I have a Computer Science Degree and MBA. Startup Internet infrastructure and software guy since 1997. Most known for doing a podcast and podcast network venture 15 years too early. Turned blogger, podcaster, and tech media developer and reporter in 2004. Before that was early in the web and internet architecture (I believe that I was the first to come up with the idea of keyword navigation to replace urls in browser and search). Before doing startups I was in enterprise tech since 1985. Right now I'm running a self-funded startup going on 10yrs now doing media and software in the cloud. At the heart, I'm an entrepreneur. I love conceiving and building new products and technology at the intersection of Media and Technology; Where Computer Science meets Social Science.View the profile
I am passionate about connecting people to information and other people. Throughout my career, I have focused on the needs of customers by working with partners to deliver the solutions or information that the customers require. I focus on technology - my background is in networking and virtualization, I focus on cloud and disruptive technologies - and leverage the latest community and innovation tools.View the profile
David Vellante is co-founder and CEO of SiliconANGLE Media, Inc., a digital-first media and content company. We are re-imagining how information is created and shared. In 2006, Vellante envisioned a peer-based, research model and co-founded The Wikibon Project, the world’s first open tech research community focused on digital transformation, the data economy, cloud and modern infrastructure. Dave is a long-time tech industry analyst, entrepreneur, writer and speaker. He is co-host of theCUBE – “The ESPN of Tech” - and manages SiliconANGLE Media with his business partner John Furrier. He is also a co-founder of theCUBE Network and CrowdChat, two startups based in Palo Alto, CA. Prior to these exploits Dave ran a CIO consultancy and spent a decade growing and managing IDC’s Enterprise Group, the firm’s largest and most profitable business. He lives in Massachusetts with his wife and four children where he has served as the President of his town's local "Kiddie Sports" association. Dave holds a B.S. in Applied Mathematics from Union College.View the profile
About the talk
John Furrier, Stu Miniman, and Dave Vellante provide their analysis on VMworld 2020.
#VMworld #theCUBE @SiliconANGLE theCUBE @VMware
Security and cloud native offer opportunities for VMware as it faces new challenges
ANALYSIS BY MARK ALBERTSON
Despite the economic disruption of 2020, the year has shaped up to be a pretty good one for VMware Inc. It is 2021 that poses some uncertainty for the enterprise information technology services giant.
VMware’s most recent quarterly earnings beat Wall Street forecasts and reflected solid growth in subscription and software-as-a-service revenue. However, plans by Dell Technologies Inc. to spin off its 81% stake in the company next year in an effort to reduce debt and bolster its credit rating are just one of the subplots surrounding VMware as it holds an all-virtual VMworld starting today.
“VMware is Dell’s piggy bank,” said Dave Vellante, co-host of theCUBE, SiliconANGLE Media’s livestreaming studio. “Dell, as we know, is using VMware’s cash flow to restructure its balance sheet to go public. The big question is if Dell is going to continue to squeeze VMware’s research and development, will it be able to execute on the translation of engineering into product and customer value? R&D is the lifeblood of innovation, so that’s something we are going to have to watch very closely.”
Vellante spoke with John Furrier and Stu Miniman, co-hosts of theCUBE, during the keynote analysis as part of theCUBE’s VMworld event coverage. They discussed the status of VMware Cloud on AWS, the company’s future role in cloud native, and opportunities to strengthen enterprise security in the stack.
Challenges in the channel
In addition to uncertainty around the spinoff of its stake in VMware by Dell, there are also questions around the impact of VMware Cloud on AWS. VMware executives acknowledged last month there have been “challenges” originating from channel conflict between their company and Amazon Web Services Inc.
The concern is around loss of millions in revenue for VMware channel partners from enterprise cloud migration deals when AWS direct sales teams become involved in during negotiations.
“While AWS is a big partner for VMware and very important, how many people will get to VMware Cloud on AWS and maybe scale back their VMware estate?” Miniman asked. “Cloud is a double-edged sword for many players. You need to partner as closely as you can to keep that momentum going forward, but VMware is also getting cut by some of those deals.”
Despite channel conflict and questions around R&D investment, VMware has positioned itself to be a central player in the evolution of enterprise cloud native technologies. In recent weeks, the company added cloud native support to its 5G telco portfolio and selected cloud native storage provider MinIO Inc. to run stateful cloud native applications on VMware infrastructure.
“Companies are building on clouds that are building on top of clouds,” Furrier said. “You are starting to see this new interconnected cloud native landscape. This is huge, and VMware is a big part of it.”
Along with the opportunities provided by the cloud native movement, VMware is also positioned for a key role in the evolving security landscape. Last year, VMware unveiled a set of new products to provide intrinsic security in the stack.
“I think security is the really interesting opportunity for VMware,” Vellante said. “Do you go after these point products like Okta, CrowdStrike, Zscaler, and SailPoint, who are really doing very well right now in the market? Or do you want an integrated stack that can be good enough? That is a huge opportunity for them because security just keeps getting more critical.”
From around the globe it's the queue with digital coverage of vmworld 2020 brought to you by the end where and its ecosystem Partners, welcome to the cubes virtual coverage of vmworld 2020. I'm just very year with my Cohoes too many men and Dave Allante 10 years covering Venusaur 11th, vmworld 2010 was our first guys, this is an unusual event. It's not in person, kind of looking at the analyzing the Keynotes and essentially, the main announcements in the General Sessions, let's analyze be in 2020. I know it's hard when I'm in person
while the hallway countries were grabbing on Twitter, awesome guitar Cube interviews on the Cube. Net is a link on the front page of the vmworld site check it out. And go check out all that dozens of interviews were doing here while with art with our community, but this the event is digital foundation for an unpredictable world. That's the thing. Most of the announcements are around in the future architecture, but the blocking and tackling around a eye with Nvidia, you got security and get some really key announcements around networking stew. So, what's your take on all this?
Because in a VMware has to set the table, it made good moves under gelsinger's, you know, the last few years of seeing another key to successful quarter. Dave, you're starting to see vmware's investment, payoff, Ragu, and the brainchild turn behind vmworld making these calls to guys this is the emeralds moment to kind of go to the next level. What's your thoughts? They will start with u. Well I mean as always you saw VMware have on stage some really high profile from
Enterprise right after billion dollar valuation at 1:50. So see you on video and video. The arm acquisition this that's going to be critical at the edge. You're seeing VMware, just sit around Telco Edge cloud with with VMware cloud, and she's doing very well. We're going to talk about that in our in our segment year. You're seeing them really go after hybrid. And so, I get paid for it. I want to come back to you gave on this Edge because some of the key trends. And I think we've been on now. That's the whole
world's going to realizing that they're kind of going to mainstream one's been the edge and you mention arm and we got analysis on that, stew cloud-native. We've been banging on the cloud needed from. We've been riding that wave now with the snowflake IPO just happened earlier you starting to see cloud-native. Everything is coming true. It's kind of evolving in front of us right now, in the whole world is now on board. With this new Megatron, Enterprise Computing company is the largest IPO since you look up snowflake. So you start to see cloud-native and
Enterprise technology as the next way. This is huge and VMware is a big part of it. Your thoughts from how they did the show. ESO John, one of the questions we always ask is, you know, how fast our customers moving are the vendors moving along with them, are our friend and often co-host. If you keep Townsend said and it was kind of thing. Phrase VMware has moved at the speed of the CIO. Dave, I've heard you so many times this year, say that the, that the impact of the, the pandemic that the financial ramifications has been the accelerator for many of the transformational journey that
we've been talking about move to Cloud much faster, adopting Cloud native faster companies that have gone through their digital transformation or able to react much faster. And to be honest, I'm not for the DM worth, moving fast enough. We've seen them do a number of big Acquisitions over the last few years. Some of them are doing great carbon black right to see then go deeper into that the security space. We've talked a lot about that before some of the others you know if it'll was came out of VMware and got pulled back in this room was a recent acquisition. What we hear inside is, you
know, someone whose group Product lines have been trimmed back soap. As companies are looking to move faster, they're looking to AWS. Is that far in what state of the u.s. is a big and very important, how many people will get to VMware? I need to be honest and say well maybe I can scale back what my via more state is or maybe there's some of my errands. So we'll get to be set for the longest time is a double-edged sword for many players. You need to partner as closely as you can to keep that momentum going forward. But VMware is also getting cut by some of those deals. Boy, John, there's a
big news, a couple weeks before the show hear about how the p.m. work like it's doing great and if it's a big deal, well, the channel off and get to cut out of it and Amazons taking it. So, they're definitely are some things that put up a little bit, warning lights for me as to, who is winning, when it comes to be a partnership. As a great point, the ecosystem in VMware, I'm the ten years we've been covering a 2 * 11 to the cube. We've always had that ecosystems evolving and I think cloud-native to me really How that's driving that with Cloud, we saw that in a server list is starting to see
Cloud native and what cloud prove day was that developers really shouldn't care about the infrastructure being distracted away. But now you look at multiple Cloud would be and where is now moving into having a multi Cloud kind of backbone if you will are connected to these environments as a key strategy, they look at the edge, The Edge is about purpose-built devices run with software and data. So, whether it's at an office on a person or in space, you have these devices that it's really not about the hardware. It's about the software running on them. They have to run in and
one Wireless. They are purpose-built. They do have to run a cloud native. The Edge is the next opportunity for being world with multiclad. What's your thoughts and reaction to that? Why is your question and the relevance of a video on stage with Nvidia are going to dominate The Edge and you're going to need much more efficient processing at the edge of the traditional x86 architecture. What is the date to the edge? I think they clearly realize that that that arm is going to be a player there. And now with the Nvidia move and I think it is really something that is starting to become real.
I've often said multi-cloud has been more of a symptom, then then then, I think they realize that they've got the right horse for the right course, and you're seeing red hat and VMware emerge as real leaders. They are you seen it in the data? You're seeing But you're also seeing VMware Cloud foundation and its other VMware, Cloud capabilities, emerging as in demand, lot of spending velocity, a lot of interest. And so these are becoming real and they're becoming fundamental strategies as two points to CIO. They're
not real. Where will all the bait? That whole idea that cios are catching up, but I'd say cisos already caught up cio's are catching up to the Sea. So, but, you know, this brings up the question of what a modern app is in. This is one of the highlights of the show modern applications. It feels a lot like, kind of window dressing to the cloud native conversation because Kansas built into it. But you'll cloud-native really is just over the modern apps are being built and it's about security, it's about multiple Cloud. So, the question for you
is, are we going to have a cloudless architecture because we get serverless. Because if you think about Mara Knapp, should you really care about which Cloud it runs? I'm sure Andy jassy would be saying he does care and you see Google call most shying away from having that conversation, but I do kind of speak. So a cloudless strategy is that something you see the truck route also, cloudless server list storage list, you know. It would all be wonderful if they didn't have to do that. Now, of course in a day does lifeblood of my business. We need to make sure
that that things are secure all the time server list is wonderful and there's even some early connections that, you know, VMware and others in the Fishbowl in perspective, face are trying to the serverless environment, but if I look at the gorge on, this still isn't even aware the app Dev. Team people come. If this is an infrastructure show and it needs to be an enabler for what they're doing. If you look at the B, Kubernetes integrate into VMware. It's take your virtual estate and let's put containers in it and it can be managed in that environment. Or we've got some new tools were
developing and do some of that multi-cloud world as opposed to the companies that are born in the cloud or have a heavy leaning towards the cloud. This might not be attractive for them, put in many ways. It's extending with vmware's, done for a long time that they've got strong position here and that's, that's why he found it. She said all the other five want to partner with VMware, cuz they, they've got, you know, just so many customers there that they will be in a white tiger today. It will I burn in the future? Did the public cloud is a full but the edges also. That
is like her sister needs to be put forth for the project Monterey gives people a road map as to where they can go and then were absolutely is it is a key player in that's a real quick reaction to what the buyers are thinking about cuz you know We can debate the speed of the CIO and I'd love to have that debate in a separate segments. I think, I think covid and stick. The security threats are forcing, the business is to really be focused because if you're not thinking about having an environment where people are working remotely, and that's what covid, and I'll see
what the security vectors. If you don't have an architecture student, then you're going to be screwed. So I think project Monterey feels to me as that VMware Ranch like look and you can have an aunt and architecture in an Asian market extras architecture. That's one thought. So let's react to that to do it. How much of that do you see? As look at if you want to move faster CIO cuz they have to move fast covid, showed that in the ones that aren't are failing and doesn't change the fire Behavior days to start with, you wondering. John. I don't think we know yet. It's it it is
it more marketecture. I'd see you know that you got to get into The Whispers swedes have those discussions if there was not as much you know pre-briefing on this. We know we talked for a while then we're on AWS, those solutions to bake out. So I think Monterey is a good Vision, they have some of the architectural underpinning but I'm not ready to say, Hey, you wanted to play that here in 2020, that's the other. That's the blueprint that you want to use going forward, but it is, it just me and we're seat at the table. I'm a big fan of the other props to think it's about time.
Someone put a stake in the ground. So this is what modern architecture looks like and love the debate that further. We'll do it another time to a buyer's where they buying VMware, what's your day to tell you in terms of where the customers are right now. In 2020, you've been doing a ton of breaking analysis on covid by your behavior spending patterns, how does VMware and catch as ecosystem stack up with all these these Focus cloud-native in a multi Cloud modern app and security networking. Well let, let me look, start with some data. Bring up the
wheel slide and it's in the talks to score. And essentially what it's doing is taking the Green in this wheel, which is spending more and it's attracting a red, which is spending less or leaving and then you see that in the middle is 53% are flat. What is that mean? That means this is a mature company from from the green. This is again a sign of a mature company but the key is they've got to continue to invest of the make a lot of inorganic Acquisitions and
some organic Acquisitions. But as we know, it was using VMware, cash flow to restructure, its balance sheet to go public. And it shows in the vertical axis spending survey needed and percent is in there with with with openshift. Even openstack believe or not. I need to see the hyperscale is in the upper, right. Everybody wants to be AWS or Azure in hybrid cloud and Ed multi-cloud and VMware really is, is clearly in a very, very strong position there. So go back to your point about project moderate. Basically using this hybrid Cloud notion to go everywhere, it's
that expansion that I love to talk about and it's the Innovation, the big question is if John's going to be squeezing VM Ware Rd, Will it be able to continue to execute on that translation of engineering? It's a product customer value doing stock BuyBacks and dividends lifeblood of innovation. And so, that's something that we have to talk about the financial pieces. Here we are on 2020. There's been that the discussions and I know you've dug into it. A bunch. By the time we get to be Emerald 2021, will the ownership of VMware
and the role that Michael Dell has Ames and will that impact that investment capabilities that you talked about the cash flow? Just, I know you've done a lot of research on this and couldn't help educate our audience. Welcome to change the income statement of the Dell because they won't have VMware in there anymore. It won't change, VMware, cash flow. And the chair was going to say, okay, let's rebalance the balance sheets and create an equilibrium. So Dell has less debt VMware, has more dead and we'll try to thread the needle, so
their investment grade, lower the interest interest cost on that debt. I don't think it's going to change anything in terms of the close relationship with between Del nnn to watch. Is what does equilibrium is reached? I want to see you again. Remember, IBM is spent six billion dollars in RMB for the past, two decades. Could have invested in Cloud the same way Amazon did and in the same way that Microsoft did they were twenty years ago and look what happened. You don't want that to
happen to be in with a must continue to spend on R&D and innovate, but I want to ask the ecosystem question. Because if you go back in history, guys, remember when Pat gelsinger that year, where he was basically giving the presentation was lied, he's in the hot seat and was a lot of rumors going around since then it's just been nothing but exceptional performance on this a company executing all new Bachelor Ben Play. It's almost like he cleaned house, put the ship in the right direction. They've been smooth sailing sense, strategically making All the Right Moves. Okay? Now that VMware
is back on their footing sand and Dave and they have a solid foundation. What happens to the ecosystem? Because now that their house is in order. What do they do with the ecosystem? How do you see it evolving? But look at me, Nico system is looking for Alternatives. That mean they have to participate in VMware. It's part of their go to market in 15 or 20 or $18 is spent in the ecosystem. You don't hear any more beat up, Jeff Clark and Michael Dell a very clear.
We are going to do much closer integration than than EMC ever did. And as it look at, look at look at hpe we are looking for Alternatives group driving to the edge, that's a huge opportunity opportunities and so they got to play nice but There's no more greenfields out there to multi cloud in Cloud native with cans who I think this is a really big opportunity to reset the ecosystem with Services. Because it used to be you know, Avengers Age of Ultron some data backup and recovery. And
you have a bunch of people doing storage around VMware and these big white spaces, their kind of huge white spaces. But now, when you start getting the cloud, native is a whole new landscape. Developing your thoughts because we're seeing some activity, certainly, come visit. Our building on top of clouds that are building on top of clouds. So you got a snowflake Builds on Amazon. Now other clouds and you're coming building on snowflake. She's starting to see this kind of new interconnected Cloud native, landscape your thoughts. It will tell you that there is definitely a huge tug of war in
the ecosystem. One of the things that's been really nice. If you were a VMware partner, let's take data protection, huge ecosystem, companies, like VMware created in that environment companies like lubricant cohesity a group of very much working in VMware all of them varmints, but they also get pulled along when you do a VMware Cloud on AWS and Azure on Google on Oracle. So, but that tug-of-war is well, if the customer decided to just go fully cloud-native, that's often used to work there and
you would think that the vendor actually make more money if it's just natively, they're there. There's not that middleman extra fees. So VMware has a slice, the pie and like Microsoft to Oracle behind them, can they justify that value for the license that you're paying when I go to some of these environments? So damn, where does not have the pole in the ecosystem? Dave talked a bit about it hpe. Cisco. IBM all companies that were early, early, big huge, proponent of VMware. Now, very much are investing heavily in alternative, so VMware major player, but no longer fit, the
D, the gravity that everyone, you know, orbit around the talks about it has customers. Why would you not VMware, why would you replace them? What are the reason? And three things stand out. To me, it's not around taking care of that with the AWS deal. Even looking out that Greg, a couple service to go to the yellow. So that's off the table, not a problem with Innovation. Look at total cost of ownership, that's gone down in terms of concern concern. Is price and that stays up there. If that's your biggest challenge in a really,
really good position. If they can an innovation for being with us a new features, a cloud native or a security, the movement in the making with NSX gelsinger's. Famous quotes are things like the internet and the crown jewels Securities at do over. So NSX Stevens. Do this has been a big part of their team every year, that's a core feature for their security play. That's where they're going to put a lot of value in there. You guys, what's your thoughts on that? Because you know you got sisters on their enemies. That's
what sounds where is an engineering driven company. They are great engineering. Team defensive about some new truck today and Brace defensive originally, but but they, they realized go on to the next week. Maybe take a little bit of hit if you got if you got to go through a transition but they've done a phenomenal job of making those Transitions and staying relevant. What's the big wave? What's the big wave guys? What's the big wave at the end? Was riding the Ten Years out? We're in, we've seen the movie. We've been through a decade with vmworld coverage, do Dave next 10 years?
What's the big wave or waves plural? What cloud is the first one? That they they they address the leader or multi-cloud is going to be. I think security is the really interesting opportunity for VMware and it's going to be the big bad wolf Kahler and sailpoint really doing very well and integrated that can say it's best to breed will see you. That is a huge opportunity for them because security just keeps getting more and more years for VMware, looking back and looking forward. Well, I
know Dave, just building off what you were just saying there. We said that the mission for pack elsinger was could he do for VMware, what in Dale at done for the longest time which is expanded? Spam at expanding markets going to but not completely sick off the ecosystem and have them run away. So he's still here at the show. I mean these killers, a partner there security. Absolutely is a monster opportunity and John networking, right? But to be multibillion-dollar business for VMware, and they can eat some of that multi-cloud environment. You know, we didn't talk pacifically about St, win,
that would cause doing well. So be aware that that software across environments, hybrid Cloud multi-cloud, there will position today. They just need to move a little bit faster and make sure they don't bleed talent and it'll continue to support their their customers. Because they be right, how many times have people set up? Microsoft, too expensive, or too expensive? Here, we are in 2020, they still have pretty strong position. VMware still has a very sore Well, I just got to take you out tickets and shows what happens when you have a technical Visionary like y'all thing or in the lead and you
have an industry Visionary luminary, like Michael Dell is a very powerful extremely capable management teams and executors. Well, he knows that acts like, he knows technology, a great run. I got to stay for me personally, I'm so excited that, you know, for 10 years that we've had the Cuban, the team covering the Enterprise Tech space. You can't be more excited. At least I'm so excited that the number one IP on the history of Wall. Street is in Enterprise tech
company. You can't see any more proof points at Enterprise technology is now with the whole end-to-end Architects, with the Edgewood talking about space with all of its cybersecurity, we're having now conversations with the cube that is now ranging. It's it reminds me David that of the SeaWorld. It's almost like consumer eyes. Now, the Enterprise technology is now so important. That is now taking over the appeal on Wall Street, entrepreneurs, and to me a V and working, tap into that. On this next wave this will be huge. Your thoughts on what
day is the is the now trends. No question about it really underscores cloud and it in the, the demand for four issues, other than, you know, the Big Apple Amazon, Google, Etc. But it's really interesting to see all is well, the streak continues to reward valuation VMware. It's rewarding Cloud. It's so that's that to me says, great opportunities for companies like VMware who have both growth great cash flow their profitable and you know, they have a huge customer base. So sexy, don't you think
these days? Sexy guys, great run, great analysis again. Vmworld virtual, we can have the face between have the Hang space but we have the virtual queue virtualization is, come to the key. We have multiple tracks on our site, check out the content. Thanks for the analysis, guys, great keynote, kind of in, and out of coverage.
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