>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE in ETR. This is "Breaking Analysis" with Dave Vellante. >> Cisco is a company at the crossroads. It's transitioning from a high margin hardware business to a software subscription-based model, which also should be high margin through both organic moves and targeted acquisitions. It's doing so in the context of massive macro shifts to digital in the cloud. We believe Cisco's dominant position in networking combined with a large market opportunity and a strong track record of earning customer trust, put the company in a good position to capitalize on cloud momentum. However, there are clear challenges ahead for Cisco, not the least of which is the growing complexity of its portfolio, a large legacy business, and the mandate to maintain its higher profitability profile as it transitions into a new business model. Hello and welcome to this week's Wiki-bond cube insights powered by ETR. In this breaking analysis, we welcome in Zeus Kerravala, who's the founder and principal analyst at ZK Research, long time Cisco watcher who together with me crafted the premise of today's session. Zeus, great to see you welcome to the program. >> Thanks Dave. It's always a pleasure to be with you guys. >> Okay, here's what we're going to talk about today, set the agenda. The catalyst for this session, Zeus and I attended Cisco's financial analyst day. We received a day and a half of firehose presentations, drill downs, interactions, Q and A with Cisco execs and one key customer. So we're going to share our takeaways from these sessions and add our additional thoughts. Now, in particular, we're going to talk about Cisco's TAM, its transformation to a subscription-based model, and how we see that evolving. As always, we're going to bring in some ETR spending data for context and get Zeus' take on what that tells us. And we'll end with a summary of Cisco's cloud strategy and outlook for how it could win in the cloud. So let's talk about Cisco's sort of structure and TAM opportunities. First, Zeus, Cisco has four main lines of business where it's organized it's executives around sort of four product areas. And it's got a large service component as well. Network equipment, SP routing, data center, collaboration that security, and as I say services, that's not necessarily how it's going to market, but that's kind of the way it organizes its ELT, its executive leadership team. >> Yeah, the in fact, the ELT has been organized around those products, as you said. It used to report to the street three product segments, infrastructure platforms, which was by far the biggest, it was all their networking equipment, then applications, and then security. Now it's moved to five new segments, secure agile networks, hybrid work, end to end security, internet for the future and optimized app experiences. And I think what Cisco's trying to do is align their, the way they report along the lines of the way customers buy. 'Cause I think before, you know, they had a very simplistic model before. It was just infrastructure, apps, and security. The ELT is organized around product roadmap and the product innovation, but that's not necessarily the way customers purchase things and so, purchase things so I think they've tried to change things a little bit there. When you look at those segments though, you know, by, it's interesting. They're all big, right? So, by far the biggest distilled networking, which is almost a hundred billion dollar TAM as they reported and they have it growing a about a 9% CAGR as reported by other analyst firms. And when you think about how mature networking is Dave, the fact that that's still growing at high single digit CAGR is still pretty remarkable. So I think that's one of those things that, you know, watchers of Cisco historically have been calling for the network to be commoditized for decades. For as long as I've been watching Cisco, we've been, people have been waiting for the network to be commoditized. My thesis has always been, if you can drive enough innovation into things, you can stave off commoditization and that's what they've done. But that's really the anchor for them to sell all their other products, some of which are higher margin, some which are a little bit sore, but they're all good high margin businesses to your point. >> Awesome. We're going to dig into that. So, so they flattened the organization when Geckler left. You've got Todd Nightingale, Jonathan Davidson, Liz Centoni, and Jeetu Patel who we heard from and we'll make some comments on what we heard from them. One of the big takeaways at the financial analysts meeting was on the TAM, as you just mentioned. Liz Centoni who also is heavily involved in strategy and the CFO Scott Herren, showed this slide, which speaks to the company's TAM and the organizational structure that you were just talking about. So the big message was that Cisco has got a large and growing market, you know, no shortage of available market. Somewhere between eight and 900 billion, depending on which of the slides you pull out of the deck. And ironically Zeus, when you look at the current markets number here on the right hand side of this slide, 260 billion, it just about matches the company's market cap. Maybe an interesting coincidence, but at any rate, what was your takeaway from this data? >> Well, I think, you know, the big takeaway from the data is there's still a lot of room ahead for Cisco to grow, right? Again, this is a, it's a company that I think most people would put in the camp of legacy IT vendor, just because of how long they've been around. But they have done a very good job of staving off innovation. And part of that is just these markets that they play in continue to grow and they continue to have challenges that they can solve. I think one of the things Cisco has done though, since the arrival of Chuck Robbins, is they don't fight these trends anymore, Dave. I know prior to Chuck's arrival, they really fought the tide of software defined networking and you know, trends like that, and even cloud to some extent. And I remember one of the first meetings I had with Chuck, I asked him about that and he said that Cisco will never do that again. That under his watch, if customers are going through a market transition, Cisco wants to lead them through it, not try and hold them back. And I think for that reason, they're able to look at, all of those trends and try and take a leadership position in them, even though you might look at some of those and feel that some of them might be detrimental to Cisco's business in the short term. So something like software defined WANs, which you would throw into secure agile networks, certainly doesn't, may not carry the same kind of RPOs and margins with it that their traditional routers did, but ultimately customers are going to buy it and Cisco would like to be the ones to sell it to them. >> You know, you bring up a great point. This industry is littered, there's a graveyard of executives who fought the trend. Many people, some people remember Ken Olson of Digital Equipment Corporation. "Unix is snake oil," is what he said. IBM mainframe guys said, "PCs are a toy." And of course the history, they were the wrong side of history. The other big takeaway was the shift to software in subscription. They really made a big point of this. Here's a chart Cisco showed a couple of times to make the point that it's one of the largest software companies in the world. You know, in the top 10. They also made the point that Chuck Robbins, when he joined in 2015, and since that time, it's nearly 4x'ed it's subscription software revenue, and roughly doubled its software sales. And it now has an RPO, remaining performance obligations, that exceeds 30 billion. And it's committing to grow its subscription business in the forward-looking statements by 15 to 17% CAGR through 25, which would imply about a doubling of these, the blue lines. Zeus, it's unclear if that forward-looking forecast is just software. I presume it includes some services, but as Herren pointed out, over time, these services will be bundled into the product revenue, same way SAS companies do it. But the point is Cisco is committed, like many of their peers, to moving to an ARR model. But please, share your thoughts on Cisco's move to software subscriptions and how you see the future of consumption-based pricing. >> Yeah, this has been a big shift for Cisco, obviously. It's one that's highly disruptive. It's one that I know gave their partners a lot of angst for a long time because when you sell things upfront, you get a big check for selling that, right? And when you sell things in a subscription model, you get a much smaller check for a number of months over the period of the contract. It also changes the way you deal with the customer. When you sell a one-time product, you basically wipe your hands. You come back in three or four years and say, "it's time to upgrade." When you sell a subscription, now, the one thing that I've tried to talk to Cisco and its partners about is customers don't renew things they don't use. And so it becomes incumbent on the partner, it becomes incumbent upon Cisco to make sure that things that the customer is subscribing to, that they do use. And so Cisco's had to create a customer success organization. They've had to help their partners create those customer success organizations. So it's really changed the model. And Cisco not only made the shift, they've done it faster than they actually had originally forecast. So during the financial analyst day, they actually touted their execution on software, noting that it hit it's 30% revenue as percent of total target well before it was supposed to, it's actually exceeded its targets. And now it's looking to increase that to, it actually raised its guidance in this area a little bit by a few percentage points, looking out over the next few years. And so it's moved to the subscription model, Dave, the thing that you brought up, which I do see as somewhat of a challenge is the shift to consumption-based pricing. So subscription is one thing in that I write you a check every month for the same amount. When I go to the consumption-based pricing, that's easy to do for cloud services, things like WebEx or Duo or, you know, CloudLock, some of the security products. That that shift should be relatively simple. If customers want to buy it that way. It's unclear as to how you do that when you're selling on-prem equipment with the software add-on to it because in that case, you have to put metering technology in to understand how much they're using. You have to have a minimum baseline to start with. They've done it in some respects. The old HCS product that they sold, the Telcos, actually was sold with a minimum commit and then they tacked on a utilization on top of that. So maybe they move into that kind of model. But I know it's something that they've, they get asked about a lot. I know they're still thinking about it, but it's something that I believe is coming and it's going to come pretty fast. >> I want to pick up on that because I think, you know, they made the point that we're one of the top 10 software companies in the world. It's very difficult for hardware companies to make the transition to software. You know, HP couldn't do it. >> Well, no one's done it. >> Well, IBM has kind of done it, but they really struggle. It's kind of this mishmash of tooling and software products that aren't really well-integrated. But, I would say this, everybody now, Cisco, Dell, HPE with GreenLake, Lenovo, pretty much all the traditional hardware players are trying to move to an as a service model or at least for a portion of their business. HPE's all in, Dell transitioning. And for the most part, I would make the following observation. And I'd love to get your thoughts on this. They're pretty much following a SAS like model, which in my view is outdated and kind of flawed from a customer standpoint. All these guys say, "Hey, we're doing this because "this is what the customers want." I think the cloud is really a true consumption based model. And if you look at modern SAS companies, a lot of the startups, they're moving to a consumption based model. You see that with Snowflake, you see that with Stripe. Now they will offer incentives. But most of the traditional enterprise players, they're saying, "Okay, pay us upfront, "commit to some base level. "If you go over it, you know, "we'll charge you for it. "If you go under it, you're still going to pay "for that base level." So it's not true consumption base. It's not really necessarily the customer's best interest. So that's, I think there's some learnings there that are going to have to play out. >> Yeah, the reason customers are shying away from that SAS type model, I think during the pandemic, the one thing we learned, Dave, is that the business will ebb and flow greatly from month to month sometimes. And I was talking with somebody that worked for one of the big hotel chains, and she was telling me that what their CRM providers, she wouldn't tell me who it was, except said it rhymed with Shmalesforce, that their utilization of it went from, you know, from a nice steady level to spiking really high when customers started calling in to cancel hotel rooms. And then it dropped down to almost nothing as we went through that period of stay at home. And now it's risen back up. And so for her, she wanted to move to a consumption-based model because what happens otherwise is you wind up buying for peak utilization, your software subscriptions go largely underutilized the majority of the year, and you wind up paying, you know, a lot more than you need to. If you go to more of a true consumption model, it's harder to model out from a financial perspective 'cause there's a lot of ebbs and flows in the business, but over a longer period of time, it's more cost-effective, right? And so the, again, what the pandemic taught us was we don't really know what we're going to need from a consumption standpoint, you know, nevermind a year from now, maybe even six months from now. And consumption just creates a lot more flexibility and agility. You can scale up, you can scale down. You can bring in users, you can take out users, you can add consultants, things like that. And it just, it's much more aligned with the way businesses are run today. >> Yeah, churn is a silent killer of a software company. And so there's retention is the key here. So again, I think there's lots of learning. Let's put Cisco into context with some of its peers. So this chart we developed compares five companies to Cisco. Core Dell, meaning Dell, without VMware. VMware, HPE, IBM, we've put an AWS, and then Cisco as, IBM, AWS and Cisco is the integrated plays. So the chart shows the latest quarterly revenue multiplied by four to get a run rate, a three-year growth outlook, gross margin percentage, market cap, and revenue multiple. And the key points here are that one, Cisco has got a pretty awesome business model. It's got 60% gross margin, strong operating margins, not shown here, but in the mid twenties, 25%. It's got a higher growth rate than most of its peers. And as such, a much better, multiple than say, for instance, Core Dell gets 33 cents on the revenue dollar. HPE is double that. IBM's below two X. Cisco's revenue multiple rivals VMware, which is a pure software company. Now in a large part that's because VMware stock took a hit recently, but still the point is obvious. Cisco's got a great business. Now for context, we've added AWS, which blows away any company on this chart. We've inferred a market cap of nearly 600 billion, which frankly is conservative at a 10 X revenue multiple given it's inferred margins and growth rate. Now Zeus, if AWS were a separate company, it could have a market cap that approached 800 billion in my view. But what does this data tell you? >> Well, it just tells me that Cisco continues to be a very well-run company that has staved off commoditization, despite the calling for it for years. And I think the big lesson, and I've talked to financial analysts about this over the years, is that if, I don't really believe anything in this world is a commodity, Dave. I think even when Cisco went to the server market, if you remember back then, they created a new way of handling memory management. They were getting well above average margins for service, albeit less than Cisco's network margins, but still above average for server margins. And so I think if you can continue to innovate, you will see the margin stay where they are. You will see customers continue to buy and refresh. And I think one of the challenges Cisco's had in the past, and this is where the subscription business will help, is getting customers to stay with the latest and greatest. Prior to this refresh of network equipment, some of the stuff that I've seen in the fields, 10, 15 years old, once you move to that sell me a box and then tack on the subscription revenue that you pay month by month, you do drive more consistent refresh. Think about the way you just handle your own mobile phone. If you had to go pay, you know, a thousand dollars every three years, you might not do it at that three-year cycle. If you pay 40 bucks a month, every time there's a new phone, you're going to take it, right? So I think Cisco is able to drive greater, better refresh, keep their customers current, keep the features in there. And we've seen that with a lot of the new products. The new Cat 9,000, some of the new service provider products, the new wifi products, they've all done very well. In fact, they've all outpaced their previous generation products as far as growth rate goes. And so I think that is a testament to the way they've run the business. But I do think when people bucket Cisco in with HP and Dell, and I understand why they do, their businesses were similar at one time, it's really not a true comparison anymore. I think Cisco has completely changed their business and they're not trying to commoditize markets, they're trying to drive innovation and keep the margins up, where I think HP and Dell tend to really compete on price versus innovation. >> Well, and we are going to get to this point about the tailwinds and headwinds and cloud, and how Cisco to do it. But, to your point about, you know, the cell phone analogy. To the extent that Cisco can make that seamless for customers could hide that underlying complexity, that's going to be critical for the cloud. Now, but before we get there, I want to talk about one of the reasons why Cisco such a high multiple, and has been able to preserve its margins, to your point, not being commoditized. And it's been able to grow both organically, but also has a strong history of M and A. It's this chart shows a dominant position in core networking. So this shows, so ETR data within the Fortune 500. It plots companies in the ETR taxonomy in two dimensions, net score on the vertical axis, which is a measure of spending velocity, and market share on the horizontal axis, which is a measure of presence in the survey. It's not like IDC market share, it's mentioned market share if you will. The point is Cisco is far and away the most pervasive player in the market, it's generally held its dominant position. Although, it's been under pressure in the last few years in core networking, but it retains or maintains a very respectable net score and consistently performs well for such a large company. Zeus, anything you'd add with respect to Cisco's core networking business? >> Yeah, it's maintained a dominant network position historically. I think part of because it drives good products, but also because the competitive landscape, historically has been pretty weak, right? We saw companies like 3Com and Nortel who aren't around anymore. It'll be interesting to see moving forward now that companies like VMware are involved in networking. AWS is interested in networking. Arista is a much stronger company. You know, Juniper bought Mist and is in better position. Even Extreme Networks who most people thought was dead a few years ago has made a number of acquisitions and is now a billion dollar company. So while Cisco has done a great job of execution, they've done a great job on the innovation side, their competitive landscape, looking out over the next five years, I think is going to be more difficult than it has been over the previous five years. And largely, Dave, I think that's good for Cisco. I think whenever Cisco's pressed a little bit from competition, they tend to step on the innovation gas a little bit more. And I look back and even just the transition when VMware bought Nicira, that got Cisco's SDN business into gear, like nothing else could have, right? So competition for that company, they always seem to respond well to it. >> So, let's break down Cisco's net score a little bit. Explain why the company has been able to hold its spending momentum despite its large size. This will give you a little insight to the survey. So this chart shows the granular components of net score. The lime green is new adoptions to Cisco. The forest green is spending more than 6%. The gray is flat plus or minus 5%. The pink is spending drops by more than 5%. And the red is we're chucking the platform, we're getting off. And Cisco's overall net score here is 25%, which for a company of its size speaks to the relationships that it has with customers. It's of course got a fat middle in the gray area, like all sort of large established companies. But very low defections as well, it's got low new adoptions. But very respectable. So that is background, Zeus. Let's look at spending momentum over time across Cisco's portfolio. So this chart shows Cisco's net score by that methodology within the ETR taxonomy for Cisco over three survey periods. And what jumps out is Meraki on the left, very strong. Virtualization business, its core networking, analytics and security, all showing upward momentum. AppD is a little bit concerning, but that could be related to Cisco's sort of pivot to full stack observability. So maybe AppD is being bundled there. Although some practitioners have cited to us some concerns in that space. And then WebEx at the end of the chart, it's showing some relative strength, but not that high. Zeus, maybe you could comment on Meraki and any other takeaways across the portfolio. >> Yeah, Meraki has proven to be an excellent acquisition for Cisco. In fact, you might, I think it's arguable to say it's its best acquisition in history going all the way back to camp Kalpana and Grand Junction, the ones that brought up catalyst switches. So, in fact, I think Meraki's revenue might be larger than security now. So, that shows you the momentum it has. I think one of the lessons it brought to Cisco was that simpler is better, sometimes. I think when they first bought Meraki, the way Meraki's deployed, it's very easy to set up. There's a lot of engineering work though that goes into making a product simple to use. And I think a lot of Cisco engineers historically looked at Meraki as, that's a little bit of a toy. It's meant for small businesses, things like that, but it's not for enterprise. But, Rocky's done a nice job of expanding the portfolio, of leveraging the cloud for analytics and showing you a lot of things that you wouldn't necessarily get from traditional networking equipment. And one of the things that I was really delighted to see was when they put Todd Nightingale in charge of all the networking business, because that showed to me that Chuck Robbins understood that the things Meraki were doing were right and they infuse a little bit of Meraki into the rest of the company. You know, that's certainly a good thing. The other areas that you showed on the chart, not really a surprise, Dave. When you think of the shift hybrid work and you think of the, some of the other transitions going on, I think you would expect to see the server business in decline, the storage business, you know, maybe in a little bit of decline, just because people aren't building out data centers. Where the other ones are related more to hybrid working, hybrid cloud, things like that. So it is what you would expect. The WebEx one was interesting too, because it did show somewhat of a dip and then a rise. And I think that's indicative of what we've seen in the collaboration space since the pandemic came about. Companies like Zoom and RingCentral really got a lot of the headlines. Again, when you, the comment I made on competition, Cisco got caught a little bit flat-footed, they've caught up in features and now they really stepped on the gas there. Chuck joked that he gave the WebEx team a bit of a blank check to go do what it had to do. And I don't think that was a joke. I think he actually did that because they've added more features into WebEx in the last year then I think they did the previous five years before that. >> Well, let's just drill into video conferencing real quick here, if we could. Here's that two dimensional view, again, showing net score against market share or pervasiveness of mentions, and you can see Microsoft Teams in the upper right. I mean, it's off the chart, literally. Zoom's well ahead of Cisco in terms of, you know, mentions presence. And that could be a spate of freemium, you know, but it's basically a three horse race in this game. And Cisco, I don't think is trying to take Zoom head on, rather it seems to be making WebEx a core part of its broader collaboration agenda. But Zeus, maybe you could comment. >> Well, it's all coming together, right? So, it's hard to decouple calling from video from meetings. All of the vendors, including Teams, are going after the hybrid work experience. And if you believe the future is hybrid and not just work from home, then Cisco does have a pretty interesting advantage because it's the only one that makes its own end points, where Teams and Zoom doesn't. And so that end to end experience it can deliver. The Microsoft Teams one's interesting because that product, frankly, when you talk to users, it doesn't have a great user score, like as far as user satisfaction goes, but the one thing Microsoft has done a very good job of is bundling it in to the Office365 licenses, making it very easy for IT to deploy. Zoom is a little bit in the middle where they've appealed to the users. They've done a better job of appealing to IT, but there is a, there is a battleground now going on where video's not just video. It includes calling, includes meetings, includes room systems now, and I think this hybrid work friend is going to change the way we think about these meeting tools. >> Now we'd be remiss if we didn't spend a moment talking about security as a key part of Cisco's business. And we have a graphic on this same kind of X, Y. And it's been, we've seen several quarters of growth. Although, the last quarter security growth was in the low single digits, but Cisco is a major player in security. And this X, Y graph shows, they've got both a large presence and a solid spending momentum. Not nearly as much momentum as Okta or Zscaler or a CrowdStrike and some of the smaller companies, but they're, these guys are on a rocket ship, but others that we featured in these episodes, but much more than respectable for Cisco. And security is critical to the strategy. It's a big part of the subscriber base. And the last thing, Zeus, I'll say about Cisco made the point in analyst day, that this market is crowded. You can see that in this chart. And their goal is to simplify this picture and make it easier for customers to secure their data and apps. But that's not easy, Zeus. What are your thoughts on Cisco's security opportunities? >> Yeah, I've been waiting for Cisco go to break up in security a little more than it has. I do think, I was talking with a CSO the other day, Dave, that said to me he's starting to understand that you don't have to have best of breed everywhere to have best in class threat protection. In fact, there's a lot of buyers now will tell you that if you try and have best of breed everywhere, it actually creates a negative when it comes to threat protection because keeping all the policies and things up to date is very, very difficult. And so the industry is moving more to a platform model, right? Now, the challenge for Cisco is how do you get that, the customer to think of the network as part of the platform? Because while the platform model, I think, is starting to gain traction, FloridaNet, Palo Alto, even McAfee, companies like that also have their own version of a security platform. And if you look at the financial performance of companies like FloridaNet and Palo Alto over the past, you know, over the past couple of years, they've been through the roof, right? And so I think an interesting and unique challenge for Cisco is can they convince the security buyer that the network is as important a part of that platform as any other component? If they can do that, I think they can break away from the pack. If not, then they'll stay mixed in with those, you know, Palo, FloridaNet, Checkpoint, and, you know, and Cisco, in that mix. But I do think that may present their single biggest needle moving opportunity just because of how big the security TAM is, and the fact that there is no de facto leader in security today. If they could gain the same kind of position in security as they have a networking, who, I mean, that would move the needle like no other market would. >> Yeah, it's really interesting that they're coming at security, obviously from a position of networking strength. You've got, to your point, you've got best of breed, Okta in identity, you got CrowdStrike in endpoint, Zscaler in cloud security. They're all growing like crazy. And you got Cisco and you know, Palo Alto, CSOs tell us they want to work with Palo Alto because they're the thought leader and they're obviously a major player here. You mentioned FloridaNet, there's a zillion others. We could talk all day about security. But let's bring it back to cloud. We've talked about a number of the piece in Cisco's portfolio, and we haven't really spent any time on full stack observability, which is a big push for Cisco with AppD, Intersight and the ThousandEyes acquisition. And that plays into this equation. But my take, Zeus, is Cisco has a number of cloud knobs that it can turn, it sells core networking equipment to hyperscalers. It can be the abstraction layer to connect on-prem to the cloud and hybrid and across clouds. And it's in a good position with Telcos too, to go after the 5G. But let's use this chart to talk about Cisco's cloud prospects. It's an ETR cut of the cloud customer spending. So we cut it by cloud customers. And they're are, I don't know, 800 or so in the survey. And then looking at various companies performance within that cut. So these are companies that compete, or in the case of HashiCorp, partner with Cisco at some level. Let me just set this up and get your take. So the insert on the chart by the way shows the raw data that positions each dot, the net score and the shared n, i.e. the number of accounts in the survey that responded. The key points, first of all, Azure and AWS, dominant players in cloud. GCP is a distant third. We've reported on that a lot. Not only are these two companies big, they have spending momentum on their platforms. They're growing, they are on that flywheel. Second point, VMware and Cisco are very prominent. They have huge customer bases. And while they're often on a collision course, there's lots of room in cloud for multiple players. When we plotted some other Cisco properties like AppD and Meraki, which as we said, is strong. And then for context, we've placed Dell, HPE, Aruba, IBM and Oracle. And also VMware cloud and AWS, which is notable on its elevation. And as I say, we've added HashiCorp because they're critical partner of Cisco and it's a multi-cloud play. Okay, Zeus, there's the setup. What does Cisco have to do to make the cloud a tailwind? Let's talk about strategy, tailwinds, headwinds, competition, and bottom line it for us. >> Yeah, well, I do think, well, I talked about security being the biggest needle mover for Cisco, I think its biggest challenge is convincing Wall Street in particular, that the cloud is a tailwind. I think if you look at the companies with the really high multiples to their stock, Dave, they're all ones where they're viewed as, they go along with the cloud ride, Right? So the, if you can associate yourself with the cloud and then people believe that the cloud is going to, more cloud equals more business, that obviously creates a better multiple because the cloud has almost infinite potential ahead of it. Now with respect to Cisco, I do think cloud has presented somewhat of a double-edged sword for Cisco. I don't believe the current consumption model for cloud is really a tailwind for Cisco, not really a headwind, but it doesn't really change Cisco's business. But I do think the very definition of cloud is changing before our eyes, Dave. And it's shifting away from centralized clouds. If you think of the way customers bought cloud before, it might have used AWS, it might've used Azure, but it really, that's not really multi-cloud, it's just multiple clouds in which I put things in these centralized resources. It's shifting more to this concept of distributed cloud in which a single application can be built using resources from your private cloud, for AWS, from Azure, from Edge locations, all the cloud providers have built their portfolios to support this concept of distributed cloud and what becomes important there, is a highly agile dynamic network. And in that case with distributed cloud, that is a tailwind for Cisco because now the network is that resource that ties all those distributed cloud components together. Now the network itself has to change. It needs to become a lot more agile and microservices and container friendly itself so I can spin up resources and, you know, in an Edge location, as fast as I can on-prem and things like that. But I do think it creates another wave of innovation and networking, and in that case, I think it does act as a tailwind for Cisco, aside from just the work it's done with the web scalers, you know, those types of companies. So, but I do think that Cisco needs to rethink its delivery model on network services somewhat to take advantage of that. >> At the analyst meeting, Cisco made the point that it does sell to the hyperscalers. It talked about the top six hyperscalers. You know, you had mentioned to me, maybe IBM and Oracle were in there. I always talk about four hyperscalers and only four, but that's fine. Here's my question. Practitioners have told me, buyers have told me, the more money and more workloads I put in the cloud, the less I spend with Cisco. Now, even though that might be Cisco gear powering those clouds, do you see that as a potential threat in that they don't own that relationship anymore and value will confer to the cloud players? >> Yeah, that's, I've heard that too. And I don't, I believe that's true when it comes to general purpose compute. You're probably not buying as many UCS servers and things like that because you are putting them in the cloud. But I do think you do need a refresh the network. I think the network becomes a very important role, plays a very important role there. The variant, the really interesting trend will be, what is your WAM look like? Do you have thousands of workers scattered all over the place, or do you just have a few centralized locations? So I think also, you know, Cisco will wind up providing connectivity within the cloud. If you think of the transition we've seen in other industries, Dave, as far as cloud goes, you think of, you know, F5, a company like that. People thought that AWS would commoditize F5's business because AWS provides their own load balancers, right? But what AWS provides is a very basic, very basic functionality and then use F5's virtual edition or a cloud edition for a lot of the advanced capabilities. And I think you'll see the same thing with the cloud that customers will start buying versions of Cisco that go in the cloud to drive a lot of those advanced capabilities that only Cisco delivers. And so I think you wind up buying more Cisco over time, although the per unit price of what you buy might be a little bit lower. If that makes sense here. >> It does, I think it makes a lot of sense and that fits into the cloud model. You know, you bring up a good point, the conversation with the customer was Rakuten. And that individual was essentially sharing with us, somebody was asking, one of the analysts was asking, "Well, what about the cloud guys? "Aren't they going to really threaten the whole Telco "industry and disrupt it?" And his point was, "Look at, this stuff is not trivial." So to your point, you know, maybe they'll provide some basic functionality. Kind of like they do in a lot of different areas. Data protection is another good example. Security is another good example. Where there's plenty of room for partners, competitors, of on-prem players to add value. And I've always said, "Look, the opportunity "is the cloud players spend 100 billion dollars a year "on CapEx." It's a gift to companies like Cisco who can build an abstraction layer that connects on-prem, cloud for hybrid, across clouds, out to the edge, and really be that layer that is that layer that takes advantage of cloud native, but also delivers that experience, I don't want to use the word seamlessly, but that experience across those clouds as the cloud expands. And that's fundamentally Cisco's cloud strategy, isn't it? >> Oh yeah. And I think people have underestimated over the years, how hard it is to build good networking products. Anybody can go get some silicon and build a product to connect two things together. The question is, can you do it at scale? Can you do it securely? And lots of companies have tried to commoditize networking, you know, White Boxes was looked at as the existential threat to Cisco. Huawei was looked at as the big threat to Cisco. And all of those have kind of come and gone because building high quality network equipment that scales is tough. And it's tougher than most people realize. And your other point on the cloud providers as well, they will provide a basic level of functionality. You know, AWS network equipment doesn't work in Azure. And Azure stuff doesn't work in Google, and Google doesn't work in AWS. And so you do need a third party to come in and act as almost the cloud middleware that can connect all those things together with a consistent set of policies. And that's what Cisco does really well. They did that, you know back when they were founded with routing protocols and you can think this is just an extension of what they're doing just up at the cloud layer. >> Excellent. Okay, Zeus, we're going to leave it there. Thanks to my guest today, Zeus Kerravala. Great analysis as always. Would love to have you back. Check out ZKresearch.com to reach him. Thank you again. >> Thank you, Dave. >> Now, remember I publish each week on Wikibond.com and siliconangle.com. All these episodes are available as podcasts, just search "Braking Analysis" podcast, and you can connect on Twitter at DVallante or email me David.Vallante@siliconangle.com. Thanks for the comments on LinkedIn. Check out etr.plus for all the survey action. This is Dave Vallante for theCUBE insights powered by ETR. Be well and we'll see you next time. (light music)

from the silicon angle media office in Boston Massachusetts it's the queue now here's your host David on tape hello everyone and welcome to this week's wiki bond cube insights powered by ETR in this breaking analysis we want to dig into the so called multi-cloud arena some of the questions we're getting from our community are what is a multi cloud did we really need it what problems does multi-cloud solve and importantly what problems does it create how is this thing called multi cloud likely to evolve and who are some of the key players to watch how do they stack up relative to each other you know recently I got a couple of interesting questions from a customer that says I have all this AI action going on and doing sophisticated modeling and this data lives and oh clouds all over the place how do I cross connect to the data and the workloads that are running on these clouds with the consistence this consistent experience of what our other customers doing another question came up in the community today is there a financial advantage to multi cloud or is it just about avoiding lock-in so I'm gonna take a stab at addressing these questions so first of all let's look at some of the noise that's going on in the marketplace and try to extract a little signal every vendor especially the ones who don't own a cloud are touting this thing called multi cloud and they tell us that customers want to avoid lock-in and organizations want seamless integration across clouds and they say we the vendor are uniquely qualified to deliver that capability although as you can see here in for a not everybody agrees because some feel that multi cloud is less secure more complicated in higher cost now the reality is that one two and three are true as is for a to a certain degree but generally I would say that multi cloud to date is more of a symptom of multi vendor then a clear strategy but that's beginning to change and there's a substantial opportunity out there for anyone to win so let's explore this a little bit and an exclusive sit-down with aunty Jessie prior to reinvent 2019 John Fourier got Jessie to talk about this trend here's what he said we have a large number of companies who have gone all-in on AWS and that's growing but there's gonna be other companies who decide that they're going to use multiple clouds for different reasons you wouldn't have to say that the vast majority of organizations pursuing cloud tend to pick a predominant provider that it's not a 50/50 scenario it's rather it's more like a 70/30 or 8020 or even a 90/10 faria went on to write somewhat paraphrasing I think Jesse in my view it's not hard to find the reasons for using multiple clouds right is M&A there's shadow IT there's developer preference but it's really not multi cloud by design it's just more of the same Enterprise IT mishmash that we've seen for decades so I generally have to say I agree with that but it is changing and I want to dig into that a bit so first let me recap the basic premise that we work off of first cloud is winning in the marketplace we know this building data centers is not the best use of capital unless you're a data center operator or a hyper scaler or you know maybe a SAS provider maybe so more and more work is going to continue to move to the cloud this was pretty much the first wave of cloud if you will a cloud of remote infrastructure services for very obvious workloads like web test dev analytics and certain SAS offerings the second wave of cloud which we've been talking about for 15 years was or should I say is a hybrid connecting remote cloud services to on-prem workloads and the third wave which is really hitting somewhat in parallel is this thing that we call multi cloud now it's not a perfect analogy but these multi generational waves remind us of the early days of networking now some of you may remember that years ago the industry was comprised of multiple dominant vendors that control their own proprietary network stacks for example IBM had SN a digital or deck had decnet all the many computer vendors had their own proprietary nets now in the early to mid-1980s the OSI model emerged with the objective of creating interoperability amongst all these different communication systems and the idea was we're going to standardize on protocols and the model had seven layers all the way from the physical layer through the application but really in reality was a pipe dream because we were way too complicated and and it sort of assumed that customers are gonna rip and replace their existing networks and then standardize on the OSI model now in reality that was never gonna happen however what it did is it open the door for new companies and you saw firms like Cisco and 3com emerged with tcp/ip and Ethernet becoming standardized and enabling connections between these systems and it totally changed the industry as we now know it so what does this have to do with multi-cloud well today you kind of have a similar situation with dominant public cloud leaders like AWS and azure and in this analogy they are the proprietary siloed networks of the past like IBM and digital they're more open obviously but still ultimately customers are going to put workloads on the right cloud for the right job and that includes putting work on Prem and connecting it to the public cloud with call it a substantially similar and ideally identical experience that's what we call hybrid now that's today's big wave and you're seeing it with Amazon's outposts and VMware and Amazon and Azure stack etc so while all this hybrid action is getting wired up customers are putting work into AWS and Azure and certainly Google and IBM cloud and the Oracle cloud and so forth now customers are wanting to connect across clouds with a substantially similar experience because that reduces cost and of course it speeds business outcomes that's what we call multi cloud now I'm not by any means suggesting that Amazon and Microsoft are gonna go the way of the mini computer vendors I don't believe that I think leaders today are much more savvy and tuned into how to surf the waves they're more paranoid and they're frankly just smarter than back in the 70s and 80s but it's not a rite of passage if they ignore the trends they will face challenges that could become driftwood so you're seeing the emergence of some of the moves from the vendor crowd the big whales connecting their infrastructure like AWS and VMware and Microsoft and Oracle quite interesting and IBM Red Hat with everybody cisco Dell HPE with everyone Google with anthos and a lot of other players all are trying to stake a claim in this hybrid and multi cloud world but you also have these emerging players that are innovators companies like CrowdStrike in security cumulant in the backup space and many dozens of well-funded players looking to grab a share of this multi cloud pie and it's worth pointing out that they're all kind of going gaga over kubernetes now of course this makes sense because kubernetes has emerged as a standard it's certainly very popular with developers why because it enables portability and allows them to package applications and of course all they're related to tendencies around those applications and then hand that app off for testing or deployment and it's gonna behave in the exact same way as when they ran it locally this we've seen and we know this but I want to share something I had a great conversation with Bernard golden yesterday and he made an excellent point about well you know kubernetes and containers he said this portability is a necessary but insufficient condition for multi cloud to succeed you still have to have an integrated management approach to security ID management monitoring performance reporting and end get into cross-training of people and skills etc ok I want to shift gears and as always I want to dig into these segments and bring in the et our perspective now pretty sure ETR is a lot of data on multi cloud from their ven meetings and other surveys but what I've done today is pulled some data that I'm using is indicators or proxies for multi cloud so I can't go out and buy me some multi cloud today it doesn't really exist in that form so what we have to do is highlight some of the trends in the data and draw some inferences from that so let's take a look at this chart what it shows is the relative position of a number of companies that my view are participating in the multi cloud arena the chart plots these companies showing net score or remember spending momentum on the y-axis and we've just opposed that to what's called market share on the x-axis market share is a measure of pervasiveness in the data set and what we've done is we've filtered on three sectors cloud container orchestration and container platforms using that as a proxy for multi cloud so these are buyers 791 of them as you can see by the end who are spenders in these three areas and we're isolating on select group of names and as a last filter we selected only companies with 50 or more results in the data set from this survey and we're using this as a multi cloud sector proxy so let me make a couple of comments here first I know kubernetes is not a company but ETR captures spending on kubernetes it's one of the hottest areas in the data set with a nearly 82% net score so we're capturing that as a reference point the next thing I want to say is you can see the big cloud players Azure and AWS and once again as in previous breaking analysis segments we see those two look they're leaders they're out the lead both companies showing very very strong momentum from a net score standpoint now AWS you might say why are you including a diversity if they don't explicitly have a multi cloud offering but in my view you cannot talk about multi cloud without including the leading cloud supplier you also see Google not so much in the market share of the big two but Google's showing strong net score we've talked about that before and they're very well positioned in multi cloud with anthos there behind their playing cloud agnostic to try to catch up again remember this is a proxy that we are running it's not necessarily a reflection of firms specific multi cloud offerings it's an indicator based on the filters that we've run now let's take a look at some of the others rubric the data protection specialists and CrowdStrike was a security darling they show some real strengths both have multi cloud offerings and they have strategies around their look at how she Corp they stand out as an important player in our view as they provide developer tooling to run secure and and deploy applications across clouds VMware cloud is I believe it's a vfc VMware cloud foundation and it's right there in the mix and you can also see fortunate in there as well executing from a security position I talked about them last week in my braking analysis they have a nice cloud portfolio and they're benefiting from execution strong execution let me call your attention to IBM in Red Hat Red Hat OpenShift look at their respective positions on this chart IBM spending velocity or net score is low but Red Hat has quite strong spending velocity and this is CEO Arvind Krishna's opportunity leverage IBM's large install based presence shown here as market share or pervasiveness and bring red hat to the right and leverage open shifts coolness to increase IBM's relevance and elevate it elevated spending velocity if arvind can make the kind of progress that i'm showing here in this picture he'll end up being CEO of the decade but that really is IBM's opportunity you can also see I put Oracle in the chart as well because of their multi cloud relationship with Microsoft which which I actually think has great potential for running mission-critical Oracle databases as I've noted many times I've you know IBM and Oracle both have clouds they're in the cloud game there are hyper scalar clouds but they have very large installed software franchises why is that important because it insulates them from the I ass ix knife fight and the pricing pressures that are putting forth by the hyper scalars the finally I have to mention Cisco I've said many times comes at multi cloud from a position of strength and networking and of course security they've got a huge market presence and not without challenges but they clearly are a player here ok now let's go on and look at some similar proxy data basically the same cut isolated on a few big players participating in multi cloud so again same cut as before but this is this shows a time series isolating on some of those Biggie's showing their net score or spending momentum in cloud and container related sectors that I talked about you got Azure leading GCP showing momentum IBM Red Hat with open shift and VMware all with solid net scores that are in the green cisco not as strong from a net score or spending velocity standpoint but it's shared in or presence in the data set is significant in this cut so two takeaways here really are one this is a wide-open race it's jump ball you really can't pick a winner yet and to each is gonna come at this from their own unique position of strength which brings me to how we see this space evolving this simple chart here really shows how we see the multi cloud infrastructure stack emerging starting at the bottom we show in the stack networking you gotta have networking to cross connect clouds and this is where cisco you has to win the day not optional for them some big players are going after the control plane including Microsoft arc Google with anthos VMware with tans ooh IBM Red Hat and we think eventually AWS is a possibility to enter that game on the data plane you got some big whales like Dell EMC you got NetApp you've got HPE at IBM the big storage players as well you have specialists like pure who's doing some interesting things in block in the cloud and cumulonimbus mention you have a bunch of companies like Veritas cohesive the rubric vMac TIFIA is gonna be in there CommVault I mentioned Klum EO before IBM is another one you got a whole bunch of folks in networking big portfolio plays from the likes of Cisco I said to network I met security from Cisco Palo Alto fortunate along with many of the security specialists we've highlighted in the past like CrowdStrike and there are many many others now on the leftmost side of this chart is really interesting we showed the full stack interconnects here we're referring to the direct cloud to cloud connections in functions up and down the entire stack examples here are AWS VMware yes that hybrid but also emerging at the edge and Microsoft and Oracle so the bottom line is we're seeing a battle brewing between the big companies with larger appetites gobbling up major portions of the market with integrated suites that are playing out within each layer of the stack competing with smaller and nimble players that are delivering best to breed function along those stack layers all right let me summarize so here are the questions that I said I would answer let's see how I did what the heck is multi cloud well let me first say it feels like everything in IT is additive what do I mean by that well we never get rid of stuff you keep things forever think about it the typical enterprise has multiple data centers they get many SAS providers more likely they have you know more than one Iast provider and they're starting to think about what should I do with the edge there is no standard for hybrid or multi cloud deployments you talk to 100 customers and you're gonna hear 120 or 150 or 300 different environments and several orders of magnitude of challenges that they face do we really need multi-cloud not an ideal world no we wouldn't need multi cloud but we talked about how we got here earlier how real is it how real is multi cloud now look companies use multiple clouds it's is it easy to do things across scope these clouds no so it's one of these problems that the industry is created that it can now make money fixing it's a vicious cycle I know but so goes the enterprise IT business what problems does it does multi-cloud solve and create look the goal of multi cloud should be that it creates more value than just the sum of the individual parts and that is clearly not happening yet in my opinion moving data around is a problem so ultimately the value comes from being able to bring cloud services to data that resides all over the place and as Bernard golden implied even with kubernetes the experience is far from seamless so we understand that technology created this problem and IT people processes and technology will be asked to clean up the crime scene as I often say it's a common story in enterprise tech we talked about how multi-cloud will evolve along a stack that it comprises specialists and big companies with very big appetites my opinion is that multi-cloud will evolve as a mishmash and vendor relationships the right tools for the right job the edge IT and OT tensions mergers and acquisitions these are gonna create even a bigger mess down the road we have well-funded companies that are exceedingly capable in this business and the leaders are gonna get their fair share cloud is a trillion-dollar market opportunity and there will not be in my opinion a winner-take-all and multi cloud so who wins like I've tried to lay out some of the leaders within different parts of the stack but there's way more to this story I do believe that the cloud players are well positioned why cuz they're they invented cloud EWS and others who followed right now Microsoft and Google are playing actively in that market but I definitely think AWS will I that space but I think VMware Red Hat IBM Cisco etc some of this from the respective positions of strength and I've sort of they have the added benefit of being cloud semi agnostic because generally they're not wed to a hyper scale cloud you know IBM as a cloud oracle as a cloud but it's on a hyper scale cloud and as always there's specialists that are gonna solve problems that are too small initially for the big whales to see so they get a leader lead bleed to market advantage but those opportunities can grow over time and allow these guys to reach escape velocity now so I'll say multi-cloud in and of itself is I believe an opportunity one that will be attacked from a position of strength within the stack and there are opportunities to be specialists up and down that stack the Akashi Corp alright this is Dave Volante for wiki bonds cube insights powered by ETR thanks for watching this breaking analysis and remember these episodes are available as podcasts you can check it out as you're driving your car wherever you listen to two podcasts you can connect with me at David Villante at Silicon angle calm or at D Volante on Twitter or please comment on my LinkedIn posts thanks for watching everyone we'll see you next time [Music]

(techno music) >> Announcer: Live, from New York, it's theCUBE. Covering Blockchain Week. Now, here's John Furrier. (techno music) >> Hello and welcome back. this is the exclusive coverage from theCUBE. I'm John Furrier, the co-host. We're here in New York City for special on the ground coverage. We go out where all the action is. It's happening here in New York City for Blockchain Week, New York, #BlockchainWeekNY Of course, Consensus 2018 and a variety of other events, happening all over the place. We got D-Central having a big boat event here, tons of events from Hollywood. We got New York money, we got Hollywood money, we got nerd money, it's money everywhere, and of course great deals are happening, and I'm here with two friends who have done a deal. Al Burgio is a CEO of DigitalBits co-founder, and Nithin who's the partner at Arcadia Crypto Ventures. You guys we've, you know, we're like family now, and you're hiding secrets from me. You did a deal. Al, what's going on here? Some news. >> Yeah, well first John, thanks for having us. We always love coming on the show, and really enjoy spending time with you and so forth. We, you know previous conversations that we've had, we were not out there fundraising. But really had the opportunity to meet a lot of great people Nithin and his firm being definitely one of them. And as a result of that, really building this, say, following, these relationships within the venture community, more specifically the crypto venture community. When we were ready to actually go out and do, let's say a first round, for us it happened very quickly, and it was a result of being able to leverage those relationships that we had. For me, it was kind of remarkable to see that support come and happen so quickly. Normally venture, it's just a process. Many many months. >> John: Long road. >> Then a month to close. >> John: Kiss all the frogs. >> Yeah, here it's like, you know, people can do due diligence on the fly, You have an opportunity with events like this. >> John: They're smart. >> They're smart, and and there's an opportunity to really foster these relationships in this really tight-knit community. And, you know, Nithin and his firm being obviously one of those. And so when we were ready to go out and do our first round, it happened quickly, and I'd like to think that in a lot of ways, it happened amongst friends. >> Well, you're being humble. We've been covering you, you've been on theCUBE earlier, when you just started the idea, so it's fun to watch you have this idea come to fruition, but you're in a, you're hitting a TAM a Total Available Market that's pretty large. And that's one of the secrets, to have a TAM. Aggressive bold move, we'll how it turns out for you, but you know, you got to have the moonshot, you're going after the loyalty market, which is completely run by the syndicate, what do you want to call it, the mafia of loyalty. >> Yeah, well, I would say that in some cases, those that are supporting us see that as really just one use case. Because we built this general-purpose blockchain, one of the use cases and one of the first use cases that were out there to support, happens to be the loyalty space. >> John: Big. And it's massive, highly fragmented but massive market, and we can solve a lot of liquidity issues with our technology. But then it goes beyond that. So it's a big market at the start, and then that can scale even greater from there. and I think that's part of what, I mean obviously, I'm not going to speak for Nithin. >> Nithin, let me weigh in here, pass the mic over. Nithin talk about the deal, why these guys? I know you met 'em, you like Al, and the feedback I've heard from other folks is he's a classic entrepreneur and that obviously, the entrepreneur gets the deal, but obviously you don't just give money 'cause you like someone. What about this deal is it that you guys like? You guys been there early, you got some great people on your team, what about this deal is it that you like? >> Sure, for us, Al met pretty much most of, almost all the criteria that we had, okay. That we had when we go, the thesis before we go fund someone. We don't get so many deals like that. Usually we get you know, they made 50% of the criteria, we might still put money because you can't get the 100%. So one thing, Al as a founder, he's experienced, he has done it multiple times before, he sold companies. Tech guy, which is very key for us. A tech project is very key. Okay, second thing, he's built the whole thing. It's not like he's raising the money to go and build it. He built it, now he's raising money to go for go to market strategies, which makes sense. He's shown it, and we tested it out. So like, we were completely blown away. He has a team behind 'im. He's built a team on every side, on the marketing side, on PR, events. And the idea, this is a general blockchain, but he's addressing a very specific issue. It is a real problem. Loyalty points, or rewards points, or gift points. Or whatever you call them. It is segmented, it's fragmented, and this is a chance. And there might be many people who are trying to solve this problem, but I think Al has the greatest possibility, or probability, of becoming the winner. >> You and I have talked on theCUBE before, both of you guys are CUBE alumni, I know you both, so I'll ask you, 'cause I'll just remind everyone, we've talked about token economics. One of the things that's coming up here at the Consensus 2018 event in New York, onstage certainly, and some fireworks in one of the sessions, is like if you're not decentralized, why the hell are you doing a decentralized model? So one of the criterias is, the fit for the business model, has to fit the notion of a decentralized world, with the ability of tokens becoming an integral part. What about this deal makes that happen? Obviously, fragmentation, is that still decentralized? So, how are you sorting through the nuances of saying, okay, is it decentralized the market for him, and this deal? Or does it fit? >> See no, decentralize is one thing okay, in here, more than decentralized, I would say there was the platform, so that all the companies can come in, use this common platform, release it, and as a user you're getting a chance to atomically swap it if you don't like something. Most of the reward points or loyalty points go waste. Maybe the companies want it to go waste, I don't know if that is. >> It's a natural burn at equilibrium going on anyway right? Perfect fit! >> So that is the only, that was the only doubt that we had. Would companies want this, because do they want their customers' loyalty points going waste rather than swapping it for something else? That was the only question that we had. Well, that's a question that will get answered in the market. But otherwise we hadn't seen something like this before. >> What's your take of the show so far? We saw each other in the hallway as we were getting set up for theCUBE, for two days of coverage, in New York, for Blockchain Week, New York, what's your take? Obviously pretty packed. >> Oh my god, it's so packed, and it's great, the show is going on. It is bringing a lot of money in, it's bringing all the investors in a new money, old money, traditional money, nerd money as you said. >> It smells like money! >> Everybody's coming in. See the beauty about those things coming in is, you're going to get a lot of people from other fields that are going to come into this field to solve problems. 'Cause earlier, if there is no money coming in, you're going to have very smart people, or very intelligent people stick with physics or whichever was their field. Now, they're going to look into the space because they're getting paid. See that brings more people who are intelligent, and who can solve problems. That is very key for me. >> Al, I want to ask you as an entrepreneur, one things you usually have to struggle with, as any entrepreneur, is navigating the 3-D chess you got to play, whether it's competitive strategy, market movement, certainly the market's moving and shifting very quickly, but you've got growth, big tailwind for you. What's your takeaway? Because now you have new things coming on. Every every day it seems like a new shoe is dropping. SEC's firing a warning on utility tokens, security tokens are still coming, are now coming online, but that looks very promising, and then ecosystems become super important. You guys just announced news this morning around the ecosystem. >> Yeah, tomorrow we have some. We had some news today, but we have more tomorrow. >> John: Well talk about the news. >> Yeah, so we have a multi-tiered go to market strategy. Obviously in the loyalty space, again I want to emphasize, it's just one use case, but it's a massive one. You have brands, the enterprise. And many of those those enterprises or brands may operate their loyalty program internally, in terms of like back offices systems, in some cases they're outsourcing the app to a SAS provider, some application provider, that's kind of hidden in the background. But let's just say like Hilton. I use Hilton, it's the location for the event, but Hilton, you have this user experience using this app, but maybe that technology, the SAS application that's powering that, is actually not Hilton technology. And so let's just say, there's 30 million people in the Hilton program and there may be 30 million of them on the Marriott, coexisting on some SAS application. And so that's another important category for us. SAS providers and so forth, supporting that industry. And then last but not least, today, whether enterprise or SAS company, many cases not touching their own hardware, right? They're using the cloud. >> So they're outsourcing the backend. >> Yeah, and so you have managed cloud providers. >> So what does it mean for the market? I don't understand, I'm not following you. >> Well, I guess what I'm saying is that there needs to be a common standard, across enterprise application provider, in global cloud community, cloud is the new hardware. >> True. So horizontally scaling loyalties as we were (mumbles). >> Exactly, so we have, we're basically securing partnerships on all three levels, to make sure that, if you want to use new technology, you want to ensure that it's widely supported, across a variety of partners you may want to work with if you're an enterprise. Whether, a software company, cloud company, and so forth. You want to be able to ensure that it can back up the truck. So we've basically signed partnerships at all of these tiers. You're going to see news in the morning. It's late here on a Monday evening. So tomorrow 9:00 a.m, major cloud company, one of the major cloud companies, and there's more to follow, making an announcement that they've joined our ecosystem partner program, and supporting this open source technology in a number of different ways. Which we're really excited about. >> You see ecosystem as a strategic move for you. >> Absolutely, this is, for us, this is, it's all about helping the consumer, but it's not about one consumer at a time for us. It's very much an enterprise play. It's one enterprise at a time. And with each enterprise we basically add to the ecosystem millions if not tens of millions of consumers instantly. >> Nithin I want to ask you a question, because what he just brought up is interesting to me as well. As a new thing, it's not new, but it's new to the crypto world, new to the analog world, that's not in the tech field. Tech business, we all know about global system integrators, we know about ecosystems, we know the value of developer programs, and community, all those things, check, check, check. But now those things are coming to new markets. People have never seen an ecosystem play before. So it's kind of, not new, it's new for some people, it's a competitive advantage opportunity. >> True, it is. See the whole thing is so new, that you can't even define it at this point. It's very hard to define. It's like, see, as an example I would say, none of us thought that when the iPhone came, there would be a 60 billion dollar taxi sharing economy that comes out of it, right? Same thing. Blockchain comes, we just don't know. And it's very hard to predict. >> New brands are going to emerge, I mean if you look at every major inflection point, I point to a couple that I think are relevant, TCP/IP was created, internetworking. >> Yep. >> That essentially went after proprietary networks, like IBM, Digital, Stacks, but it didn't replace, it wasn't a new functionality, it was interoperability. >> Yes. >> The web, HTTP, created a whole new functionality. >> Yep. >> Out of that emerged new brands. >> Yeah. >> So I think this wave's coming is a, new brands are going to emerge. >> Here, what's the brand, I don't know what's going to emerge. There it was interoperability. >> John: Well, new players. >> It's here, it's more, the collaboration. The collaboration is so huge, it's the scale is so huge, in the sense you can collaborate across the world. You're cutting those borders, there are no borders that can hold you. Even though interoperability happened in internet, There were the Googles, and the Facebook, that still had those borders. >> Well, don't put it, Cisco came out of that, 3Com, and those generations, but the hyper-scalers came out of the web. >> Yep. >> So I'm saying, well I'm saying, I want to get your reaction to, is I think that is such a small scale relative to blockchain and crypto because it's global, it's every industry, it's not just tech it's just like everything. So there's got to be new brands. Startups going to come out of the woodwork, that's my point. >> It's not yet time for the brands to come in. See that's the whole thing. So let's put it this way, the internet was there from 1978, if you really look at it, ARPANET or DARPA, those things were there. Email was there, but it was by 1997, or by the time we all came to know Google it was 2001. There is that gap between the brand forming, because it has to permeate first, more people have to use it, like what is the user-- >> Everything was was a bubble, but everything happened. I got food delivered to my house today, right? It happened, people were saying that's a crazy idea. >> It's now it's going on, right. So it's the timing and they know the time for it to permeate so here, how many people are using Bitcoin, and to do what? Most of them are just speculating right? There's very few real use case of remittance or speculative trading, that's what's happening. See that's what I said. The other use cases, it has to permeate. And that comes with more user adoption. And the user adoption initially is going to come from the speculation. >> I think it's a good sign, honestly I think it's a tell sign, because I remember when the web was new, I was in coming out right and growing in the industry. People were poo poo, oh that's just for kids. The big company's said, we wouldn't, who the hell is going to use the World Wide Web? Enter the search engines. >> I remember that like it was yesterday. I forget that I'm not a kid anymore, and I had the opportunity to be an entrepreneur during that era. One of the things I want to add is that, we had, I think what Nithin is really pointing out, it started with the infrastructure, you had network engineers and ISPs, you know, and email. But what was the enterprise application here? What was that consumer application, and that followed right? So it started infrastructure, then it evolved. Once we saw these applications, enterprises started to go crazy. Whether it was the Ubers of the world surfacing, or enterprises reinventing themselves, that's kind of the next wave. >> Well, this is why I think you're a good opportunity. 'Cause I remember licking stamps and sending out envelopes to get people to come to a seminar, held at a hotel. That's how you did it in the old world. The web replaced that with direct response. >> But there's some, there's something else-- >> The mainframe ran faster than the web. You're replacing an old loyalty, that's like licking the stamps. It's not about comparing what you're doing to something else. >> There's also something that helps, that we're not acknowledging, that really helped take internet from 1.0 to 2.0, it's Linux. You know I remember websites were insanely expensive. It was Windows servers, it was Sun Solaris, all of this crazy, expensive, server systems, that you needed to have, so the barrier of entry was extremely high. Then Linux came along, and you still needed to have your own data center space, and so still high, but the licensing fees kind of went away. >> And now with containers and Kubernetes-- >> Exactly. >> I made a bet I was going to get Kubernetes in a crypto show. >> Anybody from a bedroom could start a company, right? You could do it with your pajamas still on. >> John: Well orchestration's easier. >> Absolutely. So this has started, this really, revolution. Now you have blockchain and you start to introduce enterprise-grade blockchain technologies, it's the next wave, you know, it's not VoIP, it's value over IP. >> Okay, I'm going to ask both you guys a final question, to end this segment here at the block event. I know you guys want to get back, and I'm taking you anyway from the schmoozing and networking and the fun out there, deejay. Predictions, next year this time, what are we going to be? What's the we're going to look like? What's going to evolve? I mean we had a conversation with Richard, who partnered with you guys at Arcadia Crypto Partners, saying the trading things interesting, the liquidity has changed. What's your take? I want you guys both to take a minute to make a prediction. Next year, what's different, who's out, who's in, what's happening, is it growing? >> So I, you know, I would say this, surprisingly, CTOs, I love CTOs, but many CTOs, I would say that well above 50% of CTOs, still can't spell blockchain. Really, and what I mean by that, really understand the transformational power what this is, in terms of how this is really web 3.0. This is going to change so many industries, create so much value for consumers, help businesses and so forth, and we're going to cross that 50% mark. >> Next year. >> With CTOs-- >> 50% of what? Be clear on-- >> Basically, we're going, in terms of the net, that blockchain's going to capture, and really enterprises and not just enterprises, service providers and so forth-- >> 50% of the mind share or 50% of the projects? >> Yeah no, I'm talking it's, people aren't going to be saying, oh, blockchain, isn't that Bitcoin? They're going to really understand, and they're going to understand that impact. And over the course of the next 12 months, we're going to see that. And it starts, obviously in many cases, with the CIO, CTO of many companies. There are definitely a lot of CIOs and CTOs on the forefront of innovation that get it, but what I'm saying is that more than 50% don't. >> So you're saying-- They're very busy in doing what they're doing today, and it hasn't hit them yet. >> To recap, you're saying by next year, 50% of CTOs or CTO equivalents, will have a clear understanding of what blockchain is-- >> Absolutely. >> And what it can do. >> Absolutely. >> Nithin, your prediction, next year, this time, what's different, what's new, what's the prediction? >> So, one of the key things that I think is going to happen is there's going to be a lot more training, and knowledge that's going to spread out, so that a lot more people understand, what blockchain is and what bitcoin is. Even now, as Al said, he was telling about CTOs, if the CTOs are, that's the state, that they can't spell blockchain, imagine where the real common man is. You've got people like Jamie Dimon coming on TV and saying he doesn't like Bitcoin, but he likes blockchain. I'm like, what the heck is he saying? That he likes a database? >> He was selling it short 100% (chuckles) >> Yeah, he likes a database. And then you have Warren Buffett coming over there-- >> Rat poison. >> And then this is rat poison. And like my question is, does any of his funds buy gold? Do they buy gold? He was telling that this is only worth as much as the next buy buying at a higher price. >> What's Warren Buffett's best tech investment? >> I don't know, I think he bought Apple, he started buying Apple now, right? When it's reached a thousand bucks? Or it reached a trillion dollars or close to that, or 750 billion? >> The Apple buy was 2006. If you were there, then you were good. >> Yeah, but-- >> So, your prediction? >> Market wise I don't know, what's going to happen? I'm expecting this, the crypto, the utility token, or the crypto market, to be at least a six trillion dollar business. But it'll happen next year? Definitely not. But I've been proven wrong, like I was expecting it to happen by 2025, but then it went to 750 billion by December. Well, it's not too far. >> You did get the prediction right, in the Bahamas at POLYCON18, about the drop around the tax consequences of the-- >> Right. >> People slinging trades around, not knowing the tax consequences. >> Right, right. We don't know because, who knows? Because what is going on over there, is IRS is still saying it's a property. That's what the last (slurs) is. SEC is saying it is all equity, and the CFTC was saying it's commodity. So what tax do I pay? >> Okay, lightning round question, 'cause I want to, one more popped in my head. The global landscape, from an investor standpoint, the US, we know what's going on in the US, accredited, SEC is throwing, firing across, bullets across the bow of the boats, kind of holding people in line. What percentage of US big investors will be overseas by next year? >> Percentage of-- >> Having, meaning having deals being done, proxy deals being down outside the US, what percentage? >> It's still going to be low though. That is going to be low, because that, I don't think the US investor, means the large scale of those investors-- >> You don't think the big funds will co-locate outside the US? >> There will be some, but not enough. >> Put a number, a percentage. >> Percentage-wise I think it's still going to be less than 10%. >> Al, your prediction? >> In terms of investment? >> Investment, investors saying hey, I got money here, I want to put it out there. >> Outside of the United States? >> Share money, not move their whole fund, but do deals from a vehicle. >> Do deals outside. I think I agree with Nithin. >> Throwing darts at the board here. >> No, I'm going to clarify. There's definitely massive investment happening overseas. In some respects probably bigger than the United States. So that's not going away. If anything that's going to grow. But your question is, in terms of US entities, making abroad investments, overseas investments, versus just domestic? I think that trend doesn't necessarily change. You have the venture community, there are certain bigger venture funds that can have global operations 'cause at the end of the day, they need to have global operations, to be able to do that, and most venture funds aren't that massive, they don't have that infrastructure. So they're going to focus on their own backyard. So I don't necessarily think blockchain changes the venture mindset. It's just easier for them logistically to do due diligence on their own backyard and invest in those. >> Guys, always a pleasure. Great to see you. You guys are like friends with entourage here, great to get the update here at Blockchain Week. We get to Silicon Valley week, we'll connect up again. I'm John Furrier, here in New York, theCUBE's continuing coverage of crypto, decentralized applications, and blockchain of course, we're all over it. You'll see us all over, all of the web, all the shows. Thanks for watching. (techno music)

>> Announcer: Live, from Copenhagen, Denmark, it's theCUBE. Covering KubeCon and CloudNativeCon Europe 2018. Brought to you by the Cloud Native Computing Foundation and its Ecosystem Partners. >> Well everyone, welcome back to the live coverage of theCUBE here in Copenhagen, Denmark for KubeCon, Kubernetes Con 2018, part of the CNCF, Cloud Native Compute Foundation, part of the Linux Foundation. I'm John Furrier with Lauren Cooney, the founder of Spark Labs, breaking down day two, wrapping up our coverage of KubeCon and all the success that we've seen with Kubernetes, I thought it would be really appropriate to bring on the cofounder of KubeCon originally, Joseph Jacks, known as JJ in the industry, a good friend of theCUBE and part of the early formation of what is now Cloud Native. We were all riffing on that at the time. welcome back to theCUBE, great to see you. >> Thank you for having me John. >> So, for the story, for the folks out there, you know Cloud Native was really seen by the devops community, and infrastructure code was no secret to the insiders in the timeframes from 2010 through 2015, 16 timeframe, but really it was an open stack summit. A lot of people were kind of like, hey, you know, Google's got Kubernetes, they're going to open it up and this could be a real game changer, container, Docker was flying off the shelves. So we just kind of saw, right, and you were there and we were talking so there was a group of us. You were one of them. And you founded KubeCon, and bolted into the, at that time, the satellite Linux Foundation events, and then you pass it off as a good community citizen to the CNCF, so I wanted to just make sure that people knew that. What a great success. What's your impression? I mean, are you blown away? >> I am definitely blown away. I mean I think the size and scale of the European audience is remarkable. We had something like slightly less than half this in Austin last year. So to see more than that come here in Europe I think shows the global kind of growth curve as well as like, I think, Dan and someone else was asking sort of raise your hand if you've been to Kubecon Austin and very few actually, so there's a lot of new people showing up in Europe. I think it just shows the demand-- >> And Dan's been traveling around. I've seen him in China, some events I've been to. >> Joseph: All over. >> He's really working hard so props to him. We gave him some great props earlier. But he also told us Shanghai is coming online. >> Joseph: Yeah. >> So you got Shanghai, you to Barcelona next year for the European show, and of course Seattle. This is a community celebrating right now because there's a lot of high fives going on right now because there's a lot of cool, we've got some sort of core standard, defacto standard, now let's go to work. What are you working on now? You got a stealth startup? Share a little bit about it. I know you don't want to give the details out, but where is it kind of above the stack? Where you going to be playing? >> Sure, so we're not talking too much in terms of specifics and we're pretty stealthy, but I can tell you what I'm personally very excited about in terms of where Kubernetes is going and kind of where this ecosystem is starting to mature for practitioners, for enterprises. So one of the things that I think Kubernetes is starting to bring to bear is this idea of commoditizing distributed systems for everyday developers, for everyday enterprises. And I think that that is sort of the first time in sort of maybe, maybe the history of software development, software engineering and building applications, we're standardizing on a set of primitives, a set of building blocks for distributed system style programming. You know we had in previous eras things like Erlang and fault tolerant programming and frameworks, but those were sort of like pocketed into different programming communities and different types of stacks. I think Kubernetes is the one sort of horizontal technology that the industry's adopting and it's giving us these amazing properties, so I think some of the things that we're focusing on or excited about involve sort of the programming layer on top of Kubernetes in simplifying the experience of kind of bringing all stateful and enterprise workloads and different types of application paradigms natively into Kubernetes without requiring a developer to really understand and learn the Kubernetes primitives themselves. >> That's next level infrastructure as code. Yeah so as Kubernetes becomes more successful, as Kubernetes succeeds at a larger and larger scale, people simply shouldn't have to know or understand the internals. There's a lot of people, I think Kelsey and a few other people, started to talk about Kubernetes as the Linux kernel of distributed computing or distributed systems, and I think that's a really great way of looking at it. You know, do programmers make file system calls directly when they're building their applications? Do they script directly against the kernel for maybe some very high performance things. But generally speaking when you're writing a service or you're writing a microservice or some business logic, you're writing at a higher level of abstraction and a language that's doing some IO and maybe some reading and writing files, but you're using higher level abstractions. So I think by the same token, the focus today with Kubernetes is people are learning this API. I think over time people are going to be programming against that API at a higher level. And what are you doing here, the show? Obviously you're (mumbles) so you're doing some (mumbles) intelligence. Conversations you've been in, can you share your opinion of what's going on here? Your thoughts on the content program, the architecture, the decisions they've made. >> I think we've just, so lots of questions in there. What am I doing here? I just get so energized and I'm so, I just get reinvigorated kind of being here and talking to people and it's just super cool to see a lot of old faces, people who've been here for a while, and you know, one of the things that excites me, and this is just like proof that the event's gotten so huge. I walk around and I see a lot of familiar faces, but more than 80, 90% of people I've never seen before, and I'm like wow this has like gotten really super huge mainstream. Talking with some customers, getting a good sense of kind of what's going on. I think we've seen two really huge kind of trends come out of the event. One is this idea of multicloud sort of as a focus area, and you've talked with Bassam at Upbound and the sort of multicloud control plane, kind of need and demand out there in the community and the user base. I think what Bassam's doing is extremely exciting. The other, so multicloud is a really big paradigm that most companies are sort of prioritizing. Kubernetes is available now on all the cloud providers, but how do we actually adopt it in a way that is agnostic to any cloud provider service. That's one really big trend. The second big thing that I think we're starting to see, just kind of across a lot of talks is taking the Kubernetes API and extending it and wrapping it around stateful applications and stateful workloads, and being able to sort of program that API. And so we saw the announcement from Red Hat on the operator framework. We've seen projects like Kube Builder and other things that are really about sort of building native custom Kubernetes APIs for your applications. So extensibility, using the Kubernetes API as a building block, and then multicloud. I think those are really two huge trends happening here. >> What is your view on, I'm actually going to put you on test here. So Red Hat made a bet on Kubernetes years ago when it was not obvious to a lot of the other big wales. >> Joseph: From the very beginning really. >> Yeah from the very beginning. And that paid off huge for Red Hat as an example. So the question is, what bets should people be making if you had to lay down some thought leadership on this here, 'cause you obviously are in the middle of it and been part of the beginning. There's some bets to be made. What are the bets that the IBMs and the HPs and the Cisco's and the big players have to make and what are the bets the startups have to make? >> Well yeah, there's two angles to that. I mean, I think the investment startups are making, are different set of investments and motivated differently than the multinational, huge, you know, technology companies that have billions of dollars. I think in the startup category, startups just should really embrace Kubernetes for speeding the way they build reliable and scalable applications. I think really from the very beginning Kubernetes is becoming kind of compelling and reasonable even at a very small scale, like for two or three node environment. It's becoming very easy to run and install and manage. Of course it gives you a lot of really great properties in terms of actually running, building your systems, adopting microservices, and scaling out your application. And that's what's sort of like a direct end user use case, startups, kind of building their business, building their stack on Kubernetes. We see companies building products on top of Kubernetes. You see a lot of them here on the expo floor. That's a different type of vendor startup ecosystem. I think there's lots of opportunities there. For the big multinationals, I think one really interesting thing that hasn't really quite been done yet, is sort of treating Kubernetes as a first-class citizen as opposed to a way to commercialize and enter a new market. I think one of the default ways large technology companies tend to look at something hypergrowth like Kubernetes and TensorFlow and other projects is wrapping around it and commercializing in some way, and I think a deeper more strategic path for large companies could be to really embed Kubernetes in the core kind of crown jewel IP assets that they have. So I'll give you an example, like, for let's just take SAP, I'll just pick on SAP randomly, for no reason. This is one of the largest enterprise software companies in the world. I would encourage the co-CEOs of SAP, for example. >> John: There's only one CEO now. >> Is there one CEO now? Okay. >> John: Snabe left. It's now (drowned out by talking). >> Oh, okay, gotcha. I haven't been keeping up on the SAP... But let's just say, you know, a CEO boardroom level discussion of replatforming the entire enterprise application stack on something like Kubernetes could deliver a ton of really core meaningful benefits to their business. And I don't think like deep super strategic investments like that at that level are being made quite yet. I think at a certain point in time in the future they'll probably start to be made that way. But that's how I would like look at smart investments on the bigger scale. >> We're not seeing scale yet with Kubernetes, just the toe is in the water. >> I think we're starting to see scale, John. I think we are. >> John: What's the scale number in clusters? >> I'll give you the best example, which came up today, and actually really surprised me which I think was a super compelling example. The largest retailer in China, so essentially the Amazon of China, JD.com, is running in production for years now at 20,000 compute nodes with Kubernetes, and their largest cluster is a 5,000 node cluster. And so this is pushing the boundary of the sort of production-- >> And I think that may be the biggest one I've heard. >> Yeah, that's certainly, I mean for a disclosed user that's pretty huge. We're starting to see people actually talk publicly about this which is remarkable. And there are huge deployments out there. >> We saw Tyler Jewell come on from WSO2. He's got a new thing called Ballerina. New programming language, have you seen that? >> Joseph: I have, I have. >> Thoughts on that? What's your thoughts on that? >> You know, I think that, so I won't make any particular specific comments on Ballerina, I'm not extremely informed on it. I did play with a little bit, I don't want to give any of my opinions, but what I'd say, and I think Tyler actually mentioned this, one of the things that I believe is going to be a big deal in the coming years, is so, trying to think of Kubernetes as an implementation detail, as the kernel, do you interact directly with that? Do you learn that interface directly? Are you sort of kind of optimizing your application to be sort of natively aware of those abstractions? I think the answer to all of those questions is no, and Kubernetes is sort of delegated as a compiler target, and so frankly like directionally speaking, I think what Ballerina's sort of design is aspiring towards is the right one. Compile time abstraction for building distributed systems is probably the next logical progression. I like to think of, and I think Brendan Burns has started to talk about this over the last year or two. Everyone's writing assembly code 'cause we're swimming yaml and configuration based designs and systems. You know, sort of pseudodeclarative, but more imperative in static configurations. When in reality we shouldn't be writing these assembly artifacts. We should be delegating all of this complexity to a compiler in the same way that you know, we went from assembly to C to higher level languages. So I think over time that starts to make a lot of sense, and we're going to see a lot of innovation here probably. >> What's your take on the community formation? Obviously, it's growing, so, any observations, any insight for the folks watching what's happening in the community, patterns, trends you'd see, like, don't like. >> I think we could do a better job of reducing politics amongst the really sort of senior community leaders, particularly who have incentives behind their sort of agendas and sort of opinions, since they work for various, you know, large and small companies. >> Yeah, who horse in this race. >> Sure, and there's, whether they're perverse incentives or not, I think net the project has such a high quality genuine, like humble, focused group of people leading it that there isn't much pollution and negativity there. But I think there could be a higher standard in some cases. Since the project is so huge and there are so many very fast moving areas of evolution, there tends to be sort of a fast curve toward many cooks being in the kitchen, you know, when new things materialize and I think that could be better handled. But positive side, I think like the project is becoming incredibly diverse. I just get super excited to see Aparna from Google leading the project at Google, both on the hosted Saas offering and the Kubernetes project. People like Liz and others. And I just think it's an awesome, welcoming, super diverse community. And people should really highlight that more. 'Cause I think it's a unique asset of the project. >> Well you're involved in some deep history. I think we're going to be looking this as moment where there was once a KubeCon that was not part of the CNCF, and you know, you did the right thing, did a good thing. You could have kept it to yourself and made some good cash. >> It's definitely gotten really big, and it's way beyond me now at this point. >> Those guys did a good job with CNCF. >> They're doing phenomenal. I think vast majority of the credit, at this scale, goes to Chris Anasik and Dan Conn, and the events team at the Linux Foundation, CNCF, and obviously Kelsey and Liz and Michelle Noorali and many others. But blood, sweat, and tears. It's no small feat pulling off an event like this. You know, corralling the CFP process, coordinating speakers, setting the themes, it's a really huge job. >> And now they got to deal with all the community, licenses, Lauren your thoughts? >> Well they're consistent across Apache v2 I believe is what Dan said, so all the projects under the CNCF are consistently licensed. So I think that's great. I think they actually have it together there. You know, I do share your concerns about the politics that are going on a little bit back and forth, the high level, I tend to look back at history a little bit, and for those of us that remember JBoss and the JBoss fork, we're a little bit nervous, right? So I think that it's important to take a look at that and make sure that that doesn't happen. Also, you know, open stack and the stuff that we've talked about before with distros coming out or too many distros going to be hitting the street, and how do we keep that more narrow focused, so this can go across-- >> Yeah, I started this, I like to list rank and iterate things, and I started with this sheet of all the vendors, you know, all the Kubernetes vendors, and then Linux Foundation, or CNCF took it over, and they've got a phenomenal sort of conformance testing and sort of compliance versioning sheet, which lists all the vendors and certification status and updates and so on and I think there's 50 or 60 companies. On one hand I think that's great, because it's more innovation, lots of service providers and offerings, but there is a concern that there might be some fragmentation, but again, this is a really big area of focus, and I think it's being addressed. Yeah, I think the right ones will end up winning, right? >> Joseph: Right, for sure. >> and that's what's going to be key. >> Joseph: Healthy competition. >> Yes. >> All right final question. Let's go around the horn. We'll start with you JJ, wrapping up KubeCon 2018, your thoughts, summary, what's happened here? What will we talk about next year about what happened this week in Denmark? >> I think this week in Denmark has been a huge turning point for the growth in Europe and sort of proof that Kubernetes is on like this unstoppable inflection, growth curve. We usually see a smaller audience here in Europe, relative to the domestic event before it. And we're just seeing the numbers get bigger and bigger. I think looking back we're also going to see just the quality of end users and the end user community and more production success stories starting to become front and center, which I think is really awesome. There's lots of vendors here. But I do believe we have a huge representation of end users and companies actually sharing what they're doing pragmatically and really changing their businesses from Financial Times to Cern and physics projects, and you know, JD and other huge companies. I think that's just really awesome. That's a unique thing of the Kubernetes project. There's some hugely transformative companies doing awesome things out there. >> Lauren your thoughts, summary of the week in Denmark? >> I think it's been awesome. There's so much innovation happening here and I don't want to overuse that word 'cause I think it's kind of BS at some point, but really these companies are doing new things, and they're taking this to new levels. I think that hearing about the excitement of the folks that are coming here to actually learn about Kubernetes is phenomenal, and they're going to bring that back into their companies, and you're going to see a lot more actually coming to Europe next year. I also true multicloud would be phenomenal. I would love that if you could actually glue those platforms together, per se. That's really what I'm looking for. But also security. I think security, there needs to be a security seg. We talked to customers earlier. That's something they want to see. I think that that needs to be something that's brought to the table. >> That's awesome. My view is very simple. You know I think they've done a good job in CNCF and Linux Foundation, the team, building the ecosystem, keeping the governance and the technical and the content piece separate. I think they did a good job of showing the future state that we'd like to get to, which is true multicloud, workload portability, those things still out of reach in my opinion, but they did a great job of keeping the tight core. And to me, when I hear words like defacto standard I think of major inflection points where industries have moved big time. You think of internetworking, you think of the web, you think of these moments where that small little tweak created massive new brands and created a disruptor enabler that just created, changed the game. We saw Cisco coming out of that movement of IP with routers you're seeing 3Com come out of that world. I think that this change, this new little nuance called Kubernetes is going to be absolutely a defacto standard. I think it's definitely an inflection point and you're going to see startups come up with new ideas really fast in a new way, in a new modern global architecture, new startups, and I think people are going to be blown away. I think you're going to see fast rising growth companies. I think it's going to be an investment opportunity whether it's token economics or a venture backer private equity play. You're going to see people come out of the wood work, real smart entrepreneur. I think this is what people have been waiting for in the industry so I mean, I'm just super excited. And so thanks for coming on. >> Thank you for everything you do for the community. I think you truly extract the signal from the noise. I'm really excited to see you keep coming to the show, so it's really awesome. >> I appreciate your support, and again we're co-developing content in the open. Lauren great to host with you this week. >> Thank you, it's been awesome. >> And you got a great new venture, high five there. High five to the founder of KubeCon. This is theCUBE, not to be confused with KubeCon. And we're theCUBE, C-U-B-E. I'm John Furrier, thanks for watching. It's a wrap of day two global coverage here exclusively for KubeCon 2018, CNCF and the Linux Foundation. Thanks for watching. (techno music)

>> (Narrator) Live from Madrid, Spain it's theCUBE. Covering HP Discover Madrid 2017. Brought to you by Hewlett Packard Enterprise. >> We're back in Espana. theCUBE, the leader in live tech coverage is here covering HPE Discover Madrid, day one. I'm Dave Villante with my cohost, Peter Burris. Well, it's all coming into focus, Peter. >> It is, it actually is. >> It is, I mean, it better be after five or six years. It's taking longer than I had hoped. But, the story is consistent now. The last four Discovers, despite some of the distractions of spin merges and so forth the story of hybrid IT, the Intelligent Edge, bringing automation is somewhat new to the data center. Services lead starts to actually make sense. >> Peter: Through private cloud. >> Yep, and you know, we talked about at the top of the show today, the spectrum. We're running AWS re:Invent, we got a big presence there. Obviously its affected the entire industry, and then you've got HPE, the likes of HPE, Dell EMC, to a certain extent IMB basically not given up, say wait a minute, these are our customers, they want Cloud on prem, we're gonna deliver to them. They want Cloud in the Cloud, we'll help them get there. >> Peter: Oracle. >> Oracle as well. Oracle, different strategy. We should talk about that a little bit. But, summarize, you know synthesize your take on the day, and where we're at with HPE. >> So I would say that the... What we talked about this morning was, when Meg first took over the reins, she stopped a whole bunch of stuff, and HP stopped spending and behaving like a company that believed that it had to get scale as fast as possible because that was the only way to win. And she ended up going back to, look, lets focus on the customers and what the customers are trying to do, and not how we're trying to leverage our assets. And it kind of took a pause, and for a while you could kind of see them start putting things back together, and you kind of had a sense of where it was all gonna go. But this has been kind of the coming out party for what the last five years have been about. As you said, I think we've seen the three core messages that certainly line up, you know, with a little bit of cavat here. Their story is very much aligned with what we think the industry needs to see right now. At least, our research suggests. Gonna need true private Cloud, the ability to put the Cloud service where your data requires, and not force your business to move it's data to some Clouds location. You're gonna need increased automation within your IT organization, because you're not going to be able to support these more complex workloads if you don't find ways to increase the productivity of your people, and even more importantly, dramatically reduce even the possibility of a failure, and that's what AI inside IT's all about. And very importantly, the idea that you gotta put more intelligence at the Edge, that that interface between the real world and the digital world is really what's gonna drive the dynamic in the computing industry over the next few years. And HP has shown up and they're not just talking about it, they're showing it. And it's nice to be there. >> Well it's interesting, Meg Whitman came by and was talking to us, and we were talking about the Aruba acquisition. She said, look, we bought this because it was a nice business, it could show some growth. And it was, you know, a way to compete with Cisco and differentiate, because, hey were trying to compete head to head with Cisco and it was going okay, but not great. Aruba gave them a clear differentiator. And then all of the sudden, the Edge became this tailwind. And it kinda got them there early. >> Well, lets remember what Mark Hurd talked about. He said, well, why are you going after the network world. I like their 67% gross margins. Okay, so... >> Dave: Talking about 3Com. >> He's talking about 3Com, he's talking about all the things that HP did as it tried to get into the networking business. >> Dave: Cisco, right, yeah. >> It was purely driven by gross margin. They didn't quite have the customer story down. Aruba has always been a great customer story. They've always say, look, this is your business challenge. You know, are you sick and tired of dropping your connection as you go from one conference room to another. This is your security issues. On, and on, and on. They had three or four concrete value propositions that just worked for customers. That acquisition at that time it happened, it happened about the same time that HP was starting to rededicate itself back to thinking about it's customer base. So, it's not surprising to me that that integration, or that merger has been one of the more successful that HP's undertaken. >> So again, the spectrum. You know, you got Andy Jassy on one end who started this whole thing, and you got the likes of HPE on the other end. And you're right, it does align with a lot of things that we've been saying around true private cloud and so forth. Jassy doesn't buy it. He flat out says, this is old guard thinking trying to hang on to the past. But, our analysis suggests it's not just old guard thinking. It's customer thinking because they can't just move their business into the Cloud. Thoughts. >> Totally agree. So I'd say there are a couple of things about it. It's customer thinking based on the realities of the data assets that they're trying to leverage as they transform into a digital business. Data is real, and it has, it's gonna weigh in on how your infrastructure looks. And the Edge is gonna have characteristics that mean you're gonna have to do automation right there, right where the action is. You're not gonna be able to send it up to the Cloud all the time. There's gonna be a lot of business events that take place in that core, in that second tier. So, it's not that it's... It's not that it's old versus new guard. And here's why I say that, Dave. It's because in many respects, we're giving some props to HP right now, which is great. But, in many respects, the story that HP is telling today is a story that is still being largely, has largely been told, largely fashioned by what AWS has done over the last 10 years. And that is, here's what the Cloud experience is. And now HP's adding, "And you want that Cloud experience whatever your data demands." The difference, therefore, between the old guard and and the new guard, or the old way and the new way, on premise, is that it used to be, it was pretty clear to me, and I think it was pretty clear to us, that the old, that the talk about private Cloud was simply a way of thinking about how to put new marketing spin on the enhancement, upgrade, replacement cycle for servers and storage. And that did not work. It just flat out didn't work. >> Well it worked in the sense that it froze the market a little bit. >> Eh, it froze the market a little bit. But, overall, for the past five or six years our growth has been slowing down pretty dramatically. So, I would say, that the data is pretty unassailable. You're not gonna move everything to a central location. But, you're gonna want that Cloud experience. And so, the question is, are we gonna see great Cloud experience where the physics, the legality, and inertia property governance demands that you put your data. >> Well, I thought Jesse St Laurent was gonna talk about the next wave. He mentioned Multi-Cloud. >> Peter: He's CTO of... >> Of SimpliVity, now HPE Hyperconverged. >> Peter: Right. >> I thought he was talking about, he said the next wave is Hyper-V. Okay, check. I mean, like, that's like to me a feature of the product. And then he sort of talked about Multi-Cloud. And that really where I thought he was gonna go, because when you look at what AWS is doing, and I've always contended, they're years ahead, we can debate how many. Five, seven, three. Probably closer to five than three. But where they're headed is serverless, you know, functional programming. Stateless, new programming models. It's all about the developer to those guys. And that's the parlance that they speak in. The Hyperconverge guys all talk in VM terms. And that's not how Amazon talks or thinks. So, you know, the question is, is that a next wave, and can the Enterprise guys >> Peter: Talk developer? >> Yeah, can they catch that wave? >> So, I think... Look, lets be honest. AWS is a great company. There's no question about it. They've done things that a lot of old style infrastructure jocks thought couldn't be done. And they did it. And they continue to, they continue to demonstrate that they are really engaging their customers and turning that insight and knowledge into great services. So, this is not, this is not a knock on AWS. But what ultimately has to, and I think AWS is recognizing this as well, because they're starting to talk a lot about IoT and their approach to IoT, recognizing that not all the data is gonna be sourced up in the Cloud. The data is gonna be generated in a lot of other places and they have to participate there as well. So, from our perspective ultimately, we would say that Multi-Cloud, the ability to, the ability to naturally place your data where the data needs to be placed, which is increasingly is gonna be closer to the event that needs to be automated, that needs to have that high quality experience, is gonna be the way, is gonna be the dominant factor in determining the characteristics of the application infrastructure that you put in place. And, we'll see what happens. Serverless, yeah, serverless is great. You can do a lot with it. But, you can also still build junky applications with serverless. Microservices are great, yeah. But you can still build junky applications with Microservices. >> A lot of those services aren't so micro as Neil Raden would say. >> That's exactly right. So you can still do bad stuff in the Cloud. So, at the end of the day, the whole point is to get a new compact between business who have the vision of the digital services and digital capabilities they want, IT professionals and developers who are gonna generate, create that value, and then infrastructure people who are not who are allowing the data and the workload to fall where is naturally should fall, and then making it possible for the industry to work together, because that's what users want. >> Okay, so let me ask the question differently. You agree that the Cloud guys generally, Amazon specifically, is ahead of the Enterprise guys when it comes to infrastructures and servers. >> Peter: Yeah, there's no question there. >> Okay, is the lead extending, or is it dwindling. Amazon's lead in your view. >> Well, so look, you have Amazon's lead, first of you have to think about Amazon's lead relative to Microsoft, Oracle, and others. And, they're not as far ahead as, they're not that far ahead of Microsoft. >> Dave: Right. >> So there's a real battle raging there. Google has at least as good a relationship with a lot of developers as Amazon does. When you think about what a lot of developers are building in the Cloud experience, they're using Kubernetes, they're using TensorFlow, they're increasingly going to use Istio. I mean, so, it's not, There's gonna be increased energy being put forward to try to talk about how that Cloud innovation's gonna happen. >> So those are the three Hypercloud guys. >> Those are three Hypercloud guys. And, as we talked about, they are increasingly defining what the Cloud experience is. I think what we're seeing now, is the Enterprise guys stepping back and saying, you know what, we have to define our roll in the Cloud experience, and not presume that we're gonna tell everybody what the Cloud experience is. Which is what they were doing for many years, and they failed at it. >> And you could make an argument that HPE as a smaller company with less assets to encumber them, can actually deliver that through partnerships, maybe not as profitably, most definitely not as profitably, but actually can deliver that outcome for customers as a more agile customer. >> We'll see, we'll see, because... >> Dave: You could make that argument is all I'm saying. >> Well, you could make that argument, but remember, we're moving from, and even HP announced some stuff today with Greenlake, moving from a product orientation increasingly to a service orientation. And there's demonstration that you can do things with your business model that may allow you to do things in different levels of profitability at somewhere, you know, when you take more of a services approach to things. So, I think the most important message that we can leave from today is that, our observation on that notion of a spectrum, from, you know, public put it on public, to a true private orientation which is hybrid where an on premise play is gonna be essential. That spectrum seems to be real, number one. Number two, however, it doesn't mean that AWS in particular is not going to be successful at driving the definition of the Cloud experience, and number three, we're now seeing at least one company, but we're also starting to see indications of others, acknowledge that their roll in all of this will be to take whatever the leaders in Cloud are talking about and make it possible, that experience possible where the data requires and that will include on premise. >> So, and I agree with you, AWS is defining that Cloud experience. So, as Ana Pinczuk was speaking, I just wrote down, I jotted down, AWS Cloud experience, which they've defined, and HPE Cloud experience. So I've got pay as you go, you know this kind of flex capacity, kind of. I mean it's as close as you can probably get. >> Peter: Greenlake. >> Yeah, Greenlake Kind of. >> Something we all need to learn more about. But, it's getting there, it's getting there. >> But it will never get there entirely, right? Because, they're gonna require to be, you know, buy a years worth of capacity, thresholds, you're gonna have thresholds above and threshold below. >> Except, we also heard, again I think there's more, I don't wanna, I think you're right. >> It's nuanced, it's not 100% of the way there. >> You start throwing the balance sheet and finances in there and how you're gonna do it. >> We'll come back to that. So, elastic? Again, kind of. You know, to a point. Integrated services? Like tons of them, like thousands a year? Some of those, but as I was saying before, HP's ecosystem play, allows them to pick and choose. >> Yeah, but remember Dave, okay keep going, keep going. >> Security, sort of, let's call it the Amazon way. Here's our security, it's good. But take it or leave it. And then, the HP approach is your way. HPE, you have security your way. If that's the edict of the organization, we can map to that. One Cloud versus Multi-Cloud. Obviously, HPE has a Multi-Cloud strategy, Amazon doesn't. They don't care about managing Multi-Clouds. They care about managing their Cloud. And then services as a service. HPE can deliver that and, Amazon I got a question mark, it's their ecosystem that's delivering those services. So I guess the point is, that I'm making is, maybe it's not the exact replica of the Amazon experience, but there are attributes of it, which appeal to Enterprise IT. >> Peter: That's right. >> Which Amazon is really not interested in delivering. >> Peter: Right. >> Ergo, the assumption is, my assumption is that, that business, that on prem business will be here for a long, long time. >> Peter: Absolutely. >> Indefinitely. >> And we would agree with that. In fact we think, ultimately, that there's gonna be enough uniqueness about how businesses use their data and treat their data that we expect to see this notion of true private Cloud actually be a bigger overall piece of the marketplace than the one size fits all, with a degree of customization possible, that Amazon's providing. But, again, this is, we have to be careful here. Because as analysts, we're sort of naturally falling into this trap of setting up AWS and HPE or any of these folks in opposition. There are companies that have very, very different opposed visions of how this is gonna play out. Specifically, we can talk about Amazon saying it's all gonna be IaaS, we're gonna out paths in there. And then, increasingly obviously, Microsoft and Oracle saying, oh no, we're gonna have application Clouds. You're gonna buy and application Cloud, and you're gonna do a whole bunch of stuff in that. What we see today is not in opposition, >> Dave: Right. >> to the AWS vision, it's not. It is a, okay, great. But for this type of work, this type of data, this type of workload, this type of reality, chances are, you're gonna need to put this type of stuff here, and have it fit into the overall motion of Cloud experience, and it doesn't have to be a complete substitute. It just has to work for that class of workload. >> Well, but, bringing it back to HP, and we gotta wrap, is HPE does not have an application Cloud, right? >> Peter: They don't. >> And as a result, it's going to be in a knife fight. With Amazon, with Dell EMC, and with China. >> It's gonna be in a knife fight with companies that are like it. China, you know, Huawei, Dell EMC, Cisco. >> You're right, you're right. Amazon's setting the pricing tone and the business model tone. >> Look, right now it's Amazon and Microsoft, are helping to set the stage of what this is all gonna look like. >> So, again, bottom line is, it's not a 60% gross margin company, Mark Hurds vision of going to compete with Cisco. It's a 25 to 32% gross margin business. >> Peter: That's really focused on customer problems. >> Focus on customer problems throws off a couple billion dollars of cash, it can eke out a little bit of growth. You know, that's what it is. >> Not a bad business. >> No, it's a great business, actually. Alright, Pete, thanks the wrap on day one. We'll be back tomorrow 8:30 am local time, right? >> Man: Sure. >> Roughly. >> Man: 8:45. >> 8:45 local time. Check out theCUBE.net, where you'll see this show, you'll see the other shows that we're doing including re:Invent John Furrier and the crew are over there today. That's a wrap for day one, this is theCUBE. We'll see you tomorrow. (upbeat music)

[Electronic Music] >> Announcer: Live from San Francisco, it's theCUBE. Covering DevNet Create 2017. Brought to you by Cisco. Hello everyone. Welcome to this special presentation of theCUBE here in San Francisco, live for two days of wall-to-wall coverage for Cisco Systems inaugural developer event, called DevNet Create. The hashtag is #DevNetCreate. This is a new opportunity for Cisco, a new event. Again, inaugural event. Peter, I'd love to go through all the first-time events, because you never know if it's going to be the last event. Inaugural event, but really Cisco has a very successful DevNet developer program, all Cisco. This is a new effort to go out and talk to cloud developers in the DevOps community. This is SiliconANGLE's two days of coverage of Cisco's foray into the DevOps world. Really bringing app dynamics and all their great stuff above top of the stack together. I'm John Furrier with my co-host Peter Burris. The next two days, live coverage. Peter, big story here is that Cisco is moving up the stack, because they are the leader in networking. They have been for years. We've been joking on theCUBE for many months now, plumbers are turning into machinists. Machinists are being automated away by machines. The value of the network for infrastructure and code becomes super paramount now that automation is starting to happen at the application layer, where data is being used for value purposes to create new experiences for users. I think this is an important story. Here, for Cisco Systems as they move out of the network guys, plumbers, network box guys, who have been incumbent data center presence, as well as powering the biggest, and basically the internet. This is a big story. What is your analysis? What's your take? What's your view of Cisco's DevNet Create opportunity? >> Well, I think there's three things we should be looking for over the next couple of days, John. The first one is the very, very big strategic picture is that the world wants to better understand how to program the internet. Now, if you think about it from a computer science standpoint, the internet is still a computer. And we're still trying to find those ways where we can apply any process, any data, any time, any person, anywhere. Now, there are some physical limitations of being able to do that, but the basic model for how we're going to do internet scale computing still isn't obvious. It still isn't clear. In many respects, the cloud is an approximate to that, and we'll get there, and Cisco's going to have a major role to play. On a tactical level, one of the reasons why Cisco has been so successful and remains so successful in the networking space is because of this enormous body of experts that are still using the Cisco Command Line Interface to set up routers, to do configuration of the network, to do an enormous amount of work down in the lower levels inside the pipes. Now, that group also has to be modernized along with the technology. And Cisco wants to bring those people along. And having them become full members in this whole DevOps transition is going to be really crucial, not only to them and their businesses, but also Cisco. And I think you mentioned the third one. On a very practical, reality level, Cisco needs to bring AppDynamics out to a position of, I don't want to say primacy, but certainly importance within the overall Cisco ecosystem. And so this show is going to be one of the ways to make progress on that. >> And Peter, I got to say, the research that you're doing at wikibon.com, for the folks watching, go to wikibon.com. Peter's been leading the research team there and really has some amazing research. Key stakes in the grounds of the two big waves that are happening: cloud computing, aka DevOps and other things, and the role of data, data science, whatever you want to call it. Data in cloud. Peter, the wave that's hitting, it's musical chairs. And the music stops and you're a big player like Cisco, and you don't have a play in cloud or data, you're screwed. And so it's clear to me that with the AppDynamics acquisition of Cisco, again, a foray into establishing the relationship between applications and code of the network really gives them a unique opportunity to add a lot of value and have a big seat at the table of those next two waves. >> Yeah, I think you're absolutely right, John. In fact, the research we're doing is very very compelling and starts to point to the idea that we used to have hardware as infrastructure, now we're doing, or hardware-defined infrastructure, and now everyone's in this grip of software-defined infrastructure, which is really important and will be here for quite some time. But as you start thinking about the real asset that's going to dictate how digital business works, how businesses get reconfigured, how they re-institutionalize the work that they need to do, and how infrastructure ultimately gets deployed, in many respects, it's time to start thinking in terms of data-defined infrastructure. And it's a term that we're starting to play with inside Wikibon to see how far that actually goes. But I think it's got a lot of prescriptive potency to it. That the idea is, increasingly, your digital business is going to be function of where your data is, what you can do with it, how fast, all those other things. And this notion of data as the asset that ultimately guides and shapes the characteristics of what customers want and what businesses can do is going to be come increasingly important. And this conference and the people here are absolutely part of that change. >> The reason why I like this event and why I'm here and why we're doing this small little event is that I think this is a tell sign, a canary in the coal mine of what's coming on this big wave. And I'll give you an example. I watched Cisco dominate the internet generation because they connected the networks together. They moved and created great value in connecting offices and then ultimately, inner networking, the rest is history. We are now in the next seminal moment of internet scale going cloud and data. So to me, there are two main storylines that I'm watching and I want to get your reaction to on this. One is customer-facing digital transformation. Every customer is trying to figure out how to transform, and Cisco is no- >> Peter: Every business. >> Every business is trying to figure out or Cisco's customers or potential customers have to transform and be a better business. Look no further than the Ford CEO being fired after less than five years on the job. How the hell can you transform a company in four years? You can't. Pressure, stocks down from 39%, he's ousted by Wall Street. Now, this is the pressure of the real world. Two, the notion of cloud computing and machine learning and AI, the application-specific goodness of DevOps infrastructure and code is bringing up the issue of automation. Jobs going away. So, two major threads: growth, with digital transformation or Cisco's customers. And two, the fear that what will cloud do for my job? It's the number one question asked in our crowd chats, in our conversations on theCUBE is, hey look, there's a fire going on around us. Machines are going to take over our jobs. There's going to be a further gap between the haves and have-nots. As Sarbjeet Johal just mentioned on Twitter, as I tweeted to Jas I think, but it's come up on all the crowd chats. Jobs going away as an impact, personally I think they're going to shift but that's my opinion. Your reaction. Digital transformation and automation, machine learning, these things automating away jobs. >> Well, let's start with the second one because in many respects, it's the practical test of what happens with that first question about digital transformation. First off, I agree with you. I think we'll see tasks go away and jobs reconfigure. And a better way of thinking about this is businesses have historically institutionalized the work that they perform around the assets that they regard as most important. In a very practical sense within IT, you can track the history of IT by watching how CIOs and businesses configure the work of people within IT around the assets that the businesses regard as most valuable. When a mainframe costs 50 or 70 million dollars, not surprisingly, that's what you configure around. As you move into the client-server domain, it became the PCs and the applications. >> John: And the data center. >> And the data center. Now we're moving to datas and assets and work will get re-institutionalized that as well. But data has some very specific and interesting characteristics as an asset that maybe we'll get into. But I think what it really points up is not that we're going to see people suddenly being thrown out of work. If you got knowledge and you can apply that knowledge and you can work with other people, the world is going to continue to find a place for you to make money and to add some value. So, that's not to say that this notion of being thrown out of work isn't important, is not going to have a major implication. But more likely, what we're going to see is data as an asset is going to force a rethinking of how we institutionalize work, which is going to force a rethinking of what tasks do and do not create value and what we can automate, and that's going to give people an opportunity to learn or not, and if they don't learn, yeah, maybe you are out on your own. >> We're old enough with our gray hairs to say that we've seen some waves before, and I broke into the business with a computer science degree in the late 80s. So I was on the back end of that punch card and mainframe generation. I watched people clutch on to the mainframe and the jobs just did go, they went away. And there were a few people who did maintenance and they kept their jobs and it become a political football, and people got laid off, but they got shifted. They got shifted. They got shifted to the minicomputer and then the data center. So, the same exact thing's happening and this is why I like this show. Because Cisco has to move from those plumbers, the networking guys, the guys who were the A-1 resource. Networks were the kingpins of the enterprise. They ran the show. They ran the networks. Tier 1 personnel now being commoditized. And my advice to my friends in the networking business, and this is why the show exists, you got to shift your shills to the next value proposition. That's data. By the way, it's still the internet, so I think they're going to be in good shape. If you're a networking guy, you got to go to the next network effect. That's not necessarily boxes. It's still packets. It's still policy. It's still good work. >> It's still security. So let's think about what you just said, John. That you move from a world where I perform the tasks on a particular set of Cisco boxes, to I am responsible for insuring that distributed data works. That's not subtle. I mean, it's major transformation but we are going to have an enormous need for people that can handle and deal with distributed data. I'm going to come back to something you said earlier. And that was the minicomputer revolution. You know, I've been around for a long time too. I came in just before you. What killed the minicomputer was not the microprocessor. People could easily put microprocessors into minicomputers. What killed the minicomputer was that digital had their own proprietary network. IBM had SNA down at the System/36 AS 100, et cetera. You had Prime and DG. Everybody had their own propriety network to handle what they did from a business standpoint, from a business value standpoint within the businesses. What killed the minicomputer world was TCP/IP and this company, Cisco. >> John: Yep. >> Now the question is, >> John: 3Com was involved in that so let's not-- >> What's that? 3Com was involved. >> Peter: Oh, 3Com, absolutely. >> 3Com and Cisco, the internetworking class. >> But it was this company in particular that said, "We're going to flatten all those networks, put them into TCP/IP. Here's the routers." 3Com and Banyon and a whole bunch of others were very important. Coming back to this show at this moment right now, we also see on the horizon a focus on cloud and not data. A focus on your supplier and their wants and needs and not data is going to lead to a world where intercloud connectivity and computing is going to be a major challenge. >> John: That's ironic. Intercloud is ironic because I talked to Lou Tucker 3 years ago, OpenStack Cisco CTO, and internetworking, parallel to interclouding. Now, Cisco-- >> Peter: It's even worse. It's more complex. >> Cisco canceled the interclouding initiative but if you look at where this is going, to that point, it's semantics. Multicloud is the hottest trend right now because hybrid IT, hybrid cloud is the gateway to true multicloud. And I think you're doing a lot of research on that. But let's talk about that. With TCP/IP did for internetworking, you could argue that data and cloud does for multicloud. >> Well I would say that somebody, the data becomes the determinant. The data becomes the most interesting thing to worry about. And then the question is, who's going to do that? Are Amazon and Microsoft and Google going to get together and say here's a set of cloud standards that will ensure that you have seamless end-to-end computing? Maybe? Probably not. Will OpenStack emerge out of RedHat as kind of the universal, well, it's not happening. Will Oracle be successful at saying, "Oh no, forget all that stuff. Bring it all inside oracle."? Probably not. >> John: Here's a question. Go ahead. >> This notion of end-to-end is going to be really crucial to a business, really crucial to architects, and really crucial to development. And how you handle that end-to-end is something that has to start emerging. The answers to those questions have to start emerging out of conferences like this. >> And Cisco certainly has to make this move now. Otherwise, they'll be driftwood if they don't get out >> Peter: That's right. in front of that next wave and ride this wave. But here's what's interesting. They call this the IOT Cloud Developer Conference, where application meets infrastructure. Kind of clever wording but very specific in the wording. And I want to unpack that and get your reaction. AppDynamics coalescing with Cisco's network knowledge, Okay? Because some people are like, "Oh, networking guys, how could they be DevOps guys? They're just configuring networks. They're not relevant." Here's the issue. IOT is a network issue. So you do a lot of IOT research. So, IOT, I would still classify as in that network pool of talent and domain expertise. Now, AppDynamics, which Cisco had acquired, brings the application stack to the table. So, you got the collision between AppDynamics and classic Cisco DNA into a melting pot. (laughs) This is a huge opportunity. And I wanted to get your reaction. How important is IOT, and how important is the AppDynamics component for this new vision of Cisco? >> IOT is essential. AppDynamics, they have to make it important, and that's on Cisco to make it important quite frankly. And again, that's one of the things that the show has to do. But you know it's interesting, John, as you mention that, let's unpack it even a little bit further. You said it's a networking issue and you're right. Network's clearly part of the component. I mentioned earlier, it's a distributed data issue, where the networks is a major impact on that. We might even say it's a distributed application issue. The point is, we are still in the midst of creating the language that we're going to use to describe how to approach and solve these problems. That hasn't been done yet. I mean, people say, oh yeah. Let's talk about blockchain and security. Or let's talk data gravity, or all these other concepts we're throwing around out there. We need more precision. We need more conventional agreement, consensus. There's a lot of work that this industry has to do to really address the challenges that Cisco and the people at this conference face as they try, not only to ensure their relevance looking forward, but very importantly, to solve these extremely complex problems of how we're going to dramatically expand the distribution of function and the distribution of data while at the same time increase things like near real-time. I like to say for example, John. I like to say that the edge is not a place. The edge is a time. That at the end of the day, what's most important is can you process something in the time envelope required and the place is just a way of measuring that. These are all major challenges that Wikibon research is focused on, but also folks at this conference are going to have to address if we're going to solve that next generation of business opportunities. >> That's Peter Burris, head of research at SiliconANGLE media and also general manager of Wikibon.com. Check out the research. A lot of great stuff going on. Digital transformation. The valuation of data and certainly cloud computing and the infrastructure and the impact for customers. Check it out at wikibon.com. I'm John Furrier and we're about to kick off two days of wall-to-wall coverage with Cisco as they put their foot in the water in the cloud DevOps developer community for IOT and applications. It's where applications meets infrastructure. Infrastructure is code. We'll be right back more coverage. Stay with us for two days at Cisco DevNet Create. [Electronic Music]

>> From Phoenix, Arizona, The Cube at Catalyst Contracts. Here's your host, Jeff Frick. >> Hey welcome back everybody, Jeff Frick here with The Cube. We are in Phoenix, Arizona at the Girls in Tech Catalyst Conference. It's funny, seems something about Phoenix that this is where all the great women in tech conferences are. We were here two years ago for our first Grace Hopper and it's really fun to return now to this one, the Girls in Tech Catalyst Conference, which, a little bit smaller, about 400 people, their fourth year, but again it's all about empowering girls, empowering women to think differently, to take charge and to be more successful so really excited for our next guest, Jim McCarthy, brought in to motivate the troops. >> That's right. >> So first off, welcome. >> Thank you. >> So-- >> Thanks Jeff. >> Your keynote was all about a career without regret, have a great impact on what you care about. That is so topical right now, and especially these people that talk about, you know, the millennials and you know, kind of the younger generation coming up, they want to do things that they care about >> Yeah, I think all the research indicates millennials, more than maybe prior generations, really are looking for work that has impact and has meaning. >> Is it because they can? You know, that things are a little bit easier, they know they're not necessarily y'know, suffering to get by? Why do you think there's the change and then once you've made that decision, how do you implement that in kind of your day to day life? >> Well I'm not sure I could explain how the millennials are perhaps different, maybe they just see some of the challenges in our world like climate change for example and realize wow, there's some very serious challenges we face. That might be why they're looking for more of an impact, but in terms of what to do to find more meaning in life I always encourage people to do work that they really love, that they're passionate about, and in this conference a lot of the women have talked about passion and what you're good at and really doing that 'cause that's what you're going to be most successful at. >> Right, but that's a really common theme >> Yeah. >> We've heard that forever, to close your parachute, y'know, if you could find something that you get paid well and you're passionate about, but often times there's a conflict, right? Sometimes it's just harder, people get stuck in something that they're not happy with, but they're not really willing to make the change, not really willing to make the investment or take the chance so what are some of the things you tell people that are specific actionable, that will help them y'know, make those changes to get some place where they're y'know, feeling better about what they're working on? >> Well, so for me part of my talk was I talk about how I had a career in Silicone Valley, early employee at Yahoo! and different internet companies and then about three and a half years ago I was diagnosed with cancer and that was a big wake up call for me. And even though my health seems to be okay right now, it really sort of helped me realize that wow, I'm not going to live forever and by embracing my mortality I've started living much more fully and I decided okay, if I wanted to be a motivational speaker, I always wanted to, never had the courage to do it, I thought okay, I'm not going to live forever, I might as well dive into it, have the courage to try even if I fail. But at least I'll be happy and I'm not living a life with regrets. >> Right. >> So that was part of my workshop yesterday. >> So that's really interesting and a powerful story I mean, we often hear when there's these, y'know, kind of life changing events, these big moments, y'know that is the catalyst. Does it take that to make the change? Can people do it without the change? I mean, we can't hardly get anyone to lift up their face out of email. (laughing) I mean, how do we do it without that or does it really take that? I mean, is that really what happens, whether it's yourself or a loved one or someone you care about, it's interesting 'cause that's powerful catalyst >> Yeah so, I think for some people it does take getting, y'know, hit with a ton of bricks like that in order to really realize what they need to do and have the courage to do it and just realize y'know, this may not work out but I'm just going to go for it. In part of my workshops I try to help people think about their mortality, think about if you were to die today, how would you feel about your relationships. If you were to die today, how would you feel about the work that you've done. And then I always have them write out action plans for okay, based on what I wrote, based on what we discussed, what do you want to change in your life and what's the deadline to do it? So that's kind of the process that I use in my workshops so it's not just nice story and inspiration but it's really okay, how can we bring this back to what am I going to do with my career, what am I going to do with my relationships and there's also very practical things that people can do that I think will help them a lot, one is mindfulness to reduce their stress, one is affirmation in which you can actually train your brain to be much more positive thinking and there's a lot of neuroscience behind that today which shows that you can actually sculpt your brain to have a much more positive attitude. So those are some and then the goal setting is important too. So -- and then gratitude, I'm sorry, there's another practice. So these are very, this is not just nice ideas but actually daily practices you can do, mindfulness and meditation, gratitude and affirmations, these are all things that can really have a daily impact in a very positive way. >> Right, and I'm sure people say, "Jim, that sounds great, I printed it out, it's on my fridge, but jeez, I wake up, I have 472 unread emails, the boss is calling me," how do I really actually do it? I want to do it but I'm drowning in email, whoever invented email is problematic, I'm glad that young kids don't use it 'cause it's going to die soon. (laughing) But y'know, practically, what do you tell folks? >> What I tell people is if you meditated 10 minutes a day, that's about 1% of your waking hours and that 1% would improve the other 99% of your waking hours and meditation used to be very weird and funky and new-agey and now you see more and more people saying, "No actually, 10 minutes of mindfulness or meditation or breathing or whatever can make a huge positive impact on your health both physically and mentally". There's all sorts of very serious scientific research, neuroscience, which underscores that. So if you invest 10 minutes of your day in being at peace, reducing stress, focusing on your breathing, then the other 99% of your day is going to be calmer, you're not going to be freaking out so much, you get an email in your inbox that you may not like but you can say, "okay, let me breath, okay let me think about this, okay", don't have to do an immediate flame mail response and then you're doing a lot less damage control in your life and you're being much more focused on how do I want to spend my day. And so that is one way to reduce your stress and yet still get stuff done, the most important stuff done. >> It's interesting, I have an unwritten book that I always wanted to write, kind of on some of the things you said before about y'know, don't forget your death bed, 'cause at some point you're going to be laying on your death bed-- >> That would be the title of your book? >> And you're going to have those questions. >> Yeah >> Yeah Y'know, did I do what I want to do? Did I spend too much time at the office, or too much time at the beach or too much time with the kids or not? >> Well if I can say, there's a woman who wrote a book named "The Top Five Regrets of the Dying" and regret number two was "I wish I had worked less". And every single man in her survey that she talked to said "I wish I had worked less". And these are men on their deathbeds. But it applies to a lot of women as well. >> So I want to shift gears a little bit, back to your tech days, >> Yeah (laughing) >> Just looking at your background, obviously some of our homework and you y'know, you did a summer at McKenzie, you're kind of at the leading edge of business and smart people and you -- >> You're too kind Jeff, okay? (laughing) >> No, and then you decide I haven't finished the story, and then you go to San Jose Mercury News to work in classifieds. >> Actually to do marketing. >> To do marketing >> Yeah >> But you were involved in classifieds and I only bring up the classifieds 'cause it's interesting because then you left and went to Yahoo!, right at the main, I mean really at a pivotal time in the transformation of classifieds moving from the newspaper to online. >> Yes >> So you lived kind of this digital transformation long before Uber and some of the other examples that are so often cited. >> Yeah. >> So I'd just love to get kind of your perspective on, y'know, kind of digital transformation, it happened, this was 97 so what 20 years ago, I can't believe it's 20 years ago, to now and then in the context of what you're doing now. >> So I graduated from business school in 1996, and went to the San Jose Mercury News and was doing marketing things. But right when I was graduating I was like, "Oh jeez, y'know this internet thing is going to be huge!", and after a few months at the Mercury News, I said, "Look, I really want to do something with internet", and they said, "Sorry, can't do that, keep helping us sell papers." And I said, "Well screw this!", and so I went to Yahoo! In July 1997, I was employee number 258 and I was hired to be a product manager for Yahoo! classifieds, so realizing, 'cause I remember sitting in the Mercury News at my computer and looking at, wow, Yahoo! has some like, online classifieds for autos? And careers? And this is way better than the newspaper! I can have long descriptions here and you can even see pictures of things, so I went to Yahoo! classifieds and out of that we created Yahoo! Autos, Yahoo! Careers Yahoo! Personals, Yahoo! Real Estate. And yes, this absolutely-- And then later there was the category killers where there was Match.com, where there was Monster or Monster Board, and on down the line-- >> Monster Park, remember Monster Park, one of the first sponsored stadiums back in the day. >> Yeah, yeah. >> After 3Com. Excuse me, I'm sorry to interrupt. >> No it's okay. So it was an amazing transformation and it was one of these things where the internet just does things so much better and you could say it also sort of helped destroy an industry, right? I mean, I'm certainly a big believer in the power of local newspapers and investigative journalism, and that's really been damaged a lot from the last 20 years, but sometimes it's like this technological imperative where the web is so much better, people have to figure out different business models, different ways to fund their journalism, different revenue models that work. But I mean it's just amazing to see what's gone on with how classifieds has developed, e-commerce has developed. I worked later on Yahoo! Auctions and Shopping, you can talk about that more if you want. >> Yeah, a friend of mine works at the Yellow Pages, I was like dude, you probably need to get a new job. >> Really? Still? >> It's YP.com now. Well turns out they have a huge online business which is good for them. No still, I was like c'mon, (laughing) You need to get out of that. >> Gosh (laughing). >> So, anyway. It's just interesting, the digital transformation that we're under now y'know, has happened over and over again, we just happen to be kind of in the current iteration, sometimes people forget-- >> Yes, yeah. >> That there was a time before Google, it was called AltaVista (laughing) or WebCrawler if you want to go back even further. Anyway, we regress. So Jim, what're you working on now, what're you looking forward to in the next six months, any special projects? You just traveling the country and spreading good word? >> I travel the country and I travel internationally doing my workshop. So basically the workshop's where I teach companies how to build happy, high performance teams. >> Awesome. >> And in the workshop, some of them are a little bit more, much more sort of inspirational and about mortality and about what you want to do for life purpose, I have a workshop called, "Happiness Workshop: Keep Calm and Get Stuff Done" and then so there's ones which are much more goal setting, there's more which are inspirational and yeah, I travel and teach companies how to -- whether it's an hour workshop or a six hour workshop, that's what I do. >> Jim, thanks for stopping by, it's a great story and I think it's just so important, y'know there's a lot of great inspirational stories out there but really y'know, how you do you help people, give them actionable things that they can put on the fridge, put on their calender and-- >> And have in their daily routine. >> Right and do it right, and do change behavior 'cause it's hard to change attitude, really hard, and the way you do it is you change behavior, that you can actually change. Thanks for-- >> Yeah, yeah. >> Thanks for sharing a few minutes with us. >> Thank you Jeff, very kind of you. >> Absolutely >> Thank you >> Jim McCarthy, I'm Jeff Frick, we're in Phoenix, Arizona at the Girls in Tech Catalyst Conference, you're watching The Cube. Thanks for watching.