(upbeat music) >> We're back. This is Dave Vellante of theCUBE, and we're here with Ray Wang, who just wrote a book reminiscent of the famous Tears for Fears song, Everybody Wants to Rule the World: Surviving and Thriving in a World of Digital Giants. Ray, great to see again, man. >> What's going on, man, how are you? >> Oh great, thanks for coming on. You know, it was crazy, been crazy, but it's good to see you face-to-face. >> Ray: This is, we're in the flesh, it's live, we're having conversations, and the information that we're getting is cut right. >> Dave: Yeah, so why did you write this book and how did you find the time? >> Hey, we're in the middle of pandemic. No, I wrote the book because what was happening was digital transformation efforts, they're starting to pop up, but companies weren't always succeeding. And something was happening with digital giants that was very different. They were winning in the marketplace. And never in the form of, if you think about extreme capitalism, if we think about capitalism in general, never in the history of capitalism have we seen growth of large companies. They get large, they fall apart, they don't have anything to build, they can't scale. Their organizations are in shambles. But what happened? If you look at 2017, the combined market cap of the FAANGs and Microsoft was 2 trillion. Today, it is almost 10.2 trillion. It's quintupled. That's never happened. And there's something behind that business model that they put into place that others have copied, from the Airbnbs to the Robloxes to what's going to happen with like a Starlink, and of course, the Robinhoods and you know, Robinhoods and Coinbases of the world. >> And the fundamental premise is all around data, right? Putting data at the core, if you don't do that, you're going to fly blind. >> It is and the secret behind that is the long-term platforms called data-driven digital networks. These platforms take the ability, large memberships, our large devices, they look at that effect. Then they look at figuring out how to actually win on data supremacy. And then of course, they monetize off that data. And that's really the secret behind that is you've got to build that capability and what they do really well is they dis-intermediate customer account control. They take the relationships, aggregate them together. So food delivery app companies are great example of that. You know, small businesses are out there that hundreds and thousands of customers. Today, what happens? Well, they've been aggregated. Millions of customers together into food delivery app. >> Well, I think, you know, this is really interesting what you're saying, because if you think about how we deal with Netflix, we don't call the Netflix sales department or the marketing department of the service, just one interface, the Netflix. So they've been able to put data at their core. Can incumbents do that? How can they do that? >> Incumbents can definitely do that. And it's really about figuring out how to automate that capture. What you really want to do is you start in the cloud, you bring the data together, and you start putting the three A's, analytics, automation, and AI are what you have to be able to put into place. And when you do do that, you now have the ability to go out and figure out how to create that flywheel effect inside those data-driven digital networks. These DDDNS are important. So in Netflix, what are they capturing? They're looking at sentiment, they're looking at context. Like why did you interact with, you know, one title versus another? Did you watch Ted Lasso? Did you switch out of Apple TV to Netflix? Well, I want to know why, right? Did you actually jump into another category? You switched into genres. After 10:00 p.m., what are you watching? Maybe something very different than what you're watching at 2:00 p.m.. How many members are in the home, right? All these questions are being answered and that's the business graph behind all this. >> How much of this is kind of related to the way organizations or companies are organized? In other words, you think about, historically, they would maybe put the process at the core or the, in a bottling plant, the manufacturing facility at the core and the data's all dispersed. Everybody talks about silos. So will AI be the answer to that? Will some new database, Snowflake? Is that the answer? What's the answer to sort of bringing that data together and how do you deal with the organizational inertia? >> Well, the trick to it is really to have a single plane to be able to access that data. I don't care where the data sits, whether it's on premise, whether it's in the cloud, whether it's in the edge, it makes no difference. That's really what you want to be able to do is bring that information together. But the glue is the context. What time was it? What's the weather outside? What location are you in? What's your heart rate? Are you smiling, right? All of those factors come into play. And what we're trying to do is take a user, right? So it could be a customer, a supplier, a partner, or an employee. And how do they interact with an order doc, an invoice, an incident, and then apply the context. And what we're doing is mining that context and information. Now, the more, back to your other point on self service and automation, the more you can actually collect those data points, the more you can capture that context, the more you're able to get to refine that information. >> Context, that's interesting, because if you think about our operational systems, we've contextualized most of them, whether it's sales, marketing, logistics, but we haven't really contextualized our data systems, our data architecture. It's generally run by a technical group. They don't necessarily have the line of business context. You see what HPE is doing today is trying to be inclusive of data on prem. I mentioned Snowflake, they're saying no way. Frank Slootman says we're not going on prem. So that's kind of interesting. So how do you see sort of context evolving with the actually the business line? Not only who has the context actually can, I hate to use the word, but I'm going to, own the data. >> You have to have a data to decisions pathway. That data decisions pathway is you start with all types of data, structured, unstructured, semi-structured, you align it to a business process as an issue, issue to resolution, order to cash, procure to pay, hire to retire. You bring that together, and then you start mining and figuring out what patterns exist. Once you have the patterns, you can then figure out the next best action. And when you get the next best action, you can compete on decisions. And that becomes a very important part. That decision piece, that's going to be automated. And when we think about that, you and I make a decision one per second, how long does it get out of management committee? Could be a week, two weeks, a quarter, a year. It takes forever to get anything out of management committee. But these new systems, if you think about machines, can make decisions a hundred times per second, a thousand times per second. And that's what we're competing against. That asymmetry is the decision velocity. How quickly you can make decisions will be a competitive weapon. >> Is there a dissonance between the fact that you just mentioned, speed, compressing, that sort of time to decision, and the flip side of that coin, quality, security, governance. How do you see squaring that circle? >> Well, that's really why we're going to have to make that, that's the automated, that's the AI piece. Just like we have all types of data, we got to spew up automated ontologies, we got to spit them up, we got to be using, we've got to put them back into play, and then we got to be able to take back into action. And so you want enterprise class capabilities. That's your data quality. That's your security. That's the data governance. That's the ability to actually take that data and understand time series, and actually make sure that the integrity of that data is there. >> What do you think about this sort of notion that increasingly, people are going to be building data products and services that can be monetized? And that's kind of goes back to context, the business lines kind of being responsible for their own data, not having to get permission to add another data source. Do you see that trend? Do you see that decentralization trend? Two-part question. And where do you see HPE fitting into that? >> I see, one, that that trend is definitely going to exist. I'll give you an example. I can actually destroy the top two television manufacturers in the world in less than five years. I could take them out of the business and I'll show you how to do it. So I'm going to make you an offer. $15 per month for the next five years. I'm going to give you a 72 inch, is it 74? 75 inch, 75 inch smart TV, 4k, big TV, right? And it comes with a warranty. And if anything breaks, I'm going to return it to you in 48 hours or less with a brand new one. I don't want your personal information. I'm only going to monitor performance data. I want to know the operations. I want to know which supplier lied to me, which components are working, what features you use. I don't need to know your personal viewing habits, okay? Would you take that deal? >> TV is a service, sure, of course I would. >> 15 bucks and I'm going to make you a better deal. For $25 a month, you get to make an upgrade anytime during that five-year period. What would happen to the two largest TV manufacturers if I did that? >> Yeah, they'd be disrupted. Now, you obviously have a pile of VC money that you're going to do that. Will you ever make money at that model? >> Well, here's why I'll get there and I'll explain. What's going to happen is I lock them out of the market for four to five years. I'm going to take 50 to 60% of the market. Yes, I got to raise $10 billion to figure out how to do that. But that's not really what happens at the end. I become a data company because I have warranty data. I'm going to buy a company that does, you know, insurance like in Asurion. I'm going to get break/fix data from like a Best Buy or a company like that. I'm going to get at safety data from an underwriter's lab. It's a competition for data. And suddenly, I know those habits better than anyone else. I'm going to go do other things more than the TV. I'm not done with the TV. I'm going to do your entire kitchen. For $100 a month, I'll do a mid range. For like $500 a month, I'm going to take your dish washer, your washer, your dryer, your refrigerator, your range. And I'll do like Miele, Gaggenau, right? If you want to go down Viking, Wolf, I'll do it for $450 a month for the next 10 years. By year five, I have better insurance information than the insurance companies from warranty. And I can even make that deal portable. You see where we're going? >> Yeah so each of those are, I see them as data products. So you've got your TV service products, you've got your kitchen products, you've got your maintenance, you know, data products. All those can be monetized. >> And I went from TV manufacturer to underwriter overnight. I'm competing on data, on insurance, and underwriting. And more importantly, here's the green initiative. Here's why someone would give me $10 billion to do it. I now control 50% of all power consumption in North America because I'm also going to do HVAC units, right? And I can actually engineer the green capabilities in there to actually do better power purchase consumption, better monitoring, and of course, smart capabilities in those, in those appliances. And that's how you actually build a model like that. And that's how you can win on a data model. Now, where does HPE fit into that? Their job is to bring that data together at the edge. They bring that together in the middle. Then they have the ability to manage that on a remote basis and actually deliver those services in the cloud so that someone else can consume it. >> All right, so if you, you're hitting on something that some people have have talked about, but it's, I don't think it's widely sort of discussed. And that is, historically, if you're in an industry, you're in that industry's vertical stack, the sales, the marketing, the manufacturing, the R&D. You become an expert in insurance or financial services or whatever, you know, automobile manufacturing or radio and television, et cetera. Obviously, you're seeing the big internet giants, those 10 trillion, you know, some of the market caps, they're using data to traverse industries. We've never seen this before. Amazon in content, you're seeing Apple in finance, others going into the healthcare. So they're technology companies that are able to traverse industries. Never seen this before, and it's because of data. >> And it's the collapsing value chains. Their data value chains are collapsing. Comms, media, entertainment, tech, same business. Whether you sell me a live stream TV, a book, a video game, or some enterprise software, it's the same data value stream on multi-sided networks. And once you understand that, you can see retail, right? Distribution, manufacturing collapsed in the same kind of way. >> So Silicon Valley broadly defined, if I can include, you know, Microsoft and Amazon in there, they seem to have a dual disruption agenda, right? One is on the technology front, disrupting, you know, the traditional enterprise business. The other is they're disrupting industries. How do you see that playing out? >> Well the problem is, they're never going to be able to get into new industries going forward because of the monopoly power that people believe they have, and that's what's going on, but they're going to invest in creating joint venture startups in other industries, as they power the tools to enable other industries to jump and leap frog from where they are. So healthcare, for example, we're going to have AI in monitoring in ways that we never seen before. You can see devices enter healthcare, but you see joint venture partnerships between a big hyperscaler and some of the healthcare providers. >> So HPE transforming into a cloud company as a service, do you see them getting into insurance as you just described in your little digital example? >> No, but I see them powering the folks that are in insurance, right? >> They're not going to compete with their customers maybe the way that Amazon did. >> No, that's actually why you would go to them as opposed to a hyperscale that might compete with you, right? So is Google going to get into the insurance business? Probably not. Would Amazon? Maybe. Is Tesla in the business? Yeah, they're definitely in insurance. >> Yeah, big time, right. So, okay. So tell me more about your book. How's it being received? What's the reaction? What's your next book? >> So the book is doing well. We're really excited. We did a 20 city book tour. We had chances to meet everybody across the board. Clients we couldn't see in a while, partners we didn't see in a while. And that was fun. The reaction is, if you read the book carefully, there are $3 trillion market cap opportunities, $1000 billion unicorns that can be built right there. >> Is, do you have a copy for me that's signed? (audience laughing) >> Ray: Sorry (coughs) I'm choking on my makeup. I can get one actually, do you want one? >> Dave: I do, I want, I want one. >> Can someone bring my book bag? I actually have one, I can sign it right here. >> Dave: Yeah, you know what? If we have a book, I'd love to hold it. >> Ray: Do you have any here as well? >> So it's obviously you know, Everybody Wants to Rule the World: Surviving and Thriving in a world of Digital Giants, available, you know, wherever you buy books. >> Yeah, so, oh, are we still going? >> Dave: Yeah, yeah, we're going. >> Okay. >> Dave: What's the next book? >> Next book? Well, it's about disrupting those digital giants and it's going to happen in the metaverse economy. If we think about where the metaverse is, not just the hardware platforms, not just the engines, not just what's going on with the platforms around defy decentralization and the content producers, we see those as four different parts today. What we're going to actually see is a whole comp, it's a confluence of events that's going to happen where we actually bring in the metaverse economy and the stuff that Neal Stephenson was writing about ages ago in Snow Crash is going to come out real. >> So, okay. So you're laying out a scenario that the big guys, the disruptors, could get disrupted. It sounds like crypto is possibly a force in that disruption. >> Ray: Decentralized currencies, crypto plays a role, but it's the value exchange mechanisms in an Algorand, in an Ether, right, in a Cardano, that actually enables that to happen because the value exchange in the smart contracts power that capability, and what we're actually seeing is the reinvention of the internet. So you think, see things like SIOM pop-up, which actually is creating the new set of the internet standards, and when those things come together, what we're actually going to move from is the seller is completely transparent, the buyer's completely anonymous and it's in a trust framework that actually allows you to do that. >> Well, you think about those protocols, the internet protocols that were invented whenever, 30 years ago, maybe more, TCP/IP, wow. I mean, okay. And they've been co-opted by the internet giants. It's the crypto guys, some of the guys you've mentioned that are actually innovating and putting, putting down new innovation really and have been well-funded to do so. >> I mean, I'll give you another example of how this could happen. About four years ago, five years ago, I wanted to buy Air Canada's mileage program, $400 million, 10 million users, 40 bucks a user. What do I want them in a mileage program? Well think about it. It's funded, a penny per mile. It's redeemed at 1.6 cents a mile. It's 2 cents if you buy magazines, 2 1/2 cents if you want, you know, electronics, jewelry, or sporting equipment. You don't lose money on these. CFOs hate them, they're just like (groans) liability on the books, but they mortgage the crap out of them in the middle of an ish problem and banks pay millions of dollars a year pour those mileage points. But I don't want it for the 10 million flyers in Canada. What I really want is the access to 762 million people in Star Alliance. What would happen if I turned that airline mileage program into cryptocurrency? One, I would be the world's largest cryptocurrency on day one. What would happen on day two? I'd be the world's largest ad network. Cookie apocalypse, go away. We don't need that anymore. And more importantly, on day three, what would I do? My ESG here? 2.2 billion people are unbanked in the world. All you need is a mobile device and a connection, now you have a currency without any government regulation around, you know, crayon banking, intermediaries, a whole bunch of people like taking cuts, loansharking, that all goes away. You suddenly have people that are now banked and you've unbanked, you've banked the unbanked. And that creates a whole very different environment. >> Not a lot of people thinking about how the big giants get disintermediated. Get the book, look into it, big ideas. Ray Wang, great to see you, man. >> Ray: Hey man, thanks a lot. >> Hey, thank you. All right and thank you for watching. Keep it right there for more great content from HPE's big GreenLake announcements. Be right back. (bright music)

>> From Sand Hill Road in the heart of Silicon Valley, it's theCUBE. Presenting, the People First Network, insights from entrepreneurs and tech leaders. >> Hello everyone I'm John Furrier with theCUBE, we are here in Sand Hill Road up at Mayfield Venture Capital Firm for their 50th anniversary, their People First Network series, produced with theCUBE and Mayfield, I'm John Furrier, with Bill Schlough, the Chief Information Officer of the San Francisco Giants, CUBE alumni, great to see you thanks for joining me today for this People First Series we're doing with Mayfield's 50th anniversary, thanks for coming in. >> Good to be here, John. >> So, been a while since we chatted, it's been a year, A lot's happening in tech, you can't go a year, that's like seven dog years in tech, lot happening, you're managing, as the CIO for the Giants, a lot of things going on in baseball, what's the priorities for you these days, obviously, you guys, great social, great fan experience, what's new for you, what's the priority? >> Man, there's always something new. It's what I love about it, this'll be my 20th season with the Giants comin' up. And, it never gets old, there's always new challenges. On the field, in the seats, off the field, you name it. As we look toward next year, really excited about bringin' in a new video board, which we haven't publicly announced, maybe I just did publicly announce, we're breaking news on theCUBE today. So we're puttin' in a new video board, it'll be over three times the size of the one we have today. That's big news, we're doing a lot of exciting things in the ticketing world. The ticketing world is really transforming right before our eyes in terms of the way fans buy tickets. It's changed a lot. Once up on a time you could call a game a sellout, and we sold out 530 straight games at AT&T Park, but really there's no such thing as a sellout anymore I mean, at any point you can get a great ticket, so we have to adapt to that and change the product that we're delivering to fans, so making some changes on the ticketing front, the fan experience, the ballpark with the video board, and another thing that's changing a lot is the way fans consume our game when they're not at the ballpark. It's rare that you're going to see somebody sit on a couch for three plus hours and watch a game continuously anymore. Fans are consuming through mobile devices, streaming, catching clips here and there, all different methods, and it's fun to be a part of that, because, fans still love the game, but they're just consuming it in different ways. >> Yeah, I love having chats with you on theCUBE because one of the things that have always been the same from nine years doing theCUBE is, the buzzword of consumerization of IT has been out there, overused, but you're living it, you have a consumer product, the ultimate consumer product, in Major League Baseball, and the Giants, great franchise, in a great city, in a great stadium, with a rabid fanbase, and they know tech, so you have all the elements of tech, but the expectation of consumers, and the experiences are changing all the time, you got to deliver on the expectations and introduce new experiences that become expectations, and this is the flywheel of innovation, and it's really hard, but I really respect what you guys are doing over there, and that's why I'm always curious, but, always, the question comes back to, is, can I get faster wifi in the stadium? (laughs) It's always the number one question >> It's funny that you ask that because it is AT&T Park, you know, so, honestly, we got to check that box, and we've had to for years, all the way back to when we first rolled it out, way back in 2004 when we first rolled out wifi in the park, people weren't asking for it then, people were coming to the ballpark with a laptop and plugging a card into it, and there were about a hundred of them that were accessing it, but today, what's interesting is, who knows what next, but we're not talkin' about wifi as much, wifi is just kind of, expected, you got to have it, like water. You're talkin' about 5G networks, and new ways to connect. Honestly, this past season, our wifi usage in terms of the number of fans that use wifi, what we call the take rate, the percentage of fans, was actually down 30% from the previous year. Not because we had less fans in the stadium, because this is the take rate, a percentage of fans in the stadium, went down, because AT&T made some massive investments in their cellular infrastructure at the ballpark, and if you're just connecting, and you got great bandwidth, you don't feel the need to switch over to wifi, so who knows what the future will hold? That's a great point, and you see the LTE networks have so much more power, it used to be you needed wifi to upload your photos, so you'd go in, log in, and if they auto login that's cool, but people don't need to. >> Not with photos, what they need it now for is when we see it really maxing out is events, like our Eagles concert, or Journey concert, or a really big game, like opening day, or honestly, Warriors playoffs game, 49ers football games, that's when folks are streamin' to video. For streamin' to video, they're still goin' to that wifi. Yeah, that's the proven method, plus they don't want to jack up their charges on the AT&T site, but I won't go there, Let's talk about innovat-- Most say unlimited, I will go there, most say unlimited these days. >> Really, I got to find that plan, my daughter's killin' me with her watchin' Netflix on LTE, I tell her. Innovation is changing, I want to get your thoughts on this, 'cause I know you're on the front end of a lot of innovations, you do a lot of advising here at Mayfield. The VC's always trying to read the tea leaves, you're living it, what's the innovation formula look like now for you 'cause as you're sittin' in your staff meetings, as you look at the team of people around you, you guys want to foster, you do foster, innovation culture. What's the formula, what do you guys do when you have those meetings, when everyone's sitting around the table sayin', what do we do next? "How do we create a better experience? "How can we get better fans, and better product "in their hands as fast as possible?" What's your strategy? >> You know, it's funny, people talk about the secret sauce for innovation, what's the formula? I would say, for us, it's really a symbiotic relationship with a lot of things, first of all, where we are, geographically, we've got folks like Mayfield, down the street, and many others, that we can talk to, that are, when innovation is happening, when the startups are incubating, they're being funded by these guys, a lot of times they are here, and our phones are ringing off the hook with a lot of folks so my formula for innovation is answer the phone and take the meetings, but, to be honest, that creates its own problems, because there's so many great ideas out there, if you try to do all of them, you're going to fail at all of them. You got to pick a very small few to try to experiment with, give it a shot, we just don't have the bandwidth, we only have 250 full-time staff on the business side. For us, geographically, you have to really be laser-focused and say okay, there are so many great ideas out here, which are the three or four that we're going to focus on this year, and really give it a try, that's really going to drive, propel our business forward, enhance our product on the field, whatever it might be, but I'll tell you where it really truly starts. It's from the top with our CEO. And, I've had a few different bosses over the years, but with the Giants, our CEO is singularly focused on all of us doing things folks have never done before regardless of what business unit you're in. Whether you're in ticketing, finance, marketing, sales, what drives him, and drives all of us, is innovation. And his eyes glaze over when I talk to him about cost-cutting, and his eyes can glaze over really fast. But when I talk to him about doing something no one's ever done before, that's when he sits forward in his chair, he gets engaged, and I just have a great boss, Larry Baer, he's been with us for 25 years wit the Giants, and he is the driver for it, he creates the culture from the top, where all of us, we want to impress him, and to impress him, you got to do sometin' nobody's ever done before, and what's even more interesting is there are some challenges and some changes talking place across our industry, as I said before, ticketing and other areas, and I've sat in meetings with him where somebody might raise their hand and say, "But this is happening across the industry, "so it's just a macro trend," and he'll get upset, be like, "I don't care about macro trends. "We are here in the Bay Area, "we're the San Francisco Giants, "we're going to do it our way." >> And so when you do it your way, he promotes risk-taking, so that's a great culture. What are some of the things you have tried that were risky, and/or risque, or maybe an experiment, that went well, and maybe ones that didn't go well, can you share some color commentary around that? >> Sure, over 20 years we've had some of all of those. I would say, I've had some real scary moments, our culture is collaborative, but I wouldn't call it combative, but we all have strong opinions, a lot of us have been there a long time, and we have strong opinions and so we'll battle, internally, a lot, but then once the battle is over, we'll all align behind the victory. Thinking back, one of the most stressful times for me at the ballpark was related to wifi, when we decided to take our antennas and put 'em under people's seats. No one had ever done that before, and there were two major concerns with that. One is, honestly are people going to get cancer from these antennas under their seats, it's never been done before, what's going to happen, and whether it's going to happen or not, what's the perception of our fans going to be, because, these are, the bread and butter is, the golden goose here, all the fans, so, yeah it's great that they're going to be, have faster connection here at AT&T Park, but if they think they're going to get cancer, they're going to cancel their season ticket plans, we got to problem. Number two is, we're taking away a little storage space also, under the seats, so it was very controversial internally, we did all of our research, we proved that having a wifi antennae under your seat is the equivalent to having a cell phone in your pocket, most people do that, so we're pretty safe there, and from the storage space perspective, honestly, it actually elevates your stuff, if somebody spills a Coke behind ya, it'll fall all around your purse, which is sitting on top of that wifi antenna so we came up with a good solution, but that was an example of something that was really controversial >> So beer goes on the antennae not your bag. (laughs) >> Exactly, your bag stays dry, we found a way to spin that but, there have been so many, I can go way back in time, back to the days when it was the PalmPilot that ruled the day instead of the apple >> Well you guys also did a good job on social media, I got to give you guys props, because, you're one of the first early adopters on making the fan experience very interactive. That was, at that time, not viewed as standard. Yeah, built the @Cafe at our ballpark, which is still there really to try to bring social media to the fans. >> I think you're the first ballpark to have a kale garden, too, I think. >> That's a little off topic, but yes, driven by one of our players, who's a big kale fan, yeah, the garden out in center field. >> So sustainibility's certainly important, okay, I got to ask the question around your role in the industry, because one of the things that's happening more and more in Major League Baseball and certainly as it crosses over to tech her at Mayfield Venture Capital, there's a lot of collaboration going on, and it's a very people-centric culture where, it used to be people would meet at conferences, or you'd do conference calls, now people are in touch in real time, so these networks are forming. It takes a village to create innovative products, whether you're inside the Giants, or outside in the ecosystem, how have you personally navigated that, and can you share some experiences to the folks watching, how you became successful working in an environment where it's collaborative inside the walls of the San Francisco Giants, but also outside? >> %100, the topic is near and dear to my heart, and from when I started with the Giants, that's what I love about our industry We compete on the field, and only on the field. When you look at who the Giants competitors are, from a business perspective, honestly the Dodgers are not a competitor from a business perspective. The A's are barely a competitor from a business perspective. We got a lot of competitors and very few of them are in our actual industry, so we collaborate all day, and it's been amazing, I can count on one hand, across all of sports, folks who have not been collaborative. There's a very small group of teams, your favorite team, the Boston Red Sox, are not on that list, they are very collaborative, but their arch rival, well there's a few others out there that may be less collaborative, but most of them are highly collaborative, from top down, and so, what I did from when I first started the first trip I made, was to Cleveland. And this was many years ago, Cleveland Indians had a reputation of being very progressive so I called up my counterpart there, I said, "I'm new to the industry, can I come out, "can I learn from you?" And that's where it started, and ever since, every year, we travel to two cities, I take at least four of my staff, to two cities each year and we meet with all the sports teams in those cities. This year, we went to Milwaukee and we met with the Brewers, and we did the Packers as well. Every year, over the 20 years we've visited pretty much every professional sports city, and we just go through it again, and always, red carpet, open door, and you build those face-to-face relationships, that you can pick up the phone and make the call, in a few weeks we're all going to get together in Denver at our MLB IT Summit, my job at the IT Summit every year is I host the golf classic, so I bring all the golfers, the hackers, the duffers out, and we have a great time on the golf course and build those relationships and again, the only thing that we don't really talk about that much is the technology we use to enhance the product on the field. Everything else is fair game. >> So share the business side, but the competitive advantage, where the battle's really having Dodger and Giants obviously on the field, highly competitive-- >> But what's cool about that is then I can meet with the other sports teams to talk about that, so I'll leave the teams nameless, but we've had some awesome collaborative discussions with NBA teams especially to talk about what they're doing to assess talent, and there's no competition there. >> So there's kind of rules of the road, kind of like baseball, unwritten rules. >> Right. >> So talk about the coolest thing that you guys have done this year, share something that you personally feel proud of, or fans love, what were some of the cool things this year that pops out for you? >> Sure, the technology that we invested in this year that I thought was a game-changer, we saw, we experimented with last season, but this year, we've been experimenting with VR and AR a little bit. But, a technology that we thought was really cool is called 4DReplay, it's a company out of Korea. And we saw them, we did an experiment with them, and then we implemented them for the full season this year and we've seen them at some other venues as well, the Warriors tried them at the Playoffs, but we had 'em full year and what we did was they put in about 120 cameras, spaced approximately five feet apart, between the bases. 120 of 'em, and they focus on the pitcher and the batter, so when you have a play, you can 3D, or 4D, 4D rotate around that play and watch the ball as it's moving off the bat, and get it from that full perspective, it's awesome for the fan experience, it gives them a perspective they never have, I love watching the picture, because you can see that hand, in full 4D glory pronating as it comes through on every pitch, if you can watch that hand carefully you can predict what kind of pitch it is, it's something that a fan has never had access to before, we did that for the first time this year. >> I had a new experience, obviously you see Statcast on TV now, a lot of this overlayed stuff happening, kind of creates like an esports vibe to the table. Esports is just coming. >> And it's just the beginning >> Your thoughts on esports, competitor, natural evolution, baseball's going to be involved in it, obviously, thing in the emerging technology's looking interesting, and the younger generation wants the hot, young... Sure, we feel like our game has been around a long time, and it still is, the rules haven't changed that much, but fans still enjoy it, but they just consume it differently and our game can be incredibly exciting in moments, but, there's also some gaps in there when you can build relationships. Some of the younger generation may fill those gaps with watching somethin' else, or two other things on their devices, but that's okay, we embrace that at the ballpark, but in terms of the emergence of esports, and the changing demographic of our fanbase, what we're trying to do is just package our game differently. One thing I'm really excited about, and startin' to see, we're in the early days, I consider with virtual reality, we experiment with it, maybe two or three years ago we've been doing some stuff with it, but I'd say it feels like we're in the second or third inning with virtual reality, where we're really going, and I've seen Intel doin' some of this stuff, I was out working with Intel in Pyeongchang, at the Olympics this past year, working with their PR team, and where it's going I can already visualize what this is going to be like, this concept of volumetric video. Where, it's not about having that courtside seat, in basketball, or that seat right behind home plate, it's about being wherever you want to be, anywhere in the action. And to me it's not about doin' it live, because in baseball, you don't know where the ball's going to go, it's about doin' it, replay, right after, okay, that ball was shot to Brandon Crawford, he made the most amazing diving play, picked it up, gunned it to first, where do you want to watch that from? Everybody's different, some people might want to watch it from right behind first base, some people might want to watch it right Brandon Crawford, behind the batter, with volumetric video and the future of VR, you'll be able to do that, and this esports generation, this fan's instant gratification want, unique experiences, that's what's going to deliver it. >> This is such an immersive environment, we're looking at this kind of volumetric things from Intel, and you got VR and AR, immersion, is a new definition, and it's not, I won't say putting pressure, it's evolving the business model, who would've thought that DraftKings and these companies would be around and be successful, that's gambling, okay, you now you got that, your VR so the business model's changing, I've been hearing even token and cryptocurrency, maybe baseball cards will be tokenized. So these are kind of new, crazy ideas that might be new fan experience and a business model for you guys. Your thoughts on those kind of wacky trends. >> That's why I love working with companies like Mayfield 'cause they're seeing the future before we see it, and I love being where we are, so we can talk to them, and learn about these companies. Another example, along those lines is, how are fans going to get to the ballpark five years from now, and how do we adapt to that because we're doing a major development right adjacent to the ballpark, we've got 4,000 parking spaces. Are we going to need those five years from now? Well we're going to build out that whole parking lot, we're going to put a structure in there. But five, ten years from now, we're building that structure so it can be adaptable, because, is anyone going to need to park? Is parking going to be like typing, you know on a typewriter, 10, 15 years now because everybody is in either self-driving cars, or ride shares, and the cars just, poof, go away, and they come back when you need 'em. >> Like I said, everything that's been invented's been on Star Trek except for the transporter room, but maybe they could transport to the game. >> We could use that in San Francisco. >> Bill, got to ask you about your role with Mayfield, because one of the things I've always been impressed with you is that you always have a taste for innovation, you're not afraid to put the toe in the water or jump in the deep end where the technology is, these guys are lookin' for some trends, too. How do you advise some of these guys, how do you work with Mayfield, what's the relationship, how are they to work with, what's the intersection between Mayfield and you? >> Well the one thing that Mayfield does is they put together a conference, each Summer, that I love comin' down to, and I get to meet a lot of my counterparts and we talked about meeting with my counterparts in sports, but I love meetin' with my counterparts across all industries, and Mayfield makes that possible, they bring us all together with some really interesting speakers on a variety of topics not all directly tech related, so it's a great opportunity for me to just get outside of the daily routine, get outside the box, open my mind, and I just have to drop down the road to do it. So that's an example, another thing is, Mayfield, and other firms will come to me, and just say, "Hey, here's a technology we're evaluating, "they think it would be a great fit in sports, "what do you think?" And so, I can give them some valuable feedback, on company's they're evaluating, companies will come to us, and I might throw them their way, so it's really a two way street >> Great relationship, so you're a sounding board for some ideas, you get to peek into the future, I mean, we've interviewed entrepreneurs, successful entrepreneurs here, it's a seven, eight year build out, so it's almost like an eight year peek into the future. >> Yeah, and it's super valuable, especially given where we are geographically and our inclination toward being on the leading edge. >> I want to just end the segment by sayin', thanks for comin' in, and I want you to show the ring there, 'cause I always, can't stop starin' at the hardware, you got the ring there, the world champion. >> It's a few years old at the moment, we're going to have to get a new one sometime soon. >> We got to work on that, so is there any cutting edge technology to help you evaluate the best player, who you lookin' at next year, what's goin' on? What's the trades goin' on, share us-- >> Are we off the record now, 'cause I have a feeling you're asking this for personal reasons, for your squad, so. >> I'm a Red Sox fan of the AL, obviously, moved here 20 years ago, big fan of the Giants, I love comin' to the games, you guys do a great job, fan experience is great, you guys do great job and I'm looking forward to seeing a great season. >> Thanks, yeah, hope springs eternal this time of year, we always block off October and expect to be busy, but when we have it back, it just gives us an opportunity to get a head start on everybody. >> Well Bill, thanks for coming in, Bill Schlough, CIO for the San Francisco Giants, here on Sand Hill Road talkin' about the 50th anniversary of Mayfield, and this is the People First Network, getting ideas from entrepreneurs, industry executives, and leaders. I'm John Furrier with theCUBE, thanks for watching. (electronic music)

from the cube studios in Palo Alto in Boston bringing you data-driven insights from the cube and ETR this is breaking analysis with Dave vellante the ascendancy of AWS under the leadership of Andy jassy was marked by a tsunami of data and corresponding cloud services to leverage that data now those Services they mainly came in the form of Primitives I.E basic building blocks that were used by developers to create more sophisticated capabilities AWS in the 2020s being led by CEO Adam solipski will be marked by four high-level Trends in our opinion one A Rush of data that will dwarf anything we've previously seen two a doubling or even tripling down on the basic elements of cloud compute storage database security Etc three a greater emphasis on end-to-end integration of AWS services to simplify and accelerate customer adoption of cloud and four significantly deeper business integration of cloud Beyond it as an underlying element of organizational operations hello and welcome to this week's wikibon Cube insights powered by ETR in this breaking analysis we extract and analyze nuggets from John furrier's annual sit-down with the CEO of AWS we'll share data from ETR and other sources to set the context for the market and competition in cloud and we'll give you our glimpse of what to expect at re invent in 2022. now before we get into the core of our analysis Alibaba has announced earnings they always announced after the big three you know a month later and we've updated our Q3 slash November hyperscale Computing forecast for the year as seen here and we're going to spend a lot of time on this as most of you have seen the bulk of it already but suffice to say alibaba's cloud business is hitting that same macro Trend that we're seeing across the board but a more substantial slowdown than we expected and more substantial than its peers they're facing China headwinds they've been restructuring its Cloud business and it's led to significantly slower growth uh in in the you know low double digits as opposed to where we had it at 15 this puts our year-end estimates for 2022 Revenue at 161 billion still a healthy 34 growth with AWS surpassing 80 billion in 2022 Revenue now on a related note one of the big themes in Cloud that we've been reporting on is how customers are optimizing their Cloud spend it's a technique that they use and when the economy looks a little shaky and here's a graphic that we pulled from aws's website which shows the various pricing plans at a high level as you know they're much more granular than that and more sophisticated but Simplicity we'll just keep it here basically there are four levels first one here is on demand I.E pay by the drink now we're going to jump down to what we've labeled as number two spot instances that's like the right place at the right time I can use that extra capacity in the moment the third is reserved instances or RIS where I pay up front to get a discount and the fourth is sort of optimized savings plans where customers commit to a one or three year term and for a better price now you'll notice we labeled the choices in a different order than AWS presented them on its website and that's because we believe that the order that we chose is the natural progression for customers this started on demand they maybe experiment with spot instances they move to reserve instances when the cloud bill becomes too onerous and if you're large enough you lock in for one or three years okay the interesting thing is the order in which AWS presents them we believe that on-demand accounts for the majority of AWS customer spending now if you think about it those on-demand customers they're also at risk customers yeah sure there's some switching costs like egress and learning curve but many customers they have multiple clouds and they've got experience and so they're kind of already up to a learning curve and if you're not married to AWS with a longer term commitment there's less friction to switch now AWS here presents the most attractive plan from a financial perspective second after on demand and it's also the plan that makes the greatest commitment from a lock-in standpoint now In fairness to AWS it's also true that there is a trend towards subscription-based pricing and we have some data on that this chart is from an ETR drill down survey the end is 300. pay attention to the bars on the right the left side is sort of busy but the pink is subscription and you can see the trend upward the light blue is consumption based or on demand based pricing and you can see there's a steady Trend toward subscription now we'll dig into this in a later episode of Breaking analysis but we'll share with you a little some tidbits with the data that ETR provides you can select which segment is and pass or you can go up the stack Etc but so when you choose is and paths 44 of customers either prefer or are required to use on-demand pricing whereas around 40 percent of customers say they either prefer or are required to use subscription pricing again that's for is so now the further mu you move up the stack the more prominent subscription pricing becomes often with sixty percent or more for the software-based offerings that require or prefer subscription and interestingly cyber security tracks along with software at around 60 percent that that prefer subscription it's likely because as with software you're not shutting down your cyber protection on demand all right let's get into the expectations for reinvent and we're going to start with an observation in data in this 2018 book seeing digital author David michella made the point that whereas most companies apply data on the periphery of their business kind of as an add-on function successful data companies like Google and Amazon and Facebook have placed data at the core of their operations they've operationalized data and they apply machine intelligence to that foundational element why is this the fact is it's not easy to do what the internet Giants have done very very sophisticated engineering and and and cultural discipline and this brings us to reinvent 2022 in the future of cloud machine learning and AI will increasingly be infused into applications we believe the data stack and the application stack are coming together as organizations build data apps and data products data expertise is moving from the domain of Highly specialized individuals to Everyday business people and we are just at the cusp of this trend this will in our view be a massive theme of not only re invent 22 but of cloud in the 2020s the vision of data mesh We Believe jamachtagani's principles will be realized in this decade now what we'd like to do now is share with you a glimpse of the thinking of Adam solipsky from his sit down with John Furrier each year John has a one-on-one conversation with the CEO of AWS AWS he's been doing this for years and the outcome is a better understanding of the directional thinking of the leader of the number one Cloud platform so we're now going to share some direct quotes I'm going to run through them with some commentary and then bring in some ETR data to analyze the market implications here we go this is from solipsky quote I.T in general and data are moving from departments into becoming intrinsic parts of how businesses function okay we're talking here about deeper business integration let's go on to the next one quote in time we'll stop talking about people who have the word analyst we inserted data he meant data data analyst in their title rather will have hundreds of millions of people who analyze data as part of their day-to-day job most of whom will not have the word analyst anywhere in their title we're talking about graphic designers and pizza shop owners and product managers and data scientists as well he threw that in I'm going to come back to that very interesting so he's talking about here about democratizing data operationalizing data next quote customers need to be able to take an end-to-end integrated view of their entire data Journey from ingestion to storage to harmonizing the data to being able to query it doing business Intelligence and human-based Analysis and being able to collaborate and share data and we've been putting together we being Amazon together a broad Suite of tools from database to analytics to business intelligence to help customers with that and this last statement it's true Amazon has a lot of tools and you know they're beginning to become more and more integrated but again under jassy there was not a lot of emphasis on that end-to-end integrated view we believe it's clear from these statements that solipsky's customer interactions are leading him to underscore that the time has come for this capability okay continuing quote if you have data in one place you shouldn't have to move it every time you want to analyze that data couldn't agree more it would be much better if you could leave that data in place avoid all the ETL which has become a nasty three-letter word more and more we're building capabilities where you can query that data in place end quote okay this we see a lot in the marketplace Oracle with mySQL Heatwave the entire Trend toward converge database snowflake [ __ ] extending their platforms into transaction and analytics respectively and so forth a lot of the partners are are doing things as well in that vein let's go into the next quote the other phenomenon is infusing machine learning into all those capabilities yes the comments from the michelleographic come into play here infusing Ai and machine intelligence everywhere next one quote it's not a data Cloud it's not a separate Cloud it's a series of broad but integrated capabilities to help you manage the end-to-end life cycle of your data there you go we AWS are the cloud we're going to come back to that in a moment as well next set of comments around data very interesting here quote data governance is a huge issue really what customers need is to find the right balance of their organization between access to data and control and if you provide too much access then you're nervous that your data is going to end up in places that it shouldn't shouldn't be viewed by people who shouldn't be viewing it and you feel like you lack security around that data and by the way what happens then is people overreact and they lock it down so that almost nobody can see it it's those handcuffs there's data and asset are reliability we've talked about that for years okay very well put by solipsky but this is a gap in our in our view within AWS today and we're we're hoping that they close it at reinvent it's not easy to share data in a safe way within AWS today outside of your organization so we're going to look for that at re invent 2022. now all this leads to the following statement by solipsky quote data clean room is a really interesting area and I think there's a lot of different Industries in which clean rooms are applicable I think that clean rooms are an interesting way of enabling multiple parties to share and collaborate on the data while completely respecting each party's rights and their privacy mandate okay again this is a gap currently within AWS today in our view and we know snowflake is well down this path and databricks with Delta sharing is also on this curve so AWS has to address this and demonstrate this end-to-end data integration and the ability to safely share data in our view now let's bring in some ETR spending data to put some context around these comments with reference points in the form of AWS itself and its competitors and partners here's a chart from ETR that shows Net score or spending momentum on the x-axis an overlap or pervasiveness in the survey um sorry let me go back up the net scores on the y-axis and overlap or pervasiveness in the survey is on the x-axis so spending momentum by pervasiveness okay or should have share within the data set the table that's inserted there with the Reds and the greens that informs us to how the dots are positioned so it's Net score and then the shared ends are how the plots are determined now we've filtered the data on the three big data segments analytics database and machine learning slash Ai and we've only selected one company with fewer than 100 ends in the survey and that's databricks you'll see why in a moment the red dotted line indicates highly elevated customer spend at 40 percent now as usual snowflake outperforms all players on the y-axis with a Net score of 63 percent off the charts all three big U.S cloud players are above that line with Microsoft and AWS dominating the x-axis so very impressive that they have such spending momentum and they're so large and you see a number of other emerging data players like rafana and datadog mongodbs there in the mix and then more established players data players like Splunk and Tableau now you got Cisco who's gonna you know it's a it's a it's a adjacent to their core networking business but they're definitely into you know the analytics business then the really established players in data like Informatica IBM and Oracle all with strong presence but you'll notice in the red from the momentum standpoint now what you're going to see in a moment is we put red highlights around databricks Snowflake and AWS why let's bring that back up and we'll explain so there's no way let's bring that back up Alex if you would there's no way AWS is going to hit the brakes on innovating at the base service level what we call Primitives earlier solipsky told Furrier as much in their sit down that AWS will serve the technical user and data science Community the traditional domain of data bricks and at the same time address the end-to-end integration data sharing and business line requirements that snowflake is positioned to serve now people often ask Snowflake and databricks how will you compete with the likes of AWS and we know the answer focus on data exclusively they have their multi-cloud plays perhaps the more interesting question is how will AWS compete with the likes of Specialists like Snowflake and data bricks and the answer is depicted here in this chart AWS is going to serve both the technical and developer communities and the data science audience and through end-to-end Integrations and future services that simplify the data Journey they're going to serve the business lines as well but the Nuance is in all the other dots in the hundreds or hundreds of thousands that are not shown here and that's the AWS ecosystem you can see AWS has earned the status of the number one Cloud platform that everyone wants to partner with as they say it has over a hundred thousand partners and that ecosystem combined with these capabilities that we're discussing well perhaps behind in areas like data sharing and integrated governance can wildly succeed by offering the capabilities and leveraging its ecosystem now for their part the snowflakes of the world have to stay focused on the mission build the best products possible and develop their own ecosystems to compete and attract the Mind share of both developers and business users and that's why it's so interesting to hear solipski basically say it's not a separate Cloud it's a set of integrated Services well snowflake is in our view building a super cloud on top of AWS Azure and Google when great products meet great sales and marketing good things can happen so this will be really fun to watch what AWS announces in this area at re invent all right one other topic that solipsky talked about was the correlation between serverless and container adoption and you know I don't know if this gets into there certainly their hybrid place maybe it starts to get into their multi-cloud we'll see but we have some data on this so again we're talking about the correlation between serverless and container adoption but before we get into that let's go back to 2017 and listen to what Andy jassy said on the cube about serverless play the clip very very earliest days of AWS Jeff used to say a lot if I were starting Amazon today I'd have built it on top of AWS we didn't have all the capability and all the functionality at that very moment but he knew what was coming and he saw what people were still able to accomplish even with where the services were at that point I think the same thing is true here with Lambda which is I think if Amazon were starting today it's a given they would build it on the cloud and I think we with a lot of the applications that comprise Amazon's consumer business we would build those on on our serverless capabilities now we still have plenty of capabilities and features and functionality we need to add to to Lambda and our various serverless services so that may not be true from the get-go right now but I think if you look at the hundreds of thousands of customers who are building on top of Lambda and lots of real applications you know finra has built a good chunk of their market watch application on top of Lambda and Thompson Reuters has built you know one of their key analytics apps like people are building real serious things on top of Lambda and the pace of iteration you'll see there will increase as well and I really believe that to be true over the next year or two so years ago when Jesse gave a road map that serverless was going to be a key developer platform going forward and so lipsky referenced the correlation between serverless and containers in the Furrier sit down so we wanted to test that within the ETR data set now here's a screen grab of The View across 1300 respondents from the October ETR survey and what we've done here is we've isolated on the cloud computing segment okay so you can see right there cloud computing segment now we've taken the functions from Google AWS Lambda and Microsoft Azure functions all the serverless offerings and we've got Net score on the vertical axis we've got presence in the data set oh by the way 440 by the way is highly elevated remember that and then we've got on the horizontal axis we have the presence in the data center overlap okay that's relative to each other so remember 40 all these guys are above that 40 mark okay so you see that now what we're going to do this is just for serverless and what we're going to do is we're going to turn on containers to see the correlation and see what happens so watch what happens when we click on container boom everything moves to the right you can see all three move to the right Google drops a little bit but all the others now the the filtered end drops as well so you don't have as many people that are aggressively leaning into both but all three move to the right so watch again containers off and then containers on containers off containers on so you can see a really major correlation between containers and serverless okay so to get a better understanding of what that means I call my friend and former Cube co-host Stu miniman what he said was people generally used to think of VMS containers and serverless as distinctly different architectures but the lines are beginning to blur serverless makes things simpler for developers who don't want to worry about underlying infrastructure as solipsky and the data from ETR indicate serverless and containers are coming together but as Stu and I discussed there's a spectrum where on the left you have kind of native Cloud VMS in the middle you got AWS fargate and in the rightmost anchor is Lambda AWS Lambda now traditionally in the cloud if you wanted to use containers developers would have to build a container image they have to select and deploy the ec2 images that they or instances that they wanted to use they have to allocate a certain amount of memory and then fence off the apps in a virtual machine and then run the ec2 instances against the apps and then pay for all those ec2 resources now with AWS fargate you can run containerized apps with less infrastructure management but you still have some you know things that you can you can you can do with the with the infrastructure so with fargate what you do is you'd build the container images then you'd allocate your memory and compute resources then run the app and pay for the resources only when they're used so fargate lets you control the runtime environment while at the same time simplifying the infrastructure management you gotta you don't have to worry about isolating the app and other stuff like choosing server types and patching AWS does all that for you then there's Lambda with Lambda you don't have to worry about any of the underlying server infrastructure you're just running code AS functions so the developer spends their time worrying about the applications and the functions that you're calling the point is there's a movement and we saw in the data towards simplifying the development environment and allowing the cloud vendor AWS in this case to do more of the underlying management now some folks will still want to turn knobs and dials but increasingly we're going to see more higher level service adoption now re invent is always a fire hose of content so let's do a rapid rundown of what to expect we talked about operate optimizing data and the organization we talked about Cloud optimization there'll be a lot of talk on the show floor about best practices and customer sharing data solipsky is leading AWS into the next phase of growth and that means moving beyond I.T transformation into deeper business integration and organizational transformation not just digital transformation organizational transformation so he's leading a multi-vector strategy serving the traditional peeps who want fine-grained access to core services so we'll see continued Innovation compute storage AI Etc and simplification through integration and horizontal apps further up to stack Amazon connect is an example that's often cited now as we've reported many times databricks is moving from its stronghold realm of data science into business intelligence and analytics where snowflake is coming from its data analytics stronghold and moving into the world of data science AWS is going down a path of snowflake meet data bricks with an underlying cloud is and pass layer that puts these three companies on a very interesting trajectory and you can expect AWS to go right after the data sharing opportunity and in doing so it will have to address data governance they go hand in hand okay price performance that is a topic that will never go away and it's something that we haven't mentioned today silicon it's a it's an area we've covered extensively on breaking analysis from Nitro to graviton to the AWS acquisition of Annapurna its secret weapon new special specialized capabilities like inferential and trainium we'd expect something more at re invent maybe new graviton instances David floyer our colleague said he's expecting at some point a complete system on a chip SOC from AWS and maybe an arm-based server to eventually include high-speed cxl connections to devices and memories all to address next-gen applications data intensive applications with low power requirements and lower cost overall now of course every year Swami gives his usual update on machine learning and AI building on Amazon's years of sagemaker innovation perhaps a focus on conversational AI or a better support for vision and maybe better integration across Amazon's portfolio of you know large language models uh neural networks generative AI really infusing AI everywhere of course security always high on the list that reinvent and and Amazon even has reinforce a conference dedicated to it uh to security now here we'd like to see more on supply chain security and perhaps how AWS can help there as well as tooling to make the cio's life easier but the key so far is AWS is much more partner friendly in the security space than say for instance Microsoft traditionally so firms like OCTA and crowdstrike in Palo Alto have plenty of room to play in the AWS ecosystem we'd expect of course to hear something about ESG it's an important topic and hopefully how not only AWS is helping the environment that's important but also how they help customers save money and drive inclusion and diversity again very important topics and finally come back to it reinvent is an ecosystem event it's the Super Bowl of tech events and the ecosystem will be out in full force every tech company on the planet will have a presence and the cube will be featuring many of the partners from the serial floor as well as AWS execs and of course our own independent analysis so you'll definitely want to tune into thecube.net and check out our re invent coverage we start Monday evening and then we go wall to wall through Thursday hopefully my voice will come back we have three sets at the show and our entire team will be there so please reach out or stop by and say hello all right we're going to leave it there for today many thanks to Stu miniman and David floyer for the input to today's episode of course John Furrier for extracting the signal from the noise and a sit down with Adam solipski thanks to Alex Meyerson who was on production and manages the podcast Ken schiffman as well Kristen Martin and Cheryl Knight helped get the word out on social and of course in our newsletters Rob hoef is our editor-in-chief over at siliconangle does some great editing thank thanks to all of you remember all these episodes are available as podcasts wherever you listen you can pop in the headphones go for a walk just search breaking analysis podcast I published each week on wikibon.com at siliconangle.com or you can email me at david.valante at siliconangle.com or DM me at di vallante or please comment on our LinkedIn posts and do check out etr.ai for the best survey data in the Enterprise Tech business this is Dave vellante for the cube insights powered by ETR thanks for watching we'll see it reinvent or we'll see you next time on breaking analysis [Music]

>> Announcer: From theCUBE studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is "Breaking Analysis" with Dave Vellante. >> The rapid pace of cloud adoption has changed the way organizations approach cybersecurity. Specifically, the cloud is increasingly becoming the first line of cyber defense. As such, along with communicating to the board and creating a security aware culture, the chief information security officer must ensure that the shared responsibility model is being applied properly. Meanwhile, the DevSecOps team has emerged as the critical link between strategy and execution, while audit becomes the free safety, if you will, in the equation, i.e., the last line of defense. Hello, and welcome to this week's, we keep on CUBE Insights, powered by ETR. In this "Breaking Analysis", we'll share the latest data on hyperscale, IaaS, and PaaS market performance, along with some fresh ETR survey data. And we'll share some highlights and the puts and takes from the recent AWS re:Inforce event in Boston. But first, the macro. It's earning season, and that's what many people want to talk about, including us. As we reported last week, the macro spending picture is very mixed and weird. Think back to a week ago when SNAP reported. A player like SNAP misses and the Nasdaq drops 300 points. Meanwhile, Intel, the great semiconductor hope for America misses by a mile, cuts its revenue outlook by 15% for the year, and the Nasdaq was up nearly 250 points just ahead of the close, go figure. Earnings reports from Meta, Google, Microsoft, ServiceNow, and some others underscored cautious outlooks, especially those exposed to the advertising revenue sector. But at the same time, Apple, Microsoft, and Google, were, let's say less bad than expected. And that brought a sigh of relief. And then there's Amazon, which beat on revenue, it beat on cloud revenue, and it gave positive guidance. The Nasdaq has seen this month best month since the isolation economy, which "Breaking Analysis" contributor, Chip Symington, attributes to what he calls an oversold rally. But there are many unknowns that remain. How bad will inflation be? Will the fed really stop tightening after September? The Senate just approved a big spending bill along with corporate tax hikes, which generally don't favor the economy. And on Monday, August 1st, the market will likely realize that we are in the summer quarter, and there's some work to be done. Which is why it's not surprising that investors sold the Nasdaq at the close today on Friday. Are people ready to call the bottom? Hmm, some maybe, but there's still lots of uncertainty. However, the cloud continues its march, despite some very slight deceleration in growth rates from the two leaders. Here's an update of our big four IaaS quarterly revenue data. The big four hyperscalers will account for $165 billion in revenue this year, slightly lower than what we had last quarter. We expect AWS to surpass 83 billion this year in revenue. Azure will be more than 2/3rds the size of AWS, a milestone from Microsoft. Both AWS and Azure came in slightly below our expectations, but still very solid growth at 33% and 46% respectively. GCP, Google Cloud Platform is the big concern. By our estimates GCP's growth rate decelerated from 47% in Q1, and was 38% this past quarter. The company is struggling to keep up with the two giants. Remember, both GCP and Azure, they play a shell game and hide the ball on their IaaS numbers, so we have to use a survey data and other means of estimating. But this is how we see the market shaping up in 2022. Now, before we leave the overall cloud discussion, here's some ETR data that shows the net score or spending momentum granularity for each of the hyperscalers. These bars show the breakdown for each company, with net score on the right and in parenthesis, net score from last quarter. lime green is new adoptions, forest green is spending up 6% or more, the gray is flat, pink is spending at 6% down or worse, and the bright red is replacement or churn. Subtract the reds from the greens and you get net score. One note is this is for each company's overall portfolio. So it's not just cloud. So it's a bit of a mixed bag, but there are a couple points worth noting. First, anything above 40% or 40, here as shown in the chart, is considered elevated. AWS, as you can see, is well above that 40% mark, as is Microsoft. And if you isolate Microsoft's Azure, only Azure, it jumps above AWS's momentum. Google is just barely hanging on to that 40 line, and Alibaba is well below, with both Google and Alibaba showing much higher replacements, that bright red. But here's the key point. AWS and Azure have virtually no churn, no replacements in that bright red. And all four companies are experiencing single-digit numbers in terms of decreased spending within customer accounts. People may be moving some workloads back on-prem selectively, but repatriation is definitely not a trend to bet the house on, in our view. Okay, let's get to the main subject of this "Breaking Analysis". TheCube was at AWS re:Inforce in Boston this week, and we have some observations to share. First, we had keynotes from Steven Schmidt who used to be the chief information security officer at Amazon on Web Services, now he's the CSO, the chief security officer of Amazon. Overall, he dropped the I in his title. CJ Moses is the CISO for AWS. Kurt Kufeld of AWS also spoke, as did Lena Smart, who's the MongoDB CISO, and she keynoted and also came on theCUBE. We'll go back to her in a moment. The key point Schmidt made, one of them anyway, was that Amazon sees more data points in a day than most organizations see in a lifetime. Actually, it adds up to quadrillions over a fairly short period of time, I think, it was within a month. That's quadrillion, it's 15 zeros, by the way. Now, there was drill down focus on data protection and privacy, governance, risk, and compliance, GRC, identity, big, big topic, both within AWS and the ecosystem, network security, and threat detection. Those are the five really highlighted areas. Re:Inforce is really about bringing a lot of best practice guidance to security practitioners, like how to get the most out of AWS tooling. Schmidt had a very strong statement saying, he said, "I can assure you with a 100% certainty that single controls and binary states will absolutely positively fail." Hence, the importance of course, of layered security. We heard a little bit of chat about getting ready for the future and skating to the security puck where quantum computing threatens to hack all of the existing cryptographic algorithms, and how AWS is trying to get in front of all that, and a new set of algorithms came out, AWS is testing. And, you know, we'll talk about that maybe in the future, but that's a ways off. And by its prominent presence, the ecosystem was there enforced, to talk about their role and filling the gaps and picking up where AWS leaves off. We heard a little bit about ransomware defense, but surprisingly, at least in the keynotes, no discussion about air gaps, which we've talked about in previous "Breaking Analysis", is a key factor. We heard a lot about services to help with threat detection and container security and DevOps, et cetera, but there really wasn't a lot of specific talk about how AWS is simplifying the life of the CISO. Now, maybe it's inherently assumed as AWS did a good job stressing that security is job number one, very credible and believable in that front. But you have to wonder if the world is getting simpler or more complex with cloud. And, you know, you might say, "Well, Dave, come on, of course it's better with cloud." But look, attacks are up, the threat surface is expanding, and new exfiltration records are being set every day. I think the hard truth is, the cloud is driving businesses forward and accelerating digital, and those businesses are now exposed more than ever. And that's why security has become such an important topic to boards and throughout the entire organization. Now, the other epiphany that we had at re:Inforce is that there are new layers and a new trust framework emerging in cyber. Roles are shifting, and as a direct result of the cloud, things are changing within organizations. And this first hit me in a conversation with long-time cyber practitioner and Wikibon colleague from our early Wikibon days, and friend, Mike Versace. And I spent two days testing the premise that Michael and I talked about. And here's an attempt to put that conversation into a graphic. The cloud is now the first line of defense. AWS specifically, but hyperscalers generally provide the services, the talent, the best practices, and automation tools to secure infrastructure and their physical data centers. And they're really good at it. The security inside of hyperscaler clouds is best of breed, it's world class. And that first line of defense does take some of the responsibility off of CISOs, but they have to understand and apply the shared responsibility model, where the cloud provider leaves it to the customer, of course, to make sure that the infrastructure they're deploying is properly configured. So in addition to creating a cyber aware culture and communicating up to the board, the CISO has to ensure compliance with and adherence to the model. That includes attracting and retaining the talent necessary to succeed. Now, on the subject of building a security culture, listen to this clip on one of the techniques that Lena Smart, remember, she's the CISO of MongoDB, one of the techniques she uses to foster awareness and build security cultures in her organization. Play the clip >> Having the Security Champion program, so that's just, it's like one of my babies. That and helping underrepresented groups in MongoDB kind of get on in the tech world are both really important to me. And so the Security Champion program is purely purely voluntary. We have over 100 members. And these are people, there's no bar to join, you don't have to be technical. If you're an executive assistant who wants to learn more about security, like my assistant does, you're more than welcome. Up to, we actually, people grade themselves when they join us. We give them a little tick box, like five is, I walk on security water, one is I can spell security, but I'd like to learn more. Mixing those groups together has been game-changing for us. >> Now, the next layer is really where it gets interesting. DevSecOps, you know, we hear about it all the time, shifting left. It implies designing security into the code at the dev level. Shift left and shield right is the kind of buzz phrase. But it's getting more and more complicated. So there are layers within the development cycle, i.e., securing the container. So the app code can't be threatened by backdoors or weaknesses in the containers. Then, securing the runtime to make sure the code is maintained and compliant. Then, the DevOps platform so that change management doesn't create gaps and exposures, and screw things up. And this is just for the application security side of the equation. What about the network and implementing zero trust principles, and securing endpoints, and machine to machine, and human to app communication? So there's a lot of burden being placed on the DevOps team, and they have to partner with the SecOps team to succeed. Those guys are not security experts. And finally, there's audit, which is the last line of defense or what I called at the open, the free safety, for you football fans. They have to do more than just tick the box for the board. That doesn't cut it anymore. They really have to know their stuff and make sure that what they sign off on is real. And then you throw ESG into the mix is becoming more important, making sure the supply chain is green and also secure. So you can see, while much of this stuff has been around for a long, long time, the cloud is accelerating innovation in the pace of delivery. And so much is changing as a result. Now, next, I want to share a graphic that we shared last week, but a little different twist. It's an XY graphic with net score or spending velocity in the vertical axis and overlap or presence in the dataset on the horizontal. With that magic 40% red line as shown. Okay, I won't dig into the data and draw conclusions 'cause we did that last week, but two points I want to make. First, look at Microsoft in the upper-right hand corner. They are big in security and they're attracting a lot of dollars in the space. We've reported on this for a while. They're a five-star security company. And every time, from a spending standpoint in ETR data, that little methodology we use, every time I've run this chart, I've wondered, where the heck is AWS? Why aren't they showing up there? If security is so important to AWS, which it is, and its customers, why aren't they spending money with Amazon on security? And I asked this very question to Merrit Baer, who resides in the office of the CISO at AWS. Listen to her answer. >> It doesn't mean don't spend on security. There is a lot of goodness that we have to offer in ESS, external security services. But I think one of the unique parts of AWS is that we don't believe that security is something you should buy, it's something that you get from us. It's something that we do for you a lot of the time. I mean, this is the definition of the shared responsibility model, right? >> Now, maybe that's good messaging to the market. Merritt, you know, didn't say it outright, but essentially, Microsoft they charge for security. At AWS, it comes with the package. But it does answer my question. And, of course, the fact is that AWS can subsidize all this with egress charges. Now, on the flip side of that, (chuckles) you got Microsoft, you know, they're both, they're competing now. We can take CrowdStrike for instance. Microsoft and CrowdStrike, they compete with each other head to head. So it's an interesting dynamic within the ecosystem. Okay, but I want to turn to a powerful example of how AWS designs in security. And that is the idea of confidential computing. Of course, AWS is not the only one, but we're coming off of re:Inforce, and I really want to dig into something that David Floyer and I have talked about in previous episodes. And we had an opportunity to sit down with Arvind Raghu and J.D. Bean, two security experts from AWS, to talk about this subject. And let's share what we learned and why we think it matters. First, what is confidential computing? That's what this slide is designed to convey. To AWS, they would describe it this way. It's the use of special hardware and the associated firmware that protects customer code and data from any unauthorized access while the data is in use, i.e., while it's being processed. That's oftentimes a security gap. And there are two dimensions here. One is protecting the data and the code from operators on the cloud provider, i.e, in this case, AWS, and protecting the data and code from the customers themselves. In other words, from admin level users are possible malicious actors on the customer side where the code and data is being processed. And there are three capabilities that enable this. First, the AWS Nitro System, which is the foundation for virtualization. The second is Nitro Enclaves, which isolate environments, and then third, the Nitro Trusted Platform Module, TPM, which enables cryptographic assurances of the integrity of the Nitro instances. Now, we've talked about Nitro in the past, and we think it's a revolutionary innovation, so let's dig into that a bit. This is an AWS slide that was shared about how they protect and isolate data and code. On the left-hand side is a classical view of a virtualized architecture. You have a single host or a single server, and those white boxes represent processes on the main board, X86, or could be Intel, or AMD, or alternative architectures. And you have the hypervisor at the bottom which translates instructions to the CPU, allowing direct execution from a virtual machine into the CPU. But notice, you also have blocks for networking, and storage, and security. And the hypervisor emulates or translates IOS between the physical resources and the virtual machines. And it creates some overhead. Now, companies like VMware have done a great job, and others, of stripping out some of that overhead, but there's still an overhead there. That's why people still like to run on bare metal. Now, and while it's not shown in the graphic, there's an operating system in there somewhere, which is privileged, so it's got access to these resources, and it provides the services to the VMs. Now, on the right-hand side, you have the Nitro system. And you can see immediately the differences between the left and right, because the networking, the storage, and the security, the management, et cetera, they've been separated from the hypervisor and that main board, which has the Intel, AMD, throw in Graviton and Trainium, you know, whatever XPUs are in use in the cloud. And you can see that orange Nitro hypervisor. That is a purpose-built lightweight component for this system. And all the other functions are separated in isolated domains. So very strong isolation between the cloud software and the physical hardware running workloads, i.e., those white boxes on the main board. Now, this will run at practically bare metal speeds, and there are other benefits as well. One of the biggest is security. As we've previously reported, this came out of AWS's acquisition of Annapurna Labs, which we've estimated was picked up for a measly $350 million, which is a drop in the bucket for AWS to get such a strategic asset. And there are three enablers on this side. One is the Nitro cards, which are accelerators to offload that wasted work that's done in traditional architectures by typically the X86. We've estimated 25% to 30% of core capacity and cycles is wasted on those offloads. The second is the Nitro security chip, which is embedded and extends the root of trust to the main board hardware. And finally, the Nitro hypervisor, which allocates memory and CPU resources. So the Nitro cards communicate directly with the VMs without the hypervisors getting in the way, and they're not in the path. And all that data is encrypted while it's in motion, and of course, encryption at rest has been around for a while. We asked AWS, is this an, we presumed it was an Arm-based architecture. We wanted to confirm that. Or is it some other type of maybe hybrid using X86 and Arm? They told us the following, and quote, "The SoC, system on chips, for these hardware components are purpose-built and custom designed in-house by Amazon and Annapurna Labs. The same group responsible for other silicon innovations such as Graviton, Inferentia, Trainium, and AQUA. Now, the Nitro cards are Arm-based and do not use any X86 or X86/64 bit CPUs. Okay, so it confirms what we thought. So you may say, "Why should we even care about all this technical mumbo jumbo, Dave?" Well, a year ago, David Floyer and I published this piece explaining why Nitro and Graviton are secret weapons of Amazon that have been a decade in the making, and why everybody needs some type of Nitro to compete in the future. This is enabled, this Nitro innovations and the custom silicon enabled by the Annapurna acquisition. And AWS has the volume economics to make custom silicon. Not everybody can do it. And it's leveraging the Arm ecosystem, the standard software, and the fabrication volume, the manufacturing volume to revolutionize enterprise computing. Nitro, with the alternative processor, architectures like Graviton and others, enables AWS to be on a performance, cost, and power consumption curve that blows away anything we've ever seen from Intel. And Intel's disastrous earnings results that we saw this past week are a symptom of this mega trend that we've been talking about for years. In the same way that Intel and X86 destroyed the market for RISC chips, thanks to PC volumes, Arm is blowing away X86 with volume economics that cannot be matched by Intel. Thanks to, of course, to mobile and edge. Our prediction is that these innovations and the Arm ecosystem are migrating and will migrate further into enterprise computing, which is Intel's stronghold. Now, that stronghold is getting eaten away by the likes of AMD, Nvidia, and of course, Arm in the form of Graviton and other Arm-based alternatives. Apple, Tesla, Amazon, Google, Microsoft, Alibaba, and others are all designing custom silicon, and doing so much faster than Intel can go from design to tape out, roughly cutting that time in half. And the premise of this piece is that every company needs a Nitro to enable alternatives to the X86 in order to support emergent workloads that are data rich and AI-based, and to compete from an economic standpoint. So while at re:Inforce, we heard that the impetus for Nitro was security. Of course, the Arm ecosystem, and its ascendancy has enabled, in our view, AWS to create a platform that will set the enterprise computing market this decade and beyond. Okay, that's it for today. Thanks to Alex Morrison, who is on production. And he does the podcast. And Ken Schiffman, our newest member of our Boston Studio team is also on production. Kristen Martin and Cheryl Knight help spread the word on social media and in the community. And Rob Hof is our editor in chief over at SiliconANGLE. He does some great, great work for us. Remember, all these episodes are available as podcast. Wherever you listen, just search "Breaking Analysis" podcast. I publish each week on wikibon.com and siliconangle.com. Or you can email me directly at David.Vellante@siliconangle.com or DM me @dvellante, comment on my LinkedIn post. And please do check out etr.ai for the best survey data in the enterprise tech business. This is Dave Vellante for theCUBE Insights, powered by ETR. Thanks for watching. Be well, and we'll see you next time on "Breaking Analysis." (upbeat theme music)

>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> Despite a mixed bag of earnings reports from tech companies, negative GDP growth this past quarter, and rising inflation, the cloud continues its relentless expandtion on the IT landscape. AWS, Microsoft, and Alphabet of all reported earnings, and when you include Alibaba Cloud in the mix, the Big 4 hyperscalers are on track to generate 167 billion in revenue this year based on our projections. But as we said many times on theCUBE, the definition of cloud is expanding and hybrid environments are becoming the norm at major organizations. We're seeing the largest enterprise tech companies focus on solving for hybrid, and every public cloud company now has a strategy to bring their environments closer to where customers workloads live, at data centers, and at the edge. Hello, and welcome to this week's Wikibon CUBE Insights powered by ETR. In this Breaking Analysis will update you on our latest cloud projections and outlook. We'll share some fresh ETR data and commentary on what's happening in the hybrid zone of cloud. Let's start with the market data for the Big 4 hyperscalers. In this chart, we share our Big 4 cloud share for IaaS and PaaS for 2020, 2021, and the first quarter of 2022, and our estimate for 2022 full year and growth. Remember, only AWS and Alibaba report relatively clean IaaS and PaaS figures, whereas Microsoft and Google, they bundled their cloud infrastructure in with their SaaS numbers. We both firms, however, they do give guidance and we use survey data and other tidbits to create an apples to apples comparison, and that's what we show here. For the quarter, the Big 4 approach to 37 billion in revenue as a group. Azure's growth rate is reported by Microsoft but the absolute revenue is not. Azure growth accelerated sequentially by 49% to just over 13 billion in the quarter by our estimates while AWS's growth moderated, sequentially, but revenue still hit 18.4 billion. Azure, by our estimates, now is more than 2/3 the size of AWS's cloud business. Google and Alibaba are fighting for the bronze medal, but well behind the two leaders. Microsoft's Azure acceleration is quite remarkable for such a large revenue base, but it's not unprecedented as we've seen this pattern before with AWS. Nonetheless, the fact that Azure is growing at the same rate as GCP is quite impressive. Now, a couple of other tidbits of information. Amazon, its stock is getting hammered today because of inflation and slowing growth rates at the top line. But AWS continues to beat Wall Street's expectations. A look at Amazon's operating income this quarter tells the story. Amazon overall had operating income of -3.66 billion and AWS's operating income with 6.5 billion. AWS's operating margin grew sequentially from nearly 30% last quarter to 35.3%. That's an astoundingly profitable figure. This is comparable to insanely profitable companies like Oracle and Microsoft. These are software companies with software marginal economics. Is that level of sustainable? Probably not for AWS, but it's eye opening, nonetheless. ETR survey data shows why these companies are doing so well with customers. This chart shows the net score granularity for the Big 4 cloud players. Net score, remember, measures spending momentum by asking customers, are you adopting new? That's the lime green. Increasing spend by 6% or more, that's the forest green. Flats spend is the gray. Spending dropping by 6% or worse is the light pink. And the red is decommissioning the platform. Subtract the reds from the greens and you get a net score which is shown on the right. Anything, by the way, over 40% we consider highly elevated. Now some key points here. Microsoft includes its entire business in this chart, we are including, ETR is including Microsoft's entire business, not just its cloud. Its Azure-only net score is 67%, higher than even AWS's, and that's huge. Google Cloud, on the other hand, while still elevated is well behind the two leaders. Alibaba's data sample in the ETR survey is small and China has had its foot on the neck of Big Tech for a while so we can't read too much into a net score of 26. But notice the replacements in red across the boards single digits for all and low single digits for the two giants, 1% for Amazon and Azure. Very impressive. Now the other really telling reality check is CapEx spending on cloud. CapEx spend tends to be a pretty good indicator of scale. And Charles Fitzgerald who runs the Platformonomics blog spends a fair amount of his time on this topic and we borrowed this chart from a recent post he did, and then we put in some estimates of our own. It shows CapEx spend over time for five cloud companies, the Big 3 US firms that we just talked about, plus IBM and Oracle. And it's always astounding to me to go back to the pre-cloud era and look at IBM. They were in a great position prior to 2006 to really dominate this notion of as a service and the transition to what is now known as cloud. But they really couldn't get their head out of professional services and their outsourcing business. There was some conflicts there as well. And so, you know, IBM you see is that dark blue or black line and spent significantly more than the others way back when, not anymore. Charles is kind of a snark. He loves to make fun of our super cloud concept even though I'm confident it's evolving and is real. But his point above in this chart is right on, the Big 3 US players spend far more on CapEx than IBM and Oracle. He states that Oracle's uptick in CapEx spend puts them past IBM, but the two of them are battling to distance themselves and differentiate from the X-axis. Funny guy, Charles. In its recent earnings report, Amazon stated that around 40% of its CapEx goes to infrastructure and most of that goes to AWS. It expects CapEx to grow this year and around 50% will go toward infrastructure. So we've superimposed our rough estimate of where AWS lands when you subtract out all of Amazon's warehouses for retail. And once again, Microsoft is notable because unlike Amazon, it doesn't have a zillion warehouses to ship products to consumers. And while Google spending is massive, it's mostly on servers to power its ad network. But there's no question that GCP can leverage that infrastructure and the tech behind it, and it does. And by the way, so can everyone else, by the way, leverage all this CapEx spend. We're going to come back to that and talk about super cloud in a moment. Okay, let's close by looking at the ever-expanding cloud landscape. This chart shows a two-dimensional view of the ETR data for cloud computing. On the vertical-axis is net score or spending momentum, and in the horizontal-axis is pervasiveness in the data set. It's like market share within the survey, if you will. The chart insert shows the data for how the dots are plotted on each axis. The red dotted line at 40%, remember, indicates a highly elevated position with net score and significant spending momentum. And the green arrows show the movement for some companies relative to three months ago. Okay, so Microsoft and AWS, they're kind of circled way up in the right-hand corner, very impressive. Just to reduce the clutter, we're not showing AWS Lambda here and some other highly elevated services which would push up, ticked up AWS's net score but it's still really, really good. As is azure, they're both moving solidly to the right relative to last quarters survey. So gaining presence in the data set and presumably in the market as well. Google is, as we've said, well behind and has much work to do. It was announced this past week that the head of sales at Google Cloud, Rob Enslin, is leaving to join UiPath, so some interesting news there. We've highlighted the hybrid zone. Now to the theme of this Breaking Analysis, the ever-expanding cloud, AWS announced that it's completed the launch of 16 local zones in the US and there are 32 more coming across 26 countries. Local zones basically bring cloud infrastructure to regions where there's a lot of IT that isn't going to move. And for proximity and latency reasons, they have to move closer, move the cloud closer, the cloud operating model if you will, closer to the customers. And there's that CapEx build out showing its head again. Now the reason this hybrid zone becomes interesting is you're seeing the large enterprise players finally go after the hybrid cloud in Earnest. It's almost like the AWS outposts announcement in 2018 was a wake up call to infrastructure players like Dell, HPE, and IBM. It took a while, but Oracle is kind of skipping to its own tune, but they're in that hybrid zone as well. IBM had a really good quarter and the Red Hat acquisition seems to be working to support its hybrid cloud strategy. Now VMware several years ago clean up its fuzzy cloud strategy and partnered up with AWS and everyone else. And you see VMware Cloud on AWS doing well as is VMware Cloud, its on-prem offering. Even though it's somewhat lower on the X-axis, based on that green arrow was showing relative to last quarter. It's moving to the right with a greater presence in the data set so that we see that as a positive sign. Now, Dell and HP are interesting. Both companies are going hard after as a service with APEX and GreenLake, respectively. HPE, based on the survey data from ETR, seems to have a lead in spending momentum while Dell has a larger presence in the market, naturally, as a much bigger company. HPE is climbing up on the X-axis, as is Dell, although, not as quickly. And the point we come back to often is the definition of cloud is in the eye of the customer. AWS can say, "No, no that's not cloud." And the on-prem crowd can say, "Ooh, we have cloud too." It really doesn't matter. What matters is what the customer thinks and which platforms they choose to invest. And I'll close by circling back to the idea of super cloud. You are seeing it evolve and you're going to hear more and more about it. Yeah, maybe not the term, many don't like it. We're going to continue to use it as a metaphor for a layer that leverages the CapEx build, the gift that the hyperscalers are providing the industry. This is a real opportunity for the likes of Dell, HPE, IBM, Cisco, and dozens of other companies providing compute and storage infrastructure, networking, security, database, and other parts of the stack. By hiding the underlying complexity of the cloud, dealing with all the API and primitive muck, creating singular experience across on-prem, across clouds, and out to the edge is a definite need from customers. This is a new battle that's shaping up and it's going to be expensive to build and it require an ecosystem cooperating across this API economy, as some like to call it. It's going to have to do that to make it a reality. Now there's a definite, as I say, customer need for this common experience, and in our view, we're seeing it manifest in pockets today and in strategies and in R&D projects, both within startups and established players. Okay, that's it for today. Thanks to Stephanie Chan who helps research Breaking Analysis topics. Alex Myerson is on production and he also manages the Breaking Analysis podcast. Kristen and Martin and Cheryl Knight get the word out on social. Thanks to all, including Rob Hof, our editor in chief at SiliconANGLE. Remember these episodes are all available as podcast wherever you listen. All you got to do is search Breaking Analysis podcast. Check out ETR website at etr.ai. We publish a full report every week on wikibon.com and siliconangle.com. You can email me directly at david.vellante@siliconangle.com, or DM me @dvellante or comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Have a great week, stay safe, be well and we'll see you next time. (upbeat music)

>> From theCUBE studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE in ETR. This is "Breaking Analysis" with Dave Vellante. >> Despite all the talk about repatriation, hybrid and multi-Cloud opportunities, and Cloud is an increasingly expensive option for customers, the data continues to show the importance of public Cloud to the digital economy. Moreover, the two leaders, AWS and Azure, are showing signs of accelerated momentum that point to those two giants pulling away from the pack in the years ahead, with each firm's showing broad based momentum across their respective product lines. It's unclear if anything, other than government intervention or self-inflicted wounds will slow these two companies down this decade. Despite their commanding lead, a winning strategy for companies that don't run their own Cloud continues to be innovating on top of their massive CapEx investments. The most notable example here being Snowflake. Hello, everyone. Welcome to this week's Wikibon CUBE insights powered by ETR. In this breaking analysis, we provide our quarterly market share update for the big four hyperscale Cloud providers. And we'll share some new ETR data from their most recent survey. And we'll drill into some of the reasons for the momentum of these two companies and drill further into the database and data warehouse sector to see what, if anything, has changed in that space. First, let's look at some of the noteworthy comments from AWS and Microsoft in their recent earnings updates. We heard from Amazon, the following, "AWS has seen a reacceleration of revenue growth as customers have expanded their commitment to the Cloud and selected AWS as their Cloud partner." Notably, AWS revenues increased 39% in Q3 2021. That's a thousand basis point increase in growth relative to Q3 2020. That's an astounding milestone for a company that we expect to surpass $60 billion in revenue this year. Further, AWS touted the adoption of its custom silicon, and specifically its Graviton2 processors. AWS is fond of emphasizing Graviton's 40% price performance improvements relative to x86 processors, something we've reported on quite extensively. AWS is investing in custom silicon, encouraging ISVs to port their code to the platform so that customers will experience little or no code changes when they migrate. Again, we believe this is a secret weapon for AWS as its cost structure will continue to improve at a rate faster than competitors that don't have the resources or the skills or the stomach to develop such capabilities. Microsoft, for its part, also saw astoundingly good growth of 48% this past quarter for Azure. This is a company that we forecast will approach $40 billion in IaaS and PaaS public Cloud revenue this year. Microsoft's CEO, Satya Nadella, on its earnings call, emphasized the changing nature of Cloud expanding in a distributed fashion to the edge. He referenced Azure as the world's computer. Building on his statements last year that Microsoft is building out a powerful, ubiquitous, intelligent, sensing and predictive Cloud. Yes, folks, it does feel like we're entering the so-called Metaverse, doesn't it? Okay, to underscore the momentum of these two companies, let's take a look at the ETR breakdown of Net score, which measures spending momentum. This chart will be familiar to our listeners. It shows the breakdown of net score for AWS, with the lime green showing new adoptions. That's 11%. The forest green is spending more than 6% relative to the first half of this year. That's a very robust 53%. The gray is flat spending. That's 30% on a very, very large base. And the pink is spending declines of minus 6% or worse. That's 4%. And the bright red is defections i.e those leaving AWS. That's 1%. That's virtually non-existent. You subtract the reds from the greens and you get a net score of 59. Remember, anything over 40, we can still consider to be elevated. Let's look at that same data for Microsoft again. You have some new ads that lime green, that's 7%. The forest green is at 46% of customers spending more, which is an incredible figure for a company with revenues that will in the near term surpass $200 billion. And the red is in the low single digits. Buffered by its enormous PC software profits over the years, Microsoft is powered through its Window's Dogma and transitioned into a Cloud powerhouse. Let's now share some of our latest numbers for the big four hyperscale players, AWS, Azure, Alibaba and Google. Here, we show data for these companies from 2018 and our estimates for 2021. This data includes our final figures for AWS, Azure and GCP for Q3 with Alibaba yet to report. Remember, only AWS and Alibaba report IaaS revenue cleanly with Microsoft and Google, they give us a little breadcrumb nuggets that allow us to triangulate with our survey data and other intelligence. But it's our attempt to do an apples to apples comparison for those four companies using AWS and it's reporting as a baseline. In Q3, AWS reported more than $16 billion in revenue. We estimate Azure at 10 billion, Alibaba, we expect to come in at just under 3 billion, and GCP at 2.5 billion for the quarter. With three quarters of data in, with the exception of Alibaba, we're forecasting AWS to capture 51% of the big four revenue, the hyperscale revenue. And really we believe these are the only four hyperscalers. AWS will surpass 60 billion with Azure just under 40 billion, Alibaba approaching 11 billion, and Google coming in just under 10 billion for the year is our expectation. We forecast these four will account for $120 billion this year. That's a 41% increase over 2020 and the same collective growth rate as 2020 relative to 2019. We expect Azure to be 63% of the size of AWS revenue. So it is gaining share. Both of those companies, however, saw accelerated growth this past quarter with Alibaba and GCP's growth rates decelerating relative to last year. Now, let's take a closer look at those growth rates. This chart shows the quarterly growth rates for each of the four going back to the beginning of 2019. Both GCP and Alibaba are showing dramatic declines in growth rates, whereas, this past quarter Azure saw accelerated growth and AWS has now seen an increased rate of growth for the past two quarters. In fact, AWS' growth is about where it was in 2019 when it was around half of its current revenue size. And in 2019 growth was decelerating through the quarters as you can see where today that trend has reversed. It's quite amazing. All right, let's take a look at the broader Cloud landscape and bring back some ETR data. This chart that we're showing here, it shows net score or spending momentum on the vertical axis and market share or presence in the dataset on the horizontal axis. Note that red dotted line, anything above that we can still consider elevated and impressive. As when we've previously shared this data, AWS and Microsoft Azure are up and to the right. Now remember, this chart is not just counting IaaS and PaaS as we showed you earlier, it's however the customers views whatever they think Cloud is. And so they're likely including Microsoft SaaS in this picture. Which is why Microsoft shows larger than AWS despite what we showed you earlier. Nonetheless, these two are well ahead of the pack and the growth rates indicate that they're pulling away. But we've added some of the other players, most notably VMware Cloud on AWS. It's showing momentum as is VMware Cloud, which is VMware Cloud foundation and other on-prem Cloud offerings, even though it's below the red line for the on-prem piece, it's very respectable. The VMware Cloud on AWS has been consistently up above that red line. Has popped beneath it in some quarters, but it's very, very strong. As is, you know, Red Hat OpenShift, it's a little bit below the line, but it is respectable. We've superimposed this by the way. Red Hat OpenShift in the ETR platform is under the container orchestration taxonomy, but we'd like to put it in next to the Cloud players for context. That's how Red Hat sort of thinks about this as well. They think about OpenShift as Cloud. And then you can see the other players. Alibaba has got a small sample in the ETR dataset. Just does not enough presence in China. But Dell and HPE have started to show up in the Cloud taxonomy. So buyers are associating their private Clouds with Cloud. So Dell's Apex, HPE's GreenLake. So that's a positive. And you can see Oracle, which of course is OCI, Oracle Cloud infrastructure. And then IBM with its public Cloud. So, it's a positive that these on-prem players are showing up in this data, but the reality is the hyperscalers are growing collectively at 40% annually and the on-prem players are growing in the low single digits. So, and if you carve out the IaaS business of AWS and Azure, they're larger than most of the on-premises infrastructure players. And all the on-prem players are moving toward an as a service model, as I just alluded to. So, undoubtedly, hybrid multicloud edge are going to present opportunities for the likes of Dell, HPE, Cisco, VMware, IBM, Red Hat, et cetera. But they also present opportunities for the public Cloud players who have vibrant ecosystems and marketplaces much more diverse and deep than the traditional vendors. You know, we have a clearer picture of Microsoft's sort of hybrid and edge strategy because the company has such an enormous legacy business, it really had to think about that much more deeply. It wasn't a blank sheet of paper like AWS. It's going to be interesting at reinvent this year if new CEO, Adam Selipsky, will talk about this. And it will be good to hear how he's thinking about the next decade, how AWS thinks about hybrid and edge, I guarantee that with their developer affinity and custom Silicon capabilities, they're thinking about it differently than traditional enterprise players. And as we've stressed in this segment, they have across the board momentum. Now to quantify that, let's take a look at AWS as portfolio in the spending momentum within its product segments. This chart shows AWS's net scores or spending momentum in the areas where AWS participates in the ETR taxonomy. Again, note that red line. Anything above 40% is considered an elevated watermark. We're showing data from last October, this past July and the latest October 21 survey. That yellow line or a bar. What's notable is the yellow versus the gray bars up across the board for the most part, other than chime... And by the way, other than chime, everything is above the 40% mark as well. Now, we've highlighted database because we feel it's one of the most strategic sectors in a real battleground. So we want to drill into that a bit. Here's our familiar X Y graph showing Net score on the Y axis, remember, that's, again, spending momentum and market share or pervasiveness in the survey on the horizontal axis. This data, by the way, includes on-prem and Cloud database data warehouse. So keep that in mind. Let's start with one of our favorite topics; Snowflake. We've reported again and again and again, that we've never seen anything like this. The company's net score has moderated ever so slightly this quarter, but it's still just below 80%. Very highly elevated. Well, above that 40% mark. It's Snowflake's presence continues to grow as a gain share in the market. Snowflake is growing revenue in the triple digits. It's an insane pace, hence its current $115 billion market cap as of this episode. Now that said, all three US-based Cloud players there are above the 40% line with AWS and Microsoft having significant presence on the horizontal axis. You see Cockroach Labs, Redis, Couchbase, they're all elevated or highly elevated. Couchbase just went public this summer. So that may help with its presence. MongoDB, they're killing it. They have a $37 billion market cap as of this episode. The stock has been on a tear. You see MariaDB was also in the mix. And then of course you have Oracle, the database leader. Look, they continue to invest in making the Oracle database and other software like MySQL, the best solution for mission critical workloads, and they're investing in their Cloud. But you can see overall, they just don't have the momentum from a spending standpoint that the others do because the declines in their legacy business. And they've been around a long time. Those declines are not fully offset by the growth in Cloud database and Cloud migration. But look, Oracle is a financial powerhouse with a $250 billion plus market cap. And the stock has done very well this past year. Up over 60%. Cloudera is going private. So it can hide the pain of the transitions that it's undergoing between the legacy install bases of Cloudera and Hortonworks. It's just a tough situation. When the companies came together, Cloudera essentially had a dead end. Each of those respective platforms and migrate their customers to a more modern stack as part of its Cloud strategy. Ironic that it's name is Cloudera. You know, that's always a difficult thing to do. So as a private company, Cloudera can maybe get off that 90 day shot clock and buy some time to invest without getting hammered by the street. And you know, Teradata consistently has not shown up well in the ETR dataset. It's transitioned to Cloud and cross-Cloud still hasn't shown momentum in the surveys. So, look right now, it's looking like the rich get richer. So just to quantify that a little bit, let's line up some of the database players and look a little bit more closely at net score. This chart shows the spending momentum or lack thereof with the net score or spending velocity granularity that we described before. Remember, green is spending more, red is spending less, bright red is leaving the platform, bright green is adding the platform. You take red, subtract red from the green, and that gives you a net score. Snowflake, as we said, tops the list. You can see the granularity there. You can compare the performance. In a little different view to understand how these scores are derived, look, the ideal profile is a solid lime green, a big forest green, a not too large gray and ideally little or no bright red AKA defections. And you can see the green funnel in the gray increasing prominence as the vendor momentum declines. Interestingly, with the exception of Cloudera and Teradata, defections are all in the single digits or nonexistent. In the case of Snowflake, Redis, red is no red at all, but small sample, Couchbase has no defections and very little defection for the giant Microsoft. Incredibly impressive. This speaks to how hard it is to migrate off of a database no matter how disgruntled you are. The more common scenario is to isolate the database and build new functionality on modern platforms. Okay, so what to watch out for. Well, reinvent this coming up next month. Oh this month. It's the first time someone other than Andy Jassy will be keynoting as CEO. 15 years of Cloud, this is the 10th re-invent, which is always a market for the direction of the industry. I've said many times that the last decade was largely about IT transformation powered by the Cloud. I believe we're entering a new era of business transformation where the Cloud is going to play a significant role. But the Cloud is evolving from a set of remote services out there in the Cloud to an omnipresent platform on top of which many customers and technology companies can innovate. And virtually every industry will be impacted by Cloud. However it evolves in the coming decade. The question will be, how fast can you go? And how will players like AWS and Microsoft and many others that are building on top of these platforms make it easier for you to go fast? That's what I'll be watching for at re-invent and beyond. Okay, that's a wrap for today. Remember, these episodes, they're all available as podcasts, wherever you listen. All you got to do is search Breaking Analysis podcasts. Check out ETR's website at etr.plus. We also publish a full report every week on wikibon.com and siliconangle.com. You can get in touch with me, david.vellante@siliconangle.com. You can DM me @dvellante or comment on our LinkedIn posts. This is Dave Vellante for theCUBE insights powered by ETR. Have a great week, everybody. Stay safe, be well. And we'll see you next time. We'll see you at re-invent. (soft upbeat music)

(upbeat music) >> In 1946, the acerbic manager of the Dodgers, Leo the Lip Durocher famously said of baseball, great Mel Ott who was player manager of the Giants at the time. You know what happens to nice guys. They finished in last place. The phrase nice guys finish last was born. It became popular outside of baseball. Well joining me today is someone who was a consummate gentlemen and a nice guy who proves that idiom absolutely isn't true at all. He's also written a new book "Play nice and Win" Michael Dell chairman and CEO of Dell technologies, welcome back to the CUBE. >> Thank you very much, Dave, always great to be with you. Wonderful to be on the CUBE and thanks for your great coverage of Dell technologies world. >> Yeah. We're very excited to be covering the virtual version this year, next year we're back face to face I'm Sure. And we're going to talk about your book but I want to start by asking you to comment on the past 12 months, how are you going to remember 2020? >> I'm going to remember it by the resiliency of the world and our team, the adaptability the acceleration of digital transformation which is pretty amazing around the world. The vital role that technology played in addressing some of the biggest challenges, whether it was the creation of vaccines or, you know, decoding the virus itself or just addressing all the challenges that the world had. You know, I think it's a game changer in terms of disease identification and how we prevent these kinds of things going forward. You know, there's still a long way to go in terms of how do we get 7.5 billion people vaccinated and safe. I also think it exposed, you know some of the fault lines in our society. And that's a great learning for all of us in terms of access to healthcare and education and, you know, the digital resources that power the world. And so, yeah, those are some of the things that really stand out for me. >> Well, I mean, I think leaders like yourself and position of influence, absolutely passionate about some of those changes that we see coming in society. So hopefully we'll have time to talk about that but I wanted to get into the business. I think a lot of people, myself included felt that 2020 was going to be a down year for big tech companies like yours and that relied heavily on selling products that data centers and central offices but the remote work trend and the laptop, boom offset, some of those on-prem softness and headwinds combined with VMware the financial performance of Dell technologies was actually quite amazing. Why were you able to do so well last year? >> Well, first of all, you're right. We did, we had record pretty much everything record revenues, record operating income, record cashflow and be also paid down a record amount of debt. And so I think the strength and resiliency of our supply chain, as well as the broad diversified nature of what we provide our customers continue to serve us very well as they moved to this sort of do anything from anywhere in the world. And it continues the first part of this year, business is very strong >> You know, a few weeks ago, of course you officially announced the spinoff of Dell technologies. Wasn't a huge surprise but the 81% equity ownership of VMware are you worried about untethering VMware from Dell or maybe you can share more on what this means for the future of, your two companies and your customers. >> Right? So, I think this will drive additional growth opportunities for both Dell Tech and VMware, while it unlocks a lot of value for our stakeholders. What we've done is to formalize the commercial relationship into a series of agreements and those are unique and differentiated and they provide lots of flexibility and we've driven a tremendous amount of innovation together and that's going to continue and it will, one of the things we said back in 2015 you'll remember is our commitment to keep the VMware ecosystem open and independent and working across the whole industry. We've done that. You'll continue to see us innovate together with Edge solutions, certainly all the great work we've done with VxRail SD LAN, you know Tanzu creates this platform to modernize applications and VMware Cloud and Dell technologies are the easy path to a multi-cloud architecture. And, that continues to work super well and is not going to be slowed down at all. So... and of course, I'll continue to be a chairman of both companies and we're not selling VMware we're distributing our ownership to our shareholders. >> Well, of course, Dell is the largest sort channel if you will, for VMware. So that's ... you guys got a tight relationship but I want to ask you about digital transformation and everybody talked about it pre COVID but nobody really knew exactly what it was but COVID sort of brought that into focus very quickly. If you weren't a digital business, you were out of business. So going forward, how do you see that whole digital transformation playing out? >> You know I think the plot of any company is to figure out how it can use its data and turn that into insights and outcomes and better results and ultimately competitive advantage faster. And as you said, you know, if it's not able to do that, it's probably going to go out of business. And that agenda just got massively accelerated because it was kind of digital was sort of the only thing that worked during this, this past period. So every organization has figured out that technology is not the IT department, it's actually the fulcrum of progress in the entire company. And so we're seeing sort of across the board a dramatic acceleration in the investment in digital technologies, you know, Edge is growing very fast. I think 5G just accelerates this and, you know you're seeing it in all the demand trends. It's quite positive and, you know, I think you'll see even a more rapid separation from those companies that are able to take advantage of this and quickly adjust their businesses their organizations, and those that are >> You better hop on board or get left behind, you know, the Edge. You mentioned the Edge it's a little bit like digital transformation, you know kind of pre COVID and even post COVID. It means a lot of things to a lot of different people but the telecoms transformation and 5G they have there certainly real. How do you see the Edge? >> You know, the Edges is ... think of it as actually the real world, right? It's, not a data center sitting in the center of the universe somewhere. And look today, you know only 10% of data is processed outside of the data center, but, you know, it's estimated by 2025 you got 75% of enterprise data will be processed outside of a traditional data center or a Cloud. And so as everything becomes intelligent connected 5G accelerates that it's going to be a huge acceleration of this whole process of digital transformation. And you know, again, think about this. I mean, the cost of making something intelligent used to be really expensive. Now it's asymptotically approaching zero. And of course all those things are connected. They're talking to each other and exactly what does this mean for every industry. Nobody's really quite sure and not everything is going to work, but, you know we're seeing it in manufacturing, in retail, in healthcare and the growth on the Edge is really accelerating in a meaningful way. And it's not so much about, you know people talking people with machines, we know how to do that. Now it's about the thing right And, you know you've got like 200 billion arm processors, you know out there in the last couple of years, all those things talking to the other things, generating data it happens in the real world. That's what the Edge is. >> Yeah as you know, we're a big fans of the arm model. And I think it just presents huge opportunities for companies like Dell. I want to ask you about Cloud. And I have to say, I think, you know companies like Dell have been maybe a little bit defensive over the last several years when it comes to Cloud but I think you starting to see the Cloud as a gift with all that CAPEX that's being built out by these hyperscalers. You know, thank you. It seems to me, you can build on top of that. How are you thinking about the Cloud as an opportunity for you and your customers especially as the definition of Cloud evolves? >> Well, first, you know, what we see is and the Edge is kind of the third place or the third premise, right? You got Clouds in the public form, you've got the Colo which is really growing fast and, you know the private hybrid Clouds, and now you've got the Edge. And so you've got infrastructure all over the place with Edge being the fastest growing. You know, one of the big things we see is that customers want a consistent way to operate and execute across that whole platform. And, you know, one of the other things that we've been focused on at Dell technologies is how can we move our business to more of a service and subscription on demand and provide customers that flexibility to to pay as they consume. And so, to some extent this is an evolution of, you know, products to services to managed services, to everything as a service. And so, you know, looking at our balance sheet you'll see over $40 billion in remaining performance obligations as we moved the business to that kind of model and it's been growing double digits for several quarters in a row. And so, you know, we're embracing Cloud and on-demand, and as a service, and obviously here at Dell technologies world we're talking a lot about Apex and our continuing initiatives to move our whole business in that direction. >> Yeah. Apex is a real accelerator for that model. I want to switch topics a little bit. I got a long list of things I want to talk about ESG, sustainability, inclusion, you know, is another topic that, that I'm interested in. I want it. And I said before, people like yourself in a position of influence to influence public policy and obviously the employees and your ecosystem why is it not just the right thing to do? Why is... why are those things good business, Michael? >> Well, it's good business because people want to be part of something that is important and purposeful. You know, it's not just make a profit and earn a living right? You know, people want to be inspired and feel that they're part of something special. And look, I think if you look at the positive changes that have occurred in the world certainly you could turn on the news and see the horrible things that happened in the last 24 hours or something like that. But if you step back and think about the amazing progress that's happened in the last several decades, you know a lot of it's been driven by technology and by businesses that have stepped up and made a difference and made commitments. And, you know, we're one of those companies that has made a series of commitments you know, 10 years ago, we set out with our 2020 goals. We accomplished significant majority of those retired those. Now we set out our progress made real 2030 goals all around the ESD themes. And it's not only the right thing to do but it is good for business. It inspires our team members, our customers and I think initiatives like progress made real at Dell and thousands of other companies. Ultimately, those are the things that are going to drive progress forward. I believe, you know, more so than government edicts or regulation, those can play a role. But I think, companies voluntarily driving things like the circular economy and how we include everyone in our business and provide opportunities for everyone to succeed no matter where they come from. I think those are the things that are really going to drive the world forward. >> Well, I want to ask you about public policy because as you say, it's not just the government, but of course sometimes the government can get in the way. You're seeing a lot of vitriol around Val break up big tech but the same time, you're seeing the US government and the EU very willing to help out with the semiconductor competitiveness in the like I know you were tapped with the new administration President Biden, tapping, you know, the best minds in tech and you were asked to part sort of participate give feedback. What can you tell us about, you know your advice to the US government? >> Well, you know, lots of great discussion with the new administration and it's a delight to see that they're focused on semiconductors and sort of the industries of the future. This is a big deal. I mean, you know, we've got some big global competitors out there other nations that are with a deterministic strategy very focused on the industries of the future. But US, you know if you think about the atomic age and, you know the Apollo missions that created the whole semiconductor industry ARPANET and ultimately the Internet and that kind of stopped right there, you know, there wasn't as much government investment in some of those big R and D initiatives that really drove an enormous creation of industries and success for the United States and its citizens. And so I think focusing on semiconductors and how you build the infrastructure of the future really important for the United States to continue to be a leader in that you know, we were, you know, producing a one point about 37% of the world's semiconductors. It's now down to 12% and dropping and really important that more investments are made in that area. It's a combination of capital, talent, you know education knowledge, and also, you know, the policies that promote the development of these kinds of businesses. >> Yah well, Pat's got a very big challenge ahead of them. And so that's why but we've said Intel's too strategic to fail in our view but I wanted to plug your book a little bit. My former boss, you and I have talked about this. He was also a gentleman who proved Leo Durocher wrong. He was very nice guy, but also a winner, Play Nice But Win, why did you decide to write another book? >> Well, you know, Dave, a lot has happened in the last 20 years and especially the last nine or so years since we went private and, you know merged with EMC and VMware and went public again. And, you know, I'd say we... first of all, you know when I wrote the first book in 1998 I wasn't comfortable disclosing a lot. And, and I wasn't vulnerable enough and didn't feel, you know, able to do that. Now I do, you know, I'm older, you know hopefully a little wiser. And so I think everybody's going to like hearing some of the fun stories about not only my childhood but you know, the dorm room and beyond, and leading up to, you know the pivotal changes that have occurred the last decade my alligator wrestling with Carl Icahn and other, you know there's lots of fun stories in there. I got arrested one time. It was only for speeding tickets, don't worry but you know, lots of fun. I'm really looking forward to the book coming out and being able to talk about it. >> I can't wait. You know, I've said many times anybody who could beat the great icon is interesting to me. I wanted to ask you, I mentioned my old boss, Pat McGovern. I used to say to them all the time, "Pat how come you don't buy more companies?" And he'd say," Dave, you know the vast majority of acquisitions and mergers they failed to meet their objectives." Did you ever imagine, I mean... I did the EMC acquisition. Did... how could it not have exceeded your expectations? I wonder if you could give us your final thoughts on that. >> You know, and I talk about this a lot in the book. I mean, these are kind of the ultimate considered decisions. And in the case of the EMC combination it was something that we had thought about going back to 2008, 2009. And then, you know, started thinking about it in 2014 worked on it for a full year before it got announced in 2015 and finally closed in 2016. But yeah, I mean, you know, we thought it would be great. It turned out to be even better than We thought the revenue synergies were far greater. The teams were quite energized. Customers liked what we were providing and you know it's ... and, of course the markets were supportive Right? You know, we were paying close attention to interest rates and how we could structure the merger in a attractive way. And, you know, thank goodness, lots of hard work lots of determination, you know, it's worked out quite well. >> Yeah, great commitment from the Dell team as well. Congratulations on that. Go ahead, please. >> And any adventure continues right? It's...( both chuckles) >> I can't wait to see the next chapter and I can't wait to get the book, but congratulations on that, all your tremendous success you're you are a winner and a gentleman and a friend of the CUBE, Michael Dell. Thanks so much. >> Thank you so much Dave. >> And thank you for watching. And this is the CUBE continuous coverage of Dell tech world 2021, the virtual edition. Keep it right there, right back. (upbeat music)

>>from around the globe. It's the Cube presenting Cuban cloud brought to you by silicon angle, everybody to Cuban cloud. My name is Dave Volonte, and I'll be here throughout the day with my co host, John Ferrier, who was quarantined in an undisclosed location in California. He's all good. Don't worry. Just precautionary. John, how are you doing? >>Hey, great to see you. John. Quarantine. My youngest daughter had covitz, so contact tracing. I was negative in quarantine at a friend's location. All good. >>Well, we wish you the best. Yeah, well, right. I mean, you know what's it like, John? I mean, you're away from your family. Your basically shut in, right? I mean, you go out for a walk, but you're really not in any contact with anybody. >>Correct? Yeah. I mean, basically just isolation, Um, pretty much what everyone's been kind of living on, kind of suffering through, but hopefully the vaccines are being distributed. You know, one of the things we talked about it reinvent the Amazon's cloud conference. Was the vaccine on, but just the whole workflow around that it's gonna get better. It's kind of really sucky. Here in the California area, they haven't done a good job, a lot of criticism around, how that's rolling out. And, you know, Amazon is now offering to help now that there's a new regime in the U. S. Government S o. You know, something to talk about, But certainly this has been a terrible time for Cove it and everyone in the deaths involved. But it's it's essentially pulled back the covers, if you will, on technology and you're seeing everything. Society. In fact, um, well, that's big tech MIT disinformation campaigns. All these vulnerabilities and cyber, um, accelerated digital transformation. We'll talk about a lot today, but yeah, it's totally changed the world. And I think we're in a new generation. I think this is a real inflection point, Dave. You know, modern society and the geo political impact of this is significant. You know, one of the benefits of being quarantined you'd be hanging out on these clubhouse APS, uh, late at night, listening to experts talk about what's going on, and it's interesting what's happening with with things like water and, you know, the island of Taiwan and China and U. S. Sovereignty, data, sovereignty, misinformation. So much going on to talk about. And, uh, meanwhile, companies like Mark injuries in BC firm starting a media company. What's going on? Hell freezing over. So >>we're gonna be talking about a lot of that stuff today. I mean, Cuba on cloud. It's our very first virtual editorial event we're trying to do is bring together our community. It's a it's an open forum and we're we're running the day on our 3 65 software platform. So we got a great lineup. We got CEO Seo's data Practitioners. We got a hard core technologies coming in, cloud experts, investors. We got some analysts coming in and we're creating this day long Siri's. And we've got a number of sessions that we've developed and we're gonna unpack. The future of Cloud computing in the coming decade is, John said, we're gonna talk about some of the public policy new administration. What does that mean for tech and for big tech in General? John, what can you add to that? >>Well, I think one of the things that we talked about Cove in this personal impact to me but other people as well. One of the things that people are craving right now is information factual information, truth texture that we call it. But hear this event for us, Davis, our first inaugural editorial event. Robbo, Kristen, Nicole, the entire Cube team Silicon angle, really trying to put together Morva cadence we're gonna doom or of these events where we can put out feature the best people in our community that have great fresh voices. You know, we do interview the big names Andy Jassy, Michael Dell, the billionaires with people making things happen. But it's often the people under there that are the rial newsmakers amid savory, for instance, that Google one of the most impressive technical people, he's gotta talk. He's gonna present democratization of software development in many Mawr riel people making things happen. And I think there's a communal element. We're going to do more of these. Obviously, we have, uh, no events to go to with the Cube. So we have the cube virtual software that we have been building and over years and now perfecting and we're gonna introduce that we're gonna put it to work, their dog footing it. We're gonna put that software toe work. We're gonna do a lot mawr virtual events like this Cuban cloud Cuban startup Cuban raising money. Cuban healthcare, Cuban venture capital. Always think we could do anything. Question is, what's the right story? What's the most important stories? Who's telling it and increase the aperture of the lens of the industry that we have and and expose that and fastest possible. That's what this software, you'll see more of it. So it's super exciting. We're gonna add new features like pulling people up on stage, Um, kind of bring on the clubhouse vibe and more of a community interaction with people to meet each other, and we'll roll those out. But the goal here is to just showcase it's cloud story in a way from people that are living it and providing value. So enjoy the day is gonna be chock full of presentations. We're gonna have moderated chat in these sessions, so it's an all day event so people can come in, drop out, and also that's everything's on demand immediately after the time slot. But you >>want to >>participate, come into the time slot into the cube room or breakout session. Whatever you wanna call it, it's a cube room, and the people in there chatting and having a watch party. So >>when you're in that home page when you're watching, there's a hero video there. Beneath that, there's a calendar, and you'll see that red line is that red horizontal line of vertical line is rather, it's a linear clock that will show you where we are in the day. If you click on any one of those sessions that will take you into the chat, we'll take you through those in a moment and share with you some of the guests that we have upcoming and and take you through the day what I wanted to do. John is trying to set the stage for the conversations that folks are gonna here today. And to do that, I wanna ask the guys to bring up a graphic. And I want to talk to you, John, about the progression of cloud over time and maybe go back to the beginning and review the evolution of cloud and then really talk a little bit about where we think it Z headed. So, guys, if you bring up that graphic when a W S announced s three, it was March of 2000 and six. And as you recall, John you know, nobody really. In the vendor and user community. They didn't really pay too much attention to that. And then later that year, in August, it announced E C two people really started. They started to think about a new model of computing, but they were largely, you know, chicken tires. And it was kind of bleeding edge developers that really leaned in. Um what? What were you thinking at the time? When when you saw, uh, s three e c to this retail company coming into the tech world? >>I mean, I thought it was totally crap. I'm like, this is terrible. But then at that time, I was thinking working on I was in between kind of start ups and I didn't have a lot of seed funding. And then I realized the C two was freaking awesome. But I'm like, Holy shit, this is really great because I don't need to pay a lot of cash, the Provisional Data center, or get a server. Or, you know, at that time, state of the art startup move was to buy a super micro box or some sort of power server. Um, it was well past the whole proprietary thing. But you have to assemble probably anyone with 5 to 8 grand box and go in, and we'll put a couple ghetto rack, which is basically, uh, you know, you put it into some coasting location. It's like with everybody else in the tech ghetto of hosting, still paying monthly fees and then maintaining it and provisioning that's just to get started. And then Amazon was just really easy. And then from there you just It was just awesome. I just knew Amazon would be great. They had a lot of things that they had to fix. You know, custom domains and user interface Council got better and better, but it was awesome. >>Well, what we really saw the cloud take hold from my perspective anyway, was the financial crisis in, you know, 709 It put cloud on the radar of a number of CFOs and, of course, shadow I T departments. They wanted to get stuff done and and take I t in in in, ah, pecs, bite sized chunks. So it really was. There's cloud awakening and we came out of that financial crisis, and this we're now in this 10 year plus boom um, you know, notwithstanding obviously the economic crisis with cove it. But much of it was powered by the cloud in the decade. I would say it was really about I t transformation. And it kind of ironic, if you will, because the pandemic it hits at the beginning of this decade, >>and it >>creates this mandate to go digital. So you've you've said a lot. John has pulled forward. It's accelerated this industry transformation. Everybody talks about that, but and we've highlighted it here in this graphic. It probably would have taken several more years to mature. But overnight you had this forced march to digital. And if you weren't a digital business, you were kind of out of business. And and so it's sort of here to stay. How do you see >>You >>know what this evolution and what we can expect in the coming decades? E think it's safe to say the last 10 years defined by you know, I t transformation. That's not gonna be the same in the coming years. How do you see it? >>It's interesting. I think the big tech companies are on, but I think this past election, the United States shows um, the power that technology has. And if you look at some of the main trends in the enterprise specifically around what clouds accelerating, I call the second wave of innovations coming where, um, it's different. It's not what people expect. Its edge edge computing, for instance, has talked about a lot. But industrial i o t. Is really where we've had a lot of problems lately in terms of hacks and malware and just just overall vulnerabilities, whether it's supply chain vulnerabilities, toe actual disinformation, you know, you know, vulnerabilities inside these networks s I think this network effects, it's gonna be a huge thing. I think the impact that tech will have on society and global society geopolitical things gonna be also another one. Um, I think the modern application development of how applications were written with data, you know, we always been saying this day from the beginning of the Cube data is his integral part of the development process. And I think more than ever, when you think about cloud and edge and this distributed computing paradigm, that cloud is now going next level with is the software and how it's written will be different. You gotta handle things like, where's the compute component? Is it gonna be at the edge with all the server chips, innovations that Amazon apple intel of doing, you're gonna have compute right at the edge, industrial and kind of human edge. How does that work? What's Leighton see to that? It's it really is an edge game. So to me, software has to be written holistically in a system's impact on the way. Now that's not necessarily nude in the computer science and in the tech field, it's just gonna be deployed differently. So that's a complete rewrite, in my opinion of the software applications. Which is why you're seeing Amazon Google VM Ware really pushing Cooper Netease and these service messes in the micro Services because super critical of this technology become smarter, automated, autonomous. And that's completely different paradigm in the old full stack developer, you know, kind of model. You know, the full stack developer, his ancient. There's no such thing as a full stack developer anymore, in my opinion, because it's a half a stack because the cloud takes up the other half. But no one wants to be called the half stack developer because it doesn't sound as good as Full Stack, but really Cloud has eliminated the technology complexity of what a full stack developer used to dio. Now you can manage it and do things with it, so you know, there's some work to done, but the heavy lifting but taking care of it's the top of the stack that I think is gonna be a really critical component. >>Yeah, and that that sort of automation and machine intelligence layer is really at the top of the stack. This this thing becomes ubiquitous, and we now start to build businesses and new processes on top of it. I wanna I wanna take a look at the Big Three and guys, Can we bring up the other The next graphic, which is an estimate of what the revenue looks like for the for the Big three. And John, this is I asked and past spend for the Big Three Cloud players. And it's It's an estimate that we're gonna update after earning seasons, and I wanna point a couple things out here. First is if you look at the combined revenue production of the Big Three last year, it's almost 80 billion in infrastructure spend. I mean, think about that. That Z was that incremental spend? No. It really has caused a lot of consolidation in the on Prem data center business for guys like Dell. And, you know, um, see, now, part of the LHP split up IBM Oracle. I mean, it's etcetera. They've all felt this sea change, and they had to respond to it. I think the second thing is you can see on this data. Um, it's true that azure and G C P they seem to be growing faster than a W s. We don't know the exact numbers >>because >>A W S is the only company that really provides a clean view of i s and pass. Whereas Microsoft and Google, they kind of hide the ball in their numbers. I mean, I don't blame them because they're behind, but they do leave breadcrumbs and clues about growth rates and so forth. And so we have other means of estimating, but it's it's undeniable that azure is catching up. I mean, it's still quite distance the third thing, and before I want to get your input here, John is this is nuanced. But despite the fact that Azure and Google the growing faster than a W s. You can see those growth rates. A W s I'll call this out is the only company by our estimates that grew its business sequentially last quarter. Now, in and of itself, that's not significant. But what is significant is because AWS is so large there $45 billion last year, even if the slower growth rates it's able to grow mawr and absolute terms than its competitors, who are basically flat to down sequentially by our estimates. Eso So that's something that I think is important to point out. Everybody focuses on the growth rates, but it's you gotta look at also the absolute dollars and, well, nonetheless, Microsoft in particular, they're they're closing the gap steadily, and and we should talk more about the competitive dynamics. But I'd love to get your take on on all this, John. >>Well, I mean, the clouds are gonna win right now. Big time with the one the political climate is gonna be favoring Big check. But more importantly, with just talking about covert impact and celebrating the digital transformation is gonna create a massive rising tide. It's already happening. It's happening it's happening. And again, this shift in programming, uh, models are gonna really kinda accelerating, create new great growth. So there's no doubt in my mind of all three you're gonna win big, uh, in the future, they're just different, You know, the way they're going to market position themselves, they have to be. Google has to be a little bit different than Amazon because they're smaller and they also have different capabilities, then trying to catch up. So if you're Google or Microsoft, you have to have a competitive strategy to decide. How do I wanna ride the tide If you will put the rising tide? Well, if I'm Amazon, I mean, if I'm Microsoft and Google, I'm not going to try to go frontal and try to copy Amazon because Amazon is just pounding lead of features and scale and they're different. They were, I would say, take advantage of the first mover of pure public cloud. They really awesome. It passed and I, as they've integrated in Gardner, now reports and integrated I as and passed components. So Gardner finally got their act together and said, Hey, this is really one thing. SAS is completely different animal now Microsoft Super Smart because they I think they played the right card. They have a huge installed base converted to keep office 3 65 and move sequel server and all their core jewels into the cloud as fast as possible, clarified while filling in the gaps on the product side to be cloud. So you know, as you're doing trends job, they're just it's just pedal as fast as you can. But Microsoft is really in. The strategy is just go faster trying. Keep pedaling fast, get the features, feature velocity and try to make it high quality. Google is a little bit different. They have a little power base in terms of their network of strong, and they have a lot of other big data capabilities, so they have to use those to their advantage. So there is. There is there is competitive strategy game application happening with these companies. It's not like apples, the apples, In my opinion, it never has been, and I think that's funny that people talk about it that way. >>Well, you're bringing up some great points. I want guys bring up the next graphic because a lot of things that John just said are really relevant here. And what we're showing is that's a survey. Data from E. T. R R Data partners, like 1400 plus CEOs and I T buyers and on the vertical axis is this thing called Net score, which is a measure of spending momentum. And the horizontal axis is is what's called market share. It's a measure of the pervasiveness or, you know, number of mentions in the data set. There's a couple of key points I wanna I wanna pick up on relative to what John just said. So you see A W S and Microsoft? They stand alone. I mean, they're the hyper scale er's. They're far ahead of the pack and frankly, they have fall down, toe, lose their lead. They spend a lot on Capex. They got the flywheel effects going. They got both spending velocity and large market shares, and so, but they're taking a different approach. John, you're right there living off of their SAS, the state, their software state, Andi, they're they're building that in to their cloud. So they got their sort of a captive base of Microsoft customers. So they've got that advantage. They also as we'll hear from from Microsoft today. They they're building mawr abstraction layers. Andy Jassy has said We don't wanna be in that abstraction layer business. We wanna have access to those, you know, fine grain primitives and eso at an AP level. So so we can move fast with the market. But but But so those air sort of different philosophies, John? >>Yeah. I mean, you know, people who know me know that I love Amazon. I think their product is superior at many levels on in its way that that has advantages again. They have a great sass and ecosystem. They don't really have their own SAS play, although they're trying to add some stuff on. I've been kind of critical of Microsoft in the past, but one thing I'm not critical of Microsoft, and people can get this wrong in the marketplace. Actually, in the journalism world and also in just some other analysts, Microsoft has always had large scale eso to say that Microsoft never had scale on that Amazon owned the monopoly on our franchise on scales wrong. Microsoft had scale from day one. Their business was always large scale global. They've always had infrastructure with MSN and their search and the distributive how they distribute browsers and multiple countries. Remember they had the lock on the operating system and the browser for until the government stepped in in 1997. And since 1997 Microsoft never ever not invested in infrastructure and scale. So that whole premise that they don't compete well there is wrong. And I think that chart demonstrates that there, in there in the hyper scale leadership category, hands down the question that I have. Is that there not as good and making that scale integrate in because they have that legacy cards. This is the classic innovator's dilemma. Clay Christensen, right? So I think they're doing a good job. I think their strategy sound. They're moving as fast as they can. But then you know they're not gonna come out and say We don't have the best cloud. Um, that's not a marketing strategy. Have to kind of hide in this and get better and then double down on where they're winning, which is. Clients are converting from their legacy at the speed of Microsoft, and they have a huge client base, So that's why they're stopping so high That's why they're so good. >>Well, I'm gonna I'm gonna give you a little preview. I talked to gear up your f Who's gonna come on today and you'll see I I asked him because the criticism of Microsoft is they're, you know, they're just good enough. And so I asked him, Are you better than good enough? You know, those are fighting words if you're inside of Microsoft, but so you'll you'll have to wait to see his answer. Now, if you guys, if you could bring that that graphic back up I wanted to get into the hybrid zone. You know where the field is. Always got >>some questions coming in on chat, Dave. So we'll get to those >>great Awesome. So just just real quick Here you see this hybrid zone, this the field is bunched up, and the other companies who have a large on Prem presence and have been forced to initiate some kind of coherent cloud strategy included. There is Michael Michael, multi Cloud, and Google's there, too, because they're far behind and they got to take a different approach than a W s. But as you can see, so there's some real progress here. VM ware cloud on AWS stands out, as does red hat open shift. You got VM Ware Cloud, which is a VCF Cloud Foundation, even Dell's cloud. And you'd expect HP with Green Lake to be picking up momentum in the future quarters. And you've got IBM and Oracle, which there you go with the innovator's dilemma. But there, at least in the cloud game, and we can talk about that. But so, John, you know, to your point, you've gotta have different strategies. You're you're not going to take out the big too. So you gotta play, connect your print your on Prem to your cloud, your hybrid multi cloud and try to create new opportunities and new value there. >>Yeah, I mean, I think we'll get to the question, but just that point. I think this Zeri Chen's come on the Cube many times. We're trying to get him to come on lunch today with Features startup, but he's always said on the Q B is a V C at Greylock great firm. Jerry's Cloud genius. He's been there, but he made a point many, many years ago. It's not a winner. Take all the winner. Take most, and the Big Three maybe put four or five in there. We'll take most of the markets here. But I think one of the things that people are missing and aren't talking about Dave is that there's going to be a second tier cloud, large scale model. I don't want to say tear to cloud. It's coming to sound like a sub sub cloud, but a new category of cloud on cloud, right? So meaning if you get a snowflake, did I think this is a tale? Sign to what's coming. VM Ware Cloud is a native has had huge success, mainly because Amazon is essentially enabling them to be successful. So I think is going to be a wave of a more of a channel model of indirect cloud build out where companies like the Cube, potentially for media or others, will build clouds on top of the cloud. So if Google, Microsoft and Amazon, whoever is the first one to really enable that okay, we'll do extremely well because that means you can compete with their scale and create differentiation on top. So what snowflake did is all on Amazon now. They kind of should go to azure because it's, you know, politically correct that have multiple clouds and distribution and business model shifts. But to get that kind of performance they just wrote on Amazon. So there's nothing wrong with that. Because you're getting paid is variable. It's cap ex op X nice categorization. So I think that's the way that we're watching. I think it's super valuable, I think will create some surprises in terms of who might come out of the woodwork on be a leader in a category. Well, >>your timing is perfect, John and we do have some questions in the chat. But before we get to that, I want to bring in Sargi Joe Hall, who's a contributor to to our community. Sargi. Can you hear us? All right, so we got, uh, while >>bringing in Sarpy. Let's go down from the questions. So the first question, Um, we'll still we'll get the student second. The first question. But Ronald ask, Can a vendor in 2021 exist without a hybrid cloud story? Well, story and capabilities. Yes, they could live with. They have to have a story. >>Well, And if they don't own a public cloud? No. No, they absolutely cannot. Uh hey, Sergey. How you doing, man? Good to see you. So, folks, let me let me bring in Sergeant Kohala. He's a He's a cloud architect. He's a practitioner, He's worked in as a technologist. And there's a frequent guest on on the Cube. Good to see you, my friend. Thanks for taking the time with us. >>And good to see you guys to >>us. So we were kind of riffing on the competitive landscape we got. We got so much to talk about this, like, it's a number of questions coming in. Um, but Sargi we wanna talk about you know, what's happening here in Cloud Land? Let's get right into it. I mean, what do you guys see? I mean, we got yesterday. New regime, new inaug inauguration. Do you do you expect public policy? You'll start with you Sargi to have What kind of effect do you think public policy will have on, you know, cloud generally specifically, the big tech companies, the tech lash. Is it gonna be more of the same? Or do you see a big difference coming? >>I think that there will be some changing narrative. I believe on that. is mainly, um, from the regulators side. A lot has happened in one month, right? So people, I think are losing faith in high tech in a certain way. I mean, it doesn't, uh, e think it matters with camp. You belong to left or right kind of thing. Right? But parlor getting booted out from Italy s. I think that was huge. Um, like, how do you know that if a cloud provider will not boot you out? Um, like, what is that line where you draw the line? What are the rules? I think that discussion has to take place. Another thing which has happened in the last 23 months is is the solar winds hack, right? So not us not sort acknowledging that I was Russia and then wish you watching it now, new administration might have a different sort of Boston on that. I think that's huge. I think public public private partnership in security arena will emerge this year. We have to address that. Yeah, I think it's not changing. Uh, >>economics economy >>will change gradually. You know, we're coming out off pandemic. The money is still cheap on debt will not be cheap. for long. I think m and a activity really will pick up. So those are my sort of high level, Uh, >>thank you. I wanna come back to them. And because there's a question that chat about him in a But, John, how do you see it? Do you think Amazon and Google on a slippery slope booting parlor off? I mean, how do they adjudicate between? Well, what's happening in parlor? Uh, anything could happen on clubhouse. Who knows? I mean, can you use a I to find that stuff? >>Well, that's I mean, the Amazons, right? Hiding right there bunkered in right now from that bad, bad situation. Because again, like people we said Amazon, these all three cloud players win in the current environment. Okay, Who wins with the U. S. With the way we are China, Russia, cloud players. Okay, let's face it, that's the reality. So if I wanted to reset the world stage, you know what better way than the, you know, change over the United States economy, put people out of work, make people scared, and then reset the entire global landscape and control all with cash? That's, you know, conspiracy theory. >>So you see the riches, you see the riches, get the rich, get richer. >>Yeah, well, that's well, that's that. That's kind of what's happening, right? So if you start getting into this idea that you can't actually have an app on site because the reason now I'm not gonna I don't know the particular parlor, but apparently there was a reason. But this is dangerous, right? So what? What that's gonna do is and whether it's right or wrong or not, whether political opinion is it means that they were essentially taken offline by people that weren't voted for that. Weren't that when people didn't vote for So that's not a democracy, right? So that's that's a different kind of regime. What it's also going to do is you also have this groundswell of decentralized thinking, right. So you have a whole wave of crypto and decentralized, um, cyber punks out there who want to decentralize it. So all of this stuff in January has created a huge counterculture, and I had predicted this so many times in the Cube. David counterculture is coming and and you already have this kind of counterculture between centralized and decentralized thinking and so I think the Amazon's move is dangerous at a fundamental level. Because if you can't get it, if you can't get buy domain names and you're completely blackballed by by organized players, that's a Mafia, in my opinion. So, uh, and that and it's also fuels the decentralized move because people say, Hey, if that could be done to them, it could be done to me. Just the fact that it could be done will promote a swing in the other direction. I >>mean, independent of of, you know, again, somebody said your political views. I mean Parlor would say, Hey, we're trying to clean this stuff up now. Maybe they didn't do it fast enough, but you think about how new parlor is. You think about the early days of Twitter and Facebook, so they were sort of at a disadvantage. Trying to >>have it was it was partly was what it was. It was a right wing stand up job of standing up something quick. Their security was terrible. If you look at me and Cory Quinn on be great to have him, and he did a great analysis on this, because if you look the lawsuit was just terrible. Security was just a half, asshole. >>Well, and the experience was horrible. I mean, it's not It was not a great app, but But, like you said, it was a quick stew. Hand up, you know, for an agenda. But nonetheless, you know, to start, get to your point earlier. It's like, you know, Are they gonna, you know, shut me down? If I say something that's, you know, out of line, or how do I control that? >>Yeah, I remember, like, 2019, we involved closing sort of remarks. I was there. I was saying that these companies are gonna be too big to fail. And also, they're too big for other nations to do business with. In a way, I think MNCs are running the show worldwide. They're running the government's. They are way. Have seen the proof of that in us this year. Late last year and this year, um, Twitter last night blocked Chinese Ambassador E in us. Um, from there, you know, platform last night and I was like, What? What's going on? So, like, we used to we used to say, like the Chinese company, tech companies are in bed with the Chinese government. Right. Remember that? And now and now, Actually, I think Chinese people can say the same thing about us companies. Uh, it's not a good thing. >>Well, let's >>get some question. >>Let's get some questions from the chat. Yeah. Thank you. One is on M and a subject you mentioned them in a Who do you see is possible emanate targets. I mean, I could throw a couple out there. Um, you know, some of the cdn players, maybe aka my You know, I like I like Hashi Corp. I think they're doing some really interesting things. What do you see? >>Nothing. Hashi Corp. And anybody who's doing things in the periphery is a candidate for many by the big guys, you know, by the hyper scholars and number two tier two or five hyper scholars. Right. Uh, that's why sales forces of the world and stuff like that. Um, some some companies, which I thought there will be a target, Sort of. I mean, they target they're getting too big, because off their evaluations, I think how she Corpuz one, um, >>and >>their bunch in the networking space. Uh, well, Tara, if I say the right that was acquired by at five this week, this week or last week, Actually, last week for $500 million. Um, I know they're founder. So, like I found that, Yeah, there's a lot going on on the on the network side on the anything to do with data. Uh, that those air too hard areas in the cloud arena >>data, data protection, John, any any anything you could adhere. >>And I think I mean, I think ej ej is gonna be where the gaps are. And I think m and a activity is gonna be where again, the bigger too big to fail would agree with you on that one. But we're gonna look at white Spaces and say a white space for Amazon is like a monster space for a start up. Right? So you're gonna have these huge white spaces opportunities, and I think it's gonna be an M and a opportunity big time start ups to get bought in. Given the speed on, I think you're gonna see it around databases and around some of these new service meshes and micro services. I mean, >>they there's a There's a question here, somebody's that dons asking why is Google who has the most pervasive tech infrastructure on the planet. Not at the same level of other to hyper scale is I'll give you my two cents is because it took him a long time to get their heads out of their ads. I wrote a piece of around that a while ago on they just they figured out how to learn the enterprise. I mean, John, you've made this point a number of times, but they just and I got a late start. >>Yeah, they're adding a lot of people. If you look at their who their hiring on the Google Cloud, they're adding a lot of enterprise chops in there. They realized this years ago, and we've talked to many of the top leaders, although Curry and hasn't yet sit down with us. Um, don't know what he's hiding or waiting for, but they're clearly not geared up to chicken Pete. You can see it with some some of the things that they're doing, but I mean competed the level of Amazon, but they have strength and they're playing their strength, but they definitely recognize that they didn't have the enterprise motions and people in the DNA and that David takes time people in the enterprise. It's not for the faint of heart. It's unique details that are different. You can't just, you know, swing the Google playbook and saying We're gonna home The enterprises are text grade. They knew that years ago. So I think you're going to see a good year for Google. I think you'll see a lot of change. Um, they got great people in there. On the product marketing side is Dev Solution Architects, and then the SRE model that they have perfected has been strong. And I think security is an area that they could really had a lot of value it. So, um always been a big fan of their huge network and all the intelligence they have that they could bring to bear on security. >>Yeah, I think Google's problem main problem that to actually there many, but one is that they don't They don't have the boots on the ground as compared to um, Microsoft, especially an Amazon actually had a similar problem, but they had a wide breath off their product portfolio. I always talk about feature proximity in cloud context, like if you're doing one thing. You wanna do another thing? And how do you go get that feature? Do you go to another cloud writer or it's right there where you are. So I think Amazon has the feature proximity and they also have, uh, aske Compared to Google, there's skills gravity. Larger people are trained on AWS. I think Google is trying there. So second problem Google is having is that that they're they're more focused on, I believe, um, on the data science part on their sort of skipping the cool components sort of off the cloud, if you will. The where the workloads needs, you know, basic stuff, right? That's like your compute storage and network. And that has to be well, talk through e think e think they will do good. >>Well, so later today, Paul Dillon sits down with Mids Avery of Google used to be in Oracle. He's with Google now, and he's gonna push him on on the numbers. You know, you're a distant third. Does that matter? And of course, you know, you're just a preview of it's gonna say, Well, no, we don't really pay attention to that stuff. But, John, you said something earlier that. I think Jerry Chen made this comment that, you know, Is it a winner? Take all? No, but it's a winner. Take a lot. You know the number two is going to get a big chunk of the pie. It appears that the markets big enough for three. But do you? Does Google have to really dramatically close the gap on be a much, much closer, you know, to the to the leaders in orderto to compete in this race? Or can they just kind of continue to bump along, siphon off the ad revenue? Put it out there? I mean, I >>definitely can compete. I think that's like Google's in it. Then it they're not. They're not caving, right? >>So But But I wrote I wrote recently that I thought they should even even put mawr oven emphasis on the cloud. I mean, maybe maybe they're already, you know, doubling down triple down. I just I think that is a multi trillion dollar, you know, future for the industry. And, you know, I think Google, believe it or not, could even do more. Now. Maybe there's just so much you could dio. >>There's a lot of challenges with these company, especially Google. They're in Silicon Valley. We have a big Social Justice warrior mentality. Um, there's a big debate going on the in the back channels of the tech scene here, and that is that if you want to be successful in cloud, you have to have a good edge strategy, and that involves surveillance, use of data and pushing the privacy limits. Right? So you know, Google has people within the country that will protest contract because AI is being used for war. Yet we have the most unstable geopolitical seen that I've ever witnessed in my lifetime going on right now. So, um, don't >>you think that's what happened with parlor? I mean, Rob Hope said, Hey, bar is pretty high to kick somebody off your platform. The parlor went over the line, but I would also think that a lot of the employees, whether it's Google AWS as well, said, Hey, why are we supporting you know this and so to your point about social justice, I mean, that's not something. That >>parlor was not just social justice. They were trying to throw the government. That's Rob e. I think they were in there to get selfies and being protesters. But apparently there was evidence from what I heard in some of these clubhouse, uh, private chats. Waas. There was overwhelming evidence on parlor. >>Yeah, but my point is that the employee backlash was also a factor. That's that's all I'm saying. >>Well, we have Google is your Google and you have employees to say we will boycott and walk out if you bid on that jet I contract for instance, right, But Microsoft one from maybe >>so. I mean, that's well, >>I think I think Tom Poole's making a really good point here, which is a Google is an alternative. Thio aws. The last Google cloud next that we were asked at they had is all virtual issue. But I saw a lot of I T practitioners in the audience looking around for an alternative to a W s just seeing, though, we could talk about Mano Cloud or Multi Cloud, and Andy Jassy has his his narrative around, and he's true when somebody goes multiple clouds, they put you know most of their eggs in one basket. Nonetheless, I think you know, Google's got a lot of people interested in, particularly in the analytic side, um, in in an alternative, hedging their bets eso and particularly use cases, so they should be able to do so. I guess my the bottom line here is the markets big enough to have Really? You don't have to be the Jack Welch. I gotta be number one and number two in the market. Is that the conclusion here? >>I think so. But the data gravity and the skills gravity are playing against them. Another problem, which I didn't want a couple of earlier was Google Eyes is that they have to boot out AWS wherever they go. Right? That is a huge challenge. Um, most off the most off the Fortune 2000 companies are already using AWS in one way or another. Right? So they are the multi cloud kind of player. Another one, you know, and just pure purely somebody going 200% Google Cloud. Uh, those cases are kind of pure, if you will. >>I think it's gonna be absolutely multi cloud. I think it's gonna be a time where you looked at the marketplace and you're gonna think in terms of disaster recovery, model of cloud or just fault tolerant capabilities or, you know, look at the parlor, the next parlor. Or what if Amazon wakes up one day and said, Hey, I don't like the cubes commentary on their virtual events, so shut them down. We should have a fail over to Google Cloud should Microsoft and Option. And one of people in Microsoft ecosystem wants to buy services from us. We have toe kind of co locate there. So these are all open questions that are gonna be the that will become certain pretty quickly, which is, you know, can a company diversify their computing An i t. In a way that works. And I think the momentum around Cooper Netease you're seeing as a great connective tissue between, you know, having applications work between clouds. Right? Well, directionally correct, in my opinion, because if I'm a company, why wouldn't I wanna have choice? So >>let's talk about this. The data is mixed on that. I'll share some data, meaty our data with you. About half the companies will say Yeah, we're spreading the wealth around to multiple clouds. Okay, That's one thing will come back to that. About the other half were saying, Yeah, we're predominantly mono cloud we didn't have. The resource is. But what I think going forward is that that what multi cloud really becomes. And I think John, you mentioned Snowflake before. I think that's an indicator of what what true multi cloud is going to look like. And what Snowflake is doing is they're building abstraction, layer across clouds. Ed Walsh would say, I'm standing on the shoulders of Giants, so they're basically following points of presence around the globe and building their own cloud. They call it a data cloud with a global mesh. We'll hear more about that later today, but you sign on to that cloud. So they're saying, Hey, we're gonna build value because so many of Amazon's not gonna build that abstraction layer across multi clouds, at least not in the near term. So that's a really opportunity for >>people. I mean, I don't want to sound like I'm dating myself, but you know the date ourselves, David. I remember back in the eighties, when you had open systems movement, right? The part of the whole Revolution OS I open systems interconnect model. At that time, the networking stacks for S N A. For IBM, decadent for deck we all know that was a proprietary stack and then incomes TCP I p Now os I never really happened on all seven layers, but the bottom layers standardized. Okay, that was huge. So I think if you look at a W s or some of the comments in the chat AWS is could be the s n a. Depends how you're looking at it, right? And you could say they're open. But in a way, they want more Amazon. So Amazon's not out there saying we love multi cloud. Why would they promote multi cloud? They are a one of the clouds they want. >>That's interesting, John. And then subject is a cloud architect. I mean, it's it is not trivial to make You're a data cloud. If you're snowflake, work on AWS work on Google. Work on Azure. Be seamless. I mean, certainly the marketing says that, but technically, that's not trivial. You know, there are latent see issues. Uh, you know, So that's gonna take a while to develop. What? Do your thoughts there? >>I think that multi cloud for for same workload and multi cloud for different workloads are two different things. Like we usually put multiple er in one bucket, right? So I think you're right. If you're trying to do multi cloud for the same workload, that's it. That's Ah, complex, uh, problem to solve architecturally, right. You have to have a common ap ice and common, you know, control playing, if you will. And we don't have that yet, and then we will not have that for a for at least one other couple of years. So, uh, if you if you want to do that, then you have to go to the lower, lowest common denominator in technical sort of stock, if you will. And then you're not leveraging the best of the breed technology off their from different vendors, right? I believe that's a hard problem to solve. And in another thing, is that that that I always say this? I'm always on the death side, you know, developer side, I think, uh, two deaths. Public cloud is a proxy for innovative culture. Right. So there's a catch phrase I have come up with today during shower eso. I think that is true. And then people who are companies who use the best of the breed technologies, they can attract the these developers and developers are the Mazen's off This digital sort of empires, amazingly, is happening there. Right there they are the Mazen's right. They head on the bricks. I think if you don't appeal to developers, if you don't but extensive for, like, force behind educating the market, you can't you can't >>put off. It's the same game Stepping story was seeing some check comments. Uh, guard. She's, uh, linked in friend of mine. She said, Microsoft, If you go back and look at the Microsoft early days to the developer Point they were, they made their phones with developers. They were a software company s Oh, hey, >>forget developers, developers, developers. >>You were if you were in the developer ecosystem, you were treated his gold. You were part of the family. If you were outside that world, you were competitors, and that was ruthless times back then. But they again they had. That was where it was today. Look at where the software defined businesses and starve it, saying it's all about being developer lead in this new way to program, right? So the cloud next Gen Cloud is going to look a lot like next Gen Developer and all the different tools and techniques they're gonna change. So I think, yes, this kind of developer ecosystem will be harnessed, and that's the power source. It's just gonna look different. So, >>Justin, Justin in the chat has a comment. I just want to answer the question about elastic thoughts on elastic. Um, I tell you, elastic has momentum uh, doing doing very well in the market place. Thea Elk Stack is a great alternative that people are looking thio relative to Splunk. Who people complain about the pricing. Of course it's plunks got the easy button, but it is getting increasingly expensive. The problem with elk stack is you know, it's open source. It gets complicated. You got a shard, the databases you gotta manage. It s Oh, that's what Ed Walsh's company chaos searches is all about. But elastic has some riel mo mentum in the marketplace right now. >>Yeah, you know, other things that coming on the chat understands what I was saying about the open systems is kubernetes. I always felt was that is a bad metaphor. But they're with me. That was the TCP I peep In this modern era, C t c p I p created that that the disruptor to the S N A s and the network protocols that were proprietary. So what KUBERNETES is doing is creating a connective tissue between clouds and letting the open source community fill in the gaps in the middle, where kind of way kind of probably a bad analogy. But that's where the disruption is. And if you look at what's happened since Kubernetes was put out there, what it's become kind of de facto and standard in the sense that everyone's rallying around it. Same exact thing happened with TCP was people were trashing it. It is terrible, you know it's not. Of course they were trashed because it was open. So I find that to be very interesting. >>Yeah, that's a good >>analogy. E. Thinks the R C a cable. I used the R C. A cable analogy like the VCRs. When they started, they, every VC had had their own cable, and they will work on Lee with that sort of plan of TV and the R C. A cable came and then now you can put any TV with any VCR, and the VCR industry took off. There's so many examples out there around, uh, standards And how standards can, you know, flair that fire, if you will, on dio for an industry to go sort of wild. And another trend guys I'm seeing is that from the consumer side. And let's talk a little bit on the consuming side. Um, is that the The difference wouldn't be to B and B to C is blood blurred because even the physical products are connected to the end user Like my door lock, the August door lock I didn't just put got get the door lock and forget about that. Like I I value the expedience it gives me or problems that gives me on daily basis. So I'm close to that vendor, right? So So the middle men, uh, middle people are getting removed from from the producer off the technology or the product to the consumer. Even even the sort of big grocery players they have their APs now, uh, how do you buy stuff and how it's delivered and all that stuff that experience matters in that context, I think, um, having, uh, to be able to sell to thes enterprises from the Cloud writer Breuder's. They have to have these case studies or all these sample sort off reference architectures and stuff like that. I think whoever has that mawr pushed that way, they are doing better like that. Amazon is Amazon. Because of that reason, I think they have lot off sort off use cases about on top of them. And they themselves do retail like crazy. Right? So and other things at all s. So I think that's a big trend. >>Great. Great points are being one of things. There's a question in there about from, uh, Yaden. Who says, uh, I like the developer Lead cloud movement, But what is the criticality of the executive audience when educating the marketplace? Um, this comes up a lot in some of my conversations around automation. So automation has been a big wave to automate this automate everything. And then everything is a service has become kind of kind of the the executive suite. Kind of like conversation we need to make everything is a service in our business. You seeing people move to that cloud model. Okay, so the executives think everything is a services business strategy, which it is on some level, but then, when they say Take that hill, do it. Developers. It's not that easy. And this is where a lot of our cube conversations over the past few months have been, especially during the cova with cute virtual. This has come up a lot, Dave this idea, and start being around. It's easy to say everything is a service but will implement it. It's really hard, and I think that's where the developer lead Connection is where the executive have to understand that in order to just say it and do it are two different things. That digital transformation. That's a big part of it. So I think that you're gonna see a lot of education this year around what it means to actually do that and how to implement it. >>I'd like to comment on the as a service and subject. Get your take on it. I mean, I think you're seeing, for instance, with HP Green Lake, Dell's come out with Apex. You know IBM as its utility model. These companies were basically taking a page out of what I what I would call a flawed SAS model. If you look at the SAS players, whether it's salesforce or workday, service now s a P oracle. These models are They're really They're not cloud pricing models. They're they're basically you got to commit to a term one year, two year, three year. We'll give you a discount if you commit to the longer term. But you're locked in on you. You probably pay upfront. Or maybe you pay quarterly. That's not a cloud pricing model. And that's why I mean, they're flawed. You're seeing companies like Data Dog, for example. Snowflake is another one, and they're beginning to price on a consumption basis. And that is, I think, one of the big changes that we're going to see this decade is that true cloud? You know, pay by the drink pricing model and to your point, john toe, actually implement. That is, you're gonna need a whole new layer across your company on it is quite complicated it not even to mention how you compensate salespeople, etcetera. The a p. I s of your product. I mean, it is that, but that is a big sea change that I see coming. Subject your >>thoughts. Yeah, I think like you couldn't see it. And like some things for this big tech exacts are hidden in the plain >>sight, right? >>They don't see it. They they have blind spots, like Look at that. Look at Amazon. They went from Melissa and 200 millisecond building on several s, Right, Right. And then here you are, like you're saying, pay us for the whole year. If you don't use the cloud, you lose it or will pay by month. Poor user and all that stuff like that that those a role models, I think these players will be forced to use that term pricing like poor minute or for a second, poor user. That way, I think the Salesforce moral is hybrid. They're struggling in a way. I think they're trying to bring the platform by doing, you know, acquisition after acquisition to be a platform for other people to build on top off. But they're having a little trouble there because because off there, such pricing and little closeness, if you will. And, uh, again, I'm coming, going, going back to developers like, if you are not appealing to developers who are writing the latest and greatest code and it is open enough, by the way open and open source are two different things that we all know that. So if your platform is not open enough, you will have you know, some problems in closing the deals. >>E. I want to just bring up a question on chat around from Justin didn't fitness. Who says can you touch on the vertical clouds? Has your offering this and great question Great CP announcing Retail cloud inventions IBM Athena Okay, I'm a huge on this point because I think this I'm not saying this for years. Cloud computing is about horizontal scalability and vertical specialization, and that's absolutely clear, and you see all the clouds doing it. The vertical rollouts is where the high fidelity data is, and with machine learning and AI efforts coming out, that's accelerated benefits. There you have tow, have the vertical focus. I think it's super smart that clouds will have some sort of vertical engine, if you will in the clouds and build on top of a control playing. Whether that's data or whatever, this is clearly the winning formula. If you look at all the successful kind of ai implementations, the ones that have access to the most data will get the most value. So, um if you're gonna have a data driven cloud you have tow, have this vertical feeling, Um, in terms of verticals, the data on DSO I think that's super important again, just generally is a strategy. I think Google doing a retail about a super smart because their whole pitches were not Amazon on. Some people say we're not Google, depending on where you look at. So every of these big players, they have dominance in the areas, and that's scarce. Companies and some companies will never go to Amazon for that reason. Or some people never go to Google for other reasons. I know people who are in the ad tech. This is a black and we're not. We're not going to Google. So again, it is what it is. But this idea of vertical specialization relevant in super >>forts, I want to bring to point out to sessions that are going on today on great points. I'm glad you asked that question. One is Alan. As he kicks off at 1 p.m. Eastern time in the transformation track, he's gonna talk a lot about the coming power of ecosystems and and we've talked about this a lot. That that that to compete with Amazon, Google Azure, you've gotta have some kind of specialization and vertical specialization is a good one. But of course, you see in the big Big three also get into that. But so he's talking at one o'clock and then it at 3 36 PM You know this times are strange, but e can explain that later Hillary Hunter is talking about she's the CTO IBM I B M's ah Financial Cloud, which is another really good example of specifying vertical requirements and serving. You know, an audience subject. I think you have some thoughts on this. >>Actually, I lost my thought. E >>think the other piece of that is data. I mean, to the extent that you could build an ecosystem coming back to Alan Nancy's premise around data that >>billions of dollars in >>their day there's billions of dollars and that's the title of the session. But we did the trillion dollar baby post with Jazzy and said Cloud is gonna be a trillion dollars right? >>And and the point of Alan Answer session is he's thinking from an individual firm. Forget the millions that you're gonna save shifting to the cloud on cost. There's billions in ecosystems and operating models. That's >>absolutely the business value. Now going back to my half stack full stack developer, is the business value. I've been talking about this on the clubhouses a lot this past month is for the entrepreneurs out there the the activity in the business value. That's the new the new intellectual property is the business logic, right? So if you could see innovations in how work streams and workflow is gonna be a configured differently, you have now large scale cloud specialization with data, you can move quickly and take territory. That's much different scenario than a decade ago, >>at the point I was trying to make earlier was which I know I remember, is that that having the horizontal sort of features is very important, as compared to having vertical focus. You know, you're you're more healthcare focused like you. You have that sort of needs, if you will, and you and our auto or financials and stuff like that. What Google is trying to do, I think that's it. That's a good thing. Do cook up the reference architectures, but it's a bad thing in a way that you drive drive away some developers who are most of the developers at 80 plus percent, developers are horizontal like you. Look at the look into the psyche of a developer like you move from company to company. And only few developers will say I will stay only in health care, right? So I will only stay in order or something of that, right? So they you have to have these horizontal capabilities which can be applied anywhere on then. On top >>of that, I think that's true. Sorry, but I'll take a little bit different. Take on that. I would say yes, that's true. But remember, remember the old school application developer Someone was just called in Application developer. All they did was develop applications, right? They pick the framework, they did it right? So I think we're going to see more of that is just now mawr of Under the Covers developers. You've got mawr suffer defined networking and software, defined storage servers and cloud kubernetes. And it's kind of like under the hood. But you got your, you know, classic application developer. I think you're gonna see him. A lot of that come back in a way that's like I don't care about anything else. And that's the promise of cloud infrastructure is code. So I think this both. >>Hey, I worked. >>I worked at people solved and and I still today I say into into this context, I say E r P s are the ultimate low code. No code sort of thing is right. And what the problem is, they couldn't evolve. They couldn't make it. Lightweight, right? Eso um I used to write applications with drag and drop, you know, stuff. Right? But But I was miserable as a developer. I didn't Didn't want to be in the applications division off PeopleSoft. I wanted to be on the tools division. There were two divisions in most of these big companies ASAP. Oracle. Uh, like companies that divisions right? One is the cooking up the tools. One is cooking up the applications. The basketball was always gonna go to the tooling. Hey, >>guys, I'm sorry. We're almost out of time. I always wanted to t some of the sections of the day. First of all, we got Holder Mueller coming on at lunch for a power half hour. Um, you'll you'll notice when you go back to the home page. You'll notice that calendar, that linear clock that we talked about that start times are kind of weird like, for instance, an appendix coming on at 1 24. And that's because these air prerecorded assets and rather than having a bunch of dead air, we're just streaming one to the other. So so she's gonna talk about people, process and technology. We got Kathy Southwick, whose uh, Silicon Valley CEO Dan Sheehan was the CEO of Dunkin Brands and and he was actually the c 00 So it's C A CEO connecting the dots to the business. Daniel Dienes is the CEO of you I path. He's coming on a 2:47 p.m. East Coast time one of the hottest companies, probably the fastest growing software company in history. We got a guy from Bain coming on Dave Humphrey, who invested $750 million in Nutanix. He'll explain why and then, ironically, Dheeraj Pandey stew, Minuteman. Our friend interviewed him. That's 3 35. 1 of the sessions are most excited about today is John McD agony at 403 p. M. East Coast time, she's gonna talk about how to fix broken data architectures, really forward thinking stuff. And then that's the So that's the transformation track on the future of cloud track. We start off with the Big Three Milan Thompson Bukovec. At one oclock, she runs a W s storage business. Then I mentioned gig therapy wrath at 1. 30. He runs Azure is analytics. Business is awesome. Paul Dillon then talks about, um, IDs Avery at 1 59. And then our friends to, um, talks about interview Simon Crosby. I think I think that's it. I think we're going on to our next session. All right, so keep it right there. Thanks for watching the Cuban cloud. Uh huh.

>> Hi, my name is Andy Clemenko. I'm a Senior Solutions Engineer at StackRox. Thanks for joining us today for my talk on labels, labels, labels. Obviously, you can reach me at all the socials. Before we get started, I like to point you to my GitHub repo, you can go to andyc.info/dc20, and it'll take you to my GitHub page where I've got all of this documentation, socials. Before we get started, I like to point you to my GitHub repo, you can go to andyc.info/dc20, (upbeat music) >> Hi, my name is Andy Clemenko. I'm a Senior Solutions Engineer at StackRox. Thanks for joining us today for my talk on labels, labels, labels. Obviously, you can reach me at all the socials. Before we get started, I like to point you to my GitHub repo, you can go to andyc.info/dc20, and it'll take you to my GitHub page where I've got all of this documentation, I've got the Keynote file there. YAMLs, I've got Dockerfiles, Compose files, all that good stuff. If you want to follow along, great, if not go back and review later, kind of fun. So let me tell you a little bit about myself. I am a former DOD contractor. This is my seventh DockerCon. I've spoken, I had the pleasure to speak at a few of them, one even in Europe. I was even a Docker employee for quite a number of years, providing solutions to the federal government and customers around containers and all things Docker. So I've been doing this a little while. One of the things that I always found interesting was the lack of understanding around labels. So why labels, right? Well, as a former DOD contractor, I had built out a large registry. And the question I constantly got was, where did this image come from? How did you get it? What's in it? Where did it come from? How did it get here? And one of the things we did to kind of alleviate some of those questions was we established a baseline set of labels. Labels really are designed to provide as much metadata around the image as possible. I ask everyone in attendance, when was the last time you pulled an image and had 100% confidence, you knew what was inside it, where it was built, how it was built, when it was built, you probably didn't, right? The last thing we obviously want is a container fire, like our image on the screen. And one kind of interesting way we can kind of prevent that is through the use of labels. We can use labels to address security, address some of the simplicity on how to run these images. So think of it, kind of like self documenting, Think of it also as an audit trail, image provenance, things like that. These are some interesting concepts that we can definitely mandate as we move forward. What is a label, right? Specifically what is the Schema? It's just a key-value. All right? It's any key and pretty much any value. What if we could dump in all kinds of information? What if we could encode things and store it in there? And I've got a fun little demo to show you about that. Let's start off with some of the simple keys, right? Author, date, description, version. Some of the basic information around the image. That would be pretty useful, right? What about specific labels for CI? What about a, where's the version control? Where's the source, right? Whether it's Git, whether it's GitLab, whether it's GitHub, whether it's Gitosis, right? Even SPN, who cares? Where are the source files that built, where's the Docker file that built this image? What's the commit number? That might be interesting in terms of tracking the resulting image to a person or to a commit, hopefully then to a person. How is it built? What if you wanted to play with it and do a git clone of the repo and then build the Docker file on your own? Having a label specifically dedicated on how to build this image might be interesting for development work. Where it was built, and obviously what build number, right? These kind of all, not only talk about continuous integration, CI but also start to talk about security. Specifically what server built it. The version control number, the version number, the commit number, again, how it was built. What's the specific build number? What was that job number in, say, Jenkins or GitLab? What if we could take it a step further? What if we could actually apply policy enforcement in the build pipeline, looking specifically for some of these specific labels? I've got a good example of, in my demo of a policy enforcement. So let's look at some sample labels. Now originally, this idea came out of label-schema.org. And then it was a modified to opencontainers, org.opencontainers.image. There is a link in my GitHub page that links to the full reference. But these are some of the labels that I like to use, just as kind of like a standardization. So obviously, Author's, an email address, so now the image is attributable to a person, that's always kind of good for security and reliability. Where's the source? Where's the version control that has the source, the Docker file and all the assets? How it was built, build number, build server the commit, we talked about, when it was created, a simple description. A fun one I like adding in is the healthZendpoint. Now obviously, the health check directive should be in the Docker file. But if you've got other systems that want to ping your applications, why not declare it and make it queryable? Image version, obviously, that's simple declarative And then a title. And then I've got the two fun ones. Remember, I talked about what if we could encode some fun things? Hypothetically, what if we could encode the Compose file of how to build the stack in the first image itself? And conversely the Kubernetes? Well, actually, you can and I have a demo to show you how to kind of take advantage of that. So how do we create labels? And really creating labels as a function of build time okay? You can't really add labels to an image after the fact. The way you do add labels is either through the Docker file, which I'm a big fan of, because it's declarative. It's in version control. It's kind of irrefutable, especially if you're tracking that commit number in a label. You can extend it from being a static kind of declaration to more a dynamic with build arguments. And I can show you, I'll show you in a little while how you can use a build argument at build time to pass in that variable. And then obviously, if you did it by hand, you could do a docker build--label key equals value. I'm not a big fan of the third one, I love the first one and obviously the second one. Being dynamic we can take advantage of some of the variables coming out of version control. Or I should say, some of the variables coming out of our CI system. And that way, it self documents effectively at build time, which is kind of cool. How do we view labels? Well, there's two major ways to view labels. The first one is obviously a docker pull and docker inspect. You can pull the image locally, you can inspect it, you can obviously, it's going to output as JSON. So you going to use something like JQ to crack it open and look at the individual labels. Another one which I found recently was Skopeo from Red Hat. This allows you to actually query the registry server. So you don't even have to pull the image initially. This can be really useful if you're on a really small development workstation, and you're trying to talk to a Kubernetes cluster and wanting to deploy apps kind of in a very simple manner. Okay? And this was that use case, right? Using Kubernetes, the Kubernetes demo. One of the interesting things about this is that you can base64 encode almost anything, push it in as text into a label and then base64 decode it, and then use it. So in this case, in my demo, I'll show you how we can actually use a kubectl apply piped from the base64 decode from the label itself from skopeo talking to the registry. And what's interesting about this kind of technique is you don't need to store Helm charts. You don't need to learn another language for your declarative automation, right? You don't need all this extra levels of abstraction inherently, if you use it as a label with a kubectl apply, It's just built in. It's kind of like the kiss approach to a certain extent. It does require some encoding when you actually build the image, but to me, it doesn't seem that hard. Okay, let's take a look at a demo. And what I'm going to do for my demo, before we actually get started is here's my repo. Here's a, let me actually go to the actual full repo. So here's the repo, right? And I've got my Jenkins pipeline 'cause I'm using Jenkins for this demo. And in my demo flask, I've got the Docker file. I've got my compose and my Kubernetes YAML. So let's take a look at the Docker file, right? So it's a simple Alpine image. The org statements are the build time arguments that are passed in. Label, so again, I'm using the org.opencontainers.image.blank, for most of them. There's a typo there. Let's see if you can find it, I'll show you it later. My source, build date, build number, commit. Build number and get commit are derived from the Jenkins itself, which is nice. I can just take advantage of existing URLs. I don't have to create anything crazy. And again, I've got my actual Docker build command. Now this is just a label on how to build it. And then here's my simple Python, APK upgrade, remove the package manager, kind of some security stuff, health check getting Python through, okay? Let's take a look at the Jenkins pipeline real quick. So here is my Jenkins pipeline and I have four major stages, four stages, I have built. And here in build, what I do is I actually do the Git clone. And then I do my docker build. From there, I actually tell the Jenkins StackRox plugin. So that's what I'm using for my security scanning. So go ahead and scan, basically, I'm staging it to scan the image. I'm pushing it to Hub, okay? Where I can see the, basically I'm pushing the image up to Hub so such that my StackRox security scanner can go ahead and scan the image. I'm kicking off the scan itself. And then if everything's successful, I'm pushing it to prod. Now what I'm doing is I'm just using the same image with two tags, pre-prod and prod. This is not exactly ideal, in your environment, you probably want to use separate registries and non-prod and a production registry, but for demonstration purposes, I think this is okay. So let's go over to my Jenkins and I've got a deliberate failure. And I'll show you why there's a reason for that. And let's go down. Let's look at my, so I have a StackRox report. Let's look at my report. And it says image required, required image label alert, right? Request that the maintainer, add the required label to the image, so we're missing a label, okay? One of the things we can do is let's flip over, and let's look at Skopeo. Right? I'm going to do this just the easy way. So instead of looking at org.zdocker, opencontainers.image.authors. Okay, see here it says build signature? That was the typo, we didn't actually pass in. So if we go back to our repo, we didn't pass in the the build time argument, we just passed in the word. So let's fix that real quick. That's the Docker file. Let's go ahead and put our dollar sign in their. First day with the fingers you going to love it. And let's go ahead and commit that. Okay? So now that that's committed, we can go back to Jenkins, and we can actually do another build. And there's number 12. And as you can see, I've been playing with this for a little bit today. And while that's running, come on, we can go ahead and look at the Console output. Okay, so there's our image. And again, look at all the build arguments that we're passing into the build statement. So we're passing in the date and the date gets derived on the command line. With the build arguments, there's the base64 encoded of the Compose file. Here's the base64 encoding of the Kubernetes YAML. We do the build. And then let's go down to the bottom layer exists and successful. So here's where we can see no system policy violations profound marking stack regimes security plugin, build step as successful, okay? So we're actually able to do policy enforcement that that image exists, that that label sorry, exists in the image. And again, we can look at the security report and there's no policy violations and no vulnerabilities. So that's pretty good for security, right? We can now enforce and mandate use of certain labels within our images. And let's flip back over to Skopeo, and let's go ahead and look at it. So we're looking at the prod version again. And there's it is in my email address. And that validated that that was valid for that policy. So that's kind of cool. Now, let's take it a step further. What if, let's go ahead and take a look at all of the image, all the labels for a second, let me remove the dash org, make it pretty. Okay? So we have all of our image labels. Again, author's build, commit number, look at the commit number. It was built today build number 12. We saw that right? Delete, build 12. So that's kind of cool dynamic labels. Name, healthz, right? But what we're looking for is we're going to look at the org.zdockerketers label. So let's go look at the label real quick. Okay, well that doesn't really help us because it's encoded but let's base64 dash D, let's decode it. And I need to put the dash r in there 'cause it doesn't like, there we go. So there's my Kubernetes YAML. So why can't we simply kubectl apply dash f? Let's just apply it from standard end. So now we've actually used that label. From the image that we've queried with skopeo, from a remote registry to deploy locally to our Kubernetes cluster. So let's go ahead and look everything's up and running, perfect. So what does that look like, right? So luckily, I'm using traefik for Ingress 'cause I love it. And I've got an object in my Kubernetes YAML called flask.doctor.life. That's my Ingress object for traefik. I can go to flask.docker.life. And I can hit refresh. Obviously, I'm not a very good web designer 'cause the background image in the text. We can go ahead and refresh it a couple times we've got Redis storing a hit counter. We can see that our server name is roundrobing. Okay? That's kind of cool. So let's kind of recap a little bit about my demo environment. So my demo environment, I'm using DigitalOcean, Ubuntu 19.10 Vms. I'm using K3s instead of full Kubernetes either full Rancher, full Open Shift or Docker Enterprise. I think K3s has some really interesting advantages on the development side and it's kind of intended for IoT but it works really well and it deploys super easy. I'm using traefik for Ingress. I love traefik. I may or may not be a traefik ambassador. I'm using Jenkins for CI. And I'm using StackRox for image scanning and policy enforcement. One of the things to think about though, especially in terms of labels is none of this demo stack is required. You can be in any cloud, you can be in CentOs, you can be in any Kubernetes. You can even be in swarm, if you wanted to, or Docker compose. Any Ingress, any CI system, Jenkins, circle, GitLab, it doesn't matter. And pretty much any scanning. One of the things that I think is kind of nice about at least StackRox is that we do a lot more than just image scanning, right? With the policy enforcement things like that. I guess that's kind of a shameless plug. But again, any of this stack is completely replaceable, with any comparative product in that category. So I'd like to, again, point you guys to the andyc.infodc20, that's take you right to the GitHub repo. You can reach out to me at any of the socials @clemenko or andy@stackrox.com. And thank you for attending. I hope you learned something fun about labels. And hopefully you guys can standardize labels in your organization and really kind of take your images and the image provenance to a new level. Thanks for watching. (upbeat music) >> Narrator: Live from Las Vegas It's theCUBE. Covering AWS re:Invent 2019. Brought to you by Amazon Web Services and Intel along with it's ecosystem partners. >> Okay, welcome back everyone theCUBE's live coverage of AWS re:Invent 2019. This is theCUBE's 7th year covering Amazon re:Invent. It's their 8th year of the conference. I want to just shout out to Intel for their sponsorship for these two amazing sets. Without their support we wouldn't be able to bring our mission of great content to you. I'm John Furrier. Stu Miniman. We're here with the chief of AWS, the chief executive officer Andy Jassy. Tech athlete in and of himself three hour Keynotes. Welcome to theCUBE again, great to see you. >> Great to be here, thanks for having me guys. >> Congratulations on a great show a lot of great buzz. >> Andy: Thank you. >> A lot of good stuff. Your Keynote was phenomenal. You get right into it, you giddy up right into it as you say, three hours, thirty announcements. You guys do a lot, but what I liked, the new addition, the last year and this year is the band; house band. They're pretty good. >> Andy: They're good right? >> They hit the queen notes, so that keeps it balanced. So we're going to work on getting a band for theCUBE. >> Awesome. >> So if I have to ask you, what's your walk up song, what would it be? >> There's so many choices, it depends on what kind of mood I'm in. But, uh, maybe Times Like These by the Foo Fighters. >> John: Alright. >> These are unusual times right now. >> Foo Fighters playing at the Amazon Intersect Show. >> Yes they are. >> Good plug Andy. >> Headlining. >> Very clever >> Always getting a good plug in there. >> My very favorite band. Well congratulations on the Intersect you got a lot going on. Intersect is a music festival, I'll get to that in a second But, I think the big news for me is two things, obviously we had a one-on-one exclusive interview and you laid out, essentially what looks like was going to be your Keynote, and it was. Transformation- >> Andy: Thank you for the practice. (Laughter) >> John: I'm glad to practice, use me anytime. >> Yeah. >> And I like to appreciate the comments on Jedi on the record, that was great. But I think the transformation story's a very real one, but the NFL news you guys just announced, to me, was so much fun and relevant. You had the Commissioner of NFL on stage with you talking about a strategic partnership. That is as top down, aggressive goal as you could get to have Rodger Goodell fly to a tech conference to sit with you and then bring his team talk about the deal. >> Well, ya know, we've been partners with the NFL for a while with the Next Gen Stats that they use on all their telecasts and one of the things I really like about Roger is that he's very curious and very interested in technology and the first couple times I spoke with him he asked me so many questions about ways the NFL might be able to use the Cloud and digital transformation to transform their various experiences and he's always said if you have a creative idea or something you think that could change the world for us, just call me he said or text me or email me and I'll call you back within 24 hours. And so, we've spent the better part of the last year talking about a lot of really interesting, strategic ways that they can evolve their experience both for fans, as well as their players and the Player Health and Safety Initiative, it's so important in sports and particularly important with the NFL given the nature of the sport and they've always had a focus on it, but what you can do with computer vision and machine learning algorithms and then building a digital athlete which is really like a digital twin of each athlete so you understand, what does it look like when they're healthy and compare that when it looks like they may not be healthy and be able to simulate all kinds of different combinations of player hits and angles and different plays so that you could try to predict injuries and predict the right equipment you need before there's a problem can be really transformational so we're super excited about it. >> Did you guys come up with the idea or was it a collaboration between them? >> It was really a collaboration. I mean they, look, they are very focused on players safety and health and it's a big deal for their- you know, they have two main constituents the players and fans and they care deeply about the players and it's a-it's a hard problem in a sport like Football, I mean, you watch it. >> Yeah, and I got to say it does point out the use cases of what you guys are promoting heavily at the show here of the SageMaker Studio, which was a big part of your Keynote, where they have all this data. >> Andy: Right. >> And they're data hoarders, they hoard data but the manual process of going through the data was a killer problem. This is consistent with a lot of the enterprises that are out there, they have more data than they even know. So this seems to be a big part of the strategy. How do you get the customers to actually wake up to the fact that they got all this data and how do you tie that together? >> I think in almost every company they know they have a lot of data. And there are always pockets of people who want to do something with it. But, when you're going to make these really big leaps forward; these transformations, the things like Volkswagen is doing where they're reinventing their factories and their manufacturing process or the NFL where they're going to radically transform how they do players uh, health and safety. It starts top down and if the senior leader isn't convicted about wanting to take that leap forward and trying something different and organizing the data differently and organizing the team differently and using machine learning and getting help from us and building algorithms and building some muscle inside the company it just doesn't happen because it's not in the normal machinery of what most companies do. And so it always, almost always, starts top down. Sometimes it can be the Commissioner or CEO sometimes it can be the CIO but it has to be senior level conviction or it doesn't get off the ground. >> And the business model impact has to be real. For NFL, they know concussions, hurting their youth pipe-lining, this is a huge issue for them. This is their business model. >> They lose even more players to lower extremity injuries. And so just the notion of trying to be able to predict injuries and, you know, the impact it can have on rules and the impact it can have on the equipment they use, it's a huge game changer when they look at the next 10 to 20 years. >> Alright, love geeking out on the NFL but Andy, you know- >> No more NFL talk? >> Off camera how about we talk? >> Nobody talks about the Giants being 2 and 10. >> Stu: We're both Patriots fans here. >> People bring up the undefeated season. >> So Andy- >> Everybody's a Patriot's fan now. (Laughter) >> It's fascinating to watch uh, you and your three hour uh, Keynote, uh Werner in his you know, architectural discussion, really showed how AWS is really extending its reach, you know, it's not just a place. For a few years people have been talking about you know, Cloud is an operational model its not a destination or a location but, I felt it really was laid out is you talked about Breadth and Depth and Werner really talked about you know, Architectural differentiation. People talk about Cloud, but there are very-there are a lot of differences between the vision for where things are going. Help us understand why, I mean, Amazon's vision is still a bit different from what other people talk about where this whole Cloud expansion, journey, put ever what tag or label you want on it but you know, the control plane and the technology that you're building and where you see that going. >> Well I think that, we've talked about this a couple times we have two macro types of customers. We have those that really want to get at the low level building blocks and stitch them together creatively however they see fit to create whatever's in their-in their heads. And then we have the second segment of customers that say look, I'm willing to give up some of that flexibility in exchange for getting 80% of the way there much faster. In an abstraction that's different from those low level building blocks. And both segments of builders we want to serve and serve well and so we've built very significant offerings in both areas. I think when you look at microservices um, you know, some of it has to do with the fact that we have this very strongly held belief born out of several years of Amazon where you know, the first 7 or 8 years of Amazon's consumer business we basically jumbled together all of the parts of our technology in moving really quickly and when we wanted to move quickly where you had to impact multiple internal development teams it was so long because it was this big ball, this big monolithic piece. And we got religion about that in trying to move faster in the consumer business and having to tease those pieces apart. And it really was a lot of impetus behind conceiving AWS where it was these low level, very flexible building blocks that6 don't try and make all the decisions for customers they get to make them themselves. And some of the microservices that you saw Werner talking about just, you know, for instance, what we-what we did with Nitro or even what we did with Firecracker those are very much about us relentlessly working to continue to uh, tease apart the different components. And even things that look like low level building blocks over time, you build more and more features and all of the sudden you realize they have a lot of things that are combined together that you wished weren't that slow you down and so, Nitro was a completely re imagining of our Hypervisor and Virtualization layer to allow us, both to let customers have better performance but also to let us move faster and have a better security story for our customers. >> I got to ask you the question around transformation because I think that all points, all the data points, you got all the references, Goldman Sachs on stage at the Keynote, Cerner, I mean healthcare just is an amazing example because I mean, that's demonstrating real value there there's no excuse. I talked to someone who wouldn't be named last night, in and around the area said, the CIA has a cost bar like this a cost-a budget like this but the demand for mission based apps is going up exponentially, so there's need for the Cloud. And so, you see more and more of that. What is your top down, aggressive goals to fill that solution base because you're also a very transformational thinker; what is your-what is your aggressive top down goals for your organization because you're serving a market with trillions of dollars of spend that's shifting, that's on the table. >> Yeah. >> A lot of competition now sees it too, they're going to go after it. But at the end of the day you have customers that have a demand for things, apps. >> Andy: Yeah. >> And not a lot of budget increase at the same time. This is a huge dynamic. >> Yeah. >> John: What's your goals? >> You know I think that at a high level our top down aggressive goals are that we want every single customer who uses our platform to have an outstanding customer experience. And we want that outstanding customer experience in part is that their operational performance and their security are outstanding, but also that it allows them to build, uh, build projects and initiatives that change their customer experience and allow them to be a sustainable successful business over a long period of time. And then, we also really want to be the technology infrastructure platform under all the applications that people build. And we're realistic, we know that you know, the market segments we address with infrastructure, software, hardware, and data center services globally are trillions of dollars in the long term and it won't only be us, but we have that goal of wanting to serve every application and that requires not just the security operational premise but also a lot of functionality and a lot of capability. We have by far the most amount of capability out there and yet I would tell you, we have 3 to 5 years of items on our roadmap that customers want us to add. And that's just what we know today. >> And Andy, underneath the covers you've been going through some transformation. When we talked a couple of years ago, about how serverless is impacting things I've heard that that's actually, in many ways, glue behind the two pizza teams to work between organizations. Talk about how the internal transformations are happening. How that impacts your discussions with customers that are going through that transformation. >> Well, I mean, there's a lot of- a lot of the technology we build comes from things that we're doing ourselves you know? And that we're learning ourselves. It's kind of how we started thinking about microservices, serverless too, we saw the need, you know, we would have we would build all these functions that when some kind of object came into an object store we would spin up, compute, all those tasks would take like, 3 or 4 hundred milliseconds then we'd spin it back down and yet, we'd have to keep a cluster up in multiple availability zones because we needed that fault tolerance and it was- we just said this is wasteful and, that's part of how we came up with Lambda and you know, when we were thinking about Lambda people understandably said, well if we build Lambda and we build this serverless adventure in computing a lot of people were keeping clusters of instances aren't going to use them anymore it's going to lead to less absolute revenue for us. But we, we have learned this lesson over the last 20 years at Amazon which is, if it's something that's good for customers you're much better off cannibalizing yourself and doing the right thing for customers and being part of shaping something. And I think if you look at the history of technology you always build things and people say well, that's going to cannibalize this and people are going to spend less money, what really ends up happening is they spend less money per unit of compute but it allows them to do so much more that they ultimately, long term, end up being more significant customers. >> I mean, you are like beating the drum all the time. Customers, what they say, we encompass the roadmap, I got that you guys have that playbook down, that's been really successful for you. >> Andy: Yeah. >> Two years ago you told me machine learning was really important to you because your customers told you. What's the next traunch of importance for customers? What's on top of mind now, as you, look at- >> Andy: Yeah. >> This re:Invent kind of coming to a close, Replay's tonight, you had conversations, you're a tech athlete, you're running around, doing speeches, talking to customers. What's that next hill from if it's machine learning today- >> There's so much I mean, (weird background noise) >> It's not a soup question (Laughter) And I think we're still in the very early days of machine learning it's not like most companies have mastered it yet even though they're using it much more then they did in the past. But, you know, I think machine learning for sure I think the Edge for sure, I think that um, we're optimistic about Quantum Computing even though I think it'll be a few years before it's really broadly useful. We're very um, enthusiastic about robotics. I think the amount of functions that are going to be done by these- >> Yeah. >> robotic applications are much more expansive than people realize. It doesn't mean humans won't have jobs, they're just going to work on things that are more value added. We're believers in augmented virtual reality, we're big believers in what's going to happen with Voice. And I'm also uh, I think sometimes people get bored you know, I think you're even bored with machine learning already >> Not yet. >> People get bored with the things you've heard about but, I think just what we've done with the Chips you know, in terms of giving people 40% better price performance in the latest generation of X86 processors. It's pretty unbelievable in the difference in what people are going to be able to do. Or just look at big data I mean, big data, we haven't gotten through big data where people have totally solved it. The amount of data that companies want to store, process, analyze, is exponentially larger than it was a few years ago and it will, I think, exponentially increase again in the next few years. You need different tools and services. >> Well I think we're not bored with machine learning we're excited to get started because we have all this data from the video and you guys got SageMaker. >> Andy: Yeah. >> We call it the stairway to machine learning heaven. >> Andy: Yeah. >> You start with the data, move up, knock- >> You guys are very sophisticated with what you do with technology and machine learning and there's so much I mean, we're just kind of, again, in such early innings. And I think that, it was so- before SageMaker, it was so hard for everyday developers and data scientists to build models but the combination of SageMaker and what's happened with thousands of companies standardizing on it the last two years, plus now SageMaker studio, giant leap forward. >> Well, we hope to use the data to transform our experience with our audience. And we're on Amazon Cloud so we really appreciate that. >> Andy: Yeah. >> And appreciate your support- >> Andy: Yeah, of course. >> John: With Amazon and get that machine learning going a little faster for us, that would be better. >> If you have requests I'm interested, yeah. >> So Andy, you talked about that you've got the customers that are builders and the customers that need simplification. Traditionally when you get into the, you know, the heart of the majority of adoption of something you really need to simplify that environment. But when I think about the successful enterprise of the future, they need to be builders. how'l I normally would've said enterprise want to pay for solutions because they don't have the skill set but, if they're going to succeed in this new economy they need to go through that transformation >> Andy: Yeah. >> That you talk to, so, I mean, are we in just a total new era when we look back will this be different than some of these previous waves? >> It's a really good question Stu, and I don't think there's a simple answer to it. I think that a lot of enterprises in some ways, I think wish that they could just skip the low level building blocks and only operate at that higher level abstraction. That's why people were so excited by things like, SageMaker, or CodeGuru, or Kendra, or Contact Lens, these are all services that allow them to just send us data and then run it on our models and get back the answers. But I think one of the big trends that we see with enterprises is that they are taking more and more of their development in house and they are wanting to operate more and more like startups. I think that they admire what companies like AirBnB and Pintrest and Slack and Robinhood and a whole bunch of those companies, Stripe, have done and so when, you know, I think you go through these phases and eras where there are waves of success at different companies and then others want to follow that success and replicate it. And so, we see more and more enterprises saying we need to take back a lot of that development in house. And as they do that, and as they add more developers those developers in most cases like to deal with the building blocks. And they have a lot of ideas on how they can creatively stich them together. >> Yeah, on that point, I want to just quickly ask you on Amazon versus other Clouds because you made a comment to me in our interview about how hard it is to provide a service to other people. And it's hard to have a service that you're using yourself and turn that around and the most quoted line of my story was, the compression algorithm- there's no compression algorithm for experience. Which to me, is the diseconomies of scale for taking shortcuts. >> Andy: Yeah. And so I think this is a really interesting point, just add some color commentary because I think this is a fundamental difference between AWS and others because you guys have a trajectory over the years of serving, at scale, customers wherever they are, whatever they want to do, now you got microservices. >> Yeah. >> John: It's even more complex. That's hard. >> Yeah. >> John: Talk about that. >> I think there are a few elements to that notion of there's no compression algorithm for experience and I think the first thing to know about AWS which is different is, we just come from a different heritage and a different background. We ran a business for a long time that was our sole business that was a consumer retail business that was very low margin. And so, we had to operate at very large scale given how many people were using us but also, we had to run infrastructure services deep in the stack, compute storage and database, and reliable scalable data centers at very low cost and margins. And so, when you look at our business it actually, today, I mean its, its a higher margin business in our retail business, its a lower margin business in software companies but at real scale, it's a high volume, relatively low margin business. And the way that you have to operate to be successful with those businesses and the things you have to think about and that DNA come from the type of operators we have to be in our consumer retail business. And there's nobody else in our space that does that. So, you know, the way that we think about costs, the way we think about innovation in the data center, um, and I also think the way that we operate services and how long we've been operating services as a company its a very different mindset than operating package software. Then you look at when uh, you think about some of the uh, issues in very large scale Cloud, you can't learn some of those lessons until you get to different elbows of the curve and scale. And so what I was telling you is, its really different to run your own platform for your own users where you get to tell them exactly how its going to be done. But that's not the way the real world works. I mean, we have millions of external customers who use us from every imaginable country and location whenever they want, without any warning, for lots of different use cases, and they have lots of design patterns and we don't get to tell them what to do. And so operating a Cloud like that, at a scale that's several times larger than the next few providers combined is a very different endeavor and a very different operating rigor. >> Well you got to keep raising the bar you guys do a great job, really impressed again. Another tsunami of announcements. In fact, you had to spill the beans earlier with Quantum the day before the event. Tight schedule. I got to ask you about the musical festival because, I think this is a very cool innovation. It's the inaugural Intersect conference. >> Yes. >> John: Which is not part of Replay, >> Yes. >> John: Which is the concert tonight. Its a whole new thing, big music act, you're a big music buff, your daughter's an artist. Why did you do this? What's the purpose? What's your goal? >> Yeah, it's an experiment. I think that what's happened is that re:Invent has gotten so big, we have 65 thousand people here, that to do the party, which we do every year, its like a 35-40 thousand person concert now. Which means you have to have a location that has multiple stages and, you know, we thought about it last year and when we were watching it and we said, we're kind of throwing, like, a 4 hour music festival right now. There's multiple stages, and its quite expensive to set up that set for a party and we said well, maybe we don't have to spend all that money for 4 hours and then rip it apart because actually the rent to keep those locations for another two days is much smaller than the cost of actually building multiple stages and so we thought we would try it this year. We're very passionate about music as a business and I think we-I think our customers feel like we've thrown a pretty good music party the last few years and we thought we would try it at a larger scale as an experiment. And if you look at the economics- >> At the headliners real quick. >> The Foo Fighters are headlining on Saturday night, Anderson Paak and the Free Nationals, Brandi Carlile, Shawn Mullins, um, Willy Porter, its a good set. Friday night its Beck and Kacey Musgraves so it's a really great set of um, about thirty artists and we're hopeful that if we can build a great experience that people will want to attend that we can do it at scale and it might be something that both pays for itself and maybe, helps pay for re:Invent too overtime and you know, I think that we're also thinking about it as not just a music concert and festival the reason we named it Intersect is that we want an intersection of music genres and people and ethnicities and age groups and art and technology all there together and this will be the first year we try it, its an experiment and we're really excited about it. >> Well I'm gone, congratulations on all your success and I want to thank you we've been 7 years here at re:Invent we've been documenting the history. You got two sets now, one set upstairs. So appreciate you. >> theCUBE is part of re:Invent, you know, you guys really are apart of the event and we really appreciate your coming here and I know people appreciate the content you create as well. >> And we just launched CUBE365 on Amazon Marketplace built on AWS so thanks for letting us- >> Very cool >> John: Build on the platform. appreciate it. >> Thanks for having me guys, I appreciate it. >> Andy Jassy the CEO of AWS here inside theCUBE, it's our 7th year covering and documenting the thunderous innovation that Amazon's doing they're really doing amazing work building out the new technologies here in the Cloud computing world. I'm John Furrier, Stu Miniman, be right back with more after this short break. (Outro music)

>> Announcer: From Miami Beach, Florida, it's The Cube, covering Acronis Global Cyber Summit 2019. Brought to you by Acronis. >> Welcome back everyone. We are here with The Cube coverage for two days. We're wrapping up, getting down on day one in the books for the Acronis Global Cyber Summit 2019. I'm John Furrier, your host of The Cube. We are in Miami Beach, the Fontainebleau Hotel. I'm personally excited for this next guest because I'm a huge Red Sox fan, even though I got moved out to California. Giants is in a different area. National League is different than American League, still my heart with the Red Sox. And we're here with an industry veteran, seasoned professional in IT and data, Brian Shield. Boston Red Sox Vice President of Technology and IT. Welcome to The Cube, thanks for joining us. >> Thank you. It's great to be here. >> John: So congratulations on the rings. Since I moved out of town, Red sox win their World Series, break the curse of the Bambino. >> Hey we appreciate that. Thank you. >> My family doesn't want me back. You got to show >> Yeah, maybe I'll put this one up for the, maybe someone can zoom in on this. Which camera is the good one? This one here? So, there ya go. So, World Series champs for at least for another week. (laughter) >> Bummer about this year. Pitching just couldn't get it done. But, good team. >> Happens. >> Again, things move on, but you know. New regime, new GM going to come on board. >> Yup. >> So, but in general, Red Sox, storied franchise. Love it there. Fenway Park, the cathedral of baseball parks. >> Brian: Defnitely. >> And you're seeing that just play out now, standard. So just a great place to go. We have tickets there. So, I got to ask you. Technology, sports, really is modernized faster than I think any category. And certainly cyber security forced to modernize because of the threats. But sports, you got a business to run, not just IT and making the planes run on time. >> Sure. >> Scouts, money, whatever. >> Fans. >> You got fan experience. >> Stadium opportunities. >> Club management, scouts are out there. So you got business, team, fans. And data's a big part of it. That's part of your career. Tell us what the cutting edge innovation is at the Red Sox these days. >> I think baseball in general, as you indicated, it's a very evolving kind of environment. I mean historically I think people really sort of relish the nostalgia of sports and Fenway Park being as historic as it is, was probably the pinnacle of that, in some respects. But Red Sox have always been leaders and baseball analytics, you know. And everyone's pretty familiar with "Moneyball" and Brad Pitt. >> John: Is that a true story, he turned down the GM job? >> I'm told it is. (laughter) I don't know if I fully vetted that question. But over the last six, seven years, you know we've really turned our attention to sort of leveraging sort of technology across the businesses, right? Not just baseball and analytics and how we do scouting, which continues to evolve at a very rapid pace. But also as you pointed out, running a better business, understanding our fans, understanding fan behavior, understanding stadiums. There's a lot of challenges around running an effective stadium. First and foremost to all of us is really ensuring it's a great fan experience. Whether it's artificial intelligence, or IoT technologies or 5G or the latest Wifi, all those things are coming up at Fenway Park. You and I talked earlier about we're about to break ground for a new theater, so a live theater on the outside, beyond the bleachers type of thing. So that'll be a 5,400-seat arena, 200 live performances a year, and with e-sports, you know, complementing it. It just gives you an example of just how fast baseball is sort of transitioning. >> And the theater, is that going to be blown out from where that parking garage is, structure and going towards >> So the corner of Landsdown and Ipswich, if you think of that sort of corner back there, for those that are familiar with the Fenway area. So it's going to be a very big change and you'll see the difference too from within the ballpark. I think we'll lose a couple of rows of the bleachers. That'll be replaced with another gathering area for fans and things like that, on the back end of that theater. So build a great experience and I think it really speaks to sort of our ability to think of Fenway as more of a destination, as a venue, as a complementary experience. We want people to come to the area to enjoy sports and to enjoy entertainment and things. >> You know Brian, the consumerization of IT has been kicked around. Last decade, that was a big buzzword. Now the blending of a physical event and digital has certainly consumed the world. >> Absolutely. >> And we're starting to see that dynamic. You speak to a theater. That's a physical space. But digital is also a big part of kind of that complementary. It's not mutually exclusive for each other. They're integrated business models. >> Absolutely. >> So therefore, the technology has to be seamless. The data has to be available. >> Yup. >> And it's got to be secure. >> Well the data's got to be ubiquitous, right? I mean you don't want to, if we're going to have fans attending theater and then you're going to go to Fenway Park or they leave a game and then go to some other event or they attend a tour of Fenway Park, and beyond maybe the traditional what people might think about, is certainly when you think about baseball and Fenway Park. You know we have ten to twelve concerts a year. We'll host Spartan games, you know. This Christmas, I'm sorry, Christmas 2020 we now have sort of the Fenway Bowl. So we'll be hosting the AAC ACC championship games there with ESPN. >> John: Hockey games? >> Hockey games. Obviously we have Liverpool soccer being held there so it's much more of a destination, a venue for us. How we leverage all the wonderful things about Fenway Park and how we modernize, how we get basically the best of what makes Fenway Park as great as it is, yet as modern as we can make it, where appropriate to create a great fan experience. >> It's a tough balance between balancing the brand and having things on brand as well. >> Sure. >> Does that come into your job a lot around IT? Saying being on brand, not kind of tearing down the old. >> Yeah absolutely. I think our CEOs and leadership team, I mean it's not success for us if you pan to the audience and everyone is looking at their phone, right? That's not what we aspire to. We aspire to leverage technology to simplify people's experience of how do you get to the ballpark, how do I park, how do I get if I want to buy concessions or merchandise, how do I do it easily and simply? How do we supplement that experience with maybe additional data that you may not have had before. Things like that, so we're doing a lot of different testing right now whether it's 4D technologies or how we can understand, watch a play from different dimensions or AI and be able to perhaps see sort of the skyline of Boston since 1912, when Fenway Park launched... And so we sort of see all these technologies as supplemental materials, really kind of making it a holistic experience for fans. >> In Las Vegas, they have a section of Las Vegas where they have all their test beds. 5G, they call it 5G, it's really, you know, evolution, fake 5G but it's a sandbox. One of the challenges that you guys have in Boston, I know from a constraint standpoint physically, you don't have a lot of space. How do you sandbox new technologies and what are some of the things that are cool that people might not know about that are being sandboxed? So, one, how do you do it? >> Yeah. >> Effectively. And then what are some of the cool things that you guys are looking at or things they might not know about that would be interesting. >> Sure. Yeah so Fenway Park, we struggle as you know, a little bit with our footprint. You know, honestly, I walk into some of these large stadiums and I get instant jealousy, relative to just the amount of space that people have to work with and things. But we have a great relationship with our partners so we really partner, I think, particularly well with key partners like Verizon and others. So we now have 5G partially implemented at Fenway Park. We expect to have it sort of fully live come opening day next year. So we're really excited about that. We hope to have a new version of Wifi, the latest version of Wifi available, for the second half of the year. After the All-Star Break, probably after the season's over. But before our bowl game hopefully. We're looking at some really interesting ways that we can tease that out. That bowl game, we're really trying to use that as an opportunity, the Fenway Bowl, as an opportunity to make it kind of a high-tech bowl. So we're looking at ways of maybe doing everything from hack-a-thons to a pre-egaming sort of event to some interesting fan experiential opportunities and things like that. >> Got a lot of nerds at MIT, Northeastern, BU, Bentley, Babson, all the schools in the area. >> Yeah, so we'll be reaching out to colleges and we'll be reaching out to our, the ACC and AACs as well, and see what we can do to kind of create sort of a really fun experience and capitalize on the evolving role of e-sports and the role that technology can play in the future. >> I want to get to the e-sports in a second but I want to just get the plug in for Acronis. We're here at their Global Cyber Summit. You flew down for it, giving some keynote speeches and talks around security. It's a security company, data protection, to cyber protection. It is a data problem, not a storage appliance problem. It's a data problem holistically. You get that. >> Sure. Sure. >> You've been in the business for a long time. What is the security kind of posture that you guys have? Obviously you want to protect the data, protect privacy. But you got to business. You have people that work with you, supply chain, complex but yet dynamic, always on environment. >> That's a great question. It's evolving as you indicated. Major League Baseball, first and foremost, does an outstanding job. So the last, probably last four plus years, Major League Baseball has had a cyber security program that all the clubs partake in. So all 30 clubs are active participants in the program. They basically help build out a suite of tools as well as the ability to kind of monitor, help participate in the monitoring, sort of a lot of our cyber security assets and logs And that's really elevated significantly our posture in terms of security. We supplement that quite a bit and a good example of that is like Acronis. Acronis, for us, represents the ability for us to be able to respond to certain potential threats like ransom-ware and other things. As well as frankly, what's wonderful about a tool like this is that it allows us to also solve other problems. Making our scouts more efficient. We've got these 125 scouts scattered around the globe. These guys are the lifeblood of our, you know, the success of our business. When they have a problem, if they're in Venezuela or the Dominican or someplace else, in southeast Asia, getting them up and running as quickly as we can, being able to consume their video assets and other things as they're scouting prospects. We use Acronis for those solutions. It's great to kind of have a partner who can both double down as a cyber partner as well as someone who helps drive a more efficient business. >> People bring their phone into the stadiums too so those are end points now connecting to your network. >> Definitely. And as you pointed out before, we've got great partnerships. We've got a great concession relationship with Aramark and they operate, in the future they'll be operating off our infrastructure. So we're in the point of rolling out all new point-of-sale terminals this off-season. We're excited about that 'cause we think for the first time it really allows us to build a very comprehensive, very secure environment for both ourselves and for all the touchpoints to fans. >> You have a very stellar career. I noticed you were at Scudder Investments back in the '80s, very cutting-edge firm. FTD that set the whole standard for connecting retailers. Again, huge scale play. Can see the data kind of coming out, they way you've been a CIO, CTO. The EVP CIO at The Weather Channel and the weather.com again, first mover, kind of pioneer. And then now the Red Sox, pioneering. So I got to ask you the modernization question. Red Sox certainly have been cutting-edge, certainly under the last few owners, and the previous Henry is a good one, doing more and more, Has the business model of baseball evolved, 'cause you guys a franchise. >> Sure. >> You operate under the franchisor, Major League Baseball, and you have jurisdictions. So has digital blurred the lines between what Advanced Media unit can do. You got communities developing outside. I watch the games in California. I'm not in there but I'm present digitally. >> Sure. Sure. >> So how has the business model flexed with the innovation of baseball? >> That's a great question. So I mean, first off, the relationship between clubs like ours and MLB continue to evolve. We have a new commissioner, relatively new commissioner, and I think the whole one-baseball model that he's been promoting I think has been great. The boundaries sometimes between digital assets and how we innovate and things like that continues to evolve. Major League Baseball and technology groups and product groups that support Major League Baseball have been a fantastic partner of ours. If you look at some of the innovations with Statcast and some of the other types of things that fans are now becoming more familiar with. And when they see how fast a runner goes or how far a home run goes and all those sort of things, these kinds of capabilities are on the surface, but even like mobile applications, to make it easy for fans to come into ballparks and things like that really. What we see is really are platforms for the future touchpoints to all of our customers. But you're right, it gets complicated. Streaming videos and people hadn't thought of before. >> Latin America, huge audience for the Red Sox. Got great players down there. That's outside the jurisdiction, I think, of the franchise agreement, isn't it? (laughs) >> Well, it's complicated. As this past summer, we played two games in England, right? So we enjoy two games in London, sadly we lost to the Yankees in both of those, but amazing experience and Major League Baseball really hats off to those guys, what they did to kind of pull that together. >> You mentioned Statcast. Every year when I meet with Andy Jassy at AWS, he's a sports fan. We love to talk sports. That's a huge, kind of shows the power of data and cloud computing. >> No doubt. >> How do you guys interface with Statcast? Is that an Amazon thing? Do they come to you? Are they leveraging dimensions, camera angles? How does that all work? Are you guys involved in that or? >> Brian: Oh yeah, yeah. >> Is that separate? >> So Statcast is just one of many data feeds as you can imagine. One of the things that Major League Baseball does is all that type of data is readily available to every club. So every club has access to the data. The real competitive differentiator, if you will, is how you use it internally. Like how your analysts can consume that data. We have a baseball system we call Beacon. We retired Carmine, if you're familiar with the old days of Carmine. So we retired Carmine a few years ago with Beacon. And Beacon for us represents sort of our opportunity to effectively collapse all this information into a decision-making environment that allows us to hopefully to kind of make the best decisions to win the most games. >> I love that you're answering all these questions. I really appreciate it. The one I really want to get into is obviously the fan experience. We talked about that. No talent on the field means no World Series so you got to always be constantly replenishing the talent pool, farm system, recruiting, scouting, all these things go on. They're instrumental. Data's a key driver. What new innovations that the casual fan or IT person might be interested in what's going on around scouting and understanding the asset of a human being? >> Right. Sure. I mean some of this gets highly confidential and things, but I think at a macro level, as you start to see both in the minor leagues and in some portions of the major leagues, wearable technologies. I think beyond just sort of player performance information that you would see traditionally with you might associate it with like Billy Beane, and things like that with "Moneyball" which is evolved obviously considerably since those days. I mean understanding sort of player wellness, understanding sort of how to get the most out of a player and understanding sort of, be able to kind of predict potential injuries and accelerate recoveries and being able to use all of this technology where appropriate to really kind of help sort of maximize the value of player performance. I mean, David Ortiz, you know, I don't know where we would have been in 2018 without, you know, David. >> John: Yeah. >> But like, you know >> Longevity of a player. >> Absolutely. >> To when they're in the zone. You wear a ring now to tell you if you're sleeping well. Will managers have a visual, in-the-zone, don't pull 'em out, he can go an extra inning? >> Well, I mean they have a lot of data. We currently don't provide all that data to the clubhouse. I mean, you know, and so If you're in the dugout, that information isn't always readily available type of thing. But players know all this information. We continue to evolve it. At the end of the day though, it's finding the balancing act between data and the aptitudes of our coaching staff and our managers to really make the wise decisions. >> Brian, final question for you. What's the coolest thing you're working on right now? Besides the fan having a great experience, 'cause that's you kind of touched on that. What's the coolest thing that you're excited about that you're working on from a tech perspective that you think is going to be game-changing or interesting? >> I think our cloud strategy coming up in the future. It's still a little bit early stage, but our hope would be to kind of have clarity about that in the next couple months. I think is going to be a game-changer for us. I think having, you know, we enjoy a great relationship with Dell EMC and yet we also do work in the cloud and so being able to leverage the best of both of those to be able to kind of create sort of a compelling experience for both fans, for both player, baseball operations as well as sort of running an efficient business, I think is really what we're all about. >> I mean you guys are the poster child for hybrid cloud because you got core, data center, IoT, and >> No doubt. So it's exciting times. And we're very fortunate that with our relationship organizations like Dell and EMC, we have leading-edge technologies. So we're excited about where that can go and kind of what that can mean. It'll be a big step. >> Okay two personal questions from me as a fan. One is there really a money-counting room like in the movie "The Town"? Where they count a big stack of dollar bills. >> Well, I'm sure there is. I personally haven't visited it. (laughs) I know it's not in the room that they would tell you it is on the movie. (laughter) >> And finally, can The Cube get press passes to cover the games, next to NESN? Talk tech. >> Yeah, we'll see what we can do. >> They can talk baseball. We can talk about bandwidth. Right now, it's the level five conductivity. We're looking good on the pipes. >> Yeah we'll give you a tech tour. And you guys can sort of help us articulate all that to the fans. >> Thank you so much. Brian Shield, Vice President of Technology of the Boston Red Sox. Here talking about security and also the complications and challenges but the mega-opportunities around what digital and fan experiences are with the physical product like baseball, encapsulates kind of the digital revolution that's happening. So keep covering it. Here in Miami, I'm John Furrier. We'll be right back after this short break. (techno music)

>>live from Boston, Massachusetts. It's the Q covering I. F s World Conference 2019. Brought to you by I. F. S. >>Welcome back to Boston, everybody. You're watching The Cube. The leader in live tech coverage is Day one coverage of the I. F s World Conference. Darren Russo's here is the CEO of F S Darren. Thanks for coming back in the Cube. Great TV again. So last year was your first year. He was kind of laid out your vision at the World Conference. How's progress? >>Yeah, Look, it's going incredibly well. We were really focused on how we go from being a pretty fragment of global business to being, you know, an integrated business where we were able to operate. You know, its scale globally in a very homogenous way, where the customer experience was the same, irrespective where they engaged with us. And, you know, we've made a tremendous amount of progress with it, So you know, the business is growing really strongly. Net revenues up 22% year on year. I lost its revenues up 40% year on year are clouds up in the triple digits, so you know it's tough to be critical of how it's going so far. >>That's great, Great. You're growing faster than your peers. I think the stat was you gave us three Ex factory except in the industry would be awesome. Is that means that your primary benchmark do you want? You want to gain share? You want to go faster than the big whales, I presume. I >>think two things One is customer satisfaction, we believe, is the key indicator of long term success. S O. You know, we're the number one ranked European efforts. Salmon gotten appearance sites. That's that is and always will be my number. One metric. Can we be way the number one from a customer satisfaction perspective? And then I believe the revenue stats will follow and you know that's where we are. So certainly, if you look at our our core peers, the big G R P vendors, all of them are flat on. Dhe were growing 20 ships since >>one of the things you mentioned in your Cube interview last year was one of the things that you wanted to focus on was I'll call regional alignment. Paul and I used to work for I D. G. I worked for I. D. C. You were editor in chief of Computer World. We work for a company, had more offices overseas and IBM, and it was really hard to herd the cats. And that was one of the things that you cited. Have you been able to get people generally poor or at the same time? And how has that affected your business? Yeah. Look, I >>think the big challenge before I arrived was that there wasn't really a strategy of global strategy for the business. My face had a way of working and there was a strong culture, but there wasn't really a strategy. And obviously it's difficult to be critical of people when they not following the strategy when there isn't one s o. You know, Step one was really making sure that we had a strategy on DDE that was really about being focused on the five industries that we focused on, focused on three solutions on dhe focused on the six segments of customer, which is half a 1,000,000,000 to 5 billion. So now, globally, you know, irrespective the office that you go to, um anywhere in the world, they're focused on those five industries they focused on those three solutions and they're focused on their customer segments. So it helps me. P. M >>I said during our preview video video this morning that I've been around this industry as long as I f s has, until last year had never even heard of it. Is that just me being clueless? There's something there >>that we were just saying before we started that we're the definitely the biggest software business you've never heard of. Um, and and and that's common, I think, you know, we were There are a couple of factors. One is that the business was very European centric. Andi didn't really engaged in a tremendous amount of marketing and media prison. So, you know, those are elements that, you know, I think we're doing a better job off now, But we have a long way to go. The challenge that we have is that where we compete, we win when we get in and were able to tell our story, and we're able to show the value we win. We just don't get into as many deals as we need to. And that's the challenge we have. >>Yeah, there was a lot of talk this morning about the importance of those five pillars of those five industries. If you're going to become the next S A P, you're gonna have to branch out beyond that. What is your thinking about diversify >>becoming the next? They say he is definitely not my ambition, You know, I think way remain focused on customer satisfaction. And, you know, I think that there's a there's a difference. Whatever it is leading them, it's not customer satisfaction. You worked >>there for four years. >>I worked there for four years. I know. I think the big thing for me is is that we've got to stay focused on their customer voice. They focused on what delivers value for our customers beyond just the rhetoric and hyperbole. You know, I think when you when you listen to a lot of the complexity that our customers are facing today, any customers are facing. Companies are facing increasingly disruptive times, and the tech industry is making life more difficult for them. The more best of breed solutions get both. The more fragments that potential the landscape is, the more complex it becomes for customers if they have to try and figure out. How do we integrate these things and derive value from this highly fragmented landscape? So you know, we're trying to solve that problem. How do we make it easier for customers to challenge in their industry? And that's where this whole for the challenges has check comes from. How do we help him to be disruptive in their industry? Have competitive advantage? >>That seems to be a sort of a fundamentally different thing about your approach, though. Is this focus on those vertical industry's most e r P companies did not do that. Is that something that is core to your values? >>Look, I >>think what we recognize is that as you move to the cloud, you have to drive to standard. That's just the reality of going to the cloud on what's happening for the horizontal E. R B vendors. So the locks of ASAP and Oracle is that they have one e r P solution that fits every industry. So if it's good for health insurance and it's good for a bank, then it's difficult to really get your head around the fact that it could be good for a defense manufacturer, but the functional requirements is simply vastly different on that means that you have to customize them. If you have to customize that, they can go to the cloud. So what we believe is that you have to have this vertical specialization, the five industries that we serve us all. A lot of commonality in the process is that they use. And that's why that vertical strategy is so key to our success. So you won't see us going into financial service is, or health care or retail worth that core application. We may in time in many years to come branch out. That will be a different solutions. >>So your tailor, that app for that module for that industry, Yes, just go deep, deep functionality. You're known for that, but at the same time you're also messaging. You want your customers to be able to tailor this for their environment. So square that circle for me. >>So I think when we talk about a choice and and I think tailoring is the wrong word, we talk about choice. We're talking about choice of deployments on Prem or in the cloud choice of customer choice of partner, rather who they're going to deploy with on Dhe, then The solution is really an industry solution that comes with that functional death. And we don't we don't advocate their customers customized that all. We really don't want them to customize it. What we explain to them in some detail is that the real value comes from adopting the solution for two standard and staying on a vanilla application. Because that vanilla application, you're going to be able to withstand future upgrades, the total cost of ownership gets lower. The processes that are embedded in that application or best of breed at the box. That's what they're intended to do, and that works when you have a vertical application. When you have a horizontal application and you're trying to have a do things that it shouldn't naturally be doing, that becomes company. >>Well, correct me if I'm wrong, but wasn't that essentially the message ASAP had when it went through? It's hyper growth in the late nineties. I mean, there was a Y two k thing there, too, but ah, lot of the message was around. Do it our way and and then you don't have to get stuck in a rut, >>So I think that when it came out with that generation of application. That certainly was what they had hoped would happen. But what happened in practice is that the system integrators came in and the whole business process reengineering explosion happened on Dhe. That's not how it how it manifested itself. So what you see is, you see, he's very large, monolithic ASAP applications that were customized over in some cases decades, not not. You know, if a customer is deploying for two standard, then they should be able to deploy in a period mission. In weeks, we spoke about our deployment with Racing Point. If one team and going live in 12 weeks, you know, we're a 700 million global business. We deployed a knife s in 24 weeks. You know, if a customer's deploying for two standard, it's measured in weeks. As soon as they start to talk about two years or three years or five years or seven years there, customizing the solution significantly. Yeah, I >>mean, it became just sort of a perpetual upgrade, maintenance and up for the time it had a business impact. But boy, you think a cloud today agility, you know, getting rid of waterfall approaches, Missus. Antithetical to today's Look >>what I don't point fingers here. I think that this just maturity come with experience. The line of business applications you'll see our EMS and your HR solutions have taught people that you can, if you think about this is look at sea. Are Emma's an example? You had Siebel before people would implement stable. They would customize Siebel that would take long implementations. They were highly bespoke applications and then sells. Force came along and just destroyed them, and they destroyed them. Because what people learned very quickly was that there was a really easy to consume, really easy to use application that functionally might be inferior. But the compromises that you'd make from a functionality perspective will weigh, outweighed by their time to value in ease of use. And and the learnings from CR mnh are in procurement. Those line of business applications have now being backed into in the e. R. P >>world. So in terms of capital allocation, you're owned by private equity, which is actually a public company. I'm interested in how you're allocating capital R and D, where you're where your emphasis is. You don't have to you have to do stock buy back, but, you know, describe the P relationship. >>So look, one of my learning's to see survive this is that not all private equity firms or equal they have different strategies are very fortunate to be with Ekiti, who are a growth investor. They're known as a growth investor on dhe, and they buy companies that are strong growth tech firms on dhe. They've been hugely supportive of us investing because they understand that the investment in technology is important. So, you know, just looking at some detail today we invest twice as much in R and D as we did three years ago, just to give you, you know, one data point. So there's a big focus on technology, and the thing is, is that we we have to invest in technology to drive those attributes that are discussed earlier. How do we How do we enable customers to adopt a solution? It's a standard so they can go alive quicker. How do we enable customers to be able to sit down in the front of the application like we do with the mobile phone and intuitively know how to use it? How do we reduce the total cost of ownership through automation. Those are capabilities that you know that they don't come for free. We have to invest in them. So big investments in technology. And >>I think the private equity guys, at least the modern ones, have realized Why should the V. C's have all the fun they realize? Hey, we can actually put some money in tow and the transforming we can have a bigger exit and actually make much better returns than sucking the company drive. Yeah, well, look, I think the other >>thing is is that you know, in public companies, you have the downside off. You know this this courtly metric Ondas quarterly cadence. Andi, you see very compromising decisions being made because you know, people can't afford to miss 1/4. There's no long term planning that's done on dhe. That's fundamentally not the case and the private equity world, you know, not unusual now for four p firms to hold companies for 5678 years on, and that allows you to take a very long term strategic view. If if if a shift from perpetual to subscription is the right thing to happen, they can do that without worrying that, you know, because of the definite earnings are revenue that you're going to get caned by the market next quarter. Andi. I think that that needs to, I think, better decision making for the long term. >>A lot of companies are struggling. >>If you have the right P for because you get bought by the firm of events, you want to go public. But the the you said something this morning that 50% of your customers each year or net knew, How are you pulling that off >>That 50% of our license revenue? Eso way we went about 300 odd new customers a year. Obviously, that's growing, as I said, you know, 40%. But you know, it's ah, I think, having done this for 25 years, there are companies that are or good at extracting revenue from their installed based. One of the analysts here has as a hashtag wallet Fracking is what do you think It's such a great So you know, they're good at Wallick fracking and and I think the customers that that our customers off those vendors know exactly who they are and you know I think that for us to that the fact that we're able to go out and win 50% of our license revenue from net new name customers, I think is a really strong indicator of the health of the business. It's much harder to do than just extracting revenue out of the install base. You know, we don't have a compliance practice. We've never charged a customer for you in direct access. You know, these are principles that we stand by, and it's easier to say that your customer centric on get 80% of your revenue, have your installed base because you're doing compliance rounds. But, you know, we put our money where our mouth is, and that's not that's not how we do it. >>Are these net new customers? Are they? Are they migrating from QuickBooks or they migrating from a Competitors >>know, because of the segment that we're in this half a 1,000,000,000 to 5 billion? I would say the majority of them are what I would call first generation the Rp solution. So you know you're talking about you know, the original generation of Microsoft's acquisitions, the divisions and the eggs actors and the Solomon's and so on on. And then, you know, it's a P R two and our three customers you're talking about customer sitting on, you know, the solutions that in for hoovered up the matrix B picks type customers, ace 400 customers. So they're you know, they're first generation your P solutions that simply don't have the flexibility to deal with the complexity and demands of modern business world. >>From 2009 about 2017 I f. S was pretty inquisitive and then just actually, I was gonna ask you >>when I started, you stopped >>it, right? But then, you know, today you announced an extra small acquisition, But how should we think about M and a >>look? The first year for me was really about trying to build a functional business. You know, we spoke about how fragmented this really hit to Jenna's business. Andi just occurred to me. You know, if we go out and we start to buy things, how do we integrate them into a business that's completely fragments? And you know, it had no identity or culture. So, you know, the last year has been focused on how do we build their common understanding of what it is that we're doing. We now have a very clear strategy. Five industries, three solutions, one segment. And you know, when you when you have that clarity of vision that it's really easy to guard and do him and I because you know what fits and what doesn't fit, you can understand exactly how you're gonna build value for customers on dhe. That's why the S t a deal is so good for us. Because we're now the undisputed leader in field service management, you know, 8000 our customers globally, which is way more than anybody else. Scott, Andi, you know, you should absolutely expect more from us. But it will be in the five industries, three technology segments and one customers. Isaac. >>Well, in the A p I enablement should obviously facility. >>Absolutely. I mean, I was just with a partner of ours now, and they have this amazing augmented reality solution. You know, it will be a combination of off going out there to build market, share a cz well, as finding you know, really innovative solutions that can help us advance the technology that we provide customers. >>You have a new slogan this year for the challengers, which seems to be aimed at companies that that imagine themselves as challenging the Giants, which is great. But if you're not a company that season sees themselves that way. Are the studies level home with I have s Look, >>I I think I was with a group of CEOs from one of the big analyst rooms, and they had the portfolio companies and their private equity firm and analysts that CEOs of the companies are having a conversation with him about digital transformation. And I I made a rather provocative statement which, you know, got unanimous agreement, which is that all of the CEOs there with either in an industry that was being disrupted and we're trying to figure out how they respond to that disruption or they would soon not every job and they all acknowledge that they absolutely fit into that category. In other words, all of them were being disrupted. All of them were facing a challenge. It was kind of like, you know, if it is happening to all of us at a more rapid pace than we have ever had before. So my view is, is that you know if if you're in the room and you're going, you know, if it's might not be for us because we're not a challenger. Yeah, The lights may not be on >>for Long s o double click on that. What role does I s play in terms of digital transformation? >>If I could just hold on there because the thing is, there are leaders in Mama, there challenges. And there are leaders. The leaders typically are gonna go with seif solution. They're gonna go with one of the legacy our peace. So I'm not suggesting that everybody necessarily is a challenger. There are leaders, you know, Nokia was a leader until they weren't because they were complacent. Andi, I think they you know, they didn't run on I office. So, you know, I think there are two segments. There are leaders and there are challenges, and we're there for the ones that are ready to disrupt. Sorry. >>Please clarify that. No. Good. So So get back to it. Sort of digital transformation and disruption. What do you see? Is the role of AARP generally, but specifically I f s. >>Look, I think we digital information. A lot of discussion about it on the stage this morning. I've just touched on it now. I think that it takes very different forms. What most industries are finding is that they're facing a lot of non traditional competition and they're having to innovate around their business models. They can't going to market in the same way as they did before. They're having to innovate because of this non traditional competition. Andi. Understanding your your customer's understanding, your your staff, understanding your supply chain understanding your financials are all critical parts of being able to respond to whatever their changes, and that's where the RP solution comes into it. I think there's an interesting challenge now, which is that as those applications have become more fragmented and you've got more based debris cloud applications Ah, lot of the value often E. R P was that you had this integrated set of applications that you had this one source of the truth andan. Fortunately for many customers today, they don't have that because they've got import all of these best of breed applications and they don't have one source of the truth that multiple invoices made it multiple versions of their customer in the databases. Andi we still stand for a single integrated the r p. So, you know, I think understanding those elements of your businesses key. I was with a customer of ours in Nebraska a short while ago, and they were talking about our existing office customer. They were talking about the steel import duties that were imposed through the trade war with China. And they were saying, Look, that they had been able to respond to that in a way that they had good visibility of the supply chain, who was improved, imposing the tariffs, how they were going to impact them when they were going to impact them. And because they had this integrated Siara AARP. They were able to pass those pricing changes onto their customers, and they survived this. What could have been a cataclysmic event for their business had they not had an integrated your pee? They not being able to have this visibility into the supply chain and the customer base. They may well have gone out of business just because of that one change >>to meet all day and all comes back to the data, putting their putting data at the core of their business. That integrated data pipeline is essentially what they get out of that last question. So thinking about the next 18 to 24 months, what are the milestones that observers should look for? One of the barometers that we should be watching. >>So look, in the next two years, it's it's really about us building incremental scale. We have, ah, four year plan, which I built when I came in. We're halfway through that plan. We've hit all of the metrics and exceeded most the metrics that we had on their plan. It's really continue to focus on the strategy. As I said, we focus on those five industries, continue to build market share, continue to focus on those three solution types and build market share and market dominance on those three solutions. Andi in that segment that I defined before, so no change from a strategy perspective. I think there's really value in the consistency that we bring on on their talk track and, you know, along the way we passed the $1,000,000,000 mark, which we will do, I think, in 2021 organically if we accelerate, some of the money will pass the 1,000,000,000 before, but you know business. The margins continue to expand. We focus on customer satisfaction and, you know, it's a It's a pretty straight, you know, traditional prey book that we have to execute on now. >>Well, congratulations. It's a great playbook, and you're growing very nicely. So love that. Look, we really an honor to the last couple of years. Learn a little bit about the company in your industry. So appreciate meeting you guys. Thank you. All right. And thank you for watching over right back with our next guest. Ready for this short break day Volonte with Paul Gill in. You're watching the Cube from I f s World Conference from Boston 2019 right back.

>>from Boston, Massachusetts. It's the Q covering I. F s World Conference 2019. Brought to you by I F s. Hi, buddy. Welcome to Boston. You're watching the cubes coverage of I s s World in the Heinz Auditorium in Boston. I'm Day Volonte with my co host, Paul Gill and Paul. This is the the largest enterprise resource planning software company that our audience probably has never heard of. This is our second year covering I f s World. Last year was in Atlanta. They moved to Boston. I f s is a Swedish based company. They do about $600 million in annual revenue, about 3700 employees. And interestingly, they have a development center in Sri Lanka, of all places. Which is kind of was war torn for the last 15 years or so, but nonetheless, evidently, a lot of talent and beautiful views, but so welcome. >>Thank you, Dave. I have to admit, before our coverage last year, I had never even heard of this company been around this industry for more than 30 years. Never heard of this company. They've got 10,000 customers. They've got a full house next door in the keynote and very enthusiastic group. This is a focus company. It's a company that has a lot of ah ah, vision about where wants to go some impressive vision documents and really a company that I think it's coming out of the shadows in the U. S. And it will be a force to be reckoned with. >>So I should say they were founded in the in the mid 19 eighties, and then it kind of re architected their whole platform around Client server. You remember the component move? It was a sort of big trends in the in the nineties. In the mid nineties opened up offices in the United States. We're gonna talk to the head of North America later, and that's one of the big growth areas that growing at about three. They claim to be growing at three x the overall market rate, which is a good benchmark. They're really their focus is really three areas e r. P asset management software and field service management, and they talk about deep functionality. So, for instance, they compete with Oracle ASAP. Certainly Microsoft and in four company we've covered in four talks a lot about the last mile functionality. That's not terminology that I f s uses, but they do similar types of things. I'll give you some examples because, okay, what's last mile? Functionality? Things like, um, detailed invoicing integration, contract management. Very narrow search results on things like I just want to search for a refurbished parts so they have functionality to allow you to do that. Chain. A custom e custody chain of custody for handling dangerous toxic chemicals. Certain modules to handle FDA compliance. A real kind of nitty gritty stuff to help companies avoid custom modifications in certain industries. Energy, construction, aerospace and defense is a big area for that. For them, a CZ well as manufacturing, >>there's a segment of the e r P market that often is under uh is under seeing. There's a lot of these companies that started out in niches Peoples off being a famous example, starting out on a niche of the market and then growing into other areas. And this company continues to be very focused even after 35 years, as you mentioned, just energy aerospace, a few construction, a few basic industries that they serve serve them at a very deep level focused on the mid market primarily, but they have a new positioning this year. They're calling the challengers for the challengers, which I like. It's a it's a message that I think resonates. It's easy to understand there position their customers is being the companies that are going to challenge the big guys in their industries and this time of digital transformation and disruption. You know, that's what it's all about. I think it's a great message of bringing out this year. >>Of course I like it because the Cube is a challenger, right? Okay, even though we're number one of the segments that we cover, we started out as a sort of a challenger. Interestingly, I f s and the gardener Magic Corners actually, leader and Field Service Management. They made an acquisition that they announced today of a company called Asked. He asked, U S he is a pink sheet OTC company. I mean, they're very small is a tuck in acquisition that maybe they had a They had a sub $20 million market cap. They probably do 25 $30 million in revenue. Um, Darren rules. The CEO said that this place is them is the leader in field service management, which is interesting. We're gonna ask him about that to your other point. You look around the ecosystem here that they have 400 partners. I was surprised last night. I came early to sort of walk around the hall floor. You see large companies here like Accenture. Um and I'm surprised. I mean, I remember the early days when we did the service. Now conferences 2013 or so you didn't see accent. You're Delloye E Y p W c. Now you see them at the service now event here that you see them? I mean, and I talked to essential last night. They said, Yeah, well, we actually do a lot of business in Europe, particularly in the Scandinavian region, and we want to grow the business in the U. S. >>Europe tends to be kind of a blind spot for us cos they don't see the size of the European market, all the activities where some of the great e. R. P. Innovation has come out of Europe. This company, as you mentioned growing three times the rate of the market, they have a ah focus on your very tight with those customers that they serve and they understand them very well. And this is a you can see why it's centuries is is serving this market because, you know they're simply following the money. There's only so much growth left in the S a P market in the Oracle market. But as the CEO Darren said this morning, Ah, half of their revenues last year were from net new customers. So that's that's a great metric. That indicates that there's a lot of new business for these partners to pursue. >>Well, I think there's there's some fatigue, obviously, for big, long multi year s AP integrations, you're also seeing, you know, at the macro we work with Enterprise Technology Research and we have access to their data set. One of the things that we're seeing is a slowdown in the macro. Clearly, buyers are planning to spend less on I T in the second half of 2019 than they did in the first half of 2019 and they expect to spend less in Q four than they expected to in July. So things are clearly softening at the macro level. They're reverting back to pre 2018 levels but it's not falling off a cliff. One of the things that I've talked to e t. R about the premise we put forth love to get your thoughts is essentially we started digital transformation projects, Let's say in earnest in 2016 2017 doing a lot of pilots started kind of pre production in 2018. And during that time, what people were doing is they were had a lot of redundancy. They would maintain the legacy systems and they were experimenting with disruptive technologies. You saw, obviously a lot of you. I path a lot of snowflake and other sort of disruptive technology. Certainly an infrastructure. Pure storage was the beneficiary of that. So you had this sort of dual strategy. We had redundancy of legacy systems, and then the new stuff. What's happening now is, is the theory is that we're going into production. Would digital transformation projects and where were killing the legacy stuff? Okay, we're ready to cut over >>to a new land on that anymore, >>right? We're not going to spend them anymore. Dial that down. Number one. Number two is we're not just gonna spray and pray on all new tech Blockchain a i rp et cetera. We're gonna now focus on those areas that we think are going to drive business value. So both the incumbents and the disruptors are getting somewhat affected by that. That slowdown in that narrowing of the focused. And so I think that's really what's happening. And we're gonna, I think, have to absorb that for a year or so before we start to see new wave of spending. >>There's been a lot of spending on I t over the last three years. As you say, driven by this need, this transition that's going on now we're being going to see some of those legacy systems turned off. The more important thing I have to look at, I think the overall spending is where is that money being spent is being spent on on servers or is it being spent on cloud service is, and I think you would see a fairly dramatic shift going on. They're so the overall, the macro. I think it's still healthy for I t. There's still a lot of spending going on, but it's shifting to a new area there. They're killing off some of that redundancy. >>Well, the TR data shows couple things. There's no question that server and storage spending is has been declining and attenuating for a number of quarters now. And there's been a shift going on from that. Core infrastructure, obviously, into Cloud Cloud continues its steady march in terms of taking over market share. Other areas of bright spots security is clearly one. You're seeing a lot of spending in an analytics, especially new analytics. I mentioned Snowflake before we're disrupting kind of terror Data's traditional legacy enterprise data warehouse market. The R P. A market is also very hot. You AI path is a company that continues to extend beyond its its peers, although I have to say automation anywhere looks very strong. Blue Prison looks very strong. Cloudera interestingly used to be the darling is hitting sort of all time lows in the E. T R database, which is, by the way, that one of the best data sets I've ever seen on on spending enterprise software is actually still pretty strong. Particularly, uh, you know, workday look strong. Sales force still looks pretty strong. Splunk Because of the security uplift, it still looks pretty strong. I have a lot of data on I f s Like you said, they don't really show up in the e t R survey base. Um, but I would expect, with kind of growth, we're seeing $600 million. Company hopes to be a $1,000,000,000 by 2022 2021. I would think they're going to start showing up in the spending >>service well again in Europe. They may be They may be more dominant player than we see in the US. As I said, I really had not even heard of the company before last year, which was surprising for a company with 10,000 customers. Again, they're focused on the mid market in the mid market tends to fly a bit under the radar. Everyone thinks about what's happening in the enterprise is a huge opportunity out there. Many more mid market companies and there are enterprises. And that's a that's been historically a fertile ground for e. R. P. Companies to launch. You know J. D. Edwards came out of the mid market thes are companies that may end up being acquired by the Giants, but they build up a very healthy base of customers, sort of under the radar. >>Well, the other point I wanted to make I kind of started to about the digital transformation is, as they say, people are getting sort of sick of the big, long, ASAP complicated implementations. As small companies become midsize companies and larger midsize companies, they they look toward an enterprise resource planning, type of, of platform. And they're probably saying, All right, wait. I've got some choices here. I could go with an an I F. S, you know, or maybe another alternative. T s a p. You know, A S A P is maybe maybe the safe bet. Although, you know, it looks like i f s is got when you look around at the customers, they have has some real traction, obviously a lot of references, no question about it. One of things they've been digging for saw this gardener doing them for a P I integrations. Well, they've announced some major AP I integrations. We're gonna talk to them about that and poke it that a little bit and see if that will So to solve that criticism, that what Gardner calls caution, you know, let's see how real that is in talking to some of the customers will be talkinto the executives on members of the ecosystem. And obviously Paul and I will be giving our analysis as well. Final thoughts >>here. Just the challenge, I think, is you note for these midmarket focus Cos. Has been growing with their customers. And that's why you see of Lawson's in the JD Edwards of the World. Many of these these mid market companies eventually are acquired by the big E R P vendors. The customers eventually, if they grow, have to go through this transition. If they're going to go to Enterprise. The R P you know, they're forced into a couple of big choices. The opportunity and the challenge for F s is, can they grow those customers as they move into enterprise grade size? Can they grow them with with E. I. F s product line without having them forcing them to transition to something bigger? >>So a lot of here a lot of action here in Boston, we heard from several outside speakers. There was Linda Hill from Harvard. They had a digital transformation CEO panel, the CEO of soo say who will be on later uh PTC, a Conway, former PeopleSoft CEO was on there. And then, of course, Tony Hawk, which was a lot of fun, obviously a challenger. All right, so keep it right there, buddy. You're watching the Cube live from I F s World Conference at the Heinz in Boston right back, right after this short break.

>> Hey, welcome back. You're ready, Jeff? Rick! Here with the Cube were Oracle Park recently, A T and T Park just renamed. It's a beautiful day home in San Francisco Giants. They're on the road. We're here at a pretty interesting event is called Sports Tech. Tokyo World Demo Day brought together a coalition of about 100 startups. 25 of them are given demos today on technology as it relates to sports. But even more importantly, that can then be used in other in others. Beyond sports. We're excited to have an athlete on not just another tech crazy guy. He's Brendan Harris. He's an athlete in residence at 76 Capital. Brendan. Thanks for stopping by. >> Thanks for having me. >> So what is the effort, Principles and entrepreneur in residence? Where is the athlete residents do? It is >> essentially a play on the entrepreneur in residence. I was introduced to 76 Capital finished playing in 15 and I was doing my MBA at Warden and in Philly and got introduced Thio Wayne and the guys at 76. And they are kind of putting together an athlete venture group. Whether they're bringing in a lot of athletes don't wannabe investors and kind of providing them access to deal >> flow and >> um, >> and then also leveraging their social capital. So, uh, he was He was kind of tickled when he came when he coined the term athlete residents and he threw it on my business card. And and that's where we're at, >> right? So I'm just curious your perspective as an athlete as you look around at all the technology that's going into sports, right? Kind of the big categories are, you know that which helps the players play better. There's that which helps the people run, the team's better. And then there's that, which is really kind of part of the fan experience. I mean, you actually to go down and try to put wood on a ball coming at you in 90 plus miles an hour. All this other stuff. Do you see it as is it interesting is distraction. Is it entertaining? I mean, how do you look at it from an athlete's perspective? >> So yeah, so a lot to impact. So first of all, I have this ah, equally the equal view of fascination and frustration where a lot of this wasn't he wasn't around when I when I was playing it, certainly from the field. Now we're taking in things like recovery and rest and sleep. Ah, but I think players and me personally are fascinated with How can we improve on field performance? And I think baseball. It's such a perfect game and you fail so often, being able to turn to turn things that were previously subjective and applied data and in tech to make them objective and give you answers. I think it's fascinating and the ways that we can use data to to kind of promote performance and health and and all those things air Very fascinating. So from players, point of view, we're all about it. But at the same time, I think it certainly says why I've loved to get into sports. Tech is there's a lot of data that's just noise that's coming in and things. And so the tough part is, um, kind of weeding through and what is actionable info on what can actually help improve the on field performance? And then along with that, you know, we want to feel the product on the field, but also what the service is for the consumer and the fans are. And how can we improve that and then engage them? Because certainly sports are part of the culture and part of life now, and it's fascinating. These fans want to know more and more and more, certainly what's going >> on. And it's been It's been a >> great journey, >> right? So on the fan experience specifically, and we've been we've been here a number of years. Bill Styles, a good friend of mine off another word and other work. Brad and and, you know, talking about high density WiFi and you know the app on your phone and delivered, you know, food delivered to your seats. I mean, >> as a as an >> athlete on the field. Do you look at kind of all these things is as a distraction. Do you appreciate? It's kind of a more competitive environment these days in terms of people's attention and kind of that entertainment dollar. But I would imagine from between the lines it looks like Hey, you know, the game's down here people. It's been >> interesting because, um, you know, one of the problems of a major league baseball's been trying to address his pace of games right. And if you really look at the data, they're not that much longer. What's different? We're wired differently, right? So our attention spans are short and we're constantly so our technology. So these, you know, guys like Bill, you are trying to leverage that and try to have your food delivered and try to increase the social component. Increased the value in the in venue experience so that you're not only watching the game, but you're socially enjoying at the same time and kind of fill in those gaps. Ah, lot of it is yes on. And I think there's been balls flying into the stands since baseball's been playing, but they need to put the netting up. Has come a lot of times because nobody's watching. Some people aren't not nobody, but a lot of people aren't watching. The games are getting hit with a lot of these foul balls. So there is that component where you know there's there's some unbelievable things are going off on the sides. But um, you know it's baseball is still gonna be kind of very somewhat within within the confines. >> The other piece that I find really interesting on the data side, right? Is there so much data? Right? There's data data data. Obviously, baseball is built on data and arguments about data and conversations about data, but now it's kind of gone to this next Gen with, you know, wins over replacement and all these other things. But sometimes it's funny to me. It feels like they're forgetting the object of the game is to win the game. And it feels like sometimes the metadata has now become more important than the data. Did you win or lose and is not necessarily being used as a predictor for future performance? But it's almost like a standalone game in and of itself. Like we forget. The object is to win the game and win a championship, not to have the highest war number views since that frustration is that sound? Yeah, I think what you're getting >> into a lot of times is our know how are we making decisions right? And in the game? A lot of times people forget that human beings are out there performing and so I think that's how we've gotten into Moneyball 2.0, looking at development and certainly mental health in focus and game preparation have come into play more and you're seeing some managers. I mean, Mickey Callaway just came out and said 80% my, you know, Susan's go against the data, which which I thought was a little bit interesting, but, ah, so there is that fine line right where you have to filter in what's noise and what's actionable. And at the same time, um, you know, allow you know, your managers and your decision makers some flexibility to go with, You know, they're they're in the heat of the battle and they kind of know their guys. And they know the human element that's involved. So it's it's an interesting, you know, trying to balancing act, >> right? So from your from your new job in your new role, what are some of the things you hope to see today? What are some things that you're excited about? Um, you know, from kind of an investor. And having played the game as well. As you know, I'm looking forward to the evolution of sports. Two >> things specifically how the, uh certainly bias the performs on the field in the human element. And certainly everybody wants workout secrets, and I don't feel like it's whether it's athletes or the kind of weekend warrior or people that are, you know, kind of your senior citizens. And I don't think it's a simple as this has worked, and you should do this. It's a very personalized experience now. And I think some of this personalized digital fitness is fascinating to me on and then how it relates to and how your body relates to, you know, your diet and nutrition, your sleep, your recovery. I think all those air fascinating that, uh, advances that I want to look into more. And the second is a CZ, I kind of mentioned is the fan engagement aspect. How do we drive those those fans that digital, >> um, and >> make it actionable and monetize, right? So that you know, you have your fans that are following you know, your Facebook, twitter and all those things. And so how do you not only gauge them, but collect that data and then kind of personalized that experience? Engage your fan in a way that can kind of grow your brand. Yeah, it's interesting to me, >> really interesting to have to have your perspective, and I'm sure will be a great day and you see all kinds of crazy stuff. So thanks for taking a few minutes. >> Yeah, Any time. >> All right. He's Brendan. I'm Jeff. You're watching The Cube were at Oracle Park in San Francisco. Thanks for watching. We'll see you next time.

(upbeat music) >> Hey welcome back everybody. Jeff Frick here with theCUBE. I wish I could give you my best John Miller impersonation but I'm just not that good. But we are at Oracle Park, home of the San Francisco Giants. We haven't really done a show here since 2014, so we're excited to be back. Pretty unique event, it's called Sports Tech Tokyo World Demo Day. About 25 companies representing about 100 different companies really demonstrating a bunch of cool technology that's used for sports as well as beyond sports, so we're excited to have one of the companies here who's demoing their software today, or their solution I should say. It's Albert Ng, he's the founder and CEO of Misapplied Sciences. Albert, great to see you. >> Great to see you, thank you for having me. >> So Misapplied Sciences. Now I want to hear about the debates on that name. So how did that come about? >> Yeah, so I used to work part time for Microsoft, at Microsoft Research, and one of the groups I worked for was called the Applied Sciences group. And so it was a little bit of a spin on that and it conveys the way that we come up with innovations at our company. We're a little bit more whimsical as a company that we take technologies that weren't intended for the ways that we apply them and so we misapply those technologies to create new innovations. >> Okay, so you're here today, you're showing a demo. So what is it? What is your technology all about? And what is the application in sports, and then we'll talk about beyond sports. >> Yeah, so Misapplied Sciences, we came up with a new display technology. Think like LED video wall, digital signage, that sort of display. But what's unique about our displays, is you can have a crowd of people, all looking at the same display at the same time, yet every single person sees something completely different. You don't need to have any special glasses or anything like that. You look at your displays with your naked eyes, except everyone gets their own personalized experience. >> Interesting. So how is that achieved? Obviously, we've all been on airplanes and we know privacy filters that people put on laptops so we know there's definitely some changes based on angle. Is it based on the angles that you're watching it? How do you accomplish that and is it completely different, or I just see a little bit of difference here, there, and in other places? >> Sure, so at the risk of sounding a little too technical, it's in the pixel technology that we developed itself. So each of our pixels can control the color of light that it sends in many different directions. So one time a single pixel can emit green light towards you, whereas red light towards the person sitting right next to you, so you perceive green, whereas the person right next to you perceives red at the same time. We can do that at a massive scale. So our pixels can control the color of light that they send between tens of thousands, up to a million different angles. So using our software, our processors on our back end, we can control what each of our pixels looks like from up to a million different angles. >> So how does it have an edge between a million points of a compass? That's got to be, obviously it's your secret sauce, but what's going on in layman's terms? >> Yeah, so it's a very sophisticated technology. It's a full stack technology, as we call it. So it's everything from new optics to new high performance computing. We had to develop our own custom processor to drive this. Computer vision, software user interfaces, everything. And so this is an innovation we can up with after four and a half years in stealth mode. So we started the company in late 2014, and we were all the way completely in stealth mode until middle of last year. So about four years just hardcore doing the development work, because the technology's very sophisticated. And I know when I say this, it does sound a little impossible, a little bit like science fiction, so we knew that. So now we have our first product coming on the market, our first public installation later next year and it's going to be really exciting. >> Great. So, obviously you're not going to have a million different feeds, 'cuz you have to have a different feed I would imagine, for each different view, 'cuz you designate this is the view from point A. This is the view from point B. Use feed A, use feed B. I assume you use something like that 'cuz obviously the controller's a big piece of the display. >> Exactly, so a lot of the technology underneath the hood is to reduce the calculations, or the rendering required from a normal computer, so you can actually drive our big displays that can control hundreds of different views using a normal PC, just using our platform. >> So what's the application. You know obviously it's cute and it's fun and I told you it's a dog, no it's a cat as you said, but what are some of the applications that you see in sports? What are you going to do in your first demo that you're putting out? >> Yeah, so what the technology enables is finally having personalized experiences when in a public environment, like a stadium, like an airport, like a shopping mall. So let me give an airport example. So imagine you go up to the giant flight board and instead of a list of a hundred flights, you see only your own flight information in big letters so you can see it from 50 feet away. You can have arrows that light your path towards your particular gate. The displays could let you know exactly how many minutes you have to board, and suggest places for you to eat and shop that are convenient for you. So the environment can be tailored just for you and you're not looking down at a smart phone, you're not wearing any special glasses to see everything that you want to see. So that ability to personalize a venue stretch, is to every single public venue, even in the stadium here, imagine the stadium knowing whether you're a home team fan or away team fan or your fantasy players. You can see it all on the jumbotron or any of the displays that are in the interstitial areas. We can have the entire stadium come alive just for you and personalize it. >> Except you're not going to have 10,000 different feeds, so is there going to be some subset of infinite that people are driving in terms of the content side? >> Mhmm. >> So on your first one, you're first installation, what's that installation going to be all about? >> The first installation is going to be at an airport, I can't see right now publicly where it's going to be or when it's going to be or what partner. But the idea is to be able to have a giant flight board that you only see your own flight information, navigating you to your particular gate. You know when you're at an airport, or any other public venue like a stadium, a lot of times you feel like cow in a herd, right? And it's not tailored for you in any way. You don't have as good of an experience. So we can personalize that for you. >> All right, Misapplied Sciences. Oh I'll come down and take a look at the booth a little bit later. And thanks for taking a few minutes. Good luck on the adventure. I look forward to watching it unfold. >> Appreciate it, thank you so much. >> All right, he's Albert I'm Jeff. You're watching theCUBE. We're at Oracle Park, on the shores of McCovey Cove. Thanks for watching, we'll see ya next time. >> Thank you. (upbeat music)

(upbeat electronic music) >> Hey welcome back everybody, Jeff Frick here with theCUBE. We are at Oracle Park in San Francisco for a really special event. It's called Sports Tech Tokyo World Demo Day, really bringing together a bunch of innovative companies in the sports tech space, really with a focus on not only sports but beyond sports. And we're happy to have really one of the key players here that made this all happen from Dentsu. He's Fumihiko Nakajima, the Senior Director of Business Development from Dentsu. Welcome. >> Hi, nice to meet you. >> Yeah absolutely. So for people that aren't familiar with Dentsu, give us a little overview of Dentsu as a company and then we'll get into the specific event. >> Yeah, Dentsu has a long history focusing on broadcasting rights and sponsorship for event globally. But combining such kind of global asset and new technology to create a new business in sports tech industry and beyond sports industry. >> Right. So pretty interesting way to do that, so you didn't just go find some interesting companies, you guys have created this event to bring a lot of companies together, demonstrate their technology. What was kind of the thinking and how did you guys get involved? >> Yeah. Combining the new asset and technologies and global asset, there are lot of the Japanese company global brand, SoftBank, ITOCHU, Sony Music, Microsoft, and CBC. Such kind of companies very interested in, create new business with innovative staff all over the world. So that's a basis of this event. >> Right, right. So, you got the Tokyo Olympics coming up in a year, so that's kind of a catalyst to make all this happen. Is there anything special that you see between, you know, kind of sports technology and managing teams, sports technology applied to the athletes, and then sports technology applied to the fan experience that you're most excited about? >> Yeah, that's correct. This is a beginning. Next month world Rugby World Cup, the next year, Tokyo Olympic and Paralympic we have. That's a beginning, so, you know the, the sports and live entertainment beyond live entertainment, health cares, biometrics, bio mechanics, from the point of sports. But we enter into the new field and explore the new business field. >> Jeff: Right. >> With the great start-ups and industry leaders on the basis, that who joining these communities. >> Right, right. No, it's pretty interesting because you know the, companies spend so much money now on the players and really look at them as investments. A lot of players get hundred million dollar contracts now. So it's pretty interesting on kind of the health care and the like we talked earlier, sleep and nutrition-- >> Yeah. >> And all these things to keep that athlete performing, are really applicable to everyday people like you and me. >> Yeah. You know that Dentsu has more than one century history in marketing and branding all over the world. And our assets, such kind, properties and, global network, will really help the new technologies and new start up, the new business field. >> Jeff: Right. >> Grow rapidly. >> Jeff: Right. >> All over the world. >> Right. It's interesting, too, that so much of the stuff around the sports, you talked about sponsorship and rights beyond just the score, you know, is so important these days. To feed the 24/7 news cycle, to do fantasy sports, the changes in the gambling law, so there's so much stuff around sports that's beyond the sport that's watched in this industry grow and grow and grow. >> Yeah it's a very interesting point. We know new, legal we will need, a new legal and a new set-up structure for the new business. >> Jeff: Right. >> In specific Tokyo, a lot of specialist joined to help such kind of structures for the futures. >> Right. So before I let you go, it's a busy day, have you been to this park before, home of the Giants, and what do you think? >> Yeah very, very, very special day. It will be very memorable day that one of the best historic venue in America, the San Francisco Giants stadium, Oracle Park. We really excited to share our progress, concrete progress, and want to expand our trial to all over the world. >> Great, well thanks for inviting us and we're, we're excited to watch the story unfold. >> Yeah, thank you. >> Alright. He's Fumihiko, I'm Jeff, you're watchin' theCUBE. We're at Oracle Park in San Francisco, thanks for watching. (upbeat music)

>> Hey, welcome back, everybody. Jeffrey here with the Cube were Rhetorical Park in San Francisco on the shores of McCovey Cove. I just love saying that we >> haven't been here since >> 2014. We're excited to be back for a really interesting event is called Sports Tech Tokyo World Demo Day. This next guest has been at it for a number of years. A really cool technology. We're excited for the conversation and to welcome Mark Philip. He's the founder and CEO of Are >> You watching this Mark? >> Great to see you. Good to see you, too. Absolutely. So, first off, you've been Thio Park before. Here I have. It's been way too long. >> There are >> a few iconic stadiums in the world, and this has got to be one of the great. So let's get into it. So what is are you watching this all about? >> We are the best friend that is >> giving the digital tap on the shoulder when it's time to run to the couch. We monitor pitch by pitch, shot by shot data to figure out when the game gets exciting. I love my Yankees till death, but the >> Yankees Red Sox occasionally tend to >> take over my entire night when they play each other. So being able to get that tap on the shoulder saying, Hey, it's time to tune in or stop raking the leaves, there's a no hitter through eight. Okay, that's what we try to do. Okay, so let's break it down before we get some of the applications into which actor doing So You guys air, You're actively watching these games. You've got some type of an algorithm based on scoring plays. Pitch count. Are we? What are some of the things that drive? Whether this is an exciting game or not, it's a great question. The easiest way to think about it is if you imagine what a win probability graph looks like. So game probably starts off in the middle. Might go up or down based on who's winning, the more violently that graph goes up and down generally, the more exciting the game is, so when probability is a big factor. But also you think about rarity whether it's we had a no hitter last night, we had the Astros with a four picture no hitter a few weeks ago. You know, those sort of things that you don't see often, even if the game's nine nothing, even if the wind probabilities and changing. If that's a no hitter, that's something you want to turn into, right? And so are you tapping into just kind of some of the feeds that are out there in terms of what's happening in the game or you actually watching and using a I in terms of actually looking at a screen and making judgments? Sure, thankfully, I'm not watching or else I would never leave the house. But for us, it's about getting that real time live data. Okay, so I can see balls and strikes on my servers faster than I can see it on live TV, which is a little bit mind bending of time. So we work with the the official data sources. So whether it's a company like sport radar or stats or opt or Abels and pretty much anyone around the globe, we pull in that real time data so we can give people that tap on. The show says Hey, run to the couch. Run to the bar, tune in. Something interesting is about to happen, right? But what's entering your B to B play. So your customers are not me. Jeff, go to the couch. You're working through other people that might be motivated to have me run to the count. So how does your business model work? Who are some of your customers? What are some of the ways that they use your service? >> I'm I'm the guy behind the guy. I'm behind the >> Red Curtain, pulling the strings, you know, for us not to paint with an overly broad brush. But we're based in Austin, Texas, and one of the big things about a city like ours versus the city like this is that our companies tend to skew very B to B versus the Bay Area, which generally excuse a lot more B to C. So pitching to the cable companies, the sports providers, probably CBS Sports is our oldest customer right now. We work with small startups, more established folks, and everyone uses this differently. But the goal is the vision. Is that whether it's your DVR recording automatically when the game gets good or just making sure that, you know, maybe you want to place a bet on the Giants or if you are, ah, glutton for punishment my lowly Knicks if the if the spreads. Good enough, you know, getting that nudge when games get exciting is an accelerant. Not just for watching in, but I think, for fandom. Yeah, well, when Kevin Durant comes back, you'll get a bit more exciting >> Nets, not Nick's. I'm gonna give you one free one. So we had a conversation >> before we turn the cameras on about, you know, kind of this. This never ending attention span competition and the never ending shrinking of consumable media. And how you guys really play an interesting role in that evolution, where if you can give us a little bit deeper background, >> I think it's fascinating. You look at >> the N B A. That really any league. If you rewind five years ago, you have to pay to 5300 bucks to get access to anything digitally, and then you got access to everything, and then the NBA's said, Well, maybe just want to buy one team, so we'll let you pay things around 80 bucks and they just want to watch. One game will sell it to you for eight. I just want 1/4 with such for dollar 99 if you just want a few minutes with silty for 99 >> cents, and now they've done that really, really quietly. >> But I think it's seismic because I think all leagues we're gonna have to follow and do this. So if you look at these snack passes and especially as thes NFL rights are coming up, I could easily imagine someone like a YouTube or, I should say, a Google if they were to grab these rights, how easy would be to go to YouTube and get a game for a few bucks and how well their entire infrastructure would work. But rewind to today when you have 10 to 20 states that are online. As far as gambling goes, you take gambling. You take excitement analytics and you take the snack passes and you kind of mix him up in a pot and you get this vision of I can send you a Texas is Hey, LeBron has 60 points with 3/4. Do you want to pay 99 cents tow, Watch the finish, or do you want, let's say, place a wager on if he's gonna be Kobe's 81 point Lakers record and then we'll let you watch for free. And so getting both sides of that equation, whether your die hard or casual fan, it's hard to say no to both those options, right? And do you see within your customer base that drive to the smaller segmentation of snack packs? Is that driven by customer demand, or are they trying to get ahead of it a little bit and offer, you know, kind of different sizes of consumption, I guess, would be the right. >> Sure, I think the horse is out of the barn. I mean, imagine if >> we were still buying complete albums. Of course, we're buying tracks when we just wanna track the idea that we have to buy an entire season. No foul, 2430 games in an MLB season. Why won't you let me buy just one game? I say MLB leaves a million dollars on the table every single time is no hit bid because there's tons of people who have cut the cord, don't want to run to the bar, but would happily pay 99 cents to stream the last inning of a game on their phone on their commute. So I think it is a combination of digital. What shoring in that We're able to do these three single track sort of purchases, but also its people continue to cut the cord and rethink about how they spend their media dollars. It makes sense really interesting. So we're here. It's sports Tech, World Demo Day. What do you hope to get out of today? Why are you here? Gosh, at least to pay homage to the reason why I went to Tokyo for the first time and had life changing Rama and I feel like I need to sort of complete >> the cycle. Uh, sports like >> Tokyo is an amazing program. There's lots of different events that have shaped different ways. But there's something really unique about this. And when we all lands in Tokyo, I think it was something like 80 different entrepreneurs that came into met to meet with all of the Japanese sponsors. Everyone had the same vibe of just really happy >> to be there. >> They didn't take a percentage of these startups coming in, so you really saw different sizes, not just early stage, but late stages well and everyone was there, too. Connects and innovate and do interesting things together. So many of us were there for the first time that there's just a vibe to this event that I haven't seen in my 10 plus years in sports. Tak interesting. Well, Mark, great to sit down with you. Really cool story. And, um, I guess I'll be watching for your watching for your app. Is the man behind the man coming through my phone? Real sand Sounds great. >> All right. He's >> Mark. I'm Jeff. You're watching the Cube World. World Tech demo today here at Oracle Park. Thanks for watching. We'll see you next time.