(upbeat music) >> The ascendancy of cloud and SAS has shown new light on how organizations think about, pay for, and value hardware. Once sought after skills for practitioners with expertise in hardware troubleshooting, configuring ports, tuning storage arrays, and maximizing server utilization has been superseded by demand for cloud architects, DevOps pros, developers with expertise in microservices, container, application development, and like. Even a company like Dell, the largest hardware company in enterprise tech touts that it has more software engineers than those working in hardware. Begs the question, is hardware going the way of Coball? Well, not likely. Software has to run on something, but the labor needed to deploy, and troubleshoot, and manage hardware infrastructure is shifting. At the same time, we've seen the value flow also shifting in hardware. Once a world dominated by X86 processors value is flowing to alternatives like Nvidia and arm based designs. Moreover, other componentry like NICs, accelerators, and storage controllers are becoming more advanced, integrated, and increasingly important. The question is, does it matter? And if so, why does it matter and to whom? What does it mean to customers, workloads, OEMs, and the broader society? Hello and welcome to this week's Wikibon theCUBE Insights powered by ETR. In this breaking analysis, we've organized a special power panel of industry analysts and experts to address the question, does hardware still matter? Allow me to introduce the panel. Bob O'Donnell is president and chief analyst at TECHnalysis Research. Zeus Kerravala is the founder and principal analyst at ZK Research. David Nicholson is a CTO and tech expert. Keith Townson is CEO and founder of CTO Advisor. And Marc Staimer is the chief dragon slayer at Dragon Slayer Consulting and oftentimes a Wikibon contributor. Guys, welcome to theCUBE. Thanks so much for spending some time here. >> Good to be here. >> Thanks. >> Thanks for having us. >> Okay before we get into it, I just want to bring up some data from ETR. This is a survey that ETR does every quarter. It's a survey of about 1200 to 1500 CIOs and IT buyers and I'm showing a subset of the taxonomy here. This XY axis and the vertical axis is something called net score. That's a measure of spending momentum. It's essentially the percentage of customers that are spending more on a particular area than those spending less. You subtract the lesses from the mores and you get a net score. Anything the horizontal axis is pervasion in the data set. Sometimes they call it market share. It's not like IDC market share. It's just the percentage of activity in the data set as a percentage of the total. That red 40% line, anything over that is considered highly elevated. And for the past, I don't know, eight to 12 quarters, the big four have been AI and machine learning, containers, RPA and cloud and cloud of course is very impressive because not only is it elevated in the vertical access, but you know it's very highly pervasive on the horizontal. So what I've done is highlighted in red that historical hardware sector. The server, the storage, the networking, and even PCs despite the work from home are depressed in relative terms. And of course, data center collocation services. Okay so you're seeing obviously hardware is not... People don't have the spending momentum today that they used to. They've got other priorities, et cetera, but I want to start and go kind of around the horn with each of you, what is the number one trend that each of you sees in hardware and why does it matter? Bob O'Donnell, can you please start us off? >> Sure Dave, so look, I mean, hardware is incredibly important and one comment first I'll make on that slide is let's not forget that hardware, even though it may not be growing, the amount of money spent on hardware continues to be very, very high. It's just a little bit more stable. It's not as subject to big jumps as we see certainly in other software areas. But look, the important thing that's happening in hardware is the diversification of the types of chip architectures we're seeing and how and where they're being deployed, right? You refer to this in your opening. We've moved from a world of x86 CPUs from Intel and AMD to things like obviously GPUs, DPUs. We've got VPU for, you know, computer vision processing. We've got AI-dedicated accelerators, we've got all kinds of other network acceleration tools and AI-powered tools. There's an incredible diversification of these chip architectures and that's been happening for a while but now we're seeing them more widely deployed and it's being done that way because workloads are evolving. The kinds of workloads that we're seeing in some of these software areas require different types of compute engines than traditionally we've had. The other thing is (coughs), excuse me, the power requirements based on where geographically that compute happens is also evolving. This whole notion of the edge, which I'm sure we'll get into a little bit more detail later is driven by the fact that where the compute actually sits closer to in theory the edge and where edge devices are, depending on your definition, changes the power requirements. It changes the kind of connectivity that connects the applications to those edge devices and those applications. So all of those things are being impacted by this growing diversity in chip architectures. And that's a very long-term trend that I think we're going to continue to see play out through this decade and well into the 2030s as well. >> Excellent, great, great points. Thank you, Bob. Zeus up next, please. >> Yeah, and I think the other thing when you look at this chart to remember too is, you know, through the pandemic and the work from home period a lot of companies did put their office modernization projects on hold and you heard that echoed, you know, from really all the network manufacturers anyways. They always had projects underway to upgrade networks. They put 'em on hold. Now that people are starting to come back to the office, they're looking at that now. So we might see some change there, but Bob's right. The size of those market are quite a bit different. I think the other big trend here is the hardware companies, at least in the areas that I look at networking are understanding now that it's a combination of hardware and software and silicon that works together that creates that optimum type of performance and experience, right? So some things are best done in silicon. Some like data forwarding and things like that. Historically when you look at the way network devices were built, you did everything in hardware. You configured in hardware, they did all the data for you, and did all the management. And that's been decoupled now. So more and more of the control element has been placed in software. A lot of the high-performance things, encryption, and as I mentioned, data forwarding, packet analysis, stuff like that is still done in hardware, but not everything is done in hardware. And so it's a combination of the two. I think, for the people that work with the equipment as well, there's been more shift to understanding how to work with software. And this is a mistake I think the industry made for a while is we had everybody convinced they had to become a programmer. It's really more a software power user. Can you pull things out of software? Can you through API calls and things like that. But I think the big frame here is, David, it's a combination of hardware, software working together that really make a difference. And you know how much you invest in hardware versus software kind of depends on the performance requirements you have. And I'll talk about that later but that's really the big shift that's happened here. It's the vendors that figured out how to optimize performance by leveraging the best of all of those. >> Excellent. You guys both brought up some really good themes that we can tap into Dave Nicholson, please. >> Yeah, so just kind of picking up where Bob started off. Not only are we seeing the rise of a variety of CPU designs, but I think increasingly the connectivity that's involved from a hardware perspective, from a kind of a server or service design perspective has become increasingly important. I think we'll get a chance to look at this in more depth a little bit later but when you look at what happens on the motherboard, you know we're not in so much a CPU-centric world anymore. Various application environments have various demands and you can meet them by using a variety of components. And it's extremely significant when you start looking down at the component level. It's really important that you optimize around those components. So I guess my summary would be, I think we are moving out of the CPU-centric hardware model into more of a connectivity-centric model. We can talk more about that later. >> Yeah, great. And thank you, David, and Keith Townsend I really interested in your perspectives on this. I mean, for years you worked in a data center surrounded by hardware. Now that we have the software defined data center, please chime in here. >> Well, you know, I'm going to dig deeper into that software-defined data center nature of what's happening with hardware. Hardware is meeting software infrastructure as code is a thing. What does that code look like? We're still trying to figure out but servicing up these capabilities that the previous analysts have brought up, how do I ensure that I can get the level of services needed for the applications that I need? Whether they're legacy, traditional data center, workloads, AI ML, workloads, workloads at the edge. How do I codify that and consume that as a service? And hardware vendors are figuring this out. HPE, the big push into GreenLake as a service. Dale now with Apex taking what we need, these bare bone components, moving it forward with DDR five, six CXL, et cetera, and surfacing that as cold or as services. This is a very tough problem. As we transition from consuming a hardware-based configuration to this infrastructure as cold paradigm shift. >> Yeah, programmable infrastructure, really attacking that sort of labor discussion that we were having earlier, okay. Last but not least Marc Staimer, please. >> Thanks, Dave. My peers raised really good points. I agree with most of them, but I'm going to disagree with the title of this session, which is, does hardware matter? It absolutely matters. You can't run software on the air. You can't run it in an ephemeral cloud, although there's the technical cloud and that's a different issue. The cloud is kind of changed everything. And from a market perspective in the 40 plus years I've been in this business, I've seen this perception that hardware has to go down in price every year. And part of that was driven by Moore's law. And we're coming to, let's say a lag or an end, depending on who you talk to Moore's law. So we're not doubling our transistors every 18 to 24 months in a chip and as a result of that, there's been a higher emphasis on software. From a market perception, there's no penalty. They don't put the same pressure on software from the market to reduce the cost every year that they do on hardware, which kind of bass ackwards when you think about it. Hardware costs are fixed. Software costs tend to be very low. It's kind of a weird thing that we do in the market. And what's changing is we're now starting to treat hardware like software from an OPEX versus CapEx perspective. So yes, hardware matters. And we'll talk about that more in length. >> You know, I want to follow up on that. And I wonder if you guys have a thought on this, Bob O'Donnell, you and I have talked about this a little bit. Marc, you just pointed out that Moore's laws could have waning. Pat Gelsinger recently at their investor meeting said that he promised that Moore's law is alive and well. And the point I made in breaking analysis was okay, great. You know, Pat said, doubling transistors every 18 to 24 months, let's say that Intel can do that. Even though we know it's waning somewhat. Look at the M1 Ultra from Apple (chuckles). In about 15 months increased transistor density on their package by 6X. So to your earlier point, Bob, we have this sort of these alternative processors that are really changing things. And to Dave Nicholson's point, there's a whole lot of supporting components as well. Do you have a comment on that, Bob? >> Yeah, I mean, it's a great point, Dave. And one thing to bear in mind as well, not only are we seeing a diversity of these different chip architectures and different types of components as a number of us have raised the other big point and I think it was Keith that mentioned it. CXL and interconnect on the chip itself is dramatically changing it. And a lot of the more interesting advances that are going to continue to drive Moore's law forward in terms of the way we think about performance, if perhaps not number of transistors per se, is the interconnects that become available. You're seeing the development of chiplets or tiles, people use different names, but the idea is you can have different components being put together eventually in sort of a Lego block style. And what that's also going to allow, not only is that going to give interesting performance possibilities 'cause of the faster interconnect. So you can share, have shared memory between things which for big workloads like AI, huge data sets can make a huge difference in terms of how you talk to memory over a network connection, for example, but not only that you're going to see more diversity in the types of solutions that can be built. So we're going to see even more choices in hardware from a silicon perspective because you'll be able to piece together different elements. And oh, by the way, the other benefit of that is we've reached a point in chip architectures where not everything benefits from being smaller. We've been so focused and so obsessed when it comes to Moore's law, to the size of each individual transistor and yes, for certain architecture types, CPUs and GPUs in particular, that's absolutely true, but we've already hit the point where things like RF for 5g and wifi and other wireless technologies and a whole bunch of other things actually don't get any better with a smaller transistor size. They actually get worse. So the beauty of these chiplet architectures is you could actually combine different chip manufacturing sizes. You know you hear about four nanometer and five nanometer along with 14 nanometer on a single chip, each one optimized for its specific application yet together, they can give you the best of all worlds. And so we're just at the very beginning of that era, which I think is going to drive a ton of innovation. Again, gets back to my comment about different types of devices located geographically different places at the edge, in the data center, you know, in a private cloud versus a public cloud. All of those things are going to be impacted and there'll be a lot more options because of this silicon diversity and this interconnect diversity that we're just starting to see. >> Yeah, David. David Nicholson's got a graphic on that. They're going to show later. Before we do that, I want to introduce some data. I actually want to ask Keith to comment on this before we, you know, go on. This next slide is some data from ETR that shows the percent of customers that cited difficulty procuring hardware. And you can see the red is they had significant issues and it's most pronounced in laptops and networking hardware on the far right-hand side, but virtually all categories, firewalls, peripheral servers, storage are having moderately difficult procurement issues. That's the sort of pinkish or significant challenges. So Keith, I mean, what are you seeing with your customers in the hardware supply chains and bottlenecks? And you know we're seeing it with automobiles and appliances but so it goes beyond IT. The semiconductor, you know, challenges. What's been the impact on the buyer community and society and do you have any sense as to when it will subside? >> You know, I was just asked this question yesterday and I'm feeling the pain. People question, kind of a side project within the CTO advisor, we built a hybrid infrastructure, traditional IT data center that we're walking with the traditional customer and modernizing that data center. So it was, you know, kind of a snapshot of time in 2016, 2017, 10 gigabit, ARISTA switches, some older Dell's 730 XD switches, you know, speeds and feeds. And we said we would modern that with the latest Intel stack and connected to the public cloud and then the pandemic hit and we are experiencing a lot of the same challenges. I thought we'd easily migrate from 10 gig networking to 25 gig networking path that customers are going on. The 10 gig network switches that I bought used are now double the price because you can't get legacy 10 gig network switches because all of the manufacturers are focusing on the more profitable 25 gig for capacity, even the 25 gig switches. And we're focused on networking right now. It's hard to procure. We're talking about nine to 12 months or more lead time. So we're seeing customers adjust by adopting cloud. But if you remember early on in the pandemic, Microsoft Azure kind of gated customers that didn't have a capacity agreement. So customers are keeping an eye on that. There's a desire to abstract away from the underlying vendor to be able to control or provision your IT services in a way that we do with VMware VP or some other virtualization technology where it doesn't matter who can get me the hardware, they can just get me the hardware because it's critically impacting projects and timelines. >> So that's a great setup Zeus for you with Keith mentioned the earlier the software-defined data center with software-defined networking and cloud. Do you see a day where networking hardware is monetized and it's all about the software, or are we there already? >> No, we're not there already. And I don't see that really happening any time in the near future. I do think it's changed though. And just to be clear, I mean, when you look at that data, this is saying customers have had problems procuring the equipment, right? And there's not a network vendor out there. I've talked to Norman Rice at Extreme, and I've talked to the folks at Cisco and ARISTA about this. They all said they could have had blowout quarters had they had the inventory to ship. So it's not like customers aren't buying this anymore. Right? I do think though, when it comes to networking network has certainly changed some because there's a lot more controls as I mentioned before that you can do in software. And I think the customers need to start thinking about the types of hardware they buy and you know, where they're going to use it and, you know, what its purpose is. Because I've talked to customers that have tried to run software and commodity hardware and where the performance requirements are very high and it's bogged down, right? It just doesn't have the horsepower to run it. And, you know, even when you do that, you have to start thinking of the components you use. The NICs you buy. And I've talked to customers that have simply just gone through the process replacing a NIC card and a commodity box and had some performance problems and, you know, things like that. So if agility is more important than performance, then by all means try running software on commodity hardware. I think that works in some cases. If performance though is more important, that's when you need that kind of turnkey hardware system. And I've actually seen more and more customers reverting back to that model. In fact, when you talk to even some startups I think today about when they come to market, they're delivering things more on appliances because that's what customers want. And so there's this kind of app pivot this pendulum of agility and performance. And if performance absolutely matters, that's when you do need to buy these kind of turnkey, prebuilt hardware systems. If agility matters more, that's when you can go more to software, but the underlying hardware still does matter. So I think, you know, will we ever have a day where you can just run it on whatever hardware? Maybe but I'll long be retired by that point. So I don't care. >> Well, you bring up a good point Zeus. And I remember the early days of cloud, the narrative was, oh, the cloud vendors. They don't use EMC storage, they just run on commodity storage. And then of course, low and behold, you know, they've trot out James Hamilton to talk about all the custom hardware that they were building. And you saw Google and Microsoft follow suit. >> Well, (indistinct) been falling for this forever. Right? And I mean, all the way back to the turn of the century, we were calling for the commodity of hardware. And it's never really happened because you can still drive. As long as you can drive innovation into it, customers will always lean towards the innovation cycles 'cause they get more features faster and things. And so the vendors have done a good job of keeping that cycle up but it'll be a long time before. >> Yeah, and that's why you see companies like Pure Storage. A storage company has 69% gross margins. All right. I want to go jump ahead. We're going to bring up the slide four. I want to go back to something that Bob O'Donnell was talking about, the sort of supporting act. The diversity of silicon and we've marched to the cadence of Moore's law for decades. You know, we asked, you know, is Moore's law dead? We say it's moderating. Dave Nicholson. You want to talk about those supporting components. And you shared with us a slide that shift. You call it a shift from a processor-centric world to a connect-centric world. What do you mean by that? And let's bring up slide four and you can talk to that. >> Yeah, yeah. So first, I want to echo this sentiment that the question does hardware matter is sort of the answer is of course it matters. Maybe the real question should be, should you care about it? And the answer to that is it depends who you are. If you're an end user using an application on your mobile device, maybe you don't care how the architecture is put together. You just care that the service is delivered but as you back away from that and you get closer and closer to the source, someone needs to care about the hardware and it should matter. Why? Because essentially what hardware is doing is it's consuming electricity and dollars and the more efficiently you can configure hardware, the more bang you're going to get for your buck. So it's not only a quantitative question in terms of how much can you deliver? But it also ends up being a qualitative change as capabilities allow for things we couldn't do before, because we just didn't have the aggregate horsepower to do it. So this chart actually comes out of some performance tests that were done. So it happens to be Dell servers with Broadcom components. And the point here was to peel back, you know, peel off the top of the server and look at what's in that server, starting with, you know, the PCI interconnect. So PCIE gen three, gen four, moving forward. What are the effects on from an interconnect versus on performance application performance, translating into new orders per minute, processed per dollar, et cetera, et cetera? If you look at the advances in CPU architecture mapped against the advances in interconnect and storage subsystem performance, you can see that CPU architecture is sort of lagging behind in a way. And Bob mentioned this idea of tiling and all of the different ways to get around that. When we do performance testing, we can actually peg CPUs, just running the performance tests without any actual database environments working. So right now we're at this sort of imbalance point where you have to make sure you design things properly to get the most bang per kilowatt hour of power per dollar input. So the key thing here what this is highlighting is just as a very specific example, you take a card that's designed as a gen three PCIE device, and you plug it into a gen four slot. Now the card is the bottleneck. You plug a gen four card into a gen four slot. Now the gen four slot is the bottleneck. So we're constantly chasing these bottlenecks. Someone has to be focused on that from an architectural perspective, it's critically important. So there's no question that it matters. But of course, various people in this food chain won't care where it comes from. I guess a good analogy might be, where does our food come from? If I get a steak, it's a pink thing wrapped in plastic, right? Well, there are a lot of inputs that a lot of people have to care about to get that to me. Do I care about all of those things? No. Are they important? They're critically important. >> So, okay. So all I want to get to the, okay. So what does this all mean to customers? And so what I'm hearing from you is to balance a system it's becoming, you know, more complicated. And I kind of been waiting for this day for a long time, because as we all know the bottleneck was always the spinning disc, the last mechanical. So people who wrote software knew that when they were doing it right, the disc had to go and do stuff. And so they were doing other things in the software. And now with all these new interconnects and flash and things like you could do atomic rights. And so that opens up new software possibilities and combine that with alternative processes. But what's the so what on this to the customer and the application impact? Can anybody address that? >> Yeah, let me address that for a moment. I want to leverage some of the things that Bob said, Keith said, Zeus said, and David said, yeah. So I'm a bit of a contrarian in some of this. For example, on the chip side. As the chips get smaller, 14 nanometer, 10 nanometer, five nanometer, soon three nanometer, we talk about more cores, but the biggest problem on the chip is the interconnect from the chip 'cause the wires get smaller. People don't realize in 2004 the latency on those wires in the chips was 80 picoseconds. Today it's 1300 picoseconds. That's on the chip. This is why they're not getting faster. So we maybe getting a little bit slowing down in Moore's law. But even as we kind of conquer that you still have the interconnect problem and the interconnect problem goes beyond the chip. It goes within the system, composable architectures. It goes to the point where Keith made, ultimately you need a hybrid because what we're seeing, what I'm seeing and I'm talking to customers, the biggest issue they have is moving data. Whether it be in a chip, in a system, in a data center, between data centers, moving data is now the biggest gating item in performance. So if you want to move it from, let's say your transactional database to your machine learning, it's the bottleneck, it's moving the data. And so when you look at it from a distributed environment, now you've got to move the compute to the data. The only way to get around these bottlenecks today is to spend less time in trying to move the data and more time in taking the compute, the software, running on hardware closer to the data. Go ahead. >> So is this what you mean when Nicholson was talking about a shift from a processor centric world to a connectivity centric world? You're talking about moving the bits across all the different components, not having the processor you're saying is essentially becoming the bottleneck or the memory, I guess. >> Well, that's one of them and there's a lot of different bottlenecks, but it's the data movement itself. It's moving away from, wait, why do we need to move the data? Can we move the compute, the processing closer to the data? Because if we keep them separate and this has been a trend now where people are moving processing away from it. It's like the edge. I think it was Zeus or David. You were talking about the edge earlier. As you look at the edge, who defines the edge, right? Is the edge a closet or is it a sensor? If it's a sensor, how do you do AI at the edge? When you don't have enough power, you don't have enough computable. People were inventing chips to do that. To do all that at the edge, to do AI within the sensor, instead of moving the data to a data center or a cloud to do the processing. Because the lag in latency is always limited by speed of light. How fast can you move the electrons? And all this interconnecting, all the processing, and all the improvement we're seeing in the PCIE bus from three, to four, to five, to CXL, to a higher bandwidth on the network. And that's all great but none of that deals with the speed of light latency. And that's an-- Go ahead. >> You know Marc, no, I just want to just because what you're referring to could be looked at at a macro level, which I think is what you're describing. You can also look at it at a more micro level from a systems design perspective, right? I'm going to be the resident knuckle dragging hardware guy on the panel today. But it's exactly right. You moving compute closer to data includes concepts like peripheral cards that have built in intelligence, right? So again, in some of this testing that I'm referring to, we saw dramatic improvements when you basically took the horsepower instead of using the CPU horsepower for the like IO. Now you have essentially offload engines in the form of storage controllers, rate controllers, of course, for ethernet NICs, smart NICs. And so when you can have these sort of offload engines and we've gone through these waves over time. People think, well, wait a minute, raid controller and NVMe? You know, flash storage devices. Does that make sense? It turns out it does. Why? Because you're actually at a micro level doing exactly what you're referring to. You're bringing compute closer to the data. Now, closer to the data meaning closer to the data storage subsystem. It doesn't solve the macro issue that you're referring to but it is important. Again, going back to this idea of system design optimization, always chasing the bottleneck, plugging the holes. Someone needs to do that in this value chain in order to get the best value for every kilowatt hour of power and every dollar. >> Yeah. >> Well this whole drive performance has created some really interesting architectural designs, right? Like Nickelson, the rise of the DPU right? Brings more processing power into systems that already had a lot of processing power. There's also been some really interesting, you know, kind of innovation in the area of systems architecture too. If you look at the way Nvidia goes to market, their drive kit is a prebuilt piece of hardware, you know, optimized for self-driving cars, right? They partnered with Pure Storage and ARISTA to build that AI-ready infrastructure. I remember when I talked to Charlie Giancarlo, the CEO of Pure about when the three companies rolled that out. He said, "Look, if you're going to do AI, "you need good store. "You need fast storage, fast processor and fast network." And so for customers to be able to put that together themselves was very, very difficult. There's a lot of software that needs tuning as well. So the three companies partner together to create a fully integrated turnkey hardware system with a bunch of optimized software that runs on it. And so in that case, in some ways the hardware was leading the software innovation. And so, the variety of different architectures we have today around hardware has really exploded. And I think it, part of the what Bob brought up at the beginning about the different chip design. >> Yeah, Bob talked about that earlier. Bob, I mean, most AI today is modeling, you know, and a lot of that's done in the cloud and it looks from my standpoint anyway that the future is going to be a lot of AI inferencing at the edge. And that's a radically different architecture, Bob, isn't it? >> It is, it's a completely different architecture. And just to follow up on a couple points, excellent conversation guys. Dave talked about system architecture and really this that's what this boils down to, right? But it's looking at architecture at every level. I was talking about the individual different components the new interconnect methods. There's this new thing called UCIE universal connection. I forget what it stands answer for, but it's a mechanism for doing chiplet architectures, but then again, you have to take it up to the system level, 'cause it's all fine and good. If you have this SOC that's tuned and optimized, but it has to talk to the rest of the system. And that's where you see other issues. And you've seen things like CXL and other interconnect standards, you know, and nobody likes to talk about interconnect 'cause it's really wonky and really technical and not that sexy, but at the end of the day it's incredibly important exactly. To the other points that were being raised like mark raised, for example, about getting that compute closer to where the data is and that's where again, a diversity of chip architectures help and exactly to your last comment there Dave, putting that ability in an edge device is really at the cutting edge of what we're seeing on a semiconductor design and the ability to, for example, maybe it's an FPGA, maybe it's a dedicated AI chip. It's another kind of chip architecture that's being created to do that inferencing on the edge. Because again, it's that the cost and the challenges of moving lots of data, whether it be from say a smartphone to a cloud-based application or whether it be from a private network to a cloud or any other kinds of permutations we can think of really matters. And the other thing is we're tackling bigger problems. So architecturally, not even just architecturally within a system, but when we think about DPUs and the sort of the east west data center movement conversation that we hear Nvidia and others talk about, it's about combining multiple sets of these systems to function together more efficiently again with even bigger sets of data. So really is about tackling where the processing is needed, having the interconnect and the ability to get where the data you need to the right place at the right time. And because those needs are diversifying, we're just going to continue to see an explosion of different choices and options, which is going to make hardware even more essential I would argue than it is today. And so I think what we're going to see not only does hardware matter, it's going to matter even more in the future than it does now. >> Great, yeah. Great discussion, guys. I want to bring Keith back into the conversation here. Keith, if your main expertise in tech is provisioning LUNs, you probably you want to look for another job. So maybe clearly hardware matters, but with software defined everything, do people with hardware expertise matter outside of for instance, component manufacturers or cloud companies? I mean, VMware certainly changed the dynamic in servers. Dell just spun off its most profitable asset and VMware. So it obviously thinks hardware can stand alone. How does an enterprise architect view the shift to software defined hyperscale cloud and how do you see the shifting demand for skills in enterprise IT? >> So I love the question and I'll take a different view of it. If you're a data analyst and your primary value add is that you do ETL transformation, talk to a CDO, a chief data officer over midsize bank a little bit ago. He said 80% of his data scientists' time is done on ETL. Super not value ad. He wants his data scientists to do data science work. Chances are if your only value is that you do LUN provisioning, then you probably don't have a job now. The technologies have gotten much more intelligent. As infrastructure pros, we want to give infrastructure pros the opportunities to shine and I think the software defined nature and the automation that we're seeing vendors undertake, whether it's Dell, HP, Lenovo take your pick that Pure Storage, NetApp that are doing the automation and the ML needed so that these practitioners don't spend 80% of their time doing LUN provisioning and focusing on their true expertise, which is ensuring that data is stored. Data is retrievable, data's protected, et cetera. I think the shift is to focus on that part of the job that you're ensuring no matter where the data's at, because as my data is spread across the enterprise hybrid different types, you know, Dave, you talk about the super cloud a lot. If my data is in the super cloud, protecting that data and securing that data becomes much more complicated when than when it was me just procuring or provisioning LUNs. So when you say, where should the shift be, or look be, you know, focusing on the real value, which is making sure that customers can access data, can recover data, can get data at performance levels that they need within the price point. They need to get at those datasets and where they need it. We talked a lot about where they need out. One last point about this interconnecting. I have this vision and I think we all do of composable infrastructure. This idea that scaled out does not solve every problem. The cloud can give me infinite scale out. Sometimes I just need a single OS with 64 terabytes of RAM and 204 GPUs or GPU instances that single OS does not exist today. And the opportunity is to create composable infrastructure so that we solve a lot of these problems that just simply don't scale out. >> You know, wow. So many interesting points there. I had just interviewed Zhamak Dehghani, who's the founder of Data Mesh last week. And she made a really interesting point. She said, "Think about, we have separate stacks. "We have an application stack and we have "a data pipeline stack and the transaction systems, "the transaction database, we extract data from that," to your point, "We ETL it in, you know, it takes forever. "And then we have this separate sort of data stack." If we're going to inject more intelligence and data and AI into applications, those two stacks, her contention is they have to come together. And when you think about, you know, super cloud bringing compute to data, that was what Haduck was supposed to be. It ended up all sort of going into a central location, but it's almost a rhetorical question. I mean, it seems that that necessitates new thinking around hardware architectures as it kind of everything's the edge. And the other point is to your point, Keith, it's really hard to secure that. So when you can think about offloads, right, you've heard the stats, you know, Nvidia talks about it. Broadcom talks about it that, you know, that 30%, 25 to 30% of the CPU cycles are wasted on doing things like storage offloads, or networking or security. It seems like maybe Zeus you have a comment on this. It seems like new architectures need to come other to support, you know, all of that stuff that Keith and I just dispute. >> Yeah, and by the way, I do want to Keith, the question you just asked. Keith, it's the point I made at the beginning too about engineers do need to be more software-centric, right? They do need to have better software skills. In fact, I remember talking to Cisco about this last year when they surveyed their engineer base, only about a third of 'em had ever made an API call, which you know that that kind of shows this big skillset change, you know, that has to come. But on the point of architectures, I think the big change here is edge because it brings in distributed compute models. Historically, when you think about compute, even with multi-cloud, we never really had multi-cloud. We'd use multiple centralized clouds, but compute was always centralized, right? It was in a branch office, in a data center, in a cloud. With edge what we creates is the rise of distributed computing where we'll have an application that actually accesses different resources and at different edge locations. And I think Marc, you were talking about this, like the edge could be in your IoT device. It could be your campus edge. It could be cellular edge, it could be your car, right? And so we need to start thinkin' about how our applications interact with all those different parts of that edge ecosystem, you know, to create a single experience. The consumer apps, a lot of consumer apps largely works that way. If you think of like app like Uber, right? It pulls in information from all kinds of different edge application, edge services. And, you know, it creates pretty cool experience. We're just starting to get to that point in the business world now. There's a lot of security implications and things like that, but I do think it drives more architectural decisions to be made about how I deploy what data where and where I do my processing, where I do my AI and things like that. It actually makes the world more complicated. In some ways we can do so much more with it, but I think it does drive us more towards turnkey systems, at least initially in order to, you know, ensure performance and security. >> Right. Marc, I wanted to go to you. You had indicated to me that you wanted to chat about this a little bit. You've written quite a bit about the integration of hardware and software. You know, we've watched Oracle's move from, you know, buying Sun and then basically using that in a highly differentiated approach. Engineered systems. What's your take on all that? I know you also have some thoughts on the shift from CapEx to OPEX chime in on that. >> Sure. When you look at it, there are advantages to having one vendor who has the software and hardware. They can synergistically make them work together that you can't do in a commodity basis. If you own the software and somebody else has the hardware, I'll give you an example would be Oracle. As you talked about with their exit data platform, they literally are leveraging microcode in the Intel chips. And now in AMD chips and all the way down to Optane, they make basically AMD database servers work with Optane memory PMM in their storage systems, not MVME, SSD PMM. I'm talking about the cards itself. So there are advantages you can take advantage of if you own the stack, as you were putting out earlier, Dave, of both the software and the hardware. Okay, that's great. But on the other side of that, that tends to give you better performance, but it tends to cost a little more. On the commodity side it costs less but you get less performance. What Zeus had said earlier, it depends where you're running your application. How much performance do you need? What kind of performance do you need? One of the things about moving to the edge and I'll get to the OPEX CapEx in a second. One of the issues about moving to the edge is what kind of processing do you need? If you're running in a CCTV camera on top of a traffic light, how much power do you have? How much cooling do you have that you can run this? And more importantly, do you have to take the data you're getting and move it somewhere else and get processed and the information is sent back? I mean, there are companies out there like Brain Chip that have developed AI chips that can run on the sensor without a CPU. Without any additional memory. So, I mean, there's innovation going on to deal with this question of data movement. There's companies out there like Tachyon that are combining GPUs, CPUs, and DPUs in a single chip. Think of it as super composable architecture. They're looking at being able to do more in less. On the OPEX and CapEx issue. >> Hold that thought, hold that thought on the OPEX CapEx, 'cause we're running out of time and maybe you can wrap on that. I just wanted to pick up on something you said about the integrated hardware software. I mean, other than the fact that, you know, Michael Dell unlocked whatever $40 billion for himself and Silverlake, I was always a fan of a spin in with VMware basically become the Oracle of hardware. Now I know it would've been a nightmare for the ecosystem and culturally, they probably would've had a VMware brain drain, but what does anybody have any thoughts on that as a sort of a thought exercise? I was always a fan of that on paper. >> I got to eat a little crow. I did not like the Dale VMware acquisition for the industry in general. And I think it hurt the industry in general, HPE, Cisco walked away a little bit from that VMware relationship. But when I talked to customers, they loved it. You know, I got to be honest. They absolutely loved the integration. The VxRail, VxRack solution exploded. Nutanix became kind of a afterthought when it came to competing. So that spin in, when we talk about the ability to innovate and the ability to create solutions that you just simply can't create because you don't have the full stack. Dell was well positioned to do that with a potential span in of VMware. >> Yeah, we're going to be-- Go ahead please. >> Yeah, in fact, I think you're right, Keith, it was terrible for the industry. Great for Dell. And I remember talking to Chad Sakac when he was running, you know, VCE, which became Rack and Rail, their ability to stay in lockstep with what VMware was doing. What was the number one workload running on hyperconverged forever? It was VMware. So their ability to remain in lockstep with VMware gave them a huge competitive advantage. And Dell came out of nowhere in, you know, the hyper-converged market and just started taking share because of that relationship. So, you know, this sort I guess it's, you know, from a Dell perspective I thought it gave them a pretty big advantage that they didn't really exploit across their other properties, right? Networking and service and things like they could have given the dominance that VMware had. From an industry perspective though, I do think it's better to have them be coupled. So. >> I agree. I mean, they could. I think they could have dominated in super cloud and maybe they would become the next Oracle where everybody hates 'em, but they kick ass. But guys. We got to wrap up here. And so what I'm going to ask you is I'm going to go and reverse the order this time, you know, big takeaways from this conversation today, which guys by the way, I can't thank you enough phenomenal insights, but big takeaways, any final thoughts, any research that you're working on that you want highlight or you know, what you look for in the future? Try to keep it brief. We'll go in reverse order. Maybe Marc, you could start us off please. >> Sure, on the research front, I'm working on a total cost of ownership of an integrated database analytics machine learning versus separate services. On the other aspect that I would wanted to chat about real quickly, OPEX versus CapEx, the cloud changed the market perception of hardware in the sense that you can use hardware or buy hardware like you do software. As you use it, pay for what you use in arrears. The good thing about that is you're only paying for what you use, period. You're not for what you don't use. I mean, it's compute time, everything else. The bad side about that is you have no predictability in your bill. It's elastic, but every user I've talked to says every month it's different. And from a budgeting perspective, it's very hard to set up your budget year to year and it's causing a lot of nightmares. So it's just something to be aware of. From a CapEx perspective, you have no more CapEx if you're using that kind of base system but you lose a certain amount of control as well. So ultimately that's some of the issues. But my biggest point, my biggest takeaway from this is the biggest issue right now that everybody I talk to in some shape or form it comes down to data movement whether it be ETLs that you talked about Keith or other aspects moving it between hybrid locations, moving it within a system, moving it within a chip. All those are key issues. >> Great, thank you. Okay, CTO advisor, give us your final thoughts. >> All right. Really, really great commentary. Again, I'm going to point back to us taking the walk that our customers are taking, which is trying to do this conversion of all primary data center to a hybrid of which I have this hard earned philosophy that enterprise IT is additive. When we add a service, we rarely subtract a service. So the landscape and service area what we support has to grow. So our research focuses on taking that walk. We are taking a monolithic application, decomposing that to containers, and putting that in a public cloud, and connecting that back private data center and telling that story and walking that walk with our customers. This has been a super enlightening panel. >> Yeah, thank you. Real, real different world coming. David Nicholson, please. >> You know, it really hearkens back to the beginning of the conversation. You talked about momentum in the direction of cloud. I'm sort of spending my time under the hood, getting grease under my fingernails, focusing on where still the lions share of spend will be in coming years, which is OnPrem. And then of course, obviously data center infrastructure for cloud but really diving under the covers and helping folks understand the ramifications of movement between generations of CPU architecture. I know we all know Sapphire Rapids pushed into the future. When's the next Intel release coming? Who knows? We think, you know, in 2023. There have been a lot of people standing by from a practitioner's standpoint asking, well, what do I do between now and then? Does it make sense to upgrade bits and pieces of hardware or go from a last generation to a current generation when we know the next generation is coming? And so I've been very, very focused on looking at how these connectivity components like rate controllers and NICs. I know it's not as sexy as talking about cloud but just how these opponents completely change the game and actually can justify movement from say a 14th-generation architecture to a 15th-generation architecture today, even though gen 16 is coming, let's say 12 months from now. So that's where I am. Keep my phone number in the Rolodex. I literally reference Rolodex intentionally because like I said, I'm in there under the hood and it's not as sexy. But yeah, so that's what I'm focused on Dave. >> Well, you know, to paraphrase it, maybe derivative paraphrase of, you know, Larry Ellison's rant on what is cloud? It's operating systems and databases, et cetera. Rate controllers and NICs live inside of clouds. All right. You know, one of the reasons I love working with you guys is 'cause have such a wide observation space and Zeus Kerravala you, of all people, you know you have your fingers in a lot of pies. So give us your final thoughts. >> Yeah, I'm not a propeller heady as my chip counterparts here. (all laugh) So, you know, I look at the world a little differently and a lot of my research I'm doing now is the impact that distributed computing has on customer employee experiences, right? You talk to every business and how the experiences they deliver to their customers is really differentiating how they go to market. And so they're looking at these different ways of feeding up data and analytics and things like that in different places. And I think this is going to have a really profound impact on enterprise IT architecture. We're putting more data, more compute in more places all the way down to like little micro edges and retailers and things like that. And so we need the variety. Historically, if you think back to when I was in IT you know, pre-Y2K, we didn't have a lot of choice in things, right? We had a server that was rack mount or standup, right? And there wasn't a whole lot of, you know, differences in choice. But today we can deploy, you know, these really high-performance compute systems on little blades inside servers or inside, you know, autonomous vehicles and things. I think the world from here gets... You know, just the choice of what we have and the way hardware and software works together is really going to, I think, change the world the way we do things. We're already seeing that, like I said, in the consumer world, right? There's so many things you can do from, you know, smart home perspective, you know, natural language processing, stuff like that. And it's starting to hit businesses now. So just wait and watch the next five years. >> Yeah, totally. The computing power at the edge is just going to be mind blowing. >> It's unbelievable what you can do at the edge. >> Yeah, yeah. Hey Z, I just want to say that we know you're not a propeller head and I for one would like to thank you for having your master's thesis hanging on the wall behind you 'cause we know that you studied basket weaving. >> I was actually a physics math major, so. >> Good man. Another math major. All right, Bob O'Donnell, you're going to bring us home. I mean, we've seen the importance of semiconductors and silicon in our everyday lives, but your last thoughts please. >> Sure and just to clarify, by the way I was a great books major and this was actually for my final paper. And so I was like philosophy and all that kind of stuff and literature but I still somehow got into tech. Look, it's been a great conversation and I want to pick up a little bit on a comment Zeus made, which is this it's the combination of the hardware and the software and coming together and the manner with which that needs to happen, I think is critically important. And the other thing is because of the diversity of the chip architectures and all those different pieces and elements, it's going to be how software tools evolve to adapt to that new world. So I look at things like what Intel's trying to do with oneAPI. You know, what Nvidia has done with CUDA. What other platform companies are trying to create tools that allow them to leverage the hardware, but also embrace the variety of hardware that is there. And so as those software development environments and software development tools evolve to take advantage of these new capabilities, that's going to open up a lot of interesting opportunities that can leverage all these new chip architectures. That can leverage all these new interconnects. That can leverage all these new system architectures and figure out ways to make that all happen, I think is going to be critically important. And then finally, I'll mention the research I'm actually currently working on is on private 5g and how companies are thinking about deploying private 5g and the potential for edge applications for that. So I'm doing a survey of several hundred us companies as we speak and really looking forward to getting that done in the next couple of weeks. >> Yeah, look forward to that. Guys, again, thank you so much. Outstanding conversation. Anybody going to be at Dell tech world in a couple of weeks? Bob's going to be there. Dave Nicholson. Well drinks on me and guys I really can't thank you enough for the insights and your participation today. Really appreciate it. Okay, and thank you for watching this special power panel episode of theCube Insights powered by ETR. Remember we publish each week on Siliconangle.com and wikibon.com. All these episodes they're available as podcasts. DM me or any of these guys. I'm at DVellante. You can email me at David.Vellante@siliconangle.com. Check out etr.ai for all the data. This is Dave Vellante. We'll see you next time. (upbeat music)

(soft music) >> Hello everyone and welcome back to theCUBE on Cloud, where we're talking to CEOs, CIOs, Chief Technology Officers, and investors on the future of Cloud, with me is Dave Humphrey. Who's the Managing Director, and co-head of private equity in North America at Bain Capital. Dave, welcome to theCUBE first time, I think. >> First time, yeah, Dave, thanks very much for having me. >> So, let's get right into it, as an investor, how are you thinking about the evolution of cloud, when you look back at the last decade? It's not going to be the same, in this coming decade it's ironic 2020 is thrown us into, the accelerated digital transformation and cloud. How do you look at the evolution of cloud, from an investment perspective? What's your thesis? >> That's a great question, David for us we're focused on investing, in technology and really across the economy. And I'd say ,the cloud is the overarching trend, and dynamic in the technology markets. It really affect two reasons. One is a major shift ,of course that's going on. But the second and frankly even more interesting one, just as all the growth, that the cloud is creating, in the technology marketplace. The shift, think is been well covered, but five years ago in 2015, by our analysis, 2/3 of all computing workloads were done on premises. And only five years later, that's that's split. So, 2/3 of all computing workloads now done in the cloud and of course that shift, there's a lot of ramifications, as an investor. But even more interesting to us, is the growth in technology and the usage of technology, that the cloud is creating. So, over that same period of time, the total number of computing workloads run has increased, by 2.6 times, in just a five-year period of time which is really a dramatic thing and it makes sense when you think about, all the new software applications that could be created, all the data that can be used by new users and new segments, and the real-time insight that can be gleaned from there cause that growth, that really were focused on investing behind, as investors in technology. >> It's interesting you share those numbers, and you hear a lot of numbers. I actually think you're even being conservative. Ginni Rometty, used to talk about 80% of workloads, are still on-prem. Andy Jassy at re:Invent said that, 96% of the spending is still on premises. So, that was kind of an interesting stat. And I guess the other thing that I would note is it's not just a share shift, it is, it's not just, the cloud eating away on-prem. We've clearly seen that. But there's also incremental opportunity as well. If you look at Snowflake, for example adding value across multiple clouds and creating new markets. So there's that one-two punch, of stealing share from on-prem (clears throat). Also incremental growth, which is probably accelerated as a result, of this compressed digital transformation. So when you look at the big three Cloud players. I mean, roughly speaking, there probably account for $80 billion in total revenue. Which I guess, is a small portion of the overall IT market. So, it has a long way to go, but what's the best way to get good returns, from an investment standpoint, without getting clobbered, by their tendency to sometimes co-opt some of the best ideas and put them on their primary services. >> Yeah, absolutely, well, for us, it really comes back to the same fundamental principles, we look for in any investment. Which is finding, a business that solves, a really important problem for its customers, and does so in a way that's really advantage, versus competition and can do something, that other competitors just can't do. Whether those be the hyperscalers that you're describing, or other specialized and focused competitors. And then finding a way ,that we can partner with those companies to help them to accelerate their growth. So, surely the growth of the likes of AWS and Microsoft and Google, as you were describing has been a profound, competitive shift, along with the cloud shift, that we've all talked about. And those companies of course can offer, and do things that you asked, purveyors of computing couldn't. But, fundamentally they're selling an infrastructure layer, and there is room for all sorts of new competitors, and new applications that can do something better than anybody else can. So, any company that we're looking at, we're asking ourselves the question, why are they the best ones, to do what they're doing? How can they solve the most problems, for their customers and do that, in a way that's resilient? And we see lots of those opportunities. >> And I want to pick your brain, about the Nutanix investment, but before we get there. I wonder if you could just talk, about Bain Capital their history of investment in both cloud and infrastructure software and how do those investments, how would they perform and how do they inform your current thesis? >> Yeah, absolutely. So, Bain Capital was started in the mid 80s, 1984. Actually, as a spin out Bain Company Consulting. And the basic premise was that, if we're good at advising and supporting businesses. We should partner with them and invest behind them and if they do well, we'll do well. And as I said, focusing on these businesses but do something really valuable for their customers in a real advantage way with some discontinuous growth opportunity. That's led us to grow a lot. We started out actually in the venture business, and grew into the private equity business, but now we invest across all life stages of company all over the world. So we're $105 billion in assets that we manage, across 10 lines of business and we're truly global. So I think we have about 470 investment professionals and 210 of those, at this point are located outside the US. One of the really interesting things for us in investing in technology broadly and in infrastructure and the Cloud more specifically is that we're able to do that all over the world and we're able to do that across all the different life stages of a company. So we have a thrive in venture capital business, that really we've been in, since the origins of Bain Capital has invested across countless cloud and security and infrastructure businesses, taken successful companies public like SolarWinds sold companies to strategic and grown businesses in really thriving ways. We have a growth mid-market growth technology business, that we launched last year, called our Technology Opportunities Fund. They've made a really interesting, cloud-based investment in a company called the Cloud Gurus, Cloud Guru, excuse me. That trains, the next generation of IT professionals to be successful in the cloud. And then of course in our private equity business where I spend my time. We are highly focused on technologist sector. And the impacts of the cloud in that sector broadly, we have invested in many infrastructure businesses, scale businesses like, BMC Software and Rocket Software, security businesses like, Blue Coat Systems and Symantec. And of course, for those big businesses they've got both on premises solutions. They've got cloud solutions and often we're focused on helping them continue to grow and innovate and take their solutions to the cloud. And then, this taken us to our most recent investment in Nutanix that we're very excited about it. We think it's truly a growth business in a large market that has an opportunity to capitalize, on these trends we're talking about. >> I wonder if you could comment on some of the changes that have occurred, you guys have been in the private equity business, for a long time. And if you look at kind of the early days of private equity, it was all, EBITDA suck as much cash out of the company as possible and whatever's left over we'll figure out what to do with it. And it's, it seems like investors have realized, wow, we can actually, if we put a little investment in and do some engineering, and some go to market we can actually, get better multiples. And so you've got the kind of rule of 30, 35 and 40 where EBITDA plus growth is kind of the metric. How do you think about that and look at that evolution? >> Yeah, it's interesting because in many ways Bain Capital was started as the antithesis to what you're describing. >> Great. >> So we started again as, with a strategic lens and a focus on growth and a focus on, if we got the longterm and the lasting impact of our businesses right, that the returns would follow and you're right that the market has evolved in that way. I mean, I think some of the dynamics that we've seen, has been certainly growth of the private equity business. It's become a much larger piece of the capital markets than it was certainly 10 years ago and 20 years ago. Also with that growth comes the globalization of that business all over the world and the specialization. So you certainly see technology focused firms and technology focused funds in a way that you didn't see 10 years ago or certainly 20 years ago. Actually Bain Capital interestingly enough, we had a technology focused fund in 1989 called Bain Information Partners. So we've been focused on the sector for a very long time. But you certainly see a lot more technology investors, than you did in your 10 to 20 years ago. >> How are you thinking about valuations these days? I mean, it's good to be in tech, it's even better to be in the cloud, software, cloud, if you're looking at, some of the companies, especially the work from home pivot. But a lot of that appears to be, many people believe it's going to be permanent. How are you feeling about the both public market and private market valuations in that dynamic? >> Yeah, well, it's amazing, right? I don't think any of us in March when the COVID crisis was just emerging, would've anticipated that come November, the markets and certainly the technology markets, would be even more robust and stronger than they were say in January, February. But I think it's a testament to the resilience of the technology and just how intricate and intertwined technology has become with our daily lives. And how much companies depend on its use. And frankly, it's been, the COVID environment has been an accelerant, for many of the ways in which we depend on technology. So witness this interview, of course, through the cloud, and you're seeing the way that we operate our business day-to-day, the way companies are accessing their data and information it has only further, accelerated the need for technology, and the importance of that technology to how businesses operate. So I think you're seeing that, you're reflected in the market values out there, but for us we're focused on businesses, that still have that catalytic opportunity ahead that can, do more to compensate for the price of entry. >> Let's talk about ,this massive investment you guys made in Nutanix, $750 million. I guess it's a small piece of your 105 billion, but still massive investment. How did that opportunity come to you? What was your thinking behind that investment and what are you looking for in terms of the go-forward plan and growth plan for 2021 and really important beyond? >> Yeah, absolutely, we're thrilled to be partnered with and invested in Nutanix. We think is a terrific company and our most recent technology investment are private equity business. It really came about through a proactive efforts that we had in the spring. We've got a team focused on the technology sector, focused across infrastructure and applications and internet and digital media businesses and financial technology. And through those efforts, we were looking for businesses, that we felt had faced some dislocation in their market values, associated with the COVID environment that we're facing. But that we thought were really attractive businesses, well positioned have leading solutions, and had substantial and discontinuous growth opportunities. And as we look through that effort, we really felt that Nutanix stood out just as a core leader and in fact, really the innovator and the inventor of the market, in which it competes with a substantial market share and position, solving a really important problem for its customers, with a big growth opportunity ahead. But, the stock price had come down, because the business has been undergoing a transition. And we didn't think that was fully understood, by the market. And so, we saw an opportunity to partner with Nutanix, to invest money into the business, to help to fund its transition and its growth, and to be partners along for all the value of the business we'll continue to create, we think it's a terrific company and we're excited to be invested. >> Well, you and I have talked about this, that transition from a traditional license model, to one that's an annual recurring revenue model which many companies have gone through. Adobe certainly has done it, Tableau successfully did it. Splunk is kind of in the middle of that transition right now, and maybe not well understood. You've got companies like, Datadog and Snowflake again to doing consumption-based pricing. So there's a lot of confusion in the marketplace. And I wonder if you could talk about, that transition and why it was attractive to you, to actually place that bet now. >> Yeah, absolutely and as you say, number of companies at this point have been through, various forms of of this shift from selling their technology upfront to selling it over time. And we find that the model of selling the technology over time, is one that can be powerful. It can be aligning for customers, as well as for the vendor of the software solutions. And in Nutanix in particular, again, we saw all the ingredients that we think, make this an opportunity for the business. Again, market-leading technology that customers love that is solving a really important problem that technology because Nutanix had been grown, and bootstrapped under the leadership Dheeraj when it was built and founded. Had been selling its software together within appliance. Often in a upfront sale. And has been undergoing under their own initiative, transitioned from selling that software with an appliance to a software based model to one that's more rattle over time. And we thought that there was the opportunity to continue that transition and by doing that. To be able to offer more growth, and more innovation that we can bring to our customers to continue to fund their shifts. So, something that frankly was well underway before we invested. As the business makes this transition, from collecting upfront to more evenly over time. We saw a potential use for our capital, to help to fund that growth. And we're just focused on being a good partner, to help the company keep investing and innovating, as it continues to do that. >> As I was talking to somebody other day, Dave and I told him, I was interviewing you. And I was mentioning the Nutanix investment. And I said, I'm definitely going to cover that. As part of this Cube on Cloud program and they said, well, then Nutanix, that's not cloud. I'm like, well, wait a minute, what's cloud? So, we heard Andy Jassy at re:Invent, talking all lot about hybrid. Antonio Neri ,right after HPE, made its earning last earnings announcement. He came on and said that, well we heard the big cloud player talk about hybrid. And so the definition is changing. But so how are you looking at the market? Certainly, there's this hyper converged infrastructure, but there's also this software play, there's this cloud play. Help us squint through, how you see that. >> Absolutely, so, Nutanix as you alluded to pioneer the market for hyper converged infrastructure, for bringing compute and storage and networking together. Often in private Cloud environments, in a way that was really powerful for your customers and they can of course continue to be the leaders in that marketplace. But they've continued to innovate and invest in ways that can, solve problems for customers and related problems across the hybrid cloud. So, combining both the public cloud with that private cloud and across multiple public clouds, with things like clusters and lots of innovation, that the business is doing, in partnership with the likes of Amazon and Microsoft and others. And so we think that Nutanix has a powerful role to play, in that hybrid cloud world, in a multi-cloud world. And we're excited to back them in. >> Well, I think too, what maybe people don't understand, is that not only is Nutanix, compatible with AWS and compatible with Azure and GCP, but it's actually trying, to create an abstraction layer across those, those clouds. Now, there's two sides of that debate. Some will say, well, that has latency issues or yes it reduces complexity, but at the same time it doesn't give you, that fine-grained access that's kind of the AWS narrative customers, want simplicity and we're seeing the uptake across clouds. I have a multi-part question for you, Dave. So, obviously Bain very strong in strategy. I'm curious ,as to how much you get involved, in the operational details. I mean, obviously $750 million you've got a stake there. But what are the two or three major strategic considerations for not just even just Nutanix, but Cloud and software infrastructure companies? And how much focus do you put on the operational and what are the priorities there? >> Absolutely, well, we pride ourselves in being good partners to our businesses and in helping them to grow, not just with our capital, which I think is of course important, but also with our sweat equity and our human capital, and our partnership and we can do that in lots of ways. It's fundamentally about supporting our businesses, however, is needed to help them to grow. We've been investing in the technology sector, as I described over, over 30 years. And so, we've built up a set of capabilities around things like, helping to a partner with the Salesforce of a company is helping them to think about the ways in which they allocate their research and development and their innovation ways in which they, continue to do acquisitions, to further that pipeline. We support our businesses in lots of ways. But we're not engineers, we're not developers. Of course, we're looking for businesses that are fundamentally great. They've got great technology. They solve problems for customers in a way, we could never replicate. That's, what's all amazing about a business like Nutanix and just over a 10 year period of time, it literally has customer satisfaction levels, that we haven't seen from any other infrastructure software company that we've had the pleasure of diligencing over the last several years. So, what we're focused on, is how can we take those great products and offerings that Nutanix has, and continue to support them, through the further growth and expansion of areas like, the further Salesforce investment, to expand into these new areas like clusters, that we were talking about and thinking about, things that they can do, to further expand the strategic hold. And so, we have a large team of Bain Capital as I mentioned, 260 investment professionals, in our private equity business alone. About a third of those are just available to our companies to help support them, with various initiatives and efforts after we invest. And we'll certainly, of course make all of those available to Nutanix as well. >> Somebody was asking me the other day, what's hyper-converged infrastructure? How did that come about? And I was explaining, back in the day you had, you'd buy some servers and some storage, and you'd have a network. And you sort of have different teams. And you'd put applicant, you figure it out all out and put the applications on top, test it and make sure it all works and then the guys at VCE and VMware and Cisco and EMC, they got together and said, okay, we're going to bolt together a bunch of different components and pretest it here you go, here's a, here's a skew. And then, what Nutanix did was actually, really transformational and said, okay. Look, we can do this through software. And now that was what late 2000? Now, we're sort of entering this new era, this next generation of cloud, cross clouds. So, I wonder how you think about, based on what you were just talking about the whole notion of MA versus organic. There's a lot of organic development that needs to be done but perhaps you could buy in or inorganically through MA to actually get there faster. How do you think about that balance? >> Look I think that was an articulate by the way explanation of I think that the origins of a hyperconverged infrastructure, so I enjoyed that very much. But I think that with any of our businesses and with Nutanix we're of course looking at where are we trying to get to in several years and what are the best ways to support the business to get there? Of course, they'll primarily that will be through continuing organic investment in the company and all the innovation in the product, that they've been doing. Will the company contemplate acquisitions, to further achieve the development goals and the objectives for solving paying points for customers, to get to the strategic places they're trying to get to of course, but it all, is a part of the package of what's a good fit for the company and its growth objective. >> I mean, with the size of your portfolio, I mean, you're a full stack investor, I would say. Is there any part of the so-called tech stack that you won't touch that you would actually not walk, but run away from? (laughs) >> Well, I wouldn't say that we're running away from anything, but the questions that we're asking ourselves are, is the technology that we're investing endurable? Is it advantaged and does have a growing role in the world? And if we think that those things are true, we're absolutely, thrilled to invest behind those things. If there are things that we feel like, that's not the case. then we would tend to shy away from those investments. We've certainly found opportunities in businesses that people perceived as one, but we believe to be another. >> Well, so, let me ask you specifically about Nutanix. I mean, clearly they achieved escape velocity. One of the few companies actually, from last decade, it was Nutanix pure, not a whole lot of others that actually were able to maintain independence as a public company. What do you see as their durability? They're, moat if you will. >> Yeah, absolutely, well clearly we think that it's a very durable and very advantaged business. Yeah, thus the investment. Look, we think that Nutanix has been able to offer the best hyperconverged infrastructure product in the market bar none. One that is got the best ease of use is the most nimble and flexible for customers. And you just see that resulting customer feedback. And also that plays across very heterogeneous architectures in a way that it's really powerful. Because of that we think that they're best positioned to be able to leverage that technology as they have been, to continue to play across both public and private hybrid cloud environments. And so we're excited to back them in that journey. It really starts from solving an acute customer paying point, better than anybody else can. And we're looking to back them to continue to expand that vision. >> Yeah, well, I've talked to a lot of Nutanix customers, over the years and that is the fundamental value proposition it's really simple, very high, customer satisfaction. So, that makes a lot of sense. Well, Dave, thanks very much for coming on theCUBE and participating in theCUBE on Cloud. Really appreciate your perspectives, wish you best of luck. And hopefully we can do this again in the future. Maybe face to face >> Yeah, face to face maybe someday. Dave, I really appreciate it. It's been a pleasure and good luck with the rest of your interviews. >> All right, thank you. Well keep it right there, everybody for more Cube on Cloud. This is Dave Vellante, we'll be right back. (soft music)

>> Narrator: From around the globe, it's theCUBE with digital coverage of Dell Technologies World Digital Experience brought to you by Dell Technologies. >> Hi welcome back everybody, Jeff Frick here with theCUBE coming to you from our Palo Alto studios, with our ongoing coverage of the Dell Technology World 2020, the digital experience, we can't be together this year, but we can still get together this way. And we're excited for our very next segment, really talking about one of the big leverage points that the Dell VMware relationship can result in, so we're excited. Joining us our next guest is Guy Bartram, he is the Director of Product Marketing for Cloud Director, for VMware. Guy great to see you, where are you coming in from? >> Thanks for having me on Jeff. >> Where are you coming in from today? (Guy chuckles) >> So this yeah, this London for me, this is from London. >> Excellent, great to see you. >> In the UK. >> And also joining us, Doug Lieberman, he is the Global Solutions Director for Dell Technology, Doug, great to see you, where are you coming in from today? >> Well, thanks for having me, I'm calling in from just outside of Philadelphia, Pennsylvania in the United States. >> Excellent, love Philly's lived there for a couple of years and man, there's some terrific food in that part of the world, I tell yah. So let's get into--- >> You say--- >> Are you Pat's or Geno's. >> Actually I'll eat either one but I think I prefer Pat. >> Okay buddy, I used to get one of each and eat half and half and piss people off that were the purest, but that's a difference--- >> That's the right way to do it. (Jeff and Guy laughs) >> Right, so let's get into it, you know, before we turned on the cameras, you guys were talking about this exciting announcement that you've been working on for a really long time. So before we get kind of into the depths and the importance, why don't we just go ahead and tell us, what is the big announcement that we're sharing today? Go to you Guy. >> And so VMware and Dell really have worked together and we both have partner programs that are focused on service providers, Cloud Service providers, and systems integrators and strategic outsourcers. And what we've done is work together to build a solution that is really targeted towards them in the cloud arena, so taking our cloud capabilities and solutions and optimizing it for cloud providers and doing that through what we call, leveraging our Dell Technologies Cloud Platform and putting VMware Cloud Director on top of that. >> So that's pretty amazing, and really, to you Guy, what does that enable Cloud Service providers to do that they couldn't do so well before? >> It brings a whole lot of benefits to a Cloud Service provider, I mean, for cloud providers, historically they've had to have infrastructure services that've been, you know, quite heavy for them to build, taken a long time to get the market, and really had a high burn and operational costs and this solution VMware Cloud Director on Dell Technologies Cloud Platform is going to bring them the multitenancy aspects of cloud director and all of the speed and efficiencies in application and infrastructure delivery to enable them to address the common need now around hybrid cloud management and hybrid cloud operations. >> And you talked about before, I'm sorry, go ahead, Doug. >> No, I was saying, you know, I think that the big key piece is that, there're special requirements that cloud providers really need from their infrastructure, from their cloud, that makes it special to their business model, and what this aims to do, is to provide those capabilities in a easily consumable and rapid implementation format so that they can get to revenue faster and they can get to higher level services faster. >> It's funny, you talked about getting to revenue faster, back in the day I worked at Intel and Craig Barrett was famous for TTM. TTM, everyone used to think it was time to market bringing a new product to market, and he said, no, no, no, it's time to money, right, how fast can you get operational, so that you can basically get this thing to start generating revenue, I always think of that when you look at seven 37 sitting at a gate, you know, how do you get it operational? So Doug, what were some of those special challenges that they have in their market and how are you helping them solve them? >> So it's a great question, Jeff, as we work with service providers all over the world, they've given us a consistent message, that the days of the value in their service being, how they build the underlying cloud and how they do that orchestration automation are really behind us, right, they're expecting today, an end to end capability delivered as sort of an appliance for that underlying infrastructure for the cloud components, so that they can focus on the higher level services and the things that provide more value and more margin for them, and so, you know, the as a service offerings that run on top of the underlying cloud. And so what this joint solution does is really provide a validated design so that they can redirect their engineering resources from figuring out how to make that base cloud work in a service provider format, with multitenancy, chargeback, showback, portals, et cetera, and get that up and running faster and not have to worry about how to automate all that themselves, so they can focus their engineering efforts on those higher level services that provide greater value to their bottom line, to be honest, >> Great, that's great, and Guy, I want to go back to you, you know, the Cloud Service providers probably don't get as much of publicity as you know, we hear all the time about the big public Cloud Providers, you know, the big three or four or however you want to count them and we hear a lot about data centers and staff migrating between those two, we don't hear a lot of conversation in kind of the hybrid or the multicloud discussion about the role of the smaller Cloud Service providers. So I wonder if you can share a little bit about how they play in the market, you know why this is a really important segment for everyone's, you know, kind of architecture and ability to deliver applications. >> That's great common, I mean, one of the things we tend to call on our partners internally is the fall of mega cloud, that you know you really haven't heard of, there's 4,000 partners in our partner program and all of them are providing very valuable cloud services. They provide cloud services they've in all areas of cloud, so this could be into Azure, Google, AWS or in their own data centers, and many of them have come from infrastructure rich environments or what we call asset heavy environments and delivering services in these environments. The recent kind of drive to cloud adoption and digital transformation has meant that there's been a growing demand for Cloud Service providers to deliver valuable managed services and professional services to help customer do that digital transformation and really help the customer identify, where their customer's workloads, would be best apt and running. And, you know, cloud providers specialize in delivering these services like Doug was saying, they're looking at that higher value and they brought a lot of skills and capability in those areas. >> That's great, 'cause it's really good to keep in mind they pay a really important role in this whole thing. And Doug I want to go back to you in terms of working together with VMware in the solution space, right, so it's one thing to talk about a relationship between two companies, it's one thing to see Michael Dell and Pat Gelsinger on stage together, it's a whole nother deal to get together and put in the investment in these joint solutions. So I wonder if you could share a little bit more color on not only today's announcement, but what this really means for you guys going forward and more importantly, your customers, and ultimately your customer's customers. >> Absolutely, so Dell and VMware are both committed to really driving the success of our Cloud Provider partners all over the world, and to do that, we recognize that there's an additional level of capabilities that we need to bring together and jointly do that. And so we agreed to work together to go build a series of capabilities that are really targeted at going beyond just the basic HCI market and the basic cloud market and extending that for capabilities that are targeted specifically and built specifically for our service providers. And so this solution that we're announcing today is the first step on a journey, but we both committed to and made investments in, continuing that and adding more and more capabilities as we move forward and really addressing that very specific market. And working with our Cloud Service provider partners to figure out what is the next step, what do they need from us, at the end of the day, we're looking to jointly help them be more successful and accelerate their time to market and their go to market capabilities. >> Right, that's great, and Guy back to you, you actually had some numbers, some IDC numbers that you can share in terms of some of the real measurable benefits of this. >> That's right Jeff, yeah, we have, IDC did a recent analysis for us with about 12 partners interviewed across the globe, and some of the results that came back were pretty astounding actually, this pay-for is available on our VCE product page on vmware.com. But just as kind of summarize, you know, we talk about getting to revenue faster, they found that on average service providers were able to onboard customers, i.e migrate them, into their cloud environment around 72% faster, 57% faster delivery of new services and we all know that, you know, portfolio and construction of services takes a long time, but you get business units to buy in to give it support services, so 57% faster delivery of services is incredible. And then, you know, obviously getting to revenue 32% more revenue from VCD services than without VCD and 51% overall more growth with VCD from things like more efficient operations, which are also marked at like 31%. So, you know, significant advantages to having Cloud Director bringing those economies of scale, bringing that capability to migrate from a customer premise into service providers cloud, and then obviously be able to utilize multiple larger clouds across multiple regions. >> That's great, and Doug, I wonder if you could share, are there some specific applications that are driving this more than others, is there any particular kind of subset of the solutions that you can highlight where you're getting the most demand and where you see kind of the both short term opportunity as well as mid and longterm opportunity? >> A great question, I think it really evolves around a couple of different aspects. So one is from a pure security standpoint and things like data sovereignty, we're seeing an increased demand for the service providers that are our partners, as in the ecosystem of cloud, there will always be a role for the hyperscaler clouds as well as the role of these independent Cloud Service providers that are at the next tier down, both for the data sovereignty issues, things like GDPR, but as well as kind of that personal feel, that personal touch and specialty in applications, some of the specific areas we're seeing are things like business process management capabilities, database as a service, VDI as a service, but even more critically things like cyber recovery and backup as a service we're seeing, especially in the current situation that we're in, really an uptick in the cyber attacks and the ransomware, et cetera, and so solutions such as our cyber recovery are critical in those capabilities and those higher level services tied into and integrated with an overall service provider framework are key. And so in the area that we're really seeing uptake are really the business critical mission functions that enterprises are looking to run in a trusted partner's data center, and that's what we're seeing, where we're a lot of traction for this Dell Technologies Cloud Platform, combining VCD and VCF together to give you all those features and enterprise reliability. >> Right, and I didn't ask you Guy kind of the partnership question about having the opportunity to put your capability, you know, on the Dell Cloud Platform, opens up a whole new set of field resources, a whole new set of technical resources, you know, a whole different resources, not that VMware's short on resources by any stretch of the imagination, but it's certainly an additive, you know, kind of one plus one makes three opportunity. >> Yeah, I mean, it's great to be doing this and we've actually already been doing this on a couple of other initiatives, so from my perspective, I, you know, I manage Cloud Director Portfolio and we've already integrated Dell, Data Domain Dell, Avamar backup solutions, Data Protection Suite, into VCD as self service and we've already put in quite a bit of work, working together with Dell on that, as we go forward we're going to be putting more work into supporting VCD on the Dell Technologies Cloud Platform and integrating more services from Dell and from other vendors into the solution as well. So all we want to really provide is the capability for service provider to have the easy to consume hardware model, easy to consume subscription software model, with our program, and then the extensibility of services over and above just the infrastructure layer. So looking at things like object storage, and as Doug said, data protection, migration services, container cluster services, there's a myriad of services that VCD provides today out the box, and then there's the a whole extensibility framework, which we use when we work with partners, like we've done with Dell to deliver things like data protection. >> Yeah, I want to go back to you Doug, in terms of kind of a higher level, this whole transition to as a service, you've been in the business for a long time, you've been in the solutions a long time, but, you know, switching everything to as a service, as often as we can, and as frequently as we can, and as broadly across portfolio is really a terrific response to what the customers now, are looking for. So I'm wondering if you share some color on, you know, this philosophy of trying to get to, as a service, as much as you can, across the broadest solution set as you can. >> Yeah and if you look over the last decade, and decade and a half, there has been this increasing trend to moving to as a service offerings and the public clouds really drove a large part of that, than in tier two service providers around the globe. The key piece especially in the current business model, then going forward is how do you optimize, your CapEx versus OPEX and how do you really leverage the IT infrastructure to the maximum extent possible, based upon current business conditions, and that means the ability to grow and train and the ability to only consume what you need. In the past, when we had traditional data centers, you basically built for the worst case, and so the worst case was you had, an accounting run that happened at the end of the month that required a lot of processing power, then you built to that and that's what you use, and for the rest of the month, it really mostly idle. The cloud model really gives you the ability to A, improve their, or only use what you need and consume when you want to use it, but also adds in really shifting the responsibility for the management and the operations into someone, people who are experts in that area, so that again, you as a business can focus on your mission critical aspects of what you do whether that's developing a drug, building cars, making pizza, whatever it is, really as a service model enables your business to drive their core competency and not have to worry about the IT infrastructure that other people can do more efficiently and with better value than you could do it internally. And all that drive to that as a service model with the additional financial models that really aligned to the business paradigm that really companies are looking for. >> As you're saying that I'm thinking, wow, remember those days when our worst case scenario, was running a big batch load at the end of the month or the end of the quarter, and that would be re-missed, right, we are 2020, we're spread out all over the country and the world on both sides of the Atlantics. If I didn't say something about, you know, kind of the COVID impacts in terms of this accelerate, 'cause we hear it all the time in social media, right, who's driving your digital transformation, is it the CEO, the CIO, of COVID, and we've moved from this kind of light switch moment and then merged to, hey, this is an ongoing thing, and you know, kind of the new normal, is the new normal. And it's really shifted, a lot of people are talking about, you know, kind of shifts in the cloud infrastructure, the direction of the traffic, right, from going now from East to West and it's North to South, 'cause it's going to everybody's home. I wonder, I'll go back to you Guy, in terms of, the response that you've heard from some of your customers, in a response to, you know, kind of A, let's put a stop gap in early March that was interesting, and critical, and done, but now, kind of looking forward as to, you know, kind of a redistribution of workloads and architecture and users and I think Doug talked about security. How are you seeing any kind of ongoing effects and how is this impacting, you know, kind of you go to market and what you guys are bringing to market. >> Yeah, we're definitely seeing a lot of change in the way that service providers are trying to address this now. At the start of COVID, it was really a struggle, I think, for everyone to get the resources that they required to keep customers up from running, a lot of people started re-examining their disaster recovery contingency planning, and realizing that actually, what has happened in the last couple of years is, you know, workloads have exploded, a lot of patient workloads have completely gone through the roof and container workloads have grown drastically, and what's happened is the contingency plans behind all this stuff haven't changed and they just simply can't keep up the dynamic nature of the way we're doing business. Quite simply put technology is outpacing our weight, our ability to deal with that, so, you know, service providers need to provide a platform solution that enables them to be able to orchestrate at scale and enables them to orchestrate securely at scale, and really that means they've got to move away from this is hardware analog and move into virtual resourcing, cloud resource pooling elasticity, and particularly hypothesy. I know VMware we talk a lot about hybrid solutions and multicloud, but it's a reality when you look at where customers are today in their cloud journey, most of them have a footprint in their premise, have a footprint in a cloud provider premise and have multiple footprints in public cloud environments, so they need to have that consistent security model across that, they need to have data contingency and backup solutions, and someone needs to be in that to manage that, and that's where the service providers come in. They need to move away from the kind of infrastructure day to day operations that they were doing before and scale it out to now application protection and application development environments. >> Right, so Doug, I'm going to give you the last word as we wrap up this segment, you know, it's easy for us and pundits and people to write about multicloud and hybrid cloud and all these concepts, you guys actually have to make it work on the ground with real customers and real workloads. So I wonder if you could just kind of, you know, share your perspective, you've been working on this Dell Cloud Platform, you know, kind of how you see this evolving over time, and again, kind of what gets you up in the morning as you look forward as to what this journey is going to be over the next six months, one year, two year, three years down the road. >> Brought a lot of functionality capabilities to the world, right, the ability to consume things as you need them, the ability to really rely on a combined set of clouds and multicloud, and if you look at any enterprise that by any estimate, any company of any size, it's probably got 12, 15 clouds that contain their multicloud between using hyperscalers, tier two service providers, as well as cloud based services like Salesforce.com or Office 365, and you combine all those together and what that provides is a lot of flexibility, a lot of functionality, but also an extreme amount of complexity. And that complexity is really where Dell Technologies Cloud and Dell Technologies Cloud Platform is looking to help and to reduce that complexity, 'cause ultimately a successful enterprise is going to leverage the best from multiple clouds across multiple different implementations in order to provide the end to end IT experience that they need for both their external facing and internal IT operations. And with Dell Technologies Cloud Platform and working with our service providers, what we aim to do is to simplify the implementation of those multiple clouds and how they work together and make it as seamless as possible to shift workloads where they need to be, see your entire virtual enterprise IT environment, no matter where it's running, and to really optimize on your business to understand how you're using cloud, where you're using cloud, and how those clouds work together. And so the integration of all the different features with VMware and Dell bring together that end to end capability to significantly simplify the multicloud experience, and then ultimately our service provider partners, can help you on that journey to provide that management and orchestration across those different clouds and the data transformation, the digital transformation necessary in order to drive success. >> That's great, well, thank you Doug, for putting a nice big bow on it, and congratulations to you both for getting this release out, I know there's a lot of hard work and effort behind it, so it's always kind of good to finally get to expose it to the real world, so thanks for taking a few minutes with us. >> Great, thank you for having us. >> Absolutely. >> Yeah thanks Jeff, thank you. >> All right, he's Guy, he's Doug, I'm Jeff, you're watching theCUBE's continuous coverage of Dell Technologies World 2020, the digital experience. Thanks for watching, we'll see you next time. (soft upbeat music)

>> From the SiliconANGLE Media office in Boston, Massachusetts, it's "theCUBE." Now, here's your host, Dave Vellante. (upbeat music) >> Hello everyone and welcome to this week's episode of "theCUBE Insights," powered by ETR. In this "Breaking Analysis," I want to look into Cisco. You know theCUBE is in Barcelona this week to cover Cisco Live. There's an expected attendance of about 17,000 people. Now today, Cisco is a company in transition. It remains a leader in key segments, but it's refocusing its business for the next decade, having exited a number of areas over the last several years. Allow me to briefly give you my perspective and review how we got here. Near the end of the dot-com bubble, Cisco was the most valuable company in the world, with a $500 billion market cap. It was one of the four horsemen of the internet, remember that? Along with Oracle, Sun, and EMC. Cisco really rose to prominence by betting big on ethernet. Old reliable TCP/IP was the linchpin of the internet, and allowed Cisco to power the wave that virtually decimated the mini-computer industry in the 1990s. There were many levers that Cisco pulled, brilliantly, during its ascendancy, and I want to call out two big ones. First was it created an army of network engineers. Literally hundreds of thousands of professionals trained on installing, configuring, managing, and optimizing Cisco gear. Cisco created very complex solutions and thrived on this complexity, and the Cisco Certified Inter-network Experts, or CCIEs, deeply understood the dark art of networking, and Cisco was their beacon. The second was acquisitions. Under the leadership of CEO John Chambers, Cisco completed about 180 acquisitions over a roughly 20-year period. This enabled TAM expansion, growth, and maintained Cisco's relevance to customers, who very typically and often were the generator of acquisition ideas. Cisco diversified quickly into a conglomerate with a portfolio that spanned video, set-top boxes, telepresence, compute, collaboration, security, wireless. At one point, Chambers talked about dozens of adjacent businesses, each of which would account for a billion dollars of incremental revenue for Cisco. Many, if not most, didn't pan out, and Chambers slashed and burned prior to handing the reins over to current CEO, Chuck Robbins. Now, under Robbins, Cisco was a more focused company, kind of going back to the basics. They're betting on what I would say are more sure bets, including data center, wireless, collaboration, security, and the Edge. Cisco is also evolving its model towards software subscriptions. Now today, I want to look at how some of those bets are performing. I'll discuss the impact of cloud on Cisco's business, and then I want to drill in to the performance in some areas like networking, collaboration, security, and then close on hyper-converged. And then the last thing I'm going to do is share some things that I'm watching as barometers of success, over the next 18 to 24 months. Now the first thing I want to do is give you a snapshot of Cisco's financials today. What this chart shows is some KPIs on a trailing 12-month basis. Cisco is about a $50 billion company with a $200 billion market value. That's a 4X revenue multiple, which is pretty good for a company that's generally viewed as a traditional hardware player. Now Cisco is guiding analysts on a flat to down year, and talking about a challenging macro environment, despite the stock market's seemingly insurmountable rise. Cisco is a very profitable company, with a 33% operating margin, and very nice, 66%, roughly, gross margin. Cisco throws off a lot of cash, around $15 billion annually in free cashflow. They make a big deal that 70% of its software revenue is now coming from subscriptions. And Cisco is mandating a new consumption model that is subscription-based. Now it's somewhat hard to tell exactly how large Cisco's software revenue is, as they're opaque in that detail, but I'm pegging it at between 11 and 12 billion by the end of this year. Today it's probably seven to eight billion. Cisco is riding some big waves, adding software to its portfolio, security grew at 22% last quarter, Wi-Fi 6, 5G, which by 2021 should start kicking in, it uses a chunk of its cash of course to buy back stock to keep the street happy, and it's leveraging a leadership position to compete. Now finally, I want to make some comments, later actually, on how they're approaching developers in a strategy that I really like. Now there are some headwinds that Cisco's facing, namely cloud, this macro picture that they talk about, which is not positive for them evidently, the company's overall complex portfolio, the competitive dynamics, and the perception that they have an aging, or that they are an aging hardware company, and they're really still touting, selling ports. So, let's drill into some of the spending data, and I want to start with this notion of leadership. This chart shows Cisco's position in its core networking segment. The chart depicts market share over time, which remember is a measure of pervasiveness into each ETR dataset. Now look at what happens. Look how Cisco maintains its leadership, far outpacing the others in this networking sector each quarter. I'm going to make some comments on the sector overall, but notice the net score in the blue bars, which is a measure of spending velocity. It holds firm at 25%. Not great, but holding steady. And you can see the pie chart of the public cloud's impact on the sector, and I'm going to make some comments there later as we go on. But first let's look at the networking sector overall. ETR just released its January survey, and here's what they said in their sentiment on networking. So, when you see the networking space, it's been sort of down for a while, and ETR has been somewhat negative on the entire space, but what this shows is really net score, which is spending velocity, and the January 2020 results, with previous periods within Fortune 500 buyers. And you can see there's an uptick in momentum for networking generally, and Cisco is really cited as rebounding. But now look at the blue call-out. It's from an ETR VENN discussion, with an IT buyer, who essentially says, "Look, as we move to the cloud, "we are going to spend less on networking gear." And given that Cisco is the leader, we want to understand how the public cloud is affecting Cisco's networking business. So to answer that, what I'm showing here is data from the latest ETR January spending survey. And I'm filtering the data on organizations that are spending on AWS, Azure, and Google Cloud platform, and showing Cisco's performance measured in market share, or pervasiveness. You see, that's what's happening now in these big cloud accounts. There's an N of 809 cloud customers, and 480 Cisco customers within those accounts. And you can see the impact that the cloud is having on Cisco, much the same way it is affecting virtually every large supplier of on prime infrastructure. A slow, steady decline over the past 10 years. And you can see a net score, which measures spending intensity, in the upper right-hand corner, of almost 30%, which is somewhat lower than Cisco's average in the ETR dataset. But the story's not just about cloud. There are other waves in the industry, of what I've referred to in the past as innovation cocktail ingredients, namely data, plus AI, plus cloud. So the next question I want to pose is, how is Cisco doing in leveraging these waves? So here we have 916 customers in these superpower segments of data, AI, and cloud, that are combined, and we show the market share, or pervasiveness, over time, of Cisco, as compared to VMware's NSX, HPE, and Dell EMC. What the data shows is a couple of points. One is that Cisco is the most pervasive competitor shown in these customer segments. Its net score is 37%, four points higher, meaningfully, than the cloud-only chart. Actually seven points higher than I showed earlier. Only NSX has a higher net score, and relatively speaking, NSX is much newer, and should be growing much faster than Cisco, so that makes sense. So I would say that Cisco is holding its own here. Its challenge really, in my view, is to use data and AI to create better customer experiences. So, be a consumer of AI, if you will, as a means of better serving customers, and compete in the multi-cloud market directly with these players and others, none of whom own a public cloud. Okay, so I spoke earlier about Cisco's portfolio, so let's look at some of the ETR data, and see how various parts of Cisco's business are doing. This chart shows the net score, or remember, spending velocity, across Cisco's offerings, and includes Meraki, which is wireless, AppDynamics, AppD, is application performance management, we're showing here Cisco overall, Cisco Umbrella, which is cloud and DNS security, and Springpath, which comprises infrastructure for Cisco's hyper-converged offering. And as you can see, the segments in which Cisco plays, there are 10 in the ETR taxonomy, spanning analytics, security, mobile, device management, infrastructure, video conferencing, et cetera, et cetera. In the interest of time, I will say just the following. Red is bad, green is good, and gray is neutral. And again, Cisco is holding its own in these major segments, with decent spending velocity. So now, let's take a look in an area that I think is going to get a lot of attention in Cisco Live, and that's collaboration. This ETR chart that I ran shows net score, or spending velocity, for video conferencing platforms. And you can see, Cisco, they got some work to do. It's sort of teetering on the red zone. So I would expect some continued enhancements there. Now comparatively, you can see GotoMeeting losing steam, and Skype really falling off a cliff in January, but look at Microsoft Teams, that blue dot, with very very strong momentum. So what Microsoft's doing is they're migrating Skype and Lync, their install base, to Teams, and they're really really well-positioned there. And you can see as well, newcomer Zoom is right there in the mix, across this sample of 500 buyers. Now, I want to turn your attention to a really important sector, which of course is security. This chart that I'm showing here shows net score, again, spending velocity, in the cyber security sector. And Cisco is both large and credible in this space. Its security business grew 22% last quarter, as I said, and it's at a $3.2 billion run rate. So, spending momentum, maybe not as strong as Palo Alto Networks, which I'm showing here, and it's not as high as the rocket ship companies, like CrowdStrike, or Okta, or CyberArk, or SailPoint, or some of the others that I've highlighted in previous "Breaking Analysis" episodes, but Cisco's pretty solid. And you can see the likes of IBM and Symantec, by comparison, these guys are leaders in security, but their spending momentum is in the red. So once again, the steam of Cisco as a large player who has credibility, this story is playing out. And clearly this is going to be an area of focus at Cisco Live. So this next data point is kind of interesting, and looks at Cisco's data center business, and specifically, I'm trying to better understand what's going on in hyper-converged, the software-defined platforms that bring together storage, compute, and networking. Now the power of the ETR platform is that I can ask the question, how are the hyper-converged players doing inside of Cisco accounts? So what I've done is I've filtered on 458 Cisco accounts across three sectors, storage, compute, and networking, and I've isolated on Nutanix, VMware, or VMware's vSAN, Cisco itself, and Dell EMC with VxRail. And what we're doing is we're showing net score, or spending intensity, spending velocity. And the first thing to point out is that all of the vendors are in the green, and that's because this is a growing market that still has legs. Nutanix has noticeable spending momentum, ahead of vSAN, ahead of Cisco, and Dell EMC. Now here's the thing about Cisco. On the one hand, it's putting forth its own HyperFlex platform, based on the Springpath acquisition. But it has to tread carefully because it partners with converge players, like NetApp with FlexPod and IBM with VersaStack. And its HyperFlex, as an HCI play, is essentially designed to replace converge platforms like these. Now the same is true for VBlock, the business with Dell EMC, the old VCE business, but Cisco and Dell are at each other's throats, so, neither really cares that it's replacing them. Okay, long segment, a lot to cover, I got to wrap, but I want to end by saying what to look for over the next sort of 18 to 24 months as barometers. First thing is the pace of transition to software. The second thing that I'm watching is the uptake of the new core announcement that Cisco just made for big routers, silicon, and optics. This is Cisco's wheelhouse, and I expect that the 5G rollout in 2021 is really going to start to pick up and be a tailwind for Cisco. You know the macro should be a concern. Cisco is saying its business is soft, kind of across the board, there's China, there's Brexit, but the S and P is on fire. Now does that mean upside for Cisco? In other words, are they sandbagging a little bit? Or, are there more fundamental, structural, or execution issues? I think personally, Cisco may have a little bit of upside here, but they're big and exposed, so that's something to watch. The other thing is the impact of cloud on Cisco's business, and the company's ability to compete in multi-cloud, including how it embraces Kubernetes. Cisco, and I've said this before, has to position itself as the best, the most cost-effective, the most secure, and highest performance network to connect hybrid and multi-clouds. Now as well, the company's got to hold serve in networking, which I fully expect it to do. We're seeing a little uptick in Juniper, Arista's doing okay, but they're sort of smaller in the grand scheme of things relative to Cisco. Now the wild card here is VMware's NSX. So we'll be watching that and what impact it has. A lot of customers have both. Finally, I want to talk about developers. Cisco DevNet, as I've said many times, I really like what Cisco is doing there. I think they've outshone some of the traditional players. They are retraining hundred of thousands of CCIEs to code in Python, and really, code Cisco infrastructure. So Cisco has an infrastructure-as-code strategy that's going to help propel them in multi-cloud, the Edge, new Workloads, and they're leveraging this engineering force that they have. So, very long segment here. Watch the coverage at Cisco Live on theCUBE and on SiliconANGLE. It's a big chewy company, and a lot for me to swallow in one of these segments. So tweet me @DVellante if I've missed something, or comment on my LinkedIn feed, or you can email me at David.Vellante@SiliconANGLE.com. Thanks for watching, everybody. We'll see you next time on "Breaking Analysis, "theCUBE Insights," powered by ETR. (upbeat music)

>> Live from Las Vegas, it's theCUBE. Covering Dell Technologies World 2019. Brought to you by Dell Technologies. And it's ecosystem partners. >> Welcome back to theCUBE's live coverage of Dell Technologies World here at the Sands Expo in Las Vegas. I'm your host Rebecca Knight along with my co-host Stu Miniman, we are joined by Lewie Newcomb he is the Vice President, Server Storage and HCI Engineering Dell EMC. Thank you so much for coming on theCUBE >> Thank you. >> For the first time ever. >> For the first time, I'm excited. Very excited about it. >> Yes well we're happy to have you. So we're talking VxFlex and we have not talked a lot about VxFlex on the show, I now you had a segment earlier. Tell us about your news today. >> Okay, well the big news for the show this week is we've launched an appliance. So traditionally we do a rack level product with VxFlex. So we've launched an appliance, so basically, think half-rack without networking. And then we did some updates to our software that we can talk about. And we also still, and we've added some more platforms. So we added the 840 PowerEdge server. So all of our products are on PowerEdge servers. And the 840 with 4-socket, we now have a great platform for SAP HANA. >> So Lewie let's take it back a sec, because VxFlex, there are some new products, but a main piece of this, this was a rebranding of some of the other pieces in the CI and HCI family. So maybe those people that have a little history, if you can help put this into context as to which brands are gone and under this umbrella. >> Yeah, so I'll just start with the new brands. VxFlex is the brand, VxFlex Ready Nodes, VxFlex Appliance is the new product, VxFlex Integrated Rack. VxFlex OS and VxFlex Manager. So a lot of parts there. >> Simplicity. >> Okay. (laughs) >> The naming is very simple and it's easier to talk about. I think a big improvement over our previous brands. And then, I'll go into some of the details. So, I talked about the Appliance, think about new consumption model, little bit smaller chunk there. But we also updated the software, the OS, so the VxFlex OS we added compression in this release, it's VxFlex 3.0 is the revision, it's shipping today. We added compression and we changed the data layout so we actually have higher performance and small granularity and snapshots. So some storage features were added. We also have many new certifications. So I mentioned the SAP HANA, we also have Epic, both VDI and the database. We also have SAS Analytics has a great white paper talking about our product and the benefits of our product. And we're really a performant product. If you think about, it's a pure software SAN And we can also do HCI, we can also combine the software SAN with the HCI we call that two-layers, the way we refer to the software SAN. >> Alright, so this week there's a lot of discussion about VxRail, so maybe use that a touch point for people to understand. VxRail, joint integration between VMware and Dell. VMware Hypervisor, give us a little compare and contrast as to some of those pieces. >> Great question, the VxRail as you said, it's our, integrated in an entire VMware stack. And some great announcements, I love ACE, if you seen the ACE announcement. So the Flex though is a product that's out there because not all customers are in a VMware environment. We also support bare metal. >> Or even if they use VMware they're not 100% VMware. >> Not 100%, and many of our customers actually have both. For high performance databases they might pick Flex. For more general purpose VDI and things they might pick the Rail and so customers as we talk to 'em, they different needs and we have different products for those, so we give them that choice. >> Well, let's actually walk us through a little bit about the VxFlex customer and sort of, so this customer what are their needs and why is VxFlex the choice? >> And you've been doing software defined for a long time so I always see it this way, you start out with a customer that's transforming their business, they want to get into software defined, they want to prepare themselves for the future. Well that's where we start, we're software defined. And the next thing we look at is, do they need performance? Do need they need some one millisecond latency across you know, 50 nodes, 1000 nodes, we can do that. We're very high performance, so that's why I mentioned the databases. And the other things is, we just talked about is that choice they may not want to use just vSphere, they might want to use other hypervisors, so we support those hypervisors. And then the real interesting thing is that two-layer, because as you know with HCI we combine the application and the stored services all on one node. So in our product we can actually separate those, so you can scale storage and compute separately. And it's still all in one storage pool. So it's a very flexible product that fits that kind of customer's needs. >> Okay, simplicity is really one of the key words that we've heard in this whole trend there. It's interesting having had discussion from CI all the way through HCI, some of the software that allows me to manage it, really makes invisible some of those choices. You just said, well HCI was, I can have some choices between the computing storage, but usually they did go in blocks together versus scaling them separately. Can you talk a little bit about the management suite and what that means from a customer administrator and the infrastructure team as to how they look at this spectrum of offerings. >> Sure, so we have the VxFlex Manager, I mentioned that in the beginning, so that manager is starting to automate that management orchestration. So from deployment to serviceability to provisioning, we launched several new features in that, in this current release 3.2 release. So it, more granularity round the service of the drives and things like that. We'll continue to evolve that. You mentioned that you're hearing that, every customer I talked to this week, number one thing we talk about is more automation, more ease of use, so as they're going into software defined, they're all asking for the same thing and we're going to support that with the VxFlex Manager. >> Alright, great so talk a little bit about the application, you talk about high performance environment, one of the things we've been looking in this space especially is, what are some of the new areas, things like containerization, Kubernetes, is this platform that the customer builds ready for that environment and how do we span from kind of what I have and where I'm going. >> Yeah, so we just launched our Kubernetes plugin, the CSI plugin, so we have some customers already testing that beta and because we have bare metal, we can also support that in that native environment, So most customers they are still using that in a virtualization environment. But they're preparing for the future, they're looking at different options, so it gives them that flexibility if they want to go bare metal. >> So you're 15 years at Dell and you've really spent your career in storage and we're talking about the big customer... Customer list of what they want, they want ease of use, they want simplicity, they want speed. >> They want performance. >> They want performance, so what are the kinds of things that you're thinking about for the next year's? >> Yeah well next year, we're still building out some of the storage services. So later in the year we'll add some new storage services, like we just added compression, so our launch this week was compression and we'll add more and more storage services more data protection, more replication. We'll continue in that path, and more and more management. The management is going to be a key area focus for us. >> Right, can you take us inside some of those customer conversations, good excitement, 15,000 people here. I'm sure you've talked to a lot of customers, what are some of the key concerns that are raising to them and what's the feedback you're getting? >> A lot of the customers the reason they want automation is they want to manage their full environment, 'cause remember at the rack level we've integrated the switching. So they want a predictable outcome and when they have drift, when they want to do security updates, that's most of our conversations, they want us to do more and more automation around that. Compliance against the product itself and then when a security patch comes in. And by the way I'll mention the two-layer, another great advantage of two-layer, a lot of times, these security patches come in only on the compute side. So we can do a security patch on the compute side without disrupting the storage pool, so it's a big advantage so that's 90% of the conversations we're having. >> Yeah, maybe touch on one of the big concerns, you talk about, I want that cloud operating model. When I'm running in any of the public clouds, I don't have to think about what version I'm running. The old days of, oh I had to manage it to in the VCE days, it was the compatibility matrix and then the RCM documentation, how are we doing towards getting to that simple push button, you know I take care of it, securities patches come I don't have to worry about scrambling I've got that taken care of. >> That's nirvana, that's our north star. We're working on that and we're using the Flex Manager as that platform and more and more we're taking those requirements in the Flex Manager and we'll be rolling it out. Our goal is to have that one click upgrade right? That one button, our goal is to be able to do compliance and quick updates, and it's a journey. And it's the most complex part as you know, you mentioned, some older products, it's the most complex part of the solution, is keeping that compliance and that performance where you need it. >> So how do you manage that? I mean as you said it's a huge challenge that your company's facing and yet also all your clients are facing too. >> Well luckily we have a lot smart people. (laughs) and we have great customers. The nice thing you know, Dell's direct, the interaction we've had with customers this week, I mean they're designing with us, they're telling us what they need. And we're not a large large scale business in relative to a server business and using computing. So we have relationships with almost all of our customers. And we go and show them our roadmaps, we go get feedback from them, they help us define what they need and we follow our customers. >> Well it's really interesting, because we know that Dell's turning 35 very soon and middle age is the time where you start to get a little more set in your ways, a little older, a little creakier, but what you're describing is this real collaborative relationship with your customers and not sort of this my way or the highway kind of thing. >> I feel I work in a startup, we're agile, we're listening to our customers, we're doing the right things. We're not focused all just on our business, we're focused on our customer outcomes. We made a big ship this year on my product line of talking about the databases and the certifications and we're really trying to help our customers through those decisions without them having to make all those decisions themselves. >> Yeah, what about the consumption model, some of the other product lines we're talking to are going to manage their services as well as moving towards that OPEX model. How's that fit into the VxFlex? >> Yeah, we're not there yet, of course we're going to lead with our Dell Technologies portfolio, We have some great products in that portfolio. But we'll get there over time. Today, you saw the announcements on day one with VMware, Dell EMC and the cloud platforms. We'll continue to build infrastructure, we'll continue to stay in our lane, where we do really really well and the customers love us. But We'll eventually get to different consumption models. >> So tell us a little bit about this show for you. This is not your first rodeo here at Dell Technologies World. >> And I hope and you're seeing this, this feel like we're one big company now right? We've been three years in the making. And coming to Dell Tech this year, I feel like we're one. And Michael's key note was, the first customer I talked to, you know, everything Michael said, resonated so well with me and so it really feels that way. And just the vibe back there and in the solution expo, it's just, you know at level 10. >> Well right, so we're passed the Dell EMC integration point, but the big thing we've been talking about this week is, you know those seven logos up on the banner behind you there are acting like one. So VxRail designed together, sold together. Can you talk a little bit about where do some of the other pieces of the portfolio fit into place. >> Pivotal Cloud Foundry right? Almost all of us are parting with Pivotal Cloud Foundry and building that stack and offering that service to our customer, you know Secureworks RSA, we all need security right? We're all working there too. And even now, so I work in the PowerEdge team, you know, storage product, so we're working, we're taking PowerEdge and putting it everywhere. So all of our data protection products, RSA, our storage products, we're working PowerEdge everywhere and leveraging that. And the beauty about that is you saw the VxRail ACE announcement right? That's a platform, that's a analytics platform that now we can build on and designing PowerEdge. We can put requirements into PowerEdge to make that a much richer telemetry box and really start getting some analytics in that solve some problems, predictive analysis and things like that. So yeah, it's been fun, I've been on the tip of the spear of this, you know, coming from the storage side, and I'm starting to see it really really come together this year, here at this show. >> Alright, so want to give you the final word, VxFlex I know people, if they went through the expo hall they could see it, touch it and the like. For those that didn't make it to the show, what do you want the key takeaway for VxFlex? >> So we're pure software defined, we're very high performance, we're ideal for your databases, we're ideal for scale, we can scale up to 1000 nodes or higher. And we have many many customers doing that. We have running in the show this week, a database running at six nodes over a million IOPS, sub one millisecond latency. So... >> A good note to end on, (laughs) powerful. >> Bang yeah. (laughs) >> Lewie thank you so much for coming on theCUBE. >> Thank you, appreciate it, it's been fun. >> I'm Rebecca Knight, for Stu Miniman, we will have so much more of day three of theCUBE's live coverage of Dell Technologies World coming up in just a little bit. (techno music)

live from Las Vegas it's the queue covering Dell technologies world 2019 brought to you by Dell technologies and it's ecosystem partners welcome back everyone to the cubes live coverage of Dell technologies world here in Sin City I'm your host Rebecca night along with my co-host Stu minimun we have Chadds a catch he is the SVP PKS and Deltek Alliance at pivotal thank you so much for coming back on the cube Rebekah it is my pleasure Stu as always this is a big anniversary actually this isn't he I'm glad you brought it up this is this is Mark's 10 years of the cube at Dell technologies world and you're a cube MVP I want to hear you break it down for us would listen down this milestone when when when you guys started doing this I'm not sure whether anyone knew whether there was gonna be a season two but you know I think at these events distilling down what's happening bring in people with diverse points of view you guys have always made it real shared the perspective of the ecosystem challenged us to keep it a no-spin zone which i think is a great formula yeah Chad thank you so much first of all you know one of the things we do come in opinionated but one of the things we want is we want guests with opinions and luckily you've always brought it we love having you on the program and boy have things changed a lot in the last 10 years so I want to get your view on the keynote so I mean Chad you and I go back way we we were colleagues back at EMC I remember when you were acquired into the company we worked on like I scuzzy stuff which nobody even talks anymore of my scuzzy storage networking the dark art of that stuff but VMware was something that you know it really was a lifter for both of our careers I think it was really interesting to see how central VMware is to the strategy that we saw how it fits into multi cloud I just got a note from Dave Volante said you know Pat Geller drew up on there talking about multi cloud and you know let's not think that Microsoft obviates the need for AWS Atos is the first the big cloud and absolutely VMware's working with them so I'd love to get your take on you know VMware and the multi cloud and VMware with delve as opposed to VMware with EMC there's a lot to unpack in that yeah we've got like an hour so the first thing that I think is interesting is that history and context gives perspective but ditch context and dick ditch history and if you think of the now and the market the customer no longer wants servers network storage they don't want virtualization they don't even want things like RDS and ec2 and we still want the emotion right you know the the reality is is that with every customer that I see they're looking for things that only the Giants in increasingly vertically integrated stacks can do so think about the whole keynote through that context right basically you saw Dell EMC and VMware more aligned than ever and again you and I have the history in the context of years of EMC VMware I remember the first time I did a vien the first time played with ESX 3.0 and virtual Center 100 and 200 and going is gonna change the universe but fast-forward to now people are like I want an easy button for the whole stack Dell EMC says this is the common building block VX rail my former baby is now grown up and it's the standardized way to deploy the VMware stack on Brentt Project I mention is moved out of a hypothetical into beta management of that lifecycle as a cloud service and you'll notice that Michael started it in the keynote kubernetes is central to that vision our efforts between pivotal and VMware in the kubernetes universe is singular the objective is to make that whole stack simple to deploy consume grow etc etc now Chad I needed a comment on one thing so I seem to remember back another project you worked on that was going to start as a managed server and that turned into Acadia which turned into VCE which turned into a product because the customer gave very clear feedback that most of them didn't want it so why is it is it different now what's different now what changed in a decade the customer wants the outcome in the historical like you know that's a Wayback Machine right so circa 2010 the way you built a private cloud was an assemblage of server network computes virtualization in separate components delivering that as an outcome as a managed service even for VCE CPS D etc etc there we did it amazingly for about 3,000 customers but it was held together with services and human that's not software what's adapted is that the software-defined data center is now much more mature and it's possible for us to literally roll in a rack of VX rails manage it via dimension do full lifecycle updates not via NRC em but via button click in a window that is necessary for that degree of simplification now if we had stopped there in the keynote we'd be missing the mark because basically the customers have said I want a common multi cloud hybrid cloud operating model with consistent control consistent infrastructure can consistent kubernetes consistent developer abstractions and I thought it was a pretty big deal to see Microsoft join what VMware's been doing with AWS and you know we were there at the Google announcement at Google next you know just a couple weeks back so I think that we're moving into a face to be a little opinionated here where customers wanting an outcome are going to look at Deltek Microsoft Amazon sometimes Google and go tell us how we bring ourselves to the digital future it's interesting because that means what things that people don't like which is vertically integrated stacks they don't like industry consolidation they don't like optionality being reduced but if you want an outcome frankly increasingly what's happening is consolidation at this layer and a blossoming ecosystem above it so so where where where will that bring us I mean I think I think you're absolutely right in you you started talking about how we're sort of putting aside history and perspective and now let's bring it back into the conversation yeah what does that mean I think I think that for human beings watching the era of doing cool things assembling things that run VMS even things that run kubernetes and containers is increasingly turning into an a realm where you have to let go so that you can do things that matter increasingly the ecosystems are hyper standardizing those stacks and delivering them as a service in a public cloud and on-premises our objective and I think it's something that only Deltek really is in a position to do is to do that in a way which is open multi-cloud and yet also deeply integrated and what I would say is again to anybody watching is if you're deep passion is in building cool things build cool things but on top of that stuff so chat great set up for the question I have kubernetes I've argued for a number of years is something that the average customer shouldn't need to worry about it's something that should be baked into the platform all the public clouds have it VMware has it your babies PKS today help help us reconcile the statement you were just making and what PKS because I know it's really cool tech and there's lots of pieces and lots of smart people work on it but so you know how does that fit so a stew again you and I go back aways do you remember you remember the state of virtualization circa 2006 sure you'd show up to the VM world and it would be filled with people deeply passionate at the time it was like three four thousand people we're gonna change the world with virtualization all of them were doing weird science projects very few of them could say and I'm running this in production to you know do bla and I'm making the hospital run better right but they'd be like look at how cool this is the technology matured a lot and if you look at the time frame 2010 which was vSphere for if my timing is right it was the first year where it was like kind of for reals right and people started to talk about hey I can do cool stuff kubernetes is currently in the 2006 of virtualization so I've been doing this now for a year we as del tech are now the number two contributor to kubernetes right after Google more than RedHat more than RedHat is that combining all the pieces we have basically drove and so hard towards this point because we think it's essential now you've got the help to your team as part of that that's a big that is a big part of the strategy right how do we make contributions for the native upstream community and lead that charge via be a good citizen of that ecosystem one two we will make PKS Enterprise PKS in a central PKS the best simplest curated way to make this work that said kubernetes has three major release over three months PKS 1.4 using one dot 13.5 came out last week 1.5 with beta support for Windows is just arriving and we did a beta last week three months from now there's gonna be another major release I'm doing a session that basically says and I'm the I'm a cheerleader I'm like a superfan this is currently like juggling flaming chainsaws right yeah it's it's like you were like what and I'm like yeah so the CNC F which is the ecosystem around kubernetes kubernetes on its own is just like a base component you need to have this and this and this and this has 647 things on the landscape landing page that means if you take five minutes per you would spend a week without sleep without eating like the Game of Thrones watching last night's no food no sleeping no bathroom breaks today Chad five minutes each today and you would get a chance to learn all of those but to really deeply understand what they do you can't do with that in five minutes that's six months of work people need that market to consolidate mature industrialize and we're doing it having having been part of the VX rail envy san ramp being part of the NSX ramp the vSphere ramp the converged infrastructure ramp what's happening with kubernetes and with peak s exceeds the ramp curves for all of those so if you're a customer and you're thinking about do I need this kubernetes thing the answer is yes we have 50 of the Fortune 500 customers now using peak s people are doing it for real but it's still early days now some people may go that's scary and I'm gonna take a timeout I wouldn't do that I would say that just like virtualization 2006 those people who were there at vmworld got a ton of value leveraged and learning and now it's like an industry standard we are going to make kubernetes part of the VMware software defined data center and you heard Pat and Michael talk about it so it sounds like it's going in the direction that you that you believe thumbs up thumbs up from Chad sockets you heard it here first thumbs up it's been it's been a really exciting year and this year we are gonna take that momentum and accelerate it to the moon and beyond but we can't wait to have you back at this table this time next year for Season eleven thank you so much for returning to the queue Rebecca thank you I'm Rebecca Knight first amendment we will have much more from the cubes live coverage of Dell technologies world here in Las Vegas coming up in just a little bit [Music]

>> [Announcer] - Live from Nashville, TN it's the Cube covering Commvault Go 2018. Brought to you by Commvault. >> [Stu Miniman] - Welcome back to the Cube's first time in Nashville, TN here at Commvault Go. I'm Stu Miniman and with my co host Keith Townsend and happy to welcome back to the program, Dave Kloempken, who's the global Sales Director with Cisco. Dave, thanks so much for joining us. >> [Dave Kloempken] - I appreciate the opportunity to be here. This is great. >> [Stu] - Alright, so we've been talking this morning with some of the Commvault executives and ecosystems and partnerships are of course really important. Where they sit, they're a software company. They work with partners to do appliances and they've had a partnership with Cisco for a while now, But been some updates. So, maybe give us your view point about the partnership itself and give us the news that was announced this week at the show. >> [Dave} - Yes, so Commvault is a kind of critical partner for us so it leads to us doing like more of a portfolio sales approach. Which is important when we're out competing in the marketplace. And if you like at from a Cisco perspective, we sell convergent infrastructure solutions. We sell hyper convergent solutions. They run companies, mission critical business applications. And in the past, we hadn't really participated in that data management part of the business. And that's really one of our key core pillars going forward and Commvault is a key partner, especially in the enterprise space, is where we think we can really be successful. >> [Stu] - Yeah, Dave, drill us in a little bit more. I think at Cisco. I mean Cisco really drove that convergent infrastructure marketplace when you talk about the partnerships with IBM, with the VCE, Dell EMC activity and many other storage partnerships. I mean this is billions and billions of dollars of the foundational layer for lots of enterprises around the globe. So, data of course, a critical component of that. What do Commvault and other partners like that what do they mean to that overall solution? What are you hearing from your customers? >> [Dave] - So, in this part of the convergent infrastructure business, we have a lot key partnerships and from a Cisco perspective we own about 60% of the server part of that business. So, we're really the market leader in that area of the business. And what we're seeing, though, is our customers are looking for more than just that. So, they're looking for us to expand into other areas. So, it could be analytics. It could be data management. It could be IOT. And those are all really critical. When you think about probably the past decade or so, I would say we see an infrastructure led kind of part of the business where customers stored vast amounts of data. But they really didn't use it. And today what we're seeing is really the applications and data arcing. We're seeing that customers want to gain valuable business insights. They're looking to gain competitive advantage. They have to protect the privacy of that data. So, you think about things like GDPR and other global regulations. You think about big data. But now artificial intelligence is really taking off. The intelligent edge with IOT and analytics. Again, to use the data competitively. So again, we think it's more of a infrastructure led world where really data is kind of that new oil. >> [Stu] - Alright, so we know Cisco has a lot of partners. Commvault has a lot of partners. The branding that you have together, if I understand, is Scale Protect. >> [Dave] - It is. >> [Stu] - Just give us the thumbnail, why does one plus one Scale Protect equal more than the sum of the parts? >> [Dave] - So, with Scale Protect there's a couple of things. It's Cisco and Commvault going into offer a complete data management solution. It provides that seamless scale ability. Also, what it does is it provides us the ability to kind of scale and simplify the customer experience. If you look at kind of Legacy Data Protection, or Data Management Solutions, you have lots of touch points, lots of activities, lots of configuration, lots of room for error to go on. So, if we can use best practices and really optimize that performance, to scale seamlessly; that really provides a customer with a much better solution than you're going to get in kind of the old Legacy or even if people are selling things differently. >> [Keith] - So, Dave let's talk about some of the drivers behind the deepening of the partnership in Cisco bringing a complete data management solution with both Commvault and Cisco to customers. You mentioned, obviously, compliance data recovery they are important things. But what about this data movement theme that we heard this morning on a show forward. Customers want this flexibility between on-prim and off-prim public file private cloud. >> [Dave] - Sure, so we see lots of customers talking about moving data, moving work loads. Even moving data centers to the public cloud. And what we see at Cisco, and what we even see IDC kind of supporting, is that 90% of our customers are really in a multi cloud world. And when you talk to a customer, you're probably going to hear them talk about two or three private clouds. We have customers that have three public cloud vendors. Hybrid clouds, SAS environments. So when you look at that, we see the kind of new normal or distributed data center. Where you have applications and workloads spread across all these different environments and platforms. And some of the key things, from a Cisco perspective, is what ties all that together. It's the network. It's foundational. Obviously that's a core competency of Cisco, it's where we excel. They talked about performance today, and it's where performance is critical. So being able to get data in and out of those environments, is just really important. >> [Keith] - So, we have data and we have data. We have the transport of data which Cisco is obviously expert in helping you get data from point A to point B. Then we have the data of the storing of the bits. So, talk to us about how customers have benefited from that complete Cisco story coming from using Commvault to help at that storage layer, and then Cisco at that both compute in the data center and the network layer that connects you between the data center and the public cloud. What unique value is Cisco bringing to customers? >> [Dave] - So we have the ability to do a number of things. So, customers are going to look at... What are the two key things that customers are looking at? It's data and applications. And when they look at data, they have to kind of decide where and how do I want to store it. They have to understand, how am I going to manage all the growth? How am I going to protect it across all these environments? So we have the ability with Cisco to go ahead with primary storage, to manage that. With secondary storage, we can manage it on-prim. And we obviously have the network that can connect people to their various private and public clouds, as well. And so that's really our key value proposition. >> [Keith] - So you're Director of Sales. Who are you having this conversation with with the customer? Is this the Director of Infrastructure, the networking group, the storage group as we see the consolidation of activities, who's the audience? >> [Dave] - So I think it depends on what the kind of story is, obviously. I'm going to give you the "it depends" insert. When you look at probably data protection, it could be storage or back up type of folks. When you look at servers and hyper conversions and things like that, it could be server or virtualization teams. When you look at a multi cloud environment, you start to go up that stack. So, from a Cisco perspective, our ability to go up to various levels and various groups in a company, is really why we're successful. All the way up to that CxO level. >> [Stu] - Dave, when you talk about customers having a multi cloud environment, what we find is they want to have that really cloud experience wherever they are. It's really more about that operating model than it is about the destination of it. When I think back to hyper conversion infrastructure, that really was some of the ideas. I want to have some of the same flexibility. We heard Commvault this week expand their as a service offerings, which get to the purchasing models. Bring us inside what Cisco's doing with hyper flex, with Commvault and what you would call my own data center that might be if I owned it. >> [Dave] - Absolutely, so when we look at kind of data center modernization or that new normal, hyper convergence is one of the key disruptors in the data center architecture today. And customers are looking for three or four things. They're looking for simplicity. They're looking for consolidation. How to I consolidate, compute, network and store it. And how do I have that more cloud like experience that can reduce the complexity of the data center. So, what we're seeing is that hyper convergence market is pretty hot, it's growing at 80% per year. Our versions of that is called hyper flex. Its focus is on mission critical business applications and agile provision that can reduce the complexity. But the nice thing is in the next mid December, we'll have integration with Commvault and TeleSnap built into hyper flex. So you can do snap shotting from hyper flex. So that is some of the new things that are going to be coming in the next couple of months. >> [Keith] - And then we always like to talk about day two operations. What are the concerns customers are having when we start to expand out these relationships, these alliances? What are some of the concerns and answers to that concerns that customers are having when it comes to this kind of split mold support? >> [Dave] - Yes, so it does introduce some complexity into the discussion. But the things that Cisco does really well is we have a couple different offers that we can provide the customers. One is: we'll take the first call. So we can take the first call on a lot of our third party relationships. Which is important. And we can also sell a much more detailed solution support, kind of a contract. Where we'll take second and even third calls. On the whole stack, basically. So those are some of things that we offer. I mean, we have a global tacker or call center It follows the sun. It's first in class. So when we're able to take those first calls, or even do additional kind of services on top of that, that's pretty significant. The other thing is, we work with partners. Partners are probably 90% of our business. And partners provide a lot of services and bring, they're really the glue that brings a lot of these different solutions and vendors together, as well. So I'd be remiss if I didn't talk about one of the key value propositions of Cisco right now. >> [Stu] - If Cisco just let go to market power that Cisco and the Cisco channel have, are one of the leaders in the industry out there. Give us a little more color as we talk to how you get these solutions, joint solutions, out to the marketplace. >> [Dave] - So I handle actually the whole solutions business for the data center part of the business and we have lots of partnerships. And we do it a number of different ways. From an engineering perspective, we do what we call validated designs. Where we basically insert best practices and we can help partners and customers with step by step on how to install and implement a solution with the best practices that ensure best optimal performance. We do all kinds of reference architectures, white papers. I mean there's a meriot of engineering work that we do. And then from a sales perspective, we obviously work very closely with our partner sales organizations. We're going to go ahead and put together programs and initiatives to go out in the market. It might be a competitive take out. It might be broader than that. And then we also we'll probably choose a certain number of channel partners that we want to work with together jointly to go ahead and put programs together and drive the go to market out into the customer bases. >> [Stu] - Dave, really appreciate all the updates on what you've got here. Congratulations on the updates with Commvault and Keith and I will be back with more coverage here from Commvault GO 2018 in Nashville, TN. Thanks for watching The Cube. (upbeat music)

>> Announcer: Live from Las Vegas it's theCUBE, covering Dell Technologies World 2018. Brought to you by Dell EMC and its ecosystem partners. >> And welcome back. We are live here in Las Vegas. We're in the Sands right now of day two of Dell Technologies World 2018. I'm John Walls along with Stu Miniman, and it's a pleasure now to welcome Ashley Gorakhpurwalla, who is the President and GM of Server and Infrastructure Systems at Dell EMC. Ashley, good afternoon to you. >> Thank you, great pronunciation of my last name. >> Well, thank you very much, I've worked-- >> Not an easy thing to do. >> I worked on that, how about that? Stu and I were just talking briefly with you. What a cool exhibit floor, right? >> It really is. >> There's just a lot of-- What have you seen out there that's kind of caught your eye so far? >> Well, we brought in a lot of customers this time to show their outcomes. So I'm a car guy, so you know I went straight for the McLaren. >> How 'about that McLaren out there, right? Yeah. >> My son would love the F1 setup with the gaming, virtual reality. Top Golf is a great VxRail customer. We have GoalControl. Try to beat the AI and see if you can score a goal. I mean, there's some very cool demos back there. >> And then overall, just I'm curious about your thoughts about the show then because that's a part of it. >> That's a part of it. >> A lot of client relations you're doing here, business relations. >> Sure. We're only about half way through, but so far very, very positive energy I get. I don't know if you caught or already talked to Michael after the keynote, but certainly. >> Stu did today. Certainly, Michael was on fire at the keynote, and I really, really enjoyed the discussion with Dr. Chip Plater about, and Jeffrey Wright about, how technology connects to helping people. A lot of times engineers, stuck in a lab, looking at R&D, trying to figure out a problem, lose sight of what they're doing. Great opportunity for the team to see that and kind of expand and understand where their technology is going, what it's doing for the world, what the impact is that they're having. >> So, Ashley, your team's been real busy leading up to this, seeing some of the new products in the announcement. Before we get into this though, your role expanded a little bit since the last time we talked about, talked to Tom Burns yesterday as there was the group formerly known as VCE that turned into CPSG, It was split into some pieces, and HCI is now under your domain. >> That's right. So in addition to our server businesses, which are kind of the mainstream PowerEdge business, our Extreme Scale business, our OEM business. We had a reorganization to really kind of unlock the potential that we have in a great product set, a product set before my organization was already number one. It's a position of strength. What we're trying to do is accelerate from that. So if you think about the HCI marketplace, I think you have to be in the server business to win in the HCI business. I don't envy anyone trying to do this from a position of weakness or trying to adopt other people's technology. Our supply chain, our reach, our global services and support, and then the underlying ability to invest in the server technology and beyond and differentiate, innovate on top of that is what it's going to take to win, and maybe not tomorrow, but in the future as HCI takes off. We wanted to really accelerate that by shortening the decision-making loop, making it one mission for the team, and so that came in. In addition, maybe a quick call-out to the storage and data protection platform engineering team who also came into my group to, again, really put our best hardware and platform of systems engineers together from servers and data protection storage and kind of create a powerhouse of R&D. >> Yeah, Ashley, it's actually, it's not surprising to us, From our research side at Wikibon, we actually called it server SAN because it was really taking the functionality and what customers wanted as a business outcome from the SAN and was pulling it closer to the server. But at its core, it's really about software. One of the things that has struck me in the last few years, comparing this to EMC worlds in the past and now Dell, is what I used to see at Dell World, which was Dell is a platform that lots of things live on. So there's lots of storage partners that live on side of Dell. There's HCI partners. Of course, you've got a broad portfolio all from the Dell families, and then OEMs and other partners that fit there. 'Cause you're a team, it makes sense that HCI comes in there because you've got that platform at the server, >> Right. >> and it grows from there. >> If you circle back to just the Dell Legacy world perhaps, much more platform oriented, infrastructure at our heart, bringing that value with prop to our customers. And I've said it before, I think if you give any segment or capability time, I think a standard kind of open infrastructure hardware platform wins. It may not be a server, but it's going to look something like a server going forward. And the specialization and the value move into the IP stack and into the software. So you better be a company that can do the scale of a standards-based platform. You better have the IP, the specialized stacks, as we do in our VM-ware stacks, in our IP stacks or in data protection, storage, networking. You can see where Michael's kind of putting those two together. It's not a tomorrow thing but five, 10 years from now. We've seen it in the carrier space. We've seen it in storage. Everywhere you go, the commoditization curve takes us to standards, infrastructure, and IP in the software. >> You made an interesting point there, saying it might not necessarily be a server. Give us kind of, if you could step back for a second, the state of compute. >> Sure. >> There's compute in the cloud, there's compute at the edge, there's (chuckles) compute all over the place. A few years ago, it was like, ah, it's all going white box and undifferentiated. And in the public cloud, I say, there's probably more skews and compute in the public cloud than if I went to Dell and picked that up there. Whether that's a good or bad thing, you could probably have some insight on. But give us your view on kind of the state of compute in the industry today. >> Sure. So if I think back 10 years when we started our business with the hyper-scale, building those infrastructures as a service, multi-tenant public clouds, there really wasn't any other choice. You either did it in a legacy mode with your IT, maybe slightly modernizing, but you're still probably siloed. You probably had storage admins and networking admins, compute admins, or you went cloud. And it was such a different experience. Since then, what customers have said consistently is, why am I having to make that choice? I either go to this rent version, which is very expensive as I scale up, or I own it or I have to own it and it's different. So multi-cloud, hybrid cloud, private cloud, however you want to instantiate it. And something like hyper converged infrastructure just didn't exist. They didn't have a choice. Now, with a pushing of a few buttons, you can scale up your infrastructure, perhaps on prem or in a hosted environment. That is fairly seamless with that, and now you have that portability. >> Yeah, and I'm sorry, Ashley. I wasn't trying to poke at the cloud piece. Compute at edge use cases is a little bit different than traditional-- >> Yep, absolutely. >> Servers, what's happening with the Blade market. Definitely need to, I know we need to talk about the new PowerEdges. But there's the MX we're going to cover, too, but was just kind of, if there are form factors of servers. >> You bring up a good point. It's maybe emerging, so there's probably a little bit more hype than there is reality behind it. But there are going to be billions of sensors, trillions of sensors or things that create data outside of data center environments. That's where all the data's going to be produced, and that's where decisions are going to be made. Today, the theory is, it has to go back somewhere, although I don't think any of us are getting in an autonomous car if it has to talk back to a data center and decide what to do. >> Right. >> So there's already examples of what I would call edge compute. But what if your data center has to live at a base of a cell tower at the end of a 30 mile dirt road where someone only visits 45 days apart, and they're not an IT individual? How do you extend that infrastructure, that management domain, that security domain? How do you bring it all the way out there? How do you ruggedize it? Well, you're probably going to start with a company that's been doing fresh air cooling with 13, 14 billion server hours now, operating in fresh air environments. We understand how to bring that environment the way we've been working on that remote management, lights out management style, our security. I'll give you another emerging trend that's going to come out of that. Just at the time where we're going to extend our environments out of the safety of the data center, we're also going to go back to a stateful compute. With persistent memory, nonvolatile memory, storage class memories, and security paradigms are already shifting. We're getting ahead of that with our customers of what if it wasn't just the hard drive you had to protect but almost everything in that edge device. So the form factors will change, the connectivity will change, but what we know is, you'll likely gather as much data as you can. You'll throw some of it away 'cause it won't be useful. Right now, there's a sensor telling this building that these lights are on. Until they go off, it's not useful data. But in a car, it's very useful data. Some of that data will go back, it'll get trained because humans won't be able to take in all this data. You'll need a machine. You can't write the algorithm ahead of time. You have to learn something. Back goes that IP into the edge, and then decisions will be made at that stage. >> Before we head off, we've talked about some new products. You've alluded a little bit. So you've had a launch this week. Just run through that, if you would, real quick. >> Ashley: Sure, sure, we had a few things. >> It's nice to have a new baby to talk about. >> Sure, it's pretty exciting. And it really does stem from what we just talked about. So if I start on the PowerEdge side, if you have a strategy that is to help your customers with that digital transformation from cloud to data center and core all the way to edge, you can start to see why we're launching certain products and why they have certain technologies in them and innovations. So starting with the 940 XA, extreme acceleration, might have to rename it if you watched the keynote. Jeff called it extreme performance. He is the boss, so I think it's XP now. (Stu and John laughing) No, we'll keep it at extreme acceleration for now. That really is about large datasets training very quickly in database environments. So you want host to GPGPU to be a one-to-one ratio. You want large datasets to be local, so you need massive storage, 32 drives for instance. And you need the capability to, again, make sure it brings the tenets of security, manageability, the ecosystem with it. So, very excited about that one. I think there's some use cases we're just not even ready for. We've already have the technology today to put eight FPGAs in that system, direct connect. And there's very few workloads or even talent in the customer set to be able to enable that, but you got to get there first with the technology to allow that innovation to happen. And we want to stoke that. Then on the R840, this really was about, once you get the data in, you're going to have to make decisions. You need, still, that processing power. Maybe you don't need 20,000 cores in the box like a 940 XA. Maybe you need a little bit less, but you do need a massive storage localized in VME direct connect. That's more direct connect that any server, I think, period in the industry. And it's really about streaming those analytics, making those realtime choices. So it really fits into the strategy that we're undertaking. >> All right, Ashley, last thing I wanted to cover. It's a bit of preview that you showed at the show. The PowerEdge MX. >> Yep. >> Modular infrastructure, no midplane, should be able to upgrade it a lot more. So are we beyond where Blade Servers have gone? Do you consider this to fit into, some call it composable infrastructure. How would you position this kind of-- >> Well, I don't have some positioning yet. It's just a sneak peek. But let me tell you how we thing about it. Is it a Blade Server or not? I'm not sure the question is something we've considered yet. It's a form factor that we think for the future is really necessary, which is, we want to get to a stage, and we're putting our research into a stage of a journey where we want to get to the point where you can utilize the resources that you bring into your environment, whether they be your environment or someone else's. Today, so much is stranded connected to a CPU, and it's just the architecture that we have today. Whether it's memory, source class memory, persistent memory, GPGPUs, heterogeneous compute FPGAs, ASICs, memory semantics, IO semantics, have to leave the box. Then we can get you things like pooled up resources that can be utilized unbound, put together, then composed, if you want to use your word, or really just aligned around a workload then retired and put back in. APIs and software, we're starting to build that out. It's starting to emerge from certain management orchestration layers we have today. But we're going to need that fabric. And so, as you know, we're showing actually here today a Gen-Z demo where we're starting to build that fabric that has the latency, almost a memory-like latencies from load to store and usage, all the way out to it has the memory semantics that go all the way through from CPU all the way out to memory so that, all sudden, the node no longer traps and stands the resources. How do you do that? You better have an architecture that treats everything in the box, not just the compute part, as a first class citizen for power, for thermals, for management. Second thing, if you have a midplane, you have a point of failure, but you also are not upgradeable to these fabrics that are coming and these capabilities that are on the horizon, some of which are not even in Silicon or in a lab just yet. So when you build infrastructure, let me call it infrastructure for a second, people want it as an investment. That's the part we've talked about. There's a lot more to come, so the team's excited to get it out there. I tried to hold them back a little bit, but we cheated a little bit a showed it. >> A little demo goes a long way. Ashley, thanks for being with us. Thanks for telling your story, we appreciate the time. Look forward to seeing you down the road. >> Appreciate it, thanks, guys. >> You bet. Back with more. We are live here in Las Vegas at Dell Technologies World 2018. (electronic musical flourish)

>> Announcer: Live from Barcelona, Spain, it's the Cube, covering Cisco Live 2018. Brought to you by Cisco, Veeam, and the Cube's ecosystem partners. >> Hello and welcome back to the Cube's exclusive coverage of Cisco Live 2018 in Europe. Kicking off 2018 here in Europe is Cisco's annual event. I'm John Furrier, the cohost of the Cube, with Stu Miniman, analyst at Wikibon. Our next guest is Todd Brannon, who's the marketing director at Cisco, welcome to the Cube. >> Thank you. >> Great, thanks for coming on. >> Absolutely. >> You guys announced HyperFlex before the show. >> We did. >> And a lot of cloud happening here in the keynote. Seeing IOT, well security number one obviously. Security, that's always going to be number one, but the other themes are obviously IOT and multi-cloud. >> Todd: Multi-cloud. >> Huge conversations, both developing rapidly in kind of it's own way. >> Well that's crucial for us 'cause we talk about HyperFlex 3.0, a lot of cool features that we're building into that, but the scope for us is much, much broader because of the multi-cloud piece. That's reality for our customers. They've told us very, very clearly, I'm going to use multiple public clouds, but I'm also going to have to get my on-prem side of it. So we tell 'em, absolutely, good multi-cloud starts at home with platforms like, with HyperFlex, and that's exactly the way we've brought it together. So we talk about a kind of a very modest aspiration with this is we want to help customers power any application, on any cloud, on any scale. >> Well take a minute before we get started, help us with some questions. What is HyperFlex 3.0 for the folks watching? What is it? >> So we introduced HyperFlex as our hyper converged platform built on UCS. We acquired a company called Springpath. They brought in a purpose-built, log-structured file system for the cluster and we combined these things together to create HyperFlex. So it's really unique in the sense that, well let me back up, I'd say a lot people ignore how crucial a file system and a network are to a clustered system. It kind of goes without saying, but a lot of the focus has been on, okay what's the individual node in that stack look like, but we look at it much more at the cluster level. And so, our uniqueness is that we've engineered all of this thing together. So we brought that out in 2016, last year really we focused on performance, 40 gig, all-flash, open up the network pipes and then this year is really about our multi-cloud integration and then additional features that we're bringing in to support more workloads, Hyper-V support, containers. So 3.0 is really just filling in a lot of features that we need to really make this a ideal platform for multi-cloud. >> Todd, we've tracked UCS since the early days. UCS really created and led the whole converged infrastructure ten. >> When we heard about CI though, it's really about simplification. It's infrastructure, it's that next step. Hyper converged, a lot of the things you were talking about there, it's about cloud and the underlying platform, and while CI can be used for that, seems like a different discussion. Can you give us a little bit compare/contrast as to what you see? >> Absolutely. Well, I mean, the conversion infrastructures, you know, we started that way back in the day with Vblock and VCE, and then FlexPod, VersaStack, FlashStack, there's lots of different storage partnerships that we have we can bring customers. And private cloud has been a big workload for those infrastructure components. You know, it's really just a storage question of how you want to address that component, but it all revolves around the operating model. So our mission is, look, we've got a huge install basic customers are used to acquiring and deploying pre-engineered chunks of infrastructure like a Vxblock or a FlexPod, what have you, we need to continue to serve them, while they also evaluate where hyper convergence might fit in the equation as well, and how do we offer those both up with a common set of policy and management, with UCS management, with Intersight. So we think that these are going to coexist for quite some time and customers are going to have to decide how they want to use those different types of infrastructure, but ultimately, it's just about the workload. >> Cisco and it's storage partners have billions of reasons why they're going to keep selling CI's for a while. >> Certainly, yep. >> Help connect the dots though. You talked about that operating model in the keynote this morning, big focus on multi-cloud, >> Todd: Certainly. >> And things like, we talked to AppD at AWS re:Invent, how does the public cloud mesh with these other solutions. >> So, one of the things that we're announcing here at the show is the cloud, our Cisco container platform. That's an example of how we're going to work with Google to create an integrated stack, focused initially around Kubernetes, and we have HyperFlex as an infrastructure component under that, and that's, for people that are really accelerating their application development or maybe they're modernizing older workloads with containers, we're going to provide that element. But the true multi-cloud functionality is what we do with things like CloudCenter. So that was our CliQr acquisition, allows us to profile workloads, take 'em out to the cloud, multiple public clouds. So for us, when we talk about HyperFlex as a platform for multi-cloud it's those integrations with CloudCenter, but then also AppD, which is hugely important because like we were talking about earlier, you've got applications now that are distributed across on-prem and multiple public clouds potentially. So maybe you got a front end out in the public cloud, customer data or business logic on-prem, how do you keep track of the performance of that collection of functions and systems that are running independently and you have to do that with something like AppD. So we have a lot of the software components to help customers really get their multi-cloud going. >> So bringing it back to HyperFlex, my understanding, not just virtual environment anymore, you're also doing containers and that tied into that multi-cloud piece. >> So, a couple important things with this 3.0 release. We're bringing for Hyper-V, for customers who want to do different hypervisors, and then we developed a persistent storage plug-in into the file system for those stateful workloads that are going to be in containers. So again, with Kubernetes, as developers want to go out and do pod requests, basically self-service volumes on the HyperFlex storage environment, that's huge. And so we've opened it up to two more classes of workloads right there. >> I mean, what aren't you doing? Got these centralized apps. Is there going to be a Cisco coin in the future? (laughs) >> I think -- >> There's a rumor going around. >> So yeah, I can't speak to our cryptocurrency strategy. That's out of my domain. >> Probably coming, these centralized apps, again, on the horizon, another future thing you guys are positioned for. In all seriousness though, I want to put a plug in for Stu's Wikibon team. They came out with a true private cloud report recently last year, really kind of the only ones looking at it this way, but it really is interesting. I want to get your comment to this because we go to 100 of events a year, last year was over 100, I think, 30, and what we've observed is the same thing that's happening here. DevNet's got a lot of attraction. You've got DevNet Create, more of an open-source, cloud native focus. >> Todd: Sure. >> You're seeing the enterprises getting their act done at home, inside the premise. >> Todd: That's right. >> So it's not so much they're moving to cloud. Yeah, some stuff's going in the cloud, but they're kind of cleaning up the house first, going cloud ops on premise. >> That's right. >> And then, as a preparation to all the spend and all the intention is really on the private cloud, what they call true private cloud. Do you see the same thing? >> Absolutely. >> And is that a stepping stone to the cloud? >> Absolutely, and that's exactly, that's informed everything we've done here in this latest, this past year really, of development around HyperFlex is our IT customers telling us, look I've got the developer as my new constituent. As much as I need to maintain shrink wrapped apps or legacy workloads for the core business, the developer is really my customer now and I have to provide infrastructure on-prem that behaves like the cloud in terms of infrastructure as code and being able to do things like we're doing with this Kubernetes environment, where the developers can withdraw the resources they need, turn 'em back in and the IT team can get out of the way. That's hugely important. >> I think we're observing on our opening this morning when we were commenting on the keynote and some of the trends here is that Cisco is moving up the stack pretty rapidly over the years, this year more than ever, you can start to see a clear line of sight that it's not just network plumbing, although that's pretty critical. But with Kubernetes and the growth, you mentioned Google, it's pretty interesting, a renaissance is going on in the software world, certainly with open-source, you have app developers, which are like just classic building software apps, then you got engineering, software engineering. So I use that that term software engineering as a throwback to the age when I graduated with my CS degree, that was what you called yourself when you got a job. You were a software engineer. You have network engineers, so you're seeing a line of under the hood engineering with software and networks and whatnot. And then, above Kubernetes you're seeing, just hey I just want a program, just give me some functions. >> Absolutely, and it's the IT generalist that are emerging as the heroes here that have to understand, okay, how do I build that on-prem platform, how do I have the capability to get my developers out to the public cloud, as in when they need to and it makes sense, or potentially bring things back. And you're right, and then on the development side they don't want to have to worry about the mechanics of that. So to the degree we can enable our IT customer to provide that service, but also simplify that for them is essential. >> Talk about your posture to those two different personas because you guys just provide the network in the old days and app developers programmed on them. They get some storage or perusing some storage. Now you got to lean in towards the network engineers, which are now software engineers under the hood, and then you got to lean in to the app developers and enable them to be successful. How are you attacking those, not attacking, how are you servicing and leaning into those groups. >> We brought the storage and computing experts into the fold with UCS, nine years ago, but now when you look at our acquisition of AppD, that's where we really start to take care of the application owner, be it the developer or the business owner for the application and allowing them to kind of see across on-prem, out in the public cloud, how do I ensure that I'm going to stay out of trouble, and if something goes wrong I know exactly where in that constellation of services the problem resides. So AppD is critical in that sense because -- >> So they fill a big hole. >> Absolutely, because that's how we can, all this comes together to power our workload, power business service. Applications are the heart of new business. >> Todd, what about from a training perspective? Cisco Live's always been a show where people get their certifications, they build their careers on this stuff. It's changing so fast. How are you keeping, the training tracks, and giving that career help to all the people that do this for a living. >> We're adding the pillars for all the things we're talking about, the multi-cloud software portfolio, new infrastructure components, like HyperFlex. Those are all being built into our training regimen and also our training partners, so they can take that out and scale it for us. >> All right, so you went and just connected the dots on what I was finishing up for network engineers, software engineers, under the hood, app developers, AppD, you guys have a good solid footing there, good approach. Multi-cloud, is that the Kubernetes? Is that the secret sauce to multi-cloud in your opinion? And/or how do you guys look at multi-cloud and how do you talk to your customers about it? >> Well we talk about, the data is pretty clear, customers want to be able to use multiple public clouds and they want to be able to evaluate them. So I think the center of our strategy, we have our multi-cloud portfolio, how we organize all these things. The cloud consume pillar of that is really comprised of AppD, which we talked about, but also CloudCenter. And so CloudCenter is a tool that allows our customers basically profile an application and then go understand what's it going to cost me and what are the different attributes of these public cloud services, and which one matches up the best. So I'd say that's the center of the strategy. Obviously, particularly around containers, but more workloads in the future, Kubernetes becomes a much bigger -- >> So orchestration is pretty key. >> Yeah, orchestration's essential and it's not just in a pure software context, but how do we hook down into infrastructure. So we've already built this programmable infrastructure, so how do we expose those knobs and dials to orchestration engines so that we're not just virtualizing, but we're actually optimizing the infrastructure they need. >> That's the beautiful thing about service and function-based software. Okay, so now I've heard about this dCloud. What is dCloud? >> So dCloud's basically a demo environment that our engineering team can use and our partners can use to demo software. So, for example, we launched our cloud management platform for UCS and HyperFlex last fall, we call it Intersight. So software like that, you know software becomes central to our strategy, dCloud becomes the way that we show that. >> Customers can come in and play on that and partners? >> Partners and our sales teams can take customers through it. >> But not customers. >> I don't believe there's an end user entrance to that yet. >> So it's like a sandbox for the cloud. >> But I could be wrong. I'm not a dCloub expert. >> So for the folks watching, what's different this year at Cisco Live in Europe from other shows? Is there anything that stands out to you around this year? >> Definitely the multi-cloud theme and we're hearing that from customers. They don't, there's always been the question of what type of infrastructure should I provision for different workloads, but it's really moved that past that to here's the workload spectrum I need to support. What are the tools you're going to give me for that on-prem? How can you help me get to the cloud? And I think the other thing, more narrowly speaking, hyper convergence is really turning the corner in terms of adoption. So when we first, we weren't the first ones to arrive at the hyper convergence party in the industry by any means, but we brought the keg. So when we showed up the party kind of got started. We think we brought the complete answer and now we're seeing as more and more workloads can go onto a HCI platform, the adoption's starting to, and we're seeing large organizations bring it on, both in the core and out at the edge. So those are a couple big changes -- >> Todd, any bold predictions? Will Cisco be number three in HCI by the end of 2018? >> Todd: Yes, 'cause we already are. >> Okay. (laughs) >> We already are. So, today it's a three horse race right now. So it's Dell, Nutanix, Cisco in the latest IDC numbers. So I think by the end, I'd like to see number two within a type of a timeframe. I'll give you number two within six quarters, how about that? >> And Stu wants to know what are you going to do with all that cash that you bring over from, to the US? (laughs) >> John: What are you going to buy? >> Your patriotion, yeah. >> I heard Chuck talking about investing in employees so I hope to get some of that, or no. No guys, I think Chuck's already kind of laid it out. We got our investors, we've got potential things we can do, bringing in new technology, so he's really laid that out. >> Todd, final question for you at the end of the segment. >> Sure. >> As the personnel change, excitedly, the infrastructure of the cloud and the evolution of the renaissance that's coming with software, DevNet, DevNet Create, doing some great stuff as an indicator of what's coming, >> Sure. >> How is the roll of the network, your target customer, who's been loyal Cisco net MVP all these years and you got storage guys, interdisciplinary has been a big thing, what skill sets do you see evolving for that Cisco hero out there? What the trend that you can talk to? >> It's the ability to automate. It's the ability to take advantage of some of the technologies we're bringing in terms of assurance. It's how do you bring all of that insight that resides in the network, in the telemetry and that data, how do you bring that out and use it in a way that can help the business. I think for our core audience, for those folks you talk about, it's how do I become much more adept at bringing these pieces together in an automated way, but then how do take advantage of some of the things that are available to me now in terms of bringing the power of analytics, AI, into an IT context and take advantage of those things for all the different things you can imagine, security, assurance, et cetera. >> So the big thing then, just to summarize, if I hear you correctly, the difference this year is that you got AppD, and you got end to end DevOps. >> I think it's our multi-cloud story has really jelled over the past year, and now we're bring it in to the context of on-prem infrastructure in addition to the public cloud side of it, so I think that's the, that's big news from data center side. >> Todd Brannon who's the marketing director at Cisco here inside the Cube. We are in Barcelona, live coverage, two days, wall to wall. I'm John Furrier for Stu Miniman. More live coverage at the Cube after this short break. (synthesizer beat)

>> From the Silicon Angle Media Office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Dave Vellante. >> Prior to the historic merger between Dell and EMC, Dell had a relationship with Nutanix, a pioneer in hyper conversion infrastructure. After the merger, many people questioned whether that relationship would continue. Hi everybody, my name is Dave Vellante, I'm here with John Shirley who's the director of product management at Dell EMC, and we're here to talk about the continuation of that relationship, Hi John, good to see you. >> Good to see you as well, thanks for having me. >> You've got a new announcement today, it's the XC series, tell us all about it. >> Yeah, so the XC series, what we're announcing, this is our third generation of powered server deployments for XC series and, what we're announcing is that the two most popular models for XC series are going to be refreshed in 14th generation servers. Those specifically are XC640, which is really designed for compute intensive things like VDI, private cloud, some remote office application, as well as the XC740XD, which is more for storage intensive applications, so think share point, big data application things like that. Now all of the new platforms that we'll release will have new technologies like MVME, they'll have faster networking options like 25 gig ethernet, and a whole bunch of other features that are really going to help propel this into more mainstream applications. >> Okay, so it's not just faster, better price, performance, there's some other innovations that you mentioned in MVME that are coming in that you're integrating and engineering into the solution. >> Absolutely, so we have a really tight relationship between our Power Edge, as well as what we do on the XC series, and in addition to that, we have a really tight relationship with our Nutanix engineering counterparts as well. We're really designing these all into a single application. >> Okay, so the marketing, I'm sorry to interrupt. So the marketing gurus at Dell EMC are throwing around this term, purposeful. >> Yes. >> What does that mean? >> I love this term because it really takes into account all the additional efforts that we do around the solution, we have years and years of experience of deploying SDS solutions on top of servers, and what we really realize is that you want to design these solutions, again to be purposeful as the name implies. It's things like controlling everything, all the way from orderability to manufacturing, to serviceability to ensure that you get a really tight and clean experience with a customer. So things like CPU, memory, hard drive configuration, designed specifically for hyper converge, and that flows all the way through to support. So it's a much cleaner experience for the customer. >> So what does that mean, designed specifically for hyper converge, I mean can you unpack that a little bit? What's different about hyper converge that requires that different design? >> Yeah, well hyper converge, as you probably well know, and I'm not sure how many of the users out there know, but it was really designed around the cloud experience. So taking a look at the hyper scale vendors, and designing similar models for data centers, and really what that entails is things about taking a power edge platform, designing the technologies to be fault tolerant, to be scalable, and we've taken that to the next level. So on the XC series, we've designed some software and some Dell IP that really harnesses a lot of the capabilities of the power edge. We call it the Power Tools SDK, and it really allows for software defined solutions like Nutanix to sit on top of Power Edge. By the way, we use it for our other platforms as well within the portfolio, but it really shows that it is purposefully built and designed for SDS solutions. >> Okay, so Dell was the first to do an OEM relationship with Nutanix, and subsequently they've done maybe a couple of others, but what makes you guys special? >> Well first off, the power edge platform is the leading platform out there in the marketplace, so that alone right there gives us a lot of strength from a manufacturing, procurement, all that ecosystem. That's one of the benefits that we get. We also do things like develop our own IP around this power tools SDK, as well as other IP that we have on the platform. So that's another one right there. Collectively, within the group, we have hundreds of hours of experience, not only designing storage, but also compute around the hypervisor, and around networking, so we've brought all that expertise into the group to really design this hyperconverge platform. And that's something that no one else can really do on the marketplace. >> So in the early days of HCI, which obviously, the workloads were, VDI was a popular workload, and a lot of the knockoffs were, it's a nice infrastructure for a remote office, or small or mid sized businesses. Can you address scalability? Where are we today in terms of scale? >> On the scale, like I said it was one of the design tenets, so I'll give you a good example. If a customer has bought previous versions of XC series, whether it's the 12th generation or the 13th generation, they can now come and buy the 14th generation from us, and put that into the existing ecosystem. Right into the same cluster, and so talk about a mind shift from traditional architectures that would require essentially ripping out the old gear and putting in the new gear, now you can grow as the technology grows, and you can do that in a very seamless fashion without any downtime, and it's very scalable in a very linear sense. >> Can you talk about the portfolio a little bit? Dell EMC has one of everything, if I want it, you probably have it. >> M-hm. >> But sometimes, analysts and independent observers, customers, probably sales guys, it's confusing. So where does this fit in the portfolio, relative to some of the other things that you've announced today and have in the portfolio? >> We get that question all the time, and it's a great question. But it's a pretty clean answer for us. For customers who are standardized on VM1 and they want that experience, we have VXRL, right? Great product. For customers now who want choice of hypervisors, or if they're already standardized on Nutanix platform, then we have XC series, and we have a lot of customers out there who want to go to a model that sits on top of a power edge base because of the power of power edge, so we've got that to offer to our customers, and in particular when we talk about hypervisor choice, we know that Hyper-V is a very fast growing portion of the market, and we are focused on that part of the market for customers who want to do multiple different hypervisors. >> I wonder if I could ask you, you know when you're separate companies, and you're trying to do engineering, you make it happen. Look what you guys did with VCE. How has the experience been at the engineering level, in terms of getting higher levels of integration, now that you guys are one company? Can you talk about that a little bit? >> Yeah, so I'm going to take a step back and not just, just focus on the engineering. It's really end to end, and it goes all the way from the engineering up front, but then it trickles down to the marketing and the product managers, and all the sales teams so everything, end to end, needs to fit well together. What I'll tell you is me, personally, I talk to my product management counterparts, my sales counterparts over on the Nutanix side on a nearly daily basis, so the relationships got to be strong and we've really strengthened that over the years. >> Okay, Nutanix's got to be happy because they've got a massive distribution channel. You guys, Michael Dell was very clear on this from the early days that you guys were going to continue the relationship because that's what customers want. Can you talk about culturally your focus on customers, and EMC's always been very customer focused, Dell, Michael Dell personally was very customer focused, is that really the sort of genesis of the continuation of this relationship? Maybe you can talk about that a little bit. >> Yeah, we are maniacally focused on customers, so if you look at the new platforms that we're shipping, give you a data point. We talk to the customers and we have somewhere around 150 new design features specifically for the XC series platform because of those conversations with customers and because we've done this for three generations, we have a lot of those inputs leading into the product, and so yes we are very focused on the customers, and what we know is that the customers want to have that choice. Not all of them do, right? A lot of customers are going to go over to the Xrell, it's a great product, it's growing really quickly, but we also know that a number have really standardized again on the Hyper-V, or on the Nutanix platform. >> Well because of the size of your install space, you have a huge observation base, we like to call it, and you obviously collect a lot of data. It sounds like you've been able to leverage that for competitive advantage and to add additional value for your customers. >> Yes, it's always nice to have a product and a portfolio that can win. >> Alright so we got to wrap, so we got a crowd chat coming up on December first. First half, #NextGenHCI, it's kind of an AMA on this announcement. Where can I get additional information on this? >> So you can go to www.Dell.com/HCI. >> Excellent, well, John, thanks very much. >> Thank you. >> For coming to the Cube. Alright, thanks for watching, everybody. This is Dave Vellante, we'll see you next time. (light techno music)

>> Welcome to another edition of Wikibon's Weekly Research Meeting on theCUBE. (techno music) I'm Peter Burris, and once again I'm joined by, in studio, George Gilbert, David Floyer. On the phone we have Dave Vellante, Stu Miniman, Ralph Finos, and Neil Raden. And this week we're going to be visiting Dell EMC's Analyst Summit. And we thought we'd take some time today to go deeper into the transition that Dell and EMC have been on in the past few years, touching upon some of the value that they've been creating for customers and addressing some of the things that we think they're going to have to do to continue on the path that they're on and continue to deliver value to the marketplace. Now, to look back over the course of the past year, it was about a year ago that the transaction actually closed. And in the ensuing year, there's been a fair amount of change. We've seen some interesting moves by Dell to bring the companies together, a fair amount of conversation about how bigger is better. And at the most recent VMworld, we saw a lot of great news of VMworld, VMware in particular working more closely with Amazon and others, or AWS and others. So we've seen some very positive things happen in the course of the past year. But there are still some crucial questions that are addressed. And to kick us off, Dave Vellante, where are we one year in and what are we expecting to hear this week? >> Dave: And foremost, Michael Dell was trying to transform his company. It wasn't happening fast enough. He had to go private. He wanted to be an enterprise player, and amazingly, he and Silver Lake came up with four billion dollars in cash. And they may very well pull off one of the greatest wealth creation trades in the history of the computer industry because for four billion dollars, they're getting an asset that's worth somewhere north of 50 billion, and they're paying down the debt that they used to lever that acquisition through cash flow. So like I say, for a pittance (laughs) of four billion dollars, they're going to turn that into a lot of dough, tens and tens of billions. If you look at EMC pre the M and A, I'm sorry, if you look at Dell pre M and A, pre-merger, their transformation was largely failing. The company was making a lot of acquisitions but it wasn't able to reshape itself fast enough. If you look at EMC pre-merger, it was a powerhouse, but it was suffering from this decade-long collapse of infrastructure hardware and software pricing, which was very much a drag on growth and cash flow. So the company was forced to find a white knight, which came in the form of Michael Dell. So you had this low gross margin company, Dell's public gross margin before it went private were in the teens. EMC was in the roughly 60%. Merge those together and you get a roughly 30% plus gross margin entity. I don't think they're there yet. I think they got a lot of work to do. So a lot of talk about integration. And there's some familiarity with these two companies because they had a fairly large OEM deal for the better part of a decade in the 90s. But culturally, it's quite different. Dell's a very metrics-driven culture with a lot of financial discipline. EMC's kind of a take the hill, do whatever it takes culture. And they're in the process of bringing those together, and a lot of cuts are taking place. So we want to understand what impacts those will have to customers. The other point I want to make is that without VMware, in my view anyway, the combination of these companies would not be nearly as interesting. In fact, it would be quite boring. So the core of these companies, you know, have faced a lot of challenges. But they do have VMware to leverage. And I think the challenge that customers really need to think about is how does this company continue to innovate now that they can't really do M and A? If you look at EMC, for years, they would spend money on R and D and make incremental improvements to its product lines and then fill the gaps with M and A. And there're many, many examples of that, Isilon, Data Domain, XtremIO, and dozens of others. That kept EMC competitive. So how does Dell continue that strength? It spends about four and a half billion a year on R and D, and according to Wikibon's figures, that's about 6% of revenue. If you compare that with other companies, Oracle, Amazon, they're into the 12%. Google's mid-teens. Microsoft, obviously to 12, 13%. Cisco's up there. EMC itself was spending 12% on R and D. So IBM's only about 6%, but remember IBM, about two thirds of the company is services. It's not R and D heavy. So Dell has got to cut costs. It's a must. And what implications does that have on the service levels that customers have grown to expect, and what's the implications on Dell's roadmap? I think we would posit that a lot of the cash cows are going to get funded in a way that allows them to have a managed decline in that business. And it's likely that customers are going to see reduced roadmap functions going forward. So a key challenge that I see for Dell EMC is growth. The strength is really VMware, and the leverage of the VMware and their own install base I think gives Dell EMC the ability to keep pace with its competitors because it's got kind of the inside baseball there. It's got a little bit of supply chain leverage, and of course its sales force and its channels are a definite advantage for this company. But it's got a lot of weaknesses and challenges. Complexity of the portfolio, it's got a big debt load that hamstrings its ability to do M and A. I think services is actually a big opportunity for this company. Servicing its large install base. And I think the key threat is cloud and China. I think China, with its low-cost structure, made a deal like this inevitable. So I come back to the point of Michael Dell's got to cut in order to stay competitive. >> Peter: Alright, so one of the, sorry- >> Dave: Next week, hear a lot about sort of innovation strategies, which are going to relate to the edge. Dell EMC has not announced an edge strategy. It needs to. It's behind HPE in that regard, one its major competitors. And it's got to get into the game. And it's going to be really interesting to see how they are leveraging data to participate in that IOT business. >> Great summary, Dave. So you mentioned that one of the key challenges that virtually every company faces is how do they reposition themselves in a world in which the infrastructure platform, foundation, is going to be more cloud-oriented. Stu Miniman, why don't you take us through, very quickly, where Dell EMC is relative to the cloud? >> Stu: Yeah, great question, Peter. And just to set that up, it's important to talk about one of the key initiatives from Dell and EMC coming together, one of the synergies that Michael Dell has highlighted is really around the move from converged infrastructure to hyper converged infrastructure. And this is also the foundational layer that Dell EMC uses today for a lot of their cloud solutions. So EMC has done a great job with the first wave of converged infrastructure through partnering with Cisco. They created the Vblock, which is now VxBlock, which is now a multi-billion dollar revenue stream. And Dell did a really good job of jumping on early with the hyper converged infrastructure trend. So I'd written research years ago that not only was it through partnerships but through OEM deals, if you look at most of the solutions that were being sold on the market, the underlying server for them was Dell. And that was even before the EMC acquisition. Once they acquired EMC, they really get kind of control, if you will, of the VMware VSAN business, which is a very significant player. They have an OEM relationship with Nutanix, who's doing quite well in the space, and they put together their own full-stack solution, which takes Dell's hardware, the VMware VSAN, and the go-to-market processes of what used to be VCE, and they put together VxRail, which is doing quite well from a revenue and a growth standpoint. And the reason I set this all up to talk about cloud is that if you look at Dell's positioning, a lot of their cloud starts at that foundational infrastructure level. They have all of these enterprise hybrid clouds and different solutions that they've been offering for a few years. And underneath those, really it is a simplified infrastructure hardware offering. So whether that is the traditional VCE converged infrastructure solutions or the newer hyper converged infrastructure solutions, that's the base level. And then there's software that wraps on top of it. So they've done a decent amount of revenue. The concern I have is, you know, Peter, you laid out, it's very much a software world. We've been talking a lot at Wikibon about the multi-cloud nature of what's going on. And while Dell and the Dell family have a very strong position in the on-premises market, that's really they're center strength, is around hardware and customer and the enterprises data center. And the threat is public cloud and multi-cloud. And if it centers around hardware and especially when you dig down and say, "okay, I want to sell more servers," which is one of the primary drivers that Michael wants to have with his whole family of solutions, how much can you really live across these in various environments? Of course, they have partnerships with Microsoft. There's the VMware partnerships with Amazon, which is interesting, how they even partner with the likes of Google and others, it can be looked at. But from that kind of center strength is on premises and therefore they're not really living heavily in the public and multi-cloud world, unless you look at Pivotal. So Pivotal's a software, and that's where they're going to say that the big push is, but it's these massive shifts of large install base of EMC, Dell, and VMware, compared to the public cloud that are doing the land grabs. So this is where it's really interesting to look at. And the announcement that we're interested to look at is how IOT and edge fits into all of this. So David Foyer and you, Peter, research about how- >> Peter: Yeah, well, we'll get to that. >> Stu: There's a lot of nuance there. >> We'll get to that in a second, Stu. But one of the things I wanted to mention to David Floyer is that certainly in the case of Dell, they have been a major player in the Intel ecosystem. And as we think about what's going to happen over the course of the next couple of years, what's going to happen with Intel? It's going to continue to dominate. And what's that going to mean for Dell? >> Sure, Dell's success, I mean, what Stu has been talking about is the importance of volume for Dell, being a volume player. And obviously when they're looking at Intel, the PC is a declining market, and ARM is doing incredibly well in the mobile and other marketplaces. And Dell's success is essentially tied to Intel. So the question to ask is if Intel starts to lose market share to ARM and maybe even IBM, what is the impact on that on Dell? And in particular, what is the impact on the edge? And so if you look at the edge, there are two primary parts. We put forward there are two parts of the edge. There's the primary data, which is coming from the sensors themselves, from the cameras and other things like that. So there's the primary edge, and there's the secondary edge, which is after that data has been processed. And if you think about the primary edge, AI and DL go to the primary edge because that's where the data is coming in, and you want the highest fidelity of data. So you want to do the processing as close as possible to that. So you're looking at these examples in autonomous cars. You're seeing it in security cameras, that all of that processing is going to much cheaper chips, very, very close to the data itself. What that means is that most of that IOT, or could mean, is that most of that IOT could go to other vendors, other than Intel, to go to the ARM vendors. And if you look at that market, it's going to be very specialized in the particular industry and the particular problem it's trying to solve. So it's likely that non-IT vendors are going to be in that business. And you're likely to be selling to OT and not the IT. So all of those are challenges to Dell in attacking the edge. They can win the secondary edge, which is the compressed data, initially compressing it 1,000 to one, probably going to a million to one compression of the data coming from the sensors to a much higher value data but much, much smaller amounts, both on the compute side and on the storage side. So if that bifurcation happens at the edge, the size of marketplace is going to be very considerably reduced for Intel. And Dell has in my view a strategic decision to make of whether they get into being part of that ARM ecosystem for the edge. There's a strong argument that's saying that they would need to do that. >> And they will be announcing something on Monday, I believe, or next week. We're going to hear a lot about that. But when we think, ultimately, about the software that Dell and EMC are going to have to think about, they're very strong in VMware, which is important, and there's no question that virtual machines will remain important, if not only from an install base standpoint but from, in the future, how the cloud is organized and arranged and managed. Pivotal also is an interesting play, especially as it does a better job of incorporating more of the open source elements that are becoming very attractive to developers. But George, let me ask you a question, ultimately, about where is Dell in some of these more advanced software worlds? When we think about machine learning, when we think about AI, these are not strong markets right now, are not huge markets right now, but they're leading indicators. They're going to provide cues about where the industry's going to go and who's going to get a chance to provide the tooling for them. So what's our take right now, where Dell is, Dell EMC is relative to some of these technologies? >> Okay, so that was a good lead in for my take on all the great research David Floyer's done, which is when we go through big advances in hardware, typically relative price performance changes between CPU, memory, storage, networking. When we see big relative changes between those, then there's an opportunity for the software to be re-architected significantly. So in this case, what we call unigrid, what David's called unigrid previously is the ability to build scale-out, extremely high-performance clusters to the point where we don't have to bottleneck on shared storage like a SAN anymore. In other words, we can treat the private memory for each node as if it were storage, direct-attached storage, but it is now so fast in getting between nodes and to the memory in a node that for all intents and purposes, it can perform as if you had a shared storage small cluster before. Only now this can scale out to hundreds, perhaps thousands, of nodes. The significance of that is we are in an era of big data and big analytics. And so the issue here is can Dell sort of work with the most advanced software vendors who are trying to push the envelope to build much larger-scale data management software than they've been able to. Now, Dell has an upward, sort of an uphill climb to master the cloud vendors. They build their own infrastructure hardware. But they've done pools of GPUs, for instance, to accelerate machine learning training. Dell could work with these data management vendors to get pools of this scale-out hardware in the clouds to take advantage of the NoSQL databases, the NewSQL databases. There's an opportunity to leapfrog. What we found out at Oracle, at their user conference this week was even though they're building similar hardware, their database is not yet ready to take advantage of it. So there is an opportunity for Dell to start making inroads in the cloud where their generic infrastructure wouldn't. Now, one more comment on the edge, I know David was saying on the sort of edge device, that's looking more and more like it doesn't have to be Intel-compatible. But if you go to the edge gateway, the thing that bridges OT and IT, that's probably going to be their best opportunity on the edge. The challenge, though, is it's not clear how easy it will be in a low-touch sort of go-to-market model that Dell is accustomed to because like they discovered in the late 90s, it cost $6,000 per year per PC to support. And no one believed that number until Intel did a study on itself and verified it. The protocols from all the sensors on the OT side are so horribly complex and legacy-oriented that even the big auto manufacturers keep track of the different ones on a spreadsheet. So mapping the IT gateway server to all the OT edge devices may turn out to be horribly complex for a few years. >> Oh, it's not a question of may. It is going to be horribly complex for the next few years. (laughing) I don't think there's any question about that. But look, here's what I want to do. I want to ask one more question. And I'm going to go do a round table and ask everybody to give me what the opportunity is and what the threat is. But before I do that, the one thing we haven't discussed, and Dave Vellante, I'm going to throw it over to you, is we've looked at the past of Dell talks a lot about the advantages of its size and the economies of scale that it gets. And Dell's not in the semiconductor business or at least not in a big way. And that's one place where you absolutely do get economies of scale. They got VMware in the system software business, which is an important point. So there may be some economies there. But in manufacturing and assembly, as you said earlier, Dave, that is all under consideration when we think about where the real cost efficiencies are going to be. One of the key places may be in the overall engagement model. The ability to bring a broad portfolio, package it up, and make it available to a customer with the appropriate set of services, and I think this is why you said services is still an opportunity. But what does it mean to get to the Dell EMC overall engagement model as Dell finds or looks to find ways to cut costs, to continue to pay down its debt and show a better income statement? >> Dave: So let me take the customer view. I mean, I think you're right. This whole end to end narrative that you hear from Dell, for years you heard it from HP, I don't think it really makes that much of a difference. There is some supply chain leverage, no question. So you can get somewhat cheaper components, you could probably get supplies, which are very tight right now. So there are definitely some tactical advantages for customers, but I think your point is right on. The real leverage is the engagement model. And the interesting thing from I think our standpoint is that you've got a very high-touch EMC direct sales force, and that's got to expand into the channel. Now, EMC's done a pretty good job with the channel over the last, you know, half a decade. Dell doesn't have as good a reputation there. Its channel partners are many more but perhaps not as sophisticated. So I think one of the things to watch is the channel transformation and then how Dell EMC brings its services and its packages to the market. I think that's very, very important for customers in terms of reducing a lot of the complexity in the Dell EMC portfolio, which just doubled in complexity. So I think that is something that is going to be a critical indicator. It's an opportunity, and at the same time, if they blow it, it's a big threat to this organization. I think it's one of the most important things, especially, as you pointed out, in the context of cost cutting. If they lose sight of the importance of the customer, they could hit some bumps in the road and open it up for competition to come in and swoop some of their business. I don't think they will. I think Michael Dell is very focused on the customer, and EMC's culture has always been that way. So I would bet on them succeeding there, but it's not a trivial task. >> Yeah, I would agree with you. In fact, one of the statements that we heard from Michael Dell and other executives at Dell EMC at VMworld, over and over and over again, on theCUBE and elsewhere, was this notion of open with an opinion. And in many respects, the opinion is not just something that they say. It's something that they do through their packaging and how they put their technologies into the marketplace. Okay, guys, rapid fire, really, really, really short answers. Let's start with the threats. And then we'll close with the positive note on the strengths. David Floyer, really quick, biggest threat that we're looking at next week? >> The biggest threat is the evolution of ARM processes, and if they keep to an Intel-only strategy, that to me is their biggest threat. Those could offer a competition in both mobile, increasing percentages of mobile, and also also in the IOT and other processor areas. >> Alright, George Gilbert, biggest threat? >> Okay, two, summarizing the comments I made before, one, they may not be able to get the cloud vendors to adopt pools of their scale-out infrastructure because the software companies may not be ready to take advantage of it yet. So that's cloud side. >> No, you just get one. Dave Vellante. >> Dave: Interest rates. (laughing) >> Peter: Excellent. Stu Miniman. >> Stu: Software. >> Peter: Okay, come on Stu. Give me an area. >> Stu: Dell's a hardware company! Everything George said, there's no way the cloud guys are going to adopt Dell EMC's infrastructure gear. This is a software play. Dell's been cutting their software assets, and I'm really worried that I'm going to see an edge box, you know, that doesn't have the intelligence that they need to put the intelligence that they say that they're going to put in. >> So, specifically, it's software that's capable of running the edge centers, so to speak. Ralph Finos. >> Ralph: Yeah, I think the hardware race to the bottom. That's a big part of their business, and I think that's a challenge when you're looking at going head on head, with HPE especially. >> Peter: Neil Raden, Neil Raden. >> Neil: Private managed cloud. >> Or what we call true private cloud, which goes back to what Stu said, related to the software and whether or not it ends up being manageable. Okay, threats. David Floyer. >> You mean? >> Or I mean opportunities, strengths. >> Opportunities, yes. The opportunity is being by far the biggest IT place out there, and the opportunity to suck up other customers inside that. So that's a big opportunity to me. They can continue to grow by acquisition. Even companies the size of IBM might be future opportunities. >> George Gilbert. >> On the opposite side of what I said earlier, they really could work with the data management vendors because we really do need scale-out infrastructure. And the cloud vendors so far have not spec'd any or built any. And at the same time, they could- >> Just one, George. (laughing) Stu Miniman. >> Dave: Muted. >> Peter: Dave Vellante. >> Dave: I would say one of the biggest opportunities is 500,000 VMware customers. They've got the server piece, the networking piece kind of, and storage. And combine that with their services prowess, I think it's a huge opportunity for them. >> Peter: Stu, you there? Ralph Finos. >> Stu: Sorry. >> Peter: Okay, there you go. >> Stu: Dave stole mine, but it's not the VMware install base, it's really the Dell EMC install base, and those customers that they can continue moving along that journey. >> Peter: Ralph Finos. >> Ralph: Yeah, highly successful software platform that's going to be great. >> Peter: Neil Raden. >> Neil: Too big to fail. >> Alright, I'm going to give you my bottom lines here, then. So this week we discussed Dell EMC and our expectations for the Analyst Summit and our observations on what Dell has to say. But very quickly, we observed that Dell EMC is a financial play that's likely to make a number of people a lot of money, which by the way has cultural implications because that has to be spread around Dell EMC to the employee base. Otherwise some of the challenges associated with cost cutting on the horizon may be something of an issue. So the whole cultural challenges faced by this merger are not insignificant, even as the financial engineering that's going on seems to be going quite well. Our observation is that the cloud world ultimately is being driven by software and the ability to do software, with the other observation that the traditional hardware plays tied back to Intel will by themselves not be enough to guarantee success in the multitude of different cloud options that will become available, or opportunities that will become available to a wide array of companies. We do believe the true private cloud will remain crucially important, and we expect that Dell EMC will be a major player there. But we are concerned about how Dell is going to evolve as a, or Dell EMC is going to evolve as a player at the edge and the degree to which they will be able to enhance their strategy by extending relationships to other sources of hardware and components and technology, including, crucially, the technologies associated with analytics. We went through a range of different threats. If we identify two that are especially interesting, one, interest rates. If the interest rates go up, making Dell's debt more expensive, that's going to lead to some strategic changes. The second one, software. This is a software play. Dell has to demonstrate that it can, through its 6% of R and D, generate a platform that's capable of fully automating or increasing the degree to which Dell EMC technologies can be automated. In many conversations we've had with CIOs, they've been very clear. One of the key criteria for the future choices of suppliers will be the degree to which that supplier fits into their automation strategy. Dell's got a lot of work to do there. On the big opportunities side, the number one from most of us has been VMware and the VMware install base. Huge opportunity that presents a pathway for a lot of customers to get to the cloud that cannot be discounted. The second opportunity that we think is very important that I'll put out there is that Dell EMC still has a lot of customers with a lot of questions about how digital transformation's going to work. And if Dell EMC can establish itself as a thought leader in the relationship between business, digital business, and technology and bring the right technology set, including software but also packaging of other technologies, to those customers in a true private cloud format, then Dell has the potential to bias the marketplace to their platform even as the marketplace chooses in an increasingly rich set of mainly SaaS but public cloud options. Thanks very much, and we look forward to speaking with you next week on the Wikibon Weekly Research Meeting here on theCUBE. (techno music)

>> Announcer: Live from Las Vegas, it's the Cube covering Dell EMC World 2017 brought to you by Dell EMC. >> And welcome back here to Las Vegas, we're in the Venetian, the Cube is at Dell EMC World 2017. Good afternoon or good evening if you're watching out on the East Cost or perhaps overseas. Good to have you with us as we continue our coverage here on the Cube. I am John Walls along with Keith Townsend who's the principal at CTO advisors. And we're joined by Boaz Palgi who is the vice president and GM and one of the founders of ScaleIO. Boaz, thanks for being with us here on the Cube. Good to see you. >> Yeah my pleasure. >> John: First time I think, is that correct? >> No no no it's my fourth time. >> John: Oh fourth time, first time with me, my apologies. >> It's my first time with you, yes. >> My apologies, tell me about the history a little bit. I think it really says something about the growth, the explosion and what you've seen. 14 employees back in 2013, Dell makes the purchase. Today you have 220 plus working. So obviously you've had a lot of great growth, a lot of expansion, but a lot of success. >> Yes, yes we've experienced a lot of growth not just in the number of people, but also in customers. Not just in number of customers but also in the capacity in production with customers. So today we see we have well over 300 large enterprise customers like financial institutions, telecoms, all kinds of other enterprises. Also on top of that some mid-size and even smaller customers. And what we see is that the capacity sizes of our customers have been growing over those four years as well. So if four years ago we had maybe a part of the storage estate in some of our customers, today we have quite a few large enterprises that have completely standardized their entire block storage estate on their ScaleIO. Maybe one example of that was today in the keynote opening of this event, Dan Maslowski of CitiGroup presented how they have been using ScaleIO. They're running ScaleIO on tens of petabytes today and still growing very, very fast and with a lot more capacity to be added over the next few months and years. >> So what's going on there? Why are customers with CitiGroup want, who've already made the move, but are making the move over to SDS. What's generating that kind of activity and what kind of gains do you think they're realizing from that? >> I think there are two ways to look at this. One way to look at it is that actually storage arrays were invented 25 or 30 years ago in order to work around the problem of lack of resources for CPU, for processing, for memory in the application servers. So 25, 30 years ago an application server had barely enough resources to run a single application. So if people wanted to add another application to manage the storage, etc., they had to take another server, fill it with disks and that became the storage server which is the storage array of today. But nowadays application servers obviously have ample resources in terms of CPU memory, network, bandwidth. You can put any media whether it's flash or magnetic in your servers. So you still have enough resources. That's exactly where ScaleIO comes into play. We take those little part of those resources to actually provide enterprise class, storage capabilities in a software form factor alongside the applications or the hypervisors or the databases on those same servers. So this is maybe the technology enabling the shift in the paradigm that has been happening. On the other hand when you look at what is possible today products like ScaleIO make operations of the data centers significantly easier. So if in the past you needed to have dedicated storage products that were actually islands by themselves you couldn't really inter operate between various storage products or various vendors. You needed dedicated storage teams that were specialized on that storage every few years. Storage estate would come up for refresh or their competitors would start bidding. You would start getting very expensive and intrusive data migration projects from the old storage to the new storage. All of that is something of the past when you work with soft storage like ScaleIO. >> So Boaz, let's talk about that for a little bit. WikiBond did research and determined that they called this market originally service, some people may call it hyperconversion infrastructure. But overtake traditional storage arrays in sales in the next couple of years. You talked about ease of use, let's talk about the deployment. How is ScaleIO consumed? >> We see several form factors of ScaleIO today. The most obvious one is software. Some of our customers buy ScaleIO software. They have the servers of their choice which might be Dell servers or HP, or IBM or any other server vendor out there. They build their own estate just like they used to buy servers to run their databases for Oracle or to run their operating system, the hypervisors, etc. Now they also run the storage as another application really on their servers. That's one form factor. Actually people some of our customers today downloaded software from ScaleIO from the internet, started to use it, started to grow it and then came to Dell EMC to buy the license and to grow it and to put it into production for real. >> That's a kind of strange statement you said. This is a platform that holds petabytes of storage. You're telling me customers just download it and installed it? I missed the whole sales process before the download part. That's very unusual for an EMC. >> It's unusual for EMC and especially for all of NS really in the storage space. But this is, this is a new world. So ScaleIO software is freely downloadable for testing purposes. Customers find it, download it, and we have not a small number of customers that actually came to us that way. Hey, we already use ScaleIO, we tested it. We took some servers that were lying around, we built a cluster, it works. It gives tremendous performance, it's easy to operate. We want to roll it our in production. And we're saying we need to buy the license for that. This is one form factor. The second form factor that we see are appliances. ScaleIO obviously supports the 14G servers of Dell. We are agnostic really to the underlying hardware. But this is with one of the Dell server approaches that we are supporting is to provide appliances based on 14G servers running ScaleIO together with hybervisors or like ESX or hyper VOKVM and a management software around it that we call AMS that allows customers to manage their entire stack of the server and the ScaleIO software and the hypervisor software and the firmware, etc. with single-clicks configuration, single-click upgrades, and pretty soon also a single-click deployment of machines and storage together. This is the second form factor appliances with whole management package for the entire stack really wrapped around it. The third form factor that we see are the VX Ragflex approaches. Where VCE or CSPD these days are selling entire racks including networking, compute, and ScaleIO storage. Customers can buy these racks, plug them in, and start running their applications and their environment out of the box. >> It's all about simplicity, right? I mean talking about one-click, you're talking about the accommodation of force, the new structure. So it's all about making it a lot easier at the end of the day. >> Keith: It's solving a great problem. >> Huge problem. I would say it's simplicity of management but also simplicity of operations. In the past traditional storage estates forced people to deal with storage items. Forklift upgrades from old systems to newer systems. When you have an array that's full you now need to somehow migrate data to another array. There are a lot of operational challenges with the traditional approaches that completely disappear just like that when you deploy a software like ScaleIO which completely scales across all these clusters, across all these environments, across bare metal operating systems as well as across multiple types of hypervisors. You really get one big pool if you may, of storage that well big and big pool also provides among the best performance in the industry as well. And this is because our architecture that is completely paralyzed and it makes it possible to not only aggregate capacity, but also aggregate performance across a large number of devices and nodes. >> So curious geek question. When EMC originally bought ScaleIO, Chas Thacket did what I think he called a face melting demo of using ScaleIO in AWS. Crazy stuff I don't even know, it was like a million iops or something coming out of AWS. Shows the portability of the application. Future of ScaleIO, you see a use case for ScaleIO in the cloud? >> Well, ScaleIO in many cases enables the cloud. So we see one of our main use cases is infrastructure of the servers. This is really private clouds in the enterprise or managed hosting or public clouds in telcoms or managed service provider environments. This actually represents a very significant part of our deployments. Another part of our deployments are the traditional enterprise applications like Oracle and SQL and hypervisors of the world. Then we also see deployments of the newer type of applications like (foreign words), Cassandra, all kinds of open stick implementations, etc. Also on ScaleIO. >> I hate to jump ahead but it's always interesting to talk with people such as yourself who are always kind of thinking ahead. What's the next big headache, or what's the next big problem that you'd like to tackle or you'd like to challenge that you think with a more polished or more defined storage capability would solve whatever that dilemma might be that emerging for the enterprise? >> I think the first hurdle we need to pass is just the challenge for most industry veterans in particular to make this shift from they're built like a tank traditional storage arrays that you can touch and see to software that has a connotation, or a perception of it's just software I can't touch it, I can't see it, how can it be robust? How can it be performance? How can I operate it in an easy manner? As a matter of fact, all of those topics are better with a ScaleIO software than with traditional enterprise arrays. We've built some of them in the past. But in ScaleIO you get the most advanced benefits in terms of operational ease, elasticity, scalability, performance, flexibility of deployment, readiness for the future. Agnosticity to the underlying hardware, underlying media. So this really makes the data center a lot easier to be operated, and also a lot lower cost because you eliminate a lot of the complexity. You eliminate a lot of the smaller vendors that only deliver a small part of your hardware state because now you as a customer can really leverage everything on your X-86 hardware. This is commodity par excellence. You can go out there, you can get server vendors to bid for the hardware state that you want to run. And on that estate you can run your applications, your databases, your ScaleIO software, whatever you need. >> So you're telling them you can touch it, or you don't have to touch it, you don't have to feel it. Trust me, it's real right? >> Don't trust me, try it. >> Boaz, thanks for being with us. We appreciate the time here on the Cube and great seeing you. Again four time around you're about to join the five-time alumni club so congratulations on that. >> Can I by the way tell you a little bit about the version, the new version? Maybe very quickly end of this year we're releasing a version, a new version of ScaleIO, ScaleIO Next. The main items there are we are delivering space efficiency, but we provide it in a dynamic manner. So one of the big downsides of putting space efficiency in storage systems is that it usually hits performance quite significantly especially if the data is not too compressible. In ScaleIO we will dynamically compress data based on the compressibility of the data. So if data is not compressible we won't waste resources trying to compress it. If data is very compressible we will use more resources but we will also compress it and we will be able to do that with a very little, very small degradation of performance compared to the non-compressed environment. That's one, two we introduce volume migration in a non-disruptive manner enabling customers to move volumes from flesh-only to magnetic-only to hybrid environments on the fly without any disruption to the ongoing applications. We introduced a spot for vevos in order to be able to run all the ScaleIO capabilities, ScaleIO volume capabilities on a virtual machine granularity level in ESX. And we are also introducing the next level of the AMS management software which is the wrapper around the server with ScaleIO software appliance bundles that enables you to manage the entire stack. >> And timing again? >> End of this year, end of '17. >> Good deal, you've got a full plate, don't you? >> We do, we do. >> Very good well done, thank you again and sorry about that. I knew you had news you wanted to get in, I'm glad you did. >> Thank you for the opportunity. >> You bet, all right back with more on the Cube here from Dell EMC World 2017 right after this.

>> Narrator: Live from Orlando, Florida, it's theCUBE. Covering ServiceNow Knowledge 17, brought to you by ServiceNow. >> Welcome back to Knowledge17 everybody. This is theCUBE, the leader in live tech coverage. My name is Dave Vellante and I'm here with my cohost Jeff Frick. This is our fifth Knowledge, we're doing wall to wall coverage. This is day one, we'll be here for three days giving you all the keynotes, the announcements, talking to practitioners. We're going to talk to one of the leading partners now of ServiceNow. Michael Kollar, is the Senior Vice President and Chief Digital Officer of Vision, Strategy, and Engineering for Atos. Michael, welcome to theCUBE, thanks for coming on. >> Thanks for having me. >> Dave: You got a lot on your plate. >> I do. >> Dave: Talk about that role, I love that title. >> So, essentially what I do for Atos, I own, one, the vision and strategy of how we deliver, develop and deploy our services. And then second, I'm also accountable for how we engineer and build those services and bring 'em to market. >> Dave: Okay, so talk about your relationship with ServiceNow, how did it start, how'd you get into this space? >> So about two, three years ago we started a need to transform our service delivery platforms within Atos from the 196 different tool sets that we had across the global services that we provide to really find a better way to do it. We we're spending a lot of our time picking tools, integrating tools, trying to figure out what's the right tool for every little corner case. And we said to ourselves, "There's got to be a better way to do this." So we started to think about what were the key things we wanted in a ITSM service management platform going forward. And we thought about workflow, integration, orchestration, some of the key things that today are cornerstone to ServiceNow. And it led us down the path to find ServiceNow as our vendor partner of choice for service management and beyond. >> Okay, so how's that business going, what's the reaction been from your customers? And talk a little bit about the strategy. >> So from a business perspective I tell ya the customers love what we're doing. For the first time we're able to adapt at their rate of change and differentiate, or transform our services aligned to how they want to consume it and to align to their business. Typically in the past that was a very difficult process for us since everything was bespoke, we wrote code to do it. Now it's a configuration or an orchestration that we do with ServiceNow. So that part's been great. From an overall journey, I will tell you it's been hard. Given that we have a global customer base that we support in 72 different countries around the world, it's pretty hard to get to a standard platform, so it's taken us a considerable amount of time to get there. But the results have been, I think, extraordinary in the way that we can deliver the service, the revenue that we've created with it, and just the ability we're able to respond to customer needs with. >> So, can you talk, unpack the value flow for our audience? Just help us understand sort of, where ServiceNow adds value, where you guys add value, and then where the customers pick up, and what impact it's having on their business? >> Sure, so first question, where do we provide value? A couple of different areas, so, besides the service management discipline that we provide, we're a managed service provider, so all the platforms that go into running their private cloud and public cloud get built, designed, and deployed by Atos. So that's one of the areas. Second, as it relates to deploying ServiceNow in support of their needs, we have a set of accelerators, technologies, methodologies, and capabilities that we're able to deploy to allow them to consume our services with ServiceNow faster. Nice part about that is we have our own instance that we provide a shared service out of but we've adapted that so that if customers want their own instance of ServiceNow and want to grow and leverage that capability we're able to deploy it in their instance and let them take advantage of it, and then build with it as they want to adapt it or extend it for their enterprise. >> How about the technology integration challenges? You integrated your business and ServiceNow sort of into your business, I guess, what were the technology integration challenges that you faced and others that you're facing? >> So the first challenges we went through was just the complexity of the model that we wanted to support. So for us it wasn't just a single set of services it really is our entire global portfolio. So that is everything from cloud, our digital workplace solution, our large scale analytics, including our security offerings. So we had to integrate a global set of offerings into ServiceNow and the platforms that we use, so Amazon, Azure, Google, and other bespoke technologies, and writing the code to make that happen. >> So one of the big challenges when we talk to IT practitioners is migration from A to B. "We got to get from A to B and we don't want to "spend a billion dollars doing it and we got to do it fast." How did you deal with the migration from the legacy systems to where you are today? >> So we took an approach that we refer to as big box and little box. So the little box allowed us to take our green field services that had been built with ServiceNow and our net new customers that were consuming those services were deployed straight out onto those platforms, the new capability we built with ServiceNow. And what we've done with the legacy customers and our legacy services, as we work through either renewal strategies with our customers or they start to consume new services we migrate them onto the new platform to be able to leverage those services going forward. So it's an evolutionary process it's not a big bang. We have to do it in a very systematic way so we don't compromise the services that they consume from us that they in turn deliver to their internal IT departments or their customers from Atos. >> What are the big asks you're getting from customers and how are you advising them? >> So a big ask we get from customers is, "Can we leverage the IP that you've built "and help us extend that further, faster, with us?" And what we've done there is originally the frameworks we built at Atos we refer to as the Atos technology framework, it was a very proprietary home grown type product that we used to transform our services. What we've done over the last several years is turned that into a product, essentially a application that we can sell to our customers and they can get it from us as a license and support model to help them on their journey. The ask then is that if they aren't happy or say they want to engage other providers from Atos is to allow them to leverage the IP that we've built with them and have those other providers be part of the ecosystem. So aligned to that we've now created the ability for third parties to interact with our customers and leverage the ecosystem and products and services we built on ServiceNow in support of our common customer. >> Nice, now when you were talking off camera you obviously, hybrid cloud's a big topic, a hot topic. Dell EMC World's going on this week, you guys get a, you've won an award at that show. You're here obviously but, so what's going on in hybrid cloud, you know, what are you being recognized for? >> So from a hybrid cloud perspective we're going to announce a private Azure stack appliance in partnership with VC around VxRack and VxRail. One of the other things, when we think about hybrid cloud, what we've done specifically with ServiceNow is integrate our offerings that come from Atos, our private cloud platforms, we refer to as our digital private cloud, that was built in concert with Dell EMC around the Vmware suite of technologies, VCE, and other components of the Dell EMC family. And we stitch all of that together with public cloud providers AWS, Azure, and Google, in a seamless framework with ServiceNow. And that's I think, from us, one of our key value props that we take to customers, is the integration of the private cloud on-prem solutions and what we do in the public space, with ServiceNow as the engine to do that. >> So you see all this stuff coming together don't you? So you're saying ServiceNow is the platform glue to allow you to manage all these disparate systems? >> Oh without a doubt. We look at ServiceNow as the platform of the future for us and our customers. And we look at it, and we really refer to them as being platform businesses going forward. And you need an integrated platform end to end to drive that to, one, the transformation, but two, to be able to manage that end to end service perspective as you think about private public and the SAS model that's out there that our customers want to consume. >> I'll give you the last word on Knowledge17 what's the sort of bumper sticker for you guys? >> So I think the bumper sticker for us is, at least from an Atos perspective, it's the year of the platform. And as we look at what ServiceNow is rolling out being a platform provider, and the partnership that we have with them specifically in the cloud space, to enable a successful outcome of hybrid cloud consumption for our customers. >> Platform trumps products every time so Michael thanks very much for coming to theCUBE and sharing your knowledge, and best of luck. >> Thanks for your time and I appreciate it. >> You're very welcome. And keep it right there everybody we'll be back with out next guest, theCUBE, we're live from Knowledge17. We'll be right back. (bright electronic music)

>> Announcer: Live from Las Vegas, it's theCUBE, covering InterConnect 2017. Brought to you by IBM. >> Welcome back everyone. We are here live in Las Vegas at the Mandalay Bay for exclusive Cube coverage for three days for IBM InterConnect 2017. I'm John Furrier. My co-host, Dave Vellante. Our next guest is Ed Walsh, General Manager of Storage and Software-Defined Infrastructure at IBM. Welcome back. >> Ed: That was a mouth full wasn't it? >> Welcome back to The Cube. Welcome back to the fold at IBM. >> Thank you very much, always good. >> You're leading up a big initiative. Take a quick second to talk about what you're the general manager of scope wise, and then we'll jump right in. >> Yeah, so I run basically the storage division, which has all of our storage from mainframe to open systems, tape, software defined storage and software defined compute, but it's all under our storage portfolio. So development, sales, you know, run the PINA. >> Right, and the new innovations that are coming out, what do you have your eye on? What's your goal, you know, you got a spring in your step. What's the objective? >> So we talked probably in October, I was 90 days in. So now I'm a whopping 8 months in. I think we kind of talked about it. I kind of... my hypothesis for coming here was you know, clients are going through this big change and some of your write ups lately about the True Private cloud and how they're trying to go from where they are now to where they're trying to get to. And that confusion eats up leadership so as confusion... IBM has the right vision, but it's like clouding cognitive, as is much on PRIM. So we have the right vision to help them get through that. And we have a history of doing that. And the second one was that we have a portfolio that's pretty broad. So we almost have an embarrassment of riches on what we can do with someone when they're really trying to look to modernize environments or transform, we can help them from anything. From the biggest and baddest. But it really doesn't matter. The broad portfolio allows us to engage and bring it forward and get them to the... Whatever their path forward is we can give that vision. And then, the one thing I was really talking about is he could bring in IBM. If I could bring in IBM, the greater IBM, the True Cognitive, the analytic team, and bring that together to bear for our infrastructure clients, or inside storage itself, that would be where we'd have the trifecta taking off. So we're in the middle of that transformation. Going very well. But along the same lines I have a fantastic product line. We're going to continue, in fact we're putting more investments on that. Not only on the hardware raise, but as much on the software-defined, and going all flash just because a lot of operational benefits. But then really what we're able to do by bringing the large IBM behind us... IBM also did some interesting organizational changes in January. Arvind Krishna is now running Hybrid Cloud and research for IBM so it's bringing the girth of IBM behind what's on PRIM hybrid into the Cloud. So it allows us to play a very strategic role. >> So a couple Wikibomb buzzwords, right? The True Private Cloud, we talked about server sandwiches, really sort of instantiation of software-defined. Really the impetus is that customers on PRIM want to run the Public Cloud. With that kind of agility and automation. So what are you seeing? What is IBM delivering to support that? First of all, are you seeing that? >> So it's kind of funny, so that... I do talk about study a lot because I thought the True Private Cloud, the way you coined it, is the right way to almost just say it's not what you're thinking I'm about to say. But the study, it's everything you get in the Public Cloud and you want to bring it on PRIM. All the flexibility, all the development models, right? How you engage developers. All the financial models as well, but bring that. And then it easily extends the Hybrid Cloud. When you start going through that, every one of our clients we engage, they know we understand the value of Cloud. They're at different maturity levels of how they're using Cloud, but it's all in their vision. We do a lot of work to help people bridge. So where are you know, let's talk about where you need to get to and have some meaningful steps to get there. So the True Private Cloud resonates with them. And then what we're doing is launching. In fact we launched this week with Cisco. So we have a converged offering with Cisco called VersaStack. But what we're operating on is, how do you make a Private Cloud as agile, and has the same use cases specifically for developers or DBA's that you have on the Public Cloud? And we're bringing that to the offering set for a converged offering. So what we do around on API later... So a key use case would be to do would be, why do people go to Public Cloud? Business units like it because the developers. It's easy to use, they have true DevOps capabilities. They're able to swipe a credit card. Single line of code. Spin up an environment. Signal out a code. Spin it down. They don't have to talk to an IT guy. They don't have to wait three weeks or do a ticket system. So how do you do that on PRIM? So what we have now, in market is, imagine a API abstraction layer, that for storage allows all the orchestration and all the DevOps tools to literally do the exact same thing on PRIM. So once you set it up, it allows the IT team, it's called Spectrum Copy Data Management, allow the IT team to set up templates. But through roles based access, allow a developer or a DevOps tool like Chef or Puppet to literally infrastructures code. Single line of code, spin up a whole environment. An environment would be, let's say three or four VM's, last good snapshot, maybe Datamaster or not. Most times it's Datamast. Bring up an offense network, but literally it goes from, on PRIM I just can't get it done. It takes me two or three weeks. So that's why I go the Public Cloud for other reasons. I can not only choose where I put it, where it's the right place to do, but I can give the exact same use case on PRIM by just doing API calls and they use exactly the same tools for development that are used in the Cloud, like Chef, Puppet, Urbancode, Python scripts. >> How's the reaction been to that? Give us some anecdotal... >> So once you have that conversation, that's just one of the things we're doing to make the True Private Cloud come to life. Of course the extension to SoftLayer, in other Clouds to get the... People, all of the sudden they see a path forward. It's not as easy to... You have to explain how it works, but the fact of the matter is they don't have a lot of tools now to make... We can bring down cost, give you a little bit more efficiancy, consolidate it. But that's not really how True Private Cloud is. You need the automation. So they're responding to it well. In fact it's the number one demo on the floor. For us, as far as systems, people trying figure out actually how to do the DevOps on the PRIM. >> John: That's awesome. >> Talk more about he Cisco relationship. There's a lot of interesting things going on in the storage business. There's consolidation, and you know the whole VCE thing and then Cisco looking for partners. You guys selling off BNT, it opens up a whole new partnership potential. So how has that evolved and where do you want to take it? >> So I think, match made in heaven between us, especially in storage, and Cisco. If you look at the overall environment conversion Hipaa converts account for about a third of the storage industry, so we play well. There's no overlap between us and Cisco. It's great. We're after the exact same accounts and actually, from a... You think of the very top level of our organization all the way down, the two companies have a lot of the same cultures and to be honest we're very tight. So it allows us to have a great relationship. We've already had a good relationship. About 25 thousand joint clients, which is amazing. And then what we're doing with VersaStack specifically is we're putting in the next generation, so we have a great converged offering that has all our all flash storage, but also software-defined. But what we added is we brought in what they did with their CliQr acquisition, which is called CloudCenter, and you add that on top make it single click, deploy and application anywhere, both on PRIM in the different Clouds, and it makes it very simple for developers. We talked about the API Layer. You bring that in to DevOps environment. So we feel really strong that as far as, if you're looking to bring in a True Private Cloud probably the best answer that we could do, is what we do with VersaStack. And we just announced it this week. And also we gave a preview. It's Cisco live in Melbourne a week ago. I think it's been a good uptake. But it kind of plays to... When you know what people were trying to do, but you need to bring the automation. You got to make it self-service and that really drives, for the business units, as well as developers. That drove what we brought into VersaStack. So we brought different assets in it from Cisco and IBM to make that kind of a reality. >> John and I were talking earlier on theCUBE this week and somebody brought up, yeah the CIO, they really don't think about storage. They certainly don't want to be thinking about the media. And the conversation shifted way off... Even flash now, it's like, oh yeah, yeah we get it. But you mentioned something earlier and this is very relevent to CIO's. They want to get from point a to point b with this minimal disruption, they don't want to have to buy a boat load of services to get it done. And now you're talking about things like automation and self-service. What are the discussions like with senior IT executives and how are you helping them get from point a to point b with minimum disruption? >> So the good thing about... You think about the IBM brand. It's as much about trust and helping people through it. So people give us just a credit to say I can engage with them, get the innovation. But also we've been through the zeros So a lot of the times they're asking how are we doing it? How are we transforming our company? How are we doing it internally? And then if you jut kind of, common sense, walk them through because of the broadness of the portfolio, we don't just have this point solution and every answer is, well you buy this box, right? We're able to have that conversation and when you get that broader IBM together that's where it kind of differentiates and they love it. Now I've been to a lot of, oh I'll say, IBM friendly accounts which is great. But also, some people that have never dealt with us are eyes wide open because it's a new day. People are struggling with this big transfer, right? How do you get from now to where you want to go in Cloud is a big change. >> Those new customers, what are they getting wide-eyed about? What are they focusing on? What's the big focus? >> So we'll talk about, we'll do True Private Cloud, but really what you can do as far as data, and what we're doing around Cognitive is really telling, right? The ability to really show 'em with symbol API calls they get more... So to have a Cognitive conversation that's an industry specific conversation really gets people lit up. In the end it ends up being, okay I see the possible. Then, how do I get from here to there. And typically it doesn't start, well I'm just going to go directly that direction. It's help me with a multi-year plan to get to there, while I'm taking out costs, adding agility over time. But I would say the kind of conversations are especially with an industry lens, which is what IBM brings to it, is really telling. >> So I got to ask you about the Convergent reStructured markup because the hot trend that's in the Cloud native world is server lists. So is there a storage list version? Cause what you're basically saying with the True Private Cloud is, you're essentially doing server lists, storage lists, philosophy. Is that, I mean how do you guys rationalize this server list trend. Cause servers and storage are basically the same things in my mind these days. But, I mean, you might disagree. >> I think in general people aren't looking to the different components. They're looking for a way to operate in their environment that's more efficient. They're looking for use cases. They're also trying to have IT not be in the way of what they're trying to do in development, but actually give the right tools. So that's why, to be honest, go back to True Private Cloud, I've been using it a lot cause it really resonates with people. Is how do you get that same experience but on PRIM, cause there's different reasons to be on PRIM. >> It's like Cloud native on PRIM. You could get all the benefits of what Serverless promotes, which is here's an unlimited pool of resources. The software will just take of that for you. That's DevOps. >> And doing... >> John: On PRIM. >> And doing true DevOps, Chef, Puppet, no compromises is exactly how you do it. So you change nothing for your developers. But now you're running it on PRIM or in a Hybrid Cloud. Cause there's a lot good use cases for Hybrid Cloud even if it's born in the Cloud application. You're making a web application or iPhone application, the fact of the matter is, you might want to test it against the back end. So being able to do a Hybrid Cloud, bring this system record data there, to be able to do DevOps on what production looked like maybe last night, or a week ago is much different than the current DevOps models. >> Well it's a good strategy too. If you think about the True Private Cloud, the way you're looking at it, which I think is the right way, is a lot of the things that we look at on theCUBE, and talk about, is three areas. Product gaps, organizational gaps, and process gaps. The number one thing is organizational gaps. So when you have that True Private Cloud on PRIM, it's not a big leap to go Cloud Native Public. >> It's seamless in fact. >> John: It's totally seamless. >> And on that case that a lot of the stuff we're talking about is, we help people modernize and transform their environment. And the message is all about optimization on the traditional application environment. It's all about freeing up the resources. So... >> John: That's the ovation strategy. That's the creativity, that's the Dev element. >> And if you don't free up the key resources they can't be on the digital transformation. And without the right skill set, because they're kind of trapped in operation. So a lot of the automation things we're doing are things that, to be honest, the storage team, or the admin team will be doing. It's manual error prone, but take it away. But also you free up the team. So it kind of plays to all those. >> That must really resonate with the CIO. I mean, I would imagine CxO goes, okay I could have Cloud on PRIM and then train my organization to then start thinking Hybrid workloads as they start moving Hybrid pretty quickly. >> And here's the thing, is what do you have to change for developers? Tell me what I have to get by the developer or DBA's? And the answer is nothing. Use the exact same tools. So you know, on stage it'll literally show me how Chef or Puppet... They're not doing trouble tickets or spinning things up, down, but... Same thing with deploying applications. It's like Cloud Center application. Set up the stack and deploy either on PRIM, different architectures, both converged and non-converged or in different Clouds. And they allow you to just, one click and deploy it. And they deal with all those differences. But that's how you want to make it, you use it serverless. They don't have to worry about the infrastructure. But also we're freeing up the team. >> So Ed, I got to ask ya, on a sort of personal note, I mean I've followed your career for a long time. John and I call you the Five Tool Star. You've had the start-up experience, you've got technical chops, you did a stint at IBM, you went to MIT and came back with that big MIT brain, brought it to IBM, so pretty awesome career. By no means even close to over. What have you brought to IBM? I think I've known every GM of storage, since the first GM of storage at IBM. What specific changes have you brought and what's the vision and the direction that you want to take this organization? >> It's a great culture, great history of storage. So I guess that I would be the first outsider coming into storage. But I don't think it's any different. I've been in storage my entire career. I understand it. Some of it is optimizing their current model. The portfolio of what we're doing. Some of it is just making sure we have the right things in sales and working with channels, which one of my companies was an actual channel partner. So I think it's just the perspective of maybe a fresher look, but again we are a great team. Great portfolio. We're quietly number two in storage hardware software. Shhhhhhhh. Don't tell anyone. Cause we don't do a good job of getting the news out... But the fact of the matter is... >> Now we'll tell everyone. You say don't tell anyone, we're telling everybody. You tell us to tell everyone, we don't tell anyone. >> Together: (laughing) >> But we still get people, are you guys still doing storage? We're like, literally we're number two by revenue. And this is IDC and Gartner software hardware. So we are a player in the space. We have a lot of technology and I guess what I'm bringing is just maybe a little spice of vision and... >> Well you guys have a strategy that's unique and different but aligned with the mega trend. That, to me I think, is something that's been in the works for a while. It's been cobbled together. Dave always points it out, how the storage groups change. But the game is still the same, right? Ultimately it's about storage. Now the market conditions are changing on the organizational side. That seems to be the thing. >> Ed: Agreed. >> Well all flash is probably the thing. >> But also what you're going to start seeing is bringing Cognitive capabilities. So we're not going to call in Watson for storage, but imagine bringing Watson to storage, right? Think of all the metadata we have. Not only for support but for insight. You're going to all start doing more Cognitive data management, and not only look at metadata, but taking action on them. Using Watson to look at images, so very interesting use cases that I think only IBM can do. >> I can just envision the day where I just voice activate, Watson spin me up more servers. And provision all flash petabyte. Done. >> (giggling) Believe it or not, we can do a chat, but we have that working. >> John: (laughing) >> We're looking for applicability of that, so. >> And then Watson would tell me, well you can't right now. >> You're not authorized. (laughing) >> You got to grab the Watson for storage url. He's been grabbing url's all day on GoDaddy. (laughing) >> Ed, thanks so much for coming on theCUBE. Congratulations on taking names and kicking butt in storage, in the strategy. True Private Cloud, a good one, love that research, again from Wikibomb. >> Yup. >> Kind of new but different, but relevant. >> Ed: Very relevant. >> Thanks so much. >> Ed: (mumbles) So thank you, thank you very much. I appreciate it. >> Okay, live coverage here at Mandalay Bay here at IBM Interconnect 2017. I'm John Furrier, Dave Vellante. Stay with us. More coverage coming up after this short break. (pulsing tech music)

[Voiceover] Live from the Mandalay Bay Convention Center in Las Vegas it's The Cube. Covering VMworld 2016. Brought to you by Vmware and it's ecosystems sponsors. Now, here are your hosts, John Furrier and Stu Miniman. >> Welcome back everyone we are here live in Las Vegas for VMworld 2016 at the Mandalay Convention Center. We're in the hang space where The Cube is located. I'm John Furrier with Stu Miniman. We're here with Chad Sakac the President of EMC's Converged Platform division formerly known as VCE. Welcome back. Great to see you. Fist pump. >> It's good to see you. >> Seven years we've been doing The Cube you've been on it every single year. >> I can't believe it. >> We love having you on. >> The Cube has become a fixture of VMworld for me. Seeing you guys. Your good looking faces. It puts a smile on my face. But I can't believe it's been seven years. That's insane. >> Yeah. The seven year itch as they say in VMworld. So I got to ask you. You're always candid and colorful. But you've seen the transition. You've been in the trenches. Coding. Now you're president of a division. Big division doing great. >> It's terrifying isn't it? (laughs) >> It's interesting. The Cube is bigger. We're all getting bigger. What's your take right now? You've seen the journey. Seven years. Where are we? >> VMworld has always had a huge community. One of the things that's been defining about VMware's whole journey has been the community. And that's one thing that has stayed pretty constant. Right? There's a lot of people here. This time in Vegas. Previously in San Fran. They share a passion and a love for all things that Vmware is doing. That said. It's a very different show. It's a very different context. It's a very different ecosystem. Literally at the beginning it was one product. Right? Now if you look at the keynotes they have to struggle to get all of the awesome into an hour and a half and do it in two days. Right? And they can only hit certain highlights. Sanjay did a great job today. Kit did a great job. My favorite, Yanbing. Yanbing Li has got passion, energy and loves her baby vSAN. But imagine trying to cram all of that stuff in previously in years past. If you go back seven years that would've been all of Vmworld would it had just been on just one thing. Right? And then obviously the other thing that's going on is the entire ecosystem has changed. So we're seeing consolidation in the ecosystem. But we're also seeing, I think Pat actually did the best job I've ever seen of that realistic balance of what's happening in traditional IT, private, public hybrid cloud models. And how that's going to play out over the next few years. But there' no question that public clouds are a huge part of the landscape for here. For now. For tomorrow. Forever. >> Pat got some criticism on Twitter. Also, some blog posts out there said that the keynote was a snoozer. But it was straight talk. And that's what the ecosystem wants and we're hearing. Stu might have his own opinion on this but what I'm hearing is I want to see the path. I want to see where VMware is going to be going so I can get behind that train. Clarify. Show me the straight and narrow roadways so I can turn up the gas a little bit. >> There's the expression that basically says the customer is always right. Or the people are always right. You can trust the people. Sometimes the customer is wrong. And sometimes the people are wrong. So last year they went bananas over vMotioning of VM between two clouds. Because it plays to the base. It plays to the audience who are like I love vMotion. Why wouldn't vMotion between clouds make sense? The reality of it is that while that was cool and technically accurate. This year's demonstration of basically saying no, you're not going to motion vm between on prem and public clouds very often, if at all. But you will need to be able to do things that bridge public clouds. Is actually a much more correct and relevant answer for the market. Now the difficulty is is that sometimes you're telling people things before there ready to fully internalize it. >> Embrace it. (laughs) It's shock of the system almost. Really. So you play the base. It's a lot like politics in that way. But I got to ask you the question. >> By the way. Just like in politics if you constantly play to the base you never move forward. >> Yeah. And this has always been a diverse ecosystem. So let's start with the cloud things. Obviously ecosystem is back on the table, I'd say. It's front and center. It's always been front and center but as it consolidates we're seeing its straight path. The question that people want to know is. Will everyone have fair access to the VMware as an independent company visa the new big mega merger was announced by Michael Dell just minutes ago that September seventh will be the close date. >> What are you talking about? >> Dell Technologies. >> What? (laughter) >> You can talk about it. Dell announced it. Michael tweeted about it. >> We're not bait and switching you. We'll show you his tweets if you want. >> I'm joking. I'm joking. And by the way, I'm so pumped and so excited. Frankly, I think not everybody understands exactly what's going on inside the industry. The server storage and networking ecosystems as stand alones are actually shrinking. As workloads move to SAS. As workloads move to public cloud IOS. The parts of the ecosystem that are growing are customers that are basically saying they want converged, hyper-converged and turnkey software stacks and that's they way they want to consume. They want to simplify stuff down. To be able to pull that off you have to have all the ingredients inside the stack. Increasingly, you will not be able to be competitive without having all the those components in the stack. And this is why I am passionate that convergence hyper-convergence and convergence and also turnkey software stacks will be at the center of Dell Technologies. And I keep telling Michael and he keeps agreeing which is a good thing. Right? The reality of it is is that we cannot, in spite of that statement being true, it is also true that people will continue to want variability. That may a be a declining set but it's a bigger set of customers. And the customers are like I'm all in on turnkey. So this one is smaller but growing faster this one's a much bigger ecosystem of, I'll mix and match whatever I want and put it together. Alright? So if you look at Yanbing's section. So she said HP with vSAN. Then she went VxRail and Yanbing thanks for the shout out during the session. That was awesome. They were powering basically some great events with Di data and powerful things in small packages. That's a highly integrated system. And then they brought up a customer that was totally building it themselves. Right? So it literally in a span of two minutes you had the continuum of build it yourself, a turnkey thing and it build it yourself. So will it be sustained? Yeah. Can you expect that we are going to lean in like crazy on our integrated stack? Yeah. But will we do it in exclusion of the ecosystem? No. >> There's just different use cases. >> Yeah. VxRail is winning in the marketplace because it's a highly opinionated vSphere HCIA. If you don't have vSphere. You don't like VMware it's not the HCIA for you. Right? However, more customers say yes than they say no. And that's awesome. But we know that we're going to need to create a next generation of the Microsoft Azure stack. On prem HCIA. It won't be built by the VxRail team. But there customers want it that way. And we're not talking about it a lot this week. But last week we launched VxRack new treno which is a turnkey open stack KVM SUSE based thing. Choice baby. >> So Chad, first of all the Dell deal is announced. So this is the final nail in the coffin of VCE, correct? >> Absolutely. Of course not. The reason that we are shifting the way we talk about VCE is something really simple. If I say VCE what's the first thing that appears in your brain? >> Stu: vBlock. >> Va-blah vBlock. And that's a good thing in a sense. >> How much revenue did you do last year, Chad? >> Three point five plus billion dollars. Almost entirely in vBlock and VxBlock. >> That would be a nice a public company on it's own. >> On it's own. Right. And growing at 40% cumulative annual growth rates. That is amazing. Right? >> It's not a fail. >> And by the way the thing that's interesting is that hasn't slowed down one iota in spite of the fact that everyone knows the Dell deal is going to close. However, the difficult it is is that we are no longer just he vBlock group. We have these hyper converged appliances that are growing like sync and customers are voting with their feet and their dollars. I think in a short amount of time we'll be the number one by customer, by revenue HCIA player in the market. But furthermore, we also do these turnkey cloud stacks. So realistically VCE is more of a product brand than it is a company brand. And we're no longer a separate company. We're a part of VMC and on the seventh we'll be part of Dell EMC. >> Chad, can you help us connect the dots? We've got the converged infrastructure. The platform. You've got some SUSE team. Talk about SAS and public cloud. How does Dell, EMC, VMware stay relevant going forward and play a part in that whole story? >> So it's a great question. I'm going to try to see if I can do this in an uncharacteristically concise way. Do you believe that hybrid cloud models will win? >> Stu: Sure. >> Chad: Do you really believe it? >> I mean what we have today isn't really good hybrid cloud but that's where we need to go. >> So, by the way, we need to make the on premise clouds as simple and easy to consume in utilized modes as the public clouds are. >> Stu: Love that. >> Chad: Right. However, I think that it is inherent that economics, governance, data gravity will always balance out some workloads biasing toward public. Some biasing towards private. Furthermore, do you think that there will be one cloud model that will win? Will it all be the VMware SDDC cloud? Will it all be Azure? Will it all be Amazon? Will it all be cloud foundry? Will it all be SoftLayer? >> Well Andy Jassy has an answer for you but many people will differ with that. Including Satcha and Michael and everybody else. >> I think that there's never been in the history of all time any sustained period where there's a singularity of a stack. >> VMware has done pretty good for a while. >> Yep. But, by the way, there's never been in all of history any extended period of time when there's been a singularity of a stack. Right? So our point of view is very simple. My mission in the converged platform division today is basically to build turnkey CI and HCI to power VMware powered clouds and Cloud Foundry power clouds. Tomorrow, meaning on the seventh, immediately my strategic posture toward Microsoft pivots. EMC has always had a partnership with Microsoft but nothing like Dell's. Right? So immediately, I'm going to go. Well we must have the best on and off premises version of the Microsoft Azure stack. Dell currently leads in that market but it's very early days of that. We go from having two clouds both on and off premises. To a third one that we add. And then of course there's a fourth one which says if you want to run your most mission critical, business critical, classic apps. Virtustream is the way to go for an SAP legacy landscape. That you want to put in the cloud. That needs to have an on premise variant too. So, four clouds. Each one on and off premises. Each one available in Capex or utilitized models. If we can pull that off we can be the strongest cloud player on the market bar none. I think that's cool. >> With the choice as the key sales pitch to the client which is pick the cloud that does the best job. >> The thing that's interesting is that sometimes choice is a euphemism for blah. Like I have no strategy. I have no opinion. It's just pick whatever you want and assemble it. What I'm describing is something a little different. Which is a choice between four highly opinionated turnkey offers. >> Okay. >> Right? Now of course, we'll enable customers to build there own things but I think that over time less and less customers are going to want to do that. >> And Chad, I think that points to what we've seen in the wave of converged infrastructure and cloud is we need to get out of that heterogenous mess where I've got the poor guy buried in wires. Running around. Trouble tickets and everything else like that. It needs to be simpler. We need to have the management tools. Chad, I want to get your viewpoint on VMware. One of the criticisms I've heard is kind of the cloud management stack. We've been swinging a bunch at this and we don't yet have a solution that customers are happy with. Where do you think we are? Where do we need to go? >> So, you've been around the block on this and customers who are watching this have been around the block on this. Cloud management platforms are tough. Its actually a very, very fragmented market. With very little consolidation in the past or even looking forward. Now inside that space vRealize is actually the strongest. And it's the most deployed. It's the most widely used. But again, I don't want to make it sound like ahh we're number one. Right? Clearly there's a lot of work to be done. Last night I was talking with Sajay who heads up the vRealize suite team. And what we've seen is that the team has done a lot of work out of the 6.x, 6.5 dot and you know 6.X days into the 7.X days. And customer feedback is that it's much closer to the mark. A in terms of core product workflow, upgrade-ability. All of those sorts of things. But also in the fact that it actually has extended out to be able to automate and deploy on top of Azure and AWS. In the beginnings of the extended cloud connects vision. Now that said. In those four opinionated cloud stacks. Now this is my personal opinion, here Stu. So I always have to safe harbor all that jazz. (laughs) I think that what you see is you see those highly opinionated cloud stacks. The CMP layers, the top part of it, being able to speak to each other but always favoring their own ecosystem. Right? I think that we're going to be in that mode for a long time. >> So Chad, some people might not be aware that in addition to the VCE products in there that the solutions piece and the cloud that you have. The progress that you've made. We've talked to some of your team. I think we've got Peter coming on today. Can you talk about the EHC NHC maybe even share a bit of revenue if you can. >> Yeah. Sure. First things first, it's important to understand this at its core. The original idea of VCE, which is now eight years old, was a basic premise that says we have a pile of giblets that are all awesome. However, customers struggled to assemble them. And they want to have a turnkey offer that they can lean on us to not only deploy but sustain, support as a single offering. That was the origination story. Replace server networking compute with hypervisor, IT business operations a CMP all of those things and you have the enterprise hybrid cloud. We started getting lots of feedback from customers. We love vSphere. We love vRealize. We love vRealize automation and operations. We love all of this log-in sites stuff. We're all in with Vmware can you guys give us the easy button? Right? And so we started on version one. Then on version two, version three, 3.5 and this week we announced version 4.0. Right? We're now up to hundreds of customers so it's still in the hundreds. But it is the most curated. The most turnkey way to get the VMware SDDC deployed. Now, I still think we have a long ways to go. Because we need to make it so push button, easy. And cloud foundations that Pat announced on Monday. Is a core part of that. Think of cloud foundations turning to validated designs and the enterprise hybrid cloud being the ultimate manifestations. >> Chad, just a clarification. Hundreds of customers but from a revenue standpoint that's probably bigger than the hyper-converged market. >> So you know what's fascinating. That's actually a fact. So I hadn't really thought about it. But we're currently on a revenue run rate that we don't disclose publicly, but I'm like, how do I tiptoe around this? It is larger than the largest HCIA players by a good market margin. >> Right. >> So you're talking about hundreds of millions of dollars worth of annual revenue. And customers are saying, look I'm in. I saw the keynote. I'm aligned with VM where I want to go. Right? And enterprise hybrid cloud is designed to do that. We keep reiterating on it. On virtual geek there's a whole slew of details on the 4.0 lease. And then the other thing that we started to see is we started to see customers say, I get it. With the enterprise hybrid cloud you've made my IT operations for classic IT better. How do you help my developers build the digital enterprise? Which doesn't start with infrastructure. And it doesn't start with IAS. It starts with the way developers see the world. Which is the platform layer. And we're on version 1.1 now of the native hybrid cloud which is targeted at how do we build a platform for building cloud native apps? And that starts not with infrastructure. Not with VMware. Not with EMC. Not with servers or network. It starts with cloud foundry. >> Chad, we got to wrap. I want to get one final point in and I want to get your thoughts on it. It's more of a historical perspective but also kind of a futuristic. Take your EMC hat off and put the personal Chad hat on. The ecosystem. Where is it going to go? Obviously it's consolidating. Which means it's shifting. So the old ecosystem was great and robust as you mentioned. It's not necessarily dying. It's just shifting. It's consolidating. So that means it's shifting to something else where there will be growth. Where is it moving? Where is that puck going so people can skate to where the puck will be? >> That's a great question, John. I'm always a geek at heart. I'm always going to run that vSphere cluster in my basement. It gives me joy and gratitude on cool new intel NUC. Great stuff. But in my new job. (laughs) as the leader of a big business. The broad landscape picture is fascinating. This isn't actually rocket science. You can decode it remarkably and quickly. In industries that are declining or under pressure. Secular pressure. Consolidation is inevitable and you have to pick your partners wisely. I think people underestimate how much giants that they would think of as safe and secure bets are under pressure. Michael was wise enough to take first mover advantage. Because in those periods no one has shrunk themselves to success. Right? Conversely, you see very diversified ecosystems. When you see a very diversified ecosystem ergo cloud management platforms. Ergo security, like oh my goodness, the number of security startups and players. A hyper converged startups. I count 39 of them at the last turn. Right? They go through a life cycle of explosion of ecosystems and then inevitable consolidation phase. And people look at that consolidation phase and say oh, the fun is all over. No that means that the fun has begun because your actually starting to really move the needle at customers. Right? So you can expect to see consolidation and security space. You can expect to see by the way very disruptive point technologies occur. The container ecosystem is going to explode and then consolidate. And when you see that consolidation happening the container act Sysco acquisition is one of the earlier indications in that space but just one of them. It means that it's moving from sizzle to steak. Again, look at the open stack ecosystem. About a year ago everyone was like, all the fun is over. All of them have consolidated down into the big massive players. It's because people are now getting down- >> John: Rubber is hitting the road. >> Rubber is hitting the road. >> So where is it going now? Where is the fun going to be? >> The fun is definitely going to be very much in new data fabrics and new applications. There's no rocket science there. The space that you saw the tip of the iceberg on the cloud. Cloud connection of how you can bridge. Bridge doesn't mean migrate it means create connective tissue between on premises and off premises clouds. It's going to be really, really interesting. I think one thing that is fascinating is roles for human beings that span functions. That is the new magic mojo. When I find someone who is a developer. Who understands infrastructure they've got mojo. When you find someone who understands the span of what's going on inside the ecosystem that person's got a bright future. >> As they say in baseball, the players have to have multiple tools in their bag. Chad, we got to break but great conversation. Thanks for coming on. Really appreciate it. Good seeing you. Congratulations on all your business success and September seventh is going to be the big close date for the mega transaction. >> It's going to be awesome and by the way guys, congrats to you. Seven years of this is great. I can't wait for next year. It'll be a lot of fun. >> Thanks. Chad Sakac here inside The Cube. Where all the things are happening at VMworld inside the Hang Space at the Mandalay Bay this year for VMworld 2016. I'm John Furrier with Stu Miniman. We'll be right back. You're watching The Cube. (upbeat music)

Las Vegas expensing the signal from the noise it's the kue covering you interconnect 2016 brought to you by IBM now your host John hurry and Dave vellante okay welcome back everyone we are live here in Las Vegas this is silicon angles the cube our flagship program when we go out to the events and extract the signal annoys we are at IBM interconnect 2016 it's our fifth year now doing all the IV meds now interconnecting out the cloud show I'm John furrier with my coach Dave vellante our next guest is Eric Herzog vice president of storage and software-defined at IBM welcome back you belong great to see you great thank you very much always loved helping guys out of the cube thank you very much for including us pleasure we are very cognitive today we get cognition going on the cube we have all kinds of real-time we've got api's and notifications or and we're going to stract some insight and predictive and prescriptive analytics from you right first what's going on with storage and software obviously storage right now you're seeing huge change Dell buying EMC which you know a lot about emc IBM buys the weather company two contrasting strategies but Stewart still it's the center of the value proposition we also heard Robert de Blanc say on stage today cheap compute he didn't say cheap storage storage visited it did he didn't say so long about cheap storage okay I stand corrected but you talk about a commoditization of resource still valuable I always said what's wrong with cheap compute want more of it I want more and more compute so storage does he changing the software values their last time we spoke about that what's the update in context to cloud what's the storage equation was a storage angle well for us there's a huge value proposition when both the cognitive side and in the cloud infrastructure side obviously with the tumultuous change in storage both from just where the world is going we believe that you ride the wave a flash and software-defined and that is our mantra as you know one of the industry analyst firms who tracks the numbers we were number one in flash capacity shift and number one in flash units last year are all flash and we've been number one several years in row and software-defined storage so while the storage envelope is changing if you open up that envelope we're writing the change inside that omelet which is flash software to find converged infrastructure with our pure power product and also with our partnership with Cisco on the verses stack that's two years in a row for flash leadership right yes charge same thing with software to bunt well the good thing is well the other guy leads in revenue we believe in a fair price for an outstanding award-winning product line on the software value now the cell where that fits in we had multiple guests on today we had you know Jamie Thomas former GM and storage now thinking a more systems view its horizontally composable infrastructure now our dead loss infrastructure as code how does that change the equation certainly we want storage but now you've got software driving the change where's the wisdom value points there well when you look at the software-defined infrastructure the magic fairy dust is in the software so we can work with our own hardware we can work with our competitors hardware over 300 different raise from our competitors are completely compatible with our software to find solutions for storage and we can use with white box if one of our channel partners our end users would rather have a white box storage bear hard drives from seagate OWD and some some flash and just a wrapper of metal we are software provides the value add for integration into hybrid cloud configurations in the cognitive configurations into the oceans of data and big data and into analytic environments all powered by software-defined storage ok so you've been on less than a year now all right you came on last summer right yes mid year so what nine months roughly yes inland what are the big learnings that you've encountered and then we'll start from there and then we're going to get into result are you going to transfer yeah I think the big learning is the world is evolving and a lot of the customer base hasn't gotten there yet so we're going to take them on that journey with flash software-defined converged infrastructure so we're going to lead that charge we're going to ride the wave not fight the wave sometimes iBM has fought the wave we've changed that in the storage world so we're going to be a leader we're are a leader in flash we're leader and software-defined are converged infrastructure particularly with Cisco had an incredible year last year you know for our first year we had over 250 customers over 400 units sold and while there are others who are bigger in our first year that was one of the best first years in the converging instructor of any vendor and that's the power of our software to find portfolio our flash portfolio and the things we deliver from a storage perspective that helps customers they convert either the software-defined infrastructure or converged infrastructure so that case so that sort of answers the question as to how you're going to deal with immediate it's not unique you got old stuff that's declining you got new stuff that's growing like crazy but still not big enough to offset the decline of the old stuff you got currency headwinds but the there's light at the end of the tunnel in terms of that transformation to those newer architectures is that fair yes absolutely last year if you look whether it was in the channel with our award from computer reseller news as the best enterprise storage provider in the world and that was in the fall of 2015 so when you look at the channel and what they're looking for from their provider unlike the guys in hopkinton in Austin who are merging they didn't win that IBM one that so great solution for our Channel Partner base we've won awards for software-defined for all flash we did very well in the hybrid or a category last year with several product of the Year awards so again yes we have an older installed base one of our big goals this year is to refresh that installed base with software-defined with all flash with a comprehensive family of hybrid raise to make sure that people understand this is where the market is going this is where you need to go to drive cognitive value hybrid cloud value quite honestly it's all about applications workloads and use cases and even though I've done storage for 31 years let's face it most CEOs can't stand storage have to put it in the language that they understand which is software value-add and how it can enhance their ability to meet the business SLA s that the CIO is under pressure from the VP of Operations the VP of Marketing the finance side and of course ultimately the CEO so in this business I've been in the business maybe not 31 years but maybe 35 okay so the product portfolio is very very important one of the criticisms I've had of IBM over the years has been just not enough product innovation coming out great R&D but doesn't hit the pipeline so when you came to see us in Boston you showed us a little you know glimpse of the roadmap and it's very clear that's accelerating I wonder if you could talk about that what can you share with our audience sure we've done it we've done a couple things first of all we have the flash religion we acquired a flash company get started but so did several of our competitors in addition to spending money on that acquisition we've invested over a billion dollars in engineering resources on the flash site software-defined we're spending a billion dollars in that as you know we recently bought the award-winning and market-leading object storage technology with clever safe and we spent money on that so IBM is putting its money where its mouth is its focus is on storage and how storage enhances hybrid clouds cognitive big data analytics and you know deals with these oceans of data that our customers are facing and how do you manage that and how do you make the data more valuable and more productive to the business because that's what about it's not about storage it's about the management that data to optimize our customers business and how we can deliver that with effective cost so clever save was mentioned in the keynote in context to LeBlanc's reference to the digital transport transit of you know new stream the video stuff interesting how he plugged in clever see how it is that relate I mean honestly I know it's a recent acquisition is it's just the objects towards an unstructured data why is clever stay plugged into that kind of portfolio of those four companies you mentioned around you know is when you develop that type of technology you end up with incredible amounts of data and an object store is designed to handle exabytes of capacity and exabytes of information it doesn't necessarily have to be fast for example video surveillance data and all kinds of other data may be hot for a while and one of the values of clever say for example is on our spectrum scale product which is our scale out network attached storage actually will automatically cheer too clever safe we're in a public beta right now our spectrum protect product we've also talked about is going to support clever safe either as an source so you could back it up but more importantly as a target so you could take gobs of data and back it up into a clever safe repository when you've got oceans of data and people are generating exabytes and exabytes of data what you can get with clever safe on premises or in a cloud configuration allows you to handle this extensive data growth cost-effectively and in an easy to manage and configure way about the end where relationship with storage obviously there in an announcement today with IBM EMC recently had an announcement with VMware and VX rail rom and the big debate was I see his hybrid cloud was deposition using their software stack to be a glue and into the hybrid cloud journey but one of the comments that we made note of that we captured on the prowl chat was from Keith Townsend one of our members of our community he wrote it took Netflix seven years to move to the public cloud meaning everything all flash they had one of the first all flesh implementations that Amazon ever rolled out what does that mean for the average VMware customer in this case IBM customer from a product perspective so you got you know your relationship VMware you have this notion of hybrid cloud right it took Netflix seven years there in the cutting edge what does that mean for the average customer this whole notion of using software in storage plugging the hybrid cloud it took them seven years was it 70 years for an average company well you've got to remember that that started a while ago and the move to the hybrid cloud is just accelerated dramatically so our spectrum scale product our spectrum accelerate product our spectrum protect product all are designed for hybrid cloud configurations right this minute they're easy to employ they're easy to use they're all available in softlayer they're also filled with other cloud providers spectrum protect as close to a hundred different msps and csps who provide backup and archive services with award-winning spectrum protect so our specialist families and I've different than it was seven years ago today actually its accelerated easy-to-deploy it's easy to use you have a wide choice of msps and csps to use whether it's soft layer or other providers in the industry and our software-defined storage supports all of that vendor base regardless of whether it's IBM SoftLayer or other cloud providers as well well you could argue to Netflix did it at a time when it was early days right it was near the Pioneer they were they were final trees hack and you know right they're the ones with the arrows in motion tracking chaos monkeys everywhere so so Tommy you guys okay all right sorry John I want to talk about the state of the industry it's a lot of interesting stuff going on even in the business for four decades you understand some of the trends you've seen a lot of the ebb and the flow how would you describe where we're at right now seems like an uncertain time so storage is incredibly tumultuous right now one of the good things about storage it's constantly filled with innovation as you know from my past I've done seven startups thank God five have been acquired so I can wear a Hawaiian shirt they're expensive these days ISA why insurance so every five six years you have a wave of startups of the storage business that's not common in most other segments of the IT market space but in storage it is so you have a constant wave of startups that happens on a normal basis and we're in one of those phases right now at the same time you have massive change in the Tier one vendor base EMC and Dell emerging HP splits into two network appliance which had been an incredibly great company it's fast has now missed their numbers almost eight quarters in Rowan just last week announced they're laying off 1500 people so the world is changing dramatically also the applications workloads and use cases are changing dramatically so you've gone to a cognitive ear you don't have cereal management of data you now have parallel management of data you don't want databases that react or let's say a data warehouse it takes 30 hours to run a report you want the report to run in one so if you will real-time cognitive data availability and ability to analyze that data and that is dramatically changing what startups are out how successful they'll be how the tier 1 vendors are reacting you know for example one of the great things about IBM is we are focused on flash which is the fastest grain storage systems market and software to find which was one of the fastest growing storage software markets and we're leaders in both market spaces so when you open up the envelope of what's inside storage it's a slow growth market three to four percent per year is all it's growing but certain segments are growing rapidly and IBM focuses on those rapid growth segments now but the cloud piece right so you make you guys are talking about clever safe before I was thought that was a cloud acquisition which it was in part right but it's also something that falls into the storage portfolio right and that's because clever safe can be configured in a number of different ways on-premises only cloud only or hybrid configuration we can have an on-premises clever safe configuration talking to a cloud-based configuration so again part of IBM strategy to make sure that from a storage perspective all of our software to find infrastructure and what we acquired with clever safe are designed for hybrid cloud configurations or private cloud configurations or public again our spectrum family is used by hundreds of public cloud service writers to deliver a backup service for example a spectrum protect so the reason my question was this very clearly in effect on that you talked about three percent or whatever you know the the latest numbers are it's flat Marcus gases and flat is flat but the cloud market of course is growing like that from a smaller base but it's clearly having an impact on demand is that a fair statement yeah I think what's happening when you look at it from a storage perspective where you're really having the biggest impact on cloud is in the lower end in the entry space yes the capacity is growing exponentially but whether it's the department level of a giant at global fortune 500 whether it's Herzog's bar and grill or a midsize company when they need a small array a lot of times are going to a public cloud configuration so that low end of the market is shrinking at the same time when you do software-defined if you're one of the tier 1 vendors the storage could come from off-the-shelf hard drives so the values in the software but that also delivers a revenue hit to the vendor base and Ashley when you think about how would you get incredible performance five or six years ago you would have bought an array that was five to eight million dollars best case if not closer to 10 you'd be lucky if you could get 200,000 I ops maybe you could get five milliseconds latency today at an average sale place of 300,000 dollars we can deliver over a million I ops and sub hundred micro center and latency so you don't need to buy your big iron at five eight 10 million you can do it with something for three hundred thousand dollars huge the bottleneck John okay I mean this is back to our kena brian.krall from Apple was on stage another great company leaders in the delivering great value but he made a comment I want to get your reaction to because I know it's a phone analogy but I want to bring into storage if the values and the software and all flash is the bet you guys are making the numbers are impressive in terms of performance in terms of I ops throughput and and cost per puss per megabyte he said you got to get closer to the hardware to write your native apps and he's referring to the iphone software app using Swift and xcode to the hardware so in storage look different how does the software piece take advantage of the hardware and is that built-in is an obstacle the customer because we're seeing this notion of okay take care of it take advantage of the hardware so what was how do you reconcile the we've done some very strong things there so let's take for example our spectrum virtualized software spectrum virtualize allows enterprise class data services across heterogeneous storage environments hours our competitors and anything that's white box over 300 arrays we have taken the spectrum virtualized platform and integrate it into our v nine thousand flash systems all-flash array into our mid tier storwize v7000 and our mid tier storwize v5000 which we just launched last week three new configurations we also have the sand volume controller but what we've done is integrate that spectrum virtualized software which rides a virtual back end of all storage not just our own provides a single way to replicate a single way to snapshot transparent block migration on the fly and integrate that right into flash systems and storwize as a software comes as a hard annick Stauffer comes with it exactly it's built into the size of Jeff managed as a code or estructuras code like an apple programa billion native app to the iphone what does that develop or doing with you guys is it through that software layer or how they could be right i mean the key thing when you look from a DevOps perspective they want to quickly be able to provision storage okay and with things like all the spectrum family and with the gooeys we've implemented into our store wise our XIV and all of our storage products it's very easy to deploy storage you can do it in minutes so whether the DevOps guy does or where the deadlock flight calls the storage guy the bottom line is they can get the storage up and running in a virtual environment a containerized environment in a matter of minutes and from a DevOps perspective that's what they want so we're able to meet the needs of the DevOps guy but also the traditional storage vendor as well don't get one last question for me for the henna we've run out of time they might have one more but I want to get your take on this because it's really been an interesting industry chess game with VCE and VMware and EMC doing the hyper converged x4 star calling it this hyper conversion without Cisco right this is because no longer you mentioned you in partnership with Cisco so VCC and bx rails was talked about last week what's going on with VCE is it still going to be around you see you're taking multiple forms is the increased breadth of solution is going to be multi-vendor what's your in it what you're taking on so you were at IBM cell you have relationship with cisco has that how does that what a customer's deal and what does the customer do because they're like okay who do I so I think there's a couple things that customers to look at first of all there's going to be a transformation VCE as it was originally constructed a partnership with cisco EMC and VMware will not exist after the acquisition this is my theory what will happen this distinctive sorry Cisco is go in there's no luck involved so all happen is those Cisco servers will be transitioned now and dell servers will be tradition did it's exactly what's going to happen so cisco is aware of this and cisco has been engaging with other partners like i mentioned the vs. tak had the best first year of any converged infrastructure in the history within its first year why well in the middle of last year what happened Dell an EMC an announced a merger so a lot of the business partners a lot of the end users there's cause for concern and EMC is already taken Cisco out of a number of configurations and there's a number of things for an end-user to think about one look at the development budgets what was the EMC development budget what's the dell development budget and substantially lower EMC did an outstanding job of acquiring startups with the debt load that's been written about publicly not just in the storage fresh but really in the financial press will be able to afford to buy a bunch of cool startups like EMC used to do the old days hard to say an EMC well I thought of stata domain was a great acquisition for uniting isilon same thing will they be able to continue to do that and like IBM EMC has a pretty good reputation for support and service that's not really reputation of the guys in Austin their reputation is cost-effective rapid delivery not necessarily the best important service the enterprise side people looking for that enterprise-class important service so those the questions that a customer needs to ask at the end user level where a channel partner use a civ as this merger goes for how's it going to impact the roadmap for the future the development expense my support capability those are things that have different models in those two companies so being should see how it pans out unfortunately we're out of time because we could do a whole cube second just on that area thanks for coming by give you the last word what does the digital transformation for the customer of IBM the buyer when they talked to you in the elevator and they say hey what's the storage angle on this digital treasure where the stores fit into my digital transformation what's the what's the bumper sticker what's the value proposition well the key thing digital transformation is a different sort of data it's been data for years and years and years data has to sit on storage the better the storage is your better the digital environment is the faster it is things like flash systems or our spectrum scale for cognitive the better that date is going to be so the digital era is powered by storage underneath it's like the foundation of a home good foundation great home good foundation great digital data great foundation the cube day one here more foundational coverage tomorrow the cube conversation will continue tomorrow day two we had more interviews today but tomorrow a lot of big names the biggest names in tech most powerful people here IBM interconnect is the cube we right back with more coverage here on day ones wrap up after the short break