>> Narrator: Live from Nice, France It's theCUBE covering .NEXT Conference 2017 Europe Brought to you by Nutanix. (electronic music) >> Hi, I'm Stu Miniman and here with SiliconANGLE Media's exclusive coverage of theCUBE live from Nutanix's .NEXT conference here in Nice, France. It's the fifth Nutanix conference. theCUBE has had the pleasure of broadcasting from all five of them. It's the second annual European show. Over 2,200 in attendance here. We're in the Acropolis, which is a little ironic because, of course, Acropolis is one of the product names of Nutanix. To help me with the introduction today, happy to have Martin Veitch... Is the Contributing Editor of IDG Connect. Martin, thank you so much for joining us. >> My pleasure. >> Alright, so, Nutanix. It's a year after they IPO'd. I've been tracking them since they were a very small company. I think a friend of mine was somewhere between the number 20 and 30 employee in there. They now have 2,800 employees worldwide. Talked about, they have, you know, thousands of Nutanix certified, you know, people just in Europe alone between the employees, the partners, and the customers. You know, what's the vibe been for you so much? Tell us, you know, bring us in for the Nutanix show. >> Yeah, like you, I followed them from pretty much the early days. I always thought they were a hot-to-trot, you know. They were an exciting company back in the day. The narrative made a lot of sense. It looked like they were a company very capable of executing. They seemed to have great management. What really surprises me is, if anything, you know, in this business we have a habit of, you know, overdoing it and praising these people to the skies and saying "this is the next big thing." I think these guys really undersell themselves sometimes. To me, you know, the Goldman Sachs line that Dheeraj Pandey, the CEO, used earlier on when he was talking about the Goldman Sachs comment that it was a once-in-a-decade opportunity, to me, the company they remind me of a lot these days is VMware. I think, you know, that's a company they're going to work with, go up against, and they remind me a lot of that infrastructure revolution kind of play, you know. >> Yeah, absolutely, and I think Nutanix would like that analogy, because number one, >> I hope so. >> I love the line, they did a little song at the intro with the clapping and everything. >> Yeah that was pretty wacky, wasn't it? >> They have a little fun, they've got a fun culture. Dheeraj always says they try to be humble. From a marketing, from a sales, sometimes a little aggressive, but you need that to kind of break in to the enterprise space. But they said, in the song, they said "We used to sell boxes, now it's all about the software you know" You know, so what they've been pounding on is, it's one OS, one click, any cloud. So the question I've been asking at all of these events I go to this year is, you talk to customers, it's a choose your pick, hybrid or multi-cloud world, but how do you live in that environment? You're absolutely, you know, customers, they doing lots of SASS, they're doing Amazon, they're doing things with Microsoft or Google, and if you just live in the data center you're limiting where you're going to play. If you're just, you know, the public cloud is obviously lots of growth. Nutanix is trying to fit in all these other environments, as they said many people when they first saw them, was like, "Oh, well they sell you an appliance that goes into your data center? That's not all that interesting." They positioned themselves as enterprise cloud. What do you take, the message in, you know, they said, you know, hyper-converge was kind of the baseline, but I don't think I even heard that word in the keynote this morning. >> I was going to say the same thing >> It's now clouds, so... >> Yeah, enterprise cloud, which isn't a tag I'm particularly fond of, I must admit, but you can see what the appeal is, right? I mean, people are going to build these, they're going to have these data canters on premise. They're going to have private clouds, going to have public clouds. They're going to go for data center co-location, and what you really need is a layer of management, a layer that sits over there. So I think what they're building is something analogous to the systems management frameworks that we saw back in the day for the multi-cloud era, and really, that adds such another arrow to the quiver, and that's why I say, you know, you look at the stock price on this one and you kind of wonder whether they're under-priced in a way, you know, or whether people realize quite what the power they potentially yield is, you know. Obviously they're going to go up against some of the world's largest organizations, but I think it's going to be an extraordinarily ambitious and bullish play. Yeah, absolutely, I think it's a really fascinating story. >> Yeah, well, top line revenue Nutanix now sitting right around a billion dollars on an annual basis and from a market cap, talk about the stocks undervalued, they're still over four billion dollars in revenue. Kind of, you know, if you look at the similar compare company that, you know, Pure Storage, Nutanix now has about the same revenue but, you know, higher marker cap, so, you know, they're doing okay. But as they are trying to emphasize, and I think your point, I would agree with you, it is early still. This is not the final Nutanix. CloudPlay at the DC show made a big announcement with Google, and starting to see some of that come to fruition here at the show, and a big push of theirs is their Calm. Calm really is that layer that's going to live in the multi-cloud. It's still, most customers haven't touched it or really seen more than kind of some slides and demo. I did talk to a couple of customers already that have used it, and at least the early customers, of course heavily involved, it's a little bit self-selecting when you come to an event like this, but excited about how that is, you know, can be that layer that spans between my various environments, whether that be my core, the public cloud, or potentially even the edge. They did an example in the keynote of an oil and gas going out to the rigs. So, you know, you think the Nutanix, you know, if we look to a year from now, when I think multi-cloud is Nutanix a company that comes to mind? >> Absolutely, I've just thought of this, so tell me if you like it or not, but they've kind of gone from stack to PAC, okay. So, hyper-convergence was the play where you would conflate compute networking storage et cetera, and really this combination of Prism, Acropolis and Calm is a whole other level. And you know, again, they didn't really hammer it with the audience today, but they're moving to also a very much a software-centric view of the world. You know, and that was always the question that people like me would ask of them, "Hey, why do you bother having the appliances? Why do you have the hardware cell when, you know, software is the high-margin kind of business in technology?" And "software is eating the world" as Marc Andreessen said. And now I think they're really pivoting towards being very much a software-centric company and flying the flag for that, you know, and I think that whole combination of management layers, of virtualization, of orchestration that they have is exactly what the sweet spot is in the future of enterprise software management. >> Yeah, I've heard some companies talk about the "new stack" and you took their products and P, A, C >> See what I did? >> I do, I think maybe the marketing organization, you know, give you a call, see if they can leverage that. >> 500 bucks. >> So, you know, we've got two days of the show coming up here. Absolutely the kind of cloud story is one that I'm looking to tease apart and talk to the customers. Since I've already had a chance to talk to some customers and it's very much a spectrum. You talk to some customers, especially here in Europe, you go to Germany and it's like well, you know governage, regulation, yeah a public cloud might not be something that they can do because we have to dig into it. >> Yeah >> As opposed to, there's a customer giving a presentation today that, very much, they said everything was going to be public cloud, but they found even when they tried to put everything either in SASS or, like, infrastructures of service with Amazon, there were certain things that, well, in certain countries I just don't have the networking or it was going to be too expensive. >> Yeah. >> So I need to put something in my own data center, and that's where Nutanix has been a fit for them, so it's that good story, as they said, "Where is the center?" and Nutanix being a softer play, it's not about, "Oh I have to sell, you know, thousands and millions of boxes", and even, I've read financial reports that there have been hints from Nutanix that you've said, "Why do they offer the appliances?" Well maybe in the future they won't. It will be through a partner and they'll do that. You need to qualify it, but, you know, absolutely position themselves. They are the, you know, enterprise, you know, software company is what they want to play. Infrastructure is a piece of it. >> Yeah, you're absolutely right. I mean, you've, we've both been around the block a few times. When I started writing about this business, people used to say, "Well, mainframes, they're the dinosaurs who are about to fall off the edge of a cliff." People are still buying a lot of mainframes now. Look at IBM's revenue sheet, a lot of that's mainframe-centric. So I think you're absolutely right. People are going to persist putting stuff close their vest in internal data centers, and they're going to selectively source in various different types of cloud. And you're right, governance is a big one over here in Europe, you know GDPR is a thing that scares all the CIO's and CEO's, for that matter, witless, you know. So they're all terrified of that one PSD2 and payments. So when you have these regulatory landscapes, you know, there's a tendency to be very cautious, very calm, and keep it behind the firewall, and you know, I think probably as long as I live, God willing, you know, we're going to see this combination of deployment models. >> Yeah, GDPR absolutely something we're going to be talking about. Nutanix actually has a couple of experts here talking to customers >> Good. >> As to how they play into it, because that's a question I've had for Nutanix, is, okay, they have kind of their core focus but as they start to go in adjacencies, you know we see companies all the time, alright, I've reached a certain level and then how do I get a little bit further, and how do I have a reason to play into those environments. You know, Nutanix says push into IOT. Nutanix is not the first company that I think of, you know, they don't make sensors, they're not a GE, even Hitachi Vantara has arms that play there so, you know, Satcham Vigani, they've got a small team working on that. So, you want a company of Nutanix' size to start, right, poking out, but where will they be successful and where will they gain traction? Anything catching your eye or interest from Nutanix as they go kind of beyond, you know, kind of the core kind of infrastructure status? >> I think it's a management layer. You know, very similar, I guess, VMware initially was known for their hypervisor and then later on they were really tooling around that to become the control pane, you know, the command center of the data center. That's where I see them. You know, frankly Stu, I'd be pretty worried if they'd made a lot of noise on, I don't know, virtual reality, augmented reality in the net of things, you know. I think they, to a certain extent, can be still have to stick to the netting, and this is a company that's very much geared around being the 21st century data center nexus, and for me, that's where the real value is, and that is a multi multi multi billion dollar segment in its own right. >> Yeah, a big question I have this week, as always, is, you know, what are the relationships that are going to help Nutanix, you know, move further. One that we always look at is the Dell relationship. >> Sure. >> Dell is their largest partner, but also their largest competitor between the VXrail that they're doing, all the Vsan pieces. I'm interested to see IBM up on stage. The power announcement is one that I don't think a lot of people really understand, how that fits. You know, Bumpage Yano was talking about, you know, AI and all of those pieces. Of course, you know, Lenovo, another hardware partner, so, you know. What are the partners that are going to drive them? Which are they, you know, what's the headwinds, what are the tailwinds as they go. Anything from the partner standpoint that you're looking into? >> Well one of the ways, you know, I guess we all try to judge companies is by the company they keep. >> Yes. >> And they've got some nice partners, as you said. The complicated one is a lot of co-optition and frenemy-type stuff going on. It's a bit like Game of Thrones-type complexity of scenario there, you know? Behind the scenes is Dell telling it's sales guys to sell this rather than this and what do they do to objection handling and are they going to eventually try and stitch up Nutanix? I don't know, I think, my feeling is now companies are mature enough that if they can get significant revenues and please the customer, then that's probably the way to go. And you know, those are big, big names and those are companies that you might think would have a history of wanting to do their own thing and go their own way, but they're not. They're going with Nutanix because, you know, it's a USP. That's a unique selling point, and it's a high-quality product, and the customers are very happy. Very high net promoter score, which was an interesting little aspect, you know, a 90+ year after year, clocking at that. You speak to the customers here, they're a happy crowd. You know, you can't say that at every enterprise IT conference, I promise you. >> Yeah, absolutely, it's the channel partners and the customers. Every single one of these events I've come to, this one's a little bit self-selecting, but the people are super excited, digging into it. Alright, Martin, why don't I give you the final word. Things you're looking into, any kind of undercurrent, you know, that we should be aware of. What should Nutanix be concerned about, or people that are looking at it? >> The one thing I would say that would be kind of a risk factor, if you are saying you're reporting into the financial markets and so on is, you know, as I said, they're really up against some of the world's largest organizations here. You know, there's a lot of very, very big companies with skin in the game. And, you know, it depends. They could flip and get much more aggressive. They could decide to go their own way. They could make strategic acquisitions. We saw HPE buying Simplivity, and maybe that would be an interesting turn in the market, but I think they're sat fair for quite a while. Now, I think they've become part of the data center landscape rather than the disruptor. I think they're now part of the status quo in a good way, anyway. >> Yeah, last year they made, you know, it was one or two small software acquisitions >> Yeah. >> That's where we would expect, you know, Nutanix to make those. Alright, well, Martin Veitche, really appreciate you helping me kick off. >> Pleasure, Stu. >> We've got two days of coverage here at the Acropolis in Nice, France. Be sure to stay with us. I have the executives on, customers, and the partners. I'm Stu Miniman here with Martin. Thank you so much for watching theCUBE.

>> From theCUBE studios in Palo Alto in Boston, bringing you data-driven insights from the cube and ETR, this is Breaking Analysis with Dave Vellante. >> Organizations have considerable room to improve their performance without making expensive changes to their talent, their structure, or their fundamental business model. You don't need a slew of consultants to tell you what to do. You already know. What you need is to immediately ratchet up expectations, energy, urgency, and intensity. You have to fight mediocrity every step of the way. Amp it up and the results will follow. This is the fundamental premise of a hard-hitting new book written by Frank Slootman, CEO of Snowflake, and published earlier this year. It's called "Amp It Up, Leading for Hypergrowth "by Raising Expectations, Increasing Urgency, "and Elevating Intensity." Hello and welcome to this week's Wikibon CUBE Insights, powered by ETR. At Snowflake Summit last month, I was asked to interview Frank on stage about his new book. I've read it several times. And if you haven't read it, you should. Even if you have read it, in this Breaking Analysis, we'll dig deeper into the book and share some clarifying insights and nuances directly from Slootman himself from my one-on-one conversation with him. My first question to Slootman was why do you write this book? Okay, it's kind of a common throwaway question. And how the heck did you find time to do it? It's fairly well-known that a few years ago, Slootman put up a post on LinkedIn with the title Amp It Up. It generated so much buzz and so many requests for Frank's time that he decided that the best way to efficiently scale and share his thoughts on how to create high-performing companies and organizations was to publish a book. Now, he wrote the book during the pandemic. And I joked that they must not have Netflix in Montana where he resides. In a pretty funny moment, he said that writing the book was easier than promoting it. Take a listen. >> Denise, our CMO, you know, she just made sure that this process wasn't going to. It was more work for me to promote this book with all these damn podcasts and other crap, than actually writing the book, you know. And after a while, I was like I'm not doing another podcast. >> Now, the book gives a lot of interesting background information on Slootman's career and what he learned at various companies that he led and participated in. Now, I'm not going to go into most of that today, which is why you should read the book yourself. But Slootman, he's become somewhat of a business hero to many people, myself included. Leaders like Frank, Scott McNealy, Jayshree Ullal, and my old boss, Pat McGovern at IDG, have inspired me over the years. And each has applied his or her own approach to building cultures and companies. Now, when Slootman first took over the reins at Snowflake, I published a Breaking Analysis talking about Snowflake and what we could expect from the company now that Slootman and CFO Mike Scarpelli were back together. In that post, buried toward the end, I referenced the playbook that Frank used at Data Domain and ServiceNow, two companies that I followed quite closely as an analyst, and how it would be applied at Snowflake, that playbook if you will. Frank reached out to me afterwards and said something to the effect of, "I don't use playbooks. "I am a situational leader. "Playbooks, you know, they work in football games. "But in the military, they teach you "situational leadership." Pretty interesting learning moment for me. So I asked Frank on the stage about this. Here's what he said. >> The older you get, the more experience that you have, the more you become a prisoner of your own background because you sort of think in terms of what you know as opposed to, you know, getting outside of what you know and trying to sort of look at things like a five-year-old that has never seen this before. And then how would you, you know, deal with it? And I really try to force myself into I've never seen this before and how do I think about it? Because at least they're very different, you know, interpretations. And be open-minded, just really avoid that rinse and repeat mentality. And you know, I've brought people in from who have worked with me before. Some of them come with me from company to company. And they were falling prey to, you know, rinse and repeat. I would just literally go like that's not what we want. >> So think about that for a moment. I mean, imagine coming in to lead a new company and forcing yourself and your people to forget what they know that works and has worked in the past, put that aside and assess the current situation with an open mind, essentially start over. Now, that doesn't mean you don't apply what has worked in the past. Slootman talked to me about bringing back Scarpelli and the synergistic relationship that they have and how they build cultures and the no BS and hard truth mentality they bring to companies. But he bristles when people ask him, "What type of CEO are you?" He says, "Do we have to put a label on it? "It really depends on the situation." Now, one of the other really hard-hitting parts of the book was the way Frank deals with who to keep and who to let go. He uses the Volkswagen tagline of drivers wanted. He says in his book, in companies there are passengers and there are drivers, and we want drivers. He said, "You have to figure out really quickly "who the drivers are and basically throw the wrong people "off the bus, keep the right people, bring in new people "that fit the culture and put them "in the right seats on the bus." Now, these are not easy decisions to make. But as it pertains to getting rid of people, I'm reminded of the movie "Moneyball." Art Howe, the manager of the Oakland As, he refused to play Scott Hatteberg at first base. So the GM, Billy Bean played by Brad Pitt says to Peter Brand who was played by Jonah Hill, "You have to fire Carlos Pena." Don't learn how to fire people. Billy Bean says, "Just keep it quick. "Tell him he's been traded and that's it." So I asked Frank, "Okay, I get it. "Like the movie, when you have the wrong person "on the bus, you just have to make the decision, "be straightforward, and do it." But I asked him, "What if you're on the fence? "What if you're not completely sure if this person "is a driver or a passenger, if he or she "should be on the bus or not on the bus? "How do you handle that?" Listen to what he said. >> I have a very simple way to break ties. And when there's doubt, there's no doubt, okay? >> When there's doubt, there's no doubt. Slootman's philosophy is you have to be emphatic and have high conviction. You know, back to the baseball analogy, if you're thinking about taking the pitcher out of the game, take 'em out. Confrontation is the single hardest thing in business according to Slootman but you have to be intellectually honest and do what's best for the organization, period. Okay, so wow, that may sound harsh but that's how Slootman approaches it, very Belichickian if you will. But how can you amp it up on a daily basis? What's the approach that Slootman takes? We got into this conversation with a discussion about MBOs, management by objective. Slootman in his book says he's killed MBOs at every company he's led. And I asked him to explain why. His rationale was that individual MBOs invariably end up in a discussion about relief of the MBO if the person is not hitting his or her targets. And that detracts from the organizational alignment. He said at Snowflake everyone gets paid the same way, from the execs on down. It's a key way he creates focus and energy in an organization, by creating alignment, urgency, and putting more resources into the most important things. This is especially hard, Slootman says, as the organization gets bigger. But if you do approach it this way, everything gets easier. The cadence changes, the tempo accelerates, and it works. Now, and to emphasize that point, he said the following. Play the clip. >> Every meeting that you have, every email, every encounter in the hallway, whatever it is, is an opportunity to amp things up. That's why I use that title. But do you take that opportunity? >> And according to Slootman, if you don't take that opportunity, if you're not in the moment, amping it up, then you're thinking about your golf game or the tennis match that's going on this weekend or being out on your boat. And to the point, this approach is not for everyone. You're either built for it or you're not. But if you can bring people into the organization that can handle this type of dynamic, it creates energy. It becomes fun. Everything moves faster. The conversations are exciting. They're inspiring. And it becomes addictive. Now let's talk about priorities. I said to Frank that for me anyway, his book was an uncomfortable read. And he was somewhat surprised by that. "Really," he said. I said, "Yeah. "I mean, it was an easy read but uncomfortable "because over my career, I've managed thousands of people, "not tens of thousands but thousands, "enough to have to take this stuff very seriously." And I found myself throughout the book, oh, you know, on the one hand saying to myself, "Oh, I got that right, good job, Dave." And then other times, I was thinking to myself, "Oh wow, I probably need to rethink that. "I need to amp it up on that front." And the point is to Frank's leadership philosophy, there's no one correct way to approach all situations. You have to figure it out for yourself. But the one thing in the book that I found the hardest was Slootman challenged the reader. If you had to drop everything and focus on one thing, just one thing, for the rest of the year, what would that one thing be? Think about that for a moment. Were you able to come up with that one thing? What would happen to all the other things on your priority list? Are they all necessary? If so, how would you delegate those? Do you have someone in your organization who can take those off your plate? What would happen if you only focused on that one thing? These are hard questions. But Slootman really forces you to think about them and do that mental exercise. Look at Frank's body language in this screenshot. Imagine going into a management meeting with Frank and being prepared to share all the things you're working on that you're so proud of and all the priorities you have for the coming year. Listen to Frank in this clip and tell me it doesn't really make you think. >> I've been in, you know, on other boards and stuff. And I got a PowerPoint back from the CEO and there's like 15 things. They're our priorities for the year. I'm like you got 15, you got none, right? It's like you just can't decide, you know, what's important. So I'll tell you everything because I just can't figure out. And the thing is it's very hard to just say one thing. But it's really the mental exercise that matters. >> Going through that mental exercise is really important according to Slootman. Let's have a conversation about what really matters at this point in time. Why does it need to happen? And does it take priority over other things? Slootman says you have to pull apart the hairball and drive extraordinary clarity. You could be wrong, he says. And he admits he's been wrong on many things before. He, like everyone, is fearful of being wrong. But if you don't have the conversation according to Slootman, you're already defeated. And one of the most important things Slootman emphasizes in the book is execution. He said that's one of the reasons he wrote "Amp It Up." In our discussion, he referenced Pat Gelsinger, his former boss, who bought Data Domain when he was working for Joe Tucci at EMC. Listen to Frank describe the interaction with Gelsinger. >> Well, one of my prior bosses, you know, Pat Gelsinger, when they acquired Data Domain through EMC, Pat was CEO of Intel. And he quoted Andy Grove as saying, 'cause he was Intel for a long time when he was younger man. And he said no strategy is better than its execution, which if I find one of the most brilliant things. >> Now, before you go changing your strategy, says Slootman, you have to eliminate execution as a potential point of failure. All too often, he says, Silicon Valley wants to change strategy without really understanding whether the execution is right. All too often companies don't consider that maybe the product isn't that great. They will frequently, for example, make a change to sales leadership without questioning whether or not there's a product fit. According to Slootman, you have to drive hardcore intellectual honesty. And as uncomfortable as that may be, it's incredibly important and powerful. Okay, one of the other contrarian points in the book was whether or not to have a customer success department. Slootman says this became really fashionable in Silicon Valley with the SaaS craze. Everyone was following and pattern matching the lead of salesforce.com. He says he's eliminated the customer service department at every company he's led which had a customer success department. Listen to Frank Slootman in his own words talk about the customer success department. >> I view the whole company as a customer success function. Okay, I'm customer success, you know. I said it in my presentation yesterday. We're a customer-first organization. I don't need a department. >> Now, he went on to say that sales owns the commercial relationship with the customer. Engineering owns the technical relationship. And oh, by the way, he always puts support inside of the engineering department because engineering has to back up support. And rather than having a separate department for customer success, he focuses on making sure that the existing departments are functioning properly. Slootman also has always been big on net promoter score, NPS. And Snowflake's is very high at 72. And according to Slootman, it's not just the product. It's the people that drive that type of loyalty. Now, Slootman stresses amping up the big things and even the little things too. He told a story about someone who came into his office to ask his opinion about a tee shirt. And he turned it around on her and said, "Well, what do you think?" And she said, "Well, it's okay." So Frank made the point by flipping the situation. Why are you coming to me with something that's just okay? If we're going to do something, let's do it. Let's do it all out. Let's do it right and get excited about it, not just check the box and get something off your desk. Amp it up, all aspects of our business. Listen to Slootman talk about Steve Jobs and the relevance of demanding excellence and shunning mediocrity. >> He was incredibly intolerant of anything that he didn't think of as great. You know, he was immediately done with it and with the person. You know, I'm not that aggressive, you know, in that way. I'm a little bit nicer, you know, about it. But I still, you know, I don't want to give into expediency and mediocrity. I just don't, I'm just going to fight it, you know, every step of the way. >> Now, that story was about a little thing like some swag. But Slootman talked about some big things too. And one of the major ways Snowflake was making big, sweeping changes to amp up its business was reorganizing its go-to-market around industries like financial services, media, and healthcare. Here's some ETR data that shows Snowflake's net score or spending momentum for key industry segments over time. The red dotted line at 40% is an indicator of highly elevated spending momentum. And you can see for the key areas shown, Snowflake is well above that level. And we cut this data where responses were greater, the response numbers were greater than 15. So not huge ends but large enough to have meaning. Most were in the 20s. Now, it's relatively uncommon to see a company that's having the success of Snowflake make this kind of non-trivial change in the middle of steep S-curve growth. Why did they make this move? Well, I think it's because Snowflake realizes that its data cloud is going to increasingly have industry diversity and unique value by industry, that ecosystems and data marketplaces are forming around industries. So the more industry affinity Snowflake can create, the stronger its moat will be. It also aligns with how the largest and most prominent global system integrators, global SIs, go to market. This is important because as companies are transforming, they are radically changing their data architecture, how they think about data, how they approach data as a competitive advantage, and they're looking at data as specifically a monetization opportunity. So having industry expertise and knowledge and aligning with those customer objectives is going to serve Snowflake and its ecosystems well in my view. Slootman even said he joined the board of Instacart not because he needed another board seat but because he wanted to get out of his comfort zone and expose himself to other industries as a way to learn. So look, we're just barely scratching the surface of Slootman's book and I've pulled some highlights from our conversation. There's so much more that I can share just even from our conversation. And I will as the opportunity arises. But for now, I'll just give you the kind of bumper sticker of "Amp It Up." Raise your standards by taking every opportunity, every interaction, to increase your intensity. Get your people aligned and moving in the same direction. If it's the wrong direction, figure it out and course correct quickly. Prioritize and sharpen your focus on things that will really make a difference. If you do these things and increase the urgency in your organization, you'll naturally pick up the pace and accelerate your company. Do these things and you'll be able to transform, better identify adjacent opportunities and go attack them, and create a lasting and meaningful experience for your employees, customers, and partners. Okay, that's it for today. Thanks for watching. And thank you to Alex Myerson who's on production and he manages the podcast for Breaking Analysis. Kristin Martin and Cheryl Knight help get the word out on social and in our newsletters. And Rob Hove is our EIC over at Silicon Angle who does some wonderful and tremendous editing. Thank you all. Remember, all these episodes are available as podcasts. Wherever you listen, just search Breaking Analysis podcast. I publish each week on wikibon.com and siliconangle.com. And you can email me at david.vellante@siliconangle.com or DM me @dvellante or comment on my LinkedIn posts. And please do check out etr.ai for the best survey data in enterprise tech. This is Dave Vellante for theCUBE Insights, powered by ETR. Thanks for watching. Be well. And we'll see you next time on Breaking Analysis. (upbeat music)

>> From theCUBE studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. >> Hello everyone, this is Dave Vellante with theCUBE and welcome to this conversation. With me is Anil Singhal, who is the CEO of NETSCOUT. Anil, it's a pleasure to speak with you today. Thanks so much for coming on the program. >> Thank you. >> So I want to talk a little bit about NETSCOUT. We're kind of at theCUBE, we're sort of enamored by founder-led companies. I mean, you started NETSCOUT right around the same time that I entered the tech business, and you remember back then it was an industry dominated by IBM, monolithic systems were the norm, in the form of mainframes, you had mini computers, PCs, and things like PC local area networks, they were in their infancy. In fact, most of the PCs, as you remember, they didn't even have hard disks in them. So I want to start with, what was it that you saw 35 years ago that led you to start NETSCOUT and at the time, did you even imagine that you'd be creating a company with a billion dollars worth of revenue and a much larger market cap? >> Well, certainly I had not imagined where we'll be right now, and we didn't know that this'll be the outcome. I mean, we just happened to be at the right place at the right time, but we did have a vision. Some of you had the feeling, we are enamored by networking, and we thought that network will be the business. In fact, our business card in 91 said, "Network is the business." And so somehow we got that right, and we said, these things will be connected. And overall, we found then that the IP convergence first in the enterprise in 90s, and then internet, and carriers moving from analog to digital, (indistinct) talk about digital transformation in last few years, but this has been going on for the last 30 years. And as we add what we were doing, become relevant to more and more people over time. For example, now even power companies use our product. And we have IoT devices coming in. So basically what we do is we said we are going to provide visibility through looking at the traffic, through the lens and the vantage point of the network. A lot of people think we are just doing network monitoring or had been doing that. But actually we use the network as a vantage point, which other people are not doing, most of the people have accidental data from devices as the basis of visibility. And that turned out to be very successful, but at some point, different points in our life, we became responsible for the market, not just for NETSCOUT. And that changed the shape of the company, and what we did and how we drove the innovation. >> I want to get into some of that, but I'm still really enamored of and fascinated by the beginnings. I mean, I worked for a founder-led, a chairman, a guy named Pat McGovern who built a media empire. He had these 10 sort of core principles, he used to test us on 'em, we'd carry around little note cards, things that today still serve us. You know, stay close to the customer, you know, keep the corporate staff lean, promote from within, respect for individuals, things that are drilled into your head. I wonder, you know, what are the principles that, you know, sometimes they become dogma, but they're good dogma. I don't mean that as a pejorative. What are the things that you built your business on, the principles that you're sort of most proud of? >> Well, I think there is, so there are five, in fact, we call some of these tenets our five tenets. We call this high ambition leadership, which is more than just about making money. And just like the US is the leader of the free world, we have a responsibility beyond US. Same way, NETSCOUT has a responsibility beyond our own company and revenue and our stakeholders. So with that in mind, we have these five things, which I think I wouldn't have been able to articulate that 20 years ago, like this. But they were always there. So firstly, there's guardians of the connected world, which you see it on our website, guardians care about their asset, it's not just about money. We are going to solve problems in the connected world, which nobody else is able to solve, or have the passion or have the resources and willpower to do it. So that's the overall theme of the company. Guardians of the connected world, connected world is changing, new problems are coming. Our goal is there are pros and cons of every new thing. Our goal is to remove all the cons so you can enjoy the pros. So that's guardian of the connected world. Then our mission is accelerate digital transformation, meaning remove the roadblocks. People are looking at enablers, but there are barriers also. How do you remove the barriers for our customers, so they can improve the fruits of digital transformation? For example, going to the cloud allows you to outsource some of us, especially in these times of agility and dependency, you can cut your costs, but that comes with a price that you lose control. So our product brings the control back. So now you can enjoy the pros and the cons and I call it sometimes how do you change the wheels of your car while driving? If you change four wheels, then car is going to fall down, but how do you put one wheel in the cloud? Well, that's what our vision is. Visibility without borders. We'll give you the same information, which is the third part. That's why we have this tagline and therefore the company. And then we have the mission, accelerating digital transformation, but our vision is visibility without borders. When you run your application, no matter where you run, we'll give you the same piece of information. That allows the people to make this migration transparent from a monitoring and visibility point of view. And then the fourth area is about our technology. We call it smart data technology, and the whole world is talking about artificial intelligence, machine learning. But what are you going to learn, is your AI really authentic or is it truly artificial? And that comes from smart data. Data is the oil of the new industry. That's the oil, and people are not focusing on that. They're saying, "I have lots of data," but you don't have the data which we have. In the past, we said, we are not going to share the data with third parties. And recently we have changed that, and say, "Yeah, there is a price for that. We'll do that." So we are branding ourselves as a smart data company, where the whole industry is talking about smart analytics. And I said, "We make smart people smarter." And lastly, the value system of NETSCOUT is called lean, but not mean, okay? Anybody can get lean. If you get fat, you can get the operation. But how do you do lean decision making so you never have to be in mean? Like NETSCOUT never had to lay off in the last 35 years, we have ups and down, our stock has gone to $3 and has gone to $40, but companies continued to invest, and that's why we have this reputation we have, whether it's (indistinct). The tenure at NETSCOUT is 10, 15 years minimum, even in sales, and people don't realize the power of that because some of our customers tell us, "Hey, your salespeople are around longer than our employees." And that (indistinct) builds a franchise of loyalty in the customer base. We underestimate that, this continuity part. So that in many aspect of not, what is the definition of not being mean, that lean and mean is sort of people are very proud of that. And I think you can be lean without being mean. And then how do you become lean, is don't hire when in good times, unless you need them. The reason people are able to do it, is because they think "I can fire anytime, so let's build up the fat." So there a lot of decision-making we do around this, and that's what I talk about in the book, it's not about technology, and this is, I would say is just one of the five tenets, but it's probably one of the most important ones. And it's one of the biggest differentiators of NETSCOUT. >> Well, it's obviously served you well, I mean, no layoffs in 35 years, the retention metric is very impressive. I mean, again, I go back to my experience. I was at IDG for 15 years. My passion was always to start my own company, but I didn't want to leave 'cause it was such a great culture, and it seems like you've created something similar. You know, I talk to CIOs and CTOs a lot too about, it's always people, process, technology. And of course we want to talk about tech 'cause we love talking about tech, but they always tell me, "Look, tech comes and goes," it's the processes that you put in place, the culture that you have in place, we could deal with the tech, and it sounds like you've created a similar dynamic. And I think back again, when you started, there were proprietary networks, it was IBM SNA, DEC network, every mini computer had its own network. Then, you know, TCP/IP came in and the whole world changed and exploded. But yet you said guardians of the connected world, and that's kind of been your focus from really day one. You know, I loved what you said about the business. The network is the business. Remember the network is the computer that Scott McNealy popularized. So really kind of a similar dynamic there. So it seems, Anil, that that framework that you just laid out, those core principles, have actually allowed you to ebb, to flow, to deal with stock prices and still retain people for very long periods of time. >> Maybe one more thing to add there is that on the lean but not, many talk about generalities. We don't look any different. Like everyone cares about happy customers. They care about happy employees and they care about happy stakeholders, shareholders. Everyone, including us. But what's the order? Where do you start? So we start with employees. We say happy employees, then we get happy customers. And then because of that, they buy more stuff and we create happy shareholders. Whereas if you start with happy shareholders, you may not get happy employees. And so all I'm saying is that everyone probably believes in what we are saying or what I'm saying, but how they implement it, and then like really walking the talk is the most important part. >> Well, I think you're right. I mean, I think the financials is a by-product of happy employees, which drive happy customers. If you take care of employees and customers, then good things will happen. If you start with trying to micromanage the finances. Of course, we all attempted to do that. I wonder if we could talk a little bit about, so just to bring it forward a little bit, we're talking about how NETSCOUT has essentially from a cultural standpoint, been able to withstand the ups, the downs, I mean, you've seen since, you know, it's over 35 years, a lot of the downturns and the tech softness, the tech bubbles, the great recession. Obviously now we're in the middle of a pandemic. And I wonder if you could talk to that specifically. So the data that we have from our survey partner, ETR, Enterprise Technology Research, shows that before the pandemic around 16% of employees worked from home, we're talking about truly remote workers, not, you know, a couple of days a week. And when we talk to CIOs today, they tell us it's well over 70% now, but they fully expect that when, you know, the world comes back to the new abnormal, I call it, that number's going to, that 16% is going to double to, more than double to 34%. So it puts stress on the network. It changes the direction of the traffic. It changes the security emphasis. Maybe you could talk a little bit about that just in terms of how you are helping your customers respond, specifically. >> So I always talk about like, is this a new problem or is the bad problem getting worse? So I contend that bad problem getting worse. So if you make the bad to zero, then you can't multiply. So I think it's highlighting some of the problems which are already there, are being highlighted by, a lot of people are telling, "Are you seeing more attacks?" No, we are becoming more conscious of the attacks we always had. We have more time, by the way, hackers have more time too, because they're also sitting at home doing things. So what I feel is that, two parts. One is that I think people should not, when the new normal comes, or new abnormal, then I think people should not make people work from home for the wrong reason. Certain people are saying, "Oh, I can save money." That's the wrong reason. But if it's efficient, we should do that. So we are doing some interesting things for home users to feel how they can feel that they're really working from the office. And so, yeah, there are some new challenges on how we monitor, because when the user complains now about the performance to IT, because they can't get their work, they don't know whether it's our network or is the ISP, or is their wifi network. So we try to provide the root cause analysis as quickly as possible, which we call mean time to know. And one of the things I didn't mention earlier, about what is the uniqueness of our technology when we use the network vantage point to drive visibility, it's almost like the blood test. When you have a problem, if you tell the doctor, I say "Hey, what is my problem?" And they start looking at all kinds of things. It's going to take forever. But if I take the blood test, I will know what the next thing to do. So in a way, we are doing the blood test of the user experience, security problems. And when we do that, we can come up with some very unique things. So we think that we'll be moving on into other areas, or the visibility is the means to an end, the end could be performance management, could be visibility, troubleshooting, and could be security forensics. Like blood tests can be used for DNA evidence also. And so we have all the technology, so we are moving on, as we move to the home user, we are applying that our techniques, not just for service assurance or end user experience monitoring, but also for security forensics. And one example I give you the, I always talk more than you'll see that in my book, being different before being better. First be different, get the ear flecks out of the ideas before you tell the story. And you don't do that, even though we are very big, we are very small compared to a lot of companies in the industry, compared to big players like Cisco, IBM, and all those. So the new thing which we are looking at in security is, the security industry is catching the act. We are going to catch the actors. If I can get into the, what they were doing before the act, before they did the ransomware, what were they doing? Well, that requires continuous monitoring of the traffic. And that's what we do. So when we do catch the actor, catching the thief, not what they're stealing, then you're preventing tomorrow's attack. And that's basically the innovation part of NETSCOUT, which we have been pushing for. But we somehow decided not to apply that to security because we had other problems to be solved as guardians of the connected world from a monitoring point of view. And so those are some of the things we'll be applying as we move forward. And I feel that those are equally applicable before the pandemic and after the pandemic. And it's just polarized more, because more people are working from home. >> It's interesting what you're saying about the blood test. That's a great analogy because it kind of eliminates the guesswork, and removes the opaqueness. It goes right to sort of the heart of the matter, you called it mean time to know. And it's interesting too, to look at productivity. I mentioned some of the survey work, when we talk to organizations, they say to us that actually productivity has gone up since the pandemic. And my response to that is, "Yeah, no kidding. 'Cause people are working 15 hour days." You can't keep that up. And the silent killer of productivity is the not, having an elongated mean time to know, and having to guess. And so my premise is that this productivity gain, if in fact it exists, is not sustainable because we're doing it on the backs of our employees and it's going to burn 'em out. >> I'm not sure whether it's real also, see, there are both sides. It's not possible, practical, as you are saying, because for example, you are a salesperson and you are working six, seven hours and you're traveling six hours. You can't be on the phone for 12 hours with a customer right now. So I don't talk and then be productive, there are both sides going, some people are overworked. And so definition of productivity itself is in question. And how do you measure that? And so that's what we'll have to look, I think basically all I'm saying is we should do it, whatever we do after the pandemic is over, about how many people work from home, should be based on your business model, your expectation, not just based on cost. And a lot of people are looking at once again, "Oh, this is another cost saving exercise." And that should not be the reason, that's the wrong reason, because then they're measuring the productivity in terms of reduced cost, not everything else. Plus at least in NETSCOUT, is a company which, I mean, every meeting I go to, I use chalkboard, and it's very very hard for other companies, somebody like IBM, where most of the people work, there are 50 offices. What is the easy transition? It's not easy for NETSCOUT. And so right now we focus on safety, but we need to come up with a good hybrid model later on, and different people will set up differently. But what we do will be relevant in all cases. >> Yeah, but I think you're making a good point that it's not some kind of mandate to drive costs down. Or we saw last decade, there were a couple of prominent companies that were mandating actually working in the office, eliminating work from home. So obviously the wrong side of history, you know, they didn't know a pandemic was coming, but so how will you make that decision? Will you, is it really a discussion case by case with the employees or what's the framework for you guys to decide that? >> Well, I think so right now, our focus is on safety. So it's completely optional. In fact, we don't even allow more than 20%, and that's only in the headquarters, other places, we have less than 5% people coming, and only essential workers, manufacturing and all those. So right now it's completely optional. But my personal preference when there is no risk is people should come to work like they were coming before. We like to make it as close as possible to the old normal, but that's not going to be the case for other companies because they're bigger in size, they have other things at play, but certainly we are not going to do it, "Oh, because it's cheaper for NETSCOUT, when people work from home." And so we we'll see how it goes. I think it will be a transition, but I can see going back to new normal in a year from now, if things start winding down in six months, within a year or so, we should be getting back to some normalcy. But that doesn't mean going to be true for our customers. So from a product point of view, we are doing several things so we can help the customer through this transition. And by the way, one other thing I wanted to mention earlier, when we talk about the blood test, how does it relate to guardians of the connected world? If you believe in that, what did the industry do? They made sure needles were not painful. That blood test was reliable. There is no hygiene issues or no issues like that. The cost has come down. As the guardian of the connected world, because we do that, that's what we have been doing. We are removing the barriers to a great idea, but not all other companies give up. And then they have different strategies and some of them are successful, some are not. So as the guardian of the connected world, our goal is to continue to make this practical use. Imagine if blood test industry had not done that, where we'll be right now. And that's what I meant by guardian of the connected world. This is not easy to do and sustain that for a period of 20, 30 years. But we have been able to do that, and we get a lot of challenges from naysayers, "Oh, this will not work at high speed." When I started NETSCOUT, it was 10 megabit internet. Now we have 100 gig internet, and we are still able to handle it. And nobody had thought in those days that you can even get to 100 megs. People were questioning us. But what happens is other things keep working in the market. Intel is making improvements, lot of people are doing work to solve the problem, and we leverage that. And that's how we are able to sort of sustain this guardian of the connected world team. >> The other key aspect of the guardian of the connected world, and again, not to overdo the blood test analogy, but the time to results is very important. If you have an issue and you have to wait weeks for the results and your doctor, you can't get ahold of her. And so you're successfully dealing with that in real time or near real time, and that to me is critical. >> Very important point, thanks for reminding because I forgot today, that's one of the things I say all the time, "Hey, this one of the big thing we have done, and blood test industry has done it. How long take to get results?" Nowadays you can get results done in like two hours, and doctors can get a report in couple of hours. That's what we had done. That's like mean time to know, which we talked about. With our technology, I think we had basically all the issues, you can't even breathe without doing something on the network. So if you're listening to the traffic or hearing what the conversation, you can form an independent view of what is happening. And that's the smart data, which then becomes the basis of analytics, whether analytics in the security space or not. And so that one thing we have not changed, this technique. Now, the outcomes are different. What are we doing with our visibility is different. Is keep changing the number of customers and the type of customers are different. But ultimately that part interestingly has not changed. >> I wonder if I could ask you, I'd like to ask CEOs, especially those that are technologists and business leaders, their thoughts on the cloud. I mean, our data shows that the public cloud is growing in the 30% plus range annually, the big three public cloud players now account this year, probably for close to $75 billion in revenue, maybe even a little bit more, what do you see driving this growth? What does it mean for your customers? >> I think first of all, we have a big announcement coming out called smart cloud monitoring to address this. But what's the meaning of that? I think what our customers are looking for is that it's not all or nothing. It's not that everything is in the cloud or everything is in the on-prem, it could be private cloud, public cloud, (indistinct), the way VPNs are laid out. So they want to make sure that they can use our technology to do this (indistinct) and analytics, regardless of what decision they make. And even five years from now, there'll be enough non-cloud stuff, okay? So that's what we are striving to do. That's what is visibility without borders, and when they do that, they're saying that helps them decide what's the best mode of operation for them, for what application. Moving blindly to the cloud is a problem. Not going into that area is also a problem. But I think this, the two new things that have happened recently, I will say one is sort of, because of this crisis, people don't want to own, like the hospitality industry. This would, I mean, they're obviously having big issues with them, but if they own a lot of the infrastructure, they could have turned off some of that. And so that's driving more movement to the cloud, but I think there is now other choices available, about a year or two ago, I think affordable pricing model, multiple choices, not just AWS, and technology maturing where you can really implement and have a good experience. I think those have become big enablers. And so I think now it is possible to get to massive movement to the cloud, but then they want to make sure that I'm outsourcing my problem, but I'm not outsourcing my vision to the cloud vendors, because previously the way in the IT industry, a lot of problems were solved is, it was called the war room. Let's get everyone who reports to me and everyone who reported to you, but now everyone doesn't report to you. So how do you maintain the control? Man, I complain to my CIO, "Hey, my WebEx is slow," or "Office (indistinct)," and how do they resolve that problem? Because they cannot tell me, "Oh, we outsourced them, so I can't tell you that," well, we should not have outsourced them to the cloud. So how do you drive this collaboration between the providers and the consumers? Is going to be key to accelerating this transformation. Because otherwise the cost of CapEx cost of a deduction of moving to the cloud will be offset by the increase in OpEx and customer satisfaction for the customer. And so if we can help deal with one of the parts, industry is already doing the other big part of making cloud work, I think then we'll have the best chance of success. >> Yeah. And of course the security has implications on the security model. You were talking earlier about that, as an opportunity, people sometimes think, "Oh yeah, I put my data in the cloud. I'm good on security." But there's a shared responsibility. Again, we talked about different traffic patterns. You've got work from home going on. And it's interesting when you juxtapose the sort of industry narrative on security, which is it gets harder and harder and harder, and you hear some of the cloud players say, "Hey, the state of security is really good," but when you talk to CISOs, they'll talk about the lack of talent, the challenges they have, the tools creep, the fact that they spend more, but the adversaries just keep getting stronger and stronger and stronger. It's a really serious problem. I mean, maybe we close there. I mean kind of, how do you see it from your vantage point? >> Let's look at the blood test. So I look at, if you do the technique which we are talking about, at least in the dimension of security monitoring, then you are going to do a lot of little things, because you're doing little things, you're going to be (indistinct) tool creep, and because of that, you have a talent issue. And I think if we can make the right stuff work, then you will not have this talent issue, and I feel that we are always looking at solving yesterday's problem, okay? Because we are not watching what led to the attack. We are just dealing with the attack as an incident, a security issue. So I think continuous monitoring of traffic allows you to look at the deviation of the normal. So signature-based security is a big portion, but how do you know the signature of tomorrow? And while you know that because you know the normal, but the only way you know normal is if you have been monitoring what was going on, not for a specific event, but deviation from normal. That's what our approach is going to be, anomalous behavior detection through our smart data. And then you apply machine learning and AI algorithms to that. I think that would be Nirvana. But we don't have all the smart people for analytics, but we can feed our data to those smart people. And that's something we are going to bring up, and the reason I feel it will be successful because this idea has been wildly successful for NETSCOUT in the non-security space. >> Yeah. I think you're bringing up another point that I've talked about a lot, which is the industry has gone from sort of an industry of products to platforms, and now ecosystems is really driving a lot of the innovation. That's exactly what you're talking about. Feeding data to other partners, data partners. Now you start thinking about IoT and the edge, and machines talking to machines. I mean, I put video cameras up in my house to make my environment more secure, but of course I'm scared to death that those things could get hacked. It's a very complicated situation, and the power of many is going to trump the resources of one. And so I'm glad you brought that out. Maybe give us your final thoughts, Anil. It really has been a pleasure talking to you. >> Well, I think one of the things people ask me is, "Why didn't you start another company?" Especially in Silicon Valley, I say, "We did start many companies, but they all happen to be called NETSCOUT." NETSCOUT 1.0 or 2.0 or 3.0, actually, we are into the 4.0. I sometimes say, "You know George Foreman's four sons, they're all called George Foreman." So every time we do something different, and now we are in the process of launching NETSCOUT 5.0, it was partly because, maybe accelerated because of what's going on with the pandemic, because there are some new challenges which (indistinct), and we are entering the security space. So I'm very excited about repeating what we did in the traditional monitoring space, service insurance space, both for enterprise and carriers, to the security space. And people will question us how come it took so long. Well, we were solving other problems, which are more interesting than this for NETSCOUT. And now we want to bring that technology and all of our tenets, guardian of the connected world, smart data, to the security space. And also, I mean, people are around for long term, we are also building the next generation of leaders at NETSCOUT. And so we have our hands full over the next two, three years, in building the next generation of NETSCOUT, solving some of the problems the industry is facing, without abandoning our tenets and the culture. And if we can do that, I think there'll be, we'll be going to the next level, in terms of NETSCOUT branding and leadership. >> Well, given the guiding principles that you shared with us earlier, the fundamental technology that you have around visibility, I think that's served you very well. And I think there's no shortage of opportunity for NETSCOUT. So, Anil, thanks so much for sharing your story and coming on theCUBE. >> Good. Thank you. >> And thank you for watching everybody. This is Dave Vellante for theCUBE. We'll see you next time. 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from the cube studios in palo alto in boston connecting with thought leaders all around the world this is a cube conversation [Music] hello everyone this is dave vellante with the cube and welcome to this conversation with me is anil singal who is the ceo of netscout anil it's a pleasure to speak with you today thanks so much for coming on the program thank you so i want to talk a little bit about uh netscout we're kind of at the cube we're sort of enamored by founder-led companies i mean you started net scout right around the same time that i entered the tech business and you remember back then it was an industry dominated by ibm monolithic systems were then with a norm in the form of mainframes you had mini computers pcs and things like pc local area networks they were in their infancy in fact most of the pcs as you remember they didn't have hard disks in them so i want to start with what was it that you saw 35 years ago to let you let that led you to start net scout and at the time did you even imagine that you'd be creating a company with a billion dollars worth of revenue and a much larger market cap well certainly i'd not imagine where we'll be right now and uh we didn't need we didn't know that this will be the outcome where i mean we just happened to be at the right place at the right time but we did have a vision some of you had the feeling we are enamored by networking and we thought that network will be the business in fact our business card in 91 said network is the business and so somehow we got that right and and we said these things will be connected and overall we found then that with the ip convergence first in the enterprise in 90s and then internet and then carriers moving from analog to digital we call talk about digital transformation in last few years but this has been going on for the last 30 years and as we add what we were doing become relevant to more and more people over time for example right now even power companies use our product okay and we have iot devices coming in so so basically what we do is we we said we're going to provide visibility through looking at the traffic through the lens and the vantage point of the network a lot of people think we're just doing network monitoring or have been doing that but actually we use the network as the vantage point which is other people are not doing most of the people have accidental data from devices at the basis of visibility and that turned out to be a very successful and but at some point different points in our life we became responsible for the market not just for netscope and that changed the shape of the company and what we did and how we drove the innovation yeah now i want to get into some of that but i i i'm still really enamored of and and fascinated by by the beginnings i worked for a founder led a chairman a guy named pat mcgovern who built the media empire he had these 10 sort of core principles we he used to test us on him we'd carry him around a little little note card things that today still serve us you know stay close to the customer uh you know keep the corporate staff lean promote from within respect for individuals the things that are drilled into your head i wonder you know what are the principles that you know sometimes they come become dogma but they're good dogma i don't mean that as a pejorative what are the things that that you built your business on the principles that you're sort of most proud of well i think there is so there are five in fact we call um uh some of the standards so five tenants we have we call we call this high ambition leadership which is more than just about making money and as just like the us is the leader of the free world we have a responsibility beyond u.s same way netscout has a responsibility beyond our own company and and revenue and our stakeholders so with that in mind we have these five things which i think i wouldn't have been able to articulate that 20 years ago like this and but they were always there so first is this guardians of the connected world which you see it on our website guardians care about their asset it's not just about money we are going to solve problems in the connected world which nobody else is able to solve or have the passion or have the resources and willpower to do it so that's that's the overall theme of the company guardians of the connected world connected world is changing broad new problems are coming our goal is there are pros and cons of every new thing our goal is to remove all the cons so you can enjoy the pros so that's guardian of the connected world then our mission is accelerate digital transformation meaning remove the road blocks people are looking at enablers but there are barriers also how do you remove the barriers for our customers so they can improve the fruits of digital transformation for example going to the cloud allows you to outsource some of the stuff especially in this time of agility and and dependency you can cut your cost but that comes with the price that you lose control so our product big bring the control back so now you can enjoy the pros and the cons and i call it sometime how do you change the wheels of your car while driving well if you change the four wheels then carve is going to fall down but how do you put one wheel in the cloud well that's what the our vision is visibility without water we'll give you the same information which is the third part so we have this uh tagline and for the company and then we have the mission accelerating digital transformation our vision is visibility without border when you run your application no matter where you run we'll give you the same piece of information that allows the people to make this transparent transparent migra that's migration transparent from a monitoring and visibility point of view then the fourth area is about a technology we call it smart data technology the whole world is talking about artificial intelligence machine learning but who are you going to learn for is your ai really authentic or is it truly artificial and that comes from smart data data is the oil of the new industry that's the oil and and people are not focusing on that they're saying i have lots of data but you don't have the data which we have in the past we said we are not going to share the data with third parties so in recently we have changed that you say yeah we'll there is the price for that we'll do that so we are branding ourselves as a smart data company where the whole industry is talking about smart analytics and i said we make smart people smarter and lastly uh the the value system of netscout is called lean but not mean okay and uh anybody can get lean if you get fat you can get your operation but how do you do lean decision making so you never have to be in me like net score never had delay in the last 35 years we have ups and down our stock has gone to three dollars and has gone to forty dollars but company continued to invest and uh and that's why we have this reputation we have with this tom here or steve here the tenure at netscout is 10 15 years minimum even in sales and people don't realize the power of that because some of our customers tell us hey your sales people are around longer than our employees and that how it builds a franchise of loyalty in the customer base we underestimate that this continuity part so there are many aspects of not what is the definition of not being mean the lean and mean is is sort of people are very proud of that and i think you can be lean without being mean and how do you become lean is don't hire when in good times unless you need them the reason people are able to do it is because they think i can fire any time so let's build up the fact so there are a lot of decision making we do around this and that's what i talk about in the book it's not about technology and this is i would say it's just one of the five diamonds but it's probably one of the most important ones and is one of the biggest differentiator of netscope well it's obviously served you well i mean no layoffs in 35 years the the retention metric is is very impressive i mean again i go back to my experience i was at idg for 15 years my passion was always to start my own company but i didn't want to leave because it was such a great culture and it seems like you've created something similar you know i talk to cios and ctos a lot too about about you know it's always people process technology and of course we want to talk about tech because we love talking about tech but they always tell me look tech comes and goes it's the processes that you put in place the culture that you have in place we could deal with the tech and it and it sounds like you've created a similar dynamic and i think back again when you started there were proprietary networks it was ibm sna dec network every mini computer had its own network then you know tcpip came in the whole world it changed and exploded but yet you said guardians of the connected world and that's kind of been your your focus from really day one you know i i loved what you said about the business the the network is the business remember the network is the computer that scott mcneely popularized so really kind of a similar dynamic there so it seems anneal that that framework that you just laid out those core principles have actually allowed you to ebb to flow to deal with stock prices and still retain people for very long periods of time maybe one more thing to add there is that on the lean but not when you talk about generalities we don't look any different like everyone cares about happy customers they care about happy employees and they care about happy stakeholders shareholders everyone including us but what's the order what's uh what's where do you start so we start with employees we say if they're happy employees they create success happy customers and then because of that they drive they buy more stuff and we create happy shareholders whereas if you start with happy shareholders you may not get happy employees and so and so all i'm saying is that everyone probably believes in what what we are saying or what i'm saying but how they implement it and then like really walking the talk is the most important part well i think you're right i mean i think you know the financials is a byproduct of happy employees which drive happy customers if you take care of employees and customers then good good things will happen uh if you start with trying to micromanage the finances of course we all attempted to to do that um i i wonder if we could talk a little bit about so just to bring it forward a little bit we're talking about how netscout has essentially from a cultural standpoint been able to withstand the ups the downs i mean you've seen since since you know over 35 years a lot of the the the downturns and the the tech softness the tech bubbles the great you know recession obviously now we're in the middle of the pandemic um i and i wonder if you could talk to that specifically so the data that we have from our survey partner etr enterprise technology research shows that before the pandemic around 16 of employees worked from home we're talking about truly remote workers not you know a couple days a week and when we talked to cios today they tell us it's you know well over 70 percent now but they fully expect that when you know the world comes back to the new abnormal i call it that it's it's that number is going to that 16 is going to double to more than double the 34 so it's it puts stress on on the the network it changes the the direction of the traffic it changes the security uh emphasis maybe you could talk a little bit about that just in terms of how you you are helping your customers respond specifically so i always talk about like is this a new problem or is the bad problem getting worse and so i put it in that bad problem getting worse so if you make the bad to zero then you can't multiply it so i think it's highlighting some of the problems which are already there are being highlighted by a lot of people are telling are you seeing more attacks no we are becoming more conscious of the attacks we always had we have more time by the way hackers have more time too because they are also sitting at home doing things so what i'm saying what i feel is that two parts one is that i think people should not in the when the new normal comes or new abnormal then i think people should not make people work from her for the wrong reason certain people are saying oh i can save money that's the wrong reason but if it's efficient we should do this so we are doing some interesting things for home users to feel how they can feel that they're really working from the office and so yeah there are some new challenges on how we monitor because when a user complains now about a performance to it because they can't get their work they don't know whether it's our network or is the isp or is their wi-fi network so we try to provide the root cause analysis as quickly as possible which we call mean time to know and one of the things i didn't mention earlier about the what is the uniqueness of our technology when we use the network vantage point to drive visibility it's almost like the blood test when you have a problem if you tell the doctor i said hey what is my problem and they start looking at all kinds of things it's going to take forever but if i take the blood test i'll be able to do the i will know what the next thing to do so in a way we are doing the blood test of the user experience security problems and when we do that we can come up with some very unique things so in the we think that we'll be moving on into other areas so the visibility is the means to an end the end could be performance management could be visibility troubleshooting uh and could be security forensics like blood tests can be used for dna evidence also and so we have all the technology so we are moving on as we move to the home user we are applying that our techniques not just for service assurance or end user experience monitoring but also for security financing and one example i give you the i always talk about and you'll see that in my book being different before being be better first be different get the earplugs out of the audience before you tell the story and you don't do that even though we are very big we are very small compared to a lot of companies in the industry compared to big players like cisco ibm and all those so the new thing which we are looking at in security is the security industry is catching the act we are going to catch the actor if i can get into the what they were doing before the act before they did the ransomware what were they doing well that required continuous monitoring of the traffic and that's what we do so when we do catch the actor catching the thief not what they're stealing then you're preventing tomorrow's attack and that's basically the innovation part of netscout which we have been pushing for but we somehow decided not to apply that to security because we had enough problems to be sold as guardians of the connected world from a monitoring point of view and so those are those are some of the things we'll be applying as as we move forward and i feel that those are equally applicable before the pandemic and after the pandemic and it's just polarized more because more people are working from home it's interesting what you're saying about the blood test uh that's a great analogy because it kind of eliminates the guesswork uh and and removes the opaqueness uh goes right to sort of the hard heart of the matter you call it mean time to know um and and it's interesting too to look at productivity i i mentioned some of the survey work when we talked to organizations they say to us that actually productivity has gone up since the the pandemic and my response to that is yeah no kidding because people are working 15-hour days you can't keep that up and and the silent killer of productivity is is the the not has having an elongated mean time to know um and having to to guess and so my premise is that this productivity gain if in fact it exists is not sustainable because we're doing it on the backs of our employees and it's going to it's going to burn them out i'm not sure whether it's real also see there are both sides it's not possible practical as you are saying because for example you're a sales person and you're working six seven hours and you're traveling six hours you can't be on the phone for 12 hours with the customer right now right how can they be productive is there both sides going some people are overworked and so definition of productivity itself is in question and how do you measure that and so that's what we'll have to look i think basically what i'm saying is we should do it whatever we do after the pandemic is over about how many people work from home should be based on your business model your expectation not just based on cost and a lot of people are looking at once again oh this is another cost saving exercise and that should not be the reason that's the wrong reason because then they're measuring the productivity in terms of reduced cost not everything else plus at least in net stock is a company which i mean every meeting i go to i use chalkboard and it's very very hard as a for our company like somebody like ibm where most of the people were there 50 offices they were remote is the easy transition it's not easy for netscout and so right now we focus on safety but we need to come up with a good hybrid model later on and different people will set up differently but what we do will be relevant in all cases yeah but i think you're making a good point that it's not some kind of mandate to drive your costs down or we saw last decade there were a couple of prominent companies that were mandating actually working in the office eliminating work from home so obviously the wrong side of history you know who they didn't know a pandemic was coming but so so how how will you make that decision uh will you is it really a discussion case by case with the employees or how what's the framework for you guys to decide that well i think so right now our focus is on safety so it's completely optional in fact we don't even allow more than 20 percent and that's only in the headquarters other places we have less than five percent people coming right and only essential workers manufacturing and all those so right now is completely optional but my personal preference when there is no risk these people should come to work like they were coming before we like to make it as close as possible to the old normal but that's not going to be the case for other companies because they're bigger in size they have other things at play but certainly we are not going to do it or because it's cheaper for net scores because we when people work from home and so we will see how it goes i think it will be a transition but i can see we going back to new normal in a year from now if the things start winding down in six months within a year or so we should be getting back to uh some normalcy and but that doesn't mean it's going to be true for our customers so from a product point of view we are doing several things so we can help the customer through this transition and by the way one other thing i wanted to mention earlier when we talk about the blood test how does it relate to guardians of the connective connected world if you believe in that what did the industry do they made sure needles were not painful that blood test was reliable you could there is no hygiene issues or no issues like that the cost has come down as a guardian of the connected world because we do that that's what we have been doing we are removing the banners to a great idea but lot of other companies gave up and then they have different strategy and some are successful some are not so as a guardian of the connected wall our goal is to continue to make this practical use imagine if blood test industry has not done that where we'll be right now and that's what what i meant by guardian of the connected world this is not easy to do and sustain that in for a period of 20 30 years but we have been able to do that and we get a lot of challenges from naysayers or this will not work at high speed when i started mad scout it was 10 megabit ethernet now we have 100 gigs 100 gig ethernet and we are still able to handle it and nobody thought in those days that you can even get 200 likes people were questioning us but what happens is other things keep working in the market intel is making improvements a lot of people are doing work to solve the problem and we leverage that and and that's how we are able to uh sort of sustain this guardian of the connected world team yeah you know the other key aspect of the guardian of the connected world again not to overdo the blood test analogy but the time to results is very important if you if you have an issue and you have to wait wait weeks for the results and your doctor you can't get a hold of her and so you're you're successfully dealing with that in real time or near real time and that that to me is is critical a very important point thanks for reminding me because i forgot today that's one of the things i say all the time hey this one of the big things we have done if blood test industry has done it how long take to get results nowadays you can get results done in in like two hours and doctors can get a report in couple of hours that's what we have done that's like mean time to know which we talked about with our technology i think we're basically the all the issues that you can't even breathe without doing something on the network so if you're listening to the traffic or hearing that uh what the conversation you can form an independent view of what is happening and that could be the that's the smart data which then becomes the basis of analytics whether analytics in the security space or not and so that's uh and that one thing we have not changed this technique now the outcomes are different what are we doing with the visibility is different is keep changing the number of customers and the type of customers are different but ultimately that part has interestingly has not changed i wonder if i could ask you i'd like to ask ceos especially those that are technologists and business leaders you know their thoughts on on the cloud i mean our data shows that the public cloud is growing in the 30 plus range annually the big three cloud public cloud players now account this year probably for close to 75 billion dollars in revenue maybe even a little bit more you know what what do you see driving this growth what does it mean for your customers well i think so forth we have a big announcement coming out called smart cloud monitoring to address this but what's the meaning of that i think what our customers are looking for is that it's it's not all or nothing it's not that everything is in the cloud or everything is in the program it could be private cloud public cloud colos the way vpns are laid out so they want to make sure that they can use our technology to do this react and analytics regardless of what decision they make and even five years from now there'll be enough non-cloud stuff okay so that's what we are trying to do we want to that's what is visibility without water and when they do that they say that helps them decide what's the best mode of operation for them for what application moving blindly to the cloud is a problem not going into that area is is also a problem but i think this the two new things have happened recently i would say one is sort of because of this crisis people don't want to own uh like hospitality industry okay this would i mean they're obviously having a big big issues with them but if they want a lot of the infrastructure they could have turned off some of that and so that's driving more movement to the cloud but i think there is a lot of choices available about a year or two ago i think affordable pricing model multiple choices not just aws and technology maturing where you can you can really implement and have a good experience i think those have become big enablers and so i think now it is possible to get to massive movement to the cloud but then they want to make sure that i'm now i'm outsourcing my problems but i'm not also outsourcing my vision to the cloud vendors because previously the way in the iit industry a lot of problems were solved is it was called the war rule let's get everyone who reports to me and everyone who reported to you but now that everyone doesn't report to you so how do you maintain the control when i complain to my ci hey my webex is slow or office three seriously and how does it resolve that problem because they cannot tell me oh we outsource them so i can't tell you that well we should not have outsourced them to the cloud so how do you drive this collaboration between the providers and the consumers is going to be key to accelerating this transformation because otherwise the cost of capex cost of reduction of moving to the cloud will be offseted by the increase in operax and customer satisfaction for the customer and so if we can help deal with one of the parts industry is already doing the other big part of making cloud work i think then we'll have the best chance of success yeah and of course the security has implications on the security model you were talking earlier about that as an opportunity people sometimes think oh yeah i put put my data in the cloud i'm good on security but there's there's a shared responsibility uh again we talked about different traffic patterns uh you've got work from home going on uh so and it's interesting when you juxtapose a sort of industry narrative on security which is it's it gets harder and harder and harder and you hear some of the cloud players say hey the state of security is really good uh but when you talk to csos you know they'll talk about the lack of talent uh the challenges they have the tools tools creep the fact that they spend more but the adversaries just keep getting stronger and stronger and stronger it's a really serious problem i mean maybe we close there i mean kind of how do you see it from your your vantage point let's look at the blood test so i look at if you don't the technique which we are talking about at least in the dimension of security monitoring then you are going to a lot of little things because you are doing little things you are going to be do a tool creep and because of that you have a like a talent issue and i think if you can make the right stuff work then you will not have this this talent issue and i feel that we are always looking solving yesterday's problem okay because we are not watching what led to the attack we are just dealing with the attack as an incident a security issue so i think continuous monitoring of deviation traffic allows you look at the deviation of the north so signature based security is a big portion but how do you know the signature of tomorrow and well you know that because you know the normal but only way you know normal is if you have been monitoring what was going on not for a specific event but deviation from normal that's what our approach is going to be anomalous behavior detection through our smart data and then you apply machine learning and ai algorithms to that i think that could be nirvana and but we don't have all the smart people for analytics but we can feed our data to those smart people and that's something we are going to bring up and the reason i feel it will be successful because this idea has been widely successful for netscout in the non-security space yeah i think you're bringing up another point that i've talked about a lot which is we've the industry has gone from sort of an industry of products to platforms and now ecosystems is really driving a lot of the innovation it's exactly what you're talking about feeding data to other partners data partners and now you start thinking about iot and the edge and machines talking to machines i mean i put you know video cameras up in my house to to make my environment more secure but of course i'm scared to death that those things can get hacked um it's a very complicated situation and the the power of many is going to trump the the the resources of one and so i'm glad you you brought that out um maybe give us your final thoughts anil it really has been a pleasure talking to you well i think the vr one of the things people have asked me is uh is why did you start another company especially in silicon valley i said with this spot many companies but they all happened to be called netstar netscout 1.0 2.0 3.0 actually we we are into the 4.0 i sometimes say you know george foreman's four sons they're all called george foreman so it's like one and so every time we do something different and now we are in the process of launching netscore 5.0 it was partly because maybe accelerated because of what's what's going on with the pandemic because there are some new challenges which we then here for and we are entering the security space so i'm very excited about repeating what we did in the traditional monitoring space service assurance space both for enterprise and carriers to the security space and people will question us how come it took so long while we were solving other problems which were more interesting than this for netscout and now we're going to bring that technology and all the tenants guardian of the connected world smart data to the security space and also i mean people are around for a long time we are also building the next generation of leaders at netstar and and so we have our hands full over the next two three years in uh building the next generation of net scout solving some of the problems which industry is facing without abandoning our tenants and the culture and if we can do that i think uh there'll be uh we'll be going to uh to the next level in terms of netscore branding and leadership well given given the guiding principles that you shared with us earlier the the the fundamental technology that you have around visibility uh i think that's served you very well and i think there's no shortage of of opportunity uh for netscout so neil thanks so much for sharing your story and coming on thecube good thank you all right and thank you for watching everybody this is dave vellante for the cube we'll see you next time [Music] you

>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE in ETR. This is Breaking Analysis with Dave Vellante. >> Snowflake is not going to grow into its valuation by stealing the croissant from the breakfast table of the on-prem data warehouse vendors. Look, even if snowflake got 100% of the data warehouse business, it wouldn't come close to justifying its market cap. Rather Snowflake has to create an entirely new market based on completely changing the way organizations think about monetizing data. Every organization I talk to says it wants to be, or many say they already are data-driven. why wouldn't you aspire to that goal? There's probably nothing more strategic than leveraging data to power your digital business and creating competitive advantage. But many businesses are failing, or I predict, will fail to create a true data-driven culture because they're relying on a flawed architectural model formed by decades of building centralized data platforms. Welcome everyone to this week's Wikibon Cube Insights powered by ETR. In this Breaking Analysis, I want to share some new thoughts and fresh ETR data on how organizations can transform their businesses through data by reinventing their data architectures. And I want to share our thoughts on why we think Snowflake is currently in a very strong position to lead this effort. Now, on November 17th, theCUBE is hosting the Snowflake Data Cloud Summit. Snowflake's ascendancy and its blockbuster IPO has been widely covered by us and many others. Now, since Snowflake went public, we've been inundated with outreach from investors, customers, and competitors that wanted to either better understand the opportunities or explain why their approach is better or different. And in this segment, ahead of Snowflake's big event, we want to share some of what we learned and how we see it. Now, theCUBE is getting paid to host this event, so I need you to know that, and you draw your own conclusions from my remarks. But neither Snowflake nor any other sponsor of theCUBE or client of SiliconANGLE Media has editorial influence over Breaking Analysis. The opinions here are mine, and I would encourage you to read my ethics statement in this regard. I want to talk about the failed data model. The problem is complex, I'm not debating that. Organizations have to integrate data and platforms with existing operational systems, many of which were developed decades ago. And as a culture and a set of processes that have been built around these systems, and they've been hardened over the years. This chart here tries to depict the progression of the monolithic data source, which, for me, began in the 1980s when Decision Support Systems or DSS promised to solve our data problems. The data warehouse became very popular and data marts sprung up all over the place. This created more proprietary stovepipes with data locked inside. The Enron collapse led to Sarbanes-Oxley. Now, this tightened up reporting. The requirements associated with that, it breathed new life into the data warehouse model. But it remained expensive and cumbersome, I've talked about that a lot, like a snake swallowing a basketball. The 2010s ushered in the big data movement, and Data Lakes emerged. With a dupe, we saw the idea of no schema online, where you put structured and unstructured data into a repository, and figure it all out on the read. What emerged was a fairly complex data pipeline that involved ingesting, cleaning, processing, analyzing, preparing, and ultimately serving data to the lines of business. And this is where we are today with very hyper specialized roles around data engineering, data quality, data science. There's lots of batch of processing going on, and Spark has emerged to improve the complexity associated with MapReduce, and it definitely helped improve the situation. We're also seeing attempts to blend in real time stream processing with the emergence of tools like Kafka and others. But I'll argue that in a strange way, these innovations actually compound the problem. And I want to discuss that because what they do is they heighten the need for more specialization, more fragmentation, and more stovepipes within the data life cycle. Now, in reality, and it pains me to say this, it's the outcome of the big data movement, as we sit here in 2020, that we've created thousands of complicated science projects that have once again failed to live up to the promise of rapid cost-effective time to insights. So, what will the 2020s bring? What's the next silver bullet? You hear terms like the lakehouse, which Databricks is trying to popularize. And I'm going to talk today about data mesh. These are other efforts they look to modernize datalakes and sometimes merge the best of data warehouse and second-generation systems into a new paradigm, that might unify batch and stream frameworks. And this definitely addresses some of the gaps, but in our view, still suffers from some of the underlying problems of previous generation data architectures. In other words, if the next gen data architecture is incremental, centralized, rigid, and primarily focuses on making the technology to get data in and out of the pipeline work, we predict it's going to fail to live up to expectations again. Rather, what we're envisioning is an architecture based on the principles of distributed data, where domain knowledge is the primary target citizen, and data is not seen as a by-product, i.e, the exhaust of an operational system, but rather as a service that can be delivered in multiple forms and use cases across an ecosystem. This is why we often say the data is not the new oil. We don't like that phrase. A specific gallon of oil can either fuel my home or can lubricate my car engine, but it can't do both. Data does not follow the same laws of scarcity like natural resources. Again, what we're envisioning is a rethinking of the data pipeline and the associated cultures to put data needs of the domain owner at the core and provide automated, governed, and secure access to data as a service at scale. Now, how is this different? Let's take a look and unpack the data pipeline today and look deeper into the situation. You all know this picture that I'm showing. There's nothing really new here. The data comes from inside and outside the enterprise. It gets processed, cleanse or augmented so that it can be trusted and made useful. Nobody wants to use data that they can't trust. And then we can add machine intelligence and do more analysis, and finally deliver the data so that domain specific consumers can essentially build data products and services or reports and dashboards or content services, for instance, an insurance policy, a financial product, a loan, that these are packaged and made available for someone to make decisions on or to make a purchase. And all the metadata associated with this data is packaged along with the dataset. Now, we've broken down these steps into atomic components over time so we can optimize on each and make them as efficient as possible. And down below, you have these happy stick figures. Sometimes they're happy. But they're highly specialized individuals and they each do their job and they do it well to make sure that the data gets in, it gets processed and delivered in a timely manner. Now, while these individual pieces seemingly are autonomous and can be optimized and scaled, they're all encompassed within the centralized big data platform. And it's generally accepted that this platform is domain agnostic. Meaning the platform is the data owner, not the domain specific experts. Now there are a number of problems with this model. The first, while it's fine for organizations with smaller number of domains, organizations with a large number of data sources and complex domain structures, they struggle to create a common data parlance, for example, in a data culture. Another problem is that, as the number of data sources grows, organizing and harmonizing them in a centralized platform becomes increasingly difficult, because the context of the domain and the line of business gets lost. Moreover, as ecosystems grow and you add more data, the processes associated with the centralized platform tend to get further genericized. They again lose that domain specific context. Wait (chuckling), there are more problems. Now, while in theory organizations are optimizing on the piece parts of the pipeline, the reality is, as the domain requires a change, for example, a new data source or an ecosystem partnership requires a change in access or processes that can benefit a domain consumer, the reality is the change is subservient to the dependencies and the need to synchronize across these discrete parts of the pipeline or actually, orthogonal to each of those parts. In other words, in actuality, the monolithic data platform itself remains the most granular part of the system. Now, when I complain about this faulty structure, some folks tell me this problem has been solved. That there are services that allow new data sources to really easily be added. A good example of this is Databricks Ingest, which is, it's an auto loader. And what it does is it simplifies the ingestion into the company's Delta Lake offering. And rather than centralizing in a data warehouse, which struggles to efficiently allow things like Machine Learning frameworks to be incorporated, this feature allows you to put all the data into a centralized datalake. More so the argument goes, that the problem that I see with this, is while the approach does definitely minimizes the complexities of adding new data sources, it still relies on this linear end-to-end process that slows down the introduction of data sources from the domain consumer beside of the pipeline. In other words, the domain experts still has to elbow her way into the front of the line or the pipeline, in this case, to get stuff done. And finally, the way we are organizing teams is a point of contention, and I believe is going to continue to cause problems down the road. Specifically, we've again, we've optimized on technology expertise, where for example, data engineers, well, really good at what they do, they're often removed from the operations of the business. Essentially, we created more silos and organized around technical expertise versus domain knowledge. As an example, a data team has to work with data that is delivered with very little domain specificity, and serves a variety of highly specialized consumption use cases. All right. I want to step back for a minute and talk about some of the problems that people bring up with Snowflake and then I'll relate it back to the basic premise here. As I said earlier, we've been hammered by dozens and dozens of data points, opinions, criticisms of Snowflake. And I'll share a few here. But I'll post a deeper technical analysis from a software engineer that I found to be fairly balanced. There's five Snowflake criticisms that I'll highlight. And there are many more, but here are some that I want to call out. Price transparency. I've had more than a few customers telling me they chose an alternative database because of the unpredictable nature of Snowflake's pricing model. Snowflake, as you probably know, prices based on consumption, just like AWS and other cloud providers. So just like AWS, for example, the bill at the end of the month is sometimes unpredictable. Is this a problem? Yes. But like AWS, I would say, "Kill me with that problem." Look, if users are creating value by using Snowflake, then that's good for the business. But clearly this is a sore point for some users, especially for procurement and finance, which don't like unpredictability. And Snowflake needs to do a better job communicating and managing this issue with tooling that can predict and help better manage costs. Next, workload manage or lack thereof. Look, if you want to isolate higher performance workloads with Snowflake, you just spin up a separate virtual warehouse. It's kind of a brute force approach. It works generally, but it will add expense. I'm kind of reminded of Pure Storage and its approach to storage management. The engineers at Pure, they always design for simplicity, and this is the approach that Snowflake is taking. Usually, Pure and Snowflake, as I have discussed in a moment, is Pure's ascendancy was really based largely on stealing share from Legacy EMC systems. Snowflake, in my view, has a much, much larger incremental market opportunity. Next is caching architecture. You hear this a lot. At the end of the day, Snowflake is based on a caching architecture. And a caching architecture has to be working for some time to optimize performance. Caches work well when the size of the working set is small. Caches generally don't work well when the working set is very, very large. In general, transactional databases have pretty small datasets. And in general, analytics datasets are potentially much larger. Is it Snowflake in the analytics business? Yes. But the good thing that Snowflake has done is they've enabled data sharing, and it's caching architecture serves its customers well because it allows domain experts, you're going to hear this a lot from me today, to isolate and analyze problems or go after opportunities based on tactical needs. That said, very big queries across whole datasets or badly written queries that scan the entire database are not the sweet spot for Snowflake. Another good example would be if you're doing a large audit and you need to analyze a huge, huge dataset. Snowflake's probably not the best solution. Complex joins, you hear this a lot. The working set of complex joins, by definition, are larger. So, see my previous explanation. Read only. Snowflake is pretty much optimized for read only data. Maybe stateless data is a better way of thinking about this. Heavily right intensive workloads are not the wheelhouse of Snowflake. So where this is maybe an issue is real-time decision-making and AI influencing. A number of times, Snowflake, I've talked about this, they might be able to develop products or acquire technology to address this opportunity. Now, I want to explain. These issues would be problematic if Snowflake were just a data warehouse vendor. If that were the case, this company, in my opinion, would hit a wall just like the NPP vendors that proceeded them by building a better mouse trap for certain use cases hit a wall. Rather, my promise in this episode is that the future of data architectures will be really to move away from large centralized warehouses or datalake models to a highly distributed data sharing system that puts power in the hands of domain experts at the line of business. Snowflake is less computationally efficient and less optimized for classic data warehouse work. But it's designed to serve the domain user much more effectively in our view. We believe that Snowflake is optimizing for business effectiveness, essentially. And as I said before, the company can probably do a better job at keeping passionate end users from breaking the bank. But as long as these end users are making money for their companies, I don't think this is going to be a problem. Let's look at the attributes of what we're proposing around this new architecture. We believe we'll see the emergence of a total flip of the centralized and monolithic big data systems that we've known for decades. In this architecture, data is owned by domain-specific business leaders, not technologists. Today, it's not much different in most organizations than it was 20 years ago. If I want to create something of value that requires data, I need to cajole, beg or bribe the technology and the data team to accommodate. The data consumers are subservient to the data pipeline. Whereas in the future, we see the pipeline as a second class citizen, with a domain expert is elevated. In other words, getting the technology and the components of the pipeline to be more efficient is not the key outcome. Rather, the time it takes to envision, create, and monetize a data service is the primary measure. The data teams are cross-functional and live inside the domain versus today's structure where the data team is largely disconnected from the domain consumer. Data in this model, as I said, is not the exhaust coming out of an operational system or an external source that is treated as generic and stuffed into a big data platform. Rather, it's a key ingredient of a service that is domain-driven and monetizable. And the target system is not a warehouse or a lake. It's a collection of connected domain-specific datasets that live in a global mesh. What is a distributed global data mesh? A data mesh is a decentralized architecture that is domain aware. The datasets in the system are purposely designed to support a data service or data product, if you prefer. The ownership of the data resides with the domain experts because they have the most detailed knowledge of the data requirement and its end use. Data in this global mesh is governed and secured, and every user in the mesh can have access to any dataset as long as it's governed according to the edicts of the organization. Now, in this model, the domain expert has access to a self-service and obstructed infrastructure layer that is supported by a cross-functional technology team. Again, the primary measure of success is the time it takes to conceive and deliver a data service that could be monetized. Now, by monetize, we mean a data product or data service that it either cuts cost, it drives revenue, it saves lives, whatever the mission is of the organization. The power of this model is it accelerates the creation of value by putting authority in the hands of those individuals who are closest to the customer and have the most intimate knowledge of how to monetize data. It reduces the diseconomies at scale of having a centralized or a monolithic data architecture. And it scales much better than legacy approaches because the atomic unit is a data domain, not a monolithic warehouse or a lake. Zhamak Dehghani is a software engineer who is attempting to popularize the concept of a global mesh. Her work is outstanding, and it's strengthened our belief that practitioners see this the same way that we do. And to paraphrase her view, "A domain centric system must be secure and governed with standard policies across domains." It has to be trusted. As I said, nobody's going to use data they don't trust. It's got to be discoverable via a data catalog with rich metadata. The data sets have to be self-describing and designed for self-service. Accessibility for all users is crucial as is interoperability, without which distributed systems, as we know, fail. So what does this all have to do with Snowflake? As I said, Snowflake is not just a data warehouse. In our view, it's always had the potential to be more. Our assessment is that attacking the data warehouse use cases, it gave Snowflake a straightforward easy-to-understand narrative that allowed it to get a foothold in the market. Data warehouses are notoriously expensive, cumbersome, and resource intensive, but they're a critical aspect to reporting and analytics. So it was logical for Snowflake to target on-premise legacy data warehouses and their smaller cousins, the datalakes, as early use cases. By putting forth and demonstrating a simple data warehouse alternative that can be spun up quickly, Snowflake was able to gain traction, demonstrate repeatability, and attract the capital necessary to scale to its vision. This chart shows the three layers of Snowflake's architecture that have been well-documented. The separation of compute and storage, and the outer layer of cloud services. But I want to call your attention to the bottom part of the chart, the so-called Cloud Agnostic Layer that Snowflake introduced in 2018. This layer is somewhat misunderstood. Not only did Snowflake make its Cloud-native database compatible to run on AWS than Azure in the 2020 GCP, what Snowflake has done is to obstruct cloud infrastructure complexity and create what it calls the data cloud. What's the data cloud? We don't believe the data cloud is just a marketing term that doesn't have any substance. Just as SAS is Simplified Application Software and iOS made it possible to eliminate the value drain associated with provisioning infrastructure, a data cloud, in concept, can simplify data access, and break down fragmentation and enable shared data across the globe. Snowflake, they have a first mover advantage in this space, and we see a number of fundamental aspects that comprise a data cloud. First, massive scale with virtually unlimited compute and storage resource that are enabled by the public cloud. We talk about this a lot. Second is a data or database architecture that's built to take advantage of native public cloud services. This is why Frank Slootman says, "We've burned the boats. We're not ever doing on-prem. We're all in on cloud and cloud native." Third is an obstruction layer that hides the complexity of infrastructure. and fourth is a governed and secured shared access system where any user in the system, if allowed, can get access to any data in the cloud. So a key enabler of the data cloud is this thing called the global data mesh. Now, earlier this year, Snowflake introduced its global data mesh. Over the course of its recent history, Snowflake has been building out its data cloud by creating data regions, strategically tapping key locations of AWS regions and then adding Azure and GCP. The complexity of the underlying cloud infrastructure has been stripped away to enable self-service, and any Snowflake user becomes part of this global mesh, independent of the cloud that they're on. Okay. So now, let's go back to what we were talking about earlier. Users in this mesh will be our domain owners. They're building monetizable services and products around data. They're most likely dealing with relatively small read only datasets. They can adjust data from any source very easily and quickly set up security and governance to enable data sharing across different parts of an organization, or, very importantly, an ecosystem. Access control and governance is automated. The data sets are addressable. The data owners have clearly defined missions and they own the data through the life cycle. Data that is specific and purposely shaped for their missions. Now, you're probably asking, "What happens to the technical team and the underlying infrastructure and the cluster it's in? How do I get the compute close to the data? And what about data sovereignty and the physical storage later, and the costs?" All these are good questions, and I'm not saying these are trivial. But the answer is these are implementation details that are pushed to a self-service layer managed by a group of engineers that serves the data owners. And as long as the domain expert/data owner is driving monetization, this piece of the puzzle becomes self-funding. As I said before, Snowflake has to help these users to optimize their spend with predictive tooling that aligns spend with value and shows ROI. While there may not be a strong motivation for Snowflake to do this, my belief is that they'd better get good at it or someone else will do it for them and steal their ideas. All right. Let me end with some ETR data to show you just how Snowflake is getting a foothold on the market. Followers of this program know that ETR uses a consistent methodology to go to its practitioner base, its buyer base each quarter and ask them a series of questions. They focus on the areas that the technology buyer is most familiar with, and they ask a series of questions to determine the spending momentum around a company within a specific domain. This chart shows one of my favorite examples. It shows data from the October ETR survey of 1,438 respondents. And it isolates on the data warehouse and database sector. I know I just got through telling you that the world is going to change and Snowflake's not a data warehouse vendor, but there's no construct today in the ETR dataset to cut a data cloud or globally distributed data mesh. So you're going to have to deal with this. What this chart shows is net score in the y-axis. That's a measure of spending velocity, and it's calculated by asking customers, "Are you spending more or less on a particular platform?" And then subtracting the lesses from the mores. It's more granular than that, but that's the basic concept. Now, on the x-axis is market share, which is ETR's measure of pervasiveness in the survey. You can see superimposed in the upper right-hand corner, a table that shows the net score and the shared N for each company. Now, shared N is the number of mentions in the dataset within, in this case, the data warehousing sector. Snowflake, once again, leads all players with a 75% net score. This is a very elevated number and is higher than that of all other players, including the big cloud companies. Now, we've been tracking this for a while, and Snowflake is holding firm on both dimensions. When Snowflake first hit the dataset, it was in the single digits along the horizontal axis and continues to creep to the right as it adds more customers. Now, here's another chart. I call it the wheel chart that breaks down the components of Snowflake's net score or spending momentum. The lime green is new adoption, the forest green is customers spending more than 5%, the gray is flat spend, the pink is declining by more than 5%, and the bright red is retiring the platform. So you can see the trend. It's all momentum for this company. Now, what Snowflake has done is they grabbed a hold of the market by simplifying data warehouse. But the strategic aspect of that is that it enables the data cloud leveraging the global mesh concept. And the company has introduced a data marketplace to facilitate data sharing across ecosystems. This is all about network effects. In the mid to late 1990s, as the internet was being built out, I worked at IDG with Bob Metcalfe, who was the publisher of InfoWorld. During that time, we'd go on speaking tours all over the world, and I would listen very carefully as he applied Metcalfe's law to the internet. Metcalfe's law states that the value of the network is proportional to the square of the number of connected nodes or users on that system. Said another way, while the cost of adding new nodes to a network scales linearly, the consequent value scores scales exponentially. Now, apply that to the data cloud. The marginal cost of adding a user is negligible, practically zero, but the value of being able to access any dataset in the cloud... Well, let me just say this. There's no limitation to the magnitude of the market. My prediction is that this idea of a global mesh will completely change the way leading companies structure their businesses and, particularly, their data architectures. It will be the technologists that serve domain specialists as it should be. Okay. Well, what do you think? DM me @dvellante or email me at david.vellante@siliconangle.com or comment on my LinkedIn? Remember, these episodes are all available as podcasts, so please subscribe wherever you listen. I publish weekly on wikibon.com and siliconangle.com, and don't forget to check out etr.plus for all the survey analysis. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching. Be well, and we'll see you next time. (upbeat music)

>> Narrator: Live from San Diego, California, it's theCube, covering Cisco Live US 2019, brought to you by Cisco and its ecosystem partners. >> Welcome back to theCube, Lisa Martin with Dave Vellante, day three of our coverage of Cisco Live. We're in the DevNet Zone, we've been here all week. Dave, this DevNet Zone is the place to be at Cisco Live. >> Well, first of all, it's so packed downstairs, not that it's not packed here, but there's a little space you can walk around in, number one, and number two, it's where all the action is from the learning standpoint and education. People are just eating it up, they're like sponges. >> They are eating it up. Speaking of learning, we are pleased to welcome Mike Adams, the VP and GM of Learning at Cisco. Mike, welcome to theCube. >> Thank you, it's my pleasure to be here. >> We talked to Susie a number of times, she's actually coming on to guest host with me in an hour or so, and looking at the DevNet evolution in the last five years, 600,000 members in this community, which is mind-boggling how this is, I teased that it was like a field of dreams. >> (chuckles) >> Dave: Which also was 30 years ago. >> It is, yes. That's kind of scary isn't it? But also so is Bill and Ted's Excellent Adventure, I think those are two really good ways of looking at DevNet. If we look at some of the things that you guys have announced with respect to bringing software skills and software practices to network engineers, it's a big signal in Cisco's evolution. Talk to us about some of the things you guys have announced from the certification perspective and why that's a signal of changing winds. >> Yeah, absolutely. It's been exciting. Susie and I have been working together very closely for the last year in preparation for this. I'm not sure if I'm Bill or Ted in the combo. >> Lisa: Either one's pretty good. >> You're the one who started the excellent adventure. >> That's right. There's some really fundamental significant changes to the program. The most exciting, of course, is the launch of our DevNet branded software certification. It's one of a kind in the industry. There is not other company that has the mix of network engineering certifications and software certifications like Cisco does, certainly not at the scale that we do. We've certified over 1.7 million people since the program has launched over 25 years ago. You imagine the power of bringing together the community of developers with this community of network engineers that we've created. The sky's the limit. It's going to be amazing. That's the biggest announcement is the launch of the software certification, DevNet certification. We've made some other pretty important changes too, and all of these were based on the feedback that we got from customers and partners. One is you can now use continuing education credits to maintain your certification at any level. Rather than having to go back and retake the test every three years, now you can branch out and learn new things, like software as a continuing education credit to maintain that certification you have. We've also added flexibility into the program. In the past, you had to start at associate level and then go to professional and then go to expert. Today, if you feel like you're ready for professional, we invite you to start right there. If you feel like you're ready for that very rigorous CCIE Lab Exam, bring it on, we'll welcome you into it. We feel like that's going to give learners more of a choice in terms of how they process their learning and training and which certifications they want to pursue. Go on, I could go on. >> Let's keep goin'. You could essentially cut the line if you've had some field experience, and/or you just naturally have an affinity towards this. >> That's right. If you have developed depth of expertise and skill and experience, but you haven't started the certification program, why would I make you go back and take an entry level engineer exam just to work your way into the direction you wanted to go, rather we welcome you to come in and start working where you feel like you're ready. >> Can you explain more about the continuous certification, because if I infer correctly, it used to be every three years you got to re-up, kind of like an EMT has to get re-certified. That's not required anymore? You can traverse across the portfolio? >> I'll answer it very specifically. In today's program, the highest level, the CCIE, the expert level, that level can use continuing education credits to re-certify, to maintain their certification. We've extended that same principle to all the others, so today, if you had a CCNA, and you wanted to maintain that CCNA, you would have to go take that exam again. We think it's a lot more valuable, and it's interesting you would mention EMTs, there are lots of other verticals and professions, there's a lot of data and science behind this, that will say that there's more value in terms of extending and maintaining your skills by doing continuing education rather than studying for a test. >> Absolutely. Couldn't agree more. You're allowing the folks to have more control over their education. >> Mike: Exactly. >> Choose your own adventure kind of thing. >> Mike: That's right. >> Also, one of the things that sort of strikes me about what Cisco has done in this big pivot, software's becoming developer friendly, which for a large organization with a history and the girth that Cisco has is not easy to do. From a competitive advantage perspective, what are you hearing from customers, in terms of, are you seeing this as a dial-up on Cisco's competitive edge? >> Yes, absolutely. We took counsel from Gerri, our Head of Sales, she believes very strongly that the DevNet certification, in combination with our network certification program, gives us a real selling edge because it demonstrates the commitment we have to solving real world problems for our customers. We know our customers are anxious to take advantage of what software on top of the network creates for them. To take advantage of those APIs, to build applications and programs that let them maximize the use of their technology as they compete in their own marketplaces. We're absolutely hearing very positive things about how this differentiates Cisco. I'll just add one more point. Even though it looks like there's two tracks, there's a network engineering track and a software track, that's really not the case. It's one certification program. As an example, at the professional level, to earn that CCNP, you have to take a CORE exam, and then you take a concentration exam in the same technology vertical. Data Center, Enterprise, Collaboration, Security Service Bribe, or DevNet. Interestingly, in each of the first five that I mentioned, you'll take the CORE exam and then the concentration can be a DevNet concentration. So we're inviting people to begin to add that software skills into the traditional network certification track that they've had. >> I wonder if you could help us understand the philosophy of the programs. I've seen some education programs, it's like a Chinese menu. It's deep and wide. My sense is that a lot of companies, some companies, not a lot, have said, "Okay, we're really not relevant to the Cloud market, "Let's do some Cloud certifications," stamping it premature there. It seems like Cisco's strategy is to be very focused. Is that fair? Maybe you could add some comments to that. >> It's absolutely fair. We've been very thoughtful about how we have structured the program and what content we have put into it. We've been very mindful to focus on need-to-know information in the CORE exams, and then allowing the learner to choose concentrations for the nice-to-know, the things they want to round themselves out with. Around relevancy, we built the program with job-role specific skills in mind. As an example we've been talking about it this week. Dev Sec-Ops Engineer is an example. It would maybe get their CCNP in Enterprise, route switch, and then they could add on to that various DevNet concentration exams to earn them specialists that would mix that, whether it be WebEx or IOT, and then those combination of skills speak to a very specific job role, this Dev Sec-Ops Engineer, as an example. There are other ways you can mix and match the components to create the capability around skills for a job. >> I imagine as time goes on with these new certifications that you guys are going to be analyzing the different pathways that each person is taking to understand, maybe looking at some consistencies and maybe even offering some recommendation, recommended pathways. >> That's exactly right, because as those job roles evolve in the industry, we're constantly evaluating what skills are needed for those, making sure that we're bringing those to the market. I just can't say enough how important it is to DevNet certification is. Being able to have developers demonstrate their capabilities and skills through a certification is really powerful. >> What's the strategy with regard to partnering with universities, are you doing things along those line? >> I'm so glad you brought that up. There's another leader that Susie and I have been working with, Laura Quintana, she's runs Networking Academy. Networking Academy reaches out to higher education, and also to high schools, they also create networking academies in underserved areas around the globe. Laura and her team have been at this for a while. They have trained over 9.2 million people and have a goal to graduate another two million within the next year. The reason I mention that is that's the arm of Cisco that reaches into higher education and invites people in underserved areas into our industry by giving them those fundamentals. The primary certification that they graduate with is the CCNA, is that entry-level engineer, and now entry level software DevNet associate, those are the graduation that they'll focus on out of Networking Academy. We do a lot of that. >> How about the technology of learning. When you started this almost three decades ago, this is a massive scale of learning. How has the technology of learning evolved? >> Massively. Think about how you like to learn new things. Much of it is going to the web, or finding some digital format, and then doing it at your own pace. That's the other important thing here as well. We are massively transforming the way we are meeting our customers through digitized products. It's very important. Another one of the other big announcements this week was the move from Cisco's services to customer experience, you may have heard Maria Martinez on stage, day two. If you noticed there were four main pillars to the CX Strategy, one of them was learning, active learning. We know that by embedding learning and education into the digital products that we have and getting it to our customers just in time, and ideally by looking at telemetry coming back from how they're using our products, maybe I can predict what training you need before you know you even need it. That's where we're going. >> Very awesome. Last question for you, Mike. Cisco's a massive part of our Ecosystem, we've been talking with a lot of them this week, and at many events, what's to them, to your partners, what does the certification and this massive change signal to them in terms of Cisco's evolution? >> It absolutely signals where the company is going, our commitment to software, our commitment to continue to evolve and stay on the forefront of technology, giving them what they need to go serve their customers and make money in the meantime. Our partner ecosystem is so critical to this company. The software certification, as an example, is going to allow them to demonstrate to their customers, in a very quantifiable way, how many DevNet certified engineers they have. Some of these partners have over a thousand DevNet members already, but wouldn't it be great via certifications? It's a real differentiator for them. I'll mention one other thing. We have a group of very strong learning partners that we work with that extend our capability globally, that are able to take the content that we create and then form that to meet the needs of very specific customers. There's another aspect of partners that are critical to this transformation. >> So you talk about partners to your customers, to the engineers, when I was at IDG one of the most frequently read articles was the Annual Computer World Salary. >> Mike: (laughs) >> You know what, if everyone's going to publish salaries, I'm going to look and see where do I stand. That's part of it, getting more certifications, you're going to be worth more in the market. >> It is. We've got some really good data that says what an investment in professional or expert level certification should do for your W-2 at the end of the year, and we're very mindful of that. >> DevNet bringing the street-cred. Mike, it was great to have you in the program. I can only imagine how dynamic you and Susie are together. >> We have a lot of fun. >> I got to see that next time. Congrats on all the success. It's palpable. >> Thanks. >> Cool stuff. For Dave Velannte, I'm Lisa Martin, you're watching theCube Live from Cisco Live San Diego. Thanks for watching. (upbeat music)

>> From the SiliconANGLE Media office in Boston, Massachusetts, it's theCube! (funky electronic music) Now, here's your host, Dave Vellante! >> Welcome, everybody, to this Cube conversation here in our Marlborough offices. I am very excited today, I spent a number of years at IDC, which, of course, is owned by IDG. And there's a new book out, relatively new, called Future Forward: Leadership Lessons from Patrick McGovern, the Visionary Who Circled the Globe and Built a Technology Media Empire. And it's a great book, lotta stories that I didn't know, many that I did know, and the author of that book, Glenn Rifkin, is here to talk about not only Pat McGovern but also some of the lessons that he put forth to help us as entrepreneurs and leaders apply to create better businesses and change the world. Glenn, thanks so much for comin' on theCube. >> Thank you, Dave, great to see ya. >> So let me start with, why did you write this book? >> Well, a couple reasons. The main reason was Patrick McGovern III, Pat's son, came to me at the end of 2016 and said, "My father had died in 2014 and I feel like his legacy deserves a book, and many people told me you were the guy to do it." So the background on that I, myself, worked at IDG back in the 1980s, I was an editor at Computerworld, got to know Pat during that time, did some work for him after I left Computerworld, on a one-on-one basis. Then I would see him over the years, interview him for the New York Times or other magazines, and every time I'd see Pat, I'd end our conversation by saying, "Pat, when are we gonna do your book?" And he would laugh, and he would say, "I'm not ready to do that yet, there's just still too much to do." And so it became sort of an inside joke for us, but I always really did wanna write this book about him because I felt he deserved a book. He was just one of these game-changing pioneers in the tech industry. >> He really was, of course, the book was even more meaningful for me, we, you and I started right in the same time, 1983-- >> Yeah. >> And by that time, IDG was almost 20 years old and it was quite a powerhouse then, but boy, we saw, really the ascendancy of IDG as a brand and, you know, the book reviews on, you know, the back covers are tech elite: Benioff wrote the forward, Mark Benioff, you had Bill Gates in there, Walter Isaacson was in there, Guy Kawasaki, Bob Metcalfe, George Colony-- >> Right. >> Who actually worked for a little stint at IDC for a while. John Markoff of The New York Times, so, you know, the elite of tech really sort of blessed this book and it was really a lot to do with Pat McGovern, right? >> Oh, absolutely, I think that the people on the inside understood how important he was to the history of the tech industry. He was not, you know, a household name, first of all, you didn't think of Steve Jobs, Bill Gates, and then Pat McGovern, however, those who are in the know realize that he was as important in his own way as they were. Because somebody had to chronicle this story, somebody had to share the story of the evolution of this amazing information technology and how it changed the world. And Pat was never a front-of-the-TV-camera guy-- >> Right. >> He was a guy who put his people forward, he put his products forward, for sure, which is why IDG, as a corporate name, you know, most people don't know what that means, but people did know Macworld, people did know PCWorld, they knew IDC, they knew Computerworld for sure. So that was Pat's view of the world, he didn't care whether he had the spotlight on him or not. >> When you listen to leaders like Reed Hoffman or Eric Schmidt talk about, you know, great companies and how to build great companies, they always come back to culture. >> Yup. >> The book opens with a scene of, and we all, that I usually remember this, well, we're just hangin' around, waitin' for Pat to come in and hand out what was then called the Christmas bonus-- >> Right. >> Back when that wasn't politically incorrect to say. Now, of course, it's the holiday bonus. But it was, it was the Christmas bonus time and Pat was coming around and he was gonna personally hand a bonus, which was a substantial bonus, to every single employee at the company. I mean, and he did that, really, literally, forever. >> Forever, yeah. >> Throughout his career. >> Yeah, it was unheard of, CEOs just didn't do that and still don't do that, you were lucky, you got a message on the, you know, in the lunchroom from the CEO, "Good work, troops! Keep up the good work!" Pat just had a really different view of the culture of this company, as you know from having been there, and I know. It was very familial, there was a sense that we were all in this together, and it really was important for him to let every employee know that. The idea that he went to every desk in every office for IDG around the United States, when we were there in the '80s there were probably 5,000 employees in the US, he had to devote substantial amount-- >> Weeks and weeks! >> Weeks at a time to come to every building and do this, but year after year he insisted on doing it, his assistant at the time, Mary Dolaher told me she wanted to sign the cards, the Christmas cards, and he insisted that he ensign every one of them personally. This was the kind of view he had of how you keep employees happy, if your employees are happy, the customers are gonna be happy, and you're gonna make a lot of money. And that's what he did. >> And it wasn't just that. He had this awesome holiday party that you described, which was epic, and during the party, they would actually take pictures of every single person at the party and then they would load the carousel, you remember the 35-mm. carousel, and then, you know, toward the end of the evening, they would play that and everybody was transfixed 'cause they wanted to see their, the picture of themselves! >> Yeah, yeah. (laughs) >> I mean, it was ge-- and to actually pull that off in the 1980s was not trivial! Today, it would be a piece of cake. And then there was the IDG update, you know, the Good News memos, there was the 10-year lunch, the 20-year trips around the world, there were a lot of really rich benefits that, you know, in and of themselves maybe not a huge deal, but that was the culture that he set. >> Yeah, there was no question that if you talked to anybody who worked in this company over, say, the last 50 years, you were gonna get the same kind of stories. I've been kind of amazed, I'm going around, you know, marketing the book, talking about the book at various events, and the deep affection for this guy that still holds five years after he died, it's just remarkable. You don't really see that with the CEO class, there's a couple, you know, Steve Jobs left a great legacy of creativity, he was not a wonderful guy to his employees, but Pat McGovern, people loved this guy, and they st-- I would be signing books and somebody'd say, "Oh, I've been at IDG for 27 years and I remember all of this," and "I've been there 33 years," and there's a real longevity to this impact that he had on people. >> Now, the book was just, it was not just sort of a biography on McGovern, it was really about lessons from a leader and an entrepreneur and a media mogul who grew this great company in this culture that we can apply, you know, as business people and business leaders. Just to give you a sense of what Pat McGovern did, he really didn't take any outside capital, he did a little bit of, you know, public offering with IDG Books, but, really, you know, no outside capital, it was completely self-funded. He built a $3.8 billion empire, 300 publications, 280 million readers, and I think it was almost 100 or maybe even more, 100 countries. And so, that's an-- like you were, used the word remarkable, that is a remarkable achievement for a self-funded company. >> Yeah, Pat had a very clear vision of how, first of all, Pat had a photographic memory and if you were a manager in the company, you got a chance to sit in meetings with Pat and if you didn't know the numbers better than he did, which was a tough challenge, you were in trouble! 'Cause he knew everything, and so, he was really a numbers-focused guy and he understood that, you know, his best way to make profit was to not be looking for outside funding, not to have to share the wealth with investors, that you could do this yourself if you ran it tightly, you know, I called it in the book a 'loose-tight organization,' loose meaning he was a deep believer in decentralization, that every market needed its own leadership because they knew the market, you know, in Austria or in Russia or wherever, better than you would know it from a headquarters in Boston, but you also needed that tightness, a firm grip on the finances, you needed to know what was going on with each of the budgets or you were gonna end up in big trouble, which a lot of companies find themselves in. >> Well, and, you know, having worked there, I mean, essentially, if you made your numbers and did so ethically, and if you just kind of followed some of the corporate rules, which we'll talk about, he kind of left you alone. You know, you could, you could pretty much do whatever you wanted, you could stay in any hotel, you really couldn't fly first class, and we'll maybe talk about that-- >> Right. >> But he was a complex man, I mean, he was obviously wealthy, he was a billionaire, he was very generous, but at the same time he was frugal, you know, he drove, you know, a little, a car that was, you know, unremarkable, and we had buy him a car. He flew coach, and I remember one time, I was at a United flight, and I was, I had upgraded, you know, using my miles, and I sat down and right there was Lore McGovern, and we both looked at each other and said right at the same time, "I upgraded!" (laughs) Because Pat never flew up front, but he would always fly with a stack of newspapers in the seat next to him. >> Yeah, well, woe to, you were lucky he wasn't on the plane and spotted you as he was walking past you into coach, because he was not real forgiving when he saw people, people would hide and, you know, try to avoid him at all cost. And, I mean, he was a big man, Pat was 6'3", you know, 250 lbs. at least, built like a linebacker, so he didn't fit into coach that well, and he wasn't flying, you know, the shuttle to New York, he was flyin' to Beijing, he was flyin' to Moscow, he was going all over the world, squeezing himself into these seats. Now, you know, full disclosure, as he got older and had, like, probably 10 million air miles at his disposal, he would upgrade too, occasionally, for those long-haul flights, just 'cause he wanted to be fresh when he would get off the plane. But, yeah, these are legends about Pat that his frugality was just pure legend in the company, he owned this, you know, several versions of that dark blue suit, and that's what you would see him in. He would never deviate from that. And, but, he had his patterns, but he understood the impact those patterns had on his employees and on his customers. >> I wanna get into some of the lessons, because, really, this is what the book is all about, the heart of it. And you mentioned, you know, one, and we're gonna tell from others, but you really gotta stay close to the customer, that was one of the 10 corporate values, and you remember, he used to go to the meetings and he'd sometimes randomly ask people to recite, "What's number eight?" (laughs) And you'd be like, oh, you'd have your cheat sheet there. And so, so, just to give you a sense, this man was an entrepreneur, he started the company in 1964 with a database that he kind of pre-sold, he was kind of the sell, design, build type of mentality, he would pre-sold this thing, and then he started Computerworld in 1967, so it was really only a few years after he launched the company that he started the Computerworld, and other than Data Nation, there was nothing there, huge pent-up demand for that type of publication, and he caught lightning in a bottle, and that's really how he funded, you know, the growth. >> Yeah, oh, no question. Computerworld became, you know, the bible of the industry, it became a cash cow for IDG, you know, but at the time, it's so easy to look in hindsight and say, oh, well, obviously. But when Pat was doing this, one little-known fact is he was an editor at a publication called Computers and Automation that was based in Newton, Massachusetts and he kept that job even after he started IDC, which was the original company in 1964. It was gonna be a research company, and it was doing great, he was seeing the build-up, but it wasn't 'til '67 when he started Computerworld, that he said, "Okay, now this is gonna be a full-time gig for me," and he left the other publication for good. But, you know, he was sorta hedging his bets there for a little while. >> And that's where he really gained respect for what we'll call the 'Chinese Wallet,' the, you know, editorial versus advertising. We're gonna talk about that some more. So I mentioned, 1967, Computerworld. So he launched in 1964, by 1971, he was goin' to Japan, we're gonna talk about the China Stories as well, so, he named the company International Data Corp, where he was at a little spot in Newton, Mass.-- >> Right, right. >> So, he had a vision. You said in your book, you mention, how did this gentleman get it so right for so long? And that really leads to some of the leadership lessons, and one of them in the book was, sort of, have a mission, have a vision, and really, Pat was always talking about information, about information technology, in fact, when Wine for Dummies came out, it kind of created a little friction, that was really off the center. >> Or Wine for Dummies, or Sex for Dummies! >> Yeah, Sex for Dummies, boy, yeah! >> With, that's right, Ruth Westheimer-- >> Dr. Ruth Westheimer. >> But generally speaking, Glenn, he was on that mark, he really didn't deviate from that vision. >> Yeah, no, it was very crucial to the development of the company that he got people to, you know, buy into that mission, because the mission was everything. And he understood, you know, he had the numbers, but he also saw what was happening out there, from the 1960s, when IBM mainframes filled a room, and, you know, only the high priests of data centers could touch them. He had a vision for, you know, what was coming next and he started to understand that there would be many facets to this information about information technology, it wasn't gonna be boring, if anything, it was gonna be the story of our age and he was gonna stick to it and sell it. >> And, you know, timing is everything, but so is, you know, Pat was a workaholic and had an amazing mind, but one of the things I learned from the book, and you said this, Pat Kenealy mentioned it, all American industrial and social revolutions have had a media company linked to them, Crane and automobiles, Penton and energy, McGraw-Hill and aerospace, Annenberg, of course, and TV, and in technology, it was IDG. >> Yeah, he, like I said earlier, he really was a key figure in the development of this industry and it was, you know, one of the key things about that, a lot publications that came and went made the mistake of being platform or, you know, vertical market specific. And if that market changed, and it was inevitably gonna change in high tech, you were done. He never, you know, he never married himself to some specific technology cycle. His idea was the audience was not gonna change, the audience was gonna have to roll with this, so, the company, IDG, would produce publications that got that, you know, Computerworld was actually a little bit late to the PC game, but eventually got into it and we tracked the different cycles, you know, things in tech move in sine waves, they come and go. And Pat never was, you know, flustered by that, he could handle any kind of changes from the mainframes down to the smartphone when it came. And so, that kind of flexibility, and ability to adjust to markets, really was unprecedented in that particular part of the market. >> One of the other lessons in the book, I call it 'nation-building,' and Pat shared with you that, look, that you shared, actually, with your readers, if you wanna do it right, you've gotta be on the ground, you've gotta be there. And the China story is one that I didn't know about how Pat kind of talked his way into China, tell us, give us a little summary of that story. >> Sure, I love that story because it's so Pat. It was 1978, Pat was in Tokyo on a business trip, one of his many business trips, and he was gonna be flying to Moscow for a trade show. And he got a flight that was gonna make a stopover in Beijing, which in those days was called Peking, and was not open to Americans. There were no US and China diplomatic relations then. But Pat had it in mind that he was going to get off that plane in Beijing and see what he could see. So that meant that he had to leave the flight when it landed in Beijing and talk his way through the customs as they were in China at the time with folks in the, wherever, the Quonset hut that served for the airport, speaking no English, and him speaking no Chinese, he somehow convinced these folks to give him a day pass, 'cause he kept saying to them, "I'm only in transit, it's okay!" (laughs) Like, he wasn't coming, you know, to spy on them on them or anything. So here's this massive American businessman in his dark suit, and he somehow gets into downtown Beijing, which at the time was mostly bicycles, very few cars, there were camels walking down the street, they'd come with traders from Mongolia. The people were still wearing the drab outfits from the Mao era, and Pat just spent the whole day wandering around the city, just soaking it in. He was that kind of a world traveler. He loved different cultures, mostly eastern cultures, and he would pop his head into bookstores. And what he saw were people just clamoring to get their hands on anything, a newspaper, a magazine, and it just, it didn't take long for the light bulb to go on and said, this is a market we need to play in. >> He was fascinated with China, I, you know, as an employee and a business P&L manager, I never understood it, I said, you know, the per capita spending on IT in China was like a dollar, you know? >> Right. >> And I remember my lunch with him, my 10-year lunch, he said, "Yeah, but, you know, there's gonna be a huge opportunity there, and yeah, I don't know how we're gonna get the money out, maybe we'll buy a bunch of tea and ship it over, but I'm not worried about that." And, of course, he meets Hugo Shong, which is a huge player in the book, and the home run out of China was, of course, the venture capital, which he started before there was even a stock market, really, to exit in China. >> Right, yeah. No, he was really a visionary, I mean, that word gets tossed around maybe more than it should, but Pat was a bonafide visionary and he saw things in China that were developing that others didn't see, including, for example, his own board, who told him he was crazy because in 1980, he went back to China without telling them and within days he had a meeting with the ministry of technology and set up a joint venture, cost IDG $250,000, and six months later, the first issue of China Computerworld was being published and within a couple of years it was the biggest publication in China. He said, told me at some point that $250,0000 investment turned into $85 million and when he got home, that first trip, the board was furious, they said, "How can you do business with the commies? You're gonna ruin our brand!" And Pat said, "Just, you know, stick with me on this one, you're gonna see." And the venture capital story was just an offshoot, he saw the opportunity in the early '90s, that venture in China could in fact be a huge market, why not help build it? And that's what he did. >> What's your take on, so, IDG sold to, basically, Chinese investors. >> Yeah. >> It's kind of bittersweet, but in the same time, it's symbolic given Pat's love for China and the Chinese people. There's been a little bit of criticism about that, I know that the US government required IDC to spin out its supercomputer division because of concerns there. I'm always teasing Michael Dow that at the next IDG board meeting, those Lenovo numbers, they're gonna look kinda law. (laughs) But what are your, what's your, what are your thoughts on that, in terms of, you know, people criticize China in terms of IP protections, etc. What would Pat have said to that, do you think? >> You know, Pat made 130 trips to China in his life, that's, we calculated at some point that just the air time in planes would have been something like three and a half to four years of his life on planes going to China and back. I think Pat would, today, acknowledge, as he did then, that China has issues, there's not, you can't be that naive. He got that. But he also understood that these were people, at the end of the day, who were thirsty and hungry for information and that they were gonna be a player in the world economy at some point, and that it was crucial for IDG to be at the forefront of that, not just play later, but let's get in early, let's lead the parade. And I think that, you know, some part of him would have been okay with the sale of the company to this conglomerate there, called China Oceanwide. Clearly controversial, I mean, but once Pat died, everyone knew that the company was never gonna be the same with the leader who had been at the helm for 50 years, it was gonna be a tough transition for whoever took over. And I think, you know, it's hard to say, certainly there's criticism of things going on with China. China's gonna be the hot topic page one of the New York Times almost every single day for a long time to come. I think Pat would have said, this was appropriate given my love of China, the kind of return on investment he got from China, I think he would have been okay with it. >> Yeah, and to invoke the Ben Franklin maxim, "Trading partners seldom wage war," and so, you know, I think Pat would have probably looked at it that way, but, huge home run, I mean, I think he was early on into Baidu and Alibaba and Tencent and amazing story. I wanna talk about decentralization because that was always something that was just on our minds as employees of IDG, it was keep the corporate staff lean, have a flat organization, if you had eight, 10, 12 direct reports, that was okay, Pat really meant it when he said, "You're the CEO of your own business!" Whether that business was, you know, IDC, big company, or a manager at IDC, where you might have, you know, done tens of millions of dollars, but you felt like a CEO, you were encouraged to try new things, you were encouraged to fail, and fail fast. Their arch nemesis of IDG was Ziff Davis, they were a command and control, sort of Bill Ziff, CMP to a certain extent was kind of the same way out of Manhasset, totally different philosophies and I think Pat never, ever even came close to wavering from that decentralization philosophy, did he? >> No, no, I mean, I think that the story that he told me that I found fascinating was, he didn't have an epiphany that decentralization would be the mechanism for success, it was more that he had started traveling, and when he'd come back to his office, the memos and requests and papers to sign were stacked up two feet high. And he realized that he was holding up the company because he wasn't there to do this and that at some point, he couldn't do it all, it was gonna be too big for that, and that's when the light came on and said this decentralization concept really makes sense for us, if we're gonna be an international company, which clearly was his mission from the beginning, we have to say the people on the ground in those markets are the people who are gonna make the decisions because we can't make 'em from Boston. And I talked to many people who, were, you know, did a trip to Europe, met the folks in London, met the folks in Munich, and they said to a person, you know, it was so ahead of its time, today it just seems obvious, but in the 1960s, early '70s, it was really not a, you know, a regular leadership tenet in most companies. The command and control that you talked about was the way that you did business. >> And, you know, they both worked, but, you know, from a cultural standpoint, clearly IDG and IDC have had staying power, and he had the three-quarter rule, you talked about it in your book, if you missed your numbers three quarters in a row, you were in trouble. >> Right. >> You know, one quarter, hey, let's talk, two quarters, we maybe make some changes, three quarters, you're gone. >> Right. >> And so, as I said, if you were makin' your numbers, you had wide latitude. One of the things you didn't have latitude on was I'll call it 'pay to play,' you know, crossing that line between editorial and advertising. And Pat would, I remember I was at a meeting one time, I'm sorry to tell these stories, but-- >> That's okay. (laughs) >> But we were at an offsite meeting at a woods meeting and, you know, they give you a exercise, go off and tell us what the customer wants. Bill Laberis, who's the editor-in-chief at Computerworld at the time, said, "Who's the customer?" And Pat said, "That's a great question! To the publisher, it's the advertiser. To you, Bill, and the editorial staff, it's the reader. And both are equally important." And Pat would never allow the editorial to be compromised by the advertiser. >> Yeah, no, he, there was a clear barrier between church and state in that company and he, you know, consistently backed editorial on that issue because, you know, keep in mind when we started then, and I was, you know, a journalist hoping to, you know, change the world, the trade press then was considered, like, a little below the mainstream business press. The trade press had a reputation for being a little too cozy with the advertisers, so, and Pat said early on, "We can't do that, because everything we have, our product is built, the brand is built on integrity. And if the reader doesn't believe that what we're reporting is actually true and factual and unbiased, we're gonna lose to the advertisers in the long run anyway." So he was clear that that had to be the case and time and again, there would be conflict that would come up, it was just, as you just described it, the publishers, the sales guys, they wanted to bring in money, and if it, you know, occasionally, hey, we could nudge the editor of this particular publication, "Take it a little bit easier on this vendor because they're gonna advertise big with us," Pat just would always back the editor and say, "That's not gonna happen." And it caused, you know, friction for sure, but he was unwavering in his support. >> Well, it's interesting because, you know, Macworld, I think, is an interesting case study because there were sort of some backroom dealings and Pat maneuvered to be able to get the Macworld, you know, brand, the license for that. >> Right. >> But it caused friction between Steve Jobs and the writers of Macworld, they would write something that Steve Jobs, who was a control freak, couldn't control! >> Yeah. (laughs) >> And he regretted giving IDG the license. >> Yeah, yeah, he once said that was the worst decision he ever made was to give the license to Pat to, you know, Macworlld was published on the day that Mac was introduced in 1984, that was the deal that they had and it was, what Jobs forgot was how important it was to the development of that product to have a whole magazine devoted to it on day one, and a really good magazine that, you know, a lot of people still lament the glory days of Macworld. But yeah, he was, he and Steve Jobs did not get along, and I think that almost says a lot more about Jobs because Pat pretty much got along with everybody. >> That church and state dynamic seems to be changing, across the industry, I mean, in tech journalism, there aren't any more tech journalists in the United States, I mean, I'm overstating that, but there are far fewer than there were when we were at IDG. You're seeing all kinds of publications and media companies struggling, you know, Kara Swisher, who's the greatest journalist, and Walt Mossberg, in the tech industry, try to make it, you know, on their own, and they couldn't. So, those lines are somewhat blurring, not that Kara Swisher is blurring those lines, she's, you know, I think, very, very solid in that regard, but it seems like the business model is changing. As an observer of the markets, what do you think's happening in the publishing world? >> Well, I, you know, as a journalist, I'm sort of aghast at what's goin' on these days, a lot of my, I've been around a long time, and seeing former colleagues who are no longer in journalism because the jobs just started drying up is, it's a scary prospect, you know, unlike being the enemy of the people, the first amendment is pretty important to the future of the democracy, so to see these, you know, cutbacks and newspapers going out of business is difficult. At the same time, the internet was inevitable and it was going to change that dynamic dramatically, so how does that play out? Well, the problem is, anybody can post anything they want on social media and call it news, and the challenge is to maintain some level of integrity in the kind of reporting that you do, and it's more important now than ever, so I think that, you know, somebody like Pat would be an important figure if he was still around, in trying to keep that going. >> Well, Facebook and Google have cut the heart out of, you know, a lot of the business models of many media companies, and you're seeing sort of a pendulum swing back to nonprofits, which, I understand, speaking of folks back in the mid to early 1900s, nonprofits were the way in which, you know, journalism got funded, you know, maybe it's billionaires buying things like the Washington Post that help fund it, but clearly the model's shifting and it's somewhat unclear, you know, what's happening there. I wanted to talk about another lesson, which, Pat was the head cheerleader. So, I remember, it was kind of just after we started, the Computerworld's 20th anniversary, and they hired the marching band and they walked Pat and Mary Dolaher walked from 5 Speen Street, you know, IDG headquarters, they walked to Computerworld, which was up Old, I guess Old Connecticut Path, or maybe it was-- >> It was actually on Route 30-- >> Route 30 at the time, yeah. And Pat was dressed up as the drum major and Mary as well, (laughs) and he would do crazy things like that, he'd jump out of a plane with IDG is number one again, he'd post a, you know, a flag in Antarctica, IDG is number one again! It was just a, it was an amazing dynamic that he had, always cheering people on. >> Yeah, he was, he was, when he called himself the CEO, the Chief Encouragement Officer, you mentioned earlier the Good News notes. Everyone who worked there, at some point received this 8x10" piece of paper with a rainbow logo on it and it said, "Good News!" And there was a personal note from Pat McGovern, out of the blue, totally unexpected, to thank you and congratulate you on some bit of work, whatever it was, if you were a reporter, some article you wrote, if you were a sales guy, a sale that you made, and people all over the world would get these from him and put them up in their cubicles because it was like a badge of honor to have them, and people, I still have 'em, (laughs) you know, in a folder somewhere. And he was just unrelenting in supporting the people who worked there, and it was, the impact of that is something you can't put a price tag on, it's just, it stays with people for all their lives, people who have left there and gone on to four or five different jobs always think fondly back to the days at IDG and having, knowing that the CEO had your back in that manner. >> The legend of, and the legacy of Patrick J. McGovern is not just in IDG and IDC, which you were interested in in your book, I mean, you weren't at IDC, I was, and I was started when I saw the sort of downturn and then now it's very, very successful company, you know, whatever, $3-400 million, throwin' off a lot of profits, just to decide, I worked for every single CEO at IDC with the exception of Pat McGovern, and now, Kirk Campbell, the current CEO, is moving on Crawford del Prete's moving into the role of president, it's just a matter of time before he gets CEO, so I will, and I hired Crawford-- >> Oh, you did? (laughs) >> So, I've worked for and/or hired every CEO of IDC except for Pat McGovern, so, but, the legacy goes beyond IDG and IDC, great brands. The McGovern Brain Institute, 350 million, is that right? >> That's right. >> He dedicated to studying, you know, the human brain, he and Lore, very much involved. >> Yup. >> Typical of Pat, he wasn't just, "Hey, here's the check," and disappear. He was goin' in, "Hey, I have some ideas"-- >> Oh yeah. >> Talk about that a little. >> Yeah, well, this was a guy who spent his whole life fascinated by the human brain and the impact technology would have on the human brain, so when he had enough money, he and Lore, in 2000, gave a $350 million gift to MIT to create the McGovern Institute for Brain Research. At the time, the largest academic gift ever given to any university. And, as you said, Pat wasn't a guy who was gonna write a check and leave and wave goodbye. Pat was involved from day one. He and Lore would come and sit in day-long seminars listening to researchers talk about about the most esoteric research going on, and he would take notes, and he wasn't a brain scientist, but he wanted to know more, and he would talk to researchers, he would send Good News notes to them, just like he did with IDG, and it had same impact. People said, "This guy is a serious supporter here, he's not just showin' up with a checkbook." Bob Desimone, who's the director of the Brain Institute, just marveled at this guy's energy level, that he would come in and for days, just sit there and listen and take it all in. And it just, it was an indicator of what kind of person he was, this insatiable curiosity to learn more and more about the world. And he wanted his legacy to be this intersection of technology and brain research, he felt that this institute could cure all sorts of brain-related diseases, Alzheimer's, Parkinson's, etc. And it would then just make a better future for mankind, and as corny as that might sound, that was really the motivator for Pat McGovern. >> Well, it's funny that you mention the word corny, 'cause a lot of people saw Pat as somewhat corny, but, as you got to know him, you're like, wow, he really means this, he loves his company, the company was his extended family. When Pat met his untimely demise, we held a crowd chat, crowdchat.net/thankspat, and there's a voting mechanism in there, and the number one vote was from Paul Gillen, who posted, "Leo Durocher said that nice guys finish last, Pat McGovern proved that wrong." >> Yeah. >> And I think that's very true and, again, awesome legacy. What number book is this for you? You've written a lot of books. >> This is number 13. >> 13, well, congratulations, lucky 13. >> Thank you. >> The book is Fast Forward-- >> Future Forward. >> I'm sorry, Future Forward! (laughs) Future Forward by Glenn Rifkin. Check out, there's a link in the YouTube down below, check that out and there's some additional information there. Glenn, congratulations on getting the book done, and thanks so much for-- >> Thank you for having me, this is great, really enjoyed it. It's always good to chat with another former IDGer who gets it. (laughs) >> Brought back a lot of memories, so, again, thanks for writing the book. All right, thanks for watching, everybody, we'll see you next time. This is Dave Vellante. You're watchin' theCube. (electronic music)

(electronic dance music) (Intel Jingle) (ethereal electronic dance music) ♪ Okay ♪ (upbeat techno dance music) ♪ Oh oh oh oh ♪ ♪ Oh oh oh oh ♪ ♪ Oh oh oh oh oh ♪ ♪ Oh oh oh oh ♪ ♪ Oh oh oh oh oh ♪ ♪ Take it back take it back ♪ ♪ Take it back ♪ ♪ Take it back take it back ♪ ♪ Take it back ♪ ♪ Take it back take it back ♪ ♪ Yeah everybody get loose yeah ♪ ♪ Yeah ♪ ♪ Ye-yeah yeah ♪ ♪ Yeah yeah ♪ ♪ Everybody everybody yeah ♪ ♪ Whoo whoo ♪ ♪ Whoo whoo ♪ ♪ Whoo yeah ♪ ♪ Everybody get loose whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ >> As a courtesy to the presenters and those around you, please silence all mobile devices, thank you. (electronic dance music) ♪ Everybody get loose ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ ♪ Whoo ♪ (upbeat salsa music) ♪ Ha ha ha ♪ ♪ Ah ♪ ♪ Ha ha ha ♪ ♪ So happy ♪ ♪ Whoo whoo ♪ (female singer scatting) >> Ladies and gentlemen, please take your seats. Our program will begin momentarily. ♪ Hey ♪ (female singer scatting) (male singer scatting) ♪ Hey ♪ ♪ Whoo ♪ (female singer scatting) (electronic dance music) ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ Red don't go ♪ ♪ All hands are in don't go ♪ ♪ In don't go ♪ ♪ Oh red go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ Red red red red ♪ ♪ All hands are red don't go ♪ ♪ All hands are in red red red red ♪ ♪ All hands are in don't go ♪ ♪ All hands are in red go ♪ >> Ladies and gentlemen, there are available seats. Towards house left, house left there are available seats. If you are please standing, we ask that you please take an available seat. We will begin momentarily, thank you. ♪ Let go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ ♪ All hands are in don't go ♪ ♪ Red all hands are in don't go ♪ (upbeat electronic dance music) ♪ Just make me ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ I live ♪ ♪ Just make me ♪ ♪ Just make me ♪ ♪ Hey ♪ ♪ Yeah ♪ ♪ Oh ♪ ♪ Ah ♪ ♪ Ah ah ah ah ah ah ♪ ♪ Just make me ♪ ♪ Just make me ♪ (bouncy techno music) >> Ladies and gentlemen, once again we ask that you please take the available seats to your left, house left, there are many available seats. If you are standing, please make your way there. The program will begin momentarily, thank you. Good morning! This is Lenovo Transform 2.0! (keyboard clicks) >> Progress. Why do we always talk about it in the future? When will it finally get here? We don't progress when it's ready for us. We need it when we're ready, and we're ready now. Our hospitals and their patients need it now, our businesses and their customers need it now, our cities and their citizens need it now. To deliver intelligent transformation, we need to build it into the products and solutions we make every day. At Lenovo, we're designing the systems to fight disease, power businesses, and help you reach more customers, end-to-end security solutions to protect your data and your companies reputation. We're making IT departments more agile and cost efficient. We're revolutionizing how kids learn with VR. We're designing smart devices and software that transform the way you collaborate, because technology shouldn't just power industries, it should power people. While everybody else is talking about tomorrow, we'll keep building today, because the progress we need can't wait for the future. >> Please welcome to the stage Lenovo's Rod Lappen! (electronic dance music) (audience applauding) >> Alright. Good morning everyone! >> Good morning. >> Ooh, that was pretty good actually, I'll give it one more shot. Good morning everyone! >> Good morning! >> Oh, that's much better! Hope everyone's had a great morning. Welcome very much to the second Lenovo Transform event here in New York. I think when I got up just now on the steps I realized there's probably one thing in common all of us have in this room including myself which is, absolutely no one has a clue what I'm going to say today. So, I'm hoping very much that we get through this thing very quickly and crisply. I love this town, love New York, and you're going to hear us talk a little bit about New York as we get through here, but just before we get started I'm going to ask anyone who's standing up the back, there are plenty of seats down here, and down here on the right hand side, I think he called it house left is the professional way of calling it, but these steps to my right, your left, get up here, let's get you all seated down so that you can actually sit down during the keynote session for us. Last year we had our very first Lenovo Transform. We had about 400 people. It was here in New York, fantastic event, today, over 1,000 people. We have over 62 different technology demonstrations and about 15 breakout sessions, which I'll talk you through a little bit later on as well, so it's a much bigger event. Next year we're definitely going to be shooting for over 2,000 people as Lenovo really transforms and starts to address a lot of the technology that our commercial customers are really looking for. We were however hampered last year by a storm, I don't know if those of you who were with us last year will remember, we had a storm on the evening before Transform last year in New York, and obviously the day that it actually occurred, and we had lots of logistics. Our media people from AMIA were coming in. They took the, the plane was circling around New York for a long time, and Kamran Amini, our General Manager of our Data Center Infrastructure Group, probably one of our largest groups in the Lenovo DCG business, took 17 hours to get from Raleigh, North Carolina to New York, 17 hours, I think it takes seven or eight hours to drive. Took him 17 hours by plane to get here. And then of course this year, we have Florence. And so, obviously the hurricane Florence down there in the Carolinas right now, we tried to help, but still Kamran has made it today. Unfortunately, very tragically, we were hoping he wouldn't, but he's here today to do a big presentation a little bit later on as well. However, I do want to say, obviously, Florence is a very serious tragedy and we have to take it very serious. We got, our headquarters is in Raleigh, North Carolina. While it looks like the hurricane is just missing it's heading a little bit southeast, all of our thoughts and prayers and well wishes are obviously with everyone in the Carolinas on behalf of Lenovo, everyone at our headquarters, everyone throughout the Carolinas, we want to make sure everyone stays safe and out of harm's way. We have a great mixture today in the crowd of all customers, partners, industry analysts, media, as well as our financial analysts from all around the world. There's over 30 countries represented here and people who are here to listen to both YY, Kirk, and Christian Teismann speak today. And so, it's going to be a really really exciting day, and I really appreciate everyone coming in from all around the world. So, a big round of applause for everyone whose come in. (audience applauding) We have a great agenda for you today, and it starts obviously a very consistent format which worked very successful for us last year, and that's obviously our keynote. You'll hear from YY, our CEO, talk a little bit about the vision he has in the industry and how he sees Lenovo's turned the corner and really driving some great strategy to address our customer's needs. Kirk Skaugen, our Executive Vice President of DCG, will be up talking about how we've transformed the DCG business and once again are hitting record growth ratios for our DCG business. And then you'll hear from Christian Teismann, our SVP and General Manager for our commercial business, get up and talk about everything that's going on in our IDG business. There's really exciting stuff going on there and obviously ThinkPad being the cornerstone of that I'm sure he's going to talk to us about a couple surprises in that space as well. Then we've got some great breakout sessions, I mentioned before, 15 breakout sessions, so while this keynote section goes until about 11:30, once we get through that, please go over and explore, and have a look at all of the breakout sessions. We have all of our subject matter experts from both our PC, NBG, and our DCG businesses out to showcase what we're doing as an organization to better address your needs. And then obviously we have the technology pieces that I've also spoken about, 62 different technology displays there arranged from everything IoT, 5G, NFV, everything that's really cool and hot in the industry right now is going to be on display up there, and I really encourage all of you to get up there. So, I'm going to have a quick video to show you from some of the setup yesterday on a couple of the 62 technology displays we've got on up on stage. Okay let's go, so we've got a demonstrations to show you today, one of the greats one here is the one we've done with NC State, a high-performance computing artificial intelligence demonstration of fresh produce. It's about modeling the population growth of the planet, and how we're going to supply water and food as we go forward. Whoo. Oh, that is not an apple. Okay. (woman laughs) Second one over here is really, hey Jonas, how are you? Is really around virtual reality, and how we look at one of the most amazing sites we've got, as an install on our high-performance computing practice here globally. And you can see, obviously, that this is the Barcelona supercomputer, and, where else in New York can you get access to being able to see something like that so easily? Only here at Lenovo Transform. Whoo, okay. (audience applauding) So there's two examples of some of the technology. We're really encouraging everyone in the room after the keynote to flow into that space and really get engaged, and interact with a lot of the technology we've got up there. It seems I need to also do something about my fashion, I've just realized I've worn a vest two days in a row, so I've got to work on that as well. Alright so listen, the last thing on the agenda, we've gone through the breakout sessions and the demo, tonight at four o'clock, there's about 400 of you registered to be on the cruise boat with us, the doors will open behind me. the boat is literally at the pier right behind us. You need to make sure you're on the boat for 4:00 p.m. this evening. Outside of that, I want everyone to have a great time today, really enjoy the experience, make it as experiential as you possibly can, get out there and really get in and touch the technology. There's some really cool AI displays up there for us all to get involved in as well. So ladies and gentlemen, without further adieu, it gives me great pleasure to introduce to you a lover of tennis, as some of you would've heard last year at Lenovo Transform, as well as a lover of technology, Lenovo, and of course, New York City. I am obviously very pleasured to introduce to you Yang Yuanqing, our CEO, as we like to call him, YY. (audience applauding) (upbeat funky music) >> Good morning, everyone. >> Good morning. >> Thank you Rod for that introduction. Welcome to New York City. So, this is the second year in a row we host our Transform event here, because New York is indeed one of the most transformative cities in the world. Last year on this stage, I spoke about the Fourth Industrial Revolution, and our vision around the intelligent transformation, how it would fundamentally change the nature of business and the customer relationships. And why preparing for this transformation is the key for the future of our company. And in the last year I can assure you, we were being very busy doing just that, from searching and bringing global talents around the world to the way we think about every product and every investment we make. I was here in New York just a month ago to announce our fiscal year Q1 earnings, which was a good day for us. I think now the world believes it when we say Lenovo has truly turned the corner to a new phase of growth and a new phase of acceleration in executing the transformation strategy. That's clear to me is that the last few years of a purposeful disruption at Lenovo have led us to a point where we can now claim leadership of the coming intelligent transformation. People often asked me, what is the intelligent transformation? I was saying this way. This is the unlimited potential of the Fourth Industrial Revolution driven by artificial intelligence being realized, ordering a pizza through our speaker, and locking the door with a look, letting your car drive itself back to your home. This indeed reflect the power of AI, but it just the surface of it. The true impact of AI will not only make our homes smarter and offices more efficient, but we are also completely transformed every value chip in every industry. However, to realize these amazing possibilities, we will need a structure built around the key components, and one that touches every part of all our lives. First of all, explosions in new technology always lead to new structures. This has happened many times before. In the early 20th century, thousands of companies provided a telephone service. City streets across the US looked like this, and now bundles of a microscopic fiber running from city to city bring the world closer together. Here's what a driving was like in the US, up until 1950s. Good luck finding your way. (audience laughs) And today, millions of vehicles are organized and routed daily, making the world more efficient. Structure is vital, from fiber cables and the interstate highways, to our cells bounded together to create humans. Thankfully the structure for intelligent transformation has emerged, and it is just as revolutionary. What does this new structure look like? We believe there are three key building blocks, data, computing power, and algorithms. Ever wondered what is it behind intelligent transformation? What is fueling this miracle of human possibility? Data. As the Internet becomes ubiquitous, not only PCs, mobile phones, have come online and been generating data. Today it is the cameras in this room, the climate controls in our offices, or the smart displays in our kitchens at home. The number of smart devices worldwide will reach over 20 billion in 2020, more than double the number in 2017. These devices and the sensors are connected and generating massive amount of data. By 2020, the amount of data generated will be 57 times more than all the grains of sand on Earth. This data will not only make devices smarter, but will also fuel the intelligence of our homes, offices, and entire industries. Then we need engines to turn the fuel into power, and the engine is actually the computing power. Last but not least the advanced algorithms combined with Big Data technology and industry know how will form vertical industrial intelligence and produce valuable insights for every value chain in every industry. When these three building blocks all come together, it will change the world. At Lenovo, we have each of these elements of intelligent transformations in a single place. We have built our business around the new structure of intelligent transformation, especially with mobile and the data center now firmly part of our business. I'm often asked why did you acquire these businesses? Why has a Lenovo gone into so many fields? People ask the same questions of the companies that become the leaders of the information technology revolution, or the third industrial transformation. They were the companies that saw the future and what the future required, and I believe Lenovo is the company today. From largest portfolio of devices in the world, leadership in the data center field, to the algorithm-powered intelligent vertical solutions, and not to mention the strong partnership Lenovo has built over decades. We are the only company that can unify all these essential assets and deliver end to end solutions. Let's look at each part. We now understand the important importance data plays as fuel in intelligent transformation. Hundreds of billions of devices and smart IoTs in the world are generating better and powering the intelligence. Who makes these devices in large volume and variety? Who puts these devices into people's home, offices, manufacturing lines, and in their hands? Lenovo definitely has the front row seats here. We are number one in PCs and tablets. We also produces smart phones, smart speakers, smart displays. AR/VR headsets, as well as commercial IoTs. All of these smart devices, or smart IoTs are linked to each other and to the cloud. In fact, we have more than 20 manufacturing facilities in China, US, Brazil, Japan, India, Mexico, Germany, and more, producing various devices around the clock. We actually make four devices every second, and 37 motherboards every minute. So, this factory located in my hometown, Hu-fi, China, is actually the largest laptop factory in the world, with more than three million square feet. So, this is as big as 42 soccer fields. Our scale and the larger portfolio of devices gives us access to massive amount of data, which very few companies can say. So, why is the ability to scale so critical? Let's look again at our example from before. The early days of telephone, dozens of service providers but only a few companies could survive consolidation and become the leader. The same was true for the third Industrial Revolution. Only a few companies could scale, only a few could survive to lead. Now the building blocks of the next revolution are locking into place. The (mumbles) will go to those who can operate at the scale. So, who could foresee the total integration of cloud, network, and the device, need to deliver intelligent transformation. Lenovo is that company. We are ready to scale. Next, our computing power. Computing power is provided in two ways. On one hand, the modern supercomputers are providing the brute force to quickly analyze the massive data like never before. On the other hand the cloud computing data centers with the server storage networking capabilities, and any computing IoT's, gateways, and miniservers are making computing available everywhere. Did you know, Lenovo is number one provider of super computers worldwide? 170 of the top 500 supercomputers, run on Lenovo. We hold 89 World Records in key workloads. We are number one in x86 server reliability for five years running, according to ITIC. a respected provider of industry research. We are also the fastest growing provider of hyperscale public cloud, hyper-converged and aggressively growing in edge computing. cur-ges target, we are expand on this point soon. And finally to run these individual nodes into our symphony, we must transform the data and utilize the computing power with advanced algorithms. Manufactured, industry maintenance, healthcare, education, retail, and more, so many industries are on the edge of intelligent transformation to improve efficiency and provide the better products and services. We are creating advanced algorithms and the big data tools combined with industry know-how to provide intelligent vertical solutions for several industries. In fact, we studied at Lenovo first. Our IT and research teams partnered with our global supply chain to develop an AI that improved our demand forecasting accuracy. Beyond managing our own supply chain we have offered our deep learning supply focused solution to other manufacturing companies to improve their efficiency. In the best case, we have improved the demand, focused the accuracy by 30 points to nearly 90 percent, for Baosteel, the largest of steel manufacturer in China, covering the world as well. Led by Lenovo research, we launched the industry-leading commercial ready AR headset, DaystAR, partnering with companies like the ones in this room. This technology is being used to revolutionize the way companies service utility, and even our jet engines. Using our workstations, servers, and award-winning imaging processing algorithms, we have partnered with hospitals to process complex CT scan data in minutes. So, this enable the doctors to more successfully detect the tumors, and it increases the success rate of cancer diagnosis all around the world. We are also piloting our smart IoT driven warehouse solution with one of the world's largest retail companies to greatly improve the efficiency. So, the opportunities are endless. This is where Lenovo will truly shine. When we combine the industry know-how of our customers with our end-to-end technology offerings, our intelligent vertical solutions like this are growing, which Kirk and Christian will share more. Now, what will drive this transformation even faster? The speed at which our networks operate, specifically 5G. You may know that Lenovo just launched the first-ever 5G smartphone, our Moto Z3, with the new 5G Moto model. We are partnering with multiple major network providers like Verizon, China Mobile. With the 5G model scheduled to ship early next year, we will be the first company to provide a 5G mobile experience to any users, customers. This is amazing innovation. You don't have to buy a new phone, just the 5G clip on. What can I say, except wow. (audience laughs) 5G is 10 times the fast faster than 4G. Its download speed will transform how people engage with the world, driverless car, new types of smart wearables, gaming, home security, industrial intelligence, all will be transformed. Finally, accelerating with partners, as ready as we are at Lenovo, we need partners to unlock our full potential, partners here to create with us the edge of the intelligent transformation. The opportunities of intelligent transformation are too profound, the scale is too vast. No company can drive it alone fully. We are eager to collaborate with all partners that can help bring our vision to life. We are dedicated to open partnerships, dedicated to cross-border collaboration, unify the standards, share the advantage, and market the synergies. We partner with the biggest names in the industry, Intel, Microsoft, AMD, Qualcomm, Google, Amazon, and Disney. We also find and partner with the smaller innovators as well. We're building the ultimate partner experience, open, shared, collaborative, diverse. So, everything is in place for intelligent transformation on a global scale. Smart devices are everywhere, the infrastructure is in place, networks are accelerating, and the industries demand to be more intelligent, and Lenovo is at the center of it all. We are helping to drive change with the hundreds of companies, companies just like yours, every day. We are your partner for intelligent transformation. Transformation never stops. This is what you will hear from Kirk, including details about Lenovo NetApp global partnership we just announced this morning. We've made the investments in every single aspect of the technology. We have the end-to-end resources to meet your end-to-end needs. As you attend the breakout session this afternoon, I hope you see for yourself how much Lenovo has transformed as a company this past year, and how we truly are delivering a future of intelligent transformation. Now, let me invite to the stage Kirk Skaugen, our president of Data Center growth to tell you about the exciting transformation happening in the global Data C enter market. Thank you. (audience applauding) (upbeat music) >> Well, good morning. >> Good morning. >> Good morning! >> Good morning! >> Excellent, well, I'm pleased to be here this morning to talk about how we're transforming the Data Center and taking you as our customers through your own intelligent transformation journey. Last year I stood up here at Transform 1.0, and we were proud to announce the largest Data Center portfolio in Lenovo's history, so I thought I'd start today and talk about the portfolio and the progress that we've made over the last year, and the strategies that we have going forward in phase 2.0 of Lenovo's transformation to be one of the largest data center companies in the world. We had an audacious vision that we talked about last year, and that is to be the most trusted data center provider in the world, empowering customers through the new IT, intelligent transformation. And now as the world's largest supercomputer provider, giving something back to humanity, is very important this week with the hurricanes now hitting North Carolina's coast, but we take this most trusted aspect very seriously, whether it's delivering the highest quality products on time to you as customers with the highest levels of security, or whether it's how we partner with our channel partners and our suppliers each and every day. You know we're in a unique world where we're going from hundreds of millions of PCs, and then over the next 25 years to hundred billions of connected devices, so each and every one of you is going through this intelligent transformation journey, and in many aspects were very early in that cycle. And we're going to talk today about our role as the largest supercomputer provider, and how we're solving humanity's greatest challenges. Last year we talked about two special milestones, the 25th anniversary of ThinkPad, but also the 25th anniversary of Lenovo with our IBM heritage in x86 computing. I joined the workforce in 1992 out of college, and the IBM first personal server was launching at the same time with an OS2 operating system and a free mouse when you bought the server as a marketing campaign. (audience laughing) But what I want to be very clear today, is that the innovation engine is alive and well at Lenovo, and it's really built on the culture that we're building as a company. All of these awards at the bottom are things that we earned over the last year at Lenovo. As a Fortune now 240 company, larger than companies like Nike, or AMEX, or Coca-Cola. The one I'm probably most proud of is Forbes first list of the top 2,000 globally regarded companies. This was something where 15,000 respondents in 60 countries voted based on ethics, trustworthiness, social conduct, company as an employer, and the overall company performance, and Lenovo was ranked number 27 of 2000 companies by our peer group, but we also now one of-- (audience applauding) But we also got a perfect score in the LGBTQ Equality Index, exemplifying the diversity internally. We're number 82 in the top working companies for mothers, top working companies for fathers, top 100 companies for sustainability. If you saw that factory, it's filled with solar panels on the top of that. And now again, one of the top global brands in the world. So, innovation is built on a customer foundation of trust. We also said last year that we'd be crossing an amazing milestone. So we did, over the last 12 months ship our 20 millionth x86 server. So, thank you very much to our customers for this milestone. (audience applauding) So, let me recap some of the transformation elements that have happened over the last year. Last year I talked about a lot of brand confusion, because we had the ThinkServer brand from the legacy Lenovo, the System x, from IBM, we had acquired a number of networking companies, like BLADE Network Technologies, et cetera, et cetera. Over the last year we've been ramping based on two brand structures, ThinkAgile for next generation IT, and all of our software-defined infrastructure products and ThinkSystem as the world's highest performance, highest reliable x86 server brand, but for servers, for storage, and for networking. We have transformed every single aspect of the customer experience. A year and a half ago, we had four different global channel programs around the world. Typically we're about twice the mix to our channel partners of any of our competitors, so this was really important to fix. We now have a single global Channel program, and have technically certified over 11,000 partners to be technical experts on our product line to deliver better solutions to our customer base. Gardner recently recognized Lenovo as the 26th ranked supply chain in the world. And, that's a pretty big honor, when you're up there with Amazon and Walmart and others, but in tech, we now are in the top five supply chains. You saw the factory network from YY, and today we'll be talking about product shipping in more than 160 countries, and I know there's people here that I've met already this morning, from India, from South Africa, from Brazil and China. We announced new Premier Support services, enabling you to go directly to local language support in nine languages in 49 countries in the world, going directly to a native speaker level three support engineer. And today we have more than 10,000 support specialists supporting our products in over 160 countries. We've delivered three times the number of engineered solutions to deliver a solutions orientation, whether it's on HANA, or SQL Server, or Oracle, et cetera, and we've completely reengaged our system integrator channel. Last year we had the CIO of DXE on stage, and here we're talking about more than 175 percent growth through our system integrator channel in the last year alone as we've brought that back and really built strong relationships there. So, thank you very much for amazing work here on the customer experience. (audience applauding) We also transformed our leadership. We thought it was extremely important with a focus on diversity, to have diverse talent from the legacy IBM, the legacy Lenovo, but also outside the industry. We made about 19 executive changes in the DCG group. This is the most senior leadership team within DCG, all which are newly on board, either from our outside competitors mainly over the last year. About 50 percent of our executives were now hired internally, 50 percent externally, and 31 percent of those new executives are diverse, representing the diversity of our global customer base and gender. So welcome, and most of them you're going to be able to meet over here in the breakout sessions later today. (audience applauding) But some things haven't changed, they're just keeping getting better within Lenovo. So, last year I got up and said we were committed with the new ThinkSystem brand to be a world performance leader. You're going to see that we're sponsoring Ducati for MotoGP. You saw the Ferrari out there with Formula One. That's not a surprise. We want the Lenovo ThinkSystem and ThinkAgile brands to be synonymous with world record performance. So in the last year we've gone from 39 to 89 world records, and partners like Intel would tell you, we now have four times the number of world record workloads on Lenovo hardware than any other server company on the planet today, with more than 89 world records across HPC, Java, database, transaction processing, et cetera. And we're proud to have just brought on Doug Fisher from Intel Corporation who had about 10-17,000 people on any given year working for him in workload optimizations across all of our software. It's just another testament to the leadership team we're bringing in to keep focusing on world-class performance software and solutions. We also per ITIC, are the number one now in x86 server reliability five years running. So, this is a survey where CIOs are in a blind survey asked to submit their reliability of their uptime on their x86 server equipment over the last 365 days. And you can see from 2016 to 2017 the downtime, there was over four hours as noted by the 750 CXOs in more than 20 countries is about one percent for the Lenovo products, and is getting worse generation from generation as we went from Broadwell to Pearlie. So we're taking our reliability, which was really paramount in the IBM System X heritage, and ensuring that we don't just recognize high performance but we recognize the highest level of reliability for mission-critical workloads. And what that translates into is that we at once again have been ranked number one in customer satisfaction from you our customers in 19 of 22 attributes, in North America in 18 of 22. This is a survey by TVR across hundreds of customers of us and our top competitors. This is the ninth consecutive study that we've been ranked number one in customer satisfaction, so we're taking this extremely seriously, and in fact YY now has increased the compensation of every single Lenovo employee. Up to 40 percent of their compensation bonus this year is going to be based on customer metrics like quality, order to ship, and things of this nature. So, we're really putting every employee focused on customer centricity this year. So, the summary on Transform 1.0 is that every aspect of what you knew about Lenovo's data center group has transformed, from the culture to the branding to dedicated sales and marketing, supply chain and quality groups, to a worldwide channel program and certifications, to new system integrator relationships, and to the new leadership team. So, rather than me just talk about it, I thought I'd share a quick video about what we've done over the last year, if you could run the video please. Turn around for a second. (epic music) (audience applauds) Okay. So, thank you to all our customers that allowed us to publicly display their logos in that video. So, what that means for you as investors, and for the investor community out there is, that our customers have responded, that this year Gardner just published that we are the fastest growing server company in the top 10, with 39 percent growth quarter-on-quarter, and 49 percent growth year-on-year. If you look at the progress we've made since the transformation the last three quarters publicly, we've grown 17 percent, then 44 percent, then 68 percent year on year in revenue, and I can tell you this quarter I'm as confident as ever in the financials around the DCG group, and it hasn't been in one area. You're going to see breakout sessions from hyperscale, software-defined, and flash, which are all growing more than a 100 percent year-on-year, supercomputing which we'll talk about shortly, now number one, and then ultimately from profitability, delivering five consecutive quarters of pre-tax profit increase, so I think, thank you very much to the customer base who's been working with us through this transformation journey. So, you're here to really hear what's next on 2.0, and that's what I'm excited to talk about today. Last year I came up with an audacious goal that we would become the largest supercomputer company on the planet by 2020, and this graph represents since the acquisition of the IBM System x business how far we were behind being the number one supercomputer. When we started we were 182 positions behind, even with the acquisition for example of SGI from HP, we've now accomplished our goal actually two years ahead of time. We're now the largest supercomputer company in the world. About one in every four supercomputers, 117 on the list, are now Lenovo computers, and you saw in the video where the universities are said, but I think what I'm most proud of is when your customers rank you as the best. So the awards at the bottom here, are actually Readers Choice from the last International Supercomputing Show where the scientific researchers on these computers ranked their vendors, and we were actually rated the number one server technology in supercomputing with our ThinkSystem SD530, and the number one storage technology with our ThinkSystem DSS-G, but more importantly what we're doing with the technology. You're going to see we won best in life sciences, best in data analytics, and best in collaboration as well, so you're going to see all of that in our breakout sessions. As you saw in the video now, 17 of the top 25 research institutions in the world are now running Lenovo supercomputers. And again coming from Raleigh and watching that hurricane come across the Atlantic, there are eight supercomputers crunching all of those models you see from Germany to Malaysia to Canada, and we're happy to have a SciNet from University of Toronto here with us in our breakout session to talk about what they're doing on climate modeling as well. But we're not stopping there. We just announced our new Neptune warm water cooling technology, which won the International Supercomputing Vendor Showdown, the first time we've won that best of show in 25 years, and we've now installed this. We're building out LRZ in Germany, the first ever warm water cooling in Peking University, at the India Space Propulsion Laboratory, at the Malaysian Weather and Meteorological Society, at Uninett, at the largest supercomputer in Norway, T-Systems, University of Birmingham. This is truly amazing technology where we're actually using water to cool the machine to deliver a significantly more energy-efficient computer. Super important, when we're looking at global warming and some of the electric bills can be millions of dollars just for one computer, and could actually power a small city just with the technology from the computer. We've built AI centers now in Morrisville, Stuttgart, Taipei, and Beijing, where customers can bring their AI workloads in with experts from Intel, from Nvidia, from our FPGA partners, to work on their workloads, and how they can best implement artificial intelligence. And we also this year launched LICO which is Lenovo Intelligent Compute Orchestrator software, and it's a software solution that simplifies the management and use of distributed clusters in both HPC and AI model development. So, what it enables you to do is take a single cluster, and run both HPC and AI workloads on it simultaneously, delivering better TCO for your environment, so check out LICO as well. A lot of the customers here and Wall Street are very excited and using it already. And we talked about solving humanity's greatest challenges. In the breakout session, you're going to have a virtual reality experience where you're going to be able to walk through what as was just ranked the world's most beautiful data center, the Barcelona Supercomputer. So, you can actually walk through one of the largest supercomputers in the world from Barcelona. You can see the work we're doing with NC State where we're going to have to grow the food supply of the world by 50 percent, and there's not enough fresh water in the world in the right places to actually make all those crops grow between now and 2055, so you're going to see the progression of how they're mapping the entire globe and the water around the world, how to build out the crop population over time using AI. You're going to see our work with Vestas is this largest supercomputer provider in the wind turbine areas, how they're working on wind energy, and then with University College London, how they're working on some of the toughest particle physics calculations in the world. So again, lots of opportunity here. Take advantage of it in the breakout sessions. Okay, let me transition to hyperscale. So in hyperscale now, we have completely transformed our business model. We are now powering six of the top 10 hyperscalers in the world, which is a significant difference from where we were two years ago. And the reason we're doing that, is we've coined a term called ODM+. We believe that hyperscalers want more procurement power than an ODM, and Lenovo is doing about $18 billion of procurement a year. They want a broader global supply chain that they can get from a local system integrator. We're more than 160 countries around the world, but they want the same world-class quality and reliability like they get from an MNC. So, what we're doing now is instead of just taking off the shelf motherboards from somewhere, we're starting with a blank sheet of paper, we're working with the customer base on customized SKUs and you can see we already are developing 33 custom solutions for the largest hyperscalers in the world. And then we're not just running notebooks through this factory where YY said, we're running 37 notebook boards a minute, we're now putting in tens and tens and tens of thousands of server board capacity per month into this same factory, so absolutely we can compete with the most aggressive ODM's in the world, but it's not just putting these things in in the motherboard side, we're also building out these systems all around the world, India, Brazil, Hungary, Mexico, China. This is an example of a new hyperscale customer we've had this last year, 34,000 servers we delivered in the first six months. The next 34,000 servers we delivered in 68 days. The next 34,000 servers we delivered in 35 days, with more than 99 percent on-time delivery to 35 data centers in 14 countries as diverse as South Africa, India, China, Brazil, et cetera. And I'm really ashamed to say it was 99.3, because we did have a forklift driver who rammed their forklift right through the middle of the one of the server racks. (audience laughing) At JFK Airport that we had to respond to, but I think this gives you a perspective of what it is to be a top five global supply chain and technology. So last year, I said we would invest significantly in IP, in joint ventures, and M and A to compete in software defined, in networking, and in storage, so I wanted to give you an update on that as well. Our newest software-defined partnership is with Cloudistics, enabling a fully composable cloud infrastructure. It's an exclusive agreement, you can see them here. I think Nag, our founder, is going to be here today, with a significant Lenovo investment in the company. So, this new ThinkAgile CP series delivers the simplicity of the public cloud, on-premise with exceptional support and a marketplace of essential enterprise applications all with a single click deployment. So simply put, we're delivering a private cloud with a premium experience. It's simple in that you need no specialists to deploy it. An IT generalist can set it up and manage it. It's agile in that you can provision dozens of workloads in minutes, and it's transformative in that you get all of the goodness of public cloud on-prem in a private cloud to unlock opportunity for use. So, we're extremely excited about the ThinkAgile CP series that's now shipping into the marketplace. Beyond that we're aggressively ramping, and we're either doubling, tripling, or quadrupling our market share as customers move from traditional server technology to software-defined technology. With Nutanix we've been public, growing about more than 150 percent year-on-year, with Nutanix as their fastest growing Nutanix partner, but today I want to set another audacious goal. I believe we cannot just be Nutanix's fastest growing partner but we can become their largest partner within two years. On Microsoft, we are already four times our market share on Azure stack of our traditional business. We were the first to launch our ThinkAgile on Broadwell and on Skylake with the Azure Stack Infrastructure. And on VMware we're about twice our market segment share. We were the first to deliver an Intel-optimized Optane-certified VSAN node. And with Optane technology, we're delivering 50 percent more VM density than any competitive SSD system in the marketplace, about 10 times lower latency, four times the performance of any SSD system out there, and Lenovo's first to market on that. And at VMworld you saw CEO Pat Gelsinger of VMware talked about project dimension, which is Edge as a service, and we're the only OEM beyond the Dell family that is participating today in project dimension. Beyond that you're going to see a number of other partnerships we have. I'm excited that we have the city of Bogota Columbia here, an eight million person city, where we announced a 3,000 camera video surveillance solution last month. With pivot three you're going to see city of Bogota in our breakout sessions. You're going to see a new partnership with Veeam around backup that's launching today. You're going to see partnerships with scale computing in IoT and hyper-converged infrastructure working on some of the largest retailers in the world. So again, everything out in the breakout session. Transitioning to storage and data management, it's been a great year for Lenovo, more than a 100 percent growth year-on-year, 2X market growth in flash arrays. IDC just reported 30 percent growth in storage, number one in price performance in the world and the best HPC storage product in the top 500 with our ThinkSystem DSS G, so strong coverage, but I'm excited today to announce for Transform 2.0 that Lenovo is launching the largest data management and storage portfolio in our 25-year data center history. (audience applauding) So a year ago, the largest server portfolio, becoming the largest fastest growing server OEM, today the largest storage portfolio, but as you saw this morning we're not doing it alone. Today Lenovo and NetApp, two global powerhouses are joining forces to deliver a multi-billion dollar global alliance in data management and storage to help customers through their intelligent transformation. As the fastest growing worldwide server leader and one of the fastest growing flash array and data management companies in the world, we're going to deliver more choice to customers than ever before, global scale that's never been seen, supply chain efficiencies, and rapidly accelerating innovation and solutions. So, let me unwrap this a little bit for you and talk about what we're announcing today. First, it's the largest portfolio in our history. You're going to see not just storage solutions launching today but a set of solution recipes from NetApp that are going to make Lenovo server and NetApp or Lenovo storage work better together. The announcement enables Lenovo to go from covering 15 percent of the global storage market to more than 90 percent of the global storage market and distribute these products in more than 160 countries around the world. So we're launching today, 10 new storage platforms, the ThinkSystem DE and ThinkSystem DM platforms. They're going to be centrally managed, so the same XClarity management that you've been using for server, you can now use across all of your storage platforms as well, and it'll be supported by the same 10,000 plus service personnel that are giving outstanding customer support to you today on the server side. And we didn't come up with this in the last month or the last quarter. We're announcing availability in ordering today and shipments tomorrow of the first products in this portfolio, so we're excited today that it's not just a future announcement but something you as customers can take advantage of immediately. (audience applauding) The second part of the announcement is we are announcing a joint venture in China. Not only will this be a multi-billion dollar global partnership, but Lenovo will be a 51 percent owner, NetApp a 49 percent owner of a new joint venture in China with the goal of becoming in the top three storage companies in the largest data and storage market in the world. We will deliver our R and D in China for China, pooling our IP and resources together, and delivering a single route to market through a complementary channel, not just in China but worldwide. And in the future I just want to tell everyone this is phase one. There is so much exciting stuff. We're going to be on the stage over the next year talking to you about around integrated solutions, next-generation technologies, and further synergies and collaborations. So, rather than just have me talk about it, I'd like to welcome to the stage our new partner NetApp and Brad Anderson who's the senior vice president and general manager of NetApp Cloud Infrastructure. (upbeat music) (audience applauding) >> Thank You Kirk. >> So Brad, we've known each other a long time. It's an exciting day. I'm going to give you the stage and allow you to say NetApp's perspective on this announcement. >> Very good, thank you very much, Kirk. Kirk and I go back to I think 1994, so hey good morning and welcome. My name is Brad Anderson. I manage the Cloud Infrastructure Group at NetApp, and I am honored and privileged to be here at Lenovo Transform, particularly today on today's announcement. Now, you've heard a lot about digital transformation about how companies have to transform their IT to compete in today's global environment. And today's announcement with the partnership between NetApp and Lenovo is what that's all about. This is the joining of two global leaders bringing innovative technology in a simplified solution to help customers modernize their IT and accelerate their global digital transformations. Drawing on the strengths of both companies, Lenovo's high performance compute world-class supply chain, and NetApp's hybrid cloud data management, hybrid flash and all flash storage solutions and products. And both companies providing our customers with the global scale for them to be able to meet their transformation goals. At NetApp, we're very excited. This is a quote from George Kurian our CEO. George spent all day yesterday with YY and Kirk, and would have been here today if it hadn't been also our shareholders meeting in California, but I want to just convey how excited we are for all across NetApp with this partnership. This is a partnership between two companies with tremendous market momentum. Kirk took you through all the amazing results that Lenovo has accomplished, number one in supercomputing, number one in performance, number one in x86 reliability, number one in x86 customers sat, number five in supply chain, really impressive and congratulations. Like Lenovo, NetApp is also on a transformation journey, from a storage company to the data authority in hybrid cloud, and we've seen some pretty impressive momentum as well. Just last week we became number one in all flash arrays worldwide, catching EMC and Dell, and we plan to keep on going by them, as we help customers modernize their their data centers with cloud connected flash. We have strategic partnerships with the largest hyperscalers to provide cloud native data services around the globe and we are having success helping our customers build their own private clouds with just, with a new disruptive hyper-converged technology that allows them to operate just like hyperscalers. These three initiatives has fueled NetApp's transformation, and has enabled our customers to change the world with data. And oh by the way, it has also fueled us to have meet or have beaten Wall Street's expectations for nine quarters in a row. These are two companies with tremendous market momentum. We are also building this partnership for long term success. We think about this as phase one and there are two important components to phase one. Kirk took you through them but let me just review them. Part one, the establishment of a multi-year commitment and a collaboration agreement to offer Lenovo branded flash products globally, and as Kurt said in 160 countries. Part two, the formation of a joint venture in PRC, People's Republic of China, that will provide long term commitment, joint product development, and increase go-to-market investment to meet the unique needs to China. Both companies will put in storage technologies and storage expertise to form an independent JV that establishes a data management company in China for China. And while we can dream about what phase two looks like, our entire focus is on making phase one incredibly successful and I'm pleased to repeat what Kirk, is that the first products are orderable and shippable this week in 160 different countries, and you will see our two companies focusing on the here and now. On our joint go to market strategy, you'll see us working together to drive strategic alignment, focused execution, strong governance, and realistic expectations and milestones. And it starts with the success of our customers and our channel partners is job one. Enabling customers to modernize their legacy IT with complete data center solutions, ensuring that our customers get the best from both companies, new offerings the fuel business success, efficiencies to reinvest in game-changing initiatives, and new solutions for new mission-critical applications like data analytics, IoT, artificial intelligence, and machine learning. Channel partners are also top of mind for both our two companies. We are committed to the success of our existing and our future channel partners. For NetApp channel partners, it is new pathways to new segments and to new customers. For Lenovo's channel partners, it is the competitive weapons that now allows you to compete and more importantly win against Dell, EMC, and HP. And the good news for both companies is that our channel partner ecosystem is highly complementary with minimal overlap. Today is the first day of a very exciting partnership, of a partnership that will better serve our customers today and will provide new opportunities to both our companies and to our partners, new products to our customers globally and in China. I am personally very excited. I will be on the board of the JV. And so, I look forward to working with you, partnering with you and serving you as we go forward, and with that, I'd like to invite Kirk back up. (audience applauding) >> Thank you. >> Thank you. >> Well, thank you, Brad. I think it's an exciting overview, and these products will be manufactured in China, in Mexico, in Hungary, and around the world, enabling this amazing supply chain we talked about to deliver in over 160 countries. So thank you Brad, thank you George, for the amazing partnership. So again, that's not all. In Transform 2.0, last year, we talked about the joint ventures that were coming. I want to give you a sneak peek at what you should expect at future Lenovo events around the world. We have this Transform in Beijing in a couple weeks. We'll then be repeating this in 20 different locations roughly around the world over the next year, and I'm excited probably more than ever about what else is coming. Let's talk about Telco 5G and network function virtualization. Today, Motorola phones are certified on 46 global networks. We launched the world's first 5G upgradable phone here in the United States with Verizon. Lenovo DCG sells to 58 telecommunication providers around the world. At Mobile World Congress in Barcelona and Shanghai, you saw China Telecom and China Mobile in the Lenovo booth, China Telecom showing a video broadband remote access server, a VBRAS, with video streaming demonstrations with 2x less jitter than they had seen before. You saw China Mobile with a virtual remote access network, a VRAN, with greater than 10 times the throughput and 10x lower latency running on Lenovo. And this year, we'll be launching a new NFV company, a software company in China for China to drive the entire NFV stack, delivering not just hardware solutions, but software solutions, and we've recently hired a new CEO. You're going to hear more about that over the next several quarters. Very exciting as we try to drive new economics into the networks to deliver these 20 billion devices. We're going to need new economics that I think Lenovo can uniquely deliver. The second on IoT and edge, we've integrated on the device side into our intelligent devices group. With everything that's going to consume electricity computes and communicates, Lenovo is in a unique position on the device side to take advantage of the communications from Motorola and being one of the largest device companies in the world. But this year, we're also going to roll out a comprehensive set of edge gateways and ruggedized industrial servers and edge servers and ISP appliances for the edge and for IoT. So look for that as well. And then lastly, as a service, you're going to see Lenovo delivering hardware as a service, device as a service, infrastructure as a service, software as a service, and hardware as a service, not just as a glorified leasing contract, but with IP, we've developed true flexible metering capability that enables you to scale up and scale down freely and paying strictly based on usage, and we'll be having those announcements within this fiscal year. So Transform 2.0, lots to talk about, NetApp the big news of the day, but a lot more to come over the next year from the Data Center group. So in summary, I'm excited that we have a lot of customers that are going to be on stage with us that you saw in the video. Lots of testimonials so that you can talk to colleagues of yourself. Alamos Gold from Canada, a Canadian gold producer, Caligo for data optimization and privacy, SciNet, the largest supercomputer we've ever put into North America, and the largest in Canada at the University of Toronto will be here talking about climate change. City of Bogota again with our hyper-converged solutions around smart city putting in 3,000 cameras for criminal detection, license plate detection, et cetera, and then more from a channel mid market perspective, Jerry's Foods, which is from my home state of Wisconsin, and Minnesota which has about 57 stores in the specialty foods market, and how they're leveraging our IoT solutions as well. So again, about five times the number of demos that we had last year. So in summary, first and foremost to the customers, thank you for your business. It's been a great journey and I think we're on a tremendous role. You saw from last year, we're trying to build credibility with you. After the largest server portfolio, we're now the fastest-growing server OEM per Gardner, number one in performance, number one in reliability, number one in customer satisfaction, number one in supercomputing. Today, the largest storage portfolio in our history, with the goal of becoming the fastest growing storage company in the world, top three in China, multibillion-dollar collaboration with NetApp. And the transformation is going to continue with new edge gateways, edge servers, NFV solutions, telecommunications infrastructure, and hardware as a service with dynamic metering. So thank you for your time. I've looked forward to meeting many of you over the next day. We appreciate your business, and with that, I'd like to bring up Rod Lappen to introduce our next speaker. Rod? (audience applauding) >> Thanks, boss, well done. Alright ladies and gentlemen. No real secret there. I think we've heard why I might talk about the fourth Industrial Revolution in data and exactly what's going on with that. You've heard Kirk with some amazing announcements, obviously now with our NetApp partnership, talk about 5G, NFV, cloud, artificial intelligence, I think we've hit just about all the key hot topics. It's with great pleasure that I now bring up on stage Mr. Christian Teismann, our senior vice president and general manager of commercial business for both our PCs and our IoT business, so Christian Teismann. (techno music) Here, take that. >> Thank you. I think I'll need that. >> Okay, Christian, so obviously just before we get down, you and I last year, we had a bit of a chat about being in New York. >> Exports. >> You were an expat in New York for a long time. >> That's true. >> And now, you've moved from New York. You're in Munich? >> Yep. >> How does that feel? >> Well Munich is a wonderful city, and it's a great place to live and raise kids, but you know there's no place in the world like New York. >> Right. >> And I miss it a lot, quite frankly. >> So what exactly do you miss in New York? >> Well there's a lot of things in New York that are unique, but I know you spent some time in Japan, but I still believe the best sushi in the world is still in New York City. (all laughing) >> I will beg to differ. I will beg to differ. I think Mr. Guchi-san from Softbank is here somewhere. He will get up an argue very quickly that Japan definitely has better sushi than New York. But obviously you know, it's a very very special place, and I have had sushi here, it's been fantastic. What about Munich? Anything else that you like in Munich? >> Well I mean in Munich, we have pork knuckles. >> Pork knuckles. (Christian laughing) Very similar sushi. >> What is also very fantastic, but we have the real, the real Oktoberfest in Munich, and it starts next week, mid-September, and I think it's unique in the world. So it's very special as well. >> Oktoberfest. >> Yes. >> Unfortunately, I'm not going this year, 'cause you didn't invite me, but-- (audience chuckling) How about, I think you've got a bit of a secret in relation to Oktoberfest, probably not in Munich, however. >> It's a secret, yes, but-- >> Are you going to share? >> Well I mean-- >> See how I'm putting you on the spot? >> In the 10 years, while living here in New York, I was a regular visitor of the Oktoberfest at the Lower East Side in Avenue C at Zum Schneider, where I actually met my wife, and she's German. >> Very good. So, how about a big round of applause? (audience applauding) Not so much for Christian, but more I think, obviously for his wife, who obviously had been drinking and consequently ended up with you. (all laughing) See you later, mate. >> That's the beauty about Oktoberfest, but yes. So first of all, good morning to everybody, and great to be back here in New York for a second Transform event. New York clearly is the melting pot of the world in terms of culture, nations, but also business professionals from all kind of different industries, and having this event here in New York City I believe is manifesting what we are trying to do here at Lenovo, is transform every aspect of our business and helping our customers on the journey of intelligent transformation. Last year, in our transformation on the device business, I talked about how the PC is transforming to personalized computing, and we've made a lot of progress in that journey over the last 12 months. One major change that we have made is we combined all our device business under one roof. So basically PCs, smart devices, and smart phones are now under the roof and under the intelligent device group. But from my perspective makes a lot of sense, because at the end of the day, all devices connect in the modern world into the cloud and are operating in a seamless way. But we are also moving from a device business what is mainly a hardware focus historically, more and more also into a solutions business, and I will give you during my speech a little bit of a sense of what we are trying to do, as we are trying to bring all these components closer together, and specifically also with our strengths on the data center side really build end-to-end customer solution. Ultimately, what we want to do is make our business, our customer's businesses faster, safer, and ultimately smarter as well. So I want to look a little bit back, because I really believe it's important to understand what's going on today on the device side. Many of us have still grown up with phones with terminals, ultimately getting their first desktop, their first laptop, their first mobile phone, and ultimately smartphone. Emails and internet improved our speed, how we could operate together, but still we were defined by linear technology advances. Today, the world has changed completely. Technology itself is not a limiting factor anymore. It is how we use technology going forward. The Internet is pervasive, and we are not yet there that we are always connected, but we are nearly always connected, and we are moving to the stage, that everything is getting connected all the time. Sharing experiences is the most driving force in our behavior. In our private life, sharing pictures, videos constantly, real-time around the world, with our friends and with our family, and you see the same behavior actually happening in the business life as well. Collaboration is the number-one topic if it comes down to workplace, and video and instant messaging, things that are coming from the consumer side are dominating the way we are operating in the commercial business as well. Most important beside technology, that a new generation of workforce has completely changed the way we are working. As the famous workforce the first generation of Millennials that have now fully entered in the global workforce, and the next generation, it's called Generation Z, is already starting to enter the global workforce. By 2025, 75 percent of the world's workforce will be composed out of two of these generations. Why is this so important? These two generations have been growing up using state-of-the-art IT technology during their private life, during their education, school and study, and are taking these learnings and taking these behaviors in the commercial workspace. And this is the number one force of change that we are seeing in the moment. Diverse workforces are driving this change in the IT spectrum, and for years in many of our customers' focus was their customer focus. Customer experience also in Lenovo is the most important thing, but we've realized that our own human capital is equally valuable in our customer relationships, and employee experience is becoming a very important thing for many of our customers, and equally for Lenovo as well. As you have heard YY, as we heard from YY, Lenovo is focused on intelligent transformation. What that means for us in the intelligent device business is ultimately starting with putting intelligence in all of our devices, smartify every single one of our devices, adding value to our customers, traditionally IT departments, but also focusing on their end users and building products that make their end users more productive. And as a world leader in commercial devices with more than 33 percent market share, we can solve problems been even better than any other company in the world. So, let's talk about transformation of productivity first. We are in a device-led world. Everything we do is connected. There's more interaction with devices than ever, but also with spaces who are increasingly becoming smart and intelligent. YY said it, by 2020 we have more than 20 billion connected devices in the world, and it will grow exponentially from there on. And users have unique personal choices for technology, and that's very important to recognize, and we call this concept a digital wardrobe. And it means that every single end-user in the commercial business is composing his personal wardrobe on an ongoing basis and is reconfiguring it based on the work he's doing and based where he's going and based what task he is doing. I would ask all of you to put out all the devices you're carrying in your pockets and in your bags. You will see a lot of you are using phones, tablets, laptops, but also cameras and even smartwatches. They're all different, but they have one underlying technology that is bringing it all together. Recognizing digital wardrobe dynamics is a core factor for us to put all the devices under one roof in IDG, one business group that is dedicated to end-user solutions across mobile, PC, but also software services and imaging, to emerging technologies like AR, VR, IoT, and ultimately a AI as well. A couple of years back there was a big debate around bring-your-own-device, what was called consumerization. Today consumerization does not exist anymore, because consumerization has happened into every single device we build in our commercial business. End users and commercial customers today do expect superior display performance, superior audio, microphone, voice, and touch quality, and have it all connected and working seamlessly together in an ease of use space. We are already deep in the journey of personalized computing today. But the center point of it has been for the last 25 years, the mobile PC, that we have perfected over the last 25 years, and has been the undisputed leader in mobility computing. We believe in the commercial business, the ThinkPad is still the core device of a digital wardrobe, and we continue to drive the success of the ThinkPad in the marketplace. We've sold more than 140 million over the last 26 years, and even last year we exceeded nearly 11 million units. That is about 21 ThinkPads per minute, or one Thinkpad every three seconds that we are shipping out in the market. It's the number one commercial PC in the world. It has gotten countless awards but we felt last year after Transform we need to build a step further, in really tailoring the ThinkPad towards the need of the future. So, we announced a new line of X1 Carbon and Yoga at CES the Consumer Electronics Show. And the reason is not we want to sell to consumer, but that we do recognize that a lot of CIOs and IT decision makers need to understand what consumers are really doing in terms of technology to make them successful. So, let's take a look at the video. (suspenseful music) >> When you're the number one business laptop of all time, your only competition is yourself. (wall shattering) And, that's different. Different, like resisting heat, ice, dust, and spills. Different, like sharper, brighter OLA display. The trackpoint that reinvented controls, and a carbon fiber roll cage to protect what's inside, built by an engineering and design team, doing the impossible for the last 25 years. This is the number one business laptop of all time, but it's not a laptop. It's a ThinkPad. (audience applauding) >> Thank you very much. And we are very proud that Lenovo ThinkPad has been selected as the best laptop in the world in the second year in a row. I think it's a wonderful tribute to what our engineers have been done on this one. And users do want awesome displays. They want the best possible audio, voice, and touch control, but some users they want more. What they want is super power, and I'm really proud to announce our newest member of the X1 family, and that's the X1 extreme. It's exceptionally featured. It has six core I9 intel chipset, the highest performance you get in the commercial space. It has Nvidia XTX graphic, it is a 4K UHD display with HDR with Dolby vision and Dolby Atmos Audio, two terabyte in SSD, so it is really the absolute Ferrari in terms of building high performance commercial computer. Of course it has touch and voice, but it is one thing. It has so much performance that it serves also a purpose that is not typical for commercial, and I know there's a lot of secret gamers also here in this room. So you see, by really bringing technology together in the commercial space, you're creating productivity solutions of one of a kind. But there's another category of products from a productivity perspective that is incredibly important in our commercial business, and that is the workstation business . Clearly workstations are very specifically designed computers for very advanced high-performance workloads, serving designers, architects, researchers, developers, or data analysts. And power and performance is not just about the performance itself. It has to be tailored towards the specific use case, and traditionally these products have a similar size, like a server. They are running on Intel Xeon technology, and they are equally complex to manufacture. We have now created a new category as the ultra mobile workstation, and I'm very proud that we can announce here the lightest mobile workstation in the industry. It is so powerful that it really can run AI and big data analysis. And with this performance you can go really close where you need this power, to the sensors, into the cars, or into the manufacturing places where you not only wannna read the sensors but get real-time analytics out of these sensors. To build a machine like this one you need customers who are really challenging you to the limit. and we're very happy that we had a customer who went on this journey with us, and ultimately jointly with us created this product. So, let's take a look at the video. (suspenseful music) >> My world involves pathfinding both the hardware needs to the various work sites throughout the company, and then finding an appropriate model of desktop, laptop, or workstation to match those needs. My first impressions when I first seen the ThinkPad P1 was I didn't actually believe that we could get everything that I was asked for inside something as small and light in comparison to other mobile workstations. That was one of the I can't believe this is real sort of moments for me. (engine roars) >> Well, it's better than general when you're going around in the wind tunnel, which isn't alway easy, and going on a track is not necessarily the best bet, so having a lightweight very powerful laptop is extremely useful. It can take a Xeon processor, which can support ECC from when we try to load a full car, and when we're analyzing live simulation results. through and RCFT post processor or example. It needs a pretty powerful machine. >> It's come a long way to be able to deliver this. I hate to use the word game changer, but it is that for us. >> Aston Martin has got a lot of different projects going. There's some pretty exciting projects and a pretty versatile range coming out. Having Lenovo as a partner is certainly going to ensure that future. (engine roars) (audience applauds) >> So, don't you think the Aston Martin design and the ThinkPad design fit very well together? (audience laughs) So if Q, would get a new laptop, I think you would get a ThinkPad X P1. So, I want to switch gears a little bit, and go into something in terms of productivity that is not necessarily on top of the mind or every end user but I believe it's on top of the mind of every C-level executive and of every CEO. Security is the number one threat in terms of potential risk in your business and the cost of cybersecurity is estimated by 2020 around six trillion dollars. That's more than the GDP of Japan and we've seen a significant amount of data breach incidents already this years. Now, they're threatening to take companies out of business and that are threatening companies to lose a huge amount of sensitive customer data or internal data. At Lenovo, we are taking security very, very seriously, and we run a very deep analysis, around our own security capabilities in the products that we are building. And we are announcing today a new brand under the Think umbrella that is called ThinkShield. Our goal is to build the world's most secure PC, and ultimately the most secure devices in the industry. And when we looked at this end-to-end, there is no silver bullet around security. You have to go through every aspect where security breaches can potentially happen. That is why we have changed the whole organization, how we look at security in our device business, and really have it grouped under one complete ecosystem of solutions, Security is always something where you constantly are getting challenged with the next potential breach the next potential technology flaw. As we keep innovating and as we keep integrating, a lot of our partners' software and hardware components into our products. So for us, it's really very important that we partner with companies like Intel, Microsoft, Coronet, Absolute, and many others to really as an example to drive full encryption on all the data seamlessly, to have multi-factor authentication to protect your users' identity, to protect you in unsecured Wi-Fi locations, or even simple things like innovation on the device itself, to and an example protect the camera, against usage with a little thing like a thinkShutter that you can shut off the camera. SO what I want to show you here, is this is the full portfolio of ThinkShield that we are announcing today. This is clearly not something I can even read to you today, but I believe it shows you the breadth of security management that we are announcing today. There are four key pillars in managing security end-to-end. The first one is your data, and this has a lot of aspects around the hardware and the software itself. The second is identity. The third is the security around online, and ultimately the device itself. So, there is a breakout on security and ThinkShield today, available in the afternoon, and encourage you to really take a deeper look at this one. The first pillar around productivity was the device, and around the device. The second major pillar that we are seeing in terms of intelligent transformation is the workspace itself. Employees of a new generation have a very different habit how they work. They split their time between travel, working remotely but if they do come in the office, they expect a very different office environment than what they've seen in the past in cubicles or small offices. They come into the office to collaborate, and they want to create ideas, and they really work in cross-functional teams, and they want to do it instantly. And what we've seen is there is a huge amount of investment that companies are doing today in reconfiguring real estate reconfiguring offices. And most of these kind of things are moving to a digital platform. And what we are doing, is we want to build an entire set of solutions that are just focused on making the workspace more productive for remote workforce, and to create technology that allow people to work anywhere and connect instantly. And the core of this is that we need to be, the productivity of the employee as high as possible, and make it for him as easy as possible to use these kind of technologies. Last year in Transform, I announced that we will enter the smart office space. By the end of last year, we brought the first product into the market. It's called the Hub 500. It's already deployed in thousands of our customers, and it's uniquely focused on Microsoft Skype for Business, and making meeting instantly happen. And the product is very successful in the market. What we are announcing today is the next generation of this product, what is the Hub 700, what has a fantastic audio quality. It has far few microphones, and it is usable in small office environment, as well as in major conference rooms, but the most important part of this new announcement is that we are also announcing a software platform, and this software platform allows you to run multiple video conferencing software solutions on the same platform. Many of you may have standardized for one software solution or for another one, but as you are moving in a world of collaborating instantly with partners, customers, suppliers, you always will face multiple software standards in your company, and Lenovo is uniquely positioned but providing a middleware platform for the device to really enable multiple of these UX interfaces. And there's more to come and we will add additional UX interfaces on an ongoing base, based on our customer requirements. But this software does not only help to create a better experience and a higher productivity in the conference room or the huddle room itself. It really will allow you ultimately to manage all your conference rooms in the company in one instance. And you can run AI technologies around how to increase productivity utilization of your entire conference room ecosystem in your company. You will see a lot more devices coming from the node in this space, around intelligent screens, cameras, and so on, and so on. The idea is really that Lenovo will become a core provider in the whole movement into the smart office space. But it's great if you have hardware and software that is really supporting the approach of modern IT, but one component that Kirk also mentioned is absolutely critical, that we are providing this to you in an as a service approach. Get it what you want, when you need it, and pay it in the amount that you're really using it. And within UIT there is also I think a new philosophy around IT management, where you're much more focused on the value that you are consuming instead of investing into technology. We are launched as a service two years back and we already have a significant number of customers running PC as a service, but we believe as a service will stretch far more than just the PC device. It will go into categories like smart office. It might go even into categories like phone, and it will definitely go also in categories like storage and server in terms of capacity management. I want to highlight three offerings that we are also displaying today that are sort of building blocks in terms of how we really run as a service. The first one is that we collaborated intensively over the last year with Microsoft to be the launch pilot for their Autopilot offering, basically deploying images easily in the same approach like you would deploy a new phone on the network. The purpose really is to make new imaging and enabling new PC as seamless as it's used to be in the phone industry, and we have a complete set of offerings, and already a significant number customers have deployed Autopilot with Lenovo. The second major offering is Premier Support, like in the in the server business, where Premier Support is absolutely critical to run critical infrastructure, we see a lot of our customers do want to have Premier Support for their end users, so they can be back into work basically instantly, and that you have the highest possible instant repair on every single device. And then finally we have a significant amount of time invested into understanding how the software as a service really can get into one philosophy. And many of you already are consuming software as a service in many different contracts from many different vendors, but what we've created is one platform that really can manage this all together. All these things are the foundation for a device as a service offering that really can manage this end-to-end. So, implementing an intelligent workplace can be really a daunting prospect depending on where you're starting from, and how big your company ultimately is. But how do you manage the transformation of technology workspace if you're present in 50 or more countries and you run an infrastructure for more than 100,000 people? Michelin, famous for their tires, infamous for their Michelin star restaurant rating, especially in New York, and instantly recognizable by the Michelin Man, has just doing that. Please welcome with me Damon McIntyre from Michelin to talk to us about the challenges and transforming collaboration and productivity. (audience applauding) (electronic dance music) Thank you, David. >> Thank you, thank you very much. >> We on? >> So, how do you feel here? >> Well good, I want to thank you first of all for your partnership and the devices you create that helped us design, manufacture, and distribute the best tire in the world, okay? I just had to say it and put out there, alright. And I was wondering, were those Michelin tires on that Aston Martin? >> I'm pretty sure there is no other tire that would fit to that. >> Yeah, no, thank you, thank you again, and thank you for the introduction. >> So, when we talk about the transformation happening really in the workplace, the most tangible transformation that you actually see is the drastic change that companies are doing physically. They're breaking down walls. They're removing cubes, and they're moving to flexible layouts, new desks, new huddle rooms, open spaces, but the underlying technology for that is clearly not so visible very often. So, tell us about Michelin's strategy, and the technology you are deploying to really enable this corporation. >> So we, so let me give a little bit a history about the company to understand the daunting tasks that we had before us. So we have over 114,000 people in the company under 170 nationalities, okay? If you go to the corporate office in France, it's Clermont. It's about 3,000 executives and directors, and what have you in the marketing, sales, all the way up to the chain of the global CIO, right? Inside of the Americas, we merged in Americas about three years ago. Now we have the Americas zone. There's about 28,000 employees across the Americas, so it's really, it's really hard in a lot of cases. You start looking at the different areas that you lose time, and you lose you know, your productivity and what have you, so there, it's when we looked at different aspects of how we were going to manage the meeting rooms, right? because we have opened up our areas of workspace, our CIO, CEOs in our zones will no longer have an office. They'll sit out in front of everybody else and mingle with the crowd. So, how do you take those spaces that were originally used by an individual but now turn them into like meeting rooms? So, we went through a large process, and looked at the Hub 500, and that really met our needs, because at the end of the day what we noticed was, it was it was just it just worked, okay? We've just added it to the catalog, so we're going to be deploying it very soon, and I just want to again point that I know everybody struggles with this, and if you look at all the minutes that you lose in starting up a meeting, and we know you know what I'm talking about when I say this, it equates to many many many dollars, okay? And so at the end the day, this product helps us to be more efficient in starting up the meeting, and more productive during the meeting. >> Okay, it's very good to hear. Another major trend we are seeing in IT departments is taking a more hands-off approach to hardware. We're seeing new technologies enable IT to create a more efficient model, how IT gets hardware in the hands of end-users, and how they are ultimately supporting themselves. So what's your strategy around the lifecycle management of the devices? >> So yeah you mentioned, again, we'll go back to the 114,000 employees in the company, right? You imagine looking at all the devices we use. I'm not going to get into the number of devices we have, but we have a set number that we use, and we have to go through a process of deploying these devices, which we right now service our own image. We build our images, we service them through our help desk and all that process, and we go through it. If you imagine deploying 25,000 PCs in a year, okay? The time and the daunting task that's behind all that, you can probably add up to 20 or 30 people just full-time doing that, okay? So, with partnering with Lenovo and their excellent technology, their technical teams, and putting together the whole process of how we do imaging, it now lifts that burden off of our folks, and it shifts it into a more automated process through the cloud, okay? And, it's with the Autopilot on the end of the project, we'll have Autopilot fully engaged, but what I really appreciate is how Lenovo really, really kind of got with us, and partnered with us for the whole process. I mean it wasn't just a partner between Michelin and Lenovo. Microsoft was also partnered during that whole process, and it really was a good project that we put together, and we hope to have something in a full production mode next year for sure. >> So, David thank you very, very much to be here with us on stage. What I really want to say, customers like you, who are always challenging us on every single aspect of our capabilities really do make the big difference for us to get better every single day and we really appreciate the partnership. >> Yeah, and I would like to say this is that I am, I'm doing what he's exactly said he just said. I am challenging Lenovo to show us how we can innovate in our work space with your devices, right? That's a challenge, and it's going to be starting up next year for sure. We've done some in the past, but I'm really going to challenge you, and my whole aspect about how to do that is bring you into our workspace. Show you how we make how we go through the process of making tires and all that process, and how we distribute those tires, so you can brainstorm, come back to the table and say, here's a device that can do exactly what you're doing right now, better, more efficient, and save money, so thank you. >> Thank you very much, David. (audience applauding) Well it's sometimes really refreshing to get a very challenging customers feedback. And you know, we will continue to grow this business together, and I'm very confident that your challenge will ultimately help to make our products even more seamless together. So, as we now covered productivity and how we are really improving our devices itself, and the transformation around the workplace, there is one pillar left I want to talk about, and that's really, how do we make businesses smarter than ever? What that really means is, that we are on a journey on trying to understand our customer's business, deeper than ever, understanding our customer's processes even better than ever, and trying to understand how we can help our customers to become more competitive by injecting state-of-the-art technology in this intelligent transformation process, into core processes. But this cannot be done without talking about a fundamental and that is the journey towards 5G. I really believe that 5G is changing everything the way we are operating devices today, because they will be connected in a way like it has never done before. YY talked about you know, 20 times 10 times the amount of performance. There are other studies that talk about even 200 times the performance, how you can use these devices. What it will lead to ultimately is that we will build devices that will be always connected to the cloud. And, we are preparing for this, and Kirk already talked about, and how many operators in the world we already present with our Moto phones, with how many Telcos we are working already on the backend, and we are working on the device side on integrating 5G basically into every single one of our product in the future. One of the areas that will benefit hugely from always connected is the world of virtual reality and augmented reality. And I'm going to pick here one example, and that is that we have created a commercial VR solution for classrooms and education, and basically using consumer type of product like our Mirage Solo with Daydream and put a solution around this one that enables teachers and schools to use these products in the classroom experience. So, students now can have immersive learning. They can studying sciences. They can look at environmental issues. They can exploring their careers, or they can even taking a tour in the next college they're going to go after this one. And no matter what grade level, this is how people will continue to learn in the future. It's quite a departure from the old world of textbooks. In our area that we are looking is IoT, And as YY already elaborated, we are clearly learning from our own processes around how we improve our supply chain and manufacturing and how we improve also retail experience and warehousing, and we are working with some of the largest companies in the world on pilots, on deploying IoT solutions to make their businesses, their processes, and their businesses, you know, more competitive, and some of them you can see in the demo environment. Lenovo itself already is managing 55 million devices in an IoT fashion connecting to our own cloud, and constantly improving the experience by learning from the behavior of these devices in an IoT way, and we are collecting significant amount of data to really improve the performance of these systems and our future generations of products on a ongoing base. We have a very strong partnership with a company called ADLINK from Taiwan that is one of the leading manufacturers of manufacturing PC and hardened devices to create solutions on the IoT platform. The next area that we are very actively investing in is commercial augmented reality. I believe augmented reality has by far more opportunity in commercial than virtual reality, because it has the potential to ultimately improve every single business process of commercial customers. Imagine in the future how complex surgeries can be simplified by basically having real-time augmented reality information about the surgery, by having people connecting into a virtual surgery, and supporting the surgery around the world. Visit a furniture store in the future and see how this furniture looks in your home instantly. Doing some maintenance on some devices yourself by just calling the company and getting an online manual into an augmented reality device. Lenovo is exploring all kinds of possibilities, and you will see a solution very soon from Lenovo. Early when we talked about smart office, I talked about the importance of creating a software platform that really run all these use cases for a smart office. We are creating a similar platform for augmented reality where companies can develop and run all their argumented reality use cases. So you will see that early in 2019 we will announce an augmented reality device, as well as an augmented reality platform. So, I know you're very interested on what exactly we are rolling out, so we will have a first prototype view available there. It's still a codename project on the horizon, and we will announce it ultimately in 2019, but I think it's good for you to take a look what we are doing here. So, I just wanted to give you a peek on what we are working beyond smart office and the device productivity in terms of really how we make businesses smarter. It's really about increasing productivity, providing you the most secure solutions, increase workplace collaboration, increase IT efficiency, using new computing devices and software and services to make business smarter in the future. There's no other company that will enable to offer what we do in commercial. No company has the breadth of commercial devices, software solutions, and the same data center capabilities, and no other company can do more for your intelligent transformation than Lenovo. Thank you very much. (audience applauding) >> Thanks mate, give me that. I need that. Alright, ladies and gentlemen, we are done. So firstly, I've got a couple of little housekeeping pieces at the end of this and then we can go straight into going and experiencing some of the technology we've got on the left-hand side of the room here. So, I want to thank Christian obviously. Christian, awesome as always, some great announcements there. I love the P1. I actually like the Aston Martin a little bit better, but I'll take either if you want to give me one for free. I'll take it. We heard from YY obviously about the industry and how the the fourth Industrial Revolution is impacting us all from a digital transformation perspective, and obviously Kirk on DCG, the great NetApp announcement, which is going to be really exciting, actually that Twitter and some of the social media panels are absolutely going crazy, so it's good to see that the industry is really taking some impact. Some of the publications are really great, so thank you for the media who are obviously in the room publishing right no. But now, I really want to say it's all of your turn. So, all of you up the back there who are having coffee, it's your turn now. I want everyone who's sitting down here after this event move into there, and really take advantage of the 15 breakouts that we've got set there. There are four breakout sessions from a time perspective. I want to try and get you all out there at least to use up three of them and use your fourth one to get out and actually experience some of the technology. So, you've got four breakout sessions. A lot of the breakout sessions are actually done twice. If you have not downloaded the app, please download the app so you can actually see what time things are going on and make sure you're registering correctly. There's a lot of great experience of stuff out there for you to go do. I've got one quick video to show you on some of the technology we've got and then we're about to close. Alright, here we are acting crazy. Now, you can see obviously, artificial intelligence machine learning in the browser. God, I hate that dance, I'm not a Millenial at all. It's effectively going to be implemented by healthcare. I want you to come around and test that out. Look at these two guys. This looks like a Lenovo management meeting to be honest with you. These two guys are actually concentrating, using their brain power to race each others in cars. You got to come past and give that a try. Give that a try obviously. Fantastic event here, lots of technology for you to experience, and great partners that have been involved as well. And so, from a Lenovo perspective, we've had some great alliance partners contribute, including obviously our number one partner, Intel, who's been a really big loyal contributor to us, and been a real part of our success here at Transform. Excellent, so please, you've just seen a little bit of tech out there that you can go and play with. I really want you, I mean go put on those black things, like Scott Hawkins our chief marketing officer from Lenovo's DCG business was doing and racing around this little car with his concentration not using his hands. He said it's really good actually, but as soon as someone comes up to speak to him, his car stops, so you got to try and do better. You got to try and prove if you can multitask or not. Get up there and concentrate and talk at the same time. 62 different breakouts up there. I'm not going to go into too much detai, but you can see we've got a very, very unusual numbering system, 18 to 18.8. I think over here we've got a 4849. There's a 4114. And then up here we've got a 46.1 and a 46.2. So, you need the decoder ring to be able to understand it. Get over there have a lot of fun. Remember the boat leaves today at 4:00 o'clock, right behind us at the pier right behind us here. There's 400 of us registered. Go onto the app and let us know if there's more people coming. It's going to be a great event out there on the Hudson River. Ladies and gentlemen that is the end of your keynote. I want to thank you all for being patient and thank all of our speakers today. Have a great have a great day, thank you very much. 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>> Narrator: Live from New York, it's the Cube. Covering Machine Learning Everywhere: Build Your Ladder to AI. Brought to you by IBM. >> And welcome back here to New York City. We're at IBM's Machine Learning Everywhere: Build Your Ladder to AI, along with Dave Vellante, John Walls, and we're now joined by Sam Lightstone, who is an IBM fellow in analytics. And Sam, good morning. Thanks for joining us here once again on the Cube. >> Yeah, thanks a lot. Great to be back. >> Yeah, great. Yeah, good to have you here on kind of a moldy New York day here in late February. So we're talking, obviously data is the new norm, is what certainly, have heard a lot about here today and of late here from IBM. Talk to me about, in your terms, of just when you look at data and evolution and to where it's now become so central to what every enterprise is doing and must do. I mean, how do you do it? Give me a 30,000-foot level right now from your prism. >> Sure, I mean, from a super, if you just stand back, like way far back, and look at what data means to us today, it's really the thing that is separating companies one from the other. How much data do they have and can they make excellent use of it to achieve competitive advantage? And so many companies today are about data and only data. I mean, I'll give you some like really striking, disruptive examples of companies that are tremendously successful household names and it's all about the data. So the world's largest transportation company, or personal taxi, can't call it taxi, but (laughs) but, you know, Uber-- >> Yeah, right. >> Owns no cars, right? The world's largest accommodation company, Airbnb, owns no hotels, right? The world's largest distributor of motion pictures owns no movie theaters. So these companies are disrupting because they're focused on data, not on the material stuff. Material stuff is important, obviously. Somebody needs to own a car, somebody needs to own a way to view a motion picture, and so on. But data is what differentiates companies more than anything else today. And can they tap into the data, can they make sense of it for competitive advantage? And that's not only true for companies that are, you know, cloud companies. That's true for every company, whether you're a bricks and mortars organization or not. Now, one level of that data is to simply look at the data and ask questions of the data, the kinds of data that you already have in your mind. Generating reports, understanding who your customers are, and so on. That's sort of a fundamental level. But the deeper level, the exciting transformation that's going on right now, is the transformation from reporting and what we'll call business intelligence, the ability to take those reports and that insight on data and to visualize it in the way that human beings can understand it, and go much deeper into machine learning and AI, cognitive computing where we can start to learn from this data and learn at the pace of machines, and to drill into the data in a way that a human being cannot because we can't look at bajillions of bytes of data on our own, but machines can do that and they're very good at doing that. So it is a huge, that's one level. The other level is, there's so much more data now than there ever was because there's so many more devices that are now collecting data. And all of us, you know, every one of our phones is collecting data right now. Your cars are collecting data. I think there's something like 60 sensors on every car that rolls of the manufacturing line today. 60. So it's just a wild time and a very exciting time because there's so much untapped potential. And that's what we're here about today, you know. Machine learning, tapping into that unbelievable potential that's there in that data. >> So you're absolutely right on. I mean the data is foundational, or must be foundational in order to succeed in this sort of data-driven world. But it's not necessarily the center of the universe for a lot of companies. I mean, it is for the big data, you know, guys that we all know. You know, the top market cap companies. But so many organizations, they're sort of, human expertise is at the center of their universe, and data is sort of, oh yeah, bolt on, and like you say, reporting. >> Right. >> So how do they deal with that? Do they get one big giant DB2 instance and stuff all the data in there, and infuse it with MI? Is that even practical? How do they solve this problem? >> Yeah, that's a great question. And there's, again, there's a multi-layered answer to that. But let me start with the most, you know, one of the big changes, one of the massive shifts that's been going on over the last decade is the shift to cloud. And people think of the shift to cloud as, well, I don't have to own the server. Someone else will own the server. That's actually not the right way to look at it. I mean, that is one element of cloud computing, but it's not, for me, the most transformative. The big thing about the cloud is the introduction of fully-managed services. It's not just you don't own the server. You don't have to install, configure, or tune anything. Now that's directly related to the topic that you just raised, because people have expertise, domains of expertise in their business. Maybe you're a manufacturer and you have expertise in manufacturing. If you're a bank, you have expertise in banking. You may not be a high-tech expert. You may not have deep skills in tech. So one of the great elements of the cloud is that now you can use these fully managed services and you don't have to be a database expert anymore. You don't have to be an expert in tuning SQL or JSON, or yadda yadda. Someone else takes care of that for you, and that's the elegance of a fully managed service, not just that someone else has got the hardware, but they're taking care of all the complexity. And that's huge. The other thing that I would say is, you know, the companies that are really like the big data houses, they got lots of data, they've spent the last 20 years working so hard to converge their data into larger and larger data lakes. And some have been more successful than others. But everybody has found that that's quite hard to do. Data is coming in many places, in many different repositories, and trying to consolidate, you know, rip the data out, constantly ripping it out and replicating into some data lake where you, or data warehouse where you can do your analytics, is complicated. And it means in some ways you're multiplying your costs because you have the data in its original location and now you're copying it into yet another location. You've got to pay for that, too. So you're multiplying costs. So one of the things I'm very excited about at IBM is we've been working on this new technology that we've now branded it as IBM Queryplex. And that gives us the ability to query data across all of these myriad sources as if they are in one place. As if they are a single consolidated data lake, and make it all look like (snaps) one repository. And not only to the application appear as one repository, but actually tap into the processing power of every one of those data sources. So if you have 1,000 of them, we'll bring to bear the power 1,000 data sources and all that computing and all that memory on these analytics problems. >> Well, give me an example why that matters, of what would be a real-world application of that. >> Oh, sure, so there, you know, there's a couple of examples. I'll give you two extremes, two different extremes. One extreme would be what I'll call enterprise, enterprise data consolidation or virtualization, where you're a large institution and you have several of these repositories. Maybe you got some IBM repositories like DB2. Maybe you've got a little bit of Oracle and a little bit of SQL Server. Maybe you've got some open source stuff like Postgres or MySQL. You got a bunch of these and different departments use different things, and it develops over decades and to some extent you can't even control it, (laughs) right? And now you just want to get analytics on that. You just, what's this data telling me? And as long as all that data is sitting in these, you know, dozens or hundreds of different repositories, you can't tell, unless you copy it all out into a big data lake, which is expensive and complicated. So Queryplex will solve that problem. >> So it's sort of a virtual data store. >> Yeah, and one of the terms, many different terms that are used, but one of the terms that's used in the industry is data virtualization. So that would be a suitable terminology here as well. To make all that data in hundreds, thousands, even millions of possible data sources, appear as one thing, it has to tap into the processing power of all of them at once. Now, that's one extreme. Let's take another extreme, which is even more extreme, which is the IoT scenario, Internet of Things, right? Internet of Things. Imagine you've, have devices, you know, shipping containers and smart meters on buildings. You could literally have 100,000 of these or a million of these things. They're usually small; they don't usually have a lot of data on them. But they can store, usually, couple of months of data. And what's fascinating about that is that most analytics today are really on the most recent you know, 48 hours or four weeks, maybe. And that time is getting shorter and shorter, because people are doing analytics more regularly and they're interested in, just tell me what's going on recently. >> I got to geek out here, for a second. >> Please, well thanks for the warning. (laughs) >> And I know you know things, but I'm not a, I'm not a technical person, but I've been a molt. I've been around a long time. A lot of questions on data virtualization, but let me start with Queryplex. The name is really interesting to me. When I, and you're a database expert, so I'm going to tap your expertise. When I read the Google Spanner paper, I called up my colleague David Floyer, who's an ex-IBM, I said, "This is like global Sysplex. "It's a global distributed thing," And he goes, "Yeah, kind of." And I got very excited. And then my eyes started bleeding when I read the paper, but the name, Queryplex, is it a play on Sysplex? Is there-- >> It's actually, there's a long story. I don't think I can say the story on-air, but we, suffice it to say we wanted to get a name that was legally usable and also descriptive. >> Dave: Okay. >> And we went through literally hundreds and hundreds of permutations of words and we finally landed on Queryplex. But, you know, you mentioned Google Spanner. I probably should spend a moment to differentiate how what we're doing is-- >> Great, if you would. >> A different kind of thing. You know, on Google Spanner, you put data into Google Spanner. With Queryplex, you don't put data into it. >> Dave: Don't have to move it. >> You don't have to move it. You leave it where it is. You can have your data in DB2, you can have it in Oracle, you can have it in a flat file, you can have an Excel spreadsheet, and you know, think about that. An Excel spreadsheet, a collection of text files, comma delimited text files, SQL Server, Oracle, DB2, Netezza, all these things suddenly appear as one database. So that's the transformation. It's not about we'll take your data and copy it into our system, this is about leave your data where it is, and we're going to tap into your (snaps) existing systems for you and help you see them in a unified way. So it's a very different paradigm than what others have done. Part of the reason why we're so excited about it is we're, as far as we know, nobody else is really doing anything quite like this. >> And is that what gets people to the 21st century, basically, is that they have all these legacy systems and yet the conversion is much simpler, much more economical for them? >> Yeah, exactly. It's economical, it's fast. (snaps) You can deploy this in, you know, a very small amount of time. And we're here today talking about machine learning and it's a very good segue to point out in order to get to high-quality AI, you need to have a really strong foundation of an information architecture. And for the industry to show up, as some have done over the past decade, and keep telling people to re-architect their data infrastructure, keep modifying their databases and creating new databases and data lakes and warehouses, you know, it's just not realistic. And so we want to provide a different path. A path that says we're going to make it possible for you to have superb machine learning, cognitive computing, artificial intelligence, and you don't have to rebuild your information architecture. We're going to make it possible for you to leverage what you have and do something special. >> This is exciting. I wasn't aware of this capability. And we were talking earlier about the cloud and the managed service component of that as a major driver of lowering cost and complexity. There's another factor here, which is, we talked about moving data-- >> Right. >> And that's one of the most expensive components of any infrastructure. If I got to move data and the transmission costs and the latency, it's virtually impossible. Speed of light's still up. I know you guys are working on speed of light, but (Sam laughs) you'll eventually get there. >> Right. >> Maybe. But the other thing about cloud economics, and this relates to sort of Queryplex. There's this API economy. You've got virtually zero marginal costs. When you were talking, I was writing these down. You got global scale, it's never down, you've got this network effect working for you. Are you able to, are the standards there? Are you able to replicate those sort of cloud economics the APIs, the standards, that scale, even though you're not in control of this, there's not a single point of control? Can you explain sort of how that magic works? >> Yeah, well I think the API economy is for real and it's very important for us. And it's very important that, you know, we talk about API standards. There's a beautiful quote I once heard. The beautiful thing about standards is there's so many to choose from. (All laugh) And the reality is that, you know, you have standards that are official standards, and then you have the de facto standards because something just catches on and nobody blessed it. It just got popular. So that's a big part of what we're doing at IBM is being at the forefront of adopting the standards that matter. We made a big, a big investment in being Spark compatible, and, in fact, even with Queryplex. You can issue Spark SQL against Queryplex even though it's not a Spark engine, per se, but we make it look and feel like it can be Spark SQL. Another critical point here, when we talk about the API economy, and the speed of light, and movement to the cloud, and these topics you just raised, the friction of the Internet is an unbelievable friction. (John laughs) It's unbelievable. I mean, you know, when you go and watch a movie over the Internet, your home connection is just barely keeping up. I mean, you're pushing it, man. So a gigabyte, you know, a gigabyte an hour or something like that, right? Okay, and if you're a big company, maybe you have a fatter pipe. But not a lot fatter. I mean, not orders of, you're talking incredible friction. And what that means is that it is difficult for people, for companies, to en masse, move everything to the cloud. It's just not happening overnight. And, again, in the interest of doing the best possible service to our customers, that's why we've made it a fundamental element of our strategy in IBM to be a hybrid, what we call hybrid data management company, so that the APIs that we use on the cloud, they are compatible with the APIs that we use on premises. And whether that's software or private cloud. You've got software, you've got private cloud, you've got public cloud. And our APIs are going to be consistent across, and applications that you code for one will run on the other. And you can, that makes it a lot easier to migrate at your leisure when you're ready. >> Makes a lot of sense. That way you can bring cloud economics and the cloud operating model to your data, wherever the data exists. Listening to you speak, Sam, it reminds me, do you remember when Bob Metcalfe who I used to work with at IDG, predicted the collapse of the Internet? He predicted that year after year after year, in speech after speech, that it was so fragile, and you're bringing back that point of, guys, it's still, you know, a lot of friction. So that's very interesting, (laughs) as an architect. >> You think Bob's going to be happy that you brought up that he predicted the Internet was going to be its own demise? (Sam laughs) >> Well, he did it in-- >> I'm just saying. >> I'm staying out of it, man. >> He did it as a lightning rod. >> As a talking-- >> To get the industry to respond, and he had a big enough voice so he could do that. >> That it worked, right. But so I want to get back to Queryplex and the secret sauce. Somehow you're creating this data virtualization capability. What's the secret sauce behind it? >> Yeah, so I think, we're not the first to try, by the way. Actually this problem-- >> Hard problem. >> Of all these data sources all over the place, you try to make them look like one thing. People have been trying to figure out how to do that since like the '70s, okay, so, but-- >> Dave: Really hasn't worked. >> And it hasn't worked. And really, the reason why it hasn't worked is that there's been two fundamental strategies. One strategy is, you have a central coordinator that tries to speak to each of these data sources. So I've got, let's say, 10,000 data sources. I want to have one coordinator tap into each of them and have a dialogue. And what happens is that that coordinator, a server, an agent somewhere, becomes a network bottleneck. You were talking about the friction of the Internet. This is a great example of friction. One coordinator trying to speak to, you know, and collaborators becomes a point of friction. And it also becomes a point of friction not only in the Internet, but also in the computation, because he ends up doing too much of the work. There's too many things that cannot be done at the, at these edge repositories, aggregations, and joins, and so on. So all the aggregations and joins get done by this one sucker who can't keep up. >> Dave: The queue. >> Yeah, so there's a big queue, right. So that's one strategy that didn't work. The other strategy that people tried was sort of an end squared topology where every data source tries to speak to every other data source. And that doesn't scale as well. So what we've done in Queryplex is something that we think is unique and much more organic where we try to organize the universe or constellation of these data sources so that every data source speaks to a small number of peers but not a large number of peers. And that way no single source is a bottleneck, either in network or in computation. That's one trick. And the second trick is we've designed algorithms that can truly be distributed. So you can do joins in a distributed manner. You can do aggregation in a distributed manner. These are things, you know, when I say aggregation, I'm talking about simple things like a sum or an average or a median. These are super popular in, in analytic queries. Everybody wants to do a sum or an average or a median, right? But in the past, those things were hard to do in a distributed manner, getting all the participants in this universe to do some small incremental piece of the computation. So it's really these two things. Number one, this organic, dynamically forming constellation of devices. Dynamically forming a way that is latency aware. So if I'm a, if I represent a data source that's joining this universe or constellation, I'm going to try to find peers who I have a fast connection with. If all the universe of peers were out there, I'll try to find ones that are fast. And the second is having algorithms that we can all collaborate on. Those two things change the game. >> We're getting the two minute sign, and this is fascinating stuff. But so, how do you deal with the data consistency problem? You hear about eventual consistency and people using atomic clocks and-- Right, so Queryplex, you know, there's a reason we call it Queryplex not Dataplex. Queryplex is really a read-only operation. >> Dave: Oh, there you go. >> You've got all these-- >> Problem solved. (laughs) >> Problem solved. You've got all these data sources. They're already doing their, they already have data's coming in how it's coming in. >> Dave: Simple and brilliant. >> Right, and we're not changing any of that. All we're saying is, if you want to query them as one, you can query them as one. I should say a few words about the machine learning that we're doing here at the conference. We've talked about the importance of an information architecture and how that lays a foundation for machine learning. But one of the things that we're showing and demonstrating at the conference today, or at the showcase today, is how we're actually putting machine learning into the database. Create databases that learn and improve over time, learn from experience. In 1952, Arthur Samuel was a researcher at IBM who first, had one of the most fundamental breakthroughs in machine learning when he created a machine learning algorithm that will play checkers. And he programmed this checker playing game of his so it would learn over time. And then he had a great idea. He programmed it so it would play itself, thousands and thousands and thousands of times over, so it would actually learn from its own mistakes. And, you know, the evolution since then. Deep Blue playing chess and so on. The Watson Jeopardy game. We've seen tremendous potential in machine learning. We're putting into the database so databases can be smarter, faster, more consistent, and really just out of the box (snaps) performing. >> I'm glad you brought that up. I was going to ask you, because the legend Steve Mills once said to me, I had asked him a question about in-memory databases. He said ever databases have been around, in-memory databases have been around. But ML-infused databases are new. >> Sam: That's right, something totally new. >> Dave: Yeah, great. >> Well, you mentioned Deep Blue. Looking forward to having Garry Kasparov on a little bit later on here. And I know he's speaking as well. But fascinating stuff that you've covered here, Sam. We appreciate the time here. >> Thank you, thanks for having me. >> And wish you continued success, as well. >> Thank you very much. >> Sam Lightstone, IBM fellow joining us here live on the Cube. We're back with more here from New York City right after this. (electronic music)

>> Announcer: Live, from Madrid, Spain, it's theCUBE covering HPE Discover Madrid 2017 brought to you by, Hewlett Packard Enterprise (techno music) >> We're back in Madrid, Spain everybody, this is theCUBE. My name is Dave Vellante, and I'm here with my cohost Peter Burris. Keerti Melkote is here. He's a co-founder and CTO of Aruba. Keerti, good to see you again, thanks for coming on theCUBE. >> Absolutely, my pleasure to be here again. >> So I want to go back to when you co-founded Aruba what was your vision, what was the outcome that you were, you were perceiving for your customers and how has that journey manifested itself to where you are today? >> Wow that, it goes back a long time, 15 years ago. >> And do it in 15 minute increments. >> Right, so you know I, I spent my early days of my career at Cisco in fact, building land switches and the big rage then, was to plug into the network, into the internet and we sold a boatload of these catalyst boxes to all sorts of enterprise customers throughout the world and around 2002 when I started Aruba, I spoke to a few customers about what's next for them around the horizon, it was very clear that it was not the next ethernet standard it's not about going from 100 megabytes to a thousand megabytes. Like, you have a lot of bandwidth going to everybody's desks what they wanted to talk about was how can I connect my people when they're away from their desks and that naturally led to more of a wireless solution. And WiFi, which was still very early back in 2002, was the answer, but when I asked them why are they not adopting WiFi and they said, "Hey, its not secure "it doesn't have the performance I need, "it's not manageable" in other words, it's simply not ready for enterprise. It could be good for the home, in the consumer world, but not for the enterprise. Yeah I took that as a challenge and say, "Hey, looks like a business opportunity, "let's see if I can convince someone "to pay me or at least fund my idea "and to solve those problems." and you know, when when you go with a business plan to venture capitalists they ask for two things. They say, "Hey, whats your technology differentiation?" which are all the things I talk about, we solve the security problem, the manageability problem, the deployment problem, and the like, but they also ask you, "Why can't Cisco do this and kill you guys" and "What gives you the right to exist?" and the thing that I learned about business is, if you're disruptive it's a good thing, especially to the incumbent. And wireless was fundamentally disruptive to Cisco because we were basically, our value prop was, "You don't need all these wires" and if you built a business on connecting people on wires, my business was about unplugging and still staying connected. So it was naturally disruptive and it led to we didn't foresee the boom in mobility that we had seen. At at that time we didn't even have an iPhone or an iPad, >> Dave: Right. >> It was about laptops. So we had a fun time connecting the laptop-carrying workforce in university campuses, in enterprises, and the like, and, but our business changed dramatically in two ways. One was when the iPad was introduced, our customers said here is a personal device and the idea of bring your own device became popular with the iPad. Where employees bring their own devices and there's no security model to connect them into the enterprise. So we allowed them to connect over wireless, and there's no Ethernet on an iPad, you can't plug it in even if you want to. So that made WiFi more of a pervasive technology and at the same time we were coming out of the 2008 economic recession, so there was a lot of, uh I would say, demand for new ways to accomplish more of the same with reduced budgets. And so we said with wireless you can really cut out the wires, and lower your cost, and yet keep people connected. And so that sort of gave us the boom. >> So, so it started as a technical challenge, >> Keerti: Yeah. >> And, and one that you just said okay, I'm going to just dive in >> Keerti: Yeah. >> And we'll see what, I remember Bob Metcalfe, Peter, at one point was asked the question, we used to used to work with him at IDG, you know, "Wireless or wired?" that was you know business back in the late 90s right, >> Keerti: Yeah. >> And he said well, the ethernet guy, so, he invented it, so he said "Well wireless is always going to be 'better'" he said, "but I can't predict "what's going to happen in the future, "it's hard to believe that wireless isn't just going to "explode at some point, I don't know why." And then this is, of course, before the iPad, before the smartphones, you as well when you started the company, and then, and and I would imagine the VCs were asking about the market potential. And now you fast forward to you know the days when HPE saw the opportunity, I mean, it just seems so blatantly obvious now with the intelligent edge, so take us forward to where we are today whats that, obviously the TAM has changed completely and the wind is at your back so maybe, talk about that. >> Absolutely, so last year alone we have grown the business 21% which is three times the market in terms of growth and it's profitable growth because we are really a software-defined architecture. That's one of the core differentiators of the businesses it's not really about wired or wireless, it's what do you enable the customer to do with this technology and how agile can they be to use the technology to meet their business needs. And you know there's a lot of conversation obviously as part of HP around the data center and what's happening there with hybrid IT. The intelligent edge is the complement of that. The simple way to think about the intelligent edge is IT technology, which is hardware, software, services, that goes outside the data center that's closer to the user and delivers basically on the business outcomes with digital initiatives that our customers are looking at. So I'll give you some examples. One is in the enterprise itself, the most simple example is take a workplace, take an office and transform the office in some way, and the easiest way to do it is, get it off your cubicle farms with desktops and mobile devices, make it an open collaborative workplace which is what everybody wants and oh by the way, as you start to do this not only do you raise the productivity of your workforce, but you make it more attractive to attract and retain the best and brightest from the new workforce that is graduating from colleges that are looking for these work environments. And the other upshot is that you have an idea of where people are, not only who is getting onto the network but with wireless you know where they are that gives you a sense of how your real estate is being utilized which, I didn't know this, but it was basically you used to hire people to watch how people moved around and do like six months studies of if your real estate is being used appropriately or not. Now you get it real time with analytics. And you can use that location to really create new workflows within the enterprise that are completely not known. An example is conference rooms. If you look at how people book conference rooms, you go to your calendar in exchange and book it, the meeting may or may not happen but the meeting is booked anyway and so we flip the model and I say instead instead of booking meetings two weeks in advance before they happen, how about we turn it around and make it just in time, just like taxi cabs or limousine rides right, they used to be you had to book it in advance, now with Uber you just hail it right whenever you want. You can do the same thing with conference rooms. Another example was not only do you book the conference room but you can turn up the lights, turn up the AC. So a lot of IOT elements to the workplace, so a very simple prosaic things like a workplace can be completely modernized using this technology. So that's an example of an intelligent edge. Another is in retail, where customers want to, our customers in that industry want to use the network, the wireless channel, to increase the engagement for the shoppers when they enter the stores. Today if you look at a bricks-and-mortar experience, you walk into a store, it is totally disconnected. Whereas if you're shopping online, on Amazon let's say right it has your shopping history, it'll give you recommendations its a very modern sort of shopping experience. So how do you bring that online experience to the offline world, and make it real time when you're out there, when you're touching and feeling the products you get information about the products, you get, you might get some promotions, you might be asked to consider accessories that go with the product that you might be buying. So it gives the retailer an ability to really engage with the shopper in real time, and that modernizes their business right, so now you're talking about using IT to enhance revenue, so IT is no longer just a back office thing that you do it's really to enhance the business itself. And we are seeing this in industrial settings as well, where the factory floor is being modernized to ensure that new workflows are coming in, to the to ensure the plant equipment is being maintained correctly before things break down. So we see so much action frankly at the intelligent edge that the in terms of just the market demand and the TAM, it's growing dramatically. >> Well Peter, Keerti's describing, when HPE bought Aruba, I said "Is this a strategic infrastructure or "is it just a great business?" and you're, what you're describing is a strategic infrastructure so >> Yeah, but it's also a great business so it's you, you weren't, HP might have originally thought that it was buying Aruba to buttress itself in the networking business, to help make the networking business happen. But whats occurred is, Keerti and his team, have helped catalyze this whole competency around the intelligent edge and it's, you mentioned a couple things that I think are really interesting. First off, what the, when we talk to CIOs and business people today, what they keep telling us is "I need to think in terms of the event "that I need to support, and put processing, compute, "right there, at the moment, "and I can't do that without great networking." So number one, network is a crucial feature of thinking differently about process and data, compute and data, right there when the customer wants it. You mentioned the whole notion of retail, well I do this, I think we all do this, we go into the store, we get the tactile experience, we look at the price, and we decide to go home and buy it somewhere else 'cause its more convenient. Lost opportunity for the retailer >> Keerti: Yeah. >> You put compute and data right there, and marry it with the tactile experience and you need Aruba-like technologies to make that happen, so talk a little bit about this idea of how it changes the way a businessperson thinks how the intelligent edge is not just a technologist talking about stuff but it's, turn around, how is it a new way of thinking about business that then translates into the intelligent edge? >> Yeah, so I think today when you talk about digital right, it's all about, I don't see in the future any business that is going to be independent of IT. IT used to be a support function, but every business in the world, can >> Peter: can I pick up on that really quick before you go? >> Yeah. >> We talk about the difference between business and digital business is data, full stop, that's it. Data as an asset is the basis of digital business. Otherwise it's all the same. What do you think? >> Exactly so and data for powering experiences that's kind of how we put it, right, that's really what it's about. You talked about the moment right, so what they want to capture, the you know, if you look at retail, they want to capture the shopping experience, when you're in there. The data is about what they're interested in, is, in aggregate, where do my shoppers spend most of their time when they walk into my store, how long do they hang out, do they come back, how often do they come back? This is analytics information that they can use to craft their campaigns, to bring more shoppers into the stores right, this is data. The data comes based on when you walk into the store and the asset that allows this data to be built is the network. The moment you walk in, the network recognizes you, that you walked in, by your device. And it now knows how, the path you're taking. I don't need to know you, Peter, walked, but I know that a shopper took this particular path. And I collect enough data, I get patterns out of it, and based on the patterns, I then monetize it to bring the shoppers back. Now I marry this data to my prior existing data like a loyalty card database, if you are in my loyalty card database, then I know more about you, about your shopping habits, and that allows me to cross-sell and upsell to you. So they look at this whole shopping experience. Ultimately it's about business, it's about how do you increase the wallet share of your spend when you walk into the store, and also to convert the sale when you're there. Not just do window shopping, walk off, and purchase on Amazon, but make the sale happen. To do all of that you need to crunch the data, you need to have super fast networking to engage the customer, and all that needs to happen in real time, right at that point in time. And that's what the edge is about. >> Do you know, have you heard the name, I'm going to throw something out, have you heard the name Christopher Alexander? >> Yeah. >> Timeless way building? >> Yeah. >> The whole notion that architecture is about creating spaces that are functional to people, and make them convenient and attractive and useful. And in many respects what we're talking about is creating digital and real spaces combined at the same time, that allows people to do things that are valuable to them. Fundamentally, do you agree with that? Is that kind of where we're going with this? >> Completely. Digital as I said right, today we think of digital as an add-on to the space. In the future it'll be embedded, you wont even think about it, it'll just be there, and you'll just experience as a digital space. >> It's putting the capabilities into the space that the customer, the employee, whoever needs to make that moment most valuable. >> And voice interfaces, if you think about Alexa and all these new things that are coming out right, they're much more natural, you're not going like this right, you're just walking in, you might have an Apple watch on you that's as good of a mobile device as a mobile phone right. So I don't need to you to be looking at anything I just, walk in, I can buzz your Apple watch and say, "Hey, here's a coupon for you" or you can just talk to a display and say, "Hey, tell me more about this product" and you'll get information back, beamed to you. >> Keerti, bring it back to Discover, what are we going to hear this week from, >> So one of the big big things you'll hear from us is as you think about all these digital experiences that we're creating, in whatever setting, there's one huge barrier to all of it and, guess what that is. >> Peter: Security! >> Absolutely, security is the number one issue. And if you don't have a secure foundation your digital business is at risk. And we have seen that in headlines, in bold headlines, in the last year or two years right, so how do you build security from the ground up, and give you a super robust infrastructure that gives you what you want but doesn't compromise your business? That's fundamental, security is a boardroom topic. The CEO has to respond to how you're ensuring consumer data is not being compromised, patient data is not being compromised, or whatever the sacrosanct data is that the enterprise owns about its customers. So we are talking about security and how you provide advanced machine learning and behavioral analytics capabilities to give you advanced warning about security threats that may be already inside the enterprise. Because there is no such enterprise today, that is digital and not vulnerable, everybody is vulnerable, and everybody knows there's a threat. The key is how long does it take you to figure out you have a threat and fix it. And we are helping them figure out faster and fix it faster. >> And you brought in some assets to do that, Niara, >> They're going to be introducing this, this idea this product called Introspect, we acquired Niara, which brings us to the AI machine learning world into the enterprise, and the key idea there is that security doesn't stop at the perimeter. You really have this in corporate security from the internal from the inside out, not just from the outside in. >> Great, Keerti, thanks so much for coming in theCUBE and good luck this week, we appreciate your time. >> Thank you very much. >> Oh you're welcome. Alright, keep it right there everybody, Peter and I will be back with our next guest. We're live from HPE Discover Madrid, this is theCUBE. (techno music)