(upbeat music) >> Okay, we're back to wrap up Fal.con 2022 CrowdStrike's customer event. You're watching theCUBE. My name is Dave Vellante. My co-host, Dave Nicholson, is on injured reserve today, so I'm solo. But I wanted to just give the audience a census to some of my quick takeaways. Really haven't given a ton of thought on this. We'll do review after we check out the videos and the transcripts, and do what we do at SiliconANGLE and theCUBE. I'd say the first thing is, look CrowdStrike continues to expand it's footprint. And, it's adding the identity module, through the preempt acquisition. Working very closely with managed service providers, MSPs, managed security service providers. Having an SMB play. So CrowdStrike has 20,000 customers. I think it could, it could 10X that, you know, over some period of time. As I've said earlier, it's on a path by mid-decade to be a 5 billion company, in terms of revenue. At the macro level, security is somewhat, I'd say it's less discretionary than some other investments. You know, you can, you can probably hold off buying a new storage device. You can maybe clean that up. You know, you might be able to hold off on some of your analytics, but at the end of the day, security is not completely non-discretionary. It's competing. The CISO is competing with other budgets. Okay? So it's, while it's less discretionary, it is still, you know, not an open checkbook for the CISO. Now, having said that, from CrowdStrike standpoint it has an excellent opportunity to consolidate tools. It's one of the biggest problems in the security business Go to Optiv and check out their security taxonomy. It'll make your eyes bleed. There's so many tools and companies that are really focused on one specialization. But really, what CrowdStrike can do with its 22 modules, to say, hey, we can give you ROI and consolidate those. And not only is it risk reduction, it's lowering the labor cost and labor intensity, so you can focus on other areas and free up the biggest problem that CISOs have. It's the lack of enough talent. So, really strong business value and value proposition. A lot of that is enabled by the architecture. We've talked about this. You can check out my breaking analysis that I dropped last weekend, on CrowdStrike. And, you know, can it become a generational company. But it's really built on a cloud-native architecture. George Kurtz and company, they shunned having an on-premise architecture. Much like Snowflake Frank Slootman has said, we're not doing a halfway house. We're going to put all our resources on a cloud-native architecture. The lightweight agent that allows them to add new modules and collect more data, and scale out. The purpose-built threat graph and and time series database, and asset graph that they've built. And very strong use of AI, to not only stop known malware, but stop unknown malware. Identify threats. Do that curation. And really, you know, support the SecOp teams. Product wise, I think the big three takeaways, and there were others, but the big three for me is EDR extending into XDR. You know, X is the extending for, in really, the core of endpoint detection and response, extending that further. Well, it seems to be a big buzzword these days. CrowdStrike, I think, is very focused on making a more complete, a holistic offering, beyond endpoint. And I think it's going to do very well in that space. They're not alone. There are others. It's a very competitive space. The second is identity. Through the acquisition of Preempt. CrowdStrike building that identity module. Partnering with leaders like Okta, to really provide that sort of, treating identity, if you will, as an endpoint. And then sort of Humio is now Falcon Log Scale. Bringing together, you know, the data and the observability piece, and the security piece, is kind of the three big product trends that I saw. I think the last point I'll make, before we wrap, is the ecosystem. The ecosystem here is good. It reminds me, I said, a number of times this week, of ServiceNow in 2013 I think the difference is, CrowdStrike has an SMB play it can go after many more customers, and actually have an even broader platform. And I think it can accelerate its ecosystem faster than ServiceNow was able to do that. I mean, it's got to be, sort of, an open and collaborative sort of ecosystem. You know, ServiceNow is kind of, more of, a one-way street. And I think the other piece of that ecosystem, that we see evolving, into IOT, into the operations technology and critical infrastructure. Which is so important, because critical infrastructure of nations is so vulnerable. We're seeing this in the Ukraine. Security is a key component now of any warfare. And going forward, it's always going to be a key component. Nation states are going to go after trust, or secure infrastructure, or critical infrastructure. Try to disable that and disrupt that. So securing those operation assets is going to be very critical. Not just the refrigerator and the coffee maker, but really going after those critical infrastructures. (chuckles) Getting asked to break. And the last thing I'll say, is the developer platform. We heard from ML that, the opportunity that's there, to build out a PaaS layer, super PaaS layer, if you will, so that developers can add value. I think if that happens, this ecosystem, which is breaking down, will explode. This is Dave Vellante, wrapping up at CrowdStrike, Fal.con 2022, Fal.con 2022. Go to SiliconAngle.com, for all the news. Check out theCUBE.net. You'll see these videos on demand and many others. Check out (indistinct).com for all the research. And look for where we'll be next. Of course, re:Invent is the big fall event, but there are many others in between. Thanks for watching. We're out. (music plays out)

>>Hi there. Welcome back to the cubes day. One coverage of VMware Explorer, 2022 from San Francisco, Lisa Martin and Dave Nicholson. Dave, we've been here all day, having some great conversations with the VMware partner ecosystem >>With real live people >>Within in 3d. Yeah. People actually sitting down next to us still >>Appreciated, even though, you know, we've, we've done a few of these events, but yeah, it feels like things are getting back to normal. >>It does. You and I were both in the keynote starting this morning, standing room only. We're hearing somewhere between 7,000 and 10,000 attendees. Yeah. We're in Moscoe west. So we're kind of away from a little bit of the, the main action. But talk to me about some of the things that you heard this morning in the keynote, some of the announcements from VMware, did it meet your expectations? >>Yes. And because I didn't expect, you know, this is very, very different than going to say an AWS event where they're going to launch 300 new shiny objects. This was very much in my mind so far about VMware focusing on its core value proposition and an aspect of its core value proposition that is the cloud stack and how they are shoring up places in that strategy that needed shoring up like addressing issues with licensing. So you don't have to have separate licensing for on premises, VMware things. You're doing separate licenses in hyperscale cloud providers for doing those very same things that looks like something that's going to roll out over time. That's very, very interesting. Something that wasn't really wasn't mentioned directly, but, but, but actually one of our guests mentioned it. It's this idea that if you take the VMware cloud provider partner, community VCP P is the inside term for it. >>There are thousands of VMware partners that deliver VMware cloud software on top of infrastructure, all around the globe. If you take that VCP P community as an entity, you can argue that it is the third or fourth largest cloud on earth. If you look at that as a core value proposition and you look at Broadcom, acquiring VMware, assuming everything goes through it, isn't just vSphere. That is exciting to Broadcom, or it shouldn't be at least because you have the entire cloud stack when you look at it from that perspective. And I think they were trying to get some of that across today. >>So they address the Broadcom acquisition obviously is the elephant in the room. It was right. Impossible. >>Well, well, they have OC 10 stand up in wave. OC >>Tanon stood up. Did, did a wave, just >>Crowd because he can't say anything. And you know, I've got European approval still pending, right. You know, all sorts of stuff. But >>What we are, what we heard today from, I'll say the partner ecosystem, we talked with NetApp, we talked with pure storage. We talked with Phoenix, snap, others. I I'd have to look through my notes. Everyone's actually quite positive. Yeah. On the acquisition and what it can mean for the future of VMware. Did you hear the same? >>Yes, absolutely. And I think partially that's because the partners that we talk to are really close to the core of VMware's value proposition. That's never going to go away. So if you're talking about NetApp and AWS partnering with VMware to deliver NetApp storage services into that environment, that's core VMware proposition, it's nowhere near the bleeding edge of what, of, what, of what VMware has been doing. So they're going to be bullish. The other thing that's interesting from some of the partners that we've talked to, if you had asked us five or 10 years ago, would those partners be successful today? We might have predicted that they'd all be gone, right? NetApp what's gonna happen. Well, all storage is going to cloud. Guess what NetApp's doing? Pretty darn well with its partner, with its cloud partnerships and card and, and cloud strategy, VMware old school virtualization on premises. Ah, what are they gonna do? I'll tell you. I was skeptical when pat Gelsinger first pursued the VMC strategy with AWS. Hey, it's worked out pretty well and now they have the same capabilities everywhere. So I think that it's, it's interesting to see how solidly positioned some traditional good old fashioned blue gene technologies are how well positioned they are in this era of cloud and how VMware is such a, such a core part of that. So of course they're happy. Yeah. >>Yeah. We talked, we had AWS, NetApp and VMware on, on set for a segment and talked about, and you and I were talking about that segment before it went live. Just the power of look what AWS is doing, how you know, how, how many years ago, 10 years ago would they have been, I'm not gonna partner with NetApp and VMware and now look, it's a core to their business unit. >>Yeah, no, they wouldn't have acknowledged it. They, in fact, there was a time when AWS thought that they could maintain their stratospheric rise at the level they needed to while just letting all legacy existing stuff, just sort of fade away, you know, they'll just do it on the backs of everything new. They ran headlong into something. We call stickiness specifically around the area. VMware, they found that application environments for a variety of really good reasons belong in this context. And it's hard to rip them out by the roots. It's, you know, AWS might have told you five or 10 years ago. Well, if people don't move to cloud immediately, it's because of one reason they're stupid. The reality is there are a lot of really good reasons to maintain that VMware context. They embrace that with VMC. And now I think the it's really interesting. The NetApp announcement is another indication that the world of hyperscale cloud sees VMware as something that is part of the future. That is a very, very long tail. That very, very long tail is clearly what Broadcom is interested in. They don't see this as a flash in the pan. Let's make revenue really quickly. This is about a long ti a long time of future long future >>Long future. Well, VMware's coming off solid quarter earnings that just announced speeding estimates growing the top line by up to 6%. So there's, there's momentum that they're bringing with them into this acquisition. >>Yeah, definitely momentum big argument over what the strategy might be moving forward in terms of growth versus efficiency. I think that virtualization that includes the traditional VM with a resident full blown OS is definitely something that is behind us, but that we're carrying forward for good reason. The transition in, from a VMware perspective into the world of Zu critically important, it's critically important that they get that right as they move forward. So that net new cloud native applications could be, can be created in the VMware context that way. So it's, it's really gonna be interesting to watch over the next couple of years, the direction that this goes, but, but it's easy to get immersed in the Kool-Aid when you're at an event like this, I try to be as skeptical as possible. And I'm actually feeling pretty, I'm feeling better about VMware's future than I did before I arrived today. So that's >>Interesting. Yeah. >>Yeah, no question about it. I think, I mean, there, there, there is such a large core that I think it's gonna take it into the future a long way. >>Well, they definitely have a lot of tailwind behind them. The, the one thing that I, that we didn't get to do today was talk to any customers. We will get to do that tomorrow. When I always love hearing from the voice of the customer, we heard voice of the customer stories from the vendors, from VMware, from NetApp, from >>Little skewed, eat a little skewed. Exactly. They're all happy. All the customers are happy >>They're and very >>Successful and very successful. >>But tomorrow we get to actually rack open and talk with some VMware customers, obviously, right. Customers in the ecosystem as well. And I want to hear from them what their thoughts are on the acquisition. Yeah. >>We know they're, they're not bringing their disgruntled customers. Right. You know, this is my, this is my ex-wife's my, my ex-mother-in-law. And she's here to tell you that she didn't have a good experience. Yeah, no, that's not >>Gonna happen. We're gonna hear good stories tomorrow, but it's always nice to, to hear the stories from the customers themselves. Yeah. I always like doing that. >>No, it's always, it is informative. It's all, it's interesting from the perspective that you, you hone in on what they care about, because even if they have sort of an idea of, of, of the message that they want to get across in terms of what they're doing, still build default to that core of what they really care about. And that's interesting because what the customers really care about is part of that core. And as VMware becomes part of Broadcom, potentially, it's gonna be all about those things that are important, that you know, that customers find important. >>And that's exactly what it should be about. You know, of course we, every conversation that we had today, probably every conversation was inclusive of customer outcomes. What outcomes are you helping businesses achieve regardless of industry, especially as we're hopefully coming out of the pandemic, still in a, in a dynamic, remote hybrid work environment, but it's all about enabling businesses to, to achieve their goals. So I always wanna understand from, from VMware's perspective or AWS or NetApp procure, what are the goals that your customers are coming to you with and who are you having those conversations with? We also heard today a number of probably almost everyone that during the pandemic, the conversations are going up the stack. And maybe they've been talking with the director of it. Now it's the VP of engineering. Maybe it's the CFO. Yep. We're seeing much more strategic initiatives and focus here as customers in every industry have to pivot and have gotta get to the cloud. >>Yeah. I think that's why we work together. Well, Lisa, because you have the virtual leash and you can yank me back from diving into the technical stuff because, because I just, I, I get a pit in my stomach when someone says, oh, technology doesn't matter. It's all about outcomes. Yeah, yeah, yeah. Okay. Try doing this on technology that doesn't work. Your outcomes are gonna suck both Arely but no, no, no, they are. I know. And, and, and, and it's important that we focus on those things cuz that's what customers really care about. They do, they really care about the business outcomes >>They do. And, and on the cube, we care about those as well. And we wanna get that message across. >>I wish they would care more about speeds and feeds though. It's super interesting. It's like horsepower and torque and it's all >>He does. He gets really excited about that. But the good thing is tomorrow we have more opportunities. Yes. Got a great guest line up tomorrow. Dave and I are gonna be talking to them from right here on this set. So we encourage you to come check in for day two of our coverage of VMware Explorer live from San Francisco. We hope you have a great rest of your day and we'll see you tomorrow.

>> From the Cube studios in Palo Alto and Boston, bringing you data driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> While the precise direction of VMware's future is unknown, given the plan Broadcom acquisition, one thing is clear. The topic of what Broadcom plans will not be the main focus of the agenda at the upcoming VMware Explore event next week in San Francisco. We believe that despite any uncertainty, VMware will lay out for its customers what it sees as its future. And that future is multi-cloud or cross-cloud services, what we call Supercloud. Hello, and welcome to this week's Wikibon Cube Insights powered by ETR. In this breaking analysis, we drill into the latest survey data on VMware from ETR. And we'll share with you the next iteration of the Supercloud definition based on feedback from dozens of contributors. And we'll give you our take on what to expect next week at VMware Explorer 2022. Well, VMware is maturing. You can see it in the numbers. VMware had a solid quarter just this week, which was announced beating earnings and growing the top line by 6%. But it's clear from its financials and the ETR data that we're showing here that VMware's Halcion glory days are behind it. This chart shows the spending profile from ETR's July survey of nearly 1500 IT buyers and CIOs. The survey included 722 VMware customers with the green bars showing elevated spending momentum, ie: growth, either new or growing at more than 6%. And the red bars show lower spending, either down 6% or worse or defections. The gray bars, that's the flat spending crowd, and it really tells a story. Look, nobody's throwing away their VMware platforms. They're just not investing as rapidly as in previous years. The blue line shows net score or spending momentum and subtracts the reds from the greens. The yellow line shows market penetration or pervasiveness in the survey. So the data is pretty clear. It's steady, but it's not remarkable. Now, the timing of the acquisition, quite rightly, is quite good, I would say. Now, this next chart shows the net score and pervasiveness juxtaposed on an XY graph and breaks down the VMware portfolio in those dimensions, the product portfolio. And you can see the dominance of respondents citing VMware as the platform. They might not know exactly which services they use, but they just respond VMware. That's on the X axis. You can see it way to the right. And the spending momentum or the net score is on the Y axis. That red dotted line at 4%, that indicates elevated levels and only VMware cloud on AWS is above that line. Notably, Tanzu has jumped up significantly from previous quarters, with the rest of the portfolio showing steady, as you would expect from a maturing platform. Only carbon black is hovering in the red zone, kind of ironic given the name. We believe that VMware is going to be a major player in cross cloud services, what we refer to as Supercloud. For months, we've been refining the concept and the definition. At Supercloud '22, we had discussions with more than 30 technology and business experts, and we've gathered input from many more. Based on that feedback, here's the definition we've landed on. It's somewhat refined from our earlier definition that we published a couple weeks ago. Supercloud is an emerging computing architecture that comprises a set of services abstracted from the underlying primitives of hyperscale clouds, e.g. compute, storage, networking, security, and other native resources, to create a global system spanning more than one cloud. Supercloud is three essential properties, three deployment models, and three service models. So what are those essential elements, those properties? We've simplified the picture from our last report. We show them here. I'll review them briefly. We're not going to go super in depth here because we've covered this topic a lot. But supercloud, it runs on more than one cloud. It creates that common or identical experience across clouds. It contains a necessary capability that we call a superPaaS that acts as a cloud interpreter, and it has metadata intelligence to optimize for a specific purpose. We'll publish this definition in detail. So again, we're not going to spend a ton of time here today. Now, we've identified three deployment models for Supercloud. The first is a single instantiation, where a control plane runs on one cloud but supports interactions with multiple other clouds. An example we use is Kubernetes cluster management service that runs on one cloud but can deploy and manage clusters on other clouds. The second model is a multi-cloud, multi-region instantiation where a full stack of services is instantiated on multiple clouds and multiple cloud regions with a common interface across them. We've used cohesity as one example of this. And then a single global instance that spans multiple cloud providers. That's our snowflake example. Again, we'll publish this in detail. So we're not going to spend a ton of time here today. Finally, the service models. The feedback we've had is IaaS, PaaS, and SaaS work fine to describe the service models for Supercloud. NetApp's Cloud Volume is a good example in IaaS. VMware cloud foundation and what we expect at VMware Explore is a good PaaS example. And SAP HANA Cloud is a good example of SaaS running as a Supercloud service. That's the SAP HANA multi-cloud. So what is it that we expect from VMware Explore 2022? Well, along with what will be an exciting and speculation filled gathering of the VMware community at the Moscone Center, we believe VMware will lay out its future architectural direction. And we expect it will fit the Supercloud definition that we just described. We think VMware will show its hand on a set of cross-cloud services and will promise a common experience for users and developers alike. As we talked about at Supercloud '22, VMware kind of wants to have its cake, eat it too, and lose weight. And by that, we mean that it will not only abstract the underlying primitives of each of the individual clouds, but if developers want access to them, they will allow that and actually facilitate that. Now, we don't expect VMware to use the term Supercloud, but it will be a cross-cloud multi-cloud services model that they put forth, we think, at VMworld Explore. With IaaS comprising compute, storage, and networking, a very strong emphasis, we believe, on security, of course, a governance and a comprehensive set of data protection services. Now, very importantly, we believe Tanzu will play a leading role in any announcements this coming week, as a purpose-built PaaS layer, specifically designed to create a common experience for cross clouds for data and application services. This, we believe, will be VMware's most significant offering to date in cross-cloud services. And it will position VMware to be a leader in what we call Supercloud. Now, while it remains to be seen what Broadcom exactly intends to do with VMware, we've speculated, others have speculated. We think this Supercloud is a substantial market opportunity generally and for VMware specifically. Look, if you don't own a public cloud, and very few companies do, in the tech business, we believe you better be supporting the build out of superclouds or building a supercloud yourself on top of hyperscale infrastructure. And we believe that as cloud matures, hyperscalers will increasingly I cross cloud services as an opportunity. We asked David Floyer to take a stab at a market model for super cloud. He's really good at these types of things. What he did is he took the known players in cloud and estimated their IaaS and PaaS cloud services, their total revenue, and then took a percentage. So this is super set of just the public cloud and the hyperscalers. And then what he did is he took a percentage to fit the Supercloud definition, as we just shared above. He then added another 20% on top to cover the long tail of Other. Other over time is most likely going to grow to let's say 30%. That's kind of how these markets work. Okay, so this is obviously an estimate, but it's an informed estimate by an individual who has done this many, many times and is pretty well respected in these types of forecasts, these long term forecasts. Now, by the definition we just shared, Supercloud revenue was estimated at about $3 billion in 2022 worldwide, growing to nearly $80 billion by 2030. Now remember, there's not one Supercloud market. It comprises a bunch of purpose-built superclouds that solve a specific problem. But the common attribute is it's built on top of hyperscale infrastructure. So overall, cloud services, including Supercloud, peak by the end of the decade. But Supercloud continues to grow and will take a higher percentage of the cloud market. The reasoning here is that the market will change and compute, will increasingly become distributed and embedded into edge devices, such as automobiles and robots and factory equipment, et cetera, and not necessarily be a discreet... I mean, it still will be, of course, but it's not going to be as much of a discrete component that is consumed via services like EZ2, that will mature. And this will be a key shift to watch in spending dynamics and really importantly, computing economics, the things we've talked about around arm and edge and AI inferencing and new low cost computing architectures at the edge. We're talking not the near edge, like, Lowes and Home Depot, we're talking far edge and embedded devices. Now, whether this becomes a seamless part of Supercloud remains to be seen. Look, if that's how we see it, the current and the future state of Supercloud, and we're committed to keeping the discussion going with an inclusive model that gathers input from all parts of the industry. Okay, that's it for today. Thanks to Alex Morrison, who's on production, and he also manages the podcast. Ken Schiffman, as well, is on production in our Boston office. Kristin Martin and Cheryl Knight, they help us get the word out on social media and in our newsletters. And Rob Hoffe is our editor in chief over at Silicon Angle and does some helpful editing. Thank you, all. Remember these episodes, they're all available as podcasts, wherever you listen. All you got to do is search Breaking Analysis Podcast. I publish each week on wikibon.com and siliconangle.com. You can email me directly at david.vellante@siliconangle.com or DM me @Dvellante or comment on our LinkedIn posts. Please do check out etr.ai. They've got some great enterprise survey research. So please go there and poke around, And if you need any assistance, let them know. This is Dave Vellante for the Cube Insights powered by ETR. Thanks for watching, and we'll see you next time on Breaking Analysis. (lively music)

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

>>The cube presents HPE discover 2022 brought to you by HPE. >>Okay. We're back to wrap up HPE discover 2022. The Cube's continuous coverage is day three. John furrier, Dave ante. We had a business friend that we met during the pandemic. A really interesting gentleman, norm Ette. He's the director of global technical marketing at Hewlett Packard enterprise, a real innovator norm. Great to see you. Thanks for making time for coming on >>The cube, gentlemen. Thank you. Thank you. I appreciate that. You're giving me the opportunity to bring it home. Yeah. You know, if I'm only gonna get one shot at it, it might as well be >>The last we always, we always like to bring the energy in the last segment because you know, the cube, we grind it out for three days. I mean, it's just such a great content injection. And so we love to wrap it up, especially with someone like yourself who can really help us convey the themes, but even more so when we look around here this entire ecosystem, you and your team built this. And so take us through that. >>Well, we did, you know, and it takes a village. You know, we have the core team, HPE global technical marketing, uh, which is my team. And then of course we're partnered with other parts of the, our marketing organizations on different pieces, different aspects. And then we have a tremendous team of vendors that we work with on a regular basis. Companies such as, you know, F two B and ivory and others that, you know, really kind of pitch in. And they're, they're kind of my, I call 'em my flex force. You know, we also have another group called promote live and we bring all these people together. And, and in addition, all the vendors, we have something like 380 employees that come from all different parts of the organization to, to land in Las Vegas, to man, these booths and staff, these, uh, staff, these exhibits. >>And so for one week, we get to really work as a, as a, a team, as a family, you know, there's no organizational borders, so to speak, you know, you know, we're a big company, everybody has, you know, different objectives and different things that they're focused on, but we get a chance to all get together and work as one, one team. And so that, that the people aspect is what's so exciting, I think this week. And I think I even saw some of your broadcast earlier. So I think it kind of, it kind of came through as well. Just the joy of, of being together, you know? Sure. Human beings <laugh> >>And, and H HP's got a new spring and its step, which so much focus brought to the table from Antonio and, you know, the team is the lining. >>Yeah, we do. And that's, you know, when you go, when we start talking about the design and you know, one of the things that, you know, we work on this months ahead of time. Yeah. Right. And so it's kinda like a spinning top, you know, we, we, we keep, we, we keep spinning that thing tightening up and then this week you put it on the table and just let it go. Yeah. Right. But it's that whole multi-month process of, of, of twisting that top around and getting it going and right at the middle and right at the centerpiece. And, uh, the core design principle and an ask from, uh, Antonio is that we make sure that we major on HPE, uh, GreenLake edge to cloud platform that, you know, it, it's a, obviously you've been talking about it all week. Yeah. Uh, we've been talking about it all week. It's a big focus of our company. And so right at the very center, we have our HPE GreenLake edge to cloud platform demonstration, and then everything in the showcase then radiates from that centerpiece, uh, you know, right, right. At, right at the nexus of all the activities. So the experience starts there and propagates its >>Way. Well, I wanna get into some of the themes and the set pieces you have here. Um, you are in technical marketing and this platform is a tech play. So it's not so much just solutions that you're enabling the theme this year is very much technical marketing. So there's edge, especially cloud data and edge is the big themes security's baked in throughout the whole set, right as well. And that messaging, but it's technical marketing right now. We had, you know, platform play uett packer is a platform. Google packer enterprise is a >>Platform. It is, and it's a, it is a, it's a software platform. Um, you, it, it really completes a cloud strategy. And when you really think about it, I, again, I know some of these numbers have been floating around. Um, but, uh, you know, 70% of all data is still staying OnPrem for good reasons, you know, and then 30% of it can be out there in the public cloud. Uh, so what you kind of have is an incomplete cloud strategy, if you will. And what's happened is that organizations have gotten spoiled a little bit by the cloud experience. Mm-hmm <affirmative> right. That, you know, I, you know, your, your dev teams say go, Hey, I just, I wanna work in a Azure. I wanna work in AWS. I love how I go through this process. Why can't I do that with my on-prem stuff? Why, you know, why, you know, I want that kind of experience. So it organizations are really being challenged about how to create that, that kind of service and that experience to their customers because expectations are not because >>Data ha it has to be inclusive. It can't be exclusive to just one part of the organization. >>Yeah. And so how did you, how did that impact obviously, cause GreenLake was coming together, you know, you got the multiple months in advance planning for this big event, right. A lot of lot work goes into it. What was some of the impact to the execution of this event, um, that you can share in terms of the set pieces? Some of the displays was there was there, I won't say radical cause it's not radical. It looks, it turned out great. But what are some of the popular things happening here? What worked, what resonated with customers and what was different from, from, uh, that GreenLake enabled you to do differently? >>Well, I mean, first the first thing is that we, we kind of had a high touch experience at that center point, right. That nexus, the hub of the activity, the GreenLake edge to club platform, uh, demonstration. And it started with us just kind of, you know, having the strategy about first of all, if you sh, if you guys show this and I know, I think maybe you have, when you enter in, we've got like this big aha moment, right. And that aha moment is that platform right in the center, surrounded with wonderful visuals above, below, you know, behind, uh, all around it. But we, we, we had to think about, okay, now I'm staring at this thing. What am I, how am I gonna experience it? So, uh, when I say a high touch experience, we start with a, what I call a platform generalist that would greet you up front, engage in the conversation, you know, so realize that, you know, Dave is a network operations director, he's got some keen interests. >>He has some sort of peripheral idea about what the, uh, HPE GreenLake edge cloud platform is about, but what can it really do for him? You know, what can do, what can he use? How can he use it? So we start at that level of conversation, you know, socialize the core services, the attributes, you know, the, the technology that is actually enabling it. And then as we've identified in our conversation that you're a network geek, you know, and you want to understand, you've heard about Aruba, you know, how's Aruba central play into that. How do the networking services play into that? And so for then we take that, that, that big leap and go up two steps up onto the platform. And we go over to the network specialist, what I, what I'm calling a platform specialist, uh, who understands all the things about the platform, but then is peaked in networking. And we have that conversation and you see how the Aruba customer can benefit by this evolution, uh, and how the different platform services combine to give a holistic experience across a company. And so when I'm an it ops director, and I'm trying to service my network, guys, my storage guys, my compute guys, my external cloud services guys, that this is an environment that I can, so you >>Have an experience where they come in, they can easily move to a point quickly in the display, on the platform >>And it's tailored for them. Exactly. Right. Exactly. That's the exactly. Right. And so if I transition over to you, you know, and you're my, you know, you're my specialist, you know, you're not saying, Hey, Dave, what brings you here today? What are you today? <laugh>, you know, I, I mean, you're prequalified, it's a prequalified conversation. We jump into it. And then that specialist is armed with knowledge as to where, okay, this guy is really interested in switching technology and switches as well. Well, that's demo five 12. Mm-hmm <affirmative>, you know, let me have one of my colleagues take you over there. So then you're, you're escorted over to demo five 12 to go to the next level or perhaps, and this has happened throughout the week that people want to take a test drive of the environment. And so we have the HPE GreenLake living lab, and we have a, a test drive environment right there. >>And so we bring you right to that test drive, where you can, you know, kick the tires yourself, you fire up a live environment. We have a series of exercises that you're taken through. And, uh, I think I've just checked with one of my colleagues where like, well over, you know, well, over 1100 experiences of people doing that here. And that lab has 25 seats, but also externally. Yeah. So right off of hpe.com, that same test drive experience that we're doing here. People can launch at home. And so we got in this morning, there were like four guys logged in from New Zealand, you know, doing exercises, which is pretty neat. So, so when you ask me the question, what are the design considerations, uh, that HPE GreenLake that we baked in and thought through it's again, that, Hey, it's a, it's a big thing. Yeah. It's a big, it's an experience. Let's start with you just digesting the, you know, the comp basic concepts. Then let's talk about your persona and how it directly maps to what you can do. And then if you want to get deeper, you know, we have the solutions that we design behind it, solution demos, and, and if you wanna drive it, let you know, buckle up. Let's >>Go. Yeah, you get right to a spot, multiple monitors, great experience, high touch. Um, that's awesome. I gotta ask you another question. Cause you've been, you know, pre pandemic, you've been doing a lot of this technical marketing and events and then virtual hit right now. We're back face to face, right? It's clear, Dave and I were just talking about our, on our opening day, year on day. One, people love to see each other back. Every event we've been to face to face. People are energized to a level. We didn't even see. What are you seeing here in terms of performance? Obviously, you got sales people here, you got executives here, you got customers right. Face to face, right. >>Doing belly to belly, >>Belly to belly, as Dave says, that's a positive, what's it like, explain what it's like. >>Well, I mean, you don't, you never know what you got until it's gone, right? >>Yeah. >>You, and so people didn't really realize that, Hey, we really needed to have this kind of touch and this, this kind of activity. And it was funny because people be before the pandemic, there was also a push to do a lot of virtual stuff, you know, economies of scale. Yeah. You know, some of that stuff works. Teams are making decisions, but then it all goes away and people realize how valuable, you know, just the conversations were, you know, meeting >>Somebody, relationships, meeting >>Somebody for a coffee, you know, talking through different bumping into colleagues than that. You haven't seen for years, or you worked with somebody and now they're doing this. And then you realize you have some sort of synergy with each other and you know, you can still help each other. And just the, just, you know, just the discovery <laugh> of being at discover, you know, and running into these different types of things. So, uh, well >>You think about it norm, you know, we, we've done plenty of stuff virtually we have, but I think we've talked maybe four times this week. Yeah. You've seen you here walking around the hallways. We saw you last night, right? Yeah. You just, that just wouldn't happen in your little virtual >>World. Yeah. I mean, not at all. And during that virtual era, and I think we'll look back on that and we're still gonna do virtual stuff >>Course, and we're learning, >>It's got value, but I just want to thank you guys for just being the cube and the whole team, you know, Frank, everybody just tremendous partners through that because you can still look at that content that we produced together last year and it's still relevant. We're still sharing it. It still has impact. We, we point, you know, we tell people, Hey, here's call to action. You're leaving. Discover by the way, there's these three or four pieces out on the cube that really go with, go at this topic. >>Right. That GreenLake event we did last year was phenomenal. >>It was, it was, and it was a partnership with you guys. And I, I, you know, I, I speak on, on behalf of many of my colleagues here at HPE, we just wanna thank the cube for all the support, creativity, uh, and how we got through that >>All together. We we'll back at you because norm you were a real innovator when John and I first met you, we were like, Hey, this guy, actually, he's gonna, he's gonna push us to some new levels. Technical >>Marketing know >>That's our, our team marketing. Like our team was a little nervous, a lot nervous actually, because you know, you do, you are not only demanding, but you're super creative. Well, thank you. And so you, you helped us, you know, up, up our game. >>Yeah. Thanks a lot. Yeah. You know, Frank was getting, Hey, Frank, Dave, can you guys do this? You >>Know, so yeah, we were on the background. >>I mean, but we were, we were growing and surviving and thriving together and getting through it, but what's coming out. The other side now is a new format. You mentioned virtual. That's not going away. Hybrid is a steady state for all of us. Even the cube. Yeah. So the new protocols and the new standards are emerging. And I think the newness of it scares people also like how do you do it? Um, who, whose role is it to take the virtual and digital? So this whole new set of experiences still coming out. Yeah. What's your vision? How do you see this? Cause we're face to face clearly is what everyone wants from school kids to adults. Right. We want face to face. Right. How does digital fit in? >>Well, I mean, that's, that's a, that's a really tricky question. I'll give you a, a, I'll kind of back into the answer a little bit. Um, you guys can see this, right, right behind us. We had this whole backdrop here, greetings from the edge of virtual reality experience. Well, we built that. We built that during the COVID era, so we could have experiences with people remotely. Right. Uh, and we used it for our executive summit, you know, last year for the virtual discovery, we shipped those Oculus headsets to everybody. They, everybody jumped into it. And so I was sitting there being a host, you know, with four CTOs that were scattered all over the world. So we were in cyberspace together. Right. And so of course being good, uh, you know, good business people we realized, Hey, this is pretty fun. So let's dust it off and bring it out here for the more general public. >>So again, it was like a 200 person, you know, uh, executive level experience and all of that, but it had tremendous value, different types of experiences. I recommend you try it if you ever have the opportunity. Um, so that's a way that we start emerging virtual reality and digital experiences to try to keep that human connection, but now we're using it again. And everybody's in these little pod rooms, six of them together. So they're having this experience in cyberspace and they're having it physically. Yeah. And so I think some, and everyone's enjoying being together and still in cyber space together. So I think when we start to build assets and we start to look at different types of things and experiences, we gotta think, we, we gotta think through that now. Right. You know, how is this, how is this investment or this, this experience, how's it gonna translate, you know, outside of these four walls, right. And how can we use it outside of these four walls, uh, and create, you know, a more engaging experience. So that's a little bit of a backing into that answer, but I think I'm, I'm, >>It's emerging. It's >>Important. Well, I'm saying it more as an example of us thinking through and trying to leverage. Yeah. >>I love it though. I mean, you always, you've always been struck me as a visionary and I, I loved that answer and I can just see, it's just gonna progress by the end of the decade. This is gonna become right. Uh, a a, you know, a normal sort of practice, and we're gonna bring people in from the outside and interacting. I love what you were saying about, yeah. Even though we're here physically, we're actually creating a virtual world within this physical pod. We are. Where can people discover more about that? About, about, about the shows, the content that >>Was here? Well on hpe.com, you can just launch into discover. We have a tremendous amount of content that's been recorded, keynote sponsor sessions, the cube they're dialed in all kinds of different pieces of assets that we've done. Um, I'll plug just another couple of things just to, again, to talk about the connectivity of things that we're doing. So one of the projects that I lead, uh, I am very proud to lead is HPE space born and our space born computer space, born computer two, flying a most powerful machine, uh, computer to ever fly in space. Uh, we've been up there for a year. We've done 24 different experiments over the year to, for the benefit of the entire scientific community. Um, also, you know, doing things for the ISS national lab in NASA, our partners up there, but what we've got is we've built a scale replica of the Columbus module, right? So this is, you know, this is a 28 by 12 foot module. Hey, we're bringing her home seriously. >>They're gonna pull the plugs. They're gonna pull the >>Plug on me soon. Right. So anyway, so we have that module built, right? And this is, uh, we work with a Hollywood production company. We've had it before, but you know, we we've customized it. We have a live link to the ISS station in there. And, and so we're talking about everything that we're doing there, but also in this virtual reality experience, we have you going on a space walk, right. And so we've, we've captured that as well. So we've, we're tying this physical and virtual experience together. Uh, and, uh, so it's a fun project. So you can check that >>Out. We did exit scale together during the pandemic, and that's when I first really got into to space point. It was awesome to see frontier announced actually breaking through the exo scale barrier. We, we were on the cusp, but we, we now see it breaking through. So, yeah. Congratulations on that. Thank you >>Very much. And, you know, a couple, you know, just couple other things that we're doing, that's pretty exciting. I don't, I don't wanna give away all my tricks, uh, but you know, we've organized our demonstrations through the customer lenses. So we have these customer journeys that we see people that are using our technology, you know, so I'm, I'm not talking about the storage business unit or, you know, the networking business unit, but how are our customers really trying to, you know, advance AI and machine learning, for example, how are they actually trying to, you know, protect their data? You know, the different things, the business issues, the business issues. Yeah. And so we've organized our demos through that, and we have these, these pods and then satellites, and you, you, you give you walk through that whole thing and it's addressing different aspects of that. >>Um, and then another thing that we've done is we have tours here, uh, as well, where, cuz there's so much content that people can take tours and you know, 1400 people have taken those tours. Uh, you know, and these are guided tours, headsets, curated, big numbers, designated places to go. And we see big traffic the first day or so and by design. And so we hit the highlights and then they decide how to use their valuable time later in the showcase about what they want to deep dive on. And so that's been a tremendous success for >>Us. Well norm thanks for bringing us on the tour of discover. Yeah. Well and really, you know, sharing that with our audience and you've been an awesome partner. And as you say, a great innovator, hope I can't wait to see what's next. All right. >>You so much. Hey, thanks for letting me on here guys. Welcome to our pleasure. I'm somebody I made. You're a Cub >>Alumni alumni. You're alumni. Welcome to alumni. So >>Guys great. Our week. That's a wrap on on day three, uh, Dave Valant day, John furrier for Lisa Martin. Don't forget to go to Silicon angle.com where we've got all the news, all the interviews that we've done this week, get written up and posted on Silicon angle.com. The cube.net I publish every week. Uh, my breaking analysis on, on, on wikibon.com. It's on a podcast. So check that out. Thanks to everybody. Thanks for the crew. Everybody back at the office. Really appreciate it. Great job. And we'll see you next time. All right.

>>The cube presents HPE discover 2022 brought to you by HPE. >>Welcome back to the Cube's coverage. We're wrapping up day two, John furrier and Dave ante. We got some friends and colleagues, longtime friends, Crawford Del Pret is the president of IDC. Matt Eastwood is the senior vice president of infrastructure and cloud guys. Thanks for coming on spending time. Great to you guys. >>That's fun to do it. Awesome. >>Cravin I want to ask you, I, I think this correct me if I'm wrong, but this was your first physical directions as, as president. Is that true or did you do one in 2019? >>Uh, no, we did one in 20. We did, we did one in 20. I was president at the time and then, and then everything started, >>Well, how was directions this year? You must have been stoked to get back together. Yeah, >>It was great. I mean, it was actually pretty emotional, you know, it's, it's a community, right? I mean, we have a lot of customers that have been coming to that event for a long, long time and to stand up on the stage and look out and see people, you know, getting a little bit emotional and a lot of hugs and a lot of bringing people together. And this year in Boston, we were the first event really of any size that kind of came back. And when I kind of didn't see that coming in terms of how people, how ready people were to be together. Cause >>When did you did it April >>In Boston? Yeah, we did it March in March. Yeah, it was, it was, it was, it was a game day decision. I mean, we were, we had negotiated it, we were going back and forth and then I kind of made the call at the last minute, say, let's go and do it. And in Santa Clara, I felt like we were kind of opening up the crypt at the convention center. I mean, all the production people said, you know what? You guys were really the first event to be back. And attendance was really strong. You know, we, we, we got over a thousand. It was, it was really good. >>Good. It's always a fun when I was there. It was, it's a big deal. You guys prepare for it. Yeah. Some new faces up on the stage. Yeah. So, so Matt, um, you've been doing the circuit. I take it like, like all top analysts, super busy. Right. This is kind of end of the spring. I mean, I know it's summer, right. That's right. But, um, how do you look at, at discover relative some, some of the other events you've been at? >>So I think if you go back to what Crawford was just talking about our event in March, I mean, March was sort of the, the reopening and there was, I think people just felt so happy to be, to be back out there. You still get a little bit at, at these events. I mean, cuz for each, each company it's their first time back at it, but I think we're starting to get down what these events are gonna feel like going forward. Um, and it, I mean, there's good energy here. There's been a good attendance. I think the, the interest in getting back live and having face to face meetings is clearly strong. >>Yeah. I mean, this definitely shows that hybrids, the steady state, both events cloud. Yeah. Virtualization remotes. So what are you guys seeing with that hybrid mode? Just from a workforce, certainly people excited to get back together, but it's gonna continue. You're starting to see that digital piece. How is that impacting some of the, some of the customers you're tracking, who's winning and who's losing, coming out of the pandemic. What's the big picture look like? >>Yeah. I mean, if you, if you take a look at hybrid work, um, people are testing many, many, many different models. And I think as we move from a pandemic to an em, we're gonna have just waves and waves and waves of people needing that flexibility for a lot of different reasons, whether they have, uh, you know, preexisting conditions, whether they're just not comfortable, whether they have people who can't be vaccinated at home. So I think we're gonna be in this hybrid work for a long, long time. I do think though that we are gonna transition back into some kind of a normal, um, and I, and I think the big difference is that I think leaders back in the day, a long time ago, when people weren't coming into work, it was kind of like, oh, I know nothing's going on there. People aren't getting worked. And I think we're over that stage. Yeah. I think we're now into a stage where we know people can be productive. We know people can effectively work from home and now we're into the reason to be in the office. And the reason to be in the office is that collaboration, it's that mentoring it's that, you know, think about your 25 year old self. Do you wanna be staring at a windshield all day long and not kind of building those relationships? People want face to face, it's difficult. They want face >>To face and I would, and you guys had a great culture and it's a young culture. How are you handling it as an executive in terms of, is there a policy for hybrid or >>Yeah, so, so, so at IDC, what we did is we're in a pilot period and we've kind of said that the summertime is gonna be a pilot period and we've asked people, we're actually serving shocker, we're >>Serving, >>But we're, but we're, but, but we're actually asking people to work with their manager on what works for them. And then we'll come up with, you know, whether you are in, out of the office worker, which will be less than two days a hybrid worker, which will be three days or, uh, in, in the office, which is more than three days a week. And you know, we all know there's, there's, there's limitation, there's, there's, there's variability in that, but that's kind of what we're shooting for. And we'd like to be able to have that in place in the fall. >>Are you pretty much there? >>Yeah, I am. I, I am there three days a week. I I, Mondays and Fridays, unless, >>Because you got the CEO radius, right? Yeah. >><laugh>, <laugh> >>The same way I'm in the office, the smaller, smaller office. But so, uh, let's talk a little bit about the, the numbers we were chatting earlier, trying to squint through you guys are, you know, obviously the gold standard for what the market does, what happened in, you know, during the pandemic, what happened in 2021 and what do you expect to happen in, in 2022 in terms of it spending growth? >>Yeah. So this is, this is a crazy time, right? We've never seen this. You and I have a long history of, uh, of tracking this. So we saw in, in, in, in 2020, the market decelerated dramatically, um, the GDP went down to a negative like it always does in these cases, it was, you know, probably negative six in that, in that, in that kind of range for the first time, since I've been tracking it, which goes back over 30 years, tech didn't go negative tech went to about just under 3%. And then as we went to 2021, we saw, you know, everything kind of snap back, we saw tech go up to about 11% growth. And then of course we saw, you know, GDP come back to about a 4%, you know, ki kind of range growth. Now what's I think the story there is that companies and you saw this anecdotally everywhere companies leaned into tech, uh, company. >>You know, I think, you know, Matt, you have a great statistic that, you know, 80% of companies used COVID as their point to pivot into digital transformation, right. And to invest in a different way. And so what we saw now is that tech is now where I think companies need to focus. They need to invest in tech. They need to make people more productive with tech and it played out in the numbers now. So this year what's fascinating is we're looking at two Fastly different markets. We've got gasoline at $7 a gallon. We've got that affecting food prices. Uh, interesting fun fact recently it now costs over $1,000 to fill an 18 Wheeler. All right. Based on, I mean this just kind of can't continue. So you think about it, don't put the boat >>In the wall. Yeah. Yeah. >>Good, good, good, good luck. It's good. Yeah, exactly. <laugh> so a family has kind of this bag of money, right? And that bag of money goes up by maybe three, 4% every year, depending upon earnings. So that is sort of sloshing around. So if food and fuel and rent is taking up more gadgets and consumer tech are not, you know, you're gonna use that iPhone a little longer. You're gonna use that Android phone a little longer. You're gonna use that TV a little longer. So consumer tech is getting crushed, you know, really it's very, very, and you saw it immediately and ad spending, you've seen it in meta. You've seen it in Facebook. Consumer tech is doing very, very it's tough enterprise tech. We haven't been in the office for two and a half years. We haven't upgraded whether that be campus wifi, whether that be, uh, servers, whether that be, uh, commercial PCs, as much as we would have. So enterprise tech, we're seeing double digit order rates. We're seeing strong, strong demand. Um, we have combined that with a component shortage and you're seeing some enterprise companies with a quarter of backlog. I mean, that's, you know, really unheard at higher >>Prices, which >>Also, and therefore that drives that >>Drives. It shouldn't be that way. If there's a shortage of chips, it shouldn't be that way, >>But it is, but it is, but it is. And then you look at software and we saw this, you know, we've seen this in previous cycles, but we really saw it in the COVID downturn where, uh, in software, the stickiness of SaaS means that you just, you're not gonna take that stuff out. So the, the second half of last year we saw double digit rates in software surprise. We're seeing high single digit revenue growth in software now, so that we think is gonna sustain, which means that overall it demand. We expect to be between five and 6% this year. Okay, fine. We have a war going on. We have, you know, potentially, uh, a recession. We think if we do, it'll be with a lower case, R maybe you see a banded down to maybe 4% growth, but it's gonna grow this. >>Is it, is it both the structural change of the disruption of COVID plus the digital transformation yeah. Together? Or is it, >>I, I think you make a great point. Um, I, I, I think that we are entering a new era for tech. I think that, you know, Andrew's famous wall street journal oped 10 years ago, software is even world was absolutely correct. And now we're finding that software is, is eing into every nook and cranny people have to invest. They, they know disruptors are coming around every single corner. And if I'm not leaning into digital transformation, I'm dead. So >>The number of players in tech is, is growing, >>Cuz there's well, the number of players in tech number >>Industry's coming >>In. Yeah. The industry's coming in. So I think the interesting dynamic you're gonna see there is now we have high interest rates. Yeah. Which means that the price of funding these companies and buying them and putting data on is gonna get higher and higher, which means that I think you could, you could see another wave of consolidation. Mm-hmm <affirmative> because tech large install based tech companies are saying, oh, you know what? I like that now >>4 0 9 S are being reset too. That's another point. >>Yeah. I mean, so if you think about this, this transformation, right. So it's all about apps, absent data and differentiating and absent data. What the, the big winner the last couple years was cloud. And I would just say that if this is the first potential recession that we're talking about, where the cloud service providers. So I think a cloud as an operating model, not necessarily a destination, but for these cloud service providers, they've actually never experienced a slowdown. So how, and, and if you think about the numbers, 30% of, of the typical it budget is now quote, unquote cloud and 30% of all expenditures are it related. So there's a lot of exposure there. And I think you're gonna see a lot of, a lot of focus on how we can rationalize some of those investments. >>Well, that's a great point. I want to just double click on that. So yeah, the cloud did well during the pandemic. We saw that with SAS, have you guys tracked like the Tams of what got pulled forward? So the bit, a big discussion about something that pulled forward because of the pandemic, um, like zoom, for instance, obviously everyone's using zoom. Yeah, yeah, yeah. Was there fake Tams? There was one, uh, couple analysts who were pointing out that some companies were hot during the pandemic will go away that that Tam doesn't really exist, but there's some that got pulled forward early. That's where the growth is. So is there a, is there a line between the, I call fake Tam or pulled forward TA that was only for the pandemic situationally, um, devices might be like virtual event, virtual event. Software was one, I know Hoppin got laid a lot of layoffs. And so that was kind of gone coming, coming and going. And you got SAS which got pulled forward. Yep. And it's not going away, but it's >>Sustaining. Yeah. Yeah. But it's, but, but it's sustaining, um, you know, I definitely think there was a, there was a lot of spending that absolutely got pulled forward. And I think it's really about CEO's ability to control expectations and to kind of message what it, what it looks like. Um, you know, I think I look, I, I, I think virtual event platforms probably have a role. I think you can, you can definitely, you know, raise your margins in the event, business, significantly using those platforms. There's a role for them. But if you were out there thinking that this thing was gonna continue, then you know, that that was unrealistic, you know, Dave, to, to your point on devices, I'm not necessarily, you know. Sure. I think, I think we definitely got ahead of our expectations and things like consumer PCs, those things will go back to historical growth >>Rates. Yeah. I mean, you got the install base is pretty young right now, but I think the one way to look at it too, is there was some technical debt brought in because people didn't necessarily expect that we'd be moving to a permanent hybrid state two years ago. So now we have to actually invest on both. We have to make, create a little bit more permanency around the hybrid world. And then also like Crawford's talking about the permanency of, of having an office and having people work in, in multiple modes. Yeah. It actually requires investment in both the office. And >>Also, so you're saying operationally, you gotta run the company and do the digital transformation to level up the hybrid. >>Yeah. Yeah. Just the way people work. Right. So, so, you know, you basically have to, I mean, even for like us internally, Crawford was saying, we're experimenting with what works for us. My team before the pandemic was like one third virtual. Now it's two third virtual, which means that all of our internal meetings are gonna be on, on teams or zoom. Right. Yeah. They're not gonna necessarily be, Hey, just coming to the office today, cuz two thirds of people aren't in the Boston area. >>Right. Matt, you said if you see cloud as an operating model, not necessarily a place. I remember when you were out, I was in the, on the, on the, on the zoom when, when first met Adam Celski yeah. Um, he said, you were asking him about, you know, the, the on-prem guys and he's like, nah, it's not cloud. And he kind of was very dismissive of it. Yeah. Yeah. I wanna get your take on, you know, what we're seeing with as Azure service GreenLake, apex, Cisco's got their version. IBM. Fewer is doing it. Is that cloud. >>I think if it's, I, I don't think all of it is by default. I think it is. If I actually think what HPE is doing is cloud, because it's really about how you present the services and how you allow customers to engage with the platform. So they're actually creating a cloud model. I think a lot of people get lost in the transition from, you know, CapEx to OPEX and the financing element of this. But the reality is what HPE is doing and they're sort of setting the standard. I think for the industry here is actually setting up what I would consider a cloud model. >>Well, in the early days of, of GreenLake, for sure it was more of a financial, you >>Know, it was kind of bespoke, right. But now you've got 70 services. And so you can, you can build that out. But >>You know, we were talking to Keith Townsend right after the keynote and we were sort of UN unpacking it a little bit. And I, I asked the question, you know, if you, if you had to pin this in terms of AWS's maturity, where are we? And the consensus was 2014 console filling, is that fair or unfair? >>Oh, that's a good question. I mean, um, I think it's, well, clouds come a long way, right? So it'd be, I, I, I think 20, fourteen's probably a little bit too far back because >>You have more modern tools I Kubernetes is. Yeah. >>And, but you also have, I would say the market still getting to a point of, of, of readiness and in terms of buying this way. So if you think about the HP's kind of strategy around edge, the core platform as a, as a service, you know, we're all big believers in edge and the apps follow the data and the data's being created in new locations and you gotta put the infrastructure there. And for an end user, there's a lot of risk there because they don't know how to actually plan for capacity at the edge. So they're gonna look to offload that, but this is a long term play to actually, uh, build out and deploy at the edge. It's not gonna happen tomorrow. It's a five, 10 year play. >>Yeah. I mean, I like the operating model. I'd agree with you, Matt, that if it's, if it's cloud operations, DevSecOps and all that, all that jazz it's cloud it's cloud operating and, and, and public cloud is a public cloud hyperscaler on premise. And the storage folks were presented. That's a single pane of glass. That's old school concepts, but cloud based. Yep. Shipping hardwares, auto figures. Yeah. That's the kind of consumption they're going for now. I like it. Then I, then they got the partner led thing is the partner piece. How do you guys see that? Because if I'm a partner, there's two things, wait a minute, am I at bottleneck to the direct self-service? Or is that an enabler to get more cash, to make more money? If I'm a partner. Cause you see what Essentia's doing with what they do with Amazon and Deloitte and et C. Yeah. You know, it's interesting, right? Like they've a channel partner, I'm making more cash. >>Yeah. I mean, well, and those channel partners are all in transition too. They're trying to yeah. Right. Figure out. Right, right. Are they, you know, what are their managed services gonna look like? You know, what kind of applications are they gonna stand up? They're they're not gonna just be >>Reselling, bought a big house in a boat. The box is not selling. I wanna ask you guys about growth because you know, the big three cloud, big four growing pick a number, I dunno, 30, 35% revenue big. And like you said, it's 30% of the business now. I think Dell's growing double digits. I don't know how much of that is sustainable. A lot of that is PCs, but still strong growth. Yep. I think Cisco has promised 9% >>In, in that. Right, right. >>About that. Something like that. I think IBM Arvin is at 6%. Yep. And I think HPE has said, Hey, we're gonna do three to 4%. Right. Which is so really sort of lagging and which I think a lot of people in wall street is like, okay, well that's not necessarily so compelling. Right. What does HPE have to do to double that growth? Or even triple that growth. >>Yeah. So they're gonna need, so, so obviously you're right. I mean, being able to show growth is Tanem out to this company getting, you know, more attention, more heat from, from investors. I think that they're rightly pointing to the triple digit growth that they've seen on green lake. I think if you look at the trailing, you know, 12 month bookings, you got over, you know, 7 billion, which means that in a year, you're gonna have a significant portion of the company is as a service. And you're gonna see that revenue that's rat being, you know, recognized over a series of months. So I think that this is sort of the classic SAS trough that we've seen applied to an infrastructure company where you're basically have to kind of be in the desert for a long time. But if they can, I think the most important number for HPE right now is that GreenLake booking snow. >>And if you look at that number and you see that number, you know, rapidly come down, which it hasn't, I mean off a very large number, you're still in triple digits. They will ultimately start to show revenue growth, um, in the business. And I think the one thing people are missing about HPE is there aren't, there are a lot of companies that want to build a platform, but they're small and nobody cares. And nobody let's say they throw a party and nobody comes. HP has such a significant installed base that if they do build a platform, they can attract partners to that platform. What I mean by that is partners that deliver services on GreenLake that they're not delivering. They have the girth to really start to change an industry and change the way stuff is being built. And that's the be they're making. And frankly, they are showing progress in that direction. >>So I buy that. But the one thing that concerns me is they kind of hide the ball on services. Right. And I, and I worry about that is like, is this a services kind of just, you know, same wine, new bottle or, >>Or, yeah. So, so I, I, I would argue that it's not about hiding the ball. It's about eliminating confusion of the marketplace. This is the company that bought EDS only to spin it off <laugh>. Okay. And so you don't wanna have a situation where you're getting back into services. >>Yeah. They're the only one >>They're product, not the only ones who does, I mean, look at the way IBM used to count and still >>I get it. I get it. But I think it's, it's really about clarity of mission. Well, I point next they are in the Ts business, absolutely. Point of it. It's important prop >>Drive for them at the top. Right. The global 50 say there's still a lot of uniqueness in what they want to buy. So there's definitely a lot of bespoke kind of delivery. That's still happening there. The real promise here is when you get into the global 2000 and yeah. And can start them to getting them to consume very standardized offers. And then the margins are, are healthy >>And they got they're what? Below 30, 33, 30 3%. I think 34% last quarter gross margin. Yeah. That that's solid. Just compare that with Dell is, I don't know. They're happy with 20, 21% of correct. You get that, which is, you know, I I'll come back. Go ahead. I want, I wanna ask >>Guys. No, I wanna, I wanna just, he said one thing I like, which was, I think he nailed it. They have such, um, big install base. They have a great channel. They know how to use it. Right. That's a real asset. Yeah. And Microsoft, I remember when their stock was trading at 26 when Baltimore was CEO. Yep. What they did with no, they had office and windows, so a little bit different. Yep. But similar strategy, leverage our install base, bring something up to them. That's what you're kind of connecting the >>Absolutely. You have this velocity, uh, machine with a significant girth that you can now move to a new model. They move that to a new model. To Matt's point. They lead the industry, they change the way large swath the customers buy and you will see it in steady revenue growth over time. Okay. So I just in that, well, >>So your point is the focus and there the right it's the right focus. And I would agree what's >>What's the other move. What's their other move, >>The problem. Triple digit booking growth off a number that gets bigger >>Inspired. Okay. >>Whats what's the scoreboard. Okay. Now they're go at the growth. That's the scoreboard. What are the signals? Are you looking at on the scoreboard Crawford and Matt in terms of success? What are the benchmarks? Is it ecosystem growth, number of services, triple growth. Yeah. What's the, what are some of the metrics that you guys are gonna be watching and we should be watching? >>Yeah. I mean, I dunno if >>You wanna jump in, I mean, I think ecosystem's really critical. Yeah. You want to, you want to have well and, and you need to sell both ways like HPE needs to be selling their technology on other cloud providers and vice versa. You need to have the VMs of the world on, you know, offering services on your platform and, and kind of capturing some, some motion off that. I think that's pretty critical. The channel definitely. I mean, you have to help and what you're gonna see happen there is there will be channel partners that succeed in transforming and succeeding and there'll be a lot that go away and that some, some of that's, uh, generational there'll be people that just kind of age outta the system and, and just go home. >>Yeah. Yeah. So I would argue it's, it's, it's, it's gonna be, uh, bookings growth rate. It's gonna be retention rate of the, of, of, of the customers, uh, that they have. And then it's gonna be that, that, um, you know, ultimately you're gonna see revenue, um, growth, and which is that revenue growth is gonna have to be correlated to the booking's growth for green lake cross. >>What's the Achilles heel on, on HPE. If you had to do the SWAT, what's the, what's the w for HPE that they really need to pay >>Attention to. I mean, they, they need to continue their relentless focus on cost, particularly in the, in the core compute, you know, segment they need to be, they need to be able to be as cost effective as possible while the higher profit dollars associated with GreenLake and other services come in and then increase the overall operating margin and gross margin >>Picture for the, I mean, I think the biggest thing is they just have, they have to continue the motion that they've been on. Right. And they've been consistent about that. Mm-hmm, <affirmative> what you see where others have, have kind of slipped up is when you go to, to customers and you present the, the OPEX as a service and the traditional CapEx side by side, and the customers put in this position of trying to detangle what's in that OPEX service, you don't wanna do that obviously. And, and HP has not done that, but we've seen others kind of slip up. And, but >>A lot of companies still wanna buy CapEx. Right. Absolutely liquid. And, and I think, >>But you shouldn't do a, you shouldn't do that bake off by putting those two offers out. You should basically ascertain what they want to do. >>What's kind of what Dell does. Right. Hey, how, what do you want? We got this, we got >>This on one hand, we got this, the, we got that, right. Uh, the two hand sales rep, no, this CapEx. Thing's interesting. And if you're Amazon and Azure and, and GCP, what are they thinking right now? Cause remember what, four years ago outpost was launched, which essentially hardware. Yeah. This is cloud operating model. Yep. Yeah. They're essentially bringing outpost. This is what they got basically is Amazon and Azure, like, is this ABL on the radar for them? How would you, what, what are they thinking in your mind if we're on, if we're in their office, in their brain trust, are they laughing? Are they like saying, oh, they're scared. Is this real threat >>Opportunity? I, I, I mean, I wouldn't say they're laughing at all. I, I would say they're probably discounting a little bit and saying, okay, fine. You know, that's a strategy that a traditional hardware company is moving to. But I think if you look underneath the covers, you know, two years ago it was, you know, pretty basic stuff they were offering. But now when you start getting into some, you know, HPC is a service, you start getting into data fabric, you start getting into some of the more, um, sophisticated services that they're offering. And, and I think what's interesting about HP. What my, my take is that they're not gonna go after the 250 services the Amazon's offering, they're gonna basically have a portfolio of services that really focus on the core use cases of their infrastructure set. And, and I think one of the danger things, one, one of the, one of the red flags would be, if they start going way up the stack and wanting to offer the entire application stack, that would be like a big flashing warning sign, cuz it's not their sweet spot. It's not, not what they have. >>So machine learning, machine learning and quantum, okay. One you can argue might be up the stack machine learning quantum should be in their wheelhouse. >>I would argue machine learning is not up the stack because what they would focus on is inference. They'd focus on learning. If they came out and said, machine learning all the way up to the, you know, what a, what, what a drug discovery company needs to do. >>So they're bringing it down. >>Yeah. Yeah. Well, no, I think they're focusing on that middle layer, right? That, that, that data layer. And I think that helping companies manage their data make more sense outta their data structure, their data that's core to what they wanna do. >>I, I feel as though what they're doing now is table stakes. Honestly, I do. I do feel like, okay, Hey finally, you know, I say the same thing about apex, you >>Know, we finally got, >>It's like, okay guys, the >>Party. Great. Welcome to the, >>But the one thing I would just say about, about AWS and the other big clouds is whether they might be a little dismissive of what's truly gonna happen at the edge. I think the traditional OEMs that are transforming are really betting on that edge, being a huge play and a huge differentiator for them where the public cloud obviously have their own bets there. But I think they were pretty dismissive initially about how big that went. >>I don't, and I don't think anybody's really figured out the edge yet. >>Well, that's an, it's a battleground. That's what he's saying. I think you're >>Saying, but on the ecosystem, I wanna say up the stack, I think it's the ecosystem. That's gotta fill that out. You gotta see more governance tools and catalogs and AI tools and, and >>It immediately goes more, it goes more vertical when you go edge, you're gonna have different conversations and >>They're >>Lacking. Yeah. And they, but they're in there though. They're in the verticals. HP's in the, yeah, >>For sure. But they gotta build out an ego. Like you walk around here, the data, the number of data companies here. I mean, Starburst is here. I'm actually impressed that Starburst is here. Cause I think they're a forward thinking company. I wanna see that times a hundred. Right. I mean, that's >>You see HP's in all the verticals. That's I think the point here, >>So they should be able to attract that ecosystem and build that, that flywheel that's the, that's the hallmark of a cloud that marketplace. >>Yeah, it is. But I think there's a, again, I go back to, they really gotta stay focused on that infrastructure and data management. Yeah. >>But they'll be focused on that, but, but their ecosystem, >>Their ecosystem will then take it up from there. And I think that's the next stage >>And that ecosystem's gotta include OT players and communications technologies players as well. Right. Because that stuff gets kind of sucked up in that, in that edge play. Do >>You feel like HPE has a, has a leg up on that or like a little, a little bit of a lead or is it pretty much, you know, even raced right now? >>I think they've, I think the big infrastructure companies have all had OEM businesses and they've all played there. It's it's, it's also helping those OT players actually convert their own needs into more of a software play and, and not so much of >>Physical. You've been, you've been following and you guys both have been following HP and HPE for years. They've been on the edge for a long time. I've been focused on this edge. Yeah. Now they might not have the product traction that's right. Or they might not develop as fast, but industrial OT and IOT they've been talking about it, focused on it. I think Amazon was mostly like, okay, we gotta get to the edge and like the enterprise. And, and I think HP's got a leg up in my opinion on that. Well, I question is can they execute? >>Yeah. I mean, PTC was here years ago on stage talking >>About, but I mean, you think about, if you think about the edge, right. I mean, I would argue one of the best acquisitions this company ever did was Aruba. Right. I mean, it basically changed the whole conversation of the edge changed the whole conversation. >>If >>Became GreenLake, it was GreenLake. >>Well, it became a big department. They gave a big, but, but, but I mean, you know, I mean they, they, they went after going selling edge line servers and frankly it's very difficult to gain traction there. Yeah. Aruba, huge area. And I think the March announcement was when they brought Aruba management into. Yeah. Yeah. >>Totally. >>Last question. Love >>That. >>What are you guys saying about the, the Broadcom VMware acquisition? What's the, what are the implications for the ecosystem for companies like HPE and just generally for the it business? >>Yeah. So >>You start. Yeah, sure. I'll start, I'll start there. So look, you know, we've, you know, spent some time, uh, going through it spent some time, you know, speaking, uh, to the, to the, to the folks involved and, and, and I gotta tell you, I think this is a really interesting moment for Broadcom. This is Broadcom's opportunity to basically build a different kind of a conversation with developers to, uh, try to invest in. I mean, just for perspective, right? These numbers may not be exact. And I know a dollar is not a dollar, but in 2001, anybody, remember what HP paid for? Compact >>8,000,000,020, >>So 25 billion, 25 billion. Wow. VMware just got sold for 61 billion. Wow. Okay. Unbill dollars. Okay. That gives you a perspective. No, again, I know a dollar is not a dollar 2000. >>It's still big numbers, >>2022. So having said that, if you just did it to, to, to basically build your DCF model and say, okay, over this amount of time, I'll pay you this. And I'll take the money out of this period of time, which is what people have criticized them for. I think that's a little shortsighted. I, yeah, I think this is Broadcom's opportunity to invest in that product and really try to figure out how to get a seat at the table in software and pivot their company to enterprise software in a different way. They have to prove that they're willing to do that. And then frankly, that they can develop the skills to do that over time. But I do believe this is a, a different, this is a pivot point. This is not >>CA this is not CA >>It's not CA >>In my, in my mind, it can't be CA they would, they would destroy too much. Now you and I, Dave had some, had some conversations on Twitter. I, I don't think it's the step up to them sort of thinking differently about semiconductor, dying, doing some custom semi I, I don't think that's. Yeah. I agree with that. Yeah. I think I, I think this is really about, I got two aspiration for them pivoting the company. They could >>Justify the >>Price to the, getting a seat at the adults table in software is, >>Well, if, if Broadcom has been squeezing their supplies, we all hear the scutle butt. Yeah. If they're squeezing, they can use VMware to justify the prices. Yeah. Maybe use that hostage. And that installed base. That's kind of Mike conspiracy. >>I think they've told us what they're gonna do. >><laugh> I do. >>Maybe it's not like C what's your conspiracy theory like Symantec, but what >>Do you think? Well, I mean, there's still, I mean, so VMware there's really nobody that can do all the things that VMware does say. So really impossible for an enterprise to just rip 'em out. But obviously you can, you can sour people's taste and you can very much influence the direction they head in with the collection of, of providers. One thing, interesting thing here is, was the 37% of VMware's revenues sold through Dell. So there's, there's lots of dependencies. It's not, it's not as simple as I think John, you you're right. You can't just pull the CA playbook out and rerun it here. This is a lot more complex. Yeah. It's a lot more volume of, of, of distribution, but a fair amount of VMware's install >>Base Dell's influence is still there basically >>Is in the mid-market. It's not, it's not something that they're gonna touch directly. >>You think about what VMware did. I mean, they kept adding new businesses, buying new businesses. I mean, is security business gonna stay >>Networking security, I think are interesting. >>Same >>Customers >>Over and over. Haven't done anything. VMware has the same customers. What new >>Customers. So imagine simplifying VMware. Right, right. Becomes a different equation. It's really interesting. And to your point, yeah. I mean, I think Broadcom is, I mean, Tom Crouse knows how to run a business. >>Yeah. He knows how to run a business. He's gonna, I, I think it's gonna be, you know, it's gonna be an efficient business. It's gonna be a well run business, but I think it's a pivot point for >>Broadcom. It's amazing to me, Broadcom sells to HPE. They sell it to Dell and they've got a market cap. That's 10 X, you know? Yes. Yeah. All we gotta go guys. Awesome. Great conversation guys. >>A lot. Thanks for having us on. >>Okay. Listen, uh, day two is a, is a wrap. We'll be here tomorrow, all day. Dave ante, John furrier, Lisa Martin, Lisa. Hope you're feeling okay. We'll see you tomorrow. Thanks for watching the cube, your leader in enterprise tech, live coverage.

>>The cube presents, Coon and cloud native con Europe 22, brought to you by the cloud native computing foundation. >>Welcome to Valencia Spain and coverage of Q con cloud native con Europe, 2022. I'm Keith Townsend. You're a host of the cube along with Paul Gillum, senior editor, enterprise architecture for Silicon angle, ENCO, senior ready, senior it analyst for giga own. Uh, this has been a full day, 7,500 attendees. I might have seen them run out of food. This is just unexpected. I mean, they, the, it escalated from what understand it went from four, capping it off to 4,000 gold, 5,000 gold in and off. Finally at 7,500 people. I'm super excited for, you know, today's been a great day of coverage. I'm super excited for tomorrow's coverage, uh, from the cube. But first off, we'll let the, the new person on stage take the, the first question of, of the wrap up of the day of coverage, UN Rico on Rico. What's different about this year versus other Q coupons or cloud native conversations. >>I, I think in general, it's the maturity. So we talk it a lot about day two operations, uh, observability monitoring, uh, going deeper and deeper in the security aspects of the application. So this means that for many enterprises, Kubernetes is becoming real critical. They want to, to get more control of it. And of course you have the discussion around Phen op around, you know, uh, cost control because we are deploying Kubernetes everywhere. And, and if you don't have everything optimized control, monitor it, you know, uh, cost to the roof and think about, uh, deploying the public cloud. If your application is not optimized, you're paying more, but also in the on premises, if you are not optimiz, you don't have the clear idea of what is going to happen. So capacity planning become the nightmare that we know from the past. So there is a lot of going on around these topics, uh, really exciting, actually less infrastructure, more replication. That is what Kubernetes is India. >>Paul help me separate some of the signal from the noise. Uh, there is a lot going on a lot of overlap. What are some of the big themes of takeaways for day one that enterprise architects executives need to take home and really chew >>On? Well, the Kubernetes was a turning point. You know, Docker was introduced nine years ago and for the first three or four years, it was an interesting technology that was not very widely adopted. Kubernetes came along and gave developers a reason to use containers. What strikes me about this conference is that this is a developer event, you know, ordinarily you go to conferences and it's geared toward it managers towards CIOs. This is very much geared toward developers when you have the hearts and minds of developers, the rest of the industry is sort of pulled along with it. So this is ground zero for the hottest, uh, the, the hottest area of the entire computing industry. Right now, I is in this area building distributed services, BA microservices based cloud native applications. And it's the developers who are leading the way. I think that's, that's a significant shift. I don't see the managers here, the CIOs here, these are the people who are, uh, who are pulling this industry into the next generation. >>Um, one of the interesting things that I've seen when we, you know, we've always said, Kubernetes is for the developers, but we talk with, uh, an icon from, uh, MoneyGram. Who's a end user, he's an enterprise architect. And he brought Kubernetes to his front end developers and they, they, they kind of rejected it. They said, what is this? I just wanna develop cold. So when we say Kubernetes is for developers, or the developers are here, where, how do we reconcile that mismatch of experience? We have enterprise architecture. I hear constantly that, that the, uh, Kubernetes is for developers, but is it a certain kind of developer that Kubernetes is for? >>Well, yes and no. I mean, so the paradigm is changing. Okay. So, and maybe a few years back, it was tough to understand how, you know, uh, uh, make your application different. So microservices, everything was new for everybody, but actually, so everything is changed to a point. Now, the developer understands, you know, it is neural. So, you know, going through the application APIs automation, because the complexity of this application is, is huge. And you have, you know, 7 24 kind of development, uh, sort of deployment. So you have to stay always on cetera, et cetera. And actually to the point of, you know, developers, uh, you know, bringing this new generation of, uh, decision makers in India. So they are actually decision, they are adopting technology. Maybe it's a sort of shadow it at the very beginning. So they're adopting it, they're using it. And they're starting to use a lot of open source stuff. And then somebody upper in the stack, the executive says, what are, yeah, they, they discover that the technology is already in place is, uh, is a critical component. And then it's, uh, you know, uh, transformed in something enterprise, meaning, you know, paying enterprise services on top of it to be sure con uh, contract and so on. So it's a real journey. And these are, these guys are the real decision makers. Oh, they are at the base of the decision making process. At least >>Cloud native is something we're gonna learn to take for granted. You know, when you remember back, remember the fail whale in the early days of Twitter, when periodically the service would just would just, uh, um, crash from, uh, from, uh, traffic or Amazon went through the same thing. Facebook went through the same thing. We don't see that anymore because we are now learning to take cloud native for granted. We assume applications are gonna be available. They're gonna be performant. They're gonna scale. They're gonna handle anything. We throw at them that is cloud native at work. And I think we, we forget sometimes how refreshing it is to have, uh, an internet that really works for you. >>Yeah. I, I think we're much earlier in the journey. You know, we have Microsoft, uh, on the Xbox team talked about 22,000 pods running ni D some of the initial problems and pain points of, uh, around those challenges. Uh, much of my hallway track conversation has been centered around as we talk about kind of the decision makers, the platform teams. And this is what I'm getting excited to talk about in tomorrow's coverage. Who's on the ground doing this stuff. Is it developers as we are, as, as we see or hear or told, or is it what we're seeing from the Microsoft example, the MoneyGram example where central it is kind of getting it, and not only are they getting it, they're enabling developers to, to simply write code, build it. And Kubernetes is invisible. It seems like that's become the holy grill to make Kubernetes invisible cloud native invisible, and the experience is much closer to cloud. >>So I, I think that, uh, um, it's an interesting, I mean, I had a lot of conversation in the past year is that it's not that the original, you know, traditional it operations are disappearing. So it's just that, uh, traditional it operation are giving resources to these new developers. Okay. So it's a, it's a sort of walled garden. You don't see the wall, but it's a walled garden. So they are giving you resources and you use these resources like an internal cloud. So a few years back, we were talking about private cloud, the private cloud, as, you know, as a, let's say, uh, the same identical paradigm of, of the public cloud. This is not possible because there are no infinite resources or, well, whatever we, we think are infinite resources. So what you're doing today is giving these developers enough resources to think that they are unlimited and they can, uh, do automatic provisioning and do all these kind of things. So they don't think about infrastructure at all, but actually it's there. So it operation are still there providing resources to let developers be more free and agile and everything. So we are still in a, I think in an interesting time for all of it, >>Kubernetes and cloud native in general, I think are blurring the lines, traditional lines development and operations always were separate entities, obviously through with DevOps. Those two are emerging, but now we're moving. When you add in shift left testing shift, right? Testing, uh, dev SecOps, you see the developers become much more involved in the infrastructure and they want to be involved in infrastructure because that's what makes their applications perform. So this is gonna, cause I think it organizations to have, do some rethinking about what those traditional lines are, maybe break down those walls and have these teams work, work much closer together. And that should be a good thing because the people who are developing applications should also have intimate knowledge of the infrastructure they're gonna run on. >>So Paul, another recurring theme that we've heard here is the impact of funding on resources. What have you, what have your discussions been around founders and creators when it comes to sourcing talent and the impact of the markets on just their day to day? >>Well, the sourcing talent has been a huge issue for the last year. Of course, really ever since the pandemic started interesting. We, uh, one of our, our guests earlier today said that with the meltdown in the tech stock market, actually talent has become more available because people who were tied to their companies because of their, their stock options are now seeing those options are underwater. And suddenly they're not as loyal to the companies they joined. So that's certainly for the, for the startups. Uh, there are many small startups here. Um, they're seeing a bit of a windfall now from the, uh, from the tech stock, uh, bust, um, nevertheless skills are a long term problem. The us, uh, educational system is turning out about 10% of the skilled people that the industry needs every year. And no one I know, sees an end to that issue anytime soon. >>So ENGO, last question to you, let's talk about what that means to the practitioner. There's a lot of opportunity out >>There. >>200 plus sponsors I hear here I think is, or the projects is 200 plus, where are the big opportunities as a practitioner, as I'm thinking about the next thing that I'm going to learn to help me survive the next 10 or 15 years of my career? Where, where do you think the focus should be? Should it be that low level, uh, cloud builder, or should it be at those Le levels of extraction that we're seeing and reading about? >>I, I think, I think that, uh, you know, it's, uh, it's a good question. The, the answer is not that easy. I mean, uh, being a developer today, for sure grants, you, you know, uh, a salary at the end of the month, I mean, there is high demand, but actually there are a lot of other technical, uh, figures in, in the, in, uh, in the data center in the cloud that could, you know, really find easily a job today. So developers is the first in my mind also because they are more, uh, they, they can serve multiple roles. It means you can be a developer, but actually you can be also, you know, with the new roles that we have, especially now with the DevOps, you can be, uh, somebody that supports operation because, you know, automation, you know, a few other things. So you can be a C admin of the next generation, even if you're a developer, even if when you start as a developer, >>Cuan 20, 22 is exciting. I don't care if you're a developer practitioner, a investor, a, uh, it decision maker is CIO CXO. They're so much to learn and absorb here and we're going to be covering it for the next two days. Me and Paul will be shoulder to shoulder. We will, you, I'm not gonna say you're gonna get sick of this because it's just, you know, it's all great information. We'll, we'll, we'll help sort all of this from Valencia Spain. I'm Keith Townsend, along with my host ENCO senior, the Paul Gillon. And you're watching the, you, the leader in high tech coverage.

>> From theCUBE studios in Palo Alto, in Boston, bringing you data-driven insights from theCUBE and ETR. This is breaking analysis with Dave Vellante. >> Despite the posture from some that big tech generally and Amazon specifically, should be regulated and/or broken apart, recent survey research suggests that Amazon faces many disruption challenges, independent of any government intervention. Specifically, respondents to our recent survey believe that history will repeat itself in that there's a 60% probability that Amazon Inc. will be disrupted by market forces, including self-inflicted wounds. Amazon faces at least seven significant disruption scenarios of varying likelihood and impact, perhaps leading to the conclusion that the government should just let the market adjudicate Amazon Inc's ultimate destiny. Hello, and welcome to this week's Wikibon CUBE insights powered by ETR. In this breaking analysis and ahead of AWS reinvent, we share the results of our survey designed to assess what if anything, could disrupt Amazon specifically, Amazon Inc. not just AWS. Now here's the background of the survey. Recently, in collaboration with author David Mitchell, the cube initiated a community research project to understand one, what scenarios could disrupt Amazon and two, what's the likelihood that each scenario would occur. We developed the scenarios, we tested them in small samples and then refine the questions and launch the survey. Here are the key findings. The survey asked respondents to rate the likelihood of each scenario disrupting Amazon on a scale of 1-10. As we show here, we have inferred that the ratings are a proxy for probability of disruption. And now in the interest of simplicity, we chose not to have respondents evaluate the impact of the disruption, at this time anyway. Here's the ranking by order of likelihood for each scenario. The end in the survey was just under 600 at 597 respondents. On average, across all scenarios, respondents indicate there's a 60% probability that Amazon will be disrupted. By one of, or some combination of these seven scenarios. Now by a notable margin, respondents felt that complacency, I.e a self-inflicted wound or series of wounds would be the most likely disruption scenario for Amazon. Now history in the industry would support this scenario is leadership in the tech business has proven to be transitory. The likelihood of a technological disruption was rated the lowest at 5.5, although some of the open-ended responses suggested that new models of computing could emerge. Look in the mainframe days, sharing resources in a timeshare model was very popular and then that gave way to a model of dedicated centralized infrastructure. The prevailing model then became distributed computing, which has seeded momentum back to a more centralized cloud. It's not inconceivable that with edge computing, the pendulum could swing back again. Now on balance, the remaining scenarios hovered around 60% likelihood individually, but taken all together The combination of these factors, it could be argued, present a multitude of challenges to Amazon Inc. Now, by looking at the distribution of responses, you can see further evidence of potential to disrupt the company. Here are the distribution results for each scenario and the order of the questions that they were presented. First, was government mandated separation, divestment and/or limits on Amazon's cloud computing, retail, media, credit card, and/or in-house product groups. 47% of the respondents believe there's a 70% or better chance of the government disrupting Amazon. Next question was major companies increasingly choose to do their own cloud computing and/or sell their products directly for competitive costs, security, or other reasons. Think of this as do it yourself cloud. That was not as prominent, but still 42% of respondents gave this a 70% chance or better. So think Walmart, the Walmart cloud or the target cloud. Okay, the next question was environmental policies raise, or the next scenario, environmental policies raise costs, change packaging delivery, recycling rules, and/or consumer preferences. If you think about it Amazon, they ship, you know, they order a toothpaste that comes in a box and every little piece you order every little item that you order comes in its own separate package. So environmental policy intervention showed a similar profile as above with a somewhat less likelihood in that 70% plus range. Okay next scenario was price or trade wars with the U.S and/or China create friction with e-commerce giants. So for instance, the China cloud or/and or e-commerce giants and protectionism would start to favor national players. Think again pricing wars, trade wars, you know, with China and others had a similar profile for likelihood as we just showed you earlier. But you know, what if you went, think about this thought exercise? What if you go on the web to order an item and AWS doesn't have it but Alibaba does. You know, maybe that's not such a huge factor at the U.S because really we don't buy directly from Alibaba but certainly outside of the United States particularly in Asia Pacific, it could be a scenario that disrupts Amazon Inc. Okay, the next scenario, major computing innovations, such as quantum edge or machine-to-machine obsolete today's cloud architectures. Tech disruptions ranked the lowest of all of these scenarios presumably because AWS is seen as on the cutting edge technically. So only 36% of respondents felt there was a 70% or better probability of this scenario disrupting Amazon. Next scenario, software replaces, centralized warehouses as delivery services are directly connected to suppliers and factories. Perhaps this is one of the most interesting scenarios I mean, imagine if Google creates software that upon a search, you can then order the item and have it shipped directly to you, no middle person. You know, like an airline ticket actually is today, except now it's physical goods. This direct model would disrupt Amazon's warehouse approach, but as you can see, it didn't really strike the respondents as highly likely. We think it's actually again, one of the more interesting scenarios, and it's certainly being put to the test by, for instance Alibaba, which really doesn't rely on a massive warehouse infrastructure. Now by far, the most likely scenario as rated by their respondents was this one; Complacency, arrogance, blindness, abusive power, loss of trust, consumer and/or employee backlash/boycotts. Think of it as self-inflicted wounds. More than half of the respondents indicated that there's a better than 70% chance that Amazon Inc. would shoot itself in the foot over time. And again, history would suggest this is consistent in the most likely pattern, especially when new executives come in. I mean, you saw this with famous companies at the time, like Wang, Digital, IBM eventually, Intel going through some of the challenges that we see today, Microsoft under bomber. And you know you see these founder led companies like Dell and Oracle they continue to thrive. Salesforce as well but it could be that today's executives and systems are more tuned to longevity, Andy Jassy is a long time Amazonian, Adam Selipsky the new CEO of AWS, he boomeranged back to AWS from Tableau, he's got a deep understanding of the company and its culture. So it's by no means assured that Amazon is going to trip up, However, taken together in combination, these factors suggest that government intervention may not be necessary. Indeed, the history of government breakups and pressure on big tech has been mixed and arguably futile. AT&T, IBM and Microsoft all came under close government scrutiny. and in the case of AT&T, the company was broken up. Generally these actions led to the US companies being less competitive, certainly was the case with AT&T is international telcos became dominant in the market. And in the case of IBM and Microsoft antitrust actions by the government while a distraction, were less a factor in the challenges that these firms ultimately faced and challenges to their leadership then were market disruptions. Think about an IBM unwittingly and famously handed its monopoly power to Intel and Microsoft in the PC era, and Microsoft under Ballmer, yeah kind of hugged onto its windows past and it became much less relevant in the industry until Satya Nadella initiated Microsoft's current hugely successful strategy, on top of the Azure cloud. The point is, despite the saber rattling of governments, history would suggest that market forces will be much more successful in moderating the power of giants like Amazon. We'll leave you with one last thought. At a $64 billion run rate and a 39% growth rate last quarter, AWS is the profit engine of Amazon. AWS accounts for over a hundred percent of Amazon Incs overall operating profit, so it was surprising to us last quarter when the stock dropped kind of precipitously after Amazon Inc. announced its earnings, its retail business underperformed, but AWS blew away expectations. The profit engine, the stock rebounded since then, and many investors saw it as a buying opportunity by the dip. But the point is that AWS is the most critical part of Amazon Inc. in our opinion. It helps fund Amazon's massive capex investment and gives Amazon a platform to enter other industries like payments, and content and groceries and other industries that Amazon wants to disrupt. So if you look at the ETR data across AWS's vast portfolio, The picture is very solid. This chart shows net score or spending momentum for AWS in its businesses comparing three survey snapshots, October 2020, July 21 and October, 2021, that's the yellow bar. Note, the comments from ETR at every sector, AWS spending velocity's up relative to last year. And we certainly saw that in this year's AWS results, accelerating growth with a much larger revenue base across the board and infrastructure, AI data, database analytics, core cloud, everything is up even chime, which is amazing because chime is horrible compared to other tools that you use of that like, but other than that weak spot, AWS is hitting on all cylinders. So what do you think should the government put the shackles on Amazon Inc? Or should it just let the market forces do their thing? Now, by the way we asked respondents, what else could disrupt Amazon, other than these seven scenarios? And we received some pretty interesting open-ended responses that we'll publish for your enjoyment, including my favorite; God could disrupt the Amazon. Okay, that's it for now, thanks to my colleague, David Mitchell for his excellent work on these scenarios. Don't forget these episodes of Braking Analysis, They're all available as podcasts, wherever you listen. All you're got to do is search Braking Analysis podcast. Don't forget to check out ETR's 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 directly David.volante@siliconangle.com or you can DM me at @DVellante. You can comment on our LinkedIn posts. This is Dave Vellante for The Cube Insights, powered by ETR. Have a great week, be safe, be well and we'll see you next time. (upbeat music)

>> Narrator: From around the globe, it's The Cube, with digital coverage of PagerDuty summit 2020. Brought to you by PagerDuty. >> Welcome to the Cube's coverage of PagerDuty Summit 2020, the virtual edition. I'm Lisa Martin and I'm pleased to welcome back to the program Cube alumni, Jonathan Randy, the Senior Vice President of Product at PagerDuty. Jonathan, welcome back. >> Good to be here. Great to be here again, Lisa, thank you. >> Quite the week for you guys, just wrapping up the three day virtual event this year reaching thousands of folks. Lots of news coming out, as we even kind of talked about the other day announcements, you said this was the biggest product release in the company's history, which is amazing to achieve during a pandemic, but AIOps, integration with Microsoft Teams, customer service solution. And we've heard a lot about automation in the keynotes and of course, with respect to the acquisition of Rundeck. Give us a quick little 60 second kind of overview of some of the things that you announced this week at the summit. >> Oh, it's been busy, as you said, and it has been really the biggest set of investments that we've brought all together at one time in the history of the company and so kind of leading the list was everything we're doing around, the category of AIOps. And so there's been a focus on automation, there's been a focus on what we're doing around event intelligence, and many new enhancements and updates to that product that's a part of the PagerDuty platform. We've also applied machine learning to our analytics, which is great with a recommendation engine to help organizations mature and really understand where they are and then, as you mentioned, big announcements around communication and collaboration with zoom, and Microsoft Teams, and even a new product from PagerDuty built on our core platform called PagerDuty for customer service. So it's been incredibly busy. >> And I'm sure lots of great feedback from customers and partners across the globe. You know, one of the things that you and I have already talked about is in the last six months, this explosion and a number of incidents that your customers are having to deal with and how PagerDuty is helping them to respond to those a lot faster. We talked about automation a lot last week, but as we think about the folks on the digital front line, have to be empowered with the information should be able to respond immediately to a customer inquiry, or risk the customer churning, talk to me a little bit about how automation, is this really kind of the next essential for combating that digital stress that the frontline workers are facing? >> Yeah, so automation has always been important to PagerDuty, and there really a couple kinds of automation that are so important. The first of which, and this is what many people know PagerDuty for is what we always refer to as people orchestration, it is automation, but it's automating is really the identification of issues and then engaging responders, these frontline workers on the right issues at the right time to make the right decisions with the right information. And so that's been the type of automation PagerDuty has really been focused on and more recently, we've taken some baby steps in the area of machine automation. We've done some things with custom actions in our web hook technology that we've delivered, but really to address some of the issues that you're referring to for workers on the front lines. We've had integrations with Rundeck, runbook automation vendors before and we have several partners in this area that do what's referred to many times as machine learning, not people orchestration and automation but machine learning. And we really felt it was important to have a world class capability as a part of PagerDuty, because it's one thing to engage individuals. But then if they still have to undergo manual toil, manual work and resolving issues, and much of that can be automated with machine automation. It's just a perfect match and it should be something that I would expect if I was a customer of PagerDuty ultimately to have. >> So PagerDuty has been working with Rundeck for about a year now, so to talk to us about some of the things that you saw from the capabilities, compatibilities rather, perspective, that you guys thought this is going to be a phenomenal addition to what PagerDuty delivers and exceeding our customer expectations. >> Well, this acquisition and the coming together of Rundeck with PagerDuty, we're super excited about, it's the first really major acquisition that PagerDuty has done and it's an extension to PagerDuty in multiple ways and it's an extension to PagerDuty in the use cases. And that customers can use us, you know, with Rundeck and PagerDuty. It's an extension to, as I just mentioned, people orchestration automation with machine automation. It's an extension of value. There's no overlap anyway, anywhere. But it's also, there's a lot of synergies and the coming together of these two organizations in particular as you know working more closely with Rundeck now, is really about their culture. Their culture is very similar to PagerDuty. And more importantly, like, as I've gotten to know, many of their customers, many of their users and there are, we have some of the same customers in the enterprise and mid market, which is really exciting, is that, although many of them are in the ITOps area, and while we have customers in ITOps, as well as in development, they all refer to themselves, those customers have Rundeck today as DevOps. And so they're very much along the same philosophy, as, you know, empowering self service, being able to take action as somebody on the on the front lines, and being able to take that action, not just be notified of it, but complete that work. And so, that notion of, you know, ubiquitous use, self service, empowerment, that's very consistent in Rundeck's culture, and their customers as it is with PagerDuty and our customers and our culture. >> I know both companies are steeped in DevOps and digital transformation, but it's nice to hear about the cultural alignment, because it's a big thing. It's not just a big thing for the two companies coming together, but also for your customers to ensure not just a seamless transition, but they really get to unlock the value of what Rundeck is going to add to PagerDuty's technologies, right? >> Very much so, very much so. In talking to some of their customers, who are our customers as well, it's just been so clear that it's a very similar use in many ways, although it's a different product, meaning a small group will start to use Rundeck and then other teams in the organization see the value of that and it grows virally. PagerDuty works in much the same way. And their product can be used for a lot of different automation uses in an organization from automating a data processing ETL process to provisioning systems for internal development teams. But one use case that really brings us both together is the focus on the incident response process, the incident response lifecycle and that's where we really got excited. And I'm seeing this week that our customers, our mutual customers are excited. Also, this notion of being able to not only identify, but also engage the right teams, prevent issues from happening in the first place, and then automate the diagnosing and the resolving of these issues before then you learn from that. So it's better the next time. So those automation steps in there, the diagnosing, and the the resolution, it's such an important part of the incident process that our customers just need in these times when digital services are more important than ever. >> Right digital services are the new norm. So is Rundeck, sort of a piece that allows PagerDuty to automate 100% of the incident response lifecycle? >> Much more than ever before, yes. So again, I look at it as take people orchestration and automation, add machine automation, the ability to bring down and bring back up a service as a part of a Rundeck set of steps or jobs, like having that together in one solution really does automate all of the incident response and gives the ability to incident to automate more and more of that incident response process. You know, the other key thing too, I was thinking through the other, obviously, throughout this process, in the other day was the synergy between, not only our customers, but our communities. And I always think of communities as a little different than just customers and PagerDuty has a thriving, growing community around it, in addition to our paying customers. One of the things that's in common with Rundeck is they have the same thing. They are an open source product with an enterprise product on top and it's a open source community of 60,000 DevOps professionals that we're bringing together with the PagerDuty community. So very excited about that synergy as well. >> Tell me a little bit about some of the feedback that you've heard from that community as these announcements including Rundeck have been made and this real obvious pivot towards automation. What are some of the things that you've heard that pleased you? >> Yeah, a couple things. From the community, from the customers, from internal teams, both on the Rundeck side of the house and on the PagerDuty side of the house. Sometimes it's just when things are, it's a good match, you don't have to explain it that much. People just see the natural synergy in it, you don't have to spend a lot of time explaining why machine automation and runbook automation is such a natural hand-in glove fit with PagerDuty and what we do today. And I think that's a huge validation. And, that message has been very consistent in what I've heard back. Some other specifics that were exciting to hear is some of our existing customers today who attended summit, who obviously had no background as to the announcement we were going to make with with Rundeck, contacted the Rundeck leadership, who then forwarded that information to me saying how excited they were, as they were attending summit, sitting in the virtual audience during our keynote addresses, as they heard the coming together of Rundeck as a part of PagerDuty, and immediately sent notes to the leadership on Rundeck saying how excited they were about that and how they wanted to expand the use, which then got forwarded to myself which nothing can be better validation. Nothing's more exciting than to see the community really understand what we're doing and see the benefits of it. >> You're right. That's the most public objective validation that the brand, any brand could get. So what would be the next steps, for example, you know, we talked last week about a whole bunch of PagerDuty customers, 13,000 plus great brands, many types of brands, Zoom, Slack, AWS, they were on main stage with you and Jennifer and the team. But if we think about some of those existing customers, what would be the next step for them to start leveraging the value that Rundeck can deliver to their environment? >> So a couple things. First, there's so much that can be automated today, if you think of just like the two big departments that use Rundeck, and PagerDUty, and there are more frontline teams than just these two. But if you think of just Dev and development, and then ITOps as two organizations that are working more closely together than ever before. You know, the real opportunity is for them to really start to shorten the time it takes for them to do so many things in their world on via Rundeck, you know, Rundeck automation and going back to some of the comments, you know, questions you asked me earlier about where some of the synergies they've made it so easy, they being Rundeck, to automate to create what they call jobs, and then make those jobs, you know, everybody be able to run those in a standard way. And then from a compliance standpoint, get the reporting on that, that the use, I think will really not only grow within IT, but for the most part, a lot of the development community, the core DevOps teams out there that use PagerDuty on the dev side, I think that you know, run books have been largely a manual activity for them, manual steps that they do. If I had to guess, the majority of our, you know, partners, community, customers today, who use PagerDuty when they actually get pulled into a real event and they're walking through the steps that they need, whether it's pulling together all the diagnostics information, and then going out in action to solve a major incident, a major event, the majority of that is manual today. And so the fact that we're allowing the equivalent of a big red easy button for those individuals for those teams on the development side, who really have been doing this unassisted today, to automate more of what they're doing, to cut down on the time, to cut down on the toil, to reduce the time that digital services are out in their organization. I think that's a huge opportunity for the larger PagerDuty customer base. >> I was looking at the press release, and with respect to the Rundeck acquisition, and about Rundeck saying and customers have experienced up to 50% reduction in incident response time using Rundeck automated run books. So from a team productivity perspective, that's huge. >> Especially when, you know, minutes are millions of dollars. And we were talking about this the other day that so many casual services are now mission critical, they're critical path for all of us, we need them, both in our professional and in our personal lives. So given that, given what's riding on these services, and how PagerDuty has always been about, you know, behind all of those services, our people and those people have to respond in the most effective efficient way in those really critical important moments, that type of savings, you know, reducing the time that it takes by another 50% on top of that, hopefully our customers will see the value in that Just like we do today. >> Big reduction in digital strategy, which I think we could all use today. Let me ask you one last question. Since this was the fifth PagerDuty summit, but the first virtual, you got to interact, or rather had the chance to impact a lot more customers than our traditional in-person event. But what was your take on having this virtual experience? Did you feel that you were able to really engage those customers as much as you would like to in a digital world? >> I'm really glad you asked. So much of us put so much of our time and effort into this, and I know our customers depend on us to do that. That usually, when you meet in person, you know, as you say, this is our fifth PagerDuty summit, and the other four have all been live, but they've all been in person, that nothing does substitute for the interaction, the live interaction you get, whether it's delivering something on main stage, or interacting one on one, with customers and clients, nothing, I think is a substitute for that. We are where we are and I do believe we're making, you know, obviously the best of it. And it has been great, we've generated probably five times as much content in this event than we do for a normal in person event. So while the the interaction isn't quite what you would expect in a three dimensional versus a two dimensional world, and I think the positive is, there is more content, and all of that content is kind of imminently more shareable than ever before, I personally have gone in to look at some of the track sessions, more in, you know, via zoom than I have in the past when they were recorded, but you know, it was a live event because I was so busy with other things. So I think the downside is some of the real personal interaction, we can still have personal interaction, of course, but it's not quite the same, but the content, the material, and then the reuse of that over time. I see that as being positive. >> Absolutely, I couldn't agree more. Well, congratulations on a very successful event. I imagine you must need a good weekend rest after delivering the most product news and announcements in the history of the company, especially in the last six months. Jonathan, it's been great having you on the program. >> It's always a pleasure, Lisa, thank you so much for having us and I hope you get some rest this weekend too. >> Likewise, I'm looking forward to that. For Jonathan Randy, I'm Lisa Martin. You're watching The Cube. (lighthearted music)

(enlightening music) >> From theCUBE's studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a CUBE conversation. >> As we've been reporting, there's a new class of workloads emerging in the cloud. Early cloud was all about IaaS, spinning up storage, compute, and networking infrastructure to support startups, SaaS, easy experimentation, dev test, and increasingly moving business workloads into the cloud. Modern cloud workloads are combining data. They're infusing machine intelligence into application's AI. They're simplifying analytics and scaling with the cloud to deliver business insights in near real time. And at the center of this mega trend is a new class of data stores and analytic databases, what some called data warehouses, a term that I think is outdated really for today's speed of doing business. Welcome to this week's Wikibon CUBE Insights, powered by ETR. In this breaking analysis, we update our view of the emerging cloud native analytic database market. Today, we want to do three things. First, we'll update you on the basics of this market, what you really need to know in the space. The next thing we're going to do, take a look into the competitive environment, and as always, we'll dig into the ETR spending data to see which companies have the momentum in the market, and maybe, ahead of some of the others. Finally, we're going to close with some thoughts on how the competitive landscape is likely to evolve. And we want to answer the question will the cloud giants overwhelm the upstarts, or will the specialists continue to thrive? Let's take a look at some of the basics of this market. We're seeing the evolution of the enterprise data warehouse market space. It's an area that has been critical to supporting reporting and governance requirements for companies, especially post Sarbanes-Oxley, right? However, historically, as I've said many times, EDW has failed to deliver on its promises of a 360-degree view of the business and real-time customer insights. Classic enterprise data warehouses are too cumbersome, they're too complicated, they're too slow, and don't keep pace with the speed of the business. Now, EDW is about a $20 billion market, but the analytic database opportunity in the cloud, we think is much larger, why is that? It's because cloud computing unlocks the ability to rapidly combine multiple data sources, bring data science tooling into the mix, very quickly analyze data, and deliver insights to the business. More importantly, even more importantly, allow a line of business pros to access data in a self service mode. It's a new paradigm that uses the notion of DevOps as applied to the data pipeline, agile data or what we sometimes called DataOps. This is a highly competitive marketplace. In the early part of last decade, you saw Google bring BigQuery to market, Snowflake was founded, AWS did a one-time license deal to acquire the IP to ParAccel, an MPP database, on which it built Redshift. In the latter part of the decade, Microsoft threw his hat in the ring with SQL DW, which Microsoft has now evolved into Azure Synapse. They did so at the Build conference, a few weeks ago. There are other players as well like IBM. So you can see, there's a lot at stake here. The cloud vendors want your data, because they understand this is one of the key ingredients of the next decade of innovation. No longer is Moore's Law, the mainspring of growth. We've said this many times. Rather today, it's data driven, and AI to push insights and scale with the cloud. Here's the interesting dynamic that is emerging in the space. Snowflake is a cloud specialist in this field, having raised more than a billion dollars in venture, a billion four, a billion five. And it's up against the big cloud players, who are moving fast and often stealing moves from Snowflake and driving customers to their respective platforms. Here's an example that we reported on at last year's re:Invent. It's an article by Tony Baer. He wrote this on ZDNet talking about how AWS RA3 separates compute from storage, and of course, this was a founding architectural principle for Snowflake. Here's another example from the information. They were reporting on Microsoft here turning up the heat on Snowflake. And you can see the highlighted text, where the author talks about Microsoft trying to divert customers to its database. So you got this weird dynamic going on. Snowflake doesn't run on-prem, it only runs in the cloud. Runs on AWS, runs on Azure, runs on GCP. The cloud players again, they all want your data to go into their database. So they want you to put their data into their respective platforms. At the same time, they need SaaS ISVs to run in the cloud because it sells infrastructure services. So, is Snowflake, are they going to pivot to run on-prem to try to differentiate from the cloud giants? I asked Frank Slootman, Snowflake's CEO, about the on-prem opportunity, and his perspective earlier this year. Let's listen to what he said. >> Okay, we're not doing this endless hedging that people have done for 20 years, sort of keeping a leg in both worlds. Forget it, this will only work in the public cloud because this is how the utility model works, right? I think everybody is coming to this realization, right? I mean the excuses are running out at this point. We think that it'll, people will come to the public cloud a lot sooner than we will ever come to the private cloud. It's not that we can't run a private cloud, it just diminishes the potential and the value that we that we bring. >> Okay, so pretty definitive statements by Slootman. Now, the question I want to pose today is can Snowflake compete, given the conventional wisdom that we saw in the media articles that the cloud players are going to hurt Snowflake in this market. And if so, how will they compete? Well, let's see what the customers are saying and bring in some ETR survey data. This chart shows two of our favorite metrics from the ETR data set. That is Net Score, which is on the y-axis. Net Score, remember is a measure of spending momentum and market share, which is on the x-axis. Market share is a measure of pervasiveness in the data set. And what we show here are some of the key players in the EDW and cloud native analytic database market. I'll make a couple of points, and we'll dig into this a little bit further. First thing I want to share is you can see from this data, this is the April ETR survey, which was taken at the height of the US lockdown for the pandemic. The survey captured respondents from more than 1,200 CIOs and IT buyers, asking about their spending intentions for analytic databases for the companies that we show here on this kind of x-y chart. So the higher the company is on the vertical axis, the stronger the spending momentum relative to last year, and you could see Snowflake has a 77% Net Score. It leaves all players with AWS Redshift showing very strong, as well. Now in the box in the lower right, you see a chart. Those are the exact Net Scores for all the vendors in the Shared N. A Shared N is a number of citations for that vendor within the N of the 1,269. So you can see the N's are quite large, certainly large enough to feel comfortable with some of the conclusions that we're going to make today. Microsoft, they have a huge footprint. And they somewhat skew the data with its very high market share due to its volume. And you could see where Google sits, it's at good momentum, not as much presence in the marketplace. We've also added a couple of on-prem vendors, Teradata and Oracle primarily on-prem, just for context. They're two companies that compete, they obviously have some cloud offerings, but again, most of their base is on-prem. So what I want to do now is drill into this a little bit more by looking at Snowflake within the individual clouds. So let's look at Snowflake inside of AWS. That's what this next chart shows. So it's customer spending momentum Net Score inside of AWS accounts. And we cut the data to isolate those ETR survey respondents running AWS, so there's an N there of 672 that you can see. The bars show the Net Score granularity for Snowflake and Amazon Redshift. Now, note that we show 96 Shared N responses for Snowflake and 213 for Redshift within the overall N of 672 AWS accounts. The colors show 2020 spending intentions relative to 2019. So let's read left to right here. The replacements are red. And then, the bright red, then, you see spending less by 6% or more, that's the pinkish, and then, flat spending, the gray, increasing spending by more than 6%, that's the forest green, and then, adding to the platform new, that's the lime green. Now, remember Net Score is derived by subtracting the reds from the greens. And you can see that Snowflake has more spending momentum in the AWS cloud than Amazon Redshift, by a small margin, but look at, 80% of the AWS accounts plan to spend more on Snowflake with 35%, they're adding new. Very strong, 76% of AWS customers plan to spend more in 2020 relative to 2019 on Redshift with only 12% adding the platform new. But nonetheless, both are very, very strong, and you can see here, the key point is minimal red and pink, but not a lot of people leaving, not a lot of people spending less. It's going to be critical to see in the June ETR survey, which is in the field this month, if Snowflake is able to hold on to these new accounts that it's gained in the last couple of months. Now, let's look at how Snowflake is doing inside of Azure and compare it to Microsoft. So here's the data from the ETR survey, same view of the data here except we isolate on Azure accounts. The N there is 677 Azure accounts. And we show Snowflake and Microsoft cuts for analytic databases with 83 and 393 Shared N responses respectively. So again, enough I feel to draw some conclusions from this data. Now, note the Net Scores. Snowflake again, winning with 78% versus 51% from Microsoft. 51% is strong but 78% is there's a meaningful lead for Snowflake within the Microsoft base, very interesting. And once again, you see massive new ads, 41% for Snowflake, whereas Microsoft's Net Score is being powered really by growth from existing customers, that forest green. And again, very little red for both companies. So super positive there. Okay, let's take a look now at how Snowflake's doing inside of Google accounts, GCP, Google Cloud Platform. So here's the ETR data, same view of that data, but now, we isolate on GCP accounts. There are fewer, 298 running, then, you got those running Snowflake and Google Analytic databases, largely BigQuery, but could be some others in there but the Snowflake Shared N is 49, it's smaller than on the other clouds, because the company just announced support for GCP, just about a year ago. I think it was last June, but still large enough to draw conclusions from the data. I feel pretty comfortable with that. We're not slicing and dicing it too finely. And you could see Google Shared N at 147. Look at the story. I sound like a broken record. Snowflake is again winning by a meaningful margin if you measure this Net Score or spending momentum. So 77.6% Net Score versus Google at 54%, with Snowflake at 80% in the green. Both companies, very little red. So this is pretty impressive. Snowflake has greater spending momentum than the captive cloud providers in all three of the big US-based clouds. So the big question is can Snowflake hold serve, and continue to grow, and how are they going to to be able to do that? Look, as I said before, this is a very competitive market. We reported that how Snowflake is taking share from some of the legacy on-prem data warehouse players like Teradata and IBM, and from what our data suggests, Lumen and Oracle too. I've reported how IBM is stretched thin on its research and development budget, spends about $6 billion a year, but it's got to spend it across a lot of different lines. Oracle's got more targeted spending R&D. They can target more toward database and direct more of its free cash flow to database than IBM can. But Amazon, and Microsoft, and Google, they don't have that problem. They spend a ton of dough on R&D. And here's an example of the challenge that Snowflake faces. Take a look at this partial list that I drew together of recent innovations. And we show here a set of features that Snowflake has launched in 2020, and AWS since re:Invent last year. I don't have time to go into these, but we do know this that AWS is no slouch at adding features. Amazon, as a company, spends two x more on research and development than Snowflake is worth as a company. So why do I like Snowflake's chances. Well, there are several reasons. First, every dime that Snowflake spends on R&D, go-to market, and ecosystem, goes into making its databases better for its customers. Now, I asked Frank Slootman in the middle of the lockdown how he was allocating precious capital during the pandemic. Let's listen to his response. I've said, there's no layoffs on our radar, number one. Number two, we are hiring. And number three is, we have a higher level of scrutiny on the hires that we're making. And I am very transparent. In other words, I tell people, "Look, I prioritize the roles that are closest "to the drivetrain of the business." Right, it's kind of common sense. But I wanted to make sure that this is how we're thinking about this. There are some roles that are more postponable than others. I'm hiring in engineering, without any reservation because that is the long term, strategic interest of the company. >> But you know, that's only part of the story. And so I want to spend a moment here on some other differentiation, which is multi-cloud. Now, as many of you know, I've been sort of cynical of multi-cloud up until recently. I've said that multi-cloud is a symptom, more of a symptom of multi-vendor and largely, a bunch of vendor marketing hooey today. But that's beginning to change. I see multi-cloud as increasingly viable and important to organizations, not only because CIOs are being asked to clean up the crime scene, as I've often joked, but also because it's increasingly becoming a strategy, right cloud for the right workload. So first, let me reiterate what I said at the top. New workloads are emerging in the cloud, real-time AI, insights extraction, and real-time inferencing is going to be a competitive differentiator. It's all about the data. The new innovation cocktail stems from machine intelligence applied to that data with data science tooling and simplified interfaces that enable scaling with the cloud. You got to have simplicity if you're going to scale and cloud is the best way to scale. It's really the only way to scale globally. So as such, we see cross-cloud exploitation is a real differentiator for Snowflake and others that build high quality cloud native capabilities from multiple clouds, and I want to spend a minute on this topic generally and talk about what it means for Snowflake specifically. Now, we've been pounding the table lately saying that building capabilities natively for the cloud versus putting a wrapper around your stack and making it run in the cloud is key. It's a big difference, why is this? Because cloud native means taking advantage of the primitive capabilities within respective clouds to create the highest performance, the lowest latency, the most efficient services, for that cloud, and the most secure, really exploiting that cloud. And this is enabled only by natively building in the cloud, and that's why Slootman is so dogmatic on this issue. Multi-cloud can be a differentiator for Snowflake. We can think about data lives everywhere. And you want to keep data, where it lives ideally, you don't want to have to move it, whether it's on AWS, Azure, whatever cloud is holding that data. If the answer to your query requires tapping data that lives in multiple clouds across a data network, and the app needs fast answers, then, you need low latency access to that data. So here's what I think. I think Snowflake's game is to automate by extracting, abstracting, sorry, the complexity around the data location, of course, latency is a part of that, metadata, bandwidth concerns, the time to get to query and answers. All those factors that build complexity into the data pipeline and then optimizing that to get insights, irrespective of data location. So a differentiating formula is really to not only be the best analytic database but be cloud agnostic. AWS, for example, they got a cloud agenda, as do Azure and GCP. Their number one answer to multi-cloud is put everything on our cloud. Yeah, Microsoft and Google Anthos, they would argue against that but we know that behind the scenes, that's what they want. They got offerings across clouds but Snowflake is going to make this a top priority. They can lead with that, and they must be best at it. And if Snowflake can do this, it's going to have a very successful future, in our opinion. And by all accounts, and the data that we shared, Snowflake is executing well. All right, so that's a wrap for this week's CUBE Insights, powered by ETR. Don't forget, all these breaking analysis segments are available as podcasts, just Google breaking analysis with Dave Vellante. I publish every week on wikibon.com and siliconangle.com. Check out etr.plus. That's where all the survey data is and reach out to me, I'm @dvellante on Twitter, or you can hit me up on my LinkedIn posts, or email me at david.vellante@siliconangle.com. Thanks for watching, everyone. We'll see you next time. (enlightening music)

>> From the silicon angle media office in Boston Massachusetts, it's the Cube. Now here's your host, Dave Vellante. >> Hello everyone and welcome to this week's episode of wiki buns cube insights, powered by ETR. In this breaking analysis, I plan to look deeper into the cloud market and specifically the business results and the momentum of the big three U.S cloud players. Now, Google last week opened up a bit and they not only broke out YouTube's revenues but also its cloud business. And quite a bit more detailed now like Microsoft the numbers are still somewhat opaque and hard to compare with AWS numbers which I find much cleaner. Nonetheless by squinting through the data, we're able to better understand the momentum that these three companies have in cloud and of course the ETR spending data, gives us an added data-driven dimension that is really insightful and helpful. Today we're focusing on, the big three in cloud. Amazon's AWS, Google's cloud platform GCP and Microsoft Azure. Now to meet the other U.S players are not hyper scalars and they're really not even in the discussion other than is an extension of their existing business. As an example, it would take IBM and Oracle between four and six years to spend as much on capex as Google spends, in four months. Now coming back to the big three. Each of these companies is coming at the opportunity with a different perspective. But Amazon and Microsoft, have been on a collision course for quite some time now. Google of course aspires to get into that conversation. Amazon in my opinion is the gold standard in cloud and I specifically refer to infrastructure as a service. They created the market and have earned the right to define the sector. Competitors like Microsoft are smart to differentiate and I'm going to discuss that. But first, let's take a listen as to how Amazon's CEO Andy Jassy Amazon web services CEO Andy Jassy, thinks about the goals of the AWS business. Roll the clip please. >> A high-level are top-down aggressive goals that we want every single customer who uses our platform to have an outstanding customer experience. And we want that outstanding customer experience in part is that their operational performance and their security are outstanding. But also that it allows them to build projects and initiatives that change their customer experience and allow them to be a sustainable successful business over a long period of time and then, we also really want to be the technology infrastructure platform under all the applications of people build. >> So, what's interesting to me here is how Jesse thinks about the AWS platform. It's a platform, to build applications. It's not a SaaS, it's not a platform which AWS can use to sell its software packages, it's a place to build apps. Any application, any workload, any place in the world. So when I say AWS has clean numbers, it's because they have a clean business. Infrastructure is what they do, period. That's what they report in their numbers and it's clean. Now compare that with Microsoft. Microsoft is doing incredibly well in the cloud and will come back to that, but Microsoft is taking a much different approach to the market. They report cloud revenue but it comprises public, private and hybrid. It includes SQL Server, Windows Server, Visual Studio, System Center, GateHub and Azure. And also support services and consulting. But the key here is they defined cloud to their advantage which is smart trying to differentiate with a multi cloud any cloud, any edge, story. Think Microsoft Azure stack slash Microsoft Ark etc. Now Google as we know is coming at this as a late comer. They admit they're a challenger. Their starting point is G suite. Their cloud focus is infrastructure and analytics. So, with that as some background let's take a look at the wiki bond estimates for I as revenue in 2019. What we have here is our estimates of AWS Azure and GCPs is IaaS and PaaS revenue, for 2018 and 2019. We've tried to strip out everything else so we can make an apples-to-apples comparison with Amazon. So let's start with Amazon. The street is concerned about the growth rate of AWS. It grew 35% last quarter, which admittedly is slowing down. But it did just under 10 billion. Think about that. AWS will probably hit a 50 billion dollar run rate this year 50 billion and it's growing in the double digits. AWS is going to be larger than Oracle this year and Cisco is next in its sights. it's like Drew Brees knocking down records in the NFL. Microsoft is very strong but remember, these are estimates. They report as your growth, but they don't really give us a dollar figure. We have to infer that from other data. So the narrative on Microsoft is they're catching up to AWS and in one-dimension that's true because they're growing faster than AWS. But AWS in 2019 grew by an amount almost equal to Asher's entire business in 2018. Now Google is hard to peg. The only thing we know is Google said it's cloud business was 9 billion in 2019, up from 5.8 billion in 18 and 4 billion in 17. So we're seeing an accelerating growth rate. That they said is largely attributable to GCP and they told us that GCP is growing significantly faster than their overall business. Which remember includes, G suite, cloud business that is. Okay. So that's the picture. Now, I want to take a minute to talk about the profitability of the cloud. On the Microsoft earnings call, Heather Bellini of Goldman Sachs, she was effusive she's an analyst exclaiming how impressed she was with the fact that Microsoft has been consistently increasing its cloud gross margins each quarter. I think was up five points in the last quarter. And on the Google call, Heather again was praising Google CEO Sundar Pichai on gross margin guidance for GCP. Which Sundar didn't answer. As well, Andy Jassy said in the Q blast reinvent that the cloud was higher margin than retail but it's scale, it's a relatively low margin business. As compared to software. I would like to comment on all this. First I think Jesse is sandbagging. AWS is a great margin business in my opinion. AWS has operating margins consistently in the mid 20s like 26% last quarter. Now, Bellini on the earnings call, was pressing on gross margins which in my opinion are even more impressive. Here's why. This is a chart I drew a long long time ago. It's a very basic view of the economics of the different sectors of the technology business. Namely hardware, software and services. Now, that each have a different margin profile as we're showing here. On the vertical axes, marginal cost that is the incremental cost of producing one additional unit of a product or service. On the horizontal axis, is volume. And we're showing the Pre-Cloud Era on the left and the Post-Cloud Era on the right-hand side of the chart. And you can see each segment has a different cost and hence different margin profile. In Hardware, you have economies at volume but you have to purchase and assemble components and so at some point your marginal cost hit a floor. Professional services have a diseconomies of scale. Meaning at higher volume, things get more complex and you have more overhead. Now that red line is software and everybody loves software because the marginal costs go to zero and your gross margin approaches the cost of distributing the software. Back in the old days, it really came down to the cost of a what our custom distributed a disk or a CD. So software gross margins are absolutely huge. Now let me call your attention to the green line that we've labeled outsourcing. In the pre-cloud era, outsourcing companies could get some economies but it really wasn't game changing. But in the post-cloud world the hyper scalars are driving automation. Now I'm exaggerating the margin impact because the cloud players still have to buy hardware and they have other costs. But the point is, gross margin and outsourcing IT to a cloud player is far more attractive to the vendor at scale. So Heather Bellini, was essentially asking Sachini Adela how is it that you can keep expanding your gross margins each quarter and she was trying to understand, if GCP gross margins were tracking similar to where AWS and Azure were back when they were smaller. And I think these curves at least give us some guidance. All right, so now let's pivot into the ETR data. This chart shows net score which remember, refers to spending velocity for each of the big three cloud players. Over the past nine surveys for cloud computing the cloud computing sector. Now three things stand out. First is that AWS remains very strong with net scores solidly in the 60% plus range. Second, is Azure has sustained a clear momentum lead over AWS, since the July 18 survey. And the third, is look at GCP's uptick. It's very notable and quite encouraging for Google. Now, let's take another cut on this data and drill into the larger companies, in the ETR data set. Look what happens when you isolate on Fortune 500. Two points here, AWS actually retakes the lead over azure, in net score or spending velocity even though Azure remains very strong. Amazon's showing in large accounts is very very impressive. Nearly back to early 2018 peak levels at 76%. So really strong net scores. The second point is GCPs uptrend holds firm and actually increases slightly, in these larger accounts. So it appears, that the big brands which perhaps used to shy away from cloud, are now increasingly adopting. Now, one of the things ETR does that I love is these drill downs, where they'll ask specific questions that are both timely and relevant. So we want to know, what every salesperson wants to know. Why do they buy? And that's what this chart shows. It shows data from the ETR drill downs and on the left hand in the green or the y the buys from Microsoft AWS and Google cloud. For Microsoft CIOs a compatibility with existing skills and the organization's IT footprint then its feature set etc. Look here's the deal, this is mr. softies huge advantage. It's just simpler to migrate work to Azure if you're already running Microsoft apps. And if Microsoft continues to deliver adequate features it's a no-brainer for many customers. For AWS, the pluses are ROI near-term and long-term and I've said many times, best cloud in terms of reliability, uptime, security AWS has the best cloud for infrastructure. And if you're not incurring huge migration cost or if you're not Walmart, why wouldn't you go, with the best cloud? Now GCP comes down to the tech. Google has good tech and IT guys. They're geeks. And geeks love Tech. And when it comes to analytics, Google is very very strong as well. Now the right-hand side of this chart shows why this is not in my opinion a winner-take-all game. The chart shows the percent of workloads in the cloud today in two years and three years across different survey dates. Today it's between 25% and 35% and it's headed upwards to 50% , this is a huge growth opportunity for these companies. You know sometimes people say to me that Google doesn't care about the cloud because it's such a small piece of their business or well they can't be number one or number two so they'll exit it. I don't buy this for a second. This is a trillion dollar business. Google is in it for the long game, and in my opinion, is going to slowly gain share over time. All right let's wrap up by looking forward to 2020 and beyond. The first thing I want to say is feel good for Google for reporting its cloud revenues but I think Google has to show more in cloud. I understand it's a good first step but IT buyers are still going to want to see more transparency. The other point I want to make is we are entering a new era the story of the past isn't going to be the same as this decade. Buyers aren't afraid of cloud anymore. It has become a mandate. The dominant services of the past and compute storage and networking to still be there but they're evolving, to support analytics, with AI and new types of database services. And these are becoming platforms for business transformation. Competition is, as we've seen, much more real today. Buyers have optionality. And that's going to create more innovation. SaaS, continues to be a huge factor but more so than ever. And hybrid and multi cloud is increasingly real and it's become a challenge for IT buyers so, I expect AWS is going to enter the ring in a bigger way to expand its Tim. Finally developers are no longer tinkerers, they are product creators. Now they said, there's a huge market. And the big tree can all participate as well as overseas players like, Ali Baba. As a customer it's becoming a more and more complicated situation. Cloud is not just about experimentation or startups it's increasingly about something that you really need to get right. Where to bet, migration and managing risks all become much more critical. On one hand, optionality is a good thing but if you make the wrong bet, it could be costly if you don't have a good exit strategy. Now as always, I really appreciate the comments that I get on my LinkedIn post and on Twitter I'm @DVellante So thanks for watching and thanks for your comments and your feedback This is Dave Vellante for the cube insights powered by ETR. We'll see you next time. (upbeat music)

>> From the SiliconANGLE Media office in Boston, Massachusetts, it's theCUBE. Now here's your host, Dave Vellante. >> Hello everyone and welcome to this week's episode of theCUBE insights, powered by ETR. In this Breaking Analysis, we're going deep into AWS. In a couple of weeks, theCUBE is going to be at the eighth AWS Reinvent, which will be our seventh year of having theCUBE at that show. You know, reinvent has really become the Super Bowl for enterprise tech innovation. And, ahead of the event, what I want to do is talk about the revolution of cloud, and the impact that it's having on the industry. And of course, I want to dig in to some of the data using the ETR data set. Before I do that, let me first say that the cloud 2.0, which is a term that we've been using, is becoming a reality. This is something that John Furrier and I talk about a lot here at theCUBE and at SiliconANGLE. The cloud is not about an incremental transition, it's really about transformation. We're talking here about the end to end modernization of the enterprise. The game is changing, and the engine of innovation is really being driven by new architectures, and these architectures have built around a few items. Data, machine intelligence, and of course cloud, for scale. We feel like what we are witnessing is the build out of this massively scalable distributed system. And this system is transforming businesses, and really enabling entire new companies and business models to emerge. The cloud is the under pitting of this digital revolution, and virtually every industry is going to be disrupted, no industry is safe. All right, let's get right to it. So, the key questions that I want to explore in this session, let's start with the spending patterns. We're going to look at the ETR survey data, and what services are attracting the most action inside cloud, and which vendors are winning? I then want to look at the market share data from a couple of angles. I'll look at ETR data, I'll talk about some other market data. Then we're going to drill into some of the services that are critical to innovation, and I specifically want to look at databases in particular analytic data stores. And then I want to look at the data and analytic services at AI, machine intelligence, and then I want to look at the data around containers and functions, like Lambda, which are very hot right now. Then, we're going to share some data on how the cloud is impacting the so called, "old guard." This is a pejorative term that Andy Jassy coined to refer to the legacy enterprise tech providers. Then I want to make some comments about the AWS ecosystem, it's getting a lot of chatter lately. And then I want to share some thoughts on what you can expect this year at Reinvent, and then I'll wrap. So the first data point that I want to show you here really draws on ETR's latest survey of 1,336 respondents. So what this chart does is it cuts the data, and it's showing just the cloud sector ranked by net score. Now remember, net score is a measure of spending momentum. Okay? So you can see where the action is. So at the top, you see Azure Functions and AWS Lambda popping right up. Look at their net scores, they've got a net score of 74% and 71% respectively. You can see Azure overall, this is the overall Azure business that's right up there as well, and of course AWS overall, so people responded AWS is right there. Very, very high, but it's dropped a little bit below Azure. We'll talk about that more in a moment. Then you can see VMware Cloud on AWS, it's got strong momentum, which is a real positive. You've got Google Cloud Functions, again, Functions very hot right now. Open Shift from Red Hat, GCP is up there, VMware Cloud. Then you've got Alibaba. Alibaba's only got 18 mentions, whereas the others have much higher shared in, so I'm not going to really put too much weight on that. And you can see the other folks as well on that chart. But also you can you can point out the functions. The Azure functions, and services like Lander, Lambda, are gaining really a lot of momentum in the marketplace, and I think point to a new mode of compute. What I want to do now is I want to isolate in this chart, the big 3 in cloud, and put them into context with a legacy player, you know, namely IBM. I'm not trying to pick on the legacy guys, but I think it's good for context. So as you can see here, Azure and AWS, they've been neck and neck battling it out in the last 10 surveys or so. And you can see even Google, somewhat behind, but it's still got pretty strong spending momentum. Now, these figures overall are trending down relative to the expectations earlier in the year. This is something that we've talked about, that spending is reverting back to pre '18 levels, not falling off a cliff, still solid in the grand scheme of things. So you can see, you know, net scores here are well above 50% for AWS and Azure. Now take a look at IBM. The ETR data shows them in the red zone, with a net score of 16%. That is not a surprise, that they're behind the Big 3. And I've said many many times, here's the thing, IBM and Oracle, I'm not showing Oracle here, they're at least in the cloud game. Think about it, HP had the public cloud, they had to tap out. Cisco, they don't have a public cloud. Dell EMC, even VMware, they don't have a public cloud. So at least IBM and Oracle have a cloud play, where they can take their SaaS business and run it, and get vertically integrated and some operating leverage. Okay, I'm going to switch gears a little bit and talk about market share. And we want to focus here on the battle between Azure and AWS. We all know Microsoft is growing faster, but AWS is much larger. And this is something that AWS CEO Andy Jassy, he takes a lot of time to explain to the analyst, and to the crowd at Reinvent. Let's take a look at what Jassy said last year at Reinvent on this topic, and then we'll come back. >> So if you look at the provider who most people think is the second place provider in this space, in their last financials they grew 76% year over year. And you can look at that and say, "Oh, 76% is more than 46%." But if you look at it in reality, that 76% represents about a billion dollars of growth year over year. If you look at the 46% growth of AWS on that much larger base, that represents $2.1 billion of growth year over year. So more than double that. So AWS not only has a significant market segment leadership position in share, but also on an absolute revenue basis is growing meaningfully faster than anybody else. >> Okay so, think about what Jassy said. He was using Q3 data and he said that AWS had a $27 billion run rate business. And if you look at those charts that I showed, or he showed, it looked like the yellow bar, which was Microsoft, even though they didn't say, you know, "the company that shall not be named." It was about 1/3 the size of AWS, so where would that put Microsoft? Somewhere around 9 billion last year, on kind of an apples to apples run rate basis, using those extrapolated market data that Jassy showed. By the way, ironically, this is about what AWS did last quarter which you can see here on this chart that I'm showing you. You might remember, I showed you this chart in a previous episode of Breaking Analysis. And what it shows is AWS' quarterly revenue on the blue bars, and the growth rate on the right hand axis, that's the red line. And you can see Jassy talked about 46% growth.. And you can see that in Q3 last year, and then look how its moderated. It's 35% in Q3 in 2019, the last quarter that they announced. So Jassy is right. AWS is growing slower than Microsoft last year, which was growing in the mid-70's. But Microsoft was 59% last quarter so that trend is continued. If, you know, that's if you believe Microsoft numbers, which are really not clean. It's hard to say sometimes with all the SaaS in there, and Office 365, LinkedIn, I don't know what else is in there but we try to parse that out. Regardless, Jassy's point that size matters is still correct. But, Microsoft is closing the gap. I talked to the Wikibon team recently, and they think that AWS is going to come in at $35 billion dollars in revenue this year. And they have Microsoft's IS business at around $15 billion. So that's 43% of AWS's business versus 33% at this time last year. So you can see that Microsoft is closing that gap. AWS is still adding $8 billion a year in growth, but Microsoft is definitely catching up. So what is the spending data show? Let's take a look here at the ETR data, and see what they say about market share. Now, remember, in the ETR parlance market share is a measure of how pervasive a vendor is within the data set. And as you can see here, it maps pretty well to the market estimates that I was just talking about. Although it actually appears that in these lines that AWS is widening that lead. But you can see in the net scores, by the way, this is net scores across all sectors, not just cloud computing, so it pulls in the other segments. But none the less, you can see Azure has a somewhat higher net score which indicates stronger spending intentions. So that pretty much fits what we see in the market for the most part. Now it's not all rosy for Microsoft. You know, they are super strong in the ETR data set across the board, but specifically in cloud. So that's important, I don't want to lose sight of that, but I want to share something that Gartner said recently, and it's a 2019 magic quadrant on cloud computing. Microsoft Azure's reliability issues continue to be a challenge for customers, largely as a result of Azure's growing pains. Since September of 2018, Azure has had multiple service-impacting incidents, including significant outages involving Azure active directory. The nature of many of these outages is such that customers had no controls in order to mitigate the downtime. So, caution is what Gartner said. So despite the great numbers and the fact that Azure is gaining, it's having growing pains. For years I've talked about the economies of scale for AWS due to its automation. I talked about the companies marginal economics at volume, and you can see it in the firm's operating margins. The question to ask, is Microsoft running into dis-economies at scale, due to it's large install base, and does it have technical debt? Because it's jamming large software estate into Azure, and having to preserve the past while trying to innovate for the future. I don't know, and it's hard to tell because Microsoft is so big and so profitable, but it's something that CIO's definitely should keep an eye on. Now, I want to look at some key sectors here and evaluate how AWS is doing in some of the areas where we see really innovation. And I want to start in the all important data base area. Now I'm going to focus here on analytic databases, and data warehouses, and I think there's some interesting trends going on here. So this is a cut of the ETR data warehouse segment. Now I've talked about Snowflake in the previous episodes of Breaking Analysis, and you can see why. Snowflake has a net score of 71%. They're one of the highest and most interesting newer companies in this space and in the ETR data set. You can see AWS doing very well, and I want to make some comments on both Snowflake and AWS Redshift. But before I do that, look at Oracle and Teradata on this chart. What you see here is the classic innovator's dilemma. It's at play where AWS and Snowflake, you can see them, they're solidly in the green, and you got the two legacy players affirmly in the red. So I include them as reference points. But I want to come back to Redshift and Snowflake, because I feel like there's something new going on in cloud. Where cloud 1.0 was all about IS and compute and storage and throw in some data base, there's this new trend emerging that's really driving new workloads. And this data that now sits in the cloud, it's maybe stored in S3, and customers are using data stores like Redshift and Snowflake to get more insights out of that data. They're bringing tools like data bricks into the equation, and really driving a whole new set of work loads that are not just about provisioning infrastructure, but really extracting insights much more quickly from the data and applying it to your business. And for AWS, it's driving tons of compute sales and customers are getting more value out of their data. Now, here's the interesting thing. Redshift and Snowflake are both best in class modern data warehouses, they seem to be coexisting, they're both thriving, you know, why is that? They're both MPP columnar stores, so they've got many similar attributes, but I think what it comes down to really is what I call horses for courses. I don't have time to dig into it today, but when you peel back the onion, what you find is different approaches to things like architecture, security, scaling, different philosophies, pricing, different feature sets. So it really comes down to the best strategic fit, and for now it looks like to me, there's room for both platforms. They're both doing very well from a spending momentum perspective. We'll see how that plays out over time. Let's now take a look at the analytic sector. Now here, we're talking about things like Amazon's quarry services, elastic map reduce, search kinesis, quick site glue, streaming, those kinds of tooling. You can see in this chart that AWS is very strong and it leads Microsoft by a small margin in the ETR data set. Now for comparison, and again, I'm not trying to pick on the legacy players, but I think it's important to provide context, and when it comes to spending momentum, the data doesn't lie. You can see here, IBM they've had a sizeable and very impressive set of capabilities in the analytic space, but you can see where the buyers are placing their bets. Now, what I'm showing you now in this next chart is a similar view, but this time I'm showing ETR market share for both AI and the machine learning segment. So for context I've added IBM Watson. Remember, market share for ETR is a measure of pervasiveness, not only to AWS and Microsoft, though they're battling it out for the top spot, but they got stronger spending momentum as you can see by the net scores. Look at Watson, I mean, it's respectable in the ETR data, but it just doesn't have the scale of the top two players. Okay, finally, I want to look at the container space. It's hot and I want to focus on Lambda from AWS. So what we're showing here is the net scores for Lambda, and Amazon's elastic container service. And you can see Lambda, very very strong. ECS is tapering a little bit, it's showing less momentum overtime, but still well over 50% net score. But look at Pivotal Cloud Foundry, they've showed a steady down term over time. This underscores the work that VMware and Pat Gelsinger have to do with one of their newest acquisitions. As in aside, this is an opportunity for VMware, which in my opinion, I've said they really need to get their developer act together, really to drive new innovation. And by the way, Pivotal just had some layoffs, but my understanding that it was not in engineering but rather folks that VMware saw as redundant, rolls that they already had in place. The bottom line is, Pivotal has been steadily losing momentum in the ETR surveys. But look, a 27 net score is not a disaster by any means. I said on my last Breaking Analysis, that if I were Michael Dell, I'd dedicate a thousand engineers to open sources, using Pivotal to really appeal to developers, and make his hardware run better on the open source tooling and apps that these thousand build. And make his infrastructure programmable. This is how the edge is going to be won. It's not going to be by throwing boxes over the top of the fence, but really a bottoms up by devs. I digress. The last data point that I want to share here is really designed to address the question, how is the cloud impacting what Jassy calls the "old guard?" So this view shows market share, which again is defined by ETR, remember they do the math to measure the pervasiveness of a vendor in their data set. And they call that market share. And I've cut that data by just the cloud spenders. So those buyers spending heavily, and I've isolated on AWS, Azure, and Google Cloud. And how their spending on traditional vendors has changed overtime. And I'm picking out Cisco, HPE, Dell EMC, and Oracle. And the story you can see is clear. They came out of the downturn in 2010, and the big guys who were holding their breath, and they came up for air and they saw lots of pet up demands, so they did pretty well. But the cloud has continued to slowly eat away at their share, and their spending momentum as seen by the net scores in this table, has been affected. But look at Cisco. They actually have quite a strong net score, its 37%. So to me, by the way, this makes sense. And I think Cisco is in a good position to connect clouds and secure data moving across clouds. But the cloud, it's long steady march continues. And we are entering a new era that I think is only going to see greater share gains for the cloud in my view. By the way, I don't want to just, back to my rant about the edge in programmable infrastructure, and how developers are going to win the edge. Cisco with Devnet is actually in a pretty good position here, and done a good job. And I think they're one of the few, if not the only legacy player that is going to figure this out. Now before I close, I want to make a few comments on the ecosystem, and give a glimpse as to what to expect at Reinvent in 2019. All right first the ecosystem. There's a lot of sort of chatter, and griping, and concerns around AWS cannibalizing the ecosystem partners. And I think frankly, that concern has merit. You know when AWS has this insane customer focus, you can pretty much take that to the bank. If a customer wants something and expresses that to AWS, and they see a space to fill where it can leverage that flywheel that they always talk about at ad services, AWS is not going to sub optimize it's portfolio to protect it's partner. It's going to go hard after it. So as a partner of AWS, it's up to you to keep innovating and moving fast. And that's hard, because AWS is probably moving faster than you are. But you know, you can still specialize as a partner, and thrive as a best debride player. I mean, look at the Snowflake example. There's plenty of opportunities out there in security, backup, governess, machine intelligence, work flow, edge, and of course, there's the infamous multi cloud opportunity. And I saw infamous because AWS doesn't use that term, you're not going to see it on the floor of Reinvent this year because it's frankly not allowed. AWS is very controlling over the messaging that it puts out to it's customers, and that includes the rules of the ecosystem if you want to go to their show. But you'll hear plenty of side conversations about multi cloud, and we're certainly going to be talking about it on theCUBE. Is multi cloud a symptom of multi vendor? You know what I think on this topic. I think it's more than that than it is a strategy. But CIO's are now being asked to clean up the multi cloud mess, so it does have merit. But it creates complexity, and that means opportunity for partners. So multi cloud is white space for the ecosystem, as is hybrid, and on prim connectivity, so partners are hedging their bet, they're supporting multiple clouds, and they're partnering with Azure and Google, and that makes sense to do so. But here's the thing. Cloud 2.0 is getting more complex. AI, new workloads, edge, new use cases, machine learning, more API's, more services, more complicated pricing. These are confusing matters for customers, and partners can help simplify this. As well, thinking about competition with Microsoft, Microsoft is kind of an easy choice. If you're already a Microsoft software customer, (murmurs) So partners need AWS, and AWS need partners to help them deliver solutions to go to market, and keep it simple. John Furrier says this a lot, that winning in the enterprise requires salesmanship, and AWS partners, they're a powerful channel, so AWS has to lean on this channel to really create solutions for customers and simplify. Okay, let's talk about what to expect at Reinvent 2019, and I want to start with storage. Jeff Bar put out a blog post announcing a series of new storage offers around block store, new gateways, S3 replication, a new Windows file server capabilities, and stronger emphasis on file storage. Now, most of the world's data is stored on file, and AWS is expanding it's portfolio. It started with S3 object, back in 2006, and then EBS, block store, and now a big emphasis on file services. So I expect to hear a lot about that, and as well, we're going to hear about outpost. What progress has Amazon made with outpost? What's the status? What's the vision for outpost? How does it fit in at the edge? You know as I just said in my rant earlier, the edge is all about developers, and I like AWS' edge approach. I think AWS has the right perspective. It's very devs centric. It's bottoms up from devs, not over the top like many of the box sellers. Now at Reinvent, you're probably going to hear more about unplugging Oracle databases, certainly security is going to be a big focus, as will AI and machine learning. I also expect a lot on transformation of industries. As Microsoft continues to grow in IS, expect AWS to somehow try to change the game again. And I'm not sure AWS can win the battle head on with CIO's. Rather, I think AWS is really going to focus on this duel disruption agenda, both within the horizontal technology stack but also within industries. In other words, expect AWS to increasingly focus on enabling industry transformation in different segments, like media, health care, financial services, manufacturing, government, automobiles, telco, virtually every vertical. This dual disruption agenda, both in the tech stack and within industries, its in AWS's DNA because it's in Amazon's DNA. It's driven by Jeff Bezos at the top. Now in closing, I want to stress again, the cloud 2.0 is here, and it's getting more complex. The so called "old guard" is hanging on to it's install basis, but in many ways, it's working hard to get simpler. Now are these two domains going to collide together and create an equilibrium in the cloud native wannabes and the cloud native guys? Probably not functionally, but there are a lot of opportunities for the big whales to capitalize on this industry consolidation, and compete by simplifying their experience enough to keep customers hanging around. You know, don't forget, the enterprise business for years has relied on high touch specials, and unique requirements, and that's the wheelhouse for the legacy players, it's not AWS'. And maybe this approach is going to continue to pick away at those opportunities with repeatable and automatible solutions. So this should be really interesting to watch. Stop by theCUBE, come see us at Reinvent, we got two sets there. This is Dave Vellante, signing out from this episode of CUBE insights powered by ETR. Thanks for watching, we'll see you next time. (upbeat music)

>> from Austin, Texas. It's Theo Cube covering your storage accelerate 2019. Brought to you by pure storage. >> Welcome back to the Q. We are wrapping up day two of two days of coverage. We're getting some applause. I'm pretty sure that's for us. At pure accelerate. 2019. Lisa Martin flanked by two gents Day Volante and Justin Warren. You probably know Justin, who's been on the Cube many times and less. Chief analyst. A pivot. Nine. Justin. You have been covering this event and well as an independent, so we want to get your take on this two days. We've had our 1st 2 day for the Cube covering pier storage. We've spoken with lots of people, cause Charlie kicks. I'm sure there's more nicknames that I'm forgetting customers. Partners. Dave. Let's do a quick recap of some of the trends and the themes that we've heard the last couple days. And then we'll get some independent analysis. Justin on Not just what you've heard the last three days, starting with a tech field day, but also just your history of covering and working with here. >> Well, so for my sample, its story of growth they even started pure starts all the press releases with the only company that's growing on the growth storage company. The growth in the first. So so this growth is a financial story there. Um pure is going for growth, the markets rewarding growth right now. So it's smart, double down on growth. That might change at some point on. We talked about Charlie Jean Carlo about this, and they'll decide what what they do at that point time. But But from a financial standpoint, growing fast, uh, like their balance sheet, be interesting to see if they can leverage it. Maur. But maybe they're using it for Optionality. They'll do 1.7 this fiscal year. 1.7 billion. That's good. They got 70% gross margins. It a little bit of free cash flow. Not much because they pour it back into the business. So story a growth that's number 12 was differentiation. Um, I think it it's pretty clear that their products are differentiated from the sort of big portfolio companies. I mean, it's it shows up in the numbers and the income statement, and it shows up when you talk to customers simplicity, the whole A P I thing. I guess the third is products. I mean, they're embracing the cloud, which is kind of interesting. I don't think they're gonna do a ton of business with block storage for AWS, but it's an interesting hedge, and I think it's really cool from an engineering standpoint on, I think you know, two other things. Culture but orange. They're different, They're cool. They're hip and customers, which at the end of the day, that's where the rubber meets the road. Customers happy you talk to companies are customers of companies like pure service now Splunk Nutanix >> Uh uh, >> and some others. And they're happy. They love it. It's transforming their business. Snowflake is another one. Really? How come you AI path is another one? These are the hottest companies in the business right now, and you can tell when you talk to their customers is good story >> and their customers articulate their differentiation for them pretty darn while what? You know, we've spoken to a number. I think four or five customers the last couple of days, and they're not talking about Flash Ray flash blade X M flashback. They're talking about their business and how the I T is benefiting from that and how the business is benefiting from that. You also see piers very vibrant culture being embraced organically by their customers. There's plenty of customers walking around and the brightest orange I think I've even seen here. So there they're differentiation. Their culture, their customer experience and their ability to really differentiate three that are were loud and clear for what I heard through the voice of the customer and the partners, Frankly, as well. >> So I guess, Justin, I mean, the other pieces Tam expansion 1st 10 years, Cloud New Way I workloads partnerships with backup companies growing. The Tim I've said the 1st 10 years is probably gonna be easier, and I know that's a terrible thing to say, but don't hate me for saying it pure. But then the next 10 because they're up against the flat footed E. M. C. That was getting pounded by Elliott management with pressures to go private, trying to hang on to its legacy business and then got acquired and distracted by Del. So that was a really tailwind for Pierre. Now it's like Cloud guys got their act together, you know? Aye, aye. Everybody's doing A s. Oh, so they get some challenges. But what's your take? I think I've >> still got an advantage. Talking to some customers, 11 in particular was quite clear. That they saw pure is having at least a 2 to 3 lead through 2 to 3 year lead on the technology from some of their competitors. So they shopped around and they had a look at some of his competitors, and they thought that actually they were trying to sell me technology that's 234 years old and they quite from them, was that this is something that I could do myself, so they clearly see that pure provides them with something that they can't do themselves. So pure has an advantage there. I also think that the way that the market is changing advantage is pure, a little bit as well. So you mentioned Cloud there, Dave and I think that we've all seen that people have realized that multi cloud is a thing and that not every workload is going to go to the cloud. A lot of it is going to stay on Prem, so now that that's kind of allowed, people are allowed to talk about that, That there are CEOs who would have been being pressured by boards and so on to say we have to go all in on the cloud. Now they can come back to them and say, Well, actually, weaken, stay on side. That means that we should be looking at some of these onside products, like pure so that we can go on put in storage. A race in a data center may not be our Dana Senate might be in Coehlo, but we have this on site method of doing things. Not everything has to go to the cloud. So I think that will help them with some of the growth. >> So I'm left thinking, What would Andy say? Okay to >> be >> It's the number one hottest company, you know, notwithstanding some smaller companies right now, cos moving the market is a W s obviously Microsoft with the trillion dollar valuation. But Amazon, to me, is the benchmark it. So I feel like Jassy would say, Well, so Hey, Andy, you've acknowledged hybrid, you know? Actually, yeah, I guess he uses that word. Um, and you're doing some stuff one prim, but I think he would say we still believe that the vast majority of workloads are gonna land in the public cloud. And what you just said is what everybody else believes. And to me, they're in conflict and I don't necessarily have the answer. But you got the big gorilla. Now the big claw gorilla is moving. The markets say with one philosophy and they've made some good calls and the entire i t industry. Yeah, the other the inspector. >> Except that AWS has outpost have a product that actually sits on site. And they did. And Jesse last year said that he did say that the boat inward, multi cloud, >> you know, So, uh, sorry. Used the word multi cloud used hybrid hybrid cloud. They don't say that. That's for Boden, but no. But my point is they've acknowledged hybrid, which they never used to talk about hybrid. So they capitulated there The end where capitulated on their claws on its cloud strategy. But he has not capitulated on the belief the firm belief that most workloads are gonna be in the club. I'm not sure he's wrong. >> That may be true, but on what Time horizon? So that's not going to happen next year. But I >> think for sure, >> I pointed out that the agile manifesto came out in 2001. That's 18 years ago. Not every shop is doing software in agile, so enterprises take a long time to change, so there's plenty of room for pure to grow. While that changes going on, even if it if it does go all their own cloud, it's gonna take a long time to get there. And people can make plenty of money in the meantime. >> But I believe you're sorry. I believe pure is growing in what is a crappy market. Yeah, I think the storage market is a crap market right now. It's one that's very difficult. The leader Deli emcees growing at 0%. And that's a goodness because they're gaining share. Ned ABS down last quarter, not minus 16% IBM, minus 21% hp thrilled with whatever 3% or whatever. They're at a minus three. I can't remember now. Here is the only one that showing any substantive growth on my premises there, doing that by having a superior product and business model, and they're stealing share. So and then I ask you this. I I believe in hybrid, by the way. But I'm just playing kind of devil's advocate here. Cloud is growing and it's consistently growing and everybody talks about repatriation. You don't see it in the numbers. Every talks about the large of the law of large numbers like in other words, they hit a wall. You don't see that in the numbers. What you see is the traditional IittIe spaces flattish. The new stuff that they're all developing is not growing fast enough to offset the old stuff. You see that? Certainly. See that IBM. You see that now? Adele, even though they had good bounce back last year. But now you're seeing that Adele Oracle ekes out 1% growth. So the big, uh, legacy companies are growing there, hanging on there, throwing off tons of cash. They got good, strong balance sheets, maybe taking on some cheap debt. But the cloud continues to grow at a pace that I think it's stealing share from traditional I t. >> That's that's a reasonable sort of announcing something. Yeah, whether or not we'll see an increase in growth of onsite, particularly things like EJ computing way, maybe you need Thio redefine what we think of as a data center, and maybe we're not thinking about a broad enough market. I actually think that a lot of those workloads that we would traditionally have said would go on site and cola. I don't think Cola Data Center is actually growing all that much, but I think we are going to see growth in things like EJ. >> So that's a really great point I want. I want to come back to that. But the big question is, then okay. Can cloud be before we get ahead, you can cloud be a tail wind for pure. They've embraced it. 20 years ago, the leaders of a company would say, Oh, no, it's cloud his crap about a peace Caesar of toys You remember that pure embracing cloud, I think, is impressive only from an engineering perspective but business model. So can they make in your opinion cloud a tail wind and an opportunity? Maybe that's where Multi Cloud comes in. >> Yeah, it's tricky. I think it will become more of an advantage once good things like kubernetes and containers matures a bit further and people are used to being able to deploy things in that way, both in Cloud and on site. I think that that's the portability play, and it's more about making onsite more cloudy rather than making the cloud more enterprising, which I think was one of the messages that we had here. Because enterprises a lot of what yours messaging so far. And it's product development, particularly around cloud block stories, to make the cloud look more like an enterprise. Where's what we actually needed it to go the other way. Pure is doing things in that in that regard with pure storage optimizer, which which takes a lot of the decision making a way that from the way you would normally do things on side the way we've gotten used to it, manually configuring things, it's actually turning it into software on just letting computers handle it. That integration with things like the M, where is making things operate a lot more like cloud? So once enterprises become used to operating on a lot more like clouds, I think that's going to be an advantage for pure. To be ableto have that operations be in cloud and then they'll bring in products into in time for that to happen. >> You have the opportunity just in a couple days ago to tend the technical field day, the TFT that pure dead. So you got that double click the day before all the press releases broke about. Some of you know, we talked about the expansion into cloud with aws Maur, their portfolio delivered as a service. The aye aye data hub. But if we look at one of the things that stuck out today was differentiation. We've talked about that a number of levels in the last minutes. But talk to us about the technical differentiation that you've not only heard this week from pure, but that you've been engaging with them for years. You have an interesting story of Of John Cosgrove caused their CEO and founder really describing something very unique. That seems to be quite a technical level of differentiation that you even said We don't see this from a lot of their competitors. Give us a little snapshot of that. >> Yeah, you don't sort of get that level of detail in some of the briefings as well. So it was another tech Field day event some years ago on was talking about flash array and we sat in a room, and they had a flash array in front of us, and I think they were talking about the newest kind of flash they were putting into this. But they described some of the technical decisions they made about the architecture inside the blade. So at that time, and I hope I'm getting all these details correct, they had designed and asic, so to go in front, off the flash so that they could essentially create a layer above above the flash that they could speak to within their software. That meant that it didn't matter which flash foundry they bought it from, because it's slut. There are certain differences around the way that flash works, and they do address the flash directly, unlike buying SS D's and putting them inside the box. So that gives them a performance advantage because you don't have a whole bunch of software translation going on to get into the flash. But that decision meant that they could then change flash foundry without changing the experience off the awful. The software developers up the stack inside their array, so that meant that there cadence of being able to bring out new products and gradually dropped down the cost of the supply of flash, which makes up a large amount of the calls on these particular devices. It provided them with better options so they could maintain, maintain optionality essentially and be very, very flexible and react to the things that they can't predict. So Charlie mentioned in the briefing yesterday that you know, in this industry, you might get a 20% drop in the cost of flash in one month, which will then affect them their revenues in coming months after that, because clearly they want to pass on some of those cost drops to customers. But it needs to be done a certain, more manage way. When you have that kind of dynamic behavior happening in the market, being able to react to that well in something where the hardware design time can be 18 months to two years, building that into your product so that it then provides you with business options as a technology, that's a really impressive way of thinking about how all the different pieces of your company have to interact with each other. So it's not just about the technology, it's about the business and the technology working hand in hand, >> and those lower flash prices should open up new markets for them. Flash a racy I think they call it, is still not at the price of hybrid, I wouldn't think, although they saying it will be. Hybrid arrays are priced around 70 60 70 cents a gigabyte today is according Thio Gardner analysis. Big >> Challenge with hybrid of rays Which flat, which flash around flash or a C wouldn't actually wouldn't have? This problem is the reliability of the Leighton see and predictability. So with an old flash array, you don't get Layton. See sparks if you suddenly exhaust the amount of flash that you have in a hybrid of rain that has to go back to the disk. So if you need that predictable performance, that's why people have gone with flesh arrayed very beginning, absolutely getting that as a capacity tear. I think that provides a lot of reliability, for particularly when you've got large amounts of data need to write flesh >> and the price is coming down and it's maybe it's double now on a per gigabyte basis, that'll come down further. But I welcome back to EJ because I think you bring up a good point And we didn't Thankfully, here a ton about EJ. I think we heard anything about EJ at this show. We didn't get inundated with edge, which we always do with these big shows. And I'm happy about that because I think that that a lot of the companies that we re attend I think they got it wrong. They're taking a box and they're throwing over the fence to trying to do a top down model to the edge. Hey, here's a server or here's a storage device and we're gonna put it at the edge. It's like, OK, well, I think the edge is going to evolve as a software development. You know, play not isn't over. The top is gonna be bottoms up innovation. Now, I don't know question about you know, whether Amazon at the edge vm wear at the edge. Um, but I don't see any traditional i t companies crushing it at the edge there talking about it. They're trying to build out ecosystems, and but nobody's has meaningful revenue today at the edge. But it's a new way to think about this. Distributed massive compute engine >> on. I think we'll start to see that mature as people start to bring out products that actually do operated the way heard from Nvidia about some of their ideas that they have about doing a I processing at the edge for things like image recognition systems, where you train your model on leg large data sets in a cloud or in a data center. And then you shoot those models out two devices that operate on a smaller data set. But for a lot of these things, you need to do data collection at the edge. So Formula One is a classic example based given for the F one racing team is an I. O. T. Company that is connected to a nail and analytics company. Really? >> Yeah, that's right. We did hear about EJ and that an actual use case is in college edge, so there's going to be >> a lot more of that. We have things like sensors are just all over the place, so you know, in anything in retail, if you have fridges in retail and you need to monitor the sensors in those to find out whether or not is the temperature going out out of control or outside of your control limits because that will affect the food that's in that. There's a whole bunch of kind of boring examples that are actually all I OT. So I think some of those will start to push more data into into devices at the edge. And as people's understanding of how to use machine learning and I matures away from the hype, I think we're pretty peak hype at the moment. Once we do actually drop that back a notch and we see that people they're doing really use riel riel world use cases with real world business value that will start to drive a lot more of the growth of practical. And that will drive growth in data, which will need to get close throughout the weather's device. >> I think you're right. I think that date is gonna be at the edge of a lot of that data. I would say most of that date is going to stay at the edge. It's probably it's not gonna says it. Probably it's definitely not going to sit in a million dollar storage array, and it's gonna comprise a lot of alternative processing arm, Uh, GP use versus conventional microprocessors. So >> and that's where I think he was thinking about, like the white pure One works, for example, pure. One works the same no matter what products you have from pure, and they have been very clear in stating that they want to make sure that when they bring out a new array or a new product, it works with pure one. So it's that consistency of experience for their customers, which I think is fairly unique in the industry, is a lot of other products that will come out. And they only partly supported, not full support for their entire race tagging. AMC struggle with that for a long time simply because it has so many products and needed to kill a whole bunch of them first. So when when you have that kind of engineering discipline built built into your company, when you go out and you have customers who have edge devices or you have stuff in the cloud and they have devices on their phones which they used to showing off a conference and say, Hey, come and have a look at my array, it runs on software on my phone that's pure one that software ability that pure has of being able to address this data wherever it is. I think >> there's >> a real opportunity for pure that put that kind of intelligence on to age things. Even if they don't actually sell any flash a raise to those people, they could start to sell them software. >> All right, guys. So 15 seconds each since arose at a time. Computers competitive. Positioning your thoughts in a quick summary about what you've heard the last few days and what Justin has >> to me if I would expect continued growth, forgetting about the macro for a moment, even in gonna grow faster than the market place. Um and yeah, they said they don't throw off as much cash as the big guys. So it's gonna be a game of the big guys do in stock buybacks, free cash flow and pure storage. Investing in growth. >> Excellent. Justin. >> Yes, I agree. I think they're going to double down on the R and D spend to make sure that they maintain a technological advantage over their competitors. The biggest risk of pure is if the other players, you know, the deal emcee other plays in that big online storage market. If they actually get their act together and start bringing out competitive products, that's the biggest threat to fuel. But pure has a big lead on them. I would say, >> Yeah, I think the last thing cloud, you know, kind of a question Mark. And I think the m where to me, Del. Of course I care about storage is huge business for them. They're all above the M where and to the extent that they can leverage VM where, you know, as a competitive weapon, they'll use it against anybody you know. Damn the ecosystem. >> Excellent. Well, thanks, guys, for a great wrap up to our two days here for Justin Warren and Day Volante. I'm Lisa Martin. Thank you for watching the cubes. Coverage of pure accelerate 2019.

>> from Austin, Texas. It's Theo Cube, covering pure storage. Accelerate 2019. Brought to you by pure storage. >> Welcome back to the Cube. The leader in live tech coverage. Lisa Martin and David Lantz wrapping up day one of our coverage of pure accelerate. 2019. Howdy. How do y'all Hey, I >> think I started a trend. >> I think you did. So, Dave, this has been a dice shot out of a cannon. I think, as only you know, pure does. Well, we had lots of conversations. Lots of news this morning, Which was nice to hear. As pure welcomes their 10th anniversary in a couple of weeks. We talked with customers. We talked in many different industries partners, Puritans. Lots of innovation has occurred in their 1st 10 years. Charlie got up on stage this morning. Then he came to the Cube and talked about this modern data experience and the 10 X improvements and many things that they're gonna deliver. Not in the next 10 years. In the next few years. >> Yes. So we're seeing a story of growth here. It's a theme. If you look read yours press releases, they start The first line is the only storage company that's growing, which is true, at least the storage company of size of a billion dollar plus storage company and talking a lot about modern storage. To me, it's a story of entering new markets their second decade tam expansion into new ai ai workloads. Certainly the cloud trying to make the cloud of a tailwind. We have just heard from Carrie Stanton of'em Data protection is an area. You know, years ago, Uh, I remember talking to executive at Netapp Tom George and saying, Hey, we're gonna buy ah, storage backup cos you know, we're gonna preserve our partnerships with whomever con vault and Veritas in vino, whoever they're working with time and you see pure taking a similar strategy E M. C at the time did something different. They vertically integrated. They they bought a company called Llegado. They integrated into compete. And of course, now they're that sort of their stack. And so, if you were small enough now still close to $2 billion at the at the end of this fiscal year that they don't have to necessarily vertically integrate, we'll see 10 Next 10. That's the third decade, what happens there and in the customer input you're seeing. Customers are continuing to invest in pure. They're very happy. What you've seen, Lisa is customers look at pure is shifting. And I said this on the Cube earlier shifting labor in tow. Pure czar and D. Now the hyper scale is like Amazon. They'll spend time of engineering time to save money. I t practitioners of the enterprise. They'll spend money to save time and so they will happily spend money on on products if they can lower the IittIe labor costs. So totally different mindsets and you're you're seeing that's taking hold and pure really has done a great job of that. Now, as I said in my my breaking analysis, you know, a couple weeks ago, analyzing the vendors pure, clearly growing. But these things go in cycles, right? There's hard compares. You're going to see. I guarantee you're going to see these other companies, you know, chewing their models. They're big, pure talks about 10 X. The reality is, you know, Delhi emcees 10 x the size of pure right, so they throw a farm or cash on. So if you're a big whale with a big install base, that's what you do, You mind it If you're pure and you're smaller, you're 1.51 point seven billion. You go hunting. And that's the dynamic worse we're seeing. I don't see that changing dramatically for quite some time until the economy shifts and in the mindset shifts and when. Then we'll see how pure adjusts its business model from, perhaps growth to more profitability. >> And speaking of growth, they're just coming off a very successful second quarter where they announced last month in August, 28% year on year, both adding about seven that new customers a day. A lot of that attributed to innovation and the channel. They did a good job in the last 18 months or so of pivoting. They're smaller medium customer business to the channel, allowing peer to focus on much more enterprise focus. And they actually I think, even in queue to close 50% more multi $1,000,000 deals this last quarter >> and well, and while those seem like great numbers, they actually the stock got hit after the quarter. Why? Because they lowered guidance. Why, Because of this NAND pricing confusion, Nan pricing drops so fast in the quarter faster. They expected it sort of hurt revenues a little bit. They expect that that softness that continue. So they've been conservative going for it. You know, who knows of this smart to be conservative cause I wouldn't say that they're sandbagging. I say they're being conservative, you know, makes a bigger question. You know, it's storage kind of a crappy business, and we'll see. I say, that is, if you're gonna win in storage right these days, you have to gain share. Pure is gaining share della. 0% growth appears to be gaining share 0% growth. It's not a great market. So what's happening, we don't really know is cloud siphoning off demand for the traditional on Prem surgeon Could be. Can these companies make cloud a tailwind or is cloud a zero sum game? I tend to think long term, the Maur cloud, the worse it is for on Prem. So that's why everybody's scrambling for this multi cloud strategy, which is very, very early days. Multi cloud today is largely a a symptom of multi vendor versus you know, a coherent user strategy with right we're management's. Now the Big Five are trying to change that pure is playing its role. Companies like Veum and others are playing their role, so we'll see how that plays out. I do think there's a clear opportunity and multi cloud, but, um, it you know, it's unclear how large that is or whether it's just going to be a series of horses for courses. In other words, the right strategic fit for the right workload. >> So your thoughts on the evolution of their AWS partnership really looking at what they're now doing with eight of us as this bridge toe hybrid cloud customers of choice on from hosted, you know, as a service public cloud your take on this forcing function of bringing pure and AWS together of the customer base. >> Yeah, I think it's actually pretty clever. Move by pure take their engineering. It's okay. We're gonna settle, do all the heavy lifting set up AWS with e c two priority E. C. Two instances networking we're gonna mirror. We're gonna the architect of the basically block storage inside of eight of its front ending s three, which is the cheap object store? Pretty innovative. What it does is it gives customers an option for hire availability block storage that looks like pure but runs on AWS in the cloud. Very clever. And so all the advantages of OPEC's versus cap ex. You know the cloud experience, but it's the pure management experience. Eso very clever. Give pure customers who were happy. An option is there. I'm sure they're hearing from the customers. Hey, we want to go to the cloud where we heard it from the the eight of us Speaker today. Gardner Data. 88% of customers have a cloud first strategy, but 86 continue to spend on print. Right? Okay. So smart by pure to do that, I don't know how big a business that's gonna be, but it's a nice hedge. In case that really, that trend takes off >> and your thoughts on one of the other announcements today. Another first rip your We've talked about that the number of times they have there been first in a lot of things in the last 10 years transitioning offering most of their portfolio as a service and your perspective against the other competitors that you mentioned. How do you see that? >> Yeah, you know, the first your lips, they're bigger than the small companies that people have never heard of, like Zadar, a storage who actually were probably one of the first. But but they're the first again $1,000,000,000 plus company to do this. That's what customers want Customers want. The cloud experience in a big part of that cloud experience is a pricing model in the utility model. That's cloud like when AWS announced outposts, it was a clear sign that the industry had had to respond. I'm not saying this is a response to Outpost, but it's clearly a response to the cloud model so paid by the drink. You know, Op X versus cap packs of being able to have that cloud pricing model and experience across the portfolio is goodness. >> So Charlie, their CEO, talked about this morning, this modern data experience going into the next decade, it's gonna be three. Us is simple, seamless, sustainable. We all want that. I think for anything in life, your take on that from marketing to reality >> I see is anything but simple. Let's be honest. It's seamless is probably the most overused word in a >> knot. I think in future proof >> it's the chance to say that and sustainable >> eh? Well >> sustained from the standpoint, what I love about the model is way. Heard this in the customer today. Well, you know, the five year TCO was kind of a wash, but then beyond five years, it was a no brainer because we're now in that subscription model. So I guess that's that's the sort of sustainability you think its sustainability in different ways. You know, green, I t >> right >> again. I t is not really green. So, you know, good marketing. >> Well, we heard from I think we had three or four customers on today with four to legal firms, one in New Zealand, one in the States we heard from a utility company out of Tulsa, Oklahoma, and then Mercedes AMG, Petunias Motor Sport. Formula One free, very different industries, similar stories in terms of the management simplicity of pure the evergreen model of being able to swap out and take advantage of those innovations and the things that Piers is doing the r and d on from a cost perspective. But I think those were three kind of common business and I t benefits that I heard articulated by three very different industries of very different sizes. >> I mean, I think it's important. Remember, you get a really effusive commentary from the pure customers, and I'm not trying to B B negative on that. They're very, very clear that companies like pure Nutanix cohesive the rubric wien. They have great customer experiences, and they're different than what companies air used to buying very often. Having said that, when we get these, when we get into these, you know, benefit, cost benefit discussions Typically you're you're you're comparing a modern, you know, circa 2019 platform with something that's, you know, five years old, so you better have a significantly better metrics again. Having said that, you're seeing a different experience, and that's clearly coming through in the customers that you talk to with pure. They started with a clean sheet of paper, didn't have a lot of technical debt, not a lot of baggage, that alone some really smart people that, you know, in Silicon Valley, you know, inundated with all this cloud stuff, and then they brought it forth very hard to build a billion dollar storage company. Pure was the 1st 1 since Netapp. So >> that was a couple of guys going >> to do it compelling couldn't do it. Equal logic couldn't do it after you've never heard of half of these companies, right? It's been it's been many, many years, decades since you saw a billion dollar storage company. That's how hard it is and to achieve escape velocity and fewer did it, which is quite a feat. And now that now the challenge is their market cap. It's so large that four and 1/2 1,000,000,000 and growing right ostensibly that they may be become acquisition proof. Okay, that's a good thing on the one hand, cause we love independent companies. On the other hand, at some point, the Tam Tam expansion within that little niche gets very difficult. That's why, for example, e M. C. Had to go out and buy a company like Llegado, and it made some actually, you know, some other crappy Apple acquisitions that didn't work out. And then they stumbled into VM, where it was gonna part of a TAM expansion strategy, and they lucked out because they the greatest acquisition in the history of I T. But I guess my point is at some point, a billion dollar company becomes a $2 billion company. Maybe give becomes a $5 billion company, and then it's like, OK, what do we do next? How do and you're seeing that app is in there now. Netapp is a growth challenge, Um, and a Tam expansion challenge. But it's too big to get acquired. There were years for their. For years. There were rumors about Cisco required, kept the stock up. It never happened. So stock buybacks tuck in acquisitions, you know, refresh of the portfolio, squeezing out a little bit of growth, some bad quarters. You know, that's That's the nature of the big company so pure at some point we'll hit that, but I think we're a couple of 1,000,000,000 away. >> They have also done a robust job of building a robust partner ecosystem. We talked to a number of them today, Cisco in video we had on the team. Tomorrow's Blanc is on in terms of this growth that you talked about, How well positioned are they with with the strategic and technology partnerships that they are not only building but evolving quite quickly? Where does that factor into your thoughts about their future in the next decade? >> I think, um, I think the key to that is their architecture. In terms of their AP, I, uh, framework. It makes it easy to integrate. Wait, Um and to the extent that they continue to grow, the customers buy their products, loved their products. The high end p s scores all that stuff, it's easier to have a NPS score when you're a billion dollar company is when you're, you know, $50 billion company. But are you with a big portfolio? But customers, clearly you're has momentum. People want to be with a winner. If yours a winner there. Architectures easy to integrate. Relatively speaking. Thio, You know the legacy vendors and it's clean across the portfolio. And so that's that's why I think the ecosystem continues to grow. I'd like to see more growth, you know, I remember service now when they were a billion dollar company and thinking, Wow, it was about this size, you know? Now you go to service now. I mean, you see the big, uh s eyes. You see a lot of niche players bumping into him or jumping up. I'd like to see that here, and I think it will continue. >> Well, this is certainly ah good chunk larger than last year's accelerate, which was about a year and 1/2 ago. And look where we are, Dave, We're in Austin. This is Dell's backyard. This is a bold company. I was telling you earlier today when I was doing some research for our guests, something that catches my attention as a marketer that many companies cannot d'oh and that is very bold and very direct against their competitors and tell customers this is why you should be buying us. I applaud that as a marketer, and as somebody who gets to interview folks on the Q, because it's hard to do. They have this bullish culture that they've always had, and they have grown in the last 10 years. We're seeing expansion, and we're seeing them not afraid to tackle anybody that their customers are looking at. >> So I want to talk about some of the industry dynamics as well. The I T industry loves a vacuum, and I think in some respects the acquisition of the EMS see by Del created a vacuum and pure is taking advantage of that now. For a while, Gel took its eye off the ball and was storage business was affected, and then they got their act together. And now it's 0% growth. It's it's Yeah, okay, I'd like to see better growth there, but they've been doing a lot of work, and pure is referenced this and some of the pressure. This is Dallas consolidating its portfolio, which is exactly the right thing to do. Deli emcees Portfolio is way too complicated, but you have to be careful. You can't just consolidate overnight because you're alienating your customers. So there's still some of that going on. The linchpin of Del strategy is VM wear. That is the key. That's where the future is for those guys. So when AMC was an independent storage company, it would fight tooth and nail. You know, Jeremy Burton was gonna take out net app, and he didn't do it. You have all these crazy videos and they, you know, they were focused, competitive oriented company that loved its customers and was very customer focused in many respects. I mean, they're still competitive, very competitive, but they're not that independent, pure play anymore. It's now it's netapp and pure, and I feel like net episode distracted, you know, with some of the struggles that pure is really, you know, has an opportunity. You know, I I remember Scott decent years and years and years ago told me when they were nobody said We think we could be the next TMC in storage. And I was like, Really? That's a amazingly bold statement when it appeared that the storage industry was kind of disappearing and everybody was getting acquired and it was becoming this vertically integrated converged infrastructure player with storage and networking and service. And that still may happen. A cloud, everything else, Um, but, you know, if you're has an opportunity to really become the leader in in this business in, you know, has an opportunity become the number one storage company takes some time, Uh, for a while. I question is, it doesn't really make sense to have independent stores, But you still see a lot of innovation. Certainly the backup vendors startups, you know, you see smaller companies, VC money still coming in back to something you said earlier. I t generally, and storage specifically really isn't simple. It's very complicated, and it's very hard. >> Well, Dave, we have had a great first day. I'm excited to work with you tomorrow. We've got cause coming on. Kicks coming on some more customers. Lots of good stuff in store for day two. >> All right, Cool. >> Likewise for David. Dante. I'm Lisa Martin. You're watching the Cube, the leader in live coverage.

>> Narrator: Live from Las Vegas, it's the CUBE covering ServiceNow Knowledge 2018. Brought to you by ServiceNow. >> Welcome back everyone, we are wrapping up three big days of the CUBE's live coverage of ServiceNow Knowledge 18. I'm your host Rebecca Knight along with my cohost Dave Vellante and Jeffrick. It has been such fun co-hosting with you both. It's always a ghast to be with you so three days, what have we learned? We've learned we're making the world of work work better for people. Beyond that what do you think? >> New branding you know there which I think underscores ServiceNow's desire to get into the C-Suite. Become a strategic partner. Some of the things we heard this week, platform of platforms. The next great enterprise software company is what they aspire to, just from a financial standpoint. This company literally wants to be a hundred billion dollar valuation company. I think they got a reasonable shot at doing that. They're well on their way to four billion dollars in revenue. It's hard to be a software company and hit a billion. You know the number of companies who get there ar very limited and they are the latest. We're also seeing many products, one platform and platforms in this day and age beat products. Cloud has been a huge tailwind for ServiceNow. We've seen the SaaSification of industries and now we're seeing significant execution on the original vision at penetration into deeply into these accounts. And I got to say when you come to events like this and talk to customers. There's amazing enthusiasm as much of if not more than any show that we do. I mean I really got, what's your take? >> We go to so many shows and it's not hard to figure out the health of a show. Right you walk around the floor, what's the energy, how many people are there? What's the ecosystem I mean, even now as I look around we're at the very end of the third day and there is action at most of the booths still. So it's a super healthy ecosystem. I think it grew another 4,000 people from this year of the year of year growth. So it's clearly on the rise. SaaS is a big thing, I think it's really interesting play and the kind of simple workflow. Not as much conversation really about the no code and the low code that we've heard in the past. Maybe they're past that but certainly a lot of conversation about the vertical stack applications that they're building and I think at the end of the day. We talked about this before, it's competition for your screen. You know what is it that you work in everyday. Right if you use, I don't care what application. SalesForce or any SaaS application which we all have a lot of on our desktop today. If you use it as a reporting tool it's a pain. It's double entry, it's not good. But what is the tool that you execute your business on everyday? And that's really a smart strategy for them to go after that. The other thing that I just think is ripe and we talked about a little bit. I don't know if they're down playing it because they're not where they want to be at or they're just downplaying it but the opportunity for machine learning and artificial intelligence to more efficiently impact workflows with the data from the workflow is a huge opportunity. So what was a bunch of workflows and approvals and this and that should all get, most of it should just get knocked out via AI over a short period of time. So I think they're in a good spot and then the other thing which we hear over and over. You know Frank Slootman IT our homies I still love that line. But as has been repeated IT is everywhere so what a great way to get into HR. To get into legal, to get into facilities management, to get into these other things. Where like hey this is a really cool efficient little tool can I build a nice app for my business? So seemed to be executing on that strategy. >> Yeah CJ just said IT will always be at our core. Rebecca the keynote was interesting. It got mixed reviews and I think part of that is they're struggling we heard tat from some of our guests. There's a hybrid audience now. You got the IT homies, you got the DevOps crowd and then you got the business leaders and so the keynote on day one was really reaching an audience. Largely outside of the core audience. You know I think day two and day three were much more geared toward that direct hit. Now I guess that's not a bad thing. >> No and I think that I mean as you noted it's a hybrid audience so you're trying to reach and touch and inspire and motivate a lot of different partners, customers, analysts. People who are looking at your business in a critical way. The first day John Donahoe it struck me as very sort of aspirational. Really talking about what is our purpose, what do we do as an organization. What are our values, what problems are we trying to solve here and I think that that laying out there in the way that he did was effective because it really did bring it back to, here's what we're about. >> Yeah the other thing I learned is succession has been very successful. Frank Slootman stepped down last year as CEO. He's maintained his chairman title, he's now stepped down as chairman. Fred kind of you know went away for a little while. Fred's back now as chairman. John Donahoe came in. People don't really put much emphasis on this but Fred Luddy was the chief product officer. Dan McGee was the COO, CJ Desai took over for both of them. He said on the CUBE. You know you texted me, you got big shoes to fill. He said I kept that just to remind me and he seems to have just picked up right where those guys left off. You know Pat Casey I think is understated and vital to the culture of this company. You know Jeff you see that, he's like a mini Fred you know and I think that's critical to maintain that cultural foundation. >> But as we said you know going the way that Pat talked about kind of just bifurcation in the keynote and the audiences in the building and out of the building. Which I've never heard before kind of an interesting way to cut it. The people that are here are their very passionate community and they're all here and they're adding 4,000 every single year. The people that are outside of the building maybe don't know as much about it and really maybe that aspirational kind of messaging touched them a little bit more cause they're not into the nitty gritty. It's really interesting too just cause this week is such a busy week in technology. The competition for attention, eyeballs and time. I was struck this morning going through some of our older stuff where Fred would always say. You know I'm so thankful that people will take the time to spend it with us this week. And when people had choices to go to Google IO, Microsoft build, of course we're at Nutanix next, Red Hat Summit I'm sure I'm missing a bunch of other ones. >> Busy week. >> The fact that people are here for three days of conference again they're still here is a pretty good statement in terms of the commitment of their community. >> Now the other thing I want to mention is four years ago Jeff was I think might have been five years ago. We said on the CUBE this company's on a collision course with SalesForce and you can really start to see it take shape. Of the customer service management piece. We know that SalesForce really isn't designed for CSM. Customer Service Management. But he talked about it so they are on a collision course there. They've hired a bunch of people from SalesForce. SalesForce is not going to rollover you know they're going to fight hard for that hard, Oracle's going to fight hard for that. So software companies believe that they should get their fair share of the spend. As long as that spend is a 100%. That's the mentality of a software company. Especially those run by Marc Benioff and Larry Ellis and so it's going to be really interesting to see how these guys evolve. They're going to start bumping into people. This guy's got pretty sharp elbows though. >> Yeah and I think the customer relation is very different. We were at PagerDuty Summit last right talked to Nick Meta who just got nominated for entrepreneur of the year I think for Ink from GainSight and he really talked about what does a customer management verses opportunity management. Once you have the customer and you've managed that sale and you've made that sale. That's really were SalesForce has strived in and that's we use it for in our own company but once you're in the customer. Like say you're in IBM or you're in Boeing. How do you actually manage your relationship in Boeing cause it's not Boeing and your sales person. There's many many many relationships, there's many many many activities, there's somewhere you're winning, somewhere you're losing. Somewhere you're new, somewhere you're old and so the opportunity there is way beyond simply managing you know a lead to an opportunity to a closed sale. That' just the very beginning of a process and actually having a relationship with the customer. >> The other thing is so you can, one of the measurements of progress in 2013 this company 95% of its business was in IT. Their core ITSM, change management, help desk etc. Today that number's down to about two thirds so a third of the business is outside of IT. We're talking about multi-hundreds of millions of dollars. So ITOM, HR, the security practice. They're taking these applications and they're becoming multi-hundred million dollar businesses. You know some of them aren't there yet but they're you know north of 50, 75 we're taking about hundreds of customers. Higher average price, average contract values. You know they don't broadcast that here but you know you look at peel back the numbers and you can see just tremendous financial story. The renewal rates are really really high. You know in the mid 90s, high 90s which is unheard of and so I think this company is going to be the next great enterprise software company and their focus on the user experience I think is important because if you think about the great enterprise software companies. SalesForce, Oracle, SAP, maybe put IBM in there because they sort of acquired their way to it. But those three, they're not the greatest user experiences in the world. They're working on the UI but they're, you know Oracle, we use Oracle. It's clunky, it's powerful. >> They're solving such different problems. Right when those companies came up they were solving a very different problem. Oracle on their relational database side. Very different problem. You know ARP was so revolutionary when SAP came out and I still just think it's so funny that we get these massive gains of efficiency. We had it in the ARP days and now we're getting it again. So they're coming at it from a very different angle. That they're fortunate that there are more modern architecture, there are more modern UI. You know unfortunately if you're legacy you're kind of stuck in your historical. >> In your old ways right? >> Paradigm. >> So the go to market gets more complicated as they start selling to all these other divisions. You're seeing overlay, sales forces you know it's going to be interesting. IBM just consolidated it's big six shows into one. You wonder what's going to happen with this. Are they going to have to create you know mini Knowledges for all these different lines of business. We'll see how that evolves. You think with the one platform maybe they keep it all together. I hope they don't lose that core. You think of VM world, rigt there's still a core technical audience and I think that brings a lot of the energy and credibility to a show like this. >> They still do have some little regional shows and there's a couple different kind of series that they're getting out because as we know. Once you get, well just different right. AWS reinvents over $40,000 last year. Oracle runs it I don't even know what Oracle runs. A 65,000, 75,000. SalesForce hundred thousand but they kind of cheat. They give away lot of tickets but it is hard to keep that community together. You know we've had a number of people come up to us while we're off air to say hi, that we've had on before. The company's growing, things are changing, new leadership so to maintain that culture I think that's why Pat is so important and the key is that connection to the past and that connection to Fred. That kind of carried forward. >> The other thing we have to mention is the ecosystem when we first started covering ServiceNow Knowledge it was you know fruition partners, cloud Sherpas I mean it. Who are these guys and now you see the acquisitions, it's EY is here, Deloitte is here, Accenture is here. >> Got Fruition. >> PWC you see Unisys is here. I mean big name companies, Capgemini, KPMG with big install bases. Strong relationships it's why you see the sales guys at ServiceNow bellying up to these companies because they know it's going to drive more business for them. So pretty impressive story I mean it's hard to be critical of these guys, your price is too high. Okay I mean alright. But the value's there so people are lining up so. >> Yeah I mean it's a smoking hot company as you said. What do they needed to do next? What do you need to see from them next? >> Well I mean the thing is they laid out the roadmap. You know they announced twice a year at different cities wit each a letter of the alphabet. They got to execute on that. I mean this is one of those companies that's theirs to lose. It really is, they got the energy. They got to retain the talent, attract new talent, the street's certainly buying their story. Their free cash flow is growing faster than their revenue which is really impressive. They're extremely well run company. Their CFO is a rockstar stud behind the scenes. I mean they got studs in development, they got a great CEO they got a great CFO. Really strong chief product officer, really strong general managers who've got incredible depth in expertise. I mean it's theirs to lose, I mean they really just have to keep executing on that roadmap keeping their customer focus and you know hoping that there's not some external factor that blows everything up. >> Yeah good point, good point. What about the messaging? We've heard as you said, it's new branding so it's making the world of work work better, there's this focus on the user experience. The idea that the CIO is no longer just so myopic in his or her portfolio. Really has to think much more broadly about the business. A real business leader, I mean is this. Are you hearing this at other conferences too? Is it jiving with the other? >> You know everyone talks about the new way to work, the new to work, the new way to work and the consumers they sort of IT and you know all the millennials that want to operate everything on their phone. That's all fine and dandy. Again at the end of the day, where do people work? Because again you're competing everyone has, excuse me many many applications unfortunately that we have to run to get our day job done and so if you can be the one that people use as the primary way that they get work done. That's the goal... >> Rebecca: That's where the money is. >> That's the end game right. >> Well I owe that so the messaging to me is interesting because IT practitioners as a community are some of the most under appreciated. You know overworked and they're only here from the business when things go bad. For decades we've seen this the thing that struck me at ServiceNow Knowledge 13 when we first came here was wow. These IT people ar pumped. You know you walk around a show the IT like this, they're kind of dragging their feet, heads down and the ServiceNow customers are excited. They're leading innovation in their companies. They're developing new applications on these platforms. It's a persona that I think is being reborn and it sound exciting to see. >> It's funny you bring up the old chest because before it was a lot about just letting IT excuse me, do their work with a little bit more creativity. Better tools, build their own store, build an IT services Amazon likened store. We're not hearing any of that anymore. >> Do more with less, squeeze, squeeze. >> If we're part of delivering value as we've talked about with the banking application and link from MoonsStar you know now these people are intimately involved with the forward facing edge of the company. So it's not talking about we'll have a cool service store. I remember like 2014 that was like a big theme. We're not hearing that anymore, we've moved way beyond that in terms of being a strategic partner in the business. Which we here over and over but these are you know people that header now the strategic partner for the business. >> Okay customers have to make bets and they're making bets on ServiceNow. They've obviously made a bunch of bets on Oracle. Increasingly they're making bets on Amazon. You know we're seeing that a lot. They've made big bets on VM ware, obviously big bets on SAP so CIOs they go to shows like this to make sure that they made the right bet and they're not missing some blind spots. To talk to their peers but you can see that their laying the chips on the table. I guess pun intended, I mean they're paying off. >> That's great, that's a great note to end on I think. So again a pleasure co-hosting with both of you. It's been a lot of fun, it's been a lot of hard work but a lot of fun too. >> Thank you Rebecca and so the CUBE season Jeff. I got to shout out to you and the team. I mean you guys, it's like so busy right now. >> I thought you were going to ask if we were going next. I was going to say oh my god. >> Next week I know I'm in Chicago at VMON. >> Right we have VMON, DON, we've got a couple of on the grounds. SAP Sapphire is coming up. >> Dave: Pure Accelerate. >> Pure Accelerate, OpenStack, we're going back to Vancouver. Haven't been there for a while. Informatica World, back down here in Las Vegas Pure Storage, San Francisco... >> We got the MIT's CTO conference coming up. We got Google Next. >> Women Transforming Technology. Just keep an eye on the website upcoming. We can't give it all straight but... >> The CUBE.net, SiliconAngle.com, WikiBon.com, bunch of free content.- you heard it here first. >> There you go. >> For Rebecca Knight and Jeffrick and Dave Vellante this has been the CUBE's coverage of ServiceNow Knowledge 18. We will see you next time. >> Thanks everybody, bye bye.

>> Narrator: Live from Orlando, Florida it's theCUBE covering PentahoWorld 2017. Brought to you by Hitachi Vantara. >> Welcome back to sunny Orlando everybody. This is theCUBE, the leader in live tech coverage, and this is our second day covering PentahoWorld 2017. theCUBE was here in 2015 when Pentaho had just been recently acquired by Hitachi. We then, let's see, around September timeframe we saw Hitachi rebrand, Hitachi Data Systems rebrand as Hitachi Vantara, bringing together three components of its business, the Hitachi Data Systems business, the Hitachi Insights business, and of course, the Pentaho Analytics platform. We heard yesterday from Brian Householder, the president and COO of Hitachi Vantara, what the strategy was. I thought he was a very crisp, clear presenter. The strategy made a lot of sense, it resonated. Obviously a lot of execution to be done. And then subsequently at the last two days we've heard largely from Pentaho practitioners who are applying this end to end analytics platform to really transform their businesses, to really become data driven supporting those digital transformations. So pretty positive story overall. A lot of work to be done. We got to see how this whole edge to outcome plays out. Sounds good. There's got to be some execution there. We got to see the ecosystem grow for sure. These guys got a great story. This conference should explode. >> It's really a validation for Pentaho. They've been on the market for more than a decade now as the spearhead for the open source analytics revolution in business analytics, and in predictive modeling, and in data integration, all of it open source. And they've come very far and they're really a blue chip solution program. I think this show has been a great validation of Pentaho's portfolio presence in the market. Now Hitachi Vantara has a gem of a core asset. Clearly, the storage market, the data center converged infrastructure, the core Hitachi Data Systems product lines, are starting to experience the low growth that such a mature space experiences. And clearly they're placing a strong bet on Hitachi Vantara that the IoT, that the edge analytics market, will just boom wide open. Hitachi Insight Group, which was only created last year by their corporate parent, was chartered to explore opportunities in IoT. They've got the Lumata platform. They had, Hitachi Next, their conference last month, focused on IoT. I think that's really the capstone, the Lumata portfolio, in this overall story. Now, I think what we're hearing this week is that great, they've got the components, the building blocks, of potential growth, but I don't think they're going to be able to achieve takeoff growth until such time, Hitachi Vantara, they have a stronger, more credible reach out to the developer community, specifically the developers who are building the AI and machine learning for deployment to the edge. That will require to have credibility in that space. Clearly it's going to have to be the new set of frameworks, such as TensorFlow, and MXNet, and Fee-an-o, and so forth. They're going to need some sort of a modeling framework or abstraction from it that sits on top of the Pentaho platform or really across all of their offerings, including Lumata, and enables a developer to using, the mainstream application developer to use code, whether it be Python or R or Java, whatever, to build the deep learning and AI models at the highest level of abstraction, the business level of abstraction, then to automatically compile those models, which are computational graphs, down to formats that are optimized and efficient to run on devices of all sorts, chip sets of all sorts, that are increasingly resource constrained. They're not there yet. I'm not hearing that overall developer story at this show. I think they've got a lot of smart people, including Brian, pushing them in that direction. Hopefully next year's PentahoWorld or however they may rebrand this show, I think they'll probably have more of that put together, but we'll keep on waiting to see. >> And that's something that I pushed on a little bit this week. In particular, that requires a whole new go to market where the starting point is developers and then you're nurturing those developers. And certainly Pentaho has experience with community editions, but that was more to get enterprise buyers to kind of try before they buy. As you know well, Jim, the developer community is, they're very fickle, they're persnickety, they're demanding, and they're super smart, and they can be your best advocates or they'll just ignore you. That's just kind of the way it is with developers. And if you can appeal to them you can get a foothold in markets. We've seen it. Look at what Microsoft has done, look at what Amazon has done, certainly Docker, you know, on and on and on. >> Community marketing that's full bore (mumbles) user groups, developer days, hackathons, the whole nine yards, I'm not seeing a huge emphasis on community marketing in that really evangelistic sense. They need to go there seriously. They need to win the hearts and minds of the next generation developer, the next generation developer who actually won't care about whether it's TensorFlow backends or the other ones. What they will care is the high level framework, and really a collaborative framework, that's a solution provider gives them for their teams to collaborate on building and training and deploying all this stuff. I'm not hearing from this solution provider, devops really, here this year. Hopefully in the coming years there will be. Other vendors are a bit further along than they are. We see a bit further along IBM is. We see a bit further along like Cloudera and others are in putting together really a developer friendly ecosystem of components within a broader data lake framework. >> Yeah, and that's not been the historical Pentaho DNA. However, as you know, to reach out, have a community effort to reach out to developers requires resources and commitment, and it's not a one shot deal. But, it also requires a platform, and what we're seeing today is the formation of that. The reformation of Hitachi into Hitachi Vantara with a lot of resources that has a vision of a platform, of which Pentaho is a critical component, but it's going to take a lot of effort, a lot of cultivating. I presume they're having those conversations internally. They're not ready to have them externally, which is I presume why they're not having them. But that's something that we're going to certainly watch for in the coming years. What else? You gave a talk this afternoon. >> Yeah, AI is Eating the Edge, and it was well received. In fact, when I prepared my thoughts and my research about a month ago for this event I was thinking, "Am I way too far ahead?" This is Pentaho. I've been of course familiar with them since their inception. I thought, "Are there other users? "Are there developers? "Is their community going deep into AI "and all the IoT stuff?" And the last day or so here at this event it's like, "Whoa, everybody here is into that. "They know this stuff." So, not only was I relieved that I wouldn't have to explain the ABCs of all that, they were ahead of me in terms of the questions I got. The questions are, once again, what framework should we adopt for AI, the whole TensorFlow, all those framework wars, which I think are sort of overblown and they will be fairly soon, it'll be irrelevant, but those kinds of questions. Those are actually developer level questions that people are just here and they're coming to me with. >> Well, you know, I tell you, I'm no expert in frameworks, but my advice would be whatever framework you adopt you're probably not going to be using that same framework down the road. So you have to be flexible as an organization. A lot of technical leaders tell me this is look, technology is going to come and it's going to go. We got to have great people. We've got to be able to respond to the market requirements. We have to have processes that allow us to be proactive and responsive, and that your choice of framework should ensure that it doesn't constrict you in those areas. >> And you know, the framework that actually appeals to this crowd, including the people in my room, it's a wiki bot framework, it's also what Brian Hopkins of Forrester presented, the three tier architecture. There's the edge devices. There are the gateways or hubs. There's the cloud. We call them primary, secondary, tertiaries. Whatever you call them, you put different data, you put different analytics on each of those tiers. And then really in many ways in a modular fashion then you begin to orchestrate with Kubernetes and so forth these AI infused apps and these distributed architectures, like self driving vehicles or whatever. And the buzz I've been getting here, including in my session, everybody is saying, "Yeah, that's exactly the way to go." In other words, thinking in those terms prevents you as a developer from thinking that AI has to be some monolithic frigging stack on one single node. No, it actually has to be massively parallel and distributed, because these are potentially very compute intensive applications. I think there's a growing realization in the developer community that when you're talking about developing AI you're really talking about developing two core workloads. There's the inferencing, which is where the magic happens in terms of predictions and classifications, but even more resource consumptive is the training that has to happen in the cloud, and that's data, that's exabytes, petabytes intensive potentially. That's compute intensive. Very different workload. That definitely needs to happen in the cloud primarily. There's a little bit of federated training that goes out to the edge, but that's really the exception right now. So there's a growing realization in the developer community that boy, we better get a really good platform for training. And actually they could leverage, we've seen it in our research of wiki bot is that, many AI developers, many deep learning developers, actually leverage their Spark clusters for training of TensorFlow and so forth, because of in memory massive parallelism, so forth and so on. I think there will be a growing realization in the developer community that the investments they've been making in Hadoop and Spark will just be leveraged for this growing stack, for training if nothing else. >> Well, in 8.0 that was sort of the big buzz here. And you and I talked at the open with Rebecca, our other co-host, about 8.0 A lot of incremental improvements. But you know what, in talking to customers that's kind of what they want. They want Pentaho to do a good job of incorporating, curating, open source content, open source platforms and products, bringing them into their system, and making sure that their customers can take advantage of them. That's what they consistently kept asking for. They weren't freaked out about lack of AI and lack of deep learning and ML and Weka is fine. Now maybe it's a blind spot, I don't know. >> No, no, actually I've had 24 hours since they announced to chew on it. In fact, I have a SiliconANGLE article going up fairly soon with essentially my trip report and my basic takeaway. And actually what I like about 8.0 is that it focuses on streaming, bringing open source analytic streaming more completely into the Pentaho data integration platform, in other words, their stronger interoperability with Spark streaming, with Kafka, and so forth, but also they have the ability within 8.0 to better match realtime streaming workloads to execution engines in a distributed fabric. In other words, what I think that represents not only in terms of Hitachi Vantara's portfolio, but in terms of where the industry is going with all things to do with big data applications whether or not they involve AI is streaming is coming into the mainstream, pun intended, and data at rest platforms are starting to become marginalized in a lot of applications. In other words, Hadoop is data at rest par excellence, so are a fair number of other no SQL platforms. Those are not going away. Those are the core of your data lakes. But most development is being developed now, most AI and machine learning is being developed for streaming environments that increasingly are edge oriented. So Pentaho, Hitachi Vantara, for 8.0 have put in the right incremental features for the market that lies ahead. So in many ways I think that was actually a well thought out release for this particular event. >> Great. Okay, some of the highlights here. We had a lot of different industries, gaming, we had experts on autonomous vehicles, we had the NASDAQ guys on, that was a very interesting segment, the German police interview you did, the chief data officer of community colleges in Indiana. So, a lot of diversity, which underscores the platformness of Pentaho. It's not some industry specific system. It is a horizontal capabilities platform. Final thoughts on the show, some interesting things that you saw, things you learned? >> Yeah, on the show itself, they did a really good job. Hitachi Vantara, of course it's a new brand, but it's an old company, and it's even an old established set of product teams that have come together in a hurry essentially, though it's really been two years since the acquisition. They did a really good job of presenting a unified go to market message. That's a good start They've done a good job of the fact that they had these two shows in a rapid sequence, Hitachi Next, which was IoT and Lumata, but it was Hitachi Vantara, and now this one where it's all data analytics. The fact that here in the peak of fall event season they had these two shows really highlighting their innovations and their romance for those two core of their portfolio, and have done a good job of positioning themselves in each case, that shows that the teams are orchestrating well in terms of at least go to market presenting their value prop. I think in terms of the actual, we've had a lot of great customer and partner interviews on this show. And I think, you mentioned gaming first, I wasn't actually on the gaming related CUBE interview, but gaming is a hot, of course it's a hot, hot market for AI increasingly. A lot of AI that gets developed now for lots of applications involves simulations of whatever scenario you're building, including like autonomous vehicles. So gaming is in many ways a set of practices that are well established and mature that are becoming fundamental to development of all AI, because you're developing synthetic data based on simulation environments. The fact that Hitachi Vantara has strong presence as a data provider in the gaming market I think in many ways indicates that they've got ... It's a crowded marketplace. They have much larger competitors and deeper pocketed, but I think the fact is they've got all the piece parts needed to be a roaring success in this new era, and they've got strong and very loyal customers I'm discovering, not discovering, I've known this all along. But, since I've rejoined the analysts' space it's been revalidated that Pentaho how strong in blue chip they are. Now that they're a new brand in a new era, they're turning themselves around fairly well. I don't think that they'll be isolated by ... Clearly, I mean, with AI ... AI right now belongs to AWS and Microsoft and Google and IBM to some degree. We have to recognize that the Hitachi Vantaras of the world right now are still a second tier in that arena. They probably have to hitch their wagon to at least one of those core cloud providers as a core partner going forward to really prevail. >> Dave: Which they can do. >> Yeah, they can do. >> Alright. Jim, thanks very much for closing with me. Thanks to you all for watching. theCUBE puts out a lot of content. You can go to SiliconAngle.com to see all the news. theCUBE.net is where we host all these videos. Wikibon.com is our research site, so check that out, as well. We've got CrowdChats going on, CrowdChat.net. It's just unbelievable. >> Unbelievable. >> Rush of content. We're all about the data, we're all about sharing, so check those sites out. Thanks very much to the crew here. Great job. And next week a lot going on. We're in New York City. We've got some stuff going on there. Want to thank our sponsor, without whom this show, this CUBE show, would not be possible, Hitachi Vantara slash Pentaho. >> Thank you to sunny Orlando. It's great and wonderful. >> This has been theCUBE at PentahoWorld 2017. We'll see you next time. Thanks for watching. (techno music)