 Live from San Francisco, celebrating 10 years of high-tech coverage, it's theCUBE. Covering VMworld 2019, brought to you by VMware and its ecosystem partners. Oh, good afternoon and welcome back as we continue our coverage live here on theCUBE from Moscone North in beautiful San Francisco. Clouds have melted away in a way. Of course, we're still talking about hybrid and multi. They're not going anywhere. In fact, they're very much entrenched into this show. John Walls, Justin Warren, glad to have you with us. Joined out by Kevin Schatzkammer, who's the Vice President of Product Management, Enterprise and SB Solutions at Dell Technologies. Kevin, good to see you again, sir. Nice to see you. Yeah, two shots in one week on theCUBE. We love that. And Wade Holmes, who's the Director of Technical Product Management at VMware. Wade, good to see you this afternoon. Good to see you also. Well, so this is kind of your party here, VMware. I mean, just give me your impressions so far. First off, just kind of what you're sensing that the vibe here at the show and the kind of work that you're getting done. So the vibe here is excitement. I mean, I think everyone's excited about a lot of the announcements around either Project Pacific and how we're redefining the vSphere platform and Tanzu and a lot of these capabilities and how these capabilities are going to be able to enhance our capabilities of our cloud provider partners. So I'm part of our cloud provider software business unit who specifically makes products and solutions for our cloud provider, BCPP program. And I think it couldn't be more excitement and there's been a crescendo the past few years in VMware and VMworlds. And I think this has been one of the best ever. Yeah, the wave's hitting the shore big time now. So you talk about cloud providers. So we talk about service providers. I mean, one in the same or, I mean, how do you guys define that now? Or how do you separate that now? Yeah, I think these terms are largely used interchangeably to a large degree. I think if we look at the cloud industry and the provider industry over the last several years, maybe about five to seven years ago, there was a belief from every single cloud provider that they needed to build a scaled platform like AWS, like Microsoft, Azure, like Google Compute and that they were all in the business of a race to building the most robust, most scalable, most feature rich, most differentiated cloud that was largely a race to the bottom from an economics perspective. And I think just about all of the service providers and now these cloud providers that we work with have really moved to a different model. What they've recognized is, first off, the race to the hyperscale is not a profitable business that you want to race against. Number two, the transition for large enterprise, IT, small enterprise, medium business to the cloud is so complex that it's not a game of building clouds and not a game of building platforms. It's a game of building practices at this point. And cloud providers are building practices that allow them to find their own niche and differentiated offerings, whether that be on-prem private cloud, hosted private cloud, and then partnering with the hyperscalers for the massively scaled multi-tenant cloud world. And when we start to realize that this managed offering in these cloud practices are there to help the enterprise and small medium business in their transition to the public cloud and transition to cloud and moving towards more managed IT offerings, what we're finding is the reemergence of these cloud providers in a meaningful way, starting to bridge the gap of skill set mismatches and expertise mismatches that enterprise IT just doesn't have to embrace cloud technology. Yeah, for a long time there, there was the cloud of Rati who were saying that the public cloud is the only way this is going to happen. Everything's going to be there. And some of us, I would count myself among, there was a little bit skeptical about that approach to things. And a lot of the pressure on service providers was you don't even bother getting into the cloud business, just shut up shop and go home. This is never going to be a good idea for you to compete in this at all. And it sounds like that some of these providers have actually gone, you know what, we've got a viable business here. There are customers here who need things done that we do really well that are not available out in public cloud. So what are some of the things that you're hearing from these cloud providers that they are finding from customers that they value that they're not finding anywhere else? So I agree with 100% that the cloud providers are finding that their business is still growing and it's due to the expertise, as Kevin said, that they're building practices. They understand enterprise customers' VMware business. They understand the platform that they're running their enterprise and they're able to provide additional differentiated services while leveraging the technology that the enterprise are utilizing in their own data centers. So it's able to provide value-added services with the same platform that they're using in their own premises and providing those capability, the same platform in a cloud model. So given a pragmatic way for enterprises to be able to migrate to a cloud and a hybrid cloud. Are there specific practices you're noticing that kind of stand out as being particularly common? Yeah, so I think that the answer's yes, right? And the answer is that vertical expertise is king here. Understanding the industries in which the cloud platforms get deployed and how those industries consume resources, the use cases, how they monetize their business is key for success. But I think that where we've lived over the last several years is that the building blocks for all of these vertical industries, the only uniform way you had to do it was with the massively-scaled public cloud providers, the hyperscalers. What we're doing now with Dell Technologies Cloud is we're enabling a consistent set of building blocks for all of these vertical industries that all of these experts in the vertical industries across the cloud providers can then bring a common building block and go address the complex problems of building the use cases, building the monetization models, building the differentiated feature sets. So, I mean, can you give me an example? I mean, what you're talking about, if you're talking about healthcare versus transportation versus manufacturing or something, is that where you're going? That's exactly right. It's a different way we're going to slice this. So go ahead. That's right. It's a different set of ecosystem partners. It's a different set of vertical applications. It's a different set of problems. It's a different set of monetization models across the board, right? You know, retail has very specific requirements around latency sensitivity and the need to be able to address micro transactions, security capabilities of those transactions and whatnot. Healthcare is governed by HIPAA and various other legislative. When you build in Europe, you have various data protection and privacy implications to keep in mind. That's right. So all of this is not typically available in public cloud. Public cloud is built for a lowest common denominator, one size fits all, and then you come bring differentiation on top of that. Now, as enterprise IT organizations start to migrate their workloads to public cloud, they're looking for consistency in terms of how they've lived before and how they've worked before, how they've operated before, how do they migrate those applications, right? It's not, I'm building everything natively for public cloud. It's that I have an entire set of applications that were designed in my enterprise IT environment that I just want to find a new way to operate. And VMware as a consistent abstraction layer is really the path forward. So DT cloud on Dell EMC and DT cloud leveraging the public cloud providers and the VMware abstraction with both vSphere as well as vCloud foundations is really a commonality that they can now use as a foundational building block for all their services. Yeah, so Wade, one of the things that a lot of customers have invested over a decade or more in VMware and they have a lot of processes and tools and skills that they've invested in. And it sounds like for some of these cloud providers, specializing in a particular industry, that there's a risk there that you will end up with building blocks that yes, they're customized for one particular thing, but now I have to operate them a little bit differently and now I've got a lot of different ways of doing things and particularly as a provider, then that adds cost. And I want to try to get some of those costs out there because that influences my margin. So is the choice of VMware one way of dealing with that because I can maintain that same consistent way of managing things? Absolutely, and that's key to some of the work that VMware and Dell has been working together on to allow for what Kevin mentioned Dell Technology Cloud Platform, which the baseline of that is VMware Cloud Foundation. So I've been able to have that homogenous, operational model and modernist data plane that is the same vSphere, NSX, vSAN, based from a technology perspective. So the operational model, whether it's in the provider's infrastructure or whether it's on premises within enterprise is similar. Right, and I think there's even a third vector to this which is one public cloud provider is not going to win. All of the public cloud providers are going to exist and the scale of a Microsoft Azure and the scale of an AWS and a scale of a Google Compute put them in position to continue to lead this industry forward and it's difficult to bet on one horse, right? So the VMC model and the DT cloud model allows us to be able to scale across all of these different cloud providers and as an enterprise organization that's making specific decisions based on region or based on other financials that some of these workloads are going to sit in AWS and some of them are going to sit in Microsoft Azure, et cetera, et cetera, there's a common abstraction across all of them. But to that point, I mean, the fact that you're talking about vertical practices, right, or verticals having practices that might be unique to their particular industry and now you're talking about them deciding if they might offload work to maybe an Azure, and maybe in Google, maybe IBM, whatever. I mean, multiple complexities for you in dealing with that, because you're going to be the translator, right? You've got to be multilingual, not only within the cloud world, but also in the vertical world too, right? So, tough road for you guys to provide that kind of flexibility and that kind of knowledge. Oh, I mean, that's the key to the software solutions that VMware is providing and allowing for solutions and SaaS-based capabilities to provide homogenous software-defined capabilities across clouds and be able to manage things such as cost in via cloud health and other managed services capabilities via our software platform. And then being able to have these capabilities in being consumed by providers in a turnkey fashion by utilizing Dell technologies, VxRail and VCF on VxRail and having this all packaged together. And so that providers no longer have to focus on building a core infrastructure, but they're now able to focus on that integration layer, focus on the additional higher level services that are able to stitch together this multi-cloud environment, okay? I think the decision logic that our customers have is just so complex. And I think that the message that we've heard loud and clear from them is that they feel like once they're in a particular ecosystem, they're locked into that ecosystem. And the more that we can do to give them flexibility to bring these ecosystems together and leverage the benefits and the capabilities and the regional and geo-location of just about all the different ecosystems that exist and build their own ecosystems on top of that, especially if you're a cloud provider, is really what they're looking to do. And when the foundational building blocks all look different, the integration look different, the automation look different, the orchestration look different, the storage layer look different, it's just, it was impossible. You're right, it's really on us to provide an abstraction to make that easy for them to accomplish their business. Yeah, that consistent foundation is critical and that's what we're bringing to the cloud providers today. Yeah, well one thing that has changed from technology of 12, 15, 20 years ago is the consumption model that cloud has provided. So what are you seeing around service providers pretty much you have to provide, if you're a cloud provider, you have to provide some kind of consumption model because that's what people have in their minds when they think about cloud. It's not just about the technology side of things, it's actually about the business operations and about the financing and the funding models of things. What are you seeing with the cloud providers and service providers? How are they changing the way that they allow people to finance the buy of this infrastructure? So that's one of the pieces that VMware and Dell is working together to allow for not just software, which through the VCB program, all of our software solutions are consumed through a subscription-like model, so it's pay-as-you-go, but also be able to consume hardware and consume this turnkey package so that VCF on VxRail and the cloud provider platform can be consumed in a pay-as-you-go subscription model which is a way that providers want to be able to then provide software and their capabilities to their enterprise customers. Yeah, have they completely changed across to being purely consumption or do we still have a lot of industries that prefer to buy things with capex? It would be fantastic if the world converged on one answer. Everything's always easier when there's one answer, but I think one of the things we recognize is that, and it's true in technology, it's true in business models, it's true in operational models, there's never, it's never just an or answer, right? It's always an end and there's a need for us to embrace multiple different models in order to meet the needs of our customers and even a single service provider will find particular areas that they want a consumption-based model and others that they realize that it's a well-entrenched business for them and the risk is a little bit lower and they're willing to take on that risk and look at a capex-based model, right? There's certainly financial implications to both an OPEX and a capex model, there's tax implications and we're still a little bit all over the map in terms of their preferences. Okay, hopefully we'll see that shake out a little bit and we'll have some standard patterns to match the practices that will just make it a little bit easier to design those solutions. I think the standard pattern that I expect to emerge is that we have to do everything and do it for everyone in every way that they want to see it done. Pretty easy lift there, Kevin. I can't imagine that being too difficult for you. Everything to everyone at all at every time. That's right. Hey, thanks for the time and the discussion and good luck with handling that. I know that's a big lift and I know we're joking but it's a great world for you of certainly exciting time and we thank you for your time here. Thank you. Thank you guys. Appreciate the time. I appreciate it. VMworld 2019, coverage continuing right here on theCUBE. We are live and we're in San Francisco.