 Okay, welcome back to EMC World. This is SiliconANGLE's exclusive coverage of three days of wall-to-wall coverage, and I'm John Furrier with Dave Vellante. We've got our famous guest in the house, Pat Gelsinger, the CEO of VMware. I had to kind of get that out. I'm so used to seeing EMC. Pat, welcome back to theCUBE. Hey, thank you very much. Dave, we asked Pat last year, if you were the CEO of VMware, what would you do, and what would you and Paul talk about? Like, now you've got to spin out, you've got all this action going on. What happened? Tell us. Take us through that transition. Well, you know, Paul, Joe and I met, and a little, you know, over a year ago, we started that discussion. And what we realized was that I had a hobby at EMC called Big Data, right, with Green Plum and Pivotal Labs, and Paul had a hobby at VMware called Cloud Apps. And both of us had Big Data, and we had Big Data, and we had Cloud Apps, and both of us had Big Day jobs, and neither one of us were putting nearly the amount of attention that this whole Cloud Big Data opportunity really presented. So, and what we realized was that, hey, you know, we did have a great player or David Goulden to potentially really step up at EMC. You know, Paul as an operational leader isn't where, you know, his focus, you know, is at the point of the career where, you know, he's like to me, he's doing baseball, right, because, you know, running a $5 billion software company is a lot of operational stuff, so it's like, get it back on the basketball court, you know, so Paul to sort of lead this formation be, you know, maniacal about the opportunity at Cloud of Big Data, really put him in his strength, right, for a huge opportunity as we see it. You know, this idea of the next generation data model, this is as big as the transactional database was 25 years ago, and it's moved me into the role with VMware as a great opportunity so, all in all, right, you know, we're happy. Well, congratulations, and you're now, I see you have a public and traded company, so maybe you can't be as loose on the queue, hopefully you can still be the normal Pat Gelsinger. No, we have to be solid, it's boring. So, back in 2010, Dave and I were comparing Palmer Ritz, we loved, we loved this Mojo, and we called it the new WindTel, and then we were actually kind of telegraphing the modern era, and you guys laid out that vision. A lot has changed in the market, so I want to talk about the big bets. The big data thing was happening, big cloud was there. Now, he's going to be throwing those three pointers and doing those layups now, and it's in a good role at Pivotal, but how did the world change? I mean, because that layout in 2010, that map was a legitimate same message here, top of the stack, what happened? What was going on that made things change where they had to decouple Pivotal? Obviously, big data showed up on the doorstep in a big way, what was the key catalyst behind moving that all out? There's a couple of things that have happened. One is that what was the early formative technologies around big data have really started to crystallize, and I think as you heard Paul's comments today that the HDFS, the Hadoop space, really is, and I don't know that we're quite sure what the equivalent of the transactional SQL, acid-compliant databases is, but we start to see the shape of that, and it's going to be largely around the scale-out, analytic, Hadoop architected frameworks, so that's starting to crystallize. The second thing that's happened is, as Paul also described this, is from the consumer internet companies, you've clearly seen that, hey, there's real value here, because who have been the big winners in IT in the last five years? It's all been the consumer internet companies that have really emerged as extraordinarily powerful, so they've sort of shown what that, if you could, that architectural template is for consumer properties, like Google's, Amazon's, et cetera, but now that needs to occur in the enterprise space. So I'll say those two things have occurred in pretty powerful ways, and now as we look at what we've done with regard to building this underlying infrastructure for cloud that truly can scale. It just can scale. We can spin up thousands of VMs in a few clicks in a few seconds, so you have that same kind of dynamic infrastructure that can respond to those big data environments, and this emerging big analytic to me, big analytic data, bad, is what's really going to be a great opportunity for us to monetize just about every industry. The fact that companies like GE are dropping 100 million bucks into this, that's like serious Vegas money. That's good valuation, only 10% is good valuation for them. They've got a good deal. They're going to make money on this, plus differentiate their business long-term in a powerful way. Now you've got more focus for VMware. You've gotten rid of some of what I call misfit toys. You said they weren't getting enough attention, but you put them into a place where they can get the attention. Who is the new VMware now? Who's the new VMware? What we've said is we have three things that we're going to go do. One is we use a software defined data center. We are going to build the infrastructure to virtualize the entire data center. We're going to do that not just for compute, but for network and security for storage and availability and wrap that in the layer of management and automation. So agenda number one. Agenda number two is hybrid cloud. We're going to do that for the private cloud, we're going to do it for the public cloud, and we're going to stitch those two together as seamlessly, as virtualization allowed VMs to move around separate from the underlying physical server environment. And the third is we're then going to build on that infrastructure to virtualize the end user experience as well for PCs as well as for this burgeoning BYOD mobile space as well. That's what VMware is going to do, those three things. Okay, so that's your new TAM, if you will. $50 billion TAM in 2016 growing at 20 plus percent we're not quite a $5 billion company so that's a great opportunity the $50 billion market. Let's unpack that a little bit. So $50 billion market is growing much faster than the overall IT market, so that fits in obviously to the Joe Tucci model. Absolutely. Excellent. Okay, so the other thing that we wanted to talk to you about was this notion of VMware as a cloud provider. A lot of questions about that. I was at the EMC service provider conference the other day, moderating a little panel and I asked, how do you guys feel about that? They were like, hey, well, we'll cooperate, we'll compete and somebody else said, well no, they're going to give us the IP so there seem to be still some confusion about that, so help us squid through that and understand what your objectives are there. Well, our objective is clearly is to bring this hybrid value proposition to the marketplace, what we call the inside out model. As I said, being able to build a hybrid service that is as transparent as the hypervisor was for workloads from one server to another. That's our objective of what we're going to do and we weren't doing that, nor were our service provider partners doing that because we weren't giving them the IP to go do that. So one of the premises we have is that's the market we're aiming at. The enterprise workload create that hybrid value proposition. We've decided that, hey, we need to stand up a service ourselves with our brand, our name, our credibility and reputation behind it. Because guess what, when you're running a 7x24 service yourself, you build software differently. And I need to build that DNA at VMware that we are building operationalized software that operates there at scale. Secondly, with that we're going to focus on building that software layer and we're going to rely on partners for the physical infrastructure for the network infrastructure as well. That will all be done with and through partners. I'm not pouring concrete, I'm not building networks, I'm not going to compete with them at that layer. And then we're going to aggressively franchise that relationship with service providers. Every piece of IP is going to be made available to our partners there because our customers want our brand on it, but we clearly see that they're going to leverage the service providers as well. And they're going to do all sorts of other services that build on top of ours. Some will take it and go do it under their brand as well. We will absolutely be enabling them to go do everything that we're doing. On the balance, there may be a few accounts that we compete with, but guess what? We've been doing that since the company began with our multi-tier bar relationships, etc. Because fundamentally we want them to scale dramatically more than we'll ever be able to do so from our position. So it's right to say that you're a catalyst or an accelerant for your partners? Yes, absolutely. And I want them to scale, and particularly as you go globally. In the American market it's pretty open, there's lots of competition. Amazon has clearly established themselves. But when you start thinking about this and you go to China, how successful will be an international service provider in China? Not going to happen. You have to do it with partners. That to us is a key part of our strategy here. And our VSPP program, where we essentially allow customers to take our software and run it as a service today as we announced in Q1, growing 100% per year. We're already having great traction with that, even though it's small but it's growing very rapidly. So we think we're proven on the business model. We're in beta with the service as we speak, and we're getting great response from the early customers for their interest in this with a VMware value proposition. Pat, I got to ask you about the cloud because obviously we were just an open stack. I saw some open stack on the slide there. So I want to get you about open stack. I also want to talk about some of the comments we heard about the Google comparison. Goulden was up there saying if you want a Google-like environment, great, but you've got to hire a thousand PhDs. I mean, the fact of the matter is most enterprises aren't going to be building their own clouds, right? So they're going to want help there. So obviously that's going to come into your wheelhouse. VMware has to set the table for these guys to have that API, if you will, into from on-prem to the cloud. What do you see as your to-do items to check off the boxes to make that happen? In a way that's not Amazon-like, because obviously Amazon's showing the way. Amazon's saying, hey, service levels, I need higher level services to compartmentalize them, componentize them, software layers, all that, but enterprises don't want to go to Amazon, so to speak. But they're doing shadow IT. So they need to partner for the cloud. How do you deliver that? Well, first thing I'd say is that many enterprises are building clouds today. They're just called private clouds today, right? And they're operationalizing that. So a lot of this work is actually underway, right? And we see the role of IT evolving to become what we call the service broker, right? Where here are the things that we are doing ourselves. Here are the things that we are responsible for that are being done by other parties, right, as well. But we still need to guarantee the SLAs, right? The governance, the data governance, sir, the, you know, the privacy, all of those types of things. And that's part of IT's responsibility as well. So we view that we're trying to enable IT to really be that service broker. Inside of that, we're then trying to say, guess what? There's a whole another bag of tools that we want to start enabling that are public cloud or these hybrid cloud services that we want to enable, right, those service availability for that environment with you. But we're going to do it with the same networking, the same security, the same management tools, the same, right, compatibility so you don't need to make this radical step to an incompatible public cloud service that when you get there, right, you're now in another locked in environment, you know, Dr. Lock-In as we saw at the show here today. Dr. Lock-In. You can't come back, right, and that's the problem with Shadow IT and as we talked to CIOs, right, you know, hey, you know, it's just a swipe of the MX card and I'm able to go, you know, provision some VMs, but now that you've done the app development over there, now what do I do with it? I can't deploy it in my governance. I can't put the SLA's Okay, so Private Cloud is the gateway towards, you know, a fully interface where we go to some VMware services when they're cloud, you're cloud. But I want to ask you, why do you think OpenStack is so successful? I mean, OpenStack I mean, you got cloud stacks out there, a little bit more advanced, but OpenStack is resonating with the enterprise, why is that? Well, you know, first thing is, you know, let's put this in context a little bit, right, you know, OpenStack is not being successful, right, in terms of real deployments, it's nascent, right, it's early in the hype cycle, but absolutely it's generating lots of interest, you know, people are saying, wow what's going on here? Certainly developers are Yeah, you know, there's a lot of interest going on here and, you know, why is that? Right, I think that's the more fundamental question. Yes, that's not a measure of real deployments today because they don't really exist. Right, they don't exist. And the interest is because there's so much interest in this whole cloud space, right, they realize these public clouds, they're, you know, they're incompatible, they're proprietary, I can't operationalize them internally, you know, there's now, you know, the great success of VMware internally, but we haven't presented this ability to have a compatible set of services across those environments. Okay, so let me rephrase the question, so obviously it's early, so the messaging of OpenStack is resonating with enterprises. Absolutely. Do you think it's because of demand or because of their approach? I think there is a bit of both. Right, there is this unsatisfied need, and I'll tell you, as I talk to CIOs, there's an unsatisfied need in this hybrid space, and that's what we are aggressively stepping in 2.1. Point two would be, hey, you know, this is an open store, open source, right, you know, people don't want Dr. Lockett. They want to have some governance that allows them to say, okay, I really can move, I have this flexibility. And that's why we made the announcements we did at the OpenStack Summit. You were there, you saw our announcements, right, you reported on those as well, saying, hey, you know, we have two strategies, right, we're going to build our complete stack, right, we're going to operationalize it, we're going to allow people to own private clouds, but we're also going to have a component strategy where we will follow the OpenStack APIs, we'll make our networking, we're going to make our hypervisor, we're going to make our management, right, and you'll see us in the AOS, right, and architects are very concerned for Lockett, right, they're very concerned that there is competition because that's what they've lived in for the last 25, 30 years, and they don't want to position themselves that in this cloud world, I've just created yet another set of Lockett, so we think it very much is important in that respect, and that's why we're fully supporting it. And you're contributing? Absolutely. Yeah, we're one of the large contributors, we're contributing at those three levels, and you'll see us make more steps as well. But a lot of people are afraid, they say, oh, what are those people? What are they telling you? I'm contributing code, right, I'm ready to go in that space, I'm ready to go be part of the governance process just like OpenStack is set up, that's why we joined the board, that's why we're making code contributions, and guess what, right, what's the largest deployed OpenStack today? Probably Rackspace? Yeah, Cloud, right. Probably Rackspace, whose network are they running? Mine, right, what's one of the other largest OpenStack environments is PayPal eBay, right, whose hypervisor are they running? Mine, I think we're already proving a valid partner of somebody who's chosen an OpenStack architectural framework that we are going to make our technologies absolutely suitable for those environments as well. I've got to ask you two questions about the positioning of VMware and how are you going to market the company, I know you've got a CMO search out right now, and... Have you applied yet? No, no. I don't think I'd pass the background check. The queue being on the Cuban area. The riff-raff here on the queue. Something in your background I should know about here today. I'm boring, I have four kids that live in Palo Alto and nothing to see there. So, you know, we want to hear about the positioning, but also I want to take you back in the memory lane. Okay, back in the 80s and 90s, the big thing was multi-vendor. That was the OpenStandards initiative, drove that, and that worked. That was a box mentality, right? That was components, I've got to have this, I've got to have that, I've got to work together, interoperable multi-vendor. Now, it's about openness. So, is Open in choice the new multi-vendor and how would you compare and contrast that kind of box mentality to this kind of version of multi-vendor or Open? How would you talk about that? We would talk about it maybe from a couple of lenses. One is, clearly there is this view of give me open interfaces, give me these lighter weight, restful interfaces so I don't get into these heavy things that lock me in. Secondly, we do think the software-defined data centers is just a big, big deal. Because we are taking hardware heavy and putting lightweight interfaces on it that are more programmable, more agile, et cetera, on top of that. And we're generally finding that IT wants few vendors. They don't want lots and lots of little things. They want to pick trusted partners that they can go build their next generation infrastructure on. So, in many regards, we're seeing CAO say, boy, if I trust you, if I want to partner with you, if I see you work the right way and do the right things, I actually want fewer vendors going forward. That's a big message you guys have here at EMC which has really been well received. How does it look at the choice? Is it technical choice? Is it vendor choice? Yes and yes. And for that, I would say to me it is architectural choice at both the technology and at the business model level. Because that's part of the way we set the company up the way that we do. Guess what? Tom Jorgans of NetApp is one of my best friends in this space. He's one of the best innovative partners for VMware. That is the case today and I expect it to be the case for many, many years to come. And he's the arch-rival of EMC. That is the way we structure the company. We have video of you with a NetApp t-shirt on. NetApp baseball shirt on. That ecosystem is a key differentiator. That's part of the reason that we can go into the space with such confidence and have no fear of OpenStack. Because we contribute to these open ecosystems all the time. We're competing viciously with Citrix. Please bring NetScaler on top of the NSX platform as you go forward. Who distributes N1K for virtual networking for Cisco? We do. We believe this has to be an open platform, open interfaces and the way we structure the company. And Joe is governing well in that regard as we fully realize that we have to enable the choice, best technologies have to win on open platforms. Who will be my partners in the Hadoop space? Well, certainly Pivotal will be, but guess what? You know, Cloudera, MapR, they're going to be key partners as well. It's an ecosystem. And Joe is very proud up there to say, hey, we have a different approach, our differentiations. We do have four brands. And so with that, what is going to be the... It's not just four brands, it's four companies. Four companies. What's going to be the new VMware positioning from your standpoint? Because you've got some separation now. You've got the top of the stack has kind of been pushed out with Pivotal. Our positioning will very much continue to evolve as the IT as a service infrastructure company of choice. Software-defined data center, hybrid cloud, and user computing. Build that infrastructure for anything associated with infrastructure going forward. We are the software infrastructure of the future. Okay, I've got Pat Gelsing. We're getting the hook from the handlers and this is always the case we try to hang on. We didn't run out of questions, Dave. We have more. We'll get them later. That was always a great guest. Thanks for coming outside the Cube again. Congratulations. CEO of VMware, obviously major inflection point for EMC and all the companies Pivotal, VMware and RSA. Great job. Congratulations and we'll be right back with our next guest after this short break.