>> TheCUBE presents Ignite 22 brought to you by Palo Alto Networks. >> Welcome back to Las Vegas, everyone. We're glad you're with us. This is theCUBE live at Palo Alto Ignite 22 at the MGM Grant in Las Vegas. Lisa Martin here with Dave Vellante, day one of our coverage. We've had great conversations. The cybersecurity landscape is so interesting Dave, it's such a challenging problem to solve but it's so diverse and dynamic at the same time. >> You know, Lisa theCUBE started in May of 2010 in Boston. We called it the chowder event, chowder and Lobster. It was a EMC world, 2010. BJ Jenkins, who's here, of course, was a longtime friend of theCUBE and made the, made the transition into from, well, it's still data, data to, to cyber. So >> True. And BJ is back with us. BJ Jenkins, president Palo Alto Networks great to have you back on theCUBE. >> It is great to be here in person on theCube >> Isn't it great? >> In Vegas. It's awesome. >> And we can tell by your voice will be, will be gentle. You, you've been in Vegas typical Vegas occupational hazard of losing the voice. >> Yeah. It was one of the benefits of Covid. I didn't lose my voice at home sitting talking to a TV. You lose it when you come to Vegas. >> Exactly. >> But it's a small price to pay. >> So things kick off yesterday with the partner summit. You had a keynote then, you had a customer, a CISO on stage. You had a keynote today, which we didn't get to see. But talk to us a little bit about the lay of the land. What are you hearing from CISOs, from CIOs as we know security is a board level conversation. >> Yeah, I, you know it's been an interesting three or four months here. Let me start with that. I think, cybersecurity in general is still front and center on CIOs and CISO's minds. It has to be, if you saw Wendy's presentation today and the threats out there companies have to have it front and center. I do think it's been interesting though with the macro uncertainty. We've taken to calling this year the revenge of the CFO and you know these deals in cybersecurity are still a top priority but they're getting finance and procurements, scrutiny which I think in this environment is a necessity but it's still a, you know, number one number two imperative no matter who you talked to, in my mind >> It was interesting what Nikesh was saying in the last conference call that, hey we just have to get more approvals. We know this. We're, we're bringing more go-to-market people on board. We, we have, we're filling the pipeline 'cause we know they're going to split up deals big deals go into smaller chunks. So the question I have for you is is how are you able to successfully integrate those people so that you can get ahead of that sort of macro transition? >> Yeah I, you know, I think there's two things I'd say about uncertain macro situations and Dave, you know how old I am. I'm pretty old. I've been through a lot of cycles. And in those cycles I've always found stronger companies with stronger value proposition separate themselves actually in uncertain, economic times. And so I think there's actually an opportunity here. The message tilts a little bit though where it's been about innovation and new threat vectors to one of you have 20, 30, 40 vendors you can consolidate become more effective in your security posture and save money on your TCOs. So one of the things as we bring people on board it's training them on that business value proposition. How do you take a customer who's got 20 or 30 tools take 'em down to 5 or 10 where Palo is more central and strategic and be able to demonstrate that value. So we do that through, we're making a huge investment in our people but macroeconomic times also puts some stronger people back on the market and we're able to incorporate them into the business. >> What are the conditions that are necessary for that consolidation? Like I would imagine if you're, if you're a big customer of a big, you know, competitor of yours that that migration is going to be harder than if you're dealing with lots of little point tools. Do those, do those point tools, are they sort of is it the end of the subscription? Is it just stuff that's off the books now? What's, the condition that is ripe for that kind of consolidation? >> Look, I think the challenge coming into this year was skills. And so customers had all of these point products. It required a lot more human intervention as Nikesh was talking about to integrate them or make them work. And as all of us know finding people with cybersecurity skills over the last 12 months has been incredibly hard. That drove, if you know, if you think about that a CIO and a CISO sitting there going, I have all all this investment in tools. I don't have the people to operate 'em. What do I need to do? What we tried to do is elevate that conversation because in a customer, everybody who's bought one of those, they they bought it to solve a problem. And there's people with affinity for that tool. They're not just going to say I want to get consolidated and give up my tool. They're going to wrap their arms around it. And so what we needed to do and this changed our ecosystem strategy too how we leverage partners. We needed to get into the CIO and CISO and say look at this chaos you have here and the challenges around people that it's, it's presenting you. We can help solve that by, by standardizing, consolidating taking that integration away from you as Nikesh talked about, and making it easier for your your high skill people to work on high skill, you know high challenges in there. >> Let chaos reign, and then reign in the chaos. >> Yes. >> Andy Grove. >> I was looking at some stats that there's 26 million developers but less than 3 million cybersecurity professionals. >> Talked about that skills gap and what CISOs and CIOs are facing is do you consider from a value prop perspective Palo Alto Networks to be a, a facilitator of helping organizations deal with that skills gap? >> I think there's a short term and a long term. I think Nikesh today talked about the long term that we'll never win this battle with human beings. We're going to have to win it with automation. That, that's the long term the short term right here and now is that people need people with cybersecurity skills. Now what we're trying to do, you know, is multifaceted. We work with universities to standardize programs to develop skills that people can come into the marketplace with. We run our own programs inside the company. We have a cloud academy program now where we take people high aptitude for sales and technical aptitude and we will put them through a six month boot camp on cloud and they'll come out of that ready to really work with the leading experts in cloud security. The third angle is partners, right, there are partners in the marketplace who want to drive their business into high services areas. They have people, they know how to train. We give them, we partner with them to give them training. Hopefully that helps solve some of the short-term gaps that are out there today. >> So you made the jump from data storage to security and >> Yeah. >> You know, network security, all kinds of security. What was that like? What you must have learned a lot in the last better part of a decade? >> Yeah. >> Take us through that. >> You know, so the first jump was from EMC. I was 15 years there to be CEO of Barracuda. And you know, it was interesting because EMC was, you know large enterprise for the most part. At Barracuda we had, you know 250,000 small and mid-size enterprises. And it was, it's interesting to get into security in small and mid-size businesses because, you know Wendy today was talking about nation states. For small and mid-size business, it's common thievery right? It's ransomware, it's, and, those customers don't have, you know, the human and financial resources to keep up with the threat factor. So, you know, Nikesh talked about how it's taken 'em four and a half years to get into cybersecurity. I remember my first week at Barracuda, I was talking with a customer who had, you know, breached data shut down. There wasn't much bitcoin back then so it was just a pure ransom. And I'm like, wow, this is, you know, incredible industry. So it's been a good, you know, transition for me. I still think data is at the heart of all of this. Right? And I have always believed there's a strong connection between the things I learned growing up at EMC and what I put into practice today at Palo Alto Networks. >> And how about a culture because I, you know I know have observed the EMC culture >> Yeah. >> And you were there in really the heyday. >> Yeah. >> Right? Which was an awesome place. And it seems like Palo Alto obviously, different times but you know, similar like laser focus on solving problems, you know, obviously great, you know value sellers, you know, you guys aren't the commodity >> Yeah. For Product. But there seemed to be some similarities from afar. I don't know Palo Alto as well as I know EMC. >> I think there's a lot. When I joined EMC, it was about, it was 2 billion in in revenue and I think when I left it was over 20, 20, 21. And, you know, we're at, you know hopefully 5, 5 5 in revenue. I feel like it's this very similar, there's a sense of urgency, there's an incredible focus on the customer. you know, Near and Moche are definitely different individuals but the both same kind of disruptive, Israeli force out there driving the business. There are a lot of similarities. I, you know, the passion, I feel privileged as a, you know go to market person that I have this incredible portfolio to go, you know, work with customers on. It's a lucky position to be in, but very I feel like it is a movie I've seen before. >> Yeah. And but, and the course, the challenges from the, the target that you're disrupting is different. It was, you know, EMC had a lot of big, you know IBM obviously was, you know, bigger target whereas you got thousands of, you know, smaller companies. >> Yes. >> And, and so that's a different dynamic but that's why the consolidation play is so important. >> Look at, that's why I joined Palo Alto Networks when I was at Barracuda for nine years. It just fascinated me, that there was 3000 plus players in security and why didn't security evolve like the storage market did or the server market or network where working >> Yeah, right. >> You know, two or three big gorillas came to, to dominate those markets. And it's, I think it's what Nikesh talked about today. There was a new problem in best of breed. It was always best of breed. You can never in security go in and, you know, say, Hey it's good I saved us some money but I got the third best product in the marketplace. And there was that kind of gap between products. I, believe in why I joined here I think this is my last gig is we have a chance to change that. And this is the first company as I look from the outside in that had best of breed as, you know Nikesh said 13 categories. >> Yeah. >> And you know, we're in the leaders quadrant and it's a conversation I have with customers. You don't have to sacrifice best of breed but get the benefits of a platform. And I, think that resonates today. I think we have a chance to change the industry from that viewpoint. >> Give us a little view of the voice of the customer. You had, was it Sabre? >> Yeah. >> That was on >> Scott Moser, The CISO from Sabre. >> Give us a view, what are you hearing from the voice of the customer? Obviously they're quite a successful customer but challenges, concerns, the partnership. >> Yeah. Look, I think security is similar to industries where we come up with magic marketing phrases and, you know, things to you know, make you want to procure our solutions. You know, zero trust is one. And you know, you'll talk to customers and they're like, okay, yes. And you know, the government, right? Joe, Joe Biden's putting out zero trust executive orders. And the, the problem is if you talk to customers, it's a journey. They have legacy infrastructure they have business drivers that you know they just don't deal with us. They've got to deal with the business side who's trying to make the money that keeps the, the company going. it's really helped them draw a map from where they're at today to zero trust or to a better security architecture. Or, you know, they're moving their apps into the cloud. How am I going to migrate? Right? Again, that discussion three years ago was around lift and shift, right? Today it's about, well, no I need cloud native developed apps to service the business the way I want to, I want to service it. How do I, so I, I think there's this element of a trusted partner and relationship. And again, I think this is why you can't have 40 or 50 of those. You got to start narrowing it down if you want to be able to meet and beat the threats that are out there for you. So I, you know, the customers, I see a lot of 'em. It's, here's where I'm at help me get here to a better position. And they know it's, you know Scott said in our keynote today, you don't just, you know have layer three firewall policies and decide, okay tomorrow I'm going to go to layer seven. That, that's not how it works. Right? There's, and, and by the way these things are a mission critical type areas. So there's got to be a game plan that you help customers go through to get there. >> Definitely. Last question, my last question for you is, is security being a board level conversation I was reading some stats from a survey I think it was the what's new in Cypress survey that that Palo Alto released today that showed that while significant numbers of organizations think they've got a cyber resiliency playbook, there's a lot of disconnect or lack of alignment at the boardroom. Are you in those conversations? How can you help facilitate that alignment between the executive team and the board when it comes to security being so foundational to any business? >> Yeah, it's, I've been on three, four public company boards. I'm on, I'm on two today. I would say four years ago, this was a almost a taboo topic. It was a, put your head in the sand and pray to God nothing happened. And you know, the world has changed significantly. And because of the number of breaches the impact it's had on brand, boards have to think about this in duty of care and their fiduciary duty. Okay. So then you start with a board that may not have the technical skills. The first problem the security industry had is how do I explain your risk profile in a way you can understand it. I'm, I'm on the board of Generac that makes home generators. It's a manufacturing, you know, company but they put Wifi modules in their boxes so that the dealers could help do the maintenance on 'em. And all of a sudden these things were getting attacked. Right? And they're being used for bot attacks. >> Yeah. >> Everybody on their board had a manufacturing background. >> Ah. >> So how do you help that board understand the risk they have that's what's changed over the last four years. It's a constant discussion. It's one I have with CISOs where they're like help us put it in layman's terms so they understand they know what we're doing and they feel confident but at the same time understand the marketplace better. And that's a journey for us. >> That Generac example is a great one because, you know, think about IOT Technologies. They've historically been air gaped >> Yes. >> By design. And all of a sudden the business comes in and says, "Hey we can put wifi in there", you know >> Connect it to a home Wifi system that >> Make our lives so much easier. Next thing you know, it's being used to attack. >> Yeah. >> So that's why, as you go around the world are you discerning, I know you were just in Japan are you discerning significant differences in sort of attitudes toward, towards cyber? Whether it's public policy, you know things like regulation where you, they don't want you sharing data, but as as a cyber company, you want to share that data with you know, public and private? >> Look it, I, I think around the world we see incredible government activity first of all. And I think given the position we're in we get to have some unique conversations there. I would say worldwide security is an imperative. I, no matter where I go, you know it's in front of everybody's mind. The, on the, the governance side, it's really what do we need to adapt to make sure we meet local regulations. And I, and I would just tell you Dave there's ways when you do that, and we talk with governments that because of how they want to do it reduce our ability to give them full insight into all the threats and how we can help them. And I do think over time governments understand that we can anonymize the data. There's, but that, that's a work in process. Definitely there is a balance. We need to have privacy, we need to have, you know personal security for people. But there's ways to collect that data in an anonymous way and give better security insight back into the architectures that are out there. >> All right. A little shift the gears here. A little sports question. We've had some great Boston's sports guests on theCUBE right? I mean, Randy Seidel, we were talking about him. Peter McKay, Snyk, I guess he's a competitor now but you know, there's no question got >> He got a little funding today. I saw that. >> Down round. But they still got a lot of money. Not of a down round, but they were, but yeah, but actually, you know, he was on several years ago and it was around the time they were talking about trading Brady. He said Never trade Brady. And he got that right. We, I think we can agree Brady's the goat. >> Yes. >> The big question I have for you is, Belichick. Do you ever question Has your belief in him as the greatest coach of all time wavered, you know, now that- No. Okay. >> Never. >> Weigh in on that. >> Never, he says >> Still the Goat. >> I'll give you my best. You know, never In Bill we trust. >> Okay. Still. >> All right >> I, you know, the NFL is a unique property that's designed for parody and is designed, I mean actively designed to not let Mr. Craft and Bill Belichick do what they do every year. I feel privileged as a Boston sports fan that in our worst years we're in the seventh playoff spot. And I have a lot of family in Chicago who would kill for that position, by the way. And you know, they're in perpetual rebuilding. And so look, and I think he, you know the way he's been able to manage the cap and the skill levels, I think we have a top five defense. There's different ways to win titles. And if I, you know, remember in Brady's last title with Boston, the defense won us that Super Bowl. >> Well thanks for weighing in on that because there's a lot of crazy talk going on. Like, 'Hey, if he doesn't beat Arizona, he's got to go.' I'm like, what? So, okay, I'm sometimes it takes a good good loyal fan who's maybe, you know, has >> The good news in Boston is we're emotional fans too so I understand you got to keep the long term long term in mind. And we're, we're in a privileged position in Boston. We've got Celtics, we've got Bruins we've got the Patriots right on the edge of the playoffs and we need the Red Sox to get to work. >> Yeah, no, you know they were last, last year so maybe they're going to win it all like they usually do. So >> Fingers crossed. >> Crazy worst to first. >> Exactly. Well you said, in Bill we trust it sounds like from our conversation in BJ we trust from the customers, the partners. >> I hope so. >> Thank you so much BJ, for coming back on theCUBE giving us the lay of the land, what's new, the voice of the customer and how Palo Alto was really differentiated in the market. We always appreciate your, coming on the show you >> Honor and privilege seeing you here. Thanks. >> You may be thinking that you were watching ESPN just now but you know, we call ourselves the ESPN at Tech News. This is Lisa Martin for Dave Vellante and our guest. You're watching theCUBE, the Leader and live emerging in enterprise tech coverage. (upbeat music)

>>Live from Orlando, Florida. It's the cube covering Microsoft ignite brought to you by Cohesity. >>Good afternoon everyone and welcome back to the cubes live coverage of Microsoft ignite. We are wrapping up three days of wall to wall coverage. Back to back interviews. I'm your host Rebecca Knight, alongside my cohost Stu Miniman. We have saved the best for last. We have BJ Jenkins, president and CEO of Barracuda networks. Thank you so much for coming on the cube. Feel a lot of pressure on internet. It's going to be great. Why don't you start by Barracuda. I think of that heartsong tell our viewers a little bit about, about your business, what you do. >>Yeah. Um, Barracuda is a company focused in the security industry, primarily on email security and network and application security. Uh, we have over 220,000 customers, uh, since we were founded a little over 15 years ago. And um, you know, we have a passion for making our customers secure and safe and being able to run their business. And we're a great partner in Microsoft, so, uh, they really help us drive our business. >>Yeah. So, so much to catch up, PJ, since it's been many years since you've been on the program, you were new in the role, but let's start with that Microsoft relationship here. We've been spending all week talking through all of the various environments. Talk about a little bit about your joint customers, the relationship and what's happening there. >>Yeah. I joined Barracuda seven years ago. Yesterday was my anniversary. And um, when I came into Barracuda, it was primarily at the time focused on a kind of small and midsize businesses. And most of those businesses ran Microsoft exchange or ran some form of Microsoft applications. And really that was the start of our partnership, realizing how important Microsoft was and it's grown. We were the first, uh, security company to put our firewalls in Azure. And that was over five years ago. And I think being first with a partner like Microsoft who is really at that point trying to catch up with Amazon and you know, Satya was, we're starting to drive the business in that direction. Uh, it gave us a unique vantage point in the partnership and it's grown from there. We were, uh, the Azure partner the year in 2016, uh, across their business. Um, we do joint development with them. We do joint go to market activities. And when you look around and you see 30,000 customers here, it's a, it's a good, good place to focus for a company like ourselves. >>Yeah. Well the, the, the changes in Microsoft business has had a ripple effect in the ecosystem, not only the launch of Azure, but I mean a big push office three 65 you talk about there's gotta be a difference between I'm rolling out exchange servers and well, it's all in the cloud. We know that customers still need to think sick as strong about security when they go to SAS Deere. If your customers figured that out yet. >>Yeah. I think, um, the trends that played out on prom play out in the cloud, um, how am I gonna secure my applications? How am I going to secure my data, my network? Um, and then the individuals that are using that cause at the end of the day, the individuals tend to be the weakest link in the security chain. And, um, you know, Mike, what I like is Microsoft has done a really good job improving their security posture, the base level that they provide to their customers every single day improves. And our job is to innovate on top of that and make them even safer. And, um, Microsoft's position in the industry too has been one where they want to be a ecosystem. They want to partner with third parties to help their customers move from on prem into Azure. And they know they're not gonna be able to do it on their own. >>So they've upped their game. We've got to up our game and we do it jointly, which is the nice thing. I, I joke with people. When I was at EMC and I used to go to Redmond, I'd go with battle armor on because there was not gonna be a fun meeting, uh, who's going to be, how Microsoft was going to hurt our business. And now I go to Redmond and you're embraced as a partner. They want to understand what customers and partners are thinking. They jointly plan with you. It's a completely different tone and tenor, which has been nice for us. >>So it is a scary world out there. And as we know that the threat environment is changing, hackers are becoming more sophisticated. I wonder if you could just set the scene for our viewers and just talk about security challenges in general and then we'll get into the specifics of the new solutions that you've announced here. >>Yeah, it's, threats come from everywhere and I think it's hard to boil it down and make it simple at times. But one of the stories I tell, uh, investors and customers about how fast the world is changing, uh, when I came on board, CEO's are obviously targets for hackers and the types of phishing mails I would get at that point. Um, and they would be very obvious. I've gone by BJ my entire life. On the website it says William Jenkins. And so the phishing emails would come in and say, you know, today fog, no, Hey, can you wire money here, William? Right. And so there was just base level intelligence. Nowadays they use LinkedIn, they use fee, they create social graphs. They study your communication forms, they look, they know how you're organized and they target the people. It will have, I always signed my emails past comma, BJ, the best fishing males have that in there. >>They've discovered that they've incorporated that they, so the, just the level of intelligence, the sophistication of what hackers do today, uh, has exponentially changed. And, you know, we're fortunate you can, we have more computing power. We have more artificial intelligence that we can apply to stop them. But the game just keeps getting escalated. And it's a, it's why the security industry has been strong. It's why there's so many companies out there. We've got to keep getting better. Um, but it's, it's a scary world. It's, it's, you know, you can never, never rest and never think you're ahead. You always gotta keep attacking it. >>So BJ, you had a number of announcements. Barracuda did, not nearly as many as Microsoft did, but give us the highlights if you would. >>Yeah. Um, so a number number of things announced here. Uh, first we're part of, uh, Misa, the Microsoft intelligence security association. So we're proud, proud to be a part of that. At launch. Um, we announced, uh, the cloud application platform security platform and the big announcement for us around that was our launch of as a service, uh, that's run on Azure. And, uh, we've always had a strong application approach. We've got integrated, um, detection, DDoSs uh, the O OS top 20 are all in Kurt corporate into our platform. What we've done is really leveraged Microsoft scale to run a very easy, simple to deploy a web application security platform, uh, that takes advantage of Microsoft scale and resiliency and brings that to our customers. Uh, we did a study, you know, only 10% of the websites in the world today are protected. So 90% of the web sites and web applications in the world today run on protected. >>We think this is a great way to go out and, um, help protect more of those. And then finally, um, you know, we announced Microsoft announced their V land solution and we have done joint development with them. We'll continue to innovate here, but we announced obviously our solution that we'll run, uh, with Microsoft's B when we're the only ones who can provide a customer really with multiple lengths run on Microsoft backbone, they can really run their data center. Now the corporate data center out of Azure, uh, we give them traffic prioritization, fail over resiliency that customers need when they're making those types of decisions. So there was more than that, but that was a lot of good stuff for us. We're excited about it. >>What does the recent announcement that Microsoft has won the Jetta contract, does that have any impact on Barracuda's business? Is that, >>well, I think anytime Microsoft wins business, it's a good thing because we're partnering with them. That contract is so big and, uh, has a lot of different elements and, and certainly security is a part of it. So we think there's aspects where we can play. I did hear, I think, um, Oracle was suing and I think AWS, so this may have a lot of legs before it becomes real. But it, I, you know, I think it continues to show that customers want to utilize, um, the scale breadth and depth of solutions that the cloud companies are bringing. And, you know, we view that as opportunity because security is an important element to making that work for those customers. >>So PJ, one to put aside the Microsoft stuff for a second here, since last we talk barracudas gone private and the security industry feels like it just growing so fast. You know, every week we're getting approached by new startups, heavy investment and the like, give us a little bit about your position has a CIO and CEO in this space. Uh, and you know, the love, a little bit of a note. We know it happened a few years back now, but going private when so many companies have, >>yeah, they're, you know, obviously there's a lot of funded companies in the security market. You know, we were in, uh, we had been public for, for four years. Um, a company that's been around 15 years where we were a profitable security company to, we were unique. We weren't, uh, the high flyer growth, but we were growing, you know, kind of, uh, low double digits with profitability, but there were investments that needed to be made in the business. Uh, we were running our transaction system on code, the founder wrote. Um, so there were investments we really needed to make to go from, you know, the 400, 500 million Mark to 1 billion mark. And so going private with a partner like Thoma Bravo, um, who really understands this industry has allowed us to reset the strategy and focus on, uh, the highest growth areas for us, which are email and network and application security. >>Um, they've helped us, we've invested over 20 million in internal systems, um, modern systems, Salesforce, NetSuite, uh, that we think give us the foundational elements to scale to $1 billion. And, um, you know, they combine that with operational expertise that they bring in to help us get more customers to the 220,000. Uh, one of the other interesting things for us too is, um, well we have 220,000 customers. We have 50 of the fortune 100. We have 250 of the fortune 1000 and as the movement, as, as customers have move to cloud, our solutions have become more relevant for customers of scale. And so they've given us the backing really to make that transition into that. So I liked not having to go on public conference calls every quarter. That's been a really nice thing. Um, but they've been a great partner for us. So we've, I think what you can think of us as we focused on areas that we think are the highest priority to our customers. >>Yeah, PJ, it also, we talked about there's so many startups in this space out there. The profile security keeps getting raised. Pat Gelsinger, VMware, you know, pounding the table saying that security needs to do over the, he just purchased black Boston based company that was public. You know, I talked to my friends that had been deep in the security industry and they scoff a little bit about, you know, we've been doing this for a long time. Barracuda is a company that has been around for quite a number of years. How's the industry doing? What do we need to do better? And how do you look at that landscape? >>Yeah, I, you know, I love pats energy and vigor, but there's no silver bullet that's gonna solve every problem out there. I do think, uh, where the industry is getting better is one on sharing information. You can see alliances, associations that have been formed. Um, you know, even with the cloud providers, we're actively sharing information and sharing of that information. We'll make more robust solutions first. Um, second you're seeing vendors go more towards platform where they're offering a larger, so the, the quality of solutions are getting better. And I do think there's consolidation happening where there, there are going to be certain segments of the market where you don't need 15 solutions. You really need, you know, one not from a particular player. So I think you'll see more, uh, consolidation occur around that. And you know, certainly that's been a trend we've been on in terms of integrating our solutions, making them easier to deploy and use for the customers. And then, you know, I think the last part of this is regulation is really a, it's still behind, but it's finally catching up and there's an interest in it. And I think in partnership with the industry, we can get our customers in a better position, a better security posture. So, you know, I, um, there will be consolidation over over time. Uh, you know, I've seen a map, I think there's 3000 security companies in all different segments that won't last forever. And, uh, it'll get easier for customers over time, is my belief. >>So with regulation, do you want to work in partnership with regulators? I mean, how do you, to help them understand the industry first of all and understand the dangers and the risks? I mean, how do you see the future of regulation for this industry? >>First of all, there's a large education process for legislators in general. You have to look no further than when Mark Zuckerberg got questioned by Congress. And the questions he were getting asked were not the best questions. Um, but you do have people who understand this industry and you can look at regulations like GDPR. You know, California's coming out data privacy law now and they're never perfect, but they're good foundational elements to start. And they're helping customers, um, get more aware of what they have to do to be secure and they're helping us explain to customers the things you can do to be in a better security posture. And so there's a continuum around this. We're in the early days, I, there's still a lot of education that has to go on, but when you see, >>start getting passed, it's a good step in the right direction. And by my estimation, BJ, we did save the best for last. Thank you so much for coming on the cube. That was terrific. Sorry it took so long. I'm Rebecca and I first two minutes and that wraps up three days of coverage at Microsoft ignite at the cube. Thank you so much for tuning in and we will see you next time.

>> Announcer: TheCUBE presents Ignite '22, brought to you by Palo Alto Networks. >> Welcome back to Las Vegas. It's theCUBE covering Palo Alto Networks '22, from the MGM Grand, Lisa Martin with Dave Vellante. Dave, we are going to unpack in the next few minutes what we heard and saw at day one of Palo Alto Networks, Ignite. A lot of great conversations, some great guests on the program today. >> Yeah last event, CUBE event of the year. Probably last major tech event of the year. It's kind of an interesting choice of timing, two weeks after reInvent. But you know, this crowd is it's a lot of like network engineers, SecOps pros. There's not a lot of suits here. I think they were here yesterday, all the partners. >> Yeah. >> We talked to Carl Sunderland about, Hey, these, these guys want to know how do I grow my business? You know, so it was a lot of C level executives talking about their business, and how they partner with Palo Alto to grow. The crowd today is really, you know hardcore security professionals. >> Yeah. >> So we're hearing a story of consolidation. >> Yes. >> No surprise. We've talked about that and reported on it, you know, quite extensively. The one big takeaway, and I want, I came in, as you know, wanting to understand, okay, can you through m and a maintain, you know, build a suite of great, big portfolio and at the same time maintain best of breed? And the answer was consistent. We heard it from Nikesh, we heard it from Nir Zuk. The answer was you can't be best of breed without having that large portfolio, single data lake, you know? Single version of the truth, of there is such a thing. That was interesting, that in security, you have to have that visibility. I would imagine, that's true for a lot of things. Data, see what Snowflake and Databricks are both trying to do, now AWS. So to join, we heard that last week, so that was one of the big takeaways. What were your, some of your thoughts? >> Just impressed with the level of threat intelligence that Unit 42 has done. I mean, we had Wendy Whitmer on, and she was one of the alumni, great guest. The landscape has changed so dramatically. Every business, in any industry, nobody's safe. They have such great intelligence on what's going on with malware, with ransomware, with Smishing, that they're able to get, help organizations on their way to becoming cyber resilient. You know, we've been talking a lot about cyber resiliency lately. I always want to understand, well what does it mean? How do different organizations and customers define it? Can they actually really get there? And Wendy talked about yes, it is a journey, but organizations can achieve cyber resiliency. But they need to partner with Palo Alto Networks to be able to understand the landscape and ensure that they've got security established across their organization, as it's now growingly Multicloud. >> Yeah, she's a blonde-haired Wonder Woman, superhero. I always ask security pros that question. But you know, when you talk to people like Wendy Whitmore, Kevin Mandy is somebody else. And the people at AWS, or the big cloud companies, who are on the inside, looking at the threat intelligence. They have so much data, and they have so much knowledge. They can, they analyze, they could identify the fingerprints of nation states, different, you know, criminal organizations. And the the one thing, I think it was Wendy who said, maybe it was somebody else, I think it was Wendy, that they're they're tearing down and reforming, right? >> Yes. >> After they're discovered. Okay, they pack up and leave. They're like, you know, Oceans 11. >> Yep. >> Okay. And then they recruit them and bring them back in. So that was really fascinating. Nir Zuk, we'd never had him on theCUBE before. He was tremendous founder and and CTO of Palo Alto Networks, very opinionated. You know, very clear thinker, basically saying, look you're SOC is going to be run by AI >> Yeah. >> within the next five years. And machines are going to do things that humans can't do at scale, is really what he was saying. And then they're going to get better at that, and they're going to do other things that you have done well that they haven't done well, and then they're going to do well. And so, this is an interesting discussion about you know, I remember, you know we had an event with MIT. Eric Brynjolfsson and Andy McAfee, they wrote the book "Second Machine Age." And they made the point, machines have always replaced humans. This is the first time ever that machines are replacing humans in cognitive functions. So what does that mean? That means that humans have to rely on, you know, creativity. There's got to be new training, new thinking. So it's not like you're going to be out of a job, you're just going to be doing a different job. >> Right. I thought Nir Zuk did a great job of explaining that. We often hear people that are concerned with machines taking jobs. He did a great job of, and you did a great recap, of articulating the value that both bring, and the opportunities to the humans that the machines actually deliver as well. >> Yeah so, you know, we didn't, we didn't get deep into the products today. Tomorrow we're going to have a little bit more deep dive on products. We did, we had some partners on, AWS came on, talked about their ecosystem. BJ Jenkins so, you know, BJ Jenkins again I mean super senior executive. And if I were Nikesh, he's doing exactly what I would do. Putting him on a plane and saying, go meet with customers, go make rain, right? And that's what he's doing is, he's an individual who really knows how to interact with the C-suite, has driven value, you know, over the years. So they've got that angle goin', they're driving go to market. They've got the technology piece and they've, they got to build out the ecosystem. That I think is the big opportunity for them. You know, if they're going to double as a company, this ecosystem has to quadruple. >> Yeah, yeah. >> In my opinion. And I, we saw the same thing at CrowdStrike. We said the same thing about Service Now in 2013. And so, what's happened is the GSIs, the global system integrators start to get involved. They start to partner with them and then they get to get that flywheel effect. And then there's a supercloud, I think that, you know I think Nir Zuk said, Hey, we are basically building out that, he didn't use the term supercloud. But, we're building out that cross cloud capability. You don't need another stove pipe for the edge. You know, so they got on-prem, they got AWS, Azure, you said you have to, absolutely have to run on Microsoft. 'Cause I don't believe today, right? Today they run on, I heard somebody say they run on AWS and Google. >> Yeah. >> I haven't heard much about Microsoft. >> Right. >> Both AWS and Google are here. Microsoft, the bigger competitor in security, but Nir Zuk was unequivocal. Yes, of course you have to run, you got to run it on an Alibaba cloud. He didn't say that, but if you want to secure the China cloud, you got to run on Alibaba. >> Absolutely. >> And Oracle he said. Didn't mention IBM, but no reason they can't run on IBM's cloud. But unless IBM doesn't want 'em to. >> Well they're very customer focused and customer first. So it'll be interesting to see if customers take them in that direction. >> Well it's a good point, right? If customers say, Hey we want you running in this cloud, they will. And, but he did call out Oracle, which I thought was interesting. And so, Oracle's all about mission critical data, mission critical apps. So, you know, that's a good sign. You know, I mean there's so much opportunity in cyber, but so much confusion. You know, sneak had a raise today. It was a down round, no surprise there. But you know, these companies are going to start getting tight on cash, and you've seen layoffs, right? And so, I dunno who said it, I think it was Carl at the end said in a downturn, the strongest companies come out stronger. And that's generally, generally been the case. That kind of rich get richer. We see that in the last downturn? Yes and no, to a certain extent. It's still all about execution. I mean I think about EMC coming out of the last downturn. They did come out stronger and then they started to rocket, but then look what happened. They couldn't remain independent. They were just using m and a as a technique to hide the warts. You know so, what Nir Zuk said that was most interesting to me is when we acquire, we acquire with the intent of integrating. ServiceNow has a similar philosophy. I think that's why they've been somewhat successful. And Oracle, for sure, has had a similar philosophy. So, and that idea of shifting labor into vendor R and D has always been a winning formula. >> I think we heard that today. Excited for day two tomorrow. We've got some great conversations. We're going to be able to talk with some customers, the chief product officer is on. So we have more great content coming from our last live show over the year. Dave, it's been great co-hosting day one with you. Look forward to doing it tomorrow. >> Yeah, thanks for doing this. >> All right. >> All right. For Dave Vellante, I'm Lisa Martin. You've been watching theCUBE, the leader in live enterprise and emerging tech coverage. See you tomorrow. (gentle music fades)

>> From "theCube" Studios in Palo Alto in Boston bringing you data-driven insights from "theCube" and ETR. This is "Breaking Analysis" with Dave Vellante. >> As an independent pure play company, Palo Alto Networks has earned its status as the leader in security. You can measure this in a variety of ways. Revenue, market cap, execution, ethos, and most importantly, conversations with customers generally. In CISO specifically, who consistently affirm this position. The company's on track to double its revenues in fiscal year 23 relative to fiscal year 2020. Despite macro headwinds, which are likely to carry through next year, Palo Alto owes its position to a clarity of vision and strong execution on a TAM expansion strategy through acquisitions and integration into its cloud and SaaS offerings. Hello and welcome to this week's "Wikibon Cube Insights" powered by ETR and this breaking analysis and ahead of Palo Alto Ignite the company's user conference, we bring you the next chapter on top of the last week's cybersecurity update. We're going to dig into the ETR data on Palo Alto Networks as we promised and provide a glimpse of what we're going to look for at "Ignite" and posit what Palo Alto needs to do to stay on top of the hill. Now, the challenges for cybersecurity professionals. Dead simple to understand. Solving it, not so much. This is a taxonomic eye test, if you will, from Optiv. It's one of our favorite artifacts to make the point the cybersecurity landscape is a mosaic of stovepipes. Security professionals have to work with dozens of tools many legacy combined with shiny new toys to try and keep up with the relentless pace of innovation catalyzed by the incredibly capable well-funded and motivated adversaries. Cybersecurity is an anomalous market in that the leaders have low single digit market shares. Think about that. Cisco at one point held 60% market share in the networking business and it's still deep into the 40s. Oracle captures around 30% of database market revenue. EMC and storage at its peak had more than 30% of that market. Even Dell's PC market shares, you know, in the mid 20s or even over that from a revenue standpoint. So cybersecurity from a market share standpoint is even more fragmented perhaps than the software industry. Okay, you get the point. So despite its position as the number one player Palo Alto might have maybe three maybe 4% of the total market, depending on what you use as your denominator, but just a tiny slice. So how is it that we can sit here and declare Palo Alto as the undisputed leader? Well, we probably wouldn't go that far. They probably have quite a bit of competition. But this CISO from a recent ETR round table discussion with our friend Eric Bradley, summed up Palo Alto's allure. We thought pretty well. The question was why Palo Alto Networks? Here's the answer. Because of its completeness as a platform, its ability to integrate with its own products or they acquire, integrate then rebrand them as their own. We've looked at other vendors we just didn't think they were as mature and we already had implemented some of the Palo Alto tools like the firewalls and stuff and we thought why not go holistically with the vendor a single throat to choke, if you will, if stuff goes wrong. And I think that was probably the primary driver and familiarity with the tools and the resources that they provided. Now here's another stat from ETR's Eric Bradley. He gave us a glimpse of the January survey that's in the field now. The percent of IT buyers stating that they plan to consolidate redundant vendors, it went from 34% in the October survey and now stands at 44%. So we fo we feel this bodes well for consolidators like Palo Alto networks. And the same is true from Microsoft's kind of good enough approach. It should also be true for CrowdStrike although last quarter we saw softness reported on in their SMB market, whereas interestingly MongoDB actually saw consistent strength from its SMB and its self-serve. So that's something that we're watching very closely. Now, Palo Alto Networks has held up better than most of its peers in the stock market. So let's take a look at that real quick. This chart gives you a sense of how well. It's a one year comparison of Palo Alto with the bug ETF. That's the cyber basket that we like to compare often CrowdStrike, Zscaler, and Okta. Now remember Palo Alto, they didn't run up as much as CrowdStrike, ZS and Okta during the pandemic but you can see it's now down unquote only 9% for the year. Whereas the cyber basket ETF is off 27% roughly in line with the NASDAQ. We're not showing that CrowdStrike down 44%, Zscaler down 61% and Okta off a whopping 72% in the past 12 months. Now as we've indicated, Palo Alto is making a strong case for consolidating point tools and we think it will have a much harder time getting customers to switch off of big platforms like Cisco who's another leader in network security. But based on the fragmentation in the market there's plenty of room to grow in our view. We asked breaking analysis contributor Chip Simington for his take on the technicals of the stock and he said that despite Palo Alto's leadership position it doesn't seem to make much difference these days. It's all about interest rates. And even though this name has performed better than its peers, it looks like the stock wants to keep testing its 52 week lows, but he thinks Palo Alto got oversold during the last big selloff. And the fact that the company's free cash flow is so strong probably keeps it at the one 50 level or above maybe bouncing around there for a while. If it breaks through that under to the downside it's ne next test is at that low of around one 40 level. So thanks for that, Chip. Now having get that out of the way as we said on the previous chart Palo Alto has strong opinions, it's founder and CTO, Nir Zuk, is extremely clear on that point of view. So let's take a look at how Palo Alto got to where it is today and how we think you should think about his future. The company was founded around 18 years ago as a network security company focused on what they called NextGen firewalls. Now, what Palo Alto did was different. They didn't try to stuff a bunch of functionality inside of a hardware box. Rather they layered network security functions on top of its firewalls and delivered value as a service through software running at the time in its own cloud. So pretty obvious today, but forward thinking for the time and now they've moved to a more true cloud native platform and much more activity in the public cloud. In February, 2020, right before the pandemic we reported on the divergence in market values between Palo Alto and Fort Net and we cited some challenges that Palo Alto was happening having transitioning to a cloud native model. And at the time we said we were confident that Palo Alto would make it through the knot hole. And you could see from the previous chart that it has. So the company's architectural approach was to do the heavy lifting in the cloud. And this eliminates the need for customers to deploy sensors on prem or proxies on prem or sandboxes on prem sandboxes, you know for instance are vulnerable to overwhelming attacks. Think about it, if you're a sandbox is on prem you're not going to be updating that every day. No way. You're probably not going to updated even every week or every month. And if the capacity of your sandbox is let's say 20,000 files an hour you know a hacker's just going to turn up the volume, it'll overwhelm you. They'll send a hundred thousand emails attachments into your sandbox and they'll choke you out and then they'll have the run of the house while you're trying to recover. Now the cloud doesn't completely prevent that but what it does, it definitely increases the hacker's cost. So they're going to probably hit some easier targets and that's kind of the objective of security firms. You know, increase the denominator on the ROI. All right, the next thing that Palo Alto did is start acquiring aggressively, I think we counted 17 or 18 acquisitions to expand the TAM beyond network security into endpoint CASB, PaaS security, IaaS security, container security, serverless security, incident response, SD WAN, CICD pipeline security, attack service management, supply chain security. Just recently with the acquisition of Cider Security and Palo Alto by all accounts takes the time to integrate into its cloud and SaaS platform called Prisma. Unlike many acquisitive companies in the past EMC was a really good example where you ended up with a kind of a Franken portfolio. Now all this leads us to believe that Palo Alto wants to be the consolidator and is in a good position to do so. But beyond that, as multi-cloud becomes more prevalent and more of a strategy customers tell us they want a consistent experience across clouds. And is going to be the same by the way with IoT. So of the next wave here. Customers don't want another stove pipe. So we think Palo Alto is in a good position to build what we call the security super cloud that layer above the clouds that brings a common experience for devs and operational teams. So of course the obvious question is this, can Palo Alto networks continue on this path of acquire and integrate and still maintain best of breed status? Can it? Will it? Does it even have to? As Holger Mueller of Constellation Research and I talk about all the time integrated suites seem to always beat best of breed in the long run. We'll come back to that. Now, this next graphic that we're going to show you underscores this question about portfolio. Here's a picture and I don't expect you to digest it all but it's a screen grab of Palo Alto's product and solutions portfolios, network cloud, network security rather, cloud security, Sassy, CNAP, endpoint unit 42 which is their threat intelligence platform and every imaginable security service and solution for customers. Well, maybe not every, I'm sure there's more to come like supply chain with the recent Cider acquisition and maybe more IoT beyond ZingBox and earlier acquisition but we're sure there will be more in the future both organic and inorganic. Okay, let's bring in more of the ETR survey data. For those of you who don't know ETR, they are the number one enterprise data platform surveying thousands of end customers every quarter with additional drill down surveys and customer round tables just an awesome SaaS enabled platform. And here's a view that shows net score or spending momentum on the vertical axis in provision or presence within the ETR data set on the horizontal axis. You see that red dotted line at 40%. Anything at or over that indicates a highly elevated net score. And as you can see Palo Alto is right on that line just under. And I'll give you another glimpse it looks like Palo Alto despite the macro may even just edge up a bit in the next survey based on the glimpse that Eric gave us. Now those colored bars in the bottom right corner they show the breakdown of Palo Alto's net score and underscore the methodology that ETR uses. The lime green is new customer adoptions, that's 7%. The forest green at 38% represents the percent of customers that are spending 6% or more on Palo Alto solutions. The gray is at that 40 or 8% that's flat spending plus or minus 5%. The pinkish at 5% is spending is down on Palo Alto network products by 6% or worse. And the bright red at only 2% is churn or defections. Very low single digit numbers for Palo Alto, that's a real positive. What you do is you subtract the red from the green and you get a net score of 38% which is very good for a company of Palo Alto size. And we'll note this is based on just under 400 responses in the ETR survey that are Palo Alto customers out of around 1300 in the total survey. It's a really good representation of Palo Alto. And you can see the other leading companies like CrowdStrike, Okta, Zscaler, Forte, Cisco they loom large with similar aspirations. Well maybe not so much Okta. They don't necessarily rule want to rule the world. They want to rule identity and of course the ever ubiquitous Microsoft in the upper right. Now drilling deeper into the ETR data, let's look at how Palo Alto has progressed over the last three surveys in terms of market presence in the survey. This view of the data shows provision in the data going back to October, 2021, that's the gray bars. The blue is July 22 and the yellow is the latest survey from October, 2022. Remember, the January survey is currently in the field. Now the leftmost set of data there show size a company. The middle set of data shows the industry for a select number of industries in the right most shows, geographic region. Notice anything, yes, Palo Alto up across the board relative to both this past summer and last fall. So that's pretty impressive. Palo Alto network CEO, Nikesh Aurora, stressed on the last earnings call that the company is seeing somewhat elongated deal approvals and sometimes splitting up size of deals. He's stressed that certain industries like energy, government and financial services continue to spend. But we would expect even a pullback there as companies get more conservative. But the point is that Nikesh talked about how they're hiring more sales pros to work the pipeline because they understand that they have to work harder to pull deals forward 'cause they got to get more approvals and they got to increase the volume that's coming through the pipeline to account for the possibility that certain companies are going to split up the deals, you know, large deals they want to split into to smaller bite size chunks. So they're really going hard after they go to market expansion to account for that. All right, so we're going to wrap by sharing what we expect and what we're going to probe for at Palo Alto Ignite next week, Lisa Martin and I will be hosting "theCube" and here's what we'll be looking for. First, it's a four day event at the MGM with the meat of the program on days two and three. That's day two was the big keynote. That's when we'll start our broadcasting, we're going for two days. Now our understanding is we've never done Palo Alto Ignite before but our understanding it's a pretty technically oriented crowd that's going to be eager to hear what CTO and founder Nir Zuk has to say. And as well CEO Nikesh Aurora and as in addition to longtime friend of "theCube" and current president, BJ Jenkins, he's going to be speaking. Wendy Whitmore runs Unit 42 and is going to be several other high profile Palo Alto execs, as well, Thomas Kurian from Google is a featured speaker. Lee Claridge, who is Palo Alto's, chief product officer we think is going to be giving the audience heavy doses of Prisma Cloud and Cortex enhancements. Now, Cortex, you might remember, came from an acquisition and does threat detection and attack surface management. And we're going to hear a lot about we think about security automation. So we'll be listening for how Cortex has been integrated and what kind of uptake that it's getting. We've done some, you know, modeling in from the ETR. Guys have done some modeling of cortex, you know looks like it's got a lot of upside and through the Palo Alto go to market machine, you know could really pick up momentum. That's something that we'll be probing for. Now, one of the other things that we'll be watching is pricing. We want to talk to customers about their spend optimization, their spending patterns, their vendor consolidation strategies. Look, Palo Alto is a premium offering. It charges for value. It's expensive. So we also want to understand what kind of switching costs are customers willing to absorb and how onerous they are and what's the business case look like? How are they thinking about that business case. We also want to understand and really probe on how will Palo Alto maintain best of breed as it continues to acquire and integrate to expand its TAM and appeal as that one-stop shop. You know, can it do that as we talked about before. And will it do that? There's also an interesting tension going on sort of changing subjects here in security. There's a guy named Edward Hellekey who's been in "theCube" before. He hasn't been in "theCube" in a while but he's a security pro who has educated us on the nuances of protecting data privacy, public policy, how it varies by region and how complicated it is relative to security. Because securities you technically you have to show a chain of custody that proves unequivocally, for example that data has been deleted or scrubbed or that metadata does. It doesn't include any residual private data that violates the laws, the local laws. And the tension is this, you need good data and lots of it to have good security, really the more the better. But government policy is often at odds in a major blocker to sharing data and it's getting more so. So we want to understand this tension and how companies like Palo Alto are dealing with it. Our customers testing public policy in courts we think not quite yet, our government's making exceptions and policies like GDPR that favor security over data privacy. What are the trade-offs there? And finally, one theme of this breaking analysis is what does Palo Alto have to do to stay on top? And we would sum it up with three words. Ecosystem, ecosystem, ecosystem. And we said this at CrowdStrike Falcon in September that the one concern we had was the pace of ecosystem development for CrowdStrike. Is collaboration possible with competitors? Is being adopted aggressively? Is Palo Alto being adopted aggressively by global system integrators? What's the uptake there? What about developers? Look, the hallmark of a cloud company which Palo Alto is a cloud security company is a thriving ecosystem that has entries into and exits from its platform. So we'll be looking at what that ecosystem looks like how vibrant and inclusive it is where the public clouds fit and whether Palo Alto Networks can really become the security super cloud. Okay, that's a wrap stop by next week. If you're in Vegas, say hello to "theCube" team. We have an unbelievable lineup on the program. Now if you're not there, check out our coverage on theCube.net. I want to thank Eric Bradley for sharing a glimpse on short notice of the upcoming survey from ETR and his thoughts. And as always, thanks to Chip Symington for his sharp comments. Want to thank Alex Morrison, who's on production and manages the podcast Ken Schiffman as well in our Boston studio, Kristen Martin and Cheryl Knight they help get the word out on social and of course in our newsletters, Rob Hoof, is our editor in chief over at Silicon Angle who does some awesome editing, thank you to all. Remember all these episodes they're available as podcasts. Wherever you listen, all you got to do is search "Breaking Analysis" podcasts. I publish each week on wikibon.com and silicon angle.com where you can email me at david.valante@siliconangle.com or dm me at D Valante or comment on our LinkedIn post. And please do check out etr.ai. They've got the best survey data in the enterprise tech business. This is Dave Valante for "theCube" Insights powered by ETR. Thanks for watching. We'll see you next week on "Ignite" or next time on "Breaking Analysis". (upbeat music)

>> Announcer: Live from Las Vegas, it's the Cube, covering Dell EMC World 2017. Brought to you by Dell EMC. >> Hello everyone, welcome to the Cube special coverage of Dell EMC World 2017. This is the Cube Silicon Angle's flagship program where we go out to the events and extract the signal from the noise. This is our eighth year of covering EMC World, but now called Dell EMC World. I'm John Furrier, your co-host on our set one and with my co-host Paul Gillin this week as well as Kieth Townshend and John Walls and Rebecca Knight on set two. Double barrel shotgun of content here at Dell EMC World with you. Thanks for joining us for three days of wall to wall coverage. Paul, so much to talk about here this week. Digital transformation, little bit boring theme, it's being played out in real time. But this is a historic moment because one, the Cube started at EMC World in 2010, eight years ago. But, this is the first official EMC World where it's Dell EMC World, kind of a mini event in Austin, but since Michael Dell took over, or I'm sorry, merger of equals, a combination. >> Paul: Combination, as they call it. >> (chuckling) Combination. This is the first instantiation of EMC World as Dell EMC World. Jeremy Burton's now the CMO of Dell Technologies which is the holding company for all the companies. It's the same EMC World flair, now the integrated content. Notable absent Cube alumni and executives from EMC. We'll talk about that in the EMC Mafia segment shortly, but (chuckling) your thoughts because now Michael Dell's puttin' the rubber to the road. Kind of nothing earth shattering in his keynote, but certainly private company, all guns blaring, smiling and dialing, he's got the swagger on stage. >> Well, Michael is nothing if not an optimist. He's always good at seeing a brighter future, and at his keynote this morning, as you said it was blissfully free of content, but it did talk a lot about digital transformation which is of course the buzzword of the year in the IT industry. Little surprised that Dell adopted the same buzzword that HP and Cisco and all these other big companies are adopting. What happened in the keynote is less interesting than how the mood changes here, and this is the coming out party for Dell EMC. Yeah, there was a conference last October, a month after the merger, but this is really, things have finally settled out, now six months later and it's a chance for customers and for the partners to get a sense of how well this is all working out. >> And one of the things I'm watching is how the story's unfolding 'cause now you're starting to see the big companies, certainly in the consolidation side of the business market of infrastructure and data center and enterprise IT, it's a consolidating mature market. It is transforming, there is a cloud story requirement, there are new software requirements, software defined data center, as well as new growth opportunities, so what I'm looking at is what is the story? What is Michael packaging and how does that compare to the competition? We're going to hear from HPE at HPE Discover coming up, the Cube will be covering that for the seventh consecutive year. We're seeing Amazon's story playing out in real time. Oracle's story, everyone's got their story. And it's certainly digital transformation but what's interesting is Michael's got the packaging. He's packaging it up, your thoughts. >> And Michael kind of dissed the cloud this morning, actually in his presentation. He said, you can't have a successful business, or your business is not going to grow as quickly if you're 100% cloud based. He was very much making a pitch for data center infrastructure. Really not surprising coming from Michael. One thing that will be a sub-theme here I think is how this merger is working out, and as we wrote on Silicon Angle this week, if you go back to the history of big mega mergers, particularly in the hardware industry, going back to Burroughs Sperry, DEC Compaq, HP Compaq, Wellfleet Synoptics and NCR AT&T. I mean, it goes on and on and on. Pretty much all disasters, and we really haven't seen a merger anywhere near this scale between two IT companies that has worked well. All indications are now that they're doing the right things, they even have some people on board with Dell EMC who went through some of those mergers. But it's going to be interesting to see how they break a pattern that has been decidedly negative. >> Great point, I loved your post by the way, and I would add that interesting observation, at least from my perspective is, as we sit down with these billionaires and interview them one-on-one on the Cube is, you look at Amazon, Andy Jasse and Jeff Bezos, Bezos in particular. Larry Ellison and Michael Dell, you have essentially captains of industry at the helm. Michael Dell is no spring chicken, but he's also not over the hill either, he's 51 years old. >> Paul: He's a kid relative to most leaders in this industry. >> You know, you hear Jeff Bezos talk and I was watching his talk in DC just this week, he's saying we're taking the long view. If you look at Amazon.com's CEO, Bezos, look at Michael Dell, look at what Ellison's doing, they're all playing the long game card. Now I don't know if that's a hedge against we don't have our story right, or give us more time to bake out our stuff, but I think what's different about Dell Technologies is, Michael's 33 years into the business, one trillion dollars later in sales and he's young, so I think that is a wild card. Ellison's still running the show, Bezos is still running the show, Dell's certainly running the show. I think the wild card on this is the fact that you got a strong founder, and a privately held company. >> And Ellison, it's questionable how long Ellison will be able to run the show, I mean he is over 70 at this point. Dell certainly will be around for a long time. You have to take a long term strategy. If you're not Amazon, you have to take a long term strategy 'cause what other choice do you have? You've lost in the short term, so it's not surprising to hear these guys going that way. I'll be interested to hear from Michael and from his team about the cloud and how they really design and differentiate its strategy. I think IBM has staked its position in cloud out pretty well. Even HPE has got a differentiated position. HPE of course has the configurable hardware, that's a point that Dell I think has to come back on, and the big question is software. John, as you pointed out the other day, VMware is worth more than HPE, by a substantial margin at this point. They've got this huge asset in VMware, not to mention Virtuestream and Pivotal and the other good software assets they acquired. What are they going to do with them? Are they just going to let 'em go free like Michael has done in the past, or are they going to try to mold these into some kind of coordinated whole? >> Well, great point one is on the HPE valuation thing market cap, VMware's actually worth more on market cap and public markets than HPE. Interesting, but not significant in my mind yet, but it does point to the fact that Michael Dell's rhetoric on stage today, he didn't take any shots at HP. Last year he took a big shot at HPE. It's been his rival from day one. I used to work at HP when he was just a mail order company selling white boxes and then he grew that business, obviously the rest is history, but no shot at HP because VMware has to work with HP. Right, (chuckling) so that's interesting. Two is, on the software side, Dell is a hardware company, let's face it. But they have more software now than they've ever had before so that is a good point, we're going to be getting into this date software defined data center to find out how much they actually have. A couple core themes that I see already popping out of the keynote, one, Pivotal. Pivotal and Cloud Foundry's instrumental in the keynotes. NSX was mentioned, Pat Gelsinger's going to be on tomorrow. NSX is VMware's secret play. If you look at what NSX is doing with the Amazon public cloud deal that they did recently this year, NSX could be the real lever in that intellectual property, that lock in, that kind of differentiation. The cloud is not a place, it's a way of doing IT is another message we heard all day today. To me, and your point about bashing cloud, I actually think that's a stake in the ground to kind of hold the line, because they have no cloud strategy. Now, their cloud strategy is kind of hand waiving right now with multi-cloud, which I buy, but multi-cloud is still a fantasy in my mind. Latencies are too low, there just isn't the kind of plumbing yet in place on the clouds for multi-cloud, but certainly hybrid-cloud I think will be multi-cloud roll, so those are the key things and then I'm going to ask Michael directly. You blew 60 billion dollars on this deal. Is there any cash left for M&A? >> Paul: Acquisitions, yeah. >> M&A right now is hot market, you can do some nice tuck ins, fill in the white spaces on the products. Get those software assets and really start cobbling together a growth strategy. There's no doubt in my mind, Paul, that they're going to win the mature, classic business school move of consolidated market. Own the consolidated market, and try to get a growth strategy. To me, that's going to be the big question. What is Dell Technologies and Dell EMC's growth strategy? >> And you would have to think it's either through M&A, perhaps an acquisition of HPE if the valuation continues to go down. Or it's in software It's a good point you made about VMware. Vmware also has a strategic alliance with IBM, so if you're Michael Dell, it's hard to give a compelling keynote speech these days because you can't really offend anybody. His companies now are in cahoots with all these other firms, and of course dissing the cloud is even dangerous because Cloud Foundry is such a critical part of the Pivotal strategy. I think it's an important point, you've got a company that is almost trying to reassemble the old IBM, the old IBM of the '80s which dominated every segment that was important Dell is almost doing that now, I mean the only piece they really don't have is networking. To make a big play, to become the mongo IT company in the world, can they raise the kind of funds for that? >> Yeah, and we're also going to talk about the cloud transition as well as what I'm calling the EMC mafia, folks that have been on the Cube and big executives at EMC. We'll get to that in a minute, but I just want to talk about that cloud play, because you're right, the growth strategy has to come from software. I just don't see the cloud growth yet for these guys, although Michael, in the hallway, conversations are growth in the cloud is doing really well for EMC, not sure. But on the growth strategy, Pivotal, Boo-Mee, Vmware, Virtuestream, and Software Converge Infrastructure are interesting plays, so I think that's where we have to look here. I still think there's a lot of holes in the product line. To me that's important. Now, trends so far, and what we're expecting to hear at the show is, some of my notes Paul, I'll share with you, and get your reaction on. All flash arrays are going to be big, continuing to grow that. Hyperconverge VX rail, we heard that on stage today, claiming to be number one. Power edge 14G. Again, back to speeds and feeds, (chuckling) you know. Storage. Storage is the bread and butter of EMC and now Dell EMC I still think is going to be a real critical beachhead that they going to continue to expand, storage is not going away. Obviously the ice lawn all flash is coming out, and then SSD's, data protection in the cloud. You're starting to see them going where their roots are. Cloud stuff is coming out of the data domain, kind of their core storage first, make sense strategy wise, while they buy their time to fill in the cloud. >> Well, it's a good point about storage. They have a comfortable lead in storage. According to the latest IDC figures, they're a good 15 points ahead of their next biggest competitor. They have a comfortable lead in the hyper converge infrastructure. Four different product lines in that area. These are beachheads that they have to shore up. They have to be sure that their market share doesn't erode in those areas. The question is where does the growth come from? You look at a company that's going through a very similar transition right now, Cisco, which has finally really bought in to software defined networking and is remaking its company around it. That company is having to change the whole culture in response to a technology trend. Now the same thing's going on in the data center. Everything's being remade as virtualized and Vmware is at the center of that, so Michael Dell has the asset to be able to lead that conversion, but are they psychologically going to get there? >> Great point. One, I would agree with you that the whole Cisco example proves the same channel that Dell EMC is. Can they move up the stack? In this case, they're hardware guys, can they add software. Cisco, they're transforming themselves to be more cloud native. The classic move's happening. Cisco have been trying to move up the stack for over a generation. They're plumbing guys, they're networking guys. These guys are hardware guys. Can they get the DNA to truly become software providers, not in the sense of selling software, just providing a software fabric that's going to be the key differentiators, because digital transformation is about IT transformation. That is certainly the reality, what we're seeing when you start to peel back the onions. And that to me is going to be the big discussion because as David Gooldun said on stage, apps provide the value. As the enterprises build more apps, you got to have a platform, you got to have a cohesive horizontal end to end software fabric, and the question is, do they have it? >> Well, they certainly have the foundation for it, I mean they have Pivotal, there's a whole developer community around Pivotal. Dell itself doesn't have a developer community, nor does EMC but they have elements of that to build upon. The interesting thing about the conversion to software, about software defined infrastructure, is that it requires thinking from an application perspective and that's not something hardware companies have ever been inclined to do. So, how does Michael Dell make that transition, has he made it himself, is there other leadership he's going to have to bring in who are going to make it for him? The whole leadership of the Dell EMC company right now is ex-Dell and EMC people, it's hardware guys. >> I'm going to put pressure on Dell, the question on software. But you wrote a two part series on SiliconAngle.com, worth checking out, getting a lot of viral buzz around open source and the value of open source, because if you look at say Cisco for instance, what they're doing with the cloud native strategy, they have actually pivoted and Chuck Robbins, the CEO has acknowledged, actually re-tweeted one of my tweets the other day, with as we were talking about this new program called DevNet Create. They're taking the developer program from Cisco and moving it into an open community model, which basically is the toe in the water for saying, we have to figure out open source. All the critical, big vendors that are transforming from called the old guard, as Amazon calls 'em, Amazon Web Services, Andy Jasse. Dell's an old guard guy, but still young, but they got to get to open source. What are you finding is the success parameters there because you got to play in the open source, be a contributing member. Again, back to the DNA of the culture, and two, there's real value there. >> Well, there's no question that open source has won when it comes to infrastructure. I mean, the biggest IT companies in the world which are Google and Facebook, are both built on open source platforms. Game over. This is where IT infrastructure is headed. Cisco, interesting case because they are an infrastructure company, and they are being eroded, their traditional market is being eroded by open source, they've chosen to embrace it through their developer community. Cisco is one company I would never bet against. They're such a great company. If anyone's going to make the transition, they will. Open source is still an infrastructure play. I don't see open source in the applications area being a major driver, but Dell is an infrastructure company, so you have to assume that everything they're doing in managing, in securing storage and servers is going to be under pressure from open source at some point. They have to embrace that as Cisco is doing. >> Paul, we had thought leader chat with some experts on our digital panel, software crowd chat, everyone knows crowdchat.net, check it out. And comment and conversation was taking place among the influential folks saying, what is a software company? You go back to the web, shrink wrapped, download software, to now fully SAS based and Saas now platform, what is a software company? So, the question was, is Facebook a software company? Or are they an app company? Which begs the question, you have to be a software company, but it's not the classic software company category, business model. You need software (chuckling) to run stuff, so you can be a hardware guy, like Michael Dell, and have Dell Technologies. You can be a network company like Cisco, but you've got to be a software company in the new way. >> Well, I spoke to a Forester analyst in writing that piece on open source who had a great point, he said Facebook and Google are two big successful software companies, neither of which makes. >> Any money. >> Any money, a little bit in Google's case licensing software. They created business models that have nothing to do with the traditional software model, but that have leveraged their expertise in the software that they've developed. And maybe that is the business model, ultimately the business model is building software in order to do something else with it that customers will pay for. >> I think you're on to something. I think your post illuminates that. I think that this is going to be one of those things where in the history books of the tech generation, as we're on our whatever wave of open source generation, this is it, it's not about the business model of the software, it's how the software's being used in the business model of the transformation. That is really really key. Paul, I want to just talk about, really quickly about my observation at EMC. A little bit of editorial moment here. Because, Dell took over. Dell EMC. We've interviewed now eight years, pretty much all the executives at EMC over the years, but there's an EMC mafia developing. There's a lot of people who have left EMC, that we know, we're friends with. Guy Churchwood, CJ DeSai, Josh Conn, Rich DePellatano, Brian Gallagher, BJ Jenkins, Sanjay Murchandani, and many more have left because of the consolidation. Certainly you can't, EMC's going to get consolidated down, but no major layoffs but still enough that some eagles have flown from the nest, as they say and are running other companies. So you have this EMC culture out there of very sales oriented, very customer centric, now running other companies, and I want to give a shout out to all those EMC alumni and mafia out there. Good luck on your new ventures, but the impact here to Dell is a mashup of the two cultures. What's your observation, what's your reaction of that. Have you heard anything? I have some thoughts, but I want to get your reaction because okay, some eagles fly away, you still got the worker bees inside EMC, and now Dell coming together. Thoughts on the culture clash. >> Well, I live in Boston, and so I've been through the acquisition of Prime Computer, through EMC acquiring Data General, through the DEC acquisition by Compaq. All of which were disasters, and all of which where the cultural issues were much bigger than the technology issues. So, I think that that is something that Dell has to be front and center for Michael Dell, is how do you mash up these two cultures. As you pointed out, EMC, very aggressive, take no prisoners, enterprise-oriented sales force. Their sales people make a lot of money. I used to live in a neighborhood where everyone was EMC salespeople. >> John: Buying new houses. >> They were making a million dollars a year. And you've got Dell with its direct model, with its channeled model, and without a particularly strong roots in enterprise sales force and how do you coordinate those. It's not surprising to see people leaving. Of course, in the early days after an acquisition, choices get made, people get promoted and moved in new positions. Those who lose out tend to leave the company. But, I think the sales issue would be something to delve into too. Does Dell want to adopt EMC's sales style, or the other way around? Or is there some way that they can live both in harmony? >> You know, I follow a lot of companies in Silicon Valley as well, I'm out there on the west coast, left coast, as they say. Where all the crazy ones are, as they say. But I got to say, there's been some shrinkage on EMC, but for the most part, I haven't really heard any really negative horror stories. Actually, it's been going pretty well, and I think you bring up an issue of effectiveness with the sales folks. Dell's an efficiency guy, right so you got effectiveness and efficiency coming together. But I think they've handled it well. I really haven't heard any real horror stories. Again, I think that has to do with the founder being actively involved, they're a private company, so they have some room. And I think they've invested in making that happen, so I think generally, props to EMC folks and for the Dell folks on the acquisition. Still not clear the woods yet, it's going to surely be in the products and the revenue, but for the most part, we're going to unpack that. So Paul. >> But you can't, I just wanted to jump in just quickly. You can't minimize customer touch, and EMC was always a high touch company. Outstanding service, they put people on a plane in the middle of the night, charter a private jet in the middle of the night to get someone on site at a customer to fix a problem. As you mentioned, Dell is an efficiency company. That's not a very efficient way to operate. Can they absorb the best of EMC and the best of Dell at the same time? >> Yeah, well we'll certainly tell, I mean they got a lot of competition, Michael Dell saying on stage. (mumbling) startups, essentially what's he's saying is Amazon, there in my opinion, although that's not probly what he really meant but that's my interpretation. But I'm expecting to see the same old EMC world with a twist, and that is, we're doin' good, the messaging's out there, we're going to see how the products compare vis a vis the competition. I'm interested in Vmware piece. Paul, what are you looking forward to? >> I'm looking forward to hearing how this is all going, how this company is culturally, what kind of a cultural chimera they're putting together here that's going to make sense, that the market is going to understand. I also want to hear how they're going to differentiate in cloud, internet of things, we just heard a little bit about that this morning. That's something where I think you're seeing Cisco. The way Cisco's dealing with the cloud these days is to say, don't worry about it, it's all going IOT. It's all going to distributed intelligent devices, the cloud is already history, is what they're saying. So, does Dell have a similar differentiated position on that. I'm least interested in hearing about the new products because it's speeds and feeds. But really, how is this company going to dominate an industry, how is it going to get over some of the speed bumps that we've been talking about for the last 20 minutes that have foiled so many merger attempts in the past. >> One of the tell signs that I look at a conference when I see a lot of AI washing. The good news is, there's not a lot of AI being talked about here, 'cause usually that's just lipstick on the pig, as they say. Except for the case of Google and Amazon Web Services, they do have some AI story, with some real products to back it up. For the most part, you're not seeing EMC glob on the whole machine learning, rah rah. They did talk about it but it wasn't like a big theme. I think they really talked about the packaging of the value. Of the brands together, comments around costs for public cloud, nice little ding there. I'm going to dig into the story. I'm going to really test the story, and I'm going to look at the customer traction. I really want to see who they have on stage, I really want to hear who's really going down the road, how that growth strategy, 'cause I think they're going to win the data consolidation market pretty handily, and the question between HPE and Dell, for instance, 'cause that's really to me the two big horses on the track. Who's going to win the growth. Who's going to be able to lock in their beachhead on the core market, traditional market, and have access to the growth of what cloud will bring and IOT and among other things. >> I think at this point, HP has a better story in that area with their configurable infrastructure, with their pay as you go on site model, really interesting models. I was at HP World in Europe in December, and I came away from that feeling like these guys have some unique talking points here. At least they have a strategy that I think I understand and that is different. Dell is still working through this huge merger and that's a big catch. >> Bottom line is, Dave Donatelli, who's an executive at Oracle told me, he also was an EMC executive, and HPE. The business of provisioning servers and storage (laughing) is not going to be the growth strategy. Now, it might be a component of the overall business model, like software, but ultimately, that business is in decline, and that's a fact. Okay, this is the Cube, bringing you all the coverage of the kickoff from day one at Dell EMC World 2017. Our eighth year, three days of wall to wall coverage. We have two sets, the blue set and the white set. Go to SiliconAngle.tv to find the coverage, also go on Twitter, follow us on the Cube, I'm John Furrier with Paul Gillin, kickin' off Dell EMC World 2017, back with more, stay with us after this short break. (atmospheric instrumental music)