>> Narrator: Live from Washington, D.C., it's the Cube covering .conf 2017 brought to you by Splunk. (electronic music) >> Welcome back to our nation's capitol. Here in Washington, D.C., the Cube which is Silicon Angle TV's flagship broadcast, broadcasting live today and tomorrow from D.C. here at .conf 2017, Splunk's annual get-together. Along with Dave Vellante, I'm John Walls. Now, we're joined by Chidi Alams who is the Head of IT and Security for Heartland Jiffy Lube. We all know Jiffy Lube for sure. Chidi, thanks for being with us. Good to see you. >> Of course, thanks for having me. >> Before I jump in, I was looking at your, kind of the portfolio of responsibilities earlier. Information security, application development, database development, reporting services, enterprise PM, blah, on and on and on. When do you sleep, Chidi? >> I don't. (laughing) That's the easy answer. The reality is I also have two young children at home, so between work and the family life, I'm up all the time. >> John: I imagine so. >> But I would have it no other way. >> Dave: How old are your kids? >> Three and two. >> Oh, you won't sleep for a decade. >> Right. >> I know. >> Wait til they start driving. >> That's what they tell me. >> Then it gets even better or worse, depends on how you look at it. >> That's how you learn how to sleep on airplanes. (laughing) >> Well, let's look at the big picture of security at Jiffy Lube. Your primary concerns these days, I assume, are very much laser-focused on security and what you're seeing. What are the kinds of things that keep you up at night? Other than kids these days? >> So, we're a very large retailer and brand recognition is something that we're very proud of, however, with that comes a considerable amount of risk. So the bad guys are also aware of Jiffy Lube. They understand that as a retailer, we have credit cards, we have very sensitive data. When I started with Jiffy Lube about two and a half years ago, I started a program to focus not only on keeping the bad guys out, right, that's essentially table stakes in any security program, but also implementing a discipline approach around insider threat. Frankly, that's where Splunk has proved to be a significant value for our organization because now we have visibility with respect to both of those risks. Additionally, we've spent a lot of time just taking more of a risk-based approach to security. Quite often what happens, technologists tend to focus on implementing technology and kind of filling gaps that way. The first thing that we did was assess organizational risk based on our most critical assets. Once we were able to determine asset X, in most cases a data asset, was really critical to the organization, credit card data, we were able to build a unified solution and program to ensure that we protect not only our brand, but our customers' data all the time. >> So, first of all I'll say, I love Jiffy Lube. I'm a customer. I go there all the time. It's so convenient, great service. Generally, very customer service oriented, but I see your challenge with all this distributed infrastructure and retail shops around. I would imagine there's somewhat of a transient, some turnover in employee base. >> Chidi: Yeah. >> The bad guys can target folks and say, "Hey, here's a few bucks. "Let me in." So how do you use data and analytics? I'm sure you have all kinds of screening and all kinds of corporate policies around that that's sort of one layer, but it's multi-dimensional. So how do you use technology and data to thwart that risk internally? >> Sure. So I think the key there is having a holistic program. That's a term that's thrown around a lot, so for me, that means a clear focus on people-processed technology. As I mentioned earlier, the tendency is to start with your comfort zone, so with us as technologists, it's technology, but the people aspect, I have found in my career, is always the largest variable that you have to account for. So disgruntled employees. In retail, regardless of how robust and how strong a culture you create, you're always going to have higher turnover than any industry, particularly in the field. Having very tight alignment with HR, Operations, other stakeholders to ensure that, look, when someone leaves, we track that effectively. That's all data-driven, by the way, so that we're able to track the lifecycle of an employee not only on the positive side when they enter the organization, but when they exit. If the exit is immediate, we have triggers and data-driven events that alert us to that so we can respond immediately. Then, I mentioned insider threat. It's not just employees out in the field. Globally, insider threat is probably the biggest blind spots for organizations. Again, the focus is on the outside, so when we look at things like data exfiltration which is a risk in any large organization where there's a lot of change and transformation, you have to have a good baseline of activity that's going on and understand what activity is truly normal versus activity that could be anomalous and an indicator of a bad actor within the enterprise. We have all that visibility and more now with Splunk. >> What is the role that Splunk plays? How has that journey evolved? I don't know if you've been there long enough, but pre-Splunk, post-Splunk, maybe you could describe that. >> Yeah, so pre-Splunk we were very, very reactive. Let me answer that by providing a little more context about how we're leveraging Splunk. So Splunk Enterprise Security is our centralized hub. Data across the enterprise comes to Splunk Enterprise Security. We have a team of SOC analysts that work around the clock to monitor events that, again, could be indicators of something bad happening. So with that infrastructure in place, we've gone from a very reactive situation where we had analysts and engineers going to disparate systems and having to manually triangulate and figure out, hey, is this an event? Is this something worthy of escalation? How do we handle this? Now, we have a platform not only in Splunk, but with some other solutions that gives us data, one, that's actionable. It's not hard to aggregate data, but to make that data meaningful and expose only what's legitimate from a triage and troubleshooting perspective. So those are some of the things we've done that Splunk has played a role in that. >> Okay. Talk about the regime for cybersecurity within your organization. It used to be, oh, it's an IT problem. In your organization, is it still an IT problem? Is the balance of the organization taking more responsibility? Is there a top-down initiative? I wonder if you could talk about how you guys approach that? >> That's a great question because it speaks to governance. One of the things that I did almost immediately when I started with Jiffy Lube was worked very closely with the senior leadership team to define what proper governance looks like because with governance, you've got accountability. So what happens all too often is security is just this thing that's kind of under-the-table. It's understood we've got some technology and some processes and policies in place, however, the question of accountability doesn't arise until there is a problem, especially in the case of a breach and most certainly when that breach leads to front-page exposure which was something I was very concerned about, again, Jiffy Lube being a very large retailer. Worked very closely with the senior leadership team to first of all, identify the priorities. We can't boil the ocean, there are a lot of gaps. There were a lot of gaps, but working as a team, we said, "Look, these are the priorities." Obviously, customer data, that's everything. That's our brand. We want to protect our customers, right. It's not just about keeping their vehicles running as long as possible. We want to be good stewards of their data. So with that, we implemented a very robust data-management strategy. We had regular meetings with business stakeholders and education also played a critical role. So taking technology and security out of the dark room of IT and bringing it to the senior leadership team and then, of course, being a member of that senior leadership team and speaking to these things in a way that my colleagues in Operations or Finance or Supply Chain could readily connect with. Then, translating that to risk that they can understand. >> So it's a shared responsibility? >> Absolutely. >> A big part of security. You talked before about keeping the bad guys out. That's table stakes. Big part of security, at least this day and age, seems to be response, how effectively the organization responds and, as you well know, it's got to be a team sport. It's kind of a bro mod, but the response mechanism, is it rehearsed? It is trained? Can you describe that? >> Both. I agree, response is critical, so you have to plan for everything. You have to be ready. Some of the things that we've done: one, we created a crisis management team, an incident response team. We have a very deliberate focus and a disciplined approach to disaster recovery and business continuity which is often left out of security conversations. Which is fascinating because the classic security triad is confidentiality, integrity, and availability. So the three have to be viewed in light of each other. With that, we not only created the appropriate incident response teams and processes within IT, but then created very clear links between other parts of the business. So if we have a security event or an availability event, how do we communicate that internally? Who is in charge? Who manages the incident? Who decides that we communicate with legal, HR? What is that ecosystem look like? All of that is actually clearly defined in our security policy and we rehearse it at least twice a year. >> You know, we just had Robert Herjavec on from the Herjavec Group just a few minutes ago. He brought up a point I thought pretty interesting. He says, "Security, obviously, is a huge concern." Obviously, it's his focus, but he said, "A problem is that the bad guys, the bad actors, "are extremely inventive and innovative "and keep coming up with new entry points, "new intrusion points." That's the big headache is they invent these really newfangled ways to thwart our systems that were unpredicted. So how does that sit with you? You say you've got all of these policies in place, you've got every protocol aligned, and all-of-a-sudden the door opens a different way that you didn't expect. >> Yeah, one of my favorite topics that really speaks to the future and where I believe the industry is going. So traditionally, security has been very signature-based. In other words, we alert against known patterns of behavior that are understood to be malicious or bad. A growing trend is machine learning, artificial intelligence. In fact, at Jiffy Lube, we are experimenting with a concept that I refer to now as the security immune system. So leveraging machine data to proactively asses potential threats versus waiting for those threats to materialize and then kind of building that into our response going forward. I think a lot of that is still in the early phases, but I imagine that in the very near future that'll be a mandatory part of every security plan. We've got to go beyond two-dimensional signature-based to true AI, machine learning. Taking action, not just providing visibility via response and alerts, but taking action based on that data proactively in a way that might not include a human actor, at least initially. >> What's the organizational structure at your shop? Are you the de-facto CISO? >> Chidi: I am. >> And the CIO? >> Chidi: I am. I wear both hats. >> Yeah, so that's interesting. You know where I'm going with this. There's always the discussion about should you separate those roles. I can make a case for either way, that if you want the best security in IT, have the security experts managing that. The same time, people say, "Well, it's like the fox "watching the hen house and there's lack of transparency." I think I know where you fall on this, but how do you address the guys that say that function should be split? What's the advantage of keeping them together in your view? >> Yeah, so I think you have to marry best practice with the realities of a particular organization. That's the mistake that I think many make when they set about actually defining the appropriate org structure. There's no such thing as a copy and paste org structure. I actually believe, and I have no problem going on record with this, that the best practice does represent in reality a division between IT and security, particularly in larger organizations. Now, for us, that is more of a journey. What you do initially and your end-state are two different things, but the way you get there is incrementally. You don't go big bang out of the gate. Right now, they both roll up to me. Foreseeably, they will roll up to me, but that works best for the Jiffy Lube organization because of some interesting dynamics. The board of directors by the way, given the visibility of security, does have a say on that. Now that we're in transformation mode, they do want one person kind of overseeing the entire transformation of IT and security. Now, in the future, if we decide to split that up and I think we have to be at the right place as an organization to ensure that that transition is successful. >> I'm glad you brought up the board, Chidi, because to me, it's all about transparency. If the CIO can go to the board and say, "Hey, here's the deal. "We're going to get hacked, we have been hacked, "and here's what we're doing about it. "Here's our response routine," and in a transparent way has an open conversation with the board, that's different than historically. A lot of times CIOs would say, "Alright, we've got this covered," because failure meant fired. That's a mistake that a lot of boards made. Now, eventually, over time the board may decide, look, the job's too big to have one person which is kind of what you're ... But how do you feel about that? What's your sentiment on that transparency piece? How often do you meet with the board and what are the discussions like? >> Yeah, great topic. So, a few things. One, and you've hinted to this, it's very important for the CIO or the CISO to have board-level visibility, board-level access. I have that at Jiffy Lube. I've had to present to the board regarding the IT strategy. I think it's also important to be an effective communicator of risk. So when you're talking to the board, what I've done is I've highlighted two things and I believe this very strongly. As a security leader, you have to practice due care and due diligence. So due care represents doing your job within the scope of whatever your role is. Due diligence involves maintaining that over a period of time, including product evaluations. If you have due care and due diligence and you're able to demonstrate that, even if your environment is compromised, you have to have the enterprise including the board realize that as long as those two things are in place, then a security officer is doing his job. Now, what's fascinating is many breaches can be mapped back to a lack of due care and due diligence. That's why the security officer gets fired to be very blunt, but as long as you have those things and you articulate very clearly what that represents to the board and the senior leadership team, then I think you just focus on doing your job and continuing to communicate. >> John wanted to know if you had any Jiffy Lube coupons before we go. >> Yeah, 'cause in my car on the way home I thought I'd just jump in there. >> I'm all out, but I'll (laughs). >> You got one right down the street from the house. They probably know me all too well because I take the kids' cars there too. >> That's right. We'll hook you up, don't worry about it. >> We appreciate the time. >> Thank you. >> Thank you. A newly-converted Dallas Cowboys fan, by the way. >> That's right. Very proud. >> Perhaps here in Washington, we can work on that. >> We'll see about that. >> Alright, we'll see. Chidi, thanks for being with us. >> Thank you, appreciate it. >> Thank you very much. Chidi Alams from Heartland Jiffy Lube. Back with more here on the Cube in Washington, D.C. at .conf 2017 right after this. (electronic music)

(upbeat music) >> Welcome everyone, this is Stephanie Chan with theCUBE. Recently analyst Dave Ross RADIO entitled, Pat Gelsinger has a vision. It just needs the time, the cash and a miracle where he highlights why he thinks Intel is years away from reversing position in the semiconductor industry. Welcome Dave. >> Hey thanks, Stephanie. Good to see you. >> So, Dave you been following the company closely over the years. If you look at Wall Street Journal most analysts are saying to hold onto Intel. can you tell us why you're so negative on it? >> Well, you know, I'm not a stock picker Stephanie, but I've seen the data there are a lot of... some buys some sells, but most of the analysts are on a hold. I think they're, who knows maybe they're just hedging their bets they don't want to a strong controversial call that kind of sitting in the fence. But look, Intel still an amazing company they got tremendous resources. They're an ICON and they pay a dividend. So, there's definitely an investment case to be made to hold onto the stock. But I would generally say that investors they better be ready to hold on to Intel for a long, long time. I mean, Intel's they're just not the dominant player that it used to be. And the challenges have been mounting for a decade and look competitively Intel's fighting a five front war. They got AMD in both PCs and the data center the entire Arm Ecosystem` and video coming after with the whole move toward AI and GPU they're dominating there. Taiwan Semiconductor is by far the leading fab in the world with terms of output. And I would say even China is kind of the fifth leg of that stool, long term. So, lot of hurdles to jump competitively. >> So what are other sources of Intel's trouble sincere besides what you just mentioned? >> Well, I think they started when PC volumes peaked which was, or David Floyer, Wikibon wrote back in 2011, 2012 that he tells if it doesn't make some moves, it's going to face some trouble. So, even though PC volumes have bumped up with the pandemic recently, they pair in comparison to the wafer volume that are coming out of the Arm Ecosystem, and TSM and Samsung factories. The volumes of the Arm Ecosystem, Stephanie they dwarf the output of Intel by probably 10 X in semiconductors. I mean, the volume in semiconductors is everything. And because that's what costs down and Intel they just knocked a little cost manufacture any anymore. And in my view, they may never be again, not without a major change in the volume strategy, which of course Gelsinger is doing everything he can to affect that change, but they're years away and they're going to have to spend, north of a 100 billion dollars trying to get there, but it's all about volume in the semiconductor game. And Intel just doesn't have it right now. >> So you mentioned Pat Gelsinger he was a new CEO last January. He's a highly respected CEO and in truth employed more than four decades, I think he has knowledge and experience. including 30 years at Intel where he began his career. What's your opinion on his performance thus far besides the volume and semiconductor industry position of Intel? >> Well, I think Gelsinger is an amazing executive. He's a technical visionary, he's an execution machine, he's doing all the right things. I mean, he's working, he was at the state of the union address and looking good in a suit, he's saying all the right things. He's spending time with EU leaders. And he's just a very clear thinker and a super strong strategist, but you can't change Physics. The thing about Pat is he's known all along what's going on with Intel. I'm sure he's watched it from not so far because I think it's always been his dream to run the company. So, the fact that he's made a lot of moves. He's bringing in new management, he's repairing some of the dead wood at Intel. He's launched, kind of relaunched if you will, the Foundry Business. But I think they're serious about that. You know, this time around, they're spinning out mobile eye to throw off some cash mobile eye was an acquisition they made years ago to throw off some more cash to pay for the fabs. They have announced things like; a fabs in Ohio, in the Heartland, Ze in Heartland which is strikes all the right chords with the various politicians. And so again, he's doing all the right things. He's trying to inject. He's calling out his best Andrew Grove. I like to say who's of course, The Iconic CEO of Intel for many, many years, but again you can't change Physics. He can't compress the cycle any faster than the cycle wants to go. And so he's doing all the right things. It's just going to take a long, long time. >> And you said that competition is better positioned. Could you elaborate on why you think that, and who are the main competitors at this moment? >> Well, it's this Five Front War that I talked about. I mean, you see what's happened in Arm changed everything, Intel remember they passed on the iPhone didn't think it could make enough money on smartphones. And that opened the door for Arm. It was eager to take Apple's business. And because of the consumer volumes the semiconductor industry changed permanently just like the PC volume changed the whole mini computer business. Well, the smartphone changed the economics of semiconductors as well. Very few companies can afford the capital expense of building semiconductor fabrication facilities. And even fewer can make cutting edge chips like; five nanometer, three nanometer and beyond. So companies like AMD and Invidia, they don't make chips they design them and then they ship them to foundries like TSM and Samsung to manufacture them. And because TSM has such huge volumes, thanks to large part to Apple it's further down or up I guess the experience curve and experience means everything in terms of cost. And they're leaving Intel behind. I mean, the best example I can give you is Apple would look at the, a series chip, and now the M one and the M one ultra, I think about the traditional Moore's law curve that we all talk about two X to transistor density every two years doubling. Intel's lucky today if can keep that pace up, let's assume it can. But meanwhile, look at Apple's Arm based M one to M one Ultra transition. It occurred in less than two years. It was more like, 15 or 18 months. And it went from 16 billion transistors on a package to over a 100 billion. And so we're talking about the competition Apple in this case using Arm standards improving it six to seven X inside of a two year period while Intel's running it two X. And that says it all. So Intel is on a curve that's more expensive and slower than the competition. >> Well recently, until what Lujan Harrison did with 5.4 billion So it can make more check order companies last February I think the middle of February what do you think of that strategic move? >> Well, it was designed to help with Foundry. And again, I said left that out of my things that in Intel's doing, as Pat's doing there's a long list actually and many more. Again I think, it's an Israeli based company they're a global company, which is important. One of the things that Pat stresses is having a a presence in Western countries, I think that's super important, he'd like to get the percentage of semiconductors coming out of Western countries back up to at least maybe not to where it was previously but by the end of the decade, much more competitive. And so that's what that acquisition was designed to do. And it's a good move, but it's, again it doesn't change Physics. >> So Dave, you've been putting a lot of content out there and been following Intel for years. What can Intel do to go back on track? >> Well, I think first it needs great leadership and Pat Gelsinger is providing that. Since we talked about it, he's doing all the right things. He's manifesting his best. Andrew Grove, as I said earlier, splitting out the Foundry business is critical because we all know Moore's law. This is Right Law talks about volume in any business not just semiconductors, but it's crucial in semiconductors. So, splitting out a separate Foundry business to make chips is important. He's going to do that. Of course, he's going to ask Intel's competitors to allow Intel to manufacture their chips which they very well may well want to do because there's such a shortage right now of supply and they need those types of manufacturers. So, the hope is that that's going to drive the volume necessary for Intel to compete cost effectively. And there's the chips act. And it's EU cousin where governments are going to possibly put in some money into the semiconductor manufacturing to make the west more competitive. It's a key initiative that Pat has put forth and a challenge. And it's a good one. And he's making a lot of moves on the design side and committing tons of CapEx in these new fabs as we talked about but maybe his best chance is again the fact that, well first of all, the market's enormous. It's a trillion dollar market, but secondly there's a very long term shortage in play here in semiconductors. I don't think it's going to be cleared up in 2022 or 2023. It's just going to be keep being an explotion whether it's automobiles and factory devices and cameras. I mean, virtually every consumer device and edge device is going to use huge numbers of semiconductor chip. So, I think that's in Pat's favor, but honestly Intel is so far behind in my opinion, that I hope by the end of this decade, it's going to be in a position maybe a stronger number two position, and volume behind TSM maybe number three behind Samsung maybe Apple is going to throw Intel some Foundry business over time, maybe under pressure from the us government. And they can maybe win that account back but that's still years away from a design cycle standpoint. And so again, maybe in the 2030's, Intel can compete for top dog status, but that in my view is the best we can hope for this national treasure called Intel. >> Got it. So we got to leave it right there. Thank you so much for your time, Dave. >> You're welcome Stephanie. Good to talk to you >> So you can check out Dave's breaking analysis on theCUBE.net each Friday. This is Stephanie Chan for theCUBE. We'll see you next time. (upbeat music)

>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR, this is "Breaking Analysis" with Dave Vellante. >> If it weren't for Pat Gelsinger, Intel's future would be a disaster. Even with his clear vision, fantastic leadership, deep technical and business acumen, and amazing positivity, the company's future is in serious jeopardy. It's the same story we've been telling for years. Volume is king in the semiconductor industry, and Intel no longer is the volume leader. Despite Intel's efforts to change that dynamic With several recent moves, including making another go at its Foundry business, the company is years away from reversing its lagging position relative to today's leading foundries and design shops. Intel's best chance to survive as a leader in our view, will come from a combination of a massive market, continued supply constraints, government money, and luck, perhaps in the form of a deal with apple in the midterm. Hello, and welcome to this week's "Wikibon CUBE Insights, Powered by ETR." In this "Breaking Analysis," we'll update you on our latest assessment of Intel's competitive position and unpack nuggets from the company's February investor conference. Let's go back in history a bit and review what we said in the early 2010s. If you've followed this program, you know that our David Floyer sounded the alarm for Intel as far back as 2012, the year after PC volumes peaked. Yes, they've ticked up a bit in the past couple of years but they pale in comparison to the volumes that the ARM ecosystem is producing. The world has changed from people entering data into machines, and now it's machines that are driving all the data. Data volumes in Web 1.0 were largely driven by keystrokes and clicks. Web 3.0 is going to be driven by machines entering data into sensors, cameras. Other edge devices are going to drive enormous data volumes and processing power to boot. Every windmill, every factory device, every consumer device, every car, will require processing at the edge to run AI, facial recognition, inference, and data intensive workloads. And the volume of this space compared to PCs and even the iPhone itself is about to be dwarfed with an explosion of devices. Intel is not well positioned for this new world in our view. Intel has to catch up on the process, Intel has to catch up on architecture, Intel has to play catch up on security, Intel has to play catch up on volume. The ARM ecosystem has cumulatively shipped 200 billion chips to date, and is shipping 10x Intel's wafer volume. Intel has to have an architecture that accommodates much more diversity. And while it's working on that, it's years behind. All that said, Pat Gelsinger is doing everything he can and more to close the gap. Here's a partial list of the moves that Pat is making. A year ago, he announced IDM 2.0, a new integrated device manufacturing strategy that opened up its world to partners for manufacturing and other innovation. Intel has restructured, reorganized, and many executives have boomeranged back in, many previous Intel execs. They understand the business and have a deep passion to help the company regain its prominence. As part of the IDM 2.0 announcement, Intel created, recreated if you will, a Foundry division and recently acquired Tower Semiconductor an Israeli firm, that is going to help it in that mission. It's opening up partnerships with alternative processor manufacturers and designers. And the company has announced major investments in CAPEX to build out Foundry capacity. Intel is going to spin out Mobileye, a company it had acquired for 15 billion in 2017. Or does it try and get a $50 billion valuation? Mobileye is about $1.4 billion in revenue, and is likely going to be worth more around 25 to 30 billion, we'll see. But Intel is going to maybe get $10 billion in cash from that, that spin out that IPO and it can use that to fund more FABS and more equipment. Intel is leveraging its 19,000 software engineers to move up the stack and sell more subscriptions and high margin software. He got to sell what he got. And finally Pat is playing politics beautifully. Announcing for example, FAB investments in Ohio, which he dubbed Silicon Heartland. Brilliant! Again, there's no doubt that Pat is moving fast and doing the right things. Here's Pat at his investor event in a T-shirt that says, "torrid, bringing back the torrid pace and discipline that Intel is used to." And on the right is Pat at the State of the Union address, looking sharp in shirt and tie and suit. And he has said, "a bet on Intel is a hedge against geopolitical instability in the world." That's just so good. To that statement, he showed this chart at his investor meeting. Basically it shows that whereas semiconductor manufacturing capacity has gone from 80% of the world's volume to 20%, he wants to get it back to 50% by 2030, and reset supply chains in a market that has become important as oil. Again, just brilliant positioning and pushing all the right hot buttons. And here's a slide underscoring that commitment, showing manufacturing facilities around the world with new capacity coming online in the next few years in Ohio and the EU. Mentioning the CHIPS Act in his presentation in The US and Europe as part of a public private partnership, no doubt, he's going to need all the help he can get. Now, we couldn't resist the chart on the left here shows wafer starts and transistor capacity growth. For Intel, overtime speaks to its volume aspirations. But we couldn't help notice that the shape of the curve is somewhat misleading because it shows a two-year (mumbles) and then widens the aperture to three years to make the curve look steeper. Fun with numbers. Okay, maybe a little nitpick, but these are some of the telling nuggets we pulled from the investor day, and they're important. Another nitpick is in our view, wafers would be a better measure of volume than transistors. It's like a company saying we shipped 20% more exabytes or MIPS this year than last year. Of course you did, and your revenue shrank. Anyway, Pat went through a detailed analysis of the various Intel businesses and promised mid to high double digit growth by 2026, half of which will come from Intel's traditional PC they center in network edge businesses and the rest from advanced graphics HPC, Mobileye and Foundry. Okay, that sounds pretty good. But it has to be taken into context that the balance of the semiconductor industry, yeah, this would be a pretty competitive growth rate, in our view, especially for a 70 plus billion dollar company. So kudos to Pat for sticking his neck out on this one. But again, the promise is several years away, at least four years away. Now we want to focus on Foundry because that's the only way Intel is going to get back into the volume game and the volume necessary for the company to compete. Pat built this slide showing the baby blue for today's Foundry business just under a billion dollars and adding in another $1.5 billion for Tower Semiconductor, the Israeli firm that it just acquired. So a few billion dollars in the near term future for the Foundry business. And then by 2026, this really fuzzy blue bar. Now remember, TSM is the new volume leader, and is a $50 billion company growing. So there's definitely a market there that it can go after. And adding in ARM processors to the mix, and, you know, opening up and partnering with the ecosystems out there can only help volume if Intel can win that business, which you know, it should be able to, given the likelihood of long term supply constraints. But we remain skeptical. This is another chart Pat showed, which makes the case that Foundry and IDM 2.0 will allow expensive assets to have a longer useful life. Okay, that's cool. It will also solve the cumulative output problem highlighted in the bottom right. We've talked at length about Wright's Law. That is, for every cumulative doubling of units manufactured, cost will fall by a constant percentage. You know, let's say around 15% in semiconductor world, which is vitally important to accommodate next generation chips, which are always more expensive at the start of the cycle. So you need that 15% cost buffer to jump curves and make any money. So let's unpack this a bit. You know, does this chart at the bottom right address our Wright's Law concerns, i.e. that Intel can't take advantage of Wright's Law because it can't double cumulative output fast enough? Now note the decline in wafer starts and then the slight uptick, and then the flattening. It's hard to tell what years we're talking about here. Intel is not going to share the sausage making because it's probably not pretty, But you can see on the bottom left, the flattening of the cumulative output curve in IDM 1.0 otherwise known as the death spiral. Okay, back to the power of Wright's Law. Now, assume for a second that wafer density doesn't grow. It does, but just work with us for a second. Let's say you produce 50 million units per year, just making a number up. That gets you cumulative output to $100 million in, sorry, 100 million units in the second year to take you two years to get to that 100 million. So in other words, it takes two years to lower your manufacturing cost by, let's say, roughly 15%. Now, assuming you can get wafer volumes to be flat, which that chart showed, with good yields, you're at 150 now in year three, 200 in year four, 250 in year five, 300 in year six, now, that's four years before you can take advantage of Wright's Law. You keep going at that flat wafer start, and that simplifying assumption we made at the start and 50 million units a year, and well, you get to the point. You get the point, it's now eight years before you can get the Wright's Law to kick in, and you know, by then you're cooked. But now you can grow the density of transistors on a chip, right? Yes, of course. So let's come back to Moore's Law. The graphic on the left says that all the growth is in the new stuff. Totally agree with that. Huge term that Pat presented. Now he also said that until we exhaust the periodic table of elements, Moore's Law is alive and well, and Intel is the steward of Moore's Law. Okay, that's cool. The chart on the right shows Intel going from 100 billion transistors today to a trillion by 2030. Hold that thought. So Intel is assuming that we'll keep up with Moore's Law, meaning a doubling of transistors every let's say two years, and I believe it. So bring that back to Wright's Law, in the previous chart, it means with IDM 2.0, Intel can get back to enjoying the benefits of Wright's Law every two years, let's say, versus IDM 1.0 where they were failing to keep up. Okay, so Intel is saved, yeah? Well, let's bring into this discussion one of our favorite examples, Apple's M1 ARM-based chip. The M1 Ultra is a new architecture. And you can see the stats here, 114 billion transistors on a five nanometer process and all the other stats. The M1 Ultra has two chips. They're bonded together. And Apple put an interposer between the two chips. An interposer is a pathway that allows electrical signals to pass through it onto another chip. It's a super fast connection. You can see 2.5 terabytes per second. But the brilliance is the two chips act as a single chip. So you don't have to change the software at all. The way Intel's architecture works is it takes two different chips on a substrate, and then each has its own memory. The memory is not shared. Apple shares the memory for the CPU, the NPU, the GPU. All of it is shared, meaning it needs no change in software unlike Intel. Now Intel is working on a new architecture, but Apple and others are way ahead. Now let's make this really straightforward. The original Apple M1 had 16 billion transistors per chip. And you could see in that diagram, the recently launched M1 Ultra has $114 billion per chip. Now if you take into account the size of the chips, which are increasing, and the increase in the number of transistors per chip, that transistor density, that's a factor of around 6x growth in transistor density per chip in 18 months. Remember Intel, assuming the results in the two previous charts that we showed, assuming they were achievable, is running at 2x every two years, versus 6x for the competition. And AMD and Nvidia are close to that as well because they can take advantage of TSM's learning curve. So in the previous chart with Moore's Law, alive and well, Intel gets to a trillion transistors by 2030. The Apple ARM and Nvidia ecosystems will arrive at that point years ahead of Intel. That means lower costs and significantly better competitive advantage. Okay, so where does that leave Intel? The story is really not resonating with investors and hasn't for a while. On February 18th, the day after its investor meeting, the stock was off. It's rebound a little bit but investors are, you know, they're probably prudent to wait unless they have really a long term view. And you can see Intel's performance relative to some of the major competitors. You know, Pat talked about five nodes in for years. He made a big deal out of that, and he shared proof points with Alder Lake and Meteor Lake and other nodes, but Intel just delayed granite rapids last month that pushed it out from 2023 to 2024. And it told investors that we're going to have to boost spending to turn this ship around, which is absolutely the case. And that delay in chips I feel like the first disappointment won't be the last. But as we've said many times, it's very difficult, actually, it's impossible to quickly catch up in semiconductors, and Intel will never catch up without volume. So we'll leave you by iterating our scenario that could save Intel, and that's if its Foundry business can eventually win back Apple to supercharge its volume story. It's going to be tough to wrestle that business away from TSM especially as TSM is setting up shop in Arizona, with US manufacturing that's going to placate The US government. But look, maybe the government cuts a deal with Apple, says, hey, maybe we'll back off with the DOJ and FTC and as part of the CHIPS Act, you'll have to throw some business at Intel. Would that be enough when combined with other Foundry opportunities Intel could theoretically produce? Maybe. But from this vantage point, it's very unlikely Intel will gain back its true number one leadership position. If it were really paranoid back when David Floyer sounded the alarm 10 years ago, yeah, that might have made a pretty big difference. But honestly, the best we can hope for is Intel's strategy and execution allows it to get competitive volumes by the end of the decade, and this national treasure survives to fight for its leadership position in the 2030s. Because it would take a miracle for that to happen in the 2020s. Okay, that's it for today. Thanks to David Floyer for his contributions to this research. Always a pleasure working with David. Stephanie Chan helps me do much of the background research for "Breaking Analysis," and works with our CUBE editorial team. Kristen Martin and Cheryl Knight to get the word out. And thanks to SiliconANGLE's editor in chief Rob Hof, who comes up with a lot of the great titles that we have for "Breaking Analysis" and gets the word out to the SiliconANGLE audience. Thanks, guys. Great teamwork. Remember, these episodes are all available as podcast wherever you listen. Just search "Breaking Analysis Podcast." You'll want to check out ETR's website @etr.ai. We also publish a full report every week on wikibon.com and siliconangle.com. You could always get in touch with me on email, david.vellante@siliconangle.com or DM me @dvellante, and comment on my LinkedIn posts. This is Dave Vellante for "theCUBE Insights, Powered by ETR." Have a great week. Stay safe, be well, and we'll see you next time. (upbeat music)

>> Live from Orlando, Florida. It's theCUBE. Covering Microsoft Ignite. Brought to you by Cohesity and theCUBE's ecosystem partners. >> Welcome back everyone to theCUBE's live coverage of Microsoft Ignite here in Orlando. I am your host Rebecca Night, hosting, co-hosting along side Stu Miniman. We are joined today by Steven Rosenthal. He is the senior product specialist at QTS Data Centers. Thank you so much for coming on theCUBE. >> You're welcome, thank you. >> So let's start by finding out a little bit more about QTS, based in Kansas City. What do you do? What are you all about? >> Yeah, so QTS is based in Overland Park, Kansas. We have our operations based in, actually right outside of Atlanta in Suwanee, Georgia where actually I'm from. And we have 16 data centers across the United States, about six million square feet of data center floor. We cater to everybody from hyperscalers, the hyperscalers of the world that everybody, I think, knows about, to enterprises, to federal customers. We have product lines that cover, again, hyperscale, co-location, private cloud; which I think we'll talk about today and mannered services around that private cloud offering. >> I know Stu is dying to talk private cloud with you but-- (Stu Laughs) Can you just tell us a little bit about how you fit in precisely with the Microsoft Ecosystem? >> Yeah, so, we fit in because we will offer Azure Management, so for customers that will have work loads up on Azure, we can help manage that and we also have dedicated connections through our connectivity products that will get you to Azure from our data centers. So, that's how we kind of fit into this ecosystem. >> Alright, so, just to geek out on that one little bit, when I talk to a lot of service providers, things like AWS direct connect, and Azure Express Route are one of the things we're seeing just massive adoption on being able to take my own stuff and plug it in or use services from the public clouds. Do you offer all of those? >> So we have AWS Direct Connect in our Chicago data center that we can cross connect to you, to that via our other data centers. We're also utilizing the software to find networks as back-up fabric and megaport to get you to those direct routes into Azure and AWS. >> Okay, great. So you do have the way to, 'cause the discussion has been, for a few years it went from hosting to service providers and, oh wait, public cloud is the enemy. And now I think we've matured a lot. It's like, yes, of course there's competition there, but as SoftDel and Microsoft said, look we're going to compete against people, we're going to partner with a lot of people. And, of course, your customer's are using everything. >> Yeah, I don't think it's just a line. We definitely partner with the public cloud offerings. It's not if you can't beat them join them, there is a workload for public cloud, there's workloads for private clouds and we can get into that into detail, but there is absolutely a partnership that we can have there and not a competitive partnership. >> Yeah and I actually, let's bridge that discussion over to the private cloud discussion. You know, I will give you the one there is no answer for it, but how are customer's sorting this thing out? How are you dealing with it? What do they put where? How do you help them with that discussion? >> You know, what we're finding is customers are anywhere from all into public cloud, to I'm kind of just dabbling in it and maybe putting my toe into it. And we can go in and help them along their cloud journey. So, because of the integrative products that we have within QTS, we can help you from just being a co-location customer to kind of dipping your toe in a little bit with some public clouds. Getting you that direct access via AWS Direct Connect or via software to find networking, helping you manage that, but there is workloads out there that customers just want to know where their data is. Where is my data? When you go to a public cloud, I'm not saying it's not safe, it's not secure, but we all know there's issues that sometimes they go down and there's customers, for compliancy reasons, for whatever reason they have, they want to know my data is in Suwanee, Georgia and due to the private cloud, and we know it's always there, we can provide that to the customer. >> Do you think that customer anxiety of where is my data will always exist for certain clients or do you think we will actually get to a point in the cloud computing evolution where people feel really secure? >> You know, I think if you look over the last few years, people are a lot more secure today than they were three years ago, two years ago or even one year ago. So, if I had a crystal ball, I think people will get a little bit more comfortable, but I think customer's in finance-- >> Healthcare. >> Healthcare. They're all going to really be nervous about where that data is, so there's always going to be that need for that. Certain workloads, I want here. The rest of it, yeah, we can put up in public cloud, but I want to know that this data resides in this data center. >> Yeah. I mean, governance and compliance is obviously going to play into that. So, let's talk about the private cloud. In our research, we started a few years ago, we said, what customer's need is true private cloud. And we said that because cloud should really be an operating model and the public cloud really set the bar as to, how I consume, how I manage, how I don't have to get into some of the pieces, so, to do that, you really need to kind of modernize the platform. Maybe bring us through your journey as to how you've seen it versus just kind of, I had a bunch of servers in Iraq, versus how do you define what is private cloud for your environment today? >> Yeah, so at QTS, we define the entire stack is dedicated to a customer. That's everything from the Nutanix hardware that we use and we decide to use as our infrastructure base for this. All the way up to the Cisco 9K's that we support. Everything is dedicated to that customer. So, there's no multi-tendency at all within that. So, there's no noisy neighbors, there's nobody next to you that you may not know what they're doing. Our journey started about a year ago, maybe a little bit more. Where we saw that, as everyone probably did, the evolution of the customer going to that true hybrid model. That not everything is going to public. They, again, not to repeat myself, but there are some workloads that stay within the private cloud and they needed somewhere to put that. Customers also were looking for more of an optics model than a capics model. We can host that for them within our data centers, provide all the data center services that we provide to our COLO customer's around duplicate power and the security that we provide and allow them to host that within our data centers. So that's what we're seeing in our customers and that's what is really driving that. >> Alright. When Nutanix positions the enterprise, it really is about that simplicity that they can offer. Service providers often have different metrics as to how you determine. What lead you to the Nutanix solution? How does that fit in your over all operations? >> Yeah. Honestly, we did, for lack of better terms, a bake off. We looked at competitors out there but Nutanix, by far, they have a right to be in that Gartner Magic Quadrant because, one, their support is just excellent, that we have found from them everything that we needed from them. They were right there and helping us. Up until now and we don't think they're going anywhere either, right? Nutanix has been one of our best technology partners that we've brought on board. And we see the benefits of the hyper-converged environment, allowing us, you talked about people want that cloud experience >> Right. >> The loud experience is, I want to be able to swipe my credit card and have a server running in five minutes. That's not what dedicated private clouds are, but they might want it less than 30 days, less than 60 days. Having hyper-converged there, we can provide that to the customer, get them up and running in a matter of weeks, not a matter of months. You know with their traditional architecture. >> One of the things we're hearing a lot at this conference is the importance of having the right kinds of partners and making sure that there is a lot of trust embedded in the relationship. >> Right. >> You just described, choosing Nutanix, having this bake off, how else do you walk through the, can you walk our viewers through the process of how you choose the right people that you want to do business with, from sort of a business mindset stand point, but also, complimentary functionality? >> I think a couple things. One, we obviously look at the technology. Technology for us is, if not number one, it's up there as pretty close to number one. Does the technology meet the needs of our customers? Can we provide the service with the service level agreements that we have in place? Around our hosted private cloud, we have 100% SLA around that, so we want to make sure that we can meet that for the customer. So, the technology has to be there. Then, outside the technology, the support. This is technology, technology's going to have issues. If we can make sure we have the support to back that up, so if a customer or we have an issue with the infrastructure, we can bring that back online as quick as possible. Then we look at, how closely they can do, you know, co-market with us, especially Nutanix. We do a lot of things co-marketing with Nutanix. We put on panels within our data centers. We've been doing this for the past, almost a year now, with Nutanix, ourselves, maybe we'll have AWS sit on it, we'll have Cohesity sit on it, and bring in customers or prospects into our data centers and have different topics around there, so all of that kind of mixed together, provides a really good partnership for us. >> Great. >> Steve, we talked a little bit about how Azure on the public cloud fits in. How does Microsoft fit in on the private cloud discussion? >> So, most of our customers are running Windows. I mean that's really where it fits in. >> Of course. >> Currently, our hosted private cloud runs VMRS as a hypervisor-- >> Right. >> But most of the customers are running Windows as their operating system. >> Absolutely. Still, I mean, from the early days until today, the applications sits on top. Microsoft has all the business apps up there. Been a lot of announcements at the show. Windows Server 2019, talking a lot about the shift to SaaS. How are you seeing, is that still a big driver for your customers, the generational shifts of Windows and what about the changing workloads? I'm curious about how those impact you. >> Yeah, absolutely. The changing workloads definitely drives our business and as you pointed out, a lot of those are going to either Office 365, going up to Azure. We're getting a lot more customers asking us for Azure these days. I don't want to put AWS against Azure, but we are at the Microsoft show, obviously. We're getting a lot of customers who are driving their business up to Azure and to be able to support that within our community is really important to be able to support that customer, so we are definitely seeing that drive towards those types of workloads. >> You're an industry veteran. You've been in IT for 25 years. I wonder if you could talk about this point in time that we're at now. It feels like an inflection point, but maybe I'm wrong. Can you sort of paint this point in time, in the greater context of the cloud computing revolution. >> I think hybrid is the word. Right? I know it's a marketing word. I know a lot of people use it, but I think it really has hit today. Where you have companies that say, hey, we are all in on public cloud and I think that's a great marketing term, but if you really look at all of their workloads, they don't have everything up there, but even if they have 90%, 10% of their workloads are Legacy applications that they would have to re-write to be able to really work in the public cloud and these applications are running just fine where they are, they don't want to touch them. So, I think that hybrid model is where we are today and it's only going to grow. >> Steven, I'm curious, we watched for a while, public cloud polled on the data center apps, but now we have the Edge out there. You talk about IOT, you talk about what machine to machine type technology is going to push things back out, not going to be in some central location. Is that having an impact yet on your business, how would you play in some of these IOT environments? >> Yeah, we are constantly looking at the new technologies out there, especially the autonomous cars is something that we are looking at very heavily and they require, there's something like six terabytes of data that gets passed back and forth between that car and whatever service is running that car and that's got to be somewhere on the Edge, but I think if you look back at how people were defining private cloud a couple years ago, how are people are defining Edge is very different. And over the next year or two, we will get more common, how people are defining Edge Computing will become a lot more common. So, we're looking at how do we plan that market? Do we have to have data centers closer to the Edge, wherever that edge is, in cities that you typically don't see data centers. You're probably going to have a different type of data center within that city too. >> Oh, yeah. Absolutely. The edge is very different if you are a telecom provider versus an enterprise, what you said. That data center is going to be a pop, is it going to be something in a wireless tower-- >> Is it going to be in a closet somewhere that supports it? >> It's all going to be something that just fits on a wrist at some point in the future, right? (all laughing) >> Yeah. It's going to fit right there. >> Yeah, check on my data. So, getting back to the cities that you don't necessarily think of. I mean, you're a tech, a cutting edge tech company, based in Kansas City, the Heartland. >> Right. >> How do you find, is it difficult to recruit talent because frankly even the companies in Silicone Valley and Washington and Boston, they're having trouble recruiting talent. Where do you come down? >> I think it's not only recruiting the talent, it's keeping the talent; which QTS is very good about keeping the talent. I think if you look at our attrition rate, it's probably some of the lowest in the industry 'cause we have a culture that people want to stay in, but even though our headquarters are in Overland Park, Kansas, again, our, really our operations headquarters are outside of Atlanta, Georgia in Suwanne which is probably just about 30 miles north. So, we have Georgia Tech that we can pull from, you have Emory that you can pull from and, you know, the entire Georgia University system. I don't want to leave anybody out that we can pull from. And we have data centers around the country, even in Silicone Valley, we have Santa Clara, which we can pull from the Silicone Valley individuals. Dallas has a lot of tech companies, so we're not just pulling from one market, we're pulling from 16 different markets across the country, which helps us a lot not just to dry up a single market. >> You said that QTS has a culture that people want to stay and Microsoft is touting its culture as collaborative, inclusive. Describe QTS's culture. >> Our culture, a lot of people ask me that and it's like, you got to live it. It's very, very family-oriented. I know a lot of people say that, but we live it. We care about each other. Nobody walks around going, it's not my job. Everybody is there to support the customer. We are very customer-focused, you can see that in our NPS scores. Our NPS scores are very high in the industry, probably some of the highest out there. So, and that goes back to just how we take care of our customers. And we look, goes back to your question about, what do we look for in partners, Nutanix probably has a very high NPS score and we want to make sure that our partners are treating our customers as we want to treat our customers. >> Great. Well, Steven, thank you so much for coming on theCUBE. >> Thank you. Appreciate it. >> I'm Rebecca Knight for Stu Miniman, we will have more from Microsoft Ignite, coming up in just a little bit.