 Howie Xu, who's an entrepreneur in residence at a yet-to-be-disclosed venture capital firm in California somewhere. So I know you can't talk about it. Welcome back to theCUBE. Thank you. Former Cisco, former VMware. You were on last year on theCUBE. We're talking about virtualization, containers, all that good stuff, SDN. Now that you left Cisco and you went to become an EIR, that means you're working on something pretty big. So it's the most exciting time in my career for this very disruptive age. So Howie, talk about the trends. I know we can't really talk about some of the things that where you're going to go. You're going to announce that on Thursday. So look for Thursday and announcement on how his next step is going to be. But containers, okay? What have Jerry Chen on shortly? Great first investment that he did at Greylock with Container's Docker. We heard Pete Sunstein saying, hey, a lot of people missed the Docker craze, props to Jerry Chen on that one. He's got some follow on investments he's doing. Containers and DevOps are really changing the game at the application level, okay? Under the hood, what are some of the changes that you see happening that people should be paying attention to? Well, before we get on to the under the hood, I think we need to pop up. What is the big picture, right? To me, the big picture is really last year we talked about business outcome, but it's a cliche. So when I think about business outcome, it's actually something extremely concrete. It's sort of the, in the past, IT industry is about delivering the resilience with the security, with the sort of the saving. But now it's about delivering the new business outcome, delivering the sort of the new applications at a speed. So there is a collision between the resilience and agility. So that collision actually forced us to re-look at what is the platform? Is that a virtualization? Is that a container? Is that the old traditional model or this DevOps model? At the end of the day, it's really about that collision. So it's the new world versus the old world. So that's the sort of the big picture. So let me ask you a question. Does hybrid cloud really exist or is that just an outcome of implementing and deploying technology on prem, private and public? I think the juror is still out. If you look at the revenue, I think it's year to come. I mean, that's pretty clear. If you look at the potential, it's there. Now all the vendors, Cisco, VMware, IBM, all the traditional vendors love hybrid cloud because they missed the boat on the public cloud, right? They didn't do the Amazon. And they know that a private cloud has its limitation and they come up with this story. That story can be real, but it has not matured yet. Let's talk about that. So yesterday we were on theCUBE. Me and Dave Vellante were talking with Mark Lewis. Formerly ran EMC Ventures now doing his own startup called Formation Data. He's trying to kind of create a go big or go home opportunity. But we made a comment on our pre-game, pre-show, CUBE segment about who's winning. And we were trying to peg the inning of using a baseball metaphor of where this industry is. And we were debating. I was saying cloud native hasn't even begun yet and Dave's like, oh no way, Amazon's out there. So Mark Lewis pointed out that it's inning game one of a double header. Game one, Amazon one. Okay, so that's over. But game two is the enterprise. And so Amazon has yet to win that one. So the question I want to ask you, what's different about this game that's now happening in the enterprise? What are the key differences that won't let Amazon just run the table? So go back to my original thesis about this resilience versus the agility. So Amazon certainly won the game for the agility. However, they have yet to proven that it has enough security, it has enough resilience. Now you can say some of that is just emotional and people just need to get used to it. But the thing is, the resilience, people do not appreciate enough the resilience of it. So Amazon needs to work on it. Yet for the traditional vendors, they need to add agility into their sort of the products. So that's a race. So that's the second game. I very much like that analogy. And it's gonna, we'll see how it plays out. It's happening right now. Okay, so what are you looking for for VMware now to compete? So Pete Sancini was saying, hey, I'm a VC. I write big fat checks at NEA. If someone has an opportunity to compete with VMware, I'm all ears. But I don't think containers is going to wipe out VMware. So I got to ask you, will containers wipe out VMware or potentially throw them on their heels? What is the impact of containers relative to the two year investment in hybrid cloud that a lot of these companies have? So if you remember correctly, I mentioned this last time that it's actually, the potential is suddenly there to disrupt the virtualization, disrupt the VMware. But it also has to do with the execution. If you look at OpenStack, OpenStack was having a lot of this promise, but from the VC perspective, I think it wasn't turning out as good. Edison game one, maybe it has a second life, but in the first life, I don't think VC made a lot of money out of OpenStack. I think a lot of has to do with the government's model, has to do with the execution. Now, Docker is yet another thing that can potentially disrupt the VMware. It has to do, the industry has to execute. I think arguably VMware dodged the bullet of the OpenStack. I mean, OpenStack probably didn't have any negative on VMware's business. If anything, it probably has a little bit of positive. They created some confusion and it didn't move fast enough. And they took advantage of it, that they actually put some image, open image on it, that VMware actually got some wing out of it. Docker, they are trying to sort of, instead of... I don't see the wind for VMware at Docker. Well, last year, in the keynote speech, they said, better together, right? The CTO on the stage said, who would want to manage containers individually? And at this time, on the same keynote speech, they actually have a vCenter managing each of the containers. I think they are sort of trying to adapt to the new world. The question is how fast the VMware is going to transition. I mean, for any incumbents to transition, it's always hard. So that's the sort of... Well, one driver in this, we'll talk now, about is developers. You're seeing DevOps here and the hangspaces downstairs here at VMworld. Big DevOps focus. They have a lot of technical geeks at VMware who see DevOps. You've been involved in VMware with vSphere. You've seen a lot of geeks that get DevOps. Maybe the management and the sales side, maybe not materializing, but that trend is coming fast for them. They have an opportunity. Yeah, one of the things I particularly like DevOps is, what's the next 10X, 100X improvement for this sort of, we bring to the business, right? If I look at the last two or three decades, Intel, Microsoft, VMware, those are all horizontal technologies. And those horizontal technologies deliver the 10X, 100X improvement to the business. And it's pretty hard for those technologies to deliver the next 10X, 100X. I think the next sort of the big thing will be vertical integration, right? From the beginning of the business requirement, all the way to build it, test it, and then run it, that vertical integration. And then that would give you 100X speed to sort of turn out the applications. I view that DevOps has that potential to give the next 10X, 100X improvements. Okay, that's a great point. Let's double click on that and go drill down on that because I love that because you heard Pat Gelsinger saying, you know, it's disruption and you broke it out kind of by industry. You see in big data, vertical solutions, prepackaged vertical apps are successful because of domain expertise and a lot of cool things. However, horizontally scalable concept is also something that's happening at the same time. So how do people get their arms around those two mega trends? Okay, integrated systems called engineered systems, a la Oracle, a la whatever, you know, and horizontally scalable open source. So this is really a big thing. What's your take on that? What's happening in this space? Is it relevant? Are they not relevant? Well, one of the, there are many angles into this problem. One of the angle to look at this problem is this vertical integration for particular sort of sector, particular verticals. In Pat Gelsinger's sort of the keynote speech this morning, he mentioned healthcare, you know, stratosphere, all those sort of the business. My argument here is if you sort of marry the technology to those vertical sort of the sectors, then they would bring those sort of the next 10x, 100x improvements. Because if you think about it, you know, the example he gave is we went from close to zero smartphone to, you know, almost a three billion connected people. What's the next 10x? You cannot do 10x because at most you do two x because we have six billion people, right? But however, among those, you know, three billion connected people, what do we do? We have big data, but that's a very horizontal technology. That horizontal technology has now yielded the big decision, big, you know, sort of the top-line decision yet. So my argument is once we sort of transition from this big data, you know, sort of thing into the big decision thing, then we will see 100x, 1000x productivity improvements. And then the pacing item on that or the threshold will be speed, right? Performance. Yes. Low latency, real time. Yeah, I think, you know, that's the sort of the steel a little bit horizontal. When I say vertical, I mean actually marrying those technology all the way to the, you know, CEO level sort of the decision. You know, why those latency matters to him or her, right? That's the sort of the things. Well, the one thing I can learn from the game one where Amazon won is, I mean, they're dominating with Redshift on the data warehouse market because their price point and performance is so radically different. Yes. I mean, that is just a low hanging fruit. They knock on that out of the park. So let's bring that into game two of the cloud. What do people do? I mean, start chipping away at these weak parts of the market that are overpriced, uploaded software models, shitty code bases. Well, there are two particular sectors I'm personally interested in. One we already talked about the DevOps. The other one is security. I mean, security is completely broken, right? You know, you pick a random person, you know, that person can probably learn some, you know, download some scripts from Russia and then break into a random data center. That's how robust our sort of secure data center is today. Not because that person is smarter than the rest of the six billion people. It's just that, you know, security is not there. So my point is that security will be, you know, a next big thing. Yeah, we're going to talk about Steve Herrod with that. It's going to be fun. Perimeterless security is a moving train right now. And it's hard. Yeah, we spend the last two or three decades on this, you know, security architecture with this notion there's a perimeter. There is, you know, this box. And then now we realize, wow, you know, there's no such perimeter. Jawbox, virtualization, bring your own device, completely change the picture, which means that the emperor doesn't have clothes. That's totally true. Well, I got to ask you because I know, I kind of know where you're going to land on Thursday when the press release goes out. You're going to become an entrepreneur in residence at a big time venture capital firm, which is great. I mean, it's a place to play. It's kind of like, you know, you're incubating an idea. It's kind of like your halfway house between, you know, getting out and doing something big. So I'm curious, where's your head at right now? I mean, in terms of, you know, obviously you've had a great run, VMware. You had a great run at Cisco. You've seen the landscape. You talk to customers. You kind of see the big picture. What's your head at right now? What are you thinking about? What's getting you excited? Well, you know, you have to really make an impact to those sort of the business outcome. I mean, one of the insight I got, you know, from talking to so many CIOs is, CIO's job is pretty tough, because you know, every day they meet so many technology companies. It's like they are VC, right? You know, so many technology companies, you know, how to tell who's real, who's not real. That's sort of the noise. And then the other thing is, when I put everything together, you know, when I look at it individually, okay, it delivers this value. When I put everything together, can I really manage that complexity? It's a very tough job. CIO is literally a venture capital, you know, a person these days. And you know- And they're like a drill sergeant at the same time, because they've got to manage the operations as well. Yeah, it's the total cost of ownership. So how am I going to give them something that, you know, give them the value, yet not, you know, give them additional headache? That's sort of the tough thing, right? You know, but that's an exciting time to sort of, you know, because they really have a big problem, but they really have the complexity. And then they have so many choices, and then they, you know, it's tough thing. So I want to make their life easier. You'd be the pharmacist, the aspirin, you got the vitamins, and you got the vaccines, you know, you're the doctor. Well, Howie, thanks for coming on theCUBE. Really appreciate you spending the time. Howie Xu, entrepreneur in residence at a yet-to-be-named venture capital firm. Stay tuned for more details coming this week. We'll be right back with more live in San Francisco. It's theCUBE- Thank you. Here at Moscone North for VMworld 2015. We'll be right back after this short break.