>> Live from London, England, it's theCUBE. Covering .NEXT Conference Europe, 2018. Brought to you by Nutanix. >> Welcome back, I'm Stu Miniman, my cohost Joep Piscaer, and you're watching theCUBE here at Nutanix .NEXT, London, 2018. Happy to welcome back to the program the co-founder, CEO, and chairman of Nutanix, Dheeraj Pandey. Dheeraj, thanks so much. Congratulations on 3500 people here at the third annual European show, and thanks so much for having theCUBE. >> Thank you, my pleasure. >> All right. So, Dheeraj, first of all, you got a lot going on. Big company event here, last night you announced the Q1 2019 earnings. I guess, step back for a second. Nutanix is now, nine years since the founding, you've been public now for a little while, you got to be feeling good. The company's reached a certain size, very respected in the marketplace. So how are you and the team feeling? >> Yeah, well, I tell people that it's actually fun to be a public company. And obviously there is a cost to being a public company, because you're on a quarterly treadmill, in some sense. But Wall Street also keeps you honest. Just like Main Street keeps you honest on quality of product and customer service, Wall Street keeps you honest on spend and what does it really mean to grow at scale. So I like the fact that there is two good streets that are keeping the company honest. And it's really fun to think about capital allocation, one of the big things as you grow. I mean, you're going to spend more than a billion dollars this year alone. How do you allocate capital wisely is something that I think a lot about in (mumbles). >> Yeah. So, at this show, you kind of change some of the positioning of the portfolio. It's the Core, Essentials, and Enterprise, and right, that asset allocation, when I look at Essential, Xi Cloud, there's all these different pieces, some of them through acquisition, some of them created internally. You need to be careful that you don't over-commit, but when do you decide to kill stuff or keep it going, so you got a lot of plates to spin now, a lot more than you did a year or two ago. >> Yeah, absolutely, and it's not just product development. It's also marketing and sales and G&A. I mean, there's other departments we need to think hard about. Like, how do you create brand awareness for these new things? How do you do demand generation? How do you have a specialty sales force? All those things have to be considered, so, nine years, it's been a journey, but it still looks like it's nothing. And we're still a very small company, and we need to think hard about the next five years, in some sense. >> Yeah. So, one of the metrics you gave Wall Street to be able to look at is, what percentage of customers are using more than just the Core? So the Essentials or the Enterprise. And if I got it right, it's up to 19% from 15%, the quarter before. I wonder, is the packaging, how much of that is for Wall Street? Somebody cynically might look and be like, hey, is the Core market slowing down? And therefore you need to expand. We've all seen public companies that need to go into adjacencies, and shouldn't you stick to your knitting? You've got a great solid product with leadership in the marketplace. >> Yep, absolutely. Also, look, we are not bundling them in SKUs so we cannot force customers to actually buy them. We're not doing financial engineering of dollars, because these not SKUs or bundles. This is a journey which is mostly advisory, in some sense. This is how you should start, this is how you should go, and this is advisory for our sellers and our buyers and our channel people. Everybody needs to say, look, have the customer go through the journey. If you had to do what he just said, probably would've bundled them in SKUs and then allocated capital to one or the other. I think, to your other comment about just sticking to the core, Juniper stuck to the core. And many companies out there which just stayed as a single-box company, they stayed at the core. And eventually you realize the market has moved faster than your core itself. So there's this business school thinking, they call it the Icarus Effect. The Icarus Effect is all about, I'm so good at what I do that I can fly to the sun and nothing will happen. But you don't realize that Icarus, the wings were actually pasted using wax. And you go to the sun, and the sun actually melts the wax. So companies like FGI and SUN, Norca, many companies just stuck to one thing. And they couldn't evolve, actually. >> Obviously you're not sticking to the core alone, right? You're expanding the portfolio, I mean, you're not just an infrastructure company anymore. You do so much on top of the infrastructure on-prem. You have so many SAP services, so how do you manage the portfolio in terms of the customer journey? Because there's so much to tell to a customer. How do you sell it? How do you convince a customer to go from Core to Essentials to Enterprise? >> The most important thing is leverage. Is Essentials going to leverage Core, and is the Enterprise going to leverage Essentials and Core itself? Case in point, Files is completely built on top of Core. So every time somebody's using Files, they're also using Core. If you think about Flow, it uses AHV underneath. Frame, and case in point. When it's going to deliver desktops, it's going to use Files because every desktop needs a filer as well. And then when Frame delivers desktops on-prem, it's going to use all the Core. So the important thing is how they don't become disparate things, like they're all going in their own direction, is there a level of progressiveness where you say, well, if you're using the Enterprise features, a lot of them actually go in and drag in the Core as well as Essentials. So how do we build that progressive experience for the customer, where each of these layers are actually being utilized, is the important piece. >> Dheeraj, so, we're talking a lot about the expansion beyond the Core. But there was a pretty significant activity that your team did on Core itself. So the first time I heard about it, it basically said, we're doing an entire file system rewrite. Think of it almost as AoS 2.0. Now, from a product name, I believe it's 5.10, so I might have trouble remembering which release it was, but talk about what went involved in that. Obviously a lot has changed in the nine years since you created it, so. >> Absolutely. Yeah, yesterday in the earnings call I talked about it too, that people scoff at Core infrastructure. Like, oh, it's going to be a commodity because it's good enough infrastructure. But then I argue that there's no such thing as good enough infrastructure. And companies struggle when they don't focus on infrastructure itself. It's like food, shelter, clothing in the Maslow's hierarchy of needs. If you don't get that, then there's no point self-actualizing it. So, Core infrastructure completely destroys network insecurity. You got to get it right. I mean, look at Oracle, how it's struggling with IaaS. And look at Google, they're trying to figure out how to make it relevant for the Enterprise. Azure has like three or four different stacks for infrastructure. One for old 265, one for Azure DB, one for Azure, and now they're rewriting it for Azure itself. VMware has three different infrastructure stacks. One for three tier, where they are very happily, they're saying, look, let EMC, their NetApps actually are underneath, and Cisco's, and stuff like that. And then they have this software-defined infrastructure with commodity servers. And finally, they have VMware-enabled AWS which is going to use AWS services. So now you have three different forks of your core base, in some sense. And for us, what's important is how we use a single core base for everything. So architecture matters. I was arguing yesterday in the earnings call that good enough infrastructure is an oxymoron. You need to get core right before you can go and try to live the other layers of the Maslow's hierarchy of needs, actually. And that's why we went back and thought about, as the workloads were growing and increasing, and we had mission-critical stuff in memory databases, what do we need to really do about the way we lay out the data and lay out the metadata? So as you know, metadata is at the core of anything in systems, and especially storage systems. And the metadata of our erstwhile system was actually very completely distributed. And then we realized that some things can be local, and some things can be distributed, and that's better scale. Again, going back to this understanding of what things can be represented locally for a certain disk versus what things need to be global so that you can go and say, okay, where is this data really located? What drive? But once you go to the drive, you can actually get more metadata. So, again, you're getting more progressive scanning. So at the end of the day, our engineers are constantly thinking about performance and scalability, and how do you change the wings of the plane at 35,000 feet? It's a very big challenge. >> So that's one of the issues, right? So you're still focusing on your own infrastructure layer, right? But many customers do already have presence in a different hardware stack, or the public cloud, or some service provider. So not everything runs on your platform. So how are you planning to deliver the services ensemble to customers that don't necessarily run on AoS? >> So that's the multi-cloud journey, which is basically the enterprise journey of our customers. I said this yesterday in the earnings call as well, that all our services should be available both on-prem and off-prem. This idea of a VPC, that is multi-location, is what hybrid cloud is all about. So how do you get a virtual private cloud to really span multiple clouds in multiple locations? I think you saw from the demos today of how you're really running all of AoS on top of GCP virtual infrastructure. And in the course of the coming year or two, you'll see us do the same thing, BEM at Amazon, BEM at Azure. Because they deliver servers in their data centers and that's leverage for them because they've already gone and spent so much money on data centers that it's easy for them to deliver a physical server that our software can run on top of. And if people are not using AoS, they'll still want to use things like Frame and Beam and COM and other such things like that. >> Yep, Dheeraj, what are you hearing from customers and how do you think of hybrid, as it were? You know, a lot of attention gets played to things like Azure Stack from Microsoft from VMware on AWS, I know you've got some view points on this. >> Yeah, no, in fact, so if you go back five years, hyperconvergence had become a buzz word maybe three, four years ago. And there were a lot of companies doing hyperconvergence. And only one or two have survived and it's us and VMware, basically have survived that. Everybody else has a checkbox because the customers said well, what about that? Will we have a check box? But, it's really about operating system sort of hyperconvergence. And it has to be honest. And it has to really blur the lines between compute and storage and networking and security. I think hybrid needs to be honest and one of the killer things that hybrid needs is blurring the lines between networks, blurring the lines on storage so you can do one click replication and one click fail over. So a lot of those things have required a lot of innovations from us. That's why we were delayed in Xi. We didn't want to just put up data centers and just like that. I mean, if you go back in time to many hardware companies were putting open stack data centers and calling it their new cloud in response to Amazon. And VMware tried vCloud Air. And they had a charter to go spend money. They weren't going to spend a ton of money on hardware. Without even knowing that the cloud is not about data centers. Cloud is about an experience. It's about eCommerce and computing coming together. And you have to be passionate about a catalog. You know, the marketplace, the catalog so that people can really go and consume things from a catalog. I think that's what our experience has been that. Look, if you don't think of it like a retail giant or retail customer, which is what Amazon has done such a good job of. You know, they've thought about computing as an eCommerce problem as opposed to as a compute storage networking problem itself. And those are the lessons that we have learned about hybrid just as much >> Alright, you did a nice job on the keynote, laying out that Nutanix, like your customers, you're going through a journey. The crawl-walk-run, if you will. We got a tease in the keynote this morning about something cloud native. Where you're going. Final question for you is as you look at the company, you said it's still young, where are your customers going, where are some of the things they need to work on, and that Nutanix will mature with them as we look to move forward? >> Well, I mean, look. I think everybody knows where customers are headed. They're questioning who fulfills the promise because the requirements are all the same. They all want to go and use next generation infrastructure, they want to modernize their data centers, the infrastructure. They want to use some things that they want to own, some things they want to rent. The question is, where is the best experience possible? And by that, I mean not just systems experience of hybrid clouds but also customer service and having an ever-growing catalog and being able to deliver things for developers and devops. And technology will come and go. Two, three years ago, the Puppet and Chef were the hottest thing on, now today, it's Kubernetes. Tomorrow, it's going to be something else. It's the fact that what you see is what you do. And what you do is what you say. In our business, it's about integrity. I was arguing about this yesterday in the earnings call, as well, that building business software is a little bit easier. I shouldn't trivialize it as much but if people use business software, they can work around weaknesses of business software. But if you are in the business of infrastructure, applications cannot work around weaknesses of infrastructure. So integrity matters a lot in our space, actually, and that is about great products, great customer service, fast innovation, recovering fast, being resilient. Those are the things that we focus a lot on. >> Alright, well, Dheeraj, thanks again, always. We didn't even get to talk about the width part, the fourth H that you've been talking about for the honest, humble, and hungry. So, thank you. Congratulations to the team and always appreciate you having on our program. >> My pleasure. >> Alright, for Joep Piscaer, I'm Stu Miniman. Stay with us. Two days live of wall to wall coverage. Thanks for watching theCUBE. (light music) >> I have been in the software and technology industry for over 12 years now. And so I've had the opportunity as a marketer.