 Live from Las Vegas, it's theCUBE. Covering VMworld 2017, brought to you by VMware and its ecosystem partner. Hey, welcome back everyone. Live here in Las Vegas, it's theCUBE's exclusive coverage of VMworld 2017. I'm John Furrier, the co-host of theCUBE with my partner Dave Vellante, co-host. Eighth year of CUBE coverage at VMworld. Since 2010, we've been documenting the evolution of VMware. Next guest is Bhaskar Iyer, who's the CIO of VMware and Dell. Big time CIO, been in the field, been working in real practitioner, now at the company, going to the cloud. Hybrid cloud? That's great to see you. Good to see you again. So, Pat Gelsinger's keynote, really relevant. I just want to say, our conversation last year, and even the year before, you're like no-stradamus. You're like predicting the future. We talked about IoT. That's right. Now, IoT Edge, are you helping messaging with VMware? I mean, are you? Well, my background, having worked in Honeywell and so on is that. And I saw IoT as a big opportunity, so it was easy for me to see that it was going to be big, but I didn't think it was this big. But I'm messaging more with CIOs, more than VMware to say, you're going to miss this wave. Looks like a lot of CIOs are so focused on business IT, they're missing IoT. So my message is, here's a great opportunity for you to get ahead of, don't miss it. I want to talk about waves, because last year, we really made, and then you look at what Pat Gelsinger did last year, we were commenting that he gave the speech of his life, was that two years ago? I can't remember. He really was under a lot of pressure. Stock was at 42, very low, and is he the right guy? He made some bets, and Pat's a wave guy, and he's all about the waves. And as he said, you're not out in front of that next wave, you become driftwood. So I got to ask you the question, by the way, he's got the great wave slide here. From a customer perspective, they're watching here, Gelsinger lay out a great vision, the stock price is booming, strategy is clear, Andy Jassy from Amazon comes on stage. There is clarity in this direction, and the waves that you're on. Now customers have to make the choice of bets. They're looking at the wave and saying, what are my bets? The question I have for you is, what bets are customers making now as a CIO? And what should they look at? And what sequence, and how do they attack those bets? And which are the right bets? So I think the cloud is a big bet. I mean, people don't want to talk about cloud because they think we've been talking about it for a long time, but enterprise hasn't really gone much in that journey, right? There's still a lot of data centers running virtual machines, which is great, but you really don't have a private cloud setup. And then there's burst capacity to go to public cloud and so on. Very few people have examples of that. There are some people, but not the large majority. What happens in IT is, when you get spooked when you see a public cloud and a private cloud and you're not sure which way it's going, so the nice thing about this announcement is, that thing is mystery's out, right? So you want to go to public cloud, here's a way to get. You want to stay on your private cloud? Here's the way you can stay on your private cloud. Plus, moving legacy applications. People never talk about legacy. They always talk about, you know, if you and I are building a new company to go to a public cloud, do a cloud ready, pretty easy. But I have some old applications, even in a technology company, how do I move it? So I think that as a customer, when I looked at Pat's message, I said, that makes sense to me. I can choose to run it on my data center, go to a private cloud and go into Amazon. I'm going to ask you, I know Dave wants to jump in because he's got some good private cloud data to talk about. I mean, true private cloud data. You mentioned how hard it is to move legacy apps. Can you give some illustration and some color to how hard it is? Because a lot of people in the press, analysts, even startups, oh, it's so easy, I want to just win the enterprise. If it's a clean sheet of paper, I get that, but there's a lot of important things. How hard is it to really deal with this legacy data center environment in the path to hybrid and public cloud? Well, let's, there's still, you know, people think of, if you think of an ERP, people have four or five ERPs still. You know, you were just imagining, everybody's just on one nice SAPR, one nice Oracle, there are several instances. And the reason you haven't migrated to one is not because we don't know how to do it. There's an ROI, you know, do I invest the money? Do I do this right now? Do I get the people? It's not the $400 million to invest on an ERP system. Very risky. So you've got a lot of these. You've got PeopleSoft, which is different versions. You've got HR systems, sales systems. So that's what in a lot of data centers, believe it or not, how do you move it? And then when you go to the public cloud, the guy says, are you cloud ready? No, you're not. You've got a legacy system. What's that? You just don't want to run this. You want to run it in the most efficient way within a container. So I think people don't see that. The other thing they don't see is at scale, it is expensive sometimes to go to public cloud. If you and I starting a company, we won't build a data center, we can probably go to the public cloud. But if I have scale, I already have data centers, I'm running it at scale. And not everything is unpredictable. A lot of business IT is very predictable workloads, right? I know what I need to buy next year, generally. So what burst capacity am I looking for? Not everybody requires that. So that's another reason. Security both ways, right? People say that public cloud is more secure, but there's a lot of regulatory bodies who want you to show. And it's a lot of work that I have to certify to show that. So what CIOs tend to do is to say, we will try to go cloud where we can, but there's still 80%, 90% of your stuff running in a data center. Help me bridge that. Well, we talk about cloud, private cloud. We talk about, we coined this term true private cloud. And the basic concept is bring the cloud model to your data. Right. We tell our CIOs, look, don't try to form your business and fit it into the cloud. Fit the cloud into your business, wherever that data lives. Is that a reasonable way to look at it? And is that what you're doing with your business? Yeah, so I define it even more simply. I kind of say, if you have a lot of people running your data center, you don't have a cloud. I mean, the whole point of cloud is automation. The reason public clouds are cheaper or better is because it's highly automated. So that's the trick is if you have people in a data center, then it's not a cloud. So get your data center modernized. I define it as private cloud. You can call it whatever you want. You can call it automation, but get it automated. Then the scale comes up and your cost comes down. But then when you want burst capacity, you don't have to build servers for that. You can go to the public cloud for a burst capacity. But the big point for me is people have to sit down and figure out a strategy. A few years ago, people said, don't go into infrastructure, just outsource it. So we all outsource it and that became a mess. Sooner or later, you got to figure out what you need to do. You can't just outsource it, put it in the cloud, not think about it, make it go away. So you see a lot of CIOs coming back and saying, yeah, I want that, but I also want to fix this. How do I automate? I want to get the cost down. That's how I define a private cloud is don't have too much cost. So are you running a private cloud? So not only am I, so I should be modest, but I'm not going to be. I think we run one of the best private clouds there is for VMware. Everything that you see in VMware, the hands-on lab you see there, it's all running on our private cloud at scale. We're extending that cloud to now Dell Technologies, right? We're saying in the same model, cut and paste it. Imagine how much leverage you get from EMC and Dell data centers when you extend the private cloud. So for a company like us, it's a sure bet. So what does it look like underneath? I mean, you got vSANs running, you know? Yeah, you have vSAN, NSX, everything we talk about. Have you thrown out all your arrays? I mean, what? You don't throw out all our arrays, but vSAN is. I mean, what you see in the market is happening in my data center as well, right? So vSAN is, there's more and more vSAN nodes now, but you have mission critical SAP and Oracle stuff that I don't want to necessarily save dollars. I want something that is mission critical, proven, ready, certified, et cetera. So the other things don't go away, but your storage is growing. As the storage grows, you see a lot more of the vSAN growing with that. I still have a lot of vSAN, a lot of NSX. You know how many clusters you have now? Probably a zillion, I mean, for a large number. It's a large number of clusters. And the reason I don't know is every month it's just amazingly growing. Last year, when you talked about it, when you asked the question about vSAN, there was only a few left in my data center. So I deliberately didn't talk a whole lot about it. Now it's taking on like fire, right? It's reflective, it's just, you know, as the reliability increases and the cost value proposition is there, it's taking off. You're talking tens of thousands of VMs and petabytes of data, right? Yeah, multiple petabytes of data. Over 60% of that is growing, the growth mark is really large in the vSAN as well. I got to ask you, the journey for the CIO and the CXOs out there, because now there's multiple CXOs. You've got chief security officer, some say chief economics officer because of cryptocurrency blockchains coming around the corner, which we haven't get to, we got to talk about blockchains. Next year, it's going to be on the wave slides. Because decentralization is all about blockchains. There should be a computing that's already there. They all want to get there, they don't want to screw up. I need the headroom but I don't want to make any moves too early to get over my skis or foreclose an opportunity. So what's the path? Are they getting their house in order with the private cloud? Is that the stepping stone to hybrid cloud? What are some of the day in the life of the CIO right now? Because what we're seeing from the Wikibon data is true private cloud on premise is growing really well. It's not declining in any capacity. That's where the action is right now, more than hybrid cloud. What's the CIO doing? Is that the trend that you see? What's going on in their world? Well, there are three or four things going there. When there's SaaS application, that computer is going with a SaaS vendor. So that is happening a bit. But I see the private cloud growing, right? I don't see it disappearing anywhere and I talk to my other CIOs and say, should I be saying this or is it true or not? And everybody's saying, yeah, it is growing. And so is SaaS and so is public cloud. But a big majority of VMware computers run on a private cloud and so I see it grow. So what the CIOs would look for is I want to run my private cloud efficiently. But I also want to, I don't want to have these large boxes for burst capacity. So I have a Thanksgiving sale or a Christmas sale. I don't want to have boxes sitting doing nothing. Can I take advantage of the public cloud for that? And then cloud ready, even I want to do some experiments with a newer development. Let me try it on the public cloud. My feeling is my stats tells me, and you guys are the experts on it, is if you have a scale at some scale, if you're on a good private cloud, the costs are going to be better for you. That's what my experience tells me. Because some of the things are predictable, like, hey, retail season's here. I can go burst in the cloud for that. And then everything else kind of overflowed to the cloud, auto-scaling. The key is labor. Yeah, it is. You could take labor out. So I just want to share some numbers with you guys. We saw what we call the true private cloud. You're calling private cloud growing at 33% cagger versus the infrastructure as a service for the public cloud growing at 15%. And in the 10-year forecast, we have true private cloud at 230 billion, the infrastructure as a service public cloud at 150 billion. So the biggest market growing the fastest, to your point, SaaS is bigger than both. That's growing really, really fast. But it's the IT labor piece, $150 billion coming out of labor, going into vendor R&D and shifting to analytics and transformation, value-producing things. I think that is the transformation. The transformation's labor is going out, automation is coming in. So I can put that on DevOps or the business kind of transformation projects. That's good to see. That's what intuitively as a practitioner I say, but it's good to have the data. I'm going to go and read it up and see. That makes a lot of sense to me. And Pat Gelsinger actually made a quote in the keynote. I thought this is why I was honed in on that, is that he actually said shifting to value activities. That's analytics. You call it vendor R&D, which is basically a way to fund some of the new projects where the hybrid and public are being operationalized and be predictable to some level. But I totally see that the hybrid cloud is stalled in my opinion. You guys can comment on it. But based on my anecdotal hundreds of shows we go to, it's hyped up beyond all recognition. But it's happening after private cloud is set up because the operating model of the cloud has got to get set up. And it's just a lot. It's just a long for the enterprise. To your point, it's maybe bursting, maybe some DR, but it's not a federated set of federated apps or is it? At least I don't see it that way. I mean, so things should be simple, but not simpler is what they say. You got to get your house in order. I mean, I made the mistake of saying, let's just outsource it because I don't want to think about it. This is the same thing that we are talking about. Let's just put it all on the cloud. What do you mean? I mean, there are legacy apps. You still have to run at a good cost. You still have to know it. So I'm a little old fashioned that way to say get your house in order and have the options open for bursts and other kinds of things that you want to do. Well digital transformation also has a lot of pressure on top line revenue. So now you can't just put the paint aside and not look at it and put it in the corner. No look, IoT, we talked about this. You're going to have your whole business being censored. That needs a lot of latency and other kind of issues, a lot of data. You need to be better have a good private cloud story for the IoT, right? Not everything can be put on the public cloud to make it happen. You just don't have the latency. I mean, there's a lot of physics though. So like a car is going to be a data center more or less, right? You need to make response in a very short time. Factories have to have responsive systems and robotics. You can go traverse the internet, go get a data from a public cloud, come back to make a decision on robot. So don't ignore it as all I'm saying, do everything, don't ignore it. So the future, let's talk about the future. AI is here, that's also hyped up beyond all recognition. But I love AI because it's got a software aspect to it. Machine learning is super relevant. Blockchain, Pat Gelsinger and his keynote really address, I thought a really clever way to weave this in, decentralization. Obviously we all know what distributed computing is. Centralized databases can be hacked. Distribution and decentralization around blockchain is interesting. So if we're putting our futuristic hats on, what does IT look like in a totally non-controllable, fully instrumented blockchain cryptocurrency market? Is there going to be IT coins? Like an arcade, I want some IT? I think, I mean, it's exciting that the only, the thing with blockchain in enterprise is not the technology, it's our ability to think creatively on it, right? We are not able to envision these kinds of things yet. It'll come in a year. I think it's our, we have to sit down and think about how to take advantage of that. It's pretty exciting. And you know, we still have simple issues on, you know, we know we can't centralize everything. That we've tried for years and years and years, it's gone already. Now I want to decentralize. Perhaps use technology like this to make sure I can still control what I want to control, right? So the thing with blockchain, internally when I talk to people is, don't show me a proof of concept on the technology, I get the tech. What is the use case? So we have to use our brains and I think in six months we will have it. We're just not there yet, completely. Because that's where the disruption vector will be. That's right. So if anyone's doing an IT coin token sale, I'm interested. Yeah, well, next year. I mean, IOT, we talked last time, it looked like vaporware and now you have examples and everybody's doing it. I think blockchain is definitely there. I mean, supply chain can be applied to network packets, as we always say at the edge. Best thanks for coming on theCUBE. Have a great stuff. Good to see you. Cube Coverage Live here in Las Vegas for VMworld 2017. We'll be right back with more coverage after this break. Thank you.