>> Announcer: Live from Las Vegas, it's theCUBE.
Covering VMworld 2017.
Brought to by VMware and its ecosystem partners.
(upbeat techno music)
>> Okay, we're live here at VMworld 2017's
theCUBE's coverage of VMworld 2017.
I'm John Furrier.
My hosts, Dave Vellante and Stu Miniman.
We've got two sets kicking off live
here in Las Vegas for our eighth year of coverage.
Boomy, we're in the broadcast booth
at the Mandalay Bay.
Guys, we're here to kick off the show.
Three days of wall-to-wall coverage.
Three days of great keynotes.
Today, big surprise, Andy Jassy,
the CEO of Amazon Web Services
joined Pat Gelsinger on stage
in a surprise announcement together,
hugging each other before they talked
and even after they talked.
This partnership is going to be big.
We're going to have coverage, in-depth analysis of that.
Dave, VMWorld is now the cloud show with re:Invent.
If you look at what's going on, Stu,
you've been to many, many shows.
This is our eighth year. This was the show.
Great community.
Now re:Invent has been called the new VMWorld.
You put 'em both together,
it's really the only cloud show that matters.
Google does not have yet a presence.
Microsoft has all these shows that are
kind of spread all over the place.
All the top people are here in IT and cloud
at VMWorld and at re:Invent coming up in December.
>> Well, John, eight years ago we talked about
is this the last stop for IT
before cloud just decimates it?
And if you go back two years ago,
VMware was not in favor.
The stock was half of what it is today.
Licensed revenue was down 1%.
Fast forward to today, it's growing at 10 to 12% a year.
Licenses up 13%.
It's throwing off operating cash flow
at $3 Billion a year.
The market's booming.
Wall Street's talking VMware now being
and undervalued stock.
The big question is, is this a fundamental
shift in customer mindsets?
In other words, are they saying,
"Hey, we want to bring the cloud operating model
to the business and not try to force
our business into the cloud."
Or, is this the last gap of onprem.
>> Stu, I want to get your thoughts cause I want,
squinting through the announcements and all the hype
and all the posturing from the vendors is
I was looking for, where's hybrid in all this?
Where's the growth?
And, my validation point on the keynote
was when we heard very few words hybrid.
Private, on premise was the focus.
You guys put out at Wikibon a report called
True Private Cloud, Market Sizing.
Kind of lay out, that's where the growth is.
But, I tweeted private cloud is the gateway drug to hybrid.
We're seeing customers now wanting to do hybrid,
but they got to do their homework first.
They got to do the building blocks on premise,
and that is what your calling True Private Cloud.
Do you agree? And your thoughts.
>> Yeah, so, really good points, John.
And the nuance here, 'cause if I'm VMware,
I've got a great position in the data center.
500,000 customers.
Absolutely, the growth is the move
from legacy to True Private Cloud.
The challenge for VMware is they already
have 500,000 customers there.
Those are the customers that are making that shift.
So it does not increase vSphere.
One of the key things for me, is Pat said,
"What vSphere had done for the last 20 years,
is what NSX is going to do for the next 10 years, or more."
Because they're betting on networking, security,
some of these multi-cloud services that they announced.
How do those expand VMware so that
as True Private Cloud grows and they also do public cloud,
VMware has a bigger seat at the table,
not just saying "Wait, my customers are shifting.
Where are they going?"
>> Dave, I want to get your thoughts.
You and I talk about all the time on camera,
and also privately, about waves.
We've been through many waves in the industry.
We've seen a lot of waves.
Pat Gelsinger has seen many waves, too.
Let's talk about Pat Gelsinger because,
interesting little tidbits inside the stage area.
One, he said "I want to thank you for being
the CEO of this company."
Stu, you made a comment that this
is the first VMWorld where there's not a rumor
that Pat's not going to be the CEO.
He's kind of kickin' ass and takin' names right now.
Stock's up and he put the wave slide out there.
And wave slides to me, you can tell the senior
management's kind of mojo by how
well laid out the wave slide is.
He put up a slide on one side.
Mainframe mini computer cloud.
And the other side client server, internet, IoT Edge.
He nailed it, I think.
Pat Gelsinger is going to go down as being
one of the most brilliant stroke of genius
by looking at either laying down
what looked like a data center position,
and some say capitulate, to Jassy,
who's smiling up there saying,
"Bring those customers to Amazon."
But this is a real partnership.
So, Pat Gelsinger, go big or go home.
You can't be any bigger, bold bet
that Pat Gelsinger right now with VMware,
and it looks like it's paying out.
What's your thoughts on Pat Gelsinger,
the wave and his bold bet?
>> Well, I think that businesses are configuring
the cloud, John, to the realities of the data.
And the data, most of the data, is on prem.
So the big question I have it,
how is Amazon going to respond to this?
And Stu, you and Furrier have had debates over the years.
Furrier has said flat out, Amazon is going to
do a True Private Cloud, just like Azure Stack.
You have said, no.
But if Amazon doesn't do that,
I think that Pat Gelsinger's going to look like a genius.
If they do do that, it's going to become
an increasingly more competitive relationship
than it is right now.
>> Yeah, just a little bit of the inside baseball.
Kudos to VMware for getting this VMware on AW out.
I hear it was a sprint to the finish
because taking cloud foundation,
which is kind of a big piece.
It's got the VSAN, the NSX, all that stuff,
and putting it in a virtual private data center.
Amazon owns the data center.
They give them servers.
This was a heavy lift.
NSX, some of the pieces are still kind of early,
but getting this out the door, limited availability.
It's one data center.
They're going to roll out services,
but to Dave's point, right,
where does this go down the road?
Is this Amazon sticking a straw into 500,000 data centers
and saying, "Come on in.
You know that we've got great services,
and this is awesome."
'Cause, I don't see Amazon re-writing their linux
stuff to be all native VMware,
So, where will this partnership mature?
Andy said, "We're going to listen to our customers."
"We're going to do what you're asking us."
And absolutely today VMware and Amazon,
two of these strongest players in the ecosystem today,
they're going to listen to their customers.
Google, Oracle, IBM, Microsoft, all in the wings
fighting for these customers, so it's battle royale.
>> You know the straw is in there, John,
what's your take, and where do the developers fit in this?
>> Well Stu wrote a good point, inside baseball,
the key is that success with Amazon was critical.
Jassy said basically, this is not a Barney deal,
which he kind of modernized by saying
most deals are optical really hitting at Microsoft
on this one and Google.
I mean, they're groping for relevance.
It's clear that they're way behind.
Everyone's trying to follow these guys.
But, on the heels of Vcloud Air, it was critical
that they get stake in the ground with Amazon.
They took a lot of heat for the Vcloud Air, Stu.
This had to get done.
Now, my take on this is that, I think it's a genius move.
I think Pat Gelsinger, by betting the ranch on Amazon,
will go down in history as being a great move.
You heard that here, 2017.
He's so smart, he wants to be a component
of the Amazon takeover, which will happen.
It'll be a two-cloud game, maybe three,
maybe four, we'll see, but mainly two.
But the ecosystem partners on this phase one is key.
DXT, Deloitte, Accenture, Capgemini,
and then you start to see the logos coming in.
They have so many logos, you have to break them down.
But more importantly the white space.
devops, migration cost, network security
and data protection are all filled in
with plenty more room for more players.
I think this is where the ecosystem
was lagging just a few years ago.
You saw the shift in the tide.
Now you're seeing the ecosystem going,
"Wow, I get what VMware's doing. I'm doubling down."
It's an Amazon Web Services, VMWare world.
All the other cloud players, in my opinion,
are really fumbling the ball.
>> So, I can infer from that, you see this
as a balanced partnerhip i.e. that's not like
one needs more than the other.
I mean, clearly, Amazon needs VMWARE to reach
those 500,000 customers, and clearly,
VMware needs a cloud strategy because Vcloud Air
and many other attempts have failed.
Yes, we said that.
It's failed, we asked Pat about that.
So, you see it as a more balanced partnership.
Do you see that balance of power shifting over time
a that straw gets bigger and bigger and bigger.
>> Well the Walking Dead or as the Game of Thrones
reference going on is kind of the Gray War
is happening in cloud.
And it really is going to become Amazon versus
whoever they can partner with,
and the rest of the legacy world.
I think the wave slide was impressive to me
because this is such a shift from just
distributed computing now decentralized with blockchain
and AI looming as massive disrupts,
I think this is only going to get more decentralized.
So whoever has tech that's legacy, will ultimately be toast.
And I think Gelsinger's smart to see that wave,
and I'm starting to see the movement.
It's super early, so, no big bets.
It's just be directionally correct and ride that wave.
>> Yeah, so, one of the things that got me
is last year, it kind of went under the radar
that VMware is starting to launch some cloud services,
and were very direct, today, that they said
there are seven, basically SaaS offerings.
It's security, it's cost management.
Now, VMWare on AWS, little expensive.
We're starting to get the data
on how much it is per month or per year
or for three-year.
But going to have the SaaS offerings.
We know Vcloud Air failed, also Paul Moritz
had played the Microsoft game.
We're going to get this suite of applications.
We're going to give you email.
We're going to give you, you know, social.
We're going to give you all these things.
They're all gone.
Kind of cleared the table of all those.
Now they've got these SaaS applications,
so how will that play.
I kind of like Pat, very up front on security,
and said, "As an industry, we have failed you."
Dave, you've been looking at this for a long time.
It's a board-level discussion.
It's a do-over for security.
Does VMware have the chops to play in this space, Dave?
Do you buy them as a, you know, valid SaaS provider?
>> Well, two questions there.
One is in the security front that great tech
is always going to get beat by bad user behavior.
So this is a board-level issue.
As far as SaaS, to me, it's a business model issue
that VMware is migrating its business
to a routable business model, which is smart.
I don't see it as SaaS as an applications,
but I see it as a monthly fee.
Better to get ahead of it now, while you're hot,
than get crushed by Wall Street as you're
trying to make that transition like many other
companies have failed to do.
>> Guys, one thing I want to note is that VMware
also laid out their strategy.
You kind of heard it there even though
that Jassy came on stage.
A look it, Jassy's not an idiot, he's smart.
He knows what's going on.
He knows that he has to win VMware over
because VMware ... he's got to balance it.
Got 'em in the back pocket on one hand,
got a great relationship, Stu, 500,000 customers.
Remember, VMware is also an arms dealer.
They got the ops, IT operations locked down
with their customers.
So they have other clouds they can go to.
SO, the big trend that we didn't hear,
that's out there kind of hiding
in plain site is multi-cloud.
Multi-cloud is ultimately VMware's strategy.
He laid out, one, make private cloud easy.
You guys reported on that.
Two, deep partnerships with major cloud providers.
And three, expand the ecosystem.
>> John, so I mean a little bit of kind of rumors I heard.
They were actually looking to make the partnership
not with AWS at first, it was going to be Google.
And Michael Dell said, "If we're going to start
with a cloud deal, it's going to be Amazon."
The right move, absolutely, that's where it's going to be.
But you remember last year, we were here.
John, you and I, the announcement was with IBM.
Now, no offense to SoftLayer, great acquisition.
It's doing well, but IBM does not play
at the level of an Amazon.
They might have the revenue of a Google in cloud,
but, you know, very different positioning.
They were up on stage talking about security today.
Great position there with analytics.
But, we'll see, there's two more days of keynotes.
I expect we'll see another cloud provider
making some announcements with VMware.
And VMware absolutely an arms dealer.
They put out on the slide all of their service providers.
We've got people like CenturyLink and OVH
and Rackspace on theCUBE this week,
as well as how their going to play
with the Microsoft Google.
You've got Michael Dell on tomorrow.
I know you're going to talk to him about
how Dell fits with Azure Stack,
and how the Dell whole family
is going to play across all of these
because at the end of the day, Michael Dell,
and Pat working for him, they want to keep
getting revenue no matter who's the winner out there.
>> Okay final question as we wrap up the segment.
Customers are that watching here,
it's clear to me that, we even heard from one on stage,
saying, "Well, we're taking baby steps."
That wasn't her exact words, but,
their going slow to hybrid cloud.
All the actions on private as you guys pointed out
in our True Private Cloud report on Wikibon.com
If you haven't seen it, go check it out, it's going viral.
But, this is classic slowness of most enterprise customers.
When there's doubt, they slow down.
And, one of the things that concerns me, Stu,
about the cloud guys right now, whether it's AWS,
Google, and Microsoft, is the market's moving so fast,
that if these clouds aren't dead simple easy to use,
the customers aren't going to go to hybrid.
They're going to go back to their comfort zone,
which is the true private cloud, going to build that base.
It's just got to get easier to manage.
It's got to get easier to multi-cloud.
And the bottom line is that Amazon's clearly in the lead.
So, Jassy has a window right now
to run the table on enterprise.
He's got about 18-24 months, but Google's
putting the pedal to the metal.
I mean they're pedaling as fast as they can.
Microsoft's cobbling together their legacy,
okay, running as fast as they can.
But there's this economies of scale, Stu, for them.
Your thoughts and reactions.
>> Yeah, so, I always thought enterprise simplicity
is actually an oxymoron, does not exist.
This VMware community, one of the things
people loved about it, they were builders.
They were all like get in there, and I tweak that.
Harvard Business School calls it the Ikea effect.
If I help build it just enough,
I actually love it a little bit more.
VMware's not simple.
NSX, hitting about a billion dollars
when you get into it is not easy.
Security and networking are never going to be
you know dirt simple.
Amazon, we thought it was real simple,
now thousands of services.
Absolutely, we've been at that ecosystem for many years.
It gets tougher and tougher the more you get into it.
And, John, some of the builders there,
the developers there, they get in.
There's lot of room for this ecosystem to build around that.
Because one of the things we talk about as VMware
goes to some of these clouds.
Where do they get that ecosystem?
You mentioned some of the systems integrators,
but the rest of the channel, where can they make money?
And trying to help, because it's not simple,
how do they help get opinionated,
make those choices, build it all together.
There's professional services dollars there.
There's ways to help consult with companies there.
>> Ecosystem is the key point.
Watch the ecosystem and how that's forming
around cloud, hybrid cloud, true private cloud,
whatever you want to call it.
And then, again, the technology's maturing.
It's all about the people and the process
to actually affect so called cloud, hybrid cloud,
bringing the cloud model to the data,
not forcing your business into cloud.
>> We got to wrap up here.
We've also got Lisa Martin and Keith Townsend
and John Troyer, and we got some community
guests as well, joining like we did last year.
So this will be great.
But I want to put something out there, guys,
so we can hit up tomorrow and tease it out.
I worry about when you have these fast waves
that are coming through and
the velocity is phenomenal right now.
Is that, what tends to crumble, Dave,
to your ecosystem point, are these foundations.
When you have these industry consortiums,
it's kind of like it's political.
They've got boards and multiple fingers in it.
That could be the suffering point, in my opinion.
And that points directly at Cloud Foundry.
Cloud Foundry, OpenStack, some of these consortium groups
are at risk, in my opinion, if it goes too fast.
Stu, to your point.
Kubernetes has got great traction.
You've got Containers.
Dockers got a new CEO.
Uber's got a new CEO.
I mean the world is moving so fast.
So, rhetorical question, industry consortiums.
Do they suffer, or do they win in this environment?
>> Depends on what they're doing, right?
If they're low-level technical standards
that advance the industry, I think they do win.
I think if it's posturing, and co-opetition,
and trying to cut off the one vendor at the knees, it loses.
>> Stu, real quick, consortiums.
Win or lose in this environment?
>> Yeah, we've seen some that have done quite well,
and some that have been horrific.
So, absolutely, if it gets way too political.
Open source has done some really good things,
but the foundations, once they get in there,
it's challenging and, I'd say,
more times than not, they don't help.
>> Well, we're in theCUBE.
We're breaking it down.
We're going to be squinting through all the announcements
looking at where the meat on the bone is,
where the action is and the relevance
and the impact to enterprises and emerging tech.
This is theCUBE.
I'm John Furrier with Stu Miniman and Dave Vellante.
We're back with more live coverage.
Day one, after this short break.
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