>>from around the globe. It's the Cube covering HP. Discover Virtual experience Brought to you by HP. >>Welcome back to the Cube's coverage of HP Discover. 2020. The virtual experience. The Cube. The Cube has been virtualized. My name is Dave Vellante. I'm here with Stuart Minuteman and our good friend Tim Crawford is here. He's a strategic advisor to see Io's with boa. Tim, Great to see you. Stuart. Thanks for coming on. >>Great to see you as well, Dave. >>Yes. So let's unpack. What's going on in that Discover Antonio's, He notes, Maybe talk a little bit about the prospects for HP of coming forward in this decade. You know, last decade was not a great one for HP, HP. I mean, there was a lot of turmoil. There was a botched acquisitions. There was breaking up the company and spin merges and a lot of distractions. And so now that companies really and you hear this from Antonio kind of positioning for innovation for the next decade. So So I think this is probably a lot of excitement inside the company, but I want to touch on a couple of points and then you get your guys reaction, I guess, you know, to start off. Obviously, Antonio's talking about Cove in the role that they played in that whole, you know, pandemic and the transition toe the the isolation economy. But so let me start with you, Tim. I mean, what is the sort of posture amongst cios that you talk to? How strategic is HB H B two? The folks that you talk to in your community? >>Well, I think if you look at how CIOs are thinking, especially as we head into covert it into Corona virus and kind of mapping through that, that price, um, it really came down to Can they get their hands on technology? Can they get people back to work working from home? Can they do it in a secure fashion? Um, keeping people productive. I mean, there was a lot of block and tackling, and even to this day, there's still a fair amount of that was taking place. Um, we really haven't seen the fallout from the cybersecurity impact of expanding our foot print. Um, quite. But we'll see that, probably in the coming months. There are some initial inklings there when it comes to HP specifically I think it comes back to just making sure that they had the product on hand, that they understood that customers are going through dramatic change. And so all bets are off. You have to kind of step back and say, Okay, those plans that I had 60 9100 and 20 days ago those strategies that I may have already started down the path with those are up for grabs. I need to step back from those and figure out What do I do now? And I think each company, HP included, needs to think about how do they start to meld themselves, to be able to address those changing customer needs? And I think that's that's where this really kind of becomes the rubber hits the road is is HP capable of doing that? And are they making the right changes? And quite frankly, that starts with empathy. And I think we've heard pretty clearly from Antonio that he is sympathetic to the plight of their customers and the world >>on the whole. >>Yeah, and I think culturally 10 minutes do I mean I think you know HP is kind of getting back to some of its roots, and Tony has been there for a long time. I think people I think is very well liked. Andi, I think, ease of use, and I'm sure he's tough. But he's also a very fair individual, and he's got a vision and he's focused. And so, you know, I think again, as they said, looking forward to this decade, I think could be one that is, you know, one of innovation. Although, you know, look, you look at the stock price, you know, it's kind of piqued in November 19. It's obviously down like many stocks, so there's a lot of work to do there, and it's too. We're certainly hearing from HP. This notion of everything is a service that we've talked about green like a lot. What's your sense of their prospects going forward in this, you know, New Era? >>Yeah, I mean, Dave, one of the biggest attacks we've heard about H E in the last couple of years, you know the line Michael Dell would use is you're not going to grow by, say, abstraction. But as a platform company, HP is much more open. From what I've seen in the HP that I remember from, you know, 5 to 10 years ago. So you look at their partner ecosystem. It's robust. So, you know, years ago, it seemed to be if it didn't come out of HP Labs, it wasn't a product, you know. That was the services arm all wanted to sell HP here. Now, in this software defined world working in a cloud environment, they're much more open to finding that innovation and enabling it. So, you know, we talk about Green Lake Day. Three lakes got about 1000 customers right now, and a big piece of that is a partner. Port Police, whether it's VM Ware Amazon Annex, were H B's full stack themselves. They have optionality in there, and that's what we hear from from users is that they want flexibility they don't want. You know, you look at the cloud providers, it's not, you know, here's a solution. You look at Amazon. There's dozens of databases that you can use from Amazon or, if you use on top of Amazon, so H p e. You know, not a public cloud provider, but looking more like that cloud experience. They've done so many acquisitions over the years. Many of them were troubled. They got rid of some of the pieces that they might have over paid for. But you look at something like CTP them in this multi cloud world in the networking space, they've got a really cool, open source company, the company behind spiffy, inspire. And, you know, companies that are looking at containers and kubernetes, you know, really respond to say, Hey, these are projects that were interesting Oh, who's the company that that's driving that it's HP so more open, more of a partner ecosystem definitely feels that there's a lot there that I respect and like that hp >>well, I mean, the intent of splitting the company was so that HP could be more focused but focused on innovation was the intent was to be the growth company. It hasn't fully played out yet. But Tim, when you think about the conversations that CIOs are having with with HPI today versus what they were having with hpe HP, the the conglomerate of that the Comprising e ds and PCs, I guess I don't know, in a way, more more Dell like so Certainly Michael Dell's having strategic conversations, CIOs. But you got to believe that the the conversations are more focused today. Is that a good thing or a jury's still out? >>No, it absolutely is a good thing. And I think one of the things that you have to look at is we're getting back to brass tax. We're getting back to that focus around business objectives. So no longer is that hey, who has the coolest tech? And how can we implement that tax? Kind of looking from a tech business? Ah, spectrum, you're now focused squarely is a C i. O. You have to be squarely focused on what are the business objectives that you are teamed up for, and if you're not, you're on a very short leash and that doesn't end well. And I think the great thing about the split of HP HP e split and I think you almost have to kind of step back for a second. Let's talk about leadership because leadership plays a very significant role, especially for CIOs that are thinking about long term decisions and strategic partners. I don't think that HP necessarily had the right leadership in place to carry them into that strategic world. I think Antonio really makes a change there. I mean, they made some really poor decisions. Post split. Um, that really didn't bode well for HP. Um, and frankly, I talked a bit about that I know wasn't really popular within HP, but quite frankly, they needed to hear it. And I think that actually has been heard. And I think they are listening to their customers. And one of the big changes is they're getting back into the software business. And when you talk about strategic initiatives, you have to get beyond just the hardware and start moving up the proverbial stack, getting closer to those business initiatives. And that is software. >>Yeah, well, Antonio talked about sort of the insights. I mean, something I've said a lot about borrowed from the very Meeker conversations that that data is plentiful. Something I've always said. Insights aren't. And so you're right. You've seen a couple of acquisitions, you know, Matt bahr They picked up, I think pretty inexpensively. Kind of interesting cause, remember, HP hp had an investment in Horton works, which, of course, is now Cloudera and Blue Data. Ah Kumar Conte's company, you know, kind of focusing on maybe automating data, you know, they talked about Ed centric, cloud enabled, data driven. Nobody's gonna argue with those things. But you're right, Tim. I mean, you're talking more software than kind of jettisons the software business and now sort of have to rebuild it. And then, of course, do this cloud. What do you make of HP ease Cloud play? >>Yeah, well, I >>mean, >>Dave, you the pieces. You were just talking about math bar and blue data, where HP connects it together is, you know, ai ops. So you know, where are we going with infrastructure? There needs to be a lot more automation. We heard a great quote. I love from automation anywhere. Dave was, if you talk about digital transformation without automation, it's hallucination. So, you know, HP baking that into what they're doing. So, you know, I fully agree with Tim software software software, you know, is where the innovation is. So it can't just be the infrastructure. How do you have eyes and books into the applications? How are you helping customers build those new pieces? And what's the other software that you build around that? So, you know, absolutely. It's an interesting piece. And you know, HP has got a lot of interesting pieces. You know, you talk about the edge. Aruba is a great asset for that kind of environment and from a partnership, that is a damn point. Dave. They have. John Chambers was in the keynote. John, of course. Long time partners. He's with Cisco for many years Intel. Cisco started eating with HP on the server business, but now he's also the chairman of pensando. HP is an investor in pensando general availability this month of that solution, and that's going to really help build out that next generation edge. So, you know, a chip set that HP E can offer similar to what we see how Amazon builds outpost s. So that is a solution both for the enterprise and beyond. Is as a B >>yeah course. Do. Of course, it's kind of, but about three com toe. Add more fuel to that tension. Go ahead, Tim. >>Well, I was going to pick apart some of those pieces because you know, at edge is not an edge is not an edge. And I think it's important to highlight some of the advantages that HP is bringing to the table where Pensando comes in, where Aruba comes in and also we're really comes in. I think there are a number of these components that I want to make sure that we don't necessarily gloss over that are really key for HP in terms of the future. And that is when you step back and you look at how customers are gonna have to consume services, how they're going to have to engage with both the edge and the cloud and everything in between. HP has a great portfolio of hardware. What they haven't necessarily had was the glue, that connective tissue to bring all of that together. And I think that's where things like Green Lake and Green Lake Central really gonna play a role. And even their, um, newer cloud services are going to play a role. And unlike outposts and unlike some of the other private cloud services that are on the market today, they're looking to extend a cloud like experience all the way to the edge and that continuity creating that simplicity is going to be key for enterprises. And I think that's something that shouldn't be understated. It's gonna be really important because when I look at in the conversations I'm having when we're looking at edge to cloud and everything in between. Oh my gosh, that's really complicated. And you have to figure out how to simplify that. And the only way you're going to do that is if you take it up a layer and start thinking about management tools. You start thinking about autumn, and as companies start to take data from the edge, they start analyzing it at the edge and intermediate points on the way to cloud. It's going to be even more important to bring continuity across this entire spectrum. And so that's one of the things that I'm really excited about that I'm hearing from Antonio's keynote and others. Ah, here at HP Discover. >>Yeah, >>well, let's let's stay on that stupid. Let's stay on that for a second. >>Yeah, I wanted to see oh interested him because, you know, it's funny. You think back. You know, HP at one point in time was a leader in, you know, management solutions. You know, HP one view, you know, in the early days, it was really well respected. I think what I'm hearing from you, I think about outpost is Amazon hasn't really put management for the edge. All they're doing is extending the cloud piece and putting a piece out of the edge. It feels like we need a management solution that built from the ground up for this kind of solution. And do I hear you right? You believe that to be as some of those pieces today? >>Well, let's compare and contrast briefly on that. I think Amazon and the way Amazon is well, is Google and Microsoft, for that matter. The way that they are encompassing the edge into their portfolio is interesting, but it's an extension of their core business, their core public cloud services business. Most of the enterprise footprint is not in public cloud. It's at the other end of that spectrum, and so being able to take not just what's happening at the edge. But what about in your corporate data center in your corporate data center? You still have to manage that, and that doesn't fall under the purview of Cloud. And so that's why I'm looking at HP is a way to create that connective tissue between what companies are doing within the corporate data center today, what they're doing at the edge as well as what they're doing, maybe in private cloud and an extension public cloud. But let's also remember something else. Most of these enterprises, they're also in a multi cloud environment, so they're touching into different public cloud providers for different services. And so now you talk about how do I manage this across the spectrum of edge to cloud. But then, across different public cloud providers, things get really complicated really fast. And I think the hints of what I'm seeing in software and the new software branding give me a moment of pause to say, Wait a second. Is HP really gonna head down that path? And if so, that's great because it is of high demand in the enterprise. >>Well, let's talk about that some more because I think this really is the big opportunity and we're potentially innovation is. So my question is how much of Green Lake and Green Lake services are really designed for sort of on Prem to make that edge to on Prem? No, I want to ask about Cloud, how much of that is actually delivering Cloud Native Services on AWS on Google on Azure and Ali Cloud etcetera versus kind of creating a cloud like experience for on Prem in it and eventually the edge. I'm not clear on that. You guys have insight on how much effort is going into that cloud. Native components in the public cloud. >>Well, I would say that the first thing is you have to go back to the applications to truly get that cloud native experience. I think HP is putting the components together to a prize. This to be able to capitalize on that cloud like experience with cloud native APS. But the vast majority of enterprise app they're not cloud native. And so I think the way that I'm interpreting Green Lake and I think there are a lot of questions Greenland and how it's consumed by enterprises there. There was some initial questions around the branding when it first came out. Um, and so you know it's not perfect. I think HP definitely have some work to do to clarify what it is and what it isn't in a way that enterprises can understand. But from what I'm seeing, it looks to be creating and a cloud like experience for enterprises from edge to cloud, but also providing the components so that if you do have applications that are shovel ready for cloud or our cloud native, you can embrace Public Cloud as well as private cloud and pull them under the Green Lake >>Rela. Yeah, ostensibly stew kubernetes is part of the answer to that, although you know, as we've talked about, Kubernetes is necessary containers and necessary but not sufficient for that experience. And I guess the point I'm getting to is, you know we do. We've talked about this with Red Hat, certainly with VM Ware and others the opportunity to have that experience across clouds at the Edge on Prim. That's expensive from an R and D standpoint. And so I want to kind of bring that into the discussion. HP last year spent about 1.8 billion in R and D Sounds like a lot of money. It's about 6% of its of it's revenues, but it's it's spread thin now. It does are indeed through investments, for instance, like Pensando or other acquisitions. But in terms of organic R and D, you know, it's it's it's not at the top of the heap. I mean, obviously guys like Amazon and Google have surpassed them. I've written about this with regard to IBM because they, like HP, spend a lot on dividends on share buybacks, which they have to do to prop up the stock price and placate Wall Street. But it But it detracts from their ability to fund R and d student your take on that sort of innovation roadmap for the next decade. >>Yeah, I mean, one of the things we look at it in the last year or so there's been what we were talking about earlier, that management across these environments and kubernetes is a piece of it. So, you know, Google laid down and those you've got Microsoft with Azure, our VM ware with EMS. Ooh! And to Tim's point, you know, it feels like Green Lake fits kind of in that category, but there's there's pieces that fall outside of it. So, you know, when I first thought of Green Lake, it was Oh, well, I've got a private cloud stack like an azure stack is one of the solutions that they have there. How does that tie into that full solution? So extending that out, moving that brand I do here, you know good things from the field, the partners and customers. Green Lake is well respected, and it feels like that is, that is a big growth. So it's HB 50 from being more thought of, as you know, a box seller to more of that solution in subscription model. Green Lake is a vehicle for that. And as you pointed out, you know, rightfully so. Software so important. And I feel when that thing I'd say HPI ee feels toe have more embracing of software than, say, they're closest competitors. Which is Dell, which, you know, Dell Statement is always to be the leading infrastructure writer, and the arm of VM Ware is their software. So, you know, just Dell alone without VM ware, HP has to be that full solution of what Dell and VM ware together. >>Yeah, and VM Ware Is that the crown jewel? And of course, HP doesn't have a VM ware, but it does have over 8000 software engineers. Now I want to ask you about open source. I mean, I would hope that they're allocating a large portion of those software engineers. The open source development developing tooling at the edge, developing tooling from multi cloud certainly building hooks in from their hardware. But is HP Tim doing enough in open source? >>Well, I don't want to get on the open source bandwagon, and I don't necessarily want to jump off it. I think the important thing here is that there are places where open source makes sense in places where it doesn't, um, and you have to look at each particular scenario and really kind of ask yourself, does it make sense to address it here? I mean, it's a way to to engage your developers and engage your customers in a different mode. What I see from HP E is more of a focus around trying to determine where can we provide the greatest value for our customers, which, frankly, is where their focus should be, whether that shows up in open source for software, whether that shows up in commercial products. Um, we'll see how that plays out. But I think the one thing that I give HP e props on one of several things I would say is that they are kind of getting back to their roots and saying, Look, we're an infrastructure company, that is what we do really well We're not trying to be everything to everyone. And so let's try and figure out what are customers asking for? How do we step through that? I think this is actually one of the challenges that Antonio's predecessors had was that they tried to do jump into all the different areas, you know, cloud software. And they were really X over, extending themselves in ways that they probably should. But they were doing it in ways that really didn't speak to their four, and they weren't connecting those dots. They weren't connecting that that connective tissue they needed to dio. So I do think that, you know, whether it's open source or commercial software, we'll see how that plays out. Um, but I'm glad to see that they are stepping back and saying Okay, let's be mindful about how we ease into this >>well, so the reason I bring up open source is because I think it's the mainspring of innovation in the industry on that, but of course it's very tough to make money, but we've talked a lot about H B's strength since breath is, we haven't talked much about servers, but they're strong in servers. That's fine We don't need to spend time there. It's culture. It seems to be getting back to some of its roots. We've touched on some of its its weaknesses and maybe gaps. But I want to talk about the opportunities, and there's a huge opportunity to the edge. David Flores quantified. He says that Tam is four. Trillion is enormous, but here's my question is the edge Right now we're seeing from companies like HP and Dell. Is there largely taking Intel based servers, kind of making a new form factor and putting them out on the edge? Is that the right approach? Will there be an emergence of alternative processors? Whether it's our maybe, maybe there's some NVIDIA in there and just a whole new architecture for the edge to authority. Throw it out to you first, get Tim Scott thoughts. >>Yeah, So what? One thing, Dave, You know, HP does have a long history of partnering with a lot of those solutions. So you see NVIDIA up on stage when you think about Moonshot and the machine and some of the other platforms that they felt they've looked at alternative options. So, you know, I know from Wicky Bon standpoint, you know, David Foyer wrote the piece. That arm is a huge opportunity at the edge there. And you would think that HP would be one of the companies that would be fast to embrace that >>Well, that's why I might like like Moonshot. I think that was probably ahead of its time. But the whole notion of you know, a very slim form factor that can pop in and pop out. You know, different alternative processor architecture is very efficient, potentially at the edge. Maybe that's got got potential. But do you have any thoughts on this? I mean, I know it's kind of Yeah, any hardware is, but, >>well, it is a little hardware, but I think you have to come back to the applicability of it. I mean, if you're taking a slim down ruggedized server and trying Teoh essentially take out, take off all the fancy pieces and just get to the core of it and call that your edge. I think you've missed a huge opportunity beyond that. So what happens with the processing that might be in camera or in a robot or in an inch device? These are custom silicon custom processors custom demand that you can't pull back to a server for everything you have to be able to to extend it even further. And, you know, if I compare and contrast for a minute, I think some of the vendors that are looking at Hey, our definition of edge is a laptop or it is this smaller form factor server. I think they're incredibly limiting themselves. I think there is a great opportunity beyond that, and we'll see more of those kind of crop up, because the reality is the applicability of how Edge gets used is we do data collection and data analysis in the device at the device. So whether it's a camera, whether it's ah, robot, there's processing that happens within that device. Now some of that might come back to an intermediate area, and that intermediate area might be one of these smaller form factor devices, like a server for a demo. But it might not be. It might be a custom type of device that's needed in a remote location, and then from there you might get back to that smaller form factor. Do you have all of these stages and data and processing is getting done at each of these stages as more and more resources are made available. Because there are things around AI and ML that you could only do in cloud, you would not be able to do even in a smaller form factor at the edge. But there are some that you can do with the edge and you need to do at the edge, either for latency reasons or just response time. And so that's important to understand the applicability of this. It's not just a simple is saying, Hey, you know, we've got this edge to cloud portfolio and it's great and we've got the smaller servers. You have to kind of change the vernacular a little bit and look at the applicability of it and what people are actually doing >>with. I think those are great points. I think you're 100% right on. You are going to be doing AI influencing at the edge. The data of a lot of data is going to stay at the edge and I personally think and again David Floor is written about this, that it's going to require different architectures. It's not going to be the data center products thrown over to the edge or shrunk down. As you're saying, That's maybe not the right approach, but something that's very efficient, very low cost of when you think about autonomous vehicles. They could have, you know, quote unquote servers in there. They certainly have compute in there. That could be, you know, 2344 $5000 worth of value. And I think that's an opportunity. I'd love to see HP Dell, others really invest in R and D, and this is a new architecture and build that out really infuse ai at the edge. Last last question, guys, we're running out of time. One of the things I'll start with you. Still what things you're gonna watch for HP as indicators of success of innovation in the coming decade. As we said last decade, kind of painful for HP and HP. You know, this decade holds a lot of promise. One of the things you're gonna be watching in terms of success indicators. >>So it's something we talked about earlier is how are they helping customers build new things, So a ws always focuses on builders. Microsoft talks a lot. I've heard somethin double last year's talk about building those new applications. So you know infrastructure is only there for the data, and the applications live on top of it. And if you mention Dave, there's a number of these acquisitions. HP has moved up the stack. Some eso those proof points on new ways of doing business. New ways of building new applications are what I'm looking for from HP, and it's robust ecosystem. >>Tim. Yeah, yeah, and I would just pick you back right on. What's do was saying is that this is a, you know, going back to the Moonshot goals. I mean, it's about as far away as HP ease, and HP is routes used to be and that that hardware space. But it's really changing business outcomes, changing business experiences and experiences for the customers of their customers. And so is far cord that that eight p e can get. I wouldn't expect them to get all the way there, although in conversations I am having with HP and with others that it seems like they are thinking about that. But they have to start moving in that direction. And that's actually something that when you start with the builder conversation like Microsoft has had, an Amazon has had Google's had and even Dell, to some degree has had. I think you missed the bigger picture, so I'm not saying exclude the builder conversation. But you have to put it in the right context because otherwise you get into this siloed mentality of right. We have solved one problem, one unique problem, and built this one unique solution. And we've got bigger issues to be able to address as enterprises, and that's going to involve a lot of different moving parts. And you need to know if you're a builder, you've it or even ah ah, hardware manufacturer. You've got to figure out, How does your piece fit into that bigger picture and you've got to connect those dots very, very quickly. And that's one of the things I'll be looking for. HP as well is how they take this new software initiative and really carry it forward. I'm really encouraged by what I'm seeing. But of course the future could hold something completely different. We thought 2020 would look very different six months ago or a year ago than it does today. >>Well, I wanna I want to pick up on that, I think I would add, and I agree with you. I'm really gonna be looking for innovation. Can h P e e get back to kind of its roots? Remember, H B's router invents it was in the logo. I can't translate its R and D into innovation. To me, it's all about innovation. And I think you know cios like Antonio Neri, Michael Dell, Arvind Krishna. They got a They have a tough, tough position because they're on the one hand, they're throwing off cash, and they can continue Teoh to bump along and, you know, placate Wall Street, give back dividends and share buybacks. And and that's fine. And everybody would be kind of happy. But I'll point out that Amazon in 2007 spent spend less than a $1,000,000,000 in R and D. Google spent about the back, then about the same amount of each B E spends today. So the point is, if the edge is really such a huge opportunity, this $4 trillion tam is David Foyer points out, there's a There's a way in which some of these infrastructure companies could actually pull a kind of mini Microsoft and reinvent themselves in a way that could lead to massive shareholder returns. But it was really will take bold vision and a brave leader to actually make that happen. So that's one of things I'm gonna be watching very closely hp invent turn r and D into dollars. And so you guys really appreciate you coming on the Cube and breaking down the segment for ah, the future of HP be well, and, uh and thanks very much. Alright. And thank you for watching everybody. This is Dave Volante for Tim Crawford and Stupid men. Our coverage of HP ease 2020 Virtual experience. We'll be right back right after this short break. >>Yeah, yeah, yeah, yeah.

from the cube studios in Palo Alto in Boston connecting with thought leaders all around the world this is a cube conversation hello everybody welcome to the cubes exclusive coverage of IBM thanks 2020 digital event experience the cube covering wall-to-wall we've got a number of interviews planned for you going deep my name is Dave Volante I'm here with stoom in ament's - how you doing doing great Dave so we're socially distant as you can see in the studio and mohab row everybody's you know six feet apart got our masks on took them off for this for this segment so Stu let's get into it so a very interesting time obviously for IBM Arvind Krishna doing the big keynote Jim Whitehurst new president so you got a new leadership a lot of talk about resilience agility and flexibility you know which is kind of interesting obviously a lot of their clients are thinking about kovat 19 in that context iBM is trying to provide solutions and capabilities we're going to get into it but really the linchpin of all this is open shift and RedHat and we're gonna talk about what that means for the vision that Arvind Krishna laid out and let's get into it your your thoughts on think 2020 yeah so Dave of course you know last week we had Red Hat summit so Red Hat is still Red Hat you and I had a nice discussion going into Red Hat summit yes thirty four billion dollar acquisition there now under IBM Jim white her slides over in that new role as president but you know one of the questions we've had fundamentally Dave is does an acquisition like this will it change IBM will it change the cloud landscape openshift and Red Hat are doing quite well we definitely have seen some some of the financials and every audience that hasn't seen your analysis segment of IBM should really go in and see that because the Red Hat of course is one of the bright spots in the financials they're you know good growth rate on the number of customers and what they're doing in cloud and underneath a lot of those announcements you dig down and oh yeah there's openshift and there's Red Hat Enterprise Linux rel so you know I long partner for decades between IBM and Red Hat but is you know how will the IBM scale really help the Red Hat pieces there's a number of announcements underneath you know not just you know how does the entire world work on you know Z and power and all of the IBM platforms but you know I believe it's arvind says one of the enduring platforms needs to be the hybrid cloud and you heard a Red Hat summit the entire week it was the open hybrid cloud was the discussion well yes so that actually is interesting you brought up Arvin's sort of pillars there were three enduring platforms that he cited then the fourth of course is I guess open hybrid cloud but the first was mainframes the second was and I'm not sure this is the right order the second was services and then the third was middleware so basically saying excuse me we have to win the day for the architecture of hybrid cloud what's that mean to you then I'd like to chime in yeah so so Dave first of all you know when when we did our analysis when IBM bought red Hatton says you know my TL DR was does this change the cloud landscape my answer is no if I'm a Amazon I'm not sitting there saying oh geez you know the combination of IBM and Red Hat well they're partners and they're they're gonna be involved in it does IBM have huge opportunities in hybrid cloud multi cloud and edge computing absolutely one of the questions is you know how will I be M services really be transformed you know Dave we've watched over the last decade some of the big service organizations have really shrunk down cloud changed the marginal economics you've done so much discussion of this over the last handful of years that you need to measure yourself against the hyper scalars you need to you know see where you can add value and the question is Dave you know when and where do we think of IBM in the new era well so coming back to sort of your point about RedHat and services is it about cloud is a developer's near-term I've said it's it's more about services than it is about cloud longer-term I think it is about cloud but but IBM's definition of cloud is maybe a little different than 10 hours but when Jeannie when on the roadshow - after the redhead acquisitions you said this is gonna be a creative - free cash flow within one year and the reason why I always believe that is because they were gonna plug Red Hat and we've talked about this an open shift right into their services business and start modernizing applications right away they've actually achieved that so I think they had pretty good visibility and that was kind of a mandate so IBM's huge services organization is in a good position to do that they've got deep industry expertise we heard Arvind Krishna on his keynote talking about that Jim Whitehurst talking more about services you really didn't hear Jim you know previously in his previous roles talk a lot about services other than as part of the ecosystem so it's an interesting balancing act that that iBM has to do the real thing I want to dig into Stu is winning the day with the with with the architecture of hybrid cloud so let's start with with cloud talk about how IBM defines cloud IBM on its earning earnings call we talked about this on our Red Hat Summit analysis the cloud was you know 23 billion you know growing it whatever 20 20 plus percent when my eyes have been bleeding reading IBM financial statements in ten case for the last couple of weeks but when you go in there and you look at what's in that cloud and I shared this on my braking analysis this week a very small portion of that cloud revenue that what last year 21 billion very small portion is actually what they call cloud cloud and cognitive software it's only about 20 percent of the pie it's really services it's about 2/3 services so that is a bit of a concern but at the same time it's their greatest opportunity because they have such depth and services if IBM can increase the percentage of its business that's coming from higher margin software a business which was really the strategy go back 20 years ago it's just as services became this so big it's so pervasive that that software percentage you know maybe it grew maybe it didn't but but that's IBM's opportunities to really drive that that that software based revenues so let's talk about what that looks like how does OpenShift play in that IBM definition of cloud which includes on Prem the IBM public law everybody else's public cloud multi-cloud and the edge yeah well first of all Dave right the question is where does IBM technologies where do they live so you know look even before the Red Hat piece if we looked at IBM systems there's a number of times that you're seeing IBM software living on various public clouds and that it's goodness you know one of the things we've talked about for a number of years is you know how can you become more of a software company how can you move to more of the you know cloud consumption models you go in more op X and capex so IBM had done some of that and Red Hat should be able to help supercharge that when we look at some of the announcements the one that of course caught my other most Dave is the you know IBM cloud satellite would would say the shorthand of it it's IBM's version of outposts and underneath that what is it oh it's open shift underneath there and you know how can I take those pieces and we know open ship can live across you know almost any of the clouds and you know cannot live on the IB cloud IBM cloud absolutely can it be open ship be in the data center and on virtualization whether it be open source or VMware absolutely so satellite being a fundamental component underneath of open ship makes a lot of sense and of course Linux yeah Linux underneath if you look at the the one that we've heard IBM talking about for a while now is cloud packs is really how are they helping customers simplify and build that cloud native stack you start with Red Hat Enterprise Linux you put openshift on top of that and then cloud packs are that simple toolset for whether you're doing data or AI or integration that middleware that you talked about in the past iBM has way the ways that they've done middleware for decades and now they have the wonderful open source to help enable that yeah I mean WebSphere bluemix IBM cloud now but but OpenShift is really that pass layer that that IBM had coveted right and I was talking to some of IBM's partners getting ready for this event and they say if you dig through the 10k cloud packs is one of those that you know there are thousands of customers that are using this so it's good traction not just hey we have this cloud stuff and it's wonderful and we took all of these acquisitions everything from SoftLayer to software pieces but you know cloud packs is you know a nice starter for companies to help really move forward on some of their cloud native application journey yes so what whatever we talked about this past week in the braking analysis and certainly David floor has been on this as well as this notion of being able to run a Red Hat based let's call it a stack everywhere and Jim White has talked about that essentially really whether it's on Prem at the edge in the clouds but the key there stew is being able to do so natively so every layer of you know it began call it the stack IT services the data plane the control plane the management plane all the planes being able to the networking the transport etc being natively able to run wherever it is so that you can take fine-grain advantage and leverage the primitives on respective clouds the advantage that IBM has in my view would love your thoughts on this is that Red Hat based platforms it's open source and so I mean it's somebody gonna trust Amazon to be the the cloud native anybody's cloud yeah you know solution well if you're part of the Amazon stack I mean I Amazon frankly an Oracle have similar kind of mindset you know redstack Amazon stack make it all homogeneous and it'll run just fine IBM's coming at it from an open source perspective so they they in some ways will have more credibility but it's gonna take a lot of investment to really Shepherd those standards they're gonna have to put a lot of commitments in committers and they're gonna have to incent people to actually adhere to those standards yeah I mean David's the idea of pass the platform as a service that we've been chasing as an industry for more than a decade what's interesting if you listen to IBM what's underneath this well it's you know taking advantage of the container based architecture with kubernetes underneath so can I run kubernetes anywhere yeah pretty much every cloud has their own service OpenShift can live everywhere the question is what David floors rightly putting out okay if I bake to a single type of solution can i really take advantage of the native offerings so the discussion we've always had for a long time as dua virtualize something in which case I'm really abstract away I get to you know I can't take advantage of the all various pieces do I do multi cloud in which case I have some least common denominator way of looking at cloud because I what I want to be able to do is get the value in differentiation out of each cloud I use but not be stuck on any cloud and yes Dave Red Hat with openshift and based with kubernetes and the open source community is definitely a leading way to do that what you worry about is saying okay how much is this stuck on containerization will it be able to take advantage of things like serverless you talk to IBM and say okay underneath it's going to have all this wonderful components Dave when I talked to Andy Jesse and he says if I was rebuilding AWS today it would all be service underneath so what is that underlying construct you know is it flexible and can it be updated Red Hat and IBM are going to bridge between the container world and the serverless world with things like a native but absolutely we are not yet at the Nirvana that developers can just build their apps and know that it can run anywhere and take advantage of anything so you know some things we know we need to keep working so a couple other things there so Jim Weider has talked about ingesting innovation that the nature of innovation is such that it comes from a lot of different places open source obviously is a you know fundamental you know component of that he talked about the telco edge he gave an example of Vodafone Arvind Krishna talked about anthem kind of redefining healthcare post kovat so you're seeing some examples of course that's good that IBM puts forth some really you know proof points it's not just you know slide where which is good I think the the interesting thing you know you can't just put you know containers out there and expect the innovation to find its way into those containers it's gonna take a lot of work to make sure that as those different layers of the stack that we were talking about before are actually going to come to fruition so there's there's the there's some other announcements in this regard to these Edgecumbe edge computing application manager let's say the telco edge a lot of automation focused you mentioned IBM satellite there's the financial services cloud so we're seeing IBM actually you know sprinkle around some investments there as I said in my breaking in houses I'd like to see them dial up those investments a little bit more maybe dial down the return of cash at least for the next several years to shareholders yeah I mean Dave the concern you would talk to most customers and you say well if you try to even optimize your own data center and turn it into a cloud how can you take advantage of the innovation that the Amazon Microsoft Google's and IBM's are Tait are putting out there in the world you want to be able to plug into that you want to be able to leverage those those new services so that is where it's definitely a shift Dave you think about IBM over a hundred years usually they're talking about their patent portfolio I I think they've actually opened up a lot of their patent portfolio to help attack you know the kovat 19 so it is definitely a very different message and tenor that I hear under Arvind Krishna you know in very early days than what I was used to for the last decade or two from IBM yeah well at the risk of being a little bit repetitive one of the things that I talked about in my breaking the analysis I highlighted that arvind said he wants to lead with a technical story which I really like Arvin's a technical visionary his predecessors his three predecessors were not considered technical visionaries and so I think that's one of the things that's been lacking inside of IBM I think it's one of the reason why why Services has been such a dominant component so look Lou Gerstner too hard to argue with the performance of the company but when he made the decision and IBM made the decision to go all-in on services something's got to give and what gave and I've said this many many times in the cube was was product leadership so I'd like to see IBM get back to that product leadership and I think Red Hat gives them an opportunity to do that obviously Red Hat Linux you know open source is a leader the leader and this is jump all as we've talked about many times in this multi hybrid cloud edge you know throwing all the buzzwords but there's some interesting horses on the track you got you got VMware we throw in AWS just because they're there you can talk about cloud without talking about AWS certainly Microsoft has designs there Cisco Google everybody wants a piece of that pie and I would say that you know Red Hat with with with OpenShift is in a good position if in fact they can make the investments necessary to build out those stacks yeah it's funny Dave because IBM for the history the size that they are often can get overlooked you talk about you know we've probably spent more air time talking about the VMware Amazon relationship than almost any in the last few years well we forget we were sitting at vmworld and two months before VMware announced the Amazon partnership who was it that was up on the main stage with Pat Gelson der it was IBM because IBM was the first partner I I believe that I saw numbers that IBM was saying that they have more hosted VMware environments than anyone out there I'd love to see the data on it to understand there because you know IBM plays in so many different places they just often are not you know aggregated and counted together you know when you get outside of some of the you know middleware mainframe some of the pieces that you talked about earlier Dave so IBM does have a strong position they just haven't been the front center leader too often but they have a broad portfolio and very much services led so they they kind of get forgotten you know off on the sides so IBM stated strategy is to bring those mission critical workloads into the cloud they've said that 80% of the workloads remain on Prem only 20% have been been clarified you know when you when you peel the onions on that there's just is so much growth and cloud native workloads so you know there's there is a somewhat of a so what in that but I will say this so where are the mission critical workloads where do they live today they live on Prem we can but but but whose stacks are running those it's IBM and it's Oracle and and David floor has done some research that suggests that if you're gonna put stuff into the cloud that's mission-critical you're probably better off staying with those those stacks that are going to allow you to a lower risk move not have to necessarily rip and replace and so you know migrating mission-critical Oracle database into AWS or db2 you know infrastructure into AWS is is gonna be much more challenging than than going same-same into the IBM cloud or the respective Oracle cloud so I guess my question to you Stu is why do people want to move those mission critical workloads into the cloud do they well first of all it's unlocking innovation that you talked about Dave so you know we've looked at from a VMware standpoint versus a red hat standpoint if you talk about building new apps doing containerization having that cloud native mindset do I have a bimodal configuration not so not a word that we talk about as much anymore because I want to be able to modernize it modernizing those applications doing any of those migrations we know or super challenging you know heck David Flair has talked about it for a long long time so you bring up some great points here that you know Microsoft might be the best at meeting customers where they are and giving people a lot of options IBM lines up in many ways in a similar ways my biggest critique about VMware is they don't have tight ties to the application it's mostly you know virtual eyes it or now we have some cloud native pieces but other than the pivotal group they didn't do a lot with modernization on applications IBM with their middleware history Red Hat with everything that they do with the developer communities are well positioned to help customers along those digital journeys and going through those transformations so it's you know applications need to be updated you know if anybody that's used applications that are long in the tooth know that they don't have the features that I want they don't react the way they want heck today Dave everybody needs to be able to access things where they are on the go you know it's not a discussion anymore about you know virtual desktop it's about you know work anywhere have access to the data where I need it and be much more flexible and agile and those are some of the configurations that you know iBM has history and their services arm can help customers move along those journeys yeah so you know I think one of the big challenges iBM has it's got a it's got a its fingers in a lot of pies AI you know they talk a lot about blockchain they're about quantum quantum is not gonna be here for a while it's very cool we have an interview coming up with with Jamie Thomas and you know she's all over the quantum we've talked to her in the past about it but I think you know if you think about IBM's business in terms of services and product you know it's whatever it is a 75 you know billion dollar organization 2/3 or and maybe not quite 2/3 maybe 60 Plus percent is services services are not an R&D intensive business you look at a company like Accenture Stu I think Accenture spent last year 800 million on R&D they're a forty five billion dollar forty six billion dollar company so if you really isolate the IBM you know company to two products whatever its call it 25 30 billion they spend a large portion of that that revenue on R&D to get to the six billion but my argument is it's it's not enough to really drive the type of innovation that they need just another again Accenture data point because they're kind of a gold standard along with IBM you.why and others and and a couple of others in services they return seventy six percent of their cash to shareholders iBM has returned consistently 50 to 60 percent to its shareholders so arvind stated he wants to return IBM to growth you know every every IBM CEO says that Ginni I used to talk about has to shrink to grow as I said unfortunately so you should run out of time and now it's up to Arvind to show that but to me growth has got to come from fueling Rd whether it's organic or inorganic I'd like to see you know organic as the real driver for obvious reasons and I don't think just open source in and of itself obviously is going to attract that it'll attract innovation but whether or not IBM will be able to harness it to his advantage is the real challenge unless they're making huge huge commitments to that open source and in a microcosm you know it's a kind of a proxy we saw what happened to Hortonworks and cloud era because they had to had to fund that open source commitment you know IBM we're talking about much much with the hybrid multi-cloud edge much much bigger opportunity but but requirement and we haven't even talked about AI you know bringing you know I think I think you have a quote on you know data is the fuel what was that quote yes it was Jim Whitehurst he said data is the fuel cloud is the platform AI is accelerant and then security my paraphrase is the mission control there so sounds a lot like your innovation cocktail that you've been talking about for the last year or so Dave but iCloud but so okay but AI is the accelerant and I agree by the way applying AI to all this data that we have you know over the years automating it and scaling it in the cloud it's critical and if IBM wants to define cloud as you know the cloud experience anywhere I'm fine with that I'm not a fan of the way they break down their cloud business I think it's bogus and I've called them on that but okay fine so maybe we'll get by that I'll get over it but but but really that is the opportunity it's just it's got to be funded yeah no Dave absolutely iBM has a lot of really good assets there they've got strong leadership as you said can Arvind do another Satya Nadella transformation there's the culture there's the people and there's the product so you know IBM you know absolutely has a lot of great resources and you know smart people and some really good products out there as well as really good ecosystem partnerships it's you know Amazon is not the enemy to IBM Microsoft is a partner for what they're doing and even Google is somebody that they can work with so you know I always say back in the ten years I've been working for you Dave I think the first time I heard the word coopertition I thought it was like an IBM trademark name because they were the ones that really you know lead as to have a broad portfolio and work with everybody in the ecosystem even though you don't necessarily agree or partner on every piece of what you're doing so in a multi cloud AI you know open ecosystem IBM's got a real shot yeah I mean a Satya Nadella like move would be awesome of course Satya had a much much larger you know of cash hoard to play with but but I guess the similarity stew are you you're notwithstanding that now we have three prominent companies run by Indian native born leaders which is pretty astounding when you think about it but notwithstanding that there are some similarities just in terms of culture and emphasis and getting back to sort of the the technical roots the technical visionaries so I'm encouraged but I'm watching very closely stew as I'm sure you are kind of where those investments go how how it plays in the marketplace but but I think you're right I think people underestimate IBM and and but the combination of IBM Red Hat could be very dangerous yeah Dave how many times do we write the article you know has the sleeping giant of IBM been awoken so I think it's a different era now and absolutely there's IBM has the right cards to be able to play at some of these new tables and it's a different IBM for a different era somebody said to me the other day that and probably you've probably heard this you have to but it was first I heard of it is that within five years IBM had better be a division of Red Hat versus the other way around so all right Stu thanks for for helping to set up the IBM think 2020 digital event experience what coming at you wall-to-wall coverage I think we've got over 40 interviews lined up Stu you you have been doing a great job both last week with the Red Hat summit and helping out with IBM thanks so thanks for that Dave no no rainy week at the new Moscone like we had last year a really good content from the comfort of our remote settings yeah so keep it right there buddy this is Dave a lot a force to Minutemen go to Silicon angle calm you'll check out all the news the the cube net we'll have all of our videos will be running wall-to-wall wiki bong calm has some some of the research action this day Volante force too many we'll be right back right after this short break [Music]

>>live from San Francisco. It's the Q covering Micron Insight 2019 to You by Micron. >>Welcome back, everybody. We hear a Pier 27 in San Francisco. Beautiful day. David Floor is my co host on Day Volante, and this is Micron Inside. 2019. Jeff Baylor is here. He's the corporate vice president of the embedded business unit at Micron. Jeff, great to see you again. >>Thank you. Nice to be here >>so love to talk about autos. I o. T Edge. Use cases to talk about the focus of your team. Let's start there. Yeah, >>sure. So the embedded business to point. It's absolutely focused on the automotive industry's way. Call industrial markets. So factory automation, surveillance and stolen a swell as a consumer electronics businesses on we're really in across all those sort of focused on how connectivity and compute is changing inside of those. And, of course, how that drives memory. >>I mean, yeah, memory and storage. They hide in places that we use every day. You don't see them, but if they weren't there, you wouldn't be able to use all these devices. They wouldn't be as life changing as they are. So you know you mentioned some of the consumer stuff. You know what the big trends that are driving your business? Well, I do >>think it is absolutely. That's sort of the ubiquity of connectivity. First of all, and then, sort of the ubiquity of compute has enabled all of these what used to be sort of isolated applications to now be connected and doing a whole lot more analytics inside that machine. Do you think about intelligence in your thermostat on the wall? You think about intelligence, obviously, in the automotive business, where safety features and so on are using so much more electron ICs and a I machine learning. And that's happening really in every application, whether it's the smart speakers at home, voice control on your TV and so on and so forth. All of those drive more intelligence, more connectivity and then more memory and storage behind that. >>When people talk about automotive, of course, everybody wants to talk about autonomous vehicles. I love to talk about autonomous vehicles, but there's so much action going on in today's vehicles dozens and dozens of microprocessors throwing off all kinds of data. So give us the update on the automotive industry. >>Yeah, you're exactly right. I mean, autonomous gets the headlines and it will for several more years just be headlines more or less right? And the real story is what we call eight ass or advanced driver assistant system. So things like lane departure warning, lane departure, keeping things like auto emergency braking those those sort of much simpler, easier problems to solve are still very compute intensive on. So are driving a huge growth and electronics on memory of storage inside the car. The other major part of the car market in the automotive market is what we call infotainment, sort of the center console. More and more large screens going into that more high function capabilities being integrated in that whether it's navigation or streaming media service is and all of those air driving again a much richer mix that's required >>for those applications. I was at the arm conference and they were talking about automotive and some of the challenges, one of the most fascinating areas they were talking about. How do you make something that will last for 20 years in the car on make it such that if it does go wrong that it that it could recover seamless less. Can you talk about some of the technologies that >>are sort of two parts to that? Unpack a little bit? First through? What does it take to succeed in automotive? First of all, it's all about quality. Yeah, right. It is quality, quality, quality location, location, location. It's quality. It's it's reducing and eliminating defense fundamentally at the end of the day and so inside of our process. Design inside of our technology designed our product designs. Our product manufacturing flows are all designed to sort of fundamentally improve and continue to improve the quality level because at the end of the day, that is what what makes or breaks you in the car. As soon as you solve that, you know, small problem. Next problem is longevity and stability of that solution, because the design cycle itself is shortening and automotive. But it's a very long design cycle, and then the life cycle in automotive is still very, very long. I mean, the average car on the road in the U. S. Is 12 or 15 years old, right, and that needs to both continue to be viable but also often need toe continue shipping that product. It's gonna shipment volumes or have spares and replace. So So we have a strategy that sort of focused on both bringing those leading edge technologies that Micron has into automotive as soon as possible and that timeline is shrinking. But then also having a very long life manufacturing strategy to continue to provide those for so long. >>So you're certainly a leader in automotive. You might even be the leader. I'm not sure I have the data, but what is it you mentioned? You know, quality and those other factors. What is it that's allowing you to do so well in automotive? >>So So we are the beater for sure. We're about 40% market share, which is a little more than three times as big as the nearest competitors, right, So leader by far, really an automotive. And it's been a very long time that we're in this industry and very focused on. So it is. It is about the product mix and bringing in particular lately leading edge technology into that story. You know, we are at the very beginnings of LP five, the low power GDR five generation, where the very beginnings of that rolling out into mobile applications, its primary markets at the same time, almost literally the same time. Way air sampling and providing that into our automotive customers and our automotive partners to start beginning building their systems around L P. Five. So that time to adopt leading edge technology is rowing is shrinking very rapidly. And so we're able to provide that leading edge Tech started, coupled with that long life solution and then one of the areas, when you think about being in a 40% market share position, way air investing tremendously in sort of partnering with the customers around, essentially defining and driving the innovation that they need to deliver So way have a number of labs that we've established customer facing labs that were able to bring customers and even our customers customers. So the Auto am is directly into those labs to start looking at usage models and architectural sort of feasibility and optimization kinds of things that we could then plan into our road map to follow two or three years later. After that, >>a lot of domain expertise there, so tremendous I said the Derrick Dicker that Micron has a very large observation space. You sell to a lot of different channels and I want to ask you about industrial I ot David night. We spent a lot of time in the Enterprise and we see a lot of I t company saying, Hey, here's a box. We're gonna throw it over. We're gonna go dominate the edge anywhere you talkto operations, technology, professions there like No, we're talking about machines and equipment and it's like this whole different parlance and language. So what are you seeing? Just in terms of the ecosystem, how it's developing the sort of analog going to digital And that whole explosion? Yeah, >>again, Industrial is extremely broad market, and it means a 1,000,000,000 things toe people. Right? So So, one of the first things we have to do is sort of narrow the field a little bit, at least into specific verticals and specific areas. Way have the right product mix and opportunity, right? So, for example, in the in the space of factory automation, it's a little bit what you're just saying the operational technology guys are trying to figure out how they're gonna drive efficiency, drive productivity inside a factory on, and that is often a question of instrument ing, and putting in my crown is doing a lot of this sort of smart manufacturing deployment. Putting this sensor network multiple cameras, multiple high resolution cameras, audio sensors, accelerometers, sort of sensors and capturing all of that sensor data to Dr Things like better predictive maintenance, better sort of yield detection or excursion detection kind of capability. So you could tell this machine, you know, seven days, five days out of the week Sounds like this. But last night at 10 o'clock, it started sounding different way. Don't know what it means necessarily, but we can detect that. And that's where all of the A I and Machine Learning is now being applied to say. And that means it's due for a P M. About this particular portion of >>what about security at the edge, obviously a hot topic in the Enterprise on every C. I ose mind what's happening with security in Io ti industrial out in the edge. Yeah, I think >>to some extent, security in the I. O. T. I think is, is why I ot is where it is in the hype cycles. Maybe it's sort of still at the bottom of one of these types cycles, meaning solving that increasing security problem, that cyber security problem that the edge is really a big problem. You saw you know the hacks a few years back of the Jeep charity. You saw the hack two years back on surveillance cameras. All these cameras moving toe i p surveillance cameras means they're now connected and open to the world. Dispersed. He just announced last week in a report that basically showed I ot specific hacks up seven fold or seven fold this year after being up tenfold last year. So it's absolutely a growing problem for people thinking about deploying again. Connectivity is a great tool in a great weapon, Depending. And I was so so. One of my crown is doing is is way. >>Have a >>solution called authentic, which is essentially a cybersecurity, is a secure element built into the non volatile memory that goes in each one of these systems. So today, security is not a one chip problem. It is a full and and system problem. And so what we're tryingto build with that is the capability at a very sort of lowest level in the system right where the code is right where the four part of the system is to protect that in the memory itself and sort of a test that that is safe and secure. And then the system can build out about around that. And that sort of simple boot device, in the case of a nor device or Anand device is in every embedded application >>right in the world, >>right? I mean, you think about you go back a long way, Stuxnet. You know, 10 plus years ago with a seaman's controller, which was the and now you think about fast forward, how much Maur infrastructure is out there? How much more complicated it is, It's ah, it's a scary situation is Oh, it is so that we think that's a >>big opportunity. And we're making the announcement later, uh, later in the show today, on an extension of what we're doing already in that space. >>I know you're working with other vendors. People like >>me are worry with Yes, >>it is really >>an end to end. >>This is really an end to an an ecosystem >>activity, for sure, because again, arm is a great example. You know, all of the S o. C. Vendors. You know, everybody in this industry has some slice of the of the rules. Let's say to figure out how they're going to secure this system and we're tryingto build a basic building block that they can then build on >>that when we started this morning was really quiet. But the crowd is rolling in. Now there's a buzz that you can hear, hear. The key was excited to be here, Jeff. Thanks very much for coming on. The king here to see you again. >>Very much nicer here. >>All right. Keep it right to everybody. We're gonna be taking a short break. We'll be back. Day long coverage wall to Wall of Micron inside. 2019. You're watching the cube.

from our studios in the heart of Silicon Valley Palo Alto California this is a cute conversation hi I'm Peter Burris analyst wiki Bond welcome to another wiki Bond the cube digital community event this one's sponsored by HPE like all of our digital community events this one will feature about 25 minutes of video followed by a crowd chat which will be your opportunity to ask your questions share your experiences and push forward the community's thinking on important issues facing business today so what are we talking about today over the course of the last say six months or so we've had a lot of conversations with our customers about the core issues that multi-cloud is going to engender with in business one of them clearly is how do we bring greater intelligence to how we move manage and administer data within the enterprise some of the more interesting conversations we've had turns out to have been with HPE and that's what we're going to talk about today we're going to be spending a few minutes with a number of HPE professionals as well as wiki bond professionals and thought leaders talking about the challenges that enterprises face as a consider intelligent data platforms so let's get started the first conversation that we're going to talk about is with Sandeep Singh who is the vice president at HPE Sandeep let's have that conversation about the challenges facing business today as it pertains to data so Sandeep I started off by making the observation that we've got this mountain of data coming in a lot of enterprises at the same time there seems to be a the the notion of how data is going to create new classes of business value seems to be pretty deeply ingrained and acculturated to a lot of decision-makers so they want more value out of their data but they're increasingly concerned about the volume of data that's going to hit them how in your conversations with customers are you hearing them talk about this fundamental challenge so that that's a great question you know across the board data is at the heart of applications pretty much everything that organizations do and when they look at it in conversations with customers it really boils down to a couple of areas one is how is my data just effortlessly available all the time it's always fast because fundamentally that's driving the speed of my business and that's incredibly important and how can my various audiences including developers just consume it like the public cloud in a self-service fashion and then the second part of that conversation is really about this massive data storm or mountain of data that's coming and it's gonna be available how do how do I Drive a competitive advantage how do i unlock these hidden insights in that data to uncover new revenue streams new customer experiences those are the areas that we hear about and fundamentally underlying it the challenge for customers is boy I have a lot of complexity and how do I ensure that I have the necessary insights in a the infrastructure management so I am not beholden am or my IT staff isn't beholden to fighting the IT fires that can cause disruptions and delays to projects so fundamentally we want to be able to push time and attention in the infrastructure in the administration of those devices that handle the data and move that time and attention up into how we deliver the data services and ideally up into the applications that are going to actually generate a new class of work within a digital business so I got that right absolutely it's about infrastructure that just runs seamlessly it's always on it's always fast people don't have to worry about what is it gonna go down is my data available or is it gonna slow down people don't want sometimes faster one always fast right I and that's governing the application performance that ultimately I can deliver and you talked about while geez if it if the data infrastructure just work seamlessly then can I eventually get to the applications and building the right pipelines ultimately for mining that data drive doing the AI and the machine learning analytics driven insides from there great discussion about the importance of data in the enterprise and how it's changing the way we think about business we're going to come back to Sandeep shortly but first let's spend some time talking with David floor who's the wiki bond analyst about the new mindset that is required to take advantage of some of these technologies and solve some of these problems specifically we need to think increasingly about data services let's hear what David has to say explain what that new mindset is yes I completely agree that that new mindset is required and it starts with you want to be able to deal with data wherever it's gonna be you in we are in a hybrid world hybrid cloud world your own clouds other public clouds partner clouds all of these need to be integrated and data is at the core of it so that the requirement then is to have rather than think about each individual piece is to think about services which are going to be applied to that data and can be applied not only to the data in one place but across all of that data and there isn't such a thing is just one set of services there going to be multiple sets of these services available but hope we will see some degree of conversion so they'll be the same lexicon and conceptual etcetera there'll be the same levels of things that are needed within each of these architectures but there'll be different emphasis on different areas we need to look at the way we administer data as a set of services that create outcomes for the business and as opposed to that are then translated into individual devices let me so let's jump into this notion of of what those services look like it seems as though we can list off a couple of them sure yeah so we must have of data reduction techniques so you must have deduplication compression type of techniques and you want to apply that our crosses bigger an amount of data as you can the more data you apply those the higher the levels of compression and deduplication you can get so that's clearly you've got those sort of sets of services across there you must backup and restore data in another place and be able to restore it quickly and easily there's that again is a service how quickly how integrated that recovery again that's going to be a variable that's a differentiation in the service exactly you're going to need data data protection in general end to end protection of once or another for example you need end-to-end encryption across there it's no longer good enough to say this bits been encrypted and then this bits the encrypted has got to be an end-to-end from one location to another location seamlessly provided that sort of thing well let me let me let me press on it cuz I think it's a really important point and and and it's you know the notion that the weakest link determines the strength of the chain right the what you just described says if you have encryption here and you don't have encryption there but because of the nature of digital you can start you start bringing that data together guess what the weakest link determines the protection of the overall data absolutely yes and then you need services like snapshots like like other services which provide much better usage of that data one of the great things about flash and that's brought about this about is that you can take a copy of that in real time and use that first totally different purpose and have that being changed in a different way so there are some really significantly great improvements you can have with services like snapshots and then you need some other services which are becoming even more important in my opinion the advent of [Music] bad actors in the in the world has really bought about the requirement for things like air gaps to have your data with the metadata all in one place and completely separated from everything else there are such things as called logical air gaps I think they as long as they're real in the real sense that the two paths can't interfere with each other those are going to be services which become very very important that's generally as an example of a general class of security data services they require so ultimately what we're describing is we're describing a new mindset that says that a storage administrator has to think about the services that the applications in the business requires and then seek out technologies that can provide those services at the price point with the degree of power consumption in the space or the environmental or with the type of maintenance and services related support that required based on the physical location the degree to which is under their control etc so that kind of what how we're thinking about this I think absolutely and the again if there's going to be multiple of these around in the marketplace one size is not going to fit all yeah you if you're wanting super fast response time at an edge and and if you don't get that response in time it's going to be no use whatsoever you're going to take you're going to have a different architecture a different way of doing it then if you need to be a hundred percent certain that every bit is captured and you know in a financial sort of environment but from a service standpoint you want to be able to look at that specific solution in a common way current policies current bilities correct great observations by David Flor it's very clear that for enterprises to get more control over their data their data assets and how they create value out of data they have to take a services mentality but the challenge that we all face is just taking a service mentality is not going to be enough we have to think about how we're going to organize those services into a platform that is pertinent and relevant to how business operates in a digital sense so let's go back to Sandeep saying and talk to him a little bit about this HPE notion of the intelligent data platform you've been one of the leaders in the complex systems arena for a long time and that includes storage where are you guys taking some of these technologies yeah so our strategy is to deliver an intelligent data platform and that intelligent data platform begins with workload optimized composable systems that can span the mission critical workloads general purpose secondary Big Data ai workloads we also deliver cloud data services that enable you to embrace hybrid cloud all of these systems including all the way to cloud data services are plumbed with data mobility and so for example use cases of even modernizing protection and going all the way to protecting cost effectively in the public cloud are enabled but really all of these systems then are imbued with a level of intelligence with a global intelligence engine that begins with predicting and proactively resolving issues before they occur but it goes way beyond that in delivering these prescriptive insights that are built on top of global learning across hundreds of thousands of systems with over a billion data points coming in on a daily basis to be able to deliver at the information at the fingertips of even the virtual machine admins to say this virtual machine is sapping the performance of this node and if you were to move it to this other node the performance or the SLA for all of the virtual machine farm will be even better we build on top of that to deliver pre-built automation so that it's hooked in with a REST API for strategy so that developers can consume it in a containerized application that's orchestrated with kubernetes or they can leverage it as an infrastructure as code whether it's with ansible puppet or chef we accelerate all of the application workloads and bring up where data protection and so it's available for the traditional business applications whether they're built on sa P or Oracle or sequel or the virtual machine farms or the new stack containerized applications and then customers can build their AI and big data pipelines on top of the infrastructure with a plethora of tools whether they're using basically Kafka lastic map our h2o that complete flexibility exists and within HPE were then able to turn around and deliver all of this with an as a service experience with HPE Greenlake to customers so that's where I want to take you next so how invasive is this going to be to a large shop well it is completely seamless in that way so with Greenlake we're able to deliver a fully managed service experience where the a cloud like page you go consumption model and combining it with HPE financial services we're also able to transform their organization in terms of this journey and make it a fully self-funding journey as well so today the typical administrator the typical shop has got a bunch of administrators that are administrating devices that's starting to change they've introduced automation that typically is associated with those devices but if we think three to five years out folks going to be thinking more in terms of data services and how those services get consumed and that's going to be what the storage part of I t's going to be thinking about they can almost become day to administrators if I got that right yes intelligence is fundamentally changing everything not only on the consumer side but on the business side of it a lot of what we've been talking about is intelligence is the game changer we actually see the dawn of the intelligence era and through this AI driven experience what it means for customers as a it enables a support experience that they just absolutely love secondly it means that the infrastructure is always on it's always fast it's always optimized in that sense and thirdly in terms of making these data services that are available and data insights that are being unlocked it's all about how can you enable your innovators and the data scientists and the data analysts to shrink that time to deriving insights from months literally down to minutes today there's this chasm that exists where there's a great concept of how can i leverage the AI technology and between that concept to making it real to thinking about a where can I actually fit and then how do i implement an end-to-end solution and a technology stack so then I just have a pipeline that's available to me that chasm literally is a matter of months and what we're able to deliver for example with HPE blue data is literally a catalog self-service experience where you can select and seamlessly build a pipeline literally in a matter of minutes and it's just all completely hosted seamlessly so making AI and machine learning essentially available for the mainstream through so the ontology data platform makes it possible to see these new classes of applications become routine without forcing the underlying storage administrators themselves to become data scientists absolutely all right the intelligent data platform is a very great concept but it's got to be made real and it's being made real today by HP Calvin Zito's a thought leader at HPE and he's done a series of chalk talks as it pertains to improving storage improving data management one of the more interesting ones was specifically on the intelligent data platform let's watch Calvin Zito's chalk talk hey guys I love it's time for another around the storage black chalk talk in this chalk top we're gonna look at the intelligent Data Platform let me set up the discussion at HP we see the dawn of the intelligence error the flatshare brought a speed with flash flash is now table stakes the cloud era brought new levels of agility and everyone expects as a service experience going forward the intelligence era with an AI driven experience for infrastructure operations in AI enabled unlocking of insights is poised to catapult businesses forward so the intelligent era will see the rise of the intelligent enterprise the enterprise will be always on always fast always agile to respond to different challenges but most of all the intelligent enterprise will be built for innovation innovation that can ilish new services revenue streams and business models every enterprise will need to have an intelligent data strategy where your data is always on and always fast automated an on-demand hybrid by design and applies global intelligence for visibility and lifecycle management our strategy is to deliver an intelligent data platform that turns your data challenges into business opportunities it begins with workload optimized composable systems for multiple workloads and we deliver cloud services for a hybrid cloud environment so that you can seamlessly move data throughout its lifecycle I'll have more on this in a moment the global intelligence engine infuses the entire infrastructure with intelligence it starts with predicting and proactively resolving issues before they occur it creates a unique workload fingerprint and these workload fingerprints combined with global learning enable us to drive recommendations to keep your app workloads and supporting infrastructure always optimized and delivering predictable speed we have a REST API first strategy and offer pre build automation connectors we bring Apple wear protection for both traditional and modern new stack application workloads and you can use the intelligent data platform to build and deliver flexible big data and AI pipelines for driving real-time analytics let's take a quick look at the portfolio of workload optimized composable systems these are systems across mission-critical general-purpose workloads as well secondary data and solutions for the emerging big data and AI applications because our portfolio is built for the cloud we offer comprehensive cloud data services for both production workloads and backup and archive in the cloud HPE info site provides the global intelligence across the portfolio and we give you flexibility of consuming these solutions as a service with HPE Greenlake I want to close with one more thing the HPE intelligent data platform has three main attributes first it's AI driven it removes the burden of managing infrastructure so that IT can focus on innovating and not administrating second it's built for cloud and it enables easy data and workload mobility across hybrid cloud environments finally the intelligent data platform delivers and as a service experience so you can be your own cloud provider to learn more go to hp.com intelligent data always love to hear from you on Twitter where you can find me as calvin zito you can find my blog at hp.com slash blog until next time thanks for joining me on this around the storage black chalk talk I think Calvin makes a compelling case that the opportunity to use these technologies is available today not something that we're just going to wait for in the future and that's good because one of the most important things that business has to think about is how are they going to utilize some of these new AI and related technologies to alter the way that they engage their customers run their businesses and handle their operations and ultimately improve their overall efficiency and effectiveness in the marketplaces it's very clear that this intelligent data platform is required to do many of the advanced AI things that business wants to do but it also requires AI in the platform itself so let's go back to Sandeep Singh and talk to Sandeep about how HPE foresees AI being embedded in them into the intelligent data platform so it can make possible greater utilization of AI and the rest of the application portfolio so we've got the significant problem we now have to figure out how to architect because we want predictability and certainty and and cost clarity and to how we're going to do this part of the challenge or part of the pushers new use cases for AI so we're trying to push data up so that we can build these new use cases but it seems that we have to also have to take some of those very same technologies and drive them down into the infrastructure so we get greater intelligence greater self meter and greater self management self administration within the infrastructure itself I got that right yes absolutely what becomes important for customers is when you think about data and ultimately storage that underlies the data is you can build and deploy fast and reliable storage but that's only solving half the problem greater than 50% of the issues actually end up arising from the higher layers for example you could change the firmware on the host bus adapter inside a server that can trickle down and cause a data unavailability or a performance slowdown issue you need to be able to predict that all the way at that higher level and then prevent that from occurring or your virtual machines might be in a state of over memory commitment at the server level or you CPU over commitment how do you discover those issues and prevent them from happening the other area that's becoming important is when we talk about this whole notion of cloud and hybrid cloud right that complexity tends to multiply exponentially so when the smarts you guys are going after building that hybrid cloud infrastructure fundamental challenges even as I've got a new workload and I want to place that you even on premises because you've had lots of silos how do you even figure out where should I place a workload a and how it'll react with workloads B and C on a given system and now you multiply that across hundreds of systems multiple clouds and the challenge you can see that it's multiplying exponentially oh yeah well I would say that having you know where do I put workload a the right answer today maybe here but the right answer tomorrow maybe some where else and you want to make sure that the service is right required to perform workload a our resident and available without a lot of administrative work necessary to ensure that there's commonality that's kind of what we mean by this hybrid multi cloud world isn't it absolutely and you when you start to think about it basically you end up in requiring and fundamentally needing the data mobility aspect of it because without the data you can't really move your workloads and you need consistency of data services so that your app if it's architected for reliability and a set of data services those just go along with the application and then you need building on top of that the portability for your actual application workload consistently managed with a hybrid management interface there so we want to use an intelligent data platform that's capable of assuring performance assuring availability and assuring security and going beyond that to then deliver a simplified automated experience right so that everything is just available through a self-service interface and then it brings along a level of intelligence that's just built into it globally so that in instead of trying to manually predict and landing in a world of reactive after IT fires have occurred is that there are sea of sensors and it's automatic the infrastructures automatically for predicting and preventing issues before they ever occur and then going beyond that how can you actually fingerprint the individual application workloads to then deliver prescriptive insights right to keep the infrastructure always optimized in that sense so discerning the patterns of data utilization so that the administrative costs of making sure the data is available where it needs to be number one number two assuring that data as assets is made available to developers as they create new applications new new things that create new work but also working very closely with the administrators so that they are not bound [Music] as you know an explosion in the number of tasks adapt to perform to keep this all working across the board yes I want to thank Sandeep Singh and calvin zito both of HPE as well as wiki bonds David Floyd for sharing their ideas on this crucially important topic of how we're going to take more of a platform approach to do a better job of managing crucial data assets in today's and tomorrow's digital businesses I'm Peter Burris and this has been another wiki bomb the cube digital community event sponsored by HPE now stay tuned for our crowd chat which will be your opportunity to ask your questions share your experiences and push for the community's thinking on important issues facing business today thank you very much for watching and now let's crouch [Music]

live from San Francisco it's the queue covering micron insight 2018 brought to you by micron welcome to San Francisco everybody this is the cube the leader in live tech coverage my name is Dave Volante I'm here with my co-host David flora this is our special presentation of micron insight 18 hashtag micron insight 18 where the theme is accelerated intelligence the blending together of memory storage and artificial intelligence micron is a 40 year old company there's a dominant player in the DRAM marketplace years and years ago they used to be 1920 manufacturers of DRAM there's really three companies now that dominate that market they own 96% of it micron Samsung and Toshiba I believe right is the third one and and so microns is 30 billion dollar company they've got about a 50 billion just under 50 billion dollar market cap growing like crazy 70% of their business comes from DRAM the balance comes from alternative storage and other memory systems that they built and traditionally David memories have been a very cyclical business micron number two semiconductor manufacturer worldwide behind Intel obviously competing with a lot of overseas players and micron is putting forth the premise that they've begun to be able to dampen the fluctuations the peaks in the valleys in this business why because first of all the capital expense required to participate in this business is enormous that's why somebody companies have been shaken out and secondly the technology transitions are getting much much more difficult and so the premise that micron put forth in May at their financial analyst conference is that the cyclic allottee of this business is starting to moderate we've certainly seen this in some regards in the last several years with component shortages it's been a boon to Microsoft's financials the stock you know up until recently have been been climbing like crazy this is a company that has literally last quarter had seventy percent gross margins in its in business it's not and much much you know and if you look at the SSD business the flash business smaller gross margin maybe 48 50 percent they're gonna start blending those together and reporting on a blended basis I think they don't want Michael Dell you know advertising to Michael Dell that we're getting 70% gross margins on T Ram so they're gonna stop giving that guidance out excessively B to thwart competition but really it's probably examination probably something that's not sustainable but David so we're seeing sort of moderation and supply growth we're seeing a very well-run company this company is growing like crazy let me break down some of the businesses and I want to bring you into the conversation the compute and networking business very strong a grew at 53 percent year-over-year the mobile business up sixty percent last year Mobile's taking tons of of memory of course and and storage the embedded business which is sort of automobiles and and industrial markets is up about 12% and the storage business unit actually is gonna flat to down they expect growth but you know the stores business has been you know a bit of a challenge for them even though you know they're doing very well and they're gaining share they've gone through some transitions that we'll talk about to some of the executives here but but David the theme really is about about bringing artificial intelligence to the world and the intersection between AI and memory and storage obviously you need memory obviously you need storage to make AI happen and you know micron in the value chain at the lowest level is right there making tons of money shipping a lot of product driving a lot of innovation and competing very effectively so your thoughts on micron and right those are this event my car crushing it I mean the the growth in in in their revenues from DRAM with 70 percent year-on-year last four quarters to the four quarters before that was 70 percent desam that's actually was it's 70 percent of their business it was about 50 percent 47 to 50 percent growth so yeah well for the DRAM piece of the business well NAND is about 25 26 percent of the business and and growing you know about 20% a year yeah I think they're on the calling it's tiny but so the the figures the we're using a even better than that so I think as it fundamentally they're crushing it from from a business perspective and they're in as you said in a very good place because as AI takes place as what I call the matrix applications are coming on board that's a virtual reality augmented reality the the modern gaming machines all of these types of compute and then on top of that IOT as well with all the sensors and and the requirements of memory and and compute very very close to the Census themselves all of these different areas are relying on AI to make a difference of lying on that type of workload that matrix workload and some of the figures is very interesting to look at when you're looking at new workloads you need at least around six times as much DRAM and and and more storage as well more and Nan storage as well six times you're talking about the ratio between storage and the if you can take traditional processing you need for a tree you need six times that's interesting figure and and similarly with an and and and the on top of that when you're looking at graphics work all the graphics work that's very very bandwidth intensive and that requires the very latest technology and again premium technology to go into the graphics side of things as well so they are in a the right place at the right time in terms of the speed of which memory is is developing and the opportunities to make a difference so if you think about some of the tail winds and headwinds in their business there's a lot of tailwind I mean they're manufacturing efficiencies they're really started to see a flywheel effect there and they're did micron has made a lot of investment in of technology transitions what's happening is the bit density growth for each new technology transfer transition is starting to moderate presumably Moore's Law story to moderate right is what's really going on there and but they've really done a good job of investing in technology transitions ahead of their competition and so they're getting some good returns on that investment investment they lead in a lot of these markets they're a very well-run company pricing has been pretty firm for them over the last several years so that's been a nice tailwind and supply has been short in the last several years now they're the the headwinds are there are CPU shortages in the marketplace today and so if you can't can't get the CPU you can't necessarily make the box you can't ship the PC or you can't you know you need you need CPU memory and storage to go together and as a result there's a pending oversupply it looks like and so they're having to manage some of that inventory import tariffs from China not you know that's a I would say huge deal for these guys is something they can manage but you know president Trump's tariff posture it doesn't help a company like micron their tax rate is much higher this year than it was last year it's about going from 4% to like 28% and so those are some of the the headwinds and that's ahead the stock moderate a little bit but the stock has been on fire for the last several years and the company has done very very well cash flow is it's nine billion free cash flow which is important because they have to spend eight billion dollars a year more even they're growing that capex spending from 8 billion this year to 10 and a half billion next year so you get a sense of the various to entry in this marketplace it takes a lot of tenacity which I like micron is exhibited over the last 40 years when you think about all the ebbs and flows but the big changes are this used to be kind of driven by pcs it used to be a PC centered world and now we're seeing a much more diverse customer customer base probably driven by mobile no question about it the data center guys the big hyper scale is the autonomous vehicle folks the industrial internet edge computing they all need memory they all need storage the other piece of this is the transition from spinning hard disk to flash even though it's not a majority of their business today micron is in a very well position very well positioned to take advantage of that David something that you were the first in the industry to call he was a very first analyst that said that SSD flash is going to replace spinning disk it's clearly happening and it happened first in laptops and it's clearly happening in the in the data center you know with some exceptions but generally speaking that trend is pretty substantial you don't absolutely the that the technology changes we keep on saying each year we've witnessed the the most change in technology that we've ever seen and next year it gets faster and it gets faster it's absolutely amazing I think there's another area coming into play when you're looking at the traditional marketplaces they were the PC and the servers that's what we're most of the of the DRAM went we're seeing a change with mobile taking an increasing portion of that you're looking at PCs now they're introducing the the arm pcs as well and then grow ARM processors in the PCs so and that's growing very fast as as well and we're predicting that will go fast and we're looking at also at a very aggressive entry into the market place of ARM processors in general all the way through from from from the edge all the way through up to the top and therefore there's and those are really being designed for this matrix computing I was talking about met much more attention to parallelism to the ability to have GPUs inside it neural networks inside it that is that change and that that that requirement to fit in with this new way of doing is is a fantastic opportunity and they have an opportunity really to lead and powering some of these new workload so we're gonna be unpacking this all all day here at micron inside hashtag micron insight 18 you're watching the cube Dave Volante for David floor we'll be right back right after this short break

from Las Vegas it's the queue covering VMworld 2018 brought to you by VMware and its ecosystem partners and we're back here at the Mandalay Bay in somewhat beautiful Las Vegas where we're doing third day of VMworld on the cube and on Peterborough and I'm joined by my two lead analysts here at Ricky bond with me Jim Camilo's who's looking at a lot of the software stuff David floor who's helping to drive a lot of our hardware's research guys you've spent an enormous amount of time talking to an enormous number of customers a lot of partners and we all participated in the Analyst Day on Monday let me give you my first impressions and I want to ask you guys some questions here you thought so I have it this is you know my third I guess VMworld in or in a row and and my impression is that this has been the most coherent of the VM worlds I've seen you can tell when a company's going through a transition because they're reaching to try to bring a story together and that sets the tone but this one hot calendar did a phenomenal job of setting up the story it makes sense it's coherent possibly because it aligns so well with what we think is going to happen in the industry so I want to ask you guys based on three days of one around and talking to customers David foyer what's been the high point what have you found is the most interesting thing well I think the most interesting thing is the excitement that there is over VMware if you if you contrast that with a two three years ago the degree of commitment of customers to viennois the degree of integration they're wanting to make the degree rate of change and ideas that have come out of VMware it's like two different companies totally different companies some of the highlights for me were the RDS the bringing from AWS to on site as well as on the AWS cloud RDS capabilities I think that's a very very interesting thing that's the relational database is services the Maria DB and all the other services that's a very exciting thing to me and a hint to me that AWS is going to have to get serious about well Moore's gone out I think it's a really interesting point that after a lot of conversations with a lot of folks saying all AWS it's all going to go up to the cloud and wondering whether that also is a one-way street for VMware Casta Moore's right but now we're seeing it's much more of a bilateral relationship it's a moving it to the right place and that's the second thing the embracing of multi-cloud by everybody one cloud is not going to do everything they're going to be SAS clouds they're going to be multiple places where people are gonna put certain workloads because that's the best strategic fit for it and the acceptance in the marketplace that that is where it's going to go I think that again is a major change so hybrid cloud and multi cloud environments and then the third thing is I think the richness of the ecosystem is amazing the the going on the floor and the number of people that have come to talk to us with new ideas really fascinating ideas is something I haven't seen at all for the last last three four years and so I'm gonna come back to you on that but it goes back to the first point that you make that yeah there is a palpable excitement here about VMware that two-three years ago the conversation was how much longer is the franchise gonna be around Jim but now it's clear yeah it's gonna be around Jim how about you yeah actually I'm like you guys I'm a newbie to VM world this is my very first remember I'm a big data analyst I'm a data science an AI guy but obviously I've been aware of VMware and I've had many contacts with them over the years my take away my prime and I like Pat Gail singers I agree with you Peter they're really coherent take and I like that phrase even though it sounds clucking impact kind of apologize they are the dial tone to the multi-cloud if the surgery really gives you a strong sense or who else can you character is in this whole market space cloud computing has essentially a multi cloud provider who provide the unifying virtualization glue to help their custom to help customers who are investing in an AWS and maybe in a bit of you know you're adopting Google and Microsoft Azure and so forth providing a virtualization layer that's the above server virtualization network virtualization VDI all the way to the edge nobody can put it all is putting it all together and quite the way that VMware is one of the my chief takeaways is similar to David's which is that in terms of the notion of a hybrid cloud VMware with its whole what's it's doing with RDS but also projects like this project dimension which is in project in progress taking essentially the entire VMware virtualization stack and putting it onto an appliance for deployment on the edges and then for them to manage it VMware of this their plans as an end-to-end managed edge cloud service and so forth Wow the blurring of public and private cloud I don't even think the term hybrid cloud applies it's just a blurry the common cloud yeah it's moving to the workload the clouds moving to the data which is exactly what we say they are halfway there in terms of that vision halfway in a sense that RDS has been announced the you know on the VMware and this project dimension they're well along with that if there was a briefings for the analyst space I'm really impressed for how they're architecting this I think they've got a shot to really dominate well I'll tell you so I would agree with you just to maybe provide a slightly different version of one of the things you said I definitely agree I think what's VMware hopes to do and I think they're not alone is to have AWS look like an appliance to their console to have as you look like an appliance of their Khan so through free em where you can get access to whatever services you need including your VMware machines your VMs inside those clouds but that increasingly their their goal is to be that control point that management point for all of these different resources that are building and it is very compelling I think that there's one area that I still think we need more from as analysts and we always got to look through no and what's yeah what was more required and I hear what you say about project dimension but I think that the edge story still requires a fair amount of work oh yeah it's a project in place but that's going to be an increasingly important locus of how architectures get laid out how people think about applications in the future how design happens how methodologies for building software work David what do you think what when you look out what what is what what is more is needed for you so really I think there are two things that give me a small concern the the edge that's a long term view so they got time to get that right but the edge view is very much an IT view top-down and they are looking to put in place everything that they think the OT people should fit in with I think that is personally not going to be a winning strategy you you have to take it from the bottom up the world is going to go towards devices very rich devices and sensors lots of software right on that device the inference work on those devices and the job of IT will be to integrate those devices it won't be those devices taking on the standards of IT it'll be IT that has to shape itself to look after all those devices there so that's a that's the main viewpoint I think that needs adjustment and it will come I'm sure over time but as you said there's a lot of computer science it's going to be an enormous amount of new partnerships are gonna be fabricate exactly to make this happen Jim what do you think yeah I agree terms of partnerships one big gap from both VMware and Dell technologies partnerships and romance and technology proposes AI now they have a project VMware call from another project called project Magna which is really AI ops in fact I published a wiki about reports this week on AI ops AI to drive IT Service Management and to and they're doing some stuff they're working on that project it's just you know the beginning stages I think what's going to happen is that vmware dell technologies they're gonna have to make strategic acquisitions of AI solution providers to build up that capability because that's going to be fundamental to their ability to manage this complex multi called fabric from end to end continuously they need that competency internally that can't be simply a partner providing that that's got to be their core competencies so you know I'm gonna push it I'll give you the contrarian point of view okay we actually had Khamsin VMware we've had a lot of conversations about this does that is that a reflection of David's point about top-down buying things and pushing it down as opposed to other conversations we've had about how the edge is going to evolve where a lot of OT guys are going to combine with business expertise and technology expertise to create specialized solutions and is and then VMware is gonna have to reach out to them and make VMware relevant to them do you think it's going to be VMware buying a bunch of stuff or an a-grade no solution or is it going to be the solutions coming from elsewhere and VM at VMware I just becoming more relevant to them now you can still be buying a bunch of stuff to get that horizontal in place but which way you think it's going to go I think it's gonna be the top-down they're gonna buy stuff because if I talk to the channel one of the channel people this morning about well you know but they've got an IOT connected bundle and so forth they announced this show you know I think they agree with me that the core AI technology needs to be built into the fundamentals like the IOT stack bundle that they then provide to the channel partners for with you know with channel specific content that they can then tweak and customize to their specific needs but you know the core requirements for a I are horizontal you know it's the ability to run neural networks to do predictive analysis anomaly detection and so forth this is all cross-cutting across all domains it has to be in the core application stack they can't be simply something they source for particular channel opportunities it has to be leveraged across you know the same core tensorflow models for anomaly detection for manufacturing for logistics for you know customer relationship management whatever it's or are you saying essentially that then VMware becomes that horizontal play even though even if the solution providers are increasingly close to the actual action where the edges III I'm gonna disagree we can gently on that but we'd still be friends [Music] no it's you know I'm I'm an OT guy of hearth I suppose and I think that that is going to be a stronger force in terms of VMware but there will be some places where you it will be top-down but other places that where it's going to be need needed to adjust but I think there's one other there very interesting area I'd like to bring up in terms of of this question of acquisition what what we heard about beforehand was excellent results and VMware has been adding a you know a billion dollars a year in terms of free cash there and they have thirteen billion in short term cash there and the the refinancing from Dell is gonna take eleven of that thirteen and put it towards the towards the the company now you can work towards deltek yes well just Dell Dell as a hold and and silver later towards those partners I I personally believe that there is such a lot of opportunity that's going to be out there if you take NSX for example it has the potential to do things in new areas they're gonna need to provide solutions in those new areas and aggressively go after those new areas and that's going to mean big investments and many other areas where I think they are going to need acquisitions to strengthen the whole story they have the whole multi-cloud story about this real-time operating system in a sexy has a network routing virtualization backplane I mean it needs to go real-time so sensitive guaranteed ladies if they need that big investments guarantee yeah they need to go there yeah so what we're agreeing on that and I get concerned that it's not going to be given the right resources you know to be able to actually go after the opportunities that they have genuinely created it's gonna mean from you see how that plays out so I think all drugs in the future I think saying though is that there is going to be a solution a set of solution players that VMware is going to have to make significant moves to make them relevant and then the question is where it's the values story what's the value proposition it's probably gonna be like all partnerships yeah some are gonna claim that they are doing it also some are gonna DM where it's gonna claim that they do more of it but at the end of the day VMware has to make themself relevant to the edge however that happens I want to pick up on NSX because I'm a pretty big believer that NSX may be the very special crown jewel and a lot of the stuff this notion of hybrid cloud whatever we call it let's just call it extended cloud let me talk of a better word like it is predicated on the idea that I also have a network that can naturally and easily not just bridge but truly multi network interoperate internet work with a lot of different cloud sources but also all different cloud locations and there's not a lot of technologies out there that are great candidates to do that and it's and I look at NSX and I'm wondering is that gonna be kind of a I want to take the metaphor too far but is that gonna be kind of a new tcp/ip for the cloud in the sense that you're still gonna run over tcp/ip and you're still gonna run over the Internet but now we're gonna get greater visibility into jobs into workloads into management infrastructures into data locations and data placement predictive movement and NSX is going to be the at the vanguard of showing how that's gonna work and the security side of that especially to be able to know what is connected to what and what shouldn't be connected to what and to be able to have that yeah they need stateful structured streaming others Kafka flink whatever they need that to be baked into the whole nsx virtualization layer that much more programmable and that provides that much better a target for applications all right last question then we got a wrap guys David as you walk out the door get in the plane what are you taking away what's your last impression my last impression is one of genuine excitement wanting to work wanting to follow up with so many of the smaller organizations the partners that have been here and who are genuinely providing in this ecosystem a very rich tapestry of of capability that's great Jim my takeaway is I want to see their roadmap for kubernetes and serverless there wasn't a hole last year they made an announcement of a serverless project I forgot what the code name is didn't hear a whole lot about it this year but they're going up the app stack they got a coop you know distribution you know they're if they need a developer story I mean developers are building functional apps and so forth you know you can and they're also containerized they need they need a developer story and they need a server list story and they need to you need to bring us up to speed on where they're going in that regard because AWS their predominant partner I mean they got lambda functions and all that stuff you know that's that's the development platform of the present and future and I'm not hearing an intersection of that story with VMware's a story yeah my last thing that I'll say is that I think that for the next five years VMware is gonna be one of the companies that shapes the future of the cloud and I don't think we would have said that a couple of names no they wouldn't I agree with you so you said yes all right so this has been the wiki bond research leadership team talking about what we've heard at VMware this year VMworld this year a lot of great conversation feel free to reach out to us and if you want to spend more time with rookie bond love to have you once again Peter burrows for David floor and Jim Kabila's thank you very much for watching the cube we'll talk to you again [Music]

>> Announcer: Live from San Jose, it's theCUBE, presenting Big Data Silicon Valley, brought to you by SiliconANGLE Media and its ecosystem partner. (upbeat electronic music) >> Welcome back to The Cube. I'm Lisa Martin with George Gilbert. We are live at our event, Big Data SV, in downtown San Jose down the street from the Strata Data Conference. We're joined by a new guest to theCUBE, Sastry Malladi, the CTO Of FogHorn. Sastry, welcome to theCUBE. >> Thank you, thank you, Lisa. >> So FogHorn, cool name, what do you guys do, who are you? Tell us all that good stuff. >> Sure. We are a startup based in Silicon Valley right here in Mountain View. We started about three years ago, three plus years ago. We provide edge computing intelligence software for edge computing or fog computing. That's how our company name got started is FogHorn. For our particularly, for our IoT industrial sector. All of the industrial guys, whether it's transportation, manufacturing, oil and gas, smart cities, smart buildings, any of those different sectors, they use our software to predict failure conditions in real time, or do condition monitoring, or predictive maintenance, any of those use cases and successfully save a lot of money. Obviously in the process, you know, we get paid for what we do. >> So Sastry... GE populized this concept of IIoT and the analytics and, sort of the new business outcomes you could build on it, like Power by the Hour instead of selling a jet engine. >> Sastry: That's right. But there's... Actually we keep on, and David Floor did some pioneering research on how we're going to have to do a lot of analytics on the edge for latency and bandwidth. What's the FogHorn secret sauce that others would have difficulty with on the edge analytics? >> Okay, that's a great question. Before I directly answer the question, if you don't mind, I'll actually even describe why that's even important to do that, right? So a lot of these industrial customers, if you look at, because we work with a lot of them, the amount of data that's produced from all of these different machines is terabytes to petabytes of data, it's real. And it's not just the traditional digital sensors but there are video, audio, acoustic sensors out there. The amount of data is humongous, right? It's not even practical to send all of that to a Cloud environment and do data processing, for many reasons. One is obviously the connectivity, bandwidth issues, and all of that. But the two most important things are cyber security. None of these customers actually want to connect these highly expensive machines to the internet. That's one. The second is the lack of real-time decision making. What they want to know, when there is a problem, they want to know before it's too late. We want to notify them it is a problem that is occurring so that have a chance to go fix it and optimize their asset that is in question. Now, existing solutions do not work in this constrained environment. That's why FogHorn had to invent that solution. >> And tell us, actually, just to be specific, how constrained an environment you can operate in. >> We can run in about less than 100 to 150 megabytes of memory, single-core to dual-core of CPU, whether it's an ARM processor, an x86 Intel-based processor, almost literally no storage because we're a real-time processing engine. Optionally, you could have some storage if you wanted to store some of the results locally there but that's the kind of environment we're talking about. Now, when I say 100 megabytes of memory, it's like a quarter of Raspberry Pi, right? And even in that environment we have customers that run dozens of machinery models, right? And we're not talking -- >> George: Like an ensemble. >> Like an anomaly detection, a regression, a random forest, or a clustering, or a gamut, some of those. Now, if we get into more deep learning models, like image processing and neural net and all of that, you obviously need a little bit more memory. But what we have shown, we could still run, one of our largest smart city buildings customer, elevator company, runs in a raspberry Pi on millions of elevators, right? Dozens of machinery algorithms on top of that, right? So that's the kind of size we're talking about. >> Let me just follow up with one question on the other thing you said, with, besides we have to do the low-latency locally. You said a lot of customers don't want to connect these brown field, I guess, operations technology machines to the internet, and physically, I mean there was physical separation for security. So it's like security, Bill Joy used to say "Security by obscurity." Here it's security by -- >> Physical separation, absolutely. Tell me about it. I was actually coming from, if you don't mind, last week I was in Saudi Arabia. One of the oil and gas plants where we deployed our software, you have to go to five levels of security even to get to there, It's a multibillion dollar plant and refining the gas and all of that. Completely offline, no connectivity to the internet, and we installed, in their existing small box, our software, connected to their live video cameras that are actually measuring the stuff, doing the processing and detecting the specific conditions that we're looking for. >> That's my question, which was if they want to be monitoring. So there's like one low level, really low hardware low level, the sensor feeds. But you could actually have a richer feed, which is video and audio, but how much of that, then, are you doing the, sort of, inferencing locally? Or even retraining, and I assume that since it's not the OT device, and it's something that's looking at it, you might be more able to send it back up the Cloud if you needed to do retraining? >> That's exactly right. So the way the model works is particularly for image processing because you need, it's a more complex process to train than create a model. You could create a model offline, like in a GPU box, an FPGA box and whatnot. Import and bring the model back into this small little device that's running in the plant, and now the live video data is coming in, the model is inferencing the specific thing. Now there are two ways to update and revise the model: incremental revision of the model, you could do that if you want, or you can send the results to a central location. Not internet, they do have local, in this example for example a PIDB, an OSS PIDB, or some other local service out there, where you have an opportunity to gather the results from each of these different locations and then consolidate and retrain the model, put the model back again. >> Okay, the one part that I didn't follow completely is... If the model is running ultimately on the device, again and perhaps not even on a CPU, but a programmable logic controller. >> It could, even though a programmable controller also typically have some shape of CPU there as well. These days, most of the PLCs, programmable controllers, have either an RM-based processor or an x86-based processor. We can run either one of those too. >> So, okay, assume you've got the model deployed down there, for the, you know, local inferencing. Now, some retraining is going to go on in the Cloud, where you have, you're pulling in the richer perspective from many different devices. How does that model get back out to the device if it doesn't have the connectivity between the device and the Cloud? >> Right, so if there's strictly no connectivity, so what happens is once the model is regenerated or retrained, they put a model in a USB stick, it's a low attack. USB stick, bring it to the PLC device and upload the model. >> George: Oh, so this is sort of how we destroyed the Iranian centrifuges. >> That's exactly right, exactly right. But you know, some other environments, even though it's not connectivity to the Cloud environment, per se, but the devices have the ability to connect to the Cloud. Optionally, they say, "Look, I'm the device "that's coming up, do you have an upgraded model for me?" Then it can pull the model. So in some of the environments it's super strict where there are absolutely no way to connect this device, you put it in a USB stick and bring the model back here. Other environments, device can query the Cloud but Cloud cannot connect to the device. This is a very popular model these days because, in other words imagine this, an elevator sitting in a building, somebody from the Cloud cannot reach the elevator, but an elevator can reach the Cloud when it wants to. >> George: Sort of like a jet engine, you don't want the Cloud to reach the jet engine. >> That's exactly right. The jet engine can reach the Cloud it if wants to, when it wants to, but the Cloud cannot reach the jet engine. That's how we can pull the model. >> So Sastry, as a CTO you meet with customers often. You mentioned you were in Saudi Arabia last week. I'd love to understand how you're leveraging and gaging with customers to really help drive the development of FogHorn, in terms of being differentiated in the market. What are those, kind of bi-directional, symbiotic customer relationships like? And how are they helping FogHorn? >> Right, that's actually a great question. We learn a lot from customers because we started a long time ago. We did an initial version of the product. As we begin to talk to the customers, particularly that's part of my job, where I go talk to many of these customers, they give us feedback. Well, my problem is really that I can't even do, I can't even give you connectivity to the Cloud, to upgrade the model. I can't even give you sample data. How do you do that modeling, right? And sometimes they say, "You know what, "We are not technical people, help us express the problem, "the outcome, give me tools "that help me express that outcome." So we created a bunch of what we call OT tools, operational technology tools. How we distinguish ourselves in this process, from the traditional Cloud-based vendor, the traditional data science and data analytics companies, is that they think in terms of computer scientists, computer programmers, and expressions. We think in terms of industrial operators, what can they express, what do they know? They don't really necessarily care about, when you tell them, "I've got an anomaly detection "data science machine algorithm", they're going to look at you like, "What are you talking about? "I don't understand what you're talking about", right? You need to tell them, "Look, this machine is failing." What are the conditions in which the machine is failing? How do you express that? And then we translate that requirement, or that into the underlying models, underlying Vel expressions, Vel or CPU expression language. So we learned a ton from user interface, capabilities, latency issues, connectivity issues, different protocols, a number of things that we learn from customers. >> So I'm curious with... More of the big data vendors are recognizing data in motion and data coming from devices. And some, like Hortonworks DataFlow NiFi has a MiNiFi component written in C plus plus, really low resource footprint. But I assume that that's really just a transport. It's almost like a collector and that it doesn't have the analytics built in -- >> That's exactly right, NiFi has the transport, it has the real-time transport capability for sure. What it does not have is this notion of that CEP concept. How do you combine all of the streams, everything is a time series data for us, right, from the devices. Whether it's coming from a device or whether it's coming from another static source out there. How do you express a pattern, a recognition pattern definition, across these streams? That's where our CPU comes in the picture. A lot of these seemingly similar software capabilities that people talk about, don't quite exactly have, either the streaming capability, or the CPU capability, or the real-time, or the low footprint. What we have is a combination of all of that. >> And you talked about how everything's time series to you. Is there a need to have, sort of an equivalent time series database up in some central location? So that when you subset, when you determine what relevant subset of data to move up to the Cloud, or you know, on-prem central location, does it need to be the same database? >> No, it doesn't need to be the same database. It's optional. In fact, we do ship a local time series database at the edge itself. If you have a little bit of a local storage, you can down sample, take the results, and store it locally, and many customers actually do that. Some others, because they have their existing environment, they have some Cloud storage, whether it's Microsoft, it doesn't matter what they use, we have connectors from our software to send these results into their existing environments. >> So, you had also said something interesting about your, sort of, tool set, as being optimized for operations technology. So this is really important because back when we had the Net-Heads and the Bell-Heads, you know it was a cultural clash and they had different technologies. >> Sastry: They sure did, yeah. >> Tell us more about how selling to operations, not just selling, but supporting operations technology is different from IT technology and where does that boundary live? >> Right, so typical IT environment, right, you start with the boss who is the decision maker, you work with them and they approve the project and you go and execute that. In an industrial, in an OT environment, it doesn't quite work like that. Even if the boss says, "Go ahead and go do this project", if the operator on the floor doesn't understand what you're talking about, because that person is in charge of operating that machine, it doesn't quite work like that. So you need to work bottom up as well, to convincing them that you are indeed actually solving their pain point. So the way we start, where rather than trying to tell them what capabilities we have as a product, or what we're trying to do, the first thing we ask is what is their pain point? "What's your problem? What is the problem "you're trying to solve?" Some customers say, "Well I've got yield, a lot of scrap. "Help me reduce my scrap. "Help me to operate my equipment better. "Help me predict these failure conditions "before it's too late." That's how the problem starts. Then we start inquiring them, "Okay, what kind of data "do you have, what kind of sensors do you have? "Typically, do you have information about under what circumstances you have seen failures "versus not seeing failures out there?" So in the process of inauguration we begin to understand how they might actually use our software and then we tell them, "Well, here, use your software, "our software, to predict that." And, sorry, I want 30 more seconds on that. The other thing is that, typically in an IT environment, because I came from that too, I've been in this position for 30 plus years, IT, UT and all of that, where we don't right away talk about CEP, or expressions, or analytics, and we don't talk about that. We talk about, look, you have these bunch of sensors, we have OT tools here, drag and drop your sensors, express the outcome that you're trying to look for, what is the outcome you're trying to look for, and then we drive behind the scenes what it means. Is it analytics, is it machine learning, is it something else, and what is it? So that's kind of how we approach the problem. Of course, if, sometimes you do surprisingly occasionally run into very technical people. From those people we can right away talk about, "Hey, you need these analytics, you need to use machinery, "you need to use expressions" and all of that. That's kind of how we operate. >> One thing, you know, that's becoming clearer is I think this widespread recognition that's data intensive and low latency work to be done near the edge. But what goes on in the Cloud is actually closer to simulation and high-performance compute, if you want to optimize a model. So not just train it, but maybe have something that's prescriptive that says, you know, here's the actionable information. As more of your data is video and audio, how do you turn that into something where you can simulate a model, that tells you the optimal answer? >> Right, so this is actually a good question. From our experience, there are models that require a lot of data, for example, video and audio. There are some other models that do not require a lot of data for training. I'll give you an example of what customer use cases that we have. There's one customer in a manufacturing domain, where they've been seeing a lot of finished goods failures, there's a lot of scrap and the problem then was, "Hey, predict the failures, "reduce my scrap, save the money", right? Because they've been seeing a lot of failures every single day, we did not need a lot of data to train and create a model to that. So, in fact, we just needed one hour's worth of data. We created a model, put the thing, we have reduced, completely eliminated their scrap. There are other kinds of models, other kinds of models of video, where we can't do that in the edge, so we're required for example, some video files or simulated audio files, take it to an offline model, create the model, and see whether it's accurately predicting based on the real-time video coming in or not. So it's a mix of what we're seeing between those two. >> Well Sastry, thank you so much for stopping by theCUBE and sharing what it is that you guys at FogHorn are doing, what you're hearing from customers, how you're working together with them to solve some of these pretty significant challenges. >> Absolutely, it's been a pleasure. Hopefully this was helpful, and yeah. >> Definitely, very educational. We want to thank you for watching theCUBE, I'm Lisa Martin with George Gilbert. We are live at our event, Big Data SV in downtown San Jose. Come stop by Forager Tasting Room, hang out with us, learn as much as we are about all the layers of big data digital transformation and the opportunities. Stick around, we will be back after a short break. (upbeat electronic music)

it's the cube covering vmworld 2015 brought to you by VMware and its ecosystem sponsors and now your host dave vellante welcome back to moscone center everybody this is the cube silicon angles continuous production of vmworld 2015 Brian biles is here he's the CEO and co-founder of day trium Brian of course from data domain Fame David floor and I are really excited to see you thanks for coming on the cue that's great to see you guys again so in a while coming out of stealth right it's been a while you've been you've been busy right you get a domain work the DMC for a while kind of disappeared got really busy again and here you are yeah new hats got new books yeah yeah so tell us about daydream fundamentally guys on time yeah yeah well we're big on ties on the East Coast are you too well he's even more east than I am even though he goes out in California but uh yeah tell us about date you fundamentally different fundamentally different from other kinds of storage different kind of founding team so I was a founder of data domain and Hugo Patterson the CTO there BMC fellow became CTO for us we hadn't when we left emc we weren't sure what we were going to do we end up running into to VMware principal engineers who had been there 10 or 12 years working on all kinds of stuff and they believed that there was a market gap on scalable storage for VMS so we got together we use something about storage they knew something about BMS and three years later date reham is at its first trade show so talk more about that that Gavin happens all the time right guys alpha geeks nah no offense to that term it's a term of endearment yea sorry I'm a marketing guy tech ghastly ok so they get together and they sort of identify these problems and they're able to sniff them out at the root level so what really can you describe that problem or detail sure so broadly there are two kinds of storage right there's sort of arrays and emerging there's hyper converge they approach things in a very different way in a raise there tends to be a bottleneck in the controller the the electronics that that do the data services this the raid and the snapshotting and cloning and compression indeed even whatever and increasingly that takes more and more compute so Intel is you know helping every year but it's still a bottleneck and when you run out it's a cliff and you have to do a pretty expensive upgrade or migrate the data to a different place and that's sticky and takes a long time so in reaction hyper converged has emerged as an alternative and it you know it has the benefit of killing the array completely but it may have over corrected so it has some trade-offs that a lot of people don't like for example if a host goes down you know the host has assumed all the data management problems that are raised used to have so you have to migrate the data or rebuild it to service the hose if you know you can't have a fit very cleanly between a for example a blade server which has one or two drive bays and a hyper converged model where you know you look across the floor the sort of average number of capacity drives is four or five not to mention the cache drives so a blade server it's just not a fit so there's a lot of parts of the industry where that model is just not the right model you know if everybody is writing to everybody then there's a lot of neighbor noise it gets kind of weird to troubleshoot in tune arrays you know we're better in some respects things change with hyper converged a little different we're trying to create a third path in our model there's a box that we sell it's a 2u rackmount a bunch of drives for capacity but the capacity is just for at rest data it's where all the rights go it's where persistence goes but we move all the data service processing the CPU for raid for compression for dee doop whatever to host cycles we upload software to an ESX host and it uses you know anybody's x86 server and you bring your own flash for caching so you know Gartner did a thing at the end of the year where they looked at discounted street price for flash the difference between what you could pay on a server for flash you know just a commodity SSD and what you could pay in an array it was like an 8x difference so if you don't you know we don't put raid on the host all the rate is in the back end so that frees up another whatever twenty percent you end up getting an order of magnitude difference in pricing so what you can get from us in flash on a host is not you don't aim at ten percent you know of your active data in cash it gets close to a hundred dollars a terabyte after you do d Dupin compression on you know server flash so it's just cheap and plentiful you put all your data up there everything runs out of flash locally it never gets a network hit for a read we do read caching locally unlike a hyper converge we don't spread data in a pool across the host we're not interrupting every host for read for rights for you know somebody else everything is local so when you do a write it goes to our box on the end of the wire 10 gig attached but all of the compute operations are local so you're not interrupting everybody all the resourcing you would do for any i/o problem is a local either cores or flash resourcing so it's a different model and it you know it's a really well student from blade servers no one else was doing that in such a good way unlike a cash-only product it's completely organically designed for manageability you don't have a separate tier for managing on the host separate from an array where you know you're probably duplicating provisioning and having to worry about how to do dinner a snapshot when you have to flush the cache on the host it's all completely designed from the ground up so it means the the storage that we store too is minimal cost we don't have the compute overhead that you have with a controller you don't have the flash which is really expensive there that's just cycles on the host everything is you know done with the most efficient path for both data and hardware so if you look at designs in general the flash is either being a cache or it's been 100% flash or it's been a tier of story so you're just fine understand that correctly there isn't any tearing because you've got a hundred percent of it in flash so that your goals yeah we use flash on the host as a cash right but only in the sort of i only use that word guardedly initial degenerate case it's all of the data yeah so it's a cash in the spirit that if the coast dies you haven't lost any data the data is always safe somewhere else right but it's all the data it's all the data so that's sitting on the disk the back end I presume you're writing sequential event all the time with log files answering and you saw the the disk in the most effective way that's right at both sides move the flash it's a log structured and the disk it's a log stretch ownership yeah and you know we had the advantage of data domain it was the most popular log structured file system ever and you know we learned all the tricks about dee doop and garbage collection along time ago so that CTO team is uniquely qualified to get this right so what about if it does go down are you clustering it what happens when it goes down and you have to recover from those disk drives that could take a bit of time good so there's two sides of that if a host fails you know you you use vm h a to restart the vm somewhere else and life goes on if the back end fails it fails the way a traditional mid-range array might fail we have dual controllers so stay over there all the disks are dual attached there's you know dual networks on each controller you can have service which failover it's a raid 6 so there's a rebuild that happens if it disk fails but you could have two of those and keep going but a point i was getting it was that if you fail in the host you've lost all your active data be precise with them we've lost the cache copy in that local flash but you haven't lost any de una lista de menthe you've lost it from the point of view of the only from a standpoint of speed yeah so at that point you know if the ho is down you have to restart the vm somewhere else that's not instant that takes number of minutes and that gives us some time to upload data to that host to know that great good the data is all laid out in our system not for interactive views on the disk drives but for very fast upload to a cash right it's all sort of sequentially laid out unblended per vm for blasting too so what do you see is the key application times that this is going to be particularly suited full so we have the our back-end system has about 30 terabytes usable after all the you know raid and everything and dude even compressions so I figure you know 2 4 6 X data reduction call it 100 terabytes ish depends on mileage so 100 terabyte box will you know sell that that's kind of a mid-range class array it will sell mostly to those markets and our software supports only vm storage virtual disks so as long as it meets those criteria it's pretty flexible the host each host can have up to eight terabytes of raw flash you know post d doofen compression that could be 50 terabytes of effective capacity of flash / host and you know reads never leave the host so you don't get network overhead for read so that's usually two-thirds of most people I own so it's enormously price and cost effective and very performance performant as well right right latency stuff and your IP is the way you lay out the data on the media is that part of the well listen it's it's like to custom file systems from scratch yeah once in one of the hosts not to mention all the management to make it look like there's one thing you know so it's there's a lot going on it's a much more complex project than data domain wise yeah so you mentioned you know you learned from your blog structured file garbage collection days of data but the the problem that you're solving here is much closer to the host much more active data so was that obviously a challenge but so that was part of the new invention required or was really just directly sort of i mean it's at all levels we had to make it fit so we're very vm centric it looks to the software looks to ESX as though it's an NFS share right but NFS terminates in each host and then we use our own protocol to get across 10 gig to the backend and this gives us some special effects will be able to talk about overtime every version alike at entry design in some ways well it's an offense so so you get to see every VMs storage discreetly it's sort of a you know before v vols there was NFS what many support five dot five so this was a logical choice right so everything's vm centric all of the management just it just looks like there's a big pool of storage and everything else is per vm from from diagnostics to capacity planning to whatever clones are per vm you don't have to you know spend a lot of analytics to fig you know back out what the block Lunds look like with respect to the VMS and try to you know look it up figured out it's just that's all there is so I've talked to a lot of we keep on been talking to a lot of flash and you people and this is almost a flash only in the sense that you are everything is going all of the idea is going to that flash once flash is sufficiently cheap and abundant yes no so and we know we write to nvram which is the same as an all-flash array so one of the things that we've noticed is that what they find is that they have to organize things completely differently particularly as they're trying to share things and for example instead of having a the production system and then a separate copy for each application developer another separate coffee for the for the data warehouse they're trying to combine those and share the data across there with snapshots of one sort or knowledge to amortize they're very high costs just because it's much faster and quicker since the customers are doing this and I think you're not they did vendors they don't even know what's going on so but because they can share it you don't have to move the data well so it's good it's allows the developers have a more current copy the data so they can work on near production all right yeah so I was just wondering whether that was an area that you are looking at to again apply a different way of doing storage so it takes a test debuts case you saying yeah well testing or data warehousing or whatever I mean we're certainly sensitive to the overhead of having a lot of copies that's why you insolent Dean you and so on the way we do so it's but you can get so very efficient but it allows you to for example if you're doing a clone it's a you know a dee doo clone so it's it gives you a new name space entry and it keeps the rights separate but it it you know lets the common data the data with commonality across other versions be consistent so we gotta wrap but the time we have remaining so just quick update on the company headcount funding investors maybe just give us the rundown sure we raised Series A and B we've raised about 55 million so far NEA and light speed plus some angels Frank's luqman Kylie Diane Greene original founder of VMware and Ed Boon yan who was the original CTO right about a little over 70 people great and this is our first trade show and yeah awesome well congratulations Brian you know it's really awesome to see you back in and actually not to have been in action but now invisible action so well it's great to be here thanks very much for coming on cue congrat day everybody will be back right after this is the cube rely from vmworld 2015 right back

live from Las Vegas Nevada it's the kue covering knowledge 15 brought to you by service now we're back this is Dave vellante with Jeff Frick this is the cube SiliconANGLE is continuous live production of knowledge 15 service now's awesome I have to say customer conference 9,000 people we always say Jeff that this is you know one of our favorite conference absolutely it really is it's just tremendous the innovation the excitement customer stories you never seen so many satisfied happy you know excited customers a great management story the messaging matches what's going on in the market a lot of fun cloud we heard about productivity increases expanding beyond IT some really cool new development environments some new capabilities mobile modern technologies that this company is using audience loved it and we heard today about a lot of cloud high availability ready for primetime lot going on and always the passionate customers I mean I think it's an interesting gauge for all the shows that we do to look at the percentage of customers that are on our own show and are willing to come on and talk about what they do versus just executives and partners and kind of more normal set and we continue to have just a tremendous representation here at servicenow now we've been coming for three years our third year in a row we're getting a bunch of new customers that we hadn't on before and really that's the thing that I think that's great i love that the kind of the completion of full circle of the vision that that for it talks about when he sits down he tells the story of year about building the platform that nobody wanted to buy because it was just a platform we known as budget for platform may have passed the budget for applications are solved problems put the application in play sell it be successful and then slowly that platform play comes back out as other people jump on and develop new apps new places to go and it really seems to kind of be hitting a stride not that it wasn't hitting us try it a year ago in Moscow knee remember my friend Omer Peres who was the CIO of Aetna international when I first met him in the early 2000s David floor and I had a CIO consultancy and Omer came in and was our sort of you know advisor and he worked for us many years we had a lot of fun and I used to ask him as a CIO what what's the one thing that you would want out of a software company for your IT operations and he said I want the ERP of IT so this was 2001-2002 we were like wow that's big task so not something we were going to build but that's essentially what service now has built right the ERP of IT they've used that terminology you know that whole notion of them making changes to my infrastructure and I need a single system of record that can manage those changes and document them make sure I'm in compliance with those changes have an audit for those changes and then extend into other business processes and that's exactly what these guys have built but but the neat thing is erp has with it's such a heavy connotation and big implementation and classic old-school Accenture and SI p coming in that's not going to sell best marketing right but now these guys are delivering the function but using today's modern technologies its cloud-based its continuous innovation its ongoing improvements you know the talking about rolling 30 days in not having this big monolithic let's design it let's build it let's deliver it now as we do that and push out well that's the thing they have to worry about it because people know what their platform looks like and it's like when moriches talked about the software mainframe and all the more people said oh don't use that term but essentially that's pretty powerful concept in virtualization world and I think ERP of IT is very powerful here the other interesting thing is we see service now extending into non IT domains throughout the organization we saw there was announcements Salesforce extending inward taking you know what is normally sort of their CRM system and now driving toward HR and we've been saying all week with two years ago we said wow app creator service creator that's like a pass layer that's kind of like Salesforce and interesting to see how the opportunity is going to collide down the road and that's exactly what's happening you'd expect that for a company like service now that has a 40 to 45 billion dollar Tam they're going to run into a lot of places and their advantage is they're running into those places with their what Frank sleeping calls their homies which our IT people why is that an advantage the reason why that's an advantage because I t touches every aspect of the business everybody gets an IT tax right right why do I get it's like the government they're everywhere in your life you can't get away from it the same thing with IT it's everywhere whether it's marketing finance sales logistics a chart doesn't IT technology is the substrate and touches every part of the business as a result I tea has purview over that entire view maybe not the right word but it's got visibility around the entire process is so it's going to be a really interesting dynamic as these this company grows into new spaces look at a company like Salesforce they're coming at it from a sales force right angle right very important function within the company but you know does it touch HR directly does it touch logistics that I touch you know to your effects finance but do they support the processes no so that's why i would say that service now has the advantage the flip side of that is you get a company like salesforce big company hot company huge community very very interesting dynamic emerging there yeah and it is it is kind of the base in the community from which you grow and i thought some of the interesting stories that came up over the last couple days where where is where the IT guy had an efficient process and effective process that gets people a new laptop to onboard new employees and the people in the department said hey that's pretty cool and you got that done pretty well how could we do that for some of our internal processes so you know they almost have IT now is an internal sales force we hear over and over again about the IT role changing and really building stores for their services and really getting entrepreneurial and changing the company there's just there's this a really good vibe and you know most great tech companies have a really strong leader at the helm who's got a personality that helps really define that company see it with Oracle you see it with Apple you know the jobs and and fred is ease and rock star but he's so he's such a humble guy he's so approachable he walks around and people are running up taking selfies with him and he you know he's one so humble but then too don't discount the vision the guy is super smart and still one of our favorite enemies we ever did was with Doug Leone two years ago describing his impression when he first talked two to Fred and listening to that vision and I I can't remember the exact quote but basically he's a really smart guy and he can make it a really simple and he knows where he's going well what I like about Fred laude well first of all I'm a groupie I admitted I tweeted out I'm a Fred ludie groupie and I with a bunch of our homie I guess I owe me here's the better I'm groupie I mean I am only because I just his a guy who's got tremendous vision you can talk to him about virtually any kind of technology subject obviously can talk about service now I just remember one of our interviews I think it was last year or maybe two years ago we're like Fred you know know you're super busy you probably got a runny goes no I got time let's keep going yeah all right right which I love I mean it's just like a lot of these you know times at these conferences that executives are so stressed out because they're being pulled in a million different directions and Fred just kind of takes it all in stride he loves talking to the people pressing the flesh people come up they want to touch him right like I lean right but you know you're that you're good analyst you study the numbers you look at this where do you think potential head winds are obviously they're growing the bigger profile they get the more targets are going to start coming on their back what do you think some of the head ones are going to come well I mean the near-term head wounds obviously our currency related and that's what sort of noctum knock service now off the of the 12 billion dollar market cap peak last Friday it has recovered that's a financial analyst this week and clearly they communicated the story in fact it's talking to Mike scarpelli CFO and he said look when you compare the the currency you know pre currency fluctuation numbers we blew it out okay and I think what the what the street did you know Ferrari was saying well the street really doesn't understand i think the street generally understands the opportunity generally right as best thing because they see high growth they see big Tim they see great management they see happy customers I mean what more do you need very own investment right and his valuation metrics obviously in cash flow but I think that that what what the street does understand is that there is a big opportunity here so i think that scarpelli and slew been communicated in a way that scared the street a little bit because they were being conservative they gave a little lighter guidance right and this street is used to service now just blowing away its numbers i said i said on friday this is a really healthy taking some air out of the bubble great love it very good good good it's a really healthy thing I like to see this kind of dynamic you get scared when companies start to you know expand beyond their their cam so so this to answer your question specifically and it sounds like cliche but I really do see that service nows headwinds and risks are execution risks I think they control their own destiny it's like a football team that can win out and make the playoffs I think that's the situation that service now is in right now its execution we heard from jay anderson i think i t scale internal IT scale is a risk and that's that's he's got a very very important job number one number two is I think you know we heard from dan McGee on the availability piece they are making some very bold claims about availability focus on security so that obviously is something that they've got to pay attention to the ability to scale their cloud but I really do see it as execution risk I don't speak competition right now as if everybody you know has said for the last 70 s all we got the ServiceNow killer we're not seeing the ServiceNow killer emerged nothing close to it you talk to customers it's very clear they're not spitting on there just admin seats and then what do you think in terms of is now we've seen you know amazon kind of lift up the covers on their cloud business and now expose that a little bit more to the street and start to break those numbers out and the impact of that on on these cloud based businesses and how they continue to to grow I think that's interesting so amazon today announced earnings in a broke out AWS 1.56 billion in revenue 256 million dollars in operating profit that's a 17-percent operating profit I have been saying for two or three years now that AWS is far more profitable than people realize everybody calls it a race 2 0.o race 20 race 20 race 20 the guys are say it's a race 20 the guys who can't compete with Amazon's cost structure seventeen percent operating profit is not erased 20 now what Jeff Bezos and Andy Jassy decide to do with that operating profit is a different story they'll pour it back into the business they'll expand their capex because the Amazon is one big lifestyle business for Jeff Bezos so but that's fine but so I have been saying and I've drawn the curves that what essentially Amazon is doing is they're they're taking the old outsourcing marginal economics of outsourcing which was my mess for less as you grow scale as you do more volume your marginal economics actually get worse there's diseconomies of scale the opposite of software and software we learned from Microsoft and the PC era the more volume you do the better your marginal economics and essentially your cost your economic marginal costs go to zero what Amazon is doing is they're taking the outsourcing line the provisioning of services you know technology services infrastructure services servers and storage and they're bringing that they're they're tracking the software curve so that means they're driving costs down lower than any I tea shop on the planet I don't care if the big banks think that they can compete with Amazon on on cost structure a long term they can't in my opinion now they can compete in other ways right you know with proprietary sort of you know value-added IP but on cost amazon google microsoft they are going to have a volume advantage and we're seeing it now in the numbers it's not a coincidence than amazon is seventeen percent AWS operating profits is because it's not a race to 0 they've got better marginal economics and so now does that have to do with service now we've heard a lot about multi-tenant versus multi-instance i think on balance from a pure infrastructure standpoint amazon is going to have better cost structure than service now but companies like service now an Oracle who have differentiable advantage through software it can sell software subscriptions or software licenses in the case of Oracle can make up that cost when my opinions that cost disadvantage in higher margin software and that's exactly what you see with service now I don't think they'll have the marginal economics of Microsoft but it's a great great business model long term yeah and the other two pieces of it that I think are really important and with bezels especially I mean the guy's a visionary and he's making enough money to execute what he wants to do and people don't believe it but they haven't believed it for 20 20 years and he continues to evolve the business and the other thing that still people have been outsourcing their payroll for how long why'd it take so long to start to outsource your IT infrastructure when people been outsourcing payroll forever I mean if you are focused on a particular business you can out execute people trying to do the same thing and that's the other advantage natick service now is they're very focused and I think some of the guests this week's agenda be a general purpose cloud we run our application and we run our application better than anyone else and it oh by the way just so happens that our application is really a platform and there's a whole lot of other applications that you can build on and beyond the ones that we did so I think it's I think it's really good opportunity I kind of like the data point that we heard this week I don't if you picked up on the nuance but several executives at servicenow said that their intelligence says that most customers are saying we want to place most of our workload over time into the public cloud now you could say service now is biased okay emc is gonna say the exact in vmware they can say the exact opposite right ibm's going to say the up no most most of the world is going to be hybrid okay so you got Andy Jassy on one side say the whole world's going to the public cloud you got you know joe tucci and the other end say and the most of the world's going to be hybrid you know how do you square that circle and i think that the growth workloads are very clearly going into the to the public cloud Andy there's no question about that and you know it's just the way numbers work if you got public cloud workloads growing at twenty thirty fifty percent a year and you got a private cloud workloads growing at zero percent a year a two percent a year at some point they're going to catch up right so I think the vast majority of work is going to be done over time in in the public cloud that's not to say everybody's going to you know big do a big switch there's still plenty of applications there they're 20 years old that are going to stay you know behind the four walls of the the data center within a company but the economics of doing that are not going to be as good so you have to have other reason there's got to be whether it's you know really good business value reasons competitive advantage reasons security or compliance compliance i think is up in is a huge one well i mean amazon has great security the issue with amazon is they won't do one offs service now you know we'll go belly to belly with customers and bend over backwards and do things for the enterprise customers that amazon won't this is why you saw when workday launched its analytics service on AWS nobody bought it because they said well i just negotiated an SLA and a security you know deal with you and and we've agreed on the parameters of that now you're saying to access my analytics piece I got to go with Amazon's SLA that's not cool I can't get that by my lawyers forget it it's too hard right so yeah so I think people really kind of need to think about that service now is in an interesting position to be able to do those things for the enterprise that are what Amazon would consider on natural amazon strategy is any color you want as long as it's black let's add things over time that everybody can take advantage of by the way I think that's a great strategy and it's going to it's a long term winning strategy but so the way you compete with Amazon it's interesting somebody tweeted it's it's it's kind of weird to see Dan McGee compare infrastructure-as-a-service from amazon with service now okay yes that's true on the other hand you know from a conceptual standpoint I'm putting stuff in the cloud why not think about it so what does that mean how do you compete with Amazon's ecosystem the way you compete is you have differentiable advantage with IP that allows you to capture margins that reflect the value that you're delivering service now has that I think very clearly you know Oracle has that I'd mentioned Oracle even though they don't have the volume that many of the people have in and there are many many others you know that have niches that Amazon doesn't want to try and it's for cle and it's worth a little specific right it's really it's a good focus on something well i think i'm at salesforce very clearly has that differentiable advantage in may and a work day i mean many many you know companies out there that have that but workdays winning sorry at work days winning but service now is winning you're clearly seeing amazon when the cloud ification thus asif occation of IT is here it's now and it's not going to stop no it's like a stop so we've been here for three days i think we had 45 or so interviews you're fine i'm going to get you with the i won't go bumper sticker because we know you got to fly back to boston so it would be a long drive what's your what's the flag that hangs off the back of the of the year playing your banner as you leave after 40-some odd interviews three days on our third consecutive service now knowledge show so to me it's attacking the productivity problem within organizations which by the way is a whole nother vector of discussion focused our MIT of cube action right you know so that's a whole nother discussion i have concerns about that you know what are we going to do with all this increased productivity we better put it into innovation and we better educate our young people so that they can create you know new value so that's sort of one piece i think the second to me is the innovation on the software platform the developer focus the technology behind service now and the mobile capabilities and emphasis on new tech in on real time very very impressive and then i think the third is the cloud the cloud piece the devops the cloud the the the developer ecosystem adding value for the enterprise big opportunity and I guess that stuff really that that ecosystem to me is my big takeaway of service now knowledge 15 no 15 is that ecosystem development that expansion of the ecosystem that's where this company this community gets its leverage and I think that's a winning formula yeah my takes is a slightly different angle and really just go back to dine are less guest is is people are always chasing innovation for their internal how do I get my own people not necessarily who are building our core products but who are executing our strategy we're how do i get innovation and to me what we've seen so many things in initial specifically is if you simply enable more people to be able to innovate and you lower the barriers for them to try to execute ideas just a simple math by having more people contributing you're going to get more innovation and the other piece that's really important for that is it needs to be a low cost of entry to try and if it fails you need to be able to fast fail and get out so now and you've got all these people in all these departments seeing an opportunity to build a new application that that that saves time it is a little bit more efficient than what they were doing that before you multiply that by hundreds and thousands of people suddenly you're really getting significant improvements in efficiency and met Beth what I think is the most exciting about these cloud baths cloud-based applications the software world in which we live in where the barriers to actually develop things you know a coder lyst a codeless developer is a really exciting opportunity that will enable companies to expose more innovation within their own workforce I think it's for good stuff all right I think we wrap I think we're at I want to thank service now our awesome hosts for this conference will holding this conference creating a great event and having us here now for the for the third year in a row really is a pleasure for us and the cube team to be a part of this Greg Stewart shut up a great job Patrick Leonard Thank You Matthew we hear you back there doing the countdown to thank you awesome awesome job you know as always the entire cube team John my co-host as well John furrier John is getting everything up on on YouTube and on SiliconANGLE SiliconANGLE TV go to SiliconANGLE TV where all the action is go to SiliconANGLE calm kristen nicole and her team or pumping out content Bert Lattimore's on the crowd chat Crouch at net / no 15 great job thank you for all your help and check out Wikibon premium dot Wikibon comm check out all the research will be summarized in this show you know we're always on top of things they're really appreciate everybody you know watching sending in your comments your tweets we're app thanks everybody thank you we will see you next time let's see what's next is a easy world yeah emc world two weeks back here in Vegas so again thanks to everybody in the ServiceNow knowledge community that's a wrap this is dave vellante with Jeff Frick for John furrier we'll see you next time