(electronic dance music) >> Host: Live from San Francisco. It's theCUBE. Covering Oracle OpenWorld 2016. Brought to you by Oracle. Now, here's your hosts, John Furrier and Peter Burris. >> Hey, welcome back everyone. We are here live in San Francisco for Oracle OpenWorld 2016. This is theCUBE. SiliconANGLE Media's flaghship program. We got out to the events and extract the signal from the noise. I'm John Furrier the co-CEO of SiliconANGLE Media with Peter Burris, my co-host, who's the head of research for SiliconANGLE Media as well as the general manager of Wikibon Research. Our next guest is Dave Donatelli, Executive Vice President of Cloud and Converged Systems and Infrastructure at Oracle. Cube alumni always coming on. Great to see you. Thanks for spending really valuable time to come and share your insights with us. >> Great to see you guys again. It's always a pleasure. >> So you did the keynote today, obviously the forces in the industry around Cloud, Oracle's got the whole story now. They got the IaaS V2, they're calling it. And now you have up and down the stack PasS and Saas, and under the covers, under the hood is the power hardware. >> Dave: Of the infrastructure, yeah. >> Very disruptive and we chatted and we wrote a story at SiliconANGLE, also on Forbes, about the destruction of the existing incumbents. So with that in mind, how did the keynote go from your perspective? What was your key themes and how does that relate to some of the disruption in the landscape of the industry? >> Okay, well, as a self-writer, I'd say the keynote went very well, but what I really talked about was Oracle offers people three deployment models. And I gave 'em kind of five journey to take to the Cloud. The three models are public Cloud, broad-based public Cloud. Second thing is traditional enterprise, which business we've been in for so long. And then a new category is what we call Cloud a customer. Taking our public Cloud and making that available to customers. And then the second thing I did in the keynote is talk about five journeys people could take to our public Cloud and it's everything from optimizing what they currently have in their legacy environment, to running hybrid Cloud, to running this Cloud a customer, to running private Cloud, and the fifth one is just, end what you're doing in the current way and move all public Cloud. So in the five journeys, just to drill down on that. It's five different paths the customer could take. >> Dave: Correct, all from a customer's perspective. >> From their current position to a Cloud endgame, if you will. >> Dave: Yes. >> And which one you think is the most dominant right now in terms of your view because obviously we'll go though those, but of the ones, beyond on-prem, which ones has the most relevance today in terms of customers that you hear from. Why I'd say two things, what I see and what I've seen the last year is the acceleration of movement to the public Cloud in literally since the start of the year has been massive. And what's really changed about a lot of it's coming top down. So you see CEOs, board of directors, CFOs saying we're going to go to the Cloud, even some companies are giving their IT departments specific requirements. You'll have 40% of our applications in the Cloud by 2000. So big acceleration there and in saying that what most customers are doing is something in the middle. They have their legacy that they've always been running. we look at it app by app by app. What's the most likely to transform to the Cloud? Which ones are probably just going to go away? Which one should we just redesigned and build net new in the Cloud. And so that means to me that hybrid is really, you know, the one that we see most often. People are running on-premise, they're running in the Cloud. They'll have a mix for some time until the on-premise continues to go away. >> What's the concept we heard from Chuck Hollis yesterday around this notion of Cloud quotas. He's seeing customers being kind of mandated to get to the Cloud, almost like a quota. Hey, where are you with your with your Cloud migration? So there's pressure certainly coming in but you introduced Cloud insurance. Is that not actually insurance, but as a concept, just explain what you meant by that. >> Sure. So what we mean by that is this, is that, as I, as we just talked about most enterprises, if you look at most of data out there says only 5% of applications have moved to the Cloud, so far. So that means a lot are still running in their data centers. But now you're going to go to your boss and you're going to say, "Hey you know I need to buy some new infrastructure.". And if you're a regular company, that's going to take three to five years to depreciate. So you go to your boss and say, "Hey, give me $10 million, I got this great idea. I'm going to put this new infrastructure in.". Well, what if two years from now your boss comes in and says, "Guess what? We now we need to move to the public Cloud.". With traditional infrastructure or with infrastructure designed by companies who don't have a public Cloud, you now have a boat anchor, right? I run big businesses myself and the last thing you want is equipment on your books depreciating that has no technical value. What we mean by Cloud insurance, is that everything we sell customers on-premise also has a public Cloud equivalency. Think of Exadata. You can use Exadata on-premise. We have an Exadata Cloud service you can subscribe to in the Cloud. So if you buy an Exadata on-premise today and they say we want to start moving to Cloud. You can say, "Great, I'll do things like test EV in the Cloud with my equivalent Exadata service.". They're fully compatible. It's got the same management. It's one push button to move data from on-premise to the public Cloud. No one else can do that. >> Peter: So you're really selling them a Cloud option. Whatever you buy you are also buying a Cloud option. >> What I say is I'm giving them assurance and insurance. The assurance is you're buying something today that you know will have a useful life going forward in the go forward architecture. >> Peter: And if you want to exercise hat option today, you can do so, if you want exercising three years you can do so. >> Exactly. >> No financial penalty to you. >> Exactly. And what most competitors are saying is hey, by the way you always did it and guess what? You don't have that option. >> Peter: It's your asset. So one of the things, I love the idea of the five paths, but paths are going to be influenced by workloads. So as you think about the characteristics of workloads, not big companies, small company, regional, those are always going to be important. Sophistication, maturity of the shop. But, as you think about workloads, going back to John's question, what types of workloads do you see coming in first? So for example, we're seeing a lot of on-premise, big data happening, but not as fast as it might because of complexity. We're starting to see more of that move into options that are more simply packaged, easier to use like in the Cloud. What kind of workloads do you think are going to pull customers forward first? >> Dave: Sure. Well, first remember we play in Saas, PasS, and infrastructure. And what we've seen if you look at our financials, is huge growth in SaaS and that's where people are saying, I am taking, you know, with GE here, as an example, Ge is taking their ERP, big global company, they're putting that in the public Cloud. HSBC was here, same story, big financial institution. They're putting that in the Cloud first. And the reason why they're doing it, is they think it gives you more flexibility, makes them more efficient, saves them money. Then, which really changed, and what we've evolved to, is with our new infrastructure Cloud now we can do anything. This is to your question. Anything that runs on an x86 server or spark based server, whether it's an Oracle application or not, you can either migrate it and run it in our Cloud. You can, you know, reimagine it using using our PaaS to redesign it, move it to the Cloud, it's everything. And we're seeing increasing rates of people walking through by app by app in their environment and doing just what we've said. What stays, what moves, what do we transform in the process? >> You seen a lot of the the movie at EMC, certainly your history, your career at EMC and then HP. Lot of industry had changed while you're, you know, in those shops, now here at Oracle. So I got to ask you now with the Oracle advantage and you guys are pushing from the silicon to the app, however, I forget how they word it, but it's silicon to the app, the end-to-end kind of thing. What's different from a design standpoint, from a technical, as the product development teams build it, what's the unique thing that's changed? And how's that render itself to impacting the customer? >> Dave: Okay, that's a great question. So let me give you the customer benefit first and I'll tell you why it occurs. what I said today from stage is that to run our, I'll use an examples of our software. To run our software there's no better place on earth than our infrastructure, and compared to their most likely alternative which is their self build, them buying an x86 server, them buying their own networking, them buying storage. We give people better performance, better end-user experience, easier to manage and most importantly it costs them less money. >> John: So knocking down Oracle on Oracle, boom. That's a baseline. >> Less cost versus you going to buy a server online at Dell and trying to put it together yourself. >> I buy that. >> Dave: The way we do it, is the fact that we have insights which we have designed, all the way into our software as well as into our products. So depending which product you're talking about, for instance in Spark, we embedded a silicon itself. Accelerators for things like encryption, for deencryption, for the ability to compress, to decompress. All kinds of things that matter and speed. At the same time we make a lot of changes to our software itself to make that run better with our Hardware. It's RIP. It takes a lot of engineering to do that, but simply put if you don't have the software stack, you know if you're someone who just builds hardware, you can't see the software, you can't make those changes. >> John: Well, you have the advantage. Obviously, you have have software that Oracle writes, you have systems that are engineered for Oracle software. Clear advantage, so you're saying unequivocally-- >> Dave: From a technical-- >> You blow everyone away. >> Dave: From a pure technical perspective, it is an unfair fight. We will win every time. >> John: Okay, so i buy that, so that, you win those rounds. Curveball is multi-vendor. Now we're into a multi-vendor because a lot of people have that technical debt now on the books, if you will, I don't know if that's the right term, technical debt, but they have legacy. It might be Dell EMC, it might be HP and other stuff. How do how do those shops deal with this Oracle infrastructure Cloud and non Oracle software. >> Okay, so two ways. So if you look at an on-premise, we make products that run both Oracle software, engineered systems to run both Oracle software, non Oracle software in the same machine. So you get all the accrued benefits we talked about but you can also host your applications that might not necessarily be Oracle, with us. In the Cloud itself, i think you heard, you know I thought Larry gave an excellent presentation yesterday and very clearly walking through what we do that's different than alternatives. And as we said, >> John: He was very aggressive on Amazon. >> Dave: But I thought he was very, I thought he was very fair in how you did it, right. He walked through it just the facts. This is what they do, this is what we do, this is why it's technically different. He didn't just come out and say hey, we're better than amazon he gave specific reasons why. >> John: He did that and he did that, he did both. >> But if you look at it, so even just running a generic app, that's non-Oracle, on our infrastructure as a service, what we said very clearly is, we have an infrastructure by the way it is architected, that has less noise, meaning so you get less performance disruption, so it runs faster. It's built with the newer hardware and at the same time in doing so because of our architecture we can offer that to people at a lower price than they'd otherwise get. And again I think those are very straightforward, very well articulated points to show the value and you know that opens up the whole world to us. As you know the x86 market is almost a $40 billion market on-premise. What we're saying now at Oracle is, we can do a better job for you in the public Cloud running any of those workloads. >> That's right now. I think the other thing that came out, we've talked about it here, is that the stream of innovation that's going to unload itself on the industry over the next few years, someone still has to do the integration of all of these different piece parts. They're going to be improved upon and that integration cost is real, and so you can look at that from a CIOs perspective, they can look at and say do I want to put my time into the integration, do I want to put my time into the application that's going to have a differential effect on my business. So you guys seem to be coming pretty strongly on we've got the baseline we need to do the, we've got the stuff that we need to bring the innovation in an integrated way into our packaging. >> Dave: That's correct and I think very well said. I believe we are the easiest company to work with, in bringing people from, in essence, their old architecture to the new. And that is because we've already done that integration work. We offer those architectures on both sides of the equation, current on-premise into the public Cloud and give you one management software structure to manage both. Anybody else is only going to work with you on one extreme or another. It's either, hey only do Cloud or only do on-prem. How you work with the other one, you as a customer stuck with that burden to figure out. Dave, I know you got to go to another meeting, but I want to get the final question to you to elaborate on. What you're most proud of now in your tenure at Oracle. Some things that have worked for you in the organization product-wise, successes you've had. You want to highlight a few? And what's your priorities going forward? You're now running the Cloud group as well as Converged Infrastructure kind of coming together. What are you most proud of? what is, could be people not things, like ZDLRA, I know is doing really, Juan Loaiza was saying it's a smashing success and we're not hearing anything about that. We heard about it yesterday, but so what are you most proud of and then what's your priorities going forward? >> What I'm most proud of about being at Oracle is we're an organization investing for our customers' future. So we're spending $5.2 billion this year on R and D and it's all about bringing out these products that fit the future for our customers and protecting their investments along the way. I'm very proud to be part of a company, because as you know in these big transitions, companies don't make it. Think of Deck, right? They're a leader, didn't make it through to the new transition. And we're one of these companies that's leading the new transition even though we also participated in the prior architecture. I think from a product perspective, I would say ZDLRA is a great one you brought up. It stands for Zero Data Loss Recovery Appliance. It is designed by our database engineers to fully backup and recover, as it says, with zero data loss, our database. And we've had a number of customers here, we had customers of the keynote today, very major enterprises at the keynote today was General Electric, who talked about how it enables them now to sleep. They don't get woken up at three in the morning. It gives some certainty in terms of how they recover. And most importantly, it saves them money. >> And you're in the hardware business, but you're not in the box business. You're actually have the software, it's again software enabled. Congratulations, I know you're attracting a lot of good talent as well. They did a great job and it's been fun to watch your success at Oracle and we're proud to cover you guys. We have some points we would disagree with you. If we had more time we can go into little detail, but thanks for spending the time and sharing on theCUBE. >> All right, a pleasure. Always great to see you guys. Live in San Francisco for Oracle OpenWorld. This is theCUBE. I'm John Furrier, Peter Burris, we'll be back with more after this short break.

>> Narrator: From theCUBE's studios in Palo Alto, in Boston, connecting with thought leaders all around the world. This is a CUBE conversation. >> Hey everybody, this is Dave Vellante and welcome to this episode of "CXO Insights." As you know, we've been grabbing the perspectives of leaders throughout this pandemic and assessing their tips for managing in a crisis and of course, managing in good times as well. But now, as we enter the post-isolation economy, we really want to look at not just how you manage through the crisis but how you manage beyond the crisis. And I'm really excited to have Chris Riley here. He's the newly minted Chief Revenue Officer at Automation Anywhere. Chris, my friend, how you doing? I hope you and the family are well. >> Thank you, David. I wish the same for you. I think getting by as most folks are, it's the new normal, we're all getting used to it but I'm happy to be here and happy to be at Automation Anywhere. >> Yeah, I want to talk about that in detail. Eddie Walsh calls it the new abnormal but so congratulations on the new role. I want to start with your career. I met you in 1987, which ironically was the same year I met Dave Donatelli, the same year I met Michigan I. and Saul Koi, talk about great timing. And then, you came into the industry at a time, really different time. It was, the IBM people don't remember this but IBM was the dominant player and you guys unseated them amazing 12-year career at EMC and then you kind of went to the .com boom. That was amazing. You relive that ride, did a stint at HP and really turned that business around and then came back to Dell, top go to market executive. One of the top in the industry that I know and now, of course at Automation Anywhere we're going to talk about. My first question to you is, a lot of changes have occurred since 1987. What has changed the most? Now we're talking diversity, we're talking all kinds of your different sales models. From your career looking back, what's changed the most? >> I think everything has changed and candidly for the better, Dave. You just led with one of the key areas in an area I'm deeply passionate about and that is diversity and inclusion and I think there's no stronger time, at least in our country's history where the inequalities that exist have been so exposed. So I view this as an opportunity, as I did at Dell to make a difference, lead from the front and make this a destination and a company whose culture really supports and drives diversity and inclusion. So I'd say that's one area, and I know it's very passionate for you as well. The others, it was a time before laptops, desktops. I think Ken Olsen once said, who would ever need a laptop in their home and boy, the world has changed. So I think some of the things though that haven't changed and this is why I'm so excited about Automation Anywhere. At the manual processes we have our workers doing and I think there is a real opportunity. I've lived through explosive growth at EMC, top company performing stock during the 90s, I get to see VMware firsthand. I've seen what's happened with ServiceNow and I believe this RPA space, as to you is in its infancy. It's seeing 30% compounded annual growth and we're just at the beginning and I think it's going to change the way people work and really lead to that digital transformation that so many of us have been talking about for the last decade. >> Yeah and you know kind of my position. Quick aside, I don't know if you saw the Netflix announcement this morning and I've been wondering as a small business, what can we do? What more can we do for inclusion and diversity? Netflix announced they're going to take 2% of their cash and put it into banks, financial institutions that support black causes and I just talked to our CFO. I said, look, why don't we take some of our cash, let's take 2% and stick it into banks, community banks. There's 30 million small businesses in the United States. If just 1% puts 10 grand in each, that's $3 billion that go into black community. So I'm going to start a mission and I just thought I'd share that 'cause I know it's a passion of yours. >> Yeah, and we all need to be in a position to provide equal opportunity for employment and that is reaching out into those communities and starting early on in creating the opportunities for advancement professionally, mentorship and just the path forward. And I'm excited to see what Netflix is doing. I'm sure you'll come up with the right answer for your company and I think all of us are searching, what's the right answer for our respective companies? >> Yeah, so now let's get into it. You're a month in and I want to talk about this project. I've learned a lot about not only RPA but about automation. I've just had a deep dive with your team and it really brought some things into focus. Guys, if you bring up the first slide, I want to get some thoughts on the table here. So this is a chart that sort of came into my focus with a friend of mine, Dave Moschello, who really big thinker on this stuff and he pointed out, this is data from the US Bureau of Labor and Statistics and the EU and it shows the lackluster productivity that's going on in the past decade. So you can see, we had the boost in the 80s and the 90s, we had this sort of productivity uptick from laptops but now, look what's happened since 2007. And the point that Moschello made on the right hand side is we have all these huge issues that we face, whether it's climate change, we have this massive debt, healthcare, an aging population, feeding everyone, et cetera, et cetera, et cetera, and his point was, there's no way we're going to be able to solve all these problems by throwing humans at the problem. So I've really begun to sort of think about this just in terms of machines and the roles that machines will play. I think overnight, Chris, we've gone from, wow, I'm afraid that machines are going to take my job to you can't operate if you're not digital. >> Yeah, well digital transformation is not a new term. I think it's meant something different each year for the last 10 years and I look at this as an opportunity. The World Economic Forum projected that IA and RPA will create 58 million new jobs. It's an astounding number. What COVID-19 has exposed is this work from home phenomenon that really exposes the risk of manual processes within the enterprise. So I think those two things combined is almost a perfect storm and I think what it'll do is accelerate the adoption of RPA and IPA. So something that might've taken years or decades to really be adopted in force, in this new normal, I think is going to be accelerated quite dramatically. >> So, the combination of your go to market execution, you managed complex sales motions before. Automation Anywhere obviously has some great product capabilities. Guys, I want to bring up the next slide and Chris, you might have seen this in some of the stuff that I wrote but this is data from ETR Enterprise technology research. They're a data partner of ours. Now it's clear that Automation Anywhere has the right product market fit and you can see on this chart, this is a methodology that we use. ETR goes out and they ask people, are you adopting a platform new? Are you increasing spending relative to last year? Are you flat, decreasing or replacing? And you can see here, there is zero churn in the Automation Anywhere base. And so obviously you got product market fit. Churn is the silent killer, obviously of SAS companies and so, you've picked a winner and I'm learning more about this. At first I thought the team office is quite large, I sized it. I actually think it's bigger than I originally thought. Chris, I thought this was going to be a winner-take-all type of market. I'm really rethinking that after, especially the deep dive I've had with your team in terms of how you guys go to market with an end-to-end sort of life cycle approach as opposed to sort of putting point products in. So I wonder if that narrative that I just laid out, resonates with you, is it sort of consistent with what you're seeing and then maybe some of the reasons why you joined Automation Anywhere? >> Yeah, I would say the most aggressive software growth that I've seen in the last decade or so, and two companies stand out for me. That's VMware and ServiceNow. They don't have a point product, they have a platform and that's what attracted me to Automation Anywhere is this platform approach. And Dave as you know, I've spent most of my career calling on the enterprise' strong relationships with those types of companies and they aren't looking to develop a point product solution and then cobble together lots of disparate islands of solutions. They're looking for a platform that can grow as they grow. They can extend from the back office to the front office but all centered around workforce, transformation, productivity and just as importantly, resiliency. And as we start to develop more and more capabilities that will be delivered through this platform approach, I think we're going to see explosive growth as the industry goes through its explosive growth. >> Well, I know your approach and your approach is to stay very close to customers. So as you were doing your due diligence on Automation Anywhere and as you enter your sort of first part of your 100-day journey here, I'm sure you've talked to a lot of customers. What are they telling you? What are the big takeaways right now that you're hearing? >> Yeah, so I think some of the data you pointed out with 4,000 customers in essence, zero churn, the opportunity to upsell those customers with more products and solutions clearly is there. New account acquisition has been a tremendous source of growth for the company in a strong professional services organization that actually is able to deliver the outcomes that our customers expect. From an enterprise perspective, I couldn't have come into a better situation with 4,000 customers, 50% of the fortune 500, 2 million bots deployed, those types of strategic relationships are going to be more and more critical as this company continues to accelerate its growth. Most of the RPA solutions really got in through the back office and candidly, really weren't even a component of an IT solution. Now, as you go to the front of the house, where you're looking at customer facing applications and worker productivity, these are CEO, CFO, COO and IT initiatives. So I really believe we're coming into our own, at the front of the house with senior executives that really want to create a better working environment for their employees and de-risk a lot of these manual processes that have existed for years. >> So I know why you chose Automation Anywhere. My question is, why did Automation Anywhere choose Chris Riley? I know your capabilities but obviously when somebody hires a executive like yourself, they say, "Hey, Chris, we want you to help us "get to the next level," but what does that mean? Are we talking about changes in the go to market? Are we talking about your ability to recruit and coach, to manage complex of sales motions? What is it that you want to bring to Automation Anywhere? >> I think it's all those, Dave. Having built a reputation throughout my 30 plus year career around a people-centric focus, a customer-centric focus and those two things kind of aren't interchangeable. When you look at customers, they put their faith and confidence in people and they put their faith and confidence in companies. And what I see here at Automation Anywhere is that the ability to kind of expand upon the great culture that the company already has but do it with someone whose role in a company at scale globally and can put a lot of the best practices and disciplines in place to do that 'cause it is difficult but also, how do we start to do larger, more complex deals and build relationships with the CIO, the CFO, the CEO? And I think a big reason why I'm here is, that experience in doing that, doing large complex multi-year opportunities but also being able to deliver upon the outcomes that we told our customers we could achieve and do that together with our customers and again we have a strong professional services organization and an incredible ecosystem of partners that have demonstrated year over year, the company's ability to actually deliver upon its promise. >> That was my next question to you, was the ecosystem. One of the big changes from when you started in this business, was it used to be just belly to belly, hardcore, direct sales, the importance and leverage that you get from a partner ecosystem. You point out VMware. In fact ServiceNow, it's interesting. When we first started covering ServiceNow, one of the things we said is we want to see as an indicator of success, the partner ecosystem evolve and then sure enough, it exploded with the SIs and all the kinds of developers. So maybe talk about AA's ecosystem, The Partner System. You obviously have a lot of experience there in your career, how do you see that as a leverage point? >> Yeah, it's huge. This market is far larger than we can cover with a direct sales organization and requires substantial services engagements that go well beyond the kind of professional services organization we want to build out organically in the company. So when you look at that, the company today has 1,900 partners. The global systems integrators are key, especially those with VPO type practices, the regional SIs and candidly, the regional VARs who've built out a strong service malpractice, a strong VMware practice and have the professional services capabilities to do some of these complex automation or automation type work that have also built the trust and confidence of their customers. So, in partnership with these types of companies, we believe we can expand our reach. We believe we can offer a more comprehensive outcome and solution to our customers and we, what I'm going to be looking at is, how do we enhance our channel programs to be the kind of company that the channel partners want to engage with, built upon the reputation of the company, the leadership position we have in the technology and also our willingness to go after this space together. >> So I got to go but last question is, what can you share with us about your 100-day plan? Where are you going to focus? >> On the people. There is a strong culture here, there's incredible sales talent and there's talent throughout the organization. I think Dave, you've seen for me over the years, a clarity of our mission, keep things simple and try and drive a repetitive process to deliver results. I'm very accountability focused. So I think what I'm going to look to assess is where the organization is today, how to get more out of the great talent we have, build stronger and deeper relationships with our customers and really scale and grow through our ecosystem of channel partners. >> Well, Chris, I'm super excited for you. A great hire by Automation Anywhere obviously got my attention. I think it'll get the industry's as well. Best of luck, and of course we'll be watching. >> Good, always great to see you, Dave, take care. >> Yeah, ditto, thanks so much for coming on and thank you for watching everybody. Keep it here because this month we're going to be really digging into the ETR data we've been reporting on that horse race between Automation Anywhere and UI Path. The ETR data is in the field and we'll be reporting on that. So look for that. This is Dave Vellante for theCUBE and we'll see you next time. (gentle music)

>> From the SiliconANGLE Media Office in Boston, Massachusetts, it's theCUBE! Now here's your host, Dave Vellante. >> Hi, everybody, welcome to this Cube Insights, powered by ETR. In this breaking analysis I want to talk to you about what I learned this week at Dell Technology's financial analyst meeting in New York. They gathered all the financial analysts, Rob Williams hosted it, he's the head of IR, Michael Dell of course was there. They had Dennis Hoffman who is the head of strategic planning, Jeff Clarke who basically runs the business and Tom Sweet, of course, who was the star of the show, the CFO, all the analysts want to see him. Dell laid out its longterm goals, it provided much clearer understanding of its strategic direction, basically focused on three areas. Dell believes that IT is getting more complex, we know that, they want to capitalize on that by simplifying IT. We'll talk about that. And then they want to position for the wave of digital transformations that are coming and they also believe, Dell believes, that it can capitalize on the consolidation trend, consolidating vendors, so I'll talk about each of those. And so let me bring up the first slide, Alex, if you would. The takeaways from the Dell financial analyst meeting. Let me share with you the overall framework that Tom Sweet laid out. And I have to say, the messaging was very consistent, these guys were very well-prepared. I think Dell is, from a management perspective, very well-run company. They're targeting three to 5% growth on what they're saying is a 4% GDP forecast. Or sorry, 4%, I have GDP here, it's really 4% industry growth. GDP's a little lower than that obviously. So this is IDC data, Gartner data, 4% industry growth. So that's an error on my part, I apologize. The strategies to grow relative to their competition. So grow share on a relative basis. So whatever the market does, again, not GDP, but whatever the market does, Dell wants to grow faster than the market. So it wants to gain share, that's its primary metric. From there they want to grow operating income and they want to grow that faster than revenue, that's going to throw off cash. And then they're going to also continue to delever the balance sheet. I think they paid down 17 billion in debt since the EMC acquisition. They want to get to a two X debt to EBITA ratio within 18 months. And what they're saying is, you know, they talked about, Tom Sweet talked about this consistent march toward investment-grade rating. They've been talkin' about that for awhile. He made the comment, we don't need to have a triple A rating but we want to get to the point where we can reduce our interest expense, and that will, 'cause they'll drop right into the bottom line. So they talked about these various levers that they can turn, some of them under the P and L, gaining share, some are their operating structure and their organizational structure, and one big one is obviously their debt structure. The other key issue here is will this cut the liquidity discount that Dell faces? What do I mean by that? Well, VMware has about a $60 billion valuation. Dell owns about 80% of VMware, which would equate to 48 billion. But if you look at Dell's market cap, it's only 37 billion. So it essentially says that Dell's core business is worth minus 11 billion. We used to talk about this when EMC owned VMware. Its core business only comprised about 40% of the overall value of the company, in this case because of the high debt, Dell has a negative value. And it's not just the high debt. Michael Dell has control over the voting shares, it's essentially a conglomerate structure, there's very high debt, and it's a relatively low margin business, notwithstanding VMware. And so as a result, Dell trades at a discount relative to what you would think it should trade at, given its prominence in the market, $92 billion company, the leader in every category under the sun. So that's the big question is can Dell turn these levers, drop EBITA or cash to the bottom line, affect operating income, and then ultimately pay down its debt and affect that discount that it trades at? Okay, bring up, if you would, Alex, the next slide. Now I want to share with you the takeaways from the Dell line of business focus. This really was Jeff Clarke's presentations that I'm going to draw from. Servers, we know, they're softer demand, but the key there is they're really faced tough compares. Last year, Dell's server business grew like crazy. So this year the comparisons are lessened. But there's less spending on servers. I'll share with you some of the ETR data. Storage, they call it holding serve, you saw last quarter I did an analysis, I took the ETR data and the income statement, it showed Pure was gaining share at like 22% growth from the income statement standpoint. Dell was 0% growth but is actually growing faster than its competitors. With the exception of Pure. It's growing faster than the market. So Dell actually gained share with 0% growth. Dell's really focused on consolidating the portfolio. They've cut the portfolio down from 80, I think actually the right number is 88 products, down to 20 by May of 2020. They've got some new mid-range coming, they've just refreshed their data protection portfolio, so again, by May of next year, by Dell Technologies World they'll have a much, much more simplified portfolio. And they're gaining back share. They've refocused on the storage business. You might recall after the acquisition, EMC was kind of a mess. It was losing share before the acquisition, it was so distracted with all the Elliott Management stuff goin' on. And kind of took its eye off the ball, and then after the acquisition it took awhile for them to get their act together. They gained back about 375 basis points in the last 18 months. Remember a basis point is 1/100th of 1%. So gaining share and their consistent focus on trying to do that. Their PC business, which is actually doin' quite well, is focused on the commercial segment and focused on higher margins. They made the statement that the PCs are kind of undersupply right now so it's helping margins. There's a big focus in Jeff Clarke's organization on VMware integration. To me this makes a lot of sense. To the extent that you can take the VMware platform and make Dell hardware run VMware better, that's something that is an advantage for Dell, obviously. And at the same time, VMware has to walk the fine line with the ecosystem. But certainly it's earned the presence in the market now that it can basically do what I just said, tightly integrate with Dell and at the same time serve the ecosystem, 'cause frankly, the ecosystem has no choice. It must serve VMware customers. The strategy, essentially, is to, as I say, capitalize on vendor consolidation, leverage value across the portfolio, so whether it's pivotal, VMware integration, the security portfolio, try to leverage that and then differentiate with scale. And Dell really has the number one supply chain in the tech business. Something that Dave Donatelli at HP, when he was at HP, used to talk about. HPE doesn't really talk about that supply chain advantage anymore 'cause essentially it doesn't have it. Dell does. So Jeff Clarke's reorganization, he came in, he streamlined the organization, really from the focus on R and D to product to collaboration across the organization and the VMware integration. I actually was quite impressed with when I first met Jeff Clarke I guess two years ago now, what he and the organization have accomplished since then. No BS kind of person. And you can see it's starting to take effect. So we'll keep an eye on that. The next slide I want to show you, I want to bring in the ETR data. We've been sharing with you the ETR spending intention surveys for the last couple of weeks and months. ETR, enterprise technology research, they have a data platform that comprises 4,500 practitioners that share spending data with them. CIOs, IT managers, et cetera. What I'm showing here is a cut off of the server sector. So I'm going to drill down into server and storage. So these are spending intentions from the July survey asking about the second half of 2019 relative to the first half of 2019. And this is a drill-down into the giant public and private firms. Why do I do that? Because in meeting the ETR, this is the best indicator. So it's big, big public companies and big private companies. Think Uber. Private companies that spend a ton of dough on IT. UPS before it went public, for example. So those companies are in here. And they're, according to ETR, the best indicators. What this chart shows, so the bars show, and I've shared this with you a number of times, the lime green is we're adding, we're new to this platform, we're new adoption. The evergreen is we're spending more, the gray is we're spending the same, the light red or pink is we're spending less, and the dark red is we're leaving the platform. So if you subtract the red from the green you get what's called a net score, and that's that blue line. And this is the overall server spending intentions from that July survey. The end is about 525 respondents out of the 4,500. And this is, again, those that just answered the question on server. So you can see the net score on server spend is dropping. And you can see the market share on server is dropping. The takeaway here is that servers, as a percentage of overall IT spend, are on a downward slope, and have been for quite some time. Back to the January '16 survey. Okay, so that's going to serve us. Let's take a look at the same data for storage. So if, Alex, if you bring up the storage sector slide, You can see kind of a similar trend. And I would argue what's happening here, a couple of things. You've got the CLOB effect, I'll talk about that some more, and you've also got, in this case, the flash, all-flash array effect. What happened was you had all-flash arrays and flash come into the data center, and that gave performance a huge headroom. Remember, spinning disk was the last bastion of mechanical movement and it was the main bottleneck in terms of overall application performance. IO was the problem. Well you put a bunch of flash into the system and it gives a lot of headroom. People used to over-provision capacity just for performance reasons. So flash has had the effect of customers saying, hey, my performance is good, I don't need to over-provision anymore, I don't need to buy so much. So that combined with cloud, I think, has put down the pressure on the storage business as well. Now the next slide, Alex, that I want you to bring up is the vendor net scores, the server spending intentions. And what I've done is I've highlighted Dell EMC. Now what's happening here in the slide, and I realize it's an eye chart, but basically where you want to be in this chart is in the left-hand side. What it shows is the spending intentions and the momentum from the October '18, which is the gray, the April '19, which is the blue, and then the July '19 which is the most recent one. Again, the end is 525 in the servers for the July '19 survey. And you can see Dell's kind of in the middle of the pack. You'd love to be in the left-hand side, you know, Docker, Microsoft, VMware, Intel, Ubuntu. And you don't want to be on the right-hand side, you know, Fujitsu, IBM, is sort of below the line. Dell's kind of in the middle there, Dell EMC. The next slide I want to show you is that same slide for storage. And again, you can see here is that on-- So this is vendor net scores, the storage spending intentions. On the left-hand side it's all the high growth companies. Rubrik, Cohesity, Nutanix, Pure, VMware with vSAN, Veeam. You see Dell EMC's VxRail. On the right-hand side, you see the guys that are losing momentum. Veritas, Iron Mountain, Barracuda, HitachiHDS, Fusion-io still comes up in the survey after the acquisition by Western Digital. Again, you see Dell EMC kind of holding serve in the middle there. Not great, not bad. Okay, so that's kind of just some other ETR data that I wanted to share. All right, next thing we're going to talk about is the macros market summary. And Alex, I've got some bullet points on this, so if you bring up that slide, let me talk about that a little bit. So five points here. First, cloud continues to eat away at on-prem, despite all this talk about repatriation, which I know does happen. People try to throw everything to the cloud and they go, whoa! Look at my Amazon bill, yeah, I get that. That's at the margin. The main trend is that cloud continues to grow. That whole repatriation thing is not moving the on-prem market. On-prem is kind of steady eddy. Storage is still working through that AFA injection. Got a lot of headroom from performance standpoint. So people don't need to buy as much as they used to because you had that step function in performance. Now eventually the market will catch up, all this digital transformation is happening, all this data is flowing through the system and it will catch up, and the storage market is elastic. As NAN prices fall, people will, I predict, will buy more storage. But there's been somewhat of a lull in the overall storage market. It's not a great market right now, frankly, at the macro level. Now ETR does these surveys on a quarterly basis. They're just about to release the October survey, and they put out a little glimpse on Friday about this survey. And I'll share some bullet points there. Overall IT spending clearly is softening. We kind of know that, everybody kind of realizes that. Here's the nuance. New adoptions are reverting to pre-2018 levels, and the replacements are rising. What does this mean? So the number of respondents that said, oh yes, we're adopting this platform for the first time is declining, and the replacements are actually accelerating. Why is that? Well I was at ETR last week and we were talking about this and one of the theories, and I think it's a good one, is that 2016, 2017 was kind of experimentation around digital transformation. 2018, people started to put things into production or closer to production, they were running systems in parallel, and now they're making their bets, they're saying, hey, this test worked, let's put this heavy into production in 2019, and now we're going to start replacing. So we're not going to adopt as much stuff 'cause we're not doing as much experimentation. We're going to now focus and narrow in on those things that are going to drive our business, and we're going to replace those things that aren't going to drive our business. We're going to start unplugging them. So that's some of what's happening. Another big trend is Microsoft. Microsoft is extending its presence throughout. They're goin' after collaboration, you saw the impact that they had on Slack and Slack stock recently. So Slack Box, Dropbox, are kind of exposed there. They're goin' after security, they've just announced a SIM product. So Splunk and IBM, they're kind of goin' after that base. The application performance management vendors. For instance, New Relic. Microsoft goin' after them. Obviously they got a huge presence in cloud. Their Windows 10 cycle is a little slower this time around, but they've got other businesses that are really starting to click. So Microsoft is one of the few vendors that really is showing accelerated spending momentum in the ETR data. Financial services and telcos, which are always leading spender indicators, are actually very weak right now. That's having a spillover effect into Europe, which is over-banked, if I can use that term. Banking heavy, if you will. So right now it's not a pretty picture, but it's not a disaster. I don't want to necessarily suggest this as like going back to 2007, 2008, it's not. It's really just a matter of things are softening and it's, you know, maybe taking a little breath. Okay, so let me summarize the meeting overall. Again, it was a very well-run meeting. Started at 9:00, ended at 12:00, bagged lunch, go home. Nice and crisp. So these guys are very well-prepared. I think, again, Dell is a extremely well-managed company. They laid out a much clearer vision for Wall Street of its strategy, where it's headed. As they say, they're going after IT complexity. I want to make a comment on this. You think about Legacy EMC. Legacy EMC was not the company that you would expect to deal with complexity. In fact, they were the culprit of complexity. One of the things that Jeff Clarke did when he came in, he said, this portfolio's too complex, needs to be simplified. Joe Tucci used to say, overlap is better than gaps. Jeff Clarke said we got too much overlap. We don't have a lot of gaps so let's streamline that portfolio. Taking advantage of vendor consolidation, this is an interesting one. Ever since I've been in this business, which has been quite a long time now, I've been hearing that buyers want to consolidate the number of vendors that they have. They've really not succeeded in doing that. Now can they do that now 'cause there are less vendors? Well, in a sense, yes, there are less sort of on-prem big vendors. EMC's no longer in the market, you don't have companies like Sun and Digital anymore, Compact is gone. HP split in two, but still. You're not seeing a huge number of new vendors, at scale, come into the market. Except you've got AWS and Google as new players there. So I think that injects sort of a new dynamic that a lot of people like to put cloud aside and kind of ignore it and talk about the old on-prem business, but I think that you're going to see a lot of experimentations and workload ins and outs, particularly with AWS and Google and of course Azure, which is in itself, their cloud is almost a separate force. So we'll see how that shakes up. As I say, servers right now, Dell's got a very tough compare. I think Dell will be fine in the server space. Storage, it's all about simplifying the portfolio, they've got a refreshed portfolio focused on regaining share. They've rebranded everything Power, so their whole line is going to be Power by, if it's not already, by May of next year, Dell Technologies World. It's a much more scalable portfolio. And I think Dell's got a lot of valuation levers. They're a $92 billion company, they've got their current operations, their current P and L, their share gains, their cross-company synergies, particularly with VMware, they can expand their TAM into cloud with partnerships like they're doing with AWS and others, Google, Microsoft. The Edge is a TAM expansion opportunity to them. And also corporate structure. You've seen them. VMware acquired Pivotal. They're cleaning that up. I'm sure they could potentially make some other moves. Secureworks is out there, for example. Maybe they'll do some things with RSA. So they got that knob to turn and they can delever. Paying down the debt to the extent that they can get back to investment grade, that will lower their interest rates, that'll drop right to the bottom line, and they'll be able to reinvest that. And Tom Sweet said, within 18 months, we'll be able to get there with that two X ratio relative to EBITA, and that's when they're going to start having conversations with the rating agencies to talk about you know, hey, maybe we can get a better rating and lower our interest expense. Bottom line, did Wall Street buy the story? Yes. But I don't think it's going to necessarily change anything in the near term. This is a show me from Missouri, prove it, execute, and then I think Dell will get rewarded. Okay, so this is Dave Vellante, thanks for watching this Cube Insights powered by ETR. We'll see ya next time. (electronic music)

>> Announcer: Live from Las Vegas, it's theCUBE. Covering Dell Technologies World 2018. Brought to you by Dell EMC and its ecosystem partners. >> Welcome back, it's a beautiful day here in Las Vegas and this is theCUBE's live coverage of Dell Technologies World 2018. I'm Stu Miniman and happy to welcome, fresh off the keynote stage and for the first time on our program Jeff Clark, who is the Vice-Chairman of Products and Operations at Dell Technologies. Jeff, great to see you Thanks for joining us. >> Thanks, Stu. Thanks for having me. >> All right, so first of all Jeff, you know, you'll be a CUBE alum when we finish this, so for our audience that's not familiar-- >> Jeff: Do I get a badge? >> I've got a sticker for you actually. >> A sticker will work. >> Absolutely. Tell us a little bit about your background, you've been at Dell for a number of years. You now own really kind of the client and ISG businesses. >> Jeff: Sure. >> Which is a huge chunk of Michael's business. Give us your background. >> I'm an electrical engineer, by training. I went to the University of Texas at San Antonio. Got my double E degree. Out of school went to work for Motorola. And I joined what was PC's Limited when that was the first private name of Dell in 1987. I've been here for 31 years. And I've done a variety of things all on the engineering and product side. I've had the fortunate opportunity, I started in the factory as a process/test/quality/reliability engineer, we were Jacks of many trades at that time. Went to product development in 1989 and have been in that side ever since. I've worked in every kind of product that we had at the core design roles. I got to start a business, one of the funnest things I've ever done. I started the Precision business in 1997 from ground zero, me and a few of our top engineers and building that into the business that it is today. Expanded responsibilities, had a stint of running our enterprise business back in 2002 through 2005. Actually got to work with EMC back then. Dave Donatelli and many others back in the day. And now I lead a combined products and operations organization that has our CSG PC peripheral portfolio and ISG portfolio, our infrastructure products, as well as the fundamental supply chain that runs the company. >> Yeah, so Jeff, you've done it all and you've seen Michael through well, an amazing journey. >> We've worked together for a long time and it's been a heck of a ride. And to be honest, I think the ride's not over and the ride in front of us I think is more exciting than the past 30 years. >> Yeah, as we always say, it's a good thing, nothing's changing. There's nothing new to get those that love technology excited about, right? >> If there's any constant in our industry, and certainly in our company, it is change. And thinking about what's unfolded in my three plus decades at this is amazing to where we are today. But again, the future, as Bob DeCrescenzo said today, wicked cool. >> Wicked cool, absolutely. When you get up to Boston a little bit more, you can get a Boston accent. Yeah, exactly. Jeff, if we look at the Dell Technologies family, client side of the business is about half, the ISG is another 37%, so you know, you own major, major chunk of what's going on inside. Maybe give us a little bit of how you look at this portfolio. Are there interactions between the client side and the enterprise side? You know, we've seen most of the other big tech players that had both, either shed or split or, you know, kept the HPs and the IBMs of the world, no longer have both of those together. >> Yeah, those are interesting thoughts. You know, for us, our customers are asking us to provide a more set of comprehensive solutions. They want more end to end. And I don't see how you provide an end to end solution if you don't have one of the ends. And as trite as that may sound, I think it's the core fabric of what we're doing and certainly the role I have now leading this organization of being able to cultivate and build, I think, the world's leading and innovative PC products and peripherals around them. Same thing on the infrastructure side, where we have the privilege of being a leader in a number of categories. And then beginning to bring them together in new and unique ways. I referenced in my keynote this morning about how new entrants to the workforce are pressuring conventional definitions of how we do work and we deploy technology. So we have leadership, products, and now you capture or able to tie that together with VMware Workspace ONE or an AirWatch or RSA class of products and you begin to modernize the experience. How could you not do that if you're not integrating the pieces? Or a VDI experience where you take a thin client, or VxRail infrastructure, and some VMware Horizon software and build out a solution set. That's what our customers are asking us to do. And I think we're in a very unique position. In fact, I know we are, 'cause no one else has all of what I just described. >> Jeff, there was a main theme you talked about in your keynote, that IT can drive and change business and it resonated from what I'm hearing with customers. But if you dial back a few years ago, it was IT wasn't getting it done, IT wasn't listening to the business, we had Stealth IT. Why are things different now? What's the role of IT going forward? And how does Dell fit into that big picture? >> You know, Michael touched on it in his opening yesterday about IT and business have become much much more closely integrated to compete in this modern world. And I suspect some of this goes back to we've always thought of IT as a cost center, OPEX. Yet, over the past decade, we've seen some fundamental disruption of business that has been fundamentally IT-led. New technology-led. New business models that have been fueled by new technology. I think that modernization, whether it's modernization of applications, taking advantage of information at your disposal and turning that into useful insights to make better business decisions, is a catalyst for a reframing, if you will, of what IT does. And the role of IT in a business, and a role that IT can help companies be more competitive, or at a minimum, help them not get disrupted by someone who's doing it, as well. So I think that's what's changing and I think you're seeing companies embrace that. And as soon as you do, you begin to I think challenge what have you invested in, where are you going, how am I taking advantage of some of the new trends that I outlined maybe this morning. And it gets I think a pretty interesting time in front of us. >> Yeah, you know, you actually went through immersive and collaborative computing, IOT, multi-clouded options, offer to find anything and AI and ML. So a lot of new things. One area I'd like to touch on, we heard some great side from Allison Dew earlier this week. It's great when we have the new tools and the new technology but sometimes we wonder how does adoption go and how does that impact productivity and people's engagement? And I'm curious how we help the enterprise and help the client side, not just do something new but be more productive and move their business forward. >> Look, if start with the client side, I think it's pretty easy to think about productivity. Particularly if you believe this boundary between work and the workplace is fundamentally changed and think about where people do work. You're actually getting a much more productive workforce by allowing people to work when the want to work, where they want to work. And that traditional boundary of eight to five, whatever it might be, physically in the office. You now have access to all 168 hours in a week and people want to work when they want to work. And we find that the work more, particularly if you put technology in their hand that makes them more productive and they have access to what they need to do their job. You cast that forward into the enterprise and I think, look, at some level IT is hard and we have a huge role in making it much easier. How to simplify. How to make it more automated so IT practitioners can actually migrate to how do I configure this LAN? How do I set up this server? And interesting things and still important things, but can migrate to how do I take this data and turn it into information that helps my business unit, my company win. That's where I think, again, I think this migrates, too and we play a huge role in helping that. >> Yeah, there's a theme that, another thing came up in the keynote, data really at the center of everything and not just talking about storage, but you had McClaren up on stage talking about that. How do you see the role of data changing? How do we capture for companies? How valued data is? >> A tie back to Michael's opening, he talked about data being, if you will, the rocket fuel for this rocket change and digitization of our world, the digital transformation that's underway. And between Michael, Pat, and myself, we all talked about that happening at the edge in a decentralized manner. I tried to build upon that and say you hadn't seen nothing yet, there's a whole lot more coming. Well, if believe that, you have to start preparing today, and anticipating that. And again, I think we play a role in helping companies do that. I think it requires a modern approach. It requires an approach to understand how that information is coming in to be able to do something with it. That's where we're focusing, as I mentioned. In fact, I think I specifically said it's sort of the heart of our vision for IT transformation. The data's the gold. In fact, Pat may have said that yesterday. Now, the challenge will be how do you take all of that data sort through it, figure out which pieces are most valuable and then get them to where they're supposed to go to make decisions. That's yet to be seen how we do that but I'm encouraged, given our track record in this industry. We'll find ways to do that. Engines like AI and machine or capabilities like artificial intelligence and machine learning are certainly a vast step forward of making sense of all that stuff. >> Yeah. Jeff, I wonder if you could bring us inside some of your customers. You know, where do you find some of the strategic discussions happening? I think back to early PC or server days, you know, who bought boxes versus now, it seems like more of a C level discussion for some of these large trends that you're seeing. What are some of the big changes that you're seeing in the customers and what are some of the biggest challenges that they're having today? >> I think you mentioned it. One of the things that I've seen in the customer interactions I've had in this new role and getting to see more and more each and every month. The conversations I have, or participate in, are seldom, if ever, about the speeds and feeds of this, the performance of that. It's about here's my business problem, how do you help me? How do you help me get this done? How do you provide me a set of solutions to get to where I want to go? By the way, if you have advice, recommendation to help us, they want to hear that. So they want to access our technical knowledge base across our organization. But again, I think this theme that I tried to say a couple of times this morning around outcomes, so it's an outcome-driven discussion. It's solutions. It's end to end. And how can you help me? Probably, I guess, I could generalize them to fit those four attributes. >> Great. Last thing, you talked about the modern data center. What's that mean for your customers? >> To me, it's all about putting at the disposal of our customers a set of technologies and infrastructure solutions and services that allows 'em to take advantage of that data. Allow them to have the data services they need and the underlying horsepower to do it in a fairly intelligent way. Hopefully automating a few of those tasks and giving them the agility and flexibility they need. >> Yeah. Jeff, wonder if you could speak to really, the engineering culture inside of Dell. Think back to before Dell made a lot of exhibitions, it's like, oh well Dell was a supply chain company, people would say. And then a number of acquisitions came through, you know, you lived with a lot of the engineers, you've got more engineers through the EMC merger. Sometimes people that don't understand, they're like oh, it's just all going to commodity stuff, software defined anything means that infrastructure doesn't matter. You know, where does the Dell engineering culture differentiate and position you in the market? >> You know, it might not surprise you, given my background, that certainly we are a supply chain company. We were doing hardcore engineering for a long time. I look at some of the advancements we made back in the day in leading the industry. I think we have a long distinguished track record of doing that. And now with the combination of the two companies, I look at this organization and the engineering capability we have, I like my hand, we like our hand. The trick is, is to getting our teams to innovate where we can differentiate, where we can help customers solve problems. And part of what I've been doing across this community of engineers, is doing that. Pivoting resources to the most important things. Pivoting resources to where we can differentiate. Pivoting resources where our innovation can actually distinguish, or shine against the competitive set. We've seen this in every category, PC, server, storage. And many of these cases, we start from the privileged position of being the leader. So think about when we get everything aligned to be able to innovate and differentiate, I like my hand. >> All right. Jeff, I want to give you the final word, coming away from Dell Technologies World this year. There's a lot of product announcements, people are going to learn a lot in the sessions, but what do you want people to come away with? Understanding the Dell portfolio and Dell as a company, as a partner? >> Well, if I could leave any parting statement, and make it very specific to the ISG portfolio, I talked about power, our power brand now being the brand of our future state ISG products, walk away with a commitment to build a power branded portfolio that is going to be innovative, differentiated in the marketplace, and something that helps our customers with. That's our commitment and that's what we'll deliver going forward. >> All right. Jeff Clark, thank you for sharing with us all the information, your update. Your first time on theCUBE, but I'm sure we'll have you on many times in the future. >> My pleasure, thanks for having me. >> All right. We'll be back with lots more coverage here from Dell Technologies World 2018. I'm Stu Miniman and you're watching theCUBE.

>> Narrator: Live from Las Vegas, it's theCUBE, covering Dell Technologies World 2018. Brought to you by Dell EMC and its ecosystem partners. >> Welcome back to Dell Technologies World. This is Dave Vellante with Stu Miniman, and you're watching theCUBE, the leader in live tech coverage. We go out to the events, we extract the signal from the noise, break it all down. Stu, this is our ninth year at Dell, EMC, Dell EMC, Dell Technologies World. >> Yeah, I mean Dave, and Old EMC World was one of the first places I met you. I think it was like 2008 or something like that. There was like a little blogger lounge. >> Yeah, this is 15 for you, I think it's 11 or 12 for me. >> Stu: Yeah. >> So it's been quite a run. I mean you remember the early days of this event. It was really a technical show. And I think that's probably why it's had such staying power. Because the roots are embedded in technology, but wow what a long way we've come. >> Yeah, I mean, first of all, Dave, theCUBE, oh my god, I can't believe, double set here. We were looking at photos of us shoved in the corner with horrible lighting and no good cameras, and we've got a massive crew here. You're always looking sharp as usual, Dave. >> Thank you Stu. (laughing) >> Yeah, I mean gosh, that first year, I was wearing a vendor polo. (laughing) No hoodies back then. I wear a hoodie some now. But it's interesting for me, especially, since I spent 10 years working at EMC. I've been at Dell World for four or five years, kind of the mash up of those two is the biggest tech merger we've been covering since it was announced. This show has a lot of Dell overtones. So you and I have been that, Dell World was originally that CIO event. You had people like Bill Clinton and Elon Musk up onstage here. At this show we've got people like Walter Isaacson up onstage, I love reading his books, listen to the podcast. >> Dave: Andy McAfee. >> Andy McAfee, who you and I have interviewed a few times, talking about the second machine age, so some of those kind of high-level business issues as opposed to the deep in the portfolio, Dave Donatelli upstage walking through 37 different product announcements. >> So back then did you have hair or was this... >> Yeah, come on Dave, I was, when I started at EMC I was 7 foot tall and had hair. You know, the years of tech beat me down. >> So let's look at this merger, Stu. We go back, we've said, you and I have talked about this a lot. It was inevitable. You had Amazon coming in hard, driving margins of the enterprise down. Something had to happen to HPE, something had to happen to EMC, these infrastructure companies, and we said at the time that what we were going to see is 19% gross margin company married to the 16% gross margins company, come somewhere together in the low 30s gross margin. That's exactly what we've seen. The thing that's a little bit surprising to me is we've seen growth out of Dell. I've seen a lot of growth out of many enterprise infrastructure companies that are large and incumbents. Obviously people like Pure Storage grow very quickly. But at the time the merger we pinned them at slow 70s and they're now $80 billion, and we want to break that down a little bit. But did the growth surprise you? Particularly the client side grew. And the storage side declined multiplicitously. >> Dave, as you've been breaking down and I've been watching you, half of their business is the client side, and when they call out 21 consecutive quarters of growth, well if half the business has grown, that's good. And VMWare, doing well. We just interviewed Pac Elsinger. You know, VMWare's clicking well, integrating with the cloud. There's a lot of change there. Just one quick thing, talk about EMC. For me, one of the saving graces for EMC is they never bought a large services organization. You know, back in the day it was like, oh they were going to buy Accenture. There were some of these things. You look at the companies that have 100,000 services people, they're having to trim down, they're having to spin things out. You know the Dell spin merge, is Dell did spin off per row. So, while there have been some consolidation and some reductions since Dell and EMC have come together, you know, overall they're growing, there's good, there's new areas that they're putting R and D together. >> Just to give our audiences a little sort of overview in case you're not that familiar with what Dell has become, Dell Technologies, I mean, essentially you're looking at an $80 billion business. The core client side and infrastructure of the enterprise side comprised about 69 billion. VMWare's almost 8 billion, and then other, you know RSA, and well, whatever was back then pivotal before the IPO, etc., you know, Dell Financial, etc., was about 3 billion. That gets you to 80 billion. As you said, the client side is about half of the business. It's growing very nicely at about 7% a year, and it's about five and a half, 5.6% operating income. The ISG business, which is the core of, the classic EMC, all the server stuff, all the networking stuff. It's about, let's see 30.7 billion, almost 31 billion. The servers and networking side are growing at 20% a year. The storage is declining quite significantly. Double digits, they're sort of moderating that decline. And it's a higher percentage operating income, as percentage of revenue about 7%. You'd like to see that significantly higher. Now you go to VMWare, right? VMWare is 10% of the company's revenue but it accounts for half of the company's operating cash flow because it's margins, operating margins, are way up, high 20s, low 30s-- >> Yeah, I mean Dave, it was, I remember VM World, I think it was two years ago, I went to Michael, I'm like, "Michael, people think you're going to sell that off." And he was just foaming at the mouth. He's like, "They're stupid, they don't understand math." >> Dave: Well why would he? >> You know VMWare absolutely-- >> I mean, there's a 35% operating margin business, I mean it's a fantastic business. >> Dave, to be honest, everybody watching, is VMWare went through a little bit of a downturn. You know, the show two years ago wasn't great. >> Dave: Okay, right. >> But you know, NSX is now cooking, vSAN's doing great. There's lots of good areas that they have there. And the cloud picture. I mean turn back three years ago, Dave, VMWare was making statements like, when the old bookseller wins we're losing. EMC on their side was kind of trying to play a little bit with public cloud, but it was well understood in the field, public cloud is your enemy. And the market has matured. It understood that companies are figuring out their cloud strategy and their application and data strategy. And it's not a winner take all, zero sum game, everything goes to one of the top three or four public cloud players. >> So I got to ask you, so you feel as though that's sustainable, right? 'Cause I got to say, if I were AWS I would be looking at this saying this awesome. I need to get into the enterprise. I got to deal with the number one enterprise infrastructure player in VMWare in terms of its brand and its presence. I mean half a million customers, I think, is the number. I'm very excited. The flip side of that is the reality is, that deal for VMWare has been a huge tailwind for them. So help us square that circle. >> Yeah, and Dave, it's nuanced and complicated. Because when I talk to service providers, when I talk to the channel partners here with VMWare and with Dell, they're all starting to work more and more with VMWare. So you know, short-term, next two to three years, I think there's a great tailwind for VMWare to get involved here, but my concern is long term that people get on Amazon and they say, this is great and look at all these services and all of these things, maybe I don't need to pay for my server virtualization anymore. Maybe I don't need some of those pieces. What do I need in my data to center, sure I'll continue, but it's slowly declining like you mentioned. Storage is on a bit of a decline overall. So it's death by 1000 cuts. It is that replacement. For me it's always watching that data and that applications. It is tough, like super tough. David Floyer always say migrations, don't do 'em. You're going to go through so much pain, especially things like database migrations. But it is something that's happening. It's going to take the next five to 10 years as we look at these shifts. People are building new apps all the time. That tends to favor the public clouds, and there's so much happening in that space, but you know, the whole Dell family including Pivotal and VMWare, Virtustream, RSA, there are places where they win and still do well because, remember of course, none of these companies, it's not like they have 75% market share. So you know, if you ask Michael Dell, number one thing is he wants to take market share from HPE, and if he continues to take some of their market share it can help offset some of the things that he's losing to the public cloud. >> And well you have to take market share in a market that's not growing that fast. But you know, as we say on theCUBE many times, these disruptions are not binary, right? We still have mainframes for example. In fact, they're helping their tailwind for IBM right now. So you can put forth a scenario where yeah, a lot of these cloud native apps are going to be built in AWS and a lot of VMWare customers are going to do that, but as we often say, organizations can't just take their data and stuff it into the cloud, the public cloud, right? They've got to bring the cloud operating model to their data, to their business. We ask Pat, is it just use case specific, the Amazon Cloud and IBM I guess as well, or is it really bringing that cloud experience. And you know, he definitively said it's both, and I presume you buy that? >> Yeah, and I mean, Dave I listened to Michael DEll's keynote, and he said their goal is to integrate from the edge to the multi-cloud world. There's things that I want to understand this week. You know, I talked to some of my, you know, the real pellor heads here, that do really advanced type of technology. There are sessions here on containers. There's probably people talking about serverless here at the show. So they're looking at those next generation things, especially the VMWare side of the house is there. At the edge, you and I got to hear really the IoT strategy that Dell laid out towards the end of last year. Edge, absolutely huge opportunity, and there is no clear leader today because it's very early here, so how real are some of these opportunities to really expand beyond the traditional market because look, Dell's doing great in servers, that's the core of their business. It's the main driver for a lot of it, and you know, as Michael's happy to say, he said, "You know, hey, the PCs "and laptops are still doing well "two decades after IBM called it the post PC world." >> Thank goodness for client side. I mean that has been the savior here. What do you think, I mean you were at EMC for a number of years. What do you think happened to the storage side? That was a surprise to me because EMC is very rarely, if ever, a lost share in storage. They've either held share or bumped it up, doing acquisitions and so forth. But you had kind of Tucci with his hand at the wheel, doing tuck-in acquisitions, really focused on maintaining that share. Do you think it was just the disruption of the merger? Was it just inevitable that you had just the storage business getting too long in the tooth? What happened? >> Yeah, I mean, Dave, and there are so many things. Everything from the quarter shifted. So you know, it was going to take the end of quarter, which EMC always had a huge hockey stick on, shifted by a month. So some of it it was just financial where it landed up in the quarter, some of the big shifts that are happening in the market. EMC was very early on flash and did well in it, and they've got the VMAX and they've got the XtremeIO, and they're doing well there, but there's lots of competition there. Hyperconverge, once again, Dell and EMC doing great there. But there are some of these macroshifts and clouds eating away at it. So I don't have a single answer. There's so many different pieces. You know, storage has always been a knife fight. One of the things I want to understand this week, Dave, is the old EMC, well, we're going to have nine or 17 different products, and they'll all overlap. You wonder if Dell is, I really expect that Michael Dell, Jeff Clarke are going to streamline that portfolio. Profitability, make sure that they're getting the market share that they need because the old model might have worked in a growing market, but in a flat to slightly negative market it's not going to make much sense. >> And you already said that, I mean you made the point, Michael's keynote, the keynotes generally this morning, no question had Michael's fingerprint on them. That's much more like a Dell World than a traditional EMC World. We had Jeremy and Jonathan coming out on motorcycles and all kinds of crazy stuff. You know, much more staid. I think conservative, sending a message of steady. We're here for you to support your digital transformation. We are your infrastructure partner, so I mean, I think it's clear who's running the company. Alright, Stu, well, looking forward to this week. Three days of wall-to-wall coverage, double CUBE sets, check out thecube.net for all the live coverage. Check out siliconangle.com, wikibon.com as well for all the research. We'll be back right after this short break. We're live at Dell Technologies World 2018.

(uplifting music) >> Hello, everyone. Welcome to theCUBE Conversations here at the Palo Alto Studios for theCUBE. I'm John Furrier the co-host of theCUBE, co-founder of SiliconANGLE. We're here for Thought Leader Thursday, and my guest here to talk about the cloud, earnings in the industry, and also all the mega trends happening is Tarun Thakur, who is the co-founder and CEO of Datos.IO, hot start up out of Los Gatos, California. Welcome back to theCUBE, great to see you. >> Thank you, John, thank you, good to be back. >> We love having entrepreneurs come in because you guys are on the cutting edge, you're sweating bullets, you're stressing out, you're building the company. You guys are still in a growth mode, which is great, congratulations. >> Thank you. >> But you're also playing in the cloud game. You're in the ecosystem. We're seeing massive visibility now into the numbers. You see the cloud earnings just came out. Amazon continues to crush it. Microsoft, they're bundling 365 and they're juicing the numbers up but we all know what's going on there, but still, they're looking good. >> Correct. >> And then Google's a dark horse with really that developer platform looking good. So the big three are popping. But, you know, Facebook just announced a $10 billion quarter. They're a cloud too, not to be reckoned with, but kind of not in the pure infrastructures of service. So clearly the market has shown that there is some stability. We're in the second, third inning maybe of this cloud game. What's your take on the marketplace? >> No, I think this is an excellent topic. Thank you, John, for again having us back. Always great to be here. So, you know, the way I think about what's happening really in the cloud is really from three dimensions. Number one, you know, you rightly said $20 billion is what Amazon is on a run rate business of. We personally believe it's still the first innings. It's not the second or the third. You know, they've seen a massive adoption as its called the product market for developilabilty, where the developers, where the application developers, where the SMBs of the world, but the enterprises are just starting to scratch the surface of the cloud. We believe the cloud is in the first innings. The real growth. >> Enterprise cloud. >> Enterprise cloud is just beginning. Just beginning, right. I was, you know, I'll give you quickly an example. I was out in Denver visiting a customer, which is the world's largest, one of the world's largest, shipping companies. They are moving as fast as possible to the cloud, but this is their first foray. But their first foray is not five terabytes or 50 terabytes. Their first foray is 50 petabytes of data. >> So they're moving big time. >> Oh, they're moving big time. >> This is not a toe in the water. >> No, they took two years to evaluate it, and then they go big. >> Right, so talk about the trends here because let's tease through the numbers. I looked at all the earnings, and again, Microsoft is doing well, but remember, they're bundling Office 365, which kind of puts Google unnoticed because Google's got a huge presence that they could roll in. So there's a lot of number games going on that the analysts are kind of pointing out, and we're pointing out, but Amazon has just been crushing it on overall performance. >> Right. >> I mean look at the compute that's going on, the scale, they've got thousands of enterprise customers, and still there's a lot more growth there because the on-prem, true private cloud, is still growing. >> That's correct. >> So what is the state of the enterprise now, and who is using the public cloud more, and who's using it less, and why are they doing that? Is it a makeup, is it a DNA culture? Is it just evolution? >> No, it's just evolution, John. I think the enterprises are finally latching on to this, I think they are, but they're latching on it in a big way. Right, and so that's the second point that I sort of wanted to highlight that while you call Google the Trojan horse, and Amazon being the lead, and then Microsoft somewhere in the middle, let's not forget about Oracle cloud. Larry Ellison is a formidable competitive spirit. He's not going to give up. He has not given up so far. They are going to build an Oracle cloud. There will be a-- >> Well they have an Oracle cloud. >> They have an Oracle cloud. But, you know, having versus really truly-- >> It's so funny, Larry Ellison called Salesforce a fake cloud, but a lot of people are calling Oracle a fake cloud. >> A fake cloud. >> But Oracle on Oracle, we've entered Dave Donatelli, Larry is the only one that hasn't come on theCUBE. Oracle cloud works great with Oracle. >> Correct. >> They're trying to put the message out there that Oracle is working well with cloud native. They're in the Cloud Native Foundation now. >> Sure, sure. >> CNCF, so you stayed in Oracle amidst Avery and folks over there doing a great job, so, but they're not getting the word out. Oracle's not getting the job done because no one sees Oracle as a cool cloud native company. >> No, and they're not. And I think that's a very valid point. But what I'm saying is that there will be room There is oxygen in this market to get the fourth and the fifth cloud provider. There will be specialized clouds. And there will be places for that. Because Amazon is not an answer for all. It is definitely an answer for majority of your workloads, but the HPC, the high performance computing workloads, the GPU workloads, the Oracle. You know, you look at the number one database in the cloud that Amazon claims openly is MySQL. It's not Oracle. An Amazon database business, if they're making 20 billion in total AWS, I will tell you about 40% or 50% of their business is database. And that's not Oracle. So think of five to $10 billion of revenue and money that Amazon is making is not Oracle. >> What's that mean? Does that mean Oracle's losing money or. That's leakage on Oracle's model? Is that Oracle still has an opportunity? Cause they still control a lot of databases. >> Thank you and, thus, thank you, thank you for asking that. It's not that Oracle is losing money, it's the next generation applications, it's the cloud enabled applications. >> So it's growth, it's pure growth. >> It's the new oxygen, it's the new wealth creation. >> So it's like the classic example when the internet started. Web traffic increased because more people were using the internet. >> Correct. >> So what you're saying is that cloud has created a more database market. Amazon's getting a big chuck of it there, but Oracle still has the database market. >> For example if you look-- >> And SAP too. >> And look at the third reason of these clouds, if you look at AIML, right, these applications, the Alexa, the Siri-like applications, and the applications that will be built on top of this, will be built in the cloud. You're not going to start building Alexa AI application on prem infrastructure. That is not happening. And that's the third part of this whole cloud. We say it's $20 billion and we have barely scratched the surface on AI, ML, and blockchain. And all those applications that will be built, will be built on cloud elastic infrastructure. >> Alright, so what's your take? I mean, right now Amazon's winning the cloud game, Oracle, I wouldn't call them number four, but they're trying to juice the numbers up as well, but they clearly have an installed base, and they're not going anywhere. >> Tarun: Captive audience. >> SAP is going multi-cloud, so you're seeing SAP starting to put their, looking at saying, hey, we want our customers to run Oracle SAP on any cloud, so they're clearly thinking multi-cloud. Who else is out there? Alibaba cloud is now coming to the US in San Mateo, so they're number seven cloud but four worldwide, right? >> Tarun: Correct. >> So, pure worldwide numbers, Alibaba's four. >> Yes, so I'll start with Ali cloud. You know, you talk about Alibaba, their cloud is called Ali cloud, and fortunately, as you're building a company, as you talked about earlier on in our offline conversation, you get to meet all the way from governed DoD's and DIA's of the world too. We worked with Ali cloud executive team just a few weeks ago and they were out here in the bay area. Didi is the de facto car hailing company, it's not Uber, in China. We believe Ali cloud will be that in China. There will be a fifth cloud, there will be a sixth cloud. To my point, there will be specialized clouds. Amazon's not going to win this entire pie. And there will be clouds outside of US markets. >> Well I had a chance to tell Karen Lu and Dr. Min Wen Li as well as Dr. Wong at Alibaba in China a few weeks ago, and if you look at what they're doing in China, it's not just cloud. They've got eCommerce, they've got the city brain project. They're looking at holistically around data. Data's fundamental to their vision. I think that's consistent with what we're seeing in the US. A little bit more broader scope because IT here is a little bit more, has more legacy. China's got much more focus and got some government controls in there to get some latitude to do the right things. But the consumers are moving faster in China. If you look at the mobile growth. >> Absolutely. >> John: Huge indicator. >> Look at the Didi's growth. Didi's growth is more faster than Uber's growth. Right, and they've built a massive, massive company out there. >> IoT is pretty hot in China, you're starting to see that. I mean, this is a re-imagining of cloud, so you guys are in the middle of it with back on the road recovery. So as a CEO you're in the body swerving, car's that are flying by you, you're trying not to get run over. You've got a good market opportunity with the cloud because GDPR's coming right around the corner. >> Yes, yes, absolutely. >> So what's your strategy? Are you, I mean, I'm paraphrasing, not dodging cars, but, I mean, as a start up you've got to worry about your success might kill you, but how do you manage the business? I mean, how are you looking at this? Because you've got a great opportunity, and it's a growth market. >> Thank you, thank you. No we're lucky and fortunate that some of the decisions we made back four years ago people used to laugh, why are you going in this market of cloud data applications and isn't eight out of $10 dollars being spent on Oracle. Why would you go off to that. And, we're like, guys that's today. Where the puck is going. The puck is going towards the cloud and cloud applications. And to answer your question, we've found beautiful beautiful excellent product market fit. A little bit about the company. >> John: What's the use case? >> We're just classically going backup in recovery use cases. Built for cloud native applications. So, for example, I talked about the number one database in the cloud is MySQL. The number two database on prem is SQL Server. Take a guess on number two database in the cloud. It's MongoDB, they just went IPO two weeks ago. Number two database on Amazon is MongoDB. Who thought that five years ago? >> Well Lamp Stack its just open stores driving a lot of this action. >> So, I'll give you an example, one of our biggest, biggest customers which we're going to be announcing very soon, but take the liberty to share here, OpenTable. OpenTable, we are protecting OpenTable. 2.5 billion documents. That's yours and my reservation. That's your and my reservation that we make for a beautiful restaurant. >> Yeah, and if I change that reservation I've got to have that backed up, but want to bring it back. You guys are doing that. So what's the scale of the OpenTable? Ballpark it. >> So all their entire reservation applications. >> The whole thing. >> I probably will not talk about the datasets. You know, but their entire geo-distributed applications. You could be sitting in New York or you could be in London. >> And in which cloud are they using? >> They are all Google cloud, they're on prem. So they're truly private cloud and public cloud. So I call that a multi cloud data management space. They've a ton of stuff still on prem. They're not going to diverge away from that very quickly. >> What's the Google situation? Sam Ramji is over there doing a great job. Google Next is coming up soon, next year. Great traction, but still people aren't considering Google as the white glove service because, well, Amazon's not really known for that either, but at least they have a lot more, thousands more customers than Google does. >> Yeah so I think that the problem is twofold, in my humble opinion. Or the observation is twofold. One, I think Google needs to amp up their game around cloud and cloud messaging. You open Amazon AWS.cloud website, and you open GCP website, you could just see the differences. How Amazon talks about cloud. You're still selling compute storage network, but they talk business agility. What took a month for SQL Server now takes two hours. That's what you're selling, right? >> You're selling speed and you're selling automation, and you're selling value. >> Orchestration. So I think Google has to amp up their game, and amp up their game around that. >> Are they too technical, too geeky? >> Too nerdy, too geeky and still talking about infrastructure. >> Yeah sure, and I think Sam knows that too. >> And I think second part, which is, you know, they absolutely need to amp up their game not go head on and follow Amazon, find the newer applications and new use cases, where they can go ahead of Amazon. Whenever you're playing Art of War, either you can follow somebody or you go establish your own base. >> If they go frontal attack on these guys they'll lose, they've got to play the shadows. I think they can slingshot around them. I think the developer traction they have is strong, even though Amazon's got strong developer traction. Google's got some goodness with TensorFlow, they've got some great technology, but they've got to stop the game of we're Google, go with us. Enterprises don't work that way even though I get why they say that cause it's true. At some level from a alpha geek perspective, but this isn't the land of alpha geeks, these are real people that have jobs and enterprise IT that won't transform. >> They're real enterprises, who have real DBAs, and real server admins who really care about data services. Going back to the comment-- >> Not just the shiny new toy. I need reliability, proof. >> I want durability of this data. Don't just tell me I can get compute 10 times cheaper than Amazon. That's not what I care about. Change my, talk my language. I care about data services. I called data driven enterprises. >> Okay, as you guys go out and talk to customers, give me the anecdotal view of the landscape of customers. Because obviously the earnings came out. We saw, again, Amazon continuing to do well. But they've got some competition. We just laid and unpacked that. Customers now see this. What's kind of the the conversations in the boardrooms, and then in the trenches in IT and enterprise as they transform because IT is not a department anymore in the future enterprise. It's now a fabric of all things in cloud native. What are the conversations? Are they slowing down, obviously they want to go faster, is it a personnel issue? What are some of the conversations? >> I'll give you real example. We presented recently to a big, massive federal government agency. We cannot take their name out of legal. >> John: They spend a lot of money. >> Out of Washington, D.C. out here in the Bay area. >> CIA. Or, NSA. >> You're looking at the start-ups in the Bay area, and they were like, look why had we ever adopted the IBMs, the mainframes, and the EMCs, and the Dells of the world. We also know the wealth of the innovation is here in Silicon Valley. Right, so they come out once a year. And I can tell you, John, spending two hours that we did with them earlier in the week, and they are accelerating their journey to the cloud. Things that were foreign terms like micro services, that's how they want to build these federal agencies now. Every application has to have microservices. They are not truly there. I'll tell you that. They are not there, but that is top of mind for the CIA. >> And gov cloud has grown very fast, fedramp, all these services. >> Amazon called it Commercial Cloud Service, c2s, built for the government. And that entire team was here. >> Well Tarun great job. Congratulations on your opportunity we just talked about. Datos.IO. You guys, it's Datos.IO if you want to check out the website. You're going to be at Reinvent, you're going to come on theCUBE, we'll be there with two sets. Again, I have 50, you're doing Amazon, love the community there, they do a great job, Andy Jassy comes on, great group, Trace Carlson, among others. What are you expecting to see this year at Amazon? Besides the fact that it's going to be crowded and certainly the show of the year in terms of cloud. >> Momentum, they're going to accelerate the momentum. The amount of services they're planning to announce from, because we work with the team very closely, and the amount of acceleration they're showing, the new partners coming on board, and the partners like us who had one customer, and now we have 20 in Amazon cloud. You know, we just became an advanced technology partner, they understand that. >> So you're happy with how they're working with partners? >> Oh we love Amazon team. We became an advanced technology partner. They drilled us down for three months to prove themselves, yes, Datos can run on their infrastructure. You know, they want to go fast, but they want to go diligent fast. >> Yeah, we love Amazon too, of course. Our crowd chat solver's on their website as a case study using some of their stuff. Thanks so much for coming on, your final thoughts. Earnings, cloud, where are we? >> This is unstoppable force. It's an unstoppable force, we're in the first innings. There's so much opportunity ahead of us. And we couldn't have picked a beautiful market to than what we did. >> And true private cloud as we keep pointing out, turns out that's playing out. On prem activity's high. Your thoughts on on prem? True private cloud? >> It's going to survive, it's going to survive. But it's not going to be the growth place. >> But we think it will grow with the SaaS. >> With the Saas, I agree, but infrastructure. Infrastructure is not going to be growing. So that's our two cents, but you know, we'll be back in a couple of weeks, we have a phenomenal exciting product launch coming up. >> I just tweeted on Twitter this morning $1.5 billion is going to be coming out of on premise, non-differentiated labor operations. Which basically means, the rack and stacking some of these jobs are going to go away. But the growth is in automation, AI, and machine learning, and some SaaS tooling. >> Cloud applications. >> Cloud operations business models growing on premise. >> And those dollars are going to leak to the cloud. >> Yeah, and cloud, it's all to the cloud. Tarun, thanks so much. >> Thank you. >> Co-founder and CEO of Datos.IO. I'm John Furrier here for CUBE Conversation in Palo Alto at our studios, thanks for watching. (techno music)

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

>> Narrator: Live from San Francisco, it's TheCUBE! Covering Oracle OpenWorld 2016. Brought to you by Oracle. Now, here's your hosts John Furrier and Peter Burris. >> Okay welcome back everyone, we are here live in San Francisco for Oracle OpenWorld 2016. This is SiliconANGLE Media's TheCUBE. It's our flagship program, we go out to the events and extract the signals and noise. I'm John Furrier, the co-CEO of SiliconANGLE Media. My co-host, Peter Burris, head of research for SiliconANGLE Media and also the General Manager of Wikibon Research. Our next guest, CUBE alumni Amit Zavery, Senior Vice President and General Manager of Oracle' Cloud Platform, heavily involved in the platform as a service, where all the action is, as well as the cloud platform. Amit, great to see you, welcome back. >> Yeah, thank you. It's always a pleasure to be here. >> A lot of buzz, we're on day three of wall-to-wall live coverage, we got you at the end, so we have the luxury of one, getting your opinion, but also to look at the shows. So first, as day three kicks in, the big party today with Sting and the concert, but then the workshops tomorrow, pretty much ends tonight for the most part. What's your takeaway from the show? What's your vibe this year, what are you seeing, what's popped up at you at the show this year? >> A lot of things, I think one thing is there's a lot of maturity into adoption of the cloud, right, so we're seeing a lot of customers I speak to nowadays are talking about next, broader implementations, adding more and more capabilities into their services, no more just trying to try out things, a lot of production workloads been moving to the cloud. So very, very interesting conversations. And also I'm seeing a lot of different kinds of customers, typically, of course Oracle being in the very large enterprise software player, used to have large companies as the couple of folks I used to meet on a regular basis. Over the last couple of years, I'm noticing a lot of smaller companies who are probably, a lot of times I have to look up who they are, but they are doing very interesting projects, and they are coming here and talking to us. So I'm also seeing a very different audience I'm speaking to than I used to before. >> We had Dave Donatelli on earlier, Executive Vice President one of the main leaders now on the go-to market for cloud and all the converged infrastructure, and it's very clear to his standpoint, he's overtly saying it, putting the stake in the ground that if you run Oracle on Oracle hardware, it will be unequivocally the fastest, and it's an unfair advantage, and they've got to lap the field is what he said. Okay. Same for Platform as a Service, you guys have some success now under your belt this year from last. >> Yes. >> But it's not clear that Oracle has won the developers' hearts and minds in the enterprise, and winning the developers in general, Amazon has had that up their sleeve right now, but yet, you guys have a ton of open source stuff. So Platform as a Service is really going to come down to integration and developers. >> Yes. >> What's you guys' strategy there, and how do you see that playing out, because you need to fortify that middleware, that integration, that's APIs, that's a developer-centric DevOps way. What's your strategy? >> A lot of things. The one thing which you see from our Platform as a Service, we have been from the day one building it on an Open Standards technology, which is again end-to-end very broad and deep functionality. And we had a lot of history building out a platform, and we have thousands and thousands of customers who successfully deployed that. So our strategy going forward and what you see some of the announcements recently, as well as some of the use cases you might have heard from our customers, are customers who are really trying to install a broader platform requirement, not just trying to build an application, but be able to integrate them, be able to make sure they have ability to kind of take the data from it and be able to do analysis with it in real time as well as batch, and be able to publish that information whenever they choose to, and then work that in conjunction with any infrastructure as well as with any services, Software as a Service, systems applications. So this plays very well with our Software as a Service customers, they need a platform extension, so that's the developers we go after, we go to developers who are really also building brand new applications and need a platform which is Open Standard-based, and which is broad and deep and well-integrated. So that's really what we are seeing a lot of success from. So Amazon no doubt has success on the infrastructure side, but we have customers in just one cloud source to move the hardware, of course then allowing them to move up in the platform space as well, but they have very limited set of things which they still offer. We've been doing this space for many, many years, and now we may be able to provide the similar kind of breadth, which is to have on prem in the cloud, cloud natively built, with the right kind of APIs, right kind of interfaces, but a little higher-level services, so it's not very granular where you have to go and compose 15 different services together and build your application. I provide you as a customer, to a customer a very ease of use, and much more solution-centric platform. And that's really the differentiation we have there. >> So less moving parts on the composability, if you will. >> No we can do as granular as you want, but we also have composed in a way which is like okay, if we are looking at integration, for example, right, what are different kind of patterns you need in integration? You might want to be able to it to a file, you might be able to do it B2B, EDI basic integration, you might be able to do it through a process, you might do it through a messaging, might do a data integration. So we provide you integration cloud, versus saying that 20 services go at it, and then tomorrow you might not still understand what to use, what not to use. Customers can consume what they like in the integration cloud, and pay as they go in terms of what functionality they pick up. But as a developer, I don't have to go waste my time to figure out and learn the different tools, different stuff, and figure out how to make all these things work together. >> So the palette is becoming more enterprise-friendly. >> Sure. >> And on top of that, you're also providing a set of capabilities in the past platform that kind of replicates the experience developers have enjoyed certainly in the open source and the other world by making it easier to find stuff, to discover stuff, and then exploit and use stuff through the variety of different services. So as you look forward, how are developers going to change the way they spend their time? Moving from code, moving from composition. As we move forward, where will developers be spending more of their time? >> I think that over time, they should be spending time just writing either the code, or kind of extending the application they have. They shouldn't have to worry about DevOps, they shouldn't have to worry about all the underlying technologies required to build an application. They shouldn't have to worry about all the testing and the QA, which should be all part of the development life cycle, which we provide automated in the functionality. So developers, they should worry about what language they want to use, or what platform they want, what kind of framework I like, and who I'm trying to cater to, and what my user interface should be. And beyond that, all other things should be provided from the platform in terms of automation, in terms of simplicity, backup recovery, patching, upgrade, all that stuff should be automated as part of the platform provider. And that's a service we provide as part of our platform as well so that developers can focus on writing that application. And we make sure that we give you the choice, where you can pick languages you want, you can pick the standards you want. Open source and all the different things you might want to pick from, or something we have provided as well. But we give you that choice, it's not one or the other, and tomorrow if you want to move somewhere else, we'll make sure you can do that, because we are not locked into one way of doing things. >> So I know Oracle is historically very focused on professional development, but business people, well development is starting to happen elsewhere in the organization, >> Amit: Yes. >> not just in the professional developer community. So what used to be like building a spreadsheet, now has implications for some of the core digital assets that the business might run. How do you anticipate the definition of the developer evolving? The role of the developer, being able to provide these services to folks who historically might not have been developer, have them also be relevant, and at the same time collaborate with those pros. >> No, that's a very interesting point you raise, because I think more and more this idea of citizen developer, no code developers, a low code developer, whatever you want to use in industry. Many, many of them who want to be able to do quick and easy web building, their functional requirements and deliver that without having having to call an IT somebody to code it for you, or having to learn anything to code. And we have really made sure in a Platform as a Service we offer, there's lot of ease of use and quick drag-and-drop kind of tooling, we recently announced a visual code project, which is based on our application builder, composer kind of a service where you can drag and drop and create a very simple, easy to use application without having to write any code. Similarly, the integration side we do the same thing. We provide recipe-based integration, where if an event happens in one application I want to move that information to another application. As a developer I don't have a right to any single line of code. We provide the recipe or you can build your own recipe. I've shown it to my 13-year-old daughter. She was impressed, she did something from Instagram to Twitter by just using this application on a mobile phone. So similar, that's the kind of people we're going after from the line of business and business analyst, who don't want to write code but they have a business requirement and how can I make it easy and simple to use. So we're doing a lot of that work as well, and that's a very important part of our development community. >> Amit, talk about the competition, I mean obviously Amazon web services is clearly up there. We're kind of like thinking that it's more of a red herring the way it's talked about, because you have certainly the fundamentals with stall base, and you guys haven't really started moving your stall base over yet. When that comes, I'm sure that Wall Street's going to love that, but you have some time, some building blocks are being built out, but how do you guys have that conversation with customers, with AWS and Microsoft specifically, or even Google. How do you guys differentiate and where will you differentiate in the pass layer going forward? >> I think many things. One thing is of course our customers want to make sure they can preserve their investment while they move to the cloud. So we want to provide a platform which is hybrid in a way that they can take some of the information, they can run some of the things on premise, while they transition some of their workloads or move their applications to the cloud very easily without having to rewrite many of the step or retest anything. So that's something. Services we provide, we've created a lot of tooling around that to make it easy for them to do it. And the differentiation we provide to them is that, one, we will protect your investment. Second, the tools that are easy to use are out of the box. And third thing we do is to really make it compatible. We have commercial terms as well, which makes it easy for them take their work loads and move that without having to keep on reinvesting lot of the cost they put in place. >> One of the things that's not being hyped up at the show that's certainly popping out at us is integration and data sharing. We talked to the marketing cloud folks, we talked to the financial cloud folks, we talked to the retail, hospitality folks. Those once-traditional vertical apps still need big data to be differentiated at the domain level, machine learning and AI, and whether it's an IOT impact or not, same thing, but they also need to have access to other databases from other databases. >> Sure, sure. >> Retail, I didn't know if someone bought something over here, so how do you balance the horizontal play with still maintaining the integrity of the app level. >> Amit: Yeah. >> Seems like the past is the battleground for this architecturally. >> Yes, yes. No, I think you're right. I mean, if you look at typically every application customers we talk to nowadays, they have many data sources and data targets, systems underneath the covers, very very heterogeneous. And when we build our platform, we wanted to make sure that it is a heterogeneous support. Alright, so I can write from any database. >> John: That's built into the design. >> Into the design and it's already supported today. I can write from Oracle, DB2, Sequel Server, Hadoop, No Sequel, into again similar kind of back ends. Again Oracle or non-Oracle, we don't care really. We want to be able to support your infrastructure, the way you have invested in, and be able to move the data. So when the application should be gnostic of in terms of what you're using underneath the covers. And the platform extracts that out for you. So we have products and services. Today we have offering in the cloud something we call big data preparation, right, which allows you to take data sources from any kind of sensors, spreadsheets, databases, process that, do the data wrangling, prepare that information and write it into a big data lake, could be running Hadoop, could be running Oracle database or the data warehouse, could be running Amazon if they want to, and we don't really care then. >> So you're strategies offer services, >> Yes. >> On top of the core functional building blocks. At the same time, differentiating on extracting away component-level complexity. >> Yes. No doubt. Yes. And then we want to make it as simple as possible. There are things which we want to expose, we want to provide APIs for anybody who wants to really play around with things. We want to provide them also low-level capabilities if they want to get into that level, but we do also extract it out for, as you were talking about developers, we don't want to have to learn everything every time new capabilities and we provide that abstraction. >> Do you see tooling drives a lot of innovation. Do you see certain toolings becoming standard, not being abstracted away? Could you comment on that and share some color on what tooling will always be around. >> I think the tooling, what I've noticed over time and I think it's probably good to remain the same, every developer has a favorite tool, and we want to give them the choice to pick their favorite tool. I don't think that they should be, from the tooling perspective we have to make sure we can support every kind of program or developer in terms of how they want to write their code. As long as I can provide the interface to it, an API, or some kind of abstraction, and then the developer can go at it. I was a developer and I had my favorite tool, and I still use VI. >> Some will say I'm a VI guy, EMAX, world will go crazy. >> It's okay! >> John: Did you see that VI got an upgrade after how many years, 35 years. >> Amit: It's still amazing, right, I mean people use it and that's fine. (laughs) >> We may get into the VI EMAX war. Amit, final question, just we've got to wrap up here. Thanks so much fitting the time to share the insights. We'd be able to do a whole segment on VI versus editors. >> Peter: Please. >> The plans going forward, can you share any insight in the priorities, what you're looking at from a product and P and L perspective, obviously the revenue growth, you want to drive more of that, but what are some of the fundamental priorities for you, any adventure doing, where you investing your development and marketing dollars? >> A few things, right, so I think one is you probably heard some of the things we're doing for helping developers learn how to use a platform, right, so we're doing a lot of training and code samples, as well as developer-centric content globally. So that is one. Second thing you'll hear about us, the ability to kind of run our platform both on premise and in the cloud, so we have the customers can choose where they want to run it, be able to run it on their data center of choice, as well as they can get the benefit of running in the public cloud. Depending on regulation requirements, whatever it is. So you see evolution of that, but all of the platform we have in the public cloud also, we let the customer to choose. The flexibility's the big, big important part for a lot of enterprise customers, so they're getting to choose. >> John: You're going to continue to do that. >> 100 percent. I think it's very very important that they should not be tied into one, and they should be able to move away if they choose to, not be locked into one way of doing things. And third thing we're doing is we're really bringing together lot of infrastructure, platform, and Software as a Service offerings. Very close and close together as an integrated platform cloud, right, which makes it very easy for customers to consume what they want, but don't have to keep on making it all work together themselves. >> So integrate at will, however they want to compose. >> Yes, so that way at least we'll see lot of functionality, you heard a lot of this this week, we can't keep up with the amount of announcements we've made, and you'll see >> I'll rephrase the question, so first of all great answer but I was looking for something else. How about next year when we interview you, looking back, what would you view as a successful year for your group? >> I think the success for us and the way I measure it is continue customer adoption and use cases evolution right. So today we have around 10,000 plus customers. I would expect by next year we are growing at a very very rapid rate and that another four or five thousand customers more who are doing interesting use cases and going live with it. >> John: Great. >> That a big success. >> Customers ultimately. >> Keeping them happy and as long as I deliver the right things, they will be happy. >> I always say look at the scoreboard in sports, and that's ultimately the differentiation, so that's going to be the benchmark. The KPI is the number of customers, happy customers. >> Yes. >> I'm sure Mark Hurdle will have that on his next earnings report. This is TheCUBE bringing you Amit Zavery's commentary, also analysis of Oracle OpenWorld. With more after this short break, we're going to wrap up. Live, here at Oracle OpenWorld 2016. I'm John Furrier with Peter Burris, you're watching TheCUBE. (light music)

>> Announcer: The Cube presents On the Ground. (techno music) >> Hello and welcome to a special Cube presentation of Oracle On the Ground here at the headquarters in Redwood City. I'm John Furrier, host of the Cube. I'm here with Karen Sigman with Oracle. Great to see you again. Give us an overview what we're doing here with this program. What's the update with Oracle with Big Data and cloud? >> It's pretty exciting, you know. We've been continuing to innovate as you know. We've been expanding our portfolio and the big focus is on choice. So with the Big Data appliance and the Big Data now taking that to the cloud at customer strategy, we're able to now give customers choice of doing their Big Data analytics on premise, in the cloud, or as a cloud service behind their firewall. It's a huge innovation, a whole new change to the way you can do things for our customers. >> So about the operational impact to customers for this, because on premise obviously is key. Cloud economics are right there. But getting something operational has been a big problem for many people with Big Data. How does the Oracle solutions innovate and help solve that problem? >> Well, I think that's the whole value proposition around what we've done with the Big Data plans. What we heard from a lot of our customers is they can build their own, and they can put it all together, but then they have to maintain it. They have to manage it. They have to make sure that everything that they, all the software that they put together, is going to work together. And they're going to be able to keep it up to date. We actually eliminate all the steps. A vast majority of the steps it takes to bring it up online. So we can bring the time to value for doing your data analytics down to days instead of weeks. >> What do you say to customers that have come to you, Oracle customers and potentially new customers, "Hey I have Oracle database" or "I'm considering Oracle database, but I have to use Hadoop. I want to use Hadoop and some of these open source technologies. Can I do that?" >> Of course you can. Oracle is absolutely all about choice. It's the ability for you to be able to use both Oracle and non-Oracle source data in a single appliance and do your analytics against that. That's the value of the Big Data plans. >> What about cloud? The cloud machine? How does that fit into this? >> Yeah, it's all again, it's about, you know, making sure a lot of customers have different ways that they want to do business. They're worried about data sovereignty issues. They can't take it to the cloud, but they want the ability and the agility that goes with a cloud story. The ability to just access a service and run it. What we're doing with the Big Data cloud machine is we're actually allowing customers to take that cloud service and access it just behind their firewalls. So it's the same as if you're logging in to our public cloud. You just log into it in your own data center. >> Karen, so you've been traveling around the globe talking to customers. What are the main things that you're seeing bubbling up from the different conversations from all around the world? Top three things you're hearing from customers? >> I think it's a couple things. One, they don't want to spend their time becoming IT experts anymore. And so the value of an appliance like technology or a cloud service, either one, is exactly what their looking for. Because they want to simplify their IT infrastructure and they want to focus on the things that matter most, which is the applications that drive the business. So that's number one. Number two is they're worried about cost. And so they would like to have cost be specific and more transparent. So they want to make sure that whatever their spending they can actually allocate back to the business units, that's coming from the IT side. So having cloud based models actually helps quite a bit with cost transparency. And I think the third thing is that overall they want to make sure that they can get things done faster. And so the idea of having cloud services gives them that agility that they need. And as I know you only asked for three, but I would say the fourth thing is they're looking for choice. They really want to understand. They want to make sure that if they choose one model, that they're going to be able to flip and they're not going to be locked in. And what Oracle's done with this is given them the capability to either deploy on Oracle, work with Oracle or non-Oracle data, and you can do it on a cloud or you can do it on prim. It's all up to you. >> I sat down with Dave Donatelli for an exclusive interview and then publishing on Forbes and then SiliconANGLE, and he talked about how the traditional infrastructure mainly storage and server vendors, really weren't positioned for success. So I want to ask you, a year now into the Oracle real push and growth of infrastructure products, engineered systems and other things powering all the software and the database and all the good stuff with Big Data cloud. What's changed over the past years? What can you point to has been the big, you know, the needle moving? Was it been performance? Has it been hardware? Number of units? Integration? What's your view on where has the needle moved for the infrastructure engineered systems? >> I think the big thing is that we've really fill out the portfolio. We've made sure that whether you're choosing to do a build your own solution or go for the, you know, fastest time to value with an appliance like technology or you're trying to get the maximal capabilities out of our systems our engineered systems. we've actually built out our portfolio so that you can do all of that on prim or in the cloud or on your premise with a cloud service. We've made sure that whether it's database workloads, application workloads, or analytics workloads, that we have a complete portfolio of solutions that give you that choice. And that's quite different than anything I see in the market. >> Karen, thanks so much for spending time with On the Ground. Appreciate it. >> Thanks. >> I'm John Furrier. We are On the Ground here at Oracle's headquarters. Thanks for watching (techno music)

>> Narrator: Congratulations, Reggie Jackson. >> Certainly in the moment, is about what are youth is and who we are today as a country, as a universe. You are CUBE alumni. Live from San Francisco, it's theCUBE covering Oracle OpenWorld 2016. Brought to you by Oracle now here's your host John Furrier and Peter Burris. >> Hey welcome back everyone we're live here in San Francisco at Oracle OpenWorld. This is SiliconANGLE Media's flagship program, theCUBE, where we go out to the events and extract the signal from noise. I'm John Furrier, co-CEO of SiliconANGLE Media, with Peter Burris, general manager at Wikibon research, and Head of Research at SiliconANGLE Media. Our next guest is CUBE alumni, Chuck Hollis, Senior Vice-President of Infrastructure at cloud and storage. Welcome back to theCUBE. >> It's always a pleasure. I always have a good time when I'm here. >> So the best part of having you on is you've seen the movie before, you've lived it on other teams, you're now at Oracle, what, two and a half years? >> Chuck: One year at Oracle. >> Almost two years, so -- >> Chuck: I'm not dead yet. >> I don't think you -- >> What's that mean? Let's explore that. When will you be dead? >> You're looking good right now. You actually look like you been working out. >> A little tan, like you, like you, you know? >> So is it the country club here at Oracle? >> No, no, no. >> Chairs spinning at five o' clock? >> I'm up early and to bed late and weekends included, right? >> Well, certainly, Dave Donatelli's here, and a team of people really ramping up, essentially engineered systems, AKA hardware engineered in with the software. >> Both, in the cloud, and on premises, right? >> In the cloud and on premises. Clear, end-to-end oracle solution, which will, one, be optimized to run on Oracle, or -- >> Among other things, yes. >> So give us the update; what's the new announcements today? >> So Larry from onstage was very proud to talk about our new gen-two infrastructures of service, and our belief is there's a gap in the market. We have people doing public cloud, right, which, basically, is Startover, Azure, AWS. No chance of an on-prem solution. We have the private cloud guys, basically a Vmware shop, infrastructure only, no pass no nothing, and certainly not a lot of choices if you want to go to public cloud. We think that Oracle's doing a good job of creating that third option. Here's a combined, integrated strategy, on-premises and in the cloud, same technology, same set of capabilities aimed at enterprise applications that basically works the way enterprise IT needs it to work. So this next-gen two infrastructures of service is kind of the first peak of this massive investment we'd be making making entirely new infrastructure cloud that meets the needs of enterprise IT. >> So is this a reboot, or is this an extension of where you guys were? Some were, analysts were saying, not us, but -- >> Chuck: Ah, you'd never say that. >> Well, they said, I was using their words. Holger at Constellation said it's a reboot of their other infrastructure service, so he didn't want to say it failed, implied a transition -- >> Well, I wouldn't say it failed, it's more like a leapfrog. >> John: Explain. >> Oracle got into this business software as service, rather than standalone Sass packages, they worked on integrating everything tightly together, unifying the company. That was followed by platform as a service, aimed at 9,000,000 Java developers around the planet and everything they do. Infrastructure as a service was just made separately about a year ago. We got into the market, we learned a lot of things, but we also realized that we could actually start over again. We look at the engineering team, it's up to about 400 people who are building this next-gen IS, are all ex-Amazon, all ex-Azure. This is not their first infrastructure cloud, and because they were handed a blank piece of paper and said, "you can start over again," it actually is pretty exciting what they've done architecturally. >> So there's got to be something Oracle's doing that's distinct, so just for any number of reasons. Oracle has a lot of existing customers that're running heavy-duty enterprise applications. >> Chuck: Yeah, the tough stuff. >> The tough stuff, so talk to us about how the tough stuff is going to end up in the cloud. >> I think you bring up a good point. One way of looking at it now is that the easy stuff is gone. Desktop has gone to Office 365, and those kids from college are playing with AWS, and maybe I've got some generic workload consolidation sitting in the back room with a private cloud. What about those hairy applications, the demanding databases, in-memory analytics, the big to-do workloads? Where are they going to go? Well, what you see with out infrastructure-to-service is that we're actually providing two capabilities. We can run all of those through our cloud using those exact same technologies that we're running on-premises. You're probably familiar with products like Exadata. Well, you can buy an Exadata. You can use the Exadata in the Oracle public cloud, or you can consume it as a cloud machine, something we call "cloud-to-customer" on premises. And I think that's an important differentiation. A lot of this market is focused on consolidating generic workloads. That's more moderately interesting to us. To your point, what we're really interested are the big, hairy ones. As I joke, these are the ones that have vice-presidents attached to them, right? Yeah, the ones that people really care about. >> Peter: And typically eight figures. >> Depends on the size of the company. Like, Mark was interviewing a lot of people, a lot of customers this morning, and some of them were not large shops. >> But even those partners that're serving those customers often have eight figures associated with their investment in Oracle as well, so it cascades out through the entire industry. But it's also, I want to ask you this, Chuck. It's also not always the applications that have to be brought forward, but we were talking about ageism and it's always better if it's new, but there's a lot of skills in the industry. It's not a question of we want to bring them along. That's still where a lot of the value's being created, so talk about how this third way is going to make not only existing customers and existing apps, but also existing skill sets more rapidly develop inside and experience the expertise with these new technologies. >> I think that's a very good important because any IT organization's only as good as their skill set portfolio. I think anybody who's worked with IT understands that. By the same token, look at the portfolio. Walk into an average IT shop. Here's the stuff that was built decades ago. Here's the stuff that's kind of modern client-server three-tier. Here's the new stuffs that were using containers and microservices. If you're going to be an enterprise cloud provider to that IT shop, you got to support the old stuff, you got to support the kind of current stuff, and you definitely got to give a little pathway to the new stuff, and give me the ability to evolve that portfolio, and peoples' skills forward at the same time. This is what my big arguments that most public cloud providers is public cloud is easy. Just blow everything up and start over in our cloud. Well, as attractive as that might sound, that may not just be a financial reality for the majority of IT organizations. >> Yeah, operationally, too, they can't run their business. So so much for the container stuff. Ravello was the new container cloud server. >> Two things. So we have Ravello and we have a new container cloud service. So we'll put that on Ravello. So we all know hypervisors virtualize hardware. Ravello virtualizes hypervisors. What it does is it comes in to a VC or KVM environment, lifts it up, strips off the hypervisor, encapsulates the network to storage and the compute, then you can actually choose your cloud. You want to run it on AWS, you want to run it on Google, or do you want to run on the Oracle cloud? And it'll show you the prices for each, and you can shop there, so the reason we think that's interesting is nobody really wants to get locked into anybody's cloud, and if we can give people workload portability through VMs, that's great. Well, that's for stuff that we wrapped with virtualization. What about the new containerization? Well, trick with containers is container management, and today, if you want to do container management, you got to graft some open-source stuff and basically build your own. What Oracle has done is created and end-to-end container management service that says, alright, if you really would like to build your own, have at it, but in the meantime, here's something that kind of works. We can do that on-premises, on our cloud machines. We can do this in public Oracle clouds. We have this fast-burning desire to do this on other people's clouds just as soon as we get our own stuff sorted out. But it's the same thing. If I'm developing an application, Oracle has to go compete for that infrastructure business. It can't just say, well, you're an Oracle customer, you have go on all our stuff. And it would be the rare IT leader that would accept lock-in at the cloud level. >> There's no reason to do it today. There's absolutely no reason to do that. >> They may choose to go with us. >> But even if they choose to go with you, they want to do so in a way that doesn't force the lock-in. >> We all flew here, did you pay attention to the flight attendant when she showed where the exit rows are and everything? You may not plan on using that, but it's nice to know they're there. >> And it's nice for you to know where they are, too. Because you guys have learned that to stay at the vanguard of the industry, you have to be always aware of who's about to eat your lunch. >> And I think the Oracle database did a good job back in the day, and still to this day of being affordable. You can invest in the database, it can go wherever you want. And we're trying to do the same thing for that application ecosystem. And we're trying to involve three categories. The old, legacy stuff, the somewhat contemporary stuff, and the emerging containers, microservices-based stuff. >> So talk about your partners, because I know that something that we've been talking about on theCUBE a fair amount is -- >> Partners, we got lots of them. Infrastructure partners in particular? >> John: Well, Centure has an announcement. >> There's a disco party going on behind us here. >> There sure is, unfortunately theCUBE sign's in the way. Otherwise I could participate in it. >> I can see. >> But come back to this notion of a lot of the value that has always been created in the Oracle ecosystems has been created in partners. I have this theory, we have this theory at Wikibon that ultimately there will be more examples of college suppliers being created by your customers and your partners than by individual like AWS and Oracle and Microsoft. >> So Oracle's always had a very rich partner ecosystem. Applications, development, to infrastructure. And the exciting thing that I'm seeing with out partners is like they're seeing opportunity. So let's say that you have this cool vertical application. Five years ago your were selling on-prem hardware with all that entailed. Now you can run the in the Oracle cloud and simply sell a subscription service to your customers. You've evolved your business model forward. Folks that we partner with do application development. They have a platform now for application integration where they have vastly more capablites as opposed to the old school, got to go build it, got to go assemble it, etc, etc. The people who're feeling a little threatened by all of this not surprisingly, are the box-shifters, right? They're guys who just move hardware from A to B. And we're working with them, it's like there's still opportunity there. You just have to look up the stack a little bit. Their skills are still valid, they're just not assembling hardware. >> And you got a Centure announced that the business groups taking the infrastructure-to-service products out, that press release went out today. We covered that. >> I didn't know if that went out yet, but thanks for confirming. >> Oh, maybe that was embargoed, oops. >> Roll back, roll back, roll back. >> Put that back in the model, live TV. >> Centure, all these guys, they want to provide more value to their clients, and 10 years ago, that was stitching together hardware. Now it's about teaching them how to intelligently consume cloud. And I think what these partners like about the Oracle offering is designed to work the way enterprise IT works. It's not this, hey, here's our model, take it or leave it. >> One more thought on this, that there's a difference between the traditional, as you said, three-tier infrastructure, client-server innovation center, and some of the new analytic stuff that's on the horizon. Talk about how you guys are specifically focusing on some of the new analytics applications that are on the horizon coming into the cloud and how you intend to make the two worlds work better together. >> So I think that's great. Old-school analytics we used to call data warehousing, and business intelligence. That hasn't gone away. If you look back five years, it was all about big data, and mining values. Now we're moving to a phase of real-time decision making. Welcome to in-memory analytics things as fast as they can be. And once you figure out how to monetize data, it's addictive, you just want to do it faster and faster and faster and faster. Also, we're talking about relatively exotic infrastructure, right? Multi-terabyte memory spaces, shared Numa architectures. Pretty hard to go down to Best Buy and find the hardware for that and go build that, so as people start pushing the envelope, they're looking more for on-prem engineered solutions or more often, what can you do for me in the cloud. Interestingly enough, we talked about this gen-2 infrastructure service. One of the things it's very good at is having enormous memory spaces and very fast to compute, this kind of bare-metal compute we're seeing in real-time analytics. I think the other factor on this is internet of things, forgive me for playing buzzword bingo, the easy part is gathering the data. The real-time decisioning and actioning on it, that's heavy computing. >> Peter: And delivery with control. >> Yeah, delivering with control. You've got 10 million gas meters. Okay, how do I reason over that in real time, right? That kind of thing. >> So I had to ask you, we've been hearing about this spark-based exadata, what it's all about. What's that all about, is it a new product? >> Another member in the family. So you guys probably know the headlines on the spark chip has a couple of unique talents. It's got 32 encryption processors, so it can encrypt in real time, no delay. Has this ability to take queries and run them in silicon. It also has the ability to compress and decompress memory for in-memory analytics. So the exadata is basically a purpose-built, engineered system for database, so by taking our processor technology and putting it in this purpose-built machine, it gets a whole bunch of new talents for no more money because again, that's part of our differentiation. Things I've learned since I've been a year at Oracle is it's nice to have your own chips. Sometimes they come in very very handy as you build differentiated solutions, so I think exadata customers will have a new option, and I'm sure in the fullness of time it'll be available in our public cloud, it'll be available as a cloud -- >> But this brings up a good point, though. Intel was on stage yesterday, gave the same old corporate pitch, didn't really learn anything new there. >> Chuck: They had nice slides, though. >> That Ian Bryant's awesome. But the thing is, and Larry said that I find compelling is now that I can get your thoughts on it because it kind of comes back to the hyperconversion trend, which is he said, "we are going to provide it faster and cheaper." So he's clearly looking at infrastructures, bring this thing down, cost down to zero if possible, while performance he wants to bring up to a whole other level. How are you guys going to do that, what's the strategy? >> I think Larry and Oracle have the ability to invest like crazy. Don't forget, we build our own hardware. We build our own servers. We build our own data center fabrics. We don't have to buy this stuff from anybody. We build it, so Larry and the team, a couple years ago set this team up with a mission to go compete. Now if you've looked at Amazon, AWS margins, you know there's a lot of fat there. They're also running on really old stuff, the basic architecture was designed 10, 11 years ago. I don't want to throw aspersions around, but you could call it legacy cloud, right? >> John: What do you call it? >> Legacy cloud, anything 10 years or older, it's got to be legacy. So there's a clear opportunity to go build something new. That being said, this is a big boy's game. This is not let's round up a couple million dollars of VC and build a new cloud. So to look at the aggregate spend Oracle's putting behind this infrastructure -- >> Well, you just said the big boys are public, like Rackspace, they couldn't make it, right? So you're starting to see, they were a little, kind of a big boy, I mean... >> They're reasonable out there. But look at it this way, Oracle's got a national software franchise. Much like Microsoft does bring people on. We build our own hardware. We build our own data centers. We actually can become a vertical supplier in this and the argument is efficiency is result. >> So we're going to see Dave Donatelli on Wednesday after his keynote. I know he's prepping up for that. How's it going with Dave, what's going on with Dave? >> Dave's having a good time. I mean, we all came to Oracle on the same premise, is that the industry was rotating, and I think we've seen that in some of the analyst numbers, less and less on-premise spend, more and more spent in the cloud. >> A lot of new hires coming in from an industry that we know on Oracle, pre-existing players. >> And if you asked 'em five years ago if they ever would end up working for Oracle, they might have not said so. >> John: You're being polite. They'd say, "no friggin' way." >> Go through your mind and think what are the traditional on-prem IT vendors that transition their customers to the cloud? It would be a very short list. >> So you buy the whole cloud-broker Dell technologies? >> They don't have a cloud. I think customers want to consume cloud. >> Bing cloud air network now has 4,000 cloud providers. >> All slightly different, all slightly different. >> All working together with hypervisor. >> It's like a big portfolio management company. >> Is that a chess game, or is that just hail Mary? >> Vshpere was designed for the data centers. EMC bombed 10 years ago. Our tech's designed for the data center, and it wasn't designed for a world where people don't want data centers anymore. So I think VM ware's very challenged because their technology and business model is standing up viable public cloud options. The last big one was, oh no, we can't do it. We'll go to IBM. What's your cloud strategy, VM ware? Call IBM? That's kind of a rough deal on a sales call. >> Well, if you put it in the context of a V-cloud air network, you could argue that they're giving up the cloud. Basically, VM world, they said, "we're done with the cloud." they yielded -- >> Peter: I don't think they said that, John. >> They yielded that they weren't going to have their own cloud. >> Absolutely they yielded. >> They yielded on not having their own cloud. >> Okay, they yielded on their own cloud, that's what I meant. >> Nothing more than kind of a boutique offering, and certainly there's a market for small regional service providers around the world. No argument there. And there's a natural tendency, but as I look at people going to cloud, the sticking point isn't the hypervisor, the sticking point is the database and the applications, the middleware. This is something Microsoft has done brilliantly with Azure. >> Larry pointed out that's Ernie's call. Microsoft's well ahead of Oracle on migrating their install base half into their cloud. >> And that's what you guys have to try to figure out how to do as well. >> We're well along the way. But the point is that without that franchise, that's a tough road to hoe, right? The infrastructure guys maybe, the applications guys are the ones you want to talk to. >> Peter said, I'd like to get your thoughts on a comment Peter made on our intro with Matt Eastwood from IDC, everything's on the table. Ecosystems, channel partners, >> Chuck: And we're shaking the table apart. >> So if you have the gravity, an Oracle face of the world that's a suite, which I think is a little bit orthogonal to where the cloud is, but I get the language of Oracle the suite. Is it gravity around the suite, not a winner-take-all? >> You got to be able to pick off pieces and they have to stand on their own. >> You could build a ecosystem around that, and open ecosystem, so that means a new lock-in spec is stickyness, or pure performance, or not, am I getting that right? >> I think Oracle's going to try to play on both sides. If you appreciate the value of the suite, the IAS working with a pass, working with a Sass, great, we have all those pieces; pick and choose. Larry made it pretty clear. He wanted to go head-to-head on iops, memory and core, and dollars per whatever. Oracle intends to feed on that as well, so it'll be interesting to see how this plays out. Nothing like a low price to get an IT buyer -- >> Well he said, and the word he called this is interesting, he was overselling in my opinion, I've heard Larry. >> Chuck: Larry? I can't imagine he'd do that. >> Larry was overselling on their earnings call, but I don't think the analysts understand, they don't see the long game. You look down the 20-mile stare, it just hasn't even started for Oracle. >> Larry is a master at the long game in ways that I'm just now starting to appreciate. >> Well, let's be honest. What is the most sticky thing in the industry? Your applications, that's the stickiest thing in the industry. After that, the developer ecosystem and then you get down to the hypervisor, and you get down to the first -- >> Chuck: And then you get to the wires that connect it together and all that kind of stuff. >> But the most sticky thing is the businesses are still run around some of these floor applications. >> Well, that's why I brought up the suite angle, because I think that the developer angle is sticky because agility has proven that not everyone can build a killer app, so for instance, with an HCM there's probably some feature of HCM that is sub-par relative to some genius entrepreneur that eats, breathes that one feature, has an app, that could be integrated into that feature. >> I think that's your point, and with the platform-as-a-service offering, oh, you want to add it, do something different, great. Yes, exactly. >> It's all a continuous development, continuous integration, but that continuity still is close to the application. >> Yeah, ecosystem to me is, I've heard talks about what the developers' market, go-to-market strategy is. If that's in place, Oracle could have a very robust -- >> We're seeing the both the same thing on the hardware and the software. So hardware, build-your-own, is starting to get out of bow, ya know? Less and less popular buying servers and storage and knitting them together. A lot of guys still buy into that, but that market's going down. I think you're going to see the same thing with software and applications. Rather than starting with a blank piece of paper, where are the big chunks of enterprise functionality that I can grab out of the box and build the thing -- >> Reused, preexisting applications. >> Yes, yes! >> Everybody's talking about business capabilities, right? And the idea is that this capability is the things that I have to do to perform the activities to fit my business needs. And those activities are people, and increasingly, software. And being able to grab those capabilites and pick parts of them from the industry and weave them together quickly, continuously sustained, the match with the marketplace, to your point -- >> Well, we're going to have Juan Luzon next, and we're going to go deep on this, but I think -- >> That was a great guy. >> The API economy, if anything, showed us one, security is FUBARed and needs to be fixed fast, and the encryption on a chip thing has been downplayed. I don't know why Fowler's not getting more airtime on that. That's a really huge thing, but the API economy has proven that this ability to pull stuff that someone else has already done, not assembling like a junkyard kind of situation, why build it if someone's got to get it though an API? >> You talk about giving capital management, right? And you know, there's 175 functions, I don't know, some large number of function there, they're fine. I need this one little thing, so I'm just going to extend it, and still do it in such a way that I'm not developing -- >> And a developer who does that becomes a feature in a bigger pie. I mean, he'll make more money, doesn't go out of business, doesn't try to go public. >> So I wanted to share, before we wrapped up, one interesting thought. We all talked about cloud is coming, cloud is coming. I actually got tangible evidence at the beginning of the year that it's here. So a new word was given to me, cloud quotas. Cloud quotas, and it was kind of funny. This is happening mostly in the larger banks. Senior management, executive management, you're a little slow on this cloud thing. Let me help you out. We'll set a strategic objective. Five years from now, how much did we cloud-spend? This year, your cloud quota is 15% between cloud and non-cloud spent. Next year, etc, and I think what we're seeing is that kind of like the gears are starting to rub, between the businesses says, guys, this can't be so hard. Let's get on with it. >> I'm sure your sales guys have cloud quotas, too. >> Different kind of cloud quota. Different kind of cloud quota. >> On that point, 20 years ago, when it became very popular to pay executives on the basis of RONA, return on net assets, it was right about that time that outsourcing got popular. >> Shocking, isn't that, your mess for less, right? >> Sounds like cloud. >> Okay, bottom line, for the folks at home, Oracle's infrastructure stuff that you're involved in is not new, but it's growing now because it didn't have a lot of nurturing. It was always kind of like that back office secret sauce. What's the update, give a quick update. >> We want to give people a strategy for their enterprise applications for cloud. If they want to consume on-prem, great. Engineered system's cloud equivalence. You want to consume off-prem, same set of capabilites and more in our public cloud. You want to consume the public cloud in your data center, that's a cloud machine, and it oughtta be the technology stack and the set of capabilities. Geographical location, the consumption model really doesn't matter, and when we put this in front of large IT shops, and even smaller ones, they're like, this is great. I can build my architecture, I can build my strategy. I don't have to make a cloud decision now, and if I do make one, then I can undo it later. That agility has become very very attractive to people. >> I could invest in options but have a future. >> Chuck Hollis, Senior Vice-President of infrastructure, congratulations, and then Larry Ellison got to the end of his keynote, didn't have a lot of time, but there's a lot of meat on the bone in the keynote, that he kind of, he couldn't hit. Welcome to the cloud, too many product announcements. Welcome to Amazon's world. >> Peter: Seems excited. >> There's a lot of stuff coming down. It was great talking to you guys, thanks for your time. >> Thanks for sharing your insight and the data and the bits here. Here at theCUBE, we're always sending out the packets of content out to the network, live, original content. I'm John for Peter Burris with SiliconANGLE theCUBE. We'll be right back with more live coverage after this short break. >> Hi, I'm John Furrier, the co-founder of

live from New York it's the cube covering riverbed disrupt watch you buy riverbed now here are your hosts day volante and Stu minimus welcome back to the Big Apple everybody this is riverbed disrupts we've got a special guest Steve de plusieurs with us the man behind many men and women at enterprise strategy group founder head chief chief analyst senior analyst Steve's great to see you thanks for coming off thanks for having me I appreciate it I'm you doing fellas it was good we were photobombing video bombing us today and here you are that was not intentional I didn't know the exact configuration in the camera almost always live it's all right and that ended up now you're in front of the camera how the right time this is not a bomb so what's doing these days what's what's happening on that's a ridiculous question citing you ah somewhat less ridiculous and still very open to interpretation I give me a path to head down and we can't I let's start with the with Delhi MC you've got a great blog on that you know the history was good really enjoyed that it's EMC success is because you left right so I'm not exactly sure it's a 50-50 between my crackers coming in and making everything that we sold actually work because not much really good I gotta say a lot of people are really positive people who know both dell and emc are actually really positive about the the marriage here but we nuts i don't think so i think from day one I saw I'll give you a quick anecdote hopefully quick tell me to shut up if not here's the parallel in two thousand Joe Tucci comes in and at that particular run emc and at that particular time EMC was really good about bringing in some outsider and spitting them out the DNA and the antibodies were just awful in that culture in that for an outsider to come in and be able to survive in there and they went through a bunch of senior managers senior executive vice-presidents yada yada yada that nobody lasted and 2g came in and I'd never met the man or and he had no business to have any idea who I was for example and for whatever reason I was able to get an audience with him very early on and I sat down with him and the first question I asked him only question I asked him and I wasn't looking nice like you I was disrespectful and he could conceive of me as disrespectful and I said what are you going to do about mo Shay because at the time as many of us that are old enough to know mo Shay was king of the of the hill over there he owns symmetrix and and he was untouchable Harry Dixon and Mo Shay were the two untouchable human beings within that emc culture and Joe looked me right in the eye and didn't skip a beat at all and said he's either going to play nice in the sandbox or he's gone and it wasn't six weeks later that ostensibly he was gone and I couldn't believe and so I knew right that in there I knew without knowing the man that this guy was a little bit different and everybody within the EMC antibody sort of climate said nope he's not gonna last six months he's not going to last and but I you know you look somebody in the eye and you see that and so I saw a lot of the similarities in this deal so you guys have been around forever I've been around forever you know Michael Michaels a straight-shooting guy Michael's doesn't have a go or vanity pretense or he doesn't do things for the wrong reasons he said something very very interesting to me about a year before the MC deal which was or a couple years before when he was talking about I think it was three power at the time when he's in the bidding war with Dave Donatelli at HP / 3 part and I don't remember the exact context of the comment but he talked about Dell spending money and he said you know I treat it like it's my own money because it is because it is it whereas he what he was alluding to as others are spending stockholders money and it's not really it and but so that was just a sort of an interesting look into into into the guy there so when this deal happened these are not to strangers right they've been together they've been married and divorced if you will and have had a relationship for a long time they know each other and so when it sort of happened you like oh boy you know and you on paper you can see the synergies and a lot of people i think i'm certainly not unique everybody saw the synergies is not a lot of overlap really what you worry about in a deal like that is cultural other other chiefs of the generals going to be able to get along or are they going to beat the hell out of each other and backstab and and do what happens in every one of these deals it seems like and they didn't write though they really didn't interesting that you know thou MCS a private company kind of a bummer for those who live in Massachusetts good but I kind of a there's a good days that a bummer why is that a bummer well because CMC the brand emc is gonna be gone right just like the walk go up with your private yeah crime and wagon oh let's hope that doesn't happen well we'll see we'll see it's dell technologies it's there's already Delia me logos up on the building from that standpoint it's okay you're right about it too it's hard not sure after yeah of course ok but this backdrop of companies going private obviously riverbed now click BMC many many many other space this new private equity game plan veritas right exactly right used to be private equity put it in some financial guy suck all the money out sure the carcass for yeah whatever's left and now they're saying why should the VCS have all the fun I mean riverbed got taken out for 13.6 billion think at some point to an IPO they're gonna be 10 billion plus a year from now J right I mean eight ten billion maybe I probably 70th I mean that's a nice return as a nitrile Michael Dell returns so I think that you bring up a very fascinating point that I think is gonna happen more often than less and the at the I'm not that smart but fundamentally having that microscope and that's spotlight on you in 90 day increments dealing with no disrespect 26 year old MBAs that have never had a real job that their only interest is squeezing that any per share regardless of what the human impact or what the long-term impact of a company is is the wrong way to do business it's it's our way it's our system but it's the wrong fundamental way to do business you your dad's probably told you just like I did no no you you you spend less than you make it's right if we're not the government we can't print our own money you spend less than you make and and you you honor your debts and all these other things i think the privatization aspect and all of this stuff is just going to keep going because these companies are good companies and they you take the handcuffs on them they don't care what Wall Street thinks for a certain period of time years certain period of time and when they're ready to come back exactly right they go from three billion dollars to ten billion dollars because they were able to do the right things not because they only cared about squeezing the coffee budget to make another you know point ten cents a share yeah Steve so you know market shares in competition and enterprise tech you know seemed for a long time you know nothing change storage industry was very entrenched you know we've seen market share shifting a lot i'll bring it back to you know where to show called disrupt here you know there's been a leader in the networking world for most of my career here um why are you know enterprises you know open to you no more change they're doing cloud there you know looking at some of the things like riverbeds talking about it's a great question so at first i would say they're not they're not open to it nobody and there are two fundamental reasons one is i hate to say it but human beings are lazy I'm one of them the devil I know is easier than the devil I don't yeah most people don't like change no to do not like change whatsoever so the really reason that anybody changes any of this stuff is because one they have to it just doesn't work anymore nobody buys something that's better because it's better they buy it because they have to buy it yeah why'd you buy that Tesla yeah what well that's a terrible example I'm an idiot and I just bought it because it was way better all right sorry now but where we are at some inflection points right now so it doesn't matter why the change occurred right so I could still I think maybe a different answer is I could buy a horse but it's still a valid mode of transportation it just makes me a complete ass if if I do right but it's technically a valid mode of transportation so we I can still go on do that path I people get into a habit of over a course of years and sometimes decades this is just the way we did it this is the way we do it its way I was trained this is way I will train the next guy I'm gonna walk in in the morning and smash myself on the hand with a hammer in the head every day why I don't know it doesn't feel good why do you keep doing it because that's the way we do it type of stuff so it change tends to be some you need some macro external function to force a change VMware had ESX for 10 years before they became VMware as we know them in 10 years why did that happen because it was a nice to have it was the smarter thing to do it only happened when the data center ran out of power and cooling when I couldn't physically fit any more stuff in there and I still had to do a job that's when people went well those guys in the corner are running this cool stuff that emulates pretty much any environment you want to you doing them people at oh oh that's interesting and now you're an idiot if you don't run vmware just as an example right and so I think that it's the same sort of thing we get hub-and-spoke spine and leaf yatta yatta yatta whatever the networking terminology is that we had to do that had a place and and in time but you would never probably architect something like that today if you started from a clean piece of paper and I'm not picking on just Cisco I'd take the longer you're going to keep giving me a buck I'm gonna take your buck right it's because they do answer to shareholders so they're sort of at a catchment they could they could and they will eventually react to the market that says stop doing it that way because it's the wrong way to do HP HP e oh how about a go in the opposite direction of del super interesting well they will will will Dells ability to sell through EMC change the dynamic in the server market well they surpass HP ok so my personal bet if I had to bet right now I would say yes the answer is yes and here's the reason why you could you had three sort of mega companies in in what really to HP and IBM and then you had dell as the it sounds stupid to say but of the wannabe to those guys intel's grown up and now they're on equal playing field but so h IBM took one path IBM said I'm kind of getting it out of the infrastructure business and I'm gonna get into the third platform all in the higher value or what I presume to be eventually higher value plays there but there's no value in commodity hardware etc etc analytics baby yeah you got it whatever automotive yeah and ok let's very good for them and I made a lot of big bets right eight feet went exactly the other way let's just strictly you know we might have paid 10 billion for autonomy but we're gonna sell our 30 billion dollars and in software assets for less money because it is distractive and they so they split the two companies into printers assess your losses and go and don't get me wrong but those are Burger King makes money right Burger King makes money they follow McDonald's around and I'm this is not a good analogy but the only one I can kind of think of on the top of my head being number two and profitable is not a bad business and so as such they don't have to support each feed is enough to support a full stack of all of this other stuff that's really complicated and hard and really big company things so they're divesting themselves of it so makes essentially being her own PE firm she's stripping it before somebody else strips it and taking what she can get in the coffers and in a sufficient yeah starting it again what about riverbed give you a book give us your bumper sticker and then we get a rep all right so they I am I I'm probably the wrong person to ask and for the following reasons number one am not deep enough but number two is I love these guys since literally their inception and i will tell a quick story in that sense i was meeting their primary venture capitalist at the time a guy named chris chevy from light speed and i went to that that greek place in palo alto that I can never member the name of and I was meeting he he called me on the way over he said hey I'm running a little late with a guy do you mind if somebody joins us I said no and it was Jerry and in so I walk in and I'm this kid and there's Jerry and his jeans and doesn't care about anything type of thing oh great so what do you do he said oh well crank chris said why we just funded seed funded him my gosh all this terrific what's what's the company doing I swear to god he went not exactly sure yet thinking about a networking thing you know some paraphrasing Dudley they gave him money and he didn't know what they were gonna do and I was like oh my god what a great bet that worked out of any of your people really really well so I love riverbed I've loved them ever since I love Jerry is not only a character in a human being but it's a great company that is done you know again taking on Goliath really hard to take on Goliath and Cisco's about its Goliath as they come and these guys have just kicked by well you've taken on Goliath in a pretty entrenched business so I said last question last question what's new with ESG you guys are rocking you got a bunch of people working for you and just keep growing and love to see it new areas hit the security or to virtually you know every part of IT your customers love you what's what's new with you guys I'm my current personal passion and we're we're driving more I think interesting stuff the normal is insecurity because it is the wild wild west so I'm a storage guy I'm boring box kind of guy i understood that stuff 25 years ago securities fascinating to me because it is the storage business kind of 25 years ago only an order of magnitude if not bigger so there are 1500 companies not 150 trying to wannabes and and there's zero clear winners in any of these senses they riverbed brought up Palo Alto today great company but there are hundreds of different vectors that are all sort of attempting in one way or another to do the same thing but it's a it's a horse race where all the horses are running in different directions looks like a Monty Python look kind of scared two ready go hmm everywhere and so I I personally find that intriguing and fascinating also because the bigger they are the harder they fall so we'll go from 1,500 to 150 and we'll go from almost a trillion invested too oh boy a lot of people are going to lose a lot of money but from that certainly some players are going to rise tremendously and the other thing I'd really find interesting is this is we're no longer in the era of the boring box we really aren't and I and that's good for everybody in i.t except people that really love the boring box and so there's always hard a school of hard knocks right people are going to lose jobs and and it's unfortunate that respect and they'll come clinging to that Titanic but at the end of the day what's on the other side is crazy stuff you know it's great that the iphone we forget is it's seven years old or something it's eight years old we act like it's a you know we've had it forever but no no I had a bag phone when i was with the MC and i thought it was really cool at a thousand dollars a minute to be calling my friend who had a bag phone cuz you couldn't call anybody else cuz no one else at a bank what wasn't that long ago so anyway them all right well big buddy could be interesting to see picking winners in the security space but some gradual ations on all your success okay thank you very much for coming to the cubes great time guys thank you so much all right keep right to everybody will be back to wrap riverbed disrupt right after this

theCUBE presents an exclusive on the ground conversation with Oracle CEO Mark Hurd.  Mark sat down with John Fourier at Oracle's redwood city campus. >> Hello everyone welcome to a special presentation of theCUBE. I'm John Furrier   the founder of SiliconANGLE and we're here with Mark Hurd the Co-CEO for a one-on-one exclusive conversation , Mark welcome to theCUBE on the ground welcome.    >> Thanks John >> OpenWorld we were there with theCUBE >> So at Oracle and we were on Howard Street , we talked to 48 folks from Oracle executives and we learned a lot and we've been there covering it for six years and one of the striking things was Oracle's cloud message wasn't really well received by the press in the sense of they consider you kind of not in the top two. It's Amazon , Amazon it's this, that & the other thing. You guys had been doing cloud for awhile and I want to explore that conversation with you about Oracle's cloud your business startup landscape competition but one of the things that struck me was your interview on CNBC with John Ford he said are you determined to be in the cloud and you kind of had a shock back response and said determined we're in the cloud we're winning and quoted some stats give us the update you guys are in the cloud we watched that we learned that it's end to end what's the current status of Oracle's cloud play right now.    >> Thanks John,  well I think the way I would describe it numerically is not only in the cloud were a multi-billion dollar player in the cloud and so we started really several years ago in the application part of the cloud or SAS we've had tremendous success across the pillars of our SAS products or the pillars of applications in the industry we've added a platform capability or paths to that portfolio and now we've added infrastructure as a service so we're actually the only player in the cloud now today in infrastructure in pass and platform and in application so a complete portfolio differentiated by its by its scope and also differentiated by each of the pieces we believe to be Best of Breed and it's resulted in bookings I think that's out in the marketplace but I'll reiterated today. We'll book more business in the cloud  than this year than anybody else in the industry.  >> One of the things about the cloud that people love is the fact that it's fast it's got great economics but it has a scale component that customers are attracted too,  yet a lot of the folks who provide cloud technologies have different approaches.  Larry Ellison was on stage at Oracle OpenWorld saying he's long in the cloud game and you've reiterated that. What does that mean you know and the business folks out there they love this but they don't want to have different technologies that become outdated they want to have just solutions so every vendor's got different approaches why is Oracle well-positioned for this long win or the long players Larry's and you talked about.  >> Well first John we've been in this business a long time and so the fact is I think nobody's provided solutions at the depth and breadth that Oracle has over the past 20-some years so we've got a lot of experience in this business and that experience really as at the enterprise level so experience is is deep. That said to your point most of our customers spend a lot of money on IT and most of them have to go do this themselves. One of the promises of cloud is all of the things you said plus the fact it's it's simpler it's easier and you're actually not you're actually moving your innovation from your IT budget to Oracle's R&D budget and that's very attractive not just economically, it is ,attractive economically to your point but it's very attractive now to get in an area like HR. We have almost 2,000 programmers coming to work every day feature stringing that application would you rather be doing that on your IT staff or have that done by 2,000 people coming every work today who's on our payroll not yours to drive your innovation. >> global. Cloud is a global phenomenon  >>  The other impact is Obviously the geographic regions is hear now that as a key table stakes but you know it also brings in some economics on the economy side. What's your take on the global economy outlook right now in the world right now and and how does that affect customers decisions and buying patterns you know right now >> If you look over and when you say right now I'll look at it over the past couple of years. Revenue growth across the global economy the S&P 500 is fairly flat so you've had about one percent revenue growth of the S&P 500 over the past five years or so. Earnings growth though is about 5% and you've seen that reflected a bit to a degree in the stock market and the run-up of the stock market over the past several years so with revenue flat and earnings up that tells you that people are cutting expenses people are being very careful what they spend in what they invest and that gets reflected in IT and you see this in the IT industry and some of the results of the companies in it so companies are very much being very careful what they spend. I think companies overall are comfortable with their cost structures. They wish they could grow faster and it becomes the reason why cloud not just as a technology but as a business approach in a business model is extremely attractive to our customers into the broader market >> So they were there see expenses they don't only have to spend aggressively but they need to perform as well so it's also top-line >> John, it's a bigger problem than that it's a bigger problem than that because I'm worried about cost but at the same time many of our customers face competition. They face competition from startups new entrants into their industries and so they have to be innovative so it can't be just cut cost for cutting costs sake because if they do they can easily get disintermediated from their customer from their market and therefore they wind up not being competitive so the attractiveness back to the point about innovation and cloud is yes it's it's lower cost it's better economically yes it's simpler but it also drives more innovation at the same time and it's really the combination of all these factors that do the trick >> I put a question on my Twitter feed and Facebook I was interviewing you and I got a question I want to read to you as it says 'Marks on the road constant of customers then coming back to the ranch to meet Larry and Safra and the teams,  what is he hearing what is the consistent need from his customers and CEOs he's talking to who position themselves'  what's the common thread what's the holy grail for the customer that you're hearing from from consistently in the pattern that you're seeing your customer visits?  >> Help us get from here to there and and I think when you know you're in our industry you get a lot of people talking about cloud you know let's go to the cloud well if you're if you're not in the tech industry and you hear that you're like what does that mean and and then more importantly how do I get there so it's easy for us to talk about you know where we are. Most of our customers are stuck in where they are today and most of that is an on-premise many of those are older applications their homegrown applications so the process of not just telling us telling them where they could go but how do I help you get there.  At Oracle again we feel uniquely positioned and we're not just big in the cloud multibillion-dollar cloud player but we have a heritage on-premise and I see that as a very very strong asset and the ability now to bring those two worlds together and help our customers operate some of their IT on-premise, some of their IT in the cloud and be able to work those move those workloads back and forth seamlessly. >> you know you understand the athletes world >>  Timing is everything you  play tennis, being at the right spot the right time is really the business focus with customers and so when they hear cloud or hey this is a new technology from Silicon Valley think how well is that real so this isn't not so much as scared of the Silicon Valley innovation you're seeing you know for Tesla innovating things like GM and Ford but a lot of mainstream businesses want to have an answer to their problems not so much the shiny new technology. How do you balance the timing of delivering new cloud technologies with that next big thing in R&D or what not I mean what's the secret and what do customers look for is the timing issue of having the right solution at the right time what's your philosophy on that what's your take on that >> Well of course you're right I mean the fact is you know as we sit here in the Silicon Valley we tend to invent words every couple of years they're gonna solve all of the customers problems cloud big data whatever it may be whatever your problem is we're gonna we have a solution for it and the reality is most customers want to solve their business problem they're concerned about growing their revenue they're just they're concerned about becoming more efficient with their processes and so therefore we have to help them get that done so to your point we have to come in with real solutions, our solutions are baked around things as simple as running your HR system. You know running running your core accounting your core ERP and your core sales organization and being able to be able to automate those applications. I think you'll see  a tremendous workload coming around dev test. You know 30% of all of IT for example today is really done in developing and testing applications, it's all done on premise, it's all done with very little governance around it,  that whole process. Think of that, if Enterprise IT is a billion dollars,  Dev-Test at 30% is let's see I think 300 million dollars. How efficient do you think that spend is? Let's pretend it was 50 percent efficient,  which I believe is very high. A hundred and fifty billion dollars of opportunity for our customers to no longer have data centers,  computers, operating systems, databases,  people and be able to move all that to the cloud be able to access all of that capability from the cloud build and test their applications directly from the cloud and if they even want they can move those workloads to their on-premise production for their on premise production applications. So these are tremendous opportunities to change the way we think of IT and your point the timing has to be right there has to be an openness and an excitement about embracing these opportunities and I think that time is now. >> on that because it can be scariest shit >> What are you hearing from customers into the cloud and and and they might hey Oracle you know all you know you have your stuff and I hear the shiny new toy in Silicon Valley new technologies but what's in it for me that's the customer I've but I think mentality what's in it for me my problems as you said what it what is that issue for that for customers for your standpoint how do you how do they get over that fear to take that leap will the parachute open when they go to the cloud that that's the kind of mindset the customer I hear and I thought to what >>   >> various different people that have >> Well I mean they're different opinions I think many of those initial perceptions are beginning to change so I think you're getting more customers more openness and we're sitting here in the United States I think if you went back to to Europe and Western Europe there was always concerns about various issues security etc data sovereignty many of those issues I believe we're beginning to tackle and to resolve. But at the end of the day that the the real excitement is about the core things we started with,  this just costs less, this is simply driving more innovation,  and it's easier at the end of the day, and those are three fantastic benefits for customers.  >> So now there's a new class of buyers entering the market your customers and some of them are younger and you know we see some of them don't have voicemail setup, they don't really use email. Is Oracle's success generational and how are you guys bridging the gap or if no how are you bridging the gap to reach these new demographic of buyers who understand mobile and cloud have some that love that some are kind of you know as I mentioned earlier crossing the chasm on their own but this new generation of buyers what are you seeing >> there are you seeing a new demographic >> are you seeing a new class of buyers?  >> So it's a complex issue you bring up because the new generation in people sometimes generalize about these generations called Millennials,  etc.   They are both employees and customers and to a large degree they interrupt much of the status quo they work differently they also buy differently. Now at the same time remember that our customers have multiple generations of workers and multiple generations of customers so this actually gets quite quite interesting.  So if you take workers somebody my generation I like to might think of self myself as young and I'm in the technology etc but that the actual data says I'm not and I still work I still work in a workflow basis I use pieces of paper like you have today and and I look at those pieces of paper.   Not my kids. They work differently. They also work more collaboratively they work in groups but now I'm still in the company and so are a whole lot of Millennials that work at Oracle so we have to put processes and tools together that not only deal with what I do but what they do and make sure that we can all then work together that's a lot of work that's a lot of technology and it's actually made the business problem that we're talking about harder. Same thing from a customer perspective those same employees that work differently, they buy differently and you better be prepared to engage them where they want to be engaged,  how they want to be engaged, and that gives an opportunity for Oracle to help our customers innovate to give them better applications, better tools to go >> meet those customers and employees. >> Brings up a great point I mean it gets getting more complex on the business logic and business model and also the consumption and technology but isn't IT supposed to get easier?  I mean it once was easy compared to what it seems to be now what's your take on that it's got to get simpler what's your strategy. >> part of the issue is the data set >>   First of all the part of the continues to grow so the data set continues to grow and that drives tremendous desire for more information this while in some degree more data creates complexity it also creates tremendous amount of insight. The things we can do today we would never have thought of 10 years ago I mean there are things think about, can you imagine the  world 15 years ago where we couldn't search for anything.   We didn't have,  think of all the tools we have today that we use every day that we didn't have think about it this way applications the average age of an application in this country is about 21 22 years old meaning they were built in 1993 1994 1995 pre-search pre-mobile pre- social pre everything,  that  we're used too, so as a result you have this really old infrastructure trying to support this this new world and that's part of the promise I think of these new applications. They're engineered with mobile integrated into the applications themselves,  they're integrated with collaboration tools from the ground up,  and this world will get continue to get easier.  >> One of the questions we're asking our on our wikibon analyst team to our surveys and our customers is which vendor will provide the value fastest for getting the most out of the data. This seems to be a question that's kind of buried a little bit in some of the conversations out in the marketplace but it seems to be consistent. The value of the data is seems to be really really important. Who's gonna build the tooling and the automation and the integration capabilities to maximize the data whether it comes from some integration on an iPhone or collaborative document or an ERP system it could cover them anywhere and or mixing and matching data that seems to be the focus what's your thoughts on that and getting the most out of the data and what is Oracle doing >> with that in that regard? >> Yeah well listen historically in our industry you basically had applications that produced data, you then taken that data extracted it from the transaction application and warehoused it or  marted or used whatever term you wanted to use, and then create a bunch of analytics through some very very experienced scientific users who then would distribute reports out to the rest of the company that's the history of sort of data analytics. I did that for a good part of the earlier part of my career and I would say things are changing now that those analytics have to have to move right next to the application itself, they have to become real-time,  they have to be integrated into the core applications.  So we see happening today in Oracle applications is no longer do you have to take data out of the application you have to integrate it directly into the application so you can now get real-time insights. The ability now to integrate structured data and unstructured data and do it in near real-time so that you can now make a decision on something based on early indicators and then merge it and integrate it with the core way that you run a company and that's how you'll see analytics evolve,  the ability to take massive amounts of unstructured data but it's not gonna be good enough just to analyze that unstructured data that's social data,  you're gonna have to be able to merge that data where the system that can now do something with it.  >> And customers telling you that there and you're hearing that from customers as well? >> to, I want data that allows me to make >> Listen the fundamentals come back the right decision at the right time with the right customer the right employee to optimize my business. How do I get through all of this massive amount of data that you've been talking about so that I can make the optimal decision at the right time to benefit my business. That's the key.   >> the trends in the industry that you're >> Let's talk about trends, competing in the technology landscape has been very robust over the past few years and specifically past three years. What's your take on the landscape now I mean obviously the table stakes that the bar that the bar to get into the game that they're at entry what is the technology landscape like today from your perspective as a CEO co-ceo of Oracle with your competitors and your customers >> Well I think the shift is significant to your point I think this forget the overused term of cloud but that method of computing at the application layer the platform layer and the infrastructure layer is clearly where this industry is  Oheaded I made a presentation at OpenWorld that I felt by 2025, I predicted that 80% of that workload will be in the cloud. And I think I associated I made this statement then that I may be slow,  it may go faster and and that shift has a seismic impact on on our industry and it will happen and the reason it will happen is because of the reasons I've keep coming back to it when the customer can get better economics,  the customer can get more innovation, and they can get something done more simply, they're gonna they're gonna go do it . That's gonna cause losers and that's going to cause winners and that's why we've made the investments we have,  that's why we've built out all the data centers around the world that we have,  it's why Oracle has rewritten all of its applications from the ground up hundred percent >> all of our products now have basically >> 100 percent all of our been cloudified, they've been rewritten from the ground up to be cloud ready. And it's critical for us John because we believe this is and Larry started on this a decade ago so this isn't something we we thought about like 18 months ago and said hey why don't we go do this this this this came back a long time ago even before the term cloud was popular so it's this is this whole method and approach to computing which which which is key and frankly we started out getting into the SAS business the applications business and it was clear when you're in the applications business to really do that right you had to be in the platform business and then really to be in the platform business you had to be in the infrastructure business and that's why when you look at the barrier to entry John the ability to build out all three layers of the cloud the ability  R&D wise to do that or from a financial capital perspective to acquire all that good luck trying to do that then to build the infrastructure the data center infrastructure and the capital and remember John you have to do all this in advance think of it as to get into the cloud business from a IT perspective it's like building a hotel and you have to build a hotel before you can rent a room nobody can stay in the hotel til it's built think of that on a much bigger scale as being what it takes to get into the global cloud business >> So it's not winner-take-all it's winner take most or >> listen I was public in my view that I >> They'll be a couple of winners I think think that they'll be probably a couple of application providers I predict Oracle will be one I don't know right now today there is no other company in the industry who has got a complete suite of SAS applications Oracle's the only one somebody eventually will get will get that done I believe and I believe you'll have a couple of providers in that part of the industry I think probably likely at the platform level you have a couple of platforms that survive you'll also find the ability for those platforms to work together and I think like anything you'll see a couple of providers two three providers at the infrastructure layer >> Is Oracle a one big cloud or is it a company of many clouds I mean saw an  acquisitions this week, AddThis, and  I saw the word datacloud  sounds good great good marketing data cloud but it makes sense it's social data you see marketing cloud and social cloud you get in your are they a collection of clouds or does it matter is it labeling as the long tail distribution?  >> are clearly a set of capabilities in the >>  Well it's branding I mean they Oracle public cloud. Those capabilities are a marketing cloud a sales cloud they are not if you will architected as separate clouds they are built on as I said earlier they are architected on the same platform everything is built on Fusion Middleware common platform common base common infrastructure that can work together. >> You talked about in your prediction here that you know all data >>   You talked about in your prediction here that all  enterprise data we stored in the cloud faster and cheaper you also announced that pricing was or might have been earlier that cheaper than glacier and Amazon is that consistent the trend that you see pushing the price down lower and lower for the data storage.  >> think at the infrastructure layer we've >>   Yes I mean I looked at that world as more of a commoditized world that you know basically the infrastructure is a service there you're selling compute and you're selling storage and we think that market will continue to decline in in price and we expect to be very aggressive with our pricing in that market >> the cycle cycle styves kenzan flow as >> I want to get a take on startups we've seen in the 90s when I did my first startup it was really hard to get into the business you're the provision of data center buy router,  buy a Sun box at that time was very expensive it was also hard to get customers if you were starting up an enterprise customer in this case and then the world shifted easy to get customers with open source what seemed to be shifting back around where it's hard for startups to get enterprise customers because of the scale and integration challenges and the SLA is and the global requirements compliance and the list goes on and on do you agree with that statement or do you see it differently that it's gonna be harder and harder for startups it might be easy to start building stuff but they actually come in and compete and win enterprise customers what's your take of the the appetite of >> and John you're talking about tech startups  >> or tech startups that sell say you know how cells store take and I've just invented an all flash array and it's kick-ass and it's gonna you know eat into Oracle Exadata and EMC and all these those guys and I'm gonna go sell it to GM or I have a software product that I want to sell to company so again getting into the enterprises used to be hard and then it got easy it seems to be getting hard again what's your take of the state of that >> a long a subject that's got that's got >> So again quite a bit to it I think first I don't think companies are gonna buy all stick on the application layer for a second and talk about application startups I don't think customers are gonna buy from a hundred different companies for their cloud applications I I think when you're looking at applications specifically you think about automating a vertical process but companies also have to work together horizontally not just vertically so I think in the end they will they will have fewer cloud providers I mentioned sort of to could a company have three or a four a couple best to breeds maybe but they're not going to have they're not gonna make the on-premise complexity and just move that complexity to the cloud this is an opportunity to make things simpler to your to your earlier point I think that's what will happen now we happen to be we acquire quite a bit as I know you know and so we actually get to look at a lot of startups and I would say you're right that that we see with many startups is they start off trying to as inexpensively as possible which is I don't think I try to do it as expensively as I could try to try to build a capability and then many run into problems with eventually scaling and being eventually being able to build out we see this as we as we are I think for startups one of the real attractiveness of the cloud is that no longer any of those costs you described a few minutes ago exist I can now go do the remember that dev test I talked about that dev test I talked about for the big company is the same thing you could do on the cloud you can go get Java you can get the Oracle database you can only use or pay for what you use no longer you have to buy a Sun server that you describe or get a license and you can build on the most industrial strength commercial capability in the world Oracle and you can do that now as a start-up and be enterprise-grade from the first piece of code you write. >> So being a world-class leader might be harder for start to crack that nut versus becoming part of an ecosystem >> think that's right I think what you said >> I is right and I was trying to address both I think as a start-up you have an opportunity to to build on on commercial-grade tools from from the beginning and I do think you're right that being part of an ecosystem almost assuredly will be necessary as this market matures.  >> week at CES before GM announcing >>  A lot of commentary this Lyft could deal with Lyft and big investments try to be like Uber and Tesla electronic cars to in-car entertainment so I'm going to say that the car is one big gadget smartphone Internet of Things device which is true that big data problem that brings up the question GM and Ford or incumbent leaders in Detroit and the automotive industry are shifting radically this digital transformation is that something that you see similar in other verticals that >>  Well I'll stick with that vertical for a second I mean that vertical has shifted dramatically over the years I mean it used to be those companies made money selling cars they no longer made money selling cars years ago they then made money on service now they don't make much money on service now it's going to become the services that sit in the car with those are entertainment services or whatever they may be and so it's gonna be very interesting in that industry how they innovate do they outsource those services to another technology company in the Silicon Valley or do those become the core differentiators of those companies and and it's it's going that disintermediation occurs industry by industry by industry we've now talked about tech and what the implications are for the cloud on tech same things occurring in virtually every vertical.  >>  So you said early it's you know they're an enabler or it's gonna freak people out it's it >> Well this is what happens with innovation when time comes this is why we've done Oracle what we've done.  We've moved as quickly to the cloud as we possibly could.  It doesn't mean our on-premise business isn't strategic and important to us of course it is and I think the combination of the two capabilities gives us a huge differentiator. But that said for us to move quickly was critical we think to our long-term success and that's why we've been as fast moving as we can and I believe that true in every industry.  If you spend doing words like balance protect all of those sort of verbs they don't lend themselves to long-term success.  >> Let's talk about the company now that you're leading with the team. The number one question I get to ask I was told to ask you was ask them how the Co-CEO job is going and I'd like to know what it's like in the day in the life of Mark Hurd with Safra Catz, Larry Ellison take us through some color around what goes on behind the curtain >>  No.  I think well first of all we've been together awhile so so this is not like a new new phenomena so we we think we have sort of a capability that we can do a lot of things at the same time I don't know that that there is a broader team in terms of experiences I'm not trying to say we're great or try to be arrogant about it at all but it gives us the capability to touch a lot of things at the same time.  I've been a CEO multiple times and I can tell you it's a lonely job it's a hard job and it has a lot of responsibilities associated with it the fact that you can get a team that brings with it different skills different capabilities and you get the right personalities that that blend together that's that's a blessing and if you can get it take it . >> That's not just at the top tier of the management team also it's a >> company's pretty strong you know it's a >> I'm glad you brought that up John because I get questions like that a lot about Larry or Safra or they get questions about about all that but the reality is we're 140 thousand people in this company so we're a we're a large company with an enormous number of talented people I mean Thomas Kurian who runs our software development organization John Fowler runs our hardware development organization Dave Donatelli are people running regions we have we have a lot of very very skilled people come our Chief Architect Edward Screven I mean we just have a lot of depth at >> oracle and so it's a lot bigger than >> And the newly hired Dave Donatelli who is a shark when it comes to infrastructure he is strong and how's he working out I mean how's the that's a big >> listen and Dave is really leading the >> I think Dave's done great I mean product management go-to-market efforts around all of our all of our systems team which is going through its own transformation because we see the way infrastructure is now being used today and it's going through a lot of changing and Dave's just a great addition to Oracle >> He should me he knows it he knows the EMC playbook and certainly they have their challenges so I ought to ask you a question another one is that the hardware middleware market is about integration you mentioned that horizontal integration how how challenging is that for you guys and is this part of the transformation message that you guys have done internally because you're asking customers to transform and so can you give an example where you've transformed yourself >> Well when you talk about the middleware market I actually you mentioned the middleware market at least in some of the transformation I actually think with all of the data that we described earlier the opportunity to integrate that data and to integrate that data in the cloud is a huge opportunity for us we introduced an Oracle OpenWorld integration cloud services Oracle integration cloud services and the opportunity now for us to bring that to market and bring that capability to customers you know fantastic opportunity >> Let's talk about competition my favorite subject HP split up EMC sold to Dell , IBM is trying to make a run at it what does all this mean for the marketplace and specifically customers because you know those are big those are big companies that are transitioning or struggling as I'm saying what should what does all that mean connect the dots for the industry dynamics for those >> Well I think the industry our industry is no different than any other industry it's looking for revenue growth it's got leaders that that are are being driven to to grow revenue to grow or means to grow cashflow and in many times when you realize you you can't do that or they they find that they they're not in a position to do that they change and and change is inevitable and that's all you're seeing here is the change of what we described earlier you've got a certain market that behaved a certain way for a long time that market is now interrupted it's going to cause certain people to fail it's going to cause certain people to combine and as a result that change is going to occur and if you're not able to do the things I described the things that Oracle's done so if you will cross the chasm then change is coming and I don't think >> you've seen the end of it John. >> And a lot of these folks made big bets years ago going back a decade what bets do you see not paying off and what bets should people be making to be competitive in this new era >> believe what I said about our strategy I >> Well I think if you're not first in the cloud to begin with you're not gonna be long for this industry point one point two if you don't have enough breath in the cloud and you're just a single player with a point solution you're probably not long for this world so in the end companies want more from fewer people they want help with innovation they want better economics and that's going to prove in the end to come from a few companies in my opinion I think you'll see the same cycle that we've seen before that you'll see companies that frankly remember if you went back to the 80s think about how many great companies were in this industry in the 80s when I started in the industry I'm shame to have to admit that a shame but I hate to have to admit I'm old enough so I started yeah and therefore you look good well they're all gone yeah I mean Wang is gone the Digital's gone Data General is gone this Prime Computer is gone I mean this happens a lot and and this is just us going back to the future where we've got an interruption in the industry it's gonna cause winners and losers and it's the reason John that we've made the investments we've we have we could have easily done none of this invested none of this capital and harvested our existing business and it would look great for a while yeah not long run.    >> Yeah and you and you guys invested in the future at the right time seems it's working great for you guys the numbers are good how do you invest in R&D of some of the numbers in the cloud in terms of revenue book asking . l >> don't we don't give out you know all of >> Welll we our data forward-looking projections but what we did in our last quarter was we talked about our growth in the cloud virtually double our bookings year-over-year we've now got a chance to be in the ball well I won't give numbers out right now because I was already gonna make a forward projection but think of us now as multiple billions of dollars in revenue in  PAS platform and SAS growing and as our revenue has grown John our growth rate has actually gone up we say one more time the revenues grown and the growth rate has increased and so I think this comes down to the fact that we've just gotten better and better at this we've added more people from a salesperson perspective more of our products have become available in the market to the point of the percent of our portfolio that's now available in the cloud and we've now got lots of references and so it's an exciting time for us >> I've got to ask about Amazon Web Services obviously they've been going to have to work with our database and saying they can suck all that in and it'll come up in a second but I interviewed the former CTO of EMC who's now doing a storage startup on his own and he had a comment and I said well  Amazon's winning he says well we always debate what inning are we in in the industry and  Dave Vellante and I'm my cohost argued that he thinks were in the seventh inning I think we're in the first inning and so the guests said no you guys were both wrong,   Amazon won Game one of the doubleheader Game two is about the enterprise and it's not even started so I wanna get your thoughts Amazon certainly did well and doing well and numbers are pretty clear with public cloud now they're aggressively moving into the enterprise and it's just different ballgame talk about the dynamics their vis-a-vis Oracle you're targeting much more business approach understanding the IT side of the business Amazon is kind of do-it-yourself you know launching new stuff every day what's the distinction between the two some love Amazon people love the success you know good job Amazon people you know we cover them we like them they have a good product but it's not the end game to your message what's the difference in the two >> All right I'm gonna stay away from all the baseball analogies I think that they nstarted out as a retailer they had an IT infrastructure to support a retailer I think very clever they needed a lot of IT capacity when retail season was at its height during the holidays they said we've got a bunch of used capacity during other parts of the  un year we'll go rent it to people so they can leverage it makes sense now as you start to move into other workloads as you start working into enterprise workloads and dealing with all of the issues that come up there are more complexities to come up I think that we are in the I'll just say early stages and and by the way remember one thing I mentioned to you I think earlier just before we started and started this interview it doesn't take much of a change in it to have a dramatic effect on the revenue of the industry so I mentioned earlier about this dev test thing 30% of the industry three hundred billion dollars if only 5% of that moves its 15 billion dollars 15 billion goes from somewhere some companies that are supplying that today to somebody else and that's the very beginning of this see I actually don't think very little of this workload today has moved compared to what it will be five to six to seven years from that so - from that just a sheer numerical dimension we're in the very beginnings the very early phases of this the ability to get the bulk of this market is the ability to move massive amounts of workloads from some of the most complicated jobs >> so we're just scratching the surface of what it means >> just beginning >> ok so talk about the customers that you have because you have a lot of customers you guys have a zillion customers Oracle is a dominant player for many many generations of IT and computing we've seen that but I'm sure some of them have Amazon presence or they're kicking the tires doing some shadow IT through some things how are you guys do that because you kind of partner with Amazon on one hand but you also have cuffs cuz you have customers there how is how is that conversation going with Oracle and Amazon you say hey whatever or is there >> no I think that customers can chose to take their Oracle licenses and run them on Amazon they can also get those same capabilities directly out of the Oracle cloud we can take jobs between Amazon and Oracle and have them work together so it's it's really the customer's choice as to what's best for the customer my general view would be that if a customer is doing a platform job writing an application in Java I'll probably get infrastructure from the same person I'm getting Java from so I'm more likely to buy that infrastructure from Oracle if I'm buying that application from Oracle or using that platform from Oracle but if a customer says I'd really like to do my platform job on Oracle and store some of that up on Amazon that's customer's choice >> Okay Amazon is on the list of competitors Larry said one of the things is seeing new competitors he's SAP and IBM now new names yes Amazon, Microsoft Azure seems to be doing well we don't see vmware on that list yet but i mean as you're speaking in a little bit of some of the other players market share and cloud people have different cloud visions Amazon certainly has their in incumbent business Microsoft's what's your take on them visa vie Oracle which one Microsoft Microsoft Microsoft for that >> I'd say Microsoft done a good job I think Microsoft has moved its it's estate to the cloud not very dissimilar from from Oracle their applications is Microsoft the competitor of Oracle I think the answer to that would be sort of but but in many cases not directly their applications are really different from our applications my guess is many of the people using infrastructure from Microsoft are using infrastructure because they use their IP and their platform and/or their applications so I think therefore they they're doing the job that strategically that you see Oracle's multiple billion dollar cloud business doing as well which is moving many of its core capabilities from on Prem to to to the cloud they also have the capability now to merge and on Prem business and a cloud business which again I think it's a really key differentiator as we move forward >> differentiation seem to be dependent >> It seems to be the upon what people had or have going on either past or present so with that there's different approaches so I got to answer the question I'm a customer pretend I'm a customer hey Mark how do I evaluate all this stuff in the day is this like I need a matrix of like who's got one no wonder one's got checkboxes what criteria should I use to decide who >> I think John it comes back to the core stuff of you know who's got the best stuff you know whose stuff really in the end does does the best job for you starting at the application layer through through the platform layer through through the infrastructure layer and then the fact that you can now get this stuff in the cloud is a huge advantage for all the reasons we've been talking about for the past past several minutes but it's still gonna be about who's got the best IP but whoever's got the best IP in the end probably matters - I mean you know performance security I can go through a lot of other issues John but let's start with who's got the best IP I promise you promise you we will perform from a performance perspective I promise you we will have the best security now that said so a customer has done a license on Amazon Web Services are certainly probably doesn't run as good as an Oracle listen I mean obviously I believe the IP you have I believe that we're pretty good at running Oracle workloads I actually believe we're the best in the world at running Oracle workloads and and and and and I think you're gonna see that get yet even better as we >> I can attest theCUBE  interviews on the 48 interviews we did it was pretty clear that Oracle is very well optimized for Oracle on Oracle no doubt and clearly the performances order of magnitude significant >> and our cloud will also be capable of >> But John let me add handling non Oracle workloads so you know we think in the end while we'd love the whole world to run on Oracle we believe there'll be a portion of the world that doesn't and the fact that you can run those capabilities on the Oracle cloud along with your Oracle workload becomes critical as well >> Yeah I want to drill down on that because one of the things that I've observed over the past decade and past five years in particular there's been kind of a Oracle huge community because you have huge customer base but it's always been like you know redstack its proprietary and it's kind of like some whether it's truthful not that's been kind of a narrative but now it's with my sequel you got a lot of open technologies this Oracle OpenWorld it became very clear that integration it's not about redstack anymore referring to Oracle's you know their boxes and brand it's Oracle runs great on Oracle but if you don't have Oracle  you can still be an Oracle customer so talk about that dynamic this is a significant opportunity for Oracle news business >> You know maybe the narrative is the way you describe the narrative and you lowered your voice you know I got a certain impression and from the words you said now that said Oracle's always run hybrid workloads multiple applications around the Oracle database SAP runs in the Oracle database lots of applications run on the Oracle database so I think Oracle's always been if you will open from that perspective while continuing to build a complete stack now I'd make the argument that the cloud in many ways is of any cloud provider is a proprietary stack I mean insert name here is what is by the way that you know what the middleware is that Salesforce uses or the database or the middleware that Workday uses or day you can go down company by company and and at the end of the day you really though don't know what's behind that it is really totally provided to you by that provider and that is what you see being shifted in the cloud you can make the argument and this gets very into another interesting debate much of IT has been the do-it-yourself sort of approach I'm gonna if I will as an IT staff become an R&D organization and if you're a CEO and not a tech CEO but as CEO of a company with an IT organization you have to ask yourself is that really what I want to do do I really want to glue an operating system to a server build anything from scratch sure support it and do all this work and and or would I rather have somebody do it for me now as long as the economics are right and as long as I have trust in that in that in that partner and I'm secure and all the things we've talked about but at the end of the day transferring a lot of work that doesn't give me a lot of economic value add and moving that as I've mentioned earlier to Oracle's R&D budget I think becomes really attractive for a whole suite of >> I think it's great I'll rephrase the question so Oracle has a business as great business and you have customers they have Oracle software and contract value increases they renew they buy a new license new technology you grow your customer base but with cloud native what we with the web skills you pointed out a lot of companies were successful building their own stuff because they didn't have the cash but they had expertise so they would build their own caching and myself and they support it and pick up that cost but now as IT moves to cloud native that's a huge deal they don't want the build there also I agree with you you're looking at me >> I will say this and I don't mean to interupt you but there still is quite a debate in big companies and this is one of these transitions we've talked about the transition really from a tech industry perspective but inside the customer inside IT organizations the cloud is a threat so when you when you look at it as like the mainframe guys many computers were threatened exactly yeah so I'm now in an IT organization you know this do-it-yourself thing this is quite a bit of job security I wrote this application I've got to glue this to this and this is all really complicated and if you talk to a CEO and not get a non tech CEO and you say listen you really don't want to mess with all this because this is really complex and I'm the only one that really knows how to do this this whole thing work we're gonna transfer that complexity to somebody else has its own degree of threat to IT organizations so that debate you described that debate today John is still not over >> I think the Holy Grail whoever can provide a cloud native scalable turnkey infrastructure will probably of course you're right win that business of course right >> this is why these these these moves to your point about what in inor we in or what phase are we in these things have have multiple episodes so >>  are we in that cloud native phase right now are we for the for the new customer comes to Oracle hey you know what I'm I'm growing I've been doing stuff in the cloud with Amazon I've been doing this over here got my bootstrap data center I really want to go to cloud in a big way and we're growing leaps and bounds >> I'll stick with what I said we're in the very beginning of this and and we're in the beauty of this that the amount of IT John the suite of applications you go to any of these big banks in the United States around the world they have just sores of applications most of which were homegrown many of which sit on those mainframes you say we're threatened 25 or 30 years ago this whole move is a big set of moves that will take you know several years and you know use my discussion of 10 years out where I think I'll had it it'll take time like that to move now what customers are gonna want again one more time is I'm not going to be able to take that whole on-prem capability and just say thank you move it over here it's not gonna work so therefore the ability to move this thing job by job and then to be able to coexist these hybrid environments over a period of time become a become a key issue for our customers >> move at their own pace basically not >> so have them happy for examples and I think devtest is a as as >> I think customers I give you much work as has to get done to do that is is a sort of an intellectual layup I I think you're gonna see a lot of devtest move quickly I think you're gonna see applications particularly those applications that don't differentiate the enterprise customer facing application that you think is your unique sacred sauce you may keep that as homegrown on-prem but those commercial applications that don't differentiate me I mean me being the company I will move to the cloud as as quickly as I can >> Great excitement at Oracle OpenWorld this year the theme of integration and we talked to some customers and they were excited by that it's a big problem so that's that's one thing I'd like to talk about the second thing is what confidence can you share with the customers around new growth stretch I was the organic M&A and  organic growth versus M&A your a big buyer you're not afraid to go out and pay a premium for world-class IP but also you're doing IP internally tie those two together integrations the big themes continue to advance the product side as well as the growth strategy around organic growth and buying companies that might fit into >> Sure we spend a fair amount of R&D starting with your second question when I came I think we started spending 3.8 billion and in R&D we'll probably spend 5.2 billion this year in R&D so we we are we invest but not all of it is date we have a few hundred million dollars of our as well so we spent R&D and in in addition to the D the way I like to think about the innovation of Oracle is it's the D it's the art and it's what we acquire and so we have not built everything we've had very much a buy and build strategy we bought in some capabilities that we weren't building and we've merged those to create the portfolio that we have today and yeah we're not gonna stop that's continuing that's the cadence of Oracle right just continue yeah I won't put anything but I will so stop and I will say that we're very focused and and and not at all hesitant when we see something that we think is strategic to us to bring it in and add it to the portfolio you mentioned something early I want to drill down and horizontal integration and growth and vertical integration sometimes people think that mutually exclusive horizontal industry standard commodity hardware was a rage with open-source that helped grow a lot of the market and the web-scale days now vertical integration where hey it works it's kick-ass high-performance you are I don't really care what's in there it works Oracle support set is also working Oracle was kind of people were kind of poopoo in this whole appliance thing go back up you know five years ago good call working so by the way that is the same strategy that's called the class hey so when you really look at vertical integration the cloud is the ultimate in vertical integration because somebody's done now all the work for you when you buy a I try to explain this to customers all the time that when when somebody buys an application in the cloud they have actually procured a hardware database middleware services a data center floor space security they've bought all of that at the same time and so this this shift to the cloud really is the ultimate testimony to to vertical integration and horizontal they're not mutually exclusive you don't see them that's why I mentioned earlier what I said about why I think there will not be a hundred cloud providers supplying to our customer because integration we just talked about it in the vertical sense we want an HR implication that's completely integrated or in the ERP application that's completely integrated but those applications have to work horizontally as well as vertically so I would actually like my ERP application to talk to my HR application it might be nice if my marketing service applications talk to my ERP applications so I really can't I don't want to spend a munch of money on my IT staff horizontally integrating a hundred clouds I'd like somebody to do that for me and that's why having you know Oracle having the suite that we have in terms of applications platform and infrastructure is so important and that's really the trick balancing both really making that happen it seems to be you've got to do both I mean I'm a firm believer that you really have to have that full suite of capability ok so David lanthum IKOS and she'd want to get a question and so I told him I'd read a question for him he says and this is around the on-prem thing your strategy to create seamless experience between on Prem off principle is obviously your customers can't get there overnight how far along on the completion bar are you and your customers to achieving that vision of integration of allogram and off Prem and off prep seamless experience between seamless experience between off Prem and on-premise solutions today you can have an Oracle job running in the cloud you can have an Oracle job running on-premise with Oracle Enterprise Manager you can manage both jobs seamlessly and move workloads back and forth between on Prem in the cloud and you can do that today if we talk a lot about you know mainframes minis going back and looking at history total cost of ownership is a word that's been used in the computer industry going back to technology is a great way to justify things so let's talk about total cost of ownership but also want to get your take on what does patchwork IT mean to you that notion of patchwork IT in context well you've got a lot of terms you'd like to use I I would stick strategically what I said earlier I I think of much of what happened over the last seven eight years as a lot of do-it-yourself work whether you want to call that whatever term you want to use it the whole view of it for example in this valley if you drove up and down one you would see a slew of companies who individually are trying to sell you an IT organization of a company a piece part be sort of like driving up and down and buying a muffler and then buying a bumper and buying all kinds of stuff and putting it together in your driveway this is really now a shift in the industry away from you know patching together all these systems that are extremely complex and moving to a simpler more fully integrated tested optimized environment and it completely increases the complexity of tossa cost of ownership you said increases the complexity decreases the complexity and decreases total cost of ownership even in the industry through many cycles of innovation does that mean I'm old here at the peak of your career thank you very much people are freaking out some people are winning and happy because they're on one side of the disruption era or the other what does this innovation cycle mean to you right now compare and share your color a personal opinion around what's going on right now in the industry compared to other ones and then and how big seismic differences are there or there is it a big shift little shift compare contrast this much I think it's so exciting I think the most exciting things have in our industry in a long time I think the fact is this industry isn't now in a position and evolving into a position where we can really help customers we can get them out of this very complex world that we the industry have created and and like many industries simplify the way our customers get access to a fabulous intellectual property and make it easier and I think this is an opportunity that if you're if you're in this game if you're not listen let's face it out of colleges we haven't there we haven't had the excitement in the tech industry in years the fact is now with a new game to play this is a tremendous change with tremendous set of winners and and you know frankly there's gonna be the losers involved at the same time that's what makes it exciting and cloud is the better mark security was huge an Oracle OpenWorld I gotta ask you this question this came from a source on our wiki bond team top killer tech announcement Oracle OpenWorld was was security but with the Isis Massacre and the France thing the encryption has become a bad word was debated about four years encryption was a top topic in in the conversation that was a key message at Oracle overall everything could be encrypted beyond on encryption all the time as Larry said you guys are talking about what is the state of security right now with encryption and Oracle does that change your security angle with the products or what's what's going on with security right now so we're talking very much now about enterprise applications and and you know I think there's the cloud of all you know we we talked about this little earlier about the perception that I'm now going to take my data that is is very safe in my data center and on prime which we could debate and I'm now gonna move it to a cloud and therefore I feel vulnerable I feel vulnerable that my data is now in the hands of some other entity and and for us I think one big advantage Oracle has is the fact that that we're very good at data we've managed data since the beginning of the company I mean our first customer was yeah well in the CIA was our first customer they remain a customer today and so security has always been at the core of Oracle's DNA now the one of the reasons we have an encrypted database is four years is because when you encrypt them it the performance of the database actually slows so it's been years of evolution years in terms of Exadata development in terms of all the memory that's now I won't go into all the details of the technology but now we can fully encrypt the database and get incredible performance so what you have no hidden performance no I'm not you ready in great job none none incredible performance and the same theme you have an encrypted database now let me tell you what that means that means that when when a customer's HR data is in our cloud our people that are moving around the customers data don't see the customers data they see frankly gibberish they have files the key to that encrypted data can sit with the customer so when that those files come back across the network the customer can decide when where to use the key to open to open that encrypted file so therefore when you're in the Oracle cloud and I listen I encourage everybody ask our competitors how they deal with this ask ask them what their options are how do they deal with that data is is somebody whose nature or provider are there are there people looking at the customers data as they move files around well we've decided that we think the most important thing we can do is secure that data so let's pretend and by the way I don't think this would ever happen but if somebody actually got access to those there's nothing to have access to it's all encrypted talk about the implications for cloud on a global basis data sovereignty is a huge issue with cloud yeah does this impact at all there's a help it does no it does and so that's it's the reason we've had to one of one of the reasons that we've put data centers in many locations as we have so we do have customers that by law have operate in Germany and in the UK and employee data can't be of a UK employee cannot be in Germany and vice versa well we have we now have the ability because of our data center capability in Germany and our data center in the UK to actually make that capability work and so this this issue of data sovereignty like security is a big issue and you're helping the data sovereignty problem with this Robert yes we've had to address it we've had to address it we've had to embrace it and we've had to help it and it's the same thing with security so now you can have a fully secure capable capability in you know 19 20 different countries to help deal with that with that with that data sovereignty and security issue Barker thanks taking the time here for the cube 101 conversation thank you very much thanks John appreciate it you're watching special one-on-one exclusive conversation with Mark Hurd CEO of Oracle here on the cube on the ground here at Oracle's headquarters you