>> From theCUBE studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> The steepest drop in the stock market since June 11th flipped the narrative and sent investors scrambling. Tech got hammered after a two-month run, and people are asking questions. Is this a bubble popping, or is it a healthy correction? Are we now going to see a rotation into traditional stocks, like banks and maybe certain cyclicals that have lagged behind the technology winners? Hello, everyone, and welcome to this week's episode of Wikibon's CUBE Insights powered by ETR. In this Breaking Analysis, we want to give you our perspective on what's happening in the technology space and unpack what this sentiment flip means for the balance of 2020 and beyond. Let's look at what happened on September 3rd, 2020. The tech markets recoiled this week as the NASDAQ Composite dropped almost 5% in a single day. Apple's market cap alone lost $178 billion. The Big Four: Apple, Microsoft, Amazon, and Google lost a combined value that approached half a trillion dollars. For context, this number is larger than the gross domestic product for countries as large as Thailand, Iran, Austria, Norway, and even the UAE, and many more. The tech stocks that have been running due to COVID, well, they got crushed. These are the ones that we've highlighted as best positioned to thrive during the pandemic, you know, the work-from-home, SaaS, cloud, security stocks. We really have been talking about names like Zoom, ServiceNow, Salesforce, DocuSign, Splunk, and the security names like CrowdStrike, Okta, Zscaler. By the way, DocuSign and CrowdStrike and Okta all had nice earnings beats, but they still got killed underscoring the sentiment shift. Now the broader tech market was off as well on sympathy, and this trend appears to be continuing into the Labor Day holiday. Now why is this happening, and why now? Well, there are a lot of opinions on this. And first, many, like myself, are relatively happy because this market needed to take a little breather. As we've said before, the stock market, it's really not reflecting the realities of the broader economy. Now as we head into September in an election year, uncertainty kicks in, but it really looks like this pullback was fueled by a combination of an overheated market and technical factors. Specifically, take a look at volatility indices. They were high and rising, yet markets kept rising along with them. Robinhood millennial investors who couldn't bet on sports realized that investing in stocks was as much of a rush and potentially more lucrative. The other big wave, which was first reported by the Financial Times, is that SoftBank made a huge bet on tech and bought options tied to around $50 billion worth of high-flying tech stocks. So the option call volumes skyrocketed. The call versus put ratio was getting way too hot, and we saw an imbalance in the market. Now market makers will often buy an underlying stock to hedge call options to ensure liquidity in these cases. So to be more specific, delta in options is a measure of the change in the price of an option relative to the underlying stock, and gamma is a measure of the volatility of the delta. Now usually, volatility is relatively consistent on both sides of the trade, the calls and the puts, because investors often hedge their bets. But in the case of many of these hot stocks, like Tesla, for example, you've seen the call skew be much greater than the skew in the downside. So let's take an example. If people are buying cheap out of the money calls, a market maker might buy the underlying stock to hedge for liquidity. And then if Elon puts out some good news, which he always does, the stock goes up. Market makers have to then buy more of the underlying stock. And then algos kick in to buy even more. And then the price of the call goes up. And as it approaches it at the money price, this forces market makers to keep buying more of that underlying stock. And then the melt up until it stops. And then the market flips like it did this week. When stock prices begin to drop, then market makers were going to rebalance their portfolios and their risk and sell their underlying stocks, and then the rug gets pulled out from the markets. And that's really why some of the stocks that have run dropped so precipitously. Okay, why did I spend so much time on this, and why am I not freaking out? Because I think these market moves are largely technical versus fundamental. It's not like 1999. We had a double whammy of technical rug pulls combined with poor underlying fundamentals for high-flying companies like CMGI and Internet Capital Group, whose businesses, they were all about placing bets on dot-coms that had no business models other than non-monetizable eyeballs. All right, let's take a look at the NASDAQ and dig into the data a little bit. And I think you'll see what I mean and why I'm not too concerned. This is a year-to-date chart of the NASDAQ, and you can see it bottomed on March 23rd at 6,860. And then ran up until June 11th and had that big drop, but was still elevated at 9,492. And then it ran up to over 12,000 and hit an all-time high. And then you see the big drop. And that trend continued on Friday morning. The NASDAQ Composite traded below 11,000. It actually corrected to 10% of its high, 9.8% to be precise, and then it snapped back. But even at its low, that's still up over 20% for the year. In the year of COVID, would that have surprised you in March? It certainly would have surprised me. So to me, this pullback is sort of a relief. It's good and actually very normal and quite predictable. Now the exact timing of these pullbacks, of course, on the other hand is not entirely predictable. Not at all, frankly, at least for this observer. So the big question is where do we go from here? So let's talk about that a little bit. Now the economy continues to get better. Take a look at the August job report; it was good. 1.4 million new jobs, 340,000 came from the government. That was positive numbers. And the other good news is it translates into a drop in unemployment under 10%. It's now at 8.4%. And this is really good relative to expectations. Now the sell-off continued, which suggested that the market wanted to keep correcting, so that's good. Maybe some buying opportunities would emerge in over the next several months, the market snapped back, but for those who have been waiting, I think that's going to happen. And so that snapback, maybe that's an indicator that the market wants to keep going up, we'll see. But I think there are more opportunities ahead because there's really so much uncertainty. What's going to happen with the next round of the stimulus? The jobs report, maybe that's a catalyst for compromise between the Democrats and the Republicans, maybe. The US debt is projected to exceed 100% of GDP this calendar year. That's the highest it's been since World War II. Does that give you a good feeling? That doesn't give me a good feeling. And when we talk about the election, that brings additional uncertainty. So there's a lot to think about for the markets. Now let's talk about what this means for tech. Well, as we've been projecting for months with our colleagues at ETR, despite what's going on in the stock market and its rise, there's those real tech winners, we still see a contraction in 2020 for IT spend of minus 5 to 8%. And we talk a lot about the bifurcation in the market due to COVID accelerating some of these trends that were already in place, like digital transformation and SaaS and cloud. And then the work-from-home kicks in with other trends like video conferencing and the shift to security spend. And we think this is going to continue for years. However, because these stocks have run up so much, they're going to have very tough compares in 2021. So maybe time for a pause. Now let's take a look at the IT spending macroeconomics. This data is from a series of surveys that ETR conducted to try to better understand spending patterns due to COVID. Those yellow slices of the pies show the percent of customers that indicate that their budgets will be impacted by coronavirus. And you can see there's a steady increase from mid-March, which blend into April, and then you can see the June data. It goes from 63% saying yes, which is very high, to 78%, which is very, very high. And the bottom part of the chart shows the degree of that change. So 22% say no change in the latest survey, but you can see much more of a skew to the red declines on the left versus the green upticks on the right-hand side of the chart. Now take a look at how IT buyers are seeing the response to the pandemic. This chart shows what companies are doing as a result of COVID in another recent ETR survey. Now of course, it's no surprise, everybody's working from home. Nobody's traveling for business, not nobody, but most people aren't, we know that. But look at the increase in hiring freezes and freezing new IT deployments, and the sharp rise in layoffs. So IT is yet again being asked to do more with less. They're used to it. Well, we see this driving an acceleration to automation, and that's going to benefit, for instance, the RPA players, cloud providers, and modern software vendors. And it will also precipitate a tailwind for more aggressive AI implementations. And many other selected names are going to continue to do well, which we'll talk about in a second, but they're in the work-from-home, the cloud, the SaaS, and the modern data sectors. But the problem is those sectors are not large enough to offset the declines in the core businesses of the legacy players who have a much higher market share, so the overall IT spend declines. Now where it gets kind of interesting is the legacy companies, look, they all have growth businesses. They're making acquisitions, they're making other bets. IBM, for example, has its hybrid cloud business in Red Hat, Dell has VMware and it's got work-from-home solutions, Oracle has SaaS and cloud, Cisco has its security business, HPE, it's as a service initiative, and so forth. And again, these businesses are growing faster, but they are not large enough to offset the decline in core on-prem legacy and drive anything more than flat growth, overall, for these companies at best. And by the time they're large enough, we'll be into the next big thing, so the cycle continues. But these legacy companies are going to compete with the upstarts, and that's where it gets interesting. So let's get into some of the specific names that we've been talking about for over a year now and make some comments around their prospects. So what we want to do is let's start with one of our favorites: Snowflake. Now Snowflake, along with Asana, JFrog, Sumo Logic, and Unity, has a highly anticipated upcoming IPO. And this chart shows new adoptions in the database sector. And you can see that Snowflake, while down from the October 19th survey, is far outpacing its competitors, with the exception of Google, where BigQuery is doing very well. But you see Mongo and AWS remain strong, and I'm actually quite encouraged that it looks like Cloudera has righted the ship and you kind of saw that in their earnings recently. But my point is that Snowflake is a share gainer, and we think will likely continue to be one for a number of quarters and years if they can execute and compete with the big cloud players, and that's a topic that we've covered extensively in previous Breaking Analysis segments, and, as you know, we think Snowflake can compete. Now let's look at automation. This is another space that we've been talking about quite a bit, and we've largely focused on two leaders: UiPath and Automation Anywhere. But I have to say, I still like Blue Prism. I think they're well-positioned. And I especially like Pegasystems, which has, for years, been embarking on a broader automation agenda. What this chart shows is net score or spending velocity data for those customers who said they were decreasing spend in 2020. Those red bars that we showed earlier are the ones who are decreasing. And you can see both Automation Anywhere and UiPath show elevated levels within that base where spending is declining, so that's a real positive. Now Microsoft, as we've reported, is elbowing its way into the market with what is currently an inferior point product, but, you know, it's Microsoft, so we can't ignore that. And finally, let's have a look at the all-important security sector, which we've covered extensively and put out a report recently. So what this next chart does is cherry-picks of a few of our favorite names, and it shows the net score or spending momentum and the granularity for some of the leaders and emerging players. All of these players are in the green, as you can see in the upper right, and they all have decent presence in the dataset as indicated by the shared NS. Okta is at the top of the list with 58% net score. Palo Alto, they're a more mature player, but still, they have an elevated net score. CrowdStrike's net score dropped this quarter, which was a bit of a concern, but it's still high. And it followed by SailPoint and Zscaler, who are right there. The big three trends in this space right now are cloud security, identity access management, and endpoint security. Those are the tailwinds, and we think these trends have legs. Remember, net score in this survey is a forward-looking metric, so we'll come back and look at the next survey, which is running this month in the field from ETR. Now everyone on this chart has reported earnings, except Zscaler, which reports on September 9th, and all of these companies are doing well and exceeding expectations, but as I said earlier, next year's compares won't be so easy. Oh, and by the way, their stock prices, they all got killed this week as a result of the rug pull that we explained earlier. So we really feel this isn't a fundamental problem for these firms that we're talking about. It's more of a technical in the market. Now Automation Anywhere and UiPath, you really don't know because they're not public and I think they need to get their house in order so they can IPO, so we'll see when they make it to public markets. I don't think that's an if, that I think they will IPO, but the fact that they haven't filed yet says they're not ready. Now why wouldn't you IPO if you are ready in this market despite the recent pullbacks? Okay, let's summarize. So listen, all you new investors out there that think stock picking is easy, look, any fool can make money in a market that goes up every day, but trees don't grow to the moon and there are bulls and bears and pigs, and pigs get slaughtered. And I can throw a dozen other cliches at you, but I am excited that you're learning. You maybe have made a few bucks playing the options game. It's not as easy as you might think. And I'm hoping that you're not trading on margin. But look, I think there are going to be some buying opportunities ahead, there always are, be patient. It's very hard, actually impossible, to time markets, and I'm a big fan of dollar-cost averaging. And young people, if you make less than $137,000 a year, load up on your Roth, it's a government gift that I wish I could have tapped when I was a newbie. And as always, please do your homework. Okay, that's it for today. Remember, these episodes, they're all available as podcasts, wherever you listen, so please subscribe. I publish weekly on wikibon.com and siliconangle.com, so check that out, and please do comment on my LinkedIn posts. Don't forget, check out etr.plus for all the survey action. Get in touch on Twitter, I'm @dvellante, or email me at david.vellante@siliconangle.com. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching, everyone. Be well, and we'll see you next time. (gentle upbeat music)

>> from the Silicon Angle Media Office in Boston, Massachusetts. It's the cue Now, here's your host. Day Volonte. >> Hi, buddy. This is David Lantz. Welcome to this cube. Conversation with Dr Rico is the CMO of infinite out. It's still I still have a hard time saying that doctor or an engineer and I love having you on because we could talk storage. We could go deep and we could talk trends and marketing trends, too. But so welcome. Thanks for coming on my sled. So tell me what's new since the scale to win launch that you guys had. Tell me what you know. Is everything shipping Now What's the uptake been like with customers? And the reaction? Yeah, >> they're the reaction has been phenomenal. This, as you may recall, you were there. It was biggest launch in our history, which was fantastic. And the reaction has just been overwhelmingly positive, with customers with partners with analysts. Human scum cases with competitors is an interesting you know, we had a lot of things that were already shipping. They were an early customer release. There were a few things that we had started shipping in December on the things that we said we'd be coming in three Q. We G eight on time. So there, there now all generally available except the stuff that we talked about that would be available in 2020 which right now looks like it's on track. It's doing very, very well. >> So VM wear VM world eyes coming up later on this month, things are obviously changing. There was announcement recently that that VM wears gonna choir pivotal. So a little bit of financial engineering going on stock stock rose 77% on the day when the Dow dropped 800. So okay, the funny money. But things are changing in the V m where ecosystem you certainly saw we we This is our 10th year the M world. We go back and you hear Tod Nielsen back in the day, talk about for every dollar spent on a V M where lice and 15 was spent a Negro system, you know, we're kinda del izing vm wear now, which is sort of interesting, but I'm curious as to what you're seeing what that all means to you. I mean, still half a million 600,000 customers, you've got to be there you guys have great success at that show. So your thoughts what's going on? But VM world this year? Yeah, I >> kind of kind of loaded their first of all congratulations on the milestone. That's great. 10 years is super. Remember, probably seeing you with the 1st 1 there. Of course we knew each other longer. Uh, you know, and sure I get the incestuous, you know, money changing of hand there, I think I think it's it's good in one respect. You certainly CBM where, you know, making big inroads with VM wear on AWS. And this isn't now with Pivotal will be a good launching platform for Della's well, a svm where to be a little bit more in control of their own destiny. And it's certainly the way a lot of people are going. We're doing a lot of that ourselves. Not so much, in a sense. We don't have a cloud platform that we sell is a total encompassing platform. But of course, with new tricks cloud on big players and then certainly a large portion of our our customer base, our cloud service providers, they love our stuff. It helps them compete. It actually gives them in some respects, a competitive advantage, but VM world itself. Lots going on there. We have amplified our presence once again because VM where does represent a large portion of our customer base? So we're we're very proud of that. We're very proud to be a technology alliance partner of the M wears Andi. We're expecting to see a really good show in a really good cloud. A cloud crowd has they return back to their home base in San Francisco for us this year, it's It's gonna be a different experience. Were tellingme or of the software story, more of the portfolio story more about how you scare scale the win. We have a virtual presence this year, which is going to be very helpful in telling that story. Customers can come in and they can see more than just a ah box that in our world is really not important because it's for us. It's all about the software and stuff we do. We even in Booth Theater, we have some private meeting spaces well, to take people into a bigger, deeper drill down. But the virtual experience will allow them to touch and feel stuff that maybe they didn't get to do before, and that's gonna be kind of exciting as well. >> So you mentioned C S P s. We had Michael Gray thrive on a while back, and you know, he was saying that Look, he likes your product because it allows him to do other things. And don't worry about, you know, the old sort of tuning and managing and ableto re shift labor. I felt like that was an interesting discussion, primarily because you've got all these cloud service providers that everybody thought aws was just gonna kill. And if anything, it's elevated them. What are you seeing in the CSP space? Yeah, you know, >> Michael had a lot of interesting things to say that definitely love the fact that we enable multiple workloads without them having to do lots of cautious planning and re planning and shifting and shuffling. And we are seeing C S P is becoming more value. Add to a lot of businesses, especially the mid market and the smaller enterprise where people may want more than just infrastructure. You know, they don't they need that application level support and companies like thrive in some of our other really good customer, US signal and you know they're all capable of Flex Central's. Another one they're all capable of providing service is beyond the hardware they're capable of providing that application support the guidance and, in the case of Thrive, the cybersecurity guidance especial Really, which is really, really critical. So they're growing, and they're also, by the way, working with eight of us and Google and Azure to provide that capabilities well, when necessary. >> Well, that leads me to the sort of multi cloud discussion in our industry. We tend to have this alphabet soup of acronyms like another reason I like talking to you because we can kind of cut through that. And, you know, I love the marketing. I think marketing helps people understand what's going on differentiate. It gives you an indication of where the industry is going, and multi cloud is one of those things that I mean. I've kind of said it's a symptom of multi vendor and more so than a strategy. But increasingly it seems like it's becoming a strategy with customers, and you just gave an example of thrive working with multiple cloud vendors. Clearly, VM where wants to be in that business. What your thoughts on multi cloud and and hybrid. What does it mean for for infinite at What's your strategy there? You know, it's it's interesting because I >> just read an article the other day about you know, the definition of multi cloud on whether it's being abused and, you know, I I look at it as someone just trying to tell their story and give it. Give it some favor. I think at the end of the day, uh, every business is going to be talking to multiple platforms whether they want to or not. You know, there are many customers and companies out there, businesses who are in our customers who have gone the way of the cloud and repatriated. Certain things is they've they found that it it may work. It may not work, and there are many cloud providers who were trying to do things to accelerate migration of applications because they see that certain applications don't work. You know, we got one of the cloud providers buying Ah, now as provider, another one buying very recently, you know, an envy me based flash company to try to pick up those loose workloads where they might struggle today. But the end of the day everybody's going to be multiple. And whether it's because they're using cloud service is from from a software perspective or whether they just need to basically broker and maintain sort of that that independence so that they can maintain some cost control, availability, control, security, control and in some cases it will remain on premises. And some of things will be off just so they could get the applications closer to their end users. So you know what is multi Cloud? Multi Cloud really is just one of those terms that literally means what it says. It's your business running in multiple places. It doesn't have to necessarily be simultaneously by the same application. >> A big part of your value proposition is the simplicity. We've heard that from your customers, and you guys obviously push that out there. I want to ask you because you mentioned repatriation and you know, Cloud keeps growing like crazy. Sure, and the on prem not so much. You guys are smaller company. You're growing your stealing share, So yep. So maybe is that simplicity thing. Here's my question. So it's around automation. The cloud providers, generally an Amazon specifically have have driven automation. They've attacked the IittIe labor problem and they're able to charge for that on Dhe. So my question is, are you seeing that you're able to attack that labor problem in a similar sense and bring forth the value proposition to customers is Look, we can create a cloud like experience on Prem if you want MacLeod. Great. But if you want to stay on Prem, you're gonna get the benefit of being able to shift. Resource is two more strategic things and not have to worry about all this heavy, heavy lifting. You You seeing tangible evidence of that? >> We're seeing significant tangible evidence of that on and, you know, a couple of things. You know, you talk about growth, right? And I think when we did the launch, you know, only a few months ago we were at about 4.6 exabytes of capacity shipped. We just passed 5.1. That's some significant growth in in just a few months. It's like a 33% growth just from the same time last year, which is which is fairly significant. And of course, if you're familiar with the way we talk, you know you have an engineer is the head of marketing. We like to tell the truth. You know, we don't like to mask, do many things and confuse people. We don't like talking about effective storage because effective capacity doesn't really mean much to some people. So that's, you know, this is what we This is what we shipped and it's growing rapidly. And a lot of that is growing, in part because of the significance of the message and in part because of this need to control costs, contain costs and really operate in a more modern way. So get back to your comments about cloud and cloud operation. That's really what people want. People like the consumption model of cloud. They don't always like the cost on hidden costs. So simplifying that, but giving them the flexibility Thio have either an op X or cap ex that allows him to grow and shrink as they move workloads around. Because everybody grows even on Prem is growing. It's just, you know, it's the law of numbers, right? Cloud is growing, absolutely. But on Prem really is growing. And then the other thing I want is they want the operational flexibility. And that's what we talked about in our elastic data fabric. They don't like constantly having to re jigger and re balance workloads. Infinite box by itself. The platform of infinite Box takes away a lot of that mystery and magic, because it it kind of hides all of the complexity of that workload. And it, you know, we take the randomness out of the I o. I think maybe Craig Hibbert mentioned in his video is he was describing in detail how that happens. Remember Michael Gray talking about that as well, you know, So those those things come out in a single infinite box. But even if you said well, I still want to move my workload from, uh, you know this data center to an adjacent data center or perhaps a data center in another facility. Um, excuse me, Another city. So that's closer to the end user. Making that transparent to the applications is critically important. >> Yes, he talked about growth in about 1/2 a PETA bite. Sorry, half an exabyte in just a few months. A couple months? Really Right. That's that's growth. But I want to ask you about petabytes. Petabytes scales. Kind of key of companies that don't do that in a year day, eh? Exactly. So that's a petabytes scale. Is big party of marketing two questions? Why is that relevant? Or is that relevant to VM? Where customers? Why so and then, does it scare some people owe you? Asked a great question. >> It absolutely scared some people. And I know that there are some pundits out their industry pundits who who basically don't agree with our messaging. But this is this is the business problem that we we targeted the solve rate. Um, there are a lot of people out there who don't think they're petabytes scale yet because maybe they're individual applications aren't petabytes scale. But when you add it up, they get there and a lot of our customers are existing. Customers didn't start with infinite at at petabytes scale. They started a couple 100 terabytes, perhaps, but they're petabytes skill now. In fact, over 80% of the customers and systems that we have out there today or above the petty bite. We have customers that are in the tens of petabytes. We have customers that are in the hundreds of petabytes. They grow, they grow rapidly on. Why is that? Well, to two factors. Really. Number one, if you go back to. Probably when I first met you back when I had your hair, at least in quantity, way had way. Were kind of crusting that terabyte mark. Right? Right. And what was the problem? The problem was nobody could figure out how to deal with the performance. Nobody wanted to put that much risk on a single platform, so they couldn't deal with the availability. And they really didn't know how to deal with even the serviceability of that scale. So terabyte was a problem solved No, 25 years ago, and then things were rapidly from there. Now we're at the same juncture, just three orders of magnitude later. Right? >> Well, that's interesting, because, you know, you're right. People didn't want to put all all that capacity under an actuator that cost performance problems. They were concerned about, you know, just availability. And then two things happen so simultaneously, flash comes along. And, you know, you would say was put sort of a Band aid to some of the performance problems. Sure. And you guys came up with, like, this magic sauce to actually use spinning disc and get the same performance or better performance you would argue with flash. And so as a result, you were now able to do a lot Maur with the data, the concerns about that much date under the actuator somewhat attenuated because, I mean, you've got now so much data, you've got to do something that's almost that's flywheel effective. You've got tons of data machine intelligence and a I. Now, coming into the picture, you've got Cloud, which has been this huge tail when for the industry and for data creation in general. And so I see. You know, you see, like the I. D. C numbers and for forecasting growth of data and storage could be low. I mean, the curve could be bending, you know, kind of more than exponentially your thoughts on that. >> Yeah, it's an interesting, interesting observation. I think what it really comes down to is our storyline is math is greater than media, all right? And when you when you look at the flash being, you know, the panacea to performance it was just a step in the evolution, right? You go back and and say, spinning disc was the same solution to the performance problem 20 years ago. 25 years ago, even it was 5400 rpm discs and then very rapidly. Servers got faster. The interconnects got a little bit faster. They were still mostly differential. Scuzzy. There was 7200 rpm discs. And I promise you, by the way, that if you're running 5400 rpm desk, you install 7200 rpm. All yours performance problems will go away until the day you install it. And then it was 10,000 rpm discs and I was 15,000 rpm disc, and it still wasn't getting fast enough because, you know, you went to Fibre Channel One Gig Fibre channel and then to Geek Fibre, Channel four, Gig fibre, Channel eight, gig fibre channel. The unified connects got faster. The servers got faster. That was more cash on the servers. Then this thing came along, cuts called solid state disc. Right. And then it was it was SLC single layer cell technology. But don't worry about it's very expensive. Not a problem. You only need 4% of your application, right? Jerry? No, no, I'm sorry. percent. No, I'm sorry. 30%. What the heck? You know, M l c is now a little bit more reliable, so let's just make make it all slash. Right? So that was the end of the story, right? No. Servers continue to get faster. Uh, the media continue to get faster and denser, right? So now the interconnect isn't fast enough, So envy me. Is that the answer to life? The universe and everything? Well, wait. I got a better answer for your test. CIA storage class memory in parallel with that. By the way, there are some vendors out there who said that's still not fast enough. We want to put more d ram and the servers and do things in memory. We went in memory databases. I guarantee whatever you do from a media perspective on my personal guarantee to you, it's obsolete by the time you're up and running. By the time you get your applications migrated, configured and running with business value, it's already obsolete. Some vendors got something better coming out. The right answers. This stuff you talked about, the right answer is everything that you're doing for your business. APs. It's a it's a Mel. It's solving the problems in software and, you know, you said we use disc and make it fast. It's not despite itself, of course, right? It's D Bram. It's a lot of the Ram, which, by the way, is orders of magnitude faster than flash the NAND flash. And even if its ECM and still orders of magnitude faster than that, what we use the disk for today in the architecture is the cost factor. We take the random ization out in the flash and we take the >> end and in the in the diagram >> and we used the SAS in the back end to manage costs. But we use it in a way that it performs well, which is highly sequential, massively parallel. And we take full advantage of that Beck and Ben with to do that with that massive dear am front end. Our cash ratios are unparalleled in the industry and and we use it even more effectively that way. But if architecture already evolves, so if if SCM becomes more stable and becomes more cost effective, we can replace that that S S D layer with the cm. And if you know, if the economics of Q L C or something beyond that. Come down will replace the back end with that, do you? Do >> you ever look at what you're doing today as sort of a modern day symmetric. So I mean, a lot of things you just said. I mean, you've got a lot of memory. You've got a massive back end. You know, those were two of the characteristics of symmetric snow. Of course. Fast forward. Whatever. 30 years, right. But a lot of it was sort of intelligence and understanding. Sure. So how data works, is it Is it a fair sort of, or is it radically different? Well, in terms of mindset, I mean, I know the implementation is >> right, right? >> Yeah. I mean, it's not an unfair comparison. I mean, tiered storage was around before some metrics. Right? So it's certainly existed existed then, too. It was just at the time. It was a significant innovation course to layer at the time, right? A big cash front, ending some slower media and then taking advantage of the media on the back end. The big difference today is that if you look at what some metrics became through its Evolution's DMX and V Max and now Power Max. It's still tiered storage, you know, you still have some cash. That's that's for unending some faster media with power. Max, you're you're dealing now with us with an SS a back end. But what happened with those types of architectures is the tearing became more automated. But you're still moving information around. You're still moving Information from one said it This to another set of this leader in the cycle. You're still trying to promote things you know, to to the cash up front. We're doing it in real time. We're >> doing it by analyzing >> the data on the way it comes in. We're reassembling it again, taking the random ization out we're reassembling it and storing it across multiple disks in a way that it it increases our probability of pulling that information associated information back when we need it later. So there's there's no movement. Once its place, we don't have to replace it. You know it's already associated with other data that makes sense, and that gives us a lot of value. >> And secret sauce is the outcome of the secret sauce is you're able to very efficiently. Well, historically, you haven't been able to do a lot of garbage collection, a lot of data movement, and that just kills performance. There's >> really no garbage collection necessary in our in our world way. Also use very modern data structures or patents. Ah, lot of them on our neural cash Deal with the fact that we use a try data structure. So we're not using old fashioned hash tables and you know, l are you algorithms, You know it Sze very, very rapid traverse a ll of these trees >> and you're taking advantage of machine intelligence inside the software architecture. That really is some of the new innovation that really wasn't around to be able to take advantage of that 20 years ago. Maybe it was it was just not cost effective. Do the math was there, put it that the math of the mouth was there and >> there there There's been lots of evolutions of that over the years, a swell, but we continue to evolve and innovate. And, you know, one of the one of the cool things I think about working infinite at is is the multiple multiple generations of engineer where you've got people who understand that math they understand the real nuances of what it means to operate in a world of storage, which is quite a bit different than operating, saying networks or proceed be used because data integrity is paramount. There's lots of lots of things that go on there as well. But we also have younger generations, generations who like new challenges and like to re invent things so they find newer and greater ways to do things. >> This is exciting. So systems, thinkers and I mean server thinkers. I mean, people who understand, you know, systems designed it all the way through and and, you know, newbies who are super smart like you say, wanna learn and solve problems? Go back to the petabytes scale discussion, >> solve problems at petabytes scale, right? Even if the customer doesn't need that necessarily to solve that problem is critically important because even if you look at Les, just take, you know NFS, for example, most NFS systems deal with thousands of objects. Hundreds to thousands of objects are an F s. Implementation deals with billions, right? Do you need billions? How many applications you know that have billions of objects, But being able to do that in a way where performance doesn't degrade over time and also do it in a way where we say our nlm implementation isn't impacted by any any type of service events, we can take a note out, and it doesn't impact in ln There's no no degradation and performance. There's no impact or outage in service. All that's important. Even when you're dealing with smaller application sizes because they add up, they really do add up. He also brought up the point about, you know, density and actually intensity. Great. You know, back 25 years ago, when we were dealing with, you know, the first terabyte storage system, you know, how much how much stories did you have on your laptop? How much you have today, right? You know, you're probably more than a terabyte. They were laughing about putting things terabyte on the floor. And now you get more than a terabyte on your laptop. Things changing? >> Yeah. Um, I wanna ask you where you see the competition. We talked about all flash. We've had a long conversation, long, many conversations in the past about this, But you really, you know, the all flashy kind of described it as a Band Aid, essentially my words, but it was sort of a step function. Okay, great. Um, you have one company, really us who achieve escape velocity in that business in terms of pure But is that where you see in competition and you're seeing it from, you know, the hyper scale er's where you Yeah, you know, >> it's interesting. You know, you look at companies like, you know, we admire what they dio, especially with regard to marketing. They do a really good job of that. They also, um I have some really interesting ideas innovating the media, which is which is great. It helps us in the long run as well. Um, we just look at it as a component of our system, not these system, which makes it different. We don't really see the A f a. You know, the small scale a FAA is are the majority of our competition. We do run into them, but typically it the lower end of the opportunity. Even within the bigger companies that have competitors to those products, we run into them and smaller opportunities, not bigger opportunities where we run into them where there's a significant performance advantage as long as you don't mind the scale out approach to solving the problem. Unfortunately, when you're using a phase two skill out, you know you're putting all of the intelligence requirements on some poor storage administrator or system administrator to figure out what those where right, we take all of that away. So once it starts to scale, that's where we come in a plan. We don't see tons of competition there. Certainly, we're seeing competition from the clouds. And the competition from the clouds is more born of customer mandates and company mandates. Sometimes they I'm not quite sure that everybody knows why there who think to the cloud and we're problem they're trying to solve. But once they start to see a story that says, Hey, if the reasons are and you do understand those reasons, if the reasons are agility and financial flexibility and operational agility not as well as his acquisition agility, you know, we have answers to that and it starts to become a little bit more interesting and compelling. >> All right. One of the highlights of the M world each year is your dinner. Your customer I crashed in a couple of years ago when there were no other analysts there. And then last year again, it was in Vegas. Shows a nice steak house. This year we're in San Francisco, but But I had some great conversations with customers. I remember speaking to one customer about juxtaposing the sand thio to infinite debts platform. And you know the difference. The Sands taken off doing really well, but But he helped me understand the thinking from their standpoint of how they're applying it to solve problems and why v san wasn't a good fit. Your system was, um that was just one of many conversations last year had again other great conversations with customers. What do you do in this year? You have a customer dinner. We are? Yeah. We love to have you in and gave the invitation there. Yeah, the invitation. Is that definitely there? You know, a couple of >> years ago we didn't invite analysts, and you know what it was? It was a mistake. We and we learned that lesson into a large part. We credit you for for showing us how wrong we are. Our customers are very loyal. They're some of the most loyal in the industry. Don't take my word for it going. The gardener Pierre Insights and and look at our numbers compared to everybody else's any pick. Pick a vendor. We're at the top of the list with regard to not only the ratings but, more importantly, the customers willingness to recommend in every category, too. By the way, it's It's not just product quality and performance, and it's it's service support. It's easy doing business. It's an entirely different experience. So we love having the customers there, and the customers love having you there, too. They love having you and your appears in the industry there because they love learning from you and they love answering the questions and getting new insights. And we'd love to have you there. We're gonna be in the Mint this year. San Francisco meant not the not the current one that that's pretty coins, but the original historical site on duh. You know we have. We have invitations out thio to about 130 people because there's only so much room we have it at the event, but we're looking forward to a great time and a great meal and good conversation. >> That's great. Well, VM World is obviously one of the marquee events in our industry. It's the It's the fat middle of where the IittIe pro goes on dhe We're excited. Used to be Labor Day started the fall season. Now it's VM world. Well, Doc will see you out there. Thanks very much for your good to see you. All right. Excellent. All right. Thank you for watching everybody. This is day Volonte in the Cube will see you next time we'll see you at the M World 2019.

>> Live from Boston, Massachusetts, it's The Cube! Covering IBM Chief Data Officer Summit, brought to you by IBM. >> Welcome back to The Cube's live coverage of IBM's Chief Data Strategy Summit, I'm your host Rebecca Knight, along with my cohost Dave Vellante. We have a big panel today, these are our social influencers. Starting at the top, we have Christopher Penn, VP Marketing of Shift Communications, then Tripp Braden, Executive Coach and Growth Strategist at Strategic Performance Partners, Mike Tamir, Chief Data Science Officer at TACT, Bob Hayes, President of Business Over Broadway. Thanks so much for joining us. >> Thank you. >> So we're talking about data as a way to engage customers, a way to engage employees. What business functions would you say stand to benefit the most from using data? >> I'll take a whack at that. I don't know if it's the biggest function, but I think the customer experience and customer success. How do you use data to help predict what customers will do, and how do you then use that information to kind of personalize that experience for them and drive up recommendations, retention, upselling, things like that. >> So it's really the customer experience that you're focusing on? >> Yes, and I just released a study. I found that analytical-leading companies tend to use analytics to understand their customers more than say analytical laggards. So those kind of companies who can actually get value from data, they focus their efforts around improving customer loyalty by just gaining a deeper understanding about their customers. >> Chris, you want to jump in here with- >> I was just going to say, as many of us said, we have three things we really care about as business people, right? We want to save money, save time, or make money. So any function that meets those qualifications, is a functional benefit from data. >> I think there's also another interesting dimension to this, when you start to look at the leadership team in the company, now having the ability to anticipate the future. I mean now, we are no longer just looking at static data. We are now looking at anticipatory capability and seeing around corners, so that the person comes to the team, they're bringing something completely different than the team has had in the past. This whole competency of being able to anticipate the future and then take from that, where you take your organization in the future. >> So follow up on that, Tripp, does data now finally trump gut feel? Remember the HBR article of 10, 15 years ago, can't beat gut feel? Is that, we hit a new era now? >> Well, I think we're moving into an era where we have both. I think it's no longer an either or, we have intuition or we have data. Now we have both. The organizations who can leverage both at the same time and develop that capability and earn the trust of the other members by doing that. I see the Chief Data Officer really being a catalyst for organizational change. >> So Dr. Tamir I wonder if I could ask you a question? Maybe the whole panel, but so we've all followed the big data trend and the meme, AI, deep learning, machine learning, same wine, new bottle, or is there something substantive behind it? >> So certainly our capabilities are growing, our capabilities in machine learning, and I think that's part of why now there's this new branding of AI. AI is not what your mother might have thought AI is. It's not robots and cylons and that sort of thing that are going to be able to think intelligently. They just did intelligence tests on the different, like Siri and Alexa, quote AIs from different companies, and they scored horribly. They scored much worse than my, much worse than my very intelligent seven-year old. And that's not a comment on the deficiencies in Alexa or in Siri. It's a comment on these are not actually artificial intelligences. These are just tools that apply machine learning strategically. >> So you are all thinking about data and how it is going to change the future and one of the things you said, Tripp, is that we can now see the future. Talk to me about some of the most exciting things that you're seeing that companies do that are anticipating what customers want. >> Okay, so for example, in the customer success space, a lot of Sass businesses have a monthly subscription, so they're very worried about customer churn. So companies are now leveraging all the user behavior to understand which customers are likely to leave next month, and if they know that, they can reach out to them with maybe some retention campaigns, or even use that data to find out who's most likely to buy more from you in the next month, and then market to those in effective ways. So don't just do a blast for everybody, focus on particular customers, their needs, and try to service them or market to them in a way that resonates with them that increases retention, upselling, and recommendations. >> So they've already seen certain behaviors that show a customer is maybe not going to re-up? >> Exactly, so you just, you throw this data in a machine learning, right. You find the predictors of your outcome that interest you, and then using that information, you say oh, maybe predictors A, B, and C, are the ones that actually drive loyalty behaviors, then you can use that information to segment your customers and market to them appropriately. It's pretty cool stuff. >> February 18th, 2018. >> Okay. >> So we did a study recently just for fun of when people search for the term "Outlook, out of office." Yeah, and you really only search for that term for one reason, you're going on vacation, and you want to figure out how to turn the feature on. So we did a five-year data poll of people, of the search times for that and then inverted it, so when do people search least for that term. That's when they're in the office, and it's the week of February 18th, 2018, will be that time when people like, yep, I'm at the office, I got to work. And knowing that, prediction and data give us specificity, like yeah, we know the first quarter is busy, we know between memorial Day and Labor Day is not as busy in the B to B world. But as a marketer, we need to put specificity, data and predictive analytics gives us specificity. We know what week to send our email campaigns, what week to turn our ad budgets all the way to full, and so on and so forth. If someone's looking for The Cube, when will they be doing that, you know, going forward? That's the power of this stuff, is that specificity. >> They know what we're going to search for before we search for it. (laughter) >> I'd like to know where I'm going to be next week. Why that date? >> That's the date that people least search for the term, "Outlook, out of office." >> Okay. >> So, they're not looking for that feature, which logically means they're in the office. >> Or they're on vacation. (laughter) Right, I'm just saying. >> That brings up a good point on not just, what you're predicting for interactions right now, but also anticipating the trends. So Bob brought up a good point about figuring out when people are churning. There's a flip side to that, which is how do you get your customers to be more engaged? And now we have really an explosion in reinforcement learning in particular, which is a tool for figuring out, not just how to interact with you right now as a one off, statically. But how do I interact with you over time, this week, next week, the week after that? And using reinforcement learning, you can actually do that. This is the the sort-of technique that they used to beat Alpha-Go or to beat humans with Alpha-Go. Machine-learning algorithms, supervised learning, works well when you get that immediate feedback, but if you're playing a game, you don't get that feedback that you're going to win 300 turns from now, right now. You have to create more advanced value functions and ways of anticipating where things are going, this move, so that you see things are on track for winning in 20, 30, 40 moves, down the road. And it's the same thing when you're dealing with customer engagement. You want to, you can make a decision, I'm going to give this customer a coupon that's going to make them spend 50 cents more today, or you can make decisions algorithmically that are going to give them a 50 cent discount this week, next week, and the week after that, that are going to make them become a coffee drinker for life, or customer for life. >> It's about finding those customers for life. >> IBM uses the term cognitive business. We go to these conferences, everybody talks about digital transformation. At the end of the day it's all about how you use data. So my question is, if you think about the bell curve of organizations that you work with, how do they, what's the shape of that curve, part one. And then part two is, where do you see IBM on that curve? >> Well I think a lot of my clients make a living predicting the future, they're insurance companies and financial services. That's where the CDO currently resides and they get a lot of benefit. But one of things we're all talking about, but talking around, is that human element. So now, how do we take the human element and incorporate this into the structure of how we make our decisions? And how do we take this information, and how do we learn to trust that? The one thing I hear from most of the executives I talk to, when they talk about how data is being used in their organizations is the lack of trust. Now, when you have that, and you start to look at the trends that we're dealing with, and we call them data points verses calling them people, now you have a problem, because people become very, almost analytically challenged, right? So how do we get people to start saying, okay, let's look at this from the point of view of, it's not an either or solution in the world we live in today. Cognitive organizations are not going to happen tomorrow morning, even the most progressive organizations are probably five years away from really deploying them completely. But the organizations who take a little bit of an edge, so five, ten percent edge out of there, they now have a really, a different advantage in their markets. And that's what we're talking about, hyper-critical thinking skills. I mean, when you start to say, how do I think like Warren Buffet, how do I start to look and make these kinds of decisions analytically? How do I recreate an artificial intelligence when machine-learning practice, and program that's going to provide that solution for people. And that's where I think organizations that are forward-leaning now are looking and saying, how do I get my people to use these capabilities and ultimately trust the data that they're told. >> So I forget who said it, but it was early on in the big data movement, somebody said that we're further away from a single version of the truth than ever, and it's just going to get worse. So as a data scientist, what say you? >> I'm not familiar with the truth quote, but I think it's very relevant, well very relevant to where we are today. There's almost an arms race of, you hear all the time about automating, putting out fake news, putting out misinformation, and how that can be done using all the technology that we have at our disposal for disbursing that information. The only way that that's going to get solved is also with algorithmic solutions with creating algorithms that are going to be able to detect, is this news, is this something that is trying to attack my emotions and convince me just based on fear, or is this an article that's trying to present actual facts to me and you can do that with machine-learning algorithms. Now we have the technology to do that, algorithmically. >> Better algos than like and share. >> From a technological perspective, to your question about where IBM is, IBM has a ton of stuff that I call AI as a service, essentially where if you're a developer on Bluemix, for example, you can plug in to the different components of Watson at literally pennies per usage, to say I want to do sentiment analysis, I want to do tone analysis, I want personality insights, about this piece, who wrote this piece of content. And to Dr. Tamir's point, this is stuff that, we need these tools to do things like, fingerprint this piece of text. Did the supposed author actually write this? You can tell that, so of all the four magi, we call it, the Microsoft, Amazon, Google, IBM, getting on board, and adding that five or ten percent edge that Tripp was talking about, is easiest with IBM Bluemix. >> Great. >> Well, one of the other parts of this is you start to talk about what we're doing and you start to look at the players that are doing this. They are all organizations that I would not call classical technology organizations. They were 10 years ago, look at a Microsoft. But you look at the leadership of Microsoft today, and they're much more about figuring out what the formula is for success for business, and that's the other place I think we're seeing a transformation occurring, and the early adopters, is they have gone through the first generation, and the pain, you know, of having to have these kinds of things, and now they're moving to that second generation, where they're looking for the gain. And they're looking for people who can bring them capability and have the conversation, and discuss them in ways that they can see the landscape. I mean part of this is if you get caught in the bits and bites, you miss the landscape that you should be seeing in the market, and that's why I think there's a tremendous opportunity for us to really look at multiple markets of the same data. I mean, imagine looking and here's what I see, everyone in this group would have a different opinion in what they're seeing, but now we have the ability to see it five different ways and share that with our executive team and what we're seeing, so we can make better decisions. >> I wonder if we could have a frank conversation, an honest conversation about the data and the data ownership. You heard IBM this morning, saying hey we're going to protect your data, but I'd love you guys, as independents to weigh in. You got this data, you guys are involved with your clients, building models, the data trains the model. I got to believe that that model gets used at a lot of different places, within an industry, like insurance or across retail, whatever it is. So I'm afraid that my data is, my IP is going to seep across the industry. Should I not be worried about that? I wonder if you guys could weigh in. >> Well if you work with a particular vendor, sometimes vendors have a stipulation that we will not share your models with other clients, so you just got to stick to that. But in terms of science, I mean you build a model, right? You want to generalize that to other businesses. >> Right! >> (drowned out by others talking) So maybe if you could work somehow with your existing clients, say here, this is what we want to do, we just want to elevate the waters for everybody, right? So everybody wins when all boats rise, right? So if you can kind of convince your clients that we just want to help the world be better, and function better, make employees happier, customers happier, let's take that approach and just use models in a, that may be generalized to other situations and use them. If if you don't, then you just don't. >> Right, that's your choice. >> It's a choice, it's a choice you have to make. >> As long as you're transparent about it. >> I'm not super worried, I mean, you, Dave, Tripp, and I are all dressed similarly, right? We have the model of shirt and tie so, if I put on your clothes, we wouldn't, but if I were to put on your clothes, it would not be, even though it's the same model, it's just not going to be the same outcome. It's going to look really bad, right, so. Yes, companies can share the models and the general flows and stuff, but there's so much, if a company's doing machine learning well, there's so much feature engineering that's unique to that company that trying to apply that somewhere else, is just going to blow up. >> Yeah, but we could switch ties, like Tripp has got a really cool tie, I'd be using that tie on July 4th. >> This is turning into a different kind of panel (laughter) Chris, Tripp, Mike, and Bob, thanks so much for joining us. This has been a really fun and interesting panel. >> Thank you very much. Thank you. >> Thanks you guys. >> We will have more from the IBM Summit in Boston just after this. (techno music)

>> Announcer: From the SiliconANGLE Media office in Boston, Massachusetts, it's theCUBE. Now, here are your hosts, Dave Vellante and Stu Miniman. >> 2010 was the first year we brought theCUBE to VMworld. At that time, VMware was a $2.5 billion company with former Microsoft exec Paul Maritz at the helm. Two years earlier, in a stunning development, VMware fired co-founder and CEO Diane Greene, which sent the company's stock tumbling almost 25%. Under pressure from investors, Joe Tucci, the chairman of EMC, made the move after a rocky four-year relationship with Ms. Greene. EMC purchased VMware in 2004 for $635 million. The Maritz years were marked by a strategy to move the company beyond the hypervisor into new areas of growth, including desktop virtualization and applications, which were met with mixed market responses. To Maritz's credit, however, the company continued to expand its presence in the data center, and under his leadership remained highly competitive with Microsoft, who was seen at the time as VMware's main rival. In 2012, the company named long-time Intel and then recently EMC exec, Pat Gelsinger as its CEO. Gelsinger inherited a roughly $4.5 billion company, staring into the teeth of the oncoming cloud megatrend. Gelsinger quickly embarked on a strategy to refocus on the core business, buoyed by a restructuring of many of the VMware assets that EMC and VMware folded into a new company called Pivotal. Gelsinger made several attempts to maintain and expand VMware's total available market with a public cloud play called vCloud Air, which ultimately failed. On the plus side of the ledger, however, Gelsinger led VMware's software-defined data center strategy grabbing pieces of its value chain that were historically left for the ecosystem. Of course, the most notable being NSX, the company's software-defined networking product, and vSan, a software storage play. Fast forward to 2017, and add to these developments the momentum of VMware's cloud management and orchestration offerings, its security and other multi-cloud services, and you now have a nearly $8 billion revenue company growing at 10% per anum, with a $40 billion market cap, and a new owner, namely, Michael Dell and company. Hello, everyone. My name is Dave Vellante and I'm here with Stu Miniman, and this is our VMworld 2017 preview. Stu, thanks for joining me. >> Dave, can't believe it's bene eight years we've been doing theCUBE at VMworld. >> Right, and we have been tracking this, Stu, and now, as we were saying, we see new owners, Michael Dell, Dell buying EMC, and of course VMware maintaining the vast majority of the ownership. Stu, what has changed since Michael Dell purchased VMware? What's changed in terms of Dell, its ownership, and also in the past year? >> Yeah, so it's been one of the top questions. Last year, John Furrier and I interviewed Michael Dell, and there were still everybody trying to say after the acquisition happened, "Aren't you going to just sell of VMware because VMware "needs to be independent, "they need to be able to partner with everyone?" And Michael was basically like, just lit a fire underneath him, and he's like, "People that think I'm going to sell it "don't understand the business plan "and they don't understand math." Everybody thought, "Oh, you got to sell them off "to be able to pay down the debt," and he's like, "No. "VMware has been called the jewel of this acquisition "of EMC, the largest acquisition in tech history." And that relationship of VMware is something that's still playing out. One piece of it, you mentioned vSAN, one of the success stories, there was the failure of EVO:RAIL, which was kind of the first generation solution put together sold through a whole lot of partners. They took that whole product and marketing team and put them together with EMC and created the VxRail team, which now reports up to Chad Sakac. On the Dell/EMC side, VxRail doing quite well, vSAN doing phenomenally well. They claim to have the most number of customers for any product in the hyper-converged infrastructure space. Lots of different solutions out there. So, some of that blending of how Dell/EMC and VMware, we see a little bit of that, but still, VMware partners with everyone. VMworld, still, Dave, is probably the largest infrastructure ecosystem out there, and even if we look at cloud, it's one of the more robust ecosystems out there. The only one probably rivals it these days is Amazon. >> Stu, isn't Dell's ownership of VMware somewhat more threatening to server vendors in particular than EMCs? Especially Cisco, IBM, HPE, large volume movers of VMware licenses, how has that affected the dynamic in the ecosystem? >> Yeah, Dave, we've talked in previous years. I was at EMC back at the beginning of the VMware relationship. EMC really didn't know what it was getting when it got VMware. It was less dollars were going to go into servers because we consolidate with virtualization, and less dollars to servers should mean more dollars to storage, good for EMC. Well, Dell, number one thing that Michael Dell wants to do is sell Dell servers. So, of course, if I'm someone else in that ecosystem, if I'm selling other servers, if I'm selling storage that doesn't run on Dell gear and not part of that Dell ecosystem, absolutely it could be a threat. Micheal has maintained the they're going to keep VMware, allow them to have their independence, and I haven't heard too many rumblings from the ecosystem that they've messed up the apple cart from VMware's standpoint. >> Okay, last year the talk was that Pat Gelsinger was on his way out. >> Stu Miniman: Yeah. >> You see Pat Gelsinger doesn't appear to be on his way out. There's earnings momentum, which we'll talk about, but thoughts on management? >> Yeah, so, right, Dave. Number one thing is we thought Pat would be out. Things are doing better from a stock market. You talked about the growth, 10% per anum right now is solid VMware. We've seen a number of moves and changes, people that, there have been a lot of people that have left. There's new people that have come in. There are areas that are doing quite well, and virtualization is still a mainstay of the data center. One of the things we'll talk about, I know, is that Amazon relationship, which we expect to hear a lot about at the show. Amazon's one of the Global Diamond partners, which, a year ago if you had said that Amazon was one of the top partners up there with the likes of Hewlett Packard Enterprise, OVH took over the vCloud Air business, which is, as you said, it failed from VMware's standpoint. They still have a number of partners. Companies like Rackspace, OVH that took over that vCloud Air business, and lots of service providers are doing quite well selling VMware lots of places. And virtualization still is the foundational layer for most infrastructure. >> So VMware pre-announced earnings to the upside and future growth ahead of expectations, so the stock got a nice pop out of that. What's driving that momentum? >> The two areas you talked about first. vSAN is doing quite well. It's driving a lot of adoption and trying to get VMware to be a little bit more sticky and really kind of slowly expand as opposed to big chunks. We talked about when Pat first went in as CEO, it was, VMware had to play a similar game to what Intel did, Dave, which is how do they expand what they're doing without really ostracizing their ecosystem. And, to their credit, they've done a pretty good job of that. They baked in some backup solutions, but lots of backup solutions, you and I were at the vMon conference earlier this year. VM's still doing a very solid business inside of VMware's ecosystem. Lots of other players that play well there. NSX is really starting to hit its stride, that networking piece, but where a few years ago we were talking about it was VMware versus Cisco, well, they seem to be kind of settling into their swim lanes. Cisco still has their core networking business. Cisco's trying to become more of a software company. Cisco actually recently bought Springpath, which was their hyper-converged product, but today that's far behind what vSAN's doing, revenue, users, and everything like that. AirWatch was another acquisition. Sanjay Poonen really helped drive that forward. So the mobility play, VMware's doing well. A lot of the emerging areas, we've been waiting to see where VMware goes with them. Things that I look at like containerization, server lists, open stack VMware had some plays there. They are really kind of nascent at this point and haven't really exploded. I always look at this show, are we seeing many developers there? Lots of the shows we go to have a big developer group. We'll have a little bit of developers, but it's really still a small piece of the overall picture. There's still lots of virtualization admins, people looking at where VMware fits into cloud, and that's kind of where it sits today. >> Let's talk about the competitive dynamic, which is totally different. I mean, back when we first started covering VMworld with theCUBE, 2010, it was really Citrix, Microsoft, Citrix with VDI. You mentioned AirWatch, which kind of flipped the dynamic a little bit. Quite a bit, actually. But Microsoft was the key virtualization competitor. Now it's like competitors, partners, you've got Google Cloud, now, of course, Diane Greene running Google Cloud, which is kind of ironic. We can talk about that. Microsoft with Azure, AWS, which is, we expect to hear a lot from VMware at VMworld 2017 about the AWS relationship. Certainly, IBM with its cloud. Nutanix, which launched at VMworld several years ago, is now more competitive. You mentioned Cisco. They're clearly more competitive with NSX. How do you describe the competitive landscape? What should we be watching at this year's show? >> Yeah, Dave, first of all, you talked about how VMware grew from kind of the $2.5 billion to more like an $8 billion, so of course they're bumping into, kind of going over some of their swim lanes a little bit, and the market has matured. Absolutely, hyper convergence for the last few years has been one of the hot spots, not only for VMware, first when they launched vSAN, it actually was the tide that rose for a lot of their competitors out there. Nutanix, SimpliVity, many of these companies said that they actually stopped a lot of their outbound marketing for about a year because all the people that called up looking at vSAN went to those solutions. Now vSAN's hitting its stride. It's doing really well. I highlighted how VxRail is doing great revenue on the Dell/EMC side, and there's still lots of partners that VMware has. So hyper converge, absolutely something that we'll see there. Cloud, big piece. I mentioned Rackspace, OVH, all the service providers. The vCloud Air network is still kind of there. So how VMware is getting into the service providers, how they're getting into the cloud, I know we'll talk a little bit more about the cloud piece. Last year it was the Cloud Foundation suite, which takes vSAN, and NSX, and vSphere, puts it all together with a management, and that's something that VMware wants to be able to put on prem in a service provider or in AWS. So really, wherever you go, VMware is going to be there and stretch that, but it's like a four-node star configuration. It doesn't natively go into Amazon. That's been a lot of the lift that's been happening over the last year to try to get that VMware on AWS working, and I hear it's not 100% baked yet by the time we get to the show, but working out a lot of those details. But cloud, hyper-converged, some of the new ones. VDI will still come up too, I'm sure. >> How about Docker? Where do they fit in the competitive landscape? >> Yeah, it's interest, remember, I remember the last year we had the show in San Francisco we had Ben Golub, a CEO at Docker, on the program there. Ben's no longer the CEO. They switched CEO's. We had theCUBE at DockerCon this year. Containers, absolutely very important. VMware has something called VMware Integrated Containers. I hear a little bit about it, but most people, if they're saying, "I'm doing virtualization," they're probably doing it on Linux. So Red Hat Summit this year, heard a lot about containers. We're going to have theCUBE at Kubecon, which is the Kubernetes show, later this year. So we know VMware plays a little bit with Docker. I'd love to see VMware saying how they fit into the Kubernetes piece a little bit more. We heard of the Cloud Foundry Summit earlier this year, how Pivotal kind of fits into that environment and they've got a way to be able to spread across multiple environments there. But VMware tends to play in a little bit more traditional applications. And, Dave, when you talk about a competitive standpoint, that's what I look at for VMware. The biggest threat to them is they don't own the application, so Microsoft, Oracle, IBM, and all those cloud-native apps that are getting put in the public cloud, like Google, and Amazon, and Microsoft, does that leave VMware behind? Does VMware, I heard it many times last year, become the new Legacy? >> Well, and, but they're clearly positioned as an infrastructure player, so let's talk about that. I mean, cloud has become the new, infrastructure and service, become the new big competitive threat to on-prem infrastructure. Wikibon has done some research on the true private cloud. Interestingly, I mean, true private cloud essentially is a moniker representation of public cloud-like attributes on prem, bringing cloud, cloud models, to the data, for example, and Wikibon has forecast that as the largest market. I think I've got some data here. It shows that true private cloud over time will be a $230 billion market, whereas infrastructures and service in the public cloud will be about 150 billion. So you expect that true private cloud is going to overtake that. It's growing faster. The CAG here is 33% versus public IAS at 15%, but the big thing is staff. >> Yeah. >> Staffing, getting taken out essentially, getting out of non-differentiated heavy lifting, but what is VMware's cloud strategy generally, but specifically with regard to bringing the cloud model to the data on prem? >> Yeah, so when we created the true private cloud definition, we said,"Vvirtualization alone is not cloud, "and therefore, what do we need? "We really need to have that automation, "that orchestration." And VMware had done a number of acquisitions, they're putting the suite of solutions together, and it's more than just saying, "Oh, I have six different software products; "here's a bundle." How do we fully integrate that? And that's what the Cloud Foundation suite's what VMware put together so that I can have it in a virtual private cloud in Amazon. And it's something basically VMware manages it, but it's Amazon's data center, and that's plugged into the public clouds. I can do the similar sort of thing in the service providers and that's why, with our forecast, Dave, we show in about five years, true private cloud should have more revenue than public cloud. Big reason is because there's a whole lot of Legacy out there and moving from all of my, most companies hundreds if not thousands of applications, getting all of them to the public cloud is tough. Having them in a virtualized environment and being able to slide them over to this kind of environment makes a lot of sense. I can do that. And the shift of my workloads and my applications going to microservices really starting to break apart some of the the pieces is something that a lot of times that's going to take five to 10 years. So, in the meantime, we're going to shift kind of Legacy to private cloud while we're picking off the things that we can with the public cloud. And VMware with their Cloud Foundation suite and their solutions that they're putting together, networking as, really, the inter fabric with NSX, vSAN making it easy to make those applications a little bit more portable between different types of infrastructure, but that's really, VMware is they put their cloud play, and they have a very large set of partners that they're working with in this space. >> So, Stu, how should we look at the VMware AWS deal? Is it AWS's attempt to get a piece of the true private cloud action on prem? Is it VMware's initiative to try to actually get a cloud strategy that has teeth, and works, and has longevity? How should we think about that? >> Yeah, it's, of course, a little bit of both. At its core, I think it's Amazon looks at 500,000 VMware customers that have data center deployments and they're going to stick a straw into that environment and say, "Come try out the first taste of our services," and once you get on the Amazon services which, by the way, they're launching, what, three new features every week, I think. I was at the Amazon Summit in New York City recently and it was like, "Oh, it's a regional summit," there were like three main announcements. No, I got the email. There were like 12 announcements and each one of them were kind of cool and things like that. So it absolutely is how do I get customers comfortable with moving to this new model. I think one of the things that Microsoft did really well is when they pushed everybody to Office 365, they said, "SaaS is the way you should always think "about buying your applications going forward, not, "I'm going to deploy a server for my Outlook, "I'm going to deploy infrastructure for my SharePoint." It's, "I'm going to buy Office 365 and that's just "the way it's done." So they made it the okay. Now VMware, it's really dangerous, in a way, saying, working with Amazon, now we're saying, "Hey, playing on Amazon's safe. "The water's nice." And once they get in that water and you have access to all of those cool things that Amazon keeps putting out, which, by the way, Dave, the week after they announced the partnership of VMware and AWS, what Amazon announced was, "There's a really easy "migration service that, if you have "a VMware Ware environment, "you just kind of click this button." And I'm pretty sure it's for free. "You can now be completely on AWS "and you don't have to pay for VMware licensing anymore. "Wouldn't that be nice?" >> So, okay, so the way you've phrased it or framed it, is it sounds like that VMware, with its half a million customers, has more to lose than AWS in this deal. Is that the right way to think about it or is this not a zero-sum game? >> I don't think it's a zero-sum game when, you brought up the true private cloud. The data center still, there's room for some growth with VMware, even if people are 90% virtualized now, there's some room for growth there. Public cloud, though, has a strong growth engine, so now VMware has a play there. Rather than saying, "It's the book seller, don't go there," they want to have a play. Michael Dell, Dave, I'm sure we're going to ask him, say, "Hey, what do you think the world's going to look like "in five years? "You've got your Azure Stack partnership "that you're lining up with your server division "and with EMC, you've got Amazon that VMware's playing with, "you've got your data center; "how does that go?" And, of course, Michael being the smart businessman that he is, is going to say, "Uh, yeah, you're going to buy Dell "no matter what solution you go with, "and I'm going to have a strong position "in all of them." but it definitely is, we're in a bit of a transitional phase as to how this is going to look. We've, for years, been arguing how big does public cloud get, what applications go where. I do think that this has the potential to accelerate a little bit from VMware's standpoint. VMware customers getting in this environment, trying out some of the new things. I know lots of people that were in the virtualization community that are now playing in the public cloud, getting certified, doing the same things that they did a decade ago to get on public cloud. So, as those armies of certified people kind of move over in the skillset, we have a generational shift going on and lots of people are going to be like, "Hey, I don't want to spend 12 to 18 months "building a temple for my data anymore. "I can just spin this up really fast and move." It's interesting, Dave, Cycle Computing, one of the earliest customers that we interviewed at Amazon, was just acquired by one of the other cloud guys, not Amazon. So companies that know, that was an HPC company that was, rather than spend 18 months and $10 million, we can do the same thing in, like, a few weeks and $10,000. >> They're super computing in the cloud. All right, let's wrap with what to expect at VMworld 2017. Obviously it's going to be a lot of people there. They're your peeps. A lot of partying going on. It's like, it used to be Labor Day kicked off the fall selling season, and for years it's been VMworld. What should we look for this year? >> Yeah, so, I'm excited, Dave. It's always, this community, they spend like the whole summer getting ready for it. I'm actually going to be sitting on a panel at Opening Acts, which is, the VMunderground group does on Sunday. So the event really, it doesn't start Monday, Dave, it actually, a lot of people are already flying in by the time this video goes up. They're doing things Saturday. On Sunday there's three panels. I'm sitting on one on buzz words in IT, so to things like cloud and server lists. Are those meaningful or are those a total waste of our time? So that kind of gets us started. You mentioned lot of good parties at the show always. There's the vExpert community. I was a vExpert for a number of years back when it was, you know, hundred, couple hundred people. I think there's now 1,500 vExperts worldwide. We've got a bunch of hosts coming in to help us, including John Troyer who created the vExpert program, Keith Townsend, Justin Warren, excited to have them. Lisa Martin's going to be co-hosting, along with you, me, John Furrier and Peter Burris. So we've got a big team. We've got two sets. We've got a great lineup at theCUBE. Two sets, three days in the VMvillage, which this year is on the first floor right outside of the Expo Hall. So it's one of those things I don't expect to sleep a lot. I expect to see a lot of people, bump into 'em on the show floor, stop by theCUBE, see the parties, and definitely see 'em in the after parties. >> Great. Well, as Stu says, we have two sets going on, so please stop by and see us. Stu, thanks very much for helping me with this VMworld preview. We'll see you in Vegas next week. Thanks for watching, everybody. See you in Las Vegas. This is theCUBE. (electronic music)