>> live from London, England. It's the key covering a ws summat London twenty nineteen brought to you by Amazon Web services. >> Welcome back to London. Everybody, this is David. Continue watching the Cube. The leader in live tech coverage. We're here at the London A ws sum of twelve thousand people here for one day summit, which is typically the size of a large tech event that we cover in Las Vegas. John Lovelock is here is a vice president analyst that gardeners essentially gardeners Chief Forecaster John, Thanks for coming with huge pleasure to have you. Thanks for >> having me. It's a great show today. Great event. Happy to be here. >> You're in from Toronto. And, uh, yeah, I'm very impressed with the crowd. He obviously a developer crowd. You and I aren't ties. They see us coming. They think we're trying to sell him something. Waseem have >> ah, monopoly on all the ties and the rule. We have a very diverse group here, but they're all very enthusiastic. Could be here. It's been a great conference. >> So everywhere we go, we hear numbers. Obviously people want toe talk about the size of the market, its growth. That's your job to figure that out. I mean, I've heard numbers that it's a multi trillion dollar market now, uh, growing faster than GDP. I'd love to get your your thoughts on that. Where do we start? Top level macro. What's the pick? >> Top level macro cloud in all of its forms is the fastest growing tech the gardener is tracking. There is definitely spending in there. We're in the twenty twenty five percent growth globally. Nothing else comes close. Your overall growth rate for Total I'd spend this year is one point one percent cloud a twenty five percent. It is moving the market. The only way is doing that, of course, it's by taking money away from legacy lines of business. You know, it's about the switch and spending preference from legacy it and moving that into clouded in all of its forms. >> So it's a share shift you see going on. So you've got the total market growing below global GDP. Is that is that a fair statement? >> It's just below global TV >> usually tracks pretty closely. You would think right? I mean, it's logical that it would >> actually this almost no correlation between GDP and spend really It is one of the biggest things that we have to fight again. >> So that's a myth. >> Absolute myth here to tell you it is dead. There is a flight co relation, but there's no causation. Yl move between GDP and spending, just not there. >> So that makes your job even harder. It does. We have to >> watch what the vendors. They're selling off what they hope to spend. But most importantly, it's about what the demand side is doing. What are people doing? Why air they buying what they're buying? How much are they spending on the stuff that they have, what's get retired and what gets replaced with something new? And that's the whole big shift that we're seeing is a lot of things that are being retired out of the CEOs bag of tricks and a lot of new things coming in. So the spending shift that we're seeing it's all down to where is the CEO in their journey? Howie? How quickly are they able to move from legacy? I t to the new it How quickly is their business moving into being a digital business? >> So okay, so it's one plus percent growth on what we're talking two trillion, three trillion. I mean, what's the four trillion >> four trillion dollars by twenty twenty? >> Okay, And you said Cloud computing growing its twentieth twenty five percent. Eight of us, a thirty billion dollars run right business now growing at forty two percent. Inconstant currency. We're going in at nearly or maybe even slightly more than twice the market. That's astounding, that basically adding nine to ten million dollars a year. >> And they are right in the sweet spot for cloud growth. Do >> you think they hit the law of large numbers of people have been predicting that for years. Could get a company that size in your experience. Continue to grow at that pace? >> Absolutely there is. There is nothing stopping a ws from taking advantage of this market. We're nowhere near saturated for cloud changes. Most of software spend is still on legacy and maintenance of of software. On Prem. There's still a great deal of money being spent on servers and infrastructure and networking equipment, and all of that gets bled out into the cloud. Eventually, where they have opportunity to shift is almost limitless. You know the amount of money that is being spent by enterprises on cloud is different around the world. In the US, where cloud basically started where the infection started and it's spreading around the world. Back in twenty sixteen, there were about sixty percent of overall enterprise spend was on cloud. The rest of the world is tracking towards that. We have company countries that air close the U. K Canada one two years behind France Germany three four, most of Europe in the three to five years behind. We have some countries that are lagging a little bit further and several dinner just resisting that are not on track to get to cloud. We don't see them getting to cloud even in the ten year times, fam. But the fact that cloud spend in the U. S. Still makes up over fifty percent of global spending on cloud, but only twenty five percent of global spending on it, a lot of money still left to move over. >> That's interesting that that was the facts that's that suggest that there is a delta and cloud adoption between between United States and rest of world that the vendor narrative would not have you believe that? Am I getting that right? Is it? Is it not only slower adoption? What are they they as sophisticated in their adoption, or is there a delta there as well? >> There is a bit of it. There is a delta also in the sophistication. We know that there's a skill gap when it comes to cloud. Everywhere in the world faces the skill gap of the number of people they need with the new skills and cloud and the people they have with the skills that they have. Many companies are missing the fact that some of their Cobol programmers are the ones that should be developing their new cloud applications because it's about changing the business. And nobody knows their business better than the guys that have been writing the legacy apse that have been running the business for the last twenty years. So the training opportunity is actually with their Kobol programs with their long term programmers. We're not seeing that hitting into the market as much as we'd like. >> So your job very difficult job spent. The consolidation makes your job harder in a way, because part of a squint through companies want to tell you what they want to tell you, but you got to figure out what the truth is. When you think about Cloud, it appears relatively straightforward. It's a pure play. They now report their numbers. That must have helped you a lot. But a lot of vendors will throw everything the kitchen sink, you know, numbers for cloud. So you have to parse through that. You have to come up with common definitions across. I mean, good example. Certainly. IBM Oracle broke it out earlier, but now they sort of consolidate everything. One wonders, OK, Where they trying to hide? Not not to pick on people, but their large, established legacy companies. But they want to show their investors. Oh, we're growing at this. The Sirait. So how do you parse through that and squint through that and then come out the other end with the >> real numbers? Well, we have a lot of advantages of Gardner. We spend millions of dollars every year on surveying out globally. We get, we get responses back from CEOs from around the world. We do the largest CEO survey every single year, so we're getting feedback on where the money is being spent. We also have interviews that we do with our clients every single day. We do over two hundred fifty thousand enquiries with clients every year. So we're getting a great deal of feedback from where the money is being spent. We have to reconcile both sides of it. What the vendors air expecting to be what they're telling us that they're making and reconcile ing that with what we're being told is being spent. So we have multiple sides to get to this angle and again. When you start with a vendor, you start with their global revenue. It has to parse out from They're >> gonna match the income statement somehow. But so you've got the empirical data from your surveys. You've got the vendor data. You bottom up. You could do that. And you've got the anecdotal data from your inquiry. You know, your your corporate memory on kind of putting your job is to put all that together. >> Yeah, and we're tracking what we call our peer inside data. We're asking our clients, you know, when they're making a choice which fenders air, they choosing Which friends are they considering? Why did they make the choices? They are. We have our talent neuron database where we're scraping job postings from around the world. So we have somewhere over four billion job postings covering the last five years. So when a company is telling us that they have a large new division, we could go back and say, I don't see you ever hiring those people. So we do have multiple points of light that all really have to come together. It is a tremendously interesting job in a bit of a challenge, but it's one that keeps me up. >> Okay, I often joke. Well, well, Doctor, Uh, Oz. Sorry, Dr Watson. Replace Dr Welby and the answer comes back. Well, you won't replace Dr Oz because you still have to have that nurturing and that interaction. Do you feel as though machine intelligence Based on what? You know, Gardner analysts, You got experts? Many, I'm sure that Follow artificial intelligence machine intelligence. Do you feel like you guys can start applying? Aye, aye. Deep learning, et cetera. To identify patterns to make your job easier, more effective, more science than art. What? Your thoughts on >> that? Well, we have taken a different road. Artificial intelligence requires a lot of good bad data going into it in order to make the right decision. It is changing so quickly. It's difficult to get enough data points together to train and artificial intelligence. We do do some augmentation way. Do have tools that automates certain processes for us and feed us results from multiple millions of data points. But at the end of the day, it's not about coming up with four trillion dollars. That's interesting to anybody. It's the why is it four trillion dollars? Why is it a different four trillion dollars than last year's three point nine trillion dollars? And what's the changing environment that is going >> on >> and the story behind it? The segments, the share shifts and those other trends that you're seeing? >> Because everybody on this floor, all of these eyes start ups, they desperately want to make my number's wrong. They want to change the market in such a dramatic way that they disrupt all of the spending. I can't train in a eye to watch for that >> is your background in econometrics. You an economist? Do you have a math whiz or you're computer scientist? >> All of that, Yeah, have degrees in economics and statistics. I have forty years almost in computer programming been through this cycle for many, many times. So I did a great job from he has all of my sword skill sets coming together. >> You're obviously not a one man band. You mentioned you do, you know, spend millions of dollars on surveys. Two hundred fifty thousand enquiries, but still hurting all that data and actually making sense of it, is it is. It is a challenge. How do you How do you manage that? How are you evolving your your systems, your models? I mean what you used today The tooling is different than it was ten years ago, and you've gotta stay. Current >> are are forecasting model generically. We call the market dynamic models, and what they do is build out user behavior. Where's demand coming from? How are we fulfilling on that demand? What do we do with the investments that we've already made? The's models run from nineteen eighty through twenty thirty. It takes somewhere in the neighborhood of eight hundred thousand calculations to come up with one segment forecast for forty three countries. We have over two hundred fifty segments that we forecast, so you could see the complexity that we're getting into. There are over two hundred fifty analysts that gardener who are working on from what we call her our technology and service provider research group, to help our vendor clients know where their market is, know where it's going, and the partners that they should be looking >> towards you factor in or how do you factor in if it all your geo political trends? Um, tariffs, things of that nature. What do you say? You know what we're gonna do? A clean forecast on DH. Let the market figure that out. How do you handle it? At >> the end of the day, there's two very important pieces within a model. They break into signal and noise. The signal is the shifting buying patterns. When the demand level changes, there's a signal there when a choice pattern changes. Instead of buying license software, I'm starting to buy Cloud. That's a signal change. Those are the things that we focus on. The stuff that you were talking about the economic situations brexit, terrorists, China. Those were all noise. They're important. They have to be taken account of in the model, but they're not the most important thing. All right, Brexit right now is depressing the US air, the European spending on it. It is below that one point one percent growth rate. Because of the uncertainty. People are keeping their finger, their hands in their pockets when it comes to big changes in it. But the big shift is still happening. We're still seeing movement towards cloud. We're still seeing movement towards digital business. All those big signals air there, there dampened a little bit by the noise of the economy. >> So the rip currents obviously cloud. You mentioned that digital business, which I interpreted is data orientation toward a business a little >> bit more with you. >> But please add some color to that. And what are some of the other rip currents that you're seeing? >> Artificial intelligence is another riptide that is moving through. It is a big trend that is changing what's expected of technology at every level. Digital business is changing what's expected of customer interactions at every level. Digital business ecosystems, where companies air able to interact in a way that moves data from one organization to the other without necessarily having trust, commitment or a contract is a major change that we're seeing it reduces the friction of handoff between one business and the other speeds. The process drops the cost. >> A lot of your clients are large, established businesses, gardeners well known for advising those businesses. Many of those businesses, their data lives in silos. They have legacy infrastructure, technical debt. Call it whatever you want it, and they're getting disrupted by these. You know, the guys who were doing Cloud Native, all the guys out here that want to make your full forecast wrong. How does Gardner see just sort of anecdotally, those guys closing the gap, the traditional, the incumbents closing that gap >> into the source extent they don't have to, right? Certainly their size is going to give them longevity. Whether they make change or not, they will see their influence on the market. Chip away if they don't start to, they don't have the same urgency is the small vendors that are moving quickly. Where we see them doing things is very patiently and incrementally, they're taking different processes and moving them to the cloud. It is very common to see them take something that they're already doing are comfortably doing and moving that to a new platform and improving that small piece incremental change. The world gets better with incremental change. Where we love to see them do something is where they actually change the business model first using the technology that's going to enable that we have the company in China who has managed to get home food delivery cheaper than buying it in a restaurant because they change the business model First. They work with the places that are selling the food they're doing group on their doing direct cash, ordering they're doing guaranteed sale so that they could get food less expensively. They're using artificial intelligence to workout delivery routes and pick up so that multiple deliveries are made at the same time. In most of the world, that's not the That's not been the model. They've changed one part of delivery. We're going to make it easier for you to order food on your phone, and then we're going to charge you for the delivery, and we're going to charge you more for the food that's coming in. That's incremental. It's nice, it's helping. But when we change the model first, the outcome is so much better. >> So last course of U. S. Largest market, right? In terms >> of largest market for fifty eight percent of cloud. Spend >> little nightie spending Generally correct. Correct. China. When do you think Do you think China will overtake The U. S. Is the largest market for I spent >> china right now. Is Scott almost double the growth and cloud spending of the U. S. It is as a percentage of spends still well below. But they're the only country that is breaking the trend of following the US. They're on a much steeper incline. They could be above the US spend by twenty twenty five, even with a growth rate that the U. S. Is on. >> John. Awesome having you on. Thanks so much for having me really a pleasure having you great insights from Gardner analyst John Lovelock. And you're watching the Cube were bringing it all to you live from London this day. Volonte, we're right back right after this short break

>> From the SiliconANGLE media office in Boston, Massachusetts, it's theCUBE. Now here's your host Dave Vellante. (techy music) >> Hello everybody. Welcome to this episode of CUBE Insights powered by ETR. My name is Dave Vellante, and in this breaking analysis we're going to take a look at AWS. Today's October 25th, last night Amazon announced its earnings. It missed and it lowered guidance, particularly for the all-important Q4 holiday season, but I want to drill into the AWS portion of Amazon's business. When we do these breaking analysis we'd like to provide data, we'd like to provide content, context, data from our friends at ETR, things that we learn on theCUBE, input from our community, and if you look at AWS in the quarter, they came in at just around $9 billion. That was about 35% growth, and people were concerned that that's a lower growth than a year ago, so 35% is, you know, year on year comparison they were 46% last year Q3. Operating margins were also down. I'll talk a little bit about that. They were 25%, which is still pretty strong, but they were down from 31% last year in Q3. The ETR spending data shows that AWS is still strong but spending is not as robust, that's why they have a positive to neutral rating on Amazon. But Amazon's still a share gainer. When you look at the AWS customers inside of the ETR survey base, they're spending more on Amazon and less on Oracle. They're spending less on IBM, they're spending less on SAP. We talked about Cloudera last week. They're spending less on Teradata, so they're shifting spend from those legacy platforms. This is AWS customers now into AWS. The other piece is Microsoft's moving. Microsoft has been consistently growing faster than AWS, and I'm going to talk a little bit about that and what it means. So you're seeing AWS revenue slows, business is strong, but Microsoft is gaining, so let's dig into it. Alex, bring up the first slide. What I'm showing here is AWS, a little history on AWS, the quarterly revenue year on year growth rates, and what you can see here is on the left hand side is the revenue in millions, so you can see they did about $9 billion, that's the blue bars, this past quarter, just under $9 billion. On the right hand axis is the growth rate, and you can see it spiked up there in '15 and then sort of slowly came down, spiked back up in '18. You can see Q3 '18 was 46%, as I said, and then it's sort of down around 35% in Q3 of 2019. Now compare that to Microsoft. I think it grew 59% at the most recent quarter. It's been consistently up in the 60s percent growth each quarter. Now AWS will say, "Look, yeah, that's true, "but they're growing from a much smaller base." While that's true, and the other thing that AWS will say is that every year Amazon's growth is about the entire size of Azure, so in other words Amazon's growth rate and what they add is about the size of Azure. That's changing, and I'll share some data that will show you that, but this year AWS will probably add about $10 billion in new revenue, and Microsoft, if you strip out Office 365 and Skype and LinkedIn and all that other, you know, and all the SaaS stuff and just focus on the infrastructure as a service so you try to make an apples to apples comparison between AWS and Azure, Azure will be quite a bit larger than that. We think probably in the $14 to $15, maybe even $16-plus billion, so that narrative is starting to change. Now the next slide that I want to show you is our same quarterly revenue, so you can see that bar chart and the $9 billion phenomenal growth, but also show, then the red line on the right hand axis is operating margin, (clears throat) and you can see the operating margin moderated here at 25% in Q3, the announcement this week, and you can see a year ago it was 31%. So this has the street a little bit concerned. Now this is still very strong operating margins. Remember AWS, (chuckles) they started selling Compute. If you think about Dell and HPE's operating margins you're talking, you know, they're thrilled if they're in the 10%. They're, you know, oftentimes much lower than that in the single digits, sometimes, you know, low single digits, but so... So AWS much, much more profitable. Compare the AWS to some of the other leaders. Cisco, who's got 60% of the networking market, its operating margins have been in the 20% to 27% range over the last, you know, several years. Intel, which essentially has or had a monopoly, 28% to 33%, Microsoft is pure software play, or you know, largely software play, low 30%s, and again, a company that had or has, you know, a monopolistic-like, you know, cashflow and profitability. So AWS at that 25% to 30% operating margins very, very strong. Okay, now I want to shift gears and show you some of the ETR data. What this next slide shows is the net scores from the cloud sector, so what I've done is pulled from the dataset just the cloud sector and done some comparisons. Now what you can see is in the October survey the N of the entire survey is 1,336, so out of the 4,500 CIOs and IT practitioners that ETR surveys each quarter, 1,300 answered this question, and of those there were 611 Azure accounts, 546 AWS, 215 Google Cloud Platform, 157 Oracle, and 107 IBM. So you can obviously see there's multiple clouds per respondent. What the net score does, it takes the green, which is basically we're spending more, and subtracts the red, which says we're spending less, and it comes up with a net score that you can see on the right hand side. And this is just for the cloud sector. Now look at Azure's net score, 71%, that's very, very high. I mean it's up there with some of the hottest sectors in the industry and some of the pure plays like UiPath. We've talked about UiPath, like Snowflake to the companies that are demonstrating the highest net score in the ETR dataset. AWS still very strong at 63%, but not quite as strong as Azure. As we said before, there's a lot of ways to, last week, there are a lot of ways to spend money with Microsoft. Google Cloud Platform strong at 50%, but as we know, not nearly the market share of those other two, and I put in Oracle and IBM just for the sake of comparison. You can see their net scores are much, much lower, so you can, so you see the cloud continues to do really well, but particularly those two cloud leaders maintaining their dominance, but you know, Azure from a growth rate and a spending momentum standpoint is really picking up. Now the next slide that I want to show you underscores the sentiment from ETR. Remember, ETR when it released last week its October survey results they said, "We have a positive to neutral rating on AWS." Why were they neutral? Well, some of the things I was saying before is some of that spending momentum is slowing. Why are they positive? This slide underscores that. If you take all sectors, so everything for AWS, not just the cloud stuff, I mean it's all cloud, but put in AI, the machine learning, all the database activity, et cetera, et cetera, et cetera, everything you can buy from AWS and then look at the Fortune 500. They're a great indicator, obviously, of spend, so the big companies, notice the net score, which is that top line, that top blue line, very consistent. It's elevated, and it's inline, and it's up, you know, up in the high 60s, so that's very, very strong. The yellow line is market share. ETR defines market share in relative terms, so how much people are spending on AWS relative to other sectors, and you can see it's a steady, steady rise, so this is why ETR and we remain positive on AWS, because also in addition to Microsoft there's a lot of ways to spend money with AWS and that keeps growing and growing and growing. So you're seeing nice continued market share gains. They continue to be a gainer. Okay, so let me wrap here. As I say, positive to neutral because what's happening is you're seeing that share gain beyond Compute. AI, machine learning, analytics very hot. AWS cited, or Amazon cited SageMaker as a tailwind for their business. Database now at AWS is a multibillion dollar business. Amazon cited Aurora as again another tailwind. Here's the thing, the reason why we're somewhat neutral on Amazon and AWS specifically is the law of large numbers appears to finally be kicking in, you know, or is it? I had a conversation this spring with a Gartner analyst, John Lovelock, and I asked him can this continue, so let's, Alex, if you would, play the video and then we'll come back and talk about it. Can a company that size, in your experience, continue to grow at that pace? >> Absolutely. There is nothing stopping AWS from taking advantage of this market. We are nowhere near saturated for cloud changes. Most of software spend is still on legacy and maintenance of software on-prem. There is still a great deal of money being spent on servers and infrastructure and networking equipment, and all of that gets bled out into the cloud eventually. >> So you heard John Lovelock, he said there's really nothing there to stop AWS. They're going to continue to gain, and so now the question is will they bounce back to the growth rates that they did before, or are those large numbers, the law of large numbers kicking in. Let's talk about Microsoft a little bit. Microsoft is clearly gaining. So in 2017 Microsoft's cloud business, when you strip out, or you try to strip out, it's a little fuzzy, there's some gray area going on in there, but you do your best. I talked to the folks at Wikibon and Ralph Finos tracks this stuff very closely, but AWS or Azure was about 33% of AWS's business. If you go to 2018 it was about 41%, so you had Azure at a, you know, starting to crack or get close to the $10 billion mark. In 2019 it's going to be closer to 50% of AWS's business, so if AWS, let's say AWS comes in at $34, $35 billion this year, that puts Azure, you know, $13, $14, $15, maybe even $16 billion. So they're starting to get to the high 40%s or even that 50% level, so Microsoft is making moves. Microsoft is partner-friendly. People in the ecosystem at Amazon, they complain that they sometimes are concerned with Amazon competing with them. Microsoft doing partnerships even with Oracle, so this is kind of interesting that Oracle and Microsoft are partnering. One of the areas that's been difficult to get into the cloud is mission-critical workloads, and that's really what Oracle and Microsoft are partnering on. It's giving Oracle customers an option, because they may not want to go to the Oracle cloud, they may not like the Oracle cloud. They may feel like it's too locked-in. They may feel like it's too deficient relative to Azure. They may be a big Microsoft customer and they feel more comfortable with Azure, so the deal between Oracle and Microsoft, the partnership, will allow more mission-critical workloads to go into Azure. We know that AWS, if you look at the case studies on AWS's website for the Database and the Database migration they've done, they've been very successful but it's largely the analytic stuff, the data warehousing, the data marts. It's not a lot of mission-critical stuff and you see Amazon itself is struggling to, you know, convert off of Oracle into, you know, its own transaction database, and that's still taking, you know, a long time. They'll certainly tout the successes they've had in the data warehousing, but the transaction stuff is much, much tougher, so that's something that we're watching as part of what we sometimes refer to as cloud 2.0. Will the mission-critical workloads migrate into the cloud? Now again, the Microsoft numbers are fuzzy. You've got to peel, you know, the onion back. You have to take out Office 365. You got to, is Skype in there? What about GitHub, you know? They throw these things in. The companies, you know, they'll all play the kitchen sink game, but here's something I want you to think about. What percent of AWS's business comes from the Amazon retail side? It's got to be substantial. Amazon retail is easily a 10% customer of AWS, and likely much, much larger. Could Amazon retail account for $10 billion in AWS's revenue, you know it's possible. How are transfer costs allocated from quarter to quarter? What is, you know, Amazon retail pay? I think they pay rack rates, but you know, we're not sure how those transfer costs are allocated. People talk about breaking up AWS. I read an article last week that said that Jeff Bezos may even spin it off before the government forces him to. I'm not sure that makes sense. I don't think it makes any sense to do that from a business standpoint because right now AWS is subsidizing Amazon's entry into all these other markets. They're into grocery, they're into content, they're into now logistics. They're vertically integrating into logistics, and that's one of the items that they mentioned in their conference call last night, which was they're investing in logistics as potentially a future business, another, you know, big pillar. You know their ad business is really taking off, so you're seeing, you know, Amazon, like Microsoft, a lot of ways to spend with those guys. So is this pullback, the stock's down about 34 points today. Is it a buying opportunity? Yeah, probably yes, but cloud 2.0 undoubtedly in this next phase is going to see tougher competition, you know, particularly from Microsoft but of course then you've got Alibaba, and you know, China, Inc. and the China cloud coming in, and you've got, you know, partners saying, "Hey, we have to be careful because if we don't move fast "Amazon's going to gobble up some of our business," so they're hedging their bets, and you're seeing some of the customers hedge their bets as well. Bottom line, though, Amazon remains very, very strong, a leader, a continued share-gainer, so we're very positive on the company generally and AWS specifically. All right, this is Dave Vellante. Thank you for watching this version, this episode of CUBE Insights powered by ETR. We'll see you next time. (techy music)

>> from the Silicon Angle Media Office in Boston, Massachusetts. It's the cue. Now, here's your host. Day Volonte. >> Hi, >> everybody. Welcome to this cute conversation. I'm Dave Volonte and Stew Minuteman is here with me. We're gonna break down a w s kind of give you Ah, midyear What's happened so far this year with all the events that we've been covering and what to look forward to? Uh, the N Y C Summit is coming up stew. It's been a big year. Obviously. What we came off a re invent. Amazon's got $30,000,000,000 run rate business growing at 40 plus percent per year. That means they're putting 9,000,000,000 of incremental revenue every year into the cloud business. The marketplace, That growth that's roughly as large is tthe e entire Microsoft cloud business, which is astounding >> day that that that's that's the point Amazon definitely has been making for a couple of years. And you're absolutely right. Microsoft is definitely growing at a faster pace than Amazon, and they're running about 75 87 but off a much smaller number. So the incremental add that Amazon has been throwing off the last couple years. Every year they're adding more than an azure every year. So absolutely Amazon, you know, is the lead horse out there. And while you know, the horses on the track behind them are trying fast to catch up Amazon. If you talk about Infrastructures service, AWS is still the lead. >> Well, the big question is. Will that attenuate? And we were at Remember the Nutanix inaugural Nutanix Stop next? Do you rush Pandey, who's very smart guy, somebody we respect a lot. One of the fundamental assumptions they were making is eventually the law of large numbers will catch up to them and know it very well May. But it hasn't yet. I asked John Lovelock, can a company the size of Amazon $30,000,000,000 company grow it for 42% a year? Is that sustainable? And he said, Absolutely. There's nothing to stop them now. Who knows who has the crystal ball? What are your thoughts? >> Yeah, So, Dave, what we saw is Amazon's not sitting still. You know, they always like to say it's always Day one, and if you look at where they're going, the products that they keep throwing off the innovation that they keep moving on and the flywheel that they've had first of customer acquisition with all of the innovations that they're putting out there and the flight well. But I've been talking about the last couple of years the label of data, which is something we want to be a little concerned about. How much data Amazon actually does have both Amazon AWS and Amazon, with all those intelligent devices that are in your homes and connecting everything together. Some people are a little concerned about that. The government's a little bit concerned about that, but absolutely Amazon is going everywhere. We've seen Amazon going into sub segments of the market, going into verticals and going just really broad, really deep. So absolutely I don't see anything slowing a bit on down. It is a company that continues to impress one of >> the challenges. I think those do that that Amazon does have, and this came out of the reinforced >> conference a couple weeks ago in Boston, which was, Ah, conference for security practitioners, a lot of si SOS chief information security officers. The number one challenge that came out of that when you talk to practitioners was their ability to keep up with the innovations that Amazon is putting forth. So, you know, I wonder if we're gonna talk to some commercial customers. You'll see them down the summit probe to see if, in fact, that's part of their challenge. Just the pace at which Amazon brings out new features. But we've done Gosh, we've covered eight events or will have covered eight events this year. Eight productions. It started in the U. K. Where we covered a public sector health care. And then we did the AWS summit London really all about both public sector in the UK as well as the summit in the UK Innovations in the UK around cloud, etcetera, cloud adoption. 12,000 people at the AWS London summit. Now you covered re Mars, which was not the Cube wasn't there, but you were there. What was that show? >> Yes. So, first of all, it's an Amazon >> show, not a native US show, but absolutely showed underneath where eight of us fits into the fulfillment centers of Amazon. And it was about re Marceau Mars A play of course on space. But it was a machine learning automation, robotics in space. So you had the cool blue origin stuff that actually brought in. Robert Downey Jr talked about how he's going to save the planet with, you know, robotics and intelligence out there to help clean up pollution in the globe on and the like. But it was a phenomenal show, but what I said is actually going to show a little bit underneath the covers of Amazon similar what we've seen from eight of us at the reinvent shows over the years. Because, you know, we all know how many boxes air coming to our, you know, our place of home every day and how fast that's going. And so this is what's happening underneath the robotics and machine learning a lot of those Air AWS Service's that are powering that. So it was a fascinating show, Dave and absolutely showed other relationship between Amazon, the parent company. Eight of us, all those cloud service is that helped feed the bigger business. >> Now, June, the Cube covered the D. C. Public sector summit. This is Teresa Carlson's gig. She's the host. Actually, Andy Jassy was there this time. He wasn't there last year when you and I recovering it. And of course, that's all about bringing cloud to public sector, not just federal but all public sector. It includes AH, non profit and education, which talk about in a minute. The big story. There is a jet. I we're talking about tens of billions of dollars going to ah, contract. Oracle, of course, is fighting it. It's going into the courts. I guess they've been a number of reviews or could won't give up its oracle. Amazon clearly is the front runner. Last I read, it was down to AWS and Microsoft, with AWS being the lead contender there. We'll see what happens. I think the decision is coming down this month, July 2019. But it's really again about bringing cloud innovations to public sector. Public sector tends to take things a little bit later than the commercial like. For instance, last year they announced the the VM wear on AWS was available, so you'll see those kinds of things come maybe a year later. But its again. Another big show there 12. 13,000 people there at the D. C Convention center. >> Yeah, Davey, when you talked about the critique of what's happening in Amazon as Amazon goes deeper into all of these verticals How do they help get that information to the user in a way that they need to run their businesses? So my co host for New York City's Cory Quinn was listen to his podcast this morning and he said, That's where Amazon's got dozens of blog's. They've got so many announcements, they haven't done a really good job, something we've seen many companies do. How do I get to you know that business roll and put it in, you know, verbal that they understand, as opposed to just >> Hey, we had 1000 new features >> come out this year and they're awesome. Then you should use everything s o. You know, that's something that, you know the industry as a whole needs to do better at an Amazon. Just in the nature of how fast they're moving is something that they should be able to do a better job. >> And Jennifer is also gonna be in New York City. And one of things he was stressing at reinforce was the marketplace. We had Dave McCann on the just rocketing. I think it was 100,000 census of security subscriptions. I think it was 1,000,000 subscriptions in total so just an amazing ah momentum in the marketplace. But reinforce was all about security. Deep dives on security, chief information, security officers. What came out of that show the big takeaway was was head of AWS is, uh, security. The chief information security officer, Schmidt said. This narrative in the industry that the sky is falling doesn't do anybody any good. Um, it's not productive. We should be more positive. The state of the cloud union is good, like the president of states is State of the Union is strong. Um, having said that, Amazon talks about the shared security model. The practitioners that we talked to said, Yeah, shared model Amazon's going to secure the the infrastructure of the storage, the compute of the database. We are responsible for our end, and it really is on us to make sure that we are secure. So again, back to that point about the pace of innovation that Amazon is putting forth is a challenge for people. AWS imagine is also going down. I think this week what's that you're >> so it's in Seattle and it's you mentioned the public Sector one in D. C, which is government agencies, nonprofits and education. So imagine is a subset of that. My understanding is the education, a nonprofit piece of that from when you and I were in D. C. Last year for the Public sector summit. It's It is impressive how deep Amazon is going into these spaces, the affinity they have. And really, you know how happy the customers are to be able to move fast. So, you know, when you think about nonprofits and think about education, innovation is not the first thing that usually comes to mind because budgets are tight and I don't have enough people. And usually you've got, you know, whatever's left over. But imagine is them. How do we move these forward? How do we You know, we know we need to help transform education. It's so important to train the next generation. So, you know, imagine there are some great stories that come out of that. Jeffrey loves getting those stories, helping us tell those stories through the Cube platform. And so it's the second year we're doing >> Yes, it would be covering that. And then, of course, reinvent will have two sets again that reinvent this year. The Super >> Bowl of our industry, >> right? Sure. Um, something's going on. So unfortunate incidents in Southern California. Big earthquakes, actually. Multiple earthquakes, Right? You had the physical earthquake, and then you had CO I, leonard going to the Clippers. But so I'm interested in sort of poking at this notion of ground stations. So at reinvent last year, Amazon announced on his own ground station, which essentially was ground station is a service. So if I understand it, one of the challenges okay, You launched the satellites, but you still need a ground station to collect the data and then uploaded and analyze it. That's what AWS is is partnering to put in infrastructure that allows you to essentially rent ground station infrastructure. So, you know, they worry about building it in securing it yourself. Because you think about it. It's got to be a secure location. You gotta have fencing. You got a physical security. You got to get the data in. You gotta upload it to the toe. Where we gonna upload it? So Amazon is basically building this service out, saying Don't worry about the ground station piece. Rent that from us, you know, swipe your credit card. Your ground station as a service, and then we'll ingest that data uploaded to the cloud and then apply all of the tooling that we have to allow you to analyze that data. So if you think about the earthquake of devastation, if you don't have a ground station there, you can, in theory, go to AWS and actually spin up a ground station in jest. You know, on the ground, you know, the ground truth as we like to sometimes talk about and actually get satellite imaging and telemetry in that region, you know, this comes into play things like forest fires and all kinds of of natural disaster. >> Dave, even at the remarks show, I attended a session where one of the Amazon partners was talking about not only just getting the satellite data down, but Justus. They have the snowball edge today, which is, you know, for you know, I ot or some remote sites, but some of these satellites are gonna have the compute and storage at in satellite themselves. So if you think about I'm gonna have these geosynchronous satellites. I'm gonna have all this connectivity. And if I could get a gigabit of Ethernet, you know, traffic going to the satellites and I could do the processing at the edge, which is now up in space. I can process that. And you know, that edge that we talked about get to hold another dimension, you know, off off the terra firma to be able to do those kind of analysis. As you said, earthquakes, you know, all the all the climate discussion that's going on, we should be able to have tap into even more. Resource is, and we'll have to rename Cloud if it even goes beyond the Earth. >> And then, um, outpost is the other story that we've been tracking, attracting a lot of stories, but but outpost is starting to ship in beta form. We've seen instances of >> so, so seeing >> it. We just did a little quick right up. >> I mean, Dave, you know, just a ripple went through the >> industry when they showed Hey, here's Iraq and what they're like. This is the exact same rack that we have in the Amazon data centers and why it's a little surprising because we're allowed to see inside the Amazon Data Center. So it's like, Okay, this is what they're computed awaited to 24 in tracking, supposed to a 19 in track. But that line between the public cloud and my on premises environment absolutely is blurring. So everybody wants to see where Amazon's going. They have the big partnership with VM, where Veum, where is already shipping the solution? That is the same software for that Veum wear on AWS in my data center. So, you know, I can have you know, the Dell hardware with the Veum where code or I can have the Amazon hardware with the VM where code coming later this year without post. So that line between public in private is absolutely blurring. And where to my applications live, You know that that future of how fast is eight of us continue to grow? Absolutely. There are applications and data and things that will stay in my own data center and under my control. But that line is definitely blurring. And there's gonna be some re architectures. It's definitely still gonna take a couple of years to sort some of these things out. But we're at some of those inflection points where we'll see some of >> us. So I wrote a post its upon wicked bond kind of analyzing that video, and there's some interesting things that are unique. There's certainly a lot of goodness in there. Not some of the things they talk about are completely unique. Thio, aws. But things like Nitro and their special virtual ization engine and their special chip on Do you want to get a look at that? You take a look at that video and thence to New York City Summit this week. Um, we mentioned some of the innovations that we've seen up to date this year. A lot of talk I'm sure about the marketplace. >> Yeah, I'm wondering if there'll be any ripples, Dave, because the 1/2 of a chick you, too, was supposed to be in New York City. And now it's not, doesn't mean they don't have a strong presence in New York City like London and believe it's somewhere around 12 to 15,000 people. When I went to New York City two years ago was quite impressive. It is a free show, which means if your customer you get in for free. If you're a partner, of course, you're still paying for everything that goes there. But the regional summits are quite impressive and a great way to get in touch with Amazon and all that they're doing. If you don't want to go to the Super Bowl itself, which is, you know, 50,000 plus now in Las Vegas towards the end of the year. >> Yeah, these air, like many reinvents and they're actually quite good. A lot of a lot of practitioner focused on you're gonna you're gonna see that New York City >> did what I always love about every Amazon show I go to. There are customers that are interested learning new things. How can you do better with what I'm doing? But also, how can I change what I'm doing? How can I move forward? So even if it's not adopting the latest and greatest from AWS, the entire ecosystem is going there to meet with those customers and talk about digital transformation? Modern workforce? All of these hot trends definitely play out. Ground zero is the AWS. >> Yeah, and this is by design. As I said before, the pace of innovation is a challenge for people. It's an adoption blocker and so Amazon wants to educate and share the knowledge so that they can get more adoption. OK, stew. Thanks very much. Good luck. This week. Check out silicon angle dot com For all the news, the cube dot net is where the videos will live and watch. Do on John Ferrier and Corey Quinn. 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