 Good morning everyone, welcome back to theCUBE's day two coverage of VMware Explorer 23 live from the hub at Venetian Expo. Lisa Martin and Dave Vellante here. As I mentioned, this is our second day of coverage. We were here yesterday breaking down all the analysis. We are very pleased to welcome back Zia Karavala, one of our CUBE friends, the founder of ZK Research, who's going to, if you saw the last segment, tell us Zia's. The last segment we talked about Broadcom, we talked about Multicloud, we talked about AI. What did we miss? Yeah, I think, you know, I did watch the last segment. I thought one of the underappreciated announcements here flew under the radar that was the edge announcement, the software defined edge. And I think, you know, given the position that VMware has in the data center, and you know, in the analyst Q&A yesterday, Ragu actually called it an uncontested position, which I agree with. If they can use that position then to expand that VMware operational model, which let's face it, a lot of IT pros love, right, to then expand to the edge. I think that creates an opportunity for them. That's as big as their current TAM right now. There's, when you look at a lot of the verticals, you know, retail, manufacturing, warehousing, transportation, you know, those are all industries where there's a lot more connectivity to things that are edge driven. And in fact, when I talked to Sirat Malik yesterday, I asked him who's the GM of the edge group, I asked him to define the edge because everyone uses it differently. And I actually thought his definition was good. He goes, I'm not going to define it by a location like a lot of people do. He said, I'm going to define it by the constraints that you have. When you have variable bandwidth, you've got, you know, compute and storage limitations to us, that's it. So that can even be in building, right? Maybe no connectivity even, right? Yeah. In a lot of cases, that's the case. And so I do think that the anchor they have in the data center, the fact that people love Visa, the fact that they love their operational model, the fact that as, you know, we talked about yesterday, you know, in the Q&A, it's almost impossible to decouple. If they can use that position then to expand to the edge, I think that creates a massive opportunity for them. And then from there, I'll be curious if they can attach some of the network connectivity with their SD-WAN portfolio and then security. And so it winds up becoming a bit of a land and expand where the core is where they've landed, and that can expand into these emerging areas. I'm glad you brought that up because it relates to the conversation we were having with David Nicholson around AI. Because, I mean, my take is that the cloud vendors have the advantage, they've got the AI optionality, they've got the AI history, they've got the innovation, they've obviously got the infrastructure and sort of the capex around it. So they've got that advantage in the developer affinity. The on-prem companies and, you know, Ragu and theCUBE, yesterday they say, hey, it's not about on-prem in the cloud. I understand that just as quick a quick aside because VMware runs in the cloud and it's a full VMware stack. But notwithstanding, I think they'd rather see things on-prem if they can get it because they get more control and less cloud competition. But anyway, they've got the advantage of the fear, uncertainty, and doubt of all the legal requirements. That's why they trotted out the general counsel. So their challenge is on-prem anyway, they've got to get that innovation flywheel going. And then the edge, that's all about latency, right? And all the items that Zeus just mentioned. And I think in many respects it is jump ball. I don't necessarily think the cloud vendors have any greater advantage than the incumbents. No, in fact, I think they're at a disadvantage in a way because they do tend to lock you into that environment. And I think with the edge, customers will want a little bit more freedom of being able to move their information around because it does come down to what's the use case, what's the workload you're trying to solve. And so the thing with the hyperscalers is customers say this all the time, they're like Hotel California, right? You can check out but you can't leave. And I think that's okay for certain workloads in the cloud. I'm not sure that's going to fly at the edge. So the hard cases in the edge like windmills and autos, autonomous vehicles. And that's where I think it is really interesting and it could be a whole new set of economics. Arm just published its registration to go public. There's a lot of really interesting information in there. They are dominant in mobile. They are really, really strong in things like automobiles. The reason I bring this up is because I think there's a new set of silicon economics that's emerging. I mean, this is edge. There's a GPU in here. Those are all arm based. Manage the screen. These are all arm devices. There's arms in this device. There's arm processors in Tesla autonomous vehicles because they're programming the NPU, the neural processing unit. And so there could be a whole new set of economics that emerges from the edge that eventually seeps into the data center. Stuff always happens in consumer first. That's where you get the volumes. That's where you get the pricing, economics. And when the enterprise first sees it, they poo poo it, cloud their booksellers or PCs or toys or open AI. ChatGPT is a toy. It all finds its way back to the enterprise. And so that's where I think the edge is really, really interesting. So the question over the edge is, will the operational model be driven cloud to edge or data center to edge? Right? And if it's cloud to edge, that puts the advanced hyperscaler. If it's data center to edge, then who else other than VMR really could do that? Or will there be a whole new operating model that emerges at the edge? I don't know. I think you'll take your data center operational model and expand it out. And I think you'll treat it as part of that. If the multi-cloud vision becomes real, where you wind up with one logical operational model that spans edges, data centers and clouds, I think you would take your data center operational model, which is very mature and expand that out. Well, it depends. Because if the edge is a Lowe's or a Home Depot store, I agree with you. But do you feel that way for a Tesla vehicle? Because you think about a Tesla vehicle, it persists very little data. It's doing stuff in real time, real time inferencing at the edge, if you will. And it's only persisting data and sending it back, very, very small amounts of that data. Well, small percentage, probably could be huge data to your point. So what is that operating model? That's, to me, something that's new. Yeah, well, that would be edge only. Because there's not really a data center component to that. And that probably would have a different option. Well, let's go back to the cloud, though. If a deer runs in front of a Tesla and an incident happens, they will persist that data and then send it back to the cloud. For a different purpose. For modeling and training. It's not stop or not. Well, no, right. But for modeling and training. But then they will push that model back down and that intelligence back down. I think the one thing I can say about the edge that you cannot say about the cloud or the data center is you can't people your way out of it. Yes. When people run their operational models in the cloud or they run things in a data center, you can throw lots of people at it to actually make it work. You can't do it at the edge because you just don't have any local resource. That was a cloud example. There's a flip side example that favors the data center model, which is if you've got a manufacturing facility, you know, let's say remote and you've got, you know, central headquarters with the data center and they've got their data and they're running Gen AI on prem. That data is not going to go back to the cloud. That data is going to go back to the data center. So that is more of a data center-faving operating model. I think it's very hard to predict how that all shakes out. I think there's more of those in the Tesla example, so. And, you know, warehousing stadiums, even, you know, venues like hospitality, things like that. Yeah, I haven't studied it. So you may be right. That's interesting. Even hospitals, right? A lot of security concerns, privacy regulation. It's a little more likely to stay on prem. But I do think that creates a variance in opportunity for VMware to expand their operational model. And that's why they're so dominant. I don't know if their hypervisor is really any better than Microsoft's but vCenter, their operational model is rock solid. What were some of the things you... Oh, sorry, Dave. I do think they're hypervisors. VMware is hypervisors. Yeah, I do, too. But we're talking, I think the delta and the operational structure is bigger than it is in the technology. But better is not always appropriate for everybody. Yeah. You know, sometimes cheaper is better. Better fit for companies. Yeah, so... It hasn't proven that way in share. VMware dominates it, so... Yeah, yeah, that's true. Yeah, yeah. Zia, talk a little bit about... You both had conversations with Ragu and Sumit, the one I saw Sumit was on earlier, like an hour or so ago. What were they talking about with respect to Edge? VMware is edge in edge, if you will. Did you get to ask questions? Did you hear what you were looking to hear? Yeah, one of the things that I'm not sure about is how they're working into the suite approach. Because it seems like they're trying to go to market with bigger VMware offerings, right? And the challenge with that is that a lot of the technologies that go into that, that offering, are on different upgrade cycles, right? So it's not like a customer can say, yeah, I believe in your multi-cloud. I'm going to buy everything core to Edge and, you know, your SD-WAN, because those are different people. And so I did ask in the first Q&A how they would manage that from a sales motion perspective and he talked about, Regu talked about the ability to, you know, still sell breast to breed, but sell that suite approach and land and expand and stuff. But I didn't get a real great feel for how exactly that works. And I think there's a lot of complexity in that in being able to sell both ways. Go ahead, please. Yeah. And I do think that's something there's still largely to think through. And the other part of that, too, is the best to breed sale. Here, I'll sell you my SD-WAN versus this SD-WAN, right? It's a faster sale, right? But it is more competitive, which means margins are likely going to be lower. And so, you know, that suite approach takes a lot longer to sell, but you will wind up with bigger deals, better margins, but it's a different sales motion. And I think there's a bit of a, I guess, change in thought at VMware now and I'd be curious to see how they work through that. I would decode what I heard as a company like VMware has to have a, is there a horizontal technology play? And the problem the Edge brings is very fragmented and verticalized. Yeah. You know, think about it. Well, there really isn't an Edge market right now. Right, exactly. There's like a zillion of them. There's, we talked, there could be manufacturing sites. There could be windmills. There could be autos. There could be hospitals. I mean, it's very, very verticalized. I feel like windmills. So, I think I do. This is a perfect Edge example. There's like no connectivity or anything. There is now. But so, but so, VMware has to have that horizontal scalable play, but they've got to, and the answer, I think for their Edge play is they've got to have partners. Yeah. Like the GSIs who do have that vertical expertise and they've got the people who understand those industries very, very deeply and they can build solutions around that. And all those big, those big GSIs, you know, they used to be body shops, right? We'll just bring in and we'd build, build heads. Now they've got to build platforms and they are, they're building platforms and solutions on top of horizontal infrastructure. And I think, again, I think that's quite open. But that's what they're doing. They announced Edge for retail. Absolutely. And I expect down the road we're going to see an Edge for warehouse and Edge for transportation. You know, they, in San Jupal's Keynote demoed public safety in the Ford F-150 that's on the show floor. Oh, right, yeah. Right? And I think you will see them go to market with like a Surner and healthcare and things like that. And so I do think you are looking at it vertically and I do think that will be done largely through. Well, healthcare is interesting, right? Because healthcare you got, you got Epic, you got Meditech, and you got Surner. Yeah. Which is now Oracle. And by the way, VMware, I think, I think all three of those are running on VMware infrastructure. I got to check that. Who else would you run on? But yeah, VMware's got a very strong presence. Now, those are all proprietary systems. Yeah. Right. And it gets interesting, right? Oracle's trying to rule the world, put everything in Oracle. And that's never going to happen, right? Because, I mean, the government's going to mandate that these systems interoperate. But VMware's got a very strong position there. And again, that's where, when Haktan says we're going to invest in the ecosystem and the channel, he's no dumbass. I mean, he knows that that's where he's going to get leverage, sales leverage, operating leverage. Yep. Sanjay Upal is our next guest, actually. Oh. What are some of the questions, I didn't get a chance to see his keynote. What are some of the questions that you would ask, or you had a chance to sit down with him, too? Well, I watched his keynote, and I talked to him at our analyst reception last night for a while, so. Okay. Yeah. He's a good guy, and he runs that whole business you know now. I would ask about that concept of similarities and parallels and differences between software-defined data center and software-defined edge and how they use the fact that they've got that very mature software-defined data center model and then how they use that to be able to to gain momentum at the edge. I'd also, you know, from there then, how do they use that to gain traction and networking on the SD-WAN side because in a way they all kind of fit together. And then I guess the other thing I'd probably ask him is from a security perspective, that to me is the biggest question I have from their portfolio because security, as we talked about the Palo Alto event is becoming a game of sweets. And so they've either got to be all in or all out. I don't think you can half bake your way in security. And so they either do it through partners or they do it through, they build it themselves. And I think they're going through, I'd be curious to see how we answer that, actually to see if he wants to do that himself or do it through partners. So Zias really knows networking well. I'd love to get your take on NSX Plus. We sat in the sort of breakout. They basically do in the abstraction layer across the sort of super clouding NSX. They got a lot of work to do there. They haven't really connected up to the cross-cloud yet. They're sort of starting on-prem. But what's your take on NSX, NSX Plus, and its future? Yeah. Well, it's an important part of the stack, right? In fact, I think was there a ragu set on stage yesterday that when you look at the multi-cloud stack they put together, the networking is the hardest piece to solve. Yeah. Right? And so from that perspective, there's a good opportunity for them to go solve that and make it easy. The fact that the shift in everything to only subscription, I guess everyone's doing that. But I do think from the larger customers, some of them aren't very happy about that, but we'll see if that works for them. But I do think NSX has matured a lot over the last few years. And I think when they first acquired NYSERA, they made a lot of missteps, you know, targeting that towards server ops. They really alienated networking. And then I think they swung the pendulum too far where they almost ignored their traditional buyer. But I think they've brought it back now to center, which is good. But to me, it becomes a part of that stack versus a standalone offering where they'll go compete for that. You know, I don't think you'll see NSX supposed to become the lead for many things, but I think it becomes a very important part of that stack. And then versus, you know, a perpetual license model, it's split. When you talk, when I look at the ETR data, you know, some customers prefer to end or mandate it. Others, you know, don't want it, right? Because, you know, because they probably because they got sucked into Salesforce and they hate that model. The one thing the description does though, and I think this is an under-appreciated aspect of it, is it helps customers stay current with innovation? So it's a little like this. So do you pay a subscription for this? You buy them outright, right? Most people pay a subscription. I can't remember. I probably pay a subscription. Most people pay a subscription. And then three years later, when the new one comes out, you go trade it. If all of a sudden, three years later, you had to pay $1,200. You might think twice about that, right? And so with IT purchasing, you see spend, spike, year zero, right? And then it flattens up to maintenance. And then I got a refresh. Now I'm looking at this huge spike in spend. Then I do, I do it. So that's easy to push for another year. Easy to push for another year. And then not what happens is your tech is three, four years old, right? That can have big implications of performance, security. You know, you think about how it can disrupt the business, right? And so when you, when you're subscription, it does mandate that you stay current with technology and innovation. And I think there's a long-term benefit for companies that is largely misunderstood. Do you see any differences in subscription versus perpetual licenses by industry? Or is that more of a cultural people-driven decision? Well, I know there are, there certainly are any industry that likes to advertise. So you look at any government agency, they want to do perpetual, right? So, you know, I think... Bankings are, banks are well-capitalized, so they might want to, they got cash, so they might want to spend their time. Yeah, healthcare is another one that tends to buy and stick with it for a long time. I do think you wind up with a lot of old technology, though. Healthcare is a good example where there's a lot of old tech. It's almost out of panic, because the stuff's so old, they can't do a lot of things they want to do. Yeah, you probably do end up spending more on a subscription. You know, it's like, like, renting. Renting, you're going to end up spending more, but there are conveniences. It depends on how fast you refer it. Yeah, absolutely, and there are other benefits, as Zias pointed out. Zias, what is the rest of your day in our last minute? Tell us what the rest of your day to... day two of VMware Explorer looks like for you. Oh, I'm going to head to the show floor, how that's kitted out. They actually had Barcelona at Mobile World Congress. They had a Tesla police car, so I'm assuming it's very similar to that. But I want to go check out some of the demos there, meeting with a couple of the integrated partners, things like that. So it's been a good show, though. It's a different VMware Explorer that I'm used to in the past. There was a lot more innovation here, I thought, and I wasn't sure if we'd see that with Broadcom looming, but it does look like they've kept the train running with that in the background. Excellent. Well, we're excited to have day two. When we appreciate ZSU coming on, giving us your insights on Edge, we'll definitely ask Sanjay Upal some of those questions as he's coming up next. All right. And it's been a while since I've seen you. I see him all the time. I ran into you at Mandalay Bay not too long ago. Yes. At some event, we were there a couple of years ago. Well, good to see you. All right. For ZS Caravola and Dave Vellante, I'm Lisa Martin. As we just said, Sanjay Upal is up next. We're going to be talking and digging into the Edge at VMware from a strategic and a tactical perspective. Thank you.