>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE in ETR. This is "Breaking Analysis" with Dave Vellante. >> Cisco is a company at the crossroads. It's transitioning from a high margin hardware business to a software subscription-based model, which also should be high margin through both organic moves and targeted acquisitions. It's doing so in the context of massive macro shifts to digital in the cloud. We believe Cisco's dominant position in networking combined with a large market opportunity and a strong track record of earning customer trust, put the company in a good position to capitalize on cloud momentum. However, there are clear challenges ahead for Cisco, not the least of which is the growing complexity of its portfolio, a large legacy business, and the mandate to maintain its higher profitability profile as it transitions into a new business model. Hello and welcome to this week's Wiki-bond cube insights powered by ETR. In this breaking analysis, we welcome in Zeus Kerravala, who's the founder and principal analyst at ZK Research, long time Cisco watcher who together with me crafted the premise of today's session. Zeus, great to see you welcome to the program. >> Thanks Dave. It's always a pleasure to be with you guys. >> Okay, here's what we're going to talk about today, set the agenda. The catalyst for this session, Zeus and I attended Cisco's financial analyst day. We received a day and a half of firehose presentations, drill downs, interactions, Q and A with Cisco execs and one key customer. So we're going to share our takeaways from these sessions and add our additional thoughts. Now, in particular, we're going to talk about Cisco's TAM, its transformation to a subscription-based model, and how we see that evolving. As always, we're going to bring in some ETR spending data for context and get Zeus' take on what that tells us. And we'll end with a summary of Cisco's cloud strategy and outlook for how it could win in the cloud. So let's talk about Cisco's sort of structure and TAM opportunities. First, Zeus, Cisco has four main lines of business where it's organized it's executives around sort of four product areas. And it's got a large service component as well. Network equipment, SP routing, data center, collaboration that security, and as I say services, that's not necessarily how it's going to market, but that's kind of the way it organizes its ELT, its executive leadership team. >> Yeah, the in fact, the ELT has been organized around those products, as you said. It used to report to the street three product segments, infrastructure platforms, which was by far the biggest, it was all their networking equipment, then applications, and then security. Now it's moved to five new segments, secure agile networks, hybrid work, end to end security, internet for the future and optimized app experiences. And I think what Cisco's trying to do is align their, the way they report along the lines of the way customers buy. 'Cause I think before, you know, they had a very simplistic model before. It was just infrastructure, apps, and security. The ELT is organized around product roadmap and the product innovation, but that's not necessarily the way customers purchase things and so, purchase things so I think they've tried to change things a little bit there. When you look at those segments though, you know, by, it's interesting. They're all big, right? So, by far the biggest distilled networking, which is almost a hundred billion dollar TAM as they reported and they have it growing a about a 9% CAGR as reported by other analyst firms. And when you think about how mature networking is Dave, the fact that that's still growing at high single digit CAGR is still pretty remarkable. So I think that's one of those things that, you know, watchers of Cisco historically have been calling for the network to be commoditized for decades. For as long as I've been watching Cisco, we've been, people have been waiting for the network to be commoditized. My thesis has always been, if you can drive enough innovation into things, you can stave off commoditization and that's what they've done. But that's really the anchor for them to sell all their other products, some of which are higher margin, some which are a little bit sore, but they're all good high margin businesses to your point. >> Awesome. We're going to dig into that. So, so they flattened the organization when Geckler left. You've got Todd Nightingale, Jonathan Davidson, Liz Centoni, and Jeetu Patel who we heard from and we'll make some comments on what we heard from them. One of the big takeaways at the financial analysts meeting was on the TAM, as you just mentioned. Liz Centoni who also is heavily involved in strategy and the CFO Scott Herren, showed this slide, which speaks to the company's TAM and the organizational structure that you were just talking about. So the big message was that Cisco has got a large and growing market, you know, no shortage of available market. Somewhere between eight and 900 billion, depending on which of the slides you pull out of the deck. And ironically Zeus, when you look at the current markets number here on the right hand side of this slide, 260 billion, it just about matches the company's market cap. Maybe an interesting coincidence, but at any rate, what was your takeaway from this data? >> Well, I think, you know, the big takeaway from the data is there's still a lot of room ahead for Cisco to grow, right? Again, this is a, it's a company that I think most people would put in the camp of legacy IT vendor, just because of how long they've been around. But they have done a very good job of staving off innovation. And part of that is just these markets that they play in continue to grow and they continue to have challenges that they can solve. I think one of the things Cisco has done though, since the arrival of Chuck Robbins, is they don't fight these trends anymore, Dave. I know prior to Chuck's arrival, they really fought the tide of software defined networking and you know, trends like that, and even cloud to some extent. And I remember one of the first meetings I had with Chuck, I asked him about that and he said that Cisco will never do that again. That under his watch, if customers are going through a market transition, Cisco wants to lead them through it, not try and hold them back. And I think for that reason, they're able to look at, all of those trends and try and take a leadership position in them, even though you might look at some of those and feel that some of them might be detrimental to Cisco's business in the short term. So something like software defined WANs, which you would throw into secure agile networks, certainly doesn't, may not carry the same kind of RPOs and margins with it that their traditional routers did, but ultimately customers are going to buy it and Cisco would like to be the ones to sell it to them. >> You know, you bring up a great point. This industry is littered, there's a graveyard of executives who fought the trend. Many people, some people remember Ken Olson of Digital Equipment Corporation. "Unix is snake oil," is what he said. IBM mainframe guys said, "PCs are a toy." And of course the history, they were the wrong side of history. The other big takeaway was the shift to software in subscription. They really made a big point of this. Here's a chart Cisco showed a couple of times to make the point that it's one of the largest software companies in the world. You know, in the top 10. They also made the point that Chuck Robbins, when he joined in 2015, and since that time, it's nearly 4x'ed it's subscription software revenue, and roughly doubled its software sales. And it now has an RPO, remaining performance obligations, that exceeds 30 billion. And it's committing to grow its subscription business in the forward-looking statements by 15 to 17% CAGR through 25, which would imply about a doubling of these, the blue lines. Zeus, it's unclear if that forward-looking forecast is just software. I presume it includes some services, but as Herren pointed out, over time, these services will be bundled into the product revenue, same way SAS companies do it. But the point is Cisco is committed, like many of their peers, to moving to an ARR model. But please, share your thoughts on Cisco's move to software subscriptions and how you see the future of consumption-based pricing. >> Yeah, this has been a big shift for Cisco, obviously. It's one that's highly disruptive. It's one that I know gave their partners a lot of angst for a long time because when you sell things upfront, you get a big check for selling that, right? And when you sell things in a subscription model, you get a much smaller check for a number of months over the period of the contract. It also changes the way you deal with the customer. When you sell a one-time product, you basically wipe your hands. You come back in three or four years and say, "it's time to upgrade." When you sell a subscription, now, the one thing that I've tried to talk to Cisco and its partners about is customers don't renew things they don't use. And so it becomes incumbent on the partner, it becomes incumbent upon Cisco to make sure that things that the customer is subscribing to, that they do use. And so Cisco's had to create a customer success organization. They've had to help their partners create those customer success organizations. So it's really changed the model. And Cisco not only made the shift, they've done it faster than they actually had originally forecast. So during the financial analyst day, they actually touted their execution on software, noting that it hit it's 30% revenue as percent of total target well before it was supposed to, it's actually exceeded its targets. And now it's looking to increase that to, it actually raised its guidance in this area a little bit by a few percentage points, looking out over the next few years. And so it's moved to the subscription model, Dave, the thing that you brought up, which I do see as somewhat of a challenge is the shift to consumption-based pricing. So subscription is one thing in that I write you a check every month for the same amount. When I go to the consumption-based pricing, that's easy to do for cloud services, things like WebEx or Duo or, you know, CloudLock, some of the security products. That that shift should be relatively simple. If customers want to buy it that way. It's unclear as to how you do that when you're selling on-prem equipment with the software add-on to it because in that case, you have to put metering technology in to understand how much they're using. You have to have a minimum baseline to start with. They've done it in some respects. The old HCS product that they sold, the Telcos, actually was sold with a minimum commit and then they tacked on a utilization on top of that. So maybe they move into that kind of model. But I know it's something that they've, they get asked about a lot. I know they're still thinking about it, but it's something that I believe is coming and it's going to come pretty fast. >> I want to pick up on that because I think, you know, they made the point that we're one of the top 10 software companies in the world. It's very difficult for hardware companies to make the transition to software. You know, HP couldn't do it. >> Well, no one's done it. >> Well, IBM has kind of done it, but they really struggle. It's kind of this mishmash of tooling and software products that aren't really well-integrated. But, I would say this, everybody now, Cisco, Dell, HPE with GreenLake, Lenovo, pretty much all the traditional hardware players are trying to move to an as a service model or at least for a portion of their business. HPE's all in, Dell transitioning. And for the most part, I would make the following observation. And I'd love to get your thoughts on this. They're pretty much following a SAS like model, which in my view is outdated and kind of flawed from a customer standpoint. All these guys say, "Hey, we're doing this because "this is what the customers want." I think the cloud is really a true consumption based model. And if you look at modern SAS companies, a lot of the startups, they're moving to a consumption based model. You see that with Snowflake, you see that with Stripe. Now they will offer incentives. But most of the traditional enterprise players, they're saying, "Okay, pay us upfront, "commit to some base level. "If you go over it, you know, "we'll charge you for it. "If you go under it, you're still going to pay "for that base level." So it's not true consumption base. It's not really necessarily the customer's best interest. So that's, I think there's some learnings there that are going to have to play out. >> Yeah, the reason customers are shying away from that SAS type model, I think during the pandemic, the one thing we learned, Dave, is that the business will ebb and flow greatly from month to month sometimes. And I was talking with somebody that worked for one of the big hotel chains, and she was telling me that what their CRM providers, she wouldn't tell me who it was, except said it rhymed with Shmalesforce, that their utilization of it went from, you know, from a nice steady level to spiking really high when customers started calling in to cancel hotel rooms. And then it dropped down to almost nothing as we went through that period of stay at home. And now it's risen back up. And so for her, she wanted to move to a consumption-based model because what happens otherwise is you wind up buying for peak utilization, your software subscriptions go largely underutilized the majority of the year, and you wind up paying, you know, a lot more than you need to. If you go to more of a true consumption model, it's harder to model out from a financial perspective 'cause there's a lot of ebbs and flows in the business, but over a longer period of time, it's more cost-effective, right? And so the, again, what the pandemic taught us was we don't really know what we're going to need from a consumption standpoint, you know, nevermind a year from now, maybe even six months from now. And consumption just creates a lot more flexibility and agility. You can scale up, you can scale down. You can bring in users, you can take out users, you can add consultants, things like that. And it just, it's much more aligned with the way businesses are run today. >> Yeah, churn is a silent killer of a software company. And so there's retention is the key here. So again, I think there's lots of learning. Let's put Cisco into context with some of its peers. So this chart we developed compares five companies to Cisco. Core Dell, meaning Dell, without VMware. VMware, HPE, IBM, we've put an AWS, and then Cisco as, IBM, AWS and Cisco is the integrated plays. So the chart shows the latest quarterly revenue multiplied by four to get a run rate, a three-year growth outlook, gross margin percentage, market cap, and revenue multiple. And the key points here are that one, Cisco has got a pretty awesome business model. It's got 60% gross margin, strong operating margins, not shown here, but in the mid twenties, 25%. It's got a higher growth rate than most of its peers. And as such, a much better, multiple than say, for instance, Core Dell gets 33 cents on the revenue dollar. HPE is double that. IBM's below two X. Cisco's revenue multiple rivals VMware, which is a pure software company. Now in a large part that's because VMware stock took a hit recently, but still the point is obvious. Cisco's got a great business. Now for context, we've added AWS, which blows away any company on this chart. We've inferred a market cap of nearly 600 billion, which frankly is conservative at a 10 X revenue multiple given it's inferred margins and growth rate. Now Zeus, if AWS were a separate company, it could have a market cap that approached 800 billion in my view. But what does this data tell you? >> Well, it just tells me that Cisco continues to be a very well-run company that has staved off commoditization, despite the calling for it for years. And I think the big lesson, and I've talked to financial analysts about this over the years, is that if, I don't really believe anything in this world is a commodity, Dave. I think even when Cisco went to the server market, if you remember back then, they created a new way of handling memory management. They were getting well above average margins for service, albeit less than Cisco's network margins, but still above average for server margins. And so I think if you can continue to innovate, you will see the margin stay where they are. You will see customers continue to buy and refresh. And I think one of the challenges Cisco's had in the past, and this is where the subscription business will help, is getting customers to stay with the latest and greatest. Prior to this refresh of network equipment, some of the stuff that I've seen in the fields, 10, 15 years old, once you move to that sell me a box and then tack on the subscription revenue that you pay month by month, you do drive more consistent refresh. Think about the way you just handle your own mobile phone. If you had to go pay, you know, a thousand dollars every three years, you might not do it at that three-year cycle. If you pay 40 bucks a month, every time there's a new phone, you're going to take it, right? So I think Cisco is able to drive greater, better refresh, keep their customers current, keep the features in there. And we've seen that with a lot of the new products. The new Cat 9,000, some of the new service provider products, the new wifi products, they've all done very well. In fact, they've all outpaced their previous generation products as far as growth rate goes. And so I think that is a testament to the way they've run the business. But I do think when people bucket Cisco in with HP and Dell, and I understand why they do, their businesses were similar at one time, it's really not a true comparison anymore. I think Cisco has completely changed their business and they're not trying to commoditize markets, they're trying to drive innovation and keep the margins up, where I think HP and Dell tend to really compete on price versus innovation. >> Well, and we are going to get to this point about the tailwinds and headwinds and cloud, and how Cisco to do it. But, to your point about, you know, the cell phone analogy. To the extent that Cisco can make that seamless for customers could hide that underlying complexity, that's going to be critical for the cloud. Now, but before we get there, I want to talk about one of the reasons why Cisco such a high multiple, and has been able to preserve its margins, to your point, not being commoditized. And it's been able to grow both organically, but also has a strong history of M and A. It's this chart shows a dominant position in core networking. So this shows, so ETR data within the Fortune 500. It plots companies in the ETR taxonomy in two dimensions, net score on the vertical axis, which is a measure of spending velocity, and market share on the horizontal axis, which is a measure of presence in the survey. It's not like IDC market share, it's mentioned market share if you will. The point is Cisco is far and away the most pervasive player in the market, it's generally held its dominant position. Although, it's been under pressure in the last few years in core networking, but it retains or maintains a very respectable net score and consistently performs well for such a large company. Zeus, anything you'd add with respect to Cisco's core networking business? >> Yeah, it's maintained a dominant network position historically. I think part of because it drives good products, but also because the competitive landscape, historically has been pretty weak, right? We saw companies like 3Com and Nortel who aren't around anymore. It'll be interesting to see moving forward now that companies like VMware are involved in networking. AWS is interested in networking. Arista is a much stronger company. You know, Juniper bought Mist and is in better position. Even Extreme Networks who most people thought was dead a few years ago has made a number of acquisitions and is now a billion dollar company. So while Cisco has done a great job of execution, they've done a great job on the innovation side, their competitive landscape, looking out over the next five years, I think is going to be more difficult than it has been over the previous five years. And largely, Dave, I think that's good for Cisco. I think whenever Cisco's pressed a little bit from competition, they tend to step on the innovation gas a little bit more. And I look back and even just the transition when VMware bought Nicira, that got Cisco's SDN business into gear, like nothing else could have, right? So competition for that company, they always seem to respond well to it. >> So, let's break down Cisco's net score a little bit. Explain why the company has been able to hold its spending momentum despite its large size. This will give you a little insight to the survey. So this chart shows the granular components of net score. The lime green is new adoptions to Cisco. The forest green is spending more than 6%. The gray is flat plus or minus 5%. The pink is spending drops by more than 5%. And the red is we're chucking the platform, we're getting off. And Cisco's overall net score here is 25%, which for a company of its size speaks to the relationships that it has with customers. It's of course got a fat middle in the gray area, like all sort of large established companies. But very low defections as well, it's got low new adoptions. But very respectable. So that is background, Zeus. Let's look at spending momentum over time across Cisco's portfolio. So this chart shows Cisco's net score by that methodology within the ETR taxonomy for Cisco over three survey periods. And what jumps out is Meraki on the left, very strong. Virtualization business, its core networking, analytics and security, all showing upward momentum. AppD is a little bit concerning, but that could be related to Cisco's sort of pivot to full stack observability. So maybe AppD is being bundled there. Although some practitioners have cited to us some concerns in that space. And then WebEx at the end of the chart, it's showing some relative strength, but not that high. Zeus, maybe you could comment on Meraki and any other takeaways across the portfolio. >> Yeah, Meraki has proven to be an excellent acquisition for Cisco. In fact, you might, I think it's arguable to say it's its best acquisition in history going all the way back to camp Kalpana and Grand Junction, the ones that brought up catalyst switches. So, in fact, I think Meraki's revenue might be larger than security now. So, that shows you the momentum it has. I think one of the lessons it brought to Cisco was that simpler is better, sometimes. I think when they first bought Meraki, the way Meraki's deployed, it's very easy to set up. There's a lot of engineering work though that goes into making a product simple to use. And I think a lot of Cisco engineers historically looked at Meraki as, that's a little bit of a toy. It's meant for small businesses, things like that, but it's not for enterprise. But, Rocky's done a nice job of expanding the portfolio, of leveraging the cloud for analytics and showing you a lot of things that you wouldn't necessarily get from traditional networking equipment. And one of the things that I was really delighted to see was when they put Todd Nightingale in charge of all the networking business, because that showed to me that Chuck Robbins understood that the things Meraki were doing were right and they infuse a little bit of Meraki into the rest of the company. You know, that's certainly a good thing. The other areas that you showed on the chart, not really a surprise, Dave. When you think of the shift hybrid work and you think of the, some of the other transitions going on, I think you would expect to see the server business in decline, the storage business, you know, maybe in a little bit of decline, just because people aren't building out data centers. Where the other ones are related more to hybrid working, hybrid cloud, things like that. So it is what you would expect. The WebEx one was interesting too, because it did show somewhat of a dip and then a rise. And I think that's indicative of what we've seen in the collaboration space since the pandemic came about. Companies like Zoom and RingCentral really got a lot of the headlines. Again, when you, the comment I made on competition, Cisco got caught a little bit flat-footed, they've caught up in features and now they really stepped on the gas there. Chuck joked that he gave the WebEx team a bit of a blank check to go do what it had to do. And I don't think that was a joke. I think he actually did that because they've added more features into WebEx in the last year then I think they did the previous five years before that. >> Well, let's just drill into video conferencing real quick here, if we could. Here's that two dimensional view, again, showing net score against market share or pervasiveness of mentions, and you can see Microsoft Teams in the upper right. I mean, it's off the chart, literally. Zoom's well ahead of Cisco in terms of, you know, mentions presence. And that could be a spate of freemium, you know, but it's basically a three horse race in this game. And Cisco, I don't think is trying to take Zoom head on, rather it seems to be making WebEx a core part of its broader collaboration agenda. But Zeus, maybe you could comment. >> Well, it's all coming together, right? So, it's hard to decouple calling from video from meetings. All of the vendors, including Teams, are going after the hybrid work experience. And if you believe the future is hybrid and not just work from home, then Cisco does have a pretty interesting advantage because it's the only one that makes its own end points, where Teams and Zoom doesn't. And so that end to end experience it can deliver. The Microsoft Teams one's interesting because that product, frankly, when you talk to users, it doesn't have a great user score, like as far as user satisfaction goes, but the one thing Microsoft has done a very good job of is bundling it in to the Office365 licenses, making it very easy for IT to deploy. Zoom is a little bit in the middle where they've appealed to the users. They've done a better job of appealing to IT, but there is a, there is a battleground now going on where video's not just video. It includes calling, includes meetings, includes room systems now, and I think this hybrid work friend is going to change the way we think about these meeting tools. >> Now we'd be remiss if we didn't spend a moment talking about security as a key part of Cisco's business. And we have a graphic on this same kind of X, Y. And it's been, we've seen several quarters of growth. Although, the last quarter security growth was in the low single digits, but Cisco is a major player in security. And this X, Y graph shows, they've got both a large presence and a solid spending momentum. Not nearly as much momentum as Okta or Zscaler or a CrowdStrike and some of the smaller companies, but they're, these guys are on a rocket ship, but others that we featured in these episodes, but much more than respectable for Cisco. And security is critical to the strategy. It's a big part of the subscriber base. And the last thing, Zeus, I'll say about Cisco made the point in analyst day, that this market is crowded. You can see that in this chart. And their goal is to simplify this picture and make it easier for customers to secure their data and apps. But that's not easy, Zeus. What are your thoughts on Cisco's security opportunities? >> Yeah, I've been waiting for Cisco go to break up in security a little more than it has. I do think, I was talking with a CSO the other day, Dave, that said to me he's starting to understand that you don't have to have best of breed everywhere to have best in class threat protection. In fact, there's a lot of buyers now will tell you that if you try and have best of breed everywhere, it actually creates a negative when it comes to threat protection because keeping all the policies and things up to date is very, very difficult. And so the industry is moving more to a platform model, right? Now, the challenge for Cisco is how do you get that, the customer to think of the network as part of the platform? Because while the platform model, I think, is starting to gain traction, FloridaNet, Palo Alto, even McAfee, companies like that also have their own version of a security platform. And if you look at the financial performance of companies like FloridaNet and Palo Alto over the past, you know, over the past couple of years, they've been through the roof, right? And so I think an interesting and unique challenge for Cisco is can they convince the security buyer that the network is as important a part of that platform as any other component? If they can do that, I think they can break away from the pack. If not, then they'll stay mixed in with those, you know, Palo, FloridaNet, Checkpoint, and, you know, and Cisco, in that mix. But I do think that may present their single biggest needle moving opportunity just because of how big the security TAM is, and the fact that there is no de facto leader in security today. If they could gain the same kind of position in security as they have a networking, who, I mean, that would move the needle like no other market would. >> Yeah, it's really interesting that they're coming at security, obviously from a position of networking strength. You've got, to your point, you've got best of breed, Okta in identity, you got CrowdStrike in endpoint, Zscaler in cloud security. They're all growing like crazy. And you got Cisco and you know, Palo Alto, CSOs tell us they want to work with Palo Alto because they're the thought leader and they're obviously a major player here. You mentioned FloridaNet, there's a zillion others. We could talk all day about security. But let's bring it back to cloud. We've talked about a number of the piece in Cisco's portfolio, and we haven't really spent any time on full stack observability, which is a big push for Cisco with AppD, Intersight and the ThousandEyes acquisition. And that plays into this equation. But my take, Zeus, is Cisco has a number of cloud knobs that it can turn, it sells core networking equipment to hyperscalers. It can be the abstraction layer to connect on-prem to the cloud and hybrid and across clouds. And it's in a good position with Telcos too, to go after the 5G. But let's use this chart to talk about Cisco's cloud prospects. It's an ETR cut of the cloud customer spending. So we cut it by cloud customers. And they're are, I don't know, 800 or so in the survey. And then looking at various companies performance within that cut. So these are companies that compete, or in the case of HashiCorp, partner with Cisco at some level. Let me just set this up and get your take. So the insert on the chart by the way shows the raw data that positions each dot, the net score and the shared n, i.e. the number of accounts in the survey that responded. The key points, first of all, Azure and AWS, dominant players in cloud. GCP is a distant third. We've reported on that a lot. Not only are these two companies big, they have spending momentum on their platforms. They're growing, they are on that flywheel. Second point, VMware and Cisco are very prominent. They have huge customer bases. And while they're often on a collision course, there's lots of room in cloud for multiple players. When we plotted some other Cisco properties like AppD and Meraki, which as we said, is strong. And then for context, we've placed Dell, HPE, Aruba, IBM and Oracle. And also VMware cloud and AWS, which is notable on its elevation. And as I say, we've added HashiCorp because they're critical partner of Cisco and it's a multi-cloud play. Okay, Zeus, there's the setup. What does Cisco have to do to make the cloud a tailwind? Let's talk about strategy, tailwinds, headwinds, competition, and bottom line it for us. >> Yeah, well, I do think, well, I talked about security being the biggest needle mover for Cisco, I think its biggest challenge is convincing Wall Street in particular, that the cloud is a tailwind. I think if you look at the companies with the really high multiples to their stock, Dave, they're all ones where they're viewed as, they go along with the cloud ride, Right? So the, if you can associate yourself with the cloud and then people believe that the cloud is going to, more cloud equals more business, that obviously creates a better multiple because the cloud has almost infinite potential ahead of it. Now with respect to Cisco, I do think cloud has presented somewhat of a double-edged sword for Cisco. I don't believe the current consumption model for cloud is really a tailwind for Cisco, not really a headwind, but it doesn't really change Cisco's business. But I do think the very definition of cloud is changing before our eyes, Dave. And it's shifting away from centralized clouds. If you think of the way customers bought cloud before, it might have used AWS, it might've used Azure, but it really, that's not really multi-cloud, it's just multiple clouds in which I put things in these centralized resources. It's shifting more to this concept of distributed cloud in which a single application can be built using resources from your private cloud, for AWS, from Azure, from Edge locations, all the cloud providers have built their portfolios to support this concept of distributed cloud and what becomes important there, is a highly agile dynamic network. And in that case with distributed cloud, that is a tailwind for Cisco because now the network is that resource that ties all those distributed cloud components together. Now the network itself has to change. It needs to become a lot more agile and microservices and container friendly itself so I can spin up resources and, you know, in an Edge location, as fast as I can on-prem and things like that. But I do think it creates another wave of innovation and networking, and in that case, I think it does act as a tailwind for Cisco, aside from just the work it's done with the web scalers, you know, those types of companies. So, but I do think that Cisco needs to rethink its delivery model on network services somewhat to take advantage of that. >> At the analyst meeting, Cisco made the point that it does sell to the hyperscalers. It talked about the top six hyperscalers. You know, you had mentioned to me, maybe IBM and Oracle were in there. I always talk about four hyperscalers and only four, but that's fine. Here's my question. Practitioners have told me, buyers have told me, the more money and more workloads I put in the cloud, the less I spend with Cisco. Now, even though that might be Cisco gear powering those clouds, do you see that as a potential threat in that they don't own that relationship anymore and value will confer to the cloud players? >> Yeah, that's, I've heard that too. And I don't, I believe that's true when it comes to general purpose compute. You're probably not buying as many UCS servers and things like that because you are putting them in the cloud. But I do think you do need a refresh the network. I think the network becomes a very important role, plays a very important role there. The variant, the really interesting trend will be, what is your WAM look like? Do you have thousands of workers scattered all over the place, or do you just have a few centralized locations? So I think also, you know, Cisco will wind up providing connectivity within the cloud. If you think of the transition we've seen in other industries, Dave, as far as cloud goes, you think of, you know, F5, a company like that. People thought that AWS would commoditize F5's business because AWS provides their own load balancers, right? But what AWS provides is a very basic, very basic functionality and then use F5's virtual edition or a cloud edition for a lot of the advanced capabilities. And I think you'll see the same thing with the cloud that customers will start buying versions of Cisco that go in the cloud to drive a lot of those advanced capabilities that only Cisco delivers. And so I think you wind up buying more Cisco over time, although the per unit price of what you buy might be a little bit lower. If that makes sense here. >> It does, I think it makes a lot of sense and that fits into the cloud model. You know, you bring up a good point, the conversation with the customer was Rakuten. And that individual was essentially sharing with us, somebody was asking, one of the analysts was asking, "Well, what about the cloud guys? "Aren't they going to really threaten the whole Telco "industry and disrupt it?" And his point was, "Look at, this stuff is not trivial." So to your point, you know, maybe they'll provide some basic functionality. Kind of like they do in a lot of different areas. Data protection is another good example. Security is another good example. Where there's plenty of room for partners, competitors, of on-prem players to add value. And I've always said, "Look, the opportunity "is the cloud players spend 100 billion dollars a year "on CapEx." It's a gift to companies like Cisco who can build an abstraction layer that connects on-prem, cloud for hybrid, across clouds, out to the edge, and really be that layer that is that layer that takes advantage of cloud native, but also delivers that experience, I don't want to use the word seamlessly, but that experience across those clouds as the cloud expands. And that's fundamentally Cisco's cloud strategy, isn't it? >> Oh yeah. And I think people have underestimated over the years, how hard it is to build good networking products. Anybody can go get some silicon and build a product to connect two things together. The question is, can you do it at scale? Can you do it securely? And lots of companies have tried to commoditize networking, you know, White Boxes was looked at as the existential threat to Cisco. Huawei was looked at as the big threat to Cisco. And all of those have kind of come and gone because building high quality network equipment that scales is tough. And it's tougher than most people realize. And your other point on the cloud providers as well, they will provide a basic level of functionality. You know, AWS network equipment doesn't work in Azure. And Azure stuff doesn't work in Google, and Google doesn't work in AWS. And so you do need a third party to come in and act as almost the cloud middleware that can connect all those things together with a consistent set of policies. And that's what Cisco does really well. They did that, you know back when they were founded with routing protocols and you can think this is just an extension of what they're doing just up at the cloud layer. >> Excellent. Okay, Zeus, we're going to leave it there. Thanks to my guest today, Zeus Kerravala. Great analysis as always. Would love to have you back. Check out ZKresearch.com to reach him. Thank you again. >> Thank you, Dave. >> Now, remember I publish each week on Wikibond.com and siliconangle.com. All these episodes are available as podcasts, just search "Braking Analysis" podcast, and you can connect on Twitter at DVallante or email me David.Vallante@siliconangle.com. Thanks for the comments on LinkedIn. Check out etr.plus for all the survey action. This is Dave Vallante for theCUBE insights powered by ETR. Be well and we'll see you next time. (light music)

[Music] and y'all know that these [Music] ladies and gentlemen please take your seats and silence your cellphone's our program will begin shortly ladies and gentlemen please welcome Red Hat executive vice president and chief people officer dallisa Alexander an executive vice president and chief marketing officer Tim Layton [Music] hi everyone we're so excited to kick off this afternoon day 2 at the Red Hat summit we've got a stage full of stories about people making amazing contributions with open source well you know dallisa you and I both been coming to this event for a long long time so what keeps you coming back well you know the summit started as a tech conference an amazing tech conference but now it's expanded to be so much more this year I'm really thrilled that we're able to showcase the power of open source going way beyond the data center and beyond the cloud and I'm here also on a secret mission oh yes I'm here to make sure you don't make too many bad dad jokes so there's no such thing as a bad dad they're just dad jokes are supposed to be bad but I promise to keep it to my limit but I do have one okay I may appeal to the geeks in the audience okay so what do you call a serving tray full of empty beer cans yeah we container platform well that is your one just the one that's what I only got a budget of one all right well you know I have to say though in all seriousness I'm with you yeah I've been coming to the summit since its first one and I always love to hear what new directions people are scoring what ideas they're pursuing and the perspectives they bring and this afternoon for example you're gonna hear a host of different perspectives from a lot of voices you wouldn't often see on a technology mainstage in our industry and it's all part of our open source series live and I have to say there's been a lot of good buzz about this session all week and I'm truly honored and inspired to be able to introduce them all later this afternoon I can tell you over the course the last few weeks I've spent time with all of them and every single one of them is brilliant they're an innovator they're fearless and they will restore your faith in the next generation you know I can't wait to see all these stories all of that and we've got some special guests that are surprised in store for us you know one of the things that I love about the people that are coming on the stage today with us is that so many of them teach others how to code and they're also bringing more people that are very different in to our open-source communities helping our community is more innovative and impactful and speaking of innovative and impactful that's the purpose of our open brand project right that's right we're actually in the process of exploring a refresh of our mark and we'd really like your help as well because we're doing this all in the open we've we've been doing it already in the open and so please join us in our feedback zone booth at the summit to tell us what you think now it's probably obvious but I'm big into Red Hat swag I've got the shirt I've got my pen I've got the socks so this is really important to me personally especially that when my 15 year old daughter sees me in my full regalia she calls me adorable okay that joke was fed horrible as you're done it wasn't it wasn't like I got way more well Tim thanks for helping us at this stage for today it's time to get started with our first guest all right I'll be back soon thank you the people I'm about to bring on the stage are making outstanding contributions to open source in new and brave ways they are the winners of the 2018 women and open source Awards the women in open source awards was created to highlight the contributions that women are making to open source and to inspire new generations to join the movement our judges narrowed down the panel a very long list just ten finalists and then the community selected our two winners that were honoring today let's learn a little bit more about them [Music] a lot of people assume because of my work that I must be a programmer engineer when in fact I specifically chose and communications paths for my career but what's fascinating to me is I was able to combine my love of Communications and helping people with technology and interesting ways I'm able to not be bound by the assumptions that everybody has about what the technology can and should be doing and can really ask the question of what if it could be different I always knew I wanted to be in healthcare just because I feel like has the most impact in helping people a lot of what I've been working on is geared towards developing technology and the health space towards developing world one of the coolest things about open-source is bringing people together working with other people to accomplish amazing things there's so many different projects that you could get involved in you don't even have to be the smartest person to be able to make impact when you're actually developing for someone I think it's really important to understand the need when you're pushing innovation forward sometimes the cooler thing is not [Music] for both of us to have kind of a health care focus I think it's cool because so many people don't think about health care as being something that open-source can contribute to it took a while for it to even get to the stage where it is now where people can open-source develop on concepts and health and it's an untapped potential to moving the world for this award is really about highlighting the work of dozens of women and men in this open source community that have made this project possible so I'm excited for more people to kind of turn their open-source interest in healthcare exciting here is just so much [Music] I am so honored to be able to welcome to the stage some brilliant women and opensource first one of our esteemed judges Denise Dumas VP of software engineering at Red Hat she's going to come up and share her insights on the judging process Denise so you've been judging since the very beginning 2015 what does this judge this being a judge represents you what does the award mean to you you know every year it becomes more and more challenging to select the women an opensource winner because every year we get more nominees and the quality of the submissions well there are women involved in so many fabulous projects so the things that I look for are the things that I value an open source initiative using technology to solve real world problems a work ethic that includes sin patches and altruism and I think that you'll see that this year's nominees this year's winners really epitomize those qualities totally agree shall we bring them on let's bring them on let's welcome to the stage Zoe de gay and Dana Lewis [Music] [Applause] [Applause] [Music] alright let's take a seat [Applause] well you both have had an interesting path to open-source zuy you're a biomedical engineering student any of it you have a degree in public relations tell us what led to your involvement and open source yeah so coming to college I was new I was interested in science but I didn't want to be a medical doctor and I didn't want to get involved in wet lab research so through classes I was taking oh that's why I did biomedical engineering and through classes I was taking I found the classroom to be very dry and I didn't know how how can I apply what I'm learning and so I got involved in a lot of entrepreneurship on campus and through one of the projects I was asked to build a front end and I had no idea how to go about doing that and I had some basic rudimentary coding knowledge and what happened was I got and was digging deep and then found an open source library that was basically building a similar thing that I needed and that was where I learned about open source and I went from there now I'm really excited to be able to contribute to many communities and work on a variety of projects amazing contributions Dana tell us about your journey well I come from a non-traditional background but I was diagnosed with type 1 diabetes at the age of 14 and over the next couple years got really frustrated with the limitations of my own diabetes devices but felt like I couldn't change them because that wasn't my job as a patient but it was actually through social media I discovered someone who had solved one of the problems that I had been found having which was getting date off my diabetes device and that's how I learned about open source was when he was willing to share his code with me so when we turned around and made this hybrid closed-loop artificial pancreas system it was a no brainer to make our work open source as well that's right absolutely and we see using the hash tag we are not waiting can you tell us about that yeah so this hash tag was created actually before I even discovered the open source diabetes world but I loved it because it really illustrates exactly the fact that we have this amazing technology in our hands in our pockets and we can solve some of our most common problems so yes you could wait but waiting is now a choice with open source we have the ability to solve some of our hardest problems even problems dealing with life and death that's great so zuy with the vaccine carrier system that you helped to build how were you able to identify the need and where did you build it yes so I think before you even build anything first need to understand what is the problem that you're trying to solve and that really was the case when starting this project I got to collaborate with engineers in Kampala Uganda and travel there and actually interview stakeholders in the medical field medical doctors as well as pharmaceutical companies and from there I really got to understand the health system there as well as what is how do vaccines enter the country and how can we solve this problem and that's how we came up with the solution for an IOT based vaccine carrier tracking system I think it's really important especially today when products might be flashy to also understand what is the need behind it and how do we solve problems with these products yeah yeah it's so interesting how both of you have this interest in health care Dana how do you see open-source playing a role in healthcare but first before you answer that tell us about your shirt so this shirt has the code of my artificial pancreas on it and I love it as an illustration of no thank you I love it as an illustration of how open-source is more than we think it is I've just been blown away by the contributions of people in my open-source communities and I think that that is what we should apply to all of healthcare there's a lot of tools and technologies that are solving real world problems and I think if we take what we know in technology and apply it to healthcare we'll solve a lot of problems more quickly but it really needs to be recognizing everything an open source it's the documentation it's the collaboration it's the problem-solving it's working together to take technologies that we didn't previously think we're applicable and finding new ways to apply it it's a great answer Sooey yeah I think especially where healthcare is related to people and open-source is the right way to collaborate with people all over the world especially in the project I've been working on we're looking at vaccines in Uganda but the same system can be applied in any other country and then you can look at cross countries health systems there and from there it becomes bigger and bigger and I think it's really important for people who have an idea and want to take it further to know that open-source is a way that you could actually take your idea further whether you have a technical background or not so yeah stories are amazing you're just an inspiration for everyone in open-source I want to thank you so much for joining us here today let's give another round of applause to our winners [Applause] [Music] you know the tagline for the award is honor celebrate inspire and I feel like we've been doing that today very very well and I know that so many people have been inspired today especially the next generation who go on to do things we can't even dream of yet [Music] I think collabs important because we need to make sure we get younger children interested in technology so that they understand the value of it but also that there are a lot of powerful women in technology and they can be one of them I hope after this experience maybe we'll get some engineers and some girls working our hot so cool right well we have some special guests convite for the club stage now I'd like to invite Tim back and also introduce Red Hat's own Jamie Chappell along with our collab students please welcome Gabby tenzen Sofia lyric Camila and a Volyn [Applause] you've been waiting for this moment for a while we're so excited hear all about your experiences but Jamie first tell us about collab sure so collab is red hats way of teaching students about the power of open source and collaboration we kicked off a little over a year ago in Boston and that was so successful that we decided to embark on an East Coast tour so in October we made stops at middle schools in New York DC and Raleigh and these amazing people over here are from that tour and this week they have gone from student to teacher so they've hosted two workshops where they have taught Red Hat summit attendees how to turn raspberry pies into digital cameras they assigned a poem song of the open road by Walt Whitman and they've been working at the open source stories booth helping to curate photos for an installation we're excited to finish up tomorrow so amazing and welcome future women in open source we want to know all about your experiences getting involved can you tell us tenzen tell us about something you've learned so during my experience with collab I learned many things but though however the ones that I valued the most were open source and women empowerment I just I was just so fascinated about how woman were creating and inventing things for the development of Technology which was really cool and I also learned about how open source OH was free and how anyone could access it and so I also learned that many people could you know add information to it so that other people could you learn from it and use it as well and during Monday's dinner I got this card saying that the world needed more people like you and I realized through my experience with collab that the world does not only need people like me but also everyone else to create great technology so ladies you know as you were working on your cameras and the coding was there a moment in time that you had an AHA experience and I'm really getting this and I can do this yes there was an aha moment because midway through I kind of figured out well this piece of the camera went this way and this piece of the camera did it go that way and I also figured out different features that were on the camera during the camera build I had to aha moments while I was making my camera the first one was during the process of making my camera where I realized I was doing something wrong and I had to collaborate with my peers in order to troubleshoot and we realize I was doing something wrong multiple times and I had to redo it and redo it but finally I felt accomplished because I finished something I worked hard on and my second aha moment was after I finished building my camera I just stared at it and I was in shock because I built something great and it was so such a nice feeling so we talked a lot about collaboration when we were at the lab tell us about how learning about collaboration in the lab is different than in school so in school collaboration is usually few and far between so when we went to collab it allowed us to develop new skills of creativity and joining our ideas with others to make something bigger and better and also allowed us to practice lots of cooperation an example of this is in my group everybody had a different problem with their pie camera and we had to use our different strengths to like help each other out and everybody ended up assembling and working PI camera great great awesome collaboration in collab and the school is very different because in collab we were more interactive more hands-on and we had to work closer together to achieve our own goals and collaboration isn't just about working together but also combining different ideas from different people to get a product that is so much better than some of its parts so girls one other interesting observation this actually may be for the benefit of the folks in our audience but out here we have represented literally hundreds and hundreds of companies all of whom are going to be actually looking for you to come to work for them after today we get first dibs that's right but um you know if you were to have a chance to speak to these companies and say what is it that they could do to help inspire you know your your friends and peers and get them excited about open source what would you say to them well I'm pretty sure we all have app store and I'm pretty sure we've all downloaded an app on that App Store well instead of us downloading app State well the computer companies or the phone companies they could give us the opportunity to program our own app and we could put it on the App Store great idea absolutely I've got to tell you I have a 15 year old daughter and I think you're all going to be an inspiration to her for the same absolutely so much so I see you brought some cameras why don't we go down and take a picture let's do it [Applause] all right I will play my very proud collab moderator role all right so one two three collab okay one two three [Applause] yeah so we're gonna let leave you and let you tell us more open source stories all right well thank you great job thank you all and enjoy the rest of your time at Summit so appreciate it thanks thank you everyone pretty awesome pretty awesome and I would just like to say they truly are fedorable that's just um so if you would like to learn more as you heard the girls say they're actually Manning our open-source stories booth at the summit you know please come down and say hello the stories you've seen thus far from our women and open-source winners as well as our co-op students are really bringing to life the theme of this year's summit the theme of ideas worth exploring and in that spirit what we'd like to do is explore another one today and that is how open-source concepts thrive and expand in the neverending organic way that they do much like the universe metaphor that you see us using here it's expanding in new perspectives and new ideas with voices beyond their traditional all starting to make open-source much bigger than what it was originally started as fact open-source goes back a long way long before actually the term existed in those early days you know in the early 80s and the like most open-source projects were sort of loosely organized collections of self-interested developers who are really trying to build low-cost more accessible replicas of commercial software yet here we are 2018 the world is completely different the open-source collaborative development model is the font of almost all original new innovation in software and they're driven from communities communities of innovation RedHat of course has been very fortunate to have been able to build an extraordinary company you know whose development model is harnessing these open-source innovations and in turning them into technologies consumable by companies even for their most mission-critical applications the theme for today though is we see open-source this open source style collaboration and innovation moving beyond just software this collaborative community innovation is starting to impact many facets of society and you're starting to see that even with the talks we've had already too and this explosion of community driven innovation you know is again akin to this universe metaphor it expands in all directions in a very organic way so for red hat you know being both beneficiaries of this approach and stewards of the open collaboration model we see it important for us to give voice to this broader view of open source stories now when we say open source in this context of course will meaning much more than just technology it's the style of collaboration the style of interaction it's the application of open source style methods to the innovation process it's all about accelerating innovation and expanding knowledge and this can be applied to a whole range of human endeavors of course in education as we just saw today on stage in agriculture in AI as the open source stories we shared at last year's summit in emerging industries like healthcare as we just saw in manufacturing even the arts all these are areas that are now starting to benefit from collaboration in driving innovation but do we see this potentially applying to almost any area of human endeavor and it expands again organically expanding existing communities with the addition of new voices and new participants catalyzing new communities and new innovations in new areas as we were talking about and even being applied inside organizations so that individual companies and teams can get the same collaborative innovation effects and most profound certainly in my perspective is so the limitless bounds that exist for how this open collaboration can start to impact some of humankind's most fundamental challenges we saw a couple of examples in fact with our women and open-source winners you know that's amazing but it also potentially is just the tip of the iceberg so we think it's important that these ideas you know as they continue to expand our best told through storytelling because it's a way that you can embrace them and find your own inspirations and that's fundamentally the vision behind our open-source stories and it's all about you know building on what's come before you know the term we use often is stay the shoulders are giants for a lot of the young people that you've seen on this stage and you're about to see on this stage you all are those giants you're the reason and an hour appears around the world are the reasons that open-source continues to expand for them you are those giants the other thing is we all particularly in this room those of us have been around open-source we have an open-source story of our own you know how were you introduced the power of open-source how did you engage a community who inspired you to participate those are all interesting elements of our personal open-source stories and in most cases each of them are punctuated by you here my question to the girls on stage an aha moment or aha moments you know that that moment of realization that enlightens you and causes you to think differently and to illustrate I'm going to spend just a few minutes sharing my open-source story for for one fundamental reason I've been in this industry for 38 years I am a living witness to the entire life of open-source going back to the early 80s I've been doing this in the open-source corner of the industry since the beginning if you've listened to Sirhan's command-line heroes podcasts my personal open story will actually be quite familiar with you because my arc is the same as the first several podcast as she talked about I'm sort of a walking history lesson in fact of open source I wound up at most of the defining moments that should have changed how we did this not that I was particularly part of the catalyst I was just there you know sort of like the Forrest Gump of open-source I was at all these historical things but I was never really sure how it went up there but it sure was interesting so with that as a little bit of context I'm just gonna share my aha moment how did I come to be you know a 59 year old in this industry for 38 years totally passionate about not just open source driving software innovation but what open source collaboration can do for Humanity so in my experience I had three aha moments I just like to share with you the first was in the early 80s and it was when I was introduced to the UNIX operating system and by the way if you have a ha moment in the 80s this is what it looks like so 1982 mustache 19 where were you 2018 beard that took a long time to do all right so as I said my first aha moment was about the technology itself in those early days of the 80s I became a product manager and what at the time was digital equipment corporation's workstation group and I was immediately drawn to UNIX I mean certainly these this is the early UNIX workstation so the user interface was cool but what I really loved was the ability to do interactive programming via the shell but by a--basically the command line and because it was my day job to help figure out where we took these technologies I was able to both work and learn and play all from the same platform so that alone was was really cool it was a very accessible platform the other thing that was interesting about UNIX is it was built with networking and and engagement in mind had its own networking stack built in tcp/ip of course and actually built in a set of services for those who've been around for a while think back to things like news groups and email lists those were the first enablers for cross internet collaboration and that was really the the elements that really spoke to me he said AHA to me that you know this technology is accessible and it lets people engage so that was my first aha moment my second aha moment came a little bit later at this point I was an executive actually running Digital Equipment Corporation UNIX systems division and it was at a time where the UNIX wars were raging right all these companies we all compartmentalized Trump those of the community and in the end it became an existential threat to the platform itself and we came to the point where we realized we needed to actually do something we needed to get ahead of this or UNIX would be doomed the particular way we came together was something called cozy but most importantly the the technique we learned was right under our noses and it was in the area of distributed computing distributed client-server computing inherently heterogenous and all these same companies that were fierce competitors at the operating system level were collaborating incredibly well around defining the generation of client-server and distributed computing technologies and it was all being done in open source under actually a BSD license initially and Microsoft was a participant Microsoft joined the open group which was the converged standards body that was driving this and they participated to ensure there was interoperability with Windows and and.net at the time now it's no spoiler alert that UNIX lost right we did but two really important things came out of that that sort of formed the basis of my second aha moment the first is as an industry we were learning how to collaborate right we were leveraging open source licenses we realized that you know these complex technologies are best done together and that was a huge epiphany for the industry at that time and the second of course is that event is what opened the door for Linux to actually solve that problem so my second aha was all about the open collaboration model works now at this point to be perfectly candidates late 1998 well we've been acquired by compacts when I'm doing the basically same role at Compaq and I really had embraced what the potential impact of this was going to be to the industry Linux was gaining traction there were a lot of open source projects emerging in distributed computing in other areas so it was pretty clear to me that the in business impact was going to be significant and and that register for me but there was seem to be a lot more to it that I hadn't really dropped yet and that's when I had my third aha moment and that was about the passion of open-source advocates the people so you know at this time I'm running a big UNIX group but we had a lot of those employees who were incredibly passionate about about Linux and open source they're actively participating so outside of working a lot of things and they were lobbying more and more for the leadership to embrace open source more directly and I have to say their passion was contagious and it eventually spread to me you know they were they were the catalyst for my personal passion and it also led me to rethink what it is we needed to go do and that's a passion that I carry forward to this day the one driven by the people and I'll tell you some interesting things many of those folks that were with us at Compaq at the time have gone on to be icons and leaders in open-source today and many of them actually are involved with with Red Hat so I'll give you a couple of names that some of whom you will know so John and Mad Dog Hall work for me at the time he was the person who wrote the first edition of Linux for dummies he did that on his own time when he was working for us he he coined he was part of the small team that coined the term open source' some other on that team that inspired me Brian Stevens and Tim Burke who wrote the first version to rent out Enterprise Linux actually they did that in Tim Burke's garage and cost Tim's still with Red Hat today two other people you've already seen him on stage today Denise Dumas and Marko bill Peter so it was those people that I was fortunate enough to work with early on who had passion for open-source and much like me they carry it forward to this day so the punchline there is they ultimately convinced us to you know embrace open-source aggressively in our strategy and one of the interesting things that we did as a company we made an equity investment in Red Hat pre-ipo and a little funny sidebar here I had to present this proposal to the compact board on investing in Red Hat which was at that time losing money hand over fist and they said well Tim how you think they're gonna make money selling free software and I said well you know I don't really know but their customers seem to love them and we need to do this and they approve the investment on the spot so you know how high do your faith and now here we are at a three billion dollar run rate of this company pretty extraordinary so from me the third and final ha was the passion of the people in the way it was contagious so so my journey my curiosity led me first to open source and then to Red Hat and it's been you know the devotion of my career for over the last thirty years and you know I think of myself as pretty literate when it comes to open source and software but I'd be the first one to admit I would have never envisioned the extent to which open source style collaboration is now being brought to bear on some of the most interesting challenges in society so the broader realization is that open source and open can really unlock the world's potential when applied in the collaborative innovative way so what about you you know you many of you particular those have been around for a while you probably have an open source story of your own for those that maybe don't or they're new to open source are new to Red Hat your open source story may be a single inspiration away it may happen here at the summit we certainly hope so it's how we build the summit to engage you you may actually find it on this stage when I bring up some of the people who are about to follow me but this is why we tell open-source stories and open source stories live so each of you hopefully has a chance to think about you know your story and how it relates over source so please take advantage of all the things that are here at the summit and and find your inspiration if you if you haven't already so next thing is you know in a spirit of our telling open source stories today we're introducing our new documentary film the science of collective discovery it's really about citizen scientists using open systems to do serious science in their backyards and environmental areas and the like we're going to preview that I'm gonna prove it preview it today and then please come see it tonight later on when we preview the whole video so let's take a look I may not have a technical scientific background but I have one thing that the scientists don't have which is I know my backyard so conventional science happens outside of public view so it's kind of in this black box so most are up in the ivory tower and what's exciting about citizen science is that it brings it out into the open we as an environmental community are engaging with the physical world every day and you need tools to do that we needed to democratize that technology we need to make it lightweight we need to make it low-cost we needed to make it open source so that we could put that technology in the hands of everyday people so they go out and make those measurements where they live and where they breathe when you first hear about an environmental organization you mostly hear about planting trees gardens things like that you don't really think about things that are really going to affect you hey we're the air be more they'd hold it in their hand making sure not to cover the intake or the exhaust I just stand here we look at the world with forensic eyes and then we build what you can't see so the approach that we're really centered on puts humans and real issues at the center of the work and I think that's the really at the core of what open source is social value that underlies all of it it really refers to sort of the rights and responsibilities that anyone on the planet has to participate in making new discoveries so really awesome and a great story and you know please come enjoy the full video so now let's get on with our open stories live speakers you're going to really love the rest of the afternoon we have three keynotes and a demo built in and I can tell you without exaggeration that when you see and hear from the young people we're about to bring forward you know it's truly inspirational and it's gonna restore totally your enthusiasm for the future because you're gonna see some of the future leaders so please enjoy our open source stories live presentation is coming and I'll be back to join you in a little bit thanks very much please welcome code newbie founder Saran yep Eric good afternoon how y'all doing today oh that was pretty weak I think you could do better than that how y'all doing today wonderful much better I'm Saran I am the founder of code newbie we have the most supportive community of programmers and people learning to code this is my very first Red Hat summits I'm super pumped super excited to be here today I'm gonna give you a talk and I'm going to share with you the key to coding progress yes and in order to do that I'm gonna have to tell you a story so two years ago I was sitting in my hotel room and I was preparing for a big talk the next morning and usually the night before I give a big talk I'm super nervous I'm anxious I'm nauseous I'm wondering why I keep doing this to myself all the speakers backstage know exactly what I'm what I'm talking about and the night before my mom knows this so she almost always calls just to check in to see how I'm doing to see how I'm feeling and she called about midnight the night before and she said how are you how are you doing are you ready and I said you know what this time I feel really good I feel confident I think I'm gonna do a great job and the reason was because two months ago I'd already given that talk in fact just a few days prior they had published the video of that talk on YouTube and I got some really really good positive feedback I got feedback from emails and DMS and Twitter and I said man I know people really like this it's gonna be great in fact that video was the most viewed video of that conference and I said to my office said you know what let's see how many people loved my talk and still the good news is that 14 people liked it and a lot more people didn't and I saw this 8 hours before I'm supposed to give that exact same talk and I said mom I gotta call you back do you like how I did that to hang up the phone as if that's how cellphones work yeah and so I looked at this and I said oh my goodness clearly there's a huge disconnect I thought they were really liked they were I thought they were into it and this showed me that something was wrong what do you do what do you do when you're about to give that same talk in 8 hours how do you begin finding out what the problem is so you can fix it I have an idea let's read the comments you got to believe you gotta have some optimism come on I said let's read the comments because I'm sure we'll find some helpful feedback some constructive criticism some insights to help me figure out how to make this talk great so that didn't happen but I did find some really colorful language and some very creative ideas of what I could do with myself now there are some kids in the audience so I will not grace you with these comments but there was this one comment that did a really great job of capturing the sentiment of what everyone else was saying I can only show you the first part because the rest is not very family-friendly but it reads like this how do you talk about coding and not fake societal issues see the thing about that talk is it wasn't just a code talk it was a code and talk is about code and something else that talked touched on code and social justice I talked a lot about how the things that we build the way we build them affect real people and their problems and their struggles and that was absolutely not okay not okay we talk about code and code only not the social justice stuff it also talked about code and diversity yeah I think we all know the diversity is really about lowering the bar it forces us to talk about people and their issues and their problems in their history and we just don't do that okay absolutely inappropriate when it comes to a Tech Talk That Talk touched on code and feelings and feelings are squishy they're messy they're icky and a lot of us feel uncomfortable with feelings feelings have no place in technology no place in code we want to talk about code and code I want you to show me that API and when you show me that new framework that new tool that's gonna solve my problems that's all I care about I want to talk about code and give me some more code with it now I host a podcast called command line heroes it's an original podcast from Red Hat super excited about it if you haven't checked it out and totally should and what I love about this show as we talk about these really important moments and open swords these inflection points moments where we see progress we move forward and what I realized looking back at those episodes is all of those episodes have a code and something let's look at a few of those the first two episodes focused on the history of operating systems as a two-part episode part 1 and part 2 and there's lots of different ways we can talk about operating systems for these two episodes we started by talking about Windows and Mac OS and how these were two very powerful very popular operating systems but a lot of a lot of developers were frustrated with them they were closed you couldn't see inside you can see what it was doing and I the developer want to know what it's doing on my machine so we kind of had a little bit of a war one such developer who was very frustrated said I'm gonna go off and do my own thing my name is Linus this thing is Linux and I'm gonna rally all these other developers all these other people from all over the old to come together and build this new thing with me that is a code and moment in that case it was code and frustration it was a team of developers a world of developers literally old world of developers who said I'm frustrated I'm fed up I want something different and I'm gonna do something about it and what's really beautiful about frustration is it the sign of passion we're frustrated because we care because we care so much we love so deeply then we want to do something better next episode is the agile revolution this one was episode three now the agile revolution is a very very important moment in open-source and technology in general and this was in response to the way that we used to create products we used to give this huge stack of specs all these docs from the higher-ups and we'd take it and we go to our little corner and we lightly code and build and then a year with Pastor here's a pass a few years have passed and we'd finally burst forth with this new product and hope that users liked it and loved it and used it and I know something else will do that today it's okay no judgment now sometimes that worked and a lot of times it didn't but whether or not it actually worked it hurt it was painful these developers not enjoy this process so what happened a dozen developers got together and literally went off into their own and created something called the agile manifesto now this was another code and moment here it's code and anger these developers were so angry that they literally left civilization went off into a mountain to write the agile manifesto and what I love about this example is these developers did not work at the same company we're not on the same team they knew each other from different conferences and such but they really came from different survive and they agreed that they were so angry they were going to literally rewrite the way we created products next as an example DevOps tear down the wall this one is Episode four now this is a bit different because we're not talking about a piece of technology or even the way we code here we're talking about the way we work together the way that we collaborate and here we have our operations folks and our developers and we've created this new kind of weird place thing called DevOps and DevOps is interesting because we've gotten to a point where we have new tools new toys so that our developers can do a lot of the stuff that only the operations folks used to be able to do that thing that took days weeks months to set up I can do it with a slider it's kind of scary I can do it with a few buttons and here we have another code and moment and here that blink is fear for two reasons the operations focus is looking over the developer folks and thinking that was my job I used to be able to do that am I still valuable do I have a place in this future do I need to retrain there's also another fear which is those developers know what they're doing do they understand the security implications they appreciate how hard it is or something to scale and how to do that properly and I'm really interested in excited to see where we go with that where we take that emotion if we look at all of season one of the podcast we see that there's always a code and whether it's a code and frustration a code and anger or a code and fear it always boils down to code and feelings feelings are powerful in almost every single episode we see that that movement forward that progress is tied back to some type of Oshin and for a lot of us this is uncomfortable feelings make us feel weird and a lot of those YouTube commenters definitely do not like this whole feeling stuff don't be like those YouTube commenters there's one thing you take away from this whole talk let it be that don't be like these YouTube commenters feelings are incredibly powerful so the next time that you're working on a project you're having a conversation about a piece of software or a new piece of technology and you start to get it worked up you get angry you get frustrated maybe you get worried you get anxious you get scared I hope you recognize that feeling as a source of energy I hope you take that energy and you help us move forward I would take that to create the next inflection point that next step in the right direction feelings are your superpowers and I hope you use your powers for good thank you so much [Applause] please welcome jewel-box chief technology officer Sara Chipps [Music] Wow there's a lot of you out here how's it going I know there's a lot of you East Coasters here as well and I'm still catching up on that sleep so I hope you guys are having a great experience also my name is Sarah I'm here from New York I have been a software developer for 17 years it's longer than some of the people on stage today I've been alive big thanks to the folks at Red Hat for letting us come and tell you a little bit about jewel box so without further ado I'm gonna do exactly that okay so today we're gonna do a few things first I'm gonna tell you why we built jewel BOTS and why we think it's a really important technology I'm gonna show you some amazing magic and then we're gonna have one of the jewel bus experts come as a special guest and talk to you more about the deep technology behind what we're building so show hands in the audience who here was under 18 years old when they started coding it's hard for me to see you guys yep look around I'd have to say at least 50% of you have your hands up all right keep your hand up if you were under 15 when you started coding I think more hands up just what is it I don't know how that mouth works but awesome okay great yeah a little of I think about half of you half of you have your hands up that's really neat I've done a bunch of informal polls on the internet about this I found that probably about two-thirds of professional coders were under 18 when they started coding I myself was 11 I was a homeschooled kid so a little weird I'm part of the generation and some of you maybe as well is the reason we became coders is because we were lonely not because we made a lot of money so I was 11 this is before the internet was a thing and we had these things called BBS's and you would call up someone else's computer in your town and you would hang out with people and chat with them and play role-playing games with them it didn't have to be your town but if it wasn't your mom would yell at you for a long distance fees and I got really excited about computers and coding because of the community that I found online okay so this is sometimes the most controversial part of this presentation I promised you that they dominate our lives in many ways even if you don't even if you don't even know a 9 to 14 year old girl even if you just see them on the street sometimes they are deciding what you and I do on a regular basis hear me out for a second here so who here knows who this guy is okay you don't have to raise your hands but I think most people know who this guy is right so this guy used to be this guy and then teenage girls were like I think this guy has some talent to him I think that he's got a future and now he's a huge celebrity today what about this guy just got his first Oscar you know just kind of starting out well this guy used to be this guy and I'm proud to tell you that I am one of the many girls that discovered him and decided this guy has a future all right raise your hand if you listen to Taylor Swift just kidding I won't make you do it but awesome that's great so Taylor Swift we listen to Taylor Swift because these girls discovered Taylor Swift it wasn't a 35 year old that was like this Taylor Swift is pretty neat no one cares what we think but even bigger than that these huge unicorns that all of us some of us work for some of us wish we invented these were discovered by young teenage girls no one is checking to see what apps were using they're finding new communities in these thin in these platforms and saying this is how I want to commune with my friends things like Instagram snapchat and musically all start with this demographic and then we get our cues from them if you don't know what musically is I promise you ask your nearest 9 to 14 year old friend if you don't do that you'll hear about it in a few years but this demographic their futures are all at risk everyone here knows how much the field of software development is growing and how important technical literacy is to the future of our youth however just 18% of computer science graduates are girls just 19% of AP computer science test takers and just 15% of Google's tech force identify as female so we decided to do something about that we were inspired by platforms like MySpace and Geocities things like Neopets and minecraft all places where kids find something they love and they're like okay to make this better all I have to do is learn how to code I can totally do that and so we wanted to do that so we talked to 200 girls we went to schools we sat down with them and we were like what makes you tick what are you excited about and what we heard from them over and over again is their friends their friends and their community are pivotal to them and this time in their lives so when we started talking to them about a smart friendship bracelet that's when they started really freaking out so we built Jewel BOTS and Jewel BOTS has an active online community where girls can work together share code that they've built and learn from each other help each other troubleshoot sometimes the way they work is when you are near your friends your bracelets light up the same color and you can use them to send secret messages to each other and you can also code them so you can say things like when all my swimming friends are together in the same room all of our bracelets should go rainbow colors which is really fun you can even build games jewel BOTS started shipping about a year and a half ago about after a lot of work and we are about to ship our 12,000 jewel bot we're in 38 city sorry 38 countries and we're just getting started okay so now it's time for the magic and I have an important question does anyone here want to be my friend pick me all right someone today Gary oh I don't have many friends that's awesome I'm so glad that we'll be friends okay it's awesome so we just need to pair our jewel BA okay okay and in order to do that we're gonna hold the magic button in the middle down for two seconds so one locomotive two locomotive great and then we got a white flashing I'm gonna do yours again I did it wrong locomotive two locomotive it's we're adults we can't do it okay it's a good that are smart alright so now we get to pick our friendship color I'm gonna pick red hat red does that work for you sure okay great so now I just picked a red hat red and my jewel bot is saying alright Tim's jewel bot do you want to be my friend and imageable about it's like I'm thinking about it I think so okay now we're ready okay great so now we're red friends when we're together our bracelets are going to be red and I will send you a secret message when it's time for you to come out and trip and introduce the next guest awesome well thank you so much thank you tailor gun so glad we could be friends and if only people would start following me on Twitter it'd be a great day awesome alright so now you can see the not so technical part of jewel box they use bluetooth to sense when your friends are nearby so they would work in about a 30 meter hundred foot range but to tell you about the actual technology part I'm going to introduce is someone much more qualified than I am so Ellie is one of our jewel box ambassadors she's an amazing YouTube channel that I would please ask you to check out and subscribe she's le G Joel BOTS on YouTube she's an amazing coder and I'm really excited to introduce you today to Ellie Galloway come on out Ellie [Applause] hello my name is le gallais I'm gonna show you how I got coding and then show you some coding in action I first started coding at a6 when my dad helped me code a game soon after I program form a code for Minecraft then my dad had shown me jo bot I keep coding because it helps people for instance for instance you could code auto crack to make it a lot smarter so it can help make people stay run faster but what about something more serious what if you could help answer 911 calls and give alerts before we start I have three main steps to share with you I often use these steps to encoding my jaw bot and continue to use some of these now step one read the instructions and in other words this means for Jabba to memorize the colors and positions a way to memorize these because it's tricky is to remember all the colors and positions you O type will be capital and remember that the positions are either short for north west south west north east and south east step to learn the basic codes when it comes to coding you need to work your way up step 3 discover feel free to discover once you mastered everything now let's get to coding let's use or let's first use combining lights so under void loop I'm going to put LED turn on single s/w and blue and before we make sure that this works we got to put LED LED okay now let's type this again LED dot turn on single now let's do SW green now we have our first sketch so let's explain what this means led LED is a function that to control the LED lights LED turn on single SW blue tells that SW light to turn blue and green flashes so quickly with the blue it creates aqua now let's do another code lets you i'm going to use a more advanced command to make a custom color using RGB let's use a soft pink using 255 105 and 180 now let's type this in the button press function so let's do LED led LED dot set light and now we can do let's do position 3 255 105 and 180 now let's explain what this means the first one stands for the position the three others stand for red green and blue our GPS can only go up to 255 but there are 256 levels but if you count the first one as zero then get 255 so let's first before we move on let's show how this works so this is it before and now let's turn it on to see how our aqua turned out now let's see how our RGB light turned out so we are looking for a soft pink so let's see how it looks think about how much the code you write can help people all around the world these are ideas are just the beginning of opening a new world in technology a fresh start is right around the corner I hope this helped you learn a little bit about coding and even made you want to try it out for yourself thank you [Applause] alright alright alright I need your help for a second guys alright one second really really fascinating we're short on time today is Ellie's 11th birthday and I think we should give her the biggest present that she's gonna get today and it's something none of us have experienced and that is thousands of people saying happy birthday Elliott wants so when I say three can I get a happy birthday Elly one two three happy birthday Elly great job that's the best part of my job okay so those are that's two of us we're just getting started this numbers out Dana would almost shipped 12,000 jewel BOTS and what I'm really excited to tell you about is that 44% of our users don't just play with their jewel bots they code them and they're coding C do you even code C I don't know that you do but we have 8 to 14 year olds coding C for their jewel box we also have hundreds of events where kids come and they learn how to code for the first time here's how you can help we're open source so check out our github get involved our communities online you can see the different features that people's are asking for we're also doing events all over the world a lot of people are hosting them at their companies if you're interested in doing so reach out to us thank you so much for coming and learning about jewel box today enjoy the rest of your summit [Music] ladies and gentlemen please welcome hacker femme au founder Femi who Bois de Kunz [Music] good afternoon red hat summit 2018 i'm femi holiday combs founder of hacker femme Oh I started coding when I was 8 when I was 9 I set up South London raspberry jam through crowdfunding to share my passion for coding with other young people who might not otherwise be exposed to tech since then I've run hundreds of coding and robot workshops across the UK and globally in 2017 I was awarded an inaugural legacy Diana award by their Royal Highnesses Prince William and Prince Harry my service and community we welcome young people who have autism or like me tract syndrome because coding linked me up to a wider community of like-minded people and I'm trying to do the same for those who might also benefit from this I also deliver workshops to corporate companies and public organizations whilst feeding back ideas and resources into my community work we like to cascade our knowledge and experience to other young coders so that they can benefit too we're learning new tech every day we're starting to use github to document and manage our coding projects we've no dread we're using the terminal and beginning to really appreciate Linux as we explore cybersecurity and blockchain it's been quite a journey from South London to the world-famous Tate Modern museum to Bangladesh to this my first trip to the States and soon to China where I hope to translate my microwave workshops into Mandarin on this journey I'm noticed it is increasingly important for young coders to have collaborative and community led initiatives and enterprise and career ready skills so my vision now is to run monthly meetups and in collaboration with business partners help a hundred young disadvantaged people to get jobs in the digital services in fact out of all the lessons I've learned from teaching young coders they all have one thing in common the power of open source and the importance of developing community and today I want to talk about three of those lessons the value of reaching out and collaborating the importance of partnering event price and the ability to self organize and persist which translated into English means having a can-do attitude getting stuff done when you reach out when you show curiosity you realize you're not alone in this diverse community no matter who you are and where you're from from coding with minecraft to meeting other young people with jams I found there are people like me doing things I like doing I get to connect with them that's where open-source comes to the fourth second the open source community is so vast then it crosses continents it's so immersed perspectives that it can take you to amazing places out of space even that's my code running on the International Space Station's Columbus module let's take a lesson and playing was an audio representation for the frequencies recorded in space my team developed Python code to measure and store frequency readings from the space station and that was down linked back to earth to my email box Thomas who's 10 developed an audio file using audacity and importing it back into Python how cool is that Trulli collaboration can take you places you never thought possible because that's how the community works when you throw a dilemma a problem a tip the open source community comes back with answers when you give the community gives back tenfold that's how open source expands but in that vast starscape how do you know what to focus on there are so many problems to solve where do I start your world enterprice enterprise software is very good at solving problems what's the big problem how about helping the next generation be ready for the future I want to do more for the young coding community so I'm developing entrepreneurial business links to get that done this is a way to promote pathways to deal with future business problems whether in FinTech healthcare or supply chains a meeting the skill shortage it is a case for emerging in it's a case for investing in emerging communities and young change enablers throwing a wider net equates to being fully inclusive with a good representation of diversity you know under the shadow of the iconic show back in London there are pockets of deprivation where young people can't even get a job in a supermarket many of them are interested in tech in some way so my goal for the next three years is to encourage young people to become an active part of the coding community with open source we have the keys to unlock the potential for future innovation and technological development with young coders we have the people who have to face these problems working on them now troubleshooting being creative connecting with each other finding a community discovering their strengths along the way for me after running workshops in the community for a number of years when I returned from introducing coding to young street kids in Bangladesh I realized I had skills and experience so I set up my business hacker Famicom my first monetized fehmi's coding boot camp at Rice London Barclays Bank it was a sellout and a few weeks later shows my second I haven't looked back since but it works the opposite way - all the money raised enable me to buy robots for my community events and I was able to cascade my end price knowledge across to other young coders - when you focus on business problems you get active enthusiastic support from enterprise and then you can take on anything the support is great and we have tons of ideas but what does it really take to execute on those ideas to get things done can-do attitudes what open source needs you've seen it all this week we're all explorers ideator z' thinkers and doers open source needs people who can make the ideas happen get out there and see them through like I did setting up Safford and raspberry jam as an inclusive space to collaborate and learn together and that that led to organizing the young coders conference this was about organizing our own two-day event for our partners in industry to show they value young people and wanted to invest in our growth it doesn't stop there oh nice now I'm setting up monthly coding meetups and looking at ways to help other young people to access job opportunities in end price and digital services the underlying ethos remains the same in all I do promoting young people with the desire to explore collaborative problem-solving when coding digital making and building enterprise you fled having the confidence to define our journey and pathways always being inclusive always encouraging innovation and creativity being doers does more than get projects done makes us a pioneering force in the community dreaming and doing is how we will make exponential leaps my generation is standing on the shoulders of giants you the open-source pioneers and the technology you will built so I'd love to hear about your experiences who brought you into the open-source community who taught you as we go to upscale our efforts we encounter difficulties have you and how did you overcome them please do come to talk to me I'll be in the open-source stories booth both today and tomorrow giving workshops or visit the Red Hat page of my website hack Famicom I really value your insights in conclusion I'd like I'd like to ask you to challenge yourself you can do this by supporting young coders find the crowdfunding campaign kick-start their ideas into reality I'm proof that it works it's so awesome to be an active part of the next exponential leap together thank you [Applause] so unbelievable huh you know he reminds me of be at that age not even close and I can tell you I've spent a lot of time with Femi and his mom grace I mean what you see is what you get I mean he's incredibly passionate committed and all that stuff he's doing that long list of things he's doing he's going to do so hopefully today you get a sense of what's coming in the next generation the amazing things that people are doing with collaboration I'd also like to thank in addition to femi I'd like to thank Sauron Sarah and Ellie for equally compelling talks around the open source stories and again as I mentioned before any one of you can have an open source story that can be up here inspiring others and that's really our goal in telling these stories and giving voice to the things that you've seen today absolutely extraordinary things are happening out there and I encourage you to take every advantage you can hear this week and as is our theme for the summit please keep exploring thank you very much [Applause] [Music]

>> Announcer: Live, from Las Vegas, it's theCUBE covering Dell EMC World 2017. Brought to you by Dell EMC. >> Okay, welcome back everyone, we're live here, day three of three days of coverage of theCUBE at Dell EMC World 2017. I'm John Furrier with my co-host Paul Gillin and special guest on our day-three opening, Peter Burris, head of research of SiliconANGLE Media, general manager of wikibon.com research. Guys, good to see you on day three. We're goin' strong. I mean, I think I feel great, a lot of activity. So many story lines to talk about. Obviously the big one is the combination, not merger, I slipped yesterday, or acquisition, the combination of equals, Dell, EMC. Some will question did EMC acquire Dell or Dell acquire EMC? Certainly Michael Dell's still captain of the ship. But that's the top story. But a lot of product line conversations. Not a lot of overlap. Peter, you've been at all the analyst sessions. We had David Furrier on yesterday, teasing it up, but I'd like to get you, your perspective and reaction to your thoughts as you look at the giants in the industry. Michael Dell bought EMC for a record 60 billion plus. You've been around the block. You've seen many waves. You've analyzed many generations of the computer industry. What does this actually mean. Where are they, what's your thoughts and reaction? >> So John, I'll give you three different story lines here, right? The meta-picture, the good, and the what the hell's goin' on kind of picture. The first one, the meta-picture is, and SiliconANGLE said this, it was a really well written article, you might have even written it Paul, that there has never really been a successful mega-merger in the tech industry. And historically I think that's because, well here's the bottom line. This one may actually work. And it may actually work nicely. And the reason is is that most of the other mergers or combinations were companies with problems and companies that didn't have problems. Or companies with problems and companies with problems. And if you take a look at Dell and EMC, neither of them had problems. They weren't buying each other's problems. It was a nice combination and complimentary in that EMC had a great consumer business, great channel business, and had a pretty strong financial position. And EMC had a great enterprise business, great, you know-- >> Sales organizations. >> Great sales organization. And they had, they were strong in where the industry's going around how do you handle data and how do you handle storage. So it's got, what we're seeing here is everybody singing out of the same hymnal. I'm not seeing any tension. And that is an indication that this one may actually go well. I think it's a very, very good early sign. >> Paul, you and I were talking on the day one open and also, we kind of hit it a little bit yesterday with David Furrier, talking about this mega-merger. Compare and contrast that to HBE, which is been kind of, being de-positioned by some of the Dell executives. They don't actually call 'em out by name, but HP Enterprise is taking a different approach. They're taking a, you know, smaller is better approach. Obviously, Michael Dell has a complete different philosophy. We're still going to analyze that as well. We've got HPE Discover coming up as well. Thoughts on the compare and contrast, guys, reaction to the strategies of HPE, smaller, faster, as they say. Or Dell, bigger, more powerful. >> I think both are viable strategies. It's just a matter of if they can pull it off. I mean, HP, you talk about bad mergers, Peter, I mean you think of HP Compact, HP Autonomy, this is a company that has had a terrible track record of big mergers. Although they've had some successful ones certainly. >> By the Meg Whitman inherited those. >> Yes. >> Prior to Meg Whitman coming on board. >> Oh she was a board member for some of them. >> Okay, so she was at the table. Now, we don't know, okay but your thoughts, continue. >> But Dell, clearly going the other direction. They, I mean, they're building sort of an IBM-like model, the way IBM was in the '80s when it dominated every market that it played in. And it played at even more markets than Dell does now. So I think that the model makes sense. I think Peter's absolutely right, I'm not sensing any tension at this conference. There seems to be, the most important thing is there seems to be a lot of communication going on. The executives are spending a lot of time with each other and they're talking a lot to the people. And when you look back, and I live, and Peter, you remember the DEC, you know, the fiasco with DEC being purchased by Compaq. That was clearly a takeover. And that was Compaq came in, took over the company and didn't tell anybody anything. And the DEC people were living in the dark and it was clear that they had no value to the acquiring company. That, clearly, they're not making those mistakes here. >> For the younger, for the younger audience, DEC is Digital Equipment Corporation which was a behemoth winner in the micro, mini-computer era and then now defunct company. >> Except the one, one thing I'd add to that, Paul, is that, and this is why, it's why this first sign is so important. That they are seem to be, that executives here seem to be collaborating and working together. DEC had been one of those mini-computer companies dominated by an OEM business, which means you had a common set of components and then everybody was competing for customers with how you put those components together. So there was, it was a, it was a maelstrom of internal competition at DEC. When Compaq got ahold of DEC, that DEC sense of internal competition took over Compaq. And then when Compaq, when HP acquired Compaq, that maelstrom and internal competition took over HP. >> They didn't know what they were getting into. >> We used to call it the red-blue wars and it was ugly. And that's not happening here. That's a first sign. >> Yeah, I would agree Peter. I want to get your thoughts to all that. I would agree that this is, I've been tryin' to sniff out where the wind's blowin' on this for a year and to my knowledge, and my insight and sources, it's not going bad at all. It's going great. The numbers are performing, they're winning some deals, but let's compare to HP because I asked Mark Heard at their Oracle media event last week, cause they were touting number one in every market. So I said, "Well, there's a digital transformation "going on, a whole new way to do business "for the next 33 years, "not looking back at the past 33 years." Which metrics are you using? Everyone's claiming to be number one at something. So, the question is, maybe HP does have it right. Maybe their strategy will work. What are the, what are going to be those metrics for this next generation? If cloud becomes the connective tissue to data, value of data, and that apps are going to be very agile. Maybe this decentralized approach from HP might be a better strategy for the growth. Thoughts. >> Well, look, let's, so let's, I want to get back to the, what's good about what we're seeing and some other things that probably need to be worked on, but, but here's what I'd say, John. And this is what Wikibon believes. That customers is always going to be the most important metric. So, the first metric is, is HP gaining customers? Is HP losing customers? Is Dell gaining customers? Or is Dell losing customers? That's the number one most important metric. Always will be as far as I'm concerned. But the second one is, and this, and I'll pre-say something I'm going to talk about in a little bit. The second one is, I'll call it data under management. If we think about, if we think about this notion of data as an asset, data as a source of value, how much does HP, through it's customers, how much data does, does HP have under management? How much data does Dell/EMC have under management? And I think that's going to be an important way of thinking about the intensity of the relationships, which relationships are going to steer towards which types of environments. Is it going to be a procurement relationship or a real strategic relationship? By procurement, I mean, it's fundamentally focused on driving cost out of the deal. Strategic, I mean it's fundamentally focused by jointly creating value. So this notion of data under management, to me, is going to be something we're going to be talking about in five years. >> So, Bill Schmarzo, friend of both of ours, was, came by the set before we came on here and he's the dean of big data as coined by theCUBE but now he's takin' on it his own, like he's actually a dean now teaching big data. We are talking about some of the research that you're doing and taking a stand on, it's important, I want to put a plug in for the Wikibon research team that you're leading, is the business value of data. >> Peter: Oh absolutely. >> And that you're looking at data as a valuation mechanism, not an accounting, compliance thing. And this is something, I think, is way ahead of the curve. So props to you guys for puttin' the stake in the ground. To your point, the new metric might just be the valuation of how they use data, whether that's customer data, product services data, application development concepts to reconfiguring how they do business. >> And it's the reconfigure that's the smart, that's the absolutely right word. So, from our perspective John, the difference between a business and a digital business is a business uses data one way, a digital business uses data another way. A business uses data as an, something to just handle coordination and administration. >> Paul: Bookkeeping. >> Yeah, exactly. A digital business uses data as a strategic asset to differentiate how to engage to markets. That's where the industry's going, and that's what we want to talk about. >> And by the way, in previous business constructs or business books people have, might have read over the years certainly, you know, the Peter Druckers and so on, management consultants, never actually factored data into the value chains of-- >> Oh they did, they did, they did. They just didn't actually, so Drucker, for example did. >> John: Digital data? >> Oh, he talked about information and the role that information played. >> John: I stand corrected. >> Herbert Simon talked about this kind of stuff 50 years. Unfortunately it all got lost when we went through things like, jeez, you know, there was a very famous economist who said in the late 80s, "Information technology "shows up everywhere but in the productivity numbers." So, you old guys would-- >> I remember that, I remember that quote. >> So, the idea ultimately is we now have to get very discrete and very specific about what that means. And that's a challenge. But let's come back to, let's come back to at least what we think is really working here, if I may. >> John: Absolutely, go ahead. >> So the first thing is, at a more tactical level, number one is the Hyperconvert story is exciting. And it's starting to come together. And again, I'm not, we're not seeing tension between the folks that are selling servers and the folks that are doing Hyperconversion. Both are introducing new technology that are going to create new opportunities for customers, and they're not as, as, as your good friend Michael Dell said, a couple times over the past year, here in theCUBE, "We are not going to "artificially constrain any of our businesses." And, as Amazon said at re:Invent, "If you're going to do it at scale, "eventually you're going to put in hardware." And he wants to demonstrate that all this great software stuff that's happening, that ultimately Dell's going to be the leader at designing these new capabilities into the hardware and he wants to show how that's going to show up in all his product lines. >> That's a great point. I think the most interesting dynamic I've been seeing out of the interviews we've been doing the last two days is that the problem Dell has to struggle with now, and it'll be interesting to watch how they, how they figure this out, is all of their, used to be called the Federation, now they're called the Strategic Business Alliances I think. The, you know, the VMwares, the RSAs, the Pivotals, how are they going to make sense of those in the context of this bigger whole? On the one hand, they've got some competing priorities here. Dell has a very strong relationship with Microsoft, VMware is a competitor to Microsoft. So you got to figure out how to get those, how to make sense of those different alliances. Pivotal is potentially a competitor to Microsoft. >> Potentially? >> Well, Microsoft is in the pass business, yeah. >> No, it is yeah, it's going to compete. >> So you've got a, you've got some paradoxes here in the businesses that Dell has acquired. They really still, I sense they still haven't made sense of what they're going to do with them. >> Yeah, great point. I mean, first of all, you guys are pros and we have a historical view here of the collective intelligence of all of us old guys here. We've seen a lot of ways. But Rob Hof wrote an article on SiliconANGLE, our Editor-in-Chief Rob Hof, who's also an industry veteran and journalist himself. After the Oracle media event, and the headline reads, "In Oracle's Cloud Pitch to Enterprises, "an Echo of a Bygone Tech Era." And his point with this story is, I want to get your reaction to this, cause I think we're seeing a trend here, you guys are teasing out here. We're kind of going back down to the old tech days. You were the Editor-in-Chief of Computerworld back in the day with the mainframe world and then the minis. Seeing Marius Haas on here using words like "Single pain of glass." "One throat to choke." "End to end." We're almost seeing the bygone era coming back again where maybe they might have the rights to it. Certainly Oracle saying, "Hey, you know, "reorganize our sales force." So the question. Is the cloud the de-centralized mainframe. Is it now the new centralized, with edge, intelligent edge, is that, are we going back to the old ways, in a way, not fully but, unifying the sales forces. >> So, the computing industry-- >> Thoughts. >> Has been been on an inexorable march to greater utilization of public infrastructure. What an economist would say is we've always found ways to reduce asset specificities. I buy something, and I apply it to one purpose. I can't apply it to another purpose. Software changes that. Commodity pricing and hardware changes that. Public infrastructure changes that. So we're going to continue to see that inexorable march to the use of public infrastructure or somethin' that looks like public infrastructure. And that's going to continue. And the industry's always been very, very good at that. That does not mean, however, that we're going to have one supplier. So what we're seeing is a lot of FUD right now. Amazon FUD, Dell FUD, Oracle FUD. There is a real tension in the model and the real tension is, more than likely, the future is going to be composites of services operating on multiple different cloud-like instances, including on premise. And who's going to offer the best end-to-end control plane? >> Paul, I want to get your thoughts. Cause you remember goin' back to the days, IBM had SNA network stack, DEC had DECnet, we had, they had propietary stacks. Cloud, Azure stack, this stack, that. Are we seeing this again? Your thoughts. >> Well I think Peter's absolutely right but the variable, and you're right, we are seeing this again. We're seeing a trend of return to simplicity. Because what IT organizations have been wrestling with for the last 20 years is everything is just getting more complex. There's more vendors, there's more piece parts, and they've got to fit them all together, and it sucks. And so they want someone to simplify this. Now, cloud vendors simplify it on one level. But software-defined, on another level. We've been talking here about software defined storage, about software-defined networking, massive virtualization. And that's on an open source or at least an open API-based model. Which I think is the twist here. Are we going back to the days of IBM? Yeah. But IBM, But the IBM may actually be software-defined. >> Or five different companies that look like IBM. >> I know what you're saying Paul, and I'm not going to disagree with you. But here's the opposite-- >> But you disagree with him. >> No, no, but no I'm not going to, I'm going to put a slightly different spin on it. It used to be that the most valuable asset in an IT organization was the mainframe. And the entire organization was organized and the interactions with the business were organized and put in place to handle the value of that mainframe. We are not going back to a day where the IT organization, the way business uses IT is organized around the mainframe as an asset. Or even around the provision of infrastructure as an asset. We are going to start seeing organization and frameworks that are fundamentally built around this idea of data as an asset. And that is going to be a lot more complex with a lot more buyers and a lot more opportunities for differentiation creating value. So we will see more complexity in IT at the software and the use case level, less complexity at the infrastructure levels. >> Which is why machine learning and automation gets a lot of hype, but to Paul, I'm going to get your point and tie Peter's point together and introduce Jeff Bezos' comment last week on NDC. He mentioned that most things take 10 years to bake out in terms of getting things right. Ten year kind of horizon. Kind of an order of magnitude. But he says, "All these startups say they have "disruptive technology, it's not their technology that's "disruptive, it's what's the customer is disrupted." So we're talkin' about customers being disrupted. It's not some company having disruptive technologies. >> And disrupting. >> So are we saying that customers are being disrupted by reconfiguring their businesses, hence with the mainframe disrupted, a new way to do things, we're seeing clouded-data as a new way to do things. So, that's causing some reconfiguration and disruption, allows them to say, "Shit, just when I thought it was simple "it got more complex." >> But the disruptive element is the data as Peter says. >> I mean the machines are becoming, the machines are already a commodity. The, with open source, the platforms are a commodity. What's disruptive is how you use the data in different ways. And to your point Peter, yes, it's going to be a much more complex world. >> Peter: Much more. >> Because there's a lot more data and there's a lot more things we can do with data. >> And data can, that's exactly right. We can do so much more with data. So again, let's go back to the fundamental metric that at least I suggested. Who gets more customers? There are going to be more buyers of this stuff in five years than there are today. More buyers in the sense that within an organization, there's going to be more people involved in the decision and there's going to be more businesses. Because if this stuff actually works, the transaction costs are going to go down and you can then organize your businesses, institutionalize how you do work differently so you can have more partnerships. All that means that fundamentally, what we're talkin' about here is going to lead to greater complexity in business, greater opportunity therefore, but what I've always said, and I don't know if you've heard this Paul, but I know you have John, and I've said it on theCUBE. That the fundamental demarcation is that the first 50 years of this industry featured known process, unknown technology. And what do you we focus on? The technology. What's the next 50 years? Unknown process, known technology. What are we going to focus on? How to build that software, how to handle those data assets. What are we going to focus less attention on? The technology. What does everybody want to talk about at this show? >> The technology. >> Technology. That's a disconnect. So going to one of the things that we now have to think about from a DELL/EMC standpoint is where's the story about how Dell is going to appreciate the value of your data assets over time. We need more of that. >> And let me point out, you now, you didn't mention IBM but one company that is doing that well right now, they aren't getting the business benefit for it yet, is IBM. Where they are really taking, they are not technology, I mean they don't talk about power aid anymore. They talk about Watson, they talk about what you can do with analytics, they talk about a smarter planet. They haven't been able to turn this into a successful business yet but they're doing, I think, exactly what you're talking about. >> Well the product, they have some product challenges. I mean, so let's get back down to the customer thing. I like that angle. You got to have the customer, you got to have the products that customers will be buying. That's the value, exchange that customers will value and then hence by your service or product. Andy Jassy and Pat Gelsinger, when they did the Amazon deal, VMware. Jassy, Andy Jassy CEO of AWS said to me, "We are customer focused." So I believe that you're right on this 100%. Whoever can get the customers. And this is not about who's the better stack, if the customers like it, they're going to buy it. >> And very importantly, John, they are going to invest in it to make it valuable in their business. And that's what you want. You want to see your customers become a centerpiece of value-creation in your ecosystem. >> And I think Amazon Web Services proves that the dark horse could come out of nowhere and be the behemoth that they are because they served the customers. >> So that's the second thing that I'm missing at this show. And I know, I think I know why, is where is the additional details, even a little bit more, about VMware and AWS. Now, I know that they're going to wait for the VMware World, that's the story. >> They showed a little preview in the keynote, it's still baking out. >> Yeah, but it would be nice to have a little bit more. >> That's one of those tough relationships they need to manage, right? >> Yeah, exactly right. >> I mean VMware and IBM also have an alliance. They are allied with their foes now through the acquisition. The point about, about the value of data, you know, I think Amazon has done a good job of building platforms that are very flexible for customers to use but they abstract a lot of the underlying complexity. >> Alright, so with the data, I want to just double-down on that for a second and get your reaction, thoughts on, obviously, one of the themes here is IOT and we heard Michael Dell saying it's going to be centralized, pushed out to the edge, you got in research from Wikibon intellegent edge. You and David Floy and the rest of the team doing some real amazing work at Wikibon.com. Check it out, subscription required. What's the edge strategy? What does that actually mean for IT practitioners out there? It's, certainly we heard from Bask Iyer, who's the CIO of Dell said, "Most CIOs are conservative "and don't usually jump on these waves." They missed mobile, they missed some other waves. His mandate was, CIOs, don't miss the IOT wave. So what is the IOT, this edge of the network thing mean for a CIO. >> Well, the first thing is in hardcore circumstances, many CIOs aren't even involved in the edge. So if you take a look, if you go into where a lot of the edged domains are really crucial, you see a plant manager that's more responsible for what's going on in the edge than the CIO. The CIO is handling the corporate systems. The plant manager is handling what's actually happening at the edge. The operational technology stuff. So the first thing is we're going to see a slow circling of the IT and OT organizations about who's going to win-- >> OT meaning Operational Technology. >> Operational Technology. Just as we saw a slow circling back in the 1990s when TCPIP came in, and blew away DEC and blew away everybody, and started blowing away the TELECOM divisions, or TELECOM's functions within side large enterprises. >> So you think that IOT is going to be as disruptive as TCPIP was in standardizing in the network layer. >> Oh absolutely, absolutely. It's going to be, it's going to have an enormous impact because there's so many new sources. The data is going to have, how to think about it, and that was the second point I was going to make, John, is we do not currently have architectural standards in place for thinking about how this stuff is going to come together. And it's something that David Furrier and I and the Wikibon team are working on and I hope to come up with, I hope to come out with some research, actually probably next month, on what we call automation zones or data zones or probably edge zones. Which is, how do, just we think about security zones today, how do we think about edge zones. Where the edge zone is defined by a moment, an automation moment, cannot have data outside of that zone. And that needs to become an architectural principle where OT and IT can work together and say, "What data has to be in that zone? "I'll make sure my data gets there, "you make sure you're data gets there. "We'll figure out how control happens, "and that's how we drive this thing forward." >> Well, just to give you a prop here on theCUBE here is, Wikibon was right about Flash, they were right about Hyperconvergence and convergent infrastructure. Big bets early on that were kind of like, people were like, "What?" And certainly Vstand, ServiceStand although some people will disagree with this. >> They were right about the edge. >> Now you're right about, I think you're right on, way right on the edge and you're way right on value of data. >> Yeah. >> I think those are two stands that you're taking that will be-- >> And let's give great props to David Furrier who was a catalyst for thinking many of these things through. >> Alright Paul, final word from you. Obviously, you know, as a veteran, you've covered it all. Okay, what's your take? I mean, what's the, how's the wind blowing, what's your instinct tell you of what's happening. >> I think it's generally good, but it's hard to tell from conferences. As you know John, the reason most conferences are so boring is that there's no tension, there's no conflict. It's all good, it's all everybody's happy and everybody's doin' a great job. That's the very same thing that we're seeing here. >> Rah rah, Kool-aid injection. >> One thing I can't help notice is on the keynote, if you look at the keynote agenda for the three days, there's not a single customer on the, on the keynote agenda. Which I think is a problem. Or I don't think that says good things about where Dell is really focusing it's message right now. You want to have, at most big company conferences, there's lots and lots of customers who come up on stage. I think Dell is still thinking about, I mean it's a technology-focused company. They're thinking about technology integration right now. >> So speeds and feeds. >> Yeah, you hear a lot of speeds and feeds. >> Everybody wants to be the most important thing in the enterprise, and they still want hardware to be the most important thing. >> Well, I think I mean, I would agree with you 100%, but I just think, just, in this acquisition, I mean, sorry, merger of equals, they have a lot of herding cats going on right now. There's a lot of herding of portfolio and not a lot of overlap but I can see them kind of making room on the stage for that. But I do agree, I mean, customers do tell the best story. >> And in the long run, that's, as Peter said, that is what is going to make the difference. Are the customers happy? >> Guys, amazing exchange. Thanks so much, Peter, for comin' out and takin' some time out of your busy schedule to come on theCUBE and share your insight. The daily on-cue Paul, as always, we're havin' another three days. Third day of our three days of coverage here on theCUBE. Great commentary, great analysis, more live coverage from day three of Dell/EMC World 2017. We'll be right back, stay with us, we'll be right back after this short break.

the cube at emc world 2014 is brought to you by emc redefine b.c.e innovating the world's first converged infrastructure solution for private cloud computing brocade say goodbye to the status quo and hello to rokade okay welcome back everyone here live in las vegas for emc world 20 at 2040 i was going to say vmworld because you're a new CEO of vm role here I'm John for a bounder still hanging with Dave vellante my co-host he would Pat Gelsinger cube alumni friend of the cube it's our fifth season we opened up at emc world 2010 in Boston Pat was on the cube then set a great time ever since pad welcome back to the cube just got off the plane from Istanbul how do you feel I feel a little bit yet like that's been a long long day okay we'll get a lot of information out of you did so first time I ask you about the D SSD acquisition I'll see you you known Andy for a while what does that all mean for the industry software at the center of the value proposition is is the hardware and compute going to be this abundant resource that no one ever sees what's your take on all this well i think you know first I think of Andy is like the Rembrandt of hardware design right you know he's just done all the amazing system design work in the industry for many years he's been a friend for many years and just great great respect for him individually obviously d SSD is doing some great work you know I think it's going to prove to be a critical technology in the entire converged infrastructure space and clearly this high-performance flash capacity there's going to be a game changer for what you're able to do in the rack and obviously with bills participation from sa p they see it as a very very critical capability for in-memory environments and some of the data analytics that they want to do so i think this is a a bold move by emc i was a fully supportive of it and i think it's going to yield very very powerful hardware for software to take advantage they bring you in on a deal like that and consult with you is it is it it's about hey Pat we need your advice I saw the board meetings I sit in the M&A meetings and I'm an Oni and so for decades okay yeah so it wasn't just a cursory glance a little bit more than it's been in the works for a while so we've been fine we'll get more information we'll be digging for home sources I'll talk about cloud I've seen last time we're at vmworld we talked about the cloud I said hey is hybrid cloud really going to be the destination you like what are you talking about it's going to be the destination it is the hybrid cloud is the way here at ian's emc world you hear joe tucci up there even using the words AWS disruption amazon is clearly on the radar public cloud is still it is out there as a viable alternative and the words like reinvent which is the conference name for amazon redefine is this conference it's ok to have amazon out there but hybrids cloud is still the deal with containers and what not I mean has a hybrid cloud narrative change for you amplified straight narrow foot pedal to the metal ya know we are absolutely convinced hybrid is the answer and maybe start with a few facts I mean it's always good to ground ourselves in a little bit of data and today on premise is ninety two percent of IT spent so eight percent is in the cloud whereas sales pass so you sort of say wow great and predictions would say by 2020 it's seventy-five percent on-premise the twenty-five percent in the public cloud so you look at that and say boy you know even just from the spin perspective it's going to be hybrid and then you look at facts like security privacy governance s la's liability cost performance all of those things will keep people on premise so it's clearly a hybrid world right where it is the on and off premise and we've clearly seen that as we've laid out this positioning of hybrid the industry is following us we're seeing amazon talk about we're seeing Microsoft talk about or seeing google talk about it all the other big cloud players are saying yo yo VMware got it right hybrid is the answer it seems they all the territory is being claimed now it's like we almost seen in almost not bubble bursts are you seeing box pull there s one obviously their economic of buying customers isn't working so I see that the pullback for they're you're seeing some other companies get massive valuations that aren't publicly traded yeah there's really kind of know really market there and then other companies in the flash marker fusion-io by the memory kind of sub that wasted well below but the container technology so I got to ask you about some of the new stuff that you seeing one valuations and also the new containers we heard da cars pretty hot right now what do you make sense of the containers in particular well on the first of the valuations I mean clearly the Pease of these very high growth you know early stage not money-making companies were just out of control and I have comment on that before at the Wall Street Journal CIO event that they were just way out of range and it's good to see those coming into more reasonable ranges now and I think that will wash through the entire industry because there was this mini bubble of you know just crazy Pease you know and you know with respect to docker and some of the other container technologies that clearly is you know enthusiasm around some of the lightweight stateless mechanisms but what I'll point out is that there have been different container approaches over the last 30 years and the only one that has had sustained architectural influence and investment has been the vm and our effort is continuing to pound the overhead continue to add value security networking management you know all the things that we've been able to build around that's idea of the vm container and of course if people are really you know see lightweight containers is valuable but we'll stick a bunch of them in a vm i mean it's just another management model for a lightweight deployment of stateless apps so John I've been thinking about you know Joe's waves right and we think okay with this next wave that we're in what's different about this way you've laid out a 50 billion dollar tam you just talked about how much of that the public clouds going to get I wonder if we could make an observation to get your feedback on it the economics of cloud they start to look so you've got software economics ninety percent gross margins hardware you know the economics at volume the marginal economics are talking about you know aren't as attractive but they're still good and then services is negative you know but diseconomies of scale if you will it seems like in the cloud that online cloud services are now taking shape the same way software is so at volume you're getting software like economics so the question is how does VMware and VMware you know cloud vcloud hybrid service get to that scale and that volume so that you can participate in that so first of all is it is it a reasonable premise to note and can you get to that scale and how do you get to that scale yeah and you know you'll see a little bit of my keynote tomorrow I'll talk about this a little bit more one is you know we're investing we're growing very rapidly as we expand the number of presences in the u.s. you know second we're very aggressively partnering and we announced their first partnership with savvis you'll see us announce other partnerships like that that we're going to leverage their capital as well right and who invests the most in capital of any industry in the room service providers all right they blow away everybody else so partnering with them the other view of that would be with vGHS is is that we also have our bspp program where you know i'll give some of the stats in the keynote tomorrow but we have an overwhelming right Brett for those vs PP partners that already has us very much at scale as one of the largest clouds not just what we do but through this broad range of partnerships that we form so overall you know we have a very powerful strategy when you add up all of those and given our business model of software and services you know it's very unique and combine that with these statistics I was giving you up on and off-premise and the private cloud you have 40 million VMs 500,000 customers you know we bring a lot to the table once all about a AirWatch so big acquisition the Federation helped a little bit o financing that's absurd yet right so talk about the importance of air watch you know where it fits into the end-user computing strategy and and what gives you excitement about air watch well you know I think one is in the whole end-user computing space you know two years ago people viewed it like VMware had a hobby you know hey we're selling these fear and a you know growing some of this yeah yeah well and you know hiring Sanjay rebuilding the leadership team investing in our end user computing sales force and now the air watch acquisition everybody realizes this ain't a hobby anymore we are taking the space very very seriously and really redefining the industry quite rapidly with the breadth of what we've done with horizon six plus the inorganic move with air watch you know we are here to win in this space and taking share substantially from Citrix and others in the category yo secondly and as part of the whole secular shift not just the cloud but it's the mobile cloud era so it's to redefine and deliver that PC experience but it's also uniquely right to enable the secure managed experience for all the mobile devices as well that's where AirWatch is clearly you know tearing up the track and you know we believe it's separating from the rest of the industry of players as that leader and really gives us the unrivaled portfolio of assets now I talked about the obviously the compute trend is moving to the data center you're seeing the commoditization now the data centers want to do the same way you talk about that publicly so with the software at the software-defined enterprises joe tucci calls we've called the sava define data center how does that change from your standpoint from a focus standpoint because you mentioned you got AirWatch is no longer a hobby you're building a you know business got a tam expansion strategy aggressively investing you have an ecosystem that you've kind of had from your hobby days now you're kind of nurturing it and expanding it what is the focus and from a software-defined perspective what is that focus specifically and how do you keep your troops marching to the cadence of that focus yeah we laid out our three areas for VMware over a year ago we said we're going to do three things software-defined data center virtualized the whole data center second do the hybrid cloud this on and off-premise and then go from the data center to the device pcs and mobile devices you know with what we've done we have all the pieces in place now the acquisitions are all in place the execution and that consistency that we've laid out now for almost a year and a half you know has really resonated both internally to my teams you know to our sales teams through our customers and our partners as well and they get it and you know that consistency has really gotten us more and more momentum we're seeing all of those limits you know really firing on all cylinders at this point so I saw the news that Gould is no longer involved kind of he was kind of cuz he's now the CEO of e mc2 you're the free captain of VMware and the Federation of the ship what is that like for you now and what are you tapping into the Federation what is pure VMware can you kind of square that off in terms of Aussie VMware what are you tap to the Federation what do you have available to you sure sure and you know with the Federation perspective you know we got a lot of benefit from I will say you know the layer that emc provides you know I call up Joe we have a shareholders meeting right yoyo cage oh yeah I'm okay good done shareholders really finish I mean yo some of those things are just elegant definitely right you know we can get things done by John date and at the same time yeah we're accountable to the street for all the financial metrics all the things that you want to be accountable to public shareholders for you know we also get the benefit like you saw an air watch your the cash position we're better aligning ourselves and global accounts were both of us our prep presence so we get the leverage of both sales teams the capacity that we have you're seeing some of the solutions work that we're doing be pivotal assets recently right you know moving things around to you know best position things for the different players as customers or seeing that you know to line those assets between it between us and also very very clearly saying okay you know here are the areas and i'll hit on this in my keynote tomorrow right this is how the vmware assets work with the emc assets and we're going to leverage each other as we go forward but as we say you know the Federation motto is strategically aligned right you know while remain you know loosely coupled so continuing to be able to go partner right with others in the industry to facilitate that flexible ecosystem I want to ask you about Silicon Valley right so obviously you have a great campus VMware means one of the most beautiful campuses in Silicon Valley well done it's fits into the hillside there my favorite areas but as you guys go global Silicon Valley's also going global and there's also kind of like a let's say bubble ish environment out there right now evaluation we just talked about control Silicon Valley's changing what's your take of the currents data Silicon Valley in terms of the innovation I know you're going to be talking with Stanford University and Mark injuries and coming up on a panel has it changed over the past few years and it does it still have that innovation and visit is it bringing it back Alan's of cycles change which you're taken so that well we're going to have a nice campus opening you know beautiful VMware a campus we're gonna have a little party yes I don't know this is the cube invited okay thanks i hope so yes so we're going to be the ribbon cutting ceremony ins and that's going to be great and mark is going to be there john hennessy my thesis advisor now the president of Stanford is going to be there Joe the board so we're gonna have a great event talking about that exact question right and really talking about the future of the valley unquestionably today it remains the hottest bed of innovation anywhere in the world but I think you always look at that and say you know where the recipe is still there as you look to the future and you know competition for labor is intense you know tax rates you know people move out of the valley because of justification and San Francisco big discussion yeah right you know toyota just moved to texas I mean there's always this you know you know do you still have that recipe right nowhere else has even close to the valley and that today race you that in your travels oh absolutely absolutely but every place in the world says I want to be like the valley right every place in the world is saying what do I need to do to create that same recipe you know whether that's bangalore or whether that's beijing or shenzhen right or whether that's a israel or you know many spots in the world well Silicon Valley export that knowledge and is that is that a good thing you know I don't think silicon but you know knowledge ideas right you know this is bubbling cauldron but there's something special about the valley that it's been able to maintain now for you know three decades and it doesn't look like it's coming to an end hey Chuck house is pretty excited about v san are you as excited oh very excited about these why what why you so excited what does it all mean well you know if you're a V admin right which you know is the heart of our customer base you say check find me local disk check provision local disk well I've just done storage right it's powerful it is you know amazingly simple and gives great performance and it redefines the hot edge right for you know via for virtual storage a new tier of storage so we're very excited about it certainly doesn't replace all of storage but it gives a new cheer a new capacity that for a virtual admin is just perfect is that new tier incremental I mean must replace some storage of sexually it's right you know I mean the good news is storage continues to grow right you know it's one of the right the areas of IT that just continues to grow as capacity grows an application demands take and I'm of course there's going to be some trade-offs to the some places and we do see lower capacity lower end of the market test dead some vb i use cases dr use cases where hey people might trade it off versus other all tournaments good news for you MC obviously they're mostly up market right is where their strength is but so we're very excited about be San and really see it as a critical new component of the vmware family and we stream i/o acquisition you made seems to be working out okay you happy about that yeah yeah nothing's been tons of time on extreme I oh these days but you made that that was all a lot of the acquisitions they did at the MC we're doing just fine hey you know and I cheer my team on back there when I meet it was like huh why did that would slip so that's not what the JC we were talking earlier the dream team is now kind of spread thin running their own little ships if you will in the Federation but back when 2010 we started doing the cube it was all kind of under one roof and we kind of said hey you got to get the meat on the bone we talked about in the queue hey the product portfolio is in transition you talk about some of the acquisitions looking back what are you most proud of for the team not just yourself but the group what you guys made some of those calls that might have been on the fence what was some of the highlights you look back and then where you are today well you think about some of the key decisions that we made and you know we did green pump that's now in the center of a pivotal now we did I salon that's performed extremely well we have done the data domain and clearly the whole back up space is performed very well we've also laid some of the seeds for the future right like extreme i/o like Viper were done when I was there so all these things you don't it's done well EMC gained significant share since I joined and they have the tools to really be positioned to help go through this next phase of the transition and obviously under David and his team's a leadership you know the industry remains in transition and that's still affecting EMC and they're having to you know carefully navigate that next phase and I think you've heard a lot from him today we love pulling the sound bites out I have a quote here 430 two days ago from you but I want to don't talk about that now but the quote we had on the cube you said is that if you don't get out from that next wave you'll be driftwood Joe Tucci said today if you don't take an offensive approach with this platform you're going to wither away so let's talk about that getting out in front that next wave in your mind share it the folks out there in your world words why at this point in time so important from an industry perspective you seen in movies before you've seen the massive inflection points you've seen Moore's Law at full tilt you know try to compare where we are today from irrelevance and making sense of the excitement and controversy opportunity yeah well we are as we would say as we're going that you know from client server to mobile cloud right this will be tectonic shifts and write the amount that's going to shift to cloud the amount that's going to shift away from PCs to mobile devices in the industry and all the vendors that have their value propositions tied to a hardware defined approach guess what yeah that's going to be a secular decline where people are going to be competing for a premise based the revenue that way into the mime ironmen that's going to be flat to down right and there's going to be no possibility of growth and you look at what's happened right you know consecutive quarters at IBM for instance boy you know they're feeling the pain right of this transition and the cloud transition it's barely underway right mobile is just scratching the surface yeah you know so these trends are just about to get started you know the analogy I'll give them my keynote tomorrow is 1989 and we're Digital Equipment Corporation and over the next seven years guess what right the entire business is going to shift that guessing always great to have you on the cube just any final parting words about what you're going to work on this week some things you're highlighting customer events us you keynote what do you expect to see here at emc world this week well you know I always see OEMC role is a great place and you know just feel incredibly embraced and our partners at emc and just happy that they give me the opportunity to address the audience here that's always a great joy and it is this period of extraordinary transition and everybody here right as the conference's has to redefine themselves on the other side of these tectonic shifts that are underway and EMC is you know doing that and there you know to all of their partners and customers saying here's what you need to do to go with us event in August right around the corner fat thank you inside of you when he finds one of my closest friends off we love talking with you and we'll see you at your event we're going to be actually attending the ribbon-cutting ceremony I was talking to the folks but getting the cube they're going back and forth but we'll get it done Pat Gessling you inside the cube the CEO VMware friend of the cube would love having you on be right back after this short break Pat glad to see you're like I could see it you