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