 Live from San Francisco, celebrating 10 years of high-tech coverage, it's theCUBE. Covering VMworld 2019. Brought to you by VMware and its ecosystem partners. Well, welcome back everyone live. CUBE coverage here in San Francisco, California for VMworld 2019. I'm Trevor, Dave Vellante. Dave, our 10 years continues. Day one of three days of wall-to-wall coverage. Mark Lomair, Senior Vice President, Cloud Platform Business Unit, and General Manager of the VMware Managed Cloud for VMware, great to see you again. Great to see you too. Yeah, thank you. So you're managing all the VMware Managed Cloud on AWS and Dell EMC, which was a big part of today's keynote, obviously a big part of your investment. So, you know, you always look at someone's commitment to something, how they spend their resources and their time. So give us an update. Obviously a lot of resources on the VMware side to make this run what customers want. Give us an update on what's going on. Yeah, yeah, I mean, so first of all, VMware, Cloud and AWS, I mean, we're really pleased with the momentum we're seeing for that in the marketplace. So we compared what it looks like today versus a year ago, and we were talking about it a year ago, and we've increased the number of customers by 4X on the service. We've increased the number of VMs on the service by 9X. So it's kind of interesting because it shows you that, you know, we're adding most new customers as well as existing customers are expanding their investment. So that's great to see, right? And it's powered by a lot of the compelling use cases. You may have heard Pat or others talk about, most notably cloud migrations. You know, from an investment perspective, which is I think where you sort of started the question, you know, significant investment from both VMware as well as AWS into the service. You know, we say it's jointly engineered, and that is absolutely the case. I mean, we literally have hundreds of engineers that are optimizing the VMware software to be delivered as a service on top of the, on top of the AWS infrastructure. And that's a lot just to get nuance on this point because in the press coach, I've seen all the press coach from the Microsoft and Google, this is different than just cloud foundation because you're talking about something completely different. This is jointly engineered. These are specific, unique things. Yeah, I mean, the sort of distinction I would sort of sort of articulate there is that in the case of VMware cloud on AWS, it's a VMware managed, operated, supported, delivered service, right? So it's our engineers that are pushing the bits into production in AWS. It's our engineers, if there's an incident that deal with the situation, you know, it's literally a service operated by us. In the case of what we're doing with Azure and GCP, you know, first of all, from a customer perspective, what we heard them telling us is, hey, many customers are using Azure, many customers are using GCP. And they'd like to have the ability to have that same VMware consistent software stack on those clouds. But the operational model is different. So in those two cases, there's a partner called Cloud Simple, who's a VCPP partner, and they're taking our standard VMware cloud foundation software that customers use on-prem, and they are operating and delivering that as a cloud service on top of those cloud platforms. Just to review for us. So VMware cloud on AWS and Outposts, both your responsibility, and there's two-way street there, which is rare with Amazon. Usually it's a one-way street, in my words, not yours. But so, and so you manage both sides of that? Is that correct? Yeah, that's right. So you're happy to sell either one? Absolutely. And then the Dell EMC version is kind of the on-prem version of Outposts, if you will. Is that a fair characterization? Yeah, yeah. Without the public cloud. Yeah, I mean, absolutely. I think one of the interesting things was, we've been in market now with the VMware cloud on AWS for a couple years. And it's going great, but one of the things we heard from customers was, hey, we sort of really like this VMware managed cloud model, where you're taking all the heavy lifting of worrying about the life cycle of the VMware software, worrying about the firmware upgrades to the hardware. You're taking that all off of our plate. But why can't we have that same cloud delivery model back on-prem, right? And so that was sort of the impetus for what we originally announced as Project Dimension, and now we're launching this week as a VMware cloud on Dell EMC. So all the benefits of the Dell infrastructure hardware? So I got to ask you, so one of the attributes of those solutions is they're highly homogeneous, right? And Andy Jassy made a big deal about that, same control plane, same data plane. So my question is, help me square the circle with multi-cloud, which is highly heterogeneous. So can I have my cake and eat it too? Can I have this unified vision of the world, this control, same compliance, governance, security, edX, management, et cetera, and have all this heterogeneity? How does that work out? Yeah, so I think, I mean, to me it starts from what the customer would like to do, right? And what we're seeing from customers is it's increasingly a multi-cloud world, right? That expands private cloud, public cloud, and ed. You're smiling when you say that. Chaos is an opportunity. Yeah, but it's a challenge for customers, right? And so if you look at how VMware is trying to help there, you sort of square the circle. I think the first piece is this idea of consistent operations, right? That we have these management tools that you can use to consistently operate those environments, whether they're based on a VMware-based infrastructure, or whether they're based on a native cloud infrastructure, right? So if you look at our cloud health platform, for example, it's a great example where that service can help you get visibility to your cloud spend across different cloud platforms, also vSphere-based platforms, that can help you reduce that spend over time. So that's sort of what we refer to as consistent operations, right? Which can span any cloud. What my team is responsible for is more in the consistent infrastructure space, and that's really all about, how do we deliver consistent compute, network, and storage service that spans on-prem multiple public clouds and edge? So that's really where we're bringing that same VMware cloud foundation stack to all those different environments. Mark, I want to get your thoughts on what Pat Gelsinger said on the keynote. He said, modernize and migrate, or migrate and modernize. Just mentioned live migration is a big feature. On the modernize and migrate and migrate, they basically pick one, and people are doing both. What's he mean by that? Give us some examples, and what's the impact of the customer? Is this just to behavior the customer? Yeah, I mean, it varies a little bit based on what the customer is trying to accomplish, but the one thing I'll say is that, historically it was a little bit tough to have that choice, right? So the thought was, hey, I have to refactor and re-platform everything just to be able to get it to the public cloud. And then once it's there, I can sort of start to modernize. I think, and that can be a multi-year process, right? I think one of the really interesting opportunities that we've opened up for customers with VMware cloud on AWS is you don't necessarily have to refactor everything just to be able to get to the public cloud. We can help them migrate to the public cloud very quickly without requiring any changes if they don't want to. And then when they're there, they can modernize at their own pace based on the needs of the business, right? And so I think having that additional option is actually quite useful for customers that want to get to the cloud quickly and then from there begin to modernize. So two main paths with migration and modernize is the easiest one given the managed service. Yeah, yeah. But that being said, I think also you see a set of customers that say, look, sort of digital transformation and modernization is my primary goal, right? And for them, by enabling some of these things like native Kubernetes as a service in vSphere and in VMware cloud on AWS by enabling this AI and ML workloads with an NVIDIA partnership. For that class of customers, they can also just start with the modernization piece, right? Directly on the... So the migrate to modernize would be a lift and shift essentially and then modernize. I mean, that's what Amazon wants you to do. But you're giving customers a choice. We have an option here. Yeah, no, I mean, look, at the end of the day, I think both VMware and AWS believe strongly in understanding what customers are looking for and making sure we're delivering that value to them. And I think, you know, this is one of the compelling new options that we've enabled for customers, I think, with VMware cloud on AWS is that we could take a cloud migration project that would have previously taken three years and we can do it in a few months. You know, Mark, I had a chance to talk to Carl Eschenbach two weeks ago for the show. He came in for interviews at Sequoia Capital. Carl Eschenbach, former COO. VMware been there for years. He was part of the deal with AWS and do prepping that deal. We were talking about the moment on time where your stock price started to move out of this October 2016. That's right when the deal was announced since then the stock price has been up. For a lot of reasons we've talked on theCUBE before. The question I have for you is, what have you learned? What surprises you from this relationship? Because one, the clarity was easy. Be cloud-air, no more. This is our cloud strategy. We own all in AWS and multi-cloud as it develops. Certainly that clarified with customers. But now that you're into the managed service, what new things have popped out that might not have been on your radar? What did you expect? What are some surprises from this relationship from a customer behavior standpoint? Yeah, that's a really interesting question. So I think in the early days we sort of had this concept of, hey, let's enable the full VMware capabilities on AWS. And we were sort of talking about it as a tech, almost like as a technical solution, what we could enable. I think sort of what quickly became apparent is, hey, sort of behind that technical approach there's actually some really compelling use cases here. And I think that if I think back to two years ago, I don't think we fully anticipated how compelling this cloud migration use case would be. I mean, I don't think we really realized internally within VMware how hard it was for customers before to do that. And I think customers didn't realize sort of how much easier and faster and lower costs that we could make it for them with this type of service. So I think that one, although we were maybe talking about it a little bit in the early days, I think it surprised me at least how sort of broad-based the customer interest was in that type of capability. Any other broader market interests on things that were surprises or not surprises that are compelling? I mean, you know, the other thing, I wouldn't say it's a surprise per se, but I mean, I think the partnership with AWS has been fantastic, right? I mean, we sort of went into it, I think in the right way between Pat and Andy and focused on doing something meaningful together. The relationship has only gotten sort of deeper and deeper over time. And one of the interesting things about it is that relationship spans not just engineering and product management and product strategy, which is sort of my neck of the woods, but also the marketing organizations, the sales organizations, the support organizations. So it's become, I think, a very deep partnership. We're able to speak to each other very openly and trying to solve together the problems that customers are put in front of us. And what's the new update on Outpost? Yeah, yeah. So no news on Outpost today, obviously, but we're working very closely with AWS to enable the VMware Cloud on AWS Outpost model second half of this year. And the customer interest has just been fantastic, right? And in many ways, it's basically the exact same value prop of VMC on AWS in terms of- Reverse. But in reverse and anywhere you want, right? At your doorstep, right? Any edge or any data center. I got to ask you about, back to the AWS relationship. We're big fans of it, always have been learned from both sides and believe in it. Having said that, EC2 is the bread and butter for Amazon, despite its hundreds and hundreds of services. That's where the revenue comes from. And compute, your compute business is significant. So my question is, is it a zero-sum game long-term? Or when you look at the TAM, do you see all these other services that you can sell longer term, providing the growth engine for your respective companies? Or does this whole rising tide lift both boats? What are your thoughts on that? Yeah, I mean, it's clearly a rising tide lifts both boats. I mean, again, I always bring it back to the customer, right? Because that's the way I like to view the world in AWS. And you've got some evidence now. That's why I'm asking you. Yeah, and I mean, what you're seeing is actually, I mean, if you take some of these customer examples, let me give you one from the UK. So, stagecoach, I don't know if you've heard about these guys, but they're a major, so they provide transportation services in the UK and other countries as well. So they run a network of buses, trains, and they're responsible for the transportation of three million commuters every day in the UK. So they have this really mission critical application that they're building that is basically responsible for scheduling those buses and those trains and scheduling the conductors and the operators. So you can imagine this application is super mission critical for their business, right? And they chose to run that application on VMware Cloud on AWS. And one of the reasons they chose that is because we have a unique capability called stretch clustering, which says, hey, even if there's an issue in one AWS AZ, we can restart that application in a second AZ. So there's a really good reason for the customer to choose it, but now back to your question, right? If you think about the opportunity in that for both VMware and AWS, it's meaningful, right? For us, we're selling the entire VMware Cloud on AWS service to that customer across those two AZs for a mission critical workload that's core to their business. For AWS, they're able to, of course, not only supply the infrastructure that we run on top of, but also as that customer looks to do more and interesting things, they can attach additional native AWS services, right? So I think that's a great example where delivering value to the customer, and if you focus on that, the right things will kind of flow back to the companies that help make that possible. And partnering helps you reduce friction and get to market faster. Thinking about the intense effort that both, you know, Pat's described, Andy Jassy's described, you've described. In terms of that partnership, that deep engineering, can you do multiples of those? Or is it, you don't because of the respect for the partnership, or is it just too intense and it's too resource intensive? How many of these types of partnerships can you actually have? Well, I mean, I think Pat has said it pretty clearly, right? I mean, AWS is our primary preferred partner, right? And what we're doing with them is very unique, right? And it's something that we want to make sure that we have the right level of investment in and that we do an amazingly good job of, right? And I think they feel the same way. And so having that focus together between the two companies, I think is what has allowed us to be, you know, achieve some of the level of success we've had to date, and we expect to do that going forward. Mark, final question for you. What's your objective this year in your business unit? What's your focus? What are some of the things that you're working on that people should know about? Yeah, so first of all, on VMware Cloud and AWS, just to wrap that up, I think the big thing we're focused on going forward is really this modernization kind of piece of the story. How do we enable native Kubernetes in the service? How do we enable ML and AI workloads in the service? How do we do a better job of connecting to all of the AWS services? So you're going to see a big kind of focus there. Beyond VMware Cloud on AWS, I mean, we're really excited about bringing this VMC model back on-prem, both with Dell and on top of AWS Outposts. I mean, the customer interest has been fantastic, right? And you think about all the reasons that customers want to be able to run their applications on-prem, data locality, latency, compliance, all sorts of really good reasons. We think that those services have really hit a sweet spot of that market. IT is a managed service. What an interesting idea. Don't you think, hey, home on the level, same game, whole new ball game, right? Absolutely. Mark, thanks for sharing your insight. Congratulations on your success and we'll be following it. VMware Managed Solution on AWS, certainly a big hit. Changed the game for the company and now they're bringing it to Dell EMC, among other potential business model opportunities for customers. As Cloud 2.0 comes, it's theCUBE's coverage. Live at VMworld 2019, be right back with more from San Francisco after this short break.