>>From the Cube Studios in Palo Alto in Boston, bringing you data driven insights from the cube and etr. This is breaking analysis with Dave Ante. >>Have you ever been driving on the highway and traffic suddenly slows way down and then after a little while it picks up again and you're cruising along and you're thinking, Okay, hey, that was weird. But it's clear sailing now. Off we go, only to find out in a bit that the traffic is building up ahead again, forcing you to pump the brakes as the traffic pattern ebbs and flows well. Welcome to the Seesaw economy. The fed induced fire that prompted an unprecedented rally in tech is being purposefully extinguished now by that same fed. And virtually every sector of the tech industry is having to reset its expectations, including the cloud segment. Hello and welcome to this week's Wikibon Cube Insights powered by etr. In this breaking analysis will review the implications of the earnings announcements from the big three cloud players, Amazon, Microsoft, and Google who announced this week. >>And we'll update you on our quarterly IAS forecast and share the latest from ETR with a focus on cloud computing. Now, before we get into the new data, we wanna review something we shared with you on October 14th, just a couple weeks back, this is sort of a, we told you it was coming slide. It's an XY graph that shows ET R'S proprietary net score methodology on the vertical axis. That's a measure of spending momentum, spending velocity, and an overlap or presence in the dataset that's on the X axis. That's really a measure of pervasiveness. In the survey, the table, you see that table insert there that shows Wiki Bond's Q2 estimates of IAS revenue for the big four hyperscalers with their year on year growth rates. Now we told you at the time, this is data from the July TW 22 ETR survey and the ETR hadn't released its October survey results at that time. >>This was just a couple weeks ago. And while we couldn't share the specific data from the October survey, we were able to get a glimpse and we depicted the slowdown that we saw in the October data with those dotted arrows kind of down into the right, we said at the time that we were seeing and across the board slowdown even for the big three cloud vendors. Now, fast forward to this past week and we saw earnings releases from Alphabet, Microsoft, and just last night Amazon. Now you may be thinking, okay, big deal. The ETR survey data didn't really tell us anything we didn't already know. But judging from the negative reaction in the stock market to these earnings announcements, the degree of softness surprised a lot of investors. Now, at the time we didn't update our forecast, it doesn't make sense for us to do that when we're that close to earning season. >>And now that all the big three ha with all the big four with the exception of Alibaba have announced we've, we've updated. And so here's that data. This chart lays out our view of the IS and PAs worldwide revenue. Basically it's cloud infrastructure with an attempt to exclude any SaaS revenue so we can make an apples to apples comparison across all the clouds. Now the reason that actual is in quotes is because Microsoft and Google don't report IAS revenue, but they do give us clues and kind of directional commentary, which we then triangulate with other data that we have from the channel and ETR surveys and just our own intelligence. Now the second column there after the vendor name shows our previous estimates for q3, and then next to that we show our actuals. Same with the growth rates. And then we round out the chart with that lighter blue color highlights, the full year estimates for revenue and growth. >>So the key takeaways are that we shaved about $4 billion in revenue and roughly 300 basis points of growth off of our full year estimates. AWS had a strong July but exited Q3 in the mid 20% growth rate year over year. So we're using that guidance, you know, for our Q4 estimates. Azure came in below our earlier estimates, but Google actually exceeded our expectations. Now the compression in the numbers is in our view of function of the macro demand climate, we've made every attempt to adjust for constant currency. So FX should not be a factor in this data, but it's sure you know that that ma the the, the currency effects are weighing on those companies income statements. And so look, this is the fundamental dynamic of a cloud model where you can dial down consumption when you need to and dial it up when you need to. >>Now you may be thinking that many big cloud customers have a committed level of spending in order to get better discounts. And that's true. But what's happening we think is they'll reallocate that spend toward, let's say for example, lower cost storage tiers or they may take advantage of better price performance processors like Graviton for example. That is a clear trend that we're seeing and smaller companies that were perhaps paying by the drink just on demand, they're moving to reserve instance models to lower their monthly bill. So instead of taking the easy way out and just spending more companies are reallocating their reserve capacity toward lower cost. So those sort of lower cost services, so they're spending time and effort optimizing to get more for, for less whereas, or get more for the same is really how we should, should, should phrase it. Whereas during the pandemic, many companies were, you know, they perhaps were not as focused on doing that because business was booming and they had a response. >>So they just, you know, spend more dial it up. So in general, as they say, customers are are doing more with, with the same. Now let's look at the growth dynamic and spend some time on that. I think this is important. This data shows worldwide quarterly revenue growth rates back to Q1 2019 for the big four. So a couple of interesting things. The data tells us during the pandemic, you saw both AWS and Azure, but the law of large numbers and actually accelerate growth. AWS especially saw progressively increasing growth rates throughout 2021 for each quarter. Now that trend, as you can see is reversed in 2022 for aws. Now we saw Azure come down a bit, but it's still in the low forties in terms of percentage growth. While Google actually saw an uptick in growth this last quarter for GCP by our estimates as GCP is becoming an increasingly large portion of Google's overall cloud business. >>Now, unfortunately Google Cloud continues to lose north of 850 million per quarter, whereas AWS and Azure are profitable cloud businesses even though Alibaba is suffering its woes from China. And we'll see how they come in when they report in mid-November. The overall hyperscale market grew at 32% in Q3 in terms of worldwide revenue. So the slowdown isn't due to the repatriation or competition from on-prem vendors in our view, it's a macro related trend. And cloud will continue to significantly outperform other sectors despite its massive size. You know, on the repatriation point, it just still doesn't show up in the data. The A 16 Z article from Sarah Wong and Martin Martin Kasa claiming that repatriation was inevitable as a means to lower cost of good sold for SaaS companies. You know, while that was thought provoking, it hasn't shown up in the numbers. And if you read the financial statements of both AWS and its partners like Snowflake and you dig into the, to the, to the quarterly reports, you'll see little notes and comments with their ongoing negotiations to lower cloud costs for customers. >>AWS and no doubt execs at Azure and GCP understand that the lifetime value of a customer is worth much more than near term gross margin. And you can expect the cloud vendors to strike a balance between profitability, near term profitability anyway and customer attention. Now, even though Google Cloud platform saw accelerated growth, we need to put that in context for you. So GCP, by our estimate, has now crossed over the $3 billion for quarter market actually did so last quarter, but its growth rate accelerated to 42% this quarter. And so that's a good sign in our view. But let's do a quick little comparison with when AWS and Azure crossed the $3 billion mark and compare their growth rates at the time. So if you go back to to Q2 2016, as we're showing in this chart, that's around the time that AWS hit 3 billion per quarter and at the same time was growing at 58%. >>Azure by our estimates crossed that mark in Q4 2018 and at that time was growing at 67%. Again, compare that to Google's 42%. So one would expect Google's growth rate would be higher than its competitors at this point in the MO in the maturity of its cloud, which it's, you know, it's really not when you compared to to Azure. I mean they're kind of con, you know, comparable now but today, but, but you'll go back, you know, to that $3 billion mark. But more so looking at history, you'd like to see its growth rate at this point of a maturity model at least over 50%, which we don't believe it is. And one other point on this topic, you know, my business friend Matt Baker from Dell often says it's not a zero sum game, meaning there's plenty of opportunity exists to build value on top of hyperscalers. >>And I would totally agree it's not a dollar for dollar swap if you can continue to innovate. But history will show that the first company in makes the most money. Number two can do really well and number three tends to break even. Now maybe cloud is different because you have Microsoft software estate and the power behind that and that's driving its IAS business and Google ads are funding technology buildouts for, for for Google and gcp. So you know, we'll see how that plays out. But right now by this one measurement, Google is four years behind Microsoft in six years behind aws. Now to the point that cloud will continue to outpace other markets, let's, let's break this down a bit in spending terms and see why this claim holds water. This is data from ET r's latest October survey that shows the granularity of its net score or spending velocity metric. >>The lime green is new adoptions, so they're adding the platform, the forest green is spending more 6% or more. The gray bars spending is flat plus or minus, you know, 5%. The pinkish colors represent spending less down 6% or worse. And the bright red shows defections or churn of the platform. You subtract the reds from the greens and you get what's called net score, which is that blue dot that you can see on each of the bars. So what you see in the table insert is that all three have net scores above 40%, which is a highly elevated measure. Microsoft's net scores above 60% AWS well into the fifties and GCP in the mid forties. So all good. Now what's happening with all three is more customers are keep keeping their spending flat. So a higher percentage of customers are saying, our spending is now flat than it was in previous quarters and that's what's accounting for the compression. >>But the churn of all three, even gcp, which we reported, you know, last quarter from last quarter survey was was five x. The other two is actually very low in the single digits. So that might have been an anomaly. So that's a very good sign in our view. You know, again, customers aren't repatriating in droves, it's just not a trend that we would bet on, maybe makes for a FUD or you know, good marketing head, but it's just not a big deal. And you can't help but be impressed with both Microsoft and AWS's performance in the survey. And as we mentioned before, these companies aren't going to give up customers to try and preserve a little bit of gross margin. They'll do what it takes to keep people on their platforms cuz they'll make up for it over time with added services and improved offerings. >>Now, once these companies acquire a customer, they'll be very aggressive about keeping them. So customers take note, you have negotiating leverage, so use it. Okay, let's look at another cut at the cloud market from the ETR data set. Here's the two dimensional view, again, it's back, it's one of our favorites. Net score or spending momentum plotted against presence. And the data set, that's the x axis net score on the, on the vertical axis, this is a view of et r's cloud computing sector sector. You can see we put that magic 40% dotted red line in the table showing and, and then that the table inserts shows how the data are plotted with net score against presence. I e n in the survey, notably only the big three are above the 40% line of the names that we're showing here. The oth there, there are others. >>I mean if you put Snowflake on there, it'd be higher than any of these names, but we'll dig into that name in a later breaking analysis episode. Now this is just another way of quantifying the dominance of AWS and Azure, not only relative to Google, but the other cloud platforms out there. So we've, we've taken the opportunity here to plot IBM and Oracle, which both own a public cloud. Their performance is largely a reflection of them migrating their install bases to their respective public clouds and or hybrid clouds. And you know, that's fine, they're in the game. That's a point that we've made, you know, a number of times they're able to make it through the cloud, not whole and they at least have one, but they simply don't have the business momentum of AWS and Azure, which is actually quite impressive because AWS and Azure are now as large or larger than IBM and Oracle. >>And to show this type of continued growth that that that Azure and AWS show at their size is quite remarkable and customers are starting to recognize the viability of on-prem hi, you know, hybrid clouds like HPE GreenLake and Dell's apex. You know, you may say, well that's not cloud, but if the customer thinks it is and it was reporting in the survey that it is, we're gonna continue to report this view. You know, I don't know what's happening with H P E, They had a big down tick this quarter and I, and I don't read too much into that because their end is still pretty small at 53. So big fluctuations are not uncommon with those types of smaller ends, but it's over 50. So, you know, we did notice a a a negative within a giant public and private sector, which is often a, a bellwether giant public private is big public companies and large private companies like, like a Mars for example. >>So it, you know, it looks like for HPE it could be an outlier. We saw within the Fortune 1000 HPE E'S cloud looked actually really good and it had good spending momentum in that sector. When you di dig into the industry data within ETR dataset, obviously we're not showing that here, but we'll continue to monitor that. Okay, so where's this Leave us. Well look, this is really a tactical story of currency and macro headwinds as you can see. You know, we've laid out some of the points on this slide. The action in the stock market today, which is Friday after some of the soft earnings reports is really robust. You know, we'll see how it ends up in the day. So maybe this is a sign that the worst is over, but we don't think so. The visibility from tech companies is murky right now as most are guiding down, which indicates that their conservative outlook last quarter was still too optimistic. >>But as it relates to cloud, that platform is not going anywhere anytime soon. Sure, there are potential disruptors on the horizon, especially at the edge, but we're still a long ways off from, from the possibility that a new economic model emerges from the edge to disrupt the cloud and the opportunities in the cloud remain strong. I mean, what other path is there? Really private cloud. It was kind of a bandaid until the on-prem guys could get their a as a service models rolled out, which is just now happening. The hybrid thing is real, but it's, you know, defensive for the incumbents until they can get their super cloud investments going. Super cloud implying, capturing value above the hyperscaler CapEx, you know, call it what you want multi what multi-cloud should have been, the metacloud, the Uber cloud, whatever you like. But there are opportunities to play offense and that's clearly happening in the cloud ecosystem with the likes of Snowflake, Mongo, Hashi Corp. >>Hammer Spaces is a startup in this area. Aviatrix, CrowdStrike, Zeke Scaler, Okta, many, many more. And even the projects we see coming out of enterprise players like Dell, like with Project Alpine and what Pure Storage is doing along with a number of other of the backup vendors. So Q4 should be really interesting, but the real story is the investments that that companies are making now to leverage the cloud for digital transformations will be paying off down the road. This is not 1999. We had, you know, May might have had some good ideas and admittedly at a lot of bad ones too, but you didn't have the infrastructure to service customers at a low enough cost like you do today. The cloud is that infrastructure and so far it's been transformative, but it's likely the best is yet to come. Okay, let's call this a rap. >>Many thanks to Alex Morrison who does production and manages the podcast. Also Can Schiffman is our newest edition to the Boston Studio. Kristin Martin and Cheryl Knight helped get the word out on social media and in our newsletters. And Rob Ho is our editor in chief over@siliconangle.com, who does some wonderful editing for us. Thank you. Remember, all these episodes are available as podcasts. Wherever you listen, just search breaking analysis podcast. I publish each week on wiki bond.com at silicon angle.com. And you can email me at David dot valante@siliconangle.com or DM me at Dante or comment on my LinkedIn posts. And please do checkout etr.ai. They got the best survey data in the enterprise tech business. This is Dave Valante for the Cube Insights powered by etr. Thanks for watching and we'll see you next time on breaking analysis.

>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> Despite a mixed bag of earnings reports from tech companies, negative GDP growth this past quarter, and rising inflation, the cloud continues its relentless expandtion on the IT landscape. AWS, Microsoft, and Alphabet of all reported earnings, and when you include Alibaba Cloud in the mix, the Big 4 hyperscalers are on track to generate 167 billion in revenue this year based on our projections. But as we said many times on theCUBE, the definition of cloud is expanding and hybrid environments are becoming the norm at major organizations. We're seeing the largest enterprise tech companies focus on solving for hybrid, and every public cloud company now has a strategy to bring their environments closer to where customers workloads live, at data centers, and at the edge. Hello, and welcome to this week's Wikibon CUBE Insights powered by ETR. In this Breaking Analysis will update you on our latest cloud projections and outlook. We'll share some fresh ETR data and commentary on what's happening in the hybrid zone of cloud. Let's start with the market data for the Big 4 hyperscalers. In this chart, we share our Big 4 cloud share for IaaS and PaaS for 2020, 2021, and the first quarter of 2022, and our estimate for 2022 full year and growth. Remember, only AWS and Alibaba report relatively clean IaaS and PaaS figures, whereas Microsoft and Google, they bundled their cloud infrastructure in with their SaaS numbers. We both firms, however, they do give guidance and we use survey data and other tidbits to create an apples to apples comparison, and that's what we show here. For the quarter, the Big 4 approach to 37 billion in revenue as a group. Azure's growth rate is reported by Microsoft but the absolute revenue is not. Azure growth accelerated sequentially by 49% to just over 13 billion in the quarter by our estimates while AWS's growth moderated, sequentially, but revenue still hit 18.4 billion. Azure, by our estimates, now is more than 2/3 the size of AWS's cloud business. Google and Alibaba are fighting for the bronze medal, but well behind the two leaders. Microsoft's Azure acceleration is quite remarkable for such a large revenue base, but it's not unprecedented as we've seen this pattern before with AWS. Nonetheless, the fact that Azure is growing at the same rate as GCP is quite impressive. Now, a couple of other tidbits of information. Amazon, its stock is getting hammered today because of inflation and slowing growth rates at the top line. But AWS continues to beat Wall Street's expectations. A look at Amazon's operating income this quarter tells the story. Amazon overall had operating income of -3.66 billion and AWS's operating income with 6.5 billion. AWS's operating margin grew sequentially from nearly 30% last quarter to 35.3%. That's an astoundingly profitable figure. This is comparable to insanely profitable companies like Oracle and Microsoft. These are software companies with software marginal economics. Is that level of sustainable? Probably not for AWS, but it's eye opening, nonetheless. ETR survey data shows why these companies are doing so well with customers. This chart shows the net score granularity for the Big 4 cloud players. Net score, remember, measures spending momentum by asking customers, are you adopting new? That's the lime green. Increasing spend by 6% or more, that's the forest green. Flats spend is the gray. Spending dropping by 6% or worse is the light pink. And the red is decommissioning the platform. Subtract the reds from the greens and you get a net score which is shown on the right. Anything, by the way, over 40% we consider highly elevated. Now some key points here. Microsoft includes its entire business in this chart, we are including, ETR is including Microsoft's entire business, not just its cloud. Its Azure-only net score is 67%, higher than even AWS's, and that's huge. Google Cloud, on the other hand, while still elevated is well behind the two leaders. Alibaba's data sample in the ETR survey is small and China has had its foot on the neck of Big Tech for a while so we can't read too much into a net score of 26. But notice the replacements in red across the boards single digits for all and low single digits for the two giants, 1% for Amazon and Azure. Very impressive. Now the other really telling reality check is CapEx spending on cloud. CapEx spend tends to be a pretty good indicator of scale. And Charles Fitzgerald who runs the Platformonomics blog spends a fair amount of his time on this topic and we borrowed this chart from a recent post he did, and then we put in some estimates of our own. It shows CapEx spend over time for five cloud companies, the Big 3 US firms that we just talked about, plus IBM and Oracle. And it's always astounding to me to go back to the pre-cloud era and look at IBM. They were in a great position prior to 2006 to really dominate this notion of as a service and the transition to what is now known as cloud. But they really couldn't get their head out of professional services and their outsourcing business. There was some conflicts there as well. And so, you know, IBM you see is that dark blue or black line and spent significantly more than the others way back when, not anymore. Charles is kind of a snark. He loves to make fun of our super cloud concept even though I'm confident it's evolving and is real. But his point above in this chart is right on, the Big 3 US players spend far more on CapEx than IBM and Oracle. He states that Oracle's uptick in CapEx spend puts them past IBM, but the two of them are battling to distance themselves and differentiate from the X-axis. Funny guy, Charles. In its recent earnings report, Amazon stated that around 40% of its CapEx goes to infrastructure and most of that goes to AWS. It expects CapEx to grow this year and around 50% will go toward infrastructure. So we've superimposed our rough estimate of where AWS lands when you subtract out all of Amazon's warehouses for retail. And once again, Microsoft is notable because unlike Amazon, it doesn't have a zillion warehouses to ship products to consumers. And while Google spending is massive, it's mostly on servers to power its ad network. But there's no question that GCP can leverage that infrastructure and the tech behind it, and it does. And by the way, so can everyone else, by the way, leverage all this CapEx spend. We're going to come back to that and talk about super cloud in a moment. Okay, let's close by looking at the ever-expanding cloud landscape. This chart shows a two-dimensional view of the ETR data for cloud computing. On the vertical-axis is net score or spending momentum, and in the horizontal-axis is pervasiveness in the data set. It's like market share within the survey, if you will. The chart insert shows the data for how the dots are plotted on each axis. The red dotted line at 40%, remember, indicates a highly elevated position with net score and significant spending momentum. And the green arrows show the movement for some companies relative to three months ago. Okay, so Microsoft and AWS, they're kind of circled way up in the right-hand corner, very impressive. Just to reduce the clutter, we're not showing AWS Lambda here and some other highly elevated services which would push up, ticked up AWS's net score but it's still really, really good. As is azure, they're both moving solidly to the right relative to last quarters survey. So gaining presence in the data set and presumably in the market as well. Google is, as we've said, well behind and has much work to do. It was announced this past week that the head of sales at Google Cloud, Rob Enslin, is leaving to join UiPath, so some interesting news there. We've highlighted the hybrid zone. Now to the theme of this Breaking Analysis, the ever-expanding cloud, AWS announced that it's completed the launch of 16 local zones in the US and there are 32 more coming across 26 countries. Local zones basically bring cloud infrastructure to regions where there's a lot of IT that isn't going to move. And for proximity and latency reasons, they have to move closer, move the cloud closer, the cloud operating model if you will, closer to the customers. And there's that CapEx build out showing its head again. Now the reason this hybrid zone becomes interesting is you're seeing the large enterprise players finally go after the hybrid cloud in Earnest. It's almost like the AWS outposts announcement in 2018 was a wake up call to infrastructure players like Dell, HPE, and IBM. It took a while, but Oracle is kind of skipping to its own tune, but they're in that hybrid zone as well. IBM had a really good quarter and the Red Hat acquisition seems to be working to support its hybrid cloud strategy. Now VMware several years ago clean up its fuzzy cloud strategy and partnered up with AWS and everyone else. And you see VMware Cloud on AWS doing well as is VMware Cloud, its on-prem offering. Even though it's somewhat lower on the X-axis, based on that green arrow was showing relative to last quarter. It's moving to the right with a greater presence in the data set so that we see that as a positive sign. Now, Dell and HP are interesting. Both companies are going hard after as a service with APEX and GreenLake, respectively. HPE, based on the survey data from ETR, seems to have a lead in spending momentum while Dell has a larger presence in the market, naturally, as a much bigger company. HPE is climbing up on the X-axis, as is Dell, although, not as quickly. And the point we come back to often is the definition of cloud is in the eye of the customer. AWS can say, "No, no that's not cloud." And the on-prem crowd can say, "Ooh, we have cloud too." It really doesn't matter. What matters is what the customer thinks and which platforms they choose to invest. And I'll close by circling back to the idea of super cloud. You are seeing it evolve and you're going to hear more and more about it. Yeah, maybe not the term, many don't like it. We're going to continue to use it as a metaphor for a layer that leverages the CapEx build, the gift that the hyperscalers are providing the industry. This is a real opportunity for the likes of Dell, HPE, IBM, Cisco, and dozens of other companies providing compute and storage infrastructure, networking, security, database, and other parts of the stack. By hiding the underlying complexity of the cloud, dealing with all the API and primitive muck, creating singular experience across on-prem, across clouds, and out to the edge is a definite need from customers. This is a new battle that's shaping up and it's going to be expensive to build and it require an ecosystem cooperating across this API economy, as some like to call it. It's going to have to do that to make it a reality. Now there's a definite, as I say, customer need for this common experience, and in our view, we're seeing it manifest in pockets today and in strategies and in R&D projects, both within startups and established players. Okay, that's it for today. Thanks to Stephanie Chan who helps research Breaking Analysis topics. Alex Myerson is on production and he also manages the Breaking Analysis podcast. Kristen and Martin and Cheryl Knight get the word out on social. Thanks to all, including Rob Hof, our editor in chief at SiliconANGLE. Remember these episodes are all available as podcast wherever you listen. All you got to do is search Breaking Analysis podcast. Check out ETR website at etr.ai. We publish a full report every week on wikibon.com and siliconangle.com. You can email me directly at david.vellante@siliconangle.com, or DM me @dvellante or comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Have a great week, stay safe, be well and we'll see you next time. (upbeat music)

>> From theCUBE Studios in Palo Alto in Boston, bringing you data driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> New data from ETR's soon to be released April survey, shows a clear deceleration in spending and a more cautious posture from technology buyers. Just this week, we saw sell side downgrades in hardware companies like Dell and HP and revised guidance from high flyer UiPath, citing exposures to Russia, Europe and certain sales execution challenges, but these headlines, we think are a canary in the coal mine. According to ETR analysis and channel checks in theCUBE, the real story is these issues are not isolated. Rather we're seeing signs of caution from buyers across the board in enterprise tech. Hello and welcome to this week's Wikibon CUBE insights powered by ETR. In this Breaking Analysis, we are the bearers of bad news. Don't shoot the messenger. We'll share a first look at fresh data that suggests a tightening in tech spending calling for 6% growth this year which is below our January prediction of 8% for 2022. Now, unfortunately the party may be coming to an end at least for a while. You know, it's really not surprising, right? We've had a two year record run in tech spending and meteoric rises in high flying technology stocks. Hybrid work, equipping and securing remote workers. The forced march to digital that we talk about sometimes. These were all significant tailwinds for tech companies. The NASDAQ peaked late last year and then as you can see in this chart, bottomed in mid-March of 2022, and it made a nice run up through the 29th of last month, but the mini rally appears to be in jeopardy with FED rate hikes, Russia, supply chain challenges. There's a lot of uncertainty so we should expect the C-suite to be saying, hey, wait slow down. Now we don't think the concerns are confined to companies with exposure to Russia and Europe. We think it's more broad based than that and we're seeing caution from technology companies and tech buyers that we think is prudent, given the conditions. You know, looks like the two year party has ended and as my ETR colleague Erik Bradley said, a little hangover shouldn't be a surprise to anybody. So let's get right to the new spending data. I'm limited to what I can share with you today because ETR is in its quiet period and hasn't released full results yet outside of its client base. But, they did put out an alert today and I can share this slide. It shows the expectation on spending growth from more than a thousand CIOs and IT buyers who responded in the most recent survey. It measures their expectations for spending. The key focus areas that I want you to pay attention to in this data are the yellow bars. The most recent survey is the yellow compared to the blue and the gray bars, which are the December and September '21 surveys respectively. And you can see a steep drop from last year in Q1, lowered expectations for Q2 in the far right, a drop from nearly 9% last September to around 6% today. Now you may think a 200 basis point downgrade from our prediction in January of 8% seems somewhat benign, but in a $4 trillion IT market, that's 80 billion coming off the income statements of some tech companies. Now the good news is that 6% growth is still very healthy and higher than pre pandemic spending levels. And the buyers we've talked to this week are saying, look, we're still spending money. We just have to be more circumspect about where and how fast. Now, there were a few other callouts in the ETR data and in my discussions today with Erik Bradley on this. First, it looks like in response to expected supply chain constraints that buyers pulled forward their orders late last year and earlier this year. You remember when we couldn't buy toilet paper, people started the stockpile and it created this rubber banding effect. So we see clear signs of receding momentum in the PC and laptop market. But as we said, this is not isolated to PCs, UiPath's earning guidance confirm this but the story doesn't end there. This isn't isolated to UiPath in our view, rather it's a more based slowdown. The other big sign is spending in outsourced IT which is showing a meaningful deceleration in the last survey, showing a net score drop from 13% in January to 6% today. Net score remember is a measure of the net percentage of customers in the survey that on balance are spending more than last survey. It's derived by subtracting the percent of customers spending less from those spending more. And there's a, that's a 700 basis point drop in three months. This isn't a market where you can't hire enough people. The percent of companies hiring has gone from 10% during the pandemic to 50% today according to recent data from ETR. And we know there's still an acute skills shortage. So you would expect more IT outsourcing, but you don't see that in the data, it's down. And as this quote from Erik Bradley explains, historically, when outsourced IT drops like this, especially in a tight labor market, it's not good news for IT spending. All right, now, the other interesting callout from ETR were some specific company names that appear to be seeing the biggest change in spending momentum. Here's the list of those companies that all have meaningful exposure to Europe. That's really where the focus was. SAP has big exposure to on-premises installations and of course, Europe as well. ServiceNow has European exposure and also broad based exposure in IT in across the globe, especially in the US. Zoom didn't go to the moon, no surprise there given the quasi return to work and Zoom fatigue. McAfee is a bit of a concern because security seemed to be one of those areas, when you look at some of the other data, that is per actually insulated from all the spending caution. Of course we saw the Okta hack and we're going to cover that next week with hopefully some new data from ETR, but generally security's been holding up pretty well. You look at CrowdStrike, you look at Zscaler in particular. Adobe's another company that's had a nice bounce in the last couple of weeks. Accenture, again, speaks to that outsourcing headwinds that we mentioned earlier. And now the Google Cloud platform is a bit of a concern. It's still elevated overall, you know but down and well down in Europe. Under that magic, you know we often show that magic 40% dotted line, that red dotted line of net score anything above that we cite as elevated. Well, some important callouts to hear that you see companies that have Euro exposure. And again, we see this as just not confined to Europe and this is something we're going to pay close attention to and continue to report on in the next several weeks and months. All right, so what should we expect from here? The Ark investment stocks of Cathie Wood fame have been tracking in a downward trend since last November, meaning, you know, these high PE stocks are making lower lows and higher, sorry, lower highs and lower lows since then, right? The trend is not their friend. Investors I talk to are being much more cautious about buying the dip. They're raising cash and being a little bit more patient. You know, traders can trade in this environment but unless you can pay attention to in a minute by minute you're going to get whipsawed. Investors tell me that they're still eyeing big tech even though Apple has been on a recent tear and has some exposure with supply change challenges, they're looking for maybe entry points in, within that chop for Apple, Amazon, Microsoft, and Alphabet. And look, as I've been stressing, 6% spending growth is still very solid. It's a case of resetting the outlook relative to previous expectations. So when you zoom out and look at the growth in data, getting digital right, security investments, automation, cloud, AI containers, all the fundamentals are really strong and they have not changed. They're all powering this new digital economy and we believe it's just prudence versus a shift in the importance of IT. Now, one point of caution is there's a lot of discussion around a shift in global economies. Supply chain uncertainty, persistent semiconductor shortages especially in areas like, you know driver ICs and boring things like parts for displays and analog and micro controllers and power regulators. Stuff that's, you know, just not playing nice these days and wreaking havoc. And this creates uncertainty, which sometimes can pick up momentum in a snowballing effect. And that's something that we're watching closely and we're going to be vigilant reporting to you when we see changes in the data and in our forecast even when we think our forecast are wrong. Okay, that's it for today. Thanks to Alex Merson who does the production and podcasts for Breaking Analysis and Stephanie Chan who provides background research. Kristen Martin and Cheryl Knight, and all theCUBE writers they help get the word out, and thanks to Rob Hof, our EIC over at SiliconANGLE. Remember I publish weekly on wikibon.com and siliconangle.com. These episodes are all available as podcasts wherever you listen. All you got to do is search Breaking Analysis podcasts. etr.ai that's where you can get access to all this survey data and make your own cuts. It's awesome, check that out. Keep in touch with me. You can email me at dave.vellante@siliconangle.com. You can hit me up on LinkedIn. This is Dave Vellante for theCUBE insights powered by ETR. Be safe, stay well, and we'll see you next time. (gentle music)

from the cube studios in palo alto in boston bringing you data-driven insights from the cube and etr this is breaking analysis with dave vellante you know we've often said that the next 10 years in cloud computing won't be like the last ten cloud has firmly planted its footprint on the other side of the chasm with the momentum of the entire multi-trillion dollar tech business behind it both sellers and buyers are leaning in by adopting cloud technologies and many are building their own value layers on top of cloud in the coming years we expect innovation will continue to coalesce around the three big u.s clouds plus alibaba in apac with the ecosystem building value on top of the hardware saw tooling provided by the hyperscalers now importantly we don't see this as a race to the bottom rather our expectation is that the large public cloud players will continue to take cost out of their platforms through innovation automation and integration while other cloud providers and the ecosystem including traditional companies that buy it mine opportunities in their respective markets as matt baker of dell is fond of saying this is not a zero sum game welcome to this week's wikibon cube insights powered by etr in this breaking analysis we'll update you on our latest projections in the cloud market we'll share some new etr survey data with some surprising nuggets and drill into this the important cloud database landscape first we want to take a look at what people are talking about in cloud and what's been in the recent news with the exception of alibaba all the large cloud players have reported earnings google continues to focus on growth at the expense of its profitability google reported that it's cloud business which includes applications like google workspace grew 45 percent to five and a half billion dollars but it had an operating loss of 890 billion now since thomas curion joined google to run its cloud business google has increased head count in its cloud business from 25 000 25 000 people now it's up to 40 000 in an effort to catch up to the two leaders but playing catch up is expensive now to put this into perspective let's go back to aws's revenue in q1 2018 when the company did 5.4 billion so almost exactly the same size as google's current total cloud business and aws is growing faster at the time at 49 don't forget google includes in its cloud numbers a big chunk of high margin software aws at the time had an operating profit of 1.4 billion that quarter around 26 of its revenues so it was a highly profitable business about as profitable as cisco's overall business which again is a great business this is what happens when you're number three and didn't get your head out of your ads fast enough now in fairness google still gets high marks on the quality of its technology according to corey quinn of the duck bill group amazon and google cloud are what he called neck and neck with regard to reliability with microsoft azure trailing because of significant disruptions in the past these comments were made last week in a bloomberg article despite some recent high-profile outages on aws not surprisingly a microsoft spokesperson said that the company's cloud offers industry-leading reliability and that gives customers payment credits after some outages thank you turning to microsoft and cloud news microsoft's overall cloud business surpassed 22 billion in the december quarter up 32 percent year on year like google microsoft includes application software and sas offerings in its cloud numbers and gives little nuggets of guidance on its azure infrastructure as a service business by the way we estimate that azure comprises about 45 percent of microsoft's overall cloud business which we think hit a 40 billion run rate last quarter microsoft guided in its earning call that recent declines in the azure growth rates will reverse in q1 and that implies sequential growth for azure and finally it was announced that the ftc not the doj will review microsoft's announced 75 billion acquisition of activision blizzard it appears ftc chair lena khan wants to take this one on herself she of course has been very outspoken about the power of big tech companies and in recent a recent cnbc interview suggested that the u.s government's actions were a meaningful contributor back then to curbing microsoft's power in the 90s i personally found that dubious just ask netscape wordperfect novell lotus and spc the maker of harvard presentation graphics how effective the government was in curbing microsoft power generally my take is that the u s government has had a dismal record regulating tech companies most notably ibm and microsoft and it was market forces company hubris complacency and self-inflicted wounds not government intervention these were far more effective than the government now of course if companies are breaking the law they should be punished but the u.s government hasn't been very productive in its actions and the unintended consequences of regulation could be detrimental to the u.s competitiveness in the race with china but i digress lastly in the news amazon announced earnings thursday and the company's value increased by 191 billion dollars on friday that's a record valuation gain for u.s stocks aws amazon's profit engine grew 40 percent year on year for the quarter it closed the year at 62 billion dollars in revenue and at a 71 billion dollar revenue run rate aws is now larger than ibm which without kindrel is at a 67 billion dollar run rate just for context ibm's revenue in 2011 was 107 billion dollars now there's a conversation going on in the media and social that in order to continue this growth and compete with microsoft that aws has to get into the sas business and offer applications we don't think that's the right strategy for amp from for amazon in the near future rather we see them enabling developers to compete in that business finally amazon disclosed that 48 of its top 50 customers are using graviton 2 instances why is this important because aws is well ahead of the competition in custom silicon chips is and is on a price performance curve that is far better than alternatives especially those based on x86 this is one of the reasons why we think this business is not a race to the bottom aws is being followed by google microsoft and alibaba in terms of developing custom silicon and will continue to drive down their internal cost structures and deliver price performance equal to or better than the historical moore's law curves so that's the recent news for the big u.s cloud providers let's now take a look at how the year ended for the big four hyperscalers and look ahead to next year here's a table we've shown this view before it shows the revenue estimates for worldwide is and paths generated by aws microsoft alibaba and google now remember amazon and alibaba they share clean eye ass figures whereas microsoft and alphabet only give us these nuggets that we have to interpret and we correlate those tidbits with other data that we gather we're one of the few outlets that actually attempts to make these apples to apples comparisons there's a company called synergy research there's another firm that does this but i really can't map to their numbers their gcp figures look far too high and azure appears somewhat overestimated and they do include other stuff like hosted private cloud services but it's another data point that you can use okay back to the table we've slightly adjusted our gcp figures down based on interpreting some of alphabet's statements and other survey data only alibaba has yet to announce earnings so we'll stick to a 2021 market size of about 120 billion dollars that's a 41 growth rate relative to 2020 and we expect that figure to increase by 38 percent to 166 billion in 2022 now we'll discuss this a bit later but these four companies have created an opportunity for the ecosystem to build what we're calling super clouds on top of this infrastructure and we're seeing it happen it was increasingly obvious at aws re invent last year and we feel it will pick up momentum in the coming months and years a little bit more on that later now here's a graphical view of the quarterly revenue shares for these four companies notice that aws has reversed its share erosion and is trending up slightly aws has accelerated its growth rate four quarters in a row now it accounted for 52 percent of the big four hyperscaler revenue last year and that figure was nearly 54 in the fourth quarter azure finished the year with 32 percent of the hyper scale revenue in 2021 which dropped to 30 percent in q4 and you can see gcp and alibaba they're neck and neck fighting for the bronze medal by the way in our recent 2022 predictions post we said google cloud platform would surpass alibaba this year but given the recent trimming of our numbers google's got some work to do for that prediction to be correct okay just to put a bow on the wikibon market data let's look at the quarterly growth rates and you'll see the compression trends there this data tracks quarterly revenue growth rates back to 20 q1 2019 and you can see the steady downward trajectory and the reversal that aws experienced in q1 of last year now remember microsoft guided for sequential growth and azure so that orange line should trend back up and given gcp's much smaller and big go to market investments that we talked about we'd like to see an acceleration there as well the thing about aws is just remarkable that it's able to accelerate growth at a 71 billion run rate business and alibaba you know is a bit more opaque and likely still reeling from the crackdown of the chinese government we're admittedly not as close to the china market but we'll continue to watch from afar as that steep decline in growth rate is somewhat of a concern okay let's get into the survey data from etr and to do so we're going to take some time series views on some of the select cloud platforms that are showing spending momentum in the etr data set you know etr uses a metric we talked about this a lot called net score to measure that spending velocity of products and services netscore basically asks customers are you spending more less or the same on a platform and a vendor and then it subtracts the lesses from the moors and that yields a net score this chart shows net score for five cloud platforms going back to january 2020. note in the table that the table we've inserted inside that chart shows the net score and shared n the latter metric indicates the number of mentions in the data set and all the platforms we've listed here show strong presence in the survey that red dotted line at 40 percent that indicates spending is at an elevated level and you can see azure and aws and vmware cloud on aws as well as gcp are all nicely elevated and bounding off their october figures indicating continued cloud momentum overall but the big surprise in these figures is the steady climb and the steep bounce up from oracle which came in just under the 40 mark now one quarter is not necessarily a trend but going back to january 2020 the oracle peaks keep getting higher and higher so we definitely want to keep watching this now here's a look at some of the other cloud platforms in the etr survey the chart here shows the same time series and we've now brought in some of the big hybrid players notably vmware cloud which is vcf and other on-prem solutions red hat openstack which as we've reported in the past is still popular in telcos who want to build their own cloud we're also starting to see hpe with green lake and dell with apex show up more and ibm which years ago acquired soft layer which was really essentially a bare metal hosting company and over the years ibm cobbled together its own public cloud ibm is now racing after hybrid cloud using red hat openshift as the linchpin to that strategy now what this data tells us first of all these platforms they don't have the same presence in the data set as do the previous players vmware is the one possible exception but other than vmware these players don't have the spending velocity shown in the previous chart and most are below the red line hpe and dell are interesting and notable in that they're transitioning their early private cloud businesses to dell gr sorry hpe green lake and dell apex respectively and finally after years of kind of staring at their respective navels in in cloud and milking their legacy on-prem models they're finally building out cloud-like infrastructure for their customers they're leaning into cloud and marketing it in a more sensible and attractive fashion for customers so we would expect these figures are going to bounce around for a little while for those two as they settle into a groove and we'll watch that closely now ibm is in the process of a complete do-over arvin krishna inherited three generations of leadership with a professional services mindset now in the post gerschner gerstner era both sam palmisano and ginny rometty held on far too long to ibm's service heritage and protected the past from the future they missed the cloud opportunity and they forced the acquisition of red hat to position the company for the hybrid cloud remedy tried to shrink to grow but never got there krishna is moving faster and with the kindred spin is promising mid-single-digit growth which would be a welcome change ibm is a lot of work to do and we would expect its net score figures as well to bounce around as customers transition to the future all right let's take a look at all these different players in context these are all the clouds that we just talked about in a two-dimensional view the vertical axis is net score or spending momentum and the horizontal axis is market share or presence or pervasiveness in the data set a couple of call-outs that we'd like to make here first the data confirms what we've been saying what everybody's been saying aws and microsoft stand alone with a huge presence many tens of billions of dollars in revenue yet they are both well above the 40 line and show spending momentum and they're well ahead of gcp on both dimensions second vmware while much smaller is showing legitimate momentum which correlates to its public statements alibaba the alibaba in this survey really doesn't have enough sample to make hardcore conclusions um you can see hpe and dell and ibm you know similarly they got a little bit more presence in the data set but they clearly have some work to do what you're seeing there is their transitioning their legacy install bases oracle's the big surprise look what oracle was in the january survey and how they've shot up recently now we'll see if this this holds up let's posit some possibilities as to why it really starts with the fact that oracle is the king of mission critical apps now if you haven't seen video on twitter you have to check it out it's it's hilarious we're not going to run the video here but the link will be in our post but i'll give you the short version some really creative person they overlaid a data migration narrative on top of this one tooth guy who speaks in spanish gibberish but the setup is he's a pm he's a he's a a project manager at a bank and aws came into the bank this of course all hypothetical and said we can move all your apps to the cloud in 12 months and the guy says but wait we're running mission critical apps on exadata and aws says there's nothing special about exadata and he starts howling and slapping his knee and laughing and giggling and talking about the 23 year old senior engineer who says we're going to do this with microservices and he could tell he was he was 23 because he was wearing expensive sneakers and what a nightmare they encountered migrating their environment very very very funny video and anyone who's ever gone through a major migration of mission critical systems this is gonna hit home it's funny not funny the point is it's really painful to move off of oracle and oracle for all its haters and its faults is really the best environment for mission critical systems and customers know it so what's happening is oracle's building out the best cloud for oracle database and it has a lot of really profitable customers running on-prem that the company is migrating to oracle cloud infrastructure oci it's a safer bet than ripping it and putting it into somebody else's cloud that doesn't have all the specialized hardware and oracle knowledge because you can get the same integrated exadata hardware and software to run your database in the oracle cloud it's frankly an easier and much more logical migration path for a lot of customers and that's possibly what's happening here not to mention oracle jacks up the license price nearly doubles the license price if you run on other clouds so not only is oracle investing to optimize its cloud infrastructure it spends money on r d we've always talked about that really focused on mission critical applications but it's making it more cost effective by penalizing customers that run oracle elsewhere so this possibly explains why when the gartner magic quadrant for cloud databases comes out it's got oracle so well positioned you can see it there for yourself oracle's position is right there with aws and microsoft and ahead of google on the right-hand side is gartner's critical capabilities ratings for dbms and oracle leads in virtually all of the categories gartner track this is for operational dvms so it's kind of a narrow view it's like the red stack sweet spot now this graph it shows traditional transactions but gartner has oracle ahead of all vendors in stream processing operational intelligence real-time augmented transactions now you know gartner they're like old name framers and i say that lovingly so maybe they're a bit biased and they might be missing some of the emerging opportunities that for example like snowflake is pioneering but it's hard to deny that oracle for its business is making the right moves in cloud by optimizing for the red stack there's little question in our view when it comes to mission critical we think gartner's analysis is correct however there's this other really exciting landscape emerging in cloud data and we don't want it to be a blind spot snowflake calls it the data cloud jamactagani calls it data mesh others are using the term data fabric databricks calls it data lake house so so does oracle by the way and look the terminology is going to evolve and most of the action action that's happening is in the cloud quite frankly and this chart shows a select group of database and data warehouse companies and we've filtered the data for aws azure and gcp customers accounts so how are these accounts or companies that were showing how these vendors were showing doing in aws azure and gcp accounts and to make the cut you had to have a minimum of 50 mentions in the etr survey so unfortunately data bricks didn't make it just not enough presence in the data set quite quite yet but just to give you a sense snowflake is represented in this cut with 131 accounts aws 240 google 108 microsoft 407 huge [ __ ] 117 cloudera 52 just made the cut ibm 92 and oracle 208. again these are shared accounts filtered by customers running aws azure or gcp the chart shows a net score lime green is new ads forest green is spending more gray is flat spending the pink is spending less and the bright red is defection again you subtract the red from the green and you get net score and you can see that snowflake as we reported last week is tops in the data set with a net score in the 80s and virtually no red and even by the way single digit flat spend aws google and microsoft are all prominent in the data set as is [ __ ] and snowflake as i just mentioned and they're all elevated over the 40 mark cloudera yeah what can we say once they were a high flyer they're really not in the news anymore with anything compelling other than they just you know took the company private so maybe they can re-emerge at some point with a stronger story i hope so because as you can see they actually have some new additions and spending momentum in the green just a lot of customers holding steady and a bit too much red but they're in the positive territory at least with uh plus 17 percent unlike ibm and oracle and this is the flip side of the coin ibm they're knee-deep really chest deep in the middle of a major transformation we've said before arvind krishna's strategy and vision is at least achievable prune the portfolio i.e spin out kindrel sell watson health hold serve with the mainframe and deal with those product cycles shift the mix to software and use red hat to win the day in hybrid red hat is working for ibm's growing well into the double digits unfortunately it's not showing up in this chart with little database momentum in aws azure and gcp accounts zero new ads not enough acceleration and spending a big gray middle in nearly a quarter of the base in the red ibm's data and ai business only grew three percent this last quarter and the word database wasn't even mentioned once on ibm's earnings call this has to be a concern as you can see how important database is to aws microsoft google and the momentum it's giving companies like snowflake and [ __ ] and others which brings us to oracle with a net score of minus 12. so how do you square the momentum in oracle cloud spending and the strong ratings and databases from gartner with this picture good question and i would say the following first look at the profile people aren't adding oracle new a large portion of the base 25 is reducing spend by 6 or worse and there's a decent percentage of the base migrating off oracle with a big fat middle that's flat and this accounts for the poor net score overall but what etr doesn't track is how much is being spent rather it's an account based model and oracle is heavily weighted toward big spenders running mission critical applications and databases oracle's non-gaap operating margins are comparable to ibm's gross margins on a percentage basis so a very profitable company with a big license and maintenance in stall basin oracle has focused its r d investments into cloud erp database automation they've got vertical sas and they've got this integrated hardware and software story and this drives differentiation for the company but as you can see in this chart it has a legacy install base that is constantly trying to minimize its license costs okay here's a little bit of different view on the same data we expand the picture with the two dimensions of net score on the y-axis and market share or pervasiveness on the horizontal axis and the table insert is how the data gets plotted y and x respectively not much to add here other than to say the picture continues to look strong for those companies above the 40 line that are focused and their focus and have figured out a clear cloud strategy and aren't necessarily dealing with a big install base the exception of course is is microsoft and the ones below the line definitely have parts of their portfolio which have solid momentum but they're fighting the inertia of a large install base that moves very slowly again microsoft had the advantage of really azure and migrating those customers very quickly okay so let's wrap it up starting with the big three cloud players aws is accelerating and innovating great example is custom silicon with nitro and graviton and other chips that will help the company address concerns related to the race to the bottom it's not a race to zero aws we believe will let its developers go after the sas business and for the most part aws will offer solutions that address large vertical markets think call centers the edge remains a wild card for aws and all the cloud players really aws believes that in the fullness of time all workloads will run in the public cloud now it's hard for us to imagine the tesla autonomous vehicles running in the public cloud but maybe aws will redefine what it means by its cloud microsoft well they're everywhere and they're expanding further now into gaming and the metaverse when he became ceo in 2014 many people said that satya should ditch xbox just as an aside the joke among many oracle employees at the time was that safra katz would buy her kids and her nieces and her nephews and her kids friends everybody xbox game consoles for the holidays because microsoft lost money for everyone that they shipped well nadella has stuck with it and he sees an opportunity to expand through online gaming communities one of his first deals as ceo was minecraft now the acquisition of activision will make microsoft the world's number three gaming company by revenue behind only 10 cent and sony all this will be powered by azure and drive more compute storage ai and tooling now google for its part is battling to stay relevant in the conversation luckily it can afford the massive losses it endures in cloud because the company's advertising business is so profitable don't expect as many have speculated that google is going to bail on cloud that would be a huge mistake as the market is more than large enough for three players which brings us to the rest of the pack cloud ecosystems generally and aws specifically are exploding the idea of super cloud that is a layer of value that spans multiple clouds hides the underlying complexity and brings new value that the cloud players aren't delivering that's starting to bubble to the top and legacy players are staying close to their customers and fighting to keep them spending and it's working dell hpe cisco and smaller predominantly on-plan prem players like pure storage they continue to do pretty well they're just not as sexy as the big cloud players the real interesting activity it's really happening in the ecosystem of companies and firms within industries that are transforming to create their own digital businesses virtually all of them are running a portion of their offerings on the public cloud but often connecting to on-premises workloads and data think goldman sachs making that work and creating a great experience across all environments is a big opportunity and we're seeing it form right before our eyes don't miss it okay that's it for now thanks to my colleague stephanie chan who helped research this week's topics remember these episodes are all available as podcasts wherever you listen just search breaking analysis podcast check out etr's website at etr dot ai and also we publish a full report every week on wikibon.com and siliconangle.com you can get in touch with me email me at david.velante siliconangle.com you can dm me at divalante or comment on my linkedin post this is dave vellante for the cube insights powered by etr have a great week stay safe be well and we'll see you next time [Music] you

>> From the cube studios in Palo Alto in Boston bringing you data-driven insights from the cube in ETR. This is breaking analysis with Dave Vellante. >> There are four A players, in the IS slash pass hyperscale cloud services space, AWS, Azure, Alibaba, and alphabet, pretty clever, huh? In our view, these four have the resources, the momentum, and stamina to outperform all others virtually indefinitely. Now combined, we believe these companies will generate more than $115 billion in 2021 IaaS and PaaS revenue. That is a substantial chunk of market opportunity that is growing as a whole in the mid 30% range in 2021. Welcome to this week's Wiki bond cube insights, powered by ETR. In this breaking analysis, we are initiating coverage of Alibaba for our IaaS and PaaS market segments. And we'll update you on the latest hyperscale cloud market data, and survey data from ETR. Big week in hyperscale cloud land, Amazon and alphabet reported earnings and AWS CEO Andy Jassy was promoted to lead Amazon overall. I interviewed John Furrier on the cube this week. John has a close relationship with Jassy and a unique perspective on these developments. And we simulcast the interview on clubhouse, and then hosted a two hour clubhouse room that brought together all kinds of great perspectives on the topic. And then, we took the conversation to Twitter. Now in that discussion, we were just riffing on our updated cloud estimates and our numbers. And here's this tweet that inspired the addition of Alibaba. Now this gentleman is a tech journalist out of New Delhi and he pointed out that we were kind of overlooking Alibaba and I responded that no, we do not just discounting them but we just need to do more homework in the company's cloud business. He also said we're ignoring IBM, but really they're not in this conversation as a hyperscale IaaS competitor to the big four in our view. And we'll just leave it at that for now on IBM, but, back to Alibaba and the big four, we actually did some homework. So thank you for that suggestion. And this chart shows our updated IaaS figures and includes the full year 2020 which was pretty close to our Q4 projections. You know, the big change is we've added Alibaba in the mix. Now these four companies last year, accounted for $86 billion in revenue, and they grew it 41% rate combined relative to 2019. Now, notably as your revenue for the first time is more than half of that of AWS's revenue which of course hit over $45 billion. AWS's revenue, over top 45 billion last year, which is just astounding. Alibaba you'll note, is larger than Google cloud. The Google cloud platform, I should say GCP, at just over eight billion for Alibaba. Now, the reason Baba is such a formidable competitor, is because the vast majority of its revenue comes from China inside that country. And the company do have plans to continue their international expansion, so we see Alibaba as a real force here. Their cloud business showed positive EBITDA for the first time in the history of the company last quarter. So that has people excited. Now, Google, as we've often reported, is far behind AWS and Azure, despite its higher growth rates Google's overall cloud business lost 5.6 billion in 2020 which has some people concerned. We on the other hand are thrilled, because as we've reported in our view, Google needs to get its head out of its ads cloud is it's future. And we're very excited about the company pouring investments into its cloud business. Look with $120 billion essentially in the balance sheet, we can think of a better use of its cash. Now, I want to stress that these figures are our best efforts to create an apples to apples comparison across all four clouds. Many people have asked about, how much of these figures represent, for example, Microsoft office 365 or Google G suite, which by the way now is called workspaces. And the answer is our intention is $0. These are our estimates of worldwide IaaS in PaaS revenue. You know, some of said, we're too low. Some of said, we're too high. Hey, if you have better numbers, Please share them, happy to have a look. Now you maybe asking, what are the drivers of these figures and the growth that we're showing here? Well, all four of these companies, of course, they're benefiting from an accelerated shift to digital as a result to COVID, but each one has other tailwinds. You know, for example, AWS, it's Capitalizing on its a large headstart. It's created tremendous brand value. And as well, despite the fact that, while we estimate that more than 75% of AWS revenue comes from compute and storage, AWS is feature and functional differentiation combined with this large ecosystem is a very much a driving force of it's growth. In the case of Azure, in addition to its captive software application estate, the company on its earnings calls cited strong growth in its consumption based business across all of its industries and customer segments. As we've said, many times, Microsoft makes it really easy for customers to tap into Azure and a true consumption pricing model, with no minimums and cancel any time. Those kinds of terms make it extremely attractive to experiment and get hooked. We certainly saw this with AWS over the years. Now for Google it's growth is being powered by its outstanding technology, and in particular its prowess in AI and analytics. As well we suspect that much of the losses in Google cloud are coming from large go to market investments for Google cloud platform, and they're paying growth dividends. Now, as Tim Crawford said on Twitter, 6 billion, you know that's not too shabby. Also Google cited wins at Wayfair in Etsy, that Google is putting forth in our view to signal that many retailers they might be are you reluctant to do business with Amazon, was of course a big retailer competitor. These are two high profile names, we'd like to see more in future quarters and likely will. Now let's give you another view of this data and paint a picture of, how the pie is being carved out in the market. Actually we'll use bars because my, millennials sounding boards they hate pie charts. And I like to pay attention, to these emerging voices. At any rate amongst these four, AWS has more than half of the market. AWS and Azure are well ahead of the rest. And we think we'll continue to hold serve for quite some time. Now while we're impressed with Alibaba, they're currently constrained to doing business mostly in China. And we think it'll take many years for Baba and GCP to close that gap on the two leaders if they'll ever even get there. Now let's take a look at, what the customers are saying within the ETR survey data. The chart that we're showing here, this is X, Y chart that we show all the time. It's got net score or spending moments on the vertical axis, and market share or the pervasiveness in the datasets in the survey on the horizontal axis. Now on the upper right, you can see the net scores and the number of mentions for each company and the detailed behind this data. And what we've done here is cut the January survey data of 1,262 respondents, you can see that in filtered in there on the left, and we've filtered the data by cloud meaning the respondents are answering about the companies, cloud computing offerings only. So we're filtering out anything of the non-cloud spend. That's a nice little capability of the ETR platform. Azure is really quite amazing to us. It's got a net score of 72.6%, and that's across 572 responses out of the 1262. AWS is the next most pervasive in the data set with 492 shared accounts and a net score of 57.1%. Now, you may be wondering, well, why is Azure bigger in the dataset than AWS? And when we just told you that the opposite is the case in the market in the previous slide. And the answer is, like this is a survey and it's a lot of Microsoft out there, they're everywhere. And I have no doubt that the respondants notion of cloud doesn't directly map into IaaS and PaaS views of the world, but the trends are clear and consistent. Amazon and Azure, they dominate in this market space. Now for context, we've included functions in the form of AWS Lambda as your functions and Google cloud functions. Because, as you can see, there's a lot of spending momentum in these capabilities in these services. You'll also note, that we've added Alibaba to this chart, and it's got a respectable 63.6% net Score, but there are only 11 shared responses in the data. So they'll go into the bank on these numbers, but look, 11 data points, we'll take it. It's better than zero data points. We've also added VMware cloud on AWS in this chart, and you can see that, that capability that service, that has the momentum and you can see those ones that we've highlighted above the 40% red dotted line, that's where the real action in the market is. So all of those offerings have very strong or strong spending velocity in the ETR data set. Now, for context, we've put Oracle and IBM in the chart. And you can see, they both have, you know they've got a decent presence in the data set. They have 132 mentions and 81 responses respectively. So Oracle, they've got a positive net score of 16.7%, and IBM is in a negative 6.2%. Now, remember this is for their cloud offerings, as the respondents in the data set see them. So what does this mean? It says that among the 132 survey respondents answering that they use Oracle cloud, 16.7% more customers are spending more on Oracle's cloud than are spending less. In the case of IBM, it says more customers are spending less than spending more. Both companies are in the red zone, and show far less momentum than the leaders. Look, I've said many times that the good news is, that Oracle and IBM at least have clouds. But they're not direct competitors of the big four in our view, there just not. They have a large software business, and they can migrate their customers, to their respective clouds and market hybrid cloud services. Their definition of cloud is most certainly different than that of AWS, which is fine, but both companies use what I call a kitchen sink method of reporting their cloud business. Oracle includes, cloud and license support, often with revenue recognition at the time of contract, With a term that's renewable and, it also includes on-prem fees, for things like database and middleware, and if, you want to call that cloud, fine. IBM is just as bad, maybe they're worse and includes so much legacy stuff and its cloud number to hide the ball. It's just not even worth trying to unpack for this episode, I have previously and frankly, it's just not a good use of time. Now, as I've said before, both companies they're in the game that can make good money provisioning infrastructure to support their respective software businesses. I just don't consider them hyperscale class clouds which are defined by the big four, and really only those four. And I'm sure I'll get hate mail about that statement, and I'm happy to defend that position, so please reach out. Okay, but one other important thing that we want to discuss is something that came up this week in our Twitter conversation. Here's a tweet from Matt Baker who had strategic planning for Dell. He was responding to someone who commented on our cloud data, basically saying that, with all that cloud revenue who took the hit, which pockets did it come out of, and Matt was saying, look, it's coming out of customer pockets, but can we please end this zero sum game narrative. In other words, it's not a dollar for cloud that doesn't translate into a lost dollar from on-prem for the legacy companies. So let's take a look at that. For first I would agree, with Matt Baker, it's not a one for one swap of spend but there's definitely been an impact. And here's some data from ETR that can, maybe give us some insight here. What this chart shows is a cut of 915 hyperscale cloud accounts. So within those big four, and within those accounts we show the spending velocity or net score cut within further sectors representative of these on-prem players. So servers, storage and networking, so we cut the data on those three segments. And we're looking here at, VMware, Cisco, Dell, HPE, and IBM, for 2020 and into 2021. It's kind of an interesting picture, it shows the net scores for the January of 20 April, July and October 20 surveys and the January 21 surveys. Now all the on-prem players, they were of course impacted by COVID, IBM seems to be that counter trend line. Not that they weren't impacted, but they have this notable mainframe cycle thing going on. And you know, they're in a down cycle now. So it's kind of opposite of the other guys in terms of the survey momentum. And you can see pretty much, all the others are showing upticks headed into 2021, Cisco, you know kind of flattish, but stable and held up a bit. So to Matt Baker's point, despite the 35% or so growth expected for the big four and 2021 the on-prem leaders are showing some signs of positive spending momentum. So let's dig into this a little bit further, 'cause we're not saying cloud hasn't hurt on prem spending. You know, of course it has. Here's that same picture, over a 10 year view. So you're seeing this long, slow, decline occur, and it's no surprise. If you think about the prevailing model for servers, storage, and networking, on prem in particular. Servers have been perpetually under utilized, even with virtualization. You know, with the exception of like backup jobs, there aren't many workloads that can max out server utilization. So we kept buying more servers to give us performance headroom and ran at 20, 30% utilization, you know in a good day. Yes I know some folks can get up over 50%, but generally speaking servers are well under utilized in storage my gosh, it's kind of the same story, maybe even worse. Because for years it was powered by a mechanical system. So more spindles are required to gain performance, lots of copying going on, lots of, you know, pre-flash waste. And in networking it was a story of got to buy more ports. You've got to buy more ports. In the case of these segments, customers will just defense essentially, forced in this endless cycle of planning, procuring, you know, first planning. They got to get the secure the CapEx, and then they procure, and then they over-provision, and then they manage, you know, ongoing. So then along comes AWS, and says, try this on for size and you can see from that chart, the impact of cloud on those bellwether on-prem infrastructure players. Now, just to give you a little bit more insight on this topic, here's a picture of the wheel charts from the ETR data set. For AWS Microsoft, Google, and we brought in VMware to compare them. A wheel chart shows the percent of customers saying they'll either add a platform new that's the lime green. Increased spending by more than 5%, that's the forest green spend flat relative to last year. That's the gray spend less by more than 5% down, that's the pinkish or leave the platform, that's the Bright red. You subtract the red from the green and you get a percentage that represents net score, AWS with a net score of 60% is off the charts good. Microsoft remember, this includes the entire Microsoft business portfolio, not just Azure, so it's still really strong. Google, frankly, we'd like to see higher net scores and VMware's, you know, so there's a gold standard for on-prem. So we include them, so you can see for reference the strong, but notice they got a much, much bigger flat spending, which is what you would expect from some of these more mature players. Now let's compare these scores to the other, on-prem Kings. So this is not surprising to see, but the greens, they go down, the flats that gray area goes up compared to the cloud guys and the red which is virtually non-existent within AWS, goes into the high teens with the exception of Cisco which despite its exposure to virtually all industries including those hard hit by COVID shows pretty low read scores. So that's, that's good. And I got to share one other, look at this wheel chart for pure storage. We're not really not sure what's happening here, but this is impressive. We're seeing a huge rebound, and you can see we've superimposed as candlestick over comparing previous quarters surveys and, look at the huge up check in the January survey for pure that blue line. That's highlighted in that red dot at ellipse, jumps to a 63% net score from below 20% last quarter. You know, we'll see, I've never seen that kind of uptick before for an established company. And, you know, maybe it's pent up demand or some other anomaly in the data. We'll find out when pure reports in 2021, because remember these are forward looking surveys. But the point is, you still see action going on in hybrid and on-prem, and despite the freight train that is cloud, coming at the legacy players. You know, not that pure is legacy, but it's, you know, it's no longer a lanky teenager. And I think the bottom line, coming back to Matt Baker's point, is there are opportunities that the on-prem players can pursue in hybrid and multi-cloud, and we've talked about this a lot where you're building abstraction layer, on top of the hyperscale clouds and letting them build out their data center presence worldwide, spend on capex, they're going to outspend everybody. And these guys, these on-prem, and hybrid and multi-cloud folks they're going to have to add value on top of that. Now if they move fast, you no doubt there'll be acquiring startups to make that happen. They're going to have to put forth the value proposition and execute on that, in a way that adds clear value above and beyond what the hyperscalers are going to do. Now, the challenge, is picking those right spots, moving fast enough and balancing wall street promises with innovation. There's that same old dilemma. Let's face It. Amazon for years could lose tons of money and not get killed in the street. Google, they got so much cash, they can't spend it fast enough and Microsoft after years of going sideways is finally figured out and the some. Alibaba they're new to our analysis, but it's looking like you know, it's the Amazon of China, Plus ANT despite its regulatory challenges with the Chinese government. So all four of these players, are in the driver's seat in our view. And they're leading in not only cloud, but AI. And of course the data keeps flowing into their cloud. So they're really are in a strong position. Bottom line is we're still early into the cloud platform era and it's morphing. It's from a collection of remote cloud services, into this ubiquitous, sensing, thinking, anticipatory system, that's increasingly automated and working towards full automation. It's intelligent and it's hyper decentralizing toward the edge. One thing's for sure, the next 10 years, they're not going to be the same as the past 10. Okay, that's it for now. Remember I publish each week on Wikibond.com and siliconANGLE.com, these episodes they're all available as podcasts just search for breaking analysis podcast. You can always connect on Twitter. I'm @dvellante or email me at david.Vellante@siliconANGLE.com. I love the comments on LinkedIn and of course in clubhouse the new social app. So please follow me, so that you can get notified when we start a room and riff on these topics. And don't forget to check out etr.plus for all the survey action. This is Dave Vellante for the cube insights powered by ETR be well, and we'll see you next time. (upbeat music)

>> Announcer: From theCUBE Studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a Cube Conversation. >> Hey welcome back everybody, Jeff Frick here with theCUBE. We're in our Palo Alto Studios today, having a Cube Conversation, you know, with the COVID situation going on we've had to change our business and go pretty much 100% digital. And as part of that process, we wanted to reach out to our community, and talk to some of the leaders out there, because I think leadership in troubling times is even more amplified in it's importance. So we're excited to be joined today by two leaders in our community. First one being John Chambers, a very familiar face from many, many years at Cisco, who's now the founder and CEO of JC2 Ventures. John, great to see you. >> Jeff, it's a pleasure to be with you again. >> Absolutely. And joining him is Umesh Sachdev, he's the co-founder and CEO of Uniphore. First time on theCUBE, Umesh, great to meet you. >> Jeff, thank you for having me, it's great to be with you. >> You as well, and I had one of your great people on the other day, talking about CX, and I think CX is the whole solution. Why did Uber beat cabs, do you want to stand on a corner and raise your hand in the rain? Or do you want to know when the guy's going to come pick you up, in just a couple minutes? So anyway, welcome. So let's jump into it. John, one of your things, that you talked about last time we talked, I think it was in October, wow how the world has changed. >> Yes. >> Is about having a playbook, and really, you know, kind of thinking about what you want to do before it's time to actually do it, and having some type of a script, and some type of direction, and some type of structure, as to how you respond to situations. Well there's nothing like a disaster to really fire off, you know, the need to shift gears, and go to kind of into a playbook mode. So I wonder if you could share with the viewers, kind of what is your playbook, you've been through a couple of these bumps. Not necessarily like COVID-19, but you've seen a couple bumps over your career. >> So it's my pleasure Jeff. What I'll do is kind of outline how I believe you use an innovation playbook on everything from acquisitions, to digitizing a company, to dealing with crisis. Let's focus on the playbook for crisis. You are right, and I'm not talking about my age, (John laughing) but this is my sixth financial crisis, and been through the late 1990s with the Asian financial crisis, came out of it even stronger at Cisco. Like everybody else we got knocked down in the 2001 tech bubble, came back from it even stronger. Then in 2008, 2009, Great Recession. We came through that one very, very strong, and we saw that one coming. It's my fourth major health crisis. Some of them turned out to be pretty small. I was in Mexico when the bird pandemic hit, with the President of Mexico, when we thought it was going to be terrible. We literally had to cancel the meetings that evening. That's why Cisco built the PLAR Presence. I was in Brazil for the issue with the Zika virus, that never really developed much, and the Olympics went on there, and I only saw one mosquito during the event. It bit me. But what I'm sharing with you is I've seen this movie again and again. And then, with supply chain, which not many people were talking about yet, supply chain crisis, like we saw in Japan with the Tsunami. What's happening this time is you're seeing all three at one time, and they're occurring even faster. So the playbook is pretty simple in crisis management, and then it would be fun to put Umesh on the spot and say how closely did you follow it? Did you agree with issues, or did you disagree, et cetera, on it. Now I won't mention, Umesh, that you've got a review coming up shortly from your board, so that should not affect your answer at all. But the first playbook is being realistic, how much was self-inflicted, how much was market. This one's largely market, but if you had problems before, you got to address them at the same time. The second thing is what are the five to seven things that are material, what you're going to do to lead through this crisis. That's everything from expense management, to cash preservation. It's about how do you interface to your employees, and how do you build on culture. It's about how do you interface to your customers as they change from their top priority being growth and innovation, to a top priority being cost savings, and the ability to really keep their current revenue streams from churning and moving. And it's about literally, how do make your big bets for what you want to look like as you move out of this market. Then it's how do you communicate that to your employees, to your shareholders, to your customers, to your partners. Painting the picture of what you look like as you come out. As basic as that sounds, that's what crisis management is all about. Don't hide, be visible, CEOs should take the role on implementing that playbook. Umesh to you, do you agree? And have fun with it a little bit, I like the give and take. >> I want to see the playbook, do you have it there, just below the camera? (Jeff laughing) >> I have it right here by my side. I will tell you, Jeff, in crisis times and difficult times like these, you count all the things that go right for you, you count your blessings. And one of the blessings that I have, as a CEO, is to have John Chambers as my mentor, by my side, sharing not just the learning that he had through the crisis, but talking through this, with me on a regular basis. I've read John's book more than a few times, I bet more than anybody in the world, I've read it over and over. And that, to me, is preparation going into this mode. One of the things that John has always taught me is when times get difficult, you get calmer than usual. It's one thing that when you're cruising on the freeway and you're asked to put the brakes, but it's quite another when you're in rocket ship, and accelerating, which is what my company situation was in the month of January. We were coming out of a year of 300% growth, we were driving towards another 300% growth, hiring tremendously, at a high pace. Winning customers at a high pace, and then this hit us. And so what I had to do, from a playbook perspective, is, you know, take a deep breath, and just for a couple of days, just slow down, and calmly look at the situation. My first few steps were, I reached out to 15 of our top customers, the CEOs, and give them calls, and said let's just talk about what you're seeing, and what we are observing in our business. We get a sense of where they are in their businesses. We had the benefit, my co-founder works out of Singapore, and runs our Asia business. We had the benefit of picking up the sign probably a month before everyone else did it in the U.S. I was with John in Australia, and I was telling John that "John, something unusual is happening, "a couple of our customers in these countries in Asia "are starting to tell us they would do the deal "a quarter later." And it's one thing when one of them says it, it's another when six of them say it together. And John obviously has seen this movie, he could connect the dots early. He told me to prepare, he told the rest of the portfolio companies that are in his investment group to start preparing. We then went to the playbook that John spoke of, being visible. For me, culture and communication take front seat. We have employees in ten different countries, we have offices, and very quickly, even before the governments mandated, we had all of them work, you know, go work from home, and be remote, because employee safety and health was the number one priority. We did our first virtual all-hands meeting on Zoom. We had about 240 people join in from around the world. And my job as CEO, usually our all-hands meeting were different functional leaders, different people in the group talk to the team about their initiatives. This all-hands was almost entirely run by me, addressing the whole company about what's going to be the situation from my lens, what have we learned. Be very factual. At the same time, communicating to the team that because of the fact that we raised our funding the last year, it was a good amount of money, we still have a lot of that in the bank, so we going to be very secure. At the same time, our customers are probably going to need us more than ever. Call centers are in more demand than ever, people can't walk up to a bank branch, they can't go up to a hospital without taking an appointment. So the first thing everyone is doing is trying to reach call centers. There aren't enough people, and anyways the work force that call centers have around the world, are 50% working from home, so the capacity has dropped. So our responsibility almost, is to step up, and have our AI and automation products available to as many call centers as we can. So as we are planning our own business continuity, and making sure every single employee is safe, the message to my team was we also have to be aggressive and making sure we are more out there, and more available, to our customers, that would also mean business growth for us. But first, and foremost is for us to be responsible citizens, and just make it available where it's needed. As we did that, I quickly went back to my leadership team, and again, the learning from John is usually it's more of a consensus driven approach, we go around the table, talk about a topic for a couple of hours, get the consensus, and move out of the room. My leadership meetings, they have become more frequent, we get together once a week, on video call with my executive leaders, and it's largely these days run by me. I broke down the team into five different war rooms, with different objectives. One of them we called it the preservation, we said one leader, supported by others will take the responsibility of making sure every single employee, their families, and our current customers, are addressed, taken care of. So we made somebody lead that group. Another group was made responsible for growth. Business needs to, you know, in a company that's growing at 300%, and we still have the opportunity, because call centers need us more than ever, we wanted to make sure we are responding to growth, and not just hunkering down, and, you know, ignoring the opportunity. So we had a second war room take care of the growth. And a third war room, lead by the head of finance, to look at all the financial scenarios, do the stress tests, and see if we are going to be ready for any eventuality that's going to come. Because, you know, we have a huge amount of people, who work at Uniphore around the world, and we wanted to make sure their well being is taken care of. So from being over communicative, to the team and customers, and being out there personally, to making sure we break down the teams. We have tremendous talent, and we let different people, set of people, run different set of priorities, and report back to me more frequently. And now, as we have settled into this rhythm, Jeff, you know, as we've been in, at least in the Bay area here, we've been shelter in place for about a month now. As we are in the rhythm, we are beginning to do virtual happy hours, every Thursday evening. Right after this call, I get together with my team with a glass of wine, and we get together, we talk every but work, and every employee, it's not divided by functions, or leadership, and we are getting the rhythm back into the organization. So we've gone and adjusted in the crisis, I would say very well. And the business is just humming along, as we had anticipated, going into this crisis. But I would say, if I didn't have John by my side, if I hadn't read his book, the number of times that I have, every plane ride we've done together, every place we've gone together, John has spoken about war stories. About the 2001, about 2008, and until you face the first one of your own, just like I did right now, you don't appreciate when John says leadership is lonely. But having him by our side makes it easier. >> Well I'm sure he's told you the Jack Welch story, right? That you've quoted before, John, where Jack told you that you're not really a good leader, yet, until you've been tested, right. So you go through some tough stuff, it's not that hard to lead on an upward to the right curve, it's when things get a little challenging that the real leadership shines through. >> Completely agree, and Jack said it the best, we were on our way to becoming the most valuable company in the world, he looked me in the eye and said "John, you have a very good company." And I knew he was about to give me a teaching moment, and I said "What does it take to have a great one?" He said a near death experience. And I thought I did that in '97, and some of the other management, and he said, "No, it's when you went through something "like we went through in 2001, "which many of our peers did die in." And we were knocked down really hard. When we came back from it, you get better. But what you see in Umesh is a very humble, young CEO. I have to remember he's only 34 years old, because his maturity is like he's 50, and he's seen it before. As you tell, he's like a sponge on learning, and he doesn't mind challenging. And what what he didn't say, in his humbleness, is they had the best month in March ever. And again, well over 300% versus the same quarter a year ago. So it shows you, if you're in the right spot, i.e. artificial intelligence, i.e. cost savings, i.e. customer relationship with their customers, how you can grow even during the tough times, and perhaps set a bold vision, based upon facts and a execution plan that very few companies will be able to deliver on today. So off to a great start, and you can see why I'm so honored and proud to be his strategic partner, and his coach. >> Well it's interesting, right, the human toll of this crisis is horrible, and there's a lot of people getting sick, and a lot of people are dying, and all the estimations are a lot more are going to die this month, as hopefully we get over the hump of some of these curves. So that aside, you know, we're here talking kind of more about the, kind of, the business of this thing. And it's really interesting kind of what a catalyst COVID has become, in terms of digital transformation. You know, we've been talking about new ways to work for years, and years, and years, and digital transformation, and all these kind of things. You mentioned the Cisco telepresence was out years, and decades ago. I mean I worked in Mitsubishi, we had a phone camera in 1986, I looked it up today, it was ridiculous, didn't work. But now, it's here, right. Now working from home is here. Umesh mentioned, you know, these huge call centers, now everybody's got to go home. Do they have infrastructure to go home? Do they have a place to work at home? Do they have support to go home? Teachers are now being forced, from K-12, and I know it's a hot topic for you, John, to teach from home. Teach on Zoom, with no time to prep, no time to really think it through. It's just like the kids aren't coming back, we got to learn it. You know I think this is such a transformational moment, and to your point, if this goes on for weeks, and weeks, and months, and months, which I think we all are in agreement that it will. I think you said, John, you know, many, many quarters. As people get new habits, and get into this new flow, I don't think they're going to go back back to the old ways. So I think it's a real, you know, kind of forcing function for digital transformation. And it's, you can't, you can't sit on the sidelines, cause your people can't come to the office anymore. >> So you've raised a number of questions, and I'll let Umesh handle the tough part of it. I will answer the easy part, which is I think this is the new normal. And I think it's here now, and the question is are you ready for it. And as you think about what we're really saying is the video sessions will become such an integral part of our daily lives, that we will not go back to having to do 90% of our work physically. Today alone I've done seven major group meetings, on Zoom, and Google Hangouts, and Cisco Webex. I've done six meetings with individuals, or the key CEOs of my portfolio. So that part is here to stay. Now what's going to be fascinating is does that also lead into digitization of our company, or do the companies make the mistake of saying I'm going to use this piece, because it's so obvious, and I get it, in terms of effectiveness, but I'm not going to change the other things in my normal work, in my normal business. This is why, unfortunately, I think you will see, we originally said, Jeff, you remember, 40% maybe as high as 45% of the Fortune 500 wouldn't exist in a decade. And perhaps 70% of the start-ups wouldn't exist in a decade, that are venture capital backed. I now think, unfortunately, you're going to see 20-35% of the start-ups not exist in 2 years, and I think it's going to shock you with the number of Fortune 500 companies that do not make this transition. So where you're leading this, that I completely agree with, is the ability to take this terrible event, with all of the issues, and again thank our healthcare workers for what they've been able to do to help so many people, and deal with the world the way it is. As my parents who are doctors taught me to do, not the way we wish it was. And then get your facts, prepare for the changes, and get ready for the future. The key would be how many companies do this. On the area Umesh has responsibility for, customer experience, I think you're going to see almost all companies focus on that. So it can be an example of perhaps how large companies learn to use the new technology, not just video capability, but AI, assistance for the agents, and then once they get the feel for it, just like we got the feel for these meetings, change their rhythm entirely. It was a dinner in New York, virtually, when we stopped, six weeks ago, traveling, that was supposed to be a bunch of board meetings, customer meetings, that was easy. But we were supposed to have a dinner with Shake Shack's CEO, and we were supposed to have him come out and show how he does cool innovation. We had a bunch of enterprise companies, and a bunch of media, and subject matter expertise, we ended up canceling it, and then we said why not do it virtually? And to your point, we did it in 24 different locations. Half the people, remember six weeks ago, had never even used Zoom. We had milk shakes, and hamburgers, and french fries delivered to their home. And it was one of the best two hour meetings I've seen. The future is this now. It's going to change dramatically, and Umesh, I think, is going to be at the front edge of how enterprise companies understand how their relationship with their customers is going to completely transform, using AI, conversational AI capability, speech recognition, et cetera. >> Yeah, I mean, Umesh, we haven't even really got into Uniphore, or what you guys are all about. But, you know, you're supporting call centers, you're using natural language technology, both on the inbound and all that, give us the overview, but you're playing on so many kind of innovation spaces, you know, the main interaction now with customers, and a brand, is either through the mobile phone, or through a call center, right. And that's becoming more, and increasingly, digitized. The ability to have a voice interaction, with a machine. Fascinating, and really, I think, revolutionary, and kind of taking, you know, getting us away from these stupid qwerty keyboards, which are supposed to slow us down on purpose. It's still the funniest thing ever, that we're still using these qwerty keyboards. So I wonder if you can share with us a little bit about, you know, kind of your vision of natural language, and how that changes the interaction with people, and machines. I think your TED Talk was really powerful, and I couldn't help but think of, you know, kind of mobile versus land lines, in terms of transformation. Transforming telecommunications in rural, and hard to serve areas, and then actually then adding the AI piece, to not only make it better for the front end person, but actually make it for the person servicing the account. >> Absolutely Jeff, so Uniphore, the company that I founded in 2008. We were talking about it's such a coincidence that I founded the company in 2008, the year of the Great Recession, and here we are again, talking in midst of the impact that we all have because of COVID. Uniphore does artificial intelligence and automation products, for the customer service industry. Call centers, as we know it, have fundamentally, for the last 20, 30 years, not have had a major technology disruption. We've seen a couple of ways of business model disruption, where call centers, you know, started to become offshore, in locations in Asia, India, and Mexico. Where our calls started to get routed around the world internationally, but fundamentally, the core technology in call centers, up until very recently, hadn't seen a major shift. With artificial intelligence, with natural language processings, speech recognition, available in over 100 languages. And, you know, in the last year or so, automation, and RPA, sort of adding to that mix, there's a whole new opportunity to re-think what customer service will mean to us, more in the future. As I think about the next five to seven years, with 5G happening, with 15 billion connected devices, you know, my five year old daughter, she the first thing she does when she enters the house from a playground, she goes to talk to her friend called Alexa. She speaks to Alexa. So, you know, these next generation of users, and technology users will grow up with AI, and voice, and NLP, all around us. And so their expectation of customer service and customer experience is going to be quantum times higher than some of us have, from our brands. I mean, today when a microwave or a TV doesn't work in our homes, our instinct could be to either go to the website of the brand, and try to do a chat with the agent, or do an 800 number phone call, and get them to visit the house to fix the TV. With, like I said with 5G, with TV, and microwave, and refrigerator becoming intelligent devices, you know, I could totally see my daughter telling the microwave "Why aren't you working?" And, you know, that question might still get routed to a remote contact center. Now the whole concept of contact center, the word has center in it, which means, in the past, we used to have these physical, massive locations, where people used to come in and put on their headsets to receive calls. Like John said, more than ever, we will see these centers become dispersed, and virtual. The channels with which these queries will come in would no more be just a phone, it would be the microwave, the car, the fridge. And the receivers of these calls would be anywhere in the world, sitting in their home, or sitting on a holiday in the Himalayas, and answering these situations to us. You know, I was reading, just for everyone to realize how drastic this shift has been, for the customer service industry. There are over 14 million workers, who work in contact centers around the world. Like I said, the word center means something here. All of them, right now, are working remote. This industry was never designed to work remote. Enterprises who fundamentally didn't plan for this. To your point Jeff, who thought digitization or automation, was a project they could have picked next year, or they were sitting on the fence, will now know more have a choice to make this adjustment. There's a report by a top analyst firm that said by 2023, up to 30% of customer service representatives would be remote. Well guess what, we just way blew past that number right away. And most of the CEOs that I talked to recently tell me that now that this shift has happened, about 40% of their workers will probably never return back to the office. They will always remain a permanent virtual workforce. Now when the workforce is remote, you need all the tools and technology, and AI, that A, if on any given day, 7-10% of your workforce calls in sick, you need bots, like the Amazon's Alexa, taking over a full conversation. Uniphore has a product called Akira, which does that in call centers. Most often, when these call center workers are talking, we have the experience of being put on hold, because call center workers have to type in something on their keyboard, and take notes. Well guess what, today AI and automation can assist them in doing that, making the call shorter, allowing the call center workers to take a lot more calls in the same time frame. And I don't know your experience, but, you know, a couple of weekends ago, the modem in my house wasn't working. I had a seven hour wait time to my service provider. Seven hour. I started calling at 8:30, it was somewhere around 3-4:00, finally, after call backs, wait, call back, wait, that it finally got resolved. It was just a small thing, I just couldn't get to the representative. So the enterprises are truly struggling, technology can help. They weren't designed to go remote, think about it, some of the unique challenges that I've heard now, from my customers, is that how do I know that my call center representative, who I've trained over years to be so nice, and empathetic, when they take a pee break, or a bio break, they don't get their 10 year old son to attend a call. How do I know that? Because now I can no more physically check in on them. How do I know that if I'm a bank, there's compliance? There's nothing being said that isn't being, is, you know, supposed to be said, because in a center, in an office, a supervisor can listen in. When everyone's remote, you can't do that. So AI, automation, monitoring, supporting, aiding human beings to take calls much better, and drive automation, as well as AI take over parts of a complete call, by the way of being a bot like Alexa, are sort of the things that Uniphore does, and I just feel that this is a permanent shift that we are seeing. While it's happening because of a terrible reason, the virus, that's affecting human beings, but the shift in business and behavior, is going to be permanent in this industry. >> Yeah, I think so, you know it's funny, I had Marten Mickos on, or excuse me, yeah, Marten Mickos, as part of this series. And I asked him, he's been doing distributed companies since he was doing MySQL, before Sun bought them. And he's, he was funny, it's like actually easier to fake it in an office, than when you're at home, because at home all you have to show is your deliverables. You can't look busy, you can't be going to meetings, you can't be doing things at your computer. All you have to show is your output. He said it's actually much more efficient, and it drives people, you know, to manage to the output, manage to what you want. But I want to shift gears a little bit, before we let you go, and really talk a little bit about the role of government. And John, I know you've been very involved with the Indian government, and the French government, trying to help them, in their kind of entrepreneurial pursuits, and Uniphore, I think, was founded in India, right, before you moved over here. You know we've got this huge stimulus package coming from the U.S. government, to try to help, as people, you know, can't pay their mortgage, a lot of people aren't so fortunate to be in digital businesses. It's two trillion dollars, so as kind of a thought experiment, I'm like well how much is two trillion dollars? And I did the cash balance of the FAANG companies. Facebook, Apple, Amazon, Netflix, and Alphabet, just looking at Yahoo Finance, the latest one that was there. It's 333 billion, compared to two trillion. Even when you add Microsoft's 133 billion on top, it's still shy, it's still shy of 500 billion. You know, and really, the federal government is really the only people in a position to make kind of sweeping, these types of investments. But should we be scared? Should we be worried about, you know, kind of this big shift in control? And should, do you think these companies with these big balance sheets, as you said John, priorities change a little bit. Should it be, keep that money to pay the people, so that they can stay employed and pay their mortgage, and go buy groceries, and maybe get take out from their favorite restaurant, versus, you know, kind of what we've seen in the past, where there's a lot more, you know, stock buy backs, and kind of other uses of these cash. As you said, if it's a crisis, and you got to cut to survive, you got to do that. But clearly some of these other companies are not in that position. >> So you, let me break it into two pieces, Jeff, if I may. The first is for the first time in my lifetime I have seen the federal government and federal agencies move very rapidly. And if you would have told me government could move with the speed we've seen over the last three months, I would have said probably not. The fed was ahead of both the initial interest rate cuts, and the fed was ahead in terms of the slowing down, i.e. your 2 trillion discussion, by central banks here, and around the world. But right behind it was the Treasury, which put on 4 trillion on top of that. And only governments can move in this way, but the coordination with government and businesses, and the citizens, has been remarkable. And the citizens being willing to shelter in place. To your question about India, Prime Minister Modi spent the last five years digitizing his country. And he put in place the most bandwidth of any country in the world, and literally did transformation of the currency to a virtual currency, so that people could get paid online, et cetera, within it. He then looked at start-ups and job creation, and he positioned this when an opportunity or problem came along, to be able to perhaps navigate through it in a way that other countries might struggle. I would argue President Macron in France is doing a remarkable job with his innovation economy, but also saying how do you preserve jobs. So you suddenly see government doing something that no business can do, with the scale, and the speed, and a equal approach. But at the same time, may of these companies, and being very candid, that some people might have associated with tech for good, or with tech for challenges, have been unbelievably generous in giving both from the CEOs pockets perspective, and number two and three founders perspective, as well as a company giving to the CDC, and giving to people to help create jobs. So I actually like this opportunity for tech to regain its image of being good for everybody in the world, and leadership within the world. And I think it's a unique opportunity. For my start-ups, I've been so proud, Jeff. I didn't have to tell them to go do the right thing with their employees, I didn't have to tell them that you got to treat people, human lives first, the economy second, but we can do both in parallel. And you saw companies like Sprinklr suddenly say how can I help the World Health Organization anticipate through social media, where the next spread of the virus is going to be? A company, like Bloom Energy, with what KR did there, rebuilding all of the ventilators that were broken here in California, of which about 40% were, out of the stock that they got, because it had been in storage for so long, and doing it for all of California in their manufacturing plant, at cost. A company like Aspire Foods, a cricket company down in Texas, who does 3D capabilities, taking part of their production in 3D, and saying how many thousand masks can I generate, per week, using 3D printers. You watch what Umesh has done, and how he literally is changing peoples lives, and making that experience, instead of being a negative from working at home, perhaps to a positive, and increasing the customer loyalty in the process, as opposed to when you got a seven hour wait time on a line. Not only are you probably not going to order anything else from that company, you're probably going to change it. So what is fascinating to me is I believe companies owe an obligation to be successful, to their employees, and to their shareholders, but also to give back to society. And it's one of the things I'm most proud about the portfolio companies that I'm a part of, and why I'm so proud of what Umesh is doing, in both a economically successful environment, but really giving back and making a difference. >> Yeah, I mean, there's again, there's all the doctor stuff, and the medical stuff, which I'm not qualified to really talk about. Thankfully we have good professionals that have the data, and the knowledge, and know what to do, and got out ahead of the social distancing, et cetera, but on the backside, it really looks like a big data problem in so many ways, right. And now we have massive amounts of compute at places like Amazon, and Google, and we have all types of machine learning and AI to figure out, you know, there's kind of resource allocation, whether that be hospital beds, or ventilators, or doctors, or nurses, and trying to figure out how to sort that all out. But then all of the, you know, genome work, and you know, kind of all that big heavy lifting data crunching, you know, CPU consuming work, that hopefully is accelerating the vaccine. Because I don't know how we get all the way out of this until, it just seems like kind of race to the vaccine, or massive testing, so we know that it's not going to spike up. So it seems like there is a real opportunity, it's not necessarily Kaiser building ships, or Ford building planes, but there is a role for tech to play in trying to combat this thing, and bring it under control. Umesh, I wonder if you could just kind of contrast being from India, and now being in the States for a couple years. Anything kind of jump out to you, in terms of the differences in what you're hearing back home, in the way this has been handled? >> You know, it's been very interesting, Jeff, I'm sure everyone is concerned that India, for many reasons, so far hasn't become a big hot spot yet. And, you know, we can hope and pray that that remains to be the case. There are many things that the government back home has done, I think India took lessons from what they saw in Europe, and the U.S, and China. They went into a countrywide lockdown pretty early, you know, pretty much when they were lower than a two hundred positive tested cases, the country went into lockdown. And remember this is a 1.5 billion people all together going into lockdown. What I've seen in the U.S. is that, you know, California thankfully reacted fast. We've all been sheltered in place, there's cabin fever for all of us, but you know, I'm sure at the end of the day, we're going to be thankful for the steps that are taken. Both by the administration at the state level, at the federal level, and the medical doctors, who are doing everything they can. But India, on the other hand, has taken the more aggressive stance, in terms of doing a country lockdown. We just last evening went live at a University in the city of Chennai, where Uniphore was born. The government came out with the request, much like the U.S., where they're government departments were getting a surge of traffic about information about COVID, the hospitals that are serving, what beds are available, where is the testing? We stood up a voice bot with AI, in less than a week, in three languages. Which even before the government started to advertise, we started to get thousands of calls. And this is AI answering these questions for the citizens, in doing so. So it goes back to your point of there's a real opportunity of using all the technology that the world has today, to be put to good use. And at the same time, it's really partnering meaningfully with government, in India, in Singapore, in Vietnam, and here in the U.S., to make sure that happens on, you know, John's coaching and nudging, I became a part of the U.S.-India Strategic Partnership Forum, which is truly a premier trade and commerce body between U.S. and India. And I, today, co-chaired the start-up program with, you know, the top start-ups between U.S. and India, being part of that program. And I think we got, again, tremendously fortunate, and lucky with the timeline. We started working on this start-up program between U.S. and India, and getting the start-ups together, two quarters ago, and as this new regulation with the government support, and the news about the two trillion dollar packages coming out, and the support for small businesses, we could quickly get some of the questions answered for the start-ups. Had we not created this body, which had the ability to poll the Treasury Department, and say here are questions, can start-ups do A, B, and C? What do you have by way of regulation? And I think as a response to one of our letters, on Monday the Treasury put out an FAQ on their website, which makes it super clear for start-ups and small businesses, to figure out whether they qualify or they don't qualify. So I think there's ton that both from a individual company, and the technology that each one of us have, but also as a community, how do we, all of us, meaningfully get together, as a community, and just drive benefit, both for our people, for the economy, and for our countries. Wherever we have the businesses, like I said in the U.S., or in India, or parts of Asia. >> Yeah, it's interesting. So, this is a great conversation, I could talk to you guys all night long, but I probably would hear about it later, so we'll wrap it, but I just want to kind of close on the following thought, which is really, as you've talked about before John, and as Umesh as you're now living, you know, when we go through these disruptions, things do get changed, and as you said a lot of people, and companies don't get through it. On the other hand many companies are birthed from it, right, people that are kind of on the new trend, and are in a good position to take advantage, and it's not that you're laughing over the people that didn't make it, but it does stir up the pot, and it sounds like, Umesh, you're in a really good position to take advantage of this new kind of virtual world, this new digital transformation, that's just now waiting anymore. I love your stat, they were going to move X% out of the call center over some period of time, and then it's basically snap your fingers, everybody out, without much planning. So just give you the final word, you know, kind of advice for people, as they're looking forward, and Umesh, we'll get you on another time, because I want to go deep diving in natural language, I think that's just a fascinating topic in the way that people are going to interact with machines and get rid of the stupid qwerty keyboard. But let me get kind of your last thoughts as we wrap this segment. Umesh we'll let you go first. >> Umesh, you want to go first? >> I'll go first. My last thoughts are first for the entrepreneurs, everyone who's sort of going through this together. I think in difficult times is when real heroes are born. I read a quote that when it's a sunny day, you can't overtake too many cars, but when it's raining you have a real opportunity. And the other one that I read was when fishermen can't go out fishing, because of the high tide, they come back, and mend their nets, and be ready for the time that they can go out. So I think there's no easy way to say, this is a difficult time for the economy, health wise, I hope that, you know, we can contain the damage that's being done through the virus, but some of us have the opportunity to really take our products and technology out there, more than usual. Uniphore, particularly, has a unique opportunity, the contact center industry just cannot keep up with the traffic that it's seeing. Around the world, across US, across Asia, across India, and the need for AI and automation would never be pronounced more than it is today. As much as it's a great business opportunity, it's more of a responsibility, as I see it. There can be scale up as fast as the demand is coming, and really come out of this with a much stronger business model. John has always told me in final words you always paint the picture of what you want to be, a year or two out. And I see Uniphore being a much stronger AI plus automation company, in the customer service space, really transforming the face of call centers, and customer service. Which have been forced to rethink their core business value in the last few weeks. And, you know, every fence sitter who would think that digitalization and automation was an option that they could think of in the future years, would be forced to make those decisions now. And I'm just making sure that my team, and my company, and I, am ready to gear to that great responsibility and opportunity that's ahead of us. >> John, give you the final word. >> Say Jeff, I don't know if you can still hear me, we went blank there, maybe for me to follow up. >> We gotcha. >> Shimon Peres taught me a lot about life, and dealing with life the way it is, not the way you wish it was. So did my parents, but he also taught me it always looks darkest just before the tide switches, and you move on to victory. I think the challenges in front of us are huge, I think our nation knows how to deal with that, I do believe the government has moved largely pretty effectively, to give us the impetus to move, and then if we continue to flatten the curve on the issues with the pandemic, if we get some therapeutic drugs that dramatically reduce the risk of death, for people that get the challenges the worst, and over time a vaccine, I think you look to the future, America will rebound, it will be rebounding around start-ups, new job creation, using technology in every business. So not only is there a light at the tunnel, at the end of the tunnel, I think we will emerge from this a stronger nation, a stronger start-up community. But it depends on how well we work together as a group, and I just want to say to Umesh, it's an honor to be your coach, and I learn from you as much as I give back. Jeff, as always, you do a great job. Thank you for your time today. >> Thank you both, and I look forward to our next catch up. Stay safe, wash your hands, and thanks for spending some time with us. >> And I just want to say I hope and pray that all of us can get together in Palo Alto real quick, and in person, and doing fist bumps, not shake hands or probably a namaste. Thank you, it's an honor. >> Thank you very much. All right, that was John and Umesh, you're watching theCUBE from our Palo Alto Studios, thanks for tuning in, stay safe, wash your hands, keep away from people that you're not that familiar with, and we'll see you next time. Thanks for watching. (calm music)

>> Announcer: Live from New York. It's the Cube. Covering AWS Global Summit 2019. Brought to you by Amazon Web Services. >> Welcome back rush hour's started a little bit early here in New York City with over 10,000 people in attendance for AWS summit in New York City. I'm Stu Miniman, my co host for today is Corey Quinn. Happy to welcome to the program two first time guests from our host, Amazon Web Services. To my right here is Deepak Singh, who's the Director of Compute Services. Sitting to his right is Aaron Kao, who's the Senior Manager of Product Marketing. Gentlemen, thanks so much for joining us. >> Thank you for having us. >> Thank you for having us. >> Alright, so we know that every day we wake up and there's new announcements coming from Amazon and the only way most of us keep up with it is trying to read Corey's newsletter here. But in your group in compute, we know there's a lot going on and quite a few announcements. So Aaron, why don't you kick us off with some of the hard news that went through this morning? >> Yeah, we just launched Amazon EventBridge. It's a serverless event boss that allows you to connect your applications with data from sources like SaaS applications, AWS resources and your own applications. >> All right, so Deepak, I would love to dig into that a little bit. Like you said you that Amazon, you've learned a lot from CloudWatch and building this tool. Everybody looking at kind of, you know, Lambda in the serverless space is like, Okay, how are all these pieces going to come together? Is it all Amazon services all the time? And of course, Amazon has a huge ecosystem, but help us understand or layer down you know how this works? >> Yeah so as you know, AWS services send events to CloudWatch events. They consume events from CloudWatch events. One of the best ways to do it is through Lambda. One of Lambda's biggest strengths is the number of integrations we have with event sources, both taking in events and triggering events. But to your point, there are always events inside database ecosystem. And I think one of the things as a service owner that really excites me about EventBridge is how now customers have access not just to event triggers inside AWS, but also to our partners like Zendesk and the applications you can build will be really exciting. >> Alright, quite a few other announcements, maybe walk us through some of them. >> Yeah, CDK is another announcement where it's an open source software development framework that allows you to model your applications using programming language like TypeScript, Java, Python and .net. You know, the whole thing with building in the cloud, it's slightly different. You used to take your code, put it on a server and run it. Now people are building things a little more distributed, using a lot of different resources for their applications. So it's getting, provisioning your infrastructure is a little bit harder, right? You either have to do a lot of things manually or maybe you're writing a lot of scripts or using a domain specific language. But with CDK, you're now able to use the programming languages that you're programming your applications with, to model and provision your infrastructure. So it's super helpful. Really think it's going to help developers increase their development velocity. They're able to use things like loops, conditions, object oriented programming, they don't have to do context switching and just with a few lines of code, they're able to do a lot more. >> All right. >> I wound up playing with it a little bit when it was in preview and one of the things that I found that it was extremely helpful was, it was a lot easier for me to write something in using CDK, and then see what that rendered down to in terms of cloud formation and then oh, I guess that's how I do it in cloud formation, which was great. The counterpoint though, is it also felt at times like it was super wordy. So if I read that what it generates compared to what I normally write, which is admittedly awful, but I almost start to feel like I'm doing it wrong with that and then with amplify and with Sam and the rest, there's a lot of higher level abstractions that build cloud formation for you. But then it renders down in a few different and key ways. Under the hood, how much are these products that you're coming out with starting to shape the direction of cloud formation itself, or is that mostly baked and done? >> There's a lot of products that we're building that you know, are complementing cloud formation. You know, cloud formation is the templating modeling language to provision AWS resources. But on top of that, we have things like Sam right, that provides a declarative a more high level abstract declarative way to build on top of cloud formation, you know, we have Amplified that also uses cloud formation to help you build mobile applications and front end development. And then finally, you have CDK for just general use. So, these things are all complementing and, you know, things customers are asking for and helping us shape the ecosystem there. >> Yeah, Deepak the container space, of course, has been you know, one of these tidal waves that we've been watching and it's fundamentally changing the way people architect their applications and has huge impact on your product line. Give us the update. If you could just start with some of the high level, I remember first when I talked to you a couple of years ago it was when the whole Kubernetes piece was sorting out. So you know, ECS, EKS, used to have a much longer name that Cory would constantly >> Only for Cory >> Finally you've fixed the compensation problem where someone was getting compensated based upon number of syllables and a service name so good on you on that one. >> Right and you know the acronym A-M-I maybe you can you know settle once and for all you know how how we pronounce that. >> I'm old school it'll always be AMI. (laughs loudly) >> Walk us through kind of, you know your container services. >> I think the great thing about containers is as you said the adoption is everywhere. And what we find is there's a growth of ECS, the growth of EKS whether you're running it on EC2 or Fargate everything is growing like crazy, because people find new interesting ways to run applications based on what they know and what they're comfortable with. We have customers, customers like SNAP that know Kubernetes well and they are building on there're building a big chunk of their new infrastructure on EKS on AWS and it basically helps the developer velocity. On the flip side, you have customers like Turner Broadcasting that run a lot of their web services or the Comedy Central content properties like that on Fargate because they can just stamp them out. They all you know, it's a website, it's a service that they can just keep expanding. So it boils down to what are the key things that you're comfortable with? What are the reasons you've picked something. So if you're running like SNAP across, you know, in many different places, you are likely to choose Kubernetes and standardize on that. So that's the best part for me is, people have choices and then they pick based on what they need at that point in time, which can be two different teams at the same place, picking a different solution. I will add that one of the areas that we are focused on now is observe ability and developer experience. Those are areas that our customers have been asking for. CDK plays into that you saw in the demo this morning and with observe ability with container insights and with the fluid plugins that we announced. I think those are areas that you'll see us do a lot more going forward. >> So right, that was one of news today, CloudWatch container insights just to explain what that one is. >> So historically, when you do CloudWatch look, it's very BM-centric, you're looking at CPU memory, you assuming an application, instances run for a particular period of time. In the container world, you have services where the underlying tasks come and go, all you know, at a very different rate. CloudWatch container insights is meant to be a world that's aware of the fact that your containerized applications are tasks and services and pods, so you're able to get more fine grained metrics on the things that container customers care about and you're not trying to use BM-centric language to look at a containerized infrastructure. So that's the biggest reason for doing that. And then on the Fluent Bit side was, our customers want log routing to whatever they want to do it on. Whether they want it to send to S3 or the Elasticsearch We do that with Kinesis Data Firehose. So we basically wrote a bunch of open source plugins for Fluent Bit that just send your logs where you want them to go. So that's kind of where we are focused. >> Yeah, I view it as more of a log router than I do almost anything else. >> It is that. >> Yeah. A question of: Where does it come from? Where does it go? How do you keep it straight? >> Yeah. >> It's at this point, what does it output to you these days? Are there are various destination options, third party vendors, CloudWatch, history? >> So we wrote two plugins one was for well three, I don't know. One for S3 because so many people don't understand the data to S3. The other one was a Kinesis Data Firehose. So from there, you can send it to Redshift, you can send it to you can send it to Elasticsearch. So based on what you however you want another analyze it, you can send it to a custom resource that's Kinesis. So, you're using some third party provider, you can just send your logs over to those. >> Yeah, Corey, you know, you're dealing with a lot of customers, you know, there's now so many, you know, different instance types and some of the pieces, you know, what's the feedback you're giving to, you know, Amazon these days? >> Entirely depends upon the service teams and it ranges from this is amazing, excellent job to okay, it's a good start. And it's always a question though, it's when you have what 200 service options or darn near it at this point, 170. It's impossible to wind up with something that is evenly consistent and you have services that are sub components of other services and built on top. I mean, I think the, I guess the feedback I've been giving almost universally across the board is, assume that I am about 20% as smart as you right now seem to think I am and then explain it to me and then I'll probably understand it a lot better. It comes down to service to storytelling, more or less of meeting people at various points along their journey and then I was mentioning in our editorial session just before this segment, that that's something that AWS has markedly improved on the last two or three years. Where you have customer stories that are rapidly moving up the stack as far as leverage services. It's not just we took the VMs and now we run them somewhere else. Now it's about building a high, extremely volume intensive applications on top of a whole bunch of managed services and these are serious companies. These are regulators it's not just Twitter for pets anymore. >> Nothing wrong with that. >> No. >> So, you know, we were discussing, like FINRA was a great case study this morning and they talked about in the four years that they've been on, they've re-architected three times. You know, how do you balance all of these new instances coming out with, you know, and how do I make sure that I deploy something today that I've got the flexibility to change, but you know, I want to be able to lock in my pricing and make it easier. >> So actually, we think about that quite a bit. One of the reasons we built app match the way we did, as something that sits outside the container orchestrator, was it doesn't lock you into choosing one or the other or even choosing an architecture. You can start off with a monolith, start putting side cards on it, getting visibility into all your traffic, then portions of your applications you can start breaking out, you can put them on Fargate, you can put them on ECS, you can put them on the EC2. I think that is something we did very consciously because so many of our customers are in that position and I think more and more are going to go higher up the stack using managed databases, using Lambda, but it's not decision they need to make all up front. They can do it piecemeal, and we see our customers find another good example, they've done that. >> One of the philosophies of it, like AWS is giving customers building blocks to build things on. So the whole thing is, here's a new primitive that you can use, then you can take it out, replace something with something else, depending on your needs. So we give customers flexibility and choice. >> And part of the problem is that, that very much becomes a double-edged sword. I mean, most recently, you've had effectively declared war on Alphabet. I don't mean the large cloud provider that turns things off for a living. I'm talking about the English alphabet, where you take a look at all the different EC2 instance types. I think in US East one now there's over what is it 190 different instances you can pick from. It leads to analysis paralysis, which one do I pick? What's the right answer? What am I committing to, what am I not? And you see, that's a microcosm of the larger service problem. I want to build a web app that does a thing, which services do I use, you open up the service listing and you just get this sort of sinking sensation? I get that I can't imagine what someone new to the space is getting to there. >> All right, and this is where things like Amplify, Fargate, AWS Batch where you don't need to select an instance. Where you just tell us what your requirements are and Batch makes that selection for you. The core building blocks are important because you can't really figure out what to do. But then you'll see us do much more about the stack to help people get there. It's an ongoing thing that will keep trying to tackle but you'll see a lot more of that. >> It's controversial. One of my favorite things about Lambda, for example, is there's one knob RAM and as you turn that up, other performance characteristics increase and people complain about it but I love the simplicity, because I don't have to sit and think and make all these different decisions. It's one access. >> Yeah, but if you want more knobs, you can use Fargate. So I think that, that's the beauty of it that you do have that choice. >> Yeah, one of the lines Aaron, I really liked in Werner's keynote is he said, "we've really, you know, my words commoditized IT. "We all have access to all of the tools now." You know, that was, you know what big data originally and cloud also was, you know, you used to have to be a nation state or fortune 100 to be able to do some of these things so, you know, what do you hear from customers? You know, how do they make sure, you know, they're staying competitive and ahead, and therefore, in that relationship between the business and IT, what do you hear from your customers these days? >> In terms of that? Well, I think for, you know, for customers, like I think EventBridge is a, a pretty good example of that, in terms of customers asking us for ability to, you know, integrate their SaaS providers, integrate a lot of different things and not have to, you know, not have to do a lot of undifferentiated heavy lifting and things like that and, you know, customers are increasingly moving towards like event driven architectures and they asked us, hey, we really like CloudWatch events and how you do things with IT automation and then bringing SaaS providers in and, we want to, you know, we don't want to build pulling infrastructure in order to access API's and do all all those heavy liftings. What we did was we built out, we took CloudWatch events and added new features for SaaS applications and built that into a separate service for people to use. So that's like, you know, a lot of the relationships we have with our customers, listening to what they need and giving them what they want. >> And I think that, that's a very valuable thing. You know, we used to say, you know, five years ago, you would talk about, you know, let's get rid of undifferentiated heavy lifting. >> Yeah. >> Well, now it's like, no, no, let's enable, you know, something that you would have thought was heavy lifting and we're daunted to be able to do it but now hopefully, it's easier, because a lot of this stuff, you know, as Corey said, this is still a little bit daunting and you know, well you've got a lot of ecosystem and service providers and services to help us, you know, take care of, you know, because it's the Paradox of Choice with all the options that you have. >> And I think that's the beauty of what, I mean our customers are smart, they manage to find it interesting ways to keep challenging us and they keep us busy. But I also think that really, really many of them, the ones who have been able to be successful, have figured out what it means to take all the tools we give them, which are the ones where they want to completely hand it over to AWS and give us the responsibility and then which ones do they really feel they care about and the ones who can find their balance are the ones that we see moving the fastest. I think that's what we're trying to do. >> All right, now and one thing that does absolutely permeates virtually every service team I've worked with at AWS, I mean, you I've had this experience with you, where I talked about how my use case isn't a terrific fit for your product and your response is always well, what is your use case? It's not, is starting off from the baseline assumption that my use case is ridiculous, which let's face it, it probably is. But being able to address a customer need and understand that even if it doesn't dictate roadmap, is incredibly valuable and I don't find that there are too many players in any space, let alone this one that are willing to have the patience to listen to, frankly, some loud person wearing a suit. >> We try, I mean, I think you heard Andy say there's so much like a big chunk 85, 90% of our roadmap is customer requests, I would say that even the remaining 10% is maybe not things that they've directly asked for but things that we've observed they've run into or that we've run into working with, you know, the one or two customers who are ahead of the pack. And Okay, they have this problem, how do you generalize that? And we try and understand what it means. One of the reasons we made the container roadmap public, was this space is moving so quickly, it's almost impossible for us to talk to enough customers to figure that out. So like, Okay, this gives us an avenue for them to come to us and just tell us, GitHub issues. >> Yeah, so right. Final question I have for both of you. Directionally looking forward, you know, the roadmap, we love when there is publicly facing material not under the NDAs that we normally have to be able to hear. So what are you hearing from your customers? What direction are they pulling you towards and that we should expect to watch AWS kind of further, as we head towards re:Invent later this year. >> I think customers are asking us for different things for developer experience, especially event driven architectures. I think there's going to be a lot of interesting things happening in the Lambda space and that entire space. >> Yeah and to add to that, I think, to your point earlier, helping them simplify choices is going to be a big part of it. Meeting them where they are, in their IDEs with a tooling is a big part of what you'll see us do. So, you know, I think you saw examples today and we'll keep building on top of those. >> All right, well, send our congratulations to the two pizza teams that worked on all of the projects that were announced today. Look forward to seeing you, you know, down the road. Thanks so much and welcome to being Cube alumni. >> Thank you for have us. >> Thank you for having us on. >> Appreciate it. >> Aaron, Deepak you know, from AWS. He's Corey Quinn, I'm Stu Miniman. Back with lots more coverage from AWS summit, here in New York City, thanks for watching the Cube.

(upbeat techno music) >> From Mountain View California, it's the Cube covering the 15th Annual Grow Awards. Brought to you by ACG SV. >> Hi, Lisa Martin with the Cube on the ground at the Computer History Museum for the 15th annual ACG SV Awards. And in Mountain View California excited to welcome to the Cube for the first time, John Hennessy, the chairman of Alphabet and the co-founder of the Knight-Hennessy Scholars Program at Stanford. JOHN, it's truly a pleasure to have you on the Cube today. >> Well delighted to be here, Lisa. >> So I was doing some research on you. And I see Marc Andreessen has called you the godfather of Silicon Valley. >> Marc very generous (loughs) >> so I thought I was pretty cool I'm going to sit down with the godfather tonight. (loughs) >> I have not done that yet. So you are keynoting the 15th Annual ACG SV Awards tonight. Talk to us a little bit about the takeaways that the audience is going to hear from you tonight. >> Well, they're going to hear some things about leadership the importance of leadership, obviously the importance of innovation. We're in the middle of Silicon Valley innovation is a big thing. And the role that technology plays in our lives and how we should be thinking about that, and how do we ensure the technology is something that serves the public good. >> Definitely. So there's about I think over 230 attendees expected tonight over 100 sea levels, the ACG SV Is has been it's it's much more than a networking organization. there's a lot of opportunities for collaboration for community. Tell me a little bit about your experience with that from a collaboration standpoint? >> Well, I think collaboration is a critical ingredient. I mean, for so many years, you look at the collaboration is gone. Just take between between the universities, my own Stanford and Silicon Valley and how that collaboration has developed over time and lead the founding of great companies, but also collaboration within the valley. This is the place to be a technology person in the whole world it's the best place partly because of this collaboration, and this innovative spirit that really is a core part of what we are as a place. >> I agree. The innovative spirit is one of the things that I enjoy, about not only being in technology, but also living in Silicon Valley. You can't go to a Starbucks without hearing a conversation or many conversations about new startups or cloud technology. So the innovative spirit is pervasive here. And it's also one that I find in an in an environment like ASG SV. You just hear a lot of inspiring stories and I was doing some research on them in the last 18 months. Five CEO positions have been seated and materialized through ACG SV. Number of venture deals initiated several board positions. So a lot of opportunity in this group here tonight. >> Right, well I think that's important because so much of the leadership has got to come by recruiting new young people. And with the increase in concerned about diversity and our leadership core and our boards, I think building that network out and trying to stretch it a little bit from the from perhaps the old boys network of an earlier time in the Valley is absolutely crucial. >> Couldn't agree more. So let's now talk a little bit about the Knight-Hennessy Scholars Program at Stanford. Tell us a little bit about it. When was it founded? >> So we are we are in our very first year, actually, this year, our first year of scholars, we founded it in 2016. The motivation was, I think, an increasing gap we perceived in terms of the need for great leadership and what was available. And it was in government. It was in the nonprofit world, it was in the for profit world. So I being a lifelong educator said, What can we do about this? Let's try to recruit and develop a core of younger people who show that they're committed to the greater good and who are excellent, who are innovative, who are creative, and prepare them for leadership roles in the future. >> So you're looking for are these undergraduate students? >> They are graduate students, so they've completed their undergraduate, it's a little hard to tell when somebody's coming out of high school, what their civic commitment is, what their ability to lead is. But coming out of coming out of undergraduate experience, and often a few years of work experience, we can tell a lot more about whether somebody has the potential to be a future leader. >> So you said, found it just in 2016. And one of the things I saw that was very interesting is projecting in the next 50 years, there's going to be 5000 Knight-Hennessy scholars at various stages of their careers and government organizations, NGOs, as you mentioned, so looking out 50 years you have a strong vision there, but really expect this organization to be able to make a lasting impact. >> That's what our goal is lasting impact over decades, because people who go into leadership positions often take a decade or two to rise to that position. But that's what our investment is our investment is in the in the future. And when I went to Phil Knight who's my co-founder and donor, might lead donor to the program, he was enthusiastic. His view was that we had a we had a major gap in leadership. And we needed to begin training, we need to do multiple things. We need to do things like we're doing tonight. But we also need to think about that next younger generation is up and coming. >> Some terms of inspiring the next generation of innovative diversity thinkers. Talk to me about some of the things that this program is aimed at, in addition to just, you know, some of the knowledge about leadership, but really helping them understand this diverse nature in which we now all find ourselves living. >> So one of the things we do is we try to bring in leaders from all different walks of life to meet and have a conversation with our scholars. This morning, we had the UN High Commissioner for Human Rights in town, Michelle Bachelet, and she sat down and talked about how she thought about her role as addressing human rights, how to move things forward in very complex situations we face around the world with collapse of many governments and many human rights violations. And how do you how do you make that forward progress with a difficult problem? So that kind of exposure to leaders who are grappling with really difficult problems is a critical part of our program. >> And they're really seeing and experiencing real world situations? >> Absolutely. They're seeing them up close as they're really occurring. They see the challenges we had, we had Governor Brown and just before he went out of office here in California, to talk about criminal justice reform a major issue in California and around the country. And how do we make progress on that on that particular challenge? >> So you mentioned a couple of other leaders who the students I've had the opportunity to learn from and engage with, but you yourself are quite the established leader. You went to Stanford as a professor in 1977. You are a President Emeritus you were president of Stanford from 2000 to 2016. So these students also get the opportunity to learn from all that you have experienced as it as a professor of Computer Science, as well as in one of your current roles as chairman of Alphabet. Talk to us a little bit about just the massive changes that you have seen, not just in Silicon Valley, but in technology and innovation over the last 40 plus years. >> Well, it is simply amazing. When I arrived at Stanford, there was no internet. The ARPANET was in its young days, email was something that a bunch of engineers and scientists use to communicate, nobody else did. I still remember going and seeing the first demonstration of what would become Yahoo. Well, while David Filo and Jerry Yang had it set up in their office. And the thing that immediately convinced me Lisa was they showed me that their favorite Pizza Parlor would now allow orders to go online. And when I saw that I said, the World Wide Web is not just about a bunch of scientists and engineers exchanging information. It's going to change our lives and it did. And we've seen wave after wave that with Google and Facebook, social media rise. And now the rise of AI I mean this this is a transformative technology as big as anything I think we've ever seen. In terms of its potential impact. >> It is AI is so transformative. I was I was in Hawaii recently on vacation and Barracuda Networks was actually advertising about AI in Hawaii and I thought that's interesting that the people that are coming to to Hawaii on vacation, presumably, people have you know, many generations who now have AI as a common household word may not understand the massive implications and opportunities that it provides. But it is becoming pervasive at every event we're at at the Cube and there's a lot of opportunity there. It's it's a very exciting subject. Last question for you. You mentioned that this that the Knight-Hennessy Scholars Program is really aimed towards graduate students. What is your advice to those BB stem kids in high school right now who are watching this saying, oh, John, what, what? How do you advise me to be able to eventually get into a program like this? >> Well, I think it begins by really finding your passion, finding something you're really dedicated to pushing yourself challenging yourself, showing that you can do great things with it. And then thinking about the bigger role you want to have with technology. In the after all, technology is not an end in itself. It's a tool to make human lives better and that's the sort of person we're looking for in the knight-Hennessy Scholars Program, >> Best advice you've ever gotten. >> Best advice ever gotten is remember that leadership is about service to the people in the institution you lead. >> It's fantastic not about about yourself but really about service to those. >> About service to others >> JOHN, it's been a pleasure having you on the Cube tonight we wish you the best of luck in your keynote at the 15th annual ACG SV Awards and we thank you for your time. >> Thank you, Lisa. I've enjoyed it. Lisa Martin, you're watching the Cube on the ground. Thanks for watching. (upbeat tech music)

(upbeat techno music) >> From Sand Hill Road, in the heart of Silicon Valley, it's theCUBE. Presenting the People First Network, insights from entrepreneurs and tech leaders. >> Hello, everyone, I'm John Furrier the co-host on theCUBE, founder of SiliconANGLE Media. We are here at Sand Hill Road, at Mayfield for the 50th anniversary celebration and content series called The People First Network. This is a co-developed program. We're going to bring thought leaders, inspirational entrepreneurs and tech executives to talk about their experience and their journey around a people first society. This is the focus of entrepreneurship these days. I'm here with Navin Chaddha who's the managing director of Mayfield. Navin, you're kicking off the program. Tell us, why the program? Why People First Network? Is this a cultural thing? Is this part of a program? What's the rationale? What's the message? >> Yeah, first of all I want to thank, John, you and your team and theCUBE for co-hosting the People First Network with us. It's been a real delight working with you. Shifting to people first, Mayfield has had a long standing philosophy that people build companies and it's not the other way around. We believe in betting on great people because even if their initial idea doesn't pan out, they'll quickly pivot to find the right market opportunity. Similarly we believe when the times get tough it's our responsibility to stand behind people and the purpose of this People First Network is people like me were extremely lucky to have mentors along the way, when I was an entrepreneur and now as a venture capitalist, who are helping me achieve my dreams. Mayfield and me want to give back to other entrepreneurs, by bringing in people who are luminaries in their own fields to share their learnings with other entrepreneurs. >> This is a really great opportunity and I want to thank you guys for helping us put this together with you guys. It's a great co-creation. The observation that we're seeing in Silicon Valley and certainly in talking to some of the guests we've already interviewed and that will be coming up on the program, is the spirit of community and the culture of innovation is around the ecosystem of Silicon Valley. This has been the bedrock. >> Mm-hmm. >> Of Silicon Valley, Mayfield, one of the earliest if not the first handful of venture firms. >> Mm-hmm. >> Hanging around Stanford, doing entrepreneurship, this is a people culture in Silicon Valley and this is now going global. >> Mm-hmm. >> So great opportunity. What can we expect to see from some of the interviews? What are you looking for and what's the hope? >> Yeah, so I think what you're going to see from the interviews is, we are trying to bring around 20 plus people, and they'll be many John on the interview besides you. So there will be John Chambers, ex-chairman and CEO of Cisco. There'll be John Zimmer, president and co founder of Lyft. And there also will be John Hennessy who will be our first interview, with him, from Stanford University. And jokes apart, there'll be like 20 plus other people who will be part of this network. So I think what you're going to see is, goings always don't go great. There's a lot of learnings that happen when things don't work out. And our hope is, when these luminaries from their professions, share their learnings the entrepreneurs will benefit from it. As we all know, being an entrepreneur is hard. But sometimes, and many times, actually it's also a lonely road and our belief is, and I strongly personally also believe in it, that great entrepreneurs believe in continuous learning and are continuously adapting themselves to succeed. So our hope is, this People First Network serves as a learning opportunity from entrepreneurs to learn from great leaders. >> You said a few things I really admire about Mayfield and I want to get your reaction because I think is a fundamental for society. Building durable companies is about the long game because people fail and people succeed but they always move on. >> Mm-hmm. >> They move on to another opportunity. They move on to another pursuit. >> Mm-hmm. >> And this pay it forward culture has been a key thing for Silicon Valley. >> It absolutely has been. >> What's the inspiration behind it, from your perspective? You mentioned your experiences. Tell us a story and experience you've had? >> Yeah, so I would say, first of all, right, since we strongly believe people make products and products don't make people, we believe venture capital and entrepreneurship is about like running a marathon, it's not a sprint. So if you take a longterm view, have a strong vision and mission which is supported with great beliefs and values? You can do wonders. And our whole aim, not only as Mayfield but other venture capitalists, is to build iconic companies which are built to last which beyond creating jobs and economic wealth, can give back to the society and make the world a better place to work, live and play. >> You know one of the things that we are passionate about at theCUBE, and on SiliconANGLE Media is standing by our community. >> Mm-hmm. >> Because people do move around and I think one of the things that is key in venture capital now, than ever before is not looking for the quick hit. >> Mm-hmm. >> It's standing by your companies in good times and in bad. >> Mm-hmm. >> Because this is about people and you don't know how things might turn out, how a company might end up in a different place. We've heard some of your entrepreneurs talk about that, that the outcome was not how they envisioned it when they started. >> Mm-hmm. >> This is a key mindset for a business. >> It absolutely is, right? Let's look at a few examples. One of our most successful companies is Lyft. When we backed it at Series A, it was called Zimride. They weren't doing what they were doing, but the company had a strong vision and mission of changing the way people transport and given that, they were A plus people, as I mentioned earlier. The initial idea wasn't going to be a massive opportunity. They quickly pivoted to go after the right market opportunity. And hence, again and again, right? Like to me, it's all about the people. >> Navigating those boards is sometimes challenging and we hope that this content will help people, inspire people, help them discover their passion, discover people that they might want to work with. We really appreciate your support and thank you for contributing your network and your brand and your team in supporting our mission. >> Yeah, it's been an absolute pleasure and we hope the viewers and especially entrepreneurs can learn from the journeys of many iconic people who have built great things in their careers. >> Were here at Sand Hill Road, at Mayfield's venture capital headquarters in sunny Silicon Valley, California, Stanford, California, Palo Alto California, all one big melting pot of innovation. I'm here with John Hennessy, who's the Stanford President Emeritus, also the director of the Knight Hennessy Scholarship. Thanks for joining me today for this conversation. >> Delighted to be here, John. >> So I wanted to get your thoughts on the history of the valley. Obviously, Mayfield, celebrating their 50th anniversary and Mayfield was one of those early venture capital firms that kind of hung around the barbershop, looking for a haircut. Stanford University was that place. Early on this was the innovation spark that created the valley. A lot of other early VCs as well, but not that many in the early days and now 50 years later, so much has changed. What's your thoughts on the arc of entrepreneurship around Stanford, around Silicon Valley? >> Well, you're right, it's been an explosive force. I mean, I think there were a few companies out here on Sand Hill Road at that time. Now nearly the number of venture firms there are today. But I think the biggest change has been the kinds of technologies we build. You know, in those days, we built technologies that were primarily for other engineers or perhaps they were tandem computers being built for business interest. Now we build technologies that change people's lives, every single day and the impact on the world is so much larger than it was and these companies have grown incredibly fast. I mean, you look at the growth rate? We had the stars of the earlier compared to the Googles and Facebooks of today, it's small growth rates, so those are big changes. >> I'm excited to talk with you, because you're one of the only people that I can think of that has seen so many different waves of innovation. You've been involved in many of them yourself, one of the co-founders of MIPS, chairman of the board of Alphabet, which is Google, Google's holding company, the large holdings they have and just Stanford in general has been, you know, now with CAL, kind of the catalyst for a lot of the change. What's interesting is, you know, the Hewlett-Packards, the birthplace of Silicon Valley, that durable company view. >> Mm-hmm. >> Of how to build a company and the people that are involved is really a, still, essential part of it. Certainly happening faster, differently. When you look at the waves of innovation, is there anything that you could look at and say, hey, this is the consistent pattern that we see emerging of these waves? Is it a classic formula of engineers getting together trying to solve problems? Is it the Stanford drop out PH.d program? Is there a playbook? Is there a pattern that you see in the entrepreneurship over the years? >> You know, I think there are these waves that are often induced by big technology changes, right? The beginning of the personal computer. The beginning of the internet. The world wide web, social media. The other observation is that it's very hard to predict what the next one will be. (laughing) If it was easier to predict, there would be one big company, rather than lots of companies riding each one of these waves. The other thing I think that's fascinating about them is these waves don't create just one company. They create a whole new microcosm of companies around that technology which exploit it and bring it to the people and change people's lives with it. >> And another thing is interesting about that point is that even the failures have DNA. You see people, big venture backed company, I think Go is a great example, you think about those kinds of companies. The early work on mobile computing, the early work on processors that you were involved in MIPS. >> Mm-hmm. >> They become successful and/or may/may not have the outcomes but the people move on to other companies to either start companies. This is a nice flywheel, this is one of the things that Silicon Valley has enjoyed over the years. >> Yeah, and just look at the history of RISC technology that I was involved in. We initially thought it would take over the general purpose computing industry and I think Intel responded in an incredible way and eventually reduced the advantage. Now here we are 30 years later and 95%/98% of the processors in the world are RISC because of the rise of mobile, internet of things, dramatically changing where the processors were. >> Yeah. >> They're not on the desktop anymore, they're scattered around in very different ways. >> It's interesting, I was having a conversation with Andy Kessler, who used to be an analyst back at the time for Morgan Stanley. He then became an investor. And he was talking about, with me, the DRAM days when the Japanese were dumping DRAMs and then that was low margin business, and then Intel said, "Hey, no problem. "We'll let go of the DRAM business." but they created Pentium and then the micro processor. >> Right. >> That spawned a whole nother wave, so you see the global economy today, you see China, you see people manufacturing things at very low cost, Apple does work out there. What's your view and reaction to the global landscape? Because certainly things are changed a bit but it seems to be some of the same? What's your thoughts on the global landscape and the impact of entrepreneurs? >> It certainly is global. I mean, I think in two ways. First of all, supply chains have become completely global. Look at how many companies in the valley rely on TSMC as their primary source of silicon? It's a giant engine for the valley. But we also see, increasingly, even in young companies a kind of global, distributed engineering scheme where they'll have a group in Taiwan, or in China or in India that'll be doing part of the engineering work and they're basically outsourcing some of that and balancing their costs and bringing in other talent that might be very hard to hire right now in the valley or very expensive in the valley. And I think that's exciting to see. >> The future of Silicon Valley is interesting because you have a lot of the fast pace, it seems like ventures have shrink down in terms of the acceleration of the classic building blocks of how to get a company started. You get some funding, engineers build a product, they get a prototype, they get it out. Now it seems to be condensed. You'll see valuations of a billion dollars. Can Silicon Valley survive the current pace given the real estate prices and some of the transportation challenges? What's your view on the future of Silicon Valley? >> Well my view is there is no place like the valley. The interaction between great universities, Stanford and Cal, UCSF if you're interested in biomedical innovation and the companies makes it just a microcosm of innovation and excellence. It's challenges, if it doesn't solve it's problems on housing and transportation, it will eventually cause a second Silicon Valley to rise and challenge it and I think that's really up to us to solve and I think we're going to have to, the great leaders, the great companies in the valley are going to have to take a leadership role working with the local governments to solve that problem. >> On the Silicon Valley vision of replicating it, I've seen many people try, other regions try over the years and over the 20 years, my observation is, they kind of get it right on paper but kind of fail in the execution. It's complicated but it's nuanced in a lot of ways but now we're seeing with remote working and the future of work changing a little bit differently and all kinds of new tech from block chain to, you name it, remote working. >> Right. >> That it might be a perfect storm now to actually have a formula to replicate Silicon Valley. If you were advising folks to say, hey, if you want to replicate Silicon Valley, what would be your advice to people? >> Well you got to start with the weather. (laughing) Always a challenge to replicate that. But then the other pieces, right? Some great universities, an ecosystem that supports risk taking and smart failure. One of the great things about the valley is, you're a young engineer/computer scientist graduating, you come here. You go to a start up company, so what it fails? There's 10 other companies you can get a job with. So there's a sense of this is a really exciting place to be, that kind of innovation. Creating that, replicating that ecosystem, I think and getting all the pieces together is going to be the challenge and I think the area that does that will have a chance at building something that could eventually be a real contestant for the second Silicon Valley. >> And I think the ecosystem and community is the key word. >> And community, absolutely. >> So I'll get your thoughts on your journey. Take us through your journey. MIPS co-founder, life at Stanford, now with the Knights Scholarship Program that you're involved in, the Knight Hennessy Scholarship. What lessons have you learned from each kind of big sequence of your life? Obviously in the start up days. Take us through some of the learnings. >> Yeah. >> Whether it's the scar tissue or the success, you know? >> Well, no, the time I spent starting MIPS and I took a leave for about 18 months full-time from the university, but I stayed involved after that on a part time basis but that 18 months was an intensive learning experience because I was an engineer. I knew a lot about the technology we're building, I didn't know anything about starting a company. And I had to go through all kinds of things, you know? Determining who to hire for CEO. Whether or not the CEO would be able to scale with the company. We had to do a layoff when we almost ran out of cash and that was a grueling experience but I learned how to get through that and that was a lesson when I came back to return to the university, to really use those lessons from the valley, they were invaluable. I also became a much better teacher, because here I had actually built something in industry and after all, most of our students are going to build things, they're not going to become future academics. So I went back and reengaged with the university and started taking on a variety of leadership roles there. Which was a wonderful experience. I never thought I'd be university president, not in a million years would I have told you that was, and it wasn't my goal. It was sort of the proverbial frog in the pot of water and the temperature keeps going up and then you're cooking before you know it. >> Well one of the things you did I thought was interesting during your time in the 90's as the head of the computer science department is a lot of that Stanford innovation started to come out with the internet and you had Yahoo, you had Google, you had PH.ds and you guys were okay with people dropping out, coming back in. >> Yeah. >> So you had this culture of building? >> Yup. >> Tell us some of the stories there, I mean Yahoo was a server under the desk and the web exploded. >> Yeah, it was a server under the desk. In fact, Dave and Jerry's office was in a trailer and you go into their room and they'd have pizza boxes and Coke cans stacked around because Yahoo use was exploding and they were trying to build this portal out to serve this growing community of users. Their machine was called Akebono because they were both big sumo wrestling fans. Then eventually, the university had to say, "You guys need to move this off campus "because it's generating 3/4 of the internet traffic "at the university and we can't afford it." (laughing) So they moved off campus and of course figured out how to use advertising as a monetization model. And that changed a lot of things on the internet because that made it possible for Google to come along years later. Redo search in a way that lots of us thought, there's nothing left to do in search, there's just not a lot there. But Larry and Sergey came up with a much better search algorithm. >> Talk about the culture that you guys fostered there because this, I think, is notable, in my mind, as well as some of the things I want to get into about the interdisciplinary. But at that time, you guys fostered a culture of creating and taking things out and there was an investment group of folks around Stanford. Was it a policy? Was it more laid back? >> No, I think-- >> Take us through some of the cultural issues. >> It was a notion of what really matters in the world. How do you get impact? Because in the end that's what the university really wants to do. Some people will do impact by publishing a paper or a book but some technologies, the real impact will occur when you take it out into the real world. And that was a vision that a lot of us had, dating back to Hewlett-Packard, of course but Jim Clark at Silicon Graphics, the Cisco work, MIPS and then, of course, Yahoo and Google years later. That was something that was supported by both the leadership of the university and that made it much easier for people to go out and take their work and take it out to the world. >> Well thank you for doing that, because I think the impact has been amazing and had transcended a lot of society today. You're seeing some challenges now with society. Now we have our own problems. (laughing) The impact has been massive but now lives are being changed. You're seeing technology better lives so it's changing the educational system. It's also changing how people are doing work. Talk about your current role right now with the Knight Hennessy Scholarship. What is that structured like and how are you shaping that? What's the vision? >> Well our vision, I became concerned as I was getting ready to leave the president's office that we, as a human society, were failing to develop the kinds of leaders that we needed. It seemed to me it was true in government. It was true in the corporate world. It was even true in some parts of the nonprofit world. And we needed to step back and say, how do we generate a new community of young leaders who are going to go out, determined to do the right thing, who see their role as service to society? And their success aligned with the success of others? We put together a small program. We put together a vision of this. I got support from the trustees. I went to ask my good friend Phil Knight, talked to him about it, and I said, "Phil I have this great idea," and I explained it to him and he said, "That's terrific." So I said, "Phil I need 400 million dollars." (laughing) A month later he said, "Yes," and we were off and running. Now we've got 50 truly extraordinary scholars from around the world, 21 different birth countries. Really, some of them have already started nonprofits that are making a big difference in their home communities. Others will do it in the future. >> What are some of the things they're working on? And how did you guys roll this out? Because, obviously, getting the funding's key but now you got to execute. What are some of the things that you went through? How did you recruit? How did you deploy? How did you get it up and running? >> We recruited by going out to universities around the world, and meeting with them and, of course, using social media as well. If you want get 21 year and 22 year olds to apply? Go to social media. So that gave us a feed on some students and then we thought a lot, our goal is to educate people who will be leaders in all walks of life. So we have MBAs, we have MDs, we have PH.ds, we have JDs. >> Yeah. >> A broad cohort of people, build a community. Build a community that will last far beyond their time at Stanford so they have a connection to a community of like minded individuals long after they graduate and then try to build their leadership skills. Bringing in people who they can meet with and hear from. George Schultz is coming in on Thursday night to talk about his journey through government service in four different cabinet positions and how did he address some of the challenges that he encountered. Build up their speaking skills and their ability to collaborate with others. And hopefully, these are great people. >> Yeah. >> We just hope to push their trajectory a little higher. >> One of the things I want you is that when Steve Jobs gave his commencement speech at Stanford, which is up on YouTube, it's got zillions and zillions of views, before he passed away, that has become kind of a famous call to arms for a lot of young people. A lot of parents, I have four kids and the question always comes up, how do I get into Stanford? But the question I want to ask you is more of, as you have the program, and you look for these future leaders, what advice would you give? Because we're seeing a lot of people saying, hey you know people build their resume, they say what they think people want to hear to get into a school, you know Steve Job's point said, "Follow your passion, don't live other people's dogma" these are some of the themes that he shared during that famous commencement speech in Stanford. Your advice for the next generation of leaders? How should they develop their skills? What are some of the things that they can acquire? Steve Jobs was famous to say in interviews, "What have you built?" >> Yeah. >> "Tell me something that you've built." It's kind of a qualifying question. So this brings up the question of, how should young people develop? How should they think about, not just applying and getting in but being a candidate for some of these programs? >> Well I think the first thing is you really want to challenge yourself. You really want to engage your intellectual passions. Find something you really like to do. Find something that you're also good at because that's the thing that'll get you out of bed on weekends early, and you'll go do it. I mean, if you asked me about my career? And asked me about my number one hobby for most of my career? It was my career. I loved being a professor. I loved research, I love teaching. That made it very easy to do it with energy and excitement and passion. You know there's a great quote in Steve Job's commencement speech where he says, "I look in the mirror every morning "and if too many days in a row I find out "I don't like what I'm going to do that day, "it's time for a change." Well I think it's that commitment to something. It's that belief in something that's bigger than yourself, that's about a journey that you're going to go on with others in that leadership role. >> I want to get your thoughts on the future for young people and society and business. It's very people centric now. You're seeing a lot of the younger generation look for mission driven ventures, they want to make a difference. But there's a lot of skills out there that are not yet born, yet. There's jobs that haven't been invented yet. Who handles autonomous vehicles? What's the policy? These are societal and technology questions. What are some of things that you see that are important to focus on for some of these new skills? There's a zillion new cyber security jobs open, for instance. >> Right. I mean there's thousands and thousands of openings for people that don't have those skills. >> Well I think we're going to need two different types of people. The traditional techno experts that we've always had but we're also going to need people that have a deep understanding of technology but are deeply committed to understanding it's impact on people. One of the problems we're going to have with the rise of artificial intelligence is we're going to have job displacements. In the longterm, I'm a believer that the number of opportunities created will exceed those that get destroyed but there'll be a lot of jobs that are deskilled or actually eliminated. How are we going to help educate that cohort of people and minimize the disruption of this technology? Because that disruption is really people's live that you're playing with. >> It's interesting, the old expression of ATMs will kill the bank branch but yet, now there's more bank branches than ever before. >> Than ever before, right? >> So, I think you're right on that, I think there'll be new opportunities. Entrepreneurship certainly is changing and I want to get your thoughts. This is the number one question I get from young entrepreneurs is, how should I raise money? How should I leverage money investors and my board? As you build your early foundational successes whether you're an engineer or a team, putting that E team together, entrepreneurial team is critical and that's just not people around the table of the venture. >> Correct. >> It's the support service providers and advisors and board of directors. How should they leverage their investors and board? How should they leverage that resource and not make it contentious, make it positive? >> Make is positive, right? So the best boards are collaborative with the management team, they work together to try to move the company forward. With so many angels now investing in these young companies there's an opportunity to bring in experience from somebody who's already had a successful entrepreneurial venture and looking for really deciding who do you want your investor to be? And it's not just about who gives you the highest valuation. It's also about who'll be there when things get tough? When the cash squeeze occurs and you're about to run out of money and you're really in a difficult situation? Who will help you build out the rest of your management team? Lots of young entrepreneurs, they're excited about their technology. >> Yeah. >> They don't have any management experience. (laughing) They need help. >> Yeah. >> They need help building that team and finding the right people for the company to be successful. >> I want to get thoughts on Mayfield. The 50th anniversary, obviously, they've been around longer than me, I'm going to be 53 this year. I remember when I first pitched Yogan DeGaulle in 1990, my first venture, he passed, but, Mayfield's been around for a while. I mean, Mayfield was the name of the town around here? >> Right. >> And has a lot of history. How do you see the relationship with the ventures and Stanford evolving? Are they still solid? They're doing well? Is it evolved? There's a new program going on? I see much more integration. What's the future of venture? >> Well I think the university's still a source of many ideas, obviously the notion of entrepreneurship has spread much more broadly than the university. And lots of creative start ups are spun out of existing companies or a group of young entrepreneurs that were in Google or Facebook early and now decide they want to go do their own thing. That's certainly happens but I think that ongoing innovation cycle is still alive. It's still dependent on the venture community and their experience having built companies. Particularly when you're talking about first time entrepreneurs. >> Yeah. >> Who really don't have a lot of depth. >> My final question I want to ask you is obviously one relating, pure to my heart, is computer science. I got my degree in the 80's during the systems revolution. Fun time, a lots changed. Women in computer science, the surface area of what computer science is. >> Mm-hmm. >> It was interesting, there was a story in Bloomberg that was debunked but people were debating if the super micros was being hacked by a chip in the system. >> Right. >> And more people don't even know what computer architecture is, I was like, hey now, the drivers might able to inject malware. So you need computer architecture, a book you've written. >> Mm-hmm. >> Academically, to programming so the range of computer science has changed. The diversity has changed. What's your thoughts on the current computer science curriculums? The global programs? Where's it going and what's your perspective on that? >> So I think computer science has changed dramatically. When I was a graduate student, you could arguably take a full set of breadth courses across the discipline. Maybe only one course in AI or one course in data base if you were a hardware or systems person but you could do everything. I could go to basically any Ph.d defense and understand what was going on. No more, the field has just exploded. And the impact? I mean you have people who do bio computation, for example, and you have to understand a lot of biology in order to understand how computer science applies to that. So that's the excitement. The excitement of having computer science have this broad impact. The other thing that's exciting is to see more women, more people of color, coming into the field, really injecting new energy and new perspective into the field and I think that will stand the discipline well in the future. >> And open source has been growing. I mean if you think about what it's like now to write software, all this goodness coming in with open source, it just adds over the top. >> Yeah. >> More goodness. >> I think today a, even a young undergraduate, writing in Python, using all these open libraries, could write more code in two weeks than I could have written in a year when I was graduate student. >> If we were 21 together, sitting here you and I, today, we're 21 years old, what would we do? What would you do? >> Well I think the opportunity created by the rise of machine learning and artificial intelligence is just unrivaled. This is a technology which we have invested in for 50 or 60 years, that was disappointing us for 50 or 60 years, in terms of not meeting it's projections and then, all of a sudden, turning point. It was a radical breakthrough and we're still at the very beginning of that radical breakthrough so I think it's going to be a really exciting time. >> Diane Green had a great quote at her last Google Cloud conference. She said, "It's like butter, everything's great with it." (laughing) AI is the-- >> Yeah, it's great with it. And of course, it can be overstated but I think there really is a fundamental breakthrough in terms of how we use the technology. Driven, of course, by the amount of data available for training these neural networks and far more computational resources than we ever thought we'd have. >> John it's been a great pleasure. Thanks for spending the time with us here for our People First interview, appreciate it. >> My pleasure, John. >> I'm John Furrier with theCUBE, we are here in Sand Hill Road for the People First program, thanks for watching. (upbeat techno music)

(digital chime) (camera shutter) (bright pop music) >> Announcer: Live from New Orleans, Louisiana, it's theCUBE, covering .NEXT Conference 2018, brought to you by Nutanix. >> This is SiliconANGLE Media's production of theCUBE, live in New Orleans, Louisiana, I'm Stu Miniman, with my cohost Keith Townsend, happy to welcome back to the program, fresh off the keynote stage, marching band, you know, floats coming in, Mardi Gras atmosphere, and a slew of new products and updates. Sunil Potti, Chief Product & Development Officer at Nutanix. Sunil, thanks for joining us. >> Yeah, likewise Stu, anytime. >> Alright, so a lot that you covered in, so let's get into it, start with, you know, some of the broad company updates. We've been talking about this journey for making everything invisible. I'm waiting, the next time you're going to have the invisible man. Is a... no, no, no, you're putting the IT person forward. >> Yeah, you know we talk about that continuum between all the way from mainframes to like, whatever, HCI to now we've got cloud instance, hyper-converge, then cloud, and then there's functions. Then eventually we'll have NaaS, which is nothing as a service. Right, something like that, but I mean our journey I think of invisible infrastructure started off at hyper-convergence, so computing storage, and essentially it's just increased layers of convergence is how we see it, so if you can converge the networking stack, we converge the automation aspects, then we go in invisible data centers, and then eventually if you hyper-converge the cloud, CapEx and OpEx, public cloud, private clouds, distributed clouds, then you get an invisible cloud. So it's essentially, I think that's really how we've sort of professed this conference is invisible infrastructure evolving to invisible data centers to evolving to invisible clouds. >> You know, so Sunill, one of the things, if we've been talking to your customers, the question is, "Who is the Nutanix customer?" So, when we talked about kind of HCI, even before it was HCI, let's get ourselves out of the silos, you were working with the administrators and the architects. You've built some of these things, you know, you've got a new SaaS offering, you've got micro-segmentation. You're touching more of the business, and sometimes going up the stack too. >> Yeah, yeah, yeah, yeah. >> Who do you see as the primary customers? >> Yeah, I mean, I think for us, you know, if we just stayed as a broad HCI platform play, then we would probably be slowly making up our way of, between the server guys and the storage guys and maybe the director of infrastructure and so forth. And a lot of it has been groundswell movement for Nutanix over the last six, seven years, right? But, you know, this is what I talk about it to our customers, like when you actually go to cloud on AWS or GCP, there is no storage admin, there is no server admin, there's no one. There's only a cloud architect, and so I think that's what we've seen over the last few years is this evolution to this one single org called the cloud org within enterprises, and then you heard me say this before about this, you know eventually as we move up, our value up the stack, as we go from invisible infrastructure to clouds, our relevancy is also growing to the CIO, because the CIO can now be the CAO, which is the Chief Amazon Officer, or the Chief Alphabet, or the Chief Azure Officer, essentially the Chief Cloud Officer, where we can help them blur the lines between AWS inside, which is Nutanix, and then AWS outside. >> Yeah, I love that, because when we talk to customers, it's not "I'm building out "my multicloud, hybrid cloud, composite," whatever you want to call it, it's "We're "figuring out our digital transformation, "and we've got applications, we've got stuff we're SaaSifying, "there's cool things I've built, you know, "in the public cloud, and I've got, you know, "my data center and the transformation that "I'm going through there." So, the question I have for you is, what is Nutanix's position in the cloud? I didn't hear you going up on stage saying you're going to put five to 10 billion dollars a year into building out data centers and availability zones, and all those things there. Sometimes people misconstrue some of the journey and things like Zy, and they're like, "Oh, it rhymes with what Amazon's doing," or even many times, you know, similar services to an Amazon there, but partnerships with the public cloud providers, and you know, please help us set the record straight, that you're not standing up a public cloud. >> Yeah, I think look, we think increasingly the world, of the world of clouds is a dispersed world, right? I mean, you had to say that we think this construct called the core cloud, which is essentially both, you know, a private version and a public version that's harmonized together into this one enterprise core cloud, but then increasingly we are seeing cloud-like architecture in a remote office branch office or in a retail store, so we call that the distributed cloud, and then it's also with IOT especially, it's getting extended all the way to the edge, whether it be a one-node Nutanix deployment talking to a data center of clusters talking to GCP for machine learning. So we think that the world of clouds is going to emerge as the de facto standard, and public cloud just happens to be a big percentage of that. Private cloud will also be a decent percentage of that. So will these other clouds, so what we need is, I guess, one OS to bind them all, right? And that's the end goal for what we're embarking on, so one of the things that we've recognized is that one of different kinds of clouds is an extended enterprise cloud, where instead of having two primary data centers and two secondary data centers, and then having five cloud availability zones, why even be in the secondary business? What if the secondary data centers were subsumed into a cloud as a service, but you retained the same operational tooling as your primary data center? And that's really where Zy's footprint comes in is, it's to augment what a customer is going through's journey of private cloud or public cloud to this distributed cloud environment, that there will be some news cases that need to be fulfilled using the same cloud architecture. >> So Sunil, let's talk about the customer journey alongside Nutanix's journey. You guys are walking, term I heard a lot so far in the conference is, Nutanix is our partner, our partner in this journey in digital transformation. However, the customer today is very much infrastructure customers. You guys talk to developers, internal customers of your customers. What has been that story, and what has been that conversation? What have, what have you guys learned, and what have you taught your customers along the way? >> I mean I think it's, look we generally know, as I've mentioned on stage today, that we're in another decades worth of journey, as we go from invisible infrastructure to invisible clouds. That's not going to happen in six six months or so, but what we're finding is that, in the last, I would say four to five years, the view of what cloud can be used for, the "why" of cloud has changed. Initially, there used to be, "Oh, I need to get past IT," by developers, then it eventually became, "Oh, no, no, no, I need to use it as a way to, you know, to deliver a better IT." Now it's being used as a way to actually drive my business. And that's why we use the word digital transformation, just because it's a direct connotation to driving the top line, right? So, when you look at our customers and the journey that we're on, we also want to set expectations of what we are versus what we are not, right? So we're not about enabling the applications to be built, in the sense that, you know, we're not application software companies, but at the end of the day though, if we can abstract out all the, if I can call it, issues below an app and allow IT or the business to focus on a new org that we're calling, you know, the CIO and the CTO merged to be the CDO, right, the Chief Digital Officer, that becomes one org, and that's what we're seeing with many of our large customers is, many of our customers are, their orgs, either they were in the CIO organization, or the infrastructure organization, or the cloud organization, they're all now being merged into the CDO org, and the goal then becomes for it to power a digital transformation through various apps, but with our, essentially leveraging infrastructure as a boat anchor, right? It's more of an accelerator at that point. >> So, there's debate on where that ends, like you know, we can talk about with edge computing, like where does edge start and the core begin. The same thing with infrastructure. You guys made a really interesting announcement around your capability with databases today and being able to, I don't even know the term but, to put a prism-like experience to databases. Talk about those areas around what we've considered traditionally infrastructure, storage network compute, going to this middleware layer, where do you think you can help customers simplify their journey? >> I mean, I think just to recap, some of the ways that we've, you know, approached this year is, look we think about it as three layers of the cloud stack, which is we had computer storage virtualization and we sort of completed the IA stack with our Flow product, which delivers one-click secure networks. And then for the first time, even though our stack is good for running third-party workloads, just like the public cloud runs a lot of PaaS services, increasingly in enterprises, customers are asking for an opinionated view of a PaaS service. So we do have third-party partnerships with Cloudera, Hortonworks, a whole bunch of other third-party providers, but the core database workload, especially with Oracle being such a complex beast, but it's mainstream, the customer has said, "Look, "can you provide a one plus one "equals three kind of solution "for the world of database?" And that's what Nutanix Era is, and that sort of becomes sort of cornerstone of our first PaaS service, where we're trying to simplify database operations, including things like Oracle RAC, and that's what we demonstrated was to actually provision Oracle RAC in minutes, make clones, create dev instances, and democratize databases for the rest of developers using APIs. So that's the sort of evolution of the stack for us with Nutanix Era, and then we didn't stop there. We also sort of innovated with our first Nutanix SaaS service, with this product called Beam with the acquisition of Minjar, which essentially says, look multi-cloud needs to start with stability, and then obviously you enable control and then you add operational automation, and then visibility and so forth, right? So, with Beam there, it's sort of, sort of sets the stage for the fact that we can now add more to the multi-cloud portfolio. >> Sinil, Beam's an interesting one. Your first SaaS offering. Keith and I were talking before this. There are lots of companies out there that are trying to tackle this challenge. >> Sunil: Yeah, yeah, yeah, yeah, absolutely. >> With that have, you know, every single platform company out there is trying to tackle this, and then there's lot of independents. There's a lot that goes into, you know, maintaining, advising, you know, the whole consultancy world has spent decades doing this. How do you balance product development efforts there versus, you know, your core platform? You know, should this be an indication that you're going to build out a SaaS portfolio in the future? >> Got it, got it, got it. I know, that's a great question. So, so I think, just to take a step back, Minjar was an interesting company, because Netsil, the other acquisition, is also a bought in the cloud SaaS service that will integrate for hybrid, you know, visibility and networking, but also stand-alone application operations. But Minjar had this interesting history where it was originally a high-end advisory service for AWS. >> Stu: Right. >> It was in the top-five service partners for AWS, and they actually had dozens of customers that they still operate and manage and provide, you know, get a lot of learnings from helping customers, sort of, they are like the Navy SEALS of AWS and so forth, right? And when they built this product, which is now called as Beam, what we think about it is that, look that particular capability is a feature of a platform. It's not a stand-alone product category. What people are going to be looking forward to is a multi-cloud operational fabric, that has an app store and a marketplace, where I can go in and consume services, whether it be on prem or off prem, have a single pane of glass for visibility, again on prem or off prem, and then do one-click automation or orchestration, right? And so the fact that this single pane of glass has to cut over on prem as well as public cloud is the reason why we believe Nutanix has a play here to kind of make it a core feature, because we at least own one pillar of it, which is the on-prem stack, and to the extent that we can do an honest job of extending it to a deep job on AWS and DCP and others, then I think there's value added. >> How do you get closer to the application? When I look at this space, Oracle, IBM, and Microsoft have all been talking some similar messages on this, and that, the cloud strategies that they've gone through have that operational model, and you know, they own these applications, so you know, why Nutanix? >> Yeah, I mean I think it's another interesting question. So look, I think the world of apps, and I would say that power shift is happening obviously. We know that with IBM, but even with Oracle, as a mainstream enterprise app, if you really look at, say a public cloud conference, especially AWS's conference, if anything, the only vendor that they take potshots at is Oracle, because they see it as long-hanging fruit in the enterprise from a complexity side, right? And I think with the advent of cloud, the first time the customers have seen a real alternative to move away from this SQL engine on Oracle to potential Postgres or other alternatives. But to do that, you need abstractions. I need to be able to simplify my current environment of Oracle. At the same time, do it in a way that I can actually harmonize the API so that, oh, at some point, can I actually create another instance, but it's on Postgres, right? And the more I can provide that abstracted APIs, the more, you know, flexibility that's there for the customers to actually move from this legacy apps to the next generation apps. So I think, I guess the simple answer to your question is, look for us, even if you're not in the app business, if anything it's an asset than a liability, because then we can be completely neutral to the transformation from the old to the new. We have no skin in the game of keeping you in the old architecture, so if a customer says, "Look, I need to manage "my old, but I need an accelerated "way to get to the new cloud-native apps," then we are all for it. >> So Sinil, one of the, I think I would call this one of the first principles of Nutanix is this ideal of want-quick provisioning, the ability to simplify really complex, really hard things. You guys did it with HCI. The database management piece is another example. You're talking about it now, with ACS and the cloud. Let's talk about the, what happens when you zig when you should have zagged. In the case of going with Docker, the leading solution at the time, >> Sure, sure. >> Seemed like the right approach to go, now you guys are zagging. What makes Nutanix capable of making such a quick change and providing the consistent layer, like as customers go along with you on this journey, 6they count on APIs, they count on integrations, they count on just to, that basic capability and that it's stable. What gives customers the comfort level, that you know what, the complex stuff, Nutanix will take care of, if there needs to be a course correction from a culture and development platform perspective, they can right the ship? >> Yeah, no I think to your first question there Keith, I think, look, in this era now, it doesn't matter which business you're in, the time to succeed obviously is accelerated, but the time to fail is also accelerated, right? We just have to internalize that in our DNA. I would say of any high-growth company is to just be honest about failing fast. And I, yeah I mean I think Docker was a thing a year and a half ago, and we were early to market, and in fact, I would say it was our ACs and a couple of guys in Europe who actually recognized that, look why are we focusing on all this, when every customer that I talk to is testing out Kubernetes. And sure, we were sitting in Silicon Valley and Kubernetes was just coming up and so forth, and so I think it's two things, one their internalization that look, we have to fail fast in a high-growth business like ours. And then two, having the sensors that give us indications of, are we in the right course or not is also important. And so, the other thing that I would say that has worked well with this company than my prior companies is the fact that it, while it is hierarchical for scale, it is one inch to end from a communications perspective. Things like Slack, things like the communication mechanism, allow us to have that real-time touch with the front guys that focus on the customers and so forth. So, so for example, once the clarity was there around ACS to kind of zag on Kubernetes, the whole system was able to lean in, because the "why" of doing that was clear. The "what" and the "how" follow, right? I mean that's really what, how we will keep it going. >> Alright Sunil, before we let you you go, I want to bring back to the infrastructure side. You've had a few of the solutions that are growing really fast. I know you've highlighted the AFS, the Acropolis File Services. I've got the new object service that just got announced. At core platform, what are the areas that are catching wildfire for your customers? >> That's a great question, so on the core platform, which is still our bread and butter to some extent, our core focus has been about it becoming like the OS for the enterprise, period, right? And there's no workloads left as an island. And right now if I can, you know, three years ago we were talking about workloads that we're good for. Nowadays, I talk about workloads that we're not good for. So if I'm a scale-up database that requires certification, I can tell you about some of those that we are short of getting certified, but once that happens, there should be no workload that we're not good far. And that's where AFS comes in, that's where object services come in is, these are all requirements in the core OS that are needed to solve for those kinds of workloads. And, one thing though, to Keith's earlier point, that we have tried to keep honest, and that's why some of these take longer to come out, is that they still have to hold the bar of instant upgrades. Start small, start quickly, pay as you grow. They all have to follow the same ground rules, right? And that is what is keeping us honest frankly, in the overall desire. >> Okay, want to give you the final word, as Keith said, your customers consider Nutanix a partner. As they leave Nutanix .NEXT 2018, how should they be considering Nutanix? >> Yeah, no I think leaving Nutanix, they should recognize us as a company that obviously needs to be hungry, that needs to have a bold vision. We, you know, in our core values, we will make mistakes, we are vulnerable. But we are, you know, hopefully transparent about it, so that that's the, at the end of the day, the core essence of a partnership is that level of transparency between two people, right? And that's what we are hoping that customers will take away from the conference. >> Alright, well Sunil, it's always been a pleasure to document everything going at, since the inaugural .NEXT back in Miami, and we'll look forward to seeing you at the next show, where we'll make sure to pin you on, you know, how we've gone first. >> Sounds good. >> Sunil Potti and Keith Townsend. I'm Stu Miniman, be back with lots more coverage. Thanks for watching theCUBE. (techno music)

>> Narrator: Live from New York, it's theCUBE. Covering machine learning everywhere. Build your ladder to AI. Brought to you by IBM. >> Welcome back to IBM's Machine Learning Everywhere. Build your ladder to AI, along with Dave Vellante, John Walls here, wrapping up here in New York City. Just about done with the programming here in Midtown. Dave, let's just take a step back. We've heard a lot, seen a lot, talked to a lot of folks today. First off, tell me, AI. We've heard some optimistic outlooks, some, I wouldn't say pessimistic, but some folks saying, "Eh, hold off." Not as daunting as some might think. So just your take on the artificial intelligence conversation we've heard so far today. >> I think generally, John, that people don't realize what's coming. I think the industry, in general, our industry, technology industry, the consumers of technology, the businesses that are out there, they're steeped in the past, that's what they know. They know what they've done, they know the history and they're looking at that as past equals prologue. Everybody knows that's not the case, but I think it's hard for people to envision what's coming, and what the potential of AI is. Having said that, Jennifer Shin is a near-term pessimist on the potential for AI, and rightly so. There are a lot of implementation challenges. But as we said at the open, I'm very convinced that we are now entering a new era. The Hadoop big data industry is going to pale in comparison to what we're seeing. And we're already seeing very clear glimpses of it. The obvious things are Airbnb and Uber, and the disruptions that are going on with Netflix and over-the-top programming, and how Google has changed advertising, and how Amazon is changing and has changed retail. But what you can see, and again, the best examples are Apple getting into financial services, moving into healthcare, trying to solve that problem. Amazon buying a grocer. The rumor that I heard about Amazon potentially buying Nordstrom, which my wife said is a horrible idea. (John laughs) But think about the fact that they can do that is a function of, that they are a digital-first company. Are built around data, and they can take those data models and they can apply it to different places. Who would have thought, for example, that Alexa would be so successful? That Siri is not so great? >> Alexa's become our best friend. >> And it came out of the blue. And it seems like Google has a pretty competitive piece there, but I can almost guarantee that doing this with our thumbs is not the way in which we're going to communicate in the future. It's going to be some kind of natural language interface that's going to rely on artificial intelligence and machine learning and the like. And so, I think it's hard for people to envision what's coming, other than fast forward where machines take over the world and Stephen Hawking and Elon Musk say, "Hey, we should be concerned." Maybe they're right, not in the next 10 years. >> You mentioned Jennifer, we were talking about her and the influencer panel, and we've heard from others as well, it's a combination of human intelligence and artificial intelligence. That combination's more powerful than just artificial intelligence, and so, there is a human component to this. So, for those who might be on the edge of their seat a little bit, or looking at this from a slightly more concerning perspective, maybe not the case. Maybe not necessary, is what you're thinking. >> I guess at the end of the day, the question is, "Is the world going to be a better place with all this AI? "Are we going to be more prosperous, more productive, "healthier, safer on the roads?" I am an optimist, I come down on the side of yes. I would not want to go back to the days where I didn't have GPS. That's worth it to me. >> Can you imagine, right? If you did that now, you go back five years, just five years from where we are now, back to where we were. Waze was nowhere, right? >> All the downside of these things, I feel is offset by that. And I do think it's incumbent upon the industry to try to deal with the problem, especially with young people, the blue light problem. >> John: The addictive issue. >> That's right. But I feel like those downsides are manageable, and the upsides are of enough value that society is going to continue to move forward. And I do think that humans and machines are going to continue to coexist, at least in the near- to mid- reasonable long-term. But the question is, "What can machines "do that humans can't do?" And "What can humans do that machines can't do?" And the answer to that changes every year. It's like I said earlier, not too long ago, machines couldn't climb stairs. They can now, robots can climb stairs. Can they negotiate? Can they identify cats? Who would've imagined that all these cats on the Internet would've led to facial recognition technology. It's improving very, very rapidly. So, I guess my point is that that is changing very rapidly, and there's no question it's going to have an impact on society and an impact on jobs, and all those other negative things that people talk about. To me, the key is, how do we embrace that and turn it into an opportunity? And it's about education, it's about creativity, it's about having multi-talented disciplines that you can tap. So we talked about this earlier, not just being an expert in marketing, but being an expert in marketing with digital as an understanding in your toolbox. So it's that two-tool star that I think is going to emerge. And maybe it's more than two tools. So that's how I see it shaping up. And the last thing is disruption, we talked a lot about disruption. I don't think there's any industry that's safe. Colin was saying, "Well, certain industries "that are highly regulated-" In some respects, I can see those taking longer. But I see those as the most ripe for disruption. Financial services, healthcare. Can't we solve the HIPAA challenge? We can't get access to our own healthcare information. Well, things like artificial intelligence and blockchain, we were talking off-camera about blockchain, those things, I think, can help solve the challenge of, maybe I can carry around my health profile, my medical records. I don't have access to them, it's hard to get them. So can things like artificial intelligence improve our lives? I think there's no question about it. >> What about, on the other side of the coin, if you will, the misuse concerns? There are a lot of great applications. There are a lot of great services. As you pointed out, a lot of positive, a lot of upside here. But as opportunities become available and technology develops, that you run the risk of somebody crossing the line for nefarious means. And there's a lot more at stake now because there's a lot more of us out there, if you will. So, how do you balance that? >> There's no question that's going to happen. And it has to be managed. But even if you could stop it, I would say you shouldn't because the benefits are going to outweigh the risks. And again, the question we asked the panelists, "How far can we take machines? "How far can we go?" That's question number one, number two is, "How far should we go?" We're not even close to the "should we go" yet. We're still on the, "How far can we go?" Jennifer was pointing out, I can't get my password reset 'cause I got to call somebody. That problem will be solved. >> So, you're saying it's more of a practical consideration now than an ethical one, right now? >> Right now. Moreso, and there's certainly still ethical considerations, don't get me wrong, but I see light at the end of the privacy tunnel, I see artificial intelligence as, well, analytics is helping us solve credit card fraud and things of that nature. Autonomous vehicles are just fascinating, right? Both culturally, we talked about that, you know, we learned how to drive a stick shift. (both laugh) It's a funny story you told me. >> Not going to worry about that anymore, right? >> But it was an exciting time in our lives, so there's a cultural downside of that. I don't know what the highway death toll number is, but it's enormous. If cell phones caused that many deaths, we wouldn't be using them. So that's a problem that I think things like artificial intelligence and machine intelligence can solve. And then the other big thing that we talked about is, I see a huge gap between traditional companies and these born-in-the-cloud, born-data-oriented companies. We talked about the top five companies by market cap. Microsoft, Amazon, Facebook, Alphabet, which is Google, who am I missing? >> John: Apple. >> Apple, right. And those are pretty much very much data companies. Apple's got the data from the phones, Google, we know where they get their data, et cetera, et cetera. Traditional companies, however, their data resides in silos. Jennifer talked about this, Craig, as well as Colin. Data resides in silos, it's hard to get to. It's a very human-driven business and the data is bolted on. With the companies that we just talked about, it's a data-driven business, and the humans have expertise to exploit that data, which is very important. So there's a giant skills gap in existing companies. There's data silos. The other thing we touched on this is, where does innovation come from? Innovation drives value drives disruption. So the innovation comes from data. He or she who has the best data wins. It comes from artificial intelligence, and the ability to apply artificial intelligence and machine learning. And I think something that we take for granted a lot, but it's cloud economics. And it's more than just, and somebody, one of the folks mentioned this on the interview, it's more than just putting stuff in the cloud. It's certainly managed services, that's part of it. But it's also economies of scale. It's marginal economics that are essentially zero. It's speed, it's low latency. It's, and again, global scale. You combine those things, data, artificial intelligence, and cloud economics, that's where the innovation is going to come from. And if you think about what Uber's done, what Airbnb have done, where Waze came from, they were picking and choosing from the best digital services out there, and then developing their own software from this, what I say my colleague Dave Misheloff calls this matrix. And, just to repeat, that matrix is, the vertical matrix is industries. The horizontal matrix are technology platforms, cloud, data, mobile, social, security, et cetera. They're building companies on top of that matrix. So, it's how you leverage the matrix is going to determine your future. Whether or not you get disrupted, whether your the disruptor or the disruptee. It's not just about, we talked about this at the open. Cloud, SaaS, mobile, social, big data. They're kind of yesterday's news. It's now new artificial intelligence, machine intelligence, deep learning, machine learning, cognitive. We're still trying to figure out the parlance. You could feel the changes coming. I think this matrix idea is very powerful, and how that gets leveraged in organizations ultimately will determine the levels of disruption. But every single industry is at risk. Because every single industry is going digital, digital allows you to traverse industries. We've said it many times today. Amazon went from bookseller to content producer to grocer- >> John: To grocer now, right? >> To maybe high-end retailer. Content company, Apple with Apple Pay and companies getting into healthcare, trying to solve healthcare problems. The future of warfare, you live in the Beltway. The future of warfare and cybersecurity are just coming together. One of the biggest issues I think we face as a country is we have fake news, we're seeing the weaponization of social media, as James Scott said on theCUBE. So, all these things are coming together that I think are going to make the last 10 years look tame. >> Let's just switch over to the currency of AI, data. And we've talked to, Sam Lightstone today was talking about the database querying that they've developed with the Plex product. Some fascinating capabilities now that make it a lot richer, a lot more meaningful, a lot more relevant. And that seems to be, really, an integral step to making that stuff come alive and really making it applicable to improving your business. Because they've come up with some fantastic new ways to squeeze data that's relevant out, and get it out to the user. >> Well, if you think about what I was saying earlier about data as a foundational core and human expertise around it, versus what most companies are, is human expertise with data bolted on or data in silos. What was interesting about Queryplex, I think they called it, is it essentially virtualizes the data. Well, what does that mean? That means i can have data in place, but I can have access to that data, I can democratize that data, make it accessible to people so that they can become data-driven, data is the core. Now, what I don't know, and I don't know enough, just heard about it today, I missed that announcement, I think they announced it a year ago. He mentioned DB2, he mentioned Netezza. Most of the world is not on DB2 and Netezza even though IBM customers are. I think they can get to Hadoop data stores and other data stores, I just don't know how wide that goes, what the standards look like. He joked about the standards as, the great thing about standards is- >> There are a lot of 'em. (laughs) >> There's always another one you can pick if this one fails. And he's right about that. So, that was very interesting. And so, this is again, the question, can traditional companies close that machine learning, machine intelligence, AI gap? Close being, close the gap that the big five have created. And even the small guys, small guys like Uber and Airbnb, and so forth, but even those guys are getting disrupted. The Airbnbs and the Ubers, right? Again, blockchain comes in and you say, "Why do I need a trusted third party called Uber? "Why can't I do this on the blockchain?" I predict you're going to see even those guys get disrupted. And I'll say something else, it's hard to imagine that a Google or a Facebook can be unseated. But I feel like we may be entering an era where this is their peak. Could be wrong, I'm an Apple customer. I don't know, I'm not as enthralled as I used to be. They got trillions in the bank. But is it possible that opensource and blockchain and the citizen developer, the weekend and nighttime developers, can actually attack that engine of growth for the last 10 years, 20 years, and really break that monopoly? The Internet has basically become an oligopoly where five companies, six companies, whatever, 10 companies kind of control things. Is it possible that opensource software, AI, cryptography, all this activity could challenge the status quo? Being in this business as long as I have, things never stay the same. Leaders come, leaders go. >> I just want to say, never say never. You don't know. >> So, it brings it back to IBM, which is interesting to me. It was funny, I was asking Rob Thomas a question about disruption, and I think he misinterpreted it. I think he was thinking that I was saying, "Hey, you're going to get disrupted by all these little guys." IBM's been getting disrupted for years. They know how to reinvent. A lot of people criticize IBM, how many quarters they haven't had growth, blah, blah, blah, but IBM's made some big, big bets on the future. People criticizing Watson, but it's going to be really interesting to see how all this investment that IBM has made is going to pay off. They were early on. People in the Valley like to say, "Well, the Facebooks, and even Amazon, "Google, they got the best AI. "IBM is not there with them." But think about what IBM is trying to do versus what Google is doing. They're very consumer-oriented, solving consumer problems. Consumers have really led the consumerization of IT, that's true, but none of those guys are trying to solve cancer. So IBM is talking about some big, hairy, audacious goals. And I'm not as pessimistic as some others you've seen in the trade press, it's popular to do. So, bringing it back to IBM, I saw IBM as trying to disrupt itself. The challenge IBM has, is it's got a lot of legacy software products that have purchased over the years. And it's got to figure out how to get through those. So, things like Queryplex allow them to create abstraction layers. Things like Bluemix allow them to bring together their hundreds and hundreds and hundreds of SaaS applications. That takes time, but I do see IBM making some big investments to disrupt themselves. They've got a huge analytics business. We've been covering them for quite some time now. They're a leader, if not the leader, in that business. So, their challenge is, "Okay, how do we now "apply all these technologies to help "our customers create innovation?" What I like about the IBM story is they're not out saying, "We're going to go disrupt industries." Silicon Valley has a bifurcated disruption agenda. On the one hand, they're trying to, cloud, and SaaS, and mobile, and social, very disruptive technologies. On the other hand, is Silicon Valley going to disrupt financial services, healthcare, government, education? I think they have plans to do so. Are they going to be able to execute that dual disruption agenda? Or are the consumers of AI and the doers of AI going to be the ones who actually do the disrupting? We'll see, I mean, Uber's obviously disrupted taxis, Silicon Valley company. Is that too much to ask Silicon Valley to do? That's going to be interesting to see. So, my point is, IBM is not trying to disrupt its customers' businesses, and it can point to Amazon trying to do that. Rather, it's saying, "We're going to enable you." So it could be really interesting to see what happens. You're down in DC, Jeff Bezos spent a lot of time there at the Washington Post. >> We just want the headquarters, that's all we want. We just want the headquarters. >> Well, to the point, if you've got such a growing company monopoly, maybe you should set up an HQ2 in DC. >> Three of the 20, right, for a DC base? >> Yeah, he was saying the other day that, maybe we should think about enhancing, he didn't call it social security, but the government, essentially, helping people plan for retirement and the like. I heard that and said, "Whoa, is he basically "telling us he's going to put us all out of jobs?" (both laugh) So, that, if I'm a customer of Amazon's, I'm kind of scary. So, one of the things they should absolutely do is spin out AWS, I think that helps solve that problem. But, back to IBM, Ginni Rometty was very clear at the World of Watson conference, the inaugural one, that we are not out trying to compete with our customers. I would think that resonates to a lot of people. >> Well, to be continued, right? Next month, back with IBM again? Right, three days? >> Yeah, I think third week in March. Monday, Tuesday, Wednesday, theCUBE's going to be there. Next week we're in the Bahamas. This week, actually. >> Not as a group taking vacation. Actually a working expedition. >> No, it's that blockchain conference. Actually, it's this week, what am I saying next week? >> Although I'm happy to volunteer to grip on that shoot, by the way. >> Flying out tomorrow, it's happening fast. >> Well, enjoyed this, always good to spend time with you. And good to spend time with you as well. So, you've been watching theCUBE, machine learning everywhere. Build your ladder to AI. Brought to you by IBM. Have a good one. (techno music)

>> Narrator: Live from Nice, France, it's theCUBE, covering .NEXT Conference 2017 Europe, brought to you by Nutanix. (upbeat music) >> Welcome back. I'm Stu Miniman and you're watching theCUBE's live coverage of Nutanix .NEXT here in Nice. Happy to welcome back to the program Sunil Potti. Fresh off the keynote here, 2200 in attendance here at the second annual European show. Sunil is the chief product and development officer, and Sunil, your team's been busy. >> Yes. >> Product development-- >> Sunil: I hope so. >> 5.5, ton of new features in development, a lot of things going on. So let's step back for a second though, and it's a year after the IPO, I watched The Wall Street guys, they're always like, "Wait, are they boxes, or are they software, "are they infrastructure, are they cloud?" You know, you kind of step back, it's, I liked it, it was, "simplicity takes real genius," and then you're like, to try to appeal to the European cloud, it was "more tea, less clicks." So what's the kind of, as people think of Nutanix, when do we think of you, why do we think of you? >> Gotcha, gotcha. Yeah, I think there's a bunch of moving parts there, but I think our core thesis hasn't changed from where it was pre-IPO, post-IPO, multiple conferences. I think the core thesis as you know, Stu, is that we fundamentally think folks talk about hybrid cloud. Hybrid cloud, the first step is we know public clouds exist, true private clouds haven't been built yet. And they have to be first standardized, commoditized, and then harmonized with the public clouds, right? So I think, from our perspective, the core thesis is the fact that, if you can bottle up the AWS or GCP experience and funnel it inside the data center, there'll be a ton of workloads that stay inside. But with the right experience, for the right cost, right? >> Yeah. >> And essentially, that journey hasn't wavered from our perspective, right? So we're still on that. >> Yeah, absolutely, at Wikibon, we said, you know, cloud isn't a destination, it's really more of an operational model. >> Sunil: Sure, sure. >> So, if we can capture that, as you say, true private cloud, we said, we're starting to get there, and we actually credit Nutanix. So you know, of course, the messaging of enterprise cloud was probably a little bit aspirational-- >> Sure, sure. >> At the beginning, but you're filling in the pieces, you've got the partnerships, you've got the products rolling out, so, let's talk about your bread and butter. You know, what's new, what's launching now, I like that you're as a software company, you show a little bit more. Here's when we test some things out, it's that balance of, for the enterprise it's like, "Wait, is this going to work the way I think it is?" You put stuff out like the community edition first, let people play with it and then you GA it-- >> I think we talked a little bit about it and essentially, rather than me list out a whole series of functionality, I think the way we are also looking at it as well as building it, as well as rolling it out is in the form of what a customer can consume. So we are investing at Nutanix, like, capabilities that cross the life cycle, right? So we're investing and ensuring that communication gets a lot more emphasis because we think this paradigm of one-click data centers is something that people need the ubiquity to kind of play around with, right? So you see community relation from a learning side, then we're looking for capabilities for people to actually say and compare, "Look, Nutanix is one architecture, "we experienced another architecture, "three tiers in other architecture, "maybe public cloud." At some point in time people need the flexibility to actually have in the old world of TPC benchmarks the new world of what I would call production world benchmarks so we had a whole bunch of tools such as X-Ray coming out, then rather than leave it to professional services and so forth, rather than just worry about reducing the number of clicks once you have Nutanix, even before you get to Nutanix, how do you reduce the number of clicks? You get to Nutanix, right? That's where Xtract, which is a very popular tool from us again, that has been shipping for a month, for now, where you can actually click at a certain VM environment, at a certain database environment, and essentially, literally, without a whole bunch of lift and shift move into a private cloud environment, right? >> And my understanding, Xtract is, I could take my VMs really from VM environment to an AHV environment-- >> That's correct. And it also works on databases as well, like SQL databases, and so forth, right? >> Yeah, absolutely, that migration is something that, you know, it's like a four letter word for most people in IT. One of the things that we were early on kind of beating the drum on, is traditional three-tier architecture with the storage, your migration cost was at least 30% of the total cost of ownership because you had to bring data on, eventually you had to take data off, as opposed to, if you really have more like a pool, which is what HCI does, you know, that first, once I get on to it, that's the last time you need to do a migration because now I can move and add, remove, it knows, and we just kind of manage it there. Absolutely the other company I hear talking a lot about this thing is Amazon. You know, they've been working on database migration lots of companies, changing away their environment, and it's something that customers are looking for. >> Yeah, and it's almost like, for us with the public cloud at least you have a genuine sort of big hop in lift and shift, just because of the boundaries. It's a shame if we can't solve that problem without what we call make lift and shift invisible inside the data center at least so that's why we invest in things like Xtract so that people can, look, we're still less than one percent of the market so we expect a whole lot of migration to happen over the next few years. So anything that we can do to kind of accelerate customers to the point of ensuring that their architectural integrity is preserved in terms of environment I think it's a big focus for us. So you're going to see as emphasize Xtract not just for there for VM's or databases to Nutanix on pRAM. We're also going to see that as a fundamental construct for app mobility because imagine Calm as a construct that you're able to go in, proficient work loads and it's on pRAM or off pRAM but at some point in time you want to move them back and forth. You know the thing that we used to always say? "App mobility is slowly coming to fruition "with some of these constructs." >> Calms is the centerpiece of really your multi-cloud strategy. We've talked to some customers that some of the early folks pretty excited about it. A lot of the others have been like, "Okay, well, I've seen some slides and a demo," kind of squinting, looking at it. Reminds me of the early days, "I bet it can't really "do what they say it does." >> I think they have to taste the wine, just like everything else. There were a bunch of early believers who saw the product, who used the product, which we used as an early access program. But we took a step back when we acquired Calm a year ago, we had the choice of releasing a reasonably big product to mainstream. It's been seven years building our product, they had rewritten it two times. So they had already done a rewrite or two. What we took was, we took the time to ensure that it was burned into the Nutanix fabric. It had to fit into a Prism, it had to fit into a life cycle manager, it had to fit into a one-click update. It needs to look and feel like a natural extension versus a power-sucking alien, which is what we've seen with many of our competitor's products where you just buy some things and you put it in there and the more successful it is, the harder it is to homogenize. So we took our time, and that's what you're going to see in 5.5, customers can now actually genuinely use the product. And day one it'll have AHV support, AWS support, very quickly it'll have ESX, and GCP and Azure and it's a separate code train by the way, in a sense that the same code-base but it's being delivered as a service and you're going to see more and more of that paradigm where Nutanix is no longer going to be this blob of capabilities that in itself comes out fast but there's a bunch of microservices now that are going to be released. Not just on the cloud, but also on pRAM. So AFS is a good example, Xtract is a good example, Calm is a good example and now with 5.5 even Prism Central is going to be detached so that you can consume that at a different velocity than the code. >> How do you make sure that you balance that with the simplicity that really is the core piece of your business proposition? >> Yeah, yeah. I mean I think this is where we just have to be measured in ensuring that it's still one single code-base for example. What we want, we can't afford to have 18 different branches. So simple things like that will actually go a long way to make sure that somebody can still go to a console and say upgrade, it checks the right provisions. It's a little bit invisible, sort of like version mismatch of that is our problem, not a customer problem. >> Absolutely, so a lot in 5.5, which we haven't touched there but also really unveiling some of the next step in the journey, what you're working on for the next six months. What's the focus there, ya know cloud is, I think you talked about visible infrastructure to invisible cloud so looks like kind of expanding out and building out some of those cloud services. Take us through some of that. >> So I think the general theme is continue to fulfill our ambition around making infrastructure more invisible and then at the same time in parallel try to make clouds invisible and I'll break it down into three kinds of products. The first one is, we still have our journey, our things cut out to actually fulfill what I would call the A block, the Amazon block for the enterprise, and you can call it the Azure block or you can call it the Alphabet block now that we support multiple clouds. The point being that simple things suggest, we've done a great job of computer storage and virtualization. What about networking? And we've always said look, the problem is not in the data plane not working, top of the ax switches are pretty commodity, they work, you name it. The issue is always in the control plane, when something goes wrong, what are doing wrong, so that's one of the big things coming in 5.5 is built in network virtualization, provisioning, and one-click micro segmentation. And again the point being rather than buy very expensive products such as NSX or some other overlay products where you're virtualizing the network to secure the network. If you go to Amazon, or you go to Google, or you go to Azure not only do they not require to virtualize, the way that micro segmentation is built is genuinely with the simplicity of one click. You take out 10 VM's, put them in a secular group you're off to the races right? And the same paradigm then basically moves to us so in that vein of fulfilling that stack is one dimension. And a couple of key things that are new there that are in the next six months timeframe, not in the 5.5, the fact that when everything's said and done we've got a file service, we've got blocks, we've got containers, everything else, but what about object storage? Sounds obvious, right? So we've taken our time to kind of build a next generation object storage service, not a first generation one that can scale obviously to the levels of webscale that these days customers want, but is deployed with gentle requirements. An example of a gentle requirement is, you can't build an object story service that is simply on pRAM or simply off pRAM anymore. It has to be hybrid from day one. My primary needs to be data locality quote unquote to be invisible under the cover so my primary stuff is closer to my compute whereas my secondary and backup can be pulled out into the cloud. And the same thing applies on, even something much more simpler, which is EC2. What about EC2 for the enterprise? And that's where I think we were inspired to actually go build us Acropolis Compute Cloud, AC2, which essentially says you can take my Nutanix class, computer storage, and all of that, but then only have compute only nodes, and you could have SAB, SK lab requirements, you could have IBM power, you could have Oracle running on those, but they are essentially being managed with that single pane of glass. So this is the first time that you're seeing, based on a customer demand, now EH3 is now almost one of the three nodes being shipped is an EH3 node. We've come a long way in the last two years right? So people covet that simple virtualization, especially if we can, we extend it from a computer only fabric to the hyper-con only fabric. So I think that's one dimension-- >> It's interesting, just happenstance, that in the news recently, Amazon just announced that they're switching from Zen to KVM base so similar. Come on, you couldn't get Amazon to just sign on for AHV? >> No, see I think see what it is is that frankly AHV from our perspective was all about just ruggedizing KVM right, make it storage, Iops work well, the management plan work well, in fact, the fact that AWS is doing that is actually a good sign for us to go deeper with them frankly just as a tangent, rather than just go deeper with say Zi or GCP and so forth just natively as well now with C-fi instances there's an opportunity for Nutanix fabric to kind of seamlessly leverage that because the core constructs are similar with KBM right? So you're going to see some interesting stuff come up there, maybe that's for the next CUBE, the next conference. >> Sunill, it's interesting I've had a chance to talk to a few customers already and we talk about kind of that cloud, everything from the Germans that well I've got governance and compliance and I'm not not doing public cloud to, you've got a customer speaking today in a session that's like "I'm going to do "everything SAS and what I can't do SAS "I'll do infrastructure service," and then there's a little bit of stuff I can't do because I don't have enough network or things like that, and that's when Nutanix fit in for me. Making products and dealing with customers on such a broad spectrum is a little challenging and trying to fit where Nutanix is on that cloud because right if they're buying SAS from a lot of pieces it's like well you're not going to be as critical as opposed to somebody that's like well hey my data center is really my temple and you can help there so-- >> Yeah I think the philosophy that we use in terms of our product strategy and roadmap there is to maybe just give some color on it is it's the curse of the platform. The wealth of the platform which is like we are a platform company and we've internalized that, we're not a simple product company, so a lot of this comes down to what do we not do as well right which is versus what we just do. And one simple filter that we use is, is it directionally in a secular motion for enterprises or not. So a simple example is look, a lot of customers, and we would have probably quite a bit of sales if we simply said look I can take my existing Nutanix class serve, I just bought a three part array, I've bought a narat box, why don't you guys just co-exist with that. But then if you really think about it, it's like AWS coming to you and saying, "Oh by the way, take my service environment, "put my AWS software on it." It's like Apple coming out and saying, "Here's iOS, "I want it on Blackberry." So one click upgrades won't work, it's not the right thing. So there are things like that that we stayed away from that allows us to, even if we are stretched, lean in on the forward looking circular motions such as first, continue to finish the job inside, then harmonize inside and outside, and then go provide specialized services like Zi, in addition to what we're doing with DCP or Amazon, and others. >> Alright, last question I have for you, what's exciting you in the marketplace today, getting your engineers kind of fired up as kind of this next wave? >> Yeah I think look, I think some of the biggest thing is around how apps are now being re-platformed themselves, not just infrastructure and people used to word pass and all that other stuff but essentially I think we are now getting into the golden era, or the initial golden era where IAS re-platforming is more or less known. Now, of course it's going to take you five, 10 years to do it, but I don't think people are debating the way to do that. It's no longer open stack inside, it's no longer hosted clouds and all that crap right? It's two clouds, right? I think that wave has to emerge on the application side as well, you're starting to see some of that with communities, now becoming a defacto for one sliver of it, but there's so many other services that are up for grabs. So I think you're going to see in the next 12 to 18 months and you're obviously going to see Nutanix play a role there, is what does it mean to not hybridize my data center but what does it mean to hybridize my app. And I think there's a lot of interesting opportunity, interesting inspirational stuff there from an innovation perspective that keeps our guys going. >> Absolutely well Sunil, always a pleasure to chat with you, look forward to catching up with you at the next time and we'll be back with lots more coverage here from the Nutanix .NEXT conference in Nice, France. I'm Stu Miniman, you're watching theCUBE.

>> Announcer: Live from New York City, it's theCube covering Cyber Connect 2017. Brought to you by Centrify and The Institute for Critical Infrastructure Technology. >> Okay, welcome back everyone, this is a live Cube coverage here in New York City at the Grand Hyatt Ballroom. I'm John Furrier with my co-host Dave Vellante. This is Cyber Connect 2017, the inaugural conference of a new kind of conference bringing industry and government and practitioners together to solve the crisis of this generation, according to Keith Alexander, who was on stage earlier. Our next guest is the CEO of the company that's under running this event, Tom Kemp, co-founder and CEO of Centrify. Congratulations, Tom, we met, we saw you last week, came in the studio in Palo Alto. Day one was coming to a close. Great day. >> Yeah, it's been amazing, we've had over 500 people here. We've been webcasting this, we have 1,000 people. And, of course, we've got your audience as well. So, clearly, over 2,000 people participating in this event, so we're really pleased with the first day turn-out. >> So, I would say this is, like, a new kind of event, a little bit different than most events in the business. Response has been very well received, sold out, packed house, I couldn't get a chair, strolled in, not late, but, I mean, you know, towards the end of your Keynote. This is the dynamic, there's demand for this. Why is this so popular? You guys had a good hunch here, what's been the feedback? >> Well, the feedback's been great, first of all. But, the reality is, is that, organizations are spending 10% more per year on security but the reality is the breaches are growing 40 to 70% per year. So, no matter how much money they're throwing at it, the problem's getting worse, and so people are, for the most part, kind of throwing up their hands and saying, how can we re-think security as well? So, I think there's just a complete hunger to hear best practices from some of the top CSO's. You know we had US bank CSO, we had Etna, Blue Cross Blue Shield, etcetera. What are these guys doing to keep their data secure and make sure that they don't make headlines? >> So, I want to ask you a question on the business front, obviously we saw last week, Alphabet, AKA Google, Twitter and Facebook in front of the Setna committee, around this influence thing going on with the media, still an exploit, but a little bit different than pay load based stuff we're normally seeing with security hacks, still relevant, causes some problems, you guys have been very successful in Washington. I'm not saying you're lobbying, but as a start up, you ingratiated yourself into the community there, took a different approach. A lot of people are saying that the tech companies could do a better job in D.C., and a lot of the times Google and these treasure troves of data, they're trying to figure it out. You took a different approach and the feedback we heard on theCube is working. You guys are well received in there, obviously the product, good timing to have an identity solution, and zero trust philosophy you have. Well, you did something different. What was the strategy? Why so much success in D.C. for Centrify? >> Well, we actually partnered with the IT folks and the security people. I mean, we actually spent a lot of time on site, talking with them, and actually, we built a lot of capabilities for what the government was looking to address from an identity access security perspective. That's just the reality of the situation. And so, we took a long haul view, we've done very great in the, two of our largest customers are intelligence agencies, but we actually have over 20% of our sales that goes to the federal government, state and local as well. So, you really can't just go in there, spend a lot of money, do a lot of hype. You actually have to roll up your sleeves and help them solve the mission. They call it the mission, right, they have mission, and you got to be focused on how you can address them and work with the technologist out there to make sure, so it was just, really just blocking and tackling the ground game, >> So common sense sounds like, just do the work. >> Yeah, do the work, really listen. And think about it as a multi-year investment, right? I mean, in a lot of start ups, they just, like, oh, can't get the sale, move on, right. But you actually have to realize, especially in security, that most tech companies that have a big security presence, they should get 15-20% of their business from the US government. >> That's a big bet for you guys, were you nervous at first? I mean, obviously, you have confidence now looking back, I mean, it must've been pretty nerve wracking because it's a big bet. >> It's a big bet because you also have to meet certain government standards and requirements. You got to get FIP certification, you got to get common criteria, in the cloud, you got to get FedRAMP, and that means you also have to have customers in the federal government approve you and bring you in and then you have to go through the lengthy audit process. And we're actually about to get our FedRAMP certification, just passed the audit and that's going to be coming up pretty soon as well. So, yeah, to go get common criteria, to get FedRAMP, you have to spend a million dollars for those types of certifications. At the same time, working with the large federal agencies. >> So Tom, you gave us the numbers, 10% more spending every year on security but breaches are up 40 to 70%, you said in your talk that's two trillion dollars in lost dollars, productivity, IP, etcetera, so obviously it's not working, you've mentioned a number of folks in here talking today. What's their mindset? Is their mindset this is a do-over? Or, is it, just we got to do a better job? >> I think we're getting to the point where its' going to be a do-over. And I think, first of all, people realize that the legacy technology that they have have historically focused on premises. But, the world's rapidly moving to the cloud, right? And so, you need to have cloud-based scale, a cloud-based architecture, to deliver security nowadays because the perimeter is completely going away. That's the first thing. And, I think there's also realization that there needs to be Big Data machine learning applied to this. And you guys talk about this all the time, the whole rise of Big Data. But, security is probably the best vertical. >> Data application. >> Exactly, it's probably the best vertical, because you need real-time instantaneous should I let this person come into the system or not, right? Or, over time, is this, does this represent malicious activity as well? So, I think people are realizing that what they've been doing's not working, they realize they're moving to the cloud, they need to adopt cloud, to, not only secure cloud, but have their technology be based in the cloud and they need to apply machine learning to the problem as well. >> So, in your talk, you talked about a paradigm shift, which I inferred as a mindset shift in how security practices in technologies should be applied, you got to lot of content in there. But could you summarize for our audience sort of the fundamentals? >> Well, the first fundamental is, is that the attack vector is completely changed, right? Before, it was all about vulnerabilities that someone hadn't patched this latest version of Windows, etcetera. Those problems are really solved, for the most part. I mean, occasionally it kind of pops in now and then, but for the most part, enterprises and governments are good about patching systems etcetera. You don't hear about sequel injections anymore. So, a lot of those problems have been resolved. But, where the attackers are going, they're going after the actual users, and so, I know you had the Verizon folks here on theCube, and if you look at the latest Verizon data breacher port, eight out of 10 breaches involve stolen and compromised credentials, right? And that has grown over the last few years from 50% to 60% now to over 80%. Look at the election, right? You talk about all this Twitter stuff and Facebook and all that stuff, it's John Podesta's emails getting stolen, it's the democrat's emails getting stolen, and you know, now that people have the Equifax data, they've got even more information to help figure out-- >> Social engineering is a big theme here. >> Absolutely. >> They have this data out on the dark web, this methodologies and there's also, you know, we talked with the critical interset guys that you're partnering with about all the terrorism activity, so, there's influence campaigns going on that are influencing through social engineering, but that data's being cross connected for, you know, radicalizing people to kill people in the United States. >> Well, there's that. And then there's nation states, there's insiders. So, the reality is, is that, it turns out from a security perspective, that we, the humans, we're the weakest link in this. And so, yes, there needs to be process, there needs to be technology, there needs to be education here as well. But the reality is that the vast majority of spin on security is for the old stuff, it's like we're trying to fight a land war in Asia, and that's how we're investing, we're still investing in M1 tanks in security, but the reality is that 80% of the breaches are occurring because they're attacking the individuals. They're either fooling them, or stealing it by some means or mechanisms, and so the attack vector is now the user. And that's this, and people are probably spending less than 10% securing the users, but it represents 80% of the actual attack vector. >> Talk about the general, you've had some one-on-one times with him, he's giving a keynote here, gave a keynote this morning, very inspiring. I mean, I basically heard him pounding on the table, "we don't fix this mess, You know, we're going to be in trouble, it's going to be worse than it is!" Think differently, almost re-imagining, his vibe was almost about let's re-imagine, let's partner, let's be a community. What else can you share with you interaction with him? I know he's a very rare to get to speak, but you know, running the cyber command for the NSA, great on offense, we need work on defense. What have you learned from him that industry could take away? >> Yeah, I think you hit it, which is, and I didn't realize that there's a bigger opportunity here, which is, is that in real time, there needs to be more sharing among like constituents. For example, in the energy industry, these organizations, they need to come together and they need to share, not only in terms of round tables, but they actually need to share data. And it probably needs to happen in the cloud, where there's the threats, the attacks that are happening in real time, need to be shared with their peers in the industry as well. And so, and I think government needs to also play a part in that as well. Because each of us, we're trying to fight the Russians, right? And the Chinese and the North Koreans, etcetera and a enterprise just can't deal with that alone and so they need to band together, share information, not only from an educational, like we have today, but actually real time information. And then again, leverage that machine learning. That artificial intelligence to say, "wait a minute, we've detected this of our peers and so we should apply some preventative controls to stop it." >> And tech is at the center of the government transformation more than ever. And again, Twitter, Facebook, and Alphabet in front of the senate, watching them, watching the senators kind of fumbling with the marbles. You know, hey, what's Facebook again? I mean, the magnitude of the data and the impact of these new technologies and with Centrify, the collision between government and industry is happening very rapidly. So, the question is that, you know, how will you guys, seeing this going forward, is it going to be, you know, the partnership as they come together fast or will more mandates come and regulations, which could stifle innovations, so, there's this dimension going on now where I see the formation of either faster partnership with industry and government, or, hey industry, if you don't move fast enough poof, more regulations. >> And that's also what the general brought up as well, is that if you guys don't do something on your own, if you don't fix your own problems, right, then the government's going to step in. Actually, that's what's already starting to happen right now, that if Facebook, Twitter, all these other social networks are not going to do something about foreign governments advertising on their platform, they're going to get regulated. So, if they don't start doing something. So, it's better to be in front of these things right here, the reality is that, yes, from a cyber security in terms of protecting users, protecting data, enterprise needs to do more. But, you know what, regulations are starting to already occur, so, there's a major regulation that came out of New York with the financial services that a lot of these financial firms are talking about. And then in Europe, you got GDPR, right? And that goes into effect I think in May of next year. And there's some serious finds. It could be up to four percent of your revenue as well, while, in the past, the kind of, the hand slaps that have happened here, so if you do business in Europe, if you're a financial services firm doing business in New York. >> People are going to run from there, Europe. I mean, regulation, I'm not a big fan of more regulation, I like regulation at the right balance, cause innovation's key. What have you heard here from talks? Share, cause we haven't had a chance 'cause we've been broadcasting all day, share some highlights from today's sessions after, you know, Jim from Etna was on there, which, I'm sure you got a kick out of his history comment, you're a history buff. Weren't you a history major and computer science? >> I was a history major and computer science, you got that right. >> You'd be a great dean of the sciences by today's standards. But I mean, he had a good point. Civilization crumbles when there's no trust. That comment, he made that interesting comment. >> So, it's interesting what Etna's done, from his presentation, was they've invested heavily in models, they've modeled this. And I think that kind of goes back to the whole Big Data, so I think Etna is ahead of the game, and it's very impressive what he's put forth as well. And just think about the information that Etna has about their customers etcetera. That is not something that you want. >> He was also saying that he modeled, you don't model for model's sake because stuff's going on in real time, you know what I'm saying? So, the data lake wasn't the answer. >> Well, he said his mistake was, so they were operationalizing the real time, you know, security Big Data activity, and he didn't realize it, he said that was the real answer, not just, sort of, analyzing the data swamp, so. >> Yeah, absolutely. >> So, that was the epiphany that he realized. You know, that is where the opportunity was. >> John: It was unconventional tactics, too. >> What can businesses expect, Tom? What's the business outcome they can expect if they, sort of, follow the prescription that you talked about and, sort of, understand that humans are the weakest link and take actions to remediate that. What kind of business impact can that have? >> Yeah, so, we actually, we spent a lot of time on this and we partnered with Forrester, a well known analyst group, and we did this study with them, and they went out and they interviewed 120 large enterprises. And it was really interesting that one group, group A, was getting breached left and right and group B, about half the number of breaches, right? And we were like, what is group B doing versus group A? And it had to do with implementing a maturity model as it relates to identity which is, first and foremost, implementing identity assurance, getting, reducing the number of logins, delivering single sign-in, multi factor authentication. Which we should all do as consumers as well, turn on that MFA button for Twitter, and your Gmail etcetera. Then, from there, the organizations that were able to limit lateral movement and break down, make sure that people don't have too much access to too many things as well. There was an incident, it was Saudi Generale that there was a backend IT guy, he became a traitor, he started making some losses, and so he tried to, he doubled down, he leveraged the credentials that he had as a former IT person to continue trading even though he kind of turned off all the the guardrails right there, and he should have been shut down. When he made that move into that new position, so, there's just too much lateral movement aloud. And then, from there, you got to implement the concept of least privilege and then finally you got to audit, and so if you can follow this maturity model, we have seen that organizations have seen significant reduction in the number of breaches out there as well. So, that was another thing that I talked about at my keynote, that I presented this study that Forrester did by talking to customers and there turned out to be a significant difference between group A and group B in terms of the number of breaches as well. And that actually tied very well with what Jim was talking about as well, which was, you know, I call it a maturity model, he called it just models, right, as well. But there is a path forward that you can better be smarter about security. >> But there's a playbook. >> There is a playbook, absolutely. >> And it revolves around not having a lot of moving parts where human error, and this is where passwords and these directories of stuff out there, are silos, is that right? Did I get that right? So you want to go level? >> That's the first step, I mean the first step is that we're drowning in a sea of passwords, right, and we need what's known as identity assurance, we need to reduce the number of passwords. With the fewer passwords we have, we need to better protect it by adding stronger authentication. Multi-factor authentication. The new face ID technology, which I've been hearing good reviews about, coming from Apple as well, I mean, stuff like that, and say, look, before I log into that, yes, I need to do my thumbprint and do the old face ID. >> And multi factor authentication I think is a good point, also known as MFA, that's not two factor, it's more than one, but two seems to be popular cause you get your phone, multi factor could be device, IOT device, card readers, it starts getting down into other mechanisms, is that right? >> Absolutely, it's something you have, and something you know, right? >> Answer five questions. >> Yeah, but at the same time you don't want to make it too, >> Too restrictive. >> Too restrictive, etcetera. But then here's where the machine learning comes in, then you add the word adaptive in front of multi factor authentication. If the access is coming from the corporate network, odds are that means that person was badged, got through. So, maybe you don't ask as much, for much information to actually allow the person on right there. But, what if that person was, five minutes ago, was in New York, and now he's trying to access from China? Well wait a minute, right? Or what if it's a device that he or she's never accessed from before as well? So, you need to start using that machine learning and look at what is normal behavior and what deviates from that behavior? And then, factor it into the multi factor authentication. >> Well, we've seen major advancements in the last couple years, even, in fraud detection, you know, real time. And is that seeping into the enterprise? >> Well, it should, that's the ironic thing is, is that with our credit card, I mean, we get blocked all the time, right? >> It is annoying sometimes, but you know at the end of the day you say, good. >> Yeah, thank you for doing that, you know. And so that's, in effect, the multi factor authentication is you calling up the credit card company, ironically my credit card, maybe I shouldn't reveal this, too much information, someone will hack me, but I use US bank, right there, and we had Jason the CSO of US bank right there, but, you know, calling in and actually saying, yes, I'm trying to do this transaction represents another form of authentication. Why aren't we doing similar things for people logging onto mission critical servers or applications? It's just shocking. >> I'm going to ask you a personal question, so, you mentioned history and computer science, a lot of security folks that I talk to, when they were little kids, they used to sort of dream about saving the world. Did you do that? (laughter) >> Well, I definitely want to do something that adds value to society, so, you know, this is not like the Steve Jobs telling Scully, do you want to make sugared water and all that stuff? >> Dave: No, but like, superhero stuff, were you into that as a kid, or? >> D.C. or Marvel? >> Good versus evil? >> Don't answer that question, you like 'em both. >> But the nice thing about security is, when you're a security vendor, you're actually, the value that you have is real. It's not like, you know, some app or whatever where you get a bunch of teenagers to waste time and all that stuff. >> John: Serious business. >> Yeah, you're in serious business. You're protecting people, you're protecting individuals, their personal information, you're protecting corporations, their brand, look what happened to Equifax when their, when it was announced, the breach, their stock went down 13, 14%, Chipotle went down by 400 million, their market cap went. I mean, so, nowadays, if you have a, if there's a breach, you got to short that stock. >> Yeah, and security's now part of the product, cause the brand image, not just whatever the value is in the brand, I mean the product, the brand itself is the security. If you're a bank, security is the product. >> Absolutely, if you're known for being breached, who the heck's going to bank with you? >> Whole 'nother strategy there. Okay, final question from me is, this event, what are some of the hallway conversations, what's notable, what can you share for the folks watching? Some of the conversations, the interests, the kind of people here, what was the conversations? >> Yeah, I mean, the conference, we really did a great job working with our partner ICIT of attracting sea level folks, right? So, this was more of a business focus, this was not, you know, people gathered around a laptop and try to hack into the guy sitting right next to them as well. And, so, I think there, what has come out of the conversations is a better awareness of, as I said before, it's like, you know what, we got to completely, we got to like step back, completely rethink what we're trying to do here as well, cause what we're doing now is not working, right? And so I think it's, in effect, we're kind of forcing some soul searching here as well. And having others present what's been working for them, what technologies, cloud, machine learning, the zero trust concept, etcetera, where you only, you have to assume that your internal network is just as polluted as the outside. >> I know this might be early, but what's the current takeaway for you as you ruminate here on theCube that you're going to take back to the ranch in Palo Alto and Silicon Valley, what's the takeaway, personally, that you're now going to walk away with? Was there an epiphany, was there a moment of validation, what can you share about what you'll walk away with? >> There's just a hunger. I mean there's just a hunger to know more about the business of security etcetera. I mean, we're just, we were amazed with the turn out here, we're pleased with working with you guys and the level of interest with your viewership, our webcast, I mean, this is, you know, for the first time event to have both in-person and online, well over 2,000 people participating, that says a lot. That there's just this big hunger. So, we're going to work with you guys, we're going to work with ICIT and we're going to figure out how we're going to make this bigger and even better because there is an untapped need for a conference such as this. >> And a whole new generation's coming up though the ranks, our kids and the younger, new millennials , whatever they're called, Z or letters they're called, they're going to end up running the cyber. >> Yeah absolutely, absolutely. So there just needs to be a new way of going about it. >> Tom, congratulations. >> Thank you. >> Great event, you guys got a lot of credibility in D.C., you've earned it, it shows. The event, again, good timing lighting the bottle, The CyberConnect inaugural event, Cube exclusive coverage in Manhattan here, live in New York City at the Grand Hyatt Ballroom for the CyberConnect 2017 presented by Centrify, I'm here with the CEO and co-founder of Centrify, Tom Kemp, I'm John Furrier, Dave Vellante, more live coverage after this short break. (modern electronic music)

(upbeat music) >> Announcer: New York City. It's theCUBE. Covering CyberConnect 2017. Brought to you by Centrify, and the Institute For Critical Infrastructure Technology. >> Hey, welcome back everyone. This is theCUBE, live in New York City, in Manhattan. We're here at the Grand Hyatt Ballroom for CyberConnect 2017. Inaugural event presented by Centrify. I'm John Furrier, with my co-host Dave Vellante, both Co-Founders of SiliconANGLE Media. Our next guest is Parham Eftekhari, who's the Co-Founder and Senior Fellow of ICIT. Also part of the team and the lead around putting the content agenda together. These are the guys who put it all together. Really inaugural conference, great success. Turns out, you know we (laughs), we talked about it was going to be big, it was going to be huge. By the numbers, it's just a great beachhead, the right people showed up. Welcome to theCUBE, thanks for joining us. >> Yeah, thank you for having me, excited to be here, good to chat with you again. >> So, we, before the event started, just, you know, a couple months ago when we were talking about the event, we're like, this is, love the name, first event of its kind. Always wondering, you know, will people show up? Right, you know? >> That's right, first-time events, we've talked about this before, there are so many cyber security events out there, and so many organizations competing for a limited time and resources. So, I think to have a, an event like this be such a big success in the first time speaks to the quality of the content, and, you know, Centrify's role and ICIT's role in putting it together. >> I want to give you guys congratulations, to you and your partner, for running a really amazing company and event. You guys go big by thinking small, by being small, being relevant. Your model and how you do business earns trust, it's very community-driven. Same ethos as what we believe in. So, wanted to give you props for that. >> Parham: Thank you. >> It's not usual you see great execution thinking about your audience and constituents, so congratulations. >> Thank you. >> Okay, so, with that, you've got a lot of heavy hitters in your rolodex, you guys got a great community, big names. General's up there, you have big time SiSoS. >> Parham: Yeah. >> What's the vibe? I mean, you guys are dealing with this profile persona all the time. What's on the minds? I mean, obviously the General's banging his fist on the table, virtual table, or he's holding his coffee cup, telling war stories, he's basically saying, if we don't get our act together, industry and government... >> Yeah, well, I think what's happening today, and you know the business of the Institute, we're a research-driven organization, so as an organization that provides objective research, we have the fortunate position to be able to advise to some of these commercial and public sector leaders. And so, in that advisory, we have a really good sense on the pulse of the community. And we're able to hear directly from these individuals, we don't have to look at market research studies, we don't have to look at what some of these third-party groups are talking about. We're able to communicate directly, and we can actually see and feel their feedback to what we're discussing. >> There's no lag to your model, you have your fingers on the pulse. What is it telling you? Obviously, we heard the message here, there's some work to be done, there's some technical core fundamental infrastructure things, there's application-specific things, obviously the threats aren't stopping. >> Parham: That's right. >> What are the, what's-- >> If you look at the program that was built, it really does mirror the way that the Institute believes we need to approach solving these issues. And that comes with a layered security strategy. And so, oftentimes you'll go to these events, and we understand that there's organizations that are looking to make this into more of a marketing opportunity for them. So, unfortunately, the curriculum and content only touches one or two core competencies, which obviously really underscore what the sponsors do. What we've done here at CyberConnect, which is why Centrify's such a great partner, they understand that they may be one of the world's leading identity access management organizations, but they know for us to have a cyber security renaissance and actually make that quantum leap that the General and some of the executives that you were mentioning were discussing all day, we need to have a number of different technologies discussed, and have that education talk about things like the use of machine-learning based artificial intelligence. Talk about how technology can enable automation. Talk about identity access management. Talk about, like we just heard Terry Gravenstein, talk about the importance of building a culture of trust, right? Security has a human element to it, people's one of the biggest problems we have. So, I think this is one of the reasons why this event, to your point earlier, is such a big success only the first year out. >> Parham, we heard a lot today about sort of the partnership, really the imperative, of government and commercial enterprises working together. You do a lot of work in the government. And there seems to be, anyway our impression is, there's a heightened sense of security, for obvious reasons. And, board levels in the commercial side have really tuned in to security. But still, organizations seem to be struggling with what's the right regime. You know, it used to be just an IT problem, or a security team problem, and as you really pointed out many, many times at this event, it's everybody's problem. >> Parham: Yeah. >> So, what are you seeing in terms of, things that commercial enterprises can learn from government, particularly from the top, in the top down initiative. >> Yeah, I think one of the themes you've heard discussed several times today is, and Terry again just talked about us having a seat at the table, I think there's so much media discussion about cyber security. You know, all of our families, our moms, our grandparents, are understanding that cyber security is a major issue. We're even starting to get some more general consensus that cyber security is a national security imperative. And, so I think this is helpful. I think now we have to start to, as cyber security practitioners, we have to speak in the language that resonates with, so, if you're talking to a chief operating officer, and trying to educate them on the impact of ITOT convergence, then you have to speak in the terms that a COO is interested in, versus a CFO, versus your CIO, versus your Board of Directors. So I think language matters, vocabulary matters. And I think it's one of the things that we see, we see starting to percolate up in some of the conversations that we're having. >> Given that humans are the main problem, I mean we all have this assumption, we talk about it in theCUBE all the time, but oh my gosh, internet of things is going to create this huge space of people to attack, a huge attack vector. But if the humans aren't managing the devices, is there potentially an upside there, if that makes sense? >> Yeah, so, you know, I think it all goes back to, tomorrow morning, we'll hear from Dr. Ron Ross and David from Centrify. And they're going to be talking about security by design. In this, Dr. Ross actually put out a paper, 800-160, which really talks about the importance of building better systems, devices, products. So, I think that we are moving towards automation, we're moving towards machine learning, we already see it impacting a lot of our society, and even down to the, to your point, the IoT devices. We just put out a paper about cyborgs and the use of embedded devices in an actual, in humans, trans-humanism. This is all a, this, this ship has, the train has left the station, I guess you could say. I think what's important now is to not make the same mistakes we did the first go around, and pause and not put profits over security and privacy, and actually understand that, if we can't build it with security, certain security requirements there, then we can't get that functionality, or it may not cost the price point that we want it to cost, which may, you know, have it be more affordable for consumers. So I think we have to re-prioritize. >> US companies generally have not taken that pause and put security over profits. It's really been the reverse. And many would say, okay, but it's actually worked out pretty well for US companies, they dominate the technology industry. What do you say to those folks that say, well, profits are actually more important? >> Well, I think, I think it depends, when you say it worked out well, I think if you look at all those individuals that have been impacted by the breaches, I think that's where people are really starting to understand how it's impacting us, and going back to my comment about the national security side, this is no longer just about being able to steal your PII, and maybe doing some fraud in terms of identity theft and what not. When we're talking about meta-data and capitalistic dragnet surveillance, and now if you're looking at who is stealing and curating this information, it could be special interest groups, could be nation states, so now this becomes a much larger issue and a much larger challenge. >> So it's a ticking timebomb, is essentially what you're saying. And so that begs the next question: does really government have to get involved, to begin to impose its will, if you will, on commercial organizations? >> Yeah, I think what's going to happen, and actually we were talking about this at lunch with General Alexander earlier today, it's going to be a balance. You know, the government will be getting involved, they are getting involved, there's a lot of legislation being passed that truly is trying to make a bi-partisan push to address some of these issues. But I think, ultimately, that's going to be, as the General kind of said earlier, it's just going to be the government beating these, these folks virtually on the head until they start to do some self-governance and self-regulation. >> Parham, talk about your relationship with the General, vis-a-vis, this event. I see he had a great keynote, inspiring us, he moved a lot of people, talked about the general common defense versus civil liberties balancing privacy, as you mentioned. What more can you share about some of the things that he sees and feels strongly about, that you guys are seeing in your research in the Institute, because this is interesting, because you got a guy who says, "I'm an Army guy," right, who's now looking through the prism of the future, with past history at the NSA Command Center, Cyber Command Center. >> Yeah. >> He's got a pretty interesting view, and he sees both sides of the coin. >> Yeah. >> You guys are seeing that, people in the tech business are like deer in the headlights. We saw Twitter, Facebook and Alphabet, you know, like (groans). And then the center's trying to grock what Twitter does. >> Parham: Yeah. >> So, I mean, you have this generational gap, you also have historical analog to digital transformation going on. This is a societal impact, this is pretty huge. What does the General truly feel, what's his vision, what's his point of view these days? >> So, I'm not going to speak for the General, I wouldn't dare do that, but I will say that, if you listen to his comments on stage, one of the things he does talk about, and where our relationship is very strong, is the importance of public-private sector collaboration. The General actually received our pinnacle, I'm sorry, was named our pioneer last year at our gala which is actually happening in a couple of days in Washington, DC. And he really, if you listen to his message, he underscores the importance of collaboration, not just within a sector, not just within government, but cross-sector and between public-private sector, and between technology providers and government and legislative community. So, I think one of the things that I am comfortable saying is that, he would encourage more collaboration, and more information sharing, and more trust among the sectors to work together to solve these problems. >> How should people measure success in this business? >> That's a loaded question. I think, I think success needs to be, at this stage, incremental. I think that we need to be realistic in terms of how much quote success can we achieve overnight. We've, as we mentioned earlier, the ship has sailed, and so I think we need to do multiple things simultaneously. We, of course, do need to continue to implement technology and strategies that detect and respond to threats. But I personally would say that the true success is going to really be accomplished when we start to deploy strategies and re-prioritize so we're actually building more secure systems, more secure devices. I think that's going to be... Needs to go hand-in-hand, and we'll hear a lot about that tomorrow with Dr. Ross. >> Would that imply that, either, you know, the rate of growth of breaches starts to moderate, or the amount of data or loss, revenue dollars lost, begins to, you know, slow down its growth rate or-- >> Yeah, at some point that's absolutely going to be the goal, I think that-- >> Is that a reality though, I mean given that everything is growing so fast in our business? >> Oh, yeah, I'm an eternal optimist. I think absolutely, we'll get there. I can't tell you the timeframe, but I do know that venues like this, and the work that ICIT is doing, is really important to getting us to that point. Until we get folks in the media and on Capitol Hill and in federal agencies talking about these issues, so then it's not just the security folks who are focused on this, but a broader group. >> Yeah, and I think that's the opportunity, and as we wrap up day one here, education and content value is what we're seeing. You guys see that all the time, I know I'm preaching to the choir. But again, looking at mainstream media and some of the techniques that the Russians and other states have used to implement means and the election conversations, it's being gamified, we know that. So, the media picks up on it because there's identity politics going on. So, I think there needs to be a wake-up call, I mean, I think the educational process is critical. >> Yeah. >> What's next? >> And, and, and that's where, you know, we feel very fortunate to be in the position that we're in, because ICIT is a neutral, third-party, non-profit, and non-partisan research organization. So what we're doing is putting out content. We're not, we're not, the... I should say it this way, the information comes out-- >> You've no agenda in terms of how to capture? >> Yeah, exactly. >> It's all transparent. >> Our, our, our agenda is national security. Our agenda is improving the security of our nation's critical infrastructure sectors, improving resiliency. And providing trusted advisory to these various stakeholders. >> Well, getting the people here on theCUBE, and having you guys come on, and doing this great event really get, opens up the door for more voices to be heard. >> Parham: Absolutely. >> And we heard from your partner, had some great things to say. This has got to get out there, so the people, the press can report on it-- >> Parham: That's right. We'll turn on the cameras. >> Parham: Yeah. >> Dave, what's your take on the event here? Obviously, as an inaugural event, what's your analysis? >> Well, I mean, we touched on some big topics, right? I mean, the General, in particular, was talking about collaboration with the FBI, you know, Sony came in. >> John: The role of government. >> Privacy, ACLU, Jeffrey Stone. I think, you know, my big takeaway, as we were just discussing, was... And the General said that Sony, for example, he gave that example, can't do it alone. And I, we've been saying this for a while. And John, you predicted this, you said a while back that, that the government's processes, technologies, know-how, is going to seep into commercial businesses. As it has so often. I mean, you look at, you know, space launch, you know, radar, nuclear energy, the internet, et cetera. And I think security, cyber security, is such a big problem, only the government can help solve this problem. >> Well, the government's always been dealing with the moving train, and the corporations and the enterprise have traditionally been buying shrink-wrapped software loaded on a server that's evolved to buying more servers that have been pre-integrated with software. And buying silver bullet solutions, and then leave it alone until something breaks, and then fixes it. And I think, you know, when we were talking and looking at this event, my takeaway here is, the moving train is never going to stop, and the shifting of the game is going to be a cat-and-mouse, good versus bad, new technology versus reality. Open source certainly accelerated the role of the public domain. Treasure troves of information are being amassed, whether it's WikiLeaks or in the open source. This is a problem, and then there's no real, like, real creative solutions. I am not seeing anything. So, to me, this event takeaway is that, this is the first time a step has been taken to saying, whoa, holistic big picture. What is the architecture of a global society, where nation states can compete with no borders. >> Yeah. >> In a digital, virtual space, be effective, have freedom, and then respect for the individual. I mean, no one's ever had that conversation. >> Yeah, well we're excited to have it. We've gotten really great feedback from just some of the conversations that we're hearing in the hallway, as people are taking, learning actionable intelligence, where I can actually take this and instill it. I think a lot of people are actually being inspired, and that's something we need, especially in an industry where every day is about how, you know, cyber security folks don't get in the news when nothing happens. There's a commercial, I think it's an IBM commercial, right, where it's, my, my, nothing happened at work for my dad today, right? That never happens, it's always about what does go wrong, so I think we need to be inspired and motivate ourselves. >> Well, one of the things that we're excited about, as you know, we're community-model like you guys are. You look at some of the early indicators of how blockchain, and even though it's kind of crazy, you know, bubbly with the ICOs and cryptocurrency and overall blockchain, it all comes down to the common thread. We see an open source software over multiple generations, we're seeing it in blockchain, we're seeing it in security. Community matters. And I think the role of individuals and communities will be a big part of the change, as a new generation comes up. Really fundamental, so congratulations. >> Parham: Absolutely, thank you. >> Okay, Parham here's inside theCUBE for our wrap-up of day one of CyberConnect 2017. I'm John, with Dave Vellante. Thanks for watching. (synthesizer music)

>> Host: New York City, it's The Cube covering Cyber Connect 2017, brought to you by Centrify and the Institute for Critical Infrastructure Technology. >> Hey, welcome back, everyone. This the Cube's live coverage in New York City. This is the Cyber Connect 2017, presented by Centrify, underwritten by such a large industry event. I'm John Furrier, Dave Vellante. Our next guest is Byron Acohido who's the journalist at lastwatchdog.com. Thanks for joining us, welcome to The Cube. >> Thank you, pleasure to be here. >> So, seasoned journalist, there's a lot to report. Cyber is great, we heard a great talk this morning around the national issues around the government. But businesses are also struggling, too, that seems to be the theme of this event, inaugural event. >> It really is a terrific topic that touches everything that we're doing, the way we live our lives today. So, yeah, this is a terrific event where some of the smartest minds dealing with it come together to talk about the issues. >> What's the top level story in your mind in this industry right now? Chaos, is it data, civil liberties, common threats? How do you stack rank in level of importance, the most important story? >> You know, it really is all of the above. I had the privilege to sit at lunch with General Keith Alexander. I've seen him speak before at different security events. So it was a small group of the keynote speakers, and Tom Kemp, the CEO of Centrify. And he just nailed it. He basically, what resonated with me was he said basically we're kind of like where we were, where the world was at the start of World War I, where Russia and Germany and England, we're all kind of lining up, and Serbia was in the middle, and nobody really knew the significance of what lay ahead, and the US was on the sidelines. And all these things were just going to converge and create this huge chaos. That's what he compared it today, except we're in the digital space with that, because we're moving into cloud computing, mobile devices, destruction of privacy, and then now the nation states, Russia is lining up, North Korea, and Iran. We are doing it too, that was probably one of the most interesting things that came at you. >> His rhetoric was very high on the, hey, get our act together, country, attitude. Like, we got a lot to bring to the table, he highlighted a couple use cases and some war stories that the NSA's been involved in, but almost kind of teasing out, like we're kind of getting in our own way if we don't reimagine this. >> Yes, he is a very great advocate for the private sector industry, but not just industry, the different major verticals like especially the financial sector and the energy sector to put aside some of the competitive urges they have and recognize that this is going on. >> Okay, but I got to ask you, as a journalist, Last Watchdog, General Alexander definitely came down, when he sort of addressed privacy, and Snowden, and the whole story he told about the gentleman from the ACLU who came in a skeptic and left an advocate. As a journalist whose job is to be a skeptic, did you buy that? Does your community buy that? What's the counterpoint to that narrative that we heard this morning? >> Well, actually I think he hit it right on the head. As a journalist, why I got into this business and am still doing it after all these years is if I can do a little bit to shed a little bit of light on something that helps the public recognize what's going on, that's what I'm here to do. And this topic is just so rich and touches everything. We were talking just about the nation state level of it, but really it effects down to what we're doing as a society, what Google, and Facebook, and Twitter, how they're shaping our society and how that impacts privacy. >> We were talking last night, Dave, about the Twitter, and Facebook, and Alphabet in front of the Senate hearings last week, and how it means, in terms, he brought it up today. The common protection of America in this time, given the past election, that was the context of the Google thing, really has got a whole opportunity to reimagine how we work as a society in America, but also on the global stage. You got China, Russia, and the big actors. So, it's interesting, can we eventually reimagine, use this opportunity as the greatest crisis to transform the crap that's out there today. Divisiveness, no trust. We're living in an era now where, in my life time I can honestly say I've never seen it this shitty before. I mean, it's bad. I mean, it's like the younger generation looking at us, looking at, oh, Trump this, Trump that, I don't trust anybody. And the government has an opportunity. >> Alright, but wait a minute. So, I'm down the middle, as you know, but I'm going to play skeptic here a little bit. What I basically heard from General Alexander this morning was we got vetted by the ACLU, they threw sort of holy water on it, and we followed the law. And I believe everything he said, but I didn't know about that law until Snowden went public, and I agree with you, Snowden should be in jail. >> John: I didn't say that. >> You did, you said that a couple, few years ago on The Cube, you said that. Anyway, regardless. >> I'm going to go find the archive. >> Maybe I'm rewriting history, but those laws were enacted kind of in a clandestine manner, so I put it out to both of you guys. As a citizen, are you willing to say, okay, I'll give up maybe some of my privacy rights for protection? I know where I stand on that, but I'm just asking you guys. I mean, do all your readers sort of agree with that narrative? Do all of The Cube? >> If you look at the World War I example the general, he brought up at lunch, I wasn't there, but just me thinking about that, it brings up a good perspective. If you look at reinventing how society in America is done, what will you give up for safety? These are some of the questions. What does patriotizing mean for if industry's going to work together, what does it mean to be a patriot? What I heard from the general onstage today was, we're screwed if we don't figure this out, because the war, it's coming. It's happening at massive speeds. >> Again, I know where I stand on this. I'm a law-abiding citizen. >> - Byron, what do you think? >> Go ahead and snoop me, but I know people who would say no, that's violating my constitutional rights. I dunno, it's worth a debate, is all I'm saying. >> It's a core question to how we're living our lives today, especially here in the US. In terms of privacy, I think the horse has left the barn. Nobody cares about privacy if you just look at the way we live our lives. Google and Facebook have basically thrown the privacy model-- >> GPS. >> That came about because we went through World War I and World War II, and we wanted the right to be left alone and not have authoritative forces following us inside the door. But now we don't live in just a physical space, we live in a cyberspace. >> I think there's new rules. >> There is no privacy. >> Don't try and paint me into a corner here, I did maybe say some comments. Looking forward the new realities are, there are realities happening, and I think the general illuminated a lot of those today. I've been feeling that. However, I think when you you define what it means to be a patriot of the United States of America and freedom, that freedom has to be looked through the prism of the new realities. The new realities are, as the General illuminated, there are now open public domain tools for anyone to attack the United State, industry and government, he brought it up. Who do they protect, the banks? So, this ends up, I think will be a generational thing that the younger generation and others will have to figure out, but the leaders in industry will have to step up. And I think that to me is interesting. What does that look like? >> I think leadership is the whole key to this. I think there's a big thread about where the burden lies. I write about that a lot as a central theme, where is the burden? Well, each of us have a burden in this society to pay attention to our digital footprint, but it's moving and whirling so fast, and the speaker just now from US Bank said there is no such thing as unprecedented, it's all ridiculous the way things are happening. So, it has to be at the level of the leaders, a combination, and I think this is what the general was advocating, a combination of the government as we know it, as we've built it, by and for the people, and industry recognizing that if they don't do it, regulations are going to be pushed down, which is already happening here in New York. New York State Department of Financial Services now imposes rules on financial services companies to protect their data, have a CSO, check their third parties. That just went in effect in March. >> Let's unpack that, because I think that's what new. If they don't do this, they don't partner, governments and industry don't partner together, either collectively as a vertical or sector with the government, then the government will impose new mandates on them. That's kind of what you're getting at. That's what's happening. >> It'll be a push and shove. Now the push is because industry has not acted with enough urgency, and even though they were seeing them in the headlines. California's already led the way in terms of its Data Loss Disclosure law that now 47 states have, but it's a very, I mean, that's just the level the government can push, and then industry has to react to that. >> I got to say, I'm just being an observer in the industry, we do The Cube, and how many events will we hear the word digital transformation. If people think digital transformation is hard now, imagine if the government imposes all these restrictions. >> What about GDPR? >> Byron: That's a good question, yeah. >> You're trying to tell me the US government is going to be obliged to leak private information because of a socialist agenda, which GDPR has been called. >> No, that's another one of these catalysts or one of these drivers that are pushing. We're in a global society, right? >> Here's my take, I'll share my opinion on this, Dave, I brought it up earlier. What the general was pointing out is the terror states now have democratized tools that other big actors are democratizing through the public domain to allow any enemy of the United States to attack with zero consequences, because they're either anonymous. But let's just say they're not anonymous, let's just say they get caught. We can barely convert drug dealers, multiple jurisdictions in court and around the world. What court is out there that will actually solve the problem? So, the question is, if they get caught, what is the judicial process? >> Navy SEALs? >> I mean, obviously, I'm using the DEA and drug, when we've been fighting drug for multiple generations and we still have to have a process to multiple years to get that in a global court. I mean, it's hard. My point is, if we can't even figure it out for drug trade, generations of data, how fast are we going to get cyber criminals? >> Well, there is recognition of this, and there is work being done, but the gap is so large. Microsoft has done a big chunk of this in fighting botnets, right? So, they've taken a whole legal strategy that they've managed to impose in maybe a half-dozen cases the last few years, where they legally went and got legal power to shut down hosting services that were sources of these botnets. So, that's just one piece of it. >> So, this World War I analogy, let's just take it to the cloud wars. So, in a way, Dave, we asked Amazon early on, Amazon Web Services how their security was. And you questioned, maybe cloud has better security than on premise, at that time eight years ago. Oh my God, the cloud is so insecure. Now it looks like the cloud's more secure, so maybe it's a scale game. Cloud guys might actually be an answer, if you take your point to the next level. What do you think? >> Correct me if I'm wrong, you haven't seen these kind of massive Equifax-like breaches at Amazon and Google. >> That we know about. >> That we know about. >> What do you think? Don't they have to disclose? >> Cloud players have an opportunity? >> That we know about. >> That's what I was saying. The question on the table is, are the cloud guys in a better position to walk around and carry the heavy stick on cyber? >> Personally, I would say no question. There's homogeneity of the infrastructure, and standardization, and more automation. >> What do you think? What's your community think? >> I think you're right, first of all, but I think it's not the full answer. I think the full answer is what the general keeps hammering on, which is private, public, this needs to be leadership, we need to connect all these things where it makes sense to connect them, and realize that there's a bigger thing on the horizon that's already breathing down our necks, already blowing fire like a dragon at us. It's a piece of the, yeah. >> It's a community problem. The community has to solve the problem at leadership level for companies and industry, but also what the security industry has always been known for is sharing. The question is, can they get to a data sharing protocol of some sort? >> It's more than just data sharing. I mean, he talked about that, he talked about, at lunch he did, about the ISAC sharing. He said now it's more, ISACs are these informational sharing by industry, by financial industry, health industry, energy industry, they share information about they've been hacked. But he said, it's more than that. We have to get together at the table and recognize where these attacks are coming, and figure out what the smart things are doing, like at the ISP level. That's a big part of the funnel, crucial part of the funnel, is where traffic moves. That's where it needs to be done. >> What about the the balance of power in the cyber war, cyber warfare? I mean, US obviously, US military industrial complex, Russia, China, okay, we know what the balance of power is there. Is there much more of a level playing field in cyber warfare, do you think, or is it sort of mirror the size of the economy, or the sophistication of the technology? >> No, I think you're absolutely right. There is much more of a level playing field. I mean, North Korea can come in and do a, this is what we know about, or we think we know about, come in and do a WannaCry attack, develop a ransomware that actually moves on the internet of things to raise cash, right, for North Korea. So there, yeah, you're absolutely right. >> That's funding their Defense Department. >> As Robert Gates said when he was on The Cube, we have to be really careful with how much we go on the offense with cyber security, because we have more to lose than anybody with critical infrastructure, and the banking system, the electrical grid, nuclear facilities. >> I interviewed a cyber guy on The Cube in the studio from Vidder, Junaid Islam. He's like, we can look at geo and not have anyone outside the US access our grid. I mean, no one should attack our resources from outside the US, to start with. So, core network access has been a big problem. >> Here's something, I think I can share this because I think he said he wouldn't mind me sharing it. At the lunch today, to your point that we have more to lose is, the general said yeah, we have terrific offensive capability. Just like in the analog world, we have all the great bombers, more bombers than anybody else. But can we stop people from getting, we don't have the comparable level of stopping. >> The defense is weak. >> The defense, right. Same thing with cyber. He said somebody once asked him how many of your, what percentage of your offensive attacks are successful? 100%. You know, we do have, we saw some of that with leaks of the NSA's weapons that happened this year, that gone out. >> It's like Swiss cheese, the leaks are everywhere, and it's by the network itself. I ran into a guy who was running one of the big ports, I say the city to reveal who it was, but he's like, oh my God, these guys are coming in the maritime network, accessing the core internet, unvetted. Pure core access, his first job as CIO was shut down the core network, so he has to put a VPN out there and segment the network, and validate all the traffic coming through. But the predecessor had direct internet access to their core network. >> Yeah, I think the energy sector, there's a sponsor here, ICIT, that's in the industrial control space, that I think that's where a lot of attention is going to go in the next couple of years, because as we saw with these attacks of the Ukraine, getting in there and shutting down their power grid for half a day or whatever, or with our own alleged, US own involvement in something like Stuxnet where we get into the power grid in Iran, those controls are over here with a separate legacy. Once you get in, it's really easy to move around. I think that needs to be all cleaned up and locked down. >> They're already in there, the malware's sitting in there, it's idle. >> We're already over there probably, I don't know, but that's what I would guess and hope. >> I don't believe anything I read these days, except your stuff, of course, and ours. Being a journalist, what are you working on right now? Obviously you're out there reporting, what are the top things you're looking at that you're observing? What's your observation space relative to what you're feeding into your reports? >> This topic, security, I'm going to retire and be long gone on this. This is a terrific topic that means so much and connects to everything. >> A lot of runway on this topic, right? >> I think the whole area of what, right there, your mobile device and how it plugs into the cloud, and then what that portends for internet of things. We have this whole 10-year history of the laptops, and we're not even solving that, and the servers are now moving here to these mobile devices in the clouds and IOT. It's just, attack surface area is just, continues to get bigger. >> And the IT cameras. >> The other thing I noticed on AETNA's presentation this morning on the keynote, Jim was he said, a lot of times many people chase the wrong attack vector, because of not sharing, literally waste cycle times on innovation. So, it's just interesting market. Okay, final thoughts, Byron. This event, what's the significance of this event? Obviously there's Black Hat out there and other industry events. What is so significant about CyberConnect from your perspective? Obviously, our view is it's an industry conversation, it's up-leveled a bit. It's not competing with other events. Do you see it the same way? What is your perspective on this event? >> I think that it's properly named, Connect, and I think that is right at the center of all this, when you have people like Jim Ralph from AETNA, which is doing these fantastic things in terms of protecting their network and sharing that freely, and the US Bank guy that was just on, and Verizon is talking later today. They've been in this space a long time sharing terrific intelligence, and then somebody like the general, and Tom Kemp, the CEO of Centrify, talking about giving visibility to that, a real key piece that's not necessarily sexy, but by locking that down, that's accessing. >> How is the Centrify message being received in the DC circles? Obviously they're an enterprise, they're doing very well. I don't know their net revenue numbers because they're private, they don't really report those. Are they well-received in the DC and the cyber communities in terms of what they do? Identity obviously is a key piece of the kingdom, but it used to be kind of a fenced off area in enterprise software model. They seem to have more relevance now. Is that translating for them in the marketplace? >> I would think so, I mean, the company's growing. I was just talking to somebody. The story they have to tell is substantive and really simple. There's some smart people over there, and I think there are friendly ears out there to hear what they have to say. >> Yeah, anything with identity, know your customer's a big term, and you hear in blockchain and anti-money laundering, know your customer, big term, you're seeing more of that now. Certainly seeing Facebook, Twitter, and Alphabet in front of the Senate getting peppered, I thought that was interesting. We followed those guys pretty deeply. They got hammered, like what's going on, how could you let this happen? Not that it was national security, but it was a major FUD campaign going on on those platforms. That's data, right, so it wasn't necessarily hacked, per se. Great stuff, Byron, thanks for joining us here on The Cube, appreciate it. And your website is lastwatchdog.com. >> Yes. >> Okay, lastwatchdog.com. Byron Acohido here inside The Cube. I'm John Furrier, Dave Vellante, we'll be back with more live coverage after this short break.