 From the SiliconANGLE Media office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Dave Vellante. Hello everybody, this is Dave Vellante with Stu Miniman, and we're going to take a look back at 10 years of theCUBE at VMworld, and look forward to see what's coming next. So, as I say, this is theCUBE's 10th year at VMworld. It's VMworld, of course, 2019. Let's do, if you think about the VMware of 2010, when we first started, it's a dramatically different VMware today. Let's look back at 2010. Paul Moritz was running VMware, he set forth the vision of the software mainframe last decade. Well, what does that mean, software mainframe? Highly integrated hardware and software that can run any workload, any application. That is the gauntlet that Tucci and Moritz laid down, a lot of people were skeptical. Fast forward 10 years, they've actually achieved that. I mean, essentially, it is the standard operating system, if you will, in the data center, but there's a lot more to the story. But you remember, at the time, Stu, it was a very complex environment. When something went wrong, you needed guys with lab coats to come in and figure out what was going on, the IO blender problem. Storage was a real bottleneck. So, let's talk about that. Dave, so much, first of all, hard to believe 10 years. Think back to 2010. It was my first time being at VMworld, even though I started working with VMware back in 2002 when it was like 150 person company. Remember when VMotion first launched? But that first show that we went to, Dave, was in San Francisco, and most people didn't know theCUBE. Heck, we were still figuring out exactly what theCUBE will be, and we brought in a bunch of our friends that were doing the cloud camps in Silicon Valley, and we were talking about cloud, and there was this gap that we saw between, as you said, the challenges we were solving with VMware, which was fixing infrastructure. Storage and networking had been broken, and how were we going to make sure that that worked in a virtual environment even better? But there were the early thought leaders that were talking about that future of cloud computing, which today in 2019 looks like we had a good prediction, and of course, where VMware is today, we're talking all about cloud. So, so many different eras and pieces and research that we did, hundreds and hundreds of interviews that we've done at that show. It's definitely been one of our flagship shows and one of our favorite for guests and ecosystems and so much that we got to dig into at that event. So, Todd Nielsen, who was the president and probably COO at the time, talked about the ecosystem. For every dollar spent on VMware license, $15 was spent on the ecosystem. VMware was a very, even though they were owned by EMC, they were very sort of neutral to the ecosystem. You had what we called the storage cartel. It was certainly EMC, you know, but NetApp was right there. IBM, HP, Dell had purchased Equal Logic. HDS was kind of there as well. These companies were the first to get the APIs. You remember the VASA, VAI. So, we pushed VMware at the time saying, look, you guys got a storage problem. They said, well, we don't have a lot of resources. We're going to let the ecosystem solve the problem. Here's an API, you guys figure it out, which they largely did, but it took a long time. The other big thing you had in that 2010 timeframe was storage consolidation. You had the bidding war between Dell and HP, which ultimately HP under Donatelli's leadership won that bidding war and acquired three par for 2.4, 2.5 billion. It forced Dell to buy compelling. Subsequently, Isilon was acquired. Data Domain was acquired by EMC. So, you had this consolidation of the early 2000 storage startups, and then still, storage was a major problem back then. But the big sea change was two things happened in 2012. Pat Gelsinger took over as CEO and VMware acquired NYSERA, beat Cisco to the punch. Why did that change everything? Yeah, Dave, we talked a lot about storage and how the ecosystem was changing this. NYSERA, we knew it was a big deal. When I talked to my friends that were deep in networking, and I had talked with NYSERA and was majorly impressed with what they were doing. But this heterogeneous, and what now is the multi-cloud environment, networking needs to play a critical role. You see, Cisco is clearly targeted that environment and NYSERA had some really smart people and some really fundamental technology underneath that would allow networking to go just beyond the virtual machine where it was before, the V-switch. So, that expansion, and actually it took a little while for the NYSERA acquisition to run into NSX and that product to gain maturity and to gain adoption. But as Pat Gelsinger has said more recently, it is one of the key drivers for VMware, getting them beyond just the hypervisor itself. So, so much is happening. I mean, Dave, I look at the swings as you said, VMware didn't have enough resources there, we're gonna let the ecosystem do it. In the early days it was, I chose a server provider and oh yeah, VMware kind of plays in it. So, VMware really grew how much control and how much power they had in buying decisions and we're going through more of that change now as to, as they're partnering, we're gonna talk about AWS and Microsoft and Google as those pieces. And Pat, driving that ship, the analogy we gave is could Pat do for VMware what Intel had done for a long time, which is you have a big ecosystem and you slowly start eating away at some of that other functionality without alienating that ecosystem. And Pat's credit is actually something that he's done quite well. There's been some ebbs and flows, there's pushback in the community, those that remember things like the V-tax when they rolled that out. There's certain features that they've rolled into the hypervisor that have had parts of the ecosystem gripe a little bit, but for the most part, VMware is still playing well with the ecosystem, even though after the Dell acquisition of EMC, we'll talk about this some more, that relationship between Dell and VMware is tighter than it ever was in the EMC days. So, that led to the Software Defined Data Center, which was the big sort of vision, VMware wanted to do to storage and networking what it had done to compute. And this started to set up the tension between VMware and Cisco, which lives on today. The other big mega trend, of course, was flash storage, which was coming into play. In many ways, that whole API gymnastics was a bandaid. But the other big piece of it is Pat Gelsinger was much more willing to integrate some of the EMC technologies, and now Dell technologies into the VMware sort of stack. Right, so Dave, you talked about all of those APIs. VVolz was a huge multi-year initiative that VMware worked on, and all of the big storage players were talking about how that would allow them to deeply integrate and make it, virtualization, aware storage, your sort of tentry come out on their own and try to do that. But if you look at it, VVolz was also what enabled VMware to do VSAN. And that is a little bit of how they can try to erode some of the storage piece, because VSAN today has the most customers in the hyper-converged infrastructure space and is keeping to grow, but they still have those storage partnerships. It didn't eliminate it, but it definitely adds some tension. Well, it is important because under EMC's ownership, it was sort of a let-a-thousand flowers bloom sort of strategy. And today, as you see Jeff Clark coming in and consolidating the portfolio, saying, look, let VMware go hard with VSAN. So you're seeing a different type of governance structure. We'll talk about that. 2013 was a big year. That's the year they brought in Sanjay Poonan. They did the AirWatch acquisition. They took on what the industry called VDI, what VMware called EUC and user computing. Citrix was the dominant player in that space. VMware was fumbling, frankly. Sanjay Poonan came in, the AirWatch acquisition, now VMware is a leader in that space. So that was big. The other big thing in 2013 was the famous comment by Carl Eschenbach about if we lose the bookseller, we'll all lose, VMware came out with its cloud strategy, vCloud Air. I was there with the Wall Street analysts that day listening to Pat explain that, and we were talking afterwards to a number of the Wall Street analysts saying, this really doesn't make a lot of sense. And then they sort of retreated on that, said it was going to be an accelerant, it just was basically a failed cloud strategy. And Dave, that 2013 is also when they spun out Cloud Foundry and founded Pivotal. So this is where they took some of the pieces from EMC, the Green Plum and they took some of the pieces from VMware, Spring and the Cloud Foundation and put those together. As we speak right now, there was just an SEC filing that VMware might suck them back in. Where I look at that, back in 2013, there was a huge gap between what VMware was doing on the infrastructure side and what Cloud Foundry was doing on the application modernization standpoint. They had bought the Pivotal Labs piece to help people understand new programming models and everything along those lines. Today in 2019, if you look at where VMware is going, the changes happening in containerization, the changes happening from the application down, they need to come together. The Achilles heel that I've seen for VMware for a long time is that VMware doesn't have enough of a tie to or help build the applications. Microsoft owns the applications, Oracle owns the applications. There are all the ISVs that own the applications and Pivotal, if they bring that back into VMware, can help. But it made sense at the time to kind of spin that out because there wasn't synergies between them. It was what I called at the time, a bunch of misfit toys. And so it was largely David Goulden's engineering of what they called the Federation. And now you're seeing some more engineering, financial engineering of having VMware essentially by another Dell Silver Lake asset in which drove the stock price up 77% in a day that the Dow dropped 800 points. So I guess that works, kind of funny money. The other big trend sort of in that mid part of this decade, hyper-converged, really hit Nutanix who was at one point a strong partner of both VMware and Dell was sort of hitting its groove swing. Fast forward to 2019, different situation. Nutanix really doesn't have a presence there. People are looking at going beyond hyper-converged. So there's sort of the VMware ecosystem sort of friendly posture has changed. They point fingers at each other. VMware says, well, it's Nutanix's fault. Nutanix would say it's VMware's fault. So Dave, I pointed out the Achilles heel for VMware might be that they don't have the closest height of the application, but their greatest strength is really they are really the data center operating system, if you will. When we wrote out our research on server sand was before vSAN had gotten launched. It was where Nutanix, scale computing, simplicity, pivot three and a few others were early in that space, but we stated in our research if Microsoft and VMware get serious about that space they can dominate. And we've seen VMware came in strong. They do work with their partnerships. Of course, Dell with the VxRail is their largest solution, but all of the other server providers have offerings and can put those together. And Microsoft just last year that they kind of rebranded some of the Azure stack as HCI and they're going strong in that space. So absolutely strong presence in the data center platform and that's what they're extending into their hybrid and multi-cloud offering the VMware cloud solution. So I want to get to some of the trends today, but there's real quick, let's go through some of this. So 2015 was the big announcement in the fall where Dell was acquiring EMC. So we entered really the Dell era of VMware ownership in 2016. And the other piece that happened really 2016 in the fall but it went GA 2017 was the announcement AWS and VMware as the preferred partnership. Yes, AWS had a partnership with IBM. They've subsequently done. VMware has a partnership with IBM for their cloud. Subsequently VMware has done deals with Google and Microsoft. So we now have entered the multi-cloud hybrid world. VMware capitulated on cloud smart move cleaned up its cloud strategy, cleaned up that air watch mess. AWS also capitulated on hybrid. It's a term that they would never use. They don't use necessarily a lot today, but they recognize that on-prem is a viable portion of the marketplace. And so now we've entered this new era of cloud, hybrid cloud containers is the other big trend. People said containers are going to really hurt VMware. You know, the jury's still out on that VMware sort of pushes back on that. And Dave, just to put a point on that, you know, everybody including us spent a lot of time looking at this VMware cloud on AWS partnership. And what does it mean especially to the parent, you know, Dell, how do they make that environment? And you've pointed out, Dave, that while VMware gets in those environments and gives themselves a very strong cloud strategy, AWS is the key partner. But of course, as you said, Microsoft Azure, Google Cloud and all the service providers have a number of them, including you know, CenturyLink and Rackspace that they're partnering with. But we had to wait a little while before Amazon when they announced their outpost solutions, VMware is a critical software piece and you've got two flavors of the hardware. You can run the full AWS stack, just like what they're running in their data center. But the alternative of course, is VMware software running on Dell hardware. And we think that if VMware hadn't come in with a strong position with Amazon and there's 600,000 customers, we're not sure that Amazon would have said, oh yeah, hey, you can run, you know, that same software stack that you're running, but run some different hardware. So that's a good place for Dell to get in the environment and helps kind of close out that story of VMware, Dell and AWS and how the pieces fit together. Yeah, well so by the way, earlier this week, I privately mentioned to a Dell executive that one of the things I thought they should do is fold Pivotal into VMware. By the way, I think they should go further. I think they should look at RSA and Dell Boomi and SecureWorks, make VMware the mothership of software and then really tie in Dell's hardware to VMware. That seems to me, Stu, the direction that they're going to try to gain an advantage on the balance of the ecosystem. I think VMware now is in a position of strength with whatever, 500, 600,000 customers. It feels like it's less ecosystem friendly than it used to be. Yeah, Dave, there's no doubt about it. HPE and IBM who were two of the main companies that helped with VMware's ascendancy do a lot of other things beyond VMware. Of course, IBM bought Red Hat is a key counterbalance to what VMware is doing in the multi-cloud. And Dave, to your point, absolutely. If you look at Dell's cloud strategy, their number one offering is VMware, VMware Cloud on Dell. Dell, as the project dimension piece, all of these pieces do line up. I'll say some of those pieces, absolutely, I would say make sense to pull in and show together. I know one of the reasons they keep the security pieces at arm's length is just when something goes wrong in the security space, and it's not a question of if it's a question of when. They do have that arm's length to be able to keep that out and be able to remediate a little bit. It went something. So let's look at some of the things that we're following today. I think one of the big ones is how will containers affect customer spending on VMware? We know people are concerned about the VTACs. We also know that they're concerned about lock-in. And so containers are this major force. Can VMware make containers a tailwind or is it a headwind for them? So you look at all the acquisitions that they've made lately, Dave. Cloud health is, from a management standpoint, in the public cloud. Heptio and Bitnami targeting that cloud native space. Care of that with cloud foundry and you see VMware and Pivotal together trying to go all in on Kubernetes. So those 600,000 customers, VMware wants to be the group that educates you on containerization and Kubernetes and how to build these new environments. For a lot of customers, it's attractive for them to just stay. I have a relationship. I have an enterprise licensing agreement. I'm gonna stay along with that. The question I would have is if I wanna do something in a modern way, is VMware really the best partner to choose from? Do they have the cost structure? A lot of these environments set up, it's open source base or I can work with my public cloud providers there. So why would I partner with VMware? Sure, they have a lot of smart people and they have expertise and we have a relationship. But what differentiates VMware and is it worth paying for that licensing that they have or will I look at alternatives? But as VMware grows their hybrid and multi-cloud deployments, they absolutely are on the short list of strategic partners for most customers. The other big thing that we're watching is multi-cloud. I have said over and over that multi-cloud has largely been a symptom of multi-vendor. It's not necessarily to date anyway, been a strategy of customers. Having said that, issues around security, governance, compliance have forced organizations and boards to say, you know what, we need IT more involved. Let's make multi-cloud part of our strategy not only for governance and compliance but then making sure it adheres to the corporate edicts but also to put the right workload on the right cloud. So having some kind of strategy there is important. Who are the players there? Obviously VMware, I would say right now is the favorite because it's coming from a position of strength in the data center, Microsoft with its software state, Cisco coming at it from a standpoint of network strength, Google with Anthos, that announcement earlier this year and of course Red Hat with IBM. Who's the company that I didn't mention in that list? Well of course you can't talk about Cloud Dave without talking about AWS. So as you stated before, they don't really want to talk about hybrid and come on, multi-cloud, why would you do this? But any customer that has a multi-cloud environment, they've got AWS and the VMware, AWS partnership is really interesting to watch. It will be, you know, where will Amazon, you know, grow in this environment as they find their customers are using multiple solutions. Amazon has lots of offerings to allow you to leverage Kubernetes, but for the most part, they, you know, the messaging is still, we are the best place for you. If you do everything on us, you're going to get better pricing and all of these environments. But as you said, Dave, you know, we never get down to that homogeneous, you know, one vendor solution. It tends to be, you know, IT has always been this heterogeneous mess and you have different groups that purchase different things for different reasons. And we have not seen yet public clouds solving that for a lot of customers. If anything, we often have many more silos in the clouds than we had in the data center before. Okay. Another big story that we're following, big trend is the battle for networking. NSX, the software, you know, the networking component and then Cisco who's got a combination of obviously hardware and software with ACI. You know, Stu, I got to say, Cisco, a very impressive company, you know, 60 plus percent market share being able to hold that share for a long time. I've seen a lot of companies try to go up against Cisco. You know, the industry's littered with failures. It feels however, like NSX is a disruptive force that's very hard for Cisco to deal with in a number of dimensions. We talked about multicloud, but networking in general, Cisco still a major player, still, you know, owns the hardware infrastructure, obviously layering in its own software-defined strategy. But that seems to be a source of tension between the two companies. What's the customer perspective? Yeah, so, I mean, first of all, Dave, you know, Cisco from a hardware perspective is still going strong. There are some big competitors. Arista has been doing quite well into getting in especially high-performance, high-speed environment. You know, J. Shriolal and that team, you know, very impressive public company. Service providers that do really well. Absolutely, but absolutely, software is eating the world and it is impacting networking. Even when you look at Cisco's overall strategy, it is in the future. Cisco is not a networking company. They are a software company. The whole DevNet, you know, group that they have there is helping customers modernize what we were talking about with Pivotal. Cisco is going there and helping customers create those new environments. A customer standpoint, you know, they want simplicity. If, you know, my VMware is a big piece of my environment, I've probably started using NSX, NSXT, some of these environments. As I go to my service providers, as I go to multi-cloud, that NSX piece inside my VMware Cloud Foundation, you know, starts to grow. Where, I remember, Dave, a few years back, you know, Pac-Elsinir got up on stage and was like, this is the biggest collection of network administrators that we've ever seen and everybody's looking out around and they're like, where? Well, you know, we're virtualization people. Oh wait, just because we've got VNICs and VSwitches and things like that, it still is a gap between kind of the hardcore networking people and the software state. But just like we see on a storage, Dave, it's not like, you know, VSAN, despite its thousands of thousands of customers, it is not, you know, the dominant player in storage. It's a big player. It's a great revenue stream and it is expanding VMware beyond their core vSphere solutions. Back to Cisco real quickly. One of the things I'm very impressed with Cisco is the way in which they've developed infrastructure as code with the DevNet group, how CCIEs are learning Python and that's a very powerful sort of trend to watch. The other thing we're watching is VMware AWS. How will it affect spending, you know, near-term, mid-term, long-term? Clearly, it's been a momentum, you know, tailwind for VMware today, but the question remains, long-term, where will customers place their bets? Where will the spending be? We know that cloud has grown dramatically faster than on-prem, but it appears, at least in the near to mid-term, for one, two, maybe three more cycles, maybe indefinitely, that the VMware AWS relationship has been a real positive for VMware. Yeah, Dave, I think you stated it really well. You know, when I talked to customers, they were a bit frozen a couple of years ago. Ah, I know I need to do more in cloud, but I have this environment, what do I do? Do I stay with VMware? Do I have to make a big change? And what VMware did is they really opened things up and said, look, no, you can embrace cloud and we're there for you. We will be there to help be that bridge to the future if you will. So take your VMware environment, do VMware cloud in lots of places and we will enable that. What we know today, the stack that we hear all the time, the old 8020 we used to talk about was 80% keeping the lights on. Now the 80% we hear about is there's only 20% of workloads that are in public cloud today. It doesn't mean that that other 80% is going to flip overnight, but if you look over the next five to 10 years, it could be a flip from 8020 to 2080 and as that shift happens, how much of that estate will stay under VMware licenses because the day after, you know, AWS made the announcement of VMware cloud on AWS, they offered some migration services. So if you just want to go on natively on the public cloud, you can do that and Microsoft, Google, everybody has migration services. So use VMware for what I need to, but I might go more native cloud for some of those other environments. So we know it is going to continue to be a mix. Multi-cloud is what customers are doing today and multi and hybrid cloud is what customers will be doing five years from now. The other big question we're watching is outposts. Will VMware and outposts get a larger share of wallet as a result of that partnership at the expense of other vendors? And so it remains to be seen. Outposts grabbed a lot of attention, that whole notion of same control plane, same hardware, same software, same data plane on-prem as in the data center, kind of like Oracle's same, same approach, but it's seemingly a logical one. Others are responding, your thoughts on whether or not these two companies will dominate or the industry will respond for an equilibrium. Right, so first of all, that full same, same full stack has been something we've been talking about now. It feels like for 10 years, Dave, with Oracle, IBM had a strategy on that and you see that. But one of the things what VMware has strong strength, what they have over two decades of experiences on is making sure that I can have a software stack that can actually live in heterogeneous environments. So in the future, if we talk about, if Kubernetes allows me to live in a multi-cloud environment, VMware might be able to give me some flexibility so that I can move from one hardware stack to another as I move from data centers to service providers to public clouds. So absolutely, you know, one to watch. And VMware is smart. Amazon might be their number one partner, but they're lining up everywhere. When you see Sanjay Poonan up on stage with Thomas Kurian at Google Cloud, talking about how Anthos, you know, in your data center very much requires VMware. You see, you know, Satya Nadella up on stage talking about, you know, these kind of VMware partnerships. You know, VMware is going to make sure that they live in all of these environments just like they lived on all of the servers in the data center in the past. The other thing, the last two pieces that I want to touch on and they're related is as a result of Dell's ownership of VMware, our customer's going to spend more with Dell. And it's clear that Dell is architecting a very tight relationship. You can see, first of all, Michael Dell putting Jeff Clark in charge of everything Dell was brilliant because in a way, you know, Pat was kind of elevated as the superstar. And Michael Dell is the founder and he's, you know, the leader of the company. So basically what he's created is this team of rivals. Now, you know, Jeff and Pat, they've worked together for decades, but very interesting. We saw them up on stage together, you know, last year. Well, I guess at Dell Technologies World, it was kind of awkward, but so I love it. I love that tension. It's very clear to me that Dell wants to integrate more tightly with VMware. It's the clear strategy. And they don't really care at this point if it's at the expense of the ecosystem, let the ecosystem figure it out themselves. So that's one thing we're watching. Related to that is long-term, our customer's going to spend more of their VMware dollars in the public cloud. Come back to Dell for a second. To me, AWS is by far the number one competitor of Dell. You know, that shift to the cloud. Clearly they've got other competitors, you know, NetApp, Huawei, you know, on and on and on. But AWS is the big one. How will cloud spending affect both Dell and AWS long-term? The numbers right now suggest that cloud's going to keep growing. $35, $40 billion run rate company growing at 40% a year, whereas on-prem stuff growing, you know, at best single digits. So that trend really does favor the cloud guys. I talked to a Gartner analyst who tracks all their stuff, I said, can AWS continue to grow? It's so big. He said, there's no reason they can't stop. The market's enormous. I tend to agree. What are your thoughts? Yeah, on the AWS, absolutely, I agree, Dave. They are still, if you look at the overall IT spend, AWS is still a small piece. They have, that lever that they have and the influence they have on the marketplace greatly outweighs the, you know, $30, $31 billion that they're at today and absolutely they can keep growing. The one point I think what we've seen the best success that Dell is having, it is the Dell and VMware really coming together, product development, go-to-market, the field is tightly, tightly, tightly aligned. The VxRail was the first real big push and if they can do the same thing with the V Cloud Foundation, you know, VMware Cloud on Dell hardware, that can be a real tailwind for Dell to try to grow faster as an infrastructure company, you know, to grow more like the software companies or even the cloud companies will. Because we know when we've run the numbers, Dave, private cloud is going to get a lot of dollars even as public cloud, it continues its growth. I think the answer comes down to a couple things. Because right now we know that 80% of the spend and install base is on-prem, 20% in the cloud. We're entering now the cloud 2.0, which introduces hybrid cloud, on-prem, you know, connecting to clouds, multi-cloud, Kubernetes, so what it comes down to me, Stu, is to what degree can Dell, VMware, and the ecosystem create that cloud experience in a hybrid world, number one, and number two, how will they be able to compete from a cost structure standpoint? Dell's cost structure is better than anybody else's in the on-prem world. I would argue that AWS's cost structure is better, you know, relative to Dell, but remains to be seen. But really those two things, the cloud experience and the cost structure, can they hold on, and how long can they hold on to that 80%? All right, so Dave, here's the question I have for you. What are we talking about when we're talking about Dell plus VMware, and even add in Pivotal? It's primarily hardware plus software. Who's the biggest competitor in that multi-cloud space? It's IBM plus Red Hat, which you've stated emphatically, this is a services play, and IBM has just got services in their DNA, and that can help supercharge where Red Hat's going and the modernization. So is that a danger for Dell? If they bring in Pivotal, do they need to really ramp up that services? How do they do that? Yeah, and I don't think it's a zero-sum game, but I also don't think there's, it's five winners. I think that the leader, VMware right now would be my favorite. I think it's going to do very well. I think Red Hat has got a lot of good market momentum. I think they've got a captive install base with IBM and it's a large outsourcing business, and I think they can do pretty well, and I think number three can do okay. I think the other guys struggle, but it's so early right now in the hybrid cloud world, in the multi-cloud world that, if I were any one of those five, I'd be going hard after it. We know Google's got the dollars, we know Microsoft has the software estate, so I can see Microsoft actually doing quite well in that business, and could it emerge in as the, maybe they're not a long shot right now, but they could be a three to one, four to one leader that comes out as the favorite. So all right, we got to go, Stu. Thanks very much for your insights, and thank you for watching and listening. We will be at VMworld 2019, three days of coverage on theCUBE. Thanks for watching, everybody. We'll see you next time.