>> Narrator: theCUBE's live coverage is made possible by funding from Dell Technologies, creating technologies that drive human progress. (upbeat music) >> Welcome back to the Fira in Barcelona. This is Dave Vellante with David Nicholson. Lisa Martin is also here. This is day two of our coverage of MWC 23 on theCUBE. We're super excited. We're in between hall four and five. Stop by if you're here. Dennis Hoffman is here. He's the senior vice president and general manager of the Telecom systems business at Dell Technologies, and he's joined by Yousef Khalidi, who's the corporate vice president of Azure for Operators from Microsoft. Gents, Welcome. >> Thanks, Dave. >> Thank you. >> So we saw Satya in the keynote. He wired in. We saw T.K. came in. No AWS. I don't know. They're maybe not part of the show, but maybe next year they'll figure it out. >> Indeed, indeed. >> Lots of stuff happened in the Telecom, but the Azure operator distributed service is the big news, you guys got here. What's that all about? >> Oh, first of all, we changed the name. >> Oh, you did? >> You did? >> Oh, yeah. We have a real name now. It's called the Azure Operator Nexus. >> Oh, I like Nexus better than that. >> David: That's much better, much better. >> Dave: The engineers named it first time around. >> I wish, long story, but thank you for our marketing team. But seriously, not only did we rename the platform, we expanded the platform. >> Dave: Yeah. >> So it now covers the whole spectrum from the far-edge to the public cloud as well, including the near-edge as well. So essentially, it's a hybrid platform that can also run network functions. So all these operators around you, they now have a platform which combines cloud technologies with the choice where they want to run, optimized for the network. >> Okay and so, you know, we've talked about the disaggregation of the network and how you're bringing kind of engineered systems to the table. We've seen this movie before, but Dennis, there are differences, right? I mean, you didn't really have engineered systems in the 90s. You didn't have those integration points. You really didn't have the public cloud, you didn't have AI. >> Right. >> So you have all those new powers that you can tap, so give us the update from your perspective, having now spent a day and a half here. What's the vibe, what's the buzz, and what's your take on everything? >> Yeah, I think to build on what Yousef said, there's a lot going on with people still trying to figure out exactly how to architect the Telecom network of the future. They know it's got to have a lot to do with cloud. It does have some pretty significant differences, one of those being, there's definitely got to be a hybrid component because there are pieces of the Telecom network that even when modernized will not end up centralized, right? They're going to be highly distributed. I would say though, you know, we took away two things, yesterday, from all the meetings. One, people are done, I think the network operators are done, questioning technology readiness. They're now beginning to wrestle with operationalization of it all, right? So it's like, okay, it's here. I can in fact build a modern network in a very cloud native way, but I've got to figure out how to do that all. And another big part of it is the ecosystem and certainly the partnership long standing between Dell and Microsoft which we're extending into this space is part of that, making it easier on people to actually acquire, deploy, and importantly, support these new technologies. >> So a lot of the traditional carriers, like you said, they're sort of beyond the technology readiness. Jose Maria Alvarez in the keynote said there are three pillars to the future Telecom network. He said low latency, programmable networks, and then cloud and edge, kind of threw that in. You agree with that, Yousef? (Dave and Yousef speaking altogether) >> I mean, we've been for years talking about the cloud and edge. >> Yeah. >> Satya for years had the same graphic. We still have it. Today, we have expanded the graphic a bit to include the network as one, because you can have a cloud without connectivity as well but this is very, very, very, very much true. >> And so the question then, Dennis, is okay, you've got disruptors, we had Dish on yesterday. >> Oh, did you? Good. >> Yeah, yeah, and they're talking about what they're doing with, you know, ORAN and all the applications, really taking account of it. What I see is a developer friendly, you know, environment. You got the carriers talking about how they're going to charge developers for APIs. I think they've published eight APIs which is nowhere near enough. So you've got that sort of, you know, inertia and yet, you have the disruptors that are going to potentially be a catalyst to, you know, cross the chasm, if you will. So, you know, put on your strategy hat. >> Yeah. >> Dave: How do you see that playing out? >> Well, they're trying to tap into three things, the disruptors. You know, I think the thesis is, "If I get to a truly cloud native, communications network first, I ought to have greater agility so that I can launch more services and create more revenue streams. I ought to be lower cost in terms of both acquisition cost and operating cost, right, and I ought to be able to create scale between my IT organization, everything I know how to do there and my Telecom network." You know, classic, right? Better, faster, cheaper if I embrace cloud early on. And people like Dish, you know, they have a clean sheet of paper with which to do that. So innovation and rate of innovation is huge for them. >> So what would you do? We put your Clay Christensen hat on, now. What if you were at a traditional Telco who's like, complaining about- >> You're going to get me in trouble. >> Dave: Come on, come on. >> Don't do it. >> Dave: Help him out. Help him out, help him out. So if, you know, they're complaining about CapEx, they're highly regulated, right, they want net neutrality but they want to be able to sort of dial up the cost of those using the network. So what would you do? Would you try to disrupt yourself? Would you create a skunkworks? Would you kind of spin off a disruptor? That's a real dilemma for those guys. >> Well for mobile network operators, the beauty of 5G is it's the first cloud native cellular standard. So I don't know if anybody's throwing these terms around, but 5G SA is standalone, right? >> Dave: Yeah, yeah. >> So a lot of 'em, it's not a skunkworks. They're just literally saying, "I've got to have a 5G network." And some of 'em are deciding, "I'm going to stand it up all by itself." Now, that's duplicative expense in a lot of ways, but it creates isolation from the two networks. Others are saying, "No, it's got to be NSA. I've got to be able to combine 4G and 5G." And then you're into the brownfield thing. >> That's the hybrid. >> Not hybrid as in cloud, but hybrid as in, you know. >> Yeah, yeah. >> It's a converge network. >> Dave: Yeah, yeah. >> So, you know, I would say for a lot of them, they're adopting, probably rightly so, a wait and see attitude. One thing we haven't talked about and you got to get on the table, their high order bit is resilience. >> Dave: Yeah, totally. >> David: Yeah. >> Right? Can't go down. It's national, secure infrastructure, first responder. >> Indeed. >> Anytime you ask them to embrace any new technology, the first thing that they have to work through in their minds is, you know, "Is the juice worth the squeeze? Like, can I handle the risk?" >> But you're saying they're not questioning the technology. Aren't they questioning ORAN in terms of the quality of service, or are they beyond that? >> Dennis: They're questioning the timing, not the inevitability. >> Okay, so they agree that ORAN is going to be open over time. >> At some point, RAN will be cloud native, whether it's ORAN the spec, open RAN the concept, (Yousef speaking indistinctly) >> Yeah. >> Virtual RAN. But yeah, I mean I think it seems pretty evident at this point that the mainframe will give way to open systems once again. >> Dave: Yeah, yeah, yeah. >> ERAN, ecosystem RAN. >> Any RAN. (Dave laughing) >> You don't have to start with the ORAN where they're inside the house. So as you probably know, our partner AT&T started with the core. >> Dennis: They almost all have. >> And they've been on the virtualization path since 2014 and 15. And what we are working with them on is the hybrid cloud model to expand all the way, if you will, as I mentioned to the far-edge or the public cloud. So there's a way to be in the brownfield environment, yet jump on the new bandwagon of technology without necessarily taking too much risk, because you're quite right. I mean, resiliency, security, service assurance, I mean, for example, AT&T runs the first responder network for the US on their network, on our platform, and I'm personally very familiar of how high the bar is. So it's doable, but you need to go in stages, of course. >> And they've got to do that integration. >> Yes. >> They do. >> And Yousef made a great point. Like, out of the top 30 largest Telcos by CapEx outside of China, three quarters of them have virtualized their core. So the cloudification, if you will, software definition run on industry standard hardware, embraced cloud native principles, containerized apps, that's happened in the core. It's well accepted. Now it's just a ripple-down through the network which will happen as and when things are faster, better, cheaper. >> Right. >> So as implemented, what does this look like? Is it essentially what we used to loosely refer to as Azure stacked software, running with Dell optimized Telecom infrastructure together, sometimes within a BBU, out in a hybrid cloud model communicating back to Azure locations in some cases? Is that what we're looking at? >> Approximately. So you start with the near-edge, okay? So the near-edge lives in the operator's data centers, edges, whatever the case may be, built out of off the shelf hardware. Dell is our great partner there but in principle, it could be different mix and match. So once you have that true near-edge, then you can think of, "Okay, how can I make sure this environment is as uniform, same APIs, same everything, regardless what the physical location is?" And this is key, key for the network function providers and the NEPs because they need to be able to port once, run everywhere, and it's key for the operator to reduce their costs. You want to teach your workforce, your operations folks, if you will, how to manage this system one time, to automation and so forth. So, and that is actually an expansion of the Azure capabilities that people are familiar with in a public cloud, projected into different locations. And we have technology called Arc which basically models everything. >> Yeah, yeah. >> So if you have trained your IT side, you are halfway there, how to manage your new network. Even though of course the network is carrier graded, there's different gear. So yes, what you said, a lot of it is true but the actual components, whatever they might be running, are carrier grade, highly optimized, the next images and our solution is not a DIY solution, okay? I know you cater to a wide spectrum here but for us, we don't believe in the TCO. The proper TCO can be achieved by just putting stuff by yourself. We just published a report with Analysys Mason that shows that our approach will save 36 percent of the cost compared to a DIY approach. >> Dave: What percent? >> 36 percent. >> Dave: Of the cost? >> Of, compared to DIY, which is already cheaper than classical models. >> And there's a long history of fairly failed DIY, right, >> Yeah. >> That preceded this. As in the early days of public cloud, the network operators wrestled with, "Do I have to become one to survive?" >> Dave: Yeah. Right. >> So they all ended up having cloud projects and by and large, they've all dematerialized in favor of this. >> Yeah, and it's hard for them to really invest at scale. Let me give you an example. So, your biggest tier one operator, without naming anybody, okay, how many developers do they have that can build and maintain an OS image, or can keep track of container technology, or build monitoring at scale? In our company, we have literally thousands of developers doing it already for the cloud and all we're doing for the operator segment is customizing it and focusing it at the carrier grade aspects of it. But so, I don't have half a dozen exterior experts. I literally have a building of developers who can do that and I'm being literal, here. So it's a scale thing. Once you have a product that you can give to multiple people, everybody benefits. >> Dave: Yeah, and the carriers are largely, they're equipment engineers in a large setting. >> Oh, they have a tough job. I always have total respect what they do. >> Oh totally, and a lot of the work happens, you know, kind of underground and here they are. >> They are network operators. >> They don't touch. >> It's their business. >> Right, absolutely, and they're good at it. They're really good at it. That's right. You know, you think about it, we love to, you know, poke fun at the big carriers, but think about what happened during the pandemic. When they had us shift everything to remote work, >> Dennis: Yes. >> Landline traffic went through the roof. You didn't even notice. >> Yep. That's very true. >> I mean, that's the example. >> That's very true. >> However, in the future where there's innovation and it's going to be driven by developers, right, that's where the open ecosystem comes in. >> Yousef: Indeed. >> And that's the hard transition for a lot of these folks because the developers are going to win that with new workloads, new applications that we can't even think of. >> Dennis: Right. And a lot of it is because if you look at it, there's the fundamental back strategy hat back on, fundamental dynamics of the industry, forced investment, flat revenues. >> Dave: Yeah. Right. >> Very true. >> Right? Every few years, a new G comes out. "Man, I got to retool this massive thing and where I can't do towers, I'm dropping fiber or vice a versa." And meanwhile, most diversification efforts into media have failed. They've had to unwind them and resell them. There's a lot of debt in the industry. >> Yousef: Yeah. >> Dennis: And so, they're looking for that next big, adjacent revenue stream and increasingly deciding, "If I don't modernize my network, I can't get it." >> Can't do it. >> Right, and again, what I heard from some of the carriers in the keynote was, "We're going to charge for API access 'cause we have data in the network." Okay, but I feel like there's a lot more innovation beyond that that's going to come from the disruptors. >> Dennis: Oh yeah. >> Yousef: Yes. >> You know, that's going to blow that away, right? And then that may not be the right model. We'll see, you know? I mean, what would Microsoft do? They would say, "Here, here's a platform. Go develop." >> No, I'll tell you. We are actually working with CAMARA and GSMA on the whole API layer. We actually announced a service as well as (indistinct). >> Dave: Yeah, yeah, right. >> And the key there, frankly, in my opinion, are not the disruptors as in operators. It's the ISV community. You want to get developers that can write to a global set of APIs, not per Telco APIs, such that they can do the innovation. I mean, this is what we've seen in other industries, >> Absolutely. >> That I critically can think of. >> This is the way they get a slice of that pie, right? The recent history of this industry is one where 4G LTE begot the smartphone and app store era, a bevy of consumer services, and almost every single profit stream went somewhere other than the operator, right? >> Yousef: Someone else. So they're looking at this saying, "Okay, 5G is the enterprise G and there's going to be a bevy of applications that are business service related, based on 5G capability and I can't let the OTT, over the top, thing happen again." >> Right. >> They'll say that. "We cannot let this happen." >> "We can't let this happen again." >> Okay, but how do they, >> Yeah, how do they make that not happen? >> Not let it happen again? >> Eight APIs, Dave. The answer is eight APIs. No, I mean, it's this approach. They need to make it easy to work with people like Yousef and more importantly, the developer community that people like Yousef and his company have found a way to harness. And by the way, they need to be part of that developer community themselves. >> And they're not, today. They're not speaking that developer language. >> Right. >> It's hard. You know, hey. >> Dennis: Hey, what's the fastest way to sell an enterprise, a business service? Resell Azure, Teams, something, right? But that's a resale. >> Yeah, that's a resale thing. >> See, >> That's not their service. >> They also need to free their resources from all the plumbing they do and leave it to us. We are plumbers, okay? >> Dennis: We are proud plumbers. >> We are proud plumbers. I'm a plumber. I keep telling people this thing. We had the same discussion with banks and enterprises 10 years ago, by the way. Don't do the plumbing. Go add value on the top. Retool your workforce to do applications and work with ISVs to the verticals, as opposed to either reselling, which many do, or do the plumbing. You'd be surprised. Traditionally, many operators do around, "I want to plumb this thing to get this small interrupt per second." Like, who cares? >> Well, 'cause they made money on connectivity. >> Yes. >> And we've seen this before. >> And in a world without telephone poles and your cables- >> Hey, if what you have is a hammer, everything's a nail, right? And we sell connectivity services and that's what we know how to do, and that both build and sell. And if that's no longer driving a revenue stream sufficient to cover this forced investment march, not to mention Huawei rip and government initiatives to pull infrastructure out and accelerate investment, they got to find new ways. >> I mean, the regulations have been tough, right? They don't go forward and ask for permission. They really can't, right? They have to be much more careful. >> Dennis: It is tough. >> So, we don't mean to sound like it's easy for these guys. >> Dennis: No, it's not. >> But it does require a new mindset, new skillsets, and I think some of 'em are going to figure it out and then pff, the wave, and you guys are going to be riding that wave. >> We're going to try. >> Definitely. Definitely. >> As a veteran of working with both Dell and Microsoft, specifically Azure on things, I am struck by how you're very well positioned in this with Microsoft in particular. Because of Azure's history, coming out of the on-premises world that Microsoft knows so well, there's a natural affinity to the hybrid nature of Telecom. We talk about edge, we talk about hybrid, this is it, absolutely the center of it. So it seems like a- >> Yousef: Indeed. Actually, if you look at the history of Azure, from day one, and I was there from day one, we always spoke of the hybrid model. >> Yeah. >> The third point, we came from the on-premises world. >> David: Right. >> And don't get me wrong, I want people to use the public cloud, but I also know due to physics, regulation, geopolitical boundaries, there's something called on-prem, something called an edge here. I want to add something else. Remember our deal on how we are partner-centric? We're applying the same playbook, here. So, you know, for every dollar we make, so many of it's been done by the ecosystem. Same applies here. So we have announced partnerships with Ericson, Nokia, (indistinct), all the names, and of course with Dell and many others. The ecosystem has to come together and customers must retain their optionality to drum up whatever they are on. So it's the same playbook, with this. >> And enterprise technology companies are, actually, really good at, you know, decoding the customer, figuring out specific requirements, making some mistakes the first time through and then eventually getting it right. And as these trends unfold, you know, you're in a good position, I think, as are others and it's an exciting time for enterprise tech in this industry, you know? >> It really is. >> Indeed. >> Dave: Guys, thanks so much for coming on. >> Thank you. >> Dave: It's great to see you. Have a great rest of the show. >> Thank you. >> Thanks, Dave. Thank you, Dave. >> All right, keep it right there. John Furrier is live in our studio. He's breaking down all the news. Go to siliconangle.com to go to theCUBE.net. Dave Vellante, David Nicholson and Lisa Martin, we'll be right back from the theater in Barcelona, MWC 23 right after this short break. (relaxing music)

>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> OpenAI The company, and ChatGPT have taken the world by storm. Microsoft reportedly is investing an additional 10 billion dollars into the company. But in our view, while the hype around ChatGPT is justified, we don't believe OpenAI will lock up the market with its first mover advantage. Rather, we believe that success in this market will be directly proportional to the quality and quantity of data that a technology company has at its disposal, and the compute power that it could deploy to run its system. Hello and welcome to this week's Wikibon CUBE insights, powered by ETR. In this Breaking Analysis, we unpack the excitement around ChatGPT, and debate the premise that the company's early entry into the space may not confer winner take all advantage to OpenAI. And to do so, we welcome CUBE collaborator, alum, Sarbjeet Johal, (chuckles) and John Furrier, co-host of the Cube. Great to see you Sarbjeet, John. Really appreciate you guys coming to the program. >> Great to be on. >> Okay, so what is ChatGPT? Well, actually we asked ChatGPT, what is ChatGPT? So here's what it said. ChatGPT is a state-of-the-art language model developed by OpenAI that can generate human-like text. It could be fine tuned for a variety of language tasks, such as conversation, summarization, and language translation. So I asked it, give it to me in 50 words or less. How did it do? Anything to add? >> Yeah, think it did good. It's large language model, like previous models, but it started applying the transformers sort of mechanism to focus on what prompt you have given it to itself. And then also the what answer it gave you in the first, sort of, one sentence or two sentences, and then introspect on itself, like what I have already said to you. And so just work on that. So it it's self sort of focus if you will. It does, the transformers help the large language models to do that. >> So to your point, it's a large language model, and GPT stands for generative pre-trained transformer. >> And if you put the definition back up there again, if you put it back up on the screen, let's see it back up. Okay, it actually missed the large, word large. So one of the problems with ChatGPT, it's not always accurate. It's actually a large language model, and it says state of the art language model. And if you look at Google, Google has dominated AI for many times and they're well known as being the best at this. And apparently Google has their own large language model, LLM, in play and have been holding it back to release because of backlash on the accuracy. Like just in that example you showed is a great point. They got almost right, but they missed the key word. >> You know what's funny about that John, is I had previously asked it in my prompt to give me it in less than a hundred words, and it was too long, I said I was too long for Breaking Analysis, and there it went into the fact that it's a large language model. So it largely, it gave me a really different answer the, for both times. So, but it's still pretty amazing for those of you who haven't played with it yet. And one of the best examples that I saw was Ben Charrington from This Week In ML AI podcast. And I stumbled on this thanks to Brian Gracely, who was listening to one of his Cloudcasts. Basically what Ben did is he took, he prompted ChatGPT to interview ChatGPT, and he simply gave the system the prompts, and then he ran the questions and answers into this avatar builder and sped it up 2X so it didn't sound like a machine. And voila, it was amazing. So John is ChatGPT going to take over as a cube host? >> Well, I was thinking, we get the questions in advance sometimes from PR people. We should actually just plug it in ChatGPT, add it to our notes, and saying, "Is this good enough for you? Let's ask the real question." So I think, you know, I think there's a lot of heavy lifting that gets done. I think the ChatGPT is a phenomenal revolution. I think it highlights the use case. Like that example we showed earlier. It gets most of it right. So it's directionally correct and it feels like it's an answer, but it's not a hundred percent accurate. And I think that's where people are seeing value in it. Writing marketing, copy, brainstorming, guest list, gift list for somebody. Write me some lyrics to a song. Give me a thesis about healthcare policy in the United States. It'll do a bang up job, and then you got to go in and you can massage it. So we're going to do three quarters of the work. That's why plagiarism and schools are kind of freaking out. And that's why Microsoft put 10 billion in, because why wouldn't this be a feature of Word, or the OS to help it do stuff on behalf of the user. So linguistically it's a beautiful thing. You can input a string and get a good answer. It's not a search result. >> And we're going to get your take on on Microsoft and, but it kind of levels the playing- but ChatGPT writes better than I do, Sarbjeet, and I know you have some good examples too. You mentioned the Reed Hastings example. >> Yeah, I was listening to Reed Hastings fireside chat with ChatGPT, and the answers were coming as sort of voice, in the voice format. And it was amazing what, he was having very sort of philosophy kind of talk with the ChatGPT, the longer sentences, like he was going on, like, just like we are talking, he was talking for like almost two minutes and then ChatGPT was answering. It was not one sentence question, and then a lot of answers from ChatGPT and yeah, you're right. I, this is our ability. I've been thinking deep about this since yesterday, we talked about, like, we want to do this segment. The data is fed into the data model. It can be the current data as well, but I think that, like, models like ChatGPT, other companies will have those too. They can, they're democratizing the intelligence, but they're not creating intelligence yet, definitely yet I can say that. They will give you all the finite answers. Like, okay, how do you do this for loop in Java, versus, you know, C sharp, and as a programmer you can do that, in, but they can't tell you that, how to write a new algorithm or write a new search algorithm for you. They cannot create a secretive code for you to- >> Not yet. >> Have competitive advantage. >> Not yet, not yet. >> but you- >> Can Google do that today? >> No one really can. The reasoning side of the data is, we talked about at our Supercloud event, with Zhamak Dehghani who's was CEO of, now of Nextdata. This next wave of data intelligence is going to come from entrepreneurs that are probably cross discipline, computer science and some other discipline. But they're going to be new things, for example, data, metadata, and data. It's hard to do reasoning like a human being, so that needs more data to train itself. So I think the first gen of this training module for the large language model they have is a corpus of text. Lot of that's why blog posts are, but the facts are wrong and sometimes out of context, because that contextual reasoning takes time, it takes intelligence. So machines need to become intelligent, and so therefore they need to be trained. So you're going to start to see, I think, a lot of acceleration on training the data sets. And again, it's only as good as the data you can get. And again, proprietary data sets will be a huge winner. Anyone who's got a large corpus of content, proprietary content like theCUBE or SiliconANGLE as a publisher will benefit from this. Large FinTech companies, anyone with large proprietary data will probably be a big winner on this generative AI wave, because it just, it will eat that up, and turn that back into something better. So I think there's going to be a lot of interesting things to look at here. And certainly productivity's going to be off the charts for vanilla and the internet is going to get swarmed with vanilla content. So if you're in the content business, and you're an original content producer of any kind, you're going to be not vanilla, so you're going to be better. So I think there's so much at play Dave (indistinct). >> I think the playing field has been risen, so we- >> Risen and leveled? >> Yeah, and leveled to certain extent. So it's now like that few people as consumers, as consumers of AI, we will have a advantage and others cannot have that advantage. So it will be democratized. That's, I'm sure about that. But if you take the example of calculator, when the calculator came in, and a lot of people are, "Oh, people can't do math anymore because calculator is there." right? So it's a similar sort of moment, just like a calculator for the next level. But, again- >> I see it more like open source, Sarbjeet, because like if you think about what ChatGPT's doing, you do a query and it comes from somewhere the value of a post from ChatGPT is just a reuse of AI. The original content accent will be come from a human. So if I lay out a paragraph from ChatGPT, did some heavy lifting on some facts, I check the facts, save me about maybe- >> Yeah, it's productive. >> An hour writing, and then I write a killer two, three sentences of, like, sharp original thinking or critical analysis. I then took that body of work, open source content, and then laid something on top of it. >> And Sarbjeet's example is a good one, because like if the calculator kids don't do math as well anymore, the slide rule, remember we had slide rules as kids, remember we first started using Waze, you know, we were this minority and you had an advantage over other drivers. Now Waze is like, you know, social traffic, you know, navigation, everybody had, you know- >> All the back roads are crowded. >> They're car crowded. (group laughs) Exactly. All right, let's, let's move on. What about this notion that futurist Ray Amara put forth and really Amara's Law that we're showing here, it's, the law is we, you know, "We tend to overestimate the effect of technology in the short run and underestimate it in the long run." Is that the case, do you think, with ChatGPT? What do you think Sarbjeet? >> I think that's true actually. There's a lot of, >> We don't debate this. >> There's a lot of awe, like when people see the results from ChatGPT, they say what, what the heck? Like, it can do this? But then if you use it more and more and more, and I ask the set of similar question, not the same question, and it gives you like same answer. It's like reading from the same bucket of text in, the interior read (indistinct) where the ChatGPT, you will see that in some couple of segments. It's very, it sounds so boring that the ChatGPT is coming out the same two sentences every time. So it is kind of good, but it's not as good as people think it is right now. But we will have, go through this, you know, hype sort of cycle and get realistic with it. And then in the long term, I think it's a great thing in the short term, it's not something which will (indistinct) >> What's your counter point? You're saying it's not. >> I, no I think the question was, it's hyped up in the short term and not it's underestimated long term. That's what I think what he said, quote. >> Yes, yeah. That's what he said. >> Okay, I think that's wrong with this, because this is a unique, ChatGPT is a unique kind of impact and it's very generational. People have been comparing it, I have been comparing to the internet, like the web, web browser Mosaic and Netscape, right, Navigator. I mean, I clearly still remember the days seeing Navigator for the first time, wow. And there weren't not many sites you could go to, everyone typed in, you know, cars.com, you know. >> That (indistinct) wasn't that overestimated, the overhyped at the beginning and underestimated. >> No, it was, it was underestimated long run, people thought. >> But that Amara's law. >> That's what is. >> No, they said overestimated? >> Overestimated near term underestimated- overhyped near term, underestimated long term. I got, right I mean? >> Well, I, yeah okay, so I would then agree, okay then- >> We were off the charts about the internet in the early days, and it actually exceeded our expectations. >> Well there were people who were, like, poo-pooing it early on. So when the browser came out, people were like, "Oh, the web's a toy for kids." I mean, in 1995 the web was a joke, right? So '96, you had online populations growing, so you had structural changes going on around the browser, internet population. And then that replaced other things, direct mail, other business activities that were once analog then went to the web, kind of read only as you, as we always talk about. So I think that's a moment where the hype long term, the smart money, and the smart industry experts all get the long term. And in this case, there's more poo-pooing in the short term. "Ah, it's not a big deal, it's just AI." I've heard many people poo-pooing ChatGPT, and a lot of smart people saying, "No this is next gen, this is different and it's only going to get better." So I think people are estimating a big long game on this one. >> So you're saying it's bifurcated. There's those who say- >> Yes. >> Okay, all right, let's get to the heart of the premise, and possibly the debate for today's episode. Will OpenAI's early entry into the market confer sustainable competitive advantage for the company. And if you look at the history of tech, the technology industry, it's kind of littered with first mover failures. Altair, IBM, Tandy, Commodore, they and Apple even, they were really early in the PC game. They took a backseat to Dell who came in the scene years later with a better business model. Netscape, you were just talking about, was all the rage in Silicon Valley, with the first browser, drove up all the housing prices out here. AltaVista was the first search engine to really, you know, index full text. >> Owned by Dell, I mean DEC. >> Owned by Digital. >> Yeah, Digital Equipment >> Compaq bought it. And of course as an aside, Digital, they wanted to showcase their hardware, right? Their super computer stuff. And then so Friendster and MySpace, they came before Facebook. The iPhone certainly wasn't the first mobile device. So lots of failed examples, but there are some recent successes like AWS and cloud. >> You could say smartphone. So I mean. >> Well I know, and you can, we can parse this so we'll debate it. Now Twitter, you could argue, had first mover advantage. You kind of gave me that one John. Bitcoin and crypto clearly had first mover advantage, and sustaining that. Guys, will OpenAI make it to the list on the right with ChatGPT, what do you think? >> I think categorically as a company, it probably won't, but as a category, I think what they're doing will, so OpenAI as a company, they get funding, there's power dynamics involved. Microsoft put a billion dollars in early on, then they just pony it up. Now they're reporting 10 billion more. So, like, if the browsers, Microsoft had competitive advantage over Netscape, and used monopoly power, and convicted by the Department of Justice for killing Netscape with their monopoly, Netscape should have had won that battle, but Microsoft killed it. In this case, Microsoft's not killing it, they're buying into it. So I think the embrace extend Microsoft power here makes OpenAI vulnerable for that one vendor solution. So the AI as a company might not make the list, but the category of what this is, large language model AI, is probably will be on the right hand side. >> Okay, we're going to come back to the government intervention and maybe do some comparisons, but what are your thoughts on this premise here? That, it will basically set- put forth the premise that it, that ChatGPT, its early entry into the market will not confer competitive advantage to >> For OpenAI. >> To Open- Yeah, do you agree with that? >> I agree with that actually. It, because Google has been at it, and they have been holding back, as John said because of the scrutiny from the Fed, right, so- >> And privacy too. >> And the privacy and the accuracy as well. But I think Sam Altman and the company on those guys, right? They have put this in a hasty way out there, you know, because it makes mistakes, and there are a lot of questions around the, sort of, where the content is coming from. You saw that as your example, it just stole the content, and without your permission, you know? >> Yeah. So as quick this aside- >> And it codes on people's behalf and the, those codes are wrong. So there's a lot of, sort of, false information it's putting out there. So it's a very vulnerable thing to do what Sam Altman- >> So even though it'll get better, others will compete. >> So look, just side note, a term which Reid Hoffman used a little bit. Like he said, it's experimental launch, like, you know, it's- >> It's pretty damn good. >> It is clever because according to Sam- >> It's more than clever. It's good. >> It's awesome, if you haven't used it. I mean you write- you read what it writes and you go, "This thing writes so well, it writes so much better than you." >> The human emotion drives that too. I think that's a big thing. But- >> I Want to add one more- >> Make your last point. >> Last one. Okay. So, but he's still holding back. He's conducting quite a few interviews. If you want to get the gist of it, there's an interview with StrictlyVC interview from yesterday with Sam Altman. Listen to that one it's an eye opening what they want- where they want to take it. But my last one I want to make it on this point is that Satya Nadella yesterday did an interview with Wall Street Journal. I think he was doing- >> You were not impressed. >> I was not impressed because he was pushing it too much. So Sam Altman's holding back so there's less backlash. >> Got 10 billion reasons to push. >> I think he's almost- >> Microsoft just laid off 10000 people. Hey ChatGPT, find me a job. You know like. (group laughs) >> He's overselling it to an extent that I think it will backfire on Microsoft. And he's over promising a lot of stuff right now, I think. I don't know why he's very jittery about all these things. And he did the same thing during Ignite as well. So he said, "Oh, this AI will write code for you and this and that." Like you called him out- >> The hyperbole- >> During your- >> from Satya Nadella, he's got a lot of hyperbole. (group talks over each other) >> All right, Let's, go ahead. >> Well, can I weigh in on the whole- >> Yeah, sure. >> Microsoft thing on whether OpenAI, here's the take on this. I think it's more like the browser moment to me, because I could relate to that experience with ChatG, personally, emotionally, when I saw that, and I remember vividly- >> You mean that aha moment (indistinct). >> Like this is obviously the future. Anything else in the old world is dead, website's going to be everywhere. It was just instant dot connection for me. And a lot of other smart people who saw this. Lot of people by the way, didn't see it. Someone said the web's a toy. At the company I was worked for at the time, Hewlett Packard, they like, they could have been in, they had invented HTML, and so like all this stuff was, like, they just passed, the web was just being passed over. But at that time, the browser got better, more websites came on board. So the structural advantage there was online web usage was growing, online user population. So that was growing exponentially with the rise of the Netscape browser. So OpenAI could stay on the right side of your list as durable, if they leverage the category that they're creating, can get the scale. And if they can get the scale, just like Twitter, that failed so many times that they still hung around. So it was a product that was always successful, right? So I mean, it should have- >> You're right, it was terrible, we kept coming back. >> The fail whale, but it still grew. So OpenAI has that moment. They could do it if Microsoft doesn't meddle too much with too much power as a vendor. They could be the Netscape Navigator, without the anti-competitive behavior of somebody else. So to me, they have the pole position. So they have an opportunity. So if not, if they don't execute, then there's opportunity. There's not a lot of barriers to entry, vis-a-vis say the CapEx of say a cloud company like AWS. You can't replicate that, Many have tried, but I think you can replicate OpenAI. >> And we're going to talk about that. Okay, so real quick, I want to bring in some ETR data. This isn't an ETR heavy segment, only because this so new, you know, they haven't coverage yet, but they do cover AI. So basically what we're seeing here is a slide on the vertical axis's net score, which is a measure of spending momentum, and in the horizontal axis's is presence in the dataset. Think of it as, like, market presence. And in the insert right there, you can see how the dots are plotted, the two columns. And so, but the key point here that we want to make, there's a bunch of companies on the left, is he like, you know, DataRobot and C3 AI and some others, but the big whales, Google, AWS, Microsoft, are really dominant in this market. So that's really the key takeaway that, can we- >> I notice IBM is way low. >> Yeah, IBM's low, and actually bring that back up and you, but then you see Oracle who actually is injecting. So I guess that's the other point is, you're not necessarily going to go buy AI, and you know, build your own AI, you're going to, it's going to be there and, it, Salesforce is going to embed it into its platform, the SaaS companies, and you're going to purchase AI. You're not necessarily going to build it. But some companies obviously are. >> I mean to quote IBM's general manager Rob Thomas, "You can't have AI with IA." information architecture and David Flynn- >> You can't Have AI without IA >> without, you can't have AI without IA. You can't have, if you have an Information Architecture, you then can power AI. Yesterday David Flynn, with Hammersmith, was on our Supercloud. He was pointing out that the relationship of storage, where you store things, also impacts the data and stressablity, and Zhamak from Nextdata, she was pointing out that same thing. So the data problem factors into all this too, Dave. >> So you got the big cloud and internet giants, they're all poised to go after this opportunity. Microsoft is investing up to 10 billion. Google's code red, which was, you know, the headline in the New York Times. Of course Apple is there and several alternatives in the market today. Guys like Chinchilla, Bloom, and there's a company Jasper and several others, and then Lena Khan looms large and the government's around the world, EU, US, China, all taking notice before the market really is coalesced around a single player. You know, John, you mentioned Netscape, they kind of really, the US government was way late to that game. It was kind of game over. And Netscape, I remember Barksdale was like, "Eh, we're going to be selling software in the enterprise anyway." and then, pshew, the company just dissipated. So, but it looks like the US government, especially with Lena Khan, they're changing the definition of antitrust and what the cause is to go after people, and they're really much more aggressive. It's only what, two years ago that (indistinct). >> Yeah, the problem I have with the federal oversight is this, they're always like late to the game, and they're slow to catch up. So in other words, they're working on stuff that should have been solved a year and a half, two years ago around some of the social networks hiding behind some of the rules around open web back in the days, and I think- >> But they're like 15 years late to that. >> Yeah, and now they got this new thing on top of it. So like, I just worry about them getting their fingers. >> But there's only two years, you know, OpenAI. >> No, but the thing (indistinct). >> No, they're still fighting other battles. But the problem with government is that they're going to label Big Tech as like a evil thing like Pharma, it's like smoke- >> You know Lena Khan wants to kill Big Tech, there's no question. >> So I think Big Tech is getting a very seriously bad rap. And I think anything that the government does that shades darkness on tech, is politically motivated in most cases. You can almost look at everything, and my 80 20 rule is in play here. 80% of the government activity around tech is bullshit, it's politically motivated, and the 20% is probably relevant, but off the mark and not organized. >> Well market forces have always been the determining factor of success. The governments, you know, have been pretty much failed. I mean you look at IBM's antitrust, that, what did that do? The market ultimately beat them. You look at Microsoft back in the day, right? Windows 95 was peaking, the government came in. But you know, like you said, they missed the web, right, and >> so they were hanging on- >> There's nobody in government >> to Windows. >> that actually knows- >> And so, you, I think you're right. It's market forces that are going to determine this. But Sarbjeet, what do you make of Microsoft's big bet here, you weren't impressed with with Nadella. How do you think, where are they going to apply it? Is this going to be a Hail Mary for Bing, or is it going to be applied elsewhere? What do you think. >> They are saying that they will, sort of, weave this into their products, office products, productivity and also to write code as well, developer productivity as well. That's a big play for them. But coming back to your antitrust sort of comments, right? I believe the, your comment was like, oh, fed was late 10 years or 15 years earlier, but now they're two years. But things are moving very fast now as compared to they used to move. >> So two years is like 10 Years. >> Yeah, two years is like 10 years. Just want to make that point. (Dave laughs) This thing is going like wildfire. Any new tech which comes in that I think they're going against distribution channels. Lina Khan has commented time and again that the marketplace model is that she wants to have some grip on. Cloud marketplaces are a kind of monopolistic kind of way. >> I don't, I don't see this, I don't see a Chat AI. >> You told me it's not Bing, you had an interesting comment. >> No, no. First of all, this is great from Microsoft. If you're Microsoft- >> Why? >> Because Microsoft doesn't have the AI chops that Google has, right? Google is got so much core competency on how they run their search, how they run their backends, their cloud, even though they don't get a lot of cloud market share in the enterprise, they got a kick ass cloud cause they needed one. >> Totally. >> They've invented SRE. I mean Google's development and engineering chops are off the scales, right? Amazon's got some good chops, but Google's got like 10 times more chops than AWS in my opinion. Cloud's a whole different story. Microsoft gets AI, they get a playbook, they get a product they can render into, the not only Bing, productivity software, helping people write papers, PowerPoint, also don't forget the cloud AI can super help. We had this conversation on our Supercloud event, where AI's going to do a lot of the heavy lifting around understanding observability and managing service meshes, to managing microservices, to turning on and off applications, and or maybe writing code in real time. So there's a plethora of use cases for Microsoft to deploy this. combined with their R and D budgets, they can then turbocharge more research, build on it. So I think this gives them a car in the game, Google may have pole position with AI, but this puts Microsoft right in the game, and they already have a lot of stuff going on. But this just, I mean everything gets lifted up. Security, cloud, productivity suite, everything. >> What's under the hood at Google, and why aren't they talking about it? I mean they got to be freaked out about this. No? Or do they have kind of a magic bullet? >> I think they have the, they have the chops definitely. Magic bullet, I don't know where they are, as compared to the ChatGPT 3 or 4 models. Like they, but if you look at the online sort of activity and the videos put out there from Google folks, Google technology folks, that's account you should look at if you are looking there, they have put all these distinctions what ChatGPT 3 has used, they have been talking about for a while as well. So it's not like it's a secret thing that you cannot replicate. As you said earlier, like in the beginning of this segment, that anybody who has more data and the capacity to process that data, which Google has both, I think they will win this. >> Obviously living in Palo Alto where the Google founders are, and Google's headquarters next town over we have- >> We're so close to them. We have inside information on some of the thinking and that hasn't been reported by any outlet yet. And that is, is that, from what I'm hearing from my sources, is Google has it, they don't want to release it for many reasons. One is it might screw up their search monopoly, one, two, they're worried about the accuracy, 'cause Google will get sued. 'Cause a lot of people are jamming on this ChatGPT as, "Oh it does everything for me." when it's clearly not a hundred percent accurate all the time. >> So Lina Kahn is looming, and so Google's like be careful. >> Yeah so Google's just like, this is the third, could be a third rail. >> But the first thing you said is a concern. >> Well no. >> The disruptive (indistinct) >> What they will do is do a Waymo kind of thing, where they spin out a separate company. >> They're doing that. >> The discussions happening, they're going to spin out the separate company and put it over there, and saying, "This is AI, got search over there, don't touch that search, 'cause that's where all the revenue is." (chuckles) >> So, okay, so that's how they deal with the Clay Christensen dilemma. What's the business model here? I mean it's not advertising, right? Is it to charge you for a query? What, how do you make money at this? >> It's a good question, I mean my thinking is, first of all, it's cool to type stuff in and see a paper get written, or write a blog post, or gimme a marketing slogan for this or that or write some code. I think the API side of the business will be critical. And I think Howie Xu, I know you're going to reference some of his comments yesterday on Supercloud, I think this brings a whole 'nother user interface into technology consumption. I think the business model, not yet clear, but it will probably be some sort of either API and developer environment or just a straight up free consumer product, with some sort of freemium backend thing for business. >> And he was saying too, it's natural language is the way in which you're going to interact with these systems. >> I think it's APIs, it's APIs, APIs, APIs, because these people who are cooking up these models, and it takes a lot of compute power to train these and to, for inference as well. Somebody did the analysis on the how many cents a Google search costs to Google, and how many cents the ChatGPT query costs. It's, you know, 100x or something on that. You can take a look at that. >> A 100x on which side? >> You're saying two orders of magnitude more expensive for ChatGPT >> Much more, yeah. >> Than for Google. >> It's very expensive. >> So Google's got the data, they got the infrastructure and they got, you're saying they got the cost (indistinct) >> No actually it's a simple query as well, but they are trying to put together the answers, and they're going through a lot more data versus index data already, you know. >> Let me clarify, you're saying that Google's version of ChatGPT is more efficient? >> No, I'm, I'm saying Google search results. >> Ah, search results. >> What are used to today, but cheaper. >> But that, does that, is that going to confer advantage to Google's large language (indistinct)? >> It will, because there were deep science (indistinct). >> Google, I don't think Google search is doing a large language model on their search, it's keyword search. You know, what's the weather in Santa Cruz? Or how, what's the weather going to be? Or you know, how do I find this? Now they have done a smart job of doing some things with those queries, auto complete, re direct navigation. But it's, it's not entity. It's not like, "Hey, what's Dave Vellante thinking this week in Breaking Analysis?" ChatGPT might get that, because it'll get your Breaking Analysis, it'll synthesize it. There'll be some, maybe some clips. It'll be like, you know, I mean. >> Well I got to tell you, I asked ChatGPT to, like, I said, I'm going to enter a transcript of a discussion I had with Nir Zuk, the CTO of Palo Alto Networks, And I want you to write a 750 word blog. I never input the transcript. It wrote a 750 word blog. It attributed quotes to him, and it just pulled a bunch of stuff that, and said, okay, here it is. It talked about Supercloud, it defined Supercloud. >> It's made, it makes you- >> Wow, But it was a big lie. It was fraudulent, but still, blew me away. >> Again, vanilla content and non accurate content. So we are going to see a surge of misinformation on steroids, but I call it the vanilla content. Wow, that's just so boring, (indistinct). >> There's so many dangers. >> Make your point, cause we got to, almost out of time. >> Okay, so the consumption, like how do you consume this thing. As humans, we are consuming it and we are, like, getting a nicely, like, surprisingly shocked, you know, wow, that's cool. It's going to increase productivity and all that stuff, right? And on the danger side as well, the bad actors can take hold of it and create fake content and we have the fake sort of intelligence, if you go out there. So that's one thing. The second thing is, we are as humans are consuming this as language. Like we read that, we listen to it, whatever format we consume that is, but the ultimate usage of that will be when the machines can take that output from likes of ChatGPT, and do actions based on that. The robots can work, the robot can paint your house, we were talking about, right? Right now we can't do that. >> Data apps. >> So the data has to be ingested by the machines. It has to be digestible by the machines. And the machines cannot digest unorganized data right now, we will get better on the ingestion side as well. So we are getting better. >> Data, reasoning, insights, and action. >> I like that mall, paint my house. >> So, okay- >> By the way, that means drones that'll come in. Spray painting your house. >> Hey, it wasn't too long ago that robots couldn't climb stairs, as I like to point out. Okay, and of course it's no surprise the venture capitalists are lining up to eat at the trough, as I'd like to say. Let's hear, you'd referenced this earlier, John, let's hear what AI expert Howie Xu said at the Supercloud event, about what it takes to clone ChatGPT. Please, play the clip. >> So one of the VCs actually asked me the other day, right? "Hey, how much money do I need to spend, invest to get a, you know, another shot to the openAI sort of the level." You know, I did a (indistinct) >> Line up. >> A hundred million dollar is the order of magnitude that I came up with, right? You know, not a billion, not 10 million, right? So a hundred- >> Guys a hundred million dollars, that's an astoundingly low figure. What do you make of it? >> I was in an interview with, I was interviewing, I think he said hundred million or so, but in the hundreds of millions, not a billion right? >> You were trying to get him up, you were like "Hundreds of millions." >> Well I think, I- >> He's like, eh, not 10, not a billion. >> Well first of all, Howie Xu's an expert machine learning. He's at Zscaler, he's a machine learning AI guy. But he comes from VMware, he's got his technology pedigrees really off the chart. Great friend of theCUBE and kind of like a CUBE analyst for us. And he's smart. He's right. I think the barriers to entry from a dollar standpoint are lower than say the CapEx required to compete with AWS. Clearly, the CapEx spending to build all the tech for the run a cloud. >> And you don't need a huge sales force. >> And in some case apps too, it's the same thing. But I think it's not that hard. >> But am I right about that? You don't need a huge sales force either. It's, what, you know >> If the product's good, it will sell, this is a new era. The better mouse trap will win. This is the new economics in software, right? So- >> Because you look at the amount of money Lacework, and Snyk, Snowflake, Databrooks. Look at the amount of money they've raised. I mean it's like a billion dollars before they get to IPO or more. 'Cause they need promotion, they need go to market. You don't need (indistinct) >> OpenAI's been working on this for multiple five years plus it's, hasn't, wasn't born yesterday. Took a lot of years to get going. And Sam is depositioning all the success, because he's trying to manage expectations, To your point Sarbjeet, earlier. It's like, yeah, he's trying to "Whoa, whoa, settle down everybody, (Dave laughs) it's not that great." because he doesn't want to fall into that, you know, hero and then get taken down, so. >> It may take a 100 million or 150 or 200 million to train the model. But to, for the inference to, yeah to for the inference machine, It will take a lot more, I believe. >> Give it, so imagine, >> Because- >> Go ahead, sorry. >> Go ahead. But because it consumes a lot more compute cycles and it's certain level of storage and everything, right, which they already have. So I think to compute is different. To frame the model is a different cost. But to run the business is different, because I think 100 million can go into just fighting the Fed. >> Well there's a flywheel too. >> Oh that's (indistinct) >> (indistinct) >> We are running the business, right? >> It's an interesting number, but it's also kind of, like, context to it. So here, a hundred million spend it, you get there, but you got to factor in the fact that the ways companies win these days is critical mass scale, hitting a flywheel. If they can keep that flywheel of the value that they got going on and get better, you can almost imagine a marketplace where, hey, we have proprietary data, we're SiliconANGLE in theCUBE. We have proprietary content, CUBE videos, transcripts. Well wouldn't it be great if someone in a marketplace could sell a module for us, right? We buy that, Amazon's thing and things like that. So if they can get a marketplace going where you can apply to data sets that may be proprietary, you can start to see this become bigger. And so I think the key barriers to entry is going to be success. I'll give you an example, Reddit. Reddit is successful and it's hard to copy, not because of the software. >> They built the moat. >> Because you can, buy Reddit open source software and try To compete. >> They built the moat with their community. >> Their community, their scale, their user expectation. Twitter, we referenced earlier, that thing should have gone under the first two years, but there was such a great emotional product. People would tolerate the fail whale. And then, you know, well that was a whole 'nother thing. >> Then a plane landed in (John laughs) the Hudson and it was over. >> I think verticals, a lot of verticals will build applications using these models like for lawyers, for doctors, for scientists, for content creators, for- >> So you'll have many hundreds of millions of dollars investments that are going to be seeping out. If, all right, we got to wrap, if you had to put odds on it that that OpenAI is going to be the leader, maybe not a winner take all leader, but like you look at like Amazon and cloud, they're not winner take all, these aren't necessarily winner take all markets. It's not necessarily a zero sum game, but let's call it winner take most. What odds would you give that open AI 10 years from now will be in that position. >> If I'm 0 to 10 kind of thing? >> Yeah, it's like horse race, 3 to 1, 2 to 1, even money, 10 to 1, 50 to 1. >> Maybe 2 to 1, >> 2 to 1, that's pretty low odds. That's basically saying they're the favorite, they're the front runner. Would you agree with that? >> I'd say 4 to 1. >> Yeah, I was going to say I'm like a 5 to 1, 7 to 1 type of person, 'cause I'm a skeptic with, you know, there's so much competition, but- >> I think they're definitely the leader. I mean you got to say, I mean. >> Oh there's no question. There's no question about it. >> The question is can they execute? >> They're not Friendster, is what you're saying. >> They're not Friendster and they're more like Twitter and Reddit where they have momentum. If they can execute on the product side, and if they don't stumble on that, they will continue to have the lead. >> If they say stay neutral, as Sam is, has been saying, that, hey, Microsoft is one of our partners, if you look at their company model, how they have structured the company, then they're going to pay back to the investors, like Microsoft is the biggest one, up to certain, like by certain number of years, they're going to pay back from all the money they make, and after that, they're going to give the money back to the public, to the, I don't know who they give it to, like non-profit or something. (indistinct) >> Okay, the odds are dropping. (group talks over each other) That's a good point though >> Actually they might have done that to fend off the criticism of this. But it's really interesting to see the model they have adopted. >> The wildcard in all this, My last word on this is that, if there's a developer shift in how developers and data can come together again, we have conferences around the future of data, Supercloud and meshs versus, you know, how the data world, coding with data, how that evolves will also dictate, 'cause a wild card could be a shift in the landscape around how developers are using either machine learning or AI like techniques to code into their apps, so. >> That's fantastic insight. I can't thank you enough for your time, on the heels of Supercloud 2, really appreciate it. All right, thanks to John and Sarbjeet for the outstanding conversation today. Special thanks to the Palo Alto studio team. My goodness, Anderson, this great backdrop. You guys got it all out here, I'm jealous. And Noah, really appreciate it, Chuck, Andrew Frick and Cameron, Andrew Frick switching, Cameron on the video lake, great job. And Alex Myerson, he's on production, manages the podcast for us, Ken Schiffman as well. Kristen Martin and Cheryl Knight help get the word out on social media and our newsletters. Rob Hof is our editor-in-chief over at SiliconANGLE, does some great editing, thanks to all. Remember, all these episodes are available as podcasts. All you got to do is search Breaking Analysis podcast, wherever you listen. Publish each week on wikibon.com and siliconangle.com. Want to get in touch, email me directly, david.vellante@siliconangle.com or DM me at dvellante, or comment on our LinkedIn post. And by all means, check out etr.ai. They got really great survey data in the enterprise tech business. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching, We'll see you next time on Breaking Analysis. (electronic music)

from the cube studios in Palo Alto in Boston bringing you data-driven insights from the cube and ETR this is breaking analysis with Dave vellante over the past decade cloudflare has built a Global Network that has the potential to become the fourth us-based hyperscale class cloud in our view the company is building a durable Revenue model with hooks into many important markets these include the more mature DDOS protection space to other growth sectors such as zero trust a serverless platform for application development and an increasing number of services such as database and object storage and other network services in essence cloudflare could be thought of as a giant distributed supercomputer that can connect multiple clouds and act as a highly efficient scheduling engine at scale its disruptive DNA is increasingly attracting novel startups and established Global firms alike looking for Reliable secure high performance low latency and more cost-effective alternatives to AWS and Legacy infrastructure Solutions hello and welcome to this week's wikibon Cube insights powered by ETR in this breaking analysis we initiate our deeper coverage of cloudflare we'll briefly explain our take on the company and its unique business model we'll then share some peer comparisons with both the financial snapshot and some fresh ETR survey data finally we'll share some examples of how we think cloudflare could be a disruptive force with a super cloud-like offering that in many respects is what multi-cloud should have been cloudflare has been on our peripheral radar Ben Thompson and many others have written about their disruptive business model and recently a breaking analysis follower who will remain anonymous emailed with some excellent insights on cloudflare that prompted us to initiate more detailed coverage let's first take a look at how cloudflare seize the world in terms of its view of a modern stack this is a graphic from cloudflare that shows a simple three-layer Stack comprising Storage and compute the lower level and application layer and the network and their key message is basically that the big four hyperscalers have replaced the on-prem leaders apps have been satisfied and that mess of network that you see and Security in the upper left can now be handled all by cloudflare and the stack can be rented via Opex versus requiring heavy capex investment so okay somewhat of a simplified view is those companies on the the left are you know not standing still and we're going to come back to that but cloudflare has done something quite amazing I mean it's been a while since we've invoked Russ hanneman of Silicon Valley Fame on breaking analysis but remember when he was in a meeting one of his first meetings if not the first with Richard Hendricks it was the whiz kid on the show Silicon Valley and hanneman said something like if you had a blank check and you could build anything in the world what would it be and Richard's answer was basically a new internet and that led to Pied Piper this peer-to-peer Network powered by decentralized devices and and iPhones and this amazing compression algorithm that enabled high-speed data movement and low latency uh up to no low latency access across the network well in a way that's what cloudflare has built its founding premise reimagined how the internet should be built with a consistent set of server infrastructure where each server had lots of cores lots of dram lots of cash fast ssds and plenty of network connectivity and bandwidth and well this picture makes it look like a bunch of dots and points of presence on a map which of course it is there's a software layer that enables cloudflare to efficiently allocate resources across this Global Network the company claims that it's Network utilization is in the 70 percent range and it has used its build out to enter the technology space from the bottoms up offering for example free tiers of services to users with multiple entry points on different services and selling then more services over time to a customer which of course drives up its average contract value and its lifetime value at the same time the company continues to innovate and add new services at a very rapid cloud-like Pace you can think of cloudflare's initial Market entry as like a lightweight Cisco as a service the company's CFO actually he uses that term he calls it that which really must tick off Cisco who of course has a massive portfolio and a dominant Market position now because it owns the network cloudflare is a marginal cost of adding new Services is very small and goes towards zero so it's able to get software like economics at scale despite all this infrastructure that's building out so it doesn't have to constantly face the increasing infrastructure tax snowflake for example doesn't own its own network infrastructure as it grows it relies on AWS or Azure gcp and and while it gives the company obvious advantages it doesn't have to build out its own network it also requires them to constantly pay the tax and negotiate with hyperscalers for better rental rates now as previously mentioned Cloud Fair cloudflare claims that its utilization is very high probably higher than the hyperscalers who can spin up servers that they can charge for underutilized customer capacity cloudflare also has excellent Network traffic data that it can use to its Advantage with its Analytics the company has been rapidly innovating Beyond its original Core Business adding as I said before serverless zero trust offerings it has announced a database it calls its database D1 that's pretty creative and it's announced an object store called R2 that is S3 minus one both from the alphabet and the numeric I.E minus the egress cost saying no egress cost that's their big claim to fame and they've made a lot of marketing noise around about that and of course they've promised in our a D2 database which of course is R2D2 RR they've launched a developer platform cloudflare can be thought of kind of like first of all a modern CDN they've got a simpler security model that's how they compete for example with z-scaler that brings uh they also bring VPN sd-wan and DDOS protection services that are that are part of the network and they're less expensive than AWS that's kind of their sort of go to market and messaging and value proposition and they're positioning themselves as a neutral Network that can connect across multiple clouds now to be clear unlike AWS in particular cloudflare is not well suited to lift and shift your traditional apps like for instance sap Hana you're not going to run that in on cloudflare's platform rather the company started by making websites more secure and faster and it flew under the radar and much in the same way that clay Christensen described the disruption in the steel industry if you've seen that where new entrants picked off the low margin rebar business then moved up the stack we've used that analogy in the semiconductor business with arm and and even China cloudflare is running a similar playbook in the cloud and in the network so in the early part of the last decade as aws's ascendancy was becoming more clear many of us started thinking about how and where firms could compete and add value as AWS is becoming so dominant so for instance take an industry Focus you could do things like data sharing with snowflake eventually you know uh popularized you could build on top of clouds again snowflake is doing that as are others you could build private clouds and of course connect to hybrid clouds but not many had the wherewithal and or the hutzpah to build out a Global Network that could serve as a connecting platform for cloud services cloudflare has traction in the market as it adds new services like zero trust and object store or database its Tam continues to grow here's a quick snapshot of cloudflare's financials relative to Z scalar which is both a competitor and a customer fastly which is a smaller CDN and Akamai a more mature CDN slash Edge platform cloudflare and fastly both reported earnings this past week Cloud Fair Cloud flare surpassed a billion dollar Revenue run rate but they gave tepid guidance and the stock got absolutely crushed today which is Friday but the company's business model is sound it's growing close to 50 annually it has sas-like gross margins in the mid to high 70s and it's it it's got a very strong balance sheet and a 13x revenue run rate multiple in fact it's Financial snapshot is quite close to that of z-scaler which is kind of interesting which zinc sailor of course doesn't own its own network that's a pure play software company fastly is much smaller and growing more slowly than cloudflare hence its lower multiple well Akamai as you can see is a more mature company but it's got a nice business now on its earnings call this week cloudflare announced that its head of sales was stepping down and the company has brought in a new leader to take the firm to five billion dollars in sales I think actually its current sales leader felt like hey you know my work is done here bring on somebody else to take it to the next level the company is promising to be free cash flow positive by the end of the year and is working hard toward its long-term financial model or so working towards sorry it's a long-term financial model with gross margin Targets in the mid 70s it's targeting 20 non-gaap operating margins so so solid you know very solid not like completely off the charts but you know very good and to our knowledge it has not committed to a long-term growth rate but at that sort of operating profit level you would like to see growth be consistently at least in the 20 range so they could at least be a rule of 40 company or perhaps even even five even higher if they're going to continue to command a premium valuation okay let's take a look at the ETR data ETR is very positive on cloudflare and has recently published a report on the company like many companies cloudflare is seeing an across the board slowdown in spending velocity we've reported on this quite extensively using the ETR data to quantify the degree to that Slowdown and on the data set with ETR we see that many customers they're shifting their spend to Flat spend you know plus or minus let's say you know single digits you know two three percent or even zero or in the market we're seeing a shift from paid to free tiers remember cloudflare offers a lot of free services as you're seeing customers maybe turn off the pay for a while and going with the freebie but we're also seeing some larger customers in the data and the fortune 1000 specifically they're actually spending more which was confirmed on cloudflare's earnings call they did say everything across the board was softer but they did also indicate that some of their larger customers are actually growing faster than their smaller customers and their churn is very very low here's a two-dimensional graphic we'd like to share this view a lot it's got Net score or spending momentum on the vertical axis and overlap or pervasiveness in the survey on the horizontal axis and this cut isolates three segments in the etrs taxonomy that cloudflare plays in Cloud security and networking now the table inserted in that upper left there shows the raw data which informs the position of each company in the dots with Net score in the ends listed in that rightmost column the red dotted line indicates a highly elevated Net score and finally we posted the breakdown those colors in the bottom right of cloudflare's Net score the lime green that's new adoptions the forest green is we're spending more six percent or more the gray is flat plus or minus uh five percent and you can see that the majority of customers you can see that's the majority of the customers that gray area the pink is we're spending Less in other words down six percent or worse and the bright red is churn which is minimal one percent very good indicator for for cloudflare what you do to get etr's proprietary Net score and they've done this for many many quarters so we have that time series data you subtract the Reds from the greens and that's Net score cloudflare is at 39 just under that magic red line now note that cloudflare and zscaler are right on top of each other Cisco has a dominant position on the x-axis that cloudflare and others are eyeing AWS is also dominant but note that its Net score is well above the red dotted line it's incredible Palo Alto networks is also very impressive it's got both a strong presence on the horizontal axis and it's got a Net score that's pretty comparable to cloudflare and z-scaler to much smaller companies Akamai is actually well positioned for a reasonably mature company and you can see fastly ATT Juniper and F5 have far less spending momentum on their platforms than does cloudflare but at least they are in positive Net score territory so what's going to be really interesting to see is whether cloudflare can continue to hold this momentum or even accelerate it as we've seen with some other clouds as it scales its Network and keeps adding more and more services cloudflare has a couple of potential strategic vectors that we want to talk about and it'll be going to be interesting to see how that plays out Now One path is to compete more directly as a Cloud Player offering secure access Edge services like firewall as a service and zero Trust Services like data loss prevention email security from its area one acquisition and other zero trust offerings as well as Network Services like routing and network connectivity this is The Sweet Spot of the company load balancing many others and then add in things like Object Store and database Services more Edge services in the future it might be telecom like services such as Network switching for offices so that's one route and cloudflare is clearly on that path more services more cohorts at innovating and and growing the company and bringing in more Revenue increasing acvs and and increasing long-term value and keeping retention high now the other Vector is what we're just going to refer to as super cloud as an enabler of cross-cloud infrastructure this is new value uh relative to the former Vector that we were just talking about now the title of this episode is what multi-cloud should have been meaning cloudflare could be the control plane providing a consistent experience across clouds one that is fast and secure at global scale now to give you Insight on this let's take a look at some of the comments made by Matthew Prince the CEO and co-founder of cloudflare cloudflare put its R2 Object Store into public beta this past May and I believe it's storing around a petabyte of data today I think that's what they said in their call here's what Prince said about that quote we are talking to very large companies about moving more and more of their stored objects to where we can store that with R2 and one of the benefits is not only can we help them save money on the egress fees but it allows them to then use those object stores or objects across any of the different Cloud platforms they're that they're using so by being that neutral third party we can let people adopt a little bit of Amazon a little bit of Microsoft a little bit of Google a little bit of SAS vendors and share that data across all those different places so what's interesting about this in the super cloud context is it suggests that customers could take the best of each Cloud to power their digital businesses I might like AWS for in redshift for my analytic database or I love Google's machine learning Microsoft's collaboration and I'd like a consistent way to connect those resources but of course he's strongly hinting and has made many public statements that aws's egress fees are a blocker to that vision now at a recent investor event Matthew Prince added some color to this concept when he talked about one metric of success being how much R2 capacity was consumed and how much they sold but perhaps a more interesting Benchmark is highlighted by the following statement that he made he said a completely different measure of success for R2 is Andy jassy says I'm sick and tired of these guys meaning cloudflare taking our objects away we're dropping our egress fees to zero I would be so excited because we've then unlocked the ability to be the network that interconnects the cloud together now of course it would be Adam solipski who would be saying that or maybe Andy Jesse you know still watching over AWS and I think it's highly unlikely that that's going to happen anytime soon and that of course but but in theory gets us closer to the super cloud value proposition and to further drive that point home and we're paraphrasing a little bit his comments here he said something the effect of quote customers need one consistent control plane across clouds and we are the neutral Network that can be consistent no matter which Cloud you're using interesting right that Prince sees the world that's similar to if not nearly identical to the concepts that the cube Community has been putting forth around supercloud now this vision is a ways off let's be real Prince even suggested that his initial vision of an application running across multiple clouds you know that's like super cloud Nirvana isn't what customers are doing today that's that's really hard to do and perhaps you know it's never going to happen but there's a little doubt that cloudflare could be and is positioning itself as that cross-cloud control plane it has the network economics and the business model levers to pull it's got an edge up on the competition at the edge pun intended cloudflare is the definition of Edge and it's distributed platform it's decentralized platform is much better suited for Edge workloads than these giant data centers that are you know set up to to try and handle that today the the hyperscalers are building out you know their Edge networks things like outposts you know going out to the edge and other local zones Etc now cloudflare is increasingly competitive to the hyperscalers and those traditional Stacks that it depositioned on an earlier slide that we showed but you know the likes of AWS and Dell and hpe and Cisco and those others they're not sitting in their hands they have a huge huge customer install bases and they are definitely a moving Target they're investing and they're building out their own Super clouds with really robust stacks as well let's face it it's going to take a decade or more for Enterprises to adopt a developer platform or a new database Cloud plus cloudflare's capabilities when compared to incumbent stacks and the hyperscalers is much less robust in these areas and even in storage you know despite all the great conversation that R2 generated and the buzz you take a specialist like Wasabi they're more mature they're more functional and they're way cheaper even than cloudflare so you know it's not a fake a complete that cloudflare is going to win in those markets but we love the disruption and if cloudflare wants to be the fourth us-based hyperscaler or join the the big four as the as the fifth if we put Alibaba in the mix it's got a lot of work to do in the ecosystem by its own admission as much to learn and is part of the value by the way that it sees in its area one acquisition it's email security company that it bought but even in that case much of the emphasis has been on reseller channels compare that to the AWS ecosystem which is not only a channel play but is as much an innovation flywheel filling gaps where companies like snowflake Thrive side by side with aws's data stores as well all the on-prem stacks are building hybrid connections to AWS and other clouds as a means of providing consistent experiences across clouds indeed many of them see what they call cross-cloud services or what we call super cloud hyper cloud or whatever you know Mega Cloud you want to call it we use super cloud they are really eyeing that opportunity so very few companies frankly are not going after that space but we're going to close with this cloudflare is one of those companies that's in a position to wake up each morning and ask who can we disrupt today and very few companies are in a position to disrupt the hyperscalers to the degree that cloudflare is and that my friends is going to be fascinating to watch unfold all right let's call it a wrap I want to thank Alex Meyerson who's on production and manages the podcast as well as Ken schiffman who's our newest addition to the Boston Studio Kristen Martin and Cheryl Knight help us get the word out on social media and in our newsletters and Rob Hof is our editor-in-chief over at silicon angle thank you to all remember all these episodes are available as podcasts wherever you listen all you're going to do is search breaking analysis podcasts I publish each week on wikibon.com and siliconangle.com you can email me at david.velante at siliconangle.com or DM me at divalante if you comment on my LinkedIn posts and please do check out etr.ai they got the best survey data in the Enterprise Tech business this is Dave vellante for the cube insights powered by ETR thank you very much for watching and we'll see you next time on breaking analysis

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

(upbeat music) >> Okay, we're back here in theCUBE, this is day three of our coverage right here in the middle of all the action of Cloud City at Mobile World Congress. This is the hit of the entire show in Barcelona, not only in person, but out on the interwebs virtually, this is a hybrid event. This is back to real life, and theCUBE is here. I'm John Furrier and Dave Vellante and DR is here, Danielle Royston. >> Totally. >> Welcome back to theCUBE for the fourth time now at the anchor desk, coming back, we love you. >> Well, it's been a busy day, it's been a busy week. It's been an awesome week. >> John: Feeling good? >> Oh my God. >> You made the call. >> I've made the call. >> You did on your podcast what, months ago. >> Yeah, right? >> You made the call. >> Made the call. >> You're on the right side of history. >> Right, and people were like, it's going to be canceled. COVID won't be handled, blahbity blah. >> She's crazy. >> Nope, I was just crazy, I'm okay with that, right? >> Crazy good. >> Right, I'm like I'm forward looking in a lot of ways. And we were looking towards June and we're like, I think this is going to be the first event back. >> You know, the crazy ones commercial that Apple ran is one of the best commercials of all time. You can't ignore the crazy ones in a good way. You can't ignore what you're doing. And I think to me, what I'm so excited about is cause we've been covering cloud we're cloud bigots, we love the cloud, public cloud. We've been on that train from day one. But when you hear the interviews we did here in theCUBE and interviews that we talked about with the top people, Google, Amazon Web Services. We're talking about the top people, both technology leaders like Bill Vass and the people who run the telecom verticals like Alfonzo, Adolfo, I mean, Hernandez. We had Google's top networking executive, we had their industry leader and the telecom, Microsoft and the Silicon all are validating, and it's like, surround sound to what you're saying here, and it cannot be ignored. >> I mean, we are coming to a big moment in Telco, right? And I mean, I've been saying it's coming. I called 2021, the year of Public Cloud and Telco. It helped that Erickson bailed. So thank you, Erickson people. >> It was a gift. >> It was a gift. >> It was. >> It really was a gift. And it was not just for me, but I think also for the vendors in the booth, I mean, we have a Cloud City army, right? Here we go, let's start marching, and it's awesome. >> He reminds me of that baseball player that took a break, cause he had a hangover and, Cal Ripkin. >> Cal Ripkin? >> Yeah, what was that guy's name? >> Did that really happen? >> Yeah, he took a break and uh- >> New guy stepped in. >> Yeah, and so well, not Cal Ripkin. >> No, no, so before, you want to know, who was it, Lou Gehrig? >> Lou Gehrig, yeah, Lou Gehrig. >> Right, so, Lou Gehrig was nobody, and we can't remember the guy's name, nobody knows the guy's name, what was that guy's name? Nobody knows, oh, there's Lou Gehrig, he got hurt. He sat out and Lou Gehrig replaced him and never hear of him again. >> Danielle: Love it, I'll take that. >> Never, never missed a game for his entire career. So again, this is what Erickson did, they just okay, take a break. >> Yeah, but I mean, it's been great again. I had a great day yesterday, my keynote was delivered. Things are going well with the booth, we had Jon Bon Jovi. I mean, that was just epic and it was acoustic and it was right after lockdown. I think everyone was really excited to be there. But I was talking to a vendor that said we'd been able to accomplish in three days, what normally it would take three years from a sales funnel perspective. I mean, that's big and that's not me. That's not my organization. That's other organizations that are benefiting from this energy. Oh, it's awesome. >> The post isolation economy has become a living metaphor for transformation, and I've been trying to sort of grok and put the pieces together as to how this thing progresses in my interview with Portal One in particular really brought it into focus for me, anyway, I'd love to get your thoughts. One of the things we haven't talked much about is public policy, and I think about all the time, all the discussion in the United States about infrastructure, this is critical infrastructure, right? And the spectrum is a country like South Africa saying, come on in, we want to open up. We want to innovate, to me, that's the model for these tier two and tier three Telcos that are just going to disrupt the big guys, whereas, maybe China's maybe on the other end of the spectrum, very controlling, but it's the former that is going to adopt the cloud sooner, and it's going to completely transform the next decade. >> Yeah, I think this is a great technology for a smaller challenge or CSP that still is a large successful company to challenge the incumbents that are, they are dinosaurs too, they move a little bit slow, and maybe if you're a little bit faster, quicker dinosaur you'll survive longer, maybe you'll be able to transform and, and a public cloud enables that. And I think, you know I'm playing the long game here, right? Is public cloud already for every Telco in every corner of the world, no. And there's a couple of things that are barriers to that. We don't really talk about the downsides, and so maybe we sort of wrap up with- there are challenges and acknowledge there are challenges, you know, in some cases their data regulations and issues, right? And you can't right? There's not a hyperscaler in your country, right? And so you're having a little bit of challenges, but you trend this out over 10 years and then pace it with the hyperscalers that are building new data centers. They're each at 25 plus each, you know, plus or minus a few, right? They're marching along, and you trend this out over 10 years, I think one of two things happened, your data regulations are eased or a hyperscaler appears in a place you can use it, and those points converge and hopefully the software's there, and that's my effort and (claps) yeah. >> Dave: You know what's an interesting trend, DR and John, that is maybe a harbinger to this, is you just mentioned something. If the hyperscalers might not have a presence in, in a country, you know what they're doing? And our data shows this, I do that weekly series breaking analysis and the data Openstack was popping up. Like where does OpenStack come from, well, guess what, when you cut the data, it was Telcos using open source to build clouds in regions where there was no hyperscalers. >> It's a gap filler. >> Yeah, it's a gap filler, it's a bandaid. >> But I think this is where, like. outpost is such a great idea, right? Like getting outposts, and I think Microsoft has the ability to do this as well, Google less so, right? They're not providing the staff, they're doing Anthos. So you're still managing this, the rack, but they're giving you the ability to tap into their services. But I was talking to a CTO in Bolivia. He was like, we have data privacy issues in our country. There's no hyperscaler, not sure Bolivia is like next on the list for AWS, right? But he's like, I'm going to build my own public cloud. And I'm like why would you do that when you can just use outposts? And then when your data regulations release, where they get to Bolivia, you can switch and you're on the stack, and you're ready to go. I think that's what you should do. You should totally do that. >> John: Yeah, one of the things that's come up on here in the interviews, in theCUBE and here, the show is that there are risk takers and innovators and there's operators. And this has been the consistent theme around, yeah, the on-premises world you mentioned this regulation reasons, and or some workflows just have to be on premise for security reasons, whatever, that's the corner case. But the operating model of the technology architecture is shifted. And that reality, I don't think is debatable, so I find it, I got to ask you this because I'm really curious. I know you get a lot of people staring at ya, oh the public cloud's just a hosting, but why aren't people getting this architectural shift? I mean, you mentioned outpost and wavelength, which Amazon has, is a game changer. It's Amazon cloud at the hub. >> Yeah, at the edge. >> Okay, that's a low latency, again, low-hanging fruit applications, real buys, whatnot. I mean, that's an architectural dot that's been connected. Why are people getting it. >> In our industry, I think it is a lot of not invented here syndrome, right? And that's a very sort of nineties thought and I have been advocating stand on the shoulders of the greatest technologists in the world, right, and you know, there's, there is a geopolitical US thing, I think we lived through a presidency that had a sort of nationalistic approach and a lot of those conversations pop up, but I've also looked to these guys and I'm like, you're still, you still have your Huawei kit installed. And there's concerns with that too. So, and you picked it because of cost, and it's really hard to switch off of, so give me a break with your public cloud USA stuff, right? You can use it, you're just making excuses, you're just afraid. What are you afraid of, the HR implications? Let's talk about that, right? And the minute I take it there, conversation changes. >> Yeah, I talked to Teresa Carlson when she was running the public sector at AWS, she's now president of Splunk. I call her a Renaissance woman. She's been a great leader and public sector for this weird little pocket of AWS where it's a guess a sales division, but it's still its own company. >> Danielle: Yeah. >> And she's, did the CIA deal, the DOD, and the public sector partnerships are now private, a lot more private relationships, So it's not like just governments, you mentioned government and national security, and these things, you started to see the ecosystem not, not just be about companies, >> Danielle: Yeah. >> Government and private sector. So this whole vibe of the telecom being regulated, unregulated, unbundled is an interesting kind of theory. What's your thoughts and reactions to this, kind of this, melting pot of ecosystem change and evolution? >> Danielle: Yeah, I mean. I think there's a very nationalistic approach by the Telcos, right? They sort of think about the countries that they operate in. There's a couple of groups that go across multiple countries, but can there be a global Telco? Can that happen, right? Just like we say, you were saying it earlier, Netflix, right? You can say Netflix, UK. Right, and so can we have a global Telco, right. That is challenging on a lot of different levels. But think about that in a public cloud start to enable that idea, right? Elon Musk is going to get to Mars. You need a planetary level Telco. And I can, I think that day is, I mean, I don't think it's tomorrow, but I think that's like 10, 20 years away. >> Dave: You're done, we're going to see it start this decade, it's already starting. We're going to see the fruits of that dividend. >> Danielle: Yeah, it's crazy. >> I've got to ask you, you're a student of the industry and you get so much experience, it's great to have you on theCUBE and chat about, riff about these things, but, the classic who's ready for disruption question comes up, and I think there's no doubt that the Telcos as an industry has been slow moving and the role and the importance has changed. People need the need to have the internet access they need to access. >> Yeah. >> So, and you've got the edge, now applications are now running on it, since the iPhone 14 years ago, as you pointed out, people now are interested in how packets move. That's fast whether it's a doctor or an emergency worker or someone. >> Danielle: What we have done in 2020 without the internet and broadband and our mobile phones, I mean? >> You know, I think about 1920 when the Spanish flu pandemic hit a hundred years ago, those guys did not have mobile phones and they must have been bored, right? I mean, what are you going to do, right? And so, yeah I think last year really moved a lot of thinking forward in this respect, so. >> Yeah, it's always like that, that animal out in the Serengeti that gets taken down, you know, by the cheetah or the lion. How do know when someone is going to be disrupted What's the, what's the tell sign in your mind, you look at the Telco landscape. What is someone waiting to be disrupted or replaced like? >> You know what they're ostriches, how do you say that word, right? They stick their head in the sand. Like I don't want to talk about it, la la la, I don't want to, I don't want to think about it. You know, they bring up all these like roadblocks, and I'm like, okay, I'm going to come visit you in another six months to a year, and let's see what happens when the guys that are moving fast that are open-minded to this, and it's, I mean, when you start to use the public cloud, you don't, like, turn it on overnight. You start experimenting, right? You start, you take an application that is non-threatening. You have, I mean, these guys are running thousands of apps inside their data centers. Pick some boring ones, pick some old ones that no one likes, and move that to the public cloud, play with it. Right, I'm not talking about moving a whole network overnight tomorrow. You got to learn, you have no, I mean, very little talent in the Telco that know how to program against the AWS stack. Start hiring, start doing it, and you're going to start to learn about the compensation, and I used to do compensation, right? I spent a lot of time in HR, right? The compensation points and structures, they compare AWS and Google, versus a Telco. Do you want Telco stock? Do you want Google stock? >> Dave: Right, where do you want to go? >> Right, right? like that's going to challenge the HR organization in terms of compensate. How do we compensate our people when they're learning these new valuable skills? >> When you think about disruption, you know, the master or the professor of disruption, Clay Christensen, one of the best lectures he ever gave was who at Cambridge, and he gave a lecture on the steel industry, and he was describing it, it was like four layers of value in the steel industry, the value chain, it started with rebar, like the lowest end, right? >> Danielle: Yeah yeah. >> And the Telco's actually the opposite, so that, you know, when, when the international companies came in, they went after rebar, and the higher end steel companies said, nah, let them have it, that's the low margin stuff. And then eventually, uh, when they got up to the high end. >> Danielle: It was over, yeah. >> The Telcos are the opposite. They're like, the, you know, in the, in the conductivity and they're hanging on to that because it's so big, but all the high value stuff, it's already gone to the, over the top players, right. >> It's being eaten away, and I'm like, what is going to wake you guys up to realize those are your competitors, that's where the battle is, right? >> John: That's really where the value is. >> The battle of the bastards, you're there by yourself, like "Game of Thrones" and they're coming at you. >> John: You need a dragon. >> What are you doing about it? >> John: I need a dragon to compete in this market. Riding a dragon would be a good strategy. >> I know, I was just watching. Cause I have a podcast, I have a podcast called "Telco In 20" and we always put like little nuggets in the show notes, I personally reviewed them, I was just reviewing the one for the keynote that we're putting out, and I had a dragon in my keynote, right? It was a really great moment, it was really fun to do, but there's, I don't know if you guys are "Game of Thrones" fans. >> Yeah. >> Sure. >> Right, but there's a great moment when Daenerys gets her dragons, the baby dragons, and she takes over the Unsullied Army, right? And it's just this, right? Like all of a sudden the tables turn in an instant where she has nothing, and she's like on her quest, right. I'm on a quest. >> Dave: Comes out of the fire. >> Right, comes out of the fire, the unburnt, right? She has her dragons, right? She has them hatch. She takes over the Unsullied Army, right? Slaves, it starts her march, right? And I'm like, we're putting that clip into the show notes because I think that's where we are. I think I've hatched some dragons, right? The Cloud City army, let's go, let's go take on Telco. >> John: Well, I mean, this to me. >> Easy. >> It definitely have made, made it happen because I heard many people talking about cloud, this is turning into a cloud show. The question is, when does this going to be a cloud show? That's just Cloud City, it's a big section of the show. I mean, all the big players are behind it. >> Danielle: Yeah, yeah. >> Amazon Web Services, Google Azure, Ecosystem, startups, thinking differently, but everyone's agreeing why aren't we doing this? >> I think, like I said, I mean, people are like, you're such a visionary, and how did, why do you think this will work, I'm like, it's worked in every other industry. Am I really that visionary, and like, these are the three best tech companies in the world, like, are, are you kidding me? And so I think we've shown the momentum here. I think we're looking forward to 2022, you know? And that we see 2022, you got to start planning this the minute we get back, right? Like I wouldn't recommend doing this in a hundred days again, that was a very painful, but you know, February, I was, there's a sign inside NWC, February 28th. Right, we're talking seven months. You got to get going now. >> John: Let's get on the phone. >> With Telco, I mean, I think you're right on. I mean, you know, remember Skype, in the early days, right? >> Danielle: Yeah, yeah. >> It wasn't regional. It was just, plug into the internet. >> Danielle: It was just Skype, it was just WhatsApp. >> Well this is a great location, if you can get a shot guys of the people behind us, I don't know if you can, if you're watching check out the scene here, It's winding down, a lot of people having happy hour. Now this is a social construct here at Cloud City, not only is it chock full of information, reporting that we're doing and getting all the data and with the presentations on the main stage, with Adam and the studio and the team, this is a place where people are meeting and there's deals being done face to face, intimate relationships, the best of the best are here, they make the trek. So there's been a successful formula. Of course theCUBE is in the middle of all the action, which we love, we're psyched to be back. I want to thank you personally, while we have you on stage here. >> I want to thank you guys, and the crew, the crew has been amazing, turning out videos on short order. We have all these crews in different cities, it's, our own show has been virtual. You know, Adam's in Bristol, right? We're here, this was an experiment, we talked about this a hundred days ago, 90 days ago. Could we get theCUBE there, do the show but also theCUBE. >> You are a visionary, you said made for TV hybrid event with your team, produce television shows, theCUBE, we're digital, we love you guys, great alignment, but it's magical because the content doesn't end here, the show might end, they might break down the beautiful plants and the exhibits, but the community is going to continue, the content and the conversations. >> Yeah. >> So, we were looking forward to it and- >> I'm super glad, super glad we did this. >> Awesome, well, any final moments that you would like to share in the last two minutes we have, favorite moments, observations, funny things that have happened to you, weird things that have happened to you, share something that people might not know, or a favorite moment? >> I think, I don't know that people know, we have a 3D printer in the coffee shops, and so you can upload any picture and they're 3d printing, coffee art, right? So I've been seeing lots of social posts around people uploading their, their logos and things like that. I think Jon Bon Jovi, he was super thankful to be back. He thanked me personally two different times of like, I'm just glad to be out in front of people. And I think just even just the people walking around, thank you for being brave, thank you for coming back. You've helped Barcelona and we're happy to be together. Even if it is with masks, it's hard to do business with masks on, everyone's happy and psyched. >> John: Well the one thing that people cannot do relative to you is they cannot ignore you. You are making a great big wave. >> Danielle: I shout pretty loud, It's kind of hard to ignore me. >> You're making a great big wave, you're on the right side, we believe, of history, public cloud is driving the bus down main street of Cloud City, and if people don't get out of the way, they will be under the bus. >> I'm, like I said, in my keynote, it's go time let's do it. >> Okay. Thank you so much for all your attention and mission behind the cloud and the success. >> Danielle: We'll do it again. We're going to do it again soon. >> After Togi's a hundred million dollar investment, you're the CEO of Togi that, let's follow that progress, and of course, Telco DR, Danielle Royston, the digital revolution. Thanks for coming on with you. >> Thank you guys, it was super fun. >> This is theCUBE I'm John Furrier with Dave Vallante, we're going to send it back to Adam in the studio. Thanks, the team here. >> Woo! (audience applauding) >> I want to thank the team, everyone here, Adam is great, Chloe. >> Great working with you guys. >> Awesome, and what a great crew. >> So great. >> Thank you everybody. That's it for theCUBE, here on the last day, Wednesday of theCUBE, stay tuned for tomorrow more action on the main stage, here in Cloud City. Thanks for watching.

(upbeat music) >> Hey, we're back here in theCube. This is day three of our coverage right here in the middle of all the action of Cloud City at Mobile World Congress. This is the hit of the entire show in Barcelona, not only in person, but out on the interwebs virtually. This is a hybrid event. This is back to real life, and theCube is here. I'm John Furrier with Dave Vellante and D. R. is here, Danielle Royston. >> Totally. >> Welcome back to theCube for fourth time. now at the anchor desk, coming back. >> I don't know. It's been a busy day. It's been a busy week. It's been an awesome week. >> Dave: Feeling good? >> Oh, my god. >> You made the call. >> I made the call. You finished your podcast, what months ago? >> Yeah. >> Made the call. >> Made the call. You're on the right side of history. >> Right? And people were like, "It's going to be canceled. COVID won't be handled." Blahbity blah. >> She's crazy. >> And I'm like, nope. She's crazy. I'm okay with that. Right? But I'm like... >> Crazy good. >> Right, I'm like, I'm forward-looking in a lot of ways. And we were looking towards June, and we're like, "I think this is going to be the first event back. We're going to be able to do it." >> You know, the crazy one's commercial that Apple ran, probably one of the best commercials of all time. You can't ignore the crazy ones in a good way. You can't ignore what you're doing. And I think to me, what I'm so excited about is, 'cause we've been covering cloud. We're cloud bigots. We love the cloud, public cloud. We've been on that train from day one. But when you hear the interviews we did here on theCube and interviews that we talked about with the top people, Google, Amazon Web Services. We're talking about the top people, both technology leaders like Bill Vass and the people who run the Telecom Verticals like Alf, Alfonzo. >> Danielle: Yeah. >> Adolfo, I mean, Hernandez. >> Danielle: Yeah. >> We had Google's top networking executive. We had their industry leader in the telecom, Microsoft, and the Silicon. All are validating, and it's like surround sound to what you're saying here. And it cannot be ignored. >> I mean, we are coming to a big moment in Telco, right? And I mean, I've been saying that it's coming. I called 2021, the year of public cloud and Telco. It helped that Ericcson bailed. So thank you, Ericcson people. >> Dave: It was a gift. >> It was a gift. >> John: It really was. >> It really was a gift. And it was not just for me, but I think also for the vendors in the booth. I mean, we have a Cloud City army, right? Here we go. Let's start marching. And it's awesome. >> He reminds me of that baseball player that took a break 'cause he had a hangover and Cal Ripken. >> Cal Ripken, right, yeah, yeah. What was that guy's name? >> Did it really happen? >> Yeah, he took a break and... >> The new guy stepped in? >> Yeah, and so we'll go to Cal Ripken. >> No, no, so before it was it? Lou Gehrig. >> Lou Gehrig, yeah. >> Right, so Lou Gehrig was nobody. And we can't remember the guy's name. Nobody knows the guy's name. >> Danielle: Yeah, yeah. >> What was that guy's name? Nobody knows. Oh, 'cause Lou Garrett, he got hurt. >> Danielle: And Lou Gehrig stepped in. >> He sat out, and Lou Gehrig replaced him. >> Danielle: Love it. >> And never heard of him again. >> Danielle: I'll take that. >> Never missed a game. Never missed a game for his entire career. So again, this is what Ericcson did. They just okay, take a break and... >> But I mean, it's been great. Again, I had a great day yesterday. My keynote was delivered. Things are going well with the booth. We had Jon Bon Jovi. I mean, that was just epic, and it was acoustic, and it was right after lockdown. I think everyone was really excited to be there. But I was talking to a vendor that said we'd been able to accomplish in three days what normally it would take three years from a sales funnel perspective. I mean, that is, that's big, and that's not me. That's not my organization. That's other organizations that are benefiting from this energy. Oh, that's awesome. >> The post-isolation economy has become a living metaphor for transformation. And I've been trying to sort of grok and put the pieces together as to how this thing progresses. And my interview with Portaone, in particular, >> Danielle: Yeah. >> really brought it into focus for me, anyway. I'd love to get your thoughts. One of the things we haven't talked much about is public policy. And I think about all the time, all the discussion in the United States about infrastructure, this is critical infrastructure, right? >> Danielle: Yeah. >> And the spectrum is a country like South Africa saying, "Come on in. We want to open up." >> Danielle: Yeah. >> "We want to innovate." And to me that's to me, that's the model for these tier two and tier three telcos that are just going to disrupt the big guys. Whereas, you know, China, may be using the other end of the spectrum, very controlling, but it's the former that is going to adopt the cloud sooner. It's going to completely transform the next decade. >> Yeah, I think this is a great technology for a smaller challenger CSP that still is a large successful company to challenge the incumbents that are, they are dinosaurs too. They move a little bit slow. And maybe if you're a little bit faster, quicker dinosaur you'll survive longer. Maybe it will be able to transform and a public cloud enables that. And I think, you know, I'm playing the long game here, right? >> Dave: Yeah. >> Is public cloud ready for every telco in every corner of the world? No. And there's a couple of things that are barriers to that. We don't really talk about the downsides, and so maybe we sort of wrap up with, there are challenges, and I acknowledge there are challenges. You know, in some cases there are data regulations and issues, right? And you can't, right? There's not a hyperscaler in your country, right? And so you're having a little bit of challenges, but you trend this out over 10 years and then pace it with the hyperscalers are building new data centers. They're each at 25 plus each, plus or minus a few, right? They're marching along, and you trend this out over 10 years, I think one of two things happens. Your data regulations are eased or you a hyperscaler appears in a place you can use it. And those points converge, and hopefully the software's there, and that's my effort. And, yeah. >> You know what's an interesting trend, D. R., John? That is maybe a harbinger to this. You just mentioned something. If the hyperscalers might not have a presence in a country, you know what they're doing? And our data shows this, I do that weekly series "Breaking Analysis," and the data, OpenStack was popping up. >> Danielle: Yeah. >> Like where does OpenStack come from? Well, guess what. When you cut the data, it was telcos using open source to build clouds in regions where there was no hyperscaler. >> Where it didn't exist, yeah. >> So it's a-- >> Gap-filler. >> Yeah, it's a gap-filler. It's a Band-aid. >> But I think this is where like Outpost is such a great idea, right? Like getting Outposts, and I think Microsoft has the ability to do this as well, Google less so, right. They're not providing the staff. They're doing Anthos, so you're still managing this, the rack, but they're giving you the ability to tap into those services. But I was talking to a CE, a CTO in Bolivia. He was like, "We have data privacy issues in our country. There's no hyperscaler." Not sure Bolivia is like next on the list for AWS, right? But he's like, "I'm going to build my own public cloud." And I'm like, "Why would you do that when you can just use Outposts?" And then when your data regulations release or there's a, they get to Bolivia, you can switch and you're on the stack and you're ready to go. I think that's what you should do. You should totally do that. >> Yeah, and one of the things that's come up here on the interviews and theCube and here, the show, is that there are risk takers and innovators and there's operators. And this has been the consistent theme around, yeah, the on-premises world. You mentioned this regulation reasons and/or some workflows just have to be on premise for security reasons, whatever. That's the corner case. >> Danielle: Yeah. >> But the operating model of the technology architecture is shifted. >> Danielle: Yep. >> And that reality, I don't think, is debatable. So I find it. I've got to ask you this because I'm really curious. I know you get a lot of people steering 'ya, oh the public cloud's just a hosting, but why aren't people getting this architectural shift? I mean, you mentioned Outpost, and Wavelength, which Amazon has, is a game changer. It's Amazon Cloud at the hub. >> Yeah, at the edge, yeah. >> Okay, that's a low latency again, low-hanging fruit applications, robotics, whatnot. I mean, that's an architectural dot that's been connected. >> Yeah. >> Why aren't people getting it? >> In our industry, I think it is a lot of not invented here syndrome, right? And that's a very sort of nineties thought, and I have been advocating stand on the shoulders of the greatest technologists in the world. Right? And you know, there is a geopolitical US thing. I think we lived through a presidency that had a sort of nationalistic approach and a lot of those conversations pop up, but I've also looked to these guys and I'm like, you still have your Huawei kit installed, and there's concerns with that, too. So, and you picked it because of cost. And it's really hard to switch off of. >> John: Yeah. >> So give me a break with your public cloud USA stuff, right? You can use it. You're just making excuses. You're just afraid. What are you afraid of? The HR implications? Let's talk about that, right? And the minute I take it there, conversation changes. >> I talked to Teresa Carlson when she was running the public sector at AWS. She's now president of Splunk. I call her a Renaissance woman. She's been a great leader. In public sector there's been this weird little pocket of AWS where it's, I guess, a sales division, but it's still its own company. >> Danielle: Yeah. >> And she just did the CIA deal. The DOD and the public sector partnerships are now private, a lot more private relationships. So it's not like just governments. You mentioned government and national security and these things. You start to see the ecosystem, not, not just be about companies, government and private sector. So this whole vibe of the telecomm being regulated, unregulated, unbundled is an interesting kind of theory. What's your thoughts and reactions to this kind melting pot of ecosystem change and evolution? >> Yeah, I mean, I think there's a very nationalistic approach by the telcos, right? They sort of think about the countries that they operate in. There's a couple of groups that go across multiple countries, but can there be a global telco? Can that happen, right? Just like we say, you were saying it earlier, Netflix. Right? You didn't say Netflix, UK, right? And so can we have a global telco, right? That is challenging on a lot of different levels. But think about that in a public cloud starts to enable that idea. Right? Elon Musk is going to get Mars. >> Dave: Yep. >> John: Yeah. >> You need a planetary level telco, and I think that day is, I mean, I don't think it's tomorrow, but I think that's like 10, 20 years away. >> You're done. We're going to see it start this decade. It's already starting. >> Danielle: Yeah. >> But we're going to see the fruits of that dividend. >> Danielle: Right, yeah. >> I got to ask you. You're a student of the industry and you got so much experience. It's great to have you on theCube and chat about, riff about, these things, but the the classic "Who's ready for disruption?" question comes up. And I think there's no doubt that the telcos, as an industry, has been slow moving, and the role and the importance has changed. People need the need to have the internet access. They need to access. >> Danielle: Yeah. >> So and you've got the Edge. Now applications are now running on a, since the iPhone 14 years ago, as you pointed out, people now are interested in how packets move. >> Danielle: Yeah. >> That's fast, whether it's a doctor or an emergency worker or someone. >> What would we have done in 2020 without the internet and broadband and our mobile phones? I mean. >> Dave: We would have been miserable. >> You know, I think about 1920 when the Spanish flu pandemic hit a hundred years ago. Those guys did not have mobile phones, and they must have been bored, right? I mean, what are you going to do? Right? And so, yeah, I think, I think last year really moved a lot of thinking forward in this respect, so. >> Yeah, it's always like that animal out in the Serengeti that gets taken down, you know, by the cheetah or the lion. How do you know when someone is going to be disrupted? What's the, what's the tell sign in your mind? You look at the telco landscape, what is someone waiting to be disrupted or replaced look like? >> Know what? They're ostriches. Ostriches, how do you say that word right? They stick their head in the sand. Like they don't want to talk about it. La, la, la, I don't want to. I don't want to think about it. You know, they bring up all these like roadblocks, and I'm like, okay, I'm going to come visit you in another six months to a year, and let's see what happens when the guys that are moving fast that are open-minded to this. And it's, I mean, when you start to use the public cloud, you don't like turn it on overnight. You start experimenting, right? You start. You take an application that is non-threatening. You have, I mean, these guys are running thousands of apps inside their data centers. Pick some boring ones. Pick some old ones that no one likes. Move that to the public cloud. Play with it, right? I'm not talking about moving your whole network overnight tomorrow. You got to learn. You have no, I mean, very little talent in the telco that know how to program against the AWS stack. Start hiring. Start doing it. And you're going to start to learn about the compensation. And I used to do compensation, right? I spent a lot of time in HR, right? The compensation points and structures, and they can bear AWS and Google versus a telco. You want Telco stock? Do you want Google stock? >> John: Right, where do you want to go? >> Right? Right? And so you need to start. Like that's going to challenge the HR organization in terms of compensate. How do we compensate our people when they're learning these new, valuable skills? >> When you think about disruption, you know, the master or the professor of disruption, Clay Christensen, one of the best lectures he ever gave is we were at Cambridge, and he gave a lecture on the steel industry and he was describing it. It was like four layers of value in the steel industry, the value chain. It started with rebar, like the lowest end. Right? >> Danielle: Yeah, yeah. >> And the telco's actually the opposite. So, you know, when the international companies came in, they went after rebar, and the higher end steel companies said, "Nah, let them have it." >> Danielle: Let it go. >> "That's the low margin stuff." And then eventually when they got up to the high end, they all got killed. >> Danielle: It was over, yeah. >> The telcos are the opposite. They're like, you know, in the connectivity, and they're hanging on to that because it's so big, but all the high value stuff, it's already gone to the over-the-top players, right? >> It's being eaten away. And I'm like, "What is going to wake you guys up to realize those are your competitors?" That's where the battle is, right? >> Dave: That's really where the value is. >> The battle of the bastards. You're there by yourself, the Game of Thrones, and they're coming at you. >> John: You need a dragon. >> What are you doing about it? >> I need a dragon. I need a dragon to compete in this market. Riding on the dragon would be a good strategy. >> I know. I was just watching. 'Cause I have a podcast. I have a podcast called "Telco in 20," and we always put like little nuggets in the show notes. I personally review them. I was just reviewing the one for the keynote that we're putting out. And I had a dragon in my keynote, right? It was a really great moment. It was really fun to do. But there's, I don't know if you guys are Game of Thrones fans. >> Dave: Oh, yeah. >> John: For sure. >> Right? But there's a great moment when Daenerys guts her dragons, the baby dragons, and she takes over the Unsullied Army. Right? And it's just this, right? Like all of a sudden, the tables turn in an instant where she has nothing, and she's like on her quest, right? I'm on a quest. >> John: Comes out of the fire. >> Right, comes out of the fire. The unburnt, right? She has her dragons, right? She has them hatch. She takes over the Unsullied Army, right? Slays and starts her march, right? And I'm like, we're putting that clip into the show notes because I think that's where we are. I think I've hatched some dragons, right? The Cloud City Army, let's go, let's go take on Telco. >> John: Well, I mean to me... >> Easy. >> I definitely have made it happen because I heard many people talking about cloud. This is turning into a cloud show. The question is, when does this be, going to be a cloud show? You know it's just Cloud City is a big section of the show. I mean, all the big players are behind it. >> Danielle: Yeah, yeah. >> Amazon Web Services, Google, Azure, Ecosystem, startups thinking differently, but everyone's agreeing, "Why aren't we doing this?" >> I think, like I said, I mean, people are like, you're such a visionary. And how did, why do you think this will work? I'm like, it's worked in every other industry. Am I really that visionary? And like, these are the three best tech companies in the world. Like, are you kidding me? And so I think we've shown the momentum here. I think we're looking forward to 2022, you know? And do we see 2022, you get to start planning this the minute we get back. Right? >> John: Yeah. >> Like I wouldn't recommend doing this in a hundred days again. That was a very painful, but you know, February, I was, there's a sign inside NWC, February 28th, right? We're talking seven months. You got to get going now. >> John: Let's get on the phone. (John and Dave talking at the same time) >> I mean, I think you're right on. I mean, you know, remember Skype in the early days? >> Danielle: Yeah, yeah, yeah, yeah. >> It wasn't regional. >> Danielle: Yeah. >> It was just plug into the internet, right? >> Danielle: It was just Skype. It was just WhatsApp. >> Well, this great location, and if you can get a shot, guys, of the people behind us. I don't know if you can. If you're watching, check out the scene here. It's winding down. A lot of people having happy hour now. This is a social construct here at Cloud City. Not only is it chock full of information, reporting that we're doing and getting all the data and with the presentations on the main stage with Adam and the studio and the team. This is a place where people are meeting and there's deals being done face to face, intimate relationships. The best of the best are here. They make the trek, so there's been a successful formula. Of course theCube is in the middle of all the action, which we love. We're excited to be back. I want to thank you personally while we have you on stage here. >> I want to thank you guys and the crew. The crew has been amazing turning out videos on short order. We have all these crews in different cities. It's our own show has been virtual. You know, Adam's at Bristol, right? We're here. This was an experiment. We talked about this a hundred days ago, 90 days ago. Could we get theCube there and do the show, but also theCube. >> You are a visionary. And you said, made for TV hybrid event with your team, reduced television shows, theCube. We're digital. We love you guys. Great alignment, but it's magical because the content doesn't end here. The show might end. They might break down the beautiful plants and the exhibits, but the community is going to continue. The content and the conversations. >> Yeah. >> So. >> We are looking forward to it and. >> Yeah, super-glad, super-glad we did this. >> Awesome. Well, any final moments that you would like to share? And the last two minutes we have, favorite moments, observations, funny things that have happened to you, weird things that have happened to you. Share something that people might not know or a favorite moment. >> I think, I mean I don't know that people know we have a 3D printer in the coffee shops, and so you can upload any picture, and there are three 3D printing coffee art, right? So I've been seeing lots of social posts around people uploading their, their logos and things like that. I think Jon Bon Jovi, he was super-thankful to be back. He thanked me personally two different times of like, I'm just glad to be out in front of people. And I think just even just the people walking around, thank you for being brave, thank you for coming back. You've helped Barcelona, and we're happy to be together even if it is with masks. It's hard to do business with masks on. Everyone's happy and psyched. >> The one thing that people cannot do relative to you is they cannot ignore you. You are making a great big waves. >> Danielle: I shout pretty loud. It's kind of hard to ignore me. >> Okay, you're making a great big wave. You're on the right side, we believe, of history. Public cloud is driving the bus down main street of Cloud City, and if people don't get out of the way, they will be under the bus. >> And like I said, in my keynote, it's go time. Let's do it. >> Okay, thank you so much for all your tension and mission behind the cloud and the success of... >> Danielle: We'll do it again. We're going to do it again soon. >> Ketogi's hundred million dollar investment. Be the CEO of Togi as we follow that progress. And of course, Telco D. R. Danielle Royston, the digital revolution. Thanks for coming on theCube. >> Thank you, guys. It was super-fun. Thank you so much. >> This is theCube. I'm John Furrier with Dave Vellante. We're going to send it back to Adam in the studio. Thanks the team here. (Danielle clapping and cheering) I want to thank the team, everyone here. Adam is great. Chloe, great working with you guys. Awesome. And what a great crew. >> So great. >> Thank you everybody. That's it for theCube here on the last day, Wednesday, of theCube. Stay tuned for tomorrow, more action on the main stage here in Cloud City. Thanks for watching.

>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR, this is Braking Analysis with Dave Vellante. >> Intel's big announcement this week underscores the threat that the United States faces from China. The US needs to lead in semiconductor design and manufacturing. And that lead is slipping because Intel has been fumbling the ball over the past several years, a mere two months into the job, new CEO Pat Gelsinger wasted no time in setting a new course for perhaps, the most strategically important American technology company. We believe that Gelsinger has only shown us part of his plan. This is the beginning of a long and highly complex journey. Despite Gelsinger's clear vision, his deep understanding of technology and execution ethos, in order to regain its number one position, Intel we believe we'll need to have help from partners, competitors and very importantly, the US government. Hello everyone and welcome to this week's Wikibon CUBE insights powered by ETR. In this breaking analysis we'll peel the onion Intel's announcement of this week and explain why we're perhaps not as sanguine as was Wall Street on Intel's prospects. And we'll lay out what we think needs to take place for Intel to once again, become top gun and for us to gain more confidence. By the way this is the first time we're broadcasting live with Braking Analysis. We're broadcasting on the CUBE handles on Twitch, Periscope and YouTube and going forward we'll do this regularly as a live program and we'll bring in the community perspective into the conversation through chat. Now you may recall that in January, we kind of dismissed analysis that said Intel didn't have to make any major strategic changes to its business when they brought on Pat Gelsinger. Rather we said the exact opposite. Our view at time was that the root of Intel's problems could be traced to the fact that it wasn't no longer the volume leader. Because mobile volumes dwarf those of x86. As such we said that Intel couldn't go up the learning curve for next gen technologies as fast as its competitors and it needed to shed its dogma of being highly vertically integrated. We said Intel needed to more heavily leverage outsourced foundries. But more specifically, we suggested that in order for Intel to regain its volume lead, it needed to, we said at the time, spin out its manufacturing, create a joint venture sure with a volume leader, leveraging Intel's US manufacturing presence. This, we still believe with some slight refreshes to our thinking based on what Gelsinger has announced. And we'll talk about that today. Now specifically there were three main pieces and a lot of details to Intel's announcement. Gelsinger made it clear that Intel is not giving up its IDM or integrated device manufacturing ethos. He called this IDM 2.0, which comprises Intel's internal manufacturing, leveraging external Foundries and creating a new business unit called Intel Foundry Services. It's okay. Gelsinger said, "We are not giving up on integrated manufacturing." However, we think this is somewhat nuanced. Clearly Intel can't, won't and shouldn't give up on IDM. However, we believe Intel is entering a new era where it's giving designers more choice. This was not explicitly stated. However we feel like Intel's internal manufacturing arm will have increased pressure to serve its designers in a more competitive manner. We've already seen this with Intel finally embracing EUV or extreme ultraviolet lithography. Gelsinger basically said that Intel didn't lean into EUV early on and that it created more complexity in its 10 nanometer process, which dominoed into seven nanometer and as you know the rest of the story and Intel's delays. But since mid last year, it's embraced the technology. Now as a point of reference, Samsung started applying EUV for its seven nanometer technology in 2018. And it began shipping in early 2020. So as you can see, it takes years to get this technology into volume production. The point is that Intel realizes it needs to be more competitive. And we suspect, it will give more freedom to designers to leverage outsource manufacturing. But Gelsinger clearly signaled that IDM is not going away. But the really big news is that Intel is setting up a new division with a separate PNL that's going to report directly to Pat. Essentially it's hanging out a shingle and saying, we're open for business to make your chips. Intel is building two new Fabs in Arizona and investing $20 billion as part of this initiative. Now well Intel has tried this before earlier last decade. Gelsinger says that this time we're serious and we're going to do it right. We'll come back to that. This organizational move while not a spin out or a joint venture, it's part of the recipe that we saw as necessary for Intel to be more competitive. Let's talk about why Intel is doing this. Look at lots has changed in the world of semiconductors. When you think about it back when Pat was at Intel in the '90s, Intel was the volume leader. It crushed the competition with x86. And the competition at the time was coming from risk chips. And when Apple changed the game with iPod and iPhone and iPad, the volume equation flipped to mobile. And that led to big changes in the industry. Specifically, the world started to separate design from manufacturing. We now see firms going from design to tape out in 12 months versus taking three years. A good example is Tesla and his deal with ARM and Samsung. And what's happened is Intel has gone from number one in Foundry in terms of clock speed, wafer density, volume, lowest cost, highest margin to falling behind. TSMC, Samsung and alternative processor competitors like NVIDIA. Volume is still the maker of kings in this business. That hasn't changed and it confers advantage in terms of cost, speed and efficiency. But ARM wafer volumes, we estimate are 10x those of x86. That's a big change since Pat left Intel more than a decade ago. There's also a major chip shortage today. But you know this time, it feels a little different than the typical semiconductor boom and bust cycles. Semiconductor consumption is entering a new era and new use cases emerging from automobiles to factories, to every imaginable device piece of equipment, infrastructure, silicon is everywhere. But the biggest threat of all is China. China wants to be self-sufficient in semiconductors by 2025. It's putting approximately $60 billion into new chip Fabs, and there's more to come. China wants to be the new economic leader of the world and semiconductors are critical to that goal. Now there are those poopoo the China threat. This recent article from Scott Foster lays out some really good information. But the one thing that caught our attention is a statement that China's semiconductor industry is nowhere near being a major competitor in the global market. Let alone an existential threat to the international order and the American way of life. I think Scotty is stuck in the engine room and can't see the forest of the trees, wake up. Sure. You can say China is way behind. Let's take an example. NAND. Today China is at about 64 3D layers whereas Micron they're at 172. By 2022 China's going to be at 128. Micron, it's going to be well over 200. So what's the big deal? We say talk to us in 2025 because we think China will be at parody. That's just one example. Now the type of thinking that says don't worry about China and semi's reminds me of the epic lecture series that Clay Christiansen gave as a visiting professor at Oxford University on the history of, and the economics of the steel industry. Now if you haven't watched this series, you should. Basically Christiansen took the audience through the dynamics of steel production. And he asked the question, "Who told the steel manufacturers that gross margin was the number one measure of profitability? Was it God?" he joked. His point was, when new entrance came into the market in the '70s, they were bottom feeders going after the low margin, low quality, easiest to make rebar sector. And the incumbents nearly pulled back and their mix shifted to higher margin products and their gross margins went up and life was good. Until they lost the next layer. And then the next, and then the next, until it was game over. Now, one of the things that got lost in Pat's big announcement on the 23rd of March was that Intel guided the street below consensus on revenue and earnings. But the stock went up the next day. Now when asked about gross margin in the Q&A segment of the announcement, yes, gross margin is a if not the key metric in semi's in terms of measuring profitability. When asked Intel CFO George Davis explained that with the uptick in PCs last year there was a product shift to the lower margin PC sector and that put pressure on gross margins. It was a product mix thing. And revenue because PC chips are less expensive than server chips was affected as were margins. Now we shared this chart in our last Intel update showing, spending momentum over time for Dell's laptop business from ETR. And you can see in the inset, the unit growth and the market data from IDC, yes, Dell's laptop business is growing, everybody's laptop business is growing. Thank you COVID. But you see the numbers from IDC, Gartner, et cetera. Now, as we pointed out last time, PC volumes had peaked in 2011 and that's when the long arm of rights law began to eat into Intel's dominance. Today ARM wafer production as we said is far greater than Intel's and well, you know the story. Here's the irony, the very bucket that conferred volume adventures to Intel PCs, yes, it had a slight uptick last year, which was great news for Dell. But according to Intel it pulled down its margins. The point is Intel is loving the high end of the market because it's higher margin and more profitable. I wonder what Clay Christensen would say to that. Now there's more to this story. Intel's CFO blame the supply constraints on Intel's revenue and profit pressures yet AMD's revenue and profits are booming. So RTSMCs. Only Intel can't seem to thrive when there's this massive chip shortage. Now let's get back to Pat's announcement. Intel is for sure, going forward investing $20 billion in two new US-based fabrication facilities. This chart shows Intel's investments in US R&D, US CapEx and the job growth that's created as a result, as well as R&D and CapEx investments in Ireland and Israel. Now we added the bar on the right hand side from a Wall Street journal article that compares TSMC CapEx in the dark green to that of Intel and the light green. You can see TSMC surpass the CapEx investment of Intel in 2015, and then Intel took the lead back again. And in 2017 was, hey it on in 2018. But last year TSMC took the lead, again. And appears to be widening that lead quite substantially. Leading us to our conclusion that this will not be enough. These moves by Intel will not be enough. They need to do more. And a big part of this announcement was partnerships and packaging. Okay. So here's where it gets interesting. Intel, as you may know was late to the party with SOC system on a chip. And it's going to use its packaging prowess to try and leap frog the competition. SOC bundles things like GPU, NPU, DSUs, accelerators caches on a single chip. So better use the real estate if you will. Now Intel wants to build system on package which will dis-aggregate memory from compute. Now remember today, memory is very poorly utilized. What Intel is going to do is to create a package with literally thousands of nodes comprising small processors, big processors, alternative processors, ARM processors, custom Silicon all sharing a pool of memory. This is a huge innovation and we'll come back to this in a moment. Now as part of the announcement, Intel trotted out some big name customers, prospects and even competitors that it wants to turn into prospects and customers. Amazon, Google, Satya Nadella gave a quick talk from Microsoft to Cisco. All those guys are designing their own chips as does Ericsson and look even Qualcomm is on the list, a competitor. Intel wants to earn the right to make chips for these firms. Now many on the list like Microsoft and Google they'd be happy to do so because they want more competition. And Qualcomm, well look if Intel can do a good job and be a strong second sourced, why not? Well, one reason is they compete aggressively with Intel but we don't like Intel so much but it's very possible. But the two most important partners on this slide are one IBM and two, the US government. Now many people were going to gloss over IBM in this announcement, but we think it's one of the most important pieces of the puzzle. Yes. IBM and semiconductors. IBM actually has some of the best semiconductor technology in the world. It's got great architecture and is two to three years ahead of Intel with POWER10. Yes, POWER. IBM is the world's leader in terms of dis-aggregating compute from memory with the ability to scale to thousands of nodes, sound familiar? IBM leads in power density, efficiency and it can put more stuff closer together. And it's looking now at a 20x increase in AI inference performance. We think Pat has been thinking about this for a while and he said, how can I leave leap frog system on chip. And we think he thought and said, I'll use our outstanding process manufacturing and I'll tap IBM as a partner for R&D and architectural chips to build the next generation of systems that are more flexible and performant than anything that's out there. Now look, this is super high end stuff. And guess who needs really high end massive supercomputing capabilities? Well, the US military. Pat said straight up, "We've talked to the government and we're honored to be competing for the government/military chips boundary." I mean, look Intel in my view was going to have to fall down into face not win this business. And by making the commitment to Foundry Services we think they will get a huge contract from the government, as large, perhaps as $10 billion or more to build a secure government Foundry and serve the military for decades to come. Now Pat was specifically asked in the Q&A section is this Foundry strategy that you're embarking on viable without the help of the US government? Kind of implying that it was a handout or a bailout. And Pat of course said all the right things. He said, "This is the right thing for Intel. Independent of the government, we haven't received any commitment or subsidies or anything like that from the US government." Okay, cool. But they have had conversations and I have no doubt, and Pat confirmed this, that those conversations were very, very positive that Intel should head in this direction. Well, we know what's happening here. The US government wants Intel to win. It needs Intel to win and its participation greatly increases the probability of success. But unfortunately, we still don't think it's enough for Intel to regain its number one position. Let's look at that in a little bit more detail. The headwinds for Intel are many. Look it can't just flick a switch and catch up on manufacturing leadership. It's going to take four years. And lots can change in that time. It tells market momentum as well as we pointed out earlier is headed in the wrong direction from a financial perspective. Moreover, where is the volume going to come from? It's going to take years for Intel to catch up for ARMS if it never can. And it's going to have to fight to win that business from its current competitors. Now I have no doubt. It will fight hard under Pat's excellent leadership. But the Foundry business is different. Consider this, Intel's annual CapEx expenditures, if you divide that by their yearly revenue it comes out to about 20% of revenue. TSMC spends 50% of its revenue each year on CapEx. This is a different animal, very service oriented. So look, we're not pounding the table saying Intel's worst days are over. We don't think they are. Now, there are some positives, I'm showing those in the right-hand side. Pat Gelsinger was born for this job. He proved that the other day, even though we already knew it. I have never seen him more excited and more clearheaded. And we agreed that the chip demand dynamic is going to have legs in this decade and beyond with Digital, Edge, AI and new use cases that are going to power that demand. And Intel is too strategic to fail. And the US government has huge incentives to make sure that it succeeds. But it's still not enough in our opinion because like the steel manufacturers Intel's real advantage today is increasingly in the high end high margin business. And without volume, China is going to win this battle. So we continue to believe that a new joint venture is going to emerge. Here's our prediction. We see a triumvirate emerging in a new joint venture that is led by Intel. It brings x86, that volume associated with that. It brings cash, manufacturing prowess, R&D. It brings global resources, so much more than we show in this chart. IBM as we laid out brings architecture, it's R&D, it's longstanding relationships. It's deal flow, it can funnel its business to the joint venture as can of course, parts of Intel. We see IBM getting a nice licensed deal from Intel and or the JV. And it has to get paid for its contribution and we think it'll also get a sweet deal and the manufacturing fees from this Intel Foundry. But it's still not enough to beat China. Intel needs volume. And that's where Samsung comes in. It has the volume with ARM, has the experience and a complete offering across products. We also think that South Korea is a more geographically appealing spot in the globe than Taiwan with its proximity to China. Not to mention that TSMC, it doesn't need Intel. It's already number one. Intel can get a better deal from number two, Samsung. And together these three we think, in this unique structure could give it a chance to become number one by the end of the decade or early in the 2030s. We think what's happening is our take, is that Intel is going to fight hard to win that government business, put itself in a stronger negotiating position and then cut a deal with some supplier. We think Samsung makes more sense than anybody else. Now finally, we want to leave you with some comments and some thoughts from the community. First, I want to thank David Foyer. His decade plus of work and knowledge of this industry along with this collaboration made this work possible. His fingerprints are all over this research in case you didn't notice. And next I want to share comments from two of my colleagues. The first is Serbjeet Johal. He sent this to me last night. He said, "We are not in our grandfather's compute era anymore. Compute is getting spread into every aspect of our economy and lives. The use of processors is getting more and more specialized and will intensify with the rise in edge computing, AI inference and new workloads." Yes, I totally agree with Sarbjeet. And that's the dynamic which Pat is betting and betting big. But the bottom line is summed up by my friend and former IDC mentor, Dave Moschella. He says, "This is all about China. History suggests that there are very few second acts, you know other than Microsoft and Apple. History also will say that the antitrust pressures that enabled AMD to thrive are the ones, the very ones that starved Intel's cash. Microsoft made the shift it's PC software cash cows proved impervious to competition. The irony is the same government that attacked Intel's monopoly now wants to be Intel's protector because of China. Perhaps it's a cautionary tale to those who want to break up big tech." Wow. What more can I add to that? Okay. That's it for now. Remember I publish each week on wikibon.com and siliconangle.com. These episodes are all available as podcasts. All you got to do is search for Braking Analysis podcasts and you can always connect with me on Twitter @dvellante or email me at david.vellante, siliconangle.com As always I appreciate the comments on LinkedIn and in clubhouse please follow me so that you're notified when we start a room and start riffing on these topics. And don't forget to check out etr.plus for all the survey data. This is Dave Vellante for theCUBE insights powered by ETR, be well, and we'll see you next time. (upbeat music)

>>from around the globe. It's the Cube presenting Cuban cloud brought to you by silicon angle, everybody to Cuban cloud. My name is Dave Volonte, and I'll be here throughout the day with my co host, John Ferrier, who was quarantined in an undisclosed location in California. He's all good. Don't worry. Just precautionary. John, how are you doing? >>Hey, great to see you. John. Quarantine. My youngest daughter had covitz, so contact tracing. I was negative in quarantine at a friend's location. All good. >>Well, we wish you the best. Yeah, well, right. I mean, you know what's it like, John? I mean, you're away from your family. Your basically shut in, right? I mean, you go out for a walk, but you're really not in any contact with anybody. >>Correct? Yeah. I mean, basically just isolation, Um, pretty much what everyone's been kind of living on, kind of suffering through, but hopefully the vaccines are being distributed. You know, one of the things we talked about it reinvent the Amazon's cloud conference. Was the vaccine on, but just the whole workflow around that it's gonna get better. It's kind of really sucky. Here in the California area, they haven't done a good job, a lot of criticism around, how that's rolling out. And, you know, Amazon is now offering to help now that there's a new regime in the U. S. Government S o. You know, something to talk about, But certainly this has been a terrible time for Cove it and everyone in the deaths involved. But it's it's essentially pulled back the covers, if you will, on technology and you're seeing everything. Society. In fact, um, well, that's big tech MIT disinformation campaigns. All these vulnerabilities and cyber, um, accelerated digital transformation. We'll talk about a lot today, but yeah, it's totally changed the world. And I think we're in a new generation. I think this is a real inflection point, Dave. You know, modern society and the geo political impact of this is significant. You know, one of the benefits of being quarantined you'd be hanging out on these clubhouse APS, uh, late at night, listening to experts talk about what's going on, and it's interesting what's happening with with things like water and, you know, the island of Taiwan and China and U. S. Sovereignty, data, sovereignty, misinformation. So much going on to talk about. And, uh, meanwhile, companies like Mark injuries in BC firm starting a media company. What's going on? Hell freezing over. So >>we're gonna be talking about a lot of that stuff today. I mean, Cuba on cloud. It's our very first virtual editorial event we're trying to do is bring together our community. It's a it's an open forum and we're we're running the day on our 3 65 software platform. So we got a great lineup. We got CEO Seo's data Practitioners. We got a hard core technologies coming in, cloud experts, investors. We got some analysts coming in and we're creating this day long Siri's. And we've got a number of sessions that we've developed and we're gonna unpack. The future of Cloud computing in the coming decade is, John said, we're gonna talk about some of the public policy new administration. What does that mean for tech and for big tech in General? John, what can you add to that? >>Well, I think one of the things that we talked about Cove in this personal impact to me but other people as well. One of the things that people are craving right now is information factual information, truth texture that we call it. But hear this event for us, Davis, our first inaugural editorial event. Robbo, Kristen, Nicole, the entire Cube team Silicon angle, really trying to put together Morva cadence we're gonna doom or of these events where we can put out feature the best people in our community that have great fresh voices. You know, we do interview the big names Andy Jassy, Michael Dell, the billionaires with people making things happen. But it's often the people under there that are the rial newsmakers amid savory, for instance, that Google one of the most impressive technical people, he's gotta talk. He's gonna present democratization of software development in many Mawr riel people making things happen. And I think there's a communal element. We're going to do more of these. Obviously, we have, uh, no events to go to with the Cube. So we have the cube virtual software that we have been building and over years and now perfecting and we're gonna introduce that we're gonna put it to work, their dog footing it. We're gonna put that software toe work. We're gonna do a lot mawr virtual events like this Cuban cloud Cuban startup Cuban raising money. Cuban healthcare, Cuban venture capital. Always think we could do anything. Question is, what's the right story? What's the most important stories? Who's telling it and increase the aperture of the lens of the industry that we have and and expose that and fastest possible. That's what this software, you'll see more of it. So it's super exciting. We're gonna add new features like pulling people up on stage, Um, kind of bring on the clubhouse vibe and more of a community interaction with people to meet each other, and we'll roll those out. But the goal here is to just showcase it's cloud story in a way from people that are living it and providing value. So enjoy the day is gonna be chock full of presentations. We're gonna have moderated chat in these sessions, so it's an all day event so people can come in, drop out, and also that's everything's on demand immediately after the time slot. But you >>want to >>participate, come into the time slot into the cube room or breakout session. Whatever you wanna call it, it's a cube room, and the people in there chatting and having a watch party. So >>when you're in that home page when you're watching, there's a hero video there. Beneath that, there's a calendar, and you'll see that red line is that red horizontal line of vertical line is rather, it's a linear clock that will show you where we are in the day. If you click on any one of those sessions that will take you into the chat, we'll take you through those in a moment and share with you some of the guests that we have upcoming and and take you through the day what I wanted to do. John is trying to set the stage for the conversations that folks are gonna here today. And to do that, I wanna ask the guys to bring up a graphic. And I want to talk to you, John, about the progression of cloud over time and maybe go back to the beginning and review the evolution of cloud and then really talk a little bit about where we think it Z headed. So, guys, if you bring up that graphic when a W S announced s three, it was March of 2000 and six. And as you recall, John you know, nobody really. In the vendor and user community. They didn't really pay too much attention to that. And then later that year, in August, it announced E C two people really started. They started to think about a new model of computing, but they were largely, you know, chicken tires. And it was kind of bleeding edge developers that really leaned in. Um what? What were you thinking at the time? When when you saw, uh, s three e c to this retail company coming into the tech world? >>I mean, I thought it was totally crap. I'm like, this is terrible. But then at that time, I was thinking working on I was in between kind of start ups and I didn't have a lot of seed funding. And then I realized the C two was freaking awesome. But I'm like, Holy shit, this is really great because I don't need to pay a lot of cash, the Provisional Data center, or get a server. Or, you know, at that time, state of the art startup move was to buy a super micro box or some sort of power server. Um, it was well past the whole proprietary thing. But you have to assemble probably anyone with 5 to 8 grand box and go in, and we'll put a couple ghetto rack, which is basically, uh, you know, you put it into some coasting location. It's like with everybody else in the tech ghetto of hosting, still paying monthly fees and then maintaining it and provisioning that's just to get started. And then Amazon was just really easy. And then from there you just It was just awesome. I just knew Amazon would be great. They had a lot of things that they had to fix. You know, custom domains and user interface Council got better and better, but it was awesome. >>Well, what we really saw the cloud take hold from my perspective anyway, was the financial crisis in, you know, 709 It put cloud on the radar of a number of CFOs and, of course, shadow I T departments. They wanted to get stuff done and and take I t in in in, ah, pecs, bite sized chunks. So it really was. There's cloud awakening and we came out of that financial crisis, and this we're now in this 10 year plus boom um, you know, notwithstanding obviously the economic crisis with cove it. But much of it was powered by the cloud in the decade. I would say it was really about I t transformation. And it kind of ironic, if you will, because the pandemic it hits at the beginning of this decade, >>and it >>creates this mandate to go digital. So you've you've said a lot. John has pulled forward. It's accelerated this industry transformation. Everybody talks about that, but and we've highlighted it here in this graphic. It probably would have taken several more years to mature. But overnight you had this forced march to digital. And if you weren't a digital business, you were kind of out of business. And and so it's sort of here to stay. How do you see >>You >>know what this evolution and what we can expect in the coming decades? E think it's safe to say the last 10 years defined by you know, I t transformation. That's not gonna be the same in the coming years. How do you see it? >>It's interesting. I think the big tech companies are on, but I think this past election, the United States shows um, the power that technology has. And if you look at some of the main trends in the enterprise specifically around what clouds accelerating, I call the second wave of innovations coming where, um, it's different. It's not what people expect. Its edge edge computing, for instance, has talked about a lot. But industrial i o t. Is really where we've had a lot of problems lately in terms of hacks and malware and just just overall vulnerabilities, whether it's supply chain vulnerabilities, toe actual disinformation, you know, you know, vulnerabilities inside these networks s I think this network effects, it's gonna be a huge thing. I think the impact that tech will have on society and global society geopolitical things gonna be also another one. Um, I think the modern application development of how applications were written with data, you know, we always been saying this day from the beginning of the Cube data is his integral part of the development process. And I think more than ever, when you think about cloud and edge and this distributed computing paradigm, that cloud is now going next level with is the software and how it's written will be different. You gotta handle things like, where's the compute component? Is it gonna be at the edge with all the server chips, innovations that Amazon apple intel of doing, you're gonna have compute right at the edge, industrial and kind of human edge. How does that work? What's Leighton see to that? It's it really is an edge game. So to me, software has to be written holistically in a system's impact on the way. Now that's not necessarily nude in the computer science and in the tech field, it's just gonna be deployed differently. So that's a complete rewrite, in my opinion of the software applications. Which is why you're seeing Amazon Google VM Ware really pushing Cooper Netease and these service messes in the micro Services because super critical of this technology become smarter, automated, autonomous. And that's completely different paradigm in the old full stack developer, you know, kind of model. You know, the full stack developer, his ancient. There's no such thing as a full stack developer anymore, in my opinion, because it's a half a stack because the cloud takes up the other half. But no one wants to be called the half stack developer because it doesn't sound as good as Full Stack, but really Cloud has eliminated the technology complexity of what a full stack developer used to dio. Now you can manage it and do things with it, so you know, there's some work to done, but the heavy lifting but taking care of it's the top of the stack that I think is gonna be a really critical component. >>Yeah, and that that sort of automation and machine intelligence layer is really at the top of the stack. This this thing becomes ubiquitous, and we now start to build businesses and new processes on top of it. I wanna I wanna take a look at the Big Three and guys, Can we bring up the other The next graphic, which is an estimate of what the revenue looks like for the for the Big three. And John, this is I asked and past spend for the Big Three Cloud players. And it's It's an estimate that we're gonna update after earning seasons, and I wanna point a couple things out here. First is if you look at the combined revenue production of the Big Three last year, it's almost 80 billion in infrastructure spend. I mean, think about that. That Z was that incremental spend? No. It really has caused a lot of consolidation in the on Prem data center business for guys like Dell. And, you know, um, see, now, part of the LHP split up IBM Oracle. I mean, it's etcetera. They've all felt this sea change, and they had to respond to it. I think the second thing is you can see on this data. Um, it's true that azure and G C P they seem to be growing faster than a W s. We don't know the exact numbers >>because >>A W S is the only company that really provides a clean view of i s and pass. Whereas Microsoft and Google, they kind of hide the ball in their numbers. I mean, I don't blame them because they're behind, but they do leave breadcrumbs and clues about growth rates and so forth. And so we have other means of estimating, but it's it's undeniable that azure is catching up. I mean, it's still quite distance the third thing, and before I want to get your input here, John is this is nuanced. But despite the fact that Azure and Google the growing faster than a W s. You can see those growth rates. A W s I'll call this out is the only company by our estimates that grew its business sequentially last quarter. Now, in and of itself, that's not significant. But what is significant is because AWS is so large there $45 billion last year, even if the slower growth rates it's able to grow mawr and absolute terms than its competitors, who are basically flat to down sequentially by our estimates. Eso So that's something that I think is important to point out. Everybody focuses on the growth rates, but it's you gotta look at also the absolute dollars and, well, nonetheless, Microsoft in particular, they're they're closing the gap steadily, and and we should talk more about the competitive dynamics. But I'd love to get your take on on all this, John. >>Well, I mean, the clouds are gonna win right now. Big time with the one the political climate is gonna be favoring Big check. But more importantly, with just talking about covert impact and celebrating the digital transformation is gonna create a massive rising tide. It's already happening. It's happening it's happening. And again, this shift in programming, uh, models are gonna really kinda accelerating, create new great growth. So there's no doubt in my mind of all three you're gonna win big, uh, in the future, they're just different, You know, the way they're going to market position themselves, they have to be. Google has to be a little bit different than Amazon because they're smaller and they also have different capabilities, then trying to catch up. So if you're Google or Microsoft, you have to have a competitive strategy to decide. How do I wanna ride the tide If you will put the rising tide? Well, if I'm Amazon, I mean, if I'm Microsoft and Google, I'm not going to try to go frontal and try to copy Amazon because Amazon is just pounding lead of features and scale and they're different. They were, I would say, take advantage of the first mover of pure public cloud. They really awesome. It passed and I, as they've integrated in Gardner, now reports and integrated I as and passed components. So Gardner finally got their act together and said, Hey, this is really one thing. SAS is completely different animal now Microsoft Super Smart because they I think they played the right card. They have a huge installed base converted to keep office 3 65 and move sequel server and all their core jewels into the cloud as fast as possible, clarified while filling in the gaps on the product side to be cloud. So you know, as you're doing trends job, they're just it's just pedal as fast as you can. But Microsoft is really in. The strategy is just go faster trying. Keep pedaling fast, get the features, feature velocity and try to make it high quality. Google is a little bit different. They have a little power base in terms of their network of strong, and they have a lot of other big data capabilities, so they have to use those to their advantage. So there is. There is there is competitive strategy game application happening with these companies. It's not like apples, the apples, In my opinion, it never has been, and I think that's funny that people talk about it that way. >>Well, you're bringing up some great points. I want guys bring up the next graphic because a lot of things that John just said are really relevant here. And what we're showing is that's a survey. Data from E. T. R R Data partners, like 1400 plus CEOs and I T buyers and on the vertical axis is this thing called Net score, which is a measure of spending momentum. And the horizontal axis is is what's called market share. It's a measure of the pervasiveness or, you know, number of mentions in the data set. There's a couple of key points I wanna I wanna pick up on relative to what John just said. So you see A W S and Microsoft? They stand alone. I mean, they're the hyper scale er's. They're far ahead of the pack and frankly, they have fall down, toe, lose their lead. They spend a lot on Capex. They got the flywheel effects going. They got both spending velocity and large market shares, and so, but they're taking a different approach. John, you're right there living off of their SAS, the state, their software state, Andi, they're they're building that in to their cloud. So they got their sort of a captive base of Microsoft customers. So they've got that advantage. They also as we'll hear from from Microsoft today. They they're building mawr abstraction layers. Andy Jassy has said We don't wanna be in that abstraction layer business. We wanna have access to those, you know, fine grain primitives and eso at an AP level. So so we can move fast with the market. But but But so those air sort of different philosophies, John? >>Yeah. I mean, you know, people who know me know that I love Amazon. I think their product is superior at many levels on in its way that that has advantages again. They have a great sass and ecosystem. They don't really have their own SAS play, although they're trying to add some stuff on. I've been kind of critical of Microsoft in the past, but one thing I'm not critical of Microsoft, and people can get this wrong in the marketplace. Actually, in the journalism world and also in just some other analysts, Microsoft has always had large scale eso to say that Microsoft never had scale on that Amazon owned the monopoly on our franchise on scales wrong. Microsoft had scale from day one. Their business was always large scale global. They've always had infrastructure with MSN and their search and the distributive how they distribute browsers and multiple countries. Remember they had the lock on the operating system and the browser for until the government stepped in in 1997. And since 1997 Microsoft never ever not invested in infrastructure and scale. So that whole premise that they don't compete well there is wrong. And I think that chart demonstrates that there, in there in the hyper scale leadership category, hands down the question that I have. Is that there not as good and making that scale integrate in because they have that legacy cards. This is the classic innovator's dilemma. Clay Christensen, right? So I think they're doing a good job. I think their strategy sound. They're moving as fast as they can. But then you know they're not gonna come out and say We don't have the best cloud. Um, that's not a marketing strategy. Have to kind of hide in this and get better and then double down on where they're winning, which is. Clients are converting from their legacy at the speed of Microsoft, and they have a huge client base, So that's why they're stopping so high That's why they're so good. >>Well, I'm gonna I'm gonna give you a little preview. I talked to gear up your f Who's gonna come on today and you'll see I I asked him because the criticism of Microsoft is they're, you know, they're just good enough. And so I asked him, Are you better than good enough? You know, those are fighting words if you're inside of Microsoft, but so you'll you'll have to wait to see his answer. Now, if you guys, if you could bring that that graphic back up I wanted to get into the hybrid zone. You know where the field is. Always got >>some questions coming in on chat, Dave. So we'll get to those >>great Awesome. So just just real quick Here you see this hybrid zone, this the field is bunched up, and the other companies who have a large on Prem presence and have been forced to initiate some kind of coherent cloud strategy included. There is Michael Michael, multi Cloud, and Google's there, too, because they're far behind and they got to take a different approach than a W s. But as you can see, so there's some real progress here. VM ware cloud on AWS stands out, as does red hat open shift. You got VM Ware Cloud, which is a VCF Cloud Foundation, even Dell's cloud. And you'd expect HP with Green Lake to be picking up momentum in the future quarters. And you've got IBM and Oracle, which there you go with the innovator's dilemma. But there, at least in the cloud game, and we can talk about that. But so, John, you know, to your point, you've gotta have different strategies. You're you're not going to take out the big too. So you gotta play, connect your print your on Prem to your cloud, your hybrid multi cloud and try to create new opportunities and new value there. >>Yeah, I mean, I think we'll get to the question, but just that point. I think this Zeri Chen's come on the Cube many times. We're trying to get him to come on lunch today with Features startup, but he's always said on the Q B is a V C at Greylock great firm. Jerry's Cloud genius. He's been there, but he made a point many, many years ago. It's not a winner. Take all the winner. Take most, and the Big Three maybe put four or five in there. We'll take most of the markets here. But I think one of the things that people are missing and aren't talking about Dave is that there's going to be a second tier cloud, large scale model. I don't want to say tear to cloud. It's coming to sound like a sub sub cloud, but a new category of cloud on cloud, right? So meaning if you get a snowflake, did I think this is a tale? Sign to what's coming. VM Ware Cloud is a native has had huge success, mainly because Amazon is essentially enabling them to be successful. So I think is going to be a wave of a more of a channel model of indirect cloud build out where companies like the Cube, potentially for media or others, will build clouds on top of the cloud. So if Google, Microsoft and Amazon, whoever is the first one to really enable that okay, we'll do extremely well because that means you can compete with their scale and create differentiation on top. So what snowflake did is all on Amazon now. They kind of should go to azure because it's, you know, politically correct that have multiple clouds and distribution and business model shifts. But to get that kind of performance they just wrote on Amazon. So there's nothing wrong with that. Because you're getting paid is variable. It's cap ex op X nice categorization. So I think that's the way that we're watching. I think it's super valuable, I think will create some surprises in terms of who might come out of the woodwork on be a leader in a category. Well, >>your timing is perfect, John and we do have some questions in the chat. But before we get to that, I want to bring in Sargi Joe Hall, who's a contributor to to our community. Sargi. Can you hear us? All right, so we got, uh, while >>bringing in Sarpy. Let's go down from the questions. So the first question, Um, we'll still we'll get the student second. The first question. But Ronald ask, Can a vendor in 2021 exist without a hybrid cloud story? Well, story and capabilities. Yes, they could live with. They have to have a story. >>Well, And if they don't own a public cloud? No. No, they absolutely cannot. Uh hey, Sergey. How you doing, man? Good to see you. So, folks, let me let me bring in Sergeant Kohala. He's a He's a cloud architect. He's a practitioner, He's worked in as a technologist. And there's a frequent guest on on the Cube. Good to see you, my friend. Thanks for taking the time with us. >>And good to see you guys to >>us. So we were kind of riffing on the competitive landscape we got. We got so much to talk about this, like, it's a number of questions coming in. Um, but Sargi we wanna talk about you know, what's happening here in Cloud Land? Let's get right into it. I mean, what do you guys see? I mean, we got yesterday. New regime, new inaug inauguration. Do you do you expect public policy? You'll start with you Sargi to have What kind of effect do you think public policy will have on, you know, cloud generally specifically, the big tech companies, the tech lash. Is it gonna be more of the same? Or do you see a big difference coming? >>I think that there will be some changing narrative. I believe on that. is mainly, um, from the regulators side. A lot has happened in one month, right? So people, I think are losing faith in high tech in a certain way. I mean, it doesn't, uh, e think it matters with camp. You belong to left or right kind of thing. Right? But parlor getting booted out from Italy s. I think that was huge. Um, like, how do you know that if a cloud provider will not boot you out? Um, like, what is that line where you draw the line? What are the rules? I think that discussion has to take place. Another thing which has happened in the last 23 months is is the solar winds hack, right? So not us not sort acknowledging that I was Russia and then wish you watching it now, new administration might have a different sort of Boston on that. I think that's huge. I think public public private partnership in security arena will emerge this year. We have to address that. Yeah, I think it's not changing. Uh, >>economics economy >>will change gradually. You know, we're coming out off pandemic. The money is still cheap on debt will not be cheap. for long. I think m and a activity really will pick up. So those are my sort of high level, Uh, >>thank you. I wanna come back to them. And because there's a question that chat about him in a But, John, how do you see it? Do you think Amazon and Google on a slippery slope booting parlor off? I mean, how do they adjudicate between? Well, what's happening in parlor? Uh, anything could happen on clubhouse. Who knows? I mean, can you use a I to find that stuff? >>Well, that's I mean, the Amazons, right? Hiding right there bunkered in right now from that bad, bad situation. Because again, like people we said Amazon, these all three cloud players win in the current environment. Okay, Who wins with the U. S. With the way we are China, Russia, cloud players. Okay, let's face it, that's the reality. So if I wanted to reset the world stage, you know what better way than the, you know, change over the United States economy, put people out of work, make people scared, and then reset the entire global landscape and control all with cash? That's, you know, conspiracy theory. >>So you see the riches, you see the riches, get the rich, get richer. >>Yeah, well, that's well, that's that. That's kind of what's happening, right? So if you start getting into this idea that you can't actually have an app on site because the reason now I'm not gonna I don't know the particular parlor, but apparently there was a reason. But this is dangerous, right? So what? What that's gonna do is and whether it's right or wrong or not, whether political opinion is it means that they were essentially taken offline by people that weren't voted for that. Weren't that when people didn't vote for So that's not a democracy, right? So that's that's a different kind of regime. What it's also going to do is you also have this groundswell of decentralized thinking, right. So you have a whole wave of crypto and decentralized, um, cyber punks out there who want to decentralize it. So all of this stuff in January has created a huge counterculture, and I had predicted this so many times in the Cube. David counterculture is coming and and you already have this kind of counterculture between centralized and decentralized thinking and so I think the Amazon's move is dangerous at a fundamental level. Because if you can't get it, if you can't get buy domain names and you're completely blackballed by by organized players, that's a Mafia, in my opinion. So, uh, and that and it's also fuels the decentralized move because people say, Hey, if that could be done to them, it could be done to me. Just the fact that it could be done will promote a swing in the other direction. I >>mean, independent of of, you know, again, somebody said your political views. I mean Parlor would say, Hey, we're trying to clean this stuff up now. Maybe they didn't do it fast enough, but you think about how new parlor is. You think about the early days of Twitter and Facebook, so they were sort of at a disadvantage. Trying to >>have it was it was partly was what it was. It was a right wing stand up job of standing up something quick. Their security was terrible. If you look at me and Cory Quinn on be great to have him, and he did a great analysis on this, because if you look the lawsuit was just terrible. Security was just a half, asshole. >>Well, and the experience was horrible. I mean, it's not It was not a great app, but But, like you said, it was a quick stew. Hand up, you know, for an agenda. But nonetheless, you know, to start, get to your point earlier. It's like, you know, Are they gonna, you know, shut me down? If I say something that's, you know, out of line, or how do I control that? >>Yeah, I remember, like, 2019, we involved closing sort of remarks. I was there. I was saying that these companies are gonna be too big to fail. And also, they're too big for other nations to do business with. In a way, I think MNCs are running the show worldwide. They're running the government's. They are way. Have seen the proof of that in us this year. Late last year and this year, um, Twitter last night blocked Chinese Ambassador E in us. Um, from there, you know, platform last night and I was like, What? What's going on? So, like, we used to we used to say, like the Chinese company, tech companies are in bed with the Chinese government. Right. Remember that? And now and now, Actually, I think Chinese people can say the same thing about us companies. Uh, it's not a good thing. >>Well, let's >>get some question. >>Let's get some questions from the chat. Yeah. Thank you. One is on M and a subject you mentioned them in a Who do you see is possible emanate targets. I mean, I could throw a couple out there. Um, you know, some of the cdn players, maybe aka my You know, I like I like Hashi Corp. I think they're doing some really interesting things. What do you see? >>Nothing. Hashi Corp. And anybody who's doing things in the periphery is a candidate for many by the big guys, you know, by the hyper scholars and number two tier two or five hyper scholars. Right. Uh, that's why sales forces of the world and stuff like that. Um, some some companies, which I thought there will be a target, Sort of. I mean, they target they're getting too big, because off their evaluations, I think how she Corpuz one, um, >>and >>their bunch in the networking space. Uh, well, Tara, if I say the right that was acquired by at five this week, this week or last week, Actually, last week for $500 million. Um, I know they're founder. So, like I found that, Yeah, there's a lot going on on the on the network side on the anything to do with data. Uh, that those air too hard areas in the cloud arena >>data, data protection, John, any any anything you could adhere. >>And I think I mean, I think ej ej is gonna be where the gaps are. And I think m and a activity is gonna be where again, the bigger too big to fail would agree with you on that one. But we're gonna look at white Spaces and say a white space for Amazon is like a monster space for a start up. Right? So you're gonna have these huge white spaces opportunities, and I think it's gonna be an M and a opportunity big time start ups to get bought in. Given the speed on, I think you're gonna see it around databases and around some of these new service meshes and micro services. I mean, >>they there's a There's a question here, somebody's that dons asking why is Google who has the most pervasive tech infrastructure on the planet. Not at the same level of other to hyper scale is I'll give you my two cents is because it took him a long time to get their heads out of their ads. I wrote a piece of around that a while ago on they just they figured out how to learn the enterprise. I mean, John, you've made this point a number of times, but they just and I got a late start. >>Yeah, they're adding a lot of people. If you look at their who their hiring on the Google Cloud, they're adding a lot of enterprise chops in there. They realized this years ago, and we've talked to many of the top leaders, although Curry and hasn't yet sit down with us. Um, don't know what he's hiding or waiting for, but they're clearly not geared up to chicken Pete. You can see it with some some of the things that they're doing, but I mean competed the level of Amazon, but they have strength and they're playing their strength, but they definitely recognize that they didn't have the enterprise motions and people in the DNA and that David takes time people in the enterprise. It's not for the faint of heart. It's unique details that are different. You can't just, you know, swing the Google playbook and saying We're gonna home The enterprises are text grade. They knew that years ago. So I think you're going to see a good year for Google. I think you'll see a lot of change. Um, they got great people in there. On the product marketing side is Dev Solution Architects, and then the SRE model that they have perfected has been strong. And I think security is an area that they could really had a lot of value it. So, um always been a big fan of their huge network and all the intelligence they have that they could bring to bear on security. >>Yeah, I think Google's problem main problem that to actually there many, but one is that they don't They don't have the boots on the ground as compared to um, Microsoft, especially an Amazon actually had a similar problem, but they had a wide breath off their product portfolio. I always talk about feature proximity in cloud context, like if you're doing one thing. You wanna do another thing? And how do you go get that feature? Do you go to another cloud writer or it's right there where you are. So I think Amazon has the feature proximity and they also have, uh, aske Compared to Google, there's skills gravity. Larger people are trained on AWS. I think Google is trying there. So second problem Google is having is that that they're they're more focused on, I believe, um, on the data science part on their sort of skipping the cool components sort of off the cloud, if you will. The where the workloads needs, you know, basic stuff, right? That's like your compute storage and network. And that has to be well, talk through e think e think they will do good. >>Well, so later today, Paul Dillon sits down with Mids Avery of Google used to be in Oracle. He's with Google now, and he's gonna push him on on the numbers. You know, you're a distant third. Does that matter? And of course, you know, you're just a preview of it's gonna say, Well, no, we don't really pay attention to that stuff. But, John, you said something earlier that. I think Jerry Chen made this comment that, you know, Is it a winner? Take all? No, but it's a winner. Take a lot. You know the number two is going to get a big chunk of the pie. It appears that the markets big enough for three. But do you? Does Google have to really dramatically close the gap on be a much, much closer, you know, to the to the leaders in orderto to compete in this race? Or can they just kind of continue to bump along, siphon off the ad revenue? Put it out there? I mean, I >>definitely can compete. I think that's like Google's in it. Then it they're not. They're not caving, right? >>So But But I wrote I wrote recently that I thought they should even even put mawr oven emphasis on the cloud. I mean, maybe maybe they're already, you know, doubling down triple down. I just I think that is a multi trillion dollar, you know, future for the industry. And, you know, I think Google, believe it or not, could even do more. Now. Maybe there's just so much you could dio. >>There's a lot of challenges with these company, especially Google. They're in Silicon Valley. We have a big Social Justice warrior mentality. Um, there's a big debate going on the in the back channels of the tech scene here, and that is that if you want to be successful in cloud, you have to have a good edge strategy, and that involves surveillance, use of data and pushing the privacy limits. Right? So you know, Google has people within the country that will protest contract because AI is being used for war. Yet we have the most unstable geopolitical seen that I've ever witnessed in my lifetime going on right now. So, um, don't >>you think that's what happened with parlor? I mean, Rob Hope said, Hey, bar is pretty high to kick somebody off your platform. The parlor went over the line, but I would also think that a lot of the employees, whether it's Google AWS as well, said, Hey, why are we supporting you know this and so to your point about social justice, I mean, that's not something. That >>parlor was not just social justice. They were trying to throw the government. That's Rob e. I think they were in there to get selfies and being protesters. But apparently there was evidence from what I heard in some of these clubhouse, uh, private chats. Waas. There was overwhelming evidence on parlor. >>Yeah, but my point is that the employee backlash was also a factor. That's that's all I'm saying. >>Well, we have Google is your Google and you have employees to say we will boycott and walk out if you bid on that jet I contract for instance, right, But Microsoft one from maybe >>so. I mean, that's well, >>I think I think Tom Poole's making a really good point here, which is a Google is an alternative. Thio aws. The last Google cloud next that we were asked at they had is all virtual issue. But I saw a lot of I T practitioners in the audience looking around for an alternative to a W s just seeing, though, we could talk about Mano Cloud or Multi Cloud, and Andy Jassy has his his narrative around, and he's true when somebody goes multiple clouds, they put you know most of their eggs in one basket. Nonetheless, I think you know, Google's got a lot of people interested in, particularly in the analytic side, um, in in an alternative, hedging their bets eso and particularly use cases, so they should be able to do so. I guess my the bottom line here is the markets big enough to have Really? You don't have to be the Jack Welch. I gotta be number one and number two in the market. Is that the conclusion here? >>I think so. But the data gravity and the skills gravity are playing against them. Another problem, which I didn't want a couple of earlier was Google Eyes is that they have to boot out AWS wherever they go. Right? That is a huge challenge. Um, most off the most off the Fortune 2000 companies are already using AWS in one way or another. Right? So they are the multi cloud kind of player. Another one, you know, and just pure purely somebody going 200% Google Cloud. Uh, those cases are kind of pure, if you will. >>I think it's gonna be absolutely multi cloud. I think it's gonna be a time where you looked at the marketplace and you're gonna think in terms of disaster recovery, model of cloud or just fault tolerant capabilities or, you know, look at the parlor, the next parlor. Or what if Amazon wakes up one day and said, Hey, I don't like the cubes commentary on their virtual events, so shut them down. We should have a fail over to Google Cloud should Microsoft and Option. And one of people in Microsoft ecosystem wants to buy services from us. We have toe kind of co locate there. So these are all open questions that are gonna be the that will become certain pretty quickly, which is, you know, can a company diversify their computing An i t. In a way that works. And I think the momentum around Cooper Netease you're seeing as a great connective tissue between, you know, having applications work between clouds. Right? Well, directionally correct, in my opinion, because if I'm a company, why wouldn't I wanna have choice? So >>let's talk about this. The data is mixed on that. I'll share some data, meaty our data with you. About half the companies will say Yeah, we're spreading the wealth around to multiple clouds. Okay, That's one thing will come back to that. About the other half were saying, Yeah, we're predominantly mono cloud we didn't have. The resource is. But what I think going forward is that that what multi cloud really becomes. And I think John, you mentioned Snowflake before. I think that's an indicator of what what true multi cloud is going to look like. And what Snowflake is doing is they're building abstraction, layer across clouds. Ed Walsh would say, I'm standing on the shoulders of Giants, so they're basically following points of presence around the globe and building their own cloud. They call it a data cloud with a global mesh. We'll hear more about that later today, but you sign on to that cloud. So they're saying, Hey, we're gonna build value because so many of Amazon's not gonna build that abstraction layer across multi clouds, at least not in the near term. So that's a really opportunity for >>people. I mean, I don't want to sound like I'm dating myself, but you know the date ourselves, David. I remember back in the eighties, when you had open systems movement, right? The part of the whole Revolution OS I open systems interconnect model. At that time, the networking stacks for S N A. For IBM, decadent for deck we all know that was a proprietary stack and then incomes TCP I p Now os I never really happened on all seven layers, but the bottom layers standardized. Okay, that was huge. So I think if you look at a W s or some of the comments in the chat AWS is could be the s n a. Depends how you're looking at it, right? And you could say they're open. But in a way, they want more Amazon. So Amazon's not out there saying we love multi cloud. Why would they promote multi cloud? They are a one of the clouds they want. >>That's interesting, John. And then subject is a cloud architect. I mean, it's it is not trivial to make You're a data cloud. If you're snowflake, work on AWS work on Google. Work on Azure. Be seamless. I mean, certainly the marketing says that, but technically, that's not trivial. You know, there are latent see issues. Uh, you know, So that's gonna take a while to develop. What? Do your thoughts there? >>I think that multi cloud for for same workload and multi cloud for different workloads are two different things. Like we usually put multiple er in one bucket, right? So I think you're right. If you're trying to do multi cloud for the same workload, that's it. That's Ah, complex, uh, problem to solve architecturally, right. You have to have a common ap ice and common, you know, control playing, if you will. And we don't have that yet, and then we will not have that for a for at least one other couple of years. So, uh, if you if you want to do that, then you have to go to the lower, lowest common denominator in technical sort of stock, if you will. And then you're not leveraging the best of the breed technology off their from different vendors, right? I believe that's a hard problem to solve. And in another thing, is that that that I always say this? I'm always on the death side, you know, developer side, I think, uh, two deaths. Public cloud is a proxy for innovative culture. Right. So there's a catch phrase I have come up with today during shower eso. I think that is true. And then people who are companies who use the best of the breed technologies, they can attract the these developers and developers are the Mazen's off This digital sort of empires, amazingly, is happening there. Right there they are the Mazen's right. They head on the bricks. I think if you don't appeal to developers, if you don't but extensive for, like, force behind educating the market, you can't you can't >>put off. It's the same game Stepping story was seeing some check comments. Uh, guard. She's, uh, linked in friend of mine. She said, Microsoft, If you go back and look at the Microsoft early days to the developer Point they were, they made their phones with developers. They were a software company s Oh, hey, >>forget developers, developers, developers. >>You were if you were in the developer ecosystem, you were treated his gold. You were part of the family. If you were outside that world, you were competitors, and that was ruthless times back then. But they again they had. That was where it was today. Look at where the software defined businesses and starve it, saying it's all about being developer lead in this new way to program, right? So the cloud next Gen Cloud is going to look a lot like next Gen Developer and all the different tools and techniques they're gonna change. So I think, yes, this kind of developer ecosystem will be harnessed, and that's the power source. It's just gonna look different. So, >>Justin, Justin in the chat has a comment. I just want to answer the question about elastic thoughts on elastic. Um, I tell you, elastic has momentum uh, doing doing very well in the market place. Thea Elk Stack is a great alternative that people are looking thio relative to Splunk. Who people complain about the pricing. Of course it's plunks got the easy button, but it is getting increasingly expensive. The problem with elk stack is you know, it's open source. It gets complicated. You got a shard, the databases you gotta manage. It s Oh, that's what Ed Walsh's company chaos searches is all about. But elastic has some riel mo mentum in the marketplace right now. >>Yeah, you know, other things that coming on the chat understands what I was saying about the open systems is kubernetes. I always felt was that is a bad metaphor. But they're with me. That was the TCP I peep In this modern era, C t c p I p created that that the disruptor to the S N A s and the network protocols that were proprietary. So what KUBERNETES is doing is creating a connective tissue between clouds and letting the open source community fill in the gaps in the middle, where kind of way kind of probably a bad analogy. But that's where the disruption is. And if you look at what's happened since Kubernetes was put out there, what it's become kind of de facto and standard in the sense that everyone's rallying around it. Same exact thing happened with TCP was people were trashing it. It is terrible, you know it's not. Of course they were trashed because it was open. So I find that to be very interesting. >>Yeah, that's a good >>analogy. E. Thinks the R C a cable. I used the R C. A cable analogy like the VCRs. When they started, they, every VC had had their own cable, and they will work on Lee with that sort of plan of TV and the R C. A cable came and then now you can put any TV with any VCR, and the VCR industry took off. There's so many examples out there around, uh, standards And how standards can, you know, flair that fire, if you will, on dio for an industry to go sort of wild. And another trend guys I'm seeing is that from the consumer side. And let's talk a little bit on the consuming side. Um, is that the The difference wouldn't be to B and B to C is blood blurred because even the physical products are connected to the end user Like my door lock, the August door lock I didn't just put got get the door lock and forget about that. Like I I value the expedience it gives me or problems that gives me on daily basis. So I'm close to that vendor, right? So So the middle men, uh, middle people are getting removed from from the producer off the technology or the product to the consumer. Even even the sort of big grocery players they have their APs now, uh, how do you buy stuff and how it's delivered and all that stuff that experience matters in that context, I think, um, having, uh, to be able to sell to thes enterprises from the Cloud writer Breuder's. They have to have these case studies or all these sample sort off reference architectures and stuff like that. I think whoever has that mawr pushed that way, they are doing better like that. Amazon is Amazon. Because of that reason, I think they have lot off sort off use cases about on top of them. And they themselves do retail like crazy. Right? So and other things at all s. So I think that's a big trend. >>Great. Great points are being one of things. There's a question in there about from, uh, Yaden. Who says, uh, I like the developer Lead cloud movement, But what is the criticality of the executive audience when educating the marketplace? Um, this comes up a lot in some of my conversations around automation. So automation has been a big wave to automate this automate everything. And then everything is a service has become kind of kind of the the executive suite. Kind of like conversation we need to make everything is a service in our business. You seeing people move to that cloud model. Okay, so the executives think everything is a services business strategy, which it is on some level, but then, when they say Take that hill, do it. Developers. It's not that easy. And this is where a lot of our cube conversations over the past few months have been, especially during the cova with cute virtual. This has come up a lot, Dave this idea, and start being around. It's easy to say everything is a service but will implement it. It's really hard, and I think that's where the developer lead Connection is where the executive have to understand that in order to just say it and do it are two different things. That digital transformation. That's a big part of it. So I think that you're gonna see a lot of education this year around what it means to actually do that and how to implement it. >>I'd like to comment on the as a service and subject. Get your take on it. I mean, I think you're seeing, for instance, with HP Green Lake, Dell's come out with Apex. You know IBM as its utility model. These companies were basically taking a page out of what I what I would call a flawed SAS model. If you look at the SAS players, whether it's salesforce or workday, service now s a P oracle. These models are They're really They're not cloud pricing models. They're they're basically you got to commit to a term one year, two year, three year. We'll give you a discount if you commit to the longer term. But you're locked in on you. You probably pay upfront. Or maybe you pay quarterly. That's not a cloud pricing model. And that's why I mean, they're flawed. You're seeing companies like Data Dog, for example. Snowflake is another one, and they're beginning to price on a consumption basis. And that is, I think, one of the big changes that we're going to see this decade is that true cloud? You know, pay by the drink pricing model and to your point, john toe, actually implement. That is, you're gonna need a whole new layer across your company on it is quite complicated it not even to mention how you compensate salespeople, etcetera. The a p. I s of your product. I mean, it is that, but that is a big sea change that I see coming. Subject your >>thoughts. Yeah, I think like you couldn't see it. And like some things for this big tech exacts are hidden in the plain >>sight, right? >>They don't see it. They they have blind spots, like Look at that. Look at Amazon. They went from Melissa and 200 millisecond building on several s, Right, Right. And then here you are, like you're saying, pay us for the whole year. If you don't use the cloud, you lose it or will pay by month. Poor user and all that stuff like that that those a role models, I think these players will be forced to use that term pricing like poor minute or for a second, poor user. That way, I think the Salesforce moral is hybrid. They're struggling in a way. I think they're trying to bring the platform by doing, you know, acquisition after acquisition to be a platform for other people to build on top off. But they're having a little trouble there because because off there, such pricing and little closeness, if you will. And, uh, again, I'm coming, going, going back to developers like, if you are not appealing to developers who are writing the latest and greatest code and it is open enough, by the way open and open source are two different things that we all know that. So if your platform is not open enough, you will have you know, some problems in closing the deals. >>E. I want to just bring up a question on chat around from Justin didn't fitness. Who says can you touch on the vertical clouds? Has your offering this and great question Great CP announcing Retail cloud inventions IBM Athena Okay, I'm a huge on this point because I think this I'm not saying this for years. Cloud computing is about horizontal scalability and vertical specialization, and that's absolutely clear, and you see all the clouds doing it. The vertical rollouts is where the high fidelity data is, and with machine learning and AI efforts coming out, that's accelerated benefits. There you have tow, have the vertical focus. I think it's super smart that clouds will have some sort of vertical engine, if you will in the clouds and build on top of a control playing. Whether that's data or whatever, this is clearly the winning formula. If you look at all the successful kind of ai implementations, the ones that have access to the most data will get the most value. So, um if you're gonna have a data driven cloud you have tow, have this vertical feeling, Um, in terms of verticals, the data on DSO I think that's super important again, just generally is a strategy. I think Google doing a retail about a super smart because their whole pitches were not Amazon on. Some people say we're not Google, depending on where you look at. So every of these big players, they have dominance in the areas, and that's scarce. Companies and some companies will never go to Amazon for that reason. Or some people never go to Google for other reasons. I know people who are in the ad tech. This is a black and we're not. We're not going to Google. So again, it is what it is. But this idea of vertical specialization relevant in super >>forts, I want to bring to point out to sessions that are going on today on great points. I'm glad you asked that question. One is Alan. As he kicks off at 1 p.m. Eastern time in the transformation track, he's gonna talk a lot about the coming power of ecosystems and and we've talked about this a lot. That that that to compete with Amazon, Google Azure, you've gotta have some kind of specialization and vertical specialization is a good one. But of course, you see in the big Big three also get into that. But so he's talking at one o'clock and then it at 3 36 PM You know this times are strange, but e can explain that later Hillary Hunter is talking about she's the CTO IBM I B M's ah Financial Cloud, which is another really good example of specifying vertical requirements and serving. You know, an audience subject. I think you have some thoughts on this. >>Actually, I lost my thought. E >>think the other piece of that is data. I mean, to the extent that you could build an ecosystem coming back to Alan Nancy's premise around data that >>billions of dollars in >>their day there's billions of dollars and that's the title of the session. But we did the trillion dollar baby post with Jazzy and said Cloud is gonna be a trillion dollars right? >>And and the point of Alan Answer session is he's thinking from an individual firm. Forget the millions that you're gonna save shifting to the cloud on cost. There's billions in ecosystems and operating models. That's >>absolutely the business value. Now going back to my half stack full stack developer, is the business value. I've been talking about this on the clubhouses a lot this past month is for the entrepreneurs out there the the activity in the business value. That's the new the new intellectual property is the business logic, right? So if you could see innovations in how work streams and workflow is gonna be a configured differently, you have now large scale cloud specialization with data, you can move quickly and take territory. That's much different scenario than a decade ago, >>at the point I was trying to make earlier was which I know I remember, is that that having the horizontal sort of features is very important, as compared to having vertical focus. You know, you're you're more healthcare focused like you. You have that sort of needs, if you will, and you and our auto or financials and stuff like that. What Google is trying to do, I think that's it. That's a good thing. Do cook up the reference architectures, but it's a bad thing in a way that you drive drive away some developers who are most of the developers at 80 plus percent, developers are horizontal like you. Look at the look into the psyche of a developer like you move from company to company. And only few developers will say I will stay only in health care, right? So I will only stay in order or something of that, right? So they you have to have these horizontal capabilities which can be applied anywhere on then. On top >>of that, I think that's true. Sorry, but I'll take a little bit different. Take on that. I would say yes, that's true. But remember, remember the old school application developer Someone was just called in Application developer. All they did was develop applications, right? They pick the framework, they did it right? So I think we're going to see more of that is just now mawr of Under the Covers developers. You've got mawr suffer defined networking and software, defined storage servers and cloud kubernetes. And it's kind of like under the hood. But you got your, you know, classic application developer. I think you're gonna see him. A lot of that come back in a way that's like I don't care about anything else. And that's the promise of cloud infrastructure is code. So I think this both. >>Hey, I worked. >>I worked at people solved and and I still today I say into into this context, I say E r P s are the ultimate low code. No code sort of thing is right. And what the problem is, they couldn't evolve. They couldn't make it. Lightweight, right? Eso um I used to write applications with drag and drop, you know, stuff. Right? But But I was miserable as a developer. I didn't Didn't want to be in the applications division off PeopleSoft. I wanted to be on the tools division. There were two divisions in most of these big companies ASAP. Oracle. Uh, like companies that divisions right? One is the cooking up the tools. One is cooking up the applications. The basketball was always gonna go to the tooling. Hey, >>guys, I'm sorry. We're almost out of time. I always wanted to t some of the sections of the day. First of all, we got Holder Mueller coming on at lunch for a power half hour. Um, you'll you'll notice when you go back to the home page. You'll notice that calendar, that linear clock that we talked about that start times are kind of weird like, for instance, an appendix coming on at 1 24. And that's because these air prerecorded assets and rather than having a bunch of dead air, we're just streaming one to the other. So so she's gonna talk about people, process and technology. We got Kathy Southwick, whose uh, Silicon Valley CEO Dan Sheehan was the CEO of Dunkin Brands and and he was actually the c 00 So it's C A CEO connecting the dots to the business. Daniel Dienes is the CEO of you I path. He's coming on a 2:47 p.m. East Coast time one of the hottest companies, probably the fastest growing software company in history. We got a guy from Bain coming on Dave Humphrey, who invested $750 million in Nutanix. He'll explain why and then, ironically, Dheeraj Pandey stew, Minuteman. Our friend interviewed him. That's 3 35. 1 of the sessions are most excited about today is John McD agony at 403 p. M. East Coast time, she's gonna talk about how to fix broken data architectures, really forward thinking stuff. And then that's the So that's the transformation track on the future of cloud track. We start off with the Big Three Milan Thompson Bukovec. At one oclock, she runs a W s storage business. Then I mentioned gig therapy wrath at 1. 30. He runs Azure is analytics. Business is awesome. Paul Dillon then talks about, um, IDs Avery at 1 59. And then our friends to, um, talks about interview Simon Crosby. I think I think that's it. I think we're going on to our next session. All right, so keep it right there. Thanks for watching the Cuban cloud. Uh huh.

>>from around the globe. It's the Cube with digital coverage of AWS reinvent 2020 sponsored by Intel, AWS and our community partners. Welcome back to the Cubes Live coverage of AWS reinvent 2020. It's virtual this year. We're not in person because of the pandemic. We're doing the remote Cube Cube Virtual were the Cube virtual. I'm your host, John for here with Andy Jassy, the CEO of Amazon Web services, in for his annual at the end of the show comes on the Cube. This year, it's virtual Andy. Good to see you remotely in Seattle or in Palo Alto. Uh, Dave couldn't make it in a personal conflict, but he says, Hello, great to see you. >>Great to see you as well, John. It's an annual tradition. On the last day of reinvent. I wish we were doing it in person, but I'm glad at least were able to do it. Virtually >>the good news is, I know you could arrested last night normally at reinvent you just like we're all both losing our voice at the end of the show. At least me more than you, your and we're just at the end of like okay, Relief. It happens here. It's different. It's been three weeks has been virtual. Um, you guys had a unique format this year went much better than I expected. It would go on because I was pretty skeptical about these long, um, multiple days or weeks events. You guys did a good job of timing it out and creating these activations and with key news, starting with your keynote on December 1st. Now, at the end of the three weeks, um, tell me, are you surprised by the results? Can you give us, Ah, a feeling for how you think everything went? What's what's your take So far as we close out reinvented >>Well, I think it's going really well. I mean, we always gnome or a Z get past, reinvent and you start, you know, collecting all the feedback. But we've been watching all the metrics and you know, there's trade offs. Of course, now I think all of us giving our druthers would be together in Las Vegas, and I think it's hard to replace that feeling of being with people and the excitement of learning about things together and and making decisions together after you see different sessions that you're gonna make big changes in your company and for your customer experience. And yeah, and there's a community peace. And there's, you know, this from being there. There's a concert. The answer. I think people like being with one another. But, you know, I think this was the best that any of us could imagine doing doing a virtual event. And we had to really reinvent, reinvent and all the pieces to it. And now I think that some of the positive trade offs are they. You get a lot mawr engagement than you would normally get in person So normally. Last year, with about 65,000 people in Las Vegas this year, we had 530,000 people registered to reinvent and over 300,000 participate in some fashion. All the sessions had a lot more people who are participating just because you remove the constraints of of travel in costs, and so there are trade offs. I think we prefer being together, but I think it's been a really good community event, um, in learning event for for our customers, and we've been really pleased with it so >>far. No doubt I would totally agree with you. I think a lot of people like, Hey, I love to walk the floor and discover Harry and Sarah Davis moments of finding an exhibit her and the exhibit hall or or attending a session or going to a party, bumping into friends and seeing making new friends. But I think one of the things I want to get your reaction to it. So I think this is comes up. And, you know, we've been doing a lot of Q virtual for the past year, and and everyone pretty much agrees that when we go back, it's gonna be a hybrid world in the sense of events as well as cloud. You know that. But you know, I think one of the things that I noticed this year with reinvent is it almost was a democratization of reinvent. So you really had to reinvent the format. You had 300,000 plus people attend 500 pending email addresses, but now you've got a different kind of beehive community. So you're a bar raiser thinker. It's with the culture of Amazon. So I gotta ask you do the economics does this new kind of extra epiphany impact you and how you raise the bar to keep the best of the face to face when it comes back. And then if you keep the virtual any thoughts on how to leverage this and kind of get more open, it was free. You guys made it free this year and people did show up. >>Yeah, it's a really good question, and it's probably a question will be better equipped to answer in a month or two after we kind of debrief we always do after reading that we spend. Actually, I really enjoy the meeting because the team, the Collective A. W s team, works so hard in this event. There's so many months across everything. All the product teams, um, you know, all the marketing folks, all the event folks, and I think they do a terrific job with it. And we we do about 2.5 3 hour debrief on everything we did, things that we thought was really well the things that we thought we could do better and all the feedback we get from our community and so I wouldn't be surprised if we didn't find things from what we tried this year that we incorporate into what we do when we're back to being a person again. You know, of course, none of us really know when we'll be back in person again. Re event happens to fall on the time of the year, which is early December. And so you with with a lot of people seemingly able to get vaccinated, probably by you know, they'd spring early summer. You could kind of imagine that we might be able to reinvent in person next year. We'll have to see e think we all hope we will. But I'm sure there are a number of pieces that we will take from this and incorporate into what we do in person. And you know, then it's just a matter of how far you go. >>Fingers crossed and you know it's a hybrid world for the Cube two and reinvent and clouds. Let's get into the announcement. I want to get your your take as you look back now. I mean, how many announcements is you guys have me and a lot of announcements this year. Which ones did you like? Which one did you think were jumping off the page, which ones resonated the most or had impact. Can you share kind of just some stats on e mean how many announcements launches you did this >>year? But we had about 100 50 different new services and features that we announced over the last three weeks and reinvent And there, you know the question you're asking. I could easily spend another three hours like my Kino. You know, answering you all the ones that I like thought were important. You know, I think that, you know, some of the ones I think that really stood out for people. I think first on the compute side, I just think the, um the excitement around what we're doing with chips, um, is very clear. I think what we've done with gravitas to our generalized compute to give people 40% better price performance and they could find in the latest generation X 86 processors is just It's a huge deal. If you could save 40% price performance on computer, you get a lot more done for less on. Then you know some of the chip work we're doing in machine learning with inferential on the inference chips that we built And then what? We announced the trainee, um, on the machine learning training ship. People are very excited about the chip announcements. I think also, people on the container side is people are moving to smaller and smaller units of compute. I think people were very taken with the notion of E. K s and D. C s anywhere so they can run whatever container orchestration framework they're running in A. W s also on premises. To make it easier, Thio manage their deployments and containers. I think data stores was another space where I think people realize how much more data they're dealing with today. And we gave a couple statistics and the keynote that I think are kind of astonishing that, you know, every every hour today, people are creating mawr content that there was in an entire year, 20 years ago or the people expect more data to be created. The next three years in the prior 30 years combined these air astonishing numbers and it requires a brand new reinvention of data stores. And so I think people are very excited about Block Express, which is the first sand in the cloud and there really excited about Aurora in general, but then Aurora surveillance V two that allow you to scale up to hundreds of thousands of transactions per second and saved about 90% of supervision or people very excited about that. I think machine learning. You know, uh, Sage Maker has just been a game changer and the ease with which everyday developers and data scientists can build, train, tune into play machine learning models. And so we just keep knocking out things that are hard for people. Last year we launched the first i D for Machine Learning, the stage maker studio. This year, if you look at things that we announced, like Data Wrangler, which changes you know the process of Data Prep, which is one of the most time consuming pieces in machine learning or our feature store or the first see, I see deeper machine learning with pipelines or clarify, which allow you to have explain ability in your models. Those are big deals to people who are trying to build machine learning models, and you know that I'd say probably the last thing that we hear over and over again is really just the excitement around Connect, which is our call center service, which is just growing unbelievably fast and just, you know, the the fact that it's so easy to get started and so easy to scale so much more cost effective with, you know, built from the ground up on the cloud and with machine learning and ai embedded. And then adding some of the capabilities to give agents the right information, the right time about customers and products and real time capabilities for supervisors. Throw when calls were kind of going off the rails and to be ableto thio, stop the the contact before it becomes something, it hurts. The brand is there. Those are all big deals that people have been excited about. >>I think the connecting as I want to just jump on that for a second because I think when we first met many, many years ago, star eighth reinvent. You know the trends are always the same. You guys do a great job. Slew of announcements. You keep raising the bar. But one of the things that you mentioned to me when we talked about the origination of a W S was you were doing some stuff for Amazon proper, and you had a, you know, bootstrap team and you're solving your own problems, getting some scar tissue, the affiliate thing, all these examples. The trend is you guys tend to do stuff for yourself and then re factor it into potentially opportunities for your customers. And you're working backwards. All that good stuff. We'll get into that next section. But this year, more than ever, I think with the pandemic connect, you got chime, you got workspaces. This acceleration of you guys being pretty nimble on exposing these services. I mean, connect was a call center. It's an internal thing that you guys had been using. You re factored that for customer consumption. You see that kind of china? But you're not competing with Zoom. You're offering a service toe bundle in. Is this mawr relevant? Now, as you guys get bigger with more of these services because you're still big now you're still serving yourself. What? That seems to be a big trend now, coming out of the pandemic. Can you comment on um, >>yeah, It's a good question, John. And you know we do. We do a bunch of both. Frankly, you know, there there's some services where our customers. We're trying to solve certain problems and they tell us about those problems and then we build new services for him. So you know a good example that was red shift, which is our data warehouse and service, you know, two or three very large customers of ours. When we went to spend time with them and asked them what we could do to help them further, they just said, I wish I had a data warehousing service for the cloud that was built in the AWS style way. Um and they were really fed up with what they were using. Same thing was true with relation databases where people were just fed up with the old guard commercial, great commercial, great databases of Oracle and Sequel Server. And they hated the pricing and the proprietary nature of them and the punitive licensing. And they they wanted to move to these open engines like my sequel and post dress. But to get the same performance is the commercial great databases hard? So we solve that problem with them. With Aurora, which is our fastest growing service in our history, continues to be so there's sometimes when customers articulate a need, and we don't have a service that we've been running internally. But we way listen, and we have a very strong and innovative group of builders here where we build it for customers. And then there are other cases where customers say and connect with a great example of this. Connect with an example where some of our customers like into it. And Capital One said, You know, we need something for our contact center and customer service, and people weren't very happy with what they were using in that space. And they said, You, you've had to build something just to manage your retail business last 15, 20 years Can't you find a way to generalize that expose it? And when you have enough customers tell you that there's something that they want to use that you have experienced building. You start to think about it, and it's never a simple. It's just taking that technology and exposing it because it's often built, um, internally and you do a number of things to optimize it internally. But we have a way of building services and Amazon, where we do this working backwards process that you're referring to, where We build everything with the press release and frequently asked questions document, and we imagine that we're building it to be externalized even if it's an internal feature. But our feature for our retail business, it's only gonna be used as part of some other service that you never imagine Externalizing to third party developers. We always try and build it that way, and we always try to have well documented, hardened AP eyes so that other teams can use it without having to coordinate with those teams. And so it makes it easier for us to think about Externalizing it because we're a good part of the way there and we connect we. That's what we did way generalized it way built it from the ground up on top of the cloud. And then we embedded a bunch of AI and it so that people could do a number of things that would have taken him, you know, months to do with big development teams that they could really point, click and do so. We really try to do both. >>I think that's a great example of some of the scale benefits is worth calling out because that was a consistent theme this past year, The people we've reported on interviewed that Connect really was a lifeline for many during the pandemic and way >>have 5000 different customers who started using connect during the pandemic alone. Where they, you know, overnight they had to basically deal with having a a call center remotely. And so they picked up connect and they spun up call center remotely, and they didn't really quickly. And you know, it's that along with workspaces, which are virtual desktops in the cloud and things like Chime and some of our partners, Exume have really been lifelines for people. Thio have business continuity during a tandem. >>I think there's gonna be a whole set of new services that are gonna emerge You talked about in your keynote. We talked about it prior to the event where you know, if this pandemic hit with that five years ago, when there wasn't the advancements in, say, videoconferencing, it'd be a whole different world. And I think the whole world can see on full display that having integrated video communications and other cool things is gonna have a productivity benefit. And that's kind >>of could you imagine what the world would have been like the last nine months and we didn't have competent videoconferencing. I mean, just think about how different it would have been. And I think that all of these all of these capabilities today are kind of the occult 1.5 capabilities where, by the way, thank God for them. We've we've all been able to be productive because of them. But there's so early stage, they're all going to get evolved. I'm so significantly, I mean, even just today, you know, I was spending some time with with our team thinking about when we start to come back to the office and bigger numbers. And we do meetings with our remote partners, how we think about where the center of gravity should be and who should be on video conferencing and whether they should be allowed to kind of video conference in conference rooms, which are really hard to see them. We're only on their laptops, which are easier and what technology doesn't mean that you want in the conference rooms on both sides of the table, and how do you actually have it so that people who are remote could see which side of the table. I mean, all this stuff is yet to be invented. It will be very primitive for the next couple few years, even just interrupting one another in video conferencing people. When you do it, the sound counsel cancels each other out. So people don't really cut each other off and rip on one another. Same way, like all that, all that technology is going to get involved over time. It's a tremendous >>I could just see people fighting for the mute button. You know, that's power on these meetings. You know, Chuck on our team. All kidding aside, he was excited. We talked about Enron Kelly on your team, who runs product marketing on for your app side as well as computer networking storage. We're gonna do a green room app for the Q because you know, we're doing so many remote videos. We just did 112 here for reinvent one of things that people like is this idea of kind of being ready and kind of prepped. So again, this is a use case. We never would have thought off if there wasn't a pandemic. So and I think these are the kinds of innovation, thinking that seems small but works well when you start thinking about how easy it could be to say to integrate a chime through this sdk So this is the kind of things, that kind thing. So so with that, I want to get into your leadership principles because, you know, if you're a startup or a big company trying to reinvent, you're looking at the eight leadership principles you laid out, which were, um don't be afraid to reinvent. Acknowledge you can't fight gravity. Talent is hungry to reinvent solving real customer problems. Speed don't complex. If I use the platform with the broader set of tools, which is more a plug for you guys on cloud pull everything together with top down goals. Okay, great. How >>do you >>take those leadership principles and apply them broadly to companies and start ups? Because I think start ups in the garage are also gonna be there going. I'm going to jump on this wave. I'm inspired by the sea change. I'm gonna build something new or an enterprise. I'm gonna I'm gonna innovate. How do you How do you see these eight principles translating? >>Well, I think they're applicable to every company of every size and every industry and organization. Frankly, also, public sector organizations. I think in many ways startups have an advantage. And, you know, these were really keys to how to build a reinvention culture. And startups have an advantage because just by their very nature, they are inventive. You know, you can't you can't start a company that's a direct copy of somebody else that is an inventive where you have no chance. So startups already have, you know, a group of people that feel insurgent, and they wanted their passionate about certain customer experience. They want to invent it, and they know that they they only have so much time. Thio build something before money runs out and you know they have a number of those built in advantages. But I think larger companies are often where you see struggles and building a reinvention and invention culture and I've probably had in the last three weeks is part of reinvent probably about 40 different customer meetings with, you know, probably 75 different companies were accomplished in those or so and and I think that I met with a lot of leaders of companies where I think these reinvention principles really resonated, and I think they're they're battling with them and, you know, I think that it starts with the leaders if you, you know, when you have big companies that have been doing things a certain way for a long period of time, there's a fair bit of inertia that sets in and a lot of times not ill intended. It's just a big group of people in the middle who've been doing things a certain way for a long time and aren't that keen to change sometimes because it means ripping up something that they that they built and they remember how hard they worked on it. And sometimes it's because they don't know what it means for themselves. And you know, it takes the leadership team deciding that we are going to change. And usually that means they have to be able to have access to what's really happening in their business, what's really happening in their products in the market. But what customers really think of it and what they need to change and then having the courage and the energy, frankly, to pick the company up and push him to change because you're gonna have to fight a lot of inertia. So it always starts with the leaders. And in addition to having access that truth and deciding to make the change, you've gotta also set aggressive top down goal. The force of the organization moved faster than otherwise would and that also, sometimes leaders decide they're gonna want to change and they say they're going to change and they don't really set the goal. And they were kind of lessons and kind of doesn't listen. You know, we have a term the principal we have inside Amazon when we talk about the difference between good intentions and mechanisms and good intentions is saying we need to change and we need to invent, reinvent who we are and everyone has the right intentions. But nothing happens. Ah, mechanism, as opposed to good intention, is saying like Capital One did. We're going to reinvent our consumer digital banking platform in the next 18 months, and we're gonna meet every couple of weeks to see where we are into problem solved, like that's a mechanism. It's much harder to escape getting that done. Then somebody just saying we're going to reinvent, not checking on it, you know? And so, you know, I think that starts with the leaders. And then I think that you gotta have the right talent. You gotta have people who are excited about inventing, as opposed to really, Justin, what they built over a number of years, and yet at the same time, you're gonna make sure you don't hire people who were just building things that they're interested in. They went where they think the tech is cool as opposed to what customers want. And then I think you've got to Really You gotta build speed into your culture. And I think in some ways this is the very biggest challenge for a lot of enterprises. And I just I speak to so many leaders who kind of resigned themselves to moving slowly because they say you don't understand my like, companies big and the culture just move slow with regulator. There are a lot of reasons people will give you on why they have to move slow. But, you know, moving with speed is a choice. It's not something that your preordained with or not it is absolutely a leadership choice. And it can't happen overnight. You can't flip a switch and make it happen, but you can build a bunch of things into your culture first, starting with people. Understand that you are gonna move fast and then building an opportunity for people. Experiment quickly and reward people who experiment and to figure out the difference between one way doors and two way doors and things that are too way doors, letting people move quick and try things. You have to build that muscle or when it really comes, time to reinvent you won't have. >>That's a great point in the muscle on that's that's critical. You know, one of things I want to bring up. You brought on your keynote and you talk to me privately about it is you gave attribute in a way to Clay Christensen, who you called out on your keynote. Who was a professor at Harvard. Um, and he was you impressed by him and and you quoted him and he was He was your professor there, Um, your competitive person and you know, companies have strategy departments, and competitive strategy is not necessarily departments of mindset, and you were kind of brought this out in a zone undertone in your talk, we're saying you've got to be competitive in the sense of you got to survive and you've got to thrive. And you're kind of talking about rebuilding and building and, you know, Clay Christians. Innovative dilemma. Famous book is a mother, mother teachings around metrics and strategy and prescriptions. If he were alive today and he was with us, what would he be talking about? Because, you know, you have kind of stuck in the middle. Strategy was not Clay Christensen thing, but, you know, companies have to decide who they are. Their first principles face the truth. Some of the things you mentioned, what would we be talking with him about if we were talking about the innovator's dilemma with respect to, say, cloud and and some of the key decisions that have to be made right now? >>Well, then, Clay Christensen on it. Sounds like you read some of these books on. Guy had the fortunate, um, you know, being able to sit in classes that he taught. And also I got a chance. Thio, meet with him a couple of times after I graduated. Um, school, you know, kind of as more of a professional sorts. You can call me that. And, uh, he he was so thoughtful. He wasn't just thoughtful about innovation. He was thoughtful about how to get product market fit. And he was thoughtful about what your priorities in life were and how to build families. And, I mean, he really was one of the most thoughtful, innovative, um, you know, forward thinking, uh, strategist, I had the opportunity Thio encounter and that I've read, and so I'm very appreciative of having the opportunity Thio learn from him. And a lot of I mean, I think that he would probably be continuing to talk about a lot of the principles which I happen to think are evergreen that he he taught and there's it relates to the cloud. I think that one of the things that quite talked all the time about in all kinds of industries is that disruption always happens at the low end. It always happens with products that seem like they're not sophisticated enough. Don't do enough. And people always pooh pooh them because they say they won't do these things. And we learned this. I mean, I watched in the beginning of it of us. When we lost just three, we had so many people try and compare it Thio things like e m. C. And of course, it was very different than EMC. Um, but it was much simpler, but And it and it did a certain set of activities incredibly well at 1 1/100 of the price that's disrupted, you know, like 1 1/100 of the price. You find that builders, um, find a lot of utility for products like that. And so, you know, I think that it always starts with simple needs and products that aren't fully developed. That overtime continue to move their way up. Thio addressing Maura, Maura the market. And that's what we did with is what we've done with all our services. That's three and easy to and party ass and roar and things like that. And I think that there are lots of lessons is still apply. I think if you look at, um, containers and how that's changing what compute looks like, I think if you look at event driven, serverless compute in Lambda. Lambda is a great example of of really ah, derivative plays teaching, which is we knew when we were building Lambda that as people became excited about that programming model it would cannibalize easy to in our core compute service. And there are a lot of companies that won't do that. And for us we were trying to build a business that outlasts all of us. And that's you know, it's successful over a long period of time, and the the best way I know to do that is to listen to what customers We're trying to solve an event on their behalf, even if it means in the short term you may cannibalize yourself. And so that's what we always think about is, you know, wherever we see an opportunity to provide a better customer experience, even if it means in the short term, make cannibalism revenue leg lambda with complete with easy to our over our surveillance with provisions or are we're going to do it because we're gonna take the long view, and we believe that we serve customers well over a long period of time. We have a chance to do >>that. It's a cannibalize yourself and have someone else do it to you, right? That's that's the philosophy. Alright, fine. I know you've got tight for time. We got a you got a hard stop, But let's talk about the vaccine because you know, you brought up in the keynote carrier was a featured thing. And look at the news headlines. Now you got the shots being administered. You're starting to see, um, hashtag going around. I got my shot. So, you know, there's a There's a really Momenta. Mit's an uplifting vibe here. Amazon's involved in this and you talked about it. Can you share the innovation? There can just give us an update and what's come out of that and this supply chain factor. The cold chain. You guys were pretty instrumental in that share your your thoughts. >>We've been really excited and privileged partner with companies who are really trying to change what's possible for all of us. And I think you know it started with some of the companies producing vaccines. If you look at what we do with Moderna, where they built their digital manufacturing sweet on top of us in supply chain, where they used us for computing, storage and data warehousing and machine learning, and and on top of AWS they built, they're Cove in 19 vaccine candidate in 42 days when it normally takes 20 months. I mean, that is a total game changer. It's a game changer for all of us and getting the vaccine faster. But also, you just think about what that means for healthcare moving forward, it zits very exciting. And, yeah, I love what carriers doing. Kariya is building this product on top of AWS called links, which is giving them end and visibility over the transportation and in temperature of of the culture and everything they're delivering. And so it, uh, it changes what happens not only for food, ways and spoilage, but if you think about how much of the vaccine they're gonna actually transport to people and where several these vaccines need the right temperature control, it's it's a big deal. And what you know, I think there are a great example to what carrier is where. You know, if you think about the theme of this ring and then I talked about in my keynote, if you want to survive as an organization over a long period of time, you're gonna have to reinvent yourself. You're gonna have to probably do it. Multiple times over and the key to reinventing his first building, the right reinvention culture. And we talk about some of those principles earlier, but you also have to be aware of the technology that's available that allows you to do that. If you look at Carrier, they have built a very, very strong reinvention culture. And then, if you look at how they're leveraging, compute and storage and I o. T at the edge and machine learning, they know what's available, and they're using that technology to reinvent what's what's possible, and we're gonna all benefit because of >>it. All right. Well, Andy, you guys were reinventing the virtual space. Three weeks, it went off. Well, congratulations. Great to go along for the ride with the cube virtual. And again. Thank you for, um, keeping the show alive over there. Reinvent. Um, thanks for your team to for including the Cube. We really appreciate the Cube virtual being involved. Thank you. >>It's my pleasure. And thanks for having me, John and, uh, look forward to seeing you soon. >>All right? Take care. Have a hockey game in real life. When? When we get back, Andy Jesse, the CEO of a W s here to really wrap up. Reinvent here for Cuba, Virtual as well as the show. Today is the last day of the program. It will be online for the rest of the year and then into next month there's another wave coming, of course. Check out all the coverage. Come, come back, It's It's It's online. It's all free Cube Cube stuff is there on the Cube Channel. Silicon angle dot com For all the top stories, cube dot net tons of content on Twitter. Hashtag reinvent. You'll see all the commentary. Thanks for watching the Cube Virtual. I'm John Feehery.

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

>>on >>the globe. It's the Cube with digital coverage of AWS reinvent 2020 sponsored by Intel, AWS and our community partners. Okay. Welcome back, everyone. That's the cubes. Live coverage here in Palo Alto, California. I'm John for your host with David Lantana in Boston. Massachusetts. Uh, we got a great panel here. Analysts just gonna break it down. Keynote analysis. Day one, we got Ah, longtime Web services expert analyst Diane Hinchcliffe, principal researcher at N V. P. It constantly research, but he goes way back. Dan, I remember, uh, 2000 and one time frame you and I'm >>reading Last time you and I hang out with Michael Arrington's house back in the TechCrunch days >>back when, you know you were on this was Web services. I mean, that's always, uh, serves on the architectures. They called it back then. This was the beginning. This really was the catalyst of cloud. If you think about virtualization and Web services in that era, that really spawned where we are today so great to >>have you on as an Amazon got their start saying that everyone could get whatever they want to on a P. I now right, >>all right? Well, we've been riding this wave. Certainly it's cotton now more clear for the mainstream America. And I quoted you in my story, uh, on Andy Jassy when I had my one on one with them because I saw your talk with star Bit of the weekend and in the way you kicked it off was the Pandemic four was forced upon everybody, which is true, and that caught my attention was very notable because you talked to a lot of C E. O s. Does jazz sees pitch resonate with them? In your opinion, what's your take on on that on that posture? Because we heard, hey, you know, get busy building or you're dying, right? So get busy building. That's what >>I thought that was a good message. But I mean on and certainly I saw tweets and said, Hey, he's just he's just directly talking to the CEO. But if you ask me, he's still talking to the CTO, right? The technology officer who's got a feels all this technology and bend it into the shape that it will serve the business. You talk to a CEO who wants is trying to get on the cloud their biggest challenges. I know I need armies of people who know all these brand new services. You saw the development velocity of all the things that they announced and things they re emphasized there was There was a lot of things that were bringing back again because they have so many things that they're offering to the public. But the developer skills or not, they're the partner skills are not there. So you talked to CEO, says All right, I buy in and and I have had to transform overnight because of the pandemic, my customers have moved, my workers have moved on, and I have to like, you know, redirect all my I t Overnight and Cloud is the best way to do that. Where's my where's all the skills for the training programs, the department programs that allow me to get access to large amounts of talent? Those are the types of things that the CEO is concerned about is from an operational perspective. We didn't hear anything about, like a sales force type trailhead where we're going to democratize cloud skills to the very far end of your organization. >>Yeah, they're just kind of scratching the service. They didn't mention that, you know, far Gates away to get into server list. I mean, this is ultimately the challenge Dave and Deena like, don't get your thoughts on this because I was talking Teoh a big time CTO and a big time see so and that perspectives were interesting. And here's the Here's the Here's what I want you to react Thio the sea level Say everything is gonna be a service. Otherwise we're gonna be extinct. Okay, that's true. I buy that narrative, Okay, Make it as a service. That's why not use it. And then they go to the C t. And they say, implement, They go Well, it's not that easy. So automation becomes a big thing. And then so there's this debate. Automate, automate, automate. And then everything becomes a service. Is it the cart before the horse? So is automation. It's the cart before the horse, for everything is a service. What do you guys think about that? >>We'll see. I mean, CEO is to Diane's point, are highly risk averse and they like services. And those services generally are highly customized. And I think the tell in the bevy of announcements the buffet have announces that we heard today was in the marketplace what you guys thought of this or if you caught this. But there was a discussion about curated professional services that were tied to software, and there were classic PDM services. But they were very, you know, tight eso sort of off the shelf professional services, and that's kind of how Amazon plays it. And they were designed to be either self serve. It's a Diane's point. Skill sets aren't necessarily there or third parties, not directly from Amazon. So that's a gap that Amazon's got too close. I mean, you talk about all the time without post installations, you know, going on Prem. You know who's gonna support and service those things. You know, that's a that's a white space right now. I think >>e think we're still reading the tea leaves on the announcements. But there was one announcement that was, I thought really important. And that was this VM Ware cloud for a W s. It says, Let's take your VM ware skills, which you've honed and and cultivated and built a talent base inside your organization to run VMS and let's make that work for a W s. So I thought the VM Ware cloud for a W s announcement was key. It was a sleeper. It didn't spend a lot of time on it. But the CEO ears are gonna perk up and say, Wait, I can use native born skills. I already have to go out to the cloud So I didn't think that they did have 11 announcement I thought was compelling in that >>in the spending data shows of VM Ware Cloud on AWS is really gaining momentum by the way, As you see in that open shift So you see in that hybrid zone really picking up. And we heard that from AWS today. John, you and I talked about it at the open I produces in >>Yeah, I want to double down on that point you made because I want to get your thoughts on this a Z analyst because you know, the VM ware is also tell. Sign to what I'm seeing as operating and developing Dev ops as they be called back in the day. But you gotta operate, i t. And if Jassy wants to go after this next tier of spend on premise and edge. He's gotta win the global i t posture game. He's gotta win hybrid. He's got to get there faster to your point. You gotta operate. It's not just develop on it. So you have a development environment. You have operational environment. I think the VM Ware thing that's interesting, cause it's a nice clean hand in glove. VM Ware's got operators who operate I t. And they're using Amazon to develop, but they work together. There's no real conflict like everyone predicted. So is that the tell sign is the operational side. The challenge? The Dev, How does Amazon get that global I t formula down? Is it the VM Ware partnership? >>I think part of it is there, finally learning to say that the leverage that the vast pool of operational data they have on their literally watching millions of organizations run all the different services they should know a lot and I say made that point today, he said, Well, people ask us all the time. You must have all these insights about when things were going right or wrong. Can you just tell us? And so I think the announcement around the Dev ops guru was very significant, also saying you don't necessarily have to again teach all your staff every in and out about how to monitor every aspect of all these new services that are much more powerful for your business. But you don't yet know how to manage, especially at scale. So the Dev Ops guru is gonna basically give a dashboard that says, based on everything that we've known in the past, we could give you insights, operational insights you can act on right away. And so I think that is again a tool that could be put in place on the operational side. Right. So b m where for cloud gives you migration ability, uh, of existing skills and workloads. And then the Dev Ops crew, if it turns out to be everything they say it is, could be a really panacea for unlocking the maturity curve that these operators have to climb >>on. AWS is in the business now of solving a lot of the problems that it sort of helped create. So you look at, for instance, you look at the sage maker Data Wrangler trying to simplify data workloads. The data pipeline in the cloud is very very complex and so they could get paid for helping simplify that. So that's a wonderful, virtuous circle. We've seen it before. >>Yeah. I mean, you have a lot of real time contact lens you've got, um, quick site. I mean, they have to kind of match the features. And And I want to get your guys thoughts on on hybrid because I think, you know, I'm still stuck on this, Okay? They won the as path and their innovations Great. The custom chips I buy that machine learning all awesome. So from the classic cloud I as infrastructure and platform as a service business looking good. Now, if you're thinking global, I t I just don't just not connecting the dots there. See Outpost? What's riel today for Amazon? Can you guys share E? I mean, if you were watching this keynote your head explode because you've got so many announcements. What's actually going on if you're looking at this is the CEO. >>So the challenge you have is the CEO. Is that your you have 10, 20 or 30 or more years of legacy hardware, including mainframes, right. Like so big insurance companies don't use mainframe because their claims systems have been developed in their very risk averse about changing them. Do you have to make all of this work together? Like, you know, we see IBM and Redhead are actually, you know, chasing that mainframe. Which angle, which is gonna die out where Amazon, I think is smart is saying, Look, we understand that container is gonna be the model container orchestration is gonna be how I t goes forward. The CEO is now buy into that. Last year, I was still saying, Are we gonna be able to understand? Understand? Kubernetes is the regular average i t person, which are not, you know, Google or Facebook level engineers Are there gonna be able to do do containers? And so we see the open sourcing of of the AWS is, uh, kubernetes, uh, server on. We see plenty of container options. That's how organizations could build cloud native internally. And when they're ready to go outside because we're gonna move, they're gonna move many times slower than a cloud native company to go outside. Everything is ready there. Um, I like what I'm seeing without posts. I like what I'm seeing with the hybrid options. The VM ware for cloud. They're building a pathway that says you can do real cloud. And I think the big announcement that was that. That s a really, uh, spend time on which is that PCs for everywhere. Um, a saying you're gonna be able to put Amazon services are compute services anywhere. You need it, e think that's a smart message. And that allows people to say I could eventually get toe one model to get my arms around this over time >>day. What does that mean for the numbers? I know you do a lot of research on spend customer data. Um, CEO is clearly no. This is gonna be the world's never go back to the same way it was. They certainly will accelerate cloud toe. What level depends upon where they are in their truth, as Jassy says. But >>what does >>the numbers look at? Because you're looking at the data you got Microsoft, You got Amazon. What's the customer spend look like where they're gonna be spending? >>Well, so a couple things one is that when you strip out the the SAS portion of both Google and Azure, you know, as we know, I asked him pass A W S is the leader, but there's no question that Microsoft is catching up. Says that we were talking about earlier. Uh, it's the law of large numbers Just to give you a sense Amazon this year we'll add. Q four is not done yet, but they'll add 10 billion over last year. And Jesse sort of alluded to that. They do that in 12 months. You know, uh, azure will add close to nine billion this year of incremental revenue. Google much, much smaller. And so So that's, you know, just seeing, uh, as you really catch up there for sure, you know, closing that gap. But still Amazon's got the lead. The other thing I would say is die on you and I were talking about this Is that you know Google is starting. Thio do a little bit better. People love their analytics. They love the built in machine learning things like like big query. And you know, even though they're much, much smaller there, another hedge people don't necessarily want to goto Microsoft unless they're Microsoft Shop. Google gives them that alternative, and that's been a bit of a tailwind for Google. Although I would say again, looking at the numbers. If I look back at where Azure and AWS were at this point where Google is with a few billion dollars in cloud the growth rates, I'd like to see Google growing a little faster. Maybe there's a covert factor there. >>Diane. I want to get your thoughts on this transition. Microsoft Oracle competition Um, Jesse knows he's got a deal with the elite Salesforce's out there. Oracle, Microsoft. Microsoft used to be the innovator. They had the they had the phrase embracing extend back in the day. Now Amazon's embracing and extending, but they gotta go through Oracle and Microsoft if they wanna win the enterprise on premise business and everybody else. Um, eso welcome to the party like Amazon. You What's your take on them versus Microsoft? Calling them out on sequel server licensing practices almost thrown him under the bus big time. >>Well, I think that's you know, we saw the evidence today that they're actually taking aim at Microsoft now. So Babel Fish, which allows you to run Microsoft sequel server workloads directly on Aurora. Uh, that that is what I call the escape pod that gives organizations an easy way That isn't Will parliament to redesign and re architect their applications to say, Just come over to AWS, right? We'll give you a better deal. But I think you've got to see Amazon have, um, or comprehensive sales plan to go into the C. E. O s. Go after the big deals and say, You know, we want to say the whole cloud suite, we have a stack that's unbeatable. You see our velocities, you know, best in class. Arguably against Microsoft is the big challenger, but we'll beat you on on a total cost of ownership. You know, your final bill. At the end of the day, we could we commit to being less than our competitors. Things like that will get the attention. But, you know, uh, Amazon is not known for cutting customized deals. Actually, even frankly, I'm hearing from very CEO is a very large, like Fortune 20 companies. They have very little wiggle room with Microsoft's anybody who's willing to go to the big enterprise and create custom deals. So if you build a sales team that could do that, you have a real shot and saying getting into the CEO's office and saying, You know, we want to move all the I t over and I'm seeing Microsoft getting winds like that. I'm not yet seeing Amazon and they're just gonna have to build a specialized sales team that go up against those guys and migration tools like we saw with Babel fish that says, If you want to come, we can get you over here pretty quick. >>I want to chime in on Oracle to John. I do. I think this is a blind spot somewhat for AWS, Oracle and mainframes. Jesse talks that talks like, Oh yeah, these people, they wanna get off there. And there's no question there are a number of folks that are unhappy, certainly with Oracle's licensing practices. But I talked to a lot of Oracle customers that are running the shops on Oracle database, and it's really good technology. It is world class for mission critical transaction workloads. Transaction workloads tend to be much, much smaller data set sizes, and so and Oracle's got, you know, decades built up, and so their their customers air locked in and and they're actually reasonably happy with the service levels they're getting out of Oracle. So yes, licensing is one thing, but there's more to the story and again, CEO or risk averse. To Diane's point, you're not just gonna chuck away your claim system. It's just a lot of custom code. And it's just the business case isn't there to move? >>Well, I mean, I would argue that Well, first of all, I see where you're coming from. But I would also argue that one of the things that Jesse laid out today that I thought was kind of a nuanced point was during the vertical section. I think it was under the manufacturing. He really laid out the case that I saw for startups and or innovation formula, that horizontal integration around the data. But then being vertically focused with the modern app with same machine learning. So what he was saying, and I don't think he did a good job doing it was you could disrupt horizontally in any industry. That's a that's a disruption formula, but you still could have that scale. That's cloud horizontal scalability, cloud. But the data gives you the ability to do both. I think bringing data together across multiple silos is critical, but having that machine learning in the vertical is the way you could different so horizontally. Scalable vertical specialization for the modern app, I think is a killer formula. And I think >>I think that's a I think it's a really strong point, John, and you're seeing that you're seeing in industries like, for instance, Amazon getting into grocery. And that's a data play. But I do like Thio following your point. The Contact Center solutions. I like the solutions play there and some of the stuff they're doing at the edge with i o T. The equipment optimization, the predictive maintenance, those air specialized solutions. I really like the solutions Focus, which several years ago, Amazon really didn't talk solution. So that's a positive sign, >>Diane, what do you think? The context And I think that was just such low hanging fruit for Amazon. Why not do it? You got the cloud scale. You got the Alexa knowledge, you know, got machine learning >>zone, that natural language processing maturity to allow them to actually monitor that. You know that that contact lens real time allows them a lot of supervisors to intervene them conversations before they go completely south, right? So allowing people to get inside decision windows they couldn't before. I think that's a really important capability. And that's a challenge with analytics in general. Is that generates form or insights than people know how to deal with? And it solutions like contact lens Real time? This is Let's make these insights actionable before it's broken. Let's give you the data to go and fix it before it even finishes breaking. And this is the whole predictive model is very powerful. >>Alright, guys, we got four minutes left. I wanted Segway and finish up with what was said in the keynote. That was a tell sign that gives us some direction of where the dots will connect in the future. There's a lot of stuff that was talked about that was, you know, follow on. That was meat on the bone from previous announcements. Where did Jassy layout? What? I would call the directional shift. Did you see anything particular that you said? Okay, that is solid. I mean, the zones was one I could see. What clearly is an edge piece. Where did you guys see? Um, some really good directional signaling from Jassy in terms of where they really go. Deal with start >>e I felt like Jassy basically said, Hey, we invented cloud. Even use these words we invented cloud and we're gonna define what hybrid looks like We're gonna bring our cloud model to the edge. And the data center just happens to be another edge point. And hey, I thought he laid down the gauntlet. E think it's a very powerful message. >>What do you think Jesse has been saying? That he laid out here, That's >>you laid out a very clear path to the edge that the Amazons marching to the edge. That's the next big frontier in the cloud. It isn't well defined. And that just like they defined cloud in the early days that they don't get out there and be the definitive leader in that space. Then they're gonna be the follower. I think so. We saw announcement after announcement around that you know, from the zones Thio the different options for outpost um, the five g announcement wavelength. All of those things says we're gonna go out to the very tippy edge is what I heard right out to your mobile devices. Right after the most obscure field applications imaginable. We're gonna have an appliance So we're gonna have a service that lets you put Amazon everywhere. And so I think the overarching message was This is a W s everywhere it z gonna go after 100% of I t. Eventually on DSO you can move to that. You know, this one stop shop? Um and you know, we saw him or more discussions about multi cloud, but it was interesting how they stand away from that. And this is what I think One area that they're going to continue to avoid. So it was interesting, >>John, I think I think the edges one by developers. And that's good news for Amazon. And good news for Microsoft. >>We'll see the facilities is gonna be good for me. I think guys, the big take away You guys nailed two of them there, but I think the other one was I think he's trying to speak to this new generation in a very professorial way. Talk about Clay Christensen was a professor at his business school at Harvard. We all know the book. Um, but there was this There was this a posture of speaking to the younger generation like hey, the old guy, the old that was running the mainframe. Wherever the old guys there, you could take over and run this. So it's kind of like more of a leadership preach of preaching like, Hey, it's okay to be cool and innovative, right now is the time to get in cloud. And the people who are blocking you are either holding on to what they built or too afraid to shift. Eso I think a Z we've seen through waves of innovation. You always have those people you know who are gonna stop that innovation. So I was very interesting. You mentioned that would service to the next generation. Um, compute. So he had that kind of posture. Interesting point. Yeah, just very, very preachy. >>E think he's talking to a group of people who also went through the through 2020 and they might be very risk averse and not bold anymore. And so, you know, I think that may have helped address that as well. >>All right, gentlemen, great stuff. Final word in the nutshell. Kena, What do you think about it in general? Will take away. >>Yeah, I I think we saw the continued product development intensity that Amazon is going to use to try and thrash the competition? Uh, the big vision. Um, you know, the real focus on developers first? Um and I think I t and C e O's second, I think before you could say they didn't really think about them too much at all. But now it's a close second. You know, I really liked what I saw, and I think it's It's the right move. I'd like to Seymour on on hybrid cloud migration than that, even when we saw them. >>All right, leave it there. Don. Thanks for coming on from this guest analyst segment. Appreciate you jumping in Cuba. Live. Thank you. >>Thanks. Alright. >>With acute virtual. I'm your host John per day Volonte here covering A W s live covering the keynote in real time State more for more coverage after the break

>> From theCUBE studios in Palo Alto and Boston connecting with thought leaders all around the world. This is a Cube conversation. >> Hi, I'm Stu Miniman and welcome to a special CUBE conversation. We've been doing a CXO series talking to leaders around the industry how they are dealing with the global pandemic. Really happy to welcome to the program Jim Whitehurst. He is the former CEO of Red Hat. He is now the president of IBM. Jim, pleasure to see you, thanks so much for joining on. >> Hey, it's great to be on, thanks for having me. >> All right, so Jim, we talk about change in this industry an awful lot. You of course, went through a lot of professional change recently. You've got the plaque behind you for the largest software acquisition in industry history. Of course, Red Hat getting bought by IBM. In the midst of everything happening in the globe you got a new title. Yeah as I said, you just moved from Red Hat you are now an IBM-er, wearing the corporate blue, nice job. But still no tie. Oh, of course we know your style there. But Jim, want to ask you when the pandemic rolled out what was your first move as a leader? >> Well, first move was to get the team together and bond as a team. So much of traditional management is about grooving a set of routines and then driving those to drive efficiency in them. Got to take variance out because that's what drives efficiency. But this is a whole new thing, it's a whole new change. And so, first off you want to recognize the human elements and the stress related to it. But you also want to open it up saying, okay well what are we going to do? How are we going to work? And so that's no something that you'd go hire a consultant to do in two weeks. So, bringing the team together and really saying okay what do we all think? How do we actually go about running this? Really was the first thing we did at Red Hat and we did the same thing at IBM. I think this is, we talked so much about the traditional management structures really weren't built for rapid change and resilience. Well guess what, we're right in the middle of rapid change uncertainty and resilience right now. So, if there's ever a time to change how we lead now is the time to do it. >> Yeah, I would often quote Clay Christensen and I believe he said, strategy is something that you don't write it in stone. It's something that you must look at a certain point in time and make changes. And when we talked about cloud adopting it's like okay let me make a strategy but let's revisit it every quarter? These days it's, let's get the team together a couple times a week because what we did a week or a month ago is not the same as today. So, how do you make decisions today? And how do you continue to iterate and communicate with the team to deal with what's happening in the field? >> Well right now we're having multiple meetings with teams a week, with my team and then kind of rippling it out from there. We've asked everyone to commit to having well face to face video conference, so not just phone calls with their teams multiple times a week and ripple that out. We've actually and hopefully you'll soon hear in the next week or two, see it on GitHub. We've created a, I'm going to think of it as contract. What we expect, our expectations around working home including it's okay to have bad hair days and... We've got a whole set of kind of ways of working that we really crowd sourced inside of IBM in a very kind of open source type way. It wasn't something we dictated from the top and all the entire senior team is now committed to that. And we are planning on putting it out on GitHub as well, so if others find value in it. But a lot it really does start to recognize it's hard to know the stresses that people are under. Or what they need to do to be effective. And so it's the perfect time to backup and say, hey you have to figure some of this out and tell us what you need to do to be successful. >> Yeah. What you just talked about with GitHub is some the silver linings, if you will of what's been happening here. The communities we live have always been collaborative in nature. Open source is something that you expect people to be able to come together, but it really is something that we've seen highlighted some of the good cases with, whether it is 3D printing items leveraging open source projects to the like. I'm curious and we know it is early days but are there any things that you're seeing from a cultural standpoint, from a... That you believe will be permanent after we're through the immediate threat? >> Yeah, yeah we've talked about this a lot at open source is this idea of reciprocity. That transactions in an economy don't have to be so quid pro quo. I give you this, you give me that. Things like goodwill matter. Things like reputation matter. And certainly that's true in open source communities. And I do think we went through a period of time in large corporate organizations around the world where it became a little more nameless, faceless and so we're in business to make a profit. And--Milton Freidman--if you do that, that's good for society. And I think we've all already started and the business round table actually did this a few months ago. But I think this is causing all businesses to back up and say what role do we play in society? And what can we do more than what we do everyday to serve out customers? What else can we do to add value? And I think that's something certainly I don't think just senior leaders are doing. I've gotten dozens of emails from IBM-ers with the ideas of how to go do this. And I think it does really cause you, in a good way to back up and say, why do we exist as a firm, right? And I hope everyone's doing that. Or why do we exist beyond purely a for profit mechanism? And I know that theory around, well if we profit maximize society is better off. But I do think rounding that out with a little bit more of a since that weaken having direct purpose beyond profit is something that certainly great companies have always talked about, IBM's always talked about it. But this is a time it feels real, it feels personal it feels like right now, what do we do this week and next week? I don't know if you saw this, but how quickly, within a matter of days the weather channel app, which is an IBM app has a COVID button on it so you can see down to your county level the number of people infected and that bubbled up, that went to top down Arvind or me saying, let's go do that. And so, I do think that having broadly people in corporations think about well what role do I play in society is a really, really helpful thing. >> Yeah, so I'm glad you actually brought up weather because we want to talk for a second about climate. You wrote a very thoughtful piece for Earth Day. It's been really interesting to see how the planet is doing without as many humans around. I've heard things from cities in Italy that are talking about city centers will never let cars back in. There are landscapes that are more beautiful than ever. There are wild animals going places that they hadn't been before. So, I'm wondering if there's any lessons learned or things that we can do from a global climate standpoint that we've learned as a part of what has happened. >> Well, my view is that there are two major benefits in this crisis associated with environment. Not even need to say benefits. There are two lessons learned that I think could be durable. First off, I think it is inspirational to see how quickly the environment can bounce back. So if you kind of get this like, oh well what can I do? Does it really matter? Aren't we too far gone? I've heard often, well there's nothing we can do we're just down a irreversible path. I think this shows how quickly change can happen and I hope in that, people derive inspiration. Because I do think that's important to realize our actions can have benefits. I think that's important. And then I think, secondly, again back to this point of as organizations reflect on their role beyond just profit making, I'm hoping those two things can link up and we will come out of this with fundamental changes. I think we're all learning that we can work in different ways and we can still get work done. And so, we bring those things together. I'm really hopeful that as a society and as individual companies we'll back up and say hey we can impact the environment. We know we can work in some ways differently. How do we bring that together to bring about a sustainable change and outcomes in the environment. >> Well, Jim Whitehurst, always a pleasure to get an update from you. Thank you so much for sharing how you, your peers and the community are handling these challenging time. >> Hey I always enjoy our conversations. Thanks so much for having me and I look forward to seeing you soon. >> All right, thank you for watching this CUBE conversation. I'm Stu Miniman. Check out theCUBE.net for all the events upcoming interviews and archives, including lots with Jim Whitehurst in the past. Thank you for watching. (calm music)

>> From Gillette Stadium in Foxboro, Massachusetts, if the queue covering Vita Winter warmer, twenty nineteen brought to you by Silicon Angle media. >> Hi, I'm stew Minutemen. And this is the Cube Worldwide Leader and live tech coverage. >> We're on the ground here at the V Tug winter warmer, and it is twenty nineteen. It's actually, the thirteenth year of this event was one of the original, if not the original Veum, where user groups covers virtual ization, cloud computing and even Mohr, always great to be able to get back to the community, get some good interviews and no better person helped me start with my first interview at a show of the year. But good friend of the program, Keith Towns and he is the CTO advisor. And he's also now a slew front architect with the M. Where Keith. Thanks for joining >> us. Thanks for having me on the cute. >> Yeah. So, Keith, I mean, you were host of our program for a number of years. You're now, you know, back working on the vendor side. But you know, you know this community. You know what I always say in my career, There, certain communities, an ecosystem where there's just love to be a part of it. And the virtual ization group. You know, I've been part of it for a long time. You know, Veum, wear and beyond, though, you know people that you know, they get excited, They geek out on the technology and they love to share. And that's why we come to events like this. >> Yeah, it is amazing. Just, you know, the every every show is getting smaller, but maybe with the session of a Ws re event, but I don't think the intensity has shrunk at all. You get around friends, you know, we're just at a desk and one of the ten days, actually, how did I get a job doing X? And the community was like, Oh, you just talk to the people at this table. So it is. It is a great, great commute. >> Yeah, it's an interesting dynamic you talk about. You know, we've seen the huge growth in Meetups in user groups and regional shows. You know, vm Where does Veum World but the VM world being where forums around the globe. I'm sure you probably have to go for a few of those they've been doing well. I'm right back in my emcee Daisy M. C. Did a number of those. So we see you. Amazon Reinvent is growing, but oh, my God, they're regional shows are ridiculous. I I've said some of those regional shows either different communities or different localities can actually be even better than some of the big shows on. You know, we love Keith. We're happy to welcome you here to the home of the NFC Championship. New England Patriots ur >> First off, Congratulations. The wait went a little better for you to bare sand and say, You know what? Tom Brady won't play forever, so enjoy it. This is amazing backdrop through him. Little finish that you've not involved. Invited me to a veto before now. >> Oh. Oh, I'm sorry, Keith. It's It's a community thing that absolutely got to come. Absolutely. I've had friends. Most of them. It is local. I'm talking to users from Maine and Massachusetts, Rhode Island and Connecticut and like so you gave a keynote this morning and you didn't True fashion. You did a block post about reality check leading in, and I thought it was a great way for us to start is, You know, there's so much change in the industry, uh, those of us that are technologies that you know, we're super excited because there's so much new stuff. It's not like Oh, jeez, you know, twenty nineteen is probably going to be just like twenty eighteen. It's like, Oh, my gosh, what did I do in twenty eighteen? What do I have to change? How do I keep up? How do I manage it? I would love to get your viewpoint. You know what's going on with Keith? And you're talking about a lot of users, so you know how help share, You know, what is the reality? Check that everybody's going >> to know. We're talking about a pre recording in the banter. Just, you know, whether it's, you know, Vienna where we're hip Theo and all the stuff that Casey Kelsey Hightower is going out with Cooper Netease. Then as you spent spent out to serve earless, uh, infrastructures Cole scripting it centre. There's much to learn that you're a bit overwhelmed and we're seeing this out. You know, as I'm talking to executive CTO CEOs, VP of infrastructure, they're filling the same kind of excitement at the same time. Overwhelmed this Like what? What's what's really You know, we had the big cloud movements over a few years ago where I think we're at the height cycle where organizations are starting to understand that. You know, Cloud isn't the destination is part of a strategy, and everyone seems to be in the throes of figuring out what that means for us. We're just on the crowd chat, talking about multi Cloud and the drivers around. Multi Cloud. You guys did a great job hosting that cloud shit chat, nothing. We saw the gambit off where people are. You know, uh, there's not really a business rationality people who are really in the throes of trying to figure it out. >> Yeah, actually, I love to comment friend of ours that we've had on the program before, Bobby Allen from Cloud General said when he's working with companies, if they ask for a three year strategy plan, he said, I will not do it unless we guarantee that we will go revisit it every six months because I looked back. You know, Clay Christensen, you no way talks about strategy is strategy is a point in time thing, not something that you write it in stone. I've been saying for a couple of years cloud strategies that companies today is, they wrote it in ink and the ink still drying. And, you know, you're probably going to need toe, you know, go through it and change it because it is changing fast and therefore, you know, huge. Out I started Deploy something. Oh, wait, what about the next thing? Or there's some new practice or something to do it. So it is challenging because I need to run my business. Today. I got to set my budget for the year, usually, um and it's I need to be agile. But, you know, I can't constantly be tearing everything up and you're not going to be throwing it out or re training and skills. I mean, there's so many challenges. >> So still, you might remember when when I was on the other side of the the table. I, uh it was meant at somewhat of a D that Veum where moves at the speed of the aisle, and it was picked up as Maury compliment. But >> it was a >> big I'll be honest that it was a dig. And what I've learned the past few months is that Veum, where has to move at the speed of the CIA, is no longer and It's not just being wherever the community has and the CIA always faced with that we could do a few years ago. A cloud strategy, and that thing can sit on the desk for a year, and it would still be valid. But the bobbies point, if you're going to do a strategy and three year strategy, got to revisit that every six months and this agility that were not accustomed to previously in the industry, we have to now become super agile and figure out how do we keep the lights on and innovate at the pace That business, these witches? Pretty good chance. >> Yeah, it's attorney were beginning the year I made a comment personally said, You know, I'm not a big believer in, you know, setting. You know, Resolutions. Mohr. You know, let's set goals Your runner, I do some biking and it's like, Okay, you know, I've got a big race I want to do this year. I'm gonna work myself, you know, towards that goal and raise the money. You've got a certain target and something that you could do over the year. It's and there's no way that you do that, cos you know they've got goals that they need to accomplish and business. And it's great to say, Oh, well, we need to be more efficient. We need to do some down something different. But, you know, reality is, you know, it's not just digital transformation of modernizing. It was, you know. Oh, okay. Do I need to transform my backup? You know, data protection, you know, huge activity going on in the marketplace right now, you know? So, what >> is sixty million noon investment in one >> week? Exactly. You know, the wave of hyper convergence is one that really changed a lot of architectures and had people change. You know, we've talked cloud computing. They're what are some of the, You know, some of the big, you know, movements that you see, you know, will you? Tracking the industry? It was kind of the the intel refunds for a cycle, and, you know, Oh, well, it's the next version of Microsoft or, you know, Veum, where operating system would be one of those big, you know, kind of ticked. Talks of what? What are some of the big commonalities that you're seeing Al? So they're actually moving people to >> new things without a doubt. There is one conversation that customers cannot get the enough of. And I had Ah, on my little vlog. I had game being from Vienna, where V P off the Storch and Business availability unit and I challenged her on the via Where? Vision around this. But customers cannot get enough of having a conversation around data. What they What do they do with data? And how does a move data? How did they get compute closest to data? How did we get data they're closest to? They're re sources. We talked about it on the multi cloud conversation, but by far conversations are around. Howto they extract value from data had really protect data, and howto they make sure their compliant with the data is something that that's driving a lot of innovation and a lot of conversation. A lot of interest. >> Yeah, Keith, it's a great one. When I look at you know, our research team, that wicked bond data is that the center of everything. In many ways, the failings of big data was talking about, You know, the challenges. I have infrastructure. No, the growth and the variety and blah, blah, blah and everything that's not what important to the business they don't care about, You know, it's like, Oh, well, there's a storage problem in a network problem. It's the business says there's data, you know? Do I protect my bird business to make sure that I'm not a risk? You know, all the things like DDP are coming And can I livered value? Do I Can I get new lines of business? Can I generate revenue out of that? And I've seen early signs that we've learned this whole, You know, a I m l movement. You know, data, Really? At the center. All right, we've seen enough storage. We went from talking about storing data to about, you know, that data ecosystem, Andi, even computing and I ot data where data needs to be, how I work it. Absolutely a center. So, yeah, it's great to hear that. Customers are identifying that. We've been doing like, chief data officer events for many years. You know, where does data live? Is that a CEO Thing? Is that a different part of the business? I don't know if you've got anything you're seeing from, you know, your customers is Tau, >> who owns the Data initiative, So it's really interesting. I had a conversation with a major bank, and it was a one on one with the CDO and what I thought was the most tricky part of the conversation is that here, Not only does he report directly into the CIA, which you know is to be expected, but he meets regularly with the board of directors. So data were seen. I've seen these seedy old rolls being popped up, and it's not just about the technology as you mentioned. It's about the whole approach about this asset that we have. It's so critical that worth creating a sea level position that today might reporting to the CEO but is most definitely accountable to the border director. >> Well, yeah, Keith, it's that the trend we've been watching for a while, as it used to be, it was a cost center. And, you know, it's kind of, you know, that's what it was considered today. If it isn't in, you know, direct relationship, working with the business, the business will go find somebody else to do it. The whole stealthy movement. You know, I can go find an answer for what I'm doing. I think about project I've worked on in my career and been like, I wish it was easy. You know, fifteen years ago, it was today to do those. But we see security's a board level discussion data as a board level discussion is excellent. And all of those things that traditionally you would think that own them. Having awareness and visibility and information communication flow between the board in the C suite is great progress. You >> know, it's interesting. I was a big proponent of this prior to coming on The vendor side is that vendors have to start having conversations outside of it. So traditional infrastructure of injustice, his goal. Hurry, right saw and where the whole the Dale emcee Dale Technologies they have to skill up and have conversations with CIA moles. Seo's CEO Ole's H R directors because the these buying centers now have power to go out and buy solutions. You know, talked about in my no keynote this morning. You know how many people have worked day? How many people have salesforce applications? They had nothing to do when I had no nothing to do with the procurement of off these solutions. The ball is moving outside of just traditional for court technology is starting to get to the point where regular users can consume business users can consume these massive, massive solutions based on technology and just happens to be a label. The technology, whether sales Force worked in >> Sochi, thought on this this whole point there want to ask you, In my career, there's often been groups inside a business that didn't get along. And we, you know, built silos. You know, the storage in the network team don't get along cloud and traditional I t You know what we're fighting? You know who owns it? Turf wars Managing that, You know, have we built silos in multi cloud today? Is everybody holding hands and, you know, pointing the business in the same direction, you could kind of give us the good the bad. So what? We need to work on going forward. >> I think the good is that you know that the umbrella of infrastructure starting to work as a single. Uh, you So you have storage, compu networking, even configuration man groups that were kind of confrontational before and territorial. Those groups are starting. Tio. Come on. Their one senior manager or one senior executive looking at? How do you provide services as a group and providing those services? I think we're we're starting to see Silos is actually the developer versus the infrastructure group is developers just wantto FBI, too. A set of services. They want infrastructure to get away. Developers themselves. Haven't you know, kind of katende enough of the scars from heaven have to do operations, So there's a different view off the world. And, uh, today I think developers haven't yet getting the budget power off operations. But the business wants solutions, and they're going out there competing with traditional Teo get the dollars to run the services in the cloud or or wherever, however they consumed them, whether it's, you know, just saw Chick fil a's deploying two thousand ten points to run six thousand containers at the edge. Is that something that's run by tears? That something wrong? Run by developers? I don't know. Check feeling well enough to know about. This is what we're seeing in >> industry. Yeah. All right. Well, keep towns. And always a pleasure to catch up with you. Thanks so much for joining us. Be sure to check him out see Teo advisor on Twitter, check out his blogged. And of course, thank you so much for watching. We'll be back. Uh, lots more coverage here at V tug. Winter warmer, twenty nineteen. Thanks for watching.

(uplifting music) >> Hi, I'm Stu Miniman and welcome to a CUBE Conversation. Really excited to have a start up in the serverless space here in our studios in Palo Alto. Welcome to the program, first-time guest, we have Nate Taggart, who's the CEO, and Farrah Campbell, who's the Ecosystem Manager, both with Stackery. Thank you so much for joining us. >> Stu, thanks for having us. >> Thank you. >> Farrah, I know you're just in from Vegas and from the DevOps Enterprise Summit. Why don't we start there a little bit? DevOps, this big wave, a lot of changes, what's the energy you're hearing, what are people talking about what's exciting them these days? >> A lot of things are exciting them. I think that the whole ecosystem is changing. There's so much happening it's almost like the 80s and 90s, you know what I mean, where there's like the dot-commer I guess. There's so much new technology that's out there and it's available. I think that people are really trying to understand where they should go. Maybe I've already started with containers, now people are talking about serverless. What do I do? >> It's a great point. These waves of technology come so fast. When people write their strategy, you might now even want to write it in ink. (Nate and Farrah laughs) They may be drawing because Clay Christensen always says it's something you should revisit. You should go at least once a quarter. It's directionally where I need to go, but things change. All right, Nate, Stackery. Bring us back. First, give us a little bit about the team's background, yourself and what led to the formation of the company. >> Yeah, thanks, Stu. My founding team actually comes out in New Relic. We were early employees there, stayed 'til the IPO. We've worked building, DevTooling for a long time, hand-managing at scale infrastructure. One of the things that we found was, I mean, New Relic was a high-velocity engineering team and the bottleneck, in many cases, was infrastructure. After New Relic, I worked with the data science group at GitHub, again, building massive data infrastructure and the bottleneck was not figuring out what to do. It wasn't the work in front of us. It was the underlying, un-differentiate heavy-lifting of infrastructure. Chase Douglas, my co-founder, and I, when we saw AWS Lambda come out us, it's the first example of a wave of serverless services, we got really excited and realized this took away a lot of the barriers and a lot of the burden of building new applications, started playing with it. This was three years ago. Over the next few years, we've been working with all the serverless pioneers figuring out what are the changes that they're experiencing from their operations cycle from managing the life cycle of an application, how are their teams in the dynamics changing the workflow. We took those best practices and built it into Stackery, which is now a software product to accelerate serverless operations. >> We've been watching this for a while. Give us a little bit of a perspective first. There's some things different about this serverless wave or functions as a service. I'm an infrastructure guy by background and we've always wanted to not have the boat anchors of network and storage slow us down, but I lived through the virtualization wave. (Nate laughs) I've got the scars of over a decade. >> Sure. >> Working in the ecosystem of trying to fix that. Everybody got super excited when containers in a Docker helped bring that to the mainstream, but it was tools helping us move up the stack a little. Serverless, to me, when I look at it, it really starts from the application level down and there's still lots of infrastructure stuff. It's not like it disappears. I've got the great T-shirt from the cloud guru people. (Nate laughs) It's like there is no cloud of someone else's computer, they have the longer version of that for serverless. I love your viewpoint 'cause, New Relic, they'd seen, they track, they monitor that, you had a great way to look at it, GitHub of course, but what's the same, what's different about what's so important about serverless and what it does for companies? >> Fundamentally, we're looking at just two different patterns and neither one of them is right or wrong, but they have different use cases, different applications, areas where they excel. New Relic was a big champion in early pioneer of Docker. We used a lot of containers, a lot of orchestration technology, so I'm still a big proponent of that. I think when I look at the serverless marker today, it's tempting to look at it as an abstraction layer, disfunction as a service, there's maybe micro-container type view. It's not really the pattern we're seeing in industry. What we're actually seeing is people are saying it's a manage service and it's not just Lambda, it's not just compute as a manage service. It's me stringing together the manage components I need to develop quickly and deliver business value to focus on business logic instead of the plumbing. I think API Gateway is manage service, I think there's manage databases in their manage service, there's event streams. You pull all the pieces together and Lambda may be a component of that. In that way, it actually fits in and compliments a container program. >> Absolutely. What I was trying to say is containers kill VMs and serverless kills this. It's kind of like cloud is more of an operation model. >> Sure. >> Serverless is more of how I build my applications and services that I can use, not the unit of how I build something. Farrah, when I look at it, the conversations I've had with users, it's not the okay, let me take the person that did some silo and teach them to code or put that together. I've talked to marketing people that are like, "I got involved and I can do this." What are you seeing from the personnel and who's using it, how is it very different from what we've seen in the past? >> I think it opens up a lot of doors. I think it makes the unattainable attainable. You see people that go from front end to full stack. It takes you to the tip of technology. I'm mentoring a woman that is using serverless as a way to get app out. She doesn't understand infrastructure, she doesn't understand all the ops and how to set all those things up and it would take a long time to figure all those things out. Those are harder doors to open. Everything's been done the same for a very long time. There's like this free knowledge is shared here. Serverless has an ecosystem. It's kind of like a community where everybody is working together, sharing knowledge and trying to actually build something bigger and better, something that feels good to be a part of. We have a lady that's working at our office coming out of code school and she is a killer engineer. You can talk more about what Anna's doing for us at Stackery, but she's coming out of a code school and is operating as if she's a full-stack engineer >> I think that's really the compelling story behind serverless, is focus on business value. >> Yeah. >> And that's the mission of every software engineer. It's the reason most of us got into software engineering was 'cause we wanted to solve puzzles, we wanted to work with logic and idea, we wanted to build. We didn't want to sit and configure infrastructure as code templates in order to stand up some basic EC2 server, so that we can run our application, right? >> Nate, maybe you troned a little bit for us. What does Stackery do in this ecosystem? What are you helping customers? If you've got any customer examples, we'd love to hear that. >> Absolutely. First off, the development model is changing. If you want to do serverless, serverless, again, is a manage service. I can't replicate all of AWS on my laptop. In order to work with these manage services, in the development cycle, I'm shipping code to the cloud. I'm provisioning resources in the cloud. Maybe in my own account or a developer account, but I have to know how to provision those resources and then configure those resources. If I'm doing this in a professional environment, then it means I need to do this in a way that's automated, scalable, I can hand off to someone else, they can replicate and this is the workflow to tooling, the guardrails that Stackery brings to your serverless program. We make it so that a developer can take a branch out of version control and deploy their own instance of it in their sand-boxed environment within their AWS account. This was kind of automation workflows, handling of configuration templating, being able to pull a resource off the shelf, I need to put my database in a VPC (Nate snaps fingers) and boom, it's pre-configured and ready for you to go. >> Okay. >> Stackery also enables you to work on your core problems. I'm not busy trying to research how the 1400 services are going to interact with each other. I don't have time to do that. I'm trying to focus on one of my projects. I'm focused on a deadline. I'm trying to get a specific task done. I don't have time to research for a week to try to get that, to figure that out. Not only that, it's not a language, so focusing time and trying to figure out and formulate cloud formation, it seems like a waste of time. >> The flip side of this is that that is some of the most important mission critical work that teams are doing. You can't provision into your production AWS account if you have misconfigured IM roles. You don't want to open access to that account to every single person in the organization. You don't want misconfigured resources. This new model, this new development change, where the application is at the heart of the life cycle, if we're not helping people to quickly stand up correctly configured resources then we're putting more load on the ITT, more load on the operational team and actually slowing down development. >> Bring us inside. When do you usually get engaged, who's driving those engagements, when you talk about write, what were they doing before and what does this enable them to do once they're engaged? >> Even though serverless feels like an infrastructure solution, it's actually the application development side of the house that tends to be the leading adopter. A lot of cases, they're trying to un-bottleneck their operations team or not send them low-criticality work loads. A typical entry point might be something like a cron job. We have this little function that just needs to run once a day. Do I really need to have a capacity-planning meeting with the ops team to get this out in production? They go, "Okay, we'll write the code, we'll ship it as a serverless function and we'll get it out the door." That works really well when you're a single-principle engineer with maybe elevated privileges in your cloud accounts. It doesn't work so well as a replicable process that you can then scale across the org. I don't think ops leaders want just like let's open the gates to our kingdom. Instead, what we see is that four companies to go through a maturing curve of embracing this technology where they go from background tasks, data pipelines, cron jobs, low-visibility work to maybe more core services that can extend their product or deliver more customer-facing value. They have to answer a lot of questions in terms of how do we change our process and our culture in order to embrace the velocity of serverless without losing the control that our ops team's been providing for us. >> Also, setting your team up for success. Anybody knows that if I'm working on a specific task or we get a project I'm working on, if I don't understand it and can't figure it out, I'm going to get frustrated, I'm not liking my job anymore, I hate this problem that we're working on, this initiative is dumb, I don't want to be a part of this, but Stackery allows somebody, it made me feel good about it, all the things that you can accomplish. We have a customer that's using this right now that they are moving faster than they ever thought that was possible and it's been so much fun to see their excitement and more things that they learn about that they're using it like, "Look what we just did!" They were going to pull out the whiteboard. He was like, "Let's not pull out the whiteboard, Let's just pull out Stackery." That's awesome. >> It's really fun. We opened Slack channels for some of our customers and it's so exciting to watch them get so fired up about being able to self-serve, being able to actually deliver value and hit their milestones very quickly and successfully. You were talking about what segments are driving this. One of the interesting patterns that we've seen is that it's not like the cutting-edge infrastructure team. In a lot of cases, it might be the under-served software teams in an organization. One of our first customers was an enterprise company doing retail and it was their marketing enablement team, a business enablement team that says, "Hey, our work is important. It drives revenue," is critical to our business, but it feels like a busy workload to the ops team and it's hard to get priority on this. For them to be able to self-serve to relieve some of that back pressure, but then deliver the business value, it was like an immediate measurable win for 'em. >> We often talk about the future of jobs so often, it's like oh, well. Really, you need to be a data scientist. You could go get all this training, you need to get there. It sounds like the bar is kind of low to be able to jump in here and don't necessarily need to go through certifications to start getting real results. >> I think maybe instead of saying, "The bar is low," we're opening the doors wider. We're saying that you can be successful by being able to write software and deliver business value and that you don't need to learn, also, how to configure cloud resources or write infrastructure as code templates or manage an operations lifecycle, personally, to be able to ramp up and add value to your organization. >> All right. Nate, how many people in the company, tell us what you can about funding and which expect to see from you and the team throughout the next six to 12 months. >> Absolutely. Officially, our company is now two years old, we're a team of 15 and we've raised seven and a half million dollars led by Voyager Capital and Hummer Winblad. >> Okay. >> I want to add that I had been involved in a number of startups. This team is different. We have five women on our team. >> Yeah. >> When I joined 10, there was four. We have one in ops and three women engineers >> We're up to six now. >> I know, but that's what I'm saying. I'm talking 'about when I started and that is like you don't see that. >> I wonder. There's certain shows I go to when I go to the Cloud Foundry show, when I go to Kubernetes show, when I go to, more of, the developer-centered shows, I do tend to find a higher percentage women. Are we seeing it or is that really? >> Oh, for sure. My first conference, when I started Stackery, was Serverlessconf. It was awesome. I walked into this hackathon actually scared to death because I've been to them before and was basically laughed out of there like, "What are you doing here?" I asked to be a part of a team that had to build a product and we to demo it and I went up to 'em and told 'em that I knew nothing about. I'm not an engineer, I can't write code at all, but I did understand business problems and I was trying to understand where serverless could be useful or what service would be useful. They were like, "Let's find you a team," and they had me working on the business plan while they were doing all the coding and I was like, "Let's do check-ins every single hour." Just that feeling like a welcome. You felt welcomed there and, as a women working in tech, I haven't felt welcomed at a number of conferences or a lot of hackathons, but I definitely felt welcomed there. >> It's great to hear. I saw on Twitter the other day and it was like, "Could you just imagine if for the last thousand years, we'd actually use the brainpower of the entire human race, (Nate laughs) not having kept 50% of the population from contributing." Nate, want to give you the final word. Serverless, it's growing fast, there's a lot of excitement, but what do you see as the biggest challenges. What does the industry need to work on? What's exciting you that, when we come and sit down in 2019, you're hoping we've moved the ball more? >> I think that one take-away that I want to make sure your audience has is that if you're sitting here saying, "We're not doing serverless," you're wrong. Someone in your organization is doing it. If you have this self-served model where pockets of the organization, this is the old shadow IT, where they are self-serving their configuring resources, their provisioning and it's outside of your peri-view, you're going to want to start putting practice steps in place to make sure that they're able to be successful with that mission. If they're not successful with that mission, they increase risk on your cloud strategy as a whole. They put more workload back on the operations team if that team ends up being a bottleneck for these needs. I hear a lot of IT leaders going, "I don't know if we're doing serverless today." It's like, "No, you are. I've talked to two of your engineers. I know you are." (Nate chuckles) >> Absolutely, right there. When I interviewed Andy Jassy, we had him on theCUBE last year, it was serverless becomes the underlying foundation for everything that AWS is doing. It is going to leave the audience with it is not a single product, or unnecessarily a single tool, but this is what all the cloud is doing and it's moving there pretty fast. It's something that the users can get involved with even more. All right. >> Absolutely. >> Nate and Farrah, thank you so much for joining us. Look forward to watching Stackery and seeing the updates. Make sure to check out thecube.net for all of our coverage. We'll have a big coverage of course from AWS re:Invent in Las Vegas. Lots of other shows. I'm personally always excited about what's having in the serverless and emerging trends. Thanks so much for watching theCUBE. >> Thanks.

(upbeat music) >> Announcer: Live from San Jose, it's theCUBE presenting Big Data Silicon Valley brought to you by SiliconANGLE Media and its ecosystem partner. >> What am I going to spend time, next 15, 20 minutes or so, talking about. I'm going to answer three things. Our research has gone deep into where are we now in the big data community. I'm sorry, where is the big data community going, number one. Number two is how are we going to get there and number three, what do the numbers say about where we are? So those are the three things. Now, since when we want to get out of here, I'm going to fly through some of these slides but again there's a lot of opportunity for additional conversation because we're all about having conversations with the community. So let's start here. The first thing to know, when we think about where this is all going is it has to be bound. It's inextricably bound up with digital transformation. Well, what is digital transformation? We've done a lot of research on this. This is Peter Drucker who famously said many years ago, that the purpose of a business is to create and keep a customer. That's what a business is. Now what's the difference between a business and a digital business? What's the business between Sears Roebuck, or what's the difference between Sears Roebuck and Amazon? It's data. A digital business uses data as an asset to create and keep customers. It infuses data and operations differently to create more automation. It infuses data and engagement differently to catalyze superior customer experiences. It reformats and restructures its concept of value proposition and product to move from a product to a services orientation. The role of data is the centerpiece of digital business transformation and in many respects that is where we're going, is an understanding and appreciation of that. Now, we think there's going to be a number of strategic capabilities that will have to be built out to make that possible. First off, we have to start thinking about what it means to put data to work. The whole notion of an asset is an asset is something that can be applied to a productive activity. Data can be applied to a productive activity. Now, there's a lot of very interesting implications that we won't get into now, but essentially if we're going to treat data as an asset and think about how we could put more data to work, we're going to focus on three core strategic capabilities about how to make that possible. One, we need to build a capability for collecting and capturing data. That's a lot of what IoT is about. It's a lot of what mobile computing is about. There's going to be a lot of implications around how to ethically and properly do some of those things but a lot of that investment is about finding better and superior ways to capture data. Two, once we are able to capture that data, we have to turn it into value. That in many respects is the essence of big data. How we turn data into data assets, in the form of models, in the form of insights, in the form of any number of other approaches to thinking about how we're going to appropriate value out of data. But it's not just enough to create value out of it and have it sit there as potential value. We have to turn it into kinetic value, to actually do the work with it and that is the last piece. We have to build new capabilities for how we're going to apply data to perform work better, to enact based on data. Now, we've got a concept we're researching now that we call systems of agency, which is the idea that there's going to be a lot of new approaches, new systems with a lot of intelligence and a lot of data that act on behalf of the brand. I'm not going to spend a lot of time going into this but remember that word because I will come back to it. Systems of agency is about how you're going to apply data to perform work with automation, augmentation, and actuation on behalf of your brand. Now, all this is going to happen against the backdrop of cloud optimization. I'll explain what we mean by that right now. Very importantly, increasingly how you create value out of data, how you create future options on the value of your data is going to drive your technology choices. For the first 10 years of the cloud, the presumption is all data was going to go to the cloud. We think that a better way of thinking about it is how is the cloud experience going to come to the data. We've done a lot of research on the cost of data movement and both in terms of the actual out-of-pocket costs but also the potential uncertainty, the transaction costs, etc, associated with data movement. And that's going to be one of the fundamental pieces or elements of how we think about the future of big data and how digital business works, is what we think about data movement. I'll come to that in a bit. But our proposition is increasingly, we're going to see architectural approaches that focus on how we're going to move the cloud experience to the data. We've got this notion of true private cloud which is effectively the idea of the cloud experience on or near premise. That doesn't diminish the role that the cloud's going to play on industry or doesn't say that Amazon and AWS and Microsoft Azure and all the other options are not important. They're crucially important but it means we have to start thinking architecturally about how we're going to create value of data out of data and recognize that means that it, we have to start envisioning how our organization and infrastructure is going to be set up so that we can use data where it needs to be or where it's most valuable and often that's close to the action. So if we think then about that very quickly because it's a backdrop for everything, increasingly we're going to start talking about the idea of where's the workload going to go? Where's workload the dog going to be against this kind of backdrop of the divorce of infrastructure? We believe that and our research pretty strongly shows that a lot of workloads are going to go to true private cloud but a lot of big data is moving into the cloud. This is a prediction we made a few years ago and it's clearly happening and it's underway and we'll get into what some of the implications are. So again, when we say that a lot of the big data elements, a lot of the process of creating value out of data is going to move into the cloud. That doesn't mean that all the systems of agency that build or rely on that data, the inference engines, etc, are also in a public cloud. A lot of them are going to be distributed out to the edge, out to where the action needs to be because of latency and other types of issues. This is a fundamental proposition and I know I'm going fast but hopefully I'm being clear. All right, so let's now get to the second part. This is kind of where the industry's going. Data is an asset. Invest in strategic business capabilities to appreciate, to create those data assets and appreciate the value of those assets and utilize the cloud intelligently to generate and ensure increasing returns. So the next question is well, how will we get there? Now. Right now, not too far from here, Neil Raden for example, was on the show floor yesterday. Neil made the observation that, as he wandered around, he only heard the word big data two or three times. The concept of big data is not dead. Whether the term is or is not is somebody else's decision. Our perspective, very simply, is that the notion is bifurcating. And it's bifurcating because we see different strategic imperatives happening at two different levels. On the one hand, we see infrastructure convergence. The idea that increasingly we have to think about how we're going to bring and federated data together, both from a systems and a data management standpoint. And on the other hand, we're going to see infrastructure or application specialization. That's going to have an enormous implication over next few years, if only because there just aren't enough people in the world that understand how to create value out of data. And there's going to be a lot of effort made over the next few years to find new ways to go from that one expertise group to billions of people, billions of devices, and those are the two dominant considerations in the industry right now. How can we converge data physically, logically, and on the other hand, how can we liberate more of the smarts associated with this very, very powerful approach so that more people get access to the capacities and the capabilities and the assets that are being generated by that process. Now, we've done at Wikibon, probably I don't know, 18, 20, 23 predictions overall on the role that or on the changes being wrought by digital business. Here I'm going to focus on four of them that are central to our big data research. We have many more but I'm just going to focus on four. The first one, when we think about infrastructure convergence we worry about hardware. Here's a prediction about what we think is going to happen with hardware and our observation is we believe pretty strongly that future systems are going to be built on the concept of how do you increase the value of data assets. The technologies are all in place. Simpler parts that it more successfully bind specifically through all its storage and network are going to play together. Why, because increasingly that's the fundamental constraint. How do I make data available to other machines, actors, sources of change, sources of process within the business. Now, we envision or we are watching before our very eyes, new technologies that allow us to take these simple piece parts and weave them together in very powerful fabrics or grids, what we call UniGrid. So that there is almost no latency between data that exists within one of these, call it a molecule, and anywhere else in that grid or lattice. Now again, these are not systems that are going to be here in five years. All the piece parts are here today and there are companies that are actually delivering them. So if you take a look at what Micron has done with Mellanox and other players, that's an example of one of these true private cloud oriented machines in place. The bottom line though is that there is a lot of room left in hardware. A lot of room. This is what cloud suppliers are building and are going to build but increasingly as we think about true private cloud, enterprises are going to look at this as well. So future systems for improving data assets. The capacity of this type of a system with low latency amongst any source of data means that we can now think about data not as... Not as a set of sources that have to be each individually, each having some control over its own data and sinks woven together by middleware and applications but literally as networks of data. As we start to think about distributing data and distributing control and authority associated with that data more broadly across systems, we now have to think about what does it mean to create networks of data? Because that, in many respects, is how these assets are going to be forged. I haven't even mentioned the role that security is going to play in all of this by the way but fundamentally that's how it's likely to play out. We'll have a lot of different sources but from a business standpoint, we're going to think about how those sources come together into a persistent network that can be acted upon by the business. One of the primary drivers of this is what's going on at the edge. Marc Andreessen famously said that software is eating the world, well our observation is great but if software's eating the world, it's eating it at the edge. That's where it's happening. Secondly, that this notion of agency zones. I said I'm going to bring that word up again, how systems act on behalf of a brand or act on behalf of an institution or business is very, very crucial because the time necessary to do the analysis, perform the intelligence, and then take action is a real constraint on how we do things. And our expectation is that we're going to see what we call an agency zone or a hub zone or cloud zone defined by latency and how we architect data to get the data that's necessary to perform that piece of work into the zone where it's required. Now, the implications of this is none of this is going to happen if we don't use AI and related technologies to increasingly automate how we handle infrastructure. And technologies like blockchain have the potential to provide a interesting way of imagining how these networks of data actually get structured. It's not going to solve everything. There's some people that think the blockchain is kind of everything that's necessary but it will be a way of describing a network of data. So we see those technologies on the ascension. But what does it mean for DBMS? In the old way, in the old world, the old way of thinking, the database manager was the control point for data. In the new world these networks of data are going to exist beyond a single DBMS and in fact, over time, that concept of federated data actually has a potential to become real. When we have these networks of data, we're going to need people to act upon them and that's essentially a lot of what the data scientist is going to be doing. Identifying the outcome, identifying the data that's required, and weaving that data through the construction and management, manipulation of pipelines, to ensure that the data as an asset can persist for the purposes of solving a near-term problem or over whatever duration is required to solve a longer term problem. Data scientists remain very important but we're going to see, as a consequence of improvements in tooling capable of doing these things, an increasing recognition that there's a difference between a data scientist and a data scientist. There's going to be a lot of folks that participate in the process of manipulating, maintaining, managing these networks of data to create these business outcomes but we're going to see specialization in those ranks as the tooling is more targeted to specific types of activities. So the data scientist is going to become or will remain an important job, going to lose a little bit of its luster because it's going to become clear what it means. So some data scientists will probably become more, let's call them data network administrators or networks of data administrators. And very importantly as I said earlier, there's just not enough of these people on the planet and so increasingly when we think about again, digital business and the idea of creating data assets. A central challenge is going to be how to create the data or how to turn all the data that can be captured into assets that can be applied to a lot of different uses. There's going to be two fundamental changes to the way we are currently conceiving of the big data world on the horizon. One is well, it's pretty clear that Hadoop can only go so far. Hadoop is a great tool for certain types of activities and certain numbers of individuals. So Hadoop solves problems for an important but relatively limited subset of the world. Some of the new data science platforms that we just talked about, that I just talked about, they're going to help with a degree of specialization that hasn't been available before in the data world, will certainly also help but it also will only take it so far. The real way that we see the work that we're doing, the work that the big data community is performing, turned into sources of value that extend into virtually every single corner of humankind is going to be through these cloud services that are being built and increasingly through packaged applications. A lot of computer science, it still exists between what I just said and when this actually happens. But in many respects, that's the challenge of the vendor ecosystem. How to reconstruct the idea of packaged software, which has historically been built around operations and transaction processing, with a known data model and an unknown or the known process and some technology challenges. How do we reapply that to a world where we now are thinking about, well we don't know exactly what the process is because the data tells us at the moment that the actions going to be taking place. It's a very different way of thinking about application development. A very different way of thinking about what's important in IT and very different way of thinking about how business is going to be constructed and how strategy's going to be established. Packaged applications are going to be crucially important. So in the last few minutes here, what are the numbers? So this is kind of the basis for our analysis. Digital business, role of data is an asset, having an enormous impact in how we think about hardware, how do we think about database management or data management, how we think about the people involved in this, and ultimately how we think about how we're going to deliver all this value out to the world. And the numbers are starting to reflect that. So why don't you think about four numbers as I go through the two or three slides. Hundred and three billion, 68%, 11%, and 2017. So of all the numbers that you will see, those are four of the most important numbers. So let's start by looking at the total market place. This is the growth of the hardware, software, and services pieces of the big data universe. Now we have a fair amount of additional research that breaks all these down into tighter segments, especially in software side. But the key number here is we're talking about big numbers. 103 billion over the course of next 10 years and let's be clear that 103 billion dollars actually has a dramatic amplification on the rest of the computing industry because a lot of the pricing models associated with, especially the software, are tied back to open source which has its own issues. And very importantly, the fact that the services business is going to go through an enormous amount of change over the next five years as service companies better understand how to deliver some of these big data rich applications. The second point to note here is that it was in 2017 that the software market surpassed the hardware market in big data. Again, for first number of years we focused on buying the hardware and the system software associated with that and the software became something that we hope to discover. So I was having a conversation here in theCUBE with the CEO of Transwarp which is a very interesting Chinese big data company and I asked what's the difference between how you do things in China and how we do things in the US? He said well, in the US you guys focus on proof of concept. You spend an enormous amount of time asking, does the hardware work? Does the database software work? Does the data management software work? In China we focus on the outcome. That's what we focus on. Here you have to placate the IT organization to make sure that everybody in IT is comfortable with what's about to happen. In China, were focused on the business people. This is the first year that software is bigger than hardware and it's only going to get bigger and bigger over time. It doesn't mean again, that hardware is dead or hardware is not important. It's going to remain very important but it does mean that the centerpiece of the locus of the industry is moving. Now, when we think about what the market shares look like, it's a very fragmented market. 60%, 68% of the market is still other. This is a highly immature market that's going to go through a number of changes over the next few years. Partly catalyzed by that notion of infrastructure convergence. So in four years our expectation is that, that 68% is going to start going down pretty fast as we see greater consolidation in how some of these numbers come together. Now IBM is the biggest one on the basis of the fact that they operate in all these different segments. They operating the hardware, software, and services segment but especially because they're very strong within the services business. The last one I want to point your attention to is this one. I mentioned earlier on, that our expectation is that the market increasingly is going to move to a packaged application orientation or packaged services orientation as a way of delivering expertise about big data to customers. Splunk is the leading software player right now. Why, because that's the perspective that they've taken. Now, perhaps we're a limited subset. It's perhaps for a limited subset of individuals or markets or of sectors but it takes a packaged application, weaves these technologies together, and applies them to an outcome. And we think this presages more of that kind of activity over the course of the next few years. Oracle, kind of different approach and we'll see how that plays out over the course of the next five years as well. Okay, so that's where the numbers are. Again, a lot more numbers, a lot of people you can talk to. Let me give you some action items. First one, if data was a core asset, how would IT, how would your business be different? Stop and think about that. If it wasn't your buildings that were the asset, it wasn't the machines that were the asset, it wasn't your people by themselves who were the asset, but data was the asset. How would you reinstitutionalize work? That's what every business is starting to ask, even if they don't ask it in the same way. And our advice is, then do it because that's the future of business. Not that data is the only asset but data is a recognized central asset and that's going to have enormous impacts on a lot of things. The second point I want to leave you with, tens of billions of users and I'm including people and devices, are dependent on thousands of data scientists that's an impedance mismatch that cannot be sustained. Packaged apps and these cloud services are going to be the way to bridge that gap. I'd love to tell you that it's all going to be about tools, that we're going to have hundreds of thousands or millions or tens of millions or hundreds of millions of data scientists suddenly emerge out of the woodwork. It's not going to happen. The third thing is we think that big businesses, enterprises, have to master what we call the big inflection. The big tech inflection. The first 50 years were about known process and unknown technology. How do I take an accounting package and do I put on a mainframe or a mini computer a client/server or do I do it on the web? Unknown technology. Well increasingly today, all of us have a pretty good idea what the base technology is going to be. Does anybody doubt it's going to be the cloud? We got a pretty good idea what the base technology is going to be. What we don't know is what are the new problems that we can attack, that we can address with data rich approaches to thinking about how we turn those systems into actors on behalf of our business and customers. So I'm a couple minutes over, I apologize. I want to make sure everybody can get over to the keynotes if you want to. Feel free to stay, theCUBE's going to be live at 9:30. If I got that right. So it's actually pretty exciting if anybody wants to see how it works, feel free to stay. Georgia's here, Neil's here, I'm here. I mentioned Greg Terrio, Dave Volante, John Greco, I think I saw Sam Kahane back in the corner. Any questions, come and ask us, we'll be more than happy. Thank you very much for, oh David Volante. >> David: I have a question. >> Yes. >> David: Do you have time? >> Yep. >> David: So you talk about data as a core asset, that if you look at the top five companies by market cap in the US, Google, Amazon, Facebook, etc. They're data companies, they got data at the core which is kind of what your first bullet here describes. How do you see traditional companies closing that gap where humans, buildings, etc at the core as we enter this machine intelligence era, what's your advice to the traditional companies on how they close that gap? >> All right. So the question was, the most valuable companies in the world are companies that are well down the path of treating data as an asset. How does everybody else get going? Our observation is you go back to what's the value proposition? What actions are most important? what's data is necessary to perform those actions? Can changing the way the data is orchestrated and organized and put together inform or change the cost of performing that work by changing the cost transactions? Can you increase a new service along the same lines and then architect your infrastructure and your business to make sure that the data is near the action in time for the action to be absolute genius to your customer. So it's a relatively simple thought process. That's how Amazon thought, Apple increasingly thinks like that, where they design the experience and they think what data is necessary to deliver that experience. That's a simple approach but it works. Yes, sir. >> Audience Member: With the slide that you had a few slides ago, the market share, the big spenders, and you mentioned that, you asked the question do any of us doubt that cloud is the future? I'm with Snowflake, I don't see many of those large vendors in the cloud and I was wondering if you could speak to what are you seeing in terms of emerging vendors in that space. >> What a great question. So the question was, when you look at the companies that are catalyzing a lot of the change, you don't see a lot of the big companies being at the leadership. And someone from Snowflake just said, well who's going to lead it? That's a big question that has a lot of implications but at this point time it's very clear that the big companies are suffering a bit from the old, from the old, trying to remember what the... RCA syndrome. I think Clay Christensen talked about this. You know, the innovators dilemma. So RCA actually is one of the first creators. They created the transistor and they held a lot of original patents on it. They put that incredible new technology, back in the forties and fifties, under the control of the people who ran the vacuum tube business. When was the last time anybody bought RCA stock? The same problem is existing today. Now, how is that going to play out? Are we going to see a lot of, as we've always seen, a lot of new vendors emerge out of this industry, grow into big vendors with IPO related exits to try to scale their business? Or are we going to see a whole bunch of gobbling up? That's what I'm not clear on but it's pretty clear at this point in time that a lot of the technology, a lot of the science, is being done in smaller places. The moderating feature of that is the services side. Because there's limited groupings of expertise that the companies that today are able to attract that expertise. The Googles, the Facebooks, the AWSs, etc, the Amazons. Are doing so in support of a particular service. IBM and others are trying to attract that talent so they can apply it to customer problems. We'll see over the next few years whether the IBMs and the Accentures and the big service providers are able to attract the kind of talent necessary to diffuse that knowledge into the industry faster. So it's the rate at which that the idea of internet scale computing, the idea of big data being applied to business problems, can diffuse into the marketplace through services. If it can diffuse faster that will have both an accelerating impact for smaller vendors, as it has in the past. But it may also again, have a moderating impact because a lot of that expertise that comes out of IBM, IBM is going to find ways to drive in the product faster than it ever has before. So it's a complicated answer but that's our thinking at this point time. >> Dave: Can I add to that? >> Yeah. (audience member speaking faintly) >> I think that's true now but I think the real question, not to not to argue with Dave but this is part of what we do. The real question is how is that knowledge going to diffuse into the enterprise broadly? Because Airbnb, I doubt is going to get into the business of providing services. (audience member speaking faintly) So I think that the whole concept of community, partnership, ecosystem is going to remain very important as it always has and we'll see how fast those service companies that are dedicated to diffusing knowledge, diffusing knowledge into customer problems actually occurs. Our expectation is that as the tooling gets better, we will see more people be able to present themselves truly as capable of doing this and that will accelerate the process. But the next few years are going to be really turbulent and we'll see which way it actually ends up going. (audience member speaking faintly) >> Audience Member: So I'm with IBM. So I can tell you 100% for sure that we are, I hired literally 50 data scientists in the last three months to go out and do exactly what you're saying. Sit down with clients and help them figure out how to do data science in the enterprise. And so we are in fact scaling it, we're getting people that have done this at Google, Facebook. Not a whole lot of those 'cause we want to do it with people that have actually done it in legacy fortune 500 Companies, right? Because there's a little bit difference there. >> So. >> Audience Member: So we are doing exactly what you said and Microsoft is doing the same thing, Amazon is actually doing the same thing too, Domino Data Lab. >> They don't like they're like talking about it too much but they're doing it. >> Audience Member: But all the big players from the data science platform game are doing this at a different scale. >> Exactly. >> Audience Member: IBM is doing it on a much bigger scale than anyone else. >> And that will have an impact on ultimately how the market gets structured and who the winners end up being. >> Audience Member: To add too, a lot of people thought that, you mentioned the Red Hat of big data, a lot of people thought Cloudera was going to be the Red Hat of big data and if you look at what's happened to their business. (background noise drowns out other sounds) They're getting surrounded by the cloud. We look at like how can we get closer to companies like AWS? That was like a wild card that wasn't expected. >> Yeah but look, at the end of the day Red Hat isn't even the Red Hat of open source. So the bottom line is the thing to focus on is how is this knowledge going to diffuse. That's the thing to focus on. And there's a lot of different ways, some of its going to diffuse through tools. If it diffuses through tools, it increases the likelihood that we'll have more people capable of doing this in IBM and others can hire more. That Citibank can hire more. That's an important participant, that's an important play. So you have something to say about that but it also says we're going to see more of the packaged applications emerge because that facilitates the diffusion. This is not, we haven't figured out, I don't know exactly, nobody knows exactly the exact shape it's going to take. But that's the centerpiece of our big data researches. How is that diffusion process going to happen, accelerate, and what's the resulting structure going to look like? And ultimately how are enterprises going to create value with whatever results. Yes, sir. (audience member asks question faintly) So the recap question is you see more people coming in and promising the moon but being incapable of delivering because they are, partly because the technology is uncertain and for other reasons. So here's our approach. Or here's our observation. We actually did a fair amount of research on this. When you take a look at what we call a approach to doing big data that's optimized for the costs of procurement i.e. let's get the simplest combination of infrastructure, the simplest combination of open-source software, the simplest contracting, to create that proof of concept that you can stand things up very quickly if you have enough expertise but you can create that proof of concept but the process of turning that into actually a production system extends dramatically. And that's one of the reasons why the Clouderas did not take over the universe. There are other reasons. As George Gilbert's research has pointed out, that Cloudera is spending 53, 55 % of their money right now just integrating all the stuff that they bought into the distribution five years ago. Which is a real great recipe for creating customer value. The bottom line though is that if we focus on the time to value in production, we end up taking a different path. We don't focus as much on whether the hardware is going to work and the network is going to work and the storage can be integrated and how it's going to impact the database and what that's going to mean to our Oracle license pool and all the other things that people tend to think about if they're focused on the technology. And so as a consequence, you get better time to value if you focus on bringing the domain expertise, working with the right partner, working with the appropriate approach, to go from what's the value proposition, what actions are associated with a value proposition, what's stated in that area to perform those actions, how can I take transaction costs out of performing those actions, where's the data need to be, what infrastructure do I require? So we have to focus on a time to value not the time to procure. And that's not what a lot of professional IT oriented people are doing because many of them, I hate say it, but many of them still acquire new technology with the promise to helping the business but having a stronger focus on what it's going to mean to their careers. All right, I want to be really respectful to everybody's time. The keynotes start in about five minutes which means you just got time. If you want to stay, feel free to stay. We'll be here, we'll be happy to talk but I think that's pretty much going to close our presentation broadcast. Thank you very much for being an attentive audience and I hope you found this useful. (upbeat music)

>> Narrator: Live from New York, it's the Cube. Covering Big Data New York City 2016. Brought to you by headline sponsors: Cisco, IBM, Nvidia, and our ecosystem sponsors. Now, here are your hosts, Dave Vellante and Jeff Frick. >> Welcome back to New York City, everybody. This is the Cube, the worldwide leader in live tech coverage. Rob Thomas is here, he's the GM of products for IBM Analytics. Rob, always good to see you, man. >> Yeah, Dave, great to see you. Jeff, great to see you as well. >> You too, Rob. World traveller. >> Been all over the place, but good to be here, back in New York, close to home for one day. (laughs) >> Yeah, at least a day. So the whole community is abuzz with this article that hit. You wrote it last week. It hit NewCo Shift, I guess just today or yesterday: The End of Tech Companies. >> Rob: Yes. >> Alright, and you've got some really interesting charts in there, you've got some ugly charts. You've got HDP, you've got, let's see... >> Rob: You've got Imperva. >> TerraData, Imperva. >> Rob: Yes. >> Not looking pretty. We talked about this last year, just about a year ago. We said, the nose of the plane is up. >> Yep. >> Dave: But the planes are losing altitude. >> Yep. >> Dave: And when the funding dries up, look out. Interesting, some companies still are getting funding, so this makes rip currents. But in general, it's not pretty for pure play, dupe companies. >> Right. >> Dave: Something that you guys predicted, a long time ago, I guess. >> So I think there's a macro trend here, and this is really, I did a couple months of research, and this is what went into that end of tech companies post. And it's interesting, so you look at it in the stock market today: the five highest valued companies are all tech companies, what we would call. And that's not a coincidence. The reality is, I think we're getting past the phase of there being tech companies, and tech is becoming the default, and either you're going to be a tech company, or you're going to be extinct. I think that's the MO that every company has to operate with, whether you're a retailer, or in healthcare, or insurance, in banking, it doesn't matter. If you don't become a tech company, you're not going to be a company. That's what I was getting at. And so some of the pressures I was highlighting was, I think what's played out in enterprise software is what will start to play out in other traditional industries over the next five years. >> Well, you know, it's interesting, we talk about these things years and years and years in advance and people just kind of ignore it. Like Benioff even said, more SaaS companies are going to come out of non-tech companies than tech companies, OK. We've been talking for years about how the practitioners of big data are actually going to make more money than the big data vendors. Peter Goldmacher was actually the first, that was one of his predictions that hit true. Many of them didn't. (laughs) You know, Peter's a good friend-- >> Rob: Peter's a good friend of mine as well, so I always like pointing out what he says that's wrong. >> But, but-- >> Thinking of you, Peter. >> But we sort of ignored that, and now it's all coming to fruition, right? >> Right. >> Your article talks about, and it's a long read, but it's not too long to read, so please read it. But it talks about how basically every industry is, of course, getting disrupted, we know that, but every company is a tech company. >> Right. >> Or else. >> Right. And, you know, what I was, so John Battelle called me last week, he said hey, I want to run this, he said, because I think it's going to hit a nerve with people, and we were talking about why is that? Is it because of the election season, or whatever. People are concerned about the macro view of what's happening in the economy. And I think this kind of strikes at the nerve that says, one is you have to make this transition, and then I go into the article with some specific things that I think every company has to be doing to make this transition. It starts with, you've got to rethink your capital structure because the investments you made, the distribution model that you had that got you here, is not going to be sufficient for the future. You have to rethink the tools that you're utilitizing and the workforce, because you're going to have to adopt a new way to work. And that starts at the top, by the way. And so I go through a couple different suggestions of what I think companies should look at to make this transition, and I guess what scares me is, I visit companies all over the world, I see very few companies making these kind of moves. 'Cause it's a major shake-up to culture, it's a major shake-up to how they run their business, and, you know, I use the Warren Buffett quote, "When the tide goes out, you can see who's been swimming naked." The tide may go out pretty soon here, you know, it'll be in the next five years, and I think you're going to see a lot of companies that thought they could never be threatened by tech, if you will, go the wrong way because they're not making those moves now. >> Well, let's stay cognitive, now that we're on this subject, because you know, you're having a pretty frank conversation here. A lot of times when you talk to people inside of IBM about cognitive and the impact it's going to have, they don't want to talk about that. But it's real. Machines have always replaced humans, and now we're seeing that replacement of cognitive functions, so that doesn't mean value can't get created. In fact, way more value is going to be created than we can even imagine, but you have to change the way in which you do things in order to take advantage of that. >> Right, right. One thing I say in the article is I think we're on the cusp of the great reskilling, which is, you take all the traditional IT jobs, I think over the next decade half those jobs probably go away, but they're replaced by a new set of capabilities around data science and machine learning, and advanced analytics, things that are leveraging cognitive capabilities, but doing it with human focus as well. And so, you're going to see a big shift in skills. This is why we're partnering with companies like Galvanize, I saw Jim Deters when I was walking in. Galvanize is at the forefront of helping companies do that reskilling. We want to help them do that reskilling as well, and we're going to provide them a platform that automates the process of doing a lot of these analytics. That's what the new project Dataworks, the new Watson project is all about, is how we begin to automate what have traditionally been very cumbersome and difficult problems to solve in an organization, but we're helping clients that haven't done that reskilling yet, we're helping them go ahead and get an advantage through technology. >> Rob, I want to follow up too on that concept on the capital markets and how this stuff is measured, because as you pointed out in your article, valuations of the top companies are huge. That's not a multiple of data right now. We haven't really figured that out, and it's something that we're looking at, the Wikibon team is how do you value the data from what used to be liability 'cause you had to put it on machines and pay for it. Now it's really the driver, there's some multiple of data value that's driving those top-line valuations that you point out in that article. >> You know it's interesting, and nobody has really figured that out, 'cause you don't see it showing up, at least I don't think, in any stock prices, maybe CoStar would be one example where it probably has, they've got a lot of data around commercial real estate, that one sticks out to me, but I think about in the current era that we're in there's three ways to drive competitive advantage: one is economies of scale, low-cost manufacturing; another is through network effects, you know, a number of social media companies have done that well; but third is, machine learning on a large corpus of data is a competitive advantage. If you have the right data assets and you can get better answers, your models will get smarter over time, how's anybody going to catch up with you? They're not going to. So I think we're probably not too far from what you say, Jeff, which is companies starting to be looked at as a value of their data assets, and maybe data should be on the balance sheet. >> Well that's what I'm saying, eventually does it move to the balance sheet as something that you need to account for? Because clearly there's something in the Apple number, in the Alphabet number, in the Microsoft number, that's more than regular. >> Exactly, it's not just about, it's not just about the distribution model, you know, large companies for a long time, certainly in tech, we had a huge advantage because of distribution, our ability to get to other countries face to face, but as the world has moved to the Internet and digital sales and try/buy, it's changed that. Distribution can still be an advantage, but is no longer the advantage, and so companies are trying to figure out what are the next set of assets? It used to be my distribution model, now maybe it's my data, or perhaps it's the insight that I develop from the data. That's really changed. >> Then, in the early days of the sort of big data meme taking off, people would ask, OK, how can I monetize the data? As opposed to what I think they're really asking is, how could I use data to support making money? >> Rob: Right. Right. >> And that's something a lot of people I don't think really understood, and it's starting to come into focus now. And then, once you figure that out, you can figure out what data sources, and how to get quality in that data and enrich that data and trust that data, right? Is that sort of a logical sequence that companies are now going through? >> It's an interesting observation, because you think about it, the companies that were early on in purely monetizing data, companies like Dun & Bradstreet come to mind, Nielsen come to mind, they're not the super-fast-growing companies today. So it's kind of like, there was an era where data monetization was a viable strategy, and there's still some of that now, but now it's more about, how do you turn your data assets into a new business model? There was actually a great, new Clay Christensen article, it was published I think last week, talking about companies need to develop new business models. We're at the time, everybody's kind of developed in, we sell hardware, we sell software, we sell services, or whatever we sell, and his point was now is the time to develop a new business model, and those will, now my view, those will largely be formed on the basis of data, so not necessarily just monetizing the data, to your point, Dave, but on the basis of that data. >> I love the music industry, because they're always kind of out at the front of this evolving business model for digital assets in this new world, and it keeps jumping, right? It jumped, it was free, then people went ahead and bought stuff on iTunes, now Spotify has flipped it over to a subscription model, and the innovation of change in the business model, not necessarily the products that much, it's very different. The other thing that's interesting is just that digital assets don't have scarcity, right? >> Rob: Right. >> There's scarcity around the data, but not around the assets, per se. So it's a very different way of thinking about distribution and kind of holding back, how do you integrate with other people's data? It's not, not the same. >> So think about, that's an interesting example, because think about the music, there's a great documentary on Netflix about Tower Records, and how Tower Records went through the big spike and now is kind of, obviously no longer really around. Same thing goes for the Blockbusters of the world. So they got disrupted by digital, because their advantage was a distribution channel that was in the physical world, and that's kind of my assertion in that post about the end of tech companies is that every company is facing that. They may not know it yet, but if you're in agriculture, and your traditional dealer network is how you got to market, whether you know it or not, that is about to be disrupted. I don't know exactly what form that will take, but it's going to be different. And so I think every company to your point on, you know, you look at the music industry, kind of use it as a map, that's an interesting way to look at a lot of industries in terms of what could play out in the next five years. >> It's interesting that you say though in all your travels that people aren't, I would think they would be clamoring, oh my gosh, I know it's coming, what do I do, 'cause I know it's coming from an angle that I'm not aware of as opposed to, like you say a lot of people don't see it coming. You know, it's not my industry. Not going to happen to me. >> You know it's funny, I think, I hear two, one perception I hear is, well, we're not a tech company so we don't have to worry about that, which is totally flawed. Two is, I hear companies that, I'd say they use the right platitudes: "We need to be digital." OK, that's great to say, but are you actually changing your business model to get there? Maybe not. So I think people are starting to wake up to this, but it's still very much in its infancy, and some people are going to be left behind. >> So the tooling and the new way to work are sort of intuitive. What about capital structure? What's the implication to capital structures, how do you see that changing? So it's a few things. One is, you have to relook at where you're investing capital today. The majority of companies are still investing in what got them to where they are versus where they need to be. So you need to make a very conscious shift, and I use the old McKinsey model of horizon one, two and three, but I insert the idea that there should be a horizon zero, where you really think about what are you really going to start to just outsource, or just altogether stop doing, because you have to aggressively shift your investments to horizon two, horizon three, you've really got to start making bets on the future, so that's one is basically a capital shift. Two is, to attract this new workforce. When I talked about the great reskilling, people want to come to work for different reasons now. They want to come to work, you know, to work in the right kind of office in the right location, that's going to require investment. They want a new comp structure, they're no longer just excited by a high base salary like, you know, they want participation in upside, even if you're a mature company that's been around for 50 years, are you providing your employees meaningful upside in terms of bonus or stock? Most companies say, you know, we've always reserved that stuff for executives. That's not, there's too many other companies that are providing that as an alternative today, so you have to rethink your capital structure in that way. So it's how you spend your money, but also, you know, as you look at the balance sheet, how you actually are, you know, I'd say spreading money around the company, and I think that changes as well. >> So how does this all translate into how IBM behaves, from a product standpoint? >> We have changed a lot of things in IBM. Obviously we've made a huge move towards what we think is the future, around artificial intelligence and machine learning with everything that we've done around the Watson platform. We've made huge capital investments in our cloud capability all over the world, because that is an arms race right now. We've made a huge change in how we're hiring, we're rebuilding offices, so we put an office in Cambridge, downtown Boston. Put an office here in New York downtown. We're opening the office in San Francisco very soon. >> Jeff: The Sparks Center downtown. >> Yeah. So we've kind of come to urban areas to attract this new type of skill 'cause it's really important to us. So we've done it in a lot of different ways. >> Excellent. And then tonight we're going to hear more about that, right? >> Rob: Yes. >> You guys have a big announcement tonight? >> Rob: Big announcement tonight. >> Ritica was on, she showed us a little bit about what's coming, but what can you tell us about what we can expect tonight? >> Our focus is on building the first enterprise platform for data, which is steeped in artificial intelligence. First time you've seen anything like it. You think about it, the platform business model has taken off in some sectors. You can see it in social media, Facebook is very much a platform. You can see it in entertainment, Netflix is very much a platform. There hasn't really been a platform for enterprise data and IP. That's what we're going to be delivering as part of this new Watson project, which is Dataworks, and we think it'll be very interesting. Got a great ecosystem of partners that will be with us at the event tonight, that're bringing their IP and their data to be part of the platform. It will be a unique experience. >> What do you, I know you can't talk specifics on M&A, but just in general, in concept, in terms of all the funding, we talked last year at this event how the whole space was sort of overfunded, overcrowded, you know, and something's got to give. Do you feel like there's been, given the money that went in, is there enough innovation coming out of the Hadoop big data ecosystem? Or is a lot of that money just going to go poof? >> Well, you know, we're in an interesting time in capital markets, right? When you loan money and get back less than you loan, because interest rates are negative, it's almost, there's no bad place to put money. (laughing) Like you can't do worse than that. But I think, you know the Hadoop ecosystem, I think it's played out about like we envisioned, which is it's becoming cheap storage. And I do see a lot of innovation happening around that, that's why we put so much into Spark. We're now the number one contributor around machine learning in the Spark project, which we're really proud of. >> Number one. >> Yes, in terms of contributions over the last year. Which has been tremendous. And in terms of companies in the ecos-- look, there's been a lot of money raised, which means people have runway. I think what you'll see is a lot of people that try stuff, it doesn't work out, they'll try something else. Look, there's still a lot of great innovation happening, and as much as it's the easiest time to start a company in terms of the cost of starting a company, I think it's probably one of the hardest times in terms of getting time and attention and scale, and so you've got to be patient and give these bets some time to play out. >> So you're still sanguine on the future of big data? Good. When Rob turns negative, then I'm concerned. >> It's definitely, we know the endpoint is going to be massive data environments in the cloud, instrumented, with automated analytics and machine learning. That's the future, Watson's got a great headstart, so we're proud of that. >> Well, you've made bets there. You've also, I mean, IBM, obviously great services company, for years services led. You're beginning to automate a lot of those services, package a lot of those services into industry-specific software and other SaaS products. Is that the future for IBM? >> It is. I mean, I think you need it two ways. One is, you need domain solutions, verticalized, that are solving a specific problem. But underneath that you need a general-purpose platform, which is what we're really focused on around Dataworks, is providing that. But when it comes to engaging a user, if you're not engaging what I would call a horizontal user, a data scientist or a data engineer or developer, then you're engaging a line-of-business person who's going to want something in their lingua franca, whether that's wealth management and banking, or payer underwriting or claims processing in healthcare, they're going to want it in that language. That's why we've had the solutions focus that we have. >> And they're going to want that data science expertise to be operationalized into the products. >> Rob: Yes. >> It was interesting, we had Jim on and Galvanize and what they're doing. Sharp partnership, Rob, you guys have, I think made the right bets here, and instead of chasing a lot of the shiny new toys, you've sort of thought ahead, so congratulations on that. >> Well, thanks, it's still early days, we're still playing out all the bets, but yeah, we've had a good run here, and look forward to the next phase here with Dataworks. >> Alright, Rob Thomas, thanks very much for coming on the Cube. >> Thanks guys, nice to see you. >> Jeff: Appreciate your time today, Rob. >> Alright, keep it right there, everybody. We'll be back with our next guest right after this. This is the Cube, we're live from New York City, right back. (electronic music)