 Live from San Francisco, California, it's the Cube at VMworld 2014. Brought to you by VMware, Cisco, EMC, HP, and Nutanix. Now here are your hosts, Dave Vellante and Stu Miniman. Good afternoon from Moscone Center in San Francisco. This is the Cube. The Cube goes live to the events. We extract the signal from the noise. This is our fifth year doing VMworld. So we're here at VMworld 2014 in San Francisco. Peter Kutze is here, along with my co-host, Stu Miniman. We're going to talk cloud. Peter is the general manager of the cloud business unit at EMC. Peter, thanks for coming on the Cube. Thank you for having me. You're welcome. So tell us about the cloud business unit, relatively new. Tell us about the organization. Yeah, sure. Think about it as almost about a 12 to 16 month journey of kind of looking at the way our customers and partners consume our technology along with Federation technology along with industry technology. And what we realized is we were really forcing our customers into being integration engineering shops when they really should be focused on what I would call, you know, IT services and IT as a service and any type of like X as a service on top of that, desktops, et cetera. And so we formed a business unit that operates much like a product business unit within EMC that has all the cross functional representation and goes through our normal go to market business readiness processes. And so when you look at what the cloud business unit really is all about, it's about taking our products, linking them together with best of breed products from as an example with the EMC hybrid cloud today, the VMware best breed technologies, engineering those together into pre-engineered solution so that when a customer goes to actually kind of consume from EMC, you know, a cloud, they effectively get all the services, educational services, they get the integrated solution delivered in a very short period of time. We did build a cloud live at EMC world is we've got that done under about 17 hours from, you know, start to finish and really prove that under a week, a customer can have infrastructure as a service platform as a service and applications as services. The kind of differentiation that EMC really brings together is adding in things like backup and recovery as a service. So that that's tied in DR as a service, high availability. These are all just check boxes that people can consume and actually apply and manage it themselves while also focusing on how it manages and making it easier for them. So cloud architect, cloud admin approaching it a little bit differently. So your business unit sells essentially the solution. Is that correct? Yep. So do you have engineering? We do. We have an engineering staff and we've we're growing that substantially to really focus on, you know, the different components in the market and components of the solution because it's very broad as you can imagine. It's not just the EMC technology, it's really integrating from the M&O layer all the way down through the EMC technologies that go through. So how do you so you own strategy too? Is that right? We do have your your own strategic destiny. We do for the solutions. Yes. For the solutions that are close. That's a big tam. Yeah, yeah, it's a good opportunity. Yes. OK, and so and I suppose somehow a matrix matrix matrix is up to the other parts of of EMC and absolutely somehow somebody smart makes the math work. Yes, absolutely. OK, well, so, you know, talk a little bit more about that. Because EMC is thought of as a hardware company, as we were talking about off camera. And you're now talking about solutions that are very heavily software led. We live in this software defined world. Everybody's going software defined crazy. Sure. That's a good thing. So talk about that transformation and what it means for your organization. Well, I think it means a lot when you think about software defined. It's also it's all about automation and providing an outcome. Right. The goal is to automate the infrastructure underneath and provide it the ability to give the services that I mentioned such as infrastructure, platform applications, all his services allow people to control their destiny, get a self service experience. There are certain components that will basically when you think about Viper, its software defined storage for us, it can configure anything, whether it's software or hardware defined underneath it. You think of our backup technologies that can be software or hardware as appliances. We tie all that together in a neat package for an experience for the customer. So there is some customers who want best of breed hardware and there are some customers who want commodity and we kind of blend that together and allow those kind of things to fall out out of selection. But the key is to give them an engineered solution that gives them experience that they can take to their own customers and reproduce. And our partners, by the way, as well, I don't want to leave them out. They get access to all of these engineered solutions and all of the content and IP along with it. So OK, so let me play sort of, let's role play. I'm a potential customer and I come to say, Peter, I like EMC. We've had a longstanding relationship. You're one of my strategic suppliers. Love you guys, reliable. Always do what you say you're going to do. And, you know, we've been together for 15 years. Awesome. But I get in pressure from the corner office. The CEO says that most of my IT spend is non-differentiated and he's saying for now on, I got to consume everything essentially as a service. So it's a consumption-based model, no more upfront cost. I don't want to provision any hardware anymore. I don't want to do any end-use enterprise license agreements and no penalties for early exit. Can you help me? So I think it, when you look at it from a standpoint of financial vehicles aside of leasing and other ways of kind of transacting, right? The real thing when you back that up is that they're not under pressure to go do specifically that. They're under pressure to reduce cost, create operational efficiency, drive agility, at least the experiences that I've had with customers. A lot of them are focused on cost, but less so and more looking at how can I drive agility? So I don't want to minimize the cost in the consumption model, but I also want to say that IT has an opportunity right now to take to be able to present a fully functional infrastructure platform. All these things that they can provide as services to their customers. And I think when you show them that they can do that on-prem with a very reliable infrastructure that can deliver a better experience with great SLAs, with great self-service functions, that by the way also takes away their end-users and developers from having to be IT people because other vehicles sometimes make the individual developer the application or they have to go configure the environment, comply to the security requirements, etc. With EMC Hybrid Cloud, that's all done. So I think it more goes back to the answer to your question. What is the customer trying to achieve? If it's truly a licensing or a consumption model that they're trying to break, I think you'd step back and look at some examples where customers have made those decisions. When you think about University of Phoenix as that example, they went that way and then realized that they could deliver it better, faster and with the reliability on-prem. So I think conversations that I've had with customers help us drive them to a blend, by the way. There's always going to be a need for a public consumption. And so it just depends on what goes where. Yeah, and by the way, I'm not necessarily suggesting a public consumption model. I should have clarified that. Maybe it's a hybrid consumption model, but one where they want to change the nature of the transaction. Now, if I infer correctly, you're saying you could accommodate that through financial means. Got it. So Peter, I'm wondering if you could speak to kind of that hybrid discussion because here at the show we tend to get very myopic that hybrid means the V-Cloud offering here. But my understanding is your solution spanned much more than just VMware. I believe I saw an announcement with Microsoft as you were not that long ago. What are the hybrid pieces that make up the solution set that you offer? So today, the EMC Hybrid Cloud is focused around VMware. Really looking at how we can bridge out to our CSPs as well. So we have some service provider partners that we also bridge to that allow us to provide that provisioning experience with choice. So V-Cloud Air, obviously, is the lead and one of them. But we also have CSPs who are really, really aligned to the direction we're going. Azure is an example powered by EMC underneath in certain areas. Those are the things that we're doing. So again, it's the same thing that we're doing. So again, it's kind of that discussion across the board which is choice and really making sure that we integrate across the board and have offerings in each stack. Okay. So talk about choice. The other thing where that often comes up is open. And the keynote this morning, I actually heard a little bit more open source than I would have expected. Yes. There's open compute. There's open stack. There's Docker discussion. And when I think about EMC and VMware in general, they're not super involved in a lot of the open source stuff. When you look at the cloud strategy, how does things like open source and open stack fit into that? Well, I think it plays into the needs of customers, right? If you back it up. And to where you're saying there is a need where customers want an alternative, whether it's VCAC manipulating, whether it's Hyper-V or KVM underneath, or ESX underneath as an open source model, as Pat mentioned today. And then there's the other pieces which maybe they're trying to do something completely different with a different partner. Again, it's back to the federation of we really have an opinion, but also offer choice. And I think what you'll see over time is that we'll focus a lot more on providing that choice and getting deeper into those communities. So I'm wondering if you can unpack for us a little bit the buyers of these technologies. Because, of course, EMC went well beyond just selling to the storage guys long ago. Moved up to more of the C-levels of the business guide, you've got the line of business, you've got cloud architects, you've got developer people that maybe more of the federation and Pivotal would get into. How do you sort that out and make your plan of attack for how cloud gets sold to the end users? Well, I think at the highest level, I think when you're looking at what CIOs and VP of infrastructures, VP's of storage, et cetera, they're all under the pressure that was mentioned. So they've got to deliver a service to their customers, they've got to deliver it in a certain way, very quickly improve time to value, and agility for IT, that's it. So I think when we first started this journey, it was a little more contentious where it was like, well, wait a minute, this whole cloud thing's not going to happen or it's still pretty slow. I believe this year, if I had to look at it, and especially next year, I believe adoption will be the key here as opposed to worrying about the different pieces and parts. And so I guess my view to answer your question is that unpacking that story is customers all need to provide infrastructure as a service. It's something that I think they're starting to realize and power to the end user. And one of the things that we do with some of our materials is we actually create that so customers can go use that and sell to their line of businesses themselves. Because our IT partners that we've been with for years, they need to actually be able to show that they can deliver that service in a very fluid way, in a very solid way so that they can actually make them feel like they're getting the experience they want. And then you layer on things like next-gen application development, and Pivotal obviously ties in there with Plot Foundry. You tie in the data lake and how they're going to run those apps against a huge repository of information. It really is a pretty good story that comes together very easily for CIOs, VP of Infrastructure, VP of Apps. And it really, I see it as a unifier actually. And that's what we've seen with the discussions we've had to date with our customers. So you mentioned, Peter, you're talking about, you mentioned backup as a service, DR as a service, HA, et cetera, but you sort of broadly talked about infrastructure as a service, platform as a service, and something you called application as a service. I think of an app store. Is that what you're talking about, helping customers get there? And it doesn't sound like an out-of-the-box solution. Are there other services components involved in your solution? So you talk about that. Well, so the basic, it's a great question. So the basic infrastructure as a service and platform as a service are basic, going to be coming right out of the factory from our VCE partners. And so, you know, VSpecs, et cetera, these will be pre-engineered solutions that you can take out the door. When I think of DR, backup, and storage performance hearing those things all, HA, all as services, they're really all part of a single provisioning operation, which is what we've done to customize kind of the provisioning experience. So they're not really separate services. They're like, hey, I'm going to order an application. Maybe it's Oracle, maybe it's a new, net new group of VMs for a web app. And I basically order that template, and by the way, I need a backup policy with it. And I want to be able to manage that backup policy. I get to choose it. I get to choose the storage tier of each layer of that application. If IT wants them to, by the way, if it's production and finance, maybe you take away all choice. But that's the power of the integration and the engineering is that you can allow IT the flexibility to control when that's necessary to compliance and other things, but allow flexibility for developers and users and line of businesses. So it really provides kind of this, it's really an integrated thing. It's not DR separately as a service. It's like, hey, I'm ordering a VM that requires DR capabilities. I check a box, I put it in RPO and I'm going. So it's that easy. That's a service that I can invoke as part of the package. That's correct. Okay, so my other question, we were talking, I didn't ask the question while you inferred I was talking about Amazon before, but I want to bring that in now. So you talk about outcomes. Obviously, there's pressure from public cloud. It would generically cause a public cloud. I prefer to talk about Amazon because they're the gorilla. Are your customers saying, I want to be Amazon like, closer to Amazon? I know I can't be Amazon, but I want to cut my cost. Where are they on that sort of spectrum and maturity model? Well, I think they're looking for help to understand where they are sometimes. So when you think, you just had Mike obviously on, it's a lot of services conversations for some people. And then there are others who just come in and say, I need to deliver, and they understand what their end users line of businesses developers are asking for, which is they want the basic services. They want infrastructure, platform as a service, and they want their application template, their build, their hardened build in a catalog with the capability to provide backup, backup tiering, DR, high availability, those things with the object and basically deliver those. So what I'd say is we were more prescriptive with those customers and say, hey, if you know that you need to deliver, this is where you want to go and this is what you need to do. And so a lot of them are saying, I want to provide a public cloud experience on-prem, but I want to be able to offer more value. So it's the consumerization of IT trend that you're enabling on-premise. Now, and I should say, I shouldn't say just on-premise, because again, the provisioning to vCloud Air, the provisioning out to our CSPs, that is part of our solution as well. So you can literally consume vCloud Air, I'm going to take a long time on that one. But you can actually consume that as part of your operation. So I should have said under their control. Yes. I mean, it goes back to the original notion and premise of what was then called private cloud. Remember, private cloud was originally sort of a hybrid as defined, I think one of the first guys I saw was Chuck Hollis sort of wrote this blog about that. But the whole notion was control. So you're right, I was being corrected there. So brokerage, right? So part of the EMC hybrid cloud solution does include AWS provisioning, because it's the base in the vCloud suite. So- It's an arrow in the quiver. That's correct. Okay. And where are you seeing, so what are the outcomes? I mean, from a cost and efficiency and agility standpoint, I don't know how people are measuring it, but I'd love to hear sort of the results. I mean, we're several years in now to the cloud trend. You're only, so what'd you say, 16 months into this sort of business unit, but you guys have been on the cloud early. You know, the journey to the private cloud starts now, I think it was 2010. So what are some of the outcomes that you're seeing and can you share with us any metrics? Yeah, I think that if I look at the information that was given at the partner event last night from the Apollo Group, University of Phoenix, and again, this is a spot experience, so we'll give a couple of examples to make sure we resonate here, but we think about the efficiency, the reliability, the over-provisioning that they had to do before, you know, when they were on a public cloud infrastructure, and they brought it in-house to reliable V-blocks on hardened hardware with the kind of software experience with cloud and infrastructure as a service, they can now spin up their virtual machines in, you know, 15 minutes, which used to take them pretty much a window overnight that was, you know, kind of breaking their model for business of when students could access things. That's with their former public cloud, you're saying. Correct, now they're in, and they can actually do, you know, this whole build for 150 VMs in 15 minutes, which now, again, provides them with that value. So that was an interesting story right there of how it was cheaper, better, and this was per her account, cheaper, better, faster, and more reliable on-prem from her experience. Another example of that would be like Columbia Sports, not that they've ever used, excuse me, Columbia Sportsware. They've never used public cloud that I know of, but from an internal private cloud, and I actually believe they're going to start consuming V-Cloud Air, another example of where they were able to create this offering and drive cloud usage and, you know, drive return. Yeah, big as a P-shop, we've had them on theCUBE before as well. Yeah. All right, Peter, we have to leave it there, we're getting the hook signed, so thanks very much for coming on theCUBE, sharing some customer experiences, and good luck. All right, thank you. Thanks for having me. Keep it right there, everybody. We will be back after this message. This is theCUBE, we're live from Moscone in San Francisco, right back.