The Cube at OpenStack Summit at Lata 2014 is brought to you by Brocade. Say goodbye to the status quo and hello to Brocade. And Red Hat. Here are your hosts, John Furrier and Stu Miniman. Hey, welcome back everyone. We're here live in Atlanta for the OpenStack Summit. This is The Cube. We go out to the events and extract the signal from the noise. I'm John Furrier, the founder of SiliconANGLE. Stu Miniman, analyst at Wikibon.org. Our next guest, Joe Fitzgerald, general manager of Cloud Manager of Red Hat, formerly the CEO of ManageIQ. Welcome to The Cube. Thanks for having me. We're all from Jersey. We're all three guys from New Jersey. So we'll get the Jersey segment here. So you came over, big announcement today with Red Hat. Just quickly give the update on the news and some of the conversations here around that. Sure. So what we announced was basically the formation of the ManageIQ community. And it's really providing open source cloud management for the first time. And it's highly relevant to the OpenStack conference because it provides OpenStack management as well as management for other clouds, really providing the first enterprise-grade open cloud management platform. So interoperability is a key point here, right? I mean, now that's the story we've been talking about this morning. Customers want support. They want interoperability. So when you guys talk to customers, how do you guys put that in context to Linux, Red Hat Linux? Well, I think there's a couple of things. We take support really seriously, right? It's sort of irresponsible to claim support if you can't technically back it up. If you haven't certified it and if you don't have an engineering relationship with the things you're supporting, companies you're supporting, it's kind of difficult to just say, hey, we're going to support it and look somebody in the eye and guarantee them it's going to work. So Red Hat takes that very serious. As far as interoperability and support for different platforms, the announcement we made about ManageIQ is really significant because it announces support not only for OpenStack, but for Microsoft and VMware and Amazon and these other platforms. Let's talk about support because obviously the Wall Street Journal article today talked about that support. You guys support things for decades. We learned that at the Red Hat Summit. The customers do have a significant, but we've had a lot of bad news lately. Obviously, Heartbleed wakes up everyone and says, hey, if things can infect code, you don't want to have just some new stuff come into the enterprise and not be certified. So talk about that process of certification. How rigorous is it and how complicated it is. It's not as simple as saying, like I said this morning, one support node could be misconstrued by the marketplace. There's a lot of nuances. How complex and how important is that support? Yeah, so for us, support and certification is not a marketing announcement. It's a technical activity where we work with other partners to technically certify. So they have a relationship with Red Hat so they can have one person to call. We've actually done the testing, we've worked with them, and then we provide the backward compatibility and 24 by 7 support, the reference architectures and things like that. So it's a real serious endeavor for us. It's technical. So what do you say to the folks out there trying to understand some of the open source with Managed IQ? What is the key things that you've heard that made you do that? Was it like, hey, we just want to open source it? Or what went behind it? Give us some inside baseball and why the open source now. So Managed IQ was a proprietary solution. It was acquired by Red Hat 18 months ago. And Red Hat open source is everything. So on acquisition, they made it very, very clear their intent was to open source the Managed IQ technology. Now we've done that. We've created this community and we've open sourced this tremendous cross-platform enterprise cloud management. Red Hat open source is everything. Unlike a lot of other vendors who take a piece of open source software like OpenStack and then wrap proprietary offerings around it, right? Red Hat does everything in the open. So all of our technologies are all open. There is no proprietary code anywhere inside of Red Hat unless we've just done an acquisition and we're on the way to open sourcing it. What do you think of the show here in terms of, you know, we call it a DevOps show. It's not really billed as a DevOps show, but it's cloud. It's mostly DevOps. A lot of DevOps characters here. What's some of the makeup of the developers that you've interacted with and some of the customers here? There's some customers on stage, not many customers parading their deployments. What are you seeing in terms of developers and customers? Can you share some of your experiences from the show with the folks out there? Well, I think this show seems to... It feels like OpenStack has come of age at this show, right? There's a number of industry analysts that are here for the first time, right? The size of the show, the level of topics, some of the, you know, marquee, you know, experiences that some company shared during the keynotes. I believe OpenStack really is a come of age share. How do enterprise evaluate clouds? When you get your take on this, you know, you've been the CEO of a company, you have to understand the product side. You've got to go to market now, you're in red hat. How should enterprises evaluate the public and hybrid cloud opportunities? What should they look for? What are the key metrics? Well, I think cloud has so much, you know, confusion and architecture that a lot of people want to trust an advisor to help them figure out how to leverage cloud. You know, people's clouds are not the same. You know, they come at it from different ways. Some people are trying to do infrastructure as a service. Some people are doing platform as a service. So what we get involved in a lot is working with people on where are you starting from and where do you want to go. And then we help them lay out that journey. Some of the announcements that we made about Manage IQ and the commercial offering cloud forms help people get from their existing state, if you will, of IT, to that new cloud state, whether that's private on OpenStack, hybrid across different technologies, or public clouds. Yeah, so Joe, you know, as an analyst, you know, one of the jokes we had is if you look at the cloud space, you can always fall back on management and security stink. So you know, can you give us, you know, how has Manage IQ really helped us to solve this challenge and why is it different than what we've seen in the past because everybody's trying to solve the management issue? Sure. So I think a lot of technologies in clouds, not any different, start off with enablement. They try to get it working, right? And I think that now there's a lot of, you know, certainly public clouds and now with OpenStack and private clouds, cloud technology works. So then the next step really is how do I manage it? How do I enforce, you know, compliance and governance? How do I do financial management? How do I charge and manage, you know, for my resources and do metering and billing and things like that? So really I think the fact that management is the topic now is again an indicator that it's come of age. We're beyond the, hey, can I get it to work in the lab too? It works great, now I need to manage it. Okay, and how does this fit in with, say, the heat project that's going on on OpenStack? So heat is great for an OpenStack environment, but if you're going to deploy services on other platforms, then heat's not available everywhere, right? So there are certain things like, you know, we support heat in OpenStack, in Amazon's CloudFormation and other, you know, environments. They have their own techniques for deploying services. When you're planning your cloud future, you have to consider how you're going to deploy services across these different environments and what target clouds you're going to be aiming for.  Okay, for our users that aren't familiar with, people watching aren't familiar with ManagerIQ, can you talk about, you know, how many customers there are? What's the breadth of the environment and, you know, what's kind of the killer usage for it? Yeah, so ManagerIQ has been around. The company was founded in 2006. So we were on version five something when we were acquired by Red Hat. So it's not a 1.0 technology. Since we're acquired by Red Hat, we've actually put out two major versions and added significant resources, right, to the effort. Now with the open sourcing, it's going to grow even faster. This is not a new technology. It's actually a technology with a lot of IP and a lot of support for multiple platforms, you know, in terms of virtual and cloud platforms, as well as integrations to, you know, service management and CMDB and service catalogs and things like that. So it's a very mature set of technologies. It's exciting for me because I really don't think there's been a mature cloud management platform that's been open sourced before. There's some great open source management tools in very specific areas, but there really has never been an open source cloud management platform at this level of maturity. Any numbers you can share is just how many users they have and whether they're, you know, what the average profile of the customer is. So I can't share a number of customers or users, but we have deployments, global deployments where people have deployed to manage IQ technology into their data centers and clouds globally across continent, okay, where they're federated, you know, deployment, multiple, you know, dev instances, all different verticals, so financial services, technology, pharma, government, so it's been pretty widespread.  So I can't give you numbers or multipliers, but I think what I can tell you is that we've enabled globally the Red Hat Direct Sales and Partner ecosystem to sell this, and we have, you know, customers and activities going on in most parts of the world.  Clearly that's a market that is developing fast. Private cloud, public cloud, certainly there, public cloud is definitely there. Private cloud just could be the data center, you know, we can nuance on that all day long, but the hybrid cloud is really the key action point. You guys had a lot of experience in that. What workloads are you seeing and what kind of demand points do you see from customers on the hybrid cloud? People are really trying to figure out because I think it's pretty clear the data center and on-prem is not going away anytime soon, certainly in the large enterprises. Now the hybrid cloud becomes a great next step. What workloads do you see? Also, I think that what we're seeing almost across the board is that people are going to end up with the combination of your traditional workloads and your cloud workloads, and they're going to end up in an environment where things like OpenStack, which are great for cloud workloads, we're putting, you know, certain kinds of workloads in Amazon or other public cloud providers is great, but we don't want to be able to use clouds for the traditional workloads as well. So we see a lot of people that are hybridizing even in private clouds where they may have, you know, again, an OpenStack side for their cloud workloads, but they also want to have a private cloud for the traditional workloads. So we're seeing that realization of... So importing their existing workloads into the hybrid and or private as a combination? Yeah, I mean, to get to the specific workloads, I mean, the things that work best in the cloud workloads are stateless, you know, applications.  A lot of real-time, kind of the most real-time, low-latency type stuff. Yeah, stateful applications, some of the older systems, the systems of record really are sticking on more of the traditional, you know, workload side transactional stuff, and the big data certainly can come into clouds nice. That's why I see big data in the hybrid. Okay, so what are the pain points that you see in the hybrid that's solving it? Is it cost? Is it just speed to value? Is it defective to applications that are being ported there? What are some of the pain points that's driving some of those hybrid growth opportunities? Well, so I think, you know, the pain point for hybrid is complexity, right? People don't want to have more management tools. They don't want to have a silo for every variant workload platform cloud that they have, right? They're really looking for simplicity, right?  Then when you get into things like governance management, if you have to do that with, you know, silo tools, it becomes a bear. It's expensive too, and it's slow, right? I mean, you got a lot of things, a lot of moving parts involved. People are trying to reduce complexity and simplify how many vendors they work with, how many technologies, and really get down to that sort of kind of unified, you know, view of the world. And that's not for cost. That's efficiency issues too, right? I mean, there's some also efficiencies on the other side. So it's not just consolidate for cost standpoint. Yeah, I mean, still the number one driver for cloud really is agility, right? So, you know, anything that slows down the process and complexity. You don't want to give your users different portals for different cloud workloads or for different resources because that creates complexity of having to train them and support different, you know, different models. So Joe, so much of management usually started out of managing an individual product or, you know, a suite of products. You know, why is now a time that open source, you know, might be able to help solve this issue of management? Well, so great. Historically, management has been, you know, kind of the realm of proprietary vendors. Either platform vendors, right, heterogeneous systems management vendors, right, have built a big business on doing this in a very closed way. I see across the board, just like there's tremendous interest in open platforms like OpenStack, open technologies where you see mobile and some of the other, you know, big data. That's where a lot of the innovation is. Now is the time for management where I think there's this technology change anyway with cloud and some of the things going on there. And the open source opportunity now with Manage IQ as a cloud platform really gives, I think, for the first time a significant amount of technology for a serious cloud management platform where in the past it would have been hard for an open source tool to become a platform, for example. I also think Red Hat is in a position where they've been so good at helping open source communities and ecosystems evolve that we're seeing a lot of, you know, kind of glow from the fact that Red Hat is doing Manage IQ open source platform as opposed to being a small vendor and saying, hey, you know, we put this thing out in the world.  So, you know, Red Hat's got obviously great experience in the open source community. We had Sage from Ink Tank talking about, you know, what the acquisition means from Seth. If we come back a year from now, you know, what are the success factors that you're going to be looking at to see this new open source project, you know? How do we say whether this is successful or not? Well, so I think you measure success in this in a couple of different ways. First of all, we want a robust community and we don't want the community just to be a bunch of vendors. We want a big user, you know, in the community, so they'll help keep us honest in terms of where we need to go. I think, you know, in terms of the technical growth of the community, what kind of, you know, new platforms and integrations and content are available in the community. So I think there's a couple of different metrics there. Yeah. This open sourcing of the solution, did you have lots of discussion with the users on this? Was this, you know, kind of a push from them? Or, you know, can you walk us through some of that dialogue? Well, so Red Hat, you know, again, because Red Hat open sources everything, there was no discussions necessary to decide whether to open source it. That was sort of a done deal at acquisition. What we found when we're talking to users about the fact that we would be open sourcing it and that we have open sourced it is a tremendous amount of, that's great. We're really looking to not be locked into any particular vendor or technology and that's an area that we've really been locked in for a while. So we have some commentary on our crowd chat about the Wall Street Journal article where the direct quote is, does Joe have anything to say about the Wall Street Journal allegations that say you guys are dropping basically no competitor, which, you know, that makes sense, competitor. You don't want to bring your competitor into your customers, but this brings up the whole siloed approach. Does this go down the road where you start to see silos if you're not going to support a competing version of OpenStack and essentially the allegations? Well, I think that Red Hat's very responsible about what we do in terms of support. I think there's two issues here. One is if you look at our openness and not just our open source aspect but our interoperability, I mean we support running, you know, REL on, you know, VMware and Microsoft, for example. In CloudForms we support, you know, Microsoft, OpenStack, Amazon, VMware, all sorts of different, all different public cloud providers and technologies. So Red Hat has a history of being open. We also don't take certification casually, right? It's like being a startup insurance company and it's all fine until the first claim comes in and then you have to deliver on the support. We're not going to casually take on, you know, supporting different combinations of things. It would be irresponsible unless we have a technical relationship and we can be sure that things are going to work. Yeah, I loved your quote earlier. I mean you take support seriously. It's not a marketing activity, it's a technical activity, which is, you know, you're in a significant position of taking an open source open. Everyone can see the source code and the enterprise that requires bulletproof software. I mean that is not an easy task. People recognize that, so certification is important. So I just find that interesting. I want to get your comments on that and I'll see the community is concerned. They don't want to see forking. They don't want to see the big vendor strong-arming agendas. So I think that's generally, I think, the flavor of what I hear people talking about this article. But you guys have never had a track record of open stack ecosystem vendors. A lot of them have their proprietary offering, right? So they talk about open, open, open and open stack and then at a certain point you get to this, you know, kind of cut line where all of a sudden you're into their proprietary secret sauce, you know, stuff. Red Hat is all open. So our storage, our Linux, our open stack, our management, our Paz, everything is open. Not proprietary, that's a good thing. Proprietary is old school, open source is new school, tier one opportunity, tier one citizen in terms of the code. So I got to get your perspective on the future of open stack. Okay, as you look at the landscape, as a participant in the industry, how do you talk to people out there who are trying to stitch together the value opportunity, the value creation? Certainly wall street analysts are throwing darts at the board all day long. But how big of a sea change in terms of economics will cloud change the game? I mean obviously Linux changed the game. Now we have the cloud here. How do you see that industry? What's your vision? Well I think we're at the peak of the hype cycle right now for open stack. There's a lot of people who are doing all sorts of things offering distributions or management or services. I think what's going to happen is it's going to settle down and you're going to get down to the people who provide the serious code services and engagements. But I think it's at the peak of the hype cycle right now in that area. It has real value. It's here to stay again this event at this point in time proves that it's here to stay. I think one of the reasons Red Hat is getting so much attention is that because we are a major player in open source projects that we've helped push open stack really far. We've been a big contributor. We've been kind of a leader. You have a lot of customers running your stuff. Red Hat Linux. And Red Hat has a long history of providing great commercial products on top of open source. But we think it's more than just open stack per se. It's also the rest of the ecosystem. It's the storage. It's the management. It's the paths. It's all the other things that will be necessary to build successful clouds on open stack. Certainly I've always said the battleground for in the past areas, the middlewares opportunities and some people have different philosophies on that. Do you have an opinion on the past opportunity?  What's the middleware is where the action is to manage stuff underneath innovation from below the stack? That's a big battleground. What's your philosophy on the past? I think there's separate concerns. Just like you have infrastructure experts and domain expertise and technology innovation on the management plane, you have domain expertise and innovations there. I think the same thing is true on the application side and the past side. I think that area is significant enough where I think you're going to see an area in a separate segment for a while. It has to be integrated with the infrastructure and the management, but I think those three things are going to be separate for a while. Joe, congratulations on being the CEO of your company and now working at Red Haz General Manager. I want to get you the final word. Share with the folks out there why in the computer industry is this point in time so important? Why is it the folks who are not inside the ropes, if you will, are looking at this zone? What's all the buzz about? Are we in a bubble? Are we not in a bubble? In a hype cycle, what is it about the industry right now that gets everyone so excited about the opportunities? Well, I think the physics have changed. I hate to overuse paradigm shift, but cloud is real. There's people doing cloud in all different variants. They're trying things, new business models, cloud born companies. It's the age of open. I mean, open's gone from just the platform to open everything. If you look at where all the innovation is, it's in open. So I think it's a great time and there's just tremendous openness. You're ready to change for the next couple of years. Joe, thanks for coming on The Cube. Really appreciate your perspective. Again, open source is everything, and thanks for commenting on the Wall Street Journal. I really appreciate the candidness there. Red Hat, as I said, I think Red Hat's got a pole position. They also need no open source. They got a lot of customers. So we'll just see how it all plays out with OpenStack. It's the cloud show. We're here live with The Cube right back after this short break.


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I want to go to Melissa Arnaud right now because I want you to take a peek at the lower right portion of your screen looking at the Dow, soaring today. This is the first day of October. That surprised a lot of people. It really has little to do with the drama and the capital as much as people try to link that. It had everything to do with some promising news on vaccines, virus cases going down, and one out of Merck that could be a pill to treat the vaccine. That was the catalyst for a lot of this. But none of this, I guess, Melissa, for the time being a worry for the markets, even if they come up zero. What do you think? Well, the market has been worried, Neil. We fell all week until today. And even this morning, we were down before we rallied. So yes, we had a good close. Thank God we had a good close into the end of the week on Friday. But remember Monday? That was just a couple of days ago. We were down huge. We have fallen hard from off the highs, which was about two weeks ago. But wasn't that a lot, Melissa? A lot early in the week on fears that they wouldn't even get the short-term funding thing through. The government would be pushed to the brink. Now, we got a little breathing room because they did write off on something that kind of keeps the government lights on, you know, through October 18th or so.  But there was a lot of worry about that. I guess the reason I bring that up, Melissa, is that could there be similar confidence here that, even though this looks perilous now, they'll come up with at least a vote on the infrastructure itself package, putting aside this far more gargantuan one? I think the market would prefer the 1.5 trillion, even though that's an astronomical number, than the 3.5 trillion. How are we going to pay for this, Neil? I've read a lot about this in the last week. So far, raising the corporate tax rate to 21 to 26 percent at a high earners from 37 to 39. Supposedly, that's only going to generate two trillion in revenue to cover this for the next 10 years. The big 3.5 trillion, it's still going to fall short. As much as Nancy Pelosi is selling this to the American people that this is going to help the little guy, and it's going to, the rich people are going to pay for this. Let me tell you something, Neil. The rich people never turn out on the downside. The little guy is going to end up paying for this. You're already seeing this now with the cost of goods and services, gas, food, everything going up. Let's say they get something on this human infrastructure deal, but it's not nearly as big. You could switch that around and say, then the tax increases to pay for don't have to be as big. This is me taking the leap here. We don't even know what they're doing. How would investors respond to that? Because you think about it. How investors react go a long way toward, you think about it paying for all of this. The market rallied and was very bullish during the Trump tax cuts. We've had a very bullish period in the last five years. Now, I know the market has rallied this year, but that was really the COVID recovery. We're going into a period here into 2022 where even the Fed chair, Jerome Powell, said he expects inflation to continue and interest rates could go up in 2022. That's not good for anyone. We can't increase corporate tax rates too much. So if they keep on the same or lower them less like you're stating, I definitely think the companies would react positive to that. The problem I'm really seeing for the country right now is, Neil, how many people really voted this in? I heard you discussing this earlier with Martha. Is this really what people voted in who voted for Joe Biden? Don't forget how the country voted for Trump. And the people that voted for Joe Biden thought he was a moderate. Now the seems we're moving towards more socialist where you have all these entitlements. And like you said as well, it's really hard to pull those back. Then once they're given out there, they tend to carry on and last forever. I'm not so sure that this is the direction that the majority of the country wants to go. Most of the people in the country are not far right. And most of the people in the country are not far left. Why are the Democrats trying to push this leftist agenda? You know, on that point, Melissa, I just wanted to figure around this. The argument for Democrats pushing this is that it will give a sugar high to the economy. I'm not very much trivializing and simplifying what they're saying is that it's going to goose the economy. And it's going to goose the economy just the right time into the midterms. There is the inflation risk that you raise, but that it'll do more good than bad. Timing is everything. And by next year at this time, it will all be good. What do you say to that? No, I disagree with that. Boost the economy. We boosted the economy when we had the stimulus. Companies had the PPP loans. They had two of them. We're on our four stimulus check now. Some people are getting. They have the child tax grant. People are getting $300 per child until the end of the year. What more stimulus do we need? Eventually, we have to pay this back. While it might have an uptick initially, just like the stimulus we've seen in the last 19 months, it's going to come to a head.  And by sooner, I mean six to 12 months. You cannot continue to borrow without paying it back. It's like if you borrowed money on a credit card, Neil, and you can make the minimum payment, that's fine. But when you have to borrow to make the minimum payment on what you borrow, don't you see that's a problem? And we're heading down some very dangerous road. I've heard you're discussing these numbers. They're crazy numbers. You can see in two years now, we'll be talking about $10 trillion. I mean, when does it end? I mean, I can't pay for it all. You can't pay for it all. Your kids can't pay for it all. What's going to happen is the value of the dollar is going to go down. And all these cryptocurrencies that everyone's in love with, I'm not a big proponent of them, but some people love them. Guess what? People are going to start talking about other forms of besides the dollar to go to. We don't want to devalue our currency. It's very important to have a strong dollar. Well, somehow remarkably over decades, Republican and Democratic presidents, as we've been piling this up, it's been operation ignore. So eventually that stops. So if you just don't know when that would be. Melissa, thank you very much. Melissa Armo.