 Live from the Mandalay Bay Convention Center in Las Vegas. It's theCUBE, covering VMworld 2016. Brought to you by VMware and its ecosystem sponsors. Now, here are your hosts, John Furrier and Stu Miniman. Hello, welcome back everyone. We're live here at VMworld 2016 in Las Vegas, the Mandalay Bay Convention Center. We're actually in the hang space broadcast booth. This is theCUBE Silicon Angles flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier, my host Stu Miniman. Our next guest is Pat Gelsinger, CEO of VMware. Great to see you. Again, every VMworld you're here, that we've done in VMworld, you've been on theCUBE. Well, it's always a pleasure. You guys are fun, right? You do your homework, I enjoy our time together, and I can't imagine VMworld without theCUBE. Well, we are really impressed with the vision you laid out because the number one question that we get asked on theCUBE and in back channels, and crowd chat on Twitter is, VMware ecosystem is looking for the straight and narrow. They want that north star. They want to see the path, the 90 mile stair, if you will, so they can actually accelerate their business. And you laid that out on Monday. So quickly review what your key points were for the folks that didn't capture the full keynote. Well, clearly we said, boy, people and we gave clear data with regard to what the cloud market looks like, what it's going to look like today, 2021, 2030 crossover points. And really the key summary of that is it's a complex world. It's going to be a multi-cloud environment for our customers and they want to know, how do I not only build hybrid clouds, private clouds, but how do I take advantage of public clouds? And we gave a comprehensive view of what that looks like, the cross-cloud architecture. And here's a way that we can bring all cloud embodiments into a common framework. Cross-cloud architecture, two big components as part of it, build your private cloud, enable that as a service. That's the cloud foundation bringing together vSAN, vSphere, NSX, along with the new lifecycle management capabilities, making that easy, do it as a service with IBM and our partnership that we announced there, but we expect many more of those with other vCloud network partners, and then the cool new cross-cloud services. Make those available, embrace any cloud, and then give our enterprise customers the tools to manage in this cross-cloud or multi-cloud environment. What's the catalyst for this announcement? Because was it an epiphany? Was it more of the market was ready for it? Because now you, multi-cloud's been out there, you can talk about any device anywhere. It's been a previous message, but now it catalyzes around this positioning. What was the moment of truth where you said, okay, this is, we're going with this? It doesn't seem like you're betting the ranch on this, but it is betting the ranch on this, in a way, because this is, as you said, the future, and it's going to be multi-year journey. So why did it come together? A couple of things happened. If you remember last year's VMworld, we did this little NSX demo, where it says we can connect NSX onto the cloud. You remember that? You know, literally Guido comes into Raghu and I about two weeks before VMworld last night, and he says, we got it working. And can I demo it in my session, right, at the thing? And Raghu and I looked at each other, says, okay, let's do it, right? Let's see how people respond to us. So that was one catalyst. Second catalyst, we had a couple of customer meetings where the customer said to us, they says, this is my mess, right? I'm doing this on Amazon. I'm exploring Azure over here. I got a boatload of VMware. I'm doing this, help me solve these problems. So it was clearly customer feedback, and there's a vibrant response we had from this little last-minute demo that we did last year's VMworld. And sort of out of that, we said, let's really take this seriously. You know, let's go dive deeply into it. And as Guido said in the keynote, we've now talked to about a couple hundred customers and a huge response. Usually when you do a cool new product, people say, let me try that. In this case, the response we've gotten is, I need that now, right? I mean, it's a very definitive response. These are the kind of things I need to manage today's problems. So I guess Guido's already late in getting it done, so we got to crack through it harder and get this in the market. So it's not so much ritual, although we did mention, talk about that yesterday on the things, you're kind of mid-flight, but you're adjusting to the market. Absolutely, absolutely. And clearly our cloud journey has been one where, if we go back and I gave some of the data, 2011, nobody expected the public cloud to be where it is today. I mean, it clearly accelerated faster, some of the ease of use, efficiency characteristics. Hey, this is a capability that nobody quite expected to grow this rapidly. And it's now permeated enterprise customers where they're starting to take advantage of it, but they don't got the tools to really take advantage of it. So some tea leaves we were reading yesterday on your keynote, we always like to read between the lines and kind of like the messaging and kind of. Sometimes you get it right, sometimes you don't. We get it right most of the time, Pat, come on. Your comment, your sit-down with Michael Dell was very interesting, okay? Because this is an open ecosystem play. His first point was about open ecosystem. You've been banging on this from day one since you've been CEO of VMware. You throw out that first pitch at the NetApp event that got viral with their jersey on. I went to the NetApp customer and partner event last night, you know, every year I'm there as well, just like the Cube, I go to the NetApp event. He can say that you have been hardcore about open ecosystem from day one and with the merger now set for the seventh, the merger, the transaction for the seventh, you still want to be independent. The open ecosystem is super important to you and, man, Michael, I heard it right from your mouth. Share some color and why and how that's going to evolve. Will everyone have untethered access to VMware? All partners have the same level of access and visibility. Simple answer is yes. And you know, we're going to continue exactly on that strategy and as we go forward. And, you know, clearly I'm going to do more with Michael and the Dell team. And, you know, as we see that going forward. But it's incumbent upon us, even as we do more with Dell, that we lean in more aggressively to our HP, to our Lenovo, to our Fujitsu and our other partners as well. So we see that as a critical part. And I'd say the VMware ecosystem is evolving. You know, five years ago, would have you had the cadre of security and networking vendors? No. Would have you expected to have all of the system integrators? No. I mean, we're clearly, you know, expanding service provider partners. Our ecosystem as we brought in our product portfolio is becoming a broader statement as well. So that's the commitment. You know, we're going to remain a platform play and ecosystem play. And obviously with Michael's comments on stage, you know, he's cheering us on. As he says, I'm going to grow my business with VMware faster. And I hope all of the other ecosystem partners grow faster than I do. Is this going to be a persona change? Because now if you look at the VMware's ecosystem, which has been robust, there's some consolidation going on. It's a change of it. See some shifts. These centers wants the big thing. Now you got NSX and all this other stuff in the cloud. Is there a persona change over in who the target customers are in the ecosystem? Well, clearly, I mean, the customer is the same, right? You know, it remains sort of that IT buyer, which increasingly, as I talked about in the keynote, is becoming a business buyer. But, you know, it's that core IT enterprise customer. I mean, we're not a consumer company. You know, we're not an app company. We're an infrastructure company and we're going to satisfy that broadly across the industry. But in that context, I mean, look at it. You know, over here, we have the internet of things. Wow, you know, we have the NFV zone, right? You know, we're having a broader and broader set of who is our ecosystem. And that's absolutely going to continue as we go forward because the solutions to things that we do are permeating more and more of the entire business landscape as we go forward. It's a really fun time. You know, even though, you know, I like to joke Michael that, you know, he was younger when I first met him. And, you know, against that, I mean, you know, he and I have both been at this for over three decades. But in many regards, it feels like we're just getting started. It really is a fun period. So Pat, the management suite has been a challenge for the industry in general. VMware has, as John said, strong presence with vCenter. As you start reaching out to some of these environments, why does VMware kind of have the right to think that it's going to be at the center of this discussion for some of your customers, especially as they talk about, like, Microsoft. They've obviously got, you know, strong pieces there. You know, big partners like Intel, Amazon in the play. So why VMware? Yeah, well, I think there's a couple of aspects to it. And, you know, who is better to be a neutral player to enable people to have cloud freedom? Right, if you just start with that question and we'd say, hey, we enable people to have hardware freedom. You know, it's in our ethos to have this platform play to have a broad ecosystem, open APIs. It's what we do. And in the cloud world, you know, Amazon, okay, they have a legitimate role, but are they going to be the best ones to do private and public or enable Azure or Ali cloud? Right, you know, I think we have a very legitimate position there to say, hey, we're a neutral player who can be cross player, cross industry. Secondly, the technology assets that we have, you know, what we demonstrated on stage yesterday with Guido, you know, think if you didn't have NSX and vRealize and some of the storage assets, you know, that was many, many years of engineering and we pulled all of those pieces together for a comprehensive demonstration of all of those pieces in nine months. You know, that's because we have a rich set of technologies that we can bring to this cross cloud services. So, Pat, VMware's got a pretty sophisticated stack there. Lots of customer adoption. When we look at the cloud native space, things change a lot. You've got a lot of open source in there. Most customers don't buy shrink rack software. They take a lot of components. They tend to put some things together. You know, there's been a little bit open source, but we've talked for many years about, you know, open source isn't, you know, one of the revenue, you know, primary revenue drivers for VMware. It's not kind of core to the business. Is that changing? How do you keep making money in the open source world? How do you compete? Yeah, yeah. And I think there's two different aspects of that that I'd highlight Stu. You know, one is, you know, I mean, essentially our strategy is enable these new environments on the VMware franchise. Right, you know, so what's my revenue model? Hey, you know, I'm going to keep selling vSphere. I'm going to sell NSX. I'm going to sell vSAN or management tools, et cetera. Even as I add more open source components into those environments for it. And you know, hey, I'm pretty happy. You know, what's the price point of Vic going to be? It's free if you're an enterprise plus customer. Right, we're just adding it as another set of capabilities on top of it. It's all open source bits. You know, Stu, have you downloaded that yet off of GitHub? I have not. You've not. I'm disappointed to hear that. Get on it, right? You know, get them back to work. We've got a code tonight, Stu. No partying. Right, you know, so yeah, that's too much party for you, Stu. But you know, it's going to be available. We're engaging right to this, you know, open source community in an open source way, but we're adding our industry rock hard components. And that's important because enterprises are going to start deploying containerized applications. And then you're going to start asking questions. Are they secured? Are they managed? Do you have like kits set on stage? Are they monitored? Right, how are you going to network them? You know, how are you, you know, and all of a sudden, there's not going to be some lightweight stateless applications. You're going to start saying, oh, this is a better way to do stateful applications. What about resilience for that? You know, you get back to the rock hard questions that infrastructure guys know how to handle. So this is a way of saying yes to those problems. Right, but also saying yes to these cool new developer things as well. And in our sense, you know, you know, we think we're well positioned to go do it. But hey, some of it may be other open source projects. And hey, you know, we're showing that we're going to support those. We're going to deliver those. We're going to embrace those as well. You saw, I'm sure that we hired Dirk Hondale, right? You know, a longtime friend. I hired him before at Intel. So now we brought him over here to VMware. Yeah, because we clearly see we have to enhance our position overall in the open source community, not a strong point for VMware in the past. And we're quite committed to changing that perception going forward. A lot of great code in the open source, but you mentioned some of those things about the infrastructure. I want to get back to that point, those complex things. Automation is now playing a big role. We saw the demo today with VSAN. Yang Bing was just one push of a button out of policy, automatic policy automation. That's a great direction. Okay, so I like that direction, but now I want to bring that back to cross-cloud. Got NSX for security and automation and potentially with the vSphere and then cross-cloud. How do you look at this? Because I know you're strategist, so then we'll get the strategist angle here. It's like the internet working days. I was riffing with Stu earlier about internet working with spawn because of all these networks need to be connected together. And that became a huge industry. A lot of wealth created, a lot of innovation. Inter-clouding or cross-cloud, as you call it, is that dynamic. How do you play well? IBM's on stage, there's no Amazon on stage. I didn't see Microsoft. We're going to see the other clouds come in to the fold or are you going to go to them and partner with them? Yeah, so one of the architectural principles of cross-cloud is public APIs, right? So I'm not requiring any unique support from Amazon and Azure. And that's an important statement as well because now I go to a customer, right, who's taken advantage of Amazon and they can look at some of those cross-cloud services and they says, well, what if Amazon doesn't support you in the future? And we say, these are standard APIs. They're supporting hundreds of customers on those APIs. It's important that we're engaging with, you all say, the way that the cloud is being presented to customers and giving them better tools to manage. Now that does not mean I'm not going to do more work in integrating more deeply and partnering with them. So does that support like the Amazon S3 API then? Of course, okay. Yeah. Well, you can, Slinging APIs are a little different. The management APIs is actually more appropriate to look at in that respect as well. You know, how do you spawn? How do you stop? How do you, you know, manage VMs? You know, how do you do availability zones? Those are the things more appropriate to a management tool in that regard. But those are public APIs, public interfaces. We're taking advantage of all of those. And we are going to work more closely with the Azures and the Amazons as well. We're going to invest in those partnerships. And you know, there may be areas that we compete with them, but hey, we're going to go do as much as we can because that's what our customers are asking us to do. Give me better support for those environments. Which workloads can I put there? Can I network? Can I secure? Maybe in some cases I don't want my groups using non-pub or non-multi-cloud APIs. Another case is, hey, I am fully comfortable saying- So pick the right cloud for the job kind of thing. Absolutely, absolutely. Is your philosophy right? So slinging APIs is pretty trivial relative to interfaces with the cloud, but the customer might want to go deeper and because that might create a complexity issue around, and also functionality might not be as robust as say, you know, deeper stack integration for data management and whatnot. Are you worried or we're watching, certainly like Microsoft, if they build a proprietary aspect of their stack around data, for instance, that's the holy grail. You can get sticky but still be quote open but not proprietary. So the lock-in spec is the lack of openness per se just saying with data. And by the way, you know, and I mean, you know, in that respect, you know, what we want to do is present to customers the tools that they can manage those decisions. You know, for instance, a customer may say, hey, I love that machine learning API that Google offers. It's given me great competitive advantage. It's not available on any other cloud. And we're going to say, hey, it's a proprietary API. If you use it and your data's there, you've picked that service, but we're still going to help you manage and secure it. Another workload the customer may say, hey, this workload I want to make sure has multi-cloud landing zones associated with it. So we're going to help them manage those decisions as well. Because if you stay in this domain, I can make it run anywhere. Right, I'll be able to cost optimize it, maybe geo-optimize it, et cetera. So it's giving them the tools to manage those decisions. Because I think, hey, you know, Microsoft, hey, they're going to do really well on things related to collaboration in 365. I think Google, I think they're going to do really well around data machine learning. IBM enterprise-grade cloud, right? Amazon, hey, they've won this round of the developer cloud. I mean, you know, each of them have sort of stake turfs that are very clear, are going to present value to customers. And our view is we're going to make those all more readily consumer, sumable for enterprises to run, manage, secure, and connect their workloads into those environments, and build the connectivity into their private clouds, their vCloud Air networks, their managed clouds as well. That's why we can really do it. Well, Amazon is going strong in the enterprise. I agree they've won the developer cloud, but they're aggressively going after the enterprise, mainly Oracle for now, but I'm sure they might think about Beachhead that you have. Oh sure, sure, absolutely. But you know, in that space, moving a lightweight application, okay, done, right? You do an OVF conversion, you're done, man. You're someone like that. Oh, you got to move the full network configuration, IP addressability, right? I got to deal with different, oh my gosh, those are hard things to do. You know, the easy stuff moves pretty easy. The hard stuff, okay, that's where we're at now as we address enterprise customers. And you just don't pick those up and relocate those onto Amazon, Azure, or any place else. You know, and that's really where the strength of VMware lies. So Pat, Dave Vellante is, you know, disappointed he can't be here for the interview, so I'm a surrogate for him. I almost refused this interview, not having to. I know. Pat, I love you forever. That's crazy. He asked me to have your commentary on the new era of IT. You know, officially announced today, the Dell EMC deal September 7th will go down. You know, of course that has ramifications on VMware, HP split recently, lots of, I mean, major signal changes in the industry. What's your take? Yeah, you know, and as I've described before, this is a very disruptive period of the IT industry. You know, consolidation and portions of it, you know, and we think, right, as the hardware industry has matured, stabilized, you know, not growing, still cash flow rich, but not growing, we think consolidation is a very natural phase of that industry's maturation. And against that, the Dell move, you know, was a very bold move given the size of it. But if you look at the cash flows of the companies, right, as Michael says, you know, it's pretty easy math, right? You know, it wasn't that hard to, you know, this is how much the cash flow is. This is how much the debt payment is. Hmm, the math works, do the deal. Yeah, and Michael said, if you don't understand that VMware is hugely important to that, you don't understand the math. Yeah, right, you know, and for that, you know, I mean, clearly, you know, having a controlling interest there, he gets it. You know, we have a lot of growth potential as well, valuation increase, you know, potential strategic role, but he also realizes that the independence of VMware is critical as well, right? A software company is very different than, you know, a hardware company and our position in the industry and the ecosystem, he respects that greatly. You know, we also think that we're far from done with disruptions elsewhere. You know, we just saw Rackspace go private. Wow, you know, that's another structure to shift. You know, the changes in the structure of Citrix as a company at five, you know, and as they go through their transitions in this next phase of growth, you know, Palo Alto, a good friend, Mark McLaughlin, hey, they're driving their software and service revenue growth, you know, from hardware. Lots of changes in the industry. You know, collectively, we look at those and we say, boy, you know, in this period of change, disruption, radical growth, right? Consolidation of different places. You know, VMware sits now at a very stable and comfortable place. I got a great ballot sheet. I got a clear path in front of me going back to the beginning of the interview and, right, and behind my ballot sheet is this huge turbocharged engines that is cheering for our growth, distributing us and even a bigger ballot sheet behind us. So, you know, we sit in a very uniquely wonderful position. Pat, final question before we break. I know you got another appointment. Thanks for your, first of all, thanks for your time again. What's the biggest disruption that you're watching that's motivating you, whether it's, you know, lighting a fire under your feet or just something that you see that's so epic and get out in front of that next wave? As you said, if you're not out in front of that next wave, you're driftwood. Can I give you two? Yeah. So, the one that I think is clearly the biggest is the shift to the public cloud. You know, and I'll just say, you know, that's why the cross-cloud announced what was so critical, right? Also, I wanted to demystify some of the numbers in the keynote. You know, we went out there and said, very specifically, this is where it's going to be. SAS and AS and where it's going to be at different points of time. You know, because I think there's been all sorts of numbers floating around the industry of what it's going to look like over time. But clearly, you know, this public cloud is becoming a big deal, right? And we have to present to ourselves as relevant and critical to our customers in that transition. So, I'll say it that one, that's the one that we have to navigate through to really position VMware for the next couple of decades. You know, the other one that I'd point out is really this, you know, as we talked about, the IoT and the device, right, picture. Wow, you know, we're going to have more machine-connected devices in 2019. Love that stand, by the way. Than human-connected devices. And that presents enormous business opportunity, right, security, threats and opportunities, you know, data infrastructure to go with it. Right, IT, as I would say, you know, IT has left the nest, right? It's now permeated. And software is a primary function of all the new software that has to be written to handle those situations. And in that sense, you know, as I say, you know, even though I'm three and a half decades in the industry, it sort of feels like we're just getting started. You had a spring in your step, and so you had a cast on it. So, you know, you got to be careful, you don't break down. As it gets older, your bones get hurt a little bit more. That's right, that's right. Pat, thanks so much for spending the time. Great to see you again. Oh, it's a pleasure. Pat Gelsinger inside theCUBE here in VMworld 2016 in Las Vegas. Thanks, sir, Volante must be here next year, so. Dave, mandate. Stu Miniman and I, Stu, you did good. You held your own. Pat, as usual, great. This is theCUBE, you're watching theCUBE at VMworld. I'm John Furze, Stu Miniman.