>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR, this is "Breaking Analysis" with Dave Vellante. >> If it weren't for Pat Gelsinger, Intel's future would be a disaster. Even with his clear vision, fantastic leadership, deep technical and business acumen, and amazing positivity, the company's future is in serious jeopardy. It's the same story we've been telling for years. Volume is king in the semiconductor industry, and Intel no longer is the volume leader. Despite Intel's efforts to change that dynamic With several recent moves, including making another go at its Foundry business, the company is years away from reversing its lagging position relative to today's leading foundries and design shops. Intel's best chance to survive as a leader in our view, will come from a combination of a massive market, continued supply constraints, government money, and luck, perhaps in the form of a deal with apple in the midterm. Hello, and welcome to this week's "Wikibon CUBE Insights, Powered by ETR." In this "Breaking Analysis," we'll update you on our latest assessment of Intel's competitive position and unpack nuggets from the company's February investor conference. Let's go back in history a bit and review what we said in the early 2010s. If you've followed this program, you know that our David Floyer sounded the alarm for Intel as far back as 2012, the year after PC volumes peaked. Yes, they've ticked up a bit in the past couple of years but they pale in comparison to the volumes that the ARM ecosystem is producing. The world has changed from people entering data into machines, and now it's machines that are driving all the data. Data volumes in Web 1.0 were largely driven by keystrokes and clicks. Web 3.0 is going to be driven by machines entering data into sensors, cameras. Other edge devices are going to drive enormous data volumes and processing power to boot. Every windmill, every factory device, every consumer device, every car, will require processing at the edge to run AI, facial recognition, inference, and data intensive workloads. And the volume of this space compared to PCs and even the iPhone itself is about to be dwarfed with an explosion of devices. Intel is not well positioned for this new world in our view. Intel has to catch up on the process, Intel has to catch up on architecture, Intel has to play catch up on security, Intel has to play catch up on volume. The ARM ecosystem has cumulatively shipped 200 billion chips to date, and is shipping 10x Intel's wafer volume. Intel has to have an architecture that accommodates much more diversity. And while it's working on that, it's years behind. All that said, Pat Gelsinger is doing everything he can and more to close the gap. Here's a partial list of the moves that Pat is making. A year ago, he announced IDM 2.0, a new integrated device manufacturing strategy that opened up its world to partners for manufacturing and other innovation. Intel has restructured, reorganized, and many executives have boomeranged back in, many previous Intel execs. They understand the business and have a deep passion to help the company regain its prominence. As part of the IDM 2.0 announcement, Intel created, recreated if you will, a Foundry division and recently acquired Tower Semiconductor an Israeli firm, that is going to help it in that mission. It's opening up partnerships with alternative processor manufacturers and designers. And the company has announced major investments in CAPEX to build out Foundry capacity. Intel is going to spin out Mobileye, a company it had acquired for 15 billion in 2017. Or does it try and get a $50 billion valuation? Mobileye is about $1.4 billion in revenue, and is likely going to be worth more around 25 to 30 billion, we'll see. But Intel is going to maybe get $10 billion in cash from that, that spin out that IPO and it can use that to fund more FABS and more equipment. Intel is leveraging its 19,000 software engineers to move up the stack and sell more subscriptions and high margin software. He got to sell what he got. And finally Pat is playing politics beautifully. Announcing for example, FAB investments in Ohio, which he dubbed Silicon Heartland. Brilliant! Again, there's no doubt that Pat is moving fast and doing the right things. Here's Pat at his investor event in a T-shirt that says, "torrid, bringing back the torrid pace and discipline that Intel is used to." And on the right is Pat at the State of the Union address, looking sharp in shirt and tie and suit. And he has said, "a bet on Intel is a hedge against geopolitical instability in the world." That's just so good. To that statement, he showed this chart at his investor meeting. Basically it shows that whereas semiconductor manufacturing capacity has gone from 80% of the world's volume to 20%, he wants to get it back to 50% by 2030, and reset supply chains in a market that has become important as oil. Again, just brilliant positioning and pushing all the right hot buttons. And here's a slide underscoring that commitment, showing manufacturing facilities around the world with new capacity coming online in the next few years in Ohio and the EU. Mentioning the CHIPS Act in his presentation in The US and Europe as part of a public private partnership, no doubt, he's going to need all the help he can get. Now, we couldn't resist the chart on the left here shows wafer starts and transistor capacity growth. For Intel, overtime speaks to its volume aspirations. But we couldn't help notice that the shape of the curve is somewhat misleading because it shows a two-year (mumbles) and then widens the aperture to three years to make the curve look steeper. Fun with numbers. Okay, maybe a little nitpick, but these are some of the telling nuggets we pulled from the investor day, and they're important. Another nitpick is in our view, wafers would be a better measure of volume than transistors. It's like a company saying we shipped 20% more exabytes or MIPS this year than last year. Of course you did, and your revenue shrank. Anyway, Pat went through a detailed analysis of the various Intel businesses and promised mid to high double digit growth by 2026, half of which will come from Intel's traditional PC they center in network edge businesses and the rest from advanced graphics HPC, Mobileye and Foundry. Okay, that sounds pretty good. But it has to be taken into context that the balance of the semiconductor industry, yeah, this would be a pretty competitive growth rate, in our view, especially for a 70 plus billion dollar company. So kudos to Pat for sticking his neck out on this one. But again, the promise is several years away, at least four years away. Now we want to focus on Foundry because that's the only way Intel is going to get back into the volume game and the volume necessary for the company to compete. Pat built this slide showing the baby blue for today's Foundry business just under a billion dollars and adding in another $1.5 billion for Tower Semiconductor, the Israeli firm that it just acquired. So a few billion dollars in the near term future for the Foundry business. And then by 2026, this really fuzzy blue bar. Now remember, TSM is the new volume leader, and is a $50 billion company growing. So there's definitely a market there that it can go after. And adding in ARM processors to the mix, and, you know, opening up and partnering with the ecosystems out there can only help volume if Intel can win that business, which you know, it should be able to, given the likelihood of long term supply constraints. But we remain skeptical. This is another chart Pat showed, which makes the case that Foundry and IDM 2.0 will allow expensive assets to have a longer useful life. Okay, that's cool. It will also solve the cumulative output problem highlighted in the bottom right. We've talked at length about Wright's Law. That is, for every cumulative doubling of units manufactured, cost will fall by a constant percentage. You know, let's say around 15% in semiconductor world, which is vitally important to accommodate next generation chips, which are always more expensive at the start of the cycle. So you need that 15% cost buffer to jump curves and make any money. So let's unpack this a bit. You know, does this chart at the bottom right address our Wright's Law concerns, i.e. that Intel can't take advantage of Wright's Law because it can't double cumulative output fast enough? Now note the decline in wafer starts and then the slight uptick, and then the flattening. It's hard to tell what years we're talking about here. Intel is not going to share the sausage making because it's probably not pretty, But you can see on the bottom left, the flattening of the cumulative output curve in IDM 1.0 otherwise known as the death spiral. Okay, back to the power of Wright's Law. Now, assume for a second that wafer density doesn't grow. It does, but just work with us for a second. Let's say you produce 50 million units per year, just making a number up. That gets you cumulative output to $100 million in, sorry, 100 million units in the second year to take you two years to get to that 100 million. So in other words, it takes two years to lower your manufacturing cost by, let's say, roughly 15%. Now, assuming you can get wafer volumes to be flat, which that chart showed, with good yields, you're at 150 now in year three, 200 in year four, 250 in year five, 300 in year six, now, that's four years before you can take advantage of Wright's Law. You keep going at that flat wafer start, and that simplifying assumption we made at the start and 50 million units a year, and well, you get to the point. You get the point, it's now eight years before you can get the Wright's Law to kick in, and you know, by then you're cooked. But now you can grow the density of transistors on a chip, right? Yes, of course. So let's come back to Moore's Law. The graphic on the left says that all the growth is in the new stuff. Totally agree with that. Huge term that Pat presented. Now he also said that until we exhaust the periodic table of elements, Moore's Law is alive and well, and Intel is the steward of Moore's Law. Okay, that's cool. The chart on the right shows Intel going from 100 billion transistors today to a trillion by 2030. Hold that thought. So Intel is assuming that we'll keep up with Moore's Law, meaning a doubling of transistors every let's say two years, and I believe it. So bring that back to Wright's Law, in the previous chart, it means with IDM 2.0, Intel can get back to enjoying the benefits of Wright's Law every two years, let's say, versus IDM 1.0 where they were failing to keep up. Okay, so Intel is saved, yeah? Well, let's bring into this discussion one of our favorite examples, Apple's M1 ARM-based chip. The M1 Ultra is a new architecture. And you can see the stats here, 114 billion transistors on a five nanometer process and all the other stats. The M1 Ultra has two chips. They're bonded together. And Apple put an interposer between the two chips. An interposer is a pathway that allows electrical signals to pass through it onto another chip. It's a super fast connection. You can see 2.5 terabytes per second. But the brilliance is the two chips act as a single chip. So you don't have to change the software at all. The way Intel's architecture works is it takes two different chips on a substrate, and then each has its own memory. The memory is not shared. Apple shares the memory for the CPU, the NPU, the GPU. All of it is shared, meaning it needs no change in software unlike Intel. Now Intel is working on a new architecture, but Apple and others are way ahead. Now let's make this really straightforward. The original Apple M1 had 16 billion transistors per chip. And you could see in that diagram, the recently launched M1 Ultra has $114 billion per chip. Now if you take into account the size of the chips, which are increasing, and the increase in the number of transistors per chip, that transistor density, that's a factor of around 6x growth in transistor density per chip in 18 months. Remember Intel, assuming the results in the two previous charts that we showed, assuming they were achievable, is running at 2x every two years, versus 6x for the competition. And AMD and Nvidia are close to that as well because they can take advantage of TSM's learning curve. So in the previous chart with Moore's Law, alive and well, Intel gets to a trillion transistors by 2030. The Apple ARM and Nvidia ecosystems will arrive at that point years ahead of Intel. That means lower costs and significantly better competitive advantage. Okay, so where does that leave Intel? The story is really not resonating with investors and hasn't for a while. On February 18th, the day after its investor meeting, the stock was off. It's rebound a little bit but investors are, you know, they're probably prudent to wait unless they have really a long term view. And you can see Intel's performance relative to some of the major competitors. You know, Pat talked about five nodes in for years. He made a big deal out of that, and he shared proof points with Alder Lake and Meteor Lake and other nodes, but Intel just delayed granite rapids last month that pushed it out from 2023 to 2024. And it told investors that we're going to have to boost spending to turn this ship around, which is absolutely the case. And that delay in chips I feel like the first disappointment won't be the last. But as we've said many times, it's very difficult, actually, it's impossible to quickly catch up in semiconductors, and Intel will never catch up without volume. So we'll leave you by iterating our scenario that could save Intel, and that's if its Foundry business can eventually win back Apple to supercharge its volume story. It's going to be tough to wrestle that business away from TSM especially as TSM is setting up shop in Arizona, with US manufacturing that's going to placate The US government. But look, maybe the government cuts a deal with Apple, says, hey, maybe we'll back off with the DOJ and FTC and as part of the CHIPS Act, you'll have to throw some business at Intel. Would that be enough when combined with other Foundry opportunities Intel could theoretically produce? Maybe. But from this vantage point, it's very unlikely Intel will gain back its true number one leadership position. If it were really paranoid back when David Floyer sounded the alarm 10 years ago, yeah, that might have made a pretty big difference. But honestly, the best we can hope for is Intel's strategy and execution allows it to get competitive volumes by the end of the decade, and this national treasure survives to fight for its leadership position in the 2030s. Because it would take a miracle for that to happen in the 2020s. Okay, that's it for today. Thanks to David Floyer for his contributions to this research. Always a pleasure working with David. Stephanie Chan helps me do much of the background research for "Breaking Analysis," and works with our CUBE editorial team. Kristen Martin and Cheryl Knight to get the word out. And thanks to SiliconANGLE's editor in chief Rob Hof, who comes up with a lot of the great titles that we have for "Breaking Analysis" and gets the word out to the SiliconANGLE audience. Thanks, guys. Great teamwork. Remember, these episodes are all available as podcast wherever you listen. Just search "Breaking Analysis Podcast." You'll want to check out ETR's website @etr.ai. We also publish a full report every week on wikibon.com and siliconangle.com. You could always get in touch with me on email, david.vellante@siliconangle.com or DM me @dvellante, and comment on my LinkedIn posts. This is Dave Vellante for "theCUBE Insights, Powered by ETR." Have a great week. Stay safe, be well, and we'll see you next time. (upbeat music)

(upbeat music) >> Hello and welcome to this CUBE conversation here presenting the "AWS Startup Showcase: "New Breakthroughs in DevOps, Data Analytics "and Cloud Management Tools" featuring Opsani for the cloud management and migration track here today, I'm your host John Furrier. Today, we're joined by Patrick Conte, Chief Commercial Officer, Opsani. Thanks for coming on. Appreciate you coming on. Future of AI operations. >> Thanks, John. Great to be here. Appreciate being with you. >> So congratulations on all your success being showcased here as part of the Startups Showcase, future of AI operations. You've got the cloud scale happening. A lot of new transitions in this quote digital transformation as cloud scales goes next generation. DevOps revolution as Emily Freeman pointed out in her keynote. What's the problem statement that you guys are focused on? Obviously, AI involves a lot of automation. I can imagine there's a data problem in there somewhere. What's the core problem that you guys are focused on? >> Yeah, it's interesting because there are a lot of companies that focus on trying to help other companies optimize what they're doing in the cloud, whether it's cost or whether it's performance or something else. We felt very strongly that AI was the way to do that. I've got a slide prepared, and maybe we can take a quick look at that, and that'll talk about the three elements or dimensions of the problem. So we think about cloud services and the challenge of delivering cloud services. You've really got three things that customers are trying to solve for. They're trying to solve for performance, they're trying to solve for the best performance, and, ultimately, scalability. I mean, applications are growing really quickly especially in this current timeframe with cloud services and whatnot. They're trying to keep costs under control because certainly, it can get way out of control in the cloud since you don't own the infrastructure, and more importantly than anything else which is why it's at the bottom sort of at the foundation of all this, is they want their applications to be a really a good experience for their customers. So our customer's customer is actually who we're trying to solve this problem for. So what we've done is we've built a platform that uses AI and machine learning to optimize, meaning tune, all of the key parameters of a cloud application. So those are things like the CPU usage, the memory usage, the number of replicas in a Kubernetes or container environment, those kinds of things. It seems like it would be simple just to grab some values and plug 'em in, but it's not. It's actually the combination of them has to be right. Otherwise, you get delays or faults or other problems with the application. >> Andrew, if you can bring that slide back up for a second. I want to just ask one quick question on the problem statement. You got expenditures, performance, customer experience kind of on the sides there. Do you see this tip a certain way depending upon use cases? I mean, is there one thing that jumps out at you, Patrick, from your customer's customer's standpoint? Obviously, customer experience is the outcome. That's the app, whatever. That's whatever we got going on there. >> Sure. >> But is there patterns 'cause you can have good performance, but then budget overruns. Or all of them could be failing. Talk about this dynamic with this triangle. >> Well, without AI, without machine learning, you can solve for one of these, only one, right? So if you want to solve for performance like you said, your costs may overrun, and you're probably not going to have control of the customer experience. If you want to solve for one of the others, you're going to have to sacrifice the other two. With machine learning though, we can actually balance that, and it isn't a perfect balance, and the question you asked is really a great one. Sometimes, you want to over-correct on something. Sometimes, scalability is more important than cost, but what we're going to do because of our machine learning capability, we're going to always make sure that you're never spending more than you should spend, so we're always going to make sure that you have the best cost for whatever the performance and reliability factors that you you want to have are. >> Yeah, I can imagine. Some people leave services on. Happened to us one time. An intern left one of the services on, and like where did that bill come from? So kind of looked back, we had to kind of fix that. There's a ton of action, but I got to ask you, what are customers looking for with you guys? I mean, as they look at Opsani, what you guys are offering, what's different than what other people might be proposing with optimization solutions? >> Sure. Well, why don't we bring up the second slide, and this'll illustrate some of the differences, and we can talk through some of this stuff as well. So really, the area that we play in is called AIOps, and that's sort of a new area, if you will, over the last few years, and really what it means is applying intelligence to your cloud operations, and those cloud operations could be development operations, or they could be production operations. And what this slide is really representing is in the upper slide, that's sort of the way customers experience their DevOps model today. Somebody says we need an application or we need a feature, the developers pull down something from get. They hack an early version of it. They run through some tests. They size it whatever way they know that it won't fail, and then they throw it over to the SREs to try to tune it before they shove it out into production, but nobody really sizes it properly. It's not optimized, and so it's not tuned either. When it goes into production, it's just the first combination of settings that work. So what happens is undoubtedly, there's some type of a problem, a fault or a delay, or you push new code, or there's a change in traffic. Something happens, and then, you've got to figure out what the heck. So what happens then is you use your tools. First thing you do is you over-provision everything. That's what everybody does, they over-provision and try to soak up the problem. But that doesn't solve it because now, your costs are going crazy. You've got to go back and find out and try as best you can to get root cause. You go back to the tests, and you're trying to find something in the test phase that might be an indicator. Eventually your developers have to hack a hot fix, and the conveyor belt sort of keeps on going. We've tested this model on every single customer that we've spoken to, and they've all said this is what they experience on a day-to-day basis. Now, if we can go back to the side, let's talk about the second part which is what we do and what makes us different. So on the bottom of this slide, you'll see it's really a shift-left model. What we do is we plug in in the production phase, and as I mentioned earlier, what we're doing is we're tuning all those cloud parameters. We're tuning the CPU, the memory, the Replicas, all those kinds of things. We're tuning them all in concert, and we're doing it at machine speed, so that's how the customer gets the best performance, the best reliability at the best cost. That's the way we're able to achieve that is because we're iterating this thing in machine speed, but there's one other place where we plug in and we help the whole concept of AIOps and DevOps, and that is we can plug in in the test phase as well. And so if you think about it, the DevOps guy can actually not have to over-provision before he throws it over to the SREs. He can actually optimize and find the right size of the application before he sends it through to the SREs, and what this does is collapses the timeframe because it means the SREs don't have to hunt for a working set of parameters. They get one from the DevOps guys when they send it over, and this is how the future of AIOps is being really affected by optimization and what we call autonomous optimization which means that it's happening without humans having to press a button on it. >> John: Andrew, bring that slide back up. I want to just ask another question. Tuning in concert thing is very interesting to me. So how does that work? Are you telegraphing information to the developer from the autonomous workload tuning engine piece? I mean, how does the developer know the right knobs or where does it get that provisioning information? I see the performance lag. I see where you're solving that problem. >> Sure. >> How does that work? >> Yeah, so actually, if we go to the next slide, I'll show you exactly how it works. Okay, so this slide represents the architecture of a typical application environment that we would find ourselves in, and inside the dotted line is the customer's application namespace. That's where the app is. And so, it's got a bunch of pods. It's got a horizontal pod. It's got something for replication, probably an HPA. And so, what we do is we install inside that namespace two small instances. One is a tuning pod which some people call a canary, and that tuning pod joins the rest of the pods, but it's not part of the application. It's actually separate, but it gets the same traffic. We also install somebody we call Servo which is basically an action engine. What Servo does is Servo takes the metrics from whatever the metric system is is collecting all those different settings and whatnot from the working application. It could be something like Prometheus. It could be an Envoy Sidecar, or more likely, it's something like AppDynamics, or we can even collect metrics off of Nginx which is at the front of the service. We can plug into anywhere where those metrics are. We can pull the metrics forward. Once we see the metrics, we send them to our backend. The Opsani SaaS service is our machine learning backend. That's where all the magic happens, and what happens then is that service sees the settings, sends a recommendation to Servo, Servo sends it to the tuning pod, and we tune until we find optimal. And so, that iteration typically takes about 20 steps. It depends on how big the application is and whatnot, how fast those steps take. It could be anywhere from seconds to minutes to 10 to 20 minutes per step, but typically within about 20 steps, we can find optimal, and then we'll come back and we'll say, "Here's optimal, and do you want to "promote this to production," and the customer says, "Yes, I want to promote it to production "because I'm saving a lot of money or because I've gotten "better performance or better reliability." Then, all he has to do is press a button, and all that stuff gets sent right to the production pods, and all of those settings get put into production, and now he's now he's actually saving the money. So that's basically how it works. >> It's kind of like when I want to go to the beach, I look at the weather.com, I check the forecast, and I decide whether I want to go or not. You're getting the data, so you're getting a good look at the information, and then putting that into a policy standpoint. I get that, makes total sense. Can I ask you, if you don't mind, expanding on the performance and reliability and the cost advantage? You mentioned cost. How is that impacting? Give us an example of some performance impact, reliability, and cost impacts. >> Well, let's talk about what those things mean because like a lot of people might have different ideas about what they think those mean. So from a cost standpoint, we're talking about cloud spend ultimately, but it's represented by the settings themselves, so I'm not talking about what deal you cut with AWS or Azure or Google. I'm talking about whatever deal you cut, we're going to save you 30, 50, 70% off of that. So it doesn't really matter what cost you negotiated. What we're talking about is right-sizing the settings for CPU and memory, Replica. Could be Java. It could be garbage collection, time ratios, or heap sizes or things like that. Those are all the kinds of things that we can tune. The thing is most of those settings have an unlimited number of values, and this is why machine learning is important because, if you think about it, even if they only had eight settings or eight values per setting, now you're talking about literally billions of combinations. So to find optimal, you've got to have machine speed to be able to do it, and you have to iterate very, very quickly to make it happen. So that's basically the thing, and that's really one of the things that makes us different from anybody else, and if you put that last slide back up, the architecture slide, for just a second, there's a couple of key words at the bottom of it that I want to want to focus on, continuous. So continuous really means that we're on all the time. We're not plug us in one time, make a change, and then walk away. We're actually always measuring and adjusting, and the reason why this is important is in the modern DevOps world, your traffic level is going to change. You're going to push new code. Things are going to happen that are going to change the basic nature of the software, and you have to be able to tune for those changes. So continuous is very important. Second thing is autonomous. This is designed to take pressure off of the SREs. It's not designed to replace them, but to take the pressure off of them having to check pager all the time and run in and make adjustments, or try to divine or find an adjustment that might be very, very difficult for them to do so. So we're doing it for them, and that scale means that we can solve this for, let's say, one big monolithic application, or we can solve it for literally hundreds of applications and thousands of microservices that make up those applications and tune them all at the same time. So the same platform can be used for all of those. You originally asked about the parameters and the settings. Did I answer the question there? >> You totally did. I mean, the tuning in concert. You mentioned early as a key point. I mean, you're basically tuning the engine. It's not so much negotiating a purchase SaaS discount. It's essentially cost overruns by the engine, either over burning or heating or whatever you want to call it. I mean, basically inefficiency. You're tuning the core engine. >> Exactly so. So the cost thing is I mentioned is due to right-sizing the settings and the number of Replicas. The performance is typically measured via latency, and the reliability is typically measured via error rates. And there's some other measures as well. We have a whole list of them that are in the application itself, but those are the kinds of things that we look for as results. When we do our tuning, we look for reducing error rates, or we look for holding error rates at zero, for example, even if we improve the performance or we improve the cost. So we're looking for the best result, the best combination result, and then a customer can decide if they want to do so to actually over-correct on something. We have the whole concept of guard rail, so if performance is the most important thing, or maybe some customers, cost is the most important thing, they can actually say, "Well, give us the best cost, "and give us the best performance and the best reliability, "but at this cost," and we can then use that as a service-level objective and tune around it. >> Yeah, it reminds me back in the old days when you had filtering white lists of black lists of addresses that can go through, say, a firewall or a device. You have billions of combinations now with machine learning. It's essentially scaling the same concept to unbelievable. These guardrails are now in place, and that's super cool and I think really relevant call-out point, Patrick, to kind of highlight that. At this kind of scale, you need machine learning, you need the AI to essentially identify quickly the patterns or combinations that are actually happening so a human doesn't have to waste their time that can be filled by basically a bot at that point. >> So John, there's just one other thing I want to mention around this, and that is one of the things that makes us different from other companies that do optimization. Basically, every other company in the optimization space creates a static recommendation, basically their recommendation engines, and what you get out of that is, let's say it's a manifest of changes, and you hand that to the SREs, and they put it into effect. Well, the fact of the matter is is that the traffic could have changed then. It could have spiked up, or it could have dropped below normal. You could have introduced a new feature or some other code change, and at that point in time, you've already instituted these changes. They may be completely out of date. That's why the continuous nature of what we do is important and different. >> It's funny, even the language that we're using here: network, garbage collection. I mean, you're talking about tuning an engine, am operating system. You're talking about stuff that's moving up the stack to the application layer, hence this new kind of eliminating of these kind of siloed waterfall, as you pointed out in your second slide, is kind of one integrated kind of operating environment. So when you have that or think about the data coming in, and you have to think about the automation just like self-correcting, error-correcting, tuning, garbage collection. These are words that we've kind of kicking around, but at the end of the day, it's an operating system. >> Well in the old days of automobiles, which I remember cause I'm I'm an old guy, if you wanted to tune your engine, you would probably rebuild your carburetor and turn some dials to get the air-oxygen-gas mix right. You'd re-gap your spark plugs. You'd probably make sure your points were right. There'd be four or five key things that you would do. You couldn't do them at the same time unless you had a magic wand. So we're the magic wand that basically, or in modern world, we're sort of that thing you plug in that tunes everything at once within that engine which is all now electronically controlled. So that's the big differences as you think about what we used to do manually, and now, can be done with automation. It can be done much, much faster without humans having to get their fingernails greasy, let's say. >> And I think the dynamic versus static is an interesting point. I want to bring up the SRE which has become a role that's becoming very prominent in the DevOps kind of plus world that's happening. You're seeing this new revolution. The role of the SRE is not just to be there to hold down and do the manual configuration. They had a scale. They're a developer, too. So I think this notion of offloading the SRE from doing manual tasks is another big, important point. Can you just react to that and share more about why the SRE role is so important and why automating that away through when you guys have is important? >> The SRE role is becoming more and more important, just as you said, and the reason is because somebody has to get that application ready for production. The DevOps guys don't do it. That's not their job. Their job is to get the code finished and send it through, and the SREs then have to make sure that that code will work, so they have to find a set of settings that will actually work in production. Once they find that set of settings, the first one they find that works, they'll push it through. It's not optimized at that point in time because they don't have time to try to find optimal, and if you think about it, the difference between a machine learning backend and an army of SREs that work 24-by-seven, we're talking about being able to do the work of many, many SREs that never get tired, that never need to go play video games, to unstress or whatever. We're working all the time. We're always measuring, adjusting. A lot of the companies we talked to do a once-a-month adjustment on their software. So they put an application out, and then they send in their SREs once a month to try to tune the application, and maybe they're using some of these other tools, or maybe they're using just their smarts, but they'll do that once a month. Well, gosh, they've pushed code probably four times during the month, and they probably had a bunch of different spikes and drops in traffic and other things that have happened. So we just want to help them spend their time on making sure that the application is ready for production. Want to make sure that all the other parts of the application are where they should be, and let us worry about tuning CPU, memory, Replica, job instances, and things like that so that they can work on making sure that application gets out and that it can scale, which is really important for them, for their companies to make money is for the apps to scale. >> Well, that's a great insight, Patrick. You mentioned you have a lot of great customers, and certainly if you have your customer base are early adopters, pioneers, and grow big companies because they have DevOps. They know that they're seeing a DevOps engineer and an SRE. Some of the other enterprises that are transforming think the DevOps engineer is the SRE person 'cause they're having to get transformed. So you guys are at the high end and getting now the new enterprises as they come on board to cloud scale. You have a huge uptake in Kubernetes, starting to see the standardization of microservices. People are getting it, so I got to ask you can you give us some examples of your customers, how they're organized, some case studies, who uses you guys, and why they love you? >> Sure. Well, let's bring up the next slide. We've got some customer examples here, and your viewers, our viewers, can probably figure out who these guys are. I can't tell them, but if they go on our website, they can sort of put two and two together, but the first one there is a major financial application SaaS provider, and in this particular case, they were having problems that they couldn't diagnose within the stack. Ultimately, they had to apply automation to it, and what we were able to do for them was give them a huge jump in reliability which was actually the biggest problem that they were having. We gave them 5,000 hours back a month in terms of the application. They were they're having pager duty alerts going off all the time. We actually gave them better performance. We gave them a 10% performance boost, and we dropped their cloud spend for that application by 72%. So in fact, it was an 80-plus % price performance or cost performance improvement that we gave them, and essentially, we helped them tune the entire stack. This was a hybrid environment, so this included VMs as well as more modern architecture. Today, I would say the overwhelming majority of our customers have moved off of the VMs and are in a containerized environment, and even more to the point, Kubernetes which we find just a very, very high percentage of our customers have moved to. So most of the work we're doing today with new customers is around that, and if we look at the second and third examples here, those are examples of that. In the second example, that's a company that develops websites. It's one of the big ones out in the marketplace that, let's say, if you were starting a new business and you wanted a website, they would develop that website for you. So their internal infrastructure is all brand new stuff. It's all Kubernetes, and what we were able to do for them is they were actually getting decent performance. We held their performance at their SLO. We achieved a 100% error-free scenario for them at runtime, and we dropped their cost by 80%. So for them, they needed us to hold-serve, if you will, on performance and reliability and get their costs under control because everything in that, that's a cloud native company. Everything there is cloud cost. So the interesting thing is it took us nine steps because nine of our iterations to actually get to optimal. So it was very, very quick, and there was no integration required. In the first case, we actually had to do a custom integration for an underlying platform that was used for CICD, but with the- >> John: Because of the hybrid, right? >> Patrick: Sorry? >> John: Because it was hybrid, right? >> Patrick: Yes, because it was hybrid, exactly. But within the second one, we just plugged right in, and we were able to tune the Kubernetes environment just as I showed in that architecture slide, and then the third one is one of the leading application performance monitoring companies on the market. They have a bunch of their own internal applications and those use a lot of cloud spend. They're actually running Kubernetes on top of VMs, but we don't have to worry about the VM layer. We just worry about the Kubernetes layer for them, and what we did for them was we gave them a 48% performance improvement in terms of latency and throughput. We dropped their error rates by 90% which is pretty substantial to say the least, and we gave them a 50% cost delta from where they had been. So this is the perfect example of actually being able to deliver on all three things which you can't always do. It has to be, sort of all applications are not created equal. This was one where we were able to actually deliver on all three of the key objectives. We were able to set them up in about 25 minutes from the time we got started, no extra integration, and needless to say, it was a big, happy moment for the developers to be able to go back to their bosses and say, "Hey, we have better performance, "better reliability. "Oh, by the way, we saved you half." >> So depending on the stack situation, you got VMs and Kubernetes on the one side, cloud-native, all Kubernetes, that's dream scenario obviously. Not many people like that. All the new stuff's going cloud-native, so that's ideal, and then the mixed ones, Kubernetes, but no VMs, right? >> Yeah, exactly. So Kubernetes with no VMs, no problem. Kubernetes on top of VMs, no problem, but we don't manage the VMs. We don't manage the underlay at all, in fact. And the other thing is we don't have to go back to the slide, but I think everybody will remember the slide that had the architecture, and on one side was our cloud instance. The only data that's going between the application and our cloud instance are the settings, so there's never any data. There's never any customer data, nothing for PCI, nothing for HIPPA, nothing for GDPR or any of those things. So no personal data, no health data. Nothing is passing back and forth. Just the settings of the containers. >> Patrick, while I got you here 'cause you're such a great, insightful guest, thank you for coming on and showcasing your company. Kubernetes real quick. How prevalent is this mainstream trend is because you're seeing such great examples of performance improvements. SLAs being met, SLOs being met. How real is Kubernetes for the mainstream enterprise as they're starting to use containers to tip their legacy and get into the cloud-native and certainly hybrid and soon to be multi-cloud environment? >> Yeah, I would not say it's dominant yet. Of container environments, I would say it's dominant now, but for all environments, it's not. I think the larger legacy companies are still going through that digital transformation, and so what we do is we catch them at that transformation point, and we can help them develop because as we remember from the AIOps slide, we can plug in at that test level and help them sort of pre-optimize as they're coming through. So we can actually help them be more efficient as they're transforming. The other side of it is the cloud-native companies. So you've got the legacy companies, brick and mortar, who are desperately trying to move to digitization. Then, you've got the ones that are born in the cloud. Most of them aren't on VMs at all. Most of them are on containers right from the get-go, but you do have some in the middle who have started to make a transition, and what they've done is they've taken their native VM environment and they've put Kubernetes on top of it so that way, they don't have to scuttle everything underneath it. >> Great. >> So I would say it's mixed at this point. >> Great business model, helping customers today, and being a bridge to the future. Real quick, what licensing models, how to buy, promotions you have for Amazon Web Services customers? How do people get involved? How do you guys charge? >> The product is licensed as a service, and the typical service is an annual. We license it by application, so let's just say you have an application, and it has 10 microservices. That would be a standard application. We'd have an annual cost for optimizing that application over the course of the year. We have a large application pack, if you will, for let's say applications of 20 services, something like that, and then we also have a platform, what we call Opsani platform, and that is for environments where the customer might have hundreds of applications and-or thousands of services, and we can plug into their deployment platform, something like a harness or Spinnaker or Jenkins or something like that, or we can plug into their their cloud Kubernetes orchestrator, and then we can actually discover the apps and optimize them. So we've got environments for both single apps and for many, many apps, and with the same platform. And yes, thanks for reminding me. We do have a promotion for for our AWS viewers. If you reference this presentation, and you look at the URL there which is opsani.com/awsstartupshowcase, can't forget that, you will, number one, get a free trial of our software. If you optimize one of your own applications, we're going to give you an Oculus set of goggles, the augmented reality goggles. And we have one other promotion for your viewers and for our joint customers here, and that is if you buy an annual license, you're going to get actually 15 months. So that's what we're putting on the table. It's actually a pretty good deal. The Oculus isn't contingent. That's a promotion. It's contingent on you actually optimizing one of your own services. So it's not a synthetic app. It's got to be one of your own apps, but that's what we've got on the table here, and I think it's a pretty good deal, and I hope your guys take us up on it. >> All right, great. Get Oculus Rift for optimizing one of your apps and 15 months for the price of 12. Patrick, thank you for coming on and sharing the future of AIOps with you guys. Great product, bridge to the future, solving a lot of problems. A lot of use cases there. Congratulations on your success. Thanks for coming on. >> Thank you so much. This has been excellent, and I really appreciate it. >> Hey, thanks for sharing. I'm John Furrier, your host with theCUBE. Thanks for watching. (upbeat music)

>>first of all, Pat congratulations on your new role as intel Ceo. How are you approaching your new role and what are your top priorities over your first few months? >>Thanks Antonio for having me. It's great to be here with you all today to celebrate the launch of your gen 10 plus portfolio and the long history that our two companies share in deep collaboration to deliver amazing technology to our customers together. You know what an exciting time it is to be in this industry. Technology has never been more important for humanity than it is today. Everything is becoming digital and driven by what I call the four key superpowers the cloud connectivity, artificial intelligence in the intelligent edge. They are super powers because each expands the impact of the others and together they are reshaping every aspect of our lives and work in this landscape of rapid digital disruption. Intel's technology and leadership products are more critical than ever. And we are laser focused on bringing to bear the depth and breadth of software, silicon and platforms, packaging and process with at scale manufacturing. To help you and our customers capitalize on these opportunities and fuel their next generation innovations. >>I am incredibly excited about continuing the next chapter of a long partnership between our two companies. The acceleration of the Edge has been significant over the past year. With this next way for digital transformation. We expect growth in the distributed Edge and Edge build outs. What are you seeing on this front? >>Like you said Antonio, the growth of Edge computing and build out is the next key transition in the market. Telecommunications service providers want to harness the potential of 5G. to deliver new services across multiple locations in real time. As we start building solutions that will be prevalent in a 5G digital environment. We will need a scalable, flexible and programmable network. Some use cases are the massive scale IOT solutions, more robust consumer devices and solutions A. R. V. R. Remote healthcare, autonomous robotics in manufacturing environments and ubiquitous smart city solutions Intel and hp are partnering to meet this new wave head on for 5G build out and the rise of the distributed enterprise. This build out will enable even more growth as businesses can explore how to deliver new experiences and unlock new insights from the new data creation beyond the four walls of traditional data centers and public cloud providers. Network operators need to significantly increase capacity and throughput without dramatically growing their capital footprint. Their ability to achieve this is built upon a Virtualization Foundation, an area of intel expertise. For example, we've collaborated with Verizon for many years and they are leading the industry and virtualizing their entire network from the core the edge a massive redesign effort. This requires advancements in silicon and power management. They expect Intel to deliver the new capabilities in a roadmap. So ecosystem partners can continue to provide innovative and efficient products with this optimization for hybrid, we can jointly provide a strong foundation to take on the growth of data centric workloads for data analytics and ai to build and deploy models faster to accelerate insights that will deliver additional transformation for organizations of all types. The network transformation journey isn't easy. We are continuing to unleash the capabilities of 5G and the power of the intelligent edge. >>Yeah. The combination of the 5G built out and the massive new growth of data at the edge are the key drivers for the age of insight. These new market drivers offer incredible new opportunities for our customers. I am excited about recent launch of our new gen 10 plus portfolio with Intel. Together we are laser focused on delivering joint innovation for customers that stretches from the edge to exa scale. How do you see new solutions that this helping our customers solve the toughest challenges Today >>I talked earlier about the super powers that are driving the rapid acceleration of digital transformation first. The proliferation of the hybrid cloud is delivering new levels of efficiency and scale and the growth of the cloud is democratizing high performance computing. Opening new frontiers of knowledge and discovery. Next we see A I and machine learning increasingly infused into every application from the edge to the network to the cloud to create dramatically better insights And the rapid adoption of 5G. As I talked about already is fueling new use cases that demand, lower latency is and higher bandwidth. This in turn is pushing computing to the edge closer to where the data is created and consumed. The confluence of these trends is leading to the biggest and fastest build out of computing in human history. To keep pace with this rapid digital transformation, we recognize that infrastructure has to be built with the flexibility to support a broad set of workloads and that's why over the last several years, Intel has built an unmatched portfolio to deliver every component of intelligence. Silicon. Our customers need to move store and process data from the Cpus to F P G A s from memory to S S D. S from ethernet to switch silicon to silicon photonics and software. Our third gen Intel, Xeon scalable processors and our data centric portfolio deliver new core performance and higher bandwidth providing our customers the capabilities they need to power these critical workloads. And we love seeing all the unique ways customers like HPV leverage our technology and solution offerings to create opportunities and solve their most pressing challenges from cloud gaming to blood flow to the brain scans to financial markets, security. The opportunities are endless with flexible performance. >>I am proud of the amazing innovation we're bringing to support our customers especially as they respond to new data centric worlds like AI and analytics that are critical to digital transformation. These new requirements create a need for computers were not optimized for performance, security, ease of use and the economics of business. Now, more than ever compute mothers, it is the foundation for this next wave of digital transformation by pairing our compute with our software and capabilities from HP Green Lake. We can support our customers as they modernize their absent data quickly. They seamlessly and securely skill them anywhere at any size from edge to exa scale. But thank you for joining us for accelerating next today. I know our audience appreciated hearing your perspective on the market and how about your partner together to support their digital transformation journey? I am incredibly excited about what lies ahead for HP and Intel. Thank you. >>Thank you Antonio Great to be with you today.

>> From theCUBE studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> Much of the discussion around Intel's current challenges, is focused on manufacturing issues and it's ongoing market share skirmish with AMD. Of course, that's very understandable. But the core issue Intel faces is that it has lost the volume game forever. And in Silicon volume is king. As such incoming CEO Pat Gelsinger faces some difficult decisions. I mean, on the one hand he could take some logical steps to shore up the company's execution, maybe outsource a portion of its manufacturing. Make some incremental changes that would unquestionably please Wall Street and probably drive shareholder value when combined with the usual stock buybacks and dividends. On the other hand, Gelsinger could make much more dramatic moves shedding it's vertically integrated heritage and transforming Intel into a leading designer of chips for the emerging multi-trillion dollar markets that are highly fragmented and generally referred to as the edge. We believe Intel has no choice. It must create a deep partnership in our view with a semiconductor manufacturer with aspirations to manufacture on US soil and focus Intel's resources on design. Hello, everyone. And welcome to this week's Wikibon's Cube Insights powered by ETR. In this breaking analysis will put forth our prognosis for what Intel's future looks like and lay out what we think the company needs to do not only to maintain its relevance but to regain the position it once held as perhaps the most revered company in tech. Let's start by looking at some of the fundamental factors that we've been tracking and that have shaped and are shaping Intel and our thinking around Intel today. First, it's really important to point out that new CEO Gelsinger is walking into a really difficult situation. Intel's ascendancy and its dominance it was created by PC volumes. And its development of an ecosystem that the company created around the x86 instruction set. In semiconductors volume is everything. The player with the highest volumes has the lowest manufacturing costs. And the math around learning curves is very clear and it's compelling. It's based on Wright's law named after Theodore Wright T.P Wright. He was an aeronautical engineer and he discovered that for every cumulative doubling of units manufactured, costs are going to fall by a constant percentage. Now in semiconductor way for manufacturing that cost is roughly around 22% declines. And when you consider the economics of manufacturing a next generation technology, for example going from ten nanometers to seven nanometers this becomes huge. Because the cost of making seven nanometer tech for example is much higher relative to 10 nanometers. But if you can fit more circuits on a chip your wafer costs can drop by 30% or even more. Now this learning curve benefit is why volume is so important. If the time it takes to double volume is elongated then the learning curve benefit they get elongated as well and it become less competitive from a cost standpoint. And that's exactly what is happening to Intel. You see x86 PC volumes, they peaked in 2011 and that marked the beginning of the end of Intel's dominance from manufacturing and cost standpoint. You know, ironically HDD hard disk drive volumes peaked around the same time and you're seeing a similar fundamental shift in that market relative to flash. Now because Intel has a vertically integrated model it's designers are limited by the constraints in the manufacturing process. What used to be Intel's ace in the hole its process manufacturing has become a hindrance, frustrating Intel's chip designers and really seeding advantage to a number of competitors including AMD, ARM and Nvidia. Now, during this time we've seen high profile innovators adapting alternative processors companies like Apple which chose its own design based on ARM for the M1. Tesla is a fascinating case study where Intel was really not in the running. AWS probably Intel's largest customer is developing its own chips. You know through Intel, a little bone at the recent reinvent it announced its use of Intel's Habana chips in a practically the same sentence that talked about how it was developing a similar chip that would provide even better price performance. And just last month it was reported that Microsoft Intel's monopoly partner in the PC era was developing its own ARM-based chips for the surface PCs and for its servers. Intel's Zenith was marked by those peak PC volumes that we talked about. Now to stress this point this chart shows x86 PC volumes over time. That red highlighted area shows the peak years. Now, volumes actually grew in 2020 in part due to COVID which is not really reflected in this chart but the volume game was lost for Intel. When it has been widely reported that in 2005 Steve Jobs approached Intel as it was replacing IBM microprocessors with with Intel processors for the Mac and asked Intel to develop the chip for the iPhone Intel passed and the die was cast. Now to the earlier point, PC markets are actually quite good if you're Dell. Here's some ETR data that shows Dell's laptop net score. Net score is a measure of spending momentum for 2020 and into 2021. Dell's client business has been very good and profitable and frankly, it's been a pleasant surprise. You know, PCs they're doing well. And as you can see in this chart, Dell has momentum. There's approximately 275 million maybe as high as 300 million PC units shipped worldwide in 2020, you know up double digits by some estimates. However, ARM chip units shipped exceeded 20 billion units last year worldwide. And it's not apples to apples. You know, we're comparing x86 based PCs to ARM chips. So this excludes x86 servers, but the way for volume for ARM dwarfs that of x86 probably by a factor of 10 times. Back to Wright's law, how long is it going to take Intel to double wafer volumes? It's not going to happen. And trust me, Pat Gelsinger understands this dynamic probably better than anyone in the world and certainly better than I do. And as you look out to the future, the story for Intel and it's vertically integrated approach it's even tougher. This chart shows Wikibon's 2020 forecast for ARM based compared to x86 based PCs. It also includes some other devices but as you can see what happens by the end of the decade is ARM really starts to eat in to x86. As we've seen with the M1 at Apple, ARM is competing in PCs in much better position for these emerging devices that support things like video and virtual reality systems. And we think even will start to eat into the enterprise. So again, the volume game is over for Intel, period. They're never going to win it back. Well, you might ask what about revenue? Intel still dominates in the data center right? Well, yes. And that is much higher revenue per unit but we still believe that revenue from ARM-based systems are going to surpass that of x86 by the end of the decade. Arm compute revenue is shown in the orange area in this chart with x86 in the blue. This means to us that Intel's last mot is going to be its position in the data center. It has to protect that at all costs. Now the market knows this. It knows something's wrong with Intel. And you can see that is reflected in the valuations of semiconductor companies. This chart compares the trailing 12 month revenue in the market valuations for Intel, Nvidia, AMD and Qualcomm. And you can see at a trailing 12 month multiple revenue with 3 X compared to about 22 X for Nvidia about 10 X for AMT and Qualcomm, Intel is lagging behind in the street's view. And Intel, as you can see here, it's now considered a cheap stock by many, you know. Here's a graph that shows the performance over the past 12 months compared to the NASDAQ which you can see that major divergence. NASDAQ has been powered part by COVID and all the new tech and the work from home. The stock reacted very well to the appointment of Gelsinger. That's no surprise. The question people are asking is what's next for Intel? How will Pat turn the company's fortunes around? How long is it going to take? What moves can he and should he make? How will they be received by the market? And internally, very importantly, within Intel's culture. These are big chewy questions and people are split on what should be done. I've heard everything from Pat should just clean up the execution issues. It's no.. This is, you know, very workable and not make any major strategic moves all the way to Intel should do a hybrid outsourced model to Intel should aggressively move out of manufacturing. Let me read some things from Barron's and some other media. Intel has fallen behind rivals and the rest of tech Intel is replacing Bob Swan. Investors are cheering the move. Intel would likely turn to Taiwan semiconductor for chips. Here's who benefits most. So let's take a look at some of the opinions that are inside these articles. So, first one I'm going to pull out Intel has indicated a willingness to try new things and investors expect the company to announce a hybrid manufacturing approach in January. Now, if you take a look at that and you quote a CEO Swan, he says, what has changed is that we have much more flexibility in our designs. And with that type of design we have the ability to move things in and move things out. And that gives us a little more flexibility about what we will make and what we might take from the outside. So let's unpack that a little bit. The new Intel, we know is a highly vertically integrated workflow from design to manufacturing production. But to me, the designers are the artists and the flexibility you would think would come from outsourcing manufacturer to give designers more flexibility to take advantage of say seven nanometer or five nanometer process technologies versus having to wait for Intel to catch up. It used to be that Intel's process was the industry's best and it could supercharge a design or even mask certain design challenges so that Intel could maintain its edge but that's no longer the case. Here's a sentiment from an analyst, Daniel Donnelly. Donnelly is at Citi. It says he's confident. Donnelly is confident that Intel's decision to outsource more of its production won't result in the company divesting its entire manufacturing segment. And he cited three reasons. One, it would take roughly three years to bring a chip to market. And two, Intel would have to share IP. And three, it would hurt Intel's profit margins. He said it would negatively impact gross margins by 10 points and would cause a 25% decline in EPS. Now I don't know about this. I would... To that I would say one, Intel needs to reduce its current cycle time, to go from design to production from let's say three to four years where it is today. It's got to get it under you know, at least at two years maybe even less. Second, I would say is what good is intellectual property if it's not helping you win in the market? And three, I think profitability is nuance. So here's another take from a UBS analyst. His name is Timothy Arcuri. And he says, quote, We see but no option but for Intel to aggressively pursue an outsourcing strategy. He wrote that Intel could be 80% outsourced by 2026. And just by going to 50% outsourcing, he said would save the company $4 billion annually in CapEx and 25% would drop to free cashflow. So look, maybe Gelsinger has to sacrifice some gross margin in EPS for the time being. Reduce the cost of goods sold by outsourcing manufacturing lower its CapEx and fund innovation in design with free cash flow. Here's our take, Pat Gelsinger needs to look in the mirror and ask what would Andy Grove do? You know, Grove's quote that only the paranoid survive its famous less well-known are the words that proceeded that quote. Success breeds complacency and complacency breeds failure. Intel in our view is headed on a path to a long drawn out failure if it doesn't act aggressively. It simply can't compete on cost as an integrated manufacturer because it doesn't have the volume. So what will Pat Gelsinger do? You know, we've probably done 30 Cube interviews with Pat and I just don't think he's taking the job to make some incremental changes to Intel to get the stock price back up. Why would that excite Pat Gelsinger? Trends, markets, people, society, he's a dot connector and he loves Intel deeply. And he's a legend at the company. Here's what we strongly believe. We think Intel has to do a deal with TSM or maybe Samsung perhaps some kind of joint venture or other innovative structure that both protects its IP and secures its future. You know, both of these manufacturers would love to have a stronger US presence. In markets where Intel has many manufacturing facilities they may even be willing to take a loss to get this started and deeply partner with Intel for some period of time This would allow Intel to better compete on a cost basis with AMD. It would protect its core data center revenue and allow it to fight the fight in PCs with better cost structures. Maybe even gain some share that could count for, you know another $10 billion to the top line. Intel should focus on reducing its cycle times and unleashing its designers to create new solutions. Let a manufacturing partner who has the learning curve advantages enable Intel designers to innovate and extend ecosystems into new markets. Autonomous vehicles, factory floor use cases, military security, distributed cloud the coming telco explosion with 5G, AI inferencing at the edge. Bite the bullet, give up on yesterday's playbook and reinvent Intel for the next 50 years. That's what we'd like to see. And that's what we think Gelsinger will conclude when he channels his mentor. What do you think? Please comment on my LinkedIn posts. You can DM me at dvellante or email me at david.vellante@siliconangle.com. I publish weekly on wikibon.com and siliconangle.com. These episodes remember are also available as podcasts for your listening pleasure. Just search Breaking Analysis podcast. Many thanks to my friend and colleague David Floyer who contributed to this episode and that has done great work in the last better part of the last decade and has really thought through some of the cost factors that we talked about today. Also don't forget to check out etr.plus for all the survey action. Thanks for watching this episode of the Cube Insights powered by ETR. Be well. And we'll see you next time. (upbeat music)

>> Announcer: From around the globe, it's theCUBE with digital coverage of VMworld 2020 brought to you by VMware and its ecosystem partners. >> Hello, welcome back to theCUBE's coverage of VMworld 2020. This is theCUBE virtual with VMworld 2020 virtual. I'm John Furrier, your host of theCUBE with Dave Vellante. It's our 11th year covering VMware. We're not in-person, we're virtual but all the content is flowing. Of course, we're here with Pat Gelsinger, the CEO of VMware who's been on theCUBE, all 11 years. This year virtual of theCUBE as we've been covering VMware from his early days in 2010 when theCUBE started, 11 years later, Pat, it's still changing and still exciting. Great to see you, thanks for taking the time. >> Hey, you guys are great. I love the interactions that we have, the energy, the fun, the intellectual sparring and of course the audiences have loved it now for 11 years, and I look forward to the next 11 that we'll be doing together. >> It's always exciting 'cause we have great conversations, Dave, and I like to drill in and really kind of probe and unpack the content that you're delivering at the keynotes, but also throughout the entire program. It is virtual this year which highlights a lot of the cloud native changes. Just want to get your thoughts on the virtual aspect, VMworld's not in-person, which is one of the best events of the year, everyone loves it, the great community. It's virtual this year but there's a slew of content, what should people take away from this virtual VMworld? >> Well, one aspect of it is that I'm actually excited about is that we're going to be well over 100,000 people which allows us to be bigger, right? You don't have the physical constraints, you also are able to reach places like I've gone to customers and maybe they had 20 people attend in prior years. This year they're having 100. They're able to have much larger teams also like some of the more regulated industries where they can't necessarily send people to events like this, The International Audience. So just being able to spread the audience much more. A digital foundation for an unpredictable world, and man, what an unpredictable world it has been this past year. And then key messages, lots of key products announcements, technology announcements, partnership announcements, and of course in all of the VMworld is that hands-on labs, the interactions that will be delivering a virtual. You come to VMware because the content is so robust and it's being delivered by the world's smartest people. >> Yeah, we've had great conversations over the years and we've talked about hybrid cloud, I think, 2012. A lot of the stuff I look back at a lot of the videos was early on we're picking out all these waves, but there was that moment four years ago or so, maybe even four three, I can't even remember it seems like yesterday. You gave the seminal keynote and you said, this is the way the world's going to happen. And since that keynote, I'll never forget, was in Moscone and since then, you guys have been performing extremely well both on the business front as well as making technology bets and it's paying off. So what's next, you got the cloud, cloud scale, is it Space, is it Cyber? All these things are going on what is next wave that you're watching and what's coming out and what can people extract out of VMworld this year about this next wave? >> Yeah, one of the things I really am excited about and I went to my buddy Jensen, I said, boy, we're doing this work in smart mix we really like to work with you and maybe some things to better generalize the GPU. And Jensen challenged me. Now usually, I'm the one challenging other people with bigger visions. This time Jensen said, "hey Pat, I think you're thinking too small. Let's do the entire AI landscape together, and let's make AI a enterprise class works load from the data center to the cloud and to the Edge. And so I'm going to bring all of my AI resources and make VMware and Tanzu the preferred infrastructure to deliver AI at scale. I need you guys to make the GPUs work like first-class citizens in the vSphere environment because I need them to be truly democratized for the enterprise, so that it's not some specialized AI Development Team, it's everybody being able to do that. And then we're going to connect the whole network together in a new and profound way with our Monterey program as well being able to use the Smart NIC, the DPU, as Jensen likes to call it. So now with CPU, GPU and DPU, all being managed through a distributed architecture of VMware. This is exciting, so this is one in particular that I think we are now re-architecting the data center, the cloud and the Edge. And this partnership is really a central point of that. >> Yeah, the NVIDIA thing's huge and I know Dave probably has some questions on that but I asked you a question because a lot of people ask me, is that just a hardware deal? Talking about SmartNICs, you talk about data processing units. It sounds like a motherboard in the cloud, if you will, but it's not just hardware. Can you talk about the aspect of the software piece? Because again, NVIDIA is known for GPUs, we all know that but we're talking about AI here so it's not just hardware. Can you just expand and share what the software aspect of all this is? >> Yeah well, NVIDIA has been investing in their AI stack and it's one of those where I say, this is Edison at work, right? The harder I work, the luckier I get. And NVIDIA was lucky that their architecture worked much better for the AI workload. But it was built on two decades of hard work in building a parallel data center architecture. And they have built a complete software stack for all the major AI workloads running on their platform. All of that is now coming to vSphere and Tanzu, that is a rich software layer across many vertical industries. And we'll talk about a variety of use cases, one of those that we highlight at VMworld is the University, California, San Francisco partnership, UCSF, one of the world's leading research hospitals. Some of the current vaccine use cases as well, the financial use cases for threat detection and trading benefits. It really is about how we bring that rich software stack. This is a decade and a half of work to the VMware platform, so that now every developer and every enterprise can take advantage of this at scale. That's a lot of software. So in many respects, yeah, there's a piece of hardware in here but the software stack is even more important. >> It's so well we're on the sort of NVIDIA, the arm piece. There's really interesting these alternative processing models, and I wonder if you could comment on the implications for AI inferencing at the Edge. It's not just as well processor implications, it's storage, it's networking, it's really a whole new fundamental paradigm, but how are you thinking about that, Pat? >> Yeah, and we've thought about there's three aspects, what we said, three problems that we're solving. One is the developer problem where we said now you develop once, right? And the developer can now say, "hey I want to have this new AI-centric app and I can develop and it can run in the data center on the cloud or at the Edge." Secondly, my Operations Team can be able to operate this just like I do all of my infrastructure, and now it's VMs containers and AI applications. And third, and this is where your question really comes to bear most significantly, is data gravity. Right, these data sets are big. Some of them need to be very low latency as well, they also have regulatory issues. And if I have to move these large regulated data sets to the cloud, boy, maybe I can't do that generally for my Apps or if I have low latency heavy apps at the Edge, huh, I can't pull it back to the cloud or to my data center. And that's where the uniform architecture and aspects of the Monterey Program where I'm able to take advantage of the network and the SmartNICs that are being built, but also being able to fully represent the data gravity issues of AI applications at scale. 'Cause in many cases, I'll need to do the processing, both the learning and the inference at the Edge as well. So that's a key part of our strategy here with NVIDIA and I do think is going to unlock a new class of apps because when you think about AI and containers, what am I using it for? Well, it's the next generation of applications. A lot of those are going to be Edge, 5G-based, so very critical. >> We've got to talk about security now too. I'm going to pivot a little bit here, John, if it's okay. Years ago, you said security is a do-over, you said that on theCUBE, it stuck with us. But there's been a lot of complacency. It's kind of if it ain't broke, don't fix it, but but COVID kind of broke it. And so you see three mega trends, you've got cloud security, you'll see in Z-scaler rocket, you've got Identity Access Management and Octo which I hope there's I think a customer of yours and then you got Endpoint, you're seeing Crowdstrike explode you guys paid 2.7 billion, I think, for Carbon Black, yet Crowdstrike has this huge valuation. That's a mega opportunity for you guys. What are you seeing there? How are you bringing that all together? You've got NSX components, EUC components, you've got sort of security throughout your entire stack. How should we be thinking about that? >> Well, one of the announcements that I am most excited about at VMworld is the release of Carbon Black workload. 'Cause we said we're going to take those carbon black assets and we're going to combine it with workspace one, we're going to build it in NSX, we're going to make it part of Tanzu, and we're going to make it part of vSphere. And Carbon Black workload is literally the vSphere embodiment of Carbon Black in an agent-less way. So now you don't need to insert new agents or anything, it becomes part of the hypervisor itself. Meaning that there's no attack surface available for the bad guys to pursue. But not only is this an exciting new product capability, but we're going to make it free, right? And what I'm announcing at VMworld and everybody who uses vSphere gets Carbon Black workload for free for an unlimited number of VMs for the next six months. And as I said in the keynote, today is a bad day for cyber criminals. This is what intrinsic security is about, making it part of the platform. Don't add anything on, just click the button and start using what's built into vSphere. And we're doing that same thing with what we're doing at the networking layer, this is the last line acquisition. We're going to bring that same workload kind of characteristic into the container, that's why we did the Octarine acquisition, and we're releasing the integration of workspace one with Carbon Black client and that's going to be the differentiator, and by the way, Crowdstrike is doing well, but guess what? So are we, and right both of us are eliminating the rotting dead carcasses of the traditional AV approach. So there's a huge market for both of us to go pursue here. So a lot of great things in security, and as you said, we're just starting to see that shift of the industry occur that I promised last year in theCUBE. >> So it'd be safe to say that you're a cloud native and a security company these days? >> Yeah well, absolutely. And the bigger picture of us is that we're this critical infrastructure layer for the Edge, for the cloud, for the Telco environment and for the data center from every endpoint, every application, every cloud. >> So, Pat, I want to ask you a virtual question we got from the community. I'm going to throw it out to you because a lot of people look at Amazon and the cloud and they say, okay we didn't see it coming, we saw it coming, we saw it scale all the benefits that are coming out of cloud well documented. The question for you is, what's next after cloud? As people start to rethink especially with COVID highlighting and all the scabs out there as people look at their exposed infrastructure and their software, they want to be modern, they want the modern apps. What's next after cloud, what's your vision? >> Well, with respect to cloud, we are taking customers on the multicloud vision, right, where you truly get to say, oh, this workload I want to be able to run it with Azure, with amazon, I need to bring this one on-premise, I want to run that one hosted. I'm not sure where I'm going to run that application, so develop it and then run it at the best place. And that's what we mean by our hybrid multicloud strategy, is being able for customers to really have cloud flexibility and choice. And even as our preferred relationship with Amazon is going super well, we're seeing a real uptick, we're also happy that the Microsoft Azure VMware service is now GA. So there in Marketplace, are Google, Oracle, IBM and Alibaba partnerships, and the much broader set of VMware Cloud partner programs. So the future is multicloud. Furthermore, it's then how do we do that in the Telco network for the 5G build out? The Telco cloud, and how do we do that for the Edge? And I think that might be sort of the granddaddy of all of these because increasingly in a 5G world, we'll be enabling Edge use cases, we'll be pushing AI to the Edge like we talked about earlier in this conversation, we'll be enabling these high bandwidth low latency use cases at the Edge, and we'll see more and more of the smart embodiment smart city, smart street, smart factory, the autonomous driving, all of those need these type of capabilities. >> Okay. >> So there's hybrid and there's multi, you just talked about multi. So hybrid are data, are data partner ETR they do quarterly surveys. We're seeing big uptick in VMware Cloud on AWS, you guys mentioned that in your call. We're also seeing the VMware Cloud, VMware Cloud Foundation and the other elements, clearly a big uptick. So how should we think about hybrid? It looks like that's an extension of on-prem maybe not incremental, maybe a share shift, whereas multi looks like it's incremental but today multi is really running on multiple clouds, but a vision toward incremental value. How are you thinking about that? >> Yeah, so clearly, the idea of multi is truly multiple clouds. Am I taking advantage of multiple clouds being my private clouds, my hosted clouds and of course my public cloud partners? We believe everybody will be running a great private cloud, picking a primary public cloud and then a secondary public cloud. Hybrid then is saying, which of those infrastructures are identical, so that I can run them without modifying any aspect of my infrastructure operations or applications? And in today's world where people are wanting to accelerate their move to the cloud, a hybrid cloud is spot-on with their needs. Because if I have to refactor my applications, it's a couple million dollars per app and I'll see you in a couple of years. If I can simply migrate my existing application to the hybrid cloud, what we're consistently seeing is the time is 1/4 and the cost is 1/8 or less. Those are powerful numbers. And if I need to exit a data center, I want to be able to move to a cloud environment to be able to access more of those native cloud services, wow, that's powerful. And that's why for seven years now, we've been preaching that hybrid is the future, it is not a way station to the future. And I believe that more fervently today than when I declared it seven years ago. So we are firmly on that path that we're enabling a multi and hybrid cloud future for all of our customers. >> Yeah, you addressed that like Cube 2013, I remember that interview vividly was not a weigh station I got hammered answered. Thank you, Pat, for clarifying that going back seven years. I love the vision, you always got the right wave, it's always great to talk to you but I got to ask you about these initiatives that you're seeing clearly. Last year, a year and a half ago, Project Pacific came out, almost like a guiding directional vision. It then put some meat on the bone Tanzu and now you guys have that whole cloud native initiative, it's starting to flower up, thousands of flowers are blooming. This year, Project Monterey has announced. Same kind of situation, you're showing out the vision. What are the plans to take that to the next level? And take a minute to explain how Project Monterey, what it means and how you see that filling out. I'm assuming it's going to take the same trajectory as Pacific. >> Yeah, Monterey is a big deal. This is re-architecting the core of vSphere and it really is ripping apart the IO stack from the intrinsic operation of vSphere and the SX itself because in many ways, the IO, we've been always leveraging the NIC and essentially virtual NICs, but we never leverage the resources of the network adapters themselves in any fundamental way. And as you think about SmartNICs, these are powerful resources now where they may have four, eight, 16 even 32 cores running in the SmartNIC itself. So how do I utilize that resource, but it also sits in the right place? In the sense that it is the network traffic cop, it is the place to do security acceleration, it is the place that enables IO bandwidth optimization across increasingly rich applications where the workloads, the data, the latency get more important both in the data center and across data centers, to the cloud and to the Edge. So this re-architecting is a big deal, we announced the three partners, Intel, NVIDIA Mellanox and Pensando that we're working with, and we'll begin the deliveries of this as part of the core vSphere offerings beginning next year. So it's a big re-architecting, these are our key partners, we're excited about the work that we're doing with them and then of course our system partners like Dell and Lenovo who've already come forward and says, "Yeah we're going to to be bringing these to market together with VMware." >> Pat, personal question for you. I want to get your personal take, your career going back to Intel, you've seen it all but the shift is consumer to enterprise and you look at just recently Snowflake IPO, the biggest ever in the history of Wall Street. It's an enterprise data company, and the enterprise is now relevant. The consumer enterprise feels consumery, we talked about consumerization of IT years and years ago. But now more than ever the hottest financial IPO enterprise, you guys are enterprise. You did enterprise at Intel (laughing), you know the enterprise, you're doing it here at VMware. The enterprise is the consumer now with cloud and all this new landscape. What is your view on this because you've seen the waves, have you seen the historical perspective? It was consumer, was the big thing now it's enterprise, what's your take on all this? How do you make sense of it because it's now mainstream, what's your view on this? >> Well, first I do want to say congratulations to my friend, Frank and the extraordinary Snowflake IPO. And by the way they use VMware, so I not only do I feel a sense of ownership 'cause Frank used to work for me for a period of time, but they're also a customer of ours so go Frank, go Snowflake. We're excited about that. But there is this episodic to the industry where for a period of time, it is consumer-driven and CES used to be the hottest ticket in the industry for technology trends. But as you say, it has now shifted to be more business-centric, and I've said this very firmly, for instance, in the case of 5G where I do not see consumer. A faster video or a better Facebook isn't going to be why I buy 5G. It's going to be driven by more business use cases where the latency, the security and the bandwidth will have radically differentiated views of the new applications that will be the case. So we do think that we're in a period of time and I expect that it's probably at least the next five years where business will be the technology drivers in the industry. And then probably, hey there'll be a wave of consumer innovation, and I'll have to get my black turtlenecks out again and start trying to be cool but I've always been more of an enterprise guy so I like the next five to 10 years better. I'm not cool enough to be a consumer guy and maybe my age is now starting to conspire against me as well. >> Hey, Pat I know you got to go but a quick question. So you guys, you gave guidance, pretty good guidance actually. I wonder, have you and Zane come up with a new algorithm to deal with all this uncertainty or is it kind of back to old school gut feel? >> (laughing) Well, I think as we thought about the year, as we came into the year, and obviously, COVID smacked everybody, we laid out a model, we looked at various industry analysts, what we call the Swoosh Model, right? Q2, Q3 and Q4 recovery, Q1 more so, Q2 more so. And basically, we built our own theories behind that, we tested against many analyst perspectives and we had Vs and we had Ws and we had Ls and so on. We picked what we thought was really sort of grounded in the best data that we could, put our own analysis which we have substantial data of our own customers' usage, et cetera and picked the model. And like any model, you put a touch of conservatism against it, and we've been pretty accurate. And I think there's a lot of things we've been able to sort of with good data, good thoughtfulness, take a view and then just consistently manage against it and everything that we said when we did that back in March has sort of proven out incrementally to be more accurate. And some are saying, "Hey things are coming back more quickly" and then, "Oh, we're starting to see the fall numbers climb up a little bit." Hey, we don't think this goes away quickly, there's still a lot of secondary things to get flushed through, the various economies as stimulus starts tailoring off, small businesses are more impacted, and we still don't have a widely deployed vaccine and I don't expect we will have one until second half of next year. Now there's the silver lining to that, as we said, which means that these changes, these faster to the future shifts in how we learn, how we work, how we educate, how we care for, how we worship, how we live, they will get more and more sedimented into the new normal, relying more and more on the digital foundation. And we think ultimately, that has extremely good upsides for us long-term, even as it's very difficult to navigate in the near term. And that's why we are just raving optimists for the long-term benefits of a more and more digital foundation for the future of every industry, every human, every workforce, every hospital, every educator, they are going to become more digital and that's why I think, going back to the last question this is a business-driven cycle, we're well positioned and we're thrilled for all of those who are participating with Vmworld 2020. This is a seminal moment for us and our industry. >> Pat, thank you so much for taking the time. It's an enabling model, it's what platforms are all about, you get that. My final parting question for you is whether you're a VC investing in startups or a large enterprise who's trying to get through COVID with a growth plan for that future. What does a modern app look like, and what does a modern company look like in your view? >> Well, a modern company would be that instead of having a lot of people looking down at infrastructure, the bulk of my IT resources are looking up at building apps, those apps are using modern CICD data pipeline approaches built for a multicloud embodiment, right, and of course VMware is the best partner that you possibly could have. So if you want to be modern cool on the front end, come and talk to us. >> All right, Pat Gelsinger, the CEO of VMware here on theCUBE for VMworld 2020 virtual, here with theCUBE virtual great to see you virtually, Pat, thanks for coming on, thanks for your time. >> Hey, thank you so much, love to see you in person soon enough but this is pretty good. >> Yeah. >> Thank you Dave. Thank you so much. >> Okay, you're watching theCUBE virtual here for VMworld 2020, I'm John Furrier, Dave Vellante with Pat Gelsinger, thanks for watching. (gentle music)

>> Narrator: From around the globe. It's theCUBE with digital coverage of VMworld 2020, brought to you by VMware and its ecosystem partners. >> Hello, welcome back to theCUBE's coverage of VMworld 2020. This is theCUBE virtual with VMworld 2020 virtual. I'm John Furrier your host of theCUBE with Dave Vellante. It's our 11th year covering VMware. We're not in person, we're virtual, but all the content is flowing. Of course, we're here with Pat Galsinger, the CEO of VMware. Who's been on theCUBE all 11 years. This year virtual of theCUBE as we've been covering VMware from his early days in 2010, when theCUBE started 11 years later, Pat is still changing and still exciting. Great to see you. Thanks for taking the time. >> Hey, you guys are great. I love the interactions that we have, the energy, the fun, the intellectual sparring. And of course that audiences have loved it now for 11 years. And I look forward to the next 11 that we'll be doing together. >> It's always exciting cause we'd love great conversations. Dave and I like to drill in and really kind of probe and unpack the content that you're delivering at the keynotes, but also throughout the entire program. It is virtual this year, which highlights a lot of the cloud native changes. Just want to get your thoughts on the virtual aspect of VMworld, not in person, which is one of the best events of the year. Everyone loves it. The great community. It's virtual this year, but there's a slew of content. What should people take away from this virtual VMworld? >> Well, one aspect of it is that I'm actually excited about is that we're going to be well over a hundred thousand people, which allows us to be bigger, right? You don't have the physical constraints. You also are able to reach places like I've gone to customers and maybe they had 20 people attend in prior years. This year they're having a hundred, they're able to have much larger teams. Also like some of the more regulated industries where they can't necessarily send people to events like this, the international audience. So just being able to spread the audience much more broadly well, also our key messages a digital foundation for unpredictable world. And man, what an unpredictable world it has been this past year? And then key messages, lots of key products announcements technology, announcements partnership, announcements and of course in all of the VMworld, is that hands on (murmurs) interactions that we'll be delivering our virtual, you come to the VMware because the content is so robust and it's being delivered by the world's smartest people. >> Yeah. We've had great conversations over the years. And we've talked about hybrid clothing 2012, a lot of this stuff I looked back in lot of the videos was early on, we're picking out all these waves, but it was that moment four years ago or so, maybe even four, three, I can't even remember, seems like yesterday. You gave the Seminole keynote and you said, "This is the way the world's going to happen." And since that keynote I'll never forget was in Moscone. And since then you guys have been performing extremely well both on the business as well as making technology bets and is paying off. So what's next? I mean, you've got the cloud scale. Is it space? Is it cyber? I mean, all these things are going on. What is next wave that you're watching and what's coming out and what can people extract out of VMworld this year about this next wave? >> Yeah, one of the things I really am excited about I went to my buddy Jensen. I said, "Boy, we're doing this work and smart. Next We really liked to work with you and maybe some things to better generalize the GPU." And Jensen challenged me. Now, usually, I'm the one challenging other people with bigger visions, this time Jensen said, "Hey Pat, I think you're thinking too small. Let's do the entire AI landscape together. And let's make AI a enterprise classwork stowed from the data center to the cloud and to the Edge. And so I'm going to bring all of my AI resources and make VMware, And Tansu the preferred infrastructure to deliver AI at scale. I need you guys to make the GPS work like first class citizens in the vSphere environment, because I need them to be truly democratized for the enterprise. so that it's not some specialized AI development team, it's everybody being able to do that. And then we're going to connect the whole network together in a new and profound way with our Monterey Program as well being able to use the SmartNIC, the DPU as Jensen likes to call it. So now it's CPU, GPU and DPU, all being managed through a distributed architecture of VMware." This is exciting. So this is one in particular that I think we are now rearchitecting the data center, the cloud in the Edge. And this partnership is really a central point of that. >> Yeah, the Nvid thing's huge. And I know Dave, Perharbs has some questions on that. But I ask you a question because a lot of people ask me, is it just a hardware deal? I mean, talking about SmartNIC, you talking about data processing units. It sounds like a motherboard in the cloud, if you will, but it's not just hardware. Can you talk about the aspect of the software piece? Because again, Nvidia is known for GP use, we all know that, but we're talking about AI here. So it's not just hardware. Can you just expand and share what the software aspect of all this is? >> Yeah. Well, Nvidia has been investing in their AI stack and it's one of those where I say, this is Edison at work, right? The harder I work, the luckier I get. And Nvidia was lucky that their architecture worked much better for the AI workload, but it was built on two decades of hard work in building a parallel data center architecture. And they have built a complete software stack for all of the major AI workloads running on their platform. All of that is now coming to vSphere and Tansu, that is a rich software layer across many vertical industries. And we'll talk about a variety of use cases. One of those that we highlight at Vmworld is the university of California, San Francisco partnership UCSF one of the world's leading research hospitals, some of the current vaccine use cases as well, the financial use cases for threat detection and trading benefits. It really is about how we bring that rich software stack. this is a decade and a half of work to the VMware platform so that now every developer and every enterprise could take advantage of this at scale, that's a lot of software. So in many respects, yeah, there's a piece of hardware in here, but the software stack is even more important. >> So well on the sort of Nvidia the arm piece, there's really interesting, these alternative processing models. And I wonder if you could comment on the implications for AI inferencing at the Edge. It's not just as well processor implications, it's storage, it's networking. It's really a whole new fundamental paradigm. How are you thinking about that Pat? >> Yeah, we've thought about, there's three aspects, but what we said three problems that we're solving. One is the developer problem, what we said, now you develop once, right? And the developer can now say, "Hey, I want to have this new AI centric app and I can develop, and it can run in the data center on the cloud or at the Edge." You'll secondly, my operations team can be able to operate this just like I do all my infrastructure. And now it's VMs containers and AI applications and third, and this is where your question really comes to bear. Most significantly is data gravity, right? These data sets are big. Some of them need to be very low latency as well. They also have regulatory issues. And if I have to move these large regulated data sets to the cloud, boy, maybe I can't do that generally for my apps or if I have low latency heavy apps at the Edge, ah, I can't pull it back to the cloud or to my data center. And that's where the uniform architecture and aspects of the Monterey program, where I'm able to take advantage of the network and the SmartNIC that are being built, but also being able to fully represent the data gravity issues of AI applications at scale 'cause in many cases I'll need to do the processing, both the learning and the inference at the Edge as well. So that's a key part of our strategy here with Nvidia. And I do think is going to be a lock, a new class of apps because when you think about AI and containers, what am I using it for? Well, it's the next generation of applications. A lot of those are going to be Edge 5G based. So very critical. >> We got to talk about security now, too. I mean, I'm going to pivot a little bit here John if it's okay. Years ago you said security is a do over. You said that on theCUBE, It stuck with us. There's there's been a lot of complacency it's kind of, if it didn't broke, don't fix it, but COVID kind of broke it. That's why you see three mega trends. You've got cloud security, you see in Z scaler rocket, you got identity access management and I'll check, I think a customer of yours. And then you've got endpoint you're seeing CrowdStrike explode. You guys pay 2.7 billion I think for carbon black yet CrowdStrike has this huge valuation. That's a mega opportunity for you guys. What are you seeing there? How are you bringing that all together? You've got NSX components, EUC components. You've got sort of security throughout your entire stack. How should we be thinking about that? >> Well, one of the announcements that I am most excited about at Vmworld is the release of carbon black workload, this research we're going to take those carbon black assets and we're going to combine it with workspace one. We're going to build it in NSX. We're going to make it part of Tansu and we're going to make it part of vSphere. And carbon black workload is literally the vSphere embodiment of carbon black in an agentless way. Ans so now you don't need to insert new agents or anything. It becomes part of the hypervisor itself, meaning that there's no attack surface available for the bad guys to pursue, but not only is this an exciting new product capability, but we're going to make it free, right? And what I'm announcing at VMworld and everybody who uses vSphere gets carbon black workload for free for an unlimited number of VMs for the next six months. And as I said in the keynote today is a bad day for cybercriminals. This is what intrinsic security is about, making it part of the platform. Don't add anything on, just click the button and start using what's built into vSphere. And we're doing that same thing with what we're doing at the networking layer. This is the act, the last line acquisition. We're going to bring that same workload kind of characteristic into the container. That's why we did the Octarine acquisition. And we're releasing the integration of workspace one with a carbon black client, and that's going to be the differentiator. And by the way, CrowdStrike is doing well, but guess what? So are we, and like both of us are eliminating the rotting dead carcasses of the traditional AV approach. So there is a huge market for both of us to go pursue here. So a lot of great things in security. And as you said, we're just starting to see that shift of the industry occur that I promised last year in theCUBE. >> So it'd be safe to say that you're a cloud native in a security company these days? >> You all, absolutely. And the bigger picture of us, is that we're critical infrastructure layer for the Edge for the cloud, for the telco environment and for the data center from every end point, every application, every cloud. >> So Padagonia asked you a virtual question, we got from the community, I'm going to throw it out to you because a lot of people look at Amazon, The cloud and they say, "Okay, we didn't see it coming. We saw it coming. We saw it scale all the benefits that are coming out of cloud, Well-documented." The question for you is what's next after cloud, as people start to rethink, especially with COVID highlighting all the scabs out there. As people look at their exposed infrastructure and their software, they want to be modern. They want the modern apps. What's next after cloud. What's your vision? >> Well, with respect to cloud, we are taking customers on the multicloud vision, right? Where you truly get to say, "Oh, this workload, I want to be able to run it with Azure, with Amazon. I need to bring this one on premise. I want to run that one hosted. I'm not sure where I'm going to run that application." So develop it and then run it at the best place. And that's what we mean by our hybrid multicloud strategy is being able for customers to really have cloud flexibility and choice. And even as our preferred relationship with Amazon is going super well. We're seeing a real uptick. We're also happy that the Microsoft Azure VMware services now GA so they're in marketplace, our Google, Oracle, IBM and Alibaba partnerships in the much broader set of VMware cloud Partner Program. So the future is multicloud. Furthermore, it's then how do we do that in the Telco Network for the 5G build out, The Telco cloud? And how do we do that for the Edge? And I think that might be sort of the granddaddy of all of these because increasingly in a 5G world will be a nibbling Edge use cases. We'll be pushing AI to the Edge like we talked about earlier in this conversation, will be enabling these high bandwidth, with low latency use cases at the Edge, and we'll see more and more of the smart embodiment, smart cities, smart street, smart factory, or the autonomous driving. All of those need these type of capabilities. >> So there's hybrid and there's multi, you just talked about multi. So hybrid are data partner ETR, they do quarterly surveys. We're seeing big uptick in VMware cloud and AWS, you guys mentioned that in your call. we're also seeing the VMware cloud, VMware cloud Coundation and the other elements, clearly a big uptake. So how should we think about hybrid? It looks like that's an extension of on-prem maybe not incremental, maybe a share shift whereas multi looks like it's incremental, but today multi has really running on multiple clouds, but vision toward incremental value. How are you thinking about that? >> Yeah, so clearly the idea of multi is to link multiple. Am I taking advantage of multiple clouds being my private clouds, my hosted clouds. And of course my public cloud partners, we believe everybody will be running a great private cloud, picking a primary, a public cloud, and then a secondary public cloud. Hybrid then is saying, which of those infrastructures are identical so that I can run them without modifying any aspect of my infrastructure operations or applications. And in today's world where people are wanting to accelerate their move to the cloud, a hybrid cloud is spot on with their needs because if I have to refactor my applications it's a couple million dollars per app, And I'll see you in a couple of years. If I can simply migrate my existing application to the hybrid cloud, what we're consistently seeing is the time is one quarter and the cost is one eight, four less. Those are powerful numbers. And if I need to exit a data center, I want to be able to move to a cloud environment, to be able to access more of those native cloud services. Wow. That's powerful. And that's why for seven years now we've been preaching that hybrid is the future. It is not a waystation to the future. And I believe that more fervently today than when I declared it seven years ago. So we are firmly on that path that we're enabling a multi and a hybrid cloud future for all of our customers. >> Yeah. You addressed that like CUBE 2013. I remember that interview vividly was not a waystation. I got (murmurs) the answer. Thank you Pat, for clarifying than going back seven years. I love the vision. You're always got the right wave. It's always great to talk to you, but I got to ask you about these initiatives you seeing clearly last year or a year and a half ago, project Pacific name out almost like a guiding directional vision, and then put some meat on the bone Tansu and now you guys have that whole Cloud Native Initiative is starting to flower up thousand flowers are blooming. This year Project Monterrey has announced same kind of situation. You're showing out the vision. What are the plans to take that to the next level and take a minute to explain how project Monterey, what it means and how you see that filling out. I'm assuming it's going to take the same trajectory as Pacific. >> Yeah. Monetary is a big deal. This is rearchitecting The core of vSphere. It really is ripping apart the IO stack from the intrinsic operation of a vSphere and ESX itself, because in many ways, the IO we've been always leveraging the NIC and essentially virtual NICs, but we never leverage the resources of the network adapters themselves in any fundamental way. And as you think about SmartNICs, these are powerful resources now where they may have four, eight, 16, even 32 cores running in the smartNIC itself. So how do I utilize that resource? But it also sits in the right place in the sense that it is the network traffic cop. It is the place to do security acceleration. It is the place that enables IO bandwidth optimization across increasingly rich applications where the workloads, the data, the latency get more important both in the data center and across data centers to the cloud and to the Edge. So this rearchitecting is a big deal. We announced the three partners, Intel, Nvidia, Mellanox, and Penn Sandow that we're working with. And we'll begin the deliveries of this as part of the core vSphere offerings of beginning next year. So it's a big rearchitecting. These are our key partners. We're excited about the work that we're doing with them. And then of course our system partners like Dell and Lenovo, who've already come forward and says, "Yeah, we're going to be bringing these to market together with VMware." >> Pat, personal question for you. I want to get your personal take, your career, going back to Intel. You've seen it all, but the shift is consumer to enterprise. And you look at just recently snowflake IPO, the biggest ever in the history of wall street, an enterprise data's company. And the enterprise is now relevant. Enterprise feels consumer. We talked about consumerization of IT years and years ago, but now more than ever the hottest financial IPO enterprise, you guys are enterprise. You did enterprise at Intel. (laughs) You know the enterprise, you doing it here at VMware. The enterprise is the consumer now with cloud and all this new landscape. What is your view on this? Because you've seen the waves, and you've seen the historical perspective. It was consumer, was the big thing. Now it's enterprise, what's your take on all this? How do you make sense of it? Because it's now mainstream. what's your view on this? >> Well, first I do want to say congratulations to my friend Frank, and the extraordinary snowflake IPO, and by the way, they use VMware. So not only do I feel a sense of ownership 'cause Frank used to work for me for a period of time, but they're also a customer of ours. So go Frank, go snowflake. We're we're excited about that. But there is this episodic, this to the industry where for a period of time it is consumer-driven and CES used to be the hottest ticket in the industry for technology trends. But as you say, it is now shifted to be more business centric. And I've said this very firmly, for instance, in the case of 5G where I do not see consumer a faster video or a better Facebook, isn't going to be why I buy 5G. It's going to be driven by more business use cases where the latency, the security and the bandwidth will have radically differentiated views of the new applications that will be the case. So we do think that we're in a period of time and I expect that it's probably at least the next five years where business will be the technology drivers in the industry. And then probably, hey, there'll be a wave of consumer innovation and I'll have to get my black turtlenecks out again and start trying to be cool, but I've always been more of an enterprise guy. So I like the next five to 10 years better. I'm not cool enough to be a consumer guy. And maybe my age is now starting to conspire against me as well. >> Hey, Pat, I know you've got to go, but quick question. So you guys, you gave guidance, pretty good guidance, actually. I wondered have you and Zane come up with a new algorithm to deal with all this uncertainty or is it kind of back to old school gut feel? (laughs) >> Well, I think as we thought about the year as we came into the year and obviously, COVID smacked everybody, we laid out a model, we looked at various industry analysts, what we call the swoosh model, right? Q2, Q3 and Q4 recovery, Q1 more so, Q2 more so, and basically, we build our own theories behind that. We test it against many analysts, the perspectives, and we had vs and we had Ws and we had Ls and so on. We picked what we thought was really sort of grounded of the best data that we could put our own analysis, which we have substantial data of our own customer's usage, et cetera, and pick the model. And like any model, you put a touch of conservatism against it, and we've been pretty accurate. And I think there's a lot of things, we've been able to sort of, with good data good thoughtfulness, take a view and then just consistently manage against it and everything that we said when we did that back in March, sort of proven out incrementally to be more accurate. And some are saying, "Hey, things are coming back more quickly." And then, oh we're starting to see the fall numbers climb up a little bit. Hey, we don't think this goes away quickly. There's still a lot of secondary things to get flushed through the various economies, as stimulus starts tailoring off small businesses are more impacted and we still don't have a widely deployed vaccine. And I don't expect we will have one until second half of next year. Now there's the silver lining to that, as we said, which means that these changes, these faster to the future shifts in how we learn, how we work, how we educate, how we care for, how we worship, how we live, they will get more and more sedimented into the new normal relying more and more on the digital foundation. And we think ultimately that has extremely good upsides for us longterm, even as it's very difficult to navigate in the near term. And that's why we are just raving optimists for the longterm benefits of a more and more digital foundation for the future of every industry, every human, every workforce, every hospital, every educator, they are going to become more digital. And that's why I think going back to the last question, this is a business driven cycle, we're well positioned, and we're thrilled for all of those who are participating with VMworld 2020. This is a seminal moment for us and our industry. >> Pat, thank you so much for taking the time. It's an enabling model. It's what platforms are all about. You get that. My final parting question for you is whether you're a VC investing in startups or a large enterprise who's trying to get through COVID with a growth plan for that future. What is a modern app look like? And what does a modern company look like in your view? >> Well, a modern company would be that instead of having a lot of people looking down at infrastructure, the bulk of my IT resources are looking up at building apps. Those apps are using modern CICD data pipeline approaches built for a multicloud embodiment, right? And of course, VMware is the best partner that you possibly could have. So if you want to be modern, cool on the front end, come and talk to us. >> All right. Pat Galsinger the CEO of VMware here on theCUBE for VML 2020 virtual here with theCUBE virtual. Great to see you virtually Pat. Thanks for coming on. Thanks for your time. >> Hey, thank you so much. Love to see you in person soon enough, but this is pretty good. Thank you, Dave. Thank you so much. >> Okay. You're watching theCUBE virtual here for VMworld 2020. I'm John Furrier with Dave Vallente with Pat Gelsinger. Thanks for watching. (upbeat music)

from the silicon angle media office in Boston Massachusetts it's the queue now here's your host Stu minimun hi I'm Stu minimun and this is a special cube conversation from our Boston area studio following up from the Cronus global cyber summit it happened recently down in Miami Beach Florida John Fourier was a host there you can always go to the cube net to get all of the content here happy to welcome to the program first I've got Pat Hurley who's the vice president and general manager of Americas for a Cronus and joining him as one of his partners Jason Nolan who's the vice president of business development at S Castle both you locally-based thank you so much for joining us great to be here thanks for having us - all right so Pat why don't we start with you we talked a little bit earlier with William tall about some of the announcements give us some of the things and that specifically might be it'd be important to to the partners like Jason well first of all was a fantastic event was our inaugural cyber summit we had great attendance from our partners and getting a lot of feedback about the content that was there actually Jason was one of our panel speakers we got a lot of very positive feedback there as well fantastic event for us the the food was even great so we enjoyed that it was on Miami Beach fantastic location so from our side we thought was a very successful event now the biggest challenge we will have is making even that much better next year yeah did you get the stone crab while you were down there Jason who is unbelievable huh yeah so you were out the show you got to sit on some panels you know you were feeling the energy it was great to interact for the audience and kind of hear the questions that they had and the excitement and the energy around the messaging was really really powerful all right so bring us a little bit into the solutions how are they benefiting you know all of your partners absolutely so for those of you guys who don't know really who Acronis does a lot of people know us really as a backup company from back in the day maybe consumer backup maybe small medium-sized business on-premise backup solutions we've completely transformed the company over the last few years and how we talk about cyber protection which is the combination of cybersecurity and and and data protection we frame that in some tenants that we call sabes so safety accessibility privacy authenticity and security we take those solutions delivering the partners like as cast so that they can then wrap additional services around their customer base to increase the ARPU that they're getting there increase the margin that they're collecting from their customers and obviously deliver an end-to-end complete cyber protection solution all right so Jason you're here is the voice of the customer so as Castle what are your customers telling you and how does that resonate with them so for our customers data protection has always been important they've had to address the number one rule is never lose the data and with the cyber threats today always changing they're not sure what to do so they turn to us as their service provider to help guide them through you know to make sure that they're not one of the next companies on the news and it's nice as a service provider to be able to combine those those services and products with a vendor like a Cronus so that we can provide more value we can strengthen relationships and not have 300 vendors that we have to work with all right my understanding you spend a lot of time with the financial institutions absolutely they don't want to be the next one you know on the front page of the paper in the news on the radio and the like so anything specifically for them that that's worth calling out so I think with the financial services companies having the ability to protect their data their portfolio that they hold you know so important to their business they don't want anyone to have access to that and if any of their so they have to meet the requirements of the investors they have to meet the requirements of the financial institutions and make sure that they're following all of the different guidelines and depending on which markets are in what countries are in they all have different data sovereignty rules they have to deal with gdpr and so there's a lot of different areas that they need to navigate and so they as castle as a service provider we help them understand you know and kind of build that in as a standard and that's what we've done with the Cronus is we've built in the data protection strategy and now we can look at adding in the cybersecurity components to our portfolio to help give them that comprehensive suite and then I you can imagine how it takes a lot of different solutions to pack those together to provide an end band solution for their customers I think one of the beauties of recurrence is that we allow you to provide multiple services in a single pane of glass so you get a lot of very smart people on your team that have to manage multiple solutions what we try to provide is that single opportunity that single solution they learn one thing where they can be backup disaster recovery secure files things are all in one platform allow them to kind of minimize the number of solutions they need to be experts on to provide their customers the highest level service all right Jason security is a very much a multi-faceted you know ever-growing landscape out there tell us how is castle partners with the Cronus and how it fits into your your overall services so our partnership with the Cronus first started with data protection it was one of the first solutions that we were able to find that was able to fit every use case so as a platform as a service provider we're supporting on-premise legacy equipment our hosted VMware cloud infrastructure multi-tenant and infrastructure as your every flavor of cloud services you could imagine because we want the customer to have the solution that fits their needs the best and what we were looking for and a Cronus was able to provide for us was one platform of data protection that was able to be universal across all the different use cases so that's where it starts as a foundation always protecting the data always having a backup in multiple locations and all of our data centers worldwide and now to be able to layer on top of that some of the cybersecurity components in one single pane of glass is only going to allow us to give a better level of service to our customers and Panna I expect that a lot of stuff that we talked about with the financial services translate to many other industries yeah I mean the of the day data's data right and you could talk about different verticals how they use that data the other day it's all about protecting the data making sure your data is secure making sure you have an authentic copy of your data making sure that everything is secure so for us you know we we are known as a backup company but backup is kind of going away you need a more complete solution so one of the things that all these guide bad bad doers out they're doing is they're really trying to go after your backups and trying to lock them down because they understand that that's a first place you're gonna go to try to recover from a ransomware attack our solutions are based on artificial intelligence allowing the machine learning capabilities within our solutions to detect those from from the beginning from to prevent our customers from a zero-day attack so that you're not relying on that one backup to make sure your infrastructure can get back up and running you know and Jason maybe just frame for us the relationship between you and your customers and security you hear everything from you know certain cloud providers are like you know well you know we're like your landlord you know you made her lock your doors and take care of all that stuff and others are more you know hey we're gonna you know really go belly to belly with you and make sure that we've done everything bulletproof with you but what do you hear these days and what we're hearing from the customers is that they're looking to everyone is looking to migrate either start their cloud strategy if they haven't if they've been you know behind the curve if they've had a cloud strategy they were looking to increase we've actually had some customers want to maybe come out of the hyperscale as already so there's a lot of different use cases a lot of different journeys that the customers run and I think helping them navigate so what we've been able to do is as part of our services is wrap around the different cloud services a layer of security at each component so there's that perimeter network the you know there's all of the firewalls next-gen firewalls are now are a requirement they're no longer optional mobile devices endpoint protection network security fishing spearfishing user education there's so many different things that that their own employees need to be aware of that they never had to worry about before and it's it's almost you know like 20 years ago when disaster recovery emerged on the market cybersecurity now is front and center and if you're not paying attention to it at some point it's gonna come up and bite them so we're working with our customers to make sure they never have to deal with that yeah and I think an important part of that it's no longer just the data center right it's all those edge devices right we live in a very connect world data is transferred across multiple devices every day so there's different points where there's a vulnerability that could be identified and you can't just rely on an end user to make sure that they're protecting me well and especially if I know when I was having the earlier conversation with William we're talking about the smbs you know you know if the enterprise I've got my C so and I've got my team and I'm gonna work on that if I'm the SMB well it might be a generalist that security is under the bucket of all the other things that they need to do and therefore they're going to need to turn to their platforms and their partners to help them with a lot of this I mean to say they go to the IT guy right who say well he resolves everything at the end of the day enterprises have big budgets to spend on the stuff I heard something for the analysts reports that you know they're talking about high-level guy at Bank America so what's your budget for cybersecurity I have a budget that ever needs to be spent we're gonna spend on that to make sure that our customers data is secure what we really try to do is package lot of that stuff together to make it affordable complete secure for any customers no I absolutely think most of your customers don't have the billions of dollars to be able to say that they've at least done what they needed to do to make sure that they've they've done all they can so Jason I'll give you the final word first and Pat for you know things that you took away from the show and bring in to your customers so a in the panel discussion we had at the show we were asked to talk about different experiences as a service provider and one of the things that was really important for us that came from the audience was you know what does it take to switch how do you select your vendors and I think what's often overlooked by service riders is the cost of choosing a vendor and what we mean by that is if we were to choose the wrong vendor there is a huge cost of operations to switch from one vendor to the other where you're taking a very limited resource pool of the people on the operations team that are usually focused on on boarding new customers servicing the existing customer base generating revenue who now have to go to non revenue operations just to make that heavy-lift of a transition so picking the partnership with the Kronus was really important to us we made that change and it's been the best decision we've ever made yeah just to piggyback off of that we're not someone that our partners right so we considered as Castle be very strong channel partner of ours they give us reach into that mm custer community the other day they're really the experts we're providing some technology they can rely upon upon to provide a secure complete solution for their customers but that was really the key takeaway for me as you're able to interact face-to-face with your partners directly you're able to hear some of the pain points that they deal with on a daily basis it's not over email so I don't know phone calling on a zoom or WebEx you know you're talking face-to-face these guys understand those real-time problems and working toward solutions together at one big event so that's been fantastic we hope to double attendance for the next event and bring even more partners into the fold pen Jason thank you so much for sharing your takeaways from the Acronis global cybersecurity summit I'm Stu Mittleman and thanks as always for watching the cute

>>From Miami beach, Florida. It's the cube covering a Cronus global cyber summit 2019. Brought to you by Acronis. >>So Ron, welcome back to the keeps coverage of kronas cyber global cyber summit 2019. I'm John furrier here in Miami beach. Our next guest is Pat Hurley, vice president, general manager of the Americas in sales and customer relationships. Get Debbie Juan. Hey, thanks for having me. Welcome to Miami beach. Lovely place to have an event. So I hear ya. You got a lot of competition going on between the U S America's in the AMIA teens and it's very competitive group. >> The European team is very confident. I think we'll show them tomorrow what we're made of. We've been recruited very hard for some players that are Latin American. I think we'll show them a finger too. You've got a big soccer story there. We do. Yeah. We've, uh, we've got a few sports partnerships that we have across the globe. Uh, some of the first partnerships we had were actually within formula one. >>And we really try to correlate the story of the importance of, uh, data protection and cyber protection in the sporting industry because a lot of people don't think about the amount of data that's actually being generated in the space. A formula one car generates between, you know, two and three terabyte through three gigabytes of data on every lap, tons of telemetry devices that are kicked, collecting information from the car, from the road service, from the, the general environment. They're taking that data and then sending it back to the headquarter, analyzing it and making very small improvements to the car to make sure that they can qualify faster, run a faster lap, make the right type of angle into a turn, uh, which can really differentiate them from being, you know, first, second, third, 10th in a qualifying session. On the soccer side. We do have some partnerships with uh, arsenal, Manchester city, inter Milan, and we just signed a partnership as well with Liverpool. >>So we are very popping in that space here in the U S we have some other sports that we're big fans of. I'm personally a big Boston red Sox fan, being a Boston native and we do have a sports partnership with the red Sox, which has been an unbelievable partnership with them. And learning more about the use cases that they solve and using our technology has been really cool. >> You know, Patty, you bring up the sports thing and we were kidding before we on camera around the trading, you know how people do sports deals and they trade, you know, merchandise for consumer benefit or customer benefits. But really what is happening is sports teams encapsulate really the digital transformation in a nutshell because most sports franchises are, have been traditionally behind. But now with the consumerization of it and digital can go back to 2007 since the mobile phone. >>Really, I mean it's iPhone. Yeah. Since that time, sports and capsulates every aspect of it, consumer business fan experience. And it really has every, every, almost every element of what we see now as a global IOT problem opportunity. So it really encapsulates the use case of an integrated and and needed solution. Oh yeah, absolutely. I mean, if you think about the amount of data that's, that's out there today and the fast way that it's growing, you know, the explosion of, uh, of data in the, in the world today, sports have different unique challenges. So obviously they have large fan bases that need to be able to access the data and understand what's going on with their favorite sports teams. Um, for us it's really, you know, these technology partnerships that we have with these guys, it runs through all these different areas of, you know, in many cases we didn't really understand that they were using it for. >>So, you know, the red Sox for example, they've got Fenway park and iconic stadium, you know, the Mecca of baseball. If you haven't been there yet, I suggest all your viewers that they go and check it out, give me a call, we'll try and get you set up there. But, um, you know, the, the, the experience that the fans have there is all around their data experienced there. Right? And it's not just baseball games. It could be hockey games that Fenway park, it could be a concert that they're having. A phone buys a lot of different events. These stadiums are open year round and the ability to move, share access, protect the data in that stadium is really important to how they're functioning as an organization. We talked to their I-Team quite regularly about how they're using our solutions. They're talking about uh, different aspects of artificial intelligence, different ways they can use our products and machine learning. >>Obviously with the new solutions that we have in the market today around cybersecurity or helping them to address other challenges that they face. Um, as an organization, these are realtime challenges in their physical locations, national security issues, terrorist attacks could happen. There are venues, there are public gathering places too. Absolutely. We announced our partnership with them back in may and I was shocked to hear them on the main stage announcing that they had this great partnership with the Kronos was talking about their unique cyber security needs. They started talking about drone technology and I'm thinking, all right, a drone flies in the stadium. Maybe at breaks and it falls on a player and we're paying $20 million for one of these pitchers to be out there on the Hill or an interest, a fan or maybe they're collecting some video data to then share it out. >>And that's red Sox IP. No, they're talking about cybersecurity threats in the sense that a drone, a remotely controlled device could come in and lightened incendiary device in the, in the stadium and that to them as a real security server. And that's frontline for the it guys. That's what keeps them up at night. Yeah. And that's really an attack take time. Oh yeah, absolutely. What are the use cases that are coming out of some of your customers, cause you guys have a unique integrated solution with a platform as an end to end component too. You have a holistic view on data, which is interesting and unique. People are kind of figuring this out, but you guys are ahead of the game. What are some of the use cases that you've seen in the field with customers that highlight the benefits of taking a holistic view of the data? >>Yeah, absolutely. So we look at it as kind of backups dead, right? We have, we've combined the old world of backup and disaster recovery with the new world of cybersecurity and we combine that to a term we're calling cyber protection because it really requires an end to end solution and a lot of different things need to be working properly to prevent these attacks from happening. Uh, you need to be very proactive in how you're going about that. We address it with what we call 'em, the Kronos cyber platform. And what this is, is a unique, multi-tiered multi-tenant offering that's designed specifically for service providers. We have just under 6,000 servers, providers actively selling our cyber protection solutions today and they use this for are for a multiple different aspects. And usually the beachhead has something like backup. Every company needs backup. It's more of a commodity type solutions, a lot of different players in the game out there, but they take it a step further, use that same backup technology to then do disaster recovery. >>They can do files, they can share, they can do monitoring. We have notary solutions based on blockchain technologies. Now, this whole suite of cybersecurity solutions, all of this is with a single pane of glass, one platform that of a service provider can go in and work with their customers and make sure that their data is protected, make sure that their physical machines are virtual machines, they're PCs, their Macs are all protected, that data's protected, it's secure, but it's also accessible, which is an important part of you can take your data wrapping a nice bow buried a hundred feet underground, but then you can't use it, right? So you want to be able to make sure that you can actually, uh, leverage the technology there. Um, we've seen explosive growth, especially in, in my market. I think the numbers are pretty crazy. It's something like 90% of the market today in the U S has served in some capacity by a service provider. >>And this could be a small to medium size business that's served by local service fire to those really big guys that are out there. Let's on with how large your target audience, you mentioned search probably multiple times when you're out selling your target persona, your target audience, and you're trying to reach into, so we touch, everybody know, you equate it to kind of what we do with the red Sox, right? You walk into that city and the 38,000 people that, well, some of those people are just, you know, regular Joe's, right? They, they go to work every day. They have a computer at home, they have a mobile device. They probably have multiple mobile devices. We protect that for them. We call them a consumer. Slash. Prosumers. We work at a lot of very large retail organizations. If you walk into some of those shops today, you'll be able to see our software on a shelf there. >>You work with one of those tech squads where they're starting to attach services to it and you get more of a complete offering there. We then scale up a little bit further to some OEM providers. You work with companies like Honeywell and Emerson that are manufacturing devices that embed our software on there. They white label it and deliver it out. These are connected devices. You think about the, you know the, the explosion of IOT devices in the market today. We're protecting that stuff as well. We work with very large enterprises, so some of the, the major players that you see in the manufacturing space are standing up standardizing on Acronis process control process automation vendors are using our Chronis and we can deliver the solution because of the way it's so flexible in a very consumable way for them. Those enterprises can actually act as a service provider for their employees so we can actually take our technology, deploy the layer in their infrastructure where they have complete control. >>They might not want to be in an Uber cloud, they might not want to work with Chrome OS data center. They want to have and hold that data. They want to make sure it's on site. We enable that type of functionality and then the fastest growing area for us is what I hit on earlier within the service provider community. We're recruiting hundreds of service providers every quarter. We've got some great partners here. Give you an example of a service provider. You mentioned the red size, I'm assuming is that a vendor that might be working within that organization, but still it sounds like that's a supplier to the red Sox. How, how broad is that definition? It gives us many points. Yeah, it's a really good point. So we work with hosting providers. Look, can be regional hosting providers to multinational hosting providers. Some of the very big names that you've, you're probably familiar with. >>We work with, uh, we work with, uh, telco providers who work with ISV providers or sorry, ISP providers, um, kind of regional telco providers that provide a myriad of different services all the way down to your kind of local mom and pop type service providers where you've got a small business, maybe they've got 30 to 50 employees, they're servicing probably 200 to 300 customers and they want to provide a very secure, safe, easy to use complete solution to their customers. Uh, those could be focused on certain verticals so they could be focused on healthcare, financial services, construction, et cetera. Um, we have some that are very niche within like dental services or chiropractice offices, small regional doctor's offices. Uh, and the, the beauty of that, and I was getting the partners earlier, is we have partnerships with companies like ConnectWise where those are tools that service providers are using on a very daily basis. >>So essentially the platform gives you that range and that's the typical typical platform. So you have that broad horizontally scalable capability and the domain expertise either be what solution from you guys or can ISV or someone within your ecosystem is that they get that. Right? Absolutely. And that's what really differentiates us is our ability to integrate into that plat, into our platform, into their platform and make those connections. So you don't need to learn 12, 14, 15 different technologies. You've got a small suite of offerings in a single pane of glass, very easy to use, very intuitive. Um, the integrations that we have with these partners like ConnectWise, like Ingram micro, really differentiate us because what they do is they provide open API capabilities. They provide software development kits where these partners can go ahead and build it the way they want to sell it. >>You know, it's interesting when the cloud came out and as on premise has changed to a much more agile dev ops kind of mindset that forced it to think like a service provider. I think like an operating system, it's an operating environment basically. So that service provides an interesting angle and I want to get your thoughts on this because I think this is where you guys have such a unique opportunity to just integrate solution because you could get into anything and you got ISV to back that up. So I guess the question I would have is for that enterprise that's out there that's looking to refactor and replatform their entire operation, or it could be a large enterprise, it has a huge IOT opportunity or challenge or a service provider is looking at having a solution. What's the pitch that you would give me if I'm the one of those customers? >>Say, Hey Pat, what's the pitch? So you need a, you need a trusted provider that's been in the business for a number of years that understands the data protection and security markets that Kronos has that brand. We've been doing this for about 16 years. We were founded in Singapore, we're headquartered out of Switzerland and we've got a lot of really smart guys in the back room. Was building good technologies that our partners were able to use. Um, we look at it a lot of different ways. I mentioned our go to market across a lot of different verticals and a lot of different um, kind of routes for those. The way we deliver our solution. It provides the flexibility for an enterprise to a classic reseller to um, you know, a VAR or a service, right? It's delivering services. It can be delivered to those guys how they want to consume it. >>So as an example, we may work with a smaller service provider that doesn't have any colo capabilities. We provide data centers so they could have a very quick turnkey solution, allows them to get up and running with their business, selling backup within minutes to their customers. We can also work with very large enterprises where we can deliver the complete platform to them and then they have complete control over it. We sprinkle in some professional services to make sure that we're giving them the support that they need and then they're running the service for themselves. What we've really seen in terms of a trend is that a lot of these VARs, we have about 4,500 of them in North America and they're starting to look at their businesses differently. Say, I gotta adapt or die here. I gotta figure out what my next business model is. >>How am I going to be the next one that's in the news flash that says, Hey, they've been acquired, or Hey Thoma Bravo made a big investment in me. Right? They need to convert to this services business or Kronos enables that transformation to happen. I mean, I can see you guys really making money for channel partners because they want solutions. They want to touch the customer, they want to maybe add something they could bring into it or have high service gross profits around services. Absolutely. So, yeah, our solution is unique in the sense that allows partners to sell multiple offerings to, you're getting an additional layer of stickiness providing multiple solutions to a customer. You're using the same technology, so your it team is very familiar with what they're using on a daily basis. Um, you're reducing the amount of churn for your customers because you're selling so much additional there that they're really stuck with you. >>That's a good thing. Uh, and beyond that, your increasing ARPU, average revenue per user is a key metric that all of our partners are looking at. And these guys are owner operators, right? They're business owners. They're looking at the bottom line. I mean, it's interesting the operating leverage around the consistent platform just lowers, it gives them software economic model. They can get more profit over time as they make that investment look at at the end of the day, channel partners care about a couple things, money, profit and customer happiness. Absolutely. And it helps to have them want to have a lot of one offs and a lot of, you know, training, you know, anything complicated, anything confusing, anything that requires a lot of resources, they're not going to like a, it's also great to have events like this where you're able to, to press the flesh with these guys and, and being face to face and understand their real world challenges that they're dealing with on a daily basis. >>How has the sport's a solution set that you've been involved in? How has that changed the culture of Acronis? Is that, has that, has that changed as, you know, sports is fun. People love sports, they have real problems. It's a really great use case as well. How's that change the culture? It's been amazing. I, so one from a branding perspective, we are a lot more recognized, right? Um, the most important thing about these partnerships for us is that they're actually using the technology. So, you know, we've got the red Sox here with us today. We've got arsenal represented, we've got Williams, we've got Roush racing, we've got a NASCAR car back here. Um, they use our technology on a daily basis and for each one of them we solve different types of use cases. Whether it's sending them large amount of video data from an essence studio over to Fenway park, or if it's a scout out in the field that needs to send information back and their laptop crashes, how do they recover? >>A lot of these different use cases, you can call them right back to a small business owner. You don't have to be a multibillion dollar sports organization with the same challenge. Well, I'm smiling because we've been called the ESPN of tech to they bring our set. We do let the game day thing. We certainly could love to come join you in all these marquee events that you have. We'd love to have it. Yeah, so if you follow us on social, we're out there and that, that's a big part of it. You mentioned one of ours looking for what our partners looking for. They want a personal relationship too. A lot of that goes away with technology nowadays and being able to really generate that type of a, of a personal relationship. These partnerships enable that to happen and they're very anything, I don't know anything about cars. >>We started partnering with formula one. All of a sudden I know everything about 41 I go to these races. I tell everybody I don't know anything about cars and I ended up being the, the subject matter export for him over over the weekend. So we'd love to have you guys join us. We'd love all of our partners. They get more engaged in the sports aspect of it because for us, it really is something that, um, again, they're using us in real life scenarios. We're not paying to put a sticker on a car that's going 300 miles. It's not traveling as a real partnership. Exactly. Pat, congratulations on your success and good luck on people owning away the numbers. Congratulations. Thank you very much. Just the cube coverage here at the Chronis global cyber summit 2019 I'm John furry. More coverage after this short break.

>> the pendulum of centralization of decentralization has been swinging through the industry for 40 years. Pat Girl singer. Hey, you know, if I need 500 millisecond round trip to the cloud and the robotic arm needs a decision in 200 milliseconds >> CEO of the M where >> you know I'm not going to send every surveillance picture of the cat to the cloud. 40 years of technology leaders I want to just point out you're wearing a BM where tattooed to machine. There we go, Pat Nelson. Gary is >> you beloved?

>> Announcer: Live, from San Francisco, celebrating 10 years of high-tech coverage, it's theCUBE. Covering VMworld 2019. Bought to you by VMware and its ecosystem partners. >> Welcome back to theCUBE's live coverage here at Vmworld 2019, San Francisco, California. We're in Moscone North Lobby. I'm John Furrier, with my co-host Dave Vellante. Dave, 10 years of covering VMworld. This is our 10th year. Pat, you've been on every year since 2010. We have photos. >> That's sort of scary. >> You had a goatee back then. (Pat laughs) We've heard your rap going way back. Welcome back, good to see you. >> Oh man, scary. You guys probably got some dirt on me. Boy, I better be careful. >> John: Pat Gelsinger, the CEO of VMware on theCUBE. Thanks for coming on this evening. >> Oh, always a pleasure to be on with you guys, love it. >> Don't end up as driftwood. Security is a do over. We're going to talk about all that. >> We're going to spend the entire segment just talking about Pat Gelsinger's predictions. We'll recycle some of them, but let's get into the core news here, VMworld. You've done such an amazing job. We've given you a lot of props on theCUBE over the years, but still continuing, even in the market climate that's swinging up and down right now, VMware still producing great results. The team is executing. Their transition since October 2016 when you kind of made that move, cloud is it, clear vision, a lot's been falling into place. Pivotal has dropped on your lap, and you got the engineering stuff coming out on top of vSphere and a bunch of other things. Great stuff, I mean, you must be geeking out. >> Well, thank you. At the US gymnastics finals, Simone Biles did a triple double. First time ever in competition. And I think of our last week as a triple double, right, two major acquisitions, an earnings call, and now VMworld and all the announcements as part of it. It's like wow. >> John: You stick the landing, you stick the landing. >> That's right, we did yesterday morning. We stuck the landing and Ray did that today as well. So super proud of the team in bringing these across the line. And I think certainly meeting with many of the customers and the partners here everybody's sort of going wow. And I was excited about VMware before I got here. Now I'm just euphoric, and it's really-- >> I'm told Ray did an exceptional job. I'm going to talk to him later today on theCUBE. Today in his keynote he was great. He repeated the messages over and over again, but he nailed the tech piece. I got to ask you, as the engine of VMware is continuing to be put together and expand it's like a new turbo engine gets pulled in here. There's a lot of really good engineering going on. What are you most excited about? How would you describe all the action going on? If someone says, "Pat, what's the underlying engine here?" What's being built? What's going to be the outcome of all this? >> Well, I think it sort of boils down to, right, these two phrases that you heard from me yesterday. We're going to engineer for good, the tech for good stuff, we're going to do good engineering. And doing both of those is just okay. And you sort of say, "Hmm, we got vSAN," right? We're not being able to optimize the performance because big blocks, little blocks, latency, buffer size, all this other kind of stuff, so now we're doing Magna, right? And when you see that demonstration there, it's like we're going to do it automatically for you to be a fine-grain optimizing your storage. Wow, that's pretty cool, and it's intelligence, right? It's sort of saying, "Wow, this is really cool." So let's go automatically produce an understanding of the underlying network, understand what's going on, give you the rules that we recommend, and allow you to simulate them, which is super cool, right? Within minutes, we will give the network engineer more understanding of what's really going on in our applications, and then allow them to see it in real time and then apply it. Every one of these, and it's just 10 or 15 tremendous engineers who are doing these little innovations that are fundamentally changing the industries that they're in, in addition to the big stuff. It's just thrilling. >> Dave did a survey before coming into VMworld with customers with a panel. 41% said they're not going to change their spending habits with VMware so creating the-- >> Dave: They said they're going to increase-- >> Increase. >> In the second half, only 7% said they're going to decrease. >> So great customer loyalty, and remember, VMware's moving so fast and transit. Customers aren't moving as fast as you guys are, and you've talked about that before. What are you hearing from customers as they look at it and say, "Wow, is it too much new stuff?" 'Cause they want to continue to operate, but they also want to enable the developer piece. Because remember, DevOps means dev and ops. You guys got the ops piece down. You're adding stuff to it. There's always concerns there making sure it's smooth and you guys work on that. The dev piece becomes super critical. That's where Amazon really shined with public cloud. So hybrid cloud's here. What is the DevOps equation for hybrid? I mean Kubernetes is a good start. Where do you see it going? >> Yeah, and that's really the center. To me, that is the most important news of VMworld this year is the entire Tanzu message, the coming together of Pivotal, the coming together of Pacific, coming together with Mission Control, so really leveraging VMware in the run layer, leveraging Pivotal in the build, and Heptio in the manage, right, and those coming together into Tanzu. I think that's the most important thing that we're doing. And I think for operators, which is really the center of our audience here at VMworld, they've always struggled with those crazy developers. They do this cool new stuff. It's not operational, it's not secure. But in bringing those together, the magic formula for that is Kubernetes. And that's why we're making these big bets. The move with Pivotal, obviously the Heptio guys, I mean Joe Beda and Craig, they're just the rock stars of that community because they really are solving in an industry-consensual standard way. That's really the magic of Kubernetes. This ain't a VMware thing, this is an industry thing. >> Is Kubernetes the technology enabler? I mean, TCP/IP was that in the old networking days. It enabled a lot of shifts in the industry. You were part of that wave. Is Kubernetes that disruptive enabler? >> Yeah, I really see it as one of those key transition points in the industry. And as I sort of joked, if my name was Scott, and we were 20 years ago, I'd be banging the table calling it Java. And Java defined enterprise software development for two decades. By the way, Scott's my neighbor. He's down the hill, so I look down on Mr. McNealy. I always sort of like that. (everybody laughs) >> He looks up to you. >> But it changed how people did enterprise software development for the last two decades. And Kubernetes has that same kind of transformative effect, but maybe even more important, it's not just development but also operations. And I think that's what we're uniquely bringing together with Project Pacific, really being able to bridge those two worlds together. And if we deliver on this, I think the next decade or two will be the center of innovation for us, how we bridge those two roles together and really give developers what they need and make it operator friendly out of the box, cross the history to the future. This is pretty powerful. >> So that does lead to the big question. You just mentioned developers. And when you look out the VMworld audience, it's not comprised of huge developers. I know you're thinking about this, so what's your plan to attract those developers? You're giving them platform now, and the technologies. but those builders, what are you going to do for them? Is it build community, more events, more training? What's the plan there? >> Yeah, and I'd say I think about it in a couple of different context. One is if we were here six years ago, and you would have asked me about open source, right? I mean, VMware's reputation in the open source community wasn't good, right? We hired Dirk, we started to build momentum, make contributions. One of the litmus tests for Joe and Craig on Heptio, 'cause remember, a lot of people could have bought Heptio. Because some was who's going to be the buyer, but also will they be a willing seller. And their litmus test was are you really serious about open source, right? Are you really committed to the open source, Kubernetes tree and development and cloud-native computing foundation? Are you really there? 'Cause they were also looking do I want to be bought by you? Do I want to be part of the VMware family? And we passed the test. That's why Heptio's part of the team. Clearly, this has been central to Pivotal and their views. So we have to be open-source credible. We also have to be developer credible, and those two are tightly linked. And that's why we noted on stage Pivotal, particularly the Java community, is three-plus million developers. Bitnami is two million-ish developers. We now have high volume connections to the developer community, and you're going to see us show up in dramatically more profound ways at places like Kubicon and SpringOne is coming up, just start to be in the developer spaces. And ultimately, you got to do stuff that they care about. At the end of the day, winning developers has nothing to do with great marketing, even though that's important. You have to do great code, right, and bring them value to their development assignments. And we think with the assets that we're lining up, that's why we did Pivotal, Bitnami, Heptio, some of our organic things, Dirk's leadership here. I believe that a year or two from now VMware could be seen as the most developer and open source enterprise company in the industry. And that's the goal that I'm on. >> Well, I have an idea for you. Allocate 1,000 engineers to open source and start having them build new applications, new workloads, give it away to the open source community, and then sell your products and services to them. That would get you in fast. >> Well, by the way, we now have hundreds of engineers who are committed to open source, who their full-time job is open source contributions. So I'm not to 1,000 yet, but I'm now several hundred that their day job, night job, weekend job is open source contribution. So we're becoming very credible, and as you heard me say in the keynote, we are now top three contributor to Kubernetes. This is big, and some areas like the networking area we're clearly the leader in a number of the key networking open source technologies, and you'll see us do more of those kind of projects. >> One of the things you mentioned, I mean you mentioned about open source six years ago, you might have rolled your eyes, or you might not have had an opinion on it 'cause the timing of where VMware was. But one thing you've been banging the drum on since 2012 is hybrid cloud. And so you see certain things early. You see those waves. That's what you're known for, in my opinion. You're really good about it. You see blockchain as a great wave, but as a headline I'm reading on Fortune it says, "VMware CEO Pat Gelsinger, "Bitcoin is bad for humanity." >> Sold all my bitcoin (laughs). >> Okay, so now are you implying then, and blockchain is a lot of open source components there. It's evolving, you've a lot of blockchain projects. So is that an indictment on the unregulated currency market or is it the underlying infrastructure? And are you excited about blockchain as an underlying? Is it one of those hybrid cloud moments for you, or is it more of we'll see how it develops? What's your thoughts? And explain the bitcoin comment too. >> Yeah, the idea of distributed ledger technology, immutable distributed trust, I've said I think of that and blockchain as the underlying technology as almost like public private key encryption, right? If we go back 40 years before RSA or Vashumi and Ari, it's that important. This is breakthrough, innovative technology in how you do distributed secure trust. That's powerful, so we are huge believers, strongly committed to blockchain and distributed leverager technology. Now, why do I make my comments like I do on bitcoin? So bitcoin, as it's implemented, and implementation of blockchain and distributed ledger, I assert is bad. It's bad for two reasons. One is it's an environmental crisis, right? A single ledger, if you and I transacted a penny, right, I would consume enough energy to power your house for half a day. I mean, it's incredible, and I mean, that's why you have these crazy bitfarms being built and people finding GPUs. >> So you think from a sustainability standpoint. >> Absolutely. >> That's where you came from. >> Climate sustainability, right, this is a terrible implementation of blockchain. Secondly, the way it's also done as well in this totally unregulated environment, almost all of its uses are for illicit and criminal purposes. That's who's trading in bitcoin as well. So its purpose is almost all illicit, right, and it's environmental crisis. I say bad. Now, I'm not saying that blockchain is bad. I think this is revolutionizing. >> I want to make sure we clarify that because obviously unregulated outside the United States has been a big problem. We see it in the SEC crackdown, and results are-- >> Studies have shown over 95% of the use of bitcoin is criminal, so say bad. Let's go make it good, and that's what I mean these two phrases, do good engineering, and engineer for good. How do we make blockchain, and this is part of the reason, we had just announced on Sunday a partnership with Australian Stock Exchange and Data Asset, that they're leveraging the VMware distributed ledger technology, right, as part of their go-forward strategy for the stock exchange of Australia. Well, that's good, right? We're making it suitable for enterprises, meeting the regulatory requirements and-- >> John: Are you happy with the progress of where the blockchain is for you guys? >> Absolutely, and we're order-plus magnitude better in terms of performance and energy consumption. So yeah, and we're just getting started. >> And it's consensus-based, which is great. A quick question for you on multicloud. So hybrid cloud you said in 2012, I challenged you on it, and you've been banging the drum since 2012. It's a couple years into it, and hybrid cloud is pretty much standard. People see it, recognize it as the cloud 2.0. Multicloud is all the buzz and all the rage. I hear it everywhere. What does it actually mean is a different debate, so I want to get your thoughts on defining what multicloud is and is it going to have that same gestation period of the same kind of years? 'Cause if it's seven years to get or six years to get hybrid cloud mainstream, is multicloud going to have a similar trajectory? >> Yeah, so let's try to be very crisp with the definition. Multicloud is simply that. Customers using multiple clouds for different business purposes. And what we said is is that we're going to help them manage. That's the center point of cloud health, right? Help customers manage, cost optimize, secure in a multicloud environment where the underlying infrastructure is dissimilar, not compatible, right? And in that sense, you sort of say you can have consistent operations if we do our job well with cloud health, but you're not going to have consistent infrastructure, meaning I can't VMotion between these things, I can't have higher these things. So that's the multicloud. Now a proper subset of multicloud is hybrid cloud. And hybrid cloud is where you have both consistent operations and consistent infrastructure. And that's when we can do things like you saw on the demo today, right? We're running a VMware stack on Azure. We're moving Azure running workloads in real time, right, without stunning them, pausing them, to an Amazon VMC instead of moving workloads from Amazon VMC onto an Azure instance. That's the hybrid cloud, and that's the power at work, from private data centers to multiple different targets in the public cloud where you can be optimizing the location of work nodes based on the proper business requirements. And that might be governance. That might be performance. It might be latency. It might be the time of the day of the week when you have capacity available, right? And that's really what we're saying. Consistent operations and consistent infrastructure, proper subset of multicloud. >> I have a question on something you said yesterday. You said, "Strength lies in differences not similarities." True, I buy that. There's a number of difference between you and your preferred public cloud partner. AWS doesn't use the term multicloud. They say you shouldn't say security's not broken. And there are a number. You want to be the best infrastructure and developer software company. They want to be that platform. They want to be the security cloud, on and on and on. So I see this impending collision course, maybe not tomorrow, but what are your thoughts on the differences and the good or bad that does for the industry? >> Yeah, well, we appreciate Amazon, the investments that we're making. We've both bet big with each other, and they've been a great partner. And in fact, I'm going to talk to Andy before the end of the week, update some of the announcements and some of the things. Great partner, we have regular cadence of our activities with each other. And as we said, they're our preferred public cloud partner. And with it, it's preferred in two senses. It's a go to market and how we position that, but it's also an R&D statement, right? This is where we're doing a lot of core engineering, and that will flow into private cloud embodiments, flow into our other public cloud and our cloud-verified partners. But that's the point of the arrow in terms of the innovations, the go to market, and the R&D aspects of the partnership. And I expect we're going to be here five years from now and we're going to have this conversation, and I'm going to answer it exactly the same way. >> That'll be our CUBE's 15th anniversary, and so we'll be excited for that. It's our 10 year, so I want to last question put you on the spot, looking back over 10 years, pick the moments that you think were key inflection points. What were key notable good things that happened, bad things that happened, or things that didn't happen, right? And then going forward 10 years, you laid out a few of them with Kubernetes. Just past 10 years, could be CUBE memories, but in VMware's world, you were at EMC first, then became CEO, a lot's changed. Paul Maritz laid out the original vision. And where we are today, what's your key moments? >> Yeah, well, I think if you go all the way back, obviously, hey when the first WSX, right, people could run Linux and Windows on their client. Wow, right? The first VMotion, right, oh my gosh, and that sort of ushered in ESX. Obviously the transition from Diane to Paul, the public offering, boy, that was a pretty tumultuous time. And from Paul to Pat was very much we lay it out pretty much this any cloud vision, and that model, it was formative and we're sort of bringing it together. It was get rid of some assets, bring together, so sort of that transition was challenging for the company. But then we've started to sort of systematically say build from the core. What do we have? What do we need as we started to build these layers in the concentric circles? The Nicira acquisition, boom, that was the shot that changed the world of networking. And obviously, that doesn't change quickly, but we have a multibillion dollar networking business, Avi Networks, VeloCloud, we're building that set of assets. >> Software-defined data centers. The Core engine, that was a key point. >> Dave: That was a total game changer. >> You cannot build a software-defined data center if you don't address the networking. It's just that simple, and that's why I was so passionate about that. Obviously, the HCI move with vSAN. Joe Tucci was so pissed off at me, right? (everybody laugh) What are you doing? It's operative. It's part of the ingredients of the data center, Joe. I got to do it, wait. >> John: Just being a software company. >> Yeah, yeah, right, so that was a pretty tense moment. The period of the Dell EMC merger, a tough period, right, as well, and just where the company's going to go. And within a week, right, I'm going to be fired. I'm going to be spun out, right? I'm going to be the new CEO of Dell, right? I mean, it was going to be HP. >> John: All the rumor. >> Stock is 40, obviously the Amazon moment, when we did that partnership. vCloud Air, hey, we had the right idea. We didn't implement it properly, and then we did it right with the Amazon partnership, and that just changed the cloud industry. And I think we're going to look at today, this week, and the moves with Heptio, Kubernetes, Pivotal, those pieces coming together, and to this audience Project Pacific, right, it's just like okay, wow, everyone of them will become Kubernetes enabled. 20,000 selfies with Joe Beda, right, have now been ushered because it is that game changing, we believe. This is the biggest free architecture of the Core platform in a decade, so. >> My favorite quote from you was if you're not out on that next wave, you're driftwood. You said that on the QA, I forget which year it was. >> And mine's security's the do over. (Pat laughs) >> You're doing it over, you're doing it, Mr. Gelsinger. >> Next 10 years, what's the big wave everyone should be on? What's the wave that you identify? You've seen many waves, you've created waves, you've been part of waves. What's the wave for the next 10 years that people should pay attention to, that they need to be on? >> Well, if they're not on the networking wave, get on it, right? They got to be on this multicloud hybrid wave. Could it be louder? The Kubernetes one is the one, right? That's the one I'm going to put at the front of the list. And this move in security, I am just passionate about this, and as I've said to my team, if this is the last thing I do in my career is I want to change security. We just not are satisfying our customers. They shouldn't put more stuff on our platforms if they can't-- >> John: National defense issues, huge problems. >> It was just terrible. And I said if it kills me, right, I'm going to get this done. And they says, "It might kill you, Pat." >> Mount Kilimanjaro right there. Pat, thank you for all your commentary, and great look back 10 years. You've been one of our favorite guests coming on theCUBE, bringing A game, you're bringing the tech chops, the historian aspect, also you're running one of the most valuable open source companies in the cloud. (Pat and John laugh) >> Love you guys, thanks so much. >> Thanks, Pat. Pat Gelsinger here inside theCUBE. Our 10th year, VM's looking good off the tee right now, middle of the fairway, as they say, for the next 10 years. I'm John Furrier, Dave Vallante, thanks for watching. (upbeat music)

>> live from San Francisco, celebrating 10 years of high tech coverage. It's the Cube covering Veum World 2019. Brought to you by IBM Wear and its ecosystem partners. >> Welcome to our live coverage here in Mosconi North Lobby, Of'em World 2019. I'm John for a Student and a Volante celebrating our 10th VM World or 10 years of covering the M world. Dave's stew. What a run been Go back across Mosconi South 10 years ago with the green set. This is 10 years later. 10:10 p.m. World BMC Rule No longer the show, so that kind of folds in the Dell Technologies Man, The world's changed. Pat Nelson had just delivered his keynote as CEO Sanjay Poon and a CEO came on talk to customers stew. A lot of acquisitions, a lot of cloud native, a lot of cloud. 2.0, this is turning into VM. Wear 2.0, where vm zehr kind of only one part of the equation. So let's jump into the analysis, Dave. I mean, you put out some killer research on silken angle dot com, and we keep on dot com around customer spend still, we put out a lot of analysis on all the key trends that Vienna was playing into. Cloud two point. Oh, is what we're calling it. It's enterprise Cloud of fresh scale Day. What? What? What? What do you want? Your analysis, Latino >> John, when you go back. 10 VM Worlds ago, it was all about virtualization, completely changing the deployment dynamics. When when I first saw a VM deployed, I went, Oh, my God, This is gonna change everything. And it did. But while compared to now what's happening with cloud and a I we heard so much about five g. It was also the big, big difference in the ecosystem. Back when e. M. C owned VM wearing 2010 there was that sort of Chinese wall stew. You were working there, you know, just before that. And there wasn't a lot of, you know, swapping of I P, if you will. They were sort of treating them as unequal player to net app and everybody else out there. Tod Nielsen used to say, for every dollar spent on of'em were licensed, 15 spent an ecosystem. You don't hear that kind of narrative anymore, you hear we're crushing the HC. I vendor where number one basically a sort of backhand to Nutanix We heard on the on the keynote Very tight integration VX rail project Dimension So much, much tighter integration since Pat Tell Singer joined VM. Where from the emcee lots has changed >> will be a lot of research on reporting leading up to the show around Cloud two point. Oh, I'll see Dev. Ops is willing to home of the dimension on enterprise scale, the number of acquisitions of'em wears made and then, boom. They dropped two monsters on the table or the 11th hour pivotal for 2.7 billion carbon black for 2.1 billion. Lot of stories in those AK was other acquisitions, your analysis and how that played out today on the >> Kino. As Dave said when we started coming to this event back in 2010 you know, the virtual machine was the center of the universe. What were these servers that it lived on, how to storage and network and get fixed to be ableto live in that environment And the keynote. It was a lot of cloud, you know, John, we brought in a lot of the Cloud camp people that first year and some people were like, Why are we talking about Cloud? This is VM World, and we're like, Well, this is the future. And today we're not talking about V EMS at the center we're talking about containers were talking about cloud native applications, that multi cloud world absolutely something that pack l singer did. Front center actually felt it almost glossed over a little bit of the H C, I and NSX and all these wonderful things. Sure, there was some big del pieces in there. The M word cloud on Delhi emcee the Del Di are, you know, data protection, power protect, you know, into the VM where peace something that you definitely would not have seen under the old emcee Federation model. So Michael Dell, absolutely having his strong footprint here. Dave's done a lot of analysis talking about things like Pivotal getting pulled in and like so many different acquisitions, Pivotal came out of'em wear and, you know, carbon black Boston based companies so many different pieces here to get them talking about applications and where Veum, where the company sits in this multi cloud world where they're trying to be, you know, maintain their relationship with us. >> Let's get into the analysis on the whole ecosystems. I really want to dig into the work. Dave, you didn't and the team did. But let's go through the keynote first. So my personal opinion was it felt like, um, I'll give him a C plus Pat because it just didn't have a lot of meat. In my opinion, it felt like it was too much tech for good, although super important to have that mission driven stuff I think is really valuable as the market tends to look >> at tech >> as bad actors. I thought that was addressing. That was a positive thing, but it felt too much. I didn't see a lot of specifics. It felt do is and David, if they were hiding something, they were putting a lot of it didn't seem like there's a lot of substance coming out specifically around how Kubernetes was going to be impacted. Specifically, how Cooper is going to sit within the VM where ecosystem products specifically I just didn't feel like the product side was there. >> Well, you know what? I'll say it, John and General, I agree with you because Day one usually is here is the company vision. And if the vision is kubernetes, well, we've been hearing kubernetes for a bunch of years. Kubernetes is not the answer. Kubernetes is an enable ionizing technology job. Ada, who we up on stage? You know, we had him on the Cuban. He's like, look committed. This is not a magic layer. It's this thin layer that's gonna help us go between clouds. Getting into some of their future projects is something I usually would expect on Day two, the vision of V. M. Whereas a company, it feels like we're in that transition from who do you want a big tech for? Good? That that's great stuff. You know, Pat has a long history of talking about, you know, that moral compass that he has and wants the company to live. That which is a good change from many of the Silicon Valley companies. But, you know, I didn't get a strong feel for their vision and it was not >> a conservative. They didn't want to actually put a position down there because I think everyone in the hallway that I talked to wants to know how Cooper is gonna impact the sphere for instance, is gonna change the makeup of the sphere. And what's the impact on the product side the head that stat about bare metal being 8%. I was like, a little bit biased. Maybe there, So are they. They tiptoeing. Dave, you think? I mean, the spend numbers show that if you could just hold the line for 24 months and the new trends won't take away from that license, I mean, is it a tactical thing? Or do you think that here's the >> thing? I want to go back? I do want to give'em where? Props on one thing and you've used this term to If you go back to 8 4009 Paul Maritz talked about. We're building the software mainframe and passed them pretty consistent about that they used, they said, Any workload, any app? What's different today than back then is, he said, any workload, any up any cloud. Really. Cloud wasn't as much of a factor back then, but that vision has been fairly consistent it to you. Answer your question, Veum. We're spending remains strong, you know they're spending data that we shared with the GT R on silicon angle yesterday and today is that 41% of the VM were installed. Base is going to spend Maurine the second half of 2019 and only 7% are going to spend less. Okay, that's a real positive. But at the same time, the data clearly shows that cloud is negatively impacting VM wear spend and so that's a real threat. So multi club Pat said today technologists who Master Master Multi Cloud will own the next decade. He's talking to his audience. I'm not sure I agree with that. How much you're mastering Multi Cloud is what's gonna be the determining factor to own the next decade. >> Well, I'm stumped. Stick with my position. That multi cloud is not a reality. I think it's really more overhyped, and our actually just started to be hyped and probably will be then over hypes. And then seven years from now we'll start seeing multiple clouds truly interoperable. But I think multi cloud is we find on the Cuba simply enterprises have multiple vendors and multiple environments that happen to be those vendors have cloud, so I don't think it actually is an operating model yet. But again, just like on the Cube 2012 stew. We talked about hybrid Cloud. I called. I asked, yes. When was it a halfway house of the weigh station? He had a connection. >> So gassy. So, John, here's what I say. Number one is customers today absolutely have multiple clouds. But for multi cloud, to be a reality multi cloud must be greater than the sum of just the piece is that it's made up today and absolutely were not there. Today. VM wear has a strong reason why it should be at the center of that discussion. But they're gonna be right at loggerheads with Red Hat and Microsoft and Google and Cisco in that kind of debate at the multi cloud >> and we had, we had a story on our special report on silicon angle dot com. Check it out. It's called Coping With Multi Cloud. Were coping was by design. Coping as a mechanism used to deal with uncertainty. Coping strategies is what CEOs are going to deal with. But read that post. But in it I kind of see. I mean, I kind of agree and disagree. We have two perspectives, Dave developing. You want to get your thoughts butts do on this C I ose that come from a traditional I t background tend to like multi vendor things because they know they don't want lock. And they're afraid if you then swing to the progressive side si SOS, for instance, who are have a gun to their head in terms of security, they're all saying no, we're betting on one cloud and we'll have backup clouds, but our development staff is gonna build stacks. Have AP eyes, and we'll share those AP ice to our suppliers. Cloud vendors are saying Support our specs. So to spectrums the old school I t. Guys saying Multi vendor equals multi cloud. And then then, on the other end, See says to say, I'm gonna build technology and build a stack, exposed FBI's and let the clouds support my my tooling that not the other way around your thoughts. I >> pulled a quote in my piece That's on Silicon angle as well. From David. If lawyer and he was defining a hybrid multi cloud, he said, any application of application service can run on any note of the hybrid cloud without rewriting re compiling a re testing. My argument would be you're never gonna have that North Star without a high degree of homogeneity. And there's three examples of high degrees of homogeneity in hybrid Cloud. Today it's azure stack. It's clouded customer, and it's outposts. You're so this idea that we're gonna have this diverse set of clouds and yet they're all gonna run is one to me. I ask, Is it technically feasible? And is it Is it practical? >> Well, Steve, Steve Harry was on his Hey had announced the signal. FX has come. Portfolio can be sold on a big deal to split when he was on The Cube with me last week and he said one of them looking back on the 10 years that 1 may be M where great was virtual ization allowed for massive efficiencies and improvements without rewriting the apse. The question today's point is, is that a reality? Can what's next? So that that next gain that's not gonna require people to rewrite their APs >> well and that actually not rewriting the axes where VM or has its strength. Because, you know, I I made a joke during the keynote. It was like you have a V M insert magic. Congratulations. You now have a cloud workload because I just did. VM were cloud and it's the same app. But on the other hand, that's actually been my biggest dig on V M. Where is the long pole? In the tent and modernization is modernizing wraps. And that is that Tom Zoo that Veum were announced. They're taking bit Nami and pivotal because we do need to modernize the application. If you have an application, you've been running long enough that your users are complaining about it. We need to modernize that. VM wear has not been much of enabler of that pivotal. Yes, absolutely. That's what the cloud Foundry Labs, the pivotal Labs has been doing for years. It is a tough thing to do. That's what the developers we hear it Amazon. They're building new abs. I don't hear modern building new app at VM where, but they are moving in that >> direct question for you guys and John you in particular, but also used to as well followed AWS probably more closely than any two people I know, Pat said. Strength, lies and differences, not similarities. I've noted many differences in philosophy between A. W S and V M. where they're both winning in the market place. We know a divorce is growing much faster, but a divorce doesn't believe in multi cloud. A Devil's doesn't believe security is broken. That's that's VM wears narrative VM where says it wants to be the best infrastructure and develop our software company. That's kind of like eight of us is the platform for that. They both want to be the security cloud, and and VM were said today they have 10,000 cloud data centers, and I'm guessing that Andy Jassy wouldn't think that many of those data centers are cloud data centers. Your thoughts on the differences between between A. W S s philosophy and VM wears narrative. And can they both? Is there enough market for them both to win? >> Well, it's strikingly different. I mean, AWS is just in a breed of its own. VM wears hedging and playing there their bets. They're kind of putting, you know, bets on each horse, right? Interesting enough in the cloud thing. There was no mention of Google Cloud. I didn't see that mentioned there. Andi was speculation. Wouldn't Oracle be great partnering with Google? That's not a rumor. I'm just kind of put it out there. That would be a good combination partnership, given the Oracle's cloud is failing miserably, I think v M. Where because of the operating leverage in the enterprise, has that operational layer down to me, Amazon is the model, the future, because they are clearly born with a dev ops mindset. They have an environment where developers can build applications and they could operate. It scale with all the efficiencies of operations. So I think cloud to foreigners were calling. It is all about having developers and operational excellence without a lot of disruption or re platforming. So I think that's where the differences are. You have company that have toe have to work with this world of legacy applications, and that requires first lift and shift, which doesn't become attractive. Then you add containers on the game changes. So I think container ization really was, I think, the seminal moment in the shift where where you got kubernetes and containers. So let the enterprise cloud. Native guys get in and have an operational framework that takes advantage of the horsepower of public cloud, which is computing storage, which is why we think networking and security will be the absolute focus areas for Cloud two point. Oh, and Amazon is just dominating the depth and the ops. And I don't think anyone is coming close. >> I'd love to hear your thoughts, too, but I just got caught. I don't think Oracles Cloud is failing miserably. I think it's I wouldn't say it that way. I think their infrastructures of service is irrelevant and the cloud is all about SAS. But just, you know, that's what I think. Waken debate that somebody >> has been great for the Oracle customers. But in terms of all metrics in terms of public and enterprise, cloud with multiple environments nonstarter. >> So there's a bit of a schism out there if you talk to customers. There are many customers when they deploy in Public Cloud, although uses, you know, compute storage and, like the identity management and that's it. And they'll stop and I talkto you con many customers that are using kubernetes so that if they want to hit the eject button, but they're all on Amazon today, so it's not like they're all fleeing Amazon or doing it. But we talked to lots of developers that are deep in aws they're using those service is they're using Lambda and they're building it. So how deep will they go? And that's where I look at this VM we're offering. And it's if I'm gonna take the sphere and extend that with kubernetes. I saw Cuba. Well, um, actually in the Twitter stream said it is, you know, cloud lock in to Dato is what we get if we do that. Because the whole reason VM were originally created called Foundry. So they didn't have to take that entire V's fear colonel and put it everywhere. So it's a nice bridge. That van, where has the partnership they have with AWS is a great strategy. But I still think it is a bridge to an ultimate solution where they'll still use the M where the embers not going anyway. But that shift of where my application live in what service is I do is going to change a lot over the next 3 to 5. >> Let's not lose sight, Dave, of where we are in the industry. I mean, we're at VM World 2019. We go to reinvents coming up. We kind of live in a tech bubble in the sense that all this stuff is all kind of great skating to where the puck is gonna be. But the reality is in most I tea shops, and again, I use ceases as a proxy in my mind, because they're in the cutting edge of all the real critical nature of security, of the impact that harm that could happen to a company. So I look at sea. So she's more of a canary in the coal mine for trends than the nutritional CEO. At this point, most enterprises are just trying to rationalize kubernetes, generally speaking like never mind, like making a centerpiece of their entire architecture. They're looking at their existing environment saying, Hey, I got V EMS that did great for me. Serve a consolidation enabled more efficiency, not rewriting code. Now what? I gotta do kubernetes and do all this other stuff. How do I suspect my VM with kubernetes? Is it on bare metal? So I think we're way ahead right now. In the narrative, I think the reality is that people catch up. That's where the proof is gonna come into. That's why the customer survey numbers are interesting. >> Keep keep. Townsend is set on the Cube VM, where moves at the speed of the CEO, so they're not moving too far ahead of them, but they are key heating up with them. >> Let me share some data to share some data so you could go to Silicon Angle. Look at the V M World 2019 90 spending survey containers, Cloud NSX and pivotal its data from Enterprise Technology Research that we analyzed. There's no evidence right now that Container's air hurting VM wear. But then that was the narrative that containers are gonna kill the M where but long term. There's real threats there. So that's what the pivotal acquisition, at least in part was about. I want to address the pivotal acquisition cause we haven't dug into it a little bit a cz, Much as I'd like to see. There's really three things there. One pivotal was struggling. You look at the stock price, you look at their buying patterns, you know the stock was down that not even close to their original AIPO price, so they wanted to get out of the public eye right now would not be on that 30 day shot clock. The second is it's a hedge on containers. And the third is it's a financial scheme. I mean, I'll call it that VM wears paying $800 million in cash for an asset that's worth $4 billion. How can that be? Well, they already owned 15% of pivotal there. Give. They're exchanging stock. So their trade trading paper to Adele in exchange for Dell's 70% ownership in Pivotal. So they pick up this asset, and it's basically a forced migration by Michael Del, who controls 96% of the voting shares. So there's all kinds of inside nuance going on there that nobody's really talked about it a >> great deal for Of'em. Where and Michael Dell? It's >> a very good deal for VM wear and Michael Dell. >> Let's unpack that are rapidly. >> Just did the one piece on that, right, because kubernetes it was the elephant, the room that was damaging what Pivotal was doing. VM were made a couple of acquisitions VM where needs to react at, so it made sense to pull out back in. Even if it does go against some of the original mission, that Cloud Foundry and Pivotal had to be able to be that cloud native without that full strong time, >> it's all about building apse, right? It's all about enabling developers. >> Let's on that note. Let's go around the horn and talk about what we expect from the emerald this year. And then we'll kick off three days of wall to wall coverage. I'll start, I expect. And I'm not looking for is how VM wear and its ecosystem and who's really deep in the ecosystem, who's kind of independent and neutral, what they're doing with their containers and kubernetes play. Because I think the container revolution that was started with Dr Absolutely is very relevant to the C i o and the Sea. So so and then how they're using data in that in their applications. So you know how VM Way wants to position themselves on the control plane, how that fits in the NSX. I think containers in the container ization is going to change. I think bare metal is gonna be a super important topic in the next couple of years. Dio I'm kind of swinging back to the my feeling that you know, hyper convergence what it did for server storage networking back when you were calling those those moves. I think that kind of hyper convergence mentality is coming up the stack, and I think Containers and the Kubernetes Chess Board will will play out. >> I think if you my feelings, if you don't own a public cloud, you better convince your customers in your ecosystem that the future is in our definition of cloud, which is multi cloud. And that's what this VM world to me is all about. >> Yeah, you know, Veum wears taking their software state and trying to live in all of those cloud world. So you know, V. Amar has 600,000 customers and they want to be the ones to educate them on the kubernetes containers. You know you're at modernization, but there's a lot of other places customers can learn about this. No one understand where VM wear really adds value beyond all of those pieces, because all the cloud platforms have their kubernetes. >> A lot of other places, like the public cloud. That's where all the action >> exactly comes back down the cloud 2.0 Dev and ops developers and operations all come together with software. Thank you. Breaking it down here for three days. Wall to wall coverage here in Moscow north to set celebrating our 10th year covering VM World. Thanks for watching stay with us from or action after this short break.

>> from San Francisco. It's the Cube covering the M Wear Radio twenty nineteen. Brought to you by the M >> where >> Hi. Welcome to the Cube. Lisa Martin with John Farrier at the fifteenth annual Veum, Where radio, which is there are anti innovation summit. Pleased to welcome back one of the Cube alumni extraordinaire CEO Being where hot girl singer. Hey, Pat. Good morning. >> Good morning. Great to be with you guys today. Thanks >> so much Right to be here. So this this is the fifteenth radio your internal innovation summit that really has been very influential. NPM wears development over the last fifteen or so years About eighteen hundred engineers here. So each year growing Mohr and Mohr interest, excitement cross collaboration with India More talk to us about how this is really worthy of the CEOs. Time to come here. And with this geek fest, >> well, it is, in many ways, just one of these pieces of the VM wear R and D culture is a research and development innovation off site. And it's something, you know, long preceded me. But when I got here, it's like I'm going to keep doing it. Of course we are. You know this is sort of like the party for the top engineers, right? You know, they get to come geek out, share their best ideas, interact with each other. So it's become one of those unique pieces of our of our development culture and ultimately is, I say, bm where well to do two things right, developed great, breakthrough, innovative, disrupt the products and make our customers successful with those products. So everything that we do sort of centers around those two things. And obviously, if the products are great, we don't have that. We know what to do So to us, keeping that culture of innovation and giving our engineers time to really just geek out, see what each others are doing, challenge each other. It's really pretty special. And yeah, it deserves the CEO's time. >> And you've got You just had your sales president's club without top performers. On the sales side, this is the technical version. It hasn't been that organic piece of the VM were culture, engineering, leadership. But you also have acquisitions, just acquired it. Nami. Yes, you've had a few other you cloud health big time moves relationship with a ws azure. The cloud foundation stuff. How is lending it together? Because you have all this organic innovation. I see cloud management, networking, security outside suffer to find data center is playing out. As you you guys had predicted. How does the acquisitions fit into the culture and the radio? >> Well, you know, part of it is when we talked to many of the engineers about the acquisitions, we say, Hey, we do radio. They're like, huh? All right, this is well, it's this opportunity for us to see what everybody is doing interactive that level and good engineers are almost always part of the decision with respect acquisitions. So they just take to it like, you know, fish and water, right? They just jump in, right, start interacting with their peers. And it is such a, you know, open, diverse pool that all of sudden ideas air being a bounced off each other, homogenize challenged and, you know, people seeing how they can connect with people. So tow us. Many of the acquisitions just find us to be so beneficial to how they come into the company. And they quite appreciate it, you know, just getting back from sales club hate sales leaders >> and he was pretty good. I like this, you >> know, for many of those acquisitions. But the engineers, this is even better for you >> guys aren't just buying stuff up. You guys are very specific in your acquisitions. Cloud Health again is a great example. Scene. No air watch going with further back. Why? Bit, Nami, What was so big and important about it, Nami to acquire them? >> Well, you know, we saw a couple of things. One is that, you know, it's a company. They definitely had this ability, this respect. We're poor with the open source community, you know, and being able to cross between open source and enterprise credibility. That's exactly where I am, where seas and wants to be able to position ourselves so they fit exactly into that space. This idea of being able to bring enterprise packages is the cool open source applications space. And we already had a multiple set of marketplace efforts internally where we saw that we needed that ecosystem play for activities so they just snap so perfectly into the middle of that and very much hybrid will take cloud, uh, aspects to it. And as we do for every one of our acquisitions and I personally meet with every CEO before we do the deal Are they going to fit our culture? And you know, there aren't that many of our acquisitions where I have people saying no, no I'll i'll be the executive sponsor for this one. No, no, no, I will, I will. I will be No, no, no, please. I'll do this one. And you know, of course, the fact that it's in Seville, Spain, right? You know, I think I think if you it was just driven by vacation plans. But it's >> all well, of course, Erica Cube alumni. And we have a whole cube alumni thing going on here. There's no emanate work we're doing here just good people of nice. And so >> you're planing the Cube visit to civilly explain. It's >> like love, Teo. Of course, we have international presents. One of the things I always quote from you is Besides, that hybrid cloud reference years ago was a quote. You said I think twenty, twelve or twenty thirteen feet which year it wass seems like yesterday. You said if you're not out on that next wave your driftwood, so I gotta ask you here at radio you got You got all this organic stuff. It's kind of the wave's coming. Is this what wave is? Are you seeing the end? We're riding right now, because business is great. Um, you're pumping on all cylinders. You've kind of gone through your ten years that through the early days of and you got CEO and you know it. Everything's normal life now and you're on a good run. What waiver? You're going to be surfing on the business side of all this stuff behind you. What's what? When is this all fit in? >> Well, you know, one of the things that I think is so critical for us now and particularly with the, you know, the, um, war cloud on eight of us. Go now with the relationships with Azure and IBM. Alibaba are four thousand BC PP partners. So that's, you know, really starting to take off our BM or Cloud Foundation on premise. We have a big customer saying Okay, I get it right. Don't look down the stack. Look up. Rely on you guys to be the infrastructure. Bring that together for the hybrid infrastructure is a service. And to me You know, part of what I'm looking for for this from the conference is putting all those pieces together because our customers don't want to be doing it. They want us to do it, but we have to make it so consumable, so compelling that just sort of like the sphere. Was it our beginning? They just sort of say, the M where your hybrid cloud, That's what I want, right? And be ableto operationalize at a scale. And if we get that really working well for customers, the management, the automation, the security operations of that boy. Now we do have the opportunity to ride the Cuban eighties wife right into me. It really is. We have to straddle those two over the next several years, >> so make you know, super nice party stand, >> that embracing that next major trend, >> which is up on top of the stack program ability. >> Yeah. You know, when the aside describe Coburn at ease and containers, it's like Java was twenty years ago. You know, what was the last major software abstraction that the industry agreed upon? Jonah, It's almost exactly twenty years ago, and it defined middleware abstraction for the last twenty years. Containers Cooper, Netease the next middleware abstraction. And we see Cooper. Nate is becoming the next native a P I that thie VM where infrastructure, STD see will support and will deliver. And we're going to make containers and cue bernetti so seamless with regard to the core bm infrastructure that a customer never needs to decide. >> What impact will this have? I mean, I see you've been involved many ways talked about the Pentium in the Intel side of your career, I'll see and and what that enabled in terms of inflection, point and growth and creation of value. Where do you see this Cooper Netease Abstraction. If this is going to be one of those inflection points as you as you point out, how do you envision the impact to the industry? What's gonna happen? >> We see that Cuban eighties layer impacting down as well as impacting up, and that's why we see it. It's so critical to get it right. You know, it becomes the consumption a p I infrastructure, and we've talked about, you know, infrastructure is code or, you know, a P. I ittle dismiss a displace open stack. As an AP, I becomes the middle, where a pea eye of choice, but also that defines the middle where abstraction of choice. So all of your Web spheres, Web logics, Java communities, they're going to get displaced as well as they are re factored into this automated containerized, the scale out world. That's exactly where we're sitting. And that's another piece of the bit Nami acquisition that we just announce because you know, being ableto package containerized, open source applications packages exactly fits into that strategy as well. And if we do those two things, I think VM where is going to be extraordinarily well positioned for decades to come way past me? >> So let's talk about customers. Here we are at radio twenty, nineteen, fifteen years I mentioned you guys, This is a really competitive event. Engineers want to be here. You probably had well over a thousand projects. Submissions. How do customers one benefit from the innovations that are discussed here at radio, but also how to customers influence some of the projects of the exciting things that engineers want to put together? >> Well, one of the things that we really enjoy about the whole BM where R D community is you know engineers are leaving with customers all the time. We push him out into those places, you know, we selectively bring customers in and have them in Iraq. Tear a radio. We have other mechanisms, like flings, right? Yeah. These open source lightweight things that customers could be giving us code. We could be giving them code. We you regularly, you know, bring them into our campus for, you know, their participation and different advance programs. So it really is a very constant, ongoing and somewhat end and dialogue that we're having weather. That's from an early product concept that we might be seeing for the first time here at Radio Teo Act The part, this patient and beta activities before we roll them out broadly. So it really is having them participate in the end, the end roll of innovation. And sometimes Hey, it sounds like a good idea. And it sort of sucked right when we tried to do it. Other times they're like, Oh, wow, some of these things, really. I've taken off and gain legs while beyond what we would have dreamed of. >> What have you seen that this year's event? Project Wise featured project. Why's that really kind of caught your attention, Like you. That's a really good idea. >> Well, I must admit, I just landed last night, So today is my first day at radios. So I just got back from our sales club, as John mentioned earlier. So I think I'm gonna have to take a buy on that question here because I got to go do my homework here. >> We'LL ask the questions. I have attracted talent, engineering, talent That's also the best of the best elite forces. This is a challenge in the streets of retain talent on engineers. Love to work on a hard problem. I gotta ask you what, Some of the hard problems at the end where is trying to tackle that would attract the elite engineering forces to the company. Because again, you're talking about something really big is going on with software. What are some of the big problems? >> Yeah, well, a couple of them that, you know, I'm pretty focused on for our team, and one is we said, you know, we said it's a software defined data center. Right? Going forward. It's the self driving data center. How do we bring so much telemetry? and automation that we truly are running the data center on customers behalf. And if I, you know, build on the Del Technologies World announcement of'em were cloud on Delhi emcee. You know, we're now managing their on premise data center from our cloud. You know what? If we can put more machine learning a I into the middle of that, it's not just that I wantto do it instead of them. I want to do it dramatically better than they ever could write. Using the greatest algorithms telemetry, learning, etcetera that the infrastructure becomes more reliable, right, it becomes higher performance. It becomes increasingly predicted right of its behavior and adjusting to those things. So the self driving data center's pretty high on the list for us. You know this idea then of a true multi cloud operational plane. We're customers. Just say, Here's there's my working. Would you figure out where to run it here? My policies. Here's the work will take care of it for me today. I was running it on this cloud the afternoon I brought it back on promise, because you it >> sounds easy, >> Cassidy. Right? Wow, If you could do that, its scale But then you say, boy, You know, if I move it around, where does the day to reside? Right, You know, have I met my policies and compliance requirements? So this a multi cloud operational plane is a >> big problem that you're attracting talent Is that distract complexity away and making it easy? >> Yeah, right, R, that's what we do. It's hard. I know. You know some >> of the cool things, you know, the are blockchain All right, you know, also breaking through reside. Describe blockchain. It's like the public private key encryption breakthroughs of forty years ago. But they're still very raw, right? Their performances crappy. You know, they don't scale very well. You have all sorts of issues associated with audit ability and repute, ability of those mechanisms. So those are some of the new problems and then also attacking entirely new new segments like NFI, right? Hey, we're going to build a five g network. That's not reliant on hard work, right? >> Well, when you're out of the quiet here, we're going to come to your office, will go deeper, dive on the business and some of the cool tech stuff, >> and we're just coming up on the M world in a couple of months. I think this will be the cubes tenth time there and any little teasers that you could give us about the world twenty nineteen. >> Well, we certainly hope that, you know, we're able to bring a lot of these club messages together right and have sort of, you know, connected all the dots. Att VM world This year's >> state When you heard it here on the Q first, some exciting announcements coming from BM, where in just a few months at being World twenty nineteen. Pak Gil Senior Seo Thank you so much for joining Jon and me at Radio twenty nineteen. As a pleasure. Always thank you so much. We want to thank you for watching for John Ferrier. I'm Lisa Martin. You're watching the Cube from Vienna, where Radio twenty nineteen and San Francisco. Thanks for watching

>> Live from Las Vegas, it's theCUBE! Covering Dell Technologies World 2019. Brought to you by Dell Technologies and its ecosystem partners. >> Hello everyone. Welcome back to theCUBE's live coverage here in Las Vegas for Dell Technologies World. I'm John Furrier with Dave Vellante. Dave, we've got Pat Gelsinger back on theCUBE. He stopped by yesterday, did a flyby after his keynote to kick off our intro section. He's back for the sit-down. >> (laughs) Welcome back. >> I can't get enough of you, Pat. >> CEO of VMware, Pat Gelsinger. >> Yeah, I love to photobomb you guys, so it was great. >> Anytime. I know you're super busy, business is going great. And you know, what a three years its been. I remember the keynote you gave at VMworld a few years ago. This was really on a time where, I would call it the seminal moment for you because you saw a vision, and we've talked privately and on theCUBE about, and you gave this speech of this is going to be the preferred future, and it was very visionary-oriented, but it ended up happening. That became the beginning of a run for VMware. And since then, you've been kind of chipping away and filling in all the tech pieces, the business model, and deals, with Amazon and now Azure and others. How are you feeling about it? What's the highlights? What's your perspective of where we are now? What's the notable accomplishments? >> Well you know, it's been just great. And you think about the run that we've been on where we, five years ago, we described a hybrid future. And you know, most people said, what are you, stupid? And you know, student body right to the public cloud. And now everybody is starting to understand the difficulty of replatforming, right? And says wow, this is really hard. I can spend millions and millions of dollars, in fact, one customer's estimate was that they were going to spend almost $1 billion replatforming all their applications to the cloud. And when they got them cloud-native, what do they have? The same apps. So imagine going to your board and saying I'm going to spend $1 billion just so I can be on the cloud, but give you no new business value. You've got to be kidding! And that's why this hybrid future, and as I like to joke, Andy, five years ago, Andy Jassy said if you're running your own data center, you're stupid. And Pat said if you're using Amazon, you're stupid. And now we're doing bro hugs on stage with each other. (laughter) >> And by the way, hybrid, you picked that trend that was right. Multi-cloud, though, came out of more a reality, less of an operating vision, 'cause hybrid cloud, you know, you saw the dots, connected those dots, but I think multi-cloud was much more of just a reality. When people started to realize that as I started doing stuff on premises, wow, I got native workloads on the cloud, and there are benefits for being in the cloud first for certain workloads. But then the multi-cloud thing comes up. >> And I think everybody has started to realize, and I really, as I would say, I think every CIO needs a three-cloud strategy. Making their private data centers into a proper operating private cloud. And some of this week's announcements, I'm sure we'll get back to those a little bit, to me are just a huge dimension. You know, VMware Cloud on Dell EMC, you know, a huge accelerant of making your private data center op like a private cloud, right, at scale. Second, you need a primary public cloud partner. And I think most people should pick a primary. Not one, a primary, and then a secondary cloud, right, you know, as their partners. And then you have your range of SAS offerings. And I think that needs to be the core, right, of every IT, CIO's strategy for the future. And our objective is to create an environment between what we're doing with VMware Cloud Foundation, and now VMware Cloud on Dimension. What we're doing with Amazon, our preferred partner for the public cloud offering. What we announced this week with Azure, right? Our 4000 other cloud partners, including, you know, very successful relationship with IBM. And saying, okay, that's your infrastructure. And the bulk of your workloads should run on a VMware environment that we can operate across that, with the same tools, the same interfaces, the same security, the same management tools, and then use the other cloud services as they bring you business value. You're a fan of Tensorflow? Go for it, baby. Right? You know, and use it in your app. You love function as a service with Lambda, go for it. But the bulk of your workload should lay in here and use these where they have business value. >> And to follow up on the three legs of the cloud stool, the CIO's legs, number three is for what? Is it for risk mitigation, exit strategies, or more specific best-of-breed, horses-for-courses type of workloads. >> Yes, yes, and yes. To some degree, really it's saying, nobody wants to say, I'm only in one. Right? Nobody wants to lock in for it. Also you know, clearly, hey, you know, these are technologies that break. You get more resilience that way, right? You want to be able to manage your cost environments. There's clearly this view of okay, you know, if I can do one, two, and three, I can do N. 'Cause most people are also going to end up picking, oh, I'm in Hong Kong. Okay, I need a Hong Kong cloud, because my data can only go there. You know, I'm in Malaysia, oh, they require all data to be there. 'Cause a practicality, if you're a big enterprise company, it's not just going to be three. You're going to need to be four, five, and six as well, for regional. And then you're going to acquire somebody, they're using a different partner. It really says, build an operational environment that works that way. Give myself business flexibility. I have application flexibility, and if I've done that, I really can move to the other environments that my business requires. >> I think one of the reasons why you guys have been so successful, if I go back five or six years, I remember you laying out the market, the market segmentation, you're obviously close to customers. You're a very clear thinker. You've obviously looked at the market for multi-cloud. How do you describe that, how do you look at the TAM, how big is it? >> Well you know, if you think about cloud today, right, we're closing in on $100 billion of the public cloud. You add SAS to it, you know, you got almost another $100 billion at that level. And you know, the overall data center market is probably on the order of, you know, $1 trillion-ish. >> Give or take. (laughs) >> Yeah, on that order. And then you know, you throw the operations costs inside of it, you're probably looking at something that's, you know, on the order of $2 trillion as well. So this is a big market, right? You know, part of the excitement that people are seeing in this cloud environment, is that they can just go faster. And as I described in the keynote today, we want to enable every one of our customers to stop looking down and look up, right? Spend less time looking down at the infrastructure. We're going to operationalize it, we're going to automate it for you, we're going to take care of it so that every one of your engineers can become software engineers building app and business value. >> I want to ask you on that point, because one of the things, I was talkin' last night, the analyst said at the briefing or the reception was, having a debate with one of the strategists in Dell, and I'm like, look it, outcomes are great at the top of the stack. Looking up, you want outcomes. But during the OSI stack days, no one cared about outcomes. It was either token ring or Ethernet. Speed won, so certain things have to be speed-driven, world-class, and keep getting better. And so that's what we're seeing as an infrastructure requirement. Horizontal scalability, operational scale. So that's a speeds and feeds game. So the outcome there is faster (laughs), and simpler. Up the stack, data becomes a big part of that. That, more, is where we see outcome. Do you see it that way, Pat? Because you know, again, infrastructure is often, that's how they said it on stage. We want to have whole new-paved, new infrastructure for this generation, essentially a refresh of infrastructure. Okay. Well, what does it look like? It's got to be fast, got to be flexible, software-defined. Your thoughts? >> So you know, clearly, I mean, what we're trying to do is we build this common infrastructure layer. And build an environment that allows you to be fast, but also allows you to be in control and cost-effective. Because if you would say, oh, I just want to be fast, ah, that doesn't work, right? We still have limited budgets, and you know, people, someday there's a CFO day of reckoning. But you also have to realize, part of the hybrid cloud laws that I described this morning, you know, one of those is the laws of physics, right? Hey, my factory automation for robotics needs to be 40 milliseconds, period. And if I round-trip to the cloud at 150 milliseconds, guess what? (laughs) >> Latency. >> Right. You know, my image recognition for being able to detect my autonomous vehicle is less than 50 milliseconds. I can't round-trip to the cloud. It has to be fast, right, but we also need to be able to push more of this data, more of the inference of my machine learning and AI closer to the edge. That's why, you know, you heard Michael talk about, and Jeff talk about this explosion of data. Most of that data will be at the edge. Why? Because every camera, you know, every sensor will be developing it, and I'm not going to round-trip it to the cloud because of economics. I can't afford to take all that data to the cloud. It's not just the latency. >> Latency matters. >> Yeah. And so for that, so I can't take it to the cloud, I got to be able to compute locally. I got to be able to apply the inference of my AI models locally, but you know, I also then need to scale aspects of cloud as well. My third law, of course, was regulation, where you know, guess what? I was just with a major customer in Latin America, and they said they are repatriating 100% of their data and applications out of the public cloud, 'cause the new president, right, is assisting on data only in his country for all of their nationalized resources and assets. >> So that's driving the change. This brings up the multi-cloud kind of thing earlier. You guys got to play in all the ponds out there, in the industry. But let's talk about on-stage here at Dell Technologies World. You were on-stage with Michael Dell and Satya Nadella, and I was lookin' up there. I'm like, man, the generational knowledge of the three people on-stage, the history. >> (laughs) I think that just means I'm getting old. (laughs) >> Well I mean, you've seen it all. I mean, from Intel, to EMC, to VMware. Dave and I, Dave's a historian of tech, as he'll self-claims, but I'm up there, I was pretty blown away. You guys are leading the industry. What kind of moment was that for you, because now you've got Microsoft doing a deal with VMware. Who would've thought that would happen? >> Well, maybe two different aspects to it. You know, one is, I've known Satya for over 25 years. You know, he was sort of going through the Microsoft ranks, Windows NT, SQL, et cetera. (laughter) You know, at the same time I was. So we got to know each other. Almost 25 years since our first interactions. When Michael Dell first came to Intel to meet Andy Grove to get microprocessors so he could start his business, I was there. So I mean, these relationships are decades old. So in that view, it's sort of like, hey Satya, how's the wife, you know. (laughter) Hey Michael, how's Susan doing? Really, it-- >> But you haven't even gone anywhere, you're still in the industry. (laughs) >> Yeah. But then to be able, the announcement was really pretty special in the sense that I call it 20 years in the making. You know, not a year or two, 20 years in the making, 'cause VMware and Microsoft has essentially been at odds with each other for two decades. You know, at that level. And to be able to be on-stage and saying, that's right, we're cooperating on cloud, we're cooperating on client, and we're cooperating on futures, okay, that's a pretty big statement as well. And I think customers respond very positively to that. And you know, I'm-- >> It's been a bold move, and you also made a bold move with the cloud, too, Pat. I got to say, that was another good call. Partnering with Andy Jassy. Again, once, both idiots, I guess, calling each other clever, you know. (laughs) Hey, public cloud, at odds, partner. Boom. >> And I really think this idea, moving headwinds to tailwinds. And you know, the Amazon partnership with Andy, and as we say, it's our preferred cloud partner, VMware Cloud, our native US hub, VMware-offered service. You know, super committed to it. We're closing in on 2000 customers on that now. >> Clarify the Amazon relation. I saw some press articles that kind of missed, skewed a little bit. They kind of made it sound like the Azure deal was similar to the Amazon deal. So just explain the difference between the VMware deal with AWS and Andy Jassy, that relationship, and the other cloud ones. Take a minute to explain that. >> Yeah, thank you. And what we're doing with Amazon is VMware is offering a cloud service that I operate for customers, that runs on Amazon. And that is a VMware-delivered service. They're our preferred partner. We're not bashful about that, that if we have the choice, that's the one to go to. It's going to be best. But what we've done now with Azure is we've made the VMware Cloud Foundation, the same underlying components, available with CloudSimple and Virtustream, they're partners, to have a VMware Cloud Foundation offering delivered by Microsoft as a first-party service. So VMware Cloud, VMware is delivering it. In the Azure for VMware services, that's being delivered and supported by Microsoft. >> And that's the same deal you did with IBM. >> It's very, the same-- >> Google and other ones. >> Yeah, the same as we've done with our 4000 other cloud partners, right? And obviously, Virtustream and CloudSimple are part of that 4000, and they're making the VMware Cloud Foundation available to Azure customers now. >> And what's the benefits to VMware's customers for those deals? >> Well, imagine that you're somebody in, Walmart was quoted in the press release, as an example. Walmart's a big VMware customer. Walmart is also a big Azure customer. So their ability to say, oh, I can have a hybrid environment makes a lot of sense for that kind of customer. So we really do see it as saying, you know-- >> Customer-driven, basically. >> Absolutely. And people said, which are you going to sell to us? Well in most cases, customers have already decided who their major cloud partners our. We're saying that VMware offering, even though we're first and best with Amazon, we're saying as they make their cloud choices, we'll have a valid VMware Cloud Foundation offering available. >> And best, I want to understand best. Best is, in part, anyway, because of the engineering you guys have done. When we interviewed Andy Jassy in November at re:Invent, he said you can't have a lot of these types of partnerships. And it's very deep integration. Is that why it's best? And what makes it best? >> Yeah, I call it first and best for two reasons. One is because we are engineering, we are co-engineering, the bits first get done on VMware Cloud, and then we make 'em available to the other partners. That's where we're doing the core engineering, the innovation. Andy has hundreds of engineers working on this. I have hundreds of engineers working on it. So it's first and best from an engineering sense. And, given it's my service and my offering, we're selling it aggressively in the marketplace, positioning it as part of the broader set of solutions and leveraging that, like you saw this week with the Dell EMC offering, VMware Cloud on Dell EMC. It's leveraging all that first and best work to now bring it on-premise as well. So it really is both the engineering as as a go-to-market. >> I'm going to ask some CEO questions. (laughs) So Tom Sweet has said they're happy to have the Class V transaction behind them. I'm sure you're glad, too. Thank you. That was very generous of you. >> (laughs) >> You've been incredibly good at acquisitions. I mean, obviously Nicira, Heptio, CloudHealth, AirWatch, I mean, on and on. >> VeloCloud. >> VeloCloud. I mean, most acquisitions, frankly, don't live up to their objectives. I think that's not the case for VMware. So now you're, good news is you draw off a lot of cash, so you're building up that pot again. How do you see, going forward, use of that cash? R and D, M and A, maybe you could make some comments there to the extent you can? >> Yeah, and you know, we said the primary ways we use cash, stock buybacks and M and A. And that continues. We did the special one-time dividend, which helped Dell go public. Everybody's happy. The market's responded super positively on both the Dell side. They're up, what, 40% since they go public. VMware up almost 50% this year. Just tremendous. >> Tremendous, $80 billion value now, awesome. >> Yeah, just tremendous. And, right then, we said going forward, it's business as usual for us. We're going to continue to do stock buybacks. We're going to continue to do M and A's. As you've said, we're good at this acquisitions stuff. And part of that is, I call it, imagine you're a hot startup company. And you say, do I want to be part of VMware? And we try to answer these questions. Do we have vision alignment? >> (laughs) >> Second is, can we accelerate your vision? Because most startups, you know, I mean, you talk about unicorns and so on like that. But what really motivates them is their vision. And if they believe their vision is going to be accelerated as part of VMware, so they're on this and we're going to turn 'em to that, aw man, they get excited. Do we have a cultural fit? I mean, with every CEO of our acquisitions, and HR does, we really, are they going to fit our team? Because you know, cultural issues, you can't butt your heads day and night. Life's too short. >> Certainly VMware, you guys are (laughs) that culture's very hardcore. Work hard, play hard. (laughter) >> Yeah, and you know, it has to be this deep drive for technical innovation, right? The technical due diligence that we do with our startups. Right? It's sort of like, you know, this is like a PhD exam for these, I mean, they really got to know their stuff. >> Yeah, so people don't fit in the culture at VMware, and there-- >> And we've said no to a number of potential acquisitions over cultural issues as well, if they're just not going to fit. And hey, we're not going to be perfect, but the fact that we can bring these companies in, accelerate their vision, give 'em a culture that they're excited about. You know, we have maybe 90-ish% success rate. The industry average is below 50% >> Yeah, fantastic track record. I mean-- >> And that just gives us the ability to do organic and inorganic innovation, which to me is like, a potent recipe. >> And you got the radio conference coming up. What will your talk, theCUBE will be there. Pat, you've created great shareholder value. You turned those headwinds into tailwinds, and we were watchin' the whole time. It's been great to watch. And what's next? You have your VMware tattoo still on from VMworld? (laughter) Like you have a jail tattoo? >> No, I'll tell you >> Cute tattoo. >> a little inside, I'll tell you a little inside story. My wife, you know, after the VMworld keynote with the tattoo on, we were leavin' on vacation two weeks later. And all she said to me after the keynote was what's that tattoo thing, it better be gone by the time we leave for vacation. (laughter) It's like, there was no, honey, that was a great keynote today, it's like, that better be gone! (laughs) >> Nothin's better than watchin' that video and that CUBE sticker we had on your hand. Pat, great to see you, as always. Great commentary, great analysis. Congratulations on all the success with VMware. Again, the transformation's just getting started. We're seeing a lot more good things for you guys as well. >> Yeah, and you know, this has been a great week in some ways. I sort of joked this morning on-stage that, it almost felt like VMworld. We talked about VMware technologies and that Dell partnership accelerating so well. >> It's not AMCWorld, it's DellWorld now, it's a whole new vibe. >> (laughs) And you know, with that, you know, I just really believe in the superpowers that I talk about, we're just getting started. So we're going to be doing this a long time together. >> What's on your plate in front of you now? You got VMworld coming up in a few months. Priorities, objectives, what's on your plate? >> Well, I have to leave some of the secrets for what we're cookin' up for VMworld this year. But some of these steps clearly, in the developer container space, super important for us to really make some progress there. Obviously, we'll have some incremental cloud announcements as well. >> ContainerWare rhymes with VMware. (laughs) >> Yes, that's very good! We have an advertisement on that coming out, so a new ad. But it really is, I think, that topic area's one that, how can we really solve that for customers that really can deploy at scale containerized environments for an enterprise workload. So, excited about that area. And you know, maybe just a few deliverables from what we announced this week. >> Alright, take your CEO of VMware hat off, put your CUBE analyst hat on. What's the most important story here at Dell Technologies World, if you were a commentator? You can't say VMware 'cause that's biased, but you got to be objective. You can say VMware if an objective. What's the most important storyline here as a backdrop for Dell Technology Worlds, what's the real net net to customers? >> Well you know, I think, and I'll say, as exciting as the Microsoft announcements were, I think the most important thing was VMware Cloud on Dell EMC, on-prem. Because to me, you know, the fact, I go to CIOs, and I've done this probably five times since the keynote finished on Monday. And I say, how many of you have fully updated your hardware, your firmware, your operating systems, your networking stack, your compute stack, your management on the latest releases, all of them patched, upgraded appropriately for your environment? >> And they say, their eyes roll. (laughs) >> And the answer is none. Not some, none. I have customers that are askin' me to extend support for vSphere 4.5. It's like, what, that's been EOL'ed for a year and a half, what are you talking about, right?! But the reality is that most people go to the cloud, public cloud, not because it's more cost-effective or because it's better, it's because it's easier. So what we've really said is we can make easy in the private cloud and truly deliver that hybrid cloud experience. And I think the customers really experience the TCO benefits, the acceleration, the reductions in their operational environments, the personnel associated with it, the security benefits of being always patched, upgraded the most release. You know, now you're talkin' about attacking that other $1 trillion of operational costs that they're bearing in the personnel and so on. To me, that is like, so powerful if we really get that engine going. >> And the simplicity that comes out of that, is just-- >> You know, and again, the demo that we showed. That was the VMware Cloud on AWS being able to demonstrate, now, a complete picture into the on-premise environment. That's powerful. >> Pat Gelsinger, CEO of VMware. I know he's got to go. Thanks for your generous time, I know you're really busy. Again, Pat Gelsinger. >> Love you guys, thank you. >> Thanks, Pat. >> Love you too. Pat Gelsinger, CEO of VMware, creating a lot of shareholder values, got a lot of tailwinds at their back. VMworld's coming up, theCUBE, of course, will be there with two sets. As usual, theCUBE cannons, two sets here, firing cannonballs of content here at Dell Technology World. I'm Jeff Furrier with Dave Vellante, stay with us for more after this short break. (electronic music)

>> Live from Las Vegas, it's theCUBE! Covering VMworld 2018, brought to you by VMware and its ecosystem partners. >> Hello everyone, welcome back, this is theCUBE's live coverage here at VMworld 2018 in Las Vegas, I'm John Furrier, your host, with Dave Vellante my co-host, our next guest, CUBE alumni, special guest, Pat Gelsinger, CEO of VMWare, always comes on every year to share, and talk about the keynote, talk about the news, all the great stuff. VMWare, great, per it's financial performance, great product portfolio, great R&D, pumping on all cylinders, congratulations, welcome to theCUBE, great to see you. >> Thank you. Always great to see you guys, thanks John, thanks Dave, y'know. >> Y'know, it's fun, this is our ninth year doing VMWorld, you've been as the president of EMC and six years ago CEO of VMWare. We've been there, we've been following your journey. >> Hey, y'know, we've been on this path together, so it's been good. >> And, y'know, we've talked candidly around what was going on with Cloud at the time, your vision, getting sorted in. You made some real quick, decisive, decisions on Cloud, okay, Andy Jassy comes on stage, you're personally involved with Andy on the Amazon announcement, which is, I think people don't know how big that's going to be. But VMware and Amazon are seriously deep in a partnership. >> Yeah, absolutely. >> This is a big deal, this feels like a little wind-tell kind of easy, synergies across the board. (Pat laughs) >> Well, you know, in some ways, we'll say number one in public coming together with number one in private, that's a big deal. Yesterday's announcement of RDS on premise to me, sort of finishes the strategic picture that we were trying to paint, where it really is a hybrid world. Where we're taking workloads, and giving people the access to this phenomenal, rapidly-growing public Cloud, but we're also demonstrating that we can seamlessly connect it to the private Cloud and now we're bringing services back from the public Cloud onto the private and your own data centers. And that is so profound because now customers can say, Oh I like the RDS API's, I like the RDS management model. I can now put the data wherever I need it for my business purposes. That hybrid, bi-directional highway is something we're uniquely building with Amazon. And, hey, we're obviously working with other Cloud providers, but they are our preferred partner and we're pretty thrilled. >> Now we'll be talking about last year and what entailing that was. The clarity that allowed customers now to say, okay now I get the Cloud strategy, 'cause it wasn't clear before and boom, double down. >> Yeah, it's just been absolutely great. Customers get it now, and obviously seeing Andy here again this year, you've got a number of customers sort of dipping their toes in the water, you know. Now it's sort of like, okay, I'm ready to go. When we laid the one and a half year road map of availability zones, everybody sort of looking at that. I had a couple of customers saying, hey, you know I would really like that in Q1 rather than Q2. It sort of like okay, let's just sign the deal, we'll figure it out. >> Gov Cloud, we saw that in June. >> Yeah, in the public sector. >> Talk about Andy, because we got to know Andy over the years as well. A great executive, both you guys are great leaders of your team, both great managers. You're kind of both no-nonsense kind of executives, you get stuff done. If this block is in the way, you kind of remove them, you do the right thing. Andy's committed, he's committed to this, you're committed, this in for the, you're in it to win it, that kind of loyalty plus he's also customer-driven, heavily Amazon. You guys are, too, this deal is not just Amazon trying to do hybrid, it's customers. Can you share some inside baseball around the kind of customer demand around Cloud on premise with VM, with specifically Amazon website. This is new for Amazon, they've never done this. >> Yeah. >> They've never done this kind of of deal. >> It really is unique in that way, and because it was unique we went into it kind of trepidously, How's this going to work?" We committed ourselves, we do quarterly business reviews with Andy and I. You know, hey a lot of little action items, they get finished the week before the Andy-Pat meeting. (laughs) >> You know, there we are, every quarter, coming together and really building the teamwork down the teams, right, as well, down the organizations into the field, and just finding all sorts of you know. We're super excited about the RDS announcement, but hey, we have a pipeline of projects behind that. >> We're reporting that customers want this. >> Oh, Absolutely. >> This is a customer, not a kind of like you guys want to take over the Cloud, this is a customer-driven thing. >> Absolutely, Amazon don't do anything, I mean nothing, unless they believe there is meaningful customer demand. They are extraordinarily customer-focused in that respect, you know I think there's something we can all learn from their myopic focus on that aspect. They're engaging with customers, building things that customers like and the response obviously from the RDS announcement was really quite overwhelming. >> So, we've been asking people all week, and I'll ask for your commentary. The conventional wisdom on that deal is it was a one-way trip to the Hotel Cloud-ifornia and it's become boon for the data center. Why the misconceptions, why are you confident that it continues to be a boon for both companies? >> Yeah, hey, and we got to go prove it. At the end of the day, we have to go prove it. The analysts were sort of viewing it, there's this big sucking sound in the public Cloud where everything congregates. Point one, and three years ago, that was the prevailing wisdom, right, that that was going to be the case. Now, everybody, like I had the big CIO who basically said, hey, I've got 200 apps, I tried to move them to the public Cloud, I got two done. I can build new things there, but this moving was really hard until we had the VMC service. So this ability to move things to the Cloud and from the Cloud, I call it the three laws. The laws of physics, the laws of economics, and the laws of the land. The laws of physics, hey if I need 500 millisecond round-trip through the Cloud and the robotic arm needs a decision in 200 milliseconds, eh, you know, physics. Economics, I'm not going send every surveillance picture of the cat to the Cloud, bandwidth still costs, right? Then laws of the land, right, where people say, governance issues, GDPR, other things. Because of that, we see this hybrid world, in particularly as Edge and IOT becomes more prominent we fully expect that there's going to be more of that, not less. As I showed in my keynote last year, this pendulum of centralization and decentralization has been swinging through the industry for 40 years. And we don't see that stopping and Edge will be a force of more data, and computers pushing to the Edge, and that's obviously part of our keynote, as well. >> I wanted to get in a comment about how you talk about bridging technology gaps, or >> Yeah. >> Or segments with that VMware. Before I want to just point out that you're wearing a VMware tattoo for the folks who can see it. Pat is making all his employees have a VMware tattoo. (laughs) Yeah we got a tattoo machine, yeah, we're in Vegas, so. >> Ought to order some more CUBE stickers. What happens in Vegas stays on your arm, remember that. (laughing) You ought to keep the tattoos up, it's funny and clever. Let's get back to the keynote. You said a couple things I want to get your reaction to. One, the bridging of technology successfully has been a transformational gift that VMWare has had with good technologists and good engineers. So I want you to talk about that. Also, you had a quote around the old adage of the network is the computer, that's old, the new adage is the application is a network, I think is what you said. >> Precisely. >> Tell about this bridging and why that quote, that was a really good quote, I want to expand on that. >> Clearly, we think about the history of VMware and it started with this idea of HP, Dell, IBM, etcetera and all of a sudden it became VMWare with different hardware underneath it. We bridged across those hardware islands. Those hardware islands, when they started, weren't bad. Extraordinary innovation but all of sudden customers want to start using them together and VMware bridged that gap. We talked about the device guy, and BYOD, and the iPhone showing up and all of a sudden IT wasn't ready to manage it, but customers wanted it. So we see Windows devices, Macs, and IOS, and Google, and Chromes and so on. How do you bridge it, VMware is doing that. We saw many of the networks, boy, you know what my protocols are about. Okay, Again, we're bridging across that, and that's clearly where NSX is uniquely playing. So this idea of bridging across these elements, right, is deep in our heritage. Right, we do it in an ecosystem-friendly hardware independent now, Cloud-independent way, right. Where we're now saying in the Cloud health acquisition, we're going to bridge across these worlds and make them easier for our customers to consume them, wherever they may be. These are powerful innovations, capabilities that are emerging, but customers say, oh you know, where is that workload running? Increasingly, in the future, I'm going to say, Oh VMware is running it for me, and not actually say, oh where did you run that VMWare? Because we are going to meet their policies, we're going to meet their business needs. >> And that bridges what, the Cloud? The current bridge is what, the Cloud, or ? >> Oh yeah, absolutely. Right, but the Cloud will now be my private data centers as well as different public resources. I think one of the next big challenges that we'll have to lean into more aggressively is the data challenge. Hmmm, where's my data? In a Cloud world, in a SaaS world, I want to be able to use my data for different purposes, I don't want to necessarily locked in a particular SaaS application when I built up an S3 bucket. Maybe I want to run some of my private analytics on that. Oh, the laws changed and I now need to bring that back on premise, and you know... >> Is it going to cost anything? Yeah, and you know, bridging across those worlds. It's both an application statement, a networking statement, and a data center. >> So application is a network? >> Yes. >> I think if it were a network, not the network. >> Yes. >> What do you mean by that? >> I gave you an example, a heads-up display in a construction hat, as you're wearing a hard hat. This AR-VR application running in my display for my hardhat and I'm a factory worker now, right, I'm getting cool new x-ray vision into the machine of what's going on. I'm able to look through walls at what's going on. Wow, that's pretty cool, and I'm getting real-time safety information of what's going... oh, that's incredible. Now think about the application behind that. I'm accessing 30 year old building plan databases, I'm accessing systems of record, system designs that are coming from my equipment suppliers and cool new container-ized AR-VR applications. That's my application, when I think about it in that environment. And what a complex network of different services, legacy applications, modern, new, microservice, >> Data sources, those kind of things. >> All of those things are brought together into my application, and in that sense, the application is a network of these different services, data sources, et cetera. We believe in that, bridging across silos isn't important, its essential to do that because, as you say, security models across that. When that application isn't performing like I expect it to, how do I go, even debug it? Because now, a flag went off, saying the hardhat AR application is not performing well and I have upsets. You know, manufacturing people on the floor not being able to get real-time data: I got to go debug that. You know, what's not working right? It's this network that needs to be able to be analyzed, any metrics across all of those. I need security models, you know, the ability to essentially load-balance across a complex network of services. That's the world we're headed to and we think we have some pretty good opportunities to help customers get there. >> So, Pat, explain how technically does the platform of VMWare change and evolve to meet those needs? Is it sort of embracing those new services or is it rewriting at the core, can you explain that? >> Yeah, it's some of both, I'll give two examples of that: one is that we're embracing the Kubernetes layer. Right? That's what you heard us say. I'm going to make Kubernetes a new dial-tone for the VMWare layer. I didn't create Kubernetes, it's part of open-source community, but I tell you what, we are going to help evolve it, standardize it, make it part of that infrastructure. So that Kubernetes dial-tone, right, (laughs) Hopefully, everybody is old enough to understand what that means, right? You know, boom, it is always there and we're going to make sure it's always there. So I'll say in some cases we're embracing new industry innovations and that one happens to be CNCF, the Cloud  Native Computing Foundation in that community, so we're participating, we're contributing. In other cases, we got to go rewrite things. You know, NXS, the current version of NXS was primarily bound to V-sphere and customers have increasingly said, oh I need to make NXS much bigger then we ever conceived for the first NXS, and I need it to work on all these other environments, including non-V sphere. So that's why we did what we called NXS-T, which is a fundamental re-architecture of NXS. There's probably three or four lines of code that we re-used, but that's about it. (laughing) I mean it is a major architectural redo because now we're saying I need to scale this, essentially, across the planet. I need it to work in VMWare and non-VMWare environments. I need it to be native in multiple public Clouds and I need to stretch it into the container level. That was a big re-architecture project that we undertook. In some cases it will be both, and like in Cloud health, it will be things inorganically go acquire and then figure out how to meld them into the infrastructure that we build and offer. >> So, do you, as the CEO and a technologist, you have a very interesting organizational ownership, governing structure. Do you ever feel constrained writing an 11 billion dollar dividend, do you ever feel constrained in terms of your ability to fund the R&D necessary to do some of those things? >> No. >> Grayson said the same thing off camera, I'm asking you on-camera. >> Generally, no. Am I constrained in how much R&D I can do? Well, hey, I've got a budget, we build a P&L, we communicate it to the street and every day possible, I'm pushing to grow the business faster so I can shove more dollars into one of two places. More dollars into R&D or more dollars into sales and customer facing. If Robin Matlock is here, I keep giving her the table scraps at the end of those things. Build products that are innovative, radical, and break through. Sell products and support our customers using them. That's the two things we're ... >> That's the golden rule. >> And, by the way, you made some M&A, you've got Cloud health, which is a good thing. That was a vertical focus in health care. >> Yeah, and not just healthcare. Cloud Health is a multi-Cloud management platform. They've built their initial focus primarily in cost management of multiple Clouds, but, you know, we're going to build that platform out for every aspect of compliance management, performance management, et cetera. >> Multi-Cloud play, Boston-based. >> So, final question for you: as you look at NXS, it's becoming kind of that feels like a TCPIP moment. Okay, we thought you Andy gotcha to sign a baptism. He was very complimentary of NXS. I asked him what TCPIP did to connecting, inter-networking, creating, and boom, the OSA model stopped at TCPNIP, that created a lot of opportunities and, welp, that's where we are today. Is there a disruptive enable as powerful as TCPIP that you see coming, and is that an NXS mindset? What's your vision on this, because this is what the Cloud needed, it needs interoperability, it needs to go to a level to create goodness in the ecosystem, wealth creation for entrepreneurs. This is the new era, where is that disruptive enabler? >> Well, a couple of comments, and one is: if Andy says it, it's right. (laughs) >> Yeah. >> Yeah, you remember, this is the one Rembrandt of systems design for the last 30 years. Andy is that profound in his contributions to the industry. In terms of technical leadership, visionary leadership, he's very high on my list of seminal figures of Silicone Valley. At the systems level, it's just hard to get better than Andy, so you know, he honored you by coming on theCUBE. He honored us by being here at VMworld. >> He is complimentary of NXS in his position in the marketplace as a leader, he's very candid about that. >> Now with NXS we really are, I think, in this moment where you're saying okay, the old model of networking simply doesn't work. It must all be done from a software level. This isn't just like putting a few APIs on top of my hardware and saying it's now software-based, it is conceiving a globally-distributed control plane that allows you to essentially span multiple Clouds, multiple data centers, multiple services anywhere on the planet, totally consumable for services that run on top of it, transforming every aspect of a layer four through seven service, low balancing, fire wall it, all of those, routing, all of those need to be reconceived in a totally distributive fashion and underneath saying, we support a very, very broad range of different hardware. The hardware can never constrain what you do at that SDN ladder, and that's the core of our virtual Cloud network strategy. Obviously, Velocloud, hot product. ST WAN, branch transformation, pushing that edge of the network out in a fully Cloud-based way, very excited about that capability. >> We know you're probably under a lot of time pressures so we're going to let you go. Five seconds, summarize VMWorld 2018, what's this about, what's the vibe here in five seconds, go. >> Five seconds? >> Or 15, 20, 30, whatever you need, go. (laughs) Alright, take 10. >> It is, the seminal moment where the industry is seeing the value of the multi-Cloud era. Right, and now we're giving them the tools to embrace it. >> And two leaders have, on stage, Andy Jassy C of A WS, Pat Gelsinger, CEO of VMWare, are talking about multi-Cloud validation from customers and strong technology teams in business. Congratulations on your success, okay. >> Thank you. (laughing) >> Pat Gelsinger, we pay you for theCUBE sticker, we get royalties on that. Thank you so much, Pat Gelsinger inside theCUBE, CEO of VM here, breaking it down, great vibe here, VMworld 2018. Stay tuned after this short break, I'm John Furrier with Dave Vellante we'll be right back. (techno music)