>> From theCUBE Studios in Palo Alto and Boston bringing you data driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> After a two year hiatus, AWS re:Inforce is back on as an in-person event in Boston next week. Like the All-Star break in baseball, re:Inforce gives us an opportunity to evaluate the cyber security market overall, the state of cloud security and cross cloud security and more specifically what AWS is up to in the sector. Welcome to this week's Wikibon cube insights powered by ETR. In this Breaking Analysis we'll share our view of what's changed since our last cyber update in May. We'll look at the macro environment, how it's impacting cyber security plays in the market, what the ETR data tells us and what to expect at next week's AWS re:Inforce. We start this week with a checkpoint from Breaking Analysis contributor and stock trader Chip Simonton. We asked for his assessment of the market generally in cyber stocks specifically. So we'll summarize right here. We've kind of moved on from a narrative of the sky is falling to one where the glass is half empty you know, and before today's big selloff it was looking more and more like glass half full. The SNAP miss has dragged down many of the big names that comprise the major indices. You know, earning season as always brings heightened interest and this time we're seeing many cross currents. It starts as usual with the banks and the money centers. With the exception of JP Morgan the numbers were pretty good according to Simonton. Investment banks were not so great with Morgan and Goldman missing estimates but in general, pretty positive outlooks. But the market also shrugged off IBM's growth. And of course, social media because of SNAP is getting hammered today. The question is no longer recession or not but rather how deep the recession will be. And today's PMI data was the weakest since the start of the pandemic. Bond yields continue to weaken and there's a growing consensus that Fed tightening may be over after September as commodity prices weaken. Now gas prices of course are still high but they've come down. Tesla, Nokia and AT&T all indicated that supply issues were getting better which is also going to help with inflation. So it's no shock that the NASDAQ has done pretty well as beaten down as tech stocks started to look oversold you know, despite today's sell off. But AT&T and Verizon, they blamed their misses in part on people not paying their bills on time. SNAP's huge miss even after guiding lower and then refusing to offer future guidance took that stock down nearly 40% today and other social media stocks are off on sympathy. Meta and Google were off, you know, over 7% at midday. I think at one point hit 14% down and Google, Meta and Twitter have all said they're freezing new hires. So we're starting to see according to Simonton for the first time in a long time, the lower income, younger generation really feeling the pinch of inflation. Along of course with struggling families that have to choose food and shelter over discretionary spend. Now back to the NASDAQ for a moment. As we've been reporting back in mid-June and NASDAQ was off nearly 33% year to date and has since rallied. It's now down about 25% year to date as of midday today. But as I say, it had been, you know much deeper back in early June. But it's broken that downward trend that we talked about where the highs are actually lower and the lows are lower. That's started to change for now anyway. We'll see if it holds. But chip stocks, software stocks, and of course the cyber names have broken those down trends and have been trading above their 50 day moving averages for the first time in around four months. And again, according to Simonton, we'll see if that holds. If it does, that's a positive sign. Now remember on June 24th, we recorded a Breaking Analysis and talked about Qualcomm trading at a 12 X multiple with an implied 15% growth rate. On that day the stock was 124 and it surpassed 155 earlier this month. That was a really good call by Simonton. So looking at some of the cyber players here SailPoint is of course the anomaly with the Thoma Bravo 7 billion acquisition of the company holding that stock up. But the Bug ETF of basket of cyber stocks has definitely improved. When we last reported on cyber in May, CrowdStrike was off 23% year to date. It's now off 4%. Palo Alto has held steadily. Okta is still underperforming its peers as it works through the fallout from the breach and the ingestion of its Auth0 acquisition. Meanwhile, Zscaler and SentinelOne, those high flyers are still well off year to date, with Ping Identity and CyberArk not getting hit as hard as their valuations hadn't run up as much. But virtually all these tech stocks generally in cyber issues specifically, they've been breaking their down trend. So it will now come down to earnings guidance in the coming months. But the SNAP reaction is quite stunning. I mean, the environment is slowing, we know that. Ad spending gets cut in that type of market, we know that too. So it shouldn't be a huge surprise to anyone but as Chip Simonton says, this shows that sellers are still in control here. So it's going to take a little while to work through that despite the positive signs that we're seeing. Okay. We also turned to our friend Eric Bradley from ETR who follows these markets quite closely. He frequently interviews CISOs on his program, on his round tables. So we asked to get his take and here's what ETR is saying. Again, as we've reported while CIOs and IT buyers have tempered spending expectations since December and early January when they called for an 8% plus spending growth, they're still expecting a six to seven percent uptick in spend this year. So that's pretty good. Security remains the number one priority and also is the highest ranked sector in the ETR data set when you measure in terms of pervasiveness in the study. Within security endpoint detection and extended detection and response along with identity and privileged account management are the sub-sectors with the most spending velocity. And when you exclude Microsoft which is just dominant across the board in so many sectors, CrowdStrike has taken over the number one spot in terms of spending momentum in ETR surveys with CyberArk and Tanium showing very strong as well. Okta has seen a big dropoff in net score from 54% last survey to 45% in July as customers maybe put a pause on new Okta adoptions. That clearly shows in the survey. We'll talk about that in a moment. Look Okta still elevated in terms of spending momentum, but it doesn't have the dominant leadership position it once held in spend velocity. Year on year, according to ETR, Tenable and Elastic are seeing the biggest jumps in spending momentum, with SailPoint, Tanium, Veronis, CrowdStrike and Zscaler seeing the biggest jump in new adoptions since the last survey. Now on the downside, SonicWall, Symantec, Trellic which is McAfee, Barracuda and TrendMicro are seeing the highest percentage of defections and replacements. Let's take a deeper look at what the ETR data tells us about the cybersecurity space. This is a popular view that we like to share with net score or spending momentum on the Y axis and overlap or pervasiveness in the data on the X axis. It's a measure of presence in the data set we used to call it market share. With the data, the dot positions, you see that little inserted table, that's how the dots are plotted. And it's important to note that this data is filtered for firms with at least 100 Ns in the survey. That's why some of the other ones that we mentioned might have dropped off. The red dotted line at 40% that indicates highly elevated spending momentum and there are several firms above that mark including of course, Microsoft, which is literally off the charts in both dimensions in the upper right. It's quite incredible actually. But for the rest of the pack, CrowdStrike has now taken back its number one net score position in the ETR survey. And CyberArk and Okta and Zscaler, CloudFlare and Auth0 now Okta through the acquisition, are all above the 40% mark. You can stare at the data at your leisure but I'll just point out, make three quick points. First Palo Alto continues to impress and as steady as she goes. Two, it's a very crowded market still and it's complicated space. And three there's lots of spending in different pockets. This market has too many tools and will continue to consolidate. Now I'd like to drill into a couple of firms net scores and pick out some of the pure plays that are leading the way. This series of charts shows the net score or spending velocity or granularity for Okta, CrowdStrike, Zscaler and CyberArk. Four of the top pure plays in the ETR survey that also have over a hundred responses. Now the colors represent the following. Bright red is defections. We're leaving the platform. The pink is we're spending less, meaning we're spending 6% or worse. The gray is flat spend plus or minus 5%. The forest green is spending more, i.e, 6% or more and the lime green is we're adding the platform new. That red dotted line at the 40% net score mark is the same elevated level that we like to talk about. All four are above that target. Now that blue line you see there is net score. The yellow line is pervasiveness in the data. The data shown in each bar goes back 10 surveys all the way back to January 2020. First I want to call out that all four again are seeing down trends in spending momentum with the whole market. That's that blue line. They're seeing that this quarter, again, the market is off overall. Everybody is kind of seeing that down trend for the most part. Very few exceptions. Okta is being hurt by fewer new additions which is why we highlighted in red, that red dotted area, that square that we put there in the upper right of that Okta bar. That lime green, new ads are off as well. And the gray for Okta, flat spending is noticeably up. So it feels like people are pausing a bit and taking a breather for Okta. And as we said earlier, perhaps with the breach earlier this year and the ingestion of Auth0 acquisition the company is seeing some friction in its business. Now, having said that, you can see Okta's yellow line or presence in the data set, continues to grow. So it's a good proxy from market presence. So Okta remains a leader in identity. So again, I'll let you stare at the data if you want at your leisure, but despite some concerns on declining momentum, notice this very little red at these companies when it comes to the ETR survey data. Now one more data slide which brings us to our four star cyber firms. We started a tradition a few years ago where we sorted the ETR data by net score. That's the left hand side of this graphic. And we sorted by shared end or presence in the data set. That's the right hand side. And again, we filtered by companies with at least 100 N and oh, by the way we've excluded Microsoft just to level the playing field. The red dotted line signifies the top 10. If a company cracks the top 10 in both spending momentum and presence, we give them four stars. So Palo Alto, CrowdStrike, Okta, Fortinet and Zscaler all made the cut this time. Now, as we pointed out in May if you combined Auth0 with Okta, they jumped to the number two on the right hand chart in terms of presence. And they would lead the pure plays there although it would bring down Okta's net score somewhat, as you can see, Auth0's net score is lower than Okta's. So when you combine them it would drag that down a little bit but it would give them bigger presence in the data set. Now, the other point we'll make is that Proofpoint and Splunk both dropped off the four star list this time as they both saw marked declines in net score or spending velocity. They both got four stars last quarter. Okay. We're going to close on what to expect at re:Inforce this coming week. Re:Inforce, if you don't know, is AWS's security event. They first held it in Boston back in 2019. It's dedicated to cloud security. The past two years has been virtual and they announced that reinvent that it would take place in Houston in June, which everybody said, that's crazy. Who wants to go to Houston in June and turns out nobody did so they postponed the event, thankfully. And so now they're back in Boston, starting on Monday. Not that it's going to be much cooler in Boston. Anyway, Steven Schmidt had been the face of AWS security at all these previous events as the Chief Information Security Officer. Now he's dropped the I from his title and is now the Chief Security Officer at Amazon. So he went with Jesse to the mothership. Presumably he dropped the I because he deals with physical security now too, like at the warehouses. Not that he didn't have to worry about physical security at the AWS data centers. I don't know. Anyway, he and CJ Moses who is now the new CISO at AWS will be keynoting along with some others including MongoDB's Chief Information Security Officer. So that should be interesting. Now, if you've been following AWS you'll know they like to break things down into, you know, a couple of security categories. Identity, detection and response, data protection slash privacy slash GRC which is governance, risk and compliance, and we would expect a lot more talk this year on container security. So you're going to hear also product updates and they like to talk about how they're adding value to services and try to help, they try to help customers understand how to apply services. Things like GuardDuty, which is their threat detection that has machine learning in it. They'll talk about Security Hub, which centralizes views and alerts and automates security checks. They have a service called Detective which does root cause analysis, and they have tools to mitigate denial of service attacks. And they'll talk about security in Nitro which isolates a lot of the hardware resources. This whole idea of, you know, confidential computing which is, you know, AWS will point out it's kind of become a buzzword. They take it really seriously. I think others do as well, like Arm. We've talked about that on previous Breaking Analysis. And again, you're going to hear something on container security because it's the hottest thing going right now and because AWS really still serves developers and really that's what they're trying to do. They're trying to enable developers to design security in but you're also going to hear a lot of best practice advice from AWS i.e, they'll share the AWS dogfooding playbooks with you for their own security practices. AWS like all good security practitioners, understand that the keys to a successful security strategy and implementation don't start with the technology, rather they're about the methods and practices that you apply to solve security threats and a top to bottom cultural approach to security awareness, designing security into systems, that's really where the developers come in, and training for continuous improvements. So you're going to get heavy doses of really strong best practices and guidance and you know, some good preaching. You're also going to hear and see a lot of partners. They'll be very visible at re:Inforce. AWS is all about ecosystem enablement and AWS is going to host close to a hundred security partners at the event. This is key because AWS doesn't do it all. Interestingly, they don't even show up in the ETR security taxonomy, right? They just sort of imply that it's built in there even though they have a lot of security tooling. So they have to apply the shared responsibility model not only with customers but partners as well. They need an ecosystem to fill gaps and provide deeper problem solving with more mature and deeper security tooling. And you're going to hear a lot of positivity around how great cloud security is and how it can be done well. But the truth is this stuff is still incredibly complicated and challenging for CISOs and practitioners who are understaffed when it comes to top talent. Now, finally, theCUBE will be at re:Inforce in force. John Furry and I will be hosting two days of broadcast so please do stop by if you're in Boston and say hello. We'll have a little chat, we'll share some data and we'll share our overall impressions of the event, the market, what we're seeing, what we're learning, what we're worried about in this dynamic space. Okay. That's it for today. Thanks for watching. Thanks to Alex Myerson, who is on production and manages the podcast. Kristin Martin and Cheryl Knight, they helped get the word out on social and in our newsletters and Rob Hoff is our Editor in Chief over at siliconangle.com. You did some great editing. Thank you all. Remember all these episodes they're available, this podcast. Wherever you listen, all you do is search Breaking Analysis podcast. I publish each week on wikibon.com and siliconangle.com. You can get in touch with me by emailing avid.vellante@siliconangle.com or DM me @dvellante, or comment on my LinkedIn post and please do check out etr.ai for the best survey data in the enterprise tech business. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching and we'll see you in Boston next week if you're there or next time on Breaking Analysis (soft music)

(lively music) >> Hello, everyone. Welcome back to the Supercloud presentation here. I'm theCUBE, I'm John Furrier, your host. What a great segment here. We're going to unpack the networking aspect of the cloud, how that translates into what Supercloud architecture and platform deployment scenarios look like. And demystify multi-cloud, hybridcloud. We've got two great experts. Amir Khan, the Co-Founder and CEO of Alkira, Atif Khan, Co-Founder and CTO of Alkira. These guys been around since 2018 with the startup, but before that story, history in the tech industry. I mean, routing early days, multiple waves, multiple cycles. >> Welcome three decades. >> Welcome to Supercloud. >> Thanks. >> Thanks for coming on. >> Thank you so much for having us. >> So, let's get your take on Supercloud because it's been one of those conversations that really galvanized the industry because it kind of highlights almost this next wave, this next side of the street that everyone's going to be on that's going to be successful. The laggards on the legacy seem to be stuck on the old model. SaaS is growing up, it's ISVs, it's ecosystems, hyperscale, full hybrid. And then multi-cloud around the corners cause all this confusion, everyone's hand waving. You know, this is a solution, that solution, where are we? What do you guys see as this supercloud dynamic? >> So where we start from is always focusing on the customer problem. And in 2018 when we identified the problem, we saw that there were multiple clouds with many diverse ways of doing things from the network perspective, and customers were struggling with that. So we delved deeper into that and looked at each one of the cloud architectures completely independent. And there was no common solution and customers were struggling with that from the perspective. They wanted to be in multiple clouds, either through mergers and acquisitions or running an application which may be more cost effective to run in something or maybe optimized for certain reasons to run in a different cloud. But from the networking perspective, everything needed to come together. So that's, we are starting to define it as a supercloud now, but basically, it's a common infrastructure across all clouds. And then integration of high lift services like, you know, security or IPAM services or many other types of services like inter-partner routing and stuff like that. So, Amir, you agree then that multi-cloud is simply a default result of having whatever outcomes, either M&A, some productivity software, maybe Azure. >> Yes. >> Amazon has this and then I've got on-premise application, so it's kinds mishmash. >> So, I would qualify it with hybrid multi-cloud because everything is going to be interconnected. >> John: Got it. >> Whether it's on-premise, remote users or clouds. >> But have CTO perspective, obviously, you got developers, multiple stacks, got AWS, Azure and GCP, other. Not everyone wants to kind of like go all in, but yet they don't want to hedge too much because it's a resource issue. And I got to learn this stack, I got to learn that stack. So then now, you have this default multi-cloud, hybrid multi-cloud, then it's like, okay, what do I do? How do you spread that around? Is it dangerous? What's the the approach technically? What's some of the challenges there? >> Yeah, certainly. John, first, thanks for having us here. So, before I get to that, I'll just add a little bit to what Amir was saying, like how we started, what we were seeing and how it, you know, correlates with the supercloud. So, as you know, before this company, Alkira, we were doing, we did the SD-WAN company, which was Viptela. So there, we started seeing when people started deploying SD-WAN at like a larger scale. We started like, you know, customers coming to us and saying they needed connectivity into the cloud from the SD-WAN. They wanted to extend the SD-WAN fabric to the cloud. So we came up with an architecture, which was like later we started calling them Cloud onRamps, where we built, you know, a transit VPC and put like the virtual instances of SD-WAN appliances extended from there to the cloud. But before we knew, like it started becoming very complicated for the customers because it wasn't just connectivity, it also required, you know, other use cases. You had to instantiate or bring in security appliances in there. You had to secure all of that stuff. There were requirements for, you know, different regions. So you had to bring up the same thing in different regions. Then multiple clouds, what did you do? You had to replicate the same thing in multiple clouds. And now if there was was requirement between clouds, how were you going to do it? You had to route traffic from somewhere, and come up with all those routing controls and stuff. So, it was very complicated. >> Like spaghetti code, but on network. >> The games begin, in fact, one of our customers called it spaghetti mess. And so, that's where like we thought about where was the industry going and which direction the industry was going into? And we came up with the Alkira where what we are doing is building a common infrastructure across multiple clouds, across in, you know, on-prem locations, be it data centers or physical sites, branches sites, et cetera, with integrated security and network networking services inside. And, you know, nowadays, networking is not only about connectivity, you have to secure everything. So, security has to be built in. Redundancy, high availability, disaster recovery. So all of that needs to be built in. So that's like, you know, kind of a definition of like what we thought at that time, what is turning into supercloud now. >> Yeah. It's interesting too, you mentioned, you know, VPCs is not, configuration of loans a hassle. Nevermind the manual mistakes could be made, but as you decide to do something you got to, "Oh, we got to get these other things." A lot of the hyper scales and a lot of the alpha cloud players now, and cloud native folks, they're kind of in that mode of, "Wow, look at what we've built." Now, they're got to maintain, how do I refresh it? Like, how do I keep the talent? So they got this similar chaotic environment where it's like, okay, now they're already already through, so I think they're going to be okay. But then some people want to bypass it completely. So there's a lot of customers that we see out there that fit the makeup of, I'm cloud first, I've lifted and shifted, I move some stuff to the cloud. But I want to bypass all that learnings from all the people that are gone through the past three years. Can I just skip that and go to a multi-cloud or coherent infrastructure? What do you think about that? What's your view? >> So yeah, so if you look at these enterprises, you know, many of them just to find like the talent, which for one cloud as far as the IT staff is concerned, it's hard enough. And now, when you have multiple clouds, it's hard to find people the talent which is, you know, which has expertise across different clouds. So that's where we come into the picture. So our vision was always to simplify all of this stuff. And simplification, it cannot be just simplification because you cannot just automate the workflows of the cloud providers underneath. So you have to, you know, provide your full data plane on top of it, fed full control plane, management plane, policy and management on top of it. And coming back to like your question, so these nowadays, those people who are working on networking, you know, before it used to be like CLI. You used to learn about Cisco CLI or Juniper CLI, and you used to work on it. Nowadays, it's very different. So automation, programmability, all of that stuff is the key. So now, you know, Ops guys, the DevOps guys, so these are the people who are in high demand. >> So what do you think about the folks out there that are saying, okay, you got a lot of fragmentation. I got the stacks, I got a lot of stove pipes, if you will, out there on the stack. I got to learn this from Azure. Can you guys have with your product abstract the way that's so developers don't need to know the ins and outs of stack's, almost like a gateway, if you will, the old days. But like I'm a developer or team develop, why should I have to learn the management layer of Azure? >> That's exactly what we started, you know, out with to solve. So it's, what we have built is a platform and the platform sits inside the cloud. And customers are able to build their own network or a virtual network on top using that platform. So the platform has its own data plane, own control plane and management plane with a policy layer on top of it. So now, it's the platform which is sitting in different clouds, but from a customer's point of view, it's one way of doing networking. One way of instantiating or bringing in services or security services in the middle. Whether those are our security services or whether those are like services from our partners, like Palo Alto or Checkpoint or Cisco. >> So you guys brought the SD-WAN mojo and refactored it for the cloud it sounds like. >> No. >> No? (chuckles) >> We cannot said. >> All right, explain. >> It's way more than that. >> I mean, SD-WAN was wan. I mean, you're talking about wide area networks, talking about connected, so explain the difference. >> SD-WAN was primarily done for one major reason. MPLS was expensive, very strong SLAs, but very low speed. Internet, on the other hand, you sat at home and you could access your applications much faster. No SLA, very low cost, right? So we wanted to marry the two together so you could have a purely private infrastructure and a public infrastructure and secure both of them by creating a common secure fabric across all those environments. And then seamlessly tying it into your internal branch and data center and cloud network. So, it merely brought you to the edge of the cloud. It didn't do anything inside the cloud. Now, the major problem resides inside the clouds where you have to optimize the clouds themselves. Take a step back. How were the clouds built? Basically, the cloud providers went to the Ciscos and Junipers and the rest of the world, built the network in the data centers or across wide area infrastructure, and brought it all together and tried to create a virtualized layer on top of that. But there were many limitations of this underlying infrastructure that they had built. So number of routes per region, how inter region connectivity worked, or how many routes you could carry to the VPCs of V nets? That all those were becoming no common policy across, you know, these environments, no segmentation across these environments, right? So the networking constructs that the enterprise customers were used to as enterprise class carry class capabilities, they did not exist in the cloud. So what did the customer do? They ended up stitching it together all manually. And that's why Atif was alluding to earlier that it became a spaghetti mess for the customers. And then what happens is, as a result, day two operations, you know, troubleshooting, everything becomes a nightmare. So what do you do? You have to build an infrastructure inside the cloud. Cloud has enough raw capabilities to build the solutions inside there. Netflix's of the world. And many different companies have been born in the cloud and evolved from there. So why could we not take the raw capabilities of the clouds and build a network cloud or a supercloud on top of these clouds to optimize the whole infrastructure and seamlessly connecting it into the on-premise and remote user locations, right? So that's your, you know, hybrid multi-cloud solution. >> Well, great call out on the SD-WAN in common versus cloud. 'Cause I think this is important because you're building a network layer in the cloud that spans out so the customers don't have to get into the, there's a gap in the system that I'm used to, my operating environment, of having lockdown security and network. >> So yeah. So what you do is you use the raw capabilities like bandwidth or virtual machines, or you know, containers, or, you know, different types of serverless capabilities. And you bring it all together in a way to solve the networking problems, thereby creating a supercloud, which is an abstraction layer which hides all the complexity of the underlying clouds from the customer, right? And it provides a common infrastructure across all environments to that customer, right? That's the beauty of it. And it does it in a way that it looks like, if they have the networking knowledge, they can apply it to this new environment and carry it forward. One way of doing security across all clouds and hybrid environments. One way of doing routing. One way of doing large-scale network address translation. One way of doing IPAM services. So people are tired of doing individual things and individual clouds and on-premise locations, right? So now they're getting something common. >> You guys brought that, you brought all that to bear and flexible for the customer to essentially self-serve their network cloud. >> Yes, yeah. Is that the wave? >> And nowadays, from business perspective, agility is the key, right? You have to move at the pace of the business. If you don't, you are losing. >> So, would it be safe to say that you guys have a network supercloud? >> Absolutely, yeah. >> We, pretty much, yeah. Absolutely. >> What does that mean to our customer? What's in it for them? What's the benefit to the customer? I got a network supercloud, it connects, provides SLA, all the capabilities I need. What do they get? What's the end point for them? What's the end? >> Atif, maybe you can talk some examples. >> The IT infrastructure is all like distributed now, right? So you have applications running in data centers. You have applications running in one cloud. Other cloud, public clouds, enterprises are depending on so many SaaS applications. So now, these are, you can call these endpoints. So a supercloud or a network cloud, from our perspective, it's a cloud in the middle or a network in the middle, which provides connectivity from any endpoint to any endpoint. So, you are able to connect to the supercloud or network cloud in one way no matter where you are. So now, whichever cloud you are in, whichever cloud you need to connect to. And also, it's not just connecting to the cloud. So you need to do a lot of stuff, a lot of networking inside the cloud also. So now, as Amir was saying, every cloud has its own from a networking, you know, the concept perspective or the construct, they are different. There are limitations in there also. So this supercloud, which is sitting on top, basically, your platform is sitting into the cloud, but the supercloud is built on top of using your platform. So that abstracts all those complexities, all those limitations. So now your limitations are whatever the limitations of that platform are. So now your platform, that platform is in our control. So we can keep building it, we can keep scaling it horizontally. Because one of the things is that, you know, in this cloud era, one of the things is autoscaling these services. So why can't the network now autoscale also, just like your other services. >> Network autoscaling is a genius idea, and I think that's a killer. I want to ask the the follow on question because I think, first of all, I love what you guys are doing. So, I think it's a great example of this new innovation. It's not obvious until you see it, right? Geographical is huge. So, you know, single instance, global instances, multiple instances, you're seeing global. How do you guys look at that global equation? Because as companies expand their clouds into geos, and then ultimately, you know, it's obviously continent, region and locales. You're going to have geographic issues. So, this is an extension of your network cloud? >> Amir: It is the extension of the network cloud because if you look at this hyperscalers, they're sitting pretty much everywhere in the globe. So, wherever their regions are, the beauty of building a supercloud is that you can by definition, be available in those regions. It literally takes a day or two of testing for our stack to run in those regions, to make sure there are no nuances that we run into, you know, for that region. The moment we bring it up in that region, all customers can onboard into that solution. So literally, what used to take months or years to build a global infrastructure, now, you can configure it in 10 minutes basically, and bring it up in less than one hour. Since when did we see any solution- >> And by the way, >> that can come up with. >> when the edge comes out too, you're going to start to see more clouds get bolted on. >> Exactly. And you can expand to the edge of the network. That's why we call cloud the new edge, right? >> John: Yeah, it is. Now, I think you guys got a good solutions, network clouds, superclouds, good. So the question on the premise side, so I get the cloud play. It's very cool. You can expand out. It's a nice layer. I'm sure you manage the SLAs between latency and all kinds of things. Knowing when not to do things. Physics or physics. Okay. Now, you've got the on-premise. What's the on-premise equation look like? >> So on-premise, the kind of customers, we are working with large enterprises, mid-size enterprises. So they have on-prem networks, they have deployed, in many cases, they have deployed SD-WAN. In many cases, they have MPLS. They have data centers also. And a lot of these companies are, you know, moving the applications from the data center into the cloud. But we still have large enterprise- >> But for you guys, you can sit there too with non server or is it a box or what is it? >> It's a software stack, right? So, we are a software company. >> Okay, so no box. >> No box. >> Okay, got it. >> No box. >> It's even better. So, we can connect any, as I mentioned, any endpoint, whether it's data centers. So, what happens is usually these enterprises from the data centers- >> John: It's a cloud endpoint for you. >> Cloud endpoint for us. And they need highspeed connectivity into the cloud. And our network cloud is sitting inside the or supercloud is sitting inside the cloud. So we need highspeed connectivity from the data centers. This is like multi-gig type of connectivity. So we enable that connectivity as a service. And as Amir was saying, you are able to bring it up in minutes, pretty much. >> John: Well, you guys have a great handle on supercloud. I really appreciate you guys coming on. I have to ask you guys, since you have so much experience in the industry, multiple inflection points you've guys lived through and we're all old, and we can remember those glory days. What's the big deal going on right now? Because you can connect the dots and you can imagine, okay, like a Lambda function spinning up some connectivity. I need instant access to a new route, throw some, I need to send compute to an edge point for process data. A lot of these kind of ad hoc services are going to start flying around, which used to be manually configured as you guys remember. >> Amir: And that's been the problem, right? The shadow IT, that was the biggest problem in the enterprise environment. So that's what we are trying to get the customers away from. Cloud teams came in, individuals or small groups of people spun up instances in the cloud. It was completely disconnected from the on-premise environment or the existing IT environment that the customer had. So, how do you bring it together? And that's what we are trying to solve for, right? At a large scale, in a carrier cloud center (indistinct). >> What do you call that? Shift right or shift left? Shift left is in the cloud native world security. >> Amir: Yes. >> Networking and security, the two hottest areas. What are you shifting? Up or down? I mean, the network's moving up the stack. I mean, you're seeing the run times at Kubernetes later' >> Amir: Right, right. It's true we're end-to-end virtualization. So you have plumbing, which is the physical infrastructure. Then on top of that, now for the first time, you have true end-to-end virtualization, which the cloud-like constructs are providing to us. We tried to virtualize the routers, we try to virtualize instances at the server level. Now, we are bringing it all together in a truly end-to-end virtualized manner to connect any endpoint anywhere across the globe. Whether it's on-premise, home, multiple clouds, or SaaS type environments. >> Yeah. If you talk about the technical benefits beyond virtualizations, you kind of see in virtualization be abstracted away. So you got end-to-end virtualization, but you don't need to know virtualization to take advantage of it. >> Exactly. Exactly. >> What are some of the tech involved where, what's the trend around on top of virtual? What's the easy button for that? >> So there are many, many use cases from the customers and they're, you know, some of those use cases, they used to deliver out of their data centers before. So now, because you, know, it takes a long time to spend something up in the data center and stuff. So the trend is and what enterprises are looking for is agility. And to achieve that agility, they are moving those services or those use cases into the cloud. So another technical benefit of like something like a supercloud and what we are doing is we allow customers to, you know, move their services from existing data centers into the cloud as well. And I'll give you some examples. You know, these enterprises have, you know, tons of partners. They provide connectivity to their partners, to select resources. It used to happen inside the data center. You would bring in connectivity into the data center and apply like tons of ACLs and whatnot to make sure that you are able to only connect. And now those use cases are, they need to be enabled inside the cloud. And the customer's customers are also, it's not just coming from the on-prem, they're coming from the cloud as well. So, if they're coming from the cloud as well as from on-prem, so you need like an infrastructure like supercloud, which is sitting inside the cloud and is able to handle all these use cases. So all of these use cases have to be, so that requires like moving those services from the data center into the cloud or into the supercloud. So, they're, oh, as we started building this service over the last four years, we have come across so many use cases. And to deliver those use cases, you have to have a platform. So you have to have your own platform because otherwise you are depending on somebody else's, you know, capabilities. And every time their capabilities change, you have to change. >> John: I'm glad you brought up the platform 'cause I want to get your both reaction to this. So Bob Muglia just said on theCUBE here at Supercloud, that supercloud is a platform that provides programmatically consistent services hosted on heterogeneous cloud providers. So the question is, is supercloud a platform or an architecture in your view? >> That's an interesting view on things, you know? I mean, if you think of it, you have to design or architect a solution before we turn it into a platform. >> John: It's a trick question actually. >> So it's a, you know, so we look at it as that you have to have an architectural approach end to end, right? And then you build a solution based on that approach. So, I don't think that they are mutually exclusive. I think they go hand in hand. It's an architecture that you turn into a solution and provide that agility and high availability and disaster recovery capability that it built into that. >> It's interesting that these definitions might be actually redefined with this new configuration. >> Amir: Yes. >> Because architecture and platform used to mean something, like, aight here's a platform, you buy this platform. >> And then you architecture solution. >> Architect it via vendor. >> Right, right, right. >> Okay. And they have to deal with that architecture in the place of multiple superclouds. If you have too many stove pipes, then what's the purpose of supercloud? >> Right, right, right. And because, you know, historically, you built a router and you sold it to the customer. And the poor customer was supposed to install it all, you know, and interconnect all those things. And if you have 40, 50,000 router network, which we saw in our lifetime, 'cause there used to be many more branches when we were growing up in the networking industry, right? You had to create hierarchy and all kinds of things to figure out how to solve that problem. We are no longer living in that world anymore. You cannot deploy individual virtual instances. And that's what approach a lot of people are taking, which is a pure overly network. You cannot take that approach anymore. You have to evolve the architecture and then build the solution based on that architecture so that it becomes a platform which is readily available, highly scalable, and available. And at the same time, it's very, very easy to deploy. It's a SaaS type solution, right? >> So you're saying, do the architecture to get the solution for the platform that the customer has. >> Amir: Yes. >> They're not buying a platform, they end up with a platform- >> With the platform. >> as a result of Supercloud path. All right. So that's what's, so you mentioned, that's a great point. I want to double click on what you just said. 'Cause I like that what you said. What's the deployment strategy in your mind for supercloud? I'm an architect. I'm at an enterprise in the Midwest. I'm an insurance company, got some cloud action going on. I'm mostly on-premise. I've got the mandate to transform the company. We have apps. We'll be fully transformed in five years. What's my strategy? What do I do? >> Amir: The resources. >> What's the deployment strategy? Single global instance, code in every region, on every cloud? >> It needs to be a solution which is available as a SaaS service, right? So from the customer's perspective, they are onboarding into the supercloud. And then the supercloud is allowing them to do whatever they used to do, you know, historically and in the new world, right? That needs to come together. And that's what we have built is that, we have brought everything together in a way that what used to take months or years, and now taking an hour or two hours, and then people test it for a week or so and deploy it in production. >> I want to bring up something we were talking about before we were on camera about the TCP/IP, the OSI model. That was a concept that destroyed the proprietary narcissist. Work operating systems of the mini computers, which brought in an era of tech prosperity for generations. TCP/IP was kind of the magical moment that allowed for that kind of super networking connection. Inter networking is what's called as a category. It feels like something's going on here with supercloud. The way you describe it, it feels like there's this unification idea. Like the reality is we've got multiple stuff sitting around by default, you either clean it up or get rid of it, right? Or it's almost a, it's either a nuance, a new nuisance or chaos. >> Yeah. And we live in the new world now. We don't have the luxury of time. So we need to move as fast as possible to solve the business problems. And that's what we are running into. If we don't have automated solutions which scale, which solve our problems, then it's going to be a problem. And that's why SaaS is so important in today's world. Why should we have to deploy the network piecemeal? Why can't we have a solution? We solve our problem as we move forward and we accomplish what we need to accomplish and move forward. >> And we don't really need standards here, dude. It's not that we need a standards body if you have unification. >> So because things move so fast, there's no time to create a standards body. And that's why you see companies like ours popping up, which are trying to create a common infrastructure across all clouds. Otherwise if we vent the standardization path may take long. Eventually, we should be going in that direction. But we don't have the luxury of time. That's what I was trying to get to. >> Well, what's interesting is, is that to your point about standards and ratification, what ratifies a defacto anything? In the old days there was some technical bodies involved, but here, I think developers drive everything. So if you look at the developers and how they're voting with their code. They're instantly, organically defining everything as a collective intelligence. >> And just like you're putting out the paper and making it available, everybody's contributing to that. That's why you need to have APIs and terra form type constructs, which are available so that the customers can continue to improve upon that. And that's the Net DevOps, right? So that you need to have. >> What was once sacrilege, just sayin', in business school, back in the days when I got my business degree after my CS degree was, you know, no one wants to have a better mousetrap, a bad business model to have a better mouse trap. In this case, the better mouse trap, the better solution actually could be that thing. >> It is that thing. >> I mean, that can trigger, tips over the industry. >> And that that's where we are seeing our customers. You know, I mean, we have some publicly referenceable customers like Coke or Warner Music Group or, you know, multiple others and chart industries. The way we are solving the problem. They have some of the largest environments in the industry from the cloud perspective. And their whole network infrastructure is running on the Alkira infrastructure. And they're able to adopt new clouds within days rather than waiting for months to architect and then deploy and then figure out how to manage it and operate it. It's available as a service. >> John: And we've heard from your customer, Warner, they were just on the program. >> Amir: Yes. Okay, okay. >> So they're building a supercloud. So superclouds aren't just for tech companies. >> Amir: No. >> You guys build a supercloud for networking. >> Amir: It is. >> But people are building their own superclouds on top of all this new stuff. Talk about that dynamic. >> Healthcare providers, financials, high-tech companies, even startups. One of our startup customers, Tekion, right? They have these dealerships that they provide sales and support services to across the globe. And for them to be able to onboard those dealerships, it is 80% less time to production. That is real money, right? So, maybe Atif can give you a lot more examples of customers who are deploying. >> Talk about some of the customer activity. What are they like? Are they laggards, they innovators? Are they trying to hit the easy button? Are they coming in late or are you got some high customers? >> Actually most of our customers, all of our customers or customers in general. I don't think they have a choice but to move in this direction because, you know, the cloud has, like everything is quick now. So the cloud teams are moving faster in these enterprises. So now that they cannot afford the network nor to keep up pace with the cloud teams. So, they don't have a choice but to go with something similar where you can, you know, build your network on demand and bring up your network as quickly as possible to meet all those use cases. So, I'll give you an example. >> John: So the demand's high for what you guys do. >> Demand is very high because the cloud teams have- >> John: Yeah. They're going fast. >> They're going fast and there's no stopping. And then network teams, they have to keep up with them. And you cannot keep deploying, you know, networks the way you used to deploy back in the day. And as far as the use cases are concerned, there are so many use cases which our customers are using our platform for. One of the use cases, I'll give you an example of these financial customers. Some of the financial customers, they have their customers who they provide data, like stock exchanges, that provide like market data information to their customers out of data centers part. But now, their customers are moving into the cloud as well. So they need to come in from the cloud. So when they're coming in from the cloud, you cannot be giving them data from your data center because that takes time, and your hair pinning everything back. >> Moving data is like moving, moving money, someone said. >> Exactly. >> Exactly. And the other thing is like you have to optimize your traffic flows in the cloud as well because every time you leave the cloud, you get charged a lot. So, you don't want to leave the cloud unless you have to leave the cloud, your traffic. So, you have to come up or use a service which allows you to optimize all those traffic flows as well, you know? >> My final question to you guys, first of all, thanks for coming on Supercloud Program. Really appreciate it. Congratulations on your success. And you guys have a great positioning and I'm a big fan. And I have to ask, you guys are agile, nimble startup, smart on the cutting edge. Supercloud concept seems to resonate with people who are kind of on the front range of this major wave. While all the incumbents like Cisco, Microsoft, even AWS, they're like, I think they're looking at it, like what is that? I think it's coming up really fast, this trend. Because I know people talk about multi-cloud, I get that. But like, this whole supercloud is not just SaaS, it's more going on there. What do you think is going on between the folks who get it, supercloud, get the concept, and some are who are scratching their heads, whether it's the Ciscos or someone, like I don't get it. Why is supercloud important for the folks that aren't really seeing it? >> So first of all, I mean, the customers, what we saw about six months, 12 months ago, were a little slower to adopt the supercloud kind of concept. And there were leading edge customers who were coming and adopting it. Now, all of a sudden, over the last six to nine months, we've seen a flurry of customers coming in and they are from all disciplines or all very diverse set of customers. And they're starting to see the value of that because of the practical implications of what they're doing. You know, these shadow IT type environments are no longer working and there's a lot of pressure from the management to move faster. And then that's where they're coming in. And perhaps, Atif, if you can give a few examples of. >> Yeah. And I'll also just add to your point earlier about the network needing to be there 'cause the cloud teams are like, let's go faster. And the network's always been slow because, but now, it's been almost turbocharged. >> Atif: Yeah. Yeah, exactly. And as I said, like there was no choice here. You had to move in this industry. And the other thing I would add a little bit is now if you look at all these enterprises, most of their traffic is from, even from which is coming from the on-prem, it's going to the cloud SaaS applications or public clouds. And it's more than 50% of traffic, which is leaving your, you know, what you used to call, your network or the private network. So now it's like, you know, before it used to just connect sites to data centers and sites together. Now, it's a cloud as well as the SaaS application. So it's either internet bound or the public cloud bound. So now you have to build a network quickly, which caters to all these use cases. And that's where like something- >> And you guys, your solution to me is you eliminate all that work for the customer. Now, they can treat the cloud like a bag of Legos. And do their thing. Well, I oversimplify. Well, you know I'm talking about. >> Atif: Right, exactly. >> And to answer your question earlier about what about the big companies coming in and, you know, now they slow to adopt? And, you know, what normally happens is when Cisco came up, right? There used to be 16 different protocols suites. And then we finally settled on TCP/IP and DECnet or AppleTalk or X&S or, you know, you name it, right? Those companies did not adapt to the networking the way it was supposed to be done. And guess what happened, right? So if the companies in the networking space do not adopt this new concept or new way of doing things, I think some of them will become extinct over time. >> Well, I think the force and function too is the cloud teams as well. So you got two evolutions. You got architectural relevance. That's real as impact. >> It's very important. >> Cost, speed. >> And I look at it as a very similar disruption to what Cisco's the world, very early days did to, you know, bring the networking out, right? And it became the internet. But now we are going through the cloud. It's the cloud era, right? How does the cloud evolve over the next 10, 15, 20 years? Everything's is going to be offered as a service, right? So slowly data centers go away, the network becomes a plumbing thing. Very, you know, simple to deploy. And everything on top of that is virtualized in the cloud-like manners. >> And that makes the networks hardened and more secure. >> More secure. >> It's a great way to be secure. You remember the glory days, we'll go back 15 years. The Cisco conversation was, we got to move up to stack. All the manager would fight each other. Now, what does that actually mean? Stay where we are. Stay in your lane. This is kind of like the network's version of moving up the stack because not so much up the stack, but the cloud is everywhere. It's almost horizontally scaled. >> It's extending into the on-premise. It is already moving towards the edge, right? So, you will see a lot- >> So, programmability is a big program. So you guys are hitting programmability, compatibility, getting people into an environment they're comfortable operating. So the Ops people love it. >> Exactly. >> Spans the clouds to a level of SLA management. It might not be perfectly spanning applications, but you can actually know latencies between clouds, measure that. And then so you're basically managing your network now as the overall infrastructure. >> Right. And it needs to be a very intelligent infrastructure going forward, right? Because customers do not want to wait to be able to troubleshoot. They don't want to be able to wait to deploy something, right? So, it needs to be a level of automation. >> Okay. So the question for you guys both on we'll end on is what is the enablement that, because you guys are a disruptive enabler, right? You create this fabric. You're going to enable companies to do stuff. What are some of the things that you see and your customers might be seeing as things that they're going to do as a result of having this enablement? So what are some of those things? >> Amir: Atif, perhaps you can talk through the some of the customer experience on that. >> It's agility. And we are allowing these customers to move very, very quickly and build these networks which meet all these requirements inside the cloud. Because as Amir was saying, in the cloud era, networking is changing. And if you look at, you know, going back to your comment about the existing networking vendors. Some of them still think that, you know, just connecting to the cloud using some concepts like Cloud OnRamp is cloud networking, but it's changing now. >> John: 'Cause there's apps that are depending upon. >> Exactly. And it's all distributed. Like IT infrastructure, as I said earlier, is all distributed. And at the end of the day, you have to make sure that wherever your user is, wherever your app is, you are able to connect them securely. >> Historically, it used to be about building a router bigger and bigger and bigger and bigger, you know, and then interconnecting those routers. Now, it's all about horizontal scale. You don't need to build big, you need to scale it, right? And that's what cloud brings to the customer. >> It's a cultural change for Cisco and Juniper because they have to understand that they're still could be in the game and still win. >> Exactly. >> The question I have for you, what are your customers telling you that, what's some of the anecdotal, like, 'cause you guys have a good solution, is it, "Oh my god, you guys saved my butt." Or what are some of the commentary that you hear from the customers in terms of praise and and glory from your solution? >> Oh, some even say, when we do our demo and stuff, they say it's too hard to believe. >> Believe. >> Like, too hard. It's hard, you know, it's >> I dont believe you. They're skeptics. >> I don't believe you that because now you're able to bring up a global network within minutes. With networking services, like let's say you have APAC, you know, on-prem users, cloud also there, cloud here, users here, you can bring up a global network with full routed connectivity between all these endpoints with security services. You can bring up like a firewall from a third party or our services in the middle. This is a matter of minutes now. And this is all high speed connectivity with SLAs. Imagine like before connecting, you know, Singapore to U.S. East or Hong Kong to Frankfurt, you know, if you were putting your infrastructure in columns like E-connects, you would have to go, you know, figure out like, how am I going to- >> Seal line In, connect to it? Yeah. A lot of hassles, >> If you had to put like firewalls in the middle, segmentation, you had to, you know, isolate different entities. >> That's called heavy lifting. >> So what you're seeing is, you know, it's like customer comes in, there's a disbelief, can you really do that? And then they try it out, they go, "Wow, this works." Right? It's deployed in a small environment. And then all of a sudden they start taking off, right? And literally we have seen customers go from few thousand dollars a month or year type deployments to multi-million dollars a year type deployments in very, very short amount of time, in a few months. >> And you guys are pay as you go? >> Pay as you go. >> Pay as go usage cloud-based compatibility. >> Exactly. And it's amazing once they get to deploy the solution. >> What's the variable on the cost? >> On the cost? >> Is it traffic or is it. >> It's multiple different things. It's packaged into the overall solution. And as a matter of fact, we end up saving a lot of money to the customers. And not only in one way, in multiple different ways. And we do a complete TOI analysis for the customers. So it's bandwidth, it's number of connections, it's the amount of compute power that we are using. >> John: Similar things that they're used to. >> Just like the cloud constructs. Yeah. >> All right. Networking supercloud. Great. Congratulations. >> Thank you so much. >> Thanks for coming on Supercloud. >> Atif: Thank you. >> And looking forward to seeing more of the demand. Translate, instant networking. I'm sure it's going to be huge with the edge exploding. >> Oh yeah, yeah, yeah, yeah. >> Congratulations. >> Thank you so much. >> Thank you so much. >> Okay. So this is Supercloud 2 event here in Palo Alto. I'm John Furrier. The network Supercloud is here. Checkout Alkira. I'm John Furry, the host. Thanks for watching. (lively music)

Upbeat music plays >> Voice Over: TheCUBE presents Ignite 22, brought to you by Palo Alto Networks. >> Good morning everyone. Welcome to theCUBE. Lisa Martin here with Dave Vellante. We are live at Palo Alto Networks Ignite. This is the 10th annual Ignite. There's about 3,000 people here, excited to really see where this powerhouse organization is taking security. Dave, it's great to be here. Our first time covering Ignite. People are ready to be back. They.. and security is top. It's a board level conversation. >> It is the other Ignite, I like to call it cuz of course there's another big company has a conference name Ignite, so I'm really excited to be here. Palo Alto Networks, a company we've covered for a number of years, as we just wrote in our recent breaking analysis, we've called them the gold standard but it's not just our opinion, we've backed it up with data. The company's on track. We think to do close to 7 billion in revenue by 2023. That's double it's 2020 revenue. You can measure it with execution, market cap M and A prowess. I'm super excited to have the CEO here. >> We have the CEO here, Nikesh Arora joins us from Palo Alto Networks. Nikesh, great to have you on theCube. Thank you for joining us. >> Well thank you very much for having me Lisa and Dave >> Lisa: It was great to see your keynote this morning. You said that, you know fundamentally security is a data problem. Well these days every company has to be a data company. Grocery stores, gas stations, car dealers. How is Palo Alto networks making customers, these data companies, more secure? >> Well Lisa, you know, (coughs) I've only done cybersecurity for about four, four and a half years so when I came to the industry I was amazed to see how security is so reactive as opposed to proactive. We should be able to stop bad threats, right? as they're happening. But I think a lot of threats get through because we don't have the right infrastructure and the right tooling and right products in there. So I think we've been working hard for the last four and a half years to turn it around so we can have consistent data flow across an enterprise and then mine that data for threats and anomalous behavior and try and protect our customers. >> You know the problem, I wrote this, this weekend, the problem in cybersecurity is well understood, you put up that Optiv graph and it's like 8,000 companies >> Yes >> and I think you mentioned your keynote on average, you know 30 to 40 tools, maybe 50, at least 20, >> Yes. >> from the folks that I talked to. So, okay, great, but actually solving that problem is not trivial. To be a consolidator, I mean, everybody wants to consolidate tools. So in your three to four years and security as you well know, it's, you can't fake security. It's a really, really challenging topic. So when you joined Palo Alto Networks and you heard that strategy, I know you guys have been thinking about this for some time, what did you see as the challenges to actually executing on that and how is it that you've been able to sort of get through that knot hole. >> So Dave, you know, it's interesting if you look at the history of cybersecurity, I call them the flavor of the decade, a flare, you know a new threat vector gets created, very large market gets created, a solution comes through, people flock, you get four or five companies will chase that opportunity, and then they become leaders in that space whether it's firewalls or endpoints or identity. And then people stick to their swim lane. The problem is that's a very product centric approach to security. It's not a customer-centric approach. The customer wants a more secure enterprise. They don't want to solve 20 different solutions.. problems with 20 different point solutions. But that's kind of how the industry's grown up, and it's been impossible for a large security company in one category, to actually have a substantive presence in the next category. Now what we've been able to do in the last four and a half years is, you know, from our firewall base we had resources, we had intellectual capability from a security perspective and we had cash. So we used that to pay off our technical debt. We acquired a bunch of companies, we created capability. In the last three years, four years we've created three incremental businesses which are all on track to hit a billion dollars the next 12 to 18 months. >> Yeah, so it's interesting on Twitter last night we had a little conversation about acquirers and who was a good, who was not so good. It was, there was Oracle, they came up actually very high, they'd done pretty, pretty good Job, VMware was on the list, IBM, Cisco, ServiceNow. And if you look at IBM and Cisco's strategy, they tend to be very services heavy, >> Mm >> right? How is it that you have been able to, you mentioned get rid of your technical debt, you invested in that. I wonder if you could, was it the, the Cloud, even though a lot of the Cloud was your own Cloud, was that a difference in terms of your ability to integrate? Because so many companies have tried it in the past. Oracle I think has done a good job, but it took 'em 10 to 12 years, you know, to, to get there. What was the sort of secret sauce? Is it culture, is it just great engineering? >> Dave it's a.. thank you for that. I think, look, it's, it's a mix of everything. First and foremost, you know, there are certain categories we didn't play in so there was nothing to integrate. We built a capability in a category in automation. We didn't have a product, we acquired a company. It's a net new capability in instant response. We didn't have a capability. It was net new capability. So there was, there was, other than integrating culturally and into the organization into our core to market processes there was no technical integration needed. Most of our technical integration was needed in our Cloud platform, which we bought five or six companies, we integrated then we just bought one recently called cyber security as well, which is going to get integrated in the Cloud platform. >> Dave: Yeah. >> And the thing is like, the Cloud platform is net new in the industry. We.. nobody's created a Cloud security platform yet, so we're working hard to create it because we don't want to replicate the mistakes of the past, that were made in enterprise security, in Cloud security. So it's a combination of cultural integration it's a combination of technical integration. The two things we do differently I think, than most people in the industry is look, we have no pride of, you know of innovations. Like, if somebody else has done it, we respect it and we'll acquire it, but we always want to acquire number one or number two in their category. I don't want number three or four. There's three or four for a reason and there still leaves one or two out there to compete with. So we've always acquired one or two, one. And the second thing, which is as important is most of these companies are in the early stage of development. So it's very important for the founding team to be around. So we spend a lot of time making sure they stick around. We actually make our people work for them. My principle is, listen, if they beat us in the open market with all our resources and our people, then they deserve to run this as opposed to us. So most of our new product categories are run by founders of companies required. >> So a little bit of Jack Welch, a little bit of Franks Lubens is a, you know always deference to the founders. But go ahead Lisa. >> Speaking of cultural transformation, you were mentioning your keynote this morning, there's been a significant workforce transformation at Palo Alto Networks. >> Yeah >> Talk a little bit about that, cause that's a big challenge, for many organizations to achieve. Sounds like you've done it pretty well. >> Well you know, my old boss, Eric Schmidt, used to say, 'revenue solves all known problems'. Which kind of, you know, it is a part joking, part true, but you know as Dave mentioned, we've doubled or two and a half time the revenues in the last four and a half years. That allows you to grow, that allows you to increase headcount. So we've gone from four and a half thousand people to 14,000 people. Good news is that's 9,500 people are net new to the company. So you can hire a whole new set of people who have new skills, new capabilities and there's some attrition four and a half thousand, some part of that turns over in four and a half years, so we effectively have 80% net new people, and the people we have, who are there from before, are amazing because they've built a phenomenal firewall business. So it's kind of been right sized across the board. It's very hard to do this if you're not growing. So you got to focus on growing. >> Dave: It's like winning in sports. So speaking of firewalls, I got to ask you does self-driving cars need brakes? So if I got a shout out to my friend Zeus Cararvela so like that's his line about why you need firewalls, right? >> Nikesh: Yes. >> I mean you mentioned it in your keynote today. You said it's the number one question that you get. >> and I don't get it why P industry observers don't go back and say that's, this is ridiculous. The network traffic is doubling or tripling. (clears throat) In fact, I gave an interesting example. We shut down our data centers, as I said, we are all on Google Cloud and Amazon Cloud and then, you know our internal team comes in, we'd want a bigger firewall. I'm like, why do you want a bigger firewall? We shut down our data centers as well. The traffic coming in and out of our campus is doubled. We need a bigger firewall. So you still need a firewall even if you're in the Cloud. >> So I'm going to come back to >> Nikesh: (coughs) >> the M and A strategy. My question is, can you be both best of breed and develop a comprehensive suite number.. part one and part one A of that is do you even have to, because generally sweets win out over best of breed. But what, how do you, how do you respond? >> Well, you know, this is this age old debate and people get trapped in that, I think in my mind, and let me try and expand the analogy which I tried to do up in my keynote. You know, let's assume that Oracle, Microsoft, Dynamics and Salesforce did not exist, okay? And you were running a large company of 50,000 people and your job was to manage the customer process which easier to understand than security. And I said, okay, guess what? I have a quoting system and a lead system but the lead system doesn't talk to my coding system. So I get leads, but I don't know who those customers. And I write codes for a whole new set of customers and I have a customer database. Then when they come as purchase orders, I have a new database with all the customers who've bought something from me, and then when I go get them licensing I have a new database and when I go have customer support, I have a fifth database and there are customers in all five databases. You'll say Nikesh you're crazy, you should have one customer database, otherwise you're never going to be able to make this work. But security is the same problem. >> Dave: Mm I should.. I need consistency in data from suit to nuts. If it's in Cloud, if you're writing code, I need to understand the security flaws before they go into deployment, before they go into production. We for somehow ridiculously have bought security like IT. Now the difference between IT and security is, IT is required to talk to each other, so a Dell server and HP server work very similarly but a Palo Alto firewall and a Checkpoint firewall Fortnight firewall work formally differently. And then how that transitions into endpoints is a whole different ball game. So you need consistency in data, as Lisa was saying earlier, it's a data problem. You need consistency as you traverse to the enterprise. And that's why that's the number one need. Now, when you say best of breed, (coughs) best of breed, if it's fine, if it's a specific problem that you're trying to solve. But if you're trying to make sure that's the data flow that happens, you need both best of breed, you know, technology that stops things and need integration on data. So what we are trying to do is we're trying to give people best to breed solutions in the categories they want because otherwise they won't buy us. But we're also trying to make sure we stitch the data. >> But that definition of best of breed is a little bit of nuance than different in security is what I'm hearing because that consistency >> Nikesh: (coughs) Yes, >> across products. What about across Cloud? You mentioned Google and Amazon. >> Yeah so that's great question. >> Dave: Are you building the security super Cloud, I call it, above the Cloud? >> It's, it's not, it's, less so a super Cloud, It's more like Switzerland and I used to work at Google for 10 years, not a secret. And we used to sell advertising and we decided to go into pub into display ads or publishing, right. Now we had no publishing platform so we had to be good at everybody else's publishing platform >> Dave: Mm >> but we never were able to search ads for everybody else because we only focus on our own platform. So part of it is when the Cloud guys they're busy solving security for their Cloud. Google is not doing anything about Amazon Cloud or Microsoft Cloud, Microsoft's Azure, right? AWS is not doing anything about Google Cloud or Azure. So what we do is we don't have a Cloud. Our job in providing Cloud securities, be Switzerland make sure it works consistently across every Cloud. Now if you try to replicate what we offer Prisma Cloud, by using AWS, Azure and GCP, you'd have to first of all, have three panes of glass for all three of them. But even within them they have four panes of glass for the capabilities we offer. So you could end up with 12 different interfaces to manage a development process, we give you one. Now you tell me which is better. >> Dave: Sounds like a super Cloud to me Lisa (laughing) >> He's big on super Cloud >> Uber Cloud, there you >> Hey I like that, Uber Cloud. Well, so I want to understand Nikesh, what's realistic. You mentioned in your keynote Dave, brought it up that the average organization has 30 to 50 tools, security tools. >> Nikesh: Yes, yes >> On their network. What is realistic for from a consolidation perspective where Palo Alto can come in and say, let me make this consistent and simple for you. >> Well, I'll give you your own example, right? (clears throat) We're probably sub 10 substantively, right? There may be small things here and there we do. But on a substantive protecting the enterprise perspective you be should be down to eight or 10 vendors, and that is not perfect but it's a lot better than 50, >> Lisa: Right? >> because don't forget 50 tools means you have to have capability to understand what those 50 tools are doing. You have to have the capability to upgrade them on a constant basis, learn about their new capabilities. And I just can't imagine why customers have two sets of firewalls right. Now you got to learn both the files on how to deploy both them. That's silly because that's why we need 7 million more people. You need people to understand, so all these tools, who work for companies. If you had less tools, we need less people. >> Do you think, you know I wrote about this as well, that the security industry is anomalous and that the leader has, you know, single digit, low single digit >> Yes >> market shares. Do you think that you can change that? >> Well, you know, when I started that was exactly the observation I had Dave, which you highlighted in your article. We were the largest by revenue, by small margin. And we were one and half percent of the industry. Now we're closer to three, three to four percent and we're still at, you know, like you said, going to be around $7 billion. So I see a path for us to double from here and then double from there, and hopefully as we keep doubling and some point in time, you know, I'd like to get to double digits to start with. >> One of the things that I think has to happen is this has to grow dramatically, the ecosystem. I wonder if you could talk about the ecosystem and your strategy there. >> Well, you know, it's a matter of perspective. I think we have to get more penetrated in our largest customers. So we have, you know, 1800 of the top 2000 customers in the world are Palo Alto customers. But we're not fully penetrated with all our capabilities and the same customers set, so yes the ecosystem needs to grow, but the pandemic has taught us the ecosystem can grow wherever they are without having to come to Vegas. Which I don't think is a bad thing to be honest. So the ecosystem is growing. You are seeing new players come to the ecosystem. Five years ago you didn't see a lot of systems integrators and security. You didn't see security offshoots of telecom companies. You didn't see the Optivs, the WWTs, the (indistinct) of the world (coughs) make a concerted shift towards consolidation or services and all that is happening >> Dave: Mm >> as we speak today in the audience you will find people from Google, Amazon Microsoft are sitting in the audience. People from telecom companies are sitting in the audience. These people weren't there five years ago. So you are seeing >> Dave: Mm >> the ecosystem's adapting. They're, they want to be front and center of solving the customer's problem around security and they want to consolidate capability, they need. They don't want to go work with a hundred vendors because you know, it's like, it's hard. >> And the global system integrators are key. I always say they like to eat at the trough and there's a lot of money in security. >> Yes. >> Dave: (laughs) >> Well speaking of the ecosystem, you had Thomas Curry and Google Cloud CEO in your fireside chat in the keynote. Talk a little bit about how Google Cloud plus Palo Alto Networks, the Zero Trust Partnership and what it's enable customers to achieve. >> Lisa, that's a great question. (clears his throat) Thank you for bringing it up. Look, you know the, one of the most fundamental shifts that is happening is obviously the shift to the Cloud. Now when that shift fully, sort of, takes shape you will realize if your network has changed and you're delivering everything to the Cloud you need to go figure out how to bring the traffic to the Cloud. You don't have to bring it back to your data center you can bring it straight to the Cloud. So in that context, you know we use Google Cloud and Amazon Cloud, to be able to carry our traffic. We're going from a product company to a services company in addition, right? Cuz when we go from firewalls to SASE we're not carrying your traffic. When we carry our traffic, we need to make sure we have underlying capability which is world class. We think GCP and AWS and Azure run some of the biggest and best networks in the world. So our partnership with Google is such that we use their public Cloud, we sit on top of their Cloud, they give us increased enhanced functionality so that our customers SASE traffic gets delivered in priority anywhere in the world. They give us tooling to make sure that there's high reliability. So you know, we partner, they have Beyond Corp which is their version of Zero Trust which allows you to take unmanaged devices with browsers. We have SASE, which allows you to have managed devices. So the combination gives our collective customers the ability for Zero Trust. >> Do you feel like there has to be more collaboration within the ecosystem, the security, you know, landscape even amongst competitors? I mean I think about Google acquires Mandiant. You guys have Unit 42. Should and will, like, Wendy Whitmore and maybe they already are, Kevin Mandia talk more and share more data. If security's a data problem is all this data >> Nikesh: Yeah look I think the industry shares threat data, both in private organizations as well as public and private context, so that's not a problem. You know the challenge with too much collaboration in security is you never know. Like you know, the moment you start sharing your stuff at third parties, you go out of Secure Zone. >> Lisa: Mm >> Our biggest challenge is, you know, I can't trust a third party competitor partner product. I have to treat it with as much suspicion as anything else out there because the only way I can deliver Zero Trust is to not trust anything. So collaboration in Zero Trust are a bit of odds with each other. >> Sounds like another problem you can solve >> (laughs) >> Nikesh last question for you. >> Yes >> Favorite customer or example that you think really articulates the value of what Palo Alto was delivering? >> Look you know, it's a great question, Lisa. I had this seminal conversation with a customer and I explained all those things we were talking about and the customer said to me, great, okay so what do I need to do? I said, fun, you got to trust me because you know, we are on a journey, because in the past, customers have had to take the onus on themselves of integrating everything because they weren't sure a small startup will be independent, be bought by another cybersecurity company or a large cybersecurity company won't get gobbled up and split into pieces by private equity because every one of the cybersecurity companies have had a shelf life. So you know, our aspiration is to be the evergreen cybersecurity company. We will always be around and we will always tackle innovation and be on the front line. So the customer understood what we're doing. Over the last three years we've been working on a transformation journey with them. We're trying to bring them, or we have brought them along the path of Zero Trust and we're trying to work with them to deliver this notion of reducing their meantime to remediate from days to minutes. Now that's an outcome based approach that's a partnership based approach and we'd like, love to have more and more customers of that kind. I think we weren't ready to be honest as a company four and a half years ago, but I think today we're ready. Hence my keynote was called The Perfect Storm. I think we're at the right time in the industry with the right capabilities and the right ecosystem to be able to deliver what the industry needs. >> The perfect storm, partners, customers, investors, employees. Nikesh, it's been such a pleasure having you on theCUBE. Thank you for coming to talk to Dave and me right after your keynote. We appreciate that and we look forward to two days of great coverage from your executives, your customers, and your partners. Thank you. >> Well, thank you for having me, Lisa and Dave and thank you >> Dave: Pleasure >> for what you guys do for our industry. >> Our pleasure. For Nikesh Arora and Dave Vellante, I'm Lisa Martin, you're watching theCUBE live at MGM Grand Hotel in Las Vegas, Palo Alto Ignite 22. Stick around Dave and I will be joined by our next guest in just a minute. (cheerful music plays out)

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

>> From theCUBE studios in Palo Alto in Boston, connecting with our leaders all around the world, this is theCUBE Conversation. >> Hello everyone, and welcome to this week's Wiki Bond CUBE Insights powered by ETR. In this breaking analysis, we're changing the format a little bit, we're going right to the new data from ETR. You might recall that last week, ETR received survey results from over 1000 CIOs and IT practitioners. And they made a call at that time, which said that actually surprisingly, a large number of respondents about 40% said they didn't expect a change in their 2020 IT spending. At the same time about 20% of the survey said they're going to spend more largely related to Work From Home infrastructure. ETR was really the first to report on this. And it wasn't just collaboration tool like zoom and video conferencing. It was infrastructure around that security, network bandwidth and other types of infrastructure to support Work From Home like desktop virtualization. ETR made the call at that time, that it looked like budgets, were going to be flat for 2020. Now, you also might recall consensus estimates for 2020 came into the year at about 4%, slightly ahead of GDP. Obviously, that's all is changed. Last week, ETR took the forecast down, and we're going to update you today. We're now gone slightly negative. And with me to talk about that again, is Sagar Kadakia, who's the Director of Research at ETR. Sagar, great to see you again, thank you for coming on. >> Thanks for having me again David, really appreciate it. >> Let's get right into it. I mean, if you look at the time series chart that we showed last week, you can see how sentiment changed over time. That blue line was basically people who responded to the survey starting at 3/11. Now you've updated that, that forecast, really tracking after the COVID-19 really kicked in. Can you explain what we're seeing here in this chart? >> Yeah, no problem. The last time we spoke, we were around an N or sample size of about 1000. And we were right around that zero percent growth rate. One of the unique things that we've done is we've left this survey open. And so what that allows us to do is really track the impact on annual IP growth, essentially daily. And so as things have progressed, as you look at that blue line, you can really see the growth rate has continued to trend downwards. And as of just a day or two ago, we're now below zero. And so I think because of what's occurring right now, the overall current climate continues to slightly deteriorate. You're seeing that in a lot of the CIOs responses. >> If you bring that slide back up Andrew, I want to just sort of stay on this for a second. What I really like about what you guys are doing is you're essentially bringing event analysis in this. So if you see that blue line, you see on 3/13, a national emergency was declared and that's really when the blue line started to decline. What ETR has done is kind of reset that, reset the data since 3/13. Because it's now a more accurate reflection of what's actually happening happening in the market. Notice in the upper right, it says the US approved... The Senate last night approved a stimulus package. Actually, they're calling it an Aid Package. It's really not a stimulus package. It's an aid package that they're injecting to help. A number of our workers actually sounds like existing workers and small businesses and even large businesses like Boeing. Boeing was up significantly yesterday powering the Dow and potentially airlines. As you can see ETR is going to continue to monitor the impact, and roll this out. Really ETR is the only company that I know of anyway, that can track this stuff on a daily basis. So Sagar, that event analysis is really key, and you're going to be watching the impact of this stimulus slash aid packet. >> Yeah, so here's what we're doing on that chart. If you look at that yellow line again, effectively what you're seeing is, if we remove the first I think six or seven 100 respondents that took the survey and start tracking how budgets are changing as a 3/13, that's when the US declared a national emergency. We can recalculate the growth rate. And we can see it's around... It's almost negative one and a half. And so the beauty of doing this, really polling daily, is it allows us to be just as dynamic, as a lot of these organizations are. I think one of the things we talked about the last time was some of these budget changes are going to be temporary. And organizations are figuring out what they're doing day by day. And a lot of that is dictated based on government actions. And so uniquely here, what we're able to do is kind of give people a range and also say, "based on these events, "this is how things are changing."" And so I think we think the first biggest event was on 3/13, where the US effectively declared a national emergency over COVID-19. And now what we're going to start tracking between today and over the weekend, and Monday is: Are people getting more positive? Is there no change? Or is there further deterioration because of this aid package that got passed this morning? >> Now I want to share with our audience. I've been down to ETR's headquarters in New York, it's staffed with a number of data scientists and statistical experts. The ends here are well over 1000. I think we're over 1100 now, is that correct? What is the end that we're at today? >> That's right. Yeah, we're we're pushing right over 1200. And we're going to expect a few more hundred respondents. The good thing is it's balanced, which is important. All these events that are occurring, we want to make sure that we have at least a few hundred more CIOs and IT executives answering. And so every week as we kind of continue to do some of these breaking analysis, there are going to be a few more hundred CIOs. And we'll really be able to zero in or hone in on what they're saying. The growth rate on the IT side, it's going to continue to fluctuate. It's going to continue to be dynamic over the next few weeks, but right now versus (murmurs). We are in negative territory now. >> I want to also explain I mean, the end is important. But in and of itself, it's not the be all end all, what's important about the end, the larger it is, the more cuts you can make. And I want to share... You guys have been doing this for the better part of a decade. And so you have firm level data. And you've got indicators and markers that you've tracked over the years. For example, one of the things that ETR tracks is Giant Public and Private GDP we call it. And that's for example, I'm not saying that, that Mars is one of the companies but Mars is a huge private company, UPS before they went public, huge private company. ETR tracks firm level data, they of course anonymize that, but they can see markers and trackers and trends, and probably have, I don't know dozens of those types of segments. So the bigger the end is, the more... The higher the end within those buckets, and the better the confidence interval. And you guys are experts at really digging into that in trying to understand and read the tea leaves. >> That's right. The key to this survey is, it's not anonymous, we know who is taking the survey. Now to your point, we do anonymize and aggregate it when we display those results. But one of the unique capabilities is we're able to see all of these trend lines. The entire drill down survey that we did on COVID-19 through the lenses of different verticals so we can take a look at industrials materials manufacturing, healthcare, pharma, airlines, delivery services, health, and all these other verticals and get a feel for which ones are deteriorating the most, which ones look stable. And, we talked about last week and it continues to remain true this week. And again, the ends have gone up on all these verticals on the supply chain side. Industrials, materials manufacturing, healthcare, pharma, they continue and they also anticipate to see these things in the next few months, broken supply chains and on the demand side, it's really retail consumer airlines delivery services. That's coming down quite substantial. And I think, based on what United and some of these other airlines have done these last few days in terms of cutting capacity, that's just a reflection of what we're seeing. >> Let's dig into the data a little bit more and bring up the next chart. Last week, we're about 40% actually, exactly 40% where that gray line that said: CIOs and IT practitioners said, "no change." They're like the budget of the green. The green was actually at about 20 21%. So it's slightly up now at 22%. And you can see, most of the the green is in that one to 10% range. And you can see in the left hand side, it's obviously changing. Now we're at 37% in the gray line, slightly up in the green, and a little bit more down and in the red. So take us through what's changed Sagar. >> Yeah, to reiterate what we were talking about last week, and then I'll kind of talk about some of the change is, I think the market and a lot of our clients, they were expecting the growth rate to be more negative. Last week when we talked about zero percent. The reason that, it wasn't more negative is because we saw all these organizations accelerating spend because they had to keep employees productive. They don't want to catastrophe in productivity. And so you saw this acceleration, as you mentioned earlier in the interview around Work From Home tools, like collaboration tools, increasing bandwidth on the VPN networking side, laptops, MDM, so forth and so on. That continues to hold true today. Again, if we use the same example that we talked about last week, (mumbles) organizations, they have 40 50 60,000 employees or more working from home. You have to be able to support these individuals and that's why we're actually seeing some organizations accelerate spend and the majority organizations even though they are declining spend, some of that is still being offset by having to spend more on what we're calling kind of this Work From Home infrastructure. But I will say this: you are seeing more organizations versus last week, which is why the growth rate has come down, moving more and more towards the negative buckets. Again, there is some offset there. But the offset we talked about last week, Work From Home infrastructure is not a one-for-one when it comes to taking down your IT budget, and that continues to hold true. >> Let's talk a little bit about some of the industries retail, airlines, industrials, pharma, healthcare, what are you seeing in terms of the industry impact, particularly when it relates to supply chains, but other industry data that went through? >> I think the biggest takeaway is that healthcare pharma, industry materials, manufacturing organizations, they've indicated the highest levels of broken supply chains today. And they think in three months from now, it's actually going to get worse. And so we spoke about this last time, I don't think this is going to be a V shaped recovery from the standpoint of things are going to get better in the next few weeks or the next month or two. CIOs are indicating that they expect conditions to worsen over the next three months on the supply chain side and even demand the ones that are getting hit the hardest on the retail consumer side airlines, delivery services, they are again indicating that they anticipate demand to be worse three months from now. The goal is to continue serving and pulling these individuals over the next few weeks and months and to see if we can get a better timeline as we get into two edge but for the next few months, conditions look like they're going to get worse. >> I want to highlight some of the industries and let's make some comments here. Retail... You guys called out retail airlines, delivery services, industrials, materials, manufacturing, pharma and healthcare, there's some of the highest impact. I'll just make a few comments here. I think retail really, this accelerates the whole digital transformation. We already saw this starting, I think you'll see further consolidation and some permanence in the way in which companies are pivoting to digital. Obviously, the big guys like Walmart and the like are competing very effectively with Amazon. But, there's going to be some more consolidation there. I would say potentially the same thing in airlines that really are closely watching what the government is going to do. But, do we need this this many airlines? Do we need all this capacity? Maybe yes, maybe no. So watching that. And of course, healthcare right now, as I said last week in the braking analysis, they're just too distracted right now to buy anything. And they're overwhelmed. Now, of course, pharma, they're manufacturing, so they've got disruptions in supply chain and obviously the business. But there could be an upside down the road as COVID-19 vaccines come to the market. >> On the upside, I think you kind of hit it, right on the nail. When you get these type of events that occur. Sometimes it speeds up digital transformation. one of the things that the team and I have been talking about internally is: this is not your father's Keep The Lights On strategy so to speak. Organizations are very focused on maintaining productivity versus significantly cutting costs. What does that mean? Maybe three to five years ago, if this had occurred, you would have seen a lot of infrastructure as a service platform, as a service... A lot of these cloud providers, you'd have seen those projects decline as organization spent more on on plan. And we're not seeing that. We're seeing continued elevated budgets on the Cloud side and Micron just reported this morning and again, cited strong demand on the Cloud and data center side. That just goes to show that organizations are trying to maintain productivity. They want to continue these IT roadmaps and they're going to cut budgets where they can, but it's not going to be on the Cloud side. >> You know what, that's a really important point. This is not post Y2K, not 2008, 2007, 2008, 2009 because we've, pretended but a 10 year bull market, companies are doing pretty well, balance sheets are generally strong. They somewhat in whether, it was used to stronger companies, whether they're so they're not focused right now anyway, on cut cut cut as it was in the last few downturns. Let's go into some of the vendor data and some of the sector data, Andrew if you'd bring up the next chart. What we're showing here is really comparing the the blue is the January survey to the current survey in the yellow, and you're seeing some of the sectors that are up taking. You've identified mobile device management, big data and Cloud, some of the productivity, you mentioned DocuSign, Adobe zoom, Citrix, even VMware with the desktop virtualization. We've talked about security, you've got marketing and LinkedIn, my LinkedIn inbound is going through the roof as people are probably signing up for a LinkedIn premium. Let's talk about this a little bit. What you're seeing... Help us interpret this data. >> Yeah, sure. One of the things that everybody wants to know is, okay, so Work From Home infrastructures getting more spend for the vendors that are benefiting the most. One of the unique things that we can do is because we're kind of collecting all the DNA, from a tech stack aside from these organizations, we can overlap, how they're spending on these vendors. And also with the data that they provide in terms of whether they are increasing or decelerating their IT budgets because of COVID-19. What you're looking at here, is we isolated to all of those organizations and customers that indicated that they're increasing their budgets because of COVID-19. Because of the Work From Home infrastructure. And what we're doing is we're then isolating to vendors that are getting the most upticks in spend. This actually really nicely aligns with a lot of the themes that we were talking about collaboration tools. You see that VMware, they're all right on the virtualization side, MDM with Microsoft. And you're seeing a lot of other vendors with Citrix and Zoom and Adobe. These are the ones that we think are going to benefit from this kind of Work From home infrastructure movement. And again, it's all very... It's not just the qualitative and the commentary. This is all analytics, we really went in and analyzed every single one of these organizations that were increasing their budgets and tried to pinpoint using different data analysis techniques, and to see which vendors were really getting the majority or the largest, pie of that span. >> We had Sanjay Poonen, who's the CEO of VMware on yesterday and he was very sensitive but not trying to hear as your ambulance chasing because obviously they do desktop virtualization and VDI big workload. At the same time. I think he was also being cautious because there's probably portions of their business that are going to get hit, Michael Dell similarly, I think he was quoted in CRN as saying, "hey, are we seeing momentum in our laptop "business in our mobile business?" But as you guys pointed out, the flip side of that is their on prem business is probably going to suffer somewhat. It's a kind of like the Work From Home is a partial offset, but it's not a total offset. You're seeing that with a lot of these companies. Obviously, Microsoft, AWS, a lot of the cloud companies are very well positioned, how about some of the guys that are going to get impacted? Obviously, as I said that the on-prem folks, you guys talked about earlier it's not your father's Keep Your Lights On strategy. Okay but this... You asked the question, is this a reprieve for the legacy guys? Not quite, was your conclusion. What did you mean by that? >> I think a lot of times when you have these sub-events, the clients a lot of the market think okay, "some of the legacy vendors are going to do well "because, we're in malicious times, "and we don't want to keep on this kind "of next generation strategy." We're not seeing that and to the point that you highlighted earlier. There are... Even though these companies like Dell, like Cisco, where they're seeing some products accelerate, there are products to your point that are not doing as well The desktops, right? As an example for Dell or the storage. On the negative side or the legacy side where we're just not seeing any traction, the IBM's the Oracle on-prem, Symantec, which got acquired by Broadcom, checkpoint MicroStrategy. And there's another half dozen other vendors that we're seeing where they are not capitalizing. There is no reprieve for these legacy names. And we don't anticipate them getting additional spend, because of this Work From Home infrastructure kind of movement. >> Let's unpack that a little bit. It's interesting Symantec and checkpoint in security, security you think would get an uplift there, but what you're seeing here is... Let me just tell the audience who you called out. Symantec Teradata MicroStrategy, NET app Checkpoint Oracle and IBM, and I know there are others. But I would say this: These are companies that are getting impacted in a big way by the Cloud. Particularly like Symantec and checkpoint. That's a Cloud security companies are actually probably still doing pretty well. You take Teradata, their data is getting impact by the Cloud from folks like Snowflake and Redshift, MicroStrategy a lot of modern BI coming out. NetApp here's a company that's embraced the Cloud, but the vast majority of the business changess to be on-prem. I think IBM and Oracle are interesting. They're somewhat different. Actually a lot different IBM has services exposure, and you guys call that out, particularly around outsourcing. At the same time, it's going to be interesting to see IBM is going to get a lot of resources. Going to be interesting to see if they start coming out with corona virus related services. So watching for that, and then Oracle, their whole story is, "okay, we got Gen 2 Cloud and Mission Critical in the Cloud, but they're on-prem businesses, I think clearly going to be affected here is kind of what you guys pointed out, and I would agree with your thoughts. >> I think what we're seeing is organizations they had a Cloud roadmap, and that roadmap is continuing. The one thing that is changing in some of that roadmap is we need to be able to support employees as they work from home as we achieve this roadmap. And so that's why we're not seeing a reprieve on the legacy side. But we are seeing upticks and spin where we just wouldn't anticipate them right on maybe on Citrix, on Dell laptops, Adobe and a few other areas. Now, in terms of security side, some of the next gen security vendors like CrowdStrike APi, which is an MFA, those vendors are doing well. It makes sense, where you have more people working from home, you have more devices that are connecting to data applications. Just a component itself. And so you would expect spend to continue going up as you need more authentication, more Endpoint Protection. Cisco Meraki they do Cloud Networking. That piece is looking very good, even though Hardware networking is not looking very good at all. The Cloud Networking is looking good, which again makes sense, as you're increasing bandwidth on that side. >> Definitely stories of two sides of that coin. >> That's right >> I want to... Andrew, if you want to... If you wouldn't mind bringing up the next job, we're going to go back to the first one that we showed you with the time series. This is a very important point. Again, we can't stress it enough. We want to understand the impact of the stimulus or aid package. And ETR is going to continue to track that. What can we expect from you guys over the next week or so? >> The goal is to determine whether or not the stimulus is having an impact on how people are responding to our survey as a relates to how they're changing their budgets. The next four or five days, if we start seeing an uptick in this yellow and blue lines here, I think that's a positive. I think that shows that people are kind of wrapping their heads around, great government is taking action here. There is a roadmap in place to help us get out of this. But if the line continues coming down, it just may be that the last few weeks or the last month or so, there was just so much damage. There's not really... There's no coming back from this at least in the near term. So we are kind of watching out for that. >> Well, the Fed is definitely active. >> They're doing right what they can, they're pushing liquidity into the marketplace. People think out of bullets. I don't agree with the Fed. Fed has a quite a bit of of headroom and some dry powder, (murmurs) which is awesome. But the Fed itself, can't do it. You needed to have this fiscal stimulus. So we're excited to see that come to market. I think what I would say to our audiences, my concern is uncertainty. The markets don't like uncertainty and right now there's a lot of uncertainty. If you saw the piece on medium of The Hammer And The Dance it lays out some scenarios about what could happen to the healthcare system. You see people who say, "hey, we should shut down for 10 weeks." The president saying, "hey, we want "to get back to work by by April." The big concern that I have is: okay, maybe we can stamp it out in the near term and get back to work by late April, early May. But then what happens? Are people going to start traveling again? Are people going to start holding events again? And I think there's going to be some real question marks around that. That uncertainty I think, is something that we obviously have to watch. I think there is light at the end of the tunnel, when you look at China and some of the other things that are happening around the world, but we still don't know how long that tunnel is. I'll give you final thoughts before we wrap. >> I think and that's the biggest thing here is the uncertainty, which is why we're doing a lot of this event analysis. We're trying to figure out: after each one of these big events, is there more certainty in people's responses? And just we were talking about, sectors and verticals and vendors that are not doing well. Because the uncertainty we're seeing a lot of down ticks and spend amongst outsource IT and IT consulting vendors. And as long as the uncertainty continues, you're going to see more and more IT projects frozen, less and less spend on those outsource IT and IT consulting vendors and others. And until there's something really in place here where people feel comfortable, you're going to probably see budgets remain where they are, which right now they're negative. >> Folks as we said last week, Sagar and I, ETR is committed, theCUBE is committed to keep you updated on a regular basis. Right now on a weekly cadence. As we have new information, we will bring it to you. Sagar, thanks so much for coming on and supporting us. >> You're welcome and thanks for having me again. >> You're welcome. Thank you for watching this CUBE Insights powered by ETR. And remember all these breaking analysis available on podcast, go to etr.plus that's where all the action is in terms of the survey work. siliconangle.comm covers these breaking analysis and I published weekly on wikibond.com. Thanks for watching everybody. Stay safe. And we'll see you next time.

>>Fly from San Francisco. It's the cube covering RSA conference, 2020 San Francisco brought to you by Silicon angle media. >>Hi everyone. Welcome back to the cubes coverage here at in San Francisco, the Moscone center for RSA conference 2020 I'm job for your host. We are the very special guests, the COO of VMware, Sanjay Poonen, cube alumni. When you talk about security, talk about the modern enterprise as it transforms new use cases, new problems emerge. New opportunities exist here to break it down. Sanjay, welcome back. Thank you John. Always a pleasure to be on your show and I think it's my first time at RSA. We've talked a number of times, but nice to see you here. Well, it's a security guard. Well, this is really why I wanted you to talk, talk to you because operations is become now the big conversation around security. So you know, security was once part of it. It comes out and part of the board conversation, but when you look at security, all the conversations that we're seeing that are the most important conversations are almost a business model conversation. >>Almost like if you're the CEO of the company, you've got HR people, HR, organizational behavior, collaboration, technology, stack compliance and risk management. So the threat of cyber has to cut across now multiple operational functions of the business. It's no longer one thing, it's everything. So this is really kind of makes it the pressure of the business owners to be mindful of a bigger picture. And the attack velocity is happening so much faster, more volume of attacks, milliseconds and nanosecond attacks. So this is a huge, huge problem. I need you to break it down for me. >> Good. But then wonderful intro. No, I would say you're absolutely right. First off, security is a boardroom topic. Uh, audit committees are asking, you know, the CIO so often, you know, reports a report directly, sometimes, often not even to the CIO, to the head of legal or finance and often to the audit. >>So it's a boardroom topic then. You're right, every department right now cares about security because they've got both threat and security of nation state, all malicious, organized crime trying to come at them. But they've also got physical security mind. I mean, listen, growing a virus is a serious threat to our physical security. And we're really concerned about employees and the idea of a cyber security and physical security. We've put at VMware, cybersecurity and, and um, um, physical security. One guy, the CIO. So he actually runs vote. So I think you're absolutely right and if you're a head of HR, you care about your employees. If you're care ahead of communications, you care about your reputation and marketing the same way. If you're a finance, you care about your accounting systems and having all of the it systems that are. So we certainly think that holistic approach does, deserves a different approach to security, which is it can't be silo, silo, silo. >>It has to be intrinsic. And I've talked on your show about why intrinsic and how differentiated that intrinsic security, what I talked about this morning in my keynote. >> Well, and then again, the connect the dots there. It's not just security, it's the applications that are being built on mobile. For instance, I've got a mobile app. I have milliseconds, serious bond to whether something's yes or no. That's the app on mobile. But still the security threat is still over here and I've got the app over here. This is now the reality. And again, AirWatch was a big acquisition that you did. I also had some security. Carbon black was a $2 billion acquisition that VMware made. That's a security practice. How's it all coming together? Can you think of any questions? Blame the VMware because it's not just security, it's what's around it. >> Yeah. I think we began to see over the course of the last several years that there were certain control points and security that could help, you know, bring order to this chaos of 5,000 security vendors. >>They're all legitimate. They're all here at the show. They're good vendors. But you cannot, if you are trying to say healthy, go to a doctor and expect the doctor to tell you, eat 5,000 tablets and sailed. He just is not sustainable. It has to be baked into your diet. You eat your proteins, your vegetables, your fruit, your drink, your water. The same way we believe security needs to become intrinsically deeper parts, the platform. So what were the key platforms and control points? We decided to focus on the network, the endpoint, and you could think of endpoint as to both client and workload identity, cloud analytics. You take a few of those and network. We've been laboring the last seven years to build a definitive networking company and now a networking security company where we can do everything from data center networking, Dell firewalls to load balancing to SDN in this NSX platform. >>You remember where you bought an nice syrup. The industry woke up like what's VM ever doing in networking? We've now built on that 13,000 customers really good growing revenue business in networking and and now doing that working security. That space is fragmented across Cisco, Palo Alto, FIU, NetScaler, checkpoint Riverbed, VMware cleans that up. You get to the end point side. We saw the same thing. You know you had an endpoint management now workspace one the sequel of what AirWatch was, but endpoint security again, fragmented. You had Symantec McAfee, now CrowdStrike, tenable Qualis, you know, I mean just so many fragmented IOM. We felt like we could come in now and clean that up too, so I have to worry about to do >> well basically explaining that, but I want to get now to the next conversation point that I'm interested in operational impact because when you have all these things to operationalize, you saw that with dev ops and cloud now hybrid, you got to operationalize this stuff. >>You guys have been in the operations side of the business for our VMware. That's what you're known for and the developers and now on the horizon I gotta operationalize all the security. What do I do? I'm the CSO. I think it's really important that in understanding operations of the infrastructure, we have that control point called vSphere and we're now going to take carbon black and make it agentless on the silverside workloads, which has never been done before. That's operationalizing it at the infrastructure level. At the end point we're going to unify carbon black and workspace one into a unified agent, never been done before. That's operationalizing it on the client side. And then on the container and the dev ops site, you're going to start bringing security into the container world. We actually happened in our grade point of view in containers. You've seen us do stuff with Tansu and Kubernetes and pivotal. >>Bringing that together and data security is a very logical thing that we will add there. So we have a very good view of where the infrastructure and operations parts that we know well, a vSphere, NSX workspace one containers with 10 Xu, we're going to bring security to all of them and then bake it more and more in so it's not feeling like it's a point tool. The same platform, carbon black will be able to handle the security of all of those use cases. One platform, several use cases. Are you happy with the carbon black acquisition? Listen, you know, you stay humble and hungry. Uh, John for a fundamental reason, I've been involved with number of acquisitions from my SAP VMware days, billion dollar plus. We've done talking to us. The Harvard business review had an article several years ago, which Carney called acquisitions and majority of them fail and they feel not because of process of product they feel because good people leave. >>One of the things that we have as a recipe does acquisition. We applied that to AirWatch, we apply the deny Sera. There is usually some brain trust. You remember in the days of nice area, it was my team Cosato and the case of AirWatch. It was John Marshall and that team. We want to preserve that team to help incubate this and then what breve EV brings a scale, so I'm delighted about Patrick earlier. I want to have him on your show next time because he's now the head of our security business unit. He's culturally a fit for the mr. humble, hungry. He wants to see just, we were billion dollar business now with security across networking endpoint and then he wants to take just he's piece of it, right? The common black piece of it, make it a billion dollar business while the overall security business goes from three to five. >>And I think we're going to count them for many years to come to really be a key part of VMware's fabric, a great leader. So we're successful. If he's successful, what's my job then? He reports to me is to get all the obstacles out of the way. Get every one of my core reps to sell carbon black. Every one of the partners like Dell to sell carbon black. So one of the deals we did within a month is Dell has now announced that their preferred solution on at Dell laptops, this carbon bike, they will work in the past with silence and crowd CrowdStrike. Now it's common black every day laptop now as a default option. That's called blank. So as we do these, John, the way we roll is one on here to basically come in and occupy that acquisition, get the obstacles out of the way, and that let Patrick scaled us the same way. >>Martine Casado or jumbo. So we have a playbook. We're gonna apply that playbook. Stay humble and hungry. And you ask me that question every year. How are we doing a carbon black? I will be saying, I love you putting a check on you. It will be checking in when we've done an AirWatch. What do you think? Pretty good. Very good. I think good. Stayed line to the radar. Kept growing. It's top right. Known every magic quadrant. That business is significant. Bigger than the 100 million while nice here. How do we do a nice hero? NSX? It's evolved quite a bit. It's evolved. So this is back to the point. VMware makes bets. So unlike other acquisitions where they're big numbers, still big numbers, billions or billions, but they're bets. AirWatch was a good bet. Turned out okay. That the betting, you're being conservative today anyway. That's it. You're making now. >>How would you classify those bets? What are the big bets that you're making right now? Listen, >> I think there's, um, a handful of them. I like to think of things as no more than three to five. We're making a big bet. A multi-cloud. Okay. The world is going to be private, public edge. You and us have talked a lot about VMware. AWS expanded now to Azure and others. We've a big future that private cloud, public cloud edge number two, we're making a big bet on AB motorization with the container level 10 zoos. I think number three, we're making a big bet in virtual cloud networking cause we think longterm there's going to be only two networking companies in matter, VMware and Cisco. Number four, we're making a big bet in the digital workspace and build on what we've done with AirWatch and other technologies. Number five, and make it a big bet security. >>So these five we think of what can take the company from 10 to 20 billion. So we, you know, uh, we, we've talked about the $10 billion Mark. Um, and the next big milestone for the company is a 20 billion ball Mark. And you have to ask yourself, can you see this company with these five bets going from where they are about a 10 billion revenue company to 20. Boom. We hope again, >> Dave, a lot that's doing a braking and now he might've already shipped the piece this morning on multi-cloud. Um, he and I were commenting that, well, I said it's the third wave of cloud computing, public cloud, hybrid multi-cloud and hybrids, the first step towards multi-cloud. Everyone kind of knows that. Um, but I want to ask you, because I told Dave and we kind of talked about this is a multi-decade growth opportunity, wealth creation, innovation, growth, new opportunity multicloud for the generation. >>Take the, this industry the next level. How do you see that multicloud wave? Do you agree on the multigenerational and if so, what specifically do you see that unfolding into this? And I'm deeply inspired by what Andy Jassy, Satya Nadella, you know, the past leading up to Thomas Korea and these folks are creating big cloud businesses. Amazon's the biggest, uh, in the iOS pass world. Azure is second, Google is third, and just market shares. These folks collectively are growing, growing really well. In some senses, VM-ware gets to feed off that ecosystem in the public cloud. So we are firm believers in what you're described. Hybrid cloud is the pot to the multicloud. We coined that term hybrid thought. In fact, the first incantation of eco there was called via cloud hybrid service. So we coined the term hybrid cloud, but the world is not multi-cloud. The the, the key though is that I don't think you're gonna walk away from those three clouds I mentioned have deep pockets. >>Then none of them are going away and they're going to compete hard with each other. The market shares may stay the same. Our odd goal is to be a Switzerland player that can help our customers take VM or workloads, optimize them in the private cloud first. Okay? When a bank of America says on their earnings caller, Brian Warren and said, I can run a private cloud better than a public cloud and I can save 2 billion doing that, okay? It turns off any of the banks are actually running on VMware. That's their goal. But there are other companies like Freddie Mac, we're going all in with Amazon. We want to ride the best of both worlds. If you're a private cloud, we're going to make you the most efficient private cloud, VMware software, well public cloud, and going to Amazon like a Freddie Mac will help you ride your apps into that through VMware. >>So sometimes history can be a predictor of future behavior. And just to kind of rewind the computer industry clock, if you looked at mainframe mini-computers, inter networking, internet proprietary network operating systems dominated it, but you saw the shift and it was driven by choice for customers, multiple vendors, interoperability. So to me, I think cloud multicloud is going to come down to the best choice for the workload and then the environment of the business. And that's going to be a spectrum. But the key in that is multi-vendor, multi, a friend choice, multi-vendor, interoperability. This is going to be the next equation in the modern error. It's not gonna look the same as mainframe mini's networking, but it'll create the next Cisco, the create the next new brand that may or may not be out there yet that might be competing with you or you might be that next brand. >>So interoperability, multi-vendor choice has been a theme in open systems for a long time. Your reactions, I think it's absolutely right, John, you're onto something there. Listen, the multicloud world is almost a replay of the multi hardware system world. 20 years ago, if you asked who was a multi hardware player before, it was Dell, HP at the time, IBM, now, Lenovo, EMC, NetApp, so and so forth and Silva storage, networking. The multicloud world today is Amazon, Azure, Google. If you go to China, Alibaba, so on and so forth. A Motiva somebody has to be a Switzerland player that can serve the old hardware economy and the new hardware economy, which is the, which is the cloud and then of course, don't forget the device economy of Apple, Google, Microsoft, there too. I think that if you have some fundamental first principles, you expressed one of them. >>Listen where open source exists, embrace it. That's why we're going big on Kubernetes. If there are multiple clouds, embrace it. Do what's right for the customer, abstract away. That's what virtualization is. Managed common infrastructure across Ahmed, which is what our management principles are, secure things. At the point of every device and every workload. So those are the principles. Now the engineering of it changes. The way in which we're doing virtualization today in 2020 is slightly different from when Diane started the company and around the year 2020 years ago. But the principals are saying, we're just not working just with the hardware vendors working toward the cloud vendors. So using choices where it's at, the choice is what they want. Absolutely, absolutely. And you're right. It's choice because it was the big workloads. We see, for example, Amazon having a headstart in the public cloud markets, but there's some use cases where Azure is applicable. >>Some use his word, Google's applicable, and to us, if the entire world was only one hardware player or only one cloud player, only one device player, you don't need VMware. We thrive in heterogeneity. It's awesome. I love that word. No heterogeneity provides not 3000 vendors. There's almost three, three of every kind, three silver vendors, three storage vendors, three networking vendors, three cloud vendors, three device vendors. We was the middle of all of it. And yeah, there may be other companies who tried to do that too. If they are, we should learn from them, do it better than them. And competition even to us is a good thing. All right. My final question for you is in the, yeah, the Dell technologies family of which VMware is a part of, although big part of it, the crown jewel as we've been calling them the cube, they announced RSA is being sold to a private equity company. >>What's the general reaction amongst VMware folks and the, and the Dell technology family? Good move, no impact. What we support Dell and you know, all the moves that they've made. Um, and from our perspective, you know, if we're not owning it, we're going to partner it. So I see no overlap with RSA. We partner with them. They've got three core pillars, secure ID, net witness and Archer. We partnered with them very well. We have no aspirations to get into those aspects of governance. Risk and compliance or security has been, so it's a partner. So whoever's running it, Rohit runs on very well. He also owns the events conference. We have a great relationship and then we'll keep doing that. Well, we are focused in the areas I described, network, endpoint security. And I think what Michael has done brilliantly through the course of the last few years is set up a hardware and systems company in Dell and allow the software company called Vima to continue to operate. >>And I think, you know, the movement of some of these assets between the companies like pivotal to us and so on and so forth, cleans it up so that now you've got both these companies doing well. Dell has gone public, we Hammer's gone public and he has said on the record, what's good for Dell is good, what's good for VMware and vice versa and good for the customer. And I think the key is there's no visibility on what cloud native looks like. Hybrid, public, multi, multi, not so much. But you get almost, it's an easy bridge to get across and get there. AI, cyber are all big clear trends. They're waves. Sasha. Great. Thank you. Thanks for coming on. Um, your thoughts on the security show here. Uh, what's your, what's your take to, uh, definitive security shows? I hope it stays that way. Even with the change of where RSA is. >>Ownership goes is this conference in black hat and we play in both, uh, Amazon's conference. I was totally starting to, uh, reinforce, reinforce cloud security will show up there too. Uh, but we, we think, listen, there's what, 30,000 people here. So it's a force. It's a little bit like VMworld. We will play here. We'll play a big, we've got, you know, it just so happens because the acquisition happened before we told them, but we have two big presences here. We were at carbon black, um, and it's an important business for us. And I said, like I said, we have $1 billion business and security today by 30,000 customers using us in a security network, endpoints cloud. I want to take that to be a multi, multiple times that size. And I think there's a pot to do that because it's an adjacent us and security. So we have our own kind of selfish motives here in terms of getting more Mindshare and security. >>We did a keynote this morning, which was well received with Southwest airlines. She did a great job. Carrie Miller, she was a fantastic speaker and it was our way of showing in 20 minutes, not just to our point of view, because you don't want to be self serving a practitioner's point of view. And that's what's really important. Well finally on a personal note, um, you know, I always use the term tech athlete, which I think you are one, you really work hard and smart, but I got to get your thoughts. But then I saw you're not on Twitter. I'm on. When IBM announced a new CEO, Arvin, um, fishnet Indian American, another CEO, this is a pattern. We're starting to see Indian American CEOs running cup American companies because this is the leadership and it's really a great thing in my mind, I think is one of the most successful stories of meritocracy of all time. >>You're quick. I'm a big fan of oven, big fan of Shantanu, Sundar Pichai, something that Ellen, many of them are close friends of mine. Uh, many of them have grown up in Southern India. We're a different ages. Some of them are older than me and in many cases, you know, we were falling behind other great players like Vino Cosla who came even 10 to 15 years prior. And you know, it's hard for an immigrant in this country. You know, um, when I first got here and I came as an immigrant to Dartmouth college, there may have been five or 10 Brown skin people in the town of Hanover, New Hampshire. I don't know if you've been to New Hampshire. I've been there, there's not many at that time. And then the late 1980s, now of course, there's much more, uh, so, you know, uh, we stay humble and hungry. >>There's a part of our culture in India that's really valued education and hard work and people like Arvin and some of these other people are products. I look up to them, the things I learned from them. And um, you know, it's true of India. It's a really good thing to see these people be successful at name brand American companies, whether it's IBM or Microsoft or Google or Adobe or MasterCard. So we're, we're, I'm in that fan club and there's a lot I learned from that. I just love being around people who love entrepreneurship, love innovation, love technology, and work hard. So congratulations. Thank you so much for your success. Great to see you again soon as you put in the COO of VM-ware here on the ground floor here at RSA conference at Moscone, sharing his insight into the security practice that is now carbon black and VMware. All the good things that are going on there. Thanks for watching.

yeah I probably would use a sort of ever-changing I would say ever-expanding you know but you have to write because what we saw when we started off is roll around how to automate my datacenter how do I get a cloud experience in my data center what we see changing and okay Frank is driven by this whole app refactoring process that customers want to deploy apps maybe in the cloud maybe develop in the cloud and so they need an extension to the automated data center into the cloud and so really what you see from us is an expansion of that ACA concept you rangas point we actually really didn't change we just we're just extending it to container development platforms two different cloud environments what's the same area automate end-to-end network reach as well as the segmentation what is the right there right sorry security regime in this you know cloud era how is it evolving well I mean what we're doing is we're bringing tools like tetration which now runs on Prem and in the cloud things like stealthWatch which runs on from in the cloud and simply bringing them security frameworks that are very effective we're I think a very capable of well known security vendor but bringing them the capability to run the same capabilities in their on-prem environments and their data centers as well as in multiple public clouds and that just eliminates the seams that hackers could maybe get into it makes common policy Possible's they can define policy around an application once and have that apply across the vault environments which not only it's easier for them but it eliminates potential mistakes that they might make that might leave things open to a hacker so for us it's that simple bringing very effective common frameworks for security across all these cisco has embraced the idea of being a platform and not a siloed individual product line and so for a service provider like CenturyLink for us to be able to embrace that same philosophy of the platform of services what that means is that our engineering and field ops folks our Operations teams do all the hard work on the back end to make sure that we have established all of the right security the right network the reliability the global scalability of our specific platform of services and being that leader in telecommunications and then we're able to lay that cisco platform on top of it and what happens then from a product management level is once you've established that foundation it's really plug-and-play the customer calls and says I need calling I need meetings I need you know whatever it is they need and we build that solution and very quickly can put those components into play and get them to use the service right away so what we've done across the portfolio even in primary storage is made sure that we've done all sorts of things that help you against a ransomware a malware attack keep the data encrypted I think the key point and actually I think Silicon angle wrote about this is like some like 98% of all enterprises getting a broke it in two anyway so it's great that you've got security software on the edge with at the IBM or RSA or blue coat or checkpoint oh who cares who you buy the software from but when they're in there stealing and sometimes you know some accounts have told us they can track them down in a day but if you're a giant global fortune 500 datacenter look it may take you like a week so they can be stealing stuff right and left so we've done everything from we have right once technology right so it's immutable data you can't change it we've got encryption so if they steal it guess what they can't use it but the other thing we've done is real protection against ransomware now that's a great question in terms of modernization of infrastructure and there's some really interesting trends that I think are occurring and I think the one that's getting a lot of us is really edge computing and what we're finding is depending on the use case it can be an enterprise application where you're trying to get localization of your data it could be an IOT application where it's it's really critical for latency or bandwidth to keep compute and data close to the thing if you will or it could be mobile edge computing where you want to do thing like analytics and AI on a video stream before you tax the the bandwidth of the cellular infrastructure with that data stream so across the board I think edge is super exciting and you can't talk about edge with like I said talking about artificial intelligence another big trend whether it's running native running with an accelerator an FPGA I think we're seeing a myriad of use cases in that space but Security's in the end to your point right I've got software to find access I've got mobile access points I've got you know tetration I've got you know all of these products that are helping people that in the past they were just patching holes in the dike you know hey this happened let's put this software product here this happened let's put this in and we actually built the security practice like the last three or four years ago it's growing you know the number of people that are whether it's regulation compliance you know I got some real problem I think I've got a problem and I don't know what it is our ability to come back and sit down and say let's evaluate what your situation is so I was talking to the networking guys and so Wow enterprise networking it's up way up what's driving that the need to transform or is that you know what is it they're like a lot of times it's something are long security that's making them step back and reevaluate and then sometimes that transfer translates into an entire network refresh there are tools that people use and everybody's environments a little different so some might want to integrate in and use ansible terraform you know tools like that and so then you need code that will help integrate into that other people are using ServiceNow for tickets so if something happens integrate into that people are using different types of devices hopefully mostly Cisco but they may be other using others as well we can extend code that goes into that so it really helps to go in different areas and what's kind of cool is that our there's an amount of code that where people have the same problems you know and you know you start doing something everyone has to make the first few kind of same things in software let's get that into exchange and so let's share that there's places where partners are gonna want to differentiate keep that to yourselves like use that as your differentiated offer and then there's areas where people want to solve in communities of interest so we have we have someone who does networking and he wants to do automation he does it for power management in the utilities industry so he wants a community that will help write code that'll help for that area you know so people have different interests and you know we're hoping to help facilitate that because Cisco actually has a great community we have a great community that we've been building over the last 30 years there the network experts they're solving the real problems around the world they work for partners they work for customers and we're hoping that this will be a tool to get them to band together and contribute in a in a software kinda way they have the right reason to be afraid because so many automation was created a once user exactly was right and then you have the cost of traditional automation you have the complexity to create a network automation you guys realize that middle coordination you cannot have little automation only work on a portion of your needle you have to work on majority if not all of your needle right so that's became very complex just like a you wanna a self-driving car you can go buy a Tesla a new car you can drive on its own but if you wanna your 10 year order Toyota driving on its own richer feared that's a very complex well let's today Network automation how to deal with it you have to deal with multi vendor technology Marty years of technology so people spend a lot of money the return are very small they so they have a right to affair afraid of it but the challenge is there is what's alternative yeah I think that is one of the things that's very unique about the definite community is within the community we have technical stakeholders from small startups to really large partners or huge enterprises and when we're all here in the demo soon we're all engineers and we're all exchanging ideas kind of no matter what the scale so it becomes this great mixing of you know shared experiences and ideas and that is some of the most interesting conversations that I've actually heard this week is people talking about how maybe they're using one Cisco platform in these two very different environments and exchanging ideas about how they do that or maybe how they're using a Cisco platform with an open-source tool and then people finding value in thinking oh maybe I can do that in my environment so that part of the ecosystem and community is very interesting and then we're also helping partners find each other so we do a lot of work around you know here's a partner in the Cisco ecosystem who goes and installs Meraki networks right here's a software partner who builds mapping technology on top of indoor Wi-Fi networks and getting those two together because the software partner is not going to install the network and the network person may not write that application in that way and so bringing them together we've had a lot of really good information coming back from the community around kind of finding each other and being able to deliver those outcomes what are you guys doing Tom we'll start with you how are you guys working together to infuse and integrate security into the technologies and that from a customer's perspective those risks that dial down yeah so so we're in Cisco's integrating security across all of our product portfolio right and and that includes our data center portfolio all the way through our campus our when all those portfolios so we continue to look for opportunities to to integrate you know whether it's dual factor authentication or things like secure data center with a fire you know of highly scalable multi instance firewall in front of a data center things like that so we're we're definitely looking for areas and angles and opportunities for us to not only integrate it from a product standpoint but also ensure that we are talking that story with our customers so that they know they can they can leverage Cisco for the full architecture from a security standing on the storage of the data from an encryption perspective and as it gets moved or his mobile you know that that level of security and policy follows it you know wherever the data is secure of course enemy everybody always wants more performance they want lower cost security in many ways has begun to trump those other two attributes they've they've become table stakes security as well but security is really number one now ya talk about that talk about the major trends that you're seeing well of course of course security now is top of mine for everyone board level conversations executive level conversations all the time I think what ends up happening is in the past we would think about it as Network performance cost etc security as a tangent kind of side conversation now of course it's built into everything that we do [Music]

>> From the SiliconANGLE Media office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Dave Vellante. >> Hello, everyone, and welcome to this week's Cube Insights, powered by ETR. Today is November 8, 2019 and I'd like to address one of the most important topics in the minds of a lot of executives. I'm talking about CEOs, CIOs, Chief Information Security Officers, Boards of Directors, governments and virtually every business around the world. And that's the topic of cyber security. The state of cyber security has changed really dramatically over the last 10 years. I mean, as a cyber security observer I've always been obsessed with Stuxnet, which the broader community discovered the same year that theCUBE started in 2010. It was that milestone that opened my eyes. Think about this. It's estimated that Stuxnet cost a million dollars to create. That's it. Compare that to an F-35 fighter jet. It costs about $85-$100 million to build one. And that's on top of many billions of dollars in R&D. So Stuxnet, I mean, it hit me like a ton of bricks. That the future of war was all about cyber, not about tanks. And the barriers to entry were very, very low. Here's my point. We've gone from an era where thwarting hacktivists was our biggest cyber challenge to one where we're now fighting nation states and highly skilled organized criminals. And of course, cyber crime and monetary theft is the number one objective behind most of these security breaches that we see in the press everyday. It's estimated that by 2021 cyber crime is going to cost society $6 trillion in theft, lost productivity, recovery costs. I mean, that's just a staggeringly large number. It's even hard to fathom. Now, the other C-change is how organizations have had to respond to the bad guys. It used to be pretty simple. I got a castle and the queen is inside. We need to protect her, so what do we do? We built a mote, put it around the perimeter. Now, think of the queen as data. Well, what's happened? The queen has cloned herself a zillion times. She's left the castle. She's gone up to the sky with the clouds. She's gone to the edge of the kingdom and beyond. She's also making visits to machines and the factories and hanging out with the commoners. She's totally exposed. Listen, by 2020, there's going to be hundreds of billions of IP addresses. These are going to be endpoints and phones, TVs, cameras, tablets, automobiles, factory machines, and all these represent opportunities for the bad guys to infiltrate. This explosion of endpoints that I'm talking about is created massive exposures, and we're seeing it manifest itself in the form of phishing, malware, and of course the weaponization of social media. You know, if you think that 2016 was nuts, wait 'til you see how the 2020 presidential election plays out. And of course, there's always the threat of ransomware. It's on everybody's minds these days. So I want to try to put some of this in context and share with you some insights that we've learned from the experts on theCUBE. And then let's drill into some of the ETR data and assess the state of security, the spending patterns. We're going to try to identify some of those companies with momentum and maybe some of those that are a little bit exposed. Let me start with the macro and the challenged faced by organization and that's complexity. Here's Robert Herjavec on theCUBE. Now, you know him from the Shark Tank, but he's also a security industry executive. Herjavec told me in 2017 at the Splunk.com Conference that he thought the industry was overly complex. Let's take a look and listen. >> I think that the industry continues to be extremely complicated. There's a lot of vendors. There's a lot of products. The average Fortune 500 company has 72 security products. There's a stat that RSA this year, that there's 1500 new security start-ups every year. Every single year. How are they going to survive? And which ones do you have to buy because they're critical and provide valuable insights? And which ones are going to be around for a year or two and you're never going to hear about again? So it's a extremely challenging complex environment. >> So it's that complexity that had led people like Pat Gelsinger to say security is a do-over, and that cyber security is broken. He told me this years ago on theCUBE. And this past VM World we talked to Pat Gelsinger and remember, VMware bought Carbon Black, which is an endpoint security specialist, for $2.1 billion. And he said that he's basically creating a cloud security division to be run by Patrick Morley, who is the Carbon Black CEO. Now, many have sort of questioned and been skeptical about VMware's entrance into the space. But here's a clip that Pat Gelsinger shared with us on theCUBE this past VM World. Let's listen and we'll come back and talk about it. >> And this move in security, I am just passionate about this, and as I've said to my team, if this is the last I do in my career is I want to change security. We just not are satisfying our customers. They shouldn't put more stuff on our platforms. >> National defense issues, huge problems. >> It's just terrible. And I said, if it kills me, right, I'm going to get this done. And they says, "It might kill you, Pat." >> So this brings forth an interesting dynamic in the industry today. Specifically, Steven Smith, the CISO of AWS, at this year's Reinforce, which is their security conference, Amazon's big cloud security conference, said that this narrative that security is broken, it's just not true, he said. It's destructive and it's counterproductive. His and AWS's perspective is that the state of cloud security is actually strong. Kind of reminded me of a heavily messaged State of the Union address by the President of the United States. At the same time, in many ways, AWS is doing security over. It's coming at it from the standpoint of a clean slate called cloud and infrastructure as a surface. Here's my take. The state of security in this union is not good. Every year we spend more, we lose more, and we feel less safe. So why does AWS, the security czar, see if differently? Well, Amazon uses this notion of a shared responsibility security model. In other words, they secure the S3 buckets, maybe the EC2 infrastructure, not maybe, the EC2 infrastructure. But it's up to the customer to make sure that she is enforcing the policies and configuring systems that adhere to the EDIX of the corporation. So I think the shared security model is a bit misunderstood by a lot of people. What do I mean by that? I think sometimes people feel like well, my data's in the cloud, and AWS has better security than I do. Here I go, I'm good. Well, AWS probably does have better security than you do. Here's the problem with that. You still have all these endpoints and databases and file servers that you're managing, and that you have to make sure comply with your security policies. Even if you're all on the cloud, ultimately, you are responsible for securing your data. Let's take a listen to Katie Jenkins, the CISO of Liberty Mutual, on this topic and we'll come back. >> Yeah, so the shared responsibility model is, I think that's an important speaking point to this whole ecosystem. At the end of the day, Liberty Mutual, our duty is to protect policyholder data. It doesn't matter if it's in the cloud, if it's in our data centers, we have that duty to protect. >> It's on you. >> All right, so there you have it from a leading security practitioner. The cloud is not a silver bullet. Bad user behavior is going to trump good security every time. So unfortunately the battle goes on. And here's where it gets tricky. Security practitioners are drowning in a sea of incidents. They have to prioritize and respond to, and as you heard Robert Herjavec say, the average large company has 75 security products installed. Now, we recently talked to another CISO, Brian Lozada, and asked him what's the number one challenge for security pros. Here's what he said. >> Lack of talent. I mean, we're starving for talent. Cyber security's the only field in the world with negative unemployment. We just don't have the actual bodies to actually fill the gaps that we have. And in that lack of talent CISOs are starving. We're looking for the right things or tools to actually patch these holes and we just don't have it. Again, we have to force the industry to patch all of those resource gaps with innovation and automation. I think CISOs really need to start asking for more automation and innovation within their programs. >> So bottom line is we can't keep throwing humans at the problem. Can't keep throwing tools at the problem. Automation is the only way in which we're going to be able to keep up. All right, so let's pivot and dig in to some of the ETR data. First, I want to share with you what ETR is saying overall, what their narrative looks like around spending. So in the overall security space, it's pretty interesting what ETR says, and it dovetails into some of the macro trends that I've just shared with you. Let's talk about CIOs and CISOs. ETR is right on when they tell me that these executives no longer have a blank check to spend on security. They realize they can't keep throwing tools and people at the problem. They don't have the bodies, and as we heard from Brian Lozada. And so what you're seeing is a slowdown in the growth, somewhat of a slowdown, in security spending. It's still a priority. But there's less redundancy. In other words, less experimentation with new vendors and less running systems in parallel with legacy products. So there's a slowdown adoption of new tools and more replacement of legacy stuff is what we're seeing. As a result, ETR has identified this bifurcation between those vendors that are very well positioned and those that are losing wallet share. Let me just mention a few that have the momentum, and we're going to dig into this data in more detail. Palo Alto Networks, CrowdStrike, Okta, which does identity management, Cisco, who's coming at the problem from its networking strength. Microsoft, which recently announced Sentinel for Azure. These are the players, and some of them that are best positioned, I'll mention some others, from the standpoint spending momentum in the ETR dataset. Now, here's a few of those that are losing momentum. Checkpoint, SonicWall, ArcSight, Dell EMC, which is RSA, is kind of mixed. We'll talk about that a little bit. IBM, Symantec, even FireEye is seeing somewhat higher citations of decreased spending in the ETR surveys and dataset. So there's a little bit of a cause for concern. Now, let's remember the methodology here. Every quarter ETR asks are you green, meaning adopting this vendor as new or spending more? Are you neutral, which is gray, are you spending the same? Or are you red, meaning that you're spending less or retiring? You subtract the red from the green and you get what's called a net score. The higher the net score, the better. So here's a chart that shows a ranking of security players and their net scores. The bars show survey data from October '18, July '19, and October '19. In here, you see strength from CrowdStrike, Okta, Twistlock, which was acquired by Palo Alto Networks. You see Elastic, Microsoft, Illumio, the core, Palo Alto Classic, Splunk looking strong, Cisco, Fortinet, Zscaler is starting to show somewhat slowing net score momentum. Look at Carbon Black. Carbon Black is showing a meaningful drop in net score. So VMware has some work to do. But generally, the companies to the left are showing spending momentum in the ETR dataset. And I'll show another view on net score in a moment. But I want to show a chart here that shows replacement spending and decreased spending citations. Notice the yellow. That's the ETR October '19 survey of spending intentions. And the bigger the yellow bar, the more negative. So Sagar, the director of research at ETR, pointed this out to me, that, look at this. There are about a dozen companies where 20%, a fifth of the customer base is decreasing spend or ripping them out heading into the year end. So you can see SonicWall, CA, ArcSight, Symantec, Carbon Black, again, a big negative jump. IBM, same thing. Dell EMC, which is RSA, slight uptick. That's a bit of a concern. So you can see this bifurcation that ETR has been talking about for awhile. Now, here's a really interesting kind of net score. What I'm showing here is the ETR data sorted by net score, again, higher is better, and shared N, which is the number of shared accounts in the survey, essentially the number of mentions in that October survey with 1,336 IT buyers responded. So how many of that 1,300 identified these companies? So essentially it's a proxy for the size of the install base. So showing up on both charts is really good. So look, CrowdStrike has a 62% net score with a 133 shared account. So a fairly sizable install base and a very high net score. Okta, similar. Palo Alto Networks and Splunk, both large, continue to show strength. They got net scores of 44% and 313 shared N. Fortinet shows up in both. Proofpoint. Look at Microsoft and Cisco. With 521 and 385 respectively on the right hand side. So big install bases with very solid net scores. Now look at the flip side. Go down to the bottom right to IBM. 132 shared accounts with a 14.4% net score. That's very low. Check Point similarly. Same with Symantec. Again, bifurcation that ETR has been citing. Really stark in this chart. All right, so I want to wrap. In some respects from a practitioner perspective, the sky erectus is falling. You got increased attack surface. You've got exploding number of IP addresses. You got data distributed all over the place, tool creep. You got sloppy user behavior, overwork security op staff, and a scarcity of skills. And oh, by the way, we're all turning into a digital business, which is all about data. So it's a very, very dangerous time for companies. And it's somewhat chaotic. Now, chaos, of course, can mean cash for cyber security companies and investors. This is still a very vibrant space. So just by the way of comparison and looking at some of the ETR data, check this out. What I'm showing is companies in two sectors, security and storage, which I've said in previous episodes of breaking analysis, storage, and especially traditional storage disk arrays are on the back burner spending wise for many, many shops. This chart shows the number of companies in the ETR dataset with a net score greater than a specific target. So look, security has seven companies with a 49% net score or higher. Storage has one. Security has 18 above 39%. Storage has five. Security has 31 companies in the ETR dataset with a net score higher than 30%. Storage only has nine. And I like to think of 30% as kind of that the point at which you want to be above that 30%. So as you can see, relatively speaking, security is an extremely vibrant space. But in many ways it is broken. Pat Gelsinger called it a do-over and is affecting a strategy to fix it. Personally, I don't think one company can solve this problem. Certainly not VMware, or even AWS, or even Microsoft. It's too complicated, it's moving too fast. It's so lucrative for the bad guys with very low barriers to entry, as I mentioned, and as the saying goes, the good guys have to win every single day. The bad guys, they only have to win once. And those are just impossible odds. So in my view, Brian Lozada, the CISO that we interviewed, nailed it. The focus really has to be on automation. You know, we can't just keep using brute force and throwing tools at the problem. Machine intelligence and analytics are definitely going to be part of the answer. But the reality is AI is still really complicated too. How do you operationalize AI? Talk to companies trying to do that. It's very, very tricky. Talk about lack of skills, that's one area that is a real challenge. So I predict the more things change the more you're going to see this industry remain a game of perpetual whack a mole. There's certainly going to be continued consolidation, and unquestionably M&A is going to be robust in this space. So I would expect to see continued storage in the trade press of breaches. And you're going to hear scare tactics by the vendor community that want to take advantage of the train wrecks. Now, I wish I had better news for practitioners. But frankly, this is great news for investors if they can follow the trends and find the right opportunities. This is Dave Vellante for Cube Insights powered by ETR. Connect with me at David.Vellante@siliconangle.com, or @dvellante on Twitter, or please comment on what you're seeing in the marketplace in my LinkedIn post. Thanks for watching. Thank you for watching this breaking analysis. We'll see you next time. (energetic music)

>> Announcer: Live from San Diego, California it's theCUBE, covering Cisco Live US 2019. Brought to you by Cisco and its ecosystem partners. >> Welcome back to theCUBE, day two of our coverage of Cisco Live. We are live also from San Diego. I'm Lisa Martin, Stu Miniman is my co-host. And one of our alumni is back with us, Eric Herzog, the CMO of IBM Storage. >> Great, thank you for having us. >> Welcome back. So, lots of buzz, we're in the DevNet Zone. This has been, I hear, one of the busiest expos at Cisco Live this year. The community is, I'm hearing, approaching 600,000 strong. Yesterday we were talking a lot about the big waves of innovation, one of them being GPU's everywhere, AI, but also some of the challenges with respect to data, that companies are generally getting less than 1% of that data to really extract insights from it. So let's talk about what IBM is doing with respect to AI and big data, and really helping customers really turn that dial up on getting more value out of what they have. >> Well, so we're doing a lot in that space. First of all, when you're running AI in particular, if you're really going to do something like run a robotic factory, you'd better make sure the storage doesn't fail. But that's sort of, you know, the checkbox item, just the way a car always has a spare tire. So the real differentiator, from a storage perspective, is what do you do to help the data prep, what do you help to do to make sure that the data is always in the right kind of pipeline? For example, just like a human always learns, right, at least smart humans always learn, so you learned certain things when you were seven or eight, they might've changed by the time you were in college, by the time you have your first kid they might be different again, and by the time you're getting ready to retire, but it could be still the same topic and the data's recycling, and then you learn new things about that topic. So in the case of a data workload, what you need to do is make sure you have data prep along the entire pipeline. And that's what we've done with a whole bunch of software that we offer for the big data and AI workloads and applications. >> So, Eric, we've talked with you many times about what's happening in the multi-cloud world. It feels like IBM and Cisco are on similar, parallel paths as to the move from, traditionally we think about boxes, and from a Cisco standpoint it's ports, and, you know, more and more it's about the software. So can you talk a little bit about that software-defined world in where IBM and Cisco are going together along that journey. >> So, one of the things that we've done from a storage division perspective, we do what we call the VersaStack. It's a converge infrastructure that includes Cisco UCS, our all-flash arrays, but it's packed with a bunch of software. So we can use that to transparently move block data out to a cloud, any cloud, IBM cloud, Amazon, Azure. We could move it out to a block store or to an object store. Now obviously to move it out to an object store, that can help you, can prevent ransomware and malware. And it's all automated. We've done the same thing with Scale-Out File, where we just see cloud as just a tier, and we've done the same thing with object storage. So the big thing we see from a hybrid, multi-cloud perspective at the IBM storage division, is everything needs to be able to have the data easily portable, easily migrateable, and easily replicable back, and constantly moving back and forth, not just going out to the cloud and staying there. So we've done that from our software-defined portfolio. But we also did it with our modern data protection portfolio, Spectrum Protect, which is one of the most award-winning products in the backup space. We've got over 400 small-medium cloud providers where their backup-as-a-service offering is based on Spectrum Protect. So if they go to Wikibon and Wikibon says, we want to back up to the cloud and you're using Tectrade or Cloud Temple or i-Virtualize, all those cloud providers, the backup-as-a-service they sell you is based on IBM Spectrum Protect. So for us cloud is just another tier. Just like hard drives and flash and tape, cloud's just the new tier. >> So in this pivot towards software-defined everything, with, say, VersaStack for example, give us one of your favorite customer success stories that really highlights the value of what IBM and your partnerships deliver. >> Sure, sure. So one of them would be Tectrade. So Tectrade is one of our public references. They only do PCI data. So, Wikibon couldn't be a customer, IBM can't be a customer, theCube can't be a customer, Cisco can't be, because we don't specialize, as you know, in financial-centric data. So they back up about, they do about two million backups a day, all of financial data across Europe and into North America, and they've got a VersaStack that happens to run Spectrum Protect on it. It's all flash, so they're not worried about performance. And then they back up to giant hard drive farms that they've also bought from IBM. But the real thing on the VersaStack is having that very fast edge, and then having the software that allows them to A, control the storage side, but then run Spectrum Protect to do backup. So if you were a bank, if theCUBE was a bank, then you guys could use Tectrade and they use a VersaStack for backing up data as a service. That's a perfect example of what we've done with the VersaStack solution, in this case in a hybrid cloud scenario. >> What are some of the business impacts that they have achieved so far? Are they finding new revenue streams, are they unlocking more valuable data to be more competitive? >> So, what they do is obviously in the PCI world. They're very centered, you can't lose anything. Because it's financial data. So for them, it's all about the security of the data, making sure the data gets there, the data's encrypted in flight, they know that the customers can do a lot of different things, because Spectrum tech is very much a big enterprise package that's very strong in the global Fortune 2000. So they like it for that. Now, we've had some other customers, and their the value has been things like the return on investment. For example, the second-largest dating site on the planet uses VersaStack. And they got a four month return on investment. They bought it, and in four months it paid for themselves, so they bought like four or five more. We had another customer who saved, and this is also a cloud service provider by the way, so they saved the equivalent of five full-time employees that were writing custom code and managing stuff, and they used Spectrum Protect also for backup. But in this case you and I could use them because they're not specialists like Tectrade is, and they'll back up anybody's data. And they saved five full-time equivalents. So they've now redeployed those full-time employees to do something else. So those are just examples from three different companies of ways that they've saved money and really driven a business value, not just about the data, and yeah, the data's fast, but really, if you're a storage guy, been doing it as long as I have, the data's always fast and it just gets faster every generation, so okay, it's fast. And in this case it's really about business value, about the value of the data, not about the storage. >> Eric, you mentioned security. Of course security is one of those topics that's hitting all of the environments here at Cisco, but bring us inside, especially from a storage division, modern data protection and how that's getting involved in the security discussion. >> Sure, so what we've done across the portfolio, even in primary storage, is made sure that we've done all sorts of things that help you against a ransomware or malware attack, keep the data encrypted. I think the key point actually, I think Silicon Angle wrote about this, something like 98% of all enterprises are going to get broken into anyway. So it's great that you've got security software on the edge, whether that be IBM or RSA or BlueCoat or Checkpoint, or who cares who you buy the software from. But when they're in, they're stealing. And sometimes, some accounts have told us that they can track them down in a day, but if you're a giant global Fortune 500 with data centers up, it might take you a week. They could be stealing stuff right and left. So we've done everything from, we have write-once technology, so it's immutable data, you can't change it. We've got encryption, so if they steal it, guess what, they can't use it. But the other thing we've done is real protection against ransomware and malware. So I am going to attack Wikibon, theCUBE, and I am going to charge you $10 million, and I'm going to steal every video you've ever created and hold it for ransom. So the way I would do that is I look at your snapshots, your replicas, and your backups first. So what do we do? We can actually snapshot a replica out to an object store, and ransomware and malware, at least today, doesn't attack object storage. So that way, when I'm talking to you or Stu and said I want $10 million, you start laughing, and go, what are you talking about? We replicate every night. Okay, we lose one day of data. He can't get half the $10 million. So that's ransomware or malware protection. We've also built that into Spectrum Protect, because what happens is when you're starting to, if you will, look at that data to get it wrapped up in the ransomware or malware, you have a whole bunch of extra activity around the backup data sets, so we send an alert. We'd send an alert to you, Lisa, and you would say, oh my god, what's going on? Why is all this activity going on the backup set? Because the backup's not scheduled, let's say, for tonight. And we would send you a note now, at two o'clock, that there's all kinds of activity, and you would go, what is going on, and you would check it out. So we can help with ransomware and malware, encryption on primary data. So we've really integrated across the portfolio, whether it be primary storage or secondary storage. And by the way, almost nobody thinks about storage. They always say, whose security package should I buy? And they never say okay, I'm going to buy it, but I, might buy some security for the storage, too. No one ever talks like that, which is why we're bringing up, and we actually launched a sales play for the field, all around storage for cyber resiliency. >> And how is that going, if you're saying it's-- >> It's actually gone incredibly well. We started with a product called Safeguarded Copy on the mainframe, and we actually got, in the first four months, almost $60 million a pipeline in the first four months of the product shipping. And now we've got it all over the whole portfolio, so we tried it just when we first got started, and now we're now talking about the ransomware and malware stuff, which by the way we've had for three years, but we were never emphasizing it to the end user. Now we're saying, by the way, has it happened or are you worried about it? Well guess what, if you're backing up with Spectrum Protect, we'll warn you. Why don't you go out to tape and air gap? Or why you don't go out to the cloud and we can do essentially a cloud air gap to object storage? And we weren't really talking like that until really we started doing it in Q4 and then really expanded it in Q1, so it's been very, very successful. The end users love it, our business partners who sell to the end users, they're loving it. And by the way, no one else is really talking about it. It's all about the security software company. So we're going beyond that. >> So, Eric, you talked about some of the products with Cisco and IBM working together. I wonder if you can up-level a little bit. You're a great watcher of the industry out there. Chuck Robbins, now four years into his tenure as CEO, Wall Street's doing well with the stock on there, finances look well. IBM and Cisco, two of the bellwethers in tech out there. How's Cisco doing? When you talk to your customers, what are they liking about Cisco, what do they want to see more from Cisco, are they aware of the transformation that Cisco's going through? >> Well, I think there's a couple things. First of all, IBM and Cisco have a mutual relationship that spans billions of dollars. Whether that be, for example, as they publicly have disclosed, IBM is the biggest customer for WebEx on the planet, and they talked about that. There's products that we sell to them that they're one of our biggest customers in the world as well. But then beyond that, whether it's common end users or common channel partners, we make sure that we deliver the right solutions together. So I think the feedback I get from both the end users and the partners is that Cisco's back. Right when Chuck came in, said, oh, what's going on with Cisco? They're still big, but the big sometimes fall over big, right? Like in the beanstalk, the giant falls over, right? So that's what I think people were thinking four years, I don't think people are thinking that now. From our perspective, we've always kept working tightly with them, between our relationship with them as a customer and us as their customer. But more importantly, it's really the common customers we have and the common channel partners, and we've never wavered for that support from a Cisco perspective. But just sort of off the cuff, when people make a comment that's like, hey, those Cisco guys are back. And four years ago people were saying, ehh, what do you think about Cisco? My wife works at Cisco, and my ex-wife works at Cisco, so it's a little easier for them to ask me that. Because I'm a Cisco shareholder too. But now you don't hear that question. It's like Cisco's got their act together, they're doing all the right stuff. So that's very good for me personally with my stock, but it's also good just for the industry. You know, you don't want someone to not be able to make the transition. And the valley's littered with that. DEC, Compaq, they're all gone. They're not the only guys that are gone. So Cisco's not going to go the way that other big companies have. They've made the transition and are transforming to what the end users really need. >> And I think the DevNet community growth is a great, speaks to the pivot that Cisco's making. DevNet has been in large part an accelerator of Cisco's transition from network appliance provider to more of a software services provider. But that community symbiosis with their end user customers, with their partners, and with their developer community, is really a driving force here. And I think just being in this DevNet Zone and how big it is, is a great example of how they're leveraging those other feedback channels to not just persist but be successful. So here we are, their Q3 2019 results are really strong, growth across all three business segments, we're in the middle of their fourth quarter. So for Cisco's FY 2020, what are some of the big bets that you can share with us that IBM and Cisco-- >> Well, the one we've done together has been one on security, so we have joint security products that we've done. We have a joint product on the system side with the VersaStack. We've done joint products with them also in the cloud solution area, both, if you think about hybrid cloud, but also in private cloud, so IBM Cloud Private for example is available on their HCI box, right, so their hyperconverged infrastructure solution includes an option for IBM Cloud Private. So IBM has made many bets with them in the security space, in the cloud space. Also, by the way, one of the biggest providers of service on Cisco solutions is actually IBM. So our services divisions do tons of business with Cisco, whether that's servicing the physical gear or servicing the software. And we've been doing that for years. So whether it be service, whether it be cloud, whether it be infrastructure, IBM is doing joint solutions across the board with the Cisco community. >> Got to ask you one last question, Eric. You've been in this industry a long time, you're a veteran extraordinaire. What keeps you excited about storage? >> Storage always change. Storage is not boring. Storage is boring for the uneducated. It is the most exciting thing, it changes all the time. I remember one of the good things about IBM was not just an array, come here, we only just do backup software, we've got high-end storage arrays, we still do tape. We're by far the dominant player, and we're having a huge resurgence there with hyperscalers and cloud providers. We're going crazy with tape because, for them, they're all about saving money for backup and archive, and we're critical to that. We are the number two storage software company in the world, all of our software works off of our gear. Some of the other guys that sell lots of software, yeah, they sell lots, but it only works on their products. Our software works with all of our competitor's products. So that makes everything exciting. I've done this now for 35 years. I've seen hard drives that were the size of a dishwasher to now flash that fits into your phone, or my MacBook, I've got five terabytes of flash. So, you know, to me that's all exciting. And the software is where it really matters. You know, we've gone from bare metal to virtualization, now to containers and cloud. So there's always new stuff going on. But I really think part of the problem with storage is everybody takes it for granted and doesn't realize, if your storage doesn't work, isn't performing, isn't reliable, and isn't available, basically your entire infrastructure caves in. I don't care whether you're in the cloud, whether you're in a virtual world, or you're still doing it really old hat with bare metal, the storage doesn't work, you're shutting down your company until that storage is back up and running again. So it is the critical foundation for every application workload and use case, in any company, big, medium, or small. And it's always evolving. So to me it's very exciting, although some people think storage is boring. I'd say networking is boring. That, to me, is boring. (Lisa laughs) Storage is exciting. >> Stu: Don't say that too loud, here. (Eric laughs) >> That's true, storage is sexy. Well Eric, it's been a pleasure to have you back on theCUBE once again, and we very much appreciate your time. >> Great, well thank you for having us. >> Our pleasure. For Stu Miniman, I'm Lisa Martin. You're watching theCUBE live, from Cisco Live in San Diego.

(triumphant music) >> Hello and welcome to a special CUBE Conversation, exclusive content here in Palo Alto Studios, I'm John Furrier, the co-founder of SiliconANGLE Media, and cohost of theCUBE. We have exclusive news with Vectra Networks announcing new funding, new R and D facility. I'm here with the president and CEO, Hitesh Sheth, who's the president and CEO. Welcome to theCUBE Conversation, congratulations. >> Thank you John. glad to be here. >> So you've got some big news. >> Vectra Networks, you guys doing some pretty cool stuff with AI and cyber. >> Correct. >> But it's not just software, it's really kind of changing the game with IT operations, the entire Cloud movement, DevOps automations, all impacting the enterprise. >> Hitesh: Yes. >> And other companies. >> Hitesh: Yes. >> Before we dig into some of the exclusive news you guys have, take a minute to talk about, what is Vectra? What is Vectra Networks? >> Maybe it'd be useful to give you context of the way we see the security industry evolving. And if you think about the last 20 years, and if you were to speak to the security person in an enterprise, their primary concern would be around access banishment, who gets in, who gets out. The firewall industry was born to solve this problem. And you know, in many ways its been a gift that's kept on giving. You know, you've got companies with multi-billion dollar evaluations, Palo Alto, Checkpoint, Fortinet, you know, piece of Cisco, etc, right? There's roughly about 40 billion dollars on the market cap sitting in this industry today. Now, if you go back to the same enterprise today, and you look at the next 5-10 years and you ask them, "What is the number one issue that you care about?" Right? It's no longer who's getting in and out from an access policy standpoint, it's all about threat, management, and mitigation. So, the threat's signal is now the most important commodity inside the enterprise and the pervasive challenge for the customer, the enterprise customer, is, "How do I get my hands on this threat's signal in the most efficient way possible?" And we, at Vectra, are all about automating and helping our customers hunt for advanced cyber attacks using artificial intelligence. >> Where did you get the idea of AI's automation? I've always said in theCUBE, "Oh, AI's a bunch of b.s. Because real true AI is there. But again, AI is really kind of growing out of machine learning. >> Hitesh: Right >> Automating, and so this kind of loose definition but certainly is very sexy right now. People love AI. >> Hitesh: Correct. >> I mean, AI is awesome. But at a practical matter, it seems to be very important for good things, also for the enterprise, where'd you get the idea for using AI for cyber? >> Well, you know, I would go back to in my journey intersection with the notion of using AI for cyber security, Back in about 2010, there are major cyber events reported in the press. At that time, I was in the networking sector and in the networking sector, we all looked at it and said, "You know, we can do something about this," and being good networking company is, we thought we would build chips that would do DPI and do packet inspection. It was, too be blunt, old school thinking, okay? Fast forward to 2012 and I was sitting with Vinod Khosla of Khosla ventures and we were talking about the notion of security. How can you transform security dramatically >> Mhmm. >> Hitesh: And this is when we started talking about using artificial intelligence. It was very nascent and frankly, if you went up and down Sand Hill at that time, you know, most of the venture companies would have- and they did, because we were raising money at the time, they would look at us and said, "You guys are nuts. This is just not going to happen." You know, it's very experimental, it would take forever to come to pass. But that's usually the best time to go and build a new business and take a risk, right? And we said, you know what, AI has matured enough. >> By the way, at that time, they were also poo-pooing the Cloud. >> Absolutely. >> Amazon will be nothing. >> Yeah, exactly. Generally, a good time, a good time to go and do something revolutionary. But, here are the other things to know. Not only had the technology around AI and its applicability had advanced enough, but two other things have happened at the same time. The cost of compute had changed dramatically. The cost of storage had changed dramatically. And ultimately, if AI is going to be efficient, not only is the software got to be good, but the computer's got to be valid as well. Storage got to be valid as well. These three things were really coming together on their timeframe. >> Well, what's interesting, let's dig into that for a second because knowing what the scene was with networking at the time, you said, "old thinking," but the state of the art, you know, In the 90's and 2000's was, hardware got advanced, so you had wire speed capability. So, you can do some cool things like, you know, like still move through the network and do some inspection. >> Hitesh: Correct. >> And you said DPACK is recommended But that's the concept of looking at the data. >> Hitesh: That's correct. >> John: So, okay, now they might have been narrow view so now you take it back >> Hitesh: Yes. >> With AI, am I getting it right? You're thinking of zooming out saying, okay, >> Hitesh: A couple of things. >> You find that notion of inspection of data >> Right. >> With more storage, more compute >> But it comes down to also, you know, what data are you looking at, right? When you had wire spec in booties, you would apply your classic signature based approaches. So you could deal with known attacks, right? What is really happening, like 2011-2012 onwards is, the attack landscape is more stored dramatically. It changes so fast that the approach of just dealing with the known was never going to be enough. >> Yeah. >> So, how do you deal with the unknown? You need software that can learn. You need software that can adapt on the fly. And this is where machine learning comes into play. >> You got to assume everyone's a bad actor at that point. >> You got to assume everybody has been infiltrated in some way or fashion. >> Well, the Cloud, certainly, you guys were on the front end, kind of probably thought we're crazy with other VC's, you mentioned that. But at the time, I do remember when Cloud was kind of looked at as just nonsense. >> Yeah >> But if you then go look at what that impact has been, you're in the right side of history, congratulations,. What really happened? When was the C change? You mentioned 2012, was that because of the overall threat landscape change? Was that because of open source? Was that because of new state sponsored threats? >> Hitesh: Yeah. A couple things. >> What was the key flash point? >> Hitesh: A couple of things. We saw, at the time, that there was an emerging class of threats in the marketplace being sponsored by either state actors but we also saw that there was significant funding going into creating organized entities that were going to go and hack large enterprises. >> John: Not state sponsored directly, state sponsored, kind of, you know, >> On the side. >> Yeah, on the side. >> Let's call them, "For Profit Entities," okay? >> Sounds like Equifax to me. (laughter) >> That's a good point. And we saw that happening. Trend two was, there were enough public on the record, hacks are getting reported, right? Sony would be a really good example at the time. But just as fundamentally, it's not just enough that there's a market. The technology has got to be sufficiently ready to be transformative, and this is the whole point around what we saw in compute and storage and the fact that there was enough advancement in the machine learning itself that it was worth taking a risk and experimenting to see what's going to happen. And in our journey, I can tell you, it took us about 18 months, really, to kind of tune what we were doing because we tried and we failed for 18 months before we kind of came to an answer that was actually going to gel and work for the customers. >> And what's interesting is having a pattern oriented to look for the unknown >> Hitesh: Yeah >> Because it's, you know, in the old days was, "Hey, here's a bunch of threats, look for'em and be prepared to deploy." Here, you got to deal with a couple of the unknown potentially attack. But also I would say that we've observed the surface areas increased. So, you mention Checkpoint in these firewalls. >> Hitesh: Yes. Absolutely. >> Those are perimeter based security models. So you got a perimeter based environment. >> Hitesh: Correct. >> Everyday. >> Hitesh: And you got IOT. >> IOT. So it's a hacker's dream. >> It's absolutely. The way I like to think about it is you got an end by end probatational issue. You got an infinite possible, if you're a hacker, you're absolutely right, it's Nirvana. You've got endless opportunities to break into the enterprise today. It's just going to get better. It's absolutely going to get better for them. >> John: Well, let's get to the hard news. You guys have an announcement. You've got new funding >> Hitesh: Yeah. >> And an R and D facility, in your words, what is the announcement? Share the data. >> We're really excited to announced that we have raised closed a round of 36 million dollars, Series D funding, it's being led by Atlantic Bridge, they are a growth fund, and they've got significant European roots, and in addition to Atlantic Bridge, we're bringing on board two new investors, two additional investors. The Ireland's Strategic Investment Fund, number one, effectively the sovereign fund of Ireland, and then secondly, Nissho Electronics of Japan. This is going to bring our double funding to 123 millions dollars, today. What we're going to be using this funds for is to find things with. One is the classic expansion of sales and marketing. I think we've had very significance success in our business. From 2016 to 2017, our business grew 181% year end year, subscription based, all subscription revenue. So, we're going to use this, this new fuel, to drive business growth, but just as important, we're going to drive our needs growth significantly. And as part of this new funding, we are opening up a brand new R & D center in Dublin, Ireland. This is our fourth R & D center. We've got one here in San Jose, California. We've got one in Austin, Texas, Cambridge, Massachusetts, and so this is number four. >> John: So, you hired some really smart people. How many engineers do you guys have? >> So, we are about a 140% company, roughly half the company is in R and D. >> I see a lot of engineering going on and you need it, too. So let's talk about competitors. Darktrace is out there, heavily funded companies, >> Hitesh: Yes. >> Their competitor, how do you compare against the competition and why do you think you'll be winning? >> I can tell you, statistically, whether it is Darktrace or we run into barcoding with Cisco as well. We win into large enterprise. We win 90% of the time. [Overlapping Conversation] >> It's actually correct. And I'll describe to you why is it that we win. We look at people like Darktrace and there are other smaller players in the marketplace as well And I'll tell you one thing fundamentally true about the competitive landscape and that differentiates us. AI is on everybody's lips nowadays, right? As you pointed out. But what is generally true for most companies doing AI and I think this is true for our competition as well, it tends to be human augmented AI. It's not really AI, right? This is sort of like the Wizard of Oz, you know, somebody behind the curtain actually doing the work and that ultimately does not deliver the promise of AI and automation to the customer. The one thing we have been very - >> John: They're using AI to cover up essentially manual business models for all people added, is that what you're saying? >> Hitesh: That's correct. Effectively, it's still people oriented answer for the customer and if AI is really true, then automation has got to be the forefront and if automation is really going to be true, then the user experience of the software has got to be second to none >> John: So, I know Mike Lynch is on the board of that company, Darktrace, he was indicted or charged with fraud to front for HP for billions of dollars. So, is he involved? Is he a figurehead? How does he relate to that? >> I think you should talk to Mike. You should put him in this chair and have this conversation. I recommend it, that would be great. >> John: I don't think he'd come on. >> But my understanding is that he has a very heavy hand in the reign of Darktrace. Darktrace, if you go to their website, so this is all public data, if you look at their management chain, this is all Autonomy people. What that means, respect to how Autonomy was running and how Vectra is being run, is for them to speak about, what I can tell you is that, when we meet them competitively, we meet other competitors. >> John: I mean, if I'm a customer, I would have a lot of fear and certainty in doubt to work with an Autonomy led because they had such a head fake with the HP deal and how they handled that software and just software stack wasn't that great either. So, I mean, I would be concerned about that. [Overlapping Discussion] >> History may be repeating itself. >> Okay, so you won't answer the question. Okay, well, let's get back to Vectra. Some interesting, notable things I discovered was, you guys had been observing what's been reported in the press with the Olympics. >> Hitesh: Correct. >> You have information and insight on what's going on with the Olympics. Apparently, they were hacked. Obviously, it's in Korea, so it's Asia, there's no DNS that doesn't have certificates that have been hacked or whatever so, I mean, what's going on in South Korea with the Olympics? What's the impact? What's the data? >> Hitesh: Well, I'm going to think, what is really remarkable is that, despite the history of different kinds of attacks, Equifax, what have you, nation state events, political elections getting impacted and so forth, once again, a very public event. We have had a massive breach and they've been able to infiltrate their systems and the remarkable thing is they- >> John: There's proof on this? >> There's proof on this. This is in the press. There's no secret data in our part, which is, this very much out there, in the public arena, they have been sitting in the infrastructure of the Olympics, in Korea, for months and the remarkable thing is, why were they able to get in? Well, I can tell you, I'm pretty sure that the approach to security that these people took is no different than the approach of security most enterprises take. Right? The thing that should really concern us all is that they chose to attack, they chose to infiltrate, but they actually paused before really fundamentally damaging the infrastructure. It goes to show you that they are demonstrating control. I can come in. I can do what I want for as long as I want. I can stop when I want. >> John: They were undetected. >> They were undetected. Absolutely. >> John: And they realized that these attacks reflected that. >> Absolutely. And given the fact there seems to be a recent trend of going after public events, we have many other such public events coming to bear. >> How would you guys have helped? >> The way we would help them, most fundamentally is that, look, here's the fundamental reality, there are, as we've discussed just a second ago, there are infinite options as to break in, into the infrastructure, but once you're in, right? For people like you and I, who are networking people, you're on our turf and the things you can do inside the network are actually very visible. They're very visible, right? It's like somebody breaking through your door, once they get in, their footprints are everywhere, right? And if you had the ability to get your hands on those footprints, right? You can actually contain the attack at- as close to real time as possible, before any real damage is done. >> But then we're going to see where the action is, no doubt about it, you can actually roll that data up and that's where the computer- >> And then you could apply machine learning. You can extract the data, look at the network, extract the right data out of it, apply machine learning or AI and you can get your hands on the attack well before it does any real damage. >> John: And so to your point, if I get this right, if I hear ya properly, computers are much stronger now. >> Hitesh: Correct. >> And with software and AI techniques, you can move on this data quickly. >> Hitesh: Correct. But you have got to, you've got to have a fundamental mindset shift, which is, "I'm not in the business of stopping attacks anymore, I should try, but I recognize I will be breached every single time. So, then, I better have the mechanisms and the means to catch the attack once it's in my environment." And that mindset shift is not pervasive. I am 1,000% sure at the Olympics that people designed the security search have said, "We can stop this stuff, don't worry about it." You had that taught differently that would not be in this position today. >> This is the problem. In all society, whether it's a shooting at a school or Olympic hack event, the role of data is super critical. That's the focus, thanks for coming on and sharing the exclusive news at theCUBE with exclusive coverage of the breaking news of the new round of funding for Vectra Networks. I'm John Furrier. Thanks for watching. >> Hitesh: Thank you, John. (triumphant music)

>> Speaker: Live from Las Vegas. It's the Cube. Covering VMworld 2017. Brought to you by VMware and its ecosystem partners. >> Yeah we're here live the Cube coverage at VMworld 2017. Behind us is the floor of the VMvillage. I'm John Furrier with Dave Vellante. Our next two guest Beth Phalen who's the President and General Manager of Data Protection Division at Dell EMC and Yanbing Li who's the Senior Vice President General Management with Storage and Availability at VMware, vSAN, all the greatness; Welcome back to the Cube. Great to see you guys. >> Yeah, great to see you. >> Got the heavy hitters here, data protection, AWS lot of great relationships synergies happening. >> Yeah. >> Give us the update. >> Yeah well go ahead yeah. >> We've been working together for a long time but recently we've really amped it up to the next level. Great discussions around enabling data protection for vSAN and as announced this week you know with Dell EMC will be first vendor to have data protection for VMware cloud on AWS. So it's a really exciting time to be here and I've been in this business for a long time. This is the best VMworld that I've seen so far and so it's just really great to be here with Yanbing. >> It's been very cohesive, I want to just stay on that for a second. This is the big milestone for VMware. >> It is. >> To have this shipping of the general availability especially with on the heels of the vCloud Air and all that controversy. Andy Jassy's on stage from Amazon web services. >> Yeah. >> Really kind of looking right at the audience and saying we got your back, this is a real deal, and the bridge to the future. I'm paraphrasing, he didn't say those exact words. >> Yeah yeah yeah. >> How do you get that data protection? Because that data protection in the cloud is hard. >> Yeah, well the nice thing is that since we've got all of our data protection running in a cloud environment now we could then use that to build the connections with VMC. So we had Data Domain Virtual Edition running, we have Data Protection Suite running in the cloud. So people can use the same technology they used on prem but now in AWS in conjunction with VMC. >> So you kind have hyper converged infrastructure meets cloud data protection. Yanbing, what is the difference? I mean what's the requirement of hyper converged infrastructure data protection? How does it differ from traditional storage and how is it evolving? >> Ah, great questions you know Beth and I we've known each other for quite a few years. I have to say our relationship hasn't been, you know, this close is and it's getting closer and closer. So coming back to your question in terms of hyper converged infrastructure. We're seeing two fundamental shifts around data protection. One is, the blurring of the boundary between backup and DR and these two really coming together as unified data protection. I think there has been a lot of discussion around this for a long time but this become even more compelling; now we talk about hyper converged infrastructure where you know our customers they so enjoy the benefit of having compute and storage combined together in a common management experience, they're looking for the same for data protection. So we're really seeing customers want to see data protection as a feature of hyper converged, as a capability that's part of that rather than yet another silo they have to manage separately. You know they want policy that manage storage, compute, and backup and DR altogether. So that's why you know that's really drive our partnership so much closer. >> You know it's interesting many of the clients that we've worked with over the years they'll have a backup strategy but they don't really have a DR strategy and they sleep with one eye open at night and they're afraid to go to the board because it's so expensive, it's expensive insurance. So you're seeing that there, sounds like they're blending those 2 together kind of killing 2 birds with one stone. Are there trade offs or things that customers should think about in that regard? How do they sort of go from where they are today which is sort of a backup bolt on to that integrated DR and backup? >> I think one of the key is the technology that we're leveraging now and we leverage something that has like CDP continuous data protection you can use that one to have data path to the secondary storage and you can use that same code to also initiate disaster recovery with near 0 RPO and RTO. So another thing that we announced this week is with our DPS for apps next edition that we now have hypervisor direct back up and what that means is that we're integrated directly with ESX and we are leveraging ProtectPoint through VM's to move data to data domain. That same technology is also leverage within RecoverPoint through VM's and so you can see the engine, the internal engine of the data movements, can be applied both to disaster recovery and to back up with different windows of RTO and RPO. >> I'm glad you said near 0 RPO causes no such thing as 0 RPO but you're seeing, more pressure to get as close to 0 as possible. What's driving that pressure and how are you meeting it? >> Well I think with all of us we know that an industry customers are expecting 24 by, you know 24 by 7 up time right. So they have many many applications that they need to have the confidence that if it does go down for any reason they're going to be able to bring it back up within minutes or hours not days. So that's really the drive for continuous availability. Getting as close to that as possible. >> If I may one more John, the challenge in data protection has always been it's, it's largely been a one size fits all and it's either I'm either under protected or I'm spending and breaking the bank. So are you able to through your technology and process improvements improve the level of granularity for different workloads that require different service levels. >> Two things come to mind, One, we're seeing more and more interesting customers integrating data protection directlywith their applications. Whether it SQL or Oracle and or the VM itself. So that's one thing. So we can custom the data protection to particular application and then on the second piece of that is where the different interfaces that VM offers we're able to do either V80P level integration or more fine grained integration like we do with CheckPoint through VM. So we are getting to the point that we can make different choices either application specific or something that is fine tuned based on the level of mission critical capabilities that application requires. >> I will get you guys perspective just a high level ballistic view for a second. We're seeing convergence of two worlds. The cloud native world that have no walls, have no perimeters they operate in a mindset of there's a security holes everywhere. Then the protections hard. >> They think of a differently. >> Yeah On prem the traditional methods, how are those coming together? Because you have customers that run VMware and do stuff with data protection and then one of them VMware in the cloud. What's different, what do customers need to know that are we on either side of that equation? If I'm on prem and I now want to use VMware in the cloud on AWS. How does data protection fit in that? Is it the same, is there tweaks, how they think about it? >> You want to answer that? >> In terms of on prem or VMware in AWS you know a big value prop is reading at the consistency in the operating model. I'm sure you have heard about this a million times said. >> Yes, talking about it all week. >> All week long. From data protection we're trying to do exactly the same. So for example VMware cloud on AWS, the very first data protection that we certify on that platform is from [Vast 00:07:39] organization is Avamar networker being the first set of solution certified and our customers definitely love the continuity of I already have the experience and licensing associated with my own prem protection solution and they want to carry that forward in today's cloud. >> So same operating module, so from the customers perspective I've been doing it this way >> Exactly. >> With VMware and Dell Data Protection, now it's the same in the cloud. No change in. >> Yeah I mean I think that's really the beauty of it, even with DDVE I mean you can have applications or you can do through different; You know you can have application in the cloud as well as another level of protection of your secondary storage. >> I think some of the changes probably not necessary. So RPD model consistency, Dave we touch upon, hyper convergence is driving a lot of functionality into a single control plate as opposed to these different silos and you know we would like to see that happen in the cloud as well and along that line you know best organization and my organizing are really looking at how we viewed the best next generation integrated technology that truly leverages the strengths of both organizations. >> That's simple and easy to use. >> Simple, easy to use, policy base, you know turn key solutions, so this is, you know what we're doing something pretty innovative by truly bring our engineering together and try to boost our next generation solution. >> Since the synergies that Michael was talking about when we interviewed Michael yesterday he's like look, the synergies are well beyond its expectations. Just it seems to be flowing nicely in the culture. When EMC had the federation there was always kind of like an interesting but now things are flowing differently. It seems to be smoother you guys. >> They are. >> Every action. >> I totally agree with what you said. I mean it feels different and I think as we go forward we have even more opportunities but we're not even a year into it and there was a distinct difference in terms of recognition around the joint opportunity and like you said the smoothness of the conversation I think is >> It's clear, it's clarity. >> It's really helpful. >> Well also you know, the rising tide floats all boats, well VMware stock as gone like this. >> It makes us all happy. >> Its got a nice slope to it. >> I definitely want to hackle Beth on that and the type of collaboration we're seeing between our two organizations, might be you is actually having multiple touch point into Dell and Dell EMC organization whether it's our VxRail and you know the vSAN based collaboration or the data protection angle and we're really seeing that happen across different functions. So we are starting from go to market collaboration you know how we provide the best set of solutions to our customers in joint go to market effort. vSAN is gaining a lot of free print in mission critical workloads and a critical requirement is data protection. So so we're doing a lot of joint solution, joint selling together. And really in the next step is that joint engineering effort leveraging the best of both worlds to build next generation products that's optimized for hyper converged, that's optimized for the cloud. >> For the software defined data centers. >> If I dial back a decade let's say as virtualization generally in VMware specifically saw its ascendancy, data protection totally changed. For a number of reasons, you had less physical resources but backup was still very resource intensive application and so; That's really where Avarmar came before. He walked the floor, back up and data protection is exploding again. It's like the hottest area. So two part question. Why is that and then how does Dell EMC with you know its large portfolio, its big install base, how do you maintain competitiveness with all that new emerging innovation? >> Yeah well I think the first question and I want to hear your answer too but what I would say is because the industry is changing so dramatically it's requiring data protection to change just as dramatically. >> Right. >> Right, so that is a lot of people are seeing opportunity there. Where is maybe, I've had people say, you know, well you don't really have to protect data in the cloud it's all stuff that's magically protected, I've had customers say that to me and I think that we're now beyond that, right and people are realizing, wow you know, just as much of a need or more of a need than it was before. So I think there's plenty of you know companies appreciate opportunity and they see opportunity right now as data protection evolves quickly to address the new IT world that we live in. On anything you would add to the first answer? >> Yeah so I think, several years ago VMworld feels like a storage shelf you know. I think there is still a lot of exciting interesting storage company but there has been quite a bit of consolidation you know. Software defined storage it seems like that market's landscape is becoming clearer and clearer and we're definitely seeing that spreading into secondary storage is now right for a disruption and we're also seeing that is disruption around secondary storage isalso impacting data protection software. It's not just the secondary storage element but you know extent to the entire software stack. I think it's very exciting and also thinking about you know what is going to be the economical benefit of cloud and how do we take best advantage of that and this is why you know our AWS relationship. You know we are rejuvenizing our DR effort. We have successful on prem product like SRM but we're seeing tremendous new opportunity to look at that in the context of cloud to truly leveraging the economy is scale of what cloud has to offer. So lots of driving factors to really revitalize that. >> It's a cloud show and you have no cloud. >> Okay Beth second part of my question is how do you keep pace, it's a pretty tremendous innovations going on, how do you keep pace, what are your thoughts on all that? >> So the really cool thing is because where you know we're Dell Technologies we have not only data protection assets, we also have servers, we also have switches, we have everything we need to build a full integrated stack which we now have without EPA. So within a integrated data protection appliance we have the best of data domain, we have the best of our software, we're leveraging also power at servers and dellium C switches. So we have everything that we need to build that end to end best in class integrated appliance and as customers change how they consume data protection to more like a converged consumption model or hyper converged consumption model we have all the pieces that we need to make that a reality and then to continue to move forward. So when you combine that with our relationship with VMware and the ability that we have to drive innovation jointly I have no doubt that we're going to be really moving ahead into you know modern data protection. >> Final question before we rap. R&D comes up, Micheal also mention and so do Pat, billions of dollars now are in R&D. Free cash was a billion dollars. Three billion for VMware. A lot of observations this week that we kind of looked and read the tea leaves one of them was at least for me was the stack a collision between hardware software stacks as IoT and servers and devices, you have hardware stacks and software stacks. Untested scenario certainly in vSAN; You see a lot of activity around untested new use cases and so it's going to put pressure on engineers. So the question is what's the vision for the R&D for you guys around data protection, because it's not just data protection anymore it's a fundamental linchpin in the equation of cloud >> Yeah. >> Thoughts on engineering road map I mean engineering R&D. >> One thing we're doing actually right now this week is we're restructuring our EMC lab dellium c lab back in Hopkinton to move to more of an open shared pivotal type environment. So you know it's clear that as we go forward doing things like pere programming on test driven development. You know enabling continuous always good known stayed like there is definitely advancements happening in software development that are accelerating innovation and so as we take advantage of that, that's how we keep pace with what's going on around us. Because you're right the number of things to get involved in is endless. >> I just want to point out before we end the segment you guys are very inspirational women in tech. I think you guys are amazing. We talk about the engineer resources. >> Thank you John. Your thoughts on the industry, as there's a lot of controversy in Silicon Valley and around the world around STEM and women in tech. Thoughts that you'd like to share to all the men watching and all the folks and young girls who might inspiration. You know it's passionate for us. >> Yeah, I'll start. So I think, first of all I want to tank the Cube for having such awareness in this topic and you know constantly featuring women in tech on your shows. You guys have been doing a great job raising the visibility women leaders. >> Thank you >> Thanks >> in the industry. Thank you. So certainly this is a topic very dear and near to my heart. This week you know we can still see not only our employee base but our customer base is heavily men dominated. But I think we're seeing unprecedented levels of awareness and attention to this topic in Silicon Valley and across the world. Really I do think we are starting to see much better transparency metric. We're seeing increased accountability in business and business leadership. So I think those and we're seeing a lot of social awareness I think those are going to drive a positive change. So let me give you a concrete example of fuzz for example things we do in VMware, we just gone through bonus allocation and compensation adjustment. I would get a report from it make sure, comparing the percentage of what we have done for the men population and women population and so you get a real time feedback in data and when we see the data is actually quite shocking hopefully we do see, unconsciously you know we may be allocating those >> Unconscious bias if you will. >> Yeah those differently. But because of those real time data and feedback we're good able to you know keep ourself accountable. So just you know this is no longer just talk this is a real data you know in the real HR practices that we are already building into our day to day practice. So I think I'm very optimistic, this will take time but this is you know we're moving in the right direction. >> Historical moment in the world if you think about it. This is super important time. The inspiration and also the young women out there too and also for the men. They need to be aware as well because inclusion includes not just women it's everyone. That seems to be >> Absolutely. >> In fact a trend we had an interview on the Cube and our Simpson who works for Mozilla she's doing some work for Tech Nation, she said they're changing it from diversity inclusion to inclusion and diversity. They're flipping it around where inclusion leads diversity cause they want to lead with the message of inclusion; >> Yeah. >> as a primary message with diversity. So it's not just the diversity message it's inclusion. >> Yeah. >> Love that. >> Yeah the only thing I would add would be the phrase "She can be it if she sees it" I think having people like myself and Yanbing be visible role models it's very impactful, especially for young women to see you know women in tech leadership positions. It's hard to imagine yourself in a role if you don't see anyone similar to in a role. So I think the more that people like us and our peers get out there and really put an effort into being visible. >> Do you see the networks forming more, I mean is there more action flowing happen. Can you compare and contrast just even a few years ago is it on the rise significantly? >> I think it's on the rise. >> Yeah I do get us to be involved in a lot of opportunistic situations, yeah. >> And of course your Twitter handle puts it right out there, @ybhighheels. >> Yeah. >> Right, your not shy about it. >> Yeah, there's nothing shy about it. I realize you know Beth and I, we are both addressed in very feminine way. I do think. >> Your capabilities are off to chart you to great and impressive executives. >> Society is increasingly more inclusive about their notions of female tech leader. It's not just one size fits all and I think it's encouraging us to show who we really are and the authentic self and I think that's very important for young girls to see because I remember when I was a young girl I didn't go into tech expecting I do not get to be who I am >> Yeah and that shouldn't reflect your capability of anyway any kind and that seem to be the greater awareness. The Google memo that went around as all of it so getting us some great videos on Silicon Angle on that topic. Again you guys are great inspiration. We love working with you you guys are great executives. >> Thank you. >> Its great content. >> Your welcome. >> We super passionate about it. We'll be at Grace Hopper for our 4th year we do that. >> Fantastic. >> As we show every year, we're learning more and more and we're going to do a podcast for guys too. >> Nice. >> Different angle. >> Love that. >> A lot of guys want to do what to do. >> Okay that's great. >> Inclusion and diversity of course; I need the help. I'm John Furrier With Dave Vellante Here. Live at Vmworld. More coverage coming after this short break.

(upbeat electronic music) >> Announcer: Live from Santa Clara, California, it's theCUBE covering Open Networking Summit 2017. Brought to you by The Linux Foundation. >> Hey, welcome back, everybody, Jeff Frick here with theCUBE. We are in Santa Clara, California at the Open Networking Summit 2017. Really happy to be joined by my co-host for the next couple of days, Scott Raynovich. And we've been talking to a lot of providers and technical people, but now we want to talk to customers. We love talking to customers, and we're really excited to have Rashesh Jethi. He's the SVP, Head of R&D for the Americas for Amadeus, which is a big travel company. Welcome. >> Thank you so much, Jeff. Thank you, Scott. >> So like I said, we'd love to talk to a practitioner. So you're out on the frontlines, you're seeing all this talk of software-defined and software-defined networking. From your point of view, how real is it, where are we on this journey? What do you see from your point of view? >> Super real. Have you searched for a flight lately? >> I have searched for a flight. >> Excellent. I'm proud to tell you that your flight search very likely was powered by Amadeus, and it's running on a software-defined data center completely. So this stuff is real. We are, I believe, one of the first companies who have actually taken this from what was a very strong academic kind of research project onto this start-up ecosystem, but we're actually out there deploying it, running real world business, using a very purposeful and deliberate software-defined strategy. >> And it's interesting because you said before we got on camera that you guys are actually very active participants in the open source movement and development of this stuff. You're not just kind of a participant waiting in the wings for this stuff to get developed. >> I mean absolutely, and to me, that's one of the reasons which if you're serious about open source, you have to use it. You can't just talk about it. You can't just say it looks like a nice idea. You have to get out there and get your hands dirty and do it. But the other thing also is you have to contribute back. I think that's a big tenet of the open source community. And we all and certainly the company, we grew up and we've seen tech evolve through the ages. And a big part, especially in the last 10 years or so, has been the open source movement, and it's contributing back. It's one of the reasons I'm here. It's one of the reasons the conference organizers invited me, is to actually talk about how we use open source and software-defined strategy for our technology. >> That's cool. So where do you run this software? You run it in private cloud, public cloud? Do you guys build your own data centers? How do you run it? >> Quick history lesson and our quick history-- >> Let's back up. First off, where is Amadeus today for people that aren't familiar with the company? >> We are actually a 30-year-old company. We are celebrating our 30th birthday this year. The company was started in the late '80s as a consortium between four leading European airlines, Lufthansa, Air France, Iberia, and Scandinavian. So we started off, which was very typical at that time, as a mainframe shop, and that's where a lot of our core systems were built. We're a big provider of technology in general to the travel industry even though we were founded by airlines. So to put it in perspective, we carry about 95% of the world's scheduled commercial seats, airline seats, on our platform. >> 95%. >> 95%, so we work with the world's-- >> Are available to purchase. Obviously, 95% of the purchases don't go through your system. >> Right. They are available. They are used by over 90,000 travel agents, retail travel agents, corporate travel, online travel. And we work with over, like I said, 700 airlines, work for their inventory. So chances are if you travel on an airplane, very good chances that our software was used to make the reservation. We also have airline ID systems and hotel ID systems, and we work with the airports. And this is where we do departure control, flight management, baggage reconciliation, a lot of the back end processes. And we started the company, essentially runs as we write our own software. We are offered as a service from day one, so we are one of the oldest software service providers in the industry. And obviously, when we got started to do that, you had to own your own infrastructure. So we are pretty good at it. We have very strong kind of technical chops. We have a large data center outside Munich Airport and a bunch of smaller data centers all over the world. And what we're doing now is really very deliberately making the journey towards a cloud, both our private cloud, so taking our own infrastructure, virtualizing it, and making it available as a service for our own applications, and then where it makes sense, to leverage public cloud infrastructures where they are available. >> So different apps in different clouds, is that-- >> Different apps in different clouds based on customer preferences. The core reservation booking engines, they are in our own private cloud because we do have a lot of regulatory security, privacy considerations. So that stuff, we keep kind of close where we can keep a very watchful eye on it, but there are a lot of transactions we are also talking about. The volume of searches has grown up, right? Obviously, Google has seen a lot of search volume. If you look at our business, it used to be when you wanted to book a flight, you'd go to a travel agent and be able to look at a bunch of flight options and you'd pick one. About 20 years ago, you call it the look to book ratios. You'd look at 10 to 20 options and you'd book one. You want to guess what it is today? >> The look to book ratio was 20 to one. That's got to be way higher. That's got to be 80 to one. >> It's more like 1,000 to one. >> 1,000 to one. >> 1,000 to one. It's partly people like you and I who have a spare moment and have a vacation in mind, and we are looking at options. But keep in mind, anything that you search, it has to come into our systems. We have to configure the journey. We have to price it. We have to make sure it's available before we offer it up to you, right? So it's very transaction and computing intensive even before it touches any of the back ends where we do core kind of booking and passenger processing. And so to handle that scale, those are the kind of very logical applications that make sense for the public cloud. And those are the ones that we've looked to move. Certainly, for customers, we are a global company. We have customers all over the world. Some customers want to have some of these systems closer to their geographic location. So we look at all use cases kind of. >> That's amazing to think of. These things have so changed behavior and the way that we interact. I assume that 20 to one was a function because you would sit down. Now you sit down at your desk, time to book that flight, and maybe you don't get it done that day. You come back two or three times. But as you said, now it's grabbing little bits of time throughout the day whenever we can. But do you get paid on a regular subscription, or do you get paid on the transaction? Has that just increased your overhead, whatever the ratio 20 to 1,000 is? >> Absolutely, no, our business model has been very consistent from day one. We get paid on the number of bookings we make and the number of people that board aircraft, I mean roughly speaking. There are smaller lines of businesses, but those are our two main revenue drivers. So we see a lot of transaction volume upfront, but it doesn't translate to a booking which logically, it won't. Yes, that's noise or revenue for us, but we still have to service that volume because that's eventually, the funnels just gotten wider. And so it makes sense to do that in the most cost efficient manner but without compromising quality, without compromising speed. I mean if you're like me, if you have to wait for more than two or three seconds, you're like, "Ah, I'm moving on." >> Oh, two seconds. It's milliseconds, isn't it? >> Absolutely. >> And by the way, I still don't always find the flight I want. So where are those extra flights? Can you provide those for your service? >> Jeff: That extra 5% those are under. >> That's very different. It's got nothing to do with open source and kind of what we're talking about here, but a lot of what you're doing in there from an engineering perspective is just looking at, for example, machine learning algorithms. And what you said is actually a very common complaint, is how do I find kind of the right sort of flights. And more importantly, if you have certain preferences with airports or airlines or loyalty programs or time of day, how do I provide you context-sensitive results? We are doing a lot of kind of core R&D work for that, but our customers are doing amazing work as well. KAYAK is one of our customers, very close to our offices in the Boston area, and they do pretty amazing work in terms of getting their context right and then applying machine learning technologies and artificial intelligence. It's very, very early days but very exciting, very promising. >> One of the cool features I like are these fare alerts. I don't know if you use them. It tells you, it predicts this is going to go up. You better book now, wait. Do you guys do that sort of thing too? >> Our customers do that. We have a very simple model. Our customers are travel agencies, online, American Express, Expedia, metasearches like KAYAK, Skyscanner, et cetera, the airlines themselves whose products we host in our system and we sell. So a lot of our engineering work is learning to offering kind of core innovation so that they can offer products for people like you and me, their customers, the best products out there. So we focus on enabling them. And then at an operational level, we try to do it in the most efficient manner and the most future proof that we can think of. >> What about security? I mean it sounds like a lot of sensitive data changing hands here, right, where are people going to sit on an airplane, where are they going. You must have incredible security demands on your data now. >> Yes. (Jeff and Scott laugh) I mean you understand, obviously, it's paramount to us. And the good news is, look, we've been in this business for 30 years. We have really deep domain expertise in that. And also, you'll understand why I wouldn't want to talk too much about what we do and how we do it, but absolutely, that's one of the-- >> Scott: You just lock it down. >> Prime drivers of everything we think all the way from application design to things like the infrastructure planning and design to the physical level. I mean everything you can think of and probably a couple of things you may not think of. >> Hopefully a few things we didn't think of. So where do you go next? It sounds like you're enabling a lot of the innovation on your partner's side. You just mentioned KAYAK and people writing some of the machine learning and AI algorithms to help the end traveler find what they're looking for. Where are you guys concentrating? You said you've been at it for 30 years. What are some of the next big hurdles that you're looking to take down? >> It's wonderful, I think, being close to our customers. And one of the reasons I'm in Boston, we are a European company. We are actually headquartered in Madrid. Our core engineering team, our central engineering team is in France. The reason I'm in Boston and my team is in Boston is we've started doing a lot of business here in North America, and we try to stay very close to our customers. And when you listen carefully, and that's why we have two ears and one mouth is to hopefully try to listen a lot, you do see their pain points, you do see where they are going with kind of their business. And it gives us a chance to have a front row seat in designing new products that they can use. So to me, it's kind of two pronged. One is we want to offer the best technology we can to our customers at the best price point we can. And obviously, by now, you've figured out it's mission critical stuff has to always be on. Keeping those kind of boundary conditions in mind, you want to be the best technology provider, and then we want to innovate. So one of the things I'm seeing at this conference, there's a lot of friends from the service providers who are talking about 5G technology. And so with connected cars, with virtual reality, I mean these are all trends that are going to impact us as travelers in a positive way. And so we have a dedicated innovation team across all our business lines. We do a lot of work with academic institutions, with ETH in Zurich, with MIT here, close to my office in Boston. And there's just a chockfull of possibilities in terms of what can be done. >> All right, I'll give you the last word, impressions on the show. What do you get out of a show like this? Why is it important for you to come? >> It's amazing. I mean this morning, Martin Casado was there. He's called kind of the grand daddy of software-defined networking (mumbles). >> He's not that old yet, but he's going to like seeing that clip. (laughs) >> It's true. I read that at The Guardian. It was on one of the newspapers. But the fact is we used NSX for virtualization in our entire data center, and we have close to 20,000 infrastructure devices. All our computers are virtualized, 100% of it, and it's all using NSX from VMware, right? Now this was a sort of brilliant idea by an extremely intelligent and persuasive graduate student at Stanford 15 years ago that is, as he announced this morning, is a billion-dollar business today, right? And we are actually using the technology, and it's very real, to process all of this. So it's great to be able to see what people like him, I mean from Google, he's a great partner of ours. We use Kubernetes for kind of the container deployment strategy for our cloud network. We hear him speak about what they're thinking about in terms of investments and how the network is going to essentially drive the movement of data analytics. It's just phenomenal to get the top leadership. I'm obviously very honored and privileged to be presenting to this audience and to share our thoughts and what we're doing and just to see a lot of the buzz around here and what wonderful ideas are happening in the Valley. There's so much action, as always, going on. >> Great, great, great summary. Well, glad you could take a few minutes to stop by theCUBE. >> Completely my pleasure. Thank you very much. Great meeting you, and have a great rest of the show. >> All right. He's Rashesh, he's Scott, I'm Jeff. You're watching theCUBE from Open Networking Summit 2017 in Santa Clara. We'll be back after this short break. Thanks for watching. (upbeat electronic music) >> Announcer: Robert Herjavec. >> People obviously know you from Shark Tank, but The Herjavec Group has been really laser focused on cybersecurity. >> I actually helped to bring upon Checkpoint to (mumbles) firewalls, URL filtering, that kind of stuff. >> But you're also...

>> Live from the Walt Disney World Swan and Dolphin Resort in Orlando, Florida, it's theCUBE, covering Splunk .conf2016. Brought to you by Splunk. Now, here are your hosts John Furrier and John Walls. >> And welcome back here on theCUBE. The flagship broadcast of SiliconANGLE TV where we extract a signal from the noise. We're live at conf2016 here in Orlando, Florida on the show floor. A lot of activity, a lot of excitement, a lot of buzz and a really good segment coming up for you here. Along with John Furrier, I'm John Walls and we're joined by two gentlemen from the Herjavec Group, Robert Herjavec. Good to see you, sir. >> Greetings. Thank you for having us. >> The CEO, and Atif Ghauri is Senior VP at Herjavec. Good to see you, sir. >> Yes. >> First off, Robert, congratulations. Newly married, your defense was down for a change. Congratulations on that. (laughter) >> Oh thank you. It was wonderful. It was a great wedding, lots of fun but casual and just a big party. >> Yeah, it was. Looked like, pictures were great. (laughter) People obviously know you from Shark Tank. But the Herjavec Group has been, really, laser focused on cyber security for more than a decade now. Tell us a little bit about, if you would, maybe just paint the broad picture of the group, your focus, and why you drilled down on cyber. >> Yeah, I've been in the security business for about 30 years. I actually helped to bring a product called CheckPoint to Canada firewalls, URL filtering, and that kind of stuff. And we started this company 12 years ago, and our vision was to do managed services. That was our vision. No other customer's vision, but our vision. And we thought we'd do $5 million in sales in our first year and we did $400000. The market just wasn't there. SIEM technology, log aggregation isn't what it is today. I mean, I think at the time, it was enVision. What was it called? >> Yeah, enVision. >> enVision. And then RSA bought them. That was really the first go-to-market SIEM. Then you had ArcSight and Q1. So our initial business became around log aggregation, security, writing parsers. And then over time it grew. It took us five years to get to $6 million in sales, and we'll do about $170 million this year. We went from a Canadian company to really a global entity. We do a lot of business in the States, UK, Australia, everywhere. >> But you're certainly a celebrity. We love havin' you on theCUBE, our little Shark Tank in and of itself. But you're also an entrepreneur, right? And you know the business, you've been in software, you've been in the tech business, so you're a tech athlete, as we say. This world's changing right now. And I'm certain you get a lot of pitches as entertainment meets business. But the fact that the entrepreneurial activity, certainly in the bay area and San Francisco, the Silicon Valley, where I live, and all around the world, is really active. Whether you call the programmer or culture or just the fact that the cloud is allowing people to start companies, you're seeing a surge in entrepreneurship in the enterprise. (laughs) Which is like, was boring in the past, you know? You just mentioned CheckPoint in the old days, but now it's surging. Your thoughts on the entrepreneurial climate? >> I dunno if the enterprise entrepreneurship element is surging. By the way, I'm going to say intrepreneur, just the way I say it. Cuban always makes fun of me. (laughter) We don't say it like that in America! I'm like, screw off! (laughter) >> That's how you say it! >> I want to say it the way I want to say it. >> Well, internal entrepreneurs, right? Is that what you mean by intrepreneurship? >> Well, no. I'm just, it's just the way I say it. >> It's a Canadian thing. >> But business to business enterprise, we've always been in the enterprise business. So we're seeing a lot of growth in that area, a lot of VC money's going into that area, because it's more, you know, you can measure that level of return and you can go and get those customers. But on our show, we're a bubble. We don't do a lot of tech deals like we're talking because it's boring TV. Tech people love tech, consumers love the benefit of tech. You know, no consumer opens up their iPhone and says, oh my gosh, I love the technology behind my iPhone. They just love their iPhone. And our show is really a consumer platform that is-- >> It's on cable TV, so it's got a big audience. So you got to hit the wide swath-- >> We're one of the highest-rated shows on network television. Eight years, three Emmys. You know, it's a big show now. And what we've all learned is, because Mark Cuban and I are tech guys, we used to look for stuff we know. We don't invest in stuff we know any more. We invest in slippers, ugly Christmas sweaters, food products, because if you can tap into that consumer base, you're good to go. >> So bottom line, has it been fun for you? I mean, the show has been great. I mean, obviously the awards have been great. Has it been fun for you? What's it been like, what's the personal feeling on being on the Shark Tank. >> You know, filming is fun, and hanging out is fun, and it's fun to be a celebrity at first. Your head gets really big and you get really good tables at restaurants. There's no sporting venue-- >> People recognize you. >> Yeah. >> You get to be on theCUBE. (laughter) >> I get be on theCUBE. >> Doesn't happen every day. >> You get to go everywhere. But after a while it gets pretty dry. But it really helps our brand. We compete, typically, against IBM, Verizon, and you know, the CEO of IBM, you're not going to see him selling his security. >> Well I know they're doin' a lot, spending a lot of cash on Watson, trying to get that to work, but that's a whole 'nother story. But let's get down and dirty on Splunk. You're here because you're doin' a talk. Give a quick take on what you're talking about, why are you here at .conf for Splunk? >> Yeah, we're doing a talk on data transformation. The world today is about data. And the amount of data points and access points and the internet of things, it's just exponential growth. The stat I always love, and Atif's heard it 1000 times is, there's roughly three billion people on the internet today, and there's roughly six billion or seven billion IP addresses. By 2020, according to the IPV Committee, there'll five, six billion people connected. And hundreds of trillions of IP addresses. >> And the IoT is going to add more surface area to security attacks. I mean, it used to be, the old days, in CheckPoint, the moat, the firewall, backdoor, frontdoor. >> The idea of the perimeter is gone now. There is no such thing as a perimeter any more, because everything you can access. So a lot of work in that area. And all of that comes to data and log aggregation. And what we've seen for years is that the SIEM vendors wanted to provide more analytics. But if you really think about it, the ultimate analytics engine is Splunk. And Splunk now, with their ESM module, is moving more into the security world and really taking away market share. So we're very excited by, we have a great relationship with the Splunk guys, we see nothing but future growth. >> And you're using Splunk and working with it with your customers? >> We do, we've been using Splunk for a while. We have a private cloud. Tell us a little bit about that. >> Yeah, so we eat our own dog food. So not only do we sell Splunk, but we also use it in-house. We've been usin' it for over five years, and it powers our analytics platform, which is a fancy way to say, reduces the noise from all the different clutter from all the IoT, from all the different type of alerts that are comin' in. Companies need a way to filter through all that noise. We use Splunk to solve that problem for us internally, and then, of course, we sell it and we manage it for Global 2000 customers, Fortune 100 companies all over the world. >> Tell us what about the role of data, 'cause data transformation has been a big buzzword it's a holistic message around businesses digitizing and getting digital assets in front of their customers. We have a big research division that does all of this stuff. By the end of the day, you know, the digitization business means you're going to have to go digital all the way. And role of data is not the old data warehousing days, where it's fenced away, pull it in, now you need data moving around, you need organic sharing of data, data's driving policies and new pattern recognitions for security. How do you guys see that evolving? How do you talk to your customers, because in a way, the old stuff can work if you use the data differently. We're seeing a pattern, like, hey, that's an algorithm I used 10 years ago. But now, with new data, that might be workable. What are some of the things that you're seeing now that customers are doing that you talk to that are leveraging data, like Splunk, in a new way? >> Well, that's really where Splunk adds so much value, because a friend of mine is the dean of USC. And he has a great saying, more data is not necessarily more information. And so, the mistake that we see customers making a lot is they're collecting the data, but they're not doing the right things with it. And that's really where Splunk and that level of granularity can add tremendous value, not just from logging, but from analytics and going upstream with it. >> Yeah, and also, to that point, it's just automation. There's too much data >> That's a great point. >> And it's only going to get bigger, right, based on that stat Robert rattled off. Now, we need some machine learning analytics to move it further. And all points aside, machine learning isn't where it needs to be right now. Today in the market, it still has a long way to go. I would call it a work in progress. But however, it's the promise, because there's too much data, and to secure it, to automate behavior, is really what what we're looking for. >> The example I saw is the innovation strategy's comin' to take, and they're growin' with mobility, growin' with cloud, increase the surface area, IoT. But the supervised areas of the enterprise were the doors, right? Lock the doors. And perimeter is now dead. So now you have an unsupervised environment and the enterprise at risk. Once the hackers get in, they're havin' their way. >> The internet is, like, a kindergarten playground where there are no rules and the teacher went home at lunch. (laughter) That is the internet. And kids are throwin' crap. >> And high school. I think it would be high school. Kindergarten through high school! >> And you have different-aged kids in there. >> It's chaos, bedlam! >> Very well said. The internet is chaos, but by nature, that's what we want the internet to be. We don't want to control the chaos because we limit our ability to communicate, and that's really the promise of the internet. It's not the responsibility of the internet to police itself, it's the responsibility of each enterprise. >> So what new things are happening? We're seeing successes. Certainly, we're reporting on companies that are being successful are the ones that are doing reverse of what was once done, or said differently, new ways of doing things. Throwin' out kind of tryin' to do a hybrid legacy approach to security, and seeing the new ways, new things, new better cat and mouse games, better honeypots, intelligent fabrics. What do you guys recommend to your customers and what do you see, in your talk, this digital transformation's definitely a real trend, and security is the catastrophic time bomb that's ticking for all customers. So that's, it dwarfs compliance, risk management, current... >> Well, I dunno if that's necessarily true, that it's a time bomb. You know, the number one driver for security, still, is compliance. We sell stuff people don't really want to buy. Nobody wakes up and the morning and says, yeah, I want to go spend another $5 million on security. They do it, frankly, because they have to. If none of their competitors were spending money on security, I don't think most enterprises would. I mean, whenever you have to do something because it's good to do, you have a limited up cycle. When you do something because there's a compliance reason to do it, or bad things happen to you, you're really going to do it. >> So you think there's consumer pressure, then, to have to do this, otherwise-- >> Interesting stat, the Wall Street Journal did a study and asked 1000 people on a street corner in New York if, for a hamburger, they will give away their social insurance number, their home number, and their name. 72% of people gave out that information freely. >> Better be a good hamburger. (laughs) >> Back to your point, though, I want to get a-- >> So I think consumers have an expectation of security, and how they police that is they simply go to somebody else. So if you're my retailer and you get breached, you know what I'm going to do? I'm going to go next door. But I think that the average consumer's expectation is, security's your responsibility, not mine. >> Okay, so on the B to B side, let's get that. I wanted to push you on something I thought I kind of disagreed with. If compliance, I agree, compliance has been a big part of data governance and data management. >> Yeah, PCI has been the biggest driver in security in the last five years. >> No doubt. However, companies are now sharing data more with other companies. Financial institutions are sharing core data with other financial institutions, which kind of teases out the trend of, I'll give you some of my data to get, to fight the fraud detection market because it's a $1 trillion problem. So as you start to see points of growth where, okay, you start to see people go outside their comfort zone on compliance to share data. So we're tryin' to rationalize that. Your thoughts? I mean, is that an indicator? Do you see that as a trend, or, I mean, obviously locking down the data would be, you know. >> I think it's challenging. I mean, we were at the president's council on security last year at Stanford. And you know, President Obama got up there, made some passionate speech about sharing data. For the goodness of all of us, we need to share more data and be more secure. I got to tell you, you heard that speech and you're like, yeah baby, I'm going to share my data, we're all going to work together. Right after him, Tim Cook got up there (laughter) and said, I will never share my data with anybody in the government! And you heard him, and you're like, I am never sharing my data with anybody. >> Well there's the tension there, right? >> Well, this is a natural-- >> Natural tension between government and enterprise. >> Well, I think there's also a natural tension between enterprises. There's competitive issues, competitor pressures. >> Apple certainly is a great case. They hoard their data. Well, this is the dilemma, right? You want to have good policy, but innovation comes from experimentation. So it's a balancing act between what do you kind of do? How do you balance-- >> Yeah, it's a great time to be in our space. I mean, look at this floor. How many companies are here? Splunk is growing by 30%, the show itself, 30% per year. They're going to outgrow this venue next year and they're going to go, probably, Vegas or somebody. I think that's exciting. But these are all point products. The fastest-growing segment in the computer business is managed services, because the complexity in that world is overwhelming, and it's extremely fragmented. There's no interlinking. >> Talk about your business in there right now. What are you guys currently selling, how many employees do you have, what's the revenues like, what's the product mix? >> Yeah, so we are a global company. So we have 10 offices worldwide and close to 300 employees. We're one of the fastest-growing companies in North America. We sell, our focus is managed security services. We do consulting as well as incident response remediation, but the day-to-day, we want your logs, we want to do monitoring, we want to help with-- >> So you guys come in and do deployments and integration and then actually manage security for customers? >> We do the sexy of gettin' it in, and then we also do the unsexy of managing it day-to-day. >> Atif, nothing unsexy about our work. (laughter) >> It's all sexy, that's what theCUBE show's about. >> It's all sexy! >> That's why theCUBE's a household name. We have celebrities coming on now. Soon we'll be on cable. >> That's right! This will be a primetime show. (laughter) >> Before we know it! >> That's funny, I got approached by a network, I can't tell you who, big network with a big producer to do a cybersecurity show. And so, they approached me and they said, oh, we think it's going to be so hot. It's such a topical thing. So they spent a day with me and our team to watch what we do. There is no cybersecurity show! (laughter) They're like, do you guys do anything besides sit on the computer? >> You have a meeting and you look at the monitor. It's not much of a show. >> Does anybody have a gun?! (laughter) >> It's not great for network TV, I think. >> Build a wall. >> Someone has to die in the end. That has to be network TV. And yeah, but I mean, there's a problem. There's 1.4 million cyber jobs open right now. And that's not even including any data science statistics. So you know, so we're reporting that-- >> I'm sure it's the same thing in data science. >> Same problem. How do you take a high skill that there's not enough talent for, hopefully, computer science education, all that stuff happens, and automate it. So your point about automation. This is the number one problem. How do you guys advise clients what the hell do they do? >> You know, automation's tough. We just had this meeting before we got on here, because in our managed service, it's people-driven. We want to automate it. But there's only a certain amount of automation you can do. You still need that human element. I mean, if you can automate it, somebody can buy a product and they're secure. >> Machine learning isn't where it's supposed to be. Every vendor aside, machine learning's not where it needs to be, but we're getting there. Having succinct automation helps solve the cybersecurity labor shortage problem, because the skill level that you hire at can go lower. So you reduce the learning curve of who you need to hire, and what they do. >> That's a great point. I think the unsupervised machine learning algorithms are going to become so much smarter with the Splunk data, because they are, that's a tough nut to crack because you need to have some sort of knowledge around how to make that algorithm work. The data coming in from Splunk is so awesome, that turns that into an asset. So this is a moving train. This is the bigtime. Okay, go step back for a second, I want to change gears. Robert, I want to get your thoughts, because since you're here and you do a lot of, you know, picking the stocks, if you will, on Shark Tank, in the tech world, our boring tech world that we love, by the way. >> We love it too. >> How do you, as someone who's got a lot of experience in cycles of innovation, look at the changing digital transformation vendor landscape, Splunk, companies like Oracle tryin' to transform, Dell bought EMC, IBM's pivoting, Amazon is booming. How do you look at the new digital enterprise, and how do you look at that from, if you're a customer, an investor, where's the growth stocks, where's the growth companies, what's the growth parameters, what's your thoughts? >> One of the reasons a lot of our industry, why I got into tech was I had no money, my dad worked in a factory, my mom was a receptionist. And the old adage is, to make money, you need money. To get ahead, it's not what you know, it's who you know. I didn't know anybody. And the value of tech is tech transforms every three years. We follow these cycles where we eat our own young and we throw away stuff that doesn't add value. Tech is the great equalizer, 'cause if you don't add value, nobody cares. And you know, when I'm starting out as a guy with a small company, I love that! We're going to kick ass, we're going to add value. Now that we're a little bigger-- >> Well, when you're a young company you can eat someone's lunch, because if they're not paying attention, you can come in and-- >> For sure. It gets harder as you get bigger because now we're the big guys that somebody in their basement's tryin' to take out. But you know, we see tremendous innovation in security. If you look back three years, who were the leaders in the SIEM space? ArcSight, Q1, Nitro to a lesser degree, and enVision. Today, does RSA have a strategy around a SIEM? They have Netwitness, you know, security analytics, which is kind of a SIEM. Q1 is in the throes of the IBM machine, somewhere in their gut, nobody knows. ArcSight, who buys ArcSight anymore? It's so complicated. Who's the leader? Splunk! >> So back to the old classic team. Obviously, you have good people on the management team. Product matters now, in tech, doesn't it? More than ever. Obviously, balance sheet. Okay, let's get back to the data transformation. So you know, data is so critical now, and again, it's more from that data warehouse, which still is around, but to real-time data having value, moving it into different applications. Question is, how do you value data? I mean, you can't put it on the balance sheet. I mean, people value factories. GE said, we have all this investment in machines and assets. They worry about someone getting their data and doing a judo move on them. So data is truly an asset that's flying out of their network. How does companies value data? Can it ever be on the balance sheet? How do you look at that? >> I don't think data, in of itself, has any value. It's the effect of the data that has the value. And it's a very singular, it's what somebody does to it. Whatever the data is worth to you, from a business perspective, it's worth fundamentally more to an outside bad party because they can package that data and sell it to a competitor, a foreign government, all those kind of places. So it's the collection of raw data and applying it to something that has meaning to a third party. >> So it's like thermodynamics, really. Until it's in motion, it's really not worth anything. I mean, that's what you're saying. Data's data until it's put to work. >> Right, I don't think you're ever going to see it on a balance sheet as a hard, core value, because it has to have a transformative value. You have to do something with it. It's the something. >> So pretend you're in Shark Tank and you're a data guy, and you say, boss, I need more budget to do security, I need more budget to expand our presence. And the guy says sorry, I need to see some ROI on that data. Well, I just have a gut feeling that if we move the data around, it's going to be worth something. Oh, I pass. You can't justify the investment. So a lot of that, I mean, I'm oversimplifying it, but that's kind of like a dialogue that we hear in customers. How do you get that-- >> What I always tell CIOs and CCOs, it's challenging to get budget to do a good thing or the right thing. It's easier to get budget to do the necessary thing. And so, necessary is defined by the nature of your business. So if you make widgets and you want to get more budget to protect the widgets, no one cares. No one's sitting around, and like oh, are my widgets safe? They are, to certain degree, and they'll have limited budget for that. But if you go to them and say, you know what, we have a risk that if somebody can attack our widgets, we're going to be down for three days. And being down for three days or three hours has a dollar cost of $5 million. I need an extra $2.5 million to protect that from happening. As a business guy and a CEO, I understand that. >> That's great advice. >> And that's the biggest challenge, still, with security people is, we're technical people. We're not used to talking to business guys. >> It's like house insurance, in a way, or insurance. You invest this to recover that. >> It's a great analogy. You know, I used to race cars, and I had a life insurance premium for key man insurance. And my insurance agent comes along and says, you should buy a bigger policy. I'm like, I don't need a bigger policy. It's so much money, we're okay. And then he says to me, you know, if you die in a racecar, I'm not sure you're covered. (laughter) But if you pay me another $10000 a year in coverage, you're covered. Did I buy it? Absolutely. And it's the same analogy. >> That's very necessary. Personal question for you. So if you're, your dad had a factory, you mentioned. I saw that you mentioned that earlier. If he had a factory today in a modern era of IoT, and you were going to give him a digital transformation consulting project, how would you advise him? Because a lot of people are taking their analog business and kind of digitizing it. Some already have sensors in there. So you see it in manufacturing, and certainly, the industrial aspect of IoT has been a big deal. How would you advise your dad building a factory today? >> Yeah, so I think there's two aspects to it. One is just, you know, everything we've been talking about, data transformation, data analytics, making things better, none of those things are possible unless you're actually collecting the data. It's like, customers come to us and say, you know what, we don't want you to just manage our logs and tell us what's going on, we want higher-level value. And I'm like, no, I get that, but unless you're actually aggregating the logs, none of the upstream stuff matters. So first thing is, you have collect the data. Whether that's sensors, old devices, mechanical devices, and so on. The second part of it is, the minute you open up your factory and open up the mechanical devices and attach them to a PC or anything that's network-based, you're open for risk. And so, we're seeing that now in utilities, we're seeing that with gas companies, oil companies. You know, up until a few years ago, you couldn't physically change the flow of a pipeline, unless there was a physical connection, a mechanical on-off. It was very binary. Today, all those systems are connected to the internet. And it saves companies a lot of money 'cause they can test them and stuff. But they're also open to hackers. >> Bigtime. >> Well gentlemen, we appreciate the time. >> Thank you. >> And who says tech hasn't got a little pizazz, I mean-- (laughter) >> Come on, I was on Dancing with the Stars, that's a lot of pizazz! >> It's been great! >> You guys are exciting, but you are, no! >> Dancing with the Stars, of course! >> All right. >> Thank you very much. >> Well, thanks for bein' in theCUBE Tank, we appreciate that. >> Thank you. >> Don't call us, we'll call you. (laughter) Gentlemen, thank you very much. >> We're booked, maybe we can get you on next time. >> Okay, we're out. >> .conf2016, CUBE coverage continues live from Orlando. (electronic jingle)