from the cube studios in Palo Alto in Boston bringing you data-driven insights from the cube and ETR this is breaking analysis with Dave vellante over the past decade cloudflare has built a Global Network that has the potential to become the fourth us-based hyperscale class cloud in our view the company is building a durable Revenue model with hooks into many important markets these include the more mature DDOS protection space to other growth sectors such as zero trust a serverless platform for application development and an increasing number of services such as database and object storage and other network services in essence cloudflare could be thought of as a giant distributed supercomputer that can connect multiple clouds and act as a highly efficient scheduling engine at scale its disruptive DNA is increasingly attracting novel startups and established Global firms alike looking for Reliable secure high performance low latency and more cost-effective alternatives to AWS and Legacy infrastructure Solutions hello and welcome to this week's wikibon Cube insights powered by ETR in this breaking analysis we initiate our deeper coverage of cloudflare we'll briefly explain our take on the company and its unique business model we'll then share some peer comparisons with both the financial snapshot and some fresh ETR survey data finally we'll share some examples of how we think cloudflare could be a disruptive force with a super cloud-like offering that in many respects is what multi-cloud should have been cloudflare has been on our peripheral radar Ben Thompson and many others have written about their disruptive business model and recently a breaking analysis follower who will remain anonymous emailed with some excellent insights on cloudflare that prompted us to initiate more detailed coverage let's first take a look at how cloudflare seize the world in terms of its view of a modern stack this is a graphic from cloudflare that shows a simple three-layer Stack comprising Storage and compute the lower level and application layer and the network and their key message is basically that the big four hyperscalers have replaced the on-prem leaders apps have been satisfied and that mess of network that you see and Security in the upper left can now be handled all by cloudflare and the stack can be rented via Opex versus requiring heavy capex investment so okay somewhat of a simplified view is those companies on the the left are you know not standing still and we're going to come back to that but cloudflare has done something quite amazing I mean it's been a while since we've invoked Russ hanneman of Silicon Valley Fame on breaking analysis but remember when he was in a meeting one of his first meetings if not the first with Richard Hendricks it was the whiz kid on the show Silicon Valley and hanneman said something like if you had a blank check and you could build anything in the world what would it be and Richard's answer was basically a new internet and that led to Pied Piper this peer-to-peer Network powered by decentralized devices and and iPhones and this amazing compression algorithm that enabled high-speed data movement and low latency uh up to no low latency access across the network well in a way that's what cloudflare has built its founding premise reimagined how the internet should be built with a consistent set of server infrastructure where each server had lots of cores lots of dram lots of cash fast ssds and plenty of network connectivity and bandwidth and well this picture makes it look like a bunch of dots and points of presence on a map which of course it is there's a software layer that enables cloudflare to efficiently allocate resources across this Global Network the company claims that it's Network utilization is in the 70 percent range and it has used its build out to enter the technology space from the bottoms up offering for example free tiers of services to users with multiple entry points on different services and selling then more services over time to a customer which of course drives up its average contract value and its lifetime value at the same time the company continues to innovate and add new services at a very rapid cloud-like Pace you can think of cloudflare's initial Market entry as like a lightweight Cisco as a service the company's CFO actually he uses that term he calls it that which really must tick off Cisco who of course has a massive portfolio and a dominant Market position now because it owns the network cloudflare is a marginal cost of adding new Services is very small and goes towards zero so it's able to get software like economics at scale despite all this infrastructure that's building out so it doesn't have to constantly face the increasing infrastructure tax snowflake for example doesn't own its own network infrastructure as it grows it relies on AWS or Azure gcp and and while it gives the company obvious advantages it doesn't have to build out its own network it also requires them to constantly pay the tax and negotiate with hyperscalers for better rental rates now as previously mentioned Cloud Fair cloudflare claims that its utilization is very high probably higher than the hyperscalers who can spin up servers that they can charge for underutilized customer capacity cloudflare also has excellent Network traffic data that it can use to its Advantage with its Analytics the company has been rapidly innovating Beyond its original Core Business adding as I said before serverless zero trust offerings it has announced a database it calls its database D1 that's pretty creative and it's announced an object store called R2 that is S3 minus one both from the alphabet and the numeric I.E minus the egress cost saying no egress cost that's their big claim to fame and they've made a lot of marketing noise around about that and of course they've promised in our a D2 database which of course is R2D2 RR they've launched a developer platform cloudflare can be thought of kind of like first of all a modern CDN they've got a simpler security model that's how they compete for example with z-scaler that brings uh they also bring VPN sd-wan and DDOS protection services that are that are part of the network and they're less expensive than AWS that's kind of their sort of go to market and messaging and value proposition and they're positioning themselves as a neutral Network that can connect across multiple clouds now to be clear unlike AWS in particular cloudflare is not well suited to lift and shift your traditional apps like for instance sap Hana you're not going to run that in on cloudflare's platform rather the company started by making websites more secure and faster and it flew under the radar and much in the same way that clay Christensen described the disruption in the steel industry if you've seen that where new entrants picked off the low margin rebar business then moved up the stack we've used that analogy in the semiconductor business with arm and and even China cloudflare is running a similar playbook in the cloud and in the network so in the early part of the last decade as aws's ascendancy was becoming more clear many of us started thinking about how and where firms could compete and add value as AWS is becoming so dominant so for instance take an industry Focus you could do things like data sharing with snowflake eventually you know uh popularized you could build on top of clouds again snowflake is doing that as are others you could build private clouds and of course connect to hybrid clouds but not many had the wherewithal and or the hutzpah to build out a Global Network that could serve as a connecting platform for cloud services cloudflare has traction in the market as it adds new services like zero trust and object store or database its Tam continues to grow here's a quick snapshot of cloudflare's financials relative to Z scalar which is both a competitor and a customer fastly which is a smaller CDN and Akamai a more mature CDN slash Edge platform cloudflare and fastly both reported earnings this past week Cloud Fair Cloud flare surpassed a billion dollar Revenue run rate but they gave tepid guidance and the stock got absolutely crushed today which is Friday but the company's business model is sound it's growing close to 50 annually it has sas-like gross margins in the mid to high 70s and it's it it's got a very strong balance sheet and a 13x revenue run rate multiple in fact it's Financial snapshot is quite close to that of z-scaler which is kind of interesting which zinc sailor of course doesn't own its own network that's a pure play software company fastly is much smaller and growing more slowly than cloudflare hence its lower multiple well Akamai as you can see is a more mature company but it's got a nice business now on its earnings call this week cloudflare announced that its head of sales was stepping down and the company has brought in a new leader to take the firm to five billion dollars in sales I think actually its current sales leader felt like hey you know my work is done here bring on somebody else to take it to the next level the company is promising to be free cash flow positive by the end of the year and is working hard toward its long-term financial model or so working towards sorry it's a long-term financial model with gross margin Targets in the mid 70s it's targeting 20 non-gaap operating margins so so solid you know very solid not like completely off the charts but you know very good and to our knowledge it has not committed to a long-term growth rate but at that sort of operating profit level you would like to see growth be consistently at least in the 20 range so they could at least be a rule of 40 company or perhaps even even five even higher if they're going to continue to command a premium valuation okay let's take a look at the ETR data ETR is very positive on cloudflare and has recently published a report on the company like many companies cloudflare is seeing an across the board slowdown in spending velocity we've reported on this quite extensively using the ETR data to quantify the degree to that Slowdown and on the data set with ETR we see that many customers they're shifting their spend to Flat spend you know plus or minus let's say you know single digits you know two three percent or even zero or in the market we're seeing a shift from paid to free tiers remember cloudflare offers a lot of free services as you're seeing customers maybe turn off the pay for a while and going with the freebie but we're also seeing some larger customers in the data and the fortune 1000 specifically they're actually spending more which was confirmed on cloudflare's earnings call they did say everything across the board was softer but they did also indicate that some of their larger customers are actually growing faster than their smaller customers and their churn is very very low here's a two-dimensional graphic we'd like to share this view a lot it's got Net score or spending momentum on the vertical axis and overlap or pervasiveness in the survey on the horizontal axis and this cut isolates three segments in the etrs taxonomy that cloudflare plays in Cloud security and networking now the table inserted in that upper left there shows the raw data which informs the position of each company in the dots with Net score in the ends listed in that rightmost column the red dotted line indicates a highly elevated Net score and finally we posted the breakdown those colors in the bottom right of cloudflare's Net score the lime green that's new adoptions the forest green is we're spending more six percent or more the gray is flat plus or minus uh five percent and you can see that the majority of customers you can see that's the majority of the customers that gray area the pink is we're spending Less in other words down six percent or worse and the bright red is churn which is minimal one percent very good indicator for for cloudflare what you do to get etr's proprietary Net score and they've done this for many many quarters so we have that time series data you subtract the Reds from the greens and that's Net score cloudflare is at 39 just under that magic red line now note that cloudflare and zscaler are right on top of each other Cisco has a dominant position on the x-axis that cloudflare and others are eyeing AWS is also dominant but note that its Net score is well above the red dotted line it's incredible Palo Alto networks is also very impressive it's got both a strong presence on the horizontal axis and it's got a Net score that's pretty comparable to cloudflare and z-scaler to much smaller companies Akamai is actually well positioned for a reasonably mature company and you can see fastly ATT Juniper and F5 have far less spending momentum on their platforms than does cloudflare but at least they are in positive Net score territory so what's going to be really interesting to see is whether cloudflare can continue to hold this momentum or even accelerate it as we've seen with some other clouds as it scales its Network and keeps adding more and more services cloudflare has a couple of potential strategic vectors that we want to talk about and it'll be going to be interesting to see how that plays out Now One path is to compete more directly as a Cloud Player offering secure access Edge services like firewall as a service and zero Trust Services like data loss prevention email security from its area one acquisition and other zero trust offerings as well as Network Services like routing and network connectivity this is The Sweet Spot of the company load balancing many others and then add in things like Object Store and database Services more Edge services in the future it might be telecom like services such as Network switching for offices so that's one route and cloudflare is clearly on that path more services more cohorts at innovating and and growing the company and bringing in more Revenue increasing acvs and and increasing long-term value and keeping retention high now the other Vector is what we're just going to refer to as super cloud as an enabler of cross-cloud infrastructure this is new value uh relative to the former Vector that we were just talking about now the title of this episode is what multi-cloud should have been meaning cloudflare could be the control plane providing a consistent experience across clouds one that is fast and secure at global scale now to give you Insight on this let's take a look at some of the comments made by Matthew Prince the CEO and co-founder of cloudflare cloudflare put its R2 Object Store into public beta this past May and I believe it's storing around a petabyte of data today I think that's what they said in their call here's what Prince said about that quote we are talking to very large companies about moving more and more of their stored objects to where we can store that with R2 and one of the benefits is not only can we help them save money on the egress fees but it allows them to then use those object stores or objects across any of the different Cloud platforms they're that they're using so by being that neutral third party we can let people adopt a little bit of Amazon a little bit of Microsoft a little bit of Google a little bit of SAS vendors and share that data across all those different places so what's interesting about this in the super cloud context is it suggests that customers could take the best of each Cloud to power their digital businesses I might like AWS for in redshift for my analytic database or I love Google's machine learning Microsoft's collaboration and I'd like a consistent way to connect those resources but of course he's strongly hinting and has made many public statements that aws's egress fees are a blocker to that vision now at a recent investor event Matthew Prince added some color to this concept when he talked about one metric of success being how much R2 capacity was consumed and how much they sold but perhaps a more interesting Benchmark is highlighted by the following statement that he made he said a completely different measure of success for R2 is Andy jassy says I'm sick and tired of these guys meaning cloudflare taking our objects away we're dropping our egress fees to zero I would be so excited because we've then unlocked the ability to be the network that interconnects the cloud together now of course it would be Adam solipski who would be saying that or maybe Andy Jesse you know still watching over AWS and I think it's highly unlikely that that's going to happen anytime soon and that of course but but in theory gets us closer to the super cloud value proposition and to further drive that point home and we're paraphrasing a little bit his comments here he said something the effect of quote customers need one consistent control plane across clouds and we are the neutral Network that can be consistent no matter which Cloud you're using interesting right that Prince sees the world that's similar to if not nearly identical to the concepts that the cube Community has been putting forth around supercloud now this vision is a ways off let's be real Prince even suggested that his initial vision of an application running across multiple clouds you know that's like super cloud Nirvana isn't what customers are doing today that's that's really hard to do and perhaps you know it's never going to happen but there's a little doubt that cloudflare could be and is positioning itself as that cross-cloud control plane it has the network economics and the business model levers to pull it's got an edge up on the competition at the edge pun intended cloudflare is the definition of Edge and it's distributed platform it's decentralized platform is much better suited for Edge workloads than these giant data centers that are you know set up to to try and handle that today the the hyperscalers are building out you know their Edge networks things like outposts you know going out to the edge and other local zones Etc now cloudflare is increasingly competitive to the hyperscalers and those traditional Stacks that it depositioned on an earlier slide that we showed but you know the likes of AWS and Dell and hpe and Cisco and those others they're not sitting in their hands they have a huge huge customer install bases and they are definitely a moving Target they're investing and they're building out their own Super clouds with really robust stacks as well let's face it it's going to take a decade or more for Enterprises to adopt a developer platform or a new database Cloud plus cloudflare's capabilities when compared to incumbent stacks and the hyperscalers is much less robust in these areas and even in storage you know despite all the great conversation that R2 generated and the buzz you take a specialist like Wasabi they're more mature they're more functional and they're way cheaper even than cloudflare so you know it's not a fake a complete that cloudflare is going to win in those markets but we love the disruption and if cloudflare wants to be the fourth us-based hyperscaler or join the the big four as the as the fifth if we put Alibaba in the mix it's got a lot of work to do in the ecosystem by its own admission as much to learn and is part of the value by the way that it sees in its area one acquisition it's email security company that it bought but even in that case much of the emphasis has been on reseller channels compare that to the AWS ecosystem which is not only a channel play but is as much an innovation flywheel filling gaps where companies like snowflake Thrive side by side with aws's data stores as well all the on-prem stacks are building hybrid connections to AWS and other clouds as a means of providing consistent experiences across clouds indeed many of them see what they call cross-cloud services or what we call super cloud hyper cloud or whatever you know Mega Cloud you want to call it we use super cloud they are really eyeing that opportunity so very few companies frankly are not going after that space but we're going to close with this cloudflare is one of those companies that's in a position to wake up each morning and ask who can we disrupt today and very few companies are in a position to disrupt the hyperscalers to the degree that cloudflare is and that my friends is going to be fascinating to watch unfold all right let's call it a wrap I want to thank Alex Meyerson who's on production and manages the podcast as well as Ken schiffman who's our newest addition to the Boston Studio Kristen Martin and Cheryl Knight help us get the word out on social media and in our newsletters and Rob Hof is our editor-in-chief over at silicon angle thank you to all remember all these episodes are available as podcasts wherever you listen all you're going to do is search breaking analysis podcasts I publish each week on wikibon.com and siliconangle.com you can email me at david.velante at siliconangle.com or DM me at divalante if you comment on my LinkedIn posts and please do check out etr.ai they got the best survey data in the Enterprise Tech business this is Dave vellante for the cube insights powered by ETR thank you very much for watching and we'll see you next time on breaking analysis

>> From theCUBE Studios in Palo Alto and Boston, bringing you data driven insights from theCUBE and ETR. This is breaking analysis with Dave Vellante. >> The technology spending outlook is not pretty and very much unpredictable right now. The negative sentiment is of course being driven by the macroeconomic factors in earnings forecasts that have been coming down all year in an environment of rising interest rates. And what's worse, is many people think earnings estimates are still too high. But it's understandable why there's so much uncertainty. I mean, technology is still booming, digital transformations are happening in earnest, leading companies have momentum and they got cash runways. And moreover, the CEOs of these leading companies are still really optimistic. But strong guidance in an environment of uncertainty is somewhat risky. Hello and welcome to this week's Wikibon CUBE Insights Powered by ETR. In this breaking analysis, we share takeaways from ETR'S latest spending survey, which was released to their private clients on October 21st. Today, we're going to review the macro spending data. We're going to share where CIOs think their cloud spend is headed. We're going to look at the actions that organizations are taking to manage uncertainty and then review some of the technology companies that have the most positive and negative outlooks in the ETR data set. Let's first look at the sample makeup from the latest ETR survey. ETR captured more than 1300 respondents in this latest survey. Its highest figure for the year and the quality and seniority of respondents just keeps going up each time we dig into the data. We've got large contributions as you can see here from sea level executives in a broad industry focus. Now the survey is still North America centric with 20% of the respondents coming from overseas and there is a bias toward larger organizations. And nonetheless, we're still talking well over 400 respondents coming from SMBs. Now ETR for those of you who don't know, conducts a quarterly spending intention survey and they also do periodic drilldowns. So just by the way of review, let's take a look at the expectations in the latest drilldown survey for IT spending. Before we look at the broader technology spending intentions survey data, followers of this program know that we reported on this a couple of weeks ago, spending expectations that peaked last December at 8.3% are now down to 5.5% with a slight uptick expected for next year as shown here. Now one CIO in the ETR community said these figures could be understated because of inflation. Now that's an interesting comment. Real GDP in the US is forecast to be around 1.5% in 2022. So these figures are significantly ahead of that. Nominal GDP is forecast to be significantly higher than what is shown in that slide. It was over 9% in June for example. And one would interpret that survey respondents are talking about real dollars which reflects inflationary factors in IT spend. So you might say, well if nominal GDP is in the high single digits this means that IT spending is below GDP which is usually not the case. But the flip side of that is technology tends to be deflationary because prices come down over time on a per unit basis, so this would be a normal and even positive trend. But it's mixed right now with prices on hard to find hardware, they're holding more firms. Software, you know, software tends to be driven by lock in and competition and switching costs. So you have those countervailing factors. Services can be inflationary, especially now as wages rise but certain sectors like laptops and semis and NAND are seeing less demand and maybe even some oversupply. So the way to look at this data is on a relative basis. In other words, IT buyers are reporting 280 basis point drop in spending sentiment from the end of last year. Now, something that we haven't shared from the latest drilldown survey which we will now is how IT bar buyers are thinking about cloud adoption. This chart shows responses from 419 IT execs from that drilldown and depicts the percentage of workloads their organizations have in the cloud today and what the expectation is through years from now. And you can see it's 27% today and it's nearly 50% in three years. Now the nuance is if you look at the question, that ETRS, it's they asked about IaaS and PaaS, which to some could include on-prem. Now, let me come back to that. In particular, financial services, IT, telco and retail and services industry cited expectations for the future for three years out that we're well above the average of the mean adoption levels. Regardless of how you interpret this data there's most certainly plenty of public cloud in the numbers. And whether you believe cloud is an operating environment or a place out there in the cloud, there's plenty of room for workloads to move into a cloud model well beyond mid this decade. So you know, as ho hum as we've been toward recent as-a-service models announced from the likes of HPE with GreenLake and Dell with APEX, the timing of those offerings may be pretty good actually. Now let's expand on some of the data that we showed a couple weeks ago. This chart shows responses from 282 execs on actions their organizations are taking over the next three months. And the Deltas are quite traumatic from the early part of this charter than the left hand side. The brown line is hiring freezes, the black line is freezing IT projects, and the green line is hiring increases and that red line is layoffs. And we put a box around the sort of general area of the isolation economy timeframe. And you can see the wild swings on this chart. By mid last summer, people were kickstarting things and more hiring was going on and the black line shows IT project freezes, you know, came way down. And now, or on the way back up as our hiring freezes. So we're seeing these wild swings in organizational actions and strategies which underscores the lack of predictability. As with supply chains around the world, this is likely due to the fact that organizations, pre pandemic they were optimized for efficiency, not a lot of waste rather than business resilience. Meaning, you know, there's again not a lot of fluff in the system or if there was it got flushed out during the pandemic. And so the need for productivity and automation is becoming increasingly important, especially as actions that solely rely on headcount changes are very, very difficult to manage. Now, let's dig into some of the vendor commentary and take a look at some of the names that have momentum and some of the others possibly facing headwinds. Here's a list of companies that stand out in the ETR survey. Snowflake, once again leads the pack with a positive spending outlook. HashiCorp, CrowdStrike, Databricks, Freshworks and ServiceNow, they round out the top six. Microsoft, they seem to always be in the mix, as do a number of other security and related companies including CyberArk, Zscaler, CloudFlare, Elastic, Datadog, Fortinet, Tenable and to a certain extent Akamai, you can kind of put them sort of in that group. You know, CDN, they got to worry about security. Everybody worries about security, but especially the CDNs. Now the other software names that are highlighted here include Workday and Salesforce. On the negative side, you can see Dynatrace saw some negatives in the latest survey especially around its analytics business. Security is generally holding up better than other sectors but it's still seeing greater levels of pressure than it had previously. So lower spend. And defections relative to its observability peers, that's really for Dynatrace. Now the other one that was somewhat surprising is IBM. You see the IBM was sort of in that negative realm here but IBM reported an outstanding quarter this past week with double digit revenue growth, strong momentum in software, consulting, mainframes and other infrastructure like storage. It's benefiting from the Kyndryl restructuring and it's on track IBM to deliver 10 billion in free cash flow this year. Red Hat is performing exceedingly well and growing in the very high teens. And so look, IBM is in the midst of a major transformation and it seems like a company that is really focused now with hybrid cloud being powered by Red Hat and consulting and a decade plus of AI investments finally paying off. Now the other big thing we'll add is, IBM was once an outstanding acquire of companies and it seems to be really getting its act together on the M&A front. Yes, Red Hat was a big pill to swallow but IBM has done a number of smaller acquisitions, I think seven this year. Like for example, Turbonomic, which is starting to pay off. Arvind Krishna has the company focused once again. And he and Jim J. Kavanaugh, IBM CFO, seem to be very confident on the guidance that they're giving in their business. So that's a real positive in our view for the industry. Okay, the last thing we'd like to do is take 12 of the companies from the previous chart and plot them in context. Now these companies don't necessarily compete with each other, some do. But they are standouts in the ETR survey and in the market. What we're showing here is a view that we like to often show, it's net score or spending velocity on the vertical axis. And it's a measure, that's a measure of the net percentage of customers that are spending more on a particular platform. So ETR asks, are you spending more or less? They subtract less from the mores. I mean I'm simplifying, but that's what net score is. Now in the horizontal axis, that is a measure of overlap which is which measures presence or pervasiveness in the dataset. So bigger the better. We've inserted a table that informs how the dots in the companies are positioned. These companies are all in the green in terms of net score. And that right most column in the table insert is indicative of their presence in the dataset, the end. So higher, again, is better for both columns. Two other notes, the red dotted line there you see at 40%. Anything over that indicates an highly elevated spending momentum for a given platform. And we purposefully took Microsoft out of the mix in this chart because it skews the data due to its large size. Everybody else would cluster on the left and Microsoft would be all alone in the right. So we take them out. Now as we noted earlier, Snowflake once again leads with a net score of 64%, well above the 40% line. Having said that, while adoption rates for Snowflake remains strong the company's spending velocity in the survey has come down to Earth. And many more customers are shifting from where they were last year and the year before in growth mode i.e. spending more year to year with Snowflake to now shifting more toward flat spending. So a plus or minus 5%. So that puts pressure on Snowflake's net score, just based on the math as to how ETR calculates, its proprietary net score methodology. So Snowflake is by no means insulated completely to the macro factors. And this was seen especially in the data in the Fortune 500 cut of the survey for Snowflake. We didn't show that here, just giving you anecdotal commentary from the survey which is backed up by data. So, it showed steeper declines in the Fortune 500 momentum. But overall, Snowflake, very impressive. Now what's more, note the position of Streamlit relative to Databricks. Streamlit is an open source python framework for developing data driven, data science oriented apps. And it's ironic that it's net score and shared in is almost identical to those of data bricks, as the aspirations of Snowflake and Databricks are beginning to collide. Now, however, the Databricks net score has held up very well over the past year and is in the 92nd percentile of its machine learning and AI peers. And while it's seeing some softness, like Snowflake in the Fortune 500, Databricks has steadily moved to the right on the X axis over the last several surveys even though it was unable to get to the public markets and do an IPO during the lockdown tech bubble. Let's come back to the chart. ServiceNow is impressive because it's well above the 40% mark and it has 437 shared in on this cut, the largest of any company that we chose to plot here. The only real negative on ServiceNow is, more large customers are keeping spending levels flat. That's putting a little bit pressure on its net score, but that's just conservatives. It's kind of like Snowflakes, you know, same thing but in a larger scale. But it's defections, the ServiceNow as in Snowflake as well. It's defections remain very, very low, really low churn below 2% for ServiceNow, in fact, within the dataset. Now it's interesting to also see Freshworks hit the list. You can see them as one of the few ITSM vendors that has momentum and can potentially take on ServiceNow. Workday, on this chart, it's the other big app player that's above the 40% line and we're only showing Workday HCM, FYI, in this graphic. It's Workday Financials, that offering, is below the 40% line just for reference. Now let's talk about CrowdStrike. We attended Falcon last month, CrowdStrike's user conference and we're very impressed with the product visio, the company's execution, it's growing partnerships. And you can see in this graphic, the ETR survey data confirms the company's stellar performance with a net score at 50%, well above the 40% mark. And importantly, more than 300 mentions. That's second only to ServiceNow, amongst the 12 companies that we've chosen to highlight here. Only Microsoft, which is not shown here, has a higher net score in the security space than CrowdStrike. And when it comes to presence, CrowdStrike now has caught up to Splunk in terms of pervasion in the survey. Now CyberArk and Zscaler are the other two security firms that are right at that 40% red dotted line. CyberArk for names with over a hundred citations in the security sector, is only behind Microsoft and CrowdStrike. Zscaler for its part in the survey is seeing strong momentum in the Fortune 500, unlike what we said for Snowflake. And its pervasion on the X-axis has been steadily increasing. Again, not that Snowflake and CrowdStrike compete with each other but they're too prominent names and it's just interesting to compare peers and business models. Cloudflare, Elastic and Datadog are slightly below the 40% mark but they made the sort of top 12 that we showed to highlight here and they continue to have positive sentiment in the survey. So, what are the big takeaways from this latest survey, this really quick snapshot that we've taken. As you know, over the next several weeks we're going to dig into it more and more. As we've previously reported, the tide is going out and it's taking virtually all the tech ships with it. But in many ways the current market is a story of heightened expectations coming down to Earth, miscalculations about the economic patterns and the swings and imperfect visibility. Leading Barclays analyst, Ramo Limchao ask the question to guide or not to guide in a recent research note he wrote. His point being, should companies guide or should they be more cautious? Many companies, if not most companies, are actually giving guidance. Indeed, when companies like Oracle and IBM are emphatic about their near term outlook and their visibility, it gives one confidence. On the other hand, reasonable people are asking, will the red hot valuations that we saw over the last two years from the likes of Snowflake, CrowdStrike, MongoDB, Okta, Zscaler, and others. Will they return? Or are we in for a long, drawn out, sideways exercise before we see sustained momentum? And to that uncertainty, we add elections and public policy. It's very hard to predict right now. I'm sorry to be like a two-handed lawyer, you know. On the one hand, on the other hand. But that's just the way it is. Let's just say for our part, we think that once it's clear that interest rates are on their way back down and we'll stabilize it under 4% and we have clarity on the direction of inflation, wages, unemployment and geopolitics, the wild swings and sentiment will subside. But when that happens is anyone's guess. If I had to peg, I'd say 18 months, which puts us at least into the spring of 2024. What's your prediction? You know, it's almost that time of year. Let's hear it. Please keep in touch and let us know what you think. Okay, that's it for now. Many thanks to Alex Myerson. He is on production and he manages the podcast for us. Ken Schiffman as well is our newest addition to the Boston Studio. Kristin Martin and Cheryl Knight, they help get the word out on social media and in our newsletters. And Rob Hoff is our EIC, editor-in-chief over at SiliconANGLE. He does some wonderful editing for us. Thank you all. Remember all these episodes, they are available as podcasts. Wherever you listen, just search breaking analysis podcast. I publish each week on wikibon.com and siliconangle.com. Or you can email me at david.vellante@siliconangle.com or DM me @dvellante. Or feel free to comment on our LinkedIn posts. And please do check out etr.ai. They've got the best survey data in the enterprise tech business. If you haven't checked that out, you should. It'll give you an advantage. This is Dave Vellante for theCUBE Insights Powered by ETR. Thanks for watching. Be well and we'll see you next time on Breaking Analysis. (soft upbeat music)

>> From theCUBE studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> In our 2020 predictions post, we said that organizations would begin to operationalize their digital transformation experiments and POCs. We also said that based on spending data that cybersecurity companies like CrowdStrike and Okta were poised to rise above the rest in 2020, and we even said the S&P 500 would surpass 3,700 this year. Little did we know that we'd have a pandemic that would make these predictions a virtual lock, and, of course, COVID did blow us out of the water in some other areas, like our prediction that IT spending would increase plus 4% in 2020, when in reality, we have a dropping by 4%. We made a number of other calls that did pretty well, but I'll let you review last year's predictions at your leisure to see how we did. Hello, everyone. This is Dave Vellante and welcome to this week's Wikibon CUBE Insights powered by ETR. Erik Bradley of ETR is joining me again for this Breaking Analysis, and we're going to lay out our top picks for 2021. Erik, great to see you. Welcome back. Happy to have you on theCUBE, my friend. >> Always great to see you too, Dave. I'm excited about these picks this year. >> Well, let's get right into it. Let's bring up the first prediction here. Tech spending will rebound in 2021. We expect a 4% midpoint increase next year in spending. Erik, there are a number of factors that really support this prediction, which of course is based on ETR's most recent survey work, and we've listed a number of them here in this slide. I wonder if we can talk about that a little bit, the pace of the vaccine rollout. I've called this a forced march to COVID, but I can see people doubling down on things that are working. Productivity improvements are going to go back into the business. People are going to come back to the headquarters and that maybe is going to spur infrastructure on some pent-up demand, and work from home, we're going to talk about that. What are your thoughts on this prediction? >> Well, first of all, you weren't wrong last year. You were just, (laughs) you were just delayed. Just delayed a little bit, that's all. No, very much so. Early on, just three months ago, we were not seeing this optimism. The most recent survey, however, is capturing 4%. I truly believe that still might be a little bit mild. I think it can go even higher, and that's going to be driven by some of the things you've said about. This is a year where a lot of spending was paused on machine learning, on automation, on some of these projects that had to be stopped because of what we all went through. Right now, that is not a nice to have, it's a must have, and that spending is going quickly. There's a rapid pace on that spending, so I do think that's going to push it and, of course, security. We're going to get to this later on so I don't want to bury the lede, but with what's happening right now, every CISO I speak to is not panicked, but they are concerned and there will definitely be increased security spending that might push this 4% even higher. >> Yeah, and as we've reported as well, the survey data shows that there's less freezing of IT, there are fewer layoffs, there's more hiring, we're accelerating IT deployments, so that, I think, 34% last survey, 34% of organizations are accelerating IT deployments over the next three months, so that's great news. >> And also your point too about hiring. I was remiss in not bringing that up because we had layoffs and we had freezes on hiring. Both of that is stopping. As you know, as more head count comes in, whether that be from home or whether that be in your headquarters, both of those require support and require spending. >> All right, let's bring up the next prediction. Remote worker trends are going to become fossilized, settling in at an average of 34% by year-end 2021. Now, I love this chart, you guys. It's been amazingly consistent to me, Erik. We're showing data here from ETR's latest COVID survey. So it shows that prior to the pandemic, about 15 to 16% of employees on average worked remotely. That jumped to where we are today and well into the 70s, and we're going to stay close to that, according to the ETR data, in the first half of 2021, but by the end of the year, it's going to settle in at around 34%. Erik, that's double the pre-pandemic numbers and that's been consistent in your surveys over the past six month, and even within the sub-samples. >> Yeah, super surprised by the consistency, Dave. You're right about that. We were expecting the most recent data to kind of come down, right? We see the vaccines being rolled out. We kind of thought that that number would shift, but it hasn't, it has been dead consistent, and that's just from the data perspective. What we're hearing from the interviews and the feedback is that's not going to change, it really isn't, and there's a main reason for that. Productivity is up, and we'll talk about that in a second, but if you have productivity up and you have employees happy, they're not commuting, they're working more, they're working effectively, there is no reason to rush. And now imagine if you're a company that's trying to hire the best talent and attract the best talent but you're also the only company telling them where they have to live. I mean, good luck with that, right? So even if a few of them decide to make this permanent, that's something where you're going to really have to follow suit to attract talent. >> Yeah, so let's talk about that. Productivity leads us to our next prediction. We can bring that up. Number three is productivity increases are going to lead organizations to double down on the successes of 2020 and productivity apps are going to benefit. Now, of course, I'm always careful to cautious to interpret when you ask somebody by how much did productivity increase. It's a very hard thing to estimate depending on how you measure it. Is it revenue per employee? Is it profit? But nonetheless, the vast majority of people that we talk to are seeing productivity is going up. The productivity apps are really the winners here. Who do you see, Erik, as really benefiting from this trend? This year we saw Zoom, Teams, even Webex benefit, but how do you see this playing out in 2021? >> Well, first of all, the real beneficiaries are the companies themselves because they are getting more productivity, and our data is not only showing more productivity, but that's continuing to increase over time, so that's number one. But you're 100% right that the reason that's happening is because of the support of the applications and what would have been put in place. Now, what we do expect to see here, early on it was a rising tide lifted all boats, even Citrix got pulled up, but over time you realize Citrix is really just about legacy applications. Maybe that's not really the virtualization platform we need or maybe we just don't want to go that route at all. So the ones that we think are going to win longer term are part of this paradigm shift. The easiest one to put out as example is DocuSign. Nobody is going to travel and sit in an office to sign a paper ever again. It's not happening. I don't care if you go back to the office or you go back to headquarters. This is a paradigm shift that is not temporary. It is permanent. Another one that we're seeing is Smartsheet. Early on it started in. I was a little concerned about it 'cause it was a shadow IT type of a company where it was just spreading and spreading and spreading. It's turned out that this, the data on Smartsheet is continuing to be strong. It's an effective tool for project management when you're remotely working, so that's another one I don't see changing anytime. The other one I would call out would be Twilio. Slightly different, yes. It's more about the customer experience, but when you look at how many brick and mortar or how many in-person transactions have moved online and will stay there, companies like Twilio that support that customer experience, I'll throw out a Qualtrics out there as well, not a name we hear about a lot, but that customer experience software is a name that needs to be watched going forward. >> What do you think's going to happen to Zoom and Teams? Certainly Zoom just escalated this year, a huge ascendancy, and Teams I look at a little differently 'cause it's not just video conferencing, and both have done really, really well. How do you interpret the data that you're seeing there? >> There's no way around it, our data is decelerating quickly, really quickly. We were kind of bullish when Zoom first came out on the IPO prospects. It did very well. Obviously what happened in this remote shift turned them into an absolute overnight huge success. I don't see that continuing going forward, and there's a reason. What we're seeing and hearing from our feedback interviews is that now that people recognize this isn't temporary and they're not scrambling and they need to set up for permanency, they're going to consolidate their spend. They don't need to have Teams and Zoom. It's not necessary. They will consolidate where they can. There's always going to be the players that are going to choose Slack and Zoom 'cause they don't want to be on Microsoft architecture. That's fine, but you and I both know that the majority of large enterprises have Microsoft already. It's bundled in in pricing. I just don't see it happening. There's going to be M&A out there, which we can talk about again soon, so maybe Zoom, just like Slack, gets to a point where somebody thinks it's worthwhile, but there's a lot of other video conferencing out there. They're trying to push their telephony. They're trying to push their mobile solutions. There's a lot of companies out there doing it, so we'll see, but the current market cap does not seem to make sense in a permanent remote work situation. >> I think I'm inferring Teams is a little different because it's Microsoft. They've got this huge software estate they can leverage. They can bundle. Now, it's going to be interesting to see how and if Zoom can then expand its TAM, use its recent largesse to really enter potentially new markets. >> It will be, but listen, just the other day there was another headline that one of Zoom's executives out in China was actually blocking content as per directed by the Chinese government. Those are the kind of headlines that just really just get a little bit difficult when you're running a true enterprise size. Zoom is wonderful in the consumer space, but what I do is I research enterprise technology, and it's going to be really, really difficult to make inroads there with Microsoft. >> Yep. I agree. Okay, let's bring up number four, prediction number four. Permanent shifts in CISO strategies lead to measurable share shifts in network security. So the remote work sort of hyper-pivot, we'll call it, it's definitely exposed us. We've seen recent breaches that underscore the need for change. They've been well-publicized. We've talked a lot about identity access management, cloud security, endpoint security, and so as a result, we've seen the upstarts, and just a couple that we called, CrowdStrike, Okta, Zscaler has really benefited and we expect them to continue to show consistent growth, some well over 50% revenue growth. Erik, you really follow this space closely. You've been focused on microsegmentation and other, some of the big players. What are your thoughts here? >> Yeah, first of all, security, number one in spending overall when we started looking and asking people what their priority is going to be. That's not changing, and that was before the SolarWinds breach. I just had a great interview today with a CISO of a global hospitality enterprise to really talk about the implications of this. It is real. Him and his peers are not panicking but pretty close, is the way he put it, so there is spend happening. So first of all, to your point, continued on Okta, continued on identity access. See no reason why that changes. CrowdStrike, continue. What this is going to do is bring in some new areas, like we just mentioned, in network segmentation. Illumio is a pure play in that name that doesn't have a lot of citations, but I have watched over the last week their net spending score go from about 30 to 60%, so I am watching in real time, as this data comes in in the later part of our survey, that it's really happening Forescout is another one that's in there. We're seeing some of the zero trust names really picking up in the last week. Now, to talk about some of the more established names, yeah, Cisco plays in this space and we can talk about Cisco and what they're doing in security forever. They're really reinventing themselves and doing a great job. Palo Alto was in this space as well, but I do believe that network and microsegmentation is going to be something that's going to continue. The other one I'm going to throw out that I'm hearing a lot about lately is user behavior analytics. People need to be able to watch the trends, compare them to past trends, and catch something sooner. Varonis is a name in that space that we're seeing get a lot of adoptions right now. It's early trend, but based on our data, Varonis is a name to watch in that area as well. >> Yeah, and you mentioned Cisco transitioning, reinventing themselves toward a SaaS player. Their subscription, Cisco's security business is a real bright spot for them. Palo Alto, every time I sit in on a VENN, which is ETR's proprietary roundtable, the CISOs, they love Palo Alto. They want to work, many of them, anyway, want to work with Palo Alto. They see them as a thought leader. They seem to be getting their cloud act together. Fortinet has been doing a pretty good job there and especially for mid-market. So we're going to see this equilibrium, best of breed versus the big portfolio companies, and I think 2021 sets up as a really interesting battle for those guys with momentum and those guys with big portfolios. >> I completely agree and you nailed it again. Palo Alto has this perception that they're really thought leaders in the space and people want to work with them, but let's not rule Cisco out. They have a much, much bigger market cap. They are really good at acquisitions. In the past, they maybe didn't integrate them as well, but it seems like they're getting their act together on that. And they're pushing now what they call SecureX, which is sort of like their own full-on platform in the cloud, and they're starting to market that, I'm starting to hear more about it, and I do think Cisco is really changing people's perception of them. We shall see going forward because in the last year, you're 100% right, Palo Alto definitely got a little bit more of the sentiment, of positive sentiment. Now, let's also realize, and we'll talk about this again in a bit, there's a lot of players out there. There will probably be continued consolidation in the security space, that we'll see what happens, but it's an area where spending is increasing, there is a lot of vendors out there to play with, and I do believe we'll see consolidation in that space. >> Yes. No question. A highly fragmented business. A lack of skills is a real challenge. Automation is a big watch word and so I would expect, which brings us, Erik, to prediction number five. Can be hard to do prediction posts without talking about M&A. We see the trend toward increased tech spending driving more IPOs, SPACs and M&A. We've seen some pretty amazing liquidity events this year. Snowflake, obviously a big one. Airbnb, DoorDash, outside of our enterprise tech but still notable. Palantir, JFrog, number of others. UiPath just filed confidentially and their CEO said, "Over the next 12 to 18 months, I would think Automation Anywhere is going to follow suit at some point." Hashicorp was a company we called out in our 2020 predictions as one to watch along with Snowflake and some others, and, Erik, we've seen some real shifts in observability. The ELK Stack gaining prominence with Elastic, ChaosSearch just raised 40 million, and everybody's going after 5G. Lots of M&A opportunities. What are your thoughts? >> I think if we're going to make this a prediction show, I'm going to say that was a great year, but we're going to even have a better year next year. There is a lot of cash on the balance sheet. There are low interest rates. There is a lot of spending momentum in enterprise IT. The three of those set up for a perfect storm of more liquidity events, whether it be continued IPOs, whether it could be M&A, I do expect that to continue. You mentioned a lot of the names. I think you're 100% right. Another one I would throw out there in that observability space, is it's Grafana along with the ELK Stack is really making changes to some of the pure plays in that area. I've been pretty vocal about how I thought Splunk was having some problems. They've already made three acquisitions. They are trying really hard to get back up and keep that growth trajectory and be the great company they always have been, so I think the observability area is certainly one. We have a lot of names in that space that could be taken out. The other one that wasn't mentioned, however, that I'd like to mention is more in the CDN area. Akamai being the grandfather there, and we'll get into it a little bit too, but CloudFlare has a huge market cap, Fastly running a little bit behind that, and then there's Limelight, and there's a few startups in that space and the CDN is really changing. It's not about content delivery as much as it is about edge compute these days, and they would be a real easy takeout for one of these large market cap names that need to get into that spot. >> That's a great call. All right, let's bring up number six, and this is one that's near and dear to my heart. It's more of a longer-term prediction and that prediction is in the 2020s, 75% of large organizations are going to re-architect their big data platforms, and the premise here is we're seeing a rapid shift to cloud database and cross-cloud data sharing and automated governance. And the prediction is that because big data platforms are fundamentally flawed and are not going to be corrected by incremental improvements in data lakes and data warehouses and data hubs, we're going to see a shift toward a domain-centric ownership of the data pipeline where data teams are going to be organized around data product or data service builders and embedded into lines of business. And in this scenario, the technology details and complexity will become abstracted. You've got hyper-specialized data teams today. They serve multiple business owners. There's no domain context. Different data agendas. Those, we think, are going to be subsumed within the business lines, and in the future, the primary metric is going to shift from the cost and the quality of the big data platform outputs to the time it takes to go from idea to revenue generation, and this change is going to take four to five years to coalesce, but it's going to begin in earnest in 2021. Erik, anything you'd add to this? >> I'm going to let you kind of own that one 'cause I completely agree, and for all the listeners out there, that was Dave's original thought and I think it's fantastic and I want to get behind it. One of the things I will say to support that is big data analytics, which is what people are calling it because they got over the hype of machine learning, they're sick of vendors saying machine learning, and I'm hearing more and more people just talk about it as we need big data analytics, we need 'em at the edge, we need 'em faster, we need 'em in real time. That's happening, and what we're seeing more is this is happening with vendor-agnostic tools. This isn't just AWS-aligned. This isn't just GCP-aligned or Azure-aligned. The winners are the Snowflakes. The winners are the Databricks. The winners are the ones that are allowing this interoperability, the portability, which fully supports what you're saying. And then the only other comment I would make, which I really like about your prediction, is about the lines of business owning it 'cause I think this is even bigger. Right now, we track IT spending through the CIO, through the CTO, through IT in general. IT spending is actually becoming more diversified. IT spending is coming under the purview of marketing, it's coming under the purview of sales, so we're seeing more and more IT spending, but it's happening with the business user or the business lines and obviously data first, so I think you're 100% right. >> Yeah, and if you think about it, we've contextualized our operational systems, whether it's the CRM or the supply chain, the logistics, the business lines own their respective data. It's not true for the analytics systems, and we talked about Snowflake and Databricks. I actually see these two companies who were sort of birds of a feather in the early days together, applying Databricks machine learning on top of Snowflake, I actually see them going in diverging places. I see Databricks trying to improve on the data lake. I see Snowflake trying to reinvent the concept of data warehouse to this global mesh, and it's going to be really interesting to see how that shakes out. The data behind Snowflake, obviously very, very exciting. >> Yeah, it's just, real quickly to add on that if we have time, Dave. >> Yeah, sure. >> We all know the valuation of Snowflake, one of the most incredible IPOs I've seen in a long time. The data still supports it. It still supports that growth. Unfortunately for Databricks, their IPO has been a little bit more volatile. If you look at their stock chart every time they report, it's got a little bit of a roller coaster ride going on, and our most recent data for Databricks is actually decelerating, so again, I'm going to use the caveat that we only have about 950 survey responses in. We'll probably get that up to 1,300 or so, so it's not done yet, but right now we are putting Databricks into a category where we're seeing it decelerate a little bit, which is surprising for a company that's just right out of the gate. >> Well, it's interesting because I do see Databricks as more incremental on data lakes and I see Snowflake as more transformative, so at least from a vision standpoint, we'll see if they can execute on that. All right, number seven, let's bring up number seven. This is talking about the cloud, hybrid cloud, multi-cloud. The battle to define hybrid and multi-cloud is going to escalate in 2021. It's already started and it's going to create bifurcated CIO strategies. And, Erik, spending data clearly shows that cloud is continuing its steady margin share gains relative to on-prem, but the definitions of the cloud, they're shifting. Just a couple of years ago, AWS, they never talk about hybrid, just like they don't talk about multi-cloud today, yet AWS continues now to push into on-prem. They treat on-prem as just another node at the edge and they continue to win in the marketplace despite their slower growth rates. Still, they're so large now. 45 billion or so this year. The data is mixed. This ETR data shows that just under 50% of buyers are consolidating workloads, and then a similar, in the cloud workloads, and a similar percentage of customers are spreading evenly across clouds, so really interesting dynamic there. Erik, how do you see it shaking out? >> Yeah, the data is interesting here, and I would actually state that overall spend on the cloud is actually flat from last year, so we're not seeing a huge increase in spend, and coupled with that, we're seeing that the overall market share, which means the amount of responses within our survey, is increasing, certainly increasing. So cloud usage is increasing, but it's happening over an even spectrum. There's no clear winner of that market share increase. So they really, according to our data, the multi-cloud approach is happening and not one particular winner over another. That's just from the data perspective that various do point on AWS. Let's be honest, when they first started, they wanted all the data. They just want to take it from on-prem, put it in their data center. They wanted all of it. They never were interested in actually having interoperability. Then you look at an approach like Google. Google was always about the technology, but not necessarily about the enterprise customer. They come out with Anthos which is allowing you to have interoperability in more cloud. They're not nearly as big, but their growth rate is much higher. Law of numbers, of course. But it really is interesting to see how these cloud players are going to approach this because multi-cloud is happening whether they like it or not. >> Well, I'm glad you brought up multi-cloud in a context of what the data's showing 'cause I would agree we're, and particularly two areas that I would call out in ETR data, VMware Cloud on AWS as well as VM Cloud Foundation are showing real momentum and also OpenStack from Red Hat is showing real progress here and they're making moves. They're putting great solutions inside of AWS, doing some stuff on bare metal, and it's interesting to see. VMware, basically it's the VMware stack. They want to put that everywhere. Whereas Red Hat, similarly, but Red Hat has the developer angle. They're trying to infuse Red Hat in throughout everybody's stack, and so I think Red Hat is going to be really interesting to, especially to the extent that IBM keeps them, sort of lets them do their own thing and doesn't kind of pollute them. So, so far so good there. >> Yeah, I agree with that. I think you brought up the good point about it being developer-friendly. It's a real option as people start kicking a little bit more of new, different developer ways and containers are growing, growing more. They're not testing anymore, but they're real workloads. It is a stack that you could really use. Now, what I would say to caveat that though is I'm not seeing any net new business go to IBM Red Hat. If you were already aligned with that, then yes, you got to love these new tools they're giving you to play with, but I don't see anyone moving to them that wasn't already net new there and I would say the same thing with VMware. Listen, they have a great entrenched base. The longer they can kick that can down the road, that's fantastic, but I don't see net new customers coming onto VMware because of their alignment with AWS. >> Great, thank you for that. That's a good nuance. Number eight, cloud, containers, AI and ML and automation are going to lead 2021 spending velocity, so really is those are the kind of the big four, cloud, containers, AI, automation, And, Erik, this next one's a bit nuanced and it supports our first prediction of a rebound in tech spending next year. We're seeing cloud, containers, AI and automation, in the form of RPA especially, as the areas with the highest net scores or spending momentum, but we put an asterisk around the cloud because you can see in this inserted graphic, which again is preliminary 'cause the survey's still out in the field and it's just a little tidbit here, but cloud is not only above that 40% line of net score, but it has one of the higher sector market shares. Now, as you said, earlier you made a comment that you're not necessarily seeing the kind of growth that you saw before, but it's from a very, very large base. Virtually every sector in the ETR dataset with the exception of outsourcing and IT consulting is seeing meaningful upward spending momentum, and even those two, we're seeing some positive signs. So again, with what we talked about before, with the freezing of the IT projects starting to thaw, things are looking much, much better for 2021. >> I'd agree with that. I'm going to make two quick comments on that, one on the machine learning automation. Without a doubt, that's where we're seeing a lot of the increase right now, and I've had a multiple number of people reach out or in my interviews say to me, "This is very simple. These projects were slated to happen in 2020 and they got paused. It's as simple as that. The business needs to have more machine learning, big data analytics, and it needs to have more automation. This has just been paused and now it's coming back and it's coming back rapidly." Another comment, I'm actually going to post an article on LinkedIn as soon as we're done here. I did an interview with the lead technology director, automation director from Disney, and this guy obviously has a big budget and he was basically saying UiPath and Automation Anywhere dominate RPA, and that on top of it, the COVID crisis greatly accelerated automation, greatly accelerated it because it had to happen, we needed to find a way to get rid of these mundane tasks, we had to put them into real workloads. And another aspect you don't think about, a lot of times with automation, there's people, employees that really have friction. They don't want to adopt it. That went away. So COVID really pushed automation, so we're going to see that happening in machine learning and automation without a doubt. And now for a fun prediction real quick. You brought up the IT outsourcing and consulting. This might be a little bit more out there, the dark horse, but based on our data and what we're seeing and the COVID information about, you said about new projects being unwrapped, new hiring happening, we really do believe that this might be the bottom on IT outsourcing and consulting. >> Great, thank you for that, and then that brings us to number nine here. The automation mandate is accelerating and it will continue to accelerate in 2021. Now, you may say, "Okay, well, this is a lay-up," but not necessarily. UiPath and Automation Anywhere go public and Microsoft remains a threat. Look, UiPath, I've said UiPath and Automation Anywhere, if they were ready to go public, they probably would have already this year, so I think they're still trying to get their proverbial act together, so this is not necessarily a lay-up for them from an operational standpoint. They probably got some things to still clean up, but I think they're going to really try to go for it. If the markets stay positive and tech spending continues to go forward, I think we can see that. And I would say this, automation is going mainstream. The benefits of taking simple RPA tools to automate mundane tasks with software bots, it's both awakened organizations to the possibilities of automation, and combined with COVID, it's caused them to get serious about automation. And we think 2021, we're going to see organizations go beyond implementing point tools, they're going to use the pandemic to restructure their entire business. Erik, how do you see it, and what are the big players like Microsoft that have entered the market? What kind of impact do you see them having? >> Yeah, completely agree with you. This is a year where we go from small workloads into real deployment, and those two are the leader. In our data, UiPath by far the clear leader. We are seeing a lot of adoptions on Automation Anywhere, so they're getting some market sentiment. People are realizing, starting to actually adopt them. And by far, the number one is Microsoft Power Automate. Now, again, we have to be careful because we know Microsoft is entrenched everywhere. We know that they are good at bundling, so if I'm in charge of automation for my enterprise and I'm already a Microsoft customer, I'm going to use it. That doesn't mean it's the best tool to use for the right job. From what I've heard from people, each of these have a certain area where they are better. Some can get more in depth and do heavier lifting. Some are better at doing a lot of projects at once but not in depth, so we're going to see this play out. Right now, according to our data, UiPath is still number one, Automation Anywhere is number two, and Microsoft just by default of being entrenched in all of these enterprises has a lot of market share or mind share. >> And I also want to do a shout out to, or a call out, not really a shout out, but a call out to Pegasystems. We put them in the RPA category. They're covered in the ETR taxonomy. I don't consider them an RPA vendor. They're a business process vendor. They've been around for a long, long time. They've had a great year, done very, very well. The stock has done well. Their spending momentum, the early signs in the latest survey are just becoming, starting to moderate a little bit, but I like what they've done. They're not trying to take UiPath and Automation Anywhere head-on, and so I think there's some possibilities there. You've also got IBM who went to the market, SAP, Infor, and everybody's going to hop on the bandwagon here who's a software player. >> I completely agree, but I do think there's a very strong line in the sand between RPA and business process. I don't know if they're going to be able to make that transition. Now, business process also tends to be extremely costly. RPA came into this with trying to be, prove their ROI, trying to say, "Yeah, we're going to cost a little bit of money, but we're going to make it back." Business process has always been, at least the legacies, the ones you're mentioning, the Pega, the IBMs, really expensive. So again, I'm going to allude to that article I'm about to post. This particular person who's a lead tech automation for a very large company said, "Not only are UiPath and AA dominating RPA, but they're likely going to evolve to take over the business process space as well." So if they are proving what they can do, he's saying there's no real reason they can't turn around and take what Appian's doing, what IBM's doing and what Pega's doing. That's just one man's opinion. Our data is not actually tracking it in that space, so we can't back that, but I did think it was an interesting comment for and an interesting opportunity for UiPath and Automation Anywhere. >> Yeah, it's always great to hear directly from the mouths of the practitioners. All right, brings us to number 10 here. 5G rollouts are going to push new edge IoT workloads and necessitate new system architectures. AI and real-time inferencing, we think, require new thinking, particularly around processor and system design, and the focus is increasingly going to be on efficiency and at much, much lower costs versus what we've known for decades as general purpose workloads accommodating a lot of different use cases. You're seeing alternative processors like Nvidia, certainly the ARM acquisition. You've got companies hitting the market like Fungible with DPAs, and they're dominating these new workloads in the coming decade, we think, and they continue to demonstrate superior price performance metrics. And over the next five years they're going to find their way, we think, into mainstream enterprise workloads and put continued pressure on Intel general purpose microprocessors. Erik, look, we've seen cloud players. They're diversifying their processor suppliers. They're developing their own in-house silicon. This is a multi-year trend that's going to show meaningful progress next year, certainly if you measure it in terms of innovations, announcements and new use cases and funding and M&A activity. Your thoughts? >> Yeah, there's a lot there and I think you're right. It's a big trend that's going to have a wide implication, but right now, it's there's no doubt that the supply and demand is out of whack. You and I might be the only people around who still remember the great chip famine in 1999, but it seems to be happening again and some of that is due to just overwhelming demand, like you mentioned. Things like IoT. Things like 5G. Just the increased power of handheld devices. The remote from work home. All of this is creating a perfect storm, but it also has to do with some of the chip makers themselves kind of misfired, and you probably know the space better than me, so I'll leave you for that on that one. But I also want to talk a little bit, just another aspect of this 5G rollout, in my opinion, is we have to get closer to the edge, we have to get closer to the end consumer, and I do believe the CDN players have an area to play in this. And maybe we can leave that as there and we could do this some other time, but I do believe the CDN players are no longer about content delivery and they're really about edge compute. So as we see IoT and 5G roll out, it's going to have huge implications on the chip supply. No doubt. It's also could have really huge implications for the CDN network. >> All right, there you have it, folks. Erik, it's great working with you. It's been awesome this year. I hope we can do more in 2021. Really been a pleasure. >> Always. Have a great holiday, everybody. Stay safe. >> Yeah, you too. Okay, so look, that's our prediction for 2021 and the coming decade. Remember, all these episodes are available as podcasts. All you got to do is search Breaking Analysis podcast. You'll find it. We publish each week on wikibon.com and siliconangle.com, and you got to check out etr.plus. It's where all the survey action is. Definitely subscribe to their services if you haven't already. You can DM me @dvellante or email me at david.vellante@siliconangle.com. This is Dave Vellante for Erik Bradley for theCUBE Insights powered by ETR. Thanks for watching, everyone. Be well and we'll see you next time. (relaxing music)

>> Announcer: From around the globe, it's theCUBE. Covering Google Cloud Next on Air '20. >> Hi, I'm Stu Miniman. And this is theCUBE's coverage of Google Cloud Next On Air. One of the weeks that they had for the show is to dig deep into infrastructure, of course, one of the foundational pieces when we talk about cloud, so happy to welcome to the program, I've got two of the general managers for both compute and networking. First of all, welcome back one of our cube alumni, June Yang, who's the vice president of compute and also welcoming Shailesh Shukla who's the vice president and general manager of networking both with Google Cloud. Thank you both so much for joining us. >> Great to be here. >> Great to be here, thanks for inviting us Stu. >> So June, if I can start with, you know, one of the themes I heard in the keynote that you gave during the infrastructure week was talking about, we talked about meeting customers where they are, how do I get, you know, all of my applications that I have, obviously some of them are building new applications. Some of them I'm doing SaaS, but many of them, I have to say, how do I get it from where I am to where I want to be and then start taking advantage of cloud and modernization and new capabilities. So if you could, you know, what's new when it comes to migration from a Google Cloud standpoint and, you know, give us a little bit insight as to what you're hearing from your customers. >> Yeah, definitely happy to do so. I think for many of our customers, migration is really the first step, right? A lot of the applications on premise today so the goal is really how do I move from on prem to the cloud? So to that extend, I think we have announced a number of capabilities. And one of the programs that are very exciting that we have just launched is called RAMP program which stands for Google Cloud Rapid Assessment and Migration Program. So it's really kind of bundling a holistic approach of you know, kind of programs tooling and you know, as well as incentives altogether to really help customer with that kind of a journey, right? And then also on the product side, we have introduced a number of new capabilities to really ease that transition for customer to move from on premise to the cloud as well. One of the things we just announced is Google Cloud VMware Engine. And this is really, you know, we built as a native service inside Google as a (indistinct) to allow customer to run their VMware as a service on top of Google infrastructure. So customers can easily take their, you know, what's running on premise, that's running VMware today and move it to cloud was really no change whatsoever and really lift and shift. And your other point is really about a modernization, right? Cause most of our customers coming in today, it's not just about I'm running this as a way it is. It's also, how do I extract value out of this kind of capability? So we build this as a service so that customer can easily start using services like BigQuery to be able to extract data and insights out of this and to be able to give them additional advantages and to create new services and things like that. And for other customers who might want to be able to, you know, leverage our AI, ML capability, that's at their fingertips as well. So it's just really trying to make that process super easy. Another kind of class of workloads we see is really around SAP, right? That's our bread and butter for many enterprises. So customers are moving those out into the clouds and we've seen many examples really kind of really, allow customers to take the data that's sitting in SAP HANA and be able to extract more value out of those. Home Depot is a great example of those and where they're able to leverage the inquiry to take, you know, their stockouts and some of the inventory management and really to the next level, and really giving a customer a much better experience at the end of the day. So those are kind of just a few things that we're doing on that side to really make you a customer easy to lift and shift and then be able to modernize along the way. >> Well yeah, June, if I would like to dig in a little bit on the VMware piece that you talked about. I've been talking of VM-ware a bit lately, talking to some of their customers leveraging the VMware cloud offerings and that modernization is so important because the traditional way you think about virtualization was I stick something in a VM and I leave it there and of course customers, I want to be able to take advantage of the innovation and changes in the cloud. So it seems like things like your analytics and AI would be a natural fit for VMware customers to then get access to those services that you're offering. >> Yeah, absolutely. I think we have lots of customers, that's kind of want to differentiators that customers are looking for, right? I can buy my VMware in a variety of places, but I want to be able to take it to the next level. How do I use data as my differentiator? You know, one of the core missions as part of the Google mission is really how do we help customers to digitally transform and reimagine their business was a data power innovation, and that's kind of one key piece we know we want to focus on, and this is part of the reason why we built this as really a native service inside of Google Cloud so that you're going through the same council using, you know, accessing VMware engine, accessing BigQuery, accessing networking, firewalls, and so forth, all really seamlessly. And so it makes it really easy to be able to extend and modernize. >> All right, well, June one of the other things, anytime we come to the Cloud event is we know that there's going to be updates in some of the primary offerings. So when it comes to compute and storage, know there's a number of announcements there, probably more than we'll be able to cover in this, but give us some of the highlights. >> Yeah, let me give some highlights I mean, at the core of this is a really Google Compute Engine, and we're very excited we've introduced a number of new, what we call VM families, right? Essentially different UBM instances, that's catered towards different use cases and different kinds of workloads. So for example, we launched the N2D VM, so this is a set of VMs on EMD technology and really kind of provide excellent price performance benefit for customers and who can choose to go down that particular path. We're also just really introduced our A2 VM family. This is based on GPU accelerator optimized to VM. So we're the first ones in the market to introduce NVIDIA Ampere A 100. So for lots of customers who were really introduced, we're interesting, you know, use GPU to do their ML and AI type of analysis. This is a big help because it's got a better performance compared to the previous generation so they can run their models faster and turn it around and turn insights. >> Wonderful. Shailesh, of course we want to hear about the networking components to, you know, Google, very well known you know, everybody leverages Google's network and global reach so how about the update from your network side? >> Absolutely. Stu, let me give you a set of updates that we have announced at next conference. So first of all as you know, many customers choose Google Cloud for the scale, the reach, the performance and the elasticity that we provide and ultimately results in better user experience or customer experience. And the backbone of all of this capability is our private global backbone network, right? Which all of our cloud customers benefit from. The networking is extremely important to advance our customers digital journeys, the ones that June talked about, migration and modernization, as well as security, right? So to that end, we made several announcements. Let's talk about some of them. First we announced a new subsea cable called the Grace Hopper which will actually run between the U.S. on one side and UK on the other and Spain on another leg. And it's equipped with about 16 fiber pairs that will get completed in 2022. And it will allow for significant new capacity between the U.S. and Europe, right? Second Google Cloud CDN, it's one of our most popular and fast-growing service offerings. It now offers the capability to serve content from on prem, as well as other clouds especially for hybrid and multicloud deployments. This provides a tremendous amount of flexibility in where the content can be placed and overall content and application delivery. Third we have announced the expansion of our partnership with Cisco and it's we have announced this notion of Cisco SD-WAN Cloud Hub with Google Cloud. It's one of the first in the industry to actually create an automated end to end solution that intelligently and securely, you know, connects or bridges enterprise networks to any workload across multiple clouds and to other locations. Four, we announced a new capabilities in the network intelligence center. It's a platform that provides customers with unmatched visibility into their networks, along with proactive kind of network verification, security recommendations, and so on. There were two specific modules there, around firewall insights and performance dashboard that we announced in addition to the three that already existed. And finally, we have a range of really powerful announcements in the security front, as you know, security is one of our top priorities and our infrastructure and products are designed, built and operated with an end to end security framework and end to end security as a core design principle. Let me give you a few highlights. First, as part of making it easy for firewall management for our customers to manage firewall across multiple organizations, we announced hierarchical firewall. Second, in order to enable, you know, better security capability, we announced the notion of packet metering, right? So which is something that we announced earlier in the year, but it's now GA and allows customers to collect and inspect network traffic across multiple machine types without any overhead, right? Third is, in actually in our compute and security teams, we announced the capability to what we call as confidential VMs, which offer the ability to encrypt data while being processed. We have always had the capability to encrypt data at rest and while in motion, now we are the first in the industry to announce the ability to encrypt data even while it is being processed. So we are really, you know, pleased to offer that as part of our confidential computing portfolio. We also announced the ability to do a managed service around our cloud armor security portfolio for DDoS web application and bot detection, that's called Cloud Armor Managed Protection. And finally we also announced the capability called Private Service Connect that allows customers to connect effortlessly to other Google Cloud services or to third party SaaS applications while keeping their traffic secure and private over the, in kind of the broader internet. So we were really pleased to announce in number of, you know, very critical kind of announcements, products and capabilities and partnerships such as Cisco in order to further the modernization and migration for our customers. >> Yeah, one note I will make for our audience, you know, check the details on the website. I know some of the security features are now in data, many of the other things it's now general availability. Shailesh, follow up question I have for you is when I look in 2020, the internet patterns of traffic have changed drastically. You saw a very rapid shift, everyone had needed to work from home, there's been a lot of stresses and strains on the network, when I hear things like your CDN or your SD-WAN partnership with Cisco, I have to think that there's, you know, an impact on that. What are you seeing? What are you hearing from your customers? How are you helping them work through these rapid changes to be able to respond and still give people the, you know, the performance and reliability of traffic where they need it, when they need? >> Right, absolutely. This is a, you know, very important question and a very important topic, right? And when we saw the impact of COVID, you know, as you know Google's mission is to be, continue to be helpful to our customers, we actually invested and continue to invest in building out our CDN capability, our interconnect, the capacity in our network infrastructure, and so on, in order to provide better, for example distance learning, video conferencing, e-commerce, financial services and so on and we are proud to say that we were able to support a very significant expansion in the overall traffic, you know, on a global basis, right? In Google Clouds and Google's network without a hitch. So we are really proud to be able to say that. In addition there are other areas where we have been looking to help our customers. For example, high performance computing is a very interesting capability that many customers are using for things such as COVID research, right? So a good example is Northeastern University in Boston that has been using, you know, a sort of thousands of kind of preemptable virtual machines on Google Cloud to power very large scale and a data driven model and simulations to figure out how the travel restrictions and social distancing will actually impact the spread of the virus. That's an example of the way that we are trying to be helpful as part of the the broader global situation. >> Great. June, I have to imagine generally from infrastructure there've been a number of other impacts that Google Cloud has been helping your customers, any other examples that you'd like to share? >> Yeah, absolutely. I mean, if you look at the COVID impact, it impact different industries quite differently. We've seen certain industries that just really, their demand skyrocketed overnight. For example you know, I take one of our internal customer, Google, you know, Google Meet, which is Google's video conferencing service, we just announced that we saw a 30X increase over the last few months since COVID has started. And this is all running on Google infrastructure. And we've seen similar kind of a pattern for a number of our customers on the media entertainment area, and certainly video conferencing and so forth. And we've been able to scale to beat these key customer's demand and to make sure that they have the agility they need to meet the demand from their customers and so we're definitely very proud to be part of the, you know, part of this effort to kind of enable folks to be able to work from home, to be able to study from home and so on and so forth. You know, for some customers, you know, the whole business continuity is really a big deal for them, you know, where's the whole work from home a mandate. So for example, one of our customers Telus International, it's a Canadian telecommunication company, because of COVID they had to, you know, be able to transition tens and thousands of employees to work on the whole model immediately. And they were able to work with Google Cloud and our partner, itopia, who is specializing in virtual desktop and application. So overnight, literally in 24 hours, we're able to deploy a fully configured virtual desktop environments from Google Cloud and allow their employees to come back to service. So that's just one example, there's hundreds and thousands more of those examples, and it's been very heartening to be part of this, you know, Google to be helpful to our customer. >> Great. Well, I want to let both of you just have the final word when you're talking to customers here in 2020, how should they be thinking of Google Cloud? How do you make sure that you're helping them in differentiating from some of the other solutions and the environment? May be June if we could start with you. >> Sure, so at Google Cloud, our goal is to make it easy for anyone you know, whether you're big big enterprises or small startups, to be able to build your applications, to be able to innovate and harness the power of data to extract additional information, insights, and to be able to scale your business. As an infrastructure provider, we want to deliver the best infrastructure to run all customers application and on a global basis, reliably and securely. Definitely getting more and more complicated and you know, as we kind of spread our capacity to different locations, it gets more complicated from a logistics and a perspective as well so we want to help to do the heavy lifting around the infrastructure, so that from a customer, they can simply consume our infrastructure as a service and be able to focus on their businesses and not worry about the infrastructure side. So, you know, that's our goal, we'll do the plumbing work and we'll allow customers innovate on top of that. >> Right. You know, June you said that very well, right? Distributed infrastructure is a key part of our strategy to help our customers. In addition, we also provide the platform capability. So essentially a digital transformation platform that manages data at scale to help, you know, develop and modernize the applications, right? And finally we layer on top of that, a suite of industry specific solutions that deliver kind of these digital capabilities across each of the key verticals, such as financial services or telecommunications or media and entertainment, retail, healthcare, et cetera. So that's how combining together infrastructure platform and solutions we are able to help customers in their modernization journeys. >> All right, June and Shailesh, thank you so much for sharing the updates, congratulations to your teams on the progress, and absolutely look forward to hearing more in the future. >> Great, thank you Stu. >> Thank you Stu. >> All right, and stay tuned for more coverage of Google Cloud Next On Air '20. I'm Stu Miniman, thank you for watching theCUBE. (Upbeat music)

>>from the Cube Studios in Palo Alto and Boston connecting with thought leaders all >>around the world. This is a cube conversation, Everyone. Welcome to this week's Cube insights, powered by ET are My name is Dave Volante, and we've been reporting every week really on the code. 19. Impact on Budgets Docker Korakia is back in with me soccer. It's great to see you really >>again for having >>your very welcome. Soccer is, of course, the director of research, that we are our data partner and man. I mean, you guys have just been digging into the data or a court reiterate We're down, you know, roughly around minus 5% for the year. The thing about what we're doing here and where they want to stress in the audience that that's going to change. The key point is we don't just do ah, placeholder and update you in December. Every time we get new information, we're going to convey it to you. So let's get right into it. What we want to do today is you kind of part two from the takeaways that we did last week. So let's start with the macro guys. If you bring up the first chart, take us through kind of the top three takeaways. And just to reiterate where we're at >>Yeah, no problem. And look, as you mentioned, uh, what we're doing right now is we're collecting the pulse of CIOs. And so things change on and we continue to expect them to change, you know, in the next few weeks, in the next few months, as things change with it. So just kind of give a recap of the survey and then kind of going through some of our top macro takeaways. So in March mid March, we launched our Technology Spending Intention Survey. We had 1250 CIOs approximately. Take that survey. They provided their updated 2020 verse 2019 spending intentions, right? So effectively, they first Davis, those 20 21st 19 spending intentions in January. And then they went ahead and up state of those based on what happened with move it and then in tandem with that, we did this kind of over 19 drill down survey where we asked CEOs to estimate the budget impact off overnight in versus what they originally forecast in the year. And so that leads us to our first take away here, where we essentially aggregated the data from all these CIOs in that Logan 19 drill down survey. And we saw a revision of 900 basis points so down to a decline of 5%. And so coming into the year, the consensus was about 4% growth. Ah, and now you can see we're down about 5% for the year. And again, that's subject to change. And we're going again re measure that a Z kind of get into June July and we have a couple of months under our belt with the folks at night. The second big take away here is, you know, the industries that are really indicating those declines and spend retail, consumer airlines, financials, telco I key services in consulting. Those are the verticals, as we mentioned last week, that we're really seeing some of the largest Pullbacks and spend from consumers and businesses. So it makes sense that they are revising their budgets downwards the most. And then finally, the last thing we captured that we spoke about last week as well as a few weeks before that, and I think that's really been playing out the last kind of week in 1/2 earnings is CIOs are continuing to press the pedal on digital transformation. Right? We saw that with Microsoft, with service now last night, right, those companies continued the post good numbers and you see good demand, what we're seeing and where those declines that we just mentioned earlier are coming from. It's it's the legacy that's the on premise that your place there's such a concentration of loss and deceleration within some of those companies. And we'll kind of get into that more a Z go through more slides. But that's really what kind of here, you know, that's really what we need to focus on is the declines are coming from very select vendors. >>Yeah, and of course you know where we were in earning season now, and we're paying close attention to that. A lot of people say I just ignore the earnings here, you know, you got the over 19 Mulligan, but But that's really not right. I mean, obviously you want to look at balance sheets, you want to look at cash flows, but also we're squinting through some of the data your point about I t services and insulting is interesting. I saw another research firm put out that you know, services and consulting was going to be OK. Our data does, you know, different. Uh, and we're watching. For instance, Jim Kavanaugh on IBM's earnings call was very specific about the metrics that they're watching. They're obviously very concerned about pricing and their ability. The book business. There we saw the cloud guys announced Google was up in the strong fifties. The estimate is DCP was even higher up in the 80% range. Azure, you know, we'll talk about this killing it. I mean, you guys have been all over of Microsoft and its presence, you know, high fifties aws solid at around 34% growth from a larger base. But as we've been reporting, you know, downturns. They've been they've been good to cloud. >>That's right. And I think, you know, based on the data that we've captured, um, you know, it's people are really pressing the pedal on cloud and SAS with this much remote work, you need to have you know, that structure in place to maintain productivity. >>Okay, let's bring up the next slide. Now. We've been reporting a lot on this sort of next generation work loads Bob one Dato all about storage and infrastructures of service. Compute. There's an obviously some database, but there's a new analytics workload emerging. Uh, and it's kind of replacing, or at least disinter mediating or disrupting the traditional e d ws. I've said for years. CDW is failed to live up to its expectations of 360 degree insights and real time data, and that's really what we're showing here is some of the traditional CDW guys are getting hit on Some of the emerging guys, um, are looking pretty good. So take us through what we're looking at here. Soccer. >>Yeah, no problem. So we're looking at the database data warehousing sector. What you're looking at here is replacement rates. Um And so, as example, if you see up in with roughly 20% replacement, what that means is one out of five people who took the survey for that particular sector for that vendor indicated that they were replacing, and so you can see here for their data. Cloudera, IBM, Oracle. They have very elevated and accelerating replacement rates. And so when we kind of think about this space. You can really see the bifurcation, right? Look how well positioned the Microsoft AWS is. Google Mongo, Snowflake, low replacements, right low, consistent replacements. And then, of course, on the left hand side of the screen, you're really seeing elevated, accelerating. And so this space is It kind of goes with that theme that we've been talking about that we covered last week by application, right when you think about the declines that you're seeing and spend again, it's very targeted for a lot of these kind of legacy legacy vendors. And we're again. We're seeing a lot of the next gen players that Microsoft AWS in your post very strong data. And so here, looking within database, it's very clear as to which vendors are well positioned for 2020 and which ones look like they're being ripped out and swapped out in the next few months. >>So this to me, is really interesting. So you know, you you've certainly reported on the impact that snowflake is having on Terra data. And in some of IBM's business, the old man, he's a business. You can see that here. You know, it's interesting. During the Hadoop days, Cloudera Horton works when they realize that it didn't really make money on Hadoop. They sort of getting the data management and data database and you're seeing that is under pressure. It's kind of interesting to me. Oracle, you know, is still not what we're seeing with terror data, right, Because they've got a stranglehold on the marketplace That's right, hanging in there. Right? But that snowflake would no replacements is very impressive. Mongo consistent performer. And in Google aws, Microsoft AWS supports with Red Shift. They did a one time license with Park Cell, which was an MPP database. They totally retooled a thing. And now they're sort of interestingly copycatting snowflake separating compute from storage and doing some other moves. And yet they're really strong partners. So interesting >>is going on and even, you know, red shift dynamodb all. They all look good. All these all these AWS products continue screen Very well. Ah, in the data warehousing space, So yeah, to your point, there's a clear divergence of which products CIOs want to use and which ones they no longer want in their stack. >>Yeah, the database market is very much now fragment that it used to be in an Oracle db two sequel server. As you mentioned, you got a lot of choices. The Amazon. I think I counted, you know, 10 data stores, maybe more. Dynamodb Aurora, Red shift on and on and on. So a really interesting space, a lot of activity in that new workload that I'm talking about taking, Ah, analytic databases, bringing data science, pooling into that space and really driving these real time insights that we've been reporting on. So that's that's quite an exciting space. Let's talk about this whole workflow. I t s m a service now. Just just announced, uh, we've been consistently crushing it. The Cube has been following them for many, many years, whether, you know, from the early days of Fred Luddy, Bruce Lukman, the short time John Donahoe. And now Bill McDermott is the CEO, but consistent performance since the AIPO. But what are we actually showing here? Saga? Yeah, You bring up that slot. Thank you. >>So our key take away on kind of the i t m m i t s m i t workflow spaces. Look, it's best in breed, which is service now, or some of the lower cost providers. Right There's really no room for middle of the pack, so >>this is an >>interesting charts. And so what you're looking at here, there's a few directives, so kind of walk you through it and then I'll walk through. The actual results is we're looking within service now accounts. And so we're seeing how these companies are doing within or among customers that are using service. Now, today, where you're looking at on the ex, access is essentially shared market share our shared customers, and then on the Y axis you're seeing essentially the spend velocity off those vendors within service. Now's outs, right? So if the vendor was doing well, you would see them moving up into the right, right? That means they're having more customer overlap with service now, and they're also accelerating Spend, but you can see if you will get zendesk. If you look at BMC, it's a managed right. You can see there either losing market share and spend within service now accounts or they're losing spend right and zendesk is another example Here, Um, and what's actually interesting is, and we've had a lot of anecdotal evidence from CIOs is that look they start with service. Now it's best in breed, but a few of them have said, Look, it's got expensive, Um, and so they would move over Rezendes. And then they would look at it versus a conference that last year, and we had a few CEO say, Look at last quarter of the price of zendesk. Andi moved away from Zendesk and subsequently well, with last year. And so it's just it's interesting that, you know, during these times where you know CIOs are reducing their budgets on that look, it's either best of breed or low cost. There's really no room in the middle, and so it's actually kind of interesting. In this space, it's It's an interesting dynamic and being usually it's best of breed or low cost. Rarely do you kind of see both win, and I think that's what kind of makes the space interesting. >>I've been following service now for a number of years. I just make a few comments there. First of all, you know, workday was the gold standard in enterprise software for the longest time and, you know, company and and and I I always considered service now to be kind of part of that you know Silicon Valley Mafia with Frank's Loop. But what's happened is, you know, Sluman did a masterful job of identifying the total available market and executing with demand, and now you know, his successors have picking it beyond there. You know, service now has a market cap that's not quite double, but I mean, I think workday last I checked was in the mid thirties. Service now is market valuation is up in the 60 billion range. I mean, they announced, um uh, just recently, very interestingly, they be expectations. They lowered their guidance relative to consensus guide, but I think the street hose, first of all, they beat their numbers and they've got that SAS model, that very predictable model. And I think people are saying, Look there, just leaving meat on the bone so they can continue to be because that's been their sort of m o these last several years. So you got to like their positioning and you get to talk to customers. They are pricey. You do hear complaints about that, and they've got a strong lock spec. But generally I got my experiences. If people can identify business value and clear productivity, they work through the lock in, you know, they'll just fight it out in the negotiations with procurement. >>That's right, and two things on that. So with service now and and even Salesforce, right, they are a platform like approach type of vendors right where you build on them. And that's what makes them such break companies, right? Even if they have, you know, little nicks and knacks here and there. When they report people see past that right, they understand their best of breed. You build your companies on the service now's and the sales forces of the world. And to the second point, you're exactly right. Businesses want to maintain consistent productivity on, and I think that, you know, is it kind of resonates with the theme, right, doubling down on Cloud and sas. Um, as as you have all this remote work, as you have kind of, you know, questionable are curating marquee a macro environment organizations want to make sure that their employees continue to execute that they're generating consistent productivity. And using these kind of best of breed tools is the way to go. >>It's interesting you mentioned, uh, salesforce and service now for years I've been saying they're on a collision course we haven't seen yet because they're both platforms. I still, uh I'm waiting for that to happen. Let's bring up the next card and let's get into networking way talk. Um Ah. Couple of weeks ago, about the whole shift from traditional Mpls moving to SD win. And this sort of really lays it out. Take us through the data here, please. >>Yeah, no problem. So we're just looking at a handful of vendors here. Really? We're looking at networking vendors that have the highest adoption rates within cloud accounts. And so what we did was we looked inside of aws azure GCC, right. We essentially isolated just those customers. And then we said which networking vendors are seeing the best spend data and the most adoptions within those cloud accounts. And so you get you can kind of see some, uh, some themes here, right? SD lan. Right. You can see Iraqi their VM. Where nsx. You see some next gen load balance saying are they're on the cdn side right then. And so you're seeing a theme here of more next gen players on You're not really seeing a lot of the mpls vendors here, right? They're the ones that have more flattening, decreasing and replacing data. And so the reason just kind of going on this slide is you know, when you kind of think about the networking space as a whole, this is where adoptions are going. This is this is where spends billing and expanded, arise it. And what we just talked about >>your networking such a fascinating space to me because you got you got the leader and Cisco That has helped 2/3 of the market for the longest time, despite competitors like Arista, Juniper and others trying to get in the Air Force and NSX. And the big Neisseria acquisition, you know, kind of potentially disrupted that. But you can see, you know, Cisco, they don't go down without a fight. And ah, there, let's take a look at the next card on Cdn. You know, this is interesting. Uh, you know, you think with all this activity around work from home and remote offices, there's a hot area, But what are we looking at here? >>Yeah, no problem. And that's right, right? You would think. And so we're looking at Cdn players here you would think with the uptake in traffic, you would see fantastic. That scores right for all the cdn vendor. So what you're looking at here and again there's a few lenses on here, so I kind of walk. You kind of walk the audience through here is first we isolated only those individuals that were accelerating their budgets due to work from home. Right. So we've had this conversation now for a few weeks where support employees working from home. You did see a decent number of organizations. I think it was 20 or 30% of organizations at the per server that indicated they're actually accelerate instead. So we're looking at those individuals. And then what we're doing is we're seeing how are how's Cloudflare and aka my performing within those accounts, right? And so we're looking at those specific customers and you could just see within Cloudflare and we practice and security and networking which by more the Cdn piece, How consistent elevated the date is right? This is spend in density, right? Not overall market share is obviously aka my you know, their brand father CD ends. They have the most market share and if you look at optimized to the right. Now you can see the spend velocity is not very good. It's actually negative across boats sector. So you know it's not. We're not saying that. Look, there's a changing of the guard that's occurring right now. We're still relatively small compared talk my But there's just such a start on trust here and again, it kind of goes to what we're talking about. Our macro themes, right? CIOs are continuing to invest in next gen Technologies, and better technologies on that is having an impact on some of these legacy. And, you know, grandfather providers. >>Well, I mean, I think as we enter this again, I've said a number of times. It's ironic overhead coming into a new decade. And you're seeing this throughout the I T. Stack, where you've got a lot of disruptors and you've got companies with large install bases, lot of on Prem or a lot of historical legacy. Yeah, and it's very hard for them to show growth. They often times squeeze R and D because they gotta serve Wall Street. And this is the kind of dilemma they're in, and the only good news with a comma here is there is less bad security go from negative 20% to a negative 8% net score. Um, but wow, what a what a contrast, but to your point, much, much smaller base, but still very relevant. We've seen this movie before. Let's let's wrap with another area that we've talked about. What is virtualization? Desktop virtualization? Beady eye again. A beneficiary of the work from home pivot. Um, And we're focused here, right on Fortune 500 net scores. But give us the low down on this start. >>Yeah, So this is something that look, I think it's it's pretty obvious to into the market you're seeing an uptake and spend across the board versus three months ago in a year ago and spending, etc. Among your desktop virtualization players, there's FBI, right? So that's gonna be your VPN right now. Obviously, they reported pretty good numbers there, so this is an obvious slide, but we wanted to kind of throw it in there. Just say, look, you know, these organizations are seeing nice upticks incent, you know, within the virtualization sectors, specifically within Fortune 500 again, that's kind of, you know, work from home spend that we're seeing here, >>right? So, I mean, this is really a 100% net score in the Fortune 500 for workspaces is pretty amazing. And I think the shared in on this that the end was actually quite large. It wasn't like single digits, Many dozens. I remember when Workspaces first came out, it maybe wasn't ready for prime time. But clearly there's momentum there, and we're seeing this across the board saga. Thanks so much for coming in this week. Really appreciate it. We're gonna be in touch with with you with the TR. We're gonna continue to report on this, but start Dr stay safe. And thanks again. >>Thanks again. Appreciate it. Looking for to do another one. >>All right. Thank you. Everybody for watching this Cube insights Powered by ET are this is Dave Volante for Dr Sadaaki. Remember, all these episodes are available as podcasts. I published weekly on wiki bond dot com Uh, and also on silicon angle dot com Don't forget tr dot Plus, Check out all the action there. Thanks for watching everybody. We'll see you next time. Yeah, yeah, yeah, yeah, yeah

(upbeat music) >> Hello there and welcome to a special Cube conversation here at The Cube's Palo Alto studios, I'm John Furrier. Join with me for this special Cube Conference, Stu Miniman with Wikibon and The Cube co-host as well just up at Amazon Web Services Summit. Stu, great to see you again. Our next guest is Ben Golub, who's the executive chairman and interim CEO of Storj, pronounced storage. So it's a really hot cryptocurrency, blockchain based storage solution. I should say decentralized storage, not necessarily cryptocurrency, but tokens are involved, encryption. Great to see you. >> Great to see you, it's good to be back. >> Formerly Docker CEO and now advising at Mayfield Fund as a venture partner and also interim CEO of a hot-- >> Yeah really exciting company. And I'm really excited to talk to you about it today. >> So let's just jump into it. So obviously the ICO craze is awesome and we've always speculated that the blockchain and the decentralized applications are coming is going to be the real action. But yet it's going to create efficiencies where there's inefficiencies. >> Sure. >> Venture capital is one of them and that's why the ICO craze is going. People are raising a boatload of money that they probably wouldn't have gotten that amount. >> Wouldn't have gotten, yeah no dilution, things like that. It's interesting yeah. >> So give us an update on Storj or storage. How much in ICO did they raised, whitepapers out there? It's peer to peer, give a quick, take a minute to explain what the company's doing. >> Yeah well I guess that I should probably start by saying that I think that blockchain is bigger than just cryptocurrency, and decentralized is bigger than blockchain, and Storj is primarily a decentralized storage company. So we're about decentralized apps and the whole thing would absolutely work even if we were just using dollars. But I think it does make it a whole lot more exciting. And so the company, kind of unique in the crypto space in that we actually had a running service that was providing real value, before we did the large token sale. And the token sale raised about $30 million. Fortunately they took about 10 of that in Ethereum and Bitcoin which rose up. So there's a good deal more than that in the bank account right now. >> John: Hopefully they converted to fiat currency. >> And then they converted to fiat along the way. >> It's at an all-time high of $20,000 right now. It's like $7,000, something like that. >> Yeah, so you know, didn't sell everything at the peak, but didn't sell at the-- >> Yeah, so we've been having many blockchain and crypto or token-based economic kind of things. But the real question is what's happening? Now we know the action's been on the infrastructure side. We look at all the top hedge funds, Polychain, amongst others. They love these deals because it's infrastructure. Is that where the action is and how are you guys looking at that because at the same time, there's a wave of decentralized applications also known as Dapps coming on. So there's a relationship going on between how fast the infrastructure can go, and then how applications are going to work with either on chain or off chain dynamics. >> Sure, sure. So maybe it would be helpful to give you a sense of what it is that we do. 'Cause I think that if you do that, then I think it makes sense in the context of decentralized infrastructure, decentralized apps, but also actually traditional infrastructure as well. I've always been searching for a company that I could describe at Thanksgiving. I've never succeeded, so I always end up saying that I'm in computers, and fixing somebody's printer. (laughing) But I guess if I were to describe Storj at Thanksgiving, I'd say it's basically the Airbnb of storage, or the Airbnb of disc drives. So Airbnb, people have lots of condos or vacation properties that aren't being used all the time, and so Airbnb brings them together with people who want to rent those, and they're the largest hotel company in the world, without owning a single property. And we're kind of doing the same thing with Storj, in that there is, first of all, this explosion in the amount of data that's getting created. It would fill a stack of CD-ROMs to Mars and back this year. Yet the price of cloud storage hasn't come down. And 90% of all the disc drives that are out there are only about 10% utilized. So seems like a problem that needs a solution. And that's what we've done. We've basically brought together a very large network of individuals and companies that have spare storage capacity and matched them up with people who need storage. The really cool aspect, there are many cool aspects about it, but one of them is that basically if you want to store on the Storj network, we take your file, you encrypt it, so we never hold the keys. You encrypt it, it's all scrambled up, we break it up into between 20 and 80 pieces, and we spread those out across 150,000 or so nodes that we have in our network. So it's super cheap, but it's also super secure. Great performance because the data's way out at the edge. And super available because there's no storm or power outage or idiot tripping over a power cord that can take out your storage. >> So, Ben, you touched on, first question I was going to ask, of course, trust and security. Storage I absolutely have to worry about, so it sounds like that's at the core, but there's a number of dynamics going on in the industry. Object storage was great, let's spread it out, let's make it more decentralized, but most of the core storage industry is speeds and feeds and latency's super important, and even when you start getting to distributed architecture, I worry about that latency. So what are kind of the use cases, what are some of the key customer issues? Is price a big piece of it? Or what solutions does Storj solve that others can't? >> I always said when I was at Cluster, which was a storage company that there were four things that mattered in storage. There's certainly price; there was security; as in I don't want anybody to be able to access it; there's availability, I never want to drop or lose files; and finally there's performance, how fast I can get it. And so for a huge range of use cases that involve files, basically everything that object storage is kind of used for today, the design of our system is actually much better because we've encrypted it locally and then spread it out, you really can't attack it. First of all, you'd have to figure out... So a would-be attacker who wanted to find one of your files in the storage network would have to figure out which of the 80 or the 20 nodes out of 150,000 it's located on. If they found one of those, and they got the small portion of the file that's there, they wouldn't be able to do anything with it 'cause it's encrypted. Even if they were somehow able to decrypt it by stealing the key from you, not from us... >> So encryption and immutability... >> And immutability, right. So you get all of that. So for the security piece, it's great. For the availability piece, I never lose a file. It's really, really good, because if you just look at the math, the chances that somehow... You can basically lose 10 out of 20 nodes and still be able to recover your files. And all of our nodes are run by different people, different power supply. >> So let's take a step back. How many nodes are on the network now, you said? >> 150,000 now, run by 70,000 farmers, is what we call them. They're not miners, 'cause they're not just solving that problem, they're just producing something of value. 70,000 farmers, and then we have on the network right now, over 50 petabytes of data, which is a really large amount, and yet, we don't run a single data center. >> Have you guys raised any venture at all, or is it all ICO proceeds? >> There was a small seed round that was done, before the ICO craze. But other than that, it's all-- >> And how many people are working on the company? >> 25. >> So you guys are a classic startup. The working product, how does that look now? Is it on the blockchain, is it off the chain, how's it working, Bitcoin? >> So I've described to you what the product does. So far nothing I've described to you involves blockchain. The way the economics work is that as a user, somebody who wants to store on our network, we quote a price in dollars. You can either pay us in dollars or in the Storj token, and as a farmer, you get compensated with a Storj token. And that's done, of course, using blockchain we're actually part of Ethereum. >> Is that ERC-20 token? >> ERC-20 token, yeah. There are also interesting things that we are working on using blockchain for things like you just mentioned, data integrity, so I can make sure that if I'm doing a snapshot of a database, and I want to make sure that it's exactly what it is, nobody can tamper with it, et cetera, then that's a perfect use of blockchain. But using blockchain for the stuff I was talking about before, like figuring out where the shards are and making sure that they're uptime and reliable, that's actually stuff where blockchain isn't the best answer. >> Ben, tell us a little bit about the customers that you find there, 'cause storage administrators, that role's been changing a lot, but the typical storage administrator, if you tell them, "Oh yeah, I'm doing some distributed thing, "somewhere else, and paying in crypto-currency," they'd be like, are you kidding me? I want this thing that I can lock and hold and guard with a gun. >> This is like anything else, there's an adoption curve, and right now it's clearly very much early adopters. And actually similarly to Docker and similar to the cloud in general, it's developers who are leading the way. Developers are saying, oh, wow, I can write to the storage network in the same way that I would have written to S3, only it's cheaper, for many use cases, more performing, and not centralized, so I'm not trusting one cloud provider. So for certain use cases, this is fantastic. >> Are there certain cloud native apps that you're finding have strong affinity here? >> Yeah, so basically what we have affinity with right now, and let's be clear, this is early days. I wouldn't recommend that people store their most sensitive data on this, but-- >> Not Oracle certified yet, is what you're saying? >> We're not Oracle certified, no. (laughing) Basically anything involving a large file that you're not writing to very frequently, but you're reading a lot, or that's getting read by lots of people around the world, we're a really good solution. It's one of the things I think I mentioned to you. So we've got 150,000 nodes. They're located in I think it's now 180 countries, and all over the U.S. So if you want to get your data close to the edge, the people who are consuming your data are really close to the edge, this is actually really good. And because it's spread across so many, you get the benefit of parallelism, so it's super fast, in addition to being super safe and super secure. >> How does it work for the farmers? Because we have video files, so we would love to spread our video files on the Storj network. So let's just say... >> I'd do a special deal for you, too, you know. >> Of course, yeah, get a little token action going on both sides, Cube coins. But the availability thing is concerning. Whose computers is it being stored on? Is it extra capacity? Is it servers? Is it people's home computers? What's the, is it that kind of model? >> Sure, so basically yeah, we, just as Airbnb measures reputation, we measure reputation, too. And so if you don't have a good reputation, certain characteristics, we won't send data to you. What it basically means is you've got to have dedicated hardware and a dedicated connection. So we do have people who are running things in their home, but it's not a laptop, it's not on your phone. But if you have a disc drive that's connected with reasonably high capacity and reasonably well connected, then you'll establish good reputation. But what we are seeing is we are seeing a lot of universities, a lot of small businesses, some data center operators who have spare capacity or just want to use us as like, be both a farmer and a user. So backup and get stuff on their capacity as a good idea. And interestingly enough, we also are getting a lot of people who were Bitcoin miners and bought equipment, which is good quality equipment, but there's such an arms race in doing that. >> So they abandoned, because it was too hard for them to get coins. >> It's too hard to make money, right, and very expensive, specialized equipment, and in our case, basically general high quality equipment works well. >> What's the profit model? How do the farmers make money? Take our Cube videos, as an example, so I'm paying you guys, and you're distributing those tokens? >> You're paying us and you're paying us either in dollars or tokens. And then farmers get compensated in tokens. Right now, about 60 cents on every dollar goes to farmers. And farmers get more storage based off of their reputation. We charge people based on both how much you're storing as well as how much bandwidth egress that you're doing, and we compensate farmers exactly the same way. >> It's handled through a consensus protocol that you guys have? >> Yeah, yeah, so the payment and assessing reputation we actually use good distributed blockchain as well there, right, so you're not counting on Storj to be in the middle there. Now, with the remaining 40 cents, which I think is actually the really interesting part, we keep some of that, we put some back into the network, but what I'm really excited about is that this is now a way for us to economically empower demand partners as well. The first thing we announced was FileZilla, but we have lots of other open source projects waiting in the wings, and we're happy to share with them. So as opposed to centralized cloud, where it's really hard to make money as an open source company, we're not an open source project in our case, right? We're happy if you're sending us users and data, to give you a really meaningful percentage. >> Any kind of freemium model you guys are playing with? I can imagine this being pretty interesting, because S3 democratized and lowered the cost barrier, obviously with cloud. >> S3 has been great for many things. >> How low are you in terms of the disruption? You guys are probably going to have to come in and undercut S3, is that the strategy? Or is that the price value? >> I think what I learned from my time in storage, is price is important but you have to be really safe and available and reliable, 'cause people's data is really important. But we looked across a pretty broad set of use cases, in comparing us to the traditional cloud providers we're probably a third. And we could go lower. What I think is really interesting in our case is that the economics just work really well. So from our perspective, if you're a farmer, you've already got, it's spare capacity, you don't need any more electricity to run this thing, you've got bandwidth, right? You don't need to hire any more people. So it's almost pure margin for a farmer, which is great for them. And so we can give economic value to farmers, we can give economic value to our customers, we can give economic value to partners. >> Any kind of economic models you can share in terms of what someone would make? Let's just say that I had this big music library that's not being used anymore, and I had a-- >> Well, as a customer of course, if you've got data that you want to store on our network, you'll save a lot of money, and it's probably a third of what you might pay. >> But is there any kind of, if I'm a farmer, I want to join the network? >> But if you're a farmer. >> How much am I going to make? >> It really depends on how much you're storing and how good your connection is, but as a farmer, I think you can make decent money. This could probably be I don't know off the top of my head, $20, $30 a month per drive, which isn't bad, and certainly much easier than making money-- >> So it kind of depends like the Airbnb model, depends how well you're using-- >> How well you're used. So some people earn less, some people earn more. And again, for most of the farmers, this is pure margin. >> Great, we got a couple back to back rooms, Stu. We should get some drives up there and get on board. We could pay for the cameras. >> And look, I think for videos, you guys would actually be a perfect use case with a lot of the stuff that's going to be coming out later this year. You get both storage and CDN like things for free, in the sense that because-- >> I'm really glad you brought that up, 'cause I want to ask you about Videocoin, 'cause Halsey Minor has Videocoin, another ICO, he raised $50 million. We covered that on Silicon Angle. But he's trying to democratize Acromi. Is that similar to what you guys are doing? >> I guess you could say yeah, we're further democratizing object storage, democratizing S3, but I think we can also democratize Acromi, we can democratize Isilon, there's certain other really exciting things that are-- >> What other services, you mentioned CDN, so it's not just storing the information, but that global dispersion, what does that enable? >> It used to be that people had a really big difference between archival which is slow, hard to get at, and CDN, right? And but actually, given the way that we're doing this thing, we can be pretty seamless. Pay archival for stuff that's staying in archival, but go up market if you're going to be having a lot of people read it. >> So I got to ask you about the, obviously, security. You're looking at it for additional services around redundancy, I can see that being a nice headroom for you. On a personal note, you've been involved in a lot of industry companies that have done very well, entrepreneurial success. >> Ben: Why am I doing this? (laughing) >> I can tell you're having fun. How could you not have fun, it's a whole 'nother generation of innovation, disruption coming, a whole 'nother price point. So what's it like, are you having fun? And if you could talk to your 22-year-old self right now, 'cause I wish I was 22 right now in this market-- >> Are you saying I'm not 22? >> How do you explain this? And when you go to parties, even in the Valley, and people say, "Man, you're crazy, it's a fricken' "scam out there," how do you explain to 'em this revolution? Because this is like a special, unique wave. How would you talk about that? >> Actually I describe it the same way to people in the Valley the same way that I described at the beginning, which is that blockchain is bigger than cryptocurrency, and decentralized is much bigger than blockchain. And Storj is first and foremost decentralized. It's about decentralized computing, decentralized storage, supporting decentralized apps, keeping the internet from ending up in the hands of just three people, three companies, which I think is really important. But also I feel very good that, to the extent that Storj does touch on cryptocurrency, that we've done it the right way. We had the service working first before we did the token sale. We raised what now appears to be a modest amount in the token sale, tried to be very transparent and at the forefront. >> You probably could've gotten more if you wanted to. >> Probably, right? But we were trying to be forefront in terms of governance and transparency, and I think that it'll probably be a good thing, just as it was kind of a good thing that the bubble burst in the late '90s and you got rid of a lot of such not great companies and not such great operators. I think that the current corrections, or whatever, in the crypto market I think will-- >> Like pets.com is gone, but DogeCoin still exists. (laughing) >> So I'm sure that somebody has a crypto base pets.com or webvan lurking in the wings somewhere. Kodak just did it. >> I got to ask you, you're super smart. You went to some really good schools, I think Princeton, Harvard Business School. So you got a good education, so I got to get your take on the whole token economics vision. 'Cause this is, if you look at outside the tech trends, there's actually new economic models that are coming out. Have you looked at token economics? New liquidity on the one side, you've got sovereignty, you've got consensus. These are not just tech issues, these are society issues. What's your vision around that? How are you viewing it? What's the upside? How is this shaping the future? >> Yeah, I think if you're a token network, you sort of have to have some central bank chops as well, right? And we actually have a central banker. >> John: So you have a chief economic officer? >> So we don't, no, we have an advisor-- >> John: Public policy. >> I actually had a degree in public policy at one point. But we need to think about the token supply in the same way you'd think about the money supply. We're backed by something real, so it's sort of like having currencies backed by gold. We need to make sure that the market grows and the network grows. And my fundamental belief is that the more the network grows, the more people use it, the more value that we're able to provide, that'll be good for token economics in the long run. In the short run, though, what we've done, is again, we price based off of dollars, and we compensate farmers based off the token based off of the spot price. So for farmers, we've tried to remove any need to worry about volatility or things like that. >> So I want your reaction-- >> Or the price. >> I've said on The Cube multiple times that in the old days of venture startups, the CTO was everything. You had to have a great CTO or VP of engineering and great senior executive team on the entrepreneurial team. Now it's almost like the chief economic officer is a critical piece, 'cause you've got public policy intersecting with economics. You've got new kinds of math that's not technical algorithm but it's kind of business algorithms. >> It is, business algorithms. Just like any economy, the money supply matters. And people's trust in that money matters. And the supply matters. All that stuff like that, and stability matters. So I think absolutely this new breed of network based token companies will have to worry about that, and probably should think about a chief economics officer, but it doesn't mean that you don't also have to have a great CTO and great technology, 'cause that's how you make the network valuable and grow. And one of the reasons that gave me both excitement and comfort about going to Storj is that the economic model works, fundamentally, even if the crypto's not there. >> John: 'Cause technology is decentralized. >> Decentralized storage makes sense even if you're buying and selling it with dollars or pounds or rubles, or whatever. >> Ben, great to see you, thanks for coming in and sharing the Ben Golub School of Economics, Public Policy for Tokens. You can give a class at Stanford on that soon, although that's the competition's school. >> Maybe, yes. Slightly different. We still like them. >> Great to see you, congratulations. Storj, pronounced storage. Great, successful ICO, hot startup, really, an example of the infrastructure opportunities of a new decentralized infrastructure that can be and will soon, we think, it will be critical infrastructure in a whole new way. Great to see you. >> Ben: Really good to see you, great to be back with you. >> It's the Cube Conversation, I'm John Furrier, Stu Miniman, thanks for watching. (upbeat music)

>> Announcer: Live from Washington D.C. It's the Cube. Covering .NEXT Conference. Brought to you by Nutanix. >> We're back. Welcome to Nutanix.NEXT. NEXTConf. #NEXTConf. This is theCube, the leader in live tech coverage. We go out to the events and extract a signal from the noise. My name is Dave Vellante and I'm joined by my co-host Stuart Miniman. Mike Day is here as the CEO of PXP Solutions. Financial services company and a customer of Nutanix. Mike thanks for coming on theCUBE. >> My pleasure. >> So, tell us a little bit more about PXP Solutions. >> We're a payment gateway which is a part of the financial services industry that most people don't even think about. And if you think about going into a store. Going into a hotel. Presenting a card. We're the bit between there and the bank. So, talk about mission critical piece of service. That is a very complicated process involves many banks, many card scans. Visa, Mastercard and so forth. So we actually have to be the piece between the retailer or the merchant. The consumer and the bank. >> So, in thinking about your industry. Some of the drivers and changes of the industry. How has that affected your strategy with regard to information technology? >> For us it was about expanding our business. We came from that really old three tier model. Big investments, they're a lumpy IT. We're moving more and more to a global business. We worked in the US. We have some big retailers here involved in EMV rollout for the US. And that creates demands on us where we have to have processing in the localities. So we have to create a new infrastructure here in the US. So we've taken up Hostess space in New Jersey. And we had to build a whole new processing infrastructure. I don't want to have teams here. Nothing personal. We're a small business, we don't want to have teams dotted around the world. Which means I have to think about getting manageable IT in the right territory. >> So Mike, I hear things like that and it comes to mind. Well, why don't you just use the public cloud or what is the edge implications of what you're doing. Edge computing, may have been talked about a lot. So maybe sketch out for us a little bit about. You know, kind of this scope of what you do. And do you tie into the public cloud? I think of like CDN's. Are you related to that or what do you deal with and what don't you deal with? >> It's an interesting conversation. It's one I've had with the public cloud vendors. For us it's all about PCI scope. You'll get all the merchants talking about this. It's about card data. There's a lot in the press about companies being compromised. We provide secure processing. So, as soon as that card is either on somebody's webpage or is delivered into a pad. We encrypt that data. Now, if we start putting that encrypted data and those tokens and card records. And we manage over a billion card records. Into the public cloud. That brings that cloud infrastructure into scope of PCI. You don't want to be doing that. So, we kind of have to use our own infrastructure but we want to leverage. Leverage, nice American way of saying it. We want to get some leverage to way that we want all the benefits of public cloud. But we need to do it ourselves. Now, I'm sure a public cloud vendor will say. Oh, we can be PCI compliant. Right this time. We don't want to do that. So, we have a cloud solution. But it's our cloud. >> Okay, so you're essentially trying to mimic that public cloud experience on-prem. >> Mike: Yeah. >> And so presuming that's where Nutanix comes in. That's their whole message. >> Mike: Absolutely. >> So, can you maybe take us through how you. Where you came from and where you are now, how you got there. >> Okay, again the benefits to being a small business. The benefits of being an ex CIO means that we can make decisions quite quickly. You're not going through layers of the CTO and his infrastructure guy and the sequel guy and so forth. You can play fast and loose. We had a three tier architecture. Largely coming to end of life. We had a big sand. So you had lots of single points of failure actually in the process. And we needed to do something different. We've been bumping into Nutanix. And they were very aggressive three years ago. As you can imagine as a new entry. They did the puppy dog sell. You know, here have one. See how you get on. We deployed that. We were going to do a VDI deployment which seems to be how most people start. But actually, we thought why? Why do you do that? So, we went straight to heavy lifting. And we put production into a production environment into Nutanix. And immediately kicked it out. The two new data centers with Nutanix kit. It means that a whole storage compute piece is gone from our daily management. >> And Mike, can you talk about the operational model. You said especially you've got some remote sites that you don't even want anybody there. How many people do you have managing this? How's that different from the old sand days that you had before? >> I hesitate. Six people operate our entire infrastructure. They're not located anywhere near the infrastructure. The infrastructure is in the London Docklands and in New Jersey. We go to New Jersey for physical inspections once a year. Everything else is done remotely. >> I'm from New Jersey originally and I understand why people don't want to go there too often. >> Mike: It's a nice place to visit. >> But right, so. Does it live up to that invisible infrastructure that Nutanix? What do your people, in operative? What do they touch, what would they have to worry about? >> Okay, so I'm going to give you a scenario. Where we obviously have processing in more that one data center. One of the things that we need to be able to do with that processing is to move stuff. Either for reasons of operational requirements where your trying to take a part of your infrastructure down for maintenance. Or if you had a disaster recovery incident you need to be able to move your processing to these different DC's. What we can do and what we do on a regular basis is that we will ship our processing between the different stacks and the different locations. And that's the press of a button. I mean, obviously our infrastructure and our systems and solutions are designed to operate in that way. But literally we can move processing to a new data center. And in terms of consumer experience. No change. Technically there's about a half a second delay. In half a second, no problem at all. So we can move stuff between data centers. And we do that on a regular basis. >> Mike, you mentioned that initially you were considering just doing a VDI workload. Kind of testing the waters. And you decided, no let's just go forward. What were your concerns at that point? >> I think the concerns for us was does it live up to the hype. We were being given lots of figures. All the vendors were doing that. Telling us how much quicker it would be. How much less compute we would need. How cheap it would be. But only when you do this thing in real life. When you actually do some real heavy lifting. When you start installing sequel service into a Nutanix environment, does it work? I had a queue of people telling me don't do it. It's going to be a disaster. And we did it and it wasn't a disaster. It was outstanding. >> So, we always talk about the labor costs. As a former CIO you know how labor intensive IT is. >> Mike: Yeah. >> And our premise is, you know what you've described. Mimicking cloud on-prem. Our premise has always been. You know, research indicates that a lot of the savings are in the productivity of the IT people. You can shift those resources elsewhere. Guys like you are trying to do digital transformations. Which sounds like such a buzz word. But it's actually starting to gain foot hole. It's a real deal. >> Mike: Absolutely. >> And you can't be doing long provisioning and fund that and fund these analytics and data driven transformations. So, is that a correct premise? Does it have a sort of major business impact on your IT staff? >> It does, I mean. Basically what it means now is our guys can get on doing the fun stuff. When we started doing this, they all thought they were loosing jobs and we were going to be cutting head count. We were never doing that. Because we never got out of the soup. You know, the IT guys would understand this. You spend all day fighting fires. You never get to do the fun stuff. But what we've managed to do is. We've managed to get to the point where our fundamental processing is just solid. We can deploy service at the click of a button. We can move service between data centers at the click of a button. We can do the stuff that everybody aspires to. But then, now those guys can then go and do the fun stuff. >> Interviewer: What's the fun stuff? >> The fun stuff for us is the analytics. It's using tools like Splent to truly understand what's going on. Getting predictive in what we do. That's the fun stuff. >> Were the skill sets of the guys who are putting out fires with the infrastructure compatible with the fun stuff or did you have to reskill? >> We trained. It's very easy to take a bunch of guys that you always asked to do one job. Then change the job and then assume the guys are bad guys. That's not how it works. I do think it's 80% personality, 20% skill. You can fill it in. So what we did was the guys who have been previously just fire fighting. It took a while. And it took a while for them to trust us. That we weren't really taking them into a trap of some sort. But we reskilled them. We didn't just bring new people in. >> Would you had. You feel like you would have had to hire more people if you didn't make this move? >> I'd say we couldn't have actually deployed in the model we currently did deployed to with the people we have. We were looking for operation efficiency. But we want resilience. Think about payments. You don't get two chances to take a payment. >> I mean, there's a very high level. Let's not be precise by the way. In percentage terms, how much more? What percent more IT labor would you have needed if you didn't make this move? Was it a 10% factor or 20%, 50%, double? >> Remember, we're a small company. We're talking about six people now. We'll probably need another four or five people. And at one point we had that as vacancies. And we've done other things recently. So in terms of our corp environment we're going to have to office 365. You know we're taking away again stuff that doesn't add value to us as a business. And pushing that out of what we do. >> That's a substantial business impact. >> It is. So Mike, you seem really happy with Nutanix but what's on your wish list? What would you like to see from Nutanix or maybe their Ecosystem? We've got the big expo floor here. What would make your companies life easier, you know simpler? >> I think for us it's just having some clarity as to where they're heading next. They've been an excellent start up. They've been moving the market. They've been ahead of the market. The problem I've always seen is companies as they get to this size. Almost like the wave go the market swamps back over them. They start hiring in from all the companies they used to be different to. And it's how do they stop that happening? How do they preserve the essence of what made them dynamic? So, you talk about functionality. You talk about the hypervisor. We're a EXS house. We use Vmware. But we're now using a cropless hypervisor in some of our environments. The issue for that is. >> Any information you can give us as how you make that decision? Whether you go ESX or AHV? >> It's purely down to the. Not so much the capabilities of AHV or ESX. We think AHV from a price point prospective is incredibly attractive. But as you know, everybody's infrastructure isn't just the hypervisor. It isn't just the hardware. It' all of the other ancillary platforms. You know, the security platforms, the thin platforms and so forth. And until those vendors start saying they support AHV. That's a barrier to us for using it in a production environment. Nutanix are great. They'll say they'll look after us. But no CIO ever got praise for just trusting a guy that he met on the street. You know, you've got to be careful. >> So you want that ecosystem to develop further? >> Mike: Very much so. >> Whether it's Nutanix, you know. Writing, integrating with a particular platform that you need or vice versa. >> Yes, definately. And you can see that here. There are some announcements I know that are coming from some other vendors here. Where they have much tighter integration to AHV. That's got to pick up a pace. >> Well, and that's their philosophy I would presume. We're going to write you our API, at least make that open. Now, but somebody's got to write to the API. >> Mike: Absolutely. >> So the work has to be done. But fundamentally it's there. It's not a closed sack as it were. >> But there's got to be a compelling client driver for that. So I can understand where these other vendors haven't made investment in the past. Because until they know they can make money with it. Having full on deployment with AHV. Why would you invest in that? But I thing Nutanix has got to the point now where there's no doubt they're a player. So now you have to be bold. >> Well, being a public company helps. >> Mike: Yeah. >> And seeing the growth rates and it's just you know. Helps with that sort of advertising the brand. But that takes time and they're still a small company. >> Mike: Very much so. >> Mike, you said you started out with VDI and kind of got to know it. You kind of look back at what you've done. Were there any surprises or anything you'd give advice to people that are just starting this journey from your learnings? >> I'll use a really bad analogy that I used last year. And most people don't sort of like it as much as I do. When people start on VDI and we never did it. We actually have never gone down the VDI route. We looked at it and went ahhh. We've got more important stuff. More fun stuff to do. Going down this road. Taking a VDI approach. I said it's like driving your Ferrari down the high street. You might think you look cool. But you're not really driving a Ferrari. You got to take this kit out on the road. And you need to give it some heavy loads. Because in the early days, the new tanks box hated being quiet. That they took time to spool up and so forth. That problems gone away now. But if you're going to really look at this stuff and you're going to get proper return on you're investment. Give it heavy lifting to do. And use it in anger. And don't just take the easy option. You know, the option where you don't have to convince the production guys. I would say, for us, the biggest lesson. >> Absolutely, find one of those hard problems. Throw something meaningful at it. >> Mike: Yeah, and you learn then. >> You learn then, absolutely. >> How about any thoughts on the events? I mean it's early but you know inner access. >> This is my third. My third .NEXT. So they've only had three. >> Okay, so you've been to all three in the US? You didn't go to the one in Vienna? >> I did as well. My head office was in Vienna so I actually wasn't at the event. But I attended the parties. >> Oh, okay. Even better. What do you get out of event like this? >> Two things. First of all, we get to understand what's going on. We do get briefings from Nutanix, so obviously we're quite involved with them. But it's good to hear it and hear the reaction from other customers. I think more importantly is an opportunity to network with other customers in Nutanix. Understand their issues. Share ideas. It's a great networking event for like minded people. And I think for me, it's worth the trip over to the US to do that. >> Good, Mike thanks very much for coming on theCUBE. It was a pleasure having you. Appreciate your insights. >> Mike: Yes. >> Alright, keep it right there everybody. Stu and I will be back at Nutanix.net NEXTConf. This is theCUBE. We'll be right back. (tech music)

>> Announcer: Live from San Jose, California, it's the CUBE, covering Big Data Silicon Valley 2017. (upbeat synthesizer music) >> Live with the CUBE coverage of Big Data Silicon Valley or Big Data SV, #BigDataSV in conjunction with Strata + Hadoop. I'm John Furrier with the CUBE and my co-host George Gilbert, analyst at Wikibon. I'm excited to have our next guest, Yaron Haviv, who's the founder and CTO of iguazio, just wrote a post up on SiliconANGLE, check it out. Welcome to the CUBE. >> Thanks, John. >> Great to see you. You're in a guest blog this week on SiliconANGLE, and always great on Twitter, cause Dave Alante always liked to bring you into the contentious conversations. >> Yaron: I like the controversial ones, yes. (laughter) >> And you add a lot of good color on that. So let's just get right into it. So your company's doing some really innovative things. We were just talking before we came on camera here, about some of the amazing performance improvements you guys have on many different levels. But first take a step back, and let's talk about what this continuous analytics platform is, because it's unique, it's different, and it's got impact. Take a minute to explain. >> Sure, so first a few words on iguazio. We're developing a data platform which is unified, so basically it can ingest data through many different APIs, and it's more like a cloud service. It is for on-prem and edge locations and co-location, but it's managed more like a cloud platform so very similar experience to Amazon. >> John: It's software? >> It's software. We do integrate a lot with hardware in order to achieve our performance, which is really about 10 to 100 times faster than what exists today. We've talked to a lot of customers and what we really want to focus with customers in solving business problems, Because I think a lot of the Hadoop camp started with more solving IT problems. So IT is going kicking tires, and eventually failing based on your statistics and Gardner statistics. So what we really wanted to solve is big business problems. We figured out that this notion of pipeline architecture, where you ingest data, and then curate it, and fix it, et cetera, which was very good for the early days of Hadoop, if you think about how Hadoop started, was page ranking from Google. There was no time sensitivity. You could take days to calculate it and recalibrate your search engine. Based on new research, everyone is now looking for real time insights. So there is sensory data from (mumbles), there's stock data from exchanges, there is fraud data from banks, and you need to act very quickly. So this notion of and I can give you examples from customers, this notion of taking data, creating Parquet file and log files, and storing them in S3 and then taking Redshift and analyzing them, and then maybe a few hours later having an insight, this is not going to work. And what you need to fix is, you have to put some structure into the data. Because if you need to update a single record, you cannot just create a huge file of 10 gigabyte and then analyze it. So what we did is, basically, a mechanism where you ingest data. As you ingest the data, you can run multiple different processes on the same thing. And you can also serve the data immediately, okay? And two examples that we demonstrate here in the show, one is video surveillance, very nice movie-style example, that you, basically, ingest pictures for S3 API, for object API, you analyze the picture to detect faces, to detect scenery, to extract geolocation from pictures and all that, all those through different processes. TensorFlow doing one, serverless functions that we have, do other simpler tasks. And in the same time, you can have dashboards that just show everything. And you can have Spark, that basically does queries of where was this guys last seen? Or who was he with, you know, or think about the Boston Bomber example. You could just do it in real time. Because you don't need this notion of pipeline. And this solves very hard business problems for some of the customers we work with. >> So that's the key innovation, there's no pipe lining. And what's the secret sauce? >> So first, our system does about a couple of million of transactions per second. And we are a multi-modal database. So, basically, you can ingest data as a stream, exactly the same data could be read by Spark as a table. So you could, basically, issue a query on the same data. Give me everything that has a certain pattern or something, and could also be served immediately through RESTful APIs to a dashboard running AngularJS or something like that. So that's the secret sauce, is by having this integration, and this unique data model, it allows you all those things to work together. There are other aspects, like we have transactional semantics. One of the challenges is how do you make sure that a bunch of processes don't collide when they update the same data. So first you need a very low ground alert. 'cause each one may update to different field. Like this example that I gave with GeoData, the serverless function that does the GeoData extraction only updates the GeoData fields within the records. And maybe TensorFlow updates information about the image in a different location in the record or, potentially, a different record. So you have to have that, along with transaction safety, along with security. We have very tight security at the field level, identity level. So that's re-thinking the entire architecture. And I think what many of the companies you'll see at the show, they'll say, okay, Hadoop is given, let's build some sort of convenience tools around it, let's do some scripting, let's do automation. But serve the underlying thing, I won't use dirty words, but is not well-equipped to the new challenges of real time. We basically restructured everything, we took the notions of cloud-native architectures, we took the notions of Flash and latest Flash technologies, a lot of parallelism on CPUs. We didn't take anything for granted on the underlying architecture. >> So when you found the company, take a personal story here. What was the itch you were scratching, why did you get into this? Obviously, you have a huge tech advantage, which is, will double-down with the research piece and George will have some questions. What got you going with the company? You got a unique approach, people would love to do away with the pipeline, that sounds great. And the performance, you said about 100x. So how did you get here? (laughs) Tell the story. >> So if you know my background, I ran all the data center activities in Mellanox, and you know Mellanox, I know Kevin was here. And my role was to take Mellanox technology, which is 100 gig networking and silicon, and fit it into the different applications. So I worked with SAP HANA, I worked with Teradata, I worked on Oracle Exadata, I work with all the cloud service providers on building their own object storage and NoSQL and other solutions. I also owned all the open source activities around Hadoop and Saf and all those projects, and my role was to fix many of those. If a customer says I don't need 100 gig, it's too fast for me, how do I? And my role was to convince him that yes, I can open up all the bottleneck all the way up to your stack so you can leverage those new technologies. And for that we basically sowed inefficiencies in those stacks. >> So you had a good purview of the marketplace. >> Yaron: Yes. >> You had open source on one hand, and then all the-- >> All the storage players, >> vendors, network. >> all the database players and all the cloud service providers were my customers. So you're a very unique point where you see the trajectory of cloud. Doing things totally different, and sometimes I see the trajectory of enterprise storage, SAN, NAS, you know, all Flash, all that, legacy technologies where cloud providers are all about object, key value, NoSQL. And you're trying to convince those guys that maybe they were going the wrong way. But it's pretty hard. >> Are they going the wrong way? >> I think they are going the wrong way. Everyone, for example, is running to do NVMe over Fabric now that's the new fashion. Okay, I did the first implementation of NVMe over Fabric, in my team at Mellanox. And I really loved it, at that time, but databases cannot run on top of storage area networks. Because there are serialization problems. Okay, if you use a storage area network, that mean that every node in the cluster have to go and serialize an operation against the shared media. And that's not how Google and Amazon works. >> There's a lot more databases out there too, and a lot more data sources. You've got the Edge. >> Yeah, but all the new databases, all the modern databases, they basically shared the data across the different nodes so there are no serialization problems. So that's why Oracle doesn't scale, or scale to 10 nodes at best, with a lot of RDMA as a back plane, to allow that. And that's why Amazon can scale to a thousand nodes, or Google-- >> That's the horizontally-scalable piece that's happening. >> Yeah, because, basically, the distribution has to move into the higher layers of the data, and not the lower layers of the data. And that's really the trajectory where the traditional legacy storage and system vendors are going, and we sort of followed the way the cloud guys went, just with our knowledge of the infrastructure, we sort of did it better than what the cloud guys did. 'Cause the cloud guys focused more on the higher levels of the implementation, the algorithms, the Paxos, and all that. Their implementation is not that efficient. And we did both sides extremely efficient. >> How about the Edge? 'Cause Edge is now part of cloud, and you got cloud has got the compute, all the benefits, you were saying, and still they have their own consumption opportunities and challenges that everyone else does. But Edge is now exploding. The combination of those things coming together, at the intersection of that is deep learning, machine learning, which is powering the AI hype. So how is the Edge factoring into your plan and overall architectures for the cloud? >> Yeah, so I wrote a bunch of posts that are not published yet about the Edge, But my analysis along with your analysis and Pierre Levin's analysis, is that cloud have to start distribute more. Because if you're looking at the trends. Five gig, 5G Wi-Fi in wireless networking is going to be gigabit traffic. Gigabit to the homes, they're going to buy Google, 70 bucks a month. It's going to push a lot more bend with the Edge. On the same time, a cloud provider, is in order to lower costs and deal with energy problems they're going to rural areas. The traditional way we solve cloud problems was to put CDNs, so every time you download a picture or video, you got to a CDN. When you go to Netflix, you don't really go to Amazon, you got to a Netflix pop, one of 250 locations. The new work loads are different because they're no longer pictures that need to be cashed. First, there are a lot of data going up. Sensory data, upload files, et cetera. Data is becoming a lot more structured. Censored data is structured. All this car information will be structured. And you want to (mumbles) digest or summarize the data. So you need technologies like machine learning, NNI and all those things. You need something which is like CDNs. Just mini version of cloud that sits somewhere in between the Edge and the cloud. And this is our approach. And now because we can string grab the mini cloud, the mini Amazon in a way more dense approach, then this is a play that we're going to take. We have a very good partnership with Equinox. Which has 170 something locations with very good relations. >> So you're, essentially, going to disrupt the CDN. It's something that I've been writing about and tweeting about. CDNs were based on the old Yahoo days. Cashing images, you mentioned, give me 1999 back, please. That's old school, today's standards. So it's a whole new architecture because of how things are stored. >> You have to be a lot more distributive. >> What is the architecture? >> In our innovation, we have two layers of innovation. One is on the lower layers of, we, actually, have three main innovations. One is on the lower layers of what we discussed. The other one is the security layer, where we classify everything. Layer seven at 100 gig graphic rates. And the third one is all this notion of distributed system. We can, actually, run multiple systems in multiple locations and manage them as one logical entity through high level semantics, high level policies. >> Okay, so when we take the CUBE global, we're going to have you guys on every pop. This is a legit question. >> No it's going to take time for us. We're not going to do everything in one day and we're starting with the local problems. >> Yeah but this is digital transmissions. Stay with me for a second. Stay with this scenario. So video like Netflix is, pretty much, one dimension, it's video. They use CDNs now but when you start thinking in different content types. So, I'm going to have a video with, maybe, just CGI overlayed or social graph data coming in from tweets at the same time with Instagram pictures. I might be accessing multiple data everywhere to watch a movie or something. That would require beyond a CDN thinking. >> And you have to run continuous analytics because it can not afford batch. It can not afford a pipeline. Because you ingest picture data, you may need to add some subtext with the data and feed it, directly, to the consumer. So you have to move to those two elements of moving more stuff into the Edge and running into continuous analytics versus a batch on pipeline. >> So you think, based on that scenario I just said, that there's going to be an opportunity for somebody to take over the media landscape for sure? >> Yeah, I think if you're also looking at the statistics. I seen a nice article. I told George about it. That analyzing the Intel cheap distribution. What you see is that there is a 30% growth on Intel's cheap Intel Cloud which is faster than what most analysts anticipate in terms of cloud growth. That means, actually, that cloud is going to cannibalize Enterprise faster than what most think. Enterprise is shrinking about 7%. There is another place which is growing. It's Telcos. It's not growing like cloud but part of it is because of this move towards the Edge and the move of Telcos buying white boxes. >> And 5G and access over the top too. >> Yeah but that's server chips. >> Okay. >> There's going to be more and more computation in the different Telco locations. >> John: Oh you're talking about computer, okay. >> This is an opportunity that we can capitalize on if we run fast enough. >> It sounds as though because you've implemented these industry standard APIs that come from the, largely, the open source ecosystem, that you can propagate those to areas on the network that the vendors, who are behind those APIs can't, necessarily, do. Into the Telcos, towards the Edge. And, I assume, part of that is cause of the density and the simplicity. So, essentially, your footprint's smaller in terms of hardware and the operational simplicity is greater. Is that a fair assessment? >> Yes and also, we support a lot of Amazon compatible APIs which are RESTful, typically, HTTP based. Very convenient to work with in a cloud environment. Another thing is, because we're taking all the state on ourself, the different forms of states whether it's a message queue or a table or an object, et cetera, that makes the computation layer very simple. So one of the things that we are, also, demonstrating is the integration we have with Kubernetes that, basically, now simplifies Kubernetes. Cause you don't have to build all those different data services for cloud native infrastructure. You just run Kubernetes. We're the volume driver, we're the database, we're the message queues, we're everything underneath Kubernetes and then, you just run Spark or TensorFlow or a serverless function as a Kubernetes micro service. That allows you now, elastically, to increase the number of Spark jobs that you need or, maybe, you have another tenant. You just spun a Spark job. YARN has some of those attributes but YARN is very limited, very confined to the Hadoop Ecosystem. TensorFlow is not a Hadoop player and a bunch of those new tools are not in Hadoop players and everyone is now adopting a new way of doing streaming and they just call it serverless. serverless and streaming are very similar technologies. The advantage of serverless is all this pre-packaging and all this automation of the CICD. The continuous integration, the continuous development. So we're thinking, in order to simplify the developer in an operation aspects, we're trying to integrate more and more with cloud native approach around CICD and integration with Kubernetes and cloud native technologies. >> Would it be fair to say that from a developer or admin point of view, you're pushing out from the cloud towards the Edge faster than if the existing implementations say, the Apache Ecosystem or the AWS Ecosystem where AWS has something on the edge. I forgot whether it's Snowball or Green Grass or whatever. Where they at least get the lambda function. >> They're field by the way and it's interesting to see. One of the things they allowed lambda functions in their CDS which is going the direction I mentioned just for a minimal functionality. Another thing is they have those boxes where they have a single VM and they can run lambda function as well. But I think their ability to run computation is very limited and also, their focus is on shipping the boxes through mail and we want it to be always connected. >> Our final question for you, just to get your thoughts. Great save up, by the way. This is very informative. Maybe be should do a follow up on Skype in our studio for Silocon Friday show. Google Next was interesting. They're serious about the Enterprise but you can see that they're not yet there. What is the Enterprise readiness from your perspective? Cause Google has the tech and they try to flaunt the tech. We're great, we're Google, look at us, therefore, you should buy us. It's not that easy in the Enterprise. How would you size up the different players? Because they're all not like Amazon although Amazon is winning. You got Amazon, Azure and Google. Your thoughts on the cloud players. >> The way we attack Enterprise, we don't attack it from an Enterprise perspective or IT perspective, we take it from a business use case perspective. Especially, because we're small and we have to run fast. You need to identify a real critical business problem. We're working with stock exchanges and they have a lot of issues around monitoring the daily trade activities in real time. If you compare what we do with them on this continuous analytics notion to how they work with Excel's and Hadoops, it's totally different and now, they could do things which are way different. I think that one of the things that Hadook's customer, if Google wants to succeed against Amazon, they have to find the way of how to approach those business owners and say here's a problem Mr. Customer, here's a business challenge, here's what I'm going to solve. If they're just going to say, you know what? My VM's are cheaper than Amazon, it's not going to be a-- >> Also, they're doing the whole, they're calling lift and shift which is code word for rip and replace in the Enterprise. So that's, essentially, I guess, a good opportunity if you can get people to do that but not everyone's ripping and replacing and lifting and shifting. >> But a lot of Google advantages around areas of AI and things like that. So they should try and leverage, if you think about Amazon approach to AI, this fund the university to build a project and then set it's hours where Google created TensorFlow and created a lot of other IPs and Dataflow and all those solutions and consumered it to the community. I really love Google's approach of contributing Kubernetes, to contributing TensorFlow. And this way, they're planting the seeds so the new generation this is going to work with Kubernetes and TensorFlow who are going to say, "You know what?" "Why would I mess with this thing on (mumbles) just go and. >> Regular cloud, do multi-cloud. >> Right to the cloud. But I think a lot of criticism about Google is that they're too research oriented. They don't know how to monetize and approach the-- >> Enterprise is just a whole different drum beat and I think that's the only thing on my complaint with them, they got to get that knowledge and/or buy companies. Have a quick final point on Spanner or any analysis of Spanner that went from paper, pretty quickly, from paper to product. >> So before we started iguazio, I started Spanner quite a bit. All the publication was there and all the other things like Spanner. Spanner has the underlying layer called Colossus. And our data layer is very similar to how Colossus works. So we're very familiar. We took a lot of concepts from Spanner on our platform. >> And you like Spanner, it's legit? >> Yes, again. >> Cause you copied it. (laughs) >> Yaron: We haven't copied-- >> You borrowed some best practices. >> I think I cited about 300 research papers before we did the architecture. But we, basically, took the best of each one of them. Cause there's still a lot of issues. Most of those technologies, by the way, are designed for mechanical disks and we can talk about it in a different-- >> And you have Flash. Alright, Yaron, we have gone over here. Great segment. We're here, live in Silicon Valley, breakin it down, getting under the hood. Looking a 10X, 100X performance advantages. Keep an eye on iguazio, they're looking like they got some great products. Check them out. This is the CUBE. I'm John Furrier with George Gilbert. We'll be back with more after this short break. (upbeat synthesizer music)