 Hey, welcome back to VMworld 2013. This is theCUBE, our live coverage live in San Francisco, California. I'm John Furrier, the founder of SiliconANGLE, and I'm joined by my co-host Dave Vellante, the co-founder of Wikibon.org. Bill Fathers is here. He's the CD Vice President and General Manager of VMware's Hybrid Cloud Services business. I gave a great keynote on Monday. Bill, welcome to theCUBE. Thank you very much, Nate. Yeah, so we've been hearing a lot, talking a lot, as I told you off camera, about Hybrid Cloud. We just had Pat Gelsinger on. I mean, it's one of the imperatives, and I asked Pat, you know, I was asked, you know, it was what keeps you up at night, and they say execution. So I just went right to the execution points, and clearly one of them was Hybrid Cloud adoption. You guys are laying out the roadmap. So, talk about your role, and where we're at in terms of that adoption. Getting it done. I think every enterprise client we ever speak to is already starting to experiment, to some extent, with public cloud. They've obviously invested heavily with VMware to build sort of private clouds. So the reality is clients are going to be living in a hybrid cloud environment. They want to get the best of both worlds, and obviously we're very focused on making sure that they can now get the best of both worlds by having a public cloud solution that's entirely compatible with their private cloud. So that was kind of the original vision. I think back to, you know, 2009, when the Berkeley paper came out above the clouds, and then all the enterprise guys came in. So no, no, we're cloud too, and they had the private cloud, and then they laid out this vision of the hybrid cloud. A lot of that was sort of vision of federating applications. Are we still at that definition? Are we changing the definition of the hybrid cloud, or is that another journey that we're on? Yeah, I think that's still the lofty goal. I think that that was visionary, but I think the reality is you've got to sort out a lot of the stuff of the infrastructure layer to mean that you can actually realize that goal. And I think that's going to take a few years to really make sure that the infrastructure layer, you've got that compatibility on the on-premise and on the public cloud, which then over on top of that, you can start to have applications that will take advantage of this sort of compatibility in hybrid environment. So one of the big announcements was obviously the GA of the cloud, the cloud. Take us through that. What's the big feedback and the process getting there? I mean, because this is a big milestone and people want more cloud. Hybrid is a solution that enterprises need. That's it. They see shadow IT going on, but they need to control it, but have flexibility. You guys raced and got this out, got the GA out there, big milestone. Talk about that process and what was the feedback so far? Yeah, we went into an early access program on the, just in early June, we announced in 21st of May. So we went into an early access program. Very lucky, it was very oversubscribed. So we were able to get feedback from a lot of clients who started to adopt it quite aggressively through June, July and August. So we got two things out of that. One was we learned exactly how clients use this in a hybrid model and some really interesting use cases started to emerge, which I'll talk a bit about. And then the main thing though was that we felt the platform was stable, the roadmap was fine and therefore we're able to go into GA. You know, we always talk about MVP, minimal, viable product to get something out that's always a challenge. You don't want scope creep on anything. You want to get something out that's bulletproof. The buzz on Twitter and what we've been hearing in the hallways is obviously disaster recovery is one of those needed things. And you talked about that. Can you re-emphasize what you meant by that and some of the comments around disaster recovery? Yeah, disaster recovery is the perfect use case for hybrid cloud and then it gives you the opportunity to create a disaster recovery environment that you know from the get go is going to be entirely compatible with what we've already got on-premise. So it's just a great use case. A lot of our clients have already bought Site Recovery Manager and they're using that obviously to do a disaster recovery within their own facilities. And we're now just going to extend that product and integrate it with vCloud Hybrid Service so that you can just use vCloud Hybrid Service as a destination point for your disaster recovery. That'll go into an early access program in the fourth quarter. And we suspect we'll see that roll out and become more and more sophisticated by sort of middle of next year. And by that I mean we're starting out with data replication with some orchestration but as we get into the first and second quarter next year it'll be increasingly automated with increasing levels of sophistication in when you can recover back to being under-recovered in multiple locations and low balance and the rest of it. There's a spectrum of imperatives bill for disaster recovery. A lot of clients prior to VMware really didn't have a disaster recovery strategy in where it lowered the cost and enabled that but the spectrum I would describe it is going to get zero data loss versus a check off item so you can tell your board you're in compliance. Yeah. Where do you see, how do you see that spectrum laid out in terms of the imperative of disaster recovery in the context of hybrid cloud? How does it shake up? Yeah, I think the vCloud Hybrid Service is going to be very good at the end where you need absolute recovery with a recovery time under five minutes or even minutes and the ability to ensure 100% availability of all data down to sort of middle ground where you've got an RTO of a day or maybe half a day and you've got 99.99% of data recovered. So we're sort of in that spectrum the guys that just want it as a check off item it's probably not going to be something that they'd use it for. And does using the hybrid cloud as you guys have defined it change the, because so much of disaster recovery of course is the process around it. Yeah, that's it. How do I get people to the data or the apps or can I move it back and forth the constraints of doing that? Are you seeing, are you having the discussions with customers or at least seeing them with maybe some of your partners around those business process changes? Are those actually occurring or is it sort of, I always say paving the cow path? Yeah, I think it's, it is an area where a lot of professional services help can be required to help re-engineer the processes so that you do actually have that. So if in the event that you do incur disaster recovery you've actually worked it through and you've done a lot of the rehearsals. So yes, we're seeing it and we're probably going to create some professional services engagement packages that we can bolster the underlying infrastructure offering with professional services engagements that can help clients prepare for it. And frankly, if they do then instigate the DR we can be there to add resources to help them bring it up and running. So we're talking to Pat about he gave great respect to Amazon and Google and of course Microsoft and the VMware is the other big player there and we think we have some advantages of 500,000 customers and a lot of good perspectives on this. I want to talk specifically about Amazon. Kind of the gold standard of the public cloud and I think we've heard this week how you intend to compete SLA's privacy, security, governance. You have a long list of attributes that you're going to provide. Of that long list, from the standpoint of when you talk to customers, how much is there today? How much is roadmap and how long will it take to build that out, that capability? Because Amazon's moving really fast. Everything you mentioned, they'll have a web page. That says the Amazon, you know, HIPAA service. The Amazon, I mean they just got services coming out of the years and they're moving like crazy. So what's there today? What's the roadmap look like? And then I have a follow up on that. Yeah, okay. So I think today the underlying infrastructure itself is ready to go and that's why we're going into general availability and it does provide the SLA, the governance and most importantly the guaranteed access to resources. So you're not in sort of a consumer multi-tenancy environment where you're contending for resources. When you buy the cloud hybrid service from VMware, you have guaranteed access to capacity so that you know for sure that your application is going to run. In terms of roadmap items, as we further reinforce, I mean our main differentiation is this absolute compatibility so that you know the application. You've already created 400 SAP instances. When you use that same gold image, you run it on vCloud hybrid service. It is going to work. You don't have to go through three to four months of system testing, integration testing and performance testing, which is what you have to do if you put it in any other public cloud. And that's the bit that you know it's there today for us and I don't see how anyone not using VMware technology to run their cloud is ever going to compete. Okay and I want to follow up on that with an SLA question. And I talked to Pat a little bit about this but I really want to grill him on the SLAs because I want to talk to you. I knew you. Who owns it. Exactly. So I hear a lot about SLAs. Everybody criticizes Amazon SLAs but as an analyst I'll go in and I'll start, I read them. I read all the fine print at night as I'm falling asleep. It's hard to find public cloud companies other than Google, you know, you see HP. They're very similar to Amazon's SLAs but a lot of guys who are putting out the rhetoric on Amazon's public cloud, you can't find their SLA online. You ask for their SLA, you don't get their SLA. It's they're not transparent about the SLA and as an independent I see a lot of lip service there. So I want to know from VMware, will you publish those SLAs? How transparent will you be? How easy will it be to get those answers? Yeah. So today, the short answer is we're going to be very transparent. We're going to be very, very competitive and we'll have industry leading and have industry leading SLAs. The reason for that is clients are already trusting their business critical applications. Many of our 500,000 clients run their mission critical applications today on our technology and as they use vCloud hybrid service as an extension of that, they're going to expect the same level of very, very high level of service level agreements with real teeth in them. So absolutely the SLAs are available, they're public and we think that they are industry leading in terms of our guarantees on availability, on performance for things like provisioning and then frankly, you know, in terms of all the key metrics clients are going to want to see, we're very competitive. So that's a statement about your willingness to take risks and share that risk with customers at scale. I mean, that's a big bold move. I should probably ask Jonathan this, do you have to have any kind of financial reserves to do that or was there any kind of discussion internally that you can share with us to accommodate that greater risk than some of your competitors are willing to take? Yeah. I think you can't get into the services business and talk to an enterprise client about the moving meaningful workload if there isn't some discussion about the extent to which risk is going to be, you know, measured and shared between us and our clients. I've personally been in this business for 10 years and have had that conversation with a thousand clients. So you have to be in the game of being able to take a measured risk. Now, clearly it's a risk that's shared and you know, you're drilling very deeply around where the boundaries of responsibility are going to be and the scenarios in which, you know, one party takes, you know, accountability versus the other. But we think, you know, we're bringing that sort of skill and discipline into that discussion. But there was, as you say, you know, a fair discussion at the executive team about us moving into this market. And we've explicitly said, you can't go in the services market and hedge, you know, in terms of sharing risks with clients. Yeah, and that's hard work. I mean, Amazon and Google and HP as well have basically said, hey, we're going to make it a low bar and try to exceed it. You guys are taking a different approach where you're going belly to belly with clients about risk sharing. That's right. Yeah. So I got to ask you, obviously, we know infrastructure as a service. Everyone sees Amazon as the poster child for that. And, you know, platform as a service is now the new battleground. The question that is obvious is that, you know, you have to have that. You got to have it, it's table stakes. Yeah. And so you have minimum features, use cases that you're going to roll out and add more and more. But how do you guys get to a trajectory and economies of scale that others have gotten to through the growing pains? I mean, you see Amazon still have zone problems. They're still crashing, right? On some situations, just last week, there was an outage. Yeah. That's a fear, right? So enterprise customers, you know, it's a zero tolerance for outage. That's it. So that's going to be the criticism from the crowd on you guys. So how do you talk about the scale growing pains problem? And how do you guys address that? And what are you guys doing to handle that? How do you communicate and alleviate the fear? Yeah, that's a fair question. And obviously we're feeling pretty confident about basing our technology or basing our solution on VMware's technology, which has kind of been around for a while and proven and scalable. In general terms, yes, and I agree, it's amazing that Amazon still seem to have these outages that sort of get such high profile and have such a material impact on clients infrastructure. So I think our approach is twofold. One is clearly, we've spent time and effort to get the product right. We're rolling it out in a fairly steady way. We're also creating relationships with service providers. We announced one earlier this week where we're actually asking, or service providers, have looked at their own cloud offerings and decided that they would rather perhaps embrace vCloud hybrid service as a technology platform. They're now deploying that in their data centers and starting to use that as the basis for selling that into their clients. So to some extent, we're going to leverage service providers' scale and experience to help us scale and grow fast as well. So to one extent, we are building out our own services business, but we're also doing so with, hopefully, dozens of service providers around the world who've been doing this for a long time as well. Yeah, I mean, the cloud market, you're going to have your naysayers and you're going to have your critics certainly. I mean, you said Amazon goes down, they have high profile. And so this is going to be a challenge because the stack is evolving fast. I mean, the change we had in Martina earlier, I'm with the network. And the goal is to make it as simple as possible and that foundation. So I asked Pat this question and he kind of said past was the line, but where's the line for the hard and top, right? Because at the end of the day, if I can roll out and if I'm in a customer, I can have an infrastructure that's truly sustainable, bulletproof, meets the SLAs, but yet enables some agility and application development. Is that past? Is that pardoned? And I'm finding that customers really don't mind, quote, perceived even perceived lock-in or a real lock-in if it works. So there's a working, it has to work factor. Where is that line? Is it infrastructure as a service? Is that creep up into pass? We're certainly focusing day one on infrastructure as a service with some sort of services on top of that like disaster recovery. You'll also start to see us start to introduce services at the platform layer. So Cloud Foundry as a service will come online in the fourth quarter and then that will become sort of broader in the first half of next year. Which is all part of us generally pivoting towards making it an environment in which you can develop applications. So which Cloud Foundry is a tool, but I think one of the areas of opportunity we see is a lot of application developers feel rather locked in when they get stuck into the proprietary tools that reside on AWS. So we think that there's an opportunity there to sort of take a more open source approach to provide application developers with application services that are open source. And you're participating with OpenStack, so that's a flank for the strategy, right? Exactly. So you're kind of, I want to say compatibility mode, but like Cloud Option, with open APIs and vCloud. Yeah, I don't think Amazon customers are going to be flocking to VMware per se in the short term, but certainly enterprise customers who have the desire. So you're kind of picking the meat and potato use cases. That's it. Do you ask the recovery back up and whatnot, right? Is that kind of the philosophy? Exactly, and I think people are putting born in the cloud apps into Amazon are probably not looking at us, particularly for that use case, but there's an enormous opportunity of traditional applications in the enterprise that we think gives us plenty of runway. Pat called it born in the hybrid cloud. I hadn't heard that term before. I wish I'd used that. I like it. It's very good. My last question is, how do you deal with the hyperbole of things like price cuts? I mean, you go to the headlines, dedicated hardware in Amazon's cloud, now 37% to 80% cheaper. And when you peel the onion skin, you realize, oh, it just lowered the toll charge for dedicated instance. And it's really not what you would expect, but a lot of your customers are going to say, oh, you know, it's price, price, price, erase the zero. So how do you deal with that pressure? Because you're not in the race to zero business. Right, I feel pretty good about it. I mean, number one, we are very focused on our own cost structure. And we drive every scrap of cost out of our own cost basis through automation and virtualization. And frankly, I think we're ahead of most other people in terms of the underlying unit cost. Obviously what we lack is scale. The secondary though is we're absolutely layering on value added services that help clients realize the benefit of having this highly compatible approach. I mean, we see agility as the number one driver for adoption of cloud. They weren't done on Monday. And obviously they want to make sure they're not being, they're not paying a particular premium over Amazon services or Amazon pricing. So we feel pretty good actually about the combination of very low cost structure, value added services that really reinforce the hybrid benefits. And frankly, we're going to scale at some point as well. So I think as long as we stay in touch and remind ourselves of that being a useful benchmark, then I think we're going to be okay. You've cost our nail agility, sell the value, and we'll win, okay. So my final question, and this is more of kind of like an industry-wide focus. We always talk about virtualization as the engine and the car fans that want to know what color the car is, what model is it, what dashboard features. That's it. And so you're seeing big data playing a big role in that. So the theme that comes out of the show is, okay, I want to race to enable my infrastructure. I got to have a foundation. And I got to enable service cataloging, whatever you want to call it, service brokering. So clients can automate and create the top of the stack and do all that stuff, right? So that being said, that's kind of what we're hearing. Big data is obviously taken the world by storm. It's creating a data fabric component in the stack and also enabling application developers. So how do you view that from a vCloud, looking at open stack as on the table with you guys? What is the big data equation? How does that impact your world? Yeah, if we look at one of the number one net new applications our enterprise clients are spending money on, it's analytic tools that are typically creating and drawing upon the need to analyze large chunks of data. So we're going to be, you'll see this very, you know, very early on next year, you'll see us focus on partnering with some of the key providers of the underlying infrastructure for the sort of unstructured database providers or the sort of cloud areas of this world where you'll start to see us create even closer relationships. And obviously working closely with Pivotal as well. So we've got a lot of things in the pipeline with Pivotal so that we can bring offerings to enterprises that help them develop applications on our cloud that obviously going to take advantage of some big data-oriented tools. Bill, thanks for coming on theCUBE. Really appreciate it. I know you guys worked hard. I was at the hybrid launch you had at the headquarters. Great progress. You guys kind of focus on execution. The GA is a big deal. And again, it's a sign that you're telegraphing that you're going to be committed to execution. We heard that from Martin. That's the cadence of Pat Gelsinger as we, Dave and I talk about, you know, March and ship. Right? Exactly. And he's technical so it's good. So thanks for coming theCUBE. Really appreciate it. Congratulations. This is theCUBE. We'll be right back with our next guest after this break. Thank you.