from the silicon angle media office in Boston Massachusetts it's the queue now here's your host David on tape hello everyone and welcome to this week's episode of the cube insights powered by ETR you know this past week we attended the Dell technologies Industry Analysts event and in this breaking analysis I want to summarize the key takeaways and discuss some of the macro trends in the industry that are affecting Dell I'll also discuss some of the fundamental assumptions that Dell is making in its operating model and I'll talk about some of the challenges that I see for the company going forward and hopefully what is a frank manner now let me start with the event itself it was held in Austin Texas and it's clear that Austin Texas is becoming the epicenter of Dell post-acquisition of EMC it's shifting strongly back to Texas while the legacy of EMC remains what is the most critical part of Dells portfolio thanks to vmware the energy of Dell emanates from its founder Michael Dell the event was attended by about 250 press and analysts over a two-day period it was very well run with strong levels of executive access which is always very important to the analysts and lots of transparency and I thought clarity of message now the number one takeaway on this is Dell in four years the company has gone from irrelevance to a dominant and highly relevant player in the enterprise tech especially the CIOs and it's one of the most amazing transformations of a company that personally I've ever seen and I've seen several there were four other key takeaways for me that I'll show on this first slide of Alex if you bring it up first Michael Dell has put forth a set of moonshot goals for 2030 let me give you some examples by 2030 Dell says that for every product that they sell they're going to recycle an equivalent product by 2030 50 percent of the global workforce of Dell will be women and 40 percent of the managers of people will be women 25 percent of the u.s. workforce will be either Hispanic or African now most tech stories today are negative and this is a great positive message I'm not gonna spend a lot of time on this because in there's much more that Dell laid out but kudos for Dell to make for making these initiatives a priority you know particularly the women in tech and the diversity in the minorities I think it's excellent the second takeaway is Dell for Dell is the Dell is being driven by Jeff Clark and this guy is on a mission to simplify the portfolio Dell claims its reduced its product portfolio from 88 platforms down to 20 of that power platforms that powers a new brand now the reality is Dell really hasn't deprecated 68 products many if not most are still around but the RMD energy is all going into the new stuff now the third takeaway was a big announcement around power one power one is Dells new platform for the next generation of converged infrastructure now a lot of people might look at this and say well this is converged infrastructure without Cisco well it is actually and while that's true power one according to Dell is a much more of a developer friendly API and micro services based platform with a lot of automation software built in it's essentially going to be Dells go forward platform for customers that don't want to roll their own infrastructure the expectation or inference that that we took away was that power one will integrate most if not all future storage networking and server products Adela's positioning this as a complement to HCI or hyper-converged infrastructure which comprises VX rail VX flex which is the scale i/o and of course the OEM Nutanix so you can see Dell still got some work to do in terms of streamlining its portfolio and here's my lock of the day is that they'll be phasing out the Nutanix OEM relationship you could take that one to the bank now the fourth takeaway was the Dells cloud strategy is really coming into focus is it a winning strategy I honestly can't say at this point but in my view it's the only option that Dell has and and because of VMware they have a fighting chance Dell is in a much better position than other suppliers that that rely on you know Prem install bases because of VMware VMware is not only Dells piggy bank it is but it also gives Dell strategic levers with with CIOs and partners like for instance AWS now later on I'm going to share some ETR data that will give you some context but the bottom line is that the cloud is having an impact on everyone's business including Dells and I mean let me add the Dells cloud strategy in addition to relying on VMware is completely dependent on the assumptions that the world is going to be hybrid which is a good assumption and that multi cloud is going to evolve from what today I've said as a symptom of multi-vendor to a fundamental priority for CIOs again not a bad assumption but because of VMware adele has more than a fighting chance to compete for share now finally that that adele is going to be able to capitalize on the edge personally I think this is the biggest wildcard what I do think is that developers are going to be a crucial part of the edge and at this point in time Dell and VMware are not really top of mine in the developer community now the event involved keynotes from Michael Dell and other execs including including the CFO it was Tom sweet and and many other breakout sessions you know the normal one-on-ones as well now I don't have time to go into all this but there are some things that I want to share about Jeff Clark's presentation specifically he's the person that took over from David David Gordon a couple years ago he's been at Dell for more than 30 years and he was there when I think it was called pcs limited so a long time he's a trusted operational executive of Michael Dell's I'm very impressed with this guy he doesn't use a cheap prompter when he talks and in fact he has some notes but he's got these facts and figures at the in his head that he rattles off like a staccato pace he's an OBS exec and so let me summarize the his discussion now to bring up this slide the the big picture is the data sphere is gonna grow to 175 zettabytes and half of that is going to be created at the edge of that 30% is gonna require real-time processing now he talked about the mandate for simplification and he called this staying the easy button now in QA I asked him like why did it take you guys so long to figure out something so obvious which is kind of a snarky analyst question not his credit he didn't throw his predecessors under the bus rather what he did is he focused on the future and sit he said you know they shared the figures that I stated earlier about you know taking 88 platforms down to 20 and he focused on the priorities of the future so he didn't say it but I'm gonna say it for him he inherited a very messy portfolio and he had to clean up the crime scene me tell let me tell you what a buyer said about EMC back in 2018 this is from the ETR Venn survey when they go out and they probe you know specific customers and they talk to them this guy says NetApp has done a really good job of advertising and positioning itself within the cloud and within data centers themselves they've got a broad portfolio and I don't want to make comments about NetApp but so just I'm not sure I agree with all this but okay come back to his statements and and they've they've integrated fairly well here's what's relevant what he said was EMC on the other hand is not as well integrated they've got a broad portfolio but it's not necessarily - easy easy to pick and choose from the different categories okay so I agree with that you know look the mega launch product dujour worked for EMC it allowed them to carry on for another five or six years after the downturn but the lack of integration eventually caught up to that minute and it will always you know caught up catch up to large companies who rely on either lots of M&A or spinning out new products with lots of overlap anyway I digress the third thing that Clarke talked about was the big market size and the share gains pcs are a 200 billion dollar market servers are an 80 billion dollar market an external storage is a 26 billion dollar market Della's gains 600 basis points according to Clarke in pcs over the last six years 400 came in the last three years 375 basis points in storage in the past two years now of course what he didn't mention that was after a dismal performance a few years earlier so they had a pretty easy compare but my point is this when you talk to Michael Dell you talked to Tom sweet you talked to Jeff Clark and all the people folks in the company share gains are critical to Dells strategy especially because the cloud is taking so much share of wallet in the enterprise I'll make some other comments on that now finally there are two fundamental beliefs that dell has that i want to share with you one is that they can be a consolidator of these core markets in a downturn deltax they can hold their breath you know so to speak longer than the competitors and of course in an up market they think they can accelerate their leverage points which leads to the second belief that jeff clark talked about which is how dell will deliver differentiation and value so he decided four items there one is they got 40,000 direct sellers so they got a big go-to market presence they got 35,000 service professionals a 66 billion-dollar supply chain and then Dell financial services arm which you know forces Dell to carry a lot of debt but that debt throws off cash and it's not really part of Dells core debt from EMC acquisition now others have that too but but Dells got you know big presents there all right so I want to pivot to the ETR data and let's see how Dell looks in the spending survey and since market share is so important to Dell why don't we take a look at how they're doing so Alex this slide that I'm showing here what each er refers to as market share market share is defined by you TR as vendor citations in the survey excluding replacements so customers that are adding spending the same or spending more as spending less divided by the total number of respondents in the survey so it's a measure of how pervasive the vendor is in the data set what I'm showing in this slide is Dells market share and its three most important business lines namely VMware Delhi MC and Adele's laptop business and I'm showing this from the January 17 survey to October 19 now notice the survey sample overall is 960 for respondents and the three brands they show 800 and said six hundred and twenty two and three hundred and two shared ends within that 964 so there's two points one else doing pretty well I mean I'd say it's better than holding serve and as you can see it's steadily gaining now the second point is that look at the net scores here you know they're okay especially for vmware intel's laptop but Dell EMC for instance specifically their server and storage and networking business you know not so much so there's there's a mixed story here so let me make some comments on the macro and things that I've discussed with with ETR and and my narrative on demand overall some things that I've said you shared with you before as we've discussed in past breaking analyses spending is reverting back to pre eighteen levels but it's not falling off a cliff we're seeing fewer adoptions of new tech and more replacements of old tech so combine this with lower levels of spending and more citations overall we're seeing net score go down relative to previous surveys so here's what we think is happening there's less experimentation going on with the digital initiatives which started you know back in 2016 so you're seeing fewer adoptions of new tech as customers are start placing their bets and they're retiring leggy legacy systems that they were keeping on as a hedge and they're narrowing their spend on the new stuff and unplugging the stuff they don't need anymore and they're going at the serious production mode with the pocs so that means overall spending is softer it's not a disaster but it's lower than expected then coming into this year storage is on the back burner in a lot of accounts because of cloud and the big flash injection that I've talked about giving him more Headroom servers are really soft for Dell especially because they have a tough compared with previous with last year PC is actually pretty good all things being considered so where is the spending action well it's in the cloud now q how many vendors tell me that there's a big rebate repatriation trend happening ie people have cloud remorse and they're all moving back on pram not all but many M say it doesn't happen but at the macro-level its noise compared to the spending that's happening in the cloud just do the math all you got to do is look at AWS and Microsoft and what they report and compare it to any enterprise company that relies on on-prem selling I mean I don't want to argue about it you believe what you want but I would much prefer to look at the data so let's do that so here's a slide that shows ETR data on customer spending on the cloud so you got a AWS Azure and Google spenders and how their spending patterns have changed over time for dell emc servers so you got six hundred and thirty six cloud accounts 175 to 200 shared dell emc server accounts over the past three periods and yet net scores of 24% down to 16% so look at the gray bar versus the yellow bar gray is October 18 yellow is October 19 okay you get the picture the next slide is the same view for Dell EMC storage the gray bar is last year yellow bar is this year's survey so look at it 22% down to 5% that's not good so storage is getting hit by cloud and that's going to continue all right so let me conclude with some comments in general overall I like to tell strategy you know honestly without VMware I'm probably not gonna fly to Austin this week just being honest but with VMware Dell is far more important to our community so I pay more attention to it I haven't shared many thoughts on Dells financials but I think they have some upside here as they continue to pay down their debt by the way every five billion of dollars that they retire in debt it drops twenty five cents right to earnings per share Dell throws off a lot of cash it's a very well-run company they got an excellent management team we talked about their share gain lever they'll have a public cloud so they got to make on Prem as simple as possible and ideally is cloud like as they can you know the on-premise experience frankly is well behind that of the cloud but but cloud you know getting less simple and it's not cheap so on Prem in my view doesn't have to be exactly cloud it's just got to be good enough now Dell this week also refreshed its on demand pricing but it's good and it's obviously relevant to cloud not have time to go into all the detail but suffice to say that near-term there on-demand stuff it's it's going to be a small factor in their business but longer-term I think it's going to play in it's particularly to the cloud model Dell is also betting on hybrid and multi cloud they have to and but they're up against several competitors Microsoft is the is really strong in this space Microsoft's also a partner of course but you got IBM and Red Hat Cisco Google sort of and some others but VMware it gives Dell an advantage and that is the key the big hole that I see in Dell I'm going to come back to innovation you know Dell spends billions of dollars on R&D I think it's the numbers 20 billion over the last four years so that's good but you know innovation this industry is being delivered delivered by developers no those are the drivers and and it's they're taking advantage of data applying machine intelligence and cloud for scale and Dell is clearly well positioned for the data trend you know could partner for cloud it can certainly play an AI but what it lacks in my opinion is appeal to the developer community and just as Dell has become relevant to CIOs it needs this a similar type of relevance with the devs and that's a different ballgame so it's hopes are leaning on VMware and is of course its acquisition of pivotal but if I were Dell I would not sit back and wait for pivotal and VMware to figure it out here's what I would do if I were Dell I would deploy at least a thousand engineers they got twenty thousand engineers take a thousand or fifteen hundred them and point them toward developing open source tools and build applications and tools around all these hot emerging trends that we hear about multi-cloud multi cloud management edge all the innovations going on at edge autonomous vehicles etc AI workloads machine intelligence machine learning I would open-source that work and make a big commitment to the developer community big contributions and that would build hooks in from my hardware into these tools to make my hardware run better faster cheaper on these systems I want to thank my friend Peter burrows for forgiving me that idea but I think it's a great idea I think it's radical but it makes sense in this world that is really being driven by developers okay this is Dave Volante signing out from this episode of cube insights powered by ETR thanks for watching we'll see you next time

[Music] hi I'm Peter Burroughs welcome to another cube conversation from our beautiful Studios here in palo alto california as we do with every cube conversation we come up with a great topic and we find someone who really understands it so they can talk about it we capture them for you so you can learn something about some of the new trends and changes in the industry and we've doing that today too the topic that we're talking about is how do you do a better job of mapping the costs that are being generated by the cloud or that informations coming out of cloud suppliers related to what you're using with the actual business activities that generate the differential capabilities that customers are looking for that's a tough tough challenge and to understand that better we're talking with junior Stormin who's a co-founder of cloud ability Jaron welcome to the cube thanks Peter good to be here so so let's talk about first who are you yeah so I am co-founder of cloud ability and credibility is focused around improving the unit economics of cloud spend so our customers tend to be those who are spending large amounts in AWS or Azure or GC P and we take their billing data their utilization data various metadata about their business and do machine learning and data science on top of it to help them get better visibility into sort of where that spend is going how they're using it but more importantly to give them some controls around how they want to optimize an optimize doesn't necessarily mean save money in a cloud world because most companies who are moving into cloud very heavily are doing that for the innovation for the speed so they can deliver you know better data faster but it's really about fine-tuning the conversation say okay here we want to save money here we want to move faster here we want to focus on quality and really providing a way for the the various groups that aren't normally talking the finance teams with the engineering teams with the procurement teams all these groups to come together and be able to take executive input to say okay how do we want to operate and how do we one improve those your economics as we go well I want to start with just quick comment on this notion of Union I can when people here historically hear the notion of unit unit economics they think of you know increasing scale so the average cost per unit goes down yeah I think you're talking about more than that right are you really also talking about a mapping of what spend is generating to the business activities that actually generate value and ensuring that you get the differential or the optimized Union economics unit cost yeah oh so the mapping is actually really interesting ly challenging in cloud it's hard enough in traditional IT if you look at somebody like AWS they have two hundred thousand SKUs different products you can buy and they now bill at a second level resolution so what this means is you've got all these engineers out there using cloud in a very good way to move quickly and of 8/2 little more features and they kind of have an unlimited credit card that they can go spend on as quickly as they need and they never see the statements they never see the bills and the other side you've got finance teams procurement teams who've sort of lost control of traditionally the power of the PIO that they have to actually rein that in and they're they're struggling just to understand what is the spend and then to the mapping question how do i allocate these hundreds and millions of charges that i have this month into cost centers and business units and getting that sorted in a world where engineers are focused on moving fast or not they're not tagging things based on cost and are typically so once you get that sort of mapping aspect sorted to the next point you brought as is in bringing the business value so how do we start to relate that back there's a concept a lot of you know IT has been a cost center and now it's sexual driver of value in a world where businesses are increasingly delivering their value through software so we need to start tying the spending mapping into the business and then tying that to the value delivered a great example of this I was sitting last week with one of the largest cloud spenders in the world there have been you know nine figures with their primary vendor and in the conversation with the executives we realized that nobody was looking at both sides of that equation you had the the finance people who were saying hey we're tracking the cost and we think I was happening there and then you had the the revenue generators looking at the money coming anyhow the cloud people with that but there wasn't this centralized view to say alright we want to have a conversation about what value I were getting to spend and the question that always comes up what that is I was doing the right amount well let me build on that because it's seat because IT is historically and this is one of the things that we've been doing over the last few years IT has historically done things on a project level yes all right so we had waterfall development we tried to change that with agile we had you know buy the hardware upfront and then deploy the application on a cloud changes that so this project orientation has led to a set of decisions about finance at the moment that the business asides to do it we've changed the practices that we use at a development level we've changed the practices that we use at an asset level is it now time to change the practices that we use at a finance level is that really kind of what's going on here it is that the project analogy is good because what we're seeing is they're shifting from a project basis to a productive basis and products that deliver value increasingly if you think about the change that's happened with DevOps it in the scene and cloud companies are delivering more of their value through software and they're not just using IT for internal projects right it's actually the driver of business how we interact with Airlines and banks and all these things so that's the shift to say okay now we've gotten good at DevOps moving fast and we've gotten good at deploying and building better data stores now we need to bring in this new discipline and the discipline is what the market is calling fin ops which essentially is combining financial financial operations but you simply combine technology applied specifically do a cloud roll and it only can really happen in cloud it can't happen in data centers because data centers have fixed spending right you have to wait to get resources once you make the investment it's a sunk cost there's months of lead time cloud introduced the removal of constraints which means you can get whatever you want as quickly as you want and DevOps meant it's all automated so instead of your collection of 60 servers you've got thousands that are coming up and down all the time so what you don't have to do is bring in all these groups engineers have to think about cost as a new efficiency metric they have to think about the impact of their business at this code this confirmation template they just wrote is going to have and the finance teams have to shift from this mode of I'm under report retro actively and at a quarterly granularity sixty days after it happened and block investment to be I'm going to partner with these teams report in a real-time fashion give them the visibility help forecast and actually bring them together to make better business decisions about the cloud spend so cloud has allowed development to alter practically agile has been around for a long time before the cloud predates the cloud but it became practical and almost demanded as a consequence of what you could do with cloud so cloud change development through agile it changed infrastructure management through DevOps where now you're you're deploying software infrastructure of code and know as code and what you're saying is the third leg of that stool cloud is now changing how you do financial management of technology financial management of IT and we're calling that fin ops yeah and you you you can't really have fin ops without cloud or without DevOps and if you have the two together you alter we need this new set of it's a new operating model the reason this has come to a head of late is you know if you look at going to the Amazon riemeck conferences a few years back it was like well how much is cloud gonna be a thing and okay clouds now gonna be a thing when's it gonna happen now it's about the how and how do we do this better cloud is hitting for the material spend levels now at bigger organizations I mean the you know see the the cloud projections where it's going I think it's now 360 billion the next few years and we're seeing CFO's at public companies look to say okay it's not my biggest line-item yet but it's the most variable and fastest growing cogs expense so it's actually start to affect our margins we needed a new set of process used to actually manage this so one of the things that's coming to market is this new group called the phenoms Foundation which is a non-profit trade association that initially has a few dozen of some of the largest cloudspinners of the world there's the Spotify as the alaskans the nation why it's Autodesk's and they've all come together as a set of best practice practitioners to start to codify this into something that can be you know scaled out in organizations so that group is gonna be putting out a user conference around this area there's a new o'reilly book that's coming out the end of the year that's going to be sort of the treatise and all this stuff pulled together because what we found in you know me is in code ability in the last eight years we bring in technology and platform to show the recommendations of visibility how to do this but the real challenge companies run into is they don't have the internal expertise their finance teams understand what they need to the engineers don't and so you know they came to us last year saying can you help figure out the processes can you educate us and that's really where you know the spin offs foundation is growing bringing together those people to define those processes so the the impact of cloud on each of these different groups on the development group on the infrastructure team and now on the finance team the interest the developer groups I think some of them resisted it but generally speaking it's gone okay and and eventually tooling from a variety different players came along that made it easy to enact best practices and software development through an agile mechanism in the last few years after significant battles within infrastructure teams about whether or not they were going to use software as code we've seen new products new tooling that has facilitated the adoption of those practices what kind of tooling are we going to see introduced that facilitates thin ops so that finance teams procurement teams move from a project orientation to a strategic management of the resource orientation I mean I think the first is on the engineering side is seeing costs become a first-class citizen of an efficiency metric that they need to look at so you know in their build processes baked in the CI CD looking to see am I properly sizing my compute request for the workload that it needs there's some research research just came out showing that I think it's like 80 percent of the market is not using the best discounting options the cloud providers offer you hear these horror stories it's too expensive we said overspend that's not actually a problem with the cloud providers that's a problem with the enterprises not using the tools offered the discounts the reserved ences the infrequent access door exactly so I think at the end of the day it's the first step in this is getting those checks in place to say are we using the things that help drive the right cost for our needs and the other side of that the finance team is really changing the way that they are interacting with their technology teams becoming partners becoming advocates in this versus a passive you know retroactive reporter down the line and this enables these sort of micro optimization discussions that can happen where data center world we bought it some cots is sitting there odd world we can make decisions today that impact you know the business tomorrow so let me make sure I got this so I have a client who who I was having a conversation with them they told me that their their Amazon there AWS bill is 87 gigabytes mm-hmm not that monthly that's 87 pages that's 87 gigabyte yeah so we get we bring this 87 gigabytes in and it's a story about what I consume out of Amazon it's not a story what my business utilizes to achieve its objectives so we're now entering into a world where we're trying to introduce those financial visit that financial visibility into how that spend can be mapped to what the business does so the finance group can look at a common notion of truth and the IT group can look at a combination of troop application owners can look at a common notion of truth and that's what is fin ops is providing if I got that right yeah absolutely and the eighty-seven gigabyte example is the exactly reason why it is fin option not just cloud financial management you can't have a person with a spreadsheet looking at that and trying to make decisions about it right it has to be automated its IT finances code it's got to be baked into the processes you know we we've seen organizations that have hundreds of millions of individual charges hitting them in a consumption based manner the other thing that's come in with the fin ops as a core tenant is we're now seeing a decentralization of accountability for that spend so if you look at the big cloud spenders out there maybe spending tens or hundreds mils a year some of them have thousands of cloud environments gone is the day of we have a centralized Group begins to say we're gonna turn this off turn this off we want to give each of those teams the ability to see there's just their portion of that bill in the right mapped way as you said and to be able to take actions on the back of that so that's changed and they you know you run it you maintain it you understand which shutdown what has sort of come back to the old centralized model is this notion and this is where procurements job is shifted to largely of we deal still want to centralize the rate reduction so engineers you go use less right essentially finance team procurement work together with the cloud vendors to get the best possible rates through reserved instances can be reduced discounts you know volume discounts negotiated rates whatever it is and they become sort of strategic sourcing just say you're gonna use whatever you're going to use and you're gonna watch that to make sure you're using the right amount will targets threshold we're gonna make sure we get the best rate and that's sort of the two sides of the coin well very importantly procurement has always been organized on episodic purchases where the whole point is to bring the price point down and now we're talking about a continuous services where you were literally you're literally basing your business on capabilities provided by a third party and that is a very very very different relation just-in-time purchasing right and it's and it's a new supply chain management process where you have so many SKU options and you are making these purchase decisions sometimes thousands a day and that impacts everything down the road excellent gr storm and co-founder of cloud ability talking about Finn ops and cloud abilities role in helping businesses map the cloud spend to their business activities for a better more optimal views of how they get what they need out of their cloud expenditures Jr thanks very much for being on the connects here and once again I'm Peter burrows and thanks for listening to this acute conversation until next time [Music] you

(bright orchestral music) >> John: Hello there and welcome to this special cube conversation, I'm John Furrier, here in theCUBE's Palo Alto studio. We're here with Jonathan Nguyen, who's with, formerly Verizon, now with Fortinet. What's your title? >> Jonathan: Vice President of Strategy. >> John: Vice President of Strategy, but you're really, more of a security guru. You, notably, were the author of the Verizon data breach investigative report. Great report >> Jonathan: Thank you. >> John: It really has been the industry standard. Congratulations, great to have you here. >> Jonathan: Thanks, it was a great 16 years at Verizon in the security business, ran that data breach investigations team. So yeah, that was a great honor in my career. >> John: So you call it "strategy" because they don't want you to word cyber security in your title on LinkedIn in case they spearfish you. Is that right? (laughs) >> Jonathan: Yeah, having started my career as a US Foreign Service Officer, as a victim of the OPM data breach, everything about me is out there. I love in the perfect universe about how do you defend your identity when everything about you has been compromised to begin with. >> John: So many stories I had a Cube guest talk about LinkedIn and the tactics involved in spearfishing and the efforts that people go in to attack that critical resource that's inside a perimeter. This is a big problem. This is the problem with cyber warfare and security and crime. >> Jonathan: Yes. >> John: Talk about that dynamic, because this is, I mean, we always talk about the cloud changes, the perimeter, but of course, more than ever this is really critical. >> Jonathan: So, fundamentally as we begin going into digital transformation and notions about where data is today and the nature of computing, so everything has changed and the notion of a traditional perimeter has changed as well. So I'm going to borrow a great analogy from my friend Ed Amoroso and he said Look, let's pretend that this is your traditional enterprise network and all of your assets are in there, and we all agreed that that perimeter firewall is being probed every day by nation-state actors, organized criminal syndicates, hacktivists, anybody. Everyone's probing that environment. It's also dissolving because you've got staffers inside there using shadow IT, so they're opening up that firewall as well. Then, you've got applications and portals that need to be accessed by your stakeholders, your vendors, your customers. And so that traditional wall is gradually eroding, but yet that's where all of our data is, right? And against this environment you've got this group, this unstoppable force, as Ed calls it, these nation-state actors, these organize crime, these hacktivist groups, all highly sophisticated, and we all agree, that with time and effort, they can all penetrate that traditional perimeter. We know that because that's why we hire pin testers and red-teamers to demonstrate how to get into that network and how to protect that. So, if that's the case that we have this force, and they're going to break in eventually, why are we still spending all of our time and effort to defend this traditional perimeter that's highly vulnerable? Well the answer is, of course, that we need to distribute these work loads, into multiple clouds and into multi-hybrid cloud solutions. The challenge has been, well how do you do that with enough control and visibility and detection as you would have in a traditional perimeter, because a lot of folks just simply don't trust that type of deployment. >> John: That's the state of the art, that's the state of the art problem. How to deal with the complexity of IT as with digital transformation as it becomes so complicated and so important at the same time, yet cloud is also on the horizon and it's here. We see the results with Amazon Web Services. We see what Azur's doing and Google, etc., etc. And some companies are building their own cloud, so you have this new model, with cloud computing, data-driven applications, and it's complex, but does that change the security paradigm? How does the complexity play into it? >> Jonathan: Absolutely, so complexity has always been the enemy of security and at Fortinet, what we essentially do is that we help companies understand and manage complexities to manage risk. So complexity is only going to increase, so digital transformation, the widespread adoption of digital technologies to enable exponential and explosive productivity growth, right? Societal-level changes, right? >> John: Right. >> Jonathan: Also massive expand the inter connective nature of our society. More and more introductions. Accelerated cycles across the board. Greater levels of complexity. The challenge is going to be, not about whether you're moving into the cloud. Everyone is going to move into the cloud, that is the basis of computing moving next. So in the Australian government, the US government, all the agencies have a cloud-first migration initiative. It's not about whether. It's not about, it's really about when, so how do you move forward with moving your computing, your workload into the cloud? In many ways, it goes back to fundamentals about risk management. It's about understanding your users and your systems, the criticality, the applications you're associated with, and understanding what can you move into the cloud and what do you keep on prim in a private cloud as it were. >> John: I want to ask you more about global, more about cyber security, but first let's take a step back and set the table. What is the wholistic and the general trend in cyber security today. I mean, what is the, what's going on in the landscape and what are the core problems people are optimizing for? >> Jonathan: Sure. So, across my 20-odd years in cyber, what we've seen consistently has been the acceleration of the volume, the complexity, and the variety of cyber threats. 10 years ago, 2007 or so, there were about 500 threat factors. Today we're north of 5,000. Back in that point, there were maybe 200 vendors, today we're north of 5,000 vendors. There was less than $1 billion of cyber security spent. Today we're north of $80 billion of spend and yet the same challenges pervade. And what's happening now, they're only becoming more accelerated, so in the threat environment, the criminal environment, the nation-state threat actors, they're all becoming more sophisticated. They're all sharing information. They're sharing TTP and they're sharing in a very highly effective marketplace. The dark web cyber crime marketplace is an effective mechanism on sharing information, on matching threat actors to targets. So the frequency, the variety, the intelligence of attacks, automated ransomware attacks, is only going to grow. Across the board, all of us on this side of the fence, our challenge is going to be, how do we effectively address security at speed and scale. And that's the key because you can effect security very well in very discrete systems, networks, facilities, but how do you do it from the IoT Edge, from the home area network, the vehicle area network, the personal area network, to the enterprise network, then to a hybrid cloud. A highly distributed ecosystem and how do you have visibility and scale across that when the interval of detection between the detonation of malware to the point of irrecoverable damage, is in seconds. >> John: So tons of attack vectors, but also I would add to complicate the situation further is the surface area. You mentioned IoT. >> Jonathan: Yeah. >> John: We've seen examples of IoT increasing, more avenues in. >> Jonathan: Yeah. >> John: Okay, so you've got more surface area, more attack vectors with technology. Malware is one. We've seen that and ransomware certainly number one. But it's not just financial gain, it's also, there's terrorism involved. >> Jonathan: Absolutely. >> John: So, it's not just financial services, get the cash and embarrass a company. It's, I want to take down that power plant. >> Jonathan: Sure. >> John: So, is there a common thread, because you can, I mean, every vertical is going to have their own rendering issues, have their own kind of situation contextually. But is there a common thread across the industry that cyber security is run, is there a baseline that you guys are attacking and that problems are being solved on? Can you talk about that? >> Jonathan: Sure. So, at the heart of that is a convergence of operational technologies and information technology. Operational technologies were never designed to be IP enabled. They were air-gapped. Never designed to be integrated and interconnected with information technology systems. The challenge has been, as you said, is that as you go through digital transformation, become more interconnected, how do you understand when a thermostat has gone offline, or a conveyor belt has gone offline, or a furnace is going out of control, how do you understand that the HVAC system for the operating theater, the surgery theater, is operating properly? Now we have this notion of functional safety and you have to marry that with cyber security and so, in many ways, the traditional approaches are still relevant today. Understanding what systems you have, the users that use them, and what's happening in that and to detect those anomalies and mitigate that in a timely fashion. Those themes are still relevant, it's just that they're much, much larger now. >> John: Let's get back to the perimeter erosion issue because... >> Jonathan: Yeah. >> John: One of the things we're seeing on The Cube is digital transformation, it's out there, to kick around the buzzword, it's out there, but it's certainly, it's relevant. People are transforming to a digital business. Peter Burrows had (unintelligible) they talk about this all the time and it's a lot, a lot involves IT, business process, putting data to work, all that good stuff, transforming the business, drive revenue, but security is more coarse. And sometimes it's, we're seeing it being unbundled from IT and reporting directly up to either the board level or C level. So, that being said, how do you solve this? I'm a digital transformation candidate. I'm doing it. I got, my mind's full of security all the time. How do I solve the security problems, cyber security problem? Just prevention, other things? What's the formula? >> Jonathan: Okay, so at the heart of cyber security is risk management. So digital transformation is the use of digital technology to drive exponential productivity gains across the board and it's about data-driven decision making versus intuitive-led human decision making. So, the heart of digital transformation is making sure that the business leaders have the timely information to make decisions in a much more timely fashion. So that you have better business outcomes and better quality of life, safety, if you will. And so the challenge is about how do you actually enable digital transformation and it comes down to trust. And so, again across the pillars of digital transformation and they are first, IoT, these devices that are connected to collect and share information, to make decisions, the sheer volume of data, zetabytes of data that will be generated in a process of these transactions. Then you have ubiquitous access and you're going to have 5G. You have this notion of centralized and distributed computing. How will you enable those decisions to be made across the board? And then, how do you secure all of that? And so, at the heart of this is the ability to have automated, and that's key, automated deep visibility and control across an ecosystem. So you've got to be able to understand, at machine speed, what is happening. >> John: How do I do that? What do I do? Do I buy a box? Do I, is it a mindset? Is it everything? What's the, how do I stop those cyber attacks? >> Jonathan: So, you need a framework of automated devices that are integrated. So a couple of things you're going to need. You're going to need to have the points across this ecosystem where you can detect. So, whether that is a firewall on that IoT Edge or in the Home or there's an internally segmented firewall, across the enterprise network into the hybrid cloud. You're also going to need to have intelligence and by intelligence, I mean you're going to need a partner who has a global infrastructure of telemetry to understand what's happening in real time, in the wild. And once you collect that data, you're going to need to have intelligence analysts, researchers, that can put into context what that data means, because data doesn't become information on its own. You actively have to have someone analyze that. So you have to have a team. At Fortinet, we have hundreds of people who do just that. And once you have the intelligence, you've got to have a way of utilizing it, right? And so, then you've got a way of orchestrating that intelligence into that large framework of integrated devices so you can act. And in order to do that effectively, you have to do that at machine speed and that's what I mean by speed and scale. The big challenge about security is the ability to have deep visibility and control at speed, at machine speed, and at scale from that IoT Edge way across into the cloud. >> John: Scale's interesting, so I want to ask you about the Fortinet. How are you guys at Fortinet solving this problem for customers because you have to, is it, the totality of the offering? Is it some here, technology here and again, you've got 5,000 attack vectors, you mentioned that earlier and you did the defense report at Verizon, your former job. So you kind of know the landscape. What does Fortinet do? What do you guys, how do you solve that problem? >> Jonathan: So, from day one, every CISO has been trying to build the fabric. We didn't call it that, but from my first packet-filtering firewall to my first stateful firewall, then I deployed intrusion-detection systems and when all that generated far more lists than I can manage, I deployed an SEM. And then I went to intrusion prevention and I had to look at logs, and so I went to an SIEM. And when that didn't work, I deployed Sandbox, which was called dynamic malware inspection back in the day. And then when that didn't work, I had to go to analytics. And then I had to bring in third-party technology, third-party intelligence feeds and all along, I hoped I was able to make those firewalls, those defense sensors, that platform integrated with intelligence, work somehow to detect the attack and mitigate that in real time. Now, what we essentially do in the Fortinet security fabric is we reduce that complexity. We bring that level of automa-... >> John: And by the way, your ad hoc, you're reacting in that mode. You're just, ya know, I got to do this. I got to add that to it. So it's almost like sprawling, software sprawl. You're just throwing solutions at the wall. >> Jonathan: Right, and a lot of that time, no one knows if the devices are properly configured. No one has actually done the third party technology integration. No one has actually met the requirements that we'd employ three years ago through requirements today and the requirements three years from now. And so, that's a huge level of complexity and I think at the heart of that complexity, that's reflected in the fact that we're missing the basic elements in security across today. The reason the large data attacks and the data breaches didn't come because of advanced malware. They didn't happen of nation-state threats. These were known vulnerabilities. The patches existed. They weren't patched. In my experience, 80% of all the attacks could be mitigated through simple to intermediate controls. >> John: Deploying the patches. Doing the job. >> Jonathan: Complexity. Patch management sounds easy. It's hard. Some applications, there is no patch available. You can't take things offline. You have to have virtual patches or unintended consequences. And there are a lot of things that don't happen. There's the handoff between the IT team and the security team and it adds complexity. And if you think about this, if our current teams are so overwhelmed that they cannot mitigate known attacks, exploits against known vulnerabilities, how are they going to be able to grapple with the complexity of managing zetabytes of data with an ecosystem that spans around the world, that operates in milliseconds, where now it's not just digital issues. It's health, safety, physical security. How can we trust that a connected vehicle is secure or not. >> John: Talk about the dynamic between machines and humans because you mentioned patches, and this is, you can argue that it's a human mistake, but also you mentioned automation earlier. The balance between automation, using machines and humans, because prevention and risk management seem to be the axis of the practice. It used to be all prevention, now it's a lot more risk management. There's still a human component in here. >> Jonathan: Yeah. >> John: How are you guys talking about that and how is that rendering itself as a value proposition for customers? >> Jonathan: So, humans are the essence, both the challenge, in so many cases we have faulty passwords, we have bad hygiene. That's why security's awareness training is so critical, right? Because humans are part of the problem, on one end. On the other end, within the sock, humans are grappling with huge amounts of data and trying to understand what is malicious, what needs to be mitigated, and then prioritizing that. For us, it's about helping, the complexity, reducing the complexity of that challenge and helping automate those areas that should be automated so the humans can act better and faster, as it were. >> John: We're here with Jonathan Nguyen with Fortinet. I want to ask you about the ecosystem you mentioned that early and also the role of CISO, the Chief Information Security Officer and CIO, essentially the executives in charge of security. Say you have executives in charge of the risk management, don't get hacked, don't get breached, and also the ecosystem partners. So, you have a very interesting environment right not where people are sharing information, you mentioned that earlier as well. So you got the ecosystem of sharing and you have executives in charge of running their businesses effectively and not have security breaches happen. What's happening in... What are they working on? What are the key things that chief security officers are working on with CIOs? What specifics are on their plate and what's the ecosystem doing around that too? >> Jonathan: Sure. So digital transformation dominates all discussions today. And every CISO has two masters. They have a productivity master, which is always the business-side of the house and they have a security master, which is ensuring that reasonable level of security is, in the advent, managing risk, right? And that's the challenge, how do you balance that? So, across the board, CISOs are being challenged to make sure that the applications, the digital transformation initiatives are actually occurring and at the same time, in the advent of a data breach, understanding the risk and managing the risk. How do you tell your board of directors, your governments that you're not only compliant, but that you have handled risk to a reasonable level of assurance? And that means, in my opinion, across my experience, you've got to be able to demonstrate a couple of things: one, you have identified and adopted, with third-party implementation and attestation, a recommended best practices and controls. Second, you've implemented and used best-in-class products and technologies like Fortinet. Products that have gone through clearances, gone through common criteria, where things are properly certified and that's how you demonstrate a reasonable level. It's really about risk management, understanding what level of risk you will tolerate, what level of risk you will mitigate, and what level of risk you're going to transfer. And I think that's the discussion at the board level today. >> John: So more, make people feel comfortable, but also have a partner that can actually do the heavy lifting on new things. 'Cause there's always going to be a new attack vector out there. >> Jonathan: Absolutely. So I think the key to it is understanding what you're really good at and so then one of the questions I ask ever CISO is that when you look at technology, what is it that your organization is really good at? Is it using technology? Is it operationalizing that experience? Or is it really about ensuring that the firewall is integrated with your sim and that the sim works and trying to create your own threat intelligence. And I think that one of the things we do better than anybody else is that we reduce the level of complexity of that, allowing our clients to really focus on providing security, using the best-in-class technologies to do that. >> John: Jonathan, a final question. In 2018, what's your outlook for the year for CISOs and companies with cyber right now? >> Jonathan: I think it's going to be an exciting time. I think, is there going to be a focus back on basics? Because before we take this next evolutionary leap, in terms of cyber and computing and the digital nature of our society, we've got to get the basics done right. And I think the way Fortinet's going, our ability to use the fabric, to help manage risk, and reduce risk, is going to be the path forward. >> John: This is The Cube, bringing you commentary and coverage of cyber security of course, here in our Palo Alto studio. I'm John Furrier, thanks for watching. (orchestral music) The Cube.

>> Narrator: Live from Las Vegas it's the Cube. Covering Veritas Vision 2017. Brought to you by Veritas. >> Welcome back to Las Vegas everybody. This is the wrap for Veritas 2017. This is the Cube, the leader in live tech coverage, I'm Dave Vellante with Stu Mindeman. And Stu, two days where we're witnessing the evolution transformation of Veritas. Veritas used to be the gold standard for what wasn't known at the time as software design but just software function to deliver storage capabilities, no hardware agenda and now you're seeing investment under the leadership of new management. Some innovation, a cycle that's quite rapid. It's hard to tell how much of that is really taking shape in the customer base. Seems like the channel, partners are picking up on it. Customers are still sort of trying to figure out how to move beyond so their existing legacy situation, it's like Heath Townsend says. The vendor community tends to move at the speed of CIO. It's a great quote. But overall, I think very good show. Some surprises here in terms of specifically the breadth of the Veritas portfolio not just a backup company. Really focused on data management, focused on information management which obviously is relevant in the digital economy. What were your takeaways? >> So Dave the big strategy is the 360 data management. And I think one of the things we teased out in here is first of all, nobody thinks the cloud is simple. Multicloud, where customers are and when you dig into it and what Veritas has learned in the last year is that there's a lot of work to be done. Where are their deeper integrations that they need to have. There's different requirements from the different partners here. See Microsoft, the top level sponsor. Russinovich up on stage, giving kind of his usual hybrid cloud with a lot of open source pitch there but seems a good fit from the customers and partners that we talked to here to say Microsoft aligns well with what Veritas is doing. Amazon big player here. Lot of integration is happening behind the scenes to make sure that Veritas can work there. And then you follow Google of course, big focus around data, good to see where Veritas is going. We had a nice conversation with Google. Google seems very open on a lot of these not as much focus on some of the functionality that Veritas has so it's a good natural fit and then IBM and Oracle kind of rounding out the big players here. The thing I've come in, I think every show I've gone to this year Dave, is where do companies that have been around for more than a couple of years fit in this multicloud world and absolutely that's where the puck's going as Bill Coleman said that's where they're betting the company and putting it forward and we wondered coming in would it be like ah, yeah. This is a net backup and Veritas foundation suite with a new coat of paint on it? And no, I mean they really brought in a lot of new management team sure there's engineers here with a lot of expertise and experience to build on to know how to do this but I was pretty impressed with what I saw this week Dave. >> So no hardware agenda is evolving to no cloud agenda. That's one of the things we learned here and we had a good discussion. Got a little bit awkward at times but good discussion about why Veritas relative to the other players here. And what the answer we got back which we had to tease it out a little bit was essentially the upstart guys, the Rubrics, the Cohesity's to a certain extent Zerto I think they tried to put Veeam in that category we'll come back to Veeam it's kind of interesting Maybe not big enough to deliver on that multicloud vision. And they're really not even trying. Cohesity and Rubric I don't know. >> They've added a lot of cloud recently, actually Rubric's been doing it for a while, Cohesity definitely seen there. They understand that cloud but I think what maybe I'd say Dave, they tend to start from an on premises piece as opposed to you say this Veritas strategy is it doesn't matter and what many of the player, right, where is there natural gravity? Is it on premises or is in the public cloud and Nutanix, they partner with Google, they're doing the cloud. But absolutely, most of their >> Dave: They make more money. >> Stu: Most of their revenue is, you know, is found there. >> So the upstarts I kind of buy the Veritas argument that there maybe doesn't have the Gravitas and the heft to attack that multicloud other than pick at it and grow and they'll do hundreds of millions of dollars in revenue and maybe get to a billion and have a great exit. I think that'll happen. And then the other guys, the big guys, HPE, Dell EMC, IBM, they certainly have the capabilities to do that. But is it going to be the main focus of those companies? HPE maybe. We'll see. HPE and Veeam are an interesting partnership. My information suggests that Veeam is driving many tens of millions of dollars through Hewlett Packard Enterprise now that the microfocus deal has been done and they got rid of data protector. IBM they're kind of re-invigorating the storage business, data production is part of that. Dell EMC is I think challenged to invest They can't invest in as much as they used to certainly not in acquisitions. The acquisition pipeline is basically dried up. >> Stu: Dave, Dave, look at the DataMain was a great acquisition by EMC at the time now under Dell EMC. I mean, you're probably closer to it than me. I don't hear a strong cloud message coming out of that group when we talk about backup and the like. Dell corporate, of course they've got Microsoft partnerships Veeam has Amazon partnerships but it very much is tied to appliances or arrays or servers at the main piece, it's not a software message which is where Veritas is. >> Dave: If you look at Dell EMC's acquisitions recently, Isilon a couple billion, two and a half billion I think, Data Domain two and a half billion, DSSD a billion, which really hasn't turned into much at this point in time anyway. Extreme IO, not sure what they paid but you know you're hearing ebbs and flows on that but that my point is that is how under Joe Tucci EMC innovated. They would incrementally add on to their existing platforms. You were there. You saw it. And then they would invest in what Joe Tucci used to call tuck in acquisitions. And all that was well and good and they were able to sort of keep, not sort of, they were able to keep pace with the industry. That's basically stopped. That strategy. We've seen cuts and layoffs but still a financial windfall I think is coming for Dell. And VMware is a secret sauce there so we don't have to dig into that too much but my point is that services is going to be the lynchpin for that company in terms of attacking multicloud services and VMware. So now you >> Stu: And pivotal of course too. >> Dave: And pivotal as well, that's right. Great point. Now you come back to Veritas. Focused on that strategy of information management. Investing apparently in RND. Seemingly patient capital with Carlyle so you know me, I like to unpack the numbers. From what I can tell, my sources and got to do some more digging on this but when Veritas was acquired by Carlyle it was about 2.3 billion dollar company, wouldn't surprise me if on an income statement basis it's actually shrunk. It wouldn't surprise me at all. In fact, Bill Coleman kind of hinted to that. And especially if you start looking at rateable revenue models, maybe bookings could be up and I've heard numbers as high as 2.6, 2.7 billion but who knows. I've also heard now, the evaluation at the time of the acquisition was 7 billion and change. I've heard numbers as high as 14, 15 billion now, maybe a little inflated but I think easily over ten. And I think this company has an opportunity to get to three billion, get the evaluation up to 15, maybe even 20 billion. Big win for the private equity investors and the key to that, I think, is going to be a continuous investment. Go to market that aligns to those new areas that they're talking about and very importantly the ecosystem. I want to see this thing start exploding. The big highlights here were the cloud guys. What else would you highlight? You know, you walk around the shows a lot of smaller partners here Really would like to see that ecosystem grow. That's something that we're going to watch. And the audience grow. I think this show is up from last year next year I believe it's in Las Vegas again moving to the Cosmopolitan little bit better venue, bigger venue we'll see if they can get up to where the big boys go over time but overall I'd say pretty good second year for Veritas Vision. >> Yeah, you know Dave, when you look at the different areas Veritas has a full suite of software to find storage. The analogy I've used all the time storage industry is a knife fight in a dark alley. So you've got some big players out there that all have their software defined storage messaging out there of course Veritas would say they all have the hardware agenda. There's some truth to that but Veritas also has to partner with a bunch of these players to get there so where did they get the reach, how does the channel help them punch above their white, the differences there a two and a half, 2.6 billion dollar run rate company, revenue company that is private. So you know, they're trusted because they have history. They're not a small startup can this innovation and all the new team members come in and definitely the cloud piece is pretty interesting, Dave we see, we'll be back at Reinvent with the Cube and Veritas will have a presence there. Amazon, huge ecosystem, where do they play where do they show up, data, we've said so many times on here it becomes repetitive data is the new oil and customers need to take advantage of them. Can Veritas' message get them at the table and in a conversation where so much, it's about infrastructure and I love the message here at the show. It's not infrastructure technology it's information technology and we want to put a highlight on that so like the message, like where it's going, here are the customers but can they get at the table when there's so many different there's the startups, there's the big players everybody pulling at where the customers are and the GDPR was an interesting angle 'cause it was the crispest, the most crisp conversation I've heard on GDPR. I know you've been talking about it at least the last six months on some Cube interviews, I've done a number of interviews. But it really crystallized for me this week at the show. >> I'm glad you mentioned that because I've done a couple shows where GDPR has come up and I was like okay, yeah we get it. It's coming. It's nasty. How are you going to help me again? And I think Veritas did a really good job this week of saying look, we are here to help. We're going to start with Discovery and they sort of laid out the journey and I think they made a good case for their portfolio aligning well with solving that problem. So this could be a nice little kicker there. One of the things I wanted to sort of riff on a little bit was the tam, the data protection space. It reminds when ServiceNow went public I know it was a story about Gartner Antlis was very negative on and saying a helpdesk is a dead business and then Frank Sluman did a masterful job of expanding the tam, explaining that tam, guiding the company to a massive opportunity. And I see a similar dynamic here. On the one hand I say wow. Got a lot of companies in this data protection space even though it's exploding lot of VC money coming in, you're seeing new entrants like Datrium now gets in the space even though they're not just backup, that's not their primary but I mean you certainly saw SimpliVity with what's kind of their specialty. But guys like Datos.IO and some of these new guys coming in like we talked about Rubric, etc there's a lot of players here. Is the market big enough to support those? Part of me says ehh, I don't know but then I think back to that ServiceNow example. I think the tam is going to explode because it's not about backup. And it's not even just about data protection. It is about information management and I think Veritas got that right. What I like about their chances is they're big. They've got a big install base and I think their vision is right and they don't have that cloud agenda. They're a pure software company even though they do sell some appliances sometimes. And they got what seemingly is good management. I think I'd like to see them attract even more management as they grow and as they start executing this and as I say, the ecosystem has got to grow. >> Yeah, so Dave, IT has to deal with information governance. That's the defense they need to play. There's going to be money thrown at that. Some of the conversation we had this week IT operations becomes one of those tail winds that should lift companies like Veritas to be able to have further discussion and grow those budgets to be able to be a much more important piece. >> Alright good, Stu. Thank you. Good working with you again. It's been a long few weeks here but we're at it again next week. The Cube is at Big Data NYC which is done in conjunction with Strata in New York City. We've got a big party on Wednesday night. Actually we've got a presentation, Peter Burrows, Neil Raden, Jim Cubillas and we got a panel. Talking about software eating the edge. That's on Wednesday at 37 Pillars. Tweet me at @dvellante if you don't have an invitation I'll get you one although I heard there was a waitlist last week but we'll get you in, don't worry. And then we're also at Splunk next week, I'm going to be at Dotconf in DC. We've done Dotconf since I think 2011 was the first year we did Dotconf. >> And I'll be keeping a big eye on Microsoft Ignite next week while we don't have the Cube there. Obviously pretty important things like Aster Stack expected to roll out and got so many shows Dave. >> So the Cube, we love digital content creating content, sharing with you our community. Follow @thecube that handle for the Cube gems, you'll see a bunch of videos. Go to thecube.net, that's where we host all the videos from all of our shows. And then siliconangle.com is where we write up our news and analysis of these events and news of the day and of course wikibon.com is our research site. A lot of really good deep work going on there. So thanks for watching everybody. This is Dave Vellante with Stu Mindeman. We're out from Veritas Vision 2017. We'll see you next time. (music)

>> Announcer: Live from Las Vegas, it's The CUBE, covering VMworld 2017, brought to you by VMware and its ecosystem partners. >> Hey welcome back everyone, we're live here in Las Vegas. Behind me is the VM Village, this is The CUBE on the ground live at VMworld, I'm John Furrier, with Dave Vellante. Excited to have Sanjay Poonen, Cube VIP new badge that's going out. Five or more times you get a special badge on the website Chief Operating Officer, Chief Customer Operations as well at VMware, Sanjay. >> I think I won one of your hoop madness what do you call those Cube >> John: Yeah, that's right. You did get one of those. >> One of them, so add that to the smallest. >> Came in second to the bot, next year you won. We're going to have to check the algorithm on it that's before we had machine learning, so... Sanjay, great to see you. >> Always a pleasure, John and Dave, thank you for having me here. >> So, you know, in fairness to the VMware management team I got to say, great content program. Usually you can see, kind of, maybe some things that are kind of a little futuristic on the spot big time, on the content. True private cloud, data that Wikibon reported on, you guys are right in line with that. Hybrid-cloud is where its going from multi-cloud. You talk multi-cloud, the Kubernetes orchestration vision for Cloud Native, and even you were doing some interviewing on stage. >> Trying to be Anderson Cooper. >> So, tell us, what's your perspective because you got to balance here you got the reality of the Amazon relationship front and center, delivered big time there, shipping, western region, VMware on-prem, and on-cloud and this new cloud native vector of orchestration and simplicity. >> Yeah, I think, at least from our perspective as I describe in sort of that one chart where I try to put it in Sesame Street simple terms as I like to describe. VMware is one of the most fundamental companies that had a incredible impact in the data center, taking more costs and complexity. We are the defacto backbone of almost everybody's data center, but as the data center moves to the cloud you got to ask yourself, what's the relevance, and we've now shown, same way with the desktop going to mobile, and that's the end-user stuff that we've talked about the last few shows. But let's focus on that cloud part. We really felt as people extended to the public cloud we had to change our strategy to not seek to be a public cloud ourselves, and that's the reason we divested VCloud Air, and focused on significant things we could do with the leading public cloud vendors. As you know, Andy Jassy is a classmate of mine, Pat, Raghu, myself, began the discussions with Andy two years ago, and we announced the deal last year in October. This year having him on stage was, for me, personally a dream come true, and really nice to see that announcement, but we wanted to make sure we were also relevant to some of the other clouds. So earlier this year, in February, we announced Horizon Cloud, the VDI product manager. Today, we announced Kubernetes VMware, Pivotal and Google Form in Kubernetes, IBM Cloud. So all of the top four clouds, AWS, Azure, Google, and IBM have something going with VMware being with Pivotal. That's a big statement to our multi-cloud vision. >> And what a changeover from just two years ago when the ecosystem was, kind of, like a deer in the headlights, not knowing which way to zig or zag, do they cross the street. Where are we going with this? Now the clarity's very clear, cloud, and IoT, and edge with Amazon right there, a lot of the workloads there with multi-cloud. So the question I got to have you is that, as we just talked to the Google guys, is VMware turning into an arms dealer? Because that's a nice position to be at, because you're now driving VMware into multiple clouds. >> I think, you know, when I was on your show last time I described this continent called VMware, and then bridges into them. (John laughs) Let me try another and see if this works. That was good, but it had its 12-month shelf life. Think about the top four public clouds as sort of Mount Rushmore type figures. Each at different heights, AWS, Azure, Google, IBM Cloud, in market share they're the top four. If you want to build a house on top of Mount Rushmore, okay, it could work, but you're going to have to build it on top of one president's head. The moment you want to build it, you need some concrete infrastructure that fills in all the holes between them. That's VMware. It's the infrastructure platform that can sit on top of those varied disparate levels of Mount Rushmore, and make yourself relevant from on. So that's why we fell, whether you want to call that a quintessential platform, an arms provider, whatever it is, for the 4,400 cloud providers, plus the top four or five public cloud players today, VMware has to be relevant. We weren't two or three years ago. Now, for the top three, we're very relevant. >> I call it a binding agent. You're the binding agent across clouds, that's what you're really trying to become. But I wonder if, you know, you're talking about the clarity. I mean, VMware, things are good right now. Two years ago, was looking kind of hmmm, maybe not so good, with license growth down, and now it's up, stock prices double digits, >> Stock prices almost highest >> Okay, so I want to understand the factors behind that. You mentioned the clarity around vCloud Air and the AWS agreement, clearly. The second I want to attest is, the customer reality of cloud, that I can't just ship my business to the cloud, ship my data to the cloud. I got to bring the cloud model to the data. Did that in your conversation with customers, those two factors lead to customers being more comfortable, signing longer term agreements with you guys. Is that a bit part of the tailwind? I wonder if you could discuss that. >> Yeah, Dave I think that's absolutely right. One of the things I've learned in my 25 years of IT is, you want to keep being strategic to your customers. You never want to be in a place where you're in a cul-de-sac. And I started to sense, right, not definitively, but perhaps two years ago, there was a little it of that cul-de-sac perception as our license revenue was growing, particularly on this cloud strategy. Are you trying to be a public cloud, are you not, what's your stance versus AWS as one example, and with vCloud Air, there was a little bit of that hesitation. And if you asked our sales teams, the clarifying of our cloud strategy, which last year was okay but didn't have the substance or the punch. Now you've got an AWS coming on stage, and the other cloud providers where we have substance. I think that clarifying the cloud strategy game the ability for customers to say, even while they were waiting for AWS to be shipped, the last year, three or four quarters are spending of on-premise VMware stuff has gone up, 'cause they see us as strategic. The second aspect I think is our products are now a lot more mature than they were before outside of B sphere. VMware cloud foundation, which consists of storage, networking, VSAN, NSX, and you've talked to those people on your stage, workspace one, end user computing. These have really, really helped, and I think the third factor is, we've really focused on building a very strong team, from Pat, myself, to Raghu, Rajeev, Ray, Mauricio, Robin, I think it's a world-class infrastructure, so we just added Claire Dixon as our Chief Comms Officer on eBay. This is for us now, and everyone in the rest of the organization, we want to continue building a world-class sort of warrior-style strength in numbers. >> Quick follow-up if I may, just a little Jim Kramer moment. And the financial's looking good, you just raised four billion of cheap debt, right the operating cash flow, three billion dollars, and the nice thing about the clarity around vCloud Air is, the capital expenditure, it's just a very capital-efficient model that you guys have now, and I've been saying, you can't say it, but to me the stock's undervalued. When you do the ratios and the multiples on those factors, it looks like a cheap stock to me. >> John: I would love to see you buy it because we have to disclose it, the big position in VMware. >> No, no, no. >> We don't have any stock >> I wish we did. >> We just want to keep growing and the market will fairly value us over time. >> Yeah, it will. >> Well you guys had a good team at VMware, so let's just go back and unpack that. So there was a transformation. Peter Burrows was talking about IBM over the years, had a massive transformation, so really kind of a critical moment for VMware as you're pointing out. We had this great discipline, great technology, great community folks, still there now, as you mentioned, but that transition from saying, we got to post a position, are we in cloud or not, let's make a decision and move on, and as Dave said, it's good economics behind not having a cloud, but I saw a slide that said VMware Cloud, you can still have a cloud strategy using Amazon. Okay, I get that. So the question for you is this. This is the debate that we've been having. Just like in the cryptocurrency market, you're seeing native tokens in cryptography, and then secondary tokens, just one went crazy today. With cloud, we see native cloud, and then new clouds that are going to be specialty clouds. You're seeing a huge increase the long-tail power law of cloud providers that are sitting on other clouds. We think this is a trend. How does VMware help those potential ascensior clouds, the Deloitte clouds, the farming drone cloud that's going to have unique applications? So if applications become clouds, how does VMware help that? >> That's a really good question. So first off, we have 4,400 cloud providers that built their stacks on VMware. And it could be some of these sourced. Probably the best example are companies like Rackspace, OVH, T-Systems. And we're going to continue to empower them, and I think many of them that are in country-specific areas, France, Germany, China, Asia, have laws that require data to be there, and I think they quite frankly have a long existence, and some of them like Rackspace have adapted their model to be partnering with AWS, so we're going to continue to help them, and that's our VMware cloud provider program, that's going to be great. The other phenomenon we see happening is these mini data centers starting to form at what's called the edge. So edge computing is really almost like this mobile device becoming bigger and bigger, it becomes like a refrigerator, it becomes like a mini data center, and it's not sitting in the cloud, it's actually sitting in a branch someplace or somewhere external. VMware Stack could actually become the software that powers that whole thing. So if you believe that basically cloud providers are going to be three or four or five big public clouds, a bunch of cloud providers are country-specific, or vertical-specific, again in these edge computings, VMware becomes quintessentially important to all of those, and we become, whether you call it a platform, a glue, or whatever have you, and our goal is to make sure we're pervasive in all of those. I think it's going to, world is go, going to go from mobile cloud to cloud edge, I mean the whole word of cloud and edge computing is the future. >> So you believe that there potentially could be another second coming of more CSPs exploding big time. >> Especially with edge computing, and country-specific rules. There's some countries that just won't do business with a US public cloud because of whatever reason. >> Well, many of those 4,400 would say, hey, we have to have a niche so we can compete with AWS, so we don't get AWS-ized. So what's your message to those guys now that you're sort of partnered up with AWS? >> Listen, OVH is a good example. Virtuastream's another, I'll give you two good examples. OVH, we sold vCloud Air to them. We are helping those customers be successful. I go to some of those calls jointly with them, they are based in France expending some of their presence to the US, and have got some very specific IP that makes their data centers efficient. We want to help then be successful. Some of the technology that we've built in vCloud Air, we're now licensing to them so we can them be successful. Virtustream, you know Rodney Rogers being on your show. Mission-critical apps is tough for some of the public clouds to get right. They've perfected the art, and I've known them from my SAP days. So there's going to be some of these other clouds that are going to be enormously successful in their niche, and their niche are going to get bigger and bigger. We want to make sure every one of them are successful. And I think there's a big opportunity for multiple vendors to be successful. It won't be just the top three or four public clouds. There will be some boutique usage by country or some horizontal or vertical use case. >> Good for an arms dealer. Well this is my whole point, this is what we've been getting at. We're kind of riffing in real time, little competitive strategy, we got the Harvard MBA and I'm the Babson guy, we'll arm wrestle it out here, maybe do some car karaoke together. But this brings up the question, and I've been saying for a long time on The Cube, and Dave and I have been talking about, we see a long tail, torso neck expanding, where right now it's a knife-edge, long tail, top native clouds and then nobody else. So I think we're going to see this expand out where specialty clouds are going to come out for your reasons. So that is going to open up the door, and those guys they're not going to want their own cloud. >> Sanjay: I agree. >> And that's a channel, an app, who knows? >> You look at an example, one, two other examples of specialty clouds, these are SAS vendors. If you look at two vertical companies, Viva and Guidewire. These are SAS companies that are in the life sciences and insurance space. They've been enormously successful in a space that you're probably maybe a Zapier Salesforce would have done, but they have been focused in a vertical market, insurance and life sciences. And I think there's going to be many providers the same way at the IS level or the PAS level, to also be successful and we welcome, this is going to be a large multi-cloud world. >> Edge cloud. You guys talking about the edge before. Pat had the slide of the pendulum swinging. >> Sanjay: Exactly. >> What is that edge cloud do to the existing business? Is it disruptive or is it evolutionary in your opinion? >> It's disruptive in the sense that, if you've taken a hardware-centric view of that, I think you're going to be disrupted. You take things like software-defined WAN, software-defined networking. So I think the beauty of software is that we're not depending on the size of the hardware that sits underneath it, whether it's a big data center or small edge of the cloud. We're building this to be an all-form factors, and I agree with Marc Andreessen in the sense the software's eating up the world. So given the fact that VMware >> And the edge. >> Yeah, our premise is if there's more computing that's moving to the edge, more software define happening at the edge, we should benefit from that. The hardware vendors will have to adapt, and that's good. But software becomes quintessential. Now I think the edge is showing a little bit of, like, you know, Peter Levine had a story about how cloud computing might be extinct if edge computing takes off. Because what's happening is this machine starts to get bigger and bigger and sits in a branch or in some local place, and it's away from the cloud. So I think it actually is a beautiful world where if you're willing to adapt quickly, which software lets you do, adapt quickly, I think there's a bright future as world moves cloud, mobile, and edge. >> Great stuff, Sanjay, and I was referencing car karaoke, you have on your Twitter >> Oh the carpool karaoke. >> The carpool karaoke. >> It was a fun little thing. Maybe we could do it together, three of us some time. (John laughs) >> I don't do karaoke. Final... >> Just sing, man Just be out there doing your thing. >> I embarrass myself on The Cube enough, I don't need karaoke to help there. >> David: I'm in. (laughs) >> All right, I'll do it. All right, final question for you. >> That's a deal. Let's do it. >> Final question, Michael Dell and we're talking, the world's upside down right now, the computer industry has been thrown up in the air, it's going to be upside down, reconfiguration. You've been in the business for a long time, you've seen many waves. Actually the waves now are pretty clear. What's the fallout going to be from this for customers, for the vendors, for how people buy and build relationships in this new world? >> I think there's a couple of fundamental principles. I talked about one, software, let's not repeat that. I think ecosystems rule. It's really important that you don't look at yourself as having to own the full stack, you know VMware's chosen to be hardware-dependent. Yes, we're owned by Dell, but you've seen us announce a HP partnership here, right? You've seen us do deals with Fujitsu. We had AWS Cloud and Google Cloud. So when you view the world, I love this line by Isaac Newton, he said, "I see clearly because I stand on the shoulders of giants." And to me, that's a very informed strategy to actually guide our ecosystem strategy. Who are the giants in our space? It's the companies that are relevant, with the biggest market caps. Apple, Google, Microsoft, you know, AWS is part of Amazon, and then you know, HP, EMC, Dell, so and so, we list them, by my SAP. If we're relevant to all of them, I'd love to see the momentum of VMworld and the momentum to reinvent start coalescing. Collectively there's probably a hundred thousand people who come to all of our VMware vForums. Andy Jassy told me he expects 40,000 at re:Invent, and maybe across all of his AWS summits, he has a hundred thousand. I was sharing with him an idea. Why don't we have these two amoebas of growing conferences start to coalesce where we mingle, maybe 20% goes to both conferences, but we'll come to your show and be the best software vendor, that hijacks your show, so to speak, (John laughs) I didn't use that word. But we become the best vendor, and we'll roll out the red carpet to you. Now we've got a collection of 200,000, we couldn't have done that on our own. That's an example of AWS and VMware partnering. Now it doesn't have to be exclusively AWS, we could do it with another partner too. Microsoft doesn't show up at the AWS re:Invent conference, we do. Similarly we could maybe do something very specific with Azure and VDI at the Microsoft event, or Kubernetes and Google. So for VMware, our strategy needs to be highly relevant to the power players in the ecosystem, and the guiding our software-defined strategy to make that work, and I think if we do that, you know, you could see this be a 10 billion and bigger company. >> Well it says it's not a zero sum game, >> Sanjay: No, everybody wins. >> And if you can stay in the game, everybody wins, right. >> And I think in the software-defined infrastructure space, we like our odds. We feel we could be the leading player in that software-defined area. >> And it changes and reimagines that relationship between how people consume or procure technology, because the cloud's a mosaic, as Sam Ramji was telling me earlier. >> Oh you had Sam on your show? Wonderful. >> I had him on earlier, and he sees the cloud as a mosaic. >> He's a fantastic thought leader in open source, we were deeply grateful to have him at our event today. >> Andy Jassy, your classmate and friend, collaborator, he was onstage, great performance that he gave. Really talking to your crowd, saying, "We got your back," basically. Not a barney deals, not a optical deal, we are in on it, we're investing, and we got your back. That's interesting. >> We want to be with all of the key leaders that are driving significant parts of the ecosystem, we want to be friends, our tent is large. If everybody. Provided there's, like you said, not a barney announcement, so provided there's value to the customer. If there is, our tent is large, right? We will have point competitors, you know, here and there, and you know me, I'm very competitive. >> John: (laughs) No! >> I've not named competitors too much in this show. >> Really, really. >> But, if anything now, my mind's a lot more focused on the ecosystem, and I want to make this tent large for as many, many players to come here and have a big presence at VMworld. >> And the ecosystem is reforming around this new cloud reality, and the edge is going to change that shape even further. >> Competing on value, competing in a new ecosystem requires a new way to think about relationships. >> If I could give you one other example, then. In the world of mobile, who would have thought that the most important company to mobile security and enterprise to Apple is VMware now, thanks to AirWatch, or to Samsung, whatever it might be, right. This is the world we live in, and we have to constantly adapt ourselves. So maybe next year we'll be talking about IoT or something different, and their ecosystem. >> Sanjay Poonen, COO of VMware, good friend inside The Cube, always candid. Thanks for sharing your commentary and color on the industry, VMware and your personal perspective. I'm John Furrier, Cube coverage live in Las Vegas, here on the ground floor in the VM Village. We'll be right back with more live coverage after this short break.

live from the mandalay bay convention center in las vegas it's the cues covering vmworld 2016 rock you buy vmware and its ecosystem sponsors and welcome back here on the cube to continue our coverage to vmworld from mandalay bay along with peter burrows i'm john woloson it's a pleasure to welcome two fellows are know all about being on the cube one of them very recently Kim Barth is back with a CEO and co-founder of catalyzing software came good to see you oh it's great to see you and Eric Herzog I mean the Hawaiian shirt we know is is your signature moment it was finally a vice president probably marketing and management at IBM but you're an original cubist you said that I think the first year that the cube happened I was on with Dave eons ago must have been either 2010 or 2011 the first cube ever we got to make you like an emeritus member of the Alumni Association something and let it be careful when we say say cubist let's be very clear about it right now I've got to mix words here yeah kubera all right so if you would let's take a look at talk about your relationship Kenta logic at IBM I know you have a long-standing partnership you might call that that's evolving and getting a little bit stronger and Ken if you would maybe paint that picture a little bit oh look I mean these guys are just fantastic to work with we've been working with IBM for a couple of years now we're excited because we're going to continue to move the relationship forward and we've got some exciting new announcements about supporting even more of their storage coming out later this year what we're really excited about is the way that they've jumped in and they have a complete line of flash products and as you know from our conversation the other day flash is just taking the market absolutely by storm particular around the primary applications so what we've done at IBM is dramatic extend our portfolio this year we've been a market leader for years in all flash and we see flashes ubiquity cross all primary data sets so whether that be the high-performance databases VMware environments are virtualized environments cloud configurations big data linux doesn't matter what the workload is and we have all sorts of price points all sorted from performance yo flash does have different performance characteristics depending on how you configure it now you use it substantially now of course any flash configuration abstention faster than a traditional storage array or any hybrid array 10x to as much as a hundred x in real-world application spaces so we've expanded it down from our high end into very cost effective energy products as low as nineteen thousand dollars street price not lit not right there at the point of attack end-user raid five configuration for nineteen thousand we have big data analytics all flash configurations we have mainframe in the upper end of the Linux community of what's left of the UNIX world that's still out there that few Solaris and AIX business we have a lot of products of that space again all going flash and it doesn't matter what the workload is virtualized workloads database workloads virtual server workloads virtual desktop workloads cloud workloads new world databases Splunk spark Bongo Hadoop Cassandra all of those types of workloads now can be all flash and we have the right workloads with the right solution at the rice price point and you pick the right price point right solution you need for the right workload an application and when it seems to me that you talk about performance obviously key factor their speed you know off the charts but cost is the one that once that's been solved as you said is that the big nighter is that's what's going to like the what you're seeing is flash is essentially at the same price as disk was so there's a number of storage efficiency technologies on the primary side which is a we do cattle onic edges efficiency technologies on the copy side because so much copies of data are made not only for disaster protection but for test and dev snapshotting that's n used for backup so they track all that to get efficiency on the secondary side of the equation we do things like real time compression you block level d do we have all kinds of technologies dying to cut the cost of flash and so when you factor that in flash is way less expensive actually then disc and when you look at how it impacts your data center so for example if you were running certain workloads we have a real world public reference to run their work blood which is database work look took 80 servers because the storage was so slow so you over provision your servers because of what's called storage latency that customer just swapped out the storage for flash and went from 80 physical servers to 10 to the exact same workload so the impact of flash is not just performance oriented it's actually very cost oriented not just what does it cost per gigabyte for the storage but if you can take out 70 servers you just cut not only the capex on his server farm right all the operational expenditures around it and then what cat logic does people make copies of the primary data sets and they make everything efficient on the copy cider if you will the secondary side of storage and so they complement each other what we do on primary what they do on secondary so let's talk about that a little bit so if you think about it there no productivity is a function of the amount of work that you can do divided by the amount of cost or resources consumed to form that word so flash has significant benefits as you just said that cause side but when we start talking about a lot more copies that can be made available to developers or decision-makers in a lot of different forms now we're accelerating the speed by which that digital assets get created and we're improving productivity not just through efficiency and the cost but accelerating the value that I t's able to deliver through the business that's exactly right you're hitting the nail on the head because as Eric over here said it saves capex and opex with just slash but if you had a copy data management product particularly one like ours that has it's really a combination a copy data management we have a workflow engine and we have full access to rest api's that the customer can begin to tailor it to their environment and solve a lot of pain points like around test dev database copies snap copies things like that you know they did some studies IDC actually did some studies earlier this year we're at any given time a customer would have 50 copies of different data floating around the neighborhood 50 snaps and the reason this is a complex issue is because you have many different storage types taking many different stamps you have applications snaps and so if you think about it this all starts by organizing the snaps putting them in a searchable database if you will then offering a workflow engine where you can automate the process even make it self service right and at the end of the day what can happen is they can move delete so they really kind of you have control over your environment but what they can do is they can begin to really save huge money so with flash you're going to have good kept at x + op X but if you put our ECX product in which is what a lot of our customers call copy data management on steroids you can see geometric savings of that op X and capex but you're also accelerate development time absolutely official with all about efficiencies you all those things are absolutely improved absolutely right and then if you start having like we have arrested a series of rest api's you can begin to really tailor it to that customers environment so if you're doing again I go back to the test dev example and test dev we can tie that directly into things like puppets chef bluemix right these are all development tools that make it totally efficient for the software developer right that's just one use case will we go ahead no so Eric as I new introduces more of these products arguments in the storage business for a long time forever yeah ain't that about me and respects IBM created the whole concept of storage administration whatever was 30 years ago now but as IBM does this is storage increasingly being elevated as customers see their data volumes going up and the need to track where this data is who's using it the number of copies in place how is that impacting the way IBM thinks about the concept of an overall system well we look at it from the application space it's all about the applications workloads and use cases and customers want to optimize the business value of that data so as it's growing exponentially you'd be able to access that data quickly and most importantly it needs to be always there so everyone talks about speech BCC speed for flash it's not just about speed of flash your Flash ray needs to be reliable available and serviceable just like our driver ray had to be and so you're looking at different characteristics and performance different characteristics and price different characteristics in the rats capability the reliability available in serviceability and you tie that to what you need for your workloads we've had the highest in oracle database in a company let's say that company is all oracle so you need something like our flash systems a 9000 or flash system 900 but if you've got the oracle database that tracks their asset management which would mean things like chairs tables and whiteboards that's not high performance that could go on our store wise 50 30 f which is way more cost effective and it's incredibly fast compared to our driver e but not as fast as our flash systems so it's very important a that you have the performance but be if you don't have the reliability doesn't matter how fast you are if the thing fails then your cloud goes down your virtual environment goes down your VMware doesn't work you can't access that Oracle or there sa p or that Hadoop and so it's really about how to optimize those workloads those applications and those use cases and storage is the rock-solid foundation underneath that allows you to do that absolutely and when you're going into world that's all about cloud which means real-time access and self service and the self-service suspect by the way it means that you don't always have a store gentlemen accessing it so if the thing fails and the guy's a VMware admin or a developer in Oracle or in any other environment he doesn't know what to do so you can't have the storage fee land in cognitive workloads and big data analytics workloads where you're running petabytes and petabytes and petabytes of information as fast as you possibly can you're trying to make business decisions or rail times you need the speed so what if it's super fast and then it fails so to put it on a black trading you know database for black trading for example or some of financial applications if it's really fast and then it fails that didn't help it hurts you so it's all about how to manage those workloads applications use cases natural for performance which everyone knows flash is but all that reliability available in the serviceability and then they manage a cat logic on the back side all the copies that people create which is it which is critical to make sure that those get managed appropriately and you don't have you really need 50 copies but you don't want 150 it is completely and efficient on the storage side and then developer doesn't know what to use so you just made it worse for yourself so you just introduce raise an interesting point related to data governance so I know that obviously cata logic has some ideas about how data governance is likely evolved partly in response to the need to manage multiple San apples understand where they are talk to us a little bit about how data governance which is fundamentally about how a business brings policy roles responsibilities to assets as data becomes more of an asset house governance changing oh I think governance is huge because dated you know data is exploding and particularly you start moving you have numbers of copies like Eric was saying how do you track that how do you know where it is how do you you know if you're in a compliance based business you could be in a lot of trouble so you've got to make sure you can audit and know where it goes and again one of the ways to do that is to keep it under control and not have so many copies floating around in his example you might make 10 to 15 copies of that database why do that if you only need one right that's one of our big advantages that we have versus some of our competitors we do what's called in place copy data management which means we we simply leverage Eric's great storage out there so a lot of our competitors will actually put a copy of that they'll make a copy on Eric storage move it to their storage and then you've kind of exacerbated the problem a little bit right what's like hoarding right exactly right but I and I mean kind of the Peters pointing some what you're saying is is that because we can we do right and so we make all these copies and it's exactly not need you know fifth down but but because I can and it's cheaper and storage is going down like cleaning out that closet we all have that closet at the house that we just keep putting stuff in and one of these days we think we're going to clean it out and the thing just grows and grows and they have to buy another house to get another closet so again how does this all this curb that behavior and that allow me to monitor through some governance policy when somebody is going over the line and we bring it back of the line and and we get a little more regular restrictive act again because of our workflow engine that we have in the product you can set thresholds you can automate the process so is example when a you know when a DBA or somebody gets a copy of the database you can put a time limit on when it's going to wipe it out they're going to stay in sync across the board so again you're not replicating this thing time and time again they're getting timely data when they need it and then it can automatically be removed but if I mean time one of the biggest problems within an IT organization is making available making data available to the disparate groups that need it solutely administrative costs of I need data well we'll get around to giving you that second to sorry in September right being able to do this much faster and utilize flaps technologies to facilitate that process has an impact on cost has an impact on the benefits which increases productivity has an impact of governance but also is an impact on the healthy friendly relations between IT and the business yes well what's happening is you're undergoing a revolution in the data center cloud obviously it's started with virtualization now it's extending to the cloud now you have a line of business that's more involved in IT than it's ever been before so the last thing you want is to worry about your storage or you just want it to be the foundation okay I'm from Silicon Valley we have earthquakes buildings really fall down on earthquakes if they have a bad foundation if you have a rock-solid foundation your cloud your cognitive your database workloads will always be fine you want to make sure that as you're doing that you're doing a cost effectively so both high performance that you need but high performance has a whole bunch of different price points at high performance because the entire world's got high performance other thing from an IT perspective and a business on a perspective flash storage is actually the evolution the revolutions the rest of the data center right I'm old enough where when I took my first computer class of University of California not a punch card then it all went tape anyone's seen a 1985 Schwarzenegger spy movie it's all tape then you see a 1995 Schwarzenegger spy movie and it's all hard drive arrays now it's all flash arrays so it's just an evolution from a storage perspective and it coincides with a revolution in the data center of cloud cognitive big data analytics real-time evaluation of data sets and so flash is coming at the fur and perfect time as you have this revolutionary confluence in the data center in the cloud and the web application workload yusuke space the fact that flash is only at evolution is actually great because you don't have to worry about it it's just an evolution of storage and allows you to take advantage of the revolution in your gayness enter your application or workload space that's the way the flash brings is is it's not a revolution it helps the revolution it does because as Eric was saying it you want to modernize your data center is what you're out to do and if you splash is a good step towards that and then if you had a copy data management tool like our product ECX on top of it it gives you the flexibility to move to the cloud move move it move data up to the cloud and back right it allows you to start offering self-service to your people so it doesn't take you know weeks or days to get that copy of the data they can start doing it themselves so it's a step in the right direction as he said from an evolution to the revolution of the data center yeah I'll bet out there somewhere right now there are a couple Millennials watching say did you already said about punch cards what a punch good oh no that's all it's all about date at the right place at the right time for the right people and you guys are a great example of getting that job done and thanks for being with us and sharing your story and we wish you continued success that's right I'd like to say one thing with you it is finished real quick if anybody out there has SVC or if they have in the flash from IBM please come see us we've got a great product that will greatly increase the capex it's cattle ajik software or can bart thank you gentlemen for being with us here on the cube we continue our coverage from vmworld after this thank you

live from the mandalay bay convention center in las vegas it's the cues covering vmworld 2016 rock you buy vmware and its ecosystem sponsors well welcome back inside mandalay bay as we continue our coverage at vmworld here on the cube along with peter burrows i'm john walls are now joined by David Cabrera Solutions Architect CDW and leek as well vice president product storage for the VMware storage and availability business unit gentlemen thanks for being here good to see you great to hear house show going so far for you oh it's on fire man did we give a tiger by the tail here that's been great don't let go don't let go even though this for a long time and we were just talking about your history your back i said yeah i first got into virtualization back at y2k wow I remember that how far we've come huh and yeah yeah again I did it why i use it for y2k testing and then from there i worked for a disaster recovery services company and we have these customers katrina rita in 911 they just came in with their stuff and i didn't have enough physical servers to you know in their contract to recover their businesses and they were taking out vmware evaluation licenses to get their businesses up and running and vmware was super supportive of that and they knew you know the licenses would come and wow yeah it was it was like rust in the esxi or ESX at the time I you know just it's actually you know easy and as we think about what's happening on hyper conversions now right yeah it's the same idea right I mean it was actually practicality you not a necessity right of using VMware because gosh I needed to do it for kind of TCO reasons and what happened was esxi started out at the fringe almost right and then came roaring into the you know into the core as people realize hey I really can run like mission-critical applications business collapse the same trajectory is happening now with VC an HCI right and our DCM writing notes we're starting off like outside startup VDI test and dev right you know all that you know to management clusters right but now what's happening the majority of applications mates business apps right yeah yeah it's it I firmly 1,000% believe that you know any application can run ova n no I say and it's we were talking about this i still have customers they they talk about running exchange or sequel on physical servers and I'm like why so now you take all those benefits of virtualization and you add v san on top of it and make everything totally portable on on just you know commodity based hardware and you know pretty soon our job as storage architects building figuring out sans and raid groups and you know how big my lund is supposed to be who cares throw some storage in the server adam as you need and keep going well to that point lee you're talking before we went on the air here about how people you know professionals company who's saying i want to get my attention from here to up here all right i want to be able to look at business and not so much about what's going on behind the scenes in the back office is this thing i was even at CDW recently right we're talking about how long it takes to train someone on enterprise storage versus you know the actually the less you know about storage that the more a hyper conversion system words to what you expect i add a note yeah of course it gets bigger right i mean why wouldn't it right so the idea that you can get people trained up not just using the product but actually selling the product I mean it's actually a very interesting dynamic one of the other interesting things we're seeing right now is just a overlap of flash right all flash right which first you know blue you know came blazing onto the scene for performance right for an application is now coming in because customers want to spend less time actually man is that looking down I want to look down anymore right and so the idea that the customer satisfy you arts because the risk of Miss configuring something actually really low right it is you know that nearly as much time and you don't worry about it right right so you have the performance you need you have the space you need you know you get the deduplication and and it just as you will you need more performance you need more space at another node and on top of that you get compute memory and everything else so their stores some challenges associated with applications and selecting the technology and there's a lot of transformation and transition there's a lot of new technologies coming online that's right even in the storage world so how is virtualization helping customers or helping protect customers for making bad choices with current products now one thing you want to look at is where do I manage this from right how many silos do I have right and so the extent that you can leverage the Center for example right as a common management domain not just for storage by the way right well we started off with compute right they get source we also have networking right so what we have today with NSX right integrating that together we've heard what we announced the show here there it is this VMware cloud foundation great way to go and integrate right all the rich functionality and now you've got it in one user interface right that simplifies the deployment and then the support right making everything easy so you know putting everything together plug it in run a wizard everything's set up for you and it and it's set up the way it should be yeah so it's not as dependent upon the underlying type or choice that you made about storage it's now more what does the application need and let's just point the application at the pool yeah so so there's still I still see you know there's going to be those needs where that super low latency super fast care that shared storage is going to be critical and is going to be needed for specific applications but all that other stuff all that normal day-to-day web servers applications email file shares all that stuff you can just throw it on there and it works you don't have to worry about all the silos and all the different management people that you need so going back to John's question the day on your point later the idea that getting people to raise up defectives Dave how much time are you now saving not doing the physical stuff actually starting to talk to developers the people are taking all of this day to all these assets and turning it into the business value are you able to spend more time and directly supporting them as you go into customers and design the it does seem like that that shadow IT or DevOps or you know the people that aren't depending or depend on IT the consumer is becoming more of the decision maker or at least the influencer and what what V San brings to the table for those kind of people especially with the automation and and and you know the whole private cloud piece of it it takes down that I call it the IT stop sign okay so you know why is DevOps going to the public cloud because it's easy so you have to be as easy as wherever they're going in order to bring them back and and keep that governance on your data and keep your IP where it belongs whether it's in that private cloud or off into a secure more secure public cloud or through a hybrid cloud or whatever v san kind of keeps everything contained for that so yeah and I think there seems to be a trend or at least a thread here that I'm hearing a different conversation here about simplicity right felicity just not keeping things simple for people letting them focus on their core competencies and the right there really what they're paid to do and not distract them away from having to learn like you said it up to speed in 15 minutes as opposed to hours or weeks of training week looks you having these three clicks yeah yes yeah I ask customers pretty routinely now you know what is your budget gonna be is it higher or lower this year the answer it's like it's lower right there like you do you have more people or less people and I call less people they're shrinking data centers right and all of a sudden and then you say well and how many projects do you have like all of every every project now as an IT component right so now it's the pace of change right and so if you don't have to worry about the underlying infrastructure as much now all of a sudden it just becomes easier to start worrying about hey how do I go in scale we had a customer this morning I was talking to Buddy that was talking about well you know the other thing it does is it gives me the opportunity to have kind of bite-size chunks right so the risk of making the wrong decision is actually low right up by a set of servers and as opposed to you know I buy something that's this big where I have to basically predict what's going to happen for the next five years this looks more like hey you know what I kind of have to know what's going to happen over the next six months and then we'll figure it out from there that's today's mentality so easier to change one piece instead of the whole puzzle that I died nobody the dance for that that's a great point it's it there's not that many IT shops that are refreshing their entire data set there are but that's not that many usually it's a silo so but there's always projects PDI some sort of new essay p application or you know we're migrating to a new version of exchange or whatever it is it's okay let's start there and and and and let's just slip it in try it out you'll see you like it it's like sorry it's like crack everybody needs more all right so Rach wait liberal lawyers yeah try it out and you'll see you like it and then from there it'll just roll and and and as the the old siloed equipment starts to age out they'll just easily transition it into visa it's wedding we just get emotional over at a new server shut that down we could we just finished a survey of 250 decent customers and you know one of the things that we were watching is so what about the applications right because when we started like it was hey I'm going to try this in test em I'll try it over here or dr is a good one right I try it and you know it's not i'm not running like my real stuff on it right you know now what we're finding it this year's switched right so we flipped into the majority are now business-critical applications right there an X equal exchange share with the whole Microsoft stack during Oracle databases right there make Percona right i mean of mice equal variance right it's really your singing so all of a sudden they're like that you know there's no real hesitation right and it's the economics that drive this right once you started looking to say you know here's how i can go and do this in more bite-sized chunks starts to become more you know but it's more cloud like i think from that standpoint it's also the risk because as you said you make a design decision today yeah it's not going to be the right design decision in 18 months to make a product decision today it's probably not going to be the right product decision in 18 months you make the right you know you want to your company decides to buy a new company or wants to diverse the vessel you don't want the infrastructure getting in the way of those business decisions so it's it's certainly economics but it's a lot of it has to do with the fact that as you said the pace of change is so great that the only way to ensure that you can keep up is to focus on where the change really needs to be and diminish I focus on where the change isn't as required that make sense it does make sense in you know one of the things that you know degrees of freedom that customers also want is we're finding you know they're pretty used to being able to configure servers and choose their own server all right so the idea that we give choice right running software on a server where you get to choose right i mean we have what 15 different partners right server partners building something called a vc n ready node right so you can take our software pre-configured right to strip out the integration risk if you will there's also some customers who just want like the simplest easiest fully integrated we're working with emc that VX rail product is an integrated CDW offers both of these right so for customers who want just to say I want a single point of support integrated backup I mean that's a world-class product right as an integrated appliance that's one way to buy right one way to deploy but on the other hand if I'm a ucs shop I can go and say hey here's how i get a ucs if I may HPE shop here's how I do it 100 right all works all precor oh oh ya habla del e course right exactly yeah yeah thank you for that by the way so no sway be back yeah value out of the right there we go exactly yeah you know last before your eyes therefore that's all good right right but this this choice right i mean it's interesting because certainly customers are looking at like what level of choice and flexibility do they want and this server choice right is a big one yeah yeah it there's the reason why people buy servers isn't because it's a specific brand I mean you know if you if you look at the open up servers and you look inside it's really it's Intel processors or maybe an AMD processor a bunch of ram and some disks the the software that the vendors offer to manage those or what's important and and it's funny since vcenter mm-hmm even before it was vcenter you know just I guess 20 was it being able to integrate the management of the servers into vcenter and having all those sensors and all that stuff kind of bubble up into vcenter is huge and be able to hook in and take like we realize automation or viewer orchestrator and make it to pull the physical hardware as well as a virtual it's it's big have that in with ES and it just kind of makes it easy so Dave's you working with a lot of customers every single day yep they are also starting to deploy cloud or at least procure plot proud as part of their core strategy talk a bit about about talk a little bit about the challenges associated with intercloud communication and a role that brutalization plays yeah yeah so it's it's still kind of the wild wild west out there with with that I know you know VMware with NSX trying to and that with the new announcements and I haven't fully digested all this stuff from yesterday but it was out just the idea of providing that that kind of peanut butter of policy you know for security and networking and all that from you know whatever you need to keep up button the other way that's a technical term I like that or Paula I like that I have more creative butter of policy in your private cloud and being able to kind of spark that up in in whatever public cloud you choose to use kind of brings that core via you know so vmware's message was always whatever Hardware you have your choice now it's whatever cloud you have your choice yeah it kind of makes sense now and and yet security and the networking is is the biggest piece of it and that if you look at the NIS T official version of hybrid cloud it's it's being able to move things back and forth seamlessly and that's what it brings his David a big part of this cross cloud message right and there's an obligation and it turns out I I'd argue that your most strategic engagement with the cloud is actually data alright VMS you can spin up spin down right there transitory it's on or off but you know the decision about where you place data is long-standing what do and what data sovereignty issues about you know it takes you know data is not quick to move anywhere right so it takes time and it takes you know from a cost standpoint right you all of a sudden lock yourself in on data to keeping it going right so those sort of issue didn't if you want to take it back by the way you know there's some egress fees and other things to go and manage so what we announced right in this cross cloud world about how we're running for example you know in IBM SoftLayer right and you can now spin up vcn and soft layer right and see the same policy based management right across the cloud now right I mean that extension right into the public clouds right is a really interesting way for us to go and talk about moving from just a storage you know provide into a data services data management right that becomes a key element how do you convince people to be early adopters then of that because now that they're making decisions that not that they they all matter that are those matter maybe a little more is it really early adoption though this far into the game I mean wow I mean everybody we came out a transitory element yeah you're saying ok I want you to take another step yeah I want you go a little further out and so that's what I was saying well here's here's where I'd let me out a little bit too that is what I'd say is that you said data management yes i would say data Asset Management's there that's so you know we were talking earlier digital business is about how you're going to apply data differently to retain and sustain your customers and so this point ocean of data as an asset you really elevates this conversation about what data where when all those other things and to the degree that virtualization simplifies those conversations it's going to have a major impact on business flexibility agility even designed so you guys agree so degree yes so think about that and and I have to credit a vmware se his name is Paul Rowan think of NSX as kind of a bodyguard okay and every chunk of data whatever it is as a bodyguard kind of leading them leading the way and protecting that piece of data from whatever it is that it needs to protect it wherever it goes and that's really a real simple analogy so it's not just I have to configure a firewall over here and make sure that if it goes into cloud that that firewall has the same rules it doesn't matter anymore because my bodyguards going with me and and and I'm that bodyguard is making sure that all the policies are applied no matter where I end it also opens up new areas you know when you talk about data asset management now I started thinking about well you know maybe I want to do some big data analytics I'm where my data is right where where do i locate it right and you could locate different places for sovereignty security local performance for example right back up any geolocation issues right and then I also started thinking of a policy base rate we call source policy based management and that sort now it says you know it's not just capacity right maybe want to be thinking of a performance right how do I think about allocating performance how do I think about managing performance across different assets for example right so lot I mean this is what's exciting i think is once you start where we've started from which is at the hypervisor level you're at a natural architectural injection point to go and say we could take all of these pieces in and very efficiently go and manage them provide new functionality right that's a really interesting way as customers trying an SS like my date it may not just be here anymore right may be out here may be out there how do i go and get a handle on that that's true once you hit that inflection point where in the industry starts coming to you right that's right VMware's clearly hit that point and then some yeah interesting well we've had peanut butter policy we've had bodyguards i wish made more time to do morals of wisdom okay the big IT stop sign I like that too are you good thanks for joining this guy's thank you have a great show all right our coverage on the cube vmworld continues in just a moment here from Las Vegas