>> From "theCUBE" studios in Palo Alto, in Boston, bringing you data driven insights from "theCUBE" and ETR. This is "Breaking Analysis" with Dave Vellante. >> There are very few political issues that get bipartisan support these days, nevermind consensus spanning geopolitical boundaries. But whether we're talking across the aisle or over the pond, there seems to be common agreement that the power of big tech firms should be regulated. But the government's track record when it comes to antitrust aimed at big tech is actually really mixed, mixed at best. History has shown that market forces rather than public policy have been much more effective at curbing monopoly power in the technology industry. Hello, and welcome to this week's "Wikibon CUBE" insights powered by ETR. In this "Breaking Analysis" we welcome in frequent "CUBE" contributor Dave Moschella, author and senior fellow at the Information Technology and Innovation Foundation. Dave, welcome, good to see you again. >> Hey, thanks Dave, good to be here. >> So you just recently published an article, we're going to bring it up here and I'll read the title, "Theory Aside, Antitrust Advocates Should Keep Their "Big Tech" Ambitions Narrow". And in this post you argue that big sweeping changes like breaking apart companies to moderate monopoly power in the tech industry have been ineffective compared to market forces, but you're not saying government shouldn't be involved rather you're suggesting that more targeted measures combined with market forces are the right answer. Can you maybe explain a little bit more the premise behind your research and some of your conclusions? >> Sure, and first let's go back to that title, when I said, theory aside, that is referring to a huge debate that's going on in global antitrust circles these days about whether antitrust should follow the traditional path of being invoked when there's real harm, demonstrable harm to consumers or a new theory that says that any sort of vast monopoly power inevitably will be bad for competition and consumers at some point, so your best to intervene now to avoid harms later. And that school, which was a very minor part of the antitrust world for many, many years is now quite ascendant and the debate goes on doesn't matter which side of that you're on the questions sort of there well, all right, well, if you're going to do something to take on big tech and clearly many politicians, regulators are sort of issuing to do something, what would you actually do? And what are the odds that that'll do more good than harm? And that was really the origins of the piece and trying to take a historical view of that. >> Yeah, I learned a new word, thank you. Neo-brandzian had to look it up, but basically you're saying that traditionally it was proving consumer harm versus being proactive about the possibility or likelihood of consumer harm. >> Correct, and that's a really big shift that a lot of traditional antitrust people strongly object to, but is now sort of the trendy and more send and view. >> Got it, okay, let's look a little deeper into the history of tech monopolies and government action and see what we can learn from that. We put together this slide that we can reference. It shows the three historical targets in the tech business and now the new ones. In 1969, the DOJ went after IBM, Big Blue and it's 13 years later, dropped its suit. And then in 1984 the government broke Ma Bell apart and in the late 1990s, went after Microsoft, I think it was 1998 in the Wintel monopoly. And recently in an interview with tech journalist, Kara Swisher, the FTC chair Lena Khan claimed that the government played a major role in moderating the power of tech giants historically. And I think she even specifically referenced Microsoft or maybe Kara did and basically said the industry and consumers from the dominance of companies like Microsoft. So Dave, let's briefly talk about and Kara by the way, didn't really challenge that, she kind of let it slide. But let's talk about each of these and test this concept a bit. Were the government actions in these instances necessary? What were the outcomes and the consequences? Maybe you could start with IBM and AT&T. >> Yeah, it's a big topic and there's a lot there and a lot of history, but I might just sort of introduce by saying for whatever reasons antitrust has been part of the entire information technology industry history from mainframe to the current period and that slide sort of gives you that. And the reasons for that are I think once that we sort of know the economies of scale, network effects, lock in safe choices, lot of things that explain it, but the good bit about that is we actually have so much history of this and we can at least see what's happened in the past and when you look at IBM and AT&T they both were massive antitrust cases. The one against IBM was dropped and it was dropped in as you say, in 1980. Well, what was going on in at that time, IBM was sort of considered invincible and unbeatable, but it was 1981 that the personal computer came around and within just a couple of years the world could see that the computing paradigm had change from main frames and minis to PCs lines client server and what have you. So IBM in just a couple of years went from being unbeatable, you can't compete with them, we have to break up with them to being incredibly vulnerable and in trouble and never fully recovered and is sort of a shell of what it once was. And so the market took care of that and no action was really necessary just by everybody thinking there was. The case of AT&T, they did act and they broke up the company and I would say, first question is, was that necessary? Well, lots of countries didn't do that and the reality is 1980 breaking it up into long distance and regional may have made some sense, but by the 1990 it was pretty clear that the telecom world was going to change dramatically from long distance and fixed wires services to internet services, data services, wireless services and all of these things that we're going to restructure the industry anyways. But AT& T one to me is very interesting because of the unintended consequences. And I would say that the main unintended consequence of that was America's competitiveness in telecommunications took a huge hit. And today, to this day telecommunications is dominated by European, Chinese and other firms. And the big American sort of players of the time AT&T which Western Electric became Lucent, Lucent is now owned by Nokia and is really out of it completely and most notably and compellingly Bell Labs, the Bell Labs once the world's most prominent research institution now also a shell of itself and as it was part of Lucent is also now owned by the Finnish company Nokia. So that restructuring greatly damaged America's core strength in telecommunications hardware and research and one can argue we've never recovered right through this 5IG today. So it's a very good example of the market taking care of, the big problem, but meddling leading to some unintended consequences that have hurt the American competitiveness and as we'll talk about, probably later, you can see some of that going on again today and in the past with Microsoft and Intel. >> Right, yeah, Bell Labs was an American gem, kind of like Xerox PARC and basically gone now. You mentioned Intel and Microsoft, Microsoft and Intel. As many people know, some young people don't, IBM unwillingly handed its monopoly to Intel and Microsoft by outsourcing the micro processor and operating system, respectively. Those two companies ended up with IBM ironically, agreeing to take OS2 which was its proprietary operating system and giving Intel, Microsoft Windows not realizing that its ability to dominate a new disruptive market like PCs and operating systems had been vaporized to your earlier point by the new Wintel ecosystem. Now Dave, the government wanted to break Microsoft apart and split its OS business from its application software, in the case of Intel, Intel only had one business. You pointed out microprocessors so it couldn't bust it up, but take us through the history here and the consequences of each. >> Well, the Microsoft one is sort of a classic because the antitrust case which was raging in the sort of mid nineties and 1998 when it finally ended, those were the very, once again, everybody said, Bill Gates was unstoppable, no one could compete with Microsoft they'd buy them, destroy them, predatory pricing, whatever they were accusing of the attacks on Netscape all these sort of things. But those the very years where it was becoming clear first that Microsoft basically missed the early big years of the internet and then again, later missed all the early years of the mobile phone business going back to BlackBerrys and pilots and all those sorts of things. So here we are the government making the case that this company is unstoppable and you can't compete with them the very moment they're entirely on the defensive. And therefore wasn't surprising that that suit eventually was dropped with some minor concessions about Microsoft making it a little bit easier for third parties to work with them and treating people a little bit more, even handling perfectly good things that they did. But again, the more market took care of the problem far more than the antitrust activities did. The Intel one is also interesting cause it's sort of like the AT& T one. On the one hand antitrust actions made Intel much more likely and in fact, required to work with AMD enough to keep that company in business and having AMD lowered prices for consumers certainly probably sped up innovation in the personal computer business and appeared to have a lot of benefits for those early years. But when you look at it from a longer point of view and particularly when look at it again from a global point of view you see that, wow, they not so clear because that very presence of AMD meant that there's a lot more pressure on Intel in terms of its pricing, its profitability, its flexibility and its volumes. All the things that have made it harder for them to A, compete with chips made in Taiwan, let alone build them in the United States and therefore that long term effect of essentially requiring Intel to allow AMD to exist has undermined Intel's position globally and arguably has undermined America's position in the long run. And certainly Intel today is far more vulnerable to an ARM and Invidia to other specialized chips to China, to Taiwan all of these things are going on out there, they're less capable of resisting that than they would've been otherwise. So, you thought we had some real benefits with AMD and lower prices for consumers, but the long term unintended consequences are arguably pretty bad. >> Yeah, that's why we recently wrote in Intel two "Strategic To Fail", we'll see, Okay. now we come to 2022 and there are five companies with anti-trust targets on their backs. Although Microsoft seems to be the least susceptible to US government ironically intervention at this this point, but maybe not and we show "The Cincos Comas Club" in a homage to Russ Hanneman of the show "Silicon Valley" Apple, Microsoft, Google, and Amazon all with trillion dollar plus valuations. But meta briefly crossed that threshold like Mr. Hanneman lost a comma and is now well under that market cap probably around five or 600 million, sorry, billion. But under serious fire nonetheless Dave, people often don't realize the immense monopoly power that IBM had which relatively speaking when measured its percent of industry revenue or profit dwarf that of any company in tech ever, but the industry is much smaller then, no internet, no cloud. Does it call for a different approach this time around? How should we think about these five companies their market power, the implications of government action and maybe what you suggested more narrow action versus broad sweeping changes. >> Yeah, and there's a lot there. I mean, if you go back to the old days IBM had what, 70% of the computer business globally and AT&T had 90% or so of the American telecom market. So market shares that today's players can only dream of. Intel and Microsoft had 90% of the personal computer market. And then you look at today the big five and as wealthy and as incredibly successful as they've been, you sort of have almost the argument that's wrong on the face of it. How can five companies all of which compete with each other to at least some degree, how can they all be monopolies? And the reality is they're not monopolies, they're all oligopolies that are very powerful firms, but none of them have an outright monopoly on anything. There are competitors in all the spaces that they're in and increasing and probably increasingly so. And so, yeah, I think people conflate the extraordinary success of the companies with this belief that therefore they are monopolist and I think they're far less so than those in the past. >> Great, all right, I want to do a quick drill down to cloud computing, it's a key component of digital business infrastructure in his book, "Seeing Digital", Dave Moschella coined a term the matrix or the key which is really referred to the key technology platforms on which people are going to build digital businesses. Dave, we joke you should have called it the metaverse you were way ahead of your time. But I want to look at this ETR chart, we show spending momentum or net score on the vertical access market share or pervasiveness in the dataset on the horizontal axis. We show this view a lot, we put a dotted line at the 40% mark which indicates highly elevated spending. And you can sort of see Microsoft in the upper right, it's so far up to the right it's hidden behind the January 22 and AWS is right there. Those two dominate the cloud far ahead of the pack including Google Cloud. Microsoft and to a lesser extent AWS they dominate in a lot of other businesses, productivity, collaboration, database, security, video conferencing. MarTech with LinkedIn PC software et cetera, et cetera, Googles or alphabets of business of course is ads and we don't have similar spending data on Apple and Facebook, but we know these companies dominate their respective business. But just to give you a sense of the magnitude of these companies, here's some financial data that's worth looking at briefly. The table ranks companies by market cap in trillions that's the second column and everyone in the club, but meta and each has revenue well over a hundred billion dollars, Amazon approaching half a trillion dollars in revenue. The operating income and cash positions are just mind boggling and the cash equivalents are comparable or well above the revenues of highly successful tech companies like Cisco, Dell, HPE, Oracle, and Salesforce. They're extremely profitable from an operating income standpoint with the clear exception of Amazon and we'll come back to that in a moment and we show the revenue multiples in the last column, Apple, Microsoft, and Google, just insane. Dave, there are other equally important metrics, CapX is one which kind of sets the stage for future scale and there are other measures. >> Yeah, including our research and development where those companies are spending hundreds of billions of dollars over the years. And I think it's easy to look at those numbers and just say, this doesn't seem right, how can any companies have so much and spend so much? But if you think of what they're actually doing, those companies are building out the digital infrastructure of essentially the entire world. And I remember once meeting some folks at Google, and they said, beyond AI, beyond Search, beyond Android, beyond all the specific things we do, the biggest thing we're actually doing is building a physical infrastructure that can deliver search results on any topic in microseconds and the physical capacity they built costs those sorts of money. And when people start saying, well, we should have lots and lots of smaller companies well, that sounds good, yeah, it's all right, but where are those companies going to get the money to build out what needs to be built out? And every country in the world is trying to build out its digital infrastructure and some are going to do it much better than others. >> I want to just come back to that chart on Amazon for a bit, notice their comparatively tiny operating profit as a percentage of revenue, Amazon is like Bezos giant lifestyle business, it's really never been that profitable like most retail. However, there's one other financial data point around Amazon's business that we want to share and this chart here shows Amazon's operating profit in the blue bars and AWS's in the orange. And the gray line is the percentage of Amazon's overall operating profit that comes from AWS. That's the right most access, so last quarter we were well over a hundred percent underscoring the power of AWS and the horrendous margins in retail. But AWS is essentially funding Amazon's entrance into new markets, whether it's grocery or movies, Bezos moves into space. Dave, a while back you collaborated with us and we asked our audience, what could disrupt Amazon? And we came up with your detailed help, a number of scenarios as shown here. And we asked the audience to rate the likelihood of each scenario in terms of its likelihood of disrupting Amazon with a 10 being highly likely on average the score was six with complacency, arrogance, blindness, you know, self-inflicted wounds really taking the top spot with 6.5. So Dave is breaking up Amazon the right formula in your view, why or why not? >> Yeah, there's a couple of things there. The first is sort of the irony that when people in the sort of regulatory world talk about the power of Amazon, they almost always talk about their power in consumer markets, whether it's books or retail or impact on malls or main street shops or whatever and as you say that they make very little money doing that. The interest people almost never look at the big cloud battle between Amazon, Microsoft and lesser extent Google, Alibaba others, even though that's where they're by far highest market share and pricing power and all those things are. So the regulatory focus is sort of weird, but you know, the consumer stuff obviously gets more appeal to the general public. But that survey you referred to me was interesting because one of the challenges I sort of sent myself I was like okay, well, if I'm going to say that IBM case, AT&T case, Microsoft's case in all those situations the market was the one that actually minimized the power of those firms and therefore the antitrust stuff wasn't really necessary. Well, how true is that going to be again, just cause it's been true in the past doesn't mean it's true now. So what are the possible scenarios over the 2020s that might make it all happen again? And so each of those were sort of questions that we put out to others, but the ones that to me by far are the most likely I mean, they have the traditional one of company cultures sort of getting fat and happy and all, that's always the case, but the more specific ones, first of all by far I think is China. You know, Amazon retail is a low margin business. It would be vulnerable if it didn't have the cloud profits behind it, but imagine a year from now two years from now trade tensions with China get worse and Christmas comes along and China just says, well, you know, American consumers if you want that new exercise bike or that new shoes or clothing, well, anything that we make well, actually that's not available on Amazon right now, but you can get that from Alibaba. And maybe in America that's a little more farfetched, but in many countries all over the world it's not farfetched at all. And so the retail divisions vulnerability to China just seems pretty obvious. Another possible disruption, Amazon has spent billions and billions with their warehouses and their robots and their automated inventory systems and all the efficiencies that they've done there, but you could argue that maybe someday that's not really necessary that you have Search which finds where a good is made and a logistical system that picks that up and delivers it to customers and why do you need all those warehouses anyways? So those are probably the two top one, but there are others. I mean, a lot of retailers as they get stronger online, maybe they start pulling back some of the premium products from Amazon and Amazon takes their cut of whatever 30% or so people might want to keep more of that in house. You see some of that going on today. So the idea that the Amazon is in vulnerable disruption is probably is wrong and as part of the work that I'm doing, as part of stuff that I do with Dave and SiliconANGLE is how's that true for the others too? What are the scenarios for Google or Apple or Microsoft and the scenarios are all there. And so, will these companies be disrupted as they have in the past? Well, you can't say for sure, but the scenarios are certainly plausible and I certainly wouldn't bet against it and that's what history tells us. And it could easily happen once again and therefore, the antitrust should at least be cautionary and humble and realize that maybe they don't need to act as much as they think. >> Yeah, now, one of the things that you mentioned in your piece was felt like narrow remedies, were more logical. So you're not arguing for totally Les Affaire you're pushing for remedies that are more targeted in scope. And while the EU just yesterday announced new rules to limit the power of tech companies and we showed the article, some comments here the regulators they took the social media to announce a victory and they had a press conference. I know you watched that it was sort of a back slapping fest. The comments however, that we've sort of listed here are mixed, some people applauded, but we saw many comments that were, hey, this is a horrible idea, this was rushed together. And these are going to result as you say in unintended consequences, but this is serious stuff they're talking about applying would appear to be to your point or your prescription more narrowly defined restrictions although a lot of them to any company with a market cap of more than 75 billion Euro or turnover of more than 77.5 billion Euro which is a lot of companies and imposing huge penalties for violations up to 20% of annual revenue for repeat offenders, wow. So again, you've taken a brief look at these developments, you watched the press conference, what do you make of this? This is an application of more narrow restrictions, but in your quick assessment did they get it right? >> Yeah, let's break that down a little bit, start a little bit of history again and then get to Europe because although big sweeping breakups of the type that were proposed for IBM, Microsoft and all weren't necessary that doesn't mean that the government didn't do some useful things because they did. In the case of IBM government forces in Europe and America basically required IBM to make it easier for companies to make peripherals type drives, disc drives, printers that worked with IBM mainframes. They made them un-bundle their software pricing that made it easier for database companies and others to sell their of products. With AT&T it was the government that required AT&T to actually allow other phones to connect to the network, something they argued at the time would destroy security or whatever that it was the government that required them to allow MCI the long distance carrier to connect to the AT network for local deliveries. And with that Microsoft and Intel the government required them to at least treat their suppliers more even handly in terms of pricing and policies and support and such things. So the lessons out there is the big stuff wasn't really necessary, but the little stuff actually helped a lot and I think you can see the scenarios and argue in the piece that there's little stuff that can be done today in all the cases for the big five, there are things that you might want to consider the companies aren't saints they take advantage of their power, they use it in ways that sometimes can be reigned in and make for better off overall. And so that's how it brings us to the European piece of it. And to me, the European piece is much more the bad scenario of doing too much than the wiser course of trying to be narrow and specific. What they've basically done is they have a whole long list of narrow things that they're all trying to do at once. So they want Amazon not to be able to share data about its selling partners and they want Apple to open up their app store and they don't want people Google to be able to share data across its different services, Android, Search, Mail or whatever. And they don't want Facebook to be able to, they want to force Facebook to open up to other messaging services. And they want to do all these things for all the big companies all of which are American, and they want to do all that starting next year. And to me that looks like a scenario of a lot of difficult problems done quickly all of which might have some value if done really, really well, but all of which have all kinds of risks for the unintended consequence we've talked before and therefore they seem to me being too much too soon and the sort of problems we've seen in the past and frankly to really say that, I mean, the Europeans would never have done this to the companies if they're European firms, they're doing this because they're all American firms and the sort of frustration of Americans dominance of the European tech industry has always been there going back to IBM, Microsoft, Intel, and all of them. But it's particularly strong now because the tech business is so big. And so I think the politics of this at a time where we're supposedly all this great unity of America and NATO and Europe in regards to Ukraine, having the Europeans essentially go after the most important American industry brings in the geopolitics in I think an unavoidable way. And I would think the story is going to get pretty tense over the next year or so and as you say, the Europeans think that they're taking massive actions, they think they're doing the right thing. They think this is the natural follow on to the GDPR stuff and even a bigger version of that and they think they have more to come and they see themselves as the people taming big tech not just within Europe, but for the world and absent any other rules that they may pull that off. I mean, GDPR has indeed spread despite all of its flaws. So the European thing which it doesn't necessarily get huge attention here in America is certainly getting attention around the world and I would think it would get more, even more going forward. >> And the caution there is US public policy makers, maybe they can provide, they will provide a tailwind maybe it's a blind spot for them and it could be a template like you say, just like GDPR. Okay, Dave, we got to leave it there. Thanks for coming on the program today, always appreciate your insight and your views, thank you. >> Hey, thanks a lot, Dave. >> All right, don't forget these episodes are all available as podcast, wherever you listen. All you got to do is search, "Breaking Analysis Podcast". Check out ETR website, etr.ai. We publish every week on wikibon.com and siliconangle.com. And you can email me david.vellante@siliconangle.com or DM me @davevellante. Comment on my LinkedIn post. This is Dave Vellante for Dave Michelle for "theCUBE Insights" powered by ETR. Have a great week, stay safe, be well and we'll see you next time. (slow tempo music)

(high intensity music) >> Everyone, welcome back to theCube coverage of AWS, Amazon Web Services, Public Sector Summit live in D.C. We're in-person, I'm John Furrier, the host of theCube. I'm here with Max Peterson, the Head of Public Sector, Vice President. Max, great to see you in in-person event. >> Great to be here. We're in-person and we're also live streaming. So, we're here, however customers, however partners want to participate. >> I got to say, I'm very impressed with the turnout. The attendance is strong. People excited to be here. We're not wearing our masks cause we're on stage right now, but great turnout. But it's a hybrid event. >> It is. >> You've got engagement here physically, but also digitally as well with theCube and other live streams everywhere. You're putting it everywhere. >> It's been a great event so far. We did a pre-day yesterday. We had great participation, great results. It was about imagining education. And then today, from the executive track to the main tent, to all of the learning, live streaming 'em, doing things in person. Some things just don't translate. So, they'll won't be available, but many things will be available for viewing later as well. So all of the breakout sessions. >> The asynchronous consumption, obviously, the new normal, but I got to say, I was just on a break. I was just walking around. I heard someone, two people talking, just cause I over walk pass them, over hear 'em, "Yeah, we're going to hire this person." That's the kind of hallway conversations that you get. You got the programs, you got people together. It's hard to do that when you're on a virtual events. >> Max: It's hard. The customers that we had up on stage today, the same sort of spontaneity and the same sort of energy that you get from being in-person, it's hard to replicate. Lisa from State of Utah, did a great job and she got an opportunity to thank the team back home who drove so much of the innovation and she did it spontaneously and live. You know, it's a great motivator for everybody. And then Lauren from Air force was phenomenal. And Suchi, our "Imagine Me and You" artist was just dynamite. >> I want to unpack some of that, but I want to just say, it's been a really change of a year for you guys at Public Sector. Obviously, the pandemic has changed the landscape of Public Sector. It's made it almost like Public-Private Sector. It's like, it seems like it's all coming together. Incredible business performance on your end. A lot of change, a lot of great stuff. >> We had customers we talked today with SBA, with VA, with NASA, about how they just embraced the challenge and embraced digital and then drove amazing things out onto AWS. From the VA, we heard that they took tele-health consultations. Get this from 25,000 a month to 45,000 a day using AWS and the Cloud. We heard SBA talk about how they were able to turn around the unemployment benefits programs, you know, for the unemployed, as a result of the traumatic impact of the COVID-19 pandemic in a matter of weeks. And then, scaled their systems up just to unbelievable heights as President Biden announced the news. >> You had a lot of announcement. I want to get to a couple of them. One of them was the health equity thing. What is that about? Take us through that announcement. >> So the pandemic, it was hard. It was traumatic in a lot of different ways. It also turned into this little innovation laboratory, but one of the things that it laid bare more than anything else where the inequities associated with some of these systems that had to spring into action. And in particular, in the space of health, healthcare equity. We saw simply communities that didn't have access and weren't included in the same sorts of responses that the rest of the community may have been included in. And so we launched this global initiative today to power health equity solutions. It's a $40 million program. Lasts for three years. And it's open to customers or it's open to partners. Anybody who can contribute to three different areas of health equity. It's people who are leveraging data to build more equal, more sustainable health systems. Is people that are using analytics to do greater study of socioeconomic and social situational conditions that contribute to health inequities. And then finally, it's about building systems that deliver more equitable care to those who are underserved around the world. >> So, just to get this right, 40 million. Is that going to go towards the program for three years and are you going to dolo that out or as funding, or is that just a fund the organization? >> It's actually very similar to the development diagnostic initiative that we ran when COVID hit. We've launched the program. We're welcoming applications from anybody who is participating in those three developmental areas. They'll get Cloud credits. They'll get technical consulting. They may need professional services. They'll get all manner of assistance. And all you have to do is put in an application between now and November 15th for the first year. >> That's for the health equity? >> For the health equity. >> Got it. Okay, cool. So, what's the other news? You guys had some baseline data, got a lot of rave reviews from ACORE. I interviewed Constance and Thompson on the Cube earlier. That's impressive. You guys really making a lot of change. >> Well, you're hundred percent right. Sustainability is a key issue from all of our customers around the world. It's a key issue for us, frankly, as inhabitants of planet earth, right? >> John: Yeah. >> But what's really interesting is we've now got governments around the world who are starting to evaluate whether they're not their vendors have the same values and sustainability. And so that the AWS or the Amazon Climate Pledge is a game changer in terms of going carbon zero by 2040, 10 years ahead of most sort of other programs of record. And then with ACORE, we announced the ability to actually start effecting sustainability in particular parts around the world. This one's aim at that. >> But the key there is that, from what I understand is that, you guys are saying a baseline on the data. So, that's an Amazonian kind of cultural thing, right? Like you got to measure, you can't know what you're doing. >> The world is full of good intentions, but if you want to drive change at scale, you've got to figure out a way to measure the change. And then you've got to set aggressive goals for yourself. >> That's really smart. Congratulations! That's a good move. Real quick on the announcement at re:Invent, you've talked about last re:Invent, you're going to train 29 million people. Where are you on that goal? >> Well, John, we've been making tremendous progress and I'm going to use theCube here to make a small teaser. You know, stay tuned for our re:Invent conference that comes up shortly because we're actually going to be sharing some more information about it. But we've done digital trainings, self-training, online skills workshops. We just took a program called re/Start, which serves an unemployed or underemployed individuals. We launched that around the world and we're really excited. Today, we announced we're bringing it to Latin America too. So we're expanding into Colombia, Mexico, Peru, Brazil, and Argentina. And the amazing thing about that re/Start program, it's a 12 week intensive program. Doesn't require skills in advance. And after 12 weeks, 90% of the people graduating from that course go right onto a job interview. And that's the real goal, not just skills, but getting people in jobs. >> Yeah. The thing about the Cloud. I keep on banging the drum. I feel like I'm beating a dead horse here, but the level up, you don't need to have a pedigree from some big fancy school. The Cloud, you can be like top tier talent from anywhere. >> And you heard it from some of our speakers today who said they literally helped their teams bootstrap up from old skills like COBOL, you know, to new skills, like Cloud. And I will tell you, you know, right now, Cloud skills are still in a critical shortage. Our customers tell us all the time they can use every single person we can get to 'em. >> I'm going to tell my son, who's a sophomore in CS. I'm like, "Hey, work on COBOL Migration to AWS. You'll be a zillionaire." (John and Max laughs) No one knows what the passwords of the COBOL. I love that 80s jazzy jokes from two re:Invents ago. (John laughs) I got to ask you about the National-Local Governments, how they're monetizing Cloud of the past 18 months. What have you seeing at that level? >> Yeah. National and Local Governments, of course, were tremendously impacted first by the pandemic itself and the health concerns around it, but then all of the secondary effects, you know, unemployment. And immediately, you needed to put into action unemployment benefits systems. We work with the U.S. Small Business Administration, 15 other States across the U.S. You know, to have those systems in place in like weeks to be able to serve the unemployed as a result of the COVID-19 pandemic. Then you saw things progress, to the point where we had States across the country, standing up call centers on Amazon Connect. Instantly, they could have a high scalable volume call center that was situated for their instantly remote workforce, as opposed to their old call center technology. So, across the U.S. we saw those. And in fact, around the world, as governments mobilized to be able to respond to citizens. But the final thing that I think is really incredible, is though is the way that the AWS teams and partners sprung into action to work with National Governments around the world. Over 26 National Governments run their vaccine management scheduling systems on AWS. The largest to date, being in India, where in a single day, the vaccine management system scheduled and conducted 22.5 million vaccinations. Which is more than the population of New York State in one week and one day. >> Wow. That's good. That's great progress. I got to say, I mean, that kind of impact is interesting. And we had Shannon Kellogg on earlier, talking about the Virginia impact with the Amazon $220 million being spread over a few Counties just in one year. The partnership between business... and governments with the Cloud, so much more agility. This really strikes at the core of the future of government. >> Max: I think so. People have talked about private-public partnerships for a long time. I'm really proud of some of the work that Amazon and the whole team is doing around the world in those types of public private partnerships. Whether they're in skilling and workforce with partnerships, like eight different States across the U.S. to deliver skills, training through community college based systems. Whether it's with healthcare systems. Like NHS or GEL over in the UK, to really start applying cloud-scale analytics and research to solve the problems that eventually you're going to get us to personalized healthcare. >> That's a great stuff. Cloud benefits are always good. I always say the old joke is, "You hang around the barbershop long enough, you'll get a haircut." And if you get in the Cloud, you can take advantage of the wave. If you don't get on the wave, your driftwood. >> And States found that out, in fact. You'd have customers who were well on their journey. They were really able to turn on a dime. They pivoted quickly. They delivered new mission systems with customers. Those who hadn't quite progressed to the same state, they found out their legacy. IT systems were just brittle and incapable of pivoting so quickly to the new needs. And what we found, John, was that almost overnight, a business, government, which was largely in-person and pretty high touch had to pivot to the point where their only interaction was now a digital system. And those who- >> John: Middle of the day, they could have race car on the track, like quickly. >> Well, we've got it. We do have race cars on the track, right? Every year we've got the artificial intelligence powered Amazon DeepRacer and Red River on the track. >> I can see it. Always a good showing. Final question. I know you got to go on and I appreciate you coming on- >> It's been great. >> with all your busy schedule. Looking ahead. What tech trends should we be watching as Public Sector continues to be powered by this massive structural change? >> Well, I think there's going to be huge opportunity in healthcare. In fact, this afternoon at four o'clock Eastern, we're talking with Dr. Shafiq Rab from Wellforce. He and folks at Veterans Affairs to tell you telehealth and telemedicine are two, the areas where there's still the greatest potential. The number of people who now are serviced, and the ability to service a population far more broadly dispersed, I think has dramatic potential in terms of simply making the planet more healthy. >> Like you said, the pandemics have exposed the right path and the wrong path. And agility, speed, new ways of doing things, telemedicine. Another example, I interviewed a great company that's doing a full stack around healthcare with all kinds of home, agents, virtual agents, really interesting stuff. >> It is. I think it's going to change the world. >> John: Max Peterson, Head of Public Sector. Thank you for coming on theCube, as always. >> John, it's my pleasure. Love the cube. We've always had a good time. >> Yeah. Great stuff. >> Peter: We'll keep on making this difference. >> Hey, there's too many stories. We need another Cube here. So many stories here, impacting the world. Here at the Amazon Web Services Public Sector Summit. I'm John Furrier, your host. Thanks for watching. (soft 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 >> The latest Arm Neoverse announcement further cements our opinion that it's architecture business model and ecosystem execution are defining a new era of computing and leaving Intel in it's dust. We believe the company and its partners have at least a two year lead on Intel and are currently in a far better position to capitalize on a major waves that are driving the technology industry and its innovation. To compete our view is that Intel needs a new strategy. Now, Pat Gelsinger is bringing that but they also need financial support from the US and the EU governments. Pat Gelsinger was just noted as asking or requesting from the EU government $9 billion, sorry, 8 billion euros in financial support. And very importantly, Intel needs a volume for its new Foundry business. And that is where Apple could be a key. Hello, everyone. And welcome to this week's weekly bond Cube insights powered by ETR. In this breaking analysis will explain why Apple could be the key to saving Intel and America's semiconductor industry leadership. We'll also further explore our scenario of the evolution of computing and what will happen to Intel if it can't catch up. Here's a hint it's not pretty. Let's start by looking at some of the key assumptions that we've made that are informing our scenarios. We've pointed out many times that we believe Arm wafer volumes are approaching 10 times those of x86 wafers. This means that manufacturers of Arm chips have a significant cost advantage over Intel. We've covered that extensively, but we repeat it because when we see news reports and analysis and print it's not a factor that anybody's highlighting. And this is probably the most important issue that Intel faces. And it's why we feel that Apple could be Intel's savior. We'll come back to that. We've projected that the chip shortage will last no less than three years, perhaps even longer. As we reported in a recent breaking analysis. Well, Moore's law is waning. The result of Moore's law, I.e the doubling of processor performance every 18 to 24 months is actually accelerating. We've observed and continue to project a quadrupling of performance every two years, breaking historical norms. Arm is attacking the enterprise and the data center. We see hyperscalers as the tip of their entry spear. AWS's graviton chip is the best example. Amazon and other cloud vendors that have engineering and software capabilities are making Arm-based chips capable of running general purpose applications. This is a huge threat to x86. And if Intel doesn't quickly we believe Arm will gain a 50% share of an enterprise semiconductor spend by 2030. We see the definition of Cloud expanding. Cloud is no longer a remote set of services, in the cloud, rather it's expanding to the edge where the edge could be a data center, a data closet, or a true edge device or system. And Arm is by far in our view in the best position to support the new workloads and computing models that are emerging as a result. Finally geopolitical forces are at play here. We believe the U S government will do, or at least should do everything possible to ensure that Intel and the U S chip industry regain its leadership position in the semiconductor business. If they don't the U S and Intel could fade to irrelevance. Let's look at this last point and make some comments on that. Here's a map of the South China sea in a way off in the Pacific we've superimposed a little pie chart. And we asked ourselves if you had a hundred points of strategic value to allocate, how much would you put in the semiconductor manufacturing bucket and how much would go to design? And our conclusion was 50, 50. Now it used to be because of Intel's dominance with x86 and its volume that the United States was number one in both strategic areas. But today that orange slice of the pie is dominated by TSMC. Thanks to Arm volumes. Now we've reported extensively on this and we don't want to dwell on it for too long but on all accounts cost, technology, volume. TSMC is the clear leader here. China's president Xi has a stated goal of unifying Taiwan by China's Centennial in 2049, will this tiny Island nation which dominates a critical part of the strategic semiconductor pie, go the way of Hong Kong and be subsumed into China. Well, military experts say it was very hard for China to take Taiwan by force, without heavy losses and some serious international repercussions. The US's military presence in the Philippines and Okinawa and Guam combined with support from Japan and South Korea would make it even more difficult. And certainly the Taiwanese people you would think would prefer their independence. But Taiwanese leadership, it ebbs and flows between those hardliners who really want to separate and want independence and those that are more sympathetic to China. Could China for example, use cyber warfare to over time control the narrative in Taiwan. Remember if you control the narrative you can control the meme. If you can crawl the meme you control the idea. If you control the idea, you control the belief system. And if you control the belief system you control the population without firing a shot. So is it possible that over the next 25 years China could weaponize propaganda and social media to reach its objectives with Taiwan? Maybe it's a long shot but if you're a senior strategist in the U S government would you want to leave that to chance? We don't think so. Let's park that for now and double click on one of our key findings. And that is the pace of semiconductor performance gains. As we first reported a few weeks ago. Well, Moore's law is moderating the outlook for cheap dense and efficient processing power has never been better. This slideshows two simple log lines. One is the traditional Moore's law curve. That's the one at the bottom. And the other is the current pace of system performance improvement that we're seeing measured in trillions of operations per second. Now, if you calculate the historical annual rate of processor performance improvement that we saw with x86, the math comes out to around 40% improvement per year. Now that rate is slowing. It's now down to around 30% annually. So we're not quite doubling every 24 months anymore with x86 and that's why people say Moore's law is dead. But if you look at the (indistinct) effects of packaging CPU's, GPU's, NPUs accelerators, DSPs and all the alternative processing power you can find in SOC system on chip and eventually system on package it's growing at more than a hundred percent per annum. And this means that the processing power is now quadrupling every 24 months. That's impressive. And the reason we're here is Arm. Arm has redefined the core process of model for a new era of computing. Arm made an announcement last week which really recycle some old content from last September, but it also put forth new proof points on adoption and performance. Arm laid out three components and its announcement. The first was Neoverse version one which is all about extending vector performance. This is critical for high performance computing HPC which at one point you thought that was a niche but it is the AI platform. AI workloads are not a niche. Second Arm announced the Neoverse and two platform based on the recently introduced Arm V9. We talked about that a lot in one of our earlier Breaking Analysis. This is going to performance boost of around 40%. Now the third was, it was called CMN-700 Arm maybe needs to work on some of its names, but Arm said this is the industry's most advanced mesh interconnect. This is the glue for the V1 and the N2 platforms. The importance is it allows for more efficient use and sharing of memory resources across components of the system package. We talked about this extensively in previous episodes the importance of that capability. Now let's share with you this wheel diagram underscores the completeness of the Arm platform. Arms approach is to enable flexibility across an open ecosystem, allowing for value add at many levels. Arm has built the architecture in design and allows an open ecosystem to provide the value added software. Now, very importantly, Arm has created the standards and specifications by which they can with certainty, certify that the Foundry can make the chips to a high quality standard, and importantly that all the applications are going to run properly. In other words, if you design an application, it will work across the ecosystem and maintain backwards compatibility with previous generations, like Intel has done for years but Arm as we'll see next is positioning not only for existing workloads but also the emerging high growth applications. To (indistinct) here's the Arm total available market as we see it, we think the end market spending value of just the chips going into these areas is $600 billion today. And it's going to grow to 1 trillion by 2030. In other words, we're allocating the value of the end market spend in these sectors to the marked up value of the Silicon as a percentage of the total spend. It's enormous. So the big areas are Hyperscale Clouds which we think is around 20% of this TAM and the HPC and AI workloads, which account for about 35% and the Edge will ultimately be the largest of all probably capturing 45%. And these are rough estimates and they'll ebb and flow and there's obviously some overlap but the bottom line is the market is huge and growing very rapidly. And you see that little red highlighted area that's enterprise IT. Traditional IT and that's the x86 market in context. So it's relatively small. What's happening is we're seeing a number of traditional IT vendors, packaging x86 boxes throwing them over the fence and saying, we're going after the Edge. And what they're doing is saying, okay the edge is this aggregation point for all these end point devices. We think the real opportunity at the Edge is for AI inferencing. That, that is where most of the activity and most of the spending is going to be. And we think Arm is going to dominate that market. And this brings up another challenge for Intel. So we've made the point a zillion times that PC volumes peaked in 2011. And we saw that as problematic for Intel for the cost reasons that we've beat into your head. And lo and behold PC volumes, they actually grew last year thanks to COVID and we'll continue to grow it seems for a year or so. Here's some ETR data that underscores that fact. This chart shows the net score. Remember that's spending momentum it's the breakdown for Dell's laptop business. The green means spending is accelerating and the red is decelerating. And the blue line is net score that spending momentum. And the trend is up and to the right now, as we've said this is great news for Dell and HP and Lenovo and Apple for its laptops, all the laptops sellers but it's not necessarily great news for Intel. Why? I mean, it's okay. But what it does is it shifts Intel's product mix toward lower margin, PC chips and it squeezes Intel's gross margins. So the CFO has to explain that margin contraction to wall street. Imagine that the business that got Intel to its monopoly status is growing faster than the high margin server business. And that's pulling margins down. So as we said, Intel is fighting a war on multiple fronts. It's battling AMD in the core x86 business both PCs and servers. It's watching Arm mop up in mobile. It's trying to figure out how to reinvent itself and change its culture to allow more flexibility into its designs. And it's spinning up a Foundry business to compete with TSMC. So it's got to fund all this while at the same time propping up at stock with buybacks Intel last summer announced that it was accelerating it's $10 billion stock buyback program, $10 billion. Buy stock back, or build a Foundry which do you think is more important for the future of Intel and the us semiconductor industry? So Intel, it's got to protect its past while building his future and placating wall street all at the same time. And here's where it gets even more dicey. Intel's got to protect its high-end x86 business. It is the cash cow and funds their operation. Who's Intel's biggest customer Dell, HP, Facebook, Google Amazon? Well, let's just say Amazon is a big customer. Can we agree on that? And we know AWS is biggest revenue generator is EC2. And EC2 was powered by microprocessors made from Intel and others. We found this slide in the Arm Neoverse deck and it caught our attention. The data comes from a data platform called lifter insights. The charts show, the rapid growth of AWS is graviton chips which are they're custom designed chips based on Arm of course. The blue is that graviton and the black vendor A presumably is Intel and the gray is assumed to be AMD. The eye popper is the 2020 pie chart. The instant deployments, nearly 50% are graviton. So if you're Pat Gelsinger, you better be all over AWS. You don't want to lose this customer and you're going to do everything in your power to keep them. But the trend is not your friend in this account. Now the story gets even gnarlier and here's the killer chart. It shows the ISV ecosystem platforms that run on graviton too, because AWS has such good engineering and controls its own stack. It can build Arm-based chips that run software designed to run on general purpose x86 systems. Yes, it's true. The ISV, they got to do some work, but large ISV they have a huge incentives because they want to ride the AWS wave. Certainly the user doesn't know or care but AWS cares because it's driving costs and energy consumption down and performance up. Lower cost, higher performance. Sounds like something Amazon wants to consistently deliver, right? And the ISV portfolio that runs on our base graviton and it's just going to continue to grow. And by the way, it's not just Amazon. It's Alibaba, it's Oracle, it's Marvell. It's 10 cents. The list keeps growing Arm, trotted out a number of names. And I would expect over time it's going to be Facebook and Google and Microsoft. If they're not, are you there? Now the last piece of the Arm architecture story that we want to share is the progress that they're making and compare that to x86. This chart shows how Arm is innovating and let's start with the first line under platform capabilities. Number of cores supported per die or, or system. Now die is what ends up as a chip on a small piece of Silicon. Think of the die as circuit diagram of the chip if you will, and these circuits they're fabricated on wafers using photo lithography. The wafers then cut up into many pieces each one, having a chip. Each of these pieces is the chip. And two chips make up a system. The key here is that Arm is quadrupling the number of cores instead of increasing thread counts. It's giving you cores. Cores are better than threads because threads are shared and cores are independent and much easier to virtualize. This is particularly important in situations where you want to be as efficient as possible sharing massive resources like the Cloud. Now, as you can see in the right hand side of the chart under the orange Arm is dramatically increasing the amount of capabilities compared to previous generations. And one of the other highlights to us is that last line that CCIX and CXL support again Arm maybe needs to name these better. These refer to Arms and memory sharing capabilities within and between processors. This allows CPU's GPU's NPS, et cetera to share resources very often efficiently especially compared to the way x86 works where everything is currently controlled by the x86 processor. CCIX and CXL support on the other hand will allow designers to program the system and share memory wherever they want within the system directly and not have to go through the overhead of a central processor, which owns the memory. So for example, if there's a CPU, GPU, NPU the CPU can say to the GPU, give me your results at a specified location and signal me when you're done. So when the GPU is finished calculating and sending the results, the GPU just signals the operation is complete. Versus having to ping the CPU constantly, which is overhead intensive. Now composability in that chart means the system it's a fixed. Rather you can programmatically change the characteristics of the system on the fly. For example, if the NPU is idle you can allocate more resources to other parts of the system. Now, Intel is doing this too in the future but we think Arm is way ahead. At least by two years this is also huge for Nvidia, which today relies on x86. A major problem for Nvidia has been coherent memory management because the utilization of its GPU is appallingly low and it can't be easily optimized. Last week, Nvidia announced it's intent to provide an AI capability for the data center without x86 I.e using Arm-based processors. So Nvidia another big Intel customer is also moving to Arm. And if it's successful acquiring Arm which is still a long shot this trend is only going to accelerate. But the bottom line is if Intel can't move fast enough to stem the momentum of Arm we believe Arm will capture 50% of the enterprise semiconductor spending by 2030. So how does Intel continue to lead? Well, it's not going to be easy. Remember we said, Intel, can't go it alone. And we posited that the company would have to initiate a joint venture structure. We propose a triumvirate of Intel, IBM with its power of 10 and memory aggregation and memory architecture And Samsung with its volume manufacturing expertise on the premise that it coveted in on US soil presence. Now upon further review we're not sure the Samsung is willing to give up and contribute its IP to this venture. It's put a lot of money and a lot of emphasis on infrastructure in South Korea. And furthermore, we're not convinced that Arvind Krishna who we believe ultimately made the call to Jettisons. Jettison IBM's micro electronics business wants to put his efforts back into manufacturing semi-conductors. So we have this conundrum. Intel is fighting AMD, which is already at seven nanometer. Intel has a fall behind in process manufacturing which is strategically important to the United States it's military and the nation's competitiveness. Intel's behind the curve on cost and architecture and is losing key customers in the most important market segments. And it's way behind on volume. The critical piece of the pie that nobody ever talks about. Intel must become more price and performance competitive with x86 and bring in new composable designs that maintain x86 competitive. And give the ability to allow customers and designers to add and customize GPU's, NPUs, accelerators et cetera. All while launching a successful Foundry business. So we think there's another possibility to this thought exercise. Apple is currently reliant on TSMC and is pushing them hard toward five nanometer, in fact sucking up a lot of that volume and TSMC is maybe not servicing some other customers as well as it's servicing Apple because it's a bit destructive, it is distracted and you have this chip shortage. So Apple because of its size gets the lion's share of the attention but Apple needs a trusted onshore supplier. Sure TSMC is adding manufacturing capacity in the US and Arizona. But back to our precarious scenario in the South China sea. Will the U S government and Apple sit back and hope for the best or will they hope for the best and plan for the worst? Let's face it. If China gains control of TSMC, it could block access to the latest and greatest process technology. Apple just announced that it's investing billions of dollars in semiconductor technology across the US. The US government is pressuring big tech. What about an Apple Intel joint venture? Apple brings the volume, it's Cloud, it's Cloud, sorry. It's money it's design leadership, all that to the table. And they could partner with Intel. It gives Intel the Foundry business and a guaranteed volume stream. And maybe the U S government gives Apple a little bit of breathing room and the whole big up big breakup, big tech narrative. And even though it's not necessarily specifically targeting Apple but maybe the US government needs to think twice before it attacks big tech and thinks about the long-term strategic ramifications. Wouldn't that be ironic? Apple dumps Intel in favor of Arm for the M1 and then incubates, and essentially saves Intel with a pipeline of Foundry business. Now back to IBM in this scenario, we've put a question mark on the slide because maybe IBM just gets in the way and why not? A nice clean partnership between Intel and Apple? Who knows? Maybe Gelsinger can even negotiate this without giving up any equity to Apple, but Apple could be a key ingredient to a cocktail of a new strategy under Pat Gelsinger leadership. Gobs of cash from the US and EU governments and volume from Apple. Wow, still a long shot, but one worth pursuing because as we've written, Intel is too strategic to fail. Okay, well, what do you think? You can DM me @dvellante or email me at david.vellante@siliconangle.com or comment on my LinkedIn post. Remember, these episodes are all available as podcasts so please subscribe wherever you listen. I publish weekly on wikibon.com and siliconangle.com. And don't forget to check out etr.plus for all the survey analysis. And I want to thank my colleague, David Floyer for his collaboration on this and other related episodes. This is Dave Vellante for theCUBE insights powered by ETR. Thanks for watching, be well, and we'll see you next time. (upbeat music)

>>long from Las Vegas. It's the Q covering a ws re invent 2019. Brought to you by Amazon Web service is and in along with its ecosystem partners. >>Welcome back to the Cube. Here live in Las Vegas for aws reinvent I'm John for a devil on the ads, always extracting the signal from the noise. We're here for 1/7 reinvent of the eight years that they've had at what a wave. One of the biggest waves is the modernization of procurement, the modernization of business, commercial business and the rapid acceleration of public sector. We're here with the chief of public sector for AWS. Teresa Carlson, vice president publics that globally great to have you >>so great to have the Q begin this year. We appreciate you being here, >>so we're just seeing so much acceleration of modernization. Even in the commercial side, 80 talks about transformation. It's just a hard core on the public sector side. You have so many different areas transforming faster because they haven't transformed before. That's correct. This is a lot of change. What's changed the most for you in your business? >>Well, again, I'll be here 10 years this mad that A B s and my eighth reinvent, and what really changed, which was very exciting this year, is on Monday. We had 550 international government executives here from 40 countries who were talking about their modernization efforts at every level. Now again, think about that. 40 different governments, 550 executives. We had a fantastic day for them planned. It was really phenomenal because the way that these international governments or think about their budget, how much are they going to use that for maintaining? And they want to get that lesson last. Beckett for Modernization The Thin John It's a Beckett for innovation so that they continue not only modernized, but they're really looking at innovation cycles. So that's a big one. And then you heard from somewhere customers at the breakfast this morning morning from from a T. F. As part of the Department of Justice. What they're doing out. I'll call to back on firearms. They completely made you the cloud. They got rid of 20 years of technical debt thio the Veterans Administration on what they're digging for V A benefits to educational institutions like our mighty >>nose, and he had on stages Kino, Cerner, which the health care companies and what struck me about that? I think it relates to your because I want to get your reaction is that the health care is such an acute example that everyone can relate to rising costs. So cloud helping reduce costs increase the efficiencies and patient care is a triple win. The same thing happens in public sector. There's no place to hide anymore. You have a bona fide efficiencies that could come right out of the gate with cloud plus innovation. And it's happening in all the sectors within the public sector. >>So true. Well, Cerner is a great example because they won the award at V a Veteran's administration to do the whole entire medical records modernization. So you have a company on stage that's commercial as I met, commercial as they are public sector that are going into these large modernization efforts. And as you sit on these air, not easy. This takes focus and leadership and a real culture change to make these things happen. >>You know, the international expansion is impressive. We saw each other in London. We did the health care drill down at your office is, of course, a national health. And then you guys were in Bahrain, and what I deserve is it's not like these organizations. They're way behind. I mean, especially the ones that it moved to. The clouds are moving really fast. So well, >>they don't have as much technical debt internationally. It's what we see here in the U. S. So, like I was just in Africa and you know what we talked about digitizing paper. Well, there's no technology on that >>end >>there. It's kind of exciting because they can literally start from square one and get going. And there's a really hunger and the need to make that happen. So it's different for every country in terms of where they are in their cloud journey. >>So I want to ask you about some of the big deals. I'll see Jet eyes in the news, and you can't talk about it because it's in protest and little legal issues. But you have a lot of big deals that you've done. You share some color commentary on from the big deals and what it really means. >>Yeah, well, first of all, let me just say with Department of Defense, Jet are no jet. I We have a very significant business, you know, doing work at every part of different defense. Army, Navy, Air Force in the intelligence community who has a mission for d o d terminus a t o N g eight in a row on And we are not slowing down in D. O d. We had, like, 250 people at a breakfast. Are Lantian yesterday giving ideas on what they're doing and sharing best practices around the fence. So we're not slowing down in D. O d. We're really excited. We have amazing partners. They're doing mission work with us. But in terms of some really kind of fend, things have happened. We did a press announcement today with Finn Rat, the financial regulatory authority here in the U. S. That regulates markets at this is the largest financial transactions you'll ever see being processed and run on the cloud. And the program is called Cat Consolidated Audit Trail. And if you remember the flash crash and the markets kind of going crazy from 2000 day in 2008 when it started, Finneran's started on a journey to try to understand why these market events were happening, and now they have once have been called CAT, which will do more than 100 billion market points a day that will be processed on the cloud. And this is what we know of right now, and they'll be looking for indicators of nefarious behavior within the markets. And we'll look for indicators on a continuous basis. Now what? We've talked about it. We don't even know what we don't know yet because we're getting so much data, we're going to start processing and crunching coming out of all kinds of groups that they're working with, that this is an important point even for Finn rep. They're gonna be retiring technical debt that they have. So they roll out Cat. They'll be retiring other systems, like oats and other programs that they >>just say so that flash crash is really important. Consolidated, honest, because the flash crash, we'll chalk it up to a glitch in the system. Translation. We don't really know what happened. Soto have a consolidated auto trail and having the data and the capabilities, I understand it is really, really important for transparency and confidence in the >>huge and by the way, thinner has been working with us since 2014. They're one of our best partners and are prolific users of the cloud. And I will tell you it's important that we have industries like thin red regulatory authorities, that air going in and saying, Look, we couldn't possibly do what we're doing without cloud computing. >>Tell me about the technical debt because I like this conversation is that we talk about in the commercial side and developer kind of thinking. Most businesses start ups, Whatever. What is technical debt meet in public sector? Can you be specific? >>Well, it's years and years of legacy applications that never had any modernization associated with them in public sector. You know now, because you've talked about these procurement, your very best of your very savvy now public sector >>like 1995 >>not for the faint of heart, for sure that when you do procurement over the years when they would do something they wouldn't build in at new innovations or modernizations. So if you think about if you build a data center today a traditional data center, it's outdated. Tomorrow, the same thing with the procurement. By the time that they delivered on those requirements. They were outdated. So technical debt then has been built up years of on years of not modernizing, just kind of maintaining a status quo with no new insides or analytics. You couldn't add any new tooling. So that is where you see agencies like a T F. That has said, Wow, if I'm gonna if I'm gonna have a modern agency that tracks things like forensics understands the machine learning of what's happening in justice and public safety, I need to have the most modern tools. And I can't do that on an outdated system. So that's what we kind of call technical death that just maintains that system without having anything new that you're adding to >>their capabilities lag. Everything's products bad. Okay, great. Thanks for definite. I gotta ask you about something that's near and dear to our heart collaboration. If you look at the big successes in the world and within Amazon Quantum Caltex partnering on the quantum side, you've done a lot of collaboration with Cal Cal Poly for ground station Amazon Educate. You've been very collaborative in your business, and that's a continuing to be a best practice you have now new things like the cloud innovation centers. Talk about that dynamic and how collaboration has become an important part of your business model. >>What we use their own principles from Amazon. We got building things in our plan. Innovation centers. We start out piloting those two to see, Could they work? And it's really a public private partnership between eight MPs and universities, but its universities that really want to do something. And Cal Poly's a great example. Arizona State University A great example. The number one most innovative university in the US for like, four years in a row. And what we do is we go in and we do these public sector challenges. So the collaboration happens. John, between the public sector Entity, university with students and us, and what we bring to the table is technical talent, air technology and our mechanisms and processes, like they're working backwards processes, and they were like, We want you to bring your best and brightest students. Let's bring public sector in the bowl. They bring challenges there, riel that we can take on, and then they can go back and absorb, and they're pretty exciting. I today I talked about we have over 44 today that we've documented were working at Cal Poly. The one in Arizona State University is about smart cities. And then you heard We're announcing new ones. We've got two in France, one in Germany now, one that we're doing on cybersecurity with our mighty in Australia to be sitting bata rain. So you're going to see us Add a lot more of these and we're getting the results out of them. So you know we won't do if we don't like him. But right now we really like these partnerships. >>Results are looking good. What's going on with >>you? All right. And I'll tell you why. That why they're different, where we are taking on riel public sector issues and challenges that are happening, they're not kind of pie in the sky. We might get there because those are good things to do. But what we want to do is let's tackle things that are really homelessness, opioid crisis, human sex trafficking, that we're seeing things that are really in these communities and those air kind of grand. But then we're taking on areas like farming where we talked about Can we get strawberries rotting on the vine out of the field into the market before you lose billions of dollars in California. So it's things like that that were so its challenges that are quick and riel. And the thing about Cloud is you can create an application and solution and test it out very rapidly without high cost of doing that. No technical Dan, >>you mentioned Smart Cities. I just attended a session. Marty Walsh, the mayor of Boston's, got this 50 50 years smart city plan, and it's pretty impressive, but it's a heavy lift. So what do you see going on in smart cities? And you really can't do it without the cloud, which was kind of my big input cloud. Where's the data? What do you say, >>cloud? I O. T is a big part at these. All the centers that Andy talked about yesterday in his keynote and why the five G partnerships are so important. These centers, they're gonna be everywhere, and you don't even know they really exist because they could be everywhere. And if you have the five G capabilities to move those communications really fast and crypt them so you have all the security you need. This is game changing, but I'll give you an example. I'll go back to the kids for a minute at at Arizona State University, they put Io TI centers everywhere. They no traffic patterns. Have any parking slots? Airfield What Utilities of water, if they're trash bins are being filled at number of seats that are being taken up in stadiums. So it's things like that that they're really working to understand. What are the dynamics of their city and traffic flow around that smart city? And then they're adding things on for the students like Alexis skills. Where's all the activity? So you're adding all things like Alexa Abs, which go into a smart city kind of dynamic. We're not shop. Where's the best activities for about books, for about clothes? What's the pizza on sale tonight? So on and then two things like you saw today on Singapore, where they're taking data from all different elements of agencies and presenting that bad to citizen from their child as example Day one of a birth even before, where's all the service is what I do? How do I track these things? How do I navigate my city? to get all those service is the same. One can find this guy things they're not. They're really and they're actually happening. >>Seems like they're instrumented a lot of the components of the city learning from that and then deciding. Okay, where do we double down on where do we place? >>You're making it Every resilient government, a resilient town. I mean, these were the things that citizens can really help take intro Web and have a voice in doing >>threes. I want to say congratulations to your success. I know it's not for the faint of heart in the public sector of these days, a lot of blockers, a lot of politics, a lot of government lockers and the old procurement system technical debt. I mean, Windows 95 is probably still in a bunch of PCs and 50 45 fighters. 15 fighters. Oh, you've got a great job. You've been doing a great job and riding that wave. So congratulations. >>Well, I'll just say it's worth it. It is worth it. We are committed to public sector, and we really want to see everyone from our war fighters. Are citizens have the capabilities they need. So >>you know, you know that we're very passionate this year about going in the 2020 for the Cube and our audience to do a lot more tech for good programming. This'll is something that's near and dear to your heart as well. You have a chance to shape technology. >>Yes, well, today you saw we had a really amazing not for profit on stage with It's called Game Changer. And what we found with not for profits is that technology can be a game changer if they use it because it makes their mission dollars damage further. And they're an amazing father. And send a team that started game changer at. Taylor was in the hospital five years with terminal cancer, and he and his father, through these five years, kind of looked around. Look at all these Children what they need and they started. He is actually still here with us today, and now he's a young adult taking care of other young Children with cancer, using gaming technologies with their partner, twitch and eight MPs and helping analyze and understand what these young affected Children with cancer need, both that personally and academically and the tools he has He's helping really permit office and get back and it's really hard, Warren says. I was happy. My partner, Mike Level, who is my Gran's commercial sales in business, and I ran public Sector Day. We're honored to give them at a small token of our gift from A to B s to help support their efforts. >>Congratulates, We appreciate you coming on the Cube sharing the update on good luck into 2020. Great to see you 10 years at AWS day one. Still, >>it's day one. I feel like I started >>it like still, like 10 o'clock in the morning or like still a day it wasn't like >>I still wake up every day with the jump in my staff and excited about what I'm gonna do. And so I am. You know, I am really excited that we're doing and like Andy and I say we're just scratching the surface. >>You're a fighter. You are charging We love you, Great executive. You're the chief of public. Get a great job. Great, too. Follow you and ride the wave with Amazon and cover. You guys were documenting history. >>Yeah, exactly. We're in happy holidays to you all and help seeing our seventh and 20 >>so much. Okay, Cube coverage here live in Las Vegas. This is the cube coverage. Extracting the signals. Wanna shout out to eight of us? An intel for putting on the two sets without sponsorship, we wouldn't be able to support the mission of the Cube. I want to thank them. And thank you for watching with more after this short break.

>> Hello everyone. Welcome to this CUBE conversations here in Palo Alto, California John Furrier, host of the Cube. I'm here with Jagane Sundar CTO chief technology officer of WANdisco, you get great to see you again. Place we're coming on. >> Thank you for having me, John. >> So the conversation I want to talk to about the technology behind WANdisco and we've had many conversations. So for the folks watching good, our YouTube channel insurgency the evolution of conversations over, I think. Eight, eight, nine years now we've been chatting. What a level up. You guys are now with cloud big announcements around multi cloud live data in particular. So the technology is the gift that keeps giving for WANdisco you guys continuing to take territory now, a big way with cloud, big growth, A lot of changes, a lot of hires. What's going on? >> So, as you well know, WANdisco stands for wide area network distributed, computing on the value ofthe the wide data network aspect is really shining through now because nobody goes to the cloud saying, I'm going to put it in one data center. It's always multiple regions, multiple data centers in each region. Suddenly, problem of having your data consistent, being across multiple cloud windows are on prem to cloud becomes a real challenge. We stepped in. We had something that was a good solution for small users, small data. But we developed it into something that's fantastic for large data volumes on people are running into the problem. The biggest problem that IT providers have is that data scientists do not respect data that's not consistent. If you look at a replica of data and you're not sure whether it's exactly accurate or not the data scientists who spent all his time building algorithms to predict some model gonna look at it and go, that data's not quite right. I'm not going to look at it. So if you use a inconsistent tool or an inadequate tool to replicate your data, you have the problem that nobody is going to respect the replicas. Everybody's going to go back to the source of truth. We solved that problem elegantly and accurately >> State the problem specifically. Is it the integrity of the data? What is the specific problem statement that you guys solve with technology? >> Let me give you an exam you have notifications that come out of cloud object stores when an object this place into the store or deleted from the store that the best effort delivery. If there are logjams in this mechanism used to deliver some notifications, maybe drop the problem with using that notification mechanism to replicate your data is that over a period of time, so you have two three petabytes of data and you're replicating it over a month or month and a half, you'll find that maybe point one percent of your data is not quite accurate anymore. So the value ofthe the replicas essentially zero >> like a leaky pipe. Basically, >> indeed, if you have a leaking pipe, then it's just totally >> we need to have integrity and to end. All right, let's get back to some of the things I want to ask because I think it's a fascinating been following your story. For years, you had a point solution. Multiple wider. You had the replication active, active great for data centers. So disaster recovery not mission critical, but certainly critical. Correct, depending on how it the mission of us. It wasn't this asked Income's Cloud. You mentioned a wide area. Networks and you go back to the old days when I was breaking into the business. That's when they had, you know, dial up modems and front pagers. Not even cell phones. Just starting. Why do your network would have really complicated beast and all the best resource is worked on expensive bandwith, that he had remote offices and you had campus networking then. So why the area networking went through that phase one? Correct. Now we're living in. They win all the time. Cloud is when white area >> correct cloud is when. But there are subtle aspect that people miss all the time. If you go to store an object in Amazon, says three, for example, you pick a region. If it's a complete wide area distributed entity, why do you need to pick a region? The truth is, each cloud vendor hides a number of region specific or local area network specific aspects of their service. Dynamo DB runs and one data centre one one region, two or three availability zones in a region. If you want to replicate that data, you don't really have much help from the cloud vendor themselves. So you need to parse the truth from what has offered what you will find us. The van is still a very challenging problem for a lot of these data application problems. >> Talk about the wide area network challenges in the modern era we're living in, which is cloud computing mentioned some of the nuances around regions and availability zones. Basically, the cloud grew up as building blocks and the plumbing on the neither essentially a mai britt of of certain techniques and networking. Local area network V lands tunneling All these stuff Nets router. So it's obviously plumbing. Yes, what's different now that's important to take that to the next level. Because, you know, there are arguments that saying, Hey, GPR, I might want to have certain regions be smarter, right? So you're starting to see a level up that Amazon and others air going. Google, in particular, talks about this a lot as Ama's Microsoft. What's that next level of when, where the plumbing it's upgraded from basically the other things. >> So the problem really has to be stated in terms ofthe your data architecture. If you look at your data on, figure out that you need the set of data to be available for your business critical applications, then the problem turns into. I need replicas of this data in this region and the other reasons, perhaps in two different cloud render locations because you don't want to be tied down to their availability. One cloud vendor, then the problem tones into How do you hide the complexity of replicating and keeping this data consistent from the users of the data data scientists, the application authors and so on. Now, that's where we step in. We have a transparent replication solution that fits into the plumbing. It's often offered by the IT folks as part of their cloud offering or as part of the hybrid offering. The application. Developers don't really need to worry about those things. A specific example would be hive tables that are users building in one data center an IT Professional from that organization can buy our replication software. That table will be available in multiple data centers and multiple regions available for both Read and write. The user did not do anything or does not need to be a there. So if you have problems such as GDPR requires the data to be here. But this summarized data can be available across all of these regions. Then we can solve the problem elegantly for you without any act application rewiring or reauthoring. >> Talk about the technology that makes all this happen again. This has been a key part of your success that WANdisco love the always love the name wide area there was a big wide area that were fan did that in my early days configuring router tables. You know how it has been. You know, hardcore back then, Distributed systems is certainly large. Scale now is part of the clouds. So all the large scale guys like me when we grew up into computer science days had to think about systems, architecture at scale. We're actually living it now, Correct. So talk about the technology. What specifically do you guys have that that that's your technology and talk about the impact to the scale piece. I think that's a real key technology piece >> indeed. So the core of our algorithm is enhancements and superior implementation. Often algorithm called paxos. Now paxos itself is the only mathematically proven algorithm for keeping replicas in multiple machines or multiple regions. So multiple data centers the other alternatives. Such a raft and zookeeper protocol. These are all compromises for the sake of the ease of implementation. Now we don't feel the cost of implementation. We spent many years doing the research on it, so we have fantastic implementation. Of paxos is extended for use over wide data networks without any special hardware I mentioned without any special hardware piece, because Google Spanner, which is one of our primary competitors, has an implementation that that needs your own specific network and hardware. So the value of >> because they're tired, the clock, atomic clock, actually, to the infrastructure of their timings, that's all synchronized. So it's it's only within Google Cloud? >> Exactly. It cannot even be made available to Google's customers of Google Cloud. That was a feature that they added recently, but it's rolling out in very limited. >> They inherited that from their large scale correct Google. Yes, which is a big table spanner. These are awesome products. >> These are awesome products, but they're very specific >>Tailored for Google. >> Yes, they're great in the Google environment. They're not so great outside of Google. Now we have technology that makes you able to run this across a Google Cloud and Microsoft's Cloud and Amazons Cloud. The value of this is that you have truly cloud neutral solutions. You don't need to worry about when the lock in, you don't need to worry about availability problems in one of the cloud vendors and then you can scale your solution. You can go in with an approach such that when the virtual machines or the compute resource is in one cloud vendor are really inexpensive. Will use that when it's very expensive. Will move our workloads to other locations. You can think up architectures like that, with our solution underpinning your replication >> rights again. I'm gonna ask you the technical quite love these conversations get down and dirty on the hood. So Joel Horowitz was on your new CMO former Microsoft. Keep alumni Richard CEO Talk aboutthe. Same thing. Moving data around the key value probably that's tied right into your legacy of your I P and how that value is with integrity. Moving data from point A to point B. But the world's moving also to identify scenarios where I'm going to move compute rather than through the day, because people have recognized that moving data is hard you got late in C and this cost in band with so two schools of thought not mutually exclusive. When do you pick one? >> Okay, absolutely. They're not mutually exclusive because there are data availability needs that defined some replication scenarios on their computer needs that can be more flexible. If you had the ability to say, have data in Amazon's cloud on in Microsoft's Cloud, You mean Want to use some Amazon specific tools for specific computer scenarios at the same time, used Microsoft tools for other scenarios or perhaps use open source, too, like Hadoop in either one of those clouds? Those are all mechanisms that work perfectly well, but at the core you have to figure out your data architecture. If you can live with your data in one region or in one data center, clearly that's what you should do. But if you cannot have that data, be unavailable, you do have to replicate it. At that point, you should consider replicating to a different cloud window because availability is concerned with all these vendors. >> So two things I hear you say one availability is it's a driver. The other one is user preference Yes. Why not have people who know Microsoft tools and Microsoft software work on Microsoft framework of someone using something else in another cloud? The same data can live in both places. You guys make that happen? Is that what you're saying? Exactly. That's a big deal. >> Absolutely. And we guarantee the consistency that a guarantee that you will not get from any other bender. >> So this basically debunks the whole walk in, Yes, that you guys air solution to to essentially relieve this notion of lock and so me as a customer and say, Hey, I'm an Amazon right now. We're all in an Amazon. But, you know, I've got some temptation to goto Azure or Google. Why wouldn't I if I have the ability to make my data consistent, exact. Is that what you're saying? >> That is exactly what I'm saying. You have this ability to experiment with different cloud vendors. You also have the ability to mitigate some of the cost aspect. If you're going to pay for copies in two different geographic locations, you might as well do it on two different cloud vendor see have the richer subset of applications and better availability. >> So for people who say date is a lock inspect for cloud. It's kind of right if unless they use WANdisco because in a sense, and because you know what really moves with it. I mean, your data's Did you stay there? Yeah, that's kind of common sense. It's not so much technical locket, so there's no real technical lockets. More operational lock and correct with data, if you don't wantto. But if you're afraid of lock in, you go with the WANdisco. That's live data. Multi cloud is that >> that was live data multi cloud on. Does this new ability to actually have active data sets that are available in different cloud bender locations? >> Well, that's a killer app right there. How do you feel? You must You must feel pretty good. You know, you and I have talked many times. Yes, but this's like you been waiting for this moment. This is actually really wide here in a k a cloud. I was a big data problem. Which only getting bigger, exactly. Replication is now the transport between clouds for anti lock. And this is the Holy Grail for home when >> it is the Holy Grail for the industrial. We've been talking about it for years now, and we feel completely redeemed. Now we feel that the industry has gotten to the point back. They understand what we've talked about. I feel very excited, the custom attraction we're seeing on watching our customers light of when we describe the attributes we bring, It's >> exciting and just the risk management alone is a hedge. I mean, if I'm a if I'm someone in the cyber security challenges alone on data, you've got data sovereignty, compliance. Never mind the productivity piece of it, which is pretty amazing. So you guys are changing the data equation. >> Indeed, R R No most excited customers are CEOs because mitigating risk from things like cyber security. As you point out, you may have a breach in one cloud vendor. You can turn that off and use your replica in the other cloud vendor side instantly. Those are comfort. You do not get that other solutions. >> So world having a love fest here. I love the whole multi cloud data. No anti lock. And I think that's a killer feature. Think we'll sell that baby? I'm going to say, OK, that's all good, but I'm going to get you on this one. Security. So no one saw security yet. So if you saw that, then you pretty much got it all. So tell me the securities. Just >> so I'll start by saying, right. Our biggest customer base is the financial industry, banking in companies insurance company's health care. There is no industry in the world that's more security conscious than the banking. And does the government the comment? Perhaps I would. I mean, the banks are really security >> conscious, Their money's money, >> money is money. And and they have, ah, judicially responsibility both governments and to their to their customers. So we've catered to these customers for upwards off a decade. Now, every technical decision we make has security. Ask one of the focus items on DH >> years. A good un security. You >> feel's way insecurity when minute comes to date. Yes. >> Encryption. Is that what this is? It's >> encrypted on the wire. We support all on this data at rest encryption schemes. We support all the the the soup and the cloud vendor security mechanisms. We have a cross cloud product, so the security problems are multiplied and we take care of each of those specifically. So you can be confident that your data secure >> and wire speed security, no overhead involved, >> no overhead involved at all. It's not measurable. >> So well, congratulations on where you guys are a lot more work to do. You guys going to staff? So you hiring a lot of people talk about the talent you're hiring real quick because, you know large skin attracting large scale talent is also one indicator. Yeah, the successful opportunity. I see, the more I think the positioning is phenomenal. Congratulations absent about the hiring, >> as you know, as as David mentioned. A few minutes ago, we hired Joel from IBM for our marketing a department. He cmo wonderful. Higher. We've got Ronchi, who's from the University of Denver. I left the head of that computer science department to come work for us. Another amazing guy. Terrific background. We've got shocked me. Who's another column? UT Austin, phD. He's running engineering for us. We're so pleased to be able to hire talent at this level. As as you well know, it's the people who make these jobs interesting and products interesting. We are. So what are >> some of the things that those guys say when they when they get into really exposed. I mean, why would someone with somewhat what would take someone to quit their ten year professor job at a university, which is pretty much retirement to engage in a growing opportunity? What's the What do they say? >> So the single I mean that you'll find in all of this is very complex, unique technology that has bean refined on it's on the verge of exploding toe, probably something ten to one hundred times the size it is today. People see that when dish when we show them the value ofthe what we've got on the market, that we're taking this too. I'm just getting excited. >> Well, congratulations. You guys have certainly worked hard. Has been great to watch the entrepreneurial journey of getting into that growth stream and just the winds that you're back all that hard work into technologies. Phenomenal again. Multi cloud data not worrying about where your data is is going to give people some East and rest in the other rest of night. Well, because that's the number one of the number one was besides security absolutely Jagane Sundar CTO chief technology officer of WANdisco here inside the CUBE in Palo Alto. I'm John Furrier. Thanks for watching.

>> Narrator: From Berlin, Germany, it's theCUBE, covering Dataworks Summit Europe 2018. Brought to you by Hortonworks. >> Well hello, welcome to the Cube. I'm James Kobielus, I'm the lead analyst for the Wikibon team within SiliconANGLE Media. I'm your host today here at Dataworks Summit 2018 in Berlin, Germany. We have one of Hortonworks' customers in South America with us. This is Fernando Lopez of Quanam. He's based in Montevideo, Uruguay. And he has won, here at the conference, he and his company have won an award, a data science award so what I'd like to do is ask Fernando, Fernando Lopez to introduce himself, to give us his job description, to describe the project for which you won the award and take it from there, Fernando. >> Hello and thanks for the chance >> Great to have you. >> I work for Quanam, as you already explained. We are about 400 people in the whole company. And we are spread across Latin America. I come from the kind of headquarters, which is located in Montevideo, Uruguay. And there we have a business analytics business unit. Within that, we are about 70 people and we have a big data and artificial intelligence and cognitive computing group, which I lead. And yes, we also implement Hortonworks. We are actually partnering with Hortonworks. >> When you say you lead the group, are you a data scientist yourself, or do you manage a group of data scientists or a bit of both? >> Well a bit of both. You know, you have to do different stuff in this life. So yes, I lead implementation groups. Sometimes the project is more big data. Sometimes it's more data science, different flavors. But within this group, we try to cover different aspects that are related in some sense with big data. It could be artificial intelligence. It could be cognitive computing, you know. >> Yes, so describe how you're using Hortonworks and describe the project for which you won, I assume it's a one project, for which you won the award, here at this conference. >> All right, yes. We are running several projects, but this one, the one about the prize, is one that I like so much because I'm actually a bioinformatics student so I have a special interest in this one. >> James: Okay. >> It's good to clarify that this was a joint effort between Quanam and GeneLifes. >> James: Genelabs. >> GeneLifes. >> James: GeneLifes. >> Yes, it's genetics and bioinformatics company. >> Right. >> That they specialize-- >> James: Is that a Montevideo based company? >> Yes. In a line, they are a startup that was born from the Institut Pasteur, but in Montevideo and they have a lot of people, who are specialists in bioinformatics, genetics, with a long career in the subject. And we come from the other side, from big data. I was kind of in the middle because of my interest with bioinformatics. So something like one year and a half ago, we met both companies. Actually there is a research, an innovation center, ICT4V. You can visit ICT4V.org, which is a non-profit organization after an agreement between Uruguay and France, >> Oh okay. >> Both governments. >> That makes possible different private or public organizations to collaborate. We have brainstorming sessions and so on. And from one of that brainstorming sessions, this project was born. So, after that we started to discuss ideas of how to bring tools to the medical genetiticists in order to streamline his work, in order to put on the top of his desktop different tools that could make his work easier and more productive. >> Looking for genetic diseases, or what are they looking for in the data specifically? >> Correct, correct. >> I'm not a geneticist but I try to explain myself as good as I can. >> James: Okay, that's good. You have a great job. >> If I am-- >> If I am the doctor, then I will spend a lot of hours researching literature. Bear in mind that we have nearly 300 papers each day, coming up in PubMed, that could be related with genetics. That's a lot. >> These are papers in Spanish that are published in South America? >> No, just talking about, >> Or Portuguese? >> PubMed from the NIH, it's papers published in English. >> Okay. >> PubMed or MEDLINE or-- >> Different languages different countries different sources. >> Yeah but most of it or everything in PubMed is in English. There is another PubMed in Europe and we have SciELO in Latin America also. But just to give you an idea, there's only from that source, 300 papers each day that could be related to genetics. So only speaking about literature, there's a huge amount of information. If I am the doctor, it's difficult to process that. Okay, so that's part of the issue. But on the core of the solution, what we want to give is, starting from the sequence genome of one patient, what can we assert, what can we say about the different variations. It is believed that we have around, each one of us, has about four million mutations. Mutation doesn't mean disease. Mutation actually leads to variation. And variation is not necessarily something negative. We can have different color of the eyes. We can have more or less hair. Or this could represent some disease, something that we need to pay attention as doctors, okay? So this part of the solution tries to implement heuristics on what's coming from the sequencing process. And this heuristics, in short, they tell you, which is the score of each variant, variation, of being more or less pathogenic. So if I am the doctor, part of the work is done there. Then I have to decide, okay, my diagnosis is there is this disease or not. This can be used in two senses. It can be used as prevention, in order to predict, this could happen, you have this genetic risk or this could be used in order to explain some disease and find a treatment. So that's the more bioinformatics part. On the other hand we have the literature. What we do with the literature is, we ingest this 300 daily papers, well abstracts not papers. Actually we have about three million abstracts. >> You ingest text and graphics, all of it? >> No, only the abstract, which is about a few hundred words. >> James: So just text? >> Yes >> Okay. >> But from there we try to identify relevant identities, proteins, diseases, phenotypes, things like that. And then we try to infer valid relationships. This phenotype or this disease can be caused because of this protein or because of the expression of that gene which is another entity. So this builds up kind of ontology, we call it the mini-ontology because it's specific to this domain. So we have kind of mini-semantic network with millions of nodes and edges, which is quite easy to interrogate. But the point is, there you have more than just text. You have something that is already enriched. You have a series of nodes and arrows, and you can query that in terms of reasoning. What leads to what, you know? >> So the analytical tools you're using, they come from, well Hortonworks doesn't make those tools. Are they coming from another partner in South America? Or another partner of Hortonworks' like an IBM or where does that come from? >> That's a nice question. Actually, we have an architecture. The core of the architecture is Hortonworks because we have scalability topics >> James: Yeah, HDP? >> Yes, HDFS, High-von-tessa, Spark. We have a number of items that need to be easily, ultra-escalated because when we talk about genome, it's easy to think about one terrabyte per patient of work. So that's one thing regarding storage and computing. On the other hand, we use a graph database. We use Neo4j for that. >> James: Okay the Neo4j for graph. The Neo4j, you have Hortonworks. >> Yes and we also use, in order to process natural language processing, we use Nine, which is based here in Berlin, actually. So we do part of the machine learning with Nine. Then we have Neo4j for the graph, for building this semantic network. And for the whole processing we have Hortonworks, for running this analysis and heuristics, and scoring the variance. We also use Solr for enterprise search, on top of the documents, or the conclusions of the documents that come from the ontology. >> Wow, that's a very complex and intricate deployment. So, great, in terms of the takeaways from this event, we only just have a little bit more time, what of all the discussions, the breakouts and the keynotes did you find most interesting so far about this show? Data stewardship was a theme of Scott Knowles, with that new solution, you know, in terms of what you're describing as operational application, have you built out something that can be deployed, is being deployed by your customers on an ongoing basis? It wasn't a one-time project, right? This is an ongoing application they can use internally. Is there a need in Uruguay or among your customers to provide privacy protections on this data? >> Sure. >> Will you be using these solutions like the data studio to enable a degree of privacy, protection of data equivalent to what, say, GDPR requires in Europe? Is that something? >> Yes actually we are running other projects in Uruguay. We are helping the, with other companies, we are helping the National Telecommunications Company. So there are security and privacy topics over there. And we are also starting these days a new project, again with ICT4V, another French company. We are in charge of their big data part, for an education program, which is based on the one laptop per child initiative, from the times of Nicholas Negroponte. Well, that initiative has already 10 years >> James: Oh from MIT, yes. >> Yes, from MIT, right. That initiative has already 10 years old in Uruguay, and now it has evolved also to retired people. So it's a kind of going towards the digital society. >> Excellent, I have to wrap it up Fernando, that's great you have a lot of follow on work. This is great, so clearly a lot of very advanced research is being done all over the world. I had the previous guest from South Africa. You from Uruguay so really south of the Equator. There's far more activity in big data than, we, here in the northern hemisphere, Europe and North America realize so I'm very impressed. And I look forward to hearing more from Quanam and through your provider, Hortonworks. Well, thank you very much. >> Thank you and thanks for the chance. >> It was great to have you here on theCUBE. I'm James Kobielus, we're here at DataWorks Summit, in Berlin and we'll be talking to another guest fairly soon. (mood music)