 Okay, we're back live inside theCUBE. This is our flagship telecast theCUBE from SiliconANGLE.tv, where we go out to the events, extract the signal from the noise, talk to all the thought leaders, smartest people in the room we can find, CEOs, entrepreneurs, developers, bloggers, you name it. We'll cover it and bring all that to you, extracting the signal from the noise. I'm John Furrier, the founder of SiliconANGLE.com. I'm joined by my co-host. I'm Dave Vellante of Wikibon.org, and we're here with Mike Claco, who's the CEO of Brocade, CUBE alum. Mike, welcome back. Thank you very much, Dave. We've had you on here last year, and... How we call it? EMC Worlds, big event, keeps getting bigger, cloud, big data transformation, all great messaging. How you doing? Where you guys fit into all this? Well, how are we doing? Well, we're doing great, thank you for asking. Where do we fit is the fact that everything that's being talked around, whether it's big data or a virtualized enterprise, or all the different things around analytics, you got to move data from point A to point B. And the only way you can really do that is through a network. And so that's what we build, we're a pure network player from that standpoint. And the other thing is you have to understand how the data's moved. So our heritage is all around storage networking. So we can apply that storage networking to the big analytics as well as the big data, the big analytics, as well as cloud computing. So we're in a pretty good inflection point and a great spot right now. Yeah, we've dubbed, others have too, I guess, the 2012 is the year of the cloud, but it's real. We just did a survey on Wikibon and it's very clear that people don't see cloud as a buzzword anymore. You know, the whole Larry Ellison rant. I mean, it's real, it's happening. You see that in your customer base? We are. We actually are seeing it in a variety of different deployments. There are, the service provider marketplace right now is actually bifurcating into two. One is it's looking at the bit pipes. How do you get lots of bits down the pipe very rapidly? And the other one is the value added services. That value added services is hosting applications. And you see some of the companies here, they're all hosting. So that area is growing rapidly. So that's one. And then the second is inside the private companies, everybody's trying to figure out how do I create all these virtualized machines and then move them throughout my organization? And so that's another huge opportunity. That's a private cloud, if you will. I think what's going to be the big, you know, holy grail in the future is how do I take this private cloud and this public cloud and then be able to seamlessly move between the two? And those technologies are just around the corner. Yeah, and I think, Mike, I wonder what your take on this. I think two years ago people were like, that's not our primary strategy. We don't believe it. I think now when you talk to customers, they actually believe they can get there. Do you agree with that? Is that what you're seeing? Oh, I absolutely agree with it. In fact, you know, I look at the, I look at my company as just an example. And right now 45% of all my applications are hosted in the cloud. Now, my employees wouldn't know that. My customers wouldn't know that, nor should they worry about that. In fact, it's the ability to access this information anywhere is what's got people very excited. So you guys are transformed internally or you're starting to transform internally? We have, we've done about 80% of our applications are virtualized and 45% of what's remaining or the other applications are actually hosted in cloud. Eating your own dog food? We were at Sapphire last week. You know, it's a European company in a very state. They said, well, we prefer to say drinking your own champagne. I'm not sure about drinking your own champagne, but we just look at it just pragmatic business applications for us. Mike, Mike, so Joe Tucci gave his keynote. He said, you know, the debate between private and public cloud is silly. That's a direct quote from Joe Tucci, mainly emphasizing the point that there's many clouds depending upon, you know, public and private. So there's no one winner. And we pretty much believe in that. But with cloud, there's the IT implications which you can see saying, oh, cloud is IT. Big data is for the business transformation, you know, analytics, et cetera. What's the role of the networking fabric play in this evolution? Because it's evolving so fast, certainly in the big data side, it's real nascent still, but on cloud it's rapidly evolving where you have hybrid, you have private, variety of different clouds, and data is the gravity, as Pat Gelsinger said. So how do you guys talk about that fabric in the network, in the cloud? Well, in fact, one of the things that our customers have told us, which is usually a pretty good indication, instead of us telling them, is that a fabric architecture will be the foundation of any other cloud. It provides infinite elasticity. So, you know, you look at the fact that you're a fabric for storage, and now everybody takes that as common ground. You have a fabric, you actually have a network for storage, and now what we're saying is you're having a fabric or a network on the whole idea of how you do all your server connectivity. 80 to 90% of all the traffic in a data center in the next few years is going to move east-west. Between servers, not through up and down, which used to be the traditional north-south. And because of that, you have to actually have this fabric in place, if you're going to go ahead and take advantage of the promise that cloud architecture can bring. And so, you need a fabric. Tell them about the customer, event customers are telling you about this fabric. What are some of the successes you're having with the customers in that regard? Well, we actually, and we had our earnings call last week, and what we've said is, we have about 550 production customers right now that have put in ethernet fabrics. And we have more than 50,000 customers just with EMC alone that have put in storage area networks, fabrics there. And when you look at all the other, so we have hundreds of thousands there. So now what we're starting to see is we're doubling every quarter, just doubling and doubling and doubling, and because they see the value of this. And first application that we're seeing that folks are simple virtualization. The ability to seamlessly move and drag and drop an application anywhere within the data center, they need a large sphere of mobility, and that's when ethernet fabric gives them. Yeah, now you guys have had a long relationship with EMC. I remember when you guys sort of essentially made the market for sand switches, EMC at the time was selling big monolithic boxes, but EMC to its credit embraced the storage network. Could have been a great equalizer, but they didn't fight it, they embraced it when your partnership started. And then we just saw a month or so ago, you guys are part of that despex announcement. You must have been happy about that. We were, we're very happy. In fact, we recognize that actually EMC and us together and a variety of other partners have recognized that best of greed, when you put it together, is actually best for the customer. And so you take the best servers, the best storage, and the best networking technology. EMC with its variety of offerings that they have is best storage. And you can see the whole, the lineup card that they have. From our standpoint, we have a large variety of networking products. More importantly, we have a very robust Ethernet fabric technology. It's our seventh generation of silicon that we're building this upon, so we're not new to it. And then there's a lot of technology going around the Intel server space on who's best. And there's a lot of leapfrogging going on. The nice part of what the customer can do is they can actually bifurcate these all together. And by the time they're ready to implement, they can get the best breed, put it together and it'll work. So talking more about Ethernet, right? I mean, you guys obviously know them for your fiber channel, you know, stack, but you made some acquisitions, you're talking about what you say, and seventh generation, was that what you said? Seventh generation silicon. So talk a little bit more about the Ethernet uptake and that part of your strategy. Well, it's an enormous market. So you have to understand when we went into the marketplace, one of the things we looked at is we really believe that virtualization was going to be mainstay across all sizes of enterprises, as well as when we took a look at the marketplace from the growth opportunities force, we needed to have an answer for what we call the virtualized enterprise, virtualization, cloud-based computing. And that said, by definition, you need to be able to participate in the Ethernet world. And 10 gig, 100 gig, not just the basic connectivity, but the next generation. So when we look our fastest growth area, it's all around 10 gig. We're now the second largest 100 gig producer in the world in terms of shipment of product. And as soon as I shipped 100 gig, I had a customer come to me and said, when can I expect a terabit? So there's an infinite demand out there at this point in time, but if you're going to participate in cloud architecture, you have to participate in Ethernet side. So you were talking about earlier about the flattening of the network. What's driving that? And then I got to follow up. Well, I think the biggest thing that's driving it right now is just the large sphere of mobility on virtual machines. You just be able to come up to a rack, count the number of machines in a rack and say, oh, there's 20 machines in that rack. I got 20 instances. You walk up to the rack now, you may have 400 machines in there. And the ability to move these seamlessly throughout a data center, great tools by VMware, tremendous tools. But we're scaling to the point where customers want to move between hundreds of thousands of VMs. So you need a large, flat network to go ahead and do that seamlessly because going across networks, it still is a challenge. Going within a network is relatively straightforward. And your vision is that interconnect between that server to server communication is Ethernet, right? It is going to be a combination of Ethernet and fiber channel. The reason it has to be a little bit of both is it's actually relatively straightforward and VMware has done a tremendous job around the server, moving the server apps. Moving that storage behind it, you got to be able to keep the storage and the servers in sync in the data center. And then when you start stretching them outside the data center, and how do you keep FCIP and MPLS in sync? Technology's required there. So I think it's a combination of both. So server to server, driving that, that's the private piece. Ethernet and then fiber channel at the back end for the storage. But Ethernet versus InfiniBand, you guys are betting on Ethernet, right? We're betting on Ethernet, we have. We've made that position known. I mean, we're already in 100 gig technology and the price points that are on the... Ride that curve. Yeah, we're just going to ride the curve there. Mike, so one of the big themes here at EMC World and throughout all the different cube events we've covered is acceleration. Acceleration of operating cycles, acceleration of acquiring customers, acceleration of product development. So this acceleration theme, startups accelerating, all this stuff's happening. So one of the key concerns around developers and enterprises is they want to build an application environment that can accelerate fast. So the go-to market for these kinds of plans are shortening. What are you guys doing at the network fabric level to enable that acceleration? Is it the virtualization component and what specifically do you guys look at that as if you're enabling this robust top of the stack, if you will? John, that's a great question. In fact, it's all about speed at the end of the day. We can come up with technologies but you got to be able to absorb that technology in an organization or a partner has to develop. We actually, in our Ethernet fabrics, have developed and opened, there's an API that you can actually redirect frames out to take advantage of security applications or dedupe applications or encryption or a variety of other applications because there is going to be so many great technology. Technologies that haven't even been invented have to be accounted or planned for going forward. And so we provide that in the way that our products are designed that they can actually bridge out, go in to take advantage of an application and come back in at basically line rate. Yeah, and we talked to a lot of customers and one of the big concerns we hear, among other things is they don't want to foreclose future benefits by going with an existing platform. So to them, a table stakes now is the enablement, not to foreclose that. Are you hearing the same thing? Foreclosing new opportunities that they business can build on. You know what I'm hearing from a lot of customers right now is we as vendors, a lot of vendors, we've put so much complexity into the marketplace. And frankly, there's a lot of compliance that had to be accounted for. But if we can simplify that complexity. You know, a year ago we used to list the top five areas that the CIO was very, I mean, just say these are frontal lobe, things I worry about every day. What popped into the top five this year is access to skilled labor. Now you think about that. And we talk in America all the time about the number of unemployed people. Well the fact is we still can't find enough skilled people so we can do two things. We can train a lot more people or we can simplify the products that you don't need management. Abstract the complexities away. Exactly. So we're going to the latter. We're making it very simple to use technology, building diagnosis into the product sets and so forth. So we're just trying to take that complexity out so you don't even have to deal with it. So okay, so let's take that thread a little bit. Step four, you're here at EMC really probably doing a lot of customer meetings and you know schmoozing, doing a lot of biz dev. They're almost up that CEOs do. What's the conversation like with you, with customers? When you go to them and say, hey, about Brocade, what's the kind of high level conversation do you have with your peers, other C level executives? You know for the most part, I would probably say that if you grouped it in the categories, one is strategy, so where are you going? You know, how do you plan the cloud? Where do you think that virtualization's going to go ahead and fit? How do you fit into the analytics side of the business and so forth? What's next? And so they're always looking for what's next because sometimes the high C level execs, they're making a decision for something that may not implement for a year and a half or two years in that because they have to go ahead and look farther ahead. So what we do is we have those kind of discussions and then I can compare and contrast what we're doing around the world. So let's talk about some of the product things that Brocade's doing. So like we're seeing some examples in the marketplace where different approaches and purpose-built hardware and certain solutions are getting traction and grow rapidly. VCE is one we've been tracking for a long time. Dave called it out her first and he predicted that that would be an explosion. But that's also a multi-vendor environment. There's no one solution that fits all anymore. How do you guys as a company navigate those waters of, hey, I'm a multi-vendor, but you still have to integrate in and extract away the complexity, which might require more of the one vendor, but still playing nicely with the interoperability. I think that's a great point. I mean, this is the whole V-spec thing that we came up with the EMC is you build the blueprints, you test them out. We have an enormous lab at our disposal. EMC has an enormous lab at their disposal. Many customers don't want to be in the lab business. What they want to do is they want to be in the deployment of applications. They want to go ahead and solve a problem. And so what we'll do is build the blueprint, test the solution, and literally hand it to a partner and say, these are the combined solutions. Pre-fab solutions. I mean, the VNX, which we covered, the VNX launch. I mean, very simple channel product, but they just packaged it so it's cleaner. We're doing the same thing and we're in partnership with them. Yeah, so the V-specs was something you guys were working on? We're working with them. In fact, our VDX product line, which is our Ethernet fabric, as well as our ICX product line, which is our standard Ethernet connectivity products, they're part of that offering also. So Mike, I want to talk about, come back to Ethernet a little bit. I mean, the strategy is pretty clear. You guys want it to diversify, get into the growth market. It's huge, as you said. Now, talk about what you did initially. I presume what you did is you took your relationships with your best sand customers and then obviously you're going to sell Ethernet to those guys. How do you go, first of all, is that accurate? And how do you go beyond that? How do you broaden beyond that? Is that a channel play? And talk about that a little bit, if you will. Well, actually, that would have been the obvious thing to do. We weren't that obvious, I think. What we ended up doing is finding where our products fit best and because there are more competitors in that space. In the sand space, we're at 70% market share and so we know where the customers are. We know what the value props are. So what we tried to do is provide differentiation. So we have some very good niches in the service provider marketplace. However, it's in certain segments on the edges, in some of the content distribution networks, some of the internet exchanges and so forth. So very, very high growth areas that have unique requirements that we build very fast race cards for that marketplace. And then we take a look at some of the other marketplaces, the unique requirements that an educational institution will have. And so we're going there. Some of the things that we do for the government, very, very unique. Instead of just general purpose, cover the world with everything. Now we're branching a little bit because we've got our strategies in place there and now what we're doing is implementing a fairly robust two-tier network of distributors and then taking those products, building them specifically for the channel that they can go out to their partners. Okay. And then, Mike, my last question for you was around sort of vision and brand. You know, what do you want the brand to stand for? What's the bumper sticker vision for our audience? We are a pure networking company. I mean, we're really good at what we do. And so we can not only move applications, we can move data from point A to point B with 100% quality guaranteed all the time. So, I mean, we're a high quality networking company that is committed to help companies grow into either the cloud architecture or what I call the virtual enterprise. Yeah, so you guys are really playing on drafting on the trends of cloud. You know, we talked a little bit about big data, driving some of the other networking trends. Obviously, getting tighter with EMC, which is good to see, you know, give customers choice. We love choice. We love competition here at The Choice. The choice is great. Mike, thanks very much for coming. Always great to see you again. It's great to see you. Nice to see you, David. John, nice to see you again. Okay, see you, brocade. We'll be right back at the short break.