 The Cube at EMC World 2014 is brought to you by EMC. Redefine VCE, innovating the world's first converged infrastructure solution for private cloud computing. Brocade, say goodbye to the status quo and hello to Brocade. Okay, welcome back everyone. We're here live in Las Vegas for EMC World 2014. This is the Cube, our flagship program. When we go out to the events, we extract the signal from the noise. I'm John Furrier, the founder of SiliconANG. I'm joined by co-host Dave Vellante, the co-founder of Wikibon.org. We are here with Nigel Moulton, CTO of the EMIA Group, but within VCE, we had Praveen on yesterday. It was one of the most popular segments we had, certainly most voted on on CrowdChat for sure. Welcome to the Cube. Thank you. Thanks, guys. VCE, killer momentum. We've been following VCE for a while since the beginning and I remember Dave and I first met Michael Capela as we were talking about watching the evolutions and the channels and this and go to market and the early days, it really, really was a great vision. And then the market just really took off, especially at the low end, mid-range, with commodity hardware, but VCE had that nice high ground with VBlock and with virtualized environments. Really, guys did a great job, so congratulations on the product market fit. Billion dollars crossing over the last year. But 2014's your year, you got to gas it, put the gas in the car and really take it to town. All right, so what's the plan there in Europe? Could agree with you more. So, you know, if you look at VCE and you look at the European angle of VCE, within VCE Europe was the fastest growing region, so, and if I include the Middle East and Africa of that, so it was the fastest growing region that we had within the company. And then within that, the Middle Eastern portion, so Dubai, Qatar, Saudi Arabia, South Africa, these are huge engines of growth for us, but it's not just the old traditional places anymore. We're seeing a huge amount of stuff in Nigeria, in Kenya, in Tanzania. So places where, you know, you might have had a natural appetite to acquire IT with a level of sophistication that we manufacture, this is now really, really kicking off in this region. So it's a fantastic time for us, fantastic time to be standing in the region. Is there something about Europe that makes it unique? I mean, why, I mean, obviously Europe has some history, but some legacy of different countries, is it still like that? Is it unique to Europe, or is it just that Europe in general is just hot right now? Well, Europe is hot right now. It went through a period, you know, not too many years ago where people were questioning the validity of the single currency. It's come through that. So at the macroeconomic level, you've got a number of the European countries are powering ahead economically, so there's an amount of confidence and growth that has returned to the European market. But you're right, you know, Europe is a federation of 37 plus countries. So you have language issues, challenges culturally, so sometimes you do feel like you're selling into an individual nation state that's under the banner of the European Union. But also creates some complexity in IT. I mean, obviously it's like having all these different regulations. We already know the privacy issues are on computer country, very, right? Is that, is that true? Is that, it kind of creates some complexity or that VVLOG helps solve? Or is that just? I wouldn't say it was complexity. It's more a case of knowing what the boundaries and the rules are. So if you talk to a German CIO, you'll get a very different perception of privacy and data security versus perhaps an English CIO. So you do have to know some of the cultural and social issues around certainly data privacy and data security. And it is very true to say that it's not a one-size-fits-all market in that regard, that's absolutely true. What have you guys seen that's been competition for you guys? Obviously, you've had the high ground with VVLOG and certainly you've proven your case, but you've seen some new alternatives come in with software network virtualization within the Sierra. That was game-changing. You're seeing solutions like Nutanix and others that have this kind of unique approach kind of at the low end and their entry level into the mid-range. Do you guys look at that competition that way? Yeah, you know, I think you're wrong not to focus on any competitor, particularly when they are trying to encroach into your, you know, into your territory, your space. And you can look at this in a couple of different dynamics. There's the classic enterprise guys, so certainly you would consider HP to be in that space. And what they are trying to do to some extent now is a carbon copy of what we already have. So the challenge with VCE becomes one of how can you move the game on so that, you know, the story around converged infrastructure actually changes into something that we're, you know, that we're calling converged operations, the thing that you do next. If you look at the appliance guys, you see some interesting work going on there, but it tends not to be a market that we're necessarily in. And I think the other thing which sometimes compounded it was, it took a while for the analysts to actually come up with a common taxonomy for what converged infrastructure was and how they were going to measure and monitor it. And we've only seen that really be mature, I'd say within the last sort of six to nine months. So there was some market confusion around the definition. And then once the definition was solidified, very clearly the market leader is us, but there are classic competitors in the enterprise space that we watch all the time, and then some folks in the appliances side who, yes, you watch, but they're not necessarily in our market at the moment. Nigel, can you talk about application-centric infrastructure, where it fits, how customers will use it or are using it, and how it fits with VCE vision? Right, so Cisco's ACI strategy is their software-defined networking strategy, and it revolves around, in some cases, a new set of products, a new product capability in the Nexus 9000. And what it allows you to essentially do is to take a programmatic approach to the way that you define network policy. So in the past, you might have had to go to a number of individual switches within your network. When you make a configuration change, you have to touch every single one of them. What ACI allows you to do is say, I would like to have a policy for an application, and I will apply that policy uniformly across my entire network infrastructure. So I will program at once and copy it many times out to the constituent elements that are within the network. From a VCE perspective, Cisco is our networking partner, so the ACI technology is something that we are looking to embed firmly inside of VBlock, and if customers today want to take an option around the newest Cisco switches, then that is something that we're able to integrate into VBlock right now. How does that change or extend or enhance or how do customers think differently, if at all, about the model as it relates to security? Is it no change in the security model? Do they have to think about it differently, or do they want to think and talk about that? Security becomes a policy, and the different elements of the policy, there might be firewalls, gateways, load balances, there are different parts of the infrastructure which need to be thought about, but you think about them from a policy and a programmatic point of view rather than a, it's an element within the network that I need to worry about. So, if I understand that then, the logic of how you interface with the system is totally different. Yes. You're thinking, you're talking in terms of dimensions, maybe even business dimensions, risk level, threat level, cost factors, where you're setting policy based on whatever business rules you want to apply. So, I think there's traditionally been a reasonably strong disconnect between what the business wants and sometimes what the infrastructure can automatically provide in provision. And as we have added complexity and functionality into the networking elements, they have become more complex to program. They've become more complex to make sure that a change that you make on one individual element then doesn't ripple through and cause damaging effects elsewhere. A policy and a program approach simplifies that greatly. It allows you to think holistically about how the application traverses the infrastructure. So, you almost start to care less a little bit about some of the individual components that are within it and you think about how the policy applies is applied network-wide. So, it allows you to very dynamically, and in some cases very quickly, apply policy change. It might be that you are going to do a massive video conference. So, you need video to suddenly have more availability across the network than it would under normal times of the day. You can change the policy on video to make it behave differently. And when the video conference is over, you can reset the policy back. But it's something you do once and copy many times as opposed to having to go to multiple places to make the change. Yeah, so it does simplify. I mean, security's tough, right? Because the business requirements, I mean, that's such a banal statement. But anyway, the business requirement for security is I summarize it as follows. I want no risk and I want no constraints. Okay. I want to be able to do anything I want, bad behavior, et cetera, et cetera, but I want you to mitigate all threats. Yeah, so one of the things that we see a huge drive around is mobility and the desire for enterprise organizations to deliver a software experience to a customer on a mobile device. So when you do that, two things happen. One, you don't own the hardware that that experience exists on. But the software that you create to deliver the experience is something that you own as intellectual property. So what that software needs to do when it works within the infrastructure that you've built is it needs to give you this almost frictionless approach to the way that I have the experience with the customer, but I need to know that I've authenticated the individual that the time of day is right, that the behavioral patterns are right. So you're right, on the one hand, I've got this dichotomy of I need to be super, super safe and secure because I don't want anything untoward happening, but I want an almost frictionless experience from my customer with the other. And when you bring those dichotomies together, cloud becomes the obvious platform to build it on because it gives you the agility and the speed with which you can roll out the mobile applications and it gives you the sophistication with which you can secure the endpoint or the boundaries to the endpoint. So when you start, when business starts to ask you to do that, you have to change the IT architecture that you're going to use to build that suite in the first place. Many customers are starting to embark on this journey. You're starting to see many more mobile applications become available and customers are learning that the software experience on their chosen platform is the way that they want to have that experience delivered to them. The timing of the Vblock announcement was, it almost couldn't have been better because it was announced, if I recall, 2009, which was sort of the tail end of the downturn. 2010 was sort of a nice rebound for IT, when you think about the way cloud progressed, it was sort of early tire kickers and developers and then when the downturn came, it was a lot of action in cloud. I got to get rid of CapEx and go to OpEx and when we came out of that, that's when Shadow IT really started to pick up and that coincided with Vblocks go to market. And my perception is what you had is a lot of organizations say we want to duplicate the capabilities of cloud internally. We want to maintain control. We don't want the Shadow IT popping up all over the place, especially for these mission critical applications. And so you have a lot of organizations buying your product to try to duplicate those cloud economics and cloud flexibility, as well, you have some service provider uptake. In fact, early on, that was a lot of the interest. So I wonder if you could talk about that and talk about some of the examples in your customer base. Yeah, sure, so, I mean, you're right, spot on in terms of your analysis of that period of time, I think that's very correct. What's interesting is if you talk to a CIO back then and ask them what their cloud strategy was, most of them had no idea. They knew this thing existed, but they didn't know what they were going to do with it. You fast forward three or four years and you can mirror this to the growth that we've seen. People have figured out their cloud strategies and they're increasingly comfortable blending the public, the private, and then the hybrid which sits essentially between those two worlds. And they've been given a huge amount of choice as to how they can go and do this. They could go out to Amazon Web Services, they could go to their own internal IT group and say, build me a cloud capability that looks like that. And the challenge the IT folks had was that they were not prepared for how to build that cloud in the optimal way because they were taking what I wish to call a 20th century approach to a 21st century problem. So if you look at the history of IT and you look at the silos that exist within the different functional groups in an enterprise organization, these are teams that very rarely talk to each other. When they do, they talk languages that are different because the network guy and the storage guy don't necessarily understand what they're talking about. So if you're going to build out a cloud capability internally, you can't do it on those principles. You need a new set of guiding principles. And what a Vblock allows you to do is to apply a new set of principles for how you build out cloud. Because a Vblock is not a set of these individual components. You manage it as a resource and your operational teams then converge around the resource rather than oh it's an ethernet switch with a bit of storage and some virtualization. So you think about it differently and you therefore manage and operate it differently. And the service provider community, particularly some of the more forward thinking ones got this very early on. Those that have legacy network asset who still need to perhaps sweat the asset in the ground and then copper, they have a connectivity player that they can provide alongside a cloud strategy. There was another group of service providers who basically took the view that they could redefine themselves. And they could redefine themselves in the cloud era. They could go out to the market and offer to build highly secure public or private clouds for customers who wanted that agility and that flexibility but didn't feel that they had the skill set or the appetite to go and build it themselves. So people like CSC who are here, took I would say a relatively early move advantage in that market. They allowed themselves an element of redefinition in terms of what they did and how they sold that proposition. And you now see increasingly the service providers looking at those models and saying we need that. We need this speed, this agility. We need the opportunity to go and compete in a market where cloud is what a customer is asking me for. I need the optimum way of delivering that to them. The optimum way of delivering that to them. Yeah, the CSC is an interesting example. I know in reading the Gartner Magic Quadrant on infrastructure service, obviously Amazon up to the right, but number two was CSC. And they actually, Gartner actually specifically mentioned converged infrastructure and they might even specifically mentioned BCE as a partner as part of how the CSC was able to deliver that. With switching topics, growing 50% a year, 1.8 billion dollar book of business. So you have mostly tailwinds right now, not headwinds, but to the extent there are headwinds and people are concerned about moving to converged infrastructure, are they afraid of putting all their eggs in one basket? Are there organizational issues? I often tell clients, look, think about your org chart. Think about how you're into stovepipes. Maybe you don't want to think about that as you're bringing in this new infrastructure or maybe even try to sort that out beforehand. Or is that advice, slow them down? Should they just bring it in and then figure it out? What are you seeing in your client base? What's the best practice? It's the latter. So people look at converged infrastructure as a way of moving workloads from traditionally quite difficult places onto a simplified infrastructure. That's one of the beauties of the proposition. Once the V block is on the data center floor, it's the what happens next that changes the way. It's catalyst. You know, you can't make an omelet without breaking eggs. And in some regards, we act as a way of breaking eggs. Maybe we have to change the way I pose that for clients, right? Because the problem is with my advice, it may never get done. Whereas if you bring in the egg breaker, the V block, you say, okay, now we have to. We're forced to reorganize. Because the business is under tremendous pressure. You have the things that keep the CEO and the CFO awake at night are not the same things that necessarily keep the CIO awake, but they should be, right? And if you've got that alignment at that level within an enterprise organization, the CIO has a proposition based around Converged Infrastructure, which answers a lot of the problems that the CEO and the CFO see as their inability to go to market quickly. A competitor trips up. How quickly can they react when a competitor in the market makes a mistake? You know, this shouldn't be a weakened month planned project. This should be something on a capability. I should just be able to enable. I've got all these social tools, all this opportunity to go and reach out to a disaffected customer base and you're telling me you can't do it, that's not acceptable. All right, so when the CIO comes along and says, well here's an opportunity for you to put an infrastructure in place so make a capital investment into an infrastructure that will give you the agility, all of a sudden those three people look like they're singing from the same hip sheet. And that's music to everyone, so yes. Okay, Nigel, great to have you on theCUBE. Really appreciate you coming on. Appreciate the commentary. VCE doing well. This is theCUBE live in EMC Royal 2014 in Las Vegas where all the action. Day two of three days of wall-to-wall coverage. This is theCUBE. Thanks for watching. We'll be right back after this short break. Thanks guys, thank you. Hey, thanks.