with customers. You said 75% of your time with customers, I think that customer-centric approach is essential. Share with us some examples. You mentioned Dartmouth Health this morning. Share with our viewers who haven't been able to come here today. What Dartmouth is doing, how are they an example of embracing this hybrid cloud, this modern cloud world to, in their case, save lives? Yeah, and this has been really interesting because it ties very much into the current Obamacare rules that we're facing right now. Hospitals are being judged by customer satisfaction. They cannot get paid by Medicare if they constantly have a patient coming into the emergency room all the time. And so there's pressure on hospitals now that when a patient comes in and they give them some guidance on how they can improve their health, take their medication on a regular basis, eat better food, get the right exercise, that when they leave, that they actually do that. Well, I can't do that if I wait for them to call me because they're probably going to only call me when it's now, oh my gosh, my left leg is killing me. I'm coming back to the emergency room. And so what they've done is working with us, they built out this thing called ImagineCare that allows them to have a central way of tracking what the patient is doing after the doctor has given them instructions and sent them home. And we know that, and they know, there's no way I can do this if I say, here is the medical device you must wear on your wrist at all times. Here's the phone you have to use and you better have these kind of internet connections or this is going to work. So you have to accommodate the patient where they are on the technology they're using. And that's very much the approach that they took. Now, they also have regulations that say some information you can put in the cloud, some information needs to just stay in the hospital. So if we didn't have a hybrid strategy, this would be a non-starter for them. And we have other customers who are going for the same thing where they're saying the data needs to be where it's appropriate. Our Rockwell Automation is another example in the oil and gas space and sadly in the oil and gas space, you don't make money selling gas anymore. You make it by being more efficient in the delivery of the gas and that's exactly their business. And so they have built out an IoT solution using the Azure IoT Suite on the back end that allows them to anywhere the gas is going to monitor the flow of the gas that's going through and make sure that it's flowing as efficiently as possible because the last thing you want is for, you know, some car to run over a pipe and then gas is pouring out into the street. You want to catch that as fast as possible. Well, if I had to notice that was going on, wait for that to go over the internet, get over to the analytics and bring the command back, how much money would I have lost? So empowering the technology in all the places is really key. But the apps are critical of that. That's an app-specific driven value proposition with reliable infrastructure underneath. Exactly. And so your point on the keynote says that, you know, that it's about hybrid clouds, but apps not the infrastructure. I mean, so in terms of priority, infrastructure has to be there, absolutely, SLAs and whatnot. Okay, so with that kind of thread, do you guys see the infrastructure as a service, possibly OpenStack being part of the Azure stack at some point? If the apps take the priority, you guys are potentially being agnostic on that? Are you looking at OpenStack? Yeah, well kind of going back to your other question, it's about what customers want. And what we have to do is make sure that we can deliver the best experience to them, but do it in a way that's going to meet the needs that they have. Right now what they're saying as a priority for them is I want these services to be able to work in a hybrid fashion, so please make sure the apps can talk to each other at the protocols where please make sure your express routes can connect to all of my data centers and we're working with as many partners there as we can, so we have as much coverage as we can. When it comes to I want it to run on a particular platform, we have to do two things. One is we have to say what is the best implementation so the customer experience for what they're asking for is going to be great. And then second, what is the most needed by the customers? Do we have enough customers who are saying do it on this platform, do it in this area? So it's customer driven at that point. Absolutely. All right, so let me put the chessboard since your strategy at Microsoft, you probably have these chess strategy sessions all the time, so Microsoft's been very aggressive with open compute over the years, so I'm going to kind of bring in two dots to see if we connect it. Facebook has been very successful with open sourcing, a lot of their stuff they're now designing their own stuff, so you can see they're an app company, so they're basically app centric. So if you look at Facebook on one hand and then look at what's going on with open computer, which Microsoft has donated a ton of open source proprietary reference implementations to open compute. Yep. Open stack, is there a connection there? Will we see Microsoft and the chessboard making a move to say, hey, you know what, infrastructure to service, we will endorse open stack and then move up the stack in terms of your app focus? Well, we do already endorse open stack and we did all the work to make sure you could run open stack with Windows Server and with Hyper-B, so we're very much empowering open stack within the ecosystem for our customers. Where it comes down to weaving certain technologies of ours together, that's the part where the customers just have to speak up. We haven't heard them specifically saying they want that. So that's on the table for you guys? Everything's on the table. Okay, so I got to go back now to the other chessboard, which is Oracle and Microsoft, both incumbent, huge businesses, obviously the numbers are staggering, people know to go look up the market cap. Oracle has an Oracle on Oracle strategy, cloud one end to end thing and they're leveraging their strengths. If you have Oracle, they got hardware to end to end cloud on premise and their customers love it, so that's phenomenal. But one of the interesting things I asked them and I'll ask you the same thing is, and I'm sure Microsoft's playing the same strategy, we see that all the time there, using their install-based leverage of Microsoft's environment. Okay, that being said, cloud native is for new Microsoft customers, I asked the same question for Oracle, what's successfully having it in net new cloud native customers? Can you share insight into the success Azure's having with net new customers? Oh, absolutely, yeah. And a lot of that comes down to the platform as a service strategy that we put forth and the empowerment of our ecosystem for all of the modern application architecture, tools and platforms that come on to us. So we're having a tremendous amount of success with things like Azure Functions that allows you to do serverless code that calls a series of APIs. Big difference between us and other people who have a similar capability is the APIs you can call are not only Microsoft APIs, you can call third party APIs from that platform as well. And that's kind of the peak of what we call modern apps where I just write 10 lines of code, I don't manage the infrastructure, I don't even know if it's running on infrastructure, it just runs. When you go a little further down to- So the client wants to use non-Microsoft-related technology, he'll support that via API microservices and whatnot? And programming languages, exactly, yeah. To that same degree, if somebody wants to build on top of cloudfoundry.org, the pivotal version of that runs on our platform and we certified the org implementation that you download would run on top of our platform as well. And we have a lot of companies who are doing that on this platform also. So we very much believe that whatever it is you want to build, you should be able to build on our platform. Now to take this a little further, a lot of the modern apps that are sort of cloud native applications are mobile applications. And as you saw with the acquisition of Xamarin that we did, that is a huge suite and solution for building out testing and ensuring that you have the best mobile applications out there. How committed to read open source? We open source all of that technology. And we're just LinkedIn fitting. I got to ask the LinkedIn question. Oh sure. Or no comment. It's your address book for Azure. I mean, that's a huge acquisition. 26 billion for LinkedIn. What does that all fit into this? Well, a lot of it was about synergies between the two technologies. And I can't go into product plans that we have for that because obviously the deal hasn't closed yet. But as Satya stated, our mission and their mission actually align very well is about empowering all the employees to be more productive. And what we realize of course is that inside of your company, a lot of the collaboration and communications actually happens through office. A lot of the collaboration and communications happens between companies. Oftentimes happens with LinkedIn. So that's a natural place for these two things really should come together. It's a bridge between message busting between apps that are siloed, so to speak. Okay, great. So I want to go in a little bit of a different direction for the folks who aren't here today. Yesterday, John, you referenced a number of times. Martin Casada's keynote. Very interesting from Andreessen Hurwitz who talked about this explosion in developer-centric startups. I read a blog that you wrote recently around hybrid cloud and your thoughts on developers. You mentioned the word empowerment a minute ago, which kind of jogged this in my mind. Talk to us about, as we even heard this morning from some of the folks that preceded you in the keynote, really talking about why design for DevOps. What's your feeling about DevOps in terms of empowerment and how is that going to affect the customer experience when it comes to cloud? Yeah, well, the key thing about DevOps, and the term itself is probably separate discussion, but DevOps is really about continuous integration and continuous delivery, and it's about building the minimum amount of code I need to meet the customer demand, putting it out there, verifying that it works, and then when they have more requests, adding more code and rolling it out as fast as you possibly can. Now, the cloud has always been viewed as very aligned to that, and that's where kind of the cloud-native terminology comes in, because if I'm going to add new code and roll it out right away, I'm not going to wait six weeks for my IT department to set up the machines and do all that. I want to deploy it right now, and so that's where the close alignment lies here, and it helps very much if they have more than just the public cloud to deploy this to. So if you have an IaaS implementation or you have a private pass using Cloud Foundry as an example, I can do that on-premise as well. So now, if I know from a hybrid perspective, oh, this functionality they're asking for is best to done in the cloud, but this functionality here is best done over here. Now I can actually be continuous with my delivery anywhere that I need to be, and that's really important. Now, one of the things that was brought up earlier today on the DevOps front is that DevOps is applicable to your entire business, and then one of the big objections that comes up all the time is, well, not with my legacy applications. Well, one thing we do have to remember about some of the legacy applications is if it's a user experience change you want to make, if it's something that you can do where you change the code every single week, great. But if we look like at an ERP system and how it's going to track transactions or it's going to do e-commerce functionality, probably not going to change that every single day. You're probably going to need to be a little more thoughtful about how you do that. So you have to approach these applications as, okay, what is DevOpsable if we want to use that term? And what do I really need to hold on to the old model for? And one of the things that a lot of enterprises run into problematically is that they will do, they'll misinterpret what Gartner calls bimodal, and they'll say, okay, all you guys over here, you are on a every year change the code mode. All you guys over here change every second. When you do that model, then nobody writing the new applications ever touches the backend, because you guys aren't moving fast enough, you don't even have RESTful APIs, why should I bother with you? And they end up building redundant systems. And that's something companies cannot afford these days. And so if you really want to fix that problem, you have to say, no, we're going to be bimodal in the backend, not the backend is second mode. And the best way to do that is to say, okay, we don't want to change that underlying code of the e-commerce system, but if we put a RESTful API, with an API management layer in front of that, and we expose the services that they can call that will not change the code of the backend or require it, but allow them to move forward. Now, I've got a hybrid strategy that keeps the legacy in play, builds the new capabilities, and makes my customers way happier. James, I really appreciate you coming on theCUBE and sharing your insight. I want to kind of shift to tap your expertise. I used to be an analyst at Forrester, now running strategy at Microsoft, visiting a lot of customers. So you've got a great perspective on both sides of the fence. The number one thing we've been trying to tease out and trying to like laser focus on is where the action is. So digital transformation is the buzzword. Everyone kind of sees that as the new way. Okay, it's obvious. You see Amazon, you see that mobile success. Cloud has obviously got great consumption, all that stuff. Everyone kind of gets it. They got to get there. Otherwise they're going to be out of business. They all kind of get the fear there. Where's the action? I mean, is it the architects? Is it the solution architects? Is it the developers? Obviously the developers are building it, and we saw people saying all new hires will be software folks, and we see a lot of people say that. But where's the action now? Is it the front end developers on design? Is it the architects? Is a retail app might be a cloud problem? Or it might be a data problem. So there's a lot of confusion around that. Can you share any insight into where the action is? Yeah, it's a really important question to be bringing up right now, because where the action actually begins is the line of business. And it doesn't always to begin with developers. And where it has to begin with is your customer experience team. The people who out there are dealing with your customers and can articulate our customers are using these mobile devices. Here's how they're using these mobile devices. Here's the kind of things that would work with them. And so that means we should not do this. We should not do that. Like a simple example, everybody's talking about bots right now. Bots are basically you talking to a computer through text messaging and through Facebook and all those kind of things. Well, if your customers really want to hear certain things that way, do that with a bot. But if they're unhappy with you and they really want to talk to somebody, if they have to talk to a bot for 20 minutes before they finally get a person. They're going to be pissed. You know it, absolutely. And so while technologically, that might sound like the right thing to do. What an elegant technical solution, architected beautifully. Exactly. Failing at the real purpose. Yeah, yeah. Because that's the real risk is the companies that want to say digital transformation and do it badly, you didn't transform. So the microservices push the growth in Kubernetes obviously the Docker standardization, all de facto standardization, really highlights essentially this new way. And architecture is a unique perspective. So you're saying, understand the outcome and back into the problem set. Yes. From an architecture versus architecture and then figure out the solution. Exactly. Because if you start with the architecture, it sort of like goes back to the old days in which we had the Oracle DBA. Every problem was solved by running it on Oracle. That's not the case. And we know that clearly to be the case now. So why would you say the answer to your problem is containers? When you haven't yet figured out what exactly the customer is looking for. So I got to ask you, Martin Quesada's slide was up there yesterday and it said old way kind of paraphrase, old way new way, talk about developers. The number one thing was developers don't want a Gartner report. Now I know you're a forester, you're an analyst, but what that talks to is a buyer led journey to our developer led initiatives. So if you take your premise that the outcome is with a focus, the old way of doing things is upside down. So how do people figure this out? Is there a new way to get information? Is it from the open source communities? What's your thoughts on that? Because it used to be, hey, I need to build a retail app, you can call an analyst, here's the best apps to buy, it's a magic quadrant, they go deploy it, they load it on some servers, it's done. But now it's different because you have to do some work on the front end and then architect it. What's the playbook now? How do people find out what's going on? It is much more social media driven and collaborative. So we see a lot more of developers who are trying to figure out what they should do here, go to GitHub. Because there they can find out, not just from the vendors, but they can find out from other companies in the similar industry to them, what they've done, what worked, and they can see the template, they can start from there. So that's much more of the pattern. So the discovery process of the buyer, in this case with a developer, is different. Oh yeah, absolutely. It is much more collaborative, much more what are my peers doing? And by the way, the word peers has changed. So the typical retailer who would say, well let's see, I'm Nike, let's see what Underarm is doing? No, they want to know what the startups are doing. And that's why here in the Valley, we now see about 86 large enterprises who have an innovation team that is here. And they're here to learn from the startups, partner with the startups and really figure out what transformation for them really is going to mean. Okay, so what's your advice to the companies that really are scratching their heads saying, hey, you know, we've been buying gardener reports, we've been doing it the old way, and the CEO's committed, and they got to go the new way. What's the playbook for them? What do they start doing? So the playbook for them is, do us, break things down into three buckets. Do an experiment bucket, which at some companies are carving out as their innovation team, that is really going to work collaboratively, build out new things, start on the cloud, but become hybrid and they find it appropriate. And they're going to do small things that aren't going to affect the whole company. You want that to happen because that thing may not scale to the whole company. It might be something only marketing uses. It might be something only applies to four or five products, but you need that freedom and a small group to do that forward. Then you have the second group, which is things that we learned as an experiment that we think can go to volume. Okay, now that's going to cause a transformation that's going to start to impact some other programs, some other capabilities. The real investment comes in, the real meat on the bone, so to speak, happens. Yeah, and you might bring in some SaaS applications because they don't fit for your old model. You might change some infrastructure decisions that you would normally have done another way, but you do it just for those applications that are in volume. And then you have the third group, which is what's the fundamental change is we as an organization are going to make because it's going to affect air quality. So the real transformative operationalizing of that. Yeah, exactly. And Gartner's viewed by a lot of people as sort of the conservative view of what is, what are all the companies doing instead of what are the- So more benchmarking, traditional benchmarking. Yeah. How do we stay versus our competition? Exactly, so Gartner's really still very, very valuable for that second group and for that third group. Well, a lot of these new solutions don't really fit in one magic quadrant. That's the problem that a lot of these companies, the horizontally scalable cloud is not a quadrant. Right, exactly. You can't really put that in there. Or if you're saying best cloud for healthcare. I haven't seen a magic quadrant for that one yet. Yeah. Right, well I think your advice is spot on. It's very much aligning with some of the guests that we had on yesterday in terms of piloting things starting small, learning, making decisions, ensuring that there's alignment from the business, from the IT folks, and really also what you showed our guests today is that what Microsoft is doing with customers in the open source community is really kind of across a spectrum of industries, which is great to hear since we hear traditionally a lot of NFV, a lot of telecom use cases. So I think your advice is fantastic. And it's great to hear that the focus is really customer first and that your time spent with customers is quite valuable, quite useful. Great, well thanks for having me Alan. The Cube has been great. You guys are doing amazing stuff and keep it up. We appreciate it. James Staten from Microsoft here inside the Cube Live in Silicon Valley for OpenStack SV, the hashtag OSSV16 or OpenStack SV is theCUBE. Live in Silicon Valley. We'll be right back with more after this short break.