 Live from Miami Beach, Florida, extracting the signal from the noise, it's theCUBE. Covering .NEXT Conference, brought to you by Nutanix. Now your host, Dave Vellante and Stu Miniman. Okay, we're back. This is Dave Vellante with Stu Miniman. Lots of people coming by theCUBE today. Good action, Nutanix .NEXT Conference, really, really good. First inaugural, I guess that's redundant, event, customer event. Really interesting, Stu. Some things that I didn't expect was the aggressiveness with which Nutanix is really going after this platform play, which makes sense, given that they've taken in, you know, over $300 million of VC money and they're preparing to do an IPO. They're not going to be, they're not trying to be anyway, a nice little niche company. They're trying to go big. Yeah, Dave, you know, we've been talking about, you know, to be really relevant, you need to go beyond a point product. You need to fit into a platform. It's got APIs, can really sort out where you're going, be extensible and help paint that vision for the future. When I wrote my recent research on ServerSan, I said, you know, way too many people look at this and say that, you know, kind of that appliance that you deploy is the end game for it. And when we put out what ServerSan is, it's much more than what hyperconvergence is, you know, today and was built over the last, you know, kind of three to five years. It's this vision for, you know, really where modern IT works. It's going to help be that bridge from kind of my legacy applications to more modern applications. It should tie into the cloud more and, you know, really kudos to, you know, Nutanix here because the vision that they've laid forth, it's not all here at day one, but, you know, they give that path for the multi-hypervisor, multi-cloud world that enables those modern apps. Realizing that, you know, I love that Diraj, you know, being very humble, as he has said, you know, I wouldn't call us a platform yet. We've got work to do. We're partnering with companies like Microsoft. So, you know, you can kind of see where it's going and it's exciting to see, you know, how far they've come and, you know, where the future can still bring them. And as you well know, that's, again, Diraj being humble. There's no question in my mind this company wants to be a platform company. We know, we've talked to our colleagues at MIT about it, platforms beat products. And, you know, that's the future, especially in this, you know, API economy. Now, so let's break it down a little bit. I mean, what I said earlier today is that I felt like Nutanix was trying to accelerate some of those things that VMware was trying to slow roll. So somebody might say, okay, specifically, what are you talking about there? Well, Nutanix talks about making storage invisible. EMC and VMware talk about that too, by the way, as does NetApp. They talk about making the hypervisor invisible. They talk about making cloud invisible. I haven't heard those other terms. Specifically, I've heard we want to simplify orchestration and, you know, management, which is, I guess, essentially what they're saying about that middle layer, but let's start with the storage. For years, EMC and VMware have been talking about making storage invisible. Have they succeeded? We always talk it's a journey, Dave. You know, we've been, you know, grappling with that, you know, software-defined storage term and the SDDC message coming out of VMware. Storage is maturing. Storage is moving forward. Both, you know, from EMC, from a number of startups, including the hyperconvergence guys, I think we have made progress, but, you know, storage definitely is invisible. Storage still requires, you know, a lot of hand-holding and, you know, it's not quite yet the easy button, but, you know, we're starting to see some of those solutions pitch out. Has Nutanix made storage invisible? I think that Nutanix has made storage a lot easier. You know, if you look at the vision they said, when they started out, they were really homogeneous in their blocks and they're going heterogeneous. You know, their customers said that they have a lot of flexibility and they can go there, but, you know, one of the customers we talked to today, Dave, said, you know, well, I really need to balance, you know, how many nodes I put in the cluster, how I get performance. Those all tell me that we're moving in the right direction, but it's not there. It's not like, to be honest, you want to talk about invisible storage if I'm an Amazon customer and I'm just using certain performance criteria or IOPS in there, you know, it's just simple, so. Okay, so I'm hearing more so than the legacy guys, legacy, they're calling VMware legacy now, but. Yeah, yeah, Matt Eastwood tweeted, he said, you know, virtualization is, you know, legacy. I'm feeling a little old. Well, but I mean, it's unbelievable, right in the mid-2000s, for the early 2000s, the first time you ever saw a VMware demo, your jaw dropped. Well, you signed the original NDA for VMware, but so your jaw dropped, you went, wow, this is going to completely change IT infrastructure forever, and it did. And now, of course, you realized very quickly, it created all these downstream problems. So that's why you always saw, you know, VCs hovering around VMworld, finding the new opportunities. Lots and lots of problems, Nutanix is solving, you know, those, but they're not alone, right? There's a lot of competition going after this. A lot of people using the same language, VCE, you know? I mean, I think it's fair to say that Nutanix has done what VCE has it, which is from the ground up, blank sheet of paper, built a converged infrastructure from scratch. Yeah. Not taking pieces of Cisco and pieces of EMC and putting them together. So you've always, we've always talked about that. That's fair. You can see now with the messaging that VCE is doing and others, going after the very same space. Now, Nutanix doesn't talk about software defined, at least they don't talk about it extensively. Where does that fit in? Yeah, so first, Dave, you know, on VCE, and I've talked to a lot of VBlock customers, and in many ways, once the VBlock is deployed, it is invisible. You know, Chris Wall did a great job talking about how long it takes to kind of deploy it, and the upgrades aren't one click. But that being said, VCE takes care of a lot of that care and feeding for the customer, and it's just right. Who does it, and how do you pay for it? And VCE and EMC are well aware of what's going on in hyperconvergence. They've got the scale IO based VX LAN that they're doing to go after that thread. But Nutanix has a lead here, and they need to grow on it. What was the second part of your question, Dave? So, we're riffing on what's really happening here in the market space. I wanted to turn our attention to the rift between VMware and Nutanix. Really, kind of started by Chuck's blog, but Nutanix making moves. So, and VMware's going to notice. So, Chuck Hollis wrote a blog. I mean, essentially saying that Nutanix was not qualified to support VMware because it's not an OEM of VMware. We heard from Gerard's earlier today. We don't want to be an OEM because we don't want to compete with our partners. Translation, it's a crappy business. Yeah, well, Dave, the other thing is Nutanix is 100% channel driven. So, we really saw a shift over the last, I think five years. As you said, Dave, HP and IBM used to fight over who sold more licenses today. It's mostly going through the channel. The VARs and the integrators sell the VMware licenses, and therefore, those are the people that support it for the customer. So, it's just in that value chain of infrastructure provider, the channel partner, and the end user, there's somebody that you go to. VMware, of course, would say, well, you just go with the vSAN and we're a single throat to choke, but you want to be channel friendly. You want to give the channel as much opportunity to be involved and be sticky with that customer because they want to make money and they want the customer coming back for more. I mean, vSAN, you know, very clearly was also a shot, and EVO was a shot across the bow at Nutanix. I mean, clearly, we had D. Raj last year on the show, but so the choice to not OEM the hypervisor makes a lot of sense why get into that business, but interesting that VMware taking shots at Nutanix. So that says they're worried about them, right? That says we're trying to fund them, slow the market down, buy ourselves time to get our product more mature. We want to own the hyperconverged space. Why is that? Let's break that down. It's all about the TAM. VMware doesn't talk, when Todd Nielsen was, you know, at the run of the show at VMware, he used to talk about for every dollar spent on VMware license, $15 is spent in the ecosystem. VMware doesn't talk about those ratios anymore. Clearly plenty goes into that ecosystem, but in thinking about it, Stu, it's very Microsoft-like. VMware grabbing more and more pieces of the stack. So you have to be really nimble in that stack. You have to build significant value if you want to compete. Now, let's talk about what's going on in the hypervisor. So, Dave, just a quick comment on that. You talked about grabbing piece of the stack and then very, you know, Microsoft-like. Talk about a difference of Microsoft over the last few years. One of my favorite interviews of the day was the Microsoft guy here. I said, Microsoft is saying, great, you want to run Microsoft apps on top of the new Acropolis hypervisor? Awesome, and you want that mobility between KVM-based stuff, Hyper-V-based stuff in Azure? You know, great. Microsoft actually is, I think, in many ways, a lot more open than what VMware is these days. Well, Satya realizes that it's all about the developers. And if you want to attract developers, you've got to be more open. You've got to give choice. You can't lock them into your environment. You used to be able to do that based on the simplicity of Microsoft and the simplicity of the single stack and the allure of a low-cost CapEx entry point, but the world has completely changed. So, I want to talk about, sort of, Nutanix's decision to create its own hypervisor. Chris Miller wrote an article, you know. Actually, Simon Charwood, I believe, was the one that wrote the article. It was Chris Miller. Still with the register. Right, it was the register, right? To me, Chris Miller and the register is synonymous. I'm sorry, Simon, my apologies. But so, basically, talking about the impending war. It's not a hypervisor war, right? It's much bigger. But so, what's going on in the hypervisor? Essentially, you have Hyper-V, Microsoft giving away that function for free, bundling as they do so well. KVM, free, right? Nutanix, not charging for a hypervisor. So, VMWare still charges for its hypervisor. There's a version, you tell me, that's free, but it's not that functional. So, break it down for us. What's going on in the hypervisor? When you use the C word with Gelsinger, commodity, he gives you the hairy eyeball. Yeah, well, first of all, big difference between open source and commodity. And, you know, Nutanix is not the first hyper-converged, you know, company to, you know, use KVM. Dave, both scale computing and NimBox have built based on KVM. So, you know, really want to, you know, point that out that, you know, it's an option and really, Dave, we talk about it's a platform play. So, VMWare with VSAN, you know, wants to provide more of a broad solution and Nutanix, in some ways it's simplicity that they're doing. They wanted their customers, you know, when it comes out of the factory, have something that will work for many of their customers and if it can save them money, that's great. We talked to, you know, one of the practitioners we had on today said that, hey, you know, if I don't have to pay for this higher level licenses, I don't want to. And if I can get that same functionality for free, so it's always that commoditization, Dave. Right, if you know, as I get better performance out of the new generation, as we move forward, there's an option. Is it conflict between Nutanix and VMWare? Absolutely, but, you know, their customers are going to force them to work together. Absolutely, Nutanix is not going to abandon customers that are doing VMWare because that's where most of their deployments are doing. When I say most, it's, you know, 75, 95% somewhere in that range at least. But, Nutanix is not, you know, getting in line and couchowing to VMWare and just, you know, reselling the, you know, OEMing the software and doing whatever VMWare, Nutanix is, you know, flexing its muscles and trying to compete and VMWare's going to see that. No, whoa, whoa, wait a minute, we're going to fight back. So, when you talk to... I'm sorry, just on that point Dave, of course, because VMWare's trying to, you know, keep adding functionality to the hypervisor, but, and they've been trying to pull people up to those higher level licenses, and it does reach almost the innovator's dilemma, Dave. Right, as you say, if customers say yes, I want some of that, but there's going to be a part of the market that's saying, I don't need that, I don't want to pay for that. Great, there's something that's, you know, cheaper now that gives me what I need, and therefore my applications matter, my hypervisor doesn't matter as much, and that's big news. Now, when you talk to David Floyer, what he says to you is that VMWare blows away other hypervisors in terms of enterprise functionality, and so my question you're used to is, how fast is Microsoft specifically but other hypervisors generally closing that gap? Yeah, so Dave, Microsoft has really closed the gap. Hyper V3 really met what most companies need. V-motion's still probably a little better than Live Migrator, there's a couple of other value add pieces, but if I'm not kind of the enterprise plus on VMWare, and I'm a Microsoft shop, I think it's going to work. You know, it's definitely a challenge for VMWare, Dave. You know, we've talked a couple of times, you know, this week in the interviews, about, you know, if it's the application that matters, how much am I going to just be able to move to Microsoft, or as Chris Wall actually pointed out really well, if it's Microsoft plus KVM. Dave, before we finish this wrap up, you know, you spend a bunch of time, you know, talking to the financial guys, you know, there's an impending IPO, Diraj said in the keynote this morning that they've got a new constituency coming soon, and that will be the financial markets, you know, what get your take on, you know, what that looks like. I mean, we've had, you know, some less than stellar IPOs in the storage market over the last couple of years. I think everybody thinks that this new generation of infrastructure, there's a lot of opportunity, but from a financial state, you know, what are you seeing? So, a couple of things. I think that, well first of all, Nutanix had an analyst meeting and a financial analyst meeting, and they took all the financial analysts that put them in a room, so of course, I went to that meeting, packed house, about half the audience I would say were VMware financial analysts, all sell side, no buy side yet. So, and the other half were sort of infrastructure guys that, whether EMC or, you know, others that they followed. My take on this too is, well, first of all, they're not talking about what revenues are. I think you had them last year at two and a quarter. I'm hearing whisper numbers of bookings this year, a run rate between five and 600 million, which would be pretty impressive. If those numbers are correct, then I think this will be a blockbuster IPO because Nutanix really is a software company, even though their software pricing model may not be like a SaaS model, but there's somewhere between a hardware multiples and a software multiples, and I would say they're more leaning toward software multiples because of the growth potential and potentially if these numbers are correct and because of the disruption. So I would say that if my reading of the tea leaves is correct Stu, and the enthusiasm around this company, this will be a blockbuster IPO. I would say, well, well north of two billion where Nimble is today, I would say closer to $4 billion valuation would be my kind of gut feel back of the napkin guess. Yeah, so how much were the financial angelists trying to tease apart the software that they sell and kind of the hardware drag that they pull in there because Nutanix does use kind of commodity off the shelf components and puts it together. How much margin do they make on those pieces? Because if you're giving me compared against a software company, but they got a ton of revenue because they sell the whole appliance as opposed to like VMware, as when we do our revenue numbers, you can't compare apples to apples because you try to measure it on cores, you try to do a couple of things, but it's a little bit tough to squint through those numbers and how do you get a fair good comparison in multiple? So the questions were typical all over the place for financial analysts like industry analysts, but there was great interest in the application mobility fabric and isn't that just another lock-in? And it is a former lock-in. It's not the mother of all lock-ins, but it's a good form of lock-in because ostensibly you're sort of down on it in terms of the frequency of use, but we heard from some practitioners today that actually would use it more if it were easy to use. So we heard that piece, and so my point is the form of lock-in that you're going to see there is one of affinity. We like it, so we're going to use it. The other thing is, there was a lot of question around the TAM. Nutanix basically said our TAM is roughly 18 billion, much, much bigger than that in my opinion. So they're being conservative there, but they had layers, virtualization is five billion, analytics on top of that, et cetera. They talked about OEM as a viable business model. I don't want to give the exact percentages because I don't know what was NDA and what wasn't, but it was a substantial component of their business, not 50%, but a substantial and meaningful, put it this way, a number they'd have to report would be OEM, and that's the hope that they have. I saw executives from Dell at this show very, very excited about the Nutanix opportunity and basically hinting that this is perhaps one of the best relationships that they've ever had out of the chute. A lot of talk about the channel, CDW, Presidio, guys like that and loyalty from the channel, and a lot of talk about AWS and VMware. Are they, for frenemies, are they, they basically, we're trying to convince the Wall Street analysts that, look, right now, that's an opportunity for us, the public cloud. I would say the reality, Stu, is Amazon's going to embrace any one-way trip into AWS. Look at what happened with NetApp. Amazon's like, yeah, bring it all in. Once you taste it, you're going to love it. And so that is the mother of all lock-in. And so I think there was a lot of questions about that, and I think the financial analysts were pretty real about it, but very excited about getting an infrastructure company that they can sink their teeth into because there aren't a lot of great ones today that are public companies. Yeah, so I mean, Dave, as we reach towards, we're getting to the time and everybody's starting to get drinks, big party tonight, you know, big audacious moves by Nutanix at the show. There's stuff down the road that I really want to see from them. I mean, you talk about applications, analytics didn't come up much, how the whole kind of internet of sensors and things and everything fits into discussion is something that we're hearing for most of the more traditional infrastructure vendors. Some of it's hype, but some of it is really real. So there's big future opportunities for Nutanix. I like a lot of the moves there. I think they're going to have, you know, really tough competition over the next year or so because not only are there a bunch of startups, you know, trying to come after them and a lot of VC money chasing this market now that it's reached into the hundreds of millions of dollars for players like Nutanix, but the big guys are all coming after them. I mean, you know, what's your- Well, I think Acropolis is a really interesting announcement, Acropolis and Prism. So when you talk to Nutanix about the motivation for Acropolis, I think it was more to take control of their own destiny. It's not about, in my opinion, you know, competing with VMware. I'll give an example. When Nutanix shipped a product, they would have to send SES in to basically choose a hypervisor. That's sort of where they were at. So they wanted the ability to make itself serve because let's face it, Stu, if you're trying to replicate the Amazon experience in the enterprise and you got to send in an SE to choose your hypervisor, I'm sure it was an easy thing to do, but that's a non-starter. So I think Nutanix realizes this dog doesn't hunt. We have to take control of our destiny. You know, I've talked a lot about the marginal economics curve that Amazon is creating at software like. So you have to be able to replicate that in the enterprise. Yeah, Dave, you've got to get a great point because it was funny. Chris Wall was talking about the channel needs professional services to help deploy that. And that goes against what we've been talking about. You know, digital economy is about the marginal economics of software and what Amazon's doing and platforms are going to bake it into the software so that and automate it and, you know, make it more one-click. So some of those professional services, they'll always be professional services, but the percentage of that in the market compared to software is going to go down over the next five years. So a couple of big assumptions that Nutanix is making, some I agree with, some I think the jury's thought. One is this is a multi-cloud, multi-hypervisor world that we live in that's going to be hybrid. I would certainly agree with that in the near and midterm and probably even the longterm, right? We're seeing cloud silos. We're seeing silos of innovation around hypervisors. So I think that's a pretty safe bet. The other bet they're making is that the public cloud is good for unpredictable workloads, but not good for predictable workloads, that it's more expensive for predictable workloads. I guarantee that you tell that to Amazon and they'll give you a gazillion examples of in a reserved instance pricing, which is 90% less and blah, blah, blah, but it's legitimate, Stu. I don't see any reason why if Amazon executes and continues to execute the way we think they are that predictable workloads are going to be more expensive in the public cloud. Now, the obvious answer would be, well, it costs more to rent than it does to own. The wildcard there is unless you can drive the marginal economics of provisioning down so low at volume that it's essentially free. Now, can the enterprise guys replicate that? I don't know, you still got a ship hardware? You still got to install it? You got to order it? There's still some heavy lifting, even though it's dramatically reduced, it has to get done. Yeah, I mean, Dave, we've been preaching for quite a while. It's, you know, what things can IT get rid of? So, you know, friends don't let friends build another data center. You know, you're powering and cooling, you're going to be nowhere near as good as any mega data center out there, not just the Amazons in Microsoft's and Google's of the world, but you know, look at what Equinix and the Supernap and, you know, Rackspace are doing. There's lots of opportunity to get rid of some of it. So, there's always that argument as to, you know, Amazon drives volume, they can drive down that cost. So, I wouldn't count them out because, you know, they're crazy good at what they do. So, there's a lot of examples where renting is more expensive than owning, but the big issue, and you guys, you and David Floyer study this extensively, it's the first time in to the cloud is expensive and it takes a long time. And we know that from experience, you know, from our crowd chat experience, we run on AWS, got a little great and cool little video up on Amazon's website, but getting in takes resources. You need to have the right people who know how to do that, or they have to, there's a learning curve there. Whereas if you can preserve your existing processes in your on-premises data center, then you're going to get in a lot easier, right? And a lot faster, and it's going to be a lot less expensive first time in. But on a true apples to apples basis, you know, we'll see over time. Once the number of people who really understand AWS and that API increases, that's going to be a challenge. Right now, the advantage that the hybrid guys have is they got installed inertia and processes. So it is cheaper than having to rip that out and replace it with the public cloud. But over time, the volume game seems to always win in this market. And to me, it's all about economics. All the security and the privacy and the data location, all that stuff goes away if it's one-tenth the cost. Now, whether or not it's one-tenth the cost, that's the challenge for the enterprise. That's the challenge that Nutanix is stepping up to. You know, and others. Who else should we be looking at as you're stepping up to that? Are the big guys stepping up? Is Oracle, VMware, EMC, IBM, HP, are they stepping up to that vision of bringing Hyperscale to the enterprise, in your opinion? Dave, Nutanix is the best of leading that piece of it because most others kind of attack the Hyperscale piece. It's Amazon's the enemy, and therefore the way they do things isn't right. Some of the component guys in the storage space look at Sandisk, who bought Fusion IO is really early and some of this technology was a component of Nutanix. HGST is another player there. Some of these building block companies could fit in what we're doing there. But yeah, you know, so, but overall Dave, we've talked a lot about it before we even knew about Nutanix. And Nutanix is the one that really embraced that discussion. By the way, I felt like they actually talked a little bit less about that today. They're talking a lot more enterprise-y and talking the kind of the standard Wall Street stuff. I sure hope that Nutanix keeps to their vision about, I kind of even criticized them a little bit saying, two years ago when I heard from them, they didn't talk storage talk and today they talk a lot more in what the traditional storage guys talk. Talk about the application, talk about the platforms and systems and talk about that transformation. The other big questions too, and big assumption that Nutanix and others are making is that it's all about software defined, it's all about commodity components. That's where the hyperscalers were five, six, seven years ago. So where are the hyperscalers going today? You're seeing a lot more customization. Are they building silos in the hyperscale? Are they aligning? Are they building application-specific and purpose-built hardware and software? The hyperscale guys? Yes. Oh, God, David, you know, Amazon I wrote about, you know, they're hyper-optimized and, you know, absolutely. Because, you know, when they build an application, you know, it's not a bespoke out, you know, silo for, you know, a rack. It's, you know, here's the application that's just built-out scale. So that, you know, they really optimize that and it's, you know, tens of thousands of them. So are we going to see that come full circle, right? I mean, they have always been, the hyperscales have always been a predictor of the future. Now, the interesting thing is you're seeing tons of people getting pulled out of Google and Facebook and even Amazon to an extent working for these enterprise companies because they're paying them a lot of money it's an opportunity to bring what they learned in the hyperscale into the enterprise, right? So, we're going to see if that comes full circle. To be continued, more research has to be done there. We're here at .next, the Nutanix conference, winding down day one, bottom line, those two is really a lot of excitement here. A lot of momentum at this company, you know, there's a feeling. You can feel the winners when you see one and this company is a winner. You talk to customers, they're happy, they love it. A thousand people here, very, very impressive. I'll give you the last word. Dave, you know, people at this conference, they're excited about infrastructure because it's being made invisible and as Nutanix says, trying to elevate IT. So, you get the people that are here, they're using it, they really like what they're doing, makes their jobs a lot easier. I love the Bob Love Line that, you know, says he gets his weekends back. So, you know, let's not make IT a drudgery. Let's not, you know, be beating our heads and running around fighting fires all the time. So, you know, Nutanix and, you know, many others in this space, trying to really help drive that transformation. So, it's exciting to see. So, you know, we can spend a lot more time, you know, driving business. So, SiliconANGLE, this is theCUBE. We're really pleased to be here. Check out Wikibon.com for all the research. Go to SiliconANGLE.com for all the blogs, all the recap of this event, and go to SiliconANGLE.tv. It's where we host all of our videos. Thanks for watching everybody. This is the wrap for day one. We'll be back tomorrow. Condi Rice in the morning. Unfortunately, we won't have her on theCUBE. Unless, Stu, you were able to get Tucci. Maybe you can get Condi. We'll try. All right, we'll work on that. We kick off tomorrow at 9 a.m. 9 30, I believe. 9 o'clock? 9 30. 9 30 a.m. East Coast time. So, tweet him at Stu. I'm at D. Volante. That's a wrap of day one from .NEXT, the Nutanix conference. This is theCUBE. We'll see you tomorrow.