 Live from San Francisco, celebrating 10 years of high-tech coverage, it's theCUBE. Covering VMworld 2019. Brought to you by VMware and its ecosystem partners. Okay, welcome back. Live here in Moscone, North, VMworld 2019. CUBE Live coverage, I'm John Furrier with Dave Vellante. Check out AER who's here as EVP general manager, Telco and Edge of Cloud for VMware. Thanks for coming on. Thank you, thanks for having me. I know you're super busy. We don't have a lot of time. Get right to it. 5G, big part of the keynote discussion. That's going to enable a whole bunch of stuff. Pack all the pre-game show. Pre-gaming, not even anything yet. So we're going to talk about that. Also Telco and the Edge computing, big part. Michael Dell said, Edge is the future. These are two emerging areas for you guys. What's the positioning, what's the update? No, absolutely. I mean, if you look at telecom infrastructure for the longest time, Telcos have played a role just as pure basic connectivity providers. And with 5G coming on board, they finally have an opportunity to break out of that and redefine the cloud of the future. So for us, the big opportunity around 5G is not just the better provisioning of like higher bandwidth services to consumer for voice and data, but a whole set of new enterprise services that can be provided on top of this 5G network. And in order to be able to do that, you really need to go in with a virtualized Telco cloud architecture underneath that. And so we are working with carriers globally now, preparing them for 5G with an architecture that's going to help them deploy new services faster for both their consumer as well as enterprise customers. It might be the white knight at, so to speak, for these Telcos because they've been struggling for years over the top and any kind of differentiated services even in the network layer. Exactly. It runs those rack and stack machines so they're well stacked up in terms of compute and storage. Also, connectivity to the edge, that's the backhaul. So you have backhaul, which is connectivity, companies that have massive expertise in scale, but fumbling in operational cloud-native. But not just that, but I also think that having the idea of an application platform that allows them to go and deploy services faster and then decide whether they are just going to play at the network connectivity level or at the application tier or a full SAS tier. These are all options that are open to them now with this notion of Telco 5G coupled with an NFV and telco cloud infrastructure underneath that. And never before have they had this option to doing that. And this is now open to them. Yeah, and the cloud native is their green field for app support or having applications on top of it. Exactly. Icing on the cake, right? Exactly, exactly. So they are all looking at core architectures and then potentially their radio architectures now all being opened up to deploying new services that are much faster to provision and then extending that to edge and to the enterprise. And 5G is deploying, so we know it's out there. So it is pre-game, as Pat Gelsman said, not even an inning yet in the metaphor of baseball innings. I got to ask you about- I got on my phone. Oh, yeah. No, that's fake. I know, that's why I'm saying that. They did that with 4G, too. No, skeptic. The E stands for evolution, which means it's coming soon. That's vaporware for telco cloud language. The surface area is going to radically get bigger with this capability. Security's got to be baked in. This is the number one concern for IoT and more importantly, industrial IoT. We've been reporting on siliconangle.com. This is a national security issue because we're under cyber attacks. Towns getting locked out with ransomware, critical infrastructure exposed. We're a free country. We want to be free. We don't need a lockdown. So you got to have security built into this new promiscuous landscape that is called the IoT edge because you want to have no perimeter. You want the benefits of cloud, but one hole, malware's in there. One takeover, physical device could cost lives. This is a big concern. What's your thoughts? Yeah, so I think there are two ways of looking at it. One is the way you looked at it in terms of the security perimeter expanding and then us making sure that we have the right level of infrastructure security baked in to enable this to be an easier manageable security architecture. This is sort of the pitch you heard from VMware, even in the context of our acquisition of Carbon Black and how we're thinking about baking security into the infrastructure. The other way of looking at this is if you think about some of the concerns around providers of telecom infrastructure today and how there might be or might not be security back doors, this is happening in today's hardware infrastructure. So in fact, I would argue that a software defined architecture actually ends up providing you greater levels of security because what you now have is the option of running all of these network functions as software workloads in a policy envelope that you can introspect and then you can decide what kind of security you want to deploy on what kind of workload. That's an innovative approach, but it doesn't change much really from an infrastructure standpoint, does it or does it? No, it does because now instead of having a hardware box where you have to worry, I mean, if it's a closed hardware box and you don't quite know what is happening there, the question is, is that more secure than a infrastructure where you're running the software that you can actually introspect? I would argue that the software defined approach is more secure than having a hardware box that you don't know. I would buy that premise and certainly we know the supply chain concern, you know, the speculation of Supermicro which never was proved, but still. But still, you don't know. I mean, it doesn't matter who the vendor is or what the country is, it really is a concern in terms of not being able to introspect what is happening inside. So I'm an IT shop, I'm running VMware, operating, I want developers. So now you go into telcos, you revitalize their business model, they got to roll out apps now. What do you guys see that connecting? Is there going to be connective tissue between? Well, think about it, right? If we go to a telco, we look at really three stakeholders in there. One is IT, the second is their B2B or enterprise-facing business, and then the third one is their core and access network or the CTO. We now have a value proposition of having a uniform architecture across all three stakeholders with the uniform ability to create applications and drop it on top of each of these infrastructures with the ability to manage and secure these again in a uniform way, not just that, but to also make this work well with other cloud infrastructures, private, hyperscale public, as well as Edge. That's table stakes, you have to do that. Yeah. Because telcos have to operate, whatever. Well, it is, but it's not, I mean, if you think about what the infrastructure of a telco today is, it's far from that because it's sort of a closed environment, you can't access anything from a telco environment in order to go build an application to it, and it does not resemble anything like any cloud environment. Well, you could enable a telco, just I'm just kind of thinking, connecting the dots here real time in theCUBE is, if I'm a telco, I mean, hell, I'll take that VMware on a Dell EMC model, make me a cloud, and I'll sell cloud services to the market. Is that kind of a business model? It is actually, it's a very important part of our business model because most telcos would not move their own infrastructure from a network standpoint onto a public cloud, but they are eagerly awaiting the ability to operate their own network as a cloud. And if they can have somebody manage that for them, then that is very much within the, So you're enabling an increase in the number of cloud service providers potentially depending upon the makeup of the telco tier one, tier two, tier three size. Pretty much, potentially. I mean, it's taking an existing operator and having them operate in a more agile way and potentially increasing a new form of a cloud service provider. And the telcos wouldn't move into the public cloud because of they want the control and the cost, is that right? Or are there other factors? It's mostly control. It's not about cost. It's about taking what is your sort of core knitting for a packet core or for a radio network. And then, yeah. And there is also an angle around competition. I think telcos are worried about the Amazons of the world and the Azures of the world potentially becoming a service provider themselves. And that's what I wanted to ask you. The business impact of all this discussion you guys are having is, the cost per bits coming down, the amount of data is increasing faster. You got over the top providers, just picking off the telcos. Telcos can't compete. Their infrastructures are so hardened. Will this all change that? Absolutely. So I think that it has the potential to changing all that. I don't think all the telcos will take advantage of it. Some of them might end up being more traditional and sort of sticking to where they were. But for those that are willing to make the leap. I mean, as an example, Vodafone is a customer that has actually gone in with this architecture with us. AT&T is working with us with the Velocloud software from VMware, bringing a new form of branch connectivity through SDVAN. So these are all examples of telcos that are actually leading the charter over here. But if they don't lean in to this vision, they're either, well, it's either because they're protected by their local governments, or they're going to go out of business over time. Yeah, no, I would agree. I mean, it's sort of silly from our standpoint to be talking about 5G and not thinking about this as the architecture for 5G, right? I mean, if you only focus on radio waves and your wireless network, that's like a part of the problem. But you really need to have the ability to deploy these agile services. Otherwise you could get killed by the OTG. So how do you compete against the competition? What's the business plan that you have? Obviously, 5G, we see that on the horizon, that's evolving, it's evolution, so to speak, pun intended. Edge is certainly very relevant for enterprises, whether it's manufacturing or industrial or just people. Yeah, I'd say there are two things. One is, as I'm sure you heard from folks at VMware, our vision is this notion of any, any, any, where we've talked about any cloud and any application and any device. So that becomes one of the strongest differentiating factors in terms of what VMware can bring to any of our customers compared to the competition, right? Nobody can actually make it real across these dimensions. If you then take that architecture and use that to deploy a telco cloud, we're now making investments that are telco specific that allow the telco to then take this and make the most out of it. As an example, we're investing in OpenStack, we're investing in containerization. We just bought a company called Ohana, and Ohana essentially allows the operator to go and provide metrics from their radio access networks, use that to train a learning engine and then feed that back so that the operator can tune their network to get like fewer dropped calls in a region. So if you combine technology like that with this any cloud infrastructure that we have underneath that, that's the best in class deployment methodology for any telco to deploy 5G. Any of your business metrics for you internally is get more deployments. What stage of developing at 5G certainly is in a certain stage, but you know, edge is there. Where's the progress bar if you had to kind of? Oh, it's actually moved phenomenally. I mean, every time we have conversations like this, we are moving the ball further in terms of how many carriers are deploying on VMware on a telco cloud architecture, how many subscribers are basically being serviced by an architecture like this, and then how many network functions are being deployed to a VMware architecture. So we are over a hundred carriers now. We are over, we have about 800 million subscribers or so that globally are being serviced by a VMware supported network. And then we have essentially over 120 network functions that are operating on top of it. You should actually bring in all the same stuff that's announced at the show. All the stuff's going to fold into the operating platform or so telcos have different requirements on the core VMware. It's both. We take the best of what is there from the sort of overall VMware factory. And then as a team, my team then builds other widgets on top that are telco specific. How big is your TAM opportunity for you? Well, so the best way to look at it is telcos globally spend about a trillion dollars in capital investment and then probably two X that in terms of their operating expenditure over the course of all of the things that they do, right? And out of that, I would say probably a 10th of that. So if you take about a hundred billion dollar opportunity opens itself up to infrastructure investment in terms of the kinds of things that we're talking about. Now they're not going to move from like zero to a hundred overnight, right? So if you take some period of time, I would say a good subset of that hundred billion dollar opportunity is going to open itself up to this kind of infrastructure. In their business cases eliminating that two X factor or at least reducing it, is that right? Exactly, it's not just that. That's sort of a cost reduction alternative, but then you have the ability to go deploy services faster. So it's really a combination of both sort of a carrot and a stick, right? I mean the carrot here is the ability to go monetize more new services with 5G faster. The stick is that if you don't do it, OTTs will get there faster and your costs of deploying just simple services will increase. Tell Co's in your opinion, well what do they have to do to get the DNA chops to actually be able to compete with the over to top OTT providers and be more agile. I mean it's obviously sort of new skills that they have to bring in and new talent. Yeah, well first and foremost they need to get to a point where their infrastructure is agile and they get into a business model of knowing how to monetize that agile infrastructure. So for example, they could offer a network as a service on a consume as you go basis. They could offer a platform as a service on top of that network in order for OTTs to go build applications so they can do rev shares with the OTTs. Or they could offer full services where they could go in and say we are the conferencing provider for video conferencing for enterprises. I mean these are all models that they're talking about. Great conversation, love to do, you're in Palo Alto? Yes, I'm basically. We want to have you in our studio want to do more of a deep dive. We love this area, it's super provocative and it's important. Final question for you though. Pat Gelsinger here on theCUBE, I asked him, look back on the past 10 years, look back on the next 10 years, what waves should everyone be riding? He said three things. Networking, security and Kubernetes. Kubernetes being number one, obviously he's promoting Kubernetes heavily for the various reasons, CloudNate, I get that. But networking, that's your world. That's changing. Which events do you go to where you meet your audience out there in the telco? Because networking is a telco fundamental thing. You're moving packets around. This is a big thing. Yeah, so for operator, networking related stuff, I would say, I mean the biggest shows that for us would be Mobile World Congress as an example, right? It's where many operators are. But I would also say that when we do our own events like this is VMworld but we do V-forums in Asia-Pac as an example. A lot of the telco conversations, I find they are best done one-on-one. Yeah, V-forums. Yeah, V-forums are forums where we would go to to have one-on-one conversations or small group conversations with our telco customers locally. Shaker, thanks for spending, I know you got a hard stuff, very busy person. Thank you very much, thanks for having me here. Shaker, Ayaar, who's here inside theCUBE breaking down 5G, which is still pre-game mode. A few things coming, first thing's going to come up soon but Edge is super hot. A lot of telco customers. We'll be back with more live coverage from VMworld after this short break.