>>the >>globe. It's the Cube with digital coverage of AWS >>reinvent 2020 >>sponsored by Intel, AWS and our community partners. Everyone welcome back to the cubes. Virtual coverage of AWS reinvent 2020 Virtual I'm John for your host. Got a great segment here with two analyst day Volonte and Zia's Carvell who's head principles of zk research dot com. Guys. Great to see you A W s Kino. Thanks for >>coming on. Let's be back in the cube. >>Welcome back. Great to see you guys. Wanna get your thoughts? Um, it's mainly you because we talked with the enterprise a lot. You are leading analyst. You cover a broad range from networking all the way up to the C suite for enterprise buyers and and technology trends. Um, Andy Jassy laid down, in my opinion, what was directionally his next 20 mile stare. The next conquest for Amazon. And that is global. I t spend they locked in the infrastructures of service pass kicking ass. There. Check check. Hello, Enterprise. Different ballgame. What's your thoughts? >>Yeah, they have so much in different areas, obviously. You know, they have dominated cloud instances right there. Mawr compute storage memory. You know insists that anybody but you can see him, um, spreading their wings now, right? I think one of the more interesting announcements was actually what they're doing with Amazon connect. That's their contact center platform. And this is something that I think, Even last year, a lot of people weren't really even sure if they'd be in a long primary in the pocket. People about this market, they were asking, If you really think Amazon's in this, there's something they're experimenting. But we're here to stay. And I think one of the interesting things that they bring to market is, you know, almost unprecedented scale with their cloud platform as well as all the machine learning algorithms. And I think if if you believe that machine learning artificial intelligence is changing, I t. Forever and that's everything from the infrastructure to the network through the applications, then they have an inherent advantage because they have all those machine learning albums built into this stuff that they dio and so they can constantly look at these different markets and disruptive, disruptive, disrupt and take more and more sharing that and that's what they've done. E think that's you know, the context and announcements were great example that they're not doing the telephony things, and, you know, they're kind of bare table stakes. They do that pretty well, but they've just unloaded a whole bunch of ai based features that >>Dave, what's your take on this context center? Because it's not just call centers. I mean, there was a whole industry around call center, unified communications. That whole world. This is about the contact. It's about the person. This is not just a nuanced thing like telephony or, you know, PBX is in the old days. Remember those days? Things is not about the call. It's about the contact. This is what Jazzy saying. >>I think that way had Diana or on early. And I said, I like the fact that their AWS specifically is going after these solutions because several years ago it was just sort of. Here's a bunch of tools. Go figure it out. I think the contact center is I mean, everybody can relate Thio the pains of going through getting rerouted, having to restate all your credentials, not knowing who you are. And so between machine learning, Alexa, Natural language processing, better work flows. I mean there's this huge opportunity toe reinvent the whole call center contact center. So, uh, yeah, I think you called it John. It's a no brainer for a W s toe Really disrupt that >>business. Well, it also puts him in a position. You know, news is breaking on the day of and yet his keynote here at reinvent that, uh, you got Salesforce spying slack for 27 close toe, $28 billion. That's a 55% premium over when they announced it. And that's like a 30 x or 50 x on on revenue. Massive number to confess the message board software. I mean, so So. So. If Amazon can come in and get the context center model, which is not just voice, it's chat, it's machine learning. It's bots. And the innovation to create a step function kind of brings it back into the that integration of user network compute. You know, I just think that it feels very edgy in the sense of edge computing, because if I'm a person, I'm mobile. If I'm a person at work or at home, so there's a whole redefinition Zs, what's your take on this edge? Play from Amazon in context toe the enterprise software landscape. That seems to be, you know, focus on buying companies like Salesforce. >>Well, I think edges really the next big foray for computing. If one of the things and you ask we talked about this, you know, was that the compute, the unit of Compute, has gotten smaller and smaller, Right? We went from data centers to servers to virtual machines, the virtual machines and clouds. Now we're talking about containers and containers on edges, and this requires, um if you if you believe in the world of distributed computing where we're gonna have mawr containers running in MAWR, places on MAWR edges, right. The value proposition where companies is now they can move their data closer to the customer. They could move data closer to the user. And so, if I'm a retailer and I'm trying to understand what a customer is doing, I could do that in store. If I'm Tesla and I'm trying to understand what the drivers doing, I could do that in car, right? If I'm a cellular provider, I could do it by cellular edge. So the edge, I think, is where a lot of the innovation is going to be at Amazon has the luxury of this massive global network. You know, they just announced the number another a number of other local nodes, including Boston and a few other places. So they've got the footprint in place. And this this is what makes Amazon's are difficult to compete with, right? They built this massive network and this all these, no doubt for their e commerce business. And now they're leveraging that deliver I t services. You can't just go build this from the ground up the variety, right? You have to be able to monetize it another way. And they've been doing that with the commerce for a long time. And so it makes them. It makes it very, very difficult for them to capture Google could with Daniel forget about the item. Oh, yeah, so good. Microsoft. Possibly. But they I think that the more distributed compute becomes the more favors Amazon, >>I would add to that if I could, John, I mean, look good. Look at the prevailing way in which many of the infrastructure the old guard is Andy. Jesse calls them. Companies have pursued the edge they've essentially taking, taking x 86 boxes and, you know, maybe made him rugged and throwing them over the fence to the edge. And that really is not gonna play the edges. Now there's not one edge. I mean, there's a very highly specific use cases and factories and windmills. And maybe maybe it's small retail organizations, and whatever it is that those are gonna be really unique situations. And I think the idea of putting a programmable infrastructure at the edge is gonna win. I also think that the edge architecture is gonna be different. It's going to require much more efficient processing to do a I Influencing a lot of the data is gonna be, uh, stay at the edge. A lot of it's not gonna be persisted. Some of it's gonna come back to the cloud. But I think most of it is actually gonna gonna either not be persisted or stay at the edge and be affected in real time. When you think of autonomous vehicles so totally different programming model, >>well, I think that's the point of what I was saying earlier Zeus was talking about Is that it's It's the edges is just different. I mean, you got purpose built stuff. I mean, they were talking by the way they have snowball. So they have, ah, hard edge device. And they got out outpost now in multiple flavors and sizes. But they also were talking about computer vision and machine learning. We're going together for that. The panoramic appliance. I think it was where there's all these different cases to your point, Dave, where it's just different. At the edge, you have the zones for five G. I mean, if you go to a five g tower, that's essentially an edge. Just there's equipment up to this. Radios is transceivers and other back haul equipment. So when you look at the totality of what it is, the diversity, I think that's why this whole idea of Lambda and Containers is interesting. Toe Zia's. When you were saying about the compute sizes being small, because if you could put compute at the edge on small pieces to match the form factor that becomes interesting. I think that's what this Lambda container announcement I found interesting because I see that playing directly into that your reaction to >>that. It actually, um, makes it. If not done correctly, it could make I t much more complex because, um, containers air interesting because they're not like virtual machines. First live in perpetuity. Containers you They're very ephemeral, right? You spin them up to 30 seconds, you spin them up for a couple of minutes that you deprecate them. So at any given point in time, you could have thousands of containers, a handful of containers, millions of containers, Right? But it necessitates a common management. Uh huh. Underlay that could be used to visualize where these containers are, what's running on them. And that's what AWS provides. You know, all the stuff they're doing Lambda and Eks and things like that that lends itself to that. So a customer can then go and almost create a container architecture that spans all their cloud's edges, even on Prem. Now, uh, when Amazon has but still be able to manage it and simplify it, I think somebody's trying to do it themselves. They're gonna find that the complexity almost becomes untenable. Unless you have a Nike organization the size of Amazon companies don't. So we're >>gonna here, we're gonna hear from Deepak singing in a few sessions. He did the eks anywhere. That's essentially kubernetes service on the data center. But look at what they did with eks anywhere and then CCS, which has a common control plane to your point, that's compelling. And so, you know, if you're a developer or you're an enterprise, you might not have If you want to go with this. I t world. We talked about earlier zeros before you came on on our last segment. Most I t is not that built out in terms of capabilities. So learning new stuff is hard, so operating Amazon might be foreign to most I t shops. This is a challenge. Did you agree with that? Or or how do you see that? >>Um, well, a lot of Amazon used, obviously just the interviews and numbers of fucked that right. Um, but I think the concept of in a world where you have that common operating layer that spans it's no longer geographically limited to a data center or to a server. You know, it's it's now distributed across your entire multi cloud or distributed cloud environment. And so one of the important things right people remember is the world is becoming more dynamic and or distributed, and your I t strategy has to follow that. If you're doing things that are counted that you're not only standing still, you're actually going backwards. And so what Amazon is doing is they're allowing companies to be is dynamic distributors. They need to be to be able to maintain that that common operating layer that actually makes it management, because without it, you just you wind up in a situation. Like I said, that's incredible. A lot of people facing that today. And that's why that's why there's this big divergence, right? This five native cos they're going fast and legacy companies that can. >>Guys, I want to spend the next 10 minutes we have getting into more of the business side from this keynote because because I know your research on digital transmission first. I know you know the networking side up and down the stack and all that good stuff, but you've been doing a lot of research around the digital transformation with the cloud. Dave, you just put out a great great breaking and else think your 55th, um, episode on digital transformation with the cloud. It's very clear that Jackie is basically preaching, saying, Hey, Clay Christensen is former professor who passed away. He brought up this whole innovator's dilemma kind of theme and saying, Hey, if you don't get the reality that you're in, you better wake up and smell the coffee. It's a wake up call. That's what he's basically saying That's my take away. This is really this business management lesson. Leadership thinking is super important, and I know we've We've talked about people process, technology. Uh, let's Covad eyes this real quick. Bottom line. What is the playbook? Do you agree with jazz? His point of view here? Um, he's pretty being hardcore. He's like, literally saying adapter die in his own way. What, you guys thoughts on this? This is a true forcing function. This cove, In reality, >>I mean I mean, if you talk about the business transformation, digital transformation, business transformation, you know, what does that mean? I, like, said earlier that the last 10 years about I t transformation, I think the next 10 is gonna be about business transformation, organizational industry transformation, and I think what that means is the entire operational stack is gonna get digitized. So your sales you're marketing your your customer support your logistics. You know you're gonna have one interface to the customer as opposed toe, you know, fragmented stovepipe siloed. You know, data sets all over the place, and that is a major change. And I think that's ultimately what a W. S is trying to affect with its model and has obviously big challenges in doing so. But But that, to me, is what digital transformation is ultimately all about. And I think you're going to see it unfold very rapidly over the next several >>years. What's your reaction? What's your view on on the on Jackie? >>And he talked about his eight steps toe reinvention. Um and e think what digital transformation to me is the willingness to re invent disruptive own business even in the face that it might look horrible for your business, right? But understanding he is there something that I think is true. And a lot of, um, business leaders don't fully by this that if something is good for your customer, they're going to do it, and you can either make it happen, or you gonna watch it happen and then have the market taken away from me because there's a lot of cases you look at how slow you know, A lot of the banks, you know, operated until you know, the a lot of these, uh, cloud native, uh, money exchange systems came around the cape. Alan Ben more and things like that, right? Even retailers Amazon completely disrupted that model. You could say that Amazon killed, you know, Toys R us, but 20 rescue Toys R Us E. And I think there's got to be this hard willingness to look at your business model and be willing to disrupt yourself. And what Kobe did, John, I think, is a taught us a lesson that you have to be prepared for anything because nobody saw this coming. And sure you can. And a lot of companies thrived out of this, and a lot of one's gone away, but that the ability to be agile has never been more important. But you're only is Angela's. Ike lets you be, and that's what that's what. The W. Is going to sell us the ability to do anything you want with your business. But the staff, you have to have the business because they're willing to do that. >>You know, that's a great point. That's so smart. It's crime that's worth calling out. And we were talking before we came on live about our business with the Cube. There's no virtual, there's no floor anymore. So we had to go virtual if we weren't in the cloud. If we weren't doing R and D and tinkering with some software and having our studio, we'd be out of business. Dave. Everyone knows it. Now Get the Cube virtual. We have some software were position, and this kind of speaks directly to what Andy Jassy said. He said. Quote. If you're not in the process of figuring out as a company, how you're going to reinvent your customer experience in your product and reinvent who you are, you are starting to unwind. You may not realize it, but you are. What he's saying is you better wake up and smell the coffee and I want to get your guys reacted. You, particularly you around your experience and research. I've noticed that some customers that had cloud going on did well with co vid and said ones that didn't are still struggling not to catch up. So you're kind of intense. You got some companies that were that were on the wave, Maybe kind of figuring it out, that we're in good position and some that were flat footed and are desperate. Um, seems to be a trend. Do you agree with that? And what's your view on this idea of being ready? What does that even mean to be? Have readiness or >>take, you don't get the data points that Andy threw up there, right? That 50% of the companies that were the global fortune $500.2000 or are no longer here, Right? That Zatz Pretty shocking statistic. And that does come, uh, you know, from the willingness to disrupt your business. And if you got you're right. The companies that had a good, solid class raging in place, we're able to adapt their business very quickly. You could you look at retailers. Some had a very strong online presence. They had online customer service set up those companies didn't find other ones, were really forced to try and figure out how to let people in the store had a mimic. You know, the in store experience, you know, through from, uh, you know, support interface or whatever. Those are the ones that really struggling. So you're right. I think companies that were on the offensive plug to Dover companies that were fully in the cloud really accelerated their business and ones that didn't buy into it. I think they're struggling to survive in a lot of They're gone. >>Yeah, and all that. John, When Jesus was talking about his view of digital transformation, I was just writing down some of the examples to your point. The folks that were sort of had were cloud ready, covert ready, if you will. And those that weren't But think about think about automobiles. You know, there's testily even a manufacturer of automobiles or they software company. Personal health has completely changed over the last nine months with remote. You know, uh, telehealth automated manufacturing. You think about digital cash, e commerce and retail is completely, you know, accelerated. Obviously toe online. Think about kids in college and kids in high school and remote learning farming. You know, we've done a great job in terms of mono crops and actually creating a lot of food. But now I think the next 10 years is gonna be how do we get more nutritious food to people and so virtually every industry is ripe for disruption, and the cloud is the underpinning of that disruption. >>Alright, guys, got a few more minutes left. I want to get your thoughts quickly on the keynote. What it means for the customers that we're watching again. This is not a sales and marketing conference as they talk about. But if you're sitting in the audience, you guys, we're watching and we're virtual um Did it hit home with you? If you're a customer, what did he what? Give us Give the grades. Where do you Where do you hit a home run? Where he missed. Did he leave anything out? What's your take Zia's? We'll start with you. >>Um, I thought it was actually really good Keynote. I thought you did a good job of making the case for AWS. They talked about the open. They have more instances than anybody. So you could do almost any kind of compute in their cloud. I think one of the important lessons variety to is the importance. You can't just do everything. The software right? Hardware Still important silicon still important that, and to meet the needs of very special he needs from things like machine learning and AI. Amazon's actually spending their own silicon very much like Athens doing with their computers. And so if you are going to be a customer service focused company, you need to think of the I T. Stack and everything from the silicon, the hardware through the software, and build that integrated experience to Amazon's giving a tools to do that Now E. Do I would like to see Amazon be a little more, um, a supposed the cloud competitive friendly. The one thing I hear from customers all the time is they love the Amazon tools. They love the optimization capabilities, but you know, if they are adopting some kind of multi cloud strategy, the Amazon tools don't work in Azure and the capital don't work in Amazon. The same with Google, and it would be well within the best interests of those three companies. They find a way to get together and allow their common framework to work across clouds. Amazon's already got a lead that they could do that, and I don't think it's gonna be, but that that is something I think that's still missing from this world is they make it very difficult for customers to move the multi cloud. >>Well, some would say some people are saying, saying that the number one in the cloud I mean, got cloud wars Bob Evans over there saying Microsoft is dominating number one position over everybody else, multiple quarters in a row Now he's looking at revenue and granted. You got a lot of propping up there you got. You know, Windows server and sequel. You got a bunch of professional services, But clearly the I as in past side of the market, Microsoft is, like, way behind um So, yeah, they've got the numbers little legacy in their Microsoft should, and they got a little base. If I'm Amazon, I'm not. I'm worried about Microsoft more than anybody. I think you know, I looking at the Civil War between the Seattle forces. I mean, this is really Microsoft's gotta greatest all base, and they could flip that license deals and >>the cloud is good enough. I mean, it's myself doing very, very well with its classic Microsoft. You know >>they your point. Microsoft is the king of good enough, right? They put out features. They market heavily to the I t pro on. They put out licensing packages, so you're almost foolish to not at least fry their products. And then they do roll it out. So it's good enough and then you live with it for a while. But ultimately, whenever people use Microsoft, they do have an alternative under in there for a very special case. But e don't wanna >>the king of good enough. That's a great line. I love that. I'm gonna use that. But this Babel fish thing for Aurora that is a huge dagger. Potentially, it's an escape valve for customers. They wanna leave Microsoft. But clearly, if Microsoft you're gonna get penalized by running your license on Amazon. >>If our CEO our i t c t, I'd say, Okay, I definitely want to do business with with Amazon. That's what I heard today from Jassy, and I would want to hedge my bets either with Microsoft, especially if I'm a Microsoft shop or with Google's from analytics heavy unquestionably. I'd want to hedge my bets and have some kind of 70 30 80 20 mix. >>Look, if you're Andy Jassy and he's told me my interview, do it directly. I asked this question. He was very forthright. He doesn't hide from the fact that, uh, customers have multiple clouds, but they have a primary and secondary, but they're not gonna have, like, five or six major clouds. Yeah, it's hard to get these teams trained at to begin with. So there's a hedge. There's a supplier leverage. I get that. He's totally gets that. But if you're Amazon, you're gonna have your annual conference. You really don't wanna be in the business of talking about the other guys cloud, you say hybrid, right? It's on my show. You know, like you're competing. This is there's definitely competition between Microsoft and A W s. So you gotta respect that. But yeah, of course. There's multiple clouds called hybrid eks everywhere. Uh, container service. I mean, >>especially global, right? Different cloud providers of different strengths in different regions. You know, Microsoft, very strong in the Gulf. AWS isn't you know. So if you're a global company, um, you know, then you almost by default, have to go multi cloud multiple cloud vendors because of geographic differences. Obviously, China, with its own set of cloud providers. So, you know, smaller midsize businesses could get away with one, but As soon as you become global, you have to use more. >>Well, I'm a big fan of distributed computing. I loved the large scale concept of distribute computing. You got regions. Now you've got local zones. You got I O t edge. You got cloud going on Prem Edge. It's really an edge game at this point. Greater now distributed hyper Put hyper next to anything hyper cloud on your sounds better Piper >>Cube. And the opportunities the cloud providers and Amazon, you know, certainly is leading. This is the ability to take this complex, hyper distributed world and use their management tools toe create a normalized operating simplify What would be an overly complex world about it? >>Okay, we got a break. Just quick plug. There's a big salesforce event coming up on December 10th. Check it out on the Amazon site that that plug in you watching the cube stay tuned for more coverage after this break

from the cube studios in Palo Alto in Boston connecting with thought leaders all around the world this is a cube conversation LeBron's special conversation I'm John Tory here in the cube I'm not in the studio I'm at home we're sheltering in place the studio quarantine crew is there we've got a great guest here to break down and Alice in the tech industries for vallah who's this principle of zk research Aziz great to check in with you for our check-in last time we chatted you broke down entire industry a lot to talk about now we have the Cisco earnings just came out and a lot of other great things are happening thanks for joining me well what's your take on what's going on yeah I think so thanks John it's uh it's been heard about tumultuous last few months I think one of the takeaways I had from Cisco's earnings actually was that it's not as bad as you think I know if you read a lot of what's going on the media we get everything from doomsday and the world's ending or whatever but I think what Cisco's earnings showed and in Cisco I know they have a lot of enemies and a lot of competitors out there but they're really still a bellwether for the industry and so everyone should rejoice in the fact that they actually had a pretty good quarter I think what was was telling about that was security was up the services business was up the margins were good and what that shows me is that there's still room for innovation customers relax are still buying things and they're willing to pay for things that actually help drive their business forward and so Cisco's put a lot of energy into their services group to make sure that customers are able to adapt their technology and change their business right and so from an overall market perspective Cisco is you know they're the quarters are the court has shifted from almost everybody else's and so they're generally a leading indicator of where things are going so I think the fact that they showed some strength they guided up from where the street thought I think that's a good thing for the entire industry and I think I'm not saying we're out of this yet but I think businesses are starting to spend money where they need to in order to put themselves in a position to come on strong after well once we start going back to work whoever knows what that'll be I think the other sort of interesting pivot here is that I think the overall role the network has changed with income right we've covered networking technologies a long time it gets a little bit of interest sometimes from sea level certainly not as much as it should from CEOs and CIOs a lot of people think of it as the plumbing and the pipes it's hard to understand it's a very complicated technology sometimes but when you look at what's happened with digital transformation initiatives and now covent we've got more people at home or adopting cloud services we use video for connecting more things with IOT initiatives so the overall value of the network is increased that I think that was also reflected in Cisco's numbers I think this transition had started when you look at a lot of the building blocks and digital transformation IOT cloud mobility things like that they're all Network centric in nature and so for the first time in history I think business leaders actually need to look at their network strategies because if that's without a sound network strategy as we sort of come out of this and the companies that have a good one will be able to really step on the gas and do what they want with their business the ones that don't I think I'd a really struggle to survive because I'm not gonna be able to do a lot of these advanced things yeah great point one of the things Brazil the new cisco has a new leadership new c has been in place for a while positioning they're going after and you know with the cloven crisis it really puts more pressure knock the move of the network because it's a core staple of an organization yet the transformation journey is going to be accelerated this gives Cisco it's a lucky strike for Cisco because it'll move packets around and the multi cloud conversation comes in and the enablement of application development all being five to the network is what cisco has been preparing on and this has kind of been a nuance point then that everyone understands but coming out of Cova to have a growth strategy if you're not programming up and down the stack with DevOps and Nets a cops or whatever you want to call it people working at home a new perimeter is now emerged that's everything everything is the premise is this a tailwind for Cisco your thoughts on that your face oh yeah the big time tailwind francisco i think what's happened gentlemen you look at network evolution over the last five years we can do much more with our network that's coming to cost and that cost us complexity so trying to tie all these things together SP Winn Sassie datacenter Sdn right we've got Wi-Fi six coming we've got 5g coming so we've got all these great things that we're gonna let our networks be faster than ever before and run applications we can never run before right you look at some of the demos on 5g we're able to wear untethered Wi-Fi our virtual reality headsets complete creating completely new shopping experiences educational experiences but you need a lot of bandwidth that but not only you need bandwidth I think the one thing that Kovac has taught us is do you have any weakness in the network anywhere right from the user's hand all the way to the cloud that weak point at the time and so now you have to start thinking of your network not in pieces of having a campus network Wi-Fi network data center network and that a single network right and so cisco is really one of the few companies maybe the only company that can actually deliver that end and network that starts in the company extends to people's homes goes out to the cloud and with what they've done masterfully under Chuck Robbins is they've been able to pile those things together to create a much simpler way of operating this complicated network so you look at what they're doing you know with a CI and intent based networking what that is is you can think of it almost as a software overlay that masks the complexity of the network that's underneath it yeah talking about cisco over the past decade and a half and i'm with the stack guys you gotta move up the stack this has been this is now their opportunity and with multi cloud on the horizon or here this is going to give cisco a path but I got to ask you what is your take and advice to Cisco when you're out there talking to them you're talking to of the customers all the time and practitioners you're the analyst what do they need to do better because you can't just wish a multi cloud upon the marketplace it's coming but it's not clearly not the use case yet so that's a time lag between a CI intent based networking to true multi-cloud what if Cisco do in the meantime yeah well I think what's this go has to do is is think about what they're doing with a CI and multi cloud and actually help their customers implement it in in pieces and what the description I'd use is is the paths this goes on and the path customers are on actually in this world of you think if the end state is true hybrid multi-cloud right we have to get there in ship shots and not moon shots and what I mean by that is if you were to say to a customer this is your end state right the path to get there is so donkey and it's like a moon shot that it paralyzes the customer if you break this down into a set of chip shots right that gets much easier so so put the infrastructure in place to be able to just have the visibility across applause then maybe automate movement from hi private the public cloud right then automate some of the processes that give you the most headaches then move to a bigger Ottoman Ottoman automation framework right so yeah areas like security network configuration right things like that those are those are very difficult for customers to do manually those are the things they should be automating today so what they want to do is almost take through their intent-based network to almost as a lighthouse the road to a visionary state and then help customers get there in pieces because if they try and rush them along too fast I think they'll lose the customer because the complexity is too high the other area they should really be focused on is continuing to mature the services business I think that's something under Chuck Robbins that's night and day different than what it was the services business - Cisco prior to Chuck was a lot of break fix you know their TAC is well renowned as being a great pack but now they've gotten more of the pro services they've gotten more into adoption services and I think the more subscription they sell what Cisco needs to really understand is that customers tend not to renew things they don't use right so making sure that the services group helps customers and use the things that they're paying for and that'll pay dividends for them multiple dividends for them down the road I want to get the silken one on that opportunity to upsell and do a refresh because what refreshes are not gonna be on the docket early on unless discuss business value so let's hold that for a second John Chambers has been on the cube recently in his new role as a coach and investor and he says to us on the cube you know transitions versus transformation Cisco and the big companies are expected to win the transitions but now with coming out of this there's real transformation so you got to look at things like collaboration hey guys get better this is not just win the enterprise with a better web max zoom is they can ask Bob teams is out there so you know Cisco's that's a huge collaboration piece and a bunch of other business so where's their transition wins and where's their transformational opportunity in Europe in well I think the entire company is kind of going through transformations right even on the network side so it's right it's like you know the industry has been calling Francisco to get commoditized for years right and if you look the product gross margins are actually the strongest they've been in a decade right so I remember when I fell below 60% they everybody thought the world was falling this quarter I think was a little over 65 on the product side and so my belief is nothing is really a commodity if you can drive innovation that's what's this has been doing so from a transition standpoint I think they've done a lot of that they've transitioned the company to software and services they've transitioned the company more terrain model they've actually decoupled software from the hardware so customers can buy differently and you brought up the fact that we may not have a hardware refresh but that's okay as long as they keep the software a newa cycles forth where the transformations has to come is completely change the dynamics of how something works and so with intent-based networking you think of the old way that network engineers to work like the way I used to work when I was an engineer a lot of hunting pecking and at a CLI doing a lot of cutting and pasting and using homegrown tools that doesn't scale anymore my research shows that on average takes companies about four months the implemented change network-wide far too slow for digital company right so Francisco's done is they've accelerated that by letting customers automate more things and so Francisco the transformation comes in allowing customers to new new things I think you read in the collaboration side there's more work to do nobody's got a bigger collaboration portfolio than Cisco they got endpoints they got rooms just right they've got software they were a cloud on Prem but they got to take that and tie it together and I think the other area that's is gonna need improving is on they've they've got a lot of management tools that that look at different things they have at the ACI manager and a whole bunch of different security consoles in fact they funded them sometimes and said that the market leader in single panes of glass because they have more than anybody right I think eventually they got to be able to tie that information together and help customers understand what it means from a cross domain perspective because they still build a product's wireless campus data center but as I mentioned before we just have one network and so Cisco can aggregate this data up apply machine learning to it and help customers what that means they see insight across the entire network that would really be powerful because they they've got the footprint now they just have to be able to deliver the machine learning based insights some customers understand what that data means and they have a unique opportunity in the short term no one's going to be kidding Cisco out anytime soon there's a safety rating and using the big companies I think what what Cisco is able to bring is a there's a level of financial stability that other companies may not have and so they can weather the storm for a long time so you know I it's easy to say going to Cisco is the safe bet it has been for a long time but but i but I think it's also the smart bet I think they're they're able to continue to invest in things maybe smaller companies more people do yeah my question on Cisco a big fan of their strategy have been vocal about that for a while my question on Cisco want to be critical is to say how fast can you get that development going show the software value in market show customers a growth trajectory that they can execute on it can advantage the network policy intelligence if they could do that they're gonna be in good shape you agree yeah I think one of the challenges though is the transformation of their customer base do and that's where the work Suzy we've been doing in the dev that teams so important like if if they were to shift their whole strategy over at the developer folks talk word today I think that would largely put them in a position or trouble because the engineers that work with the stuff and the resellers that work with the stuff aren't they don't really have the skill sets they advantage that right so last year Suzy we she really talked a lot about the growth a definite this year they came out with in Barcelona this year they they came up with a bunch of certifications for dev net now there they were actually coming out with a number of a partner certifications as well so the resellers can get certified but I think it's important that they continue to push their engineer base into gaining these new skills I'll give you an interesting data point for my research and that's you know that only about a quarter of networking engineers has ever made an API call right and so you look at all Cisco's new gear it's all API driven and so if you want to do something as simple as say get all the IP addresses in your network you can just use an API call for that right the other way to do it is you do a show command and the CLI your screen scrape and you take a visual basic trip that you parse it you know and you get it that way right so the API map using those is a lot easier and so I think Cisco's got a good strategy with Deb net they've grown that face a lot it's still relatively small you know it's under a million people and you think of the overall size the Cisco customer user base point that's where they gonna put some effort right more and more out driving adoption to them now well I think you're smarter than I think you're researching them they must be listening to you because they haven't really tried to jam that down their throats they've been very humble about it and I think a million is pretty damn good number I think Cisco again to your point they're bringing people into the water the low end first before you you go to the deep end so swim with the bubble if you will with definite what they did was they assumed the engineer had no knowledge of software because I think at first when they put the lot of the programs a place they assumed people would have some knowledge of how to code right and and I also think the industry did them a bit of a disservice we used her there was a lot of stuff written in the media how every network engineer needs to become a software developer well they don't have to summer get make them software developers but they at least have to come software power ease right so do your job through software but you don't have to be a developer and that's where definite really when it really matured is that diverge down to past developer engineer who's your saw common software skills and then you break down a specialist after that and so they've they've actually helped with the maturity of that they've changed their certification programs for reflect that and I think Devin that really is a big be and if they can transition that engineer base then it helps the adoption of the new on these I want to get your final thoughts on this segment on multi-cloud obviously it would be a really great win for it creates of interoperability strictly with the network intelligence cisco could bring to the table and others you got startups out there like aviatrix and others and vmware with nsx trying to get that for the security fabric a lot of action going on with multi cloud and networking your thoughts what does your research tell you what's gonna transpire how do you see that market playing out in my research shows that little R ad percent of companies prior to Co vid had multi-cloud on the roadmap and I'm assuming that's that's gone up I haven't actually done a survey since then um one of the I think it's funny koban exposed a lot of things from a lot of vendors right and I think one of the things that is is shown cracks in the cloud yeah you look at some of the the data and how many outages Microsoft had Google had some strains AWS has held up pretty well under the strain of of a lot of the higher utilization when coated but they've been building a lot of capacity into theirs as well so I think from a customer perspective it makes sense you don't want to put all your eggs in one basket some cloud providers are stronger in some regions they each have different their own different cloud platforms other private cloud platforms and the problem is is if you decide if you decide to go multi-cloud you can't use the cloud providers tools right so if I use an AWS load balancer that works great in AWS but it's not gonna help me with Azure or GCE similarly if I use GCP tools I can't extend that out the azure so something needs to connect those and be able to five security and policy and that's where multi cloud comes from and you're right there's some good startups there I think um the difference with Cisco this time versus the Sdn world was when as the ends came about I think Cisco didn't want that to happen and I think they actually actively worked against us the end and I've talked to chuck Robbins about that he said you'll never ever see Cisco do that again if something is good for the customers they want to lead that transition and so Cisco's been very active in multi focking and given they've got the install base already I do think they will help bring this long but there are some good stir yeah it's interesting Sdn really wasn't ready for primetime even when VMware bought in this era hey when it was still there I didn't have a lot of revenue it had a future VMware claims that's the saves and NSX was saved by a Sdn some people say was completely rewritten final thoughts on outlook and you see coming out of Ovid obviously it's been well reported we've been reporting VPNs have been under provision that was a blind spot bought a blind spots and disruption that wasn't forecasted in the classic sense there was no there was no you know hurricane there was no flood it was a covin invisible disruption yeah and there's no impact right like even with when you think of what happened with the the floods in New York and 9/11 people knew that they'd eventually go back and so business continuity and disaster recovery was a temporary thing and I can I set up a data center to work for a couple months so I can go back to New York that's not the case with koban where we're trying to manage for an undefined endpoint which is extremely difficult for an IT perspective I do think that Kogan again has highlighted the value of the network I think we'll see a lot of transition from VPN to sd when I think that's that's certainly good I think the rise in video will also cause a Wi-Fi upgrade cycle we'll get back to the office and I think you'll see a lot of focus on programmability and agility because I don't believe we're gonna see everybody return to the office was like one big bang John I think we're more likely to see is the future work to be almost like when you and I were in college we do a bunch of stuff at home we go to the campus when we have classes and when we want to meet people similarly we'll go to work when we have meetings and then in between meetings we'll go find an open place to work but in general we'll do a lot of work a lot more work from home in fact my research shows 93 percent of the business leaders I interviewed said they expect to see at least a 30 percent increase in the work from home post Kovan right so we're gonna have a lot more people doing that but it's not gonna be everyone working for home everybody work in the office it's gonna be a hybrid of the two people are gonna come and go and that bribes the need for agility and today's networks really not that agile and so I need I want to go back to college if we do thirsty happy hours do I mean have the whole week or the stupid stuff it's the final point you mentioned SP when I was talking with Dave Volante SP Minutemen just last week and I said you know this SD win today is not your grandfather's sdn meaning SP where it's changed a lot it's basically the internet now so what was the modern update definition of SD grin I mean it used to be you connect the wide area network you can have some campus you'd do some networking what is it now what's the same name but it's yeah what is it your journey the technology if you look at the adoption of anything right the first wave of stuff is to make the new stuff look like the old stuff so we put VoIP in we made it look a lot like TDM when we had cloud we lifted and shift it and how did we didn't really enjoy wraps and then we eventually get smart and think what can I do with the new thing that I can't do the old thing and so a lot of early SD win deployments were simply just replacements for MPLS and they were put in to save a bit of money but now companies are getting smarter they're thinking about what can I do with my SD win that I couldn't do before so there's a lot more tighter integration with security I think as companies but SD win in and and think about what the win is today John it used to be corporate offices and data centers I think it's everybody's house right and so being able to extend your win at the single people out to planes trains and automobiles you remember that movie but those are all getting connected as well people's back acts fan kiosk those are all becoming way endpoints right so that's where you need to embed more security in the network and so I think that's a transition we've seen into that see you and I think the technology has matured to the point where it's getting easier to deploy faster to flow and you're right we can use the internet for transport in some cases some will still keep there still be a lot of MPLS out there but I do think we wind up in this hybrid world but clearly then the time has never been better for for SD win I will see a rule of curve for that because it's the only way to extend the win the people's homes the things the cars and really anything that's connected you know that's such a great point and I think this is a real new once in the industry it's a whole nother rebirth of the category because the aperture is brighter you got policy you've got reliability and get security built in this is key key Johnny H salt key yeah yeah whole concept the AI ops becomes real because we're collecting data and we're able to use AI to automate operations so Z's we call it s T win 2.0 that's what you got to do we got making an acronym out of this come on we can't just saw s T when it is SD win - righto because it's the next it's that it's it's the second wave of it we're actually thinking about how to transform our companies so the the John Chambers quote of transition for transversus transformation is apropos because the like I said a lot of the waves that that Cisco went through early on was we transition the market and then we transform right and so SD win so far has been transitional moving away from the old thing but now in strength and defense formed where our entire network operates these gradients that always a pleasure to talk to you get the straight scoop for the signal right there from all the noise in the industry now more than ever people are gonna be focused on critical project so thanks for your insight as DK now can research great stuff and we'll keep keep following you in great guest thank you come on thanks John first burger okay cute conversation here remote we're doing our part either at home and studio quarantine in this is the cube virtual virtualization has come to the cube will do will do whatever it takes to get the content out there Z's thanks so much for coming I appreciate thanks for watching on John Currier [Music]

>> Narrator: From theCUBE Studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. >> Hey, welcome to this CUBE Conversation. I'm John Furrier, Host of theCUBE here in Palo Alto, California, for a special conversation with an industry analyst who's been, who travels a lot, does a lot of events, covers the industry, up and down, economically and also some of the big trends, to talk about how the at scale problem that the COVID-19 is causing. Whether it's a lot of people are working at home for the first time, to at scale network problems, the pressure points that this is exposing for what I would call the mainstream world is a great topic. Zeus Kerravala, Founder and Principal Analyst at ZK Research, friend of theCUBE. Zeus, welcome back to theCUBE. Good to see you remotely. We're, as you know, working in place here. I came to the studio for, with our quarantine crew here, to get these stories out, 'cause they're super important. Thanks for spending the time. >> Hi, yeah, thanks, it's certainly been an interesting last couple months and we're probably, maybe half way through this, I'm guessing. >> Yeah, and no matter what happens the new reality of this current situation or mess or whatever you want to call it is the fact that it has awakened what us industry insiders have been seeing for a long time, big data, new networks, cloud native, micro-services, kind of at scale, scale out infrastructure, kind of the stuff that we've been kind of covering is now exposed for the whole world to see on a Petri dish that is called COVID-19, going, "Wow, this world has changed." This is highlighting the problems. Can you share your view of what are some of those things that people are experiencing for the first time and what's the reaction, what's your reaction to it all? >> Yeah, it's been kind of an interesting last couple of months when I talk to CIO's about how they're adapting to this. You know, when, before I was an analyst, John, I was actually in corporate IT. I was part of a business continuity plans group for companies and the whole definition of business continuity's changed. When I was in corporate IT, we thought of business continuity as being able to run the company with a minimal set of services for a week or a month or something like that. So, for instance, I was in charge of corporate technology and financial services firm and we thought, "Well, if we have 50 traders, can we get by with 10", right? Business continuity today is I need to run the entire organization with my full staff for an indefinite period of time, right? And that is substantially different mandate than thinking of how I run a minimal set of services to just maintain the bare minimum business operations and I think that's exposed a lot of things for a lot of companies. You know, for instance, I've talked to so many companies today where the majority of their employees have never worked remote. For you or I, we're mobile professionals. We do this all the time. We travel around. We go to conferences. We do this stuff all, it's second nature. But for a lot of employees, you think of contact center agents, in store people, things like that, they've never worked from home before. And so, all of a sudden, the new reality is they've got to set up a computer in the kitchen or their bedroom or something like that and start working from home. Also for companies, they've never had to think about a world where everybody worked remotely, right? So the VP in Infrastructure would have, the cloud apps they have, the remote access technology they have was set up for a subset of users, maybe 10%, maybe 15%, but certainly not everybody. And so now we're seeing corporate networks get crushed. All the cloud providers are getting crushed. I know some of the conferencing companies, the video companies are having to double, triple capacity. And so I think to your point when you started this, we would have seen this eventually with all the data coming in and all the new devices being connected. I think what COVID did was just accelerate it just to the point where it's exposed to everything at once. >> Yeah, and you know, I have a lot of, being an entrepreneur and done a lot of corporate legal contracts. The word force majeure is always a phrase that's a legal jargon, which means act of God or so to speak, something you can't control. I think what's interesting to your point is that the playbook in IT, even some of the most cutting edge IT, is forecasting some disruption, but never like this. And also disaster recovery and business continuity, as you mentioned, have been practices, but state of the art has been percentages of overall. But disaster recovery was a hurricane, or a power outage, so generators, fail over sites or regions of your cloud, not a change in a new vector. So the disruption is not disruption. It's an amplification of a new work stream. That's the disruption. That's what you're saying. >> Yeah, you know, that's correct. Business continuity used to be very data center-focused. It was, how do I get my power? How do I create some, replicate my office and have 50 desks in here, instead of 500? But now it's everybody working remotely, so I got to have ways for them to collaborate. I have to have ways for them to talk to customers. I have to have ways for them to deliver services. I have to enable people to do what they did in the office, but not in the office, right? And so that's been the big challenge and I think it's been an interesting test for CIO's that have been going through digital transformation plans. I think it's shifted a lot of budgets around and made companies look at the way they do things. There's also the social aspect of a job. People like to go to the office. They like to interact with co-workers. And I've talked to some companies where they're bringing in medical doctors, they're bringing in psychologists to talk to their employees, because if you're never worked from home before, it's quite a big difference. The other aspect of this that's underappreciated, I think, is the fact that now our kids are home, right? >> John: Yeah. (laughter) >> So we've got to contend with that. And I know that the first day that the shelter in place order got put in place for the San Francisco area, a new call, I believe a new version of Call of Duty had just come out. You know, we had some new shows pop up in Netflix, some series continuances. So now these kids who are at home are bored. They're downloading content. They're playing games. At the same time, we're trying to work and we're trying to do video calls and we're trying to bring in multiple video streams or even if they're in classrooms, they're doing Zoom-based calls, that type of thing, or using WebEx or an application like that, and it's played havoc on corporate networks, not just company networks, and so... >> Also Comcast and the providers, AT&T. You've got the fiber seems to be doing well, but Comcast is throttling. I mean, this is the crisis. It's a new vector of disruption. But how do you develop... >> Yeah, YouTube said that they're going to throttle down. Well, I think what this is is it makes you look at how you handle your traffic. And I think there's plenty of bandwidth out there. And even the most basic home routers are capable of prioritizing traffic and I think there's a number of IT leaders I've talked who have actually gone through the steps of helping their employees understand how you use your home networking technology to be able to prioritize video and corporate voice traffic over top. There are corporate ways to do that. You know, for instance, Aruba and Extreme Networks both offer these remote access points where you just plug 'em in and you're connected through a corporate network and you pick up all the policies. But even without that, there's ways to do with home. So I think it's made us rethink networking. Instead of the network being a home network, a WiFi network, a data center network, right, the Internet, we need to think about this grand network as one network and then how we control the quality of a cloud app when the person's home to the cloud, all the way back to the company, because that's what drives user experience. >> I think you're highlighting something really important. And I just want to illustrate and have you double down on more commentary on this, because I think, you know, the one network where we're all part of one network concept shows that the perimeter's dead. That's what we've been saying about the cloud, but also if you think about just the crimes of opportunity that are happening. You've got the hacker and hacking situation. You have all kinds of things that are impacted. There's crimes of opportunity, and there's disruption that's happening because of the opportunity. Can you just share more and unpack that concept of this one network? What are some of the things that business are thinking about now? You've got the VPN. You've got collaboration tools that sometimes are half-baked. I mean, I love Zoom and all, but Zoom is crashing too. I mean, WebEx is more corporate-oriented, but not really as strong as what Zoom is for the consumer. But still they have an opportunity, but they have a challenge as well. So all these work tools are kind of half-baked too. (laughing) >> Well, the thing is they were never designed... I remember seeing in an interview that Chuck Robbins had on CNBC where he said, "We didn't design WebEx to support everybody working from home". It just, that wasn't even a thought. Nowhere did he ever go to his team and say, build this for the whole world to connect, right? And so, every one of the video providers and the cloud collaboration providers have problems, and I don't really blame them, because this is a dynamic we were never expecting to see. I think you brought up a good point on the security side. We, a lot has been written about how more and more companies are moving to these online tools, like Zoom and WebEx and applications like that to let us communicate, but what does that mean from a security perspective? Now`all of sudden I have people working from home. They're using these Web-based applications. I remember a conversation I had about six months ago with one of the world's most famous hackers who does nothing but penetration tests now. He said that the cloud-based applications are his number one entry point into companies and to penetrate them, because people's passwords and things like that are fairly weak. So, now we're moving everything to the cloud. We're moving everything to these SaaS apps, right? And so now it's creating more exposure points. We've got fishers out there that are using the term COVID or Corona as a way to get people to click on links they shouldn't. And so now our whole security paradigm has blown up, right? So we used to have this hard shell we could drop around our company. We can't do that anymore. And we have to start worrying about things on an app-by-app basis. And it's caused companies to rethink security, to look at multi-factor authentication tools. I think those are a lot better. We have to look at Casb tools, the cloud access tools, kind of monitor what apps people are using, what they're not using. Trying to cut down on the use of consumer tools, right? So it's a lot for the security practice to take ahold of too. And you have to understand, even from a company standpoint, your security operations center was built on the concept they pull all their data into one location. SOC engineers aren't used to working remotely as well, so that's a big change as well. How do I get my data analyzed and to my SOC engineers when they're working from home? >> You know, we have coined the term Black Friday for the day after, you know, Thanksgiving. >> Thanksgiving, yeah. >> You know, the big surge, but that's a term to describe that first experience of, holy shit, everyone's going to the websites and they all crashed. So we're kind of having that same moment now, to your point earlier. So I want to read a statement that was on Nima Baidey's LinkedIn. He's at Google now, former Pivotal guy. You probably know him. He had a little graphic that says, "Who led the digital transformation of your company?" It's got a poll with a question mark. "A) Your CEO, B) your CTO, or C) COVID-19"? And it circles COVID-19 and that's the image and that's the meme that's going around. But the reality is it is highlighting it and I want to get your thoughts on this next track of thinking around how people may shift their focus and their spend, because, hey, hybrid cloud's great and multicloud's the next big wave, but screw multicloud. If I can't actually fix my current situation, maybe I'll push off some of the multicloud stuff or maybe I won't. So, how do you see the give and get of project prioritization, because I think this is going to wake everyone up. You mentioned security, clearly. >> Yeah, well, I think it has woken everybody up and I think companies now are really rethinking how they operate. I don't believe we're going to stop traveling. I think once this is over, people are going to hop back on planes. I also don't believe that we'll never go back into the office. I think the big shift here though, John, is we will see more acceptance to hire people out of region. I think that it's proved that you don't have to be in the office, right, which will drive these collaboration tools. And I also think we'll see less use of desktop phones and more use of video means. So now that people are getting used to using these types of tools, I think they're starting to like the experience. And so voice calls get replaced by video calls and that is going to crush our networks in buildings. So we've got WiFi 6 coming. We've got 5G coming, right. We've got lots of security tools out there. And I think you'll see a lot of prioritization to the network and that's kind of an interesting thing, because historically, the network didn't get a lot of C level time, right? It was those people in the basement. We didn't really know what they did. I'm a former network engineer. I was treated that way. (laughing) But most digital organizations now have to come to the realization that they're network-centric, and then so the network is the business and that's not something that anybody's ever put a lot of focus on. But if you look at the building blocks of digital IoT, mobility, cloud, the writing's been on the wall for a while, and I've written this several times. But you need to pay more attention to the network. And I think we're finally going to see that transition, some prioritization of dollars there. >> Yeah, I will attest you have been very vocal and right on point on that, so props to that. I do want to also double amplify your point. The network drives everything, that's clear. I think the other thing that's interesting and used to be kind of a cliche in a pejorative way is the user is the product. I think that's a term that's been coined to Facebook. You know, you're data. You're the product. If you're the product, that's a problem, you know. To describe Facebook as the app that monetizes you, the user. I think this situation has really pointed out that yes, it's good to be the product. The user value and the network are two now end points of the spectrum. The network's got to be kick ass from the ground up, but the user is the product now, and it should be, in a good way, not exploiting. So I think if you're thinking about user-centric value, how my kid can play Call of Duty, how my family can watch the new episode on Netflix, how I can do a kick ass Zoom call, that's my experience. The network does its job. The application service takes advantage of making me happy. So I think this is interesting, right. So we're getting a new thing here. How real do you think that is? Where are we on the spectrum of that nirvana? >> I think we're rapidly approaching that. I think it's been well documented that 2020 was the year that customer experience become the number one brand differentiate, right. In fact, I think it was actually 2018 that that happened, but Walker and Gartner and a few other companies would be 2020. And what that means is that if you're a business, you need to provide exemplary customer service in order to gain share. I think one of the things that was lost in there is that employee experience has to be best in class as well. And so I think a lot of businesses over-rotated the spin away from employee experience to customer experience, and rightfully so, but now they got to rotate back to make sure their workers have the right tools, have the right services, have the right data, to do their jobs better, because when they do, they can turn around and provide customers better experience. So this isn't just about training your people to service customers well. It's about making sure people have the right data, the right information to do their jobs, to collaborate better, right. And there's really a tight coupling now between the consumer and the employee, or the customer and the employee. And, you know, Corona kind of exposed to that, 'cause it shows that we're all connected, in a way. And the connection of people, whether they're the customers or employees or something, that businesses have to focus on. So I think we'll see some dollars sign back to internal, not just customer facing. >> Yeah, well, great insight. And, first of all, we all connect to your great CUBE alumni. But you're also right up the street in California. We're in Palo Alto. You're in San Mateo. You literally could have driven here, but we're sheltering in place. >> We're sheltered in place. >> Great insight and, you know, thanks for sharing that and I think it's good content for people, you know, be aware of this. Obviously they're living in it right now, but I think the world is going to be back to business soon, but it's never going to be the same. I think it's digital... >> No, it'll never be the same. I think this is a real watershed point for the way we work and the way we treat our employees and our customers. I think you'll see a lot of companies make a lot of change. And that's good for the whole industry, 'cause it'll drive innovation. And I think we'll have some innovation come out of this that we never saw before. >> Quick final word for the folks that are on this big wave that's happening. It's reality. It's the current situation now. What's your advice for them as they get on their surfboard, so to speak, and ride this wave? What's your advice to them? >> Yeah, I think use this opportunity to find those weak points in your networks and find out where the bottlenecks are, because I think having everybody work remotely exposes a lot of problems in processes and where a lot of the hiccups happen. But I do think my final word is invest in the network. I think a lot of the networks out there have been badly under-invested in, which I think is why people get frustrated when they're in stadiums or hotels or casinos. I think the world is shifting. Applications and people are becoming network-centric. And if those don't work, nothing works. And I think that's really been proven over the last couple months. If our networks can't handle the traffic and our networks can't handle what we're doing, nothing works. >> You know, you and I could do a podcast show called "No Latency"... >> (mumbles) so it'll be good. >> Zeus, thanks for coming on. I appreciate taking the time. >> No problem, John. >> Stay safe. And I want to follow up with you and get a check in further down the road, in a couple days or maybe next week, if you can. >> Yeah, looking forward to it. >> Thanks a lot. Okay, I'm John Furrier here in Palo Alto Studios doing the remote interviews, getting the quick stories that matter, help you out, and (mumbles) great guest there. Check out ZK Research, a great friend of theCUBE, cutting edge, knows the networking. This is an important area. The network, the users' experience is critical. Thanks for coming and watching today. I'm John Furrier. Thanks for watching. (lighthearted music)

>> Live from Mountain View, California it's theCUBE, covering DevNet Create 2019. Brought to you by Cisco. >> Okay welcome back everyone we're here live for day two coverage we're winding down at DevNet Create this is Cisco's, conferences theCUBE coverage I'm John Fourier, your host. Two days of coverage DevNet is the group the developer group DevNet Create in the never event that they bring together. We're here with Zeus Kerravala, principal analyst ZK research breaking it down with me we're going to do a debrief, break down what's happening at DevNet. Zeus great to see you thanks for coming on, let's wrap this up so what's going on with Cisco 'cause you know we've been following, I've known Susie Wee for many many years over a decade watching, what's happened is almost like I never would've thought this would have been possible almost like 10 years ago. Cisco the incumbent bought all these companies maybe lose grip on the networking, boom there's a renaissance with Cloud, they got their mojo, back developers repp in to the right a whole new changing of the guard. >> Well the network's certainly back and in fact I've been following Cisco a long time I was a customer Cisco section before I was an analyst and I've been following the developer initiatives at Cisco since 2001 the first time they tried and when Susie took this role I was as skeptical as they could be because I saw developer initiative failed developer initiative failed and I said it's not going to work the culture inside Cisco is not ready for it and behold, you know a few years later after all our hard work almost six hundred thousand members I'd say it's working I think one of the trends that's actually helping Cisco is that the IT in the world's kind of come to them I think they spend a lot of along time on the outside looking in that you know being a major strategic IT partner that was more the compute vendors the application partners but if you look today at the trends digital transformation the technology that are driving that are things like Internet of Things, Mobility, Cloud computing and Artificial Intelligence and those are all Network centric paradigms so in a way we you know we live in a world where everything's connected and think about it your own personal life John what can you do without the network, you can't watch movies, you can't play games, you can't read books, you can't do anything without the network and so the network has never been more important and Cisco's finally opened their network up to the point where developers can actually build things on top of it so you know they used to talk about the network being a platform and it was really just a platform other Cisco stuff but now it's truly a platform for others to create on it to add value. >> I mean I think it's one of you're totally right on that I think it's create analysis because it's like hey they didn't really screw it up there they didn't such a great strategic position as a supplier to the network's and it was like they wake up, oh my god we're in good position here why don't we just take advantage of the fact that everything's networked, network effect, social networks, network constructs you're totally right I think this is a game changer but then how do you explain the success now, I mean obviously new leadership, was it a leadership change, was it a realization, what's your analysis of the Susie as a team, she was a catalyst, what was the real turning point in your mind? >> Well I think leadership change was part of it and in fact part of the very first thing one of the very first things Chuck Robbins ever said to me when he took over as CEO, he promised me that Cisco would listen to customers and if there's something that's good for customers, Cisco wanted to lead that effort and you could argue that historically they weren't really on board with things that might have been bad Cisco but good for customers, now they are and one of the trends that in order for DevNet to work one of the things you have to do, is open up the network and conceptually you might think well if we open up the network now we might put ourselves in a competitively weaker position but ultimately that's good for customers you can build applications that add value to that network and so I think the big culture chip with Cisco came in with Chuck Robbins their new CEO it's not so new anymore, but a willingness to listen to customers be open and allow others to co-create on the network and that's really been the foundation for DevNet and Susie taken the ball and run with it. >> She's got the chops, technical chops MIT background understands tech knows research, knows how to make it real, she's done that but it's also the wave that they're on to, they've got some waves that are really in their favor, that's right in great position, I mean IoT you couldn't ask for the edge of the network exploding an opportunity now more than ever I mean it's been over, Cisco you always heard over the years we got to move up to the stack, there's now the full, got to go to the edge and push beyond the edge now you got power at the end you got tons of opportunity, OT, Operational Technologies, the software is kind of all built for hardware, you got IT connected devices in an IoT with GPUs on them, I mean come on, and then Wi-Fi sits over the top, >> I think one of things IoT done is its democratized the edge, if you think historically about the value of the network was commonly thought that the closer you get to the data center, the more value the network had, the branch edge less value more edge but now you've got a user edge, client access edge, an IoT edge, branch edge or wireless edge, there's is so many edges now and we're are creating data at every one of those points and what that means, we need to do analysis we need, you know to be able to do with Machine Learning at those points we need access to the data we need to be able to develop in those points and so the whole network has now been democratized where I feel there's not one part of the network that has more valuable it's all valuable and DevNet allows customers be able to tap into that. >> Can we just give it all those IoT names, called the network. >> Well that's what essentially what it is, that's a big shift for the industry to start thinking about the wireless network and the wired network and the data center network and you're right it is just one network and it needs to be treated that way. >> And on-prem Clouds still got to move packets from A to B, store stuff as well, states important all these things are coming back it's not really changing what distributed computing used to be so you know given that being said Cisco has a position. I want to get your thoughts on something that some we talk about here at the event not many people in mainstream might get this or not, I want to get your take on it. Having the portfolio of products all have api's is the potential game changer across the board what's your analysis of what that could possibly turn into because you know having things with api's on them every device is only going to create more connections of data to other devices to share and compose and create data what's the impact for the people watching that it might be in wall street saying what's the impact of having api's on every single product? >> Yeah I think it turns Cisco into a platform company and I think you're right it is a game-changer for the company. I think historically Cisco value was driven by the Cisco product, the product portfolio, it's like the routers the switches things like that, now that they've opened up their API is you're going to start seeing small software companies, large software companies systems integrators ISPs all building things to run the Cisco network and that creates a fantastic pull through effect the fact that was talking with one of the Cisco earlier today about when they do get pulled through, the cost to sale goes way down because the application partner that pulls them through so their cost to sale is really just whatever they pay out to the application vendors, it's very very low so their margins will go up you'll see them in bigger deal sizes and when you're part of that application ecosystem there's not as much tendency to pound the vendor for discounts right, so I think it puts this on a much more strategic position because now they're a part of something bigger, they're part of company transformation, they're part of application transformation and that will have a significant impact both on revenue but more important on margin company will start making more money. >> That's a great point on the pull through and sales cost impact a margin but also if you also factor in first of all great analysis but I want to get your thoughts on the ecosystem impact is the conscious i've been having with solution providers they're like, well hey I'm coming into retail and I'm coming into manufacturing in healthcare and I'm actually deploying solutions. I'm getting higher margins on my stuff. So you have contribution value going value contribution going to the partners as well not just on the Cisco. >> That's important 'cause Cisco company it's a partner led company of ninety percent of their sales go through their partner channel and for them they're always want to drive more value into that and I think for the resellers too, for their partners they need to understand that if they embrace DevNet, they embrace a lot of the applications, they are going to have more strategic relationships with their customers, their deal sizes will go up, they'll have better margins and it'll put them in a better position as well. So I think the loyalty that you see in Cisco's channel will continue to grow and frankly nobody's got the size, the install base that Cisco has so it's hard, it's really going to be hard to compete with them. >> Let me get your thoughts on as a study of the industry the horses on the track, you got other competitors you got good opportunities for expansion with Cloud Multi-Cloud, but I'm not sure that they might see the clear visibility yet into the financial impact of Multi-Cloud, so the question is what point do they start cannibalizing and eating their own to get that pole position as the battle ship of the big move happens with Cisco is that is they have this company transformation they have really huge revenue streams in other markets, Telco is that's disrupting, okay. Multi-class so when do they start cannibalizing and eating their own to bring in the new, is that on their minds, 'cause i just see there might be some antibodies that might be inside Cisco trying to say well this Cloud things not yet proven or let's see the revenue visibility into the Cloud. >> Yeah I think there's probably some of that inside Cisco and you'll have some fighting between groups. But I do think it's a net additive Cisco, I think you wind up what what the Cloud does is it makes you want network services and more places. I want, I need a network, I certainly can't get rid of my network if I'm connecting to the Cloud right they need to connect to it, but then I'm going to want to have the Cisco portfolio and network services available in Amazon or Google or Microsoft Azure and they have relationships with those companies, so I'm sitting away what it does is it takes what Cisco started on the company premise and it extends it up to the Cloud and so ultimately, what customers want almost every large enterprise they want, want some kind of hybrid environment, but the environment has to look the same on-prem in the Cloud and I think Cisco is a good position to be able to bridge that gap and so I you could look at it as cannibalizing, I don't really think it does. I think it's a net additive to Cisco, I think internally they may need to restructure things in order to get some of the business units that might be affected on board with that but ultimately it's-- >> Some tweaks basically not hardcore wholesale changes >> No they've already done a lot of tweaking. If you look the leadership team that some place now is completely different than five years ago. So they've done a lot of realignment and a lot of tweak and I think they're ready for this. >> Horses on the track, competition, Cisco's in good place Multi-Cloud seems like a great play, Multi-Cloud, internetworking was a big, Coax cables head hubs, you had subnets it sounds like Multi-Cloud might be a great similar trajectory of what internetworking was as a segment. Multi-Cloud might seem like a perfect fit for Cisco. >> Yeah well multi-Cloud extends the the current network out to the multiple Clouds and I think what what's important understand there is it does raise the bar on complexity a Multi-Cloud network is going to be more complicated to run than a plain simple On-premise network but Cisco's this is where a Cisco software business is important, DNA Center they've done a lot of work in that area to to mask a lot of complexity so if customers that use DNA center they're going to be able to use that software interface as a way to manage it and so now instead of having to configure every box one by one and I was a network engineer I do that now you do it in one central location and push it out everywhere, if I had that I would have had a lot more free times. >> Yeah, since you're a network engineer I used to do those wide area networks myself back in the day command line in telnet it into boxes all that good stuff, when you look at the vision of programmability of networks which I love that term by the way. I've always loved even when Juniper had Juno so originally that overlay love software mixing in. I love this notion of programmability not yet fully understood but it makes sense. How do you think that's going to play out? Looking back, are we going to look back in time saying hey you know 2019 this was a seminal moment or was it not seminal moment? How important is this programmability going to be for Cisco in the industry? >> Well it's extremely important as a way to be able to automate network functions and I talked a lot of the DevNet people here I think they're starting to warm up to automation, I think there's a little bit of trepidation at first that's hey it's going to take my job but I think what's happening to IT people today is there's so much to do that they simply don't have time to do a lot of what they did before you know what it's like if I'm running a legacy Network, I'm literally configuring every box one by one. So if I got a thousand branches, I'm going to make a change, I got to hit a thousand boxes right, that's not very efficient so now I can do it in one place and push it out across and so I think what programmability does is it lets me automate and orchestrate things better to the point where the network should be able to run itself and now as an IT person I can go focus on more strategic initiatives. I'll give me an anecdote from a CEO I talked a little while ago this is a few months ago. He said my IT department is becoming less and less relevant to me and I need them to become more relevant, I need them to help me innovate but they can't because they're busy running the day-to-day, I need them to find a way to offload that and that's what programmability does. It lets you offload the things that aren't strategic right my advice to IT people is if you're doing things today there aren't strategic to your resume or your company, don't do them find a way to automate them and that's where programming. >> And giving good cost structure in line but driving revenue is a great resume boost. (laughing) >> No one's going to hire you because you can configure that ACLS through that command line faster than the next guy, that's not a strategic way to drive your-- >> Are we're going to see you obviously at Cisco live as well? >> I'll be at Cisco live. >> Great love to get your perspective in summary, put a bow around DevNet, I'm a big fan of Susie and her team I've seen it from day one, yours as well, what are they going to do next I was they got a good success formula here. How do they scale it, how do you see them taking this inside Cisco and continuing to explode it internally as well as externally what's your view on what they what they should be doing? >> Well I think it's reached critical mass and I think there was a couple of things they had to do to get to this point. One was obviously build the user base but also get DevNet relevant across the portfolio and it is that everything from collab to data center security. I think looking at ahead what's next, is they got to find a way to get the general Cisco salesperson to be able to sell this to understand the value which I'm not so sure it's there and also they have a massive partner community as you talked about all the resellers, this has to now become part of that partner sale, the partners need to understand if I sell the concept of some of these advanced applications that run on top of it, I'm going to have better feel for myself and so I think now it's about the structures in place, now it's about executing to be able to get the kind of exponential value out of this. >> This is really operationalize it to the next level, is it on a startup budget, did it create success, thanks for sharing that great commentary. They're breaking it down here in the end of the game, games over, end of DevNet Create third year we've been cover the beginning while in Susie journey following Cisco as developers become more important in the modern era of new applications where network programmability will be an advantage, this is the future they're betting on Cloud computing, AI, GPUs on all devices, API is everywhere, this is the Cisco strategy it's theCUBE coverage signing off from Mountain View, thanks for watching. (upbeat music)

>> Live from Orlando, Florida It's the Cube covering Enterprise Connect twenty nineteen brought to you by five nine. >> Hello from Orlando. We are at Enterprise Connect twenty nineteen, and we're being very graciously hosted by five nine, which is the intelligent Cloud Contact center. We had a great few days, two minute minute myself talking with customers, partners, vendors on this massive change and enterprise, communication and collaboration. We're excited to welcome back to the key one of our alumni, Zs Caravella, the founder and principal analyst at Zeke Research. These It's great to have you here, >> Dawson. To me. Here >> you are. You should have the i p status at Enterprise Connect because you have been to this event some twenty times. >> I believe it's my twentieth. >> Can't imagine. So they didn't They should have rolled out the red carpet. Maybe we'll put a note >> in next year, >> but Yeah. There you go. I >> want to get my own booth. >> There you go. But I can't imagine how much this event has changed. And just your perspectives on Day three here of e. C nineteen and some of the vendors that you're like, Wow. A few years ago, you would never have seen a so and so here. >> Yeah, the shows massive compared to what it used to be the Remember when I first started coming to the show floor was maybe if I was a quarter the size, I mean generous, and it was really dominated by just a handful of companies. But since then, it's gone through several transitions the i p to software to the cloud on. That's gotten a lot more companies interested. And I think also, finally, businesses starting understand that if you're going to transform digitally right, communications has to be part of that fact. If you look at any piece of research right that I know there's a walker study throwing around saying by twenty twenty customer experience to be the number one brand differentiator, that's that's already happening. It's already the number one brand differentiator. And so because of that, more and more companies are now interested in communications. So, you know, ten years ago, fifteen years ago, we didn't have Amazon here. We didn't have Microsoft here. We didn't have Oracle here, but it's been a great thing for the show to see all these other companies that really have really great presidents validate what we've been saying for a long time, and it's a much different show today than it was. >> Yeah, it's really interesting that the thing that opened my eye is some of the companies that air here. I wish I knew which brand used these technologies so that if and when I do have an issue, I'm not gonna have that horrible customer experience that you know we've had in the past. It's like, you know, if I wanted to make a call, it's like, Can I even make a call? And, you know, do I actually get through the I V R. Things like that? I like how you set it up there. Some of these pendulums swings some of these waves of technology. Um, let's talk a little bit about voice because this used to be called Voice Khan, and it went through a rebranding because, you know, voice was in a little bit of kind. But, you know, we know voices. It's still very important. How does that fit in the hall >> when I went through that rebound, Frankly, voice wasn't sexy anymore. Everyone is talking about unified communications. No one was going to call anybody ever again. We're just gonna message or social each other to death and what's happened is voice is kind of important, right? And I think one of the undersea and friends to look at is that voice is becoming simultaneously less important and more important. What I mean by that is that they sound like a little bit of an oxymoron. But if you look across all age demographics right there, everybody has a prefered mode of communications, and it's rarely voice to start a conversation with the company. You message them your social, um, send them an e mail. But somewhere in there, you you eventually want to talk to somebody, and a that moment s o to start the conversation voices less important. But at that moment, you now want to have a conversation with uneducated agent who knows what your problem is and can help you quickly. And so now voices Mohr important than it's ever been before where, but I think the buried entry wasn't all that high, but voices, you know, it's it's important, it's sexy, and especially when people are dealing with emotional issues, they're dealing with money problems right in front of get a refund. If I'm trying to check on the status of my health, I want to talk to somebody. But when I want to talk to somebody, I want to get that conversation with over. It's possible. I think the bar's been raised as you mentioned to. You used to think that the dreaded Ivy are. If you have a dread and ivy are experience, you just want to business that company anymore, right? And so the stakes are higher than the bar's been raised on. What voices >> are you saying that the customers that you were talking to are now starting to get much more prescriptive in terms of understanding their customer journeys and their preferences? You know, before they used to go, we assume we're talking to millennials. They only want they only want ASA Master. Our company's starting to get more focused on. Alright, let's actually do analysis and determine if a voice only one of the next channels that we need to enable, >> uh, well, I wish they were. I think we're really in the early early innings that I think the best companies in the world are doing that. If you look at companies with very high, uh, NPS scores and customer SAT scores there doing that thing already and I think it's a good lesson for the rest of the industry. If you're not doing that, you're gonna fall behind pretty quickly. And I think that is driving companies more to the Saami Channel experience Where, uh, from, uh, from an analytic standpoint, you really have to understand your customer, not at the demographic level, but almost at a custom level because everyone's different, right? I think that's, uh, that's never been possible before. But today, because we've got bigger data sets. Things were in the cloud rise of artificial intelligence. It's made all the stuff possible. So companies like I said, the best cos the world to taken advantage of and they're having a, you know, big differences. That's why there's been such a huge swings in the market leadership right there cos we never heard of before. Market leaders and brands we trusted loved before they're gone. >> Yeah, I'm glad you brought that up, because every company we talked to this week that that CX is at the center of what they're talking about. So, in your research, what is differentiating though those new leaders and, you know, causing some of those swings in the market place hot out of the customer. Look at these and help differentiate and and ever changing marketplace. >> Well, it's what's going on today. It's really about being more contextual, having a deeper understanding a wire. Customers calling, uh, how you could help him faster understanding maybe what products they own. You know what? What are some of the adjacent ones? Ah, no. I think that's going very quickly, become table stakes. And I think where we're moving to is we're going to shift customer service from being largely inbound, driven and reactive. And that's where they I can help react faster to being Mohr, outbound driven and pearl active. Right? So, for instance, let's say I buy a connected refrigerator and my water filter needs changing. Well, right now, I still have to recognize that. And maybe I call that refrigerator company and they can proactively help me because they understand what I have. And they've got a great arm, the Channel contact center. But ultimately that should be a reverse. They should contact me, maybe through a text message saying, Hey, you're we noticed your water filter needs changing. Can we send you one? Yes, it comes and then maybe I call the agent and say, Can you help me install it? Right? So I think within the next three, four years, we're going to see a lot of customer service, Uh, where contextual is the table stakes and then the ability to predict what your customer wants. That's going to be the differentiator. And frankly, that's really exciting. I mean, if you think we've seen change of this industry as you mentioned in the last five years, wait for the next five. >> When you're talking with customers or even doing research and and other venues, it's to mention CX. We talk. We've been talking about it all week, but I get curious when I hear the customer experience and the agent experience just think, How are they not how they separate because of the Asian isn't empowered to be able to, whether it's no the right channel. But I want to be communicated with or have the information where the context about why I'm calling, then the customer experience, right? >> Yeah, well, they're very tightly linked together. You can't have a good customer experience that a good agent experience and you may have the best trained agents in the world that are the most empathetic that are incredibly sensitive with what people want. But if they don't have the data, you're going frustrate your customer. And everybody's been through that situation where you get transferred to somebody else and you gotta start that whole conversation over again and eventually you just hang up and say, I don't want ever to business. So I think you're right. Agent experience Customer experience are very tightly interwoven, and they're they're really dependent on one another. You can't you can't do without the data. And again, that's where all these friends of a I come into play because they're able to send better information to the agents faster, really, through an assistive technology versus replacement. Right? >> So when we came into this show, we knew that the wave of cloud had made a big transformation. We're starting to hear a I is the next wave everybody's talking about. I believe I read something that that you had written that was talking about, you know, whether that is something just internal the company build in versus how it interacts with the customer. Where do you see I having the biggest impact kind of in the short term, and nowhere is that more long. >> It's a great question because I ask my customers all the time. Should we be using intelligence bots? Or if you saw the Google Duplex Nemo, where they have on a I call in order pizza I think it was or something like that. So is a I ready to talk to people? And I think if you think of the entire world of interactions on a two by two grid is an analyst would like to buy two grids, right? And you put complexity of conversation on one axis and frequency of interactions if it's hiking, or if it's low complexity, high frequency, that might be okay to try and automate through a But other than that, everything should flipped. Agent. And I think right now we're very early in the cycle, and so is a business. I'm not sure I trust today. I tow always have the right answer, but it makes a great assistant technology to recommend to the agent. This is what you should say, and the great thing about that is, if the agent says no, that's stupid and says that wasn't helpful. That becomes the input to the learning mechanism for the A I so overtime will get smarter and smarter. But if you if you want to think about just the role of it now, I always use the analogy is like a self driving car. I'm not sure if either one of you would want to jump in a car that has no driver, no steering wheel, no controls. But there's a lot of great aye aye technology in a car like lane change assist, parallel parking assist things like that that can make you a better driver. So let's make our agents better drivers by giving him those assistive technologies. And that's the the short term vision long term. Who knows? But I But I think oh, if company's heir to aggressively they II, they're actually gonna create a nod. The opposite effect, where they hurt customer experience. It's the people that make a difference, so let's make those people better. >> That's one of the things that we've heard consistently throughout this event is the empathy factor machines can't bring. That's really got to be the humans with the A I to deliver on idea, hopefully optimal experience, too. Whatever customer has whatever issue on the back end. >> Yeah, in fact, Roman always talks about that as well. The CEO of five nine and I think he's right from that. Regarded is about having the knowledge of the customer in the empathy to understand. Put yourself in the customer's position and this to your point. Lisa, about CX. In Asian experience, we tied a couple together. If the Asian distressed because they don't have the right information and they're trying a message, this person, or look something up in the database, that frustration is going to come through to the customer. And that further frustrates the customer, right? So of the agents, armed with the right information, they can spend more time focused on the customer and less time trying to find the data that, frankly, they should have at their fingertips all the time. >> So speaking of five nine, you recently attended their analyst event. >> I did >> on. We've had the executives on the team. You know, Jonathan on earlier this week, you know, rock star background. We're goingto throwing on a little bit later. We know him from his Cisco days without breaking any India's, you know, give us a little bit of the insight as to, you know, five nine. You know, what have they been doing? Well, what's what's the new team driving them forward towards? >> Well, I mean, if you look at their stock price from Roland joined, it's it's more than doubled. So obviously there's, um, some good growth there. I think. What? I've always believed that it's very difficult to compete on product alone, right? And if you believe this whole world of it is this customer experience, that's what they do really well, the customers, their customers have a great experience here with five nine, they have a great service organization that makes sure that when you buy five nine, you have a good on boarding experience that set up the way you want it, and that services business makes a big difference. Now they've always had that. Now, where I think the new executive team has made a difference is helping the company understand the scale, move upmarket, more enterprises because the needs their different than down market. And so I think you know, they're gonna have a big impact on the future of five nine. Frankly, I think a lot of what you've seen for growth in the last year has been stuff that was put in place. But I know they're working on a lot of the AI capabilities. We're not breaking in the NBA's. I can tell you that the demonstrations that Jonathan Rosenberg, who's in there incredibly smart guy, I mean he might be the smartest guy in this industry was giving around. How a I can impact customer experience was the best set of concrete examples that I've seen today because it's really easy to give me a pie in the sky hypothetical things. But he really boiled it down in a very grand your level of this possible. This is possible and I'm expecting over the next year, five nine customers will see those things. >> They've done really well in the enterprise market. I think last year in twenty eighteen, they closed very, very strongly. Also, a lot of growth in there. Custom enterprise customers with a Million and Ahrar plus What are you seeing, though, in terms of some of the smaller businesses that probably are facing a lot of the same challenges that enterprises are? Is this an area where they can also leverage five nine two really dial up and deliver Great CX, >> Yeah, but the line has moved up right of people interested in cloud services that used to be too small businesses, and now it's all kinds. But I think for a small business, you can look like a much larger business. I think there's a lot of companies people sometimes think that's a little risky deal the small company. But five nine is a very, very valuable tool because by having that information right away that agents fingertips, they're able to actually replicates, uh, large company experience and on almost validate that the customer made the right decision using them. So I think up and down the stack it for five nine. They provide value tow companies of all sizes. Today, one of them, you know, the interesting aspects of what I've seen two is everybody talks about this twenty four billion dollars tam for Contact Center. I know I've been in that eye, and may I say that because that twenty four billion dollars tam is based on giving contact, Senator people contact center tools, but what I've been noticing over the last years, when people buy five nine, often it's not contact center people using that using it. It's sales people in marketing people, field service. Anybody that needs customer info is using it. And I'll give an example. One of the customers that was at the five nine day I can't see you. They say who they are. They migrated all fifty contacts and regions five nine. And since then they've added one hundred mohr sales people using the tools. So now we've got one hundred fifty people using five nine when there was only fifty contacts. Generations you can see the value is starting to spread across the company, and I think that's a pretty exciting thing. >> It's been interesting we've seen at the show. And in some of the interviews, that line between kind of unified communications and contact center seems to be blurring. It seems to be that >> well, everybody needs that data on the customer info. I actually cameras closer to forty. Forty five billion. To be frank, really, every anybody who uses a serum tool should have five nine capabilities. >> Zia's Thank you so much for sharing your insights and your energy on Day three. If Enterprise connect nineteen, we appreciate your time Thank you. First two minute, man. I'm Lisa Martin. You're watching the Cube?

>> From the SiliconANGLE media office in Boston, Massachusetts, it's theCUBE. Now, here's your host, Stu Miniman. >> Hi, I'm Stu Miniman, and welcome to theCUBE's Boston-area studio. Happy to welcome back to the program two CUBE alums. To my immediate right is Peter Smails, who's the CMO of Imanis Data, and joining him for the segment is Zeus Kerravala, who is founder and Principal at ZK Research. Gentlemen, thanks so much for joining us. >> Thank you. >> Thanks for having me. >> All right, so, we go out to so many shows, we're talking about massive change in the industry. Last two shows I've gone to, really looking at how hybrid and multi-cloud are shaping up, and change, and just the proliferation of options really seems to define what's happening in our industry. And Zeus, want to start with you because you've got some good research which looks at the data side of it. And of course, I'm an infrastructure guy, >> Yeah. >> but the reason we have infrastructure is to run my apps. And the only reason we have apps, really, is behind the data. And that transformation of data, and data at the core of everything, is something that we've loved to cover the last few years. So, what's new on your world? >> Yeah I, in fact, the word you said there, change, is apropos. Because I think I have never seen a time in IT, and I've been an analyst for 20 years and I was a CIO for a while, but I've never seen a period of change like this before. Where digital transformation is reshaping companies as fast as possible. Now, the key to being a successful digital organization is being able to take advantage the massive amounts of data that you have, and then be able to use some machine learning, or other analytic capabilities, to find those nuggets in there to be able to help you change your business process, make people more productive, improve customer service, whatever you're trying to do. I think it really stems from the analytics, that data. Now, what my research has found is that companies are really, and this shouldn't be a big surprise, but companies are really only using a very small slice of their data. Maybe five to 10% at the most in their data. Most data's kept in what's called secondary storage, and there what's happening is this concept called mass data fragmentation. Where we've always had data fragmentation, but it's becoming worse. Where data's now being stored, not only on local computers and servers, but also in the cloud, on IoT devices, out at the edge, within your organization. And so, this concept of mass data fragmentation has exploded. And it's hampering companies' ability to actually make critical decisions to be able to move fast and keep up with a lot of the cloud-native counterparts. And if they don't get a handle on this, they're going to wind falling further and further behind. I think it's absolutely critical today that this challenge of mass data fragmentation be solved. >> Yeah, Peter, want to pull you into this discussion. You talked to a lot of users, and we've talked to you at some of the Hadoop Shows. We look at what's happening in like the database world and there's so many options. >> Yeah. >> I know our team members that keep up to it, they keep spreadsheets. and they're trying to keep up with all of these, but seems like every week there's a new open-source this and that, >> Right, right. >> that's going to capture this segment of the market. But something that I found interesting from one of the previous interviews we'd done with you and your company is it's not that I took my main vendor of choice and I went to one other. It's that today, the database world is like everything else, I'm using a lot. >> Yeah, yeah. >> And it is, and, and therefore, we know that has ripple effects for what I do for security and what I do for things like data protection. Can you give us a little bit of, just kind of a view as to what customers, you know, why are they going to so many applications? What are some of the leading >> Sure. ones in the space? And we know that in IT nothing ever dies, >> and it's, >> Right. >> it tends to be additive. So, how are they dealing with this? >> Yeah, and it picks up directly on what Zeus was just saying before around this notion of fragmentation. So, Imanis Data, the genesis of Imanis Data was really around, if you look at it in the context of cloud, Could 1.0 was, it was essentially, let me take all my legacy applications, lift and shift. Right, let's just take everything on on-prem and let's put it in the cloud. People quickly realized that they were solving the wrong problem. The real answer to the problem was if I want to take advantage of all my data, if I want to take advantage of hybrid-cloud infrastructure. I've got to move from a traditional monolithic stack, application stack, to more of a microservices-based architecture. That led to a very rapid proliferation of new database platforms, both on the Hadoop side for big data, as well as the on the NoSQL side. So, the synergy here in why we like this research so much is because Hadoop, the key message is that Hadoop and NoSQL have both become significant contributors to the mass data fragmentation challenge. And that's really driven, ultimately, by digital transformation and organizations' desire to move to a true hybrid-cloud-based infrastructure. >> How does cloud and this data fragmentation, how does this all go together? >> Oh, our cloud and data fragmentation actually go hand in hand. People thought the cloud was actually solving a lot of their problems, but in a lot of ways it contributed to it, because, as you said, we never get rid of the old. We keep the old around and we add to it. In fact, what I've seen happens is with so many cloud repositories now, users are storing data in the place they were before and then making copies of it in these new cloud services. And in fact, almost all of the new app collaborative applications have their own cloud repositories. So, we've gone from an environment where we had a handful of storage repositories to manage to that absolutely exploding. And I think the cloud itself has matured. I think people are now starting to figure out how to really, to your point, use the cloud in a much different way than before. And so, they're reliant on it. The companies are dependent on it, but if we don't get a handle on where our data is we're going to wind up in a situation where it just becomes unmanageable. >> Yeah, and just to add to that, from additional researches, that according to recent research, 38% of interviewed companies had more than 25 databases. 20% of those same companies had over 100 databases. So, the point is there is a huge fragmentation issue. And if the problem you're trying to solve, ultimately, is insight to your data and intelligence on your business, you've got to create, you've got to solve this problem of fragmentation, because otherwise, you're never going to have any economies of scale. You're never going to be able to give visibility to all your data. That's ultimately the problem that needs to be solved. >> Yeah, it's funny, 'cause you talked about early cloud, and people thought oh, right, I'm going to move everything there and I'll have one cloud, it'll be the cloud. >> The cloud. >> Ah yeah, things like that. And of course, we understand, there's lots of reasons why I'm going to choose multiple solutions. But, too many companies I talk to, when you figure out how they got there. It wasn't like they said, well this is our strategy and we're going to do this, and this, and this. It was, well, different business units have different reasons. Just like I would build infrastructure for my various applications, I would have different groups with different needs. And then, hey IT, can you help us bring all these pieces together? So, how are we doing as an industry for helping customers get their arms around this? Is this just a mess today? Is there a wave, or a trend, as to how we put together, right? Who solves it from a vendor standpoint, and who, from the customer standpoint, kind of has the, is the champion of helping to solve this issue? >> Yeah, I think one of anything is unrealistic, right? And in fact, customers do want choice and they do want options. So, it's not the industry's job to force customers consolidate to one. In fact, it's better to let them use whatever they want. Now, where it becomes, where the work needs to be done now is creating that middleware layer, if you will, or that management layer, that sits above the infrastructure, that gives you the common view. So, I think this mythical single pane of glass we've been searching for for so long, actually, the cloud drives us in that direction, because we do need something to help us give that visibility. I know one of your partners, Cohesity, does that on the secondary storage side to actually make MDF, or mass data fragmentation, manageable. And there's other vendors that do that in other areas, but I think the concept here isn't to try and drive customers into selective choices, but it's to allow them to use whatever they want and then create a management layer over top that gives them that visibility to it looks like one environment. But in fact, it's whatever they want to use underneath. >> Yeah, and picking up on that, the notion of, if you look at the, you asked the question about, sort of, who owns the mantle of driving all this stuff together? And the answer isn't, you could say, oh, the chief data officer. Certain organizations have gone to the level of saying we have a chief data officer and they're trying to drive towards a consolidated strategy. That's a great idea, but, sort of the federation of how things have evolved is actually, is been a good model. Like, a lot of the folks that, from an Imanis Data standpoint, that we speak to, it's architects, it's developers, it's DevOps. And so, from an organizational standpoint, what's happening is you've got to have, over time, you've got to have the application folks, the DevOps folks, the architects, the DBAs, get more closely aligned with your traditional IT and infrastructure folks. That's evolving. And to Zeus' point there, that's not, you're not going to drive them all to one thing, because they have different viewpoints and such, but you need to provide that common layer. Sort of let them do their own thing, but then on the backend be able to sort of provide that common layer to be able to eliminate the backend silos. >> Okay, and drill us down a little bit. We brought up then that the notion of management being able to see across these environments as a piece of the solution, but what is Imanis doing? What are you seeing out there? And, I'll caution, we know a single pane of glass to solve everything is kind of the holy grail, but reality is we need to solve real problems for customers today, and yeah. >> Yeah, and our piece of the puzzle, our piece of the puzzle is Imanis Data is enterprise data management for Hadoop and NoSQL. That's where we focus. We're basically delivering industry-leading solutions for Hadoop and NoSQL. That has led to a very logical collaboration with Cohesity, who's one of the leaders in hyper-converged secondary storage. So, they're trying to provide that common layer of infrastructure to address mass data fragmentation. We see that as, we're the Hadoop and NoSQL folks, so there's a very logical synergy, whereby the combination of Cohesity's solution and Imanis Data's solution essentially then provides, ultimately will provide that single pane of glass. But also, again, at the end of the day provides a common visibility and a common layer to all of your secondary storage whether traditional, relational, VM-based, cloud-based, whether it's your Hadoop and NoSQL-based data. >> Okay, so, bring us back to the customers. We know that simplification is something we want. You know, the cloud world doesn't feel like it's gotten things any simpler. So, where are we? What needs to happen down the road? What more can you share about customers? >> Yeah, I think that's fair to say it hasn't gotten more simple, and in fact, it's gotten more complicated. Everybody I talk to in IT is drowning today in whatever the task is. And I think the point you made of single pane of glass, of remain largely myth, I think the focus is wrong. I don't believe we actually need a single pane of glass that can manage, that can see everything. I think what we need are separate panes of glass that let us see what we need to see. And in fact, the way you guys do that for NoSQL and Hadoop makes some sense. Cohesity has their own that looks at things at more of a higher level, data plate. So, I think we're really in the early innings here, Stu. I think over the next few years, we will see a rise in better management tools and things to help us simplify. I know I just did some research on IT priority for 2019, and simplification actually is now ahead of even cybersecurity as the number one path for today's CIOs. So, I think we've gotten to the point where we've consumed so much stuff, now it's time to simplify it. And there's no one answer for that, but I think within the different departments within IT, they need to look at what those management tools are to let them do that. >> Yeah, I mean, going back, I think back to when I first became an analyst about nine years ago. A central premise is that enterprise IT doesn't necessarily have the skillset to go architect it. They're not a Google or a Yahoo. So, they will spend money from the vendors and the suppliers to help simplify that for them environment. But Peter, I want to ask you, brought up people who are drowning in information. >> Yeah, yes. >> Definitely, we know that today in 2019 there is more going on than they had a year from now, and when we look forward to 2020, we expect that there will be even more. So, the answer in the industry is AI and ML are going to come solve some of this for us. So, to tell us, how does that fits in to these sorts of solutions? >> Sure, and the answer is machine learning and AI will absolutely need to be. Our view is that they're critical pillars to the future of data management. They have to be, because the volume of data and the complexity of the infrastructure within which you're running. You can't, as human beings, we are drowning, and you need tools, you need help to solve this problem. And machine learning and AI are absolutely going to be key contributors. From an Imanis Data standpoint, our approach has been very much about completely avoiding the whole notion of machine learning whitewash. Let's talk about the practical application of machine learning. So, for example, what we do today is we apply machine learning to do what we call ThreatSense. So, it's very specifically applied to the automation of anomaly detection, okay. Build a model of what normal looks like from a backup and recovery standpoint. Anything that falls outside of normal gets flagged, so that administrators can then do something. Provide a human feedback loop to that machine running algorithm, so it can get smarter. We also recently introduced something that we call smart policies. That's about the automation of backup. So, again, it's not about the holy grail of machine learning. In the case of smart policies, it's instead of creating spreadsheets and having a human being trying to figure out how to address a particular RPO, it's tell us what's your RPO and what data do you want to protect. We'll go build a model and we'll address your RPOs, and if we can't, we'll tell you why we can't. So, very practical for today. To the point you made earlier about that fact that we're still in the early innings, today it's about the practical application of machine learning and AI to help people automate processes. >> I think the fear and doom and gloom around AI is, particularly in the IT circles, is completely misguided. I understand why people might think it's going to take their job, but AI and ML is the IT pro's best friend. There's so much data today, they're so much to do, that people just can't connect the dots between those data points fast enough. >> Right. >> Just like you look, today you wouldn't go to a radiologist that doesn't use machine learning to look at your brain scans, right? You know, it's getting harder and harder to work, to be a customer of a company that doesn't use AI or ML to analyze your data, and it becomes very apparent, because they're just not able to provide the same type of service. >> Yeah, totally agree. We've done some events with MIT and a couple of the professors there, Erik Brynjolfsson and Andy McAfee talk about racing with the machines. >> Yeah. >> So, the people that can actually harness and leverage that, the challenge is, if you're in IT and you're working on stuff that's five to 10 years old, and you can't take advantage of those new tools, well, you need to skill up, and you need to get ready. But most companies I talk to, it's not that they're looking to cut half the workforce, it's just that they can't add many more people, so most of them can be reskilled, or heck, if there's some automation they can have in there. There's lots of projects sittin' on the table that they've been trying to do for years. I don't find anybody that ever said, hey, if I could give ya an extra month in the year that you wouldn't have to figure out. >> The question is, do you want to be strategic to your organization, or tactical? And if you want to be tactical, your job's only as long as that tactic, right, so. >> Peter, when I was hearing you walk through some of that ML piece, things like security and ransomware kind of popped into my head. Is that a part of the solution in offer? >> Yeah, absolutely. So, ThreatSense is, specifically, we talk about as anomaly detection, because overall it really is about, ransomware is essentially about detecting anomalies. So, ransomeware is an application of anomaly detection. So, our ThreatSense capability is built into the product. What happens is, when we do backups, like I said, we build a model of what normal looks like, and then we flag anomalies. My dataset size, all of a sudden spike. My data type, all of a sudden I have a bunch of ZIP files, or something, all of a sudden. Something has changed that's outside of normal, and then we flag that, and you can take action against that. So, absolutely it is, but the initial application is specifically about ransomware. >> All right. Zeus, is there advice that you would want to give users, or when you're talking to customers, what's the profile of somebody that is handling their data, and leveraging it well? >> I don't always really hand it well. (all laughing) But I think the advice I'd give is you want to simplify and automate as much as you can, and ruthlessly automate. I think if you're trying to do things the old way, you're going to wind up falling behind. And so, I suppose to your question, what's the profile of a company that's doin' it well. It's one that's actually able to roll up new services quickly, and you see that in a lot of the big name cloud companies. They always new things comin' and new things goin', and they're able to transform the way they deal with customers and employees. That's the hallmark of a company that's using it's data well. Ones that aren't, frankly, we've seen a lot of 'em go out of business, right, over the last few years. And so, I think from an IT perspective, you want to embrace automation, embrace machine learning, right, embrace this concept of single pane of glass for your particular domain. Because what it lets you do is, it becomes a tool to help you do your job better. There's certain things people are good at and there's certain things people aren't, and connecting the dots, and terabits, petabytes of, bits of data isn't one of 'em. So, I think from an IT perspective, you want to automate, and you want to embrace machine learning, because it's going to be your best friend, and it's going to help you keep your skillset current. >> Yeah, and I would just pick up on that and say that the answer isn't constraining, to a large extent it's really embracing data diversity. Like the answer to mass data fragmentation isn't homogenization of your data, or limiting particular data types. The proliferation of different data types is a direct result of organizations trying to be more agile, and trying to be more nimble. So, the answer isn't sort of constraining data. The answer is making the strategic investments in the right tools, in sort of in some of the right policies and governance, if you will. So, that you keep everybody strategically going in the right direction in this sort of federated diverse type of environment. >> Yeah, if you look at any market in IT, well, really even in the consumer world, where there has been choice, it's create a rising tide for everybody. >> Right. >> The question is, you can't have it be chaotic. >> Right. >> Right, and so you're bringing a level of order to a world that was historically chaotic, and that untethers people to make whatever choice they want and use the best possible tools. >> Yeah. >> Right. >> Peter, I go back to the promise of big data, was that I was going to turn that proliferation of volume, velocity of data from a, oh my god, that's a problem, and flip it on its head, and become an opportunity for how we can leverage data. Give me the final word. How do we connect the dot from where that was a few years ago to this mass data fragmentation world today. >> Yeah, and the answer to that is don't treat, don't make big data sort of the three guys over in the corner who are the data scientist. Embrace big data. Embrace all your data types. So, our message, as the Hadoop and NoSQL data management folks, is simply, look Hadoop and NoSQL are a key part of your overall data strategy. Embrace those, include those in your overall strategy, and make sure you're basically taking the right contextual picture of what you're trying to do. Include all your different data types. Hadoop and NoSQL are contributors to mass data fragmentation, but as part of that salute, if they're part of the problem, then they need to be part of the solution, both from a data standpoint and from a solution standpoint. So, that's really the message that we're driving is that, embrace all your different data types, put the appropriate systems in place, take the right sort of approach to consolidating and solidifying your overall data strategy. >> All right, well, Peter and Zeus, thanks so much for sharing >> Thank you. the latest update. Absolutely, data at the center of it all, and need to embrace those new tools and opportunities out there. All right, I'm Stu Miniman. And be sure to check out thecube.net for all of our research and shows that we'll be at. And thank you, as always, for watching theCUBE. (electronic music)

>> Narrator: Live form Las Vegas, Nevada, it's the Cube, covering Accelerate 2017, brought to you by Fortinet. Now here are your hosts, Lisa Martin and Peter Burris. >> Welcome back to the Cube, we are live in Las Vegas, at Fortinet's Accelerate 2017 event. A really exciting busy day that I have had with my cohost, Peter Burris, I'm Lisa Martin, we are very excited to be joined by Zeus Kerravala next, of ZK research. Welcome to the cube. >> Thanks Lisa, it's a-- >> We're happy to have you here. >> Yeah, it's great to be here. >> And we, as I've mentioned, Peter and I have been talking with a lot of great folks all day, from Fortinet, from Technology Alliance Partners. The buzz is here, obviously, the security as an industry of the market, there is tremendous change going on there, breaches are happening daily with, from big brands that we're all very aware of as consumers to the small mom 'n pop. So, Zeus, you founded ZK Research, you said a little over five years ago... >> Zeus: That's correct. But you've been in the industry as an analyst for quite a long time, and you actually were in IT as well as CIO. >> Yeah, I was. I was, I played a number of different roles, I started off as an engineer, I held a role as a CIO for a while, I worked for Avar, and then I got tired of doing that, and I became an industry analyst, and I've been doing that about 15 years now >> Excellent, so one of the things that we'd love to ask you about is, during the keynote this morning, the CEO of the Fortinet, Ken Xie, talked about this big impact that hyperconnectivity is having in general, this proliferation of mobile devices, of IoT devices, that are really causing a lot of challenges for security, but also talked about, that there will be tremendous growth in the security market, what's your take on where the security market is going? >> Yeah, I really liked Ken's keynote, in fact, Ken typically delivers very technical keynotes, and that's worked well for him, cause customers tend to love him, and this one is a little higher level, and I really like that, and Ken's right, we're moving into a world, where everything is connected, literally everything, our cars, our pets, the things we wear, the things in our home, everything in our business, and that has some profound implications for business. Alright, first of all, security is becoming a, an asymmetric problem for security professionals, what I mean by that is, it used to be you had one way into the network, and you had to protect it, and the bad guys had to come through that way. Now, security professionals have to protect tens, hundreds, thousands of new entry points, created from all these connections, to the Cloud, to IoT devices, but the bad guys still only have to find one way in, and once they're in, we assume that environment is secure, and they can meander around, and the bad guys can figure out what to steal. And so, I think, one of the points that was underscored in Ken's keynote is the fact that security is changing, it's evolving from something that was focused at the perimeter. >> Lisa: Right. >> To something that needs to be focused more internal. In fact, my research shows that 90 percent of security spend is still focused at the perimeter, and only 20 percent of the breaches occur there. So, you can see customers are misaligned with how they're spending they're money, and I thought a lot of the messages from Ken's keynote were, I think, well received by the audience, because it's something they need to hear. >> Yeah, he talked about the security evolution, which I also thought was quite interesting. I saw a graphic the other day that showed, by decades, security evolution, you talked about perimeter in the 1990s, it was focused on perimeter, obviously still important, but not the only thing, you talked about, there's a lot of ways in now. Then going onto Web 2.0, web security, then Cloud security in the 2010s, and now getting to this, what Ken described as the third generation of a Fabric needing automation, needing resilient energy, talked about kind of internal, so that I thought that was a really interesting way of looking at that, but also very interesting that you're saying almost that 80, 20 rule, with your clients, how are you helping them, to sort of switch that from a spend, and really show, even in some ways maybe, how the technology that they would employ from a security perspective can actually bring revenue opportunities. >> Yeah, well, I think they have to rely more on the technology, and automation, typically security has been deployed, box by box, device by device, at specific points in the network using manual processes, and frankly, that's kind of slow, right. And security already has a bit of a bad rap, that it slows the business down, users tend to turn things off in their computers, because it slows them down, and in this digital era, and I was glad Ken talked about digital transformation, because in the digital era, the new currency of business is speed. Companies need to move with unprecedented speed. Those, that can do that, will be able to stay in market leadership, and those that can't, will fall behind, and frankly, over the last five years, we've seen a bunch of big name vendors, brands that we all knew, go away, right, because they couldn't keep up. Now, when you think about what companies are trying to do in order to be a digital enterprise, you need to be agile, but you're only as agile as your least agile IT component, and today, that's the network. So, if I've got this fully automated IT stack, and I've got containers popping up, and new applications being deployed, and I'm accessing things from the Cloud, but my engineers have to run around with security appliances, and deploy them, all that does is slow the business down, and so, I think the concept of the Security Fabric is to ensure that you have the right services in the right places that you can turn on, and now, security becomes a business enabler, and not an inhibitor, so in some ways, we're flipping the model around where security, like I said, has been viewed as something that's held the company back, but it's now something that can allow us to differentiate ourselves, because we'll have the trust from the customers that we have the right security in the right places. >> I want to follow up on a point you made about the 90 percent of the investment at perimeter, and 20 percent. There might be another way of thinking about it, and I'm going to test this with you, is that it takes that 90 percent of security investment is what it takes to ensure that no more than 20 percent of the attacks occur at the perimeter, so does that mean that we need to reallocate that 100 percent sources, where that 100 percent is going to grow 3x, because it's still going to require that 90 percent to keep the perimeter secure. >> Yeah, I think it's a bit of both, but I do think, we will see the spend of security go up, because we have to secure more things. Like if you look at some of the big breaches that we've seen, in fact, almost all of them occurred from inside the network. So bad guys are smart, the hackers are clearly they're some of the most brilliant minds out there, that's why they're able to do what they do, and they know that the perimeter security today is so well-built that the amount of effort it takes to break through it is very, very high, so you're right, that amount of spend is required to keep all those threats out. >> Peter: But it's not the only answer. >> It's not the only answer. >> So we're going to need to continue to invest in an in-point, and perimeter, but as you were saying, we also have to invest in data, and have a balanced approach to the whole thing, which we adjust to this notion of Fabric. >> Yeah, and I think the automation capabilities of the Fabric can really help of certainly, because I don't want people watching this to think, "oh, my God, my security budget is going to be like triple what I had.", because frankly the people cost associated with security from my research are almost about 60 percent of the cost. I mean the equipment itself isn't all that much, right. So if I can invest more in the right technology, and I can automate a lot of the things I can do today, now I can reallocate those people cost somewhere else. So, in fact, I may wind up spending the same amount from an overall perspective, or maybe a little bit less, but I'll be far more secure, because I have the right technology in the right places. >> So where are those people going to go? >> I hear all the time, an I think this is one of the things that has held automation back from IT people that they're scared to death of automation, because they think their jobs are at stake, but if you look... All the way back to the mainframe, we've always had this transition, right, where we did things, and then new technology came in, and new skills are needed to do new things, and I think if you look at IT today, there's a crying need for data scientists, for analytic skills, I mean security itself Is less about point products, and more about data gathering, and data analytics, and there's very few of those professionals out there, so if I'm a professional, security professional today, I want to automate those traditional tasks because I need to invest in myself to make sure that my skillset is current today, and also a decade from now, and I think a lot of that's going to come in the area of data sciences. >> Yeah, and as you said, a lot of those skills in doing the models of security, and this Fabric notion are transferable to other domains. >> Oh, absolutely, because if you don't want to stay a security professional, but most security people like security, that's why they're doing it. But I do think there will always be need for skills in the next thing, the key for the security professionals is don't get stuck in the old world, you know, embrace this new world, embrace automation because it's going to free up their time to do things that are more strategic to the company, which is going to allow them to be more valuable as well. >> You touched on the Fabric term a minute ago, and that's one of the things that Fortinet announced last year was the Security Fabric approach. Can you talk to us about Fabric versus Platform, what are your thoughts there, and how are they different? >> Yeah, I think, first of all, the Fabric, and Platform, are both roughly trying to solve the same problem that... Too many vendors doesn't make you more secure, in fact, my research shows that on average, companies have 32 vendors, different security vendors, which you can't build any kind of strategy around that. So the concept of either, a Fabric, or a Platform, is that I can reduce the number of vendors, I can simplify my architecture, and I get more intelligence across the entirety of the Platform, or the Fabric. Now the difference though, is I think the Fabric, think of what a Fabric is, it's a big cloth where any point is connected to any point, and so the security intelligence is spread across that Fabric, and I can drop new components in, or take em out, and things will continue to work. So, it allows me, that if I put a new IoT device in, I can push security capabilities there, if I started using a new cloud service, I can push security capabilities there. A Platform to me, is more dependent on a centralized point of control, and I can attach things to that point of control, but if I take that point of control out, none of the things works, and so I think, the Fabric almost democratizes security capabilities across the infrastructure, because it's more dynamic, and more distributed, and we're clearly living in a world where dynamism, and distribution, are the norm, and so the security architecture needs to follow that. >> Paradoxically, doesn't that centralized security platform the become the biggest security risk in the company? >> Zeus: Yeah, well, if you breach that, you can get anywhere. >> Get anywhere. >> Zeus: Right, right. And so I think the Security Fabric is the right way to think about it, you're not trying to beef off one particular area here, you're trying to make a set of security services available across your entire infrastructure. >> Is that, that kind of, a key advice that you give to your clients that are looking for, this now requires a new approach, new architecture, is that kind of the key advice that you offer to them? >> Yeah, well that's the biggest conversation I have with security professionals today, is they don't really know where to go from here, they've invested all this money in all these tools, and the environment has gotten increasingly more complicated, right. So, they're falling behind. It's very, very slow, and it's not working. The average number of days to find a breach is a hundred days, think of what can happen in a hundred days, that's over a quarter. And so, there's a great desire to be able to find breaches faster, but also first simplify the architecture, and that's always my advice is, you can't move forward, until you take a step back, and simplify, right. And the concepts, I think of the Fabric, are really aligned with that, it's simplification, automation, and it removes a tremendous amount of the human burden from security operations, which frankly I think is holding things back. >> What are some of the things that you're most excited about? You were in the keynote this morning, we chatted about that, we talked about some of the things that were discussed there with the evolution of security, the third generation, you mentioned speed as currency, and actually kind jogged my memory about something that you were talking about with respect to data, and also that was brought up this morning as the data value, if it is not valuable to a business, you know, that business has-- >> Well one of the things we talked about this morning specifically was that security used to be the department of no, as you said earlier, and companies that can collapse the time between an idea, and execution, in a world where, at least in the digital world, where digital security is so essential, are going to provide an enormous net new set of value propositions to their customers, and I'm sure you've seen that. >> Yeah, well, no doesn't work anymore because of shadow IT, if you say no to a line of business, they're just going to go find a different way to do it, and that can have incredibly... That can be incredibly risky, because now IT has no control, in fact... Some of the interesting data points from my research is that 50 percent of companies, don't know what devices are attached to their network, and I think 96 percent of companies have IT services that have been procured not through IT, directly by the line of business, so it's become the norm, and I think, if you look across the entirety of the world today, from business processes through IT strategy, right, data and analytics has become the key differentiator, to be able to take the data, analyze it, and then be able to create some new insights. Now from a line of business perspective, their trying to understand the way you like to shop, the sports teams you like, the things you like to buy, and push more relevant content to you. From a security perspective, it's being able to find those breaches faster, and then, being able to cut that number down from 100 days to frankly, we've got to get to minutes, and I thought some of the more exciting things they showed in the keynote were the ability to take the data, and then show it visually, because I've always said you can't secure what you can't see, right, and if you're blind to what's going on in the network, you'll never ever, ever be able to truly secure it, and so I think we're-- Fortinet is entering an era now, where they're actually harnessing the power of all the date they have, but they're focused more on the UI in the new FortiOS 5.6, a big part of that is the new user interface to be able to display the data in a way that's understandable by the people using the tools. >> So that's a great point that you can't secure what you can't see. >> Zeus: You cannot secure what you can't see, yeah. >> Well, Derek Manky, was actually talking earlier, who's the global security strategist here at Fortinet, I'm sure you know Derek. >> Zeus: Yeah. >> Was actually talking about one of the things he's excited about, and want to get your take on this point, is that he thinks 2017 may be the year that the white hats get the upper hand. >> Well hopefully, I do think-- >> Peter: Because of this notion of automation, and-- >> Yeah, you know, I talked about the asymmetric problems to security where the bad guys need to find one way in, I think data, and visualization can reverse that, because once they're in the network, the bad guys need to stay hidden, and the good guys, right, the internal security department, only needs to find one instance of anomalous traffic, or something that could indicate a breach to be able to start the process of remediation, and so you're right, I think in some ways, 2017, well maybe a little, maybe next year, but hopefully, this year, the white hats start to, they'll at least gain ground this year, and I think that we'll start to see that assymetry problem flipped. >> Precisely, because you only need one instance of a bad action. >> correct, correct. And a lot of that, a lot of these bad actions come from users specifically being targeted, and sometimes, security, no matter how much training they do, you just don't know, you get an email from somebody, you click on it, somebody sends you a file, I've talked to HR people that have gotten resumes emailed to them that have viruses in them, and they don't know, but once that action starts, the data, and visualization tools can help identify those very, very quickly, and the important part about that is the faster you find it, the smaller the blast radius. So if I find it in five seconds, maybe only that HR person's computer is affected, but if it takes me a hundred days, now the whole department, or maybe a whole building has been impacted, so containing that blast radius, I think, is something that security professionals need to focus on. >> Now is a blast radius typically a function of time, or is it also a function of proximity to other business activities, or both? >> I think it's primarily a function of time, and I think it's exponential. So the longer the time goes exponentially, the greater the damage. >> Well gentlemen, tremendous conversation, there's a tremendous amount of opportunity, I think is what we've heard today, thank you very much, Zeus, for sharing your insight, your research with us. Let's hope that 2017 is the year, the white hats get the upper hand. >> Yeah, I think it's a really exciting time for security professionals, and first time in a long time, they have the opportunity to fight back, in a battle that they've been losing ground in for really the better part of a decade. >> Well Zeus, thank you so much for joining us. >> Zeus: Thank you. >> On behalf of my colleague, Peter Burris, thank you for watching, stay tuned, we'll be right back to wrap up the day. (electronic music)

(bright music) >> Hello, everyone. Welcome back to live coverage day two or day one, day two for theCUBE, day one for the event. I'm John Furrier, host of theCUBE. It's the keynote analysis segment. Adam just finished coming off stage. I'm here with Dave Vellante and Zeus Kerravala, with principal analyst at ZK Research, Zeus, it's great to see you. Dave. Guys, the analysis is clear. AWS is going NextGen. You guys had a multi-day analyst sessions in on the pre-briefs. We heard the keynote, it's out there. Adam's getting his sea legs, so to speak, a lot of metaphors around ocean. >> Yeah. >> Space. He's got these thematic exploration as he chunked his keynote out into sections. Zeus, a lot of networking in there in terms of some of the price performance, specialized instances around compute, this end-to-end data services. Dave, you were all over this data aspect going into the keynote and obviously, we had visibility into this business transformation theme. What's your analysis? Zeus, we'll start with you. What's your take on what Amazon web service is doing this year and the keynote? What's your analysis? >> Well, I think, there was a few key themes here. The first one is I do think we're seeing better integration across the AWS portfolio. Historically, AWS makes a lot of stuff and it's not always been easy to use say, Aurora and Redshift together, although most customers buy them together. So, they announce the integration of that. It's a lot tighter now. It's almost like it could be one product, but I know they like to keep the product development separately. Also, I think, we're seeing a real legitimization of AWS in a bunch of areas where people said it wasn't possible before. Last year, Nasdaq said they're running in the cloud. The Options Exchange today announced that they're going to be moving to the cloud. Contact centers running the cloud for a lot of real time voice. And so, things that we looked at before and said those will never move to the cloud have now moved to the cloud. And I think, my third takeaway is just AWS is changing and they're now getting into areas to allow customers to do things they couldn't do before. So, if you look at what they're doing in the area of AI, a lot of their AI and ML services before were prediction. And I'm not saying you need an AI, ML to do prediction, was certainly a lot more accurate, but now they're getting into generative data. So, being able to create data where data didn't exist before and that's a whole new use case for 'em. So, AWS, I think, is actually for all the might and power they've had, it's actually stepping up and becoming a much different company now. >> Yeah, I had wrote that post. I had a one-on-one day, got used of the transcript with Adam Selipsky. He went down that route of hey, we going to change NextGen. Oh, that's my word. AWS Classic my word. The AWS Classic, the old school cloud, which a bunch of Lego blocks, and you got this new NextGen cloud with the ecosystems emerging. So, clearly, it's Amazon shifting. >> Yeah. >> But Dave, your breaking analysis teed out the keynote. You went into the whole cost recovery. We heard Adam talk about macro at the beginning of his keynote. He talked about economic impact, sustainability, big macro issues. >> Yeah. >> And then, he went into data and spent most of the time on the keynote on data. Tools, integration, governance, insights. You're all over that. You had that, almost your breaking analysis almost matched the keynote, >> Yeah. >> thematically, macro, cost savings right-sizing with the cloud. And last night, I was talking to some of the marketplace people, we think that the marketplace might be the center where people start managing their cost better. This could have an impact on the ecosystem if they're not in in the marketplace. So, again, so much is going on. >> What's your analogy? >> Yeah, there's so much to unpack, a couple things. One is we get so much insight from theCUBE community plus your sit down 101 with Adam Selipsky allowed us to gather some nuggets, and really, I think, predict pretty accurately. But the number one question I get, if I could hit the escape key a bit, is what's going to be different in the Adam Selipsky era that was different from the Jassy era. Jassy was all about the primitives. The best cloud. And Selipsky's got to double down on that. So, he's got to keep that going. Plus, he's got to do that end-to-end integration and he's got to do the deeper business integration, up the stack, if you will. And so, when you're thinking about the keynote and the spirit of keynote analysis, we definitely heard, hey, more primitives, more database features, more Graviton, the network stuff, the HPC, Graviton for HPC. So, okay, check on that. We heard some better end-to-end integration between the elimination of ETL between Aurora and Redshift. Zeus and I were sitting next to each other. Okay, it's about time. >> Yeah. >> Okay, finally we got that. So, that's good. Check. And then, they called it this thing, the Amazon data zones, which was basically extending Redshift data sharing within your organization. So, you can now do that. Now, I don't know if it works across regions. >> Well, they mentioned APIs and they have the data zone. >> Yep. And so, I don't know if it works across regions, but the interesting thing there is he specifically mentioned integration with Snowflake and Tableau. And so, that gets me to your point, at the end of the day, in order for Amazon, and this is why they win, to succeed, they've got to have this ecosystem really cranking. And that's something that is just the secret sauce of the business model. >> Yeah. And it's their integration into that ecosystem. I think, it's an interesting trend that I've seen for customers where everybody wanted best of breed, everybody wanted disaggregated, and their customers are having trouble now putting those building blocks together. And then, nobody created more building blocks than AWS. And so, I think, under Adam, what we're seeing is much more concerted effort to make it easier for customers to consume those building blocks in an easy way. And the AWS execs >> Yeah. >> I talked to yesterday all committed to that. It's easy, easy, easy. And I think that's why. (Dave laughing) Yeah, there's no question they've had a lead in cloud for a long time. But if they're going to keep that, that needs to be upfront. >> Well, you're close to this, how easy is it? >> Yeah. >> But we're going to have Adrian Cockcroft (Dave laughing) on at the end of the day today, go into one analysis. Now, that- >> Well, less difficult. >> How's that? (indistinct) (group laughing) >> There you go. >> Adrian retired from Amazon. He's a CUBE analyst retiree, but he had a good point. You can buy the bag of Lego blocks if you want primitives >> Yeah. >> or you can buy the toy that's glued together. And it works, but it breaks. And you can't really manage it, and you buy a new one. So, his metaphor was, okay, if the primitives allow you to construct a durable solutions, a lot harder relative to rolling your own, not like that, but also the simplest out-of-the box capability is what people want. They want solutions. We call Adam the solutions CEO. So, I think, you're going to start to see this purpose built specialized services allow the ecosystem to build those toys, so that the customers can have an out-of-the box experience while having the option for the AWS Classic, which is if you want durability, you want to tune it, you want to manage it, that's the way to go for the hardcore. Now, can be foundational, but I just see the solutions things being very much like an out-of-the-box. Okay, throw away, >> Yeah. >> buy a new toy. >> More and more, I'm saying less customers want to be that hardcore assembler of building blocks. And obviously, the really big companies do, but that line is moving >> Yeah. >> and more companies, I think, just want to run their business and they want those prebuilt solutions. >> We had to cut out of the keynote early. But I didn't hear a lot about... The example that they often use is Amazon Connect, the call center solution. >> Yeah. >> I didn't hear a lot to that in the keynote. Maybe it's happening right now, but look, at the end of the day, suites always win. The best of breed does well, (John laughing) takes off, generate a couple billion, Snowflake will grow, they'll get to 10 billion. But you look at Oracle, suites work. (laughs) >> Yeah. >> What I found interesting about the keynote is that he had this thematic exploration themes. First one was space that was like connect the dot, the nebula, different (mumbles) lens, >> Ocean. >> ask the right questions. (Dave laughing) >> Ocean was security which bears more, >> Yeah. >> a lot more needed to manage that oxygen going deep. Are you snorkeling? Are you scuba diving? Barely interesting amount of work. >> In Antarctica. >> Antarctica was the performance around how you handle tough conditions and you've got to get that performance. >> Dave: We're laughing, but it was good. >> But the day, the Ocean Day- >> Those are very poetic. >> I tweeted you, Dave, (Dave laughing) because I sit on theCUBE in 2011. I hate hail. (Dave laughing) It's the worst term ever. It's the day the ocean's more dynamic. It's a lot more flowing. Maybe 10 years too soon, Dave. But he announces the ocean theme and then says we have a Security Lake. So, like lake, ocean, little fun on words- >> I actually think the Security Lake is pretty meaningful, because we were listening to talk, coming over here talking about it, where I think, if you look at a lot of the existing solutions, security solutions there, I describe 'em as a collection of data ponds that you can view through one map, but they're not really connected. And the amount of data that AWS holds now, arguably more than any other company, if they're not going to provide the Security Lake, who is? >> Well, but staying >> Yeah. >> on security for a second. To me, the big difference between Azure and Amazon is the ecosystem. So, CrowdStrike, Okta, Zscaler, name it, CyberArk, Rapid7, they're all part of this ecosystem. Whereas Microsoft competes with all of those guys. >> Yes. Yeah. >> So it's a lot more white space than the Amazon ecosystem. >> Well, I want to get you guys to take on, so in your reaction, because I think, my vision of what what's happening here is that I think that whole data portion's going to be data as code. And I think, the ecosystem harvests the data play. If you look at AWS' key announcements here, Security Lake, price performance, they're going to optimize for those kinds of services. Look at security, okay, Security Lake, GuardDuty, EKS, that's a Docker. Docker has security problems. They're going inside the container and looking at threat detection inside containers with Kubernetes as the runtime. That's a little nuance point, but that's pretty significant, Dave. And they're now getting into, we're talking in the weeds on the security piece, adding that to their large scale security footprint. Security is going to be one of those things where if you're not on the inside of their security play, you're probably going to be on the outside. And of course, the price performance is going to be the killer. The networking piece surprise me. Their continuing to innovate on the network. What does that mean for Cisco? So many questions. >> We had Ajay Patel on yesterday for VMware. He's an awesome middleware guy. And I was asking about serverless and architectures. And he said, "Look, basically, serverless' great for stateless, but if you want to run state, you got to have control over the run time." But the point he made was that people used to think of running containers with straight VMs versus Fargate or Knative, if you choose, or serverless. They used to think of those as different architectures. And his point was they're all coming together. And it's now you're architecting and calling, which service you need. And that's how people are thinking about future architectures, which I think, makes a lot of sense. >> If you are running managed Kubernetes, which everyone's doing, 'cause no one's really building it in-house themselves. >> No. >> They're running it as managed service, skills gaps and a variety of other reasons. This EKS protection is very interesting. They're managing inside and outside the container, which means that gives 'em visibility on both sides, under the hood and inside the application layer. So, very nuanced point, Zeus. What's your reaction to this? And obviously, the networking piece, I'd love to get your thought. >> Well, security, obviously, it's becoming a... It's less about signatures and more of an analytics. And so, things happen inside the container and outside the container. And so, their ability to look on both sides of that allows you to happen threats in time, but then also predict threats that could happen when you spin the container up. And the difficulty with the containers is they are ephemeral. It's not like a VM where it's a persistent workload that you can do analysis on. You need to know what's going on with the container almost before it spins up. >> Yeah. >> And that's a much different task. So, I do think the amount of work they're doing with the containers gives them that entry into that and I think, it's a good offering for them. On the network side, they provide a lot of basic connectivity. I do think there's a role still for the Ciscos and the Aristas and companies like that to provide a layer of enhanced network services that connects multicloud. 'Cause AWS is never going to do that. But they've certainly, they're as legitimate network vendor as there is today. >> We had NetApp on yesterday. They were talking about latency in their- >> I'll tell you this, the analyst session, Steven Armstrong said, "You are going to hear us talk about multicloud." Yes. We're not going to necessarily lead with it. >> Without a mention. >> Yeah. >> But you said it before, never say never with Amazon. >> Yeah. >> We talk about supercloud and you're like, Dave, ultimately, the cloud guys are going to get into supercloud. They have to. >> Look, they will do multicloud. I predict that they will do multicloud. I'll tell you why. Just like in networking- >> Well, customers are asking for it. >> Well, one, they have the, not by design, but by defaulter and multiple clouds are in their environment. They got to deal with that. I think, the supercloud and sky cloud visions, there will be common services. Remember networking back in the old days when Cisco broke in as a startup. There was no real shortest path, first thinking. Policy came in after you connected all the routers together. So, right now, it's going to be best of breed, low latency, high performance. But I think, there's going to be a need in the future saying, hey, I want to run my compute on the slower lower cost compute. They already got segmentation by their announcements today. So, I think, you're going to see policy-based AI coming in where developers can look at common services across clouds and saying, I want to lock in an SLA on latency and compute services. It won't be super fast compared to say, on AWS, with the next Graviton 10 or whatever comes out. >> Yeah. >> So, I think, you're going to start to see that come in. >> Actually, I'm glad you brought Graviton up too, because the work they're doing in Silicon, actually I think, is... 'Cause I think, the one thing AWS now understands is some things are best optimized in Silicon, some at software layers, some in cloud. And they're doing work on all those layers. And Graviton to me is- >> John: Is a home run. >> Yeah. >> Well- >> Dave, they've got more instances, it's going to be... They already have Gravitons that's slower than the other versions. So, what they going to do, sunset them? >> They don't deprecate anything ever. So, (John laughing) Amazon paid $350 million. People believe that it's a number for Annapurna, which is like one of the best acquisitions in history. (group laughing) And it's given them, it's put them on an arm curve for Silicon that is blowing away Intel. Intel's finally going to get Sapphire Rapids out in January. Meanwhile, Amazon just keeps spinning out new Gravitons and Trainiums. >> Yeah. >> And so, they are on a price performance curve. And like you say, no developer ever wants to run on slower hardware, ever. >> Today, if there's a common need for multicloud, they might say, hey, I got the trade off latency and performance on common services if that's what gets me there. >> Sure. >> If there's maybe a business case to do that. >> Well, that's what they're- >> Which by the way, I want to.... Selipsky had strong quote I thought was, "If you're looking to tighten your belt, the cloud is the place >> Yeah. >> to do it." I thought >> I tweeted that. >> that was very strong. >> Yeah. >> Yeah. >> And I think, he's right. And then, the other point I want to make on that is, I think, I don't have any data on this, but I believe believe just based on some of the discussions I've had that most of Amazon's revenue is on demand. Paid by the drink. Those on demand customers are at risk, 'cause they can go somewhere else. So, they're trying to get you into optimized pricing, whether it's reserved instances or one year or three-year subscriptions. And so, they're working really hard at doing that. >> My prediction on that is that's a great point you brought up. My prediction is that the cost belt tightening is going to come in the marketplace, is going to be a major factor as companies want to get their belts tighten. How they going to do that, Dave? They're going to go in the marketplace saying, hey, I already overpaid a three-year commitment. Can I get some cohesively in there? Can I get some of this or that and the other thing? >> Yep. >> You're going to start to see the vendors and the ecosystem. If they're not in the marketplace, that's where I think, the customers will go. There are other choices to either cut their supplier base or renegotiate. I think, it's going to happen in the marketplace. Let's watch. I think, we're going to watch that grow. >> I actually think the optimization services that AWS has to help customers lower spend is a secret sauce for them that they... Customers tell me all the time, AWS comes in, they'll bring their costs down and they wind up spending more with them. >> Dave: Yeah. >> And the other cloud providers don't do that. And that has been almost a silver bullet for them to get customers to stay with them. >> Okay. And this is always the way. You drop the price of storage, you drop the price of memory, you drop the price of compute, people buy more. And in the question, long term is okay. And does AWS get commoditized? Is that where they're going? Or do they continue to thrive up the stack? John, you're always asking people about the bumper sticker. >> Hold on. (John drowns out Dave) Before we get the bumper sticker, I want to get into what we missed, what they missed on the keynote. >> Yeah, there are some blind spots. >> I think- >> That's good call. >> Let's go around the horn and think what did they miss? I'll start, I think, they missed the developer productivity angle. Supply chain software was not talked about at all. We see that at all the other conferences. I thought that could have been weaved in. >> Dave: You mean security in the supply chain? >> Just overall developer productivity has been one of the most constant themes I've seen at events. Who are building the apps? Who are the builders? What are they actually doing? Maybe Werner will bring that up on his last day, but I didn't hear Adam talk about it all, developer productivity. What's your take in this? >> Yeah, I think, on the security side, they announced security data lake. I think, the other cloud providers do a better job of providing insights on how they do security. With AWS, it's almost a black hole. And I know there's a careful line they walk between what they do, what their partners do. But I do think they could be a little clearer on how they operate, much like Azure and GCP. They announce a lot of stuff on how their operations works and things like that. >> I think, platform across cloud is definitely a blind spot for these guys. >> Yeah. >> I think, look at- >> But none of the cloud providers have embraced that, right? >> It's true. >> Yeah. >> Maybe Google a little bit >> Yeah. >> and Microsoft a little bit. Certainly, AWS hasn't at this point in time, but I think, they perceive the likes of Mongo and Snowflake and Databricks, and others as ISVs and they're not. They're platform players that are building across clouds. They're leveraging, they're building superclouds. So, I think that's an opportunity for the ecosystem. And very curious to see how Amazon plays there down the stream. So, John, what do you think is the bumper sticker? We're only in day one and a half here. What do you think so far the bumper sticker is for re:Invent 2022? >> Well, to me, the day one is about infrastructure performance with the whole what's in the data center? What's at the chip level? Today was about data, specialized services, and security. I think that was the key theme here. And then, that's going to sequence into how they're going to reorganize their ecosystem. They have a new leader, Ruba Borno, who's going to be leading the charge. They've integrated all their bespoke fragmented partner network pieces into one leadership. That's going to be really important to hear that. And then, finally, Werner for developers and event-based services, micro services. What that world's going on, because that's where the developers are. And ultimately, they build the app. So, you got infrastructure, data, specialized services, and security. Machine learning with Swami is going to be huge. And again, how do developers code it all up is going to be key. And is it the bag of Legos or the glued toy? (Dave chuckles) So, what do you want? Out-of-the-box or you want to build your own? >> And that's the bottom line is connecting those dots. All they got to be is good enough. I think, Zeus, to your point, >> Yep. >> if they're just good enough, less complicated, the will keep people on the base. >> Yeah. I think, the bumper stickers, the more you buy, the more you're saving. (John laughing) Because from an operational perspective, they are trying to bring down the complexity level. And with their optimization services and the way their credit model works, I do think they're trending down that path. >> And my bumper sticker's ecosystem, ecosystem, ecosystem. This company has 100,000 partners and that is a business model secret weapon. >> All right, there it is. The keynote announced. More analysis coming up. We're going to have the leader of (indistinct) coming up next, here on to break down their perspective, you got theCUBE's analyst perspective here. Thanks for watching. Day two, more live coverage for the next two more days, so stay with us. I'm John Furrier with Dave Vellante and Zeus Kerravala here on theCUBE. Be right back. (bright music)

>>Hello, everybody. Welcome to Von 2022, the live version. Yes, we're finally back live. Last time we did Von was 2019 live. Of course we did two subsequent years, uh, virtual. My name is Dave Valante and we've got two days of wall to wall coverage of VEON. As usual Veeam has brought together a number of customers, but it's really doing something different this year. Like many, uh, companies that you see, they have a big hybrid event. It's close to 40,000 people online and that's sort of driving the actual program where the content is actually different for the, the, the virtual viewers versus the onsite onsite. There's the, the V I P event going on, they got the keynotes. VM is a company who's a ancy occurred during the, the VMware rise. They brought in a new way of doing data protection. They didn't use agents. They, they protected at the hypervisor level. >>That changed the way that people did things. They're now doing it again in cloud, in SAS, in containers and ransomware. And so we're gonna dig into that. My cohost is Dave Nicholson this week, and we've got a special guest Zs Carava who is the principal at ZK research. He's an extraordinary analyst Zs. Great to see you, David. Thanks for coming out. Absolutely good to see you Beon. Great to be here. Yeah, we've done. Von act, live things have changed so dramatically. Uh, I mean the focus ransomware, it's now a whole new Tam, uh, the adjacency to security data protection. It's just a Zs. It's a whole new ballgame, isn't it? >>Well, it is. And, and in fact, um, during the keynote, they, they mentioned that they've, they're now tied at number one in, for, you know, back of a recovery, which is, I think it's safe to say Veeam. Does that really well? >>I think from a that's tied with Dell. Yes. Right. They didn't, I don't think they met Dell as >>Keto. And, uh, but I, you know, they've been rising Dell, EMC's been falling. And so I think >>It's somebody said 10 points that Dell lost and sharing the I data. >>It's not a big surprise. I mean, they haven't really invested a whole lot, >>I think anyway, >>Anyways, but I think from a Veeam perspective, the question is now that they've kind of hit that number one spot or close to it, what do they do next? This company, they mentioned, I was talking the CTO yesterday. You mentioned they're holding X bite of customer data. That is a lot of data. Right. And so they, they do back recovery really well. They do it arguably better than anybody. And so how do they take that data and then move into other adjacent markets to go create, not just a back recovery company, but a true data management platform company that has relevancy in cyber and analytics and artificial intelligence and data warehousing. Right? All those other areas I think are, are really open territory for this company right now. >>You know, Dave, you were a CTO at, at EMC when you, when you saw a lot of the acquisitions that the company made, uh, you, you know, they really never had a singular focus on data protection. They had a big data protection business, but that's the differentiator with Veeam. That's all it does. And you see that shine through from a, from a CTO's perspective. How do you see this market changing, evolving? And what's your sense as to how Vema is doing here? >>I think a lot of it's being driven by kind of, uh, unfortunately evil genius, uh, out in the market space. Yeah. I know we're gonna be hearing a lot about ransomware, uh, a lot about some concepts that we didn't really talk about outside of maybe the defense industry, air gaping, logical air gaping, um, Zs, you mentioned, you know, this, this, this question of what do you do when you have so many petabytes of data under management exabytes now exabytes, I'm sorry. Yeah, I see there I'm I'm already falling behind. One thing you could do is you could encrypt it all and then ask for Bitcoin in exchange for access to that data. >>Yes. That is what happens a >>Lot of them. So we're, we're getting, we're getting so much of the evil genius stuff headed our way. You start, you start thinking in those ways, but yet to, to your point, uh, dedicated backup products, don't address the scale and scope and variety of threats, not just from operational, uh, uh, you know, mishaps, uh, but now from so many bad actors coming in from the outside, it it's a whole new world. >>See us as analysts. We get inundated with ransomware solutions. Everybody's talking about it across the spectrum. The thing that interested me about what's happening here at VEON is they're, they're sort of trotting out this study that they do Veeam does some serious research, you know, thousands of customers that got hit by ransomware that they dug into. And then a, a larger study of all companies, many of whom didn't realize or said they hadn't been hit by ransomware, but they're really trying to inject thought leadership into the equation. You saw some of that in the analyst session this morning, it's now public. Uh, so we could talk about it. What were your thoughts on that data? >>Yeah, that was, uh, really fascinating data cuz it shows the ransomware industry, the response to it is largely reactive, right? We wait to get breach. We wait to, to uh, to get held at ransom I suppose. And then we, a lot of companies paid out. In fact, I thought there's one hospital in Florida, they're buying lots and lots of Bitcoin simply to pay out ransomware attacks. They didn't even really argue with them. They just pay it out. And I think Veeam's trying to change that mentality a little bit. You know, if you have the right strategy in place to be more preventative, you can do that. You can protect your data and then restore it right when you want to. So you don't have to be in that big bucket of companies that frankly pay and actually don't get their data back. Right. >>And like a third, I think roughly >>It's shocking amount of companies that get hit by that. And for a lot of companies, that's the end of their business. >>You know, a lot of the recovery process is manual is again a technologist. You understand that that's not the ideal way to go. In fact, it's probably a, a way to fail. >>Well, recovery's always the problem when I was in corporate, it used to joke that we were the best at backup, terrible at recovery. Well, you know, that's not atypical. >>My Fred Fred Moore, who was the vice president of strategy at a company called storage tech storage technology, corpor of storage tech. He had a great, uh, saying, he said, backup is one thing. Recovery is everything. And he started, he said that 30 years ago, but, but orchestration and automating that orchestration is, is really vital. We saw in the study, a lot of organizations are using scripts and scripts are fragile here they break. Right? >>Yeah, no, absolutely. Absolutely. Um, unfortunately the idea of the red run book on the shelf is still with us. Uh, uh, you know, scripting does not equal automation necessarily in every case, there's still gonna be a lot of manual steps in the process. Um, but you know, what I hope we get to talk about during the next couple of days is, you know, some of the factors that go into this, we've got day zero exploits that have already been uncovered that are stockpiled, uh, and tucked away. And it's inevitable that they're gonna hit. Yeah. So whether it's a manual recovery process or some level of automation, um, if you don't have something that is air gapped and cut off from the rest of the world in a physical or logical way, you can't guarantee >>That the, the problem with manual processes and scripting is even if you can set it up today, the environment changes so fast, right? With shadow it and business units buying their own services and users storing things and you know, wherever, um, you, you can't keep up with scripts in manual. Automation must be the way and I've been, and I don't care what part of it. You work in, whether it's this area in networking, communications, whatever automation must be the way I think prior to the pandemic, I saw a lot of resistance from it pros in the area of mission. Since the pandemic, I've seen a lot of warming up to it because I think it pros, I just realized they can't do their job without it. So, so you >>Don't, you don't think that edge devices, uh, lend themselves to manual >>Recovery, no process. In fact, I think that's one of the things they didn't talk about. What's that is, is edge. Edge is gonna be huge. More, every retailer, I talk to oil and gas, company's been using it for a long time. I've, you know, manufacturing organizations are looking at edge as a way to put more data in more places to improve experiences. Cuz you're moving the data closer, but we're creating a world where the fragmentation of data, you think it's bad now just wait a couple of years until the edge is a little more, you know, uh, to life here. And I think you ain't see nothing yet. This is this world of data. Everywhere is truly becoming that. And the thing with edge is there's no one definition, edge, you got IOT edge cellular edge, campus edge, right? Um, you know, you look at hotels, they have their own edge. I talked to major league baseball, right? They have every, stadium's got its own edge server in it. So we're moving into a world. We're putting more data in more places it's more fragmented than ever. And we need better ways of managing Of securing that data. But then also being able to recover for when >>Things happen. I was having that Danny Allen, he used the term that we coined called super cloud. He used that in the analyst meeting today. And, and that's a metaphor for this new layer of cloud. That's developing to your point, whether it's on-prem in a hybrid across clouds, not just running on the cloud, but actually abstracting away the complexity of the underlying primitives and APIs. And then eventually to your point, going out to the edge, I don't know if anyone who has an aggressive edge strategy Veeam to its credit, you know, has gone well beyond just virtualization and gone to bare metal into cloud. They were the containers. There was first at SAS. They acquired Caston who was a partner of theirs and they tried to acquire them earlier, but there was some government things and you know, that whole thing that got cleaned up and now they've, they own Caston. And I think the edge is next. I mean, it's gotta be, there's gonna be so much data at the edge. I guess the question is where is it today? How much of that is actually persisted? How much goes back to the cloud? I don't think people really have a good answer for that yet. >>No. In fact, a lot of edge services will be very ephemeral in nature. So it's not like with cloud where we'll take data and we'll store it there forever with the edge, we're gonna take data, we'll store it there for the time, point in time we need it. But I think one of the interesting things about Veeam is because they're decoupled from the airline hardware, they can run virtual machines and containers, porting Veeam to whatever platform you have next actually isn't all that difficult. Right? And so then if you need to be able to go back to a certain point in time, they can do that instantly. It's, it's a fascinating way to do backup. Are >>You you' point about it? I mean, you remember the signs up and down, you know, near the EMC facility, right outside of Southborough no hardware agenda that that was Jeremy Burton when he was running Verto of course they've got a little hardware agenda. So, but Veeam doesn't Veeam is, you know, they they're friendly with all the hardware players of pure play software, couple other stats on them. So they're a billion dollar company. They've now started to talk about their ARR growth. They grew, uh, 27% last year in, in, in annual recurring revenue, uh, 25%, uh, in the most recent quarter. And so they're in, in the vast majority of their business is subscription. I think they said, uh, 73% is now subscription based. So they really trans transitioned that business. The other thing about vem is they they've come up with a licensing model that's very friendly. >>Um, and they sort of removed that friction early on in the process. I remember talking to TIR about this. He said, we are gonna incent our partners and make it transparent to them, whether it's, you know, that when we shift from, you know, the, the, the, the crack of, of perpetual license to a subscription model, we're gonna make that transparent to partners. We'll take care of that. Essentially. They funded that transition. So that's worked very well. So they do stand out, I think from some of the larger companies at these big portfolios, although the big portfolio companies, you know, they get board level contacts and they can elbow their ways in your thoughts on that sort of selling dynamic. >>So navigating that transition to a subscription model is always fraught with danger. Everybody wants you to be there, but they want you to be there now. Mm-hmm <affirmative>, they don't like the transition that happens over 1824 months to get there. Um, >>As a private company, they're somewhat shielded from what they would've been if they were appli. Sure, >>Exactly. But, but that, but that bodes well from a, from a, a Veeam perspective. Um, the other interesting thing is that they sit where customers sit today in the real world, a hybrid world, not everything is in the cloud or a single cloud, uh, still a lot of on-prem things to take care of. And, >>And there will be for >>A long time exactly. Back to this idea. Yeah. There's a very long tail on that. So it's, it's, it's well enough to have a niche product that addresses a certain segment of the market, but to be able to go in and say all data everywhere, it doesn't matter where it lives. We have you covered. Um, that's a powerful message. And we were talking earlier. I think they, they stand a really good shot at taking market share, you know, on an ongoing basis. >>Yeah. The interesting thing about this market, Dave is they're, you know, although, you know, they're tied to number one with Dell now, they're, it's 12%, right? This reminds me of the security industry five, six years ago, where it's so fragmented. There's so many vendors, no one really stood out right. Then what happened in security? It's a little company called Palo Alto networks came around, they created a platform story. They moved into adjacent markets like SDWAN, they did a lot of smart acquisitions and they took off. I think vem is at that similar point where they've now, you know, that 12% number they've got some capital. Now they could go do some acquisitions that they want do. There's lots of adjacent markets as they talk about this company could be the Palo Alto of the data management market, if you know, and based on good execution. But there's certainly the opportunities there with all the data that they're holding. >>That's a really interesting point. I wanna stay that in a second. So there's obviously, there's, there's backup, there's recovery, there's data protection, there's ransomware protection, there's SAS data protection. And now all of a sudden you're seeing even a company like Rubrik is kind of repositioning as a security play. Yeah. Which I'm not sure that's the right move for a company that's really been focused on, on backup to really dive into that fragmented market. But it's clearly an adjacency and we heard Anan the new CEO today in the analyst segment, you know, we asked him, what's your kinda legacy gonna look like? And he said, I want to, I want to, defragment this market he's looking at. Yeah. He wants 25 to 45% of the market, which I think is really ambitious. I love that goal now to your point, agree, he, he sure. But that doubles yeah. >>From today or more, and he gets there to your point, possibly through acquisitions, they've made some really interesting tuck-ins with Castin. They certainly bought an AWS, uh, cloud play years ago. But my, my so, uh, Veeam was purchased by, uh, private equity inside capital inside capital in January of 2020, just before COVID for 5 billion. And at the time, then COVID hit right after you were like uhoh. And then of course the market took off so great acquisition by insight. But I think an IPO is in their future and that's, uh, Zs when they can start picking up some of these adjacent markets through every day. >>And I think one of the challenges for them is now that the Holden XAB bited data, they need to be able to tell customers things they, the customer doesn't know. Right. And that's where a lot of the work they're doing in artificial intelligence machine learning comes into play. Right. And, and nobody does that better than AWS, right? AWS is always looking at your data and telling you things you don't know, which makes you buy more. And so I think from a Veeam perspective, they need to now take all this, this huge asset they have and, and find a way to monetize it. And that's by revealing these key insights to customers that the customers don't even know they have. And >>They've got that monitor monitoring layer. Um, it's if you called it, Danny, didn't like to use the term, but he called it an AI. It's really machine learning that monitors. And then I think makes recommendations. I want to dig into that a little bit with it. >>Well, you can see the platform story starting to build here. Right. And >>Here's a really good point. Yeah. Because they really have been historically a point product company. This notion of super cloud is really a platform play. >>Right. And if you look in the software industry, look across any, any segment of the software industry, those companies that were niche that became big became platforms, Salesforce, SAP, Oracle. Right. And, and they find a way to allow others to build on their platform. You know, companies, they think like a Citrix, they never did that. Yeah. And they kind of taped, you know, petered out at a certain level of growth and had to, you know, change. They're still changing their business model, in fact. But I think that's Veeam's at that inflection point, right. They either build a platform story, enable others to do more on their platform or they stagnate >>HP software is another good example. They never were able to get that platform. And we're not able bunch of spoke with it, a non used to work there. Why is it so important Dave, to have a platform over a product? >>Well, cynical, Dave says, uh, you have a platform because it attracts investment and it makes you look cooler than maybe you really are. Um, but, uh, but really for longevity, you have, you, you, you have to be a platform. So what's >>The difference. How do you know when you have platform versus it? APIs? Is it, yeah. Brett, is it ecosystem? >>Some of it is. Some of it is semantics. Look at when, when I'm worried about my critical assets, my data, um, I think of a platform, a portfolio of point solutions for backing up edge data stuff. That's in the cloud stuff that exists in SAS. I see that holistically. And I think guys, you're doing enough. This is good. Don't, don't dilute your efforts. Just keep focusing on making sure that you can back up my data wherever it lives and we'll both win together. So whenever I hear a platform, I get a little bit, a little bit sketchy, >>Well platform, beats products, doesn't >>It? Yeah. To me, it's a last word. You said ecosystem. Yes. When you think of the big platform players, everybody B in the customer, uh, experience space builds to build for Salesforce. First, if you're a small security vendor, you build for Palo Alto first, right? Right. If you're in the database, you build for Oracle first and when you're that de facto platform, you create an ecosystem around you that you no longer have to fund and build yourself. It just becomes self-fulfilling. And that drives a level of stickiness that can't be replicated through product. >>Well, look at the ecosystem that, that these guys are forming. I mean, it's clear. Yeah. So are they becoming in your view >>Of platform? I think they are becoming a platform and I think that's one of the reasons they brought on and in, I think he's got some good experience doing that. You could argue that ring kind of became that. Right. The, when, you know, when he was ring central. >>Yeah. >>Yeah. And, uh, so I think some, some of his experiences and then moving into adjacencies, I think is really the reason they brought him in to lead this company to the next level. >>Excellent guys, thanks so much for setting up VEON 20, 22, 2 days of coverage on the cube. We're here at the area. It's a, it's a great venue. I >>Love the area. >>Yeah. It's nice. It's a nice intimate spot. A lot of customers here. Of course, there's gonna be a big Veeam party. They're famous for their parties, but, uh, we'll, we'll be here to cover it and, uh, keep it right there. We'll be back with the next segment. You're watching the cube VEON 20, 22 from Las Vegas.

(upbeat music) >> The ascendancy of cloud and SAS has shown new light on how organizations think about, pay for, and value hardware. Once sought after skills for practitioners with expertise in hardware troubleshooting, configuring ports, tuning storage arrays, and maximizing server utilization has been superseded by demand for cloud architects, DevOps pros, developers with expertise in microservices, container, application development, and like. Even a company like Dell, the largest hardware company in enterprise tech touts that it has more software engineers than those working in hardware. Begs the question, is hardware going the way of Coball? Well, not likely. Software has to run on something, but the labor needed to deploy, and troubleshoot, and manage hardware infrastructure is shifting. At the same time, we've seen the value flow also shifting in hardware. Once a world dominated by X86 processors value is flowing to alternatives like Nvidia and arm based designs. Moreover, other componentry like NICs, accelerators, and storage controllers are becoming more advanced, integrated, and increasingly important. The question is, does it matter? And if so, why does it matter and to whom? What does it mean to customers, workloads, OEMs, and the broader society? Hello and welcome to this week's Wikibon theCUBE Insights powered by ETR. In this breaking analysis, we've organized a special power panel of industry analysts and experts to address the question, does hardware still matter? Allow me to introduce the panel. Bob O'Donnell is president and chief analyst at TECHnalysis Research. Zeus Kerravala is the founder and principal analyst at ZK Research. David Nicholson is a CTO and tech expert. Keith Townson is CEO and founder of CTO Advisor. And Marc Staimer is the chief dragon slayer at Dragon Slayer Consulting and oftentimes a Wikibon contributor. Guys, welcome to theCUBE. Thanks so much for spending some time here. >> Good to be here. >> Thanks. >> Thanks for having us. >> Okay before we get into it, I just want to bring up some data from ETR. This is a survey that ETR does every quarter. It's a survey of about 1200 to 1500 CIOs and IT buyers and I'm showing a subset of the taxonomy here. This XY axis and the vertical axis is something called net score. That's a measure of spending momentum. It's essentially the percentage of customers that are spending more on a particular area than those spending less. You subtract the lesses from the mores and you get a net score. Anything the horizontal axis is pervasion in the data set. Sometimes they call it market share. It's not like IDC market share. It's just the percentage of activity in the data set as a percentage of the total. That red 40% line, anything over that is considered highly elevated. And for the past, I don't know, eight to 12 quarters, the big four have been AI and machine learning, containers, RPA and cloud and cloud of course is very impressive because not only is it elevated in the vertical access, but you know it's very highly pervasive on the horizontal. So what I've done is highlighted in red that historical hardware sector. The server, the storage, the networking, and even PCs despite the work from home are depressed in relative terms. And of course, data center collocation services. Okay so you're seeing obviously hardware is not... People don't have the spending momentum today that they used to. They've got other priorities, et cetera, but I want to start and go kind of around the horn with each of you, what is the number one trend that each of you sees in hardware and why does it matter? Bob O'Donnell, can you please start us off? >> Sure Dave, so look, I mean, hardware is incredibly important and one comment first I'll make on that slide is let's not forget that hardware, even though it may not be growing, the amount of money spent on hardware continues to be very, very high. It's just a little bit more stable. It's not as subject to big jumps as we see certainly in other software areas. But look, the important thing that's happening in hardware is the diversification of the types of chip architectures we're seeing and how and where they're being deployed, right? You refer to this in your opening. We've moved from a world of x86 CPUs from Intel and AMD to things like obviously GPUs, DPUs. We've got VPU for, you know, computer vision processing. We've got AI-dedicated accelerators, we've got all kinds of other network acceleration tools and AI-powered tools. There's an incredible diversification of these chip architectures and that's been happening for a while but now we're seeing them more widely deployed and it's being done that way because workloads are evolving. The kinds of workloads that we're seeing in some of these software areas require different types of compute engines than traditionally we've had. The other thing is (coughs), excuse me, the power requirements based on where geographically that compute happens is also evolving. This whole notion of the edge, which I'm sure we'll get into a little bit more detail later is driven by the fact that where the compute actually sits closer to in theory the edge and where edge devices are, depending on your definition, changes the power requirements. It changes the kind of connectivity that connects the applications to those edge devices and those applications. So all of those things are being impacted by this growing diversity in chip architectures. And that's a very long-term trend that I think we're going to continue to see play out through this decade and well into the 2030s as well. >> Excellent, great, great points. Thank you, Bob. Zeus up next, please. >> Yeah, and I think the other thing when you look at this chart to remember too is, you know, through the pandemic and the work from home period a lot of companies did put their office modernization projects on hold and you heard that echoed, you know, from really all the network manufacturers anyways. They always had projects underway to upgrade networks. They put 'em on hold. Now that people are starting to come back to the office, they're looking at that now. So we might see some change there, but Bob's right. The size of those market are quite a bit different. I think the other big trend here is the hardware companies, at least in the areas that I look at networking are understanding now that it's a combination of hardware and software and silicon that works together that creates that optimum type of performance and experience, right? So some things are best done in silicon. Some like data forwarding and things like that. Historically when you look at the way network devices were built, you did everything in hardware. You configured in hardware, they did all the data for you, and did all the management. And that's been decoupled now. So more and more of the control element has been placed in software. A lot of the high-performance things, encryption, and as I mentioned, data forwarding, packet analysis, stuff like that is still done in hardware, but not everything is done in hardware. And so it's a combination of the two. I think, for the people that work with the equipment as well, there's been more shift to understanding how to work with software. And this is a mistake I think the industry made for a while is we had everybody convinced they had to become a programmer. It's really more a software power user. Can you pull things out of software? Can you through API calls and things like that. But I think the big frame here is, David, it's a combination of hardware, software working together that really make a difference. And you know how much you invest in hardware versus software kind of depends on the performance requirements you have. And I'll talk about that later but that's really the big shift that's happened here. It's the vendors that figured out how to optimize performance by leveraging the best of all of those. >> Excellent. You guys both brought up some really good themes that we can tap into Dave Nicholson, please. >> Yeah, so just kind of picking up where Bob started off. Not only are we seeing the rise of a variety of CPU designs, but I think increasingly the connectivity that's involved from a hardware perspective, from a kind of a server or service design perspective has become increasingly important. I think we'll get a chance to look at this in more depth a little bit later but when you look at what happens on the motherboard, you know we're not in so much a CPU-centric world anymore. Various application environments have various demands and you can meet them by using a variety of components. And it's extremely significant when you start looking down at the component level. It's really important that you optimize around those components. So I guess my summary would be, I think we are moving out of the CPU-centric hardware model into more of a connectivity-centric model. We can talk more about that later. >> Yeah, great. And thank you, David, and Keith Townsend I really interested in your perspectives on this. I mean, for years you worked in a data center surrounded by hardware. Now that we have the software defined data center, please chime in here. >> Well, you know, I'm going to dig deeper into that software-defined data center nature of what's happening with hardware. Hardware is meeting software infrastructure as code is a thing. What does that code look like? We're still trying to figure out but servicing up these capabilities that the previous analysts have brought up, how do I ensure that I can get the level of services needed for the applications that I need? Whether they're legacy, traditional data center, workloads, AI ML, workloads, workloads at the edge. How do I codify that and consume that as a service? And hardware vendors are figuring this out. HPE, the big push into GreenLake as a service. Dale now with Apex taking what we need, these bare bone components, moving it forward with DDR five, six CXL, et cetera, and surfacing that as cold or as services. This is a very tough problem. As we transition from consuming a hardware-based configuration to this infrastructure as cold paradigm shift. >> Yeah, programmable infrastructure, really attacking that sort of labor discussion that we were having earlier, okay. Last but not least Marc Staimer, please. >> Thanks, Dave. My peers raised really good points. I agree with most of them, but I'm going to disagree with the title of this session, which is, does hardware matter? It absolutely matters. You can't run software on the air. You can't run it in an ephemeral cloud, although there's the technical cloud and that's a different issue. The cloud is kind of changed everything. And from a market perspective in the 40 plus years I've been in this business, I've seen this perception that hardware has to go down in price every year. And part of that was driven by Moore's law. And we're coming to, let's say a lag or an end, depending on who you talk to Moore's law. So we're not doubling our transistors every 18 to 24 months in a chip and as a result of that, there's been a higher emphasis on software. From a market perception, there's no penalty. They don't put the same pressure on software from the market to reduce the cost every year that they do on hardware, which kind of bass ackwards when you think about it. Hardware costs are fixed. Software costs tend to be very low. It's kind of a weird thing that we do in the market. And what's changing is we're now starting to treat hardware like software from an OPEX versus CapEx perspective. So yes, hardware matters. And we'll talk about that more in length. >> You know, I want to follow up on that. And I wonder if you guys have a thought on this, Bob O'Donnell, you and I have talked about this a little bit. Marc, you just pointed out that Moore's laws could have waning. Pat Gelsinger recently at their investor meeting said that he promised that Moore's law is alive and well. And the point I made in breaking analysis was okay, great. You know, Pat said, doubling transistors every 18 to 24 months, let's say that Intel can do that. Even though we know it's waning somewhat. Look at the M1 Ultra from Apple (chuckles). In about 15 months increased transistor density on their package by 6X. So to your earlier point, Bob, we have this sort of these alternative processors that are really changing things. And to Dave Nicholson's point, there's a whole lot of supporting components as well. Do you have a comment on that, Bob? >> Yeah, I mean, it's a great point, Dave. And one thing to bear in mind as well, not only are we seeing a diversity of these different chip architectures and different types of components as a number of us have raised the other big point and I think it was Keith that mentioned it. CXL and interconnect on the chip itself is dramatically changing it. And a lot of the more interesting advances that are going to continue to drive Moore's law forward in terms of the way we think about performance, if perhaps not number of transistors per se, is the interconnects that become available. You're seeing the development of chiplets or tiles, people use different names, but the idea is you can have different components being put together eventually in sort of a Lego block style. And what that's also going to allow, not only is that going to give interesting performance possibilities 'cause of the faster interconnect. So you can share, have shared memory between things which for big workloads like AI, huge data sets can make a huge difference in terms of how you talk to memory over a network connection, for example, but not only that you're going to see more diversity in the types of solutions that can be built. So we're going to see even more choices in hardware from a silicon perspective because you'll be able to piece together different elements. And oh, by the way, the other benefit of that is we've reached a point in chip architectures where not everything benefits from being smaller. We've been so focused and so obsessed when it comes to Moore's law, to the size of each individual transistor and yes, for certain architecture types, CPUs and GPUs in particular, that's absolutely true, but we've already hit the point where things like RF for 5g and wifi and other wireless technologies and a whole bunch of other things actually don't get any better with a smaller transistor size. They actually get worse. So the beauty of these chiplet architectures is you could actually combine different chip manufacturing sizes. You know you hear about four nanometer and five nanometer along with 14 nanometer on a single chip, each one optimized for its specific application yet together, they can give you the best of all worlds. And so we're just at the very beginning of that era, which I think is going to drive a ton of innovation. Again, gets back to my comment about different types of devices located geographically different places at the edge, in the data center, you know, in a private cloud versus a public cloud. All of those things are going to be impacted and there'll be a lot more options because of this silicon diversity and this interconnect diversity that we're just starting to see. >> Yeah, David. David Nicholson's got a graphic on that. They're going to show later. Before we do that, I want to introduce some data. I actually want to ask Keith to comment on this before we, you know, go on. This next slide is some data from ETR that shows the percent of customers that cited difficulty procuring hardware. And you can see the red is they had significant issues and it's most pronounced in laptops and networking hardware on the far right-hand side, but virtually all categories, firewalls, peripheral servers, storage are having moderately difficult procurement issues. That's the sort of pinkish or significant challenges. So Keith, I mean, what are you seeing with your customers in the hardware supply chains and bottlenecks? And you know we're seeing it with automobiles and appliances but so it goes beyond IT. The semiconductor, you know, challenges. What's been the impact on the buyer community and society and do you have any sense as to when it will subside? >> You know, I was just asked this question yesterday and I'm feeling the pain. People question, kind of a side project within the CTO advisor, we built a hybrid infrastructure, traditional IT data center that we're walking with the traditional customer and modernizing that data center. So it was, you know, kind of a snapshot of time in 2016, 2017, 10 gigabit, ARISTA switches, some older Dell's 730 XD switches, you know, speeds and feeds. And we said we would modern that with the latest Intel stack and connected to the public cloud and then the pandemic hit and we are experiencing a lot of the same challenges. I thought we'd easily migrate from 10 gig networking to 25 gig networking path that customers are going on. The 10 gig network switches that I bought used are now double the price because you can't get legacy 10 gig network switches because all of the manufacturers are focusing on the more profitable 25 gig for capacity, even the 25 gig switches. And we're focused on networking right now. It's hard to procure. We're talking about nine to 12 months or more lead time. So we're seeing customers adjust by adopting cloud. But if you remember early on in the pandemic, Microsoft Azure kind of gated customers that didn't have a capacity agreement. So customers are keeping an eye on that. There's a desire to abstract away from the underlying vendor to be able to control or provision your IT services in a way that we do with VMware VP or some other virtualization technology where it doesn't matter who can get me the hardware, they can just get me the hardware because it's critically impacting projects and timelines. >> So that's a great setup Zeus for you with Keith mentioned the earlier the software-defined data center with software-defined networking and cloud. Do you see a day where networking hardware is monetized and it's all about the software, or are we there already? >> No, we're not there already. And I don't see that really happening any time in the near future. I do think it's changed though. And just to be clear, I mean, when you look at that data, this is saying customers have had problems procuring the equipment, right? And there's not a network vendor out there. I've talked to Norman Rice at Extreme, and I've talked to the folks at Cisco and ARISTA about this. They all said they could have had blowout quarters had they had the inventory to ship. So it's not like customers aren't buying this anymore. Right? I do think though, when it comes to networking network has certainly changed some because there's a lot more controls as I mentioned before that you can do in software. And I think the customers need to start thinking about the types of hardware they buy and you know, where they're going to use it and, you know, what its purpose is. Because I've talked to customers that have tried to run software and commodity hardware and where the performance requirements are very high and it's bogged down, right? It just doesn't have the horsepower to run it. And, you know, even when you do that, you have to start thinking of the components you use. The NICs you buy. And I've talked to customers that have simply just gone through the process replacing a NIC card and a commodity box and had some performance problems and, you know, things like that. So if agility is more important than performance, then by all means try running software on commodity hardware. I think that works in some cases. If performance though is more important, that's when you need that kind of turnkey hardware system. And I've actually seen more and more customers reverting back to that model. In fact, when you talk to even some startups I think today about when they come to market, they're delivering things more on appliances because that's what customers want. And so there's this kind of app pivot this pendulum of agility and performance. And if performance absolutely matters, that's when you do need to buy these kind of turnkey, prebuilt hardware systems. If agility matters more, that's when you can go more to software, but the underlying hardware still does matter. So I think, you know, will we ever have a day where you can just run it on whatever hardware? Maybe but I'll long be retired by that point. So I don't care. >> Well, you bring up a good point Zeus. And I remember the early days of cloud, the narrative was, oh, the cloud vendors. They don't use EMC storage, they just run on commodity storage. And then of course, low and behold, you know, they've trot out James Hamilton to talk about all the custom hardware that they were building. And you saw Google and Microsoft follow suit. >> Well, (indistinct) been falling for this forever. Right? And I mean, all the way back to the turn of the century, we were calling for the commodity of hardware. And it's never really happened because you can still drive. As long as you can drive innovation into it, customers will always lean towards the innovation cycles 'cause they get more features faster and things. And so the vendors have done a good job of keeping that cycle up but it'll be a long time before. >> Yeah, and that's why you see companies like Pure Storage. A storage company has 69% gross margins. All right. I want to go jump ahead. We're going to bring up the slide four. I want to go back to something that Bob O'Donnell was talking about, the sort of supporting act. The diversity of silicon and we've marched to the cadence of Moore's law for decades. You know, we asked, you know, is Moore's law dead? We say it's moderating. Dave Nicholson. You want to talk about those supporting components. And you shared with us a slide that shift. You call it a shift from a processor-centric world to a connect-centric world. What do you mean by that? And let's bring up slide four and you can talk to that. >> Yeah, yeah. So first, I want to echo this sentiment that the question does hardware matter is sort of the answer is of course it matters. Maybe the real question should be, should you care about it? And the answer to that is it depends who you are. If you're an end user using an application on your mobile device, maybe you don't care how the architecture is put together. You just care that the service is delivered but as you back away from that and you get closer and closer to the source, someone needs to care about the hardware and it should matter. Why? Because essentially what hardware is doing is it's consuming electricity and dollars and the more efficiently you can configure hardware, the more bang you're going to get for your buck. So it's not only a quantitative question in terms of how much can you deliver? But it also ends up being a qualitative change as capabilities allow for things we couldn't do before, because we just didn't have the aggregate horsepower to do it. So this chart actually comes out of some performance tests that were done. So it happens to be Dell servers with Broadcom components. And the point here was to peel back, you know, peel off the top of the server and look at what's in that server, starting with, you know, the PCI interconnect. So PCIE gen three, gen four, moving forward. What are the effects on from an interconnect versus on performance application performance, translating into new orders per minute, processed per dollar, et cetera, et cetera? If you look at the advances in CPU architecture mapped against the advances in interconnect and storage subsystem performance, you can see that CPU architecture is sort of lagging behind in a way. And Bob mentioned this idea of tiling and all of the different ways to get around that. When we do performance testing, we can actually peg CPUs, just running the performance tests without any actual database environments working. So right now we're at this sort of imbalance point where you have to make sure you design things properly to get the most bang per kilowatt hour of power per dollar input. So the key thing here what this is highlighting is just as a very specific example, you take a card that's designed as a gen three PCIE device, and you plug it into a gen four slot. Now the card is the bottleneck. You plug a gen four card into a gen four slot. Now the gen four slot is the bottleneck. So we're constantly chasing these bottlenecks. Someone has to be focused on that from an architectural perspective, it's critically important. So there's no question that it matters. But of course, various people in this food chain won't care where it comes from. I guess a good analogy might be, where does our food come from? If I get a steak, it's a pink thing wrapped in plastic, right? Well, there are a lot of inputs that a lot of people have to care about to get that to me. Do I care about all of those things? No. Are they important? They're critically important. >> So, okay. So all I want to get to the, okay. So what does this all mean to customers? And so what I'm hearing from you is to balance a system it's becoming, you know, more complicated. And I kind of been waiting for this day for a long time, because as we all know the bottleneck was always the spinning disc, the last mechanical. So people who wrote software knew that when they were doing it right, the disc had to go and do stuff. And so they were doing other things in the software. And now with all these new interconnects and flash and things like you could do atomic rights. And so that opens up new software possibilities and combine that with alternative processes. But what's the so what on this to the customer and the application impact? Can anybody address that? >> Yeah, let me address that for a moment. I want to leverage some of the things that Bob said, Keith said, Zeus said, and David said, yeah. So I'm a bit of a contrarian in some of this. For example, on the chip side. As the chips get smaller, 14 nanometer, 10 nanometer, five nanometer, soon three nanometer, we talk about more cores, but the biggest problem on the chip is the interconnect from the chip 'cause the wires get smaller. People don't realize in 2004 the latency on those wires in the chips was 80 picoseconds. Today it's 1300 picoseconds. That's on the chip. This is why they're not getting faster. So we maybe getting a little bit slowing down in Moore's law. But even as we kind of conquer that you still have the interconnect problem and the interconnect problem goes beyond the chip. It goes within the system, composable architectures. It goes to the point where Keith made, ultimately you need a hybrid because what we're seeing, what I'm seeing and I'm talking to customers, the biggest issue they have is moving data. Whether it be in a chip, in a system, in a data center, between data centers, moving data is now the biggest gating item in performance. So if you want to move it from, let's say your transactional database to your machine learning, it's the bottleneck, it's moving the data. And so when you look at it from a distributed environment, now you've got to move the compute to the data. The only way to get around these bottlenecks today is to spend less time in trying to move the data and more time in taking the compute, the software, running on hardware closer to the data. Go ahead. >> So is this what you mean when Nicholson was talking about a shift from a processor centric world to a connectivity centric world? You're talking about moving the bits across all the different components, not having the processor you're saying is essentially becoming the bottleneck or the memory, I guess. >> Well, that's one of them and there's a lot of different bottlenecks, but it's the data movement itself. It's moving away from, wait, why do we need to move the data? Can we move the compute, the processing closer to the data? Because if we keep them separate and this has been a trend now where people are moving processing away from it. It's like the edge. I think it was Zeus or David. You were talking about the edge earlier. As you look at the edge, who defines the edge, right? Is the edge a closet or is it a sensor? If it's a sensor, how do you do AI at the edge? When you don't have enough power, you don't have enough computable. People were inventing chips to do that. To do all that at the edge, to do AI within the sensor, instead of moving the data to a data center or a cloud to do the processing. Because the lag in latency is always limited by speed of light. How fast can you move the electrons? And all this interconnecting, all the processing, and all the improvement we're seeing in the PCIE bus from three, to four, to five, to CXL, to a higher bandwidth on the network. And that's all great but none of that deals with the speed of light latency. And that's an-- Go ahead. >> You know Marc, no, I just want to just because what you're referring to could be looked at at a macro level, which I think is what you're describing. You can also look at it at a more micro level from a systems design perspective, right? I'm going to be the resident knuckle dragging hardware guy on the panel today. But it's exactly right. You moving compute closer to data includes concepts like peripheral cards that have built in intelligence, right? So again, in some of this testing that I'm referring to, we saw dramatic improvements when you basically took the horsepower instead of using the CPU horsepower for the like IO. Now you have essentially offload engines in the form of storage controllers, rate controllers, of course, for ethernet NICs, smart NICs. And so when you can have these sort of offload engines and we've gone through these waves over time. People think, well, wait a minute, raid controller and NVMe? You know, flash storage devices. Does that make sense? It turns out it does. Why? Because you're actually at a micro level doing exactly what you're referring to. You're bringing compute closer to the data. Now, closer to the data meaning closer to the data storage subsystem. It doesn't solve the macro issue that you're referring to but it is important. Again, going back to this idea of system design optimization, always chasing the bottleneck, plugging the holes. Someone needs to do that in this value chain in order to get the best value for every kilowatt hour of power and every dollar. >> Yeah. >> Well this whole drive performance has created some really interesting architectural designs, right? Like Nickelson, the rise of the DPU right? Brings more processing power into systems that already had a lot of processing power. There's also been some really interesting, you know, kind of innovation in the area of systems architecture too. If you look at the way Nvidia goes to market, their drive kit is a prebuilt piece of hardware, you know, optimized for self-driving cars, right? They partnered with Pure Storage and ARISTA to build that AI-ready infrastructure. I remember when I talked to Charlie Giancarlo, the CEO of Pure about when the three companies rolled that out. He said, "Look, if you're going to do AI, "you need good store. "You need fast storage, fast processor and fast network." And so for customers to be able to put that together themselves was very, very difficult. There's a lot of software that needs tuning as well. So the three companies partner together to create a fully integrated turnkey hardware system with a bunch of optimized software that runs on it. And so in that case, in some ways the hardware was leading the software innovation. And so, the variety of different architectures we have today around hardware has really exploded. And I think it, part of the what Bob brought up at the beginning about the different chip design. >> Yeah, Bob talked about that earlier. Bob, I mean, most AI today is modeling, you know, and a lot of that's done in the cloud and it looks from my standpoint anyway that the future is going to be a lot of AI inferencing at the edge. And that's a radically different architecture, Bob, isn't it? >> It is, it's a completely different architecture. And just to follow up on a couple points, excellent conversation guys. Dave talked about system architecture and really this that's what this boils down to, right? But it's looking at architecture at every level. I was talking about the individual different components the new interconnect methods. There's this new thing called UCIE universal connection. I forget what it stands answer for, but it's a mechanism for doing chiplet architectures, but then again, you have to take it up to the system level, 'cause it's all fine and good. If you have this SOC that's tuned and optimized, but it has to talk to the rest of the system. And that's where you see other issues. And you've seen things like CXL and other interconnect standards, you know, and nobody likes to talk about interconnect 'cause it's really wonky and really technical and not that sexy, but at the end of the day it's incredibly important exactly. To the other points that were being raised like mark raised, for example, about getting that compute closer to where the data is and that's where again, a diversity of chip architectures help and exactly to your last comment there Dave, putting that ability in an edge device is really at the cutting edge of what we're seeing on a semiconductor design and the ability to, for example, maybe it's an FPGA, maybe it's a dedicated AI chip. It's another kind of chip architecture that's being created to do that inferencing on the edge. Because again, it's that the cost and the challenges of moving lots of data, whether it be from say a smartphone to a cloud-based application or whether it be from a private network to a cloud or any other kinds of permutations we can think of really matters. And the other thing is we're tackling bigger problems. So architecturally, not even just architecturally within a system, but when we think about DPUs and the sort of the east west data center movement conversation that we hear Nvidia and others talk about, it's about combining multiple sets of these systems to function together more efficiently again with even bigger sets of data. So really is about tackling where the processing is needed, having the interconnect and the ability to get where the data you need to the right place at the right time. And because those needs are diversifying, we're just going to continue to see an explosion of different choices and options, which is going to make hardware even more essential I would argue than it is today. And so I think what we're going to see not only does hardware matter, it's going to matter even more in the future than it does now. >> Great, yeah. Great discussion, guys. I want to bring Keith back into the conversation here. Keith, if your main expertise in tech is provisioning LUNs, you probably you want to look for another job. So maybe clearly hardware matters, but with software defined everything, do people with hardware expertise matter outside of for instance, component manufacturers or cloud companies? I mean, VMware certainly changed the dynamic in servers. Dell just spun off its most profitable asset and VMware. So it obviously thinks hardware can stand alone. How does an enterprise architect view the shift to software defined hyperscale cloud and how do you see the shifting demand for skills in enterprise IT? >> So I love the question and I'll take a different view of it. If you're a data analyst and your primary value add is that you do ETL transformation, talk to a CDO, a chief data officer over midsize bank a little bit ago. He said 80% of his data scientists' time is done on ETL. Super not value ad. He wants his data scientists to do data science work. Chances are if your only value is that you do LUN provisioning, then you probably don't have a job now. The technologies have gotten much more intelligent. As infrastructure pros, we want to give infrastructure pros the opportunities to shine and I think the software defined nature and the automation that we're seeing vendors undertake, whether it's Dell, HP, Lenovo take your pick that Pure Storage, NetApp that are doing the automation and the ML needed so that these practitioners don't spend 80% of their time doing LUN provisioning and focusing on their true expertise, which is ensuring that data is stored. Data is retrievable, data's protected, et cetera. I think the shift is to focus on that part of the job that you're ensuring no matter where the data's at, because as my data is spread across the enterprise hybrid different types, you know, Dave, you talk about the super cloud a lot. If my data is in the super cloud, protecting that data and securing that data becomes much more complicated when than when it was me just procuring or provisioning LUNs. So when you say, where should the shift be, or look be, you know, focusing on the real value, which is making sure that customers can access data, can recover data, can get data at performance levels that they need within the price point. They need to get at those datasets and where they need it. We talked a lot about where they need out. One last point about this interconnecting. I have this vision and I think we all do of composable infrastructure. This idea that scaled out does not solve every problem. The cloud can give me infinite scale out. Sometimes I just need a single OS with 64 terabytes of RAM and 204 GPUs or GPU instances that single OS does not exist today. And the opportunity is to create composable infrastructure so that we solve a lot of these problems that just simply don't scale out. >> You know, wow. So many interesting points there. I had just interviewed Zhamak Dehghani, who's the founder of Data Mesh last week. And she made a really interesting point. She said, "Think about, we have separate stacks. "We have an application stack and we have "a data pipeline stack and the transaction systems, "the transaction database, we extract data from that," to your point, "We ETL it in, you know, it takes forever. "And then we have this separate sort of data stack." If we're going to inject more intelligence and data and AI into applications, those two stacks, her contention is they have to come together. And when you think about, you know, super cloud bringing compute to data, that was what Haduck was supposed to be. It ended up all sort of going into a central location, but it's almost a rhetorical question. I mean, it seems that that necessitates new thinking around hardware architectures as it kind of everything's the edge. And the other point is to your point, Keith, it's really hard to secure that. So when you can think about offloads, right, you've heard the stats, you know, Nvidia talks about it. Broadcom talks about it that, you know, that 30%, 25 to 30% of the CPU cycles are wasted on doing things like storage offloads, or networking or security. It seems like maybe Zeus you have a comment on this. It seems like new architectures need to come other to support, you know, all of that stuff that Keith and I just dispute. >> Yeah, and by the way, I do want to Keith, the question you just asked. Keith, it's the point I made at the beginning too about engineers do need to be more software-centric, right? They do need to have better software skills. In fact, I remember talking to Cisco about this last year when they surveyed their engineer base, only about a third of 'em had ever made an API call, which you know that that kind of shows this big skillset change, you know, that has to come. But on the point of architectures, I think the big change here is edge because it brings in distributed compute models. Historically, when you think about compute, even with multi-cloud, we never really had multi-cloud. We'd use multiple centralized clouds, but compute was always centralized, right? It was in a branch office, in a data center, in a cloud. With edge what we creates is the rise of distributed computing where we'll have an application that actually accesses different resources and at different edge locations. And I think Marc, you were talking about this, like the edge could be in your IoT device. It could be your campus edge. It could be cellular edge, it could be your car, right? And so we need to start thinkin' about how our applications interact with all those different parts of that edge ecosystem, you know, to create a single experience. The consumer apps, a lot of consumer apps largely works that way. If you think of like app like Uber, right? It pulls in information from all kinds of different edge application, edge services. And, you know, it creates pretty cool experience. We're just starting to get to that point in the business world now. There's a lot of security implications and things like that, but I do think it drives more architectural decisions to be made about how I deploy what data where and where I do my processing, where I do my AI and things like that. It actually makes the world more complicated. In some ways we can do so much more with it, but I think it does drive us more towards turnkey systems, at least initially in order to, you know, ensure performance and security. >> Right. Marc, I wanted to go to you. You had indicated to me that you wanted to chat about this a little bit. You've written quite a bit about the integration of hardware and software. You know, we've watched Oracle's move from, you know, buying Sun and then basically using that in a highly differentiated approach. Engineered systems. What's your take on all that? I know you also have some thoughts on the shift from CapEx to OPEX chime in on that. >> Sure. When you look at it, there are advantages to having one vendor who has the software and hardware. They can synergistically make them work together that you can't do in a commodity basis. If you own the software and somebody else has the hardware, I'll give you an example would be Oracle. As you talked about with their exit data platform, they literally are leveraging microcode in the Intel chips. And now in AMD chips and all the way down to Optane, they make basically AMD database servers work with Optane memory PMM in their storage systems, not MVME, SSD PMM. I'm talking about the cards itself. So there are advantages you can take advantage of if you own the stack, as you were putting out earlier, Dave, of both the software and the hardware. Okay, that's great. But on the other side of that, that tends to give you better performance, but it tends to cost a little more. On the commodity side it costs less but you get less performance. What Zeus had said earlier, it depends where you're running your application. How much performance do you need? What kind of performance do you need? One of the things about moving to the edge and I'll get to the OPEX CapEx in a second. One of the issues about moving to the edge is what kind of processing do you need? If you're running in a CCTV camera on top of a traffic light, how much power do you have? How much cooling do you have that you can run this? And more importantly, do you have to take the data you're getting and move it somewhere else and get processed and the information is sent back? I mean, there are companies out there like Brain Chip that have developed AI chips that can run on the sensor without a CPU. Without any additional memory. So, I mean, there's innovation going on to deal with this question of data movement. There's companies out there like Tachyon that are combining GPUs, CPUs, and DPUs in a single chip. Think of it as super composable architecture. They're looking at being able to do more in less. On the OPEX and CapEx issue. >> Hold that thought, hold that thought on the OPEX CapEx, 'cause we're running out of time and maybe you can wrap on that. I just wanted to pick up on something you said about the integrated hardware software. I mean, other than the fact that, you know, Michael Dell unlocked whatever $40 billion for himself and Silverlake, I was always a fan of a spin in with VMware basically become the Oracle of hardware. Now I know it would've been a nightmare for the ecosystem and culturally, they probably would've had a VMware brain drain, but what does anybody have any thoughts on that as a sort of a thought exercise? I was always a fan of that on paper. >> I got to eat a little crow. I did not like the Dale VMware acquisition for the industry in general. And I think it hurt the industry in general, HPE, Cisco walked away a little bit from that VMware relationship. But when I talked to customers, they loved it. You know, I got to be honest. They absolutely loved the integration. The VxRail, VxRack solution exploded. Nutanix became kind of a afterthought when it came to competing. So that spin in, when we talk about the ability to innovate and the ability to create solutions that you just simply can't create because you don't have the full stack. Dell was well positioned to do that with a potential span in of VMware. >> Yeah, we're going to be-- Go ahead please. >> Yeah, in fact, I think you're right, Keith, it was terrible for the industry. Great for Dell. And I remember talking to Chad Sakac when he was running, you know, VCE, which became Rack and Rail, their ability to stay in lockstep with what VMware was doing. What was the number one workload running on hyperconverged forever? It was VMware. So their ability to remain in lockstep with VMware gave them a huge competitive advantage. And Dell came out of nowhere in, you know, the hyper-converged market and just started taking share because of that relationship. So, you know, this sort I guess it's, you know, from a Dell perspective I thought it gave them a pretty big advantage that they didn't really exploit across their other properties, right? Networking and service and things like they could have given the dominance that VMware had. From an industry perspective though, I do think it's better to have them be coupled. So. >> I agree. I mean, they could. I think they could have dominated in super cloud and maybe they would become the next Oracle where everybody hates 'em, but they kick ass. But guys. We got to wrap up here. And so what I'm going to ask you is I'm going to go and reverse the order this time, you know, big takeaways from this conversation today, which guys by the way, I can't thank you enough phenomenal insights, but big takeaways, any final thoughts, any research that you're working on that you want highlight or you know, what you look for in the future? Try to keep it brief. We'll go in reverse order. Maybe Marc, you could start us off please. >> Sure, on the research front, I'm working on a total cost of ownership of an integrated database analytics machine learning versus separate services. On the other aspect that I would wanted to chat about real quickly, OPEX versus CapEx, the cloud changed the market perception of hardware in the sense that you can use hardware or buy hardware like you do software. As you use it, pay for what you use in arrears. The good thing about that is you're only paying for what you use, period. You're not for what you don't use. I mean, it's compute time, everything else. The bad side about that is you have no predictability in your bill. It's elastic, but every user I've talked to says every month it's different. And from a budgeting perspective, it's very hard to set up your budget year to year and it's causing a lot of nightmares. So it's just something to be aware of. From a CapEx perspective, you have no more CapEx if you're using that kind of base system but you lose a certain amount of control as well. So ultimately that's some of the issues. But my biggest point, my biggest takeaway from this is the biggest issue right now that everybody I talk to in some shape or form it comes down to data movement whether it be ETLs that you talked about Keith or other aspects moving it between hybrid locations, moving it within a system, moving it within a chip. All those are key issues. >> Great, thank you. Okay, CTO advisor, give us your final thoughts. >> All right. Really, really great commentary. Again, I'm going to point back to us taking the walk that our customers are taking, which is trying to do this conversion of all primary data center to a hybrid of which I have this hard earned philosophy that enterprise IT is additive. When we add a service, we rarely subtract a service. So the landscape and service area what we support has to grow. So our research focuses on taking that walk. We are taking a monolithic application, decomposing that to containers, and putting that in a public cloud, and connecting that back private data center and telling that story and walking that walk with our customers. This has been a super enlightening panel. >> Yeah, thank you. Real, real different world coming. David Nicholson, please. >> You know, it really hearkens back to the beginning of the conversation. You talked about momentum in the direction of cloud. I'm sort of spending my time under the hood, getting grease under my fingernails, focusing on where still the lions share of spend will be in coming years, which is OnPrem. And then of course, obviously data center infrastructure for cloud but really diving under the covers and helping folks understand the ramifications of movement between generations of CPU architecture. I know we all know Sapphire Rapids pushed into the future. When's the next Intel release coming? Who knows? We think, you know, in 2023. There have been a lot of people standing by from a practitioner's standpoint asking, well, what do I do between now and then? Does it make sense to upgrade bits and pieces of hardware or go from a last generation to a current generation when we know the next generation is coming? And so I've been very, very focused on looking at how these connectivity components like rate controllers and NICs. I know it's not as sexy as talking about cloud but just how these opponents completely change the game and actually can justify movement from say a 14th-generation architecture to a 15th-generation architecture today, even though gen 16 is coming, let's say 12 months from now. So that's where I am. Keep my phone number in the Rolodex. I literally reference Rolodex intentionally because like I said, I'm in there under the hood and it's not as sexy. But yeah, so that's what I'm focused on Dave. >> Well, you know, to paraphrase it, maybe derivative paraphrase of, you know, Larry Ellison's rant on what is cloud? It's operating systems and databases, et cetera. Rate controllers and NICs live inside of clouds. All right. You know, one of the reasons I love working with you guys is 'cause have such a wide observation space and Zeus Kerravala you, of all people, you know you have your fingers in a lot of pies. So give us your final thoughts. >> Yeah, I'm not a propeller heady as my chip counterparts here. (all laugh) So, you know, I look at the world a little differently and a lot of my research I'm doing now is the impact that distributed computing has on customer employee experiences, right? You talk to every business and how the experiences they deliver to their customers is really differentiating how they go to market. And so they're looking at these different ways of feeding up data and analytics and things like that in different places. And I think this is going to have a really profound impact on enterprise IT architecture. We're putting more data, more compute in more places all the way down to like little micro edges and retailers and things like that. And so we need the variety. Historically, if you think back to when I was in IT you know, pre-Y2K, we didn't have a lot of choice in things, right? We had a server that was rack mount or standup, right? And there wasn't a whole lot of, you know, differences in choice. But today we can deploy, you know, these really high-performance compute systems on little blades inside servers or inside, you know, autonomous vehicles and things. I think the world from here gets... You know, just the choice of what we have and the way hardware and software works together is really going to, I think, change the world the way we do things. We're already seeing that, like I said, in the consumer world, right? There's so many things you can do from, you know, smart home perspective, you know, natural language processing, stuff like that. And it's starting to hit businesses now. So just wait and watch the next five years. >> Yeah, totally. The computing power at the edge is just going to be mind blowing. >> It's unbelievable what you can do at the edge. >> Yeah, yeah. Hey Z, I just want to say that we know you're not a propeller head and I for one would like to thank you for having your master's thesis hanging on the wall behind you 'cause we know that you studied basket weaving. >> I was actually a physics math major, so. >> Good man. Another math major. All right, Bob O'Donnell, you're going to bring us home. I mean, we've seen the importance of semiconductors and silicon in our everyday lives, but your last thoughts please. >> Sure and just to clarify, by the way I was a great books major and this was actually for my final paper. And so I was like philosophy and all that kind of stuff and literature but I still somehow got into tech. Look, it's been a great conversation and I want to pick up a little bit on a comment Zeus made, which is this it's the combination of the hardware and the software and coming together and the manner with which that needs to happen, I think is critically important. And the other thing is because of the diversity of the chip architectures and all those different pieces and elements, it's going to be how software tools evolve to adapt to that new world. So I look at things like what Intel's trying to do with oneAPI. You know, what Nvidia has done with CUDA. What other platform companies are trying to create tools that allow them to leverage the hardware, but also embrace the variety of hardware that is there. And so as those software development environments and software development tools evolve to take advantage of these new capabilities, that's going to open up a lot of interesting opportunities that can leverage all these new chip architectures. That can leverage all these new interconnects. That can leverage all these new system architectures and figure out ways to make that all happen, I think is going to be critically important. And then finally, I'll mention the research I'm actually currently working on is on private 5g and how companies are thinking about deploying private 5g and the potential for edge applications for that. So I'm doing a survey of several hundred us companies as we speak and really looking forward to getting that done in the next couple of weeks. >> Yeah, look forward to that. Guys, again, thank you so much. Outstanding conversation. Anybody going to be at Dell tech world in a couple of weeks? Bob's going to be there. Dave Nicholson. Well drinks on me and guys I really can't thank you enough for the insights and your participation today. Really appreciate it. Okay, and thank you for watching this special power panel episode of theCube Insights powered by ETR. Remember we publish each week on Siliconangle.com and wikibon.com. All these episodes they're available as podcasts. DM me or any of these guys. I'm at DVellante. You can email me at David.Vellante@siliconangle.com. Check out etr.ai for all the data. This is Dave Vellante. We'll see you next time. (upbeat music)

>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE in ETR. This is "Breaking Analysis" with Dave Vellante. >> Cisco is a company at the crossroads. It's transitioning from a high margin hardware business to a software subscription-based model, which also should be high margin through both organic moves and targeted acquisitions. It's doing so in the context of massive macro shifts to digital in the cloud. We believe Cisco's dominant position in networking combined with a large market opportunity and a strong track record of earning customer trust, put the company in a good position to capitalize on cloud momentum. However, there are clear challenges ahead for Cisco, not the least of which is the growing complexity of its portfolio, a large legacy business, and the mandate to maintain its higher profitability profile as it transitions into a new business model. Hello and welcome to this week's Wiki-bond cube insights powered by ETR. In this breaking analysis, we welcome in Zeus Kerravala, who's the founder and principal analyst at ZK Research, long time Cisco watcher who together with me crafted the premise of today's session. Zeus, great to see you welcome to the program. >> Thanks Dave. It's always a pleasure to be with you guys. >> Okay, here's what we're going to talk about today, set the agenda. The catalyst for this session, Zeus and I attended Cisco's financial analyst day. We received a day and a half of firehose presentations, drill downs, interactions, Q and A with Cisco execs and one key customer. So we're going to share our takeaways from these sessions and add our additional thoughts. Now, in particular, we're going to talk about Cisco's TAM, its transformation to a subscription-based model, and how we see that evolving. As always, we're going to bring in some ETR spending data for context and get Zeus' take on what that tells us. And we'll end with a summary of Cisco's cloud strategy and outlook for how it could win in the cloud. So let's talk about Cisco's sort of structure and TAM opportunities. First, Zeus, Cisco has four main lines of business where it's organized it's executives around sort of four product areas. And it's got a large service component as well. Network equipment, SP routing, data center, collaboration that security, and as I say services, that's not necessarily how it's going to market, but that's kind of the way it organizes its ELT, its executive leadership team. >> Yeah, the in fact, the ELT has been organized around those products, as you said. It used to report to the street three product segments, infrastructure platforms, which was by far the biggest, it was all their networking equipment, then applications, and then security. Now it's moved to five new segments, secure agile networks, hybrid work, end to end security, internet for the future and optimized app experiences. And I think what Cisco's trying to do is align their, the way they report along the lines of the way customers buy. 'Cause I think before, you know, they had a very simplistic model before. It was just infrastructure, apps, and security. The ELT is organized around product roadmap and the product innovation, but that's not necessarily the way customers purchase things and so, purchase things so I think they've tried to change things a little bit there. When you look at those segments though, you know, by, it's interesting. They're all big, right? So, by far the biggest distilled networking, which is almost a hundred billion dollar TAM as they reported and they have it growing a about a 9% CAGR as reported by other analyst firms. And when you think about how mature networking is Dave, the fact that that's still growing at high single digit CAGR is still pretty remarkable. So I think that's one of those things that, you know, watchers of Cisco historically have been calling for the network to be commoditized for decades. For as long as I've been watching Cisco, we've been, people have been waiting for the network to be commoditized. My thesis has always been, if you can drive enough innovation into things, you can stave off commoditization and that's what they've done. But that's really the anchor for them to sell all their other products, some of which are higher margin, some which are a little bit sore, but they're all good high margin businesses to your point. >> Awesome. We're going to dig into that. So, so they flattened the organization when Geckler left. You've got Todd Nightingale, Jonathan Davidson, Liz Centoni, and Jeetu Patel who we heard from and we'll make some comments on what we heard from them. One of the big takeaways at the financial analysts meeting was on the TAM, as you just mentioned. Liz Centoni who also is heavily involved in strategy and the CFO Scott Herren, showed this slide, which speaks to the company's TAM and the organizational structure that you were just talking about. So the big message was that Cisco has got a large and growing market, you know, no shortage of available market. Somewhere between eight and 900 billion, depending on which of the slides you pull out of the deck. And ironically Zeus, when you look at the current markets number here on the right hand side of this slide, 260 billion, it just about matches the company's market cap. Maybe an interesting coincidence, but at any rate, what was your takeaway from this data? >> Well, I think, you know, the big takeaway from the data is there's still a lot of room ahead for Cisco to grow, right? Again, this is a, it's a company that I think most people would put in the camp of legacy IT vendor, just because of how long they've been around. But they have done a very good job of staving off innovation. And part of that is just these markets that they play in continue to grow and they continue to have challenges that they can solve. I think one of the things Cisco has done though, since the arrival of Chuck Robbins, is they don't fight these trends anymore, Dave. I know prior to Chuck's arrival, they really fought the tide of software defined networking and you know, trends like that, and even cloud to some extent. And I remember one of the first meetings I had with Chuck, I asked him about that and he said that Cisco will never do that again. That under his watch, if customers are going through a market transition, Cisco wants to lead them through it, not try and hold them back. And I think for that reason, they're able to look at, all of those trends and try and take a leadership position in them, even though you might look at some of those and feel that some of them might be detrimental to Cisco's business in the short term. So something like software defined WANs, which you would throw into secure agile networks, certainly doesn't, may not carry the same kind of RPOs and margins with it that their traditional routers did, but ultimately customers are going to buy it and Cisco would like to be the ones to sell it to them. >> You know, you bring up a great point. This industry is littered, there's a graveyard of executives who fought the trend. Many people, some people remember Ken Olson of Digital Equipment Corporation. "Unix is snake oil," is what he said. IBM mainframe guys said, "PCs are a toy." And of course the history, they were the wrong side of history. The other big takeaway was the shift to software in subscription. They really made a big point of this. Here's a chart Cisco showed a couple of times to make the point that it's one of the largest software companies in the world. You know, in the top 10. They also made the point that Chuck Robbins, when he joined in 2015, and since that time, it's nearly 4x'ed it's subscription software revenue, and roughly doubled its software sales. And it now has an RPO, remaining performance obligations, that exceeds 30 billion. And it's committing to grow its subscription business in the forward-looking statements by 15 to 17% CAGR through 25, which would imply about a doubling of these, the blue lines. Zeus, it's unclear if that forward-looking forecast is just software. I presume it includes some services, but as Herren pointed out, over time, these services will be bundled into the product revenue, same way SAS companies do it. But the point is Cisco is committed, like many of their peers, to moving to an ARR model. But please, share your thoughts on Cisco's move to software subscriptions and how you see the future of consumption-based pricing. >> Yeah, this has been a big shift for Cisco, obviously. It's one that's highly disruptive. It's one that I know gave their partners a lot of angst for a long time because when you sell things upfront, you get a big check for selling that, right? And when you sell things in a subscription model, you get a much smaller check for a number of months over the period of the contract. It also changes the way you deal with the customer. When you sell a one-time product, you basically wipe your hands. You come back in three or four years and say, "it's time to upgrade." When you sell a subscription, now, the one thing that I've tried to talk to Cisco and its partners about is customers don't renew things they don't use. And so it becomes incumbent on the partner, it becomes incumbent upon Cisco to make sure that things that the customer is subscribing to, that they do use. And so Cisco's had to create a customer success organization. They've had to help their partners create those customer success organizations. So it's really changed the model. And Cisco not only made the shift, they've done it faster than they actually had originally forecast. So during the financial analyst day, they actually touted their execution on software, noting that it hit it's 30% revenue as percent of total target well before it was supposed to, it's actually exceeded its targets. And now it's looking to increase that to, it actually raised its guidance in this area a little bit by a few percentage points, looking out over the next few years. And so it's moved to the subscription model, Dave, the thing that you brought up, which I do see as somewhat of a challenge is the shift to consumption-based pricing. So subscription is one thing in that I write you a check every month for the same amount. When I go to the consumption-based pricing, that's easy to do for cloud services, things like WebEx or Duo or, you know, CloudLock, some of the security products. That that shift should be relatively simple. If customers want to buy it that way. It's unclear as to how you do that when you're selling on-prem equipment with the software add-on to it because in that case, you have to put metering technology in to understand how much they're using. You have to have a minimum baseline to start with. They've done it in some respects. The old HCS product that they sold, the Telcos, actually was sold with a minimum commit and then they tacked on a utilization on top of that. So maybe they move into that kind of model. But I know it's something that they've, they get asked about a lot. I know they're still thinking about it, but it's something that I believe is coming and it's going to come pretty fast. >> I want to pick up on that because I think, you know, they made the point that we're one of the top 10 software companies in the world. It's very difficult for hardware companies to make the transition to software. You know, HP couldn't do it. >> Well, no one's done it. >> Well, IBM has kind of done it, but they really struggle. It's kind of this mishmash of tooling and software products that aren't really well-integrated. But, I would say this, everybody now, Cisco, Dell, HPE with GreenLake, Lenovo, pretty much all the traditional hardware players are trying to move to an as a service model or at least for a portion of their business. HPE's all in, Dell transitioning. And for the most part, I would make the following observation. And I'd love to get your thoughts on this. They're pretty much following a SAS like model, which in my view is outdated and kind of flawed from a customer standpoint. All these guys say, "Hey, we're doing this because "this is what the customers want." I think the cloud is really a true consumption based model. And if you look at modern SAS companies, a lot of the startups, they're moving to a consumption based model. You see that with Snowflake, you see that with Stripe. Now they will offer incentives. But most of the traditional enterprise players, they're saying, "Okay, pay us upfront, "commit to some base level. "If you go over it, you know, "we'll charge you for it. "If you go under it, you're still going to pay "for that base level." So it's not true consumption base. It's not really necessarily the customer's best interest. So that's, I think there's some learnings there that are going to have to play out. >> Yeah, the reason customers are shying away from that SAS type model, I think during the pandemic, the one thing we learned, Dave, is that the business will ebb and flow greatly from month to month sometimes. And I was talking with somebody that worked for one of the big hotel chains, and she was telling me that what their CRM providers, she wouldn't tell me who it was, except said it rhymed with Shmalesforce, that their utilization of it went from, you know, from a nice steady level to spiking really high when customers started calling in to cancel hotel rooms. And then it dropped down to almost nothing as we went through that period of stay at home. And now it's risen back up. And so for her, she wanted to move to a consumption-based model because what happens otherwise is you wind up buying for peak utilization, your software subscriptions go largely underutilized the majority of the year, and you wind up paying, you know, a lot more than you need to. If you go to more of a true consumption model, it's harder to model out from a financial perspective 'cause there's a lot of ebbs and flows in the business, but over a longer period of time, it's more cost-effective, right? And so the, again, what the pandemic taught us was we don't really know what we're going to need from a consumption standpoint, you know, nevermind a year from now, maybe even six months from now. And consumption just creates a lot more flexibility and agility. You can scale up, you can scale down. You can bring in users, you can take out users, you can add consultants, things like that. And it just, it's much more aligned with the way businesses are run today. >> Yeah, churn is a silent killer of a software company. And so there's retention is the key here. So again, I think there's lots of learning. Let's put Cisco into context with some of its peers. So this chart we developed compares five companies to Cisco. Core Dell, meaning Dell, without VMware. VMware, HPE, IBM, we've put an AWS, and then Cisco as, IBM, AWS and Cisco is the integrated plays. So the chart shows the latest quarterly revenue multiplied by four to get a run rate, a three-year growth outlook, gross margin percentage, market cap, and revenue multiple. And the key points here are that one, Cisco has got a pretty awesome business model. It's got 60% gross margin, strong operating margins, not shown here, but in the mid twenties, 25%. It's got a higher growth rate than most of its peers. And as such, a much better, multiple than say, for instance, Core Dell gets 33 cents on the revenue dollar. HPE is double that. IBM's below two X. Cisco's revenue multiple rivals VMware, which is a pure software company. Now in a large part that's because VMware stock took a hit recently, but still the point is obvious. Cisco's got a great business. Now for context, we've added AWS, which blows away any company on this chart. We've inferred a market cap of nearly 600 billion, which frankly is conservative at a 10 X revenue multiple given it's inferred margins and growth rate. Now Zeus, if AWS were a separate company, it could have a market cap that approached 800 billion in my view. But what does this data tell you? >> Well, it just tells me that Cisco continues to be a very well-run company that has staved off commoditization, despite the calling for it for years. And I think the big lesson, and I've talked to financial analysts about this over the years, is that if, I don't really believe anything in this world is a commodity, Dave. I think even when Cisco went to the server market, if you remember back then, they created a new way of handling memory management. They were getting well above average margins for service, albeit less than Cisco's network margins, but still above average for server margins. And so I think if you can continue to innovate, you will see the margin stay where they are. You will see customers continue to buy and refresh. And I think one of the challenges Cisco's had in the past, and this is where the subscription business will help, is getting customers to stay with the latest and greatest. Prior to this refresh of network equipment, some of the stuff that I've seen in the fields, 10, 15 years old, once you move to that sell me a box and then tack on the subscription revenue that you pay month by month, you do drive more consistent refresh. Think about the way you just handle your own mobile phone. If you had to go pay, you know, a thousand dollars every three years, you might not do it at that three-year cycle. If you pay 40 bucks a month, every time there's a new phone, you're going to take it, right? So I think Cisco is able to drive greater, better refresh, keep their customers current, keep the features in there. And we've seen that with a lot of the new products. The new Cat 9,000, some of the new service provider products, the new wifi products, they've all done very well. In fact, they've all outpaced their previous generation products as far as growth rate goes. And so I think that is a testament to the way they've run the business. But I do think when people bucket Cisco in with HP and Dell, and I understand why they do, their businesses were similar at one time, it's really not a true comparison anymore. I think Cisco has completely changed their business and they're not trying to commoditize markets, they're trying to drive innovation and keep the margins up, where I think HP and Dell tend to really compete on price versus innovation. >> Well, and we are going to get to this point about the tailwinds and headwinds and cloud, and how Cisco to do it. But, to your point about, you know, the cell phone analogy. To the extent that Cisco can make that seamless for customers could hide that underlying complexity, that's going to be critical for the cloud. Now, but before we get there, I want to talk about one of the reasons why Cisco such a high multiple, and has been able to preserve its margins, to your point, not being commoditized. And it's been able to grow both organically, but also has a strong history of M and A. It's this chart shows a dominant position in core networking. So this shows, so ETR data within the Fortune 500. It plots companies in the ETR taxonomy in two dimensions, net score on the vertical axis, which is a measure of spending velocity, and market share on the horizontal axis, which is a measure of presence in the survey. It's not like IDC market share, it's mentioned market share if you will. The point is Cisco is far and away the most pervasive player in the market, it's generally held its dominant position. Although, it's been under pressure in the last few years in core networking, but it retains or maintains a very respectable net score and consistently performs well for such a large company. Zeus, anything you'd add with respect to Cisco's core networking business? >> Yeah, it's maintained a dominant network position historically. I think part of because it drives good products, but also because the competitive landscape, historically has been pretty weak, right? We saw companies like 3Com and Nortel who aren't around anymore. It'll be interesting to see moving forward now that companies like VMware are involved in networking. AWS is interested in networking. Arista is a much stronger company. You know, Juniper bought Mist and is in better position. Even Extreme Networks who most people thought was dead a few years ago has made a number of acquisitions and is now a billion dollar company. So while Cisco has done a great job of execution, they've done a great job on the innovation side, their competitive landscape, looking out over the next five years, I think is going to be more difficult than it has been over the previous five years. And largely, Dave, I think that's good for Cisco. I think whenever Cisco's pressed a little bit from competition, they tend to step on the innovation gas a little bit more. And I look back and even just the transition when VMware bought Nicira, that got Cisco's SDN business into gear, like nothing else could have, right? So competition for that company, they always seem to respond well to it. >> So, let's break down Cisco's net score a little bit. Explain why the company has been able to hold its spending momentum despite its large size. This will give you a little insight to the survey. So this chart shows the granular components of net score. The lime green is new adoptions to Cisco. The forest green is spending more than 6%. The gray is flat plus or minus 5%. The pink is spending drops by more than 5%. And the red is we're chucking the platform, we're getting off. And Cisco's overall net score here is 25%, which for a company of its size speaks to the relationships that it has with customers. It's of course got a fat middle in the gray area, like all sort of large established companies. But very low defections as well, it's got low new adoptions. But very respectable. So that is background, Zeus. Let's look at spending momentum over time across Cisco's portfolio. So this chart shows Cisco's net score by that methodology within the ETR taxonomy for Cisco over three survey periods. And what jumps out is Meraki on the left, very strong. Virtualization business, its core networking, analytics and security, all showing upward momentum. AppD is a little bit concerning, but that could be related to Cisco's sort of pivot to full stack observability. So maybe AppD is being bundled there. Although some practitioners have cited to us some concerns in that space. And then WebEx at the end of the chart, it's showing some relative strength, but not that high. Zeus, maybe you could comment on Meraki and any other takeaways across the portfolio. >> Yeah, Meraki has proven to be an excellent acquisition for Cisco. In fact, you might, I think it's arguable to say it's its best acquisition in history going all the way back to camp Kalpana and Grand Junction, the ones that brought up catalyst switches. So, in fact, I think Meraki's revenue might be larger than security now. So, that shows you the momentum it has. I think one of the lessons it brought to Cisco was that simpler is better, sometimes. I think when they first bought Meraki, the way Meraki's deployed, it's very easy to set up. There's a lot of engineering work though that goes into making a product simple to use. And I think a lot of Cisco engineers historically looked at Meraki as, that's a little bit of a toy. It's meant for small businesses, things like that, but it's not for enterprise. But, Rocky's done a nice job of expanding the portfolio, of leveraging the cloud for analytics and showing you a lot of things that you wouldn't necessarily get from traditional networking equipment. And one of the things that I was really delighted to see was when they put Todd Nightingale in charge of all the networking business, because that showed to me that Chuck Robbins understood that the things Meraki were doing were right and they infuse a little bit of Meraki into the rest of the company. You know, that's certainly a good thing. The other areas that you showed on the chart, not really a surprise, Dave. When you think of the shift hybrid work and you think of the, some of the other transitions going on, I think you would expect to see the server business in decline, the storage business, you know, maybe in a little bit of decline, just because people aren't building out data centers. Where the other ones are related more to hybrid working, hybrid cloud, things like that. So it is what you would expect. The WebEx one was interesting too, because it did show somewhat of a dip and then a rise. And I think that's indicative of what we've seen in the collaboration space since the pandemic came about. Companies like Zoom and RingCentral really got a lot of the headlines. Again, when you, the comment I made on competition, Cisco got caught a little bit flat-footed, they've caught up in features and now they really stepped on the gas there. Chuck joked that he gave the WebEx team a bit of a blank check to go do what it had to do. And I don't think that was a joke. I think he actually did that because they've added more features into WebEx in the last year then I think they did the previous five years before that. >> Well, let's just drill into video conferencing real quick here, if we could. Here's that two dimensional view, again, showing net score against market share or pervasiveness of mentions, and you can see Microsoft Teams in the upper right. I mean, it's off the chart, literally. Zoom's well ahead of Cisco in terms of, you know, mentions presence. And that could be a spate of freemium, you know, but it's basically a three horse race in this game. And Cisco, I don't think is trying to take Zoom head on, rather it seems to be making WebEx a core part of its broader collaboration agenda. But Zeus, maybe you could comment. >> Well, it's all coming together, right? So, it's hard to decouple calling from video from meetings. All of the vendors, including Teams, are going after the hybrid work experience. And if you believe the future is hybrid and not just work from home, then Cisco does have a pretty interesting advantage because it's the only one that makes its own end points, where Teams and Zoom doesn't. And so that end to end experience it can deliver. The Microsoft Teams one's interesting because that product, frankly, when you talk to users, it doesn't have a great user score, like as far as user satisfaction goes, but the one thing Microsoft has done a very good job of is bundling it in to the Office365 licenses, making it very easy for IT to deploy. Zoom is a little bit in the middle where they've appealed to the users. They've done a better job of appealing to IT, but there is a, there is a battleground now going on where video's not just video. It includes calling, includes meetings, includes room systems now, and I think this hybrid work friend is going to change the way we think about these meeting tools. >> Now we'd be remiss if we didn't spend a moment talking about security as a key part of Cisco's business. And we have a graphic on this same kind of X, Y. And it's been, we've seen several quarters of growth. Although, the last quarter security growth was in the low single digits, but Cisco is a major player in security. And this X, Y graph shows, they've got both a large presence and a solid spending momentum. Not nearly as much momentum as Okta or Zscaler or a CrowdStrike and some of the smaller companies, but they're, these guys are on a rocket ship, but others that we featured in these episodes, but much more than respectable for Cisco. And security is critical to the strategy. It's a big part of the subscriber base. And the last thing, Zeus, I'll say about Cisco made the point in analyst day, that this market is crowded. You can see that in this chart. And their goal is to simplify this picture and make it easier for customers to secure their data and apps. But that's not easy, Zeus. What are your thoughts on Cisco's security opportunities? >> Yeah, I've been waiting for Cisco go to break up in security a little more than it has. I do think, I was talking with a CSO the other day, Dave, that said to me he's starting to understand that you don't have to have best of breed everywhere to have best in class threat protection. In fact, there's a lot of buyers now will tell you that if you try and have best of breed everywhere, it actually creates a negative when it comes to threat protection because keeping all the policies and things up to date is very, very difficult. And so the industry is moving more to a platform model, right? Now, the challenge for Cisco is how do you get that, the customer to think of the network as part of the platform? Because while the platform model, I think, is starting to gain traction, FloridaNet, Palo Alto, even McAfee, companies like that also have their own version of a security platform. And if you look at the financial performance of companies like FloridaNet and Palo Alto over the past, you know, over the past couple of years, they've been through the roof, right? And so I think an interesting and unique challenge for Cisco is can they convince the security buyer that the network is as important a part of that platform as any other component? If they can do that, I think they can break away from the pack. If not, then they'll stay mixed in with those, you know, Palo, FloridaNet, Checkpoint, and, you know, and Cisco, in that mix. But I do think that may present their single biggest needle moving opportunity just because of how big the security TAM is, and the fact that there is no de facto leader in security today. If they could gain the same kind of position in security as they have a networking, who, I mean, that would move the needle like no other market would. >> Yeah, it's really interesting that they're coming at security, obviously from a position of networking strength. You've got, to your point, you've got best of breed, Okta in identity, you got CrowdStrike in endpoint, Zscaler in cloud security. They're all growing like crazy. And you got Cisco and you know, Palo Alto, CSOs tell us they want to work with Palo Alto because they're the thought leader and they're obviously a major player here. You mentioned FloridaNet, there's a zillion others. We could talk all day about security. But let's bring it back to cloud. We've talked about a number of the piece in Cisco's portfolio, and we haven't really spent any time on full stack observability, which is a big push for Cisco with AppD, Intersight and the ThousandEyes acquisition. And that plays into this equation. But my take, Zeus, is Cisco has a number of cloud knobs that it can turn, it sells core networking equipment to hyperscalers. It can be the abstraction layer to connect on-prem to the cloud and hybrid and across clouds. And it's in a good position with Telcos too, to go after the 5G. But let's use this chart to talk about Cisco's cloud prospects. It's an ETR cut of the cloud customer spending. So we cut it by cloud customers. And they're are, I don't know, 800 or so in the survey. And then looking at various companies performance within that cut. So these are companies that compete, or in the case of HashiCorp, partner with Cisco at some level. Let me just set this up and get your take. So the insert on the chart by the way shows the raw data that positions each dot, the net score and the shared n, i.e. the number of accounts in the survey that responded. The key points, first of all, Azure and AWS, dominant players in cloud. GCP is a distant third. We've reported on that a lot. Not only are these two companies big, they have spending momentum on their platforms. They're growing, they are on that flywheel. Second point, VMware and Cisco are very prominent. They have huge customer bases. And while they're often on a collision course, there's lots of room in cloud for multiple players. When we plotted some other Cisco properties like AppD and Meraki, which as we said, is strong. And then for context, we've placed Dell, HPE, Aruba, IBM and Oracle. And also VMware cloud and AWS, which is notable on its elevation. And as I say, we've added HashiCorp because they're critical partner of Cisco and it's a multi-cloud play. Okay, Zeus, there's the setup. What does Cisco have to do to make the cloud a tailwind? Let's talk about strategy, tailwinds, headwinds, competition, and bottom line it for us. >> Yeah, well, I do think, well, I talked about security being the biggest needle mover for Cisco, I think its biggest challenge is convincing Wall Street in particular, that the cloud is a tailwind. I think if you look at the companies with the really high multiples to their stock, Dave, they're all ones where they're viewed as, they go along with the cloud ride, Right? So the, if you can associate yourself with the cloud and then people believe that the cloud is going to, more cloud equals more business, that obviously creates a better multiple because the cloud has almost infinite potential ahead of it. Now with respect to Cisco, I do think cloud has presented somewhat of a double-edged sword for Cisco. I don't believe the current consumption model for cloud is really a tailwind for Cisco, not really a headwind, but it doesn't really change Cisco's business. But I do think the very definition of cloud is changing before our eyes, Dave. And it's shifting away from centralized clouds. If you think of the way customers bought cloud before, it might have used AWS, it might've used Azure, but it really, that's not really multi-cloud, it's just multiple clouds in which I put things in these centralized resources. It's shifting more to this concept of distributed cloud in which a single application can be built using resources from your private cloud, for AWS, from Azure, from Edge locations, all the cloud providers have built their portfolios to support this concept of distributed cloud and what becomes important there, is a highly agile dynamic network. And in that case with distributed cloud, that is a tailwind for Cisco because now the network is that resource that ties all those distributed cloud components together. Now the network itself has to change. It needs to become a lot more agile and microservices and container friendly itself so I can spin up resources and, you know, in an Edge location, as fast as I can on-prem and things like that. But I do think it creates another wave of innovation and networking, and in that case, I think it does act as a tailwind for Cisco, aside from just the work it's done with the web scalers, you know, those types of companies. So, but I do think that Cisco needs to rethink its delivery model on network services somewhat to take advantage of that. >> At the analyst meeting, Cisco made the point that it does sell to the hyperscalers. It talked about the top six hyperscalers. You know, you had mentioned to me, maybe IBM and Oracle were in there. I always talk about four hyperscalers and only four, but that's fine. Here's my question. Practitioners have told me, buyers have told me, the more money and more workloads I put in the cloud, the less I spend with Cisco. Now, even though that might be Cisco gear powering those clouds, do you see that as a potential threat in that they don't own that relationship anymore and value will confer to the cloud players? >> Yeah, that's, I've heard that too. And I don't, I believe that's true when it comes to general purpose compute. You're probably not buying as many UCS servers and things like that because you are putting them in the cloud. But I do think you do need a refresh the network. I think the network becomes a very important role, plays a very important role there. The variant, the really interesting trend will be, what is your WAM look like? Do you have thousands of workers scattered all over the place, or do you just have a few centralized locations? So I think also, you know, Cisco will wind up providing connectivity within the cloud. If you think of the transition we've seen in other industries, Dave, as far as cloud goes, you think of, you know, F5, a company like that. People thought that AWS would commoditize F5's business because AWS provides their own load balancers, right? But what AWS provides is a very basic, very basic functionality and then use F5's virtual edition or a cloud edition for a lot of the advanced capabilities. And I think you'll see the same thing with the cloud that customers will start buying versions of Cisco that go in the cloud to drive a lot of those advanced capabilities that only Cisco delivers. And so I think you wind up buying more Cisco over time, although the per unit price of what you buy might be a little bit lower. If that makes sense here. >> It does, I think it makes a lot of sense and that fits into the cloud model. You know, you bring up a good point, the conversation with the customer was Rakuten. And that individual was essentially sharing with us, somebody was asking, one of the analysts was asking, "Well, what about the cloud guys? "Aren't they going to really threaten the whole Telco "industry and disrupt it?" And his point was, "Look at, this stuff is not trivial." So to your point, you know, maybe they'll provide some basic functionality. Kind of like they do in a lot of different areas. Data protection is another good example. Security is another good example. Where there's plenty of room for partners, competitors, of on-prem players to add value. And I've always said, "Look, the opportunity "is the cloud players spend 100 billion dollars a year "on CapEx." It's a gift to companies like Cisco who can build an abstraction layer that connects on-prem, cloud for hybrid, across clouds, out to the edge, and really be that layer that is that layer that takes advantage of cloud native, but also delivers that experience, I don't want to use the word seamlessly, but that experience across those clouds as the cloud expands. And that's fundamentally Cisco's cloud strategy, isn't it? >> Oh yeah. And I think people have underestimated over the years, how hard it is to build good networking products. Anybody can go get some silicon and build a product to connect two things together. The question is, can you do it at scale? Can you do it securely? And lots of companies have tried to commoditize networking, you know, White Boxes was looked at as the existential threat to Cisco. Huawei was looked at as the big threat to Cisco. And all of those have kind of come and gone because building high quality network equipment that scales is tough. And it's tougher than most people realize. And your other point on the cloud providers as well, they will provide a basic level of functionality. You know, AWS network equipment doesn't work in Azure. And Azure stuff doesn't work in Google, and Google doesn't work in AWS. And so you do need a third party to come in and act as almost the cloud middleware that can connect all those things together with a consistent set of policies. And that's what Cisco does really well. They did that, you know back when they were founded with routing protocols and you can think this is just an extension of what they're doing just up at the cloud layer. >> Excellent. Okay, Zeus, we're going to leave it there. Thanks to my guest today, Zeus Kerravala. Great analysis as always. Would love to have you back. Check out ZKresearch.com to reach him. Thank you again. >> Thank you, Dave. >> Now, remember I publish each week on Wikibond.com and siliconangle.com. All these episodes are available as podcasts, just search "Braking Analysis" podcast, and you can connect on Twitter at DVallante or email me David.Vallante@siliconangle.com. Thanks for the comments on LinkedIn. Check out etr.plus for all the survey action. This is Dave Vallante for theCUBE insights powered by ETR. Be well and we'll see you next time. (light music)

>>from around the globe. It's the Cube presenting Cuban cloud brought >>to you by silicon angle. Okay, we're back. Here. Live Cuban Cloud. And this is Dave. Want with my co host, John Ferrier Were all remote. We're getting into the analyst power half hour. Really pleased to have Maribel Lopez here. She's the principal and founder of Lopez Research and Zias Caraballo, who is the principal and founder of ZK research. Guys, great to see you. Let's get into it. How you doing? >>Great. How you been? Good, >>thanks. Really good. John's hanging in there quarantining and, uh, all healthy, So I hope you guys are too. Hey, Mary, But let's start with you. You know, here we are on 2021 you know, just exited one of the strangest years, if not the strangest year of our lives. But looking back in the past decade of cloud and we're looking forward. How do you see that? Where do we come from? Where we at and where we going >>When we obviously started with the whole let's build a public cloud and everything was about public cloud. Uh, then we went thio the notion of private cloud than we had hybrid cloud and multi cloud. So we've done a lot of different clouds right now. And I think where we are today is that there's a healthy recognition on the cloud computing providers that you need to give it to the customers the way they want it, not the way you've decided to build it. So how do you meet them where they are so that they can have a cloud like experience wherever they want their data to be? >>Yes and yes, you've, you know, observed, This is well, in the early days of cloud, you heard a lot of rhetoric. It was private cloud And and then now we're, you know, hearing a lot of multi cloud and so forth. But initially, a lot of the traditional vendors kind of pooh poohed it. They called us analysts. We said we were all cloud crazy, but they seem to have got their religion. >>Well, everything. Everyone's got a definition of cloud, but I actually think we are right in the midst of another transformation of clouds Miracle talked about. We went from, you know, private clouds, which is really hosting the public cloud to multi cloud hybrid cloud. And if you look at the last post that put on Silicon Angle, which was talking about five acquisition of Volterra, I actually think we're in the midst of the transition to what's called distributed Club, where if you look at modernized cloud apps today, they're actually made up of services from different clouds on also distributed edge locations. And that's gonna have a pretty profound impact on the way we build out, because those distributed edges be a telco edge, cellular vagina. Th whatever the services that lived there are much more ephemeral in nature, right? So the way we secure the way we connect changes quite a bit. But I think that the great thing about Cloud is we've seen several several evolutionary changes. So what the definition is and we're going through that now, which is which is pretty cool to think about, right? It's not a static thing. Um, it's, uh, you know, it's a it's an ongoing transition. But I think, uh, you know, we're moving into this distributed Cloudera, which to me is a lot more complex than what we're dealing with in the Palace. >>I'm actually pretty excited about that because I think that this move toe edge and the distribution that you've talked about, it's like we now have processing everywhere. We've got it on devices, we've got it in, cars were moving, the data centers closer and closer to where the action's happening. And I think that's gonna be a huge trend for 2021. Is that distributed that you were talking about a lot of edge discussion? You >>know what? The >>reason we're doing This, too, is we want. It's not just we're moving the data closer to the user, right? And some. If you think you brought up the autonomous vehicle right in the car being an edge, you think of the data that generates right? There's some things such as the decision to stop or not right that should be done in car. I don't wanna transport that data all the way back to Google him back to decide whether I want to stop. You could also use the same data determine whether drivers driving safely for insurance purposes, right? So the same data give me located at the edge or in a centralized cloud for different purposes, and I think that's what you know, kind of cool about this is we're being able to use our data and much different ways. Now. >>You know, it's interesting is it's so complex. It's mind blowing because this is distributed computing. Everyone kind of agrees this is where it is. But if you think about the complexity and I want to get your guys reaction to this because you know some of the like side fringe trend discussions are data sovereignty, misinformation as a vulnerability. Okay, you get the chips now you got gravitas on with Amazon in front. Apple's got their own chips. Intel is gonna do a whole new direction. So you've got tons of computer. And then you mentioned the ephemeral nature. How do you manage those? What's the observe ability look like? They're what's the trust equation? So all these things kind of play into it. It sounds almost mind blowing, just even thinking about it. But how do you guys, this analyst tryto understand where someone's either blowing bullshit or kind of like has the real deal? Because all those things come into play? I mean, you could have a misinformation campaign targeting the car. Let's say Hey, you know that that data is needs to be. This is this is misinformation who's a >>in a lot of ways, this creates almost unprecedented opportunity now for for starts and for companies to transform right. The fundamental tenet of my research has always been share shifts happen when markets transition and we're in the middle of the big one. If the computer resource is we're using, John and the application resource will be using or ephemeral nature than all the things that surrounded the way we secured the way we connect. Those also have to be equal, equally agile, right, So you can't have, you know, you think of a micro services based application being secured with traditional firewalls, right? Just the amount of, or even virtual the way that the length of time it takes to spend those things up is way too long. So in many ways, this distributed cloud change changes everything in I T. And that that includes all of the services in the the infrastructure that we used to secure and connect. And that's a that is a profound change, and you mentioned the observe ability. You're right. That's another thing that the traditional observe ability tools are based on static maps and things and, you know, traditional up, down and we don't. Things go up and down so quickly now that that that those don't make any sense. So I think we are going to see quite a rise in different types of management tools and the way they look at things to be much more. I suppose you know Angela also So we can measure things that currently aren't measurable. >>So you're talking about the entire stack. Really? Changing is really what you're inferring anyway from your commentary. And that would include the programming model as well, wouldn't it? >>Absolutely. Yeah. You know, the thing that is really interesting about where we have been versus where we're going is we spent a lot of time talking about virtual izing hardware and moving that around. And what does that look like? And that, and creating that is more of a software paradigm. And the thing we're talking about now is what is cloud is an operating model look like? What is the manageability of that? What is the security of that? What? You know, we've talked a lot about containers and moving into a different you know, Dev suck ups and all those different trends that we've been talking about, like now we're doing them. So we've only got into the first crank of that. And I think every technology vendor we talked to now has to address how are they going to do a highly distributed management and security landscape? Like, what are they gonna layer on top of that? Because it's not just about Oh, I've taken Iraq of something server storage, compute and virtualized it. I now have to create a new operating model around it. In a way, we're almost redoing what the OS I stack looks like and what the software and solutions are for that. >>So >>it was really Hold on, hold on, hold on their lengthened. Because that side stack that came up earlier today, Mayor. But we're talking about Yeah, we were riffing on the OSC model, but back in the day and we were comparing the S n a definite the, you know, the proprietary protocol stacks that they were out there and someone >>said Amazon's S N a. Is that recall? E think that's what you said? >>No, no. Someone in the chest. That's a comment like Amazon's proprietary meaning, their scale. And I said, Oh, that means there s n a But if you think about it, that's kind of almost that can hang. Hang together. If the kubernetes is like a new connective tissue, is that the TCP pipe moment? Because I think Os I kind of was standardizing at the lower end of the stack Ethernet token ring. You know, the data link layer physical layer and that when you got to the TCP layer and really magic happened right to me, that's when Cisco's happened and everything started happening then and then. It kind of stopped because the application is kinda maintain their peace there. A little history there, but like that's kind of happening now. If you think about it and then you put me a factor in the edge, it just kind of really explodes it. So who's gonna write that software? E >>think you know, Dave, your your dad doesn't change what you build ups. It's already changed in the consumer world, you look atyou, no uber and Waze and things like that. Those absolute already highly decomposed applications that make a P I calls and DNS calls from dozens of different resource is already right. We just haven't really brought that into the enterprise space. There's a number, you know, what kind of you know knew were born in the cloud companies that have that have done that. But they're they're very few and far between today. And John, your point about the connectivity. We do need to think about connectivity at the network layer. Still, obviously, But now we're creating that standardization that standardized connectivity all the way a player seven. So you look at a lot of the, you know, one of the big things that was a PDP. I calls right, you know, from different cloud services. And so we do need to standardize in every layer and then stitch that together. So that does make It does make things a lot more complicated. Now I'm not saying Don't do it because you can do a whole lot more with absolute than you could ever do before. It's just that we kind of cranked up the level of complexity here, and flowered isn't just a single thing anymore, right? That's that. That's what we're talking about here It's a collection of edges and private clouds and public clouds. They all have to be stitched together at every layer in orderto work. >>So I was I was talking a few CEOs earlier in the day. We had we had them on, I was asking them. Okay, So how do you How do you approach this complexity? Do you build that abstraction layer? Do you rely on someone like Microsoft to build that abstraction layer? Doesn't appear that Amazon's gonna do it, you know? Where does that come from? Or is it or is it dozens of abstraction layers? And one of the CEO said, Look, it's on us. We have to figure out, you know, we get this a p I economy, but But you guys were talking about a mawr complicated environment, uh, moving so so fast. Eso if if my enterprise looks like my my iPhone APs. Yes, maybe it's simpler on an individual at basis, but its app creep and my application portfolio grows. Maybe they talk to each other a little bit better. But that level of complexity is something that that that users are gonna have to deal >>with what you thought. So I think quite what Zs was trying to get it and correct me if I'm wrong. Zia's right. We've got to the part where we've broken down what was a traditional application, right? And now we've gotten into a P. I calls, and we have to think about different things. Like we have to think about how we secure those a p I s right. That becomes a new criteria that we're looking at. How do we manage them? How do they have a life cycle? So what was the life cycle of, say, an application is now the life cycle of components and so that's a That's a pretty complex thing. So it's not so much that you're getting app creep, but you're definitely rethinking how you want to design your applications and services and some of those you're gonna do yourself and a lot of them are going to say it's too complicated. I'm just going to go to some kind of SAS cloud offering for that and let it go. But I think that many of the larger companies I speak to are looking for a larger company to help them build some kind of framework to migrate from what they've used with them to what they need tohave going forward. >>Yeah, I think. Where the complexities. John, You asked who who creates the normalization layer? You know, obviously, if you look to the cloud providers A W s does a great job of stitching together all things AWS and Microsoft does a great job of stitching together all things Microsoft right in saying with Google. >>But >>then they don't. But if if I want to do some Microsoft to Amazon or Google Toe Microsoft, you know, connectivity, they don't help so much of that. And that's where the third party vendors that you know aviatrix on the network side will tear of the security side of companies like that. Even Cisco's been doing a lot of work with those companies, and so what we what we don't really have And we probably won't for a while if somebody is gonna stitch everything together at every >>you >>know, at every layer. So Andi and I do think we do get after it. Maribel, I think if you look at the world of consumer APS, we moved to a lot more kind of purpose built almost throwaway apps. They serve a purpose or to use them for a while. Then you stop using them. And in the enterprise space, we really haven't kind of converted to them modeling on the mobile side. But I think that's coming. Well, >>I think with micro APS, right, that that was kind of the issue with micro APS. It's like, Oh, I'm not gonna build a full scale out that's gonna take too long. I'm just gonna create this little workflow, and we're gonna have, like, 200 work flows on someone's phone. And I think we did that. And not everybody did it, though, to your point. So I do think that some people that are a little late to the game might end up in in that app creep. But, hey, listen, this is a fabulous opportunity that just, you know, throw a lot of stuff out and do it differently. What What? I think what I hear people struggling with ah lot is be to get it to work. It typically is something that is more vertically integrated. So are you buying all into a Microsoft all you're buying all into an Amazon and people are starting to get a little fear about doing the full scale buy into any specific platform yet. In absence of that, they can't get anything to work. >>Yeah, So I think again what? What I'm hearing from from practitioners, I'm gonna put a micro serve. And I think I think, uh, Mirabelle, this is what you're implying. I'm gonna put a micro services layer. Oh, my, my. If I can't get rid of them, If I can't get rid of my oracle, you know, workloads. I'm gonna connect them to my modernize them with a layer, and I'm gonna impart build that. I'm gonna, you know, partner to get that done. But that seems to be a a critical path forward. If I don't take that step, gonna be stuck in the path in the past and not be able to move forward. >>Yeah, absolutely. I mean, you do have to bridge to the past. You you aren't gonna throw everything out right away. That's just you can't. You can't drive the bus and take the wheels off that the same time. Maybe one wheel, but not all four of them at the same time. So I think that this this concept of what are the technologies and services that you use to make sure you can keep operational, but that you're not just putting on Lee new workloads into the cloud or new workloads as decomposed APS that you're really starting to think about. What do I want to keep in whatever I want to get rid of many of the companies you speak Thio. They have thousands of applications. So are they going to do this for thousands of applications? Are they gonna take this as an opportunity to streamline? Yeah, >>well, a lot of legacy never goes away, right? And I was how companies make this transition is gonna be interesting because there's no there's no really the fact away I was I was talking to this one company. This is New York Bank, and they've broken their I t division down into modern I t and legacy I t. And so modern. Everything is cloud first. And so imagine me, the CEO of Legacy i e 02 miracles. But what they're doing, if they're driving the old bus >>and >>then they're building a new bus and parallel and eventually, you know, slowly they take seats out of the old bus and they take, you know, the seat and and they eventually start stripping away things. That old bus, >>But >>that old bus is going to keep running for a long time. And so stitching the those different worlds together is where a lot of especially big organizations that really can't commit to everything in the cloud are gonna struggle. But it is a It is a whole new world. And like I said, I think it creates so much opportunity for people. You know, e >>whole bus thing reminds me that movie speed when they drive around 55 miles an hour, just put it out to the airport and just blew up E >>got But you know, we all we all say that things were going to go away. But to Zia's point, you know, nothing goes away. We're still in 2021 talking about mainframes just as an aside, right? So I think we're going to continue tohave some legacy in the network. But the But the issue is ah, lot will change around that, and they're gonna be some people. They're gonna make a lot of money selling little startups that Just do one specific piece of that. You know, we just automation of X. Oh, >>yeah, that's a great vertical thing. This is the This is the distributed network argument, right? If you have a note in the network and you could put a containerized environment around it with some micro services um, connective tissue glue layer, if you will software abstract away some integration points, it's a note on the network. So if in mainframe or whatever, it's just I mean makes the argument right, it's not core. You're not building a platform around the mainframe, but if it's punching out, I bank jobs from IBM kicks or something, you know, whatever, Right? So >>And if those were those workloads probably aren't gonna move anywhere, right, they're not. Is there a point in putting those in the cloud? You could say Just leave them where they are. Put a connection to the past Bridge. >>Remember that bank when you talk about bank guy we interviewed in the off the record after the Cube interviews like, Yeah, I'm still running the mainframe, so I never get rid of. I love it. Run our kicks job. I would never think about moving that thing. >>There was a large, large non US bank who said I buy. I buy the next IBM mainframe sight unseen. Andi, he's got no choice. They just write the check. >>But milliseconds is like millions of dollars of millisecond for him on his back, >>so those aren't going anywhere. But then, but then, but they're not growing right. It's just static. >>No, no, that markets not growing its's, in fact. But you could make a lot of money and monetizing the legacy, right? So there are vendors that will do that. But I do think if you look at the well, we've already seen a pretty big transition here. If you look at the growth in a company like twilio, right, that it obviates the need for a company to rack and stack your own phone system to be able to do, um, you know, calling from mobile lapse or even messaging. Now you just do a P. I calls. Um, you know, it allows in a lot of ways that this new world we live in democratizes development, and so any you know, two people in the garage can start up a company and have a service up and running another time at all, and that creates competitiveness. You know much more competitiveness than we've ever had before, which is good for the entire industry. And, you know, because that keeps the bigger companies on their toes and they're always looking over their shoulder. You know what, the banks you're looking at? The venues and companies like that Brian figure out a way to monetize. So I think what we're, you know well, that old stuff never going away. The new stuff is where the competitive screen competitiveness screen. >>It's interesting. Um IDs Avery. Earlier today, I was talking about no code in loco development, how it's different from the old four g l days where we didn't actually expand the base of developers. Now we are to your point is really is democratizing and, >>well, everybody's a developer. It could be a developer, right? A lot of these tools were written in a way that line of business people create their own APs to point and click interface is, and so the barrier. It reminds me of when, when I started my career, I was a I. I used to code and HTML build websites and then went to five years. People using drag and drop interface is right, so that that kind of job went away because it became so easy to dio. >>Yeah, >>sorry. A >>data e was going to say, I think we're getting to the part. We're just starting to talk about data, right? So, you know, when you think of twilio, that's like a service. It's connecting you to specific data. When you think of Snowflake, you know, there's been all these kinds of companies that have crept up into the landscape to feel like a very specific void. And so now the Now the question is, if it's really all about the data, they're going to be new companies that get built that are just focusing on different aspects of how that data secured, how that data is transferred, how that data. You know what happens to that data, because and and does that shift the balance of power about it being out of like, Oh, I've created these data centers with large recommend stack ums that are virtualized thio. A whole other set of you know this is a big software play. It's all about software. >>Well, we just heard from Jim Octagon e You guys talking earlier about just distributed system. She basically laid down that look. Our data architectures air flawed there monolithic. And data by its very nature is distributed so that she's putting forth the whole new paradigm around distributed decentralized data models, >>which Howie shoe is just talking about. Who's gonna build the visual studio for data, right? So programmatic. Kind of thinking around data >>I didn't >>gathering. We didn't touch on because >>I do think there's >>an opportunity for that for, you know, data governance and data ownership and data transport. But it's also the analytics of it. Most companies don't have the in house, um, you know, data scientists to build on a I algorithms. Right. So you're gonna start seeing, you know, cos pop up to do very specific types of data. I don't know if you saw this morning, um, you know, uniforms bought this company that does, you know, video emotion detection so they could tell on the video whether somebody's paying attention, Not right. And so that's something that it would be eso hard for a company to build that in house. But I think what you're going to see is a rise in these, you know, these types of companies that help with specific types of analytics. And then you drop you pull those in his resource is into your application. And so it's not only the storage and the governance of the data, but also the analytics and the analytics. Frankly, there were a lot of the, uh, differentiation for companies is gonna come from. I know Maribel has written a lot on a I, as have I, and I think that's one of the more exciting areas to look at this year. >>I actually want to rip off your point because I think it's really important because where we left off in 2020 was yes, there was hybrid cloud, but we just started to see the era of the vertical eyes cloud the cloud for something you know, the cloud for finance, the cloud for health care, the telco and edge cloud, right? So when you start doing that, it becomes much more about what is the specialized stream that we're looking at. So what's a specialized analytic stream? What's a specialized security stack stream? Right? So until now, like everything was just trying to get to what I would call horizontal parody where you took the things you had before you replicated them in a new world with, like, some different software, but it was still kind of the same. And now we're saying, OK, let's try Thio. Let's try to move out of everything, just being a generic sort of cloud set of services and being more total cloud services. >>That is the evolution of everything technology, the first movement. Everything doing technology is we try and make the old thing the new thing look like the old thing, right? First PCs was a mainframe emulator. We took our virtual servers and we made them look like physical service, then eventually figure out, Oh, there's a whole bunch of other stuff that I could do then I couldn't do before. And that's the part we're trying to hop into now. Right? Is like, Oh, now that I've gone cloud native, what can I do that I couldn't do before? Right? So we're just we're sort of hitting that inflection point. That's when you're really going to see the growth takeoff. But for whatever reason, and i t. All we ever do is we're trying to replicate the old until we figure out the old didn't really work, and we should do something new. >>Well, let me throw something old and controversial. Controversial old but old old trope out there. Consumerism ation of I t. I mean, if you think about what year was first year you heard that term, was it 15 years ago? 20 years ago. When did that first >>podcast? Yeah, so that was a long time ago >>way. So if you think about it like, it kind of is happening. And what does it mean, right? Come. What does What does that actually mean in today's world Doesn't exist. >>Well, you heard you heard. Like Fred Luddy, whose founder of service now saying that was his dream to bring consumer like experiences to the enterprise will. Well, it didn't really happen. I mean, service not pretty. Pretty complicated compared toa what? We know what we do here, but so it's It's evolving. >>Yeah, I think there's also the enterprise ation of consumer technology that John the companies, you know, you look a zoom. They came to market with a highly consumer facing product, realized it didn't have the security tools, you know, to really be corporate great. And then they had to go invest a bunch of money in that. So, you know, I think that waken swing the pendulum all the way over to the consumer side, but that that kind of failed us, right? So now we're trying to bring it back to center a little bit where we blend the two together. >>Cloud kind of brings that I never looked at that way. That's interesting and surprising of consumer. Yeah, that's >>alright, guys. Hey, we gotta wrap Zs, Maribel. Always a pleasure having you guys on great great insights from the half hour flies by. Thanks so much. We appreciate it. >>Thank >>you guys. >>Alright, keep it right there. Mortgage rate content coming from the Cuban Cloud Day Volonte with John Ferrier and a whole lineup still to come Keep right there.