 Live from San Francisco, extracting the signal from the noise, it's theCUBE, covering VMworld 2015. Brought to you by VMware and its ecosystem sponsors. Now your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone. We are here live in San Francisco at Moscone North Lobby at VMworld 2015. This is Silicon Angle Media's theCUBE, our flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier, my close Dave Vellante. This is a wrap-up session we have. Our other two co-hosts from our second studio set called theCUBE Director's Set, Stu Miniman, Chief Analyst in the Cloud, and Brian Grace Lee, contributing analysts in the cloud. Guys, welcome to the closing wrap-up of day two of another full day tomorrow of VMworld this year. Real seminal moment for VMware, Dave. Guys, I want to get your perspective. So I'd love to just run down and get your take as analysts and now hosts on theCUBE, both Director's Set and he or Dave, and guys, I wanted some takeaways. What was the vibe? What was the core signal you were getting out of theCUBE this week and today? What's going on? Stu, we'll start with you. Yeah, so John, we said coming into this event, there wasn't one key theme. There's updates in a lot of the environment and today we really got to start to unpack things. So Brian and I on the Director's Set, we're looking into the hyper-converged space, looking into what's happening with networking and started to talk about both cloud and some of the emerging space and containers. And there's a lot here. It's not just a dot release, but there's real progress being made. Got to talk to a lot of the practitioners and have to dig into some of the specifics on it, but progress, real insecurity is kind of a shining area in the networking space. And vSAN, despite the FUD, but we always know, John, the FUD usually means that there's something happening. If they're ignoring it, it means that, you know, it's probably dead. So if everybody's fighting it. We'll come down and do a drill down. Just get the highlights now. We'll come back and drill in on Brian's highlights for you. Signal that was acquired from theCUBE today with you. Yeah, highlight for me, we did a great panel discussion with a number of startups that are in the container space. Those guys were really excited about what VMware announced. They're excited that containers are becoming more mature, that they're going to be able to ride on the coattails of VMware, VMware, Microsoft getting involved with that stuff. So that was really interesting, kind of hearing the maturity of what's going on with containers. People are starting to get it. The whole cloud native application thing and DevOps is big. Great, Dave. Signal, you've acquired today as theCUBE. Well, I think, you know, this shows always to me, John, about the ecosystem and the ecosystem is getting comfortable with, you know, cooperating with VMware. I mean, they're going hard after the opportunity. Every customer's here and they're saying, we're going to put up a big booth, we're going to spend a lot of money, we're going to have parties and we're going to go get those customers. And, you know, if we got to compete with VMware, we're going to. That's just kind of the new normal. My learnings I'd share with the folks out there is the affirmation of that the DevOps was going to be hot. It is, it was. And also the long view of VMware was laid out by the CEO. But moreover, it feels like a free-for-all out there, Dave. Like, to your point, it feels like it's like, finally someone's talking about the Federation and unlocking VMware. Whether that happens or not, it feels like a free-for-all. Like, yeah, let's go make some money. So it feels up-leveled on that. So, guys, next question. Did you feel the same way around that with Pat Gelsinger's keynote? Did you feel that he did a good job? Did you feel like it was a long-term perspective? Did you feel like he was almost interviewing for the CEO job? Did you feel like your thoughts, too? Yeah, so, you know, I don't know if I can do anything to answer the CEO thing, but that's my perspective. You know, if you look at it, he's trying to lay out that vision for the future. And there's some pieces of it that I really liked and a couple that I take a little bit of, you know, question on. So, I like that VMware's talking more about the cloud, but it's very much from the infrastructure and virtualization layer as to how they think about cloud. One of the critiques I had is that through the two days of keynotes, I don't think I heard AWS or Azure mentioned by name. Or Uber. Yeah. You know, Uber and Tesla, you know, were up there. Actually, you know, one of the great analogies that Pat gave, as he said, you know, let's look at cars. And, you know, over the next, you know, however many years it has, today, one of the problems we have with cars is we only utilize 4% of our cars. You know, it's about an hour a day we drive them, driving to work, driving around for stuff, but they sit around. And we're gonna see an explosion so that with things like Uber and with Google self-driving cars and some of these other technologies are gonna get greater utilization. So there's gonna be that significant shift in what's going on. And I wasn't quite sure listening to it, if Pat says, well, you know, we're that small startup trying to get into some of this space because many of us consider VMware as the incumbent. I mean, they are the leader in the data center. Virtualization is relatively mature. I guess it would almost be damning praise for me to say, you know, it's almost getting a little bit boring when we talk about virtualization. I don't really worry so much about the fights in the virtualization layer. As you said, it's a free for all, for all of these adjacencies, you know, networking and storage, you know, cloud and security, all these other pieces that can kind of add on to that ecosystem. And I think there's lots of opportunity and the question is, how much of it will VMware be able to extend into? Brian Grachly, what's your thoughts on the keynote and the buzz around the keynote? Would you hear in the hallways anything like to share? Yeah, I think, I mean, you highlighted it. You know, Pat has tried to make a statement, you know, he was talking in 30 year ranges of, you know, where innovation's going, the challenges of an age. He's definitely trying to make a statement that says, look, whatever happens with the Federation, we're the cornerstone, we're the keystone kind of technology, it's software driven. We're going to be at the center of that. And I think ultimately he's hearing customers say, look, I buy into what Tesla's doing, what Uber's doing, what these software defined and cloud neighbors are doing, but they're going, I don't know how to get there and Pat's trying to go. We may not have it all now, but we're the guys you should be talking to. It's a huge vertical play he's going after. And Paul Aschenbach agrees, by the way, reiterated that same point. We're the bridge to the future. They're trying to make a big vertical play. They're trying to, you know, to become a big player. Yes, so John, just a point, I'd like to add on that. The message that VMware's put out for the last couple of years is that the virtualization admin is going to extend into some of these areas. And there's a key case to be made to say, you know, storage adjacency, networking adjacency, the virtualization admin can absolutely extend there. But if I look at, you know, the container discussion, I'm not sure that most of these virtualization admins are ready because they're not the ones that are building the applications. It's not that side of it. I want to add, so a couple of years ago, Gelsinger laid out at the Financial Analyst Meeting, they expanded TAM and what their strategy was. And you're seeing that now. And essentially, VMware bringing those constituents into this event and they're beyond the point of no return. I mean, so, but they need more traction. A lot of them, obviously, AirWatch is a, you know, key piece of the end user computing, but long way to go in a lot of the areas, particular, you know, vCloud Air and so, but they've made that commitment. Their neck is out there. So guys, I want to hear your thoughts as analysts on the hybrid cloud messaging unified. That's a Cisco word, UCS unified has been around. It's not a new word, they're kind of throwing it into the mix. But I got to ask you from a customer standpoint and competition, does that resonate? Did VMware and the ecosystem connect with the customers and compare that to what competition may be doing? Yeah, to me, the one word is, he's calling it unified, I'm calling it underwhelmed. You know, the fact that they won't acknowledge that they've got market leaders that are as big as them, you know, Amazon, Azure, at least as big as them, just in public cloud. Their customers want to be able to use those things and at a minimum, he's got to say, how do I get there? How do I use it? No mention of it doesn't even acknowledge that it exists. And when they're that big, your customers are going to go, maybe you don't care, I'll go there myself. And so he's potentially giving up a huge control point by not giving people some sort of bridge to take advantage of those resources. Still, your thoughts on that and I'll add Azure to the equation because we had Microsoft on stage with Sanjay Poon and part of the end user group, which has a great business mobility message, but no message of Azure there. Is Azure another point to add to Brian's? Yeah, absolutely, I mean, to specifically call out the Wikibon numbers on public cloud, just to put a point as to what Brian said. If I just take Amazon's AWS public cloud revenue for 2015, what we expect it to be, and Microsoft's public cloud, what they're doing, both in Azure and in the Office suite, that revenue alone will be larger than all of VMware. And the growth rates are phenomenal. I mean, 60, 80% we're talking as opposed to a much smaller growth rate from the VMware standpoint. So I like that they're talking about Cloudmore. Many of VMware's customers and constituents are happy with what VMware's doing and will help walk down that path, but there's lots of groups inside the company that are leveraging those public clouds. And VMware needs to make the case as to why they should be relevant to be the one that can orchestrate, manage, and put all of those pieces together. Okay, so if I hear you guys correctly, the marketplace is transitioning, this turbulence, use the sailing analogy or boat analogy, their boat is taking on water and they have to unload some things. And I want to get your thoughts. Do you think that they're doing too much, Dave and guys, analysts here, Wikibon guys? What do you think? Unload, throw some off the boat, make it a little lighter? I wouldn't say the boat is taking on water. I think they're going into very uncharted and rough seas. That's what I mean. And to me, they're beyond the point of no return. They are going to have to spend a lot of money to try to win in this area where they are behind. And frankly, I agree with that. Is the boat too heavy? Do they have to unload some things? No, I think the analogy is if we're going to use a San Francisco boat racing, it's like racing Larry Ellison's America's Cup with a dinghy. They're not in the same category. And so the stuff they showed, the hybrid cloud, I mean, that's just not there yet. It's not ready, it's fall futures. And so long way to go there. Other parts, I mean, that's the core of VMware is still very, very strong. They're playing from a position of strength. They got a lot of cash. This Elliott thing is a distraction. Well, let's talk about the dev ops. I want to give some perspective because Pat Gelsinger made a quote on theCUBE. We did a survey, mostly the IT ops guys in their ecosystem. That's their business, right? So we know that. Developer, peer developer dev ops on the dev side is maybe a new opportunity. They're acknowledging it, yes it is. What's your thoughts on that guys and how do they get there? What should they be doing to outreach to those? What should the alignment be? Thoughts? Yeah, so I think from a dev ops perspective, I don't think they still, VMware doesn't reach the developer. Pivotal's going to reach the developer. They're trying to be the best ops for dev ops. And the feedback we've gotten is the dev ops event they're throwing downstairs is going really well. We talked to the V Brown Bag community, which is really the tip of the spear of the VMware technical experts. They're seeing more and more demand for that kind of thing. So I think what we're going to start to see is the beginning of VMware helping those people make that transition, but they're still not talking to developers. That's still a Pivotal game. That's still a Cloud Foundry game. And that's potentially a distraction. It may look good on paper to go for that, but do you see that potentially as a distraction for that? From a Pivotal or from a Federation selling perspective, it's two salespeople. So that's something they can fix internally, but it is, but it's two different teams. It's two different buying centers. Yeah, and John, the infrastructure people need to be aware of this trend. It reminds me of what we've seen in kind of the analytics in Hadoop space is the infrastructure guy can't just say, oh wait, I'm going to put this on my traditional infrastructure. There needs to be that give and take between the application side of the house and the infrastructure side of the house. And VMware is laying out the reason as to what they're going to do architecturally with what they're doing with Photon, what they're doing with Bonneville and having some of the DevOps stuff here for educational purposes and tying in the rest of the Federation and the ecosystem makes a lot of sense. Dave, I want to get your thoughts on Gelsinger's interview. What's going on there in your mind? You had some interesting questions. I kind of laid out my thoughts. A big fan of Pat, I think he was basically interviewing for the top job with his keynote. I think he hit a home run with it and he laid out a very CEO long vision to counter and nuke the whole Elliott Capital thing. But I think that is a really, really, it was a great strategy because it says, hey, this is the path we're going to take, 30 year horizon, whatever you want to put on it. But there was something glimmer in his eye. What did you see? What did you take away from Pat's gestures? He was certainly had it, he was on his A game today. Well, I mean, again, I've been on record saying the EMC has to see through the Federation strategy. But if I'm in Pat Gelsinger's shoes, I don't need EMC. I want to be spun out. I want to have the freedom to do whatever I want. EMC is a partner with everybody else as part of the ecosystem. I am a software company. I want to be a software company. And to me, if I'm Pat Gelsinger, that's what I would be maybe not pushing for because he's got to play the politics, but that's the best outcome from my standpoint of software company wants to be independent. Do you think that Gelsinger will become the CEO of the Federation? What do you guys think? No, I don't think so. I mean, I think if they're going to stay the course, I think it's going to be gulden because he understands the plumbing and internal mechanics. I think that's the last thing you want to put Gelsinger into. But there's a VMware that does the reverse. But why would he want that? I just don't see, I mean, this sales force, but he doesn't need it. In my view, it's just too complicated. Guys, what are you hearing in the hallways? What's the thought? What is this kind of a... So I'm actually surprised, John, is how little that is the discussion. There was a lot of it leading up to it, but people are in learning about the sessions, talking about what's going on in the industry. And at the show, I haven't heard a lot about it. I'm sure it's definitely a distraction for some of the people, but there's no news coming this week. I agree with you, I think I was wrong on that prediction that I said they'd be a big part of the conversation. Certainly it was, but it wasn't, it was like so small on the scale. I mean, I heard more buzz around EMC buying HP than the whole Elliott Capital Federation thing. Yeah, it's been quiet. And usually this kind of event, whether it's an after party, whether it's in the hallway, somebody's going to tell you something. It's been very quiet. So they're either keeping it very tight-lipped or maybe stuff isn't going to happen as quickly as we think. I mean, I think my personal predictions is they don't know what's going to happen. I think they're trying to wait it out. I know Elliott is not going to give up on this. They're going to hang out for two, three years. Well, they've got a board meeting on the 15th this month. We have a big board meeting coming up. The one little nugget that we did, we talked to Rodney Rogers, CEO of Vergestream, who's coming in doing cloud services. He hinted at some stuff coming sort of Octoberish timeframe. So that's some sort of milestone. I think we'll hear something. It may just be around their new cloud strategy, but yeah, the rest of it's been very quiet. Okay, favorite sessions so far. Go ahead, do you want to answer? So actually, yeah, there's a piece of metadata. I wanted to get Dave's feedback on it. We haven't had a chance to talk about it yet. You talk about VMware as a software company. And I wrote a great book on the plane right out called The Software of Paradox. Talked about moving from end user, I'm sorry, enterprise license agreements is something that companies need to do. We need to have more subscriptions and the open-source model's changing things. Every user that I talked to today that was doing hyper-converge and were doing NSX either was already an ELA customer or was moving to an ELA. So I mean, Dave, you look at that piece as the market. VMware, the percentage of ELA customers they have versus everything else. Well, it's increasing dramatically and that's their fundamental strategy. But from a customer standpoint, I think you're right, they want to consume it as a service, but VMware is pushing them into the end user license agreement approach. But I think that thing has medium-term legs. I think there's going to be, have to be another pricing model change in the midterm here. How about you, John? I mean, big night tonight for the VCs, but you know the VCs in this area. We saw some last night. What are you hearing from that crew? You had a panel with VCs? No, we had individual segments we did. We didn't want to do panels. We wanted to get each one their own. We had Jerry Chen on. We had Steve Herrod. Their own microphone. And Pete Sancini. So we had Ping Lee at Excel Partners, Pete Sancini at NEA, Jerry Chen at Greylock, Howie Shu as an EIR, soon to be named VC firm, but you can kind of figure out one of those three. And then we had Steve Herrod on. I'll see you at General Catalyst. So the big takeaway there was, these guys are heavily networking. It is absolute warfare in the trenches in the sense of, if you could call VC, networking warfare. They all do deals together. I saw Pete Sancini and Jerry Chen putting together a deal today. Exciting to see that right in the cube action. But this is what it's going on. They got to be out in the trenches. They're out pounding the pavements. And literally, there's so much action going on right now. You talk about the 30 year pivot. There's a major infrastructure change going on. I saw Ping Lee in Seattle. He's the top dog at Excel. He's on a plane. He's hustling in Seattle. Jerry Chen's going to engineering meetups. Pete Sancini is working his Cal connections. These guys are tapping everything. There's some really good action. So the smart money will find the good deal. So that was my big takeaway other than the fact that the V-Mafia X VMware emerging VC communities developing. There will be a VMware ecosystem in the venture community. We're already seeing it. So I think that's going to grow. And I think the leaders are Pete Sancini, Jerry Chen and Steve Herrod. Those guys are the most senior in the VC community with the biggest firms. You're going to start to see junior guys come in and you're going to see a whole new, kind of like a PayPal mafia was for the web scale. VMware is going to have a lot of DNA in the ecosystem. So that's my takeaway. All right, well, so we got a wrap here guys. So final thoughts, Stu, Brian, I'll give mine and then yours, John and we can wrap. Yeah, I mean, Dave, if we're trying to take the pulse of the ecosystem, I mean, the ecosystem is strong. Co-optitions coming out, but tons of new startups who realize that this is a, you know, one of the most important, you know, shows of the year to be at. You know, we got Amazon re-invent coming up later in the fall, we'll be there. It'll be easy, interesting to compare and contrast. One thing I pointed out is this show group had a thousand people from last year to this year and is at about 23,000. I hear that Amazon re-invent in Vegas is going to be up to about 20,000 this year, up from 14,000 last year. So next year, Amazon could be bigger from a show, from an ecosystem standpoint. VMware has that equilibrium as to how they work with their partners. I mean, Amazon is interesting to work with as a partner, you know, to say the least. So, you know, exciting stuff so far, two days. John, it's been fun doing with the director sets. Shakes it up a little, doing some panels. More content acquisition. You guys have great content, good job. Thank you. Yeah, so for me, the show's been surprisingly positive. People are very excited, but I think the underlying current is we're playing by a lot of new rules and a lot of them are trying to figure out where do they fit. You talked about co-op petition, we're talking about hybrid cloud, we're talking and starting to talk about, you know, open source and DevOps. People are trying to figure out where do they fit in that thing and it's always interesting. Yeah, when the winds are blowing and changing, there's opportunity. Absolutely. So, I'm struck by a piece that was up on wikibon.com that Ralph Finos wrote on cloud market shares. I know Brian, you and Stu contributed to that. And I think the point you guys are making is customers have to make their bets. And it's a highly fragmented market. And those bets are not clear. I mean, Amazon's pretty clear, but not for all use cases. And so, that's a really interesting new dynamic in this business. And, you know, VMware's got to make some bets too. I'd see VMware's very strong if it keeps its focus, has the right management, makes the right acquisitions. I think it's going to thrive and do very, very well despite some of these distractions. But big bets that customers have to make. My final thoughts is this was the Pat Gelsinger show. This is all about Pat laying out the future vision of VMware at a long-term, wrong range, change the conversation, up level the narrative. But I love VMware. This is a great company with great culture. They have a lot of stuff they're doing. The VM women, they've got a great campus in Palo Alto, great place to work. It's a little diverse, great culture. And I just feel that they are flat footed right now. I see great opportunity. And it's all about Amazon web services and everything about what that means. And everything underneath that's containers. And this is the real deal. A great company in VMware right now. And I saw today, Pat Gelsinger, basically the layout. This is a game changer company. We're not going to, we're going to take an offensive approach, but they got a lot of stuff they got to kind of just clean up a little bit, straighten out, maybe shed some stuff here and there. But for the most part, get lean, get hungry and grow. So to me, that was the story for me this week. So this is theCUBE guys. Thanks so much for coming on. Congratulations on the director's set in great innovation here in Moscone, North lobby. It's theCUBE at VMworld 2015. We'll be back tomorrow morning, all day coverage Wednesday. Thanks for watching.