(gentle music playing) >> For centuries, we've been captivated by the concept of machines doing the job of humans. And over the past decade or so, we've really focused on AI and the possibility of intelligent machines that can perform cognitive tasks. Now in the past few years, with the popularity of machine learning models ranging from recent ChatGPT to Bert, we're starting to see how AI is changing the way we interact with the world. How is AI transforming the way we do business? And what does the future hold for us there. At theCube, we've covered Oracle's AI and ML strategy for years, which has really been used to drive automation into Oracle's autonomous database. We've talked a lot about MySQL HeatWave in database machine learning, and AI pushed into Oracle's business apps. Oracle, it tends to lead in AI, but not competing as a direct AI player per se, but rather embedding AI and machine learning into its portfolio to enhance its existing products, and bring new services and offerings to the market. Now, last October at Cloud World in Las Vegas, Oracle partnered with Nvidia, which is the go-to AI silicon provider for vendors. And they announced an investment, a pretty significant investment to deploy tens of thousands more Nvidia GPUs to OCI, the Oracle Cloud Infrastructure and build out Oracle's infrastructure for enterprise scale AI. Now, Oracle CEO, Safra Catz said something to the effect of this alliance is going to help customers across industries from healthcare, manufacturing, telecoms, and financial services to overcome the multitude of challenges they face. Presumably she was talking about just driving more automation and more productivity. Now, to learn more about Oracle's plans for AI, we'd like to welcome in Elad Ziklik, who's the vice president of AI services at Oracle. Elad, great to see you. Welcome to the show. >> Thank you. Thanks for having me. >> You're very welcome. So first let's talk about Oracle's path to AI. I mean, it's the hottest topic going for years you've been incorporating machine learning into your products and services, you know, could you tell us what you've been working on, how you got here? >> So great question. So as you mentioned, I think most of the original four-way into AI was on embedding AI and using AI to make our applications, and databases better. So inside mySQL HeatWave, inside our autonomous database in power, we've been driving AI, all of course are SaaS apps. So Fusion, our large enterprise business suite for HR applications and CRM and ELP, and whatnot has built in AI inside it. Most recently, NetSuite, our small medium business SaaS suite started using AI for things like automated invoice processing and whatnot. And most recently, over the last, I would say two years, we've started exposing and bringing these capabilities into the broader OCI Oracle Cloud infrastructure. So the developers, and ISVs and customers can start using our AI capabilities to make their apps better and their experiences and business workflow better, and not just consume these as embedded inside Oracle. And this recent partnership that you mentioned with Nvidia is another step in bringing the best AI infrastructure capabilities into this platform so you can actually build any type of machine learning workflow or AI model that you want on Oracle Cloud. >> So when I look at the market, I see companies out there like DataRobot or C3 AI, there's maybe a half dozen that sort of pop up on my radar anyway. And my premise has always been that most customers, they don't want to become AI experts, they want to buy applications and have AI embedded or they want AI to manage their infrastructure. So my question to you is, how does Oracle help its OCI customers support their business with AI? >> So it's a great question. So I think what most customers want is business AI. They want AI that works for the business. They want AI that works for the enterprise. I call it the last mile of AI. And they want this thing to work. The majority of them don't want to hire a large and expensive data science teams to go and build everything from scratch. They just want the business problem solved by applying AI to it. My best analogy is Lego. So if you think of Lego, Lego has these millions Lego blocks that you can use to build anything that you want. But the majority of people like me or like my kids, they want the Lego death style kit or the Lego Eiffel Tower thing. They want a thing that just works, and it's very easy to use. And still Lego blocks, you still need to build some things together, which just works for the scenario that you're looking for. So that's our focus. Our focus is making it easy for customers to apply AI where they need to, in the right business context. So whether it's embedding it inside the business applications, like adding forecasting capabilities to your supply chain management or financial planning software, whether it's adding chat bots into the line of business applications, integrating these things into your analytics dashboard, even all the way to, we have a new platform piece we call ML applications that allows you to take a machine learning model, and scale it for the thousands of tenants that you would be. 'Cause this is a big problem for most of the ML use cases. It's very easy to build something for a proof of concept or a pilot or a demo. But then if you need to take this and then deploy it across your thousands of customers or your thousands of regions or facilities, then it becomes messy. So this is where we spend our time making it easy to take these things into production in the context of your business application or your business use case that you're interested in right now. >> So you mentioned chat bots, and I want to talk about ChatGPT, but my question here is different, we'll talk about that in a minute. So when you think about these chat bots, the ones that are conversational, my experience anyway is they're just meh, they're not that great. But the ones that actually work pretty well, they have a conditioned response. Now they're limited, but they say, which of the following is your problem? And then if that's one of the following is your problem, you can maybe solve your problem. But this is clearly a trend and it helps the line of business. How does Oracle think about these use cases for your customers? >> Yeah, so I think the key here is exactly what you said. It's about task completion. The general purpose bots are interesting, but as you said, like are still limited. They're getting much better, I'm sure we'll talk about ChatGPT. But I think what most enterprises want is around task completion. I want to automate my expense report processing. So today inside Oracle we have a chat bot where I submit my expenses the bot ask a couple of question, I answer them, and then I'm done. Like I don't need to go to our fancy application, and manually submit an expense report. I do this via Slack. And the key is around managing the right expectations of what this thing is capable of doing. Like, I have a story from I think five, six years ago when technology was much inferior than it is today. Well, one of the telco providers I was working with wanted to roll a chat bot that does realtime translation. So it was for a support center for of the call centers. And what they wanted do is, Hey, we have English speaking employees, whatever, 24/7, if somebody's calling, and the native tongue is different like Hebrew in my case, or Chinese or whatnot, then we'll give them a chat bot that they will interact with and will translate this on the fly and everything would work. And when they rolled it out, the feedback from customers was horrendous. Customers said, the technology sucks. It's not good. I hate it, I hate your company, I hate your support. And what they've done is they've changed the narrative. Instead of, you go to a support center, and you assume you're going to talk to a human, and instead you get a crappy chat bot, they're like, Hey, if you want to talk to a Hebrew speaking person, there's a four hour wait, please leave your phone and we'll call you back. Or you can try a new amazing Hebrew speaking AI powered bot and it may help your use case. Do you want to try it out? And some people said, yeah, let's try it out. Plus one to try it out. And the feedback, even though it was the exact same technology was amazing. People were like, oh my God, this is so innovative, this is great. Even though it was the exact same experience that they hated a few weeks earlier on. So I think the key lesson that I picked from this experience is it's all about setting the right expectations, and working around the right use case. If you are replacing a human, the level is different than if you are just helping or augmenting something that otherwise would take a lot of time. And I think this is the focus that we are doing, picking up the tasks that people want to accomplish or that enterprise want to accomplish for the customers, for the employees. And using chat bots to make those specific ones better rather than, hey, this is going to replace all humans everywhere, and just be better than that. >> Yeah, I mean, to the point you mentioned expense reports. I'm in a Twitter thread and one guy says, my favorite part of business travel is filling out expense reports. It's an hour of excitement to figure out which receipts won't scan. We can all relate to that. It's just the worst. When you think about companies that are building custom AI driven apps, what can they do on OCI? What are the best options for them? Do they need to hire an army of machine intelligence experts and AI specialists? Help us understand your point of view there. >> So over the last, I would say the two or three years we've developed a full suite of machine learning and AI services for, I would say probably much every use case that you would expect right now from applying natural language processing to understanding customer support tickets or social media, or whatnot to computer vision platforms or computer vision services that can understand and detect objects, and count objects on shelves or detect cracks in the pipe or defecting parts, all the way to speech services. It can actually transcribe human speech. And most recently we've launched a new document AI service. That can actually look at unstructured documents like receipts or invoices or government IDs or even proprietary documents, loan application, student application forms, patient ingestion and whatnot and completely automate them using AI. So if you want to do one of the things that are, I would say common bread and butter for any industry, whether it's financial services or healthcare or manufacturing, we have a suite of services that any developer can go, and use easily customized with their own data. You don't need to be an expert in deep learning or large language models. You could just use our automobile capabilities, and build your own version of the models. Just go ahead and use them. And if you do have proprietary complex scenarios that you need customer from scratch, we actually have the most cost effective platform for that. So we have the OCI data science as well as built-in machine learning platform inside the databases inside the Oracle database, and mySQL HeatWave that allow data scientists, python welding people that actually like to build and tweak and control and improve, have everything that they need to go and build the machine learning models from scratch, deploy them, monitor and manage them at scale in production environment. And most of it is brand new. So we did not have these technologies four or five years ago and we've started building them and they're now at enterprise scale over the last couple of years. >> So what are some of the state-of-the-art tools, that AI specialists and data scientists need if they're going to go out and develop these new models? >> So I think it's on three layers. I think there's an infrastructure layer where the Nvidia's of the world come into play. For some of these things, you want massively efficient, massively scaled infrastructure place. So we are the most cost effective and performant large scale GPU training environment today. We're going to be first to onboard the new Nvidia H100s. These are the new super powerful GPU's for large language model training. So we have that covered for you in case you need this 'cause you want to build these ginormous things. You need a data science platform, a platform where you can open a Python notebook, and just use all these fancy open source frameworks and create the models that you want, and then click on a button and deploy it. And it infinitely scales wherever you need it. And in many cases you just need the, what I call the applied AI services. You need the Lego sets, the Lego death style, Lego Eiffel Tower. So we have a suite of these sets for typical scenarios, whether it's cognitive services of like, again, understanding images, or documents all the way to solving particular business problems. So an anomaly detection service, demand focusing service that will be the equivalent of these Lego sets. So if this is the business problem that you're looking to solve, we have services out there where we can bring your data, call an API, train a model, get the model and use it in your production environment. So wherever you want to play, all the way into embedding this thing, inside this applications, obviously, wherever you want to play, we have the tools for you to go and engage from infrastructure to SaaS at the top, and everything in the middle. >> So when you think about the data pipeline, and the data life cycle, and the specialized roles that came out of kind of the (indistinct) era if you will. I want to focus on two developers and data scientists. So the developers, they hate dealing with infrastructure and they got to deal with infrastructure. Now they're being asked to secure the infrastructure, they just want to write code. And a data scientist, they're spending all their time trying to figure out, okay, what's the data quality? And they're wrangling data and they don't spend enough time doing what they want to do. So there's been a lack of collaboration. Have you seen that change, are these approaches allowing collaboration between data scientists and developers on a single platform? Can you talk about that a little bit? >> Yeah, that is a great question. One of the biggest set of scars that I have on my back from for building these platforms in other companies is exactly that. Every persona had a set of tools, and these tools didn't talk to each other and the handoff was painful. And most of the machine learning things evaporate or die on the floor because of this problem. It's very rarely that they are unsuccessful because the algorithm wasn't good enough. In most cases it's somebody builds something, and then you can't take it to production, you can't integrate it into your business application. You can't take the data out, train, create an endpoint and integrate it back like it's too painful. So the way we are approaching this is focused on this problem exactly. We have a single set of tools that if you publish a model as a data scientist and developers, and even business analysts that are seeing a inside of business application could be able to consume it. We have a single model store, a single feature store, a single management experience across the various personas that need to play in this. And we spend a lot of time building, and borrowing a word that cellular folks used, and I really liked it, building inside highways to make it easier to bring these insights into where you need them inside applications, both inside our applications, inside our SaaS applications, but also inside custom third party and even first party applications. And this is where a lot of our focus goes to just because we have dealt with so much pain doing this inside our own SaaS that we now have built the tools, and we're making them available for others to make this process of building a machine learning outcome driven insight in your app easier. And it's not just the model development, and it's not just the deployment, it's the entire journey of taking the data, building the model, training it, deploying it, looking at the real data that comes from the app, and creating this feedback loop in a more efficient way. And that's our focus area. Exactly this problem. >> Well thank you for that. So, last week we had our super cloud two event, and I had Juan Loza on and he spent a lot of time talking about how open Oracle is in its philosophy, and I got a lot of feedback. They were like, Oracle open, I don't really think, but the truth is if you think about database Oracle database, it never met a hardware platform that it didn't like. So in that sense it's open. So, but my point is, a big part of of machine learning and AI is driven by open source tools, frameworks, what's your open source strategy? What do you support from an open source standpoint? >> So I'm a strong believer that you don't actually know, nobody knows where the next slip fog or the next industry shifting innovation in AI is going to come from. If you look six months ago, nobody foreseen Dali, the magical text to image generation and the exploding brought into just art and design type of experiences. If you look six weeks ago, I don't think anybody's seen ChatGPT, and what it can do for a whole bunch of industries. So to me, assuming that a customer or partner or developer would want to lock themselves into only the tools that a specific vendor can produce is ridiculous. 'Cause nobody knows, if anybody claims that they know where the innovation is going to come from in a year or two, let alone in five or 10, they're just wrong or lying. So our strategy for Oracle is to, I call this the Netflix of AI. So if you think about Netflix, they produced a bunch of high quality shows on their own. A few years ago it was House of Cards. Last month my wife and I binge watched Ginny and Georgie, but they also curated a lot of shows that they found around the world and bought them to their customers. So it started with things like Seinfeld or Friends and most recently it was Squid games and those are famous Israeli TV series called Founder that Netflix bought in, and they bought it as is and they gave it the Netflix value. So you have captioning and you have the ability to speed the movie and you have it inside your app, and you can download it and watch it offline and everything, but nobody Netflix was involved in the production of these first seasons. Now if these things hunt and they're great, then the third season or the fourth season will get the full Netflix production value, high value budget, high value location shooting or whatever. But you as a customer, you don't care whether the producer and director, and screenplay writing is a Netflix employee or is somebody else's employee. It is fulfilled by Netflix. I believe that we will become, or we are looking to become the Netflix of AI. We are building a bunch of AI in a bunch of places where we think it's important and we have some competitive advantage like healthcare with Acellular partnership or whatnot. But I want to bring the best AI software and hardware to OCI and do a fulfillment by Oracle on that. So you'll get the Oracle security and identity and single bill and everything you'd expect from a company like Oracle. But we don't have to be building the data science, and the models for everything. So this means both open source recently announced a partnership with Anaconda, the leading provider of Python distribution in the data science ecosystem where we are are doing a joint strategic partnership of bringing all the goodness into Oracle customers as well as in the process of doing the same with Nvidia, and all those software libraries, not just the Hubble, both for other stuff like Triton, but also for healthcare specific stuff as well as other ISVs, other AI leading ISVs that we are in the process of partnering with to get their stuff into OCI and into Oracle so that you can truly consume the best AI hardware, and the best AI software in the world on Oracle. 'Cause that is what I believe our customers would want the ability to choose from any open source engine, and honestly from any ISV type of solution that is AI powered and they want to use it in their experiences. >> So you mentioned ChatGPT, I want to talk about some of the innovations that are coming. As an AI expert, you see ChatGPT on the one hand, I'm sure you weren't surprised. On the other hand, maybe the reaction in the market, and the hype is somewhat surprising. You know, they say that we tend to under or over-hype things in the early stages and under hype them long term, you kind of use the internet as example. What's your take on that premise? >> So. I think that this type of technology is going to be an inflection point in how software is being developed. I truly believe this. I think this is an internet style moment, and the way software interfaces, software applications are being developed will dramatically change over the next year two or three because of this type of technologies. I think there will be industries that will be shifted. I think education is a good example. I saw this thing opened on my son's laptop. So I think education is going to be transformed. Design industry like images or whatever, it's already been transformed. But I think that for mass adoption, like beyond the hype, beyond the peak of inflected expectations, if I'm using Gartner terminology, I think certain things need to go and happen. One is this thing needs to become more reliable. So right now it is a complete black box that sometimes produce magic, and sometimes produce just nonsense. And it needs to have better explainability and better lineage to, how did you get to this answer? 'Cause I think enterprises are going to really care about the things that they surface with the customers or use internally. So I think that is one thing that's going to come out. And the other thing that's going to come out is I think it's going to come industry specific large language models or industry specific ChatGPTs. Something like how OpenAI did co-pilot for writing code. I think we will start seeing this type of apps solving for specific business problems, understanding contracts, understanding healthcare, writing doctor's notes on behalf of doctors so they don't have to spend time manually recording and analyzing conversations. And I think that would become the sweet spot of this thing. There will be companies, whether it's OpenAI or Microsoft or Google or hopefully Oracle that will use this type of technology to solve for specific very high value business needs. And I think this will change how interfaces happen. So going back to your expense report, the world of, I'm going to go into an app, and I'm going to click on seven buttons in order to get some job done like this world is gone. Like I'm going to say, hey, please do this and that. And I expect an answer to come out. I've seen a recent demo about, marketing in sales. So a customer sends an email that is interested in something and then a ChatGPT powered thing just produces the answer. I think this is how the world is going to evolve. Like yes, there's a ton of hype, yes, it looks like magic and right now it is magic, but it's not yet productive for most enterprise scenarios. But in the next 6, 12, 24 months, this will start getting more dependable, and it's going to change how these industries are being managed. Like I think it's an internet level revolution. That's my take. >> It's very interesting. And it's going to change the way in which we have. Instead of accessing the data center through APIs, we're going to access it through natural language processing and that opens up technology to a huge audience. Last question, is a two part question. And the first part is what you guys are working on from the futures, but the second part of the question is, we got data scientists and developers in our audience. They love the new shiny toy. So give us a little glimpse of what you're working on in the future, and what would you say to them to persuade them to check out Oracle's AI services? >> Yep. So I think there's two main things that we're doing, one is around healthcare. With a new recent acquisition, we are spending a significant effort around revolutionizing healthcare with AI. Of course many scenarios from patient care using computer vision and cameras through automating, and making better insurance claims to research and pharma. We are making the best models from leading organizations, and internal available for hospitals and researchers, and insurance providers everywhere. And we truly are looking to become the leader in AI for healthcare. So I think that's a huge focus area. And the second part is, again, going back to the enterprise AI angle. Like we want to, if you have a business problem that you want to apply here to solve, we want to be your platform. Like you could use others if you want to build everything complicated and whatnot. We have a platform for that as well. But like, if you want to apply AI to solve a business problem, we want to be your platform. We want to be the, again, the Netflix of AI kind of a thing where we are the place for the greatest AI innovations accessible to any developer, any business analyst, any user, any data scientist on Oracle Cloud. And we're making a significant effort on these two fronts as well as developing a lot of the missing pieces, and building blocks that we see are needed in this space to make truly like a great experience for developers and data scientists. And what would I recommend? Get started, try it out. We actually have a shameless sales plug here. We have a free deal for all of our AI services. So it typically cost you nothing. I would highly recommend to just go, and try these things out. Go play with it. If you are a python welding developer, and you want to try a little bit of auto mail, go down that path. If you're not even there and you're just like, hey, I have these customer feedback things and I want to try out, if I can understand them and apply AI and visualize, and do some cool stuff, we have services for that. My recommendation is, and I think ChatGPT got us 'cause I see people that have nothing to do with AI, and can't even spell AI going and trying it out. I think this is the time. Go play with these things, go play with these technologies and find what AI can do to you or for you. And I think Oracle is a great place to start playing with these things. >> Elad, thank you. Appreciate you sharing your vision of making Oracle the Netflix of AI. Love that and really appreciate your time. >> Awesome. Thank you. Thank you for having me. >> Okay. Thanks for watching this Cube conversation. This is Dave Vellante. We'll see you next time. (gentle music playing)

>> From theCUBE studios in Palo Alto in Boston, bringing you data driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> In the words of my colleague CTO David Nicholson, Broadcom buys old cars, not to restore them to their original luster and beauty. Nope. They buy classic cars to extract the platinum that's inside the catalytic converter and monetize that. Broadcom's planned 61 billion acquisition of VMware will mark yet another new era and chapter for the virtualization pioneer, a mere seven months after finally getting spun out as an independent company by Dell. For VMware, this means a dramatically different operating model with financial performance and shareholder value creation as the dominant and perhaps the sole agenda item. For customers, it will mean a more focused portfolio, less aspirational vision pitches, and most certainly higher prices. Hello and welcome to this week's Wikibon CUBE Insights powered by ETR. In this Breaking Analysis, we'll share data, opinions and customer insights about this blockbuster deal and forecast the future of VMware, Broadcom and the broader ecosystem. Let's first look at the key deal points, it's been well covered in the press. But just for the record, $61 billion in a 50/50 cash and stock deal, resulting in a blended price of $138 per share, which is a 44% premium to the unaffected price, i.e. prior to the news breaking. Broadcom will assume 8 billion of VMware debt and promises that the acquisition will be immediately accretive and will generate 8.5 billion in EBITDA by year three. That's more than 4 billion in EBITDA relative to VMware's current performance today. In a classic Broadcom M&A approach, the company promises to dilever debt and maintain investment grade ratings. They will rebrand their software business as VMware, which will now comprise about 50% of revenues. There's a 40 day go shop and importantly, Broadcom promises to continue to return 60% of its free cash flow to shareholders in the form of dividends and buybacks. Okay, with that out of the way, we're going to get to the money slide literally in a moment that Broadcom shared on its investor call. Broadcom has more than 20 business units. It's CEO Hock Tan makes it really easy for his business unit managers to understand. Rule number one, you agreed to an operating plan with targets for revenue, growth, EBITDA, et cetera, hit your numbers consistently and we're good. You'll be very well compensated and life will be wonderful for you and your family. Miss the number, and we're going to have a frank and uncomfortable bottom line discussion. You'll four, perhaps five quarters to turn your business around, if you don't, we'll kill it or sell it if we can. Rule number two, refer to rule number one. Hello, VMware, here's the money slide. I'll interpret the bullet points on the left for clarity. Your fiscal year 2022 EBITDA was 4.7 billion. By year three, it will be 8.5 billion. And we Broadcom have four knobs to turn with you, VMware to help you get there. First knob, if it ain't recurring revenue with rubber stamp renewals, we're going to convert that revenue or kill it. Knob number two, we're going to focus R&D in the most profitable areas of the business. AKA expect the R&D budget to be cut. Number three, we're going to spend less on sales and marketing by focusing on existing customers. We're not going to lose money today and try to make it up many years down the road. And number four, we run Broadcom with 1% GNA. You will too. Any questions? Good. Now, just to give you a little sense of how Broadcom runs its business and how well run a company it is, let's do a little simple comparison with this financial snapshot. All we're doing here is taking the most recent quarterly earnings reports from Broadcom and VMware respectively. We take the quarterly revenue and multiply by four X to get the revenue run rate and then we calculate the ratios off of the most recent quarters revenue. It's worth spending some time on this to get a sense of how profitable the Broadcom business actually is and what the spreadsheet gurus at Broadcom are seeing with respect to the possibilities for VMware. So combined, we're talking about a 40 plus billion dollar company. Broadcom is growing at more than 20% per year. Whereas VMware's latest quarter showed a very disappointing 3% growth. Broadcom is mostly a hardware company, but its gross margin is in the high seventies. As a software company of course VMware has higher gross margins, but FYI, Broadcom's software business, the remains of Symantec and what they purchased as CA has 90% gross margin. But the I popper is operating margin. This is all non gap. So it excludes things like stock based compensation, but Broadcom had 61% operating margin last quarter. This is insanely off the charts compared to VMware's 25%. Oracle's non gap operating margin is 47% and Oracle is an incredibly profitable company. Now the red box is where the cuts are going to take place. Broadcom doesn't spend much on marketing. It doesn't have to. It's SG&A is 3% of revenue versus 18% for VMware and R&D spend is almost certainly going to get cut. The other eye popper is free cash flow as a percentage of revenue at 51% for Broadcom and 29% for VMware. 51%. That's incredible. And that my dear friends is why Broadcom a company with just under 30 billion in revenue has a market cap of 230 billion. Let's dig into the VMware portfolio a bit more and identify the possible areas that will be placed under the microscope by Hock Tan and his managers. The data from ETR's latest survey shows the net score or spending momentum across VMware's portfolio in this chart, net score essentially measures the net percent of customers that are spending more on a specific product or vendor. The yellow bar is the most recent survey and compares the April 22 survey data to April 21 and January of 22. Everything is down in the yellow from January, not surprising given the economic outlook and the change in spending patterns that we've reported. VMware Cloud on AWS remains the product in the ETR survey with the most momentum. It's the only offering in the portfolio with spending momentum above the 40% line, a level that we consider highly elevated. Unified Endpoint Management looks more than respectable, but that business is a rock fight with Microsoft. VMware Cloud is things like VMware Cloud foundation, VCF and VMware's cross cloud offerings. NSX came from the Nicira acquisition. Tanzu is not yet pervasive and one wonders if VMware is making any money there. Server is ESX and vSphere and is the bread and butter. That is where Broadcom is going to focus. It's going to look at VSAN and NSX, which is software probably profitable. And of course the other products and see if the investments are paying off, if they are Broadcom will keep, if they are not, you can bet your socks, they will be sold off or killed. Carbon Black is at the far right. VMware paid $2.1 billion for Carbon Black. And it's the lowest performer on this list in terms of net score or spending momentum. And that doesn't mean it's not profitable. It just doesn't have the momentum you'd like to see, so you can bet that is going to get scrutiny. Remember VMware's growth has been under pressure for the last several years. So it's been buying companies, dozens of them. It bought AirWatch, bought Heptio, Carbon Black, Nicira, SaltStack, Datrium, Versedo, Bitnami, and on and on and on. Many of these were to pick up engineering teams. Some of them were to drive new revenue. Now this is definitely going to be scrutinized by Broadcom. So that helps explain why Michael Dell would sell VMware. And where does VMware go from here? It's got great core product. It's an iconic name. It's got an awesome ecosystem, fantastic distribution channel, but its growth is slowing. It's got limited developer chops in a world that developers and cloud native is all the rage. It's got a far flung R&D agenda going at war with a lot of different places. And it's increasingly fighting this multi front war with cloud companies, companies like Cisco, IBM Red Hat, et cetera. VMware's kind of becoming a heavy lift. It's a perfect acquisition target for Broadcom and why the street loves this deal. And we titled this Breaking Analysis taming the VMware beast because VMware is a beast. It's ubiquitous. It's an epic software platform. EMC couldn't control it. Dell used it as a piggy bank, but really didn't change its operating model. Broadcom 100% will. Now one of the things that we get excited about is the future of systems architectures. We published a breaking analysis about a year ago, talking about AWS's secret weapon with Nitro and it's Annapurna custom Silicon efforts. Remember it acquired Annapurna for a measly $350 million. And we talked about how there's a new architecture and a new price performance curve emerging in the enterprise, driven by AWS and being followed by Microsoft, Google, Alibaba, a trend toward custom Silicon with the arm based Nitro and which is AWS's hypervisor and Nick strategy, enabling processor diversity with things like Graviton and Trainium and other diverse processors, really diversifying away from x86 and how this leads to much faster product cycles, faster tape out, lower costs. And our premise was that everyone in the data center is going to competes, is going to need a Nitro to be competitive long term. And customers are going to gravitate toward the most economically favorable platform. And as we describe the landscape with this chart, we've updated this for this Breaking Analysis and we'll come back to nitro in a moment. This is a two dimensional graphic with net score or spending momentum on the vertical axis and overlap formally known as market share or presence within the survey, pervasiveness that's on the horizontal axis. And we plot various companies and products and we've inserted VMware's net score breakdown. The granularity in those colored bars on the bottom right. Net score is essentially the green minus the red and a couple points on that. VMware in the latest survey has 6% new adoption. That's that lime green. It's interesting. The question Broadcom is going to ask is, how much does it cost you to acquire that 6% new. 32% of VMware customers in the survey are increasing spending, meaning they're increasing spending by 6% or more. That's the forest green. And the question Broadcom will dig into is what percent of that increased spend (chuckles) you're capturing is profitable spend? Whatever isn't profitable is going to be cut. Now that 52% gray area flat spending that is ripe for the Broadcom picking, that is the fat middle, and those customers are locked and loaded for future rent extraction via perpetual renewals and price increases. Only 8% of customers are spending less, that's the pinkish color and only 3% are defecting, that's the bright red. So very, very sticky profile. Perfect for Broadcom. Now the rest of the chart lays out some of the other competitor names and we've plotted many of the VMware products so you can see where they fit. They're all pretty respectable on the vertical axis, that's spending momentum. But what Broadcom wants is that core ESX vSphere base where we've superimposed the Broadcom logo. Broadcom doesn't care so much about spending momentum. It cares about profitability potential and then momentum. AWS and Azure, they're setting the pace in this business, in the upper right corner. Cisco very huge presence in the data center, as does Intel, they're not in the ETR survey, but we've superimposed them. Now, Intel of course, is in a dog fight within Nvidia, the Arm ecosystem, AMD, don't forget China. You see a Google cloud platform is in there. Oracle is also on the chart as well, somewhat lower on the vertical axis, but it doesn't have that spending momentum, but it has a big presence. And it owns a cloud as we've talked about many times and it's highly differentiated. It's got a strategy that allows it to differentiate from the pack. It's very financially driven. It knows how to extract lifetime value. Safra Catz operates in many ways, similar to what we're seeing from Hock Tan and company, different from a portfolio standpoint. Oracle's got the full stack, et cetera. So it's a different strategy. But very, very financially savvy. You could see IBM and IBM Red Hat in the mix and then Dell and HP. I want to come back to that momentarily to talk about where value is flowing. And then we plotted Nutanix, which with Acropolis could suck up some V tax avoidance business. Now notice Symantec and CA, relatively speaking in the ETR survey, they have horrible spending momentum. As we said, Broadcom doesn't care. Hock Tan is not going for growth at the expense of profitability. So we fully expect VMware to come down on the vertical axis over time and go up on the profit scale. Of course, ETR doesn't measure the profitability here. Now back to Nitro, VMware has this thing called Project Monterey. It's essentially their version of Nitro and will serve as their future architecture diversifying off x86 and accommodating alternative processors. And a much more efficient performance, price in energy consumption curve. Now, one of the things that we've advocated for, we said this about Dell and others, including VMware to take a page out of AWS and start developing custom Silicon to better integrate hardware and software and accelerate multi-cloud or what we call supercloud. That layer above the cloud, not just running on individual clouds. So this is all about efficiency and simplicity to own this space. And we've challenged organizations to do that because otherwise we feel like the cloud guys are just going to have consistently better costs, not necessarily price, but better cost structures, but it begs the question. What happens to Project Monterey? Hock Tan and Broadcom, they don't invest in something that is unproven and doesn't throw off free cash flow. If it's not going to pay off for years to come, they're probably not going to invest in it. And yet Project Monterey could help secure VMware's future in not only the data center, but at the edge and compete more effectively with cloud economics. So we think either Project Monterey is toast or the VMware team will knock on the door of one of Broadcom's 20 plus business units and say, guys, what if we work together with you to develop a version of Monterey that we can use and sell to everyone, it'd be the arms dealer to everyone and be competitive with the cloud and other players out there and create the de facto standard for data center performance and supercloud. I mean, it's not outrageously expensive to develop custom Silicon. Tesla is doing it for example. And Broadcom obviously is capable of doing it. It's got good relationships with semiconductor fabs. But I think this is going to be a tough sell to Broadcom, unless VMware can hide this in plain site and make it profitable fast, like AWS most likely has with Nitro and Graviton. Then Project Monterey and our pipe dream of alternatives to Nitro in the data center could happen but if it can't, it's going to be toast. Or maybe Intel or Nvidia will take it over or maybe the Monterey team will spin out a VMware and do a Pensando like deal and demonstrate the viability of this concept and then Broadcom will buy it back in 10 years. Here's a double click on that previous data that we put in tabular form. It's how the data on that previous slide was plotted. I just want to give you the background data here. So net score spending momentum is the sorted on the left. So it's sorted by net score in the left hand chart, that was the y-axis in the previous data set and then shared and or presence in the data set is the right hand chart. In other words, it's sorted on the right hand chart, right hand table. That right most column is shared and you can see it's sorted top to bottom, and that was the x-axis on the previous chart. The point is not many on the left hand side are above the 40% line. VMware Cloud on AWS is, it's expensive, so it's probably profitable and it's probably a keeper. We'll see about the rest of VMware's portfolio. Like what happens to Tanzu for example. On the right, we drew a red line, just arbitrarily at those companies and products with more than a hundred mentions in the survey, everything but Tanzu from VMware makes that cut. Again, this is no indication of profitability here, and that's what's going to matter to Broadcom. Now let's take a moment to address the question of Broadcom as a software company. What the heck do they know about software, right. Well, they're not dumb over there and they know how to run a business, but there is a strategic rationale to this move beyond just doing portfolios and extracting rents and cutting R&D, et cetera, et cetera. Why, for example, isn't Broadcom going after coming back to Dell or HPE, it could pick up for a lot less than VMware, and they got way more revenue than VMware. Well, it's obvious, software's more profitable of course, and Broadcom wants to move up the stack, but there's a trend going on, which Broadcom is very much in touch with. First, it sells to Dell and HPE and Cisco and all the OEM. so it's not going to disrupt that. But this chart shows that the value is flowing away from traditional servers and storage and networking to two places, merchant Silicon, which itself is morphing. Broadcom... We focus on the left hand side of this chart. Broadcom correctly believes that the world is shifting from a CPU centric center of gravity to a connectivity centric world. We've talked about this on theCUBE a lot. You should listen to Broadcom COO Charlie Kawwas speak about this. It's all that supporting infrastructure around the CPU where value is flowing, including of course, alternative GPUs and XPUs, and NPUs et cetera, that are sucking the value out of the traditional x86 architecture, offloading some of the security and networking and storage functions that traditionally have been done in x86 which are part of the waste right now in the data center. This is that shifting dynamic of Moore's law. Moore's law, not keeping pace. It's slowing down. It's slower relative to some of the combinatorial factors. When you add up in all the CPU and GPU and NPU and accelerators, et cetera. So we've talked about this a lot in Breaking Analysis episodes. So the value is shifting left within that middle circle. And it's shifting left within that left circle toward components, other than CPU, many of which Broadcom supplies. And then you go back to the middle, value is shifting from that middle section, that traditional data center up into hyperscale clouds, and then to the right toward infrastructure software to manage all that equipment in the data center and across clouds. And look Broadcom is an arms dealer. They simply sell to everyone, locking up key vectors of the value chain, cutting costs and raising prices. It's a pretty straightforward strategy, but not for the fate of heart. And Broadcom has become pretty good at it. Let's close with the customer feedback. I spoke with ETRs Eric Bradley this morning. He and I both reached out to VMware customers that we know and got their input. And here's a little snapshot of what they said. I'll just read this. Broadcom will be looking to invest in the core and divest of any underperforming assets, right on. It's just what we were saying. This doesn't bode well for future innovation, this is a CTO at a large travel company. Next comment, we're a Carbon Black customer. VMware didn't seem to interfere with Carbon Black, but now that we're concerned about short term disruption to their tech roadmap and long term, are they going to split and be sold off like Symantec was, this is a CISO at a large hospitality organization. Third comment, I got directly from a VMware practitioner, an IT director at a manufacturing firm. This individual said, moving off VMware would be very difficult for us. We have over 500 applications running on VMware, and it's really easy to manage. We're not going to move those into the cloud and we're worried Broadcom will raise prices and just extract rents. Last comment, we'll share as, Broadcom sees the cloud data center and IoT is their next revenue source. The VMware acquisition provides them immediate virtualization capabilities to support a lightweight IoT offering. Big concern for customers is what technology they will invest in and innovate, and which will be stripped off and sold. Interesting. I asked David Floyer to give me a back of napkin estimate for the following question. I said, David, if you're running mission critical applications on VMware, how much would it increase your operating cost moving those applications into the cloud? Or how much would it save? And he said, Dave, VMware's really easy to run. It can run any application pretty much anywhere, and you don't need an army of people to manage it. All your processes are tied to VMware, you're locked and loaded. Move that into the cloud and your operating cost would double by his estimates. Well, there you have it. Broadcom will pinpoint the optimal profit maximization strategy and raise prices to the point where customers say, you know what, we're still better off staying with VMware. And sadly, for many practitioners there aren't a lot of choices. You could move to the cloud and increase your cost for a lot of your applications. You could do it yourself with say Zen or OpenStack. Good luck with that. You could tap Nutanix. That will definitely work for some applications, but are you going to move your entire estate, your application portfolio to Nutanix? It's not likely. So you're going to pay more for VMware and that's the price you're going to pay for two decades of better IT. So our advice is get out ahead of this, do an application portfolio assessment. If you can move apps to the cloud for less, and you haven't yet, do it, start immediately. Definitely give Nutanix a call, but going to have to be selective as to what you actually can move, forget porting to OpenStack, or do it yourself Hypervisor, don't even go there. And start building new cloud native apps where it makes sense and let the VMware stuff go into manage decline. Let certain apps just die through attrition, shift your development resources to innovation in the cloud and build a brick wall around the stable apps with VMware. As Paul Maritz, the former CEO of VMware said, "We are building the software mainframe". Now marketing guys got a hold of that and said, Paul, stop saying that, but it's true. And with Broadcom's help that day we'll soon be here. That's it for today. Thanks to Stephanie Chan who helps research our topics for Breaking Analysis. Alex Myerson does the production and he also manages the Breaking Analysis podcast. Kristen Martin and Cheryl Knight help get the word out on social and thanks to Rob Hof, who was our editor in chief at siliconangle.com. Remember, these episodes are all available as podcast, wherever you listen, just search Breaking Analysis podcast. Check out ETRs website at etr.ai for all the survey action. We publish a full report every week on wikibon.com and siliconangle.com. You can email me directly at david.vellante@siliconangle.com. You can DM me at DVellante or comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Have a great week, stay safe, be well. And we'll see you next time. (upbeat music)

(upbeat music) >> Once a staid and boring business dominated by IBM, Oracle, and at the time newcomer Microsoft, along with a handful of wannabes, the database business has exploded in the past decade and has become a staple of financial excellence, customer experience, analytic advantage, competitive strategy, growth initiatives, visualizations, not to mention compliance, security, privacy and dozens of other important use cases and initiatives. And on the vendor's side of the house, we've seen the rapid ascendancy of cloud databases. Most notably from Snowflake, whose massive raises leading up to its IPO in late 2020 sparked a spate of interest and VC investment in the separation of compute and storage and all that elastic resource stuff in the cloud. The company joined AWS, Azure and Google to popularize cloud databases, which have become a linchpin of competitive strategies for technology suppliers. And if I get you to put your data in my database and in my cloud, and I keep innovating, I'm going to build a moat and achieve a hugely attractive lifetime customer value in a really amazing marginal economics dynamic that is going to fund my future. And I'll be able to sell other adjacent services, not just compute and storage, but machine learning and inference and training and all kinds of stuff, dozens of lucrative cloud offerings. Meanwhile, the database leader, Oracle has invested massive amounts of money to maintain its lead. It's building on its position as the king of mission critical workloads and making typical Oracle like claims against the competition. Most were recently just yesterday with another announcement around MySQL HeatWave. An extension of MySQL that is compatible with on-premises MySQLs and is setting new standards in price performance. We're seeing a dramatic divergence in strategies across the database spectrum. On the far left, we see Amazon with more than a dozen database offerings each with its own API and primitives. AWS is taking a right tool for the right job approach, often building on open source platforms and creating services that it offers to customers to solve very specific problems for developers. And on the other side of the line, we see Oracle, which is taking the Swiss Army Knife approach, converging database functionality, enabling analytic and transactional workloads to run in the same data store, eliminating the need to ETL, at the same time adding capabilities into its platform like automation and machine learning. Welcome to this database Power Panel. My name is Dave Vellante, and I'm so excited to bring together some of the most respected industry analyst in the community. Today we're going to assess what's happening in the market. We're going to dig into the competitive landscape and explore the future of database and database platforms and decode what it means to customers. Let me take a moment to welcome our guest analyst today. Matt Kimball is a vice president and principal analysts at Moor Insights and Strategy, Matt. He knows products, he knows industry, he's got real world IT expertise, and he's got all the angles 25 plus years of experience in all kinds of great background. Matt, welcome. Thanks very much for coming on theCUBE. Holgar Mueller, friend of theCUBE, vice president and principal analyst at Constellation Research in depth knowledge on applications, application development, knows developers. He's worked at SAP and Oracle. And then Bob Evans is Chief Content Officer and co-founder of the Acceleration Economy, founder and principle of Cloud Wars. Covers all kinds of industry topics and great insights. He's got awesome videos, these three minute hits. If you haven't seen 'em, checking them out, knows cloud companies, his Cloud Wars minutes are fantastic. And then of course, Marc Staimer is the founder of Dragon Slayer Research. A frequent contributor and guest analyst at Wikibon. He's got a wide ranging knowledge across IT products, knows technology really well, can go deep. And then of course, Ron Westfall, Senior Analyst and Director Research Director at Futurum Research, great all around product trends knowledge. Can take, you know, technical dives and really understands competitive angles, knows Redshift, Snowflake, and many others. Gents, thanks so much for taking the time to join us in theCube today. It's great to have you on, good to see you. >> Good to be here, thanks for having us. >> Thanks, Dave. >> All right, let's start with an around the horn and briefly, if each of you would describe, you know, anything I missed in your areas of expertise and then you answer the following question, how would you describe the state of the database, state of platform market today? Matt Kimball, please start. >> Oh, I hate going first, but that it's okay. How would I describe the world today? I would just in one sentence, I would say, I'm glad I'm not in IT anymore, right? So, you know, it is a complex and dangerous world out there. And I don't envy IT folks I'd have to support, you know, these modernization and transformation efforts that are going on within the enterprise. It used to be, you mentioned it, Dave, you would argue about IBM versus Oracle versus this newcomer in the database space called Microsoft. And don't forget Sybase back in the day, but you know, now it's not just, which SQL vendor am I going to go with? It's all of these different, divergent data types that have to be taken, they have to be merged together, synthesized. And somehow I have to do that cleanly and use this to drive strategic decisions for my business. That is not easy. So, you know, you have to look at it from the perspective of the business user. It's great for them because as a DevOps person, or as an analyst, I have so much flexibility and I have this thing called the cloud now where I can go get services immediately. As an IT person or a DBA, I am calling up prevention hotlines 24 hours a day, because I don't know how I'm going to be able to support the business. And as an Oracle or as an Oracle or a Microsoft or some of the cloud providers and cloud databases out there, I'm licking my chops because, you know, my market is expanding and expanding every day. >> Great, thank you for that, Matt. Holgar, how do you see the world these days? You always have a good perspective on things, share with us. >> Well, I think it's the best time to be in IT, I'm not sure what Matt is talking about. (laughing) It's easier than ever, right? The direction is going to cloud. Kubernetes has won, Google has the best AI for now, right? So things are easier than ever before. You made commitments for five plus years on hardware, networking and so on premise, and I got gray hair about worrying it was the wrong decision. No, just kidding. But you kind of both sides, just to be controversial, make it interesting, right. So yeah, no, I think the interesting thing specifically with databases, right? We have this big suite versus best of breed, right? Obviously innovation, like you mentioned with Snowflake and others happening in the cloud, the cloud vendors server, where to save of their databases. And then we have one of the few survivors of the old guard as Evans likes to call them is Oracle who's doing well, both their traditional database. And now, which is really interesting, remarkable from that because Oracle it was always the power of one, have one database, add more to it, make it what I call the universal database. And now this new HeatWave offering is coming and MySQL open source side. So they're getting the second (indistinct) right? So it's interesting that older players, traditional players who still are in the market are diversifying their offerings. Something we don't see so much from the traditional tools from Oracle on the Microsoft side or the IBM side these days. >> Great, thank you Holgar. Bob Evans, you've covered this business for a while. You've worked at, you know, a number of different outlets and companies and you cover the competition, how do you see things? >> Dave, you know, the other angle to look at this from is from the customer side, right? You got now CEOs who are any sort of business across all sorts of industries, and they understand that their future success is going to be dependent on their ability to become a digital company, to understand data, to use it the right way. So as you outline Dave, I think in your intro there, it is a fantastic time to be in the database business. And I think we've got a lot of new buyers and influencers coming in. They don't know all this history about IBM and Microsoft and Oracle and you know, whoever else. So I think they're going to take a long, hard look, Dave, at some of these results and who is able to help these companies not serve up the best technology, but who's going to be able to help their business move into the digital future. So it's a fascinating time now from every perspective. >> Great points, Bob. I mean, digital transformation has gone from buzzword to imperative. Mr. Staimer, how do you see things? >> I see things a little bit differently than my peers here in that I see the database market being segmented. There's all the different kinds of databases that people are looking at for different kinds of data, and then there is databases in the cloud. And so database as cloud service, I view very differently than databases because the traditional way of implementing a database is changing and it's changing rapidly. So one of the premises that you stated earlier on was that you viewed Oracle as a database company. I don't view Oracle as a database company anymore. I view Oracle as a cloud company that happens to have a significant expertise and specialty in databases, and they still sell database software in the traditional way, but ultimately they're a cloud company. So database cloud services from my point of view is a very distinct market from databases. >> Okay, well, you gave us some good meat on the bone to talk about that. Last but not least-- >> Dave did Marc, just say Oracle's a cloud company? >> Yeah. (laughing) Take away the database, it would be interesting to have that discussion, but let's let Ron jump in here. Ron, give us your take. >> That's a great segue. I think it's truly the era of the cloud database, that's something that's rising. And the key trends that come with it include for example, elastic scaling. That is the ability to scale on demand, to right size workloads according to customer requirements. And also I think it's going to increase the prioritization for high availability. That is the player who can provide the highest availability is going to have, I think, a great deal of success in this emerging market. And also I anticipate that there will be more consolidation across platforms in order to enable cost savings for customers, and that's something that's always going to be important. And I think we'll see more of that over the horizon. And then finally security, security will be more important than ever. We've seen a spike (indistinct), we certainly have seen geopolitical originated cybersecurity concerns. And as a result, I see database security becoming all the more important. >> Great, thank you. Okay, let me share some data with you guys. I'm going to throw this at you and see what you think. We have this awesome data partner called Enterprise Technology Research, ETR. They do these quarterly surveys and each period with dozens of industry segments, they track clients spending, customer spending. And this is the database, data warehouse sector okay so it's taxonomy, so it's not perfect, but it's a big kind of chunk. They essentially ask customers within a category and buy a specific vendor, you're spending more or less on the platform? And then they subtract the lesses from the mores and they derive a metric called net score. It's like NPS, it's a measure of spending velocity. It's more complicated and granular than that, but that's the basis and that's the vertical axis. The horizontal axis is what they call market share, it's not like IDC market share, it's just pervasiveness in the data set. And so there are a couple of things that stand out here and that we can use as reference point. The first is the momentum of Snowflake. They've been off the charts for many, many, for over two years now, anything above that dotted red line, that 40%, is considered by ETR to be highly elevated and Snowflake's even way above that. And I think it's probably not sustainable. We're going to see in the next April survey, next month from those guys, when it comes out. And then you see AWS and Microsoft, they're really pervasive on the horizontal axis and highly elevated, Google falls behind them. And then you got a number of well funded players. You got Cockroach Labs, Mongo, Redis, MariaDB, which of course is a fork on MySQL started almost as protest at Oracle when they acquired Sun and they got MySQL and you can see the number of others. Now Oracle who's the leading database player, despite what Marc Staimer says, we know, (laughs) and they're a cloud player (laughing) who happens to be a leading database player. They dominate in the mission critical space, we know that they're the king of that sector, but you can see here that they're kind of legacy, right? They've been around a long time, they get a big install base. So they don't have the spending momentum on the vertical axis. Now remember this is, just really this doesn't capture spending levels, so that understates Oracle but nonetheless. So it's not a complete picture like SAP for instance is not in here, no Hana. I think people are actually buying it, but it doesn't show up here, (laughs) but it does give an indication of momentum and presence. So Bob Evans, I'm going to start with you. You've commented on many of these companies, you know, what does this data tell you? >> Yeah, you know, Dave, I think all these compilations of things like that are interesting, and that folks at ETR do some good work, but I think as you said, it's a snapshot sort of a two-dimensional thing of a rapidly changing, three dimensional world. You know, the incidents at which some of these companies are mentioned versus the volume that happens. I think it's, you know, with Oracle and I'm not going to declare my religious affiliation, either as cloud company or database company, you know, they're all of those things and more, and I think some of our old language of how we classify companies is just not relevant anymore. But I want to ask too something in here, the autonomous database from Oracle, nobody else has done that. So either Oracle is crazy, they've tried out a technology that nobody other than them is interested in, or they're onto something that nobody else can match. So to me, Dave, within Oracle, trying to identify how they're doing there, I would watch autonomous database growth too, because right, it's either going to be a big plan and it breaks through, or it's going to be caught behind. And the Snowflake phenomenon as you mentioned, that is a rare, rare bird who comes up and can grow 100% at a billion dollar revenue level like that. So now they've had a chance to come in, scare the crap out of everybody, rock the market with something totally new, the data cloud. Will the bigger companies be able to catch up and offer a compelling alternative, or is Snowflake going to continue to be this outlier. It's a fascinating time. >> Really, interesting points there. Holgar, I want to ask you, I mean, I've talked to certainly I'm sure you guys have too, the founders of Snowflake that came out of Oracle and they actually, they don't apologize. They say, "Hey, we not going to do all that complicated stuff that Oracle does, we were trying to keep it real simple." But at the same time, you know, they don't do sophisticated workload management. They don't do complex joints. They're kind of relying on the ecosystems. So when you look at the data like this and the various momentums, and we talked about the diverging strategies, what does this say to you? >> Well, it is a great point. And I think Snowflake is an example how the cloud can turbo charge a well understood concept in this case, the data warehouse, right? You move that and you find steroids and you see like for some players who've been big in data warehouse, like Sentara Data, as an example, here in San Diego, what could have been for them right in that part. The interesting thing, the problem though is the cloud hides a lot of complexity too, which you can scale really well as you attract lots of customers to go there. And you don't have to build things like what Bob said, right? One of the fascinating things, right, nobody's answering Oracle on the autonomous database. I don't think is that they cannot, they just have different priorities or the database is not such a priority. I would dare to say that it's for IBM and Microsoft right now at the moment. And the cloud vendors, you just hide that right through scripts and through scale because you support thousands of customers and you can deal with a little more complexity, right? It's not against them. Whereas if you have to run it yourself, very different story, right? You want to have the autonomous parts, you want to have the powerful tools to do things. >> Thank you. And so Matt, I want to go to you, you've set up front, you know, it's just complicated if you're in IT, it's a complicated situation and you've been on the customer side. And if you're a buyer, it's obviously, it's like Holgar said, "Cloud's supposed to make this stuff easier, but the simpler it gets the more complicated gets." So where do you place your bets? Or I guess more importantly, how do you decide where to place your bets? >> Yeah, it's a good question. And to what Bob and Holgar said, you know, the around autonomous database, I think, you know, part of, as I, you know, play kind of armchair psychologist, if you will, corporate psychologists, I look at what Oracle is doing and, you know, databases where they've made their mark and it's kind of, that's their strong position, right? So it makes sense if you're making an entry into this cloud and you really want to kind of build momentum, you go with what you're good at, right? So that's kind of the strength of Oracle. Let's put a lot of focus on that. They do a lot more than database, don't get me wrong, but you know, I'm going to short my strength and then kind of pivot from there. With regards to, you know, what IT looks at and what I would look at you know as an IT director or somebody who is, you know, trying to consume services from these different cloud providers. First and foremost, I go with what I know, right? Let's not forget IT is a conservative group. And when we look at, you know, all the different permutations of database types out there, SQL, NoSQL, all the different types of NoSQL, those are largely being deployed by business users that are looking for agility or businesses that are looking for agility. You know, the reason why MongoDB is so popular is because of DevOps, right? It's a great platform to develop on and that's where it kind of gained its traction. But as an IT person, I want to go with what I know, where my muscle memory is, and that's my first position. And so as I evaluate different cloud service providers and cloud databases, I look for, you know, what I know and what I've invested in and where my muscle memory is. Is there enough there and do I have enough belief that that company or that service is going to be able to take me to, you know, where I see my organization in five years from a data management perspective, from a business perspective, are they going to be there? And if they are, then I'm a little bit more willing to make that investment, but it is, you know, if I'm kind of going in this blind or if I'm cloud native, you know, that's where the Snowflakes of the world become very attractive to me. >> Thank you. So Marc, I asked Andy Jackson in theCube one time, you have all these, you know, data stores and different APIs and primitives and you know, very granular, what's the strategy there? And he said, "Hey, that allows us as the market changes, it allows us to be more flexible. If we start building abstractions layers, it's harder for us." I think also it was not a good time to market advantage, but let me ask you, I described earlier on that spectrum from AWS to Oracle. We just saw yesterday, Oracle announced, I think the third major enhancement in like 15 months to MySQL HeatWave, what do you make of that announcement? How do you think it impacts the competitive landscape, particularly as it relates to, you know, converging transaction and analytics, eliminating ELT, I know you have some thoughts on this. >> So let me back up for a second and defend my cloud statement about Oracle for a moment. (laughing) AWS did a great job in developing the cloud market in general and everything in the cloud market. I mean, I give them lots of kudos on that. And a lot of what they did is they took open source software and they rent it to people who use their cloud. So I give 'em lots of credit, they dominate the market. Oracle was late to the cloud market. In fact, they actually poo-pooed it initially, if you look at some of Larry Ellison's statements, they said, "Oh, it's never going to take off." And then they did 180 turn, and they said, "Oh, we're going to embrace the cloud." And they really have, but when you're late to a market, you've got to be compelling. And this ties into the announcement yesterday, but let's deal with this compelling. To be compelling from a user point of view, you got to be twice as fast, offer twice as much functionality, at half the cost. That's generally what compelling is that you're going to capture market share from the leaders who established the market. It's very difficult to capture market share in a new market for yourself. And you're right. I mean, Bob was correct on this and Holgar and Matt in which you look at Oracle, and they did a great job of leveraging their database to move into this market, give 'em lots of kudos for that too. But yesterday they announced, as you said, the third innovation release and the pace is just amazing of what they're doing on these releases on HeatWave that ties together initially MySQL with an integrated builtin analytics engine, so a data warehouse built in. And then they added automation with autopilot, and now they've added machine learning to it, and it's all in the same service. It's not something you can buy and put on your premise unless you buy their cloud customers stuff. But generally it's a cloud offering, so it's compellingly better as far as the integration. You don't buy multiple services, you buy one and it's lower cost than any of the other services, but more importantly, it's faster, which again, give 'em credit for, they have more integration of a product. They can tie things together in a way that nobody else does. There's no additional services, ETL services like Glue and AWS. So from that perspective, they're getting better performance, fewer services, lower cost. Hmm, they're aiming at the compelling side again. So from a customer point of view it's compelling. Matt, you wanted to say something there. >> Yeah, I want to kind of, on what you just said there Marc, and this is something I've found really interesting, you know. The traditional way that you look at software and, you know, purchasing software and IT is, you look at either best of breed solutions and you have to work on the backend to integrate them all and make them all work well. And generally, you know, the big hit against the, you know, we have one integrated offering is that, you lose capability or you lose depth of features, right. And to what you were saying, you know, that's the thing I found interesting about what Oracle is doing is they're building in depth as they kind of, you know, build that service. It's not like you're losing a lot of capabilities, because you're going to one integrated service versus having to use A versus B versus C, and I love that idea. >> You're right. Yeah, not only you're not losing, but you're gaining functionality that you can't get by integrating a lot of these. I mean, I can take Snowflake and integrate it in with machine learning, but I also have to integrate in with a transactional database. So I've got to have connectors between all of this, which means I'm adding time. And what it comes down to at the end of the day is expertise, effort, time, and cost. And so what I see the difference from the Oracle announcements is they're aiming at reducing all of that by increasing performance as well. Correct me if I'm wrong on that but that's what I saw at the announcement yesterday. >> You know, Marc, one thing though Marc, it's funny you say that because I started out saying, you know, I'm glad I'm not 19 anymore. And the reason is because of exactly what you said, it's almost like there's a pseudo level of witchcraft that's required to support the modern data environment right in the enterprise. And I need simpler faster, better. That's what I need, you know, I am no longer wearing pocket protectors. I have turned from, you know, break, fix kind of person, to you know, business consultant. And I need that point and click simplicity, but I can't sacrifice, you know, a depth of features of functionality on the backend as I play that consultancy role. >> So, Ron, I want to bring in Ron, you know, it's funny. So Matt, you mentioned Mongo, I often and say, if Oracle mentions you, you're on the map. We saw them yesterday Ron, (laughing) they hammered RedShifts auto ML, they took swipes at Snowflake, a little bit of BigQuery. What were your thoughts on that? Do you agree with what these guys are saying in terms of HeatWaves capabilities? >> Yes, Dave, I think that's an excellent question. And fundamentally I do agree. And the question is why, and I think it's important to know that all of the Oracle data is backed by the fact that they're using benchmarks. For example, all of the ML and all of the TPC benchmarks, including all the scripts, all the configs and all the detail are posted on GitHub. So anybody can look at these results and they're fully transparent and replicate themselves. If you don't agree with this data, then by all means challenge it. And we have not really seen that in all of the new updates in HeatWave over the last 15 months. And as a result, when it comes to these, you know, fundamentals in looking at the competitive landscape, which I think gives validity to outcomes such as Oracle being able to deliver 4.8 times better price performance than Redshift. As well as for example, 14.4 better price performance than Snowflake, and also 12.9 better price performance than BigQuery. And so that is, you know, looking at the quantitative side of things. But again, I think, you know, to Marc's point and to Matt's point, there are also qualitative aspects that clearly differentiate the Oracle proposition, from my perspective. For example now the MySQL HeatWave ML capabilities are native, they're built in, and they also support things such as completion criteria. And as a result, that enables them to show that hey, when you're using Redshift ML for example, you're having to also use their SageMaker tool and it's running on a meter. And so, you know, nobody really wants to be running on a meter when, you know, executing these incredibly complex tasks. And likewise, when it comes to Snowflake, they have to use a third party capability. They don't have the built in, it's not native. So the user, to the point that he's having to spend more time and it increases complexity to use auto ML capabilities across the Snowflake platform. And also, I think it also applies to other important features such as data sampling, for example, with the HeatWave ML, it's intelligent sampling that's being implemented. Whereas in contrast, we're seeing Redshift using random sampling. And again, Snowflake, you're having to use a third party library in order to achieve the same capabilities. So I think the differentiation is crystal clear. I think it definitely is refreshing. It's showing that this is where true value can be assigned. And if you don't agree with it, by all means challenge the data. >> Yeah, I want to come to the benchmarks in a minute. By the way, you know, the gentleman who's the Oracle's architect, he did a great job on the call yesterday explaining what you have to do. I thought that was quite impressive. But Bob, I know you follow the financials pretty closely and on the earnings call earlier this month, Ellison said that, "We're going to see HeatWave on AWS." And the skeptic in me said, oh, they must not be getting people to come to OCI. And then they, you remember this chart they showed yesterday that showed the growth of HeatWave on OCI. But of course there was no data on there, it was just sort of, you know, lines up and to the right. So what do you guys think of that? (Marc laughs) Does it signal Bob, desperation by Oracle that they can't get traction on OCI, or is it just really a smart tame expansion move? What do you think? >> Yeah, Dave, that's a great question. You know, along the way there, and you know, just inside of that was something that said Ellison said on earnings call that spoke to a different sort of philosophy or mindset, almost Marc, where he said, "We're going to make this multicloud," right? With a lot of their other cloud stuff, if you wanted to use any of Oracle's cloud software, you had to use Oracle's infrastructure, OCI, there was no other way out of it. But this one, but I thought it was a classic Ellison line. He said, "Well, we're making this available on AWS. We're making this available, you know, on Snowflake because we're going after those users. And once they see what can be done here." So he's looking at it, I guess you could say, it's a concession to customers because they want multi-cloud. The other way to look at it, it's a hunting expedition and it's one of those uniquely I think Oracle ways. He said up front, right, he doesn't say, "Well, there's a big market, there's a lot for everybody, we just want on our slice." Said, "No, we are going after Amazon, we're going after Redshift, we're going after Aurora. We're going after these users of Snowflake and so on." And I think it's really fairly refreshing these days to hear somebody say that, because now if I'm a buyer, I can look at that and say, you know, to Marc's point, "Do they measure up, do they crack that threshold ceiling? Or is this just going to be more pain than a few dollars savings is worth?" But you look at those numbers that Ron pointed out and that we all saw in that chart. I've never seen Dave, anything like that. In a substantive market, a new player coming in here, and being able to establish differences that are four, seven, eight, 10, 12 times better than competition. And as new buyers look at that, they're going to say, "What the hell are we doing paying, you know, five times more to get a poor result? What's going on here?" So I think this is going to rattle people and force a harder, closer look at what these alternatives are. >> I wonder if the guy, thank you. Let's just skip ahead of the benchmarks guys, bring up the next slide, let's skip ahead a little bit here, which talks to the benchmarks and the benchmarking if we can. You know, David Floyer, the sort of semiretired, you know, Wikibon analyst said, "Dave, this is going to force Amazon and others, Snowflake," he said, "To rethink actually how they architect databases." And this is kind of a compilation of some of the data that they shared. They went after Redshift mostly, (laughs) but also, you know, as I say, Snowflake, BigQuery. And, like I said, you can always tell which companies are doing well, 'cause Oracle will come after you, but they're on the radar here. (laughing) Holgar should we take this stuff seriously? I mean, or is it, you know, a grain salt? What are your thoughts here? >> I think you have to take it seriously. I mean, that's a great question, great point on that. Because like Ron said, "If there's a flaw in a benchmark, we know this database traditionally, right?" If anybody came up that, everybody will be, "Oh, you put the wrong benchmark, it wasn't audited right, let us do it again," and so on. We don't see this happening, right? So kudos to Oracle to be aggressive, differentiated, and seem to having impeccable benchmarks. But what we really see, I think in my view is that the classic and we can talk about this in 100 years, right? Is the suite versus best of breed, right? And the key question of the suite, because the suite's always slower, right? No matter at which level of the stack, you have the suite, then the best of breed that will come up with something new, use a cloud, put the data warehouse on steroids and so on. The important thing is that you have to assess as a buyer what is the speed of my suite vendor. And that's what you guys mentioned before as well, right? Marc said that and so on, "Like, this is a third release in one year of the HeatWave team, right?" So everybody in the database open source Marc, and there's so many MySQL spinoffs to certain point is put on shine on the speed of (indistinct) team, putting out fundamental changes. And the beauty of that is right, is so inherent to the Oracle value proposition. Larry's vision of building the IBM of the 21st century, right from the Silicon, from the chip all the way across the seven stacks to the click of the user. And that what makes the database what Rob was saying, "Tied to the OCI infrastructure," because designed for that, it runs uniquely better for that, that's why we see the cross connect to Microsoft. HeatWave so it's different, right? Because HeatWave runs on cheap hardware, right? Which is the breadth and butter 886 scale of any cloud provider, right? So Oracle probably needs it to scale OCI in a different category, not the expensive side, but also allow us to do what we said before, the multicloud capability, which ultimately CIOs really want, because data gravity is real, you want to operate where that is. If you have a fast, innovative offering, which gives you more functionality and the R and D speed is really impressive for the space, puts away bad results, then it's a good bet to look at. >> Yeah, so you're saying, that we versus best of breed. I just want to sort of play back then Marc a comment. That suite versus best of breed, there's always been that trade off. If I understand you Holgar you're saying that somehow Oracle has magically cut through that trade off and they're giving you the best of both. >> It's the developing velocity, right? The provision of important features, which matter to buyers of the suite vendor, eclipses the best of breed vendor, then the best of breed vendor is in the hell of a potential job. >> Yeah, go ahead Marc. >> Yeah and I want to add on what Holgar just said there. I mean the worst job in the data center is data movement, moving the data sucks. I don't care who you are, nobody likes it. You never get any kudos for doing it well, and you always get the ah craps, when things go wrong. So it's in- >> In the data center Marc all the time across data centers, across cloud. That's where the bleeding comes. >> It's right, you get beat up all the time. So nobody likes to move data, ever. So what you're looking at with what they announce with HeatWave and what I love about HeatWave is it doesn't matter when you started with it, you get all the additional features they announce it's part of the service, all the time. But they don't have to move any of the data. You want to analyze the data that's in your transactional, MySQL database, it's there. You want to do machine learning models, it's there, there's no data movement. The data movement is the key thing, and they just eliminate that, in so many ways. And the other thing I wanted to talk about is on the benchmarks. As great as those benchmarks are, they're really conservative 'cause they're underestimating the cost of that data movement. The ETLs, the other services, everything's left out. It's just comparing HeatWave, MySQL cloud service with HeatWave versus Redshift, not Redshift and Aurora and Glue, Redshift and Redshift ML and SageMaker, it's just Redshift. >> Yeah, so what you're saying is what Oracle's doing is saying, "Okay, we're going to run MySQL HeatWave benchmarks on analytics against Redshift, and then we're going to run 'em in transaction against Aurora." >> Right. >> But if you really had to look at what you would have to do with the ETL, you'd have to buy two different data stores and all the infrastructure around that, and that goes away so. >> Due to the nature of the competition, they're running narrow best of breed benchmarks. There is no suite level benchmark (Dave laughs) because they created something new. >> Well that's you're the earlier point they're beating best of breed with a suite. So that's, I guess to Floyer's earlier point, "That's going to shake things up." But I want to come back to Bob Evans, 'cause I want to tap your Cloud Wars mojo before we wrap. And line up the horses, you got AWS, you got Microsoft, Google and Oracle. Now they all own their own cloud. Snowflake, Mongo, Couchbase, Redis, Cockroach by the way they're all doing very well. They run in the cloud as do many others. I think you guys all saw the Andreessen, you know, commentary from Sarah Wang and company, to talk about the cost of goods sold impact of cloud. So owning your own cloud has to be an advantage because other guys like Snowflake have to pay cloud vendors and negotiate down versus having the whole enchilada, Safra Catz's dream. Bob, how do you think this is going to impact the market long term? >> Well, Dave, that's a great question about, you know, how this is all going to play out. If I could mention three things, one, Frank Slootman has done a fantastic job with Snowflake. Really good company before he got there, but since he's been there, the growth mindset, the discipline, the rigor and the phenomenon of what Snowflake has done has forced all these bigger companies to really accelerate what they're doing. And again, it's an example of how this intense competition makes all the different cloud vendors better and it provides enormous value to customers. Second thing I wanted to mention here was look at the Adam Selipsky effect at AWS, took over in the middle of May, and in Q2, Q3, Q4, AWS's growth rate accelerated. And in each of those three quotas, they grew faster than Microsoft's cloud, which has not happened in two or three years, so they're closing the gap on Microsoft. The third thing, Dave, in this, you know, incredibly intense competitive nature here, look at Larry Ellison, right? He's got his, you know, the product that for the last two or three years, he said, "It's going to help determine the future of the company, autonomous database." You would think he's the last person in the world who's going to bring in, you know, in some ways another database to think about there, but he has put, you know, his whole effort and energy behind this. The investments Oracle's made, he's riding this horse really hard. So it's not just a technology achievement, but it's also an investment priority for Oracle going forward. And I think it's going to form a lot of how they position themselves to this new breed of buyer with a new type of need and expectations from IT. So I just think the next two or three years are going to be fantastic for people who are lucky enough to get to do the sorts of things that we do. >> You know, it's a great point you made about AWS. Back in 2018 Q3, they were doing about 7.4 billion a quarter and they were growing in the mid forties. They dropped down to like 29% Q4, 2020, I'm looking at the data now. They popped back up last quarter, last reported quarter to 40%, that is 17.8 billion, so they more doubled and they accelerated their growth rate. (laughs) So maybe that pretends, people are concerned about Snowflake right now decelerating growth. You know, maybe that's going to be different. By the way, I think Snowflake has a different strategy, the whole data cloud thing, data sharing. They're not trying to necessarily take Oracle head on, which is going to make this next 10 years, really interesting. All right, we got to go, last question. 30 seconds or less, what can we expect from the future of data platforms? Matt, please start. >> I have to go first again? You're killing me, Dave. (laughing) In the next few years, I think you're going to see the major players continue to meet customers where they are, right. Every organization, every environment is, you know, kind of, we use these words bespoke in Snowflake, pardon the pun, but Snowflakes, right. But you know, they're all opinionated and unique and what's great as an IT person is, you know, there is a service for me regardless of where I am on my journey, in my data management journey. I think you're going to continue to see with regards specifically to Oracle, I think you're going to see the company continue along this path of being all things to all people, if you will, or all organizations without sacrificing, you know, kind of richness of features and sacrificing who they are, right. Look, they are the data kings, right? I mean, they've been a database leader for an awful long time. I don't see that going away any time soon and I love the innovative spirit they've brought in with HeatWave. >> All right, great thank you. Okay, 30 seconds, Holgar go. >> Yeah, I mean, the interesting thing that we see is really that trend to autonomous as Oracle calls or self-driving software, right? So the database will have to do more things than just store the data and support the DVA. It will have to show it can wide insights, the whole upside, it will be able to show to one machine learning. We haven't really talked about that. How in just exciting what kind of use case we can get of machine learning running real time on data as it changes, right? So, which is part of the E5 announcement, right? So we'll see more of that self-driving nature in the database space. And because you said we can promote it, right. Check out my report about HeatWave latest release where I post in oracle.com. >> Great, thank you for that. And Bob Evans, please. You're great at quick hits, hit us. >> Dave, thanks. I really enjoyed getting to hear everybody's opinion here today and I think what's going to happen too. I think there's a new generation of buyers, a new set of CXO influencers in here. And I think what Oracle's done with this, MySQL HeatWave, those benchmarks that Ron talked about so eloquently here that is going to become something that forces other companies, not just try to get incrementally better. I think we're going to see a massive new wave of innovation to try to play catch up. So I really take my hat off to Oracle's achievement from going to, push everybody to be better. >> Excellent. Marc Staimer, what do you say? >> Sure, I'm going to leverage off of something Matt said earlier, "Those companies that are going to develop faster, cheaper, simpler products that are going to solve customer problems, IT problems are the ones that are going to succeed, or the ones who are going to grow. The one who are just focused on the technology are going to fall by the wayside." So those who can solve more problems, do it more elegantly and do it for less money are going to do great. So Oracle's going down that path today, Snowflake's going down that path. They're trying to do more integration with third party, but as a result, aiming at that simpler, faster, cheaper mentality is where you're going to continue to see this market go. >> Amen brother Marc. >> Thank you, Ron Westfall, we'll give you the last word, bring us home. >> Well, thank you. And I'm loving it. I see a wave of innovation across the entire cloud database ecosystem and Oracle is fueling it. We are seeing it, with the native integration of auto ML capabilities, elastic scaling, lower entry price points, et cetera. And this is just going to be great news for buyers, but also developers and increased use of open APIs. And so I think that is really the key takeaways. Just we're going to see a lot of great innovation on the horizon here. >> Guys, fantastic insights, one of the best power panel as I've ever done. Love to have you back. Thanks so much for coming on today. >> Great job, Dave, thank you. >> All right, and thank you for watching. This is Dave Vellante for theCube and we'll see you next time. (soft music)

(upbeat music) >> When Oracle acquired Sun in 2009, it paid $5.6 billion net of Sun's cash and debt. Now I argued at the time that Oracle got one of the best deals in the history of enterprise tech, and I got a lot of grief for saying that because Sun had a declining business, it was losing money, and its revenue was under serious pressure as it tried to hang on for dear life. But Safra Catz understood that Oracle could pay Sun's lower profit and lagging businesses, like its low index 86 product lines, and even if Sun's revenue was cut in half, because Oracle has such a high revenue multiple as a software company, it could almost instantly generate $25 to $30 billion in shareholder value on paper. In addition, it was a catalyst for Oracle to initiate its highly differentiated engineering systems business, and was actually the precursor to Oracle's Cloud. Oracle saw that it could capture high margin dollars that used to go to partners like HP, it's original exit data partner, and get paid for the full stack across infrastructure, middleware, database, and application software, when eventually got really serious about cloud. Now there was also a major technology angle to this story. Remember Sun's tagline, "the network is the computer"? Well, they should have just called it cloud. Through the Sun acquisition. Oracle also got a couple of key technologies, Java, the number one programming language in the world, and MySQL, a key ingredient of the LAMP stack, that's Linux, Apache, MySQL and PHP, Perl or Python, on which the internet is basically built, and is used by many cloud services like Facebook, Twitter, WordPress, Flicker, Amazon, Aurora, and many other examples, including, by the way, Maria DB, which is a fork of MySQL created by MySQL's creator, basically in protest to Oracle's acquisition; the drama is Oscar worthy. It gets even better. In 2020, Oracle began introducing a new version of MySQL called MySQL HeatWave, and since late 2020 it's been in sort of a super cycle rolling, out three new releases in less than a year and a half in an attempt to expand its Tam and compete in new markets. Now we covered the release of MySQL Autopilot, which uses machine learning to automate management functions. And we also covered the bench marketing that Oracle produced against Snowflake, AWS, Azure, and Google. And Oracle's at it again with HeatWave, adding machine learning into its database capabilities, along with previously available integrations of OLAP and OLTP. This, of course, is in line with Oracle's converged database philosophy, which, as we've reported, is different from other cloud database providers, most notably Amazon, which takes the right tool for the right job approach and chooses database specialization over a one size fits all strategy. Now we've asked Oracle to come on theCUBE and explain these moves, and I'm pleased to welcome back Nipun Agarwal, who's the senior vice president for MySQL Database and HeatWave at Oracle. And today, in this video exclusive, we'll discuss machine learning, other new capabilities around elasticity and compression, and then any benchmark data that Nipun wants to share. Nipun's been a leading advocate of the HeatWave program. He's led engineering in that team for over 10 years, and he has over 185 patents in database technologies. Welcome back to the show Nipun. Great to see you again. Thanks for coming on. >> Thank you, Dave. Very happy to be back. >> Yeah, now for those who may not have kept up with the news, maybe to kick things off you could give us an overview of what MySQL HeatWave actually is so that we're all on the same page. >> Sure, Dave, MySQL HeatWave is a fully managed MySQL database service from Oracle, and it has a builtin query accelerator called HeatWave, and that's the part which is unique. So with MySQL HeatWave, customers of MySQL get a single database which they can use for transactional processing, for analytics, and for mixed workloads because traditionally MySQL has been designed and optimized for transaction processing. So in the past, when customers had to run analytics with the MySQL based service, they would need to move the data out of MySQL into some other database for running analytics. So they would end up with two different databases and it would take some time to move the data out of MySQL into this other system. With MySQL HeatWave, we have solved this problem and customers now have a single MySQL database for all their applications, and they can get the good performance of analytics without any changes to their MySQL application. >> Now it's no secret that a lot of times, you know, queries are not, you know, most efficiently written, and critics of MySQL HeatWave will claim that this product is very memory and cluster intensive, it has a heavy footprint that adds to cost. How do you answer that, Nipun? >> Right, so for offering any database service in the cloud there are two dimensions, performance and cost, and we have been very cognizant of both of them. So it is indeed the case that HeatWave is a, in-memory query accelerator, which is why we get very good performance, but it is also the case that we have optimized HeatWave for commodity cloud services. So for instance, we use the least expensive compute. We use the least expensive storage. So what I would suggest is for the customers who kind of would like to know what is the price performance advantage of HeatWave compared to any database we have benchmark against, Redshift, Snowflake, Google BigQuery, Azure Synapse, HeatWave is significantly faster and significantly lower price on a multitude of workloads. So not only is it in-memory database and optimized for that, but we have also optimized it for commodity cloud services, which makes it much lower price than the competition. >> Well, at the end of the day, it's customers that sort of decide what the truth is. So to date, what's been the customer reaction? Are they moving from other clouds from on-prem environments? Both why, you know, what are you seeing? >> Right, so we are definitely a whole bunch of migrations of customers who are running MySQL on-premise to the cloud, to MySQL HeatWave. That's definitely happening. What is also very interesting is we are seeing that a very large percentage of customers, more than half the customers who are coming to MySQL HeatWave, are migrating from other clouds. We have a lot of migrations coming from AWS Aurora, migrations from RedShift, migrations from RDS MySQL, TerriData, SAP HANA, right. So we are seeing migrations from a whole bunch of other databases and other cloud services to MySQL HeatWave. And the main reason we are told why customers are migrating from other databases to MySQL HeatWave are lower cost, better performance, and no change to their application because many of these services, like AWS Aurora are ETL compatible with MySQL. So when customers try MySQL HeatWave, not only do they get better performance at a lower cost, but they find that they can migrate their application without any changes, and that's a big incentive for them. >> Great, thank you, Nipun. So can you give us some names? Are there some real world examples of these customers that have migrated to MySQL HeatWave that you can share? >> Oh, absolutely, I'll give you a few names. Stutor.com, this is an educational SaaS provider raised out of Brazil. They were using Google BigQuery, and when they migrated to MySQL HeatWave, they found a 300X, right, 300 times improvement in performance, and it lowered their cost by 85 (audio cut out). Another example is Neovera. They offer cybersecurity solutions and they were running their application on an on-premise version of MySQL when they migrated to MySQL HeatWave, their application improved in performance by 300 times and their cost reduced by 80%, right. So by going from on-premise to MySQL HeatWave, they reduced the cost by 80%, improved performance by 300 times. We are Glass, another customer based out of Brazil. They were running on AWS EC2, and when they migrated, within hours they found that there was a significant improvement, like, you know, over 5X improvement in database performance, and they were able to accommodate a very large virtual event, which had more than a million visitors. Another example, Genius Senority. They are a game designer in Japan, and when they moved to MySQL HeatWave, they found a 90 times percent improvement in performance. And there many, many more like a lot of migrations, again, from like, you know, Aurora, RedShift and many other databases as well. And consistently what we hear is (audio cut out) getting much better performance at a much lower cost without any change to their application. >> Great, thank you. You know, when I ask that question, a lot of times I get, "Well, I can't name the customer name," but I got to give Oracle credit, a lot of times you guys have at your fingertips. So you're not the only one, but it's somewhat rare in this industry. So, okay, so you got some good feedback from those customers that did migrate to MySQL HeatWave. What else did they tell you that they wanted? Did they, you know, kind of share a wishlist and some of the white space that you guys should be working on? What'd they tell you? >> Right, so as customers are moving more data into MySQL HeatWave, as they're consolidating more data into MySQL HeatWave, customers want to run other kinds of processing with this data. A very popular one is (audio cut out) So we have had multiple customers who told us that they wanted to run machine learning with data which is stored in MySQL HeatWave, and for that they have to extract the data out of MySQL (audio cut out). So that was the first feedback we got. Second thing is MySQL HeatWave is a highly scalable system. What that means is that as you add more nodes to a HeatWave cluster, the performance of the system improves almost linearly. But currently customers need to perform some manual steps to add most to a cluster or to reduce the cluster size. So that was other feedback we got that people wanted this thing to be automated. Third thing is that we have shown in the previous results, that HeatWave is significantly faster and significantly lower price compared to competitive services. So we got feedback from customers that can we trade off some performance to get even lower cost, and that's what we have looked at. And then finally, like we have some results on various data sizes with TPC-H. Customers wanted to see if we can offer some more data points as to how does HeatWave perform on other kinds of workloads. And that's what we've been working on for the several months. >> Okay, Nipun, we're going to get into some of that, but, so how did you go about addressing these requirements? >> Right, so the first thing is we are announcing support for in-database machine learning, meaning that customers who have their data inside MySQL HeatWave can now run training, inference, and prediction all inside the database without the data or the model ever having to leave the database. So that's how we address the first one. Second thing is we are offering support for real time elasticity, meaning that customers can scale up or scale down to any number of nodes. This requires no manual intervention on part of the user, and for the entire duration of the resize operation, the system is fully available. The third, in terms of the costs, we have double the amount of data that can be processed per node. So if you look at a HeatWave cluster, the size of the cluster determines the cost. So by doubling the amount of data that can be processed per node, we have effectively reduced the cluster size which is required for planning a given workload to have, which means it reduces the cost to the customer by half. And finally, we have also run the TPC-DS workload on HeatWave and compared it with other vendors. So now customers can have another data point in terms of the performance and the cost comparison of HeatWave with other services. >> All right, and I promise, I'm going to ask you about the benchmarks, but I want to come back and drill into these a bit. How is HeatWave ML different from competitive offerings? Take for instance, Redshift ML, for example. >> Sure, okay, so this is a good comparison. Let's start with, let's say RedShift ML, like there are some systems like, you know, Snowflake, which don't even offer any, like, processing of machine learning inside the database, and they expect customers to write a whole bunch of code, in say Python or Java, to do machine learning. RedShift ML does have integration with SQL. That's a good start. However, when customers of Redshift need to run machine learning, and they invoke Redshift ML, it makes a call to another service, SageMaker, right, where so the data needs to be exported to a different service. The model is generated, and the model is also outside RedShift. With HeatWave ML, the data resides always inside the MySQL database service. We are able to generate models. We are able to train the models, run inference, run explanations, all inside the MySQL HeatWave service. So the data, or the model, never have to leave the database, which means that both the data and the models can now be secured by the same access control mechanisms as the rest of the data. So that's the first part, that there is no need for any ETL. The second aspect is the automation. Training is a very important part of machine learning, right, and it impacts the quality of the predictions and such. So traditionally, customers would employ data scientists to influence the training process so that it's done right. And even in the case of Redshift ML, the users are expected to provide a lot of parameters to the training process. So the second thing which we have worked on with HeatWave ML is that it is fully automated. There is absolutely no user intervention required for training. Third is in terms of performance. So one of the things we are very, very sensitive to is performance because performance determines the eventual cost to the customer. So again, in some benchmarks, which we have published, and these are all available on GitHub, we are showing how HeatWave ML is 25 times faster than Redshift ML, and here's the kicker, at 1% of the cost. So four benefits, the data all remain secure inside the database service, it's fully automated, much faster, much lower cost than the competition. >> All right, thank you Nipun. Now, so there's a lot of talk these days about explainability and AI. You know, the system can very accurately tell you that it's a cat, you know, or for you Silicon Valley fans, it's a hot dog or not a hot dog, but they can't tell you how the system got there. So what is explainability, and why should people care about it? >> Right, so when we were talking to customers about what they would like from a machine learning based solution, one of the feedbacks we got is that enterprise is a little slow or averse to uptaking machine learning, because it seems to be, you know, like magic, right? And enterprises have the obligation to be able to explain, or to provide a answer to their customers as to why did the database make a certain choice. With a rule based solution it's simple, it's a rule based thing, and you know what the logic was. So the reason explanations are important is because customers want to know why did the system make a certain prediction? One of the important characteristics of HeatWave ML is that any model which is generated by HeatWave ML can be explained, and we can do both global explanations or model explanations as well as we can also do local explanations. So when the system makes a specific prediction using HeatWave ML, the user can find out why did the system make such a prediction? So for instance, if someone is being denied a loan, the user can figure out what were the attribute, what were the features which led to that decision? So this ensures, like, you know, fairness, and many of the times there is also like a need for regulatory compliance where users have a right to know. So we feel that explanations are very important for enterprise workload, and that's why every model which is generated by HeatWave ML can be explained. >> Now I got to give Snowflakes some props, you know, this whole idea of separating compute from storage, but also bringing the database to the cloud and driving elasticity. So that's been a key enabler and has solved a lot of problems, in particular the snake swallowing the basketball problem, as I often say. But what about elasticity and elasticity in real time? How is your version, and there's a lot of companies chasing this, how is your approach to an elastic cloud database service different from what others are promoting these days? >> Right, so a couple of characteristics. One is that we have now fully automated the process of elasticity, meaning that if a user wants to scale up or scale down, the only thing they need to specify is the eventual size of the cluster and the system completely takes care of it transparently. But then there are a few characteristics which are very unique. So for instance, we can scale up or scale down to any number of nodes. Whereas in the case of Snowflake, the number of nodes someone can scale up or scale down to are the powers of two. So if a user needs 70 CPUs, well, their choice is either 64 or 128. So by providing this flexibly with MySQL HeatWave, customers get a custom fit. So they can get a cluster which is optimized for their specific portal. So that's the first thing, flexibility of scaling up or down to any number of nodes. The second thing is that after the operation is completed, the system is fully balanced, meaning the data across the various nodes is fully balanced. That is not the case with many solutions. So for instance, in the case of Redshift, after the resize operation is done, the user is expected to manually balance the data, which can be very cumbersome. And the third aspect is that while the resize operation is going on, the HeatWave cluster is completely available for queries, for DMLS, for loading more data. That is, again, not the case with Redshift. Redshift, suppose the operation takes 10 to 15 minutes, during that window of time, the system is not available for writes, and for a big part of that chunk of time, the system is not even available for queries, which is very limiting. So the advantages we have are fully flexible, the system is in a balanced state, and the system is completely available for the entire duration operation. >> Yeah, I guess you got that hypergranularity, which, you know, sometimes they say, "Well, t-shirt sizes are good enough," but then I think of myself, some t-shirts fit me better than others, so. Okay, I saw on the announcement that you have this lower price point for customers. How did you actually achieve this? Could you give us some details around that please? >> Sure, so there are two things for announcing this service, which lower the cost for the customers. The first thing is that we have doubled the amount of data that can be processed by a HeatWave node. So if we have doubled the amount of data, which can be a process by a node, the cluster size which is required by customers reduces to half, and that's why the cost drops to half. The way we have managed to do this is by two things. One is support for Bloom filters, which reduces the amount of intermediate memory. And second is we compress the base data. So these are the two techniques we have used to process more data per node. The second way by which we are lowering the cost for the customers is by supporting pause and resume of HeatWave. And many times you find customers of like HeatWave and other services that they want to run some other queries or some other workloads for some duration of time, but then they don't need the cluster for a few hours. Now with the support for pause and resume, customers can pause the cluster and the HeatWave cluster instantaneously stops. And when they resume, not only do we fetch the data, in a very, like, you know, a quick pace from the object store, but we also preserve all the statistics, which are used by Autopilot. So both the data and the metadata are fetched, extremely fast from the object store. So with these two capabilities we feel that it'll drive down the cost to our customers even more. >> Got it, thank you. Okay, I promised I was going to get to the benchmarks. Let's have it. How do you compare with others but specifically cloud databases? I mean, and how do we know these benchmarks are real? My friends at EMC, they were back in the day, they were brilliant at doing benchmarks. They would produce these beautiful PowerPoints charts, but it was kind of opaque, but what do you say to that? >> Right, so there are multiple things I would say. The first thing is that this time we have published two benchmarks, one is for machine learning and other is for SQL analytics. All the benchmarks, including the scripts which we have used are available on GitHub. So we have full transparency, and we invite and encourage customers or other service providers to download the scripts, to download the benchmarks and see if they get any different results, right. So what we are seeing, we have published it for other people to try and validate. That's the first part. Now for machine learning, there hasn't been a precedence for enterprise benchmarks so we talk about aiding open data sets and we have published benchmarks for those, right? So both for classification, as well as for aggression, we have run the training times, and that's where we find that HeatWave MLS is 25 times faster than RedShift ML at one percent of the cost. So fully transparent, available. For SQL analytics, in the past we have shown comparisons with TPC-H. So we would show TPC-H across various databases, across various data sizes. This time we decided to use TPC-DS. the advantage of TPC-DS over TPC-H is that it has more number of queries, the queries are more complex, the schema is more complex, and there is a lot more data skew. So it represents a different class of workloads, and which is very interesting. So these are queries derived from the TPC-DS benchmark. So the numbers we have are published this time are for 10 terabyte TPC-DS, and we are comparing with all the four majors services, Redshift, Snowflake, Google BigQuery, Azure Synapse. And in all the cases, HeatWave is significantly faster and significantly lower priced. Now one of the things I want to point out is that when we are doing the cost comparison with other vendors, we are being overly fair. For instance, the cost of HeatWave includes the cost of both the MySQL node as well as the HeatWave node, and with this setup, customers can run transaction processing analytics as well as machine learning. So the price captures all of it. Whereas with the other vendors, the comparison is only for the analytic queries, right? So if customers wanted to run RDP, you would need to add the cost of that database. Or if customers wanted to run machine learning, you would need to add the cost of that service. Furthermore, with the case of HeatWave, we are quoting pay as you go price, whereas for other vendors like, you know, RedShift, and like, you know, where applicable, we are quoting one year, fully paid upfront cost rate. So it's like, you know, very fair comparison. So in terms of the numbers though, price performance for TPC-DS, we are about 4.8 times better price performance compared to RedShift We are 14.4 times better price performance compared to Snowflake, 13 times better than Google BigQuery, and 15 times better than Synapse. So across the board, we are significantly faster and significantly lower price. And as I said, all of these scripts are available in GitHub for people to drive for themselves. >> Okay, all right, I get it. So I think what you're saying is, you could have said this is what it's going to cost for you to do both analytics and transaction processing on a competitive platform versus what it takes to do that on Oracle MySQL HeatWave, but you're not doing that. You're saying, let's take them head on in their sweet spot of analytics, or OLTP separately and you're saying you still beat them. Okay, so you got this one database service in your cloud that supports transactions and analytics and machine learning. How much do you estimate your saving companies with this integrated approach versus the alternative of kind of what I called upfront, the right tool for the right job, and admittedly having to ETL tools. How can you quantify that? >> Right, so, okay. The numbers I call it, right, at the end of the day in a cloud service price performance is the metric which gives a sense as to how much the customers are going to save. So for instance, for like a TPC-DS workload, if we are 14 times better price performance than Snowflake, it means that our cost is going to be 1/14th for what customers would pay for Snowflake. Now, in addition, in other costs, in terms of migrating the data, having to manage two different databases, having to pay for other service for like, you know, machine learning, that's all extra and that depends upon what tools customers are using or what other services they're using for transaction processing or for machine learning. But these numbers themselves, right, like they're very, very compelling. If we are 1/5th the cost of Redshift, right, or 1/14th of Snowflake, these numbers, like, themselves are very, very compelling. And that's the reason we are seeing so many of these migrations from these databases to MySQL HeatWave. >> Okay, great, thank you. Our last question, in the Q3 earnings call for fiscal 22, Larry Ellison said that "MySQL HeatWave is coming soon on AWS," and that caught a lot of people's attention. That's not like Oracle. I mean, people might say maybe that's an indication that you're not having success moving customers to OCI. So you got to go to other clouds, which by the way I applaud, but any comments on that? >> Yep, this is very much like Oracle. So if you look at one of the big reasons for success of the Oracle database and why Oracle database is the most popular database is because Oracle database runs on all the platforms, and that has been the case from day one. So very akin to that, the idea is that there's a lot of value in MySQL HeatWave, and we want to make sure that we can offer same value to the customers of MySQL running on any cloud, whether it's OCI, whether it's the AWS, or any other cloud. So this shows how confident we are in our offering, and we believe that in other clouds as well, customers will find significant advantage by having a single database, which is much faster and much lower price then what alternatives they currently have. So this shows how confident we are about our products and services. >> Well, that's great, I mean, obviously for you, you're in MySQL group. You love that, right? The more places you can run, the better it is for you, of course, and your customers. Okay, Nipun, we got to leave it there. As always it's great to have you on theCUBE, really appreciate your time. Thanks for coming on and sharing the new innovations. Congratulations on all the progress you're making here. You're doing a great job. >> Thank you, Dave, and thank you for the opportunity. >> All right, and thank you for watching this CUBE conversation with Dave Vellante for theCUBE, your leader in enterprise tech coverage. We'll see you next time. (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 you know we've often said that the next 10 years in cloud computing won't be like the last ten cloud has firmly planted its footprint on the other side of the chasm with the momentum of the entire multi-trillion dollar tech business behind it both sellers and buyers are leaning in by adopting cloud technologies and many are building their own value layers on top of cloud in the coming years we expect innovation will continue to coalesce around the three big u.s clouds plus alibaba in apac with the ecosystem building value on top of the hardware saw tooling provided by the hyperscalers now importantly we don't see this as a race to the bottom rather our expectation is that the large public cloud players will continue to take cost out of their platforms through innovation automation and integration while other cloud providers and the ecosystem including traditional companies that buy it mine opportunities in their respective markets as matt baker of dell is fond of saying this is not a zero sum game welcome to this week's wikibon cube insights powered by etr in this breaking analysis we'll update you on our latest projections in the cloud market we'll share some new etr survey data with some surprising nuggets and drill into this the important cloud database landscape first we want to take a look at what people are talking about in cloud and what's been in the recent news with the exception of alibaba all the large cloud players have reported earnings google continues to focus on growth at the expense of its profitability google reported that it's cloud business which includes applications like google workspace grew 45 percent to five and a half billion dollars but it had an operating loss of 890 billion now since thomas curion joined google to run its cloud business google has increased head count in its cloud business from 25 000 25 000 people now it's up to 40 000 in an effort to catch up to the two leaders but playing catch up is expensive now to put this into perspective let's go back to aws's revenue in q1 2018 when the company did 5.4 billion so almost exactly the same size as google's current total cloud business and aws is growing faster at the time at 49 don't forget google includes in its cloud numbers a big chunk of high margin software aws at the time had an operating profit of 1.4 billion that quarter around 26 of its revenues so it was a highly profitable business about as profitable as cisco's overall business which again is a great business this is what happens when you're number three and didn't get your head out of your ads fast enough now in fairness google still gets high marks on the quality of its technology according to corey quinn of the duck bill group amazon and google cloud are what he called neck and neck with regard to reliability with microsoft azure trailing because of significant disruptions in the past these comments were made last week in a bloomberg article despite some recent high-profile outages on aws not surprisingly a microsoft spokesperson said that the company's cloud offers industry-leading reliability and that gives customers payment credits after some outages thank you turning to microsoft and cloud news microsoft's overall cloud business surpassed 22 billion in the december quarter up 32 percent year on year like google microsoft includes application software and sas offerings in its cloud numbers and gives little nuggets of guidance on its azure infrastructure as a service business by the way we estimate that azure comprises about 45 percent of microsoft's overall cloud business which we think hit a 40 billion run rate last quarter microsoft guided in its earning call that recent declines in the azure growth rates will reverse in q1 and that implies sequential growth for azure and finally it was announced that the ftc not the doj will review microsoft's announced 75 billion acquisition of activision blizzard it appears ftc chair lena khan wants to take this one on herself she of course has been very outspoken about the power of big tech companies and in recent a recent cnbc interview suggested that the u.s government's actions were a meaningful contributor back then to curbing microsoft's power in the 90s i personally found that dubious just ask netscape wordperfect novell lotus and spc the maker of harvard presentation graphics how effective the government was in curbing microsoft power generally my take is that the u s government has had a dismal record regulating tech companies most notably ibm and microsoft and it was market forces company hubris complacency and self-inflicted wounds not government intervention these were far more effective than the government now of course if companies are breaking the law they should be punished but the u.s government hasn't been very productive in its actions and the unintended consequences of regulation could be detrimental to the u.s competitiveness in the race with china but i digress lastly in the news amazon announced earnings thursday and the company's value increased by 191 billion dollars on friday that's a record valuation gain for u.s stocks aws amazon's profit engine grew 40 percent year on year for the quarter it closed the year at 62 billion dollars in revenue and at a 71 billion dollar revenue run rate aws is now larger than ibm which without kindrel is at a 67 billion dollar run rate just for context ibm's revenue in 2011 was 107 billion dollars now there's a conversation going on in the media and social that in order to continue this growth and compete with microsoft that aws has to get into the sas business and offer applications we don't think that's the right strategy for amp from for amazon in the near future rather we see them enabling developers to compete in that business finally amazon disclosed that 48 of its top 50 customers are using graviton 2 instances why is this important because aws is well ahead of the competition in custom silicon chips is and is on a price performance curve that is far better than alternatives especially those based on x86 this is one of the reasons why we think this business is not a race to the bottom aws is being followed by google microsoft and alibaba in terms of developing custom silicon and will continue to drive down their internal cost structures and deliver price performance equal to or better than the historical moore's law curves so that's the recent news for the big u.s cloud providers let's now take a look at how the year ended for the big four hyperscalers and look ahead to next year here's a table we've shown this view before it shows the revenue estimates for worldwide is and paths generated by aws microsoft alibaba and google now remember amazon and alibaba they share clean eye ass figures whereas microsoft and alphabet only give us these nuggets that we have to interpret and we correlate those tidbits with other data that we gather we're one of the few outlets that actually attempts to make these apples to apples comparisons there's a company called synergy research there's another firm that does this but i really can't map to their numbers their gcp figures look far too high and azure appears somewhat overestimated and they do include other stuff like hosted private cloud services but it's another data point that you can use okay back to the table we've slightly adjusted our gcp figures down based on interpreting some of alphabet's statements and other survey data only alibaba has yet to announce earnings so we'll stick to a 2021 market size of about 120 billion dollars that's a 41 growth rate relative to 2020 and we expect that figure to increase by 38 percent to 166 billion in 2022 now we'll discuss this a bit later but these four companies have created an opportunity for the ecosystem to build what we're calling super clouds on top of this infrastructure and we're seeing it happen it was increasingly obvious at aws re invent last year and we feel it will pick up momentum in the coming months and years a little bit more on that later now here's a graphical view of the quarterly revenue shares for these four companies notice that aws has reversed its share erosion and is trending up slightly aws has accelerated its growth rate four quarters in a row now it accounted for 52 percent of the big four hyperscaler revenue last year and that figure was nearly 54 in the fourth quarter azure finished the year with 32 percent of the hyper scale revenue in 2021 which dropped to 30 percent in q4 and you can see gcp and alibaba they're neck and neck fighting for the bronze medal by the way in our recent 2022 predictions post we said google cloud platform would surpass alibaba this year but given the recent trimming of our numbers google's got some work to do for that prediction to be correct okay just to put a bow on the wikibon market data let's look at the quarterly growth rates and you'll see the compression trends there this data tracks quarterly revenue growth rates back to 20 q1 2019 and you can see the steady downward trajectory and the reversal that aws experienced in q1 of last year now remember microsoft guided for sequential growth and azure so that orange line should trend back up and given gcp's much smaller and big go to market investments that we talked about we'd like to see an acceleration there as well the thing about aws is just remarkable that it's able to accelerate growth at a 71 billion run rate business and alibaba you know is a bit more opaque and likely still reeling from the crackdown of the chinese government we're admittedly not as close to the china market but we'll continue to watch from afar as that steep decline in growth rate is somewhat of a concern okay let's get into the survey data from etr and to do so we're going to take some time series views on some of the select cloud platforms that are showing spending momentum in the etr data set you know etr uses a metric we talked about this a lot called net score to measure that spending velocity of products and services netscore basically asks customers are you spending more less or the same on a platform and a vendor and then it subtracts the lesses from the moors and that yields a net score this chart shows net score for five cloud platforms going back to january 2020. note in the table that the table we've inserted inside that chart shows the net score and shared n the latter metric indicates the number of mentions in the data set and all the platforms we've listed here show strong presence in the survey that red dotted line at 40 percent that indicates spending is at an elevated level and you can see azure and aws and vmware cloud on aws as well as gcp are all nicely elevated and bounding off their october figures indicating continued cloud momentum overall but the big surprise in these figures is the steady climb and the steep bounce up from oracle which came in just under the 40 mark now one quarter is not necessarily a trend but going back to january 2020 the oracle peaks keep getting higher and higher so we definitely want to keep watching this now here's a look at some of the other cloud platforms in the etr survey the chart here shows the same time series and we've now brought in some of the big hybrid players notably vmware cloud which is vcf and other on-prem solutions red hat openstack which as we've reported in the past is still popular in telcos who want to build their own cloud we're also starting to see hpe with green lake and dell with apex show up more and ibm which years ago acquired soft layer which was really essentially a bare metal hosting company and over the years ibm cobbled together its own public cloud ibm is now racing after hybrid cloud using red hat openshift as the linchpin to that strategy now what this data tells us first of all these platforms they don't have the same presence in the data set as do the previous players vmware is the one possible exception but other than vmware these players don't have the spending velocity shown in the previous chart and most are below the red line hpe and dell are interesting and notable in that they're transitioning their early private cloud businesses to dell gr sorry hpe green lake and dell apex respectively and finally after years of kind of staring at their respective navels in in cloud and milking their legacy on-prem models they're finally building out cloud-like infrastructure for their customers they're leaning into cloud and marketing it in a more sensible and attractive fashion for customers so we would expect these figures are going to bounce around for a little while for those two as they settle into a groove and we'll watch that closely now ibm is in the process of a complete do-over arvin krishna inherited three generations of leadership with a professional services mindset now in the post gerschner gerstner era both sam palmisano and ginny rometty held on far too long to ibm's service heritage and protected the past from the future they missed the cloud opportunity and they forced the acquisition of red hat to position the company for the hybrid cloud remedy tried to shrink to grow but never got there krishna is moving faster and with the kindred spin is promising mid-single-digit growth which would be a welcome change ibm is a lot of work to do and we would expect its net score figures as well to bounce around as customers transition to the future all right let's take a look at all these different players in context these are all the clouds that we just talked about in a two-dimensional view the vertical axis is net score or spending momentum and the horizontal axis is market share or presence or pervasiveness in the data set a couple of call-outs that we'd like to make here first the data confirms what we've been saying what everybody's been saying aws and microsoft stand alone with a huge presence many tens of billions of dollars in revenue yet they are both well above the 40 line and show spending momentum and they're well ahead of gcp on both dimensions second vmware while much smaller is showing legitimate momentum which correlates to its public statements alibaba the alibaba in this survey really doesn't have enough sample to make hardcore conclusions um you can see hpe and dell and ibm you know similarly they got a little bit more presence in the data set but they clearly have some work to do what you're seeing there is their transitioning their legacy install bases oracle's the big surprise look what oracle was in the january survey and how they've shot up recently now we'll see if this this holds up let's posit some possibilities as to why it really starts with the fact that oracle is the king of mission critical apps now if you haven't seen video on twitter you have to check it out it's it's hilarious we're not going to run the video here but the link will be in our post but i'll give you the short version some really creative person they overlaid a data migration narrative on top of this one tooth guy who speaks in spanish gibberish but the setup is he's a pm he's a he's a a project manager at a bank and aws came into the bank this of course all hypothetical and said we can move all your apps to the cloud in 12 months and the guy says but wait we're running mission critical apps on exadata and aws says there's nothing special about exadata and he starts howling and slapping his knee and laughing and giggling and talking about the 23 year old senior engineer who says we're going to do this with microservices and he could tell he was he was 23 because he was wearing expensive sneakers and what a nightmare they encountered migrating their environment very very very funny video and anyone who's ever gone through a major migration of mission critical systems this is gonna hit home it's funny not funny the point is it's really painful to move off of oracle and oracle for all its haters and its faults is really the best environment for mission critical systems and customers know it so what's happening is oracle's building out the best cloud for oracle database and it has a lot of really profitable customers running on-prem that the company is migrating to oracle cloud infrastructure oci it's a safer bet than ripping it and putting it into somebody else's cloud that doesn't have all the specialized hardware and oracle knowledge because you can get the same integrated exadata hardware and software to run your database in the oracle cloud it's frankly an easier and much more logical migration path for a lot of customers and that's possibly what's happening here not to mention oracle jacks up the license price nearly doubles the license price if you run on other clouds so not only is oracle investing to optimize its cloud infrastructure it spends money on r d we've always talked about that really focused on mission critical applications but it's making it more cost effective by penalizing customers that run oracle elsewhere so this possibly explains why when the gartner magic quadrant for cloud databases comes out it's got oracle so well positioned you can see it there for yourself oracle's position is right there with aws and microsoft and ahead of google on the right-hand side is gartner's critical capabilities ratings for dbms and oracle leads in virtually all of the categories gartner track this is for operational dvms so it's kind of a narrow view it's like the red stack sweet spot now this graph it shows traditional transactions but gartner has oracle ahead of all vendors in stream processing operational intelligence real-time augmented transactions now you know gartner they're like old name framers and i say that lovingly so maybe they're a bit biased and they might be missing some of the emerging opportunities that for example like snowflake is pioneering but it's hard to deny that oracle for its business is making the right moves in cloud by optimizing for the red stack there's little question in our view when it comes to mission critical we think gartner's analysis is correct however there's this other really exciting landscape emerging in cloud data and we don't want it to be a blind spot snowflake calls it the data cloud jamactagani calls it data mesh others are using the term data fabric databricks calls it data lake house so so does oracle by the way and look the terminology is going to evolve and most of the action action that's happening is in the cloud quite frankly and this chart shows a select group of database and data warehouse companies and we've filtered the data for aws azure and gcp customers accounts so how are these accounts or companies that were showing how these vendors were showing doing in aws azure and gcp accounts and to make the cut you had to have a minimum of 50 mentions in the etr survey so unfortunately data bricks didn't make it just not enough presence in the data set quite quite yet but just to give you a sense snowflake is represented in this cut with 131 accounts aws 240 google 108 microsoft 407 huge [ __ ] 117 cloudera 52 just made the cut ibm 92 and oracle 208. again these are shared accounts filtered by customers running aws azure or gcp the chart shows a net score lime green is new ads forest green is spending more gray is flat spending the pink is spending less and the bright red is defection again you subtract the red from the green and you get net score and you can see that snowflake as we reported last week is tops in the data set with a net score in the 80s and virtually no red and even by the way single digit flat spend aws google and microsoft are all prominent in the data set as is [ __ ] and snowflake as i just mentioned and they're all elevated over the 40 mark cloudera yeah what can we say once they were a high flyer they're really not in the news anymore with anything compelling other than they just you know took the company private so maybe they can re-emerge at some point with a stronger story i hope so because as you can see they actually have some new additions and spending momentum in the green just a lot of customers holding steady and a bit too much red but they're in the positive territory at least with uh plus 17 percent unlike ibm and oracle and this is the flip side of the coin ibm they're knee-deep really chest deep in the middle of a major transformation we've said before arvind krishna's strategy and vision is at least achievable prune the portfolio i.e spin out kindrel sell watson health hold serve with the mainframe and deal with those product cycles shift the mix to software and use red hat to win the day in hybrid red hat is working for ibm's growing well into the double digits unfortunately it's not showing up in this chart with little database momentum in aws azure and gcp accounts zero new ads not enough acceleration and spending a big gray middle in nearly a quarter of the base in the red ibm's data and ai business only grew three percent this last quarter and the word database wasn't even mentioned once on ibm's earnings call this has to be a concern as you can see how important database is to aws microsoft google and the momentum it's giving companies like snowflake and [ __ ] and others which brings us to oracle with a net score of minus 12. so how do you square the momentum in oracle cloud spending and the strong ratings and databases from gartner with this picture good question and i would say the following first look at the profile people aren't adding oracle new a large portion of the base 25 is reducing spend by 6 or worse and there's a decent percentage of the base migrating off oracle with a big fat middle that's flat and this accounts for the poor net score overall but what etr doesn't track is how much is being spent rather it's an account based model and oracle is heavily weighted toward big spenders running mission critical applications and databases oracle's non-gaap operating margins are comparable to ibm's gross margins on a percentage basis so a very profitable company with a big license and maintenance in stall basin oracle has focused its r d investments into cloud erp database automation they've got vertical sas and they've got this integrated hardware and software story and this drives differentiation for the company but as you can see in this chart it has a legacy install base that is constantly trying to minimize its license costs okay here's a little bit of different view on the same data we expand the picture with the two dimensions of net score on the y-axis and market share or pervasiveness on the horizontal axis and the table insert is how the data gets plotted y and x respectively not much to add here other than to say the picture continues to look strong for those companies above the 40 line that are focused and their focus and have figured out a clear cloud strategy and aren't necessarily dealing with a big install base the exception of course is is microsoft and the ones below the line definitely have parts of their portfolio which have solid momentum but they're fighting the inertia of a large install base that moves very slowly again microsoft had the advantage of really azure and migrating those customers very quickly okay so let's wrap it up starting with the big three cloud players aws is accelerating and innovating great example is custom silicon with nitro and graviton and other chips that will help the company address concerns related to the race to the bottom it's not a race to zero aws we believe will let its developers go after the sas business and for the most part aws will offer solutions that address large vertical markets think call centers the edge remains a wild card for aws and all the cloud players really aws believes that in the fullness of time all workloads will run in the public cloud now it's hard for us to imagine the tesla autonomous vehicles running in the public cloud but maybe aws will redefine what it means by its cloud microsoft well they're everywhere and they're expanding further now into gaming and the metaverse when he became ceo in 2014 many people said that satya should ditch xbox just as an aside the joke among many oracle employees at the time was that safra katz would buy her kids and her nieces and her nephews and her kids friends everybody xbox game consoles for the holidays because microsoft lost money for everyone that they shipped well nadella has stuck with it and he sees an opportunity to expand through online gaming communities one of his first deals as ceo was minecraft now the acquisition of activision will make microsoft the world's number three gaming company by revenue behind only 10 cent and sony all this will be powered by azure and drive more compute storage ai and tooling now google for its part is battling to stay relevant in the conversation luckily it can afford the massive losses it endures in cloud because the company's advertising business is so profitable don't expect as many have speculated that google is going to bail on cloud that would be a huge mistake as the market is more than large enough for three players which brings us to the rest of the pack cloud ecosystems generally and aws specifically are exploding the idea of super cloud that is a layer of value that spans multiple clouds hides the underlying complexity and brings new value that the cloud players aren't delivering that's starting to bubble to the top and legacy players are staying close to their customers and fighting to keep them spending and it's working dell hpe cisco and smaller predominantly on-plan prem players like pure storage they continue to do pretty well they're just not as sexy as the big cloud players the real interesting activity it's really happening in the ecosystem of companies and firms within industries that are transforming to create their own digital businesses virtually all of them are running a portion of their offerings on the public cloud but often connecting to on-premises workloads and data think goldman sachs making that work and creating a great experience across all environments is a big opportunity and we're seeing it form right before our eyes don't miss it okay that's it for now thanks to my colleague stephanie chan who helped research this week's topics remember these episodes are all available as podcasts wherever you listen just search breaking analysis podcast check out etr's website at etr dot ai and also we publish a full report every week on wikibon.com and siliconangle.com you can get in touch with me email me at david.velante siliconangle.com you can dm me at divalante or comment on my linkedin post this is dave vellante for the cube insights powered by etr have a great week stay safe be well and we'll see you next time [Music] you

>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from the cube in ETR. This is Breaking Analysis with Dave Vellante. >> On Friday, December 10th, Oracle announced a strong earnings beat and raise, on the strength of its licensed business, and slightly better than expected cloud performance. The stock was up sharply on the day and closed up nearly 16% surpassing 280 billion in market value. Oracle's success is due largely to its execution, of a highly differentiated strategy, that has really evolved over the past decade or more, deeply integrating its hardware and software, heavily investing in next generation cloud, creating a homogeneous experience across its application portfolio, and becoming the number one platform. Number one for the world's most mission critical applications. Now, while investors piled into the stock, skeptics will point to the beat being weighed toward licensed revenue and likely keep one finger on the sell button until they're convinced Oracle's cloud momentum, is more consistent and predictable. Hello and welcome to this week's Wikibond CUBE insights powered by ETR. In this breaking analysis, we'll review Oracle's most recent quarter, and pull in some ETR survey data, to frame the company's cloud business, the momentum of fusion ERP, where the company is winning and some gaps and opportunities that we see. The numbers this quarter was strong, particularly top line growth. Here are a few highlights. Oracle's revenues that grew 6% year on year that's in constant currency, surpassed $10 billion for the quarter. Oracle's non-gap operating margins, were an impressive 47%. Safra Catz has always said cloud is more profitable business and it's really starting to show in the income statement. Operating cash and free cash flow were 10.3 billion and 7.1 billion respectively, for the past four quarters, and would have been higher, if not for charges largely related to litigation expenses tied to the hiring of Mark Hurd, which the company said would not repeat in the future quarters. And you can see in this chart how Oracle breaks down its business, which is kind of a mishmash of items they lump into so-called the cloud. The largest piece of the revenue pie is cloud services, and licensed support, which in reading 10Ks, you'll find statements like the following; licensed support revenues are our largest revenue stream and include product upgrades, and maintenance releases and patches, as well as technical support assistance and statements like the following; cloud and licensed revenue, include the sale of cloud services, cloud licenses and on-premises licenses, which typically represent perpetual software licenses purchased by customers, for use in both cloud, and on-premises, IT environments. And cloud license and on-prem license revenues primarily represent amounts earned from granting customers perpetual licenses to use our database middleware application in industry specific products, which our customers use for cloud-based, on-premise and other IT environments. So you tell me, "is that cloud? I don't know." In the early days of Oracle cloud, the company used to break out, IaaS, PaaS and SaaS revenue separately, but it changed its mind, which really makes it difficult to determine what's happening in true cloud. Look I have no problem including same same hardware software control plane, et cetera. The hybrid if it's on-prem in a true hybrid environment like exadata cloud@customer or AWS outposts. But you have to question what's really cloud in these numbers. And Larry in the earnings call mentioned that Salesforce licenses the Oracle database, to run its cloud and Oracle doesn't count that in its cloud number, rather it counts it in license revenue, but as you can see it varies that into a line item that starts with the word cloud. So I guess I would say that Oracle's reporting is maybe somewhat better than IBM's cloud reporting, which is the worst, but I can't really say what is and isn't cloud, in these numbers. Nonetheless, Oracle is getting it done for investors. Here's a chart comparing the five-year performance of Oracle to some of its legacy peers. We excluded Microsoft because it skews the numbers. Microsoft would really crush all these names including Oracle. But look at Oracle. It's wedged in between the performance of the NASDAQ and the S&P 500, it's up over 160% in that five-year timeframe, well ahead of SAP which is up 59% in that time, and way ahead of the dismal -22% performance of IBM. Well, it's a shame. The tech tide is rising, it's lifting all boats but, IBM has unfortunately not been able to capitalize. That's a story for another day. As a market watcher, you can't help but love Larry Ellison. I only met him once at an IDC conference in Paris where I got to interview Scott McNealy, CEO at the time. Ellison is great for analysts because, he's not afraid to talk about the competition. He'll brag, he'll insult, he'll explain, and he'll pitch his stories. Now on the earnings call last night, he went off. Educating the analyst community, on the upside in the fusion ERP business, making the case that because only a thousand of the 7,500 legacy on-prem ERP customers from Oracle, JD Edwards and PeopleSoft have moved Oracle's fusion cloud ERP, and he predicted that Oracle's cloud ERP business will surpass 20 billion in five years. In fact, he said it's going to bigger than that. He slammed the hybrid cloud washing. You can see one of the quotes here in this chart, that's going on when companies have customers running in the cloud and they claim whatever they have on premise hybrid, he called that ridiculous. I would agree. And then he took an opportunity to slam the hyperscale cloud vendors, citing a telco customer that said Oracle's cloud never goes down, and of course, he chose the same week, that AWS had a major outage. And so to these points, I would say that Oracle really was the first tech company, to announce a true hybrid cloud strategy, where you have an entirely identical experience on prem and in the cloud. This was announced with cloud@customer, two years, before AWS announced outposts. Now it probably took Oracle two years to get it working as advertised, but they were first. And to the second point, this is where Oracle differentiates itself. Oracle is number one for mission critical applications. No other vendor really can come close to Oracle in this regard. And I would say that Oracle is recent quarterly performance to a large extent, is due to this differentiated approach. Over the past 10 years, we've talked to hundreds literally. Hundreds and hundreds of Oracle customers. And while they may not always like the tactics and licensing policies of Oracle in their contracting, they will tell you, that business case for investing and staying with Oracle are very strong. And yes, a big part of that is lock-in but R&D investments innovation and a keen sense of market direction, are just as important to these customers. When you're chairman and founder is a technologist and also the CTO, and has the cash on hand to invest, the results are a highly competitive story. Now that's not to say Oracle is not without its challenges. That's not to say Oracle is without its challenges. Those who follow this program know that when it comes to ETR survey data, the story is not always pretty for Oracle. So let's take a look. This chart shows the breakdown of ETR is net score methodology, Net score measures spending momentum and works ETR. Each quarter asks customers, are you adding in the platform, That's the lime green. Increasing spend by 6% or more, that's the fourth green. Is you're spending E+ or minus 5%, that's the gray. You're spending climbing by 6%, that's the pinkish. Or are you leaving the platform, that's the bright red retiring. You subtract the reds from the greens, and that yields a net score, which an Oracle's overall case, is an uninspiring -4%. This is one of the anomalies in the ETR dataset. The net score doesn't track absolute actual levels, of spending the dollars. Remember, as the leader in mission critical workloads, Oracle commands a premium price. And so what happens here is the gray, is still spending a large amount of money, enough to offset the declines, and the greens are spending more than they would on other platforms because Oracle could command higher prices. And so that's how Oracle is able to grow its overall revenue by 6% for example, whereas the ETR methodology, doesn't capture that trend. So you have to dig into the data a bit deeper. We're not going to go too deep today, but let's take a look at how some of Oracle's businesses are performing relative to its competitors. This is a popular view that we like to share. It shows net score or spending momentum on the vertical axis, and market share. Market share is a measure of pervasiveness in the survey. Think of it as mentioned share. That's on the x-axis. And we've broken down and circled Oracle overall, Oracle on prem, which is declining on the vertical axis, Oracle fusion and NetSuite, which are much higher than Oracle overall. And in the case of fusion, much closer to that 40% magic red horizontal line, remember anything above that line, we consider to be elevated. Now we've added SAP overall which has, momentum comparable to fusion in the survey, using this methodology and IBM, which is in between fusion and Oracle, overall on the y-axis. Oracle as you can see on the horizontal axis, has a larger presence than any of these firms that are below the 40% line. Now, above that 40% line, you see companies with a smaller presence in the survey like Workday, salesforce.com, pretty big presence still, Google cloud also, and Snowflake. Smaller presence but much much higher net score than anybody else on this chart. And AWS and Microsoft overall with both a strong presence, and impressive momentum, especially for their respective sizes. Now that view that we just showed you excluded on purpose Oracle specific cloud offering. So let's now take a look at that relative to other cloud providers. This chart shows the same XY view, but it cuts the data by cloud only. And you can see Oracle while still well below the 40% line, has a net score of +15 compared to a -4 overall that we showed you earlier. So here we see two key points. One, despite the convoluted reporting that we talked about earlier, the ETR data supports that Oracle's cloud business has significantly more momentum than Oracle's overall average momentum. And two, while Oracle is smaller and doesn't have the growth of the hyperscale giants, it's cloud is performing noticeably better than IBM's within the ETR survey data. Now a key point Ellison emphasized on the earnings call, was the importance of ERP, and the work that Oracle has done in this space. It lives by this notion of a cloud first mentality. It builds stuff for the cloud and then, would bring it on-prem. And it's been attracting new customers according to the company. He said Oracle has 8,500 fusion ERP customers, and 28,000 NetSuite customers in the cloud. And unlike Microsoft, it hasn't migrated its on-prem install base, to the cloud yet. Meaning these are largely new customers. Now this chart isolates fusion and NetSuite, within a sector ETR calls GPP. The very giant, public and private companies. And this is a bellwether of spending in the ETR dataset. They've gone back and it correlates to performance. So think large public companies, the biggest ones, and also privates big privates like Mars or Cargo or Fidelity. The chart shows the net score breakdown over time for fusion and NetSuite going back to 2019. And you can see, a big uptick as shown in the blue line from the October, 2020 survey. So Oracle has done a good job building and now marketing its cloud ERP to these important customers. Now, the last thing we want to show you is Oracle's performance within industry sectors. On the earnings call, Oracle said that it had a very strong momentum for fusion in financial services and healthcare. And this chart shows the net score for fusion, across each industry sector that ETR tracks, for three survey points. October, 2020, that's the gray bars, July 21, that's the blue bars and October, 2021, the yellow bars. So look it confirms Oracles assertions across the board that they're seeing fusion perform very well including the two verticals that are called out healthcare and banking slash financial services. Now the big question is where does Oracle go from here? Oracle has had a history of looking like it's going to break out, only to hit some bumps in the road. And so investors are likely going to remain a bit cautious and take profits off the table along the way. But since the Barron's article came out, we reported on that earlier this year in February, declaring Oracle a cloud giant, the stock is up more than 50% of course. 16 of those points were from Friday's move upward, but still, Oracle's highly differentiated strategy of integrating hardware and software together, investing in a modern cloud platform and selectively offering services that cater to the hardcore mission critical buyer, these have served the company, its customers and investors as well. From a cloud standpoint, we'd like to see Oracle be more inclusive, and aggressively expand its marketplace and its ecosystem. This would provide both greater optionality for customers, and further establish Oracle as a major cloud player. Indeed, one of the hallmarks of both AWS and Azure is the momentum being created, by their respective ecosystems. As well, we'd like to see more clear confirmation that Oracle's performance is being driven by its investments in technology IE cloud, same same hybrid, and industry features these modern investments, versus a legacy licensed cycles. We are generally encouraged and are reminded, of years ago when Sam Palmisano, he was retiring and leaving as the CEO of IBM. At the time, HP under the direction ironically of Mark Hurd, was the now company, Palmisano was asked, "do you worry about HP?" And he said in fact, "I don't worry about HP. I worry about Oracle because Oracle invests in R&D." And that statement has proven present. What do you think? Has Oracle hit the next inflection point? Let me know. Don't forget these episodes they're all available as podcasts wherever you listen, all you do is search it. Breaking Analysis podcast, check out ETR website at etr.plus. We also publish a full report every week on wikibon.com and siliconANGLE.com. You can get in touch with me on email David.vellante@siliconangle.com, you can DM me @dvellante on Twitter or, comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights. Powered by ETR. Have a great week everybody. Stay safe, be well, and we'll see you next time. (upbeat music)

>>Earlier this week, Oracle announced the new X nine M generation of exit data platforms for its cloud at customer and legacy on prem deployments. And the company made some enhancements to its zero data loss, recovery appliance. CLRA something we've covered quite often since its announcement. We had a video exclusive with one Louisa who was the executive vice president of mission critical database technologies. At Oracle. We did that on the day of the announcement who got his take on it. And I asked Oracle, Hey, can we get some subject matter experts, some technical gurus to dig deeper and get more details on the architecture because we want to better understand some of the performance claims that Oracle is making. And with me today is Susan. Who's the vice president of product management for exit data database machine. Bob tome is the vice president of product management for exit data cloud at customer. And Tim chin is the senior director of product management for DRA folks. Welcome to this power panel and welcome to the cube. >>Thank you, Dave. >>Can we start with you? Um, Juan and I, we talked about the X nine M a that Oracle just launched a couple of days ago. Maybe you could give us a recap, some of the, what do we need to know? The, especially I'm interested in the big numbers once more so we can just understand the claims you're making around this announcement. We can dig into that. >>Absolutely. They've very excited to do that. In a nutshell, we have the world's fastest database machine for both LTP and analytics, and we made that even faster, not just simply faster, but for all LPP we made it 70% faster and we took the oil PPV ops all the way up to 27.6 million read IOPS and mind you, this is being measured at the sequel layer for analytics. We did pretty much the same thing, an 87% increase in analytics. And we broke through that one terabyte per second barrier, absolutely phenomenal stuff. Now, while all those numbers by themselves are fascinating, here's something that's even more fascinating in my mind, 80% of the product development work for extra data, X nine M was done during COVID, which means all of us were remote. And what that meant was extreme levels of teamwork between the development teams, manufacturing teams, procurement teams, software teams, the works. I mean, everybody coming together as one to deliver this product, I think it's kudos to everybody who touched this product in one way or the other extremely proud of it. >>Thank you for making that point. And I'm laughing because it's like you the same bolt of a mission-critical OLT T O LTP performance. You had the world record, and now you're saying, adding on top of that. Um, but, okay. But, so there are customers that still, you know, build the builder and they're trying to build their own exit data. What they do is they buy their own servers and storage and networking components. And I do that when I talk to them, they'll say, look, they want to maintain their independence. They don't want to get locked in Oracle, or maybe they believe it's cheaper. You know, maybe they're sort of focused on the, the, the CapEx the CFO has him in the headlock, or they might, sometimes they talk about, they want a platform that can support, you know, horizontal, uh, apps, maybe not Oracle stuff, or, or maybe they're just trying to preserve their job. I don't know, but why shouldn't these customers roll their own and why can't they get similar results just using standard off the shelf technologies? >>Great question. It's going to require a little involved answer, but let's just look at the statistics to begin with. Oracle's exit data was first productized in Delaware to the market in 2008. And at that point in time itself, we had industry leadership across a number of metrics. Today, we are at the 11th generation of exit data, and we are way far ahead than the competition, like 50 X, faster hundred X faster, right? I mean, we are talking orders of magnitude faster. How did we achieve this? And I think the answer to your question is going to lie in what are we doing at the engineering level to make these magical numbers come to, uh, for right first, it starts with the hardware. Oracle has its own hardware server design team, where we are embedding in capabilities towards increasing performance, reliability, security, and scalability down at the hardware level, the database, which is a user level process talks to the hardware directly. >>The only reason we can do this is because we own the source code for pretty much everything in between, starting with the database, going into the operating system, the hypervisor. And as I, as I just mentioned the hardware, and then we also worked with the former elements on this entire thing, the key to making extra data, the best Oracle database machine lies in that engineering, where we take the operating system, make it fit like tongue and groove into, uh, a bit with the opera, with the hardware, and then do the same with the database. And because we have got this deep insight into what are the workloads that are, that are running at any given point in time on the compute side of extra data, we can then do micromanagement at the software layers of how traffic flows are flowing through the entire system and do things like, you know, prioritize all PP transactions on a very specific, uh, you know, queue on the RDMA. >>We'll converse Ethan at be able to do smart scan, use the compute elements in the storage tier to be able to offload SQL processing. They call them the longer I used formats of data, extend them into flash, just a whole bunch of things that we've been doing over the last 12 years, because we have this deep engineering, you can try to cobble a system together, which sort of looks like an extra data. It's got a network and it's got storage, tiering compute here, but you're not going to be able to achieve anything close to what we are doing. The biggest deal in my mind, apart from the performance and the high availability is the security, because we are testing the stack top to bottom. When you're trying to build your own best of breed kind of stuff. You're not going to be able to do that because it depended on the server that had to do something and HP to do something else or Dell to do something else and a Brocade switch to do something it's not possible. We can do this, we've done it. We've proven it. We've delivered it for over a decade. End of story. For as far as I'm concerned, >>I mean, you know, at this fine, remember when Oracle purchased Sohn and I know a big part of that purchase was to get Java, but I remember saying at the time it was a brilliant acquisition. I was looking at it from a financial standpoint. I think you paid seven and a half billion for it. And it automatically, when you're, when Safra was able to get back to sort of pre acquisition margins, you got the Oracle uplift in terms of revenue multiples. So then that standpoint, it was a no brainer, but the other thing is back in the Unix days, it was like HP. Oracle was the standard. And, and in terms of all the benchmarks and performance, but even then, I'm sure you work closely with HP, but it was like to get the stuff to work together, you know, make sure that it was going to be able to recover according to your standards, but you couldn't actually do that deep engineering that you just described now earlier, Subin you, you, you, you stated that the X sign now in M you get, oh, LTP IO, IOP reads at 27 million IOPS. Uh, you got 19 microseconds latency, so pretty impressive stuff, impressive numbers. And you kind of just went there. Um, but how are you measuring these numbers versus other performance claims from your competitors? What what's, you know, are you, are you stacking the deck? Can you give you share with us there? >>Sure. So Shada incidents, we are mentioning it at the sequel layer. This is not some kind of an ion meter or a micro benchmark. That's looking at just a flash subsystem or just a persistent memory subsystem. This is measured at the compute, not doing an entire set of transactions. And how many times can you finish that? Right? So that's how it's being measured. Now. Most people cannot measure it like that because of the disparity and the number of vendors that are involved in that particular solution, right? You've got servers from vendor a and storage from vendor B, the storage network from vendor C, the operating system from vendor D. How do you tune all of these things on your own? You cannot write. I mean, there's only certain bells and whistles and knobs that are available for you to tune, but so that's how we are measuring the 19 microseconds is at the sequel layer. >>What that means is this a real world customer running a real world. Workload is guaranteed to get that kind of a latency. None of the other suppliers can make that claim. This is the real world capability. Now let's take a look at that 19 microseconds we boast and we say, Hey, we had an order of magnitude two orders of magnitude faster than everybody else. When it comes down to latency. And one things that this is we'll do our magic while it is magical. The magic is really grounded in deep engineering and deep physics and science. The way we implement this is we, first of all, put the persistent memory tier in the storage. And that way it's shared across all of the database instances that are running on the compute tier. Then we have this ultra fast hundred gigabit ethernet RDMA over converged ethernet fabric. >>With this, what we have been able to do is at the hardware level between two network interface guides that are resident on that fabric, we create paths that enable high priority low-latency communication between any two end points on that fabric. And then given the fact that we implemented persistent memory in the storage tier, what that means is with that persistent memory, sitting on the memory bus of the processor in the storage tier, we can perform it remote direct memory access operation from the compute tier to memory address spaces in the persistent memory of the storage tier, without the involvement of the operating system on either end, no context, switches, knowing processing latencies and all of that. So it's hardware to hardware, communication with security built in, which is immutable, right? So all of this is built into the hardware itself. So there's no software involved. You perform a read, the data comes back 19 microseconds, boom. End of story. >>Yeah. So that's key to my next topic, which is security because if you're not getting the OSTP involved and that's, you know, very oftentimes if I can get access to the OSTP, I get privileged. Like I can really take advantage of that as a hacker. But so, but, but before I go there, like Oracle talks about, it's got a huge percentage of the Gayety 7% of the fortune 100 companies run their mission, critical workloads on exit data. But so that's not only important to the companies, but they're serving consumer me, right. I'm going to my ATM or I'm swiping my credit card. And Juan mentioned that you use a layered security model. I just sort of inferred anyway, that, that having this stuff in hardware and not have to involve access to the OS actually contributes to better security. But can you describe this in a bit more detail? >>So yeah, what Brian was talking about was this layered security set differently. It is defense in depth, and that's been our mantra and philosophy for several years now. So what does that entail? As I mentioned earlier, we designed our own servers. We do this for performance. We also do it for security. We've got a number of features that are built into the hardware that make sure that we've got immutable areas of form where we, for instance, let me give you this example. If you take an article x86 server, just a standard x86 server, not even express in the form of an extra data system, even if you had super user privileges sitting on top of an operating system, you cannot modify the bias as a user, as a super user that has to be done through the system management network. So we put gates and protection modes, et cetera, right in the hardware itself. >>Now, of course the security of that hardware goes all the way back to the fact that we own the design. We've got a global supply chain, but we are making sure that our supply chain is protected monitored. And, uh, we also protect the last mile of the supply chain, which is we can detect if there's been any tampering of form where that's been, uh, that's occurred in the hardware while the hardware shipped from our factory to the customers, uh, docks. Right? So we, we know that something's been tampered with the moment it comes back up on the customer. So that's on the hardware. Let's take a look at the operating system, Oracle Linux, we own article the next, the entire source code. And what shipping on exit data is the unbreakable enterprise Connell, the carnal and the operating system itself have been reduced in terms of eliminating all unnecessary packages from that operating system bundle. >>When we deliver it in the form of the data, let's put some real numbers on that. A standard Oracle Linux or a standard Linux distribution has got about 5,000 plus packages. These things include like print servers, web servers, a whole bunch of stuff that you're not absolutely going to use at all on exit data. Why ship those? Because the moment you ship more stuff than you need, you are increasing the, uh, the target, uh, that attackers can get to. So on AXA data, there are only 701 packages. So compare this 5,413 packages on a standard Linux, 701 and exit data. So we reduced the attack surface another aspect on this, when we, we do our own STIG, uh, ASCAP benchmarking. If you take a standard Linux and you run that ASCAP benchmark, you'll get about a 30% pass score on exit data. It's 90 plus percent. >>So which means we are doing the heavy lifting of doing the security checks on the operating system before it even goes out to the factory. And then you layer on Oracle database, transparent data encryption. We've got all kinds of protection capabilities, data reduction, being able to do an authentication on a user ID basis, being able to log it, being able to track it, being able to determine who access the system when and log back. So it's basically defend at every single layer. And then of course the customer's responsibility. It doesn't just stop by getting this high secure, uh, environment. They have to do their own job of them securing their network perimeters, securing who has physical access to the system and everything else. So it's a giant responsibility. And as you mentioned, you know, you as a consumer going to an ATM machine and withdrawing money, you would do 200. You don't want to see 5,000 deducted from your account. And so all of this is made possible with exited and the amount of security focus that we have on the system >>And the bank doesn't want to see it the other way. So I'm geeking out here in the cube, but I got one more question for you. Juan talked about X nine M best system for database consolidation. So I, I kinda, you know, it was built to handle all LTP analytics, et cetera. So I want to push you a little bit on this because I can make an argument that, that this is kind of a Swiss army knife versus the best screwdriver or the best knife. How do you respond to that concern and how, how do you respond to the concern that you're putting too many eggs in one basket? Like, what do you tell people to fear you're consolidating workloads to save money, but you're also narrowing the blast radius. Isn't that a problem? >>Very good question there. So, yes. So this is an interesting problem, and it is a balancing act. As you correctly pointed out, you want to have the economies of scale that you get when you consolidate more and more databases, but at the same time, when something happens when hardware fails or there's an attack, you want to make sure that you have business continuity. So what we are doing on exit data, first of all, as I mentioned, we are designing our own hardware and a building in reliability into the system and at the hardware layer, that means having redundancy, redundancy for fans, power supplies. We even have the ability to isolate faulty cores on the processor. And we've got this a tremendous amount of sweeping that's going on by the system management stack, looking for problem areas and trying to contain them as much as possible within the hardware itself. >>Then you take it up to the software layer. We used our reliability to then build high availability. What that implies is, and that's fundamental to the exited architecture is this entire scale out model, our based system, you cannot go smaller than having two database nodes and three storage cells. Why is that? That's because you want to have high availability of your database instances. So if something happens to one server hardware, software, whatever you got another server that's ready to take on that load. And then with real application clusters, you can then switch over between these two, why three storage cells. We want to make sure that when you have got duplicate copies of data, because you at least want to have one additional copy of your data in case something happens to the disc that has got that only that one copy, right? So the reason we have got three is because then you can Stripe data across these three different servers and deliver high availability. >>Now you take that up to the rack level. A lot of things happen. Now, when you're really talking about the blast radius, you want to make sure that if something physically happens to this data center, that you have infrastructure that's available for it to function for business continuity, we maintain, which is why we have the maximum availability architecture. So with components like golden gate and active data guard, and other ways by which we can keep to this distant systems in sync is extremely critical for us to deliver these high availability paths that make, uh, the whole equation about how many eggs in one basket versus containing the containment of the blast radius. A lot easier to grapple with because business continuity is something which is paramount to us. I mean, Oracle, the enterprise is running on Xcel data. Our high value cloud customers are running on extra data. And I'm sure Bob's going to talk a lot more about the cloud piece of it. So I think we have all the tools in place to, to go after that optimization on how many eggs in one basket was his blast radius. It's a question of working through the solution and the criticalities of that particular instance. >>Okay, great. Thank you for that detailed soup. We're going to give you a break. You go take a breath, get a, get a drink of water. Maybe we'll come back to you. If we have time, let's go to Bob, Bob, Bob tome, X data cloud at customer X nine M earlier this week, Juan said kinda, kinda cocky. What we're bothering, comparing exit data against your cloud, a customer against outpost or Azure stack. Can you elaborate on, on why that is? >>Sure. Or you, you know, first of all, I want to say, I love, I love baby. We go south posts. You know why it affirms everything that we've been doing for the past four and a half years with clouded customer. It affirms that cloud is running that running cloud services in customers' data center is a large and important market, large and important enough that AWS felt that the need provide these, um, you know, these customers with an AWS option, even if it only supports a sliver of the functionality that they provide in the public cloud. And that's what they're doing. They're giving it a sliver and they're not exactly leading with the best they could offer. So for that reason, you know, that reason alone, there's really nothing to compare. And so we, we give them the benefit of the doubt and we actually are using their public cloud solutions. >>Another point most customers are looking to deploy to Oracle cloud, a customer they're looking for a per performance, scalable, secure, and highly available platform to deploy. What's offered their most critical databases. Most often they are Oracle databases does outposts for an Oracle database. No. Does outpost run a comparable database? Not really does outposts run Amazon's top OTP and analytics database services, the ones that are top in their cloud public cloud. No, that we couldn't find anything that runs outposts that's worth comparing against X data clouded customer, which is why the comparisons are against their public cloud products. And even with that still we're looking at numbers like 50 times a hundred times slower, right? So then there's the Azure stack. One of the key benefits to, um, you know, that customers love about the cloud that I think is really under, appreciated it under appreciated is really that it's a single vendor solution, right? You have a problem with cloud service could be I as pass SAS doesn't matter. And there's a single vendor responsible for fixing your issue as your stack is missing big here, because they're a multi-vendor cloud solution like AWS outposts. Also, they don't exactly offer the same services in the cloud that they offer on prem. And from what I hear, it can be a management nightmare requiring specialized administrators to keep that beast running. >>Okay. So, well, thanks for that. I'll I'll grant you that, first of all, granted that Oracle was the first with that same, same vision. I always tell people that, you know, if they say, well, we were first I'm like, well, actually, no, Oracle's first having said that, Bob and I hear you that, that right now, outpost is a one Datto version. It doesn't have all the bells and whistles, but neither did your cloud when you first launched your cloud. So let's, let's let it bake for a while and we'll come back in a couple of years and see how things compare. So if you're up for it. Yeah. >>Just remember that we're still in the oven too. Right. >>Okay. All right. Good. I love it. I love the, the chutzpah. One also talked about Deutsche bank. Um, and that, I, I mean, I saw that Deutsche bank announcement, how they're working with Oracle, they're modernizing their infrastructure around database. They're building other services around that and kind of building their own sort of version of a cloud for their customers. How does exit data cloud a customer fit in to that whole Deutsche bank deal? Is, is this solution unique to Deutsche bank? Do you see other organizations adopting clouded customer for similar reasons and use cases? >>Yeah, I'll start with that. First. I want to say that I don't think Georgia bank is unique. They want what all customers want. They want to be able to run their most important workloads. The ones today running their data center on exit eight as a non other high-end systems in a cloud environment where they can benefit from things like cloud economics, cloud operations, cloud automations, but they can't move to public cloud. They need to maintain the service levels, the performance, the scalability of the security and the availability that their business has. It has come to depend on most clouds can't provide that. Although actually Oracle's cloud can our public cloud Ken, because our public cloud does run exit data, but still even with that, they can't do it because as a bank, they're subject to lots of rules and regulations, they cannot move their 40 petabytes of data to a point outside the control of their data center. >>They have thousands of interconnected databases, right? And applications. It's like a rat's nest, right? And this is similar many large customers have this problem. How do you move that to the cloud? You can move it piecemeal. Uh, I'm going to move these apps and, you know, not move those apps. Um, but suddenly ended up with these things where some pieces are up here. Some pieces are down here. The thing just dies because of the long latency over a land connection, it just doesn't work. Right. So you can also shut it down. Let's shut it down on, on Friday and move everything all at once. Unfortunately, when you're looking at it, a state decides that most customers have, you're not going to be able to, you're going to be down for a month, right? Who can, who can tolerate that? So it's a big challenge and exited cloud a customer let's then move to the cloud without losing control of their data. >>And without unhappy having to untangle that thousands of interconnected databases. So, you know, that's why these customers are choosing X data, clouded customer. More importantly, it sets them up for the future with exited cloud at customer, they can run not just in their data center, but they could also run in public cloud, adjacent sites, giving them a path to moving some work out of the data center and ultimately into the public cloud. You know, as I said, they're not unique. Other banks are watching and some are acting and it's not just banks. Just last week. Telefonica telco in Spain announced their intent to migrate the bulk of their Oracle databases to excavate a cloud at customer. This will be the key cloud platform running. They're running in their data center to support both new services, as well as mission critical and operational systems. And one last important point exited cloud a customer can also run autonomous database. Even if customers aren't today ready to adopt this. A lot of them are interested in it. They see it as a key piece of the puzzle moving forward in the future and customers know that they can easily start to migrate to autonomous in the future as they're ready. And this of course is going to drive additional efficiencies and additional cost savings. >>So, Bob, I got a question for you because you know, Oracle's playing both sides, right? You've got a cloud, you know, you've got a true public cloud now. And, and obviously you have a huge on-premise state. When I talk to companies that don't own a cloud, uh, whether it's Dell or HPE, Cisco, et cetera, they have made, they make the point. And I agree with them by the way that the world is hybrid, not everything's going into the, to the cloud. However, I had a lot of respect for folks at Amazon as well. And they believed long-term, they'll say this, they've got them on record of saying this, that they believe long-term ultimately all workloads are going to be running in the cloud. Now, I guess it depends on how you define the cloud. The cloud is expanding and all that other stuff. But my question to you, because again, you kind of on both sides, here are our hybrid solutions like cloud at customer. Do you see them as a stepping stone to the cloud, or is cloud in your data center, sort of a continuous sort of permanent, you know, essential play >>That. That's a great question. As I recall, people debated this a few years back when we first introduced clouded customer. And at that point, some people I'm talking about even internal Oracle, right? Some people saw this as a stop gap measure to let people leverage cloud benefits until they're really ready for the public cloud. But I think over the past four and a half years, the changing the thinking has changed a little bit on this. And everyone kind of agrees that clouded customer may be a stepping stone for some customers, but others see that as the end game, right? Not every workload can run in the public cloud, not at least not given the, um, you know, today's regulations and the issues that are faced by many of these regulated industries. These industries move very, very slowly and customers are content to, and in many cases required to retain complete control of their data and they will be running under their control. They'll be running with that data under their control and the data center for the foreseeable future. >>Oh, I got another question for kind of just, if I could take a little tangent, cause the other thing I hear from the, on the, the, the on-prem don't own, the cloud folks is it's actually cheaper to run in on-prem, uh, because they're getting better at automation, et cetera. When you get the exact opposite from the cloud guys, they roll their eyes. Are you kidding me? It's way cheaper to run it in the cloud, which is more cost-effective is it one of those? It depends, Bob. >>Um, you know, the great thing about numbers is you can make, you can, you can kind of twist them to show anything that you want, right? That's a have spreadsheet. Can I, can, I can sell you on anything? Um, I think that there's, there's customers who look at it and they say, oh, on-premise sheet is cheaper. And there's customers who look at it and say, the cloud is cheaper. If you, um, you know, there's a lot of ways that you may incur savings in the cloud. A lot of it has to do with the cloud economics, the ability to pay for what you're using and only what you're using. If you were to kind of, you know, if you, if you size something for your peak workload and then, you know, on prem, you probably put a little bit of a buffer in it, right? >>If you size everything for that, you're gonna find that you're paying, you know, this much, right? All the time you're paying for peak workload all the time with the cloud, of course, we support scaling up, scaling down. We supply, we support you're paying for what you use and you can scale up and scale down. That's where the big savings is now. There's also additional savings associated with you. Don't have the cloud vendors like work. Well, we manage that infrastructure for you. You no longer have to worry about it. Um, we have a lot of automation, things that you use to either, you know, probably what used to happen is you used to have to spend hours and hours or years or whatever, scripting these things yourselves. We now have this automation to do it. We have, um, you eyes that make things ad hoc things, as simple as point and click and, uh, you know, that eliminates errors. And, and it's often difficult to put a cost on those things. And I think the more enlightened customers can put a cost on all of those. So the people that were saying it's cheaper to run on prem, uh, they, they either, you know, have a very stable workload that never changes and their environment never changes, um, or more likely. They just really haven't thought through the, all the hidden costs out there. >>All right, you got some new features. Thank you for that. By the way, you got some new features in, in cloud, a customer, a what are those? Do I have to upgrade to X nine M to, to get >>All right. So, you know, we're always introducing new features for clouded customer, but two significant things that we've rolled out recently are operator access control and elastic storage expansion. As we discussed, many organizations are using Axeda cloud a customer they're attracting the cloud economics, the operational benefits, but they're required by regulations to retain control and visibility of their data, as well as any infrastructure that sits inside their data center with operator access control, enabled cloud operations, staff members must request access to a customer system, a customer, it team grants, a designated person, specific access to a specific component for a specific period of time with specific privileges, they can then kind of view audit controls in real time. And if they see something they don't like, you know, Hey, what's this guy doing? It looks like he's, he's stealing my data or doing something I don't like, boom. >>They can kill that operators, access the session, the connections, everything right away. And this gives everyone, especially customers that need to, you know, regulate remote access to their infrastructure. It gives them the confidence that they need to use exit data cloud, uh, conduct, customer service. And, and the other thing that's new is, um, elastic storage expansion. Customers could out add additional service to their system either at initial deployment or after the fact. And this really provides two important benefits. The first is that they can right size their configuration if they need only the minimum compute capacity, but they don't need the maximum number of storage servers to get that capacity. They don't need to subscribe to kind of a fixed shape. We used to have fixed shapes, I guess, with hundreds of unnecessary database cores, just to get the storage capacity, they can select a smaller system. >>And then incrementally add on that storage. The second benefit is the, is kind of key for many customers. You are at a storage, guess what you can add more. And that way, when you're out of storage, that's really important. Now they'll get to your last part of that question. Do you need a deck, a new, uh, exit aquatic customer XIM system to get these features? No they're available for all gen two exited clouded customer systems. That's really one of the best things about cloud. The service you subscribed to today just keeps getting better and better. And unless there's some technical limitation that, you know, we, and it, which is rare, most new features are available even for the oldest cloud customer systems. >>Cool. And you can bring that in on from my, my last question for you, Bob is a, another one on security. Obviously, again, we talked to Susan about this. It's a big deal. How can customer data be secure if it's in the cloud, if somebody, other than the, their own vetted employees are managing the underlying infrastructure, is is that a concern you hear a lot and how do you handle that? >>You know, it's, it's only something because a lot of these customers, they have big, you know, security people and it's their job to be concerned about that kind of stuff. And security. However, is one of the biggest, but least appreciate appreciated benefits of cloud cloud vendors, such as Oracle hire the best and brightest security experts to ensure that their clouds are secure. Something that only the largest customers can afford to do. You're a small, small shop. You're not going to be able to, you know, hire some of this expertise. So you're better off being in the cloud. Customers who are running in the Oracle cloud can also use articles, data, safe tool, which we provide, which basically lets you inspect your databases, insurance. Sure that everything is locked down and secure and your data is secure. But your question is actually a little bit different. >>It was about potential internal threats to company's data. Given the cloud vendor, not the customer's employees have access to the infrastructure that sits beneath the databases and really the first and most important thing we do to protect customers' data is we encrypt that database by default. Actually Subin listed a whole laundry list of things, but that's the one thing I want to point out. We encrypt your database. It's, you know, it's, it's encrypted. Yes. It sits on our infrastructure. Yes. Our operations persons can actually see those data files sitting on the infrastructure, but guess what? They can't see the data. The data is encrypted. All they see as kind of a big encrypted blob. Um, so they can't access the data themselves. And you know, as you'd expect, we have very tight controls over operations access to the infrastructure. They need to securely log in using mechanisms by stuff to present, prevent unauthorized access. >>And then all access is logged and suspicious. Activities are investigated, but that still may not be enough for some customers, especially the ones I mentioned earlier, the regulated industries. And that's why we offer app operator access control. As I mentioned, that gives customers complete control over the access to the infrastructure. The, when the, what ops can do, how long can they do it? Customers can monitor in real time. And if they see something they don't like they stop it immediately. Lastly, I just want to mention Oracle's data ball feature. This prevents administrators from accessing data, protecting data from road operators, robot, world operations, whether they be from Oracle or from the customer's own it staff, this database option. A lot of ball is sorry. Database ball data vault is included when running a license included service on exited clouded customer. So basically to get it with the service. Got it. >>Hi Tom. Thank you so much. It's unbelievable, Bob. I mean, we've got a lot to unpack there, but uh, we're going to give you a break now and go to Tim, Tim chin, zero data loss, recovery appliance. We always love that name. The big guy we think named it, but nobody will tell us, but we've been talking about security. There's been a lot of news around ransomware attacks. Every industry around the globe, any knucklehead with, uh, with a high school diploma could become a ransomware attack or go in the dark web, get, get ransomware as a service stick, a, put a stick in and take a piece of the VIG and hopefully get arrested. Um, with, when you think about database, how do you deal with the ransomware challenge? >>Yeah, Dave, um, that's an extremely important and timely question. Um, we are hearing this from our customers. We just talk about ha and backup strategies and ransomware, um, has been coming up more and more. Um, and the unfortunate thing that these ransoms are actually paid, um, uh, in the hope of the re you know, the, uh, the ability to access the data again. So what that means it tells me is that today's recovery solutions and processes are not sufficient to get these systems back in a reliable and timely manner. Um, and so you have to pay the ransom, right, to get, uh, to get the, even a hope of getting the data back now for databases. This can have a huge impact because we're talking about transactional workloads. And so even a compromise of just a few minutes, a blip, um, can affect hundreds or even thousands of transactions. This can literally represent hundreds of lost orders, right? If you're a big manufacturing company or even like millions of dollars worth of, uh, financial transactions in a bank. Right. Um, and that's why protecting databases at a transaction level is especially critical, um, for ransomware. And that's a huge contrast to traditional backup approaches. Okay. >>So how do you approach that? What do you, what do you do specifically for ransomware protection for the database? >>Yeah, so we have the zero data loss recovery appliance, which we announced the X nine M generation. Um, it is really the only solution in the market, which offers that transaction level of protection, which allows all transactions to be recovered with zero RPO, zero again, and this is only possible because Oracle has very innovative and unique technology called real-time redo, which captures all the transactional changes from the databases by the appliance, and then stored as well by the appliance, moreover, the appliance validates all these backups and reading. So you want to make sure that you can recover them after you've sent them, right? So it's not just a file level integrity check on a file system. That's actual database level of validation that the Oracle blocks and the redo that I mentioned can be restored and recovered as a usable database, any kind of, um, malicious attack or modification of that backup data and transmit that, or if it's even stored on the appliance and it was compromised would be immediately detected and reported by that validation. >>So this allows administrators to take action. This is removing that system from the network. And so it's a huge leap in terms of what customers can get today. The last thing I just want to point out is we call our cyber vault deployment, right? Um, a lot of customers in the industry are creating what we call air gapped environments, where they have a separate location where their backup copies are stored physically network separated from the production systems. And so this prevents ransomware for possibly infiltrating that last good copy of backups. So you can deploy recovery appliance in a cyber vault and have it synchronized at random times when the network's available, uh, to, to keep it in sync. Right. Um, so that combined with our transaction level zero data loss validation, it's a nice package and really a game changer in protecting and recovering your databases from modern day cyber threats. >>Okay, great. Thank you for clarifying that air gap piece. Cause I, there was some confusion about that. Every data protection and backup company that I know as a ransomware solution, it's like the hottest topic going, you got newer players in, in, in recovery and backup like rubric Cohesity. They raised a ton of dough. Dell has got solutions, HPE just acquired Zerto to deal with this problem. And other things IBM has got stuff. Veem seems to be doing pretty well. Veritas got a range of, of recovery solutions. They're sort of all out there. What's your take on these and their strategy and how do you differentiate? >>Yeah, it's a pretty crowded market, like you said. Um, I think the first thing you really have to keep in mind and understand that these vendors, these new and up and coming, um, uh, uh, vendors start in the copy data management, we call CDN space and they're not traditional backup recovery designed are purpose built for the purpose of CDM products is to provide these fast point in time copies for test dev non-production use, and that's a viable problem and it needs a solution. So you create these one time copy and then you create snapshots. Um, after you apply these incremental changes to that copy, and then the snapshot can be quickly restored and presented as like it's a fully populated, uh, file. And this is all done through the underlying storage of block pointers. So all of this kind of sounds really cool and modern, right? It's like new and upcoming and lots of people in the market doing this. Well, it's really not that modern because we've, we know storage, snapshot technologies has been around for years. Right. Um, what these new vendors have been doing is essentially repackaging the old technology for backup and recovery use cases and having sort of an easier to use automation interface wrapped around it. >>Yeah. So you mentioned a copy data management, uh, last year, active FIO. Uh, they started that whole space from what I recall at one point there, they value more than a billion dollars. They were acquired by Google. Uh, and as I say, they kind of created that, that category. So fast forward a little bit, nine months a year, whatever it's been, do you see that Google active FIO offer in, in, in customer engagements? Is that something that you run into? >>We really don't. Um, yeah, it was really popular and known some years ago, but we really don't hear about it anymore. Um, after the acquisition, you look at all the collateral and the marketing, they are really a CDM and backup solution exclusively for Google cloud use cases. And they're not being positioned as for on premises or any other use cases outside of Google cloud. That's what, 90, 90 plus percent of your market there that isn't addressable now by Activia. So really we don't see them in any of our engagements at this time. >>I want to come back and push it a little bit, uh, on some of the tech that you said, it's kind of really not that modern. Uh, I mean it's, if they certainly position it as modern, a lot of the engineers who are building there's new sort of backup and recovery capabilities came from the hyperscalers, whether it's copy data management, you know, the bot mock quote, unquote modern backup recovery, it's kind of a data management, sort of this nice all in one solution seems pretty compelling. How does recovery clients specifically stack up? You know, a lot of people think it's a niche product for, for really high end use cases. Is that fair? How do you see a town? >>Yeah. Yeah. So it's, I think it's so important to just, you know, understand, again, the fundamental use of this technology is to create data copies for test W's right. Um, and that's really different than operational backup recovery in which you must have this ability to do full and point in time recoverability in any production outage or Dr. Situation. Um, and then more importantly, after you recover and your applications are back in business, that performance must continue to meet servers levels as before. And when you look at a CDM product, um, and you restore a snapshot and you say with that product and the application is brought up on that restored snapshot, what happens or your production application is now running on actual read rideable snapshots on backup storage. Remember they don't restore all the data back to the production, uh, level stores. They're restoring it as a snapshot okay. >>Onto their storage. And so you have a huge difference in performance. Now running these applications where they instantly recovered, if you will database. So to meet these true operational requirements, you have to fully restore the files to production storage period. And so recovery appliance was first and foremost designed to accomplish this. It's an operational recovery solution, right? We accomplish that. Like I mentioned, with this real-time transaction protection, we have incremental forever backup strategies. So that you're just taking just the changes every day. And you, you can create these virtual full backups that are quickly restored, fully restored, if you will, at 24 terabytes an hour. And we validate and document that performance very clearly in our website. And of course we provide that continuous recovery validation for all the backups that are stored on the system. So it's, um, it's a very nice, complete solution. >>It scales to meet your demands, hundreds of thousands of databases, you know, it's, um, you know, these CDM products might seem great and they work well for a few databases, but then you put a real enterprise load and these hundreds of databases, and we've seen a lot of times where it just buckles, you know, it can't handle that kind of load in that, uh, in that scale. Uh, and, and this is important because customers read their marketing and read the collateral like, Hey, instant recovery. Why wouldn't I want that? Well, it's, you know, nicer than it looks, you know, it always sounds better. Right. Um, and so we have to educate them and about exactly what that means for the database, especially backup recovery use cases. And they're not really handled well, um, with their products. >>I know I'm like way over. I had a lot of questions on this announcement and I was gonna, I was gonna let you go, Tim, but you just mentioned something that, that gave me one more question if I may. So you talked about, uh, supporting hundreds of thousands of databases. You petabytes, you have real world use cases that, that actually leverage the, the appliance in these types of environments. Where does it really shine? >>Yeah. Let me just give you just two real quick ones. You know, we have a company energy transfer, the major natural gas and pipeline operator in the U S so they are a big part of our country's critical infrastructure services. We know ransomware, and these kinds of threats are, you know, are very much viable. We saw the colonial pipeline incident that happened, right? And so the attack, right, critical services while energy transfer was running, lots of databases and their legacy backup environments just couldn't keep up with their enterprise needs. They had backups taking like, well, over a day, they had restores taking several hours. Um, and so they had problems and they couldn't meet their SLS. They moved to the recovery appliance and now they're seeing backwards complete with that incremental forever in just 15 minutes. So that's like a 48 times improvement in backup time. >>And they're also seeing restores completing in about 30 minutes, right. Versus several hours. So it's a, it's a huge difference for them. And they also get that nice recovery validation and monitoring by the system. They know the health of their enterprise at their fingertips. The second quick one is just a global financial services customer. Um, and they have like over 10,000 databases globally and they, they really couldn't find a solution other than throw more hardware kind of approach to, uh, to fix their backups. Well, this, uh, not that the failures and not as the issues. So they moved to recovery appliance and they saw their failed backup rates go down for Matta plea. They saw four times better backup and restore performance. Um, and they have also a very nice centralized way to monitor and manage the system. Uh, real-time view if you will, that data protection health for their entire environment. Uh, and they can show this to the executive management and auditing teams. This is great for compliance reporting. Um, and so they finally done that. They have north of 50 plus, um, recovery appliances a day across that on global enterprise. >>Love it. Thank you for that. Um, uh, guys, great power panel. We have a lot of Oracle customers in our community and the best way to, to help them is to, I get to ask you a bunch of questions and get the experts to answer. So I wonder if you could bring us home, maybe you could just sort of give us the, the top takeaways that you want to your customers to remember in our audience to remember from this announcement. >>Sure, sorry. Uh, I want to actually pick up from where Tim left off and talk about a real customer use case. This is hot off the press. One of the largest banks in the United States, they decided to, that they needed to update. So performance software update on 3000 of their database instances, which are spanning 68, exited a clusters, massive undertaking, correct. They finished the entire task in three hours, three hours to update 3000 databases and 68 exited a clusters. Talk about availability, try doing this on any other infrastructure, no way anyone's going to be able to achieve this. So that's on terms of the availability, right? We are engineering in all of the aspects of database management, performance, security availability, being able to provide redundancy at every single level is all part of the design philosophy and how we are engineering this product. And as far as we are concerned, the, the goal is for forever. >>We are just going to continue to go down this path of increasing performance, increasing the security aspect of the, uh, of the infrastructure, as well as our Oracle database and keep going on this. You know, this, while these have been great results that we've delivered with extra data X nine M the, the journey is on and to our customers. The biggest advantage that you're going to get from the kind of performance metrics that we are driving with extra data is consolidation consolidate more, move, more database instances onto the extended platform, gain the benefits from that consolidation, reduce your operational expenses, reduce your capital expenses. They use your management expenses, all of those, bring it down to accelerator. Your total cost of ownership is guaranteed to go down. Those are my key takeaways, Dave >>Guys, you've been really generous with your time. Uh Subin uh, uh, uh, Bob, Tim, I appreciate you taking my questions and we'll willingness to go toe to toe, really? Thanks for your time. >>You're welcome, David. Thank you. Thank you. >>And thank you for watching this video exclusive from the cube. This is Dave Volante, and we'll see you next time. Be well.

the cloud has dramatically changed the way providers think about delivering database technologies not only has cloud first become a mandate for many if not most but customers are demanding more capabilities from their technology vendors examples include a substantially similar experience for cloud and on-prem workloads increased automation and a never-ending quest for more secure platforms broadly there are two prevailing models that have emerged one is to provide highly specialized database products that focus on optimizing for a specific workload signature the other end of the spectrum combines technologies in a converge platform to satisfy satisfy the needs of a much broader set of use cases and with me to get a perspective on these and other issues is andy mendelson is the executive vice president of oracle the world's leading database company andy leads database server technologies hello andy thanks for coming on hey dave glad to be here okay so we saw the recent announcements this is kind of your baby around next generation autonomous data warehouse maybe you could take us through the path you took from the original cloud data warehouses to where we are today yeah when we uh we first brought autonomous database out uh we were basically a second generation technology at that point you know we decided that what customers wanted was to the other you know the push of a button provision the really powerful oracle database technology that they've been using for years and um we did that with autonomous database and beyond that we provided a very unique capability that around self-tuning self-driving of the database which is something the first generation vendors didn't provide and this this is really important because customers today are you know developers and data analysts you know you know at the push of a button build out their their data warehouses but you know they're not experts in tuning and so what we thought was really important is that customers get great performance out of the box and that's one of the really unique things about autonomous data warehouse autonomous database in particular and then this latest generation that we just came out with also answers the questions we got from you know the data analysts and developers they said you know it's really great that i can press a button and provision this very powerful data warehouse infrastructure or database infrastructure from oracle but you know if i'm an analyst i want data you know so it's still hard for me to go and you know get data from various data sources transform them clean them up and get them to a way a place where i can start querying the data now i still need data engineers to help me do that and so we've done in the new release we said okay we want to give data analysts and data engineer data scientists developers is a true self-service experience where they can do their job completely without bringing in any you know any any engineers from their i.t organization and so that's what this new version is all about yeah awesome i mean look years ago you guys identified the i.t labor problem and you've been focused on r d and putting it in your r d to solve that problem for customers so we're really starting to see that hit now now gartner recently did some analysis they ranked and rated them some of the more popular cloud databases and oracle did very well i mean particularly particularly in operational categories i mean an operational side and the mission critical stuff you smoked everybody we had mark stamer and david floyer on and our big takeaways were that you're you're again dominating in that mission critical workloads that that that dominance continues but your approach of converging functionality really differs from some others that we saw i mean obviously when you get high ratings from gartner you're pretty stoked about that but what do you think contributed to those rankings and what are you finding specifically in customer interactions yeah so gardner does a lot of its analysis based on talking to customers finding out how their product these products that sound great on paper actually work in practice and i think that's one of the places where oracle database technology really shines it's it's uh it solves real-world problems um it's been doing it for a long time and as we've moved that technology into the cloud you know that continues you know the differentiation we've built up over the years really stands out you know you look at like amazon's databases they generally take some open source technology that isn't that new it could be 30 years old 25 years old and they put it up on the cloud and they say oh it's cloud native it's great but but in fact it's the same old you know technology that that doesn't really compete you know decade behind oracle's database technology so i think the gartner analysis really showed that sort of thing quite clearly yeah so let's talk about that a little bit because obviously i've learned a lot you know one of the things i've learned over the last many years of following this business a lot of ways to skin a cat and cloud database vendors if you think about you mentioned aws you know look at snowflake kind of right tool for the right job approach they're going to say that their specialty databases they're focused uh are better than your converged approach which they make you know think of as a you know swiss army knife what's your take on that yeah well the converged approach is something of course we've been working on for a long time so the the idea is pretty simple you know think about your smartphone you know if you can think back you know over 10 years ago used to have you know a camcorder and a a camera and a messaging device and also a dump phone device that all those different devices got converged into what we now call the smartphone why did the smartphone win it's just simply much more productive for you to carry one device around that that is actually best to breed in all the different categories instead of lots of separate devices and that's what we're doing with converge database over the years you know we've been able to build out technologies that are really good at transaction breasts at analytics for data warehousing now we're working on you know json technologies graph technologies the other vendors basically can't do this i mean it's much easier to build a specialty database that does one thing to build out a converged database that does end things really well and that's what we've been doing for years and again it's it's based on technology that uh you've invested in for quite a long time um and it's something that i think uh customers and developers and analyze analysts find to be a much more productive way of doing their jobs it's very unique and not common at all to see a technology that's been around as long as oracle database to see that sort of morph into a more modern platform i mean you mentioned aws uses leverages open source a lot you know snowflake would say okay hey we are born in the cloud and they are i think google bigquery would be another good example but but but that notion of boy i want to get your take on this born in the cloud those folks would say well we're superior to oracle's because you know they started you know decades ago not necessarily you know native cloud services uh how have you been able to address that i know you know cloud first is kind of the buzzword but but how have you you made that sort of transparent to users or or irrelevant to users because you are cloud first maybe you could talk about how you've able to achieve that and convince us that you actually really are cloud native now you know one of the things we we sort of like pointing out is that um oracle very uniquely has had this scale out technology for running all kinds of workloads not just analytic workloads which is what you see out in the cloud there but we can also scale out transaction processing workloads now that was another one of the reasons we do so well in for example the gardner analysis for trans operational workloads and that technology is really valuable as we went to cloud it lets us do some really unique things and the most obvious unique thing we we have is something we like to call you know you know cloud native you know instant elasticity and so with our technology if you want to provision a share you know some number of amount of compute to run your workloads you can provision exactly what you need you know if you need 17 cpus to get your job done you do 17 cpus when you provision your autonomous database our competitors who claim to be born in the cloud like snowflake and amazon they still use this this archaic way of provisioning uh servers based on shapes you know snowflake you know says what which shape cluster do you want you want 16 you want 32 you want 64. no it goes up by a power of 2 which means if you compare that to what oracle does you you have to provision up to like twice as much cpu than you really need so if you really need 17 they make you provision 32. if you really need 33 they make your provision 64. so this is not a cloud native experience at all it's an archaic way of doing things and and we like to point out with our instant elasticity you know we can go from 17 to 18 to 19 you know whatever you want plus we have something called auto scale so you can set your baseline to be 17 let's say but we will automatically based on your workload scale you up to three times that so in this case be 51 and because of that true elasticity we have we are really the only ones that can deliver true pay as you go kind of you know just pay for what you need kind of capability which is certainly what amazon was talking about when they first called their cloud elastic but it turns out for database services these guys still do this archaic thing with shapes so that's a really good example of where we're quite better than the other guys and it's much more cloud native than the other guys i want to follow up on that uh just stay here for a second because you're basically saying we have we have better granularity than the so-called cloud native guys now you mentioned snowflake right you got you got the shapes you got to you got to choose which shape you want and it sounds like it sounds like redshift the same and of course i know the way in which amazon separates compute from storage is largely a tiering exercise so it's not as as is as smooth as you might expect but nonetheless it's it's good how is it that you were you were able to achieve this with a database that was you know born you know many decades ago is it i mean what is it in from a technical standpoint an r d standpoint that you were able to do i mean did you design that in in the 1980s how did you how did you get here yeah well um it's a combination of interesting technologies so autonomous database you know it has the oracle database software that software is running on a very powerful optimized infrastructure for database based on the exadata technology that we've had on prem for many years we brought that to the cloud and that technology is a scale-out infrastructure that supports you know thousands of cpus and then we use our multi-tenant technology which is a way of sharing large infrastructures amongst amongst separate uh clients and we divide it up dynamically on the fly so if there's thousands of cpus you know this guy wants 20 and this one wants 30 we we divide it up and give them exactly what they need and if they want to grow we just take some extra cpus that are in reserve and we give it to them instantly and so that's a very different way of doing things and that's been a shape based approach where you know what what snowflake and amazon do under the covers they give you a real physical server you know or a cluster and that's how they provision if you want to grow they give you another big physical cluster which takes a long time to get the data populated to get it get it working we just have that one infrastructure that we're sharing among lots of users and we just give you a little extra capacity we don't it doesn't it's done instantly there's no need for data to be moved to populate the new clusters that you know snowflake or amazon are provisioning for you so it's a very different way of doing things and you're able to do that because of the tight integration between you mentioned exadata tight integration between the hardware and software we got david floyer calls it the iphone of enterprise sometimes sometimes you get some grief for that but it's it's not a bad metaphor but is that really the sort of secret well the big secret under the covers is this you know exudated technology our real application cluster scale out technologies our multi-tenant technologies so these are things we've been working on for a long time and they are very mature very powerful technologies and they really provide very unique benefits in a cloud world where people want things to happen instantly and they want to work well for any kind of workload um you know that's that's why we call we talk about being converged we can do mixed workloads you can do transactions and analytics all in the same data the other guys can't do that you know they're really good at like you said a narrow workload like i can do analytics or i can do graph you know i can do json but they can't really do the combination which is what real world applications are like they're not pure one thing versus enough right thank you for that so one of the questions people want to know is can oracle attract you know new customers that aren't existing oracle customers so maybe you could talk about that and you know why should uh somebody who's not an existing oracle customer think about using autonomous database yeah that's a that's a really good question you know oracle if you look at our customer base has a lot of really large enterprises you know the biggest banks and the biggest telcos you know they run oracle they run their businesses on oracle and these guys are sort of the most conservative of the bunch out there and they are moving to cloud at a somewhat slower rate than the than the smaller companies and so if you look at who's using autonomous database now it's actually the smaller companies you know the same type of people that first decided amazon was an interesting cloud 10 years ago they're also using our technologies and it's for the same reason they're finding you know they don't have large it organizations they don't have large numbers of engineers to engineer their infrastructure and that's why cloud is so attractive to them and autonomous database on top of cloud is really attractive as well because you know information is the lifeblood of every organization and if they can empower their analysts to get their job done without lots of help from it organizations they're going to do it and you know that's really what's made autonomous database really interesting you know the whole self-driving nature is very attractive to the smaller shops that don't have a lot of sophisticated um i.t expertise all right let's talk about developers you guys are the stewards of the java community so obviously you know big probably you know the biggest most popular programming language out there but when i think of developers i think of guys in hoodies pounding away but when i think of oracle developers i might think of maybe an app dev team inside of maybe some of those large customers that you talked about but why would developers and or analysts be interested in in using oracle as opposed to some some of those more focused narrow use databases that we were talking about earlier yeah so if you're a developer um you want to get your job done as fast as possible and so having a database that gives you the most productive application development experience is important to you and so you know i was talking we've been talking about converged database off and on so if i'm a developer i have a given job to do a converged database that lets me do a combination of analytics and and transactions and do a little json and little graph all in one is a much more productive place to go because if i if i i don't have something like that then i'm stuck taking my my application and breaking it up into pieces you know this piece i'm going to run on say aurora on amazon and this piece i have to run on the graph database and here's some json i got to run that on some document database and then i have to move the data around the data gets sort of fragmented between these databases and i have to do all this data you know integration and and whatever with a converged database i have a much simpler world where i can just use one technology stack i can get my job done and then i'm future proof against change you know requirements change all the time so you build the initial version of the application and your users say you know that this is not what i want i want some something else and it turns out that something else often is why i want analytics and you use something like a you know a document stored technology that has really poor analytic capabilities and then so you have to take that data and you have to move it to another database and so with with our converged approach you don't have to do that you know you're already in a place where everything works everything that you need you can possibly need in the future is going to be there as well and so for developers i i think you know converged is the right way to go plus for people who are what we call citizen developers you know like the data analysts that they cuddle they write a little code occasionally but they're really after getting value of the data we have this really fabulous no code loco tool called apex and apex is again a very mature technology it's been around for years and it lets somebody who's just a data analyst he knows a little sql but doesn't want to write code get their job done really fast and we've published some benchmark on our website showing you know basically you can get the job done 20 to 40 times faster using a no co loco tool like apex versus something like you know just writing cutting lots of traditional code i'm glad you brought up apex we recently interviewed one of your former colleagues amit xavery and all he would talk about is low code no code and then in the apex announcement you said something to the effect of coding should be the exception not the rule did you mean that what do you mean by that yeah so apex is a tool that people use with our our database technology for building what we call data driven applications so if you got a bunch of data and you want to get some value out of it you want to build maybe dashboards or more sophisticated reports apex is an incredible tool for doing that and it's it's modern you know it builds applications that look great on your smartphone and it automatically you know renders that same user interface on a bigger device like a laptop desktop device as well and uh it's very it's one of these things that uh the people that use it just go bonkers with it it's a viral technology they get really excited about how productive they they've been using it and they tell all their friends and i think we decided uh i guess about a year ago when we came up with this apex service that you know we really want to start going bigger on the marketing around it because it's very unique nobody else has anything quite like it and it's it again it just adds value to the whole developer productivity story around an oracle database so uh that's why we have the apex service now and we also have apex available with every oracle database on the cloud god i want to i want to ask you about some of the features around 21c there are a lot of them you announced earlier this year maybe you could tease out some of the top things that we should be paying attention to in 21c yeah sure um so one of the ways to look at 21c is we're we're continuing down this path of a converged database and so one of the the marquee features in 21c is something we call blockchain tables so what is blockchain well blockchain was this technology that's under the covers behind bitcoin you know it's a way of creating a tamper-proof data store um that was used by the original bitcoin algorithms well developers actually like having tamper proof data objects and databases too um you know and so what we decided to do was say well if i create a sql table in an oracle database what if there's a new option that just says i want that table implemented using blockchain technology to make the table tamper proof and fully audited etc and so we just did that and so in 21c you can now get a basically another feature of the converged database that says uh you know give me a sql table i can do everything i can query it i can insert rows into it but it's it's tamper proof i can't ever update it i can't delete rows from it amazon did the their usual thing they took again some open source technology and they said hey we got this great thing called quantum ledger database and it does blockchain tables but but if you want to do blockchain tables in any of their other databases you're out of luck they don't have it you have to go move the data into this new thing and it's again one of their it's again showing sort of the problem with their their proprietary this proprietary approach of having specialty databases versus just having one conversion that does it all so that's the blockchain cable feature uh we did a bunch of other things um the one i i think is worth mentioning the most is is support for persistent memory so a lot of people out there haven't noticed this this very interesting technology that intel shipped a couple years ago called optane data center memory and what it is it's basically a hybrid of flash memory which is persistent memory and standard dram which is not persistent means you can't store a database in dram um and so with this persistent memory you can basically have a database stored persistently in memory all the time and so it's a very innovative new technology from a database standpoint it's a very disruptive technology to the database market because now you can have an in-memory database basic period all the time 24 7. and so 21c is the first database out there that has native support for this new kind of persistent memory technology and we think it's it's really important so we're actually making it available as uh to our 19c customers as well and uh you know that's another technology i'd call out that we think is very unique we're way ahead of the game there and we're going to continue investing moving forward in that space as well yeah so that layer in between dram and and persistent flash that's that's a great innovation and good game changing from a from a performance and actually the way you write applications but i gotta i gotta ask you i and all the analysts were wrong with juan recently juan loyza and and to listen to that introduction of blockchain and everybody wants to know is safra going to start putting bitcoin on the oracle balance sheet i'm about to get that leap yeah that's a good question who knows yeah i can't comment on speculation ah that would be interesting okay last question then we got to go uh look oracle the narrative on oracle is you're expensive and you're mean you know it's hard to do business with do you care are you doing things to maybe change that perception in the cloud yeah i think we've made a very conscious decision that as we move to the cloud we're offering a totally new business model on the club that is a a cloud-native model you pay for what you use um you have everyday low prices you don't have to negotiate with some salesman for for months to get get a good price um so yeah we really like the message to get out there that those of you who think you know what oracle's all about um you know i and how it might be to work with oracle on in from your on premises days um you should really check out how oracle is now on the cloud we have this autonomous database technology really easy to use really simple any analysts can help get value out of the data without any help from any other engineers it's very unique it's it's uh it's the same technology you're used to but now it's delivered in a way that's much easier to consume and much lower cost and so yeah you should definitely take a look at what we've got out there on the cloud and it's all free to try out we got this free tier you can provision free vms free databases um free apex whatever you want and uh try it out and see what you think well thanks for that i was kidding about me and a lot of a lot of friends at oracle some relatives as well and thanks andy for coming on thecube today it's really great to talk to you yeah it's my pleasure and thanks for watching this is dave vellante we'll see you next time you

(upbeat music) >> On February 19th of this year, Barron's dropped an article declaring Oracle, a cloud giant and the article explained why the stock was a buy. Investors took notice and the stock ran up 18% over the next nine trading days and it peaked on March 9th, the day before Oracle announced its latest earnings. The company beat consensus earnings on both top-line and EPS last quarter, but investors, they did not like Oracle's tepid guidance and the stock pulled back. But it's still, as you can see, well above its pre-Barron's article price. What does all this mean? Is Oracle a cloud giant? What are its growth prospects? Now many parts of Oracle's business are growing including Fusion ERP, Fusion HCM, NetSuite, we're talking deep into the double digits, 20 plus percent growth. It's OnPrem legacy licensed business however, continues to decline and that moderates, the overall company growth because that OnPrem business is so large. So the overall Oracle's growing in the low single digits. Now what stands out about Oracle is it's recurring revenue model. That figure, the company says now it represents 73% of its revenue and that's going to continue to grow. Now two other things stood out on the earnings call to us. First, Oracle plans on increasing its CapEX by 50% in the coming quarter, that's a lot. Now it's still far less than AWS Google or Microsoft Spend on capital but it's a meaningful data point. Second Oracle's consumption revenue for Autonomous Database and Cloud Infrastructure, OCI or Oracle Cloud Infrastructure grew at 64% and 139% respectively and these two factors combined with the CapEX Spend suggest that the company has real momentum. I mean look, it's possible that the CapEx announcements maybe just optics in they're front loading, some spend to show the street that it's a player in cloud but I don't think so. Oracle's Safra Catz's usually pretty disciplined when it comes to it's spending. Now today on March 17th, Oracle announced updates towards Autonomous Data Warehouse and with me is David Floyer who has extensively researched Oracle over the years and today we're going to unpack the Oracle Autonomous Data Warehouse, ADW announcement. What it means to customers but we also want to dig into Oracle's strategy. We want to compare it to some other prominent database vendors specifically, AWS and Snowflake. David Floyer, Welcome back to The Cube, thanks for making some time for me. >> Thank you Vellante, great pleasure to be here. >> All right, I want to get into the news but I want to start with this idea of the autonomous database which Oracle's announcement today is building on. Oracle uses the analogy of a self-driving car. It's obviously powerful metaphor as they call it the self-driving database and my takeaway is that, this means that the system automatically provisions, it upgrades, it does all the patching for you, it tunes itself. Oracle claims that all reduces labor costs or admin costs by 90%. So I ask you, is this the right interpretation of what Oracle means by autonomous database? And is it real? >> Is that the right interpretation? It's a nice analogy. It's a test to that analogy, isn't it? I would put it as the first stage of the Autonomous Data Warehouse was to do the things that you talked about, which was the tuning, the provisioning, all of that sort of thing. The second stage is actually, I think more interesting in that what they're focusing on is making it easy to use for the end user. Eliminating the requirement for IT, staff to be there to help in the actual using of it and that is a very big step for them but an absolutely vital step because all of the competition focusing on ease of use, ease of use, ease of use and cheapness of being able to manage and deploy. But, so I think that is the really important area that Oracle has focused on and it seemed to have done so very well. >> So in your view, is this, I mean you don't really hear a lot of other companies talking about this analogy of the self-driving database, is this unique? Is it differentiable for Oracle? If so, why, or maybe you could help us understand that a little bit better. >> Well, the whole strategy is unique in its breadth. It has really brought together a whole number of things together and made it of its type the best. So it has a single, whole number of data sources and database types. So it's got a very broad range of different ways that you can look at the data and the second thing that is also excellent is it's a platform. It is fully self provisioned and its functionality is very, very broad indeed. The quality of the original SQL and the query languages, etc, is very, very good indeed and it's a better agent to do joints for example, is excellent. So all of the building blocks are there and together with it's sharing of the same data with OLTP and inference and in memory data paces as well. All together the breadth of what they have is unique and very, very powerful. >> I want to come back to this but let's get into the news a little bit and the announcement. I mean, it seems like what's new in the autonomous data warehouse piece for Oracle's new tooling around four areas that so Andy Mendelsohn, the head of this group instead of the guy who releases his baby, he talked about four things. My takeaway, faster simpler loads, simplified transforms, autonomous machine learning models which are facilitating, What do you call it? Citizen data science and then faster time to insights. So tooling to make those four things happen. What's your take and takeaways on the news? >> I think those are all correct. I would add the ease of use in terms of being able to drag and drop, the user interface has been dramatically improved. Again, I think those, strategically are actually more important that the others are all useful and good components of it but strategically, I think is more important. There's ease of use, the use of apex for example, are more important. And, >> Why are they more important strategically? >> Because they focus on the end users capability. For example, one of other things that they've started to introduce is Python together with their spatial databases, for example. That is really important that you reach out to the developer as they are and what tools they want to use. So those type of ease of use things, those types of things are respecting what the end users use. For example, they haven't come out with anything like click or Tableau. They've left that there for that marketplace for the end user to use what they like best. >> Do you mean, they're not trying to compete with those two tools. They indeed had a laundry list of stuff that they supported, Talend, Tableau, Looker, click, Informatica, IBM, I had IBM there. So their claim was, hey, we're open. But so that's smart. That's just, hey, they realized that people use these tools. >> I'm trying to exclude other people, be a platform and be an ecosystem for the end users. >> Okay, so Mendelsohn who made the announcement said that Oracle's the smartphone of databases and I think, I actually think Alison kind of used that or maybe that was us planing to have, I thought he did like the iPhone of when he announced the exit data way back when the integrated hardware and software but is that how you see it, is Oracle, the smartphone of databases? >> It is, I mean, they are trying to own the complete stack, the hardware with the exit data all the way up to the databases at the data warehouses and the OLTP databases, the inference databases. They're trying to own the complete stack from top to bottom and that's what makes autonomy process possible. You can make it autonomous when you control all of that. Take away all of the requirements for IT in the business itself. So it's democratizing the use of data warehouses. It is pushing it out to the lines of business and it's simplifying it and making it possible to push out so that they can own their own data. They can manage their own data and they do not need an IT person from headquarters to help them. >> Let's stay in this a little bit more and then I want to go into some of the competitive stuff because Mendelsohn mentioned AWS several times. One of the things that struck me, he said, hey, we're basically one API 'cause we're doing analytics in the cloud, we're doing data in the cloud, we're doing integration in the cloud and that's sort of a big part of the value proposition. He made some comparisons to Redshift. Of course, I would say, if you can't find a workload where you beat your big competitor then you shouldn't be in this business. So I take those things with a grain of salt but one of the other things that caught me is that migrating from OnPrem to Oracle, Oracle Cloud was very simple and I think he might've made some comparisons to other platforms. And this to me is important because he also brought in that Gartner data. We looked at that Gardner data when they came out with it in the operational database class, Oracle smoked everybody. They were like way ahead and the reason why I think that's important is because let's face it, the Mission Critical Workloads, when you look at what's moving into AWS, the Mission Critical Workloads, the high performance, high criticality OLTP stuff. That's not moving in droves and you've made the point often that companies with their own cloud particularly, Oracle you've mentioned this about IBM for certain, DB2 for instance, customers are going to, there should be a lower risk environment moving from OnPrem to their cloud, because you could do, I don't think you could get Oracle RAC on AWS. For example, I don't think EXIF data is running in AWS data centers and so that like component is going to facilitate migration. What's your take on all that spiel? >> I think that's absolutely right. You all crown Jewels, the most expensive and the most valuable applications, the mission-critical applications. The ones that have got to take a beating, keep on taking. So those types of applications are where Oracle really shines. They own a very large high percentage of those Mission Critical Workloads and you have the choice if you're going to AWS, for example of either migrating to Oracle on AWS and that is frankly not a good fit at all. There're a lot of constraints to running large systems on AWS, large mission critical systems. So that's not an option and then the option, of course, that AWS will push is move to a Roller, change your way of writing applications, make them tiny little pieces and stitch them all together with microservices and that's okay if you're a small organization but that has got a lot of problems in its own, right? Because then you, the user have to stitch all those pieces together and you're responsible for testing it and you're responsible for looking after it. And that as you grow becomes a bigger and bigger overhead. So AWS, in my opinion needs to have a move towards a tier-one database of it's own and it's not in that position at the moment. >> Interesting, okay. So, let's talk about the competitive landscape and the choices that customers have. As I said, Mendelssohn mentioned AWS many times, Larry on the calls often take shy, it's a compliment to me. When Larry Ellison calls you out, that means you've made it, you're doing well. We've seen it over the years, whether it's IBM or Workday or Salesforce, even though Salesforce's big Oracle customer 'cause AWS, as we know are Oracle customer as well, even though AWS tells us they've off called when you peel the onion >> Five years should be great, some of the workers >> Well, as I said, I believe they're still using Oracle in certain workloads. Way, way, we digress. So AWS though, they take a different approach and I want to push on this a little bit with database. It's got more than a dozen, I think purpose-built databases. They take this kind of right tool for the right job approach was Oracle there converging all this function into a single database. SQL JSON graph databases, machine learning, blockchain. I'd love to talk about more about blockchain if we have time but seems to me that the right tool for the right job purpose-built, very granular down to the primitives and APIs. That seems to me to be a pretty viable approach versus kind of a Swiss Army approach. How do you compare the two? >> Yes, and it is to many initial programmers who are very interested for example, in graph databases or in time series databases. They are looking for a cheap database that will do the job for a particular project and that makes, for the program or for that individual piece of work is making a very sensible way of doing it and they pay for ads on it's clear cloud dynamics. The challenge as you have more and more data and as you're building up your data warehouse in your data lakes is that you do not want to have to move data from one place to another place. So for example, if you've got a Roller,, you have to move the database and it's a pretty complicated thing to do it, to move it to Redshift. It's a five or six steps to do that and each of those costs money and each of those take time. More importantly, they take time. The Oracle approach is a single database in terms of all the pieces that obviously you have multiple databases you have different OLTP databases and data warehouse databases but as a single architecture and a single design which means that all of the work in terms of moving stuff from one place to another place is within Oracle itself. It's Oracle that's doing that work for you and as you grow, that becomes very, very important. To me, very, very important, cost saving. The overhead of all those different ones and the databases themselves originate with all as open source and they've done very well with it and then there's a large revenue stream behind the, >> The AWS, you mean? >> Yes, the original database is in AWS and they've done a lot of work in terms of making it set with the panels, etc. But if a larger organization, especially very large ones and certainly if they want to combine, for example data warehouse with the OLTP and the inference which is in my opinion, a very good thing that they should be trying to do then that is incredibly difficult to do with AWS and in my opinion, AWS has to invest enormously in to make the whole ecosystem much better. >> Okay, so innovation required there maybe is part of the TAM expansion strategy but just to sort of digress for a second. So it seems like, and by the way, there are others that are doing, they're taking this converged approach. It seems like that is a trend. I mean, you certainly see it with single store. I mean, the name sort of implies that formerly MemSQL I think Monte Zweben of splice machine is probably headed in a similar direction, embedding AI in Microsoft's, kind of interesting. It seems like Microsoft is willing to build this abstraction layer that hides that complexity of the different tooling. AWS thus far has not taken that approach and then sort of looking at Snowflake, Snowflake's got a completely different, I think Snowflake's trying to do something completely different. I don't think they're necessarily trying to take Oracle head-on. I mean, they're certainly trying to just, I guess, let's talk about this. Snowflake simplified EDW, that's clear. Zero to snowflake in 90 minutes. It's got this data cloud vision. So you sign on to this Snowflake, speaking of layers they're abstracting the complexity of the underlying cloud. That's what the data cloud vision is all about. They, talk about this Global Mesh but they've not done a good job of explaining what the heck it is. We've been pushing them on that, but we got, >> Aspiration of moment >> Well, I guess, yeah, it seems that way. And so, but conceptually, it's I think very powerful but in reality, what snowflake is doing with data sharing, a lot of reading it's probably mostly read-only and I say, mostly read-only, oh, there you go. You'll get better but it's mostly read and so you're able to share the data, it's governed. I mean, it's exactly, quite genius how they've implemented this with its simplicity. It is a caching architecture. We've talked about that, we can geek out about that. There's good, there's bad, there's ugly but generally speaking, I guess my premise here I would love your thoughts. Is snowflakes trying to do something different? It's trying to be not just another data warehouse. It's not just trying to compete with data lakes. It's trying to create this data cloud to facilitate data sharing, put data in the hands of business owners in terms of a product build, data product builders. That's a different vision than anything I've seen thus far, your thoughts. >> I agree and even more going further, being a place where people can sell data. Put it up and make it available to whoever needs it and making it so simple that it can be shared across the country and across the world. I think it's a very powerful vision indeed. The challenge they have is that the pieces at the moment are very, very easy to use but the quality in terms of the, for example, joints, I mentioned, the joints were very powerful in Oracle. They don't try and do joints. They, they say >> They being Snowflake, snowflake. Yeah, they don't even write it. They would say use another Postgres >> Yeah. >> Database to do that. >> Yeah, so then they have a long way to go. >> Complex joints anyway, maybe simple joints, yeah. >> Complex joints, so they have a long way to go in terms of the functionality of their product and also in my opinion, they sure be going to have more types of databases inside it, including OLTP and they can do that. They have obviously got a great market gap and they can do that by acquisition as well as they can >> They've started. I think, I think they support JSON, right. >> Do they support JSON? And graph, I think there's a graph database that's either coming or it's there, I can't keep all that stuff in my head but there's no reason they can't go in that direction. I mean, in speaking to the founders in Snowflake they were like, look, we're kind of new. We would focus on simple. A lot of them came from Oracle so they know all database and they know how hard it is to do things like facilitate complex joints and do complex workload management and so they said, let's just simplify, we'll put it in the cloud and it will spin up a separate data warehouse. It's a virtual data warehouse every time you want one to. So that's how they handle those things. So different philosophy but again, coming back to some of the mission critical work and some of the larger Oracle customers, they said they have a thousand autonomous database customers. I think it was autonomous database, not ADW but anyway, a few stood out AON, lift, I think Deloitte stood out and as obviously, hundreds more. So we have people who misunderstand Oracle, I think. They got a big install base. They invest in R and D and they talk about lock-in sure but the CIO that I talked to and you talked to David, they're looking for business value. I would say that 75 to 80% of them will gravitate toward business value over the fear of lock-in and I think at the end of the day, they feel like, you know what? If our business is performing, it's a better business decision, it's a better business case. >> I fully agree, they've been very difficult to do business with in the past. Everybody's in dread of the >> The audit. >> The knock on the door from the auditor. >> Right. >> And that from a purchasing point of view has been really bad experience for many, many customers. The users of the database itself are very happy indeed. I mean, you talk to them and they understand why, what they're paying for. They understand the value and in terms of availability and all of the tools for complex multi-dimensional types of applications. It's pretty well, the only game in town. It's only DB2 and SQL that had any hope of doing >> Doing Microsoft, Microsoft SQL, right. >> Okay, SQL >> Which, okay, yeah, definitely competitive for sure. DB2, no IBM look, IBM lost its dominant position in database. They kind of seeded that. Oracle had to fight hard to win it. It wasn't obvious in the 80s who was going to be the database King and all had to fight. And to me, I always tell people the difference is that the chairman of Oracle is also the CTO. They spend money on R and D and they throw off a ton of cash. I want to say something about, >> I was just going to make one extra point. The simplicity and the capability of their cloud versions of all of this is incredibly good. They are better in terms of spending what you need or what you use much better than AWS, for example or anybody else. So they have really come full circle in terms of attractiveness in a cloud environment. >> You mean charging you for what you consume. Yeah, Mendelsohn talked about that. He made a big point about the granularity, you pay for only what you need. If you need 33 CPUs or the other databases you've got to shape, if you need 33, you've got to go to 64. I know that's true for everyone. I'm not sure if that's true too for snowflake. It may be, I got to dig into that a little bit, but maybe >> Yes, Snowflake has got a front end to hiding behind. >> Right, but I didn't want to push it that a little bit because I want to go look at their pricing strategies because I still think they make you buy, I may be wrong. I thought they make you still do a one-year or two-year or three-year term. I don't know if you can just turn it off at any time. They might allow, I should hold off. I'll do some more research on that but I wanted to make a point about the audits, you mentioned audits before. A big mistake that a lot of Oracle customers have made many times and we've written about this, negotiating with Oracle, you've got to bring your best and your brightest when you negotiate with Oracle. Some of the things that people didn't pay attention to and I think they've sort of caught onto this is that Oracle's SOW is adjudicate over the MSA, a lot of legal departments and procurement department. Oh, do we have an MSA? With all, Yes, you do, okay, great and because they think the MSA, they then can run. If they have an MSA, they can rubber stamp it but the SOW really dictateS and Oracle's gotcha there and they're really smart about that. So you got to bring your best and the brightest and you've got to really negotiate hard with Oracle, you get trouble. >> Sure. >> So it is what it is but coming back to Oracle, let's sort of wrap on this. Dominant position in mission critical, we saw that from the Gartner research, especially for operational, giant customer base, there's cloud-first notion, there's investing in R and D, open, we'll put a question Mark around that but hey, they're doing some cool stuff with Michael stuff. >> Ecosystem, I put that, ecosystem they're promoting their ecosystem. >> Yeah, and look, I mean, for a lot of their customers, we've talked to many, they say, look, there's actually, a tail at the tail way, this saves us money and we don't have to migrate. >> Yeah. So interesting, so I'll give you the last word. We started sort of focusing on the announcement. So what do you want to leave us with? >> My last word is that there are platforms with a certain key application or key parts of the infrastructure, which I think can differentiate themselves from the Azures or the AWS. and Oracle owns one of those, SAP might be another one but there are certain platforms which are big enough and important enough that they will, in my opinion will succeed in that cloud strategy for this. >> Great, David, thanks so much, appreciate your insights. >> Good to be here. Thank you for watching everybody, this is Dave Vellante for The Cube. We'll see you next time. (upbeat music)

>> From theCUBE studios in Palo Alto, in Boston bringing you data-driven insights from theCUBE and ETR. This is breaking analysis with Dave Vellante. >> SaaS companies have been some of the strongest performers in this COVID era. They finally took a bit of a breather this month, but they remain generally well-positioned for the next several years with their predictable models and cloud platforms. Meanwhile, the demise of on-prem legacy players from COVID shock, seems to have been overstated, in part because of the return of the laptop and in the case of Oracle with some see as a cloud play, Hmm. Then there's Bitcoin which is seeing public companies use their balance sheet liquidity to invest in the cryptocurrency. (chuckles) Wow. What does that all mean? I'll leave that for another day. Hello everyone and welcome to this week on Cube insights powered by ETR. On this breaking analysis, we'll pick out some of the more recent themes from this month and share our thoughts in some major enterprise software players, the future of on-prem, a review of our take on cloud and what cloud will look like in the 2020s. Wow. It's true, trees really don't grow to the moon. As predicted, the stock market has been a little bit crazy this month. February saw some leading SaaS names like Workday, Salesforce, and ServiceNow take a bit of a breather in the second half of the month. Workday and Salesforce announced earnings on the 25th. Workday had its first billion dollar subscription revenue quarter at 16% revenue growth a revenue and earnings beat. And of course the stock closed down Friday, more than 2%. Salesforce had a nearly $6 billion revenue quarter 20% growth, a revenue and earnings beat. And the day after it announced earnings the stock was down more than 6%. The market is worried about rising interest rates, and maybe concerned that an inflation fears are going to kill the stimulus bill. And so any whiff of caution by company managements is met with dampened enthusiasm. Meanwhile, it's looking like some of the big on-prem legacy firms, notably Dell, HPQ and HPE are making it through COVID, and might even come out in the other side stronger maybe. Dell handily beat expectations on the 25th on the strength of 17% growth in its client business. That's PCs. It's the gift that keeps on giving. HPQ had a strong beat as well, and we're anticipating a solid quarter from HPE next week on March 2nd. And then there's Oracle. Barron's had a big article on February 19th, entitled, "Oracle is turning into a cloud giant and why it's stock is a buy". It moved the market. And many investors rotated out of growth stocks, tech growth tech stocks into Oracle, others who had owned Oracle for a while scooped up some profits. Is Oracle a cloud giant? Hmm. We'll discuss that in a moment. And then there's all this Bitcoin mania. You know, our interest there is much more beyond the price fluctuations rather we're interested in the innovations in crypto. Look, we're going to table this for another day, but it's an interesting side note of this February madness. Let's take a look closer look at the February chill for SaaS companies. Here's a chart showing the relative performance of some of the big SaaS names in the latter half of this month. Now despite the strong earnings for Workday and Salesforce you can see the market's negative response on the 26th. Snowflake and ServiceNow they had epic runs last year, and they've been softening although on Friday morning ServiceNow shut down quickly on the open on sympathy with Workday and ServiceNow and then investors, you know, came back in. Very weird action in the market these days, again, not surprising. And look at the reaction investors had to the Barron's article on the 19th. They anointed Oracle as a cloud giant. Kudos to the Oracle PR team for that one. Now, let's take a look at these companies and put them in context. Even though they're not direct competitors it's instructive to model some of the top enterprise software players in positions, and line them up against each other. This chart here shows two dimensions from the ETR data. On the vertical axis is net score or customer spending momentum. And the horizontal axis is market share or pervasiveness in the survey. The table inset shows the net score measurement in the shared end. That's the metric that plots the dots. In both cases bigger is better. Note, that red dotted-line there is the 40% line. 40% to us is the magic number. Anything above that line is considered elevated. So we have ServiceNow and Salesforce they're up to the right. They're both big companies. They have significant market presence amongst the CIO and both have elevated spending velocity in the 50% range. And I've said for years, these two companies are on a collision course and I stand by that. It started happening and McDermott Bill McDermott, new CEO he's going to accelerate that in our view. We put a cloud around Snowflake tongue in cheek, because they are literally in the clouds on this chart. They stand alone, with a solid market presence that continues to grow in an off the charts net score of 83.3% now. For context you can see Oracle Fusion, NetSuite and Taleo. In addition, we put Slack and Coupa on the graphic, two names that have been on the radar lately and SAP, which continues to show decent spending momentum despite its challenges. All right, let me make a few comments on some of these companies. Snowflake, we've talked about a lot. I said earlier that their IPO, that if you really wanted to own it and couldn't wait for a better price, which I thought you'd get. And by the way you did, but then if you really wanted to own it on day one hold your nose and buy it and then wait a few years. So, you know, good luck. And I think you'll, it'll turn out okay for you. Now, the data really continues to show strong demand for Snowflake. There's no signs of them slowing down. So they announced earnings on March 3rd. We didn't have more data there. So we would expect confirmation of our analysis but you never know. Now Workday, here's our take. In our view the market is catching up to Workday. They had about a three-year lead at least in human capital management and the cloud and that whole model. And they had the best product. It was really simple and it was quite disruptive. But now you got Oracle, ADP, Ceridian they're catching up. Workday's expansion into financial management has been much more challenging and as it gets bigger, things get tougher. It's still though an enduring name. Salesforce, we see a bit differently. Salesforce is so big now, it's really hard for it to move the needle. And so it's been on an acquisition binge, and to grow that's likely going to continue. It could work well for the company. I mean, similar to the ways in which Oracle consolidated software names and picked up a lot of customers. Salesforce is a great name, and we think is going to continue to grow. ServiceNow is interesting. It's entering a new chapter under CEO, Bill McDermott, new CEO. He wants to double the company's revenue. And I think he's got a reasonable chance at that through a combination of great go-to-market and expanding the platform and in McDermott style doing acquisitions. SAP's market value tripled under his watch, and he knows the customers. And he's a magnet for attracting talent. Now ServiceNow is not without its challenges. Its customers often complain that ServiceNow is pricing is really high and it's becoming the Oracle of service management. But as McDermott aims more at SAP and Oracle customers, they create a nice umbrella for ServiceNow to work with. And technically, we think ServiceNow has other challenges around its multi-instance. We call it, if you can't fix it feature it architecture. That may present some issues down the road at scale. We don't have time to go into that in detail but suffice it to say that ServiceNow runs on its own cloud. So it's not running on a hyper scale cloud. Yeah. Good news it doesn't have to pay it through that. The bad news is, has got to manage all that infrastructure. It's basically be a cloud supply supplier but it doesn't do multi-tenant which means fundamentally, it has a more expensive cost structure. Okay. Let's turn our attention to what's happening on-prem with some of the big legacy names. Here's the same X Y chart with some of the big names that have a presence on-prem. First you can see VMware and Cisco, Oracle, Dell, IBM and HP. Look at them on the horizontal scale. They've got a large market share of presence in the ETR dataset. Unlike the larger SaaS companies however, none is above that magic 40% net scoreline. Pure, Dell's laptop business, Red Hat, OpenShift. They're above the line with Nutanix just about there at the line. The other major laptop players, Lenovo and HPQ showing momentum from the whole remote work trend. And for context, we put in NetApp so you can get a sense of where they're at. Pure beat its earnings last week but only grew 2% last quarter. Now remember the ETR survey, this is a forward-looking survey. So this potentially bodes well for the companies that are above that 40% line. Okay. So most so sorry of the companies on this chart only IBM and Oracle, those two own a public cloud. And we'll dig further into that in a moment, but virtually every name shown here, even Oracle has a mandate to redefine cloud. Meaning it has to put forth in our view in North star vision and execute on it. That will unify the experience between on-prem, hybrid cloud, public clouds, cross clouds and the edge. Now I say even Oracle, because in my view, Oracle is in a stronger position than the others, because of it's more coherent software architecture. Now the other companies on this chart, they have to architect a platform that abstracts the underlying complexity of clouds, leverage cloud native tooling in the respective public clouds. Connect on-prem infrastructure and build a layer, that stretches out and accommodates edge workloads. I think Oracle will follow suit and is actually ahead of most in a narrower context, i.e hybrid. But it doesn't have to race toward this vision. It can sit back as it often does, watch everyone else fumble around and make mistakes. And then Oracle will keep investing in R&D, watch the market, you know make its own experimental mistakes, and then enter the market and act like we invented it. Now, Cisco will come at this from a strong networking and security perspective. And it has a nice story on programmable infrastructure with Cisco DevNet. But unfortunately it does not own VMware as does Dell, but Dell is in the middle of a fairly remarkable journey. And it will be interesting to see what happens with the VMware spin-out and the cozy commercial relationship that Dell is structuring with VMware as you know, and as we've reported, Dell has used VMware's cash for a lot of this restructuring. And so we'll see, as it exits the current phase and enters a new phase, how it will be able to pursue that vision. It's going to be, whatever it does it's going to be much different than that vertically integrated Oracle approach, which of course brings me to IBM. Potentially Red Hat with OpenShift is the most powerful card in the deck right now. OpenShift I mean, it's open it's everywhere. It has momentum as we showed. And I like their position. My concern is IBM, IBM is still unwinding and restructuring its business. And it's taking a long time as we've seen, with its outsourcing business. And now the Watson health assets, Irvine is continuing that downsizing trend that we saw under Ginny, shedding non-strategic businesses that don't fit, Irvine has a lot to deal with. And I want to point out that this idea of an abstraction layer across clouds is not trivial. First, all of these companies have to stop being so defensive about the public cloud. To a large extent, VMware and Red Hat have found a happy place. But in my view, they all should be thanking AWS, Azure, and Google for building out this great global distributed system, that they can leverage and build on top of. And second, this is going to be expensive. And Cisco, Dell VMware, IBM, they're all really stretched thin from an R&D perspective. They a lot of mouths to feed across the portfolio. So is HPE stretched thin, and it doesn't have the R&D budget at less than $2 billion annually. So my concern is that we're going to have lots of complexity across these obstructions layers by vendor. Now maybe the good news for companies. This may be good news for companies like Hashi or specialists with a vision to do this within a domain like a clumial, or a vast data, but this is big, and they are small. So it's going to take the better part of a decade to play out. Now, let's take a quick look at the cloud players. OMG when I saw that article in Barron's last weekend my mouth dropped. What a headline and it had this illustration of a stout Larry Ellison rising above the clouds. Here's a picture of the ETR data for the cloud players. It's the same X, Y plotting or net score and market share. If you follow this program, you know we believe there are four and only four hyper scale cloud players, with the resources to compete and differentiate as horizontal infrastructure players, which really is how we view the origination of modern cloud computing. AWS created it with S3 and EC2 with 2006. Those four are AWS and Azure, which have a large lead over the pack. Google cloud and Alibaba. And you can see we've circled the on-prem pack which comprises Oracle and IBM along with Dell VMware. And we snuck Google just stuck them at the edge of that circle because the differentiate they're cozying up to companies with strong enterprise sales teams and Google's, they're smart, they're patient. And so we, by no means, count them out. They're spending like mad and they have a lot of cash. They've done some really interesting open source things with containers. And so, you know, no doubt they're a player, but they are behind. Now in that on-prem pack, IBM and Oracle they actually own their own public clouds. IBM, they acquired soft layer which was a bare metal hosting company at the time to get IBM into the game. They retooled the platform over several years. Now here's the thing, try and unpack IBM's cloud business looking at its financial or in earnings reports. It's just a mess. I hope Irvine cuts the nonsense and actually develops and reports a set of metrics that are meaningful to cloud observers and IBM observers, because the way IBM reports its cloud business today is opaque and it's nonsense. It's frankly embarrassing to the company. It needs to end sooner rather than later is fundamentally meaningless to any observers. Now observers of cloud. If you care about the big chunk of whatever then maybe it has meaning. Now Oracle for its part, they announced the public cloud years ago, its version of one datto cloud was crap. And the company, they hired a bunch of really smart cloud engineers and they spent a lot of money to fix that. Now neither IBM nor Oracle have the CapEx resources of the big four, not even close, yet they'll build out data centers and yes they'll have a play, but they're different and that's okay. Now in the Barron's article on Oracle, the author was quite positive on Oracle, noting that quote, "On a recent earnings call CEO Safra Catz said that Oracle cloud infrastructure revenue was up 139% for the quarter". So, (laughs) we have really no sense or a stake in the ground is to up from what? Anyway, noting further the author said, quote, "Alas! Oracle doesn't break out OCI sales and comps can be messy". Hmm, indeed. Oracle is hiding the ball on OCI, that's because if they did break it out, which by the way they used to report, AIS revenue explicitly, but if they did break it out, they would only be highlighting that they are a minor player in AIS. Further, the article continues, quote, "Catz says that hers is the only tech company that has both a global cloud and a full set of enterprise applications". Unquote, bingo. There it is. That's why Oracle is in a better position than many of or most of the on-prem players listed in this chart. By the way, I would argue that Microsoft has a pretty impressive set of enterprise applications in a fairly global cloud. But what Safra is talking about is applications that support the world's most mission critical work. And when it comes to that, Oracle is number one. Don't fool yourself and get caught up in the Oracle lock-in and high pricing narrative, thinking that they're going to get crushed. They're not. Oracle is the best in the mission critical workload game. There is no one better, period. But guys, come on. The big four last year grew 41% and accounted for $86 billion in AIS revenue, AKA real cloud revenue. And they're going to surpass $115 billion this year combined. Real cloud companies don't grow in the single digits today. So talk to me when we reach equilibrium on that front. Okay. So let's wrap by looking at what does a cloud company look like in the 2020s? Now, I'm not saying that the rest of the pack shouldn't redefine cloud they should. But I hope we can all agree by now that modern day cloud computing was defined in business terms by AWS. They are number one in cloud computing, make no mistake. However, AWS is bringing the cloud into the wheelhouse of the on-prem players, cleverly saying that it's bringing AWS to the edge and it looks at the data centers. Just another edge node is great positioning but that is not trivial. Just look it out posts and how AWS has had to evolve its pricing strategy in terms, can't just turn it off like you can, the public cloud. I have an entire rant on all the, SaaS service transformations. It's really interesting to watch as AWS goes out, and the on-prem players come in and go hybrid. I got a lot of thought on what's happening there both in terms of SaaS, which I think is an outdated pricing model, and the infrastructure as a service players that are really getting into this game, we would love to do a session on that sometime. And it's a real disruption I think coming. Anyway, AWS competitors should absolutely try to redefine cloud. By AWS moving to the edge, it's opened up the door to that possibility. Microsoft is obviously in the best position I think by far here. They've earned the right and I'll never accuse them of cloud washing. Google, they got some work to do in this regard, but they probably have the largest physical cloud infrastructure in the world. As I've said, they just need to pull their heads out of their ads and quadruple down on cloud. But this idea of abstracting away the underlying complexity of the cloud, leveraging cloud native capabilities and building on top of the shoulders of the cloud giants such as David Floyer has expressed in this chart, moving from stateless to state full, integrating across clouds, advancing automation not only through the stack, but across domains and ultimately using metadata to govern where workloads should live or be moved, be disintegrated and recombined with low latency and be highly secured. I look at this, I think about this and I say one there is this technically feasible and smart techies tell me yes, so I keep trying to dig here for signs and I definitely see some movement in this direction. And two, I don't think any one vendor is going to do this themselves. They're not going to, it's not going to be owned by one company. I think what's going to happen is you'll get successes within layers of the stack. I mean, think about Snowflakes data cloud. We're going to see that for storage. See it for backup, data management, security maybe security within different domains. You see endpoint and identity access management. Maybe that cloud comes together as cloud security. You see it in applications, but without clear standards, it's going to be a challenge. And with respect to my friends at Snowflake, we might even see it in database sometime LOL, but look you all have a lot of work to do. And to my CIO friends, you know the drill much better than I, technology is going to keep relentlessly coming at you and you can deal with that. It's the people and the change management in the culture. Those are your bigger challenges, but don't screw up the tech. Okay. Thanks for watching. Remember, these episodes are all available as podcasts wherever you listen, just search breaking analysis podcasts, and please subscribe to the series, we appreciate that. Check out ETR's website at ETR.plus sorry, ETR.plus. We also publish a full report every week on wikibon.com and siliconangle.com. You can email me at David.Vellante@siliconangle.com or DM me on Twitter at DVellante that's @DVellante or comment, excuse me on my LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Stay safe, be well, get the jab if you have an opportunity. And we'll see you next time. (soft music)

>> Narrator: From theCUBE studios in Palo Alto in Boston, connecting with thought leaders all around the world. This is a CUBE conversation. >> As you know by now, Jeff Bezos, CEO of Amazon, is stepping aside from his CEO role and AWS CEO, Andy Jassy, is being promoted to head all of Amazon. Bezos, of course, is going to remain executive chairman. Now, 15 years ago, next month, Amazon launched it's simple storage service, which was the first modern cloud offering. And the man who wrote the business plan for AWS, was Andy Jassy, and he's navigated the meteoric rise and disruption that has seen AWS grow into a $45 billion company that draws off the vast majority of Amazon's operating profits. No one in the media has covered Jassy more intimately and closely than John Furrier, the founder of SiliconANGLE. And John joins us today to help us understand on theCUBE this move and what we can expect from Jassy in his new role, and importantly what it means for AWS. John, thanks for taking the time to speak with us. >> Hey, great day. Great to see you as always, we've done a lot of interviews together over the years and we're on our 11th year with theCUBE and SiliconANGLE. But I got to be excited too, that we're simulcasters on Clubhouse, which is kind of cool. Love Clubhouse but not since the, in December. It's awesome. It's like Cube radio. It's like, so this is a Cube talk. So we opened up a Clubhouse room while we're filming this. We'll do more live hits in studio and syndicate the Clubhouse and then take questions after. This is a huge digital transformation moment. I'm part of the digital transformation club on Clubhouse which has almost 5,000 followers at the moment and also has like 500 members. So if you're not on Clubhouse, yet, if you have an iPhone go check it out and join the digital transformation club. Android users you'll have to wait until that app is done but it's really a great club. And Jeremiah Owyang is also doing a lot of stuff on digital transformation. >> Or you can just buy an iPhone and get in. >> Yeah, that's what people are doing. I can see all the influences are on there but to me, the digital transformation, it's always been kind of a cliche, the consumerization of IT, information technology. This has been the boring world of the enterprise over the past, 20 years ago. Enterprise right now is super hot because there's no distinction between enterprise and society. And that's clearly the, because of the rise of cloud computing and the rise of Amazon Web Services which was a side project at AWS, at Amazon that Andy Jassy did. And it wasn't really pleasant at the beginning. It was failed. It failed a lot and it wasn't as successful as people thought in the early days. And I have a lot of stories with Andy that he told me a lot of the inside baseball and we'll share that here today. But we started covering Amazon since the beginning. I was as an entrepreneur. I used it when it came out and a huge fan of them as a company because they just got a superior product and they have always had been but it was very misunderstood from the beginning. And now everyone's calling it the most important thing. And Andy now is becoming Andy Jassy, the most important executive in the world. >> So let's get it to the, I mean, look at, you said to me over holidays, you thought this might have something like this could happen. And you said, Jassy is probably in line to get this. So, tell us, what can you tell us about Jassy? Why is he qualified for this job? What do you think he brings to the table? >> Well, the thing that I know about Amazon everyone's been following the Amazon news is, Jeff Bezos has a lot of personal turmoil. They had his marriage fail. They had some issues with the smear campaigns and all this stuff going on, the run-ins with Donald Trump, he bought the Washington post. He's got a lot of other endeavors outside of Amazon cause he's the second richest man in the world competing with Elon Musk at Space X versus Blue Origin. So the guy's a billionaire. So Amazon is his baby and he's been running it as best he could. He's got an executive team committee they called the S team. He's been grooming people in the company and that's just been his mode. And the rise of AWS and the business performance that we've been documenting on SiliconANGLE and theCUBE, it's just been absolutely changing the game on Amazon as a company. So clearly Amazon Web Services become a driving force of the new Amazon that's emerging. And obviously they've got all their retail business and they got the gaming challenges and they got the studios and the other diversified stuff. So Jassy is just, he's just one of those guys. He's just been an Amazonian from day one. He came out of Harvard business school, drove across the country, very similar story to Jeff Bezos. He did that in 1997 and him and Jeff had been collaborating and Jeff tapped him to be his shadow, they call it, which is basically technical assistance and an heir apparent and groomed him. And then that's how it is. Jassy is not a climber as they call it in corporate America. He's not a person who is looking for a political gain. He's not a territory taker, but he's a micromanager. He loves details and he likes to create customer value. And that's his focus. So he's not a grandstander. In fact, he's been very low profile. Early days when we started meeting with him, he wouldn't meet with press regularly because they weren't writing the right stories. And everyone is, he didn't know he was misunderstood. So that's classic Amazon. >> So, he gave us the time, I think it was 2014 or 15 and he told us a story back then, John, you might want to share it as to how AWS got started. Why, what was the main spring Amazon's tech wasn't working that great? And Bezos said to Jassy, going to go figure out why and maybe explain how AWS was born. >> Yeah, we had, in fact, we were the first ones to get access to do his first public profile. If you go to the Google and search Andy Jassy, the trillion dollar baby, we had a post, we put out the story of AWS, Andy Jassy's trillion dollar baby. This was in early, this was January 2015, six years ago. And, we back then, we posited that this would be a trillion dollar total addressable market. Okay, people thought we were crazy but we wrote a story and he gave us a very intimate access. We did a full drill down on him and the person, the story of Amazon and that laid out essentially the beginning of the rise of AWS and Andy Jassy. So that's a good story to check out but really the key here is, is that he's always been relentless and competitive on creating value in what they call raising the bar outside Amazon. That's a term that they use. They also have another leadership principle called working backwards, which is like, go to the customer and work backwards from the customer in a very Steve Job's kind of way. And that's been kind of Jobs mentality as well at Apple that made them successful work backwards from the customer and make things easier. And that was Apple. Amazon, their philosophy was work backwards from the customer and Jassy specifically would say it many times and eliminate the undifferentiated heavy lifting. That was a key principle of what they were doing. So that was a key thesis of their entire business model. And that's the Amazonian way. Faster, cheaper, ship it faster, make it less expensive and higher value. While when you apply the Amazon shipping concept to cloud computing, it was completely disrupted. They were shipping code and services faster and that became their innovation strategy. More announcements every year, they out announced their competition by huge margin. They introduced new services faster and they're less expensive some say, but in the aggregate, they make more money but that's kind of a key thing. >> Well, when you, I was been listening to the TV today and there was a debate on whether or not, this support tends that they'll actually split the company into two. To me, I think it's just the opposite. I think it's less likely. I mean, if you think about Amazon getting into grocery or healthcare, eventually financial services or other industries and the IOT opportunity to me, what they do, John, is they bring in together the cloud, data and AI and they go attack these new industries. I would think Jassy of all people would want to keep this thing together now whether or not the government allows them to do that. But what are your thoughts? I mean, you've asked Andy this before in your personal interviews about splitting the company. What are your thoughts? >> Well, Jon Fortt at CNBC always asked the same question every year. It's almost like the standard question. I kind of laugh and I ask it now too because I liked Jon Fortt. I think he's an awesome dude. And I'll, it's just a tongue in cheek, Jassy. He won't answer the question. Amazon, Bezos and Jassy have one thing in common. They're really good at not answering questions. So if you ask the same question. They'll just say, nothing's ever, never say never, that's his classic answer to everything. Never say never. And he's always said that to you. (chuckles) Some say, he's, flip-flopped on things but he's really customer driven. For example, he said at one point, no one should ever build a data center. Okay, that was a principle. And then they come out and they have now a hybrid strategy. And I called them out on that and said, hey, what, are you flip-flopping? You said at some point, no one should have a data center. He's like, well, we looked at it differently and what we meant was is that, it should all be cloud native. Okay. So that's kind of revision, but he's cool with that. He says, hey, we'll revise based on what customers are doing. VMware working with Amazon that no one ever thought that would happen. Okay. So, VMware has some techies, Raghu, for instance, over there, super top notch. He worked with Jassy, directly in his team Sanjay Poonen when they went to business school together, they cut a deal. And now Amazon essentially saved VMware, in my opinion. And Pat Gelsinger drove that deal. Now, Pat Gelsinger, CEO, Intel, and Pat told me that directly in candid conversation off theCUBE, he said, hey, we have to make a decision either we're going to be in cloud or we're not going to be in cloud, we will partner. And I'll see, he was Intel. He understood the Intel inside mentality. So that's good for VMware. So Jassy does these kinds of deals. He's not afraid he's got a good stomach for business and a relentless competitor. >> So, how do you think as you mentioned Jassy is a micromanager. He gets deep into the technology. Anybody who's seen his two hour, three hour keynotes. No, he has a really fine grasp of the technology across the entire stack. How do you think John, he will approach things like antitrust, the big tech lash of the unionization of the workforce at Amazon? How do you think Jassy will approach that? >> Well, I think one of the things that emerges Jassy, first of all, he's a huge sports fan. And many people don't know that but he's also progressive person. He's very progressive politically. He's been on the record and off the record saying things like, obviously, literacy has been big on, he's been on basically unrepresented minorities, pushing for that, and certainly cloud computing in tech, women in tech, he's been a big proponent. He's been a big supporter of Teresa Carlson. Who's been rising star at Amazon. People don't know who Teresa Carlson is and they should check out her. She's become one of the biggest leaders inside Amazon she's turned around public sector from the beginning. She ran that business, she's a global star. He's been a great leader and he's been getting, forget he's a micromanager, he's on top of the details. I mean, the word is, and nothing gets approved without Andy, Andy seeing it. But he's been progressive. He's been an Amazon original as they call it internally. He's progressive, he's got the business acumen but he's perfect for this pragmatic conversation that needs to happen. And again, because he's so technically strong having a CEO that's that proficient is going to give Amazon an advantage when they have to go in and change how DC works, for instance, or how the government geopolitical landscape works, because Amazon is now a global company with regions all over the place. So, I think he's pragmatic, he's open to listening and changing. I think that's a huge quality >> Well, when you think of this, just to set the context here for those who may not know, I mean, Amazon started as I said back in 2006 in March with simple storage service that later that year they announced EC2 which is their compute platform. And that was the majority of their business, is still a very large portion of their business but Amazon, our estimates are that in 2020, Amazon did 45 billion, 45.4 billion in revenue. That's actually an Amazon reported number. And just to give you a context, Azure about 26 billion GCP, Google about 6 billion. So you're talking about an industry that Amazon created. That's now $78 billion and Amazon at 45 billion. John they're growing at 30% annually. So it's just a massive growth engine. And then another story Jassy told us, is they, he and Jeff and the team talked early on about whether or not they should just sort of do an experiment, do a little POC, dip their toe in and they decided to go for it. Let's go big or go home as Michael Dell has said to us many times, I mean, pretty astounding. >> Yeah. One of the things about Jassy that people should know about, I think there's some compelling relative to the newest ascension to the CEO of Amazon, is that he's not afraid to do new things. For instance, I'll give you an example. The Amazon Web Services re-invent their annual conference grew to being thousands and thousands of people. And they would have a traditional after party. They called a replay, they'd have a band like every tech conference and their conference became so big that essentially, it was like setting up a live concert. So they were spending millions of dollars to set up basically a one night concert and they'd bring in great, great artists. So he said, hey, what's been all this cash? Why don't we just have a festival? So they did a thing called Intersect. They got LA involved from creatives and they basically built a weekend festival in the back end of re-invent. This was when real life was, before COVID and they turned into an opportunity because that's the way they think. They like to look at the resources, hey, we're already all in on this, why don't we just keep it for the weekend and charge some tickets and have a good time. He's not afraid to take chances on the product side. He'll go in and take a chance on a new market. That comes from directly from Bezos. They try stuff. They don't mind failing but they put a tight leash on measurement. They work backwards from the customer and they are not afraid to take chances. So, that's going to board well for him as he tries to figure out how Amazon navigates the contention on the political side when they get challenged for their dominance. And I think he's going to have to apply that pragmatic experimentation to new business models. >> So John I want you to take on AWS. I mean, despite the large numbers, I talked about 30% growth, Azure is growing at over 50% a year, GCP at 83%. So despite the large numbers and big growth the growth rates are slowing. Everybody knows that, we've reported it extensively. So the incoming CEO of Amazon Web Services has a TAM expansion challenge. And at some point they've got to decide, okay, how do we keep this growth engine? So, do you have any thoughts as to who might be the next CEO and what are some of their challenges as you see it? >> Well, Amazon is a real product centric company. So it's going to be very interesting to see who they go with here. Obviously they've been grooming a lot of people. There's been some turnover. You had some really strong executives recently leave, Jeff Wilkes, who was the CEO of the retail business. He retired a couple of months ago, formerly announced I think recently, he was probably in line. You had Mike Clayville, is now the chief revenue officer of Stripe. He ran all commercial business, Teresa Carlson stepped up to his role as well as running public sector. Again, she got more power. You have Matt Garman who ran the EC2 business, Stanford grad, great guy, super strong on the product side. He's now running all commercial sales and marketing. And he's also on the, was on Bezos' S team, that's the executive kind of team. Peter DeSantis is also on that S team. He runs all infrastructure. He took over for James Hamilton, who was the genius behind all the data center work that they've done and all the chip design stuff that they've innovated on. So there's so much technical innovation going on. I think you still going to see a leadership probably come from, I would say Matt Garman, in my opinion is the lead dog at this point, he's the lead horse. You could have an outside person come in depending upon how, who might be available. And that would probably come from an Andy Jassy network because he's a real fierce competitor but he's also a loyalist and he likes trust. So if someone comes in from the outside, it's going to be someone maybe he trusts. And then the other wildcards are like Teresa Carlson. Like I said, she is a great woman in tech who's done amazing work. I've profiled her many times. We've interviewed her many times. She took that public sector business with Amazon and changed the game completely. Outside the Jedi contract, she was in competitive for, had the big Trump showdown with the Jedi, with the department of defense. Had the CIA cloud. Amazon set the standard on public sector and that's directly the result of Teresa Carlson. But she's in the field, she's not a product person, she's kind of running that group. So Amazon has that product field kind of structure. So we'll see how they handle that. But those are the top three I think are going to be in line. >> So the obvious question that people always ask and it is a big change like this is, okay, in this case, what is Jassy going to bring in? And what's going to change? Maybe the flip side question is somewhat more interesting. What's not going to change in your view? Jassy has been there since nearly the beginning. What are some of the fundamental tenets that he's, that are fossilized, that won't change, do you think? >> I think he's, I think what's not going to change is Amazon, is going to continue to grow and develop their platform business and enable more SaaS players. That's a little bit different than what Microsoft's doing. They're more SaaS oriented, Office 365 is becoming their biggest application in terms of revenue on Microsoft side. So Amazon is going to still have to compete and enable more ecosystem partners. I think what's not going to change is that Bezos is still going to be in charge because executive chairman is just a code word for "not an active CEO." So in the corporate governance world when you have an executive chairman, that's essentially the person still in charge. And so he'll be in charge, will still be the boss of Andy Jassy and Jassy will be running all of Amazon. So I think that's going to be a little bit the same, but Jassy is going to be more in charge. I think you'll see a team change over, whether you're going to see some new management come in, Andy's management team will expand, I think Amazon will stay the same, Amazon Web Services. >> So John, last night, I was just making some notes about notable transitions in the history of the tech business, Gerstner to Palmisano, Gates to Ballmer, and then Ballmer to Nadella. One that you were close to, David Packard to John Young and then John Young to Lew Platt at the old company. Ellison to Safra and Mark, Jobs to Cook. We talked about Larry Page to Sundar Pichai. So how do you see this? And you've talked to, I remember when you interviewed John Chambers, he said, there is no rite of passage, East coast mini-computer companies, Edson de Castro, Ken Olsen, An Wang. These were executives who wouldn't let go. So it's of interesting to juxtapose that with the modern day executive. How do you see this fitting in to some of those epic transitions that I just mentioned? >> I think a lot of people are surprised at Jeff Bezos', even stepping down. I think he's just been such the face of Amazon. I think some of the poll numbers that people are doing on Twitter, people don't think it's going to make a big difference because he's kind of been that, leader hand on the wheel, but it's been its own ship now, kind of. And so depending on who's at the helm, it will be different. I think the Amazon choice of Andy wasn't obvious. And I think a lot of people were asking the question who was Andy Jassy and that's why we're doing this. And we're going to be doing more features on the Andy Jassy. We got a tons, tons of content that we've we've had shipped, original content with them. We'll share more of those key soundbites and who he is. I think a lot of people scratching their head like, why Andy Jassy? It's not obvious to the outsiders who don't know cloud computing. If you're in the competing business, in the digital transformation side, everyone knows about Amazon Web Services. Has been the most successful company, in my opinion, since I could remember at many levels just the way they've completely dominated the business and how they change others to be dominant. So, I mean, they've made Microsoft change, it made Google change and even then he's a leader that accepts conversations. Other companies, their CEOs hide behind their PR wall and they don't talk to people. They won't come on Clubhouse. They won't talk to the press. They hide behind their PR and they feed them, the media. Jassy is not afraid to talk to reporters. He's not afraid to talk to people, but he doesn't like people who don't know what they're talking about. So he doesn't suffer fools. So, you got to have your shit together to talk to Jassy. That's really the way it is. And that's, and he'll give you mind share, like he'll answer any question except for the ones that are too tough for him to answer. Like, are you, is facial recognition bad or good? Are you going to spin out AWS? I mean these are the hard questions and he's got a great team. He's got Jay Carney, former Obama press secretary working for him. He's been a great leader. So I'm really bullish on, is a good choice. >> We're going to jump into the Clubhouse here and open it up shortly. John, the last question for you is competition. Amazon as a company and even Jassy specifically I always talk about how they don't really focus on the competition, they focus on the customer but we know that just observing these folks Bezos is very competitive individual. Jassy, I mean, you know him better than I, very competitive individual. So, and he's, Jassy has been known to call out Oracle. Of course it was in response to Larry Ellison's jabs at Amazon regarding database. But, but how do you see that? Do you see that changing at all? I mean, will Amazon get more publicly competitive or they stick to their knitting, you think? >> You know this is going to sound kind of a weird analogy. And I know there's a lot of hero worshiping on Elon Musk but Elon Musk and Andy Jassy have a lot of similarities in the sense of their brilliance. They got both a brilliant people, different kinds of backgrounds. Obviously, they're running different things. They both are builders, right? If you were listening to Elon Musk on Clubhouse the other night, what was really striking was not only the magic of how it was all orchestrated and what he did and how he interviewed Robin Hood. He basically is about building stuff. And he was asked questions like, what advice do you give startups? He's like, if you need advice you shouldn't be doing startups. That's the kind of mentality that Jassy has, which is, it's not easy. It's not for the faint of heart, but Elon Musk is a builder. Jassy builds, he likes to build stuff, right? And so you look at all the things that he's done with AWS, it's been about enabling people to be successful with the tools that they need, adding more services, creating things that are lower price point. If you're an entrepreneur and you're over the age of 30, you know about AWS because you know what, it's cheaper to start a business on Amazon Web Services than buying servers and everyone knows that. If you're under the age of 25, you might not know 50 grand to a hundred thousand just to start something. Today you get your credit card down, you're up and running and you can get Clubhouses up and running all day long. So the next Clubhouse will be on Amazon or a cloud technology. And that's because of Andy Jassy right? So this is a significant executive and he continue, will bring that mindset of building. So, I think the digital transformation, we're in the digital engine club, we're going to see a complete revolution of a new generation. And I think having a new leader like Andy Jassy will enable in my opinion next generation talent, whether that's media and technology convergence, media technology and art convergence and the fact that he digs music, he digs sports, he digs tech, he digs media, it's going to be very interesting to see, I think he's well-poised to be, and he's soft-spoken, he doesn't want the glamorous press. He doesn't want the puff pieces. He just wants to do what he does and he puts his game do the talking. >> Talking about advice at startups. Just a quick aside. I remember, John, you and I when we were interviewing Scott McNealy former CEO of Sun Microsystems. And you asked him advice for startups. He said, move out of California. It's kind of tongue in cheek. I heard this morning that there's a proposal to tax the multi-billionaires of 1% annually not just the one-time tax. And so Jeff Bezos of course, has a ranch in Texas, no tax there, but places all over. >> You see I don't know. >> But I don't see Amazon leaving Seattle anytime soon, nor Jassy. >> Jeremiah Owyang did a Clubhouse on California. And the basic sentiment is that, it's California is not going away. I mean, come on. People got to just get real. I think it's a fad. Yeah. This has benefits with remote working, no doubt, but people will stay here in California, the network affects beautiful. I think Silicon Valley is going to continue to be relevant. It's just going to syndicate differently. And I think other hubs like Seattle and around the world will be integrated through remote work and I think it's going to be much more of a democratizing effect, not a win lose. So that to me is a huge shift. And look at Amazon, look at Amazon and Microsoft. It's the cloud cities, so people call Seattle. You've got Google down here and they're making waves but still, all good stuff. >> Well John, thanks so much. Let's let's wrap and let's jump into the Clubhouse and hear from others. Thanks so much for coming on, back on theCUBE. And many times we, you and I've done this really. It was a pleasure having you. Thanks for your perspectives. And thank you for watching everybody, this is Dave Vellante for theCUBE. We'll see you next time. (soft ambient music)

>> From the SiliconANGLE media office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Dave Vellante. >> Hi, everybody, welcome to this CUBE Insights, powered by ETR. In this episode of the Breaking Analysis, we're going to take a look at SAP. Thursday, October 10th, SAP surprised the Street, they announced early, they preannounced their earnings, and at the same time they timed that with the announcement that CEO, longtime CEO Bill McDermot was stepping down, his contract was up for renewal in January of 2020, and he decided that he's going to turn it over to a co-CEO structure that I'll talk about a little bit, so that was big news. Spending on SAP has been holding pretty steady over the last several quarters, I'll share some ETR data with you. It's been quite a run by Bill McDermott, he started out as CEO, I think it was February of 2010, as co-CEO with Jim Hagemann Snabe, and then two years later was named the sole CEO and I'll share some data on that in terms of the performance of SAP during his tenure. But the bottom line is, we expect, based on the spending data, some continued momentum from SAP, I'll show you some data that shows a little bit of a mix in the numbers, ETR basically just dropped a report on Friday that I'll share with you as well, but the bottom line is we see some major challenges ahead for SAP, specifically from a technology integration point that I'll talk to you, and it really is not showing up yet in the spending numbers, but it's something that we're keeping an eye on, and it's something that we want to share with you, our community. So Alex, if you wouldn't mind bringing up the first slide, here. I'll make some key points, really around SAP's Q3 earnings and the CEO news. So as they say, they pre-announced earnings on October 10th after the close, 10% revenue growth, which is a nice, healthy double digit revenue growth, cloud was up considerably, Bill McDermott made the big emphasis when he was doing the rounds on how their cloud revenue is growing faster than competitors, 33%, but definitely from a smaller base, but their license revenue, their traditional on-prem businesses continues to be under pressure and decline, it's got a, SAP is a strong services business, services and maintenance business, and they're up to 12,000 customers with HANA, I'll make some comments on HANA in a little bit later. This may have some implications for Europe, we've been saying that Europe is over-banked, that banking is soft based on the ETR spending data, so this may be a little bit of a bright spot for Europe. Of course SAP with its ERP business of strong manufacturing, anybody who has a supply chain, so this may be a good sign for Europe, that's something that we're watching. And then, say McDermott steps down, we're going back to the dual CEO structure. Jennifer Morgan, who headed the cloud business, is a longtime SAP employee, and she essentially is going to be taking that role of the customer-facing CEO. Christian Kline is really, has history as product development and HANA, he did a stint in finance at SuccessFactors, and is really an operations guru, so back to that dual CEO role that you saw with Snabe and McDermott, where McDermott was really the front-facing, sales-facing individual, and Snabe was the product person. So that's kind of an interesting structure, we see that, we saw that in Oracle before Mark Hurd stepped down with Safra Catz as co-CEO, so it's not a unique structure, although it's not, certainly not common in the industry. The next thought I want to share with you is one that you may have seen before, every time that ETR does a survey, and this is data, fresh data from the October survey, every time they do a survey, they take spending intentions and they ask folks, "Are you spending more, "are you spending less, are you spending the same, "are you adding to the platform, "are you subtracting from the platform?" So they essentially ignore the, for this net score that I'm showing you now, they ignore the people that aren't spending, that are staying the same, flat, and they take the more minus the less, subtract amount, you get a net score, and the net score here is 27%. This is not uncommon for, from the data that I've seen out of ETR for a large company established legacy provider like SAP. Net score 27% is not great, but it's a holding steady score, it's not in the negatives, it's not in the red zone, and so you can see here that 32% of the survey respondents were saying they're going to spend more, 54% basically flat, but only a smaller number, 6%, saying they're going to spend less, so it's reasonable for SAP, but if you look at the trendline, Alex, bring up the next slide, look at the spending trendline from the survey for SAP since the July 16 survey, they do this every quarter, and so the blue is the net score, that green minus the red that I've talked about in the past, and you can see that sort of steady decline, but this is not a disaster, what it is, is it's a sign of spending momentum relative to previous years or previous quarters, and you can see the yellow line is also declining, that's market share, what that means is market share in terms of spend relative to other initiatives, so the categories that SAP participates in, enterprise software, et cetera, spending on SAP relative to other sectors has been in decline. If you look at, Alex, if you bring up the next slide, look at the SaaS business, you'll see that it's a much happier story. SAP's made a number of acquisitions that I'll talk about in a moment, of cloud/SaaS players, so you can see their SaaS position has been holding firm, ETR cites Concur, SuccessFactors, Ariba, Callidus, they kind of remaining stable versus a year ago, and you can see the market share's kind of ticking up, so pretty solid from the new growth, that high growth area, and that's something that the Street really pays very close attention to. The next data point that I want to show you on the next slide is actually quite fascinating, so SAP beat its forecasts, so it didn't beat and raise expectations for the rest of the year, but so what this shows is ETR's regression analysis, what the quants at ETR do, is they crunch the numbers, and they compare them to the consensus on Wall Street, and they actually forecast higher or lower, where they think that earnings are going to come in based on their spending data, so you can see here that green, you see that little RPM meter, they're in the green, that's where you want to be, 359 basis points ahead of the median forecast, so they're saying, so the ETR second half spending 10.4% versus consensus of 6.8%, very positive sign. I think it's no coincidence that SAP records B for the quarter, so based on that data collected in that October survey, it looks like there's some momentum for SAP. Now the next slide I want to show you is the stock chart, this is kind of the scorecard, if you will, for Bill McDermott's tenure, and you can see, so I went back to 2010, as I say, he started in 2010, as a co-CEO with Jim Snabe, and then look at the performance here, I mean it's been pretty solid. And so you see today it's up around 10%, as I say, they announced the earnings beat, they announced their revenue beat, and they basically affirmed expectations, maybe raised them a little bit going forward. The reason why the stock is up is the beat, but also McDermott has put in place sort of an efficiency improvement and a restructuring. They've made a promise to improve operating margins by 1% a year over the next five years. They've made a promise to get cloud gross margins to 75% by 2023. They've done a restructuring, I think it affects around 4400 people, and they're hiring data scientists and AI experts and machine learning people, and RPA folks, they acquired an RPA company a while ago, and kind of just threw that in 'cause it's such a hot space. Software coders all around the world, China, US, Europe, all over the place. And so that restructuring, the Street loves when you restructure, you cut the dead wood, so to speak. With all due respect to the folks that might be affected by this, but the Street loves that. So you're seeing the combination of the beat, and the uptick or the efficiencies taking place in the quarter, and they timed that with the McDermott announcement because they wanted to, I'm sure, time it with some positive news, so you can see the stocks up today, so that's kind of a scorecard on Bill McDermott, I have to say, pretty impressive performance over the last 10 years, or nearly 10 years. But here's the thing, we see some major challenges coming forth with SAP, and I want to talk about that a little bit. Before I do, Alex, if you would play the video from Bill McDermott answering a question that John Furrier asked several years ago, and then we'll come back and talk about it. >> I had a meeting with the CEO yesterday, and this is a very common conversation. He grew his business by acquisition, and now he's got a federation of a whole bunch of companies, and he feels like a holding company. What he wants to do is consolidate these businesses onto a common platform. He won't do it overnight because you can't shut down businesses, but the vision over the next few years is consolidate everything onto one common SAP platform, and take all the databases out and standardize everything on HANA. >> Now here's what's ironic. The core success of SAP historically has been what? It's been that they have a single, unified system, the general ledger and all the financial data and all the supply chain data, all of that is in the same place, accessible, single version of the truth if you will. What's ironic is SAP's made 31 acquisitions in the last nearly 10 years under the tenure of Bill McDermott. So in a way, SAP is becoming a tech holding company, kind of picking up on some of the things that Bill McDermott said in his little clip there. In our view, SAP's big technical challenge is to get all this stuff working together. As you all know, it's nontrivial when you make a lot of acquisitions, billions and billions of dollars of acquisitions, which by the way, they promised to stop that torrid pace of multibillion dollar acquisitions, very difficult to pull those together. Let's look at some of those acquisitions that they've made, Ariba, Concur, SuccessFactors, SuccessFactors is interesting because SuccessFactors was kind of talent management, you had kind of core HR from SAP and it's kind of been a challenge to put those things together. Think about the legacy R3 and R4 and all the on-prem manufacturing stuff that SAP still runs, that customers still run. Acquisition of Sybase, Callidus, so... SAP's answer to all this integration is to put everything in memory in HANA. So the motivation for HANA, however, in many ways was to compete more effectively with Oracle and not have to rely so much on the Oracle database and get people off Oracle. But here's the thing that SAP didn't do that Oracle did do, and I think, my opinion, Oracle got right. Oracle did Fusion, they bit the bullet and did Oracle Fusion, it took the better part of a decade, it actually took more than a decade, but every time Oracle buys a company, and every SAS application that it jams into the Red Stack, runs Fusion middleware, and runs the Oracle database. So, it's not the case with HANA. So it's kind of an integration nightmare, it's very very complex what SAP has got handed to the new regime. I think this is a daunting task, and I think this might be in part why the timing of Bill McDermott stepping down, I mean he sees that this is going to be a heavy lift, it's going to need more of a product-focused leadership team, that's why I think it's smart that SAP has maybe gone back to that two-headed monster of two CEOs, one that's customer-facing and one that's more product-oriented and R&D-oriented because they have a major integration challenge ahead of them. So as I say, SAP has promised to stop making these multibillion dollar acquisitions, they got to get to work on integration, which is going to be a major portion of the task in the next five years, so spending data from ETR shows some positive momentum relative to consensus, now remember, the Street works in a quarter, so they're on a quarterly shot clock, so if the Street says, "You're going to do this for earnings," and they do this, well, that means higher EPS, so the stock's going to go up. If you do this and you come in below, that means the stock's going to go down, so these are very tactical kinds of things. We're talking here about more longer terms, this could be a five to seven year integration challenge if not more, remember, it took Oracle 10 years plus in terms of integrating Fusion, so that's something that you need to keep an eye on, especially if you're a customer and you're getting pitched all these different services and cloud services, just got to think about the architecture for integration. Okay, this is Dave Vellante with CUBE Insights powered by ETR, thanks for watching, we'll see you next time. (techno music)

from the silicon angle media office in Boston Massachusetts it's the queue now here's your host David on tape hi everybody welcome to this special edition of cube insights powered by ETR this is Dave Volante and we've been running these breaking analysis segments and it's timely because oracle last night announced earnings ahead of expectations they were expected to announce today a Friday but they announced early ostensibly because Co CEO Mark Hurd is taking a leave of absence for medical reasons so of course we we wish him the best hope everything's okay with him but but but that looks like they pre announced or announced ahead of schedule in order to get that out of the way and prepare for Oracle OpenWorld Larry Ellison and Safra Catz are going to be filling in during mark heards absence but so this is a breaking analysis on Oracle's earnings I would call this you know can expect more of the same so Alex if you kind of bring up the financial overview of Oracle we'll dig into it a little bit so Oracle is a company with around 40 billion dollars in annual revenue it's growing it you know single digit growth maybe you know 1% of the top line last quarter they've got a large market cap 187 billion dollars so they consistently trade in the four and a half to 5x revenue range and they've got an outstanding margin of operating margin of 42% is very high you know their software company and very very profitable software company that is a non-gaap margin their free cash flow is also very strong they throw off about 14 12 to 14 billion dollars annually in a trailing 12-month basis in free cash flow and the other thing about Oracle I made this point many many times in the cube is Oracle spends money on R&D they spend about fifteen percent of revenue on on R&D they've got a lot of cash they got you know over thirty five thirty six billion dollars in cash and short-term investments but they of course also have a some long term debt over 50 well over fifty billion dollars in long-term debt now that doesn't bother me some people point to that as a concern but if you look at Oracle's EBIT it's many many times greater than its interest payments I think you know 3x is kind of the benchmark they're an Oracle you know whose well well over that de miel 6 7x be bit relative to its interest payment so that's really not a concern of mine but definitely is interest on the debt is oftentimes its tax deductible and so it can be a good source of capital it's cheap cheap debt and of course Oracle's got to compete with some of the cloud suppliers building out more data centers they just had an announcement in that in that regard and so it needs capital even though it you know it can't spend nearly as much as Amazon Google and Microsoft not even close it would take Oracle years and years and years to spend what what Google does in four months but but nonetheless they need cash to compete in their business Oracle's got a shifting business mix from kind of lower margin hardware you know the remnants of the Sun business and and really shifting to a higher margin cloud services and support Oracle has really gone all-in on on cloud again even though it's really it's cloud is not competitive with the hyper scalars but it's sort of the Oracle cloud the redstack cloud but in that that business is growing it's around growing at around 4% from a constant currency standpoint this past quarter it's shifting Oracle's shifting toward an annual recurring revenue model and it's license business is declining and so you saw that last quarter declined around 6% and you're seeing a major shift from on-prem to cloud with Oracle ERP cloud ERP is where the action is for Oracle and I'll show you some data on that from from ETR it's really fusion fusion ERP and NetSuite they're growing it you know combined well over 30 percent last quarter and as I say they get the news here is Mark Hurd is going on a leave of absence we got Oracle OpenWorld coming up next week and you know they're going to be talking about what we call cloud 2.0 Larry Ellison I'm sure is gonna be talking about autonomous database there's gonna be I'm sure some Exadata announcements and I'll talk a little bit more about why that's important now I want to share with you some spending intentions from ETR we've been last couple of months we've been sharing enterprise technology research data we've partnered with them to do these breaking analysis and these cube insights ETR has a panel of about 4,500 CIOs IT practitioners and they go out quarterly and do spending intention surveys and I'm showing you data now from the july 2019 survey focused on spending intention intentions for the second half of 2019 you can see the number of survey respondents was 1068 out of that 4,500 panel what this slide shows is if you look in the left-hand side you can see the the the products or the categories of spend so there's on the reading top to bottom fusion Oracle Fusion NetSuite Oracle overall and an Oracle on Prem so these are the categories some of the categories that ETR captures and what we're showing here is is the calculation of net score and I'll share with you how net score is is calculated so if you look on the left hand side you'll see the dark red that is we're leaving the platform the light red is we're gonna spend less the gray is spending as flat the dark green is we're gonna spend more and the lime green is we're adding the platform so if you take the green minus the red you get net score so let's look down as I said fusion and NetSuite are where the action is for Oracle you see the net score here is 14% for fusion 12% for NetSuite Oracle itself is 7% and Oracle on-premise minus 4 these are not great scores we shared with you just recently snowflake and its net score snowflakes and net scores you know 81 percent we shared with you some data are around UI path that's also 80 percent plus net score these are much smaller companies but they're growing very very fast and I'll share some other scores from Oracle competitors in just a moment I also want to point out the shared accounts what the shared accounts are is the number of mentions that these platforms received in within that n of 1068 so you can see the fusion and NetSuite in a relatively small at 80 and 87 but still statistically significant Oracle itself very very large you know huge install base 1329 and then Oracle on Prem at 282 so there you have it I mean this is not barn burning this to me underscores that Oracle is losing share and now and I'll show you that in context in this next slide so again same kind of format with the the net score calculation but what I've done is compared Oracle to service now workday salesforce an SI p now look at service now service now is a net score 53% with a number of shared accounts of 358 so a very large sample inside of that 10 sec 1068 I'll show you some time series at a moment service now obviously very strong company they get a valuation now that's up actually higher than workday believe or not we've talked a lot about the the CEO transition and on and on and on and we've covered the service now shows for many years but some very strong very strong install both growing their Tam it's a into new markets and so you can see their and their workday as well extremely strong now Oracle will often you know give examples of how its beating workday I think in the earnings call yesterday Ellison talked about how they beat you know workday at McDonald's you know when you peel the onion and those things oftentimes it's one division or but who knows you know it's very possible that that you know Oracle swept the floor of workday but but regardless workday is growing much much faster than Oracle it's taking share from Oracle despite you know the examples that Oracle gives Salesforce as well same with Salesforce it's growing much much faster than Oracle if you look at ServiceNow workday and Salesforce even s ap look at sa pees net score 31% which frankly we consider neutral and it's not like sa pees you know burning the bar and I they're but much much stronger than Oracle 7% net score so again I say it's some sort of more of the same Oracle its earnings are kind of mad I mean it's throws off great cashflow it's got great earnings but there's no growth there and and as a result you know people are down in the stock a little bit today and that combined with the herd news and then the stock should be down based on the earnings announcements a little bit of a disappointment or of course Oracle focus is on on the profit and today people are rewarding growth that may change and I'll talk more about that in a moment but before I do that I want to show you a time series so this is the same competitor service network day sales force s AP and Oracle all the way back to January 2017 the January 2017 survey so you can see that ETR takes these surveys in January April July and October they're just now running the the October survey so we'll have some you know up-to-date results there but you can see the net score is what I just showed you 53% 52% 44% for those leaders those growth leaders very very strong these are the share gainers s ap holding at 31% you can see Oracle down in the single digits each of these companies is actually kind of holding serve if you will but again ServiceNow workday Salesforce growing much much faster than the market growing much much faster than that Oracle so let me summarize look so again mark hard leaving a leave of absence for medical reasons Ellison Larry Ellison and Safra Catz are filling in for heard I'm sure you're gonna hear some more talk about that at Oracle OpenWorld this week Oracle's losing share in the enterprise software space despite what they tell you that's the fact they are a company around around cash flow EPS and stock buybacks that's how they're keeping the stock up it's an effective technique everybody does it Oracle make stuck in acquisitions here and there I've been very aggressive over the years and it's going hard after cloud it's an Oracle cloud it's it's it really is around their database which the Oracle remains the leader for mission-critical Database Oracle has the best database for mission-critical but it's under attack in all those non mission-critical areas with whether it's Mongo we showed you the snowflake data the other day I mean there's this dozens and dozens of database competitors that are going after Oracle at in the periphery but they remain the core leader in mission-critical database fighting it out with with with Microsoft and IBM and and others but Oracle is by far and away the leader their exadata is the key to Oracle's lock spec in our opinion because Oracle's got a fight for you know for straight database they've got to fight all these other database competitors once a once a customer decides on Exadata Oracle's Gotham and so that's why Oracle is putting so much effort into exadata I'm sure at Oracle OpenWorld this week you're gonna hear a lot about exadata and autonomous and all kinds of stuff that they're doing at exadata and try to make it a an increasingly competitive platform Orgel also has a very strong apps business and that's really the linchpin to its it's cloud its cloud in our view is not even closely competitive with with the cloud infrastructure at Amazon Google and Microsoft and those companies spend much much more on capex they have you know a much greater infrastructure as a service Microsoft's in Microsoft's case got very strong software estate at applications business Google a massive scale so from a just a cloud infrastructure standpoint you know really Oracle is is playing catch-up just like IBM is and probably will never catch up or go over all again it's sort of a story of man more the same until the market sentiment shifts toward cash flow and earnings its stock is in my view is gonna trade inside a range I'm not a stock picker I don't make stock recommendations but I'm you know kind of a fundamental analysis and observer you know I just don't see that that stock breaking out there's really no growth story there and the markets rewarding growth now if and when the market does turn down let's say there's a recession people will reward companies like Oracle you have the cash who can you know do the buybacks or companies that pay dividends and so Oracle holding serve making a lot of right moves you know Larry Ellison is you know leading the ship obviously a very smart person don't bet against that individual fact is they're losing share but at the same time they're running a playbook that's working and it's working from the standpoint of EPs and cashflow and I think that story is going to continue so they have it that's our analysis thanks for watching everybody we'll see you next time this is Dave wante with cube insights powered by ETR

>> Live from Washington D.C. It's theCUBE, covering the AWS Public Sector Summit 2018. Brought to you by Amazon Web Services, and its eco-system partners. (upbeat music) >> Welcome back to the nation's capitol. I'm Stu Miniman and you're watching theCUBE's coverage of AWS Public Sector Summit 2018. Joining me for the wrap-up of day one, John Furrier, Dave Vellante. So John, thanks for bringing us down. So you were here last year. We've interviewed Teresa Carlson a number of times at Reinvent, but we've got to start with you. Since you were here last year, watching this explode. I said, this reminds me of Reinvent three years ago, how big it is, 14,500 people, wow. >> Yeah, so you're right on. This is definitely a Reinvent kind of vibe, in a way to describe what happened with Amazon Reinvent, their annual conference which we were at the 2nd year, 2013, and have been every year. Reinvent got bigger every year, and just became more prominent, and the solutions scaled, the number of announcements, as we know Amazon today is packed, it's bigger than ever. The public sector market, which is defined as government, education, and global public sector countries like Bahrain and other countries, are really the target. They have unique requirements. So what's happening is that that market is being disrupted, and there's been similar moments in the public sector here in the United States, as well known. The fail of the website that Obama. You know, the health care sight was one. The government initiatives that have been going on. The government is not modern and people are frustrated. The IT workers are living in cages, they're strapped in. It's like, not good. The tooling's old, old client server, old vendors like Oracle and IBM and others that are trying to keep that business, and they're not modernizing. So, this modernization wave has hit the public sector across the board, and what's happening is they can actually build newer systems faster, and get lower cost, more efficiency, done faster. And this is disrupting not only their business model, but how they buy technology, the role of the supplier in that piece of the equation, and also just overall faster innovation. So, this is driving it. The shocker of all of it is the security conversation has been up leveled, meaning it's not a real issue. Certainly the security is a real issue, but in terms of a barrier that stops everything, that's not the case anymore. The CIA is really the most notable that came on and said the worst day in cloud security is better than anything we got working today. So that's a really interesting thing and the Department of Defense Jedi project is billions of dollars that would have gone to say, an Oracle, IBM, and all the incumbents, or, beltway bandits, as they've been called. Those days are over. So that to me is a really exciting thing for the country. But, Amazon is running the tables too. So again, this year, more of the same, bigger. Big agencies. Small partners and big, all riding the wave of growth. And, it's a new operating model, and again, we'll predict it here in theCUBE, as we always say, and then we'll be right again. This is going to be a special market for Amazon going forward. >> I think government market is definitely a microcosm of the overall marketplace as John said. It's very bureaucratic, they're slower to move, you got to regime change every four or eight years, so a lot of turnover. It's really hard to get. Okay, we're going to go with strategy, cause the strategy as they start stop, it's a near to mid term strategies are affected in the government. Obviously, there's a greater focus on security. Cloud addresses a lot of those. We certainly heard that from the CIA. I don't think you can talk about cloud and federal, without talking about that milestone CIA deal. That really was a watershed moment. It was a wake up call to the old guard. IBM, as you might recall, tried to fight the government, because the CIA awarded the contract to Amazon. IBM lost that case, they were eviscerated by the judge. It forced IBM to go out and pay two billion dollars for software. It was years later that Oracle really got in. So, Amazon, to an earlier guest's point, has a huge lead. The estimate was five to 10 years, I heard, over some of the legacy suppliers. Interesting, not sure exactly where Microsoft fits in there. Stu, I'd love to get your thoughts. The thing about cloud that we've, John, you talk about being right, for years, we've talked about the economics of cloud, the scale of cloud, the marginal economics, looking much more like software. That's clearly been to Amazon's advantage. And, they're mopping the floor with guys who can't keep pace. And so, that's played out in a big way, and this seems to be a winner take all market. Or, a few companies take all market. >> Yeah, the thing that I actually wanted to comment on that's really interesting to dig in here, is if you talk about application modernization. Yes, it is super challenging, and it's not happening overnight, but, have heard universities, non profits, they're moving. It's not just mobility, moving to the web, but talking about how they are decoupling and creating cloud native microservices environments. So, was talking to a large, government healthcare organization that was super excited to show me how he was going to take his really old application, and start pulling together services at a time. And, he's like, I've got 130 services. And here's how I'll stick a router in here and I'll start pulling them off to the cloud. Talked to a big university and said, how are they going from, my data center, which I'm out of power, I'm out of capacity. I'm going to use the VMWare thing, but over time, I'm moving to containers, I'm moving to serverless. That modernization, we know it's not moving all of it to the public cloud, but that migration is happening. It is challenging and as I've said many times in many of these Amazon shows, Dave and John, it's the companies that come here. They're the ones that are trying cool stuff. They're are able to play in some of these environments and they make progress. So, the thing that really excites me too, is when you hear government agencies that are doing innovative, cool things. It's like, how do I leverage my data and give back to the communities I serve. Help charities, help our communities, and do it in cost effective ways. >> Stu, I got to say, Dave, Theresa Carlson just came by theCUBE, we gave her a wave. She's the CEO of Public Sector, as I call her, she's the chief, she's in charge. Andy Jackson's the CEO of AWS, but again, public sector's almost its own little pocket of AWS. Her leadership, I think, is a real driving force of why it was successful so fast. Theresa Carleson is hard charging, she knows the government game. She's super nice, but she can fight. And she motivates her team. But she listens to the customers, and she takes advantage of that Amazon vibe, which is solve a problem, lower prices, make things go faster, that's the flywheel of the culture. And she brings it to a whole nother level. She's brought together a group of people that are succeeding with her. She leans on her partners, so partners are making money. She's bringing in cloud native kind of culture. I mean, CrowdStrike, you can't get any better than seeing guys like CrowdStrike raise 200 million dollars, Dave, today announced, worth over three billion dollars, because they built their system to work for cloud scale. CloudChecker, another company. Purpose built for the cloud and is extremely successful because they're not trying to retrofit an enterprise technology and make it cloudified. They actually built it for the cloud. This, to me, is a signal of what has to happen on successful deployments, from a customer standpoint. And I think that's what attracting the customers and they will change their operations 'cause the benefits are multifold and they're pretty big. Financially, operationally, culturally, it's disruptive. So I think that's a key point. >> Yeah, and I think again, this a microcosm of the larger AWS, which is a microcosm of the larger Amazon, but, some of the things we heard today, some of the benchmarks and milestones from Theresa on the keynote. 60 consultancies that she put up on the slide, 200 ISVs ans SAAS companies, 950 third-party software providers, this is all GovCloud. And then Aurora now in GovCloud, which is, you know, you see here, it lags. >> Database. >> Amazon and Specter, you've heard a lot about database. Amazon and Specter, which manages security configurations. We heard about the intent to go forward with the VMWare partnership, the VMWare cloud in GovCloud. So, a little bit behind where you see the Amazon web services in commercial. But, taking basically the same strategy as John said. The requirements are different. I also think, Stu and John, it's important to point out just the progress of AWS. We're talking about tracking to 22 billion dollars this year. They're growing still at 15 percent, that massive number. 26 percent operating income. Their operating income is growing at 54 percent a year. So, just to compare Amazon web services to other so called infrastructure providers, HPE's operating income is eight percent, IBM's is nine percent, VMWare, which is a software company, is at 19 percent, Amazon's at 26 percent. It's Cisco level of profitability. Only companies like Oracle and Microsoft are showing better operating income. This is that marginal economics, that we've talked about for years. And Amazon is crushing it, just in terms of the economic model. >> Yeah, and they bring in the public sector. Can you imagine that disruption for that incumbent mindset of these government kind of agencies that have been the frog in boiling water for so many years around IT. It's like Boom, what a wake up call. If you know IT, you know what it's like. Older tools, huge budget cycles, massive amounts of technology trends in terms of time to value. I mean, Stu, you've seen this buoy before. >> Yeah, absolutely, and it's interesting. Some of the things we heard is there's challenge in the government sometimes, moving from capex to opex. The way that government is used to buying is they buy out of the GSA catalog, they are making that move. We actually had on the federal CTO for Cohesity, came from the GSA, and he said we're making progress as an industry on this. Dave, you mentioned a whole lot of stats here. I mean, year after year, Q1 Amazon was up 49 percent revenue growth. So, you know, you always hear on the news, it's like, oh well, market share is shifting. Amazon is still growing at such a phenomenal pace, and in the GovCloud, one of the things I thought Kind of interesting that gets overlooked is the GovCloud is about five years, no it launched in August of 2011, so it's coming up on seven years. It's actually based out of the West Coast. They have GovCloud, US East is coming later this year. And we talked in the VMWare interview that we did today about why some of the lag and you need to go through the certification and you need to make sure there's extra security levels. Because, there's not only GovCloud, then they've got the secret region, the top secret region, so special things that we need to make sure that you're FedRAMP compliant and all these things. Amazon is hitting it hard, and definitely winning in this space. >> Yeah, and they have a competitive advantage, I mean, they're running the table, literally. Because no body else has secret cloud, right? So, Amazon, Google, others, they don't have what the spec requires on these big agencies, like the DOD. So, it's not a sole source deal. And we saw the press that President Trump had dinner with Safra Catz, the CEO of Oracle. And, that Amazon, that people are crying foul. Making a multicloud, multivendor kind of, be fair, you know fairness. Amazon's not asking for sole source, they're just saying we're responding to the bid. And, we're the only ones that actually can do it. You know, John Wood, the CEO of Telos, said it best on theCUBE today, Amazon is well down the road, five years advantage over any cloud, five years he said. >> There's no compression algorithm for experience, right? >> Right, right, but this is a real conundrum for the government buyers, the citizens, and the vendors. So, typically, let's face it, technology, IBM, HPE, Oracle, Dell, they can all pretty much do the same thing. Granted, they got software, Cisco, whatever. They got their different spaces, but head to head, they all pretty much can do what the RFP requires. But what you just pointed out John, is Amazon's the only one that can do a lot of this stuff, and so, when they say, okay let's make it fair, what they're really saying is, let's revert back to the mean. Is that the right thing for the citizens? That's the kind of question that's on the table now. As a citizen, do you want the government pushing the envelope... >> That's what he said from CrowdStrike, why go backwards? >> Right, right, but that's essentially what the old guard is saying. Come back to us, make it fair, is that unfair? >> You're too successful, let the competition catch up, so it can be fair. No, they've got to match up the value proposition. And that fundamentally is going to put the feet to fire of government and it's going to be a real critical tell sign on how much teeth to the mission that the government modernization plan is. If that mission to be modernizing government has teeth, they will stay in the course. Now, if they have the way to catch up, that's great. I can already hear it on Twitter, John, you don't really know what you're talking about. Microsoft's right there. Okay, you can say you're doing cloud, but as they teach you in business school, there's diseconomies of scale, to try to match a trajectory of an experienced cloud vendor. Stu, you just mentioned that, let's explore that. If I want to match Amazon's years of experience, I can say I'm up there with all these services, but you can't just match that overnight. There's diseconomies of scale, reverse proxies, technical debt, all kinds of stuff. So, Microsoft, although looking good on paper, is under serious pressure and those diseconomies of scales creates more risk. That more risk is more downtime. They just saw 11 hours of downtime on Microsoft Azure in Europe, 11 hours. That's massive, it's not like, oh, something just happened for a day. >> Here's the behind the scenes narrative that you hear from certain factions. Is, hey, we hire people, let's say I'm talkin' about Microsoft, we hire people out of Amazon too, we know where they're at. We think we've narrowed that lead down to six months. You and I have both heard that. When you talk to people on the other side of the table, it's like, no way, there's no way. We're movin' faster, in fact, our lead is extended. So, the proof is in the pudding. In the results that you see in the marketplace. >> Well, and just to build on that, the customers. Amazon has the customers, you talk to anybody that's in these agencies, you know, like any industry, they're all moving around. Not only the federal, but, I had a great interview with Nutanix this morning, he said this was the best collection of state and local government that I ever had. It's like I got to meet all my customers in person last year when they came here. So, the fed kind of sets the bar, and then state, local, education, they all learn there. So, as you said, John, Theresa and her team have really built a flywheel of customers, and those customers, they understand the product. They're going deeper on that. >> But look, Microsoft has success where it has a software state. Clearly there are a lot of Microsoft customers in the government, and they're going to do very well there. But it's really different. We're talkin' about the inventor, essentially, of infrastructure as a service in Public Cloud and Amazon with a clean sheet of paper. >> Microsoft, Google and the others, they have to catch up. So, really if you look at, let's compare and contrast. Amazon, first mover, they did the heavy lifting up front. They win the CIA deal three, four years ago. Now they're going to win the DOD deal and more. So, they've got the boiler plate, and they've got scale, economies of scale. Microsoft's got to catch up, so, they've got diseconomies of scale. Google is kind of backing out, we heard. Some Google employees revolting cause they don't want to work on these AI projects for drones or what not. But, Google's approach is not tryin' to match Amazon speed for speed, they're thing is they have leverage. Their Android, their security, the data. So, Google's staying much more pragmatic. And they're humble, they're saying, look, we're not tryin' to match Amazon. But we're going to have a badass cloud from a Google perspective. Microsoft hasn't yet said that, they just try to level up. I think if Microsoft takes that approach, they will do well. >> Well, you got to give Microsoft a lot of credit, obviously for the transformation that's occurred. Again it's still tied to the company's software estate, in my view anyway. >> All right Stu, what's your impression, what's your take? >> So, John, like every Amazon show I've been to, I'm impressed, it set a high bar. We go to a lot of shows and not only are there more people here, but the quality of people, the energy, the passion, the discussion of innovation and change, is just super impressive. >> You and I cover cloud data pretty deep. We go to all the shows, obviously the Lennox Foundation and Amazon Reinvent, and others. Does the Public Sector have that vibe in your opinion? What's your sense of it? >> Oh, yeah, no, I've already had a couple of conversations about Kubernetes and Lambda, you know, more serverless conversations at this show than almost any show I go to, other than probably KubeCon or the Serverless conf. So, no, advanced users, these are not the ones, a couple of years ago, oh I'm checking what this is. No, no, no, they're in, they're deep, they're using. >> Yeah, I notice also, near the press room, they had the certification stickers, now levels of certifications. So, they're just movin' the ball down the field at Amazon. Dave, I want to go to you and ask you what your impression is. Obviously, you know, we've done shows like HPE Reinvent, which we didn't do this year. That's goin' down its own path. We've got other shows. >> HPE Discover you mean. >> What did I say? >> You said Reinvent. >> Okay, every year they break. >> There's two ends of the spectrum. >> You know, there's is going to try to transform. What's your take of this show, Public Sector? What's your view? >> Well, first of all, it's packed. And, the ecosystem here is really robust. I mean, you see the consultancies, you see every technology vendor, I mean, it's quite amazing. They got to figure out the logistics, right? I've never seen a line so long. The line to get into registration was longer than Disney lines this morning. I mean, really, it was amazing. >> It's a Disneyland for Public Sector. >> It really is, and people are excited here. I think you were touching upon it before. They've sort of been hit with this bureaucratic, you know, cemented infrastructure. And now, it's like they're takin' the gloves off and they're really excited. >> Stu and Dave, I really got to say, I'm not a big federal person, over the years in my career but my general impression over the past couple years, diggin' in here, is that most of the people in the agency want to do a good job. I saw that last year, it's like, these are real innovators. And finally they can break away, right, and do some real, good. Not do shadow IT, do it legit with a cloud. So, good stuff. Guys, thanks for commentating, Stu? >> Yeah, so let me bring it on home. I just want to say, this goes up in a podcast, if you go to your favorite podcast player and look for theCUBE Insights, you'll find this as well as the key analysis from our team from all of the shows. Of course, as always, go to theCube dot net to get all the research. If you want the exclusive, more detail on Theresa Carlson, just search John Ferrier in Forbes and you'll find that article. This is the end of Day One of two days live coverage from AWS Public Sector. Of course, theCUBE dot net, come find us, we've got stickers if you're at the show. For Dave Vellante, John Furrier, I'm Stu Miniman. And as always, thanks so much for watching theCUBE. (techno music)

>> Narrator: Live from Las Vegas, it's theCUBE. Covering Oracle Modern Customer Experience, 2017. Brought to you by, Oracle. (upbeat music) >> Welcome back to theCUBE. I'm Peter Burris, and once again theCUBE is here at Oracle Modern Marketing... Modern Customer Experience, having a great series of conversations about the evolution of marketing, the role technology is playing, and especially important, the centerpiece that data now has within a overall orientation towards customer experience. Now one of the key features of that notion of customer experience is what's going on with service. And this is a great session, because we've got a representative from Oracle, but also a customer, as well. Welcome to Steve Fioretti, who's the VP of Product Management, Oracle Service Cloud and Heather Miksch, who's the Vice President of Field and Product Operations at Carbon. >> Thank you. >> Peter: Welcome to the (mumbles) >> Thanks. >> Glad to be here. >> So, Steve why don't we start with you. >> Steve: Sure. >> Oracle is here talking about how the cloud can help transform field and service operations. >> Steve: Right. >> How is it transforming it, what're the trends? >> Well, there's a lot of interesting trends that are affecting customer service, and I would, you talked about marketing and a lot of people say customer service is the new marketing. A lot of, a lot of interactions that people have with a company is in the customer service group and that really affects their impact on the brand. And there's a lot of things going on in the industry that are affecting customer service. There's new dynamic channels emerging, for example, people want to use Facebook Messenger, or WeChat, or WhatsApp as customer service channels to interact with their brand. It's much beyond just email, phone, chat, things like that. So, new channels are emerging and companies have to think about how do I integrate that into my customer service organization. Automation has really come into the fore. So, you know, in our personal lives we use Siri, and other V, you know, interactions we have with Alexa. So, those are coming into businesses to automate those, perhaps more simple, customer service processes. The internet of things is really taking off, where connected devices are allowing organizations to deliver predictive and proactive service. And on the automation front, they're even extending to where organizations are taking robotics and making robots agents in a retail store, for example. >> Are you talking about me? >> Wow it's Pepper. Hi, Pepper, what are...(Peter laughs) I didn't know you were here, that's awesome. So, Pepper, I'll ask you a question. What makes you a great Customer Service Agent? >> I'm smart, I'm connected, and I'm cool and, most importantly, I'm effective. (Steve laughs) >> And we replaced John Furrier with Pepper. >> Steve: Excellent.(Heather laughs) >> So, going to the next question about the, as we use robotics, as we use many of these things: we have to remember that these are not magic, they're really is no intelligence, in the classical sense, in them, they are still being driven to perform functions, take action, based on the availability of data that is coming off of customers. So talk a bit about the role the data, data integration, and some of these new tools: AI, or Adaptive Intelligence as you're calling it, are playing in ensuring that we can, enhance Customer Experience with new devices, and these new channels. >> You're absolutely right. I mean, if, you know, it's all about making the experience with a device like, like Pepper personalized and effective, and data, knowing what a consumer wants, what their preferences, and perhaps anticipating their preferences before, you know, they even know that; their past buying history, and taking all that, first-party data and third-party data, combining that with artificial intelligence, to deliver those personalized smart experiences is what's really happening. You heard a lot at this conference about Oracle's Adaptive Intelligence Initiative, and in the context of service, we're going to be building applications for things like account health, predictive field service, so, you know, you can predict ahead of time that a machine may, you know, may need service or break. And, you know, our customer here, Heather from Carbon is going to talk a lot about what they're doing with-- >> Well, so-- >> You know, smarts and the experience-- >> Got it, so how does this resonate with Carbon? >> Well, so, Carbon, is a, we manufacture an industrial 3D printer, and we have a process we call Digital Light Synthesis, which allows us to make photo-polymer materials that are robust enough to use in final production. So, our goal is to take customers from their design, of their part, straight into production, using the 3D printer as a means of production. And the reason why this is so exciting to Carbon, is our printer is actually an IOT device. It operates over the internet, and it operates through a browser. As a result, all types of data, from machine data from the printer, are flowing into our databases; as well as operational data, how long is the print taking, what type of resin is the customer using, how often are they printing, are they running into problems with their print? We've also built in a feedback system for the user, directly in the user interface, that flows directly through our channels into our databases, and it actually opens tickets in our Oracle Service Cloud for agents to contact the customers. The way we use this in a very practical standpoint, to give you one example, is for machine failures. The idea that we can monitor our printers in the field, and we can see if a part is having problems, and might fail, and we can actually proactively reach out to the customer and say, "We'd like to be there "in a couple weeks, change out this part. "It's not affecting your machine yet. "It's not affecting your prints." And, the customer is now able, instead of having unplanned downtime, which can be very difficult for a production environment, they now have planned downtime. This technology is nothing new. The example I like to use is, in the nuclear power industry, you don't wait until you have a core meltdown and then call your service engineer.(Steve laughs) Like, it's been around for for decades. >> Form has been around for a while. >> But what's new, is actually taking this technology and putting it in capital equipment, or putting it in devices like Peppper. I mean, she's also an IOT device; or even putting it into some of our wearables, or just other consumer products as well. And once you actually have this data coming through to the manufacturer of the device, it's really almost limitless what you can do with it. And, just in our short time of Carbon actually working on this problem, we have about 70% of our hardware failures are actually predictive. So that we're able to go out and repair the printer before the customer even realizes they have a problem. And some of the problems, we can actually fix before the customer knows anything, and we can fix them remotely from our offices in Redwood City. >> And it's interesting, theCUBE this week was also at the National Association of Broadcasters, in the NEB show, and we actually had an astronaut present over theCUBE. >> Yes, yes. >> One of the things that's interesting is there are 3D printers now on-- >> There are. >> Up on the Space Station. >> Yes, yes. >> So that you can print things a long ways away. That's one of the advantages, one of the great use cases of 3D printers >> Yes. >> Is that you can actually assemble, or you can create and assemble things, in very very, you know, unfriendly environments. >> Yes, yes. So, being able to schedule, and being able to plan that, is absolutely essential. >> Yes, yes and you can see, so for us, for 3D printers, some of the use cases that our customers are coming to us with, is they are companies, their own capital equipment manufacturers that have hundreds of thousands of spare parts, and they don't want to have to keep these inventories of massive spare parts. They want to have a design sent directly to a printer, maybe it's located in another country, closer to the point of use for that part, print out the part, and get it to the user faster. The idea is to actually move, one of the ideas, is to move manufacturing closer to the point of use. So that we're not spending all this time shipping products, you know, across the entire world, when we can actually be producing them much closer to the user. >> So that suggests, when we think about, again, the role of integration, the role of data, the idea of the Service Cloud; that there will be circumstances in which the part is printed and the capital equipment, Lessor, or the person who sold it, is on site to then put it in place, and assemble it. So now we're talking about multiple people operating very very quickly with a lot of new technology. >> Right. >> And, we now see why these types of devices and the need for that data sharing is so crucial. So, how is Oracle, in Oracle's vision of how service is going to be performed in the future, facilitating these types of interactions. >> So, I mean what we have to do is think about the technologies that are powering devices like robots, that are, providing technologies that are powering virtual assistants to automate customer interactions, to deliver technologies that help customers serve themselves. Another example is, more and more people, particularly younger generation, they don't want to phone. You've got a phone in home, they don't want to call you. They don't want to have anything to do with the phone. So, that's why things like messaging, self-service, going to a website and finding their own answer are critical. So, enabling and anticipating the data, the technologies, the way, the channels that people want to use, are all going to allow brands like Carbon and others to deliver great customer service for-- >> How are you using the Oracle Service Cloud, then, to facilitate many of these changes in your organization. >> So right now, what we have is for... We actually have a database we use for our big machine data. So, all the big machine data comes through, all the data coming off of our printers. And then we've integrated that database into Oracle Service Cloud; so then, instead of a customer having to phone up if they have a problem, we actually have, on our user interface, a little button, it just says "Request Help", that's all they need to do, and it's within the print job that they've been working on. All of that data about their print job: who the user is, what the company is, which printer they were using, how long was the print. Any specific information they want to say about the print, like why they're having trouble with it, it flows through into Oracle Service Cloud, and within the Oracle Service Cloud environment we can open up our big machine database, within that same environment, we can look at the actual print job. And then, we have an escalation tool we use for our engineering team. If we need to escalate, we can do that out of Service Cloud as well. And the idea is that there's very little manual entry of any other information. All of that is just flowing through, and everybody within the organization, whether it's the people that are first in front of the customer, or whether it's our engineers, have access to the exact same data. >> But is the system also then, through the escalation process, saying, well, we really got to get someone at the hardware level, or someone here, or someone at the design level. So you're flowing it to the right person. >> Yes, yes, absolutely. And the other fabulous thing about having these internet connected devices, is even when we do need to send somebody out on site to make a hardware fix, because of the diagnostic data we have from the device, we have, until now, 100% success rate in having the right part on-hand. Which is, if you've ever had much experience with capital equipment repairs, or even a repair of your dishwasher, sometimes the people don't have the right parts. We always have the right parts. >> That's too bad you couldn't >> So far, nothing-- >> print the part with the printer when it's down.(laughs) >> That's an interesting thing. We actually do have some parts within our printer that are printed on our printers, so its (laughs) it's pretty fun >> Can I talk about one other short example-- >> Of course. >> Of another customer that actually Heather's met here at the show, Denon & Marantz, so, they make all sorts of audio equipment, high-end audio equipment, and they've got a new brand of speakers, wireless speakers, called HEOS. And, when they first started, selling those to consumers they noticed, these are connected as well, they noticed that a number of them were having, a chip problem, remotely. People were calling in. So they went out, and they, they pinged, if you will, because they're connected, all of their consumer deployments, and they could tell that, you know, a small percentage of them are going to fail. They actually shipped speakers to those consumers before they even knew they had a problem, and they arranged to pick up the old ones, and you can imagine the value the customer, loyalty, and customer sat that that had. So that proactive predictive customer service example in the consumer world, and in a business world, really makes service that much-- >> Yeah. >> So, customer service, increasingly, is taking some degree of responsibility for ensuring that things operate within the threshold, as opposed to fixing things after they've broken. >> Yes, absolutely. >> Exactly. >> Heather: Yes, yeah. >> So how does that tie back into marketing and sales. So, at Carbon what is the, what is the way these feedback loops are being used to also inform marketing and selling. >> So, the interesting thing is that because we're also gathering operational data, we actually use the data coming off our printers for much more than just a service organization. In fact, our entire company is becoming more and more dependent on this printer data. So, for instance, our product group, when they're looking at bringing out a new feature they're actually looking at the data of the actual prints and the features that the customers are currently using, and deciding, do we need to augment this feature? Do we need to bring out another tool for our customers to use? And then looking at the printer data to make those decisions, and to prioritize what projects to work on because as you can imagine we've just got a ton of projects that we'd like to work on, and we need to make some priorities. The other thing that we're looking at is changing customer dynamics. Like we have, all of our customers are broken down into different industries, and we monitor the different printing behaviors, across industries, and we've been surprised. Like, there's certain industries that have grown faster than we would have expected, and because we've got this data that we look at every single day, we're looking at our customers' print data, we can actually make much faster corrections to either marketing campaigns, or sales strategies, or things like that, rather than waiting for a monthly roll-up or a quarterly roll-up or something like that. >> So who's the steward of data within Carbon? >> Who is the steward of data? We actually have a Director of Business Operations, his name is Chris Hutton. He actually works a lot with Oracle. He recently spoke at the Modern Finance Experience with Safra Catz, and I would say that if anyone's the steward of the data, he's probably the Grand Poobah of this data? But many of us have access to it. I mean, I can go into some of these databases and pull all the data I need. We don't really restrict it. >> But he's making sure that every, he's making sure that the data works for everybody in the organization. >> Yeah. Yeah, I'd say to some degree, yes. We also have our software engineers, making sure the printer data is actually-- >> Well, they're always... >> Heather, I think I would... >> Always behind the scenes. >> I think I would like the title Steward of Data. >> Yeah. (laughs) >> I think that's, I think I just found my new title. >> It's a little geeky.(laughs) >> Well it won't be long. Somebody's going to be called, and-- >> Exactly. One other quick example of how that feedback's happening between a customer service experience and let's say marketing, is, back to my Denon & Marantz example. They had another set of speakers, and they can tell, they often, the consumer will label the speaker, based upon, you know, this is the living room, this is the bedroom... And they had some failures on another brand of speakers, and they noticed a commonality, they were all labeled Bathroom. And, basically, they realized that their speakers... Some of these speakers couldn't handle the humidity that was happening in the bathroom; drove that back into product development, built a new series of speakers quickly for bathroom that were more waterproof, >> Yeah. >> Or, more moisture resistant, and created a new product extension that actually sells quite well. So, there's just a simple example of how that data flowed back into product development and marketing. >> So, Heather, you're not feeling like a fish out water here at a customer experience show with all of the-- >> Oh, no, of course not. No, I love this kind of stuff. >> What's exciting you about listening to, mainly marketers, but a lot of customer experience, too? >> I, you know people-- >> Talk about customer service >> That are in service, they get excited. I mean, fundamentally, there's all kinds of reasons for growing the business, and increasing revenue, and cutting costs, and all those things, but fundamentally, people are in service to help other people. Like, that's what gets us up in the morning. That's what makes us jump out of bed. So, the idea that there's all these companies doing these super-cool things, where you can, really, proactively be helping people instead of waiting till they're already in trouble. That's like, you've just burst through a barrier that's existed for millennia; the fact that we can actually start predicting problems. >> But that's also, we also talked a lot here on theCUBE this week about the role that talent's going to play. And, while I've never been in a hardcore customer service job, I know that people who have gone in, often got demoralized because they were always being yelled at because there was problem. >> Yes, yes, yes. >> And I had to believe it's attracting a new class of person because they can actually be participating, and anticipating, and solving problems >> Yes, yes, yes. Well, and I, it does take a certain type to be a customer, to be in front of customers all the time. We always say that the number one rule is you have to hire happy people to be put in that position, because (laughs) >> Peter: So, how about (Heather laughs) >> Actually, that was a very insightful question, because we were on a panel yesterday with an analyst, Denis Pombriant from the Beagle Research and he talked about, well, a couple of dynamics. One is, agents, the profile of the agents that you hire is changing. Because all the simple things are being solved online through self-service, and now that agent has to be a more gifted, even arguably, he called it a controller, a more aggressive agent that's going to be a problem-solver, able to collaborate with others. So, more empowered, and that's one thing, so I thought your question was really insightful. The nature of that agent is changing. And another thing that smart companies do, is they empower those agents. You know, not just with technology, but they give them the ability to, you know, the a brand of hotels, high-end hotels, I won't use the brand, but their agents are given a couple thousand dollars a day, and are empowered to use that to fix any issues. You know, somebody shows up and the room's booked, they don't drag them out of the hotel. (all laugh) They actually find them... Maybe they upgrade the room or they get them a meal if they have a problem so, empowering them also makes the agent feel much better about delivering customer service-- >> Alright, so Steve Fioretti, VP Product Management Oracle Service Cloud. Heather Miksch the Vice President of Field and Product Operations at Carbon, and Pepper from SoftBank. >> Yay! >> Thank you all for being a part of theCUBE here at the Oracle-- >> Thank you. >> Modern Customer Experience >> Thank you Peter. >> And talking about the role that service is now playing in driving customer experience and the role that the Cloud is playing in improving customer service. >> Steve: Great, awesome. >> We'll be back with a wrap-up in a few minutes, and in fact, John will magically reappear. Give us a few minutes and we'll be back with more from theCUBE. (upbeat music)

>> Voiceover: Live from San Francisco, it's theCUBE! Covering Oracle OpenWorld 2016, brought to you by Oracle. Now here's your hosts, John Furrier and Peter Burris. >> Welcome back everyone, we're here live in San Francisco for Oracle OpenWorld 2016. This is SiliconANGLE Media's theCUBE, our flagship program We go out to events and extract the signal noise. Three days of coverage, wall to wall, ending up day one right now. Wrapping up amazing day. I'm John Furrier with my co-host Peter Burris. Our next guest is Senior Vice President of Oracle Cloud, Steve Daheb. CUBE alumni, great to see you again! >> I have four times, four time alum. >> (Mumbles) the MVP award for most times on theCUBE. You've been there almost for a couple years now. >> Yeah. >> Peter: Yeah, you and Alec Baldwin. (laughter) >> Yeah, less than two years, it's exciting. >> So you are working hard. Last time I saw you like, you have to be running harder. You're running harder. >> Yeah, we were in DC together. >> You've been running really hard, so congratulations. Saw the numbers, 70% growth percentage. Not numbers, I don't remember the eh, four billion. >> Numbers are getting bigger, percentages are still going up, so it's good. >> Percentages are double digits, but the real big thing is that you guys now are putting a dent into the awareness of Oracle being a viable and competing opportunity against Amazon Web Service. Larry Ellison said "Amazon, your lead is no more." Which was a headline in SiliconANGLE. So question, how are you guys continuing to differentiate yourself against AWS and Microsoft? >> I think there's three things. One is we differentiate when we look holistically in cloud. 'Cause you know you talk about cloud, and people define it in multiple different ways. Some say oh, Salesforce is cloud, or Amazon is cloud. And we define it as really requiring all three layers of the stack. So Software as a Service, which we can talk about. Platform as a Service, which is that core database middleware application development. And then the Infrastructure as a Service. And we're seeing at some points all these things are interrelated. When does past-op and IS begin? What's a discrete IaaS motion and how does that move to sort of production databases and different things? And so we first and foremost differentiate by looking holistically at what we're offering, and then sharing that we have a complete portfolio that's also open and provides choice to customers in terms of how to deploy it. >> Holistic, end to end holistic or holistic breadth? >> I think it's both. So we look at where we go deep into all layers of the cloud, and then we'll look holistically around a hybrid solution that allows people to deploy in cloud and on prem. And that's where we can differentiate with Amazon. So you know, at a technology perspective, Larry announced some incredible things in terms of we have the benefit of coming in and re-defining what an IaaS architecture looks like and provide scale and performance as well as cost. We provide choice in terms of, look, if I deploy something on Amazon, I can't actually move that back to what's on prem. You can't actually have isolated orphaned sort of instances on public cloud without tying that back to what's on prem. And then you just look at some of the database examples. It's a fork of an old code. I mean, it's not compatible with anything so I can run Oracle database on Amazon, I can run Oracle database on Oracle, I can run Oracle database in Microsoft. I can run Amazon on Amazon. I can't inter-operate with DV2, with SQL, with Oracle, with Teradata, so I think we're just sort of trying to demystify a little bit of what's going on out there. >> But one of the ways was talk about work loads moving between on prem, that's going to get that right 100% across the board. >> Absolutely. >> It's interesting, but I got to ask you. Larry Ellison said on the earnings call last Thursday after Safra and then Mark Hurd made their announcements and man, sounded like things were going amazing. The earnings call was like woohoo, oh my God, the Kool-Aid injection! Then Larry got on, but he said a really cool thing I wanted to just drill down on. He said we're not even getting started yet. We are playing the long game is what he's obviously saying. But he made a comment about Microsoft. He said Microsoft is already well into moving their install base and apps onto Azure. >> Yeah. >> And Oracle hasn't even begun getting started. Now, I'm sure you started, but implying significantly that a lot of the database customers and customers haven't really moved there yet. Is that true? How would you (mumbles). >> It's actually interesting, 415 Research just actually published a study and they said only 6% of workloads are actually running in public cloud infrastructure today. And IDC just actually put out a note that said only 6% around database and analytics. So I think we're actually showing up with the right solution at the right time. And we have 4,000 database customers, we're in a great position to move them to cloud. >> So is Larry right, that a large portion haven't moved yet, and Microsoft, larger have moved? >> Yeah, I think that the majority hasn't. I think that the analogy he was drawing is think about Microsoft that can move their office suite. Take 365 and move that to cloud, or things like SharePoint and move that to cloud. I think what he's saying is look at that analogy in terms of who's in the best position to migrate these database customers to cloud, and we believe Oracle is. And again, it is early days overall. There's a lot of noise about what the cool kids are out there doing, but when you think about it, 90% of these. >> The cool kids are making money. >> The cool kids are making money, Oracle is making money too. >> Of course, that's what I brought a (mumbles). You had a question, sorry to interrupt. >> Well yeah, no, really quickly. So in many respects, it sounds like what you're saying is that you can do what Amazon can do, but Amazon still can't do what you can do. >> Yeah, I think that's right. I mean, I think we're coming out and saying look, if you look at it, the application layer, they don't have anything. And so again, we have core ERP, HCM, supply, sales, service, all these things that we've shipped it to cloud. We actually do 45 billion transactions a day and support 30 million unique users weekly on our cloud. We're a viable cloud. These are core financial systems that companies use to run their business. We've been running in cloud for a while. We have the PaaS layer, our database, our middleware, the analytics, the security, things like IOT, that's core to Oracle's DNA. And then yeah, you have this commodity compute infrastructure. If you look at Amazon, 86% of their business is still about commodity compute. So we can offer that for customers as part of the overall solution. And I know they've been talking about getting it to the database so I would say stay tuned to what Larry has to say tomorrow on that. But we believe holistically when you look at all the pieces, we provide that solution that those 95% of workloads that haven't moved to cloud yet actually really need. >> So that brings up a good point. Cloud world, you mentioned DC where we had your special event, theCUBE was broadcasting live in DC. There all up on youtube.com/siliconangle. >> Shameless plug, shameless plug. >> Of course, get that last minute in there. But I want to ask you (mumbles) you announced the Cloud at Customer >> Yeah. >> So what's the status of that, 'cause we get lost in the slew of announcements here at Oracle OpenWorld. What's the update? Doing well? Reaction from customers? >> It's doing really well. It actually solves a big, again, that problem we talked about. I want to consume public cloud services, but I might have regulatory data sovereignty sort of industry or it might just be my own internal governance that's not going to allow me to deploy that, consume public cloud services on somebody else's cloud, but I can consume it with Cloud at Customer. >> Is it a transition point, because they feel good about this, they get some stability with the Cloud on Customer? Is it a transition point, is it a fixture, is it a blanky? Is it their binky? >> I think it could be both. I think it could be a transition point. I think for some customers again, depending on where they are, where they live, what type of industry, what type of data we're talking about, that might be the way they're going to consume it. Whereas I have data sovereignty laws, I can't actually move anything to cloud unless those change, but it still allows me to consume cloud in a cloud-like fashion subscription basis. Same identical services that we have in our public cloud, but just have it behind their firewall. >> So today's announcements featured partners pretty strong, and Oracle's always had a pretty big ecosystem. It's one of the key reasons for your success. And a lot of the partners out there would like themselves to start getting into the cloud, by offering services to their customers using a lot of what you're doing from a standpoint of moving your enterprise customers forward. As Oracle looks out at the landscape, you see Oracle, AWS, you're going to compete aggressively for that. But also your partners are going to step up, and they're going to offer their own cloud services. What about your customers? Do you anticipate seeing branded cloud services from your customers as they engage their customers differently through digital means? >> Yeah, that's actually a great question. I do think, yeah, a lot of our customers actually have their own services that they provide to end users. And I would say first, to back up, I think again it's about providing choice to our customers so they can engage within Oracle. They can engage with our partners on not only our technology, but maybe how do I migrate to cloud? How do I consume it in different ways? Also take a more solutions-based approach. (intercom blares) So if I'm looking at. Aw, we just got hit with that. Are they shutting this thing down in a few minutes? >> No no, we're good. >> A 16 ton thing's going to drop on the table. >> What is happening here? >> The Monty Python foot is going to come down on us. >> That's right. >> I thought that was a CUBE announcement sort of coming up. >> CUBE, Steve Daheb is on theCUBE! >> We should be announcing that. So I think that again, enabling the ecosystem to provide solutions. And I think as customers provide their own branded solutions, hopefully that's based on Oracle Cloud services and it's something that they can just re-brand, maybe augment, customize, and deploy for their own customers. >> They're giving us the bell here, but I want to get one last word in, we've got a little noise factor going on here. >> This is alright, man. >> The Infrastructure as a Service really is the third leg of the stool here for you guys. Big push here, you have the SaaS business on the press release. Second year in a row, Oracle has sold more SaaS and PaaS than any other cloud service provider. I think Larry used the word combined. Not sure I agree with that, but I haven't looked up the numbers, so I haven't fact-checked that. But then the next one comes down here as the second generation infrastructure that does twice the compute, twice the memory, four times the storage, 10 times more IO, 20% in price lower than Amazon Web Services. It's a new opportunity for Oracle to layer on top of our rapidly growing SaaS and PaaS. How are you going to layer infrastructures on top of PaaS and Saas? Isn't it the other way around? >> Yeah, I think it, yeah, sort of how do you look at it. They're tightly integrated. There's different sorts of entry points for IaaS. There could be discrete compute, but we think ultimately we see a lot of pull through from PaaS. So I might be deploying Oracle database but I'm doing it on a non-Oracle sort of application here. So I move the database to cloud and I pull compute to support that. And then from a software perspective, as Mark would say and Larry would say, we actually when we sell SaaS, you know, Software as a Service, we're selling that full stack to go along with it. >> Well, put it this way, that a database buyer looks at IaaS and sees infrastructure. An applications seller looks at the database and sees infrastructure. And so as you said, it's really what your perspective is. Containers is going to make it even more complex. >> Yeah, I agree. But it's interesting, 'cause I think ultimately that's the more strategic way that this is going to be consumed. I don't think you walk into somewhere, you say hey, you want some compute? We got some compute. Maybe more on the storage archive position, but when you look at the application development, when you look at applications, when you look at migrating databases, I think that's where you're going to pull through the infrastructure, and so that's why we're focused on offering all three layers of the cloud. >> There's definitely a trend towards enterprise-grade cloud, I was seeing that here at Oracle and at VMworld. We were just at theCUBE there. You're seeing this shift, they're getting out of the cloud game, so they're a different strategy. But Pat Gelsinger when I asked, pressed him on Amazon Web Service, saying did Amazon Web Service kind of force your hand? He kind of called it the developer cloud. That's how he called the Amazon Web Services. But they have developers. So my question to you is what's the strategy for developers? 'Cause at the end of the day we're seeing, talking to the VC certainly that was just on, there's going to be a mobile explosion of enterprise developers for mobile, cloud, lot of white space. You guys have an ecosystem, you have PaaS that's developer friendly. >> It is very developer friendly. >> What do you do with developers? Give us the update. What specifically are you guys doing in market. >> We have a big focus you're going to see with respect to developers. We've had Java developers that have been an incredible community for years and we've been serving them for years. I think Judy, before Larry took the stage, announced Oracle Code, which is going to be a multi-city road show where can get together. We're going to provide them access to Oracle Cloud, allow them to develop in multiple type tools, which I think was an important part of the announcement as well. Larry's saying look, it's not just about Java. It's about Ruby, it's about Python, it's about Node.js, it's about having an open platform that supports all developers. Tools like application containers and some of the other things. >> How would you grade you guys now? Not well suited for developers? Certainly Java you have developer community. But in market when you bring it to customers, is there a developer program that you guys have in motion? What's in the market? >> We do have things in motion. There's a developer program today and we continue to expand in that community. So we move away from just maybe traditionally Oracle developers to a broader set of developers. I think giving them a robust enterprise-grade platform, that gives them choice. So you're going to see a lot, hopefully we'll see you guys on the road at some of these events. But we're going to go out. >> There's a huge demand for developers to create opportunity in the ecosystem. I know you got to go, better wrap up. Thanks for spending the time. >> No thanks, a great way to wrap up the day. >> Congratulations, I know you're running hard. You look great, nice watch again. Yeah, flash the watch. >> I just miss the pocket square that you guys had in DC, I got to get that right next time. >> Best dressed man at Oracle. We are here live at theCUBE in San Francisco. I'm John Furrier, Peter Burris. Day one of coverage, three days wall-to-wall here live. TheCUBE, Thanks for watching.

theCUBE presents an exclusive on the ground conversation with Oracle CEO Mark Hurd.  Mark sat down with John Fourier at Oracle's redwood city campus. >> Hello everyone welcome to a special presentation of theCUBE. I'm John Furrier   the founder of SiliconANGLE and we're here with Mark Hurd the Co-CEO for a one-on-one exclusive conversation , Mark welcome to theCUBE on the ground welcome.    >> Thanks John >> OpenWorld we were there with theCUBE >> So at Oracle and we were on Howard Street , we talked to 48 folks from Oracle executives and we learned a lot and we've been there covering it for six years and one of the striking things was Oracle's cloud message wasn't really well received by the press in the sense of they consider you kind of not in the top two. It's Amazon , Amazon it's this, that & the other thing. You guys had been doing cloud for awhile and I want to explore that conversation with you about Oracle's cloud your business startup landscape competition but one of the things that struck me was your interview on CNBC with John Ford he said are you determined to be in the cloud and you kind of had a shock back response and said determined we're in the cloud we're winning and quoted some stats give us the update you guys are in the cloud we watched that we learned that it's end to end what's the current status of Oracle's cloud play right now.    >> Thanks John,  well I think the way I would describe it numerically is not only in the cloud were a multi-billion dollar player in the cloud and so we started really several years ago in the application part of the cloud or SAS we've had tremendous success across the pillars of our SAS products or the pillars of applications in the industry we've added a platform capability or paths to that portfolio and now we've added infrastructure as a service so we're actually the only player in the cloud now today in infrastructure in pass and platform and in application so a complete portfolio differentiated by its by its scope and also differentiated by each of the pieces we believe to be Best of Breed and it's resulted in bookings I think that's out in the marketplace but I'll reiterated today. We'll book more business in the cloud  than this year than anybody else in the industry.  >> One of the things about the cloud that people love is the fact that it's fast it's got great economics but it has a scale component that customers are attracted too,  yet a lot of the folks who provide cloud technologies have different approaches.  Larry Ellison was on stage at Oracle OpenWorld saying he's long in the cloud game and you've reiterated that. What does that mean you know and the business folks out there they love this but they don't want to have different technologies that become outdated they want to have just solutions so every vendor's got different approaches why is Oracle well-positioned for this long win or the long players Larry's and you talked about.  >> Well first John we've been in this business a long time and so the fact is I think nobody's provided solutions at the depth and breadth that Oracle has over the past 20-some years so we've got a lot of experience in this business and that experience really as at the enterprise level so experience is is deep. That said to your point most of our customers spend a lot of money on IT and most of them have to go do this themselves. One of the promises of cloud is all of the things you said plus the fact it's it's simpler it's easier and you're actually not you're actually moving your innovation from your IT budget to Oracle's R&D budget and that's very attractive not just economically, it is ,attractive economically to your point but it's very attractive now to get in an area like HR. We have almost 2,000 programmers coming to work every day feature stringing that application would you rather be doing that on your IT staff or have that done by 2,000 people coming every work today who's on our payroll not yours to drive your innovation. >> global. Cloud is a global phenomenon  >>  The other impact is Obviously the geographic regions is hear now that as a key table stakes but you know it also brings in some economics on the economy side. What's your take on the global economy outlook right now in the world right now and and how does that affect customers decisions and buying patterns you know right now >> If you look over and when you say right now I'll look at it over the past couple of years. Revenue growth across the global economy the S&P 500 is fairly flat so you've had about one percent revenue growth of the S&P 500 over the past five years or so. Earnings growth though is about 5% and you've seen that reflected a bit to a degree in the stock market and the run-up of the stock market over the past several years so with revenue flat and earnings up that tells you that people are cutting expenses people are being very careful what they spend in what they invest and that gets reflected in IT and you see this in the IT industry and some of the results of the companies in it so companies are very much being very careful what they spend. I think companies overall are comfortable with their cost structures. They wish they could grow faster and it becomes the reason why cloud not just as a technology but as a business approach in a business model is extremely attractive to our customers into the broader market >> So they were there see expenses they don't only have to spend aggressively but they need to perform as well so it's also top-line >> John, it's a bigger problem than that it's a bigger problem than that because I'm worried about cost but at the same time many of our customers face competition. They face competition from startups new entrants into their industries and so they have to be innovative so it can't be just cut cost for cutting costs sake because if they do they can easily get disintermediated from their customer from their market and therefore they wind up not being competitive so the attractiveness back to the point about innovation and cloud is yes it's it's lower cost it's better economically yes it's simpler but it also drives more innovation at the same time and it's really the combination of all these factors that do the trick >> I put a question on my Twitter feed and Facebook I was interviewing you and I got a question I want to read to you as it says 'Marks on the road constant of customers then coming back to the ranch to meet Larry and Safra and the teams,  what is he hearing what is the consistent need from his customers and CEOs he's talking to who position themselves'  what's the common thread what's the holy grail for the customer that you're hearing from from consistently in the pattern that you're seeing your customer visits?  >> Help us get from here to there and and I think when you know you're in our industry you get a lot of people talking about cloud you know let's go to the cloud well if you're if you're not in the tech industry and you hear that you're like what does that mean and and then more importantly how do I get there so it's easy for us to talk about you know where we are. Most of our customers are stuck in where they are today and most of that is an on-premise many of those are older applications their homegrown applications so the process of not just telling us telling them where they could go but how do I help you get there.  At Oracle again we feel uniquely positioned and we're not just big in the cloud multibillion-dollar cloud player but we have a heritage on-premise and I see that as a very very strong asset and the ability now to bring those two worlds together and help our customers operate some of their IT on-premise, some of their IT in the cloud and be able to work those move those workloads back and forth seamlessly. >> you know you understand the athletes world >>  Timing is everything you  play tennis, being at the right spot the right time is really the business focus with customers and so when they hear cloud or hey this is a new technology from Silicon Valley think how well is that real so this isn't not so much as scared of the Silicon Valley innovation you're seeing you know for Tesla innovating things like GM and Ford but a lot of mainstream businesses want to have an answer to their problems not so much the shiny new technology. How do you balance the timing of delivering new cloud technologies with that next big thing in R&D or what not I mean what's the secret and what do customers look for is the timing issue of having the right solution at the right time what's your philosophy on that what's your take on that >> Well of course you're right I mean the fact is you know as we sit here in the Silicon Valley we tend to invent words every couple of years they're gonna solve all of the customers problems cloud big data whatever it may be whatever your problem is we're gonna we have a solution for it and the reality is most customers want to solve their business problem they're concerned about growing their revenue they're just they're concerned about becoming more efficient with their processes and so therefore we have to help them get that done so to your point we have to come in with real solutions, our solutions are baked around things as simple as running your HR system. You know running running your core accounting your core ERP and your core sales organization and being able to be able to automate those applications. I think you'll see  a tremendous workload coming around dev test. You know 30% of all of IT for example today is really done in developing and testing applications, it's all done on premise, it's all done with very little governance around it,  that whole process. Think of that, if Enterprise IT is a billion dollars,  Dev-Test at 30% is let's see I think 300 million dollars. How efficient do you think that spend is? Let's pretend it was 50 percent efficient,  which I believe is very high. A hundred and fifty billion dollars of opportunity for our customers to no longer have data centers,  computers, operating systems, databases,  people and be able to move all that to the cloud be able to access all of that capability from the cloud build and test their applications directly from the cloud and if they even want they can move those workloads to their on-premise production for their on premise production applications. So these are tremendous opportunities to change the way we think of IT and your point the timing has to be right there has to be an openness and an excitement about embracing these opportunities and I think that time is now. >> on that because it can be scariest shit >> What are you hearing from customers into the cloud and and and they might hey Oracle you know all you know you have your stuff and I hear the shiny new toy in Silicon Valley new technologies but what's in it for me that's the customer I've but I think mentality what's in it for me my problems as you said what it what is that issue for that for customers for your standpoint how do you how do they get over that fear to take that leap will the parachute open when they go to the cloud that that's the kind of mindset the customer I hear and I thought to what >>   >> various different people that have >> Well I mean they're different opinions I think many of those initial perceptions are beginning to change so I think you're getting more customers more openness and we're sitting here in the United States I think if you went back to to Europe and Western Europe there was always concerns about various issues security etc data sovereignty many of those issues I believe we're beginning to tackle and to resolve. But at the end of the day that the the real excitement is about the core things we started with,  this just costs less, this is simply driving more innovation,  and it's easier at the end of the day, and those are three fantastic benefits for customers.  >> So now there's a new class of buyers entering the market your customers and some of them are younger and you know we see some of them don't have voicemail setup, they don't really use email. Is Oracle's success generational and how are you guys bridging the gap or if no how are you bridging the gap to reach these new demographic of buyers who understand mobile and cloud have some that love that some are kind of you know as I mentioned earlier crossing the chasm on their own but this new generation of buyers what are you seeing >> there are you seeing a new demographic >> are you seeing a new class of buyers?  >> So it's a complex issue you bring up because the new generation in people sometimes generalize about these generations called Millennials,  etc.   They are both employees and customers and to a large degree they interrupt much of the status quo they work differently they also buy differently. Now at the same time remember that our customers have multiple generations of workers and multiple generations of customers so this actually gets quite quite interesting.  So if you take workers somebody my generation I like to might think of self myself as young and I'm in the technology etc but that the actual data says I'm not and I still work I still work in a workflow basis I use pieces of paper like you have today and and I look at those pieces of paper.   Not my kids. They work differently. They also work more collaboratively they work in groups but now I'm still in the company and so are a whole lot of Millennials that work at Oracle so we have to put processes and tools together that not only deal with what I do but what they do and make sure that we can all then work together that's a lot of work that's a lot of technology and it's actually made the business problem that we're talking about harder. Same thing from a customer perspective those same employees that work differently, they buy differently and you better be prepared to engage them where they want to be engaged,  how they want to be engaged, and that gives an opportunity for Oracle to help our customers innovate to give them better applications, better tools to go >> meet those customers and employees. >> Brings up a great point I mean it gets getting more complex on the business logic and business model and also the consumption and technology but isn't IT supposed to get easier?  I mean it once was easy compared to what it seems to be now what's your take on that it's got to get simpler what's your strategy. >> part of the issue is the data set >>   First of all the part of the continues to grow so the data set continues to grow and that drives tremendous desire for more information this while in some degree more data creates complexity it also creates tremendous amount of insight. The things we can do today we would never have thought of 10 years ago I mean there are things think about, can you imagine the  world 15 years ago where we couldn't search for anything.   We didn't have,  think of all the tools we have today that we use every day that we didn't have think about it this way applications the average age of an application in this country is about 21 22 years old meaning they were built in 1993 1994 1995 pre-search pre-mobile pre- social pre everything,  that  we're used too, so as a result you have this really old infrastructure trying to support this this new world and that's part of the promise I think of these new applications. They're engineered with mobile integrated into the applications themselves,  they're integrated with collaboration tools from the ground up,  and this world will get continue to get easier.  >> One of the questions we're asking our on our wikibon analyst team to our surveys and our customers is which vendor will provide the value fastest for getting the most out of the data. This seems to be a question that's kind of buried a little bit in some of the conversations out in the marketplace but it seems to be consistent. The value of the data is seems to be really really important. Who's gonna build the tooling and the automation and the integration capabilities to maximize the data whether it comes from some integration on an iPhone or collaborative document or an ERP system it could cover them anywhere and or mixing and matching data that seems to be the focus what's your thoughts on that and getting the most out of the data and what is Oracle doing >> with that in that regard? >> Yeah well listen historically in our industry you basically had applications that produced data, you then taken that data extracted it from the transaction application and warehoused it or  marted or used whatever term you wanted to use, and then create a bunch of analytics through some very very experienced scientific users who then would distribute reports out to the rest of the company that's the history of sort of data analytics. I did that for a good part of the earlier part of my career and I would say things are changing now that those analytics have to have to move right next to the application itself, they have to become real-time,  they have to be integrated into the core applications.  So we see happening today in Oracle applications is no longer do you have to take data out of the application you have to integrate it directly into the application so you can now get real-time insights. The ability now to integrate structured data and unstructured data and do it in near real-time so that you can now make a decision on something based on early indicators and then merge it and integrate it with the core way that you run a company and that's how you'll see analytics evolve,  the ability to take massive amounts of unstructured data but it's not gonna be good enough just to analyze that unstructured data that's social data,  you're gonna have to be able to merge that data where the system that can now do something with it.  >> And customers telling you that there and you're hearing that from customers as well? >> to, I want data that allows me to make >> Listen the fundamentals come back the right decision at the right time with the right customer the right employee to optimize my business. How do I get through all of this massive amount of data that you've been talking about so that I can make the optimal decision at the right time to benefit my business. That's the key.   >> the trends in the industry that you're >> Let's talk about trends, competing in the technology landscape has been very robust over the past few years and specifically past three years. What's your take on the landscape now I mean obviously the table stakes that the bar that the bar to get into the game that they're at entry what is the technology landscape like today from your perspective as a CEO co-ceo of Oracle with your competitors and your customers >> Well I think the shift is significant to your point I think this forget the overused term of cloud but that method of computing at the application layer the platform layer and the infrastructure layer is clearly where this industry is  Oheaded I made a presentation at OpenWorld that I felt by 2025, I predicted that 80% of that workload will be in the cloud. And I think I associated I made this statement then that I may be slow,  it may go faster and and that shift has a seismic impact on on our industry and it will happen and the reason it will happen is because of the reasons I've keep coming back to it when the customer can get better economics,  the customer can get more innovation, and they can get something done more simply, they're gonna they're gonna go do it . That's gonna cause losers and that's going to cause winners and that's why we've made the investments we have,  that's why we've built out all the data centers around the world that we have,  it's why Oracle has rewritten all of its applications from the ground up hundred percent >> all of our products now have basically >> 100 percent all of our been cloudified, they've been rewritten from the ground up to be cloud ready. And it's critical for us John because we believe this is and Larry started on this a decade ago so this isn't something we we thought about like 18 months ago and said hey why don't we go do this this this this came back a long time ago even before the term cloud was popular so it's this is this whole method and approach to computing which which which is key and frankly we started out getting into the SAS business the applications business and it was clear when you're in the applications business to really do that right you had to be in the platform business and then really to be in the platform business you had to be in the infrastructure business and that's why when you look at the barrier to entry John the ability to build out all three layers of the cloud the ability  R&D wise to do that or from a financial capital perspective to acquire all that good luck trying to do that then to build the infrastructure the data center infrastructure and the capital and remember John you have to do all this in advance think of it as to get into the cloud business from a IT perspective it's like building a hotel and you have to build a hotel before you can rent a room nobody can stay in the hotel til it's built think of that on a much bigger scale as being what it takes to get into the global cloud business >> So it's not winner-take-all it's winner take most or >> listen I was public in my view that I >> They'll be a couple of winners I think think that they'll be probably a couple of application providers I predict Oracle will be one I don't know right now today there is no other company in the industry who has got a complete suite of SAS applications Oracle's the only one somebody eventually will get will get that done I believe and I believe you'll have a couple of providers in that part of the industry I think probably likely at the platform level you have a couple of platforms that survive you'll also find the ability for those platforms to work together and I think like anything you'll see a couple of providers two three providers at the infrastructure layer >> Is Oracle a one big cloud or is it a company of many clouds I mean saw an  acquisitions this week, AddThis, and  I saw the word datacloud  sounds good great good marketing data cloud but it makes sense it's social data you see marketing cloud and social cloud you get in your are they a collection of clouds or does it matter is it labeling as the long tail distribution?  >> are clearly a set of capabilities in the >>  Well it's branding I mean they Oracle public cloud. Those capabilities are a marketing cloud a sales cloud they are not if you will architected as separate clouds they are built on as I said earlier they are architected on the same platform everything is built on Fusion Middleware common platform common base common infrastructure that can work together. >> You talked about in your prediction here that you know all data >>   You talked about in your prediction here that all  enterprise data we stored in the cloud faster and cheaper you also announced that pricing was or might have been earlier that cheaper than glacier and Amazon is that consistent the trend that you see pushing the price down lower and lower for the data storage.  >> think at the infrastructure layer we've >>   Yes I mean I looked at that world as more of a commoditized world that you know basically the infrastructure is a service there you're selling compute and you're selling storage and we think that market will continue to decline in in price and we expect to be very aggressive with our pricing in that market >> the cycle cycle styves kenzan flow as >> I want to get a take on startups we've seen in the 90s when I did my first startup it was really hard to get into the business you're the provision of data center buy router,  buy a Sun box at that time was very expensive it was also hard to get customers if you were starting up an enterprise customer in this case and then the world shifted easy to get customers with open source what seemed to be shifting back around where it's hard for startups to get enterprise customers because of the scale and integration challenges and the SLA is and the global requirements compliance and the list goes on and on do you agree with that statement or do you see it differently that it's gonna be harder and harder for startups it might be easy to start building stuff but they actually come in and compete and win enterprise customers what's your take of the the appetite of >> and John you're talking about tech startups  >> or tech startups that sell say you know how cells store take and I've just invented an all flash array and it's kick-ass and it's gonna you know eat into Oracle Exadata and EMC and all these those guys and I'm gonna go sell it to GM or I have a software product that I want to sell to company so again getting into the enterprises used to be hard and then it got easy it seems to be getting hard again what's your take of the state of that >> a long a subject that's got that's got >> So again quite a bit to it I think first I don't think companies are gonna buy all stick on the application layer for a second and talk about application startups I don't think customers are gonna buy from a hundred different companies for their cloud applications I I think when you're looking at applications specifically you think about automating a vertical process but companies also have to work together horizontally not just vertically so I think in the end they will they will have fewer cloud providers I mentioned sort of to could a company have three or a four a couple best to breeds maybe but they're not going to have they're not gonna make the on-premise complexity and just move that complexity to the cloud this is an opportunity to make things simpler to your to your earlier point I think that's what will happen now we happen to be we acquire quite a bit as I know you know and so we actually get to look at a lot of startups and I would say you're right that that we see with many startups is they start off trying to as inexpensively as possible which is I don't think I try to do it as expensively as I could try to try to build a capability and then many run into problems with eventually scaling and being eventually being able to build out we see this as we as we are I think for startups one of the real attractiveness of the cloud is that no longer any of those costs you described a few minutes ago exist I can now go do the remember that dev test I talked about that dev test I talked about for the big company is the same thing you could do on the cloud you can go get Java you can get the Oracle database you can only use or pay for what you use no longer you have to buy a Sun server that you describe or get a license and you can build on the most industrial strength commercial capability in the world Oracle and you can do that now as a start-up and be enterprise-grade from the first piece of code you write. >> So being a world-class leader might be harder for start to crack that nut versus becoming part of an ecosystem >> think that's right I think what you said >> I is right and I was trying to address both I think as a start-up you have an opportunity to to build on on commercial-grade tools from from the beginning and I do think you're right that being part of an ecosystem almost assuredly will be necessary as this market matures.  >> week at CES before GM announcing >>  A lot of commentary this Lyft could deal with Lyft and big investments try to be like Uber and Tesla electronic cars to in-car entertainment so I'm going to say that the car is one big gadget smartphone Internet of Things device which is true that big data problem that brings up the question GM and Ford or incumbent leaders in Detroit and the automotive industry are shifting radically this digital transformation is that something that you see similar in other verticals that >>  Well I'll stick with that vertical for a second I mean that vertical has shifted dramatically over the years I mean it used to be those companies made money selling cars they no longer made money selling cars years ago they then made money on service now they don't make much money on service now it's going to become the services that sit in the car with those are entertainment services or whatever they may be and so it's gonna be very interesting in that industry how they innovate do they outsource those services to another technology company in the Silicon Valley or do those become the core differentiators of those companies and and it's it's going that disintermediation occurs industry by industry by industry we've now talked about tech and what the implications are for the cloud on tech same things occurring in virtually every vertical.  >>  So you said early it's you know they're an enabler or it's gonna freak people out it's it >> Well this is what happens with innovation when time comes this is why we've done Oracle what we've done.  We've moved as quickly to the cloud as we possibly could.  It doesn't mean our on-premise business isn't strategic and important to us of course it is and I think the combination of the two capabilities gives us a huge differentiator. But that said for us to move quickly was critical we think to our long-term success and that's why we've been as fast moving as we can and I believe that true in every industry.  If you spend doing words like balance protect all of those sort of verbs they don't lend themselves to long-term success.  >> Let's talk about the company now that you're leading with the team. The number one question I get to ask I was told to ask you was ask them how the Co-CEO job is going and I'd like to know what it's like in the day in the life of Mark Hurd with Safra Catz, Larry Ellison take us through some color around what goes on behind the curtain >>  No.  I think well first of all we've been together awhile so so this is not like a new new phenomena so we we think we have sort of a capability that we can do a lot of things at the same time I don't know that that there is a broader team in terms of experiences I'm not trying to say we're great or try to be arrogant about it at all but it gives us the capability to touch a lot of things at the same time.  I've been a CEO multiple times and I can tell you it's a lonely job it's a hard job and it has a lot of responsibilities associated with it the fact that you can get a team that brings with it different skills different capabilities and you get the right personalities that that blend together that's that's a blessing and if you can get it take it . >> That's not just at the top tier of the management team also it's a >> company's pretty strong you know it's a >> I'm glad you brought that up John because I get questions like that a lot about Larry or Safra or they get questions about about all that but the reality is we're 140 thousand people in this company so we're a we're a large company with an enormous number of talented people I mean Thomas Kurian who runs our software development organization John Fowler runs our hardware development organization Dave Donatelli are people running regions we have we have a lot of very very skilled people come our Chief Architect Edward Screven I mean we just have a lot of depth at >> oracle and so it's a lot bigger than >> And the newly hired Dave Donatelli who is a shark when it comes to infrastructure he is strong and how's he working out I mean how's the that's a big >> listen and Dave is really leading the >> I think Dave's done great I mean product management go-to-market efforts around all of our all of our systems team which is going through its own transformation because we see the way infrastructure is now being used today and it's going through a lot of changing and Dave's just a great addition to Oracle >> He should me he knows it he knows the EMC playbook and certainly they have their challenges so I ought to ask you a question another one is that the hardware middleware market is about integration you mentioned that horizontal integration how how challenging is that for you guys and is this part of the transformation message that you guys have done internally because you're asking customers to transform and so can you give an example where you've transformed yourself >> Well when you talk about the middleware market I actually you mentioned the middleware market at least in some of the transformation I actually think with all of the data that we described earlier the opportunity to integrate that data and to integrate that data in the cloud is a huge opportunity for us we introduced an Oracle OpenWorld integration cloud services Oracle integration cloud services and the opportunity now for us to bring that to market and bring that capability to customers you know fantastic opportunity >> Let's talk about competition my favorite subject HP split up EMC sold to Dell , IBM is trying to make a run at it what does all this mean for the marketplace and specifically customers because you know those are big those are big companies that are transitioning or struggling as I'm saying what should what does all that mean connect the dots for the industry dynamics for those >> Well I think the industry our industry is no different than any other industry it's looking for revenue growth it's got leaders that that are are being driven to to grow revenue to grow or means to grow cashflow and in many times when you realize you you can't do that or they they find that they they're not in a position to do that they change and and change is inevitable and that's all you're seeing here is the change of what we described earlier you've got a certain market that behaved a certain way for a long time that market is now interrupted it's going to cause certain people to fail it's going to cause certain people to combine and as a result that change is going to occur and if you're not able to do the things I described the things that Oracle's done so if you will cross the chasm then change is coming and I don't think >> you've seen the end of it John. >> And a lot of these folks made big bets years ago going back a decade what bets do you see not paying off and what bets should people be making to be competitive in this new era >> believe what I said about our strategy I >> Well I think if you're not first in the cloud to begin with you're not gonna be long for this industry point one point two if you don't have enough breath in the cloud and you're just a single player with a point solution you're probably not long for this world so in the end companies want more from fewer people they want help with innovation they want better economics and that's going to prove in the end to come from a few companies in my opinion I think you'll see the same cycle that we've seen before that you'll see companies that frankly remember if you went back to the 80s think about how many great companies were in this industry in the 80s when I started in the industry I'm shame to have to admit that a shame but I hate to have to admit I'm old enough so I started yeah and therefore you look good well they're all gone yeah I mean Wang is gone the Digital's gone Data General is gone this Prime Computer is gone I mean this happens a lot and and this is just us going back to the future where we've got an interruption in the industry it's gonna cause winners and losers and it's the reason John that we've made the investments we've we have we could have easily done none of this invested none of this capital and harvested our existing business and it would look great for a while yeah not long run.    >> Yeah and you and you guys invested in the future at the right time seems it's working great for you guys the numbers are good how do you invest in R&D of some of the numbers in the cloud in terms of revenue book asking . l >> don't we don't give out you know all of >> Welll we our data forward-looking projections but what we did in our last quarter was we talked about our growth in the cloud virtually double our bookings year-over-year we've now got a chance to be in the ball well I won't give numbers out right now because I was already gonna make a forward projection but think of us now as multiple billions of dollars in revenue in  PAS platform and SAS growing and as our revenue has grown John our growth rate has actually gone up we say one more time the revenues grown and the growth rate has increased and so I think this comes down to the fact that we've just gotten better and better at this we've added more people from a salesperson perspective more of our products have become available in the market to the point of the percent of our portfolio that's now available in the cloud and we've now got lots of references and so it's an exciting time for us >> I've got to ask about Amazon Web Services obviously they've been going to have to work with our database and saying they can suck all that in and it'll come up in a second but I interviewed the former CTO of EMC who's now doing a storage startup on his own and he had a comment and I said well  Amazon's winning he says well we always debate what inning are we in in the industry and  Dave Vellante and I'm my cohost argued that he thinks were in the seventh inning I think we're in the first inning and so the guests said no you guys were both wrong,   Amazon won Game one of the doubleheader Game two is about the enterprise and it's not even started so I wanna get your thoughts Amazon certainly did well and doing well and numbers are pretty clear with public cloud now they're aggressively moving into the enterprise and it's just different ballgame talk about the dynamics their vis-a-vis Oracle you're targeting much more business approach understanding the IT side of the business Amazon is kind of do-it-yourself you know launching new stuff every day what's the distinction between the two some love Amazon people love the success you know good job Amazon people you know we cover them we like them they have a good product but it's not the end game to your message what's the difference in the two >> All right I'm gonna stay away from all the baseball analogies I think that they nstarted out as a retailer they had an IT infrastructure to support a retailer I think very clever they needed a lot of IT capacity when retail season was at its height during the holidays they said we've got a bunch of used capacity during other parts of the  un year we'll go rent it to people so they can leverage it makes sense now as you start to move into other workloads as you start working into enterprise workloads and dealing with all of the issues that come up there are more complexities to come up I think that we are in the I'll just say early stages and and by the way remember one thing I mentioned to you I think earlier just before we started and started this interview it doesn't take much of a change in it to have a dramatic effect on the revenue of the industry so I mentioned earlier about this dev test thing 30% of the industry three hundred billion dollars if only 5% of that moves its 15 billion dollars 15 billion goes from somewhere some companies that are supplying that today to somebody else and that's the very beginning of this see I actually don't think very little of this workload today has moved compared to what it will be five to six to seven years from that so - from that just a sheer numerical dimension we're in the very beginnings the very early phases of this the ability to get the bulk of this market is the ability to move massive amounts of workloads from some of the most complicated jobs >> so we're just scratching the surface of what it means >> just beginning >> ok so talk about the customers that you have because you have a lot of customers you guys have a zillion customers Oracle is a dominant player for many many generations of IT and computing we've seen that but I'm sure some of them have Amazon presence or they're kicking the tires doing some shadow IT through some things how are you guys do that because you kind of partner with Amazon on one hand but you also have cuffs cuz you have customers there how is how is that conversation going with Oracle and Amazon you say hey whatever or is there >> no I think that customers can chose to take their Oracle licenses and run them on Amazon they can also get those same capabilities directly out of the Oracle cloud we can take jobs between Amazon and Oracle and have them work together so it's it's really the customer's choice as to what's best for the customer my general view would be that if a customer is doing a platform job writing an application in Java I'll probably get infrastructure from the same person I'm getting Java from so I'm more likely to buy that infrastructure from Oracle if I'm buying that application from Oracle or using that platform from Oracle but if a customer says I'd really like to do my platform job on Oracle and store some of that up on Amazon that's customer's choice >> Okay Amazon is on the list of competitors Larry said one of the things is seeing new competitors he's SAP and IBM now new names yes Amazon, Microsoft Azure seems to be doing well we don't see vmware on that list yet but i mean as you're speaking in a little bit of some of the other players market share and cloud people have different cloud visions Amazon certainly has their in incumbent business Microsoft's what's your take on them visa vie Oracle which one Microsoft Microsoft Microsoft for that >> I'd say Microsoft done a good job I think Microsoft has moved its it's estate to the cloud not very dissimilar from from Oracle their applications is Microsoft the competitor of Oracle I think the answer to that would be sort of but but in many cases not directly their applications are really different from our applications my guess is many of the people using infrastructure from Microsoft are using infrastructure because they use their IP and their platform and/or their applications so I think therefore they they're doing the job that strategically that you see Oracle's multiple billion dollar cloud business doing as well which is moving many of its core capabilities from on Prem to to to the cloud they also have the capability now to merge and on Prem business and a cloud business which again I think it's a really key differentiator as we move forward >> differentiation seem to be dependent >> It seems to be the upon what people had or have going on either past or present so with that there's different approaches so I got to answer the question I'm a customer pretend I'm a customer hey Mark how do I evaluate all this stuff in the day is this like I need a matrix of like who's got one no wonder one's got checkboxes what criteria should I use to decide who >> I think John it comes back to the core stuff of you know who's got the best stuff you know whose stuff really in the end does does the best job for you starting at the application layer through through the platform layer through through the infrastructure layer and then the fact that you can now get this stuff in the cloud is a huge advantage for all the reasons we've been talking about for the past past several minutes but it's still gonna be about who's got the best IP but whoever's got the best IP in the end probably matters - I mean you know performance security I can go through a lot of other issues John but let's start with who's got the best IP I promise you promise you we will perform from a performance perspective I promise you we will have the best security now that said so a customer has done a license on Amazon Web Services are certainly probably doesn't run as good as an Oracle listen I mean obviously I believe the IP you have I believe that we're pretty good at running Oracle workloads I actually believe we're the best in the world at running Oracle workloads and and and and and I think you're gonna see that get yet even better as we >> I can attest theCUBE  interviews on the 48 interviews we did it was pretty clear that Oracle is very well optimized for Oracle on Oracle no doubt and clearly the performances order of magnitude significant >> and our cloud will also be capable of >> But John let me add handling non Oracle workloads so you know we think in the end while we'd love the whole world to run on Oracle we believe there'll be a portion of the world that doesn't and the fact that you can run those capabilities on the Oracle cloud along with your Oracle workload becomes critical as well >> Yeah I want to drill down on that because one of the things that I've observed over the past decade and past five years in particular there's been kind of a Oracle huge community because you have huge customer base but it's always been like you know redstack its proprietary and it's kind of like some whether it's truthful not that's been kind of a narrative but now it's with my sequel you got a lot of open technologies this Oracle OpenWorld it became very clear that integration it's not about redstack anymore referring to Oracle's you know their boxes and brand it's Oracle runs great on Oracle but if you don't have Oracle  you can still be an Oracle customer so talk about that dynamic this is a significant opportunity for Oracle news business >> You know maybe the narrative is the way you describe the narrative and you lowered your voice you know I got a certain impression and from the words you said now that said Oracle's always run hybrid workloads multiple applications around the Oracle database SAP runs in the Oracle database lots of applications run on the Oracle database so I think Oracle's always been if you will open from that perspective while continuing to build a complete stack now I'd make the argument that the cloud in many ways is of any cloud provider is a proprietary stack I mean insert name here is what is by the way that you know what the middleware is that Salesforce uses or the database or the middleware that Workday uses or day you can go down company by company and and at the end of the day you really though don't know what's behind that it is really totally provided to you by that provider and that is what you see being shifted in the cloud you can make the argument and this gets very into another interesting debate much of IT has been the do-it-yourself sort of approach I'm gonna if I will as an IT staff become an R&D organization and if you're a CEO and not a tech CEO but as CEO of a company with an IT organization you have to ask yourself is that really what I want to do do I really want to glue an operating system to a server build anything from scratch sure support it and do all this work and and or would I rather have somebody do it for me now as long as the economics are right and as long as I have trust in that in that in that partner and I'm secure and all the things we've talked about but at the end of the day transferring a lot of work that doesn't give me a lot of economic value add and moving that as I've mentioned earlier to Oracle's R&D budget I think becomes really attractive for a whole suite of >> I think it's great I'll rephrase the question so Oracle has a business as great business and you have customers they have Oracle software and contract value increases they renew they buy a new license new technology you grow your customer base but with cloud native what we with the web skills you pointed out a lot of companies were successful building their own stuff because they didn't have the cash but they had expertise so they would build their own caching and myself and they support it and pick up that cost but now as IT moves to cloud native that's a huge deal they don't want the build there also I agree with you you're looking at me >> I will say this and I don't mean to interupt you but there still is quite a debate in big companies and this is one of these transitions we've talked about the transition really from a tech industry perspective but inside the customer inside IT organizations the cloud is a threat so when you when you look at it as like the mainframe guys many computers were threatened exactly yeah so I'm now in an IT organization you know this do-it-yourself thing this is quite a bit of job security I wrote this application I've got to glue this to this and this is all really complicated and if you talk to a CEO and not get a non tech CEO and you say listen you really don't want to mess with all this because this is really complex and I'm the only one that really knows how to do this this whole thing work we're gonna transfer that complexity to somebody else has its own degree of threat to IT organizations so that debate you described that debate today John is still not over >> I think the Holy Grail whoever can provide a cloud native scalable turnkey infrastructure will probably of course you're right win that business of course right >> this is why these these these moves to your point about what in inor we in or what phase are we in these things have have multiple episodes so >>  are we in that cloud native phase right now are we for the for the new customer comes to Oracle hey you know what I'm I'm growing I've been doing stuff in the cloud with Amazon I've been doing this over here got my bootstrap data center I really want to go to cloud in a big way and we're growing leaps and bounds >> I'll stick with what I said we're in the very beginning of this and and we're in the beauty of this that the amount of IT John the suite of applications you go to any of these big banks in the United States around the world they have just sores of applications most of which were homegrown many of which sit on those mainframes you say we're threatened 25 or 30 years ago this whole move is a big set of moves that will take you know several years and you know use my discussion of 10 years out where I think I'll had it it'll take time like that to move now what customers are gonna want again one more time is I'm not going to be able to take that whole on-prem capability and just say thank you move it over here it's not gonna work so therefore the ability to move this thing job by job and then to be able to coexist these hybrid environments over a period of time become a become a key issue for our customers >> move at their own pace basically not >> so have them happy for examples and I think devtest is a as as >> I think customers I give you much work as has to get done to do that is is a sort of an intellectual layup I I think you're gonna see a lot of devtest move quickly I think you're gonna see applications particularly those applications that don't differentiate the enterprise customer facing application that you think is your unique sacred sauce you may keep that as homegrown on-prem but those commercial applications that don't differentiate me I mean me being the company I will move to the cloud as as quickly as I can >> Great excitement at Oracle OpenWorld this year the theme of integration and we talked to some customers and they were excited by that it's a big problem so that's that's one thing I'd like to talk about the second thing is what confidence can you share with the customers around new growth stretch I was the organic M&A and  organic growth versus M&A your a big buyer you're not afraid to go out and pay a premium for world-class IP but also you're doing IP internally tie those two together integrations the big themes continue to advance the product side as well as the growth strategy around organic growth and buying companies that might fit into >> Sure we spend a fair amount of R&D starting with your second question when I came I think we started spending 3.8 billion and in R&D we'll probably spend 5.2 billion this year in R&D so we we are we invest but not all of it is date we have a few hundred million dollars of our as well so we spent R&D and in in addition to the D the way I like to think about the innovation of Oracle is it's the D it's the art and it's what we acquire and so we have not built everything we've had very much a buy and build strategy we bought in some capabilities that we weren't building and we've merged those to create the portfolio that we have today and yeah we're not gonna stop that's continuing that's the cadence of Oracle right just continue yeah I won't put anything but I will so stop and I will say that we're very focused and and and not at all hesitant when we see something that we think is strategic to us to bring it in and add it to the portfolio you mentioned something early I want to drill down and horizontal integration and growth and vertical integration sometimes people think that mutually exclusive horizontal industry standard commodity hardware was a rage with open-source that helped grow a lot of the market and the web-scale days now vertical integration where hey it works it's kick-ass high-performance you are I don't really care what's in there it works Oracle support set is also working Oracle was kind of people were kind of poopoo in this whole appliance thing go back up you know five years ago good call working so by the way that is the same strategy that's called the class hey so when you really look at vertical integration the cloud is the ultimate in vertical integration because somebody's done now all the work for you when you buy a I try to explain this to customers all the time that when when somebody buys an application in the cloud they have actually procured a hardware database middleware services a data center floor space security they've bought all of that at the same time and so this this shift to the cloud really is the ultimate testimony to to vertical integration and horizontal they're not mutually exclusive you don't see them that's why I mentioned earlier what I said about why I think there will not be a hundred cloud providers supplying to our customer because integration we just talked about it in the vertical sense we want an HR implication that's completely integrated or in the ERP application that's completely integrated but those applications have to work horizontally as well as vertically so I would actually like my ERP application to talk to my HR application it might be nice if my marketing service applications talk to my ERP applications so I really can't I don't want to spend a munch of money on my IT staff horizontally integrating a hundred clouds I'd like somebody to do that for me and that's why having you know Oracle having the suite that we have in terms of applications platform and infrastructure is so important and that's really the trick balancing both really making that happen it seems to be you've got to do both I mean I'm a firm believer that you really have to have that full suite of capability ok so David lanthum IKOS and she'd want to get a question and so I told him I'd read a question for him he says and this is around the on-prem thing your strategy to create seamless experience between on Prem off principle is obviously your customers can't get there overnight how far along on the completion bar are you and your customers to achieving that vision of integration of allogram and off Prem and off prep seamless experience between seamless experience between off Prem and on-premise solutions today you can have an Oracle job running in the cloud you can have an Oracle job running on-premise with Oracle Enterprise Manager you can manage both jobs seamlessly and move workloads back and forth between on Prem in the cloud and you can do that today if we talk a lot about you know mainframes minis going back and looking at history total cost of ownership is a word that's been used in the computer industry going back to technology is a great way to justify things so let's talk about total cost of ownership but also want to get your take on what does patchwork IT mean to you that notion of patchwork IT in context well you've got a lot of terms you'd like to use I I would stick strategically what I said earlier I I think of much of what happened over the last seven eight years as a lot of do-it-yourself work whether you want to call that whatever term you want to use it the whole view of it for example in this valley if you drove up and down one you would see a slew of companies who individually are trying to sell you an IT organization of a company a piece part be sort of like driving up and down and buying a muffler and then buying a bumper and buying all kinds of stuff and putting it together in your driveway this is really now a shift in the industry away from you know patching together all these systems that are extremely complex and moving to a simpler more fully integrated tested optimized environment and it completely increases the complexity of tossa cost of ownership you said increases the complexity decreases the complexity and decreases total cost of ownership even in the industry through many cycles of innovation does that mean I'm old here at the peak of your career thank you very much people are freaking out some people are winning and happy because they're on one side of the disruption era or the other what does this innovation cycle mean to you right now compare and share your color a personal opinion around what's going on right now in the industry compared to other ones and then and how big seismic differences are there or there is it a big shift little shift compare contrast this much I think it's so exciting I think the most exciting things have in our industry in a long time I think the fact is this industry isn't now in a position and evolving into a position where we can really help customers we can get them out of this very complex world that we the industry have created and and like many industries simplify the way our customers get access to a fabulous intellectual property and make it easier and I think this is an opportunity that if you're if you're in this game if you're not listen let's face it out of colleges we haven't there we haven't had the excitement in the tech industry in years the fact is now with a new game to play this is a tremendous change with tremendous set of winners and and you know frankly there's gonna be the losers involved at the same time that's what makes it exciting and cloud is the better mark security was huge an Oracle OpenWorld I gotta ask you this question this came from a source on our wiki bond team top killer tech announcement Oracle OpenWorld was was security but with the Isis Massacre and the France thing the encryption has become a bad word was debated about four years encryption was a top topic in in the conversation that was a key message at Oracle overall everything could be encrypted beyond on encryption all the time as Larry said you guys are talking about what is the state of security right now with encryption and Oracle does that change your security angle with the products or what's what's going on with security right now so we're talking very much now about enterprise applications and and you know I think there's the cloud of all you know we we talked about this little earlier about the perception that I'm now going to take my data that is is very safe in my data center and on prime which we could debate and I'm now gonna move it to a cloud and therefore I feel vulnerable I feel vulnerable that my data is now in the hands of some other entity and and for us I think one big advantage Oracle has is the fact that that we're very good at data we've managed data since the beginning of the company I mean our first customer was yeah well in the CIA was our first customer they remain a customer today and so security has always been at the core of Oracle's DNA now the one of the reasons we have an encrypted database is four years is because when you encrypt them it the performance of the database actually slows so it's been years of evolution years in terms of Exadata development in terms of all the memory that's now I won't go into all the details of the technology but now we can fully encrypt the database and get incredible performance so what you have no hidden performance no I'm not you ready in great job none none incredible performance and the same theme you have an encrypted database now let me tell you what that means that means that when when a customer's HR data is in our cloud our people that are moving around the customers data don't see the customers data they see frankly gibberish they have files the key to that encrypted data can sit with the customer so when that those files come back across the network the customer can decide when where to use the key to open to open that encrypted file so therefore when you're in the Oracle cloud and I listen I encourage everybody ask our competitors how they deal with this ask ask them what their options are how do they deal with that data is is somebody whose nature or provider are there are there people looking at the customers data as they move files around well we've decided that we think the most important thing we can do is secure that data so let's pretend and by the way I don't think this would ever happen but if somebody actually got access to those there's nothing to have access to it's all encrypted talk about the implications for cloud on a global basis data sovereignty is a huge issue with cloud yeah does this impact at all there's a help it does no it does and so that's it's the reason we've had to one of one of the reasons that we've put data centers in many locations as we have so we do have customers that by law have operate in Germany and in the UK and employee data can't be of a UK employee cannot be in Germany and vice versa well we have we now have the ability because of our data center capability in Germany and our data center in the UK to actually make that capability work and so this this issue of data sovereignty like security is a big issue and you're helping the data sovereignty problem with this Robert yes we've had to address it we've had to address it we've had to embrace it and we've had to help it and it's the same thing with security so now you can have a fully secure capable capability in you know 19 20 different countries to help deal with that with that with that data sovereignty and security issue Barker thanks taking the time here for the cube 101 conversation thank you very much thanks John appreciate it you're watching special one-on-one exclusive conversation with Mark Hurd CEO of Oracle here on the cube on the ground here at Oracle's headquarters you