>>Welcome back to the Cube, as a continued coverage here from AWS Reinvent 22. It's day three of our coverage here at the Venetian in Las Vegas, and we're part of the AWS Global Startup Showcase. With me to talk about what Kong's to in that regard is Marco Palladino, who's the, the CTO and the co-founder of Con Marco. Good >>To see you. Well, thanks for having me >>Here. Yeah, I was gonna say, by the way, I, I, you've got a beautiful exhibit down on the show floor. How's the week been for you so far as an exhibitor here? >>It's been very busy. You know, to this year we made a big investment at the WS reinvent. You know, I think this is one of the best conferences in the industry. There is technology developers, but it's also business oriented. So you can learn about all the business outcomes that our, you know, customers or, you know, people are trying to make when, when adopting these new technologies. So it's very good so far. >>Good, good, good to hear. Alright, so in your world, the API world, you know, it used to be we had this, you know, giant elephant. Now we're cutting down the little pieces, right? That's right. We're all going micro now these days. That's right. Talk about that trend a little bit, what you're seeing, and we'll jump in a little deeper as to how you're addressing that. >>Well, I think the industry learned a long time ago that running large code bases is actually quite problematic when it comes to scaling the organization and capturing new opportunities. And so, you know, we're transitioning to microservices because we want to get more opportunities in our business. We want to be able to create new products, fasters, we want to be able to leverage existing services or data that we have built, like an assembly line of software, you know, picking up APIs that other developers are building, and then assemble them together to create new experiences or new products, enter new markets. And so microservices are fantastic for that, except microservices. They also introduce significant concerns on the networking layer, on the API layer. And so this is where Kong specializes by providing API infrastructure to our customers. >>Right. So more about the problems, more about the challenges there, because you're right, it, opportunities always create, you know, big upside and, and I, I don't wanna say downside, but they do introduce new complexities. >>That's right. And introducing new complexity. It's a little bit the biggest enemy of any large organization, right? We want to reduce complexity, we want to move faster, we want to be more agile, and, and we need an API vision to be able to do that. Our teams, you know, I'm speaking with customers here at Reinvent, they're telling me that in the next five years, the organization is going to be creating more APIs than all the APIs they've created up until now. Right? So how do you >>Support, that's a mind boggling number, right? >>It's mind boggling. Yeah, exactly. How do you support that type of growth? And things have been moving so fast. I feel like there is a big dilemma in, you know, with certain organizations where, you know, we have not taught a long term strategy for APIs, whereas we do have a long term strategy for our business, but APIs are running the business. We must have a long term strategy for our APIs, otherwise we're not gonna be able to execute. And that's a big dilemma right now. Yeah. >>So, so how do we get the horse back in front of the cart then? Because it's like you said, it's almost as if we've, we're, we're reprioritizing, you know, incorrectly or inaccurately, right? You're, you're getting a little bit ahead of ourselves. >>Well, so, you know, whenever we have a long-term strategy for pretty much anything in the organization, right? We know what we want to do. We know the outcome that we want to achieve. We work backwards to, you know, determine what are the steps that are gonna bring us there. And, and the responsibility for thinking long term in, in every organization, including for APIs at the end of the day, always falls on the leaders and the should on the shoulders of the leadership and, and to see executives of the organization, right? And so we're seeing, you know, look at aws by the way. Look at Amazon. This conference would not have been possible without a very strong API vision from Amazon. And the CEO himself, Jeff Bezos, everybody talks about wanting to become an API first organization. And Amazon did that with the famous Jeff Bezos mandate today, aws, it's a hundred billion revenue for Amazon. You see, Amazon was not the first organization with, with an e-commerce, but if it was the first one that married a very strong e-commerce business execution with a very strong API vision, and here we are. >>So yeah, here we are putting you squarely in, in, in a pretty good position, right? In terms of what you're offering to the marketplace who has this high demand, you see this trend starting to explode. The hockey sticks headed up a little bit, right? You know, how are you answering that call specifically at how, how are you looking at your client's needs and, and trying to address what they need and when they need it, and how they need it. Because everybody's in a kind of a different place right now. >>Right? That's exactly right. And so you have multiple teams at different stages of their journey, right? With technology, some of them are still working on legacy, some of them are moving to the cloud. Yep. Some of them are working in containers and in microservices and Kubernetes. And so how do you, how do we provide an API vision that can fulfill the needs of the entire organization in such a way that we reduce that type of fragmentation and we don't introduce too much complexity? Well, so at con, we do it by essentially splitting the API platform in three different components. Okay. One is API management. When, whenever we want to expose APIs internally or to an ecosystem of partners, right? Or to mobile, DRA is a service mesh. You know, as we're splitting these microservices into smaller parts, we have a lot of connectivity, all, you know, across all the services that the teams are building that we need to, to manage. >>You know, the network is unreliable. It's by default, not secure, not observable. There is nothing that that works in there. And so how do we make that network reliable without asking our teams to go and build these cross-cut concerns whenever they create a new service. And so we need a service match for that, right? And then finally, we could have the best AP infrastructure in the world, millions of APIs and millions of microservices. Everything is working great. And with no API consumption, all of that would be useless. The value of our APIs and the value of our infrastructure is being driven by the consumption that we're able to drive to all of these APIs. And so there is a whole area of API productivity and discovery and design and testing and mocking that enables the application teams to be successful with APIs, even when they do have a, the proper API infrastructure in place that's made of meshes and management products and so on and so forth. Right. >>Can you gimme some examples? I mean, at least with people that you've been working with in terms of addressing maybe unique needs. Cuz again, as you've addressed, journeys are in different stages now. Some people are on level one, some people are on level five. So maybe just a couple of examples Yeah. Of clients with whom you've been working. Yeah, >>So listen, I I was talking with many organizations here at AWS Reinvent that are of course trying to migrate to the cloud. That's a very common common transformation that pretty much everybody's doing in the world. And, and how do you transition to the cloud by de-risking the migration while at the same time being able to get all the benefits of, of running in the cloud? Well, we think that, you know, we can do that in two, two ways. One, by containerizing our workloads so that we can make them portable. But then we also need to lift and shift the API connectivity in such a way that we can determine how much traffic goes to the legacy and how much traffic goes to the new cloud infrastructure. And by doing that, we're able to deal with some of these transformations that can be quite complex. And then finally, API infrastructure must support every team in the organization. >>And so being able to run on a single cloud, multi-cloud, single cluster, multi cluster VMs containers, that's important and essential because we want the entire organization to be on board. Because whenever we do not do that, then the developers will make short term decisions that are not going to be fitting into the organizational outcomes that we want to achieve. And we look at any outcome that your organization wants to achieve the cloud transformation, improving customer retention, creating new products, being more agile. At the end of the day, there is an API that's powering that outcome. >>Right? Right. Well, and, and there's always a security component, right? That you have to be concerned about. So how are you raising that specter with your clients to make them aware? Because sometimes it, I wouldn't say it's an afterthought, but sometimes it's not the first thought. And, and obviously with APIs and with their integral place, you know, in, in the system now security's gotta be included in that, right? >>API security is perhaps the biggest, biggest request that we're hearing from customers. You know, 83% of the world's internet traffic at the end of the day runs on APIs, right? That's a lot of traffic. As a matter of fact, APIs are the first attack vector for any, you know, malicious store party. Whenever there is a breach, APIs must be secured. And we can secure APIs on different layers of our infrastructure. We can secure APIs at the L four mesh layer by implementing zero trust security, for example, encrypting all the traffic, assigning an identity to every service, removing the concept of trust from our systems because trust is exploitable, right? And so we need to remove the cut zero trust, remove the concept of trust, and then once we have that underlying networking that's being secure and encrypted, we want to secure access to our APIs. >>And so this is the typical authentication, authorization concerns. You know, we can use patterns like op, op or opa open policy agent to create a security layer that does not rely on the team's writing code every time they're creating a new service. But the infrastructure is enforcing the type of layer. So for example, last week I was in Sweden, as a matter of fact speaking with the largest bank in Sweden while our customers, and they were telling us that they are implementing GDPR validation in the service mesh on the OPPA layer across every service that anybody's building. Why? Well, because you can embed the GDPR settings of the consumer into a claim in a gel token, and then you can use OPPA to validate in a blanket way that Jo Token across every service in the mesh, developers don't have to do that. It just comes out of the box like that. And then finally, so networking, security, API security for access and, and management of those APIs. And then finally we have deep inspection of our API traffic. And here you will see more exotic solutions for API security, where we essentially take a subset of our API traffic and we try to inspect it to see if there is anybody doing anything that they shouldn't be doing and, and perhaps block them or, you know, raise, raise, raise the flag, so to speak. >>Well, the answer is probably yes, they are. Somebody's trying to, somebody's trying to, yeah, you're trying to block 'em out. Before I let you go, you've had some announcements leading up here to the show that's just to hit a few of those highlights, if you would. >>Well, you know, Kong is an organization that you know, is very proud of the technology that we create. Of course, we started with a, with the API gateway Con Gateway, which was our first product, the most adopted gateway in the world. But then we've expanded our platform with service mesh. We just announced D B P F support in the service mesh. For example, we made our con gateway, which was already one of the fastest gateway, if not the fastest gateway out there, 30% faster with Con Gateway 3.0. We have shipped an official con operator for Kubernetes, both community and enterprise. And then finally we're doubling down on insomnia, insomnia's, our API productivity application that essentially connects the developers with the APIs that are creating and allows them to create a discovery mechanism for testing, mocking the bagging, those APIs, all of this, we of course ship it OnPrem, but then also on the cloud. And you know, in a cloud conference right now, of course, cloud, right? Right. Is a very important part of our corporate strategy. And our customers are asking us that. Why? Because they don't wanna manage the software, they want the API platform, they don't, don't wanna manage it. >>Well, no, nobody does. And there are a few stragglers, >>A few, a few. And for them there is the on-prem >>Platform. Fine, let 'em go. Right? Exactly. But if you wanna make it a little quick and dirty, hand it off, right? Oh, >>That's exactly right. Yes. >>Let Con do the heavy lifting for you. Hey Marco, thanks for the time. Yeah, thank you so much. We appreciate, and again, congratulations on what appears to be a pretty good show for you guys. Yeah, thank you. Well done. All right, we continue our discussions here at aws. Reinvent 22. You're watching the Cube, the leader in high tech coverage. >>Okay.

>>Welcome back everyone to the cubes coverage here in Seattle, Washington for the Avis marketplace seller conference, part of the APN partner network merging with the marketplace to form the Amazon partner organization. I'm John furrier, host of the cube Walter Wall coverage today, Christian Gor cash, who is the VP of alliances at Kong Inc. Welcome to the cube. Thanks for coming on. >>Thank you. Thank you, John. Really glad to be here. Corke exactly. Yeah. It's awesome. >>So Kong we've been following you guys for while Docker Kong cube. You've been part of our cube conversation. Also part of our, our startup showcase fast growing startup, you know, working on stuff that everyone loves APIs. I mean, APIs are so popular now that they now a security concern, right? Yeah. So like it gets squat there everywhere. I won't say API sprawl, but APIs are the connections and that are, is the web. That is the cloud. Okay. Now with cloud native developers who are now in the front lines have taken over it, everyone knows DevOps dev SecOps is now the new it and it's the developers security and data they're below they're the new ops, right? So, so this is where microservices come in, open source service MES new automation is coming down the pike. That's super valuable to businesses as they look at cloud native architecture, what are you guys doing in there? Take a minute to explain Kong's value proposition, the hot products, and then why you're here. >>Yeah. So, you know, I joined Kong now or three years ago, you know, we were still just reaching our hundred employees, mark, which is very important, very startup, but even back then, you know, Kong was relatively well known in industry, you know, so we have one of the most, well the most popular open source project in API gateway area. So con API gateway, you know, we cross now 300 million downloads, even more important is just the scale it, which the product's been used. So between our open source community and enterprise customers, we are now crossing like 11 trillion transactions per month. Now just give you comparison. Like this is like 18, 19 times more than Netflix per month. You know? So for any company that has a technology that operates it at scale, you need to hit few things outta the park. You know, as he mentions cloud data developers, they want simplicity. You know, they want automation. They also want performance and scale and security, which are all critical, you know, to how Kong, you know, start as opensource project. Now, of course we have the whole suite of enterprise products. We also have our con service mesh offering as well as our cloud offerings. >>Yeah. And this is how open source is doing it now, obviously, you know, I, I still remember, I still tell the story to the young startups. Hey, I, there was proprietary software when I was in college. Open source is now everything. Now you've got, got cloud scale. So the dynamic between open source, which has become the software industry open source success doesn't mean it's it's game over. It's the beginning. The commercialization that you guys have gone through is super important. Trillions of transactions. Now you have enterprises working with you. What's the big advantage of the seller relationship that you have with Amazon? Why are customers using it? What are they buying it for? Give the pitch of con for the marketplace customer. >>Yeah, it's actually, we are relatively new in AWS marketplace. You know, so our first transaction that we ever done was actually in July and 2021. So we are just over a year, you know, that journey, you know, when I look what Chris gross talked today, he was talking about, you know, Hey, just publishing marketplace, not enough. You know, you need to understand what's your value proposition. You need to make sure your operations already, your sales is ready. Everything is, is set. And we kind of did this for the first year and a half is spend a lot of time improving our integration with AWS overall, all the first party services relevant to con we also understood, well, what does it take to kind of fine tune our value proposition? We have like three specific sales place. And you know, when we launch our flagship product con connect enterprise and got our first transaction, that was great milestone for, for star like Kong. But then what we've seen is just that work that we've done before really paid off. I mean right now, >>Like what we'll give example. >>Yeah. So, you know, we are focusing on as measure three sales place. Money is we are focused, specific on helping customers who are modernizing and, and their application going to the cloud. And you have a lot of these, you know, lifting shift and are rearchitect and modernized, but most of the attentions on the workloads, what about the connections? You know, so a monolith application had to authentic all the users understand wheres the network and so on. When you build those, when you now decouple this built like 1,000 thousand microservices, you don't want to repeat this for every microservice. So that's where K brings the whole suite from, you know, service match to the API gate to help manage the journey and really support this environment. And we spend a lot of time to just fine tune that message. So that customers understood where, you know, how can we help them on their journey beyond what, for instance, cloud native or AWS API gateway offers them. So we can really help them from day one on the journey and accelerate. And >>I think I it's a no, it's a no braining for a customer to buyer or to come into the marketplace and say, click, I'm gonna buy some data analytics services. I'm gonna buy gateway through Kong. But when they start getting into these microservices, this automation opportunity there, there's more behind the curtain for them with Kong. So I have to ask you with the keynote we heard from Chris, the leader of the marketplace. Now he said that he wants the ISVs to be more native in the cloud. That probably resonates with you. You, >>You guys well with con's relatively simple because we were built at cloud native, you know, so very briefly the whole story of Congo. This is before Ajo, our founders were actually running the, the very popular API exchange col mesh shape. And they had to build their own gateway just to handle the scale and was built on cloud native technologies. And then when everybody's calling you, what are you using to running? This are using PGS. And so else, no, we built ourselves, oh, how can we get our hands on? That's how con actually >>Came to. And that's how the big winners usually happen too. They start build their own, solve their own problem because it's a big scale problem. Exactly. No one's had that problem. >>Yeah. And what we have seen, especially what was very, you know, through, through the pandemic, what we have seen. And it's interesting, you know, being in a startup doing pandemic is like, whoa, will the life just shut down or what we're doing? You know? But actually what we have seen customers prioritize the new business capability. For instance, you have a large parental companies that overnight, they have to understand where the assets are. Yeah. Or banks who are like 45 days of, you know, approving process for the loans. They need to reduce it for a day or two. >>Yeah. And they're adding more developers, too, exactly. To build the modern application. So they need to have that infrastructure as code aspect. Correct. >>And they >>Need in place. >>Yeah. I need to like you have, you know, I don't think that many customers still have waterfall cycles, but they have, have pre pretty long developers development cycles. And now you need to, you know, do this multiple times a day. That's >>Interesting. We talked to a lot of cloud architects and C CIO C says, and you know, the executive just hire more developers take that hill, build. It just don't build a new app. It's not that easy boss. When, when the cloud architect says we have to be fully operationally ready with cloud native infrastructure's code. So with that, you're seeing a lot more enterprises come in now that are more savvy. They getting better. We're seeing Kubernetes more and more. You're seeing containerization. You're seeing that cloud native enterprise acceptance. What does that mean for you guys in the marketplace, as you look at the value proposition, how are you guys working with the marketplace today and where do you see customers buying in the future? >>Yeah, so we as mentioned, you know, we, we are now a year into that journey. We already seen tremendous benefits just in terms of reducing the friction. You know, the whole procurement, you know, you come as a startup with some, some of the largest companies in the world, they used to buy five, 10 billion in software and they have all these processes and you're like, well, but we only have like two people in finance. Sorry. How can you, and where marketplace can really, really helps us is, you know, improve this experience, both sides because they understand like we are fast moving company. They, they want us because of our speed and, and innovation that we, the product's strong. Yeah. They don't want us to get bogged down in all these pro procurement processes either. And so, so that's the first benefit. We also are working very hard to make sure that the customers can provision Kong in AWS and automate across the board. So essentially reducing their time to value dramatically. Yeah. And another thing that we found tremendously beneficial for us is a startup is the whole concept of a standard marketplace contract. Yeah. So instead of us coming with our little MSA or come like 50 page MSA from companies, we now have a middle ground. So we can just agree. You know, there's some differences, some specifics to qu software and it's tremendously reduced costs on both sides. >>Great. For you guys great for the buyers. Yeah. You get deployed services. They're not just buying, they're managing and deploying. Yeah, >>Exactly. Great. >>Quick, final question. Put a plugin for the company. What are you working on now? What's the big news. What's the con update? >>Well, that's an interesting part because I can't tell you because next week we have our con summit. Oh right. In San Francisco. The cubes not so 28, 20 ninth. Yeah. We, we we'll, I think we are gonna fix that in the future. But anyway, this is the first time after pandemic to do this in person, we have number of very exciting announcement, our Kong products, as well as you may hear some news about our AWS partnership, >>We like con we believe that DevOps has happened. Dev sec ops, whatever you gonna call it, dev is now the developers they're in the front lines. They're in the C I CD pipeline. They're shifting left. That's the new they took over it. That's what DevOps does. It's not a title. Now you have security and data ops behind the scenes. That's gonna be middleware. That's gonna have tons of microservices. So more, more, more action coming, all API based. >>Exactly. And the more, you know, the more complexity we can take away from that, the better we, you know, the >>Whole community. Thank you. Spending the time to come on the cube here at the, a us marketplace seller conference. What do you think about the APN merging with the marketplace formed the P the Amazon partner organization. Thumbs up, thumbs down. What's your heard? >>It's excellent. We have a great friend in AP, a great friend, us marketplace. Now both of them work together with huge. >>Fantastic. Yes. Thanks for okay. Cube coverage here in Seattle. I'm John furier APN marketplace together. APOs the new organization making it easier. Of course, we got all the coverage here. Thanks for watching.

>>Well, good day and welcome back to the cube as we continue our segment featuring AWS star showcase we're with now Mike Bilodeau, who's in corporate development and operations at Kong. Mike, uh, thank you for joining us here on the cube and particularly on the startup showcase. Nice to have you and pong represented here today. Thanks for having me, John. Great to be here. You bet. All right, first off, let's just tell us about pong a little bit and, and, uh, con cadet, which I know is your, your feature program, um, or, um, service. Oh, I love the name by the way. Um, but tell us a little bit about home and then what connect is all about to? Sure. So, uh, Kong as a company really came about in the past five years, our two co-founders came over from Italy in, uh, in the late, in the late aughts, early 20 teens and, uh, had a company called Mashape. >>And so what they were looking at and what they were betting on at that time was that API APIs, uh, were going to be the future of how software was built and how developers interacted with software. And so what came from that was a piece of, uh, they were running that shape as a marketplace at the time. So connecting developers sit in for an API so they can consume them and use them to build new software. And what they found was that actually the most valuable piece of technology that they created was the backbone for running that marketplace. And that backbone is what Kong is. And so they created it to be able to handle a massive amount of traffic, a massive amount of API APIs, all simultaneously. This is a problem that a lot of enterprises have, especially now that we've started to get some microservices, uh, started to, to have more distributed technologies. >>And so what Kong is really is it's a way to manage all of those different API APIs, all of the connections between different microservices, uh, through a single platform, which is called connect. And now that we've started to have Coobernetti's, uh, the, sort of the birth and the, the nascent space of service mesh con connect allows all of those connections to be managed and to be secured and made reliable, uh, through a single platform. So what's driving this right. I mean, um, you, you mentioned micro services, um, and Coobernetti's, and that environment, which is kind of facilitating, you know, this, uh, I guess transformation you might say. Um, but what's the big driver in your opinion, in terms of, of what's pushing this microservices phenomenon, if you will, or this revolution. Sure. And when I think it starts out at, at the simple active of technology acceleration in general, um, so when you look at just the, the real shifts that have come in enterprise, uh, especially looking, you know, start with that at the cloud, but you could even go back to VMware and virtualization is it's really about allowing people to build software more rapidly. >>Um, all of these different innovations that have happened, you know, with cloud, with virtualization now with containers, Kubernetes, microservices, they're really focused on making it, uh, so that developers can build software a lot more quickly, uh, develop the, the latest and greatest in a more rapid way. >>A huge driver out of this is just making it easier for developers, for organizations to bring new technologies to market. Uh, and we see that as a kind of a key driver in a lot of these decisions that are being made. I think another piece of it that's really coming about is looking at, uh, security, uh, as a really big component, you know, do you have a huge monolithic app? Uh, it can become very challenging to actually secure that if somebody gets into kind of that initial, uh, into the, the initial ops space, they're really past the point of no return and can get access to some things that you might not want them to similar for compliance and governance reasons that becomes challenging. So I think you're seeing this combination of where people are looking at breaking things into smaller pieces, even though it does come with its own challenges around security, um, that you need to manage, it's making it so that, uh, there's less ability to just get in and cause a lot of damage kind of all at once. Often Melissa malicious attackers. >>Yeah. You bring up security. And so, yeah, to me, it's almost, in some cases it's almost counterintuitive. I think about, I've got the, if I got this model, the gap and I've got a big parameter around it, right. And I know that I can confine this thing. I can contain this. This is good. Now microservices, now I got a lot of, it's almost like a lot of villages, right. They're all around. And, and uh, I don't have the castle anymore. I've got all these villages, so I have to build walls around all these villages. Right. But you're saying that there that's actually easier to do, or at least you're more capable of doing that now as opposed to living >>Three years ago. Well, you can almost think of it, uh, as if you have this little just right, and you might, um, if you have one castle and somebody gets inside, they're going to be able to find whatever treasury may have, you know, to extend the analogy here a bit, but now it's different, uh, 50 different villages that, you know, uh, an attacker needs to look in, it starts to become really time-consuming and really difficult. And now when you're looking at, especially this idea of kind of cybersecurity, um, the ability to secure a monolithic app is typically not all that different from what you can do with a microservice or with a once you get past that initial point, instead of thinking of it, you know, I have my one wall around everything, you know, think of it almost as a series of walls where it gets more and more difficult. Again, this all depends on, uh, that you're, you're managing that security well, which can get really time-consuming more than anything else and challenging from a pure management standpoint, but from an actual security posture, it is a way of where you can strengthen it, uh, because you're, you're creating more, um, more difficult ways of accessing information for attackers, as well as just more layers potentially of security. >>But what do you do to lift that burden then from, from the customer? Because like you said, that that that's a concern they really don't want to have. Right. They want, they want you to do that. They want somebody to do that for them. So what can, what do you do to alleviate those kinds of stress >>On their systems? Yeah, it's a great question. And this is really where the idea of API management and, um, in it's in its infancy came from, was thinking about, uh, how do we extract a way these different tasks that people don't really want to do when they're managing, uh, how API, how people can interact with their API APIs, whether that be a device or another human, um, and part of that is just taking away. So what we do and what API gate management tools have always done is abstract that into a, a new piece of software. So instead of having to kind of individually develop and write code for security, for logging, for, you know, routing logic, all these different pieces of how those different APIs will communicate with each other, we're putting that into a single piece of software and we're allowing that to be done in a really easy way. >>And so what we've done now with con connect and where we've extended that to you, is making it even easier to do that at a microservices level of scale. So if you're thinking about hundreds or thousands of different microservices that you understand and be able to manage, that's what we're really building to allow people to do. And so that comes with, you know, being able to, to make it extremely easy, uh, to, to actually add policies like authentication, you know, rate-limiting, whatever it may be, as well as giving people the choice to use what they want to use. Uh, we have great partners, you know, looking at the Datadog's, the Okta's of the world who provide a pretty, pretty incredible product. We don't necessarily want to reinvent the wheel on some of these things that are already out there, and that are widely loved and accepted by, uh, technology, practitioners and developers. We just want to make it really easy to actually use those, uh, those different technologies. And so that's, that's a lot of what we're doing is providing a, a way to make it easy to add this, you know, these policies and this logic into each one of these different services. >>So w if you're providing these kinds of services, right. And, and, and, and they're, they're, they're new, right. Um, and you're merging them sometimes with kind of legacy, uh, components, um, that transition or that interaction I would assume, could be a little complex. And, and you've, you've got your work cut out for you in some regards to kind of retrofit in some respects to make this seamless, to make this smooth. So maybe shine a little light on that process in terms of not throwing all the, you know, the bath out, you know, with, with the baby, all the water here, but just making sure it all works right. And that it makes it simple and, and, um, takes away that kind of complexity that people might be facing. >>Yeah, that's really the name of the game. Uh, we, we do not believe that there is a one size fits all approach in general, to how people should build software. Uh, there are going to need instances aware of building a monolithic app. It makes the most sense. There are going to be instances where building on Kubernetes makes the most sense. Um, the key thing that we want to solve is making sure that it works and that you're able to, to make the best technical decision for your products and for your organization. And so in looking at, uh, sort of how we help to solve that problem, I think the first is that we have first class support for everything. So we support, you know, everything down to, to kind of the oldest bare metal servers to NAMS, to containers across the board. Uh, and, and we had that mindset with every product that we brought to market. >>So thinking about our service mesh offering, for instance, um, Kula is the open source project that under tens now are even, but looking at Kumo, one of the first things that we did when we brought it out, because we saw this gap in space was to make sure that that adds first-class support for and chance at the time that wasn't something that was commonly done at all. Uh, now, you know, there there's more people are moving in that direction because they do see it as a need, which is great for the space. Um, but that's something where we, we understand that the important thing is making sure your point, you said it kind of the exact way that we like to, which is it needs to be reliable. It needs work. So I have a huge estate of, you know, older applications, older, uh, you know, potentially environments, even. I might have data centers that might've cloud being, trying to do everything all at once. Isn't really a pragmatic approach. Always. It needs to be able to support the journey as you move to, to a more modern way of building. So in terms of going from on-premise to the cloud, running in a hybrid approach, whatever it may be, all of those things shouldn't be an all or nothing proposition. It should be a phase approach and moving to, to really where it makes sense for your business and for the specific problem >>Talking about cloud deployments, obviously AWS comes into play there in a major way for you guys. Um, tell me a little bit about that, about how you're leveraging that relationship and how you're partnering with them, and then bringing the, the value then to your customer base and kind of how long that's been going on and the kinds of work that you guys are doing together, uh, ultimately to provide this kind of, uh, exemplary product or at least options to your customers. >>Yeah, of course. I think the way that we're doing it first and foremost is that, um, we, we know exactly who AWS is and the space and, and, you know, a great number of our customers are running on AWS. So again, I think that first class support in general for AWS environments services, uh, both from the container service, their, their Kubernetes services, everything that they can have and that they offer to their customers, we want to be able to support, uh, one of the first areas of really that comes to mind in terms of first-class integration and support is thinking about Lambda and serverless. Um, so at the time when we first came out, was that, again, it was early for us, uh, or early in our journey as product and as company, uh, but really early for the space. And so how we were able to support that and how we were able to see, uh, that it could support our vision and, and what we wanted to bring as a value proposition to the market has been, you know, really powerful. So I think in looking at, you know, how we work with AWS, certainly on a partnership level of where we share a lot of the same customers, we share a very similar ethos and wanting to help people do things in the most cost-effective rapid manner possible, and to build the best software. Uh, and, you know, I mean, for us, we have a little bit of a backstory with AWS because Jeffrey's us was a, an early investor in, in common. >>Yeah, exactly. I mean, the, the whole memo that he wrote about, uh, you know, build an API or you're fired was, was certainly an inspiration to, to us and it catalyzed, uh, so much change in, in the technology landscape in general, about how everyone viewed API APIs about building a software that could be reused and, and was composable. And so that's something that, you know, we, we look at, uh, kind of carrying forward and we've been building on that momentum ever since. So, >>Well, I mean, it's just kind of take a, again, a high level, look at this in terms of microservices. And now that it's changing in terms of cloud connectivity. Thank you. Actually, I have a graphic to that. Maybe we can pull up and take a look at this and let's talk about this evolution. You know, what's occurring here a little bit, and, and as we take a look at this, um, tell us what you think those, these impacts are at the end of the day for your customers and how they're better able to provide their services and satisfy their customer needs. >>Absolutely. So this is really the heart of the connect platform and of our vision in general. Um, we'd spoken just a minute ago about thinking how we can support the entire journey or, uh, the, the enterprise reality that is managing a, a relatively complex environment of modelists different services, microservices, you know, circle assumptions, whatever it may be, uh, as well as lots of different deployment methods and underlying tech platforms. You know, if you have, uh, virtual machines and Kubernetes, whatever, again, whatever it may be. But what we look at is just the different sort of, uh, design patterns that can occur in thinking about a monolithic application. And, um, okay. Mainly that's an edge concern of thinking about how you're going to handle connectivity coming in from the edge and looking at a Kubernetes environment of where you're going to have, you know, many Kubernetes clusters that need to be able to communicate with each other. >>That's where we start to think about, uh, our ingress products and Kubernetes ingress that allows for that cross applic, uh, across application communication. And then within the application itself, and looking at service mesh, which we talked a little bit about of just how do I make sure that I can instrument and secure every transaction that's happening in a, a truly microservices, uh, deployment within Kubernetes or outside of it? How do I make sure that that's reliable and secure? And so what we look at is this is just a, uh, part of it is evolution. And part of it is going to be figuring out what works best when it, um, certainly if you're, if you're building something from scratch, it doesn't always make sense to build it, your MDP, as, you know, microservices running on Kubernetes. It probably makes sense to go with the shortest path, uh, at the same time, if you're trying to run it at massive scale and big applications and make sure they're as reliable as possible, it very well does make sense to spend the time and the effort to, to make humanize work well for you. >>And I think that's, that's the, the beauty of, of how the space is shifting is that, uh, it's, it's going towards a way of the most practical solution to get towards business value, to, to move software quicker, to give customers the value that they want to delight them to use. Amazon's, uh, you know, phrase ology, if that's, uh, if that's a word, uh, it's, it's something of where, you know, that is becoming more and more standard practice versus just trying to make sure that you're doing the, the latest and greatest for the sake of, of, uh, of doing it. >>So we've been talking about customers in, in rather generic terms in terms of what you're providing them. We talked about new surfaces that are certainly, uh, providing added value and providing them solutions to their problems. Can you give us maybe just a couple of examples of some real life success stories, where, where you've had some success in terms of, of providing services that, um, I assume, um, people needed, or at least maybe they didn't know they needed until, uh, you, you provided that kind of development that, but give us an idea of maybe just, uh, shine, a little light on some success that you've had so that people at home watching this can perhaps relate to that experience and maybe give them a reason to think a little more about calm. >>Yeah, absolutely. Uh, there, there's a number that come to mind, but certainly one of the customers that I spent a lot of time with, uh, you know, become almost friends would be with, uh, with the different, with a couple of the practitioners who work there is company called Cargill. Uh, it's a shared one with us and AWS, you know, it's one we've written about in the past, but this is one of the largest companies in the world. Um, and, uh, the, the way that they describe it is, is that if you've ever eaten a Vic muffin or eaten from McDonald's and had breakfast there, you you've used a Cargill service because they provide so much of the, the food supply chain business and the logistics for it. They had a, uh, it's a, it's an old, you know, it's a century and a half old company. >>It has a really story kind of legacy, and it's grown to be an extremely large company that's so private. Uh, but you know, they have some of the most unique challenges. I think that I've, I've seen in the space in terms of needing to be able to ensure, uh, that they're able to, to kind of move quickly and build a lot of new services and software that touch so many different spaces. So they were, uh, the challenge that was put in front of them was looking at really modernizing, you know, again, a century and a half old company modernizing their entire tech stack. And, you know, we're certainly not all of that in any way, shape or form, but we are something that can help that process quite a bit. And so, as they were migrating to AWS, as they were looking at, you know, creating a CICB process for, for really being able to ship and deploy new software as quickly as possible as they were looking at how they could distribute the, the new API APIs and services that they were building, we were helping them with every piece of that journey, um, by being able to, to make sure that the services that they deployed, uh, performed in the way that they expected them to, we're able to give them a lot of competence and being able to move, uh, more rapidly and move a lot of software over from these tried and true, uh, you know, older or more legacy of doing things to a much more cloud native built as they were looking at using Kubernetes in AWS and, and being able to support that handle scale. >>Again, we are something that was able to, to kind of bridge that gap and make sure that there weren't going to be disruptions. So there, there are a lot of kind of great reasons of why they're their numbers really speak for themselves in terms of how, uh, how much velocity they were able to get. You know, they saying them saying them out loud on the sense fake in some cases, um, because they were able to, you know, I think like something, something around the order of 20 X, the amount of new API APIs and services that they were building over a six month period, really kind of crazy crazy numbers. Um, but it is something where, you know, the, for us, we, we got a lot out of them because they were open source users. So calling is first and foremost, an open source company. >>And so they were helping us before they even became paying customers, uh, just by testing the software and providing feedback, really putting it through its paces and using it at a scale that's really hard to replicate, you know, the scale of a, uh, a couple of hundred thousand person company, right? Yeah. Talking about a win-win yeah. That worked out well. It's certainly the proof is in the pudding and I'm sure that's just one of many examples of success that you've had. Uh, we appreciate the time here and certainly the insights and wish you well on down the road. Thanks for joining us, Mike. Thanks, Sean. Thanks for having me. I've been speaking with Mike Villa from Kong. He is in corporate development and operations there on John Walls, and you're watching on the cube, the AWS startup showcase.

(upbeat music) >> Well, thank you for joining us here as we continue our Cube Conversation on the AWS startup showcase with Marco Palladino who is the CTO of Kong. And Marco, also a co-founder by the way, Marco, thank you for joining us here on theCUBE. It's good to have you with us. >> Thank you, John, for having me. >> You bet, absolutely. First off, for our visitors and our viewers who might not be too familiar with Kong, tell us a little bit about what you're up to and your core competencies, of which I know are many. >> Yeah, Kong is a cloud connectivity company. We provide the technology software that developers and enterprise organizations all over the world can use to connect securely their software, and their microservices, and their APIs together. So we're really executing here on being the Cisco of L4 and L7. >> Yeah, great analogy. A really good analogy. So when you are talking about microservices, obviously this is a pretty new space, or certainly a growing space, in terms of deployments and different technologies. How come, like where's this come from, basically the whole microservice notion and concept? >> Yeah, it's a very interesting concept. In 2013 and 2014 there was a market transition in the landscape. Docker was released in 2013. Kubernetes was released in 2014. And Docker and Kubernetes together really have unleashed a new era of microservices across pretty much every organization in the world. We know that if we are trying to grow a business we must iterate fast ship, new products faster. We must be reliable. We must be distributed decoupled. And to do that, monolithic applications, which is the previous way of building modern software, monolithic applications, doesn't really scale that well in a distributed world. And so with microservices, running on top of Kubernetes containerized with Docker, we can now decouple our software and run it in a faster, better, more reliable way across pretty much any cloud vendor in the world. And as a result of that, we can enter new markets faster. We can make our users happier by shipping fixes and features faster. And therefore we can grow the business. That's why microservices really have been adopted across the board. >> So let's dive into that a little deeper here in terms of the value proposition, because, just because you could do something obviously isn't what the reason why you should do it. There is value at the end of the day that you're delivering, a new value. So summarize that a little bit for, again, a perspective customer who might be watching right now, somebody that you want to talk to about these new services these new values that they can enjoy. Why they be thinking about Kong? Why should they be thinking about microservices? >> Yeah, you see, every organization in the world is becoming digital. And we've discovered that, a few years ago, with digital transformation 1.0, as I call it. And in that digital transformation, we have realized that in order for us to build a successful software, in order for us to grow our business, we really must be able to innovate quicker. We must be able to create and ship new products faster. We must be able to duplicate our workloads across multiple regions and cloud vendors so that we can target our users with low latency and with the quickest performance we can possibly get. Now, in order to do that the monolithic applications we used to build they don't do that that well. monolithic applications, as they grow, they become huge, hard to move, hard to scale, hard, to deploy, hard to innovate. And we, as an industry, have learned that if we can decouple those large monolithic applications into smaller components, like microservices, we can then ship and innovate faster. Now, of course, on one end, we ship and deploy faster. On the other end, we are introducing something that our monolithic applications never really had at this scale. And that is this massive connectivity across all the services that make up the final application. Being decoupled and being distributed really means that we are connecting them over the network with service connectivity. And if that service connectivity is not working well then the application is not working. So digital transformation 2.0 really is all about taking our digital business and transforming it, by decoupling it and distributing it, in order for us to build a stronger business. >> So you talked about the monolithic application and there's some simplicity to that though, isn't there? Because now we're introducing multiple layers and a lot of complexity in some respects. Which allows us to do a lot of things really well, but it also introduces challenges. So if you were talking to, again, a prospective customer and they said, "Hey, this all sounds well and good, but what if..?" There are a lot of what ifs out there. How do you address the different challenges or the questions that might be raised in terms of trouble that you're inviting by introducing this new complexity into the marketplace? >> Yeah, the key here is to abstract away all the things that we don't need to build for our business. The key is to focus on what drives our business and that's our users, our customers, the applications that we're building. Everything else that's not part of the core business should be delegated as part of the underlying infrastructure. Likewise, today, when we want to enter a new market we just leverage a cloud vendor. We don't go and build a physical data center from scratch. Likewise, when we build new modern applications, we don't want to build the orchestration platforms by ourselves. We don't want to build the connectivity stack by ourselves. But we want to abstract that away so that our teams can focus on what matters for the business. And that's the users, the customers, the application. It's not building the underlying infrastructure which can be given as a service to the application teams as opposed to asking the teams to build it from scratch. And there's going to be challenges, of course, but there's going to be benefits. And as long as the benefits are bigger than the challenges then it's worth while transitioning to microservices if that can help us scale faster and grow faster. And if anything, with COVID last year, we have learned how important it is for every organization to think about digitalizing in a faster way, in order to keep being in business, as a matter of fact, to keep winning against their competitors. And the organizations that can acquire good knowledge of the underlying tooling to allow them to transform this way, those are the organizations that are going to be succeeding moving forward. >> What do you think is the biggest shift in this paradigm then in terms of this legacy system that we had in place, that worked pretty well, to now We have a much more specialized, instead a much more distributed approach, that is providing these new values and certainly great benefits. But in your mind, what's the biggest shift there, you think, in terms of mindset and in terms of actual deployment? >> Well transitioning to microservices really involves three different transformations and that's why sometimes it can be challenging. It requires transforming our software to microservices. By doing so, it requires us to rethink the operations of how we deploy, run, and test our software. And the third aspect, the third component that it transforms it's the cultural component. And now we can build smaller teams that can work in a decoupled asynchronous way. And as long as they expose an API those teams are going to be very well integrated with the rest of the organization. Look at what companies like Amazon, Netflix, or Google have done. And that's a big cultural shift. Like any large transformation, it is not, there is not one secret ingredient. It's an entire mindset that has to change. Now, thankfully for us, this transition is also being driven by bottom up adoption and transformation that's being driven by open source software. So unlike the previous transformations, these ones, if you wish, it's a self service transformation. Open source ecosystem provides us with a self-service ecosystem of a landscape of tools and platform and technologies that the application teams and the infrastructure teams can go ahead and use in order to figure out what's the best formula for them to achieve their success. >> When you have the, so let's just say, you've got your operation in place and you have multiple communications going on amongst microservices, whatever. It's all well and good. Now you want to introducing yet another. And so are there, not concerns, are there challenges there in bringing a newcomer into that environment in terms of testing, in terms of deployment, because of the factors, the variables that come into play here? How one piece works with another piece won't be the same how it works with another piece, right? So how do you handle testing? How do you handle new deployments in this kind of an environment? >> This is perhaps the most critical cultural change and transformation that microservices bring. With a monolithic application, if the monolith was up and running the business was up and running. If the monolith was down the business was done. Simple, easy. It was clear. It's one-to-one clear to understand. With microservices we're effectively making ourselves comfortable of always running in a partially degraded system. Because there is so much more, so many more moving parts running at the same time they cannot possibly be all up and running at any given point in time. Some of them will be running. Some of them will be slow. Some of them will be not executing. And guess what? Our infrastructure is built in such a way that, even when that happens, the customer and the users will never experience any downtime. This is a chance for us to transition to microservices. It's a chance for us to accelerate the innovation in your organization. But also to accelerate the reliability of our applications and also accelerate the security of our applications. And these may sound counterintuitive. Many technology leaders they're like, "Wait, what do you mean by that? How can you transition to microservices and improve the security if you have so many moving parts in your systems running as opposed to a monolith?" But that's an opportunity for us to improve the security. Because now, unlike the monolith, where everything can consume and access everything else, with microservices we can set up a tighter security rules in place to determine what services can consume what other services and in what capacity? In a monolithic world, as long as the code base is accessible, anybody can do anything that the monolith can do. With microservices it's an opportunity for us to lock that down. And even the past year, we've seen how important that is. The reputational of an entire organization can be destroyed by a high profile breach or attack. And so it's very important for us to catch this opportunity so that we can implement zero trust security. We can implement a consistent, non-fragmented layer of security across all of our applications, not just the Kubernetes ones or the containerized ones, but even the virtual machine based ones. And all the connections that we're generating, that's the backbone of every modern architecture, that's the bread and butter of every microservice oriented application. And that connectivity has to be managed, and secure, and observed, and exposed to our partners, developers, and customers. If that connectivity fails, then our business fails. And so today we can not ask the application teams to build that connectivity for us. That's like asking them to go build an application, and as they're doing that, walking to the data center and physically connecting the switches and the routers to the server racks to build the underlying physical connectivity. We don't, we cannot ask them to do that. The connectivity as well has to be abstracted the same way we are abstracting the data center with platforms like Kubernetes. >> So just back again to security. Obviously, you pointed out, we've had some pretty high profile cases here of late. Well, actually it's probably the past four or five years, but certainly of late, state actors taking actions. So that security mindset that you're in right now it does seem counterintuitive to me. That you have multiple doors, right? In the monolithic environment you've got one big one, right? And you just have to crack the code, and you're in. But in this case, you've got a lot of different entry points but you're saying that you're actually, you can batten down that hatch, if you will. You can provide the protective barrier around all of these microservices in an effective way. >> It's an opportunity for us. I'm a big fan of when John Chambers, the ex CEO of Cisco said, "Whenever there is a threat, how can we think of that as an opportunity?" And really microservices gave us the opportunity to implement a new generation security model for all of our applications. That's tight, that cannot be breaked into. And so that zero trust security, OPA, across the entire organization for both North/South and East/West traffic, for both the gateways and the service meshes. That is, for us, the opportunity to secure our applications in a way that could not be secured before in a monolithic world. Microservices not only create a business advantage but they gave us also many, many different chances for us to improve all the other aspects of security and productivity within your organization. And securing it, that's one of the opportunities that we can not miss. >> Well, Marco thank you for the time. Fascinating work, it really is, revolutionary in many respects. And I wish you continued success at Kong. And thank you for joining us here on the startup showcase. >> Thank you so much. >> Great. John was here talking to the Marco Palladino Who is the CTO and co-founder of Kong. We're talking about the service mesh, that landscape. It is new. It is evolving. And it is certainly a fascinating wrinkle to our world. Thanks for joining us here on theCUBE Conversation. I'm John Walls. We'll see you next time. (upbeat music)

(upbeat music) >> Well, good day and welcome back to the Cube as we continue our segment, featuring AWS Startup Showcase and we're with now Mike Bilodeau who's in corporate development and operations at Kong. Mike, thank you for joining us here on the Cube and particularly on the Startup Showcase. Nice to have you and Kong represented here today. >> Thanks for having me, John. Great to be here. >> You better and first off let's just tell us about Kong a little bit and column cadet which I know is your feature program or service. I love the name by the way, but tell us a little bit about Kong and then what Kong is all about too? >> Sure, so Kong as a company really came about in the past five years. Our two co-founders came over from Italy in the late aughts early to 20 teens and had a company called Mashape. And so what they were looking at and what they were betting on at that time, was that APIs were going to be the future of how software was built and how developers interacted with software. And so what came from that was a piece of they were running Mashape as a marketplace at the time. So connecting developers to different APIs so they can consume them and use them to build new software. And what they found was that actually the most valuable piece of technology that they had created was the backbone for running that marketplace. And that backbone is what Kong is. And so they created it to be able to handle a massive amount of traffic, a massive amount of APIs, all simultaneously. This is a problem that a lot of enterprises have especially now that we've started to get some microservices, started to have more distributed technologies. And so what Kong is really is, it's a way to manage all of those different APIs. All of the connections between different microservices through a single platform which is Kong connect. And now that we've started to have Kubernetes the sort of the birth and the nascent space of service mesh. Kong connect allows all of those connections to be managed and to be secured and made reliable through a single platform. >> So what's driving this, right? I mean you mentioned microservices and Kubernetes and that environment which is kind of facilitating this, I guess transformation you might say. But what's the big driver in your opinion in terms of what's pushing this microservices phenomenon if you will or this revolution? >> Sure, and when I think it starts out at the simple active of technology acceleration in general. So when you look at just the real shifts that have come in enterprise to hack especially looking, you know start with that at the cloud but you could even go back to VMware and virtualization is it's really about allowing people to build software more rapidly. All of these different innovations that have happened with cloud, with virtualization, now with containers, Kubernetes, microservices they're really focused on making it so that developers can build software a lot more quickly. Develop the latest and greatest in a more rapid way. I think a huge driver out of this is just making it easier for developers, for organizations to bring new technologies to market. And we see that as a key driver in a lot of these decisions that are being made. I think another piece of it that's really coming about is looking at security as a really big component. You know we have a huge monolithic app. It can become very challenging to actually secure that. If somebody gets into the initial Ops space they're really past the point of no return and can get access to some things that you might not want them to. Similar for compliance and governance reasons, that becomes challenging. So I think you're seeing this combination of where people are looking at breaking things into smaller pieces, even though it does come with its own challenges around security that you need to manage. It's making it so that there's less ability to just get in and cause a lot of damage all at once from malicious attackers. >> Yeah, you bring up security and so, yeah to me it's almost in some cases it's almost counterintuitive. I think about if I got this model to gap and I've got a big parameter around it, right. And I know that I can confine this thing. I can contain this, this is is good. Now microservices, now got a lot of, it's almost like a lot of villages, right? They're all around. And I don't have the castle anymore. I've got all these villages. So I have to build walls around all these villages. But you're saying that that's actually easier to do or at least you're more capable of doing that now as opposed to maybe where we were two, three years ago. >> Well you can almost think of it as if you have those villages, right. And if you have one castle and somebody gets inside they're going to be able to find whatever treasure you may have you know, to extend the analogy here a bit. But now if you have 50 different villages that an attacker needs to look in it starts to become really time consuming and really difficult. And now when you're looking at, especially this idea of cybersecurity, the ability to secure a monolithic app is typically not all that different from what you can do with a microservice or once you get past that initial point. Instead of thinking of it as, you know I have my one wall around everything you now think of it almost as a series of walls where it gets more and more difficult. Again this all depends on that you're managing that security well which can get really time-consuming more than anything else and challenging from a pure management standpoint. But from an actual security posture it is a way of where you can strengthen it because you're you're creating more difficult ways of accessing information for attackers as well as just more layers potentially of security that they need to get them. >> But what do you do to lift that burden then from the customers because like you said that's a concern they really don't want to have. They want you to do that. They want somebody to do that before them. So what do you do to alleviate those kinds of stresses on their systems? >> Yeah, it's a great question. And this is really where the idea of API management in its infancy came from. Was thinking about, how do we abstract a way these different tasks that people don't really want to do when they're managing how people can interact with their APIs whether that be a device or another human? And part of that is just taking away. So what we do and what API game management tools have always done is abstract that into a new piece of software. So instead of having to kind of individually develop and write code for security, for logging, for routing logic, all these different pieces of how those different APIs will communicate with each other we're putting that into a single piece of software, And we're allowing that to be done in a really easy way. And so what we've done now with Kong connect and where we've extended that to is making it even easier to do that at a microservices level of scale. So if you're thinking about hundreds or thousands of different microservices that you need to understand and be able to manage that's what we're really building to allow people to do. And so that comes with being able to make it extremely easy to actually add policies like authentication, rate limiting whatever it may be as well as giving people the choice to use what they want to use. We have great partners looking at the Datadog's, the Okta's of the world who provide a pretty, pretty incredible product. We don't necessarily want to reinvent the wheel on some of these things that are already out there and that are widely loved and accepted by technology practitioners and developers. We just want to make it really easy to actually use those different technologies. And so that's a lot of what we're doing is providing a a way to make it easy to add these policies and this logic into each one of these different services. >> So what if you're providing these kinds of services and they're new and you're merging them sometimes with kind of legacy components? That transition or that interaction I would assume could be a little complex. And you've got your work cut out for you in some regards to kind of retrofit, right? In some respects to make this seamless, to make this smooth. So maybe you shine a little light on that process in terms of not throwing all the bath out with the baby or the water here, but just making sure it all works. And that it makes it simple and takes away that kind of complexity that people might be facing. >> Yeah, that's really the name of the game. We do not believe that there is a one size fits all approach in general to how people should build software. There are going to be instances of where building a monolithic app makes the most sense. There are going to be instances where building a Kubernetes makes the most sense. The key thing that we wonna solve is making sure that it works and that you're able to make the best technical decision for your products and for your organization. And so in looking at how we help to solve that problem, I think the first is that we have first-class support for everything. So we support everything down to kind of the oldest bare metal servers, to IBMs to containers across the board. And we've had that mindset with every product that we brought to market. So thinking about our service mesh for instance Kuma is the open-source project that all depends now on an enterprise one. But looking at Kuma, one of the first things that we did when we brought it out because we saw this gap in the space was to make sure that they have first-class support for virtual machines. At the time that wasn't something that was commonly done at all. Now more people are moving in that direction because they do see it as it need which is great for the space. But that's something where we understand that the important thing is making sure your point you said it kind of the exact way that we like to which is it needs to be reliable. It needs to work. So I have a huge estate of older applications, older potentially environments even I might have data centers, I might have cloud been trying to do everything all at once. Isn't really a pragmatic approach always. It needs to be able to support the journey as you move to a more modern way of building. So in terms of going from on-premise to the cloud, running in a hybrid approach, whatever it may be, all of those things shouldn't be an all-or-nothing proposition. It should be a phased approach and moving to really where it makes sense for your business and for the specific product. >> You've been talking about cloud deployments obviously. AWS comes into play there in a major way for you guys. Tell me a little bit about that. About how you're leveraging that relationship and how you're partnering with them and then bringing the value then to your customer base. And how long that's been going on and the kinds of work that you guys are doing together ultimately to provide this kind of exemplary product or at least options to your customers. >> Yeah, of course. I think the way that we're doing it first and foremost is that we know exactly who AWS is in the space. And great number of our customers are running on AWS. So again, I think that first-class support in general for AWS environments, services both from the container service, their Kubernetes services, everything that they can have and that they offer to their customers we wonna be able to support. One of the first areas really that comes to mind in terms of first-class integration and support is thinking about Lambda and serverless. So at the time when we first came out with that, again it was early for us or early in our journey as product and as company, but really early for the space. And so how we were able to support that and how we were able to see that it could support our vision and what we wanted to bring as a value proposition to the market has been really powerful. So I think in looking at how we work with AWS certainly on a partnership level of where we share a lot of the same customers we share a very similar ethos and wanting to help people do things in the most cost-effective rapid manner possible and to build the best software. And I mean for us we have a little bit of a backstory with AWS 'cause Jeff Bezos was an early investor in Kong. >> That didn't hurt really. Yeah exactly, I mean the whole memo that he wrote about build an API or you're fired was certainly an inspiration to us. And just it catalyzed so much change in the technology landscape in general about how everyone viewed APIs about building a software that could be reused and and was composable. And so that's something that we look at and kind of carry it forward and we've been building on that momentum ever since. >> So I'm going to just kind of take, again a high level. Look at this in terms of microservices and how that's changing in terms of cloud connectivity. Think you actually have a graphic too that maybe we can pull up and take a look at this and let's talk about this evolution. What's occurring here a little bit and as we take a look at this tell us what you think these impacts are at the end of the day for your customers and how they're better able to provide their services and satisfy their customer needs. >> Absolutely, so this is really the heart of the connect platform and of our vision in general. We've spoken just a minute ago about thinking how we can support the entire journey or the enterprise reality that is managing a relatively complex environment of monoliths, different services, microservices, serverless functions, whatever it may be as well as lots of different deployment methods and underlying tech platforms. If you have virtual machines and Kubernetes whatever it may be. But what we look at is just the different design patterns that can occur in thinking about a monolithic application. Okay, mainly that's an edge concern of thinking about how you going to handle connectivity coming in from the edge in looking at a Kubernetes environment of where you going to have many Kubernetes clusters that need to be able to communicate with each other. That's where we start to think about our ingress products and Kubernetes ingress that allows for that cross application communication. And then within the application itself and looking at service mesh which we talked a little bit about of just how do I make sure that I can instrument and secure every transaction that's happening in a truly microservices deployment within Kubernetes or outside of it? How do I make sure that that's reliable and secure? And so what we look at is part of it is evolution. And part of it is going to be figuring out what works best when. Certainly if you're building something from scratch it doesn't always make sense to build it. Your MDP as microservices running on Kubernetes it probably makes sense to go with the shortest path. At the same time if you're trying to run it at massive scale and big applications and make sure they're as reliable as possible it very well does make sense to spend the time and the effort to make Kubernetes work well for you. And I think that's the beauty of how the space is shifting is that it's going towards a way of the most practical solution to get towards business value to move software quicker to give customers the value that they want to delight them to use Amazon's phraseology if that's a word. It's something that is becoming more and more standard practice versus just trying to make sure that you're doing the latest and greatest for the sake of doing it. >> So we've been talking about customers in rather generic terms in terms of what you're providing them. We've talked about new services that are certainly providing added value and providing them with solutions to their problems. Can you give us maybe just a couple of examples of some real life success stories where you've had some success in terms of providing services that I assume people needed or at least maybe they didn't know they needed until you provided that kind of development. But give us an idea, maybe just shine a little light on some success that you've had so that people at home and are watching this can perhaps relate to that experience and maybe give them a reason to think a little more about Kong and Kong connect. >> Yeah, absolutely, there's a number that come to mind but certainly one of the customers that I have spent a lot of time with, become almost friends with a couple of the practitioners who work there, is company called Cargill. It's a shared one with us and AWS. It's one we've written about in the past but this is one of the largest companies in the world. And the way that they describe it as is that if you've ever eaten a McMuffin or eaten from McDonald's and had breakfast there, you've used a Cargill service because they provide so much of the food supply chain business and the logistics for it. You know, it's a century and a half old company. It has a really story and a legacy and it's grown to be an extremely large company that's still private. But they have some of the most unique challenges, I think that I've seen in the space in terms of needing to be able to ensure that they're able to kind of move quickly and build a lot of new services and software that touch so many different spaces. So the challenge that was put in front of them was looking at really modernizing a century and a half old company. Modernizing their entire tech stack. And we're certainly not all of that in any way shape or form but we are something that can help that process quite a bit. And so as they were migrating to AWS as they were looking at creating a CICB process for really being able to shape and deploy new software as quickly as possible. As they were looking at how they could distribute the new APIs and services that they were building, we were helping them with every piece of that journey by being able to to make sure that the services that they deployed performed in the way that they expected them to. We're able to give them a lot of confidence in being able to move more rapidly and move a lot of software over from these tried and true older or more legacy ways of doing things to a much more cloud native build. As they were looking at using Kubernetes in AWS and being able to support that handle scale, again we're something that was able to kind of bridge that gap and make sure that there weren't going to be disruptions. So there are a lot of great reasons of why their numbers really speak for themselves in terms of how much velocity they were able to get. Saying them out loud will sound fake in some cases because they were able to, you know, I think like something around the order of 20 X the amount of new APIs and services that they were building over a six month period. Really kind of crazy, crazy numbers. But it is something where, for us we got a lot out of them because they were open-source users. So Kong is first and foremost an open-source company. And so they were helping us before they even became paying customers. Just by testing the software, providing feedback, really putting it through its paces and using it at a scale that's really hard to replicate. You know the scale of a couple of hundred thousand person company, yeah. >> Talk about a win-win. That worked out well. Certainly the proof is in the pudding and I'm sure that's just one of many examples of success that you've had. We appreciate the time here and certainly the insights and I wish you well on down the road. Thanks for joining us Mike. >> Thanks John, thanks for having me. >> Been peaking with Mike Bilodeau from Kong. He is in corporate development and operations there. I'm John Walls and you're watching "On the Cube" the AWS Startup Showcase. (soft music)

(upbeat music) >> Well, thank you for joining us here as we continue our Cube Conversation on the AWS startup showcase with Marco Palladino who is the CTO of Kong. And Marco, also a co-founder by the way, Marco, thank you for joining us here on theCUBE. It's good to have you with us. >> Thank you, John, for having me. >> You bet, absolutely. First off, for our visitors and our viewers who might not be too familiar with Kong, tell us a little bit about what you're up to and your core competencies, of which I know are many. >> Yeah, Kong is a cloud connectivity company. We provide the technology software that developers and enterprise organizations all over the world can use to connect securely their software, and their microservices, and their APIs together. So we're really executing here on being the Cisco of L4 and L7. >> Yeah, great analogy. A really good analogy. So when you are talking about microservices, obviously this is a pretty new space, or certainly a growing space, in terms of deployments and different technologies. How come, like where's this come from, basically the whole microservice notion and concept? >> Yeah, it's a very interesting concept. In 2013 and 2014 there was a market transition in the landscape. Docker was released in 2013. Kubernetes was released in 2014. And Docker and Kubernetes together really have unleashed a new era of microservices across pretty much every organization in the world. We know that if we are trying to grow a business we must iterate fast ship, new products faster. We must be reliable. We must be distributed decoupled. And to do that, monolithic applications, which is the previous way of building modern software, monolithic applications, doesn't really scale that well in a distributed world. And so with microservices, running on top of Kubernetes containerized with Docker, we can now decouple our software and run it in a faster, better, more reliable way across pretty much any cloud vendor in the world. And as a result of that, we can enter new markets faster. We can make our users happier by shipping fixes and features faster. And therefore we can grow the business. That's why microservices really have been adopted across the board. >> So let's dive into that a little deeper here in terms of the value proposition, because, just because you could do something obviously isn't what the reason why you should do it. There is value at the end of the day that you're delivering, a new value. So summarize that a little bit for, again, a perspective customer who might be watching right now, somebody that you want to talk to about these new services these new values that they can enjoy. Why they be thinking about Kong? Why should they be thinking about microservices? >> Yeah, you see, every organization in the world is becoming digital. And we've discovered that, a few years ago, with digital transformation 1.0, as I call it. And in that digital transformation, we have realized that in order for us to build a successful software, in order for us to grow our business, we really must be able to innovate quicker. We must be able to create and ship new products faster. We must be able to duplicate our workloads across multiple regions and cloud vendors so that we can target our users with low latency and with the quickest performance we can possibly get. Now, in order to do that the monolithic applications we used to build they don't do that that well. monolithic applications, as they grow, they become huge, hard to move, hard to scale, hard, to deploy, hard to innovate. And we, as an industry, have learned that if we can decouple those large monolithic applications into smaller components, like microservices, we can then ship and innovate faster. Now, of course, on one end, we ship and deploy faster. On the other end, we are introducing something that our monolithic applications never really had at this scale. And that is this massive connectivity across all the services that make up the final application. Being decoupled and being distributed really means that we are connecting them over the network with service connectivity. And if that service connectivity is not working well then the application is not working. So digital transformation 2.0 really is all about taking our digital business and transforming it, by decoupling it and distributing it, in order for us to build a stronger business. >> So you talked about the monolithic application and there's some simplicity to that though, isn't there? Because now we're introducing multiple layers and a lot of complexity in some respects. Which allows us to do a lot of things really well, but it also introduces challenges. So if you were talking to, again, a prospective customer and they said, "Hey, this all sounds well and good, but what if..?" There are a lot of what ifs out there. How do you address the different challenges or the questions that might be raised in terms of trouble that you're inviting by introducing this new complexity into the marketplace? >> Yeah, the key here is to abstract away all the things that we don't need to build for our business. The key is to focus on what drives our business and that's our users, our customers, the applications that we're building. Everything else that's not part of the core business should be delegated as part of the underlying infrastructure. Likewise, today, when we want to enter a new market we just leverage a cloud vendor. We don't go and build a physical data center from scratch. Likewise, when we build new modern applications, we don't want to build the orchestration platforms by ourselves. We don't want to build the connectivity stack by ourselves. But we want to abstract that away so that our teams can focus on what matters for the business. And that's the users, the customers, the application. It's not building the underlying infrastructure which can be given as a service to the application teams as opposed to asking the teams to build it from scratch. And there's going to be challenges, of course, but there's going to be benefits. And as long as the benefits are bigger than the challenges then it's worth while transitioning to microservices if that can help us scale faster and grow faster. And if anything, with COVID last year, we have learned how important it is for every organization to think about digitalizing in a faster way, in order to keep being in business, as a matter of fact, to keep winning against their competitors. And the organizations that can acquire good knowledge of the underlying tooling to allow them to transform this way, those are the organizations that are going to be succeeding moving forward. >> What do you think is the biggest shift in this paradigm then in terms of this legacy system that we had in place, that worked pretty well, to now We have a much more specialized, instead a much more distributed approach, that is providing these new values and certainly great benefits. But in your mind, what's the biggest shift there, you think, in terms of mindset and in terms of actual deployment? >> Well transitioning to microservices really involves three different transformations and that's why sometimes it can be challenging. It requires transforming our software to microservices. By doing so, it requires us to rethink the operations of how we deploy, run, and test our software. And the third aspect, the third component that it transforms it's the cultural component. And now we can build smaller teams that can work in a decoupled asynchronous way. And as long as they expose an API those teams are going to be very well integrated with the rest of the organization. Look at what companies like Amazon, Netflix, or Google have done. And that's a big cultural shift. Like any large transformation, it is not, there is not one secret ingredient. It's an entire mindset that has to change. Now, thankfully for us, this transition is also being driven by bottom up adoption and transformation that's being driven by open source software. So unlike the previous transformations, these ones, if you wish, it's a self service transformation. Open source ecosystem provider us with a self-service ecosystem of a landscape of tools and platform and technologies that the application teams and the infrastructure teams can go ahead and use in order to figure out what's the best formula for them to achieve their success. >> When you have the, so let's just say, you've got your operation in place and you have multiple communications going on amongst microservices, whatever. It's all well and good. Now you want to introducing yet another. And so are there, not concerns, are there challenges there in bringing a newcomer into that environment in terms of testing, in terms of deployment, because of the factors, the variables that come into play here? How one piece works with another piece won't be the same how it works with another piece, right? So how do you handle testing? How do you handle new deployments in this kind of an environment? >> This is perhaps the most critical cultural change and transformation that microservices bring. With a monolithic application, if the monolith was up and running the business was up and running. If the monolith was down the business was done. Simple, easy. It was clear. It's one-to-one clear to understand. With microservices we're effectively making ourselves comfortable of always running in a partially degraded system. Because there is so much more, so many more moving parts running at the same time they cannot possibly be all up and running at any given point in time. Some of them will be running. Some of them will be slow. Some of them will be not executing. And guess what? Our infrastructure is built in such a way that, even when that happens, the customer and the users will never experience any downtime. This is a chance for us to transition to microservices. It's a chance for us to accelerate the innovation in your organization. But also to accelerate the reliability of our applications and also accelerate the security of our applications. And these may sound counterintuitive. Many technology leaders they're like, "Wait, what do you mean by that? How can you transition to microservices and improve the security if you have so many moving parts in your systems running as opposed to a monolith?" But that's an opportunity for us to improve the security. Because now, unlike the monolith, where everything can consume and access everything else, with microservices we can set up a tighter security rules in place to determine what services can consume what other services and in what capacity? In a monolithic world, as long as the code base is accessible, anybody can do anything that the monolith can do. With microservices it's an opportunity for us to lock that down. And even the past year, we've seen how important that is. The reputational of an entire organization can be destroyed by a high profile breach or attack. And so it's very important for us to catch this opportunity so that we can implement zero trust security. We can implement a consistent, non-fragmented layer of security across all of our applications, not just the Kubernetes ones or the containerized ones, but even the virtual machine based ones. And all the connections that we're generating, that's the backbone of every modern architecture, that's the bread and butter of every microservice oriented application. And that connectivity has to be managed, and secure, and observed, and exposed to our partners, developers, and customers. If that connectivity fails, then our business fails. And so today we can not ask the application teams to build that connectivity for us. That's like asking them to go build an application, and as they're doing that, walking to the data center and physically connecting the switches and the routers to the server racks to build the underlying physical connectivity. We don't, we cannot ask them to do that. The connectivity as well has to be abstracted the same way we are abstracting the data center with platforms like Kubernetes. >> So just back again to security. Obviously, you pointed out, we've had some pretty high profile cases here of late. Well, actually it's probably the past four or five years, but certainly of late, state actors taking actions. So that security mindset that you're in right now it does seem counterintuitive to me. That you have multiple doors, right? In the monolithic environment you've got one big one, right? And you just have to crack the code, and you're in. But in this case, you've got a lot of different entry points but you're saying that you're actually, you can batten down that hatch, if you will. You can provide the protective barrier around all of these microservices in an effective way. >> It's an opportunity for us. I'm a big fan of when John Chambers, the ex CEO of Cisco said, "Whenever there is a threat, how can we think of that as an opportunity?" And really microservices gave us the opportunity to implement a new generation security model for all of our applications. That's tight, that cannot be breaked into. And so that zero trust security, OPA, across the entire organization for both North/South and East/West traffic, for both the gateways and the service meshes. That is, for us, the opportunity to secure our applications in a way that could not be secured before in a monolithic world. Microservices not only create a business advantage but they gave us also many, many different chances for us to improve all the other aspects of security and productivity within your organization. And securing it, that's one of the opportunities that we can not miss. >> Well, Marco thank you for the time. Fascinating work, it really is, revolutionary in many respects. And I wish you continued success at Kong. And thank you for joining us here on the startup showcase. >> Thank you so much. >> Great. John was here talking to the Marco Palladino Who is the CTO and co-founder of Kong. We're talking about the service mesh, that landscape. It is new. It is evolving. And it is certainly a fascinating wrinkle to our world. Thanks for joining us here on theCUBE Conversation. I'm John Walls. We'll see you next time. (upbeat music)

(lively music) >> Hello, everyone. Welcome back to the Supercloud presentation here. I'm theCUBE, I'm John Furrier, your host. What a great segment here. We're going to unpack the networking aspect of the cloud, how that translates into what Supercloud architecture and platform deployment scenarios look like. And demystify multi-cloud, hybridcloud. We've got two great experts. Amir Khan, the Co-Founder and CEO of Alkira, Atif Khan, Co-Founder and CTO of Alkira. These guys been around since 2018 with the startup, but before that story, history in the tech industry. I mean, routing early days, multiple waves, multiple cycles. >> Welcome three decades. >> Welcome to Supercloud. >> Thanks. >> Thanks for coming on. >> Thank you so much for having us. >> So, let's get your take on Supercloud because it's been one of those conversations that really galvanized the industry because it kind of highlights almost this next wave, this next side of the street that everyone's going to be on that's going to be successful. The laggards on the legacy seem to be stuck on the old model. SaaS is growing up, it's ISVs, it's ecosystems, hyperscale, full hybrid. And then multi-cloud around the corners cause all this confusion, everyone's hand waving. You know, this is a solution, that solution, where are we? What do you guys see as this supercloud dynamic? >> So where we start from is always focusing on the customer problem. And in 2018 when we identified the problem, we saw that there were multiple clouds with many diverse ways of doing things from the network perspective, and customers were struggling with that. So we delved deeper into that and looked at each one of the cloud architectures completely independent. And there was no common solution and customers were struggling with that from the perspective. They wanted to be in multiple clouds, either through mergers and acquisitions or running an application which may be more cost effective to run in something or maybe optimized for certain reasons to run in a different cloud. But from the networking perspective, everything needed to come together. So that's, we are starting to define it as a supercloud now, but basically, it's a common infrastructure across all clouds. And then integration of high lift services like, you know, security or IPAM services or many other types of services like inter-partner routing and stuff like that. So, Amir, you agree then that multi-cloud is simply a default result of having whatever outcomes, either M&A, some productivity software, maybe Azure. >> Yes. >> Amazon has this and then I've got on-premise application, so it's kinds mishmash. >> So, I would qualify it with hybrid multi-cloud because everything is going to be interconnected. >> John: Got it. >> Whether it's on-premise, remote users or clouds. >> But have CTO perspective, obviously, you got developers, multiple stacks, got AWS, Azure and GCP, other. Not everyone wants to kind of like go all in, but yet they don't want to hedge too much because it's a resource issue. And I got to learn this stack, I got to learn that stack. So then now, you have this default multi-cloud, hybrid multi-cloud, then it's like, okay, what do I do? How do you spread that around? Is it dangerous? What's the the approach technically? What's some of the challenges there? >> Yeah, certainly. John, first, thanks for having us here. So, before I get to that, I'll just add a little bit to what Amir was saying, like how we started, what we were seeing and how it, you know, correlates with the supercloud. So, as you know, before this company, Alkira, we were doing, we did the SD-WAN company, which was Viptela. So there, we started seeing when people started deploying SD-WAN at like a larger scale. We started like, you know, customers coming to us and saying they needed connectivity into the cloud from the SD-WAN. They wanted to extend the SD-WAN fabric to the cloud. So we came up with an architecture, which was like later we started calling them Cloud onRamps, where we built, you know, a transit VPC and put like the virtual instances of SD-WAN appliances extended from there to the cloud. But before we knew, like it started becoming very complicated for the customers because it wasn't just connectivity, it also required, you know, other use cases. You had to instantiate or bring in security appliances in there. You had to secure all of that stuff. There were requirements for, you know, different regions. So you had to bring up the same thing in different regions. Then multiple clouds, what did you do? You had to replicate the same thing in multiple clouds. And now if there was was requirement between clouds, how were you going to do it? You had to route traffic from somewhere, and come up with all those routing controls and stuff. So, it was very complicated. >> Like spaghetti code, but on network. >> The games begin, in fact, one of our customers called it spaghetti mess. And so, that's where like we thought about where was the industry going and which direction the industry was going into? And we came up with the Alkira where what we are doing is building a common infrastructure across multiple clouds, across in, you know, on-prem locations, be it data centers or physical sites, branches sites, et cetera, with integrated security and network networking services inside. And, you know, nowadays, networking is not only about connectivity, you have to secure everything. So, security has to be built in. Redundancy, high availability, disaster recovery. So all of that needs to be built in. So that's like, you know, kind of a definition of like what we thought at that time, what is turning into supercloud now. >> Yeah. It's interesting too, you mentioned, you know, VPCs is not, configuration of loans a hassle. Nevermind the manual mistakes could be made, but as you decide to do something you got to, "Oh, we got to get these other things." A lot of the hyper scales and a lot of the alpha cloud players now, and cloud native folks, they're kind of in that mode of, "Wow, look at what we've built." Now, they're got to maintain, how do I refresh it? Like, how do I keep the talent? So they got this similar chaotic environment where it's like, okay, now they're already already through, so I think they're going to be okay. But then some people want to bypass it completely. So there's a lot of customers that we see out there that fit the makeup of, I'm cloud first, I've lifted and shifted, I move some stuff to the cloud. But I want to bypass all that learnings from all the people that are gone through the past three years. Can I just skip that and go to a multi-cloud or coherent infrastructure? What do you think about that? What's your view? >> So yeah, so if you look at these enterprises, you know, many of them just to find like the talent, which for one cloud as far as the IT staff is concerned, it's hard enough. And now, when you have multiple clouds, it's hard to find people the talent which is, you know, which has expertise across different clouds. So that's where we come into the picture. So our vision was always to simplify all of this stuff. And simplification, it cannot be just simplification because you cannot just automate the workflows of the cloud providers underneath. So you have to, you know, provide your full data plane on top of it, fed full control plane, management plane, policy and management on top of it. And coming back to like your question, so these nowadays, those people who are working on networking, you know, before it used to be like CLI. You used to learn about Cisco CLI or Juniper CLI, and you used to work on it. Nowadays, it's very different. So automation, programmability, all of that stuff is the key. So now, you know, Ops guys, the DevOps guys, so these are the people who are in high demand. >> So what do you think about the folks out there that are saying, okay, you got a lot of fragmentation. I got the stacks, I got a lot of stove pipes, if you will, out there on the stack. I got to learn this from Azure. Can you guys have with your product abstract the way that's so developers don't need to know the ins and outs of stack's, almost like a gateway, if you will, the old days. But like I'm a developer or team develop, why should I have to learn the management layer of Azure? >> That's exactly what we started, you know, out with to solve. So it's, what we have built is a platform and the platform sits inside the cloud. And customers are able to build their own network or a virtual network on top using that platform. So the platform has its own data plane, own control plane and management plane with a policy layer on top of it. So now, it's the platform which is sitting in different clouds, but from a customer's point of view, it's one way of doing networking. One way of instantiating or bringing in services or security services in the middle. Whether those are our security services or whether those are like services from our partners, like Palo Alto or Checkpoint or Cisco. >> So you guys brought the SD-WAN mojo and refactored it for the cloud it sounds like. >> No. >> No? (chuckles) >> We cannot said. >> All right, explain. >> It's way more than that. >> I mean, SD-WAN was wan. I mean, you're talking about wide area networks, talking about connected, so explain the difference. >> SD-WAN was primarily done for one major reason. MPLS was expensive, very strong SLAs, but very low speed. Internet, on the other hand, you sat at home and you could access your applications much faster. No SLA, very low cost, right? So we wanted to marry the two together so you could have a purely private infrastructure and a public infrastructure and secure both of them by creating a common secure fabric across all those environments. And then seamlessly tying it into your internal branch and data center and cloud network. So, it merely brought you to the edge of the cloud. It didn't do anything inside the cloud. Now, the major problem resides inside the clouds where you have to optimize the clouds themselves. Take a step back. How were the clouds built? Basically, the cloud providers went to the Ciscos and Junipers and the rest of the world, built the network in the data centers or across wide area infrastructure, and brought it all together and tried to create a virtualized layer on top of that. But there were many limitations of this underlying infrastructure that they had built. So number of routes per region, how inter region connectivity worked, or how many routes you could carry to the VPCs of V nets? That all those were becoming no common policy across, you know, these environments, no segmentation across these environments, right? So the networking constructs that the enterprise customers were used to as enterprise class carry class capabilities, they did not exist in the cloud. So what did the customer do? They ended up stitching it together all manually. And that's why Atif was alluding to earlier that it became a spaghetti mess for the customers. And then what happens is, as a result, day two operations, you know, troubleshooting, everything becomes a nightmare. So what do you do? You have to build an infrastructure inside the cloud. Cloud has enough raw capabilities to build the solutions inside there. Netflix's of the world. And many different companies have been born in the cloud and evolved from there. So why could we not take the raw capabilities of the clouds and build a network cloud or a supercloud on top of these clouds to optimize the whole infrastructure and seamlessly connecting it into the on-premise and remote user locations, right? So that's your, you know, hybrid multi-cloud solution. >> Well, great call out on the SD-WAN in common versus cloud. 'Cause I think this is important because you're building a network layer in the cloud that spans out so the customers don't have to get into the, there's a gap in the system that I'm used to, my operating environment, of having lockdown security and network. >> So yeah. So what you do is you use the raw capabilities like bandwidth or virtual machines, or you know, containers, or, you know, different types of serverless capabilities. And you bring it all together in a way to solve the networking problems, thereby creating a supercloud, which is an abstraction layer which hides all the complexity of the underlying clouds from the customer, right? And it provides a common infrastructure across all environments to that customer, right? That's the beauty of it. And it does it in a way that it looks like, if they have the networking knowledge, they can apply it to this new environment and carry it forward. One way of doing security across all clouds and hybrid environments. One way of doing routing. One way of doing large-scale network address translation. One way of doing IPAM services. So people are tired of doing individual things and individual clouds and on-premise locations, right? So now they're getting something common. >> You guys brought that, you brought all that to bear and flexible for the customer to essentially self-serve their network cloud. >> Yes, yeah. Is that the wave? >> And nowadays, from business perspective, agility is the key, right? You have to move at the pace of the business. If you don't, you are losing. >> So, would it be safe to say that you guys have a network supercloud? >> Absolutely, yeah. >> We, pretty much, yeah. Absolutely. >> What does that mean to our customer? What's in it for them? What's the benefit to the customer? I got a network supercloud, it connects, provides SLA, all the capabilities I need. What do they get? What's the end point for them? What's the end? >> Atif, maybe you can talk some examples. >> The IT infrastructure is all like distributed now, right? So you have applications running in data centers. You have applications running in one cloud. Other cloud, public clouds, enterprises are depending on so many SaaS applications. So now, these are, you can call these endpoints. So a supercloud or a network cloud, from our perspective, it's a cloud in the middle or a network in the middle, which provides connectivity from any endpoint to any endpoint. So, you are able to connect to the supercloud or network cloud in one way no matter where you are. So now, whichever cloud you are in, whichever cloud you need to connect to. And also, it's not just connecting to the cloud. So you need to do a lot of stuff, a lot of networking inside the cloud also. So now, as Amir was saying, every cloud has its own from a networking, you know, the concept perspective or the construct, they are different. There are limitations in there also. So this supercloud, which is sitting on top, basically, your platform is sitting into the cloud, but the supercloud is built on top of using your platform. So that abstracts all those complexities, all those limitations. So now your limitations are whatever the limitations of that platform are. So now your platform, that platform is in our control. So we can keep building it, we can keep scaling it horizontally. Because one of the things is that, you know, in this cloud era, one of the things is autoscaling these services. So why can't the network now autoscale also, just like your other services. >> Network autoscaling is a genius idea, and I think that's a killer. I want to ask the the follow on question because I think, first of all, I love what you guys are doing. So, I think it's a great example of this new innovation. It's not obvious until you see it, right? Geographical is huge. So, you know, single instance, global instances, multiple instances, you're seeing global. How do you guys look at that global equation? Because as companies expand their clouds into geos, and then ultimately, you know, it's obviously continent, region and locales. You're going to have geographic issues. So, this is an extension of your network cloud? >> Amir: It is the extension of the network cloud because if you look at this hyperscalers, they're sitting pretty much everywhere in the globe. So, wherever their regions are, the beauty of building a supercloud is that you can by definition, be available in those regions. It literally takes a day or two of testing for our stack to run in those regions, to make sure there are no nuances that we run into, you know, for that region. The moment we bring it up in that region, all customers can onboard into that solution. So literally, what used to take months or years to build a global infrastructure, now, you can configure it in 10 minutes basically, and bring it up in less than one hour. Since when did we see any solution- >> And by the way, >> that can come up with. >> when the edge comes out too, you're going to start to see more clouds get bolted on. >> Exactly. And you can expand to the edge of the network. That's why we call cloud the new edge, right? >> John: Yeah, it is. Now, I think you guys got a good solutions, network clouds, superclouds, good. So the question on the premise side, so I get the cloud play. It's very cool. You can expand out. It's a nice layer. I'm sure you manage the SLAs between latency and all kinds of things. Knowing when not to do things. Physics or physics. Okay. Now, you've got the on-premise. What's the on-premise equation look like? >> So on-premise, the kind of customers, we are working with large enterprises, mid-size enterprises. So they have on-prem networks, they have deployed, in many cases, they have deployed SD-WAN. In many cases, they have MPLS. They have data centers also. And a lot of these companies are, you know, moving the applications from the data center into the cloud. But we still have large enterprise- >> But for you guys, you can sit there too with non server or is it a box or what is it? >> It's a software stack, right? So, we are a software company. >> Okay, so no box. >> No box. >> Okay, got it. >> No box. >> It's even better. So, we can connect any, as I mentioned, any endpoint, whether it's data centers. So, what happens is usually these enterprises from the data centers- >> John: It's a cloud endpoint for you. >> Cloud endpoint for us. And they need highspeed connectivity into the cloud. And our network cloud is sitting inside the or supercloud is sitting inside the cloud. So we need highspeed connectivity from the data centers. This is like multi-gig type of connectivity. So we enable that connectivity as a service. And as Amir was saying, you are able to bring it up in minutes, pretty much. >> John: Well, you guys have a great handle on supercloud. I really appreciate you guys coming on. I have to ask you guys, since you have so much experience in the industry, multiple inflection points you've guys lived through and we're all old, and we can remember those glory days. What's the big deal going on right now? Because you can connect the dots and you can imagine, okay, like a Lambda function spinning up some connectivity. I need instant access to a new route, throw some, I need to send compute to an edge point for process data. A lot of these kind of ad hoc services are going to start flying around, which used to be manually configured as you guys remember. >> Amir: And that's been the problem, right? The shadow IT, that was the biggest problem in the enterprise environment. So that's what we are trying to get the customers away from. Cloud teams came in, individuals or small groups of people spun up instances in the cloud. It was completely disconnected from the on-premise environment or the existing IT environment that the customer had. So, how do you bring it together? And that's what we are trying to solve for, right? At a large scale, in a carrier cloud center (indistinct). >> What do you call that? Shift right or shift left? Shift left is in the cloud native world security. >> Amir: Yes. >> Networking and security, the two hottest areas. What are you shifting? Up or down? I mean, the network's moving up the stack. I mean, you're seeing the run times at Kubernetes later' >> Amir: Right, right. It's true we're end-to-end virtualization. So you have plumbing, which is the physical infrastructure. Then on top of that, now for the first time, you have true end-to-end virtualization, which the cloud-like constructs are providing to us. We tried to virtualize the routers, we try to virtualize instances at the server level. Now, we are bringing it all together in a truly end-to-end virtualized manner to connect any endpoint anywhere across the globe. Whether it's on-premise, home, multiple clouds, or SaaS type environments. >> Yeah. If you talk about the technical benefits beyond virtualizations, you kind of see in virtualization be abstracted away. So you got end-to-end virtualization, but you don't need to know virtualization to take advantage of it. >> Exactly. Exactly. >> What are some of the tech involved where, what's the trend around on top of virtual? What's the easy button for that? >> So there are many, many use cases from the customers and they're, you know, some of those use cases, they used to deliver out of their data centers before. So now, because you, know, it takes a long time to spend something up in the data center and stuff. So the trend is and what enterprises are looking for is agility. And to achieve that agility, they are moving those services or those use cases into the cloud. So another technical benefit of like something like a supercloud and what we are doing is we allow customers to, you know, move their services from existing data centers into the cloud as well. And I'll give you some examples. You know, these enterprises have, you know, tons of partners. They provide connectivity to their partners, to select resources. It used to happen inside the data center. You would bring in connectivity into the data center and apply like tons of ACLs and whatnot to make sure that you are able to only connect. And now those use cases are, they need to be enabled inside the cloud. And the customer's customers are also, it's not just coming from the on-prem, they're coming from the cloud as well. So, if they're coming from the cloud as well as from on-prem, so you need like an infrastructure like supercloud, which is sitting inside the cloud and is able to handle all these use cases. So all of these use cases have to be, so that requires like moving those services from the data center into the cloud or into the supercloud. So, they're, oh, as we started building this service over the last four years, we have come across so many use cases. And to deliver those use cases, you have to have a platform. So you have to have your own platform because otherwise you are depending on somebody else's, you know, capabilities. And every time their capabilities change, you have to change. >> John: I'm glad you brought up the platform 'cause I want to get your both reaction to this. So Bob Muglia just said on theCUBE here at Supercloud, that supercloud is a platform that provides programmatically consistent services hosted on heterogeneous cloud providers. So the question is, is supercloud a platform or an architecture in your view? >> That's an interesting view on things, you know? I mean, if you think of it, you have to design or architect a solution before we turn it into a platform. >> John: It's a trick question actually. >> So it's a, you know, so we look at it as that you have to have an architectural approach end to end, right? And then you build a solution based on that approach. So, I don't think that they are mutually exclusive. I think they go hand in hand. It's an architecture that you turn into a solution and provide that agility and high availability and disaster recovery capability that it built into that. >> It's interesting that these definitions might be actually redefined with this new configuration. >> Amir: Yes. >> Because architecture and platform used to mean something, like, aight here's a platform, you buy this platform. >> And then you architecture solution. >> Architect it via vendor. >> Right, right, right. >> Okay. And they have to deal with that architecture in the place of multiple superclouds. If you have too many stove pipes, then what's the purpose of supercloud? >> Right, right, right. And because, you know, historically, you built a router and you sold it to the customer. And the poor customer was supposed to install it all, you know, and interconnect all those things. And if you have 40, 50,000 router network, which we saw in our lifetime, 'cause there used to be many more branches when we were growing up in the networking industry, right? You had to create hierarchy and all kinds of things to figure out how to solve that problem. We are no longer living in that world anymore. You cannot deploy individual virtual instances. And that's what approach a lot of people are taking, which is a pure overly network. You cannot take that approach anymore. You have to evolve the architecture and then build the solution based on that architecture so that it becomes a platform which is readily available, highly scalable, and available. And at the same time, it's very, very easy to deploy. It's a SaaS type solution, right? >> So you're saying, do the architecture to get the solution for the platform that the customer has. >> Amir: Yes. >> They're not buying a platform, they end up with a platform- >> With the platform. >> as a result of Supercloud path. All right. So that's what's, so you mentioned, that's a great point. I want to double click on what you just said. 'Cause I like that what you said. What's the deployment strategy in your mind for supercloud? I'm an architect. I'm at an enterprise in the Midwest. I'm an insurance company, got some cloud action going on. I'm mostly on-premise. I've got the mandate to transform the company. We have apps. We'll be fully transformed in five years. What's my strategy? What do I do? >> Amir: The resources. >> What's the deployment strategy? Single global instance, code in every region, on every cloud? >> It needs to be a solution which is available as a SaaS service, right? So from the customer's perspective, they are onboarding into the supercloud. And then the supercloud is allowing them to do whatever they used to do, you know, historically and in the new world, right? That needs to come together. And that's what we have built is that, we have brought everything together in a way that what used to take months or years, and now taking an hour or two hours, and then people test it for a week or so and deploy it in production. >> I want to bring up something we were talking about before we were on camera about the TCP/IP, the OSI model. That was a concept that destroyed the proprietary narcissist. Work operating systems of the mini computers, which brought in an era of tech prosperity for generations. TCP/IP was kind of the magical moment that allowed for that kind of super networking connection. Inter networking is what's called as a category. It feels like something's going on here with supercloud. The way you describe it, it feels like there's this unification idea. Like the reality is we've got multiple stuff sitting around by default, you either clean it up or get rid of it, right? Or it's almost a, it's either a nuance, a new nuisance or chaos. >> Yeah. And we live in the new world now. We don't have the luxury of time. So we need to move as fast as possible to solve the business problems. And that's what we are running into. If we don't have automated solutions which scale, which solve our problems, then it's going to be a problem. And that's why SaaS is so important in today's world. Why should we have to deploy the network piecemeal? Why can't we have a solution? We solve our problem as we move forward and we accomplish what we need to accomplish and move forward. >> And we don't really need standards here, dude. It's not that we need a standards body if you have unification. >> So because things move so fast, there's no time to create a standards body. And that's why you see companies like ours popping up, which are trying to create a common infrastructure across all clouds. Otherwise if we vent the standardization path may take long. Eventually, we should be going in that direction. But we don't have the luxury of time. That's what I was trying to get to. >> Well, what's interesting is, is that to your point about standards and ratification, what ratifies a defacto anything? In the old days there was some technical bodies involved, but here, I think developers drive everything. So if you look at the developers and how they're voting with their code. They're instantly, organically defining everything as a collective intelligence. >> And just like you're putting out the paper and making it available, everybody's contributing to that. That's why you need to have APIs and terra form type constructs, which are available so that the customers can continue to improve upon that. And that's the Net DevOps, right? So that you need to have. >> What was once sacrilege, just sayin', in business school, back in the days when I got my business degree after my CS degree was, you know, no one wants to have a better mousetrap, a bad business model to have a better mouse trap. In this case, the better mouse trap, the better solution actually could be that thing. >> It is that thing. >> I mean, that can trigger, tips over the industry. >> And that that's where we are seeing our customers. You know, I mean, we have some publicly referenceable customers like Coke or Warner Music Group or, you know, multiple others and chart industries. The way we are solving the problem. They have some of the largest environments in the industry from the cloud perspective. And their whole network infrastructure is running on the Alkira infrastructure. And they're able to adopt new clouds within days rather than waiting for months to architect and then deploy and then figure out how to manage it and operate it. It's available as a service. >> John: And we've heard from your customer, Warner, they were just on the program. >> Amir: Yes. Okay, okay. >> So they're building a supercloud. So superclouds aren't just for tech companies. >> Amir: No. >> You guys build a supercloud for networking. >> Amir: It is. >> But people are building their own superclouds on top of all this new stuff. Talk about that dynamic. >> Healthcare providers, financials, high-tech companies, even startups. One of our startup customers, Tekion, right? They have these dealerships that they provide sales and support services to across the globe. And for them to be able to onboard those dealerships, it is 80% less time to production. That is real money, right? So, maybe Atif can give you a lot more examples of customers who are deploying. >> Talk about some of the customer activity. What are they like? Are they laggards, they innovators? Are they trying to hit the easy button? Are they coming in late or are you got some high customers? >> Actually most of our customers, all of our customers or customers in general. I don't think they have a choice but to move in this direction because, you know, the cloud has, like everything is quick now. So the cloud teams are moving faster in these enterprises. So now that they cannot afford the network nor to keep up pace with the cloud teams. So, they don't have a choice but to go with something similar where you can, you know, build your network on demand and bring up your network as quickly as possible to meet all those use cases. So, I'll give you an example. >> John: So the demand's high for what you guys do. >> Demand is very high because the cloud teams have- >> John: Yeah. They're going fast. >> They're going fast and there's no stopping. And then network teams, they have to keep up with them. And you cannot keep deploying, you know, networks the way you used to deploy back in the day. And as far as the use cases are concerned, there are so many use cases which our customers are using our platform for. One of the use cases, I'll give you an example of these financial customers. Some of the financial customers, they have their customers who they provide data, like stock exchanges, that provide like market data information to their customers out of data centers part. But now, their customers are moving into the cloud as well. So they need to come in from the cloud. So when they're coming in from the cloud, you cannot be giving them data from your data center because that takes time, and your hair pinning everything back. >> Moving data is like moving, moving money, someone said. >> Exactly. >> Exactly. And the other thing is like you have to optimize your traffic flows in the cloud as well because every time you leave the cloud, you get charged a lot. So, you don't want to leave the cloud unless you have to leave the cloud, your traffic. So, you have to come up or use a service which allows you to optimize all those traffic flows as well, you know? >> My final question to you guys, first of all, thanks for coming on Supercloud Program. Really appreciate it. Congratulations on your success. And you guys have a great positioning and I'm a big fan. And I have to ask, you guys are agile, nimble startup, smart on the cutting edge. Supercloud concept seems to resonate with people who are kind of on the front range of this major wave. While all the incumbents like Cisco, Microsoft, even AWS, they're like, I think they're looking at it, like what is that? I think it's coming up really fast, this trend. Because I know people talk about multi-cloud, I get that. But like, this whole supercloud is not just SaaS, it's more going on there. What do you think is going on between the folks who get it, supercloud, get the concept, and some are who are scratching their heads, whether it's the Ciscos or someone, like I don't get it. Why is supercloud important for the folks that aren't really seeing it? >> So first of all, I mean, the customers, what we saw about six months, 12 months ago, were a little slower to adopt the supercloud kind of concept. And there were leading edge customers who were coming and adopting it. Now, all of a sudden, over the last six to nine months, we've seen a flurry of customers coming in and they are from all disciplines or all very diverse set of customers. And they're starting to see the value of that because of the practical implications of what they're doing. You know, these shadow IT type environments are no longer working and there's a lot of pressure from the management to move faster. And then that's where they're coming in. And perhaps, Atif, if you can give a few examples of. >> Yeah. And I'll also just add to your point earlier about the network needing to be there 'cause the cloud teams are like, let's go faster. And the network's always been slow because, but now, it's been almost turbocharged. >> Atif: Yeah. Yeah, exactly. And as I said, like there was no choice here. You had to move in this industry. And the other thing I would add a little bit is now if you look at all these enterprises, most of their traffic is from, even from which is coming from the on-prem, it's going to the cloud SaaS applications or public clouds. And it's more than 50% of traffic, which is leaving your, you know, what you used to call, your network or the private network. So now it's like, you know, before it used to just connect sites to data centers and sites together. Now, it's a cloud as well as the SaaS application. So it's either internet bound or the public cloud bound. So now you have to build a network quickly, which caters to all these use cases. And that's where like something- >> And you guys, your solution to me is you eliminate all that work for the customer. Now, they can treat the cloud like a bag of Legos. And do their thing. Well, I oversimplify. Well, you know I'm talking about. >> Atif: Right, exactly. >> And to answer your question earlier about what about the big companies coming in and, you know, now they slow to adopt? And, you know, what normally happens is when Cisco came up, right? There used to be 16 different protocols suites. And then we finally settled on TCP/IP and DECnet or AppleTalk or X&S or, you know, you name it, right? Those companies did not adapt to the networking the way it was supposed to be done. And guess what happened, right? So if the companies in the networking space do not adopt this new concept or new way of doing things, I think some of them will become extinct over time. >> Well, I think the force and function too is the cloud teams as well. So you got two evolutions. You got architectural relevance. That's real as impact. >> It's very important. >> Cost, speed. >> And I look at it as a very similar disruption to what Cisco's the world, very early days did to, you know, bring the networking out, right? And it became the internet. But now we are going through the cloud. It's the cloud era, right? How does the cloud evolve over the next 10, 15, 20 years? Everything's is going to be offered as a service, right? So slowly data centers go away, the network becomes a plumbing thing. Very, you know, simple to deploy. And everything on top of that is virtualized in the cloud-like manners. >> And that makes the networks hardened and more secure. >> More secure. >> It's a great way to be secure. You remember the glory days, we'll go back 15 years. The Cisco conversation was, we got to move up to stack. All the manager would fight each other. Now, what does that actually mean? Stay where we are. Stay in your lane. This is kind of like the network's version of moving up the stack because not so much up the stack, but the cloud is everywhere. It's almost horizontally scaled. >> It's extending into the on-premise. It is already moving towards the edge, right? So, you will see a lot- >> So, programmability is a big program. So you guys are hitting programmability, compatibility, getting people into an environment they're comfortable operating. So the Ops people love it. >> Exactly. >> Spans the clouds to a level of SLA management. It might not be perfectly spanning applications, but you can actually know latencies between clouds, measure that. And then so you're basically managing your network now as the overall infrastructure. >> Right. And it needs to be a very intelligent infrastructure going forward, right? Because customers do not want to wait to be able to troubleshoot. They don't want to be able to wait to deploy something, right? So, it needs to be a level of automation. >> Okay. So the question for you guys both on we'll end on is what is the enablement that, because you guys are a disruptive enabler, right? You create this fabric. You're going to enable companies to do stuff. What are some of the things that you see and your customers might be seeing as things that they're going to do as a result of having this enablement? So what are some of those things? >> Amir: Atif, perhaps you can talk through the some of the customer experience on that. >> It's agility. And we are allowing these customers to move very, very quickly and build these networks which meet all these requirements inside the cloud. Because as Amir was saying, in the cloud era, networking is changing. And if you look at, you know, going back to your comment about the existing networking vendors. Some of them still think that, you know, just connecting to the cloud using some concepts like Cloud OnRamp is cloud networking, but it's changing now. >> John: 'Cause there's apps that are depending upon. >> Exactly. And it's all distributed. Like IT infrastructure, as I said earlier, is all distributed. And at the end of the day, you have to make sure that wherever your user is, wherever your app is, you are able to connect them securely. >> Historically, it used to be about building a router bigger and bigger and bigger and bigger, you know, and then interconnecting those routers. Now, it's all about horizontal scale. You don't need to build big, you need to scale it, right? And that's what cloud brings to the customer. >> It's a cultural change for Cisco and Juniper because they have to understand that they're still could be in the game and still win. >> Exactly. >> The question I have for you, what are your customers telling you that, what's some of the anecdotal, like, 'cause you guys have a good solution, is it, "Oh my god, you guys saved my butt." Or what are some of the commentary that you hear from the customers in terms of praise and and glory from your solution? >> Oh, some even say, when we do our demo and stuff, they say it's too hard to believe. >> Believe. >> Like, too hard. It's hard, you know, it's >> I dont believe you. They're skeptics. >> I don't believe you that because now you're able to bring up a global network within minutes. With networking services, like let's say you have APAC, you know, on-prem users, cloud also there, cloud here, users here, you can bring up a global network with full routed connectivity between all these endpoints with security services. You can bring up like a firewall from a third party or our services in the middle. This is a matter of minutes now. And this is all high speed connectivity with SLAs. Imagine like before connecting, you know, Singapore to U.S. East or Hong Kong to Frankfurt, you know, if you were putting your infrastructure in columns like E-connects, you would have to go, you know, figure out like, how am I going to- >> Seal line In, connect to it? Yeah. A lot of hassles, >> If you had to put like firewalls in the middle, segmentation, you had to, you know, isolate different entities. >> That's called heavy lifting. >> So what you're seeing is, you know, it's like customer comes in, there's a disbelief, can you really do that? And then they try it out, they go, "Wow, this works." Right? It's deployed in a small environment. And then all of a sudden they start taking off, right? And literally we have seen customers go from few thousand dollars a month or year type deployments to multi-million dollars a year type deployments in very, very short amount of time, in a few months. >> And you guys are pay as you go? >> Pay as you go. >> Pay as go usage cloud-based compatibility. >> Exactly. And it's amazing once they get to deploy the solution. >> What's the variable on the cost? >> On the cost? >> Is it traffic or is it. >> It's multiple different things. It's packaged into the overall solution. And as a matter of fact, we end up saving a lot of money to the customers. And not only in one way, in multiple different ways. And we do a complete TOI analysis for the customers. So it's bandwidth, it's number of connections, it's the amount of compute power that we are using. >> John: Similar things that they're used to. >> Just like the cloud constructs. Yeah. >> All right. Networking supercloud. Great. Congratulations. >> Thank you so much. >> Thanks for coming on Supercloud. >> Atif: Thank you. >> And looking forward to seeing more of the demand. Translate, instant networking. I'm sure it's going to be huge with the edge exploding. >> Oh yeah, yeah, yeah, yeah. >> Congratulations. >> Thank you so much. >> Thank you so much. >> Okay. So this is Supercloud 2 event here in Palo Alto. I'm John Furrier. The network Supercloud is here. Checkout Alkira. I'm John Furry, the host. Thanks for watching. (lively music)

(upbeat music) (upbeat music) >> Hi everybody, welcome back to our coverage of the Cloud Native Security Con. I'm Dave Vellante, here in our Boston studio. We're connecting today with Palo Alto, with John Furrier and Lisa Martin. We're also live from the show floor in Seattle. But right now, I'm here with Andy Thurai who's from Constellation Research, friend of theCUBE, and we're going to discuss the intersection of AI and security, the potential of AI, the risks and the future. Andy, welcome, good to see you again. >> Good to be here again. >> Hey, so let's get into it, can you talk a little bit about, I know this is a passion of yours, the ethical considerations surrounding AI. I mean, it's front and center in the news, and you've got accountability, privacy, security, biases. Should we be worried about AI from a security perspective? >> Absolutely, man, you should be worried. See the problem is, people don't realize this, right? I mean, the ChatGPT being a new shiny object, it's all the craze that's about. But the problem is, most of the content that's produced either by ChatGPT or even by others, it's an access, no warranties, no accountability, no whatsoever. Particularly, if it is content, it's okay. But if it is something like a code that you use for example, one of their site projects that GitHub's co-pilot, which is actually, open AI + Microsoft + GitHub's combo, they allow you to produce code, AI writes code basically, right? But when you write code, problem with that is, it's not exactly stolen, but the models are created by using the GitHub code. Actually, they're getting sued for that, saying that, "You can't use our code". Actually there's a guy, Tim Davidson, I think he's named the professor, he actually demonstrated how AI produces exact copy of the code that he has written. So right now, it's a lot of security, accountability, privacy issues. Use it either to train or to learn. But in my view, it's not ready for enterprise grade yet. >> So, Brian Behlendorf today in his keynotes said he's really worried about ChatGPT being used to automate spearfishing. So I'm like, okay, so let's unpack that a little bit. Is the concern there that it just, the ChatGPT writes such compelling phishing content, it's going to increase the probability of somebody clicking on it, or are there other dimensions? >> It could, it's not necessarily just ChatGPT for that matter, right? AI can, actually, the hackers are using it to an extent already, can use to individualize content. For example, one of the things that you are able to easily identify when you're looking at the emails that are coming in, the phishing attack is, you look at some of the key elements in it, whether it's a human or even if it's an automated AI based system. They look at certain things and they say, "Okay, this is phishing". But if you were to read an email that looks exact copy of what I would've sent to you saying that, "Hey Dave, are you on for tomorrow? Or click on this link to do whatever. It could individualize the message. That's where the volume at scale to individual to masses, that can be done using AI, which is what scares me. >> Is there a flip side to AI? How is it being utilized to help cybersecurity? And maybe you could talk about some of the more successful examples of AI in security. Like, are there use cases or are there companies out there, Andy, that you find, I know you're close to a lot of firms that are leading in this area. You and I have talked about CrowdStrike, I know Palo Alto Network, so is there a positive side to this story? >> Yeah, I mean, absolutely right. Those are some of the good companies you mentioned, CrowdStrike, Palo Alto, Darktrace is another one that I closely follow, which is a good company as well, that they're using AI for security purposes. So, here's the thing, right, when people say, when they're using malware detection systems, most of the malware detection systems that are in today's security and malware systems, use some sort of a signature and pattern scanning in the malware. You know how many identified malwares are there today in the repository, in the library? More than a billion, a billion. So, if you are to check for every malware in your repository, that's not going to work. The pattern based recognition is not going to work. So, you got to figure out a different way of identification of pattern of usage, not just a signature in a malware, right? Or there are other areas you could use, things like the usage patterns. For example, if Andy is coming in to work at a certain time, you could combine a facial recognition saying, that should he be in here at that time, and should he be doing things, what he is supposed to be doing. There are a lot of things you could do using that, right? And the AIOps use cases, which is one of my favorite areas that I work, do a lot of work, right? That it has use cases for detecting things that are anomaly, that are not supposed to be done in a way that's supposed to be, reducing the noise so it can escalate only the things what you're supposed to. So, AIOps is a great use case to use in security areas which they're not using it to an extent yet. Incident management is another area. >> So, in your malware example, you're saying, okay, known malware, pretty much anybody can deal with that now. That's sort of yesterday's problem. >> The unknown is the problem. >> It's the unknown malware really trying to understand the patterns, and the patterns are going to change. It's not like you're saying a common signature 'cause they're going to use AI to change things up at scale. >> So, here's the problem, right? The malware writers are also using AI now, right? So, they're not going to write the old malware, send it to you. They are actually creating malware on the fly. It is possible entirely in today's world that they can create a malware, drop in your systems and it'll it look for the, let me get that name right. It's called, what are we using here? It's called the TTPs, Tactics, Techniques and procedures. It'll look for that to figure out, okay, am I doing the right pattern? And then malware can sense it saying that, okay, that's the one they're detecting. I'm going to change it on the fly. So, AI can code itself on the fly, rather malware can code itself on the fly, which is going to be hard to detect. >> Well, and when you talk about TTP, when you talk to folks like Kevin Mandia of Mandiant, recently purchased by Google or other of those, the ones that have the big observation space, they'll talk about the most malicious hacks that they see, involve lateral movement. So, that's obviously something that people are looking for, AI's looking for that. And of course, the hackers are going to try to mask that lateral movement, living off the land and other things. How do you see AI impacting the future of cyber? We talked about the risks and the good. One of the things that Brian Behlendorf also mentioned is that, he pointed out that in the early days of the internet, the protocols had an inherent element of trust involved. So, things like SMTP, they didn't have security built in. So, they built up a lot of technical debt. Do you see AI being able to help with that? What steps do you see being taken to ensure that AI based systems are secure? >> So, the major difference between the older systems and the newer systems is the older systems, sadly even today, a lot of them are rules-based. If it's a rules-based systems, you are dead in the water and not able, right? So, the AI-based systems can somewhat learn from the patterns as I was talking about, for example... >> When you say rules-based systems, you mean here's the policy, here's the rule, if it's not followed but then you're saying, AI will blow that away, >> AI will blow that away, you don't have to necessarily codify things saying that, okay, if this, then do this. You don't have to necessarily do that. AI can somewhat to an extent self-learn saying that, okay, if that doesn't happen, if this is not a pattern that I know which is supposed to happen, who should I escalate this to? Who does this system belong to? And the other thing, the AIOps use case we talked about, right, the anomalies. When an anomaly happens, then the system can closely look at, saying that, okay, this is not normal behavior or usage. Is that because system's being overused or is it because somebody's trying to access something, could look at the anomaly detection, anomaly prevention or even prediction to an extent. And that's where AI could be very useful. >> So, how about the developer angle? 'Cause CNCF, the event in Seattle is all around developers, how can AI be integrated? We did a lot of talk at the conference about shift-left, we talked about shift-left and protect right. Meaning, protect the run time. So, both are important, so what steps should be taken to ensure that the AI systems are being developed in a secure and ethically sound way? What's the role of developers in that regard? >> How long do you got? (Both laughing) I think it could go for base on that. So, here's the problem, right? Lot of these companies are trying to see, I mean, you might have seen that in the news that Buzzfeed is trying to hire all of the writers to create the thing that ChatGPT is creating, a lot of enterprises... >> How, they're going to fire their writers? >> Yeah, they replace the writers. >> It's like automated automated vehicles and automated Uber drivers. >> So, the problem is a lot of enterprises still haven't done that, at least the ones I'm speaking to, are thinking about saying, "Hey, you know what, can I replace my developers because they are so expensive? Can I replace them with AI generated code?" There are a few issues with that. One, AI generated code is based on some sort of a snippet of a code that has been already available. So, you get into copyright issues, that's issue number one, right? Issue number two, if AI creates code and if something were to go wrong, who's responsible for that? There's no accountability right now. Or you as a company that's creating a system that's responsible, or is it ChatGPT, Microsoft is responsible. >> Or is the developer? >> Or the developer. >> The individual developer might be. So, they're going to be cautious about that liability. >> Well, so one of the areas where I'm seeing a lot of enterprises using this is they are using it to teach developers to learn things. You know what, if you're to code, this is a good way to code. That area, it's okay because you are just teaching them. But if you are to put an actual production code, this is what I advise companies, look, if somebody's using even to create a code, whether with or without your permission, make sure that once the code is committed, you validate that the 100%, whether it's a code or a model, or even make sure that the data what you're feeding in it is completely out of bias or no bias, right? Because at the end of the day, it doesn't matter who, what, when did that, if you put out a service or a system out there, it is involving your company liability and system, and code in place. You're going to be screwed regardless of what, if something were to go wrong, you are the first person who's liable for it. >> Andy, when you think about the dangers of AI, and what keeps you up at night if you're a security professional AI and security professional. We talked about ChatGPT doing things, we don't even, the hackers are going to get creative. But what worries you the most when you think about this topic? >> A lot, a lot, right? Let's start off with an example, actually, I don't know if you had a chance to see that or not. The hackers used a bank of Hong Kong, used a defect mechanism to fool Bank of Hong Kong to transfer $35 million to a fake account, the money is gone, right? And the problem that is, what they did was, they interacted with a manager and they learned this executive who can control a big account and cloned his voice, and clone his patterns on how he calls and what he talks and the whole name he has, after learning that, they call the branch manager or bank manager and say, "Hey, you know what, hey, move this much money to whatever." So, that's one way of kind of phishing, kind of deep fake that can come. So, that's just one example. Imagine whether business is conducted by just using voice or phone calls itself. That's an area of concern if you were to do that. And imagine this became an uproar a few years back when deepfakes put out the video of Tom Cruise and others we talked about in the past, right? And Tom Cruise looked at the video, he said that he couldn't distinguish that he didn't do it. It is so close, that close, right? And they are doing things like they're using gems... >> Awesome Instagram account by the way, the guy's hilarious, right? >> So, they they're using a lot of this fake videos and fake stuff. As long as it's only for entertainment purposes, good. But imagine doing... >> That's right there but... >> But during the election season when people were to put out saying that, okay, this current president or ex-president, he said what? And the masses believe right now whatever they're seeing in TV, that's unfortunate thing. I mean, there's no fact checking involved, and you could change governments and elections using that, which is scary shit, right? >> When you think about 2016, that was when we really first saw, the weaponization of social, the heavy use of social and then 2020 was like, wow. >> To the next level. >> It was crazy. The polarization, 2024, would deepfakes... >> Could be the next level, yeah. >> I mean, it's just going to escalate. What about public policy? I want to pick your brain on this because I I've seen situations where the EU, for example, is going to restrict the ability to ship certain code if it's involved with critical infrastructure. So, let's say, example, you're running a nuclear facility and you've got the code that protects that facility, and it can be useful against some other malware that's outside of that country, but you're restricted from sending that for whatever reason, data sovereignty. Is public policy, is it aligned with the objectives in this new world? Or, I mean, normally they have to catch up. Is that going to be a problem in your view? >> It is because, when it comes to laws it's always miles behind when a new innovation happens. It's not just for AI, right? I mean, the same thing happened with IOT. Same thing happened with whatever else new emerging tech you have. The laws have to understand if there's an issue and they have to see a continued pattern of misuse of the technology, then they'll come up with that. Use in ways they are ahead of things. So, they put a lot of restrictions in place and about what AI can or cannot do, US is way behind on that, right? But California has done some things, for example, if you are talking to a chat bot, then you have to basically disclose that to the customer, saying that you're talking to a chat bot, not to a human. And that's just a very basic rule that they have in place. I mean, there are times that when a decision is made by the, problem is, AI is a black box now. The decision making is also a black box now, and we don't tell people. And the problem is if you tell people, you'll get sued immediately because every single time, we talked about that last time, there are cases involving AI making decisions, it gets thrown out the window all the time. If you can't substantiate that. So, the bottom line is that, yes, AI can assist and help you in making decisions but just use that as a assistant mechanism. A human has to be always in all the loop, right? >> Will AI help with, in your view, with supply chain, the software supply chain security or is it, it's always a balance, right? I mean, I feel like the attackers are more advanced in some ways, it's like they're on offense, let's say, right? So, when you're calling the plays, you know where you're going, the defense has to respond to it. So in that sense, the hackers have an advantage. So, what's the balance with software supply chain? Are the hackers have the advantage because they can use AI to accelerate their penetration of the software supply chain? Or will AI in your view be a good defensive mechanism? >> It could be but the problem is, the velocity and veracity of things can be done using AI, whether it's fishing, or malware, or other security and the vulnerability scanning the whole nine yards. It's scary because the hackers have a full advantage right now. And actually, I think ChatGPT recently put out two things. One is, it's able to direct the code if it is generated by ChatGPT. So basically, if you're trying to fake because a lot of schools were complaining about it, that's why they came up with the mechanism. So, if you're trying to create a fake, there's a mechanism for them to identify. But that's a step behind still, right? And the hackers are using things to their advantage. Actually ChatGPT made a rule, if you go there and read the terms and conditions, it's basically honor rule suggesting, you can't use this for certain purposes, to create a model where it creates a security threat, as that people are going to listen. So, if there's a way or mechanism to restrict hackers from using these technologies, that would be great. But I don't see that happening. So, know that these guys have an advantage, know that they're using AI, and you have to do things to be prepared. One thing I was mentioning about is, if somebody writes a code, if somebody commits a code right now, the problem is with the agile methodologies. If somebody writes a code, if they commit a code, you assume that's right and legit, you immediately push it out into production because need for speed is there, right? But if you continue to do that with the AI produced code, you're screwed. >> So, bottom line is, AI's going to speed us up in a security context or is it going to slow us down? >> Well, in the current version, the AI systems are flawed because even the ChatGPT, if you look at the the large language models, you look at the core piece of data that's available in the world as of today and then train them using that model, using the data, right? But people are forgetting that's based on today's data. The data changes on a second basis or on a minute basis. So, if I want to do something based on tomorrow or a day after, you have to retrain the models. So, the data already have a stale. So, that in itself is stale and the cost for retraining is going to be a problem too. So overall, AI is a good first step. Use that with a caution, is what I want to say. The system is flawed now, if you use it as is, you'll be screwed, it's dangerous. >> Andy, you got to go, thanks so much for coming in, appreciate it. >> Thanks for having me. >> You're very welcome, so we're going wall to wall with our coverage of the Cloud Native Security Con. I'm Dave Vellante in the Boston Studio, John Furrier, Lisa Martin and Palo Alto. We're going to be live on the show floor as well, bringing in keynote speakers and others on the ground. Keep it right there for more coverage on theCUBE. (upbeat music) (upbeat music) (upbeat music) (upbeat music)

>>Okay, welcome back to everyone. Cube's live coverage of VMware Explorer, 2022. I'm John fur, host of the cube. Two sets three days of live coverage. Dave Ante's here. Lisa Martin, Dave Nicholson, all host of the cube 12 interviews today, just we're with Rocklin and rolling, getting down to the end of the show. As we wind down and look back and look at the future. We've got Steven Jones. Here's the general manager of the VMware cloud on AWS. He's with Amazon web service. Steven Jones. Welcome to the cube. >>Thanks John. >>Welcome back cube alumni. I've been on many times going back to 2015. Yeah. >>Pleasure to be here. Great >>To see you again. Thanks for coming on. Obviously 10 years at AWS, what a ride is that's been, come on. That's fantastic. Tell me it's been crazy. >>Wow. Learned a lot of stuff along the way, right? I mean, we, we, we knew that there was a lot of opportunity, right? Customers wanting the agility and flexibility of, of the cloud and, and we, we still think it's early days, right? I mean, you'll hear Andy say that animals say that, but it really is. Right. If you look at even just the amount of spend that's being spent on, on clouds, it's in the billions, right. And the amount of, of spend in it is still in the trillion. So there's, there's a long way to go and customers are pushing us hard. Obviously >>It's been interesting a lot going on with VM. We're obviously around with them, obviously changing the strategy with their, their third generation and their narrative. Obviously the Broadcom thing is going on around them. And 10 years at abs, we've been, we've been, this'll be our ninth year, no 10th year at reinvent coming up for us. So, but it's 10 years of everything at Amazon, 10 years of S three, 10 years of C two. So if you look at the, the marks of time, now, the history books are starting to be written about Amazon web services. You know, it's about 10 years of full throttle cube hyperscaler in action. I mean, I'm talking about real growth, like >>Hardcore, for sure. I'll give you just one anecdote. So when I first joined, I think we had maybe two EC two instances back in the day and the maximum amount of memory you could conversion into one of these machines was I think 128 gig of Ram fast forward to today. You literally can get a machine with 24 terabytes of Ram just in insane amounts. Right? My, my son who's a gamer tells me he's got 16 gig in his, in his PC. You need to, he thinks that's a lot. >>Yeah. >>That's >>Excited about that. That's not even on his graphics card. I mean, he's, I know it's coming next. The GPU, I mean, just all >>The it's like, right? >>I mean, all the hardware innovation that you guys have done, I mean, look at every it's changed. Everyone's changed their strategy to copy AWS nitro, Dave ante. And I talk about this all the time, especially with James Hamilton and the team over there, Peter DeSantos, these guys have, are constantly going at the atoms and innovating at the, at the level. I mean that, that's how hardcore it is over there right now. I mean, and the advances on the Silicon graviton performance wise is crazy. I mean, so what does that enabling? So given that's continuing, you guys are continuing to do great work there on the CapEx side, we think that's enabling another set of new net new applications because we're starting to see new things emerge. We saw snowflake come on, customer of AWS refactor, the data warehouse, they call it a data cloud. You're starting to see Goldman Sachs. You see capital one, you see enterprise customers building on top of AWS and building a cloud business without spending the CapEx >>Is exactly right. And Ziggy mentioned graviton. So graviton is one of our fastest growing compute families now. And you know, you mentioned a couple of ISVs and partners of ours who are leaning in heavily on porting their own software. Every event Adam announced that we're working with SAP to, to help them port their HANA cloud, which is a, a database of service offering HANA flagship to graviton as well. So it's, it's definitely changing. >>And I think, you know, one of the, and we're gonna circle back to VMware is kind of a point to this. This conversation is that, is that if you look at the trends, right, okay. VMware really tried hard to do cloud and they had a good shot at it V cloud air, but it just, they didn't have the momentum that you guys had at AWS. We saw a lot, lot of other stragglers try to do cloud. They fell off the road, OpenStack, HP, and the list goes on and on. I don't wanna get into that, but the point is, as you guys become more powerful and you're open, right? So you have open ecosystem, you have people now coming back, taking advantage and refactoring and picking up where they left off. VMware was the one of the first companies that actually said, you know what pat Gelsinger said? And I was there, let's clear up the positioning. Let's go all in with AWS. That's >>Right >>At that time, 2016. >>Yeah. This was new for us, for >>Sure. And then now that's set the standard. Now everybody else is kind of doing it. Where is the VMware cloud relationship right now? How is that going out? State's worked. >>It's working well very well. It's I mean, we're celebrating, I think we made the announcement what, five years ago at this conference. Yeah. 2016. So, I mean, it's, it's been a tremendous ride. The best part are the customers who were coming and adopting and proving to us that our vision back then was the right vision. And, and, and what's been different. I think about this relationship. And it was new for us was that we, we purposely went after a jointly engineered solution. This wasn't a, we've got a, a customer or a partner that's just going to run and build something on us. This is something where we both bring muscle and we actually build a, a joint offering together. Talk about, about the main difference. >>Yeah. And that, and that's been working, but now here at this show, if you look at, if you squint through the multi-cloud thing, which is like just, I think positioning for, you know, what could happen in, in a post broad Broadcom world, the cloud native has traction they're Tansu where, where customers were leaning in. So their enterprise customer is what I call the classic. It, you know, mainstream enterprise, which you guys have been doing a lot of business with. They're now thinking, okay, I'm gonna go on continu, accelerate on, in the public cloud, but I'm gonna have hybrid on premise as well. You guys have that solution. Now they're gonna need cloud native. And we were speculating that VMware is probably not gonna be able to get 'em all of it. And, and that there's a lot more cloud native options as customers want more cloud native. How do you see that piece on Amazon side? Because there's a lot of benefits between the VMware cloud on AWS and the services that you guys have natively in your cloud. So we see customers really taking advantage of the AWS goodness, as well as expanding the cloud side at VMware cloud on AWS. >>Yeah. There's probably two ways I would look at this. Right? So, so one is the combination of VMware cloud on AWS. And then both native services just generally brings more options to customers. And so typically what we're seeing now is customers are just able to move much faster, especially as it comes to data center, evacuations, migrating all their assets, right? So it used to be that, and still some customers they're like, I I've gotta think through my entire portfolio of applications and decide what to refactor. And the only way I can move it to cloud is to actually refactor it into some net new application, more and more. We're actually seeing customers. They've got their assets. A lot of them are still on premises in a VMware state, right. They can move those super quick and then modernize those. And so I think where you'll see VMware and AWS very aligned is on this, this idea of migrate. Now you need to get the benefits of TCO and, and the agility that comes with being in the cloud and then modernize. We took a step further, which is, and I think VMware would agree here too, but all of the, the myriad of services, I think it's 200 plus now AWS native services are for use right alongside any that a customer wants to run in VMware. And so we have examples of customers that are doing just, >>And that's, that's how you guys see the native and, and VMware cloud integrating in. Yeah, that's, that's important because this, I mean, if I always joke about, you know, we've been here 12 years listening in the hallways and stuff, you know, on the bus to the event last night, walking the parties and whatnot, listening in the streets, there's kind of two conversations that rise right to the top. And I wanna get your reaction to this Steven, because this seems to be representative of this demographic here at VMware conference, there's conversations around ransomware and storage and D dub and recovery. It's all, a lot of those happen. Yeah. Clearly a big crowd here that care about, you know, Veeam and NetApp and storage and like making sure stuff's secure and air gapped. And a lot of that kind of, I call nerdy conversations and then the other one is, okay, I gotta get the cloud story. >>Right. So there's kind of the operational security. And then there's like, okay, what's my path to true cloud. I need to get this moving. I need to have better applications. My company is the application now not it serves some sort of back office function. Yeah. It's like, my company is completely using technology as its business. So the app is the business. So that means everything's technology driven, not departmental siloed. So there's a, that's what I call the true cloud conversation. How do you, how do you see that evolving because VMware customers are now going there. And I won't say, I won't say they're behind, but they're certainly going there faster than ever before. >>I think, I think, I mean, it's an interesting con it's an interesting way to put it and I, I would completely agree. I think it's, it's very clear that I think a lot of customer companies are actually being disrupted. Right. And they have to move fast and reinvent themselves. You said the app is now becoming the company. Right. I mean, if, if you look at where not too many years back, there were, you know, big companies like Netflix that were born in the cloud. Right. Airbnb they're disruptors. >>There's, that's the >>App, right? That's the app. Yeah. So I, I would exactly agree. And, and that's who other companies are competing with. And so they have to move quickly. You talked about some, some technology that allows them to do that, right? So this week we announced the general availability of a NetApp on tap solution. It's been available on AWS for some time as a fully managed FSX storage solution. But now customers can actually leverage it with, with VMC. Now, why is that important? Well, there's tens of thousands of customers running VMware. On-premises still, there's thousands of them that are actually using NetApp filers, right? NetApp, NetApp filers, and the same enterprise features like replication. D do you were talking about and Snapp and clone. Those types of things can be done. Now within the V VMware state on AWS, what's even better is they can actually move faster. So consider replicating all this, you know, petabytes and petabytes of data that are in these S from on-premises into AWS, this, this NetApp service, and then connected connecting that up to the BMC option. So it just allows customers much, much. >>You guys, you guys have always been customer focus. Every time I sat down with the Andy jazzy and then last year with Adam, same thing we worked back from, I know it's kind of a canned answer on some of the questions from media, but, but they do really care. I've had those conversations. You guys do work backwards from the customer, actually have documents called working backwards. But one of the things that I observed, we talked about here yesterday on the cube was the observations of reinvent versus say, VM world. Now explore is VM world's ecosystem was very partner-centric in the sense of the partners needed to rely on VMware. And the customers came here for both more of the partners, not so much VMware in the sense there wasn't as much, many, many announcements can compare that to the past, say eight years of reinvent, where there's so much Amazon action going on the partners, I won't say take as a second, has a backseat to Amazon, but the, the attendees go there generally for what's going on with AWS, because there's always new stuff coming out. >>And it's, it's amazing. But this year it starts to see that there's an overlap or, or change between like the VMware ecosystem. And now Amazon there's, a lot of our interviews are like, they're on both ecosystems. They're at Amazon's show they're here. So you start to see what I call the naturalization of partners. You guys are continuing to grow, and you'll probably still have thousands of announcements at the event this year, as you always do, but the partners are much more part of the AWS equation, not just we're leasing all these new services and, and oh, for sure. Look at us, look at Amazon. We're growing. Cause you guys were building out and look, the growth has been great. But now as you guys get to this next level, the partners are integral to the ecosystem. How do you look at that? How has Amazon thinking about that? I know there's been some, some, a lot of active reorgs around AWS around solving this problem or no solve the problem, addressing the need and this next level of growth. What's your reaction to >>That? Well, I mean, it's, it's a, it's a good point. So I have to be honest with you, John. I, I, I spent eight of my 10 years so far at AWS within the partner organization. So partners are very near and dear to my heart. We've got tens of thousands of partners and you are you're right. You're starting to see some overlap now between the VMware partner ecosystem and what we've built now in AWS and partners are big >>By the way, you sell out every reinvent. So it's, you have a lot of partners. I'm not suggesting that you, that there's no partner network there, but >>Partners are critical. I mean, absolutely naturally we want a relationship with a customer, but in order to scale the way we need to do to meet the, the needs of customers, we need partners. Right. We, we can't, we can't interact with every single customer as much as we would like to. Right. And so partners have long built teams and expertise that, that caters to even niche workloads or opportunity areas. And, and we love partners >>For that. Yeah. I know you guys do. And also we'll point out just to kind of give props to you guys on the partner side, you don't, you keep that top of the stack open on Amazon. You've done some stuff for end to end where customers want all Amazon, but for the most part, you let competition come in, even on, so you guys are definitely partner friendly. I'm just observing more the maturization of partners within the reinvent ecosystem, cuz we're there every year. I mean, it's, I mean, first of all, they're all buzzing. I mean, it's not like there's no action. There's a lot of customers there it's sold out as big numbers, but it just seems that the partners are much more integrated into the value proposition of at a AWS because of the, the rising tide and, and now their enablement, cuz now they're part of the, of the value proposition. Even more than ever before >>They, they really are. And they, and they're building a lot of capabilities and services on us. And so their customers are our customers. And like you say, it's rising tide, right. We, we all do better together. >>Okay. So let's talk about the VMware cloud here. What's the update here in terms of the show, what's your, what's your main focus cuz a lot of people here are doing, doing sessions. What's been some of the con content that you guys are producing here. >>Yeah. So the best part obviously is a always the customer conversations to partner conversations. So a, a lot of, a lot of sessions there, we did keynote yesterday in Ryan and I, where we talked about a number of announcements that are, I think pretty material now to the offering a joint announcement with NetApp yesterday as well around the storage solution I was talking about. And then some, some really good technical deep dives on how the offering works. Customers are still interested in like how, how do I take what I've got on premises and easily move into AWS and technology like HSX H CX solution with VMware makes it really easy without having to re IP applications. I mean, you know, it is super difficult sometimes to, to move an application. If you've got figure out where all the firewall rules are and re iPing those, those things source. But yeah, it's, it's been fantastic. >>A lot of migrations to the cloud too. A lot of cloud action, new cloud action. You guys have probably seen an uptake on services right on the native side. >>Yes. Yes. For sure. So maybe I just outlined some of the, some of the assets we made this week. So absolutely >>Go ahead. >>We, we announced a new instance family as a, a major workhorse underneath the VMware cloud offering called I, I, you mentioned nitro earlier, this is on, based on our latest generation of nitro, which allows us to offer as you know, bare metal instances, which is, which is what VMware actually VMware was our first partnership and customer that I would say actually drove us to really get Nira done and out the door. And we've continued to iterate on that. And so this I four, I instance, it's based on the, the latest Intel isolate processor with more than double the Ram double the compute, a whopping 75 gigabytes per second network. So it's a real powerhouse. The cool thing is that with the, with the NetApp storage solution that we, we discussed, we're now disaggregating the need to provision, compute and storage at the same time. It used to be, if you wanted to add more storage to your VSAN array, that was on a V VMware cloud. Yeah. You'd add another note. You might not need more compute for memory. You'd have to add another note. And so now customers can simply start adding chunks of storage. And so this opens up customers. I had a customer come to me yesterday and said, there's no reason for us not to move. Now. We were waiting for something that like this, that allowed us to move our data heavy workloads yeah. Into VMware cloud. It's >>Like, it's like the, the alignment. You mentioned alignment earlier. You know, I would say that VMware customers are lined up now almost perfectly with the hybrid story that's that's seamless or somewhat seems it's never truly seamless. But if you look at like what Deepak's doing with Kubernetes and open source, you, you guys have that there talking that big here, you got vs a eight vSphere, eight out it's all cloud native. So that's lined up with what you guys are doing on your services and the horsepower. They have their stuff, you have yours that works better together. So it seems like it's more lined up than ever before. What's your take on that? Do you agree? And, and if so, what folks watching here that are VMware customers, what's, what's the motivation now to go faster? >>Look, it is, it is absolutely lined up. We are, as, as I mentioned earlier, we are jointly engineering and developing this thing together. And so that includes not just the nuts and bolts underneath, but kind of the vision of where it's going. And so we're, we're collectively bringing in customer feedback. >>What is that vision real quick? >>So that vision has to actually help an under help meet even the most demanding customer workloads. Okay. So you've got customer workloads that are still locked in on premises. And why is that? Well, it used to be, there was big for data and migration, right? And the speed. And so we continue to iterate this and that again is a joint thing. Instead of say, VMware, just building on AWS, it really is a, a tight partnership. >>Yeah. The lift and shift is a, an easy thing to do. And, and, and by the way, that could be a hassle too. But I hear most people say the reason holding us back on the workloads is it's just a lot of work, a hassle making it easier is what they want. And you guys are doing that. >>We are doing that. Absolutely. And by the way, we've got not just engineering teams, but we've got customer support teams on both sides working together. We also have flexible commercial options, right? If a customer wants to buy from AWS because they've negotiated some kind of deal with us, they can do that. They wanna buy from VMware for a similar reason. They could buy from VMware. So are >>They in the marketplace? >>They are in the market. There, there are some things in the marketplace. So you talked about Tansu, there's a Tansu offering in the marketplace. So yes. Customers can >>Contract. Yeah. Marketplaces. I'm telling you that's very disruptive. I'm Billy bullish on the market AIOS marketplace. I think that's gonna be a transformative way. People have what they procure and fully agree, deploy and how, and channel relationships are gonna shift. I think that's gonna be a disruptive enabler to the partner equation and, and we haven't even seen it yet. We're gonna be up there in September for their inaugural event. I think it's a small group, but we're gonna be documenting that. So even final question for you, what's next for you? What's on the agenda. You got reinvent right around the corner. Your P ones are done. Right? I know. Assuming all that, I turn that general joke. That's an internal Amazon joke. FYI. You've got your plan. What's next for the world. Obviously they're gonna go this, take this, explore global. No matter what happens with Broadcom, this is gonna be a growth wave with hybrid. What's next for you and your team with AWS and VMware's relationship? >>Yeah. So both of us are hyper focused on adding additional options, both from a, an instance compute perspective. You know, VMware announced some, some, some additional offerings that we've got. We've got a fully complete, like, so they're, they announce things like VMware flex compute V VMware flex storage. You mentioned earlier, there was a conversation around ransomware. There's a new ransomware based offering. So we're hyper focused on rounding out, continuing to round out the offering and giving customers even more choice >>Real quick. Jonathan made me think about the ransomware we were at reinforce Steven Schmidtz now the CSO. Now you got a CSO. AJ's the CSO. You got a whole focus, huge emphasis on security right now. I know you always have, but now it's much more public. It's PO more positive, I think, than some of the other events I've been to. It's been more Lum and doom. What's the security tie in here with VMware. Can you share a little bit real quick on the security piece update around this relationship? >>Yeah, you bet. So as you know, security for us is job zero. Like you don't have anything of security. And so what are the things that, that we're excited about specifically with VMware is, is the latest offering that, that we put together and it's called this, this ransomware offering. And it's, it's a little bit different than other ransomware. I mean, a lot of people have ransomware offerings today, just >>Air gap. >>Right, right, right. Exactly. No, that's easy. No, this one is different. So on the back end, so within VMC, there's this, this option where CU we can be to be taking iterative snapshots of a customer environment. Now, if an event were to occur, right. And a customer is like, I have to know if I'm compromised, we can actually spin up super easy. This is cloud. Remember? Yeah. We can spin up a, a copy of this environment, throw a switch, pick a snapshot with NSX. So VMware NSX firewall it off and then use some custom tooling from VMware to actually see if it's been compromised or not. And then iterate through that until you actually know you're clean. And that's different than just tools that do maybe a >>Little bit of scam. We had Tom gills on yesterday and, and one of the things Dave ante had to leave is taking the sun to college is last one in the house and B nester now, but Tom Gill was on. We were talking about how good their security story is ware. And they really weren't showboating it as much as they could have here. I thought they could have done a better job, but this is an example of kind of them really leaning in with you guys. That's the key part of the relationship. >>Yeah, it really is. And I think this is something is materially different than what you can get elsewhere. And it's exciting for, >>Okay. Now the, the real question I want to know is what's your plans for AWS reinvent the blockbuster end of the year, Amazon surf show that gets bigger and bigger. I know it's still hybrid now, but it's looking be hybrid, but people are back in person last year. You guys were the first event really come back and still had massive numbers. AWS summit, New York at 19,000. I heard last week in Chicago, big numbers. So we're expecting reinvent to be pretty large this year. What are you, what are you gonna do there? What's your role there? >>We are expecting, well, I'll be there. I cover multiple businesses. Obviously. We're, we're planning on some additional announcements, obviously in the VMware space as well. And one of the other businesses I run is around SAP. And you should look for some things there as well. Yeah. Really looking forward to reinvent, except for the fact that it's right after Thanksgiving. But I think it >>Always ruins my, I always get an article out. I like, why are you we're having, we're having Thanksgiving dinner. I gotta write this article. It's gotta get Adam, Adam. Leski exclusive. We, every year we do a, a CEO sit down with Andy was the CEO and then now Adam. But yeah, it's a great event to me. I think it sets the tone. And it's gonna be very interesting to see the big clouds are coming to the big cloud. You guys, and you guys are now called hyperscalers. Now, multiple words. It's interesting. You guys are providing the CapEx goodness for everybody else now. And that relationship seems to be the new, the new industry standard of you guys provide the enablement and then everyone you get paid, cuz it's a service. A whole nother level of cloud is emerging in the partner network, GSI other companies. Yeah. >>Yeah. I mean we're really scaling. I mean we continue to iterate and release regions at a fast clip. We just announced support for VMware in Hong Kong. Yeah. So now we're up to 21 regions for this service, >>The sovereign clouds right around the corner. Let's we'll talk about that soon. Steven. Thanks for coming. I know you gotta go. Thank you for your valuable time. Coming in. Put Steven Jones. Who's the general manager of the VMware cloud on AWS business. Four AWS here inside the cube day. Three of cube coverage. I'm John furrier. Thanks for watching. We'll be right back.

(upbeat music) >> Hey, welcome back everyone to theCube's live coverage of the Monaco Crypto Summit here in Monaco. I'm John Furrier, host of theCube, and Lauren Bissell here, founder and CEO of Immutable Industries, focused on the advancement of technologies in art, entertainment, blockchain across multiple sectors. Great background in entertainment music, complying that into the convergence and to crypto. Welcome to theCube. I appreciate it. >> Thank you so much. Thank you guys for having me. It's been an incredible day so far. >> So we were just talking before we came on camera, your background and just the people you've worked with in the music industry. You've been there for a very long part of your career, from the beginning. Now you're on the wave of Web3, crypto, DeFi. There's a confluence of refactoring businesses. We're seeing that impact. And I think a lot of people, finance and entrepreneurial, the best brains are coming into the sector because it's an opportunity, clearly, to reset and refactor old antiquated business models and practices, in a new way to achieve the same things. Better, faster, cheaper >> Exactly. Better, faster, cheaper, is good sometimes, other times that's... We will see. But I think for me, coming in from the music industry was something that, I honestly never expected to be involved in blockchain and futuristic tech. It's always something that I admired, but I didn't really see, "Okay. Here's how I can be involved in that." I was obsessed with it. But as I was sort of progressing my career as a music producer, I saw so many issues with the industry. The way capital came in, the way that it was distributed. I mean, these things are still happening today. But I was just constantly looking around for better solutions and how to make this work in a better way. In 2017, when I started really diving into crypto, that was something where I saw a huge opportunity for the entire industry. The music industry is notorious for just sort of being behind the curve when it comes to new tech. And it's a shame. When you're in an industry that's full of art and innovation, you would think that it's something... It's an industry that would embrace this position. Maybe some people do this, and I applaud those people very much. But in general, the music industry is kind of behind. We live a little bit in the Wild West. Not in the futures way, but kind of in the old way. I'm just really excited to be able to bring these things into the industry. >> It's interesting. I'm not in the industry, in the music side, but I've been on the software industry, where you had the proprietary software, the rights, and people used to build software. And then when the company went under, the software was gone, lost forever. And in around the late eighties, nineties, open source movement happened, and it just changed everything. And I think, to me, I feel like this is a similar structural inflection point in change, where rights are changing. People are still holding onto like, "He can't use the copyright." And I even saw a stat that said, with AI now, you can actually copyright every single melody, every single note in music. So that means like, "Who the hell's going to develop anything?" So are even rights even matter? So rights, ownership, art, mixing. Funny story of my son, a year and a half ago, mixed an old song from a band that wasn't around, and it became a TikTok sensation. Hundreds of millions of listens, and then the Spotify and Apple account was making like 20,000 a week, and DistroKid cut him off. Because someone went back and claimed the copyrights. But it was a mix of a couple of different pieces of the song for a new melody. But because that wasn't his work, the middle man killed the account. >> Right. But if there had been maybe an easier solution for him to go get those rights. So I actually used to be a rights and royalties negotiation specialist. I was on the phone with labels, every second of every day. From a producer standpoint, you're trying to find something that works for the artist, something that works for the label, something that you can arrange in perpetuity, if possible. But it's just... Again, there's so many people that have to just get on the phone- >> Like a busy gen system of like- >> Yeah. >> Weirdness >> Right. >> What's the solution? >> I mean, right now one of the favorite... It's super simple. Smart contracts related to publishing and royalties. Now you still need, probably in the interim, someone to go out and... The old school job for someone in rights and royalties is sitting in a restaurant and listening to see if the music is being played, and then you write it all down on a piece of paper. I mean, that's quite old school, but that still happens in a lot of places. So we can kind of move into smart contracts for the payment systems, and eventually we can move into AI, to actually detect what music is being played where. Just to go, not really on a tangent, but it's like, "Okay. Well, are we taking a job away from someone who's supposed to sit in a restaurant and listen to the music?" Well, I think we're developing a lot of new jobs by needing to generate this software. This is more- >> I've heard that. We've heard that argument before, "Oh! Bank tellers are going to be put out of business by the ATM machine." Turns out there's more branches now. >> Right. >> Okay. There's a total waste there. I mean, people say that are like... I mean, but it does bring up the next gen, the creator, the young artist, the ability to collaborate with smart contracts, the removal of the middle person in all this, the intermediaries. That's really the key, right? >> I think it is the key. And like I said, before removal of the middle person, some people would look down on that. I think it's more efficient systems. When you have more efficient systems, you have more efficient societies, you can create bigger and better things. So is there a change process that has to happen there? Yeah, of course. But this is humanity, this is history, this is what happens. >> Okay. So you're a pro, you've been through- >> I just embrace that. >> You've been through the business, you got the scar tissue, you got the experience, you got the brains. Now you're here in the front of a new generation, a lot of pioneering going on, a lot of chaos, a lot of confusion. Some people... Blood's spilling on the ground. There's a lot of stuff going on, that is opportunity. What are you up to? How are you attacking this market, how do you look at it, what's on your mind? >> Yeah. I mean, so what's funny, I've actually been spending the last few years, sort of directly advising individuals and companies in the music industry. So everyone from artists to label executives, content distribution executives, licensing teams and publishers, and sort of explaining, "Here's how things work. Here's how we think they're going to go. And here's how, instead of running away from that and trying to block your artists from using that system, we can actually use this to enhance the financial pie of the music industry, instead of just trying to steal a piece of everyone else's pie." That's what I really want to do, is, the industry pie can get bigger. We don't need to steal your blueberries. It's just- >> They're picking up crumbs and fighting over crumbs >> Exactly. The industry changed, and I understand why it's scary. I really, really do. I've lived through this. But it's going to be- >> What do they say? What's your advice to them, and what's their reaction? Is it like, "Yeah, you said that you'd get lip service." Or like, "Yeah, we're trying my best. I'll stop drinking, I promise." I mean, I've heard... I tried last week. I mean, are they actually getting it done, or they don't know what to do? >> Yeah. Well, I think it starts with individuals. I actually spent a lot of time working with individuals on education and how they can take that information to their companies or implement that in their companies. It's on sort of a corporate level. It is slower. That's okay. That's expected. But educating sort of individuals, like I said, that's what I've been doing for the past few years, is what's really been helpful. Because if you just kind of do this overnight, I understand it's not going to happen overnight. But being able, like I said, to figure out, "Okay. We grow the financial pie for the whole industry." This accumulates, this helps the health of the industry. Like I said, I grew up in the industry. I care a lot about the industry. I actually want to see good things happen- >> Positive change. >> It's in my heart, in my soul, to make the music industry- >> So Lauren, I got to ask you. So as you see the industry changing, and it's going to be hard to get people to go through transformation. >> Yeah. >> They have to get there. Otherwise, they'll be extinct. And we kind of see that. Is there new brands emerging that have a clean sheet of paper? Because I'm a far young artist, I'm saying to myself, "Okay. If I can write my own ticket..." And by the way, brands become platforms is a big trend you're seeing with NFTs and- >> Yeah. >> And these great Web3 platforms. So I got more social power, I got collective intelligence, I got network effect, I got fans. All that's tappable now from a monetization standpoint. >> Yeah. >> Are there new agencies, new brands, emerging that's artists friendly like this? >> I mean, that's one of the reasons we're here, to begin with. I'm obviously just going to mention Digital Bits, because they're literally creating NFTs for brands. I'm here because I believe in what they're building. Their model is applicable to brands, it's applicable to artists and athletes. I actually truly believe in what they're building and how they're doing it. NFTs is a faster way to achieve what we thought we were going to achieve with sort of the tokenization of a person or an individual brand. NFTs, I think, is a better way to do that. Obviously NFTs are tokens as well, but it's a different type of thing than an ICO. >> It has more versatility and it's got the same kind of characteristics- >> Yeah. I think you can build more community with it, you can maintain the value of the token itself, the non-punchable token itself, a little bit better, and you can build community around it. >> What are some of the companies you're advising and people you're advising? Are they record labels, are they executive, like an executive coach on one end, business consultant on the other? >> Yeah. >> What's some of the range of... >> So I actually advise a couple of brands, I can't completely speak about in the music industry, but from the executive position, I do advise individual executives from the label and the content distribution side, on sort of how to implement futurist tech into their company a little bit better, and sort of what the real things that are going on, the new things that are going on. I actually just took on a role for a company called Cyber Yachts, which I'm really excited about. This one's just going to be fun. International music, entertainment, fun. >> Do you need some media up there? We'll have to do interviews on both- >> Yeah. You can come on the metaverse yacht and the physical yacht, if you want to. But- >> Monaco's a great place for that. >> We will be here. >> All right. >> Absolutely. >> So tell me about the future of some of these big agencies you mentioned? Because if you look at the market right now, if you zoom out, content is king, distribution is Kong. That's what they say. There's a lot more distribution now more than, it seems, content. That's maybe on some perspectives. But it seems like there's a lot more outlets looking for better content. >> Always. >> Do you agree that distribution's hungry for the content, or is there more content than distribution? >> I think it just depends on the type of content. If you look at the content that's being distributed over, say social media, for example, there's a plethora of content. >> Yeah. I guess I'm not- >> There's actually, now, this new hierarchy there, where you have to really scrap to get to the top. So in a weird way, you're seeing that sort of mimic. We see how societies work. So now that's become very hierarchical, and that's almost mimicking the way the traditional industry has been developed. So we go through these cycles. >> It must be hard for a record label to try to do the A and R job, when you have more artists emerging from TikTok, Instagram, the social networks, or- >> I would say their job's probably gotten easier. >> Do you think because of the filtering? >> Well, yeah. Now you can view so much talent in a tiny amount of time online. Now, do I know what they are like lives, do I know how they perform? No, I got to go figure that out. But before you had to go to clubs and sit in there, and run around a city. You can only be in so many places at one time. >> You got to chase content down, look it down. >> Yeah. >> All right, so what's the most exciting thing that you think is happening in the whole crypto world, that's people should pay attention to, that's going to impact some of the mainstream? What's the most important things, do you think? >> Well, something that's actually, somewhat unrelated to music, which is government adoption. Sorry, but hands down, that is the most exciting and important thing that's going on right now. >> Adopting it and embracing it is important. >> Adopting it, embracing it, new regulations coming out. >> Are you happy with the progress? >> Yeah. I mean, it takes time. But right now we're the biggest sort of country that sun is, El Salvador. >> And now Monaco's leaning in. >> Now Monaco is obviously leaning in, that's... It's exciting. It's really exciting. >> Well, to me, I think Digital Bits, so when you climbed in earlier, is that, there's a legitimate crossover between the physical asset, digital asset world, and now the kind of the tough parts, the in between the details and the gaps, the contracts, the royalties. >> Yeah. >> Compliance. What does that even mean? >> Right. >> How is that going to get sorted out? Do you think this is going to settle itself out on its own or self govern, a little bit of a iron hand in there, or... >> It'll be a mix. I mean, there's a lot of trial and error going on right now, as far as governments. Like I said, there's really only a few places in the world that are doing it. I applaud these places for their bravery because... Don't get me wrong. It's going to be a struggle. There's going to be failures and successes, and being willing to be one of the countries that does that, that shows some grit. I really respect it. >> And the upside is if they get it right, it's huge. Lauren, final question. What are you up to next, what's on your mind? What are you working on beyond this consultancy? What's around the corner for you? Where do you see the self dots connecting in the future? >> Well, I'm really... Right now I travel quite a bit. I spend a lot of different... A lot of time at different conferences. I spoke earlier a little bit about an education program that I'm developing with an alliance with Draper University in El Salvador. So I want to finish the programming for that. We're going to scale that out across multiple countries. And that's everything from education for governments and education for people that, maybe just recently heard of Bitcoin and they don't even know how to go about seeing what it is. >> 5G in emerging countries is pretty potential there. >> It is. Absolutely. >> Great stuff. Lauren, thanks for coming on theCube sharing. >> Thank you so much. >> I appreciate it. Lauren Bissell here on theCube, I'm John Furrier, live in Monaco, for the Monaco Crypto Summit, Digital Bits. We got a big gala event tonight with Prince Albert in attendance. A lot of action, a lot of big news happening here. All the players are gathered for the inaugural Monaco Crypto Summit. I'm John Furrier. We'll have more live coverage after this short break. (upbeat music)

(upbeat music) >> We're back at VeeamON 2022. We're here at the Aria in Las Vegas Dave Vellante with Dave Nicholson. Bill Andrews is here. He's the president and CEO of ExaGrid, mass boy. Bill, thanks for coming on theCUBE. >> Thanks for having me. >> So I hear a lot about obviously data protection, cyber resiliency, what's the big picture trends that you're seeing when you talk to customers? >> Well, I think clearly we were talking just a few minutes ago, data's growing like crazy, right This morning, I think they said it was 28% growth a year, right? So data's doubling almost just a little less than every three years. And then you get the attacks on the data which was the keynote speech this morning as well, right. All about the ransomware attacks. So we've got more and more data, and that data is more and more under attack. So I think those are the two big themes. >> So ExaGrid as a company been around for a long time. You've kind of been the steady kind of Eddy, if you will. Tell us about ExaGrid, maybe share with us some of the differentiators that you share with customers. >> Sure, so specifically, let's say in the Veeam world you're backing up your data, and you really only have two choices. You can back that up to disc. So some primary storage disc from a Dell, or a Hewlett Packard, or an NetApp or somebody, or you're going to back it up to what's called an inline deduplication appliance maybe a Dell Data Domain or an HPE StoreOnce, right? So what ExaGrid does is we've taken the best of both those but not the challenges of both those and put 'em together. So with disc, you're going to get fast backups and fast restores, but because in backup you keep weekly's, monthly's, yearly retention, the cost of this becomes exorbitant. If you go to a deduplication appliance, and let's say the Dell or the HPs, the data comes in, has to be deduplicated, compare one backup to the next to reduce that storage, which lowers the cost. So fixes that problem, but the fact that they do it inline slows the backups down dramatically. All the data is deduplicated so the restores are slow, and then the backup window keeps growing as the data grows 'cause they're all scale up technologies. >> And the restores are slow 'cause you got to rehydrate. >> You got to rehydrate every time. So what we did is we said, you got to have both. So our appliances have a front end disc cache landing zone. So you're right directed to the disc., Nothing else happens to it, whatever speed the backup app could write at that's the speed we take it in at. And then we keep the most recent backups in that landing zone ready to go. So you want to boot a VM, it's not an hour like a deduplication appliance it's a minute or two. Secondly, we then deduplicate the data into a second tier which is a repository tier, but we have all the deduplicated data for the long term retention, which gets the cost down. And on top of that, we're scale out. Every appliance has networking processor memory end disc. So if you double, triple, quadruple the data you double, triple, quadruple everything. And if the backup window is six hours at 100 terabyte it's six hours at 200 terabyte, 500 terabyte, a petabyte it doesn't matter. >> 'Cause you scale out. >> Right, and then lastly, our repository tier is non-network facing. We're the only ones in the industry with this. So that under a ransomware attack, if you get hold of a rogue server or you hack the media server, get to the backup storage whether it's disc or deduplication appliance, you can wipe out all the backup data. So you have nothing to recover from. In our case, you wipe it out, our landing zone will be wiped out. We're no different than anything else that's network facing. However, the only thing that talks to our repository tier is our object code. And we've set up security policies as to how long before you want us to delete data, let's say 10 days. So if you have an attack on Monday that data doesn't get deleted till like a week from Thursday, let's say. So you can freeze the system at any time and do restores. And then we have immutable data objects and all the other stuff. But the culmination of a non-network facing tier and the fact that we do the delayed deletes makes us the only one in the industry that can actually truly recover. And that's accelerating our growth, of course. >> Wow, great description. So that disc cache layer is a memory, it's a flash? >> It's disc, it's spinning disc. >> Spinning disc, okay. >> Yeah, no different than any other disc. >> And then the tiered is what, less expensive spinning disc? >> No, it's still the same. It's all SaaS disc 'cause you want the quality, right? So it's all SaaS, and so we use Western Digital or Seagate drives just like everybody else. The difference is that we're not doing any deduplication coming in or out of that landing zone to have fast backups and fast restores. So think of it like this, you've got disc and you say, boy it's too expensive. What I really want to do then is put maybe a deduplication appliance behind it to lower the cost or reverse it. I've got a deduplication appliance, ugh, it's too slow for backups and restores. I really want to throw this in front of it to have fast backups first. Basically, that's what we did. >> So where does the cost savings, Bill come in though, on the tier? >> The cost savings comes in the fact that we got deduplication in that repository. So only the most recent backup >> Ah okay, so I get it. >> are the duplicated data. But let's say you had 40 copies of retention. You know, 10 weekly's, 36 monthly's, a few yearly. All of that's deduplicated >> Okay, so you're deduping the stuff that's not as current. >> Right. >> Okay. >> And only a handful of us deduplicate at the layer we do. In other words, deduplication could be anywhere from two to one, up to 50 to one. I mean it's all over the place depending on the algorithm. Now it's what everybody's algorithms do. Some backup apps do two to one, some do five to one, we do 20 to one as well as much as 50 to one depending on the data types. >> Yeah, so the workload is going to largely determine the combination >> The content type, right. with the algos, right? >> Yeah, the content type. >> So the part of the environment that's behind the illogical air gap, if you will, is deduped data. >> Yes. >> So in this case, is it fair to say that you're trading a positive economic value for a little bit longer restore from that environment? >> No, because if you think about backup 95% of the customers restores are from the most recent data. >> From the disc cache. >> 95% of the time 'cause you think about why do you need fast restores? Somebody deleted a file, somebody overwrote a file. They can't go work, they can't open a file. It's encrypted, it's corrupted. That's what IT people are trying to keep users productive. When do you go for longer-term retention data? It's an SEC audit. It's a HIPAA audit. It's a legal discovery, you don't need that data right away. You have days and weeks to get that ready for that legal discovery or that audit. So we found that boundary where you keep users productive by keeping the most recent data in the disc cache landing zone, but anything that's long term. And by the way, everyone else is long term, at that point. >> Yeah, so the economics are comparable to the dedupe upfront. Are they better, obviously get the performance advance? >> So we would be a lot looped. The thing we replaced the most believe it or not is disc, we're a lot less expensive than the disc. I was meeting with some Veeam folks this morning and we were up against Cisco 3260 disc at a children's hospital. And on our quote was $500,000. The disc was 1.4 million. Just to give you an example of the savings. On a Data Domain we're typically about half the price of a Data Domain. >> Really now? >> The reason why is their front end control are so expensive. They need the fastest trip on the planet 'cause they're trying to do inline deduplication. >> Yeah, so they're chasing >> They need the fastest memory >> on the planet. >> this chips all the time. They need SSD on data to move in and out of the hash table. In order to keep up with inline, they've got to throw so much compute at it that it drives their cost up. >> But now in the case of ransomware attack, are you saying that the landing zone is still available for recovery in some circumstances? Or are you expecting that that disc landing zone would be encrypted by the attacker? >> Those are two different things. One is deletion, one is encryption. So let's do the first scenario. >> I'm talking about malicious encryption. >> Yeah, absolutely. So the first scenario is the threat actor encrypts all your primary data. What's does he go for next? The backup data. 'Cause he knows that's your belt and suspend is to not pay the ransom. If it's disc he's going to go in and put delete commands at the disc, wipe out the disc. If it's a data domain or HPE StoreOnce, it's all going to be gone 'cause it's one tier. He's going to go after our landing zone, it's going to be gone too. It's going to wipe out our landing zone. Except behind that we have the most recent backup deduplicate in the repository as well as all the other backups. So what'll happen is they'll freeze the system 'cause we weren't going to delete anything in the repository for X days 'cause you set up a policy, and then you restore the most recent backup into the landing zone or we can restore it directly to your primary storage area, right? >> Because that tier is not network facing. >> That's right. >> It's fenced off essentially. >> People call us every day of the week saying, you saved me, you saved me again. People are coming up to me here, you saved me, you saved me. >> Tell us a story about that, I mean don't give me the names but how so. >> I'll actually do a funnier story, 'cause these are the ones that our vendors like to tell. 'Cause I'm self-serving as the CEO that's good of course, a little humor. >> It's your 15 minutes of job. >> That is my 15 minutes of fame. So we had one international company who had one ExaGrid at one location, 19 Data Domains at the other locations. Ransomware attack guess what? 19 Data Domains wiped out. The one ExaGrid, the only place they could restore. So now all 20 locations of course are ExaGrids, China, Russia, Mexico, Germany, US, et cetera. They rolled us out worldwide. So it's very common for that to occur. And think about why that is, everyone who's network facing you can get to the storage. You can say all the media servers are buttoned up, but I can find a rogue server and snake my way over the storage, I can. Now, we also of course support the Veeam Data Mover. So let's talk about that since we're at a Veeam conference. We were the first company to ever integrate the Veeam Data Mover. So we were the first actually ever integration with Veeam. And so that Veeam Data Mover is a protocol that goes from Veeam to the ExaGrid, and we run it on both ends. So that's a more secure protocol 'cause it's not an open format protocol like SaaS. So with running the Veeam Data Mover we get about 30% more performance, but you do have a more secure protocol layer. So if you don't get through Veeam but you get through the protocol, boom, we've got a stronger protocol. If you make it through that somehow, or you get to it from a rogue server somewhere else we still have the repository. So we have all these layers so that you can't get at it. >> So you guys have been at this for a while, I mean decade and a half plus. And you've raised a fair amount of money but in today's terms, not really. So you've just had really strong growth, sequential growth. I understand it, and double digit growth year on year. >> Yeah, about 25% a year right now >> 25%, what's your global strategy? >> So we have sales offices in about 30 countries already. So we have three sales teams in Brazil, and three in Germany, and three in the UK, and two in France, and a lot of individual countries, Chile, Argentina, Columbia, Mexico, South Africa, Saudi, Czech Republic, Poland, Dubai, Hong Kong, Australia, Singapore, et cetera. We've just added two sales territories in Japan. We're adding two in India. And we're installed in over 50 countries. So we've been international all along the way. The goal of the company is we're growing nicely. We have not raised money in almost 10 years. >> So you're self-funding. You're cash positive. >> We are cash positive and self-funded and people say, how have you done that for 10 years? >> You know what's interesting is I remember, Dave Scott, Dave Scott was the CEO of 3PAR, and he told me when he came into that job, he told the VCs, they wanted to give him 30 million. He said, I need 80 million. I think he might have raised closer to a hundred which is right around what you guys have raised. But like you said, you haven't raised it in a long time. And in today's terms, that's nothing, right? >> 100 is 500 in today's terms. >> Yeah, right, exactly. And so the thing that really hurt 3PAR, they were public companies so you could see all this stuff is they couldn't expand internationally. It was just too damn expensive to set up the channels, and somehow you guys have figured that out. >> 40% of our business comes out of international. We're growing faster internationally than we are domestically. >> What was the formula there, Bill, was that just slow and steady or? >> It's a great question. >> No, so what we did, we said let's build ExaGrid like a McDonald's franchise, nobody's ever done that before in high tech. So what does that mean? That means you have to have the same product worldwide. You have to have the same spares model worldwide. You have to have the same support model worldwide. So we early on built the installation. So we do 100% of our installs remotely. 100% of our support remotely, yet we're in large enterprises. Customers racks and stacks the appliances we get on with them. We do the entire install on 30 minutes to about three hours. And we've been developing that into the product since day one. So we can remotely install anywhere in the world. We keep spares depots all over the world. We can bring 'em up really quick. Our support model is we have in theater support people. So they're in Europe, they're in APAC, they're in the US, et cetera. And we assign customers to the support people. So they deal with the same support person all the time. So everything is scalable. So right now we're going to open up India. It's the same way we've opened up every other country. Once you've got the McDonald's formula we just stamp it all over the world. >> That's amazing. >> Same pricing, same product same model, same everything. >> So what was the inspiration for that? I mean, you've done this since day one, which is what like 15, 16 years ago. Or just you do engineering or? >> No, so our whole thought was, first of all you can't survive anymore in this world without being an international company. 'Cause if you're going to go after large companies they have offices all over the world. We have companies now that have 17, 18, 20, 30 locations. And there were in every country in the world, you can't go into this business without being able to ship anywhere in the world and support it for a single customer. You're not going into Singapore because of that. You're going to Singapore because some company in Germany has offices in the U.S, Mexico Singapore and Australia. You have to be international. It's a must now. So that was the initial thing is that, our goal is to become a billion dollar company. And we're on path to do that, right. >> You can see a billion. >> Well, I can absolutely see a billion. And we're bigger than everybody thinks. Everybody guesses our revenue always guesses low. So we're bigger than you think. The reason why we don't talk about it is we don't need to. >> That's the headline for our writers, ExaGrid is a billion dollar company and nobody's know about it. >> Million dollar company. >> On its way to a billion. >> That's right. >> You're not disclosing. (Bill laughing) But that's awesome. I mean, that's a great story. I mean, you kind of are a well kept secret, aren't you? >> Well, I dunno if it's a well kept secret. You know, smaller companies never have their awareness of big companies, right? The Dells of the world are a hundred billion. IBM is 70 billion, Cisco is 60 billion. Easy to have awareness, right? If you're under a billion, I got to give a funny story then I think we got to close out here. >> Oh go ahead please. >> So there's one funny story. So I was talking to the CIO of a super large Fortune 500 company. And I said to him, "Just so who do you use?" "I use IBM Db2, and I use, Cisco routers, and I use EMC primary storage, et cetera. And I use all these big." And I said, "Would you ever switch from Db2?" "Oh no, the switching costs would kill me. I could never go to Oracle." So I said to him, "Look would you ever use like a Pure Storage, right. A couple billion dollar company." He says, "Who?" >> Huh, interesting. >> I said to him, all right so skip that. I said, "VMware, would you ever think about going with Nutanix?" "Who?" Those are billion dollar plus companies. And he was saying who? >> Public companies. >> And he was saying who? That's not uncommon when I talk to CIOs. They see the big 30 and that's it. >> Oh, that's interesting. What about your partnership with Veeam? Tell us more about that. >> Yeah, so I would actually, and I'm going to be bold when I say this 'cause I think you can ask anybody here at the conference. We're probably closer first of all, to the Veeam sales force than any company there is. You talk to any Veeam sales rep, they work closer with ExaGrid than any other. Yeah, we are very tight in the field and have been for a long time. We're integrated with the Veeam Data Boomer. We're integrated with SOBR. We're integrated with all the integrations or with the product as well. We have a lot of joint customers. We actually do a lot of selling together, where we go in as Veeam ExaGrid 'cause it's a great end to end story. Especially when we're replacing, let's say a Dell Avamar to Dell Data Domain or a Dell Network with a Dell Data Domain, very commonly Veeam ExaGrid go in together on those types of sales. So we do a lot of co-selling together. We constantly train their systems engineers around the world, every given week we're training either inside sales teams, and we've trained their customer support teams in Columbus and Prague. So we're very tight with 'em we've been tight for over a decade. >> Is your head count public? Can you share that with us? >> So we're just over 300 employees. >> Really, wow. >> We have 70 open positions, so. >> Yeah, what are you looking for? Yeah, everything, right? >> We are looking for engineers. We are looking for customer support people. We're looking for marketing people. We're looking for inside sales people, field people. And we've been hiring, as of late, major account reps that just focus on the Fortune 500. So we've separated that out now. >> When you hire engineers, I mean I think I saw you were long time ago, DG, right? Is that true? >> Yeah, way back in the '80s. >> But systems guy. >> That's how old I am. >> Right, systems guy. I mean, I remember them well Eddie Castro and company. >> Tom West. >> EMV series. >> Tom West was the hero of course. >> The EMV 4000, the EMV 20,000, right? >> When were kids, "The Soul of a New Machine" was the inspirational book but anyway, >> Yeah Tracy Kidder, it was great. >> Are you looking for systems people, what kind of talent are you looking for in engineering? >> So it's a lot of Linux programming type stuff in the product 'cause we run on a Linux space. So it's a lot of Linux programs so its people in those storage. >> Yeah, cool, Bill, hey, thanks for coming on to theCUBE. Well learned a lot, great story. >> It's a pleasure. >> That was fun. >> Congratulations. >> Thanks. >> And good luck. >> All right, thank you. >> All right, and thank you for watching theCUBE's coverage of VeeamON 2022, Dave Vellante for Dave Nicholson. We'll be right back right after this short break, stay with us. (soft beat music)

(upbeat music) >> Welcome back to Las Vegas everybody. You're watching theCUBE coverage of AWS reinvent 2021. I tell you this place is packed. It's quite amazing here, over 20,000 people, I'd say it's closer to 25, maybe 27,000, and it's whole overflow, lots going on in the evenings. It's quite remarkable and we're really happy to be part of this. Jay Turner is here, he's the Vice President of Development and Operations, at PCCW Global. He's joined by Garrett Lowell, Vice President of Ecosystem Partnerships for the Americas at PCCW Global. Guys, welcome to theCUBE. Thanks for coming on. >> Thank you. >> Thank you so much. Jay, maybe you could take us through, for those people who aren't familiar with your company, what do you guys do, what are you all about? >> PCCW Global is the international operating wing of Hong Kong telecom. If it's outside of Hong Kong, it's our network. We've got about 695,000 kilometers of diverse cable, we've got about 43, 44 terabit of capacity came into business in 2005, if my brain is serving me correctly right now. We have a very diverse and vast portfolio ranging all the way from satellite teleports, all the way to IP transit. We're a Tier 1 service provider from that perspective as well. We do one of everything when it comes to networking and that's really, what was the basis of Console Connect, was inventing a platform to really enable our users to capitalize on our network and our assets. >> Okay. 2005, obviously you predated Cloud, you laid a bunch of fibers struck it in the ocean, I mean, global networks. There was a big trend to do that you had to think, you had to go bigger, go home in that business, (laughing) all right. Console Connect is your platform, is that right? >> Jay: Yes. >> So explain- >> Yeah, sorry, Console Connect is a software defined interconnection platform. We built a user self-service portal. Users can allocate ports, they get the LOAs issued to them directly from the platform. And then once they've got an active port or they've come in via one of our partnerships, they can then provision connectivity across our platform. That may be extending to their data centers or extending to their branch office, or it could be building a circuit into the Cloud via direct connect, could be building a circuit into an internet exchange. All of those circuits are going to be across that 685,000 kilometers of diverse fiber rather than going across the public internet. >> When you started, it took some time obviously to build out that infrastructure and then the Cloud came into play, but it was still early days, but it sounds like you're taking the AWS Cloud model and applying that to your business, eliminate all that undifferentiated heavy lifting, if you will, like the visioning in management. >> Yeah, we've heard many people, and that's kind of the impetus of this was, I want to be directly connected to my end point. And how do I do that? AWS, yes, they had direct connect, but figuring out how to do that as an enterprise was challenging. So we said, hey, we'll automate that for you. Just tell us what region you want to connect to. And we'll do all the heavy lifting and we'll just hand you back a villain tag. You're good to go. So it's a classic case, okay. AWS has direct connect. People will go, oh, that's directly competitive, but it's now you're adding value on top of that. Right? >> Yeah. >> Describe where you fit, Garrett, inside of the AWS ecosystem. You look around this hall and it's just a huge growing ecosystem, where you fit inside of that ecosystem and then your ecosystem. What's that like? >> Where we fit into the AWS ecosystem, as Jay alluded to, we're adding value to our partners and customers where they can come in, not only are they able to access the AWS platform as well as other Cloud platforms, but they're also able to access each other. We have a marketplace in our platform, which allows our customers and partners to put a description of their services on the marketplace and advertise their capabilities out to the rest of the ecosystem of PCCW Global and Console Connect. >> And you're doing that inside of AWS, is that right or at least in part? >> No, that's not inside of AWS. >> So your platform is your platform. >> Yes. >> Your relationship with AWS is to superpower direct connect. Is that right or? >> So we're directly connected to AWS throughout the globe. And this allows our customers and partners to be able to utilize not only the PCCW global network, but also to expand that capability to the AWS platform in Cloud. >> So wherever there's a Cloud, you plug into it, okay? >> Garrett: That's correct. >> Jay: Yeah. And then another advantage, the customer, obviously doesn't have to be directly co-located with AWS. They don't have to be in the same geographical region. If for some reason you need to be connected to U.S. west, but you're in Frankfurt, fine, we'll back all the traffic for you. >> Dave: Does that happen a lot? >> It actually does. >> How come? What's the use case there. >> Global diversity is certainly one of them just being able to have multiple footprints. But the other thing that we're seeing more of late is these Cloud-based companies are beginning to be attracted to where their customers are located. So they'll start seeing these packets of views and they'll go, well, we're going to go into that region as well, stand up a VPC there. We want our customers then being able to directly connect to that asset that's closest to them. And then still be able to back call that traffic if necessary or take it wherever. >> What's the big macro trends in your business? Broadly you see cost per bit coming down, you see data consumption and usage going through the roof. How does that affect you? What are some of the big trends that you see? >> I think one of the biggest ones and one that we targeted with Console Connect, we were hearing a lot of customers going, the world's changing so dynamically. We don't know how to do a one-year forecast of bandwidth, much less a three-year, which is what a lot of contracts are asking us for. So we said, hey, how about one day? Can you do one day? (Dave laughs) Because that's what our granularity is. We allow for anything from one day up to three years right now, and then even within that term, we're dynamic. If something happens, if suddenly some product goes through the roof and you've suddenly got a spike in traffic, if a ship drags its anchor through a sub sea cable, and suddenly you're having to pivot, you just come into the platform, you click a couple of buttons, 20 seconds later, we've modified your bandwidth for you or we've provisioned a new circuit for you, we've got your backup going, whatever. Really at the end of the day, it's the customer paying for their network, so the customer should be the one making those decisions. >> How's that affect pricing? I presume or so, I can have one day to a three-year term, for example if I commit to three years, I get a better deal. Is that right, or? >> You do, but at the end of the day, it's actually pretty much a moderate, a better deal. We don't want to force the hand of the customer. If you signed a 12 month contract with us, we're going to give you a 3% discount. >> So it's not really, that's not a motivation to do it. It's just (indistinct) reduce the transaction complexity. And that's why you will sign up for a longer term not to get the big discount. >> Correct. And then, like I said, even within a longer contract, we're still going to allow you to flex and flow and modify if you need to, because it's your network. >> What kind of constraints do you put on that? Do I have to commit to a flow? And then everything above that is, I can flex up. Is that how it works? >> Yeah. >> Okay. And then, the more I commit to, the better the deal is, or not necessarily? >> No, it's pretty much flat rate. >> Okay, I'm going to commit and I'm going to say, all right, I know I'm going to use X, or sign up for that and anything over it, you're pretty flexible, I might get a few points if I sign up for more, somebody might want to optimize that if they're big enough. >> And another really neat advantage, the other complaint we heard from customers, they go, I need three different direct connect, I need to be connected to three different parties, but I don't want to run three different cross-connects and I don't want to have three different ports. That's just an expense and I don't want. And we, fine, take your one gig port run one gig of services on it. If that's 20 different services, we're fine. We allow you to multiplex your port and provision as- >> So awesome. I love that model. I know some software companies who I would recommend to take a look at that pricing model. So Garrett, how do you segment the ecosystem? How do you look at that? Maybe you could draw and paint a picture of the idea of partners and what they look like. I know there's not just one category, but, >> Sure. Our ideal partners are internet exchangers, Cloud partners and SAS providers, because a big piece of our business is migration to the Cloud, and the flexibility of our platform allows and encourages our SAS providers and SI partners to perform migration to the Cloud much easier in a flexible format for their customers. >> What can you tell us, any kind of metrics you can give us around your business to give a sense of the scope, the scale? >> Well, of our business, (Dave laughs) one of the driving factors here, Gardner says that about 2023, I think, 40% of the enterprise workloads will be deployed in the Cloud, which is all fine and dandy, except in my head, you're just trading one set of complexities for another. Instead of having everything in a glass house and being able to understand that, now you're going, it's in the Cloud, now I need to manage my connectivity there. wait a minute, are my security policies still the same? Do they apply if I'm going across the public internet? What exposure have I just bought into myself to try to run this? The platform really aims at normalizing that as much as possible. If you're directly connected to AWS, at the end of the day, that's a really long ethernet cable. So your a glass house just got a lot bigger, but you're still able to maintain and use the exact same policies and procedures that you've been using. That's really one of our guiding principles, is to reduce that complexity and make it very simple for the user. >> I understand that, cause in the early days of Cloud, a lot of enterprises, the CIOs, they were concerned about security, then I think they realized, ah, AWS has pretty good security. CIA is using it. But still people would say to me, it's not that it's best security, it's just different. You know, we move slow, Dave. How do you accommodate, there's that diversity, I mean, AWS is obviously matured, but are you suggesting that you can take my security edicts in my glass house and bring those into your networks and ultimately into the Cloud? Is that how it works? >> That's the goal. It's not going to be a panacea more than likely, but the more edicts that we can allow you to bring across and not have to go back and revamp and, the better for you as a customer and the better really for us, because it normalizes things, it makes it much easier for us to accommodate more and more users. >> And is it such now in the eco, is all the diversity in the ecosystem, is it such that there's enough common patterns you guys can accommodate most of those use cases? >> Yeah, absolutely. One of the key components is the fact that the platform runs on our MPLS network, which is inherently secure. It's not on the public internet anywhere. We do have internet on demand capability. So in the event that a customer wants access to the internet, no problem. We can accommodate this. And we also have 5G capability built into the platform to allow flexibility of location and flexibility of, I would say, standing up new customer locations. And then the other component of the security is the fact that the customers can bring their own security and apply anywhere. We're not blocking, we don't have any port filters or anything of this nature. >> If would think 5G actually, I could see people arguing both sides, but my sense is 5G is going to be a huge driver for your business cause it's going to just create so much more demand for your services, I think. I can see somebody arguing the counter about it. What's your point of view on that? >> No, I think that's a fair assessment. I think it's going to drive business for everyone here on the show floor and it's pushing those workloads more toward the edge, which is not an area that people were typically concerned with. The edge was just the door that they walked through. That's becoming much different now. We're also going to start seeing, and we're already seeing it, huge trends of moving that data at the edge rather than bringing it all the way back to a central warehouse and help ending it. The ability to have a dynamic platform where you can see exactly what your network's doing and in the push of a button, modify that, or provision new connectivity in response to how your business is performing. >> Yeah, ultimately it's all about the applications that are going to be driving demand for more data. That's just a tailwind for you guys. >> Yeah. You look at, some of the car companies are coming on, Tesla, you're drive around with like eight CPUs and I think communicating back over the air. >> Dave: Yeah, right. >> You start scaling that and you start getting into some some real bottlenecks. >> Amazing business you guys having obviously capital intensive, but once you get in there, you got a big moat. That is a matter of getting on a flywheel and innovating. Guys, congratulations on all the progress and so much for coming on theCUBE. >> Thanks for the time. >> Thank you very much. >> Great to meet you guys. Good luck. All right, thank you for watching. This is Dave Vellante for theCUBE, the leader in High-Tech Coverage. We'll be right back. (upbeat music)

(upbeat music) >> Welcome back to Las Vegas everybody. You are watching theCube's coverage of AWS reinvent 2021. I'll tell you this place is packed. It's quite amazing here over 20,000 people, I'd say it's closer to 25, maybe 27,000. And there's a little overflow, lots going on in the evenings. It's quite remarkable. And we're really happy to be part of this. Jay Turner is here, he's the vice president of development and ops at PCCW Global. He's joined by Garrett Lowell, vice-president of ecosystem partnerships for the Americas at PCCW Global. Guys, welcome to theCube. Thanks for coming on. >> Thank you so much. >> So, Jay, maybe you could take us through for those people who aren't familiar with your company, what do you guys do? What do you all about? >> Yes, so PCCW Global is the international operating wing of Hong Kong Telecom. So if it's outside of Hong Kong, it's our network. We've got about 695,000 kilometers of diverse cable. We've got about 43, 44 terabit of capacity. Came into business in 2005 if my brain is serving me correctly right now. So we have a very diverse and vast portfolio ranging all the way from satellite teleports, all the way to IP transit. We're a tier one service provider from that perspective as well. So we do one of everything when it comes to networking and that's really what was the basis of Console Connect, was inventing a platform to really enable our users to capitalize on that our network and our assets. >> Okay, so 2005, obviously you predated cloud, you laid a bunch of fibers, it's getting in the ocean, I mean, global networks, I mean, there was a big trend to do that and you had to think, you had to go bigger or go home and that business. >> Jay: Yes you had to do. >> So and Console Connect is your platform, is that right? So explain. >> Yeah, sorry. Yeah, Console Connect is our software defined interconnection platform. So we built a user self-service portal. Users can allocate ports, they get the LOAs issue to them directly from the platform. And then once they've got an active port or they've come in via one of our partnerships, they can then provision connectivity across our platform. And that may be extending to their data centers or extending or their branch office, or it could be building a circuit into the cloud via direct connect, could be building a circuit into an internet exchange. And all of those circuits are going to be across that 685,000 kilometers of diverse fiber rather than going across the public internet. >> So, when you started, it took some time obviously to build out that infrastructure and then the cloud came into play, but it was still early days, but it sounds like you're taking the cloud model, AWS Cloud model and applying that to your business, eliminate all that undifferentiated, heavy lifting, if you will, the visioning and management. >> Yeah, we've heard many people and that's kind of the impetus of this was, I want to be directly connected to my end point. And how do I do that? And AWS, yes, they had direct connect, but figuring out how to do that as an enterprise was challenging. So we said, hey, we'll automate that for you. Just tell us what region you want to connect to. And we'll do all the heavy lifting, and we'll just hand you back a villain tag. You're good to go. >> So it's a classic case of, okay, AWS has direct connect, people they go, "Ah, that's directly competitive, but it's not, you're adding value on top of that." Right. So describe where you fit Garrett inside of the AWS ecosystem. You look around this hall and it's just a huge growing ecosystem, where you fit inside of that ecosystem and then your ecosystem, what's that like? >> Okay, so where we fit into the AWS ecosystem, as Jay alluded to, we're adding value to our partners and customers where they can come in, not only are they able to access the AWS platform as well as other cloud platforms, but they're also able to access each other. So we have a marketplace in our platform, which allows our customers and partners to put a description of their services on the marketplace and advertise their capabilities out to the rest of the ecosystem of PCCW Global and Console Connect. >> Okay, so and you're doing that inside of AWS? I that right? Or at least in part? >> No, that's not inside of AWS. >> Okay, so your platform is your platform. >> Yes. >> And then, so your relationship with AWS is to sort of superpower direct connect, is that right or? >> So we're directly connected to AWS throughout the globe. And this allows our customers and partners to be able to utilize not only the PCCW Global network, but also to expand that capability to the AWS platform in clouds. >> Wherever there's a cloud you plug into it? Okay. >> That's correct. >> And then another advantage there is the customer, obviously doesn't have to be directly co-located with AWS. They don't have to be in the same geographic region. If for some reason you need to be connected to US West, but you're in Frankfurt, fine, we'll back all the traffic for you. >> Does that happen a lot? >> It actually does. >> How come? Why, what's the use case there? >> Global diversity is certainly one of them, just being able to have multiple footprints. But the other thing that we're seeing more of late is these cloud-based companies are beginning to kind of be attracted to where their customers are located. So they'll start seeing these pockets of use and they'll go, well, okay, we're going to go into that region as well, stand up a VPC there. And so then we want to our customers then being able to directly connect to that asset, that's closest to them. And then still be able to back call that traffic if necessary or take it wherever. >> What are the big, sort of macro trends in your business? I mean, broadly you see cost per bit coming down, you see data consumption and usage going through the roof. How does that affect you? What are some of the big trends that you see? >> I think one of the biggest ones and one that we targeted with Console Connect, we were hearing a lot of customers going, the world's changing so dynamically. We don't know how to do a one-year forecast of bandwidth, much less a three-year, which is what a lot of contracts are asking us for. So we said, hey, how about one day? Can you do one day? (Dave laughing) Because that's what our granularity is. So we allow for anything from one day up to three years right now, and then even within that term, we're dynamic. So if something happens, suddenly some product goes through the roof and you've suddenly got a spike in traffic. If a ship drags its anchor through a sub sea cable, and suddenly you're having to pivot, you just come into the platform, you click a couple of buttons, 20 seconds later, we've modified your bandwidth for you, or we've provisioned a new circuit for you. We've got your backup going whatever. Really at the end of the day, it's the customer paying for their network, so the customer should be the one making those decisions. >> How's that affect pricing? I presume, so I can have one date or a three-year term. Presume if I commit to three years, I get a better deal, is that right or? >> You do, but I mean, at the end of the day, it's actually pretty much a moderate, a better deal. We don't want to force the hand of the customer. So yeah, if you signed a 12 month contract with us, we're going to give you a 3% discount. >> Yeah, so it's not really, that's not a motivation to do it. Is just you want to reduce the transaction complexity. And that's why you would sign up for a longer term not to get the big discount. >> Correct. And then, like I said, even within a longer contract, we're still going to allow you to flex and flow and modify if you need to because it's your network. >> What kind of constraints do you put on that? Do I have to commit to a floor and then everything above that is I can flex up? Is that how it works? Okay. And then the more I commit to the better the deal is, or not necessarily? >> No, it's pretty much flat, right. >> So, okay. So I'm going to come in and I'm going to say, all right, I know I'm going to use X, I'll sign up for that and anything over it. You're pretty flexible, I might get a few points if I sign up for more, somebody might want to optimize that if they're big enough. >> And another really neat advantage, and the other complaint we heard from customers, they go, I need three different direct connect, or I need to be connected to three different parties, but I don't want to run three different cross-connects and I don't want to have three different ports. That's just an expense I don't want. And we say, fine, take your one gig port, run one gig of services on it, if that's 20 different services, we're fine. So we allow you to multiplex your port and provision- >> It's awesome. I love that model. I know some software companies who I would recommend take a look at that pricing model. So, Garrett, how do you segment the ecosystem? How do you look at that way? Maybe you could draw paint a picture sort of the, the ideal partners and what they look like. I know there's not just one category, but. >> Sure, so our ideal partners are internet exchanges, cloud partners, and SAS providers, because a big piece of our business is migration to the cloud. And the flexibility of our platform allows and encourages our SAS providers and SI partners to perform migration to the cloud much easier and flexible in a flexible format for their customers. >> Yeah, so what can you tell us, any kind of metrics you can give us around your business to give a sense of the the scope, the scale. >> Well, of our business, kind of one of the driving factors here, Gardner says that about 2023, I think 40% of the enterprise workloads will be deployed in the cloud, which is all fine and dandy, except in my head, you're just trading one set of complexities for another. So now, instead of having everything in a glass house and being able to kind of understand that now you're going, well, okay, so it's in the cloud now I need to manage my connectivity there. And, oh, well, wait a minute, are my security policies still the same? Do they apply if I'm going across the public internet? What exposure have I just, bought into myself to try to run this? So the platform really aims at normalizing that as much as possible. If you're directly connected to AWS, at the end of the day, that's a really long ethernet cable. So you're a glass house just got a lot bigger, but you're still able to maintain and use the exact same policies and procedures that you've been using. So that's really one of our guiding principles is to reduce that complexity and make it very simple for the user. >> Well, I don't understand, 'cause in the early days of cloud, a lot of enterprises, CIO they were concerned about security. And I think they realized that AWS has pretty good security, well, CIA is using it. But still people would say to me, it's not that it's bad security, it's just different. We move slow, Dave. So how do you accommodate, now I don't know, does that diversity, I mean, AWS has obviously matured, but are you suggesting that you can take my security edicts in my glass house and bring those into your networks and ultimately into the cloud? Is that kind of how it works? >> That's the goal. It's not going to be a panacea more than likely, but the more edicts that we can allow you to bring across and not have to go back and revamp and the better for you as a customer and the better really for us, because it normalizes things, it makes it much easier for us to accommodate more and more users. >> It is such now in the eco, it was all the diversity in the ecosystem. Is it such that there's enough common patterns that you you guys can kind of accommodate most of those use cases? >> Yeah, absolutely. I think the, one of the key components is the fact that the platform runs on our MPLS network, which is inherently secure. It's not on the public internet anywhere. Now we do have internet on demand capability. So in the event that a customer wants access to the internet, no problem, we can accommodate this. And we also have 5G capability built into the platform to allow flexibility of location and flexibility of... I would say, standing up new customer locations. And then the other component of the security is the fact that the customers can bring their own security and apply anywhere. So we're not blocking, we don't have any port filters or anything of this nature. >> Well, I would think 5G actually, I mean, I could see people arguing both sides, but my sense is 5G is going to be a huge driver for your business, 'cause it's going to just create so much more demand for your services I think, I could see somebody arguing the counter, but what's your point of view on that? >> No. I think that's a fair assessment. I think it's going to drive business for everyone here on the show floor. And it's pushing those workloads more toward the edge, which is not an area that people were typically concerned with. The edge was just the door that they walked through. That's becoming much different now. And we're also going to start seeing, and we're already seeing it, huge trends of moving that data at the edge, rather than bringing it all the way back to a central warehouse in Hare pending it. So, again, the ability to have a dynamic platform where you can see exactly what your network's doing and in the push of a button, modify that, or provision new connectivity in response to how your business is performing. >> Yeah, and ultimately it's all about the applications that are going to be driving demand for more data. And that's just a tailwind for you guys. >> Yeah, yeah and then you look at some of the car companies are coming on, you know, Tesla, you're driving around with like eight CPU's in that thing, communicating back over the air. >> Dave: Yeah right. >> You start scaling that, and you start getting into some real bottleneck. >> Amazing business you guys having, obviously capital intensive, but once you get in there, you've got a big moat, and then it's a matter of getting on a flywheel and innovating. Guys, congratulations on all the progress and thanks so much for coming on theCube. >> Yeah. No, thanks for the time. >> Thank you very much. >> Yeah, great to meet you guys. Good luck. All right. Thank you for watching. This is Dave Vellante for theCube, the leader in high-tech coverage, right back. (upbeat music)

from the cube studios in palo alto in boston bringing you data driven insights from the cube and etr this is breaking analysis with dave vellante semiconductors are the heart of technology innovation for decades technology improvements have marched the cadence of silicon advancements in performance cost power and packaging in the past 10 years the dynamics of the semiconductor industry have changed dramatically soaring factory costs device volume explosions fabulous chip companies greater programmability compressed time to tape out a lot more software content the looming presence of china these and other factors have changed the power structure of the semiconductor business chips today power every aspect of our lives and have led to a global semiconductor shortage that's been well covered but we've never seen anything like it before we believe silicon's success in the next 20 years will be determined by volume manufacturing capabilities design innovation public policy geopolitical dynamics visionary leadership and innovative business models that can survive the intense competition in one of the most challenging businesses in the world hello and welcome to this week's wikibon cube insights powered by etr in this breaking analysis it's our pleasure to welcome daniel newman in one of the leading analysts in the technology business and founder of futurum research daniel welcome to the program thanks so much dave great to see you thanks for having me big topic yeah i'll say i'm really looking forward to this and so here's some of the topics that we want to cover today if we have time changes in the semiconductor industry i've said they've been dramatic the shift to nofap companies we're going to talk about volume manufacturing those shifts that have occurred largely due to the arm model we want to cover intel and dig into that and what it has to do to to survive and thrive these changes and then we want to take a look at how alternative processors are impacting the world people talk about is moore's law dead is it alive and well daniel you have strong perspectives on all of this including nvidia love to get your thoughts on on that plus talk about the looming china threat as i mentioned in in the intro but daniel before we get into it do these topics they sound okay how do you see the state of the semiconductor industry today where have we come from where are we and where are we going at the macro level there are a lot of different narratives that are streaming alongside and they're not running in parallel so much as they're running and converging towards one another but it gradually different uh you know degrees so the last two years has welcomed a semiconductor conversation that we really hadn't had and that was supply chain driven the covid19 pandemic brought pretty much unprecedented desire demand thirst or products that are powered by semiconductors and it wasn't until we started running out of laptops of vehicles of servers that the whole world kind of put the semiconductor in focus again like it was just one of those things dave that we as a society it's sort of taken for granted like if you need a laptop you go buy a laptop if you needed a vehicle there'd always be one on the lot um but as we've seen kind of this exponentialism that's taken place throughout the pandemic what we ended up realizing is that semiconductors are eating the world and in fact the next industrial the entire industrial itself the complex is powered by semiconductor technology so everything we we do and we want to do right you went from a vehicle that might have had 50 or 100 worth of semiconductors on a few different parts to one that might have 700 800 different chips in it thousands of dollars worth of semi of semiconductors so you know across the board though yes you're dealing with the dynamics of the shortage you're dealing with the dynamics of innovation you're dealing with moore's law and sort of coming to the end which is leading to new process we're dealing with the foundry versus fab versus invention and product development uh situation so there's so many different concurrent semiconductor narratives that are going on dave and we can talk about any of them and all of them and i'm sure as we do we'll overlap all these different themes you know maybe you can solve this mystery for me there's this this this chip shortage and you can't invent vehicle inventory is so tight but yet when you listen to uh the the ads if the the auto manufacturers are pounding the advertising maybe they're afraid of tesla they don't want to lose their brand awareness but anyway so listen it's by the way a background i want to get a little bit academic here but but bear with me i want to introduce actually reintroduce the concept of wright's law to our audience we know we all know about moore's law but the earlier instantiation actually comes from theodore wright t.p wright he was this engineer in the airplane industry and the math is a little bit abstract to apply but roughly translated says as the cumulative number of units produced doubles your cost per unit declines by a fixed percentage now in airplanes that was around 15 percent in semiconductors we think that numbers more like 20 25 when you add the performance improvements you get from silicon advancements it translates into something like 33 percent cost cost declines when you can double your cumulative volume so that's very important because it confers strategic advantage to the company with the largest volume so it's a learning curve dynamic and it's like andy jassy says daniel there's no compression algorithm for experience and it definitely applies here so if you apply wright's law to what's happening in the industry today we think we can get a better understanding of for instance why tsmc is dominating and why intel is struggling any quick thoughts on that well you have to take every formula like that in any sort of standard mathematics and kind of throw it out the window when you're dealing with the economic situation we are right now i'm not i'm not actually throwing it out the window but what i'm saying is that when supply and demand get out of whack some of those laws become a little bit um more difficult to sustain over the long term what i will say about that is we have certainly seen this found um this fabulous model explode over the last few years you're seeing companies that can focus on software frameworks and innovation that aren't necessarily getting caught up in dealing with the large capital expenditures and overhead the ability to as you suggested in the topics here partner with a company like arm that's developing innovation and then and then um you know offering it uh to everybody right and for a licensee and then they can quickly build we're seeing what that's doing with companies like aws that are saying we're going to just build it alibaba we're just going to build it these aren't chip makers these aren't companies that were even considered chip makers they are now today competing as chip makers so there's a lot of different dynamics going back to your comment about wright's law like i said as we normalize and we figure out this situation on a global scale um i do believe that the who can manufacture the most will certainly continue to have significant competitive advantages yeah no so that's a really interesting point that you're bringing up because one of the things that it leads me to think is that the chip shortage could actually benefit intel i think will benefit intel so i want to introduce this some other data and then get your thoughts on this very simply the chart on the left shows pc shipments which peaked in in 2011 and then began at steady decline until covid and they've the pcs as we know have popped up in terms of volume in the past year and looks like they'll be up again this year the chart on the right is cumulative arm shipments and so as we've reported we think arm wafer volumes are 10x those of x86 volumes and and as such the arm ecosystem has far better cost structure than intel and that's why pat gelsinger was called in to sort of save the day so so daniel i just kind of again opened up this this can of worms but i think you're saying long term volume is going to be critical that's going to confer low cost advantages but in the in in the near to mid-term intel could actually benefit from uh from this chip shortage well intel is the opportunity to position itself as a leader in solving the repatriation crisis uh this will kind of carry over when we talk more about china and taiwan and that relationship and what's going on there we've really identified a massive gap in our uh in america supply chain in the global supply chain because we went from i don't have the stat off hand but i have a rough number dave and we can validate this later but i think it was in like the 30-ish high 30ish percentile of manufacturing of chips were done here in the united states around 1990 and now we're sub 10 as of 2020. so we we offshored almost all of our production and so when we hit this crisis and we needed more manufacturing volume we didn't have it ready part of the problem is you get people like elon musk that come out and make comments to the media like oh it'll be fixed later this year well you can't build a fab in a year you can't build a fab and start producing volume and the other problem is not all chips are the same so not every fab can produce every chip and when you do have fabs that are capable of producing multiple chips it costs millions of dollars to change the hardware and to actually change the process so it's not like oh we're going to build 28 today because that's what ford needs to get all those f-150s out of the lot and tomorrow we're going to pump out more sevens for you know a bunch of hp pcs it's a major overhaul every time you want to retool so there's a lot of complexity here but intel is the one domestic company us-based that has basically raised its hand and said we're going to put major dollars into this and by the way dave the arm chart you showed me could have a very big implication as to why intel wants to do that yeah so right because that's that's a big part of of foundry right is is get those volumes up so i want to hold that thought because i just want to introduce one more data point because one of the things we often talk about is the way in which alternative processors have exploded onto the scene and this chart here if you could bring that up patrick thank you shows the way in which i think you're pointing out intel is responding uh by leveraging alternative fat but once again you know kind of getting getting serious about manufacturing chips what the chart shows is the performance curve it's on a log scale for in the blue line is x86 and the orange line is apple's a series and we're using that as a proxy for sort of the curve that arm is on and it's in its performance over time culminating in the a15 and it measures trillions of operations per second so if you take the traditional x86 curve of doubling every 18 to 24 months that comes out roughly to about 40 percent improvement per year in performance and that's diminishing as we all know to around 30 percent a year because the moore's law is waning the orange line is powered by arm and it's growing at over a hundred percent really 110 per year when you do the math and that's when you combine the cpu the the the neural processing unit the the the xpu the dsps the accelerators et cetera so we're seeing apple use arm aws to you to your point is building chips on on graviton and and and tesla's using our list is long and this is one reason why so daniel this curve is it feels like it's the new performance curve in the industry yeah we are certainly in an era where companies are able to take control of the innovation curve using the development using the open ecosystem of arm having more direct control and price control and of course part of that massive arm number has to do with you know mobile devices and iot and devices that have huge scale but at the same time a lot of companies have made the decision either to move some portion of their product development on arm or to move entirely on arm part of why it was so attractive to nvidia part of the reason that it's under so much scrutiny that that deal um whether that deal will end up getting completed dave but we are seeing an era where we want we i said lust for power i talked about lust for semiconductors our lust for our technology to do more uh whether that's software-defined vehicles whether that's the smartphones we keep in our pocket or the desktop computer we use we want these machines to be as powerful and fast and responsive and scalable as possible if you can get 100 where you can get 30 improvement with each year and generation what is the consumer going to want so i think companies are as normal following the demand of consumers and what's available and at the same time there's some economic benefits they're they're able to realize as well i i don't want to i don't want to go too deep into nvidia arm but what do you handicap that that the chances that that acquisition actually happens oh boy um right now there's a lot of reasons it should happen but there are some reasons that it shouldn't i still kind of consider it a coin toss at this point because fundamentally speaking um you know it should create more competition but there are some people out there that believe it could cause less and so i think this is going to be hung up with regulators a little bit longer than we thought we've already sort of had some previews into that dave with the extensions and some of the timelines that have already been given um i know that was a safe answer and i will take credit for being safe this one's going to be a hard one to call but it certainly makes nvidia an amazing uh it gives amazing prospects to nvidia if they're able to get this deal done yeah i i agree with you i think it's 50 50. okay my i want to pose the question is intel too strategic to fail in march of this year we published this article where we posed that question uh you and i both know pat pretty well we talked about at the time the multi-front war intel is waging in a war with amd the arm ecosystem tsmc the design firms china and we looked at the company's moves which seemed to be right from a strategy standpoint the looking at the potential impact of the u.s government intel's partnership with ibm and what that might portend the us government has a huge incentive to make sure intel wins with onshore manufacturing and that looming threat from china but daniel is intel too strategic to fail and is pat gelsinger making the right moves well first of all i do believe at this current juncture where the semiconductor and supply chain shortage and crisis still looms that intel is too strategic to fail i also believe that intel's demise is somewhat overstated not to say intel doesn't have a slate of challenges that it's going to need to address long term just with the technology adoption curve that you showed being one of them dave but you have to remember the company still has nearly 90 of the server cpu market it still has a significant market share in client and pc it is seeing market share erosion but it's not happened nearly as fast as some people had suggested it would happen with right now with the demand in place and as high as it is intel is selling chips just about as quickly as it can make them and so we right now are sort of seeing the tam as a whole the demand as a whole continue to expand and so intel is fulfilling that need but where are they really too strategic to fail i mean we've seen in certain markets in certain uh process in um you know client for instance where amd has gained of course that's still x86 we've seen uh where the m1 was kind of initially thought to be potentially a pro product that would take some time it didn't take nearly as long for them to get that product in good shape um but the foundry and fab side is where i think intel really has a chance to flourish right now one it can play in the arm space it can build these facilities to be able to produce and help support the production of volumes of chips using arm designs so that actually gives intel and inroads two is it's the company that has made the most outspoken commitment to invest in the manufacturing needs of the united states both here in the united states and in other places across the world where we have friendly ally relationships and need more production capabilities if not in intel b and there is no other logical company that's us-based that's going to meet the regulator and policymakers requirements right now that is also raising their hand and saying we have the know-how we've been doing this we can do more of this and so i think pat is leaning into the right area and i think what will happen is very likely intel will support manufacturing of chips by companies like qualcomm companies like nvidia and if they're able to do that some of the market share losses that they're potentially facing with innovation challenges um and engineering challenges could be offset with growth in their fab and foundry businesses and i think i think pat identified it i think he's going to market with it and you know convincing the street that's going to be a whole nother thing that this is exciting um but i think as the street sees the opportunity here this is an area that intel can really lean into so i think i i think people generally would recognize at least the folks i talk to and it'll be interested in your thoughts who really know this business that intel you know had the best manufacturing process in in the world obviously that's coming to question but but but but for instance people say well intel's 10 nanometer you know is comparable to tsm seven nanometer and that's sort of overstated their their nanometer you know loss but but so so they they were able to point as they were able to sort of hide some of the issues maybe in design with great process and and i i believe that comes down to volume so the question i have then is and i think so i think patrick's pat is doing the right thing because he's going after volume and that's what foundry brings but can he get enough volume or does he need for inst for instance i mean one of the theories i've put out there is that apple could could save the day for intel if the if the us government gets apple in a headlock and says hey we'll back off on break up big tech but you got to give pat some of your foundry volume that puts him on a steeper learning curve do you do you worry sometimes though daniel that intel just even with like qualcomm and broadcom who by the way are competitors of theirs and don't necessarily love them but even even so if they could get that those wins that they still won't have the volume to compete on a cost basis or do you feel like even if they're numbered a number three even behind samsung it's good enough what are your thoughts on that well i don't believe a company like intel goes into a business full steam and they're not new to this business but the obvious volume and expansion that they're looking at with the intention of being number two or three these great companies and you know that's same thing i always say with google cloud google's not out to be the third cloud they're out to be one well that's intel will want to to be stronger if the us government and these investments that it's looking at making this 50 plus billion dollars is looking to pour into this particular space which i don't think is actually enough but if if the government makes these commitments and intel being likely one of the recipients of at least some of these dollars to help expedite this process move forward with building these facilities to make increased manufacturing very likely there's going to be some precedent of law a policy that is going to be put in place to make sure that a certain amount of the volume is done here stateside with companies this is a strategic imperative this is a government strategic imperative this is a putting the country at risk of losing its technology leadership if we cannot manufacture and control this process of innovation so i think intel is going to have that as a benefit that the government is going to most likely require some of this manufacturing to take place here um especially if this investment is made the last thing they're going to want to do is build a bunch of foundries and build a bunch of fabs and end up having them not at capacity especially when the world has seen how much of the manufacturing is now being done in taiwan so i think we're concluding and i i i correctly if i'm wrong but intel is too strategic to fail and and i i sometimes worry they can go bankrupt you know trying to compete with the likes of tsmc and that's why the the the public policy and the in the in the partnership with the u.s government and the eu is i think so important yeah i don't think bankruptcy is an immediate issue i think um but while i follow your train of thought dave i think what you're really looking at more is can the company grow and continue to get support where i worry about is shareholders getting exhausted with intel's the merry-go-round of not growing fast enough not gaining market share not being clearly identified as a leader in any particular process or technology and sort of just playing the role of the incumbent and they the company needs to whether it's in ai whether it's at the edge whether it's in the communications and service provider space intel is doing well you look at their quarterly numbers they're making money but if you had to say where are they leading right now what what which thing is intel really winning uh consistently at you know you look at like ai and ml and people will point to nvidia you look at you know innovation for um client you know and even amd has been super disruptive and difficult for intel uh of course you we've already talked about in like mobile um how impactful arm has been and arm is also playing a pretty big role in servers so like i said the market share and the technology leadership are a little out of skew right now and i think that's where pat's really working hard is identifying the opportunities for for intel to play market leader and technology leader again and for the market to clearly say yes um fab and foundry you know could this be an area where intel becomes the clear leader domestically and i think that the answer is definitely yes because none of the big chipmakers in the us are are doing fabrication you know they're they're all outsourcing it to overseas so if intel can really lead that here grow that large here then it takes some of the pressure off of the process and the innovation side and that's not to say that intel won't have to keep moving there but it does augment the revenue creates a new profit center and makes the company even more strategic here domestically yeah and global foundry tapped out of of sub 10 nanometer and that's why ibm's pseudonym hey wait a minute you had a commitment there the concern i have and this is where again your point is i think really important with the chip shortage you know to go from you know initial design to tape out took tesla and apple you know sub sub 24 months you know probably 18 months with intel we're on a three-year design to tape out cycle maybe even four years so they've got to compress that but that as you well know that's a really hard thing to do but the chip shortage is buying them time and i think that's a really important point that you brought out early in this segment so but the other big question daniel i want to test with you is well you mentioned this about seeing arm in the enterprise not a lot of people talk about that or have visibility on that but i think you're right on so will arm and nvidia be able to seriously penetrate the enterprise the server business in particular clearly jensen wants to be there now this data from etr lays out many of the enterprise players and we've superimposed the semiconductor giants in logos the data is an xy chart it shows net score that's etr's measure of spending momentum on the vertical axis and market share on the horizontal axis market share is not like idc market share its presence in the data set and as we reported before aws is leading the charge in enterprise architecture as daniel mentioned they're they're designing their own chips nitro and graviton microsoft is following suit as is google vmware has project monterey cisco is on the chart dell hp ibm with red hat are also shown and we've superimposed intel nvidia china and arm and now we can debate the position of the logos but we know that one intel has a dominant position in the data center it's got to protect that business it cannot lose ground as it has in pcs because the margin pressure it would face two we know aws with its annapurna acquisition is trying to control its own destiny three we know vmware has project monterey and is following aws's lead to support these new workloads beyond x86 general purpose they got partnerships with pansando and arm and others and four we know cisco they've got chip design chops as does hpe maybe to a lesser extent and of course we know ibm has excellent semiconductor design expertise especially when it comes to things like memory disaggregation as i said jensen's going hard after the data center you know him well daniel we know china wants to control its own destiny and then there's arm it dominates mobile as you pointed out in iot can it make a play for the data center daniel how do you see this picture and what are your thoughts on the future of enterprise in the context of semiconductor competition it's going to take some time i believe but some of the investments and products that have been brought to market and you mentioned that shorter tape out period that shorter period for innovation whether it's you know the graviton uh you know on aws or the aiml chips that uh with trainium and inferentia how quickly aws was able to you know develop build deploy to market an arm-based solution that is being well received and becoming an increasing component of the services and and uh products that are being offered from aws at this point it's still pretty small and i would i would suggest that nvidia and arm in the spirit of trying to get this deal done probably don't necess don't want the enterprise opportunity to be overly inflated as to how quickly the company's going to be able to play in that space because that would somewhat maybe slow or bring up some caution flags that of the regulators that are that are monitoring this at the same time you could argue that arm offering additional options in competition much like it's doing in client will offer new form factors new designs um new uh you know new skus the oems will be able to create more customized uh hardware offerings that might be able to be unique for certain enterprises industries can put more focus you know we're seeing the disaggregation with dpus and how that technology using arm with what aws is doing with nitro but what what these different companies are doing to use you know semiconductor technology to split out security networking and storage and so you start to see design innovation could become very interesting on the foundation of arm so in time i certainly see momentum right now the thing is is most companies in the enterprise are looking for something that's fairly well baked off the shelf that can meet their needs whether it's sap or whether it's you know running different custom applications that the business is built on top of commerce solutions and so intel meets most of those needs and so arm has made a lot of sense for instance with these cloud scale providers but not necessarily as much sense for enterprises especially those that don't want to necessarily look at refactoring all the workloads but as software becomes simpler as refactoring becomes easier to do between different uh different technologies and processes you start to say well arm could be compelling and you know because the the bottom line is we know this from mobile devices is most of us don't care what the processor is the average person the average data you know they look at many of these companies the same in enterprise it's always mattered um kind of like in the pc world it used to really matter that's where intel inside was born but as we continue to grow up and you see these different processes these different companies nvidia amd intel all seen as very worthy companies with very capable technologies in the data center if they can offer economics if they can offer performance if they can offer faster time to value people will look at them so i'd say in time dave the answer is arm will certainly become more and more competitive in the data center like it was able to do at the edge in immobile yeah one of the things that we've talked about is that you know the software-defined data center is awesome but it also created a lot of wasted overhead in terms of offloading storage and and networking security and that much of that is being done with general purpose x86 processors which are more expensive than than for instance using um if you look at what as you mentioned great summary of what aws is doing with graviton and trainium and other other tooling what ampere is doing um in in in oracle and you're seeing both of those companies for example particularly aws get isvs to write so they can run general purpose applications on um on arm-based processors as well it sets up well for ai inferencing at the edge which we know arms dominating the edge we see all these new types of workloads coming into the data center if you look at what companies like nebulon and pensando and and others are doing uh you're seeing a lot of their offloads are going to arm they're putting arm in even though they're still using x86 in a lot of cases but but but they're offloading to arm so it seems like they're coming into the back door i understand your point actually about they don't want to overplay their hand there especially during these negotiations but we think that that long term you know it bears watching but intel they have such a strong presence they got a super strong ecosystem and they really have great relationships with a lot of the the enterprise players and they have influence over them so they're going to use that the the the chip shortage benefits them the uh the relationship with the us government pat is spending a lot of time you know working that so it's really going to be interesting to see how this plays out daniel i want to give you the last word your final thoughts on what we talked about today and where you see this all headed i think the world benefits as a whole with more competition and more innovation pressure i like to see more players coming into the fray i think we've seen intel react over the last year under pat gelsinger's leadership we've seen the technology innovation the angstrom era the 20a we're starting to see what that roadmap is going to look like we've certainly seen how companies like nvidia can disrupt come into market and not just using hardware but using software to play a major role but as a whole as innovation continues to take form at scale we all benefit it means more intelligent software-defined vehicles it puts phones in our hands that are more powerful it gives power to you know cities governments and enterprises that can build applications and tools that give us social networks and give us data-driven experiences so i'm very bullish and optimistic on as a whole i said this before i say it again i believe semiconductors will eat the world and then you know you look at the we didn't even really talk about the companies um you know whether it's in ai uh like you know grok or grav core there are some very cool companies building things you've got qualcomm bought nuvia another company that could you know come out of the blue and offer us new innovations in mobile and personal computing i mean there's so many cool companies dave with the scale of data the uh the the growth and demand and desire for connectivity in the world um it's never been a more interesting time to be a fan of technology the only thing i will say as a whole as a society as i hope we can fix this problem because it does create risks the supply chain inflation the economics all that stuff ties together and a lot of people don't see that but if we can't get this manufacturing issue under control we didn't really talk about china dave and i'll just say taiwan and china are very physically close together and the way that china sees taiwan and the way we see taiwan is completely different we have very little control over what can happen we've all seen what's happened with hong kong so there's just so many as i said when i started this conversation we've got all these trains on the track they're all moving but they're not in parallel these tracks are all converging but the convergence isn't perpendicular so sometimes we don't see how all these things interrelate but as a whole it's a very exciting time love being in technology and uh love having the chance to come out here and talk with you i love the optimism and you're right uh that competition in china that's going to come from china as well xi has made it a part of his legacy i think to you know re-incorporate taiwan that's going to be interesting to see i mean taiwan ebbs and flows with regard to you know its leadership sometimes they're more pro i guess i should say less anti-china maybe that's the better way to say it uh and and and you know china's putting in big fab capacity for nand you know maybe maybe people look at that you know some of that is the low end of the market but you know clay christensen would say well to go take a look at the steel industry and see what happened there so so we didn't talk much about china and that was my oversight but but they're after self-sufficiency it's not like they haven't tried before kind of like intel has tried foundry before but i think they're really going for it this time but but now what are your do you believe that china will be able to get self-sufficiency let's say within the next 10 to 15 years with semiconductors yes i would never count china out of anything if they put their mind to it if it's something that they want to put absolute focus on i think um right now china vacillates between wanting to be a good player and a good steward to the world and wanting to completely run its own show the the politicization of what's going on over there we all saw what happened in the real estate market this past week we saw what happened with tech ed over the last few months we've seen what's happened with uh innovation and entrepreneurship it is not entirely clear if china wants to give the more capitalistic and innovation ecosystem a full try but it is certainly shown that it wants to be seen as a world leader over the last few decades it's accomplished that in almost any area that it wants to compete dave i would say if this is one of gigi ping's primary focuses wanting to do this it would be very irresponsible to rule it out as a possibility daniel i gotta tell you i i love collaborating with you um we met face to face just recently and i hope we could do this again i'd love to have you you back on on the program thanks so much for your your time and insights today thanks for having me dave so daniel's website futuram research that's three use in futurum uh check that out for termresearch.com uh the the this individual is really plugged in he's forward thinking and and a great resource at daniel newman uv is his twitter so go follow him for some great stuff and remember these episodes are all available as podcasts wherever you listen all you do is search for breaking analysis podcast we publish each week on wikibon.com and siliconangle.com and by the way daniel thank you for contributing your your quotes to siliconangle the writers there love you uh you can always connect on twitter i'm at divalanto you can email me at david.velante at siliconangle.com appreciate the comments on linkedin and don't forget to check out etr.plus for all the survey data this is dave vellante for the cube insights powered by etr be well and we'll see you next time you

>> From theCUBE studios in Palo Alto, in Boston bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante >> The latest Arm Neoverse announcement further cements our opinion that it's architecture business model and ecosystem execution are defining a new era of computing and leaving Intel in it's dust. We believe the company and its partners have at least a two year lead on Intel and are currently in a far better position to capitalize on a major waves that are driving the technology industry and its innovation. To compete our view is that Intel needs a new strategy. Now, Pat Gelsinger is bringing that but they also need financial support from the US and the EU governments. Pat Gelsinger was just noted as asking or requesting from the EU government $9 billion, sorry, 8 billion euros in financial support. And very importantly, Intel needs a volume for its new Foundry business. And that is where Apple could be a key. Hello, everyone. And welcome to this week's weekly bond Cube insights powered by ETR. In this breaking analysis will explain why Apple could be the key to saving Intel and America's semiconductor industry leadership. We'll also further explore our scenario of the evolution of computing and what will happen to Intel if it can't catch up. Here's a hint it's not pretty. Let's start by looking at some of the key assumptions that we've made that are informing our scenarios. We've pointed out many times that we believe Arm wafer volumes are approaching 10 times those of x86 wafers. This means that manufacturers of Arm chips have a significant cost advantage over Intel. We've covered that extensively, but we repeat it because when we see news reports and analysis and print it's not a factor that anybody's highlighting. And this is probably the most important issue that Intel faces. And it's why we feel that Apple could be Intel's savior. We'll come back to that. We've projected that the chip shortage will last no less than three years, perhaps even longer. As we reported in a recent breaking analysis. Well, Moore's law is waning. The result of Moore's law, I.e the doubling of processor performance every 18 to 24 months is actually accelerating. We've observed and continue to project a quadrupling of performance every two years, breaking historical norms. Arm is attacking the enterprise and the data center. We see hyperscalers as the tip of their entry spear. AWS's graviton chip is the best example. Amazon and other cloud vendors that have engineering and software capabilities are making Arm-based chips capable of running general purpose applications. This is a huge threat to x86. And if Intel doesn't quickly we believe Arm will gain a 50% share of an enterprise semiconductor spend by 2030. We see the definition of Cloud expanding. Cloud is no longer a remote set of services, in the cloud, rather it's expanding to the edge where the edge could be a data center, a data closet, or a true edge device or system. And Arm is by far in our view in the best position to support the new workloads and computing models that are emerging as a result. Finally geopolitical forces are at play here. We believe the U S government will do, or at least should do everything possible to ensure that Intel and the U S chip industry regain its leadership position in the semiconductor business. If they don't the U S and Intel could fade to irrelevance. Let's look at this last point and make some comments on that. Here's a map of the South China sea in a way off in the Pacific we've superimposed a little pie chart. And we asked ourselves if you had a hundred points of strategic value to allocate, how much would you put in the semiconductor manufacturing bucket and how much would go to design? And our conclusion was 50, 50. Now it used to be because of Intel's dominance with x86 and its volume that the United States was number one in both strategic areas. But today that orange slice of the pie is dominated by TSMC. Thanks to Arm volumes. Now we've reported extensively on this and we don't want to dwell on it for too long but on all accounts cost, technology, volume. TSMC is the clear leader here. China's president Xi has a stated goal of unifying Taiwan by China's Centennial in 2049, will this tiny Island nation which dominates a critical part of the strategic semiconductor pie, go the way of Hong Kong and be subsumed into China. Well, military experts say it was very hard for China to take Taiwan by force, without heavy losses and some serious international repercussions. The US's military presence in the Philippines and Okinawa and Guam combined with support from Japan and South Korea would make it even more difficult. And certainly the Taiwanese people you would think would prefer their independence. But Taiwanese leadership, it ebbs and flows between those hardliners who really want to separate and want independence and those that are more sympathetic to China. Could China for example, use cyber warfare to over time control the narrative in Taiwan. Remember if you control the narrative you can control the meme. If you can crawl the meme you control the idea. If you control the idea, you control the belief system. And if you control the belief system you control the population without firing a shot. So is it possible that over the next 25 years China could weaponize propaganda and social media to reach its objectives with Taiwan? Maybe it's a long shot but if you're a senior strategist in the U S government would you want to leave that to chance? We don't think so. Let's park that for now and double click on one of our key findings. And that is the pace of semiconductor performance gains. As we first reported a few weeks ago. Well, Moore's law is moderating the outlook for cheap dense and efficient processing power has never been better. This slideshows two simple log lines. One is the traditional Moore's law curve. That's the one at the bottom. And the other is the current pace of system performance improvement that we're seeing measured in trillions of operations per second. Now, if you calculate the historical annual rate of processor performance improvement that we saw with x86, the math comes out to around 40% improvement per year. Now that rate is slowing. It's now down to around 30% annually. So we're not quite doubling every 24 months anymore with x86 and that's why people say Moore's law is dead. But if you look at the (indistinct) effects of packaging CPU's, GPU's, NPUs accelerators, DSPs and all the alternative processing power you can find in SOC system on chip and eventually system on package it's growing at more than a hundred percent per annum. And this means that the processing power is now quadrupling every 24 months. That's impressive. And the reason we're here is Arm. Arm has redefined the core process of model for a new era of computing. Arm made an announcement last week which really recycle some old content from last September, but it also put forth new proof points on adoption and performance. Arm laid out three components and its announcement. The first was Neoverse version one which is all about extending vector performance. This is critical for high performance computing HPC which at one point you thought that was a niche but it is the AI platform. AI workloads are not a niche. Second Arm announced the Neoverse and two platform based on the recently introduced Arm V9. We talked about that a lot in one of our earlier Breaking Analysis. This is going to performance boost of around 40%. Now the third was, it was called CMN-700 Arm maybe needs to work on some of its names, but Arm said this is the industry's most advanced mesh interconnect. This is the glue for the V1 and the N2 platforms. The importance is it allows for more efficient use and sharing of memory resources across components of the system package. We talked about this extensively in previous episodes the importance of that capability. Now let's share with you this wheel diagram underscores the completeness of the Arm platform. Arms approach is to enable flexibility across an open ecosystem, allowing for value add at many levels. Arm has built the architecture in design and allows an open ecosystem to provide the value added software. Now, very importantly, Arm has created the standards and specifications by which they can with certainty, certify that the Foundry can make the chips to a high quality standard, and importantly that all the applications are going to run properly. In other words, if you design an application, it will work across the ecosystem and maintain backwards compatibility with previous generations, like Intel has done for years but Arm as we'll see next is positioning not only for existing workloads but also the emerging high growth applications. To (indistinct) here's the Arm total available market as we see it, we think the end market spending value of just the chips going into these areas is $600 billion today. And it's going to grow to 1 trillion by 2030. In other words, we're allocating the value of the end market spend in these sectors to the marked up value of the Silicon as a percentage of the total spend. It's enormous. So the big areas are Hyperscale Clouds which we think is around 20% of this TAM and the HPC and AI workloads, which account for about 35% and the Edge will ultimately be the largest of all probably capturing 45%. And these are rough estimates and they'll ebb and flow and there's obviously some overlap but the bottom line is the market is huge and growing very rapidly. And you see that little red highlighted area that's enterprise IT. Traditional IT and that's the x86 market in context. So it's relatively small. What's happening is we're seeing a number of traditional IT vendors, packaging x86 boxes throwing them over the fence and saying, we're going after the Edge. And what they're doing is saying, okay the edge is this aggregation point for all these end point devices. We think the real opportunity at the Edge is for AI inferencing. That, that is where most of the activity and most of the spending is going to be. And we think Arm is going to dominate that market. And this brings up another challenge for Intel. So we've made the point a zillion times that PC volumes peaked in 2011. And we saw that as problematic for Intel for the cost reasons that we've beat into your head. And lo and behold PC volumes, they actually grew last year thanks to COVID and we'll continue to grow it seems for a year or so. Here's some ETR data that underscores that fact. This chart shows the net score. Remember that's spending momentum it's the breakdown for Dell's laptop business. The green means spending is accelerating and the red is decelerating. And the blue line is net score that spending momentum. And the trend is up and to the right now, as we've said this is great news for Dell and HP and Lenovo and Apple for its laptops, all the laptops sellers but it's not necessarily great news for Intel. Why? I mean, it's okay. But what it does is it shifts Intel's product mix toward lower margin, PC chips and it squeezes Intel's gross margins. So the CFO has to explain that margin contraction to wall street. Imagine that the business that got Intel to its monopoly status is growing faster than the high margin server business. And that's pulling margins down. So as we said, Intel is fighting a war on multiple fronts. It's battling AMD in the core x86 business both PCs and servers. It's watching Arm mop up in mobile. It's trying to figure out how to reinvent itself and change its culture to allow more flexibility into its designs. And it's spinning up a Foundry business to compete with TSMC. So it's got to fund all this while at the same time propping up at stock with buybacks Intel last summer announced that it was accelerating it's $10 billion stock buyback program, $10 billion. Buy stock back, or build a Foundry which do you think is more important for the future of Intel and the us semiconductor industry? So Intel, it's got to protect its past while building his future and placating wall street all at the same time. And here's where it gets even more dicey. Intel's got to protect its high-end x86 business. It is the cash cow and funds their operation. Who's Intel's biggest customer Dell, HP, Facebook, Google Amazon? Well, let's just say Amazon is a big customer. Can we agree on that? And we know AWS is biggest revenue generator is EC2. And EC2 was powered by microprocessors made from Intel and others. We found this slide in the Arm Neoverse deck and it caught our attention. The data comes from a data platform called lifter insights. The charts show, the rapid growth of AWS is graviton chips which are they're custom designed chips based on Arm of course. The blue is that graviton and the black vendor A presumably is Intel and the gray is assumed to be AMD. The eye popper is the 2020 pie chart. The instant deployments, nearly 50% are graviton. So if you're Pat Gelsinger, you better be all over AWS. You don't want to lose this customer and you're going to do everything in your power to keep them. But the trend is not your friend in this account. Now the story gets even gnarlier and here's the killer chart. It shows the ISV ecosystem platforms that run on graviton too, because AWS has such good engineering and controls its own stack. It can build Arm-based chips that run software designed to run on general purpose x86 systems. Yes, it's true. The ISV, they got to do some work, but large ISV they have a huge incentives because they want to ride the AWS wave. Certainly the user doesn't know or care but AWS cares because it's driving costs and energy consumption down and performance up. Lower cost, higher performance. Sounds like something Amazon wants to consistently deliver, right? And the ISV portfolio that runs on our base graviton and it's just going to continue to grow. And by the way, it's not just Amazon. It's Alibaba, it's Oracle, it's Marvell. It's 10 cents. The list keeps growing Arm, trotted out a number of names. And I would expect over time it's going to be Facebook and Google and Microsoft. If they're not, are you there? Now the last piece of the Arm architecture story that we want to share is the progress that they're making and compare that to x86. This chart shows how Arm is innovating and let's start with the first line under platform capabilities. Number of cores supported per die or, or system. Now die is what ends up as a chip on a small piece of Silicon. Think of the die as circuit diagram of the chip if you will, and these circuits they're fabricated on wafers using photo lithography. The wafers then cut up into many pieces each one, having a chip. Each of these pieces is the chip. And two chips make up a system. The key here is that Arm is quadrupling the number of cores instead of increasing thread counts. It's giving you cores. Cores are better than threads because threads are shared and cores are independent and much easier to virtualize. This is particularly important in situations where you want to be as efficient as possible sharing massive resources like the Cloud. Now, as you can see in the right hand side of the chart under the orange Arm is dramatically increasing the amount of capabilities compared to previous generations. And one of the other highlights to us is that last line that CCIX and CXL support again Arm maybe needs to name these better. These refer to Arms and memory sharing capabilities within and between processors. This allows CPU's GPU's NPS, et cetera to share resources very often efficiently especially compared to the way x86 works where everything is currently controlled by the x86 processor. CCIX and CXL support on the other hand will allow designers to program the system and share memory wherever they want within the system directly and not have to go through the overhead of a central processor, which owns the memory. So for example, if there's a CPU, GPU, NPU the CPU can say to the GPU, give me your results at a specified location and signal me when you're done. So when the GPU is finished calculating and sending the results, the GPU just signals the operation is complete. Versus having to ping the CPU constantly, which is overhead intensive. Now composability in that chart means the system it's a fixed. Rather you can programmatically change the characteristics of the system on the fly. For example, if the NPU is idle you can allocate more resources to other parts of the system. Now, Intel is doing this too in the future but we think Arm is way ahead. At least by two years this is also huge for Nvidia, which today relies on x86. A major problem for Nvidia has been coherent memory management because the utilization of its GPU is appallingly low and it can't be easily optimized. Last week, Nvidia announced it's intent to provide an AI capability for the data center without x86 I.e using Arm-based processors. So Nvidia another big Intel customer is also moving to Arm. And if it's successful acquiring Arm which is still a long shot this trend is only going to accelerate. But the bottom line is if Intel can't move fast enough to stem the momentum of Arm we believe Arm will capture 50% of the enterprise semiconductor spending by 2030. So how does Intel continue to lead? Well, it's not going to be easy. Remember we said, Intel, can't go it alone. And we posited that the company would have to initiate a joint venture structure. We propose a triumvirate of Intel, IBM with its power of 10 and memory aggregation and memory architecture And Samsung with its volume manufacturing expertise on the premise that it coveted in on US soil presence. Now upon further review we're not sure the Samsung is willing to give up and contribute its IP to this venture. It's put a lot of money and a lot of emphasis on infrastructure in South Korea. And furthermore, we're not convinced that Arvind Krishna who we believe ultimately made the call to Jettisons. Jettison IBM's micro electronics business wants to put his efforts back into manufacturing semi-conductors. So we have this conundrum. Intel is fighting AMD, which is already at seven nanometer. Intel has a fall behind in process manufacturing which is strategically important to the United States it's military and the nation's competitiveness. Intel's behind the curve on cost and architecture and is losing key customers in the most important market segments. And it's way behind on volume. The critical piece of the pie that nobody ever talks about. Intel must become more price and performance competitive with x86 and bring in new composable designs that maintain x86 competitive. And give the ability to allow customers and designers to add and customize GPU's, NPUs, accelerators et cetera. All while launching a successful Foundry business. So we think there's another possibility to this thought exercise. Apple is currently reliant on TSMC and is pushing them hard toward five nanometer, in fact sucking up a lot of that volume and TSMC is maybe not servicing some other customers as well as it's servicing Apple because it's a bit destructive, it is distracted and you have this chip shortage. So Apple because of its size gets the lion's share of the attention but Apple needs a trusted onshore supplier. Sure TSMC is adding manufacturing capacity in the US and Arizona. But back to our precarious scenario in the South China sea. Will the U S government and Apple sit back and hope for the best or will they hope for the best and plan for the worst? Let's face it. If China gains control of TSMC, it could block access to the latest and greatest process technology. Apple just announced that it's investing billions of dollars in semiconductor technology across the US. The US government is pressuring big tech. What about an Apple Intel joint venture? Apple brings the volume, it's Cloud, it's Cloud, sorry. It's money it's design leadership, all that to the table. And they could partner with Intel. It gives Intel the Foundry business and a guaranteed volume stream. And maybe the U S government gives Apple a little bit of breathing room and the whole big up big breakup, big tech narrative. And even though it's not necessarily specifically targeting Apple but maybe the US government needs to think twice before it attacks big tech and thinks about the long-term strategic ramifications. Wouldn't that be ironic? Apple dumps Intel in favor of Arm for the M1 and then incubates, and essentially saves Intel with a pipeline of Foundry business. Now back to IBM in this scenario, we've put a question mark on the slide because maybe IBM just gets in the way and why not? A nice clean partnership between Intel and Apple? Who knows? Maybe Gelsinger can even negotiate this without giving up any equity to Apple, but Apple could be a key ingredient to a cocktail of a new strategy under Pat Gelsinger leadership. Gobs of cash from the US and EU governments and volume from Apple. Wow, still a long shot, but one worth pursuing because as we've written, Intel is too strategic to fail. Okay, well, what do you think? You can DM me @dvellante or email me at david.vellante@siliconangle.com or comment on my LinkedIn post. 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. And I want to thank my colleague, David Floyer for his collaboration on this and other related episodes. This is Dave Vellante for theCUBE insights powered by ETR. Thanks for watching, be well, and we'll see you next time. (upbeat music)