VMware rakes in nearly $2 billion from its SDN business, said CEO Pat Gelsinger at this week’s Deutsche Bank Conference. And he thinks IBM paid too much for Red Hat and its OpenShift Kubernetes platform. When it comes to Kubernetes, VMware has “better assets,” Gelsinger said.

IBM paid $34 billion for Red Hat. Meanwhile VMware paid $2.8 billion for Pivotal, which has a similar Kubernetes play.

Earlier in the conversation, however, Gelsinger noted that companies increasingly adopt software-defined everything. That’s a boon to VMware’s bottom line as “hardware-centric chunks of the stack” tilt “meaningfully software defined,” he said, according to a Seeking Alpha transcript.

“That’s been the center of what we’ve been driving since we articulated the software defined data center vision now six years ago,” Gelsinger said. “Networking hardware becomes networking software. Storage hardware become storage software. Increasingly, it’s multi-cloud.”

VMware’s hyperconverged infrastructure software business “is well over $1 billion,” he added. “The SDN business for us is closing in on $2 billion.”

NSX is VMware’s SDN platform. The vendor got its start in virtualized compute, and then moved into SDN and NFV after it acquired Nicira in 2012. Since then it has added security capabilities to the networking platform, and stretched SDN from the data center to the edge and the cloud, adding SD-WAN from its VeloCloud acquisition and support for vSphere-private clouds, native Microsoft Azure and Amazon Web Services (AWS) workloads, and VMware Cloud on AWS.

At last month’s VMworld event, it added a load balancer and analytics engine to NSX.

Late last year Gelsinger said VMware’s top priorities for 2019 are NSX, cloud, and containers, and in that order. “Obviously I love my vSAN child. It’s not as important as my NSX child,” he said.

During his talk at the Deutsche Bank Conference, Gelsinger also addressed the importance of containers, and the role that technology will play in VMware’s strategy moving forward.

VMware recently bought a trio of container and Kubernetes-focused companies including Heptio, Bitnami, and Pivotal, although that acquisition hasn’t yet closed. Gelsinger also kicked off VMworld last month by announcing Tanzu, VMware’s new Kubernetes’ products and services portfolio.

“We’re going to own the Kubernetes stack,” Gelsinger said at the Deutsche Bank Conference. “We’re not going to be relying on third-party code. It’s all going to be an integrated solution stack to execute on that Kubernetes.”

He also fielded a question about VMware’s Pivotal purchase in relation to IBM’s Red Hat acquisition. IBM now owns OpenShift, an enterprise-grade Kubernetes platform that’s an alternative to Pivotal Cloud Foundry.

“Do we assess the competitive environment? Well, of course, we do,” Gelsinger said. “So, IBM spent $34 billion doing this. I spent $2.8 billion [on Pivotal], plus add Heptio. So, I spent less than $3 billion and I think I have better assets.”