 Cloud converged infrastructure, hyperscale, hyper-converged software defined. The IT world is a buzz with buzzwords. At the center of it all is EMC and VCE. VCE once a company that was owned by a collection of Cisco, VMware, EMC, a little bit of Intel with a separate governing board has now been rolled in to EMC and this is really the first big VCE announcement that we're going to analyze. Subsequent to that bringing back VCE internally to EMC. I'm here with Stu Miniman here at Wikibon headquarters. Stu, big announcement from VCE today, taking off the gloves a little bit or maybe I should say the handcuffs. Yeah, so Dave, it's interesting. We've watched VCE since the start. Dyslamer actually worked on some of the architecture when it was a project inside of EMC back in the early days. It's interesting, there's so many out there in the press that love to pick on VCE. Every time Cisco did something with one of the storage partners out there, it's, oh, VCE's dead. Anything in the ripple as to how the relationships were, oh, VCE's going to be dead. VCE's growing. You were just at the EMC analyst event down in New York City this week and I think that the number you gave me is for seven quarters they've grown 50% year over year. I mean, phenomenal growth. Number we hear is in the ballpark of $2 billion that VCE did and so some of the data that we got from the people involved is of course when a company's grown that big, everybody wants to be a part of you. Everybody's like, hey, I've got a software product, I've got a hardware product. How do I get on board this train? Because it's huge and some of those pressures from the parent companies were starting to cause some tension and cause some problems and it just made sense since EMC was the majority owner that it really just comes back into EMC. Cisco, by the way, still a minority owner but there's no board anymore. It's just a division of EMC, still keeping the brand, still keeping VCE and we're starting to see some changes along the way but it's core mission to still simplify IT and drive that convergence and they're one of the leaders in this space. And that train that you talked about, that's a single SKU train. It's not a reference architecture. They've made a big deal about that and I used to joke any color you want as long as it's black but there's some different shades now that they're offering. So take us through the announcement. Yeah, sure Dave. So first of all, you're right. When we think back to the early days, one of the knocks on V blocks was really it's a single configuration and I can't adjust and I can't modify and customers need options but what we know is customers spend way too much time trying to over optimize and configure it and turn those knobs and the simplicity of VCE so that it is truly that single SKU that ships out of the manufacturing and you know exactly what you get. You know how it's going to perform with certain workloads. That was great. Over time they've added more models. They've added more configurations and the announcement today, a couple of big things that are going to allow even more flexibility but still keeping what they call the VCE experience. So the first one we'll talk about is what are called the VX block which is a little bit, it forks what a V block was. A V block we always knew was it's EMC storage, Cisco compute, Cisco networking. A VX block actually is going to allow me to change some of those components a little bit so they talk down the road that both the compute and the networking, maybe even the virtualization could change off of the original configuration. The first configuration that they're going to have is that you can run VMware NSX which of course is the software networking component or SDN component, the huge NICERO 1.2 billion dollar acquisition, NSX on what basically is a V block because even though it's going to be called a VX block the hardware configuration is really the same as what I had with a V block before but it's just going to give that option for VMware's software network. So that's an example of something that probably wouldn't have happened right in previous administrations. If Cisco has a vote on the board wouldn't they have vetoed something like that? So there was definitely some tension there and there was discussion that hey if I'm still using Cisco hardware gear yeah I can do VMware networking, I can do other software on top of that. I mean there are places where Cisco and EMC and VMware compete a little bit when it comes to the software component so if the core components say the same it might have happened on VCE. It just happens a lot faster and a lot easier now that VCE is part of really just under the EMC umbrella. Well what about Cisco's software to find ACI? I presume that's still at play. I mean some customers are going to want to use that. Yeah absolutely and ACI is being baked into the V block that is a configuration that you can get and if Cisco's smart they're going to leverage VCE to be the driver really the tip of the spear to get those customers to adopt it because V block customers tend to be pushing the envelope a little bit trying those newer technologies so ACI is a perfect fit for the V block. Well Cisco I mean really that relationship worked out in the sense that it created a distribution channel for Cisco at EMC's sales force who's got relationships with a lot of big customers like you said it's the big customers who are buying V block. I mean it worked out pretty well but you always hear about these tensions. I mean what's going on there? So first of all of course Dave, Cisco wants anybody to sell their gear so more of their gear and absolutely when it comes to the UCS, the compute platform if it wasn't for really the two I'd call out it to EMC and NetApp did a great job of getting those to the customer's environment because even though it's the server piece the storage guys have had a long time interconnecting how those pieces work so VCE with the V block and the NetApp FlexPod both delivered a ton of those environments. If you look at the bigger UCS customers most of them are buying Converge. A lot of revenue that drove Cisco made it easier for customers to adopt that change because one thing that Convergence does and even Hyper Convergence takes it even further is I don't think as much about the brand I think about the solution and if I think about the solution I can make that change if I've been an HP or an IBM shop for ages well I'm also a Cisco customer and I buy the solution it makes sense I don't worry about oh wait you know the compute has so and so's logo on it. Well what about Hyper Converged? We talk all the time you saw a big raise the other day by SimpliVity, Nutanix is doing well granted it's at the lower end of the market space maybe than what V blocks traditionally have played but those markets always come together what about Hyper Converged? What's VCE's Hyper Converged strategy? Yeah so today Dave VCE does not play in Hyper Converged EMC does EMC has the V-Specs Blue which is based on the VMware V-SAN EVO rail technology I would expect that VCE needs to move in the space Cisco's going to move into the space Cisco actually is a V-SAN partner they don't do the EVO rail so today nothing from VCE but expect to see more V-Specs is already there but by the way V-Specs and the Solutions Organization in EMC all report now to Praveen who's the CEO of VCE so absolutely I expect to see and hear more from VCE on Hyper Converged but today I mean Dave we talked about if VCE's doing two billion and Converged is like a six billion dollar market Hyper Converged last year was about a tenth of that so it's still early it's still growing it's the future. So just keying on what you just said Pat Gelsinger at the financial analyst meeting this week talked about EVO RAC and he said that the first configuration is going to be a solution around VCE or V-Block so that's going, you know, that EVO rail is going up market. Okay, what about V-Scale? Where does V-Scale fit into exactly? Actually just one more piece talk about the flexibility of the solution the other one is if you look at a Converged environment or especially a Hyper Converged one of the things that people have question is what if I need more computer I need more storage can I be flexible and VCE now has a solution that they're calling a VCE technology extension so now I can take a block of compute or a block of storage and plug that into the network so it's great if I just need more Cisco UCS or if I wanted to say from EMC and Iceland or ExtremeIO to programmatically plug that in still keep it in the V-Block experience and that leads to your question which is Yeah, but so yeah, but I just want to, second I mean that's a criticism you have of a lot of the Hyper Converged solutions that you can't scale storage independent of compute you actually hear a lot of people in the Hadoop community complaining about that and why not, I mean different workloads are going to require different profiles. Yeah and absolutely on that and that's why a single solution isn't what you need, you need flexibility so take Nutanix for example it's not a single option they have kind of a small remote office box they have a big storage heavy box and if I put them all in a pool together I can have different configurations and balance as needed and grow as needed so that's their angle Yeah, that's Nutanix's angle and you know it's simplicity, you know it's not like you've got one monolithic box and there's not a little bit of adjustment inside there but absolutely there are environments where you might run out of computer or might run out of storage But there's greater granularity than the marketing would lead you to believe is what you're saying Yeah, there's some nuance there absolutely Okay, what about V-Scale? Okay, so VCE when they first came out it was while you're just taking the parent company's technology are you going to create anything yourself? And the first thing that they created is what they call VCE Vision which is really their orchestration software layer and V-Scale is really the next generation and kind of what this whole announcement from VCE was called the dot next release reminds me a lot of how VMware does their announcements but it's taking vision and really turning V-Scale into a software backplane that can pull together the V blocks and the VX blocks and the compute and storage and manage all of them in a really software defined way and it really plays in nicely with if you look at what EMC has with Viper what Cisco has with ACI it's a similar type of orchestration model and could leverage all of those things going forward Okay, so it's another layer on top of the fabric and vision is a VCE product right? I mean they sort of built that themselves Yes, a homegrown software which was the first product that they actually created IP on their own Right, I mean normally it was taking some VMware, some Cisco, some EMC so where do you see that product going? So V-Scale, customers of VCE don't just buy one box that they're usually buying a lot a lot of repeat, a lot of larger customers going into service providers going into large enterprises and when I want to manage these large clusters in these environments this is where V-Scale is going to be able to take care of that and it's a good extension for the product line So Stu, I want to talk about cloud in a box when these systems came out it was interesting, Larry Ellison actually made the statement that Oracle didn't get it all started VCE didn't get it all started it was actually Teradata that it got all started the first to actually put sort of this appliance model together and all the compute storage and other infrastructure in the box and so that was many, many that was back in the 80s but it was really Exadata and VCE and sort of HP has sort of chimed in with converged infrastructure right around that 2009 timeframe but when that occurred everybody started talking about cloud in a box and it really wasn't cloud in a box it was compute networking and storage in a box and then you had this management and orchestration thing where are we with cloud in the box? Yeah, yeah, great question Dave you know I think back a few years ago it was really, you know advanced virtualization in a box and maybe with some management on top of it and we've come a lot further so if you look at EMC's hybrid cloud it uses converged infrastructure as the substrate it's the base layer and then there's a lot of software on top of it to really turn that into a cloud offering so EMC hybrid cloud is specifically it's either V block or V specs underneath it and therefore I know if I have a certain number of virtual machines or a certain number of virtual desktops or those environments I know what increment I want to buy that in I know the base configurations and that's an underlying piece because when I go to cloud and if I go to software defined data center or anything there still needs to be hardware that it all lives on I still need spindles and nodes and compute and everything else so how do I build those out and I want something that just really easy works and can scale and that's one of the things that converged infrastructure can bring. So where are we in the marketplace? I mean I definitely have to give Cisco props I mean they've done very very well in the market they underestimated them when they entered the market I was extremely skeptical that they'd be able to succeed in an adjacency like servers and looking back the success is because they were very focused they changed the game and obviously have done very well and they had a partner in not just EMC I mean NetApp's done very well the FlexPod and so they've got a good strategy it's worked can you give us an update on sort of the market what are the players looking like? Yeah so it was interesting Dave we had theCUBE at the Open Compute Summit this week and we've talked about one of the biggest threats to Cisco is what we call kind of the white box or bright boxes kind of the new term is not just saying just go buy some generic but you know if what about if I buy from Dell or HP and they give you some hardware and I disaggregate the software so some of that disaggregation is a big threat to Cisco it's interesting you listen to John Chambers and he said I'm not worried I'm going to crush all of those white box guys but it's a you know for years Cisco's been squeezing huge margins out of the network and they got much better margins out of compute than anybody thought that they could a lot of it because they marry some of the network pieces in there so there are some big threats you see most of the big players out here are using more commodity components you know we talked to HP and Dell IBM uses a lot of open source components even EMC offers you know white box type of technologies with what they build with ECS with Viper you know a lot of their components they're going to more off the shelf componentry and Cisco builds their own stuff so you know there is a threat that if you know I can deliver a platform at a lower price and I can get software built on top of it to really build more of a kind of a software ecosystem which is how most of the market is but it's not how infrastructure typically is today that there's a huge threat to Cisco and you know while they've been riding UCS and they're doing great with it at the macro trend you know I think there's some huge threats well that's interesting you know open source even finds its way into hardware with OCP and I would imagine companies like Cumulus and others would be sort of an interesting wild card I should say in that space but what's the market look like I mean do you have a sense as to the to the size of the business who's got the biggest shares I mean even in a rough sense it's just sure from a compute standpoint yeah so it was actually SimpliVity in their announcement said that it's basically storage and compute are both a little over like 52 to 54 billion dollars so it's a hundred billion yeah it's a hundred billion just taking the compute and the storage and the convert space is you know looking to attack a big piece of that well and you throw in so you said the compute and the storage throw in the networking yeah you know it's another piece throw in the software it's I mean at one point I had it at a 400 billion but okay so it's huge yeah and just a quick note on the network piece because really core networking is mostly orthogonal to this you know I don't build my whole network that I run all the internet and all my nodes off of it's there's top of rack switching and that embedded stuff is in the convergence but I don't get all the networks so yeah so who's doing well there I mean obviously VC what's their share do you know the of converge if I see you know if VCE is at about two billion and it's a little over six billion it's they are you know number one in you know Gartner breaks it up into two or three different segments and they might have about half of the segment that they play in they're about you know more than a quarter maybe is that kind of high-end overall yeah our target market as opposed to the reference architectures another one and then Gartner actually segments the you know application specific solutions like what Oracle does in some IBM's solutions as a third piece so you know all those markets are growing convergence is really you know that the rising tide that's raising you know a lot of these pieces so VCE seems to strategy is to expand horizontally with more choice go up the stack maybe over time more more management you know more cloud-like capabilities probably not going into the application unless I mean they're not Oracle so they're not can start you know layering databases but maybe they could you know create affinity with with databases so what do you see there that that sort of horizontal versus vertical play yeah and it I'll bring a note that VCE told us is said in the early days it was really about saving money and simplifying things that they they love our terminology Dave which is to get rid of that undifferentiated heavy lifting and the transformation that they've started to see over the last kind of six to twelve months is customers are looking to build this platform and get faster and do cloud speed I'm sure it's something you heard from the whole EMC Federation is that agility and speed is something that they're driving especially with Pivotal so in some ways you know they are moving up the stack but they're not trying to make you know specific you know environments for applications they want a general purpose you know pool of resources where I can understand the specific workloads and go after them so if I juxtapose that to Oracle Oracle is basically I call it appliance creep they're building highly optimized appliances for virtually every workload you can imagine whether it's database or analytics you name it they've got you know an appliance for it and so VCE's strategy is much much different they're talking about a horizontal infrastructure that can support not just Oracle applications but applications across the portfolio now Oracle might say well we can support other applications too but they really don't want to you know Oracle doesn't want to support Microsoft applications they want to support Oracle application I would think that VCE is application that wants to be application agnostic right is that the strategy yeah absolutely application agnostic I'm in some ways they're even going to be you know virtualization agnostic who said it's VMware today but that you can do physical environments on parts of the V block you can use other virtualization environments the interesting thing Dave when we talk to the storage companies is right how are they doing with those new applications you mentioned Hadoop before today convergence is not been a good fit even hyperconvergence hasn't been a good fit for Hadoop because just the balance isn't quite right it's usually not the same buyer most of the hyperconverting solutions are built for virtualization and while VMware is working hard to virtualize Hadoop that's that's not where most people are with that type of well and I see this is modern apps VCE and Praveen you know expanding their their their total available market I mean if they can start getting into new forms of virtualization maybe even you know other choice around servers and network not choice around storage that's not going to happen is it no no it's any anything you want as long as it's emcee storage I mean that's kind of even though well you know Federation I mean you know if vSAN makes sense you know that's a little bit different it's you know the role it's interesting to see oh emcee how much of it is hardware and how much of it our software solution that looks real that's that's getting you know traction and it's just it's only going to go up from here alright Stu we're out of time we have to leave it there final thought on on the announcement and the market the directions you know customer thoughts what do you think yeah so you know the thing that I keep coming back to is when I talk to VCE customers it's you know storage goes away as a problem and as a matter of fact most of my infrastructure can become invisible and that's great because it need to move to that different model when we talk to the hyperscale guys you know they don't have infrastructure teams they focus on their application they focus on their business value and that's something that I know we've been preaching at Wikibon for years so how do I make it simpler how do I make that infrastructure go away and while Vblock you know takes pieces from some of these big you know traditional companies they deliver an experience in a different way and it's really more about the people and processes often that it is the technology so it's it's it's great to see this this process and this solution you know driving some change back to these parent companies all right thank you Stu check out check out Stu's work at wikibon.org and also premium.wikibon.com new website that we have you can text him or tweet him at he's at Stu if you had any questions on the announcement I'm at D. Volante thanks for watching everybody this is the cube we'll see you next time