(upbeat music) >> Welcome everyone, this is Stephanie Chan with theCUBE. Recently analyst Dave Ross RADIO entitled, Pat Gelsinger has a vision. It just needs the time, the cash and a miracle where he highlights why he thinks Intel is years away from reversing position in the semiconductor industry. Welcome Dave. >> Hey thanks, Stephanie. Good to see you. >> So, Dave you been following the company closely over the years. If you look at Wall Street Journal most analysts are saying to hold onto Intel. can you tell us why you're so negative on it? >> Well, you know, I'm not a stock picker Stephanie, but I've seen the data there are a lot of... some buys some sells, but most of the analysts are on a hold. I think they're, who knows maybe they're just hedging their bets they don't want to a strong controversial call that kind of sitting in the fence. But look, Intel still an amazing company they got tremendous resources. They're an ICON and they pay a dividend. So, there's definitely an investment case to be made to hold onto the stock. But I would generally say that investors they better be ready to hold on to Intel for a long, long time. I mean, Intel's they're just not the dominant player that it used to be. And the challenges have been mounting for a decade and look competitively Intel's fighting a five front war. They got AMD in both PCs and the data center the entire Arm Ecosystem` and video coming after with the whole move toward AI and GPU they're dominating there. Taiwan Semiconductor is by far the leading fab in the world with terms of output. And I would say even China is kind of the fifth leg of that stool, long term. So, lot of hurdles to jump competitively. >> So what are other sources of Intel's trouble sincere besides what you just mentioned? >> Well, I think they started when PC volumes peaked which was, or David Floyer, Wikibon wrote back in 2011, 2012 that he tells if it doesn't make some moves, it's going to face some trouble. So, even though PC volumes have bumped up with the pandemic recently, they pair in comparison to the wafer volume that are coming out of the Arm Ecosystem, and TSM and Samsung factories. The volumes of the Arm Ecosystem, Stephanie they dwarf the output of Intel by probably 10 X in semiconductors. I mean, the volume in semiconductors is everything. And because that's what costs down and Intel they just knocked a little cost manufacture any anymore. And in my view, they may never be again, not without a major change in the volume strategy, which of course Gelsinger is doing everything he can to affect that change, but they're years away and they're going to have to spend, north of a 100 billion dollars trying to get there, but it's all about volume in the semiconductor game. And Intel just doesn't have it right now. >> So you mentioned Pat Gelsinger he was a new CEO last January. He's a highly respected CEO and in truth employed more than four decades, I think he has knowledge and experience. including 30 years at Intel where he began his career. What's your opinion on his performance thus far besides the volume and semiconductor industry position of Intel? >> Well, I think Gelsinger is an amazing executive. He's a technical visionary, he's an execution machine, he's doing all the right things. I mean, he's working, he was at the state of the union address and looking good in a suit, he's saying all the right things. He's spending time with EU leaders. And he's just a very clear thinker and a super strong strategist, but you can't change Physics. The thing about Pat is he's known all along what's going on with Intel. I'm sure he's watched it from not so far because I think it's always been his dream to run the company. So, the fact that he's made a lot of moves. He's bringing in new management, he's repairing some of the dead wood at Intel. He's launched, kind of relaunched if you will, the Foundry Business. But I think they're serious about that. You know, this time around, they're spinning out mobile eye to throw off some cash mobile eye was an acquisition they made years ago to throw off some more cash to pay for the fabs. They have announced things like; a fabs in Ohio, in the Heartland, Ze in Heartland which is strikes all the right chords with the various politicians. And so again, he's doing all the right things. He's trying to inject. He's calling out his best Andrew Grove. I like to say who's of course, The Iconic CEO of Intel for many, many years, but again you can't change Physics. He can't compress the cycle any faster than the cycle wants to go. And so he's doing all the right things. It's just going to take a long, long time. >> And you said that competition is better positioned. Could you elaborate on why you think that, and who are the main competitors at this moment? >> Well, it's this Five Front War that I talked about. I mean, you see what's happened in Arm changed everything, Intel remember they passed on the iPhone didn't think it could make enough money on smartphones. And that opened the door for Arm. It was eager to take Apple's business. And because of the consumer volumes the semiconductor industry changed permanently just like the PC volume changed the whole mini computer business. Well, the smartphone changed the economics of semiconductors as well. Very few companies can afford the capital expense of building semiconductor fabrication facilities. And even fewer can make cutting edge chips like; five nanometer, three nanometer and beyond. So companies like AMD and Invidia, they don't make chips they design them and then they ship them to foundries like TSM and Samsung to manufacture them. And because TSM has such huge volumes, thanks to large part to Apple it's further down or up I guess the experience curve and experience means everything in terms of cost. And they're leaving Intel behind. I mean, the best example I can give you is Apple would look at the, a series chip, and now the M one and the M one ultra, I think about the traditional Moore's law curve that we all talk about two X to transistor density every two years doubling. Intel's lucky today if can keep that pace up, let's assume it can. But meanwhile, look at Apple's Arm based M one to M one Ultra transition. It occurred in less than two years. It was more like, 15 or 18 months. And it went from 16 billion transistors on a package to over a 100 billion. And so we're talking about the competition Apple in this case using Arm standards improving it six to seven X inside of a two year period while Intel's running it two X. And that says it all. So Intel is on a curve that's more expensive and slower than the competition. >> Well recently, until what Lujan Harrison did with 5.4 billion So it can make more check order companies last February I think the middle of February what do you think of that strategic move? >> Well, it was designed to help with Foundry. And again, I said left that out of my things that in Intel's doing, as Pat's doing there's a long list actually and many more. Again I think, it's an Israeli based company they're a global company, which is important. One of the things that Pat stresses is having a a presence in Western countries, I think that's super important, he'd like to get the percentage of semiconductors coming out of Western countries back up to at least maybe not to where it was previously but by the end of the decade, much more competitive. And so that's what that acquisition was designed to do. And it's a good move, but it's, again it doesn't change Physics. >> So Dave, you've been putting a lot of content out there and been following Intel for years. What can Intel do to go back on track? >> Well, I think first it needs great leadership and Pat Gelsinger is providing that. Since we talked about it, he's doing all the right things. He's manifesting his best. Andrew Grove, as I said earlier, splitting out the Foundry business is critical because we all know Moore's law. This is Right Law talks about volume in any business not just semiconductors, but it's crucial in semiconductors. So, splitting out a separate Foundry business to make chips is important. He's going to do that. Of course, he's going to ask Intel's competitors to allow Intel to manufacture their chips which they very well may well want to do because there's such a shortage right now of supply and they need those types of manufacturers. So, the hope is that that's going to drive the volume necessary for Intel to compete cost effectively. And there's the chips act. And it's EU cousin where governments are going to possibly put in some money into the semiconductor manufacturing to make the west more competitive. It's a key initiative that Pat has put forth and a challenge. And it's a good one. And he's making a lot of moves on the design side and committing tons of CapEx in these new fabs as we talked about but maybe his best chance is again the fact that, well first of all, the market's enormous. It's a trillion dollar market, but secondly there's a very long term shortage in play here in semiconductors. I don't think it's going to be cleared up in 2022 or 2023. It's just going to be keep being an explotion whether it's automobiles and factory devices and cameras. I mean, virtually every consumer device and edge device is going to use huge numbers of semiconductor chip. So, I think that's in Pat's favor, but honestly Intel is so far behind in my opinion, that I hope by the end of this decade, it's going to be in a position maybe a stronger number two position, and volume behind TSM maybe number three behind Samsung maybe Apple is going to throw Intel some Foundry business over time, maybe under pressure from the us government. And they can maybe win that account back but that's still years away from a design cycle standpoint. And so again, maybe in the 2030's, Intel can compete for top dog status, but that in my view is the best we can hope for this national treasure called Intel. >> Got it. So we got to leave it right there. Thank you so much for your time, Dave. >> You're welcome Stephanie. Good to talk to you >> So you can check out Dave's breaking analysis on theCUBE.net each Friday. This is Stephanie Chan for theCUBE. We'll see you next time. (upbeat music)

>>Mhm. Yes. Hello. Welcome back to the cubes coverage of dr khan 2021 virtual. I'm john for your host of the cube. We're messing my fair principal technologist at AWS amazon Web services messman. Thank you for coming on the cube, appreciate it. Um >>Thank you. Thank you for having me. >>Great to see you love this amazon integration with doctor want to get into that in a second. Um Been great to see the amazon cloud native integration working well. E. C. S very popular. Every interview I've done at reinvent uh every year it gets better and better more adoption every year. Um Tell us what's going on with amazon E. C. S because you have Pcs anywhere and now that's being available. >>Yeah that's fine, that's correct, join and uh yeah so customers has been appreciating the value and the simplicity of VCS for many years now. I mean we we launched GCS back in 2014 and we have seen great adoption of the product and customers has always been appreciating. Uh the fact that it was easy to operate and easy to use. Uh This is a journey with the CS anywhere that started a few years ago actually. And we started this journey uh listening to customers that had particular requirements. Um I'd like to talk about, you know, the the law of the land and the law um uh of the physic where customers wanted to go all in into uh into the cloud, but they did have this exception that they need to uh deal with with the application that could not move to the cloud. So as I said, this journey started three years ago when we launched outpost. Um and outpost is our managed infrastructure that customers can deploy in their own data centers. And we supported Pcs on day one on outpost. Um having that said, there are lots of customers that came to us and said we love outputs but there are certain applications and certain requirements, uh such as compliance or the fact simply that we have like assets that we need to reuse in our data center uh that we want to use and before we move into into the cloud. So they were asking us, we love the simplicity of Vcs but we have to use gears that we have in our data center. That is when we started thinking about Pcs anywhere. So basically the idea of VCS anywhere is that you can use e c s E C as part of that, you know, and love um uh appreciated the simplicity of using Pcs but using your customer managed infrastructure as the data plane, basically what you could do is you can define your application within the Ec. S country plane and deploy those applications on customer own um infrastructure. What that means from a very practical perspective is that you can deploy this application on your managed infrastructure ranging from uh raspberry pis this is the demo that we show the invent when we pronounce um e c s anywhere all the way up to bare metal server, we don't really care about the infrastructure underneath. As long as it supported, the OS is supported. Um we're fine with that. >>Okay, so let's take this to the next level and actually the big theme at dr Connors developer experience, you know, that's kind of want to talk about that and obviously developer productivity and innovation have to go hand in hand. You don't want to stunt the innovation equation, which is cloud, native and scale. Right. So how does the developer experience improve with amazon ECs and anywhere now that I'm on, on premises or in the cloud? Can you take me through? What's the improvements around pcs and the developer? >>Yeah I would argue that the the what you see as anywhere solved is more for operational aspect and the requirements that more that are more akin to the operation team that that they need to meet. Uh We're working very hard to um to improve the developing experience on top of the CS beyond what we're doing with the CS anywhere. So um I'd like to step back a little bit and maybe tell a little bit of a story of why we're working on those things. So um the customer as I said before, continue to appreciate the simplicity and the easier views of E. C. S. However what we learn um over the years is that as we added more features to E. C. S, we ended up uh leveraging more easy. Um AWS services um example uh would be a load balancer integration or secret manager or Fc. Or um other things like service discovery that uses underneath other AWS products like um clubman for around 53. And what happened is that the end user experience, the developer experience became a little bit more complicated because now customers opportunity easy of use of these fully managed services. However they were responsible for time and watering all uh together in the application definition. So what we're working on to simplify this experience is we're working on tools that kind of abstract these um this verbal city that you get with pcs. Um uh An example is a confirmation template that a developer we need to use uh to deploy an application leveraging all of these features. Could then could end up being uh many hundreds of transformation lines um in the in the in the definition of the service. So we're working on new tools and new capabilities to make this experience better. Uh Some of them are C d k uh the copilot cli, dws, copilot cli those are all instruments and technologies and tools that we're building to abstract that um uh verbosity that I was alluding to and this is where actually also the doctor composed integration with the CS falls in. >>Yeah, I'm just gonna ask you that the doctor piece because actually it's dr khan all the developers love containers, they love what they do. Um This is a native, you know, mindset of shifting left with security. How is the relationship with the Docker container ecosystem going with you guys? Can you take him in to explain for the folks here watching this event and participating in the community, explain the relationship with Docker container specifically. >>Yeah, absolutely. Uh so basically we started working with dR many, many years ago, um uh Pcs was based on on DR technology when we launch it. Uh and it's still using uh DR technology and last year we started to collaborate with dR more closely um when DR releases the doctor composed specification um as an open source projects. So basically doctor is trying to use the doctor composed specification to create uh infrastructure product gnostic, uh way to deploy Docker application um uh using those specification in multiple infrastructure as part of these journey, we work with dr to support pcs as a back end um for um for the specification, basically what this means from a very practical perspective, is that you can take a doctor composed an existing doctor composed file. Um and doctor says that there are 650,000 doctor composed files spread across the top and all um uh lose control uh system um over the world. And basically you can take those doctor composed file and uh composed up and deploy transparently um into E. C. S Target on AWS. So basically if we go back to what I was alluding to before, the fact that the developer would need to author many 100 line of confirmation template to be able to take their application and deploy it into the cloud. What they need to do now is um offering a new file, a um a file uh with a very clear and easy to use dr composed syntax composed up and deploy automatically on AWS. Um and using Pcs Fargate um and many other AWS services in the back end. >>And what's the expectation in your mind as you guys look at the container service to anywhere model the on premise and without post, what does he what's the vision? Because that's again, another question mark for me, it's like, okay, I get it totally makes sense. Um, but containers are showing the mainstream enterprises, not the hyper skills. You guys always been kind of the forward thinkers, but you know, main street enterprise, I call it. They're picking up adoption of containers in a massive way. They're looking at cloud native specifically as the place for modern application development period. That's happening. What's the story? Say it again? Because I want to make sure I get this right e C s anywhere if I want to get on premises hybrid, What's it mean for me? >>Uh, this goes back to what I was saying at the beginning. So there are there are there when we have been discussing here are mostly to or token of things. Right. So the fact that we enable these big enterprises to meet their requirements and meet their um their um checkboxes sometimes to be able to deploy outside of AWS when there is a need to do that. This could be for edge use cases or for um using years that exist in the data center. So this is where e c s anywhere is basically trying, this is what uh pcs anywhere is trying to address. There is another orthogonal discussion which is developer experience, uh and that development experience is being addressed by these additional tools. Um what I like to say is that uh the confirmation is becoming a little bit like assembler in a sense, right? It's becoming very low level, super powerful, but very low level and we want to abstract and bring the experience to the next level and make it simple for developers to leverage the simplicity of some of these tools including Docker compose um and and and being able to deploy into the cloud um and getting all the benefits of the cloud scalability, electricity and security. >>I love the assembler analogy because you think about it. A lot of the innovation has been kind of like low level foundational and if you start to see all the open source activity and the customers, the tooling does matter. And I think that's where the ease of use comes in. So the simplicity totally makes sense. Um can you give an example of some simplicity piece? Because I think, you know, you guys, you know, look at looking at ec. S as the cornerstone for simplicity. I get that. Can you give an example to walk us through a day in the life of of an example >>uh in an example of simplicity? Yeah, supposedly in action. Yeah. Well, one of the examples that I usually do and there is this uh, notion of being served less and I think that there is a little bit of a, of an obsession around surveillance and trying to talk about surveillance for so many things. When I talk about the C. S, I like to use another moniker that is version less. So to me, simplicity also means that I do not have to um update my service. Right? So the way E C. S works is that engineering in the service team keeps producing and keeps delivering new features for PCS overnight for customers to wake up in the morning and consuming those features without having to deal with upgrades and updates. I think that this is a very key, um, very key example of simplicity when it comes to e C s that is very hard to find um in other, um, solutions whether there are on prime or in the cloud. >>That's a great example in one of the big complaints I hear just anecdotally around the industry is, you know, the speed of the minds of business, want the apps to move faster and the iteration with some craft obviously with security and making sure things buttoned up, but things get pulled back. It's almost slowed down because the speed of the innovation is happening faster than the compliance of some sort of old governance model or code reviews. I want to approve everything. So there's a balance between making sure what's approved, whether security or some pipeline procedures and what not. >>So that I could have. I cannot agree more with you. Yeah, no, it's absolutely true because I think that we see these very interesting um, uh, economy, I would say between startups moving super fast and enterprises try to move fast but forced to move at their own speed. So when we when we deliver services based on, for example, open source software uh, that customers need to um, look after in terms of upgrade to latest release. What we usually see is start up asking us can you move faster? There is a new version of that software, can you enable us to deploy that version? And then on the other hand of the spectrum, there are these big enterprises trying to move faster but not so much that are asking us can use lower. Can you slow down a little bit? Right, because I cannot keep that pigs. So it's a very it's a very interesting um, um, a very interesting time to be alive. >>You know, one of the, one of the things that pop up into these conversations when you talk, when I talk to VP of engineering of companies and then enterprises that the operational efficiency, you got developer productivity and you've got innovation right, you've got the three kind of things going on there knobs and they all have to turn up. People want more efficiency of the operations, they want more developed productivity and more innovation. What's interesting is you start seeing, okay, it's not that easy. There's also a team formation and I know Andy Jassy kinda referred to this in his keynote at Reinvent last year around thinking differently around your organizational but you know, that could be applied to technologists too. So I'd love to get your thoughts while you're here. I know you blog about this and you tweet about this but this is kind of like okay if these things are all going to be knobs, we turned up innovation efficiency, operationally and develop productivity. What's the makeup of the team? Because some are saying, you have an SRE embedded, you've got the platform engineering, you've got version lists, you got survival is all these things are going on all goodness. But does that mean that the teams have to change? What's your thoughts on that you want to get your perspective? >>Yeah, no, absolutely. I think that there was a joke going around that um as soon as you see a job like VP of devoPS, I mean that is not going to work, right? Because these things are needs to be like embedded into each team, right? There shouldn't be a DEVOPS team or anything, it would be just a way of working. And I totally agree with you that these knobs needs to go insane, right? And you cannot just push too hard on innovation which are not having um other folks um to uh to be able to, you know, keep that pace um with you. And we're trying to health customers with multiple uh tools and services to try to um have not only developers and making developer experience uh better but also helping people that are building these underneath platforms. Like for example, prod on AWS protein is a good example of this, where we're focusing on helping these um teams that are trying to build platforms because they are not looking themselves as being a giant or very fast. But they're they're they're measured on being secure, being compliant and being, you know, within a guardrail uh that an enterprise um regulated enterprise needs to have. So we need to have all of these people um both organizationally as well as with providing tools and technologies that have them in their specific areas um to succeed. >>Yeah. And what's interesting about all this is that you know I think we're also having conversations and and again you're starting to see things more clearly here at dr khan we saw some things that coop con which the joke there was not joke but the observation was it's less about kubernetes which is now becoming boring, lee reliable to more about cloud native applications under the covers with program ability. So as all this is going on there truly is a flip of the script. You can actually re engineer and re factor everything, not just re platform your applications in I. T. At once. Right now there's a window whether it's security or whatever. Now that the containers and and the doctor ecosystem and the container ecosystem and the The kubernetes, you've got KS and you got six far gay and all the stuff of goodness. Companies can actually do this right now. They can actually change everything. This is a unique time. This window might close are certainly changed if you're not on it now, it's the same argument of the folks who got caught in the pandemic and weren't in the cloud got flat footed. So you're seeing that example of if you weren't in the cloud up during the pandemic before the pandemic, you were probably losing during the pandemic, the ones that one where the already guys are in the cloud. Now the same thing is true with cloud native. You're not getting into it now, you're probably gonna be on the wrong side of history. What's your reaction to that? >>Yeah, No, I I I agree totally. I I like to think about this. I usually uh talk about this if I can stay back step back a little bit and I think that in this industry and I have gray areas and I have seen lots of things, I think that there has been too big Democratisation event in 90 that happened and occurred in the last 30 years. So the first one was from, you know from when um the PC technology has been introduced, distributed computing from the mainframe area and that was the first Democratisation step. Right? So everyone had access to um uh computers so they could do things if you if you fast forward to these days. Um uh what happened is that on top of that computer, whatever that became a server or whatever, there is a state a very complex stack of technologies uh that allow you to deployment and develop and deploy your application. Right. But that stack of technology and the complexity of that stack of technology is daunting in some way. Right? So it is in a bit access and democratic access to technology. So to me this is what cloud enabled, Right? So the next step of democratisation was the introduction of services that allow you to bypass that stack, which we call undifferentiated heavy lifting because you know, um you don't get paid for managing, I don't know any M. R. Server or whatever, you get paid for extracting values through application logic from that big stack. So I totally agree with you that we're in a unique position to enable everyone um with what we're building uh to innovate a lot faster and in a more secure way. >>Yeah. And what comes out, I totally agree. And I think that's a great historical view and I think let's bring this down to the present today and then bring this as the as the bridge to the future. If you're a developer you could. And by the way, no matter whether you're programming infrastructure or just writing software or even just calling a PS and rolling your own, composing your services, it's programmable and it's just all accessible. So I think that that's going to change the again back to the three knobs, developer productivity or just people productivity, operational efficiency, which is scale and then innovation, which is the business logic where I think machine learning starts to come in, right? So if you can get the container thing going, you start tapping into that control plane. It's not so much just the data control plane. It's like a software control plane. >>Yeah, no, absolutely. The fact that you can, I mean as I said, I have great hair. So I've seen a lot of things and back in the days, I mean the, I mean the whole notion of being able to call an api and get 10 servers for example or today, 10 containers. It would be like, you know, almost a joke, right? So we spent a lot of time racking and um, and doing so much manual stuff that was so ever prone because we usually talk about velocity and agility, but we, we rarely talk about, you know, the difficulties and the problems that doing things manually introduced in the process, the way that you can get wrong. >>You know, you know, it reminds me of this industry and I was like finally get off my lawn in the old days. I walk to school with no shoes on in the snow. We had to build our own colonel and our own graphics libraries and then now they have all these tools. It's like, you're just an old, you know, coder, but joking aside, you know that experience, you're bringing up appointments for the younger generation who have never loaded a Linux operating system before or had done anything like that level. It's not so much old versus young, it's more of a systems thinking, he said distributed computing. If you look at all the action, it's essentially distributed computing with new software paradigm and it's a system architecture. It's not so much software engineering, software developer, you know, this that it's just basically all engineering at this point, all software. >>It is, it is very much indeed. It's uh, it's whole software, there is no other um, there is no other way to call it. It's um, I mean we go back to talk about, you know, infrastructure as code and everything is now uh corridor software in in in a way. It's, yeah. >>This is great to have you on. Congratulations. A CS anywhere being available. It's great stuff. Um, and great to see you and, and great to have this conversation. Um, amazon web services obviously, uh, the world has has gone super cloud. Uh, now you have distributed computing with edge iot exploding beautifully, which means a lot of new opportunities. So thanks for coming on. >>Thank you very much for having me. It was a pleasure. Okay, cube >>Coverage of Dr Khan 2021 virtual. This is the Cube. I'm John for your host. Thanks for watching.

>>mhm Yes, everyone, welcome back to the cubes coverage of dr khan 2021. I'm john for your host of the cube. Got a great segment here. One of the big supporters and open source amazon web services returning back second year. Dr khan virtual Deepak Singh, vice president of the compute services at AWS Deepak, Great to see you. Thanks for coming back on remotely again soon. We'll be in real life. Reinvent is going to be in person, we'll be there. Good to see you. >>Good to see you too, john it's always good to do these. I don't know how how often I've been at the cube now, but it's great every single time your >>legend and getting on there, a lot of important things to discuss your in one of the most important areas in the technology industry right now and that is at the confluence of cloud scale and modern development applications as they shift towards as Andy Jassy says, the new guard, right. It's been happening. You guys have been a big proponent of open source and enabling open source is a service creating business models for companies. But more importantly, you guys are powering, making it easier for folks to use software. And doctor has been a big relationship for you. Could you take a minute to first talk about the doctor, a W S relationship and your involvement and what you're doing? >>Yeah, actually it goes back a long way. Uh you know, Justin, we announced PCS had reinvented 2014 and PCS at that time was very much managed orchestration service on top of DACA at that time. I think it was the first really big one out there from a cloud provider. And since then, of course, the world has evolved quite a bit and relationship with DR has evolved a lot. The thing I'd like to talk to is something that we announced that Dr last year, I don't remember if I talked about it on the cube at that time. But last year we started working with DR on how can we go from doctor Run, which customers love or DR desktop, which customers love and make it easy for people to run containers on pcs and Fergie. Uh so most new customers running containers and AWS today start with this Yes and party or half of them and we wanted to make it very easy for them to start with where they are on the laptop which is often bucket to stop and have running services the native US. So we started working with DR and that that collaboration has been very successful. We want to keep you look forward to continuing to work on evolving that where you can use Docker compose doctor, desktop, doctor run the fuel that darker customers used and the labour grand production services on the end of your side, which is the part that we've got that on. So I think that's one area where we work really well together. Uh, the other area where I think the two companies continue to work well together. It's open source in general as some of, you know, AWS has a very strong commitment to contain a. D uh, EKS our community service is moving towards community. Forget it actually runs all on community today and uh, we collaborate dr Rhonda on the Ocr specification because, you know, the Oc I am expect is becoming the de facto packaging format idea. W S. This morning we launched yesterday, we launched a service called Opera. And the main expected input for opera is an Ocr image are being in this Atlanta as well, where those ci images now a way of packaging for lambda. And I think the last one I like to call out and it has been an amazing partnership and it's an area where most people don't pay attention is amid signing. Uh, there's a project called Notary. We do the second version of the Notary Spec for remit signing and AWS Docker and a couple of other companies have been working very closely together on bringing that uh, you know, finalizing no tv too, so that at least in our case we can start building services for our customers on top of that. You know, it's it's a great relationship and I expect to see it continue. >>Well, I think one of the themes this year is developer experience. So good. Good call out there in the new announcements on the tools you have and software because that seems to be a great developer integration with Docker question I have for you is how should the customers think about things like E C. S and versus E K. S. App, Runner lambda uh for kind of running their containers. How do they understand the difference is, what's there? What's the, what's the thought process there? What's >>that? It's a good question actually been announced after. And I think there was one of the questions I started getting on twitter. You know, let's start at the very beginning. Anyone can pick up a Docker container and run it on easy to today. You can run it on easy to, we can run a light sail, but doc around works just fine. It's the limits machine. Then people want to do more complex things. They want to run large scale orchestrated services. They won't run their entire business and containers. We have customers will do that today. Uh, you know, you have people like Vanguard who runs a significant portion of the infrastructure on pcs frg or you have to elope with the heavy user of chaos, our community service. So in general, if you're running large scale systems, you're building your platforms, you're most likely to use the csny Chaos. Um, if you come from a community's background, you're, you're running communities on prem or you want the flexibility and control the communities gives you, you're gonna end up with the chaos. That's what we see our customers doing. If you just want to run containers, you want to use AWS to its fullest extent where you want the continue a P I to be part of the W A S A P. I said then you pick is yes. And I think one of the reasons you see so many customers start with the CSN, Forget is with forget to get the significant ease of use from an operational standpoint. And we see many start ups and you know, enterprises, especially security focus enterprises leaning towards farming. But there's a class of customers that doesn't want to think about orchestration that just wants. Here's my code, here's my container image just run my service for me and that's when things like happen, I can come and that's one of the reasons we launched it. Land is a little bit different. Lambda is a unique service. You buy into an event driven architecture. If you do that, then you can figure our application into this. That's they should start its magic. Uh, the container part, there is what land announced agreement where they now support containers, packaging. So instead of zip files, you can package up your functions as containers. Then lambda will run them for you. The advantage it gives you with all the tooling that you built, that you have to build your containers now works the land as well. So I won't call and a container orchestration service in the same sense of the CSC cso Afrin are but it definitely allows the container image format as a standard packaging format. I think that's the sort of universal common theme that you find across AWS at this point of time. >>You know, one of the things that we're observing at this at this event here is a lot of developers Coop con and Lennox foundations. A lot of operators to kubernetes hits that. But here's developers. And the thing is I want to ease of use, simplicity experience, but also I want the innovation. Yeah, I want all of it. When I ask you what is amazon bring to the table for the new equation, what would you say? >>Yeah, I mean for me it's always you've probably heard me say this 100 times. Many 1000 times. It's foggy fog. It's unique to us. It takes a lot of what we have learned about operating infrastructure scale. The question we asked ourselves, you know, in many ways we talk about forget even before belong pcs but we have to learn on what it meant and what customers really wanted. But the idea was when you are running clusters of instances of machines to run containers on, you have to start thinking about a lot of things that in some ways VMS but BMS in the car were taken away capacity. What kind of infrastructure to run it on? Should have been touched. Should have not been back. You know, where is my container running? Those are things. They suddenly started having to think about those kind of backwards almost. So the idea was how can we make your containerized bundles? So TCS task or community is part of the thing that you talk to and that is the main unit that you operate on. That is the unit that you get built on and meet it on. That's where Forget comes in and it allows us to do many interesting things. We've effectively changed the engine of forget since we've launched it. Uh, we run it on ec two instances and we run it on fire cracker. Uh, we have changed the forget agent architecture. We've made a lot of underneath the hood, uh, changes that even take the take advantage of the broader innovation, the rate of us, We did a whole bunch more to launch acronym trans on top of family customers don't have to think about it. They don't have to worry about it. It happens underneath the hood. It's always your engine as as you go along and it takes away all the operational pain of managing clusters of running into picking which instances to use to getting out, trying to figure out how to bend back and get efficiency. That becomes our problem. So, you know, that is an area where you should expect to see a Stuart done more. It's becoming the fabric of so many things that eight of us now. Uh, it's, you know, in some ways we're just talking a lot more to do. >>Yeah. And it's a really good time. A lot more wave of developers coming in. One of the things that we've been reporting on on Silicon England cube with our cute videos is more developers keep on coming on, more people coming in and contributing to the open source community. Even end users, not just the normal awesome hyper scholars you're talking about like classic, I call main street enterprises. So two things I want to ask you on the customer side because you have kind of to customers, you have the community that open source community and you have enterprise customers that want to make it easier. What are you seeing and hearing from customers? I know you guys work backwards from the customer. So I got to ask you work backwards from the community and work backwards from the enterprise customer. What's going on in their environment? What's the key trends that they're riding? What's the big challenges? What's the big opportunities that they're facing and saying for the community? >>Yeah, I start with the enterprise. That's almost an easier answer. Which is, you know, we're seeing increasingly enterprises moving into the cloud wholesale. Like in some ways you could argue that the pandemic has just accelerated it, but we have started seeing that before. Uh they want to move to the cloud and adult modern best practices. Uh If you see my talk agreement last few years, I've talked about modernization and all the aspects of modernization, and that's 90% of our conversation with enterprises, I've walked into a meeting supposedly to talk about containers, whatever half a conversation is spent on. How does an organization modernize? What does an organization need to do to modernize and containers and serverless play a pretty important part in it, because it gives them an opportunity to step away from the shackles of sort of fixed infrastructure and the methods and approaches that built in. But equally, we are talking about C I C. D, you know, fully automated deployments. What does it mean for developers to run their own services? What are the child, how do you monitor and uh, instrument uh, your services? How do you do observe ability in the modern world? So those are the challenges that enterprises are going towards, and you're spending a ton of time helping them there. But many of them are still running infrastructure on premises. So, you know, we have outpost for them. Uh, you know, just last week, you're talking to a bunch of our customers and they have lots of interesting ideas and things that they want to do without both, but many of them also have their own infrastructure and that's where something like UCS anywhere came from, which is hey, you like using Pcs in the cloud, You like having the safety i that just orchestrates containers for you. It does it on on his in an AWS region. It will do it in an outpost. It'll do it on wavelength, it'll do it on local zone. How about we allow you to do it on whatever infrastructure you bring to us. Uh you want to bring a raspberry pi, you can do that. You want to bring your on premises data center infrastructure, we can do that or a point of sale device, as long as you can get the agent running and you can connect to an AWS region, even though it's okay to lose connectivity every now and then. We can orchestrate a container for you over there and, you know, the same customer that likes the ease of use of Vcs. And the simplicity really resonated with that message really resonates with them. So I think where we are today with the enterprise is we've got some really good solutions for you in eight of us and we are now allowing you to take those a. P. I. S and then launch containers wherever you want to run them, whether it's the edge or whether it's your own data center. I think that's a big part of where the enterprise is going. But by and large, I think yes, a lot of them are still making that change from running infrastructure and applications the way they used to do a modern sort of, if you want to use the word cloud native way and we're helping them a lot. We've done, the community is interesting. They want to be more participatory. Uh that's where things like co pilot comes from. God, honestly, the best thing we've ever done in my order is probably are open road maps where the community can go into the road map and engage with us over there, whether it's an open source project or just trying to tell us what the feature is and how they would like to see it. It's a great engagement and you know, it's not us a lot. It's helped us prioritize correctly and think about what we want to do next. So yeah, I think that's, that >>must be very hard to do for opening up the kimono on the road map because normally that's the crown jewels and its secretive and you know, and um, now it's all out in the open. I think that is a really interesting, um, experiment and what's your reaction to that? What's been the feedback on the road map peace? Because I mean, I definitely want to see, uh, >>we do it pretty much for every service in my organization and we've been doing it now for three years. So years forget, I think about three years and it's been great. Now we are very we are very upfront, which is security and availability. Our job 000 and you know, 100 times out of 100 at altitudes between a new feature and helping our customers be available and safe. We'll do that. And this is why we don't put dates in that we just tell you directionally where we are and what we are prioritizing Uh, there every now and then we'll put something in there that, you know, well not choose not to put a feature in there because we want to keep it secret until it launches. But for the most part, 99% of our own myself there and people engaged with it. And it's not proven to be a problem because you've also been very responsible with how we manage and be very transparent on whether we can commit to something or not. And I think that's not. >>I gotta ask you on as a leader uh threaded leader on this group. Open source is super important, as you know, and you continue to do it from under years. How are you investing in the future? What's your plan? Uh plans for your team, the industry actually very inclusive, Which is very cool. It's gonna resonate well, what's the plans? Give us some details on what you're investing in, what your priorities? What's your first principles? >>Yeah, So it goes in many ways, one when I I also have the luxury also on the amazon open source program office. So, you know, I get the chance to my team, rather not me help amazon engineers participate in open source. That that's the team that helps create the tools for them, makes it easy for them to contribute, creates, you know, manages all the licenses, etcetera. I'll give you a simple example, you know, in there, just think of the cr credential helper that was written by one of our engineers and he kind of distorted because he felt it was something that we needed to do. And we made it open source in general, in in many of our teams. The first question we asked is should something the open why is this thing not open source, especially if it's a utility or some piece of software that runs along with services. So they'll step one. But we've done some big things also, I, you know, a couple of years ago we launched Lennox operating system called bottle Rocket. And right from the beginning it was very clear to us that bottle Rocket was two things. It was both in AWS product. But first it was an open source project. We've already learned a little bit from what we've done at Firecracker. But making bottle rocket and open source operating system is very important. Anyone can take part of Rocket the open source to build tooling. You can run it whatever you want. If you want to take part of Rocket and build a version and manage it for another provider. For another provider wants to do it, go for it. There's nothing stopping you from doing that. So you'll see us do a lot there. Obviously there's multiple areas. You've seen WS investing on the open source side. But to me, the winds come from when engineers can participate in small things, released little helpers or get contributions from outside. I think that's where we're still, we can always have that. We're going to continue to strive to make it better and easier. And uh, you know, I said, I have, you know, me and my team, we have an opportunity to help their inside the company and we continue to do so. But that's what gets me excited. >>Yeah, that's great stuff. And congratulations on investing in the community, really enjoys it and I know it moves the needle for the industry. Deepak, I gotta ask you why I got you here. Dr khan obviously, developers, what's the most important story that they should be paying attention to as a developer because of what's going on shift left for security day two operations also known as a I ops getups, whatever you wanna call it, you know, ongoing, you get server lists, you got land. I mean, all kinds of great things are going on. You mentioned Fargate, >>um >>what should they be paying attention to that's going to really help their life, both innovation wise and just the quality of life. >>Yeah, I would say look at, you know, in the end it is very easy developers in particular, I want to build the buildings and it's very easy to get tempted to try and get learn everything about something. You have access to all the bells and whistles and knobs, but in reality, if you want to run things you want to, you want to focus on what's important, the business application, that and you the application. And I think a lot of what I'll tell developers and I think it's a lot of where the industry is going is we have built a really solid foundation, whether it's humanity, so you CSN forget or you know, continue industries out there. We have very solid foundation that, you know, our customers and develop a goal of the world can use to build upon. But increasingly, and you know, they are going to provide tools that sort of take that wrap them up and providing a nice package solution After another great example, our collaboration, the doctor around Dr desktop are a great example where we get all the mark focus on the application and build on top of that and you can get so much done. I think that's one trend. You'll see more and more. Those things are no longer toys, their production grade systems that you can build real world applications on, even though they're so easy to use. The second thing I would add to that is uh, get uh, it is, you know, you can give it whatever name you want. There's uh, there's nuances there, but I actually think get up is the way people should be running the infrastructure, my virus in my personal, you know, it's something that we believe a lot in homicide as hard as you go towards immutable infrastructure, infrastructure, automation, we can get off plays a significant role. I think developers naturally gravitate towards it. And if you want to live in a world where development and operations are tightly linked, I think it after the huge role to play in that it's actually a big part of how we're planning to do things like yes, anywhere, for example, a significant player and that it would be a proton. I think get up will be a significant in the future of proton as well. So I think that's the other trend. If you wanted to pick a trend that people should pay attention. That's what I believe in a lot. >>Well you're an expert. So I want to get you a quick definition. What is get Ops, how would you define it? Because that's a big trend. What does it, what does that mean? >>Electricity will probably shoot me for getting this wrong. I tell you how I think about it. Which is, you know, in many cases, um, you when you're doing deployments are pushing a deployment getups is more of a full deployment. When you are pushing code to get depository, you have a system that knows that the event has happened and then pulls from there and triggers the thing as opposed to you telling it take I have this new piece of code now go deployed everywhere. So to me, the biggest changes that Two parts one is it's more for full mechanism where you're pulling because something has changed. So it needs systems like container orchestrators to keep them, you know, to keep them in sync. And the second part of the natural natural evolution of infrastructure score, which is basically everything is called the figures code. Infrastructure as code, code is code and everything is getting stored in that software repo and the software repo becomes your store of record and drives everything. Uh So for a glass of customers, that's going to be a pretty big deal. >>Yeah, when you're checking in code, that's again, it's like a compiler for the compiler, a container for the container, you've got things for each other. Automation is ultimately what we're talking about here. And that's to me where machine learning kicks in. So again, having this open source foundational fabric, as you said, forget out the muck or the undifferentiated heavy lifting. This is what we're talking about automation, isn't it? Deepak? >>Yes. I mean I said uh one thing where we hang our hat on is there's such good stuff out there in the world which we like to contribute to, but the thing we like to hang our hat on is how do you run this? How do you do it this in ways that you can uniquely bring capabilities to customers where there's things like nitro or things are nitro open stuff. Well, the fact that we have built up this operational infrastructure over the last in a decade plus or in the container space over the last seven years where we really really know how to run these things at scale and have made all the investments to make it easy to do. So that's that's where we have hanger hard keeping people safe, helping them only available applications, their new startup, that just completely takes off in over the weekend. For whatever reason, because, you know, you're the next hot thing on twitter and our goal is to support you whether you are, you know, uh enterprise that's moving from the main train or you are the next hot startup, that's you know, growing virally and uh, you know, we've done a lot to build systems help both sides and yeah, it's >>interesting if you sing about open source where it's come from, I mean I remember that base wouldn't open source wasn't open, I would be peddling software, there's a free copy of Linux, UNIX um in college and now it's all free. But I mean just what's changed now. It used to be just free software, download software. You got it now, it's a service. Service now can be monetized quickly. And what you guys are offering with AWS and cloud scale is you've done all these things as I don't have to have a developer. I get the benefits of the scale, I can bring my open source code to the table, make it a service integrated in with other services and be the next snowflake, be the next, you know, a company that could scale. And that is that's the that's the innovation, right? That's the this is a new phenomenon. So it also changes the business model. >>Yeah, actually you're you're quite right. Actually, I I like one more thing to it. But you look at how a lot of enterprises use containers today. Most of them are using something like this year, Symphony or GS to build an internal developer platform and internal developer portal. And then the question then becomes this hard to scale this modern and development practices to an entire organization. What is your big bank that's been around as thousands and thousands of ID stuff That may not all be experts are running communities running container is when you scale it out different systems that proton come into play. That was actually the inspiration is how do you help an organization where they're building these developer Portholes and developer infrastructure, developer platforms, How do you make it easy for them to build it? Be almost use it as a way to get these modern practices into the hands of all the business units, where they may not have the time to become experts at the modern ways of running infrastructure because they're busy doing other things. And I think you'll see the a lot more happening that space that's not happening in the open source community. There's proton, there's a bunch of interesting things happening here and be interesting to see how that evolves. >>And also, you know, the communal, communal aspect of not just writing code together, but succeeding, right, building something. I mean, that's when you start to see the commercial meets open kind of ethos of communal activity of working together and sharing a big part of this year's. Dakar Con is sharing not just running and shipping code but sharing. >>Yeah, I mean if you think about it uh Dockers original value was you build run and shit right? You use the same code to build it, you use the same code to ship it, the same sort of infrastructure interface and then you run it and that, you know, the fact that the doctor images such a wonderfully shareable entity uh that can run every girl is such a powerful and it's called the Ci Image. Now I still call him Dr images because it's just easier. But that to me like that is a big deal and I think it's becoming and become an even bigger deal over the years. I came from something before, Amazon has to work in The sciences and bioinformatics and you know, the ability to share codeshare dependencies, package all of that up in a container image is a big deal. It's what got me one of the reasons I got fascinated with container 78 years ago. So it will be interesting to see where all of systems. >>It's great, great stuff. Great success. And congratulations. Deepak, Great to always talk to you got a great finger on the pulse. You lead a really important organizations at AWS and you know, doctor has such a huge success with developers, even though the company has gone through kind of a uh change over and a pivot to what they're doing now. They're back to their open source roots, but they have millions and millions of developers use Docker and new developers are coming in dot net developers are coming in. Windows developers are coming in and and so it's no longer about Lennox anymore. It's about just coding. >>Yeah. And it's it's part of this big trend towards infrastructure, automation and and you know development and deployment practices that I think everyone is going to adopt faster than we think they will. But you know, companies like Doctor and opens those projects that they involved are critical in making that a lot easier for them. And then you know, folks like us get to build on top of that orbit them and make it even easier. >>Well, great testimony the doctor that you guys based your E C. S on Docker Doctor has a critical role in developing community. I run composed in their hub with dr desktop and we'll be watching amazon and and the community activity and see what kind of experiences you guys can bring to the table and continue that momentum. Thank you Deepak for coming on the >>cube. Thank you, john. That's always a pleasure. >>Okay. Mr cubes. Dr khan 2021 virtual coverage. I'm john for your host of the cube. Thanks for watching.

>>mhm, mm. All right. Mhm. Mhm, mm mm. Mhm. Yeah, mm. Mhm. Yeah, yeah. Mhm, mm. Okay. Mm. Yeah, Yeah. >>Mhm. Mhm. Yeah. Welcome to future cloud made possible by Cisco. My name is Dave Volonte and I'm your host. You know, the cloud is evolving like the universe is expanding at an accelerated pace. No longer is the cloud. Just a remote set of services, you know, somewhere up there. No, the cloud, it's extending to on premises. Data centers are reaching into the cloud through adjacent locations. Clouds are being connected together to each other and eventually they're gonna stretch to the edge and the far edge workloads, location latency, local laws and economics will define the value customers can extract from this new cloud model which unifies the operating experience independent of location. Cloud is moving rapidly from a spare capacity slash infrastructure resource to a platform for application innovation. Now, the challenge is how to make this new cloud simple, secure, agile and programmable. Oh and it has to be cloud agnostic. Now, the real opportunity for customers is to tap into a layer across clouds and data centers that abstracts the underlying complexity of the respective clouds and locations. And it's got to accommodate both mission critical workloads as well as general purpose applications across the spectrum cost, effectively enabling simplicity with minimal labor costs requires infrastructure i. E. Hardware, software, tooling, machine intelligence, AI and partnerships within an ecosystem. It's kind of accommodate a variety of application deployment models like serverless and containers and support for traditional work on VMS. By the way, it also requires a roadmap that will take us well into the next decade because the next 10 years they will not be like the last So why are we here? Well, the cube is covering Cisco's announcements today that connect next generation compute shared memory, intelligent networking and storage resource pools, bringing automation, visibility, application assurance and security to this new decentralized cloud. Now, of course in today's world you wouldn't be considered modern without supporting containers ai and operational tooling that is demanded by forward thinking practitioners. So sit back and enjoy the cubes, special coverage of Cisco's future cloud >>From around the globe. It's the Cube presenting future cloud one event, a world of opportunities brought to you by Cisco. >>We're here with Dejoy Pandey, a VP of emerging tech and incubation at Cisco. V. Joy. Good to see you. Welcome. >>Good to see you as well. Thank you Dave and pleasure to be here. >>So in 2020 we kind of had to redefine the notion of agility when it came to digital business or you know organizations, they had to rethink their concept of agility and business resilience. What are you seeing in terms of how companies are thinking about their operations in this sort of new abnormal context? >>Yeah, I think that's a great question. I think what what we're seeing is that pretty much the application is the center of the universe. And if you think about it, the application is actually driving brand recognition and the brand experience and the brand value. So the example I like to give is think about a banking app uh recovered that did everything that you would expect it to do. But if you wanted to withdraw cash from your bank you would actually have to go to the ATM and punch in some numbers and then look at your screen and go through a process and then finally withdraw cash. Think about what that would have, what what that would do in a post pandemic era where people are trying to go contact less. And so in a situation like this, the digitization efforts that all of these companies are going through and and the modernization of the automation is what is driving brand recognition, brand trust and brand experience. >>Yeah. So I was gonna ask you when I heard you say that, I was gonna say well, but hasn't it always been about the application, but it's different now, isn't it? So I wonder if you talk more about how the application is experience is changing. Yes. As a result of this new digital mandate. But how should organizations think about optimizing those experiences in this new world? >>Absolutely. And I think, yes, it's always been about the application, but it's becoming the center of the universe right now because all interactions with customers and consumers and even businesses are happening through that application. So if the application is unreliable or if the application is not available is untrusted insecure, uh, there's a problem. There's a problem with the brand, with the company and the trust that consumers and customers have with our company. So if you think about an application developer, the weight he or she is carrying on their shoulders is tremendous because you're thinking about rolling features quickly to be competitive. That's the only way to be competitive in this world. You need to think about availability and resiliency. Like you pointed out and experience, you need to think about security and trust. Am I as a customer or consumer willing to put my data in that application? So velocity, availability, Security and trust and all of that depends on the developer. So the experience, the security, the trust, the feature, velocity is what is driving the brand experience now. >>So are those two tensions that say agility and trust, you know, Zero Trust used to be a buzzword now it's a mandate. But are those two vectors counter posed? Can they be merged into one and not affect each other? Does the question makes sense? Right? Security usually handcuffs my speed. But how do you address that? >>Yeah that's a great question. And I think if you think about it today that's the way things are. And if you think about this developer all they want to do is run fast because they want to build those features out and they're going to pick and choose a piece and services that matter to them and build up their app and they want the complexities of the infrastructure and security and trust to be handled by somebody else is not that they don't care about it but they want that abstraction so that is handled by somebody else. And typically within an organization we've seen in the past where this friction between Netapp Sec ops I. T. Tops and and the cloud platform Teams and the developer on one side and these these frictions and these meetings and toil actually take a toll on the developer and that's why companies and apps and developers are not as agile as they would like to be. So I think but it doesn't have to be that way. So I think if there was something that would allow a developer to pick and choose, discover the apis that they would like to use connect those api is in a very simple manner and then be able to scale them out and be able to secure them and in fact not just secure them during the run time when it's deployed. We're right off the back when the fire up that I'd and start developing the application. Wouldn't that be nice? And as you do that, there is a smooth transition between that discovery connectivity and ease of consumption and security with the idea cops. Netapp psych ops teams and see source to ensure that they are not doing something that the organization won't allow them to do in a very seamless manner. >>I want to go back and talk about security but I want to add another complexity before we do that. So for a lot of organizations in the public cloud became a staple of keeping the lights on during the pandemic but it brings new complexities and differences in terms of latency security, which I want to come back to deployment models etcetera. So what are some of the specific networking challenges that you've seen with the cloud native architecture is how are you addressing those? >>Yeah. In fact, if you think about cloud, to me that is a that is a different way of seeing a distributed system. And if you think about a distributed system, what is at the center of the distributed system is the network. So my my favorite comment here is that the network is the wrong time for all distribute systems and modern applications. And that is true because if you think about where things are today, like you said, there's there's cloud assets that a developer might use in the banking example that I gave earlier. I mean if you want to build a contact less app so that you get verified, a customer gets verified on the app. They walk over to the ATM and they were broadcast without touching that ATM. In that kind of an example, you're touching the mobile Rus, let's say U S A P is you're touching cloud API is where the back end might sit. You're touching on primary PS maybe it's an oracle database or a mainframe even where transactional data exists. You're touching branch pipes were the team actually exists and the need for consistency when you withdraw cash and you're carrying all of this and in fact there might be customer data sitting in salesforce somewhere. So it's cloud API is a song premise branch. It's ass is mobile and you need to bring all of these things together and over time you will see more and more of these API is coming from various as providers. So it's not just cloud providers but saas providers that the developer has to use. And so this complexity is very, very real. And this complexity is across the wide open internet. So the application is built across this wide open internet. So the problems of discovery ability, the problems of being able to simply connect these apis and manage the data flow across these apis. The problems of consistency of policy and consumption because all of these areas have their own nuances and what they mean, what the arguments mean and what the A. P. I. Actually means. How do you make it consistent and easy for the developer? That is the networking problem. And that is a problem of building out this network, making traffic engineering easy, making policy easy, making scale out, scale down easy, all of that our networking problems. And so we are solving those problems uh Francisco. >>Yeah the internet is the new private network but it's not so private. So I want to go back to security. I often say that the security model of building a moat, you dig the moat, you get the hardened castle that's just outdated now that the queen is left her castle, I always say it's dangerous out there. And the point is you touched on this, it's it's a huge decentralized system and with distributed apps and data, that notion of perimeter security, it's just no longer valid. So I wonder if you could talk more about how you're thinking about this problem and you definitely address some of that in your earlier comments. But what are you specifically doing to address this and how do you see it evolving? >>Yeah, I mean, that's that's a very important point. I mean, I think if you think about again the wide open internet being the wrong time for all modern applications, what is perimeter security in this uh in this new world? I mean, it's to me it boils down to securing an API because again, going with that running example of this contact lists cash withdrawal feature for a bank, the ap wherever it's it's entre branch SAs cloud, IOS android doesn't matter that FBI is your new security perimeter. And the data object that is trying to access is also the new security perimeter. So if you can secure ap to ap communication and P two data object communication, you should be good. So that is the new frontier. But guess what software is buggy? Everybody's software not saying Cisco software, everybody's Softwares buggy. Uh software is buggy, humans are not reliable and so things mature, things change, things evolve over time. So there needs to be defense in depth. So you need to secure at the API layer had the data object layer, but you also need to secure at every layer below it so that you have good defense and depth if any layer in between is not working out properly. So for us that means ensuring ap to ap communication, not just during long time when the app has been deployed and is running, but during deployment and also during the development life cycle. So as soon as the developer launches an ID, they should be able to figure out that this api is security uses reputable, it has compliant, it is compliant to my to my organization's needs because it is hosted, let's say from Germany and my organization wants appears to be used only if they are being hosted out of Germany so compliance needs and and security needs and reputation. Is it available all the time? Is it secure? And being able to provide that feedback all the time between the security teams and the developer teams in a very seamless real time manner. Yes, again, that's something that we're trying to solve through some of the services that we're trying to produce in san Francisco. >>Yeah, I mean those that layered approach that you're talking about is critical because every layer has, you know, some vulnerability. And so you you've got to protect that with some depth in terms of thinking about security, how should we think about where where Cisco's primary value add is, I mean as parts of the interview has a great security business is growing business, Is it your intention to to to to add value across the entire value chain? I mean obviously you can't do everything so you've got a partner but so has the we think about Cisco's role over the next I'm thinking longer term over the over the next decade. >>Yeah, I mean I think so, we do come in with good strength from the runtime side of the house. So if you think about the security aspects that we haven't played today, uh there's a significant set of assets that we have around user security around around uh with with do and password less. We have significant assets in runtime security. I mean, the entire portfolio that Cisco brings to the table is around one time security, the secure X aspects around posture and policy that will bring to the table. And as you see, Cisco evolve over time, you will see us shifting left. I mean, I know it's an overused term, but that is where security is moving towards. And so that is where api security and data security are moving towards. So learning what we have during runtime because again, runtime is where you learn what's available and that's where you can apply all of the M. L. And I models to figure out what works what doesn't taking those learnings, Taking those catalogs, taking that reputation database and moving it into the deployment and development life cycle and making sure that that's part of that entire they have to deploy to runtime chain is what you will see. Cisco do overtime. >>That's fantastic phenomenal perspective video. Thanks for coming on the cube. Great to have you and look forward to having you again. >>Absolutely. Thank you >>in a moment. We'll talk hybrid cloud applications operations and potential gaps that need to be addressed with costume, Das and VJ Venugopal. You're watching the cube the global leader in high tech coverage. Mhm >>You were cloud. It isn't just a cloud. It's everything flowing through it. It's alive. Yeah, connecting users, applications, data and devices and whether it's cloud, native hybrid or multi cloud, it's more distributed than ever. One company takes you inside, giving you the visibility and the insight you need to take action. >>One company >>has the vision to understand it, all the experience, to securely connect at all on any platform in any environment. So you can work wherever work takes you in a cloud first world between your cloud and being cloud smart, there's a bridge. Cisco the bridge to possible. >>Okay. We're here with costume does, who is the Senior Vice President, General Manager of Cloud and compute at Cisco. And VJ Venugopal, who is the Senior Director for Product Management for cloud compute at Cisco. KTV. J. Good to see you guys welcome. >>Great to see you. Dave to be here. >>Katie, let's talk about cloud you And I last time we're face to face was in Barcelona where we love talking about cloud and I always say to people look, Cisco is not a hyper Scaler, but the big public cloud players, they're like giving you a gift. They spent almost actually over $100 billion last year on Capex. The big four. So you can build on that infrastructure. Cisco is all about hybrid cloud. So help us understand the strategy. There may be how you can leverage that build out and importantly what a customer is telling you they want out of hybrid cloud. >>Yeah, no that's that's that's a perfect question to start with. Dave. So yes. So the hybrid hyper scholars have invested heavily building out their assets. There's a great lot of innovation coming from that space. Um There's also a great innovation set of innovation coming from open source and and that's another source of uh a gift. In fact the I. T. Community. But when I look at my customers they're saying well how do I in the context of my business implement a strategy that takes into consideration everything that I have to manage um in terms of my contemporary work clothes, in terms of my legacy, in terms of everything my developer community wants to do on DEVOPS and really harnessed that innovation that's built in the public cloud, that built an open source that built internally to me, and that naturally leads them down the path of a hybrid cloud strategy. And Siskel's mission is to provide for that imperative, the simplest more power, more powerful platform to deliver hybrid cloud and that platform. Uh It's inter site we've been investing in. Inner side, it's a it's a SAS um service um inner side delivers to them that bridge between their estates of today that were closer today, the need for them to be guardians of enterprise grade resiliency with the agility uh that's needed for the future. The embracing of cloud. Native of new paradigms of deVOPS models, the embracing of innovation coming from public cloud and an open source and bridging those two is what inner side has been doing. That's kind of that's kind of the crux of our strategy. Of course we have the entire portfolio behind it to support any, any version of that, whether that is on prem in the cloud, hybrid, cloud, multi cloud and so forth. >>But but if I understand it correctly from what I heard earlier today, the inter site is really a linchpin of that strategy, is it not? >>It really is and may take a second to totally familiarize those who don't know inner side with what it is. We started building this platform quite a few years back and we we built a ground up to be an immensely scalable SAs, super simple hybrid cloud platform and it's a platform that provides a slew of service is inherently and then on top of that there are suites of services, the sweets of services that are tied to infrastructure, automation. Cisco, as well as Cisco partners. The streets of services that have nothing to do with Cisco um products from a hardware perspective. And it's got to do with more cloud orchestration and cloud native and inner side and its suite of services um continue to kind of increase in pace and velocity of delivery video. Just over the last two quarters we've announced a whole number of things will go a little bit deeper into some of those but they span everything from infrastructure automation to kubernetes and delivering community than service to workload optimization and having visibility into your cloud estate. How much it's costing into your on premise state into your work clothes and how they're performing. It's got integrations with other tooling with both Cisco Abdi uh as well as non Cisco um, assets and then and then it's got a whole slew of capabilities around orchestration because at the end of the day, the job of it is to deliver something that works and works at scale that you can monitor and make sure is resilient and that includes that. That includes a workflow and ability to say, you know, do this and do this and do this. Or it includes other ways of automation, like infrastructure as code and so forth. So it includes self service that so that expand that. But inside the world's simplest hybrid cloud platform, rapidly evolving rapidly delivering new services. And uh we'll talk about some more of those day. >>Great, thank you, Katie VJ. Let's bring you into the discussion. You guys recently made an announcement with the ASCIi corp. I was stoked because even though it seemed like a long time ago, pre covid, I mean in my predictions post, I said, ha, she was a name to watch our data partners. Et are you look at the survey data and they really have become mainstream? You know, particularly we think very important in the whole multi cloud discussion. And as well, they're attractive to customers. They have open source offerings. You can very easily experiment. Smaller organizations can take advantage. But if you want to upgrade to enterprise features like clustering or whatever, you can plug right in. Not a big complicated migration. So a very, very compelling story there. Why is this important? Why is this partnership important to Cisco's customers? Mhm. >>Absolutely. When the spot on every single thing that you said, let me just start by paraphrasing what ambition statement is in the cloud and computer group. Right ambition statement is to enable a cloud operating model for hybrid cloud. And what we mean by that is the ability to have extreme amounts of automation orchestration and observe ability across your hybrid cloud idea operations now. Uh So developers and applications team get a great amount of agility in public clouds and we're on a mission to bring that kind of agility and automation to the private cloud and to the data centers and inter site is a quickie platform and lynchpin to enable that kind of operations. Uh, Cloud like operations in the in the private clouds and the key uh As you rightly said, harsher car is the, you know, they were the inventors of the concept of infrastructure at school and in terra form, they have the world's number one infrastructure as code platform. So it became a natural partnership for Cisco to enter into a technology partnership with harsher card to integrate inter site with hardship cops, terra form to bring the benefits of infrastructure as code to the to hybrid cloud operations. And we've entered into a very tight integration and uh partnership where we allow developers devops teams and infrastructure or administrators to allow the use of infrastructure as code in a SAS delivered manner for both public and private club. So it's a very unique partnership and a unique integration that allows the benefits of cloud managed i E C. To be delivered to hybrid cloud operations. And we've been very happy and proud to be partnering with Russian government shutdown. >>Yeah, Terra form gets very high marks from customers. The a lot of value there. The inner side integration adds to that value. Let's stay on cloud native for a minute. We all talk about cloud native cady was sort of mentioning before you got the the core apps, uh you want to protect those, make sure their enterprise create but they gotta be cool as well for developers. You're connecting to other apps in the cloud or wherever. How are you guys thinking about this? Cloud native trend? What other movies are you making in this regard? >>I mean cloud native is there is one of the paramount I. D. Trends of today and we're seeing massive amounts of adoption of cloud native architecture in all modern applications. Now, Cloud Native has become synonymous with kubernetes these days and communities has emerged as a de facto cloud native platform for modern cloud native app development. Now, what Cisco has done is we have created a brand new SAs delivered kubernetes service that is integrated with inter site, we call it the inter site community service for A. Ks. And this just geared a little over one month ago. Now, what interstate kubernetes service does is it delivers a cloud managed and cloud delivered kubernetes service that can be deployed on any supported target infrastructure. It could be a Cisco infrastructure, it could be a third party infrastructure or it could even be public club. But think of it as kubernetes anywhere delivered as says, managed from inside. It's a very powerful capability that we've just released into inter site to enable the power of communities and clog native to be used to be used anywhere. But today we made a very important aspect because we are today announced the brand new Cisco service mess manager, the Cisco service mesh manager, which is available as an extension to the KS are doing decide basically we see service measures as being the future of networking right in the past we had layer to networking and layer three networking and now with service measures, application networking and layer seven networking is the next frontier of, of networking. But you need to think about networking for the application age very differently how it is managed, how it is deployed. It needs to be ready, developer friendly and developer centric. And so what we've done is we've built out an application networking strategy and built out the service match manager as a very simple way to deliver application networking through the consumers, like like developers and application teams. This is built on an acquisition that Cisco made recently of Banzai Cloud and we've taken the assets of Banzai Cloud and deliver the Cisco service mesh manager as an extension to KS. That brings the promise of future networking and modern networking to application and development gives >>God thank you. BJ. And so Katie, let's let's let's wrap this up. I mean, there was a lot in this announcement today, a lot of themes around openness, heterogeneity and a lot of functionality and value. Give us your final thoughts. >>Absolutely. So, couple of things to close on, first of all, um Inner side is the simplest, most powerful hybrid cloud platform out there. It enables that that cloud operating model that VJ talked about, but enables that across cloud. So it's sad, it's relatively easy to get into it and give it a spin so that I'd highly encouraged anybody who's not familiar with it to try it out and anybody who is familiar with it to look at it again, because they're probably services in there that you didn't notice or didn't know last time you looked at it because we're moving so fast. So that's the first thing. The second thing I close with is um, we've been talking about this bridge that's kind of bridging, bridging uh your your on prem your open source, your cloud estates. And it's so important to to make that mental leap because uh in past generation, we used to talk about integrating technologies together and then with public cloud, we started talking about move to public cloud, but it's really how do we integrate, how do we integrate all of that innovation that's coming from the hyper scale, is everything they're doing to innovate superfast, All of that innovation is coming from open source, all of that innovation that's coming from from companies around the world, including Cisco, How do we integrate that to deliver an outcome? Because at the end of the day, if you're a cloud of Steam, if you're an idea of Steam, your job is to deliver an outcome and our mission is to make it super simple for you to do that. That's the mission we're on and we're hoping that everybody that's excited as we are about how simple we made that. >>Great, thank you a lot in this announcement today, appreciate you guys coming back on and help us unpack you know, some of the details. Thank thanks so much. Great having you. >>Thank you >>Dave in a moment. We're gonna come back and talk about disruptive technologies and futures in the age of hybrid cloud with Vegas Rattana and James leach. You're watching the cube, the global leader in high tech coverage. >>What if your server box >>wasn't a box at >>all? What if it could do anything run anything? >>Be any box you >>need with massive scale precision and intelligence managed and optimized from the cloud integrated with all your clouds, private, public or hybrid. So you can build whatever you need today and tomorrow. The potential of this box is unlimited. Unstoppable unseen ever before. Unbox the future with Cisco UCS X series powered by inter site >>Cisco. >>The bridge to possible. Yeah >>we're here with Vegas Rattana who's the director of product management for Pcs at Cisco. And James Leach is the director of business development for U. C. S. At the Cisco as well. We're gonna talk about computing in the age of hybrid cloud. Welcome gentlemen. Great to see you. >>Thank you. >>Thank you because let's start with you and talk about a little bit about computing architectures. We know that they're evolving. They're supporting new data intensive and other workloads especially as high performance workload requirements. What's this guy's point of view on all this? I mean specifically interested in your thoughts on fabrics. I mean it's kind of your wheelhouse, you've got accelerators. What are the workloads that are driving these evolving technologies and how how is it impacting customers? What are you seeing? >>Sure. First of all, very excited to be here today. You're absolutely right. The pace of innovation and foundational platform ingredients have just been phenomenal in recent years. The fabric that's writers that drives the processing power, the Golden city all have been evolving just an amazing place and the peace will only pick up further. But ultimately it is all about applications and the way applications leverage those innovations. And we do see applications evolving quite rapidly. The new classes of applications are evolving to absorb those innovations and deliver much better business values. Very, very exciting time step. We're talking about the impact on the customers. Well, these innovations have helped them very positively. We do see significant challenges in the data center with the point product based approach of delivering these platforms, innovations to the applications. What has happened is uh, these innovations today are being packaged as point point products to meet the needs of a specific application and as you know, the different applications have no different needs. Some applications need more to abuse, others need more memory, yet others need, you know, more course, something different kinds of fabrics. As a result, if you walk into a data center today, it is very common to see many different point products in the data center. This creates a manageability challenge. Imagine the aspect of managing, you know, several different form factors want you to you purpose built servers. The variety of, you know, a blade form factor, you know, this reminds me of the situation we had before smartphones arrived. You remember the days when you when we used to have a GPS device for navigation system, a cool music device for listening to the music. A phone device for making a call camera for taking the photos right? And we were all excited about it. It's when a smart phones the right that we realized all those cool innovations could be delivered in a much simpler, much convenient and easy to consume through one device. And you know, I could uh, that could completely transform our experience. So we see the customers were benefiting from these innovations to have a way to consume those things in a much more simplistic way than they are able to go to that. >>And I like to look, it's always been about the applications. But to your point, the applications are now moving in a much faster pace. The the customer experience is expectation is way escalated. And when you combine all these, I love your analogy there because because when you combine all these capabilities, it allows us to develop new Applications, new capabilities, new customer experiences. So that's that I always say the next 10 years, they ain't gonna be like the last James Public Cloud obviously is heavily influencing compute design and and and customer operating models. You know, it's funny when the public cloud first hit the market, everyone we were swooning about low cost standard off the shelf servers in storage devices, but it quickly became obvious that customers needed more. So I wonder if you could comment on this. How are the trends that we've seen from the hyper scale, Is how are they filtering into on prem infrastructure and maybe, you know, maybe there's some differences there as well that you could address. >>Absolutely. So I'd say, first of all, quite frankly, you know, public cloud has completely changed the expectations of how our customers want to consume, compute, right? So customers, especially in a public cloud environment, they've gotten used to or, you know, come to accept that they should consume from the application out, right? They want a very application focused view, a services focused view of the world. They don't want to think about infrastructure, right? They want to think about their application, they wanna move outward, Right? So this means that the infrastructure basically has to meet the application where it lives. So what that means for us is that, you know, we're taking a different approach. We're we've decided that we're not going to chase this single pane of glass view of the world, which, frankly, our customers don't want, they don't want a single pane of glass. What they want is a single operating model. They want an operating model that's similar to what they can get at the public with the public cloud, but they wanted across all of their cloud options they wanted across private cloud across hybrid cloud options as well. So what that means is they don't want to just consume infrastructure services. They want all of their cloud services from this operating model. So that means that they may want to consume infrastructure services for automation Orchestration, but they also need kubernetes services. They also need virtualization services, They may need terror form workload optimization. All of these services have to be available, um, from within the operating model, a consistent operating model. Right? So it doesn't matter whether you're talking about private cloud, hybrid cloud anywhere where the application lives. It doesn't matter what matters is that we have a consistent model that we think about it from the application out. And frankly, I'd say this has been the stumbling block for private cloud. Private cloud is hard, right. This is why it hasn't been really solved yet. This is why we had to take a brand new approach. And frankly, it's why we're super excited about X series and inter site as that operating model that fits the hybrid cloud better than anything else we've seen >>is acute. First, first time technology vendor has ever said it's not about a single pane of glass because I've been hearing for decades, we're gonna deliver a single pane of glass is going to be seamless and it never happens. It's like a single version of the truth. It's aspirational and, and it's just not reality. So can we stay in the X series for a minute James? Uh, maybe in this context, but in the launch that we saw today was like a fire hose of announcements. So how does the X series fit into the strategy with inter site and hybrid cloud and this operating model that you're talking about? >>Right. So I think it goes hand in hand, right. Um the two pieces go together very well. So we have uh, you know, this idea of a single operating model that is definitely something that our customers demand, right? It's what we have to have, but at the same time we need to solve the problems of the cost was talking about before we need a single infrastructure to go along with that single operating model. So no longer do we need to have silos within the infrastructure that give us different operating models are different sets of benefits when you want infrastructure that can kind of do all of those configurations, all those applications. And then, you know, the operating model is very important because that's where we abstract the complexity that could come with just throwing all that technology at the infrastructure so that, you know, this is, you know, the way that we think about is the data center is not centered right? It's no longer centered applications live everywhere. Infrastructure lives everywhere. And you know, we need to have that consistent operating model but we need to do things within the infrastructure as well to take full advantage. Right? So we want all the sas benefits um, of a Ci CD model of, you know, the inter site can bring, we want all that that proactive recommendation engine with the power of A I behind it. We want the connected support experience went all of that. They want to do it across the single infrastructure and we think that that's how they tie together, that's why one or the other doesn't really solve the problem. But both together, that's why we're here. That's why we're super excited. >>So Vegas, I make you laugh a little bit when I was an analyst at I D C, I was deep in infrastructure and then when I left I was doing, I was working with application development heads and like you said, uh infrastructure, it was just a, you know, roadblock but but so the target speakers with Cisco announced UCS a decade ago, I totally missed it. I didn't understand it. I thought it was Cisco getting into the traditional server business and it wasn't until I dug in then I realized that your vision was really to transform infrastructure, deployment and management and change them all. I was like, okay, I got that wrong uh but but so let's talk about the the ecosystem and the joint development efforts that are going on there, X series, how does it fit into this, this converged infrastructure business that you've, you've built and grown with partners, you got storage partners like Netapp and Pure, you've got i SV partners in the ecosystem. We see cohesive, he has been a while since we we hung out with all these companies at the Cisco live hopefully next year, but tell us what's happening in that regard. >>Absolutely, I'm looking forward to seeing you in the Cisco live next year. You know, they have absolutely you brought up a very good point. You see this is about the ecosystem that it brings together, it's about making our customers bring up the entire infrastructure from the core foundational hardware all the way to the application level so that they can, you know, go off and running pretty quick. The converse infrastructure has been one of the corners 2.5 hour of the strategy, as you pointed out in the last decade. And and and I'm I'm very glad to share that converse infrastructure continues to be a very popular architecture for several enterprise applications. Seven today, in fact, it is the preferred architecture for mission critical applications where performance resiliency latency are the critical requirements there almost a de facto standards for large scale deployments of virtualized and business critical data bases and so forth with X series with our partnerships with our Stories partners. Those architectures will absolutely continue and will get better. But in addition as a hybrid cloud world, so we are now bringing in the benefits of canvas in infrastructure uh to the world of hybrid cloud will be supporting the hybrid cloud applications now with the CIA infrastructure that we have built together with our strong partnership with the Stories partners to deliver the same benefits to the new ways applications as well. >>Yeah, that's what customers want. They want that cloud operating model. Right, go ahead please. >>I was going to say, you know, the CIA model will continue to thrive. It will transition uh it will expand the use cases now for the new use cases that were beginning to, you know, say they've absolutely >>great thank you for that. And James uh have said earlier today, we heard this huge announcement, um a lot of lot of parts to it and we heard Katie talk about this initiative is it's really computing built for the next decade. I mean I like that because it shows some vision and you've got a road map that you've thought through the coming changes in workloads and infrastructure management and and some of the technology that you can take advantage of beyond just uh, you know, one or two product cycles. So, but I want to understand what you've done here specifically that you feel differentiates you from other competitive architectures in the industry. >>Sure. You know that's a great question. Number one. Number two, um I'm frankly a little bit concerned at times for for customers in general for our customers customers in general because if you look at what's in the market, right, these rinse and repeat systems that were effectively just rehashes of the same old design, right? That we've seen since before 2000 and nine when we brought you C. S to market these are what we're seeing over and over and over again. That's that's not really going to work anymore frankly. And I think that people are getting lulled into a false sense of security by seeing those things continually put in the market. We rethought this from the ground up because frankly future proofing starts now, right? If you're not doing it right today, future proofing isn't even on your radar because you're not even you're not even today proved. So we re thought the entire chassis, the entire architecture from the ground up. Okay. If you look at other vendors, if you look at other solutions in the market, what you'll see is things like management inside the chassis. That's a great example, daisy chaining them together >>like who >>needs that? Who wants that? Like that kind of complexity is first of all, it's ridiculous. Um, second of all, um, if you want to manage across clouds, you have to do it from the cloud, right. It's just common sense. You have to move management where it can have the scale and the scope that it needs to impact your entire domain, your world, which is much larger now than it was before. We're talking about true hybrid cloud here. Right. So we had to solve certain problems that existed in the traditional architecture. You know, I can't tell you how many times I heard you talk about the mid plane is a great example. You know, the mid plane and a chastity is a limiting factor. It limits us on how much we can connect or how much bandwidth we have available to the chassis. It limits us on air flow and other things. So how do you solve that problem? Simple. Just get rid of it. Like we just we took it out, right. It's not no longer a problem. We designed an architecture that doesn't need it. It doesn't rely on it. No forklift upgrades. So, as we start moving down the path of needing liquid cooling or maybe we need to take advantage of some new, high performance, low latency fabrics. We can do that with almost. No problem at all. Right, So, we don't have any forklift upgrades. Park your forklift on the side. You won't need it anymore because you can upgrade gradually. You can move along as technologies come into existence that maybe don't even exist. They they may not even be on our radar today to take advantage of. But I like to think of these technologies, they're really important to our customers. These are, you know, we can call them disruptive technologies. The reality is that we don't want to disrupt our customers with these technologies. We want to give them these technologies so they can go out and be disruptive themselves. Right? And this is the way that we've designed this from the ground up to be easy to consume and to take advantage of what we know about today and what's coming in the future that we may not even know about. So we think this is a way to give our customers that ultimate capability flexibility and and future proofing. >>I like I like that phrase True hybrid cloud. It's one that we've used for years and but to me this is all about that horizontal infrastructure that can support that vision of what true hybrid cloud is. You can support the mission critical applications. You can you can develop on the system and you can support a variety of workload. You're not locked into one narrow stovepipe and that does have legs, Vegas and James. Thanks so much for coming on the program. Great to see you. >>Yeah. Thank you. Thank you. >>When we return shortly thomas Shiva who leads Cisco's data center group will be here and thomas has some thoughts about the transformation of networking I. T. Teams. You don't wanna miss what he has to say. You're watching the cube. The global leader in high tech company. Okay, >>mm. Mhm, mm. Okay. Mhm. Yeah. Mhm. Yeah. >>Mhm. Yes. Yeah. Okay. We're here with thomas Shiva who is the Vice president of Product Management, A K A VP of all things data center, networking STN cloud. You name it in that category. Welcome thomas. Good to see you again. >>Hey Sam. Yes. Thanks for having me on. >>Yeah, it's our pleasure. Okay, let's get right into observe ability. When you think about observe ability, visibility, infrastructure monitoring problem resolution across the network. How does cloud change things? In other words, what are the challenges that networking teams are currently facing as they're moving to the cloud and trying to implement hybrid cloud? >>Yeah. Yeah, visibility as always is very, very important. And it's quite frankly, it's not just it's not just the networking team is actually the application team to write. And as you pointed out, the underlying impetus to what's going on here is the data center is where the data is. And I think we set us a couple years back and really what happens the applications are going to be deployed uh in different locations, right. Whether it's in a public cloud, whether it's on prayer, uh, and they are built differently right there, built as microservices, they might actually be distributed as well at the same application. And so what that really means is you need as an operator as well as actually a user better visibility. Where are my pieces and you need to be able to correlate between where the app is and what the underlying network is that is in place in these different locations. So you have actually a good knowledge while the app is running so fantastic or sometimes not. So I think that's that's really the problem statement. What what we're trying to go afterwards, observe ability. >>Okay, and let's double click on that. So a lot of customers tell me that you gotta stare at log files until your eyes bleed and you gotta bring in guys with lab coats who have phds to figure all this stuff out. So, so you just described, it's getting more complex, but at the same time you have to simplify things. So how how are you doing that, >>correct? So what we basically have done is we have this fantastic product that that is called 1000 Ice. And so what this does is basically as the name, which I think is a fantastic fantastic name. You have these sensors everywhere. Um, and you can have a good correlation on uh links between if I run from a site to aside from a site to a cloud, from a cloud to cloud and you basically can measure what is the performance of these links. And so what we're, what we're doing here is we're actually extending the footprint of these thousands agent. Right? Instead of just having uh inversion machine clouds, we are now embedding them with the Cisco network devices. Right? We announced this with the catalyst 9000 and we're extending this now to our 8000 catalyst product line for the for the SD were in products as well as to the data center products the next line. Um and so what you see is is, you know, half a saying, you have 1000 eyes, you get a million insights and you get a billion dollar of improvements uh for how your applications run. And this is really uh, the power of tying together the footprint of where the network is with the visibility, what is going on. So you actually know the application behavior that is attached to this network. >>I see. So okay. So as the cloud evolves and expands it connects your actually enabling 1000 eyes to go further, not just confined within a single data center location, but out to the network across clouds, et cetera, >>correct. Wherever the network is, you're going to have 1000 I sensor and you can't bring this together and you can quite frankly pick if you want to say, hey, I have my application in public cloud provider, a uh, domain one and I have another one domain to, I can't do monitor that link. I can also monitor have a user that has a campus location or branch location. I kind of put an agent there and then I can monitor the connectivity from that branch location all the way to the let's say corporations that data centre, our headquarter or to the cloud. And I can have these probes and just we have visibility and saying, hey, if there's a performance, I know where the issue is and then I obviously can use all the other foods that we have to address those. >>All right, let's talk about the cloud operating model. Everybody tells us it's really the change in the model that drives big numbers in terms of R. O. I. And I want you to maybe address how you're bringing automation and devops to this world of of hybrid and specifically how is Cisco enabling I. T. Organizations to move to a cloud operating model? Is that cloud definition expands? >>Yeah, no that's that's another interesting topic beyond the observe ability. So really, really what we're seeing and this is going on for uh I want to say a couple of years now, it's really this transition from operating infrastructure as a networking team more like a service like what you would expect from a cloud provider. Right? It's really around the network team offering services like a cloud provided us. And that's really what the meaning is of cloud operating model. Right? But this is infrastructure running your own data center where that's linking that infrastructure was whatever runs on the public club is operating and like a cloud service. And so we are on this journey for why? So one of the examples uh then we have removing some of the control software assets, the customers that they can deploy on prayer uh to uh an instance that they can deploy in a cloud provider and just busy, insane. She ate things there and then just run it that way. Right. And so the latest example for this is what we have our identity service engine that is now limited availability available on AWS and will become available in mid this year, both in Italy as unusual as a service. You can just go to market place, you can load it there and now you create, you can start running your policy control in a cloud, managing your access infrastructure in your data center, in your campus wherever you want to do it. And so that's just one example of how we see our customers network operations team taking advantage of a cloud operating model and basically employing their, their tools where they need them and when they need them. >>So what's the scope of, I hope I'm saying it right. Ice, right. I see. I think it's called ice. What's the scope of that like for instance, turn in effect my or even, you know, address simplify my security approach. >>Absolutely. That's now coming to what is the beauty of the product itself? Yes. What you can do is really is that there's a lot of people talking about else. How do I get to zero trust approach to networking? How do I get to a much more dynamic, flexible segmentation in my infrastructure. Again, whether this is only campus X as well as a data center and Ice help today, you can use this as a point to define your policies and then any connect from there. Right. In this particular case we would instant Ice in the cloud as a software load. You now can connect and say, hey, I want to manage and program my network infrastructure and my data center on my campus, going to the respective control over this DNA Center for campus or whether it is the A. C. I. Policy controller. And so yes, what you get as an effect out of this is a very elegant way to automatically manage in one place. What is my policy and then drive the right segmentation in your network infrastructure? >>zero. Trust that, you know, it was pre pandemic. It was kind of a buzzword. Now it's become a mandate. I wonder if we could talk about right. I mean I wonder if you talk about cloud native apps, you got all these developers that are working inside organizations. They're maintaining legacy apps. They're connecting their data to systems in the cloud there, sharing that data. I need these developers, they're rapidly advancing their skill sets. How is Cisco enabling its infrastructure to support this world of cloud? Native making infrastructure more responsive and agile for application developers? >>Yeah. So, you know, we're going to the top of his visibility, we talked about the operating model, how how our network operators actually want to use tools going forward. Now, the next step to this is it's not just the operator. How do they actually, where do they want to put these tools, how they, how they interact with these tools as well as quite frankly as how, let's say, a devops team on application team or Oclock team also wants to take advantage of the program ability of the underlying network. And this is where we're moving into this whole cloud native discussion, right? Which is really two angles, that is the cloud native way, how applications are being built. And then there is the cloud native way, how you interact with infrastructure. Right? And so what we have done is we're a putting in place the on ramps between clouds and then on top of it we're exposing for all these tools, a P I S that can be used in leverage by standard uh cloud tools or uh cloud native tools. Right. And one example or two examples we always have and again, we're on this journey for a while is both answerable uh script capabilities that exist from red hat as well as uh Ashitaka from capabilities that you can orchestrate across infrastructure to drive infrastructure, automation and what what really stands behind it is what either the networking operations team wants to do or even the ap team. They want to be able to describe the application as a code and then drive automatically or programmatically in situation of infrastructure needed for that application. And so what you see us doing is providing all these capability as an interface for all our network tools. Right. Whether it's this ice that I just mentioned, whether this is our D. C. And controllers in the data center, uh whether these are the controllers in the in the campus for all of those, we have cloud native interfaces. So operator or uh devops team can actually interact directly with that infrastructure the way they would do today with everything that lives in the cloud, with everything how they brought the application. >>This is key. You can't even have the conversation of op cloud operating model that includes and comprises on prem without programmable infrastructure. So that's that's very important. Last question, thomas our customers actually using this, they made the announcement today. There are there are there any examples of customers out there doing this? >>We do have a lot of customers out there that are moving down the past and using the D. D. Cisco high performance infrastructure, but also on the compute side as well as on an exercise one of the customers. Uh and this is like an interesting case. It's Rakuten uh record and is a large tackle provider, a mobile five G. Operator uh in Japan and expanding and is in different countries. Uh and so people something oh, cloud, you must be talking about the public cloud provider, the big the big three or four. But if you look at it, there's a lot of the tackle service providers are actually cloud providers as well and expanding very rapidly. And so we're actually very proud to work together with with Rakuten and help them building a high performance uh, data and infrastructure based on hard gig and actually phone a gig uh to drive their deployment to. It's a five G mobile cloud infrastructure, which is which is uh where the whole the whole world where traffic is going. And so it's really exciting to see this development and see the power of automation visibility uh together with the high performance infrastructure becoming reality and delivering actually services, >>you have some great points you're making there. Yes, you have the big four clouds, your enormous, but then you have a lot of actually quite large clouds. Telcos that are either approximate to those clouds or they're in places where those hyper scholars may not have a presence and building out their own infrastructure. So so that's a great case study uh thomas, hey, great having you on. Thanks so much for spending some time with us. >>Yeah, same here. I appreciate it. Thanks a lot. >>I'd like to thank Cisco and our guests today V Joy, Katie VJ, viscous James and thomas for all your insights into this evolving world of hybrid cloud, as we said at the top of the next decade will be defined by an entirely new set of rules. And it's quite possible things will evolve more quickly because the cloud is maturing and has paved the way for a new operating model where everything is delivered as a service, automation has become a mandate because we just can't keep throwing it labor at the problem anymore. And with a I so much more as possible in terms of driving operational efficiencies, simplicity and support of the workloads that are driving the digital transformation that we talk about all the time. This is Dave Volonte and I hope you've enjoyed today's program. Stay Safe, be well and we'll see you next time.

>>from around the globe. It's the Cube with digital coverage of AWS reinvent 2020 sponsored by Intel and AWS. Yeah, welcome back to the Cubes. Live coverage of AWS reinvent 2020. It's virtual this year over three weeks. Next three weeks we're here on the ground, covering all the live action. Hundreds of videos Walter Wall coverage were virtual not in person this year. So we're bringing all the interviews remote. We have Deepak Singh, vice president of Compute Services. A range of things within Amazon's world. He's the container guy. He knows all what's going on with open source. Deepak, great to see you again. Sorry, we can't be in person, but that's the best we could do. Thanks for coming on. And big keynote news all year all over the keynote. Your DNA is everywhere in the keynote. Thanks for coming on. >>Yeah. Now, no thanks for having me again. It's always great to be on the Cube. Unfortunately, not sitting in the middle of the floral arrangement, which I kind of miss. I know, but it waas great morning for us. We had a number of announcements in the container space and sort of adjacent to that in the developer and operator experience space about making it easy for people to adopt things like containers and serverless. So we're pretty excited about. And his keynote today and the rest agreement. >>It's interesting, You know, I've been following Amazon. Now start a three invent. I've been using Amazon since easy to started telling that garment that story. But you look like the mainstream market right now. This is a wake up call for Cloud. Um, mainly because the pandemic has been forced upon everybody. I talked to Andy about that he brought up in the keynote, but you start to get into the meat on the bone here. When you're saying OK, what does it really mean? The containers, the server Lis, Uh, the machine learning all kind of tied together with computers getting faster. So you see an absolute focus of infrastructures of service, which has been the bread and butter for Amazon web services. But now that kinda you know, connective tissue between where the machine learning kicks in. This is where I see containers and lambda and serve Earless really kicking ass and and really fill in the hole there because that's really been the innovation story and containers air all through that and the eks anywhere was to me the big announcement because it shows Amazon's wow vision of taking Amazon to the edge to the data center. This is a big important announcement. Could you explain E. K s anywhere? Because I think this is at the heart of where customers are looking to go to its where the puck is going. You're skating to where the puck is. Explain the importance of eks anywhere. >>Yeah, I'll actually step back. And I talked about a couple of things here on I think some of the other announcements you heard today like the smaller outposts, uh, you know, the one you and do you outpost skills are also part of that story. So I mean, if you look at it, AWS started thinking about what will it take for us to be successful in customers data centers a few years ago? Because customers still have data centers, they're still running there On our first step towards that Waas AWS in many ways benefits a lot from the way we build hardware. How what we do with nitro all the way to see C two instance types that we have. What we have a GPS on our post waas. Can we bring some of the core fundamental properties that AWS has into a customer data center, which then allowed PCs any KS and other AWS services to be run on output? Because that's how we run today. But what we started hearing from customers waas That was not enough for two reasons. One, not all of them have big data centers. They may want to run things on, you know, in a much smaller location. I like to think about things like oil rates of point of sale places, for they may have existing hardware that they still plan to use and intend to use for a very long time with the foundational building blocks easy to EBS. Those get difficult when we go on to hardware. That is not a W s hardware because be very much depend on that. But it containers we know it's possible. So we started thinking about what will it take for us to bring the best of AWS toe help customers run containers in their own data center, so I'll start with kubernetes, so with que binaries. People very often pick Kubernetes because they start continue rising inside their own data centers. And the best solution for them is Cuban Aires. So they learn it very well. They understand it, their organizations are built around it. But then they come to AWS and run any chaos. And while communities is communities, if you're running upstream, something that runs on Prem will run on AWS. They end up in two places in sort of two situations. One, they want to work with AWS. They want to get our support. They want to get our expertise second, most of them once they start running. Eks realized that we have a really nice operational posture of a D. K s. It's very reliable. It scales. They want to bring that same operational posture on Prem. So with the ts anywhere what we decided to do Waas start with the bits underlying eks. The eks destroyed that we announced today it's an open source communities distribution with some additional pieces that that we had some of the items that we use that can be run anywhere. They're not dependent on AWS. You don't even have be connected to a W s to use eks destro, but we will Patrick. We will updated. It's an open source project on get help. So that's a starting point that's available today. No, Over the next several months, what will add is all of the operational to link that we have from chaos, we will make available on premises so that people can operate the Cuban and these clusters on Prem just the way they do on AWS. And then we also announced the U. K s dashboard today which gives you visibility into our communities clusters on AWS, and we'll extend that so that any communities clusters you're running will end up on the dashboard to get a single view into what's going on. And that's the vision for eks anywhere, which is if you're running communities. We have our operational approach to running it. We have a set of tools that we're gonna that we have built. We want everybody to have access to the same tools and then moving from wherever you are to aws becomes super easy cause using the same tooling. We did something similar with the C s as well the DCs anywhere. But we did it a little bit differently. Where in the CSU was centralized control plane and all we want for you is to bring a CPU and memory. The demo for that actually runs in a bunch of raspberry PiS. So as long as you can install the C s agent and connect to an AWS region, you're good to go. So same problem. Different, slightly different solutions. But then we are customers fall into both buckets. So that's that's the general idea is when we say anywhere it means anywhere and we'll meet you there >>and then data centers running the case in the data center and cloud all good stuff. The other thing that came out I want you to explain is the importance of what Andy was getting to around this notion of the monolith versus Micro Services at one slightly put up. And that's where he was talking about Lambda and Containers for smaller compute loads. What does it mean? What was he talking about there? Explain what he means by that >>that Z kind of subtle and quite honestly, it's not unique to London containers. That's the way the world was going, except that with containers and with several functions with panda. You got this new small building blocks that allow you to do it that much better. So you know you can break your application off. In the smaller and smaller pieces, you can have teams that own each of those individual pieces each other pieces. Each of these services can be built using architecture that you secret, some of them makes sense. Purely service, land and media gateway. Other things you may want to run on the C s and target. Ah, third component. You may have be depending on open source ecosystem of applications. And there you may want to run in communities. So what you're doing is taking up what used to be one giant down, breaking up into a number of constituent pieces, each of which is built somewhat independently or at least can be. The problem now is how do you build the infrastructure where the platform teams of visibility in tow, what all the services are they being run properly? And also, how do you scale this within an organization, you can't train an entire organ. Communities overnight takes time similar with similarly with server list eso. That's kind of what I was talking about. That's where the world is going. And then to address that specific problem we announced AWS proton, uh, AWS program is essentially a service that allows you to bring all of these best practices together, allows the centralized team, for example, to decide what are the architectures they want to support. What are the tools that they want to support infrastructure escort, continuous delivery, observe ability. You know all the buzzwords, but that's where the world's going and then give them a single framework where they can deploy these and then the developers can come into self service. It's like I want to build a service using Lambda. I don't even learn how toe put it all together. I'm just gonna put my coat and pointed at this stock that might centralized team has built for me. All I need to do is put a couple of parameters, um, and I'm off to the races and not scale it to end, and it gives you the ability to manage also, So >>it's really kind of the building blocks pushing that out to the customer. I gotta ask you real quick on the proton. That's a fully managed service created best. Could you explain what that means for the developer customer? What's the bottom line? What's the benefit to >>them? So the biggest benefit of developers if they don't need to become an expert at every single technology out there, they can focus on writing application court, not have to learn how to crawl into structure and how pipelines are built and what are the best practices they could choose to do. So the developers, you know, modern and companies Sometimes developers wear two hats and the building off, the sort of underlying scaffolding and the and the build applications for application development. Now all you have to do is in writing an application code and then just go into a proton and say, This is architecture, that I'm going to choose your self, service it and then you're off to the races. If there's any underlying component that's changing, or any updates are coming on, put on it automatically take care off updates for you or give you a signal that says, Hey, the stock has to be updated first time to redeploy accord so you can do all of that in a very automated fashion. That's why everything is done. Infrastructures Gold. It's like a key, uh, infrastructure and told us, and continuous delivery of sort of key foundational principles off put on. And what they basically do is doing something that every company that we talked oh wants to do. But only a handful have the teams and the skill set to do that. It takes a lot of work and it takes ah lot of retraining. And now most companies don't need to do that. Or at least not in that here. So I think this is where the automation and manageability that brings makes life a lot easier. >>Yeah, a lot of drugs. No docker containers. They're very familiar with it. They want to use that. Whatever. Workflow. Quickly explain again to me so I can understand fully the benefit of the lamb container dynamic. Because what was the use case there? What's the problem that you solve? And what does it mean for the developer? What specifically is going on there? What's the What's the benefit? Why would I care? >>Yeah, eso I'll actually talked about one of the services that my team runs called it of your stature. AWS batch has a front time that's completely serverless. It's Lambda and FBI did play its back in the PCs running on the city right? That's the better the back end services run on their customers. Jobs in the running. Our customers are just like that. You know, we have many customers out there that are building services that are either completely service, but they fit that pattern. They are triggered by events. They're taking an event from something and then triggering a bunch of services or their triggering an action which is doing some data processing. And then they have these long running services, which almost universally in our running on containment. How do you bring all of this together into a single framework, as opposed to some people being experts on Lambda and some people being experts and containers? That's not how the real world works. So trying to put all of this because these teams do work together into a single framework was our goal, because that's what we see our customers doing, and I think they'll they'll do it. More related to that is the fact that Lambda now supports Dr Images containing images as a packaging format because a lot of companies have invested in tooling, toe build container images and our land. I can benefit from that as well. While customers get all the, you know, magic, The Lambda brings you >>a couple of years ago on this on the Cube. I shared this tweet out earlier in the week. Andy, we pressed and even services launches like, would you launch build Amazon on Lamb? Day says we probably would. And then he announced to me And he also I think you mentioned the keynote that half of Amazon's new APS are built on lambda. >>Yeah, that's good. This >>is a new generation of developers. >>Oh, absolutely. I mean, you should talk to the Lambda today also, but even like even in the container side, almost half of the new container customers that we have on AWS in 2020 have chosen target, which is serverless containers. They're not picking E c s or E. T. S and running at least two. They're running it on target the vast majority of those two PCs, but we see that trend on the container side as well, and actually it's accelerating. More and more and more new customers will pick target, then running containers on the city. >>Deepak, great to chat with you. I know you gotta go. Thanks for coming on our program. Breaking down the keynote analysis. You've got a great, um, focus area is only going to get hotter and grow faster and a lot more controversy and goodness coming at the same time. So congratulations. >>Thank you. And always good to be here. >>Thanks for coming on. This is the Cube Virtual. We are the Cube. Virtual. I'm John for your host. Thanks for watching.

(upbeat music) >> Live from Boston, Massachusetts, it's theCube, covering AWS reInforce, 2019. Brought to you by Amazon Web Services and its ecosystem partners. >> Okay, welcome back, everyone. We are here live in Boston with theCube's coverage of AWS, Amazon Web Services, reInforce their inaugural conference, getting into the security event business because the customers are here and it's growing like crazy. I'm John Furrier, Dave Vellante. We are two guests of a hot startup called Valtix, Vishal Jain CEO, and Brian Lazear, Chief Product Officer. Valtix, you guys just launched out of stealth, congratulations. >> Thank you. >> You guys got some good pedigree I here, in the company. >> Yeah. >> Welcome to the cube. >> Thank you so much. >> Thank you John. >> Okay, so first of all, before we get to the conference, which I think is very relevant, you guys are are getting out there. What do you guys do? What is Valtix all about? What is the core problem you solve? Why start this company? What's the value proposition? >> Yeah, so Valtix is building the first cloud native network security platform. So before you start a company, you talk to lot of customers, and you talk to customers, and we saw the cloud is real. You can see here, cloud is real. And we saw that network security, have challenges in how to scale in the cloud, that mainly because of three things to look at that main thing is that the cloud is crawling. The data center used to be like three and four. Now the customer says is hard in the morning in the keynote, they have suddenly one than 10, hundred and 30 PCs. So the new logical perimeter you're seeing. Second thing we saw was that the apps are agile. And the third thing is security is always falling behind DevOps. So if you want to make security to be scaled with apps. >> So, you're saying level up the security apps piece to the DevOps pace. So DevOps is kind of pushing things really fast. You mentioned cloud come the new way. I mean, I remember the conversations around Software Defined data center, Brian, that was the holy grail for the on premises activity, was going to put some software on the storage and you got virtualization, we're done. In comes the cloud, changed the game on the Hadoop ecosystem, change the game on the on premises ecosystem. So what has it actually done differently? Where's it going? Where's the game happening now for security with kind of, because software is key to it? Where do you see it? >> Yeah, we definitely see that, I mean, DevOps is doing such a great job in the public cloud. I mean, DevOps is just, they're really doing a great job with the tooling, the teamwork, you know, automation aspects, and traditionally, security is always had a little bit of a lag to that. And in the cloud, that distance is much greater than ever has before so the security teams, particularly we do, which is network security, they are struggling. And so we focus on providing them a really good platform for that. And that platform includes the firewall. So we are building a cloud based firewall, that goes to the customer's premise, it's all structured around a controller, we have a cloud based controller that manages the firewall is in their central place to configure things. And also that controller is very aware of the applications. So we're keen on giving them that cloud-like experience with a vendor like us that comes over the top, and it can provide that capability as they grow. >> And the status of the product is what, shipping? It's a service? >> Yep. >> Explain the product. >> So last week, we did launch. We announced our funding, and we launched the the availability of the product, and it is built as a SAS. So the controller is a SAS model. The customer does own the firewall, we're a software company, so the software goes into their cloud premise, and it has all the services that they need for protecting their network edge. >> So what are the finer aspects, what are the real differences of network security in the cloud relative to traditional network security? >> Yeah, so what we saw was that the enterprises try to bring the our on prem vendor to the cloud, based as boxes, and as you said, a software defined environment, you need to bring up something more. So what we do is, we bring the whole lifecycle and three core elements of that is the visibility that we do the inventory of the apps, across your accounts, across your regions, across the cloud even. And second thing is how to plumb yours in the path and how to build an unified enforcement solution, which is what we call a firewall. So and built on three principles, cloud native, unification, and performance. >> And the the purpose of the company, when was the origination? When would you get the idea? Was it like, you decided to start a company? What was the motivation? >> Yeah, the big motivation was that, again, we talked to our customers, and we saw the cloud is real. But security is a big impediment to the public adoption and that's why we have this conference here, as well. And then we noticed the network security is not scaling the cloud. We like the problem, we found a team. Our team has the networking background, security background, and the cloud background. And we like the problem. We like a team and he said, okay, let's attack this problem and go after the market. >> So the blocker is scale, right? >> Scale and agility. Okay, so it's a company like Cisco is not solving this problem? Yeah, so what they did was they tried to bring the appliances to the cloud, in a virtual form factor. But in this new world of the cloud, getting sprawl. Agile's... You need kind of centralized control model to secure this new logical perimeter. You can't be appliance by appliance to secure the perimeter. You need to have a more data. >> You can't throw boxes at them. >> Yeah. >> Right, whether whether it's physical or virtual Yeah, exactly. I mean, what Vishal's pointing out too is that we want one aspect of what we do is that there's this super elegance to that day zero. You can just click a button and we deploy the gateway through the controller. That gateway is your firewall. Its right there. I mean, its almost instantaneous. So, even that level reflects the cloud native capabilities. That really gets people excited because the alternative is they grudgingly have to go and get the license and build it and build their functions to scale it and we handle all that. >> And I get why the hardware box model doesn't scale. Why doesn't the software defined virtual appliance scale? >> Yeah. Well, the background is that we see a couple competitors. We see the classic NG firewall players and we see the cloud native capabilities. On the cloud native side, they've made efforts to get into a virtual form factor, but its still basically a box. Its a VM form factor. The instrumentation for it, in a cloud environment, its sub-par and there's still a lot of manual effort to get these things up and running. The plumbing, its not... The user experience is very poor. >> So, its really bring your own box as opposed to here's a... >> Yeah and it has to be a solid form factor. >> So, network security, we heard yesterday at the partner event I attended, and I heard the folks from Amazon up there and they're getting serious about this cause they see the big enterprise opportunity. They want channel marketing, all kinds of new things. But, network security kind of has that same vibe that DevOps had. Which was, you have different consumption mechanisms, the customers are buying services, the pricing's different, the scale is different, you have policy, APIs too, its very cloud native. Are customers ready for that or is your controller, Valtix controller the gateway drug to the cloud so to speak cause, certainly if all those things are changing, that means the old just can be retrofitted for the new. You got to have something from scratch. And not a lot of people are lifting and shifting beyond infrastructure as a service. That's easy to replicate with the cloud, but when you get into some of the nuances with the apps that you're mentioning, these new dynamics have to be pure play features. >> Correct. >> Are you a solution to that? Or are you a gateway to that? Its the controller right? >> Yeah, we are a solution. For example, as I said, we do the full lifecycle. We have a controller will discover all your apps, so, an enterprise can have apps that cross your accounts and cross your cloud even and we discover all the apps. Second thing is once we discover the apps, put yourself in the path of security and we do that automatically. Third thing is enforcement. For that, we have two core engines, as I said. Provide re-development, which we call a cloud firewall from Valtix and secondly the cloud controller, which sees everything. So, its a global view of the entire enterprise infrastructure. >> In your marketing documentation, you talk about the trade-offs that people have to make between security and agility. That's always been a trade-off. Do you solve that problems and if so, how? >> So, again when we saw the customer we talked to and they bring their workshop appliances, or appliances to the cloud, then there are two choices they have. One is that are apps agile, but then you cannot secure using the client's model, so you kind of insecure, or naked we call it. The other option is that you must have heard, security slows me down. So you kind of become a secure and rigid. So every time you have a new app, a new EPC, you open a ticket and you install the new firewall. So, what we are giving a third option because both options I gave are bad choices, so we give a third option, which is agile and secure. That's what a centralized controller and a Valtix file will give you that option. >> Vishal and Brian, I want to get your thoughts on why you guys, so be the devil's advocate. You guys are just a startup, although your startups actually doing well in the cloud environment, I'm being a skeptic, I'm trying to shoot my own narrative here. But the reality is you guys are young company, you want to get the attention of the enterprise or customers, what's the pitch? Why you guys? What's your backgrounds, pedigrees, the backgrounds you guys bring to the table with software, talk about why you guys? What's the differentiator? >> In terms of the team, I would say, there are three core pillars, networking, security, and cloud, right? So, this team has built up billions of parkline and deployed in thousands of enterprises and there were two core expertise initially the team was, building fast performance by plans. Second thing is decoupling the control development. I mentioned some of that. So, those are some of the aspects and then you build your team around network expertise, security expertise, and a cloud expertise. >> Have they done it before? >> Yes, multiple times. >> How big's the team? >> The team is right now twenty people. >> Twenty people? And you just raised 14 million or over 14 million? >> Yeah, over 14 million we raised and we announced it last week. >> Yeah, great. Congratulations. >> What are some of the backgrounds of the team members? >> I mean they're Cisco, Juniper, Palo Alto, Google Cloud... >> Fortinet. >> Yeah, Fortinet. Its kind of that bench strength of security in a networking cloud and then I think the other component to that is that we all come from a common denominator of building, hands on building, shipping and marketing products that are transformative. That's also exciting. So, we see this and say, this is clearly transformative or this big market opportunity to help customers and we're like, ecstatic. >> Yeah, the cloud really... It sounds like to me you guys have a real holistic systems view of the world. Because the cloud is essentially an operating system or large, distributed computer and decentralized with crypto and blockchain. Its the system thinking that's interesting. Right, you guys have that... To know the network, you got to know the system. And you get into the apps, you got to understand that middle layer that's developing with Kubernetes and containers. With cloud native, that's developing really fast. So, to see that end to end is more of a systems kind of mindset. A lot of companies are lacking that because they've outsourced everything to global SI's and now they got to rebuild. Capital One's Sie So said, we're investing everything building. We're building more. So, they're builders, they're systems guys. What's your reaction to that? >> Yeah, so basically we also know this, that all of the enterprise we talk to were told that a lot of wine products, what we're building the platform. So, we'll be starting off with the food services, but its a platform, so a wholistic platform could do the full network security in the public cloud. That's what we are working towards. >> What's the differentiator? Why you guys? What's the main value proposition that you guys bring to the table? What's in it for the customer? >> Correct, the main value proposition is the team can build it and second thing is taking a cloud related approach to this problem. We are building for the cloud and we are building using the cloud are the principles. >> So you just went through your raise, so all these answers to the questions are fresh in your mind. But, Brian you talked about a large market. Help us understand that because the market is enormous, its like a hundred billion dollars or whatever it is, but its so fragmented, there's so many different segments. How do you guys look at the TAM and then the served market for you guys, that you go after? >> Our goal is to protect their data center, this new data center, basically everything that's going in or out of the data center on the network side, that's our focus. We didn't mention some of these services, but in the product we're shipping right now, it does decryption of TLS traffic, it does firewall, it does intrusion prevention, it does WAF, so it has this, and more, so there's this set of things that when we talk to the customers, they'll say, my blueprint for the cloud is like the prep, I have to stack all these things together, risk in security says you have to emulate that environment, its worked well here, make it happen out there. And so that's where you see people getting a little bit amped up. Its hard to do that. We have a platform that can consolidates that really well and knows the system level things that John was mentioning, but it is covering a lot of space, but we are very optimistic. We're making good grounds with that. >> So its a platform approach versus five, six products? >> Exactly, so the consolidation story connects really well. >> What's the most important story that needs to be told in the security industry today in your opinion? What do you think that customers should know about, that the media and or the industry should be discussing? >> The main thing is that we talk about DevOps. DevOps is very agile. So one thing is the current security is slowing me down. Security has to be agile, especially network security, we have heard in the past, slows you down. So that's, in the cloud world, the main reason people are going to cloud is because of the agility and network security should not stop that. >> So, security's slowing down... >> Yeah and we don't want that. >> Its a deep bottleneck for mass adoption, we're seeing that more and more and that problem statement, there's a lot of Ops angles to this. Its understanding, like multi-AZ deploys and the Transit Gateway, the new Transit Gateway from Amazon and how does this all work together and we're on top of that in the network security perspective. >> What do you think about the show here? Amazon's inaugural re:Inforce. Its not a summit, summits are regional re-invents. This is its own name, just like re-invent's different for the customer. Re-invent isn't re:Inforce. Pretty important, pretty strategic for Amazon Web Services. What do you guys think? >> I think its great. I mean, we have been using all alternatives like Transit, their mutilated support, the ST bucket. We use all the infrastructure they provide. Its always good to know what they are doing because in the reinvent around Transit Gateway and we incorporate that into our product. So, we want to be ahead of what they announcing, incorporate that and giving our customer what they need as a whole solution. >> So, Brian you're running the product, Chief Product Officer. What's on the roadmap? (laughter) >> Lots of good stuff. >> C'mon! >> We're very busy. >> Feed your request coming in. Give you their services, you could just bang them out, no big deal. (talking over each other) >> Just so easy, 2,000 a year. Amazon does it, you could do a couple hundred a year, no problem. >> There's probably a couple things. One is that we will continue to expand to other clouds because our customers want that. But its also just about more capabilities. So, they're seeing what we could do today. There's a lot that it could do and they're with us, they're on the journey with us and saying we want more help and this show is an example of that. The cloud is becoming more than a thing and security's getting emphasized, literally, its emphasized here. So, we're happy to help our customers along. >> Well you guys are launched, what's the priority? You're obviously hiring, what kind of culture do you have? What are some of your needs here? Put a plug for the company real quick. >> In terms of hiring, initially I'm also hiring more engineering, building the product. They're the core of the engine. But, now we are expanding the go to market team, we have sales, marketing and we are going to expand on both the sides, like sell and build more and sell more. >> Yeah, get the revenue in. Congratulations, hot startup. Good job, well done. Thanks for coming on theCube. >> Thanks John. >> Valtix launching with new product out of stealth with funding, getting off the runway, here at Amazon Websters Re:Invent theCube coverage. I'm John Furrier, Dave Vellante. Stay with us for more after this short break. (upbeat music)

>> Female Voice: From San Francisco, it's theCUBE, covering VMware RADIO 2019, brought to you by VMware. >> Welcome to theCUBE's exclusive coverage of VMware RADIO 2019, Lisa Martin with John Furrier in San Francisco, talking all sorts of innovation in this innovation long history culture at VMware, welcoming back to theCUBE, Mornay Van Der Walt, VP of R&D in the Explorer Group. Mornay, thank you for joining John and me on theCUBE today. >> Thank you for having me. >> So, I got to start with Explorer Group. Super cool name. >> Yeah. >> What is that within R&D? >> So the origins of the Explorer Group. I've had many roles at VMware, and I've been fortunate enough to do a little bit of everything. Technical marketing; product development; business development; one of the big things I did before the Explorer group was created was actually EVO:RAIL. I was the founder of that, pitched that idea. Raghu and Ray and Pat were very supportive. We took that to market, took it to (inaudible), handed that off to Dell EMC, the rest is history, right? And then was, "what's next?" So Ray and me look at some special projects, go and look at IoT, go and look at Telemetry, and did some orders for them, and then said "Alright, why don't you look at all our innovation programs." Because beyond RADIO, we actually have four other programs. And everyone, was -- RADIO gets a lot of airtime and press, but it's really the collective. It's the power of those other four programs that support RADIO that allow us to take an idea from inception to an impactful outcome. So hence the name, the Explorer Group. We're going out there, we're exploring for new ideas, new technologies, what's happening in the market. >> Talk about the R&D management style. You've actually got all these-- RADIO's one-- kind of a celebration, it's kind of the best of the best come together, with papers and submissions. Kind of a symposium meets kind of a, you know, successive end for all the top engineers. There's more, as you've mentioned. How does all of it work? Because, in this modern era of distributed teams, decentralization, decisions around business, decisions on allocating to the portfolio, what gets invested, money, spend, how do you organize? Give a quick minute to explain how R&D is structured. >> So, obviously, we have the BUs structured-- well there's PCS, Raghu and Rajeev head that up. And then we've got the OCTO organization, which Ray O'Farrell heads up. And the business, you know, it's innovating every day to get products out the door, right, and that's something that we've got to be mindful of because, I mean, that's ultimately what's allowing us to get products into the hands of our customers, solving tough problems. But then in addition to that, we want to give our engineers an avenue to go and explore, and, you know, tinker on something that's maybe related to their day job, or completely off, unrelated to their day job. The other thing that's important is, we also want to give, because we're such a global R&D, you know, our setup globally, we want to give teams the opportunity to work together, collaborate together, get that diversity of thought going, and so a lot of times, if we do a Hackathon, which we call a Borathon, we actually give bonus points if teams pull from outside of their business units. So you've got an idea, well, let's make it a diverse idea in terms of thought and perspective. If you're from the storage business unit, bring in folks from the network business unit. Bring in folks from the cloud business unit. Maybe you've partnered with some folks that are in IT. It's very, you know, sometimes engineers will go, "Ah, it's just R&D that's innovating." But in reality, there's great innovation coming out of our IT department. There's great innovation coming out of our global support organization. Our SEs that are on the front lines, sometimes are seeing the customers' pain points firsthand, and then they bring that back, and some of that makes it into the product. >> How much of R&D is applied R&D, which is kind of business unit aligned, or somewhat aligned, versus the wacky, crazy ideas: "Go solve a big, hairy problem", that's out there, that's not, kind of, related to the current product sets? >> Ah, that's tough to put an actual number on it, >> John: Well ballpark, I mean. >> But if I just say, like, if I had to just think about budgets and that, it's probably ten to fifteen percent is the wacky stuff, that's, you know, not tied to a roadmap, that's why we call it "off-road innovation", and the five programs that my Explorer Group ultimately leads is all about driving that off-road innovation. And eventually you want to find an on-ramp, >> Yeah. >> to a roadmap, you know, that's aligned to a business unit, or a new emerging, you know, technology. >> How does someone come up with an idea and say, "Hey, you know, I want to do this"? Do they submit, like, a form? Is there a proposal? Who approves it? I mean, do you get involved? How does that process work? >> So that's a good question. It really depends on the engineer, right? You take someone who's just a new college grad, straight out of, you know, college. That's why we have these five programs. Because some of these folks, they've got a good idea, but they don't really know how to frame it, pitch it. And so if you've got a good idea, and let's say, this is your first rodeo, so to speak, We have a program called TechTalks where it allows you to actually go and pitch your idea; get some feedback. And that's sometimes where you get the best feedback, because you go and, you know, present your idea, and somebody will come back and say, "Well, you know, have you met, you know, Johnny and Sue over there, in this group? They're actually working on something similar. You should go and talk to them, maybe you guys can bring your ideas together." Folks that are, you know, more seasoned, you know, longer tenure, sometimes they just come up, and-- "I'm going to pitch an idea to xLabs," and for xLabs, for example --that's an internal incubator-- there is, like, a submissions process. We want to obviously make sure, that, you know, your idea's timing in the market's correct, we've got limited funding there so we're going to make sure we're really investing on the right, you know, type of ideas. But if you don't want to go and pitch your idea and get feedback, go and do a Borathon. Turn an idea into a little prototype. And we see a lot of that happening, and some of the greatest ideas are coming from our Borathons, you know? And it's also about tracking the journey. So, we have RADIO here today, we have mentioned xLabs, TechTalks, we have another program called Flings. Some of our engineers are shipping product, and they've got an idea to augment the product. They put it out as a Fling, and our customers and the ecosystem download these, and it augments the product. And then we get great feedback. And then that makes it back into the product roadmap. So there's a lot of different ways to do it, and RADIO, the process for RADIO, there's a lot of rigor in it. It's, like, it's run as a research program. >> Lisa: It's a call for papers, right? >> Call for papers, you know, there's a strict format, it's got to be, you know, this many pages; if you go over about one line, you're sort of, disqualified, so to speak. And then once you've got those papers, like this year we had 560 papers be submitted, out of those 560, 31 made it onto mainstage, and another 61 made it as posters, as you can see in the room we're sitting in. >> I have an idea. Machine learning should get all those papers. (laughs) I mean, that's-- >> Funny you say that. We actually have, one of our engineers, Josh Simons, is actually using machine learning to go back in time and look at all the submissions. So idea harvesting is something we're paying a lot of attention to, because you submit an idea, >> Interesting. >> the market may not be right for it, or reality is, I just don't have a budget to fund it if it's an xLab. >> John: So it's like a Google search for your, kind of, the indexing all those workers. >> Internally, yeah, and sometimes it's-- there's a great idea here, you merge that with another idea from another group or another geo, and then you can actually go and fund something. >> Well, that's important because timing is critical, in these early-- most stuff can be early in just incubation, gestation period for that tech or concept, could be in play because the computer-- all the new things, right? >> Correct. And, do you actually have the time? You're an engineer working on a release, the priority is getting that release out the door, right? >> (laughs) >> So, put the idea on the back burner, come off the release, and then, you know, get a couple of colleagues together and maybe there's a Borathon being held and you go and move that idea forward that way. Or, it's time for RADIO submissions, get a couple of colleagues together and submit a RADIO paper. So we want to have different platforms for our engineers to submit ideas outside of their day job. >> And it sounds like, the different programs that you're talking about: Flings, xLab, Borathon, RADIO, what it sounds like is, there isn't necessarily a hierarchy that ideas have to go through. It really depends on the teams that have the ideas, that are collaborating, and they can put them forward to any of these programs, >> Correct, yeah. >> and one might get, say, rejected for RADIO, but might be great for a Borathon or a Fling? >> Correct. >> So they've got options there, and there's multiple committees, I imagine? Is that spearheaded out of Ray's OCTO group, >> Yep. >> that's helping to make the selections? Tell us a little bit about that process. >> Sure, so. That's a great point, right? To get an idea out the door, you don't always have to take the same pathway. And so one thing we started tracking was these innovation journeys that all take different pathways. We just published an impact report on innovation for FY19, and we've got the vSAN story in there, right? It was an idea. A group of engineers had an idea, like, in 2009, and they worked on their idea a little bit-- it first made it to RADIO in 2011. And then they came back in 2013, and, sort of, the rest is history, you know. vSAN launched in 2014. We had a press release this week for Carbon Avoidance Meter. It was an idea that actually started as a calculator many years ago. Was used, and then sort of died on the vine, so to speak? One of our SEs said, "You know, this is a good idea. I want to evolve this a little bit further." Came and pitched an xLabs idea, and we said, "Alright, we're going to fund this as an xLabs Lite. Three to six months project, limited funding, work on one objective --you're still doing your day job-- move the project forward a little bit." Then Nicola Acutt, our Sustainability VP, got involved, wanted to move the idea a little bit further along, came back for another round of funding through an xLabs Lite, and then GSS, with their Skyline platform, picked it up, and that's going to be integrated in the coming months into Skyline, and we're going to be able to give our customers a carbon, sort of, readout of their data center. And then they'll be able to, you know, map that, and get a bigger picture, because obviously, it's not just the servers that are virtualized, there's cooling in the data center plants, and all these other factors that you've got to, you know, take into account when you want to look at your carbon footprint for your facility. So, we have lots of examples of how these innovation pathways take different turns, and sometimes it's Team A starting with an idea, Team B joins in, and then there's this convergence at a particular point, and then it goes nowhere for a couple of months, and then, a business unit picks it up. >> One of the things that's come out-- Pat Gelsinger mentioned that a theme outside of the normal product stuff is how people do work. There's been some actual R&D around it, because you guys have a lot of distributed, decentralized operations in R&D because of the global nature. >> Yeah. >> How should companies and R&D be run when the reality is that developers could be anywhere? They could be at a coffee shop, they could be overseas, they could be in any geography, how do you create an environment where you have that kind of innovation? Can you just share some of the best practices that you guys have found? >> I'm not sure if there's 'best practices', per se, but to make sure that the programs are open and inclusive to everybody on the planet. So, I'll give you some stats. For example, when RADIO started in the early days, we were founded in Palo Alto. It was a very Palo Alto-centric company. And for the first few years, if you looked at the percentage of attendees, it was probably over 75% were coming from Palo Alto. We've now over the years shifted that, to where Palo Alto probably represents about 44%, 16% is the rest of North America, and then the balance is from across the globe. And so that shift has been deliberate, obviously that impacts the budget a little bit, but in our programs, like a Borathon, you can hack from anywhere. We've got a lot of folks that are remote office workers, using, you know, collaborative tools, they can be part of a team. If the Borathon's happening in China, it doesn't stop somebody in Palo Alto or in Israel or in Bulgaria, participating. And, you know, that's the beautiful nature of being global, right? If you think about how products get out of the door, sometimes you've got teams and you are literally following the sun, and you're doing handoff, you know, from Team A to B to C, but at the end of the day you're delivering one product. And so that's just part of our culture, I mean, everybody's open to that, we don't say, "Oh, we can't work with those guys because they're in that geo-location." It's pretty open. >> This is also, really, an essential driver, and I think I saw last year's RADIO, there were participants from 25+ countries. But this is an essential-- not only is VMware a global company, but many of your customers are as well, and they have very similar operating models. So that thought diversity, to be able to build that into the R&D process is critical. >> Absolutely. And also, think about, you know, when you're going to Europe. Smaller borders, countries, you deploy technology differently. And so, you want to have that diversity in thought as well, because you don't just want to be thinking, "Alright, we're going to deploy a disaster recovery product in North America where they can fail over from, you know, East Coast to West Coast. You go to Europe, and typically you're failing over from, you know, site A to site B, and they're literally three or four miles apart. And so, just having that perspective as well, is very important. And we see that, you know, when we release certain products, you'll get, you know, better uptick in a certain geo, and then, "Why is it stalling over here?" well it's, sometimes it's cultural, right? How do you deploy that technology? Just because it works in the US, doesn't mean it's going to work in Europe or in APJ. >> How was your team involved in the commercialization? You mentioned vSAN and the history of that, but I'm just wondering, looking at it from an investment standpoint of deciding which projects to invest in, and then there's also the-- if they're ready to go to market, the balance of "How much do we need to invest in sales and marketing to be able to get this great idea-- because if we can't market it and sell it, you know, then there's obviously no point." So what's that balance like, within your organization, about, "how do we commercialize this effectively, at scale"? >> So that is ultimately not the responsibility of my group. We'll incubate ideas, like, for example, through an xLabs project. And, you know, sometimes we'll get to a point and we'll work, collaborate with a business unit, and we'll say, "Alright, we feel this project's probably a 24 months project", if it's an xLabs Full. So these folks are truly giving up their day job. But at the end of the day, you want to have an exit and when we say exit, what does that exit mean? Is that an exit into a business unit? Are you exiting the xLabs project because we're now out of funding? You know, think about a VC, I'm going to fund you to, you know, to a particular point; if there is no market traction, >> Right. >> we may, you know, sunset the project. And, you know, so our goal is to get these ideas, select which ones we want to invest in, and then find a sort of off-ramp into a business unit. And sometimes there'll be an off-ramp into a business unit, and the project goes on for a couple of months, and then we make a decision, right? And it's not a personal decision, it's like, "Well we funded that as an xLabs; we're now going to shut it down because, you know, we're going to go and make an acquisition in this space. And with the talent that's going to come onboard, the talent that was working on this xLab project, we can push the agenda forward." >> John: You have a lot of action going on so you move people around. >> Exactly. >> Kind of like the cloud, elastic resource, yeah? (laughs) >> So, then, some of these things, because xLabs is only a two-year-old, you know, we haven't had things exit yet that are, you know, running within a business unit that we're seeing this material impact. You know, from a revenue point of view. So that's why tracking the journeys is very important. And, you know, stay tuned, maybe in about three or four years we'll have this, similar, you know, interview, and I'll be able to say, "Yeah, you know, that started as an xLab, and now it's three years into the market, and look at the run rate. >> So there's 31-- last question for you-- there's 31 projects that were presented on mainstage. Are there any that you could kind of see, early on, "ooh", you know, those top five? Anything that really kind of sticks out-- you don't have to explain it in detail, but I'm just curious, can you see some of that opportunity in advance? >> Absolutely. There's been some great papers up on mainstage. And covering, you know, things on the networking side, there's a lot of innovation going in on the storage side. If you think about data, right, the explosion of data because of edge computing, how are you going to manage that data? How are you going to take, you know, make informed decisions on that data? How can you manipulate that data? What are you going to have to do from a dedupe point of view, or a replication point of view, because you want to get that to many locations, quickly? So, I saw some really good papers on data orchestration, manipulation, get it out to many places, it can take an informed decision. I saw great-- there was a great paper on, you know, you want to go and put something in AWS. There's a bull that you get at the end of the month, right? Sometimes those bulls can be a little bit frightening, right? You know, what can you do to make sure that you manage those bulls correctly? And sometimes, the innovation has got nothing to do with the product per se, but it has to do with how we're going to develop. So we have some innovation on the floor here where an engineer has looked at a different way of, basically, creating an application. And so, there's a ton of these ideas, so after RADIO, it doesn't stop there. Now the idea harvesting starts, right? So yes, there were 31 papers that made it onto mainstage, 61 that are posters here. During that review process, and you asked that question earlier and I apologize, I didn't answer it-- you know, when we look at the papers, there's a team of over 100 folks from across the globe that are reviewing these papers. During that review process, they'll flag things like "This is not going to make it onto mainstage, but the idea here is very novel; we should send this off to our IP team," you know. So this year at RADIO, there were 250 papers that were flagged for further followup with our IP team, so, do we go and then file an IDF, Invention Disclosure Form, do those then become patents, you know? So if we look at the data last year, it was 210. Out of those 210, 74 patents were filed. So there's a lot of work that now will happen post-RADIO. Some of these papers come in, they don't make it onto mainstage; they might become a poster. But at the same time they're getting flagged for a business unit. So from last year, there were 39 ideas that were submitted that are now being mapped to roadmap across the BUs. Some of these papers are great for academic research programs, so David Tennenhouse's research group will take these papers and then, you know, evolve them a little bit more, and then go and present them at academic conferences around the world. So there's a lot of, like, the "what's next?" aspect of RADIO has become a really big deal for us. >> The potential is massive. Well, Mornay, thank you so much for joining John and me, >> Thank you. >> and I've got to follow xLabs, there's just a lot of >> (laughs) >> really, really, innovative things that are so collaborative, coming forward. We thank you for your time. >> Thank you. >> For John Furrier, I'm Lisa Martin; you're watching theCUBE, exclusive coverage of VMware RADIO 2019, from San Francisco. Thanks for watching.

>> Live from Las Vegas it's theCUBE, covering Dell Technologies World 2019 brought to you by Dell Technologies and its ecosystem partners. >> Okay welcome back everyone we are here live in Las Vegas with Dell Technology World 2019 and I'm John Furrier and my co-host Dave Vellante breaking down all the action, three days of wall-to-wall coverage. We go all day, all night here at Dell's great event. We're here with the CMO of Dell Technology Allison Dew, great to see you, thanks for coming on. >> My pleasure, it's nice to be here. >> Good to see you again, Allison. >> It's fun. >> What a show, action-packed as always. We got two sets, we call it the theCUBE content cannons. We're just firing off content, a lot of conversations, a lot of boxes being checked, but also growth, lookin' at the numbers. The business performance of Dell is strong. Leadership across all categories, large-scale, and an integrated approach with the products and the relationship with VMware paying off in big-time. Azure News, Microsoft integrating in, so a lot of great product leadership, business results, things are booming at Dell Technologies. >> They really are and you know, when you think about the journey for us in particular over the last three years since starting the EMC combination, and all of the things that are written about integrations, technology integrations of this scale and scope, and you look at what the teams together have successfully done, the business performance, the share growth across categories, and as of today, the true end-to-end solutions that we're announcing in partnership with VMware and Secureworks. And we tend to be a pretty humble culture, but I will say, I think it's a pretty impressive result, when you look at most integrations are focused on don't break anything, and not only did we not break anything, we've kept the trust of our customers, we've continued to grow the customer base, and now we're really focused on, how across the Dell Technologies family, primarily with VMware and Secureworks and Pivotal do we bring to life the solutions that solve our customers' biggest IT problems. Pretty amazing spot to be in. >> You know one of the luxuries of doing theCUBE for 10 years is that we've had conversations over 10 years and I remember many years ago when Michael was about to go private, we saw him in Austin, was a small Dell world back then, we had two conferences, and he was standing there alone. We approached him, Dave and I, and we had a long conversation with him, he was very approachable, and then when he talked about, when he did the private and then the acquisition at these points, everyone was pooh-poohing it at saying, it's a declining market, things are going, why would you want to do this? Obviously the scale benefits are showing, but the macroeconomic conditions of the marketplace, you couldn't be happier for. Public cloud drove a lot of application deployment, you have SAS businesses started, you have on-premise booming, refresh and infrastructure, a complete growth. >> Right. >> Yeah, there's actual growth there. >> Right. >> So the bet paid off. You as a marketer have to market this now, so what's your strategy because you have digital transformation as the kind of standard positioning posture, but as you have to market Dell Technology on the portfolio of capabilities, which is large, I can only imagine it's challenging. >> So let me actually back up, and to one of the points that you talked about, and then I'll answer your actual question. So I can't remember off the top of my head, but we very jokingly talk about, in the era since the PC was declared dead, we have sold billions of PCs right and it would be funnier if I could remember the number, but you know we used to joke around with Jeff Clark, ala Monty Python, I'm not dead yet. >> Yeah. >> And so you get this hype about what's happening in the industry, and the truth is it's actually a very different picture than some of that hype, and one of the reasons I think that's important is because obviously we've continued to take share on the PC business, we've continued to grow there, but we also believe that the hype sometimes applies to these other technology cycles as well. So if you go back a couple of years ago, it was everything was going to the public cloud. If you don't go to the public cloud you are a dinosaur. You don't know what you're doing. You're going to go out of business. The traditional infrastructure companies are going to go out of the business, and to be honest, that is also just nonsense, right. And so if you think about what's evolving, is we believe very firmly that we're going to see the continued growth of a hybrid cloud, multi-cloud world and it's not one thing or the other. And in fact, when you look at all of the research around the economics of doing one or the other, it all becomes workload-dependent. So for some workloads you should go to the public cloud. For some workloads, you should have it on-prem and that conversation may not be as interesting a headline, but it's the truth. >> It's reality actually. >> It's the truth. >> Well it's also reality, the workloads are dictating what the architecture should be or the solutions. That's what you're saying is a reality. >> Exactly, and so that's why we're so excited about the announcements that we had this morning with VMware, with Microsoft. We're really talking about a multi-cloud, hybrid cloud world, and across all of the solutions that we announced this morning. The key, continuity and what we're really focused on, sounds so hackneyed, is how do we make it simpler for our customers? How do you make it simpler to manage and deploy PCs? How do you make it simpler to manage and deploy your cloud environment, that's it. >> So let's talk about the show a little bit, let's see 15,000 attendees, 122 countries represented, 4,000 channel partners, 250 industry analysts and media folks, so pretty big numbers. You could see it in the hallways. It's not quiet. You're kind of doing a lot of this. >> It's actually sort of hard to pay attention to you guys with all the noise in the background. You must be used to it. I'm like a goldfish, like what's happening? >> Now the interesting thing to me is, and we were talking about you know, it's the transitions, consolidations, oh it's traditional infrastructure companies are dead, et cetera, et cetera. I'd observe that over the years the testament of today's leaders is they respond, they don't just sit back and say oh Unix is snake-oil. Do you remember that famous quote? Look at what Microsoft has done, but my point is Michael's keynote today, it wasn't about a bunch of products, it was about big visions, solving a lot of the world's problems, and really conveying that Dell is in a position to help these companies as a partner. I presume you had some input to that keynote, I just wonder. >> I hope so. (laughs) >> What the thinking was there? >> So there's a lot of conversation and it's, you don't have to go that far in the media to read everything about technology as a force of evil in the world. One of the things that you notice, Michael's keynote this morning and I'll come back to what we're doing about it again later this week, is we are putting a very firm stake in the ground that we believe that technology is overall a force for positive change in the world and we're having a conversation about that on Wednesday that I'll talk a little bit more about in a second. And there's a subtlety there, that I think sometimes again, may not be the most interesting headline but is true, which is technology in aggregate drives great progress in the world, however we as leaders, we as humans, also have a responsibility to drive the responsible use of technology and so you see some of the conversations that we're having later this week in the Guru sessions, for example, where Joy Bilal-Meany is talking about responsible use of AI and some of the inherent biases in AI. Those are the tough issues that leaders need to be tackling now. >> Yeah well and one of the other you know, you're right a trade press loves to pick up on it and pick at it but one of the things to talk about, of course, is jobs, automation affecting jobs, I know Erik Brynjolfsson is one of your speakers, he's been on theCUBE before, and the discussion we had was machines have always replaced humans. For the first time ever,now they're replacing humans in cognitive functions. So the the answer is not protect the past from the future it's educate people, find new ways to be creative. I mean, technology has always been-- >> That's right. >> Part of human good and human advancement. There's always a two-sided coin, but it's got to be managed. >> That's right, one of the conversations that I think gets lost is when we talk about, I am a Battlestar Galactica fan, the second one not the one from the 70s, so you know I always say jokingly-- >> Darn. >> Yeah, yeah. >> We're a little older. >> Did you watch the one from the 2,000s? >> Yes, of course. >> 2,000s are so good. You know the conversation about are the Cylons coming to get us? And is AI really the thing that's destroying what's happening for human populations? The reality is AI has been evolving for many years, so it's not actually new. What is new is the combination of AI and data and the compute power to make that real and I do think it requires a different conversation with societies, with employers about how do you continue to reeducate your employee base? What does that mean? And that is really meaty stuff that we need to be leaning into. On aside, you've got me thinking of this whole Battlestar Galactica. My mind's thinking Star Trek, Star Wars. I heard a rumor that you guys had so many unhappy employees because Game of Thrones was on yesterday. >> Yeah. >> That you actually rented a big screen? >> Yeah, we did. >> A lot of Game of Thrones fans? Are you in that mix? >> So yeah. >> No spoiler alerts. >> No, I won't say anything about what happened. But I'll tell you, so we have all of our employees who work at the show, have to get here on Saturday or Sunday at the very latest. And even me personally, we came to Las Vegas and I thought, well I can watch it in my hotel room and then my hotel room didn't have HBO and I thought I don't really want to watch it on my little HBO Go app that's about this big because we're all waiting for what's going to happen in episode three, and I won't tell you if you haven't seen it. >> It's a lot of battling. >> So exactly, so my team and I had this conversation about could we have a joint viewing of Game of Thrones and it's really my team who did all of the work, but it was super-fun and we had a party with a bunch of team, had a few beers and it was fun. >> That's a great culture. >> I just wanted to get that out there. I think, cool culture. Allison, you mentioned something about the press and stories for good and how people looking for headlines. You know we're not advertising, so we're not trying to chase the clickbait, it's about getting the story right and sometimes the boring story doesn't get the headlines. Or the page views, advertising. So we're in a world now where a lot of other people in the media, they're censoring posts, there was an incident on Forbes where I wrote a negative post about a company and they took it down, that was Oracle. A lot of journalists looking for stories just to put tech in a bad spot. >> Right. >> And there's a lot of tech for good, but a lot of people can't point to one thing saying that's an example for tech for good and there's some few out there missing children, exploited children, trafficking, all kinds of things, talk about that dynamic because this is changing how you market, how people consume. You have the role of open communities. >> Yep. >> Social networking. A lot of dynamics going on. How do you view all this? >> So first of all, I think so much of the conversation about tech for good or tech for bad actually indexes only on social media and media broadly, and perhaps that's because it's the media who are writing about that. And so there's sort of this loop that we get in and I do think there are real issues that we need to think about in terms of social media. You guys likely saw Kara Swisher had a an op-ed in the New York Times after the Sri Lankan bombings where she, long-term technology advocate, actually said after the Sri Lankan bombings when the government shut down all social media communications, I thought that was a good thing and so that probably actually did help with the immediate situation on the ground and yet is a very scary precedent, right? I'd like to to take the conversation and say what about media? Right, so there's a lot of work that we need to do in order to maintain media fairness and then there's a whole other conversation about technology that we're not talking about. Everything that we're doing in terms of medicine and indexing the human genome, and addressing deafness and Michael talked about that even this morning, there are these really big technology problems that were really leaning into, and yet we're either talking about Amazon drone delivery or what Facebook is doing. We need to talk about those, but let's talk about where technology is really struggling to address real problems. >> I just read an essay yesterday from Dana Boyd who wrote a great fascinating piece around extremism in social media. Media's being hijacked by these extreme groups and they're mixing up causation and correlation and conflating many things to just tell a story to support an initiatives, no curation. >> Right. >> And with social media everything's open so that just flies out there. And so that's a big problem. >> And then takes off, you know. >> So how do you deal with that as a CMO 'cause you're spending advertising dollars. You're trying to deploy capital. You now have a new open source kind of mindset around communities customers are shopping themselves now. >> Right, so this is going to sound possibly a little bit overly simplistic but what I am responsible for in my job is the reputation and brand of this company right. I think about other things in terms of how we think about media and everything but I want to make sure that we are spending our media dollars in a responsible way and yet also recognize that people can disagree with us and that's okay and be comfortable with, we can be both a media advertiser on a publication who might write a review where they don't like one of our products and I'm never going to be in the business of saying take down our media dollars because that sets a terrible precedent and frankly there are people who would say take down our media dollars so that's one thing that we're really focused on. And then the other is, we consistently year-over-year are recognized as one of the world's most ethical companies and I will tell you from the leadership with Michael across the board I believe that that is true. And we actually think about business in an ethical way and we behave in an ethical way and that's why frankly you're not reading those headlines about us which are a lot more problematic. >> It's a cultural thing you guys have. Michael's always been a direct-to-consumer. That's been a direct mail, back in the glory days, now-- >> We still do that actually. >> Cloud, SAS, he texts me all the time. Hey John, what's going on? So he's he's open. >> Yeah. >> He's also now with Cloud and SAS, it's a direct to consumer business. >> I love your positive attitude. You have a session tomorrow, Optimism and Happiness in the Digital Age, looking forward to that. I have a personal question. So you started out your career, I think, in East Asia studies, right? >> That's right, good memory. >> You speak multiple languages. >> Yeah. >> I think three languages? >> If you count English, three. >> Yes okay so you're trilingual. >> Trilingual, yeah. >> If you speak two, you're what? >> Bilingual. >> Speak one, you're what? >> Monolingual, American. (all laughing) American, I was like, I know this joke. >> I wonder how that affected sort of your career? >> Absolutely. >> In terms of getting into this business. >> I would first say that I was an incredibly naive undergraduate. I wanted to be an editor of a paper and I loved foreign languages. So I studied Japanese and French and that led me to going to Japan as a very naive 22 year old and I started working in this small Japanese ad agency. I was the only non-Japanese person in that company and of course I learned some functional things in terms of the art of advertising but what I actually learned was how to survive in an environment that was so different to mine. Even if you speak Japanese, it is a language of unsaid things and you have to constantly be figuring out what's actually happening here and so ironically that decision that I made at 18, very naively, to study Japanese is one of the things that sets the course of my life because I've always been, my entire career, in international jobs and I think if I ever had to come back to just being in an American job, I wouldn't know what to do with myself, I'd be so bored. And it's also one of the reasons when we talk about technology and education and AI and what are robots going to do, This is my personal opinion, somewhat controversial opinion which is of course we need to support STEM, of course I want to see more women in STEM. At the same time, I want to see us focus our children on critical thinking skills. How do you write well? How do you have an argument? How do you convince somebody? And that's because until I went to business school I was a liberal arts major born and bred and so that's not the pat answer that you expect from somebody in my job which is it's all about STEM. It's about STEM and more. >> Emotional quotient's a big thing we're seeing a lot. The whole self. That's a big part of the kids growing up being aware. >> Yeah. >> Socially emotional. Allison, thanks coming on theCUBE and sharing. >> My pleasure. >> Great insights here in theCUBE. We're here with the CMO, Allison Dew, with Dell Technologies. I'm John Furrier, Dave Vellante. Stay with us for more day one coverage after this short break. >> Awesome. (upbeat electronic music)

(upbeat music) >> Live from Las Vegas. It's the Cube. Covering, Boomi World, 2018. Brought to you by Dell Boomi. >> Hello everyone, welcome to the live Cube coverage here in Las Vegas, the Wynn Hotel for Dell Boomi World 18. So, exclusive coverage. We're here all day. Wall to wall coverage covering the impact of cloud native to application developers and owners and for businesses. I'm John Furrier with Lisa Martin here. We're here with Michael Dell. 13th time on the Cube. He's the founder and CEO of Dell Technologies. Continuing to defy logic. Growing leaps and bounds. Continuing to do more in the new era of IT and computing. Mike, great to see you. Thanks for coming. >> Great to be with you. Lisa, John, always fun. And here at Boomi World it's really exciting to see the ecosystem continue to grow. As people try to connect everything together Boomi is right there. Incredible business last quarter. Booking growth, 80%, 7500 customers. I still can't find a customer that doesn't need Boomi. The team continues to evolve what the capabilities. We've just had a great show here. 1000 customers showed up. Lot's of great customer stories about how they're integrating all their apps and data together. With the tsunami of data that is coming, it just gets more and more important and interesting and fun. >> You know, you mentioned on the key note stage with CEO Boomi, talking about some performance numbers that you always throw out, server growth. Continuing to grow, okay. The pundants were saying oh servers, that's cloud server-less. You still need compute, networking and storage but they do change with the cloud and SaaS has proven that business model of as a service is key. Boomi's got this little secret weapon around the unified platform that integrates a lot of these traditional components that is still going to be foundational but yet set up the next wave around AI, Edge, data tsunami that you mentioned. This is a key variable in the architectural shift. Can you talk about how you see that playing out? Because you got a couple big pieces on the chess board. VMWare, the continuous Dell Technologies portfolio kind of as the table stakes. This is kind of interesting new architecture. Explain how you see that. >> Pivotal, Dell EMC, VMWare. >> So a lot of pieces. >> Right. >> How does Boomi play into that? Because if it does be a glue layer if you will for lack of a better word, it can be very powerful. >> Yeah, so the challenge is when you go to Software as a Service, how do you connect the things together? Now, connecting 1 or 2 together is pretty straight forward. But when you start having 50 or 100 of these things, and then you've got on premise systems and now you want to have actions like an employee does something and based on their roll then something else happens, you have work flow. And then you get this, you go from a couple billion PCs to 5 billion smart phones to 100s of billions of connected things out there with this explosion in the edge. How you integrate and connect everything together with work flow and do it securely is super, super important. So we're seeing just an explosion of use cases. There was some great examples from a city digitizing and being able to detect leaks and when traffic lights aren't working. The used cases are pretty unlimited and Boomi and Pivitol play sort of at the top layer for us so the applications and integrating all the data and allowing customers to express their competitive advantage with software and data and AI and machine learning. And then of course we've got VM Ware to virtualize everything from the data center to the network and beyond. With NSX, what we're doing with NFE and software to fine win. And then of course we're the initial infrastructure company. Absolute number 1 in all aspects of the data center. And growing much faster than any of the competitors. >> And I want to also get your thoughts on VM Ware announced up to this morning, actually Barcelona time for VM Ware Europe, the acquisition of Heptio. >> Absolutely. >> Okay, Pat Kelson said in VM World, we're going in, we're going to make Kubernetes the dial tone. This is a key architectural component around orchestration. Containers certainly everyone knows, that's been standardized. People love containers. They're using them. As applications need to be more efficiently built out, out of the Boomi's value proposition, Kubernetes and these cloud native things are super important. What's your view on that? Great acquisitions, very young company? Not 34 billion dollars for a Red Hat like IBM bought but a small tuck in. How important is that trend for you? >> Well, think about what we've done with Pivitol and VM Ware together with the Pivitol container service and now adding Heptio with 2 of the 3 founders of the whole Kubernetes movement. We're going to be making Kubernetes just part of the dial tone of vSpheres. So for virtually all the customers out there, 600000 of them that use vSphere, it'll just be super easy to now have Kubernetes containers built into their vSphere environment. That's the vision. We've got a great team working on it across VM Ware and Pivitol and now the Heptio team. Adding to it. We're super pumped about all this. >> If your friend asked you at a party this weekend, hey Michael, why is Kubernetes important? What do you say to that? >> I guess it would depend on how much they know about this. >> They're a business owner responsible for application development. >> Yeah. >> They are owning to transform their organization. They realize clouds going to be a part of it. They here Kubernetes really popular, it's trending. But it's a technology. A lot of people are now getting this for the first time and seeing it as the early dopples have shown it. They try to want to know the impact and why it's important. Why is Kubernetes important as you start to get into this orchestration of apps and work loads across clouds. Why is it important? >> I think people don't want to get locked in to a particular place when it comes to their infrastructure. Kubernetes has clearly won the battle in terms of being able to be that abstraction layer. That's the simple thing that is super exciting. When it sort of went from cloud to hybrid cloud to multi cloud, people realized they wanted a 2 way street where they could move things back and forth. And now with the edge, they want to move it to the edge. With the distributed core. This explosion in data, this dat tsunami really requires a whole new set of tools in terms of the software infrastructure to be able to make it all work. >> So transformation is ... You're talking about Dell Technologies now. 34 years later you have 7 corporations under that. Done a lot to keep those brands, as they're very valuable. Dell Boomi as a business unit. Transformation is essential and Dell Boomi wants to be the transformation partner. It's also incredibly difficult. IT transformation. Digital, security, workforce. Dell Boomi works and Dell Technologies with a lot of large enterprise organizations that are still probably fairly not as well connected as they should be to find new value, new business dreams. How do you talk with customers, large enterprises that need to transform to stay competitive? Where do they start? And how dose the Dell transformation story in and of itself help those customers feel confident in what Dell Technologies can deliver? >> Right, well first thing I'd say is we actually work with customers of all sizes. We have an enormous business with small and medium and large customers. We're number 1 across the whole spectrum. We serve 99% of the Fortune 500. Since your question is about those types. They're looking at the digital transformation and figuring out this is really not an IT project. It's about technology becoming pervasive in everything that they're doing. From sells to marketing, to product creation to their whole fundamental strategy. So then it shows up in the office of the CEO and business line executives and they're having to reimagine. And so they look for a partner and Dell Technologies is very unique. 2 years and 2 months ago we put together all these companies and it's been fabulous. We've been growing double digits consistently and the response has been great because we can deliver a complete set of capabilities. Now you're right, change management, and how do I do it in my company, that's a big deal. So they're pulling on us to bring them more of a ... The don't want us to show up with a bunch of parts and drop em off. They want us to actually build them a solution that is specific to their needs. Help them implement it. In many cases, run it for them. So we do much of that ourselves with our own services organization. 60000 plus people in our services organization. And of course we have the best, all the great SIs out there that are helping customers implement and run and manage like I said, 99% of the Fortune 500. We're right there with them in this digital transformation. Of course we do the IT, the workforce, the PCs and of course security. Unbelievably important. Your whole brand trust is all based on that so we wrap the whole thing with security and no company has the breath that we have. I think we've kind of won the hearts and minds of the decision makers because of the capabilities that we have. Not that we take it for granted. We have to go earn that trust every single day. We have unbelievably talented people in our company. Over 20000 engineers. Scientists, PHDs. About 90% of them are software engineers. This is a very different company than it was 5 or 10 years ago. We're having a blast. It's a rocket ship, so. >> I had a chance to interview an IT leader and his name is Allen Bean. He's the global CTO and head of IT innovation at Proctor and Gamble. He brought the cloud to Coca-Cola. Has had a career all in IT going back to DHL in the 90s and 80s. So we were talking and I asked him, does IT matter. And Dave Alampi always brings up the book by Nick Carr. And we always talk about it. >> Love it. Such a fun topper, yeah. >> And so he says, quote, at that time some people thought it didn't matter, everyone was kind of complaining, but he says it does matter. It's a competitive advantage. And over the decades IT was outsourced. And now people are trying to bring that back in and make it a competitive advantage. This is now ... It's a mandate basically. So as people who have been kind of anemic with IT, they've got people running stuff but eventually outsource all the value. They got to bring that value in. Cloud is that opportunity. How do you respond to the leaders out there trying to figure this out. What are the keys to success around bringing back the competitive advantage and using the cloud for things that aren't core to the core competency but getting that core competency nailed down. What's your vision. >> Yeah, well, look, I mean, it's all about understanding what is your competitive differentiation and advantage as a business. And if you give that away to somebody else, you're going to be out of business in not too much time. Packers applications are great for things that aren't differentiated. But if you actually do something that's unique and valuable and special and you can't express that in software with your own data, you're going to have a problem, right? This is what companies are figuring out. This is what we're doing with Pivitol and Boomi allowing companies to build all this together. And look I think as it relates to cloud, customers have figured out it's multi cloud, right? It's a workload dependent discussion. Some workloads are great in the public cloud but in many cases, not so much, right? As we've modernized and automated the infrastructure we have customers that tell us hey our private cloud for our predictable workload, which is 90%, is 5, 6 times less expensive than AWS. We're building these converge, hyper converge, like the fast track to the automated modernized infrastructure. And look, you can decide. But we're seeing customers that want to move things back and forth and we're seeing a bit of a boomerang. Where customers have said oh everything you upload to the cloud, and no, not everything. >> And the digital transformation really is making IT a competitive advantage. So I had a long ranging interview. It's up on YouTube. I asked him a final question. I always said, okay, so you know, he's transforming Proctor and Gamble. I said okay, as you look ads and all those things what's the next mountain that you're going to climb? You're an IT pro, you said in the agenda. And I'll read you the quote. I want to get your reaction. He said, "I think we're looking forward. Latency is still an issue. We have to find ways to defeat latency and we're not going to do it through basic physics, we're going to have to change out business models, change our technology, distribution, change everything that we're doing. Consumers and customers are demanding instant access to enhanced information through AI and machine learning right at the point when they want it." So this is his next mountain. This is kind of what you were talking about on the stage here at the Dell Boomi event around the impact of AI and data. What's your reaction to that quote? >> Well to me this is all about the edge and 5G coming around the corner. And you look at all the big telcos. They're all piling in on 5G because it's 1000 times faster and 1000 times less latency. That's going to be a big turbo charge. The rocket ship. And it will just create an explosion in data and compute on the edge. And a lot of it's going to stay on the edge. Because you'll have these edge devices talking to each other. A whole new class of applications and capabilities because of that. That's super exciting. We're already seeing it with this build out of distributed core. And that's why we see so much growth in the data center business. >> So Michael, Dell Boomi, if you look at Boomi for a second, was named by the Gartner Magic Quadrant of 2018 as a leader in Ipads. Today they talked about ... >> Again, I think 6th or 7th year in a row. It's been there for quite some time. >> An established leader in an established market. But today they were talking about, hey we want to change the, we want to redefine the I in Ipads to intelligence. How is Dell Technologies and Boomi particularly starting to leverage terra bites and terra bites of customer meta data to make your systems smarter? To enable businesses to truly connect. Prim, edge devices as things continue to get more distributed and data becomes more critical? >> Yeah, so, the key to AI and all of its variance of machine learning, deep learning neural network is the data. The data is the fuel for the rocket ship of AI. And the challenge is, if you have your data spread out in 100 softwares of service providers and 3 public clouds and here and there and where's all your data? We don't really know. How do you fuel the rocket? It becomes a very difficult problem. This is the problem that we're beginning to address for our customers. We're going to have an event all about AI coming up I think next week. Where we're going to be talking much more about this. We got a number of offerings that we're rolling out. We've been helping customers for years build their data lakes and curate the data. And of course Pivitol and Boomi are essential to how you bring all of this together and make sense of it. Because if you just have all the data but you can't actually use it. If you're not already using AI and it's variance to improve your products and services, you're doing it wrong. We've identified over 450 projects just within Dell Technologies internally. As I mentioned on stage, we've sold about 700 million computers since I started in my dorm room. We have enormous telemetry data. Imagine, if you will, that something doesn't work exactly the way it's supposed to. Okay? What's the chance that has never happened before? >> Zero. >> The answers almost zero, right? Our job is to take all this data that we have, use all this intelligence and actually prevent it from happening. So we're building all kinds of intelligence and AI and preventative technology into all of our solutions from the data center to the desk top to the edge, to the multi cloud so that all these systems are just self healing and auto magically way more reliable. >> Auto magically, I like that. It just sounds like what you're saying is Dell Technologies articulating it's value and it's differentiation because you're using that data. >> You have to. >> To identify insight, to take action immediately. >> And to your point about the big companies, they have an advantage but it's a bit of a time value expiring advantage. They have the data that the new entrance don't have. >> Right. >> But they have to activate it quickly with this new computer science or else they'll be dinosaurs, right? Nobody wants to be a dinosaur. >> Michael, what's the business drivers, and you talk to customers all the time, that they're seeing and that matter most to them. Is it agility, is it transform the customer employee experience, compliant security? How would you view the pattern around the most important business driver for your customers that are trying to put the business transformation together with digital. Could you comment just anecdotally what you see? >> I think every customer is a little bit different in their journey. Some customers, security is number 1. Because of the kind of business that they're in and it just has to be that way. For other customers it's how do I increase my speed to the solution. It used to be we need a new feature. We'll get it in a year or 2. How about never. Does never work for you? That's kind of the old IT. Now with agile development you've got, what we're doing with Pivotol cloud foundry, you've got companies implementing, these are giant companies. Biggest companies in the world. They're implementing new things like in 2 or 3 weeks. It's amazing how fast. Speed and as a chief executive, that's what you crave. How can I take this new requirement that I heard from the customer and turn it into a feature that I can go offer very, very quickly? That's what you want to be able to do. It's what we used to be able to do when we were little tiny cubs. How do you do it with 200000 people? >> I want to get your thoughts on a trend that you popularized early on in your career, the direct business model, you also had the just in time manufacturing kind of ethos of build it, build to order, really streamline efficiency. So I want to kind of take the leap to now a new generation with cloud native where you have workflows and efficiencies. You have integration. So in a way the customers are now going direct to their customers and wanting to compose and build solutions. As you said on stage, these are going to be new problems that not yet have been identified. New solutions. So that customers have to be what you did. They got to build their own. So they got to build their own, they got to have the suppliers, they got to have the code. How do you see customers being successful if they want to take that efficiency approach? Kind of be 5 nines if you will in this new modern era. Because this is the challenge that they have. They have to build their own. They need suppliers. They need you guys. How do you see the customers being successful in that scenario? >> Yeah, I think what they're trying to do is shrink the time from when at that point of customer interaction, they can use the data to make the service and the product better and if it's like this lengthy value chain with all these different intermediaries and it takes weeks or months or never, that's just way too slow. They want it to be like instantaneous. How do they create that direct relationship with their customers? I only had 1000 dollars when I started so we couldn't really afford much so each dollar you invest very carefully. We just kind of out of necessity came up with some ideas that ... >> You were efficient because you had to be. >> We didn't have any choice, right? >> So when we talk about integration, we talk about it's the foundation of digital transformation, we've talked about IT, security, workforce. One of the things that you mentioned earlier that I'd like to get your perspective on, a different view of transformation is cultural. An enterprise organization as you mentioned has a huge advantage of a tremendous wealth of data. With that amount of data and the need for speed as you just talked about, where, in your opinion, and your experience, is cultural transformation as an enabler of an enterprise to really be able to react that quickly to develop new products, new revenue strengths? >> Yeah, I think it's a big challenge. And a lot of customers struggle with change management. You never want a good crisis go to waste. We sort of grew up in the business where it was change or die, quick or dead. If you don't do it you're gone, right? This was just the way our business, this was just how we had to compete. It's what we grew up in. And I think what's happened is more and more businesses are that way now. It requires the business leaders to say hey friends, we've got a real challenge here and we've got to move faster. It is change or die, it's quick or dead, I think for all businesses because this is the fastest time ever but it's the slowest time relative to the future. It's just going to get faster and faster. If companies ... The only way you get good at change is to do it more frequently. And so if you've never changed anything for 80 years in your company and all the sudden you start trying to change, it's really hard. You just have to start. >> How do you inspire say employees at Dell Technologies who've been with you for a very long time to be able to be open and agile themselves to help facilitate this transformation? >> I believe we built it into our culture that they understand that change is good as opposed to change is bad. If you fear something well then it's bad, right? We precondition people to say okay we're going to change something. Not to say every time we change something it works perfectly. We make mistakes, we learn, we trial and error. That's all fine. Fail fast. But you need a culture where you can embrace change. No question about it. I think a lot of companies that didn't really have that are figuring that out and either by crisis or by leadership or by some combination they're then forced into it. For me, it's what we grew up in. Because hey it's a tough world out there. >> Mike, I want to ask you a final question. Thanks for coming on and spending the time with us. Great interview here. Good length. Recently in the news with a lot of commentary from us as well as the industry around IBM buying Red Hat. I made a comment around the innovation piece of this and I want to get your thoughts on that because when you bought EMC, it was a merger of equals. You integrated that and the growth that you've been successful since then, I want to get your perspective. I want you to take a minute to explain to folks watching, when you did the merger equal with EMC, what happened? You've been successful integrating the organization. What innovative things have you done since the EMC merger of equals? Take a minute to explain, again, there's a lot of moving pieces on the table. You got VM Wares, you got Pivitol, you got Boomi. A lot of moving parts in your plan. You've been successful with the numbers. Financial performance shows it. Take a minute to explain what happened, where's the innovation coming out of Dell Technologies? >> So in hind sight, it looks pretty obvious, right? You take the leader and servers and the leader in storage and you say hey infrastructure hardware goes together. And by the way, if you have the leader of infrastructure software, VM Wares, you put that all together. Wow, that'd be really great. And turns out it was. It was actually much better than we thought. And so customers have really bought into that and then with Pivitol and Boomi and Rsave, Virtustream, Secureworks etc., we have such a complete set of capabilities that customers have said, hey, why do I want to buy from 20 smaller less capable companies and integrate it myself versus you guys will just do all this for me. If they were buying from 2 or 3 or 4 parts of Dell Technologies they'll say, well, why don't we just take the others, right? We been picking up huge amounts of share across the whole business. I'm talking about like 10s of billions of dollars of growth here. There's clearly a consolidation going on in the kind of existing parts of the industry but we've also got massive investments in the new cloud native parts and software defined, and security. It's been a real blessing to be able to pull all of these teams together. We had this relationship with EMC going back from 2001. We were very early supporters of VM Ware. We had a theory of victory and it's played out very well. The teams have really gelled enormously well and the customers have continued to give us their trust. >> I think, first of all servers, storage, networking is never going away. It's the holy trinity of anything in computing. Just looks different and consumes differently. But I think people underestimate the execution innovation that you guys have done. You didn't skip a beat. VM Ware didn't skip a beat. So things have happened, so that was a challenge of the integration. >> Not everybody predicted that it was going to go that way. It's actually gone much better than even we had planned. The revenue synergies have been much larger. >> Well congratulations and thanks for taking the time on the Cube. Michael Dell is here inside the Cube here at Boomi World 18. Dell Boomi World. It's the part of Dell Technologies. We think of them being the power engine for data processing, data growth, powering AI, integrating all the application workloads. I'm John Furrier with Lisa Martin. Stay tuned for more coverage after this short break. (upbeat music) >> Since the dawn of the cloud, the Cube has been there. Connected.

>> From the Hard Rock Hotel in Las Vegas, it's theCUBE covering HoshoCon 2018. Brought to you by Hosho. >> Over and welcome back to our live coverage here in Las Vegas for HoshoCon. I'm John Furrier host of theCUBE. The first inaugural conference on security in the blockchain security is obviously not new to the blockchain It's number one concern. Crypto is crypto, decentralized networks is what people want. Security is the only thing that matters, if you haven't been hacked, then you should know we're being hacked. This is theCUBE coverage here in Las Vegas for HoshoCon. I'm John Furrier with Steven Sprague CEO of Rivetz, who's a security and an entrepreneur I've known for almost 20 years now he has been at this all through multiple ways of innovation, multiple security paradigm stacks, not new the problem, great time for you, Welcome to theCUBE. >> Thank you for having me. >> So I've known you and knowing your father as well for almost 25 plus years, you have been at this in one form or another with security and the waves are different, I mean there's different the web wave there's different architectures I mean people call it internet 3.0 whatever they're just different evolutionary steps, now is the killer time because we're seeing the most action. You got web, internet, mobile, global, new economics, new money the stakes are higher it's not not just like some isolated box, you got cloud. This is the time to harvest the work you've been doing, give us an overview. >> Absolutely you know I've been at this my whole career, I started down this path in 1990. Doing digital rights management micro transactions and video games and was part of the formation that Trusted Computing group in the 2000s and helped shipped 1.4 billion PCs with hardware security on the motherboard of the PC that still out there today. Started with started Rivets in 2013 to really go after, how do we enable the hardware security and mobile devices? And just about instantaneously ran into the blockchain and at my first Bitcoin conference, which was the Miami Bitcoin conference about a half an hour into it, it dawned on me two things. One, we were talking a lot about crypto but nobody was talking about cybersecurity and there's a gap between those just because we talk crypto all the time doesn't mean that we know what we're doing in cyber and the other one that was true as, oh my God, I've been looking for this for the last 10 years, which is how do we enable the user to own their own keys? And I don't mean like single keys on each device. I mean, the root key that controls all the other keys on all their devices. This is a super interesting space, we're just the very beginning of it in some ways the Bitcoin side the sort of value or or money side is the demo, the real opportunity is, this is the infrastructure that's going to replace how we do normal enterprise computing. >> Yeah. >> And the end of PC computing, we're about to have a new paradigm, blockchain-- >> I agree with you as an infrastructure shift over because the efficiencies that are gained and the disruption around what's not efficient, whether it's venture capital or infrastructure, IoT, whatever the supply chain or the decentralized way is the way to make it efficient, so it's an opportunity. Every entrepreneur that I know that is licking their chops going, wow, I can come in here and and create value. The mainstream adoptions around this complexity around use to your point, and then the fear of being hacked the cybersecurity piece whether it's for money, or a a hostile actor. >> But think of it in a different way. Security, nobody cares about security, nobody buys security, nobody wants security, security is UI. So if I asked you what your favorite multi factor authentication experience, you think like fingerprints and all this kind of stuff, it's not true, the send button is your favorite one, dial the number and push then and it just works. It works everywhere in the world works every time you've taught mom how to use it and the kids how to use it. It's simple, so why, so we would never use like, dial the number and we're going to use AI and big data to determine whether your phone is in the right condition to complete the call. And then a message is going to come up and say, would you please breathe deeply and calm down, because you're clearly agitated, I can't complete your call for you at this time. (laughing) Like, you've never used that phone, so why are we going to use that for the rest of our enterprise? >> I just sent you a pin number on your phone that you can't use before you can make the call. Again, I agree, it should be under the wire. It should be transparent security should be native, always on. >> That's right. >> And that's what you're getting at, okay. In your opinion, where are we in the progress because again, I think this connects the dots for your career, what you've worked on the itch you've been scratching in security because you have the perfect storm, you have full mobility penetration, you have commerce on top of it, and you have full global connectedness those three things alone make a-- >> And we have decentralization, so the thing that's important in blockchain is it's important remember, while the data on a chain is immutable, we know we can seal inside a little envelope a message and sign it and we write it to a chain it never changes. What we don't know is whether the data written to the chain was intended so all the information on all the blockchains is fake news. It's important to understand that we, if we take a blockchain to court try and prove something, all we can prove with the data hasn't changed. I have absolutely no idea whether your private key was written on the bathroom wall or stored in Fort Knox. And so if you try and record something on chain, your defense is always ah somebody stole my private key. Or if I'm trying to defend that you didn't do it on chain, somebody stole his private key, so actually the date on the chain is fake. It's real it was signed by a private key, but we have no knowledge to the quality of the private key and if you told the blockchain community that we got to go get your Windows log files to see whether or not your key was compromised at the time and the windows log files are the way we secure all blockchains. We're not going to get there, so the problem is-- >> That's a roadblock for sure, no doubt. >> Yeah, so the problem is that blockchains, are decentralized therefore, they're censorship proof. All of network security is censorship, therefore, blockchain is network security proof. Oops. So everything we spent in the last trillion dollars in cyber security doesn't work on blockchain Unless I run private chains, all a private chain is running inside the enterprise security while using all Juniper firewalls to secure your chain. That's not what we're talking about, We're talking about a decentralized solution. >> So match the security for pro posture for the architecture that you're working on. >> So we are going to have to do for the first time something that's crazy, we're going to have to do security commerce, which is when we form an instruction 'cause blockchains aren't authentication either, this isn't about logging into a node, getting a web page and filling out a form, no this is about sending an instruction. So, a blockchain instruction, a nuclear launch code, an e-commerce transaction, an IoT instruction like turn the lights on to 50% are all the same thing, it's an instruction based paradigm so it's not only about protecting the key but also the protection of the instruction that tells the system what to do and so in order to do that, the device that creates the instruction has to be a known device. Today we run our whole world, all our critical infrastructure, everything on unknown compute. When you turn this machine on, you didn't check to see it wasn't run by the North Koreans and you can't tell. >> Yeah, they could be in there, they probably are. >> Absolutely, more so than you would want to know. >> So what whereas the answer on this so get to the, cut to the chase here in your opinion, as the people figure out okay, we have all this great hardware that was built for a certain generation, now I'm using it as mission critical in my life, it's integrated to my lifestyle with my watch, my computer, my phone, now my in house Siri, portal, Facebook thing. >> So we need to get away from Apple's embracing of the CompuServe model, where you have a mobile phone that is a terminal, when you log into apps and your identity is based on your login to your phone. We don't actually check to see if the phone is really your phone. And we need to move to the concept of mobile, where it's a device identity network where services are delivered, not based on the username and password, but based on the identity of the device and really, ultimately, we need to get to what looks like an IoT network, which is a device identity network with messaging as the primary protocol. So secure messages sent. Fundamentally, we need to demote the importance of user authentication and promote the importance of device identity, so that I have a known device and a known condition with known controls that is producing the instructions that are sent to the chain. Ideally, you'd like in every chain, a second hash. And that second hash represents a manifest of controls that were in place, so I checked to see I was in the building, I checked to see who's still an employee, I checked to see my devices working properly, I check to see the trust infrastructure in the hardware of my devices working properly, and that gives me a hash I can write that to chain with the same immutable transaction, now I can prove that John's device in this condition with these controls wrote this transaction. >> Authentication powered the last architecture blockchain to your point about being you know, you don't know what's on the data needs to have an identity model for the signatures. >> For the robot. >> For the robot. >> For the robot. So some people like oh my god, but what if I lose my phone and the most important thing is you notice. If I steal your private keys you don't notice I still your phone like I just touch your phone. It makes you feel nervous, >> Yeah. (laughing) It's a very, but that's 100,000 years. >> I know when I leave my phone home I turn around soon as am three feet the driveway I'm like, okay, go back, get the phone. >> And so that's cyber security training it starts when you're 18 months old, when somebody gives you an important object you're not supposed to forget places like heaven forbid you remove the fuzzy rabbit from the three year old, you can lose an arm, right. So that model buying device, the good news is the trusted computing standards of the world have given us embedded hardware security in the chip sets as a standard capability in every ARM processor. Now in every Intel processor, we can turn these capabilities that have been deployed in these devices. We turn them on, provide an effective hardware based wallet for all of crypto. >> How does the hardware wallet work in your vision? Because I think most people generally and me included would say, look I love crypto but I'm busy got my four kids, two are in college, two or in high school and running around you're running around, bottom line is I got my key, my cold storage, I get keys everywhere, I forgot where I put my damn keys where's my key anyway I ended up writing and I post it. Who knows? >> I want to believe your keys are your collection of devices. So we've actually just done a recent relationship with Telefonica we showed two weeks ago, a dual Root of Trust handset, so half of your key is protected by the SIM architecture in your phone, half of your key is protected by the manufactured ARM processor in your, in your handset. So I have two separate routes of trust. I'm not trusting the carrier, I'm not trusting the manufacturer, they have to work in cooperation, the owner owns the keys, then I want to backup those keys. So why not, now that I have multiple routes of trust in my device, they can talk to my other devices, So we think of your household of devices as your key, not your single super phone. So every time I make a new wallet, you're right. You're running around, you didn't think about it, You don't want to write down 12 words, you're out at Starbucks, you shouldn't be writing the 12 words down on the surveillance camera at Starbucks. That would be a bad plan, Instead, you want your device to just communicate out to your other devices. So imagine in the future I lose my phone I can shut it off by calling my carrier and then I want to Make a new phone, maybe I've got to go like push a button in my Tesla push a button on my smart refrigerator. And my wife has to push a button or my girlfriend, or whatever the complications we all have. (laughing) And that's what allows me to recreate, not just my blockchain keys, but my Marriott keys, my car keys, my refrigerator keys, my these keys and we're going to have lots of keys for all this stuff. >> And the hardware is key in your opinion, got to have the hardware. >> Right, the reason why you have hardware is because, we can measure that the hardware hasn't changed so we can have a hardware Root of Trust, something that we know is anchored in silicon, in iron and then, or really in copper, and then from that we can build a stack that says we know this hasn't changed because if it's cast in the ground now we can build up from there each step and know that this measured environment is running properly. >> So people want be concerned, obviously Bloomberg had a story this week about China putting a mod chip on super micro boxes that's hardware. How do you talk to that, because I'm now saying, hey, I love the Root of Trust concept you guys are awesome, great job, but what about being hacked by someone else-- >> Well let's assume hacks continue on in time, I think the ultimate disinfectant in this is identity of the device, so give me a list of where 100% of those computers are. And are they in any critical systems that you have? So you're running DHS, and you've got 1.2 million servers across your network? Can you tell me 100% of the machines, that have that capability on them? Now that you know that model 45 had that. So we have an example for this VIN numbers in cars have been a great example of how we've improved the quality of cars, not that we aren't stupid humans and we build stuff that breaks or doesn't work and people die, we just want to know, that if he dies in his car that I don't want to drive the same car he drove without fixing whatever it is they're broken your car. >> So unique ID for the car, an asset. >> Yeah. And so tracking that, yep, we have it for lots of things. We don't have it for PCs, if you ask the average organization, please give me a list of the software that runs your corporation, they have no idea. >> Yeah, and the same thing with data to the GDPR thing, all these regulations, >> Right, because all, so GDPR is a great example of where now I need to prove I had controls in place in order to show that my data is properly-- >> They didn't know they had a server out there. >> I don't want to audit once a year, I want to check every time I do a transaction, was the person and employee did they have data rest in their machine, did they. So we can use the concepts of GDPR regulation to press this idea that I've provable controls at a transactional level for every instruction that's done. I want to know that I have known compute, if you had to write policy for the federal government, it's only known computers connected to sensitive networks and data. That doesn't require rocket science to understand. It's like, don't hook anonymous unknown computers you picked up out in the parking lot and tie them to the nuclear launch codes, that would be a bad plan. Like, let's start with at least machines we know and that are running software we know and that we've tested them so that we know they're running what we expect and they're working correctly, then let's use them for critical systems. So let's talk about the, and want to just finish up this segment on looking at what you're saying, which is a whole new operating model is coming really fast. The old model that's being operate is run by huge companies, Apple, Amazon, IT departments all around the world, governments, so there's going to be some resistance is going to have to be some change, that change is going to be disruptive. How do you see it playing out, you see people waking up going it's inevitable or you see a train wreck or collision. >> Now I think we have to create a transition. I spent a decade trying to create the train wreck and that didn't work very well, we shipped the technology and every PC. What we've done here is we're making it possible for you measure the integrity of a device in a mobile phone, and then you can hold keys in it. But I can apply policies or rules to those keys and those policies can talk to all of my old external systems. So I can ask all my network security stack, Where is this device, is this person an employee? Is my organization feeling good today, before I let you use the key. >> You bring program ability and state into-- >> Right, it's like you drag along the whole network security stack, and all their API controls and their SIEMs and let's hook Watson up and watch the whole network and apply that as a rule to a case. So now I can sit in Starbucks, and my device checks to see my organization's good, and then logs me into Gmail. I didn't have to tell Gmail to ask whether I was an employee, so I can have a mobile phone that says only log on if you're on the nuclear submarine and it'll work and I don't have to tell GitHub that check to see whether he's on a nuclear submarine. They just have to know that this two factor authentication is external, what's making that possible is that two factor authentication and all the services is fundamentally device registration, and as we mature that as the industry matures, those standards it provides the vehicle for all the services to incorporate a device component to the authentication strategy and then we can engage the robot to make that device smarter. >> Robot being the machine. >> Our device. >> Great to have you on, give the quick plug, what's going on Rivets real give us a quick. >> So Rivets is a fun company going after building these tools, we have a great partnership with Telefonica, we're extending it to other carriers as well. And our mission here is to bring the next billion people the blockchain by giving them a hardware based wallet for crypto, for IoT, for cloud in 100% of the mobile devices that are shipped and use the carriers as a mechanism to deliver that to us. >> You bring value that carries you also help the users make that usability peace secure. If you can pull that off, man I'd have a parade on Main Street for you. We need that. >> We desperately need this. We are so ready for our digital life to become simpler and safer for the user, And really for the services, it allows them to have more valuable data. So it's the combination of those two things, it's a win both for the consumer and for the services. >> Well, let's hope it can be a seamless transition rather than a train wreck collision. I'm John Furrier we here at talking security at Hoshocon, the inaugural blockchain secure, the first blockchain security conference am here with Steven Sprague CEO Rivets, hot, hot company in the space with many, many years experience. Time is ripe, right now the time is perfect for you. Congratulations. >> Thank you. >> Thanks for coming on, we're back with more after this short break. (electronic music)

(electronic dance music) (Intel Jingle) (ethereal electronic dance music) ♪ Okay ♪ (upbeat techno dance music) ♪ Oh oh oh oh ♪ ♪ Oh oh oh oh ♪ ♪ Oh oh oh oh oh ♪ ♪ Oh oh oh oh ♪ ♪ Oh oh oh oh oh ♪ ♪ Take it back take it back ♪ ♪ Take it back ♪ ♪ Take it back take it back ♪ ♪ Take it back ♪ ♪ Take it back take it back ♪ ♪ Yeah everybody get loose yeah ♪ ♪ Yeah ♪ ♪ Ye-yeah yeah ♪ ♪ Yeah yeah ♪ ♪ Everybody everybody yeah ♪ ♪ Whoo whoo ♪ ♪ Whoo whoo ♪ ♪ Whoo yeah ♪ ♪ Everybody get loose whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ >> As a courtesy to the presenters and those around you, please silence all mobile devices, thank you. (electronic dance music) ♪ Everybody get loose ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ (upbeat salsa music) ♪ Ha ha ha ♪ ♪ Ah ♪ ♪ Ha ha ha ♪ ♪ So happy ♪ ♪ Whoo whoo ♪ (female singer scatting) >> Ladies and gentlemen, please take your seats. Our program will begin momentarily. ♪ Hey ♪ (female singer scatting) (male singer scatting) ♪ Hey ♪ ♪ Whoo ♪ (female singer scatting) (electronic dance music) ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ Red don't go ♪ ♪ All hands are in don't go ♪ ♪ In don't go ♪ ♪ Oh red go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ All hands are red don't go ♪ ♪ All hands are in red red red red ♪ ♪ All hands are in don't go ♪ ♪ All hands are in red go ♪ >> Ladies and gentlemen, there are available seats. Towards house left, house left there are available seats. If you are please standing, we ask that you please take an available seat. We will begin momentarily, thank you. ♪ Let go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ (upbeat electronic dance music) ♪ Just make me ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ I live ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ Hey ♪ ♪ Yeah ♪ ♪ Oh ♪ ♪ Ah ♪ ♪ Ah ah ah ah ah ah ♪ ♪ Just make me ♪ ♪ Just make me ♪ (bouncy techno music) >> Ladies and gentlemen, once again we ask that you please take the available seats to your left, house left, there are many available seats. If you are standing, please make your way there. The program will begin momentarily, thank you. Good morning! This is Lenovo Transform 2.0! (keyboard clicks) >> Progress. Why do we always talk about it in the future? When will it finally get here? We don't progress when it's ready for us. We need it when we're ready, and we're ready now. Our hospitals and their patients need it now, our businesses and their customers need it now, our cities and their citizens need it now. To deliver intelligent transformation, we need to build it into the products and solutions we make every day. At Lenovo, we're designing the systems to fight disease, power businesses, and help you reach more customers, end-to-end security solutions to protect your data and your companies reputation. We're making IT departments more agile and cost efficient. We're revolutionizing how kids learn with VR. We're designing smart devices and software that transform the way you collaborate, because technology shouldn't just power industries, it should power people. While everybody else is talking about tomorrow, we'll keep building today, because the progress we need can't wait for the future. >> Please welcome to the stage Lenovo's Rod Lappen! (electronic dance music) (audience applauding) >> Alright. Good morning everyone! >> Good morning. >> Ooh, that was pretty good actually, I'll give it one more shot. Good morning everyone! >> Good morning! >> Oh, that's much better! Hope everyone's had a great morning. Welcome very much to the second Lenovo Transform event here in New York. I think when I got up just now on the steps I realized there's probably one thing in common all of us have in this room including myself which is, absolutely no one has a clue what I'm going to say today. So, I'm hoping very much that we get through this thing very quickly and crisply. I love this town, love New York, and you're going to hear us talk a little bit about New York as we get through here, but just before we get started I'm going to ask anyone who's standing up the back, there are plenty of seats down here, and down here on the right hand side, I think he called it house left is the professional way of calling it, but these steps to my right, your left, get up here, let's get you all seated down so that you can actually sit down during the keynote session for us. Last year we had our very first Lenovo Transform. We had about 400 people. It was here in New York, fantastic event, today, over 1,000 people. We have over 62 different technology demonstrations and about 15 breakout sessions, which I'll talk you through a little bit later on as well, so it's a much bigger event. Next year we're definitely going to be shooting for over 2,000 people as Lenovo really transforms and starts to address a lot of the technology that our commercial customers are really looking for. We were however hampered last year by a storm, I don't know if those of you who were with us last year will remember, we had a storm on the evening before Transform last year in New York, and obviously the day that it actually occurred, and we had lots of logistics. Our media people from AMIA were coming in. They took the, the plane was circling around New York for a long time, and Kamran Amini, our General Manager of our Data Center Infrastructure Group, probably one of our largest groups in the Lenovo DCG business, took 17 hours to get from Raleigh, North Carolina to New York, 17 hours, I think it takes seven or eight hours to drive. Took him 17 hours by plane to get here. And then of course this year, we have Florence. And so, obviously the hurricane Florence down there in the Carolinas right now, we tried to help, but still Kamran has made it today. Unfortunately, very tragically, we were hoping he wouldn't, but he's here today to do a big presentation a little bit later on as well. However, I do want to say, obviously, Florence is a very serious tragedy and we have to take it very serious. We got, our headquarters is in Raleigh, North Carolina. While it looks like the hurricane is just missing it's heading a little bit southeast, all of our thoughts and prayers and well wishes are obviously with everyone in the Carolinas on behalf of Lenovo, everyone at our headquarters, everyone throughout the Carolinas, we want to make sure everyone stays safe and out of harm's way. We have a great mixture today in the crowd of all customers, partners, industry analysts, media, as well as our financial analysts from all around the world. There's over 30 countries represented here and people who are here to listen to both YY, Kirk, and Christian Teismann speak today. And so, it's going to be a really really exciting day, and I really appreciate everyone coming in from all around the world. So, a big round of applause for everyone whose come in. (audience applauding) We have a great agenda for you today, and it starts obviously a very consistent format which worked very successful for us last year, and that's obviously our keynote. You'll hear from YY, our CEO, talk a little bit about the vision he has in the industry and how he sees Lenovo's turned the corner and really driving some great strategy to address our customer's needs. Kirk Skaugen, our Executive Vice President of DCG, will be up talking about how we've transformed the DCG business and once again are hitting record growth ratios for our DCG business. And then you'll hear from Christian Teismann, our SVP and General Manager for our commercial business, get up and talk about everything that's going on in our IDG business. There's really exciting stuff going on there and obviously ThinkPad being the cornerstone of that I'm sure he's going to talk to us about a couple surprises in that space as well. Then we've got some great breakout sessions, I mentioned before, 15 breakout sessions, so while this keynote section goes until about 11:30, once we get through that, please go over and explore, and have a look at all of the breakout sessions. We have all of our subject matter experts from both our PC, NBG, and our DCG businesses out to showcase what we're doing as an organization to better address your needs. And then obviously we have the technology pieces that I've also spoken about, 62 different technology displays there arranged from everything IoT, 5G, NFV, everything that's really cool and hot in the industry right now is going to be on display up there, and I really encourage all of you to get up there. So, I'm going to have a quick video to show you from some of the setup yesterday on a couple of the 62 technology displays we've got on up on stage. Okay let's go, so we've got a demonstrations to show you today, one of the greats one here is the one we've done with NC State, a high-performance computing artificial intelligence demonstration of fresh produce. It's about modeling the population growth of the planet, and how we're going to supply water and food as we go forward. Whoo. Oh, that is not an apple. Okay. (woman laughs) Second one over here is really, hey Jonas, how are you? Is really around virtual reality, and how we look at one of the most amazing sites we've got, as an install on our high-performance computing practice here globally. And you can see, obviously, that this is the Barcelona supercomputer, and, where else in New York can you get access to being able to see something like that so easily? Only here at Lenovo Transform. Whoo, okay. (audience applauding) So there's two examples of some of the technology. We're really encouraging everyone in the room after the keynote to flow into that space and really get engaged, and interact with a lot of the technology we've got up there. It seems I need to also do something about my fashion, I've just realized I've worn a vest two days in a row, so I've got to work on that as well. Alright so listen, the last thing on the agenda, we've gone through the breakout sessions and the demo, tonight at four o'clock, there's about 400 of you registered to be on the cruise boat with us, the doors will open behind me. the boat is literally at the pier right behind us. You need to make sure you're on the boat for 4:00 p.m. this evening. Outside of that, I want everyone to have a great time today, really enjoy the experience, make it as experiential as you possibly can, get out there and really get in and touch the technology. There's some really cool AI displays up there for us all to get involved in as well. So ladies and gentlemen, without further adieu, it gives me great pleasure to introduce to you a lover of tennis, as some of you would've heard last year at Lenovo Transform, as well as a lover of technology, Lenovo, and of course, New York City. I am obviously very pleasured to introduce to you Yang Yuanqing, our CEO, as we like to call him, YY. (audience applauding) (upbeat funky music) >> Good morning, everyone. >> Good morning. >> Thank you Rod for that introduction. Welcome to New York City. So, this is the second year in a row we host our Transform event here, because New York is indeed one of the most transformative cities in the world. Last year on this stage, I spoke about the Fourth Industrial Revolution, and our vision around the intelligent transformation, how it would fundamentally change the nature of business and the customer relationships. And why preparing for this transformation is the key for the future of our company. And in the last year I can assure you, we were being very busy doing just that, from searching and bringing global talents around the world to the way we think about every product and every investment we make. I was here in New York just a month ago to announce our fiscal year Q1 earnings, which was a good day for us. I think now the world believes it when we say Lenovo has truly turned the corner to a new phase of growth and a new phase of acceleration in executing the transformation strategy. That's clear to me is that the last few years of a purposeful disruption at Lenovo have led us to a point where we can now claim leadership of the coming intelligent transformation. People often asked me, what is the intelligent transformation? I was saying this way. This is the unlimited potential of the Fourth Industrial Revolution driven by artificial intelligence being realized, ordering a pizza through our speaker, and locking the door with a look, letting your car drive itself back to your home. This indeed reflect the power of AI, but it just the surface of it. The true impact of AI will not only make our homes smarter and offices more efficient, but we are also completely transformed every value chip in every industry. However, to realize these amazing possibilities, we will need a structure built around the key components, and one that touches every part of all our lives. First of all, explosions in new technology always lead to new structures. This has happened many times before. In the early 20th century, thousands of companies provided a telephone service. City streets across the US looked like this, and now bundles of a microscopic fiber running from city to city bring the world closer together. Here's what a driving was like in the US, up until 1950s. Good luck finding your way. (audience laughs) And today, millions of vehicles are organized and routed daily, making the world more efficient. Structure is vital, from fiber cables and the interstate highways, to our cells bounded together to create humans. Thankfully the structure for intelligent transformation has emerged, and it is just as revolutionary. What does this new structure look like? We believe there are three key building blocks, data, computing power, and algorithms. Ever wondered what is it behind intelligent transformation? What is fueling this miracle of human possibility? Data. As the Internet becomes ubiquitous, not only PCs, mobile phones, have come online and been generating data. Today it is the cameras in this room, the climate controls in our offices, or the smart displays in our kitchens at home. The number of smart devices worldwide will reach over 20 billion in 2020, more than double the number in 2017. These devices and the sensors are connected and generating massive amount of data. By 2020, the amount of data generated will be 57 times more than all the grains of sand on Earth. This data will not only make devices smarter, but will also fuel the intelligence of our homes, offices, and entire industries. Then we need engines to turn the fuel into power, and the engine is actually the computing power. Last but not least the advanced algorithms combined with Big Data technology and industry know how will form vertical industrial intelligence and produce valuable insights for every value chain in every industry. When these three building blocks all come together, it will change the world. At Lenovo, we have each of these elements of intelligent transformations in a single place. We have built our business around the new structure of intelligent transformation, especially with mobile and the data center now firmly part of our business. I'm often asked why did you acquire these businesses? Why has a Lenovo gone into so many fields? People ask the same questions of the companies that become the leaders of the information technology revolution, or the third industrial transformation. They were the companies that saw the future and what the future required, and I believe Lenovo is the company today. From largest portfolio of devices in the world, leadership in the data center field, to the algorithm-powered intelligent vertical solutions, and not to mention the strong partnership Lenovo has built over decades. We are the only company that can unify all these essential assets and deliver end to end solutions. Let's look at each part. We now understand the important importance data plays as fuel in intelligent transformation. Hundreds of billions of devices and smart IoTs in the world are generating better and powering the intelligence. Who makes these devices in large volume and variety? Who puts these devices into people's home, offices, manufacturing lines, and in their hands? Lenovo definitely has the front row seats here. We are number one in PCs and tablets. We also produces smart phones, smart speakers, smart displays. AR/VR headsets, as well as commercial IoTs. All of these smart devices, or smart IoTs are linked to each other and to the cloud. In fact, we have more than 20 manufacturing facilities in China, US, Brazil, Japan, India, Mexico, Germany, and more, producing various devices around the clock. We actually make four devices every second, and 37 motherboards every minute. So, this factory located in my hometown, Hu-fi, China, is actually the largest laptop factory in the world, with more than three million square feet. So, this is as big as 42 soccer fields. Our scale and the larger portfolio of devices gives us access to massive amount of data, which very few companies can say. So, why is the ability to scale so critical? Let's look again at our example from before. The early days of telephone, dozens of service providers but only a few companies could survive consolidation and become the leader. The same was true for the third Industrial Revolution. Only a few companies could scale, only a few could survive to lead. Now the building blocks of the next revolution are locking into place. The (mumbles) will go to those who can operate at the scale. So, who could foresee the total integration of cloud, network, and the device, need to deliver intelligent transformation. Lenovo is that company. We are ready to scale. Next, our computing power. Computing power is provided in two ways. On one hand, the modern supercomputers are providing the brute force to quickly analyze the massive data like never before. On the other hand the cloud computing data centers with the server storage networking capabilities, and any computing IoT's, gateways, and miniservers are making computing available everywhere. Did you know, Lenovo is number one provider of super computers worldwide? 170 of the top 500 supercomputers, run on Lenovo. We hold 89 World Records in key workloads. We are number one in x86 server reliability for five years running, according to ITIC. a respected provider of industry research. We are also the fastest growing provider of hyperscale public cloud, hyper-converged and aggressively growing in edge computing. cur-ges target, we are expand on this point soon. And finally to run these individual nodes into our symphony, we must transform the data and utilize the computing power with advanced algorithms. Manufactured, industry maintenance, healthcare, education, retail, and more, so many industries are on the edge of intelligent transformation to improve efficiency and provide the better products and services. We are creating advanced algorithms and the big data tools combined with industry know-how to provide intelligent vertical solutions for several industries. In fact, we studied at Lenovo first. Our IT and research teams partnered with our global supply chain to develop an AI that improved our demand forecasting accuracy. Beyond managing our own supply chain we have offered our deep learning supply focused solution to other manufacturing companies to improve their efficiency. In the best case, we have improved the demand, focused the accuracy by 30 points to nearly 90 percent, for Baosteel, the largest of steel manufacturer in China, covering the world as well. Led by Lenovo research, we launched the industry-leading commercial ready AR headset, DaystAR, partnering with companies like the ones in this room. This technology is being used to revolutionize the way companies service utility, and even our jet engines. Using our workstations, servers, and award-winning imaging processing algorithms, we have partnered with hospitals to process complex CT scan data in minutes. So, this enable the doctors to more successfully detect the tumors, and it increases the success rate of cancer diagnosis all around the world. We are also piloting our smart IoT driven warehouse solution with one of the world's largest retail companies to greatly improve the efficiency. So, the opportunities are endless. This is where Lenovo will truly shine. When we combine the industry know-how of our customers with our end-to-end technology offerings, our intelligent vertical solutions like this are growing, which Kirk and Christian will share more. Now, what will drive this transformation even faster? The speed at which our networks operate, specifically 5G. You may know that Lenovo just launched the first-ever 5G smartphone, our Moto Z3, with the new 5G Moto model. We are partnering with multiple major network providers like Verizon, China Mobile. With the 5G model scheduled to ship early next year, we will be the first company to provide a 5G mobile experience to any users, customers. This is amazing innovation. You don't have to buy a new phone, just the 5G clip on. What can I say, except wow. (audience laughs) 5G is 10 times the fast faster than 4G. Its download speed will transform how people engage with the world, driverless car, new types of smart wearables, gaming, home security, industrial intelligence, all will be transformed. Finally, accelerating with partners, as ready as we are at Lenovo, we need partners to unlock our full potential, partners here to create with us the edge of the intelligent transformation. The opportunities of intelligent transformation are too profound, the scale is too vast. No company can drive it alone fully. We are eager to collaborate with all partners that can help bring our vision to life. We are dedicated to open partnerships, dedicated to cross-border collaboration, unify the standards, share the advantage, and market the synergies. We partner with the biggest names in the industry, Intel, Microsoft, AMD, Qualcomm, Google, Amazon, and Disney. We also find and partner with the smaller innovators as well. We're building the ultimate partner experience, open, shared, collaborative, diverse. So, everything is in place for intelligent transformation on a global scale. Smart devices are everywhere, the infrastructure is in place, networks are accelerating, and the industries demand to be more intelligent, and Lenovo is at the center of it all. We are helping to drive change with the hundreds of companies, companies just like yours, every day. We are your partner for intelligent transformation. Transformation never stops. This is what you will hear from Kirk, including details about Lenovo NetApp global partnership we just announced this morning. We've made the investments in every single aspect of the technology. We have the end-to-end resources to meet your end-to-end needs. As you attend the breakout session this afternoon, I hope you see for yourself how much Lenovo has transformed as a company this past year, and how we truly are delivering a future of intelligent transformation. Now, let me invite to the stage Kirk Skaugen, our president of Data Center growth to tell you about the exciting transformation happening in the global Data C enter market. Thank you. (audience applauding) (upbeat music) >> Well, good morning. >> Good morning. >> Good morning! >> Good morning! >> Excellent, well, I'm pleased to be here this morning to talk about how we're transforming the Data Center and taking you as our customers through your own intelligent transformation journey. Last year I stood up here at Transform 1.0, and we were proud to announce the largest Data Center portfolio in Lenovo's history, so I thought I'd start today and talk about the portfolio and the progress that we've made over the last year, and the strategies that we have going forward in phase 2.0 of Lenovo's transformation to be one of the largest data center companies in the world. We had an audacious vision that we talked about last year, and that is to be the most trusted data center provider in the world, empowering customers through the new IT, intelligent transformation. And now as the world's largest supercomputer provider, giving something back to humanity, is very important this week with the hurricanes now hitting North Carolina's coast, but we take this most trusted aspect very seriously, whether it's delivering the highest quality products on time to you as customers with the highest levels of security, or whether it's how we partner with our channel partners and our suppliers each and every day. You know we're in a unique world where we're going from hundreds of millions of PCs, and then over the next 25 years to hundred billions of connected devices, so each and every one of you is going through this intelligent transformation journey, and in many aspects were very early in that cycle. And we're going to talk today about our role as the largest supercomputer provider, and how we're solving humanity's greatest challenges. Last year we talked about two special milestones, the 25th anniversary of ThinkPad, but also the 25th anniversary of Lenovo with our IBM heritage in x86 computing. I joined the workforce in 1992 out of college, and the IBM first personal server was launching at the same time with an OS2 operating system and a free mouse when you bought the server as a marketing campaign. (audience laughing) But what I want to be very clear today, is that the innovation engine is alive and well at Lenovo, and it's really built on the culture that we're building as a company. All of these awards at the bottom are things that we earned over the last year at Lenovo. As a Fortune now 240 company, larger than companies like Nike, or AMEX, or Coca-Cola. The one I'm probably most proud of is Forbes first list of the top 2,000 globally regarded companies. This was something where 15,000 respondents in 60 countries voted based on ethics, trustworthiness, social conduct, company as an employer, and the overall company performance, and Lenovo was ranked number 27 of 2000 companies by our peer group, but we also now one of-- (audience applauding) But we also got a perfect score in the LGBTQ Equality Index, exemplifying the diversity internally. We're number 82 in the top working companies for mothers, top working companies for fathers, top 100 companies for sustainability. If you saw that factory, it's filled with solar panels on the top of that. And now again, one of the top global brands in the world. So, innovation is built on a customer foundation of trust. We also said last year that we'd be crossing an amazing milestone. So we did, over the last 12 months ship our 20 millionth x86 server. So, thank you very much to our customers for this milestone. (audience applauding) So, let me recap some of the transformation elements that have happened over the last year. Last year I talked about a lot of brand confusion, because we had the ThinkServer brand from the legacy Lenovo, the System x, from IBM, we had acquired a number of networking companies, like BLADE Network Technologies, et cetera, et cetera. Over the last year we've been ramping based on two brand structures, ThinkAgile for next generation IT, and all of our software-defined infrastructure products and ThinkSystem as the world's highest performance, highest reliable x86 server brand, but for servers, for storage, and for networking. We have transformed every single aspect of the customer experience. A year and a half ago, we had four different global channel programs around the world. Typically we're about twice the mix to our channel partners of any of our competitors, so this was really important to fix. We now have a single global Channel program, and have technically certified over 11,000 partners to be technical experts on our product line to deliver better solutions to our customer base. Gardner recently recognized Lenovo as the 26th ranked supply chain in the world. And, that's a pretty big honor, when you're up there with Amazon and Walmart and others, but in tech, we now are in the top five supply chains. You saw the factory network from YY, and today we'll be talking about product shipping in more than 160 countries, and I know there's people here that I've met already this morning, from India, from South Africa, from Brazil and China. We announced new Premier Support services, enabling you to go directly to local language support in nine languages in 49 countries in the world, going directly to a native speaker level three support engineer. And today we have more than 10,000 support specialists supporting our products in over 160 countries. We've delivered three times the number of engineered solutions to deliver a solutions orientation, whether it's on HANA, or SQL Server, or Oracle, et cetera, and we've completely reengaged our system integrator channel. Last year we had the CIO of DXE on stage, and here we're talking about more than 175 percent growth through our system integrator channel in the last year alone as we've brought that back and really built strong relationships there. So, thank you very much for amazing work here on the customer experience. (audience applauding) We also transformed our leadership. We thought it was extremely important with a focus on diversity, to have diverse talent from the legacy IBM, the legacy Lenovo, but also outside the industry. We made about 19 executive changes in the DCG group. This is the most senior leadership team within DCG, all which are newly on board, either from our outside competitors mainly over the last year. About 50 percent of our executives were now hired internally, 50 percent externally, and 31 percent of those new executives are diverse, representing the diversity of our global customer base and gender. So welcome, and most of them you're going to be able to meet over here in the breakout sessions later today. (audience applauding) But some things haven't changed, they're just keeping getting better within Lenovo. So, last year I got up and said we were committed with the new ThinkSystem brand to be a world performance leader. You're going to see that we're sponsoring Ducati for MotoGP. You saw the Ferrari out there with Formula One. That's not a surprise. We want the Lenovo ThinkSystem and ThinkAgile brands to be synonymous with world record performance. So in the last year we've gone from 39 to 89 world records, and partners like Intel would tell you, we now have four times the number of world record workloads on Lenovo hardware than any other server company on the planet today, with more than 89 world records across HPC, Java, database, transaction processing, et cetera. And we're proud to have just brought on Doug Fisher from Intel Corporation who had about 10-17,000 people on any given year working for him in workload optimizations across all of our software. It's just another testament to the leadership team we're bringing in to keep focusing on world-class performance software and solutions. We also per ITIC, are the number one now in x86 server reliability five years running. So, this is a survey where CIOs are in a blind survey asked to submit their reliability of their uptime on their x86 server equipment over the last 365 days. And you can see from 2016 to 2017 the downtime, there was over four hours as noted by the 750 CXOs in more than 20 countries is about one percent for the Lenovo products, and is getting worse generation from generation as we went from Broadwell to Pearlie. So we're taking our reliability, which was really paramount in the IBM System X heritage, and ensuring that we don't just recognize high performance but we recognize the highest level of reliability for mission-critical workloads. And what that translates into is that we at once again have been ranked number one in customer satisfaction from you our customers in 19 of 22 attributes, in North America in 18 of 22. This is a survey by TVR across hundreds of customers of us and our top competitors. This is the ninth consecutive study that we've been ranked number one in customer satisfaction, so we're taking this extremely seriously, and in fact YY now has increased the compensation of every single Lenovo employee. Up to 40 percent of their compensation bonus this year is going to be based on customer metrics like quality, order to ship, and things of this nature. So, we're really putting every employee focused on customer centricity this year. So, the summary on Transform 1.0 is that every aspect of what you knew about Lenovo's data center group has transformed, from the culture to the branding to dedicated sales and marketing, supply chain and quality groups, to a worldwide channel program and certifications, to new system integrator relationships, and to the new leadership team. So, rather than me just talk about it, I thought I'd share a quick video about what we've done over the last year, if you could run the video please. Turn around for a second. (epic music) (audience applauds) Okay. So, thank you to all our customers that allowed us to publicly display their logos in that video. So, what that means for you as investors, and for the investor community out there is, that our customers have responded, that this year Gardner just published that we are the fastest growing server company in the top 10, with 39 percent growth quarter-on-quarter, and 49 percent growth year-on-year. If you look at the progress we've made since the transformation the last three quarters publicly, we've grown 17 percent, then 44 percent, then 68 percent year on year in revenue, and I can tell you this quarter I'm as confident as ever in the financials around the DCG group, and it hasn't been in one area. You're going to see breakout sessions from hyperscale, software-defined, and flash, which are all growing more than a 100 percent year-on-year, supercomputing which we'll talk about shortly, now number one, and then ultimately from profitability, delivering five consecutive quarters of pre-tax profit increase, so I think, thank you very much to the customer base who's been working with us through this transformation journey. So, you're here to really hear what's next on 2.0, and that's what I'm excited to talk about today. Last year I came up with an audacious goal that we would become the largest supercomputer company on the planet by 2020, and this graph represents since the acquisition of the IBM System x business how far we were behind being the number one supercomputer. When we started we were 182 positions behind, even with the acquisition for example of SGI from HP, we've now accomplished our goal actually two years ahead of time. We're now the largest supercomputer company in the world. About one in every four supercomputers, 117 on the list, are now Lenovo computers, and you saw in the video where the universities are said, but I think what I'm most proud of is when your customers rank you as the best. So the awards at the bottom here, are actually Readers Choice from the last International Supercomputing Show where the scientific researchers on these computers ranked their vendors, and we were actually rated the number one server technology in supercomputing with our ThinkSystem SD530, and the number one storage technology with our ThinkSystem DSS-G, but more importantly what we're doing with the technology. You're going to see we won best in life sciences, best in data analytics, and best in collaboration as well, so you're going to see all of that in our breakout sessions. As you saw in the video now, 17 of the top 25 research institutions in the world are now running Lenovo supercomputers. And again coming from Raleigh and watching that hurricane come across the Atlantic, there are eight supercomputers crunching all of those models you see from Germany to Malaysia to Canada, and we're happy to have a SciNet from University of Toronto here with us in our breakout session to talk about what they're doing on climate modeling as well. But we're not stopping there. We just announced our new Neptune warm water cooling technology, which won the International Supercomputing Vendor Showdown, the first time we've won that best of show in 25 years, and we've now installed this. We're building out LRZ in Germany, the first ever warm water cooling in Peking University, at the India Space Propulsion Laboratory, at the Malaysian Weather and Meteorological Society, at Uninett, at the largest supercomputer in Norway, T-Systems, University of Birmingham. This is truly amazing technology where we're actually using water to cool the machine to deliver a significantly more energy-efficient computer. Super important, when we're looking at global warming and some of the electric bills can be millions of dollars just for one computer, and could actually power a small city just with the technology from the computer. We've built AI centers now in Morrisville, Stuttgart, Taipei, and Beijing, where customers can bring their AI workloads in with experts from Intel, from Nvidia, from our FPGA partners, to work on their workloads, and how they can best implement artificial intelligence. And we also this year launched LICO which is Lenovo Intelligent Compute Orchestrator software, and it's a software solution that simplifies the management and use of distributed clusters in both HPC and AI model development. So, what it enables you to do is take a single cluster, and run both HPC and AI workloads on it simultaneously, delivering better TCO for your environment, so check out LICO as well. A lot of the customers here and Wall Street are very excited and using it already. And we talked about solving humanity's greatest challenges. In the breakout session, you're going to have a virtual reality experience where you're going to be able to walk through what as was just ranked the world's most beautiful data center, the Barcelona Supercomputer. So, you can actually walk through one of the largest supercomputers in the world from Barcelona. You can see the work we're doing with NC State where we're going to have to grow the food supply of the world by 50 percent, and there's not enough fresh water in the world in the right places to actually make all those crops grow between now and 2055, so you're going to see the progression of how they're mapping the entire globe and the water around the world, how to build out the crop population over time using AI. You're going to see our work with Vestas is this largest supercomputer provider in the wind turbine areas, how they're working on wind energy, and then with University College London, how they're working on some of the toughest particle physics calculations in the world. So again, lots of opportunity here. Take advantage of it in the breakout sessions. Okay, let me transition to hyperscale. So in hyperscale now, we have completely transformed our business model. We are now powering six of the top 10 hyperscalers in the world, which is a significant difference from where we were two years ago. And the reason we're doing that, is we've coined a term called ODM+. We believe that hyperscalers want more procurement power than an ODM, and Lenovo is doing about $18 billion of procurement a year. They want a broader global supply chain that they can get from a local system integrator. We're more than 160 countries around the world, but they want the same world-class quality and reliability like they get from an MNC. So, what we're doing now is instead of just taking off the shelf motherboards from somewhere, we're starting with a blank sheet of paper, we're working with the customer base on customized SKUs and you can see we already are developing 33 custom solutions for the largest hyperscalers in the world. And then we're not just running notebooks through this factory where YY said, we're running 37 notebook boards a minute, we're now putting in tens and tens and tens of thousands of server board capacity per month into this same factory, so absolutely we can compete with the most aggressive ODM's in the world, but it's not just putting these things in in the motherboard side, we're also building out these systems all around the world, India, Brazil, Hungary, Mexico, China. This is an example of a new hyperscale customer we've had this last year, 34,000 servers we delivered in the first six months. The next 34,000 servers we delivered in 68 days. The next 34,000 servers we delivered in 35 days, with more than 99 percent on-time delivery to 35 data centers in 14 countries as diverse as South Africa, India, China, Brazil, et cetera. And I'm really ashamed to say it was 99.3, because we did have a forklift driver who rammed their forklift right through the middle of the one of the server racks. (audience laughing) At JFK Airport that we had to respond to, but I think this gives you a perspective of what it is to be a top five global supply chain and technology. So last year, I said we would invest significantly in IP, in joint ventures, and M and A to compete in software defined, in networking, and in storage, so I wanted to give you an update on that as well. Our newest software-defined partnership is with Cloudistics, enabling a fully composable cloud infrastructure. It's an exclusive agreement, you can see them here. I think Nag, our founder, is going to be here today, with a significant Lenovo investment in the company. So, this new ThinkAgile CP series delivers the simplicity of the public cloud, on-premise with exceptional support and a marketplace of essential enterprise applications all with a single click deployment. So simply put, we're delivering a private cloud with a premium experience. It's simple in that you need no specialists to deploy it. An IT generalist can set it up and manage it. It's agile in that you can provision dozens of workloads in minutes, and it's transformative in that you get all of the goodness of public cloud on-prem in a private cloud to unlock opportunity for use. So, we're extremely excited about the ThinkAgile CP series that's now shipping into the marketplace. Beyond that we're aggressively ramping, and we're either doubling, tripling, or quadrupling our market share as customers move from traditional server technology to software-defined technology. With Nutanix we've been public, growing about more than 150 percent year-on-year, with Nutanix as their fastest growing Nutanix partner, but today I want to set another audacious goal. I believe we cannot just be Nutanix's fastest growing partner but we can become their largest partner within two years. On Microsoft, we are already four times our market share on Azure stack of our traditional business. We were the first to launch our ThinkAgile on Broadwell and on Skylake with the Azure Stack Infrastructure. And on VMware we're about twice our market segment share. We were the first to deliver an Intel-optimized Optane-certified VSAN node. And with Optane technology, we're delivering 50 percent more VM density than any competitive SSD system in the marketplace, about 10 times lower latency, four times the performance of any SSD system out there, and Lenovo's first to market on that. And at VMworld you saw CEO Pat Gelsinger of VMware talked about project dimension, which is Edge as a service, and we're the only OEM beyond the Dell family that is participating today in project dimension. Beyond that you're going to see a number of other partnerships we have. I'm excited that we have the city of Bogota Columbia here, an eight million person city, where we announced a 3,000 camera video surveillance solution last month. With pivot three you're going to see city of Bogota in our breakout sessions. You're going to see a new partnership with Veeam around backup that's launching today. You're going to see partnerships with scale computing in IoT and hyper-converged infrastructure working on some of the largest retailers in the world. So again, everything out in the breakout session. Transitioning to storage and data management, it's been a great year for Lenovo, more than a 100 percent growth year-on-year, 2X market growth in flash arrays. IDC just reported 30 percent growth in storage, number one in price performance in the world and the best HPC storage product in the top 500 with our ThinkSystem DSS G, so strong coverage, but I'm excited today to announce for Transform 2.0 that Lenovo is launching the largest data management and storage portfolio in our 25-year data center history. (audience applauding) So a year ago, the largest server portfolio, becoming the largest fastest growing server OEM, today the largest storage portfolio, but as you saw this morning we're not doing it alone. Today Lenovo and NetApp, two global powerhouses are joining forces to deliver a multi-billion dollar global alliance in data management and storage to help customers through their intelligent transformation. As the fastest growing worldwide server leader and one of the fastest growing flash array and data management companies in the world, we're going to deliver more choice to customers than ever before, global scale that's never been seen, supply chain efficiencies, and rapidly accelerating innovation and solutions. So, let me unwrap this a little bit for you and talk about what we're announcing today. First, it's the largest portfolio in our history. You're going to see not just storage solutions launching today but a set of solution recipes from NetApp that are going to make Lenovo server and NetApp or Lenovo storage work better together. The announcement enables Lenovo to go from covering 15 percent of the global storage market to more than 90 percent of the global storage market and distribute these products in more than 160 countries around the world. So we're launching today, 10 new storage platforms, the ThinkSystem DE and ThinkSystem DM platforms. They're going to be centrally managed, so the same XClarity management that you've been using for server, you can now use across all of your storage platforms as well, and it'll be supported by the same 10,000 plus service personnel that are giving outstanding customer support to you today on the server side. And we didn't come up with this in the last month or the last quarter. We're announcing availability in ordering today and shipments tomorrow of the first products in this portfolio, so we're excited today that it's not just a future announcement but something you as customers can take advantage of immediately. (audience applauding) The second part of the announcement is we are announcing a joint venture in China. Not only will this be a multi-billion dollar global partnership, but Lenovo will be a 51 percent owner, NetApp a 49 percent owner of a new joint venture in China with the goal of becoming in the top three storage companies in the largest data and storage market in the world. We will deliver our R and D in China for China, pooling our IP and resources together, and delivering a single route to market through a complementary channel, not just in China but worldwide. And in the future I just want to tell everyone this is phase one. There is so much exciting stuff. We're going to be on the stage over the next year talking to you about around integrated solutions, next-generation technologies, and further synergies and collaborations. So, rather than just have me talk about it, I'd like to welcome to the stage our new partner NetApp and Brad Anderson who's the senior vice president and general manager of NetApp Cloud Infrastructure. (upbeat music) (audience applauding) >> Thank You Kirk. >> So Brad, we've known each other a long time. It's an exciting day. I'm going to give you the stage and allow you to say NetApp's perspective on this announcement. >> Very good, thank you very much, Kirk. Kirk and I go back to I think 1994, so hey good morning and welcome. My name is Brad Anderson. I manage the Cloud Infrastructure Group at NetApp, and I am honored and privileged to be here at Lenovo Transform, particularly today on today's announcement. Now, you've heard a lot about digital transformation about how companies have to transform their IT to compete in today's global environment. And today's announcement with the partnership between NetApp and Lenovo is what that's all about. This is the joining of two global leaders bringing innovative technology in a simplified solution to help customers modernize their IT and accelerate their global digital transformations. Drawing on the strengths of both companies, Lenovo's high performance compute world-class supply chain, and NetApp's hybrid cloud data management, hybrid flash and all flash storage solutions and products. And both companies providing our customers with the global scale for them to be able to meet their transformation goals. At NetApp, we're very excited. This is a quote from George Kurian our CEO. George spent all day yesterday with YY and Kirk, and would have been here today if it hadn't been also our shareholders meeting in California, but I want to just convey how excited we are for all across NetApp with this partnership. This is a partnership between two companies with tremendous market momentum. Kirk took you through all the amazing results that Lenovo has accomplished, number one in supercomputing, number one in performance, number one in x86 reliability, number one in x86 customers sat, number five in supply chain, really impressive and congratulations. Like Lenovo, NetApp is also on a transformation journey, from a storage company to the data authority in hybrid cloud, and we've seen some pretty impressive momentum as well. Just last week we became number one in all flash arrays worldwide, catching EMC and Dell, and we plan to keep on going by them, as we help customers modernize their their data centers with cloud connected flash. We have strategic partnerships with the largest hyperscalers to provide cloud native data services around the globe and we are having success helping our customers build their own private clouds with just, with a new disruptive hyper-converged technology that allows them to operate just like hyperscalers. These three initiatives has fueled NetApp's transformation, and has enabled our customers to change the world with data. And oh by the way, it has also fueled us to have meet or have beaten Wall Street's expectations for nine quarters in a row. These are two companies with tremendous market momentum. We are also building this partnership for long term success. We think about this as phase one and there are two important components to phase one. Kirk took you through them but let me just review them. Part one, the establishment of a multi-year commitment and a collaboration agreement to offer Lenovo branded flash products globally, and as Kurt said in 160 countries. Part two, the formation of a joint venture in PRC, People's Republic of China, that will provide long term commitment, joint product development, and increase go-to-market investment to meet the unique needs to China. Both companies will put in storage technologies and storage expertise to form an independent JV that establishes a data management company in China for China. And while we can dream about what phase two looks like, our entire focus is on making phase one incredibly successful and I'm pleased to repeat what Kirk, is that the first products are orderable and shippable this week in 160 different countries, and you will see our two companies focusing on the here and now. On our joint go to market strategy, you'll see us working together to drive strategic alignment, focused execution, strong governance, and realistic expectations and milestones. And it starts with the success of our customers and our channel partners is job one. Enabling customers to modernize their legacy IT with complete data center solutions, ensuring that our customers get the best from both companies, new offerings the fuel business success, efficiencies to reinvest in game-changing initiatives, and new solutions for new mission-critical applications like data analytics, IoT, artificial intelligence, and machine learning. Channel partners are also top of mind for both our two companies. We are committed to the success of our existing and our future channel partners. For NetApp channel partners, it is new pathways to new segments and to new customers. For Lenovo's channel partners, it is the competitive weapons that now allows you to compete and more importantly win against Dell, EMC, and HP. And the good news for both companies is that our channel partner ecosystem is highly complementary with minimal overlap. Today is the first day of a very exciting partnership, of a partnership that will better serve our customers today and will provide new opportunities to both our companies and to our partners, new products to our customers globally and in China. I am personally very excited. I will be on the board of the JV. And so, I look forward to working with you, partnering with you and serving you as we go forward, and with that, I'd like to invite Kirk back up. (audience applauding) >> Thank you. >> Thank you. >> Well, thank you, Brad. I think it's an exciting overview, and these products will be manufactured in China, in Mexico, in Hungary, and around the world, enabling this amazing supply chain we talked about to deliver in over 160 countries. So thank you Brad, thank you George, for the amazing partnership. So again, that's not all. In Transform 2.0, last year, we talked about the joint ventures that were coming. I want to give you a sneak peek at what you should expect at future Lenovo events around the world. We have this Transform in Beijing in a couple weeks. We'll then be repeating this in 20 different locations roughly around the world over the next year, and I'm excited probably more than ever about what else is coming. Let's talk about Telco 5G and network function virtualization. Today, Motorola phones are certified on 46 global networks. We launched the world's first 5G upgradable phone here in the United States with Verizon. Lenovo DCG sells to 58 telecommunication providers around the world. At Mobile World Congress in Barcelona and Shanghai, you saw China Telecom and China Mobile in the Lenovo booth, China Telecom showing a video broadband remote access server, a VBRAS, with video streaming demonstrations with 2x less jitter than they had seen before. You saw China Mobile with a virtual remote access network, a VRAN, with greater than 10 times the throughput and 10x lower latency running on Lenovo. And this year, we'll be launching a new NFV company, a software company in China for China to drive the entire NFV stack, delivering not just hardware solutions, but software solutions, and we've recently hired a new CEO. You're going to hear more about that over the next several quarters. Very exciting as we try to drive new economics into the networks to deliver these 20 billion devices. We're going to need new economics that I think Lenovo can uniquely deliver. The second on IoT and edge, we've integrated on the device side into our intelligent devices group. With everything that's going to consume electricity computes and communicates, Lenovo is in a unique position on the device side to take advantage of the communications from Motorola and being one of the largest device companies in the world. But this year, we're also going to roll out a comprehensive set of edge gateways and ruggedized industrial servers and edge servers and ISP appliances for the edge and for IoT. So look for that as well. And then lastly, as a service, you're going to see Lenovo delivering hardware as a service, device as a service, infrastructure as a service, software as a service, and hardware as a service, not just as a glorified leasing contract, but with IP, we've developed true flexible metering capability that enables you to scale up and scale down freely and paying strictly based on usage, and we'll be having those announcements within this fiscal year. So Transform 2.0, lots to talk about, NetApp the big news of the day, but a lot more to come over the next year from the Data Center group. So in summary, I'm excited that we have a lot of customers that are going to be on stage with us that you saw in the video. Lots of testimonials so that you can talk to colleagues of yourself. Alamos Gold from Canada, a Canadian gold producer, Caligo for data optimization and privacy, SciNet, the largest supercomputer we've ever put into North America, and the largest in Canada at the University of Toronto will be here talking about climate change. City of Bogota again with our hyper-converged solutions around smart city putting in 3,000 cameras for criminal detection, license plate detection, et cetera, and then more from a channel mid market perspective, Jerry's Foods, which is from my home state of Wisconsin, and Minnesota which has about 57 stores in the specialty foods market, and how they're leveraging our IoT solutions as well. So again, about five times the number of demos that we had last year. So in summary, first and foremost to the customers, thank you for your business. It's been a great journey and I think we're on a tremendous role. You saw from last year, we're trying to build credibility with you. After the largest server portfolio, we're now the fastest-growing server OEM per Gardner, number one in performance, number one in reliability, number one in customer satisfaction, number one in supercomputing. Today, the largest storage portfolio in our history, with the goal of becoming the fastest growing storage company in the world, top three in China, multibillion-dollar collaboration with NetApp. And the transformation is going to continue with new edge gateways, edge servers, NFV solutions, telecommunications infrastructure, and hardware as a service with dynamic metering. So thank you for your time. I've looked forward to meeting many of you over the next day. We appreciate your business, and with that, I'd like to bring up Rod Lappen to introduce our next speaker. Rod? (audience applauding) >> Thanks, boss, well done. Alright ladies and gentlemen. No real secret there. I think we've heard why I might talk about the fourth Industrial Revolution in data and exactly what's going on with that. You've heard Kirk with some amazing announcements, obviously now with our NetApp partnership, talk about 5G, NFV, cloud, artificial intelligence, I think we've hit just about all the key hot topics. It's with great pleasure that I now bring up on stage Mr. Christian Teismann, our senior vice president and general manager of commercial business for both our PCs and our IoT business, so Christian Teismann. (techno music) Here, take that. >> Thank you. I think I'll need that. >> Okay, Christian, so obviously just before we get down, you and I last year, we had a bit of a chat about being in New York. >> Exports. >> You were an expat in New York for a long time. >> That's true. >> And now, you've moved from New York. You're in Munich? >> Yep. >> How does that feel? >> Well Munich is a wonderful city, and it's a great place to live and raise kids, but you know there's no place in the world like New York. >> Right. >> And I miss it a lot, quite frankly. >> So what exactly do you miss in New York? >> Well there's a lot of things in New York that are unique, but I know you spent some time in Japan, but I still believe the best sushi in the world is still in New York City. (all laughing) >> I will beg to differ. I will beg to differ. I think Mr. Guchi-san from Softbank is here somewhere. He will get up an argue very quickly that Japan definitely has better sushi than New York. But obviously you know, it's a very very special place, and I have had sushi here, it's been fantastic. What about Munich? Anything else that you like in Munich? >> Well I mean in Munich, we have pork knuckles. >> Pork knuckles. (Christian laughing) Very similar sushi. >> What is also very fantastic, but we have the real, the real Oktoberfest in Munich, and it starts next week, mid-September, and I think it's unique in the world. So it's very special as well. >> Oktoberfest. >> Yes. >> Unfortunately, I'm not going this year, 'cause you didn't invite me, but-- (audience chuckling) How about, I think you've got a bit of a secret in relation to Oktoberfest, probably not in Munich, however. >> It's a secret, yes, but-- >> Are you going to share? >> Well I mean-- >> See how I'm putting you on the spot? >> In the 10 years, while living here in New York, I was a regular visitor of the Oktoberfest at the Lower East Side in Avenue C at Zum Schneider, where I actually met my wife, and she's German. >> Very good. So, how about a big round of applause? (audience applauding) Not so much for Christian, but more I think, obviously for his wife, who obviously had been drinking and consequently ended up with you. (all laughing) See you later, mate. >> That's the beauty about Oktoberfest, but yes. So first of all, good morning to everybody, and great to be back here in New York for a second Transform event. New York clearly is the melting pot of the world in terms of culture, nations, but also business professionals from all kind of different industries, and having this event here in New York City I believe is manifesting what we are trying to do here at Lenovo, is transform every aspect of our business and helping our customers on the journey of intelligent transformation. Last year, in our transformation on the device business, I talked about how the PC is transforming to personalized computing, and we've made a lot of progress in that journey over the last 12 months. One major change that we have made is we combined all our device business under one roof. So basically PCs, smart devices, and smart phones are now under the roof and under the intelligent device group. But from my perspective makes a lot of sense, because at the end of the day, all devices connect in the modern world into the cloud and are operating in a seamless way. But we are also moving from a device business what is mainly a hardware focus historically, more and more also into a solutions business, and I will give you during my speech a little bit of a sense of what we are trying to do, as we are trying to bring all these components closer together, and specifically also with our strengths on the data center side really build end-to-end customer solution. Ultimately, what we want to do is make our business, our customer's businesses faster, safer, and ultimately smarter as well. So I want to look a little bit back, because I really believe it's important to understand what's going on today on the device side. Many of us have still grown up with phones with terminals, ultimately getting their first desktop, their first laptop, their first mobile phone, and ultimately smartphone. Emails and internet improved our speed, how we could operate together, but still we were defined by linear technology advances. Today, the world has changed completely. Technology itself is not a limiting factor anymore. It is how we use technology going forward. The Internet is pervasive, and we are not yet there that we are always connected, but we are nearly always connected, and we are moving to the stage, that everything is getting connected all the time. Sharing experiences is the most driving force in our behavior. In our private life, sharing pictures, videos constantly, real-time around the world, with our friends and with our family, and you see the same behavior actually happening in the business life as well. Collaboration is the number-one topic if it comes down to workplace, and video and instant messaging, things that are coming from the consumer side are dominating the way we are operating in the commercial business as well. Most important beside technology, that a new generation of workforce has completely changed the way we are working. As the famous workforce the first generation of Millennials that have now fully entered in the global workforce, and the next generation, it's called Generation Z, is already starting to enter the global workforce. By 2025, 75 percent of the world's workforce will be composed out of two of these generations. Why is this so important? These two generations have been growing up using state-of-the-art IT technology during their private life, during their education, school and study, and are taking these learnings and taking these behaviors in the commercial workspace. And this is the number one force of change that we are seeing in the moment. Diverse workforces are driving this change in the IT spectrum, and for years in many of our customers' focus was their customer focus. Customer experience also in Lenovo is the most important thing, but we've realized that our own human capital is equally valuable in our customer relationships, and employee experience is becoming a very important thing for many of our customers, and equally for Lenovo as well. As you have heard YY, as we heard from YY, Lenovo is focused on intelligent transformation. What that means for us in the intelligent device business is ultimately starting with putting intelligence in all of our devices, smartify every single one of our devices, adding value to our customers, traditionally IT departments, but also focusing on their end users and building products that make their end users more productive. And as a world leader in commercial devices with more than 33 percent market share, we can solve problems been even better than any other company in the world. So, let's talk about transformation of productivity first. We are in a device-led world. Everything we do is connected. There's more interaction with devices than ever, but also with spaces who are increasingly becoming smart and intelligent. YY said it, by 2020 we have more than 20 billion connected devices in the world, and it will grow exponentially from there on. And users have unique personal choices for technology, and that's very important to recognize, and we call this concept a digital wardrobe. And it means that every single end-user in the commercial business is composing his personal wardrobe on an ongoing basis and is reconfiguring it based on the work he's doing and based where he's going and based what task he is doing. I would ask all of you to put out all the devices you're carrying in your pockets and in your bags. You will see a lot of you are using phones, tablets, laptops, but also cameras and even smartwatches. They're all different, but they have one underlying technology that is bringing it all together. Recognizing digital wardrobe dynamics is a core factor for us to put all the devices under one roof in IDG, one business group that is dedicated to end-user solutions across mobile, PC, but also software services and imaging, to emerging technologies like AR, VR, IoT, and ultimately a AI as well. A couple of years back there was a big debate around bring-your-own-device, what was called consumerization. Today consumerization does not exist anymore, because consumerization has happened into every single device we build in our commercial business. End users and commercial customers today do expect superior display performance, superior audio, microphone, voice, and touch quality, and have it all connected and working seamlessly together in an ease of use space. We are already deep in the journey of personalized computing today. But the center point of it has been for the last 25 years, the mobile PC, that we have perfected over the last 25 years, and has been the undisputed leader in mobility computing. We believe in the commercial business, the ThinkPad is still the core device of a digital wardrobe, and we continue to drive the success of the ThinkPad in the marketplace. We've sold more than 140 million over the last 26 years, and even last year we exceeded nearly 11 million units. That is about 21 ThinkPads per minute, or one Thinkpad every three seconds that we are shipping out in the market. It's the number one commercial PC in the world. It has gotten countless awards but we felt last year after Transform we need to build a step further, in really tailoring the ThinkPad towards the need of the future. So, we announced a new line of X1 Carbon and Yoga at CES the Consumer Electronics Show. And the reason is not we want to sell to consumer, but that we do recognize that a lot of CIOs and IT decision makers need to understand what consumers are really doing in terms of technology to make them successful. So, let's take a look at the video. (suspenseful music) >> When you're the number one business laptop of all time, your only competition is yourself. (wall shattering) And, that's different. Different, like resisting heat, ice, dust, and spills. Different, like sharper, brighter OLA display. The trackpoint that reinvented controls, and a carbon fiber roll cage to protect what's inside, built by an engineering and design team, doing the impossible for the last 25 years. This is the number one business laptop of all time, but it's not a laptop. It's a ThinkPad. (audience applauding) >> Thank you very much. And we are very proud that Lenovo ThinkPad has been selected as the best laptop in the world in the second year in a row. I think it's a wonderful tribute to what our engineers have been done on this one. And users do want awesome displays. They want the best possible audio, voice, and touch control, but some users they want more. What they want is super power, and I'm really proud to announce our newest member of the X1 family, and that's the X1 extreme. It's exceptionally featured. It has six core I9 intel chipset, the highest performance you get in the commercial space. It has Nvidia XTX graphic, it is a 4K UHD display with HDR with Dolby vision and Dolby Atmos Audio, two terabyte in SSD, so it is really the absolute Ferrari in terms of building high performance commercial computer. Of course it has touch and voice, but it is one thing. It has so much performance that it serves also a purpose that is not typical for commercial, and I know there's a lot of secret gamers also here in this room. So you see, by really bringing technology together in the commercial space, you're creating productivity solutions of one of a kind. But there's another category of products from a productivity perspective that is incredibly important in our commercial business, and that is the workstation business . Clearly workstations are very specifically designed computers for very advanced high-performance workloads, serving designers, architects, researchers, developers, or data analysts. And power and performance is not just about the performance itself. It has to be tailored towards the specific use case, and traditionally these products have a similar size, like a server. They are running on Intel Xeon technology, and they are equally complex to manufacture. We have now created a new category as the ultra mobile workstation, and I'm very proud that we can announce here the lightest mobile workstation in the industry. It is so powerful that it really can run AI and big data analysis. And with this performance you can go really close where you need this power, to the sensors, into the cars, or into the manufacturing places where you not only wannna read the sensors but get real-time analytics out of these sensors. To build a machine like this one you need customers who are really challenging you to the limit. and we're very happy that we had a customer who went on this journey with us, and ultimately jointly with us created this product. So, let's take a look at the video. (suspenseful music) >> My world involves pathfinding both the hardware needs to the various work sites throughout the company, and then finding an appropriate model of desktop, laptop, or workstation to match those needs. My first impressions when I first seen the ThinkPad P1 was I didn't actually believe that we could get everything that I was asked for inside something as small and light in comparison to other mobile workstations. That was one of the I can't believe this is real sort of moments for me. (engine roars) >> Well, it's better than general when you're going around in the wind tunnel, which isn't alway easy, and going on a track is not necessarily the best bet, so having a lightweight very powerful laptop is extremely useful. It can take a Xeon processor, which can support ECC from when we try to load a full car, and when we're analyzing live simulation results. through and RCFT post processor or example. It needs a pretty powerful machine. >> It's come a long way to be able to deliver this. I hate to use the word game changer, but it is that for us. >> Aston Martin has got a lot of different projects going. There's some pretty exciting projects and a pretty versatile range coming out. Having Lenovo as a partner is certainly going to ensure that future. (engine roars) (audience applauds) >> So, don't you think the Aston Martin design and the ThinkPad design fit very well together? (audience laughs) So if Q, would get a new laptop, I think you would get a ThinkPad X P1. So, I want to switch gears a little bit, and go into something in terms of productivity that is not necessarily on top of the mind or every end user but I believe it's on top of the mind of every C-level executive and of every CEO. Security is the number one threat in terms of potential risk in your business and the cost of cybersecurity is estimated by 2020 around six trillion dollars. That's more than the GDP of Japan and we've seen a significant amount of data breach incidents already this years. Now, they're threatening to take companies out of business and that are threatening companies to lose a huge amount of sensitive customer data or internal data. At Lenovo, we are taking security very, very seriously, and we run a very deep analysis, around our own security capabilities in the products that we are building. And we are announcing today a new brand under the Think umbrella that is called ThinkShield. Our goal is to build the world's most secure PC, and ultimately the most secure devices in the industry. And when we looked at this end-to-end, there is no silver bullet around security. You have to go through every aspect where security breaches can potentially happen. That is why we have changed the whole organization, how we look at security in our device business, and really have it grouped under one complete ecosystem of solutions, Security is always something where you constantly are getting challenged with the next potential breach the next potential technology flaw. As we keep innovating and as we keep integrating, a lot of our partners' software and hardware components into our products. So for us, it's really very important that we partner with companies like Intel, Microsoft, Coronet, Absolute, and many others to really as an example to drive full encryption on all the data seamlessly, to have multi-factor authentication to protect your users' identity, to protect you in unsecured Wi-Fi locations, or even simple things like innovation on the device itself, to and an example protect the camera, against usage with a little thing like a thinkShutter that you can shut off the camera. SO what I want to show you here, is this is the full portfolio of ThinkShield that we are announcing today. This is clearly not something I can even read to you today, but I believe it shows you the breadth of security management that we are announcing today. There are four key pillars in managing security end-to-end. The first one is your data, and this has a lot of aspects around the hardware and the software itself. The second is identity. The third is the security around online, and ultimately the device itself. So, there is a breakout on security and ThinkShield today, available in the afternoon, and encourage you to really take a deeper look at this one. The first pillar around productivity was the device, and around the device. The second major pillar that we are seeing in terms of intelligent transformation is the workspace itself. Employees of a new generation have a very different habit how they work. They split their time between travel, working remotely but if they do come in the office, they expect a very different office environment than what they've seen in the past in cubicles or small offices. They come into the office to collaborate, and they want to create ideas, and they really work in cross-functional teams, and they want to do it instantly. And what we've seen is there is a huge amount of investment that companies are doing today in reconfiguring real estate reconfiguring offices. And most of these kind of things are moving to a digital platform. And what we are doing, is we want to build an entire set of solutions that are just focused on making the workspace more productive for remote workforce, and to create technology that allow people to work anywhere and connect instantly. And the core of this is that we need to be, the productivity of the employee as high as possible, and make it for him as easy as possible to use these kind of technologies. Last year in Transform, I announced that we will enter the smart office space. By the end of last year, we brought the first product into the market. It's called the Hub 500. It's already deployed in thousands of our customers, and it's uniquely focused on Microsoft Skype for Business, and making meeting instantly happen. And the product is very successful in the market. What we are announcing today is the next generation of this product, what is the Hub 700, what has a fantastic audio quality. It has far few microphones, and it is usable in small office environment, as well as in major conference rooms, but the most important part of this new announcement is that we are also announcing a software platform, and this software platform allows you to run multiple video conferencing software solutions on the same platform. Many of you may have standardized for one software solution or for another one, but as you are moving in a world of collaborating instantly with partners, customers, suppliers, you always will face multiple software standards in your company, and Lenovo is uniquely positioned but providing a middleware platform for the device to really enable multiple of these UX interfaces. And there's more to come and we will add additional UX interfaces on an ongoing base, based on our customer requirements. But this software does not only help to create a better experience and a higher productivity in the conference room or the huddle room itself. It really will allow you ultimately to manage all your conference rooms in the company in one instance. And you can run AI technologies around how to increase productivity utilization of your entire conference room ecosystem in your company. You will see a lot more devices coming from the node in this space, around intelligent screens, cameras, and so on, and so on. The idea is really that Lenovo will become a core provider in the whole movement into the smart office space. But it's great if you have hardware and software that is really supporting the approach of modern IT, but one component that Kirk also mentioned is absolutely critical, that we are providing this to you in an as a service approach. Get it what you want, when you need it, and pay it in the amount that you're really using it. And within UIT there is also I think a new philosophy around IT management, where you're much more focused on the value that you are consuming instead of investing into technology. We are launched as a service two years back and we already have a significant number of customers running PC as a service, but we believe as a service will stretch far more than just the PC device. It will go into categories like smart office. It might go even into categories like phone, and it will definitely go also in categories like storage and server in terms of capacity management. I want to highlight three offerings that we are also displaying today that are sort of building blocks in terms of how we really run as a service. The first one is that we collaborated intensively over the last year with Microsoft to be the launch pilot for their Autopilot offering, basically deploying images easily in the same approach like you would deploy a new phone on the network. The purpose really is to make new imaging and enabling new PC as seamless as it's used to be in the phone industry, and we have a complete set of offerings, and already a significant number customers have deployed Autopilot with Lenovo. The second major offering is Premier Support, like in the in the server business, where Premier Support is absolutely critical to run critical infrastructure, we see a lot of our customers do want to have Premier Support for their end users, so they can be back into work basically instantly, and that you have the highest possible instant repair on every single device. And then finally we have a significant amount of time invested into understanding how the software as a service really can get into one philosophy. And many of you already are consuming software as a service in many different contracts from many different vendors, but what we've created is one platform that really can manage this all together. All these things are the foundation for a device as a service offering that really can manage this end-to-end. So, implementing an intelligent workplace can be really a daunting prospect depending on where you're starting from, and how big your company ultimately is. But how do you manage the transformation of technology workspace if you're present in 50 or more countries and you run an infrastructure for more than 100,000 people? Michelin, famous for their tires, infamous for their Michelin star restaurant rating, especially in New York, and instantly recognizable by the Michelin Man, has just doing that. Please welcome with me Damon McIntyre from Michelin to talk to us about the challenges and transforming collaboration and productivity. (audience applauding) (electronic dance music) Thank you, David. >> Thank you, thank you very much. >> We on? >> So, how do you feel here? >> Well good, I want to thank you first of all for your partnership and the devices you create that helped us design, manufacture, and distribute the best tire in the world, okay? I just had to say it and put out there, alright. And I was wondering, were those Michelin tires on that Aston Martin? >> I'm pretty sure there is no other tire that would fit to that. >> Yeah, no, thank you, thank you again, and thank you for the introduction. >> So, when we talk about the transformation happening really in the workplace, the most tangible transformation that you actually see is the drastic change that companies are doing physically. They're breaking down walls. They're removing cubes, and they're moving to flexible layouts, new desks, new huddle rooms, open spaces, but the underlying technology for that is clearly not so visible very often. So, tell us about Michelin's strategy, and the technology you are deploying to really enable this corporation. >> So we, so let me give a little bit a history about the company to understand the daunting tasks that we had before us. So we have over 114,000 people in the company under 170 nationalities, okay? If you go to the corporate office in France, it's Clermont. It's about 3,000 executives and directors, and what have you in the marketing, sales, all the way up to the chain of the global CIO, right? Inside of the Americas, we merged in Americas about three years ago. Now we have the Americas zone. There's about 28,000 employees across the Americas, so it's really, it's really hard in a lot of cases. You start looking at the different areas that you lose time, and you lose you know, your productivity and what have you, so there, it's when we looked at different aspects of how we were going to manage the meeting rooms, right? because we have opened up our areas of workspace, our CIO, CEOs in our zones will no longer have an office. They'll sit out in front of everybody else and mingle with the crowd. So, how do you take those spaces that were originally used by an individual but now turn them into like meeting rooms? So, we went through a large process, and looked at the Hub 500, and that really met our needs, because at the end of the day what we noticed was, it was it was just it just worked, okay? We've just added it to the catalog, so we're going to be deploying it very soon, and I just want to again point that I know everybody struggles with this, and if you look at all the minutes that you lose in starting up a meeting, and we know you know what I'm talking about when I say this, it equates to many many many dollars, okay? And so at the end the day, this product helps us to be more efficient in starting up the meeting, and more productive during the meeting. >> Okay, it's very good to hear. Another major trend we are seeing in IT departments is taking a more hands-off approach to hardware. We're seeing new technologies enable IT to create a more efficient model, how IT gets hardware in the hands of end-users, and how they are ultimately supporting themselves. So what's your strategy around the lifecycle management of the devices? >> So yeah you mentioned, again, we'll go back to the 114,000 employees in the company, right? You imagine looking at all the devices we use. I'm not going to get into the number of devices we have, but we have a set number that we use, and we have to go through a process of deploying these devices, which we right now service our own image. We build our images, we service them through our help desk and all that process, and we go through it. If you imagine deploying 25,000 PCs in a year, okay? The time and the daunting task that's behind all that, you can probably add up to 20 or 30 people just full-time doing that, okay? So, with partnering with Lenovo and their excellent technology, their technical teams, and putting together the whole process of how we do imaging, it now lifts that burden off of our folks, and it shifts it into a more automated process through the cloud, okay? And, it's with the Autopilot on the end of the project, we'll have Autopilot fully engaged, but what I really appreciate is how Lenovo really, really kind of got with us, and partnered with us for the whole process. I mean it wasn't just a partner between Michelin and Lenovo. Microsoft was also partnered during that whole process, and it really was a good project that we put together, and we hope to have something in a full production mode next year for sure. >> So, David thank you very, very much to be here with us on stage. What I really want to say, customers like you, who are always challenging us on every single aspect of our capabilities really do make the big difference for us to get better every single day and we really appreciate the partnership. >> Yeah, and I would like to say this is that I am, I'm doing what he's exactly said he just said. I am challenging Lenovo to show us how we can innovate in our work space with your devices, right? That's a challenge, and it's going to be starting up next year for sure. We've done some in the past, but I'm really going to challenge you, and my whole aspect about how to do that is bring you into our workspace. Show you how we make how we go through the process of making tires and all that process, and how we distribute those tires, so you can brainstorm, come back to the table and say, here's a device that can do exactly what you're doing right now, better, more efficient, and save money, so thank you. >> Thank you very much, David. (audience applauding) Well it's sometimes really refreshing to get a very challenging customers feedback. And you know, we will continue to grow this business together, and I'm very confident that your challenge will ultimately help to make our products even more seamless together. So, as we now covered productivity and how we are really improving our devices itself, and the transformation around the workplace, there is one pillar left I want to talk about, and that's really, how do we make businesses smarter than ever? What that really means is, that we are on a journey on trying to understand our customer's business, deeper than ever, understanding our customer's processes even better than ever, and trying to understand how we can help our customers to become more competitive by injecting state-of-the-art technology in this intelligent transformation process, into core processes. But this cannot be done without talking about a fundamental and that is the journey towards 5G. I really believe that 5G is changing everything the way we are operating devices today, because they will be connected in a way like it has never done before. YY talked about you know, 20 times 10 times the amount of performance. There are other studies that talk about even 200 times the performance, how you can use these devices. What it will lead to ultimately is that we will build devices that will be always connected to the cloud. And, we are preparing for this, and Kirk already talked about, and how many operators in the world we already present with our Moto phones, with how many Telcos we are working already on the backend, and we are working on the device side on integrating 5G basically into every single one of our product in the future. One of the areas that will benefit hugely from always connected is the world of virtual reality and augmented reality. And I'm going to pick here one example, and that is that we have created a commercial VR solution for classrooms and education, and basically using consumer type of product like our Mirage Solo with Daydream and put a solution around this one that enables teachers and schools to use these products in the classroom experience. So, students now can have immersive learning. They can studying sciences. They can look at environmental issues. They can exploring their careers, or they can even taking a tour in the next college they're going to go after this one. And no matter what grade level, this is how people will continue to learn in the future. It's quite a departure from the old world of textbooks. In our area that we are looking is IoT, And as YY already elaborated, we are clearly learning from our own processes around how we improve our supply chain and manufacturing and how we improve also retail experience and warehousing, and we are working with some of the largest companies in the world on pilots, on deploying IoT solutions to make their businesses, their processes, and their businesses, you know, more competitive, and some of them you can see in the demo environment. Lenovo itself already is managing 55 million devices in an IoT fashion connecting to our own cloud, and constantly improving the experience by learning from the behavior of these devices in an IoT way, and we are collecting significant amount of data to really improve the performance of these systems and our future generations of products on a ongoing base. We have a very strong partnership with a company called ADLINK from Taiwan that is one of the leading manufacturers of manufacturing PC and hardened devices to create solutions on the IoT platform. The next area that we are very actively investing in is commercial augmented reality. I believe augmented reality has by far more opportunity in commercial than virtual reality, because it has the potential to ultimately improve every single business process of commercial customers. Imagine in the future how complex surgeries can be simplified by basically having real-time augmented reality information about the surgery, by having people connecting into a virtual surgery, and supporting the surgery around the world. Visit a furniture store in the future and see how this furniture looks in your home instantly. Doing some maintenance on some devices yourself by just calling the company and getting an online manual into an augmented reality device. Lenovo is exploring all kinds of possibilities, and you will see a solution very soon from Lenovo. Early when we talked about smart office, I talked about the importance of creating a software platform that really run all these use cases for a smart office. We are creating a similar platform for augmented reality where companies can develop and run all their argumented reality use cases. So you will see that early in 2019 we will announce an augmented reality device, as well as an augmented reality platform. So, I know you're very interested on what exactly we are rolling out, so we will have a first prototype view available there. It's still a codename project on the horizon, and we will announce it ultimately in 2019, but I think it's good for you to take a look what we are doing here. So, I just wanted to give you a peek on what we are working beyond smart office and the device productivity in terms of really how we make businesses smarter. It's really about increasing productivity, providing you the most secure solutions, increase workplace collaboration, increase IT efficiency, using new computing devices and software and services to make business smarter in the future. There's no other company that will enable to offer what we do in commercial. No company has the breadth of commercial devices, software solutions, and the same data center capabilities, and no other company can do more for your intelligent transformation than Lenovo. Thank you very much. (audience applauding) >> Thanks mate, give me that. I need that. Alright, ladies and gentlemen, we are done. So firstly, I've got a couple of little housekeeping pieces at the end of this and then we can go straight into going and experiencing some of the technology we've got on the left-hand side of the room here. So, I want to thank Christian obviously. Christian, awesome as always, some great announcements there. I love the P1. I actually like the Aston Martin a little bit better, but I'll take either if you want to give me one for free. I'll take it. We heard from YY obviously about the industry and how the the fourth Industrial Revolution is impacting us all from a digital transformation perspective, and obviously Kirk on DCG, the great NetApp announcement, which is going to be really exciting, actually that Twitter and some of the social media panels are absolutely going crazy, so it's good to see that the industry is really taking some impact. Some of the publications are really great, so thank you for the media who are obviously in the room publishing right no. But now, I really want to say it's all of your turn. So, all of you up the back there who are having coffee, it's your turn now. I want everyone who's sitting down here after this event move into there, and really take advantage of the 15 breakouts that we've got set there. There are four breakout sessions from a time perspective. I want to try and get you all out there at least to use up three of them and use your fourth one to get out and actually experience some of the technology. So, you've got four breakout sessions. A lot of the breakout sessions are actually done twice. If you have not downloaded the app, please download the app so you can actually see what time things are going on and make sure you're registering correctly. There's a lot of great experience of stuff out there for you to go do. I've got one quick video to show you on some of the technology we've got and then we're about to close. Alright, here we are acting crazy. Now, you can see obviously, artificial intelligence machine learning in the browser. God, I hate that dance, I'm not a Millenial at all. It's effectively going to be implemented by healthcare. I want you to come around and test that out. Look at these two guys. This looks like a Lenovo management meeting to be honest with you. These two guys are actually concentrating, using their brain power to race each others in cars. You got to come past and give that a try. Give that a try obviously. Fantastic event here, lots of technology for you to experience, and great partners that have been involved as well. And so, from a Lenovo perspective, we've had some great alliance partners contribute, including obviously our number one partner, Intel, who's been a really big loyal contributor to us, and been a real part of our success here at Transform. Excellent, so please, you've just seen a little bit of tech out there that you can go and play with. I really want you, I mean go put on those black things, like Scott Hawkins our chief marketing officer from Lenovo's DCG business was doing and racing around this little car with his concentration not using his hands. He said it's really good actually, but as soon as someone comes up to speak to him, his car stops, so you got to try and do better. You got to try and prove if you can multitask or not. Get up there and concentrate and talk at the same time. 62 different breakouts up there. I'm not going to go into too much detai, but you can see we've got a very, very unusual numbering system, 18 to 18.8. I think over here we've got a 4849. There's a 4114. And then up here we've got a 46.1 and a 46.2. So, you need the decoder ring to be able to understand it. Get over there have a lot of fun. Remember the boat leaves today at 4:00 o'clock, right behind us at the pier right behind us here. There's 400 of us registered. Go onto the app and let us know if there's more people coming. It's going to be a great event out there on the Hudson River. Ladies and gentlemen that is the end of your keynote. I want to thank you all for being patient and thank all of our speakers today. Have a great have a great day, thank you very much. (audience applauding) (upbeat music) ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ♪ ♪ Ba da bop bop bop ba do ♪

(techy music) >> Announcer: Live from Las Vegas, it's theCUBE, covering Dell Technologies World 2018. Brought to you by Dell EMC and its ecosystem partners. >> We're back in not-so-sunny Las Vegas. You're watching theCUBE, the leader in live tech coverage. We're here at day three, wall-to-wall coverage of Dell Technologies World, the Inaugural Dell Tech World. I'm here with Tom Sweet, who's the CFO of the 80 billion dollar Dell Technologies empire. Thanks for coming to theCUBE. >> Happy to be here. >> So, really thrilled to have you on. I think it's the first time you've been on theCUBE. >> You guys usually don't let me on, so you know, they're letting me out a little bit, I guess. >> Well, I say, we're happy to have you. So, a lot going on, obviously, in your business. I mean, let's start with, you know, we're a couple of years into the integration, you guys, obviously, you dug in. You've got a pretty good handle on this, like I said, 80 billion. When it started, you guys were in the low 70's, I believe, so you've seen some growth. Not a lot of growth in this business, but you guys are growing. So, give us the rundown of your business. How should we think about the Dell empire, as I called it? >> Look, I think that we're very happy with the progress that we've made since the integration, which was back in September of 16, so over the last 20 months, we've been focused on building velocity within the business, and particularly, as you think about our major tranches of product, if you will. So, you know, our client business is growing quite nicely, as we evidenced by last year, 21 consecutive quarters of share gain. Pleased with our server velocity. Last year, we were number one in servers. Storage has been a bit of a work in process, as you know, but I think we're beginning to see a little bit better velocity in that business. Clearly, we have VMware, and we have Pivotal. So, what's been really interesting is how the companies have come together, and the offerings have come together in a much more integrative fashion, which has been fun to watch and fun to sort of help put this thing together. The customer buy-in and the customer acceptance of the vision and the story has been pretty remarkable, from my perspective. >> And, the client's side of the business surprised me anyway. It's like the gift that keeps on giving. >> Well, you know, what was it, 10 years ago, they said the PC was dead, you know, and today it's roughly half of our revenue and growing nicely. I think the secret, as always, as you know, is work gets done on a keyboard. The tablet and the phone become an and device, a notebook and a tablet, a notebook and a phone. We keep innovating form factors or innovating the interfaces with the device, so we're pretty excited about it. It's just a really good, really great business for us. >> I think what Michael said in his keynote, when IBM announced the end of the PC era, since then there's been four, I think he said four billion PCs shipped. >> Yes, exactly. >> It's astounding. >> Clearly, the overall market for PCs is flat to slightly down, it's going to be in that range, but in that type of market, our point of view, as you well know, is you have to take share, you have to grow. The team's done a nice job. Jeff Clark and his product team have done a really nice job around form factor innovation, 87 CES awards this year for PCs, so really good business. >> And, from a CFO's perspective, it's throwing off cash, you're comfortable with, what is it, a 5% to 6% operating margin, basically? >> We typically think of that as about a 5% op inc business, but it provides huge amount of scale for us, if you think about our supply chain, our ability. It's a nice, predictable, really strong cash flow business for us, so it's a good business. >> And, the higher end, the server business and the storage business is what now, around 7% op inc, and there's a lot of upside there, potentially? >> Yeah, it's a little bit higher than that, but there is upside there as we continue to drive the business and drive efficiency in that business and, as you know, we're doing a lot of work right now in our storage area in terms of how, over time, do we evolve that road map around the solution set, and working more in an integrative fashion with VMware around the convergence of hardware and software, into more thoughtful and more smarter designs or in the storage platforms. So, you know, that business is, that's going to be a really interesting business for us over the next year or so. >> Well, really, VMware, people look at Dell as a hardware company, but VMware is not a hardware company. It's software, marginal economics. It throws off 50% roughly of your operating cash, I mean, it's a gem. >> We're actually huge fans of VMware. It's a great company, growing very nicely, and extraordinarily well-positioned, as you think about the world of Multi-Cloud. And, what we're doing and how they're thinking about any device to any device, any Cloud to any Cloud, that whole story is resonating, and from a CFO perspective, you got to like software margins. It's a good business. >> So, let's talk about the debt a little bit, because I think there are a lot of misconceptions out there. You paid down $10 billion in debt, I think it's roughly around 40 billion now. Is that about right? >> A little bit higher than that, because we've added some debt related to our GFS business, but I think the way you ought to think about our debt load is that very manageable, we're right on the schedule we thought we were going to be on, in terms of debt paydown, and we'll continue to pay down debt, from a capital allocation focus. You know, 60-70% of our capital is focused on debt paydown, doesn't mean we're not investing in the business properly, 'cause I think we are, and we're continuing to fuel those investments, and then we're going to add some debt, because our DFS, or financing business, we use debt to fund that business, but that's a little bit different sort of perspective. We think about that debt separately and different than the core debt of the business, and our analyst community and the credit rating agencies think about that debt differently. And the GFS business is growing very nicely in terms of originations, and it's a great tool for our sales force to help in terms of the financing capacity and credit capacity for our customers. So, it's a good business. >> And, let's talk taxes for a second. I know it's kind of off the normal CUBE interviews, but a lot of people talk about that. All the legislation tax, legislation, that's bad for Dell, you can't write off that debt, but essentially, from what I've read, it's a net neutral to you guys. >> It's generally neutral to maybe slightly negative, as we understand the debt regulatory environment today, with the US tax reform. They did put some limits on how much interest, and there's transition rules around how much you can deduct, but you know, you got to lower corporate tax rate in the US, you also have the immediate expensing of CapX, and then you've got the repatriation toll charge, but when you throw it all together, slightly negative, but it's not a big cash dynamic for us, it's not a driver of, geez, we've got to go do something with our capital structure as a result of that. So, that's just a misconception that's out there right now. >> And then, you've told me earlier that the Pivotal move was not about delevering, it was a move that you guys have been planning for a while. I mean, that was in the works before the merger. Talk about that. >> Look, I mean, Pivotal's done, their growth at Pivotal and the acceptance of Pivotal's been remarkable. So, that conversation around should we IPO, when should we IPO, has been in the works for over a year, and Pivotal needed to continue to grow and mature a little bit in some of its processes and making sure that when you decide to go public that you're ready to go public. For that last year, that's what they've been working on. But in terms of the actual, to go public and the proceeds from that, that's all about giving Pivotal their own capital to fund their business growth and dynamic. We could have done it at the Dell level, Dell technology level, but I thought it was more appropriate, the size of company they are, that they have their own capital. They're doing business with over half of the Fortune 500, so they need some substance, and it's a great retention to 'em, in terms of having currency for their employee base, for both their attracting talent and retaining talent. >> A Silicon Valley company with its own, I've visited those offices. It's not the normal corporate office down on Howard Street, right? >> No, you know, they're doing the huddles in the morning, but that's what's interesting about Dell technology, the family of businesses, the different cultures, the different capabilities, it's a pretty remarkable set of companies with it. >> The market's booming right now, hope it continues, knock wood here, but what are the assumptions you're making in your business, maybe the economy, you could touch on that. >> We look across the top 45 economies right now, where we do business. They're all growing, GDP's growing, so we feel pretty good about the overall economic environment. Interest rates are slightly rising, but not a big issue for us, even with our debt load. We're about, roughly 70% fixed, 30% floating, so the fact that LiveBoard's up a little bit isn't a big deal. Currency's relatively stable, so we're positive, and companies and institutions are spending on IT, the round of innovation that's being driven, the round of investments and the changes in business models. Typically, one of the first things they go do is they invest in IT to help with that digital transformation, that IT transformation. We're bullish on the economics, so it's a good platform for us. >> One of the things I've said for quite some time now is that the merger between Dell and EMC was inevitable. You had these pressures of Cloud, you needed a company who was comfortable, with a lower margin business and had a profitability model that could thrive, and it made a lot of sense. But, you don't have a public cloud, and you're comfortable with that, but you've done a lot of work with, I'll call, utility pricing. Can you talk about that a little bit? >> Well, one of the feedback things we got from our customers is, hey, look, I like the economics of the Cloud. I like this pay-as-you-consume, pay-as-you-grow, that flexibility to scale up, scale down, so through our Dell Financial Services and using our own balance sheet, we have put together flexible consumption models, so I can offer you a pay-as-you-grow, pay-as-you-consume, or we can do a straight out utility where the assets are on my balance sheet and you're paying a monthly fee, if you will. So, all we're trying to do there is to normalize the economics for our customers, say, hey, I want you to take economics out of your decision about whether you want to go to the Cloud or not, because we can offer that capacity and capability. And, let's really talk why, and what's the purpose, and what's the work load, what's the problem that you're trying to solve? >> And, you obviously recognize that as radical revenue. >> Yeah, absolutely. >> I'm guessing it's not meaningful, like a software company shifting from a perpetual model, or is it? >> Well, I think over time you're going to see the rise in these types of models. Customers are interested, as a service models. So, there is interest in that, and I think you'll see that piece of the business grow over time, but I don't think it's going to be a step function change. But, again, it's just another example, I think, of Dell Technologies offering customers what they want and in different and innovative ways to do business with us. >> One of the things that EMC did, was they did a lot of M&A. That's kind of how EMC innovated, no offense to my friends from EMC, but they fill gaps. And, a lot of times, those gaps created huge overlaps. You guys are addressing that carefully, I understand that. How has the merger, the debt, affected your ability to do M&A? How critical is that to you guys, because you are very acquisitive, obviously, as well? >> We are still very active, as we look at the technology trends and what type of capabilities and new technologies are on the horizon, so we haven't done a lot of M&A since the acquisition of EMC. We've principally focused on the integration, but if you look at VMware, they've done acquisition, we've done a couple of really small tuck-ins within the family, but we'll continue to look at that. And, one of the other tools in our tool chest, as you know, is Dell Technologies Capital. I think we've got roughly over 81 investments in technology startups, principally on the West Coast, but some overseas, and very focused on security, AI, machine learning, next-generation storage capabilities, and so we get exposed to that type of technology, and we put our R&D teams together with them, so I feel like we're in a reasonable position, and as the business tells me they need something, we'll go evaluate it. >> I want to ask you a question about your peers, the CFOs. I'm getting to know you a little bit. I think you're a rock star CFO. One of our analysts said to us the other day, Tom Sweet is a stud, I said, yeah, it's the make-up on theCUBE. >> I don't know about that. >> So, what's going on in the, well, you've got a big job, and you've got a really good handle on what's going on here. What's going on in the world of CFOs these days? I mean, obviously, you've got stuff like GDPR that gets in there, but digital transformation is obviously a huge theme among the C-Suite. Security is a board level issue. What kind of discussions are you having with your peers these days? >> Look, I mean, most of the conversations tend to be around two or three different areas. One is how do you think about how does the finance function and our capabilities change over the coming three, five years, right? How do you think about the use of AI, machine learning, and in the processes of the company? And, what is everybody doing to innovate around that? That's a pretty common conversation we're having. You know, security cyber is a huge conversation point in terms of how is your board looking at it, how are you thinking about it. Since we're CFOs, we're always talking about how much money, what's that investment profile you need to have there, in terms of what's the right amount? As you well know, you can spend a lot of money there. Are you guaranteed of a perfect defense? Absolutely not, so that tends to be a common area, but more importantly, there's this whole comment, this whole big data conversation that's also happening around how do you help the business make better decisions? How do you add and drive value back to the business? How are you using advanced analytics to drive insight back into the business, the various businesses? So, pretty much the same sort of conversations we're having with our customers, we're having internally, or amongst the CFO community. >> A lot of risk management, obviously, >> Yeah, absolutely, absolutely. >> goes into that equation. >> I mean, inside of tech or outside of tech, are there companies or CFOs that you sort of follow, admire, kind of models that you look at? >> Look, there's some great CFOs that I've had the opportunity to have interactions with. You know, Mark Hawkins at Salesforce is a great CFO, also a good friend, Amy up at Microsoft, really doing a really nice job up there, and then Bob Swan at Intel. So, we tend to sort of be industry-organized, just because that's how we interact, but they're all doing nice jobs and really interesting innovative things within the context of their companies' business models. >> Have you changed the sources of where you guys get information? Obviously, your peers is probably number one, but as the digital world comes forward, have you sort of changed the sources, or still sort of the Wall Street Journal every day? >> Well, it's guys like you, right? We're all watching the blogs and, look, the amount of data and information that's flowing these days can be overwhelming, so I tend to be, I'm looking at industry publications, I'm looking at some of the online blogs in terms of trying to understand where are our competitors headed, where is the industry headed, what are the themes out there? You know, Michael's got a perspective with his leadership team that, hey, he wants us out in front of customers, so I spend roughly 30% of my time with customers and partners. You have to be aware of, obviously, what's going around in the industry, not only to be thoughtful and intelligent, but to also help think about where do you position the company, three and five years down the road? And, helping Michael in that thought process, and helping the leadership team in that thought process. >> Well, Tom, it's been a real pleasure getting to know you a little bit, and watching you guys in action. Wish you best of luck. >> I appreciate it. >> Thank you so much for being on theCUBE. >> It was a lot of fun. >> All right. Keep it right there, buddy. We'll be right back with our next guest, right after this short break. You're watching Dell Technologies World, live on theCUBE. (techy music)

>> Announcer: Live from Las Vegas, Nevada. It's the Cube covering Accelerate 2017, brought to you by Fortinet. Now here are your hosts Lisa Martin and Peter Burris. >> Hi welcome back to the Cube. I'm Lisa Martin joined by my co-host Peter Burris and we are with Fortinet in beautiful Las Vegas at their Fortinet Accelerate 2017 event. A great event that brings together over 700 partners from 93 countries. And right now we're very excited to be joined by one of their technology partners, Carbon Black. Jim Rein, welcome to the Cube. >> Thank you very much, I appreciate it. Great to be here. >> Absolutely. You are a key alliance partner, Carbon Black, as you're the director of technology alliances. I knew you've been at Carbon Black for three years but you're quite the veteran in terms of technology, engineering, sales, channel services expertise, quite the veteran, quite the sage. But some interesting things that I wanted to let our viewers know about Carbon Black, and we'll have you expand upon this is that you guys are the leading cloud based endpoint security company that stops cyber threats. And that your roots are actually in offensive security. You now protect more than seven million endpoints worldwide and 30 of the Fortune 100 are your customers. Tell our viewers a little more about Carbon Black. what are you doing? What are some of the things that you are seeing as security now as a boardroom level topic? >> We're seeing a lot of changes. It's the idea of taking an endpoint context, what's actually happening at the endpoints. The endpoints are always the real source of where the attacker was really targeting to get to the information. For such a long period of time we've used legacy technology to really to do that. So we're looking at what are some things that we need to do now to really change that entire game. And one of the key things about that is looking beyond just simple files. Malware's bad, we know that, and we have great ways of stopping that for years and our attackers are moving well beyond just malware today and they're moving really into leveraging different attacks by actual actors within the customers' environments. And so we're really positioning ourselves to stop those next threats, the new threats that we're seeing and do it in such a way that it's very easy for a customer to do. Still manage, still maintain it, and then integrate that with other things. >> And I think the key word is integrate it with other things. Because it's not just enough to know what the endpoint's doing, you have to know what the endpoint's doing in the context of what its supposed to be able to do with those other things. Talk a little bit about that and Fortinet come together for customers. >> So it was really important. We've had a really strong opinion that open APIs are very important. The idea that we're better together than we are apart. And that really is true in security. For too long we've had different vendors that have tried to installing everything under one roof and the problem is that most customers will make financial investments within a given product and then they need to capitalize on that, on every single new product they bring on board. With us at Endpoint Contacts we really wanted to make sure that our endpoint data, the actual vision of what we're seeing, could be shared with network entities, could be shared with a sock. And so the sock can have a holistic picture of the entire environment not just on premise but also off. >> Talking about endpoints, tablets, mobile, the proliferation of IOT devices, how does a company nowadays that, we we're talking off air, but the day of everyone getting issued a phone or a Black Berry is over. But when we're all providing our own devices as employees, how realistic is it for a company to actually secure the things that I as an employee are doing with my own devices? On a corporate network. >> It's really tough. It's really tough. We have to control the things we can control, right? Which are the endpoints that we issue. So the laptops, the desktops, the home systems. For a lot of engineers now with a remote context, they're working from home on an iMac. We need to be able to protect that as it was on a corporate network. And so part of that is taking that off network devices, but enabling the corporate assets, the actual on network devices, to leverage that. And that's what we've done with Fortinet. We leverage the FortiSandbox so that whenever we see a brand new binary on an endpoint, we can submit that to FortiSandbox and say, is it good or is it bad? Obviously we don't know that binary at that point, we're making a determination. And if FortiSandbox comes back and says that is malicious, we can not only stop it from executing again, but also terminating in motion. >> One of the things I'm curious about, during the general session this morning, there was a Cecil panel of Levis, AT&T, and Lizard was there. There were also some great customer videos. Pittsburgh Stealers. And some other telecommunications companies. When we're talking about what you're doing at Fortinet, expand upon that a little bit more in terms of the integration. Also are you focused on certain industries that might be at higher risk? Health care, financial services, for example? >> I mean I'd like to say yes, but honestly I think everybody's at a high risk. The hard part today is that attackers are going after wherever they can find the most valuable data to them. And it's not based upon my role or my job or my industry, it's based upon what that attacker actually needs. And so we see it in small mom and pop shops, we see it in health care, we see it in finance. Definitely see it in retail a lot recently and manufacturing. And so we really view it as the customer needs to take a proper assessment, understand where their assets are, and then deploy multiple different layers, which includes an endpoint solution, to actually stop that. So you take our next generation endpoint. You take Fortinet's advanced capabilities on the network. You take the visibility what they've done with the fabric, and now all of a sudden you have this really great solution that does protect the assets they can control. For IOT I mean honestly that'll be something that we'll have to challenged for with a while. But if these can segment that a little bit and protect what I can control, I don't throw my hands up and say I can't do anything. Now I have IOT segment in such a way that I can properly address that with an overall posture. >> Can we presume that your customers have this awareness as knowledge that we're already breached, we now have to be providing or limiting damage? Is that the feeling and the vibe that you're getting when you're talking to customers about endpoint security? >> We hope so. We came out about three years ago and said that there's an assumption of breach. Which is don't assume you won't be, assume it's already happened. And assume you just don't know about it. And that's really a reality I think for a lot of people nowadays. You know Ponamon does a really great yearly expose where it talks about how long a breach has occurred within environments, and it's 200 plus days or some number. The point is it's always a significant amount of time. So the ability to have more visibility within a network, not only on the network side but also on the endpoint side, and combine that into one view is so important. Because most customers honestly don't know they have that. And then what it is, it's a panic situation. And that's rough. >> But increasingly, in enterprise, it's providing service to a customer or partner, is really providing service to an endpoint somewhere. >> It is. >> And so we know for example that when the bad guys are trying to do something malicious, they're just not getting into your network, and working their way through your systems until they can find the most valuable data. They also know that if you are a trading partner, that even if your data is not that valuable, the trading partner's data may be very valuable. And so they are hopping corporate boundaries as well. And so trading partners absolutely have to be able to secure and validate that their relations are working the way that they're supposed to be working. So how does my ability to be a trading partner go up and down based on my ability to demonstrate that I've got great endpoint security in my business? >> You know it's a great question, because I don't know of too many customers that have a strict validation to say if I'm a partner of yours, not a technology partner but a business partner, that I expect you to maintain a certain level of security protection. There's just an automatic assumption that we partner with you know Sea-bil or somebody else and of course they have a protection enabled. I think you have to raise it up a level. So we have to have a policy mindset to not say that you know obviously we have different solutions deployed, but what have I enabled? From a very broad perspective, what kind of things do I allow my endpoints or do I allow my network to do? What kind of things do I disallow, do I block? Do I have control of domain admin? Something as simple as that. But that forms a policy, and then different companies can match policies together and say, yes you actually do comply with our policy or our security posture, therefore we're going to enable the partnership. Because you're right. If I come in through a partner, does that allow my insurance to cover me from a cyber protection perspective? That may be disallowed because it may be seen as an authorized entry within an environment, not a breach. And so there's all kinds of complexities that come out of that. But we have to have a better way of communicating between our companies. >> So as Ken Xie, the CEO of Fortinet, talked about this morning in his key note. He was talking about the evolution of security, going from the perimeter to web, and web 2.0, cloud, and now we're moving towards 2020 in this time of needing to have resilience and automation. And it's also an interesting time as we get towards 2020, and that's not that far away. You know this is 2017, if you can believe that. The proliferation of mobile and IOT and tablet, I mean there's suspected to be about 20 billion IOT devices connected in 2020, and only about a billion PCs. As you see that proliferation, and you look at the future from an endpoint perspective, how has the game changed today, and how do you expect the game for endpoint security to change in the next few years as we get to 2020? >> I mean it's interesting, because I remember the days when I was first installing the firewall, the only one in my enterprise, and working through that, that kind of perimeter and barrier concept. And now that barrier's disappeared. So we see a lot of things moving to cloud. And I think that really is the key enabler. What Fortinet is doing with the structure, they're really targeting for a cloud controller, cloud protection, we're seeing it from a lot of vendors. There's a lot of focus on that right now. Because if I have a mobile device, I may not be able to attach the mobile itself, because of the operating system or restrictions from the provider like IOS has in it. But I can control the application, I can tie into that. And if I tie that back to my corporate environment, so the same policies are being applied, and I can apply that down to my endpoint to make sure that at least from an application perspective, what's running on my laptop is the same control segment running on my application in the cloud. I now have a better control of the entire environment. And I think that's where our first step is. There's going to be a lot of advances I believe really in the next 10 years, five years or less for 2020, that really bring about some unique things concerning to mobile and IOT. >> Can you share with us a little bit more exactly how your technologies integrate with Fortinet's technologies, especially kind of looking at the announcements today? What they're doing with FortiGate, the announcements with the operating system? >> Absolutely. So today from an endpoint perspective, anytime we see a binary that comes on from our CB protection product, we'll send that to FortiSandbox. First we'll quarry it, find out whether or not they've seen it before. If they haven't, we'll send it to them, and they can do a detonation. Obviously we're taking the results of that back and we're making a block determination on that. Obviously those are things that we haven't already seen before. So different protection modes, different protection policies are in place. But if I haven't seen that particular binary, something brand new, it could be malicious, it could be a zero day. I can play that against the FortiSandbox and find out whether or not it actually does have that malicious nature to it and then act upon it. >> I've always though of endpoint security, and tell me if I'm right, as the first line of defense. >> It is. We've always thought of the firewall as the first line, because we think outward in. But really it is inward out, because you use your laptops at home, right? So it is the first place that everything always starts. >> So it's the first line of defense, to my perspective, and increasingly as businesses deliver, provide, or their services are in fact based on data, that that notion of the first line of defense creates new new responsibilities for both customers as well as vendors, as well as sellers. So over the next few years, how is that notion of the first line of defense going to change? Are we going to see customers start thinking about this, and whether or not I'm a good customer? How do we anticipate kind of some of the social changes that are going to be made possible by evolution of endpoint security and how it will make new demands on endpoint security? >> It's going to start with more visibility. I don't mean that in a very broad sense. But today we have antivirus solutions that we're really targeted about, just simply binary yes or no. Do I allow something to execute or not? And that worked very well 10 15 years ago. Increasingly over time we know that it really hasn't, because advanced attacks have come around. So now we're applying more visibility to that endpoint, saying what actually is occurring, and how are those processes working together? If I see something operate from an email file, I click on it, something else happens, now all of a sudden there's code executing. That sequence of events or that stream becomes very very important for the visibility standpoint. Our project CB defense takes that streaming prevention. We say what is the risk factor scoring that we've applied to this, and how does that sum together not only blocking good and bad, but now I'm getting to actions. So now that I'm paying more attention, that rolls into what are users doing? What are they actually doing on the endpoints, and how does that policy dictate? I think for so long we've said that we can't approach endpoints because we can't control them, and that's the CEO's device or whatever it is. We're really changing that methodology. I think mindset wise people are okay with I need more controls on the endpoint, I need more capabilities. That's going to start transitioning to having conversations about well how do you control your endpoints? And suddenly there's more of a focus, besides just saying do you have something installed to block stuff? That conversation got really short, because it just doesn't work today. So I'm not saying do I have Carbon Black installed or anything else installed, it's what am I doing, what policy am I applying there, and then how does that match up to my business partners? >> I've made commitments to this customer, this customer's made commitments to me. Are those commitments being fulfilled, and is someone trying to step beyond those commitments to do something bad? >> I never want to be the source of an attack to my partner. (laughing) That would be the worst. >> And well there are some very high profile cases where an HVAC company for example suddenly discovered that they were a security risk to some very very big companies. It wasn't supposed to happen that way. >> And to your point before, it was an HVAC company. Nobody thought about HVAC being a targeted industry. >> A critical infrastructure, right, right. >> Exactly, it doesn't matter. People are after the data. They're after what's on the endpoint, and that's why we need to protect the endpoints as the first step. But obviously combining that with a bigger motion, because it's not all endpoint. There has to be a network barrier. You have to have other things involved. There's cloud now and were transitioning to Quickway, and that's where partnerships are going to be formed. I really believe that you're going to see more and more partnerships over time with this collective nature of leveraging Fortinet calls it the intent-based networking, right? So intent-based, what is the intent behind it? What is the attacker really trying to do? And I love that and that concept, because it really does match up well with us. >> Well but as security practices and technologies improve in one area, security practices and technologies have to improve in all areas. Otherwise one part of that security infrastructure becomes the point that everybody's using for the attack. >> A vulnerability, right. >> Yeah, it's a vulnerability. My point is a lot of people are now starting to think, oh endpoint security, that's not that, this. No, that too has to evolve. And it's going to create value, and it has to, in context, it has to evolve in the context of the broader class of attacks and the things that people are trying to do with their data in digital business. >> Absolutely. I think that a lot of customers have realized that they're making that a part of their overall security planning. You know for three years our what am I going to do, and where do I stand at today? And obviously there's existing license cycles and things like that on the network side as well. But I think a lot of customers are starting to formulate a whole plan about how do I look at my entire infrastructure? Forget what I have. Let me say I want to have certain protections in place. First off, do I have them? And if not can I plug something in that actually still will seamlessly integrate? And that's a really important point for a lot of our customer base. >> And speaking on kind of giving you the last word Jim, you both talked about evolution here. As we look at where Carbon Black is today, you were just named by Forrester as the market leader for endpoint security, fantastic. Looking at that going into 2017 as we're in January 2017, the announcements from Fortinet today. What most excites you about this continued technology partnership? >> Continued with Fortinet? >> With Fortinet, yes. >> Okay, I thought you were talking over all, it's good. Honestly it's something as simple as their approach to the APIs. I mean it sounds silly, but at the end of the day, if their approach is really to leverage and to work with other partners, and that's what ours has been for a long time. So we're not saying it just has to be our product, it just has to be our solutions. They're saying whatever the customer is already invested in, we're going to make it better. And that's a strong message we've had for a long time as well. I don't care what you've put in for a firewall necessarily. But I do want to be able to integrate with that, because the customer needs that. It's not me being very selfish so to speak. Customers are demanding that they have a simpler solution to manage. And it's that simplistic way, that's where we're headed from and endpoint perspective, of having a solution that actually takes in everything from the environment and really makes it a common view, for the instant responder and the personnel. >> And it's all essential for digital business transformation which is as we've been talking about Peter is the crux of that is data and that. Well Jim Rein from Carbon Black, thank you so much for joining us on the Cube today. And on behalf of Peter Burris and myself Lisa Martin, we thank you so much for watching the Cube, and we're going to be right back.

okay we're back at vmworld twenty twelve i'm john fairy with SiliconANGLE calm this is the cube this is our flagship telecast we go out to the events extract a signal from the noise and share that with you i'm joe and stu miniman my co-host with this segment and martine casado the co-founder of nicera you guys are ranking number one on our trending tool that we built under networking because it moved up to the top of the list because of vmworld company had spent a billion dollars for you guys jaishree from Arista called you guys the Instagram of networking kind of tongue-in-cheek on the huge buyout but hey congratulations great wired story today SR with you guys we've done about the talent you have and you brought over the vmworld and you're the top story here so congratulations thank you welcome to the cube thank you so take us through the logic and your motion around past year okay up until the buyout what a roller coaster so just share with us personally from Europe as an entrepreneur what was it like what highlights of what happened well I guess I've been very focused on changing networking right so for me it's been largely a technical ride and since we started the company five years ago we've been focusing on developing core technology and we did that for the first three years and then the last year to us was primarily about execution and customer engagement and so you know we've spent a lot of time proving the technology getting into production doing the support and fixing out that model and so it turned out is a very natural transition point when the acquisition happened because we had gotten traction we had starting to realize how difficult it is to address a market as large as this within a small start-up and so it was very welcome to come join a much larger company where we can kind of provide this as a much box so you guys have some big backers obviously you know they're all it's all well documented in the valley but every entrepreneur has that moments like wait a minute is this what I wanted is this tea but the dollars was so good and vmware's asti growing company what clicked for you what made you go is this the right thing take us through that decision you know absolutely so I mean like to me business guides behavior and at the end of the day the goal is is how do you change networking and have a very very firm belief that the access layer to that network is moving from within the network towards the edge and so we wanted to develop technologies that can use this position to re-implement networking and software and so once you get the core technology done once you prove it out with large customers once you prove out the market the question is is kind of what is the best way to have the biggest impact and I think in some respects you can look at vmware is one of the largest networking companies in the in the world just based on port count right the number of virtual ports that they control is as large as any large networking vendor so this is the opportunity of a lifetime to change in industry so like I've been doing this now you know sdn since those doing my PhD at stanford for so going on 10 years now and this is the the opportunity of a lifetime to actually have broad broad like planet scale impact well congratulations certainly you disrupted the market not only in the validation of the acquisition but as you guys were moving out and talking about some of the deployments you guys were doing it just came out of left field for most people but in the inside baseball sure people knew it was going on in terms of like how you guys are disrupting so so congratulations thank you here I want to talk about is also the messaging here at vmworld very solid around suffered to find datacenter sure and that really kind of brings you into a whole nother beyond networking so you know we've been covering converged infrastructure that's looking a look upon you know around house storage servers and networking so its bigger now than just networking right so now you're taking it to a whole nother leg of the journey so connect the dots out there for the folks between software virtualization and software-defined networking to this to the data center help them understand what is going to happen under that next leg of the journey yeah of course so we're all familiar with compute virtualization right I mean this is how vmware initially changed the world where the time it takes to provision a workload when from weeks to literally minutes like two minutes however I t isn't about single workloads ideas about applications and all the network services that those applications require for example firewalling or security or or monitoring debugging and so even though we reduce the time it took to provisional workload from weeks two minutes you still took days to do everything else that was required so if we take a broad scope if we take a broad look at a thai tea we still realize it still takes days to provision new applications and to provision new workloads and so the only way to get past this the next step that we want to take is to virtualize every aspect of infrastructure and so there's three of those there's there's compute which is virtualized their storage which we're making good progress on and there's network and network really is a pivot piece right it's the one piece that touches everything right it is between the compute in the storage it is between the different types of compute and so if you look at large data centers even cloud data centers the long pole in the tent and provisioning is the network so we must must virtualize that so the goal is the software-defined data center that's like everything's in software everything's totally dynamic you create it on demand you can move it its liquid it's like water it'll go anywhere but in order for this dream to be realized we've got to get the network out of the way and that's what the sierra does we've been talking about going to go and Wikibon we've just kicked up a whole kind of research section on what we're calling data infrastructure and really highlighting this modern era right and we kind of use a lot of sports analogies but you know a modern era meaning the new way not the old way right so you're a classic example of disruption in a new way so talk about the enablement that you see happening from a from a marker play standpoint just you know open your mind and share the crowds and vision around what you will enable with this because networking is has to be dynamic it has that makes total sense you guys have done it what's going to happen next in your mind's eye in terms of what the possibilities are yeah yeah absolutely so I think ultimately this is where we want to get to we want to build a platform that will provide that will recreate you know every Network Service and functionality in a virtualized manner in software from the edge and that means that there can be any service available anywhere over any type of hardware at any scale that's needed and it can be done all at virtualization timeframe so this is like you do an API call you get a virtual network abstraction you add a firewall to it you you configure ackles to it and so all of network configuration all of network services all of network operations become soft state it becomes like a VM image and it's available anywhere that you want it to and so that is the first step so I believe these transformations and systems and this happened many times in the past happen in two steps the first one is you virtualize and when you virtualize you offer the same thing but in a more flexible manner like when you virtualize compute you offered an x86 cpu but you did it in software after you virtualize you can actually change the operational paradigm like when you when they created compute virtualization they didn't immediately get to migration or snapshot or rewind all these other kind of operational benefits these came later so the first step is any networking anywhere you want at any scale automatically and then the second step is like drastically changing the operational paradigm so you can do things like better security so you can rewind configuration state I mean things that we can't even think about today because now we have this ultimate point of indirection that's virtualized this virtualized layer and who's the candidate for these developers just admins net admins all the above is it going to be software programmatic I mean how does that it takes DevOps right to a level of functionality that is just mind-boggling so yeah who's the new personnel yeah it was like who's life does this impact think what happens called a CI easy out there well I mean it's a good question whose life does this impact I mean I mean immediately anybody that's building out a data center like a cloud architect is going to have this this primitive that that they can use to architect better system just like you gave them a virtual machine they use that as a primitive for building better data centers now we're giving them virtual networks as a primitive build virtual data centers so the cloud architects job gets easier application developers don't have to worry about the basics of you know the way networks work our network configuration operations will have a lot more flexibility and the virtual layer of where they can move things around as far as the physical networking layer the problem actually becomes quite a bit simpler but you still have to focus the on the problem of building a physical network so for example when server virtualization came around you didn't like reduce the need for servers you needed more servers and just like the same thing will happen with with network virtualization which is you'll still need physical networks and they're going to probably have to be better physical networks but the problem now is more of how do you build a physical network with high capacity that can support any workload and less about doing all the operational stuff you do today how does an impact we just had chris hoffman from juniper who's now a worker he's been a big security buff a great guest for us but we just were just riffing on the security problems right so give us your perspective on how this new canvas of software-defined virtualization is gonna impact security paradise yeah so I mean I think there are a couple of answers i actually think ultimately the security model is improved honestly so yeah the original work was done with the intelligence community actually the the original funding for nasira came from the intelligence community my background I used to work for the intelligence agencies and when you move everything to software we already have a fundamental security paradigm which is crust consolidation in the hypervisor right and with network virtualization you follow the same paradigm which is you you entrust the hypervisor to enforce things like isolation enforce the security but now you've got a strongly authenticated endpoint there you're not guessing about things but but it requires the security community to evolve with the virtualization community so I think that there's much more of a socialization hurdle more of a social hurdle than a technical hurdle like all of the technology is there to do good security in the cloud I think getting the traditional vendors to evolve their tools into of all they're thinking it's much more difficult so I've got one more thing to add I actually think there's an opportunity to do security in entirely new ways ones that again can transform the industry so for example with virtualization you've got deep semantics into the workloads I mean you're in the hypervisor you can look inside the VMS you know who's using them know what applications they're using guy you could even know what the documents are being sent or or read or passed around and because you have this information at the edge if you virtualize the network as well you can pass this context into the network so now instead of like looking at packets and kind of trying to guess what application there is by looking at traffic you can actually get past like the ground truth information from the hypervisor so I think we have the potential so it's like drastically improved security that's Martine if you look at the networking industry there's lots of companies that have tried to change it in the past when you talk about innovation standards have a lot of times slow things down yep you know there's the legacy thought set you know great respect for ccie s but you know they have their install base in their way of doing things so you know there's there's so many pieces that make up networking and even the first time I saw your solution there's multiple standards and open you know groups working on this so you know how do you guys tease through and work through all of these issues yeah so clearly a very complex and multifarious question so I'm going to I'm going to attack one piece of it and we can go from there one of the primary benefits of actual virtualization like actual virtualization is that what you end up with should look like what you started with right so like if you're fundamentally changing an operational paradigm you're probably not doing virtualization so for example in a network virtualization solution the physical network is still a physical Network and it needs to be managed like a physical network with physical networking tools and in order to be fully virtualized the virtual abstraction I give you if I give you a virtual network that should also look like the networks that you've kind of grown to love as a child right they should have all the counters all the debugging the ability to interpose services right and so from from that standpoint you're still preserving the interfaces that people are used to it says there's more of them so like for example when I talk to a network operator today they're like oh this is confusing I've got virtualization I say actually instead of having one network that's really complicated you've got em and simple networks now you've got a very simple physical Network and if you got any virtual networks and they all all of the same interfaces that you use to manage it however there's one catch and that one catch is is there's an additional bit of information which is how do you map this virtual world to the physical world which happened in compute virtualization as well so like everybody understood a virtual machine everybody understood the physical machine but people weren't entirely sure how you debug the mapping between the two and that's incumbent as US is software providers and solution providers to provide that to provide the ability to to map from this kind of you know like platonic virtual reality down to this kind of gritty physical reality okay so from a standard standpoint you I mean you guys helped invent OpenFlow you guys created the open V switch you're heavily involved in OpenStack Andy there's been a lot of buzz since the acquisition about you know the involvement in OpenStack and yeah yeah kind of God how many people today everything in what's your thoughts on it yeah so let me also teach a tease apart you know two things before I get to that one so in networking standards are really important and like in the way standards work he's got a bunch of people that kind of go and talk about things and they design things they agree on them that's actually quite different than open source right and like their different processes different communities different rules of engagement so let me focus on the open source first then we'll go back to the standards thank you because I perfect just to give you a little bit foreshadowing like I hope the world goes open source not open Stan so can we do to it so but we'll get there right so as far as open source yes so I wrote the first version of open flow I mean it came out of my thesis right the first three employees of nicera created the first craft of open flow and it was it was just something that we wanted to use to control switches right i mean we wrote the first reference implementation the first open flow controller you know we seeded the stanford stuff of course i'm a consulting a faculty at stanford so i was involved there we also are the primary developers behind open V switch it's in the linux kernel you know we've probably put you know many millions of dollars in developing that it's used by competitors and partners alike that's used in many clouds and then we've heavily participated in an OpenStack in particular you know where the Delete on quantum which is the networking portion of OpenStack we've done a lot of development bear so as far as the merger is concerned the acquisitions concerned none of that will change we're fully committed to open V switch to OpenStack will continue and even escalate our contribution there quick quick note on OpenStack i was told that something for folks have actually entered some code into the OpenStack of storage just kind of curious about that so and we touched many areas of OpenStack and again the the networking piece touches everything and you know we do a lot of the development on quantum and we run actually nasira internally randa an openstack cloud for internal dev cloud and we've got thousands of VMs on it that we use it and so we're heavily we're like heavy users and contributors to both OpenStack and linux I mean if you look in Linux we've actually fixed a lot of the veal and issues in the kernel right so like and we're very very involved in open source but we're involved as users right like we don't sell you know linux we don't sell OpenStack but we do believe for to have a vibrant ecosystem is nice to have these tools out there and as we use the tools we fix them and we contribute it back okay what about multi hypervisor environments because that was one of the things that really impressed me about like the open D switch is it really doesn able kind of that that multi hypervisor even more than kind of heterogeneous switches it's the multi hypervisor piece yeah that's right so if you kind of zoom away like I think we've had like a fairly myopic focus in the industry on servers over the last 10 years and it's like if you zoom away from the server to a data center you end up in this realm of heterogeneous technologies multiple cloud management systems multiple hypervisors and so when we came up with our our initial strategy of building a network virtualization layer we knew networks touch everything we must support all of those technologies and so it was like a fundamental tenant of the technology that we might support all hypervisors and physical hardware switches as well because there are workloads that are not july's and so you know open V switch itself which is the V switch that we use it's in sports in kvm bare metal linux it's been ported to bsd it's been ported to other operating systems it's been ported to top-of-rack hardware switches so we can use all of them to do to do network virtualization so mark can I want to ask you about the sufferer define partnering strategy from a technical perspective obviously we're really big believers in open source as well they love that we'd love to think it's great and it's now a business model in the industry so it's great to see all that work as vmware now with you guys in the family there go to other unifying clouds so they took a multiple clouds at this point so you know what would you bring to the table from hyper Microsoft hyper-v environment and other big vendors HP Dell yeah Microsoft what can you bring to the table in working with those guys or are you outgoing are you talking to them and and if you were having those conversations what does what would those conversations be well so the product itself that we're developing and we we do bring to market now we will continue is a network virtualization platform that's multi hypervisor right and so the goal is to have something that you can deploy into any cloud environment regardless of what CMS are running and regardless of what of what hypervisors they're using now we have many many partners whether their system integrators with the solution partners and so you know we don't have any religion on on the type of technologies in play we want to provide the best virtual networking solution in the industry and that's really our primary our primary focus let me ask you about it Trent some trends in the in the tech community in in academia and the research areas obviously at this example just randomly low-level virtual machines that kind of those kinds of shifts are happening could you talk about just what you're tracking right now that your get your eye on in terms of what's going on at some of the top university obviously low-level virtual machines at the University of Illinois and in Chicago so what other areas can you share with us that you monitoring listen this is a great question to ask a nap academic and I'm going to totally disappoint you in that I you know I i I'm on a lot of pcs and I follow a lot of research I mean you know I submit papers you know all the time and like I've mostly lost faith in the academic process on the research side lately which i haven't relevant so in terms of trends no but that's exactly the point I think that there's enough vision to last for a century and like now it's time to do work and if it were up to me we would all be taking these ideas that we've come up with over the last 10 years there's very few new ones in my opinion and we'd be executing like crazy and so well again while i'm on the pcs and while i do review the papers i do submit the papers i think we should all focus on like changing infrastructure into software executing like hell and changing the world that way and so and I don't have a really bad attitude about this especially as abuse or but it's a bad attitude okay we say it we hit it all hang out so final question for me and if she wants to get one more in and don't you can't say the acquisition as the answer what is the biggest surprise that that that you fell out of your chair over the past 24 months around you in the industry in your entrepreneurial venture here now at VMware and it could be like a surprise and this trend didn't happen that happened that you know these are the things that happened it could be good or bad what's the biggest surprise that caught you off guard this year that's 24 months yeah it's a good question I think the one that actually been a little the most shocking is how how difficult is being just very honest is how difficult to manage perception in the industry and if you look at kind of social media and you look at a lot of the buzz in the rags so much of it is generated by non disinterested parties so invested parties and so I think it's possible to be a perfectly good citizen and then get paint in a very negative light or be a very negative citizen and be painted in a very good light and it's been counterintuitive to me how you manage this effectively like almost a dynamic feedback system so for example this year has been an enormous contributor to open source I think we've contributed more than anybody in our space by you know factor of 10 or more we contributed most of the core technologies and often people like well but it's a proprietary solution on the other hand there sometimes we're like okay this is a closer source product people like we should use this here because it's the open solution and so well I think that definitely felt on both sides you know being both open source and close or sometimes it's worked for us and for the wrong reasons sometimes it's not worked for us for the right reasons and so that dynamic has been the least intuitive to me so I'm not sure I fell off my chair but definitely it's been the most surprising yeah and you know and that's what we're trying to solve a SiliconANGLE as we say we're agile media and ultimately with social media the whole media business is changing so we know one of the things that we care about here so that's why we have the qubits we just this is raw data we want to share be provocative be edgy is too it's a data-driven world and we believe the media business is absolutely screwed up beyond all recognition so so because of just lack of fact-checking just old techniques aren't working and but it's the same game right so it's just so things circulate things get branded and we've seen a time and time again I've seen great people show up as like almost painted as criminals yeah so it's just a sad state of reporting and media so would agree with you there okay John so if I if I can have that one last question your machine you know the networking industries is a big community and when you talk about kind of the jobs that people are doing today what's your recommendation to folks out there in the networking industry what should what should they start to you know we'd or you know start playing with to kind of understand where things are going down the line honestly I don't want to say a cliche but I actually really believe this one I think I think networking networks are evolving to become proper systems and proper systems in an end-to-end manner meaning that goes a very well-defined hardware a software layer they all work together and I think the data center is is becoming a large computer and I think the most important thing is to view the industry and that lens meaning you know I would get as much information as I could on how guys like Google or Amazon or Facebook build their data centers and you realize that if you do a cross-section of these things like the Capital savings the operational savings the flexibility of the software like that's changing the world and if it's not changing the world directly by changing infrastructure it's changing the world to the surfaces they deliver and understanding that model in your bones I think is the beacon going forward so if it were me the first thing I do is I really understand why they make those decisions what the benefits are and I would use that to guide my learning going forward okay Martinez out of this co-founder of this year now at do you have a title at VMware yet or do you I mean did i do I don't know my head honcho of the Sierra am where Thanks coming inside the cube really preciate it we right back with our next guest we're going to wrap up try to wrap up the day as they start to bon jovi soundcheck here at V emerald 2012 this is SiliconANGLE calm and Wikibon doors continues coverage at vmworld great thank you