>> Narrator: From around the globe, it's theCUBE with digital coverage VMworld 2020. Brought to you by the VMware and its ecosystem partners. >> Everyone, welcome to "theCUBE's" virtual coverage of VMworld 2020. I'm John furrier with my cohosts, Stuart Miniman and Dave Vellante. 10 years covering VM it's our 11th Vmworld, 2010 was our first. Guys, this is an unusual event. It's not in person. Analyzing the keynotes and essentially the main announcements in the general sessions. Let's analyze VMworld 2020. I know it's hard, we're not in person. A lot of the hallway conversations we're grabbing on Twitter. Obviously we've got our Cube interviews on "theCube".net. There's a link on the front page of the VMworld site. Check it out and go check out all the dozens of interviews we're doing here with our community. But, the event is "Digital Foundation "For An Unpredictable World," that's the theme. Most of the announcements are around future architecture, but the blocking and tackling is around AI With NVIDIA. You got security and you got some really key announcements around networking Stuart. So guys, what's your take on all this? Because, VMware has to set the table. They've made good moves under Gelsinger, last few years, you're seeing another Q2 successful quarter, Dave, you're starting to see VMware's investments pay off Raghu and the brain child who are behind VMware making these calls Stuart. Guys, this is the VMware's moment to go to the next level. What's your thoughts, Dave, we'll start with you. >> Well, I mean, as always you saw VMware have on stage some really high profile guests. So John Donahoe from Nike, who knows a little bit about the enterprise, right? He left ServiceNow after a couple of years, stint. Ironically ServiceNow is pushing a hundred billion dollar valuation. Nike's at 150. But he's more comfortable in the consumer world. CEO of Nvidia. I think that's a key move, Nvidia the arm acquisition. That's going to be critical at the edge. You're seeing VMware just throw its blanket around telco Edge cloud with VMware cloud and AWS, which is doing very well. We're going to talk about that in our cube segment. You're, seeing them really go after hybrid. And so they're really about expanding their marketplace and they've done a great job of that. For translating engineering into customer value and getting paid for it. >> I want to come back to you Dave, on this edge because some of the key trends that I think we've been on now that the whole world is kind of realizing that they're kind of going mainstream. One's been the edge and you mentioned ARM, and we got analysis on that. Stuart, cloud native, we've been banging on the cloud native drone. We've been riding that wave, now with the Snowflake IPO just happened earlier, you starting to see cloud native, everything is coming true. It's kind of evolving in front of us right now and the whole world is now on board with this new mega trend enterprise computing companies, the largest IPO, since we enrolled, actually if you look at Snowflake, so you start to see cloud native and Enterprise Technology as the next wave, this is huge. And VMware is a big part of it. Your thoughts from how they did the show. >> Yeah, so John, one of the questions we always ask is, how fast are customers moving? Are the vendors moving along with them? Our friend and often co-hosts in "theCube" Keith Townsend said, and it was kind of faint praise. "VMware has moved at the speed of the CIO." Dave, I've heard you so many times this year say that the impact of the pandemic, that the financial ramifications has been an accelerator for many of the transformational journeys that we've been talking about. Move to cloud much faster adopting cloud native faster. Companies that have gone through their digital transformation, are able to react much faster. And to be honest, I'm not sure that VMware's moving fast enough. We've seen them do a number of big acquisitions over the last few years. Some of them are doing great. Carbon Black, great to see them go deeper into the security space. We've talked a lot about that before. Some of the others, Pivotal came out of VMware and got pulled back in. Datrium was a recent acquisition. What we hear inside is, some of those groups and product lines have been trimmed back. So as companies are looking to move faster, they're looking to AWS is that bar. And while AWS is a big partner for VMware and very important, how many people will get to VMware on AWS and say, well, maybe I can scale back what my VMware state is, or maybe those some environments. So, we've said for the longest time, cloud is a double edged sword for many players you need to partner as closely as you can to keep that momentum going forward. But VMware is also getting cut by some of those deals. Boy, John, there was a big news a couple of weeks before the show here about how the VMware cloud on AWS, it's doing great. And if it's a big deal, the channel often gets cut out of it and Amazon's taking it. So there definitely are some things that put up a little bit warning lights for me as to who is winning, when it comes to the partnership. >> That's a great point, the ecosystem in VMware, out of 10 years we've been covering here, this is our 11th year with ""theCube"," we've always had that ecosystems evolving. And I think cloud native to me really sees how that's driving them with cloud. We saw that, serverless, you starting to see cloud native. And what cloud proved Dave was that developers really shouldn't care about the infrastructure being abstracted away. But now you look at multiple clouds, with VMware's now moving into having a multicloud kind of backbone, connected to these environments as a key strategy. But then you look at the edge. The edge is about purpose built devices, run with software and data. So whether it's at an office on a person or in space, you have these devices that is really not about the hardware, it's about the software running on them. They have to run into multiple environments. They are purpose built. They do have to run like cloud native. The edge is the next opportunity for VMware with multicloud. What's your thoughts and reaction to that? >> Well, I think there's no question. And again, the relevance of Nvidia on stage, we think that ARM and Nvidia are going to dominate AI inferencing at the edge real time, and you're going to need much more efficient processing at the edge than you're going to get with traditional x86 architectures. So today what we're seeing is a lot of companies, Dell, HPE included a throwing over x86 boxes to the edge. I think they clearly realized that ARM is going to be a player there and now with the Nvidia move. And I think, multicloud is really something that is starting to become real. I've often said multi-cloud has been more of a symptom of multi-vendor than an actual strategy. Well, that's changing. I think people don't want lock-in. I think they realize that they've got the right horse for the right course, and you're seeing Red Hat and VMware emerge as real leaders there. You're seeing it in the data, you're seeing VMware cloud on AWS. Okay, that's in AWS, but you're also seeing VMware Cloud Foundation and it's other VMware cloud capabilities emerging as in demand, a lot of spending velocity, a lot of interest gaining share. And so these are becoming real and they're becoming fundamental strategies as to your points Stuart, CIO's are catching up. And it's, actually becoming not just slideware, but real aware. >> Well, I'll debate that whole idea that CIO's are catching up, but I'd say CSOs already caught up. CIO's are catching up to the CSO, but this brings up the question Stuart, of what a modern app is. And this is one of the highlights of the show, modern applications, and feels a lot like kind of window dressing to the cloud native conversation because Tanzu is built into it but cloud native really is. This is where the modern apps are being built. And it's about security, it's about multiple clouds. So the question for you is, are we going to have a cloudless architecture? Because we've got serverless. Because if you think about modern apps, should you really care about which cloud it runs on? I'm sure Andy Jassy would be saying he does care. And you see Google almost shying away from having that conversation. But, Tanzu kind of speaks to a cloudless strategy. Is that something you see? >> John you're absolutely right. The goal we want is... Developers don't even want to think about the infrastructure at all. So cloudless serverless, storageless, it would all be wonderful if they didn't have to do that. Now, of course, data is the lifeblood of my business. We need to make sure that things are secure all the time. Serverless is wonderful and there's even some early connections that VMware and others in the traditional infrastructure space are tying to serverless environment. But if I look at VMware, John, this still isn't, where the app dev team people come, this is an infrastructure show and it needs to be an enabler for what they're doing. If you look at how Kubernetes integrates into VMware, it's, take your virtual estate and let's put containers in it and it can be managed in that environment. Or we've got some new tools we're developing and do some of that multicloud world, as opposed to the companies that are born in the cloud, or have a heavy leaning towards the cloud. This might not be attractive for them, but in many ways, it's extending what VMware has done for a long time. They've, got strong position here. And that's why John, as you've said, all the other clouds want to partner with VMware ' 'cause they've got just so many customers there that they will be... it's hybrid today it will be hybrid in the future. The public cloud is a pool, but the edge is also a pool. So that those new architectures like are starting to be put forward with project Monterey, give people a roadmap as to where they can go. And VMware absolutely is a key player in that discussion. >> Yeah, well, I want to bring this up real quick on project Monterey and then I want to get Dave's reaction too what the buyers are thinking about. 'Cause you know, we can debate the speed of the CIO and I'd love to have that debate in a separate segment. I think,COVID and the security threats are forcing the businesses to really be focused because if you not thinking about having an environment where people are working remotely and that's with COVID, and I'll see with the security vectors, if you don't have an architecture Stuart, then you're going to be screwed. So I think project Monterey feels to me as that VMware answer like, look, and you can have an end to end architecture. I think there's marketechure there's architecture, that's one thought. So let's react to that Stuart. How much of that do you see as, look at, if you want to move faster CIO, because they have to now move fast. COVID showed that and the ones that aren't are failing and it doesn't change the buyer behavior, Dave. Stuart we'll start with you Monterey. >> John I don't think we know yet. It is more marketecture I'd say you got to get into the whisper suites, have those discussions. There was not as much, pre-briefing on this. We talked for awhile, VMware on AWS, those solutions, they take two or three years to bake out. So I think Monterey is a good vision. They have some of the architectural underpinnings, but I'm not ready to say, "hey, you want to deploy that gear in 2020? "That's the blueprint that you want to use going forward," but it gets VMware a seat at the table. >> I'm a big fan of the project I think it's about time someone put a stake in the ground. So this is what a modern architecture looks like and love to debate that further, we'll do that another time, Dave buyers. Were they buying the VMware? What's your data tell you in terms of where the customers are right now in 2020, you've been doing a ton of breaking analysis on COVID fire behavior, spending patterns. How does VMware potentially its ecosystem stack up with all these focused cloud native, multicloud modern app and security and networking? >> Well, let's start with some data and I'll bring up this slide, which is this kind of wheel slide. And it's ETR data that talks to what we call net score. And essentially what it's doing is it's taking the green in this wheel, which is spending more and it's subtracting the red, which is spending less or leaving. And then you see that in the middle is 53% are flat. So they've got a net score at 29. What does that mean? That means this is a mature company, which is amazing to me that VMware continues to really outperform from a financial standpoint. Yeah, so you could see that, we subtract the red from the green. This is again a sign of a mature company, but the key is they've got to continue to invest. Now they make a lot of inorganic acquisitions and some organic acquisitions, but Dell, as we know, is using VMware's cashflow to restructure its balance sheet to go public, et cetera. So if you could bring up the next slide, if you would guys. This is a slide I like to share. And it shows in the vertical axis, spending momentum, which is net score and the horizontal axis, which is presence in the survey. It's a 1200 person survey or a respondent survey, IT buyers. Look where VMware cloud on AWS is. So while VMware has a 29%, net score, look at VMware cloud on AWS, look at VMware cloud, which is cloud foundation. And you can see Red Hat is in there with OpenShift, even OpenStack, believe it or not and telcos. And then just see the hyperscalers in the upper right. Everybody wants to be AWS or Azure, and you sort of see Google there. But the point of this is the momentum in hybrid cloud and multicloud, and VMware really is clearly in a very, very strong position there. So, back to your point about project Monterey, they're basically using this hybrid cloud notion to go everywhere. It's that TAM expansion that I love to talk about. And it's the innovation. The big question is if Dell's going to be squeezing VMware R&D, will it be able to continue to execute on that translation of engineering into product and customer value? That's going to be a challenge. We saw it decades ago, where IBM got squeezed doing stock buybacks and dividends R&D is the lifeblood of innovation. And so that's something that we have to watch very closely, I think. >> Just to one quick followup, Dave, we're talking about the financial pieces here we are in 2020, there's been the discussions and I know you've dug into it a bunch. By the time we get to VMworld 2021 will the ownership of VMware and the role that Michael Dell has, change? And will that impact that investment capability that you talked about? The cashflow just, I know you've done a lot of research on this and could it help educate our audience? >> Well, it's going to change the income statement of Dell because they won't have VMware in there anymore. It won't change VMware's cashflow. It will affect VMware and Dell's balance sheet. And so two companies, one chairman and the chairman is going to say, okay, let's rebalance the balance sheets and create an equilibrium. So Dell has less debt, VMware has more debt and we'll try to thread the needle so they're both investment grade, which will lower the interest costs on that debt. But fundamentally, I don't think it's going to change anything in terms of strategy, go to market, the close relationship was between Dell and VMware. the thing to watch is VMware's, Dell's piggyback. And so I would rather see a lot of that go... once this equilibrium is reached, I want to see that go more in R&D. You know, again, remember IBM has spent $6 billion in R&D for the past two decades IBM was right there. They could have invested in cloud the same way Amazon did. And in the same way that Microsoft did, they were kind of equal 20 years ago. And look what happened. You don't want that to happen to VMware. They must continue to spend on R&D and innovate. >> Oh, well let's get to the innovation strategy in a second, but I want to ask the ecosystem question, because if you go back in history guys, and remember when Pat Gelsinger had that year, where he was basically given the presentation of his life, and he was in the hot seat and there's a lot of rumors spinning around. Since then it's just been nothing but exceptional performance on as a company executing, all new bets have been played it's almost like he'd cleaned house, put the ship in the right direction they've been smooth sailing since strategically making all the right moves. Okay now that VMware is back on their footings and Dave they have a solid foundation, what happens to the ecosystem because now that their houses in order, what do they do with the ecosystem? How do you see it evolving? >> Well look, I mean the ecosystem is looking for alternatives. I mean they have to participate in VMware. It's part of their go to market. You remember Todd Neilson used to say, "For every dollar spend on a VMware license, "15 or 20 or $18 is spent in the ecosystem," you don't hear that type of ratio anymore. Maybe it still exists I'm sure it does because it's a very vibrant and robust ecosystem but look, let's face it. Jeff Clark and Michael Dell are very clear. We are going to do a much closer integration than EMC ever did. And look at HPE we're looking for alternatives, driving to the edge. That's a huge opportunity for people. VMware becomes the ecosystems cash cow, but they need new growth and new strategic opportunities. And so they got to play nice, but there's more green fields out there. >> Stuart multicloud and cloud native with Tansu I think this is a really big opportunity to reset the ecosystem with services, because it used to be vendors, you bolt on some data backup and recovery, and you have a bunch of people doing storage around VMware, and these big white spaces, they're kind of huge white spaces. But now, when you start getting into cloud native, is a whole new landscape developing. Your thoughts because we're seeing some activity, certainly companies that are building on top of clouds that are building on top of clouds. So you've got Snowflake builds on Amazon now, other clouds and you have companies building on Snowflake. So you're starting to see this kind of new interconnected cloud native landscape, your thoughts. >> Yeah, well John there's definitely a huge tug of war in the ecosystem. One of the things that's been really nice if you were a VMware partner, let's take data protection. Huge ecosystem companies like Veeam, that were created in that environment. Hot companies like Rubrik and Cohesity grew very much working in VMware. All of them now play natively with the cloud environments, but they also get pulled along when you do a VMware Cloud on AWS, on Azure, on Google, on Oracle. So VMware will pull some of the ecosystem with them, but that tug of war is well, if the customer decides to just go fully cloud native, that software needs to work there and you would think that the vendor actually makes more money if it's just natively there, there's not that middleman extra piece. So VMware has a slice the pie and like Microsoft or Oracle behind them, can they justify that value for the license that you're paying when I go to some of these environments. So VMware does not have the pull in the ecosystem Dave talked a bit about it. HPE, Cisco, IBM, all companies that were early, early big huge proponent of VMware now very much are investing heavily in alternative. So VMware major player but no longer the gravity that everyone orbits around. >> Dave, what do you think? >> I want to bring up another data point if I could I want to share something with you. This is a slide that talks about... It asks customers. Why would you not work with VMware? Why would you replace them? What are the reasons? And three things stand out to me, it's not around cloud on the very left alignment with Cloud they've taken care of that with the AWS deal and even now Oracle. And you look at the right hand side, you see technology lead or lag that's innovation. Look at how that gray a couple surveys ago, has gone down to the yellow. So that's off the table, not a problem with innovation, look at total cost of ownership that's gone down, in terms of concerns. The one concern is price and that stays up there. If that's your biggest challenge, that your price is too high, that says to me that VMware's ticking all the boxes of value. So they're in a really, really good position if they can continue to innovate and that's why I've been harping so much on innovation and R&D and key acquisitions they're are great acquire of companies. So, I see this as this data is very, very positive for VMware. If your price is too high and that's your big objection, all you need as good salespeople. >> Or also you'd lower the price and you shift the value to say new features, say cloud native or security. I'll see the movement they've been making with NSX Gelsinger famous quotes are things like, "Kubernetes the dial tone of the internet, "and NSX is the crown jewel security is a do over." So NSX Dave and Stuart, this been a big part of their theme every year. That's a core feature for their security play. That's where they're going to put a lot of value in there. You guys, what's your thoughts on that because you've got Cisco in going that " mh we're frenemies" that's what Sanjay Poonen says, but are they really frenemies? >> But culturally VMware is an engineering driven company they a great engineering team and they don't have dogma about these new... they don't get defensive about some new trends. They embraced Kubernetes, they finally figured out Cloud, they were sort of defensive originally, but they realized hey, and they got religion. So that's the smart thing to do, go on to the next way maybe take a little bit of heat if you've got to go through a transition, but they've done a phenomenal job of making those transitions and staying relevant >> What's the big wave guys? What's the big wave that VMware's riding? The 10 years out we're in we've seen the movie, we've been through a decade with VM world coverage Stuart Dave next 10 years, what's the big wave or waves plural? >> Well, cloud is the first one that they addressed no doubt and then they are in my mind, the leader, or certainly a leader in multicloud. Edge I think there's a big question Mark there, AI is going to be everywhere. I think security is the really interesting opportunity for VMware and it's going to be... the big battle and security is, do you go after these point products like Okta and CrowdStrike and Zscaler and SailPoint who are really doing very well right now in the market or do you want an integrated stack that can be, you good enough VMware will say it's best to breed. We'll see that is a huge opportunity for them because security just keeps getting more and more critical. We've seen that with COVID. >> Let's do final word on your thoughts on the next 10 years for VMware looking back and learn and looking forward. >> Yeah well Dave just building off what you were just saying there, we said that the mission for Pat Gelsinger was, could he do for VMware, what Indel had done for the longest time, which has expanded Tam, expand what markets to go into, but not completely tick off the ecosystem and have them run away. So you saw here at the show, I mean Dave, Zscaler is a partner there. Security absolutely is a monster opportunity and John networking, networking, right. But it should be multibillion dollar business for VMware and they can eat some of that multicloud environment. we talk specifically about SD-WAN, now that cloud's doing well. So VMware that's software across environments, hybrid cloud multicloud, they're well positioned today, they just need to move a little bit faster and make sure they don't bleed talent and continue to support their customers because Dave, you're right how many times have people said, "Microsoft too expensive. "Oracle's too expensive." Here we are in 2020, they still have pretty strong positions VMware still has a very strong position. >> Well, I'll just add, I think it just shows what happens when you have a technical visionary, like Gelsinger in the lead and you have an industry visionary of not just technical, not just financial, but industry luminary like Michael Dell. These are very powerful... VMware and Dell have extremely capable management teams and you're seeing it in action >> And you've got Sanjay Poonen who's a great executer as well, he knows how to execute, he knows technology. Guys it's been a great run. I got to say for me personally, I'm so excited that, for 10 years that we've had "theCube" and the team covering the enterprise tech space, you can't be more excited. At least I'm so excited at the number one IPO in the history of wall street is an enterprise tech company. You can't see any more proof points that enterprise technology is now with the whole end to end architecture with the edge. We're talking about space, we're talking about cybersecurity. We're having now conversations with "theCube" that is now ranging... It reminds me David of the B to C world it's almost like consumerized. Now the enterprise technology is now so important that is now taking over the appeal on wall street entrepreneurs, and to me, VMware can tap into that on this next wave and this will be huge. Your thoughts on- >> I think the Snowflake IPO tells us several things. One, I totally agree, it says the technology is the now trend, no question about it. It also really underscores the cloud and it underscores the demand for issues other than the big Apple, Amazon, Google, et cetera. But it's really interesting to see as well the street continues to reward growth. I mean, Snowflake has as a valuation higher than Workday comparable to VMware. In fact it exceeded VMware on its first day. So that says that the street is rewarding growth. It's rewarding technology, it's rewarding cloud. And so that's that to me says great opportunities for companies like VMware who have both growth, great cash flow, they're profitable and they have a huge, huge customer base. So right now things look good for tech >> Dave enterprise tech is hot, it's sexy. Don't you think? Enterprise tech these days? >> Used to be storage is sexy. Now Enterprise tech sexy. >> You guys great run great analysis again, VMworld's virtual, we didn't have the face to face. We didn't have the hang space, but we have the virtual cube. Virtualization has come to "theCube". We have multiple tracks on our site, check out the content. Thanks for the analysis guys. Great keynote announcement coverage of the Vmworld 2020. This is "theCube". Thanks for watching. (digital music)