 Okay, we're live here in VMworld 2013. This is SiliconANGLE and Wikibon's the cube, our flagship program. We go out to the events, it's struck the signal from the noise. I'm John Furrier, the founder of SiliconANGLE. I'm joined with my co-host Dave Vellante from wikibon.org, co-founder. Dave runs the free open source research group, wikibon.org for all the free research. And go to siliconangle.com for all the tech news, covering around cloud mobile and social. But we're here live in San Francisco, California for three days of wall-to-wall coverage of VMworld 2013. Dave Vellante and I have been here now, what, our fourth year doing VMworld here in this spot in Moscone, South, four years ago. The cube came to VMworld, Palmer, it's laid out at that time, the architecture of what we called the software mainframe, Dave. But this year, a lot of action, we're here live in Moscone for three days of VMworld coverage. So stay tuned, stay with us for three full days, and we're going to be here interviewing all the thought leaders, CEOs, experts, partners, companies, entrepreneurs, bloggers, influencers, to get the signal from the noise here, what's going on in the enterprise. And also we've added a new feature this year, go to crowdchat.net, crowdchat.net slash VMworld, and participate in our thought leader community where we'll be documenting live the transcript, it's live tweeting, also live to LinkedIn, where all the thought leaders will curate the best content here at the show live, and becomes the official transcript of record for VMworld from SiliconANGLE and wikibon. Dave, we're in Moscone, San Francisco. The theme this year is we were talking yesterday and then the Wall Street Journal actually penned a story, almost the exact same story we were talking about on the phone yesterday about change. The industry is going through massive change. You're seeing really massive disruption. The transformation that we've been talking about for three years is actually happening. You're seeing big companies like HP having a tough performance, changing management, executive management, IBM, shifting their gears and turning that ship. And obviously the big news this past week is Microsoft has announced that Steve Ballmer will be stepping down and resigning in the next 12 months. This is proof positive that transformation is happening. This change is affecting everybody and it's about the cloud, it's about new economics, it's about the modern era. This is stuff that we've been talking about. Well, it's kind of ironic, John, the theme of the show here is defy convention and VMworld's gone mainstream. I mean, it's the heart of IT right now. So in a lot of ways it's becoming convention. Even though I think what VMworld's doing is celebrating 10 years of innovation that really has disrupted the old client server. Pat Gelsinger said today, and his keynote, the data centers of today are the museums of the IT past. Talking about the glass house and the raised floors and so forth. But the reality is that we are entering a new era. VMworld's sweet spot of course is the core infrastructure. They've made some announcements today to shore that up. But the big looming battle, John, the convention defyers all about cloud and VMworld is playing its hand with what it calls true hybrid cloud, compatibility across networking, across the hypervisor, across security, across policy and GRC, et cetera. That's like to say the new battleground that VMworld is putting forth. Yeah, and the 10 years of celebration really is ironic at the same time. Interesting because 10 years is a decade. It seemed like a long time and a lot has happened in the past 10 years. The rise and fall of Microsoft in terms of some of what things they've done. You've seen in the evolution of truly the cloud. If you go back even within that decade, you saw the iPhone hit the scene, that changed the whole application landscape. Amazon has absolutely set the standard for disruption and innovation at the same time. That to me is ultimately the main force that we're seeing at the cloud. And that modern era, Dave, you talk about the museum of IT, that glass house data center mentality. Those infrastructures are morphing and continue to change at a pace we've never seen before. And the thing that I want to point out is that this show now, this year, 10 years, it's a whole new VMware. Pivotal was spun out. Paul Moritz left VMware and is now running Pivotal, which is more of a big data application-centric software developer mindset. And VMware with the leader, Pat Gelsinger, Cube alumni has been on many times. We'll have him on Wednesday morning at nine o'clock. First thing, so look for that, is leading the charge. And VMware is a cloud company. They are an infrastructure company. And all this commoditization of the infrastructure layer and the development of platforms is grounded, as we always said, Dave, in software. So this 10 year mark defying convention really is about thinking differently. I mean, I think if they could use that phrase and didn't want to copy Apple, I think that that's what VMware's trying to do. And thinking differently and defying conventions about software, moving up the stack where applications are driving the standards. And if you remember, I asked Pat Gelsinger at EMC World like three years ago. Which comes first? The applications of the infrastructure. Which drives the innovation? It's clear that the applications are now driving that standard. The data centers are no longer telling the applications what to do. The applications are telling the infrastructure what to do. That is driven by virtualization. That is driven by software. And that cloud is the expandable, extensible infrastructure. That is a done deal. Now it's who's going to do what? Well, what's interesting to me, John, so VMware's got a three-front war going on. War or slash opportunity. So the first one is, of course, their core infrastructure business. A lot of talk about Amazon coming after that, but more specifically OpenStack. And of course, the second, you hear a lot of talk within VMware circles about cloud, mobile, social, and big data. The first time I ever heard those four terms tied together was many, many years ago. You use them. Now everybody uses them. And it's a fundamental part of strategic plans for a lot of IT vendors. And I think specifically, a lot of people ask, why is VMware even in that end user computing space? And I think it's because it's got to have a mobile play. A lot of people think it's maybe, takes them a little bit off their core focus, but nonetheless, there's a big part of their $50 billion TAM is going beyond the PC era. And then of course, the big prize is the cloud. And VMware's clearly playing its hand. It announced its vCloud hybrid cloud service today. It sort of unveiled at last January at the financial analyst meeting, but it's GA now. It had up in the States today, had a city GE and eBay as customer references for their networking virtualization piece. So what we're looking for now is okay, who are the references for the vCloud hybrid service? Proof points, that's really what it's all about here. Let's, before we get into the Pat Gelsinger keynote analysis, I want to just say to the folks that if you're watching and you're not at the show, go to crowdchat.net. We're putting questions up there. All the thought leaders are going to be weighing in. Get your voice registered on the record. Couple questions out that I want to highlight is that we're going to ask on theCUBE this week is, one, is cloud open source software a standalone market? Or will it be embedded in hardware in the new cloud model? And do customers care, Dave, if software is embedded in hardware? That's a question. Go to the crowdchat.net slash VMworld, weigh in on that. That's a question we're going to be following heavily. And then the other question at the top is, how does VMware grow in the market without poisoning their ecosystem? Lots of questions from partners. We will ask this on theCUBE this week on SiliconANGLE.com. Those two questions, Dave, open source software. Obviously it's going to continue to grow and expand. But is it a standalone install model? Will it be bundled with hardware? These are the kind of questions that customers want to know and functionality ultimately might win. So with all that and with the ecosystem, what is Pat Gelsinger saying on the keynote? What's your analysis from the keynote? So Pat basically spent some time today talking about the whole open stack piece. Let me just say, David Floyer and Stu Miniman at Wikibon just released a piece of research. And one of the questions they asked is essentially, who's going open? Who's going dogmatic open source versus how many customers are willing to risk lock in to get simplicity and function? And about half the customers said the latter, we'll take the risk of lock in, we want simplicity and function. And only about 15% said we're going to be dogmatic about open source. It's early days for open stack, but nonetheless, Pat Gelsinger said today, we're embracing open stack, we're going multi-hypervisor, we see that many of our customers want the single solution, but many others want this open source movement. So we're going to go there. So I mean, I think VMware's being smart, John. I mean, I think it saw the potential threat that open stack provided. The big difference today between large companies and those of 10 to 15 years ago, large companies today respond much more quickly. They don't stick their head in the sand when they see a threat. They try to embrace that threat and then co-opt it essentially. So one of the big stories this week will be the ecosystem. Obviously as with all this change theme, obviously we talked about the change in the industry, VMware's positioning themselves for the cloud and the enterprise cloud. Dave, obviously the ecosystem has been a big part of VMware over the past five years. I mean, before that is really the hypervisor, huge penetrates in the enterprise, but the past five years has been about VMware being a platform for the enterprise. The hypervisor is now becoming commoditized. What is your take on this ecosystem opportunity for VMware? Honestly, you got to either embed it all in or be decoupled and let the ecosystem do its thing. There's a lot of poisoning potential conversations about VMware. It's a delicate balance. What's your take on it? Well, I think you're right, this is a delicate balance. VMware is walking a fine line and of course EMC has this federation, right? And VMware made announcements today, both with Pivotal and within Cloud Foundry being available on the vCloud hybrid service as well as EMC with the virtual sand, the vSAN. So you're seeing two federation partners now, Front and Center and the major announcement mojo. But as well, Pat made a big point of putting up all the logo slides of the ecosystem and you had everybody on there, certainly Cisco and NetApp and HP and IBM and all the other culprits, FusionIO was up there. But we spent a lot of time this morning hearing about NSX, essentially the NYSERA with a little bit of VMware organic stuff thrown in, essentially moving from compute virtualization to network virtualization. So bringing in a layer, an abstraction layer across the networking component, really going at the heart of the business of one of VMware's major partners and of course that's Cisco. So what do you think about the VMware opportunity here? What are we going to hear this week? Do you think from VMware? Obviously the ecosystem's going to be one message, but also how they put their solutions together. The enterprises want function, open source has been a big part of it. We've heard Pat Gelsman's view on Hadoop. He said there'll be no red hat for Hadoop. Everyone has their own distributions. You know, there's an argument that standalone software, open source software is not a viable market. And you know, obviously Horton works cloud-era betting on that but with the mission towards functionality, this might be a shift, a seed change for some of the enterprise vendors. And again, this might be an interesting thing for HP whose earnings were impacted by server storage and networking performance this quarter. What's your take on that? I'll give you my take on it. I want to get yours. The competitive dynamic is very interesting here, John. You got a 10th anniversary of VMworld. It's a 15-year-old company. It's a $5 billion company with a $38 billion market cap. So it's a substantial player in the market space. Its goal is to virtualize the 100% of the applications on the planet. You mentioned earlier, John, the software mainframe. Essentially, VMware is doing just that. It's building out the software mainframe, virtualizing compute, storage, and networking, and ultimately apps, building in security. The big difference, of course, is the external cloud. But so VMware sees a $50 billion total available market and it's going after that market and the way it wants to attack that market is to essentially be the best at core infrastructure. It's an infrastructure software company at heart. And it has to stay ahead of companies like Microsoft and obviously now OpenStack in that core infrastructure service. So its play there is to have more function, more integration sooner in the marketplace than anybody else. The second play there, obviously, as I talked about before is end user computing. It's got to have a mobile play and then, of course, the third is the big cloud play. So I think that you're going to hear about those three things. You're going to hear a lot of proof points in the core infrastructure. I mean, that is VMware's sweet spot. I think you're going to see more and more on NSX now, the networking piece. That's a big opportunity for VMware to disrupt networking infrastructure the same way it disrupted compute. And, of course, storage is a little bit more interesting, John, because storage is both complex so it's really, really hard. It's disrupted by virtualization in a big way and the EMC factor. So you've got this ecosystem play going on. So that's a little fuzzier in terms of how the ecosystem evolves. David Florey calls it a cartel. We saw the cartel slide go up this morning when Pat was talking about storage. It was all the large storage players, the large established storage players, the little innovators sort of, you know, according. And so there's a balance between innovation and functionality. So I'm really watching the hype factor on software-defined data center, but more importantly, what's going to be the leading indicator for the reality of the software-defined data center? Is it going to be storage led or is it going to be networking led? Certainly the servers are going to be continuing to be deployed in the cloud. You're going to see flash integration in the servers, but to me the real enabler, Dave, is going to be the action at the storage or networking level. Software-defined networking is obviously moving fast. You see NSX announcement here coming in with VMware. That's going to be a big thing. We're going to watch how that plays out. Is it going to be an underlay or overlay network? Are they separate? Are they together? Strategic questions for VMware. So we're watching that. Storage, software-defined storage. We'll hear from NetApp, EMC, others. That's a big push. And all of this sits within the fabric of the data layer. So again, to break that down is that the software-defined data center is a destination. It's being marketed heavily. Large enterprises are moving to the cloud. And that's what it's all about here for me. And what does EMC do? What does NetApp do? What does HP do? And how does VMware deal with their frenemies? Their friends and enemies at the same time. So I think you write on about this notion of storage and networking. So little levers can move big stones, right, as they say. And so you saw the NYSERA acquisition, even though it was a billion dollar plus acquisition, but also VMware made an acquisition of a company called Versto earlier this year. So you've got, in NSX and NYSERA, you now got the networking lever. And VMware building out its storage virtualization. So essentially what it's doing is it's co-opting the layer that is the control layer for it's got compute, now it's going after networking and storage, and it wants the layer and automation and management component over that. Yeah, the other thing we're watching is the ecosystem of startups. To startups, as we always like to look at is the indicator of where the innovation is. And as we always talk about innovations, what make technologies companies stay differentiated and stay ahead of the game. And ultimately, the bets are being made. We're going to have Jerry Chen on from Greylock. He's a new partner at Greylock General Partner. He was a VMware executive. He did ESX, he did a lot of things at VMware, get his perspective. But the thing that I'm watching are the bets already made in the enterprise? Okay, so that's one area we're going to look at. Any new opportunities, white spaces for startups. Two, does age matter? I mean, just on Facebook today, I was commenting to a post written by the CEO of box.net. And it was just kind of like, you know, an analysis of Microsoft. He's 28 years old. Windows 95 was taking the initiative, Simon Storm, when he was winning science fairs in elementary school. And so, but this new blood of CEOs are coming in. Is that viable in the enterprise? Can the young CEOs be the new guard in the enterprise? Or does experience matter, Dave? These are real questions that investors want to know, that customers want to know. Well, I got to ask you, John. So, Bomber, he's been with Microsoft for three decades. He was a CEO for what? Well over a decade, about 10, 12 years. Let me ask you, did Bomber do a good job in his tenure? Absolutely. Steve Bomber was obviously one of the founders of Microsoft the early days. And when Bill Gates stepped down, that was really to me part of fatigue. And as, you know, I did compliment the post by Aaron Laby, the young CEO at box was, you know, and we've talked to this on theCUBE. You know, after the DOJ neutered Microsoft, it really took the soul of Microsoft away. And since then, they just haven't been the competitive engine that they once were, or monopolist that they once were. And since that time, they were mostly shepherding the company. So you really haven't seen the breakout. So Bomber did a good job. But the thing that Bomber really screwed himself on was, he missed search, okay? He missed a lot of growing markets that would redefine the company. He missed mobile. He called the iPhone. He said about the iPhone in 2007. Oh, that'll never work. You know, the touch screen and swiping. I mean, this is just the kind of reality he's living in. They produce billions and billions in dollars of free cash flow. So to cannibalize their own, it's just a mindset. And Bomber was just not the right guy for that to go forward. So to me, it's a good move that he kind of steps aside, and we do need new blood. The question is, is it, what kind of, does experience matter? Well, so Bomber faced the classic innovators dilemma, didn't he? I mean, it was, he was taking over the ship at a very tumultuous time. And, you know, one measure of success is cash. Microsoft has over $70 billion on the balance sheet. It's got gobs and gobs and gobs of cash. So it can get into virtually any market that it wants. So despite the fact it failed in search, it's failed in mobile so far, et cetera, it's still got tons of money. And so does experience matter? I think it does. I mean, I think it does to the point where if the person in charge is willing to try new things, it has a let's try attitude, then experience is vital. So I want to just put a plug out there for the folks watching. Go to crowdchat.net slash VMworld. That is a live chat room that goes to Twitter. So it's like a tweet chat, but also works on LinkedIn. So log in with your LinkedIn handle. That's where the thought leaders are. A lot of good questions there. And post a question or comment and then people will thread on either. If you want to reply to someone, make sure you reply to their thread. But Dave, there's a comment on there from VSoft. Probably an anonymous handle. Big surprise, Cisco is absent as a technology partner in NSX. So obviously Cisco has an interest in networking and with virtualization, that's going to change their business. Big surprise, no, no surprise. Cisco is retooling, but here's the issue that we're talking about again with software. And this is going to be a fundamental philosophy, religion, whatever you want to call it. It's kind of like the Democrats and the Republicans of technology. What do you believe in? I believe Cisco thinks that the software should be free and you charge for the hardware. That's an approach that I see Cisco taking where others are saying, we'll give you the hardware and charge you for the software. Those are fundamentally different approaches and this is going to be which one resonates. And I think if you're Cisco, you're late to the party, you got to be disruptive. So I think Cisco clearly might be looking from the outside in on this one, but has a few moves of their own that we're going to be watching. First it was right. There was absolutely no mention of Cisco in the whole networking discussion and so that was sort of an obvious, I wouldn't say omission, sort of an obvious statement that VMware is making. But as I said before, it's taking the paradigm of compute virtualization and applying it directly to network virtualization. Martin gave a demo, a very simplified conceptual demo, really wasn't a technology demo, what is NSX? And it's like ESX except it's targeted at networking. As I said before, the storage is a bit more convoluted and I don't know if that's because VMware's trying to preserve some of what David Florer calls the cartel or it's just because storage is so complex. Okay, we're here live in San Francisco, Moscone South. So if you're at the event or you want to stop by later, we're at the hall, Moscone South in the lobby. So you don't need a badge to come in if you want to say hi to theCUBE or if you want to have an opinion, go to crowdchat.net slash VMworld and vote on the threads that you like and we'll be taking comments and questions through crowd chat. Also folks that are thought leading in there, there might be room on theCUBE for commentating. I'm going to watch that and see what the crowd says, Dave. The votes will come in and they will rise to the top and you can see the threaded conversations. Respond to threads that you like or if you want to post a question or a comment or a particular thought leading position, log in with Twitter or LinkedIn and post it. Dave, in summary, what I'm looking for this trip and I want to get your take is where's VMware going? Okay, what are the other companies doing? What are the horses on the track? Who has the wind behind them? The shift is happening, the transformation, debate is over, cloud is disrupting, IBM, HP, Microsoft, they're all kind of shifting. What's the ecosystem look like? There is a massive reconfiguration going on in the industry, in the enterprise market and we want to find out who's got the wind at their back, who's tacking their boats, where are their sails and love to get your take on that. I think VMware is attacking from a position of strength that's got momentum. It's a $5 billion company, as I said, it's got a $38 billion market captive. It's got 500,000 customers. It's got, there are 40 million virtual machines installed. That's an astounding statement about the loyalty to VMware. You go to any VMUG and people absolutely love the technology. So they're coming from a position of strength and they're going to use that to, one, shore up their core infrastructure business. They've got to keep the lead ahead of in particular Microsoft, but there are others, OpenStack, et cetera. They're going to embrace OpenStack, but it's got to maintain that lead in vSphere, that functional lead. And that's what VMware's going to spend a lot of time and a lot of effort and a lot of money and I think they will succeed in doing that. VMware is the dominant hypervisor today and I think it will remain the dominant hypervisor for the next three to four, for the foreseeable future. The second piece is cloud, the jury is still out on the whole vCloud hybrid piece of it. VMware has to prove that it can compete effectively with Amazon, that it can build with its ecosystem a comparable level of service of simplicity to Amazon. Everybody pokes Amazon for SLAs. You know this, John. We've done a lot of these events. They poke Amazon for SLAs, they poke Amazon for security, but the fact is Amazon's moving faster than anybody else in that marketplace. They've got more function. They're focused on things like security and compliance and governance and so it remains to be seen. Who can take those guys on? I mean, Gartner came out with the Magic Quadrant last week with cloud service providers and you can see Amazon stands alone, you know, according to Gartner. Like no other Magic Quadrant, you can see they extending their lead. So VMware's got a lot of work to do there. And I think similarly with end user computing. I think while there are some good proof points and some good examples, we need to see more. Okay, we're here live at VMworld and we're going to get all the data. Before we wrap up this intro, they want to ask you about the Wikibon research you guys put out. I mean, honestly, the surveys are a big part of what you do in getting the data and sharing that folks on the free research on wikibon.org, but you guys just did a study on the hypervisor and Microsoft's growing significant. Where's KVM standing and all that? What's OpenStack look like? And obviously VMware as a leader. What's your findings from that research? Yeah, so the title of the piece was VMware Dominant and Multi-Hypervisor Environment. So you can just Google that in Wikibon. But basically what it was is a survey of Wikibon community members as well as a refresh of the VMware integration study that we do every year. And here's what it showed. VMware is the dominant. Everybody knows that. But when we look toward momentum, other hypervisors had momentum, but they're growing from a much, much smaller base. So even when you take that into consideration, VMware is well over 70% of the action today within the customer base, moving to declining into the high 60s. So it's still the dominant hypervisor as you look forward. Growth rates in VMware, 20, 25%, kind of tacking the company's growth of 15 to 20% overall. You're seeing others like Microsoft growing much, much faster, 50, 60%. The other significant piece there is you're starting to see mission critical applications really are becoming mainstream for VMware, not so much for other hypervisors. You're seeing a lot of VDI, a lot of desktop infrastructure for things like Hyper-V. That's really the only place where Citrix Zen seems to have any traction. And OpenStack obviously is an area that people are looking at, as I said before, about 15% of the customers are looking at OpenStack as sort of a viable option that they're going to pursue. You're seeing, as well, you're seeing KVM in the cloud service provider space. So that's, to me, that's a big one for VMware, is can it attack the cloud service provider space with its homogeneous hypervisor strategy? Got a big day, wall-to-wall coverage. This is day one. We're going to try to maintain our pace and excitement. We're really excited for VMworld 2013 in San Francisco. Again, this is theCUBE, our flagship program. We go out to the events to extract the civil noise. I'm John Furrier, Dave Vellante. We've got a great guest of lineups, all the top executives here, all the top companies, CEOs, startups, thought leaders here inside theCUBE. Stay with us all day, siliconangle.com or siliconangle.tv. And of course, try the new crowdchat.net slash VMworld and get your voice heard on there. We'll be going to that and taking comments and also highlighting the key voices that aren't here. If you want to be part of VMworld, go to crowdchat.net slash VMworld. I'm John Furrier, Dave Vellante. We'll be right back with our next guest to kick off VMworld 2013 live in San Francisco. This is theCUBE, be right back.