(upbeat music) >> Hello and welcome back to theCUBE. We're here in Palo Alto, California. I'm your host, John Furrier with a special guest here in the studio. As part of our Cloud Native SecurityCon Coverage we had an opportunity to bring in Jon Turow who is the partner at Madrona Venture Partners formerly with AWS and to talk about machine learning, foundational models, and how the future of AI is going to be impacted by some of the innovation around what's going on in the industry. ChatGPT has taken the world by storm. A million downloads, fastest to the million downloads there. Before some were saying it's just a gimmick. Others saying it's a game changer. Jon's here to break it down, and great to have you on. Thanks for coming in. >> Thanks John. Glad to be here. >> Thanks for coming on. So first of all, I'm glad you're here. First of all, because two things. One, you were formerly with AWS, got a lot of experience running projects at AWS. Now a partner at Madrona, a great firm doing great deals, and they had this future at modern application kind of thesis. Now you are putting out some content recently around foundational models. You're deep into computer vision. You were the IoT general manager at AWS among other things, Greengrass. So you know a lot about data. You know a lot about some of this automation, some of the edge stuff. You've been in the middle of all these kind of areas that now seem to be the next wave coming. So I wanted to ask you what your thoughts are of how the machine learning and this new automation wave is coming in, this AI tools are coming out. Is it a platform? Is it going to be smarter? What feeds AI? What's your take on this whole foundational big movement into AI? What's your general reaction to all this? >> So, thanks, Jon, again for having me here. Really excited to talk about these things. AI has been coming for a long time. It's been kind of the next big thing. Always just over the horizon for quite some time. And we've seen really compelling applications in generations before and until now. Amazon and AWS have introduced a lot of them. My firm, Madrona Venture Group has invested in some of those early players as well. But what we're seeing now is something categorically different. That's really exciting and feels like a durable change. And I can try and explain what that is. We have these really large models that are useful in a general way. They can be applied to a lot of different tasks beyond the specific task that the designers envisioned. That makes them more flexible, that makes them more useful for building applications than what we've seen before. And so that, we can talk about the depths of it, but in a nutshell, that's why I think people are really excited. >> And I think one of the things that you wrote about that jumped out at me is that this seems to be this moment where there's been a multiple decades of nerds and computer scientists and programmers and data thinkers around waiting for AI to blossom. And it's like they're scratching that itch. Every year is going to be, and it's like the bottleneck's always been compute power. And we've seen other areas, genome sequencing, all kinds of high computation things where required high forms computing. But now there's no real bottleneck to compute. You got cloud. And so you're starting to see the emergence of a massive acceleration of where AI's been and where it needs to be going. Now, it's almost like it's got a reboot. It's almost a renaissance in the AI community with a whole nother macro environmental things happening. Cloud, younger generation, applications proliferate from mobile to cloud native. It's the perfect storm for this kind of moment to switch over. Am I overreading that? Is that right? >> You're right. And it's been cooking for a cycle or two. And let me try and explain why that is. We have cloud and AWS launch in whatever it was, 2006, and offered more compute to more people than really was possible before. Initially that was about taking existing applications and running them more easily in a bigger scale. But in that period of time what's also become possible is new kinds of computation that really weren't practical or even possible without that vast amount of compute. And so one result that came of that is something called the transformer AI model architecture. And Google came out with that, published a paper in 2017. And what that says is, with a transformer model you can actually train an arbitrarily large amount of data into a model, and see what happens. That's what Google demonstrated in 2017. The what happens is the really exciting part because when you do that, what you start to see, when models exceed a certain size that we had never really seen before all of a sudden they get what we call emerging capabilities of complex reasoning and reasoning outside a domain and reasoning with data. The kinds of things that people describe as spooky when they play with something like ChatGPT. That's the underlying term. We don't as an industry quite know why it happens or how it happens, but we can measure that it does. So cloud enables new kinds of math and science. New kinds of math and science allow new kinds of experimentation. And that experimentation has led to this new generation of models. >> So one of the debates we had on theCUBE at our Supercloud event last month was, what's the barriers to entry for say OpenAI, for instance? Obviously, I weighed in aggressively and said, "The barriers for getting into cloud are high because all the CapEx." And Howie Xu formerly VMware, now at ZScaler, he's an AI machine learning guy. He was like, "Well, you can spend $100 million and replicate it." I saw a quote that set up for 180,000 I can get this other package. What's the barriers to entry? Is ChatGPT or OpenAI, does it have sustainability? Is it easy to get into? What is the market like for AI? I mean, because a lot of entrepreneurs are jumping in. I mean, I just read a story today. San Francisco's got more inbound migration because of the AI action happening, Seattle's booming, Boston with MIT's been working on neural networks for generations. That's what we've found the answer. Get off the neural network, Boston jump on the AI bus. So there's total excitement for this. People are enthusiastic around this area. >> You can think of an iPhone versus Android tension that's happening today. In the iPhone world, there are proprietary models from OpenAI who you might consider as the leader. There's Cohere, there's AI21, there's Anthropic, Google's going to have their own, and a few others. These are proprietary models that developers can build on top of, get started really quickly. They're measured to have the highest accuracy and the highest performance today. That's the proprietary side. On the other side, there is an open source part of the world. These are a proliferation of model architectures that developers and practitioners can take off the shelf and train themselves. Typically found in Hugging face. What people seem to think is that the accuracy and performance of the open source models is something like 18 to 20 months behind the accuracy and performance of the proprietary models. But on the other hand, there's infinite flexibility for teams that are capable enough. So you're going to see teams choose sides based on whether they want speed or flexibility. >> That's interesting. And that brings up a point I was talking to a startup and the debate was, do you abstract away from the hardware and be software-defined or software-led on the AI side and let the hardware side just extremely accelerate on its own, 'cause it's flywheel? So again, back to proprietary, that's with hardware kind of bundled in, bolted on. Is it accelerator or is it bolted on or is it part of it? So to me, I think that the big struggle in understanding this is that which one will end up being right. I mean, is it a beta max versus VHS kind of thing going on? Or iPhone, Android, I mean iPhone makes a lot of sense, but if you're Apple, but is there an Apple moment in the machine learning? >> In proprietary models, here does seem to be a jump ball. That there's going to be a virtuous flywheel that emerges that, for example, all these excitement about ChatGPT. What's really exciting about it is it's really easy to use. The technology isn't so different from what we've seen before even from OpenAI. You mentioned a million users in a short period of time, all providing training data for OpenAI that makes their underlying models, their next generation even better. So it's not unreasonable to guess that there's going to be power laws that emerge on the proprietary side. What I think history has shown is that iPhone, Android, Windows, Linux, there seems to be gravity towards this yin and yang. And my guess, and what other people seem to think is going to be the case is that we're going to continue to see these two poles of AI. >> So let's get into the relationship with data because I've been emerging myself with ChatGPT, fascinated by the ease of use, yes, but also the fidelity of how you query it. And I felt like when I was doing writing SQL back in the eighties and nineties where SQL was emerging. You had to be really a guru at the SQL to get the answers you wanted. It seems like the querying into ChatGPT is a good thing if you know how to talk to it. Labeling whether your input is and it does a great job if you feed it right. If you ask a generic questions like Google. It's like a Google search. It gives you great format, sounds credible, but the facts are kind of wrong. >> That's right. >> That's where general consensus is coming on. So what does that mean? That means people are on one hand saying, "Ah, it's bullshit 'cause it's wrong." But I look at, I'm like, "Wow, that's that's compelling." 'Cause if you feed it the right data, so now we're in the data modeling here, so the role of data's going to be critical. Is there a data operating system emerging? Because if this thing continues to go the way it's going you can almost imagine as you would look at companies to invest in. Who's going to be right on this? What's going to scale? What's sustainable? What could build a durable company? It might not look what like what people think it is. I mean, I remember when Google started everyone thought it was the worst search engine because it wasn't a portal. But it was the best organic search on the planet became successful. So I'm trying to figure out like, okay, how do you read this? How do you read the tea leaves? >> Yeah. There are a few different ways that companies can differentiate themselves. Teams with galactic capabilities to take an open source model and then change the architecture and retrain and go down to the silicon. They can do things that might not have been possible for other teams to do. There's a company that that we're proud to be investors in called RunwayML that provides video accelerated, sorry, AI accelerated video editing capabilities. They were used in everything, everywhere all at once and some others. In order to build RunwayML, they needed a vision of what the future was going to look like and they needed to make deep contributions to the science that was going to enable all that. But not every team has those capabilities, maybe nor should they. So as far as how other teams are going to differentiate there's a couple of things that they can do. One is called prompt engineering where they shape on behalf of their own users exactly how the prompt to get fed to the underlying model. It's not clear whether that's going to be a durable problem or whether like Google, we consumers are going to start to get more intuitive about this. That's one. The second is what's called information retrieval. How can I get information about the world outside, information from a database or a data store or whatever service into these models so they can reason about them. And the third is, this is going to sound funny, but attribution. Just like you would do in a news report or an academic paper. If you can state where your facts are coming from, the downstream consumer or the human being who has to use that information actually is going to be able to make better sense of it and rely better on it. So that's prompt engineering, that's retrieval, and that's attribution. >> So that brings me to my next point I want to dig in on is the foundational model stack that you published. And I'll start by saying that with ChatGPT, if you take out the naysayers who are like throwing cold water on it about being a gimmick or whatever, and then you got the other side, I would call the alpha nerds who are like they can see, "Wow, this is amazing." This is truly NextGen. This isn't yesterday's chatbot nonsense. They're like, they're all over it. It's that everybody's using it right now in every vertical. I heard someone using it for security logs. I heard a data center, hardware vendor using it for pushing out appsec review updates. I mean, I've heard corner cases. We're using it for theCUBE to put our metadata in. So there's a horizontal use case of value. So to me that tells me it's a market there. So when you have horizontal scalability in the use case you're going to have a stack. So you publish this stack and it has an application at the top, applications like Jasper out there. You're seeing ChatGPT. But you go after the bottom, you got silicon, cloud, foundational model operations, the foundational models themselves, tooling, sources, actions. Where'd you get this from? How'd you put this together? Did you just work backwards from the startups or was there a thesis behind this? Could you share your thoughts behind this foundational model stack? >> Sure. Well, I'm a recovering product manager and my job that I think about as a product manager is who is my customer and what problem he wants to solve. And so to put myself in the mindset of an application developer and a founder who is actually my customer as a partner at Madrona, I think about what technology and resources does she need to be really powerful, to be able to take a brilliant idea, and actually bring that to life. And if you spend time with that community, which I do and I've met with hundreds of founders now who are trying to do exactly this, you can see that the stack is emerging. In fact, we first drew it in, not in January 2023, but October 2022. And if you look at the difference between the October '22 and January '23 stacks you're going to see that holes in the stack that we identified in October around tooling and around foundation model ops and the rest are organically starting to get filled because of how much demand from the developers at the top of the stack. >> If you look at the young generation coming out and even some of the analysts, I was just reading an analyst report on who's following the whole data stacks area, Databricks, Snowflake, there's variety of analytics, realtime AI, data's hot. There's a lot of engineers coming out that were either data scientists or I would call data platform engineering folks are becoming very key resources in this area. What's the skillset emerging and what's the mindset of that entrepreneur that sees the opportunity? How does these startups come together? Is there a pattern in the formation? Is there a pattern in the competency or proficiency around the talent behind these ventures? >> Yes. I would say there's two groups. The first is a very distinct pattern, John. For the past 10 years or a little more we've seen a pattern of democratization of ML where more and more people had access to this powerful science and technology. And since about 2017, with the rise of the transformer architecture in these foundation models, that pattern has reversed. All of a sudden what has become broader access is now shrinking to a pretty small group of scientists who can actually train and manipulate the architectures of these models themselves. So that's one. And what that means is the teams who can do that have huge ability to make the future happen in ways that other people don't have access to yet. That's one. The second is there is a broader population of people who by definition has even more collective imagination 'cause there's even more people who sees what should be possible and can use things like the proprietary models, like the OpenAI models that are available off the shelf and try to create something that maybe nobody has seen before. And when they do that, Jasper AI is a great example of that. Jasper AI is a company that creates marketing copy automatically with generative models such as GPT-3. They do that and it's really useful and it's almost fun for a marketer to use that. But there are going to be questions of how they can defend that against someone else who has access to the same technology. It's a different population of founders who has to find other sources of differentiation without being able to go all the way down to the the silicon and the science. >> Yeah, and it's going to be also opportunity recognition is one thing. Building a viable venture product market fit. You got competition. And so when things get crowded you got to have some differentiation. I think that's going to be the key. And that's where I was trying to figure out and I think data with scale I think are big ones. Where's the vulnerability in the stack in terms of gaps? Where's the white space? I shouldn't say vulnerability. I should say where's the opportunity, where's the white space in the stack that you see opportunities for entrepreneurs to attack? >> I would say there's two. At the application level, there is almost infinite opportunity, John, because almost every kind of application is about to be reimagined or disrupted with a new generation that takes advantage of this really powerful new technology. And so if there is a kind of application in almost any vertical, it's hard to rule something out. Almost any vertical that a founder wishes she had created the original app in, well, now it's her time. So that's one. The second is, if you look at the tooling layer that we discussed, tooling is a really powerful way that you can provide more flexibility to app developers to get more differentiation for themselves. And the tooling layer is still forming. This is the interface between the models themselves and the applications. Tools that help bring in data, as you mentioned, connect to external actions, bring context across multiple calls, chain together multiple models. These kinds of things, there's huge opportunity there. >> Well, Jon, I really appreciate you coming in. I had a couple more questions, but I will take a minute to read some of your bios for the audience and we'll get into, I won't embarrass you, but I want to set the context. You said you were recovering product manager, 10 plus years at AWS. Obviously, recovering from AWS, which is a whole nother dimension of recovering. In all seriousness, I talked to Andy Jassy around that time and Dr. Matt Wood and it was about that time when AI was just getting on the radar when they started. So you guys started seeing the wave coming in early on. So I remember at that time as Amazon was starting to grow significantly and even just stock price and overall growth. From a tech perspective, it was pretty clear what was coming, so you were there when this tsunami hit. >> Jon: That's right. >> And you had a front row seat building tech, you were led the product teams for Computer Vision AI, Textract, AI intelligence for document processing, recognition for image and video analysis. You wrote the business product plan for AWS IoT and Greengrass, which we've covered a lot in theCUBE, which extends out to the whole edge thing. So you know a lot about AI/ML, edge computing, IOT, messaging, which I call the law of small numbers that scale become big. This is a big new thing. So as a former AWS leader who's been there and at Madrona, what's your investment thesis as you start to peruse the landscape and talk to entrepreneurs as you got the stack? What's the big picture? What are you looking for? What's the thesis? How do you see this next five years emerging? >> Five years is a really long time given some of this science is only six months out. I'll start with some, no pun intended, some foundational things. And we can talk about some implications of the technology. The basics are the same as they've always been. We want, what I like to call customers with their hair on fire. So they have problems, so urgent they'll buy half a product. The joke is if your hair is on fire you might want a bucket of cold water, but you'll take a tennis racket and you'll beat yourself over the head to put the fire out. You want those customers 'cause they'll meet you more than halfway. And when you find them, you can obsess about them and you can get better every day. So we want customers with their hair on fire. We want founders who have empathy for those customers, understand what is going to be required to serve them really well, and have what I like to call founder-market fit to be able to build the products that those customers are going to need. >> And because that's a good strategy from an emerging, not yet fully baked out requirements definition. >> Jon: That's right. >> Enough where directionally they're leaning in, more than in, they're part of the product development process. >> That's right. And when you're doing early stage development, which is where I personally spend a lot of my time at the seed and A and a little bit beyond that stage often that's going to be what you have to go on because the future is going to be so complex that you can't see the curves beyond it. But if you have customers with their hair on fire and talented founders who have the capability to serve those customers, that's got me interested. >> So if I'm an entrepreneur, I walk in and say, "I have customers that have their hair on fire." What kind of checks do you write? What's the kind of the average you're seeing for seed and series? Probably seed, seed rounds and series As. >> It can depend. I have seen seed rounds of double digit million dollars. I have seen seed rounds much smaller than that. It really depends on what is going to be the right thing for these founders to prove out the hypothesis that they're testing that says, "Look, we have this customer with her hair on fire. We think we can build at least a tennis racket that she can use to start beating herself over the head and put the fire out. And then we're going to have something really interesting that we can scale up from there and we can make the future happen. >> So it sounds like your advice to founders is go out and find some customers, show them a product, don't obsess over full completion, get some sort of vibe on fit and go from there. >> Yeah, and I think by the time founders come to me they may not have a product, they may not have a deck, but if they have a customer with her hair on fire, then I'm really interested. >> Well, I always love the professional services angle on these markets. You go in and you get some business and you understand it. Walk away if you don't like it, but you see the hair on fire, then you go in product mode. >> That's right. >> All Right, Jon, thank you for coming on theCUBE. Really appreciate you stopping by the studio and good luck on your investments. Great to see you. >> You too. >> Thanks for coming on. >> Thank you, Jon. >> CUBE coverage here at Palo Alto. I'm John Furrier, your host. More coverage with CUBE Conversations after this break. (upbeat music)

>> Narrator: From around the globe, It's theCUBE! Covering Fortinet Security Summit, brought to you by Fortinet. >> And welcome to the cube coverage here at the PGA champion-- Fortinet championship, where we're going to be here for Napa valley coverage of Fortinet's, the championships security summit, going on Fortinet, sponsoring the PGA, but a great guest Merritt Baer, who's the principal in the office of the CISO at Amazon web services. Great to see you. Thanks for coming on. >> Merritt: Thank you for having me. It's good to be here. >> So Fortinet, uh, big brand now, sponsoring the PGA. Pretty impressive that they're getting out there with the golf. It's very enterprise focused, a lot of action. A lot of customers here. >> Merritt: It seems like it, for sure. >> Bold move. Amazon, Amazon web services has become the gold standard in terms of cloud computing, seeing DevOps people refactoring. You've seen the rise of companies like Snowflake building on Amazon. People are moving not only to the cloud, but they're refactoring their business and security is top of mind for everyone. And obviously cybersecurity threats that Fortinet helps cover, you guys are partnering with them, is huge. What is your state of the union for cyber? What's the current situation with the threat landscape? Obviously there's no perimeter in the cloud. More end points are coming on board. The Edge is here. 5G, wavelength with outpost, a lot happening. >> That was a long question, but I'll, I'll try. So I think, you know, as always business in innovation is the driver. And security needs to be woven into that. And so I think increasingly we're seeing security not be a no shop, but be an enabler. And especially in cloud, when we're talking about the way that you do DevOps with security, I know folks don't like the term DevSecOps, but you know, to be able to do agile methodology and be able to do the short sprints that are really agile and, and innovative where you can-- So instead of nine months or whatever, nine week timelines, we're talking about short sprints that allow you to elastically scale up and down and be able to innovate really creatively. And to do that, you need to weave in your security because there's no like, okay, you pass go, you collect $200. Security is not an after the fact. So I think as part of that, of course the perimeter is dead, long live the perimeter, right? It does matter. And we can talk about that a little bit. You know, the term zero trust is really hot right now. We can dig into that if that's of interest. But I think part of this is just the business is kind of growing up. And as you alluded to we're at the start of what I think is an S curve that is just at the beginning. >> You know, I was really looking forward to Reinforced this year. It was got canceled last year, but the first inaugural event was in Boston. I remember covering that. This year it was virtual, but the keynote Steven gave was interesting, security hubs at the center of it. And I want to ask you, because I need you to share your view on how security's changed with the cloud, because there's now new things that are there to take advantage of if you're a business or an enterprise, yeah on premises, there's a standard operating procedure. You have the perimeter, et cetera. That's not there anymore, but with the cloud, there's a new, there's new ways to protect and security hub is one. What are some of the new things that cloud enables for security? >> Well, so just to clarify, like perimeters exist logically just like they do physically. So, you know, a VPC for example, would be a logical perimeter and that is very relevant, or a VPN. Now we're talking about a lot of remote work during COVID, for example. But one of the things that I think folks are really interested with Security Hub is just having that broad visibility and one of the beauties of cloud is that, you get this tactile sense of your estate and you can reason about it. So for example, when you're looking at identity and access management, you can look at something like access analyzer that will under the hood be running on a tool that our, our group came up with that is like reasoning about the permissions, because you're talking about software layers, you're talking about computer layer reasoning about security. And so another example is in inspector. We have a tool that will tell you without sending a single packet over the network, what your network reach ability is. There's just like this ability to do infrastructure as code that then allows you to do security as code. And then that allows for ephemeral and immutable infrastructures so that you could, for example, get back to a known good state. That being said, you know, you kill a, your web server gets popped and you kill it and you spin up a new one. You haven't solved your problem, right? You need to have some kind of awareness of networking and how principals work. But at the same time, there's a lot of beauties about cloud that you inherit from a security perspective to be able to work in those top layers. And that's of course the premise of cloud. >> Yeah, infrastructure as code, you mentioned that, it's awesome. And the program ability of it with, with server-less functions, you're starting to see new ways now to spin up resources. How is that changing the paradigm and creating opportunities for better security? Is it, is it more microservices? Is it, is, are there new things that people can do differently now that they didn't have a year ago or two years ago? Because you're starting to see things like server-less functions are very popular. >> So yes, and yes, I think that it is augmenting the way that we're doing business, but it's especially augmenting the way we do security in terms of automation. So server-less, under the hood, whether it's CloudWatch events or config rules, they are all a Lambda function. So that's the same thing that powers your Alexa at home. These are server-less functions and they're really simple. You can program them, you can find them on GitHub, but they are-- one way to really scale your enterprise is to have a lot of automation in place so that you put those decisions in ahead of time. So your gray area of human decision making is scaled down. So you've got, you know, what you know to be allowable, what you know to be not allowable. And then you increasingly kind of whittled down that center into things that really are novel, truly novel or high stakes or both. But the focus on automation is a little bit of a trope for us. We at Amazon like to talk about mechanisms, good intentions are not enough. If it's not someone's job, it's a hope and hope is not a plan, you know, but creating the actual, you know, computerized version of making it be done iteratively. And I think that is the key to scaling a security chain because as we all know, things can't be manual for long, or you won't be able to grow. >> I love the AWS reference. Mechanisms, one way doors, raising the bar. These are all kind of internal Amazon, but I got to ask you about the Edge. Okay. There's a lot of action going on with 5G and wavelength. Okay, and what's interesting is if the Edge becomes so much more robust, how do you guys see that security from a security posture standpoint? What should people be thinking about? Because certainly it's just a distributed Edge point. What's the security posture, How should we be thinking about Edge? >> You know, Edge is a kind of catch all, right, we're talking about Internet of Things. We're talking about points of contact. And a lot of times I think we focus so much on the confidentiality and integrity, but the availability is hugely important when we're talking about security. So one of the things that excites me is that we have so many points of contact and so many availability points at the Edge that actually, so for example, in DynamoDB, the more times you put a call on it, the more available it is because it's fresher, you've already been refreshing it, there are so many elements of this, and our core compute platform, EC2, all runs on Nitro, which is our, our custom hardware. And it's really fascinating, the availability benefits there. Like the best patching is a patching you don't have to do. And there are so many elements that are just so core to that Greengrass, you know, which is running on FreeRTOS, which has an open source software, for example, is, you know, one element of zero trust in play. And there are so many ways that we can talk about this in different incarnations. And of course that speaks to like the breadth and depth of the industries that use cloud. We're talking about automotive, we're talking about manufacturing and agriculture, and there are so many interesting use cases for the ways that we will use IOT. >> Yeah. It's interesting, you mentioned Nitro. we also got Annapurna acquisition years ago. You got latency at the Edge. You can handle low latency, high volume compute with the data. That's pretty powerful. It's a paradigm shift. That's a new dynamic. It's pretty compelling, these new architectures, most people are scratching their heads going, "okay, how do I do this, like what do I do?" >> No, you're right. So it is a security inheritance that we are extremely calculated about our hardware supply chain. And we build our own custom hardware. We build our own custom Silicon. Like, this is not a question. And you're right in that one of the things, one of the north stars that we have is that the security properties of our engineering infrastructure are built in. So there just is no button for it to be insecure. You know, like that is deliberate. And there are elements of the ways that nature works from it running, you know, with zero downtime, being able to be patched running. There are so many elements of it that are inherently security benefits that folks inherit as a product. >> Right. Well, we're here at the security summit. What are you excited for today? What's the conversations you're having here at the Fortinet security summit. >> Well, it's awesome to just meet folks and connect outside. It's beautiful outside today. I'm going to be giving a talk on securing the cloud journey and kind of that growth and moving to infrastructure as code and security as code. I'm excited about the opportunity to learn a little bit more about how folks are managing their hybrid environments, because of course, you know, I think sometimes folks perceive AWS as being like this city on a hill where we get it all right. We struggle with the same things. We empathize with the same security work. And we work on that, you know, as a principal in the office of the CISO, I spend a lot of my time on how we do security and then a lot of my time talking to customers and that empathy back and forth is really crucial. >> Yeah. And you've got to be on the bleeding edge and have the empathy. I can't help but notice your AWS crypto shirt. Tell me about the crypto, what's going on there. NFT's coming out, is there a S3 bucket at NFT now, I mean. (both laughing) >> Cryptography never goes out of style. >> I know, I'm just, I couldn't help-- We'll go back to the pyramids on that one. Yeah, no, this is not a, an advertisement for cryptocurrency. It is, I'm a fangirl of the AWS crypto team. And as a result of wearing their shirts, occasionally they send me more shirts. And I can't argue with that. >> Well, love, love, love the crypto. I'm big fan of crypto, I think crypto is awesome. Defi is amazing. New applications are going to come out. We think it's going to be pretty compelling, again, let's get today right. (laughing) >> Well, I don't think it's about like, so cryptocurrency is just like one small iteration of what we're really talking about, which is the idea that math resolves, and the idea that you can have value in your resolution that the math should resolve. And I think that is a fundamental principle and end-to-end encryption, I believe is a universal human right. >> Merritt, thank you for coming on the cube. Great, great to have you on. Thanks for sharing that awesome insight. Thanks for coming on. >> Merritt: Thank you. >> Appreciate it. Okay. CUBE coverage here in Napa valley, our remote set for Fortinet's security cybersecurity summit here as part of their PGA golf Pro-Am tournament happening here in Napa valley. I'm John Furrier. Thanks for watching.

>>From around the globe. It's the cube with digital coverage of AWS reinvent 2020 sponsored by Intel and AWS. >>Hey, welcome back to the cubes. Live coverage here for re-invent 2020 Amazon web services. I'm John for your host with the cube. We are the cube virtual. Normally we're in person this year. We're remote because of the pandemic. It's a virtual event on both sides. Got a great guest here. Derek did a Scala vice-president of IOT at AWS. Um, Derek, did I get the name right last year? I think I got it right. Did a scholar, >>You still did a good ride last year and this year. It's exactly it's Greek. >>Great to see you. Um, keep alumni and last year's talk was phenomenal. Really a precursor to what you, you did this year and your keynote leadership session, which you just came off of. Um, really kind of extending the conversation around new news and announcements around what's going on in the complex system. That is the edge and or IOT, some really awesome announcements. So give us a quick overview of, you know, what was the main theme of the keynote. And then I got some specific questions on the news. >>Uh, so the main theme was connected. They transform tomorrow. And I think the idea was that, um, in order to do complex IOT solutions, um, which, which they are, as you said, complex systems you need in principle three different types of elements, software that runs on devices that you connect then services that you have in the cloud that you manage all of the devices and then, uh, technology like services again in the cloud that can make sense of data, um, so that you can do your business logic. And what I was walking the audience through was what is IOT? What are the use cases that we empower today? And then of course I have a bunch of, uh, new launches actually 19 launched new 19 very significant features at reinvent this this morning about what else can you do? And some of them hopefully we'll talk about today. >>Well, we don't have all that time ago to check out for the folks watching, go to the Amazon re-invent site, log in and watch the replays playing multiple times in different time zones and it's, and it's on demand. The thing that got me was impressive to me, I loved your talk. And one of the key news was this I, uh, AWS IOT core for low Rowan, which is fully managed service on AWS. One of the highlights of the, of the presentation. So this is interesting, right? So it's all this a whole nother way. It's kind of a disconnected kind of system. Then you've got fleet as well. You announced, but to what is a low Rawan, can you explain what that is? >>Ryan stands for long range wide area network, and it's a type of connectivity standard, um, which uses very little energy on devices. So think about your own level cellular or wifi, which are connectivity standards. Some of them are for high throughput, but if you have low data rates like for sensors and you want to have those sensors, um, having a lifespan of let's send 10 years for the same battery, then you need very specific standards. Don't require a lot of compute and Laura ran as one of those standards. And the other thing is as long range. So that means you can put sensors pretty far away. Um, you penetrates also concrete or, uh, normally basements, which you counted differently. So if you think about asset tracking or a large scale monitoring off of sensors, Laura van is the standard to go. It's also a similar technology that powers the sidewalk network for Amazon, which is a public offering that we have as well. And the announcement that we did is that we now have this technology fully integrated with AWS IOT core. So customers who want to spin up those Laurel when networks, they don't have to do it themselves. We do it for them. The only thing they need to do is just buy or acquire a specific gateway, which is also pre-certified in our device kind of. And every sensor that is Laura, when standard specific can immediately connect securely to the AWS IOT cloud. >>Okay. So two questions. One is use cases. What does this use for, and you mentioned long range, I'm assuming it's radio-frequency so there's a, uh, um, radio and design a battery power. I mean, how you drive those long rain signals and what are the use cases? I mean, it's just for like manufacturing, is it for like buildings? I mean, would it be, >>We'll use it for all of them? So I give you a great example. We had their compliance mate as one of our launch customers for one a Lang. And what they do is they put sensors in refrigeration units in restaurants, and they are typically agreeably big metal, shielded refrigeration units, and basements. And if you're trying to get what seller or 5g take your phone down in the basement, there's no reception anymore. But Laura ran because it's a low frequency. It can actually penetrate a concrete quite a bit. And because it sends very more data rates, because it only tells you the temperature instead of a streaming video and uses very little battery. So they can put the sensor in all of the refrigeration units and all of the rest ones. And you don't have to touch them for years to come. So that's, for example, one use case, or you want to asset tracking, you put those small little sensors, I don't know, on containers, on pallets and ship them all, all the country. So that's parts where you can more or less than how these assets. >>And so is like a base station. Is there an antenna? Is there a main antenna that goes for walls? It sounds like it's yeah. >>What'd you do your bite. What is called a LoRa LAN gateway? That is a gateway, which has, if you like, it's a mini base station that you can buy from multiple suppliers and partners of ours actually be pre-certified 13 of those with 13 different suppliers in our device, uh, catalog, and then you buy them and more or less, and then you just connect them directly to the internet because everything else, what we'll do, we'll just call this LoRa network server, which normally is the backend infrastructure runs. They're not in the AWS cloud. These gateways act as base stations. Think of them. It's like your wifi router in the home. It's then a LoRa gateway device, which then has a longer range than a wifi would have. And we don't talk about just a few meters used. So it's, it's much further along. I'd love to follow >>Up. I don't have a lot of time, but that was a fascinating announcement, really kind of core, uh, fleet hub and other one that got my attention. Um, this is managing IOT to AWS IOT devices from anywhere, from anywhere from any device. Give us quick tutorial on fleet hub, >>Really tough. So I would take coral, any managers, a lot of devices you have, as I said, more than half a billion devices now going, or end points as we call them through our service 70 months. And if you have so many devices, then you would like to understand, okay, is something going wrong? Is everything fine in order to do so? You can't just probe every single device who typically buy a, built an application that the motor shows you, this fleet management dashboards. And that's exactly what feed pump fleet have is with very little effort. Actually, an it administrator cannot click a button and it has these applications that everybody in the company can log in with their standard logins. And then they can see, okay, all the entire fleets, they see there's something wrong. It can identify issues and they can also do remediations like, okay, maybe reboot a device or make a firmware update or security tunnel into a more complicated device for troubleshooting. >>Awesome. And the other one, by the way, that's awesome. People love those dashboards. Sitewise edge software. This was interesting localizing data for developers to process their run visualization on a connected or disconnected scenario. This sounds really cool and relevant. What's the point? Yeah, >>Well Sitewise edge is for industrial customers. This is a really big deal. So imagine that you would like to optimize your main function. Um, our dedicated industrial services called Sightlines edge came to the gateway component, took all of the data out of the manufacturing plants into the cloud, where you could model them and you'd do cool stuff with it. Um, the problem is in very many of the scenarios, you don't want to sync all of the data to the cloud, or you can't send all of the data to the cloud. So customers were saying is okay, can I do all this good stuff that I can do in the cloud locally and DH even disconnected? And that's what we know. We launched the sideways. It's the same capabilities that you'd have in the cloud, which is not can run on gateways on outpost, on snow devices, which is data ingestion, data modeling, ETL metrics calculation. And you also have a dashboard application that we have in the cloud called side-by-side monitor. And the exact same application can run locally so that you can log in again, like with three tab locally in that URL. And you see what's actually happening with your equipment, all that it disconnected. >>Awesome. Great job there. Finally, the other one got my attention as James Gosling tweeted about the open source of green grass, which was awesome. He obviously he's a legend in the programming and systems world. Um, now works for AWS. You guys are getting all the great talent, um, Greengrass 2.0 at the edge. This is, uh, a new announcement. Take us through that. And obviously the open sourcing with Gosling involved pretty much >>Big deal. Oh yeah. So I don't know for everybody Greenglass alias besotted, reinvest, that's our runtime environment, which brings typical IOT core to the cloud from the cloud to the edge. It can be Lunda runtimes, including containers, including machine learning inferencing. And over the last few years, James and our team together, we were working actually to revamp this completely. It's a complete rewrite of the entire software that runs on the edge. It's no JVM based. It's not modular. And as you said, we just open-sourced it. So, um, there was an enormous effort into how can I modularize this because there are so many applications and sometimes you have a very powerful machine is what all the features together, or you have a much cheaper device where you said, Hey, you know what? I only want specific applications. And then how do you modularize this? And you also need a deployable at the edge of the past. You always needed the cloud in order to provision stuff. Now I can actually code and deploy all locally by doing that at scale. And of course, open sourcing. This is a pretty big deal because everybody can now inspect the code and you can extend it to whatever you would like it to ask. So >>What is someone going to do with the open source, given an example of some innovation, a bar raising activity app that someone could take with the, with the green grass open source, what would it be? What would you envision? >>So what you can do with green goes open source in the past. If you wanted to put it, for example, put on a very specific proprietary system and the past, we only shifted as binary code working from the next for example, but now I can see no one, I have a mix, so I have it a windows. So I want to have an Q and X on any type of operating system. And you can now have the code and therefore adopted yourself. You can also extend it if you'd like, because all of them, of course the short support is available. And then the modularization is that you can also build your own mind >>And it's an Apache license. So follows that >>Super easy. You can do whatever you like with a code, by the way, open sourcing, doesn't change anything to pricing when it's wherever. So you get the code, you do what you like with this Apache 2.0, not to be confounded. You have another open source, which is free. Artose, that's our real-time operating system. That's under the MIT license that they have. We also had some great news at reinvent. We have no long-term support for free, right? >>I think there's going to be a tsunami of innovation and creative thinking around the edge. Um, real quick, final comment edge is a complex system. One of the themes that reinvent this year is, you know, re re-imagined reinvent everything. Um, when you have complexity came in, complexity is the number one challenge that we're hearing from customers, your customers and people in the industry saying, we love it. It keeps getting better and better with AWS, but, you know, putting it behind the curtain of SAS and plot pass and it, I got to tame the complexity. What do you say to that? >>It's true, particularly in IOT, it's true because we need to somehow manage complexity from embedded software and hardware and fleet management. As we said, uh, clouds, capabilities, AI, it's really, really complex. If you try to muscle this all yourself. So that's why we try to integrate our offerings. I don't know whether you've realized we didn't announce any new services. All of our capabilities are part of what we have and trying to combine. So if you like, Sitewise edge is bringing sideways to the edge, but under the hood, it's using green grass in order to make the work freed up as well. Um, everything we've done in fleet hub is based on device management. Greenglass V2 itself is not under the hood using also device management for the fleet provisioning. So we try now to combine all of the dots, make it easier to access. And then as we set for this web applications, whether it's Sightlines monitor or from the top, you don't even have to be a developer anymore. You can more or less just directly access a dashboarding app and just see what's happening without that. You need to >>Turk exciting times, congratulations a lot more to dig into, um, tons of videos on demand on the re-invent site, of course, uh, comes to the cube and we got more coverage on siliconangle.com. Dirk. Thanks for your time. Congratulations. >>Can I just one thing which I would like to still denounce or people understand, communicate for everybody. If you go to amazon.com and look for AWS IOT, educate for $42, you can buy now a tiny little device. It's not about the device, it's about a curriculum. It shows you everybody can code. How do I use IOT? How easy it is and how do I do the invoice and the amount. So it's an awesome thing for students and everybody else who would like to understand how IOT works. So check it out@amazon.com. >>Okay. We'll get it out. Educate, check it out. Learn it's easy. Next level. Programming, complexity, Turk. Thanks for coming on. >>Appreciate it. I'm John >>Florio, host of the cube here. Eight hours coverage reinvent 20, 20 virtual. We are the cube virtual. Thanks for watching.

>> From the SiliconANGLE media office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Dave Vellante. >> Hello, everyone, and welcome to this week's episode of theCUBE Insights, powered by ETR. In this Breaking Analysis, I want to do a quasi post-mortem on AWS re:Invent, and put the company's prospects into context using some ETR spending data. First I want to try to summarize some of the high-level things that we heard at the event. I won't go into all the announcements in any kind of great detail, there's a lot that's been written out there on what was announced, but I will touch on a few of the items that I felt were noteworthy and try to give you some of the main themes. I then want to dig into some of the spending data and share with you what's happening from a buyer's perspective in the context of budgets, and we'll specifically focus on AWS's business lines. And then I'm going to bring my colleague Stu Miniman into the conversation, and we're going to talk about AWS's hybrid strategy in some detail, and then we're going to wrap. So, the first thing that I want to do is give you a brief snapshot of the re:Invent takeaways, and I'll try to give you some commentary that you might not have heard coming out of the show. So, to summarize re:Invent, AWS is not being on rinsing and repeating, they have this culture of raising the bar, but one thing that doesn't change is this shock and awe that they do of announcements, it comes out each year, and it's obvious. It's always a big theme, and this year Andy Jassy really wanted to underscore the company's feature and functional lead relative to some of the other cloud providers. Now the overarching theme that Jassy brought home in his keynote this year is that the cloud is enabling transformation. Not just teeny, incremental improvement, he's talking about transformation that has to start at the very top of the organization, so it's somewhat a challenge and an appeal to enterprises, generally versus what is often a message to startups at re:Invent. And he was specifically talking to the c-suite here. Jassy didn't say this, but let me paraphrase something that John Furrier said in his analysis on theCUBE. He said if you're not born in the cloud, you basically better find the religion and get reborn, or you're going to be out of business. Now, one of the other big trends that we saw this year at re:Invent, and it's starting to come into focus, is that AWS is increasingly leveraging its acquisition of Annapurna with these new chip sets that give it higher performance and better cost structures and utilization than it can with merchant silicon, and specifically Intel. And here's what I'll say about that. AWS is one of the largest, if not the largest customer of Intel's in the world. But here's the thing, Intel wants a level playing field. We've seen this over the years, where it's in Intel's best interest to have that level playing field as much as possible, in its customer base. You saw it in PCs, in servers, and now you're seeing it in cloud. The more balanced the customer base is, the better it is for Intel because no one customer can exert undue influence and control over Intel. Intel's a consummate arms dealer, and so from AWS's perspective it makes sense to add capabilities and innovate, and vertically integrate in a way that can drive proprietary advantage that they can't necessarily get from Intel, and drive down costs. So that's kind of what's happening here. The other big thing we saw is latency, what Pat Gelsinger calls the law of physics. Well a few years ago, AWS, they wouldn't even acknowledge on-prem workloads, and Stu and I are going to talk about that, but clearly sees hybrid as an opportunity now. I'm going to talk more on detail and drill into this with Stu, but a big theme of the event was moving Outposts closer to on-prem workloads, that aren't going to be moving into the cloud anytime soon. And then also the edge, as well as, for instance, Amazon's Wavelength announcement that puts Outposts into 5G networks at major carriers. Now another takeaway is that AWS is unequivocal about the right tool for the right job, and you see this really prominently in database, where I've counted at least 10 purpose-built databases in the portfolio. AWS took some really indirect shots at Oracle, maybe even direct shots at Oracle, which, Oracle treats Oracle Database as a hammer, and every opportunity as a nail, antithetical to AWS's philosophy. Now there were a ton of announcements around AI and specifically the SageMaker IDE, specifically Studio, SageMaker Studio, which stood out as a way to simplify machine intelligence. Now this approach addresses the skillset problem. What I mean by that is, the lack of data scientists to leverage AI. But one of the things that we're kind of watching here is, it's going to be interesting to see if it exacerbates the AI black box issue. Making the logic behind the machines' outcomes less transparent. Now, all of this builds up to what we've been calling next-gen cloud, and we're entering a new era that goes well beyond infrastructure as a service, and lift and shift workloads. And it really ties back to Jassy's theme of transformation, where analytics approaches new computing models, like serverless, which are fundamental now, as is security, and a topic that we've addressed in detail in prior Breaking Analysis segments. AWS even made an announcement around quantum computing as a service, they call it Braket. So those are some of the things that we were watching. All right, now let's pivot and look at some of the data. Here's a reminder of the macro financials for AWS, we get some decent data around AWS financials, and this chart, I've showed before, but it's AWS's absolute revenue and quarterly revenue year on year with the growth rates. It's very large and it's growing, that's the bottom line, but growth is slowing to 35% last quarter as you can see. But to iterate, or reiterate, we're looking at a roughly 36 billion dollar company, growing at 35% a year, and you don't see that often. And so, this market, it still has a long way to go. Now let's look at some of the ETR tactical data on spending. Now remember, spending attentions according to ETR are reverting to pre-2018 levels, and are beginning to show signs of moderation. This chart shows spending momentum based on what ETR calls net score, and that represents the net percentage of customers that are spending more on a particular platform. Now, here's what's really interesting about this chart. It show the net scores for AWS across a number of the company's markets, comparing the gray, which is October '18 survey, with the blue, July '19, and the yellow, October '19. And you can see that workspaces, machine learning and AI, cloud overall, analytic databases, they're all either up or holding the same levels as a year ago, so you see AWS is bucking the trend, and even though spending on containers appears to be a little less than last year, it's holding firm from the July survey, so my point is that AWS is really bucking that trend from the overall market, and is continuing to do very very well. Now this next slide takes the same segments, and looks at what ETR refers to as market share, which is a measure of pervasiveness in the survey. So as you can see, AWS is gaining in virtually all of its segments. So even though spending overall is softening, AWS in the marketplace, AWS is doing a much better job than its peers on balance. Now, the other thing I want to address is this notion of repatriation. I get this a lot, as I'm sure do other analysts. People say to me, "Dave, you should really look into this. "We hear from a lot of customers "that they moved to the cloud, "now they're moving workloads back on-prem "because the cloud is so expensive." Okay, so they say "You should look into this." So this next chart really does look into this. What the chart shows is across those same offerings from AWS, so the same services, the percent of customers that are replacing AWS, so I'm using this as a proxy for repatriation. Look at the numbers, they're low single digits. You see traditional enterprise vendors' overall business growing in the low single digits, or shrinking. AWS's defections are in the low single digits, so, okay, now look at this next chart. What about adoptions, if the cloud is slowing down, you'd expect a slowdown in new adoptions. What this data shows is the percent of customers that are responding, that they're adding AWS in these segments, so there's a new platform. So look, across the board, you're seeing increases of most of AWS's market segments. Notably, in respondents citing AWS overall at the very rightmost bars, you are admittedly seeing some moderation relative to last year. So that's a bit of a concern and clearly something to watch, but as I showed you earlier, AWS overall, that same category, is holding firm, because existing customers are spending more. All right, so that's the data portion of the conversation, hopefully we put that repatriation stuff to bed, and I now want to bring in Stu Miniman to the conversation, and we're going to talk more about multicloud, hybrid, on-prem, we'll talk about Outposts specifically, so Stu, welcome, thank you very much for coming on. >> Thanks Dave, glad to be here with you. >> All right, so let's talk about, let's start with multicloud, and dig into the role of Kubernetes a little bit, let me sort of comment on how I think AWS looks at multicloud. I think they look at multicloud as using multiple public clouds, and they look at on-prem as hybrid. Your thoughts on AWS's perspective on multicloud, and what's going on in the market. >> Yeah, and first of all, Dave, I'll step back for a second, you talked about how Amazon has for years had shots against Oracle. The one that Amazon actually was taking some shots at this year was Microsoft, so, not only did they talk about Oracle, they talked about customers looking to flee their SQL customers, and I lead into that because when you talk about hybrid cloud, Dave, if you talked to any analyst over the last three, four years and you say "Okay, what vendor is best position in hybrid, "which cloud provider has the "best solution for hybrid cloud?" Microsoft is the one that we'd say, because their strong domain in the enterprise, of course with Windows, the move to Office 365, the clear number two player in Azure, and they've had Azure Stack for a number of years, and they had Azure Pack before that, they'd had a number of offerings, they just announced this year Azure Arc, so three, we've had at least three generations of hybrid multicloud solutions from Microsoft, Amazon has a different positioning. As we've talked about for years, Dave, not only doesn't Amazon like to use the words hybrid or multicloud, for the most part, but they do have a different viewpoint. So the partnership with VMware expanded what they're doing on hybrid, and while Andy Jassy, he at least acknowledges that multicloud is a thing, when he sat down with John Furrier ahead of the show, he said "Well, there might be reasons why customers "either there's a group inside "that has a service that they want, "that they might want to do a secondary cloud, "or if I'm concerned that I might fall out of love "with this primary supplier I have, "I might need a second one." Andy said in not so, just exactly, said "Look, we understand multicloud is a thing." Now, architecturally, Amazon's positioning on this is that you should use Amazon, and they should be the center of what you're doing. You talked a lot about Outposts, Outposts, critical to what Amazon is doing in this environment. >> And we're going to talk about that, but you're right, Amazon doesn't like to talk about multicloud as a term, however, and by the way, they say that multicloud is more expensive, less secure, more complicated, more costly, and probably true, but you're right, they are acknowledging at least, and I would predict just as hybrid, which we want to talk about right now, they'll be talking about, they'll be participating in some way, shape, or form, but before we go to multicloud, or hybrid, what about Kubernetes? >> So, right, first of all, we've been at the KubeCon show for years, we've watching Kubernetes since the early days. Kubernetes is not a magic layer, it does not automatically say "Hey, I've got my application, I can move it willy-nilly." Data gravity's really important, how I architect my microservices solution absolutely is hugely important. When I talk to my friends in the app dev world, Dave, hybrid is the way they are building things a lot, if I took some big monolithic application, and I start pulling it apart, if I have that data warehouse or data store in my data center, I can't just migrate that to the cloud, David Floyer for years has been talking about the cost of migration, so microservice architecture's the way most customers are building, a hybrid environment often is there. Multicloud, we're not doing cloud bursting, we're not just saying "Oh hey, I woke up today, "and cloud A is cheaper than cloud B, "let me move my workload." Absolutely, I had a great conversation with a good Amazon customer that said two years ago, when they deployed Kubernetes, they did it on Azure. You want to know why, the Azure solution was more mature and they were doing Azure, they were doing things there, but as Amazon fully embraced Kubernetes, not just sitting on top of their solution, but launched the service, which is EKS, they looked at it, and they took an application, and they migrated it from Azure to Amazon. Now, migrating it, there's the underlying services and everybody does things a little bit different. If you look at some of the tooling out there, great one to look at is HashiCorp has some great tooling that can span across multiple clouds, but if you look at how they deploy, to Azure, to Google, to AWS, it's different, so you got to have different code, there's different skillsets, it's not a utility and just generic compute and storage and networking underneath, you need to have specific skills there, so Kubernetes, absolutely when I've been talking to users for the last few years and saying "Why are you using Kubernetes?" The answer is "I need that eject lever, "so that if I want to leave AWS with an application, "I can do that, and it's not press a button and it's easy, "that easy, but I know that I can move that, "'cause underneath the pods, and the containers, "and all those pieces, the core building blocks "are the same, I will have to do some reconfiguration," as we know with the migration, usually I can get 80 to 90 percent of the way there, and then I need to make the last minute-- >> So it's a viable hedge on your AWS strategy, okay. >> Absolutely, and I've talked to lots of customers, Amazon shows that most cloud Kubernetes solutions out there are running on Amazon, and when I go talk to customers, absolutely, a lot of the customers that are doing Kubernetes in the public cloud are doing that on Amazon, and one of the main reasons they're using it is in case they do want to, as a hedge against being all-in on Amazon. >> All right, let's talk about Outposts, specifically as part of Amazon's hybrid strategy, and now their edge strategy as well. >> Right, so Azure Stack, I mentioned earlier from Microsoft has been out there for a few years. It has not been doing phenomenally well, when I was at Microsoft Ignite this year, I heard basically certain government agencies and service providers are using it and basically acting, delivering Azure as a service, but, Azure Stack is basically an availability zone in my data center, and Amazon looked at this and says "That's not how we're going to build this." Outposts is an extension of your local region, so, while people look at the box and they say, I took a picture of the box and Shu was like, "Hey, whose server and what networking card, "and the chipset and everything," I said "Hold on a second. "You might look at that box, "and you might be able to open the door, "but Amazon is going to deploy that, "they're going to manage that, "really you should put a curtain in front of it "and say pay no attention to what's behind here, "because this is Amazon gear, it's an Amazon "as a service in your data center, "and there are only a few handful of services "that are going to be there at first." If I want to even use S3, day one, the Amazon native services, you're going to just use S3 in your local region. Well, what if I need special latency? Well, Amazon's going to look at that, and see what's available, so, it is Amazon hardware, the Amazon software, the Amazon control plane, reaching into that data center, and very scalable, it's, Amazon says over time it should be able to go to thousands of racks if you need, so absolutely that cloud experience closer to my environment, but where I need certain applications, certain latency, certain pieces of data that I need to store there. >> And we've seen Amazon dip its toe into the hybrid on-prem market with Snowball and Greengrass and stuff like that before, but this is a much bigger commitment, one might even say capitulation, to hybrid. >> Well, right, and the reason why I even say, this is hybrid, but it's all Amazon, it is not "Take my private cloud and my public cloud "and tie 'em together," it's not, "I've taken cloud to customer" or IBM solution, where they're saying "I'm going to put a rack here "and a rack there, and it's all going to work the same." It is the same hardware and software, but it is not all of the pieces-- >> VMware and Outposts is hybrid. >> Really interesting, Dave, as the native AWS solution is announced first here in 2019, and the VMware solution on Outposts isn't going to be available until 2020. Draw what you will, it's been a strong partnership, there are exabytes of data in the VMware cloud on AWS now, but yeah, it's a little bit of a-- >> Quid pro quo, I think is what you call that. >> Well I'd say Amazon is definitely, "We're going to encroach a little bit on your business, "and we're going to woke you into our environment, too." >> Okay, let's talk about the edge, and Outposts at the edge, they announced Wavelength, which is essentially taking Outposts and putting it into 5G networks at carriers. >> Yeah, so Outposts is this building block, and what Amazon did is they said, "This is pretty cool, "we actually have our environment "and we can do other things with it." So sometimes they're just taking, pretty much that same block, and using it for another service, so one that you didn't mention was AWS Local Zones. So it is not a whole new availability zone, but it is basically extending the cloud, multi-tenant, the first one is done for the TME market in Los Angeles, and you expect, how does Amazon get lower latency and get closer, and get specialized services, local zones are how they're going to do this. The Wavelength solution is something they built specifically for the telco environment. I actually got to sit down with Verizon, this was at least an 18 month integration, anybody that's worked in the telco space knows that it's usually not standard gear, there's NEBB certification, there's all these things, it's often even DC power, so, it is leveraging Outposts, but it is not them rolling the same thing into Verizon that they did in their environments. Similar how they're going to manage it, but as you said, it's going to push to the telco edge and in a partnership with Verizon, Vodafone, SK, Telecom, and some others that will be rolling out across the globe, they are going to have that 5G offering and this little bit, I actually buy it from Amazon, but you still buy the 5G from your local carrier. It's going to roll out in Chicago first, and enabling all of those edge applications. >> Well what I like about the Amazon strategy at the edge is, and I've said this before, on a number of occasions on theCUBE Breaking Analysis, they're taking programmable infrastructure to the edge, the edge will be won by developers in my view, and Amazon obviously has got great developer traction, I don't see that same developer traction at HPE, even Dell EMC proper, even within VMware, and now they've got Pivotal, they've got an opportunity there, but they've really got a long way to go in terms of appealing to developers, whereas Amazon I think is there, obviously, today. >> Yeah, absolutely true, Dave. When we first started going to the show seven years ago, it was very much the hoodie crowd, and all of those cloud-native, now, as you said, it's those companies that are trying to become born again in the cloud, and do these environments, because I had a great conversation with Andy Jassy on air, Dave, and I said "Do we just shrink wrap solutions "and make it easy for the enterprise to deploy, "or are we doing the enterprise a disservice?" Because if you are truly going to thrive and survive in the cloud-native era, you've got to go through a little bit of pain, you need to have more developers. I've seen lots of stats about how fast people are hiring developers and I need to, it's really a reversal of that old outsourcing trend, I really need IT and the business working together, being agile, and being able to respond and leverage data. >> It's that hyperscaler mentality that Jassy has, "We got engineers, we'll spend time "on creating a better mousetrap, on lowering costs," whereas the enterprise, they don't have necessarily as many resources or as many engineers running around, they'll spend money to save time, so your point about solutions I think is right on. We'll see, I mean look, never say never with Amazon. We've seen it, certainly with on-prem, hybrid, whatever you want to call it, and I think you'll see the same with multicloud, and so we watch. >> Yeah, Dave, the analogy I gave in the final wrap is "Finding the right cloud is like Goldilocks "finding the perfect solution." There's one solution out there, I think it's a little too hot, and you're probably not smart enough to use it just yet. There's one solution that, yeah, absolutely, you can use all of your credits to leverage it, and will meet you where you are and it's great, and then you've got Amazon trying to fit everything in between, and they feel that they are just right no matter where you are on that spectrum, and that's why you get 36 billion growing at 35%, not something I've seen in the software space. >> All right, Stu, thank you for your thoughts on re:Invent, and thank you for watching this episode of theCUBE Insights, powered by ETR, this is Dave Vellante for Stu Miniman, we'll see you next time. (techno music)

>>LA from Las Vegas. It's the cube covering AWS. Reinvent 20 nineteens brought to you by Amazon web services and they don't care along with its ecosystem partners. >>Hey, welcome back. Everyone is the cubes live covers in Las Vegas for AWS. Reinvent 2019 it's our seventh year covering Amazon reinvent. They've only had the conference for eight years. We've been documenting history. I'm John Farrow, stupid man. Dave Alante, John Walls, Jeff, Rick, they're all on the other step two sets sponsored by Intel. Want to thank their support without their generous support to our mission. We wouldn't be able to bring this great content. Our next guest to talk about the IOT edge jerk DDoSs column. Perfect. Welcome back. VP of IOT. Well the Greek names. Yeah, I'm half Greek, half German so I can expect, okay. Is smart. Good. So Derek, I gotta ask you, so IOT is hot. Explain quickly your role at AWS because you're not an I-Team specifically define your scope. So my scope is owning all or my team's sculpt is owning old software services and tools that deal with non it equipment. >>So when you go to AWS and look for IOT, all the service that you'll find, that's the scope of my teams and this it group which have all the it stuff and just feels like cars, manufacturing sensors, all of the axioms for the NFL, all that good stuff. So women, you're going to see Edelweiss so I go AWS, amazon.com and then you're fine either. means all of our compute, all of our databases, all of our storage and there's also all of our and Melanie and I and then there's an IOT section and there you find all of the goodness that we do for IOT. You know, it's exciting. Stu and I talking about all week here, the whole cloud native, you take the T out of cloud native, it's cloud naive. You've got the general commercial business and public sector barely getting their act together. They're transforming, they're doing it now. >>He's $1 trillion on a vouch. Trillions of dollars of of change coming. Good up business opportunity. But if they're having trouble transforming, you get this whole new world of industrial edge which requires computing cars manufactured. This is a hot area. So a lot of change happening. What is the most important story people should pay attention to in your area that that's notable for this collision of all this transformation? I think maybe the most notable story that we currently have is a corporation that they do with the VW, which is the largest a car manufacturer. And you were just lucky that via their CIO mountain Huffman being part of Verona for good's keynote, our CTO. So if you haven't seen that, just go and review the keynote of Verner and then as the larger part then he was talking about all of that, what he calls industrial 4.0, this digitization fourth revolution. And Martin did an awesome job explaining what are we doing together with them to build their industrial cloud. Yeah. >>Uh, well, one of the things we've been really watching is the, the extent that Amazon services are starting to push out. Uh, I've been super excited, really looking at some of the growth of there. Your team did a bunch of announcements ahead of the show including the one that caught my eye the most was the IOT green grass sport for Lambda and Docker. Maybe start there and walk us through some of the new pieces that in your org. Okay. >>Maybe for us to understand the offer three type of offerings for our customers. One is device software, which might sound strange that a cloud company actually gives you a software that it's not running on the cloud, but then you're talking about IOT. You need software running on your devices in order to be able to be controlled and communicate with the cloud and we have an offering in that area which is called IOT Greenglass, which is a software runtime that you can install on edge devices like gateways for example, and via announced junior additions to our IOT Greenglass. One is Docker supports, which was very important because up till now green were supporting machine learning at the edge and Lambda, which is our service offering, but many companies now more established enterprises said, you know what, I have legacy applications which I can package. Can I deploy them as well? >>Now you can deploy Docker containers, Lambda functions, and a melody edge all with one goal with green glass at the edge. So that was one of the announcements we did for our device >> software. They're, I want to get your thoughts on an area that we're reporting on and doing a lot of investigation, collecting a lot of data, talking to a lot of people and that's around the industrial IOT or IOT, industrial IOT. And one of our big concerns, I want to get your reaction to this and thoughts is security is of paramount importance because it's not just a DDoS attack or some malware which is causing credit card data or these kinds of theft. You could actually take over machines. People could die this and serious issues around the guarantee. This is the number one conversation. What is the state of the art security posture in your area around software and the edge? >>So at AWS, whether it's IOT or any other workloads, we always say if you have two primary zeros, one is security and one is operations. Because if any company puts their faith in us, if we are down, their business is down and if there would be any security issues, of course all the trust would be broken and we do the exact same approach. Now with IOT, so we built our services with security in mind. For example, when you connect to AWS IOT core, every single individual device needs to have certificates to be identified. If you require that you can encrypt your data, it doesn't even lo you to connect to the cloud without encryption. We have software, as I said, at the edge with Amazon free artists and Greengrass where we support all of the hardware TM modules that you have security postures there. If you have secrets managers, they even have an award winning clout. >>If you're like security tool, which is called IOT device management, but at any given point in time audits but the you configured correctly and does something like detection. If something's going wrong, like when you get your credit card and said, Hey, by the way, have you been in this country? Candy making any purchase? If you figure out if something's going wrong with your device >> and you feel good that it's built in from zero, I mean you've got DNS tax going on. What? I mean you feel comfortable that it's, I mean we believe whatever we build, you can never be 100% sure and security is always evolving. But we believe that we are at the forefront of being, you're always the latest and greatest technology at the hands of our customers. >>Jerks. That's really powerful. Cause I saw one of the other announcements was really taking the Alexa voice service integration, but if I understand it rightly, it pulls that core along. So you know part of me was like, it's like okay Alexa enabled everywhere. That's great. I don't need 700 devices in my house that all have that. But the security piece is going to be needed everywhere. So help us tease that out. >>Maybe, maybe don't understand what we did you ask about the other launches. We also launched something called AVS integration for IUT and AVS stands for Alexa voice services. So if you know Alexa, that's our digital assistant that runs for example an equity devices, but if you want to build a device as a third party, which you can directly talk to media, there's microphones and speakers that is called AVS or Alexa built in devices and if you wanted to build one today you needed to put quite some resources onto this device because it needs to understand you. It needs to have a lot of audio processing. That means there's a lot of memory involved and quite some processing. Now I'm using some technical terms. You need something like a cortex, a CPU which makes this device expensive. So the bill of material is quite elevated and we were working with our Alexa team saying is how can we make this really, really affordable? >>If you found a trick where we said let's offload all of this audio processing to the cloud that you an eSense can build very dumb devices. The only thing that these devices don't need to do is have microphones, have our speaker and what we call a week work detection. They need to wake up and you say, Alexa, echo computer, everything else gets streamed to the cloud. Ptosis sits there and comes back so that you can reduce cost for those devices by at least a factor of half. And we had a great customer on stage as well because if you can make so cheap Alexa built in devices, you can put this into a light switch and iDevices now believe it or not, non-sales light switch. Yup. Which you can now directly talk to, reach, talks back and place your music. They're talking about your role. Again, I want to understand that you are not technical side, your development teams. What are you, what do you do on a daily basis? What's your job? So officially I'm a VP of engineering, so I'm a tech guy, so I love the hoodie. By the way. This is tech. That's because I'm on video. Okay. >>It looks great. So I'm an engineer by Heights and at Amazon we don't have a separation between businesses and product management and engineering. They call it a single thread of leaders that we believe the teams have to own it all. So that means my teams on everything from the conception of their services, the development operations that what be called dev ops and also the business behind. So that means all of the services, whether it's free outro, screen grabs at the edge, but it's IOT core device management and defender or our data services like IOT analytics or your talked about industrial site wise, their health or being conceived by my teams. They have all been developed and they are all operated today so that all customers can use that as it make. What should people >>totally does. Thanks for clarifying. That's awesome. Uh, what should people pay attention to? What should we be reporting on in your area? What are some of the key things that people watching this should pay attention to in this, in your IOT area? What are the most important items and products and services that you're doing? I think >>one of the most important things to understand is be talk just before the interview about this, that a lot of the technical hurdles actually solve that because we have the software on devices, we have the connectivity controlled services, and we have all the analytic services to make sense of the data that you can take actions. You don't need to be an expert in machine learning anymore to do machine learning at AWS. You don't have to be an embedded software developer to get connected devices. You don't have to be a data scientist to understand what your data does. The most interesting part though is there is a cultural aspect of this because in the past you had to ideally most likely in your old company join said, Oh, I would like to connect something, so do I have a purchase acquisition? Can I go to my finance team? Does it install this today? You don't need that anymore. With AWS IOT, the same thing that happens with the cloud and it happens with IOT. So understanding that via very powerful tools for engineers in the company that you can build at any given point in time. I think that's maybe the most, >>and I think the it, I think that whole process of the time it takes, they go to the airport on Thanksgiving, go through TSA and knows all that pre ocracy. And then the other thing too is that the other IOT used to be kind of a closed system self, um, form dot devices. Now you've got with Clough, you've got a lot more range and compatibility. Can you talk about that address, address that issue? Because there might be still legacy out there and no problem. It's data's data, but those are the days come in the cloud. But there's now a new shift happening where it's not just, you know, fully monolithic OT devices if it, so the pasta >>monolithic what's called machine to machine, close systems, IOT is the opposite there. It's where you say now all the devices and connections can be done in between the devices and the cloud. So it's system of systems. And in order to make that happen. For example, when you call it the legacy systems, we also announced on Monday and our IOT day additional features for IOT core that you can migrate legacy systems much easier to the cloud without that you need to update your devices. >>Yeah. Dirk, one of the things I find most interesting about your space as you span between the consumer and the enterprise piece, so I remember a few years ago there was like a hackathon on building skills for Alexa and it got lots of people involved. There was a giveaway of lots of the devices there. You know, we used to talk about the consumerization of it. How is what's happening in the tumor world? You know, how is the enterprise going to take care of take that and transform business as we see IOT permeating everywhere. >>So the capabilities that you need, whether you're going in industrial or in consumer or in the medical or pick your favorite other vertical is in essence the same. You need to connect the devices. You need to ensure that they're secure. We talked about security. You need to make sense of the data, whether you do this in the home with your television or your light switch or your robot, or you do the exact same thing with the most sophisticated robot in the industry. It's the same thing. The good thing about us handling all of those sites is that the scale that we gain with literally hundreds of millions of devices now managed by our service in the backend of course means we will handle all of that scale also in the industry and the security and postures and complexity that we need to handle an industrial also benefits computer, so our consumer side, so you benefit from both sides, very cheap and scale on the one industrial benefit. Very complex. How do you solve that consumable benefit, so it's very fruitful synergies if you like, >>Oh, you guys love to solve problems at Amazon that's going to eat those. Yeah. Derek, thank you so much for coming on and sharing the insights and what you're working on and what's important. Congratulations on all your success. Thank you so much. The threaded leader here. Final question for you. Eighth year of reinvent. It gets bigger every year. Louder. Crazier for parties, more business development more. Exactly. I mean just, it's crazy. Yeah. It's just say work hard, play hard. What is your favorite thing going on here? What's the coolest thing that you've seen? >>I think the coolest thing, and it might sound a little cheeky, is, is the excitement from all of our customers and partners coming here every year. >>PR tells you to say, I'm not about fraud. I mean, you're talking about products. I love my products. I'm still so happy about that. I mean, I can talk to a light switch now. Well, you see the comma car and the other quad had the area that we have yet. It's a very different experience that you can do. Don't talk to your lights, which when you get home your wife will think you're going crazy. I love that. Thank you for coming on. Really appreciate it. Thanks for having cube coverage here. All I'm, we're going to wrap up here. Keep coverage with Derek runs all the IOT for with an AWS exciting new area. It's going to change the game on architecture and solutions are being baked out in real time. We're here breaking out the cube in real time. I'm John. Thanks for watching.

>> Voiceover: Live from Washington D.C., it's the Cube. Covering AWS Public Sector Summit. (upbeat music) Brought to you by Amazon Web Services. >> Welcome back everyone to the Cube's live coverage of the AWS Public Sector Summit here in wonderful Washington D.C. I'm your host, Rebecca Knight along with my co-host, John Furrier. We are welcoming Dave Levy to the program, he is the Vice President, Federal Government at AWS. Thank you so much for coming on the Cube. >> Yeah, thank you for having me. >> Rebecca: This is your first time, your first rodeo. >> It is my first time. >> Rebecca: Welcome. >> Glad to be here. >> You're now a Cube alumni, welcome to the Cube alumni club. >> Well exactly, right, exactly. So you have been with AWS for about two years now. AWS famously has this day one mentality. I want you to talk a little bit about the culture of the company and how the culture helps create more innovative products and services. >> Yeah, and it is always day one. You hear about that but truly working in my first two years, you really get the experience when you're here everyday, that excitement and that enthusiasm for customers. It's interesting and somebody was asking me the other day, how do you get influence inside of Amazon, how do you get you points across? And in large part because Amazon's not a PowerPoint culture, being charismatic or having some of those traits really doesn't carry the day. What really carries the day inside of Amazon is what customers want and so I can't tell you how many times in the first few years that I've been here that we have been in meetings, going through our customer working backwards process, where somebody has said, wait a minute, we heard customers say we prioritize these four things versus these three things. And that kind of sentiment carries a lot of currency inside of the business for what we prioritize and what's important to us and it's how we innovate on behalf of customers. So that's what happens everyday, it happens day one at AWS and it's been really exciting these first few years. >> That's been a great formula for Amazon. That long game as Bezos always says, Andy always says, customer first, customer-centric thinking. But this working backwards process we've learned, come to learn, it's really critical within Amazon. But also making sure customers have the right journey, right, they get what they need, they get value, lower costs, living with undifferentiated heavy lifting. I feel like I'm messaging for Amazon. (laughing) Got it memorized. I sit down and interview so many people from Amazon, I got the rap down but digital transformation is about the long game 'cause all the shifts that are going on now aren't incremental, small improvements, it's really moving the ball down the field, big time. So you're seeing major shifts within customer bases saying, like the CIA did in 2013, >> Dave: Sure. >> which was initially a hedge against big data, we heard on stage today, turned out to be a critical decision for their innovation, this modernization. Could you share some other customer experiences around this IT modernization trend that's, it's totally real, it's happening right now in D.C. in Public Sector. >> Sure, there are a lot of examples. IT modernization is something that takes on a lot of different forms and a lot of different agencies think about it in different ways but fundamentally, it's about taking the systems that are serving citizens or a war fighter and allowing for an ability and an agility to do things better and faster and cheaper and doing it in a way that continues to innovate. And you see a lot of examples of that. CMS has the 76 million records of Americans on AWS. You see large data sets starting to be hosted on AWS from agencies across the civilian sector. DOD is really starting to lean in on workloads that are traditional things like ERP. >> DOD is more than leaning in, they're really going big. There's a paper that they put out was very comprehensive-- >> Yeah, I think there's a tremendous advantage from this digital transformation and agencies are really just at the beginning of it. They're really beginning to see what flexibility it provides. I think the other thing that it's doing is it's really helping to modernize the workforce. It's allowing the IT workforce to start focusing on things that are really valuable instead of managing hardware or managing IT environment strictly. It's giving the ability to deliver solutions and that's really exciting, that's what modernization is doing. >> One of the things that comes up in the modernization talks, it's not that obvious on the mainstream press, but the whole red tape argument of government process. People process technology, again, we've done these conversations all the time but in each one, the process piece, there's red tape in all of them. People who go slower, the process has red tape in it but this idea of busting through and cutting the red tape. >> Dave: Yeah. >> All these bottlenecks, Teresa calls them blockers. >> Yeah. >> Right. That's her different word. >> Yeah, yeah. >> These are real, now people are identifying that they can be taken away, not just dealing with them. Your thoughts and reaction to that. >> Yeah, well, I agree. There's a lot of opportunity. Digitizing work flows gives you the opportunity to re-examine all of these operational processes which frankly, may have been in place for very sound reasons in the past but when you modernize and you digitize and you do it in a cloud way, you're going to start to see that some of those things and those processes that were in place, really aren't necessary any more. And it allows you to move faster, it gives you more speed and we're seeing that across customers and the US government. We're seeing it really everywhere. >> And one of the things you were saying too about the digitizing the work flow, it's really about ensuring that citizens, civilians or members of the armed forces are interacting with government in a more meaningful way. That is the overarching problem that you're trying to solve here. >> It is and it can be as simple as citizens getting the kind of content that they need from a modern website, accessing it quickly, going to higher level functions around chatbots and things like that. So these modern cloud architectures are allowing agencies to deliver services faster, deliver things to citizens in a way they haven't before. Could be citizens that need assistive technology. It's giving agencies the opportunity to do things around 508 compliance that they haven't done before. So it's really opening up the aperture for a lot of agencies on what they can deliver. >> We've been doing a lot of reporting around Jedi, the DOD, actually been following a lot of the white papers from a cloud perspective. We're not really in the political circle so we don't know sometimes whose toes we're stepping on when we poke round but one thing that's very clear from the agencies that I report, even here in the hallways this week, CIA and other agencies I've talked to, all talk about the modernization in the context of one common theme, data. Data is the critical piece of the equation and it's multifold, this single cloud with the workload objective or multiple clouds in an architecture like the DOD put out. So there's clear visibility on what it looks like architecturally, multicloud, some hybrid, some pure public cloud based on workloads, the right cloud with the right job and people are getting that. But data is evolving, the role of data 'cause you got AI which is fed by machine learning. This really is a game changer. How is that playing out in conversations that you're seeing with customers and talk about that dynamic because if you get it right, good things happen, if you get it wrong, you could be screwed. It's really one of those linchpin, core items, your thoughts. >> Every agency, virtually every agency we talk to, every customer we're talking to is saying that data is the most important thing, their data strategy. Data, you know, we've all heard the sayings, data has gravity, data is the new oil. So there's a lot of ways to characterize it but once you have the opportunity to get your data both unstructured and structured, in a place, in a cloud, in an environment where you can start to do things with it, create data lakes, you can start to apply analytics to it, build machine learning models in AI. Then you're really starting to get into delivering things that you haven't thought about before. And up until then it's been tough because the data, in a lot of our customers, has been spread out. It's been in different data centers, it's been in different environments, sometimes it's under somebody's desk. So this idea of data and data management is really exciting to a lot of our customers. >> Now a lot of people don't understand that there's also down, and this is what we're getting, we're hearing from customers as well is that, they set up the data lakes or whatever they're calling it, data strategy, data lake, whatever, then there's downstream benefits to having that data just materialize and as an anecdote to what is, you look at the Ground Station after we've had a couple great interviews here about Ground Station which I love by the way. I think that's totally the coolest thing because of the, well, the real impact is going to be great back hog, IoT is going to boom, blossom from it but it only happens because you got Amazon scale. So again, data has that similar dynamic where as you start collecting and managing it in a holistic way, new things emerge, new value emerges. >> Yeah, I would say-- >> What are some of those things that you're seeing with your customers there? >> I would say there are real-world challenges that our customers have to deal with with data, right. When you start to have volumes, terabytes, petabytes of data, they've got decisions to make. Do they expand the wall, knock out a wall and expand their data center and buy more appliances which require more heating, more cooling? Maybe they do do that but there's an alternative now. There's a place for that data to go and be safe and secure and they can start doing the things that they want to do with that data. And like you said, downstream effects. There are some things that they can do with that data that they don't even know about today, right, and Ground Station's a good example of that. >> You talk to people in the military, for example, because we just had Keith Alexander, our General, the General was on. They think tactical ads using data, save lives, protect our nation, et cetera but there's also the other benefit of it that has nothing to do with the tactical, it's a business value. The enablement is a huge conversation >> Dave: Sure. >> that you hear in these modernization trends. Not just the benefits tactically, but the enablement setup, talk about that dynamic. >> Well, you think about the data that is collected. You think about the valuable data at the VA and that has potential implications for population health and so this day is just enormously valuable. I think we're at the very beginning of what we can do with some of these things across federal and you look at agencies like Department of Interior and some of the data sets they have are just fascinating. What we can do. We've got millions of visitors to our national parks every day and we don't know what's possible with a lot of those data sets. >> Talk about some of the tools and techniques that are being used to work with that data and talk about AI and machine learning and how they have been a real game changer for some of your federal customers. >> Well, ML and AI is really, we're really at the very beginning of this transformation. I think in the fullness of time, the vast majority of applications are going to be effused with machine learning and artificial intelligence. I think that day is not too far away and they're using tools on our platform like SageMaker to make predictions in this data. And one of the great things about having a platform that has really three, different parts to the stack which are machine learning, that's where you have your frameworks. I say that's where all the really, really smart people live, all the data scientists that we're all so desperate for and then you've got that middle layer which are tools like our SageMaker which everyday developers can use. So if you've got geospatial data and you're trying to determine what's in a given area, everyday developers can use SageMaker to build machine learning models. Those are some of the things they're doing, very exciting. >> Hey, I want to get your thoughts on a comment that Teresa Carlson just made earlier today. I'm not sure she said this on camera or not but it was memorable. She said, "It used to be an aha moment with the cloud "but this year it's not, it's real, people now recognize "that cloud adoption is legit, proof is in the--" >> Rebecca: Cloud is the new normal. >> The proof is in the pudding, it's right there. You can start seeing evidence, all the doubting people out there can now see the evidence and make their own judgment, it's clear. >> Yeah. >> Cloud is of great benefit, creates disruption. As this continues to increase, and it is, numbers are there, see the business performance, what are the challenges and drivers for continued success? >> Yeah. I think the first conversation starter, so Teresa's spot on as she always is. I think the first conversation starter is always cost savings. That was the way everybody thought about the cloud in the beginning and I think there are cost savings that customers are going to realize. But I think the real value, the real reasons why customers do it is, there's an agility that happens when you move to cloud that you don't necessarily have in your other environments, there's the ability to move fast, to spin up a lot of capability in just a few minutes, in just even minutes and change the experience for users, change the experience for citizens. I think the other thing that cloud is delivering is this whole breadth of functionality that we didn't really have before. We talked about machine learning and AI but there are tools around IoT now. There's Greengrass on AWS which is simply AWS IoT inside. And places like John Deere, we have hundred thousands of telematically enabled tractors sending data back to planters. So customers are getting involved because there's this huge breadth of functionality. I think, and so that's exciting, those are the enablers, that's what's driving. I think some of the things that are getting in the way is, we've got a workforce by and large, especially in the federal government, well, this is new and that learning is happening, that enablement is happening about cloud. We're teaching about security in the cloud. It's a shared responsibility model. So it's the new normal, we know what can be done in the cloud but now there are some new paradigms about how to do it and AWS and a lot of our partners are out there talking about how to get that done. >> I want to get a double down on that because one of the things that we're doing a report on, I've been investigating, is kind of a boring topic but it's your world right on which is how Amazon bare-knuckled their way into this market through cost saving which for the federal government, I would say, is a great lead 'cause they care about cost savings. A financial institution in Wall Street might not care about cost savings. They might want arbitrage on the other side but again, government's government. You guys have earned, done the work to get all the certifications. Your team, Teresa's team has done that and now you're at the beginning of the next level. But procurement is really broken, right. I was talking to an official in an interview off the record and he said, I won't say his name till I can say it here, he said, "You know, we're living procurement in the 80s. "We still have a requirement to ship a manual "on a lot of these things." So the antiquated, inadequate procurement process is lagging so much that the technology shifts are happening in a shorter period of time. Amazon which produces thousands of new services every year and reinvents Jace's big slide thousands, next year it'll be probably 5000, who knows but it'll be a big number. That's happening, all this is happening right now, really fast but procurement's lagging behind it, really stunting the innovation equation, >> Dave: Yeah. >> the growth of innovation. Your thoughts on fixing that, how you get around it, all these old tripwire rules. >> Well, first I'll say, procurement reform is something that's on everybody's mind. This is, it's not just a blocker for cloud, it's a blocker for everybody. Technology is far outpacing what our federal government can do. So I don't, there's nobody that I talk to that thinks that we're headed in the right place with procurement reform, even our customers inside of the government. So I think what I'd say is it's really collective approach. It's an industry approach that's going to be taken to change a procurement, to help them adapt to modern laws. Do we need changes in the far perhaps, yes, but I think we need fundamental policy changes, a legislative approach to change procurement for technology. It's only going to move faster, you're right. Indie announced in 2018 I think, nearly 2000 services so you can expect there's going to be more this year. Part of that is understanding new models. Our marketplace, for example, is a way to buy and access software quickly, fast, even by the hour if necessary. That's a total-- >> Rebecca: Like Ground Station >> Yeah. >> in that way, yeah. >> By the minute if necessary. >> Yes, yes, yes. >> So it's a totally new paradigm. As far as how we're approaching now, it takes having good partners. We have good partners that are helping us with respect to contract vehicles. I think we're being transparent around how we bill, how these services translate, what's in the services that they're getting charged and I think agencies are starting to feel more comfortable with that. >> I learned a term from Charlie Bell, Engineer Lead for Amazon, did an interview, a term you guys use internally at Amazon called, dogs not barking. >> Dave: Yes. >> And it means that everyone, the barking dog everyone hears and they go after, they solve that problem. It's what you don't see, the blind spot, aka blind spots. What do you see in federal that's not barking >> Yeah, what are our dogs? >> that you're aware of? What keeps you up at night? >> What are our dogs not barking? >> John: Yeah. >> I would say, it really is our customer workforce. I think our customers really need to get enablement and training and support from us and the partner community on how to make this transition to cloud. It's incumbent upon us and it's incumbent upon the agencies to really deliver it. That does keep me up at night because this is new. This is new for, the ATO process is a little bit different. The accreditation process is different. So there's a lot of new things out there and if there's a dog that's not barking, it's somebody needs help and they're not really letting us-- >> They might not even know they need it. >> They don't know they need help or they're not saying that that they need help and they don't know where to go. >> Right. >> Right. >> They should come to you. >> Well, thanks for coming on. (laughing) >> Dave, thank you so much for coming on the Cube. >> Yeah, thank you, all right. >> Thank you, thank you. >> I'm Rebecca Knight for John Furrier. We will have more from the Cube AWS Public Sector Summit, stay tuned. (upbeat music)

>> Live from Las Vegas, it's theCUBE! Covering VMworld 2018. Brought to you by VMware and its ecosystem partners. >> Welcome back to VMworld day three, continuing coverage for theCUBE, I'm Lisa Martin with Dave Vellante sporting this fantastic salmon tie, and what you can't see is the matching salmon pants. Dave- >> There ya go. I still have my voice. (laughs) >> The outfit game is on point, Dave. >> Thank you. >> So we've been here, this is our third day, this is a huge event, 25,000 or so people here, lots of great announcements. We're excited to welcome to theCUBE for the first time Mimi Spier the Vice President of the Internet of Things Business at Vmware, Mimi, it's great to have you! >> Thank you! I'm so happy to be here. >> Thanks for comin' on. >> Yeah, it's great. >> So, three action packed days, lot's of announcements, lots of momentum. You lead a team at VMware that launched the VMware IoT business about a year and a half ago, including, launching the product, the GTM strategy, the partner in marketing strategy. In the last year and a half, talk to us about the evolution of VMware IoT, the business challenges that you're helping customers to solve. >> Absolutely, so, this has been a journey for almost a couple years now, and, VMware saw a need to really start to look at what we'll call the edge or IoT use cases. Our customers started coming to us saying "Wait a minute, this is coming, I know my business units are starting to invest in IoT, I have no control over it, I have no exposure to it, what should I do?" And, we are really committed to being an infrastructure company, we knew that when started this journey, and we said "We really want to focus on infrastructure, but we want to help our customers go to the edge, really start to embrace this new opportunity in the industry, to be able to take advantage of this data." We call it, the data is the gold, how do you actually be able to take advantage of it? So, we're really excited, we just started the journey and now we've really this VMworld is where the momentum is starting to take off. >> How do you look at that opportunity? Because it's complicated, especially for a bunch of IT people, right? And now you're entering this world of operations technology. But how do you sort of look at the landscape of the market? >> I'm really glad you asked that, 'cause that's one of my favorite topics, so. I want our customers to think about, first of all, what are the mission critical objectives of their business? They shouldn't do IoT just to do IoT, they need to do what's right for their business; but I also think it's important that they look beyond that. So, if you look at some of the macro trends happening in the world today, there will need to be 70% more food that's created, and there's only 5% more land that it can be built on. There's going to be 300 million connected cars out on the roads There was a statistic that there will be two thirds of energy is consumed by cities, yet we still have very old ways of doing it, but it's in this very consolidated area; why would we not take advantage of that? So I think industries, whether you're in energy or you're in smart cities or you're in automotive, you have to really think about where is your industry going? And even IT people need to think about this, I think, and I'll explain why in a minute but, how can I actually create an industry and a company that can sustain in this future world, and also contribute to the future of what our world's going to be like. So I think, and the technology, and the way we set this up, and the architecture, is really the foundation to do that. So, that's where VMware comes in. >> Okay. And talk a little bit more about VMware's specific strategy as it relates to IoT. I mean I was at the big Dell announcement last fall. Okay, so you've got Dell sort of with existing relationships actually with a lot of the industrial giants. But now enter VMware, what's your strategy? >> So, first I want to say that Dell and VMware have come together into one big business unit to solve IoT and edge. And the beauty of that is we believe that our customers can really have a more simplistic way of achieving this infrastructure foundation, if we can offer these end-to-end solutions together; so I'll talk about how the Dell piece fits into the VMware strategy. But what VMware's trying to do is drastically simplify the complexity of the infrastructure and the foundation you'll need for IoT. So we want to extend what we're doing in the cloud and the multi-cloud, because we fundamentally believe most of our customers are actually in multiple clouds, private, public, multiple public, and actually be able to extend that down to whatever edge they need as well. Because of the amount of data that will be generated at the edge, there's going to be, I don't know, analysts say 50 to 75% of data will be generated at the edges of our business by 2020. And think about it, all of our applications today are in the cloud, so there must be edge computing that is local to be able to process that data. And there also needs to be, there's this heterogeneous set of devices that will need to be managed, monitored, secure, and collect that data; so this requires, it's complex, so we want to drastically simplify that and that's the overarching part of our strategy. But we also want to allow our customers to do it in a way that's secure, that's scalable, and that's manageable over time, so. >> So does that mean putting some, first of all the Dell partnership is interesting, and Alan Cohen one of our guest analysts this week said "Partnerships used to be like tennis, one-on-one, and now partnerships are like soccer." There's just so many parts of the ecosystem so that's sort of one observation, but. Are you sort of bringing VMware to the edge? Is that? >> We are, so we're bringing VMware to the edge, we announced a new portfolio of solutions called VMware Edge it will take advantage of the ability to do the compute edge which is the processing at the edge, and really extending our hyper-converge technology as a service, like we're doing for VMC on AWS, to the edge; and it includes our device edge, and there's a lot of things that is happening on the device edge, which is like gateways and things, that we want to help provide a more software-defined approach, as well as ensure that those can be managed, monitored, secure, across all the diverse set of devices. Now, you can't do that alone. The ecosystem you mentioned, I've never seen any in my history of my career the amount of collaboration that's going on across the ecosystem, because IoT is so hard; so, you really do need to collaborate. And we are collaborating with the IoT platform providers, the gateway and the thing providers, the hardware providers, the system integrators; it requires that to be successful. But what we want to do with Dell is do it in a way that we offer these end-to-end solutions so that it's just more simple, you can go to one place to consume it, to ensure that it gets deployed, and to actually support that solution, but offering it from a multitude of our partners, typically so. >> So let's dig into to simplicity because we hear that, Mimi, all the time, as you do too. Customers want choice, they want simplicity, right Dave? They want flexibility. >> They want it all! >> They want it all! We all want it all. But how is the VMware edge computing strategy, the technology level, actually facilitating simplicity, in what is inherently a complex world of multiple devices, multiple clouds, et cetera? Talk to us about the technology and the actual enablers of that simple approach they need. >> I'm so glad you asked me that! So, we've been saying very consistently, that we want to offer consistent infrastructure, consistent operations, but we want to give you the choice of your application platform or development platform. We're going to do the exact same thing at the edge. So everything that VMware customers experience in their private cloud, their SDDC solution, private cloud, public cloud, we are now going to offer as a service at the edge same infrastructure, same operational model as the HyperCloud model, but at the edge; with the choice of the application development tools that they would like, because, they might want Greengrass from Amazon, they might want the Azure, they might IoT Watson, whatever they want at the edge we want to be able to support that on our infrastructure, but still maintaining that simplicity of a consistent infrastructure no matter where you choose to run your applications. We want to just eliminate the even thought process, run your applications anywhere, on a consistent infrastructure, with the same management, the same operations, and move 'em around as much as you like. >> So is there an abstraction layer almost that this can enable so that that management of all of these different applications and development platforms can be really done seamlessly? >> Yeah, so Project Dimension we announced a tech preview, and, well we'll be launching it later this year, and it will have a management layer that allows you to move your infrastructure and be able to actually, actually it's a VMware managed solution, so we will do it for you, it's even more simple; but be able to choose where you want to run that appliance as a service or infrastructure, whether it be the public cloud, the private cloud or the data center, and the edge. So that is the new what you call extraction, it's almost a new dimension, no pun intended. >> Hence the name. >> Hence the name, of, across all of your different clouds, or edge. >> So the notes I had on dimension, a hybrid cloud control plane, and the end-to-end VMware stack, on-prem cloud at the edge. And I think I heard Lenovo, VMware, and Dell are the initial sort of platform providers. >> That's right, Lenovo, Dell is the hardware. >> And that, what's the consumption model, is that an as a service consumption model? >> So we'll start with as a service, and what that means is VMware will actually manage your hardware, your infrastructure, and your software, we will do it for you. Obviously with the collaboration of when to do it and if everything, because this could be at the edge running mission critical applications. We want to make sure the OT, it's really an opportunity for OT and IT to collaborate and ensure that it's meeting the OT needs as well. >> So it's bringing a cloud-like consumption model to the edge, which of course is huge for VMware, I think probably 10% of your business today is SaaS-based, and the trend is clear; and the trend is your friend as they say, but, it's not easy to necessarily get there. So that's exciting I think that you're delivering as a service. >> I think we got really lucky. We ended up with this hybrid cloud strategy, it was the right thing to do, it's absolutely where the market's gone, and we're now almost at a multi-cloud strategy. And that puts us at the perfect position because we have set up our customers to be flexible and be able to choose whatever cloud or private they want in a cloud, we are very easily able to extend that to the edge, so it puts us in a very good position. >> Talking about the ecosystem again, I mean IoT it's every industry, every sector, every size of company, and I want you to discuss an ISV piece of this it's a very complex situation. >> I would love to talk with ISVs. >> But there's so many ISVs it makes your eyes bleed when you look at the list of ISVs, hard to figure out, okay who's real, who's not, and who to partner with; how are you guys sorting all that out? >> Okay. So, we are the infrastructure, what is beautiful about that is we are not competing with ISVs at all, so they all want to work with us. And the ISVs in the IoT world consist of not only specific application providers, but also IoT platform providers. So it's the SAPs of the world, it's Microsoft, it's also the Bosch, the GE, everybody that wants to do something with that data and build applications it. Most of those are doing industry-specific things, so what we're going to do is take Project Dimension and we're going to offer appliances as a service for industry-specific use cases, and sometimes they're horizontal like building management, but we're going to pick the best ones that we think have the right solution that can scale to the level our customers need in a secure way, and doing the most rich experience with our data. In fact we have 15 different partners in our zone right now really showing what they can do across six different industries, and that's what we're going to do with them. We're also, with Pulse, so I need to talk a little bit about Pulse because it's my baby, we announced Pulse IoT Center 2.0. And what that is, is it's the ability to manage, monitor, and secure things, or IoT gateways. So, one example of that is surveillance, we are partnering with camera companies that also offer analytic applications for visualization and surveillance, and we offering an end-to-end solution. In fact we announced the Dell Technologies surveillance solution partnering with companies like Access Communications owned by Cannon, Pulse runs on the camera to ensure that that camera is working properly, hasn't been hacked into, can get patched, can get isolated, God forbid something happens; and we're doing the same thing across many of the device and thing providers as well, which really falls into that. >> Let's talk about- Sorry Mimi, let's talk about an actual customer. Where do they start in this conversation? Because as you were saying in the beginning, the world is going IoT, there's this proliferation of devices, companies are moving in this direction because they have no choice. We were talking with a school district yesterday and the proliferation of BYOD, all of the things. So where does the conversation start with a customer about VMware edge? Does it start with the business level leadership who need to be able to get a handle on this, and identify new revenue streams, new business models? Does it start with the technology folks who have to have the infrastructure to support it? What is that sort of, I'm a customer, maybe a hospital or what not, where do I start? >> Great question. So, it starts, it depends is the answer, it can start either way, even if it starts on the infrastructure side. What we always tell IT is that you really need to have a reason to do this. You need to work with your business, you need to prioritize, you need to understand the mission critical objectives of your business, the outcome you're trying to achieve; and then let's work together on a use case, and we can help solve it with your business. So, whether we go through IT and we really educate them on the importance of this digital foundation at the edge, and then we work with one of their businesses, maybe in security and surveillance, or maybe it's with a bank, the ATM group; actually there is a group that runs the ATMs and we're working with that group. It might be the bank of the future retail bank, and they're all different organizations with many different use cases, we'll work with all of them. The nice thing about starting with IT is IT understands the challenge that they're faced with, and they really want to have the impact that they've had on the IT organization now on the OT, OT's very siloed. So, anyway, it starts there, but, with our partners, and the beauty about working with partners like ISVs, it will start on the OT side, and it will start with a use case; and then they'll go to the IT side and say "Hey, what about VMware to solve this?" And the IT will say are you serious? That's a dream. So, it absolutely is both, but it has to have a business outcome. >> Mimi, how about the data model? I mean, we know from talking to IT people they understand data, they've lived data their whole lives. A lot of the operations side of the business is analog today, and it's becoming digital. What's the conversation like around data? >> So, okay, so my whole background is data, I started business intelligence and then analytics, and then big data, now IoT. The purpose of the data, so first of all it depends on the use case, so the one thing we like to educate our anyone we're talking to is that you are going to need deep learning, and you're going to need real-time analytics. And each use case will be unique, and depending on the use case, you will need a slightly different architecture. So we'll help support this foundation based on the data, it's always about the data, or actually even more importantly the insights you're trying to get from the data. Once you know your use case, then you can determine where am I getting this data? Although sometimes you already know. And what's the right analytic process? Am I doing machine learning, am I doing AI, am I doing just predictive analytics, do I want to do something quickly at the edge to determine something in real-time and then send it back to make that process smarter, that's actually what I think will ultimately happen, it will be a decision making loop that goes from the edge to the cloud and back. But that's the data conversation we have, and I could talk all day, just in that topic. (laughs) >> And I mean I know we're tight on time but, how prominent is the discussion around data ownership? I mean, does the factory own the data? Does the device manufacturer own the data? I mean yes and yes? I don't know. >> I mean, there is controversy there, but typically, I know the device manufacturers want to own the data, and often times they have access to that data. Every industry's slightly different, but at the end of the day, the customer should own the data, I mean they should at least have access to that data. And we will always say in our situation the customer, the data is yours. And we will work with the both of those organizations 'cause those will be our constituents to a use case, and we will do what's right for that use case, and hopefully everybody wins. It really does depend. If it's car manufacturer, they have to own the data, because they have to make sure that car's safe and secure, but there might need to be level of access that the consumers get as well, so. >> Mimi, thanks so much for stopping by. I can tell by your energy and your genuine passion for this, we're going to hear a lot more, Dave, about what VMware edge is doing and helping customers embrace the superpowers that Pat Gelsinger was talking about on Monday. Great to have you on the show, Mimi. >> Thank you for having me, have a great day. >> Thank you, for Dave Vellante, I'm Lisa Martin, you're watch theCUBE, continuing coverage of VMworld 2018, this is our third day, stick around, we'll be right back with our next guest. (bubbly music)

(electronic music) >> Narrator: From the SiliconANGLE Media office in Boston Massachusetts, it's the CUBE. Now here are your hosts, Dave Vellante and Stu Miniman. >> Cloud is dead, it's all going to the edge. Or is it? Hi everybody, this is Dave Vellante and I'm here with Stu Miniman. Stu, where does this come from, this narrative that the cloud is over? >> Well Dave, you know, clouds had a good run, right? It's been over a decade. You know, Amazon's dominance in the marketplace but Peter Levine from Andreessen Horowitz did an article where he said, cloud is dead, the edge is killing the dead. The Edge is killing the cloud and really we're talking about IoT and IoT's huge opportunity. Wikibon, Dave we've been tracking for many years. We did you know the original forecast for the Industrial Internet and obviously there's going to be lots more devices at the edge so huge opportunity, huge growth, intelligence all over the place. But in our viewpoint Dave, it doesn't mean that cloud goes away. You know, we've been talking about distributed architectures now for a long time. The cloud is really at the core of this building services that surround the globe, live in just hundreds of places for all these companies so it's nuanced. And just as the cloud didn't overnight kill the data center and lots of discussion as to what lives in the data center, the edge does not kill the cloud and it's really, we're seeing some major transitions pull and push from some of these technologies. A lot of challenges and lots to dig into. >> So I've read Peter Levine's piece, I thought was very thought-provoking and quite well done. And of course, he's coming at that from the standpoint of a venture capitalist, all right. Do I want to start you know, do I want to pour money into the trend that is now the mainstream? Or do I want to get ahead of it? So I think that's what that was all about but here's my question Stu is, in your opinion will the activity that occurs at the edge, will it actually drive more demand from the cloud? So today we're seeing the infrastructure, the service business is growing at what? Thirty five percent? Forty percent? >> Sure, sure. Amazon's growing at the you know, 35 to 40 percent. Google, Microsoft are growing double that right now but overall you're right. >> Yeah, okay and so, and then of course the enterprise players are flat if they're lucky. So my question is will the edge actually be a tailwind for the cloud, in your opinion? >> Yeah, so first on your comment there from an investment standpoint, totally can understand why edge is greenfield opportunity. Lots of different places that I can place bets and probably can win as opposed to if I think that today I'm going to compete against the hyperscale cloud guys. You know, they're pouring 10 billion dollars a year into their infrastructure. They have huge massive employment so the bar to entry is a lot higher. I'm sorry, the second piece was? >> So will the edge drive more demand for the cloud? >> Yeah, absolutely. I think it does Dave because you know, let's take something like autonomous vehicles. Something that we talk about. I need intelligence of the edge. I can't wait for some instruction to go back to the cloud before my Tesla plows into an individual. I need to know that it's there but the models themselves, really I've got all the compute in the cloud. This is where I'm going to train all of my models but I need to be able to update and push those to the edge. If I think about a lot of the industrial applications. Flying a plane is, you know, things need to happen locally but all the anomalies and new things that we run into there's certain pieces that need to be updated to the cloud. So you know, it's kind of a multi-layer. If we look at how much data will there be at the edge, well there's probably going to be more data at the edge than there will be in the central cloud. But how much activity, how much compute do I need, how much things do I need to actually work on. The cloud is probably going to be that central computer still and it's not just a computer, as I said, a distributed architecture. That's where, you know. When we've looked at big data in the early days Dave, when we can put those data lines in the cloud. I've got thousands or millions of compute cycles that I can throw at this at such a lower price and use that there as opposed to at the edge especially. What kind of connectivity do I have? Am i isolated from those other pieces? If you go back to my premise of we're building distributed architectures, the edge is still very early. How do I make sure I secure that? Do I have the network? There's lots of things that I'm going to build in a tiny little component and have that be there. And there's lots of hardware innovation going on at that edge too. >> Okay, so let's talk about how this plays out a little bit and you're talking about a distributed model and it's really to me a distributed data model. The research analysts at Wikibon have envisioned this three-tier data model where you've got data at the edge, which you may or may not persist. You've got some kind of consolidation or aggregation layer where it's you know, it's kind of between the edge and the deep data center and then you've got the cloud. Now that cloud can be an on-prem cloud or it could be the public cloud. So that data model, how do you see that playing out with regard to the adoption of cloud, the morphing of cloud and the edge and the traditional data center? >> Yeah we've been talking about intelligent devices at the edge for a couple decades now. I mean, I remember I built a house in like 1999 and the smart home was already something that people were talking about then. Today, great, I've got you know. I've got my Nest if I have, I probably have smart assistants. There's a lot of things I love-- >> Alexa. >> Saw on Twitter today, somebody's talking like I'm waiting for my light bulbs to update their firmware from the latest push so, some of its coming but it's just this slow gradual adoption. So there's the consumer piece and then there's the business aspect. So, you know, we are still really really early in some of these exciting edge uses. Talk about the enterprise. They're all working on their strategy for how devices and how they're going to work through IoT but you know this is not something that's going to happen overnight. It's they're figuring out their partnerships, they're figuring out where they work, and that three-tiered model that you talked about. My cloud provider, absolutely hugely important for how I do that and I really see it Dave, not as an or but it's an and. So I need to understand where I collect my data, where it's at certain aspects are going to live, and the public cloud players are spending a lot of time working on on that intelligence, the intelligence layer. >> And Stu, I should mention, so far we're talking about really, the infrastructure as a service layer comprises database and middleware. We haven't really addressed the the SAS space and we're not going to go deep into that but just to say. I mean look, packaged software as we knew it is dead, right? SAS is where all the action is. It's the highest growth area, it's the highest value area, so we'll cover that in another segment. So we're really talking about that, the stack up to the middleware, the database, and obviously the infrastructures as a service. So when you think about the players here, let's start with AWS. You've been to I think, every AWS re:Invent maybe, with the exception of one. You've seen the evolution. I was just down in D.C. the other day and they have this chart on the wall, which is their releases, their functional releases by year. It's just, it's overwhelming what they've done. So they're obviously the leader. I saw a recent Gartner Magic Quadrant. It looked like, I tweeted it, it looked like Ronnie Turcotte looking back on Secretariat from the Belmont and whatever it was. 1978, I think it was. (laughs) 31 lengths. I mean, massive domination in the infrastructure as a service space. What do you see going on? >> Yeah so, Dave, absolutely. Today the cloud is, it's Amazon's market out there. Interestingly if you say, okay what's some of the biggest threats in the infrastructure as a service? Well, maybe China, Dave. You know, Alibaba was one that you look at there. But huge opportunity for what's happened at the edge. If you talk about intelligence, you talk about AI, talk about machine learning. Google is actually the company that most people will talk about it, can kind of have a leadership. Heck, I've even seen discussion that maybe we need antitrust to look at Google because they're going to lock things up. You know, they have Android, they have Google Home, they have all these various pieces. But we know Dave, they are far behind Amazon in the public cloud market and Amazon has done a lot, especially over the last two years. You're right, I've been to every Amazon re:Invent except for the first one and the last two years, really seen a maturation of that growth. Not just you know, devices and partnerships there but how do they bring their intelligence and push that out to the edge so things like their serverless technology, which is Lambda. They have Lambda Greengrass that can put to the edge. The serverless is pervading all of their solutions. They've got like the Aurora database-- >> And serverless is profound, not just that from the standpoint of application development but just an entire new business model is emerging on top of serverless and Lambda really started all that but but carry on. >> Yeah and when you look in and you say okay, what better use case than IoT for, well I need infrastructure but I only need it when I need it and I want to call it for when it's there. So that kind of model where I should be able to build by the microsecond and only use what I need. That's something that Amazon is at the forefront, clear leadership position there and they should be able to plug in and if they can extend that out to the edge, starting new partnerships. Like the VMware partnerships, interesting. Red Hat's another partnership they have with OpenShift to be able to get that out to more environments and Amazon has a tremendous ecosystem out there and absolutely is on their radar as to how their-- >> They're crushing it So we were at Google Next last year. Big push, verbally anyway, to the enterprise. They've been making some progress, they're hiring a lot of people out of formerly Cisco, EMC, folks that understand the enterprise but beyond sort of the AI and sort of data analytics, what kind of progress has Google made relative to the leader? >> So in general, enterprise infrastructure service, they haven't made as much progress as most of us watching would expect them to make. But Dave, you mentioned something, data. I mean, at the center of everything we're talking about is the data. So in some ways is Google you know, come on Google, they're smarter than the rest of us. They're skating to where the puck is Dave and infrastructure services, last decades argument if it's the data and the intelligence, Google's got just brilliant people. They're working at the some of these amazing environments. You look at things like Google's Spanner. This is distributed architecture. Say how do I plug in all of these devices and help the work in a distributed gradual work well. You know, heck, I'd be reading the whitepapers that Google's doing in understanding that they might be really well positioned in this 3D chess match that were playing. >> Your eyes might bleed. (laughs) I've read the Google Spanner, I was very excited about it. Understood, you know, a little bit of it. Okay, let's talk about Microsoft. They're really of the big cloud guys. They're really the one that has a partnership strategy to do both on-prem and public cloud. What are your thoughts on that now that sort of Azure stack is starting to roll out with some key partners? >> Yeah absolutely, it's the one that you know. Dave, if you use your analogy looking back, it's like well the next one, it's gaining a little bit, gaining a little bit but still far back. There is Microsoft. Where Microsoft has done best of course is their portfolio of business applications that they have. That they've really turned the green light on for enterprises to adopt SAS with Office 365. Azure stack, it's early days still but companies that use Microsoft, they trust Microsoft. Microsoft's done phenomenal working with developers over the last couple of years. Very prominent like the Kubernetes shows that I've been attending recently. They've absolutely got a play for serverless that we were talking about. I'm not as up to speed as to where Microsoft sits for kind of the IoT edge discussions. >> But you know they're playing there. >> Yeah, absolutely. I mean, Microsoft does identity better than anyone. Active Directory is still the standard in enterprises today. So you know, I worry that Microsoft could be caught in the middle. If Google's making the play for what's next, Microsoft is still chasing a little bit what Amazon's already winning. >> Okay and then we don't have enough time to really talk about China, you mentioned it before. Alibaba's you know, legit. Tencent, Baidu obviously with their captive market in China, they're going to do a lot of business and they're going to move a lot of compute and storage and networking but maybe address that in another segment. I want to talk about the traditional enterprise players. Dell EMC, IBM, HPE, Cisco, where do they stand? We talk a lot at Wikibond about true private cloud. The notion that you can't just stick all your data into the public cloud. Andy Jassy may disagree with that but there are practical realities and certainly when you talk to CIOs they they underscore that. But that notion of true private cloud hasn't allowed these companies to really grow. Now of course IBM and Oracle, I didn't mention Oracle, have a different strategy and Oracle's strategy is even more different. So let's sort of run through them. Let's take the arms dealers. Dell EMC, HPE, Cisco, maybe you put Lenovo in there. What's their cloud strategy? >> Well first of all Dave I think most of them, they went through a number of bumps along the road trying to figure out what their cloud strategy is. Most of them, especially let's take, if you take the compute or server side of the business, they are suppliers to all the service providers trying to get into the hyperscalers. Most of them have, they all have some partnership with Microsoft. There's a Assure stack and they're saying, okay hey, if I want an HPE server in my own data center and in Azure, Microsoft's going to be happy to provide that for you. But David, it's not really competing against infrastructure as a service and the bigger question is as that market has kind of flattened out and we kind of understand it, where is the opportunity for them in IoT. We saw, you know Dave. Last five years or so, can I have a consumer business and an enterprise business in the same? HPE tore those two apart. Michael Dell has kept them together. IBM spun off to Lenovo everything that was on the more consumer side of the business. Where will they play or will companies like Google, like Apple, the ones that you know, Dave. They are spending huge amounts of money in chips. Look at Google and what they're doing with TP use. Look at Apple, I believe it was, there was an Israeli company that they bought and they're making chips there. There's a different need at the edge and sure, company like Dell can create that but will they have the margin, will they have the software, will they have the ecosystem to be able to compete there? Cisco, I haven't seen on the compute side, them going down that path but I was at Cisco Live and a big talk there. I really like the opening keynote and we had a sit down on the CUBE with the executive, it said really if I look out to like 2030. If Cisco still successful and we're thinking about them, we don't think of them as a network company anymore. They are a software company and therefore, things like collaboration, things like how it's kind of a new version of networking that's not on ports and boxes. But really as I think about my data, think about my privacy and security, Cisco absolutely has a play there. They've done some very large acquisitions in that space and they've got some deep expertise there. >> But again, Dell, HPE, Cisco, predominantly arms dealers. Obviously don't have, HPE at one point had a public cloud, they've pulled back. HP's cloud play really is cloud technology partners that they acquire. That at least gives them a revenue stream into the cloud. Now maybe-- >> But it's a consultancy. >> It's a consultancy, maybe it's a one-way trip to the cloud but I will say this about CTP. What it does is it gives HPE a footprint in that business and to the extent that they're a trusted service provider for companies trying to move into the cloud. They can maybe be in the catbird seat for the on-prem business but again, largely an arms dealer. it's going to be a lower margin business certainly than IBM and Oracle, which have applications. They own their own public cloud with the Oracle public cloud and IBM cloud, formerly SoftLayer, which was a two billion dollar acquisition several years ago. So those companies from a participation standpoint, even a tiny market share is compared to Amazon, Google, and Microsoft. They're at least in that cloud game and they're somewhat insulated from that disruption because of their software business and their large install base. Okay, I want to sort of end with, sort of where we started. You know, the Peter Levine comment, cloud is dead, it's all going to the edge. I actually think the cloud era, it's kind of, it's here, we're kind of. It's kind of playing out as many of us had expected over the last five years. You know what blew me away? Is Alexa, who would have thought that Amazon would be a leader in this sort of natural language processing marketplace, right? You would have thought it would come from, certainly Google with all the the search capability. You would have thought Apple with Siri, you know compared to Alexa. So my point is Amazon is able to do that because it's got a data model. It's a data company, all these companies, including Apple, Google, Microsoft, Amazon, Facebook. The largest market cap companies in the world, they have data at the core. Data is foundational for those companies and that's why they are in such a good position to disrupt. So cloud, SAS, mobile, social, big data, to me still these are kind of the last 10 years. The next 10 years are going to be about AI, machine intelligence, deep learning, machine learning, cognitive. We're trying to even get the names right but it starts with the data. So let me put forth the premise and get your commentary. and tie it back in the cloud. So the innovation, in the next 10 years is going to come from data and to the extent that your data is not in silos, you're going to be in a much better position than if it is. Number two is your application of artificial intelligence, you know whatever term you want to use, machine intelligence, etc. Data plus AI, plus I'll bring it back to cloud, cloud economics. If you don't have those cloud economics then you're going to be at a disadvantage of innovation. So let's talk about what we mean by cloud economics. You're talking about the API economy, talking about global scale, always on. Very importantly something we've talked about for years, virtually zero marginal costs at volume, which you're never going to get on-prem because this creates a network effect. And the other thing it does from an innovation context, it attracts startups. Or startups saying, hey I want to build on-prem. No, they don't want to build in the cloud. So it's data plus artificial intelligence plus cloud economics that's going to drive innovation in the next ten years. What are your thoughts? >> Yeah Dave, absolutely. Something I've been saying for the last couple of years, we watched kind of the the customer flywheel that the public clouds have. Data is that next flywheel so companies that can capture that. You mentioned Amazon and Alexa, one of the reasons that Amazon can basically sell that as a loss is lots of those people, they're all Amazon Prime customers and they're ordering more things from Amazon and they're getting so much data that drive all of those other services. Where is Amazon going to threaten in the future? Everywhere. It is basically what they see. The thing we didn't discuss there Dave, you know I love your premise there, is it's technology plus people. What's going to happen with jobs? You and I did the sessions with Andy McAfee and Eril Brynjolfsson, it's racing with the machine. Where is, we know that people plus machines always beat so we spent the last five years talking about data scientist, the growth of developers and developers and the new king makers. So you know what are those new jobs, what are those new roles that are going to help build the solutions where people plus machine will win and what does that kind of next generation of workforce going to look like? >> Well I want to add to that Stu, I'm glad you brought that up. So a friend of mine David Michelle is just about to publish a new book called Seeing Digital. And in that book, I got an advance copy, in there he talks about companies that have data at their core and with human expertise around the data but if you think about the vast majority of companies, it's human expertise and the data is kind of bolted on. And the data lives in silos. Those companies are in a much more vulnerable position in terms of being disrupted, than the ones that have a data model that everybody has access to with human expertise around it. And so when you think about digital disruption, no industry is safe in my opinion, and every industry has kind of its unique attributes. You know, obviously publishing and books and music have disrupted very quickly. Insurance hasn't been disrupted, banking hasn't been disrupted, although blockchain it's probably going to affect that. So again, coming back to this tail-end premise is the next 10 years is going to be about that digital disruption. And it's real, it's not just a bunch of buzzwords, a cloud is obviously a key component, if not the key component of the underlying infrastructure with a lot of activity in terms of business models being built on top. All right Stu, thank you for your perspectives. Thanks for covering this. We will be looking for this video, the outputs, the clips from that. Thanks for watching everybody. This is Dave Vellante with Stu Miniman, we'll see you next time. (electronic music)

>> Narrator: Live from Las Vegas, it's theCUBE covering the AWS re:Invent 2017. Presented by AWS, Intel, and our ecosystem of partners. >> Welcome back, I'm Stu Miniman joined by my co-host, Keith Townsend, and this is one of the interviews we've been really excited. Of course, we've got about 60 interviews. We love all of them. Lots of good excitement. Lots going on at this ecosystem. Over 43 thousand in attendance here in Las Vegas, but happy to welcome back to the program, Chris Wolf, who's the Vice President and CTO of Global Field and Industry at VMware. Chris, great to see you. >> Thanks Stu, thanks Keith. Great to see you guys. >> So for the year, the whole VMware on AWS has been a hot buzz discussion. We've all been arguing internally and on theCUBE about you know, partnering and how does that work and who gets the most benefit out of it, but let's start, Chris I'd love to hear your viewpoint, you know. You talk to a lot of customers. I've talked to some customers that are really excited about it, especially at VMWorld, that were there testing it and doing it. Give us the customer viewpoint. What's really exciting them? What's interesting them? And I know there's a lot of new news we're wanna gonna get into. >> Yeah, you know, there's so much that I think is exciting to customers because you know, they're struggling with being more agile, being more software defined, being able to have more flexibility in their environments. And to be able to leverage VMware Cloud on AWS allows them to go through data center consolidation easier. It allows them to get applications to the Cloud to take advantage of Cloud services. One of the things people, I think kind of falls between the cracks in VMware Cloud on AWS is the fact that if I want to modernize an application or a traditional application, refactoring an application is enormously expensive. It's very hard to do. It's very time consuming. If I can start to move an application into the VMware Cloud on AWS and then start to integrate that with other native AWS services, I get the benefit of modernizing that application without having to touch any of the application code, which is a huge benefit to customers. >> Yeah, we've spent the last couple of years at this show, which well, do I lift and shift? Do I just re-platform it? Do I refactor it? Do I totally rewrite it? You know, the number of customers that I've talked to at this show, their advice that they give to their peers is like well, go faster. And how do we go faster? Do I just take my VMware stuff that I was doing in my own data center, stick it in VMware on AWS, start using all the cool stuff. Is that kind of the path that you see? >> That's part of it. You know, I think there's a couple threads here. There's the notion that you know, I wanna go faster, but to go faster, I have to slay some old demons in IT. Where I have to change my mindset. You know, I can't say I want to be more software defined and more agile and then have specific hardware requirements in my architecture. Of course, that's not for all applications, but that's part of that shift in mindset is how can I go faster? And if it's harder to transform some of my data centers, if I can get into that operational model by getting on Amazon quicker, then that's good for my business. >> Yeah, let me just poke on one more thing on that and I know Keith wants to jump in here, but one of the great things, I think back to 15 years ago. It was like, you know my Windows operating system going end to life. I'm gonna stick it in VM and keep it there forever. But, boy that application was all the technical data. My users hated it and everything like that. How does VMware go from I managed what you had to enabling your future? >> The thing that we're really focused on here in terms of enabling the future, when you think about programmatic compute and networking and storage and security, all applications need them. I can abstract all that away with a Lambda function or whatever, but at the end of the day, somebody has to do it and that part of the fabric becomes really important for things like having a security auto-trell. The other thread there is where VMware's strategic to customers is that they say, "You know I might wanna start this in the Cloud, "but I wanna maintain full control "of all of the intellectual property, "so I wanna use Kubernetes, I wanna use containers, "I wanna use a variety of open source projects. "I wanna use their native API's for my software engineers, "but I wanna have flexibility to build these applications "without pre-destining their future." Maybe it runs in a Cloud today, maybe it runs in a data center tomorrow, maybe it runs out at the edge. Maybe I do an acquisition and it has to run in that facility. The bottom line is, I don't always know what the future holds for my apps. And for the aspect of the apps that are core to your business, there's a lot value in running them on VMware because we can allow you to maintain that flexibility and independence, just like we've done way back in the past with your traditional enterprise applications. >> So Chris, that's a great setup for the next set of questions, which is, VMware has been known to move at the speed of the CIO. We're at AWS re:Invent. These folks move much faster than the speed of the CIO. The question is around, what's VMware's focus? You know, there's VMware Cloud on AWS, there's PKS, there's VIG. You guys came out with Openstack, VMware integrated Openstack 4.0, and then even VMware Cloud on AWS, the promised innovation three and a half months after the release. Iteration on that. That's much faster than what the CIO used to have. How are those conversations balanced between the CIO and the new business user here at AWS? >> Yeah, way to sugarcoat Keith. That's a good question. Look at CIOs today. There's very innovative CIOs. We had the NFL CIO up on stage in the morning Keynote, right? And I thought that was highly dynamic, really talking about how you have to transform business. What we're really focused on in terms of helping customers is making sure that that fabric that runs their business applications is just as fluid and dynamic as their businesses. The security has to be as fluid and dynamic or more dynamic than the threats that you face. So, these are areas that we're focused on, but your point is: how can VMware continue to deliver quick innovation? I think VMware integrated Openstack actually is an example of VMware integration or innovation, so I'm glad you brought it up. We don't talk about Openstack that much now, but VMware was the very first Openstack distro-vendor to make upgrades of Openstack versions they feature as software. Where our competitors in that space were making it a professional services engagement. You look at us, what we've done in terms of supporting containers natively on vSphere. We announced PKS and we were very quick to embrace Kubernetes. We announced Greengrass preview that we're bringing to market as well on vSphere. So, you're absolutely right to give us the feedback that in the past, you could say Vmware was a bit conservative of a company. We were slow and deliberate in some of our innovations. They were important and we were deliberate because we had a reputation to uphold for product quality. That's what our customers expect, but at the same time, it's very good feedback to say that we have to work quicker, and that's the model that we're in. I think that the AWS partnership for Vmware is one example of how we've had a couple of companies learning from each other in terms of AWS and interacting with the enterprise and VMware in terms of innovating a Cloud space, and you're staring to see the benefits and the fruits of that labor now. >> So, ironically I ran into the VMUG president, Ben Clayton doing a show floor. It's amazing to see the crossover between the VMware community and the AWS community. I think VMware Cloud on AWS has been a boom, a realizing that Cloud is coming into the enterprise in a great way. Let's talk about the community and the users. How do you help move that traditional community of, I think VMUG is 200,000 users. How do you help move that membership forward to this new speed of IT? >> It's a terrific question. There's definitely some challenges with getting folks. Part of it is IT folks, we're builders at heart. We love building everything. We love the pieces and parts. We can understand how they matter, but even if they matter like this much, it doesn't necessarily mean that I should build a snowflake for my business because some of the problems that VMware solves, you could say that every business in the world has to solve the same problems. So why focus on some of those smaller nuisances? What we've been really after is providing much more content into the VMUG communities around transformation, around how more modular IT architectures are important. Even beyond the VMUG community, if you think about some traditional VMware channel partners, where their core focus was on some very tightly integrated hardware-based solutions. Those partners, the more innovative ones, are now building hybrid applications across VMware and AWS components and modernizing enterprises that way. We're trying to encourage our VMUG community to do the same thing. I've had talks with VMUG events this year talking to them about Edge Compute and how VMware is investing there and what R&D looks like. Part of this is, I think all of us in IT, we have to have that point in time where we say "I have to let go, "I know the market's shifting, "I know I have to do something different." If I didn't let go in my past, I would still be known for being a Certified Novell Engineer, right? Times change and we have to change too, so it's really important to be prescriptive and give our community all the tools they need to evolve with us. >> Chris, you mention the Greengrass thing that you have in preview for a bit. I want you talk about that a little bit and when I heard Andy Jassy this morning, he talked about the continuum. Instances, which underneath, that's virtualization from VMware. There's containers and there's serverless. Andy says if he was to build IWBS today, he'd build it all serverless. We know it's not a zero sum game and nothing changes overnight, but virtualization is not decimated by containers overnight and containers doesn't go away now that serverless comes out. I want you to talk about the Greengrass and how that spectrum fits into the customers you're talked to in the VMware journey. >> I think it's really, really exciting and certainly I'm a huge proponent of serverless. My 14 year old son has an Echo Dot in his bedroom and he likes to program it to do really fun things. My favorite example is he had it talking about who the ugliest person in the world is and wanted Alexa to name his sister. There's a part of me that's like "No don't do that, son" but then the other part's like "I'm so proud of you." >> That's awesome. But if we step back, there's this huge press to start doing more in terms of getting the analytics and the intelligence to either where the data's being created or where the data's being consumed. We've had a lot of customers come to us jointly, saying "Look, I can't move the data to the Cloud "to do deep analytics or machine learning. "It defies the laws of physics "or the networking costs are just too much. "Or there's latency considerations. "I need a faster transaction execution time." We have a customer, a joint customer, where they're monitoring the heat of the brake pad on a train and they're trying to understand in real time, how that impacts the train's maintenance schedule and when they should take it out of service. They need to get the intelligence of the Cloud closer to where these things are occurring. Let's bring that all back to Greengrass on vSphere. You heard an announcement of machine learning on Greengrass today. To do machine learning, I need some considerable compute horsepower to really make it effective. Most of our customers already have a lot of that horsepower already out at the edge. One of our customers has six to 10 servers. This is very common of a lot of retail organizations, six to 10 servers per stores times 10,000 stores. They're trying to do more with IOT and more analytics. They want to leverage the investments that they already have an infrastructure. The other part that's strategically important to VMware is this: we want to have Cloud services be able to execute where the data's being created and that's a natural use case for virtualization. Then second, we want to have a platform that can allow the most popular opensource technologies to also run there to give customers all of that choice. So for us, it's all about promoting heterogeneity at the edge. We see those Cloud services as really that new generation of application platforms that customers, they don't want some artificial constraint of a Cloud data center to say "this is where it has to run." I want it to run wherever the business requirements say it needs to run and that's what's important and that's what we're doing with this announcement. >> Chris, we talk to a lot of CTOs, senior architects, CIOs and even looking at VMware, trust that part of it has been very stable in the environment for years, the product selection can be overwhelming. CIOs, CTOs need to focus their investment and their strategies in a certain area. Conversations, where are you telling CTOs, CIOs to focus their investment? >> It's a really good question. You definitely have to have a focus area and for us, it's about a platform for rapid agility and innovation. That's really key. We don't know what the future's gonna be. We can guess and you are both two very visionary guys and you have a general idea of what's gonna happen over the next 12, 18 months, but there's things that are just unexpected, especially in the business context. We can understand technology, but business dynamics change very quickly. Helping CTOs and CIOs understand how to build a fabric that can make them more agile and flexible is really key. That's one. So, greater automation, greater efficiencies, rapid innovation, but even more importantly for a lot that's really top of mind is security. Giving them a way to do rapid recovery, being able to start to segment some of their resources, being able to dynamically offer and adjust security and understand threats in real time and combat them in real time is key. The traditional model of security is: I have a dynamic threat so I'm gonna have increased layers of static security to combat it and I'll just add more layers. Doesn't work. We've had customers have massive outages that we've worked with because they've had ransomware attacks and things like that, so they want to be more agile and more dynamic. Their VMware environments, they've been able to get up very quickly, but these lessons are teaching organizations that they have to think differently. So really, that security and agility I see is really top of line for a lot of folks. >> Chris, I've seen lots of traffic at the VMware booth, talked to a lot of customers that are interested. The elephant in the room when I talk to all of them is cost. We've looked at Big Bear Metal, Amazon released that instance. That's a big hunking instance, a lot of memory, a lot of networking. I've talked to a couple customers that said, "I did the analysis on VMware over AWS "versus heck, just buying a rack "and stick it in my environment." You get a significant difference in there. One customer is like "Hey, it was 3x the cost "for me to just buy it and do it myself, "and I didn't feel I was gonna get any "operational efficiencies even doing it "'cause I know VMware and I know how to run it." What do you say to those customers? What are they missing? I'd love any misconceptions that you're hearing out there. >> I'll give ya an example. Let's use the cost analogy. My daughter wants a new radio for Christmas. I can go to Best Buy and buy a really nice stereo, but that's actually 3x the cost of me buying the circuit board kit, say on Amazon, and soldering in the components myself. When you think about that in a practical, real world example, we used to buy motherboards and build PCs and servers back in the day. We don't even think about doing it anymore and even if I could save 25 dollars doing it, I still wouldn't do it because there's more important things I can be doing with my time to differentiate my business. Look, we are-- >> I wanna poke at that. Because you're partners at Delium Sig and I buy one of the VX whatever family from their team. It's pretty easy to ploy, I do that. I understand how to do VMware. It's not gonna take me months to deploy. I know how to a VMware environment and it's that type of configuration. They're saying it's not building versus buying and I understand there's a spectrum there, but just the raw VMware and AWS. They said "I'm gonna get two bills. "I'm gonna get one from VMware and one from Amazon" and the price of it does seem pretty massive compared to what they were doing. So, are they wrong about that? >> I'm really surprised at that. We're not hearing that from our customers We're seeing them have very solid in terms of cost saving, in terms of running on AWS because unlike a traditional Cloud environment, I can oversubscribe physical hosts, I can run more workloads because it is native VMware. You're also getting additional benefits. I'm getting V-SAN storage, I'm getting NSX for networking and security. To say I'm just gonna take vSphere and compare, I would say that that's probably not the closest comparison. There's other aspects that we're providing that operate in a Cloud environment. And, listen, we had this before. Five years ago, people were saying, "Well, Cloud's too expensive so I'm gonna stay on premises." We don't even think that way anymore. There's other benefits that you're getting in the Cloud model that you have to weigh into consideration and we've seen VMware Cloud on AWS is as price competitive as a lot of the native public Cloud services are without all the added benefits of networking and security and management and other things that we throw in. >> Chris, wanna give you the final word. What's exciting you these days? You used to sit on kind of this side of the table, look at the environment. You're deep in some of the emerging pieces. What's getting you excited? I'd love to hear any final insights on partnering between VMware and Amazon, which a lot of us on the outside are like cats and dogs living together. >> Okay, let's hit a couple of them. First, certainly for me, the innovation that's occurring at the edge, I think is extremely exciting. Driving new use cases around augmented reality, more machine learning. How we're looking in terms of moving services to where data's being generated instead of moving the data, which is always problematic. That's a new wave of innovation that I think is really exciting. So that's the certainly the area I'd say that's most exciting for me, is how we can innovate there. It's also around hybrid applications. It's the integration of things like Lambda functions in a traditional file system. I was with a major global financial services organization yesterday and we were not talking about traditional Lambda function use cases. We were talking about integrating Lambda with database and file system events and VM's running on vSphere. So, there's this whole new way to modernize applications that we're just at the cusp of. That pace of innovation's happening faster and faster. I'll say this about Amazon: we are really committed to working together and I think what you're seeing in the industry in general, it's not just VMware with AWS, but it's with our partners in the container spaces. An example is containers as a service and platform as a service, is we're being very pragmatic about focusing on what we're really, really good at. And there's areas where VMware is fantastic at it, in terms of reliability and heterogeneity at the edge and there's natural synergies where we can work together with Amazon web services. In my opinion, they've been a fantastic partner. All of the work that we've done with the Greengrass team and the IOT team, in terms of bringing Greengrass to market on vSphere, has been an enormously positive experience. We share lessons learned, we share engineering, work together. It's extremely collaborative because just like all of our technology partners, there's always areas where we're going to compete a little bit and there can be some overlap, but there's a lot more areas where we get to work together and that's what we're really focused on with VMware and AWS. >> Well, Chris, I know Keith and I always appreciate your perspectives, the VMware community engagement, know you're always open to having some good, real discussions here, so really appreciate you coming sharing all our viewpoints. Congratulations on all the progress here. We're certainly excited to see where it goes. >> I appreciate the opportunity. >> Alright, for Keith Townsend, I'm Stu Miniman. We'll be back with lots more coverage here. 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>> Announcer: Live, from Las Vegas, it's The Cube, covering VMworld 2017, brought to you by VMware, and its ecosystem partners. >> I'm Stu Miniman, here with Justin Warren, and you're watching The Cube, the worldwide leader in tech covered. Happy to welcome back to the program, Satyam Vaghani, who is now the Vice President of Technology with Nutanix. Satyam, great to see you, you've got a long history with the VMware community, always good to catch up with you, how have you been? >> Likewise too, great to see you guys again. I've been good. >> All right, so I like, it's always the progression as to what discussed at the show. I was kind of poking at VMware a little bit, that in 2015 it was any device in any application one cloud, and the keynote this morning it was any device, any application, any cloud, and we're highlighting one of the things VMware's highlighting is NSX, they want to be kind of the interconnected fabric between the cloud and the edge. And of course I bring that up because, besides the virtualization stuff that you've done for years, you've got a little bit of a different role now, you joined Nutanix through the PernixData acquisition, so why don't you tell us what's been keeping you busy and excited these days. >> In a word, or in two words, edge computing for sure. You know, this has been striking to me too because I walked in to pick up my badge this morning, and the first thing I see at VMworld is IoT, you know there's this big area right next to where you pick up the badge. And so it's quite telling as to how computing is evolving. As you just said, you know NSX is one way to quantify that evolution from, you know, how do we stretch the cloud all the way into the edge. There's some other ways. And so yeah, I've been working on what defines that operating system that can converge the edge and the cloud into one seamless piece. >> There's definitely a lot of excitement around edge, but as with any early technology, if you're talking to a telco it means one thing, if you're talking to somebody involved in centers and IoT, it kind of means a different thing. We're not talking about kind of the robo-use cases that some people looked at, kind of HCIS, so what is that, what is edge computing in your parlance, and that OS, how does that fit into it? >> Great question, in fact I'll come back to the talking to different verticals, and how we can make some sense out of all those disparate conversations, maybe, you know as second part of my answer. But you know, the edge in my definition, is a way to collect, digitize the real world, that's one thing, but then take real-time decisions on all this data that is coming in from the real world. And so in my sense, the edge is all about taking real-time decisions on data, and then the cloud long-term is going to be about taking some long-term decisions about the same data or some subset of that data. You know, that Tesla is a great post-agile example right, as you know, in a self-driving car, you want to figure out whether you're going to get into an accident or not right at the car, which is the edge. But the longer term notion of how Teslas can be made to drive better can be all done in the cloud, deep learning et cetera. And so there is this very fluid movement of data and code between the two systems, that we as operating system vendors need to make possible. Otherwise, every agile application, which is really a hybrid application, some part of the logic runs here on the edge, some part of the logic runs on the cloud. It's going to be tremendously difficult to create these applications. And you mentioned, and very rightfully so, is you know, the interpretation of what edge computing or IoT means is very different by vertical. And so in fact right now, my number one mission is to look at all these different use cases and figure out what's common, right? I think back 30, 40 years ago, when the guys sat down to write POSIX, right, you know people figured out what is it that an operating system can provide that makes sense to 200,000 different applications. I think it's time to answer that exact same question for the world of machines, right? What is it that an operating system can provide which makes sense in the world of machines, that sells transportation, that sells defense, that sells health care, and blah blah blah, et cetera. >> So what are some of the things you've discovered in the research you've done so far? Have you got some early hints of what those pieces of commonality are? >> For sure, great question. And so you know, one common thread that unifies all these different use cases is your, most of the use cases are around getting insights from the data that's being collected, whether it's image data, whether it's raw numbers, whatever it is, and so you know, machine learning and analytics seem to form the core of any interesting application subset that you're looking at. And so then the question is, can you make it from an operating system point of view, can you make it very easy to build applications around machine learning, can you make it very easy to build applications around analytics? And the third thing is, you know, it's very, this is not about running virtual machines anymore, yeah, sure, inside at the very crux of the system you might be running virtual machines, but it's about a developer-centric world. So, the question is, can you make it such that the developers can just deploy code without worrying about whether the code runs in a virtual machine, in a container, in a combination thereof? Can you make it very easy for data to move across without the developer having to explicitly code develop? And so that's the common parts. >> I wonder, you know, what your thoughts are contextually when you go in there? So we actually had, at Wikibon we have a weekly research call, we were talking about serverless last week, and we actually saw, you know, for edge computing, serverless, really good, Amazon has their Greengrass, leverages Lambda to go in there because, sure VMs seem a little heavy for some of these applications. What should we look at kind of from that same point? >> I agree, I agree. It seems to be more serverless and maybe containers, because sometimes when you're trying to do serverless applications you need a bunch of infrastructure that then has to be packaged into containers. And so, between the two probably is where the compute part of edge computing or IT is going to be edge. >> Can you talk to us, you know, Nutanix, I think there's, obviously Nutanix and VMware, strong partnership for some things, which is, you know about three quarters of Nutanix customers are running VMware, but differences of opinion as to some other things that, you know, VSAN versus Nutanix, and Nutanix has AHV. I've heard you saying operating system a bunch of time, is that an extension of AHV, is it something else? VMware has plans as to how they're going to go from IoT, can you maybe compare, contrast what your vision, how that matches with your skillsets inside Nutanix versus, you know VMware who you know real well. >> Oh yeah, for sure. And so AHV, the distributed storage fabric, which Nutanix has, I think that is a great kind of, you know, substrate on top of which to now build a much more application-oriented edge computing kind of you know, stack, right. And so the edge computing stack is more about what other data services that you can provide, which are not data stores anymore, you know, it's things like structured data as a service, or unstructured data as a service, or streaming data as a service, and function as a service to your point of serverless computing or containers. And so I think this becomes, the Nutanix asset becomes a great substrate on top of which to build this much more application-oriented architecture. You know the VMware story I would imagine is kind of sort of the same, although VMware is I think remarkably leading with NSX, because you know, there's network, the extended network between the cloud and the edge is obviously a great problem to solve. I have my own biases, so I tend to lead with the application side of things, right, which is, you know, what does it, as I said, what does it take to make the next POSIX layer for machine learning or for analytics, and then the infrastructure base is obviously important, bit it is worry less, you know, I'm sure we are going to solve it. And so, in some sense the two stories are evolving in a very congruent manner. We'll see. I think the market is so big, and the use cases are so diverse, that for a change, we can potentially, if we kind of do it in a cooperative manner, we can probably evolve an interesting standard, interesting stack that is kind of sort of you know, stable. And so I think this could potentially be a story of cooperation as opposed to throwing stones at each other, but you know, time will tell. >> One of the things that VMware talked about in the keynote was security, and the nature of security being baked into things, and you mentioned that your focus is on applications, and certainly developers of applications, they don't really care anything about infrastructure at all. So this service consumption is something that they think is quite interesting. But you also mentioned how fast things are changing. Those three things at once, on the edge, how do you see security services developing so that they can be easily consumed by people, instead of it being this really difficult infrastructure problem? >> I wish I had just an easy one line answer, but I think I'll explain it, just the abstract of how I see this evolving through an example, right. Because if you think about iOS and Android, they have a very structured way of doing notification, and no app can do notifications by itself, it just has to get in. So I think, you know, probably it's time to solve security that way, right. You know, it's time to put some structure to how you can program the movement of data, the collection of data, the deployment of compute, of program onto a substrate, and if you tightly control that movement of data and the deployment of compute and so on, then there is a higher chance that you are going to be able to, from an operating system provider point of view, probably you are going to be able to deliver a much more secure system, because you've taken the bulk load of security programming away from the application developer, and made it an operating system core service, right? And of course that requires you to impose a framework on how you develop applications, which is, you know, the notification examples, right. I've imposed a framework on how you deliver notifications, and by doing so, I've kind of, you know, made a very seamless or very good experience. I think >> So it's taking a very opinionated approach to doing things? >> Satyam: I think so, yeah. >> Which, that does restrain choice a little bit, and one thing that various vendors say is, well we're all about customer choice. But sometimes there is too much choice. However on the flipside, IT so far has been making choices about how you should do security so far that haven't really worked out so well. So what do you think needs to change for this opinionated design to feel like the correct one that people will want to use, and not then feel constrained and, but I want to be able to choose to write my own encryption algorithms. >> I think if we can democratize the availability of data, so you know, the edge computing stacks are all about collecting as much data as possible, and then writing great applications on it. So if there is a security framework which doesn't impede the ability of different tenants, whether it's analysts, whether it's application developers, whether it's regular operators like the guy running the airport, if it doesn't impede their ability to interface with data, and if it doesn't impede their ability to deploy interesting compute on top of that data, then probably we have a way to go. So I think having a great security framework, but in way that still democratizes the availability of data, the movement of data, and the deployment of compute, if we can achieve that, I know I'm asking for a bit too much, (Justin and Stu laugh) but probably the source of my next five patents. I think it's a doable thing, it's a doable thing. >> Satyam, why does Nutanix have a right to be a player in IoT? You know, I look at it, you know these are going to be some pretty gnarly ecosystems. I look at, you know, we did some early work with GE when they were coming up with the idea for the industrial internet, you know there's some really big challenges, you know, you're not going to create those centers and all those devices, you know, some of the really big companies in the world are working on some, you know, the messaging protocols and things like that. Where realistically does Nutanix play and how do you fit into that really big and very immature ecosystem today? >> Great question. So various different takes on it. One is, I think it's a natural evolution of the company strategy. We started by saying, look, here's hyperconvergence 1.0 the ability to converge, compute, storage and networking into this box. Hyperconvergence 2.0, which is what we are executing right now as we speak, is this orchestration layer between public and private cloud. So we have converging public and private into one. So things like Calm, et cetera. And so we naturally think the next step of our strategy, hyperconvergence 3.0, if you will, is a convergence of the edge and the cloud. And so just from the point of view of how we evolve the enterprise cloud operating system, we think this is the natural place for it to grow into as a piece of technology. The other way to look at it is, it's time to build the next hypervisor, and the next hypervisor is the hypervisor for data as it moves around in all these clouds between ridiculously disparate places, right, from an oil rig all the way to some mainland data center or from an airport into the cloud and so on and so forth. And so the process of creating hypervisor for data is a distributed data systems problem, which we have been really good at, historically. And so we think we deserve a good cut at it. And the last thing I'll say is, if you think about how ideal world, you used the example of G, great respect for companies like that, but think about it, you know, those companies had to evolve all of that by themselves because they happened to be the sensor vendor, and so the G's of the world, the Honeywells of the world, they had to not only make the sensors, but now they also had to make some compute capability to make some sense out of all that data. But now that sensors are here, they are here to stay, they are all open to your point, you know, the protocols to get data out of it, MQTT, CoAP, this that, everything is open. So now it's genuinely the time to focus on the data and code aspect of the data that's coming in. You know, 40 times more data is going to hit the edge than the cloud will ever see in three years. And you know, that deserves a, kind of a swing from traditional data operating systems guys like Nutanix and some of the other guys you see on the show floor. >> You mentioned it's a distributed computing problem, which is obviously very hard to do. But there's a networking aspect, and that's one thing, particularly in cloud and other things, it tends to get overlooked quite a bit, I mean the poor network people feel left out. What implications do you think there's going to be for this level of data from all of these sensors and the amount of computing and decision-making that will happen at the edge, as distinct from in the cloud, talking between different devices in the edge, but then also providing the data back to cloud. What are some of the network impacts that that's going to have? >> Great question, there's so many of them but, something that is front and foremost in my mind, because I literally got out of a customer conversation on this, is you know, for example, there's this customer who does smart oil rigs, and they now need to move that data, some of it at least, to the cloud, but the network is really flaky. So there is obviously the problem of securing that network, and so on, but now there's also the problem of what does that mean to the application itself? Can you express the flakiness of the network as a policy that a programmer can program towards? You know, when flakiness of the network happens, literally from a programming and API point of view, the programmer can make a choice as to, you know, for all the streaming data that's coming in, the programmer can choose either to drop all of it, you know, when the network's flaky, or to you know, have a data moving system which can catch up, when the network becomes stable again. So all those things now become a, these are all infrastructure problems that now manifest themselves into how you program the system, and so we are having some conversations around that. And so yeah, you know, there is so many interesting possibilities here, I don't even know where to start. >> Whole new programming abstractions that we may not even be using today. >> Exactly. And there's obviously the hardware part of the problem. People are creating LoRa networks, they are creating NBD, this new type of LT network just for IoT data, and so there's a whole bunch happening in hardware as well. >> Satyam, pull this all together for us. What, you know, you said you're meeting with customers. What can they do today and what are some of the major kind of milestones that we should be looking for to say, oh, I'm hearing from Nutanix customers they're doing this, we've reached that point, you know, give us a little bit of a today and maybe a year or two out if you can. >> Great question. So I think the here and now thing customers can do as well, apart from the obvious thing of figuring out what other interesting ways that their business wants to monetize data coming out of their own operational infrastructure. Assuming they've figured that out, you know the important thing they can do now, is to start creating their dispersed cloud, right. Cloud of assets out in the field, you know, in factories and airports and oil rigs and aircraft carriers, that they can manage centrally, right, and that they can deploy applications into centrally. And so now they don't need a specialist on an oil rig to figure out how to operate infrastructure. So that's a here and now problem. They can set it up right now, centrally managed clouds, with central application orchestration on those clouds. The second part of the thing, is to create a new generation infrastructure, which is one level higher than virtual machines and data stores. It's infrastructure that gives their developers the ability to use data as a service, both on the edge and on the cloud, and to deploy compute as literally code, functional service, either on the edge or on the cloud, and so that gives them a homogeneous system, a much more developer-friendly system to deploy applications that can, you know, that can consume data at a volume, at a pace that we have never seen before. And the only way to make that consumption possible is if we can make the movement of data, the availability of data across this dispersed cloud very, very easy. So that's step two, is a data and code hypervisor, something that we haven't seen yet in the industry. >> Satyam Vaghani, pleasure to catch up with you as always. We look forward to watching the progress as all of this progresses. >> Thanks guys, I'm jazzed. >> From Justin Warren and myself, we'll be back with lots more coverage here, from VMworld 2017, you're watching The Cube. (electronic music)

>> Voiceover: Live from the Javits Center in New York City, it's The Cube, covering Inforum 2017. Brought to you by Infor. >> Welcome back to The Cube's coverage of Inforum. I am your host, Rebecca Knight, along with my co-host, Dave Vellante. We're joined by Terry Wise. He is the Vice President of Alliances for AWS. Thanks so much for coming on the program again. >> It's great to be here, yeah, thanks. >> So we are now a few years into this relationship with Infor. Where are we? Put things in perspective for us. >> Oh it's a great question. I think in some respects, this is arguably the most mature and strategic relationship we have. We've been working with Infor for, I've been at Amazon now nine years, and a better part of my nine years, we've been working with Infor, you know. In the early days it was awesome, before Infor bought the company. And, they've always done a great job of pushing us to be more enterprise-centric, more innovative in our platform and services. So it's very mature from that perspective. But I'd say, also at the same time, we're just entering a whole new days. We'd like to call it Day One at Amazon. If you look at some of the things that Charles and the team announced today with Coleman, and some of the new functionality and the growth of the cloud, I mean, we really are still at the early stages of this relationship, which is exciting. >> You know what's interesting to me Terry is, you know, Andy always talks about the fly wheel. He was, sort of, the first to use that terminology. And I was sitting in the endless meeting yesterday, and Infor was going through its architecture. And I just saw a lot of fly wheel in there. I mean, there is DynamoDB in there. I certainly saw S3. I think there was Kinesis, in terms of time series stuff. I think I saw Redshift in there. And so I wonder if you could talk about how this company, specifically, but generally, how people are leveraging net fly wheel of innovation to drive value for their customers. >> Yeah. And again, I think this goes back to the relationship we've had with Infor for so many years. Cloud is not just about cheap computing storage. It's really about platform and innovation that comes from that platform. And, you know, and partners and customers, like Infor, that have been with us a while, and they've got the skillsets internally, they've got great vision for how they want to take their customers with application functionality. They're really ripe to be able to take advantage of all the innovative platform services we build. Kinesis, Lambda for serverless computing. We're talking about some neat things around Edge. You heard Charles and Duncan today talk about Lex and some of the AI capabilities we have that are underpinning Coleman and some other new offerings. So they really are, kind of, the poster child for adopting our new services and driving innovation on top of our platform for their customer base. >> So where, if you can, look into your crystal ball a little bit. Where will we be a year from now, three years from now, with these technologies? >> So if I look out a year, I think, you know, rapid global expansion. You know, we're long past in many respects, sort of the, the early questions around cloud. Is it secure? Is it cost-effective? Is it robust and reliable? We're really past that if I look out across the globe. And now it's a question of how can we help enterprises adapt faster. And that's really, probably, the single biggest question I get from enterprise customers is, "This is great. Help me move quickly." And I think one of the neat things about the Infor relationship is, because they've packaged all of this innovation, into a set of business applications, they're actually helping customers move to the cloud quite a bit faster, and get that great value prop of cost efficiency, security, innovation, et cetera. Looking out three years, I think Duncan and the team did a very nice job today talking about the interaction ad user experience of how you're going to engage with business software moving forward. It's going to be very voice-driven. It's going to be predictive in nature so it's actually going to tell you what you need to think about versus going to a terminal or even a mobile device. So much left to do in that space. But I really do think, you know, three years from now, machine-learning won't be a buzz word, nor will artificial intelligence. It'll just be a bigger part of our daily lives. >> We were talking to Chip Coyle a little bit about trying to debunk some of the myths in cloud, specifically Amazon cloud. And I mentioned Oracle, saying that core enterprise apps really aren't going to the cloud, that's why you need Oracle. And they've got a strategy to do that, you've seen it. But then you going to see Infor, 55% of their business is in your cloud. They look like core enterprise apps. So is it, my question is, help us debunk that myth. But is it narrowly confined to companies like Infor, or are there examples of others? I mean, certainly there are companies, you guys have unbelievable logo chart. But when you peel back the onion, many of those apps are cloud-native or emerging apps. Those core of enterprise apps, we're seeing it from Infor. I wonder if you can add some color to that and are there other examples? >> Absolutely, I mean, I think there's others in the market that may be uncomfortable with the change that's happening with cloud, and therefore might be incented to try to slow that down. But I will say, the vast majority of all software companies we're engaging with are moving mission-critical enterprise apps to AWS. Some built natively in SaaS, like Infor is done. Others that are enabling, certifying their applications, SAP is another good example. You can kind of go across the stack, Adobe, AutoDesk, Siemens PLM, for product lifecycle management. And if you think about, you know, that's putting companies' core IP, the product development into the cloud to take advantage of all this agility, scale, cost-savings, et cetera. So it's been happening for a long time. Di-so is another great one, very innovative but somewhat conservative french company. They were very early on in the journey with us. And again, that's, you know, IP used to design airplanes, the things we fly around it. So it's been happening for a long time. It's accelerating. And I would say the other trend we're seeing is the companies out there that are resisting, we're hearing more and more from customers that, "Hey, that company is not helping move me to the future. Can you help me find an alternative?" So there's this big movement for enterprises to actually migrate out of legacy platforms, whether that's hardware or software, and move in to the cloud-native platforms, which are the future. >> So we see, we've been talking on The Cube for years about this whole digital transformation and how it's going to allow companies to play in different industries. Amazon, obviously. Retailer just purchased Whole Foods, getting into grocery. It's a content company. So Walmart said, "Alright, we're not going to put our stuff "in the Amazon cloud." Netflix obviously does. How do you deal with that? The obvious competitive fears of some of the customers that you have for AWS? How do you message that? And what do you tell the world? >> Sure, the first thing is, I mean, AWS, while it is part of Amazon.com, we are a separate operating group. And we've been that way since the beginning. So yeah, Amazon is a customer, just like Netflix or Nordstrom, or any of the other, you know, millions that we serve. Now a very hard customer and a very good customer. And they help drive our innovation road map. But we don't treat them any differently than we do, Netflix or the others. And part of that has to do with how we protect and secure the information that those companies put on AWS. So there's some companies out there, the one you just mentioned, that's still may be a bit uncomfortable, for whatever reasons, competitive reasons, putting information or having third parties put information related to their business on AWS. Yeah, I think that's unfortunate, I think. And it also talks about two different philosophies. We take very much a customer-centric view of the business. What's best for the customer. And if one of our partners has a better capability, we've got plenty of partners that have similar products to what we offer, but if it's the better product for the customer, we're more than happy to support that. Whereas others out there take a very competitive focus to the market. Where it's, they're watching what their competitors are doing. They're trying to head them off at the pass, or copy what their competitors are doing. In the long term, I don't think that's a fantastic strategy 'coz you're never really innovating on behalf of the customer. You're never giving them the best solution. You're actually preventing them from getting something that could be beneficial to that customer. And we just don't believe that's a long-term great business strategy for our customers and for ourselves. >> We recently saw the announcement of Amazon purchasing Whole Foods. Can you talk a little bit about this for our viewers. And talk about where, how you see the future of grocery and retail, where it's going. >> Sure, so we've announced our intention to purchase Whole Foods. It has not happenned. There's still some work to do there. But I think, you know, anytime we look at, you know, how we're going to expand, either organically or through acquisition, it's about, what are the synergies between our existing business, what the customers are looking for, and how can we create a better experience for that customer. How can we do it at scale? How can we innovate around that model? And then, you know, how can we make that a great long-term experience for the customer that ultimately drives the success and growth of our business, but also the partners that we bring in, whether again through acquisition or through third party partnership. This is kind of a, you look at this as a natural move as we look at what our customers are telling us, "Hey make it easier for us to purchase groceries and "household items." You know, and do it in a hybrid way, both, you know, combination of online and more from the physical presence. >> Terry I wonder if you could talk about, we mentioned the Edge before. And as you build out your partner strategy and the partner ecosystem. Talk more about the Edge, where it fits. Analytics at the Edge, and Amazon being the cloud, so what's your point of view on what happens at the Edge, what moves back to the cloud, the expense of moving things back to the cloud. What's your thought on that whole thing? >> Well, there's so many use cases for Edge computing. I mean, take the mining industry. You're putting huge trucks in the middle of nowhere that may have limited or very expensive connectivity. And they're capturing all kinds of, you know, information, during the natural operation of that machine. And it just makes sense that you want some level of data processing, storage, and analytics to happen on that machine. It could be a cruise ship, it could be a naval vessel, it could be an airplane. There's, you know, lots and lots of different applications there. But by doing some of that processing at the Edge, you're actually limiting the amount of data you have to send back to the central cloud. But of course, if you want to take full advantage of the analytics, you actually have to match that data with all the historical data and other real-time data that's resided in the cloud to get the result you're looking for. So it really becomes, you know, kind of this hybrid computing model. So some of it is efficiency around how much data you're sending back and forth. Some of it is just efficiency around processing, the point of data capture. Some due to connectivity reasons. Some due to other. It really is kind of this interesting new extension of hybrid cloud, if you will. We're very excited about it. >> You've made some moves in that area. I mean, Snowball was, I think, you know, one of the first. And there are other sort of Edge, what I would consider Edge-like devices or solutions. How dogmatic are you about everything living in the cloud? I mean, those are steps. Should we expect, you know, increasingly extending the reach of the cloud or is it just really going to all, your world come back to the AWS clouds? >> Yeah, yeah. It'll certainly be an extension of the cloud. That's already been happening. I mean, if you look at hybrid cloud. I think we've always been a supporter of hybrid cloud if you look at our roadmap going back many, many years with virtual private cloud, with Direct Connect, with some of the newer capabilities like Snowball, and, of course, Greengrass, our Edge capabilities. We're really extending the reach out to be much more of a hybrid store. 'Coz we recognize that not all the data today exist in the cloud or AWS in the future, you know. We think most applications will run in the cloud because the value proposition is so strong across so many different dimensions. But today, there's plenty of other places we have to connect to, again to capture the data. Now, I do think the vast majority of the data that we're capturing will be either pre-processed or sent natively into AWS to create a massive data leg so that you can start to drive these innovative machine-learning and artificial intelligence applications. The predictive analytics, the algorithms. They just don't work if you don't, they don't work effectively if you don't have massive amounts of data and you continuously refresh that data so that the algorithms can continue to learn. >> I want to double click on something you said about the value. To capture most of the value, your belief is that it's going to be in the cloud, one cloud. And others obviously have different view for a variety of different reasons. I buy the cost argument. You didn't make that argument, I'm making it. The marginal cost of having a single cloud. You know, standard, how much an A it is, superior. I'll grant that. What else is there though? Is it speed? Is it innovation? Is it standardization across the base? >> The single biggest value that I hear from customers today, but they love it, they love the cheap hosting fees, the efficiency part of it, but it really is the speed and agility. It's certainly the security model as well. I would say that most, almost every organization now that we talk to, once we've had the chance to educate them, if they haven't already done so themselves, has determined that the cloud-computing security model is much more effective than they could deliver on their own. We can just invest more. We can experiment more. We can have have multiple certifications across different industries, which every customer gets to take advantage of. But I would just come back, it's the ability to move quickly whether it's moving into new market. I was just in Europe, we were talking about it. It's so volatile there right now on so many dimensions with Brexit and some of the nationalistic politics things that are happening. Potentially the opening up more of the Middle East with the sovereign wealth funds comin' into play. There's just so much opportunity that enterprises need to be able to move quickly. And if they have to go stand up a data center somewhere else, or they can't deploy the software quickly, they're at a competitive disadvantage. So the single biggest driver from what I hear from customers and what I'm seeing is agility. >> Yeah, okay, so just to clarify, I said, cost not price. But we can debate that some other time. (Terry laughs) You just came back from Europe. You mentioned Brexit. What about things like GDPR which has taken effect but the penalties go in effect May of 18. Obviously that puts a lot of pressure on the cloud provider, as well as your customers. What are you hearing in Europe? And generally and specifically GDPR. >> Yeah, I mean, I would say the regulatory environment everywhere, but specifically in Europe, continues to evolve and it's fairly fluid. We've spent many years working with the various different regulatory bodies. The Article 29 Working Party. That's actually been crafting a lot of this legislation. So we're heavily influencing, because, if you step back, people said you couldn't do cloud, but they didn't explicitly say you could. (Rebecca and Dave laugh) So, customers are meant to, "How do I interpret this?" And some, you know, like, if I look at Nel, and I look at Societe Generale, and I look at BMW, and some of, you know, our forward-leaning European customers, Siemens is another great one, who was one of the original companies to put PII in the cloud. Here's a big German company putting PII in AWS a number of years ago. So we figured out how to get, not get around, but interpret the regulations, and then also ensure that we've got the features and capabilities to make sure that they comply with those regulations. So the full audit trail, the ability to encrypt data, the ability to make sure that data storage and localization is complying with, whether it's a country-level regulation or an industry-level regulation. So we continue to spend a lot of time and effort, monitoring and influencing that. And then building the services to make sure our customers fully comply. >> Well, you've always done well with permutations and complexity and automating that, so it's going to be fun to watch. >> Rebecca: It will indeed. >> Great. >> Terry thanks so much for joining us. We really appreciate it. It's been a lot of fun talking to you. >> Yeah, great, thanks, appreciate it. >> I'm Rebecca Knight for Dave Vellante. We will have more from Inforum just after this. (upbeat music)

>> Announcer: Please welcome Vice President of Worldwide Marketing, Amazon Web Services, Ariel Kelman. (applause) (techno music) >> Good afternoon, everyone. Thank you for coming. I hope you guys are having a great day here. It is my pleasure to introduce to come up on stage here, the CEO of Amazon Web Services, Andy Jassy. (applause) (techno music) >> Okay. Let's get started. I have a bunch of questions here for you, Andy. >> Just like one of our meetings, Ariel. >> Just like one of our meetings. So, I thought I'd start with a little bit of a state of the state on AWS. Can you give us your quick take? >> Yeah, well, first of all, thank you, everyone, for being here. We really appreciate it. We know how busy you guys are. So, hope you're having a good day. You know, the business is growing really quickly. In the last financials, we released, in Q four of '16, AWS is a 14 billion dollar revenue run rate business, growing 47% year over year. We have millions of active customers, and we consider an active customer as a non-Amazon entity that's used the platform in the last 30 days. And it's really a very broad, diverse customer set, in every imaginable size of customer and every imaginable vertical business segment. And I won't repeat all the customers that I know Werner went through earlier in the keynote, but here are just some of the more recent ones that you've seen, you know NELL is moving their their digital and their connected devices, meters, real estate to AWS. McDonalds is re-inventing their digital platform on top of AWS. FINRA is moving all in to AWS, yeah. You see at Reinvent, Workday announced AWS was its preferred cloud provider, and to start building on top of AWS further. Today, in press releases, you saw both Dunkin Donuts and Here, the geo-spatial map company announced they'd chosen AWS as their provider. You know and then I think if you look at our business, we have a really large non-US or global customer base and business that continues to expand very dramatically. And we're also aggressively increasing the number of geographic regions in which we have infrastructure. So last year in 2016, on top of the broad footprint we had, we added Korea, India, and Canada, and the UK. We've announced that we have regions coming, another one in China, in Ningxia, as well as in France, as well as in Sweden. So we're not close to being done expanding geographically. And then of course, we continue to iterate and innovate really quickly on behalf of all of you, of our customers. I mean, just last year alone, we launched what we considered over 1,000 significant services and features. So on average, our customers wake up every day and have three new capabilities they can choose to use or not use, but at their disposal. You've seen it already this year, if you look at Chime, which is our new unified communication service. It makes meetings much easier to conduct, be productive with. You saw Connect, which is our new global call center routing service. If you look even today, you look at Redshift Spectrum, which makes it easy to query all your data, not just locally on disk in your data warehouse but across all of S3, or DAX, which puts a cash in front of DynamoDB, we use the same interface, or all the new features in our machine learning services. We're not close to being done delivering and iterating on your behalf. And I think if you look at that collection of things, it's part of why, as Gartner looks out at the infrastructure space, they estimate the AWS is several times the size business of the next 14 providers combined. It's a pretty significant market segment leadership position. >> You talked a lot about adopts in there, a lot of customers moving to AWS, migrating large numbers of workloads, some going all in on AWS. And with that as kind of backdrop, do you still see a role for hybrid as being something that's important for customers? >> Yeah, it's funny. The quick answer is yes. I think the, you know, if you think about a few years ago, a lot of the rage was this debate about private cloud versus what people call public cloud. And we don't really see that debate very often anymore. I think relatively few companies have had success with private clouds, and most are pretty substantially moving in the direction of building on top of clouds like AWS. But, while you increasingly see more and more companies every month announcing that they're going all in to the cloud, we will see most enterprises operate in some form of hybrid mode for the next number of years. And I think in the early days of AWS and the cloud, I think people got confused about this, where they thought that they had to make this binary decision to either be all in on the public cloud and AWS or not at all. And of course that's not the case. It's not a binary decision. And what we know many of our enterprise customers want is they want to be able to run the data centers that they're not ready to retire yet as seamlessly as they can alongside of AWS. And it's why we've built a lot of the capabilities we've built the last several years. These are things like PPC, which is our virtual private cloud, which allows you to cordon off a portion of our network, deploy resources into it and connect to it through VPN or Direct Connect, which is a private connection between your data centers and our regions or our storage gateway, which is a virtual storage appliance, or Identity Federation, or a whole bunch of capabilities like that. But what we've seen, even though the vast majority of the big hybrid implementations today are built on top of AWS, as more and more of the mainstream enterprises are now at the point where they're really building substantial cloud adoption plans, they've come back to us and they've said, well, you know, actually you guys have made us make kind of a binary decision. And that's because the vast majority of the world is virtualized on top of VMWare. And because VMWare and AWS, prior to a few months ago, had really done nothing to try and make it easy to use the VMWare tools that people have been using for many years seamlessly with AWS, customers were having to make a binary choice. Either they stick with the VMWare tools they've used for a while but have a really tough time integrating with AWS, or they move to AWS and they have to leave behind the VMWare tools they've been using. And it really was the impetus for VMWare and AWS to have a number of deep conversations about it, which led to the announcement we made late last fall of VMWare and AWS, which is going to allow customers who have been using the VMWare tools to manage their infrastructure for a long time to seamlessly be able to run those on top of AWS. And they get to do so as they move workloads back and forth and they evolve their hybrid implementation without having to buy any new hardware, which is a big deal for companies. Very few companies are looking to find ways to buy more hardware these days. And customers have been very excited about this prospect. We've announced that it's going to be ready in the middle of this year. You see companies like Amadeus and Merck and Western Digital and the state of Louisiana, a number of others, we've a very large, private beta and preview happening right now. And people are pretty excited about that prospect. So we will allow customers to run in the mode that they want to run, and I think you'll see a huge transition over the next five to 10 years. >> So in addition to hybrid, another question we get a lot from enterprises around the concept of lock-in and how they should think about their relationship with the vendor and how they should think about whether to spread the workloads across multiple infrastructure providers. How do you think about that? >> Well, it's a question we get a lot. And Oracle has sure made people care about that issue. You know, I think people are very sensitive about being locked in, given the experience that they've had over the last 10 to 15 years. And I think the reality is when you look at the cloud, it really is nothing like being locked into something like Oracle. The APIs look pretty similar between the various providers. We build an open standard, it's like Linux and MySQL and Postgres. All the migration tools that we build allow you to migrate in or out of AWS. It's up to customers based on how they want to run their workload. So it is much easier to move away from something like the cloud than it is from some of the old software services that has created some of this phobia. But I think when you look at most CIOs, enterprise CIOs particularly, as they think about moving to the cloud, many of them started off thinking that they, you know, very well might split their workloads across multiple cloud providers. And I think when push comes to shove, very few decide to do so. Most predominately pick an infrastructure provider to run their workloads. And the reason that they don't split it across, you know, pretty evenly across clouds is a few reasons. Number one, if you do so, you have to standardize in the lowest common denominator. And these platforms are in radically different stages at this point. And if you look at something like AWS, it has a lot more functionality than anybody else by a large margin. And we're also iterating more quickly than you'll find from the other providers. And most folks don't want to tie the hands of their developers behind their backs in the name of having the ability of splitting it across multiple clouds, cause they actually are, in most of their spaces, competitive, and they have a lot of ideas that they want to actually build and invent on behalf of their customers. So, you know, they don't want to actually limit their functionality. It turns out the second reason is that they don't want to force their development teams to have to learn multiple platforms. And most development teams, if any of you have managed multiple stacks across different technologies, and many of us have had that experience, it's a pain in the butt. And trying to make a shift from what you've been doing for the last 30 years on premises to the cloud is hard enough. But then forcing teams to have to get good at running across two or three platforms is something most teams don't relish, and it's wasteful of people's time, it's wasteful of natural resources. That's the second thing. And then the third reason is that you effectively diminish your buying power because all of these cloud providers have volume discounts, and then you're splitting what you buy across multiple providers, which gives you a lower amount you buy from everybody at a worse price. So when most CIOs and enterprises look at this carefully, they don't actually end up splitting it relatively evenly. They predominately pick a cloud provider. Some will just pick one. Others will pick one and then do a little bit with a second, just so they know they can run with a second provider, in case that relationship with the one they choose to predominately run with goes sideways in some fashion. But when you really look at it, CIOs are not making that decision to split it up relatively evenly because it makes their development teams much less capable and much less agile. >> Okay, let's shift gears a little bit, talk about a subject that's on the minds of not just enterprises but startups and government organizations and pretty much every organization we talk to. And that's AI and machine learning. Reinvent, we introduced our Amazon AI services and just this morning Werner announced the general availability of Amazon Lex. So where are we overall on machine learning? >> Well it's a hugely exciting opportunity for customers, and I think, we believe it's exciting for us as well. And it's still in the relatively early stages, if you look at how people are using it, but it's something that we passionately believe is going to make a huge difference in the world and a huge difference with customers, and that we're investing a pretty gigantic amount of resource and capability for our customers. And I think the way that we think about, at a high level, the machine learning and deep learning spaces are, you know, there's kind of three macro layers of the stack. I think at that bottom layer, it's generally for the expert machine learning practitioners, of which there are relatively few in the world. It's a scarce resource relative to what I think will be the case in five, 10 years from now. And these are folks who are comfortable working with deep learning engines, know how to build models, know how to tune those models, know how to do inference, know how to get that data from the models into production apps. And for that group of people, if you look at the vast majority of machine learning and deep learning that's being done in the cloud today, it's being done on top of AWS, are P2 instances, which are optimized for deep learning and our deep learning AMIs, that package, effectively the deep learning engines and libraries inside those AMIs. And you see companies like Netflix, Nvidia, and Pinterest and Stanford and a whole bunch of others that are doing significant amounts of machine learning on top of those optimized instances for machine learning and the deep learning AMIs. And I think that you can expect, over time, that we'll continue to build additional capabilities and tools for those expert practitioners. I think we will support and do support every single one of the deep learning engines on top of AWS, and we have a significant amount of those workloads with all those engines running on top of AWS today. We also are making, I would say, a disproportionate investment of our own resources and the MXNet community just because if you look at running deep learning models once you get beyond a few GPUs, it's pretty difficult to have those scale as you get into the hundreds of GPUs. And most of the deep learning engines don't scale very well horizontally. And so what we've found through a lot of extensive testing, cause remember, Amazon has thousands of deep learning experts inside the company that have built very sophisticated deep learning capabilities, like the ones you see in Alexa, we have found that MXNet scales the best and almost linearly, as we continue to add nodes, as we continue to horizontally scale. So we have a lot of investment at that bottom layer of the stack. Now, if you think about most companies with developers, it's still largely inaccessible to them to do the type of machine learning and deep learning that they'd really like to do. And that's because the tools, I think, are still too primitive. And there's a number of services out there, we built one ourselves in Amazon Machine Learning that we have a lot of customers use, and yet I would argue that all of those services, including our own, are still more difficult than they should be for everyday developers to be able to build machine learning and access machine learning and deep learning. And if you look at the history of what AWS has done, in every part of our business, and a lot of what's driven us, is trying to democratize technologies that were really only available and accessible before to a select, small number of companies. And so we're doing a lot of work at what I would call that middle layer of the stack to get rid of a lot of the muck associated with having to do, you know, building the models, tuning the models, doing the inference, figuring how to get the data into production apps, a lot of those capabilities at that middle layer that we think are really essential to allow deep learning and machine learning to reach its full potential. And then at the top layer of the stack, we think of those as solutions. And those are things like, pass me an image and I'll tell you what that image is, or show me this face, does it match faces in this group of faces, or pass me a string of text and I'll give you an mpg file, or give me some words and what your intent is and then I'll be able to return answers that allow people to build conversational apps like the Lex technology. And we have a whole bunch of other services coming in that area, atop of Lex and Polly and Recognition, and you can imagine some of those that we've had to use in Amazon over the years that we'll continue to make available for you, our customers. So very significant level of investment at all three layers of that stack. We think it's relatively early days in the space but have a lot of passion and excitement for that. >> Okay, now for ML and AI, we're seeing customers wanting to load in tons of data, both to train the models and to actually process data once they've built their models. And then outside of ML and AI, we're seeing just as much demand to move in data for analytics and traditional workloads. So as people are looking to move more and more data to the cloud, how are we thinking about making it easier to get data in? >> It's a great question. And I think it's actually an often overlooked question because a lot of what gets attention with customers is all the really interesting services that allow you to do everything from compute and storage and database and messaging and analytics and machine learning and AI. But at the end of the day, if you have a significant amount of data already somewhere else, you have to get it into the cloud to be able to take advantage of all these capabilities that you don't have on premises. And so we have spent a disproportionate amount of focus over the last few years trying to build capabilities for our customers to make this easier. And we have a set of capabilities that really is not close to matched anywhere else, in part because we have so many customers who are asking for help in this area that it's, you know, that's really what drives what we build. So of course, you could use the good old-fashioned wire to send data over the internet. Increasingly, we find customers that are trying to move large amounts of data into S3, is using our S3 transfer acceleration service, which basically uses our points of presence, or POPs, all over the world to expedite delivery into S3. You know, a few years ago, we were talking to a number of companies that were looking to make big shifts to the cloud, and they said, well, I need to move lots of data that just isn't viable for me to move it over the wire, given the connection we can assign to it. It's why we built Snowball. And so we launched Snowball a couple years ago, which is really, it's a 50 terabyte appliance that is encrypted, the data's encrypted three different ways, and you ingest the data from your data center into Snowball, it has a Kindle connected to it, it allows you to, you know, that makes sure that you send it to the right place, and you can also track the progress of your high-speed ingestion into our data centers. And when we first launched Snowball, we launched it at Reinvent a couple years ago, I could not believe that we were going to order as many Snowballs to start with as the team wanted to order. And in fact, I reproached the team and I said, this is way too much, why don't we first see if people actually use any of these Snowballs. And so the team thankfully didn't listen very carefully to that, and they really only pared back a little bit. And then it turned out that we, almost from the get-go, had ordered 10X too few. And so this has been something that people have used in a very broad, pervasive way all over the world. And last year, at the beginning of the year, as we were asking people what else they would like us to build in Snowball, customers told us a few things that were pretty interesting to us. First, one that wasn't that surprising was they said, well, it would be great if they were bigger, you know, if instead of 50 terabytes it was more data I could store on each device. Then they said, you know, one of the problems is when I load the data onto a Snowball and send it to you, I have to still keep my local copy on premises until it's ingested, cause I can't risk losing that data. So they said it would be great if you could find a way to provide clustering, so that I don't have to keep that copy on premises. That was pretty interesting. And then they said, you know, there's some of that data that I'd actually like to be loading synchronously to S3, and then, or some things back from S3 to that data that I may want to compare against. That was interesting, having that endpoint. And then they said, well, we'd really love it if there was some compute on those Snowballs so I can do analytics on some relatively short-term signals that I want to take action on right away. Those were really the pieces of feedback that informed Snowball Edge, which is the next version of Snowball that we launched, announced at Reinvent this past November. So it has, it's a hundred-terabyte appliance, still the same level of encryption, and it has clustering so that you don't have to keep that copy of the data local. It allows you to have an endpoint to S3 to synchronously load data back and forth, and then it has a compute inside of it. And so it allows customers to use these on premises. I'll give you a good example. GE is using these for their wind turbines. And they collect all kinds of data from those turbines, but there's certain short-term signals they want to do analytics on in as close to real time as they can, and take action on those. And so they use that compute to do the analytics and then when they fill up that Snowball Edge, they detach it and send it back to AWS to do broad-scale analytics in the cloud and then just start using an additional Snowball Edge to capture that short-term data and be able to do those analytics. So Snowball Edge is, you know, we just launched it a couple months ago, again, amazed at the type of response, how many customers are starting to deploy those all over the place. I think if you have exabytes of data that you need to move, it's not so easy. An exabyte of data, if you wanted to move from on premises to AWS, would require 10,000 Snowball Edges. Those customers don't want to really manage a fleet of 10,000 Snowball Edges if they don't have to. And so, we tried to figure out how to solve that problem, and it's why we launched Snowmobile back at Reinvent in November, which effectively, it's a hundred-petabyte container on a 45-foot trailer that we will take a truck and bring out to your facility. It comes with its own power and its own network fiber that we plug in to your data center. And if you want to move an exabyte of data over a 10 gigabit per second connection, it would take you 26 years. But using 10 Snowmobiles, it would take you six months. So really different level of scale. And you'd be surprised how many companies have exabytes of data at this point that they want to move to the cloud to get all those analytics and machine learning capabilities running on top of them. Then for streaming data, as we have more and more companies that are doing real-time analytics of streaming data, we have Kinesis, where we built something called the Kinesis Firehose that makes it really simple to stream all your real-time data. We have a storage gateway for companies that want to keep certain data hot, locally, and then asynchronously be loading the rest of their data to AWS to be able to use in different formats, should they need it as backup or should they choose to make a transition. So it's a very broad set of storage capabilities. And then of course, if you've moved a lot of data into the cloud or into anything, you realize that one of the hardest parts that people often leave to the end is ETL. And so we have announced an ETL service called Glue, which we announced at Reinvent, which is going to make it much easier to move your data, be able to find your data and map your data to different locations and do ETL, which of course is hugely important as you're moving large amounts. >> So we've talked a lot about moving things to the cloud, moving applications, moving data. But let's shift gears a little bit and talk about something not on the cloud, connected devices. >> Yeah. >> Where do they fit in and how do you think about edge? >> Well, you know, I've been working on AWS since the start of AWS, and we've been in the market for a little over 11 years at this point. And we have encountered, as I'm sure all of you have, many buzzwords. And of all the buzzwords that everybody has talked about, I think I can make a pretty strong argument that the one that has delivered fastest on its promise has been IOT and connected devices. Just amazing to me how much is happening at the edge today and how fast that's changing with device manufacturers. And I think that if you look out 10 years from now, when you talk about hybrid, I think most companies, majority on premise piece of hybrid will not be servers, it will be connected devices. There are going to be billions of devices all over the place, in your home, in your office, in factories, in oil fields, in agricultural fields, on ships, in cars, in planes, everywhere. You're going to have these assets that sit at the edge that companies are going to want to be able to collect data on, do analytics on, and then take action. And if you think about it, most of these devices, by their very nature, have relatively little CPU and have relatively little disk, which makes the cloud disproportionately important for them to supplement them. It's why you see most of the big, successful IOT applications today are using AWS to supplement them. Illumina has hooked up their genome sequencing to AWS to do analytics, or you can look at Major League Baseball Statcast is an IOT application built on top of AWS, or John Deer has over 200,000 telematically enabled tractors that are collecting real-time planting conditions and information that they're doing analytics on and sending it back to farmers so they can figure out where and how to optimally plant. Tata Motors manages their truck fleet this way. Phillips has their smart lighting project. I mean, there're innumerable amounts of these IOT applications built on top of AWS where the cloud is supplementing the device's capability. But when you think about these becoming more mission-critical applications for companies, there are going to be certain functions and certain conditions by which they're not going to want to connect back to the cloud. They're not going to want to take the time for that round trip. They're not going to have connectivity in some cases to be able to make a round trip to the cloud. And what they really want is customers really want the same capabilities they have on AWS, with AWS IOT, but on the devices themselves. And if you've ever tried to develop on these embedded devices, it's not for mere mortals. It's pretty delicate and it's pretty scary and there's a lot of archaic protocols associated with it, pretty tough to do it all and to do it without taking down your application. And so what we did was we built something called Greengrass, and we announced it at Reinvent. And Greengrass is really like a software module that you can effectively have inside your device. And it allows developers to write lambda functions, it's got lambda inside of it, and it allows customers to write lambda functions, some of which they want to run in the cloud, some of which they want to run on the device itself through Greengrass. So they have a common programming model to build those functions, to take the signals they see and take the actions they want to take against that, which is really going to help, I think, across all these IOT devices to be able to be much more flexible and allow the devices and the analytics and the actions you take to be much smarter, more intelligent. It's also why we built Snowball Edge. Snowball Edge, if you think about it, is really a purpose-built Greengrass device. We have Greengrass, it's inside of the Snowball Edge, and you know, the GE wind turbine example is a good example of that. And so it's to us, I think it's the future of what the on-premises piece of hybrid's going to be. I think there're going to be billions of devices all over the place and people are going to want to interact with them with a common programming model like they use in AWS and the cloud, and we're continuing to invest very significantly to make that easier and easier for companies. >> We've talked about several feature directions. We talked about AI, machine learning, the edge. What are some of the other areas of investment that this group should care about? >> Well there's a lot. (laughs) That's not a suit question, Ariel. But there's a lot. I think, I'll name a few. I think first of all, as I alluded to earlier, we are not close to being done expanding geographically. I think virtually every tier-one country will have an AWS region over time. I think many of the emerging countries will as well. I think the database space is an area that is radically changing. It's happening at a faster pace than I think people sometimes realize. And I think it's good news for all of you. I think the database space over the last few decades has been a lonely place for customers. I think that they have felt particularly locked into companies that are expensive and proprietary and have high degrees of lock-in and aren't so customer-friendly. And I think customers are sick of it. And we have a relational database service that we launched many years ago and has many flavors that you can run. You can run MySQL, you can run Postgres, you can run MariaDB, you can run SQLServer, you can run Oracle. And what a lot of our customers kept saying to us was, could you please figure out a way to have a database capability that has the performance characteristics of the commercial-grade databases but the customer-friendly and pricing model of the more open engines like the MySQL and Postgres and MariaDB. What you do on your own, we do a lot of it at Amazon, but it's hard, I mean, it takes a lot of work and a lot of tuning. And our customers really wanted us to solve that problem for them. And it's why we spent several years building Aurora, which is our own database engine that we built, but that's fully compatible with MySQL and with Postgres. It's at least as fault tolerant and durable and performant as the commercial-grade databases, but it's a tenth of the cost of those. And it's also nice because if it turns out that you use Aurora and you decide for whatever reason you don't want to use Aurora anymore, because it's fully compatible with MySQL and Postgres, you just dump it to the community versions of those, and off you are. So there's really hardly any transition there. So that is the fastest-growing service in the history of AWS. I'm amazed at how quickly it's grown. I think you may have heard earlier, we've had 23,000 database migrations just in the last year or so. There's a lot of pent-up demand to have database freedom. And we're here to help you have it. You know, I think on the analytic side, it's just never been easier and less expensive to collect, store, analyze, and share data than it is today. Part of that has to do with the economics of the cloud. But a lot of it has to do with the really broad analytics capability that we provide you. And it's a much broader capability than you'll find elsewhere. And you know, you can manage Hadoop and Spark and Presto and Hive and Pig and Yarn on top of AWS, or we have a managed elastic search service, and you know, of course we have a very high scale, very high performing data warehouse in Redshift, that just got even more performant with Spectrum, which now can query across all of your S3 data, and of course you have Athena, where you can query S3 directly. We have a service that allows you to do real-time analytics of streaming data in Kinesis. We have a business intelligence service in QuickSight. We have a number of machine learning capabilities I talked about earlier. It's a very broad array. And what we find is that it's a new day in analytics for companies. A lot of the data that companies felt like they had to throw away before, either because it was too expensive to hold or they didn't really have the tools accessible to them to get the learning from that data, it's a totally different day today. And so we have a pretty big investment in that space, I mentioned Glue earlier to do ETL on all that data. We have a lot more coming in that space. I think compute, super interesting, you know, I think you will find, I think we will find that companies will use full instances for many, many years and we have, you know, more than double the number of instances than you'll find elsewhere in every imaginable shape and size. But I would also say that the trend we see is that more and more companies are using smaller units of compute, and it's why you see containers becoming so popular. We have a really big business in ECS. And we will continue to build out the capability there. We have companies really running virtually every type of container and orchestration and management service on top of AWS at this point. And then of course, a couple years ago, we pioneered the event-driven serverless capability in compute that we call Lambda, which I'm just again, blown away by how many customers are using that for everything, in every way. So I think the basic unit of compute is continuing to get smaller. I think that's really good for customers. I think the ability to be serverless is a very exciting proposition that we're continuing to to fulfill that vision that we laid out a couple years ago. And then, probably, the last thing I'd point out right now is, I think it's really interesting to see how the basic procurement of software is changing. In significant part driven by what we've been doing with our Marketplace. If you think about it, in the old world, if you were a company that was buying software, you'd have to go find bunch of the companies that you should consider, you'd have to have a lot of conversations, you'd have to talk to a lot of salespeople. Those companies, by the way, have to have a big sales team, an expensive marketing budget to go find those companies and then go sell those companies and then both companies engage in this long tap-dance around doing an agreement and the legal terms and the legal teams and it's just, the process is very arduous. Then after you buy it, you have to figure out how you're going to actually package it, how you're deploy to infrastructure and get it done, and it's just, I think in general, both consumers of software and sellers of software really don't like the process that's existed over the last few decades. And then you look at AWS Marketplace, and we have 35 hundred product listings in there from 12 hundred technology providers. If you look at the number of hours, that software that's been running EC2 just in the last month alone, it's several hundred million hours, EC2 hours, of that software being run on top of our Marketplace. And it's just completely changing how software is bought and procured. I think that if you talk to a lot of the big sellers of software, like Splunk or Trend Micro, there's a whole number of them, they'll tell you it totally changes their ability to be able to sell. You know, one of the things that really helped AWS in the early days and still continues to help us, is that we have a self-service model where we don't actually have to have a lot of people talk to every customer to get started. I think if you're a seller of software, that's very appealing, to allow people to find your software and be able to buy it. And if you're a consumer, to be able to buy it quickly, again, without the hassle of all those conversations and the overhead associated with that, very appealing. And I think it's why the marketplace has just exploded and taken off like it has. It's also really good, by the way, for systems integrators, who are often packaging things on top of that software to their clients. This makes it much easier to build kind of smaller catalogs of software products for their customers. I think when you layer on top of that the capabilities that we've announced to make it easier for SASS providers to meter and to do billing and to do identity is just, it's a very different world. And so I think that also is very exciting, both for companies and customers as well as software providers. >> We certainly touched on a lot here. And we have a lot going on, and you know, while we have customers asking us a lot about how they can use all these new services and new features, we also tend to get a lot of questions from customers on how we innovate so quickly, and they can think about applying some of those lessons learned to their own businesses. >> So you're asking how we're able to innovate quickly? >> Mmm hmm. >> I think there's a few things that have helped us, and it's different for every company. But some of these might be helpful. I'll point to a few. I think the first thing is, I think we disproportionately index on hiring builders. And we think of builders as people who are inventors, people who look at different customer experiences really critically, are honest about what's flawed about them, and then seek to reinvent them. And then people who understand that launch is the starting line and not the finish line. There's very little that any of us ever built that's a home run right out of the gate. And so most things that succeed take a lot of listening to customers and a lot of experimentation and a lot of iterating before you get to an equation that really works. So the first thing is who we hire. I think the second thing is how we organize. And we have, at Amazon, long tried to organize into as small and separable and autonomous teams as we can, that have all the resources in those teams to own their own destiny. And so for instance, the technologists and the product managers are part of the same team. And a lot of that is because we don't want the finger pointing that goes back and forth between the teams, and if they're on the same team, they focus all their energy on owning it together and understanding what customers need from them, spending a disproportionate amount of time with customers, and then they get to own their own roadmaps. One of the reasons we don't publish a 12 to 18 month roadmap is we want those teams to have the freedom, in talking to customers and listening to what you tell us matters, to re-prioritize if there are certain things that we assumed mattered more than it turns out it does. So, you know I think that the way that we organize is the second piece. I think a third piece is all of our teams get to use the same AWS building blocks that all of you get to use, which allow you to move much more quickly. And I think one of the least told stories about Amazon over the last five years, in part because people have gotten interested in AWS, is people have missed how fast our consumer business at Amazon has iterated. Look at the amount of invention in Amazon's consumer business. And they'll tell you that a big piece of that is their ability to use the AWS building blocks like they do. I think a fourth thing is many big companies, as they get larger, what starts to happen is what people call the institutional no, which is that leaders walk into meetings on new ideas looking to find ways to say no, and not because they're ill intended but just because they get more conservative or they have a lot on their plate or things are really managed very centrally, so it's hard to imagine adding more to what you're already doing. At Amazon, it's really the opposite, and in part because of the way we're organized in such a decoupled, decentralized fashion, and in part because it's just part of our DNA. When the leaders walk into a meeting, they are looking for ways to say yes. And we don't say yes to everything, we have a lot of proposals. But we say yes to a lot more than I think virtually any other company on the planet. And when we're having conversations with builders who are proposing new ideas, we're in a mode where we're trying to problem-solve with them to get to yes, which I think is really different. And then I think the last thing is that we have mechanisms inside the company that allow us to make fast decisions. And if you want a little bit more detail, you should read our founder and CEO Jeff Bezos's shareholder letter, which just was released. He talks about the fast decision-making that happens inside the company. It's really true. We make fast decisions and we're willing to fail. And you know, we sometimes talk about how we're working on several of our next biggest failures, and we hope that most of the things we're doing aren't going to fail, but we know, if you're going to push the envelope and if you're going to experiment at the rate that we're trying to experiment, to find more pillars that allow us to do more for customers and allow us to be more relevant, you are going to fail sometimes. And you have to accept that, and you have to have a way of evaluating people that recognizes the inputs, meaning the things that they actually delivered as opposed to the outputs, cause on new ventures, you don't know what the outputs are going to be, you don't know consumers or customers are going to respond to the new thing you're trying to build. So you have to be able to reward employees on the inputs, you have to have a way for them to continue to progress and grow in their career even if they work on something didn't work. And you have to have a way of thinking about, when things don't work, how do I take the technology that I built as part of that, that really actually does work, but I didn't get it right in the form factor, and use it for other things. And I think that when you think about a culture like Amazon, that disproportionately hires builders, organizes into these separable, autonomous teams, and allows them to use building blocks to move fast, and has a leadership team that's looking to say yes to ideas and is willing to fail, you end up finding not only do you do more inventing but you get the people at every level of the organization spending their free cycles thinking about new ideas because it actually pays to think of new ideas cause you get a shot to try it. And so that has really helped us and I think most of our customers who have made significant shifts to AWS and the cloud would argue that that's one of the big transformational things they've seen in their companies as well. >> Okay. I want to go a little bit deeper on the subject of culture. What are some of the things that are most unique about the AWS culture that companies should know about when they're looking to partner with us? >> Well, I think if you're making a decision on a predominant infrastructure provider, it's really important that you decide that the culture of the company you're going to partner with is a fit for yours. And you know, it's a super important decision that you don't want to have to redo multiple times cause it's wasted effort. And I think that, look, I've been at Amazon for almost 20 years at this point, so I have obviously drank the Kool Aid. But there are a few things that I think are truly unique about Amazon's culture. I'll talk about three of them. The first is I think that we are unusually customer-oriented. And I think a lot of companies talk about being customer-oriented, but few actually are. I think most of the big technology companies truthfully are competitor-focused. They kind of look at what competitors are doing and then they try to one-up one another. You have one or two of them that I would say are product-focused, where they say, hey, it's great, you Mr. and Mrs. Customer have ideas on a product, but leave that to the experts, and you know, you'll like the products we're going to build. And those strategies can be good ones and successful ones, they're just not ours. We are driven by what customers tell us matters to them. We don't build technology for technology's sake, we don't become, you know, smitten by any one technology. We're trying to solve real problems for our customers. 90% of what we build is driven by what you tell us matters. And the other 10% is listening to you, and even if you can't articulate exactly what you want, trying to read between the lines and invent on your behalf. So that's the first thing. Second thing is that we are pioneers. We really like to invent, as I was talking about earlier. And I think most big technology companies at this point have either lost their will or their DNA to invent. Most of them acquire it or fast follow. And again, that can be a successful strategy. It's just not ours. I think in this day and age, where we're going through as big a shift as we are in the cloud, which is the biggest technology shift in our lifetime, as dynamic as it is, being able to partner with a company that has the most functionality, it's iterating the fastest, has the most customers, has the largest ecosystem of partners, has SIs and ISPs, that has had a vision for how all these pieces fit together from the start, instead of trying to patch them together in a following act, you have a big advantage. I think that the third thing is that we're unusually long-term oriented. And I think that you won't ever see us show up at your door the last day of a quarter, the last day of a year, trying to harass you into doing some kind of deal with us, not to be heard from again for a couple years when we either audit you or try to re-up you for a deal. That's just not the way that we will ever operate. We are trying to build a business, a set of relationships, that will outlast all of us here. And I think something that always ties it together well is this trusted advisor capability that we have inside our support function, which is, you know, we look at dozens of programmatic ways that our customers are using the platform and reach out to you if you're doing something we think's suboptimal. And one of the things we do is if you're not fully utilizing resources, or hardly, or not using them at all, we'll reach out and say, hey, you should stop paying for this. And over the last couple of years, we've sent out a couple million of these notifications that have led to actual annualized savings for customers of 350 million dollars. So I ask you, how many of your technology partners reach out to you and say stop spending money with us? To the tune of 350 million dollars lost revenue per year. Not too many. And I think when we first started doing it, people though it was gimmicky, but if you understand what I just talked about with regard to our culture, it makes perfect sense. We don't want to make money from customers unless you're getting value. We want to reinvent an experience that we think has been broken for the prior few decades. And then we're trying to build a relationship with you that outlasts all of us, and we think the best way to do that is to provide value and do right by customers over a long period of time. >> Okay, keeping going on the culture subject, what about some of the quirky things about Amazon's culture that people might find interesting or useful? >> Well there are a lot of quirky parts to our culture. And I think any, you know lots of companies who have strong culture will argue they have quirky pieces but I think there's a few I might point to. You know, I think the first would be the first several years I was with the company, I guess the first six years or so I was at the company, like most companies, all the information that was presented was via PowerPoint. And we would find that it was a very inefficient way to consume information. You know, you were often shaded by the charisma of the presenter, sometimes you would overweight what the presenters said based on whether they were a good presenter. And vice versa. You would very rarely have a deep conversation, cause you have no room on PowerPoint slides to have any depth. You would interrupt the presenter constantly with questions that they hadn't really thought through cause they didn't think they were going to have to present that level of depth. You constantly have the, you know, you'd ask the question, oh, I'm going to get to that in five slides, you want to do that now or you want to do that in five slides, you know, it was just maddening. And we would often find that most of the meetings required multiple meetings. And so we made a decision as a company to effectively ban PowerPoints as a communication vehicle inside the company. Really the only time I do PowerPoints is at Reinvent. And maybe that shows. And what we found is that it's a much more substantive and effective and time-efficient way to have conversations because there is no way to fake depth in a six-page narrative. So what we went to from PowerPoint was six-page narrative. You can write, have as much as you want in the appendix, but you have to assume nobody will read the appendices. Everything you have to communicate has to be done in six pages. You can't fake depth in a six-page narrative. And so what we do is we all get to the room, we spend 20 minutes or so reading the document so it's fresh in everybody's head. And then where we start the conversation is a radically different spot than when you're hearing a presentation one kind of shallow slide at a time. We all start the conversation with a fair bit of depth on the topic, and we can really hone in on the three or four issues that typically matter in each of these conversations. So we get to the heart of the matter and we can have one meeting on the topic instead of three or four. So that has been really, I mean it's unusual and it takes some time getting used to but it is a much more effective way to pay attention to the detail and have a substantive conversation. You know, I think a second thing, if you look at our working backwards process, we don't write a lot of code for any of our services until we write and refine and decide we have crisp press release and frequently asked question, or FAQ, for that product. And in the press release, what we're trying to do is make sure that we're building a product that has benefits that will really matter. How many times have we all gotten to the end of products and by the time we get there, we kind of think about what we're launching and think, this is not that interesting. Like, people are not going to find this that compelling. And it's because you just haven't thought through and argued and debated and made sure that you drew the line in the right spot on a set of benefits that will really matter to customers. So that's why we use the press release. The FAQ is to really have the arguments up front about how you're building the product. So what technology are you using? What's the architecture? What's the customer experience? What's the UI look like? What's the pricing dimensions? Are you going to charge for it or not? All of those decisions, what are people going to be most excited about, what are people going to be most disappointed by. All those conversations, if you have them up front, even if it takes you a few times to go through it, you can just let the teams build, and you don't have to check in with them except on the dates. And so we find that if we take the time up front we not only get the products right more often but the teams also deliver much more quickly and with much less churn. And then the third thing I'd say that's kind of quirky is it is an unusually truth-seeking culture at Amazon. I think we have a leadership principle that we say have backbone, disagree, and commit. And what it means is that we really expect people to speak up if they believe that we're headed down a path that's wrong for customers, no matter who is advancing it, what level in the company, everybody is empowered and expected to speak up. And then once we have the debate, then we all have to pull the same way, even if it's a different way than you were advocating. And I think, you always hear the old adage of where, two people look at a ceiling and one person says it's 14 feet and the other person says, it's 10 feet, and they say, okay let's compromise, it's 12 feet. And of course, it's not 12 feet, there is an answer. And not all things that we all consider has that black and white answer, but most things have an answer that really is more right if you actually assess it and debate it. And so we have an environment that really empowers people to challenge one another and I think it's part of why we end up getting to better answers, cause we have that level of openness and rigor. >> Okay, well Andy, we have time for one more question. >> Okay. >> So other than some of the things you've talked about, like customer focus, innovation, and long-term orientation, what is the single most important lesson that you've learned that is really relevant to this audience and this time we're living in? >> There's a lot. But I'll pick one. I would say I'll tell a short story that I think captures it. In the early days at Amazon, our sole business was what we called an owned inventory retail business, which meant we bought the inventory from distributors or publishers or manufacturers, stored it in our own fulfillment centers and shipped it to customers. And around the year 1999 or 2000, this third party seller model started becoming very popular. You know, these were companies like Half.com and eBay and folks like that. And we had a really animated debate inside the company about whether we should allow third party sellers to sell on the Amazon site. And the concerns internally were, first of all, we just had this fundamental belief that other sellers weren't going to care as much about the customer experience as we did cause it was such a central part of everything we did DNA-wise. And then also we had this entire business and all this machinery that was built around owned inventory business, with all these relationships with publishers and distributors and manufacturers, who we didn't think would necessarily like third party sellers selling right alongside us having bought their products. And so we really debated this, and we ultimately decided that we were going to allow third party sellers to sell in our marketplace. And we made that decision in part because it was better for customers, it allowed them to have lower prices, so more price variety and better selection. But also in significant part because we realized you can't fight gravity. If something is going to happen, whether you want it to happen or not, it is going to happen. And you are much better off cannibalizing yourself or being ahead of whatever direction the world is headed than you are at howling at the wind or wishing it away or trying to put up blockers and find a way to delay moving to the model that is really most successful and has the most amount of benefits for the customers in question. And that turned out to be a really important lesson for Amazon as a company and for me, personally, as well. You know, in the early days of doing Marketplace, we had all kinds of folks, even after we made the decision, that despite the have backbone, disagree and commit weren't really sure that they believed that it was going to be a successful decision. And it took several months, but thankfully we really were vigilant about it, and today in roughly half of the units we sell in our retail business are third party seller units. Been really good for our customers. And really good for our business as well. And I think the same thing is really applicable to the space we're talking about today, to the cloud, as you think about this gigantic shift that's going on right now, moving to the cloud, which is, you know, I think in the early days of the cloud, the first, I'll call it six, seven, eight years, I think collectively we consumed so much energy with all these arguments about are people going to move to the cloud, what are they going to move to the cloud, will they move mission-critical applications to the cloud, will the enterprise adopt it, will public sector adopt it, what about private cloud, you know, we just consumed a huge amount of energy and it was, you can see both in the results in what's happening in businesses like ours, it was a form of fighting gravity. And today we don't really have if conversations anymore with our customers. They're all when and how and what order conversations. And I would say that this going to be a much better world for all of us, because we will be able to build in a much more cost effective fashion, we will be able to build much more quickly, we'll be able to take our scarce resource of engineers and not spend their resource on the undifferentiated heavy lifting of infrastructure and instead on what truly differentiates your business. And you'll have a global presence, so that you have lower latency and a better end user customer experience being deployed with your applications and infrastructure all over the world. And you'll be able to meet the data sovereignty requirements of various locales. So I think it's a great world that we're entering right now, I think we're at a time where there's a lot less confusion about where the world is headed, and I think it's an unprecedented opportunity for you to reinvent your businesses, reinvent your applications, and build capabilities for your customers and for your business that weren't easily possible before. And I hope you take advantage of it, and we'll be right here every step of the way to help you. Thank you very much. I appreciate it. (applause) >> Thank you, Andy. And thank you, everyone. I appreciate your time today. >> Thank you. (applause) (upbeat music)

(upbeat music) >> Announcer: Live from Silicon Valley, it's theCUBE, covering Google Cloud Next '17. >> Welcome back to theCUBE's coverage of Google Next 2017, 10,000 people are in San Francisco, SiliconANGLE media, we've got reporters there, as well as the Wikibon analysts. I've been up there for the analyst's event, some of the keynotes, and we're getting thought leaders, partners, really getting lots of viewpoints as to what's happening, not just in the Google Cloud, but really the multi-Cloud world. And that's why I'm really excited to bring back a guest that we've had on the program before, Craig Mcluckie, who, four months ago, was with Google, but he's now the CEO of Heptio, and he's also one of the co-creators of Kubernetes, which anybody that's watching the event, definitely has been hearing, plenty about Kubernete so, welcome back to the program. >> Thanks for having me back. >> Yeah, absolutely, I know you were part of, a little event that kind of went before the Google Cloud event, brought in some people in the Cloud ecosystem, talk about a lot was going on. Maybe start us off with, what led you to kind of pop out of Google, what is Heptio, and how does that kind of extend what you're doing with Kubernetes when you're at Google? >> Certainly. So Heptio is a company that has been created, by my co-founder Joe and myself, to bring Kubernetes-- >> Stu: That's Joe Beda. >> Joe Beda. >> Stu: Yeah. To bring Kubernetes to enterprises, and the thing that really motivated me to start this company was the sense that there was not a unfettered Kubernetes company in existence. I spoke to a lot of organizations, that were having tremendous success with Kubernetes. It was transforming the way they approached infrastructure management. It created new levels of portability for their workloads. But they wanted to use Kubernetes on their own terms, in ways that made sense to them. And, most every other organization that is creating a Kubernetes distro, has attached it to other technologies. It's either attached to an opinionated operating system, or it's attached to a specific cloud environment, or it's attached to a Paas, and it just didn't meet the way that most of the customers I saw wanted to use the technology. I felt that a key missing part of this ecosystem, was a company that would meet the open source community where it is and help customers that just needed a little bit more help. A little more help with training, bit of documentation support, and the tools they needed to make themselves successful in the environments that they wanted to operate in. And that's what motivated Joe and I to start this company. >> Yeah, and it's interesting, cause you look at the biggest contributors, Google's there, you've got Red Hat, you've got, as you said, people that have their viewpoint as to where that fits. I think that that helps the development overall, but maybe you can help us unpack there. Why do you want, is it separate? Is there that opinionated-ness? What's inherently sub-optimal about that? (laughing) >> I think part of the key value in Kubernetes is the fact that it supports a common framework in a highly heterogonous world. Meaning you can mix together a broad variety of things, to your needs. So you could mix together, the right operating system, in the right hosting environment, with the right networking stack. And you could run general applications that are then managed and performed in a very efficient and easy to use way. And, one of the things that I think is really important, is this idea that customers should have choice, they should be picking the infrastructure based on the merits of the infrastructure. They should pick the OS that works for them, and they should be able to put together a system that operates tremendously well. And, I think it's particularly critical, at this juncture, that a layer emerges that allows customers, and service providers, to mix together the sort of things that they want to use, and consume, in a way that's agnostic to the infrastructure and the operating environment. I see the mainstream cloud providers, taking us in some ways back to the world of the mainframe. If you think about what we're starting to see, with companies like Amazon, who are spectacularly successful in the market, is this world where you have this deeply vertically integrated service provider, that provides not only the compute, but also the set of core services, and almost everything else that you need to run. And, at the end of the day, it's getting to a point where, a customer has to kind of pick their service provider. And, you know, for using IBM, but it was also sub-optimal from an ecosystem perspective. It inhibited innovation in many ways. And it was the emergence of Wintel, that sort of Windows and Intel ecosystem that really opened up the vendor ecosystem, and drove a tremendous amount of innovation and advancement. And, you know, when I think about what enterprise customers want and need today, they want that abstraction. They want a safe way to separate out the set of services that run their business, the set of technologies that they build and maintain, from the underlying infrastructure. And I think that's what driving a lot of the popularity of Kubernetes, is this idea that it is a logical infrastructure abstraction, that lets you pick the environment that you operate in, purely based on the merits of the environment. >> Yeah, it's been a struggle, I mean, I know through my entire career in IT, we've had that discussion of "do I just standardize on what we have? Cause, the enterprise today, absolutely. Every time I put a new technology in, it doesn't displace, it adds to it. So, I talked to lots of customers, still using mainframe. They're using the Wintel stuff, they using public cloud, they're using, you know, yes and and and, and therefore, managing it, orchestrating it, doing all those pieces that are difficult. The challenge when I put an abstraction layer in, and one of the big challenges is, how to really get the full value out of the pieces that I had. Sam Ramji said that, when he was at Cloud Foundry, they were trying to make it so that you really don't care which cloud, whether it's on premises or public cloud environments. And he said one of the reasons he joined Google was because he felt you couldn't make, if you went least common denominator or something, there was things Google was doing that nobody else can do. So there's always that balance of, "can I put an abstraction layer or virtualize something, and take advantage of it?" Or "do I just go all in with one vendor?" I mean, IBM back in the day, did lots of great things to make it simple, and cloud is trying to make it simple, lots of things, Amazon of course, no doubt that they're trying to vertically integrate everything they would like to do. You know, all your services. So, where do you see that balance? And, it's interesting, does it solve customers the best to be able to say "okay, you can take your mess that you have", and therefore, is this a silver bullet to help them solve it? >> I think it's a really good point. And, consistently, as I look through history, a lot of the platforms that people have pursued, that created this sort of complete decoupling, introduced this lowest common denominator problem, where you had to trade off a set of things that you really wanted with the capabilities of the platform. And, you know, I think that absolutely, in some cases, it makes a tremendous amount of sense, to invest in a vendor specific technology. So let's take an example out of Google, Cloud Spanner. Cloud Spanner has, it's literally the only, globally consistent, well right now it's regionally consistent, but it's literally the only globally consistent relational store available. There is nothing like it. The CockroachDB folks are building something that emulates some of the behavior, but without the true time API, that sort of atomic clock, you know, crazy infrastructure that Google's built. It adds very little utility. And so, in certain applications and certain workloads, if what you really want is a globally replicated, highly consistent relational data store, there is literally only one provider on the planet that would deliver it, which is Google. However, you might look at, you know, something that Amazon provides, and they may have some other service. Perhaps you've already built something on RedShift, and you want to be able to use that. Or Microsoft might offer up some other technologies that make sense to you. And, I think it's really important for enterprises to have the option. There's times when, for a given workload, it makes tremendous amount of sense, to put on a vendor, if you're looking to run something that has, deep machine learning hooks, or needs some other science fiction technology that Google's bringing to the world. It makes sense to run that on Google. For applications that are potentially integrated into a productivity suite, if you're an Office 365 user, it probably makes sense to host it on Microsoft. And then, perhaps there's some other pieces that you run on Amazon. And I don't think it's going to be pick one cloud provider and live in the static world forever. I think the landscape is constantly evolving and shifting. And, one of the things technologies like Kubernetes provide is an option. An option to move, an option to decide which specific services you want to pull through and use in which application. Recognizing that those are going to bind you to that cloud provider in perpetuity, but not necessarily pulling the entirety of your IT structure through. >> Yeah, Craig, I'm curious. When I look out as to kind of the people that commentate on this space, one of the things they say "Kubernetes is interesting, but this whole hybrid cloud thing, kill all the on premises stuff, public cloud's really where it's at." I know when I talk to most companies, they got plenty of on premises stuff, most infrastructure that is bought is still, there's a lot of it going on premises. So companies are sorting out what applications go where, what data goes where. Diane Green, suddenly 5% of the world's data really is in the public cloud today. What's your view on kind of that on premises, public cloud piece, and Kubernetes' role there? >> Yeah, I think it's a great question. And I have had some really interesting conversations with CIOS in the past. I remember in my very earliest days, pooh-poohing the idea of the private cloud, and having a really intense CIO look across the thing and he was like "you will pry my data centers from my cold, dead hands". (Stu laughing) He literally said that to me. And so, there's certainly a lot of passion in this space, and I think, at the end of the day, one has to be pragmatic. You know, first of all, one has to recognize that, if you're an organization that has bought significant data center footprint, you're probably going to want to continue to use that asset that you've acquired, and that's, you're going to want to use that in perpetuity. If you're a company, and most large companies are also naturally heterogonous, meaning as you go through an acquisition, the acquired portion of your company may have a profoundly different IT portfolio. You know, may have a different set of environments. And so, I think the world certainly benefits from an abstraction layer that allows you to train your engineers with a certain set of skills, and then be highly decoupled from the infrastructure environment you run in. And I think, again, Kubernetes is delivering some of that promise in a way that I think really resonates with customers. >> Absolutely, and even, we've been telling people for years "stop building data centers"? You know, there's very few companies that want to build data centers even, yes Google talks about their data centers, but Amazon? Gets their data center space from lots of other players there. But, if I stop building data centers today, I'm going to have em for another 25 30 years, and even it, what am I going to owe myself? I talked to plenty of the big financial guys, they're not going to move all of their information. They want to have it under their control, whether it's their own data center, a hosted managed environment there. So, we're going to be living with this multi-cloud thing for a long time. >> There is another thing that I don't think people have fully internalized yet, which is in many ways, the way that cloud provider data centers are structured is around power sources. At the end of the day, it's around cheap power and cooling. As you start looking at the dynamics of what's happening to our energy grid, it's no longer being quite as centralized as it was. And, it starts to beg the question "does it make sense to think about smaller units that are more distributed? Does it make sense to start really thinking about Edge compute capacity?" The option to deploy something really close to your customers if you need low latency and attainment scenarios. Or, the option to push a lot of capacity into your distribution center, if you're running high, heavy IoT workloads, where you just don't want to put all that data on the network. And so I think that, again, certainly, I think that people underestimate the power of the Amazon, Microsoft and Google. People that are still building data centers today, don't realize quite how remarkable the vendors at that scale are, in terms of their ability to build and run these things. But I do think that there are some interesting options, in terms of regional locality, data sovereignty, Edge latency, that legitimize, other types of deployment. >> Yeah, and you talked about IoT, Edge computing absolutely is something that comes up a lot there. At AWS Re:Invent last year, Amazon put their serverless solution using Greengrass, out at the Edge because there's tons of centers that I might not have the networking, or I can't have the latency I need to do the compute there. How does things like serverless at the Edge, and IoT play into the discussion of Kubernetes? >> I think it plays really well, insofar as, Kubernetes, it's not intrinsically magic. What it has done is created a relatively simple, and turns out, pretty reusable abstraction that lets you run a broad array of workloads. I wouldn't say it's exactly cracked the serverless paradigm in terms of event-driven, low cost of activation computing, but that's something that can certainly be built on top of it. The thing that it does do, is it provides you the ability to manage an application as if it were software as a service, in a location that is remote from you, by providing you a very principled, automated framework for operations. >> Alright, Craig, last thing I want you to do is give us an update on Heptio. How many people do you have? How are you engaging with customers? What's the business model look like for that? What can you share? >> So, we're currently 13 people. We've been in business for four months, and we've been able to hire some really amazing folks, out of the distributed systems communities. We are at a point where we're starting to provide our first supported configurations of Kubernetes. We don't position ourselves as a distribution provider, we rather like to think of ourselves as an organization that's invested in helping users get the most of the Upstream community. Right now, our focus is on training, support, and services, and over time, if we do that really well, we do aspire to provide a more robust set of product capabilities that help organizations succeed. For now, the thing that we focus most relentlessly on is helping customers manage down the cost of supporting a cluster. How do we create a better way for folks to understand what a configuration should look like? When are they likely to encounter issues? And if they do encounter those issues, helping them resolve them in the lowest friction and least painful way possible. >> Alright, and any relationships with the public cloud guys? Or what do you work with when you talk about OpenStack, Amazon, Google, Microsoft, what's the relationship and how do those work? >> So we announced the first joint quick start for Kubernetes with the Amazon folks last Tuesday. And that's been going pretty well. We're getting a lot of positive feedback around that. And we're now starting to think more broadly in terms of providing supported configurations on premises and then on Microsoft. So Amazon, for us, was the obvious starting point. It felt like an under-supported community from a Kubernetes perspective, insofar as, Microsoft had our friend Brenda Burns, who helped us build communities in the first place. And he's been doing some great work to bring Kubernetes to the Azure container service. What we really wanted to do was to make sure that Kubernetes runs well on Amazon, and that it is naturally integrated into the Amazon operating model, so cloud formation templates, and we have a really principled way to manage, maintain, upgrade and support those clusters. >> Alright, Craig Mcluckie, co-creator of Kubernetes, and CEO of Heptio. Really appreciate you coming here to our Palo Alto studio, helping us as we get towards the end of two days of live coverage of Google Cloud Next 2017. You're watching theCUBE. (upbeat music)

>>Like for Las Vegas, Nevada, that's the cue governor AWS reinvent 2016, brought to you by AWS and its ecosystem partners. Now, here are your hosts, John furrier and Stu minimum. >>We are here, live in Las Vegas with the cube all week. I'm John minimum. We are breaking down all the re-invent coverage. The cube is going on for three days. Um, Stu and I are going to break down here and studio B the analysis of Andy Jassy, his keynote. This is really day one of the event yesterday was kind of a preview at James Hamilton. Uh, Tuesday evening, I had a great band up there. Uh, and then he came on and delivered a really an Epic performance laying out as a, he's not a showman in the sense of, uh, uh, Steve jobs like, but he has a Steve jobs like cred, uh, James Hamilton, when it comes to the gigs in the community, he delivered the, what I call the secret sauce with AWS as data centers. And then Andy Jassy today with his keynote again is so high pack. >>They start at 8:00 AM, which is kind of not usual for events with so much to up their pack. Councilor came on stage AI Stu. First, I want to get your take on today's keynote with Andy Jassy. You were in the front row. What was going on inside the room? Tip, tell us your perspective, give us the vibe. What was the energy level and what was, what was it like? Yeah. John, as you said, starting at 8:00 AM, it's like a up, we must be talking to the tech audience because developers usually like to start a little bit later than that. Um, it was an embarrassment of riches. Uh, Andy gets on stage, as he told you, when you met with him up at his home in Seattle, uh, they've got, they're going to have about a thousand, you know, major new features updates. Uh, and you know, I think Andy went through a couple of hundred of them up on stage. >>Uh, you know, this is a group of true believers pack. Keynote people started streaming in over an hour ahead of time because only 10,000 could fit in the main tent. They had other remote locations where you could go get, you know, mimosas, bloody Marys or coffee. Uh, if you wanted to watch us, all over that. But it, it, it just to tell you, my fourth year here at the show and it's like, Oh yeah, another tech show. You're going to get keynotes. They're going to make some announcements yawn, no Amazon impresses every year. And they delivered this year. Andy might not be a showman, but you know, he was punching at a, you know, Larry Ellison and Oracle quite a bit. He got huge ovations. Like every time they announced a new compute instance, uh, in lots of these things, uh, and a little bit of show flare, uh, at the end, uh, certainly the going into the database market. >>Uh, but also they're making some really good infrastructure enhancements with the new services. What was your highlight if you're going to look at what the most significant, most important story this morning, what, what was squinting through all the great announcements? What ones you liked best? Oh boy. John, I have to pick one. I mean, here, here's a few number one is, you know, there's, there's some pushback from people in the community that, Oh, you know, they announced another ton of news, you know, compute instances, there's all these different storage configurations. Uh aren't we supposed to be making things simple. Uh, and that's when they had a one Amazon LightSail, which is the virtual private servers in seconds really goes after, you know, kind of a, you know, simple, low cost model, uh, really digital ocean's the leader in that space starting at like $5 a month, John, uh, you know, very exciting. A lot of people, uh, you know, really getting, uh, you know, as to where this could go every year, Amazon has a number of competitors that they're just like up, we see this opportunity. We can go after this. And John, this is not a high margin business. I mean, usually it's like, Oh, okay, database. I understand there's huge margin there. The storage market, of course, LightSail $5 a month. I mean, you know, they make it up in volume, but it's super fast. >>It was on a playbook. It drive the price down as low as possible, and then shift the value with the analytics. Um, and, uh, Aurora PA um, um, uh, pack housing or any chassis said fastest growing service in the history of Amazon last year, he said red shift was that this surpass red shift, uh, the announced Postgres equal on a roar, another big significant customer request. Um, just on and on the database seems to be the lock-in spec that they're trying to undo from Oracle. Um, they're not stopping. I mean, the rhetoric was all time high, John, the picture Larry Ellison popped out, popped in the Oracle. Oh, in the, in, in the O >>We know the long pole in the tent for enterprises is the applications you have making any changes in that, uh, doing any refactoring, you know, tinkering, you know, those are hard things to do. Um, but you know, we've heard a lot from Amazon this week as to how they're helping with migration, how they're giving options, how they're giving bridges, uh, things like VMware on AWS to bridge over from where you are, you know, you can lift and shift it. You can move it, you can rewrite it, lots of options there. Uh, and Amazon just has so many services and so many customers, thousands of systems integrators, uh, you know, thousands of ASVs, uh, and really big enterprises, you know, making statements up on stage. When you get Workday up on stage, John, you get McDonald's up on stage. Uh, you know, it's impressive. >>Some big name accounts, no doubt about it. That's do I want to get your thoughts on James Hamilton? Again, Amazon's got some of the announcements. I mean, some companies will launch entire conference keynote around maybe one or two of what they've done out of the many that they've had here also to note, there's been over 150 partner announcements. So the ecosystems do before we get to Hamilton, I want to talk about the ecosystem. This feels a lot like 2011, VMware. I was kind of joking with Sanjay Poonen the CEO of VMware was just on the cube with us and saying, what do you think about VMworld this year? I mean, re-invent, I was kind of tongue in cheek. I wanted to zinc them a little bit, but stew, this feels like, >>So John, I'm an infrastructure guy, and I want to talk about James Hamilton. One thing we got to cover first green grass. I, you know, green grass is how Amazon is taking their serverless architecture, really Lambda and taking it beyond the cloud. So how do I get, you know, that, that kind of hybrid edge, we talked about it a little bit with Sanjay, but number one, I can start pulling VMware into AWS. Number two, I can now get, you know, my Lambda services, uh, out on the edge, they talked about some IOT plays on, they talked about the snowball edge, uh, which is going to allow me to have kind of compute and storage, uh, down at that edge. Uh, I've seen huge excitement at this show, uh, on the serverless piece developers, it's really quick to work with, uh, twenty-five thousand Amazon echo dots were handed out and I've already talked to people that are already, you know, writing functions for that and figuring out how to can play with it. And God, we haven't even talked about the AI, John with voice and images. How many hours do we have John? >>I we'll get there. Let's stay on green grass for a minute, because if you think about what that's about, I want to get your thoughts on your thoughts on the impact of green grass. I mean, obviously the lamb done, that's got a little edge piece of snowball tied to it. Uh, you know, green grass and high ties forever. The old song by, you know, Southern rock band Outlaws back in the day, this is a significant announcement. What is the impact of that? >>Yeah, well, John, I mean the grass is greener in the cloud, right? So now we're going to bring the green grass, >>No ball when it snowball, my melts extends in the green grass. >>So we're going to be riffing all day on this stuff. So David foyer, uh, our CTO at Wiki bond has been talking for awhile, uh, that, you know, while cloud is great for data, the problem we have is that IOT is going to have most of the, you know, most of the data out on the edge. And we know the physics of moving large amounts of data is really tough. And especially if it's spread out things like sensors, things like wind farms, getting the networking to that last mile can be difficult. That's where things like green grass are going to be able to play in. How can I take really that cloud type of compute and put it on the edge. It really has potential to be a real game changer. I think John, we talked about what hybrid means, uh, and you know, we'll, we'll see a lot, a lot of buzz in the industry about what Microsoft's doing with Azure stack, uh, and you know, lots of pieces, but you know, grass, you know, it gives this new model of programming. It gives the developers, uh, it gives me, you know, I can use the arm processors, uh, out on the edge and, you know, we could try and talk about how that fits with James Hamilton too. >>We are inside the hall next to the cube studio, being so much content. We have to actually set up a separate set. Stu I want to get your thoughts on, I mean, obviously we can go on forever, but the significant innovation on multiple fronts for Amazon, you mentioned Greengrass, snowball, multiple instances. Um, and certainly they got all the analytics on Bubba, the top of the stack with Redshift and other stuff. And he says, streaming goes on and on the list goes on and on, but you look at what they're doing with Greengrass and snowball. And then you go look at what James Hamilton talked about yesterday. Now they're going down an innovating down to the actual physical chip level. They're doing stuff with the network routes, the control in the packet there, no one's touching the packets. They are significantly building the next global infrastructure backbone for themselves to power the world. This is, to me, I thought a subtle talk that James gave. There's a ton of nuance in there. Your thoughts on last, night's a really Epic presentation. I know we're gonna have a sit down exclusive interview with James Hamilton with Rob Hoff, our new editor in chief Silicon angle, but still give us a preview. What blew you away? What got you excited? I mean, it was certainly a geek dream. >>Yeah. I mean, John, you know, James Hamilton is just one of those. You talk about tech athletes, you know, just the, the real heroes in this space, uh, that so many of us look up to, uh, it's been one of the real pleasures of my career working, uh, with the cube that I've gotten to speak to James a few times. Uh, and the first article I wrote three years ago, uh, about what James Hamilton has done is it's hyper optimization. The misconception that people had about cloud is, Oh, it's just a white box. They're taking standard stuff, Amazon. And what James always talks about is how to, you know, really grow and innovate at scale. And that means they build for their environments and they really get down to every piece of the environment, all the software, all the hardware, they either customize it or make their own. So, you know, the big monitor >>And Stu to your point for their own use cases, the home, a prime Fridays and those spike days, he was talking about how they would have to provision months and months in advance to add, to understand some estimated peak that they were spinning up, literally thousands of servers. >>Yeah. So John, you know, Amazon doesn't make a lot of acquisitions, but one that they made is Annapurna labs. So they've got their own custom Silicon that they're making. Uh, so this will really allows them to control, uh, how they're doing their build-out. They can focus on things like performance. Uh, James talked about, uh, you know, how they're, they're really innovating on the network side. He was very early with 25 gigabit ethernet, uh, which really drove down. Some of the costs, gave them huge bandwidth advantages, uh, and kind of leading the way in the industry. Uh, the, the, the thing we've been poking out a bit is while Amazon leverages a lot of open source, they don't tend to give back as much. Uh, they've got the big MX net announcement as to how they're going to be involved in, in the machine learning. And that's good to see they hired Adrian Cockcroft, uh, you know, who lots of us knew from his Netflix days. Uh, and when he was a venture capitalist, he's going to be driving a lot of the open source activity. But James, you know, kind of went through everything from, >>By the way, on your point about source, I set it on the cube and I'll say it again. And you Mark my words. If Amazon does not start thinking about the open source equation, they could see a revolt that no one's ever seen before in the tech industry. And that is the open source community. Now as a tier one, it has been for a long time tier one contributor to innovation, and as a difference between using open source for an application like Facebook and a specific point application or Google for search, if you are building open source to build a company, to take territory from others, there will be a revolts. Do you, John, do you agree? Am I off, >>Uh, revolt might be a little strong, but absolutely. We already see some pushback there. And anytime a company gets large power in the marketplace, you see pushback. We saw it with Oracle, with salt, with Microsoft, we see it with VMware. Uh, so you know, and I think Amazon, here's this point, uh, Andy Jassy talks about how they're making meaningful contributions. I expect Adrian, uh, to make that much more visible. Um, we'll have to get into some of the James Hamilton stuff at a later date, but >>Down with him with Rob posts more on that later, you and I will hit James Hamilton analysis on the key later final thoughts you were giving me some help before we came on to talk here about me saying, I'm bullish on VMware's relationship with AWS. And you said, really? And I said, I am because I am a big fan of VMware, um, also AWS, but for their customers, for AI, for VMware customers, this is a good thing. Now you might have some thoughts on execution. Maybe what's your, why? Why did you roll your eyes when I said that? >>So, John, I mean, you know, I've lots of love for the VMware community. Uh, you know, spent lots of time in that space. Uh, and it, it's good to see, uh, VMware working with the public clouds. However, uh, I think the balance of power Shilton shifts in the side of Amazon being in control here. Uh, and you know, there's a lot of nuance. Where are the services where the value is what's going to be good for customer. Amazon's really good at listening. Uh, and you know, this embarrassment of riches that they do, right? >>A real summary, what bottom line, what happened this morning and your mind abstracted all the way in one soundbite, wait, >>They rolled a truck out, out stage, John, this snowmobile a hundred terabytes, a hundred petabytes of storage and a terabyte of information. Something that, you know, we were like, this is amazing. It's it's the, the maturation of the hybrid message is different from what people have been talking about hybrid, uh, you know, where SAS lives, all the ISV is. Where's the data, where's the application. Amazon's in a really good position. John, there's a big and growing ecosystem here. Uh, but there's a huge battles that I know we're going to get into, uh, out in the marketplace. You know, who's going to win voice, uh, you know, everybody's their apples, their Microsoft, >>Because everyone's jocking for position. Got Google, you got Oracle, you've got IBM. You've got Microsoft all looking at AWS and saying, how do we change the game on them? And we'll be covering this. The cute we are here in Las Vegas studio B cube three days of wall-to-wall Cubs, I'm Jeffers do minimum, breaking it down on day one, keynotes and analysis. Thanks for watching. We'll be right back. Stay tuned to the cube cube siliconangle.tv. You go to siliconangle.com for all the special exclusive stories from re-invent specifically to, with Andy Jassy, James Hamilton, and more thanks for watching.