 Live from Las Vegas, it's theCUBE. Covering VMworld 2017, brought to you by VMware and its ecosystem partners. We're back, I'm Stu Miniman here with Justin Warren and this is theCUBE SiliconANGLE Media's broadcast of VMworld 2017. We're the worldwide leader in live tech coverage. Happy to welcome to the program a first-time guest, Russ Reader, who is the president and CEO of OVH. Russ, thanks so much for joining us. You bet, Stu, thank you. All right, Russ. So, those of us who've been coming for VMworld for years said, you know, VMware, their cloud strategy, what a mess. VCloud Air, total failure. Now, I think you might have a slightly different viewpoint on some of that, you know, dynamic. So, you know, for audience that doesn't know OVH, you know, was predominantly European, you know, cloud hosting provider, part of the VCloud Air network, if I understand. And, you know, tell us what brought you to OVH and, you know, what's your story on the whole VCloud Air today? Sure, OVH, we're one of the largest infrastructure providers in the world. We're the fifth largest and we're the number one partner for VMware over in Amia, right? And so, I guarantee if Pat Gelsinger was here, you wouldn't have thrown VCloud Air into the bus so hard, but it's a great opportunity. We'll be on tomorrow, let's see. Yeah, perfect, yeah. So, you know, VCloud Air was a great opportunity for VMware, kind of launching it, working with some of the top enterprise customers in the world, some of the biggest of VMware, launching a cloud strategy, but VMware is more of a software play rather than an infrastructure player. We're one of the largest in the world. And so, when VMware called us and said, hey, one of our bests in Amia, we know that you're coming to the U.S., we think there's a perfect acquisition. And so, when I sat down with Pat and talked about the acquisition, we said, look, we're about ready to come into the U.S. with all of our force. We have 27 data centers around the world. We have 11 terabyte network, three terabytes of DDoS capacity. And we're coming here with scale. And so, if we can add in two over 200, close to 300 employees that understand the space and about 1,000 enterprise customers that are committed to VMware solution and then really care about great tech to match Made in Heaven. Yeah, what can you share? How many customers did you get for that? And since OVH took it over, where are things? What moment was it? So we have around 1,000 enterprise customers, some of the biggest names out there. And so, and a lot of those are the biggest names for VMware. With that, we took around 250 employees globally. So we now have the global VCloud Air infrastructure, personnel, and customer base. Yeah, so with 1,000 customers, I mean, Stu, you sort of call that an abject failure. It's like clearly there's some people who do like it, otherwise you wouldn't have managed to sell. And there's significant business here and they're really important customers to VMware. Yeah, so what is it that those customers really like about the VCloud Air solution? So what they like just about, first it's VMware, right? So they really love the flexibility that VMware solutions give them. With VCloud Air, they went to it to have more of a, you know, no vendor lock in, more of a portable solution where they can migrate VMs from on-prem to off-prem and be a part of the cloud. And so what they're excited about now with OVH is going to a provider that is very well known for high performance, great network, at the best value. And so coming to the U.S., what they care about is, the U.S. is 58% of the world market in cloud hosting. Very large market, 58%. And you have a number of very large, hyperscale cloud providers. And OVH is the largest cloud provider that no one knows about in the U.S., but where everyone knows about us in Europe. And so the customers now are super excited about bringing that technology and we've really reinvented the whole infrastructure cloud hosting market and bringing that new technology into, and the green technology into the U.S. Russ, we've been watching kind of this, the Colo data center business, seeing a number of companies that have kind of exited. I think Rackspace, how they've changed Verizon, what they've done. I talked to some of your team at the booth here at the show, and they're actually excited about talking about the way OVH builds data centers. Can you bring us inside this? Because some people look and they're like, oh, if you're not spending five to $10 billion a year, you're probably not in that business. Once again, OVH I think has a slightly different viewpoint on this. Yeah, so we were founded by Octav Klaaba, who's an engineer, network engineer, started building hosting websites and then started to build their own servers. And so now we are vertically integrated. We build our own servers. We build all of our own DDoS equipment. We build our own data centers. Our servers are water cooled and we have very strong R&D relationships with Intel and AMD and allows us to crank up the processing speed with our data cooling capacity. 30% of the data centers are cooled by natural air. 70% are cooled by water. So when other very large, well-known companies are out there trying to put data centers in Alaska and on syncing them in containers, we have it figured out at scale. We have 27 data centers around the world. We're investing $1.5 billion in the next three years to have over 50 data centers. So we're doing it at scale and our data centers are not only more high-performance, but 50% more cost effective and we give that cost savings directly back to the client. Russ, one of the things that when I talk to customers and you ask them about their cloud strategy, sometimes they say hybrid cloud, sometimes they assume multi-cloud, but whatever they say, their strategy is different for every customer I talk to. Some are actually federating or splitting up applications between different environments. Others are workloads depending on where they have. What are you hearing from your customers? What are the types of applications? And I know it depends and it varies greatly, but where is it that you have kind of the gravity of where customers are going and how do you fit into kind of the broader ecosystem? Amazon's the elephant in the room. I think the booth next to yours, if I recall right. So how's that dynamic work? So unless you're a very small business, you need a hybrid cloud strategy. If you're only in one cloud provider, you should be very worried, right? We've seen multiple attacks, any kind of failure, right? And so a hybrid cloud strategy from even a medium and definitely enterprise is where they already are. And you can't, even if you're going to create a brand new application, that data is going to be somewhere else, whether it's on-prem or whether it's in another data center, instantly you have to think about hybrid cloud, right? We're kind of in that third generation of the cloud. First generation was Rackspace, do it for me, second generation was AWS. I'm going to do it. And now third generation is like, whoa, I just can't be in one cloud provider. I need to have multiple cloud providers. So based on my workload, who can, I need high-performance servers. Where can that go? I have a lot of traffic on my Ingress egress. And so what cloud provider should I use there? And so now you can pick and choose workloads and then also your disaster recovery. You obviously should have had, not just in a different data center, but with an entirely different partner. Yeah, so question on what exactly is hybrid cloud? Because early on when people were talking about, well, hybrid cloud means I'm going to have some onsite and I'm going to have some in the cloud as well. We had the idea of cloud bursting, where it'd be basically the same application and I'd have part of it move into the cloud when I needed it to and then I turn it off. But people who tried that found out that's actually really, really hard. It seems to be that people are more choosing that I'll put this application onsite and I'll put that application in that cloud and I'll put a different application over here. Is that what you see customers doing and what does that imply when we have features that are available in one cloud than aren't in another? I'm thinking of things like Google's abilities in AI. That seems to be something people would like to do, but if my data is sitting over here, it's actually really difficult for me to pull it stuff across. So what are you seeing with customers in their application choice of location? So at the most basic level, obviously a hybrid cloud strategy is to leverage multiple cloud infrastructure providers for your enterprise, most basic level. Whether you keep the data onsite and then maybe the application onsite, that's really not a hybrid cloud. That's kind of like I've got my on-prem and my one-cloud provider. Hybrid cloud really comes into play when you're using everyone from OVH for a specific set of workloads. Maybe you have your disaster recovery here. Maybe you have your whole set of enterprise workloads on OVH and you're using, say, maybe IBM for a different workload or maybe your data set is in another colo facility. And so once you start mixing workloads, where the data is and having multiple cloud providers, that's more of where the definition is really evolving to, right? Because it's definitely evolving. Yeah, so if I'm an enterprise who wants to do that, not a lot of people actually have the skills in-house to be able to do that themselves. So they generally rely on partners to do that. I'm thinking people like the global systems integrators, they tend to get involved in these kinds of deals. Is that something that you see OVH providing as well or are you looking more to partner with other firms to help? Yeah, so that's a great question. We're a pure play infrastructure provider. We work really well with other systems integrators and this works very well with VMware's Vcan offering where all the system integrators out there now that have found themselves competing with AWS and competing with Rackspace and now that they're spinning up their managed services providers, all these great system architects that are used to sitting on the client, being that consultant, kind of helping with their hybrid cloud strategy. Now they're competing with the offerings that they used to offer, right? So AWS and Rackspace now have managed services. We're not providing managed services, we rely on system integrators for that. Yeah, I actually want to put a point on that. So I bumped into AJ Patel, we're going to be talking to him tomorrow. It feels like it's actually been, that the network has been invigorated some since VMware no longer owns VCloud Air, you do. And so now it's VMware can focus on the ecosystem more. I've got a number of other, you know, hosting and service providers that we're talking to on theCUBE. So does that dynamic help VMware and help you? You know, how's that look? No, I think it helps everyone. It gives clarity, right? It gives clarity to the customer. That's what we're all here for, right? We're definitely a customer driven organization. We focus on making sure the customers are successful. And so the customer really understands, hey, this is someone that is investing billions of dollars in global infrastructure, security and scalability. And then for a VMware customer, they understand, okay, I can use VMware for all the great software, enterprise software scale that they provide as a VCAM partner. Now I'm not trying to compete, I understand where I can play. And OVH, we're very clear on what we do and what we don't do. So we're big partners on the VSAN and the whole working with AJ Patel on the whole network to make sure those resellers now see that they can actually make more money with the VCloud Air on OVH. Right, so things like the Cloud Foundation that you're, I'm assuming that NSX, you're all tied in. How much joint engineering work did you do there? We're working very closely with all the teams that were at VMware, so I mean, whether it's HSX or on the VCloud Air side that already has a lot of technology built in and now VMware's productizing it, so our engineers have to work together. So it's very exciting. Yeah, is there anything in particular at the show that's really caught your attention? Because you were saying earlier that this is pretty much your first show, we're in the VMware ecosystem. So what stood out to you from that you've seen at the show? Yeah, I think what stands out most are the customers that are really, we're talking about hybrid cloud, but there have been so many customers that really are looking for hybrid cloud and that we all have been a part of the cloud for so many years and that they're now just migrating workloads off of on-prem. I mean, it's like every year I have to pinch myself, like really, are there still 65% of workloads that aren't in the cloud? I mean, it's just amazing. Yeah, what do you think that in-state's going to look like though? Because I question whether it's going to be 100% in the cloud because we have people, customers still have mainframes. It's not most of the market, but they still exist and there are plenty of heritage systems that are out there. They're very difficult to move and often the upside of moving, it isn't worth taking the risk. In the future, there will definitely be 100%. That's like saying that we need a fire in every house to keep it warm, right? I mean, everything will be in the cloud in the future and then you have to differentiate based on the quality of service you're getting. What's the SLA? If I choose you, can I not choose someone else in the future? The vendor lock-in is pretty scary. But without a doubt, as companies are spinning up and you look at these startups now, yes, this is a long time. It may take 100 years for GM to be totally in the cloud, right? But you have such vendor lock-in now that these startups are learning that they can be 100% in the cloud and then how do I work with different cloud providers not to be locked in with them forever? It's been a big issue. Using other PAS offerings are good and bad. So you have to be very careful to let your engineers just go off and start spinning up services. Russ, the last thing I want to ask you, you talked about, we talked a lot about the VMware partnership. I know you said you've got some networking capabilities. What other cloud services can people tie into? And I'm curious, the public clouds, is there direct connect from your offering? So we've got some great offerings, obviously we're the world's largest player in the infrastructure bare metal player. And so we have tremendous automation and everything is redundant and backed up automatically. And then we build all of the other solutions on top of that. So we not only have now vCloud Air, we've been a vSphere provider for seven years now. We have OpenStack provider as well for the people that do want a public cloud, more of an open play. A lot of retail companies out there that don't want to go to AWS that are looking for more of a kind of an open source public cloud offering as well. And we've been a great partner there. Okay, so your services, I'm just curious, do you plug into other clouds like Azure, AWS? There's not a specific API that we've built to plug in but we definitely have our philosophy and our culture is a portable open free internet. So we don't lock anything down. All right, Russ Reader, really appreciate you joining us. Congratulations on the progress. We bring OVH to the U.S. And yeah, maybe we'll ask Pat Gelsinger tomorrow his opinion on it today and some of the criticisms. All right, for Justin Moran, I'm Stu Miniman. We'll be back with lots more coverage here of VMworld 2017. You're watching theCUBE.