 From the SiliconANGLE Media office in Boston, Massachusetts, it's theCUBE. Now, here are your hosts, Dave Vellante and Stu Miniman. 2010 was the first year we brought theCUBE to VMworld. At that time, VMware was a $2.5 billion company with former Microsoft exec, Paul Moritz at the helm. Two years earlier in a stunning development, VMware fired co-founder and CEO, Diane Greene, which sent the company stock tumbling almost 25%. Under pressure from investors, Joe Tucci, the chairman of EMC made the move after a rocky four-year relationship with Ms. Greene. EMC purchased VMware in 2004 for $635 million. The Moritz years were marked by a strategy to move the company beyond the hypervisor into new areas of growth, including desktop virtualization and applications, which were met with mixed market responses. To Moritz's credit, however, the company continued to expand its presence in the data center and under his leadership remained highly competitive with Microsoft, who was seen at the time as VMware's main rival. In 2012, the company named Longtime Intel and then recently EMC exec Pat Gelsinger as its CEO. Gelsinger inherited a roughly $4.5 billion company staring into the teeth of the oncoming cloud mega-trend. Gelsinger quickly embarked on a strategy to refocus on the core business, buoyed by a restructuring of many of the VMware assets that EMC and VMware folded into a new company called Pivotal. Gelsinger made several attempts to maintain and expand VMware's total available market with a public cloud play called vCloud Air, which ultimately failed. On the plus side of the ledger, however, Gelsinger led VMware's software-defined data center strategy grabbing pieces of its value chain that were historically left for the ecosystem. Of course, the most notable being NSX, the company's software-defined networking product, and VSAN, a software storage play. Fast forward to 2017 and add to these developments the momentum of VMware's cloud management and orchestration offerings, its security and other multi-cloud services, and you now have a nearly $8 billion revenue company growing at 10% per annum with a $40 billion market cap and a new owner, namely, Michael Dellen company. Hello, everyone, my name is Dave Vellante, and I'm here with Stu Miniman, and this is our VMworld 2017 preview. Stu, thanks for joining me. Dave, can't believe it's been eight years we've been doing theCUBE at VMworld. Right, and we have been tracking this, Stu, and now, as we were saying, we see new owners, Michael Dell, Dell buying EMC and, of course, VMware, maintaining the vast majority of ownership. Stu, what has changed since Michael Dell purchased VMware, and what's changed in terms of Dell, its ownership, and also in the past year? Yeah, so it's been one of the top questions. It's last year, John Furrier and I interviewed Michael Dell, and there were still everybody trying to say after the acquisition happened, aren't you gonna just sell off VMware because VMware needs to be independent, they need to be able to partner with everyone, and Michael was basically, you know, just lit a fire underneath him, and he's like, people that think I'm gonna sell it don't understand the business plan, and they don't understand math. That everybody thought, oh, you gotta sell them off to be able to pay down the debt, and he's like, no. VMware has been called the jewel of this acquisition of EMC, the largest acquisition in tech history, and that relationship of VMware is something that's still playing out. One piece of it, you mentioned VSAN, one of the success stories. There was the failure of EvoRail, which was kind of the first generation solution put together, sold through a whole lot of partners. They took that whole product and marketing team and put them together with EMC and created the VxRail team, which now reports up to Chad Sackich on the Dell EMC side, VxRail doing quite well, VSAN doing phenomenally well. They claim to have the most number of customers for any product in the hyper-converged infrastructure space, lots of different solutions out there. So some of that blending of how Dell EMC and VMware, we see a little bit of that, but still VMware partners with everyone. VMworld still, Dave, is probably the largest infrastructure ecosystem out there, and even if we look at cloud, it's one of the more robust ecosystems out there. The only one probably rivals it these days is Amazon. Isn't Dell's ownership of VMware somewhat more threatening to server vendors in particular than EMCs? Especially Cisco, IBM, HPE, large volume movers of VMware licenses. How has that affected the dynamic in the ecosystem? Yeah, Dave, I mean, we've talked in previous years. I was at EMC back at the beginning of the VMware relationship. EMC really didn't know what it was getting when it got VMware. It was less dollars we're going to go into servers because we consolidate with virtualization and less dollars to servers should mean more dollars to storage. Good for EMC. Well, Dell, number one thing Michael Dell wants to do is sell Dell servers. So of course, if I'm someone else in that ecosystem, if I'm selling other servers, if I'm selling storage that doesn't run on Dell gear and not part of that Dell ecosystem, absolutely it could be a threat. Michael has maintained that they're going to keep VMware, allow them to have their independence. And I haven't heard too many rumblings from the ecosystem that they've messed up the Apple cart from VMware standpoint. Okay, last year the talk was that Pat Gelsinger was on his way out. You see Pat Gelsinger doesn't appear to be on his way out. There's earnings momentum, which we'll talk about, but thoughts on management. Yeah, so, right, David, number one thing is we thought Pat would be out. Things are doing better from a stock market. You talked about the growth 10% per annum right now is solid VMware. You've seen a number of moves and changes, people that, there have been a lot of people that have left. There's new people that have come in. There are areas that are doing quite well and virtualization is still a mainstay of the data center. One of the things we'll talk about I know is that Amazon relationship, which we expect to hear a lot about at the show. Amazon's one of the global diamond partners, which a year ago, if you'd said that Amazon was one of the top partners up there with the likes of, you know, Hewlett Packard Enterprise, you know, OVH took over the vCloud Air business, which is, as you said, it failed from VMware standpoint, they still have a number of partners. Companies like Rackspace, OVH that took over that vCloud Air business and lots of service providers are doing quite well selling VMware lots of places and virtualization still is the foundational layer for most infrastructure. So VMware pre-announced earnings to the upside and future growth ahead of expectations. So the stock, you know, got a nice pop out of that. What's driving that momentum? Yeah, the two areas you talked about first. VSan is doing quite well, it's driving a lot of adoption and trying to get VMware to be a little bit more sticky and really kind of slowly expand as opposed to big chunks. So we talked about when Pat first went in as CEO, it was VMware had to play a similar game to what Intel did, Dave, which is how do they expand what they're doing without really ostracizing their ecosystem and to their credit, they've done a pretty good job of that. They baked in some backup solutions but lots of backup solutions. You and I were at the Veeamon conference earlier this year. Veeam still doing a very solid business inside of VMware's ecosystem. Lots of other players that play well there. NSX is really starting to hit its stride, that networking piece, but where a few years ago we were talking about it was VMware versus Cisco. Well, they seem to be kind of settled into their swim lanes. Cisco still has their core networking business. Cisco's trying to become more of a software company. Cisco actually recently bought Springpath, which was their hyper-converged product, but today that's far behind what VeeSAN's doing, revenue, users, and everything like that. AirWatch was another acquisition, Sanjay Poonan really helped drive that forward. So the mobility play, VMware's doing well. Some of the, there's a lot of the emerging areas. We've been waiting to see where VMware goes with them. Things that I look at like containerization, serverless, OpenStack, VMware had some plays there. They are really kind of nascent at this point and have really exploded. I always look at the show, are we seeing many developers there? Lots of the shows we go to have a big developer group. We'll have a little bit of developers, but it's really still a small piece of the overall picture. There's still lots of virtualization admins, people looking at where VMware fits into cloud, and that's kind of where it sits today. Let's talk about the competitive dynamic, which is totally different. I mean, back when we first started covering VMworld with theCUBE in 2010, it was really Citrix, Microsoft, Citrix with VDI. You mentioned AirWatch, which kind of flipped the dynamic a little bit, quite a bit actually, but Microsoft was the key virtualization competitor. Now it's like competitors, partners, you've got Google Cloud, now of course Diane Green running Google Cloud, which is kind of ironic, we can talk about that. Microsoft with Azure, AWS, which we expect to hear a lot from VMware at VMworld 2017, about the AWS relationship. Certainly IBM with its cloud. Nutanix, which launched at VMworld several years ago, is now more competitive. You mentioned Cisco, they're clearly more competitive with NSX. How do you describe the competitive landscape? What should we be watching at this year's show? Yeah, Dave, first of all, you talked about how VMware grew from kind of the two and a half billion dollars to more like an eight billion dollars, so of course they're bumping into, kind of going over some of their swim lanes a little bit and the market has matured. Absolutely, hyperconvergence for the last few years has been one of the hotspots, not only for VMware, first when they launched VSan, it actually was the tide that rose for a lot of their competitors out there, Nutanix, ImpliVity. Many of these companies said that they actually stopped a lot of their outbound marketing for about a year because all the people that called up looking at VSan went to those solutions. Now, VSan's hitting its stride, it's doing really well. I highlighted how VxRail is doing great revenue on the Dell EMC side and there's still lots of partners that VMware has, so hyperconverged, absolutely something that we'll see there. Cloud, big piece. I mentioned Rackspace, OVH, all the service providers. The VCloud Air Network is still kind of there, so how VMware is getting into the service providers, how they're getting into the cloud. I know we'll talk a little bit more about the cloud piece. Last year it was the Cloud Foundation Suite, which takes VSan and NSX and vSphere, puts it all together with the management and that's something that VMware wants to be able to put on-prem in a service provider or in AWS. So really wherever you go, VMware is going to be there and stretch that, but it's like a four node start configuration. It doesn't natively go into Amazon. That's been a lot of the lift that's been happening over the last year to try to get that VMware on AWS working and I hear it's not 100% baked yet by the time we get to the show, but working out a lot of those details, but cloud, hyperconverged, some of the new ones. VDI will still come up to, I'm sure. How about Docker? Where do they fit in the competitive landscape? Yeah, it's interesting. I remember the last year we had the show in San Francisco. We had Ben Golub, a CEO of Docker on the program there. Ben's no longer the CEO. They switched CEOs. We had theCUBE at DockerCon this year. Containers, absolutely very important. VMware has something called VMware Integrated Containers. I hear a little bit about it, but most people, if they're saying I'm doing virtualization, they're probably doing it on Linux. So Red had summit this year, heard a lot about containers. We're going to have theCUBE at KubeCon, which is the Kubernetes show later this year. So we know VMware plays a little bit with Docker. I'd love to see VMware saying how they fit into the Kubernetes piece a little bit more. We heard of the Cloud Foundry Summit earlier this year. How pivotal. Kind of fits into that environment. They've got a way to be able to spread across multiple environments there, but VMware tends to play in a little bit more traditional applications. And Dave, when you talk about a competitive standpoint, that's what I look at for VMware. The biggest threat to them is they don't own the application. So Microsoft, Oracle, IBM, and all those cloud native apps that are getting put in the public cloud, like Google and Amazon and Microsoft, does that leave VMware behind? Does VMware, I heard many times last year, become the new legacy? Well, but they're clearly positioned as an infrastructure player. So let's talk about that. I mean, cloud has become the new infrastructure service, become the new big competitive threat to on-prem infrastructure. Wikibon has done some research on the true private cloud. Interestingly, I mean, true private cloud essentially is a moniker representation of public cloud-like attributes on-prem, bringing cloud, cloud models to the data, for example. And Wikibon has forecast that as the largest market. I think I've got some data here. It shows that true private cloud over time will be a $230 billion market, whereas infrastructure as a service in the public cloud will be about $150 billion. So you expect that true private cloud is going to overtake that. It's growing faster. Cagger is 33% versus public IAS is 15%. But the big thing is staff. Staffing, you know, getting taken out essentially, getting out of non-differentiated heavy lifting. But what is VMware's cloud strategy generally, and but specifically with regard to bringing the cloud model to the data on-prem? Yeah, so when we created the true private cloud definition we said virtualization alone is not cloud and therefore what do we need? We really need to have that automation, that orchestration. And VMware had done a number of acquisitions. They're putting the suite of solutions together and it's more than just saying, oh, I have six different software products. Here's a bundle. How do we fully integrate that? And that's what the cloud foundation suite would VMware put together so that I can have it in a virtual private cloud in Amazon. And it's something basically VMware manages it but it's Amazon's data center and that's plugged into the public clouds. I can do the similar sort of thing in the service providers. And that's why with our forecast, Dave, we show in about five years true private cloud should have more revenue than public cloud. Big reason is because there's a whole lot of legacy out there. And moving from all of my, you know, most companies, hundreds if not thousands of applications, getting all of them to the public cloud is tough. Having them in a virtualized environment and being able to slide them over to this kind of environment makes a lot of sense. I can do that. And the shift of my workloads and my applications, going to microservices, you know, really starting to break apart some of the pieces is something that, you know, a lot of times that's going to take five to 10 years. So in the meantime, we're going to shift kind of legacy to private cloud while we're picking off the things that we can with the public cloud and VMware with their cloud foundation suite and, you know, their solutions that they're putting together, networking as really the inter-fabric with NSX, vSAN making it easy to make those applications a little bit more portable between different types of infrastructure. But, you know, that's really VMware as they put their cloud play and they have, you know, a very large set of partners that they're working with in this space. So Stu, how should we look at the VMware AWS deal? Is it AWS's attempt to get a piece of the true private cloud action? On-prem, is it VMware's initiative to try to actually get a cloud strategy that has teeth and works and has longevity? How should we think about that? Yeah, it's, of course, a little bit of both. At its core, I think it's Amazon looks at 500,000 VMware customers that have data center deployments and they're going to stick a straw into that environment and say, come try out the first taste of our services and once you get on the Amazon services, which, by the way, they're launching three new features every week, I think. I was at the Amazon summit in New York City recently and it was like, oh, it's a regional summit. There were like three main announcements. No, I got the email. There were like 12 announcements and each one of them were kind of cool and things like that. So it absolutely is, how do I get customers comfortable with moving to this new model? I think one of the things that Microsoft did really well is when they pushed everybody to Office 365, they said, SaaS is the way you should always think about buying your applications going forward. Not, I'm going to deploy a server for my outlook. I'm going to deploy infrastructure for my SharePoint. It's, I'm going to buy Office 365 and that's just the way it's done. So they made it the okay. Now VMware, it's really dangerous in a way saying working with Amazon. Now we're saying, hey, playing on Amazon safe, the water's nice and once they get in that water and you have access to all of those cool things that Amazon keeps putting out, which, by the way, the week after they announced the partnership of VMware on AWS, what Amazon announced is there's a really easy migration service that if you have a VMware environment, you just kind of click this button and I'm pretty sure it's for free. You can now be completely on AWS and you don't have to pay for VMware licensing anymore. Wouldn't that be nice? So, okay, so the way you phrased it or framed it is it sounds like that VMware with it's half a million customers has more to lose than AWS in this deal. Is that the right way to think about it or is this not a zero sum game? I don't think it's a zero sum game when you brought up the true private cloud. The data center still, there's room for some growth with VMware. Even if people are 90% virtualized now, there's some room for growth there. Public cloud, though, has a strong growth engine so now VMware has a play there. Rather than saying it's the bookseller don't go there, they wanna have a play. Michael Dell, Dave, I'm sure we're gonna ask him, say, hey, what do you think the world's gonna look like in five years? You've got your Azure Stack partnership that you're lining up with your server division and with EMC, you've got Amazon that VMware's playing with. You've got your data center, how does that go? And of course, Michael being the smart businessman that he is is gonna say, yeah, you're gonna buy Dell no matter what solution you go with and I'm gonna have a strong position in all of them but it definitely is, we're in a bit of a transitional phase as to how this is gonna look. We've for years been arguing, how big does public cloud get? What applications go where? I do think that this has the potential to accelerate a little bit from VMware's standpoint, VMware customers getting in this environment, trying out some of the new things. I know lots of people that were in the virtualization community that are now playing in the public cloud, getting certified, doing the same things that they did a decade ago to get on public cloud. So as those armies of certified people kind of move over in the skill set, we have a generational shift going on and lots of people are gonna be like, hey, I don't want to spend 12 to 18 months building a temple for my data anymore. I can just spin this up really fast and move. It's interest Dave, cycle computing, one of the earliest customers that we interviewed at Amazon was just acquired by one of the other cloud guys, not Amazon. So companies that know that was an HPC company that was rather than spend 18 months and $10 million, we can do the same thing in like a few weeks and $10,000. They're super computing in the cloud. All right, let's wrap with what to expect at VMworld 2017. Obviously it's going to be a lot of people there, they're your peeps, a lot of partying going on. You know, it's like, it used to be Labor Day kicked off the fall selling season and for years it's been VMworld. What should we look for this year? Yeah, so I'm excited, Dave. It's always this community, they spend like the whole summer getting ready for it. I'm actually going to be sitting on a panel at Opening Acts, which is the VM underground group does on Sunday. So the event really doesn't start Monday, Dave. It actually, a lot of people are already flying in by the time this video goes up. They're doing things Saturday, on Sunday, there's three panels. I'm sitting on one on buzzwords and IT. So the things like cloud and serverless, are those meaningful or are those a total waste of our time? So that's kind of gets us started. You mentioned a lot of good parties at the show always there's the Vexpert community. I was a Vexpert for a number of years back when it was a couple hundred people. I think there's now 1500 Vexperts worldwide. We've got a bunch of hosts coming in to help us including John Troyer who created the Vexpert program, Keith Townsend, Justin Warren, excited to have them. Lisa Martin is going to be co-hosting along with you, me, John Furrier and Peter Burr. So we've got a big team. We've got two sets. We've got a great lineup of theCUBE, two sets, three days in the VM Village which this year is on the first floor right outside of the Expo Hall. So it's one of those things, I don't expect to sleep a lot. I expect to see a lot of people, bump into them on the show floor, stop by theCUBE, see the parties and definitely see them in the after parties. Great, well as Stu says, we have two sets going on. So please stop by and see us, Stu. Thanks very much for helping me with this VMworld preview. We'll see you in Vegas next week. And thanks for watching everybody. See you in Las Vegas. This is theCUBE. Thank you.