 From around the globe, it's theCUBE with digital coverage of VMworld 2020 brought to you by VMware and its ecosystem partners. All right, welcome back to theCUBE's coverage of VMworld 2020. This is theCUBE virtual with VMworld 2020 virtual. I'm John Furrier, host of theCUBE with Dave Vellante. It's our 11th year covering VMware. We're not in person, we're virtual but all the content is flowing. Of course, we're here with Pat Gelsinger, the CEO of VMware who's been on theCUBE all 11 years this year, virtual of theCUBE as we've been covering VMware from its early days in 2010 when theCUBE started. 11 years later, Pat, it's still changing and it's still exciting. Great to see you, thanks for taking the time. Hey, you guys are great. I love the interactions that we have, the energy, the fun, the intellectual sparring and of course, the audiences have loved it now for 11 years and I look forward to the next 11 that we'll be doing together. It's always exciting because we have great conversations. Dave and I like to drill in and really kind of probe and unpack the content that you're delivering at the keynotes but also throughout the entire program. It is virtual this year, which highlights a lot of the cloud native changes. Just want to get your thoughts on the virtual aspect of VMworld's not in person, which is one of the best events of the year. Everyone loves it, great community. It's virtual this year but there's a slew of content. What should people take away from this virtual VMworld? Well, one aspect of it is that I'm actually excited about is that we're going to be well over 100,000 people, which allows us to be bigger, right? You don't have the physical constraints. You also are able to reach places like I've gone to customers and maybe they had 20 people with 10 in prior years. This year they're having 100. They're able to have much larger teams also like some of the more regulated industries where they can't necessarily send people to events like this, the international audience. So just being able to spread the audience much more. A digital foundation for an unpredictable world. And man, what an unpredictable world it has been this past year. And then key messages, lots of key product announcements, technology announcements, partnership announcements. And of course, in all of the VMworld is that hands on labs, the interactions that we'll be delivering virtual. You come to VMware because the content is so robust and it's being delivered by the world's smartest people. You know, we've had great conversations over the years and we've talked about hybrid cloud, I think 2012. A lot of the stuff I looked back at a lot of the videos was early on, we're picking out all these waves. But it was that moment four years ago or so, maybe even four or three, I can't even remember. Seems like yesterday you gave the seminal keynote and you said, this is the way the world's going to happen. And since that keynote, I'll never forget it was in Moscone and since then, you guys have been performing extremely well both on the business front as well as making technology bets and it's paying off. So what's next? I mean, you've got the cloud, cloud scale. Is it space? Is it cyber? I mean, all these things are going on. What is next wave that you're watching and what's coming out and what can people extract out of VMworld this year about this next wave? Yeah, one of the things I really am excited about, I went to my buddy, Jensen, I said, boy, we're doing this work in SmartNix. We really like to work with you and maybe some things to better generalize the GPU. And Jensen challenged me. Now, usually I'm the one challenging other people with bigger visions. This time Jensen said, hey, Pat, I think you're thinking too small. Let's do the entire AI landscape together and let's make AI a enterprise classworks, though, from the data center to the cloud and to the edge. And so I'm going to bring all of my AI resources and make VMware and Tanzu the preferred infrastructure to deliver AI at scale. I need you guys to make the GPUs work like first class citizens in the vSphere environment because I need them to be truly democratized for the enterprise. So that it's not some specialized AI development team that's everybody being able to do that. And then we're going to connect the whole network together in a new and profound way with our Monterey program as well, being able to use the SmartNix, the DPU, as Jensen likes to call it. So now it's CPU, GPU and DPU all being managed through a distributed architecture of VMware. This is exciting. So this is one in particular that I think we are now re-architecting the data center, the cloud and the edge. And this partnership is really a central point of that. Yeah, the NVIDIA thing is huge. And I know Dave probably has some questions on that, but I got to ask you a question because a lot of people ask me, is it just a hardware deal? I mean, you're talking about SmartNix, you're talking about data processing units. It sounds like a motherboard in the cloud, if you will, but it's not just hardware. Can you talk about the aspect of the software piece? Because again, NVIDIA is known for GPUs. We all know that, but we're talking about AI here. So it's not just hardware. Can you just expand and share what the software aspect of all this is? Well, NVIDIA has been investing in their AI stack. And it's one of those where I say, I mean, this is Edison at work, right? The harder I work, the luckier I get. And NVIDIA was lucky that their architecture worked much better for the AI workload, but it was built on two decades of hard work in building a parallel data center architecture. And they have built a complete software stack for all of the major AI workloads running on their platform. All of that is now coming to vSphere and Tanzu. That is a rich software layer across many vertical industries. And we'll talk about a variety of use cases. One of those that we highlight at VMworld is the University of California, San Francisco partnership UCSF, one of the world's leading research hospitals, some of the current vaccine use cases as well, the financial use cases for threat detection and trading benefits. It really is about how we bring that rich software stack. This is a decade and a half of work to the VMworld platform so that now every developer and every enterprise could take advantage of this at scale. That's a lot of software. So in many respects, yeah, there's a piece of hardware in here but the software stack is even more important. It's so well on the sort of NVIDIA, the ARM piece. There's really interesting these alternative processing models. And I wonder if you could comment on the implications for AI inferencing at the edge. It's not just as well processor implications, it's storage, it's networking, it's really a whole new fundamental paradigm. How are you thinking about that, Pat? Yeah, and we've thought about, you know, there's three aspects to what we said, three problems that we're solving. One is the developer problem where we said, now you develop once, right? And the developer can now say, hey, I want to have this new AI centric app and I can develop and it can run in the data center on the cloud or at the edge. You know, secondly, my operations team can be able to operate this just like I do all of my infrastructure. And now it's VMs, containers and AI applications. And third, and this is where your question really comes to bear most significantly is data gravity, right? These data sets are big. Some of them need to be very low latency as well. They also have regulatory issues. And, you know, if I have to move these large regulated data sets to the cloud, boy, you know, maybe I can't do that generally for my apps. Or if I have low latency, heavy apps at the edge, I can't pull it back to the cloud or to my data center. And that's where the uniform architecture and aspects of the Monterey program where I'm able to take advantage of the network and the, you know, smart NICs that are being built but also being able to fully represent the data gravity issues of AI applications at scale. Because in many cases I'll need to do the processing both the learning and the inference at the edge as well. So that's a key part of our strategy here with NVIDIA. And I do think it's going to be, unlock a new class of apps because when you think about AI and containers, what am I using it for? Well, it's a next generation of applications. A lot of those are going to be edge 5G based. So very critical. We got to talk about security now too. I mean, I'm going to pivot a little bit here, John, if it's okay. Years ago you said security is a do-over. You said that on the cube, it stuck with us. But there's been a lot of complacency, you know, kind of if it ain't broke, you know, don't fix it, but COVID kind of broke it. And so you see three mega trends. You've got cloud security, you see in Zscaler rocket, you got identity access management. And Oped is I think a customer of yours. And then you got endpoint, you're seeing CrowdStrike explode. You guys paid 2.7 billion I think for carbon black. Yet, you know, CrowdStrike has this huge valuation. That's a mega opportunity for you guys. What are you seeing there? How are you bringing that all together? You've got NSX components, EUC components, you got sort of security throughout your entire stack. How should we be thinking about that? Well, one of the announcements that I am most excited about at VMworld is the release of carbon black workload. Because we said we're going to take those carbon black assets and we're going to combine it with workspace one. We're going to build it in NSX. We're going to make it part of Tanzu. And we're going to make it part of vSphere. And carbon black workload is literally the vSphere embodiment of carbon black in an agentless way. So now you don't need to insert new agents or anything. It becomes part of the hypervisor itself. Meaning that there's no attack surface available for the bad guys to pursue. But not only is this an exciting new product capability, but we're going to make it free. And what I'm announcing at VMworld, and everybody who uses vSphere gets carbon black workload for free for an unlimited number of VMs for the next six months. And as I said in the keynote, today is a bad day for cyber criminals. This is what intrinsic security is about, making it part of the platform. Don't add anything on, just click the button and start using what's built into vSphere. And we're doing that same thing with what we're doing at the networking layer. This is the last line acquisition. We're going to bring that same workload kind of characteristic into the container. That's why we did the octarene acquisition. And we're releasing the integration of workspace one with carbon black client. And that's going to be the differentiator. And by the way, CrowdStrike is doing well. But guess what? So are we, and both of us are eliminating the rotting dead carcasses of the traditional AV approach. So there's a huge market for both of us to go pursue here. So a lot of great things in security. And as you said, we're just starting to see that shift of the industry occur that I promised last year in the cube. So it'd be safe to say that you're a cloud native and a security company these days. Yeah, well, absolutely. And the bigger picture of us is that we're this critical infrastructure layer for the edge, for the cloud, for the telco environment, and for the data center, from every endpoint, every application, every cloud. So Pat, I want to ask you a virtual question we got from the community. I'm going to throw it out to you because a lot of people look at Amazon on the cloud and they say, okay, we didn't see it coming. We saw it coming. We saw it scale. All the benefits that are coming out of cloud will document it. The question for you is, what's next after cloud? As people start to rethink, especially with COVID, highlighting all the scabs out there, as people look at their exposed infrastructure and their software, they want to be modern. They want the modern apps. What's next after cloud? What's your vision? Well, with respect to cloud, we are taking customers on the multi-cloud vision. Where you truly get to say, oh, this workload, I want to be able to run it with Azure, with Amazon, I need to bring this one on-premise. I want to run that one hosted. I'm not sure where I'm going to run that application, so develop it and then run it at the best place. And that's what we mean by our hybrid multi-cloud strategy is being able for customers to really have cloud flexibility and choice. And even as our preferred relationship with Amazon is going super well, we're seeing a real uptick. We're also happy that the Microsoft Azure VMware service is now GA, so they're in marketplace, our Google, Oracle, IBM, and Alibaba partnerships and the much broader set of VMware Cloud Partner Program. So the future is multi-cloud. Furthermore, it's then how do we do that in the telco network for the 5G build out, the telco cloud? And how do we do that for the edge? And I think that might be sort of the granddaddy of all of these, because increasingly in a 5G world, we'll be enabling edge use cases, we'll be pushing AI to the edge, like we talked about earlier in this conversation, we'll be enabling these high bandwidth, low latency use cases at the edge, and we'll see more and more of the smart embodiment, smart cities, smart streets, smarts factory, the autonomous driving, all of those need these type of capabilities. So there's hybrid and there's multi, just talked about multi. So hybrid, our data, our data partner ETR, they do quarterly service, we're seeing big uptick in VMware Cloud and AWS. You guys mentioned that in your call. We're also seeing the VMware Cloud, VMware Cloud Foundation and the other elements, clearly a big uptick. So how should we think about hybrid? It looks like that's an extension of on-prem, maybe not incremental, maybe a share shift, whereas multi looks like it's incremental, but today multi is really running on multiple clouds, but a vision toward incremental value. How are you thinking about that? Yeah, so clearly, the idea of multi is truly multiple clouds. Am I taking advantage of multiple clouds being my private clouds, my hosted clouds, and of course my public cloud partners. We believe everybody will be running a great private cloud, picking a primary public cloud and then a secondary public cloud. Hybrid then is saying, which of those infrastructures are identical so that I can run them without modifying any aspect of my infrastructure operations or applications? And in today's world where people are wanting to accelerate their move to the cloud, a hybrid cloud is spot on with their needs. Because if I have to refactor my applications, it's a couple million dollars per app and I'll see you in a couple of years. If I can simply migrate my existing application to the hybrid cloud, what we're consistently seeing is the time is one quarter and the cost is one eighth or less. Those are powerful numbers. And if I need to exit a data center, I want to be able to move to a cloud environment to be able to access more of those native cloud services. Wow, that's powerful. And that's why for seven years now, we've been preaching that hybrid is the future. It is not a way station to the future. And I believe that more fervently today than when I declared it seven years ago. So we are firmly on that path that we're enabling a multi and hybrid cloud future for all of our customers. Yeah, you addressed that like Qube 2013. I remember that interview vividly was not a way station. I got hammered, I answered thank you. Thank you Pat for clarifying that. Going back seven years, I love the vision. You're always got the right waves. It's always great to talk to you. But I got to ask you about these initiatives you're seeing clearly last year or a year and a half ago, Project Pacific came out, almost like a guiding directional vision. It then put some meat on the bone, Tanzu, and now you guys have that whole cloud native initiative. It's starting to flower up, thousand flowers are blooming. This year, Project Monterey is announced. Same kind of situation. You're showing out the vision. What are the plans to take that to the next level and take a minute to explain how Project Monterey, what it means and how you see that filling out. I'm assuming it's going to take the same trajectory as Pacific. Yeah, Monterey is a big deal. This is re-architecting the core of vSphere and it really is ripping apart the IO stack from the intrinsic operation of vSphere and ESX itself. Because in many ways, the IO, we've been always leveraging the NIC and essentially virtual NICs, but we never leverage the resources of the network adapters themselves in any fundamental way. And as you think about smart NICs, these are powerful resources now, where they may have four, eight, 16, even 32 cores running in the smart NIC itself. So how do I utilize that resource? But it also sits in the right place in the sense that it is the network traffic cop. It is the place to do security acceleration. It is the place that enables IO bandwidth optimization across increasingly rich applications where the workloads, the data, the latency get more important both in the data center and across data centers to the cloud and to the edge. So this re-architecting is a big deal. We announced the three partners, Intel, NVIDIA Melanox and Pensando that we're working with and we'll begin the deliveries of this as part of the core vSphere offerings at the beginning next year. So it's a big re-architecting. These are our key partners. We're excited about the work that we're doing with them. And then of course, our system partners like Dell and Lenovo, who've already come forward and says, yeah, we're going to be bringing these to market together with VMware. Pat, personal question for you. I want to get your personal take, your career going back to Intel. You've seen it all. But the shift is consumer to enterprise. And you look at just recently Snowflake IPO, the biggest ever in the history of Wall Street. It's an enterprise data company. And the enterprise is now relevant. The consumer enterprise feels consumery. We talked about consumerization of IT years and years ago. But now more than ever, the hottest financial IPO enterprise. You guys are enterprise. You did enterprise at Intel. You know the enterprise. You're doing it here at VMware. The enterprise is the consumer now with cloud and all this new landscape. What is your view on this? Because you've seen the waves. You've seen the historical perspective. It was consumer, was the big thing. Now it's enterprise. What's your take on all this? How do you make sense of it? Because it's now mainstream. What's your view on this? Well, first I do want to say congratulations to my friend Frank and the extraordinary Snowflake IPO. And by the way, they use VMware. So not only do I feel a sense of ownership it's Frank used to work for me for a period of time. But they're also a customer of ours. So go Frank, go Snowflake. We're excited about that. But there is this episodicness to the industry where for a period of time it is consumer driven. And CES used to be the hottest ticket in the industry for technology trends. But as you say, it has now shifted to be more business centric. And I've said this very firmly for instance in the case of 5G, where I do not see consumer, a faster video or a better Facebook isn't going to be why I buy 5G. It's going to be driven by more business use cases where the latency, the security and the bandwidth will have radically differentiated views of the new applications that will be the case. So we do think that we're in a period of time and I expect that it's probably at least the next five years where business will be the technology drivers in the industry. And then probably, hey, there'll be a wave of consumer innovation and I'll have to get my black turtlenecks out again and start trying to be cool. But I've always been more of an enterprise guy. So I like the next five to 10 years better. I'm not cool enough to be a consumer guy and maybe my age is now starting to conspire against me as well. Hey, Pat, I know you got to go, but a quick question. So you guys, you gave guidance, pretty good guidance actually. I wondered, have you and Zane come up with a new algorithm to deal with all this uncertainty or is it kind of back to old school gut feel? Well, I think as we thought about the year, as we came into the year and obviously COVID, smacked everybody, we laid out a model, we looked at various industry analysts, what we call the swoosh model, right? Q2, Q3 and Q4 recovery, Q1 more so, Q2 more so. And basically, we built our own theories behind that. We tested against many analyst perspectives and we had Vs and we had Ws and we had Ls and so on. We picked what we thought was really sort of grounded in the best data that we could, put our own analysis, which we have substantial data of our own customers usage, et cetera and picked a model. And like any model, you put a touch of conservatism against it and we've been pretty accurate. And I think there's a lot of things we've been able to sort of with good data, good thoughtfulness, take a view and then just consistently manage against it. And everything that we said, when we did that back in March, sort of proven out incrementally to be more accurate. And some are saying, hey, things are coming back more quickly. And then, oh, we're starting to see the fall numbers climb up a little bit. Hey, we don't think this goes away quickly. There's still a lot of secondary things to get flushed through. The various economies as stimulus starts tailoring off, small businesses are more impacted. And we still don't have a widely deployed vaccine. And I don't expect we will have one until second half of next year. Now, there's the silver lining to that, as we said, which means that these changes, these faster to the future shifts in how we learn, how we work, how we educate, how we care for, how we worship, how we live, they will get more and more sedimented into the new normal relying more and more on the digital foundation. And we think ultimately that has extremely good upsides for us long-term, even as it's very difficult to navigate in the near term. And that's why we are just raving optimists for the long-term benefits of a more and more digital foundation for the future of every industry, every human, every workforce, every hospital, every educator, they are going to become more digital. And that's why I think going back to the last question, this is a business-driven cycle. We're well positioned and we're thrilled for all of those who are participating with VMworld 2020. This is a seminal moment for us and our industry. Pat, thank you so much for taking the time. It's an enabling model. It's what platforms are all about. You get that. My final parting question for you is, whether you're a VC investing in startups or a large enterprise who's trying to get through COVID with a growth plan for that future, what does a modern app look like and what does a modern company look like in your view? Well, a modern company would be that, you know, instead of having a lot of people looking down at infrastructure, the bulk of my IT resources are looking up at building apps. Those apps are using modern CICD data pipeline approaches built for a multi-cloud embodiment, right? And of course, VMware is the best partner that you possibly could have. So if you want to be modern, cool on the front end, come and talk to us. All right, Pat, counseling of the CEO of VMware here on theCUBE for VMworld 2020 virtual here with theCUBE virtual. Great to see you virtually, Pat. Thanks for coming on. Thanks for your time. Hey, thank you so much. Love to see you in person soon enough, but this is pretty good. Thank you, Dave. Thank you so much. Okay, you're watching theCUBE virtual here for VMworld 2020. I'm John Furrier, Dave Vellante with Pat Gelsinger. Thanks for watching.