 Live from Las Vegas, it's theCUBE. Covering VMworld 2017, brought to you by VMware and its ecosystem partner. Welcome back, I'm Stu Miniman joined by my co-host John Troyer. You're watching SiliconANGLE's production of theCUBE here at VMworld 2017 in Las Vegas. Happy to welcome to the program two first-time guests, but from a company we've talked to many times. Rex Backman and Rob Young, both with Red Hat. Rex is the Senior Principal Product Marketing Manager and Rob is the Senior Manager of Red Hat Product Management. Gentlemen, thanks so much for joining us. Thanks for having us. We're happy to be here. So sorry, tripping over sometimes titles and things like that, just like acronyms go out there sometimes. So I go back, I started working with Red Hat before. Red Hat Advanced Server came out, which became Red Hat Enterprise Server. Then when we talk about virtualization, it used to be Rev, R-H-E-V, and now it's R-H-V. So sometimes the people say in the same place and the badges change other times that things change a lot. So why don't we start with Rob, tell us a little bit about how long you've been at Red Hat, your role there. So I've been with Red Hat now for two years, almost to the date. I come from an open-source pedigree. So I worked with companies like MySQL, MongoDB to develop not only the open-source model, but a community around those products and a commercialized version that people trust to run in their data centers. All right, and Rex yourself? I'm fairly new to Red Hat joined about three months ago. Virtualization background is really from the world of Microsoft. So happy to be at Red Hat. We've got a strong offering with Rev and we just want to help get people more educated on it and the opportunities we have to help solve their problems. All right, it's always an interesting dynamic. You talk virtualization, we spent a decade. It was VMware's ascendancy and the threat of Microsoft and KVM and Rev and everything were going to be there. There's a nice Red Hat booth on the show floor. Always customers have had Linux sitting as guests in there and lots of those. I'm sure you probably have stats for me as to how much of that's been Red Hat over the year, but tell us about the relationship. VMware, Red Hat, virtualization. So we see the relationship with VMware and other companies and partners within our ecosystem as very positive. If you look at the workloads that are running on VMware primarily, a lot of those are Red Hat Enterprise Linux, applications that are running on Red Hat Enterprise Linux. So we see it as a very positive relationship and moving ahead, we see a challenge in maintaining a virtualization footprint within VMware, within the market because of the evolution of the market. And we see that virtualization is becoming more of a commodity based feature and the challenges that it poses to partners like VMware going forward to evolve along with that model within the market. Well, if virtualization is a commodity and it's becoming a commodity, what is the Red Hat approach with KVM and RHEL in terms of, it's parts of it a commodity, but certainly the stack and the system it plugs into is not. Yeah, I would say it's also very foundational. Virtualization is everywhere. And I think the value Red Hat brings to it is the capabilities we have in our team, capabilities we derive from the open source model, and then virtualization with Rev, bundled in with Red Hat Enterprise Linux. It's foundational and then if you bring in other aspects of the Red Hat stack around manageability, cloud, things of that nature, I think we have a strong offering, a good offering that people can choose from. And I think that's really important for us is our customers have choice. And then us, we differentiate ourselves on the open source model primarily. It keeps becoming a more and more complex world. We've been watching for years, it was the pull of kind of cloud against the data center. Now we're even seeing edge pulling at the cloud, but let's go back to the data center. What's Red Hat's viewpoint? What are you hearing from customers? What do they need in the data center and how are they viewing that these days? So what we see in the modern data center one, the workloads that we see around mode one applications that are legacy applications, that footprint is not going away. It's going to continue to have a bare metal footprint as well as a virtualized and private cloud. So what we're doing and what our customers are asking us for is a transition from pure virtualization or bare metal to virtualization to hybrid cloud. And what we're doing now with our engineering efforts, not only upstream, but also from a proprietary and a configuration standpoint, all open source by the way, is we are giving customers the option to standardize on a virtualization platform built on KVM that shares components with hybrid cloud technologies for mode two. So what we see from our customers is they're maintaining mode one, but buying and planning for mode two. And that's how we see the on-premise data center market heading at this point. Like you don't unpack that a little bit for our audience because you know, the big discussion this week is public cloud. Yeah, sure it has virtualization, but it's not VMware. So now we've got this one option, VMware and AWS starting to roll out. Are you saying that my data center, I can really be compatible with the public clouds and is that the red hat pieces on both side or is it native to what AWS and Google are doing? How does that dynamic work? So the way that we're approaching it is we look at it not only as a software solution, but also as a paradigm shift in more openness, APIs. Things are more generic. So if you want to plug into a common framework for management as an example or deployment, you can easily do that via the open APIs that are available in the open source community. So as an example, we provide a management solution called CloudForms and with that platform, it's part of the red hat stock and solution, we allow customers to manage not only their virtualized environment, but also their hybrid or private clouds, but also AWS as well. So if they've got instances running on AWS, they can manage it through one pane of glass. And this is our strategy going forward, but it's not tomorrow. This is happening today with our red hat stock platform. Yeah, so Rex, you've got a background in networking, networking front and center, and networking security even more than ever that I've seen is at VMworld. How does that fit into red hat's whole story? You know, if you look at the world of virtualization, obviously we've gone from the story of server virtualization, network virtualization, storage virtualization, and those are the Annie's into the game now. And you know, I think red hat with what we provide and red hat enterprise Linux, obviously the foundation started with, you know, the knowledge that our R&D team brings from their open source background around rev and server virtualization, but also now network virtualization capabilities. And also what red hat has around storage, you know. So I think we cover those three Annie's into the game of virtualization. And then, you know, it adds to, you know, the equation Rob was talking about, which is the whole red hat stack, which I think is a good, good, good story. And again, choice for our customers. I think actually 2017 is actually a really interesting year for virtualization. We're at an interesting era, right? 10 years ago, you had some, you know, market dominance, you had, you know, you're looking at Microsoft and VMware like we talked about, but, and another, we had Zen and KVM came up and they were a little scary for people, right? They were developing, they weren't as, they weren't as mature of a stack. I do think now that the average admin in an average, you know, IT estate is actually dealing with the fact that, oh, I could actually manage multiple hypervisors, look at a mixed estate. It's not as scary anymore. The technology is more mature, more manageable. Can you talk a little bit about that scenario of a mixed estate? Like if you have a, you know, part of your data center is running VMware, what kinds of use cases and what kinds of management scenarios would you, as you start to add, you know, red hat virtualization to the mix? So the way that the dynamic that we see and play right now is there's a huge install base on VMware and a lot of customers, a lot of clients, a lot of partners are looking at that relationship now and deciding if they should invest elsewhere in other solutions. So what we provide is the ability to manage those environments. The clients for Hyper-V, for VMware, for Red Hat, all within one pane of glass, but it allows customers, one, the choice to manage that heterogeneous environment built on multiple hypervisors, but it allows them to evaluate if maybe the Red Hat solution is better for them. And if we can help them with V2V migrations as well, workload migration, mobility, I think that's the perfect scenario for Red Hat and open source company and choice. And I think, you know, some of the customers, you know, public case studies that we've promoted, some of the attributes that they've been looking at that shifted them over towards the Red Hat side was, you know, performance, you know, was very, very important. Scalability was very, very important. So I think, you know, it depends, customer to customer. I was actually wondering about, so do we see like replatforming as people are re-architecting, are these green field opportunities? I mean, I imagine that, again, it's all across the board, but any, have you seen any particular kind of common patterns of people standing up, maybe a new business critical app on a new platform? Maybe they're re-architecting it to be a little bit more cloud native. Any particular directions like that? I think, you know, some of the things I've seen recently is an enterprise, IT organization has decided to go down an open source path for their world. And then that kind of is a strong point for us. You know, Intermountain Health is a company that there's some news on from us last week is an example of that. You know, British Airways is another customer like that. And as Rob has said, it's large companies, big brands, down to commercial companies as well, or governments or education. So I think it could be performance, it could be open source. Open source is definitely one of the drivers. Yeah, yeah. Yeah, and what we're seeing there with open source is that the more trust is built in open source, the more enterprise adoption and the cost-effectiveness of working with a development team that's worldwide, a QE team that's worldwide, really helps to build the stability of the products that companies like Red Hat build subscription models around. So there's no vendor lock-in as well for a proprietary licensing model. And we find that many customers are very open to that discussion as opposed to the alternatives. One of the other discussions we've been having at VMworld for the last couple of years is this whole containers discussion. Is it VMs versus containers? Is it containers inside VMs? Red Hat Summit, I mean, huge discussion. There was a super popular t-shirt on one side that said Linux is containers, and on the other side it says containers are Linux. So where do you see that discussion? Any, what do you think about how VMware's been looking at things? There was a big announcement about VMware and through the Pivotal activity, kind of embracing Kubernetes. Red Hat, I'm sure is saying, hey, welcome to the party, right? So there's an interesting dynamic with containers because containers, Kubernetes, you name the project, is purely an open-source play. And if you look at the projects, the contributors, most of this is going to be built on an open-source model. So proprietary software companies like VMware are going to be challenged to adapt and evolve how they develop, how they contribute, the presence within those communities. Now Red Hat is uniquely positioned in that our model has been for the last 25 years that we're purely open-source. Everything we do is out in the community and it lends itself very naturally, not only the way we've done commercialization of Linux, but we're doing that now with containers as well. And if you look at the dynamic in the market, you know, a lot of people believe that there's VM and or containers and this is really a symbiotic complementary relationship. 85% of the workloads for containers runs within a virtualized environment and containers and virtualization fill gaps for each other that is just a natural compliment and because Red Hat is already comfortable operating in the open-source environment in this way, we think we're just in a very good position to lead in both areas. So. The, you mentioned open-source commercialization and Jim Whitehurst, the CEO of Red Hat has been on theCUBE. Stu and I talked with him at the last OpenStack Summit. I was super impressed by his insight and grasp into the economics of open-source and how Red Hat has been able to build a model like that. Can you talk at all about data centers or IT spend in general and CapEx and OpEx, where it's going in a more open-source-driven world? Where do you put your money then? So do you want to answer or do you want? I'll take a stab at it. Where can you now invest your money? How don't we, that's a little better. Yeah, I think it's really interesting and you know, I'm going to answer this question from the perspective of a three-month Red Hat employee but with, you know, a lot of experience in the industry with proprietary companies, if you will. I think the value, the commercialization of what Red Hat has done is, you know, there's the upstream aspects of open-source and the programs available there and then there's the downstream commercialization of what Red Hat has done, which is wrapping the value of a Red Hat subscription around that open-source project. And I think what we see in our customers in terms of budget spend, you know, more on the OPEC side than the CAPEX side in our case is, you know, looking at that price point because some of our customers, well, many of our customers, if not all of our customers, there is a price sensitivity. I think a lot of customers now maybe not be, and this may be kind of a crazy thing to say, may not be as price sensitive as they used to be. Now it's more about innovation, agility, speed to market, but still the economics is important and I think the value Red Hat provides and the uniqueness in the model that Jim and his crew cracked early on to start Red Hat is the ability to provide that Red Hat subscription at value for open-source. And what we see is that it's most of the time in cases, you know, it's an attractive price point and that's how we win customers. So I think, you know, long-winded answer to your question is I think there's a strong future. You see more and more companies adopting open-source in their programs. I think Red Hat is the leader of that in good shape. Rob, why don't you just give us the final word, conversations you're having at the show, how are people here in the VMware community embracing, is it an open-source discussion, is it the innovation and kind of the new features, what's bringing them by to talk to Red Hat? So I think it's a mixture. So what we're seeing is a lot of interest in Red Hat solutions, the Red Hat stock. And I think customers are now looking at Red Hat as a good enough alternative to more pricey alternatives or more pricey options. And if you look at what we've done from a strategic standpoint is much like we did with Red Hat Enterprise Linux, we are now using Enterprise Linux as a foundational support pillar, so to speak, for the Red Hat stock. So if you look at the APIs that we've generated, a lot of the interest that I'm getting, the question I'm getting, not only from customers, but from folks out on the show floor, other vendors, is what's your API look like? Can I learn more about it? And to me, that's the leading edge of a wave of maybe that Parker Favillion looking a little bit more red in the days to come. So just my opinion. Absolutely, I know John Troyer and I have been talking for a few years now, that API economy, something that's been coming into this world and that intersection between what all the Linux admins have known for a long time as to their operational model matches a lot of what we're seeing in the cloud. So Rob Young, Rex Backman, really appreciate you joining us. For John Troyer, I'm Stu Miniman, we'll be back with a lot more coverage here from VMworld 2017. You're watching theCUBE.