 Live from Las Vegas, it's theCUBE. Covering VMworld 2017, brought to you by VMware and its ecosystem partner. Hello everyone, welcome back to theCUBE's three day coverage of VMworld 2017, this is day two. I'm John Furrier, your host with Wikibon analyst Peter Burris and Stu Miniman, Peter, head of research wikibon.com, Stu Miniman analyst. Guys and co-host Stu on stage two. We've got two sets, day one, and we've got two more days to do. 27 videos, a lot of content, keynote is up, Gelsinger's on stage with Michael Dell, your thoughts. Yeah, so John, first of all, last year, you know, we've been doing this show for a lot of years. Last year, the energy was a little off. You know, we talked about it in the intro, there's rumors about management change, everything like that, energy's up. The attendance isn't up much, but there's a lot of good discussion. People are digging into kind of this whole hybrid cloud, multi-cloud world. The keynote this morning, they've got folks from Google Cloud up on stage, supposed to be the biggest announcement in the platform in the last four years. I think we'll dig into that some, I'm not sure, it's the biggest announcement. Is there an applause? There was actually a bigger applause when Andy Jassy got on stage yesterday than there was when they announced that VMware and Pivotal are now part of the Cloud Native Container Foundation, so, you know, CNTF, you know, three weeks, a few weeks ago, Amazon joined the CNTF, Microsoft part of the CNTF, good step, Kubernetes, absolutely hugely important, VMware and Pivotal, don't want to ride that wave, participate in that wave, but I'm not sure that they're, you know, the leading edge of it, I like NSX is plugging into it, they're starting to figure out all of those internet-working pieces, but it's not the one that I think, you know, we come a year from now and say like, oh geez, remember when they announced, you know, PKS, that's the thing that really kind of changed the landscape. Yeah, I think the Google announcement was a little bit, seemed desperate to me, although very important, I said it's more of a long game on my tweet stream, but I think they try to force that a little bit. Certainly, I personally don't think it was a good move for them to do that at this stage and try to hype it up given the impact that Jassy had and also Jassy's jab a little bit at some of these optical deals, we used to call them Barney deals named after the cartoon, Barney, you know, they love each other, but no real deal there, Jassy hinting that most of these cloud deals are optical, not a lot of meat behind it, unlike their deal. You know, I'm going to be the contrarian in this one, guys. I'm not going to say that it's the most important infrastructure deal in the last four years, I think that's very true Stu, but I would say this. Our research, when the AWS VMware deal was announced last October, was that it was an important deal and it was going to have a material impact on the industry because it promised a way for a lot of VM customers to get to the cloud and now we're seeing that happen. But we also observed that it became pretty, it was kind of obvious that AWS had a lot to gain in that and VMware was, I don't want to say desperate, but VMware was holding on and trying to remain relevant as it goes through this transition. I think a great thing about this conference is that VMware is demonstrating a transforming, but think about this Google deal, who gets the most out of this deal? VMware, VMware, but Google needs us really bad. Google really needs that enterprise presence and VMware is in a great position relative to the Google deal. So VMware's now got a couple of companies that it can kind of- You're shaking your head. Yeah, so because here's the thing I'd say, while Google Cloud's standing up there, this is not VMware saying use Google Cloud. This is Pivotal and VMware saying we're fully integrated with Kubernetes, which means that if I have Pivotal and VMware using PKS, it is now fully compatible with GKE, but that is very different from what we're seeing with Amazon. I talked to a VMware Amazon joint customer this morning and he said, I've got my data center. We've been using AWS for four years and my data center guys are kind of slow and VMware and AWS allows them to be agile. They have the operating model. They have the tools they like to use this as opposed to Kubernetes. That changes. You don't talk to a lot of people here at VMware that are like, oh yeah, hey, I'm ready for microservices. I'm going to refactor all my applications. VMware from day one was I want to take my applications. I want to, without changing a lot of code, move it in there. So, John, we've been talking for years at this show. Where are the developers? Are they here? Kubernetes? It's all about the developers. I didn't hear a strong developer push in the announcement this morning, so that's where I think that still, they're very different. It's a good conversation. I think Peter's right. Google does need this, but here's the nuance that's kind of in this game. It came from the VMware Cloud Native group. So, Cloud Native is certainly a strategy for VMware to play. VMware doesn't want to have just Amazon. They need to be multi-cloud. So, there's a multi-cloud game. They need to be multi-cloud. They need to be multi-cloud, but I don't think that they should be playing the card. This is a long game. The Kubernetes do you know and I know. It's really difficult. People want to make it simple. There needs to be cross compatibility on with application workloads. Very strategic, very important. Not a lot of meat on the bone. Okay, they're shipping a commercial version of Kubu. Big deal. Most container implementations are running in a virtual machine. They just are. Yeah, true. This is an important deal for users. And that's the most important thing. Potential users that are going to be in the evolution of where this is going. To Sue's point, I think where it connects is, the conversation here is, I'm just trying to get my act together on-prem True Private Cloud. We're seeing the industry start to reform. And so again, Stu, you're right. It's not the most important thing in four years, but it's also not something to be- It's a strategic intent. It's very important. Same. It's also got near-term implications. Is that for anybody that's doing container-based development is doing it, is running that whole thing inside of VM and along comes VMware that says, hey, you know what? Yeah. We're going to bring industrial strength to this. It's a good thing. Let's treat it as a good thing. It's a good thing. Again, we all have good conversations. This is a frothy conversation. I love it, it means it's relevant to you guys out there. I think timing's interesting. Again, I wouldn't have done the strategic play on this one. I would have done it more of a strategic intent. The shipping stuff, okay, cool. But you guys are on it. We'll be monitoring it. Peter, I got to ask you the question. That's kick-off day two. You guys have been beavering away for two days now here in analyst sessions, meeting all the executives. What's your observation? What's your takeaway so far? Well, the thing that we talked about, we did the wrap-up yesterday and out of the analyst day came a couple of things. And the first thing I'll say is that when you now kind of peel back the covers of any new VMware initiative, increasingly you find NSX staring back at you. And it didn't used to be that way. So increasingly you're finding that NSX is becoming that kind of crown jewel. And that plays into this notion of VMware wanting to be the multi-cloud orchestrator using NSX as kind of a cross-multi-cloud technology. The second thing is that it's always interesting to observe how software technology, we talk about software technology in abstraction or independent of hardware. But the two always do move together. And we talked about yesterday how vSAN has become such an important technology industry stew. And the observation we made was that and isn't it interesting that at vSAN's importance grew just as people started doing flash-based storage arrays. And so those two things are becoming much more important in the aggregate universe here. And the third thing is VMware is trying to do more around simplification through the cloud foundation. But it looks, they have to make sure that it doesn't just look like a new architecture or new set of marketing. So here's what I'm going to throw some controversy out there. Stu, I heard some hallway conversations all last night. And the theme pretty much was this. I'm kind of paraphrasing multiple conversations. Love the direction. Love vSAN, love all this NSX stuff. I do agree NSX is looking like the crown jewel, cloud native over the top. Orchestration is going to be the battleground for middleware. Great, I love that. But now I'm an operations guy. I got VMware and I got to go to the cloud in the big way, got to manage all this stuff. I have operational stacks merging together that have not been tested in multiple configurations with VMs, hardware stacks, software stacks, jamming together untested. This is a new pain point and a slow point where slowing people down. Stu, do you agree? Yeah, really interesting point because let's look at vSAN and NSX. vSAN, I can hand that to a virtualization admin and they can get running pretty fast on that. Actually, one of the executives from VMware, he's like, we save money for customers really fast. NSX, a little bit of a longer game, a little bit more complicated, especially when you start getting into it. This whole inter-fabric between clouds, this is not an easy button for multi-cloud or anything like that. But NSX is really cool. John, we've been watching since day one. I mean, I remember back you and I interviewed Martin Casado right after the acquisition, huge acquisition and as Pat Gelsinger said in the keynote yesterday, what vSphere was for the last 20 years, NSX will be for the next decade or more. So absolutely, we kind of understand where the battlegrounds are. The devil's always in the details. Is this stable, Stu? Is this stuff stable? No, none of it's stable. But we're in the midst of a significant transformation. So we shouldn't expect stability. You know, stability, you know, I think it's not simple. You're implying the outcome for the customers is significantly there to make the investment. Stu is right, this is not plug and play world. This is, there's a lot of work that's going on and what users are looking for now is who are the technology companies are going to be able to make and sustain the investments to drive simplification. And VMware is in the mix. One of the other things we said last night, John, is that if you look back, there have been very few technology companies who have successfully made a major transformation. IBM did it in the early 1990s. Microsoft's done it a couple of times. We may be witnessing VMware making a pretty significant transformation here. The show is not a dud, that's for sure, no doubt. VMworld and re-invent will probably become the most, two most important shows in cloud, hands down, obviously, besides some of the international stuff we're seeing with Alibaba. That's important. You know, Microsoft, I'm seeing not a lot of clarity around Microsoft. It's Google, they're trying to get that cloud event going. Again, it's the great cloud wars are going on, guys. So this is going to be crazy. Michael Dell. It's starting to take shape, it's starting to take shape. You mentioned simplicity. Michael Dell's coming on. One of the things I'm going to ask him, and I'd like to get your thoughts on what we should ask him. I'm going to ask him, how do you make this shit simple? That ultimately is in the era of all the stuff kind of jamming together, stacks, hardware stacks, software stacks, operational, seamless operational capability, new developers coming on board, edge of the network. Yeah, I mean, one of the things, a critique I have for Dell the company is they want to give you choice. You know, you're going to talk to Michael and he's going to say, Azure Stack, I've got that solution. AWS, VMware's got that solution. We've got the VMware solutions. We've got Virtustream over here and everything. Customers want opinionated offerings to help them through that because, oh my gosh, I figured out the virtualization stuff and I'm figuring out some of the networking and security piece. I got containers and there's other stuff coming from the future and oh my God, security is beating me over the head non-stop and now you want to be a major player in there. So yeah, how can they help customers get into the right swim lanes, you know, get comfortable in the deep. But Peter just talked about what I think is really kind of key is, he mentioned plug and play, I'll just kind of go a step further. This general purpose computing market is over. Nothing's general purpose anymore. There's general things that you need to bolt on but you have unique requirements by corporations and enterprises that need to. So I'll push in that a second and then I'll give you the question I would ask because if we look at the big picture, the big picture goes like this. The first 50 years of the computing industry were dominated by an OLTP oriented model of how you do computing. Highly, you know, highly imperative programming. The tool sets were set up that way. Single database manager, you serialize everything through the database manager. That is the model that drove the first 50 years. We're in the middle of something totally different right now. We really don't know what it is. We can see the piece parts of what they're coming together. It's going to be more functional programming, more declarative, distributed data. We're not going to serialize the same way. We can see what it's going to look like but it's unclear exactly what shape it's going to take. The question I would ask, and I think it's kind of builds on what you said is, what is Dell's commitment to the cloud experience of 2022? We know what the cloud experience is today. The cloud experience today is defined by Amazon. They've done an absolutely magnificent job. Nobody thought they could do it except for Amazon. And they did it and they've done an absolutely magnificent job of it. But what's the cloud experience of 2022? We say it's going to be true private cloud, hybrid cloud and a set of methods and a computing model that starts with data and finishes with outcome. What does Michael Dell say it's going to be? Great question. Yeah, I was just going to say, Peter, that is the question you talk about. When we look at the whole mega merger of Dell, EMC and VMware, at the end of the day, Michael wants to pull through more servers. But it's that operating model that's going to drive things. So will VMware really be able to fix their management stack? Peter, when I became an analyst seven years ago, I was like, well, anytime I can always say back, well, security and management are broken and they still suck, right? And so the question is five years from now, will we be able to say, hey, VMware's really doing some awesome things, Pivotal's really bringing this together. Dell Technologies is front and center to help that experience. Well, I was going to ask him who he's voting for, Mayweather or McGregor, fighting to fight night. Mike Tyson, right? They had Mike Tyson. All right, serious question to end this, Peter. I know this is something that's near and dear to your heart and Stu and Wikibon, you guys are really doing a lot of end user conversations. How should end users start preparing themselves? Because Pat Gelsinger kind of laying out the narrative of, today is the last day, the shortest time things are going to chip, whatever his quote was, it's going to get faster. And to your point about all this work that needs to get done on the investment, the customer environment is going to get crazier, hairier and more complex. What are end user enterprise customers having to do? So if I'm a CAO, I'm doing three things. The first thing I'm doing is I am introducing the core principles that are related to agile. So I'm telling my people culturally, we're going to be empirical, we're going to use data to make decisions, we're going to be iterative, we're going to cycle, and we're going to be really opportunistic. We are going to be very willing to break down sacred cows. That's the first thing I'm doing. The second thing I'm doing is I'm starting to introduce a set of edicts that say, if we can put it in a public cloud, we will put it in the public cloud. But we have to use iterative, empirical and opportunistic to recognize that we won't always be able to put it in the club of cloud. And we have to be prepared to be able to do stuff on premise because we are going to be doing things on premise. The third thing that I'm going to do, and I think this is really important, is that IT for the last number of years has been focused on taking cost out of the business. And David Floyer talks about this a lot. The idea of automation, well increasingly IT is going to be asked to find ways to add revenue to the business. That's kind of where a lot of this digital engagement goes. What that boils down to ultimately is that the history of working, collaborating has been based on taking cost out, driven by procurement and this notion of strategic relationships has been kind of a fraud. It's been kind of something that we just say. So the third thing is, you're going to have to start focusing on what it really means to do strategic vendor management, to truly partner, to transfer and control intellectual property boundaries and how that happens. So those are the three things I think CIOs absolutely must start doing. And that is what Andy Jassy was hinting around these optical illusions, whether it's vendor, where's the partnerships, where's the coding, great observation, Peter, I got to say that was phenomenal. Well, I agree. I mean, this is ultimately a new era of computing with AI, IoT Edge. I think Pat Gelsinger laid out the wave slide beautifully yesterday. We're growing the computing industry up in the air right now and seeing what's going to land. It's time to start shaping that into the new model of how we're going to think through problems and how we're going to solve problems with technology. And we had the CIO perspective yesterday with Baskair on, who's the CIO VM, where he said, John, look at these some things in, in IT are recognizable. So there are certain patterns we know when retail has spikes. So yeah, I'll do a bursting in the cloud, but most things can be patternized and that's okay. And that's going to have to be, some things will always be unrecognizable, but it's not always that dynamic. But once you get that nailed down, that's where the true private cloud report comes in. Congratulations, by the way, on the true private cloud report from Wikibon. It's going viral here at the show. Hey, you've done some great work from Stu and David Floyer over many years. Great work. It's going viral, talk of the town here in Vegas. Congratulations, Stu. Thank you. And it's something that we've been having this conversation in this community specifically at VMworld for years because where do I get, it was that air gap between, I virtualized and that helped utilization to, I really need to get to that operating model of the cloud. I interviewed a consultant from Australia last year on the other set and he said, a lot of the companies he's still talked to is IT is still a cost center. And we've been talking for years about moving from just being a cost center to really partnering with the business or Jeremy Burton I interviewed recently and he's like, no, IT is driving the business and it's great that there are some companies that are fully transformed and they're engaging in that or at least they tell a good story of it. But there's a lot of customers that are still working on their own journey and that's what shows like this are all about. So really quick, John, the way I described that is we think about cost benefit or we think about productivity. It's how much work am I going to get done for how much cost? The cost is the denominator. What we like to say is that IT has to start taking on a numerator mentality. What benefits am I going to create? What opportunities am I going to create? What revenue am I going to help create? Got to think on the numerator side of the equation. You guys do some great work. You know a lot of analysts always put a number of reports. Oh, you got to see this and then pushing it out to analyst relations. If you're in this business, whether you're a CXO and in price or work for a company and you don't read that true private cloud report, you possibly could be fired. It's really game changing. It's like the software eating the word world memo. This is the marketplace that's hot right now. True private cloud report by Wikibon, check it out. It's theCUBE day two coverage continues. We'll be right back with more after this short break.