>> From the Cube Studios in Palo Alto in Boston bringing you data-driven insights from the Cube and ETR. This is Breaking Analysis with Dave Vellante. >> The unraveling of market enthusiasm continued in Q4 of 2022 with the earnings reports from the US hyperscalers, the big three now all in. As we said earlier this year, even the cloud is an immune from the macro headwinds and the cracks in the armor that we saw from the data that we shared last summer, they're playing out into 2023. For the most part actuals are disappointing beyond expectations including our own. It turns out that our estimates for the big three hyperscaler's revenue missed by 1.2 billion or 2.7% lower than we had forecast from even our most recent November estimates. And we expect continued decelerating growth rates for the hyperscalers through the summer of 2023 and we don't think that's going to abate until comparisons get easier. Hello and welcome to this week's Wikibon Cube Insights powered by ETR. In this Breaking Analysis, we share our view of what's happening in cloud markets not just for the hyperscalers but other firms that have hitched a ride on the cloud. And we'll share new ETR data that shows why these trends are playing out tactics that customers are employing to deal with their cost challenges and how long the pain is likely to last. You know, riding the cloud wave, it's a two-edged sword. Let's look at the players that have gone all in on or are exposed to both the positive and negative trends of cloud. Look the cloud has been a huge tailwind for so many companies like Snowflake and Databricks, Workday, Salesforce, Mongo's move with Atlas, Red Hats Cloud strategy with OpenShift and so forth. And you know, the flip side is because cloud is elastic what comes up can also go down very easily. Here's an XY graphic from ETR that shows spending momentum or net score on the vertical axis and market presence in the dataset on the horizontal axis provision or called overlap. This is data from the January 2023 survey and that the red dotted lines show the positions of several companies that we've highlighted going back to January 2021. So let's unpack this for a bit starting with the big three hyperscalers. The first point is AWS and Azure continue to solidify their moat relative to Google Cloud platform. And we're going to get into this in a moment, but Azure and AWS revenues are five to six times that of GCP for IaaS. And at those deltas, Google should be gaining ground much faster than the big two. The second point on Google is notice the red line on GCP relative to its starting point. While it appears to be gaining ground on the horizontal axis, its net score is now below that of AWS and Azure in the survey. So despite its significantly smaller size it's just not keeping pace with the leaders in terms of market momentum. Now looking at AWS and Microsoft, what we see is basically AWS is holding serve. As we know both Google and Microsoft benefit from including SaaS in their cloud numbers. So the fact that AWS hasn't seen a huge downward momentum relative to a January 2021 position is one positive in the data. And both companies are well above that magic 40% line on the Y-axis, anything above 40% we consider to be highly elevated. But the fact remains that they're down as are most of the names on this chart. So let's take a closer look. I want to start with Snowflake and Databricks. Snowflake, as we reported from several quarters back came down to Earth, it was up in the 80% range in the Y-axis here. And it's still highly elevated in the 60% range and it continues to move to the right, which is positive but as we'll address in a moment it's customers can dial down consumption just as in any cloud. Now, Databricks is really interesting. It's not a public company, it never made it to IPO during the sort of tech bubble. So we don't have the same level of transparency that we do with other companies that did make it through. But look at how much more prominent it is on the X-axis relative to January 2021. And it's net score is basically held up over that period of time. So that's a real positive for Databricks. Next, look at Workday and Salesforce. They've held up relatively well, both inching to the right and generally holding their net scores. Same from Mongo, which is the brown dot above its name that says Elastic, it says a little gets a little crowded which Elastic's actually the blue dot above it. But generally, SaaS is harder to dial down, Workday, Salesforce, Oracles, SaaS and others. So it's harder to dial down because commitments have been made in advance, they're kind of locked in. Now, one of the discussions from last summer was as Mongo, less discretionary than analytics i.e. Snowflake. And it's an interesting debate but maybe Snowflake customers, you know, they're also generally committed to a dollar amount. So over time the spending is going to be there. But in the short term, yeah maybe Snowflake customers can dial down. Now that highlighted dotted red line, that bolded one is Datadog and you can see it's made major strides on the X-axis but its net score has decelerated quite dramatically. Openshift's momentum in the survey has dropped although IBM just announced that OpenShift has a a billion dollar ARR and I suspect what's happening there is IBM consulting is bundling OpenShift into its modernization projects. It's got a, that sort of captive base if you will. And as such it's probably not as top of mind to the respondents but I'll bet you the developers are certainly aware of it. Now the other really notable call out here is CloudFlare, We've reported on them earlier. Cloudflare's net score has held up really well since January of 2021. It really hasn't seen the downdraft of some of these others, but it's making major major moves to the right gaining market presence. We really like how CloudFlare is performing. And the last comment is on Oracle which as you can see, despite its much, much lower net score continues to gain ground in the market and thrive from a profitability standpoint. But the data pretty clearly shows that there's a downdraft in the market. Okay, so what's happening here? Let's dig deeper into this data. Here's a graphic from the most recent ETR drill down asking customers that said they were going to cut spending what technique they're using to do so. Now, as we've previously reported, consolidating redundant vendors is by far the most cited approach but there's two key points we want to make here. One is reducing excess cloud resources. As you can see in the bars is the second most cited technique and it's up from the previous polling period. The second we're not showing, you know directly but we've got some red call outs there. Reducing cloud costs jumps to 29% and 28% respectively in financial services and tech telco. And it's much closer to second. It's basically neck and neck with consolidating redundant vendors in those two industries. So they're being really aggressive about optimizing cloud cost. Okay, so as we said, cloud is great 'cause you can dial it up but it's just as easy to dial down. We've identified six factors that customers tell us are affecting their cloud consumption and there are probably more, if you got more we'd love to hear them but these are the ones that are fairly prominent that have hit our radar. First, rising mortgage rates mean banks are processing fewer loans means less cloud. The crypto crash means less trading activity and that means less cloud resources. Third lower ad spend has led companies to reduce not only you know, their ad buying but also their frequency of running their analytics and their calculations. And they're also often using less data, maybe compressing the timeframe of the corpus down to a shorter time period. Also very prominent is down to the bottom left, using lower cost compute instances. For example, Graviton from AWS or AMD chips and tiering storage to cheaper S3 or deep archived tiers. And finally, optimizing based on better pricing plans. So customers are moving from, you know, smaller companies in particular moving maybe from on demand or other larger companies that are experimenting using on demand or they're moving to spot pricing or reserved instances or optimized savings plans. That all lowers cost and that means less cloud resource consumption and less cloud revenue. Now in the days when everything was on prem CFOs, what would they do? They would freeze CapEx and IT Pros would have to try to do more with less and often that meant a lot of manual tasks. With the cloud it's much easier to move things around. It still takes some thinking and some effort but it's dramatically simpler to do so. So you can get those savings a lot faster. Now of course the other huge factor is you can cut or you can freeze. And this graphic shows data from a recent ETR survey with 159 respondents and you can see the meaningful uptick in hiring freezes, freezing new IT deployments and layoffs. And as we've been reporting, this has been trending up since earlier last year. And note the call out, this is especially prominent in retail sectors, all three of these techniques jump up in retail and that's a bit of a concern because oftentimes consumer spending helps the economy make a softer landing out of a pullback. But this is a potential canary in the coal mine. If retail firms are pulling back it's because consumers aren't spending as much. And so we're keeping a close eye on that. So let's boil this down to the market data and what this all means. So in this graphic we show our estimates for Q4 IaaS revenues compared to the "actual" IaaS revenues. And we say quote because AWS is the only one that reports, you know clean revenue and IaaS, Azure and GCP don't report actuals. Why would they? Because it would make them look even, you know smaller relative to AWS. Rather, they bury the figures in overall cloud which includes their, you know G-Suite for Google and all the Microsoft SaaS. And then they give us little tidbits about in Microsoft's case, Azure, they give growth rates. Google gives kind of relative growth of GCP. So, and we use survey data and you know, other data to try to really pinpoint and we've been covering this for, I don't know, five or six years ever since the cloud really became a thing. But looking at the data, we had AWS growing at 25% this quarter and it came in at 20%. So a significant decline relative to our expectations. AWS announced that it exited December, actually, sorry it's January data showed about a 15% mid-teens growth rate. So that's, you know, something we're watching. Azure was two points off our forecast coming in at 38% growth. It said it exited December in the 35% growth range and it said that it's expecting five points of deceleration off of that. So think 30% for Azure. GCP came in three points off our expectation coming in 35% and Alibaba has yet to report but we've shaved a bid off that forecast based on some survey data and you know what maybe 9% is even still not enough. Now for the year, the big four hyperscalers generated almost 160 billion of revenue, but that was 7 billion lower than what what we expected coming into 2022. For 2023, we're expecting 21% growth for a total of 193.3 billion. And while it's, you know, lower, you know, significantly lower than historical expectations it's still four to five times the overall spending forecast that we just shared with you in our predictions post of between 4 and 5% for the overall market. We think AWS is going to come in in around 93 billion this year with Azure closing in at over 71 billion. This is, again, we're talking IaaS here. Now, despite Amazon focusing investors on the fact that AWS's absolute dollar growth is still larger than its competitors. By our estimates Azure will come in at more than 75% of AWS's forecasted revenue. That's a significant milestone. AWS is operating margins by the way declined significantly this past quarter, dropping from 30% of revenue to 24%, 30% the year earlier to 24%. Now that's still extremely healthy and we've seen wild fluctuations like this before so I don't get too freaked out about that. But I'll say this, Microsoft has a marginal cost advantage relative to AWS because one, it has a captive cloud on which to run its massive software estate. So it can just throw software at its own cloud and two software marginal costs. Marginal economics despite AWS's awesomeness in high degrees of automation, software is just a better business. Now the upshot for AWS is the ecosystem. AWS is essentially in our view positioning very smartly as a platform for data partners like Snowflake and Databricks, security partners like CrowdStrike and Okta and Palo Alto and many others and SaaS companies. You know, Microsoft is more competitive even though AWS does have competitive products. Now of course Amazon's competitive to retail companies so that's another factor but generally speaking for tech players, Amazon is a really thriving ecosystem that is a secret weapon in our view. AWS happy to spin the meter with its partners even though it sells competitive products, you know, more so in our view than other cloud players. Microsoft, of course is, don't forget is hyping now, we're hearing a lot OpenAI and ChatGPT we reported last week in our predictions post. How OpenAI is shot up in terms of market sentiment in ETR's emerging technology company surveys and people are moving to Azure to get OpenAI and get ChatGPT that is a an interesting lever. Amazon in our view has to have a response. They have lots of AI and they're going to have to make some moves there. Meanwhile, Google is emphasizing itself as an AI first company. In fact, Google spent at least five minutes of continuous dialogue, nonstop on its AI chops during its latest earnings call. So that's an area that we're watching very closely as the buzz around large language models continues. All right, let's wrap up with some assumptions for 2023. We think SaaS players are going to continue to be sticky. They're going to be somewhat insulated from all these downdrafts because they're so tied in and customers, you know they make the commitment up front, you've got the lock in. Now having said that, we do expect some backlash over time on the onerous and generally customer unfriendly pricing models of most large SaaS companies. But that's going to play out over a longer period of time. Now for cloud generally and the hyperscalers specifically we do expect accelerating growth rates into Q3 but the amplitude of the demand swings from this rubber band economy, we expect to continue to compress and become more predictable throughout the year. Estimates are coming down, CEOs we think are going to be more cautious when the market snaps back more cautious about hiring and spending and as such a perhaps we expect a more orderly return to growth which we think will slightly accelerate in Q4 as comps get easier. Now of course the big risk to these scenarios is of course the economy, the FED, consumer spending, inflation, supply chain, energy prices, wars, geopolitics, China relations, you know, all the usual stuff. But as always with our partners at ETR and the Cube community, we're here for you. We have the data and we'll be the first to report when we see a change at the margin. Okay, that's a wrap for today. I want to thank Alex Morrison who's on production and manages the podcast, Ken Schiffman as well out of our Boston studio getting this up on LinkedIn Live. Thank you for that. Kristen Martin also and Cheryl Knight help get the word out on social media and in our newsletters. And Rob Hof is our Editor-in-Chief over at siliconangle.com. He does some great editing for us. Thank you all. Remember all these episodes are available as podcast. Wherever you listen, just search Breaking Analysis podcast. I publish each week on wikibon.com, at siliconangle.com where you can see all the data and you want to get in touch. Just all you can do is email me david.vellante@siliconangle.com or DM me @dvellante if you if you got something interesting, I'll respond. If you don't, it's either 'cause I'm swamped or it's just not tickling me. You can comment on our LinkedIn post as well. And please check out ETR.ai for the best survey data in the enterprise tech business. This is Dave Vellante for the Cube Insights powered by ETR. Thanks for watching and we'll see you next time on Breaking Analysis. (gentle upbeat music)

(gentle music) >> Hello, beautiful humans and welcome back to fabulous Las Vegas, where we are combating the dry air of the desert and all giggling about the rasp of our voice at this stage. We're theCUBE and we are live from AWS reinvent. I am Savannah Peterson, joined by the fabulous Paul Gillin. Paul, how are you holding up? How are your feet doing? >> My feet are, I can't feel them anymore. (both laugh) >> We can't feel much after these feet. >> Two miles. Just to get from, just to get to to the keynotes this morning. >> Did you do your cross training to prepare >> For, >> Apparently not well enough. (Savannah laughs) Not well enough. >> Well, it's great to have you here >> likewise. and I'm very excited for our next conversation. We've got Ramesh from Prosimo. >> Thank you. >> Savannah: Welcome to the show. How is the show going for you? How's your voice? >> Oh my God. I woke up this morning and I could not hear my own voice. I'm like, this is not me. I think it's the dry air here, so if I cough, I apologize in advance. But no, the show has been great. It's been nonstop at the booth. It's wonderful to see all the customers in one place so you don't have to schedule lots of meetings spread across three, four weeks. So you get to >> Savannah: Right. I, yeah >> So yesterday was like eight to six, nonstop and it was awesome, right? Because you get to meet all these guys. The other important thing is the focus on the right layer, right? Like, I loved the keynote from Adam. It was about applications, services, data. Nowhere in there was there like infrastructure. Like we are infrastructure, right? I actually love that because that's where the focus should be and that's what customers are caring about right? So it's, it's been great so far. >> Yeah. I'm so happy to hear your booth's packed. I know exactly what you mean. I mean, we're going to be talking about optimization. It's a theme, but we also optimize our time here >> Ramesh: Yeah. >> on the show floor by getting to engage with our community. Prosimo's been around for three years just in case folks aren't familiar, give us the pitch. >> Sure. We are in the cloud networking space, solving for two problems. What happens within the cloud as you bring up VPCs, vnet and workloads, how are they able to talk to each other, secure each other, and how to use those access workloads? Those are the two problems that we solve for. It stemmed from really us seeing a complete diversion in what cloud wants versus what network really focuses on. Cloud has been always focused on applications and speed of operations and network has always been about reliability, scalability, and robust architecture. And we didn't really see these things come together. So that's when prosimo was born. >> So what are some of the surprises newcomers to the cloud may encounter with networking, with cloud networking that was not a factor when they were fully on-prem? >> So the first thing is in the cloud, you can't deal with the workload the same way you dealt with in the data center. In the data center, you usually had pools of service. They were all allocated some level of addressing. And it was not about the workload, it was more about the identity, IP addresses and so forth. In the cloud, those things have completely gotten demolished, right? You have to refer to a S3 service as an S3 service. It's not an IP endpoint. IP endpoint comes and goes, right? >> Savannah: Yeah. >> And so you have to completely shift around that, right? >> Now, this actually challenges almost 10 years, 12, 20 years maybe, of networking that we knew about, right? So that's why cloud networking is almost night and day difference compared to regular networking right? And, we're seeing that and that's what we are really helping customers with. >> What are some of the trends that you're seeing? I, well actually, let me ask you this question. Do you, is there an industry or vertical you work with specifically? I would imagine most people across, >> Ramesh: The Yeah, across. >> Yeah. >> Anybody that has workloads in the cloud right? >> Yeah, right. >> Ramesh: That's, >> I mean I can't imagine any companies that would have that. >> Exactly. (Savannah laughs) >> What are some of the trends that you're seeing? I know we talk about time to value. We talk about cost optimization. Is that the top priority for your customers? >> Yeah. Up until end of last year, a lot of the focus was about speed of operations. And so people would look at what are the type of workloads? How do I enable things? How do I empower my development team? So, if I'm the cloud platform team responsible for connecting, securing and making sure my applications can get deployed smooth and fast, that was the primary focus. Fast forward to this year, we started to see this a little bit at the beginning of the year. Now it's in full force. It's about cost control, right? It's about egress charges coming out of the cloud. Suddenly the cloud bill and every single line item on the cloud bill is in focus, right? And so that has a direct impact on what does this mean for networking. Cloud networking for many may not be familiar, it's about 14% of the cloud bill. And so anything that materially moves the needle on the cloud networking costs can actually have a have a big impact, right? And so we have seen the focus on the speed of operations are still there but cloud cost control has become a big part of it. >> So where are the excesses? I mean, it's, it's a big part of the bill. Where can company, where do companies typically waste money in networking costs? >> So, if you bring a person who understands networking and networking architecture really, really well, they'll can build a solid architecture, but they'll not focus on operations and automation. If you bring a 25 year old, they will automate the heck out of it. They know python day in and day out. And so they'll automate the heck out of it but it will not be with a robust architecture, right? And so you, on one hand, you end up wasting because you do things very suboptimally. It's a solid architecture, it's a really good design but it's really bad for operations. In the other hand, with push of a button you can get anything done but underneath the covers, underneath the hood, if you look at it, it's a mess, right? And so you have more competence than necessary. And so, what customers want is really a best of both, right? You need solid architecture that has all the right principles but also you need the automation so that you don't employ four, five people and a whole toolkit in order to make things work, right? And that's where we see most of the efficiencies come from >> You said you were you were super busy at your booth. Do customers understand that this is a problem now? >> So more so now than I would say last year. The last reinvent when we had a session. >> Yeah. >> We had to educate a lot of people on these are the requirements for cloud networking. Thanks to Gartner, thanks to many of the sessions you guys have been doing as well. The focus and the education for what cloud networking requires has started to come about. Now, this is where the savviness of the customer is important, right? Like there are customers in different stages of their journey. Those that have been operating in the cloud for three years plus, know that they've crossed that initial phase, right? Like you have basic hygiene, you have certain things and moving from hundreds of VPCs to maybe about thousand, right? And so at that time, the set of challenges I need to work with are very, very different, right? So now increasingly we are seeing at the booth the challenges are, "Hey, I know how to operate in the cloud". Right? Like, "Don't talk to me about that." Right? "But how do I get from hundred to a thousand?" Because I have a gun to my head. My CIO has said, I need to decommission my data centers in the next couple of years and I need to go all in on cloud. Help me with that, right? And so it's the, I wouldn't call it like massive scale it's the scale from kind of the trivial to the next stage that's actually causing a lot of these problems to surface. >> It's that layer of transformation. >> Ramesh: Yeah. It's when you've made the commitment and now we've got to catch everything up >> [Ramesh} exactly. >> across the company locations and probably a variety of different silos doing different things. >> Ramesh: Exactly. Yeah. >> Super complex. So, how do folks get started with you? >> Yeah, so typically we start with like, even if the customer says, "Here's what my blueprint looks like." We say, "Bring two regions." That's it, two regions, a few workloads. We'll help you set up the connectivity, set up the secure access required, set up the foundational things There's a certain level of automation, right? Let's get to that point because governance is different. The cloud privileges are different so let's work through all of that, right? Usually this takes about a week or so. The actual proof of concept, proof of value can be done in a day, but getting permissions and what not takes about, about a week, right? And once you show two regions then it's actually game on, right? Then you go from 10 VPCs to a hundred to a thousand and it's just like one to one thing after another. So that's usually how we see customers get started. We have a full stack that covers kind of what does this mean for the network to application services to kind of layer seven and so forth. We tell the customer, as much as we want you to focus on the entire stack, let's start with one, right? Start baby steps, start with one. Because for many, cloud itself is, I wouldn't say new but they're in a region that's not comfortable, right? So you wannna, you don't want to throw too much at them. >> Savannah: Right. >> So we help them kind of progressively move towards different types of workplace. >> Savannah: Yeah. >> And you have a multicloud story as well. >> Ramesh: That's correct. >> So when companies begin to cross clouds with workloads, move them between clouds, what kinds of issues emerge then? >> Yeah, so there are two parts for this, right? There is the AWS and data center and then there is the AWS plus other clouds. Two different set of problems, actually, >> Paul: Hm-hmm. Hm-hmm. The AWS plus connectivity, back into my data center almost every single enterprise. We deal with kind of the global 2000. Every single one of them has that, right? And so we kind of, we go through a series of steps, come up with an architecture, deploy a solution. After that, it's, Hey, I have BigQuery in Google that needs to talk back to an S3 bucket out here. Like, no networking solution can help you with that. Like, you need like cloud native principles in order to come into the picture. So increasingly we are seeing requests for, hey I have a distributed workload. It's not, it's not that one single application is spread across multiple clouds, but I have these islands of workloads that all need to talk to each other. >> Paul: Right. And what I don't want to do is actually build highways that actually connect all these things together because that's a waste of time. I actually want to make sure that only these applications that care about the talking to each other, are allowed to talk to each other. So that's kind of one foundational thing that we see. A few others are around compliance and governance. So we say, Hey, if I'm a retailer, I need to have some workloads in Azure some in the GCP and so forth. So it depends on kind of the industry compliance, regulatory requirements and so forth. >> So many different needs >> Ramesh: Exactly. for so many different types of companies. But also, you know, creating that efficiency is so great. >> Ramesh: Yup. >> And especially that time to value tune, cost reduction >> Ramesh: Yup. doing a lot of great things for your customers. There's a note on my run sheet here that you've seen some success with Topgolf and I suspect we have some golfers in the audience. John even used to be a caddy. We had a caddy segment with someone who was a pro caddy. Drew, when we were at Cape Con. Tell us about that story. >> So it was a really wild idea. We said, okay people are going to be walking around 22,000 steps right? >> Savannah: Yeah. >> And so >> Like Paul, >> And, they're going to be talking to people, listening to sessions. So we said, let's, what do most others do? You set up some time in a restaurant, you come, you have a social time, and what not. We said, let's give people something different. So we reserve the Topgolf here and we opened it up. We initially paid for a certain number of things. It's actually gone three x of that right now. So we had in the Topgolf, can you give us like the entire thing? I think people just want to go do something different, right? >> Savannah: Yeah. >> And of course the topic is important but equally important is like, I just want to have a good time, right? >> Yeah. And if you, hit a few And there you go. >> It doesn't have to relate back to network >> Cloud, network. >> Yeah, exactly. And so >> Well, it's all about building community. >> Exactly. >> And especially right now, we all, you know, we're stronger together. >> Ramesh: Yup. We're entering a unique time, we're coming out of a unique time. >> Ramesh: Exactly. >> And, no, I think that's great. And we actually do a swag segment here on theCUBE, differentiating on the show floor. I mean, it's clear because of how thoughtful you are >> Ramesh: Yeah. there's a reason that your, that your booth is so busy. >> Ramesh: That's right. >> So what's next? What can you, can you give us a little sneak preview? What's coming out for you? >> Yeah, so, I'm sensitive and sympathetic to all the macroeconomic conditions that are happening but there's been, we have not skipped a beat. So our business is growing really well. Thanks to all the things that are happening in the cloud. Increasingly, folks are looking at, you know, how how do I move in mass into the cloud? And so a few themes have come about as a result. One, certainly around cost control. How do I, how do I make, how do we make sure that we help our customers in that journey, right? So we have a few things around those lines. Modernization, especially after you go through the first few workloads, the next few that come about are invariably modern workloads. And modern workloads is this sensitive thing where I think the ultra savvy developers know what to do but the infrastructure guys don't know what to do in order to serve, right? And so we have actually developed a set of capabilities to help with that kind of modernization, right? Because it's not enough if your apps are modernized, your infrastructure that serves the apps also need to be modernized. And so those are the, those are the things and certainly, getting our customers less than us. We want to get our customers to talk. And so you'll see quite a bit of that as well. >> I want to ask you about a statement that was in the notes that we were reading, running up this interview. Zero Trust network access is the next solution that will be disrupted. What do you mean by that? >> So, when we started the company about three years ago, zero test network access was there. It was about maybe two, three years old at that time. And so we said, it needs to be done differently in the cloud. Why? Because you are a user. You're trying to access an application in the cloud. Do you care what's in the middle? You really don't, you just want to be able to open up your laptop, go to dub dub something.com and you should be able to access, right? But that's not how the experience is today. There's invariably something that comes, a middle mile solution that comes in the middle, right? And then the guy needs to operationalize all of that. And that now passes on to you. You need to launch a an agent on your thing, connect into something. It just brings a lot of complexity, right? So we looked at that problem and we said, cloud has done really really a few things really, really well, right? It's literally at your doorstep. Cloud presence is literally at your doorstep. So as you open up your browser, connect from your home, I don't need anything in the middle. I am jumping straight into the cloud. And so when you do that, then you actually have the luxury of bringing a few capabilities to the entry point of the cloud so that security can be done better, posture control can be done better and so on and so forth. So we developed those capabilities almost three years ago. We have quite a few large enterprises that have deployed this. And we fundamentally believe on building on top of the hyperscale network because billions of tens of billions of dollars go into the investment here. And we want to be building a layer of value on top, right? And so we've been working closely with our AWS buddies here and actually built capabilities so that the infrastructure presence, the massive reach and also the underlying capabilities for zero trust are provided. But what the customer regains in terms of value is through our platform, right? And so we'll see a whole lot more innovation along these lines. Probably bad news for the Middle Mile provider who sit in the, in the middle because hey AWS is literally at your doorstep, so you have to rethink your strategy. >> Going to be a lot of agility >> Ramesh: Yes, absolutely. >> In a very different context than we normally use it in Nerdland. And no, I think that's great. So we have, it's an exciting time for you as a company. We have a new challenge here at Reinvent. >> Okay. >> On theCUBE. I know you're a venerable alumni. >> Yep. >> You have been on theCUBE multiple times with multiple companies which is very impressive. Which says a lot about you. Although given how fun this interview's been, I'm not surprised. Give us your 30 second, Instagram real highlight, sound bite on the biggest or most important theme or takeaway from this year's show. >> From this show? Yeah, so if you look across the keynotes in all the sessions, the focus is on data, services and the applications. So the biggest takeaway I would offer anybody is focus on that first because that's where the outcome needs to shine. The rest of the stuff is a means to an end. I am an infrastructure guy through and through, I have been for the last 20 years. It hurts me to say infrastructure is a means to end but it is, right. Let the people dealing with the infrastructure deal with the infrastructure. If you are a customer or a client of the service, focus on the outcome, focus on the apps, focus on the services focus on on the data. That would be the biggest takeaway. >> Savannah: I appreciate your >> Paul: Words of wisdom >> Savannah: transparency. Yeah, no, exactly. Words of wisdom and very honest words of wisdom. Really great to talk to you about intelligent infrastructure. >> Absolutely. >> Savannah: Thank you so much for being on the show, Ramesh. >> Thank you. >> Savannah: It's been, it's been awesome. Paul, it's always a pleasure. >> Likewise. Thank you all for tuning in today here live from the show floor at AWS, reinvent in beautiful sin city, in the high desert and the high end dry desert with Paul Gillin. My name is Savannah Peterson and you're watching theCUBE, the leader in high tech coverage. (gentle music)

>>How do y'all, and welcome to Dallas, where we're proud to be live from Supercomputing 2022. My name is Savannah Peterson, joined here by my cohost David on the Cube, and our first guest today is a very exciting visionary. He's a leader at Dell. Please welcome Travis Vhi. Travis, thank you so much for being here. >>Thank you so much for having me. >>How you feeling? >>Okay. I I'm feeling like an exciting visionary. You >>Are. That's, that's the ideas why we tee you up for that. Great. So, so tell us, Dell had some huge announcements Yes. Last night. And you get to break it to the cube audience. Give us the rundown. >>Yeah. It's a really big show for Dell. We announced a brand new suite of GPU enabled servers, eight ways, four ways, direct liquid cooling. Really the first time in the history of the portfolio that we've had this much coverage across Intel amd, Invidia getting great reviews from the show floor. I had the chance earlier to be in the whisper suite to actually look at the gear. Customers are buzzing over it. That's one thing I love about this show is the gear is here. >>Yes, it is. It is a haven for hardware nerds. Yes. Like, like well, I'll include you in this group, it sounds like, on >>That. Great. Yes. Oh >>Yeah, absolutely. And I know David is as well, sew up >>The street. Oh, big, big time. Big time hardware nerd. And just to be clear, for the kids that will be watching these videos Yes. We're not talking about alien wear gaming systems. >>No. Right. >>So they're >>Yay big yay tall, 200 pounds. >>Give us a price point on one of these things. Re retail, suggested retail price. >>Oh, I'm >>More than 10 grand. >>Oh, yeah. Yeah. Try another order of magnitude. Yeah. >>Yeah. So this is, this is the most exciting stuff from an infrastructure perspective. Absolutely. You can imagine. Absolutely. But what is it driving? So talk, talk to us about where you see the world of high performance computing with your customers. What are they, what are they doing with this? What do they expect to do with this stuff in the future? >>Yeah. You know, it's, it's a real interesting time and, and I know that the provenance of this show is HPC focused, but what we're seeing and what we're hearing from our customers is that AI workloads and traditional HPC workloads are becoming almost indistinguishable. You need the right mix of compute, you need GPU acceleration, and you need the ability to take the vast quantities of data that are being generated and actually gather insight from them. And so if you look at what customers are trying to do with, you know, enterprise level ai, it's really, you know, how do I classify and categorize my data, but more, more importantly, how do I make sense of it? How do I derive insights from it? Yeah. And so at the end of the day, you know, you look, you look at what customers are trying to do. It's, it's take all the various streams of data, whether it be structured data, whether it be unstructured data, bring it together and make decisions, make business decisions. >>And it's a really exciting time because customers are saying, you know, the same things that, that, that, you know, research scientists and universities have been trying to do forever with hpc. I want to do it on industrial scale, but I want to do it in a way that's more open, more flexible, you know, I call it AI for the rest of us. And, and, and customers are here and they want those systems, but they want the ecosystem to support ease of deployment, ease of use, ease of scale. And that's what we're providing in addition to the systems. We, we provide, you know, Dell's one of the only providers on the on in the industry that can provide not only the, the compute, but the networking and the storage, and more importantly, the solutions that bring it all together. Give you one example. We, we have what we call a validated design for, for ai. And that validated design, we put together all of the pieces, provided the recipe for customers so that they can take what used to be two months to build and run a model. We provide that capability 18 times faster. So we're talking about hours versus months. So >>That's a lot. 18 times faster. I just wanna emphasize that 18 times faster, and we're talking about orders of magnitude and whatnot up here, that makes a huge difference in what people are able to do. Absolutely. >>Absolutely. And so, I mean, we've, you know, you've been doing this for a while. We've been talking about the, the deluge of data forever, but it's gotten to the point and it's, you know, the, the disparity of the data, the fact that much of it remains siloed. Customers are demanding that we provide solutions that allow them to bring that data together, process it, make decisions with it. So >>Where, where are we in the adoption cycle early because we, we've been talking about AI and ML for a while. Yeah. You, you mentioned, you know, kind of the leading edge of academia and supercomputing and HPC and what that, what that conjures up in people's minds. Do you have any numbers or, you know, any, any thoughts about where we are in this cycle? How many, how many people are actually doing this in production versus, versus experimenting at this point? Yeah, >>I think it's a, it's a reason. There's so much interest in what we're doing and so much demand for not only the systems, but the solutions that bring the systems together. The ecosystem that brings the, the, the systems together. We did a study recently and ask customers where they felt they were at in terms of deploying best practices for ai, you know, mass deployment of ai. Only 31% of customers said that they felt that they self-reported. 31% said they felt that they were deploying best practices for their AI deployments. So almost 70% self reporting saying we're not doing it right yet. Yeah. And, and, and another good stat is, is three quarters of customers have fewer than five AI applications deployed at scale in their, in their IT environments today. So, you know, I think we're on the, you know, if, if I, you think about it as a traditional S curve, I think we're at the first inflection point and customers are asking, Can I do it end to end? >>Can I do it with the best of breed in terms of systems? But Dell, can you also use an ecosystem that I know and understand? And I think that's, you know, another great example of something that Dell is doing is, is we have focused on ethernet as connectivity for many of the solutions that we put together. Again, you know, provenance of hpc InfiniBand, it's InfiniBand is a great connectivity option, but you know, there's a lot of care and feeding that goes along with InfiniBand and the fact that you can do it both with InfiniBand for those, you know, government class CU scale, government scale clusters or university scale clusters and more of our enterprise customers can do it with, with ethernet on premises. It's a great option. >>Yeah. You've got so many things going on. I got to actually check out the million dollar hardware that you have just casually Yeah. Sitting in your booth. I feel like, I feel like an event like this is probably one of the only times you can let something like that out. Yeah, yeah. And, and people would actually know what it is you're working >>With. We actually unveiled it. There was a sheet on it and we actually unveiled it last night. >>Did you get a lot of uz and os >>You know, you said this was a show for hardware nerds. It's been a long time since I've been at a shoe, a show where people cheer and u and a when you take the sheet off the hardware and, and, and Yes, yes, >>Yes, it has and reveal you had your >>Moment. Exactly, exactly. Our three new systems, >>Speaking of u and os, I love that. And I love that everyone was excited as we all are about it. What I wanna, It's nice to be home with our nerds. Speaking of, of applications and excitement, you get to see a lot of different customers across verticals. Is there a sector or space that has you personally most excited? >>Oh, personally most excited, you know, for, for credibility at home when, when the sector is media and entertainment and the movie is one that your, your children have actually seen, that one gives me credibility. Exciting. It's, you can talk to your friends about it at, at at dinner parties and things like that. I'm like, >>Stuff >>Curing cancer. Marvel movie at home cred goes to the Marvel movie. Yeah. But, but, but you know, what really excites me is the variety of applications that AI is being used, used in healthcare. You know, on a serious note, healthcare, genomics, a huge and growing application area that excites me. You know, doing, doing good in the world is something that's very important to Dell. You know, know sustainability is something that's very important to Dell. Yeah. So any application related to that is exciting to me. And then, you know, just pragmatically speaking, anything that helps our customers make better business decisions excites me. >>So we are, we are just at the beginning of what I refer to as this rolling thunder of cpu. Yes. Next generation releases. We re recently from AMD in the near future it'll be, it'll be Intel joining the party Yeah. Going back and forth, back and forth along with that gen five PCI e at the motherboard level. Yep. It's very easy to look at it and say, Wow, previous gen, Wow, double, double, double. It >>Is, double >>It is. However, most of your customers, I would guess a fair number of them might be not just N minus one, but n minus two looking at an upgrade. So for a lot of people, the upgrade season that's ahead of us is going to be not a doubling, but a four x or eight x in a lot of, in a lot of cases. Yeah. So the quantity of compute from these new systems is going to be a, it's gonna be a massive increase from where we've been in, in, in the recent past, like as in last, last Tuesday. So is there, you know, this is sort of a philosophical question. We talked a little earlier about this idea of the quantitative versus qualitative difference in computing horsepower. Do we feel like we're at a point where there's gonna be an inflection in terms of what AI can actually deliver? Yeah. Based on current technology just doing it more, better, faster, cheaper? Yeah. Or do we, or do we need this leap to quantum computing to, to get there? >>Yeah. I look, >>I think we're, and I was having some really interesting conversations with, with, with customers that whose job it is to run very, very large, very, very complex clusters. And we're talking a little bit about quantum computing. Interesting thing about quantum computing is, you know, I think we're or we're a ways off still. And in order to make quantum computing work, you still need to have classical computing surrounding Right. Number one. Number two, with, with the advances that we're, we're seeing generation on generation with this, you know, what, what has moved from a kind of a three year, you know, call it a two to three year upgrade cycle to, to something that because of all of the technology that's being deployed into the industry is almost more continuous upgrade cycle. I, I'm personally optimistic that we are on the, the cusp of a new level of infrastructure modernization. >>And it's not just the, the computing power, it's not just the increases in GPUs. It's not, you know, those things are important, but it's things like power consumption, right? One of the, the, the ways that customers can do better in terms of power consumption and sustainability is by modernizing infrastructure. Looking to your point, a lot of people are, are running n minus one, N minus two. The stuff that's coming out now is, is much more energy efficient. And so I think there's a lot of, a lot of vectors that we're seeing in, in the market, whether it be technology innovation, whether it be be a drive for energy efficiency, whether it be the rise of AI and ml, whether it be all of the new silicon that's coming in into the portfolio where customers are gonna have a continuous reason to upgrade. I mean, that's, that's my thought. What do you think? >>Yeah, no, I think, I think that the, the, the objective numbers that are gonna be rolling out Yeah. That are starting to roll out now and in the near future. That's why it's really an exciting time. Yeah. I think those numbers are gonna support your point. Yeah. Because people will look and they'll say, Wait a minute, it used to be a dollar, but now it's $2. That's more expensive. Yeah. But you're getting 10 times as much Yeah. For half of the amount of power boom. And it's, and it's >>Done. Exactly. It's, it's a >>Tco It's, it's no brainer. It's Oh yeah. You, it gets to the point where it's, you look at this rack of amazing stuff that you have a personal relationship with and you say, I can't afford to keep you plugged in anymore. Yeah. >>And Right. >>The power is such a huge component of this. Yeah. It's huge, huge. >>Our customer, I mean, it's always a huge issue, but our customers, especially in Amia with what's going on over there are, are saying, I, you know, I need to upgrade because I need to be more energy efficient. >>Yeah. >>Yeah. I I, we were talking about 20 years from now, so you've been at Dell over 18 years. >>Yeah. It'll be 19 in in May. >>Congratulations. Yeah. What, what commitment, so 19 years from now in your, in your second Dell career. Yeah. What are we gonna be able to say then that perhaps we can't say now? >>Oh my gosh. Wow. 19 years from now. >>Yeah. I love this as an arbitrary number too. This is great. Yeah. >>38 year Dell career. Yeah. >>That might be a record. Yeah. >>And if you'd like to share the winners of Super Bowls and World Series in advance, like the world and the, the sports element act from back to the future. So we can play ball bets power and the >>Power ball, but, but any >>Point building Yeah. I mean this is what, what, what, what do you think ai, what's AI gonna deliver in the next decade? >>Yeah. I, I look, I mean, there are are, you know, global issues that advances in computing power will help us solve. And, you know, the, the models that are being built, the ability to generate a, a digital copy of the analog world and be able to run models and simulations on it is, is amazing. Truly. Yeah. You know, I, I was looking at some, you know, it's very, it's a very simple and pragmatic thing, but I think it's, it, it's an example of, of what could be, we were with one of our technology providers and they, they were, were showing us a digital simulation, you know, a digital twin of a factory for a car manufacturer. And they were saying that, you know, it used to be you had to build the factory, you had to put the people in the factory. You had to, you know, run cars through the factory to figure out sort of how you optimize and you know, where everything's placed. >>Yeah. They don't have to do that anymore. No. Right. They can do it all via simulation, all via digital, you know, copy of, of analog reality. And so, I mean, I think the, you know, the, the, the, the possibilities are endless. And, you know, 19 years ago, I had no idea I'd be sitting here so excited about hardware, you know, here we are baby. I think 19 years from now, hardware still matters. Yeah. You know, hardware still matters. I know software eats the world, the hardware still matters. Gotta run something. Yeah. And, and we'll be talking about, you know, that same type of, of example, but at a broader and more global scale. Well, I'm the knucklehead who >>Keeps waving his phone around going, There's one terabyte in here. Can you believe that one terabyte? Cause when you've been around long enough, it's like >>Insane. You know, like, like I've been to nasa, I live in Texas, I've been to NASA a couple times. They, you know, they talk about, they sent, you know, they sent people to the moon on, on way less, less on >>Too far less in our pocket computers. Yeah. It's, it's amazing. >>I am an optimist on, on where we're going clearly. >>And we're clearly an exciting visionary, like we said, said the gate. It's no surprise that people are using Dell's tech to realize their AI ecosystem dreams. Travis, thank you so much for being here with us David. Always a pleasure. And thank you for tuning in to the Cube Live from Dallas, Texas. My name is Savannah Peterson. We'll be back with more supercomputing soon.

>>Welcome back. You're watching the cubes coverage of AWS 2021. We're here in the Venetian, formerly the sands convention center in Las Vegas. My name is Dave Volante. Really excited to have Bob bright tell here. He's the director of SAP global alliances at IBM and Manu.. I'm going to try that again. Pro boxcar, is that correct? Rebecca Head of Linux and IBM alliances at AWS Manu. I'm sorry for bashing your name, but at least I got it right, guys. Great to see you. Thanks for coming on. >>And I'm actually now AWS partnership. I had SAP before, so it's great. I first, my first reinvest, >>I have a old DNA title. That's great. That's why I was asking you about Philly before you don't have the accent though. Bob, >>I'm not a Philly native, so cowboy >>Because you have the SAP connection there. IBM, AWS. It's like, whoa, what's going on here? >>Well, maybe I'll start and then have my new, my new, make some comments. And I'll just start by just, uh, we're real excited to be here. IBM's a diamond sponsor at, at re-invent and it's great to be in person and really appreciate AWS being able to put this event on this week and get us back in person. It really makes a difference. And I know there's a lot of people virtually as well, but, um, IBM and AWS have worked together for a number of years. Uh, maybe we could characterize it more opportunistically, um, prior, but in the last 12, 18 months, I think there's been a lot of developments that have really made us come together strategically as partners. I know we'll talk a little bit about red hat during the course of the conversation, but with IBM's >>You say opportunities like you mean in the field and the more strategic >>Relationship or strategic and with IBM's open hybrid cloud strategy. And, uh, with so many of our clients preferring AWS is their cloud. Um, we are working together now to meet clients where they're at to help them get the value of the cloud. And we're talking a little bit about coming out of the pandemic before this. Um, and one of the things that we're seeing with our clients that IBM is a lot of that low hanging fruit. The cloud was achieved, maybe the lift and shift or doing some SAS based applications, but now it's even more important to rapidly adopt hybrid cloud and cloud technologies to provide your business with flexible innovation transformation, all of those things. So that's why it has been important for us to, to partner with AWS strategically. Um, our clients are telling us that when they do move those heavier workloads to the cloud and do it in a hybrid model, they see about two and a half times the value. >>So with that, our partnership is multi-dimensional, we're doing a lot with IBM consulting. My new we'll talk a little bit about IBM software and red hat. Just one example, Dave, with IBM consulting, we now are up to almost 10,000 certifications and 10 plus AWS competencies. So that competency chart that shows we're knocking them all out on the, on the checkerboard there to get them to IBM consulting competencies. And we just had the energy one announced this week. So IBM consulting is in area software's big too. In my news, been helping us with that part of the partner. >>Well, it's, you know, to your point, you can't pick whatever cliche you want. You can't fight fashion. The trend is your friend. You have a lot of, a lot of people want to be on AWS. So rather than fighting, oh, we have our own cloud. No, you've got to meet customers where they are, right >>David, this is where this takes us. You know, the analogy we use between Bob and I, IBM boss spoke about IBM consulting, which we know has been a strategic partnership for the last two, two and a half years. I think I'm going to share the best kept secret in the cloud phase right now. IBM software and AWS now are working together. The analogy we use is IBM software and AWS. I like peanut butter and jelly better together. And over the last 12 months, the two companies have accelerated working together around three key dimensions. Number one, around product, number two around making sure our customers, joint customers successful. And number three, around building a robust ecosystem of partners. One thing that we have realized is just helping customers modernize. Migrate is challenging. And on the product side, now we have about 15 products on AWS marketplace. >>I think about trusty or verify insecurity, cloud Pak for data, uh, uh, Cognos data DataStage over the next 12 months, we plan to land all of the cloud packs. These are containerized version of IBM software on AWS and the marketplace. In addition, many of our customers are now using the managed red hat, OpenShift servers. We launched it earlier in April. This year, we are seeing tremendous customer feedback, tremendous, uh, growth there that is also informing that customers really like the open shirt model managed services one-click deployment. And so our goal is over the next 12 months, launched many more IBM software as a managed service offering. So that's kind of like what we're doing on the product side, on the customer success. A great example is somebody is helping a big oil and gas customers managed with this energy transition that we're working through. Um, Schlumberger software around simulation runs on OpenShift on Amazon in a hybrid environment, especially critical as we have a lot of oil and gas data that needs to have maybe sit on premises, uh, because of data residency requirements. >>I think the third piece is around building an ecosystem of partners for our red hat OpenShift services, which we launched April. We already have 30 partners that are helping customers not only to modernize, but to migrate on AWS. We know modernization is challenging, moving to containers is difficult. So we need this robust ecosystem of partners and Bob and I, and you know, the IBM and AWS team are investing heavily. We have cash credit to do financial incentives plus also technical content so that our customers so that our partners can help customers to be successful. Yeah, >>So the cloud packs are cool. That makes a lot of sense. And now the acquisition of red hat makes it easier. It's a catalyst gets IBM, much more closely aligned to developers and it makes it easier for things like cloud packs to be migrated to the cloud and being running cloud native. How did that acquisition affect from your standpoint menu and Bob I'd love your thoughts and your relationship. >>The red hat acquisition by IBM is a net positive red hat. And AWS have been working together for 14 years now. And we have tens of thousands of customers that are running mission critical workloads, such as SAP, Oracle databases. And there's a lot of trust that is engendered by working in the field for 14 years, uh, supporting mission critical customers, mission critical workloads. And so that relationship has provided a lot of tailwinds to our partnership with IBM software. I think a lot of the stuff we spoke about a lot of the progress you've made in the last six to eight to 12 months, a big function is that the trust that we have engendered working together with red hat. >>Yeah. I'll add Dave that, um, I, I agree with my new comments on the red hat. Red hat really is the epitome of openness right. Of open source software and the history that Manu described with AWS, there has been excellent adoption of red hat on AWS, red hat, enterprise Linux, and then most recently, um, red hat OpenShift on AWS. And just to give another example to the ecosystem point, just this morning, red hat with IBM, with a major ISV named Solonus announced that Solonus will be running one of their key, uh, applications and releasing it on Rossa on AWS. And all this means for our clients is faster adoption and acceleration and being able to innovate, um, in a hybrid way. So that's really the value that red hat is helping, um, to bring to the table in our cloud packs are available on open shift and rose as an option as well. So we're excited about the red hat partnership. It's really essential to our partnership into our, our hybrid cloud strategy. >>You mentioned up front, you know, happy that AWS decided to have this show. Of course, a lot of people watching online and you can get massive scale online, but there's nothing like the live event, you know, and when you make announcements at a live event, there's a little buzz going on and you get feedback. So are you making any hard news here? What, what announcements can you >>Share? Yeah, well, the one we had, um, on, um, uh, Solonus earlier with red hat and to do roasts on top of red hat was one and there's just an advance of, um, of re-invent. Um, we announced something in the data and AI space. So that's another big area of our partnership is data and AI. So we're in, we announced that in the oil industry and in the, um, uh, in that area that we are partnering together with AWS to be able to get insights on data so that we could get clean and reusable energy solutions out there. And there's so much untapped data. We know data is such an important resource, that that's an area that we're going to partner on with our cloud Pak for data on AWS. And of course underlying everything is open shifts. So that's one big announcement. We're also doing a lot in security for IBM and my news has been working closely with this. So my new, I, I know you're close to the integrations we're doing with AWS. So I'll let you comment maybe on some of the things in security. >>I mean, everybody's a security company these days, right? I mean, >>And then we continue to work and making sure that a lot of the IBM security products are integrating with our native services. So the customers have a seamless experience. And as he you'll see a lot of the same investments happening over 2022 as we grow the >>Partnership. So what like a QRadar or something like that >>Are, for example, integrating with security hub. That would be great example. >>I mean, it's the, it's the number one topic for CEO's that has been for a while and still will be okay. So give us a little roadmap, you know, maybe Bob, you could start, where do you want to see this relationship go? Um, what can we expect in the, in the coming 12 months? Yeah, well, >>Again, we're super excited about our partnership with AWS. I think we're just scratching the surface of how we're going to add value to our clients on this, on this hybrid cloud journey that they're all going through. And IBM, and this has been in our financial reports and in our earnings and everything, we're investing over a billion dollars in the ecosystem. And so partners like AWS are critical to provide that platform of growth for our clients and innovation for our clients. So all of the things that I talked about in money talked about today, whether it be our IBM consulting capabilities or our IBM software, our red hat, we're going to continue to invest. We talked about the red hat acquisition. IBM has made a few other acquisitions that help drive this partnership and drive value to our clients for adoption, from Instana to Turbonomic X, to some really innovative cloud consulting companies like Knorr cloud in towels. So we're going to continue to make investments. And I think we're just on the tip of the iceberg and we invite everybody at re-invent, either in person, which is exciting or virtually to learn more about our partnership and how we can help you and my new, any additional comments to that. >>Thanks, Bob V have a golden child hair with red hat OpenShift on Amazon. That'd be launched in April. We are seeing tremendous customer adoption. So we suspect that in next year, we'll continue to see solid adoption around red hat OpenShift. That VocaliD is also informing how customers want a more native experience for IBM software on AWS. And so we, um, we are targeting to, to launch many more IBM software in a native format on edema. So that would be the big team for next year. Uh, in addition, again, I'll call to action to our partner community. There's a huge opportunity to help our joint customers to modernize and migrate on AWS via both IBM, AWS are leaning in, we have cash credit to give financial incentives to partners, to help our customers, to migrate and modernize as well as we are also creating a lot of technical content that is not freely available so that a lot of our partners can start this. IBM focus on AWS practice >>Guys. Thanks so much for coming on the cube. Congratulations, and look at, you know, I often say the next 10 years is not going to be like the last 10 years. The cloud is expanding is a really good example. So thank you for your time. Appreciate your time. All right. You're watching the cube, the leader in high tech coverage at AWS reinvent 2021

>>Welcome back to the cubes. Continuous live coverage of AWS reinvent 2021 live from Las Vegas. It's I'm Lisa Martin. And it's so great to say that we are doing with AWS and its massive ecosystem of partners. One of the most important hybrid tech events of the year. We've two sets over a hundred guests to remote studios, lots going on. I've got an alumni back with me and a new guest. Please. Welcome back. Sabina. Jo said the GM of technology partners at AWS and Neil Fowler joins her is the GM of micro-focus AMC. And you're going to tell me what AMC stands for >>Application modernization and >>Connectivity. I love it. Awesome guys. It's great. It's great to see you again in person. Thank you for having us. It's great to have the buzz. I know it's gonna be a little bit hard to hear, but great to have. AWS has done a phenomenal job of getting everyone in here safely. I want to give them kudos to that. So being to talk to me with, it's been a while since I've seen you in person, but talk to me about your current role at AWS. What's going on? >>Yeah, so I'm the general manager for technology partnerships globally out of the Americas. We also help partners out of EMEA and APAC grow in the Americas. And one of the great examples of a successful partnership is micro-focus with their solutions across application modernization security, database services, mainframes. >>And so from your perspective, through your lens, how do you think they're performing as a partner? Yes. >>So, um, first of all, kudos to Neil and the entire micro-focus team. They have done a great job leaning in with a cloud first strategy with SAS solutions on AWS and these solutions help customers across application modernization, application, delivery, security, cyber resiliency, database services, and also it performance management. And we've been working with them now for a few years. And in fact, today we have actually 400 customer wins together regulations and then also eight digit annual recurring revenue. They have six active listings in marketplace and all of this is really helping customers move their workloads and modernize their workloads into AWS. >>We've seen that such an acceleration nail in the digital transformation cloud adoption. The pandemic has really been a forcing function for that. There are some silver linings, but talk to me about some of the things that you've seen at micro-focus the last 20 months or so. And how have you helped those 400 customers, you know, getting to that big ARR, how are you helping them with that acceleration? >>Well, I think as you're saying that there's lots of changes in the last 12 to 18 months, some of it brought on by the pandemic and the change in business in business to having to respond, deliver solutions more quickly to the market, as well as remote working. So optimizing and the economic environment of costs, but being there to be more dynamic, it really has caused businesses to have to do something different than just to be able to survive and serve their customers better. That was a >>Big thing that we saw in the very beginning. It was not survival mode. And then of course it wasn't too long when we started seeing those survivors really start to thrive. And you started seeing who were going to be the winners of tomorrow. Cause the thing is every company, these days is a data company. If it's not, it's going to be passed up by competitor, that's right there in the rear view mirror. >>For sure. And so we've got, you know, organizations, so running mainframes, you know, older applications, legacy applications, modernization, where are most industries in terms of adopting that, the mindset, first of all, that they need to change? Well, I think across the whole industry, I mean, it doesn't matter whether it's retail. I mean, if you think about airlines with when the, when the pandemic hit business went down to, unless they've got that elastic nature of flashy to respond to it, but everyone had to bring in new services, new offerings very quickly. So the ability to be able to innovate in their environments and bring more solutions to their customers in a really fast way, you know, they couldn't just sit there and work with what they had. They had to move forward just to be able to stay in the business, but also be able to reduce the costs out of what they're trying to do. So running and transforming at the same time. >>Absolutely. And so how can organizations integrate existing core applications with new technologies to really be able to thrive in today's dynamic market? >>We look at modernization overall. We think of it in sort of three different ways with application process and infrastructure. So with a move to cloud, that's the infrastructure modernization they've immediately got far more access to more scalable dynamic elastic, compute resources, as well as all the technology platforms they have around. And then if you look at the application size and that's where the Microfocus platform comes in, we can help customers actually move those applications forward in terms of making them available through API APIs, maybe as a journey to microservices and cloud native. But once that core business logic and that data is available, it can be integrated into artificial intelligence machine learning and actually rained out the whole solution. So the final part of that from the process modernization, if you, as they're developing these applications with new tools, new ranges, in terms of where they can deploy on the AWS platform, they can automate the build deployment and operations so that all those existing applications and they were running on to contemporary platform with full access to the technologies that were available. >>That's fantastic and so necessary for businesses in any industry. So can you talk about some of the different business units of micro-focus? Are there any ones in particular that you want to call out? >>Yeah, so we work with them across all of their business units, but some of them that come to my mind is of course, Neil and team are doing a great job with application modernization and connectivity, really helping customers modernize the applications. And as customers are modernizing the applications, their cyber resiliency business unit is helping customers secure those applications. And then they also have their it operations management bridge product listed in marketplace. And then just since September are verdict a business unit launch Vertica accelerator on AWS. So I think they have a very holistic story to help customers >>On AWS. Talk to me a little bit, Neil, about cyber resiliency. We have seen such a dramatic change in cybersecurity in the threat landscape the last 20 months. I think I saw a stat recently that ransomware was up almost 11 X in the first half of 2021. Every, every day that companies had had a company, that data is gotta be secure. It's no longer a nice to have. That is a core requirement. How are you helping customers achieve that cyber? >>Well, the thing is, I mean, as you say, across the whole spectrum from cyber, from, from the identity access management through data encryption, through data protection, it's not, it's not a nice to actually say it's not a nice to have Kate take capability. You really have to have an integrated solution to be able to manage access control it, and also generating the events in terms of being able to, if anyone tries to get into the systems and log it because, you know, before, by the time you've discovered something it's too late, so you really need a combined solution for multi-factor authentication to really take it to that next level. >>Absolutely. Right. Once you've detected it, it's too late. And I mean, with ransomware as a service, cyber criminals are getting so much more sophisticated and also more brazen. There's so much money in it that the security front is, is I think even more interesting now than it's ever been. Talk to me about some joint customers and how you've helped them together with AWS with micro-focus achieve some of those key outcomes that you were talking about earlier. Well, I think >>Obviously with AWS as a platform has quite over a technology solutions going in, what we often find with our customers is a lots of, um, they're coming from an existing on-prem solution. So they need that hybrid model. So as part of taking that forward, been able to have that integrated solution that allows them to work both on-prem and as part of the cloud, most of it all being hooked up now, even that from even down to the, uh, as they're developing the applications now to do static code analysis, to help those applications be more secure with things like 40 pound demand, as well as integrating internet security platform for multifactor. So I think as you know, it's a combination of Brunel to bridge between all the different technologies, but have one single view of mail to protect the whole real estate, multiple layers for both external and internal threat. So that's, that's the other thing you also need to take into and can be able to protect all, all layers multi-layered approach. >>Absolutely. But you're right. The internal threats is something that we don't talk about as much, but that is obviously a substantial problem for organizations and most, if not any industries to be, to talk to me a little bit about, let's kind of get into the, the responsibilities that you have a little bit more in there. You've got responsibility for multiple solutions segments at AWS. You told me before we went live, you have 50 meetings this week. My goodness. And since day one, it taught all good. It's fun, fun. It is. Talk to me about AWS approach to partnering. What does it look like? What are some of the things that you think are really critical components? Yeah. >>So as you may have heard, we always start with the, at Amazon and AWS, we start with the customer. We work backwards when we are relaunching our products, our programs or services, you really go and ask the customers, what do you want us to develop? Where do you want us to focus the resources? It takes a lot of discipline to do that, but it's something that where we really want to walk the talk and we use the same approach with our partners when we started to work with micro-focus, we really kind of want to make sure that what we are working on together is what customers want, because we firmly believe that once you lay that foundation of that solution, you can scale your business a lot more quicker. Your story is a lot more simple and the customers are going to find a lot of value in what you are doing together. So it's really all about the customer for us. It is >>Absolutely critical, right? That's the whole point that the whole reason that we're here now, talk to me a little bit about maybe some cultural alignment with AWS, that customer first customer obsession. It sounds like at Microfocus, very similar. >>Absolutely. I mean, the way that we always think about how we're building our products, it's all around customer centric innovation. So that aspect of trying to make sure that we can solve what the business, understanding what the customers are trying to do to then help develop, to deliver solutions that meet that and that combination of a, the way that we look at it from that infrastructure modernization and the range of technologies that are available and that relentless focus on making customer successful is so key. But we have to make sure that that collaboration works together to make sure that the solutions align and we're helping customers get there together >>In your customer conversations. I imagine they've changed quite a bit during the pandemic with so many things being escalated to the C-suite to the board. How have your, how important is that cultural alignment between AWS and Microfocus from your customer's perspective? Is it something that comes up fairly often? Well, >>It's, it's a, I think it, when you actually get a mismatching culture, it's more obvious. So don't think that necessarily people are looking for it to say, I need organizations, but if you're not thinking the same way, you're not behaving the same way and actually partnering. I think that partnering part of it is really important because you're both working together to come up with that desired outcome. So I think it's more, more obvious when it isn't a good match as opposed to what it looking for that particular site. But I think that's a really key aspect in the sense of working together to help that customer be successful. >>Right? That's a great point that you bring up, but it's probably more obvious when it isn't working than when it's beautifully aligned, falling into place and really focused on that customer. So what are some of the things that attendees can, can feel and see and learn at the micro-focus booth at this year's reinvent nail, >>As well as obviously the key Roundup application modernization, where we're looking at the mainframe modernization on the site, we've got the full range of the Microsoft booth in terms of cyber resilience, as well as our, uh, item, my top, uh, it operations management or ADM portfolios. So we've got a lot of technologies which we can learn about in the booth interactive as well as all by experts to understand how we can do all these things and work together as part of the AWS platform to be able to deliver those solutions. >>Excellent. I'm sure there will be plethora of, of knowledge shared at the booth there. Last question, Neil, for you, talk to me about the vision going forward with the partnership. What are some of the things that you're looking forward to as we end 2021 and go into hopefully what is a better year, 2022? >>You know, one of the key things, you know, especially range, no one might, my passionate areas is helping our customers really look in terms of building the platform of the future. We can help solve their customer the problems today, but we're really trying to create that innovation platform to going through. So again, that combination of the technologies that we can bring to help our customers and the breadth and the investment that AWS continue making in the platform, those two combinations really helps us help our customers, not just solve today's problems, who really move into the forward to be the platform for innovation for the next decade. >>And that's really critical that that future ready state that is so undefined most of the time, I mean, none of us saw the pandemic coming, all right. That was a complete shock, but to be able to partner together, to help your customers really set up the foundation to be innovative as things happen that we can't even predict is really critical. So congratulations on your 400 customer wins your eight digit ARR. That's fantastic. Yes, we thank you so much for joining us on the queue, talking about the Microfocus AWS partnership and all of the successes that you guys have had. Great job. And I hope that you have cough drops and a lot of water this week. Sabina. I hope you do too guys. Thanks for joining me. Pleasure for my is I'm Lisa Martin. You're watching the cube, the global leader in live tech coverage.

(upbeat music) >> Hello everyone, and welcome to this CUBE conversation where we're going to go deep into system performance. We're here with an expert. Kim Leyenaar is the Principal Performance Architect at Broadcom. Kim. Great to see you. Thanks so much for coming on. >> Thanks so much too. >> So you have a deep background in performance, performance assessment, benchmarking, modeling. Tell us a little bit about your background, your role. >> Thanks. So I've been a storage performance engineer and architect for about 22 years. And I'm specifically been for abroad with Broadcom for I think next month is going to be my 14 year mark. So what I do there is initially I built and I manage their international performance team, but about six years ago I moved back into architecture, and what my roles right now are is I generate performance projections for all of our next generation products. And then I also work on marketing material and I interface with a lot of the customers and debugging customer issues, and looking at how our customers are actually using our storage. >> Great. Now we have a graphic that we want to share. It talks to how storage has evolved over the past decade. So my question is what changes have you seen in storage and how has that impacted the way you approach benchmarking. In this graphic we got sort of big four items that impact performance, memory processor, IO pathways, and the storage media itself, but walk us through this data if you would. >> Sure. So what I put together is a little bit of what we've seen over the past 15 to 20 years. So I've been doing this for about 22 years and kind of going back and focusing a little bit on the storage, we looked back at hard disk, they ruled for. And nearly they had almost 50 years of ruling. And our first hard drive that came out back in the 1950s was only capable of five megabytes in capacity. and one and a half iOS per second. It had almost a full second in terms of seat time. So we've come a long way since then. But when I first came on, we were looking at Ultra 320 SCSI. And one of the biggest memories that I have of that was my office is located close to our tech support. And I could hear the first question was always, what's your termination like? And so we had some challenges with SCSI, and then we moved on into SAS and data protocols. And we continued to move on. But right now, back in the early 2000s when I came on board, the best drives really could do maybe 400 iOS per second. Maybe two 250 megabytes per second, with millisecond response times. And so when I was benchmarking way back when it was always like, well, IOPS are IOPS. We were always faster than what the drives to do. And that was just how it was. The drives were always the bottleneck in the system. And so things started changing though by the early 2000s, mid 2000s. We started seeing different technologies come out. We started seeing that virtualization and multi-tenant infrastructures becoming really popular. And then we had cloud computing that was well on the horizon. And so at this point, we're like, well, wait a minute, we really can't make processors that much faster. And so everybody got excited to include (indistinct) and the home came out but, they had two cores per processor and four cores per processor. And so we saw a little time period where actually the processing capability kind of pulled ahead of everybody else. And memory was falling behind. We had good old DVR, 2, 6, 67. It was new with the time, but we only had maybe one or two memory channels per processor. And then in 2007 we saw disk capacity hit one terabyte. And we started seeing a little bit of an imbalance because we were seeing these drives are getting massive, but their performance per drive was not really kind of keeping up. So now we see a revolution around 2010. And my co-worker and I at the time, we have these little USB discs, if you recall, we would put them in. They were so fast. We were joking at the time. "Hey, you know what, wonder if we could make a raid array out of these little USB disks?" They were just so fast. The idea was actually kind of crazy until we started seeing it actually happen. So in 2010 SSD started revolutionizing storage. And the first SSDs that we really worked with these plaint LS-300 and they were amazing because they were so over-provisioned that they had almost the same reader, right performance. But to go from a drive that could do maybe 400 IOS per second to a drive like 40,000 plus iOS per second, really changed our thought process about how our storage controller could actually try and keep up with the rest of the system. So we started falling behind. That was a big challenge for us. And then in 2014, NVMe came around as well. So now we've got these drives, they're 30 terabytes. They can do one and a half million iOS per second, and over 6,000 megabytes per second. But they were expensive. So people start relegating SSDs more towards tiered storage or cash. And as the prices of these drives kind of came down, they became a lot more mainstream. And then the memory channels started picking up. And they started doubling every few years. And we're looking now at DVR 5 4800. And now we're looking at cores that used to go from two to four cores per processor up to 48 with some of the latest different processes that are out there. So our ability to consume the computing and the storage resources, it's astounding, you know, it's like that whole saying, 'build it and they will come.' Because I'm always amazed, I'm like, how are we going to possibly utilize all this memory bandwidth? How are we going to utilize all these cores? But we do. And the trick to this is having just a balanced infrastructure. It's really critical. Because if you have a performance mismatch between your server and your storage, you really lose a lot of productivity and it does impact your revenue. >> So that's such a key point. Pardon, begin that slide up again with the four points. And that last point that you made Kim about balance. And so here you have these, electronic speeds with memory and IO, and then you've got the spinning disc, this mechanical disc. You mentioned that SSD kind of changed the game, but it used to be, when I looked at benchmarks, it was always the D stage bandwidth of the cash out to the spinning disc was always the bottleneck. And, you go back to the days of you it's symmetrics, right? The huge backend disk bandwidth was how they dealt with that. But, and then you had things the oxymoron of the day was high spin speed disks of a high performance disk. Compared to memories. And, so the next chart that we have is show some really amazing performance increases over the years. And so you see these bars on the left-hand side, it looks at historical performance for 4k random IOPS. And on the right-hand side, it's the storage controller performance for sequential bandwidth from 2008 to 2022. That's 22 is that yellow line. It's astounding the increases. I wonder if you could tell us what we're looking at here, when did SSD come in and how did that affect your thinking? (laughs) >> So I remember back in 2007, we were kind of on the precipice of SSDs. We saw it, the writing was on the wall. We had our first three gig SAS and SATA capable HPAs that had come out. And it was a shock because we were like, wow, we're going to really quickly become the bottleneck once this becomes more mainstream. And you're so right though about people work in, building these massive hard drive based back ends in order to handle kind of that tiered architecture that we were seeing that back in the early 2010s kind of when the pricing was just so sky high. And I remember looking at our SAS controllers, our very first one, and that was when I first came in at 2007. We had just launched our first SAS controller. We're so proud of ourselves. And I started going how many IOPS can this thing, even handled? We couldn't even attach enough drives to figure it out. So what we would do is we'd do these little tricks where we would do a five 12 byte read, and we would do it on a 4k boundary, so that it was actually reading sequentially from the disc, but we were handling these discrete IOPS. So we were like, oh, we can do around 35,000. Well, that's just not going to hit it anymore. Bandwidth wise we were doing great. Really our limitation and our bottleneck on bandwidth was always either the host or the backend. So, our controllers are there basically, there were three bottlenecks for our storage controllers. The first one is the bottleneck from the host to the controller. So that is typically a PCIe connection. And then there's another bottleneck on the controller to the disc. And that's really the number of ports that we have. And then the third one is the discs themselves. So in typical storage, that's what we look at. And we say, well, how do we improve this? So some of these are just kind of evolutionary, such as PCIE generations. And we're going to talk a little bit about that, but some of them are really revolutionary, and those are some of the things that we've been doing over the last five or six years to try and make sure that we are no longer the bottleneck. And we can enable these really, really fast drives. >> So can I ask a question? I'm sorry to interrupted but on these blue bars here. So these all spinning disks, I presume, out years they're not. Like when did flash come in to these blue bars? is that..you said 27 you started looking at it, but on these benchmarks, is it all spinning disc? Is it all flash? How should we interpret that? >> No, no. Initially they were actually all hard drives. And the way that we would identify, the max iOS would be by doing very small sequential reads to these hard drives. We just didn't have SSDs at that point. And then somewhere around 2010 is where we.. it was very early in that chart, we were able to start incorporating SSD technology into our benchmarking. And so what you're looking at here is really the max that our controller is capable of. So we would throw as many drives as we could and do what we needed to do in order to just make sure our controller was the bottleneck and what can we expose. >> So the drive then when SSD came in was no longer the bottleneck. So you guys had to sort of invent and rethink sort of how, what your innovation and your technology, because, I mean, these are astounding increases in performance. I mean, I think in the left-hand side, we've built this out pad, you got 170 X increase for the 4k random IOPS, and you've got a 20 X increase for the sequential bandwidth. How were you able to achieve that level of performance over time? >> Well, in terms of the sequential bandwidth, really those come naturally by increases in the PCIe or the SAS generation. So we just make sure we stay out of the way, and we enable that bandwidth. But the IOPS that's where it got really, really tricky. So we had to start thinking about different things. So, first of all, we started optimizing all of our pathways, all of our IO management, we increased the processing capabilities on our IO controllers. We added more on-chip memory. We started putting in IO accelerators, these hardware accelerators. We put in SAS poor kind of enhancements. We even went and improved our driver to make sure that our driver was as thin as possible. So we can make sure that we can enable all the IOPS on systems. But a big thing happening a few couple of generations ago was we started introducing something called tri capable controllers, which means that you could attach NVMe. You could attach SAS or you could attach SATA. So you could have this really amazing deployment of storage infrastructure based around your customized needs and your cost requirements by using one controller. >> Yeah. So anybody who's ever been to a trade show where they were displaying a glass case with a Winchester disc drive, for example, you see it's spinning and its actuators is moving, wow, that's so fast. Well, no. That's like a tourist slower. It's like a snail compared to the system's speed. So it's, in a way life was easy back in those days, because when you did a right to a disk, you had plenty of time to do stuff, right. And now it's changed. And so I want to talk about Gen3 versus Gen4, and how all this relates to what's new in Gen4 and the impacts of PCIe here, you have a chart here that you've shared with us that talks to that. And I wonder if you could elaborate on that, Kim. >> Sure. But first, you said something that kind of hit my funny bone there. And I remember I made a visit once about 15 or 20 years ago to IBM. And this gentleman actually had one of those old ones in his office and he referred to them as disk files. And he never until the day he retired, he'd never stopped calling them disc files. And it's kind of funny to be a part of that history. >> Yeah. DASD. They used to call it. (both laughing) >> SD, DASD. I used to get all kinds of, you know, you don't know what it was like back then, but yeah. But now nowadays we've got it quite easily enabled because back then, we had, SD DASD and all that. And then, ATA and then SCSI, well now we've got PCIe. And what's fabulous about PCIe is that it just has the generations are already planned out. It's incredible. You know, we're looking at right now, Gen3 moving to Gen4, and that's a lot about what we're going to be talking about. And that's what we're trying to test out. What is Gen4 PCIe when to bias? And it really is. It's fantastic. And PCIe came around about 18 years ago and Broadcom is, and we do participate and contribute to the PCIe SIG, which is, who develops the standards for PCIe, but the host in both our host interface in our NVMe desk and utilize the standards. So this is really, really a big deal, really critical for us. But if you take a look here, you can see that in terms of the capabilities of it, it's really is buying us a lot. So most of our drives right now NVMe drives tend to be by four. And a lot of people will connect them. And what that means is four lanes of NVMe and a lot of people that will connect them either at by one or by two kind of depending on what their storage infrastructure will allow. But the majority of them you could buy, or there are so, as you can see right now, we've gone from eight gig transfers per second to 16 gig of transfers per second. What that means is for a by four, we're going from one drive being able to do 4,000 to do an almost 8,000 megabytes per second. And in terms of those 4k IOPS that really evade us, they were really really tough sometimes to squeeze out of these drives, but now we're got 1 million, all we have to 2 million, it's just, it's insane. You know, just the increase in performance. And there's a lot of other standards that are going to be sitting on top of PCIe. So it's not going away anytime soon. We've got to open standards like CXL and things like that, but we also have graphics cards. You've got all of your hosts connections, they're also sitting on PCIe. So it's fantastic. It's backwards, it's orbits compatible, and it really is going to be our future. >> So this is all well and good. And I think I really believe that a lot of times in our industry, the challenges in the plumbing are underappreciated. But let's make it real for the audience because we have all these new workloads coming out, AI, heavily data oriented. So I want to get your thoughts on what types of workloads are going to benefit from Gen4 performance increases. In other words, what does it mean for application performance? You shared a chart that lists some of the key workloads, and I wonder if we could go through those. >> Yeah, yeah. I could have a large list of different workloads that are able to consume large amounts of data, whether or not it's in small or large kind of bytes of data. But as you know right now, and I said earlier, our ability to consume these compute and storage resources is amazing. So you build it and we'll use it. And the world's data we're expected to grow 61% to 175 zettabytes by the year 2025, according to IDC. So that's just a lot of data to manage. It's a lot of data to have, and it's something that's sitting around, but to be useful, you have to actually be able to access it. And that's kind of where we come in. So who is accessing it? What kind of applications? I spend a lot of time trying to understand that. And recently I attended a virtual conference SDC and what I like to do when I attend these conferences is to try to figure out what the buzz words are. What's everybody talking about? Because every year it's a little bit different, but this year was edge, edge everything. And so I kind of put edge on there first in, even you can ask anybody what's edge computing and it's going to mean a lot of different things, but basically it's all the computing outside of the cloud. That's happening typically at the edge of the network. So it tends to encompass a lot of real time processing on those instant data. So in the data is usually coming from either users or different sensors. It's that last mile. It's where we kind of put a lot of our content caching. And, I uncovered some interesting stuff when I was attending this virtual conference and they say only about 25% of all the usable data actually even reach the data center. The rest is ephemeral and it's localized, locally and in real time. So what it does is in the goal of edge computing is to try and reduce the bandwidth costs for these kinds of IOT devices that go over a long distance. But the reality is the growth of real-time applications that require these kinds of local processing are going to drive this technology forward over the coming years. So Dave, your toaster and your dishwasher they're, IOT edge devices probably in the next year, if they're not already. So edge is a really big one and consumes a lot of the data. >> The buzzword does your now is met the metaverse, it's almost like the movie, the matrix is going to come in real time. But the fact is it's all this data, a lot of videos, some of the ones that I would call out here, you mentioned facial recognition, real-time analytics. A lot of the edge is going to be real-time inferencing, applying AI. And these are just a massive, massive data sets that you again, you and of course your customers are enabling. >> When we first came out with our very first Gen3 product, our marketing team actually asked me, "Hey, how can we show users how they can consume this?" So I actually set up a head to environment. I decided I'm going to learn how to do this. I set up this massive environment with Hadoop, and at the time they called big data, the 3V's, I don't know if you remember these big 3Vs, the volume, velocity and variety. Well Dave, did you know, there are now 10 Vs? So besides those three, we got velocity, we got valued, we got variability, validity, vulnerability, volatility, visualization. So I'm thinking we need just to add another beat of that. >> Yeah. (both laughing) Well, that's interesting. You mentioned that, and that sort of came out of the big data world, a dupe world, which was very centralized. You're seeing the cloud is expanding, the world's getting, you know, data is by its very nature decentralized. And so you've got to have the ability to do an analysis in place. A lot of the edge analytics are going to be done in real time. Yes, sure. Some of it's going to go back in the cloud for detailed modeling, but we are the next decade Kim, ain't going to be like the last I often say. (laughing) I'll give you the last word. I mean, how do you see this sort of evolving, who's going to be adopting this stuff. Give us a sort of a timeframe for this kind of rollout in your world. >> In terms of the timeframe. I mean really nobody knows, but we feel like Gen5, that it's coming out next year. It may not be a full rollout, but we're going to start seeing Gen5 devices and Gen5 infrastructure is being built out over the next year. And then follow very, very, very quickly by Gen6. And so what we're seeing though is, we're starting to see these graphics processors, These GPU's, and I'm coming out as well, that are going to be connecting, using PCIe interfaces as well. So being able to access lots and lots and lots of data locally is going to be a really, really big deal and order because worldwide, all of our companies they're using business analytics. Data is money. And the person that actually can improve their operational efficiency, bolster those sales and increase your customer satisfaction. Those are the companies that are going on to win. And those are the companies that are going to be able to effectively store, retrieve and analyze all the data that they're collecting over the years. And that requires an abundance of data. >> Data is money and it's interesting. It kind of all goes back to when Steve jobs decided to put flash inside of an iPhone and the industry exploded, consumer economics kicked in 5G now edge AI, a lot of the things you talked about, GPU's the neural processing unit. It's all going to be coming together in this decade. Very exciting. Kim, thanks so much for sharing this data and your perspectives. I'd love to have you back when you got some new perspectives, new benchmark data. Let's do that. Okay. >> I look forward to it. Thanks so much. >> You're very welcome. And thank you for watching this CUBE conversation. This is Dave Vellante and we'll see you next time. (upbeat music)

>>no real filter and that kind of stuff. But you're also an entrepreneur, right? And you know the business, you've been in software, you detect business. I'm instructing you get a lot of pictures, this entertainment business on our show, we're a bubble. We don't do a lot of tech deals that were talking because it's boring tv tech people love tech consumers love the benefit of text. No consumer opens up their iphone and says, oh my gosh, I love the technology behind my, what's it been like being on the shark tank? You know, filming is fun and hang out just fun and it's fun to be a celebrity at first your head gets really big and you get a really good tables at restaurants and who says texas has got a little possessed more skin in the game today in charge of his destiny. Great robert Herjavec. No, these two stars cube alumni >>welcome back to the cubes coverage of A W. S. Public sector seven. I'm john for your host of the cube got a great segment here on healthcare startup accelerators of course. Sandy carter is co hosting media. This one Vice President Aws. She's awesome on the cuBA and jennifer Blumenthal co founder and C of one record entrepreneur, very successful. Thanks for coming on jennifer. Thank good to see you. Sandy thanks for joining me again. You >>are most welcome, >>jennifer. Before we get into the whole accelerated dynamic, just take a minute to explain what you guys do. One record. >>Sure. So one record is a digital health company that enables users to access aggregate and share their healthcare information. So what that means is we help you as a person get your data and then we also help companies who would like to have workflows were consumers in the loop to get their data. So whether they're sharing it with a provider, researcher payer. >>So, Sandy, we've talked about this amazon web services, healthcare accelerator cohort batches. What do you call cohort batches? Cohorts explain what's going on with the healthcare accelerator? >>Yeah. So, um, we decided that we would launch and partner an accelerator program and accelerator program just provides to a start up a little bit extra technical help. A little bit extra subject matter expertise and introductions to funders. And so we decided we were going to start one for health care. It's one of the biggest disruptive industries in public sector. Um, and so we weren't sure how it's gonna go. We partnered with Kids X. Kids X is part of the Los Angeles system for medical. And so we put out a call for startups and we had 427 startups, we were told on average and accelerating it's 50-100. So we were blown away 31 different countries. So it was really amazing. And then what we've been doing is down selecting and selecting that Top 10 for our first cohort. So we're going from 427 down to 10. And so obviously we looked at the founders themselves to see the quality of the leadership of the company, um the strength of their technology and the fit of the technology into the broader overall healthcare and healthcare ecosystem. And so we were thrilled that jennifer and one record was one of the top 10 start ups in this space that we chose to be in the, in the cohort. And so now we're going to take it to the six weeks intensive where we'll do training, helping them with AWS, provide them A W. S. Credits and then Kid X will also provide some of the health care uh subject matter >>expertise as well. Can I get some of those credits over here to maybe? >>Yes, you can actually, you can talk to me don you can't >>Talk to me, Jennifer, I gotta ask you. So you're an entrepreneur. So doing start doing cos it's like a roller coaster. So now to make the top 10 but also be in the area of his accelerator, it's a partnership, right? You're making a bet. What's your take on all this? >>Well, we've always been partners with a W. S. We started building on AWS in the very beginning. So when I was setting up the company a huge decision early on with infrastructure and when I saw the launch of the accelerator, I had to apply because we're at the point in the company that we're growing and part of growing is growing with the VW. So I was really excited to take advantage of that opportunity and now in the accelerator, it's more of thinking about things that we weren't thinking about the services that we can leverage to fill in the gaps within our platform so we can meet our customers where they are >>using award winning MSP cloud status city, your partners, great relationship with the ecosystem. So congratulations Sandi. What's the disruption for the healthcare? Because right now education and health care, the two top areas we're seeing and we're reporting on where cloud scale developed two point or whatever buzzword digital transformation you want to use is impacting heavily healthcare industry. There's some new realities. What's your, what's your vision, what's your view? >>Hey john before she does that, I have to give a plug to Claudius city because they just made premier partner as well, which is a huge deal. Uh and they're also serving public sector. So I just wanted to make sure that you knew that too. So you can congratulate. Go ahead, jennifer >>Well, so if I zoom in, I think about a P. I. S. Every day, that's what I think about and I think about microservices. So for me and for one record, what we think about is legislation. So 21st century Cures act says that you as a consumer have to be able to access your healthcare data from both your providers and from your players and not just your providers, but also the underlying technology vendors and H. I. E. S. H. I am and it's probably gonna extend to really anyone who plays within the healthcare ecosystem. So you're just going to see this explosion of A. P. I. S. And we're just your one of that. I mean for the payers that we went into effect on july 1st. So I mean when you think about the decentralization of healthcare where healthcare is being delivered plus an api economy, you're just going to have a whole new model developing and then throwing price transparency and you've got a whole new cake. >>I'm smiling because I love the peacocks. In fact, last night I shouldn't have tweeted this but there's a little tweet flames going on around A. P. Is being brittle and all this stuff and I said, hey developer experience about building great software apps are there for you. It's not a glue layer by itself. You got to build software around the so kind of a little preaching to the younger generation. But this health care thing is huge because think about like old school health care, it was anti ap I was also siloed. So what's your take on has the culture is changing health care because the user experience, I want my records, I want my privacy, I want to maintain everything confidential but access. That's hard. >>I think well health care to be used to just be paper was forget about a. P. I. Is it was just paper records. I think uh to me you think about uh patient journey, like a patient journey starts with booking an appointment and then everything after that is essentially an api call. So that's how I think about it is to all these micro transactions that are happening all the time and you want your data to go to your health care provider so they can give you the proper care, you want your data to go to your pair so they can pay for your care and then those two stakeholders want your data so that they can provide the right services at the right time to the right channel. And that is just a series of api calls that literally sits on a platform. >>What's interesting, I'd love to get your take on the where you think the progress bar is in the industry because Fintech has shown the way you got defy now behind a decentralized finance, health care seems to be moving on in a very accelerated rate towards that kind of concept of cloud, scale, decentralization, privacy. >>Yeah, I mean, that's a big question, what's interesting to me around that is how healthcare stakeholders are thinking about where they're providing care. So as they're buying up practices primary care specialty care and they're moving more and more outside of the brick and mortar of the health care system or partnering with your startups. That's really where I think you're going to see a larger ecosystem development, you could just look at CVS and walmart or the dollar store if they're going to be moving into health care, what does that look like? And then if you're seeking care in those settings, but then you're going to Mayo clinic or Kaiser permanente, there's so many new relationships that are part of your hair circle >>delivery is just what does that even mean now, delivery of health >>care. It's wherever you it's like the app economy you want to ride right now, you want a doctor right now, that's where we're heading its ease of use. >>This is this exciting startups, changing the game. Yes, I love it. I mean, this is what it's all about this health >>Care, this is what it's all about. And if you look at the funding right now from VCS, we're seeing so much funding pour into health care, we were just looking at some numbers and in the second quarter alone, the funding went up almost 700%. And the amount of funding that is pouring into companies like jennifer's company to really transform healthcare, 30% of it is going into telehealth. So when you talked about, you know, kind of ai at the edge, getting the right doctor the right expert at the right time, we're seeing that as a big trend in healthcare to >>well jennifer, I think the funding dynamics aside the opportunity for market total addressable market is massive when the application is being decomposed, you got front end, whether it's telemedicine, you got the different building blocks of healthcare being radically reconfigured. It's a re factoring of healthcare. Yeah, >>I think if you just think about where we're sitting today, you had to use an app to prove proof of vaccination. So this is not just national, this is a global thing to have that covid wallet. We at one record have a covid wallet. But just a couple years from now, I need more than just by covid vaccination. I need all my vaccinations. I need all my lab results. I need all my beds. It's opening the door for a new consumer behavior pattern, which is the first step to adoption for any technology. >>So somebody else covid wallet. So I need >>that was California. Did the, did a version of we just have a pen and it's pretty cool. Very handy. I should save it to my drive. But my phone, but I don't jennifer, what's the coolest thing you're working on right now because you're in the middle of all the action. >>I get very excited about the payer app is that we're working on. So I think by the end of the month we will be connected to almost to all the blues in the United States. So I'm very excited when a user comes into the one record and they're able to get their clinical data from the provider organization and then their clinical financial and formulary data from their payers because then you're getting a complete view, You're getting the records for someone who gave you care and you're getting the records from someone who paid for your care. And that's an interesting thing that's really moving towards a complete picture. So from a personal perspective that gets exciting. And then from a professional perspective, it's really working with our partners as they're using our API s to build out workflows and their applications. >>It's an api economy. I'd like to ask you to on the impact side to the patient. I hear a lot of people complaining that hey, I want to bring my records to the doctor and I want to have my own control of my own stuff. A lot of times, some doctors don't even know other historical data points about a patient that could open up a diagnosis and, or care >>or they can't even refer you to a doctor. Most doctors really only refer within a network of people that they know having a provider directory that allows doctors refer, having the data from different doctors outside of their, you know, I didn't really allows people to start thinking beyond just their little box. >>Cool. Well, great to have you on and congratulations on being in the top 10 saying this is a wonderful example of how the ecosystem where you got cloud city, your MSP. You mentioned the shout out to them jerry Miller and his team by working together the cloud gives you advantages. So I have to ask, we look at amazon cloud as an entrepreneur. It's kind of a loaded question, but I'm going to ask it. I love it. >>You always do it >>when you look at amazon, what do you see as opportunities as an entrepreneur? Because I'll see the easy ones. They have computing everything else. But like what's the, what does cloud do for you as an entrepreneur? What does it, what does it make you do? >>Yeah. So for been working with jerry since the beginning for me when I think about it, it's really the growth of our company. So when we start building, we really just thinking about it from a monolithic build and we move to microservices and amazon has been there every step of the way to support us as that. And now, you know, the things that I'm interested in are specifically health lake and anything that's NLP related that we could plug into our solution for when we get data from different sources that are coming in really unstructured formats and making it structured so that it's searchable for people and amazon does that for us with their services that we can add into the applications. >>Yeah, we announced that data health like and july it has a whole set of templates for analytics, focused on health care as well as hip hop compliance out of the box as well. >>The I think I think that's what's important is people used to think application first. Now it's creating essentially a data lake, then analytics and then what applications you build on top of that. And that's how our partners think about it and that's how we try and service them using amazon as our problem. So >>you're honing in on the value of the data and how that conflicts and then work within the whatever application requests might come >>in. Yes, >>it's interesting. You know, we had an event last month and jerry Chen from Greylock partners came on and gave a talk called castles in the cloud. He's gonna be cute before. He's a, he's a veces, they talk about moats and competitive manage so having a moat, The old school perimeter moz how cloud destroyed that. He's like, no, now the castles are in the cloud, he pointed snowflake basically data warehouse in the cloud red shifts there too. But they can be successful. And that's how the cloud, you could actually build value, sustainable value in the cloud. If you think that way of re factoring not just hosting a huge, huge, huge thing. >>I think the only thing he, this was customer service because health care is still very personal. So it's always about how you interact with the end user and how you can help me get to where they need to be going >>and what do you see that going? Because that's, that's a good point. >>I think that is a huge opportunity for any new company that wants to enter healthcare, customer service as a service in health care for all the different places that health care is going to be delivered. Maybe there's a company that I don't know about, but when they come out, I'd like to meet them. >>Yeah, I mean, I can't think of one cover that can think of right now. This is what I would say is great customer service for health care. >>And if there is one out there contacted me because I want to talk to you about AWS. >>Yeah. And you need the app from one record that make it all >>happen. That's where Omni channel customer service across all health care entities. Yeah, that's >>a great billion dollar idea for someone listening to our show right now. >>Right, alright. So saying they had to give you the opportunity to talk more because this is a great example of how the world's very agile. What's the next step for the AWS Healthcare accelerator? Are there more accelerators? Do you do it by vertical? >>What happens next? So, with the healthcare accelerator, this was our first go at the accelerator. So, this is our first set of cohorts, Of course, all 427 companies are going to get some help from a W. S. as well. We also you'll love this john We also did a space accelerator. Make sure you ask Clint about that. So we have startups that are synthesizing oxygen on mars to sending an outpost box to the moon. I mean, it's crazy what these startups are doing. Um, and then the third accelerator we started was around clean energy. So sustainability, we sold that one out to, we had folks from 66 different countries participate in that one. So these have been really successful for us. So it reinvent. When we talk again, we'll be announcing a couple of others. So right now we've got healthcare, space, clean energy and we'll be announcing a couple other accelerators moving forward. >>You know, it's interesting, jennifer the pandemic has changed even our ability to get stories. Just more stories out there now. So you're seeing kind of remote hybrid connections, ap ideas, whether it's software or remote interviews or remote connections. There's more stories being told out there with digital transformation. I mean there wasn't that many before pandemic has changed the landscape because let's face it, people were hiding some really bad projects behind metrics. But when you pull the pandemic back and you go, hey, everyone's kind of emperors got no clothes on. Those are bad projects. Those are good projects that cloud investment worked or I didn't have a cloud investment. They were pretty much screwed at that point. So this is now a new reality of like value, you can't show me value. >>It's crazy to me when I meet people who tell me like we want to move to the cloud of like, why are you not on the cloud? Like this really just blows my life. Like I don't understand why you have on prem or while you did start on the cloud, this is more for larger organizations, but younger organizations, you know, the first thing you have to do, it's set up that environment. >>Yeah. And then now with the migration plans and seeing here, uh whereas education or health care or other verticals, you've got, now you've got containers to give you that compatibility and then you've got kubernetes and you've got microservices, you've got land. Uh I mean, come on, that's the perfect storm innovation. There's no excuses in my opinion. So, you know, if you're out there and you're not leveraging it, then you're probably gonna be out of business. That's my philosophy. Thank you for coming up. Okay. Sandy, thank you. Thank you, john Okay. Any of his coverage here, summit here in D. C. I'm john ferrier. Thanks for watching. Mm >>mm mm mhm. I have been in the software and technology industry for over 12 years now, so I've had >>the opportunity

>>Hey, welcome to this cube conversation with Dell technologies. I'm Lisa Martin. I've got kosha ghost here with me. He's back on the cube director of product management for unified NAS solutions at Dell technologies. CATIA. Great to see you again. >>Yes. I raped a great to be here again. >>We're going to be talking about the major announcement that Dell technologies just made with their scale-out file storage system that has Dell EMC power scale. We're going to unpack the recent announcement, new features, capabilities, all that good stuff. Kaushik let's go ahead and start. Just give us that high level view of Dell EMC power scale. >>Yes, absolutely. Itself power scale is a high-performance scale-out file storage solution. Um, it's the successor to the Isilon family record, which as you guys know, I mean, there's one of the leading file solutions in the market today. Um, power scale one best, which is the file system that runs on power scale and also the Isilon family, um, is offers an exceptional simplicity, flexibility, and performance, um, which is what Isilon and Parscale is known for. I mean, um, if you look at Gardner's magic ordered one, Fs has been listed as the leader in that, uh, in the distributed and object file system. So, uh, so that basically is now our scaled. We launched our first Parscale all flash products last year. And then this year with this launch, we are sort of completing that portfolio, um, with, uh, with new hybrid and archive, uh, platforms. >>Excellent. And we're going to get into that as well. Let's go ahead and start unpacking this announcement. Walk me through some of the key things that are new and announced in this recent announcement. >>Yeah, except we just launched the hybrid archive platforms, um, on, as part of the Parscale family, are there two archive platforms and two hybrid platforms that we launched and, uh, they offer better CPU, performance, cash, and all that stuff, but, but we don't want to go into the speeds and feeds what I really want to hide breast is the, is the software capabilities that is far skull rings for starters. Um, it is, uh, it now includes inline data compression in 99 reduction. It's all built into it. Um, we support now new ransomware protection capabilities with, uh, with this product. Um, there's a new data protection capability that we now support with our, um, with our, our protected data data manager. Um, and, um, and then the, all the goodness of, uh, Iceland, one Fs and Parscale one Fs that sort of continues. >>I imagine, since the launch last year, cash took a lot of customer conversations that helped to drive this launch and the complete transition on the innovation of what we now see as power scale. >>Yeah. Yeah. I mean, uh, there, there have been some great conversations. People have been, um, people have been really waiting for this product offering because now, uh, they can basically combine those flash platforms that we launched last year with these hybrid platforms and can offer a really a solution that only gives you that performance, but also the, the cost and, uh, savings and the value that, um, that, uh, only our powers skill in Iceland can give you, >>Give me a good overview of some of those key capabilities that the existing Isilon customers and the prospective new customers of power scale are going to be able to take advantage of. >>Yes. So the new, some of the new capabilities as in line efficiency, as I mentioned earlier, that's now built into the product. Um, we have a line efficiency today on our all flash platforms. Uh, so now introducing it with these hybrid and archived nodes, what that means is that when you set up a mixed cluster with all flash and hybrid, when you gear the data down from the national hybrid, the data does not have to be rehydrated. They stay compressed, they stay in protected and so on and so forth. So that's one big advantage that you get. Second, um, these power skill hybrid type platforms were built ground up, uh, with our own custom hardware, unlike the flashback phones with be leverage powered servers for these ones, we use our custom hardware. And the reason for that is because what those archive and storage, the whole story we want that density, we can store up to 500 terabytes of usable capacity, effective usable capacity in, in these archive nodes in a single, uh, one U rack unit. And then, uh, of course, uh, from a software perspective, uh, we talked about ransomware protection. So, so we have a new capability with trends of bear protection. And then there's this new capability that we just launched in regard to backups, more efficient, more faster backups with, uh, with our, our protector will be bought predict family of products. >>Excellent. I want to dig into the ransomware and data protection in a minute, but I want to get a sense of the overall theme of the launch. You talked about this being the completion of that tech refresh some of the new capabilities and enhancements that customers are going to be able to take advantage of it. Give me that higher level kind of thematic look at this news. >>The big team of this is basically finishing that Parscale family that we started last year, right? So we started with launching the whole flash. Now with this hybrid and archive. Now we have the flu family done, um, all products, not support in line efficiency, so we can move the data around, you get the same, uh, data doesn't get high rehydrated. Um, you are, you can make it part of a single cluster. Um, and you get all the performance benefits, um, the scalability benefits of one Fs, um, and new data management capabilities, the, um, so all of that, that we started all of that goodness that we started with our skill, all flash. Um, we soft, continued now with this, uh, with this platform. >>Got it. And I know you guys did your own internal study and I'd like you to share some of the results with the audience, you guys compared power scale to competitors in traditional NAS in flash only NAS in mixed NAS, San and software only NAS give us a snapshot into what some of those results were for power scale. >>Yeah. I mean, uh, the big take away out here is that, um, that when it comes to power scale, um, they, we don't have a competitor when it comes to scalability, right? Uh, the fact that you can now work, uh, on petabytes of capacity under a single namespace, a single file system, and also give you that performance. Um, we, there is none to today, right? And, um, and then there may be some which can do those also, but then they don't have the enterprise capabilities like replication, um, and, uh, the rich enterprise capabilities that one, if fit, sets so off performance, scale capabilities and all the, uh, the simplicity of one Fs. And that's basically what the unique thing about our skaters >>W performance scale and simplicity, three things that I'm sure enterprises, small, medium businesses in any industry appreciate you. You talked about the, um, what's new in terms of the hybrid notes and the archive nodes. Can you help us understand what workloads does nos are best targeted for? >>Absolutely so hybrid and archive. What we have realized is that not every data can be a compressed RDU, right? So, so it's not, we would love customers to use our all flash products. They get the deduplication, they get the compression, then it lowers the cost. And clearly then you get the performance and the cost, but there are workloads like media and entertainment, video surveillance, where you will not be able to compress or that guest, rather than it being for a very expensive flash. You could put those data sets in our lower cost archive platforms as an example. And if you have situations where look, I need some performance, but there is a lot of old data and you can actually mix and match it also. So you're going to have those flash platform is giving that performance. And then you have our archive platforms, which is basically giving you the lowest cost storage for that data. And it is not so frequent giving access. >>And there's the flexibility there. So how can, this is the tech refresh? He said, this has been completed now a power scale from Isilon. How can existing Isilon customers take advantage? What are their next steps to be able to take advantage of the newer capabilities and technologies? >>Yeah, absolutely. I mean, one thing we, we, our scale has it, that's very different from others is that Parscale has this mantra called the no, no left behind. So if you are an existing Isilon customer, you can basically add these Parscale nodes to your existing Iceland cluster without breaking any donut. Then we put our scale, we lock them, magically redistribute, rebalance your workloads across these new nodes. And you sort of keep on expanding our cluster. And when you, when you feel like that, you can, uh, take out the older nodes, uh, at the time of your choosing, right? So that stuff, um, that's a huge benefit that we get. So in fact, in some customer environments, their data has been there for almost 10 to 12 years now, uh, uh, because they've never had to do a forklift upgrade. So that sort of continues with this family. Um, if you learn to learn more about it, I would encourage, uh, going to Dell technologies slash power scale, uh, or contact your Dell technologies, uh, rep >>Let's kind of wrap up things here with talking about, dig into ransomware. We've seen ransomware become a household word, the colonial pipeline, the meat packing organization that was attacked earlier this summer. We know that that a lot of data show that there's a one ransomware attack happens every 11 seconds. And of course we only hear about the really big attacks. Um, I've had the opportunity to talk to a lot of cybersecurity leaders lately, and they're showing that ransomware is up, you know, at least 10 X in the last year with this massive pivot to work from home now, work from anywhere. Talk to me about some of the focus that Dell has put in power scale now with perspective of ransomware protection and recovery. >>Yeah. So for ransomware product, we have to do things that we are doing. So one is this concept of a detection. So when an attack is happening, we want it to be able to detect with date at an attack is happening and take some corrective measures, right? And so we have this product called Sabrina eyeglass, which is exclusively built for, uh, uh, built for, uh, uh, our scale and using this product they use, we use AIS, uh, to basically to figure out that if an attack is happening, we detect it. And based on that based on policies, we can then either, if it's happening with only one user, we can start off, um, uh, start off, uh, prevent, uh, sort of lock it down that particular user profile or, or take other corrective actions taking meaning set up. So that's one aspect of it, which is about the detection of it and taking some quick steps. >>Then there's a second aspect of it, which is all about recovery, right? So, so we do have a replications event. If the customer chooses, we can have reputations set up from your Parscale, uh, production cluster to another cluster. And, um, and in that replication, uh, we can introduce an air gap so that, uh, any, anything bad thing is happening here does not get, uh, uh, does not get replicated to that, uh, remote in mine. So, um, so, so those are the two ways, one detecting, and second basically protecting it. Um, and not only just protecting it, but ensuring that air gap, um, capabilities, data as well, so that, uh, the ransom reason not replicated there as well. >>Absolutely critical. Given some of the things that you and I mentioned a few minutes ago in terms of the explosion of ransomware, which hopefully in our remote, remote work hybrid environment, as more technologies like this come out from Dell technologies and its partners, we'll start to see those ransomware numbers go down. Lastly, I want you to just restate, you mentioned a URL where folks can go to learn more information. Now you've got several different links to point folks to, can you go ahead and remind us what those are again? >>Yes, absolutely. I mean, uh, the easiest you are to go to is Dell technologies slash flower scale. I mean, if you're, that's a one-to-one URL and I'd like you to remember, once you go there, there'll be videos, articles, blogs, and you can, uh, look through a much going and then whatever you want from them. >>Excellent contract. Thank you for joining me today. Talking to me about what's new with power scale, congratulations on the completion of the refresh, a lot of new capabilities and, and, uh, technologies that your customers, existing Isilon and feature perspective, power scale customers are going to be able to take advantage of, look forward to hearing in the next few months in customer success stories. Thanks for your time. Thank >>You >>For Casha gauche. I'm Lisa Martin. You're watching a cube conversation.

>>Hi, welcome to this cube conversation. I'm Lisa Martin and pleased to welcome back. One of our cube alumni, Christian rowdy, the VP of technology strategy at Citrix Christian. Welcome back to the program. >>Thank you, Lisa. And thanks for having me. Great to see you again, and we'll be virtually at this time. >>Great to see you too. It's been a couple of years and quite a few things have changed since we got to sit down at synergy a couple of years together together. Citrix has an exciting new announcement. Let's unpack that. Talk me to me about what you're announcing and what it's going to deliver. >>Sure. You know, as you said, actually, I can't believe it's been a couple of years since we last saw each other. And I think, you know, time's kind of just disappeared within the pandemic. So it actually, as a result of some of those things that we've seen, you know, people get so tired of being stuck in the same place and tired of being on this constant stream of video. And one of the things that we wanted to do was, was actually a vital Citrix launch part, which is kind of our new announcement series that will be delivered via LinkedIn live. But he's really intended to be kind of a short burst approach to providing updates to some of them really important things that we're working on at Citrix. So, uh, hopefully, uh, people would love to say a reason and get some rich information from them. >>And there's going to be a series of three launchpad programs. Now we've seen so much change since the rapid pivot to work from home. Now this worked from anywhere hybrid environment. We've seen the, the massive adoption of cloud and SAS. We've also seen the threat landscape, the attack surface, just expand and expand. Talk to me about why Citrix is doing the launch pad series and then we'll go through each of the three series. >>Yeah, absolutely. So maybe I think just to set a little bit of context, you know, we, we were working on some pretty interesting things, uh, pre pandemic, you know, uh, as a result of the, kind of the, the evolution of Citrix as an organization, but perhaps more importantly, the journey that our customers were on globally, you know, every customer that we had in, in any industry across the world, we're all at various stages of their own digital transformation. And I think what the pandemic has done apart from all the really bad things, actually, if you look at it as a, perhaps one gleaming bit of light in the whole thing was that we've given organizations, whether we realize it or not the opportunity to try this huge remote work experiment. And I think what it has done above anything else has shown that remote work actually works. >>And so as a result of that, what we've seen coming out of the pandemic is that organizations are really going to use that as a springboard. So implement some new strategies, new technologies, and really drive the next generation of that business. So with one eye on that, I think if you were to categorize the three big things that we're looking at from a Citrix perspective, it's really about how to help, we'll continue to help our customers with that accelerated it modernization to really help them understand what it takes to have secure, flexible work in this new post pandemic world. And then also to think about productivity, what does productivity mean in a world of ever more distributed teams? And so the events that we're talking about and specifically the cloud one, we'll focus on some of the new offerings from Citrix, some of the new technologies and talk about the trends that we've seen within our customers. >>So, you know, one of the big things that Citrix has always been very proud of is our market leading position in virtual application and virtual desktop delivery. And even that itself has now begun to emerge into what we call desktop as a service. And there's a ton of new innovations that we've been working on in that space as well. But also if you think about what's happening in cloud, as you talked about, you know, the evolution of applications being from traditional on premises, wills to SAS applications, what we're also seeing is things like the network services that use to support those applications when they looked slightly different, which from a deployment perspective, and now all moving to cloud services, the security that you alluded to in terms of how complicated that is, but how important it is for it, organizations, those services also moving to cloud as the applications begin to look very differently in the future. So extremely excited about the cloud launch. Patino, we're going to talk a lot about those things that we're doing both in the public cloud, in the hybrid cloud. And I think it will resonate well with customers around the world. >>I think it will as well. And you mentioned there are glimmers of hope that we've seen in the last 18 months. And one of the things that this has proved is that work from home can be productive, can be successful. Employees need to be empowered to be able to do that. Let's go ahead and talk through the first, um, program accelerating it monetization. This is Tuesday, September 28th. Let's talk about some of the, of the Citrix innovations that you're going to be announcing. >>Yeah, so I mean, as I mentioned know, we, we, we think about sort of ecstatic. I see modernization in various parts. You know, we tend to start with the classic infrastructure and we've seen over the years that lots of infrastructure, you know, he's leaving the building. And by that we mean the traditional realms of on-premise data centers or co-location facilities, this constant evolution and migration of those services, uh, to, to infrastructure as a service providers from the huge cloud companies that are out there. And we can continue to see that as a, as a huge trend. Of course. Um, one of the things that off the back of that of course is our move from the traditional world of virtual desktops, which was a very on-premise concept into desktop as a service. So really the key around desktop as a service, it's a simplification, some cost optimization and the things that it are looking at in terms of how they can really bring things to the party for their organizations going forward. >>And of course, as we move into that world of everything being delivered as a service know, things like network services, security services, they almost follow. So some of the things that you'll hear about that is really around our application, delivering security and also our move from VDI to DAS. And, you know, you'll hear a lot about what we're doing with the world's leading cloud providers to really add more Citrix value or build on what we've already done with them, but lots, lots more, uh, and really support the, the, the notion of the, every customer is on a journey to cloud one way or the other. And of course, districts will be ready to help at any stage of that journey. >>Every customer is on the journey to cloud. And we've seen that accelerate so much in the last 18 months. Talk to me a little bit about if we, if we think of desktop as a service, as an evolution of VDI, is that what you're saying? >>Yeah. You know, you think about sort of the traditional VDI scenario was that your virtual desktops, where we were using instead of physical desktops, you know, in inside the usual office location, but during the pandemic, you know, we saw so many customers rely on moving to VDI, to cloud, for reasons of scalability and reasons of security, but then also needing to still in many cases, provide access to those sort of traditional physical PCs. And of course, Citrix has had solutions for that for fundamentally many, many years. Um, but what we're also seeing is that organizations are striving for simplicity. You know, the kind of the value of the desktop is being able to deliver it on demand to the end user securely from wherever they are in the world on whatever device they're on. And as we see this sort of establishment of these new working norms, and I'm not a great fan of the phrase, the new normal, I think we have a new now and that now will evolve. You know, they almost daily as we come through the other side of the pandemic. So the real key drivers for us there obviously flexibility, reliability, security, and also cost optimization, which of course is the bread and butter of most conversations we have with CIO and CTO is around the world. >>That's critical. And I'm going to borrow that, um, the new, now, if you don't mind, I'll cite you credit. But I like that. I agree that I hope this is not the new normal, but one of the things that we've seen in the new now on the security front is we've seen this massive increase in ransomware. Everybody went to work from home almost overnight. Suddenly you have millions of devices, IOT devices connecting to corporate networks. Security became the acceleration of security, became a huge challenge for customers in any organization globally. Let's talk about now the second announcement. This is going to be Tuesday, October 5th, empowering a secure distributed workforce. >>Yeah. And I, and I think you you've hit the nail on the head there. I think the one thing that was perhaps completely staggering to everybody was the speed in which organizations were forced to lock their employees out of the physical office locations and by force. I mean, for all the right reasons that are around the health and wellbeing. I mean, if I think back to my earlier career, you know, before I joined Citrix, I was in a large organization and we would, you know, perform these fire drills every so often where we would go through our disaster recovery business continuity plans and really play scenarios out. Like the office in London was unavailable or the office in LA was unavailable, but never once do I remember is doing every office. And every location is offline from tomorrow. And there's no negotiability. If you have a device at home, please use it. >>You know, we can't provide laptops quick enough, especially with the global chip shortage now as well. So whatever device you have, we'll do our best to, to make that secure. And I think there was, uh, an expectation that the employees would sort of play nicely in that scenario. But of course, you know, if you have your home device, you probably don't update it as much as a work device. So it really does require a new set of thinking. And of course, Citrix has been at the forefront of the zero trust evolution. Now the technologies that we have in place do permit remote work and have them for many years. But I think what we're seeing now is a slightly different type of remote work, you know, with different types of, of applications and devices, as you said, different locations, you know, needing to knit all of that together in a sort of a more contextual way so that we can understand, you know, combinations of the end user, their location, the types of applications that they're using the state of their devices, and sort of bring it all that together to really understand, you know, just exactly how much security needs to be applied. >>I think the traditional challenges are still there, you know, too much security and end users will find a way around it because it's not a good user experience. And, you know, perhaps too much user experience without the security leaves, big holes and big problems for organizations. So, yeah, I think this balancing act is really key. And of course, uh, as we go through the launch funnel security, we'll talk about some of the great innovations and solutions that are coming from central. >>You're right with the fact that, uh, you know, this rapid pivot security, the changes, the things that people are saying, the workforce needs to be empowered. You know, we saw this sudden dependence on all these SAS applications to communicate and to collaborate. We also saw with that rapid PennDOT to work from home ransomware, I was doing some research recently, Christian, and that's it, it's up almost 11 X just in the first half of 2021 DDoSs is massively up. People are, are working from home in environments that are just suddenly a bit chaotic. And it's challenging from a security perspective when you have so many distractions to be able to make sure that you're following all the right steps as an employee, um, that you're not clicking on nefarious links and that you're really doing your own due diligence. So having that zero trust and help from folks like Citrix is really key to this new. Now, as you say, >>It is, you know, the unfortunate thing is that wildlife, uh, no end user, or certainly I would hope that no one user would willingly cause a problem from a security perspective. I think just by the very nature of the way that end users thing, can they interact with links in emails or the, uh, you know, interact with attachments in emails? Unfortunately, relying on the human is always going to be the weakest link in the chain. And I think that's why we have to have new approaches to how we address the use of behavior. You know, can we actually, uh, you know, guide people in different ways. There are plenty of technologies that are out there now. And then many, many from Citrix that actually allow us to what we've lovingly said is, is to save the users from themselves. You know, we can't simply rely on every user to be diligent for every single email or every single link that they see. So, you know, being able to actually understand, you know, where the threats are as it relates to the end user and the likely interaction they have, and then being able to combat those threats in the technology at a seamless way is really part of the excited evolution of, of what we're doing with Citrix. And again, lots of great things to come as we go through the security. >>And the third announcement is around worker boosting worker productivity. That's been a challenge that we've all faced in the last 18 months of having, like I said, a minute ago, you know, people that have suddenly kids learning from home spouses, working people competing for bandwidth. Talk to me about some of the things that Citrix is doing to help those workers be more engaged, be plugged in and really be able to get their jobs done from anywhere. >>Yeah, well, you know, I mean, I can give you the benefit of my experience, you know, being, uh, in a, in a home office for, for, for almost 20 months has been completely the antithesis of the opposite of the rest of my career. You know, I've, I've always been very mobile, um, you know, kind of picking up different devices and using them for different things, just purely from a, you know, the perspective of what's most convenient to me. And I think, you know, if you take that and extrapolate it to, to every employee and every organization around the world who has had to invite work into their home, you know, and another soundbite that I use quite often now is that, you know, for the last 20 months, we really haven't been working from home. We've been living at work, you know, and, and, and it's, it's a fact, you know, we've probably done more hours than ever before. >>We've run the risk of burnout more than ever before. And, you know, prior to the pandemic, I know, talked to you and I talked about this very thing, uh, at synergy, you know, w we talked about the notion of needing to focus on employee experience and employee productivity. You know, we saw plenty of examples in customers with huge initiatives around employee experience and employee productivity. You know, CIO is partnering with HR leads and really trying to figure out a map, the employee journey, you know, what is it that they do every day? You know, how can we make their life easier? And perhaps interestingly, how can we reduce some of the mundane overhead, you know, approvals or requests or things that we see in our everyday life, but actually give the employees more time to be valuable and, and do great cognitive work, which is of course, what, what humans do best. >>And so, you know, you remember, we talked about the micro apps back then. We, we we'd completed the acquisition of Sappho, uh, as you and I talked last time when we unveiled micro apps and micro workflows, as a way to really help end users interact within Citrix workspace. So the systems that they use every day, but provide a new way to do that. And just earlier this year, we completed the acquisition and integration of Reich, which was a fantastic addition to the Citrix portfolio. And so we've really begun to think about, you know, how can we actually help employees to do their best work? You know, w w what are the new capabilities that we need within Citrix workspace? What are the new capabilities that we need in Reich? How do we bring all that together with some of the other solutions that we have Citrix Podio is a really interesting suite of productivity applications that we have really aimed at that number one problem, which is how can I get people to be productive, to stay engaged, to lower the burnout and help them do their best work. And I'm really, really excited because there's some fantastic things. So we announced that the work version of the launch pod, which is on October 12th, >>All of those are so critical. You know, I I've always said employee productivity employee is directly related to the customer experience. I've used Wrike myself before, um, for different projects and being able to have productivity tools that allow the employee to engage, to be able to empower them to move projects forward, especially in a time that is still somewhat chaotic is, is critical as is to your point, ensuring that there are the proper tools to facilitate folks so that they get what they need when they need it to help reduce burnout. That's been a big challenge. You're right. That the living at work thing is real, it's persisting, and we're going to be in this hybrid environment for some TBD amount of time longer. So having the ability to be empowered and productive in a secure way, leveraging cloud capabilities is really key. And it's exciting to hear what Citrix launchpad is going to announce over those three days and deliver. >>Yeah. You know, I, I would just say, you know, in, in, in sort of summary where we're, we're really excited about the three areas now, and they really do sort of all come together in some of those challenges that we talked about, you know, specifically around how we can help organizations to address that accelerated it modernization to drive secure, flexible work in the new now, and also to really reach that goal of having extremely productive, distributed teams as we come out the other side of the pandemic. So, you know, lots going on a fantastic time to, to be here and to talk to you and to be at Citrix, of course, with so many, you know, huge customer issues that we, that we have to solve. And we're really excited for the challenge. >>Excellent. And we all are looking forward to that, the Citrix launchpad series, Christian, where can folks go to register for these different programs? >>Yeah, sure. So it's pretty simple. So if we just go to HTTP bit dot Lee, bit dot L Y forward slash Citrix launchpad, and we can sign up through that. >>Excellent. I've already signed up. I'm looking forward to these series, this series, to learn more about what you guys are doing and kind of dig in double click on some of the things that you spoke about Christian. Thank you for joining me today, talking about the launch pad series and letting folks know where they can go to register. >>Thank you. Great to be on the great to see you again. >>Likewise, for Christian Riley, I'm Lisa Martin, you're watching a cube conversation.

>> 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 >>covering fortunate security summit brought to you by ford in it. >>Welcome back to the cubes coverage, affording that security summit at the ford championship here in napa. I'm lisa martin and I'm very pleased to welcome back to the cube kenzi founder and chairman and ceo affording that, ken. Welcome back to the program. >>Thank you is uh, we're happy to be here after almost two years and uh, >>I know it's great to see you in person. I was saying before we went live, I forgot how tall you are. So this is a great event. But I want you to talk to me a little bit about some of the amazing growth. The Fortinet has seen 500,000 customers close to 30% year on year growth continuing to post solid earnings stock is more than double this year. What are some of the things that you attribute this group to and what do you think in your opinion differentiates format? >>I think some of the more strategic long term investment we made started paying off like uh, we're still the only company actually develop basic chip which can making a huge computing power advantage compared to using software to all the security function computing Because security tend to need about like 1300 times more company in power to process the same data as a routing switching. So that's where for the network security definitely a chap, a huge advantage And we invested very early and take a long term and also a big investment and so far started paying off the other thing we also keeping a lot of innovation and the internal organic growth for the company instead of do a lot of acquisition and that's also started making all these different products integrate well ultimately to get well. And that's also driving a huge growth, not just that was security, but also we see the fabric also has global fast, >>interesting. So you're really keeping it organic, which is not common a lot of these days we see a lot of acquisitions, but one of the things, a lot of growth, another thing that we do know that's growing is the threat landscape I was mentioning before we went live that I spoke with Derek Manky a couple times this summer and John Madison and the global threat landscape report showing ransomware up nearly 11 times in the last year. Of course we had this rapid transition to work from home and all these devices on accessing corporate networks from home. Talk to me about some of the security challenges that you're helping customers deal with. >>I think during the pandemic, definitely you see a lot of security issues that come up because work from home with your remote access a lot of important information, a lot of important data there At the same time. The ransomware attacks studying like a mentioning 11 times compared to like one or two years ago all this driving all there's a new technology for security. So now you cannot just secure the board anymore. So you have a secure the whole infrastructure. Both internal to a lot of internal segmentation And also go outside security when like I see when the 5G. Connection and how to secure work from home and they trust their trust access environment all these drive a lot of security growth. So we see the yeah it's a it's a pretty healthy market >>it's definitely a healthy market that's one thing looking at it from that lens. What are some of the customer conversation? How have the customer conversations changed? Are you now talking with different levels and organizations security Being a board level conversation discussion and talk to me about how those conversations have evolved. >>Security now become very important part of I. T. And uh pretty much all top one top two on the 80 spending now and the same time what to work from home or some other uh definitely seeing the board level conversation right now because you can see if there's a security issue for the company the damage could be huge. Right? So that's where the secure awareness especially ransomware is very very huge And plus the supply chain issues some other attack on the infrastructure. So we see a lot of security conversation in the bowl level in the Ceo in the in the executive level now compared to before more I. T. Conversation. So it's to drive the huge awareness of security and that's also we see everybody citing concerns security now. >>But I'm sure I imagine that's across every industry. Yes. >>Yeah pretty much all the vertical right? And especially a lot of new area traditionally they don't have much security like some smb some consumer some traditional Ot IOT space now it's all security studying that very important for them now. >>So let's talk about, here we are. The security summit at the fortunate championship. Give me your perspective on the P. G. A. Ford in that relationship. >>Uh first I think it's a golf is also event sports especially during the epidemic that's probably become the most favorite spot. And for me also I'm a golfer for 30 years. Never market golfer but I love the sport on the other side we see sometimes it's uh working with a lot of a customer a lot of a partner they behave if we can combine some business and there was certain like activity especially outdoor that's also be great. And also helping Brandon and that's another way we can contribute back to the community. So they say hey then then that's that's the first time for us. We just love it gets going. >>It's great to be outdoors right at 40 minutes doing an event outdoors showing that yes you can do that safely. But also I also hear from some of your other team members that it's a very culturally synergistic relationship. The pgn format. >>Yes. Exactly. Yeah that's where we love this golf and especially working with a different partner and different partner and also all the team working together. So it's a team sport kind of on the other side it's all do and enjoy a combined working uh activity altogether. Everybody love it. >>Something that so many of us have missed Ken for the last 18 months or so. So we're at the security summit, there's over 300 technology leaders here. Talk to me about some of the main innovations that are being discussed. >>Uh definitely see security starting uh little covered whole infrastructure and uh especially in a lot of environment. Traditionally no security cannot be deployed like internal segmentation because internal network can be 10, 200 faster than the one connection. So it has to be deployed in the in the internal high speed environment whether inside the company or kind of inside the data center, inside the cloud on the other side, like a lot of one connection traditionally like whether they see one or the traditional like cuba more than the S E O. They also need to be combined with security and also in the zero trust access environment to really supporting work from home and also a lot of ot operation technology and a lot of other IOT space utility. All these different kind of like environment need to be supported, sometimes recognized environment. So we see security studying deport everywhere whether the new small city or the like connected car environment and we just see become more and more important. That's also kind of we studying what we call in a secure driven networking because traditionally you can see today's networking just give you the connectivity and speed so they treat everything kind of uh no difference but with security driven network and you can make in the networking decision move based on the security function, like a different application or different content, different user, different device, even different location, you can make a different kind of level decision so that we see is a huge demand right now can make the whole environment, whole infrastructure much secure. >>That's absolutely critical that pivot to work from home was pretty much overnight a year and a half ago and we still have so many people who are permanently remote, remote but probably will be permanently and a good amount will be hybrid in the future, some TBD amount. Uh and one of the challenges is of course you've got people suddenly from home you've got a pandemic. So you've got an emotional situation, you've got people multitasking, they've got kids at home trying to learn maybe spouses working, they're trying to do Everything by a video conferencing and collaboration tools and the security risks. There are huge and we've seen some of that obviously reflected in the nearly 11 x increase in ransomware but talk to me about what 14 announced yesterday with links is to help on that front in a considerable way. >>That's where we totally agree with you the work from home or kind of hybrid way to work in. Pretty much will become permanent. And that's where how to make a home environment more kind of supporting is a remote working especially like when you have a meeting, there are some other things going on in the whole activity and also sometimes data you access can be pretty important, pretty confidential. That's where whether in the zero trust environment or making the home connection more reliable, more secure. It's all very, very important for us. Uh, that's where we were happy to partner with Lynxes and some other partner here uh, to support in this hybrid working environment to make work from home more secure. And uh, as we see is a huge opportunity, >>huge opportunity and a lot of industries, I had the pleasure of talking with links to Ceo Harry do is just an hour or so ago and I asked him what are some of the vertical, since we know from a security and a ransomware perspective, it's just wide open. Right, Nobody's safe anymore from it. But what are some of the verticals that you think are going to be early adopters of this technology, government health care schools, >>I think pretty much all vertical start and see this work from home and it's very, very important for us. There's a few top vertical, traditionally finance service, uh, spend a lot of money healthcare, spend a lot of money on security. So they are still the same? We don't see that change March on the other side. A lot of high tech company, which also one of the big vertical for us now, I say maybe half or even more than half the employee they want to work for home. So that's also making they say uh they call home branch now, so it's just make home always just secure and reliable as a branch office and at the same time of Southern government and the sort of education vertical and they all started C is very, very important to do this, remote their trust access approach and the same time working with a lot of service providers to supporting this, both the D. N. A. And also the sassy approach. So we are only companies on the saturday company partner, a lot of IT service provider. We do believe long term of the service provider, they have the best location, best infrastructure, best team to supporting Sassy, which we also build ourselves. If customers don't have a service provider, we're happy to supporting them. But if they have a service provider, we also prefer, they go to service provider to supporting them because we also want to have a better ecosystem and making everybody like uh benefit has women's situation. So that's what we see is whether they trust no access or sassy. Very happy to work with all the partners to making everybody successful. >>And where our customers in that evolution from traditional VPN to Z T and a for example, are you seeing an acceleration of that given where we are in this interesting climate >>uh definitely because work from home is uh if you try to access use VPN, you basically open up all the network to the home environment which sometimes not quite secure, not very reliable. Right? So that's where using a Z T N A, you can access a certain application in a certain like environment there. And the same leverage ste when there's other huge technology advantage can lower the cost of the multiple link and balance among different costs, different connection and uh different reliability there. Uh it's a huge advantage, >>definitely one of the many advantages that reporting it has. So this afternoon there's going to be a, as part of the security summit, a panel that you and several other Fortinet execs are on taking part in A Q and a, what are some of the topics that you think are going to come up? And as part of that Q and >>A. I see for certain enterprise customer, definitely the ransomware attack, how to do the internal segmentation, how to securely do the remote access work from home. So we are very important For some service provider. We also see how to supporting them for the sassy environment and certain whole infrastructure security, whether the 5G or the SD went because everyone has a huge demand and uh it's a group over for us, we become a leader in the space. It's very very important for them. We also see uh like a different vertical space, Some come from healthcare, some from come from education. Uh they all have their own kind of challenge. Especially like there's a lot of uh oh T IOT device in healthcare space need to be secured and the same thing for the O. T. IOT space, >>Tremendous amount of opportunity. One thing I want to ask it, get your opinion on is the cybersecurity skills gap. It's been growing year, over year for the last five years. I know that just last week 14 that pledge to train one million professionals in the next five years, you guys have been focused on this for a while. I love that you have a veterans program. I'm the daughter of a Vietnam combat veterans. So that always warms my heart. But is that something, is the cybersecurity skills got something that customers ask you ken? How do you recommend? We saw this? >>Yes, we have been doing this for over 10 years. We have the program, we call the network secured expert program a different level. So we have 24 million people. We also commit a traditional million people because there's a huge shortage of the scale separate security expert there. So we do work in with over like a 4500 university globally at the same time. We also want to offer the free training to all the people interested, especially all the veterans and other Like even high school graduate high school student there and at the same time anyone want to learn several security. We feel that that's, that's very good space, very exciting space and very fast-growing space also still have a huge shortage globally. There's a 3-4 million shortage of skilled people in the space, which is a or fast growing space. And so we were happy to support all the train education with different partners at the same time, try to contribute ourselves. >>I think that's fantastic. Will be excited to see over the next five years that impact on that training one million. And also to see it to your point with how much the industry is changing, how much, how fast supporting that's growing. There's a lot of job opportunity out there. I think it was Sandra who said that I was talking to her this morning that there's no job security like cybersecurity. It's really true. If you think about it. >>Yeah, I totally agree. Yeah. Like remember a few years ago when we started the first time to do all this interview, I said, hey, it's a barber hot space now, let's get harder and harder, more people interested now. And I really thank you cube and you give all the support it all these years and we're happy to be here. >>Absolutely. It's our pleasure. Well, I know you are paired up. You said tomorrow with Phil Mickelson for the pro am. That's pretty exciting, ken. >>I'm not sure I'm a very good golfer, but I will try my best. >>You try your best. I'm sure it will be a fantastic experience. Thank you for having the cube here for bringing people back together for this event, showing that we can do this, we can do this safely and securely. And also what Fortinet is doing to really help address that cyber security skills gap and uh, really make us more aware of the threats and the landscape and how we, as individuals and enterprises can help sort to quiet that storm >>also will be happy to be here and also being honored to be part of the program at the same time. We also want to thank you a lot of partner model customer and join us together for this big PJ event and thank you for everyone. >>Absolutely. And you guys are a big partner driven organization. I'm sure the partners appreciate that, ken, Thank you so much. >>Thank you. Thank you lisa >>for kenzi. I'm lisa martin. You're watching the cue from the Fortinet security summit in napa valley. >>Yeah. Mhm

>>Welcome to this cube conversation. I'm Lisa Martin. I'm joined by Derek manky next, the chief security insights and global threat alliances at 40 guard labs. Derek. Welcome back. >>Yeah, it's great to be here again. So then, uh, uh, a lot of stuff's happened since we last talked. >>One of the things that was really surprising from this year's global threat landscape report is a 10 more than 10 X increase in ransomware. What's going on? What have you guys seen? >>Yeah, so, uh, th th this is, is massive. We're talking about a thousand percent over a 10, a 10 X increase. This has been building police. So this, this has been building since, uh, December of 2020 up until then we saw relatively low, uh, high watermark with ransomware. Um, it had taken a hiatus really because cyber criminals were going after COVID-19 lawyers and doing some other things at the time, but we did see us a seven fold increase in December, 2020. That is absolutely continued. Uh, continued this year into a momentum up until today. It continues to build never subsided. Now it's built to this monster, you know, almost 11 times increase from, from what we saw back last December and what the, uh, the reason what's fueling. This is a new verticals that cyber criminals are targeting. We've seen the usual suspects like telecommunication government and, uh, position one and two, but new verticals that have risen up into this, uh, third and fourth position following our MSSP. And this is on the heels of the Casia attack. Of course, that happened in 2021, as well as operational technology. There's actually four segments, there's transportation, uh, automotive manufacturing, and then of course, energy and utility all subsequent to each other. So there's a huge focus now on, on OTA and MSSP for cybercriminals. >>One of the things that we saw last year, this time was that attackers had shifted their focus away from enterprise infrastructure devices, to home networks and consumer grade products. And now it looks like they're focusing on both. Are you seeing that? >>Yes, absolutely. I in two ways. So first of all, again, this is a kill chain that we talk about. They have to get a foothold into the infrastructure, and then they can load things like ransomware on there. They can little things like information Steelers as an example, the way they do that is through botnets. And, uh, what we reported in this, um, in the first half of 2021 is that Mariah, which is about a two to three-year old button that now is, is number one by far, it was the most prevalent bond that we've seen. Of course, the thing about Mariah is that it's an IOT based bot net. So it sits on devices, uh, sitting inside a consumer networks as an example, or home networks, right? And that, that can be a big problem. So that's the targets that cyber criminals are using. The other thing that we saw that was interesting was that one in four organizations detected malvertising. >>And so what that means at least, is that cyber criminals are shifting their tactics from going just from cloud-based or centralized email phishing campaigns to a web born threats, right? So they're infecting sites, waterhole attacks, where people would go to read their, their, their daily updates as an example of things that they do as part of their habits. Um, they're getting sent links to these sites that when they go to it, it's actually installing those botnets onto those systems. So they can get a foothold. We've also seen scare tactics, right? So they're doing new social engineering Lewis pretending to be human resource departments, uh, you know, uh, uh, it staff and personnel, as an example, with pop-ups through the web browser that looked like these people to fill out different forms and ultimately get infected on, on a home devices. >>Well, the home device we use is proliferate. It continues because we are still in this work from home work, from anywhere environment. Is that when you think a big factor in this increased from seven X to nearly 11 X, >>It is a factor. Absolutely. Yeah. Like I said, it's, it's also, it's a hybrid of sorts. So, so a lot of that activity is going to the MSSP, uh, angle, like I said, uh, to, to the OT. And so to those verticals, which by the way, are actually even larger than traditional targets in the past, like, uh, finance and banking is actually lower than that as an example. So yeah, we are seeing a shift to that. And like I said, that's, that's further, uh, backed up from what we're seeing on with the, the, the, the botnet activity specifically with Veronica too. Are >>You seeing anything in terms of the ferocity? We know that the volume is increasing. Are they becoming more ferocious? These attacks? >>Yeah. Yeah. There, there is. There's a lot of aggression out there, certainly from, from criminals. And I would say that the velocity is increasing, but the amount of, if you look at the cyber criminal ecosystem, the, the stakeholders, right. Um, that is increasing, it's not just one or two campaigns that we're seeing. Again, we're seeing, this has been a record cases here almost every week. We've seen one or two significant, you know, cyber security events that are happening. That is a dramatic shift compared to, to, to last year or even, you know, two years ago too. And this is because, um, because the cyber criminals are getting deeper pockets now, they're, they're becoming more well-funded and they have business partners, affiliates that they're hiring each one of those has their own methodology, and they're getting paid big. We're talking up to 70 to 80% commission, just if they actually successfully, you know, in fact, someone that pays for the ransom as an example. And so that's really, what's driving this too. It's, it's, it's a combination of this kind of perfect storm as we call it. Right. You have this growing attack surface and work from home, uh, environments, um, and footholds into those networks. But you have a whole bunch of other people now on the bad side that are orchestrating this and executing the attacks too. >>What can organizations do to start to slow down or limit the impacts of this growing ransomware as a service? >>Yeah, great question. Um, everybody has their role in this, I say, right? So, uh, if we look at, from a strategic point of view, we have to disrupt cyber crime. How do we do that? Um, it starts with the kill chain. It starts with trying to build resilient networks. So things like a ZTE and a zero trust network access, a SD LAN as an example, as an example for producting that land infrastructure on, because that's where the threats are floating to, right? That's how they get the initial footholds. So anything we can do on the, on the, you know, preventative, preventative side, making, uh, networks more resilient, um, also education and training is really key. Things like multi-factor authentication are all key to this because if you build that, uh, uh, preventatively and that's a relatively small investment upfront, Lisa compared to the collateral damage that can happen with these ransomware, it passes, the risk is very high. Um, that goes a long way. It also forces the attackers to it slows down their velocity. It forces them to go back to the drawing board and come up with a new strategy. So that is a very important piece, but there's also things that we're doing in the industry. There's some good news here too, uh, that we can talk about because there's, there's things that we can actually do. Um, apart from that to, to really fight cyber crime, to try to take the cyber criminal cell phone. >>All right. Hit me with the good news Derek. >>Yeah. So, so a couple of things, right. If we look at the bot net activity, there's a couple of interesting things in there. Yes, we are seeing Mariah rise to the top right now, but we've seen big problems of the past that have gone away or come back, not as prolific as before. So two specific examples, a motel that was one of the most prolific botnets that was out there for the past two to three years, there is a take-down that happened in January of this year. Uh, it's still on our radar, but immediately after that takedown, it literally dropped to half of the activity. It hadn't before. And it's been consistently staying at that low watermark now had that half percentage since, since that six months later. So that's very good news showing that the actual coordinated efforts that we're getting involved with law enforcement, with our partners and so forth to take down, these are actually hitting their supply chain where it hurts. >>Right. So that's good news part one trick. Bob was another example. This is also a notorious spot net take down attempt in Q4 of 2020. It went offline for about six months. Um, in our landscape report, we actually show that it came back online, uh, in about June this year. But again, it came down, it came back weaker and another form is not nearly as prolific as before. So we are hitting them where it hurts. That's, that's the really good news. And we're able to do that through new, um, what I call high resolution intelligence. >>Talk to me about that high resolution intelligence. What do you mean by that? >>Yeah, so this is cutting edge stuff really gets me excited and keeps, keeps me up at night in a good way. Uh, cause we're, we're looking at this under the microscope, right? It's not just talking about the why we know there's problems out there. We know there's, there's ransomware. We know there's the botnets, all these things, and that's good to know, and we have to know that, but we're able to actually zoom in on this now and look at it. So we, for the first time in the threat landscape report, we've published TTPs, the techniques, tactics procedures. So it's not just talking about the, what it's talking about, the how, how are they doing this? What's their preferred method of getting into systems? How are they trying to move from system to system and exactly how are they doing that? What's the technique. And so we've highlighted that it's using the MITRE attack framework TTP, but this is real-time data. >>And it's very interesting. So we're clearly seeing a very heavy focus from cyber criminals and attackers to get around security controls, to do defensive, Asian, to do privilege escalation on systems. So in other words, trying to be common administrator so they can take full control of the system. Uh, as an example, a lateral movement on there's still a preferred over 75%, 77, I believe percent of activity we observed from malware was still trying to move from system to system by infecting removable media like thumb drives. And so it's interesting, right? It's a brand new look on the, these a fresh look, but it's this high resolution is allowing us to get a clear image so that when we come to providing strategic guidance and solutions of defense, and also even working on these, take down that Fritz, it allows us to be much more effective. So >>One of the things that you said in the beginning was we talked about the increase in ransomware from last year to this year. You said, I don't think that we've hit that, that ceiling yet, but are we at an inflection points, the data showing that we're at an inflection point here with being able to get ahead of this? >>Yeah, I, I, I would like to believe so. Um, it, there is still a lot of work to be done. Unfortunately, if we look at, you know, there is a, a recent report put out by the department of justice in the S saying that, you know, the chance of, uh, criminal, uh, to be committing a crime, but to be caught in the U S is somewhere between 55 to 60%, the same chance for a cyber criminal lies less than 1% above 0.5%. And that's the bad news. The good news is we are making progress and sending messages back and seeing results. But I think there's a long road ahead. So, um, you know, there there's a lot of work to be done. We're heading in the right direction. But like I said, they say, it's not just about that. It's everyone has, has their role in this all the way down to organizations and end users. If they're doing their part and making their networks more resilient through this, through all the, you know, increasing their security stack and strategy, um, that is also really going to stop the, you know, really ultimately the profiteering, uh, that, that wave, you know, cause that continues to build too. So it's, it's a multi-stakeholder effort and I believe we are, we are getting there, but I continue to still, uh, you know, I continue to expect the ransomware wave to build. In the meantime, >>On the end user front, that's always one of the vectors that we talk about it's people, right? It's there's so there's so much sophistication in these attacks that even security folks and experts are nearly fooled by them. What are some of the things that you're saying that governments are taking action on some recent announcements from the white house, but other organizations like Interpol, the world, economic forum, cyber crime unit, what are some of the things that governments are doing that you're seeing that as really advantageous here for the good guys? >>Yeah, so absolutely. This is all about collaboration. Governments are really focused on public private sector collaboration. Um, so we've seen this across the board, uh, with 40 guard labs, we're on the forefront with this, and it's really exciting to see that it's great. Uh, there, there, there's always been a lot of will work together, but we're starting to see action now. Right. Um, Interpol is a great example. They recently this year held a high level forum on ransomware. I was actually spoken was part of that forum as well too. And the takeaways from that event were that we, this was a message to the world, that public private sector we need. They actually called ransomware a pandemic, which is what I've referred to it as before in itself as well too, because it is becoming that much of a problem and that we need to work together to be able to create action, action action against this measure, success become more strategic. >>The world economic forum, uh, were, were, uh, leading a project called the partnership against cyber crime threat map project. And this is to identify not just all this stuff we talked about in the threat landscape report, but also looking at, um, you know, things like how many different ransomware gangs are there out there. Uh, what are their money laundering networks look like? It's that side of the side of the supply chains of apple so that we can work together to actually take down those efforts. But it really is about this collaborative action that's happening and it's, um, innovation and there's R and D behind this as well. That's coming to the table to be able to make, you know, make it impactful. >>So it sounds to me like ransomware is no longer a for any organization in any, any industry you were talking about the expansion of verticals, it's no longer a, if this happens to us, but a matter of when and how do we actually prepare to remediate prevent any damage? Yeah, >>Absolutely. How do we prepare? The other thing is that there's a lot of, um, you know, with just the nature of, of, of cyber, there's a lot of, uh, connectivity. There's a lot of different, uh, it's not just always siloed attacks. Right? We saw that with colonial obviously this year where you have the talks on, on it that can affect consumers right now to consumers. Right. And so for that very reason, um, everybody's infected in this, uh, it, it truly is a pandemic, I believe on its own. Uh, but the good news is there's a lot of smart people, uh, on the good side and, you know, that's what gets me excited. Like I said, we're working with a lot of these initiatives and like I said, some of those examples I called up before, we're actually starting to see measurable progress against this as well. >>That's good. Well, never adult day, I'm sure. In your world, any thing that you think when we talk about this again, in a few more months of the second half of 2021, anything that, that you predict crystal ball wise that we're going to see? >>Yeah. I think that we're going to continue to see more of the, I mean, ransomware, absolutely. More of the targeted attacks. That's been a shift this year that we've seen. Right. So instead of just trying to infect everybody for ransom, but as an example of going after some of these new, um, you know, high profile targets, I think we're going to continue to see that happening from there. Add some more side on, on, and because of that, the average costs of these data breaches, I think they're going to continue to increase. Um, they had already did, uh, in, uh, 20, uh, 2021, as an example, if we look at the cost of the data breach report, it's gone up to about $5 million us on average, I think that's going to continue to increase as well too. And then the other thing too, is I think that we're going to start to see more, um, more, more action on the good side. Like we talked about, there was already a record amount of take downs that have happened five take downs that happened in January. Um, there were, uh, arrests made to these business partners that was also new. So I'm expecting to see a lot more of that coming out, uh, uh, towards the end of the year, too. >>So as the challenges persist, so do the good things that are coming out of this. They're working folks go to get this first half 2021 global threat landscape. What's the URL that they can go to. >>Yeah, you can check it all, all of our updates and blogs, including the threat landscape reports on blog about 40 nine.com under our threat research category. >>Excellent. I read that blog. It's fantastic. Derek, always a pleasure to talk to you. Thanks for breaking this down for us showing what's going on. Both the challenging things, as well as the good news. I look forward to our next conversation. >>Absolutely. It's great. Chatting with you again, Lisa. Thanks. >>Likewise for Derek manky. I'm Lisa Martin. You're watching this cube conversation.

>>Welcome >>back to HP discover 2021. My name is Dave Volonte and you're watching the cubes virtual coverage of discover 21 we're excited to welcome back our wa Kadoura, She's the vice president and worldwide go to market leader for HP. Es smoking hot. Green Lake Cloud services are welcome back to the cube. Good to see you again. >>Thank you for having me to be with you. >>So talk about how your products and services are supporting customer transformations. I'm interested in the experience that everybody has been dreaming about describe how you're giving your customer that competitive advantage. If you've got any examples, that would be awesome. >>Yeah, you got it. Um, I think as we heard Antonio say the cloud is an experience, not a destination, right? And what we're doing with Green Lake is bringing those cloud capabilities and the cloud experience to our customers. You know, we like to say co locations, data center and edge of course. So this is the cloud on prem. And so rather than forcing customers to only have to go up to cloud to get modern cloud capabilities or the benefits of things like, you know, pay as you go for consumption, et cetera. You know, cloud native capabilities like containers, leveraging, kubernetes. We now bring all of that to Green Lake and to our customers. Edge locations and co locations and data centers. We've been able to dramatically transform many of our customers businesses. Right? And you'll probably see it discover some of those examples come to life. For example, Care Stream, who is, you know, in the electronic medical imaging world, Right? They have all of the X ray equipment that capture x rays and different sort of diagnostics for patients. Um and we worked with them to not only craft a ml solution to better read and diagnose these images, um but also all of the underlying infrastructure with the HP Green Lake Ml ops platform that allows them to instantly leverage the capabilities of machine learning and the infrastructure to go with it. >>And so tell me, so, how is it resonating with customers? What you're out there, talking to customers all the time? What are they >>telling you? You know, I think what our customers appreciate about HP Green Lake is it's not sort of look, it's either all on prem in my data center and I have to fully manage it, build it, implement it, take care of it or it's fully public cloud. I have little control and basically I get whatever the public cloud gives me right. Hp Green leg gives our customers the flexibility and control that they require. Right. And so you can think of many use cases where customers have a need to have the compute storage sort of processing need to happen closer to where their data and apps live. Um and so for that exact reason our customers love the flexibility, right? Cloud one, Dato was public cloud. Cloud to Dato I think is the cloud that comes to our customers at their convenience. And to me, you know what I tell C I O S and C T O S and sort of other lines of business leaders when I meet with them is you shouldn't be forced to have to take your data and apps elsewhere to get the transformation that you need. We want to be able to bring that directly to our customers. >>Of course, a lot of the transformation is around data. We love talking about data on the cube and it's funny, I mean we talked about big data last decade. We don't use that term much anymore. Uh It was kind of overhyped but as as often times as the case may be in the early days it's overhyped but then it's under hyped when it actually starts to kick in. And I feel like we're entering a new age of data. And insights with the ascendancy of machine learning and ai what does this mean from H. P. S. Perspective and what our customers telling you that it means for them. >>Yeah no data. I think we often hear data is the new currency writes the new gold. Um You know we've heard uh Antonio even say things like look data could even become something that maybe over time companies start to put some kind of value on their balance sheet. Behind right the same way that maybe brands represented this value on a balance sheet. Um effectively what's happened with data is a lot of people have a lot of data but there's not been a lot of ability to extract insights from data. Right? And I think this is the new revolution that we're all undergoing is we finally have the modern analytics tools to actually turn the data into insights and what we bring to the table from an HPD perspective is the fact that we have the best infrastructure. We obviously now have the cloud capabilities mixed in with our data fabric or container platform, our machine learning operations platform to then be able to process that data again, integrated with many of the great I SV partners that we have on the data side allow our customers to turn that into real insights for their business. And effectively data is becoming a huge competitive advantage. Right? I think many of us are you know, leveraging some, you know, pretty interesting tools or gadgets these days, right? Like I wear one of those, you know, sleep brings, you can imagine a company like that in the future that's able to collect so much data from the folks that purchase their products. Then being able to give us insights about, you know, where is the best zip code that, you know, people get the most amount of sleep in or you know, which zip codes are the healthiest and you know, the United States or countries, et cetera. Um but data really is becoming um you know, a competitive advantage. And one of the things that we care most about at HP is also using it as a force for good and making sure that there is a sort of ethical ai capability. >>That's a great message and very important one. And and it's interesting you're saying about data and the value how well it's clearly it's clearly being valued in terms of companies market caps. I mean it's it's it's you know, maybe it's not the balance yet, but it's on the income statement in terms of data products and data services that that's happening. So we'll see if Antonio's right in the next, you know, several years. But so let's talk more about the specific data challenges that you're solving for your customers. They talk about silos, they talk about they haven't got as much value out of their data initiatives as they wanted to. What are they telling you? Are there challenges and how are you approaching it? >>Yeah, I think, you know, um data's everywhere right. The ability for customers to store the right amount of data is a huge challenge because obviously there's, you know, a huge cost associated with collecting, keeping cleansing processing, you know, all the way to sort of analyzing your data. There tends to be a ton of data silos, right? So customers are looking for a common data fabric that they can then process their data sources across and then be able to sort of tap into that data from an analytics perspective. So much of the technology again that we're focused on is be able to store the data right, Our data fabric layer with his moral right being able to process that data capture that data and then allow the analytics tools to then harness the power of that data and turn that into real business insights for our customers. Um Every customer that I have spoken to, you know whether their financial services, you know, you can imagine the big financial services. I mean they've got you know, just bazillions of pockets of data everywhere and you know, the real sort of a challenge for them is how do I build a common data platform that allows me to tap into that data in effective ways for my business users? >>You talk a little bit about how you're changing the way you're providing solutions? Maybe maybe you could contrast it with the way HP has done in the past, because I think that's important when you, when you think about, you talk a lot about green lake and as a service, but if the products are still, you know, kind of boxes and Luns and, and gigahertz and ports, then, you know, that's that's a dis continuity. So what's changed from the past and how are you feeding into the way customers are transforming their business and supporting their outcomes? >>That's exactly right. You know, at some point in time, right. If you think maybe 10 or 20 years back, it used to be very much about the infrastructure for hp. What's exciting about what we're doing differently for our customers is look, we have the best infrastructure in the business, right. Hp has been doing this you no longer than anyone has probably almost 60 years now. Um but being able to vertically integrate right, move up in that value change so that our customers can get more complete solutions is the more interesting part for our customers. Our customers love our technology, Yes, the gigahertz and the speeds and feeds all of that do matter because they, you know, make for some very powerful infrastructure. However, what makes it easier is the fact that we are building platform stacks on top of that hardware, um that help abstract away the complexity of that infrastructure and the ability to use it far more seamlessly. Um and then if you think about it, we of course have also one of the most advanced services organizations. So being able to leverage our services capabilities, our platform capabilities on top of that hardware, again, deliver it back to our customers In a consumption model, which they've become two X, which they've come to expect from a cloud model. Um and then surrounded by a very rich ecosystem of partners. And we're talking about system Integrators that now have capabilities on helping our customers run their Green Lake environments. We're talking about I. S. V. S. Right? So software stacks and platforms that fully integrate with the Green Lake platform for completely seamless solutions. Um as well as channel Partners and global distributors. So I think that's where we can truly deliver the ultimate end to end solution. It's not just the hardware, right? But it's being complemented with the right services being complemented with the right platform capabilities, the software integrations to deliver that workload that the customer expects. >>And partners, they gotta they gotta place bets, they gonna put resources time money in a line, their resources with with their their partners and their suppliers like HP. So when they ask you, hey, okay. Hp. Tell me or well, what's your overall strategy? Why is it compelling and why do you give me competitive advantage relative to some of your peers in the industry? >>Yeah, I think what, you know, partners are going to be most excited about is the openness of the platform, right? Being able to allow our partners to leverage Green Lake Central with open API so that they can integrate some of their own technologies into our platform. Uh the ability to allow them to also layer in their own um managed services on top of the platform is key. Um And of course being able to build sort of these win win solutions with the system Integrators, right. The system Integrators have some fantastic capabilities all the way from an application development, all the way down to the infrastructure management and data center delivery centers that they have. And so leveraging HP Green Lake um really helps them have access to core technologies that they need to deliver these solutions. >>I wonder if I could take a little sort of side road here and ask you because so many changes going on HP itself is transforming your customers are transforming the pandemic has accelerated all these transformations. Can you talk a little bit about how you've transformed go to market specifically in the context of of as a service? I mean that had to be quite a change for you guys. >>Yeah, no, go to market transformations in support of sort of moving from traditional go to markets right to call, go to markets or significant. Um They required us to really think through what does delivering as a service solutions mean for our direct sales force? What does it mean for our partners and their transformations and being able to support as a service solutions? Um for HP specifically, it also means um thinking about our customer outcomes, not just our ability to ship them, you know, the requisite hardware and say, look, once it's left our dog, our job is done right. It really takes our obligation all the way to the customer using the technology on a day by day basis, as well as supporting them in making sure that everything from implementation to set up to the ongoing monitoring operations of the technology is working for them in the way that they expect in an as a service way, right? We don't expect them to operate it. We don't expect them to, you know, do anything more than pick up the phone and call us if something doesn't go as planned. >>And how about your sellers and your partners? How did they respond? I mean you just wake up one day is okay guys, here we go, new compensation scheme, new way to sell new way to market that that took some thought in some time. And where are you in that journey? >>That's right. And I always say, you know, if you expect people to wake up one day and be transformed, right? You're kidding yourself. Um So everything from sort of the way that we think about our customers use cases, right? And empowering our sellers to understand the outcomes that our customers expect and demand from us to things like compensation too. You know, the partner rebate program that we leverage through the channel partners in order to give them the right incentives to also allow them to make the right investments to support Green Lake. Um, you know, we've all, you know, HP has a fairly significant field sales and solution team and so not thinking about this only as a single person that represents Green Lake, but looking at our capabilities across the board, right. We have fantastic advisory consultants on the ground with phds and data science. We have folks that understand, you know, high performance computing, so making sure that we're embedding the expertise in all of the right personas that support our customers, not just from a calm perspective, but also from an understanding of the end to end solutions that we're bringing to those markets. >>So what gets you stoked in the morning, you get out of bed and you're like, okay, I'm gonna go attack the world. What are you most excited about for H P E and his future? >>You know, it's, there's so much happening right now in this sort of cloud world. Right? Um to me the most exciting portion is the fact that given that we've now introduced on prem cloud to the world, our ability to ship new services and new capabilities, um, but also do that via a very rich partner ecosystem honestly is what probably has me most excited. This is no longer the age of go at it alone, Right. So not only are engineering and product teams hard at work in the engine room producing, you know, capabilities at sort of lightening fast speeds, but it's also our ability to partner, uh you know, whether it's with platform providers, you know, software providers or, you know, system Integrators and services providers, that ecosystem is starting to come together to deliver highly meaningful solutions to our customers and all in a very open way. Um, the number one thing that I personally care about is that our customers never feel like they are being locked in or that they are sort of being forced to have to give up certain levels of capabilities. We want to give them the best of what's out there and allow them to then have that flexibility in their solution. >>And one of the challenges, of course with virtual events is you don't have the hallway track. You know, somebody can't say, hey, have you seen that IOT zone? It's amazing. They got all these robots going around. But so what, what would you say that people should be focused on the discovery maybe things that you want to call out specific highlights or segments that you think are relevant? >>Yeah, there's gonna be a ton of fantastic stuff I think, um you know, really looking for that edge to cloud strategy, um that we're gonna be spending a lot of time talking about um looking at some of our vertical workload solutions, right. We're gonna be talking about quite a few from electronic health care records to payment solutions. Um and many more I think depending on what folks are interested in, there's gonna be something for everyone. Um Project Aurora, which now starts to announce our new security capabilities. Um, you know, the zero trust capabilities that we're delivering um is probably interesting to a lot of our customers, so lots of exciting things coming and I'm excited for our customers to check this out. >>No doubt that's a hot topic. Especially given what's been happening the news these past several months. All right, well, thanks so much for coming back in. The cube is great to see you hopefully face to face next time. >>I sure hope so. Thanks so much for having me. >>It's our pleasure. And thank you for watching and thank you for being with us and our ongoing coverage of HPD discovered 2021. This is Dave Volonte. You're watching the cube, The leader and digital tech coverage. >>Yeah.

>>Welcome >>back to HP discover 2021. My name is Dave Volonte and you're watching the cubes virtual coverage of discover 21 we're excited to welcome back our wa Kadoura, She's the vice president and worldwide go to market leader for HP. Es smoking hot. Green Lake Cloud services are welcome back to the cube. Good to see you again. >>Thank you for having me to be with you. >>So talk about how your products and services are supporting customer transformations. I'm interested in the experience that everybody has been dreaming about describe how you're giving your customer that competitive advantage. If you've got any examples, that would be awesome. >>Yeah, you got it. Um, I think as we heard Antonio say the cloud is an experience, not a destination, right? And what we're doing with Green Lake is bringing those cloud capabilities and the cloud experience to our customers. You know, we like to say co locations, data center and edge of course. So this is the cloud on prem. And so rather than forcing customers to only have to go up to cloud to get modern cloud capabilities or the benefits of things like, you know, pay as you go for consumption, et cetera. You know, cloud native capabilities like containers, leveraging, kubernetes. We now bring all of that to Green Lake and to our customers. Edge locations and co locations and data centers. We've been able to dramatically transform many of our customers businesses. Right? And you'll probably see it discover some of those examples come to life. For example, Care Stream, who is, you know, in the electronic medical imaging world, Right? They have all of the X ray equipment that capture x rays and different sort of diagnostics for patients. Um and we worked with them to not only craft a ml solution to better read and diagnose these images, um but also all of the underlying infrastructure with the HP Green Lake Ml ops platform that allows them to instantly leverage the capabilities of machine learning and the infrastructure to go with it. >>And so tell me, so, how is it resonating with customers? What you're out there, talking to customers all the time? What are they >>telling you? You know, I think what our customers appreciate about HP Green Lake is it's not sort of look, it's either all on prem in my data center and I have to fully manage it, build it, implement it, take care of it or it's fully public cloud. I have little control and basically I get whatever the public cloud gives me right. Hp Green leg gives our customers the flexibility and control that they require. Right. And so you can think of many use cases where customers have a need to have the compute storage sort of processing need to happen closer to where their data and apps live. Um and so for that exact reason our customers love the flexibility, right? Cloud one, Dato was public cloud. Cloud to Dato I think is the cloud that comes to our customers at their convenience. And to me, you know what I tell C I O S and C T O S and sort of other lines of business leaders when I meet with them is you shouldn't be forced to have to take your data and apps elsewhere to get the transformation that you need. We want to be able to bring that directly to our customers. >>Of course, a lot of the transformation is around data. We love talking about data on the cube and it's funny, I mean we talked about big data last decade. We don't use that term much anymore. Uh It was kind of overhyped but as as often times as the case may be in the early days it's overhyped but then it's under hyped when it actually starts to kick in. And I feel like we're entering a new age of data. And insights with the ascendancy of machine learning and ai what does this mean from H. P. S. Perspective and what our customers telling you that it means for them. >>Yeah no data. I think we often hear data is the new currency writes the new gold. Um You know we've heard uh Antonio even say things like look data could even become something that maybe over time companies start to put some kind of value on their balance sheet. Behind right the same way that maybe brands represented this value on a balance sheet. Um effectively what's happened with data is a lot of people have a lot of data but there's not been a lot of ability to extract insights from data. Right? And I think this is the new revolution that we're all undergoing is we finally have the modern analytics tools to actually turn the data into insights and what we bring to the table from an HPD perspective is the fact that we have the best infrastructure. We obviously now have the cloud capabilities mixed in with our data fabric or container platform, our machine learning operations platform to then be able to process that data again, integrated with many of the great I SV partners that we have on the data side allow our customers to turn that into real insights for their business. And effectively data is becoming a huge competitive advantage. Right? I think many of us are you know, leveraging some, you know, pretty interesting tools or gadgets these days, right? Like I wear one of those, you know, sleep brings, you can imagine a company like that in the future that's able to collect so much data from the folks that purchase their products. Then being able to give us insights about, you know, where is the best zip code that, you know, people get the most amount of sleep in or you know, which zip codes are the healthiest and you know, the United States or countries, et cetera. Um but data really is becoming um you know, a competitive advantage. And one of the things that we care most about at HP is also using it as a force for good and making sure that there is a sort of ethical ai capability. >>That's a great message and very important one. And and it's interesting you're saying about data and the value how well it's clearly it's clearly being valued in terms of companies market caps. I mean it's it's it's you know, maybe it's not the balance yet, but it's on the income statement in terms of data products and data services that that's happening. So we'll see if Antonio's right in the next, you know, several years. But so let's talk more about the specific data challenges that you're solving for your customers. They talk about silos, they talk about they haven't got as much value out of their data initiatives as they wanted to. What are they telling you? Are there challenges and how are you approaching it? >>Yeah, I think, you know, um data's everywhere right. The ability for customers to store the right amount of data is a huge challenge because obviously there's, you know, a huge cost associated with collecting, keeping cleansing processing, you know, all the way to sort of analyzing your data. There tends to be a ton of data silos, right? So customers are looking for a common data fabric that they can then process their data sources across and then be able to sort of tap into that data from an analytics perspective. So much of the technology again that we're focused on is be able to store the data right, Our data fabric layer with his moral right being able to process that data capture that data and then allow the analytics tools to then harness the power of that data and turn that into real business insights for our customers. Um Every customer that I have spoken to, you know whether their financial services, you know, you can imagine the big financial services. I mean they've got you know, just bazillions of pockets of data everywhere and you know, the real sort of a challenge for them is how do I build a common data platform that allows me to tap into that data in effective ways for my business users? >>You talk a little bit about how you're changing the way you're providing solutions? Maybe maybe you could contrast it with the way HP has done in the past, because I think that's important when you, when you think about, you talk a lot about green lake and as a service, but if the products are still, you know, kind of boxes and Luns and, and gigahertz and ports, then, you know, that's that's a dis continuity. So what's changed from the past and how are you feeding into the way customers are transforming their business and supporting their outcomes? >>That's exactly right. You know, at some point in time, right. If you think maybe 10 or 20 years back, it used to be very much about the infrastructure for hp. What's exciting about what we're doing differently for our customers is look, we have the best infrastructure in the business, right. Hp has been doing this you no longer than anyone has probably almost 60 years now. Um but being able to vertically integrate right, move up in that value change so that our customers can get more complete solutions is the more interesting part for our customers. Our customers love our technology, Yes, the gigahertz and the speeds and feeds all of that do matter because they, you know, make for some very powerful infrastructure. However, what makes it easier is the fact that we are building platform stacks on top of that hardware, um that help abstract away the complexity of that infrastructure and the ability to use it far more seamlessly. Um and then if you think about it, we of course have also one of the most advanced services organizations. So being able to leverage our services capabilities, our platform capabilities on top of that hardware, again, deliver it back to our customers In a consumption model, which they've become two X, which they've come to expect from a cloud model. Um and then surrounded by a very rich ecosystem of partners. And we're talking about system Integrators that now have capabilities on helping our customers run their Green Lake environments. We're talking about I. S. V. S. Right? So software stacks and platforms that fully integrate with the Green Lake platform for completely seamless solutions. Um as well as channel Partners and global distributors. So I think that's where we can truly deliver the ultimate end to end solution. It's not just the hardware, right? But it's being complemented with the right services being complemented with the right platform capabilities, the software integrations to deliver that workload that the customer expects. >>And partners, they gotta they gotta place bets, they gonna put resources time money in a line, their resources with with their their partners and their suppliers like HP. So when they ask you, hey, okay. Hp. Tell me or well, what's your overall strategy? Why is it compelling and why do you give me competitive advantage relative to some of your peers in the industry? >>Yeah, I think what, you know, partners are going to be most excited about is the openness of the platform, right? Being able to allow our partners to leverage Green Lake Central with open API so that they can integrate some of their own technologies into our platform. Uh the ability to allow them to also layer in their own um managed services on top of the platform is key. Um And of course being able to build sort of these win win solutions with the system Integrators, right. The system Integrators have some fantastic capabilities all the way from an application development, all the way down to the infrastructure management and data center delivery centers that they have. And so leveraging HP Green Lake um really helps them have access to core technologies that they need to deliver these solutions. >>I wonder if I could take a little sort of side road here and ask you because so many changes going on HP itself is transforming your customers are transforming the pandemic has accelerated all these transformations. Can you talk a little bit about how you've transformed go to market specifically in the context of of as a service? I mean that had to be quite a change for you guys. >>Yeah, no, go to market transformations in support of sort of moving from traditional go to markets right to call, go to markets or significant. Um They required us to really think through what does delivering as a service solutions mean for our direct sales force? What does it mean for our partners and their transformations and being able to support as a service solutions? Um for HP specifically, it also means um thinking about our customer outcomes, not just our ability to ship them, you know, the requisite hardware and say, look, once it's left our dog, our job is done right. It really takes our obligation all the way to the customer using the technology on a day by day basis, as well as supporting them in making sure that everything from implementation to set up to the ongoing monitoring operations of the technology is working for them in the way that they expect in an as a service way, right? We don't expect them to operate it. We don't expect them to, you know, do anything more than pick up the phone and call us if something doesn't go as planned. >>And how about your sellers and your partners? How did they respond? I mean you just wake up one day is okay guys, here we go, new compensation scheme, new way to sell new way to market that that took some thought in some time. And where are you in that journey? >>That's right. And I always say, you know, if you expect people to wake up one day and be transformed, right? You're kidding yourself. Um So everything from sort of the way that we think about our customers use cases, right? And empowering our sellers to understand the outcomes that our customers expect and demand from us to things like compensation too. You know, the partner rebate program that we leverage through the channel partners in order to give them the right incentives to also allow them to make the right investments to support Green Lake. Um, you know, we've all, you know, HP has a fairly significant field sales and solution team and so not thinking about this only as a single person that represents Green Lake, but looking at our capabilities across the board, right. We have fantastic advisory consultants on the ground with phds and data science. We have folks that understand, you know, high performance computing, so making sure that we're embedding the expertise in all of the right personas that support our customers, not just from a calm perspective, but also from an understanding of the end to end solutions that we're bringing to those markets. >>So what gets you stoked in the morning, you get out of bed and you're like, okay, I'm gonna go attack the world. What are you most excited about for H P E and his future? >>You know, it's, there's so much happening right now in this sort of cloud world. Right? Um to me the most exciting portion is the fact that given that we've now introduced on prem cloud to the world, our ability to ship new services and new capabilities, um, but also do that via a very rich partner ecosystem honestly is what probably has me most excited. This is no longer the age of go at it alone, Right. So not only are engineering and product teams hard at work in the engine room producing, you know, capabilities at sort of lightening fast speeds, but it's also our ability to partner, uh you know, whether it's with platform providers, you know, software providers or, you know, system Integrators and services providers, that ecosystem is starting to come together to deliver highly meaningful solutions to our customers and all in a very open way. Um, the number one thing that I personally care about is that our customers never feel like they are being locked in or that they are sort of being forced to have to give up certain levels of capabilities. We want to give them the best of what's out there and allow them to then have that flexibility in their solution. >>And one of the challenges, of course with virtual events is you don't have the hallway track. You know, somebody can't say, hey, have you seen that IOT zone? It's amazing. They got all these robots going around. But so what, what would you say that people should be focused on the discovery maybe things that you want to call out specific highlights or segments that you think are relevant? >>Yeah, there's gonna be a ton of fantastic stuff I think, um you know, really looking for that edge to cloud strategy, um that we're gonna be spending a lot of time talking about um looking at some of our vertical workload solutions, right. We're gonna be talking about quite a few from electronic health care records to payment solutions. Um and many more I think depending on what folks are interested in, there's gonna be something for everyone. Um Project Aurora, which now starts to announce our new security capabilities. Um, you know, the zero trust capabilities that we're delivering um is probably interesting to a lot of our customers, so lots of exciting things coming and I'm excited for our customers to check this out. >>No doubt that's a hot topic. Especially given what's been happening the news these past several months. All right, well, thanks so much for coming back in. The cube is great to see you hopefully face to face next time. >>I sure hope so. Thanks so much for having me. >>It's our pleasure. And thank you for watching and thank you for being with us and our ongoing coverage of HPD discovered 2021. This is Dave Volonte. You're watching the cube, The leader and digital tech coverage. >>Yeah.

(upbeat music) >> From theCUBE studios in Palo Alto, in Boston bringing you data-driven insights from theCUBE and ETR. This is braking analysis with Dave Vellante. >> Database is the heart of enterprise computing. The market is both exploding and it's evolving. The major force is transforming the space include Cloud and data, of course, but also new workloads, advanced memory and IO capabilities, new processor types, a massive push towards simplicity, new data sharing and governance models, and a spate of venture investment. Snowflake stands out as the gold standard for operational excellence and go to market execution. The company has attracted the attention of customers, investors, and competitors and everyone from entrenched players to upstarts once in the act. Hello everyone and welcome to this week's Wikibon CUBE Insights powered by ETR. In this breaking analysis, we'll share our most current thinking on the database marketplace and dig into Snowflake's execution. Some of its challenges and we'll take a look at how others are making moves to solve customer problems and try to get a piece of the growing database pie. Let's look at some of the factors that are driving market momentum. First, customers want lower license costs. They want simplicity. They want to avoid database sprawl. They want to run anywhere and manage new data types. These needs often are divergent and they pull vendors and technologies in different direction. It's really hard for any one platform to accommodate every customer need. The market is large and it's growing. Gardner has it at around 60 to 65 billion with a CAGR of somewhere around 20% over the next five years. But the market, as we know it is being redefined. Traditionally, databases have served two broad use cases, OLTP or transactions and reporting like data warehouses. But a diversity of workloads and new architectures and innovations have given rise to a number of new types of databases to accommodate all these diverse customer needs. Many billions have been spent over the last several years in venture money and it continues to pour in. Let me just give you some examples. Snowflake prior to its IPO, raised around 1.4 billion. Redis Labs has raised more than 1/2 billion dollars so far, Cockroach Labs, more than 350 million, Couchbase, 250 million, SingleStore formerly MemSQL, 238 million, Yellowbrick Data, 173 million. And if you stretch the definition of database a little bit to including low-code or no-code, Airtable has raised more than 600 million. And that's by no means a complete list. Now, why is all this investment happening? Well, in a large part, it's due to the TAM. The TAM is huge and it's growing and it's being redefined. Just how big is this market? Let's take a look at a chart that we've shown previously. We use this chart to Snowflakes TAM, and it focuses mainly on the analytics piece, but we'll use it here to really underscore the market potential. So the actual database TAM is larger than this, we think. Cloud and Cloud-native technologies have changed the way we think about databases. Virtually 100% of the database players that they're are in the market have pivoted to a Cloud first strategy. And many like Snowflake, they're pretty dogmatic and have a Cloud only strategy. Databases has historically been very difficult to manage, they're really sensitive to latency. So that means they require a lot of tuning. Cloud allows you to throw virtually infinite resources on demand and attack performance problems and scale very quickly, minimizing the complexity and tuning nuances. This idea, this layer of data as a service we think of it as a staple of digital transformation. Is this layer that's forming to support things like data sharing across ecosystems and the ability to build data products or data services. It's a fundamental value proposition of Snowflake and one of the most important aspects of its offering. Snowflake tracks a metric called edges, which are external connections in its data Cloud. And it claims that 15% of its total shared connections are edges and that's growing at 33% quarter on quarter. This notion of data sharing is changing the way people think about data. We use terms like data as an asset. This is the language of the 2010s. We don't share our assets with others, do we? No, we protect them, we secure or them, we even hide them. But we absolutely don't want to share those assets but we do want to share our data. I had a conversation recently with Forrester analyst, Michelle Goetz. And we both agreed we're going to scrub data as an asset from our phrasiology. Increasingly, people are looking at sharing as a way to create, as I said, data products or data services, which can be monetized. This is an underpinning of Zhamak Dehghani's concept of a data mesh, make data discoverable, shareable and securely governed so that we can build data products and data services that can be monetized. This is where the TAM just explodes and the market is redefining. And we think is in the hundreds of billions of dollars. Let's talk a little bit about the diversity of offerings in the marketplace. Again, databases used to be either transactional or analytic. The bottom lines and top lines. And this chart here describe those two but the types of databases, you can see the middle of mushrooms, just looking at this list, blockchain is of course a specialized type of database and it's also finding its way into other database platforms. Oracle is notable here. Document databases that support JSON and graph data stores that assist in visualizing data, inference from multiple different sources. That's is one of the ways in which adtech has taken off and been so effective. Key Value stores, log databases that are purpose-built, machine learning to enhance insights, spatial databases to help build the next generation of products, the next automobile, streaming databases to manage real time data flows and time series databases. We might've missed a few, let us know if you think we have, but this is a kind of pretty comprehensive list that is somewhat mind boggling when you think about it. And these unique requirements, they've spawned tons of innovation and companies. Here's a small subset on this logo slide. And this is by no means an exhaustive list, but you have these companies here which have been around forever like Oracle and IBM and Teradata and Microsoft, these are the kind of the tier one relational databases that have matured over the years. And they've got properties like atomicity, consistency, isolation, durability, what's known as ACID properties, ACID compliance. Some others that you may or may not be familiar with, Yellowbrick Data, we talked about them earlier. It's going after the best price, performance and analytics and optimizing to take advantage of both hybrid installations and the latest hardware innovations. SingleStore, as I said, formerly known as MemSQL is a very high end analytics and transaction database, supports mixed workloads, extremely high speeds. We're talking about trillions of rows per second that could be ingested in query. Couchbase with hybrid transactions and analytics, Redis Labs, open source, no SQL doing very well, as is Cockroach with distributed SQL, MariaDB with its managed MySQL, Mongo and document database has a lot of momentum, EDB, which supports open source Postgres. And if you stretch the definition a bit, Splunk, for log database, why not? ChaosSearch, really interesting startup that leaves data in S-3 and is going after simplifying the ELK stack, New Relic, they have a purpose-built database for application performance management and we probably could have even put Workday in the mix as it developed a specialized database for its apps. Of course, we can't forget about SAP with how not trying to pry customers off of Oracle. And then the big three Cloud players, AWS, Microsoft and Google with extremely large portfolios of database offerings. The spectrum of products in this space is very wide, with you've got AWS, which I think we're up to like 16 database offerings, all the way to Oracle, which has like one database to do everything not withstanding MySQL because it owns MySQL got that through the Sun Acquisition. And it recently, it made some innovations there around the heat wave announcement. But essentially Oracle is investing to make its database, Oracle database run any workload. While AWS takes the approach of the right tool for the right job and really focuses on the primitives for each database. A lot of ways to skin a cat in this enormous and strategic market. So let's take a look at the spending data for the names that make it into the ETR survey. Not everybody we just mentioned will be represented because they may not have quite the market presence of the ends in the survey, but ETR that capture a pretty nice mix of players. So this chart here, it's one of the favorite views that we like to share quite often. It shows the database players across the 1500 respondents in the ETR survey this past quarter and it measures their net score. That's spending momentum and is shown on the vertical axis and market share, which is the pervasiveness in the data set is on the horizontal axis. The Snowflake is notable because it's been hovering around 80% net score since the survey started picking them up. Anything above 40%, that red line there, is considered by us to be elevated. Microsoft and AWS, they also stand out because they have both market presence and they have spending velocity with their platforms. Oracle is very large but it doesn't have the spending momentum in the survey because nearly 30% of Oracle installations are spending less, whereas only 22% are spending more. Now as a caution, this survey doesn't measure dollar spent and Oracle will be skewed toward the big customers with big budgets. So you got to consider that caveat when evaluating this data. IBM is in a similar position although its market share is not keeping up with Oracle's. Google, they've got great tech especially with BigQuery and it has elevated momentum. So not a bad spot to be in although I'm sure it would like to be closer to AWS and Microsoft on the horizontal axis, so it's got some work to do there. And some of the others we mentioned earlier, like MemSQL, Couchbase. As shown MemSQL here, they're now SingleStore. Couchbase, Reddis, Mongo, MariaDB, all very solid scores on the vertical axis. Cloudera just announced that it was selling to private equity and that will hopefully give it some time to invest in this platform and get off the quarterly shot clock. MapR was acquired by HPE and it's part of HPE's Ezmeral platform, their data platform which doesn't yet have the market presence in the survey. Now, something that is interesting in looking at in Snowflakes earnings last quarter, is this laser focused on large customers. This is a hallmark of Frank Slootman and Mike Scarpelli who I know they don't have a playbook but they certainly know how to go whale hunting. So this chart isolates the data that we just showed you to the global 1000. Note that both AWS and Snowflake go up higher on the X-axis meaning large customers are spending at a faster rate for these two companies. The previous chart had an end of 161 for Snowflake, and a 77% net score. This chart shows the global 1000, in the end there for Snowflake is 48 accounts and the net score jumps to 85%. We're not going to show it here but when you isolate the ETR data, nice you can just cut it, when you isolate it on the fortune 1000, the end for Snowflake goes to 59 accounts in the data set and Snowflake jumps another 100 basis points in net score. When you cut the data by the fortune 500, the Snowflake N goes to 40 accounts and the net score jumps another 200 basis points to 88%. And when you isolate on the fortune 100 accounts is only 18 there but it's still 18, their net score jumps to 89%, almost 90%. So it's very strong confirmation that there's a proportional relationship between larger accounts and spending momentum in the ETR data set. So Snowflakes large account strategy appears to be working. And because we think Snowflake is sticky, this probably is a good sign for the future. Now we've been talking about net score, it's a key measure in the ETR data set, so we'd like to just quickly remind you what that is and use Snowflake as an example. This wheel chart shows the components of net score, that lime green is new adoptions. 29% of the customers in the ETR dataset that are new to Snowflake. That's pretty impressive. 50% of the customers are spending more, that's the forest green, 20% are flat, that's the gray, and only 1%, the pink, are spending less. And 0% zero or replacing Snowflake, no defections. What you do here to get net scores, you subtract the red from the green and you get a net score of 78%. Which is pretty sick and has been sick as in good sick and has been steady for many, many quarters. So that's how the net score methodology works. And remember, it typically takes Snowflake customers many months like six to nine months to start consuming it's services at the contracted rate. So those 29% new adoptions, they're not going to kick into high gear until next year, so that bodes well for future revenue. Now, it's worth taking a quick snapshot at Snowflakes most recent quarter, there's plenty of stuff out there that you can you can google and get a summary but let's just do a quick rundown. The company's product revenue run rate is now at 856 million they'll surpass $1 billion on a run rate basis this year. The growth is off the charts very high net revenue retention. We've explained that before with Snowflakes consumption pricing model, they have to account for retention differently than what a SaaS company. Snowflake added 27 net new $1 million accounts in the quarter and claims to have more than a hundred now. It also is just getting its act together overseas. Slootman says he's personally going to spend more time in Europe, given his belief, that the market is huge and they can disrupt it and of course he's from the continent. He was born there and lived there and gross margins expanded, do in a large part to renegotiation of its Cloud costs. Welcome back to that in a moment. Snowflake it's also moving from a product led growth company to one that's more focused on core industries. Interestingly media and entertainment is one of the largest along with financial services and it's several others. To me, this is really interesting because Disney's example that Snowflake often puts in front of its customers as a reference. And it seems to me to be a perfect example of using data and analytics to both target customers and also build so-called data products through data sharing. Snowflake has to grow its ecosystem to live up to its lofty expectations and indications are that large SIS are leaning in big time. Deloitte cross the $100 million in deal flow in the quarter. And the balance sheet's looking good. Thank you very much with $5 billion in cash. The snarks are going to focus on the losses, but this is all about growth. This is a growth story. It's about customer acquisition, it's about adoption, it's about loyalty and it's about lifetime value. Now, as I said at the IPO, and I always say this to young people, don't buy a stock at the IPO. There's probably almost always going to be better buying opportunities ahead. I'm not always right about that, but I often am. Here's a chart of Snowflake's performance since IPO. And I have to say, it's held up pretty well. It's trading above its first day close and as predicted there were better opportunities than day one but if you have to make a call from here. I mean, don't take my stock advice, do your research. Snowflake they're priced to perfection. So any disappointment is going to be met with selling. You saw that the day after they beat their earnings last quarter because their guidance in revenue growth,. Wasn't in the triple digits, it sort of moderated down to the 80% range. And they pointed, they pointed to a new storage compression feature that will lower customer costs and consequently, it's going to lower their revenue. I swear, I think that that before earnings calls, Scarpelli sits back he's okay, what kind of creative way can I introduce the dampen enthusiasm for the guidance. Now I'm not saying lower storage costs will translate into lower revenue for a period of time. But look at dropping storage prices, customers are always going to buy more, that's the way the storage market works. And stuff like did allude to that in all fairness. Let me introduce something that people in Silicon Valley are talking about, and that is the Cloud paradox for SaaS companies. And what is that? I was a clubhouse room with Martin Casado of Andreessen when I first heard about this. He wrote an article with Sarah Wang, calling it to question the merits of SaaS companies sticking with Cloud at scale. Now the basic premise is that for startups in early stages of growth, the Cloud is a no brainer for SaaS companies, but at scale, the cost of Cloud, the Cloud bill approaches 50% of the cost of revenue, it becomes an albatross that stifles operating leverage. Their conclusion ended up saying that as much as perhaps as much as the back of the napkin, they admitted that, but perhaps as much as 1/2 a trillion dollars in market cap is being vacuumed away by the hyperscalers that could go to the SaaS providers as cost savings from repatriation. And that Cloud repatriation is an inevitable path for large SaaS companies at scale. I was particularly interested in this as I had recently put on a post on the Cloud repatriation myth. I think in this instance, there's some merit to their conclusions. But I don't think it necessarily bleeds into traditional enterprise settings. But for SaaS companies, maybe service now has it right running their own data centers or maybe a hybrid approach to hedge bets and save money down the road is prudent. What caught my attention in reading through some of the Snowflake docs, like the S-1 in its most recent 10-K were comments regarding long-term purchase commitments and non-cancelable contracts with Cloud companies. And the companies S-1, for example, there was disclosure of $247 million in purchase commitments over a five plus year period. And the company's latest 10-K report, that same line item jumped to 1.8 billion. Now Snowflake is clearly managing these costs as it alluded to when its earnings call. But one has to wonder, at some point, will Snowflake follow the example of say Dropbox which Andreessen used in his blog and start managing its own IT? Or will it stick with the Cloud and negotiate hard? Snowflake certainly has the leverage. It has to be one of Amazon's best partners and customers even though it competes aggressively with Redshift but on the earnings call, CFO Scarpelli said, that Snowflake was working on a new chip technology to dramatically increase performance. What the heck does that mean? Is this Snowflake is not becoming a hardware company? So I going to have to dig into that a little bit and find out what that it means. I'm guessing, it means that it's taking advantage of ARM-based processes like graviton, which many ISVs ar allowing their software to run on that lower cost platform. Or maybe there's some deep dark in the weeds secret going on inside Snowflake, but I doubt it. We're going to leave all that for there for now and keep following this trend. So it's clear just in summary that Snowflake they're the pace setter in this new exciting world of data but there's plenty of room for others. And they still have a lot to prove. For instance, one customer in ETR, CTO round table express skepticism that Snowflake will live up to its hype because its success is going to lead to more competition from well-established established players. This is a common theme you hear it all the time. It's pretty easy to reach that conclusion. But my guess is this the exact type of narrative that fuels Slootman and sucked him back into this game of Thrones. That's it for now, everybody. Remember, these episodes they're all available as podcasts, wherever you listen. All you got to do is search braking analysis podcast and please subscribe to series. Check out ETR his website at etr.plus. We also publish a full report every week on wikinbon.com and siliconangle.com. You can get in touch with me, Email is David.vellante@siliconangle.com. You can DM me at DVelante on Twitter or comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Have a great week everybody, be well and we'll see you next time. (upbeat music)