live from San Francisco California it's the queue at vmworld 2014 brought to you by vmware cisco EMC HP and nutanix now here are your hosts John courier and Dave vellante okay welcome back in when we are live in san francisco california at vmworld 2014 is the cube I'm John furry with Dave a lot day our next guest is ecology about the president and chief operating officer VMware welcome back to the queue great to see you thanks for having me again Dave appreciate it looking good the question I want to get get to you right away as vmworld gets bigger and bigger and bigger every year and your job gets bigger and bigger and bigger every year so give us the update on what's going on at the top of VMware obviously operationalizing cloud and with air watch end-user computing I'll see several engine data center you're still on your mission what's the big change or impact to your business yeah so at the top of VMware we've recently announced some realignment of our executive staff and it started with myself patent Jonathan or CFO sitting down and having a conversation and how can we scale our company to be 10 billion dollars from six billion where we're at today so we looked at all of different operational aspects we looked at our go-to-market aspects we looked at the strategy and how we run our M&A business and we decided to break things up and I've now got responsibilities continue to have responsibility for the go-to-market aspects our partner ecosystem and i also have responsibility obviously for marketing's of these events in robin matlock our chief marketing officer and i also recently picked up the responsibility to support our strategy efforts as well as our ma efforts so all of that at the same time and I've given up a few of the operational you know responsibilities I've had and given in the Jonathan's and now Jonathan can really look at the back office and make sure we're built to scale operationally and this is freed pad up than to really focus his efforts and I'm on each of the strategic initiatives we have around the software-defined data center the hybrid cloud and our end user computing components and and it really worked out well the structures work and you know we have a great executive team that really like to work together yeah you got so you got guy running the trains on time in the back office you're watching the chess board has stringing the products together trying to build out the division exactly yeah exactly so I got I got to ask you about just in general the the overall plan with MA for instance obviously AirWatch very successful position pat was kind of glowing about it didn't give specifics certain a lot to do growing market a lot of white space is a lot of new things like docker obviously evo rails and I'll see an end user side before before we get the kind of that vision talk about air watch how is that done can you be specific about some metrics yeah so you know we're very excited about the air watch acquisition obviously it took place earlier this year and you know we've achieved everything we expected to achieve out of that acquisition it's really you know hit its mark based on the business hand when we built as we went into the acquisition and what I'm really excited about now is you know how do we get leverage how do we get economies of scale on leverage ally existing VMware footprint that we have on a global basis to really help bear watch expand deeper into our large accounts and faster internationally so as you could imagine VMware having a large international footprint AirWatch did not we're leveraging our international footprint to get air watch deep into parts of Europe and Asia and Pacific where they haven't been in the past and then the last area leverage we're really excited about is you know it was just last month when we put the air watch product on our price list that now gives not only VMware core sales folks the ability to sell it into the market but also our channel so now our channel has the ability to sell if you will you know all of the air watch products into the market and not just do it themselves in their channels so there's a lot of leverage we're going to get so go to market seems exciting a lot of action going on talk about the name change is obviously there's been some that we've got a decoder ring blog posts were putting together around okay you got you got the air name vCloud air a lot of stuff changing on kind of the nomenclature of some of the what's the rationale behind that was there a method to the madness was it just kind of like just trying to align everything not just water vapor anymore yeah exactly no yeah so we actually have a you know under Robin that like our CMO we have a team that focus on naming and branding and when we looked at all the components we have we actually were getting a little bit disconnect is connected and how we take to market our products their brands in their names so we've decided to streamline everything everything always mark starts with a small D so now we have vCloud air right for you know our hybrid cloud we have V realize which is now our suite of management automation and provisioning tools and operation tools so we just thought it was the right time to do it we had this great event called vmworld to take our new brand and naming conventions into the market and you know everyone seems to be responding quite well to it everyone recognized V something around VMware and we're just trying to streamline that across everything we do so there's some some consistency in our naming because they're not going to call this the VQ I'm actually I'm very open to doing that to hit you are a TM world and if you want to change the name we can make that announcement right now my stag Dave and I will sell right you're running out that I'm just asking I don't run M&A now so you guys pretty much I think nailed the docker positioning obviously this this conference I mean announced a big partnership OpenStack you know there was a lot of buzz about that before these disruptive technologies seem to have a good playbook for saying okay how are we going to address these how are we going to embrace them and how does I was going to help us attack art am so we started to pool the other day though I got to ask you this so who gets to 10 billion first AWS or or VMware so you mentioned how do you get to 10 billion now Behrendt yesterday at the analyst meeting I thought asked a very good question he brought up he basically said this conventional wisdom out here that Amazon is going to rule the world he said I don't I don't agree that said there's at least one other guy that doesn't agree you obviously didn't agree so I want to talk about that it's the one piece that is still hard to understand because you got you know guys like Andy Jassy I'm one end of the world saying okay this is what the world is going to look like and you guys like yourself and pat and joe tucci say no no this is what the world is going to look like and certainly you talk to customers are they are you guys both right you both is one wrong is one right what's your take on it well I obviously can't comment on whether they're right or wrong but I can give you our views and pay nobody really sad right we'll find out in a few years I you know during during the keynote yesterday I thought bill fathers had a great slide to talked about the amount of workloads that are on premise versus the amount of workloads that are off premise in the public cloud and still to this day less than ten percent of the workloads are in the public cloud and even if you look out many years from now there will still be you know less than twenty percent of the workloads in a public cloud so the opportunity still exists in private clouds and on-premise but what we need to do is we need to make sure that we're not locking any customer into a or strategy is it on premise or off premise is a hybrid cloud or as a public cloud or is it only public cloud and hybrid cut it has to be in an strategy that's why we tried to articulate the power of and and that's how we think we're differentiating ourselves in the market so we don't think about it as we're competing against the public cloud providers because we have a differentiated platform we're bringing this hybrid solution to market to what we call hybridity that allows our customers to move workloads you know inside out and outside in and when we pull all that together I think the winner will be the people who can truly deliver a hybrid cloud infrastructure and allow companies to seamlessly and securely federated workloads and move them on premise and off-premise and that's our focus so I like that strategy I mean basically you're saying we're focused on the customers you got about half a million customers now we have half a million customers and fifty million virtual machines under metal the strategies of you if you service those guys you're gonna you're going to do well and I and I buy that at the same time Carl in a way I feel like well you may not be competing with the public cloud AKA amazon your customers in a way are and what i mean by that is there's pressure from the corner office yeah now you have to be their advocate and help drive those costs down you've cited I think yesterday you started but look when it comes to security reliability availability that's where we're going to win that's our spot so my specific question is what do you make for example of the CIA deal a company like Amazon was able to take on a company like IBM and knock them out is that a unique corner case or I wonder if you could give a perspective on that no I think I think as we go forward we're going to see more and more if you all vertical clouds start to emerge you can think of the CIA transaction with AWS as a vertical cloud specifically to serve the CIA you know department and I think you'll see more and more of them emerge in the future and it's a very competitive world that we live in right i mean everyone bid on that except for vmware because we didn't necessarily have our product in the market for the federal government we didn't have our certification to service the federal market but now we will have in the very near future all assertive certifications we need to build a vertical cloud and go and support you know department of defense agencies so i think in the future it's going to be a competitive battleground everyone's going to buy for it but at the same time you know i think you know people can over rotate and say hey they won that and that means they're going to dominate this market this market is still very immature it's growing the majority of the workloads are on premise and I still go back to the fundamentals of the hybrid approach that you talked about to securely and seamlessly move workloads I think you know we're well positioned and but time will tell right and well the average age of an enterprise app I think it's uh almost 20 years one of years those actors gonna disappear overnight yeah no they will not disappear and again just remember that slide from bill father's presentation yesterday I remember it's a lot of DNA from BM worldstar 50 year 2010 when calm originals to CEO he laid out the vision and it's happening maybe Linda different for how you get there pivotal now out separate company yeah I got to ask you the Pat Gelsinger question I get in some comments here and LinkedIn people from my friend John bare ass CMO mint ago who worked at padded Intel people tend to forget Pat led the Intel team that designed for 86 he knows his stuff technically pad certainly as a technical person so Pat's got some time freed up you're doing the MA is Pat yesterday is you guys playing defense or offense of course was packing say offense you know he's an offensive player so did you really think he was gonna say detail I didn't I was actually saying he's an offensive nobody came up in the cube earlier somebody said oh thank you but I said no how had a player that's he doesn't play defense been knowing bad so I'd ask you the same question what is the offense for your plays in strategy go to market for VMware what hills are you going to take down first given your base position you had a lot of clients you're adding value certainly that's cool but as you go out and compete and win what's your offensive strategies so listen the thing we do every year at vmworld as we come out and we go on the offensive right we're a very disruptive you know technology innovative lead company in a very positive way disruption can be viewed negatively but I think we're a very disruptive company in a positive way and what we did this year is we absolutely went on the offensive we looked at the market dynamics we looked at the shift in how people might want to consume technology in the future whether it's open source OpenStack or this whole emergence of the containers that are happening so if you just stop and look at where each of those are at OpenStack is still very immature you're not going to find a lot of people have built big implementations of OpenStack successfully containers right has just emerged in the last if you will six months we're actually recognizing that as a potential market you know movement and we're embracing it so this is an opportunity for VMware to say we're not trying to defend our strategy we're not trying to defend our turf we see containers we see OpenStack as a market expansion opportunity for us and I think one of the things people tend to forget if you go back a decade ago there was many different value propositions around just server virtualization but one of the key ones was it allowed us to break down the silos that existed in data centers for many decades and with virtualization we brought to market a platform that allow people to get easy access to infrastructure in the same form factor so it was a platform play now think about that we broke down the silos a decade ago if we go back in as an industry we start to deploy VMware which most customers have today then all of a sudden now I need to OpenStack environment and let's now think about a container strategy and deploy something like Dockers and you do all on different physical infrastructures you've built a lot more silos and it only makes it that much more complex for our customers and our partners this is why we're now taking to market in a very offensive offensive approach to say support VMware but if you want to run these other things please do so but we believe are the best platform for service delivery that gives consistency and lowers both effects and capex for our customers yeah and you said the consumption is key and this cloud consumption models changing the game on how customers can soon technologies so you're saying hey we want to protect our vmware base but we're going to give them a choice exactly right fictional flexibility a choice is one of our key tenets of our strategy and as our company if you will values so I want to talk about caught I mean it's kind of boring in mundane but when you talk to we have a CIO of San Mateo County coming on one of your customers shortly and there's always a focus on cost when you talk about infrastructure vmware's got a very tough act to follow in it then it's because it it created such a huge cost savings by you know taking all the waste out of much of the waste out of servers so where does that next sort of wave come from there's certainly a lot of innovation going on we're seeing that is it things like hyper convergence what you guys announced this week can you keep that cost curve go is it volume with your you know 4,000 partners I wonder if you could talk about that a little because I'm sure your customers are beating up all the time how do we keep costs going what have you done for me lately Carl yeah absolutely it's a great question so it to your point you know over the last decade we brought our customers a massive amount of capex savings you know you take a hundred widget you consolidate that the tenders an immediate ROI there but you have to remember where you are now not just a computer chua zation company we're a data center automation company and we're taking the core tenants of the cat back savings that we brought many of our customers over the last decade and we're moving from compute and we're doing the same on networking and we're doing the same on storage so if you look at it networking alone right by implementing a technology like NSX as an abstraction in an overlay networking platform you don't need to rip and replace your hardware infrastructures to get network virtualization if you think about our customers who have a whole bunch of servers out there today and a lot of those servers have local did saan them most of them are never being used in VMware environment you're using you know an ass or a SAN storage array around VMware now you implement something like this and you can take advantage of all that unused excess capacity that people already have in the data center that is just three examples of capex savings we're bringing our customers so it's not just that we did it in compute I fundamentally believe we have the opportunity to do the same across the rest of the physical state of the data center now on top of that by implementing you know management automation orchestration and remediation proactive remediation tools across the software-defined data center we know there is massive capex savings and affects a great labor cost acting there you know we can take a server administrator who used to support you know a hundred physical servers now can support 500 virtual machines the optic savings around that is just incredible is the business case greater in your opinion I think with the software-defined data center the business case is even greater going forward because again we're doing it on the server but now network can compute and is the automation tools really start to take shape and form to manage the software-defined data center I think you even drive more value and you know even going back a decade ago everyone thought our play was really catback savings but if you talk to most of our customers why they got massive capex savings even in the early days the amount of affects a savings they got because of how we've implemented our technology and architecture in our data center was even greater than the capex savings so I think when you pull it all together this is a bias statement so i'm going to say i'm biased up front so you can't call me biased but i don't think there's a technology in the last decade or in the next decade that has driven more value both business value as well as Capital savings in the data center than VMware we're out to duty independent I would say the same thing another way Carl I mean it connect the dots there on the effects piece and also you guys do something to find data center hybrid cloud and and use a computer if those things all come home and and and and it happened the way you want you move to your next fail point so I got to bring up the globalization conversation if cloud goes down this path the consumption model will be I want by pay by the drink all surfaces and mobile becomes a huge deal so because globalization outside North America you have different issues data center clouds and I real sovereignty also so what's your take on that you guys have a huge base what's your globalization view in that piece if things start to start to materialize really aggressively you build on your base cloud comes home clouds happen in consumption but is happening what's the global strategy global impact I should say yeah so let me talk about our global strategy and then global impact so first of all vmware is very global if you look at our book of business today you know greater than fifty percent of our business is out in or outside of you know the u.s. and North America right so we're already doing very well internationally and how we go to market and how we're generating revenue across the company what you're talking about as the world becomes more and more global in the context of cloud computing how do we play into that so what we've done is we've taken our vCloud air platform and we said where are the biggest markets in the world for cloud computing it's the u.s. right it's the UK right it's Australia it's Japan it's China and if you look at what we've done is we've built out our own data centers we're addressing probably greater than ninety five percent of the infrastructure as a service market in the world with our vCloud air platform where we're not we allow our partners to do that those 3900 partners that we showcase yesterday on stage cover almost a hundred percent of the cloud opportunity so we're not going to do it ourselves we're not going to be in every country around the world but our 3900 partners are in over a hundred countries and we're servicing the cloud market opportunity directly and indirectly across vCloud air in the vCloud air network getting the hook but i want to get that partner thing is just to kind of get pivot quickly for quick comment on that AUSA to partner networks are huge they care about margin expansion and serving customers what's going on with VMware how's that going for the partners yeah so I guess it depends on which type of partner were talking about but I would say in general you know our partner ecosystem is alive and well and all you need to do is take a few steps down over there and go look at the solutions exchange floor and you'll see every technology company in the world that is either integrated or wishes to integrate with VMware in one capacity or the other and it is our responsibility just like we have over the last decade to bring our ecosystem along with us to enjoy the rich opportunity we see in the mobile cloud era the boots are big the booths are packed v Emeril's rock and i'll give you the final word but the bumper sticker on the show this year as the car drives away at down out of san francisco what's it say about vmware what's going to say in the bumper sticker that's a great question what do you think i should say Pat kelson had a good one brave new IT yeah well that's our motto it's the brave new IT but I actually think what it will say is let's go do it again we've had a hell of a journey with our customers in our ecosystem over the last decade and I say let's go do it again over the next decade and disrupt this market in a very positive way and break innovation and technology to market each in every year Kaiser by president and chief I promise of VMware making moves on the offensive vmworld 2014 we'll be right back with our next guest after this break thanks