 from San Jose in the heart of Silicon Valley, extracting the signal from the noise. It's theCUBE covering OCP US Summit 2016, brought to you by OCP. Now your host, Jeff Brick and Stu Miniman. Hey, welcome back everybody. Jeff Brick here with theCUBE. We are live in downtown San Jose at the Open Compute Project Summit 2016. It's the 30th year theCUBE has been here and this is really where the cloud is. I mean, it's actually out in data centers, but these are all the data center people with the hardware, the guts of the cloud, and really the Open Compute Project. It was Facebook's early project to kind of share best practices in hyperscale computing and this is what it's grown into. It's a pretty amazing thing. Stu Miniman from Wikibon is here and we're really excited to have Mike Shutz, the GM of cloud platform marketing from Microsoft. Or is your first short, I should say. That's right. Thank you, yeah. Thank you so much, great to be here. So you just tell us a little bit off camera. You have been on the road talking cloud all over the world. So tell us a little bit about that project. Azure is there, everybody kind of knows it. It's kind of still kind of under the Microsoft banner, not under the Microsoft banner. Obviously you guys are a huge player, a ton of data centers. Talks about the tour and kind of what's going on in Azure right now. Absolutely, so we're doing kind of a 25 city cloud road show and it's really, because customers really wanted us to get out there and explain to them more about the real hard benefits they can see and then honestly how to get started and what to do. Everybody's got their own unique journey to the cloud. Everybody's talking cloud, but the customers are really trying to get down to brass tacks around. Okay, how do I really take advantage of it? And so this, we've done a series of events around the world. I was in Europe and Eastern Europe last week. Just meeting with customers, having great dialogues just like we are here at OCP and really just helping them kind of develop their own cloud strategy. And so it's been a blast. So Mike, I think back to the last 10 years and we've been talking about this whole cloud thing. I remember the Microsoft ad, to the cloud, all my friends and family, they're like, isn't this the stuff you've been talking about for a while? It's like, yeah, but hybrid cloud is really, we've said we didn't love the term because there's multiple things. There's companies that are using SaaS. Microsoft's got Office 365 and lots of SaaS apps. There's public cloud, you've got Azure. There's private cloud, you guys have Azure pack. So how do you talk to those terms to customers? What's resonating with them? Where are they trying to figure out as to what goes in what buckets and where? Because it's usually an and discussion for the customers we talk to. That's a fantastic point. And because cloud is such a big conversation, a big term, I think you've got to break it down into chunks to help people understand it. We've been talking to customers about, first, why? Why cloud, what we're real seeing customers that are using it in significant ways, seeing a number of benefits. The first around efficiency. You think about the way that you can pay as you go. Just use what you need. The fact you can spin up and down applications or virtual machines on demand, high levels of efficiency. But it's not just about cost savings. We see a lot of agility benefits to it. And so customers can move faster. IT has been kind of the department that has to say no a lot because they frankly haven't been able to keep up with the needs of the business. And so the development organizations have been going around them and swiping a credit card and going to the cloud. And because they need more agility. And therefore the cloud provides that level of flexibility and agility to do things on demand. And then differentiation. With big data and IoT, machine learning, advanced analytics, a lot of these higher level services that are now in Microsoft Azure and in other clouds. Organizations can do things and differentiate their businesses in ways that have never been done before. You think about a company like Tissencrop. They make elevators and escalators. They've been able to fully instrument all of their assets throughout their organization. Thousands and thousands of elevators and escalators. And you think about, that's not a very high tech firm but they're using IoT and machine learning to predict when an escalator in the mall in San Francisco might be having an issue. So they can send a technician out there and fix it before something actually happens. And before they have a stoppage. And so you think about, and that's all in the cloud. And so really enables them to differentiate from their competitors. And so kind of efficiency, agility and differentiation are really key to it. That's funny to just follow up on that. There was a great, I think it was a Splunk Show we did where the data from the elevators was actually a leading indicator as to the health of the tenants inside and potential vacancy in commercial buildings. The opposite of a health truck. Yeah, who knew, right, who knew? But then the other thing is open source and I thought it was interesting in the keynote today Mark talked about his lead statement was, why is Microsoft here talking about open source? So it feels like cloud has had a big part of that because it's not a closed system anymore, right? So talk about Microsoft's position in open source and how that's really benefited from kind of your play on the cloud. Absolutely, it's really all about flexibility and choice. And I think the notion of a platform for us has changed. Azure is the new platform. And so therefore, you know, when we think about flexibility and choice, we want an organization, whether it be a developer or a serious set of developers or a complete company to basically be able to run whatever apps they want in the cloud. And a lot of those are going to be Linux and open source and that's great. We've got about a quarter of all of the virtual machines running in Azure today are running Linux. That tends to surprise people. And so, you know, open source plays a huge part in our strategy up and down the stack not just the operating system with Red Hat and Ubuntu and Linux, but you think about things like Java, Node.js, PHP, all the open source frameworks, Docker, we've done a ton with Docker and the container ecosystem. And so, we're really benefiting from the community and like to believe that we're contributing in a meaningful way as well. So, like, you know, I thought it was really telling, you know, and Marcus Zinovich is keynote this morning and he's like, how many people think about Microsoft as open source? You know, there weren't many of us that raised our hands. It's like, you know, look, I've seen what you guys have done not only with Linux, with Docker. I mean, you know, my social graph just blew up when you guys announced that you were taking, you know, SQL and moving it to Linux. I mean, that was just like, oh my gosh, I can't believe it. I mean, you know, many people think about Microsoft. This is the company that brought us, you know, Embrace, Extend, Extinguish. You know, not the company that you think of as the keynote. It was enable, integrate, release, and contribute. So, you know, you know, does this come up a lot in the conversations you do in the road shows? You know, are they asking you to be open source? Is this something that's been driven on high? And, you know, how, you know, how do we change that? You know, the perceptions are tough to change, so. Well, I think it's been a big shift for the company, but it's been one that we've been on for about 10 years. You know, I think Mark talked about kind of the journey we've been on from an open source perspective. But I'll absolutely say that with Satya's leadership that it's been tremendously helpful and empowering to go out and really embrace the communities. Right now, we've got some 5,000 developers that are, you know, empowered to go participate in all these open source projects and are actively participating in almost 2,000 open source projects. And so, the activity is extremely high. And we're seeing great benefit from it. I think we're seeing more and more customers use open source on Azure. The conversations I'm having out with customers really are, we're having, able to have a different dialogue with us as a more strategic vendor for them because they're able to address more of their estate, more of the things that they use as opposed to just siloing us off in the Windows world. And so, it's been really empowering and great, but it happened at the grassroots at the developer level in the organization as well as Satya as a great leader really helping us to chart that course for helping customers and leveraging the best tools that are out there, whatever it might be. So, can we talk a little bit about OCP here? So, you know, as I was prepping for this, one of the articles I read said that, you know, Microsoft has 90% of the servers are now, you know, OCP, which, you know, on the one hand, I'm a little surprised, but on the other hand, you guys donated to kind of that chassis design. So, I mean, you guys are heavily involved. Can you talk about, you know, involvement with OCP, what that means for the partnerships? I mean, I look a lot at like Azure Stack and what you guys are doing in Azure and of course, you know, Dell and HPE or big partners want to make sure that they, you know, have equipment there and help customers. So, OCP and the partnerships, what does that mean to Microsoft? Absolutely. Well, part of it goes to this flexibility and choice message that we've hit on, but really what brought us to OCP is, you know, we're spending billions of dollars on our own data center infrastructure, rollout, Azure at scale, and all of our cloud services. We've got some odd 200 cloud services and so that infrastructure requires, obviously, a lot of servers, a lot of network and because we learned a lot building out this, we felt like it was an opportunity for us to help contribute, participate, and influence the designs of a lot of these servers and now it's in the networking as well. And so, we joined OCP, as you know, two years ago in January and that was when we contributed the open cloud server spec and we've had just an awesome reception of that and it is our primary design now that we're bringing into our data centers. And so, it's really been phenomenal to participate in OCP, to see the vendor and the community really rally around these designs and then you've seen here how it's, you know, two years ago, three years ago there was a conversation about the server, mostly, right? And now, networking and storage are kind of taking the forefront of the dialogue because a lot of the server innovation is catching steam and there's a lot more work to do in networking and so, that was part of what we did here this week is we open sourced our Sonic, the software for open networking in the cloud software and then are proposing that for contribution to OCP and so, it's been a phenomenal journey so far. We couldn't be more pleased with the participation and reception we're getting and we're looking forward to doing it more. Yeah, I mean, the Sonic piece is really interesting, kind of leaves the discussion of what's happening on the networking side here. Yeah, it's just, you know, not something that you traditionally think about Microsoft participating in. You know, how does that translate into kind of deep relationship with your customers and, you know, adoption in general of Azure? Well, you know, you mentioned Azure Stack. We have a lot of conversations with customers about hybrid cloud. So they want to know what we do in the data center so they can make their data centers more efficient and this, what we do here at OCP is a big part of that. We talk about open sourcing our server designs. Well, ultimately that'll benefit us too because we can then consume those servers in our data centers in thousands or tens of thousands or hundreds of thousands of volume. But we also want to be able to work with our partners like Dell and HP and the Chinese partners here as well that really help build out those servers because we think that we can start to help the broader set of customers do that in their own data centers as well. And then we marry that with the software like Azure Stack that was born in the public cloud that lets customers consume and deploy Azure services out of their own data center. And I know you were at Dell World and we talked a lot about cloud platform system there. Absolutely the same design point in terms of helping customers in this hybrid cloud world say and not or. And so that's absolutely a big part of our strategy. Yeah, I mean, I go back to two years ago we interviewed Brad Anderson and he, you know, was beating the table about, you know, it was cloud first. And, you know, Microsoft really is, you know, the one of the big public clouds that also has that full end-end story. So, you know, Kudo's there. You know, when we ran our numbers of cloud overall, I mean, Microsoft, you know, comes up, you know, revenue-wise and, you know, positioning in quite good shape. You know, what are kind of some of the big things that, you know, white space, where do you think there's still a lot of opportunity moving forward to improve the customer's experience? Well, we see a lot of customers embracing the cloud. And they are running their existing infrastructure. And so hybrid is really what they're looking for. In the public cloud, infrastructure as a service is where they're starting. They think about starting DevTest in the cloud, starting to move some workloads, where those be Windows workloads or Linux workloads. And then we start to see organizations start using our platforms of service offerings. This is really all about agility from a developer perspective, getting things done faster and developer productivity. And so we start to see organizations as their own journey progresses, go from infrastructure as a service, platform as a service. A lot of them start with software as a service like Office 365. And so it's that breadth of offering that we have across infrastructure, platform and SaaS that organizations can come to us as one place to go across all those cloud offerings and also have that hybrid cloud solution as well. And so a lot of the conversations we're having now are moving toward these higher value services. So think about big data, advanced analytics, machine learning that builds on what they've already started in the cloud. But now it's instead of just moving compute from on-premises to the cloud, it's how do I get more done? How do I really take advantage of those cloud services at broader scale? So Mike, we're getting close to the end of our time. Unfortunately, I'm just curious, you've been at Microsoft for a long time. I wonder if you could share just a little personal perspective as to how things have changed. We always thought of Microsoft making a lot of money on the OS, obviously, and Office and server. Some really core products that had huge market penetration drove a lot of business. And now this kind of transformation, he said it started before Satya got there, really accelerated with Satya on open source cloud and really being, I don't know, you guys are always part of the community. I don't want to overstep my bounds, but not really embracing it as aggressively now to open source all these projects. How's it been kind of sitting on the inside and watching this transformation? And was it a hard thing to do, or were there some old stalwarts that finally came around? I wonder if you could share some insight from the inside. It's honestly been a blast. I think that we've had successful products all throughout that journey. There were times where we always wanted to do more for customers. And some of the things that we're now able to do in the open source community really enable us to do that. Coming down here to the valley wasn't always a lot of fun for somebody from Microsoft, right? And so, and today, I've got a great team down here in Mountain View, right on Moffitt. And it's a fantastic time to be at Microsoft. Our customers are embracing us like I've never seen. Personally, it's just so fun to go talk to our customers because of the conversations we can have now, enabling them to do more. And so, I've got to say, I've been there 14 years and there's never been a better time to be at Microsoft. Awesome. Not to mention just the tan with cloud and big data and mobile and just the opportunity, the reinvention of the technology world just continues to roll along. Well, Mike, thanks for spending a few minutes with us, appreciate you taking the time. Thank you so much for having me. Absolutely. Mike Sheep from Microsoft, I'm Jeff Brick. He's Stu Miniman. We are theCUBE and we're live in downtown San Jose at the Open Compute Project Summit 2016. We'll be back with our next guest after this short break. Thanks for watching.