 Live from San Francisco, California, it's theCUBE at VMworld 2014. Brought to you by VMware, Cisco, EMC, HP, and Nutanix. Now here are your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone. We're live in San Francisco, California for the end of day two of VMworld 2014. I'm John Furrier with SiliconANGLE, my co-host Dave Vellante for the wrap-up of day two. Dave, five years now running. VMworld's like a marathon. It really, truly tests the limit of our fatigue and our awareness and our ability to put together the analysis. So let's try to wrap things up. We had Carl Escherbach on, slew of customers, great guest Steve Herit came on. We started out with the VC panel with Jerry Chen, Pete Sancini. The VC is now tier one investing. Just ran into a bunch of folks here in Northwest, Lightspeed, Highland Capitals here. It is a target-rich environment to find the next Docker, to find that next Tintry, that next Nutanix. And the theme to me here, Dave, is fundamentally, under the hood, day two, is about the technology. So the keynotes today were about technology innovation. Yesterday was the grand vision, today was under the hood. And this is where the opportunity is. And the entrepreneurs are right here scouring. It's not Monday, no partner meetings. They're out doing deals. And there is some significant change happening. And it's great opportunities for entrepreneurs. But more importantly, the companies who have funding, the people who are part of the transformation. And finally, the incumbents, Dave, the guys who are protecting their market share. They're either going to be on a defensive or an offensive position. We heard Pat Gelsinger yesterday, Carl Escherbach today, reiterated. VMware is on the offensive. The VCs are doing deals. What's your take? Give me your analysis. Well, I think VMware realized many, many years ago that the hypervisor was going to get commoditized and they started making moves to add value up the stack. And that's what they're doing. They're operating, acting like a software company, even though, you know, when Pat Gelsinger took over, Floyer wrote a piece on Wikibon basically saying there's going to be a lot tighter integration between the hardware and the software. Because Pat is a guy who understands that level of integration. And that's exactly what's happening. You saw that with the announcement of Evo Rails, even though they're distributing that through partners. Interestingly, those partners are not including Cisco and HP, at least at this time. And so, I think you're seeing just VMware behaving just as you would predictably expect them to, grab more pieces of the stack, maybe elbow out some folks out of the ecosystem. That's fine. That's the way these big platform plays work. So, you know, I think we're seeing the evolution. Now the question is, okay, how big is it? How big can it be? I think it can be very large. I think that as we talked about, you talked with Jerry Chen and Pete Sancini, and we also discussed with Steve Herrod, there are a lot of pockets of opportunity. I don't know if there's any pocket as large as VMware itself. I think right now I don't see that pocket. I see many little pockets with great opportunities. I mean, multi-billion dollar opportunities. It's like Nutanix, for example. So, I think, John, that we're starting to see that coalesce just as we had expected and predicted that it would. What are your thoughts? Well, yesterday I commented on the wrap-up that it was obvious we're back to this mainframe concept. The mainframe is the cloud. The cloud is decentralized. Open source is the ethos. And I mentioned about the developers are coming back in-house. I got a lot of tweets on that yesterday. Today, I think it's a couple things. I mentioned the VC opportunity. Certainly, entrepreneurially, there's a lot of activity. There's a lot of entrepreneurship inside these existing companies to innovate. We heard VMware. I mean, EMC say they had Docker early on. We're playing with, obviously, that probably influenced the decision with the Federation to go with Docker. But I think Steve Herrod kind of highlighted to me in our chat with Steve to hear today about his investment thesis, which I think is right on. Steve Herrod, former CTO of VMware, basically pointed out the following. It's a multi-cloud world, not just one cloud, multi-cloud, infrastructure for mobile, big data, internet of things, and perimeter-less IT, meaning the security has to be outside, I mean, inside the application with some sort of wrapper or container, not as a perimeter. So if you wrap all these things out, this speaks to the applications are driving the innovation of the infrastructure level. And I think today, clearly we heard that. Google came on theCUBE with the news around Google's involvement. Again, that points to some of the innovations happening at the cloud level. Amazon and Amazon certainly is the threat. We heard that yesterday. Now Google's a player. But I think what Steve pointed out in my question to him, Dave, I asked a very pointed question about Docker, about stateless applications and stateful applications. And what you see with VMware and Docker is that hedge, that bridge between the reliability of applications across both those environments. I think that's VMware's play, clearly enterprise-based cloud. And they're all in on that. So again, I think VMware's staying the course, hybrid cloud, end user computing, and then software-defined data center all underneath. Yeah, I think that the big strategic move, news at this show was sort of, I would say co-opting a strategy around both OpenStack number one and number two around Docker. I think that third piece is not as clear, and that's the public cloud. Although, it appears that Google is sort of throwing holy water on VMware's approach of hybrid cloud. We heard Craig from Google said, well, long-term we believe that the vast majority of workloads are going to be in the public cloud. I think long-term, depending on how you define that, they're probably right. But in the interim, Google's taking a very pragmatic approach. That, I think, is a big win for VMware, because let's face it, Amazon has a completely different mindset here. It's like our way of the highway. So I think that's an interesting setup, sets up an interesting battle. The other huge battle you're seeing, there's a vicious battle for taking cost out of back-end infrastructure, John. I mean, you're seeing EMC, HP, Dell really focused on doing that. IBM does not have a huge presence at the show, by the way, I mean to hear, but not as visible, certainly not in our little world here in theCUBE. And then you got guys like Nutanix coming in really trying to drive costs down. So there's an amazing battle going on. Then you have V-SAN, you see Evo Rail. So VMware's doing what software companies do. They're commoditizing the hardware. They say they're not, they are. Of course they are. Because the software message is clear and we haven't seen the meat and the bone yet. We're going to get to that tomorrow, I hope. But ultimately, Dave, this is where it's at. They're thinking big. And what I love about this year's show is, I love big thinkers. And I think that's one of the things I miss about some of the entrepreneurial culture is that people don't think big enough, right? So one of the things you're seeing about this transformation in IT and cloud is big ideas and big thinking is happening. People are moving fast around these big ideas. Certainly the game-changing benefits of that is going to be in the monetary side of the financial side, the investment opportunity, the financial opportunity to make a profit if you're a VC, if you're an entrepreneur, you build a big company. And I think, you know, I was talking to the investor of Nutanix. He did the seed investment. They're worth over $2 billion. Tintry's on the queue, Tintry, Nutanix. These are the companies that are thinking differently and they are eating some of the lunch of the big guys, EMC and NetApp, have to be worried. And they are, this is just a complete fun environment. I mean, it can be stressful in terms of the show, in terms of activity, but it's absolutely really exciting to see all the action. Well, the epicenter of the enterprise IT economy is VMware. And that's why VMware has a $40 billion valuation. And so- I want to ask you a question, okay? Because in 2010, when we started the cubes, our 50 year doing the cube here at VMworld, you and I said, we first did our first cube at EMC world, stores at the center of all the innovation. Okay, it's a centerpiece. It still hasn't changed. We had one quote on the cube today. It said, this is a storage show. Why, in your opinion, Dave, is storage such a central piece of the conversation? It's really, I mean, it's cloud. Is that the battleground? Well, I do, well, I think it's one of the battlegrounds. I mean, certain storage and networking is becoming increasingly a battleground. And I still feel like, while it's critically important, mobile and end user computing is, I don't want to say peripheral, but it's out there. Okay, and there is another battle going on between Citrix and Microsoft and VMware. But storage is at the heart of it because storage is so hard. It's always been so problematic. And it's such a huge opportunity. You know, big, hard problems. And I do think, you know, again, I would give props to networking as a big opportunity. It's just, there's a big whale there in Cisco, and it's unclear how VMware and Cisco are going to evolve that part of the software-defined ecosystem. Who's going to win that battle? Cisco is, you know, not going to back down. But, you know, it's very interesting to see what VMware is doing. Pat Gelsinger said, we love Cisco gear. That's a quote that he said in his keynote. So he's deep positioning Cisco in his keynote as a hardware company. We're going to do the software piece. So, again, I wouldn't, storage is a critical piece, especially with the flash disruption, but networking is there as well. More action tomorrow. Stay with theCUBE, okay? We're here wall-to-wall coverage. As usual, 50 year at VMworld is theCUBE, our flagship. We go out and start to see all the noise. We had Bill Fathers coming on tomorrow. We got the CTO of VMware, Chris Wolfe. We have Citrus coming on, Ted Gile. We're going to hear from Eric Nielsen who runs social media for VMworld. How are they going to go to the digital 3.0? Convergence, the next generation social. Frank Artali with Ignition Partners will be on tomorrow. Another VC. D. Raj coming on, I think. Tom Cook, Permabit. D. Raj, Ben Gallop's coming on from Docker. We're going to hear Docker. From the CEO of Docker, the world-win that is Docker. We're going to get the inside baseball from him, and obviously D. Raj Pandey is coming on. We're going to have the CEO of Basha. We have really great guests. We have Oracle coming on tomorrow. Cap Gem and I, and just a ton of great guests. Not only Martin Casado will be on as well. Sanjay Poonan, we're going to hear about AirWatch and all the momentum. Amazing talent coming on, Dave. How about Docker, John? I mean, actually, I got props to SiliconANGLE. SiliconANGLE covered that right on top of it. Jerry Chen's first investment, and now they're here in front of 25,000 people. They are the talk of the show. Dave. Up there with Google and VMware. It's amazing. You know, it's a private victory for me. I always talk to Mark Hopkins about this, and now Jeff Frick is building out the Cube Silicon Valley. We break markets, right? We look for the next big thing. We don't just say it, we do it, and we don't really do enough credit. Thanks for the props. Pat ourselves on the back a little bit here and there. But for the most part, we really break news. I mean, we break markets, not news, and ultimately, it's awesome, right? So we pride ourselves on that. And we want to get better. Obviously the Cube, Wikibon, SiliconANGLE, continue to do our thing. We've had over 41 interviews so far in the past two days and props to the team. Great workflow here. And we're in Moscone's lobby right now. It's great action coming on here inside the Cube. VMworld is pumping on all cylinders. We're getting people texting in live right now. We got a lot of segments recorded. We're going to go to the parties and we get the metadata, Dave. We're going to go out and get the metadata and play a little beer pong maybe later on, like last night. A lot of fun, a lot of action. VMworld, always a great show. Conversations in the hallway, certainly just as good as the conversations here on the Cube and it's exciting. So stay with us. We're live here in San Francisco, California for VMworld 2014 and stay tuned for tomorrow, day three here inside the Cube in San Francisco for VMworld. That's a good night. We'll see you tomorrow.