 The Cube at OpenStack Summit at Lata 2014 is brought to you by Brocade. Say goodbye to the status quo and hello to Brocade. And Red Hat. Here are your hosts, John Furrier and Stu Miniman. Okay, welcome back everyone here live in Atlanta for the OpenStack Summit. This is The Cube, this is our flagship program. We go out to the events and extract the signals from the noise. I'm John Furrier, the founder of SiliconANG. I'll enjoy my co-student Miniman, from Wikibon Analyst, and our next guest is Alessandro Perilli. That's very good. Okay, say it. Perfect. Okay, perfect. You are with Red Hat Open Hybrid Cloud Program Office. Former Gartner Analyst at Red Hat, obviously doing really well right now. If the Red Hat Summit was fantastic, we had The Cube there. Red Hat has got certainly a big bench of talent. You know, ex-deck guys, strong chops and systems. Obviously Linux, Linux is in the enterprise. What's your view of the landscape with Red Hat, because you're coming in as an analyst. You get the keys to the kingdom. Look at the strategy. That's right. Where are you going to drive this bus? So my role, like I read that, is to be sure that the different products that we have in our portfolio come together into a coherent solution that we call Open Hybrid Cloud. And be sure that this solution is engineered in a way that makes sense for customers, right? The one to deploy a cloud, the one to deploy private cloud, the one to deploy hybrid cloud. So what I'm doing right now in this moment is reshaping the narrative, reshaping the message for Red Hat. And be sure that the new message makes sense to reflect this integration between the different products that are available on the market. Certainly, my position at Gartner gave me a lot of visibility and a lot of insights about what other players are doing in the market. So it's challenging for me, right? It's very challenging, very fascinating being on the other side of the table and trying to figure out what is a message that is really differentiating from what other 50, 60, depending on your taxonomy vendors are saying. I mean, the game is still the same for you. It's still analyzing, you're synthesizing, you're reading the tea leaves, you're connecting the dots. But now you're working internally with the product teams and now go to market stuff. So what do you see for the opportunity for Red Hat? I mean, obviously, there's this huge middleware battle at the past layer, obviously everyone's been talking about. Docker with containers is disrupting, even kind of here, even though Josh McKinney was saying that's where Docker hasn't stole the show, it's certainly an undercurrent, this containerization. There's a lot of action going on. It's kind of a quiet chess match being played in the industry. How do you see that playing out? So I believe that we are fundamentally three different playgrounds, right? Three opportunities. One of them is infrastructure as a service and with our OpenStack offering. Another one is platform as a service with OpenShift. It's certainly a third one is the Cloud Management platform with CloudForms. And yesterday, as you probably know, we announced the open source version of it that is called Manage IQ. So I believe that we can play on these three fronts. There's plenty of opportunities for all the three. There are three markets that are emerging. There are no many players that made significant penetration in the enterprise market, for example. And so I believe we have plenty of opportunities in these areas. And I also believe that the market is so big that we don't necessarily have to win over other players to get a relevant revenue stream, right? It's not necessary for us to win others to lose. This is a key message and important thing that I'm trying to communicate to customers. So Red Hat's making the market at some level. You guys have Linux background. You're in the enterprise. I mean, customers that we talk to, I certainly, you know, Wikibon has a huge practitioner of CIOs. You know, I've talked to a few of them, like, hey, I got Red Hat in here and I need someone to support it. That's that big vendor over there. And so I'm not going to go with Amazon. I need OpenStack. And like, well, you know what OpenStack is? They're like, well, I know it needs to work at Red Hat and needs drives. And I got NetApp and EMC and all this stuff. So it's a legacy environment. It's not that clean relative to... Okay, so I believe that so far vendors in the industry and probably this is, again, the former gardener analyst talking more than the Red Hat. Made a fundamental mistake in trying to position OpenStack to the enterprises. The tone we use, the kind of messaging we use, all of us, right, so far, sounded very much like a binary choice, meaning to embrace the new war, you need to give up your legacy war, your traditional war, where you made the large majority of your investment so far. And that message for large enterprise doesn't resonate well. I believe that's very alienating. I believe that is out of touch in many ways, right? And so when we look at how customers are investing in cloud infrastructure and cloud management platform, it is a multi-year investment. There's sometimes million dollars of commitment. And to do that in sort of investment, customers are looking into business partners, not just solutions that solve a tactical problem, right? So if you say to a customer, OpenStack requires you to embrace the new war, the scale-out war, the non-persistent war, right? Or the new cloud applications. And you need to forget the traditional scale-up application. That doesn't resonate well with customers. I believe that there is a better way. I believe that Red Hat is reshipping the message to tell a story that is slightly different to that. And Position OpenStack as the next step, right? The evolutionary step as part of a journey, moving from traditional application to new cloud application. And I believe that rather than say, this or that, the new war versus the old war, there is a way to say the traditional war, that the new war can coexist together. And it can be managed under a single pane of glass, which is the cloud management platform. So Alessandro, as we look at OpenStack maturing, one of the attacks I've heard is that really what this is is a bunch of infrastructure companies trying to maintain relevance as cloud grows. I don't think that attack can be leveraged at Red Hat because Red Hat, it works in lots of different cloud environments. You argue it's a software company, you're open source at its core. Why is OpenStack important? How important is OpenStack in Red Hat's overall cloud strategy and can you expand into that? So the overall cloud strategy that we have is in part, as I say, supporting customers in this evolutionary journey from the traditional applications to the new applications. Now, when we think about new applications, right? It's two full kind of problem. The first part of the problem is that you need to re-engineer the application to be scale out, right? The second part of the problem is that you need to have an underlying cloud infrastructure that can support the kind of scale out model. And you can do that fundamentally two different layers. You can do that through infrastructure as a service platform or you can do that through platform as a service kind of solution. And we have a portfolio that includes all these different solutions. So we have a bucket for traditional virtualization. We have an offering for pure plain infrastructure as a service and another one for platform as a service. Which means that no matter what is the decision of the customer, we are going to support the way they are going to re-architect applications or portion of those applications. So to us OpenStack is very important because it's one of the building components that are necessary for this evolutionary journey. We're not forcing customers and this is why our portfolio is so diverse. We're not forcing customers in one direction over another. We're saying no matter what is your architectural decision, we have the right platform to support you. So can you talk a little bit about the opportunity in front of Red Hat here? Obviously Red Hat's been very successful in Linux but it took a decade to get over that billion dollar mark. Are we looking at similar time frames for cloud? I don't believe it's possible. I believe that certainly the... So let me say two things. The first one is that it's certainly true that the cloud market is emerging. Compared to what we say overall as an industry or the perception that we project outside as an industry, this is an emerging market. It's in the early stages. So there is a lot of room for growth. There is a lot of opportunity for all vendors to establish themselves in terms of market share, in terms of business opportunities. So it may take some time. It's not a market that is ready to be won today, right? It's a market that is evolving over the next, I would say three to five years. This is part of the problem. The other part of the problem is that or the other part of my answer is that this is not the same kind of dynamics that we saw with the Linux coin mainstream. This is much faster world. We are almost in 2015. The way we approach and consume technology is completely different pace compared to the past, right? And so I wouldn't expect Reda to establish as a leader in cloud infrastructure, cloud solution, a cloud management platform in 10 years like it happened with Linux. I would expect this to happen much faster. What do you think that's going to happen from a Red Hat standpoint? In terms of advice, let me ask the question this way. What advice are you giving Red Hat now that you're on board with strategy on navigating the landscape in terms of what are the key things that they need to knock down and be successful doing and what things do they need to avoid doing? So what we need to do first and foremost, we need to start thinking in terms of solution oriented company rather than product oriented company. There is a very strong engineer follows which is our strength, no question about that. There is an immense value in that. But there is, historically speaking, a lot of focus on products rather than on the overall solution. It is something that doesn't sit well with specific kind of customers in the large enterprise market. So the first advice that I gave to Red Hat before being hired and the same advice is still true today is that we need to focus on the solution and think about products in the context of a solution. So all the products need to be engineered to work together and needs to be described to customers in context of a big picture. This is the most important advice. This is what drives the strategy in terms of how we market the products in terms of how we engineer the products but also in terms of how we make acquisition, for example. Because the moment you have the big picture in mind and you execute that big picture you start to look at companies from a different standpoint how they can fit the overall solution that you have in mind. So be more strategic acquisition compared to tactical choices. So the big thing at the EMC world last week Stu and I were at was the big messaging from Pivotal and they obviously had the Cloud Foundry which they spun out of a different foundation which is a whole different question we'll get to that in a second. But the Linux of Cloud is the big positioning that everyone's taken. Everyone's trying to co-op that position. You guys have Linux in your back pocket. Who is the Linux of Cloud? Is there a Linux of Cloud? Is it everyone? Is it Red Hat? Is it the world? Is it open? Is it free? Okay, so this is again a tricky question for one reason. We need to be extremely careful. All of us as an industry to not confuse what is the hype, what is the press noise, right? The analyst noise, even our own noise when marketing with what is the real penetration in the market, okay? Which is very different thing. There is not, in my opinion today, a Linux of Cloud yet, okay? If we look at what is the penetration on the market, there is not yet. There is certainly no opportunity for Red Hat to become the Linux of Cloud. There are different dynamics at play. It's a different challenge that we need to win. So it's not going to be exactly executing the same playbook that we executed 10 years ago because otherwise we would already have won, right? By the way, and we're talking about this. It's a different software. You installed it there. Now it's all automation. You got DevOps driving a big part of it. Yeah, but there's also a difference in what customers want. There is much more, I would say, awareness about competitors. There is much more demand for specific capabilities compared to the past. There is much more desire to avoid looking. There is plenty of reasons why the playbook that was used with Linux is not applicable anymore in today's world. Also, it's more mature. I mean, enterprises have compliance. They bolted on some existing legacy and sometimes positive compliance type of things. Right, it's more, I would say, complex and sophisticated. It's just not more mature in the sense of more aware. Yes, yes, definitely. Definitely strict. So Alessandro, Red Hat has lots of partnerships, has a broad ecosystem. So you guys on stage this week with Alexa Dell and SolidFire, when we look at OpenStack, there's a lot of companies that are building clouds. Red Hat's not one of them. Can you talk, what do you see kind of a landscape out there? What do you mean no building? So, I mean, you guys aren't having a Red Hat cloud that I can host all of my environment on. Or are you? I mean, I'm- Oh, you mean an infrastructure as a service, public cloud, do you mean that? Or public infrastructure, or, you know, some of them are blurring the lines. I mean, obviously AWS kind of blurs that lines. But IBM and HP, you know, good partners are Red Hat. Right, you know, have their public offer. So for now, we have a public cloud infrastructure that is platform as a service, which is the OpenShift online platform, right? Yes, it's true. We don't have infrastructure as a service public cloud. I'm not sure I am marching to my new job to comment specifically on this point. Certainly, I would expect Red Hat to make strong partnerships. Let me say this, okay? And this is very outside of the Red Hat perspective. Let's try to take all this from a very unbiased position. There are two ways to solve this problem. One is that you become a provider, okay? You are a provider, you offer a platform, and you try to win customers in adopting that platform. The alternative is that you try to be the wide label software, the multiple service provider, are using, okay? And you try to be the hybrid cloud provider. So in having a big adoption of your wide label solution, then you can sell the private cloud offering and say, we guarantee you interoperability between the two environment. There is an obvious enormous adoption for Amazon AWS, and there is enormous adoption for a number of different public clouds, but only this many. Enterprise customer, for example, tend to use in my experience two, three providers at most, maybe one or two infrastructures of service, one for platform as a server, and a certain number in software as a service, right? So I don't necessarily, but this is Alessandro, this is not in this moment representing Red Hat because I'm too new to the job. I don't necessarily believe that going out and becoming yet another public cloud provider, at least for infrastructures of service is the best possible choice that we have. So just following up on that, how do you sort through some of that co-opetition because you have your partners that have their own distribution now and it looks like Red Hat is trying to be a leader in the distribution market when it comes to OpenStack. What's the role of the distribution going forward? So first comment is that maintaining the distribution is incredibly hard. It's a lot of work. There is a lot of aspects you must look at. One of them is certifying the component in a way that the enterprise is expecting to see and one is fostering an ecosystem around the distribution. And even before there's two things, there is a credibility issues, right? Red Hat is a trusted, probably the most trusted vendor providing open source solution for enterprise customers. Yes, there are many companies, many organizations that can go out and develop and sell their own distributions, but very, very, very few, okay? Can count on a large credibility for potential buyers. That's the key, I believe, along with the ecosystem and certifications. Well, Sandra, tell us what's going on with the news. To see what's a quick update, obviously you mentioned at Manage IQ being open source. What are the things that Red Hat announced at the event here? So one of the things that we announced is that we are taking our commercial cloud management platform, which is called CloudForms, we are making it available as open source, okay? So Red Hat made the acquisition of Manage IQ as a commercial company almost two years ago, and now we are ready to release that called full and open source. So what we want to do there is to establish, we are framing this now as the cloud management platform for open stack clouds, but it goes well beyond that. We can manage clouds that are based on infrastructure, we can support Amazon and AWS. There is a number of options in terms of how we plug the different cloud fabrics together. We believe that this is a variable mode because nobody ever in this industry so far took an enterprise grade cloud management platform and released it completely open source. What we want to do is looking at the CMP market that exists today that has 30, 40, 50 different vendors and invite them to build value on top of our platform, on top of the code that we are opening, right? Manage IQ code rather than try to reinvent the wheel and everybody trying to compete for the same CMP solution, right? That few customers are adopting today. So tell the folks out there in your own words, my last question for you is, you've obviously been an analyst, you knew Red Hat, but you're very familiar with them, covering them. Explain to the folks in your own words why this year is so important from the confluence of all the different trends, technology innovations, why is it so exciting right now to be in the tech business? This is a very exciting moment to be in the tech business because what we're doing here is defining the architecture of tomorrow, defining the strategy on how to evolve from traditional application to next generation cloud application and the choices we are making from an architectural standpoint here are going to have an impact in the next few years to come and it's three to five years to come. It is a word that is full of opportunities, a lot of flexibility, a lot of offering and certainly it's very challenging but that challenge is the thrill, right? To be in AT this day. I had this conversation with a lot of enterprises when I was a gardener, one of the things the head of IT, Vice President of Infrastructure and Operational always told me was, I have so many challenges right now but it's so exciting because what I'm doing right now is going to have a long standing impact going forward and I believe it's true for me to understand. So in the industry, a lot of Kool-Aid injection here at OpenStack Summit, last night watching the party, certainly everyone's excited, 7,200 people. So 4,700 people here, whatever the numbers are math, I think 4,700 people. Is there a trough of disillusionment around the corner? Are we past that now? Are we coming into the trough of disillusionment? When does it kick in? When do we see the trough when we start moving into the real winning? The moment when we start to embrace different kind of metrics. I heard way too many times metrics like line of code contributed and we are number one, just to be clear, in terms of- Red Hat number one. Yeah, number one. So I'm saying something against the company. Everyone loves the leaderboard, but that's a metric. Yeah, but let's talk about different metric that makes more sense. The moment we start, we stop embracing those kind of metrics and talks about number of developers, number of projects, number of lines contributed and we start to talk about penetration in the different industries and size of deployments and maturity of deployments, meaning pilot, dev and test production. Real TAM numbers, maybe? Exactly right. The moment we start looking at those metrics to measure what is the real penetration of OpenStack, that's the moment we can be a little more realistic, honest and move forward in understanding what is taken. So we're not in the trough yet, in your opinion. No. We're going to get there, but that's always good to sober up a little bit and come out of it with some momentum. It always does, right? You found that? Okay. So we won't get to the magic quadrant question, but let's talk about it. Oh, I knew what this was coming. Okay. No, no, no. If you want to, we can talk about it. No, we don't. It's too early to tell. The horses are on their own track, as Dave Vellante would say. I always use the NASCAR example, though the race hasn't started, but I've always said in the intro, you guys have pole position, certainly with the breadth and experience in Linux and the penetration numbers of Linux and the enterprise. So you guys are in a good spot. Not guaranteed to win, it's yours to lose in my opinion and how you play that out with strategy and the partnerships, we'll see. But I want to ask you about Cloud Foundry and that whole Cloud Foundry foundation model. What do you think of that? What's going on with that? I mean, obviously you're not involved. Red Hat's not involved in that. People want to know what is Cloud Foundry relative to the other things out there in the past layers? You know that we have our own platform as a service opportunity, right? We have our solution. I'm not, the only thing I want to comment about this is I strongly believe, as I said before in this interview, that for us to win is not necessary that others have to lose. This is the only comment I have. This is a personal style of mine. I don't believe in being confrontational. I don't believe that the market is small, that you are not in this phase at least, that you have to fight the low cost to get business out of it. There's a growing market, there's plenty of fruit on the trees to pick your territory. So it's a matter of playing together in a fair way. I believe that we can do much better job in this direction compared to what we did so far. And this is the only comment I have. It's kind of like a Republican versus a Democrat. I mean, it's different orientations towards the view as you say, Cicely, saying, you know, see on the field kind of thing. But there's plenty of beachhead out there. It's not like there's a competing marketplace. I mean, at the end of the day, there's a lot of landscape that can be comfortably on their own little beach. Yeah, but the problem is that I believe there is too much focus on how you come across from a marketing standpoint and evangelism standpoint compared to be heads down and do real business. I believe that we are losing a little more, little too much to focus on doing business. So I prefer to focus on business rather than trying to go out and be confrontational. Well, my counter argument to that would be that you said, you know, the old Linux way is not the way you're going to win in the cloud. And there is a lot of noise. The competition for Red Hat is blowing a lot of smoke around with the marketing dollars. I mean, that's just a fact. Yeah, but coming from Garner, I can guarantee you that it's very clear to me there is a massive, what could be massive difference between what is the noise and what is the reality. So I tend to pay little amount of attention to the noise and focus what is the real meat behind it. Yeah, as we say, meat in the bone. That's what we always say. Where's the meat in the bone? And Stu and I are looking at, where are the customers? At the end of the day, last year was Vote With Your Code. I can appreciate that in the current stage of the business, but we're quickly moving into, where are the customers? Where are the use cases? How much penetration? So I totally agree on the metrics. So I think that's a great observation. I think that's when you start to see the health. Who's making money? Who's doing more financing rounds? Who's cash flow positive? Yeah, that's a real business. That's a business model. And one of the things, one of the first things I asked and we're establishing as soon as it was hired was to increase the amount of effort in evangelizing our customer references. Spending more time and describing what our customer wins, what they're doing, what their maturity stage and so on. Because as you said, we want to show real business down to our solution rather than talk about how great we are in fear. Alessandro Pirelli, I didn't get that right, but I'm letting- It's okay, Pirelli. Dave Vellante would have got it right. He's Italian. The crowd father loved you, by the way, in the crowd chat. I mean, a little highlight on that. But Alessandro, thank you for coming on theCUBE. Really appreciate it. Congratulations at going to Red Hat. I mean, certainly having a strategy guy from Gardner in the back pocket is going to give them some extra navigation and support. We'll be following you. Certainly we'll do some more interviews later on in the year. This is theCUBE. We'll be right back with our next guest after this short break.