 coverage here at VMworld 2015 from San Francisco. We're here on the director's set of theCUBE. I'm here with Ron Nash from Pivot3. Ron, welcome aboard, welcome to theCUBE. Thank you. Glad to be here. Glad to have you on. So we're going to talk about hyper-converged. Hyper-converged, huge in the marketplace right now. A lot going on in terms of the buzz on the street, the convergence that's happening, the transition that's happening in data centers. Tell us a little bit about what you guys are doing, because we were talking offline. You guys are making a lot of progress in the marketplace. Yeah, it is a trend that is pervasive, and it is a trend that people are saying is going to be responsible for taking over something like half the processing in data centers worldwide in a very short period of time. So that makes it a massive market. Probably the biggest market that I've ever seen in my career. And it also says the companies in it will be highly valued. They'll have fast revenue traction. But it's early in the process, so I think people are starting just to, they understand the general concept, they understand what it is, but they're starting to see differentiation between the players and such like that. And it's benefiting us, which is good. Absolutely, so hyper-converged, while it's fundamentally looking at the intersection of storage and compute and networking, the differentiation a lot of times is in software. So talk about what you guys do that's different, what your team brings that expertise that makes essentially like we talked about earlier, enterprises and mid-market infrastructure look like Googles or the web scale guys. Right, yeah, and one simple way of thinking is just taking the platforms that Google and Facebook and a lot of the web scale companies pioneered and taking them over and bringing it into enterprise, such as it has all the things that an enterprise would need to be able to trust and run their stuff on. We came at it very differently because our founders were storage experts. And so it was like a 30-man team that worked five years to get our storage part of this right. And then we added on the processing parts and the other parts later on pretty quickly. And so when you look at it, we're heavily functional and heavily performance better in storage than almost anybody else. But if you look at it, there's three things that you need to think about in performance. There's the processing performance, the storage performance, and the scalability. And if you look at those three things, that's what makes the difference in something because this whole thing is, in philosophical terms, is supposed to be about having commodity price, 686 servers, and each time your load grows, you just throw another one on it, another one on it, another one on it, another one on it. And it's very simple to say, what's difficult to do is what we've done, which is the more servers you throw on, our processing gets better, our performance gets better, our storage efficiency gets better, our scalability gets easier, and it versus bogging down, which a lot of other people have. If you don't foresee these problems, you'll just throw hardware at it and you'll get no effective increase in performance, like you will with bit three. But let's talk about what you guys do in the marketplace. So while hyperconverge is an efficient technology, it's probably a better way to run your infrastructure, you've got to overcome existing organizational silos, you've got some skill sets, you've got to talk about how you get customers to onboard the technology and what they typically go through when they're leveraging what you guys do. Well you're right, it is a big philosophical difference because if you look at the way a CIO runs their organization, they have silos, they have a processing team, they have a storage team, they have a networking team, they have a security team, because each of those parts of the data center used to have their own software, their own hardware, and their own chips. And so it required a specialist to understand those. Now we're wiping that away by putting one platform and it's, you know, you have some pushback when you go into a data center organization, because there's a lot of people with their best interest in taking the old type of technology and their experts in that. And we're making it very simple, we're making it very scalable, very easy to do, and that's a good thing because the cost comes down for the company, something like to 40% of what you would do normally, but it displaces a lot of people in the organization. And so what we typically do is we sell a solution that comes in like VDI is a very simple example. And when you're selling that solution, it just works better and it just works faster and we don't have to philosophically get into these deep debates with people. But once they see it working on that, then they think, oh, maybe I can use this same technology for other things. And that's, I think, the easiest way to penetrate. Now, is that the common blueprint? You find a application that really needs to either run faster, needs to get deployed faster. So VDI is a great example. People know, they want to make, the outcome is I want desktop management to be easier. VDI is one way to, do you find that ends of being a lighthouse to drive people to go, this is going to work for other applications? Absolutely, that's one way to do it. And then once they get it and they get it in, they see that this stuff stays up, it doesn't go down, it protects their data, we have great failover type activity, so it just stays up and runs. And that makes a big difference to them. And then they can say, well, maybe I'll put another application on and then they start loading it up. And so penetrating like that I think is much preferred way of penetrating versus getting into a big philosophical debate. I mean, if I show up at the front door of a CIO and say, my team and I are going to replace half your infrastructure, they'll throw us out, they'll laugh. It just doesn't, it's like too good to be true, but that's what's happening. But so we had to do it a little piece of the time and step at a time. Yeah, well, at the end of the day, change is hard when you're trying to drive it through PowerPoint. Change is easier when you've got results or you've got operational efficient, numbers that you can measure against. That's correct. We were talking a little bit earlier, you've got almost more than 1,600 customers right around that number. It's a large number. What are you seeing in terms of spreading that across either geographies or verticals? Are there certain types of customers that are a better fit at this point for converged infrastructure or is it pretty horizontal? Well, it's pretty horizontal. We're in, at the moment, we're installed in 53 different countries. Oh wow. So geographically, that's a pretty good spread that we already have. And I think it's a matter of customers that are willing to try something and willing to try something new and always trying to push the envelope and see if they can get something better. And I think it's going to be a fundamental change also in the CIO's job. Because if you think about it, the CIO used to be responsible for the infrastructure and the hardware and the software and the network. And he also was responsible or had a big say in the application. Now the business universal also did. But if we simplify that infrastructure for the CIO and make that part of his job easier, we're going to free CIO's up to be a business advisor to the corporation or the organization. And that's a big difference. And I think that's something that a lot of CIO's would like rather than worrying about keeping their network up and worrying about how fast they're going on processing or they're going to run out of storage. If they can have all that set and then they could focus on how do I take technology into this organization to make this business more profitable, faster growing, more efficient, whatever, then you realize the promise of IT. So I think we're just part of the help. Okay. One of the things that we hear all the time from our clients and is, you know, making these rounds, it was in the keynote today. Containers, DevOps, this application driven, more agile driven. How much are you hearing, you mentioned a little bit that the CIO is responsible for applications but infrastructure, how much do you hear from them that the application teams are saying, you guys just aren't fast, you know, the infrastructure teams aren't fast enough, make it go fast. Is it being driven a lot by the application teams or is it the infrastructure teams trying to be responsive? Are you hearing one way or the other who's driving this transformation? It's driven more by the application team and by the business users. If you look in most big corporations, business users are starting to look at IT and say, what's my return on investment? Are there other operations? If I give you an extra of $15 million, what do I get in terms of that in efficiencies in my organization? Or, you know, what they don't want to hear is, I'll give you $15 million and I'm just refreshing my storage. And so I'm buying the latest product and I did nothing better. Maybe, you know, that type of thing. So does that make your competition as much the other converged infrastructures or does that make the public cloud, you know, in terms of mindset, in terms of how fast I can get resources? Do you feel like sometimes you're also competing against the public cloud as opposed to just other converged infrastructure players? Somewhat, but actually the biggest competition is the incumbent IT companies. The large incumbent IT companies that sell these separates and have done so for decades. But this is a big wave and when these technology waves come through, a lot of times some of these big IT companies disappear. They do, every time this happens. And some of the new ones pop up and they're the incumbents for the next couple of decades. This is one of those multi-decade type of things. If you think about over a long period of time, technology got the price performance going up and up and up and up. Every year it was better. But so the complexity also went up and these things got more and more complex. The businesses we're sitting here at VMware's show, that was one of the first times that price performance went up and complexity went down. At VMware it was easier to manage a bunch of servers. Hyperconvergence is the second big wave, I think, on that reduction of complexity. And that's very, very important for CIOs. How do you manage security when, in the olden days, which could be three or four years ago, you had sort of, when you had silos, while it was maybe less efficient, it was clear where security boundaries were, where somebody owned something. How do you think about security in a hyperconverged or converged infrastructure environment? Where do you think about the demarcation points? Who should be in charge of it? Well, security is a difficult problem and it's an arms race. I mean, it goes to every year, the bad guys out there get more and more creative about the way they're penetrating and this goes on and you have to do it. If we simplify the infrastructure, it's going to be easier to focus on hardening those parts of the infrastructure that will not allow as many penetrations. You don't have as many moving parts. Now, that doesn't solve anything. It does make it much easier when you have less moving parts on that infrastructure that you can focus on. It's going to be much easier, I think, to continue to work. It's not going to make security go away. The bad guys are creative, they're well-funded, they're making money and they're investing on trying to be devious in more and more creative ways. So, as an industry, we have to combat that. Gotcha. Now, we talked a lot about what your customers look for in terms of their side of the business, an application, going faster, needing agility. From your perspective, conversion infrastructure is a very competitive market right now. There's a lot of players, some established, some startups coming in. How do you feel like you differentiate yourself? What's your message to a customer that says, why are you different? Why are you better than a Nutanix or an Evo variation or something like that? If you look at it, it's all about performance, as I said. We run faster. You put applications on us and we have some information coming out where the same application on us will run faster than it will on somebody else's. Second, we have, because of our technology, a big difference in storage efficiency versus people. So in other words, if you've got X amount of storage, say you've got 100 units, whatever that unit is of storage, how much of that can you put unique data on? We go up to 94% of that you can use for unique data because we don't replicate the data. Most other people replicate. So if you replicate it one time, then you're immediately down to 50% storage efficiency. If you've got a giant installation, like our most sizable installation is a seven petabyte installation with 275 servers on it. If you look at the odds of an individual server going down or individual grives going down, if you were in a replication environment, you would have to replicate that multiple times to keep it up. We do not use replication. We use erasure coding and some other technologies. And so we keep it up with a six nines reliability without having to do that replication. So it's an efficiency. And then finally, if you look at what happens when we scale, we get better. We get better on the storage efficiency line. Our performance gets better. The overhead gets less as we scale. And that's because of our architecture and design and the fact that it took a 35 man team five years to get it working. Yeah, yeah. And we invested a lot for a long period of time. It was a big science project. Right. And I was around and it was pretty scary when we had no revenue, no product, no customers for five years and all these very, very smart experienced people working away. But once they delivered, it was a magnificent product and a good base that we could build on. Yeah, one of the things that's interesting to me is a lot of times what traditional vendors will do is they'll reuse a concept they'd used before. So you talked about RAID and the different ways of doing that. A lot of the newer startups, even though what they deliver looks to the customer like what storage sort of looks like or what compute looks like, what you do under the covers, and this is why it's so important to sort of dig into who's the founding team, what's their background, what is some of that technology, because like you said, could be storage, erasure encoding versus RAID or some of the newer things that people do with how they leverage flash or how they leverage caching can make an enormous difference in there. So that's to me, while everyone sort of wants to make the infrastructure kind of less visible or abstracted, you have to know what's happening under the covers to validate, am I really getting better efficiencies? Is it really going faster or is this just sort of yet another converged infrastructure? Yeah, and the other big delineation is you've got the incumbent IT vendors and then we've got what we call converged and then hyper-converged, now, Converse is basically just the existing pieces and offerings from incumbent vendors, screwed into a rack, put some software on it, test it out, and those things are selling because they are simpler than buying the piece parts yourself. But when you look at the value, that's not adding a lot of value other than just, it's a very simple contract manufacturing or systems integration type function. And then you go to hyper-converged, and in that, we get rid of all those pieces other than basic x86 processes that we continue to use. So what's next? What's next for the vision that you want to help your customers with or what are the next big problems they want you to help solve? Well, the next big problem that I see is if you look at the computing universe, we're computing on a very small part of the universe right now, and that's the part that does traditional IT, PCs, notebooks, mobile phones, that type of stuff. There's this whole other thing out there called Internet of Things with a lot of machines and devices that are producing data. That amount of processing and data they just produce is going to overwhelm the traditional IT. Hyper-converged is very, very well set and particularly our form of hyper-converged with the storage efficiency for handling the Internet of Things. We handle peak loads very, very well. For example, one of the things we do well that other hyper-converged people can is video surveillance because cameras are basic things. They're not like an IT device that if you're not ready, it buffers or cues something. They just transmit, and if you don't catch it, it's gone forever. That's what the Internet of Things looks like. It looks like massive amount of data coming at you and you've got to be able to catch it and hyper-converged solves that problem very, very well. At least the Pivot 3 version of Hyper-converged. Yeah, and that's something that I know within Wikibon Research, we've been looking at a lot, that intersection between big data, streaming data. What's the infrastructure going to look like as it's changing under the guffers? One last thing before we wrap this up, we're sort of running out of time. What's the message you want to sort of put out there to CIOs that say, look, you've got challenges. You're going to have challenges like you said with, how do you manage data, big data? Your boss is going to want you know, your marketing teams, your intelligence teams want better insight. You want to respond better to DevOps. What's that message that says, you know, why hyper-converged is so important to drive, not just infrastructure change, but things downstream that are business changes and so on? Well, this is one of the time that separates the CIOs that prosper in their organizations versus those that don't. Because you're requiring CIOs at this moment in time to step up and make a decision against some of their entrenched organization and for the overall health of their business organization. And the CIOs that do that are going to be further embedded in the business organization of their company. And those that don't are going to be pushed down to be just, you know, somebody that handles the bits and the bytes and such like this. So it's just one of those times. It's almost like you say, calling all CIOs. Here's a time when you can step up and this is the type of thing that makes your career for the next couple of decades. If you can look at this and jump on this bandwagon. Okay, so big transformational opportunity. Obviously, you know, we're seeing the internet of things. We're seeing DevOps. We're seeing cloud-aided applications. CIOs that want to be part of that, they want to lead through this as opposed to sort of following big opportunity for them to move their career, help shape their businesses. And you guys are right in the middle of driving that. And just look at this. Look at us, look at others. I think the more people look at us and everybody, I love the scrutiny. We'll come out just fine. Excellent, excellent. Well, Ron, thank you very much for being on. Folks, we're going to wrap up for this episode. Continue to watch here on Silicon Angle on theCUBE, continuing coverage from VMworld 2015 here in beautiful San Francisco. Thank you very much.