(gentle synth music) (music ends) >> Welcome back to Supercloud 2, an open industry collaboration between technologists, consultants, analysts, and of course practitioners to help shape the future of cloud. At this event, one of the key areas we're exploring is the intersection of cloud and data. And how building value on top of hyperscale clouds and across clouds is evolving, a concept of course we call "Supercloud". And we're pleased to welcome our friends from Enterprise Technology research, Erik Bradley and Darren Brabham. Guys, thanks for joining us, great to see you. we love to bring the data into these conversations. >> Thank you for having us, Dave, I appreciate it. >> Yeah, thanks. >> You bet. And so, let me do the setup on what is Supercloud. It's a concept that we've floated, Before re:Invent 2021, based on the idea that cloud infrastructure is becoming ubiquitous, incredibly powerful, but there's a lack of standards across the big three clouds. That creates friction. So we defined over the period of time, you know, better part of a year, a set of essential elements, deployment models for so-called supercloud, which create this common experience for specific cloud services that, of course, again, span multiple clouds and even on-premise data. So Erik, with that as background, I wonder if you could add your general thoughts on the term supercloud, maybe play proxy for the CIO community, 'cause you do these round tables, you talk to these guys all the time, you gather a lot of amazing information from senior IT DMs that compliment your survey. So what are your thoughts on the term and the concept? >> Yeah, sure. I'll even go back to last year when you and I did our predictions panel, right? And we threw it out there. And to your point, you know, there's some haters. Anytime you throw out a new term, "Is it marketing buzz? Is it worth it? Why are you even doing it?" But you know, from my own perspective, and then also speaking to the IT DMs that we interview on a regular basis, this is just a natural evolution. It's something that's inevitable in enterprise tech, right? The internet was not built for what it has become. It was never intended to be the underlying infrastructure of our daily lives and work. The cloud also was not built to be what it's become. But where we're at now is, we have to figure out what the cloud is and what it needs to be to be scalable, resilient, secure, and have the governance wrapped around it. And to me that's what supercloud is. It's a way to define operantly, what the next generation, the continued iteration and evolution of the cloud and what its needs to be. And that's what the supercloud means to me. And what depends, if you want to call it metacloud, supercloud, it doesn't matter. The point is that we're trying to define the next layer, the next future of work, which is inevitable in enterprise tech. Now, from the IT DM perspective, I have two interesting call outs. One is from basically a senior developer IT architecture and DevSecOps who says he uses the term all the time. And the reason he uses the term, is that because multi-cloud has a stigma attached to it, when he is talking to his business executives. (David chuckles) the stigma is because it's complex and it's expensive. So he switched to supercloud to better explain to his business executives and his CFO and his CIO what he's trying to do. And we can get into more later about what it means to him. But the inverse of that, of course, is a good CSO friend of mine for a very large enterprise says the concern with Supercloud is the reduction of complexity. And I'll explain, he believes anything that takes the requirement of specific expertise out of the equation, even a little bit, as a CSO worries him. So as you said, David, always two sides to the coin, but I do believe supercloud is a relevant term, and it is necessary because the cloud is continuing to be defined. >> You know, that's really interesting too, 'cause you know, Darren, we use Snowflake a lot as an example, sort of early supercloud, and you think from a security standpoint, we've always pushed Amazon and, "Are you ever going to kind of abstract the complexity away from all these primitives?" and their position has always been, "Look, if we produce these primitives, and offer these primitives, we we can move as the market moves. When you abstract, then it becomes harder to peel the layers." But Darren, from a data standpoint, like I say, we use Snowflake a lot. I think of like Tim Burners-Lee when Web 2.0 came out, he said, "Well this is what the internet was always supposed to be." So in a way, you know, supercloud is maybe what multi-cloud was supposed to be. But I mean, you think about data sharing, Darren, across clouds, it's always been a challenge. Snowflake always, you know, obviously trying to solve that problem, as are others. But what are your thoughts on the concept? >> Yeah, I think the concept fits, right? It is reflective of, it's a paradigm shift, right? Things, as a pendulum have swung back and forth between needing to piece together a bunch of different tools that have specific unique use cases and they're best in breed in what they do. And then focusing on the duct tape that holds 'em all together and all the engineering complexity and skill, it shifted from that end of the pendulum all the way back to, "Let's streamline this, let's simplify it. Maybe we have budget crunches and we need to consolidate tools or eliminate tools." And so then you kind of see this back and forth over time. And with data and analytics for instance, a lot of organizations were trying to bring the data closer to the business. That's where we saw self-service analytics coming in. And tools like Snowflake, what they did was they helped point to different databases, they helped unify data, and organize it in a single place that was, you know, in a sense neutral, away from a single cloud vendor or a single database, and allowed the business to kind of be more flexible in how it brought stuff together and provided it out to the business units. So Snowflake was an example of one of those times where we pulled back from the granular, multiple points of the spear, back to a simple way to do things. And I think Snowflake has continued to kind of keep that mantle to a degree, and we see other tools trying to do that, but that's all it is. It's a paradigm shift back to this kind of meta abstraction layer that kind of simplifies what is the reality, that you need a complex multi-use case, multi-region way of doing business. And it sort of reflects the reality of that. >> And you know, to me it's a spectrum. As part of Supercloud 2, we're talking to a number of of practitioners, Ionis Pharmaceuticals, US West, we got Walmart. And it's a spectrum, right? In some cases the practitioner's saying, "You know, the way I solve multi-cloud complexity is mono-cloud, I just do one cloud." (laughs) Others like Walmart are saying, "Hey, you know, we actually are building an abstraction layer ourselves, take advantage of it." So my general question to both of you is, is this a concept, is the lack of standards across clouds, you know, really a problem, you know, or is supercloud a solution looking for a problem? Or do you hear from practitioners that "No, this is really an issue, we have to bring together a set of standards to sort of unify our cloud estates." >> Allow me to answer that at a higher level, and then we're going to hand it over to Dr. Brabham because he is a little bit more detailed on the realtime streaming analytics use cases, which I think is where we're going to get to. But to answer that question, it really depends on the size and the complexity of your business. At the very large enterprise, Dave, Yes, a hundred percent. This needs to happen. There is complexity, there is not only complexity in the compute and actually deploying the applications, but the governance and the security around them. But for lower end or, you know, business use cases, and for smaller businesses, it's a little less necessary. You certainly don't need to have all of these. Some of the things that come into mind from the interviews that Darren and I have done are, you know, financial services, if you're doing real-time trading, anything that has real-time data metrics involved in your transactions, is going to be necessary. And another use case that we hear about is in online travel agencies. So I think it is very relevant, the complexity does need to be solved, and I'll allow Darren to explain a little bit more about how that's used from an analytics perspective. >> Yeah, go for it. >> Yeah, exactly. I mean, I think any modern, you know, multinational company that's going to have a footprint in the US and Europe, in China, or works in different areas like manufacturing, where you're probably going to have on-prem instances that will stay on-prem forever, for various performance reasons. You have these complicated governance and security and regulatory issues. So inherently, I think, large multinational companies and or companies that are in certain areas like finance or in, you know, online e-commerce, or things that need real-time data, they inherently are going to have a very complex environment that's going to need to be managed in some kind of cleaner way. You know, they're looking for one door to open, one pane of glass to look at, one thing to do to manage these multi points. And, streaming's a good example of that. I mean, not every organization has a real-time streaming use case, and may not ever, but a lot of organizations do, a lot of industries do. And so there's this need to use, you know, they want to use open-source tools, they want to use Apache Kafka for instance. They want to use different megacloud vendors offerings, like Google Pub/Sub or you know, Amazon Kinesis Firehose. They have all these different pieces they want to use for different use cases at different stages of maturity or proof of concept, you name it. They're going to have to have this complexity. And I think that's why we're seeing this need, to have sort of this supercloud concept, to juggle all this, to wrangle all of it. 'Cause the reality is, it's complex and you have to simplify it somehow. >> Great, thanks you guys. All right, let's bring up the graphic, and take a look. Anybody who follows the breaking analysis, which is co-branded with ETR Cube Insights powered by ETR, knows we like to bring data to the table. ETR does amazing survey work every quarter, 1200 plus 1500 practitioners that that answer a number of questions. The vertical axis here is net score, which is ETR's proprietary methodology, which is a measure of spending momentum, spending velocity. And the horizontal axis here is overlap, but it's the presence pervasiveness, and the dataset, the ends, that table insert on the bottom right shows you how the dots are plotted, the net score and then the ends in the survey. And what we've done is we've plotted a bunch of the so-called supercloud suspects, let's start in the upper right, the cloud platforms. Without these hyperscale clouds, you can't have a supercloud. And as always, Azure and AWS, up and to the right, it's amazing we're talking about, you know, 80 plus billion dollar company in AWS. Azure's business is, if you just look at the IaaS is in the 50 billion range, I mean it's just amazing to me the net scores here. Anything above 40% we consider highly elevated. And you got Azure and you got Snowflake, Databricks, HashiCorp, we'll get to them. And you got AWS, you know, right up there at that size, it's quite amazing. With really big ends as well, you know, 700 plus ends in the survey. So, you know, kind of half the survey actually has these platforms. So my question to you guys is, what are you seeing in terms of cloud adoption within the big three cloud players? I wonder if you could could comment, maybe Erik, you could start. >> Yeah, sure. Now we're talking data, now I'm happy. So yeah, we'll get into some of it. Right now, the January, 2023 TSIS is approaching 1500 survey respondents. One caveat, it's not closed yet, it will close on Friday, but with an end that big we are over statistically significant. We also recently did a cloud survey, and there's a couple of key points on that I want to get into before we get into individual vendors. What we're seeing here, is that annual spend on cloud infrastructure is expected to grow at almost a 70% CAGR over the next three years. The percentage of those workloads for cloud infrastructure are expected to grow over 70% as three years as well. And as you mentioned, Azure and AWS are still dominant. However, we're seeing some share shift spreading around a little bit. Now to get into the individual vendors you mentioned about, yes, Azure is still number one, AWS is number two. What we're seeing, which is incredibly interesting, CloudFlare is number three. It's actually beating GCP. That's the first time we've seen it. What I do want to state, is this is on net score only, which is our measure of spending intentions. When you talk about actual pervasion in the enterprise, it's not even close. But from a spending velocity intention point of view, CloudFlare is now number three above GCP, and even Salesforce is creeping up to be at GCPs level. So what we're seeing here, is a continued domination by Azure and AWS, but some of these other players that maybe might fit into your moniker. And I definitely want to talk about CloudFlare more in a bit, but I'm going to stop there. But what we're seeing is some of these other players that fit into your Supercloud moniker, are starting to creep up, Dave. >> Yeah, I just want to clarify. So as you also know, we track IaaS and PaaS revenue and we try to extract, so AWS reports in its quarterly earnings, you know, they're just IaaS and PaaS, they don't have a SaaS play, a little bit maybe, whereas Microsoft and Google include their applications and so we extract those out and if you do that, AWS is bigger, but in the surveys, you know, customers, they see cloud, SaaS to them as cloud. So that's one of the reasons why you see, you know, Microsoft as larger in pervasion. If you bring up that survey again, Alex, the survey results, you see them further to the right and they have higher spending momentum, which is consistent with what you see in the earnings calls. Now, interesting about CloudFlare because the CEO of CloudFlare actually, and CloudFlare itself uses the term supercloud basically saying, "Hey, we're building a new type of internet." So what are your thoughts? Do you have additional information on CloudFlare, Erik that you want to share? I mean, you've seen them pop up. I mean this is a really interesting company that is pretty forward thinking and vocal about how it's disrupting the industry. >> Sure, we've been tracking 'em for a long time, and even from the disruption of just a traditional CDN where they took down Akamai and what they're doing. But for me, the definition of a true supercloud provider can't just be one instance. You have to have multiple. So it's not just the cloud, it's networking aspect on top of it, it's also security. And to me, CloudFlare is the only one that has all of it. That they actually have the ability to offer all of those things. Whereas you look at some of the other names, they're still piggybacking on the infrastructure or platform as a service of the hyperscalers. CloudFlare does not need to, they actually have the cloud, the networking, and the security all themselves. So to me that lends credibility to their own internal usage of that moniker Supercloud. And also, again, just what we're seeing right here that their net score is now creeping above AGCP really does state it. And then just one real last thing, one of the other things we do in our surveys is we track adoption and replacement reasoning. And when you look at Cloudflare's adoption rate, which is extremely high, it's based on technical capabilities, the breadth of their feature set, it's also based on what we call the ability to avoid stack alignment. So those are again, really supporting reasons that makes CloudFlare a top candidate for your moniker of supercloud. >> And they've also announced an object store (chuckles) and a database. So, you know, that's going to be, it takes a while as you well know, to get database adoption going, but you know, they're ambitious and going for it. All right, let's bring the chart back up, and I want to focus Darren in on the ecosystem now, and really, we've identified Snowflake and Databricks, it's always fun to talk about those guys, and there are a number of other, you know, data platforms out there, but we use those too as really proxies for leaders. We got a bunch of the backup guys, the data protection folks, Rubric, Cohesity, and Veeam. They're sort of in a cluster, although Rubric, you know, ahead of those guys in terms of spending momentum. And then VMware, Tanzu and Red Hat as sort of the cross cloud platform. But I want to focus, Darren, on the data piece of it. We're seeing a lot of activity around data sharing, governed data sharing. Databricks is using Delta Sharing as their sort of place, Snowflakes is sort of this walled garden like the app store. What are your thoughts on, you know, in the context of Supercloud, cross cloud capabilities for the data platforms? >> Yeah, good question. You know, I think Databricks is an interesting player because they sort of have made some interesting moves, with their Data Lakehouse technology. So they're trying to kind of complicate, or not complicate, they're trying to take away the complications of, you know, the downsides of data warehousing and data lakes, and trying to find that middle ground, where you have the benefits of a managed, governed, you know, data warehouse environment, but you have sort of the lower cost, you know, capability of a data lake. And so, you know, Databricks has become really attractive, especially by data scientists, right? We've been tracking them in the AI machine learning sector for quite some time here at ETR, attractive for a data scientist because it looks and acts like a lake, but can have some managed capabilities like a warehouse. So it's kind of the best of both worlds. So in some ways I think you've seen sort of a data science driver for the adoption of Databricks that has now become a little bit more mainstream across the business. Snowflake, maybe the other direction, you know, it's a cloud data warehouse that you know, is starting to expand its capabilities and add on new things like Streamlit is a good example in the analytics space, with apps. So you see these tools starting to branch and creep out a bit, but they offer that sort of neutrality, right? We heard one IT decision maker we recently interviewed that referred to Snowflake and Databricks as the quote unquote Switzerland of what they do. And so there's this desirability from an organization to find these tools that can solve the complex multi-headed use-case of data and analytics, which every business unit needs in different ways. And figure out a way to do that, an elegant way that's governed and centrally managed, that federated kind of best of both worlds that you get by bringing the data close to the business while having a central governed instance. So these tools are incredibly powerful and I think there's only going to be room for growth, for those two especially. I think they're going to expand and do different things and maybe, you know, join forces with others and a lot of the power of what they do well is trying to define these connections and find these partnerships with other vendors, and try to be seen as the nice add-on to your existing environment that plays nicely with everyone. So I think that's where those two tools are going, but they certainly fit this sort of label of, you know, trying to be that supercloud neutral, you know, layer that unites everything. >> Yeah, and if you bring the graphic back up, please, there's obviously big data plays in each of the cloud platforms, you know, Microsoft, big database player, AWS is, you know, 11, 12, 15, data stores. And of course, you know, BigQuery and other, you know, data platforms within Google. But you know, I'm not sure the big cloud guys are going to go hard after so-called supercloud, cross-cloud services. Although, we see Oracle getting in bed with Microsoft and Azure, with a database service that is cross-cloud, certainly Google with Anthos and you know, you never say never with with AWS. I guess what I would say guys, and I'll I'll leave you with this is that, you know, just like all players today are cloud players, I feel like anybody in the business or most companies are going to be so-called supercloud players. In other words, they're going to have a cross-cloud strategy, they're going to try to build connections if they're coming from on-prem like a Dell or an HPE, you know, or Pure or you know, many of these other companies, Cohesity is another one. They're going to try to connect to their on-premise states, of course, and create a consistent experience. It's natural that they're going to have sort of some consistency across clouds. You know, the big question is, what's that spectrum look like? I think on the one hand you're going to have some, you know, maybe some rudimentary, you know, instances of supercloud or maybe they just run on the individual clouds versus where Snowflake and others and even beyond that are trying to go with a single global instance, basically building out what I would think of as their own cloud, and importantly their own ecosystem. I'll give you guys the last thought. Maybe you could each give us, you know, closing thoughts. Maybe Darren, you could start and Erik, you could bring us home on just this entire topic, the future of cloud and data. >> Yeah, I mean I think, you know, two points to make on that is, this question of these, I guess what we'll call legacy on-prem players. These, mega vendors that have been around a long time, have big on-prem footprints and a lot of people have them for that reason. I think it's foolish to assume that a company, especially a large, mature, multinational company that's been around a long time, it's foolish to think that they can just uproot and leave on-premises entirely full scale. There will almost always be an on-prem footprint from any company that was not, you know, natively born in the cloud after 2010, right? I just don't think that's reasonable anytime soon. I think there's some industries that need on-prem, things like, you know, industrial manufacturing and so on. So I don't think on-prem is going away, and I think vendors that are going to, you know, go very cloud forward, very big on the cloud, if they neglect having at least decent connectors to on-prem legacy vendors, they're going to miss out. So I think that's something that these players need to keep in mind is that they continue to reach back to some of these players that have big footprints on-prem, and make sure that those integrations are seamless and work well, or else their customers will always have a multi-cloud or hybrid experience. And then I think a second point here about the future is, you know, we talk about the three big, you know, cloud providers, the Google, Microsoft, AWS as sort of the opposite of, or different from this new supercloud paradigm that's emerging. But I want to kind of point out that, they will always try to make a play to become that and I think, you know, we'll certainly see someone like Microsoft trying to expand their licensing and expand how they play in order to become that super cloud provider for folks. So also don't want to downplay them. I think you're going to see those three big players continue to move, and take over what players like CloudFlare are doing and try to, you know, cut them off before they get too big. So, keep an eye on them as well. >> Great points, I mean, I think you're right, the first point, if you're Dell, HPE, Cisco, IBM, your strategy should be to make your on-premise state as cloud-like as possible and you know, make those differences as minimal as possible. And you know, if you're a customer, then the business case is going to be low for you to move off of that. And I think you're right. I think the cloud guys, if this is a real problem, the cloud guys are going to play in there, and they're going to make some money at it. Erik, bring us home please. >> Yeah, I'm going to revert back to our data and this on the macro side. So to kind of support this concept of a supercloud right now, you know Dave, you and I know, we check overall spending and what we're seeing right now is total year spent is expected to only be 4.6%. We ended 2022 at 5% even though it began at almost eight and a half. So this is clearly declining and in that environment, we're seeing the top two strategies to reduce spend are actually vendor consolidation with 36% of our respondents saying they're actively seeking a way to reduce their number of vendors, and consolidate into one. That's obviously supporting a supercloud type of play. Number two is reducing excess cloud resources. So when I look at both of those combined, with a drop in the overall spending reduction, I think you're on the right thread here, Dave. You know, the overall macro view that we're seeing in the data supports this happening. And if I can real quick, couple of names we did not touch on that I do think deserve to be in this conversation, one is HashiCorp. HashiCorp is the number one player in our infrastructure sector, with a 56% net score. It does multiple things within infrastructure and it is completely agnostic to your environment. And if we're also speaking about something that's just a singular feature, we would look at Rubric for data, backup, storage, recovery. They're not going to offer you your full cloud or your networking of course, but if you are looking for your backup, recovery, and storage Rubric, also number one in that sector with a 53% net score. Two other names that deserve to be in this conversation as we watch it move and evolve. >> Great, thank you for bringing that up. Yeah, we had both of those guys in the chart and I failed to focus in on HashiCorp. And clearly a Supercloud enabler. All right guys, we got to go. Thank you so much for joining us, appreciate it. Let's keep this conversation going. >> Always enjoy talking to you Dave, thanks. >> Yeah, thanks for having us. >> All right, keep it right there for more content from Supercloud 2. This is Dave Valente for John Ferg and the entire Cube team. We'll be right back. (gentle synth music) (music fades)

>> 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)

>>Okay, welcome back everyone. There's the cubes coverage of VMware Explorer, 22 formerly world. We've been here since 2010 and world 2010 to now it's 2022. And it's VMware Explorer. We're here at the CEO, regular writer. Welcome back to the cube. Great to see you in person. >>Yeah. Great to be here in person, >>Dave and I are, are proud to say that we've been to 12 straight years of covering VMware's annual conference. And thank you. We've seen the change in the growth over time and you know, it's kind of, I won't say pinch me moment, but it's more of a moment of there's the VMware that's grown into the cloud after your famous deal with Andy jazzy in 2016, we've been watching what has been a real sea change and VMware since taking that legacy core business and straightening out the cloud strategy in 2016, and then since then an acceleration of, of cloud native, like direction under your leadership at VMware. Now you're the CEO take us through that because this is where we are right now. We are here at the pinnacle of VMware 2.0 or cloud native VMware, as you point out on your keynote, take us through that history real quick. Cuz I think it's important to know that you've been the architect of a lot of this change and it's it's working. >>Yeah, definitely. We are super excited because like I said, it's working, the history is pretty simple. I mean we tried running our own cloud cloud air. We cloud air didn't work so well. Right. And then at that time, customers really gave us strong feedback that the hybrid they wanted was a Amazon together. Right. And so that's what we went back and did and the andjay announcement, et cetera. And then subsequently as we were continue to build it out, I mean, once that happened, we were able to go work with the Satia and Microsoft and others to get the thing built out all over. Then the next question was okay, Hey, that's great for the workloads that are running on vSphere. What's the story for workloads that are gonna be cloud native and benefit a lot from being cloud native. So that's when we went the Tansu route and the Kubernetes route, we did a couple of acquisitions and then we started that started paying off now with the Tansu portfolio. And last but not the least is once customers have this distributed portfolio now, right. Increasingly everything is becoming multi-cloud. How do you manage and connect and secure. So that's what you start seeing that you saw the management announcement, networking and security and everything else is cooking. And you'll see more stuff there. >>Yeah know, we've been talking about super cloud. It's kinda like a multi-cloud on steroids kind a little bit different pivot of it. And we're seeing some use cases. >>No, no, it's, it's a very great, it's a, it's pretty close to what we talk about. >>Awesome. I mean, and we're seeing this kind of alignment in the industry. It's kind of open, but I have to ask you, when did you, you have the moment where you said multicloud is the game changer moment. When did you have, because you guys had hybrid, which is really early as well. When was the Raghu? When did you have the moment where you said, Hey, multicloud is what's happening. That's we're doubling down on that go. >>I mean, if you think about the evolution of the cloud players, right. Microsoft really started picking up around the 2018 timeframe. I mean, I'm talking about Azure, right? >>In a big way. >>Yeah. In a big way. Right. When that happened and then Google got really serious, it became pretty clear that this was gonna be looking more like the old database market than it looked like a single player cloud market. Right. Equally sticky, but very strong players all with lots of IP creation capability. So that's when we said, okay, from a supplier side, this is gonna become multi. And from a customer side that has always been their desire. Right. Which is, Hey, I don't want to get locked into anybody. I want to do multiple things. And the cloud vendors also started leveraging that OnPrem. Microsoft said, Hey, if you're a windows customer, your licensing is gonna be better off if you go to Azure. Right. Oracle did the same thing. So it just became very clear. >>I am, I have gone make you laugh. I always go back to the software mainframe because I, I think you were here. Right. I mean, you're, you're almost 20 years in. Yeah. And I, the reason I appreciate that is because, well, that's technically very challenging. How do you make virtualization overhead virtually non-existent how do you run any workload? Yeah. How do you recover from, I mean, that's was not trivial. Yeah. Okay. So what's the technical, you know, analog today, the real technical challenge. When you think about cross cloud services. >>Yeah. I mean, I think it's different for each of these layers, right? So as I was alluding to for management, I mean, you can go each one of them by themselves, there is one way of Mo doing multi-cloud, which is multiple clouds. Right. You could say, look, I'm gonna build a great product for AWS. And then I'm gonna build a great product for Azure. I'm gonna build a great product for Google. That's not what aria is. Aria is a true multi-cloud, which means it pulls data in from multiple places. Right? So there are two or three, there are three things that aria has done. That's I think is super interesting. One is they're not trying to take all the data and bring it in. They're trying to federate the data sources. And secondly, they're doing it in real time and they're able to construct this graph of a customer's cloud resources. >>Right. So to keep the graph constructed and pulling data, federating data, I think that's a very interesting concept. The second thing that, like I said is it's a real time because in the cloud, a container might come and go like that. Like that is a second technical challenge. The third it's not as much a technical challenge, but I really like what they have done for the interface they've used GraphQL. Right? So it's not about if you remember in the old world, people talk about single pan or glass, et cetera. No, this is nothing to do with pan or glass. This is a data model. That's a graph and a query language that's suited for that. So you can literally think of whatever you wanna write. You can write and express it in GraphQL and pull all sorts of management applications. You can say, Hey, I can look at cost. I can look at metrics. I can look at whatever it is. It's not five different types of applications. It's one, that's what I think had to do it at scale is the other problem. And, and >>The, the technical enable there is just it's good software. It's a protocol. It's >>No, no, it's, it's, it's it's software. It's a data model. And it's the Federation architecture that they've got, which is open. Right. You can pull in data from Datadog, just as well as from >>Pretty >>Much anything data from VR op we don't care. Right? >>Yeah. Yeah. So rego, I have to ask you, I'm glad you like the Supercloud cuz you know, we, we think multi-cloud still early, but coming fast. I mean, everyone has multiple clouds, but spanning this idea of spanning across has interesting sequences. Do you data, do you do computer both and a lot of good things happening. Kubernetes been containers, all that good stuff. Okay. How do you see the first rev of multi-cloud evolving? Like is it what happens? What's the sequence, what's the order of operations for a client standpoint? Customer standpoint of, of multicloud or Supercloud because we think we're seeing it as a refactoring of something like snowflake, they're a data base, they're a data warehouse on the cloud. They, they say data cloud they'd they like they'll tell us no, you, we're not a data. We're not a data warehouse. We're data cloud. Okay. You're a data warehouse refactored for the CapEx from Amazon and cooler, newer things. Yeah, yeah, yeah. That's a behavior change. Yeah. But it's still a data warehouse. Yeah. How do you see this multi-cloud environment? Refactoring? Is there something that you see that might be different? That's the same if you know what I'm saying? Like what's what, what's the ne the new thing that's happening with multi-cloud, that's different than just saying I'm I'm doing SAS on the cloud. >>Yeah. So I would say, I would point to a, a couple of things that are different. Firstly, my, the answer depends on which category you are in. Like the category that snowflake is in is very different than Kubernetes or >>Something or Mongo DB, right? >>Yeah. Or Mongo DB. So, so it is not appropriate to talk about one multi-cloud approach across data and compute and so, so on and so forth. So I'll talk about the spaces that we play. Right. So step one, for most customers is two application architectures, right? The cloud native architecture and an enterprise native architecture and tying that together either through data or through networks or through et cetera. So that's where most of the customers are. Right. And then I would say step two is to bring these things together in a more, in a closer fashion and that's where we are going. And that is why you saw the cloud universal announcement and that's already, you've seen the Tansu announcement, et cetera. So it's really, the step one was two distinct clouds. That is just two separate islands. >>So the other thing that we did, that's really what my, the other thing that I'd like to get to your reaction on, cause this is great. You're like a masterclass in the cube here. Yeah, totally is. We see customers becoming super clouds because they're getting the benefit of, of VMware, AWS. And so if I'm like a media company or insurance company, if I have scale, if I continue to invest in, in cloud native development, I do all these things. I'm gonna have a da data scale advantage, possibly agile, which means I can build apps and functionality very quick for customers. I might become my own cloud within the vertical. Exactly. And so I could then service other people in the insurance vertical if I'm the insurance company with my technology and create a separate power curve that never existed before. Cause the CapEx is off the table, it's operating expense. Yep. That runs into the income statement. Yep. This is a fundamental business model shift and an advantage of this kind of scenario. >>And that's why I don't think snowflakes, >>What's your reaction to that? Cuz that's something that, that is not really, talk's highly nuanced and situational. But if Goldman Sachs builds the biggest cloud on the planet for financial service for their own benefit, why wouldn't they >>Exactly. >>And they're >>Gonna build it. They sort of hinted at it that when they were up on stage on AWS, right. That is just their first big step. I'm pretty sure over time they would be using other clouds. Think >>They already are on >>Prem. Yeah. On prem. Exactly. They're using VMware technology there. Right? I mean think about it, AWS. I don't know how many billions of dollars they're spending on AWS R and D Microsoft is doing the same thing. Google's doing the same thing we are doing. Not as much as them that you're doing oral chair. Yeah. If you are a CIO, you would be insane not to take advantage of all of this IP that's getting created and say, look, I'm just gonna bet on one. Doesn't make any sense. Right. So that's what you're seeing. And then >>I think >>The really smart companies, like you talked about would say, look, I will do something for my industry that uses these underlying clouds as the substrate, but encapsulates my IP and my operating model that I then offer to other >>Partners. Yeah. And their incentive for differentiation is scale. Yeah. And capability. And that's a super cloud. That's a, or would be say it environment. >>Yeah. But this is why this, >>It seems like the same >>Game, but >>This, I mean, I think it environment is different than >>Well, I mean it advantage to help the business, the old day service, you >>Said snowflake guys out the marketing guys. So you, >>You said snowflake data warehouse. See, I don't think it's in data warehouse. It's not, that's like saying, you >>Know, I, over >>VMware is a virtualization company or service now is a help desk tool. I, this is the change. Yes. That's occurring. Yes. And that you're enabling. So take the Goldman Sachs example. They're gonna run OnPrem. They're gonna use your infrastructure to do selfer. They're gonna build on AWS CapEx. They're gonna go across clouds and they're gonna need some multi-cloud services. And that's your opportunity. >>Exactly. That's that's really, when you, in the keynote, I talked about cloud universal. Right? So think of a future where we can go to a customer and say, Mr. Customer buy thousand scores, a hundred thousand cores, whatever capacity you can use it, any which way you want on any application platform. Right. And it could be OnPrem. It could be in the cloud, in the cloud of their choice in multiple clouds. And this thing can be fungible and they can tie it to the right services. If they like SageMaker they could tie it to Sage or Aurora. They could tie it to Aurora, cetera, et cetera. So I think that's really the foundation that we are setting. Well, I think, I >>Mean, you're building a cloud across clouds. I mean, that's the way I look at it. And, and that's why it's, to me, the, the DPU announcement, the project Monterey coming to fruition is so important. Yeah. Because if you don't have that, if you're not on that new Silicon curve yep. You're gonna be left behind. Oh, >>Absolutely. It allows us to build things that you would not otherwise be able to do, >>Not to pat ourselves on the back Ragu. But we, in what, 2013 day we said, feel >>Free. >>We, we said with Lou Tucker when OpenStack was crashing. Yeah. Yeah. And then Kubernetes was just a paper. We said, this could be the interoperability layer. Yeah. You got it. And you could have inter clouding cuz there was no clouding. I was gonna riff on inter networking. But if you remember inter networking during the OSI model, TCP and IP were hardened after the physical data link layer was taken care of. So that enabled an entire new industry that was open, open interconnect. Right. So we were saying inter clouding. So what you're kind of getting at with cross cloud is you're kind of creating this routing model if you will. Not necessarily routing, but like connection inter clouding, we called it. I think it's kinda a terrible name. >>What you said about Kubernetes is super critical. It is turning out to be the infrastructure API so long. It has been an infrastructure API for a certain cluster. Right. But if you think about what we said about VSE eight with VSE eight Kubernetes becomes the data center API. Now we sort of glossed over the point of the keynote, but you could do operations storage, anything that you can do on vSphere, you can do using a Kubernetes API. Yeah. And of course you can do all the containers in the Kubernetes clusters and et cetera, is what you could always do. Now you could do that on a VMware environment. OnPrem, you could do that on EKS. Now Kubernetes has become the standard programming model for infrastructure across. It >>Was the great equalizer. Yeah. You, we used to say Amazon turned the data center through an API. It turns, turns of like a lot of APIs and a lot of complexity. Right. And Kubernetes changed. >>Well, the role, the role of defacto standards played a lot into the T C P I P revolution before it became a standard standard. What the question Raghu, as you look at, we had submit on earlier, we had tutorial on as well. What's the disruptive enabler from a defacto. What in your mind, what should, because Kubernetes became kind of defacto, even though it was in the CNCF and in an open source open, it wasn't really standard standard. There's no like standards, body, but what de facto thing has to happen in your mind's eye around making inter clouding or connecting clouds in a, in a way that's gonna create extensibility and growth. What do you see as a de facto thing that the industry should rally around? Obviously Kubernetes is one, is there something else that you see that's important for in an open way that the industry can discuss and, and get behind? >>Yeah. I mean, there are things like identity, right? Which are pretty critical. There is connectivity and networking. So these are all things that the industry can rally around. Right. And that goes along with any modern application infrastructure. So I would say those are the building blocks that need to happen on the data side. Of course there are so many choices as well. So >>How about, you know, security? I think about, you know, when after stuck net, the, the whole industry said, Hey, we have to do a better job of collaborating. And then when you said identity, it just sort of struck me. But then a lot of people tried to sort of monetize private reporting and things like that. So you do you see a movement within the technology industry to do a better job of collaborating to, to solve the acute, you know, security problems? >>Yeah. I think the customer pressure and government pressure right. Causes that way. Yeah. Even now, even in our current universe, you see, there is a lot of behind the scenes collaboration amongst the security teams of all of the tech companies that is not widely seen or known. Right. For example, my CISO knows the AWS CSO or the Microsoft CSO and they all talk and they share the right information about vulnerability attacks and so on and so forth. So there's already a certain amount of collaboration that's happening and that'll only increase. Do, >>Do you, you know, I was somewhat surprised. I didn't hear more in your face about security would, is that just because you had such a strong multi-cloud message that you wanted to get, get across, cuz your security story is very strong and deep. When you get into the DPU side of things, the, you know, the separation of resources and the encryption and I'll end to end >>I'm well, we have a phenomenal security story. Yeah. Yeah. Tell security story and yes. I mean I'll need guilty to the fact that in the keynote you have yeah, yeah, sure time. But what we are doing with NSX and you will hear about some NSX projects as you, if you have time to go to some of the, the sessions. Yeah. There's one called project, not star. Another is called project Watchman or watch, I think it's called, we're all dealing with this. That is gonna strengthen the security story even more. Yeah. >>We think security and data is gonna be a big part of it. Right. As CEO, I have to ask you now that you're the CEO, first of all, I'd love to talk about product with you cuz you're yeah. Yeah. We just great conversation. We want to kind of read thet leaves and ask pointed questions cuz we're putting the puzzle together in real time here with the audience. But as CEO, now you have a lot of discussions around the business. You, the Broadcom thing happening, you got the rename here, you got multi-cloud all good stuff happening. Dave and I were chatting before we came on this morning around the marketplace, around financial valuations and EBIDA numbers. When you have so much strategic Goodwill and investment in the oven right now with the, with the investments in cloud native multi-year investments on a trajectory, you got economies of scale there. >>It's just now coming out to be harvest and more behind it. Yeah. As you come into the Broadcom and or the new world wave that's coming, how do you talk about that value? Cuz you can't really put a number on it yet because there's no customers on it. I mean some customers, but you can't probably some for form. It's not like sales numbers. Yeah. Yeah. How do you make the argument to the PE type folks out there? Like EBIDA and then all the strategic value. What's the, what's the conversation like if you can share any, I know it's obviously public company, all the things going down, but like how do you talk about strategic value to numbers folks? >>Yeah. I mean, we are not talking to PE guys at all. Right. I mean the only conversation we have is helping Broadcom with >>Yeah. But, but number people who are looking at the number, EBIDA kind of, >>Yeah. I mean, you'd be surprised if, for, for example, even with Broadcom, they look at the business holistically as what are the prospects of this business becoming a franchise that is durable and could drive a lot of value. Right. So that's how they look at it holistically. It's not a number driven. >>They do. They look at that. >>Yeah. Yeah, absolutely. So I think it's a misperception to say, Hey, it's a numbers driven conversation. It's a business driven conversation where, I mean, and Hawk's been public about it. He says, look, I look at businesses. Can they be leaders in their market? Yeah. Because leaders get, as we all know a disproportionate share of the economic value, is it a durable franchise that's gonna last 10 years or more, right. Obviously with technology changes in between, but 10 years or more >>Or 10, you got your internal, VMware talent customers and >>Partners. Yeah. Significant competitive advantage. So that's, that's really where the conversation starts and the numbers fall out of it. Got it. >>Okay. So I think >>There's a track record too. >>That culture >>That VMware has, you've always had an engineering culture. That's turned, you know, ideas and problems into products that, that have been very successful. >>Well, they had different engineering cultures. They're chips. You guys are software. Right. You guys know >>Software. Yeah. Mean they've been very successful with Broadcom, the standalone networking company since they took it over. Right. I mean, it's, there's a lot of amazing innovation going on there. >>Yeah. Not, not that I'm smiling. I want to kind of poke at this question question. I'll see if I get an answer out of you, when you talk to Hawk tan, does he feel like he bought a lot more than he thought or does he, did he, does he know it's all here? So >>The last two months, I mean, they've been going through a very deliberate process of digging into each business and certainly feels like he got a phenomenal asset base. Yeah. He said that to me even today after the keynote, right. Is the amazing amount of product capability that he's seeing in every one of our businesses. And that's been the constant frame. >>But congratulations on that. >>I've heard, I've heard Hawk talk about the shift to, to Mer merchant Silicon. Yeah. From custom Silicon. But I wanted to ask you when you look at things like AWS nitro yeah. And graviton and train and the advantage that AWS has with custom Silicon, you see Google and Microsoft sort of Alibaba following suit. Would it benefit you to have custom Silicon for, for DPU? I mean, I guess you, you know, to have a tighter integration or do you feel like with the relationships that you have that doesn't buy you anything? >>Yeah. I mean we have pretty strong relationships with in fact fantastic relationships with the Invidia and Intel and AMD >>Benon and AMD now. >>Yeah. Yeah. I mean, we've been working with the Pendo team in their previous incarnations for years. Right, right. When they were at Cisco and then same thing with the, we know the Melanox team as well as the invi original teams and Intel is the collaboration right. From the get go of the company. So we don't feel a need for any of that. We think, I mean, it's clear for those cloud folks, right. They're going towards a vertical integration model and select portions of their stack, like you talked about, but there is always a room for horizontal integration model. Right. And that's what we are a part of. Right. So there'll be a number of DPU pro vendors. There'll be a number of CPU vendors. There'll be a number of other storage, et cetera, et cetera. And we think that is goodness in an alternative model compared to a vertically integr >>And yeah. What this trade offs, right. It's not one or the other, I mean I used to tell, talk to Al Shugar about this all the time. Right. I mean, if vertically integrated, there may be some cost advantages, but then you've got flexibility advantages. If you're using, you know, what the industry is building. Right. And those are the tradeoffs, so yeah. Yeah. >>Greg, what are you excited about right now? You got a lot going on obviously great event. Branding's good. Love the graphics. I was kind of nervous about the name changed. I likem world, but you know, that's, I'm kind of like it >>Doesn't readily roll off your phone. Yeah. >>I know. We, I had everyone miscue this morning already and said VMware Explorer. So >>You pay Laura fine. Yeah. >>Now, I >>Mean a quarter >>Curse jar, whatever I did wrong. I don't believe it. Only small mistake that's because the thing wasn't on. Okay. Anyway, what's on your plate. What's your, what's some of the milestones. Do you share for your employees, your customers and your partners out there that are watching that might wanna know what's next in the whole Broadcom VMware situation. Is there a timeline? Can you talk publicly about what? To what people can expect? >>Yeah, no, we, we talk all the time in the company about that. Right? Because even if there is no news, you need to talk about what is where we are. Right. Because this is such a big transaction and employees need to know where we are at every minute of the day. Right? Yeah. So, so we definitely talk about that. We definitely talk about that with customers too. And where we are is that the, all the processes are on track, right? There is a regulatory track going on. And like I alluded to a few minutes ago, Broadcom is doing what they call the discovery phase of the integration planning, where they learn about the business. And then once that is done, they'll figure out what the operating model is. What Broadcom is said publicly is that the acquisition will close in their fiscal 23, which starts in November of this year, runs through October of next year. >>So >>Anywhere window, okay. As to where it is in that window. >>All right, Raghu, thank you so much for taking valuable time out of your conference time here for the queue. I really appreciate Dave and I both appreciate your friendship. Congratulations on the success as CEO, cuz we've been following your trials and tribulations and endeavors for many years and it's been great to chat with you. >>Yeah. Yeah. It's been great to chat with you, not just today, but yeah. Over a period of time and you guys do great work with this, so >>Yeah. And you guys making, making all the right calls at VMware. All right. More coverage. I'm shot. Dave ante cube coverage day one of three days of world war cup here in Moscone west, the cube coverage of VMware Explorer, 22 be right back.

>>Okay, welcome back everyone to the Cube's live coverage here in Monaco for the MoCo crypto summit. I'm John fur. You're host of the cube. We got a great guest Dustin plant Boltz who is a crypto advisor, but also the crypto editor for Forbes Monaco here. Seeing the official event, the AAL event of the Monaco crypto summit in Monaco, your coverage area for Forbes, your MCing. Welcome to the >>Cube. Thank you for having me. And it's, it's always fun when I get to have an event in our backyard, cuz I get to hear what others know. And to me I'm very curious. Yeah. Always >>Learning. So you're on the MC on the stage here, you know, queue in the program online great program. So it's innovative event, inaugural event, great name by the way. Crypto summit and mono crypto >>Summit. Yeah, the MoCo crypto summit. >>That sounds like I want to attend every year. >>You're you're more than welcome to attend next year. >>Well, I hope so. Either way. I'm at the Al event with you. So gimme the take on what's on stage. What's been the program, like what's your observations going on here at the event today? >>So what we're starting to see globally is this digitization of things and the people that are part of the innovation side. And so that's what we've been able to see this morning. We're we're now at the break is what sort of companies are out there, the good ones and what are they building? Is this innovation? Is it even innovative and figuring out how they're gonna do it and the roadmaps to getting there from the metaverses to NFTs and even to decentralized finance. >>Yeah, it's the number one question I get is what's legit. What's not legit. And then you're starting to see the, the, the wheat and the shaft separating here and you know, something called crypto winter. But I don't see it. I mean, I see correction for some of the bad things going on in terms of not having the right underpinning infrastructure, the creative ideas are amazing. We're also seeing like digital bits and other platforms kind of coming together to enable the creators and, and the NFT side for instance has been huge. What has been your observation on that enablement? Because you have two schools of thoughts. You have the total nerds we're up and down building everything. Then you have artists and creators, whether it's music, tech apps building, they don't necessarily want to get 'em to the covers. They don't want to deal with all that. Yeah. Have you seen, what's your, what's your take on that? >>So I I'm seeing that a lot of these major brands, you know, they they're striving for excellence. You know, they're being more careful of who they partner with and the types of companies and you know, they, they look at it from reality and a little tough love to figure out should they align their brand. So what we're seeing here is is that there is so much inertia moving forward. That we're just at the beginning of this thing. Yeah. McKinsey recently said that the ecosystem will be over $30 trillion. So when you recognize that we are so early and it's those right now, or some might say are the risk takers. But to me there, aren't taking risk. They're being a part of making history. >>Yeah. You get the pioneers and you get the financial. So as they come together, how do you see the market? Cause what I've noticed with crypto and here in, in this, this market is international. One lot of international finance us is kind of lag behind. You got all kinds of rules, but you got the, the combination of the, the future billionaires. Sure. Okay. The pioneers and then the financeers yeah. Coming the money, the money and the power coming together. What's your reporting show you that's going on right now? What should people know about on how this is evolving? What they shouldn't >>Expect? Well, so you have a group that wants to become cryers they're seeing these individuals globally. They're making lots and lots of money, but what they don't realize is that not everybody is gonna have that outcome, but looking at the technology aspect of it and how it's going to improve a system that many can agree is collectively broken legacy just can't move beyond. It was never designed to you'll see people take shots at certain card companies and I go, but you recognize they developed the assembly line. And so I'm seeing that the smart money they got in long ago, believe it or not. And those now they're looking out for their errors are the ones that saying, I will not have an excuse when my, my grandkids or my, my nieces or my nephews, when they come and ask, where were you when the greatest transformational shift in human history, from both education to jobs, to careers and even wealth was being shifted to a digital world, why were you on the sideline waiting? And so I think what we're gonna see is this tsunami coming, and it's gonna start with one big player and then two and five, you go, go alone. You go far, go together. You go further. And that's what we're seeing is that this collective is moving forward >>And the community, we just had Beth Kaiser on, I've known Beth for many, many years. And she's what she's her journey has done. She's had a great mission and then gets she's a data scientist and came to Analytica. Now she's doing work with Ukraine and the rallying support around it has been impressive. And it's a community vibe, but the community's not just like sympathetic they're hands on together to your point. >>Yeah. It, but it also takes courage. I mean, you look at Britney Kaiser and what she had, and to me, courage is not, not having fear. Courage is not allowing the fear to stop. You, you know, recently asked my executive coach, who's 85 and I'm turning 39. This question of, do you let fear stop you? How do you decide? And he said, you know, you can either let, you can either ride the dragon. And I said, or let the dragon chase you. And Brittany has been one of these that made a decision to do what was right. And it came down to integrity. Yeah. >>So what are you have to these days what's going on in your world? >>What is going on in my world? So I moderate events all over and I connect and I like to ask people questions. So I'm gonna ask you, I'm gonna turn at the interviewer on the >>Interview. It's good. Natural. >>What are you learning? >>I mean, I'm learning, I mean today or this week or this month or this year. Well, I was just talking with Brittany about this. The security world is converging cloud technology, cloud computing. That revolution has just been amazing. Amazon posted their earnings yesterday. They blew it away as far as I'm concerned. So they kind of show there's no tech recession. I've learned that this recession, that we're so called in is the first downturn in tech where there's been cloud players as hyperscalers as an economic engine. Okay. So from a, from a business perspective, Amazon web services, Microsoft Azure now Google cloud, Alibaba's now in, in international version. This is the first time at downturns ever happened with cloud computing as an economic engine. And so therefore what I'm seeing is the digital transformation that's happening across the world for enterprises and entrepreneurs is not stopping. >>It's actually accelerating. So although the GDPs down in inflation is down, you're seeing a massive shift continuing to accelerate, spending and transformation with cloud technologies and decentralized. So you can almost see it kind of in the, this event and other events, even some of the bigger events, the best smartest people are working on it. The applications in all the categories are transforming. If cloud is step one, decentralized gonna be step two. So I see that kind of bridge going from cloud computing, cloud native to decentralized native. And I think a D DAPP market's gonna just explode. I think NFTs are just scratched on the surface. I think that's kind of, I won't say gimmicky, but I think no, but you're right, much more of a much more of a, an illustration that there's more coming. >>There is a lot more coming because people are seeing that there's more to an NFT than an ugly luck and J you know, ugly and JP image that there's, that there's data in there. And that your avatar will be stored as just that as an NFT. And I learned today from go of sing, that decentralization is, is the key to innovation. And I agree with that statement. Holy. >>Yeah. I mean, I think access to stuff is gonna be multidimensional. Like you think about the NFT as, as an ID, whether it's him or UN unstoppable domains is that company just got financing another round where the billion dollars, their concept is like, Hey, one NFT is your access for all of your potential identities in context. >>And isn't that exciting that we're now gonna be at this stage where you travel with you. Yeah. Instead of someone else traveling with you, you get to decide who you will be. And to me, everything you're doing in this world, this reality is now becoming part of your digital asset as a whole. >>I remember when I started my podcasting company in 20 2004, early pioneers, Evan Williams was there with Odo and you had, you know, the blogging revolution going on that whole democratization wave actually didn't happen right then. But all the people that were involved in that web two oh, kind of CRAs was all about democratization. It's kind of happening now. I mean, 15, 20 years later at web services is transformed cloud the democratization for own your own data, putting users in control. And I think in the middle of that, the Facebook's the world, the world garden data, you know, manipulation kind of took it off track a little bit. So I think now I'm, I psych to see that it's back on track to where it was. I mean, Facebook made billions of dollars. Now you got LinkedIn. I mean, LinkedIn's great for your resume, but it's also become a wall's garden with no data export. >>Yeah. And then >>No APIs keep >>Changing. Think about this. That if you wanna apply for a job, just change something quickly. Yeah. Ah, now you're the senior VP. Yeah. Before you were, you're an office manager >>Like to see the immutable block change, >>You don't get to see when did the record change. Yeah. >>Reputation data. You're a digital exhaust people gonna wanna reign that in. And I think the user in charge message that Brit Kaiser was talks about is hugely a mess under, under, under amplified concept. Digital assets are key, but the data ownership is something that I think is, is >>Powerful. So I'm gonna be launching a brand new company in and around September called cryptos. And it's a crypto career center. Think of it like the, the crypto for LinkedIn, that it's an aggregator becoming the industry standard for education, becoming the industry standard for crypto ships, with partners like ledger and moon pay and Casper labs. >>Look at this, we got an exclusive scoop on the cube. This >>Is the first time I will tell you this the first time in, in an environment like this. Yeah. That I'm excited to, I'm excited to talk about, right. Because it's time to be part of the change. Yeah, exactly. You know, as a father, I look at, I know where it's headed in the world of business. I know in the world of this, that we're gonna call the internet of connected things. Yeah. That it's gonna require you to have a certain talent skill or a certain certification. And to me, it's important to have an industry that supports one >>Staff and also, and also history on misinformation, smear campaigns can happen and ruin a career >>Overnight. Can you imagine that one little thing and because the internet never forgets. Yeah. It stays around indefinitely. >>The truth has to come out. Dustin. Great to have you on the queue. Thank you so much. Final question. What have you learned in there is MC what's your takeaway real quick? >>What I've learned is I never tire of learning. Thank you again, to learn more. Dustin plan.com. >>All right. Thanks for coming. Thank you. Cube coverage here at Monaco. I'm Shawn furry. We'll back with more coverage after this short break.

>>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 >>UI path has always been an unconventional company. You know, it started with humble beginnings. It was essentially a software development shop. And then it caught lightning in a bottle with its computer vision technology. And it's really it's simplification mantra. And it created a very easy to deploy software robot system for bespoke departments. So they could automate mundane tasks. You know, you know, the story, the company grew rapidly was able to go public early this year. Now consistent with its out of the ordinary approach. While other firms are shutting down travel and physical events, UI path is moving ahead with forward for its annual user conference next week with a live audience there at the Bellagio in Las Vegas, it's also fast-forwarding as a company determined to lead the charge beyond RPA and execute on a more all encompassing enterprise automation agenda. Hello everyone. And welcome to this week's Wiki bond Cuban sites powered by ETR in this breaking analysis and a head of forward four we'll update you in the RPA market. >>The progress that UI path has made since its IPO and bringing some ETR customer survey data to contextualize the company's position in the overall market and relative to the competition. Here's a quick rundown of today's agenda. First, I want to tell you the cube is going to be at forward for, at the Bellagio next week, UI paths. This is their big customer event. It's live. It's a physical event. It's primarily outdoors. You have to be vaccinated to attend. Now it's not completely out of the ordinary John furrier and the cube. We're at AWS public sector this past week. And we were at mobile world Congress and one of the first big hybrid events of the year at Barcelona. And we thought that event would kick off the fall event season live event in earnest, but the COVID crisis has caused many tech firms. Most tech firms actually to hit the pause button, not UI path. >>They're moving ahead, they're going forward. And we see a growing trend for smaller VIP events with a virtual component topic, maybe for another day. Now we've talked extensively about the productivity challenges and the automation mandate. The pandemic has thrust upon us. Now we've seen pretty dramatic productivity improvements as remote work kicked in, but it's brought new stresses. For example, according to Qualtrics, 32% of working moms said their mental health has declined since the pandemic hit. 15% of working dads said the same by the way. So one has to question the sustainability of this perpetual Workday, and we're seeing a continuum of automation solutions emerging. And we'll talk about that today. We're seeing tons of MNA, M and a as well, but now in that continuum on the left side of the spectrum, there's Microsoft who in some ways they stand alone and that Azure is becoming ubiquitous as a SAS cloud collaboration and productivity platform. >>Microsoft is everywhere and in virtually every market with their video conferencing security database, cloud CRM, analytics, you name it, Microsoft is pretty much there. And RPA is no different with the acquisition of soft emotive. Last year, Microsoft entered the RTA market in earnest and is penetrating very deeply into the space, particularly as it pertains to personal approach, personal productivity building on its software state. Now in the middle of that spectrum, if you will, we're seeing more M and a, and that's defined really by the big software giants. Think of this domain as integrated software plays SAP, they acquired contexture, uh, uh, they also acquired a company called process insight service now acquired Intella bought Salesforce service trace. We see in for entering the fray. And I, I would put even Pega Pega systems in this camp, software companies focused on integrating RPA into their broader workflows into their software platforms. >>And this is important because these platforms are entrenched. They're walled gardens of sorts and complicated with lots of touchpoints and integration points. And frankly, they're much harder to automate because of their entrenched legacy. Now on the far side of that, spectrum are the horizontal automation players and that's being led by UI path with automate automation anywhere as the number two player in this domain. And I didn't even put blue prism prism in there more M and a recently announced, uh, that Vista is going to acquire them. Vista also owns TIBCO. They're going to merge those two companies, you know, tip goes kind of an integration play. And so again, I'm, I might, I would put them in that, you know, horizontal piece of the spectrum. So with that as background, we're going to look at how UI path has performed since we last covered them at IPO. >>And then we'll bring in some ETR survey data to get the spending view from customers. And then we'll wrap up now just to emphasize the importance of, of automation and the automation mandate mandate. We talk about it all the time in this program, we use this ETR chart. It's a two dimensional view with net score, which is a measure of spending momentum on the vertical axis and market share, which is a proxy for pervasiveness in the dataset. That's on the horizontal axis. Now note that red dotted line at signifies companies with an elevated position on the net score, vertical axis, anything over that is considered pretty good, very good. Now this shows every spending segment within the ETR taxonomy and the four spending categories with the greatest velocity are AI cloud containers and RPA. And they've topped the charts for quite a while. Now they're the only four categories which have sustained above that 40% line consistently throughout the pandemic. >>And even before now, the impressive thing about cloud of course, is it has a spending has both spending momentum on the vertical axis at a very large share of the, of the market share of presence in the dataset. The point is RPA is nascent still. It has an affinity with AI as a means of more intelligently identifying and streamlining process improvements. And so we expect those to, to remain elevated and grow to the right together, UI path pegs it's Tam, total available market at 60 billion. And the reality is that could be understated. Okay. As we reported from the UI path S one analysis, we did pre IPO. The company at that time had an AR annual recurring revenue of $580 million and was growing at 65% annually at nearly 8,000 customers at the time, a thousand of which had an ARR in excess of a hundred K and a net revenue retention, the company had with 145%. >>So let's take a look at the picture six months forward. We mentioned the $60 billion Tam ARR now up over 725 million on its way to a billion ARR holding pretty steady at 60% growth as is an RR net revenue retention, and more than a thousand new customers in 200 more with over a hundred thousand in ARR and a small operating profit, which by the way, exceeded the consensus pretty substantially. Profitability is not shown here and no one seems to care anyway, these days it's all about growing into that Tam. Well, that's a pretty good looking picture. Isn't it? The company had a beat and a raise for the quarter early this month. So looking good, right? Well, you ask how come the stock's not doing better. That's an interesting question. So let's first look at the stocks performance on a relative basis. Here, we show you I pass performance against Pega systems and blue prism. >>The other two publicly traded automation, pure plays, you know, sort of in the case of Pega. So UI path outperformed post its IPO, but since the early summer Pega has been the big winner. Well, UI path slowly decelerated, you see blue prism was the laggard until it was announced. It was in an acquisition talks with a couple of PE firms and the prospects of a bidding war sent that yellow line up. As you can see UI path, as you can see on the inset has a much higher valuation than Pega and way higher than blue prison. Pega. Interestingly is growing revenues nicely at around 40%. And I think what's happening is the street simply wants more, even though UI path beat and raised wall street, still getting comfortable with which is new to the public market game. And the company just needs to demonstrate a track record and build trust. >>There's also some education around billings and multi-year contracts that the company addressed on its last earnings call, but the street was concerned about ARR from new logos. It appears to be slowing down sequentially in a notable decline in billings momentum, which UI pass CEO, CFO addressed on the earnings call saying, look, they don't need to trade margin for prepaid multi-year deals, given the strong cash position while I give anything up. And even though I said, nobody cares about profitability. Well, I guess that's true until you guide for an operating loss. When you've been showing a small profit in recent recent quarters, which you AIPAC did, then all of a sudden people care. So UI path, isn't a bit of an unknown territory to the street and it has a valuation that's pretty rich, very rich, actually at 30 times, a revenue multiple greater than 30 times revenue, multiple. >>So that's why in, in my view, investors are being cautious, but I want to address a dynamic that we've seen with these high growth rocket ship companies, something we talked about with snowflake. And I think you're seeing some of that here with UI paths, different model in the sense that snowflake is pure cloud, but I'm talking about concerns around ARR from new logos and in that growth on a sequential basis. And here's what's happening in my view with UI path, you have a company that started within departments with a small average contract size in ACV, maybe 25,000, maybe 50,000, but not deep six figure deals that wasn't UI paths play it because the company focused so heavily on simplicity and made it really easy to adopt customer saw really fast ROI. I mean breakeven in months. So you very quickly saw expansion into other departments. >>So when ACV started to rise and installations expanded within each customer UI path realized it had to move beyond being a point product. And it started thinking about a platform and making acquisitions like process gold and others, and this marked a much deeper expansion into the customer base. And you can see that here in this UI path, a chart that they shared at their investor deck customers that bought in 2016 and 2017 expanded their they've expanded their spend 15, 13, 15, 18 20 X. So the LTV, the lifetime value of the customer is growing dramatically. And because UI path has focused on simplicity, it has a very facile freemium model, much easier to try before you buy than its competitors. It's CAC, it's customer acquisition costs are likely much lower than some of its peers. And that's a key dynamic. So don't get freaked out by some of those concerns that we raised earlier, because just like snowflake what's happening is the company for sure is gaining new customers. >>Maybe just not at the same rate, but don't miss the forest through the trees. I E they're getting more money from their existing customers, which means retention, loyalty and growth. Speaking of forests, this chart is the dynamic I'm talking about. It's an ETR graphic that shows the components of net score or against spending momentum net score breaks down into five areas that lime green at the top is new additions. Okay? So that's only 11% of the customer mentions by the way, we're talking about more than 125 responses for UI path. So it's meaningful. It's, it's actually larger in this survey, uh, or certainly comparable to Microsoft. So that says something right there. The next bar is the forest green forest. Green is where I want you to focus. That's customer spending 6% or more in the second half of the year, relative to the first half. >>The gray is flat spending, which is quite large, the pink or light red that's spending customer spending 6% or worse. That's a 4% number, but look at the bottom bar. There is no bar that's churn. 0% of the respondents in the survey are churning and churn is the silent killer of SAS companies, 0% defections. So you've got 46% spending, more nobody leaving. That's the dynamic that is powering UI path right now. And I would take this picture any day over a larger lime green and a smaller forest green and a bigger churn number. Okay. So it's pretty good. It's not snowflake good, but it's solid. So how does this picture compare to UI pass peers? Well, let's take a look at that. So this is ETR data, same data showing the granularity net score for Microsoft power, automate UI path automation, anywhere blue prism and Pega. >>So as we said before, Microsoft is ubiquitous. What can we say about that? But UI path is right there with a more robust platform, not to overlook Microsoft. You can't, but UI path, it'll tell you that they don't compete head to head for enterprise automation deals with Microsoft. Now, maybe they will over time. They do however, compete head to head with automation anywhere. And their picture is quite strong. As you can see here, it has this blue Prism's picture and even Pega, although blue prism, automation, anywhere UI path and power automate all have net scores on this chart. As you can see the table in the upper right over 40% Pega does not. But again, we don't see Pega as a pure play RPA vendor. It's a little bit of sort of apples and oranges there, but they do sell RPA and ETR captures in their taxonomy. >>So why not include them also note that UI path has, as I said before, more mentions in the survey than power automate, which is actually quite interesting, given the ubiquity of Microsoft. Now, one other notable notable note is the bright red that's defections and only UI path is showing zero defections. Everybody else has at least even of the slim, some defections. Okay. So take that as you will, but it's another data 0.1. That's powerful, not only for UI path, but really for the entire sector. Now, the last ETR data point that we want to share is our famous two dimensional view. Like the sector chart we showed earlier, this graphic shows net score on the vertical axis. That's against spending velocity and market share or pervasiveness on the horizontal axis. So as we said earlier, UI path actually has greater presence in the survey than the ever-present Microsoft. >>Remember, this is the July survey. We don't have full results from the September, October survey yet. And we can't release them until ETR is out of its quiet period. But I expect the entire sector, like everything is going to be slightly down because as we reported last week, tech spending is moderated slightly in the second half of this year, but we don't expect the picture to change dramatically. UI path and power automate, we think are going to lead and market presence in those two plus automation anywhere are going to show strength and spending momentum as well. Most of the sector. And we'll see who comes in above the 40% line. Okay. What to watch at forward four. So in summary, I'll be looking for a few things. One UI path has hinted toward a big platform announcement that will deepen its capabilities to go beyond being an RPA point tool into much more of an enterprise automation platform rewriting a lot of the code Linux cloud, better automation of the UI. >>You're going to hear all kinds of new product announcements that are coming. So I'll be listening for those details. I want to hear more from customers to further confirm what I've been hearing from them over the last couple of years and get more data, especially on that ROI on that land and expand. I want to understand that dynamic and that true enterprise automation. It's going to be good to get an update face to face and test some of our assumptions here and see where the gaps are and where UI path can improve. Third. I want to talk to ecosystem players to see where they are in participating in the value chain here. What kind of partner has UI path become since it's IPO? Are they investing more in the ecosystem? How to partners fit into that flywheel fourth, I want to hear from UI path management, Daniel DNAs, and other UI path leaders, they're exiting toddler Ville and coming into an adolescent phase or early adulthood. >>And what does that progression look like? How does it feel? What's the vibe at the show. And finally, I'm very excited to participate in a live in-person event to see what's working, see how a hybrid events are evolving. We got a good glimpse at mobile world Congress and this week, and, uh, in DC and public sector summit, here's, you know, the cube has been doing hybrid events for years, and we intend to continue to lead in this regard and bring you the best, real time information as possible. Okay. That's it for today. Remember, these episodes are all available as podcasts, wherever you listen. All you do is search braking analysis podcast. We publish each week on Wiki bond.com and siliconangle.com. And you can always connect on twitter@devolanteoremailmeatdaviddotvolanteatsiliconangle.com. Appreciate the comments on LinkedIn. And don't forget to check out E T r.plus for all the survey data. This is Dave Volante for the cube insights powered by ETR be well, and we'll see you next time.

>> 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. >> UiPath has always been an unconventional company. You know it started with humble beginnings. It's essentially a software development shop. Then it caught lightning in a bottle with its computer vision technology. It's really, it's simplification mantra and it created a very easy to deploy software robot system for bespoke departments so they could automate mundane tasks. You know the story. The company grew rapidly, was able to go public early this year. Now consistent with its out-of-the-ordinary approach, while other firms are shutting down travel and physical events, UiPath is moving ahead with Forward IV, it's annual user conference next week with a live audience there at the Bellagio in Las Vegas. It's also fast forwarding as a company, determined to lead the charge beyond RPA and execute on a more all-encompassing Enterprise automation agenda. Hello everyone and welcome to this week's Wikibond Cube Insights powered by ETR. In this breaking analysis and ahead of Forward IV, we'll update you in the RPA market the progress that UiPath has made since its IPO and bringing some ETR customer survey data that's contextualized the company's position in the overall market and relative to the competition. Here's a quick rundown of today's agenda. First I want to tell you theCube is going to be at Forward IV at the Bellagio next week. UiPath, this is their big customer event. It's live, it's a physical event. It's primarily outdoors. You have to be vaccinated to attend. Now, this not completely out of the ordinary. John Furrier and theCube were at AWS Public Sector this past week and we were at Mobile World Congress in one of the first big hybrid events of the year at Barcelona. We thought that event would kick of the fall event season, live event in earnest but the COVID crisis has caused many tech firms, most tech firms actually, to hit pause button. Not UiPath, they're moving ahead. They're going forward and we see a growing trend for smaller VIP events with a virtual component, topic maybe for another day. Now we've talked extensively about the productivity challenges and the automation mandate the pandemic has thrust upon us. Now, we've seen pretty dramatic productivity improvements as remote work kicked in but its brought new stresses. For example, according to Qualtrics, 32% of working moms said their mental health has declined since the pandemic hit. 15% of working dads said the same by the way. So, one has to question the sustainability of this perpetual workday. And we're seeing a continuum of automation solutions emerging and we'll talk about that today. We're seeing tons of M&A as well but now, in that continuum, on the left-side of the spectrum, there's Microsoft who in some ways, they stand alone and their Azure is becoming ubiquitous as a SaaS-Cloud collaboration and productivity platform. Microsoft is everywhere and in virtually every market, whether video conferencing, security, database, cloud, CRM, analytics, you name it. Microsoft is pretty much there and RPA is no different. With the acquisition of Softomotive last year, Microsoft entered the RTA market in earnest and is penetrating very deeply into the space, particularly as it pertains to personal productivity building on its software stake. Now in the middle of that spectrum if you will, we're seeing more M&A and that's defined really by the big software giants. Think of this domain as integrated software place. SAP, they acquired Contextere. They also acquired a company called Process Insights, Service now acquired Inttellebot. Salesforce acquired Servicetrace, we see Infor entering the frame and I would put even Pega, Pega systems in this camp. Software companies focused on integrating RPA into their broader workflows, into their software platforms and this is important because these platforms are entrenched Their well guardants of thoughts and complicated with lots of touchpoints and integration points and frankly they are much harder to automate because of their entrenched legacy. Now, on the far side of that spectrum, are the horizontal automation players and that's been let by UiPath with automation anywhere as the number two player in this domain. And I even put a blue prism in there more M&A recently announced that Vista is going to acquire them Vista also owns Tibco, they are going to merge those two companies. You know Tibco is come up with the integration play. So again I would put them in that you know, horizontal piece of the spectrum. So with that as background, we're going to look at how UiPath has performed since we last covered them and IPO and I'm going to bring in some ETR survey data to get the spending view from customers and we'll wrap up. Now, just to emphasize the importance of automation and the automation mandate, we talk about it all the time in this program. We use this ETR chart. It's a two dimensional view with net score which is the measure of spending momentum on the vertical axis and market share which is a proxy for pervasiveness in the data set that's on the horizontal axis. Now note that red dotted line, it signifies companies within elevated position on the net score vertical axis anything over that is considered pretty good. Very good. Now this shows every spending segment within the ETR taxonomy. And the four spending categories with the greatest velocity are AI, cloud, containers and RPA. And they have topped the charts for quite a while now. They are the only 4 categories which have sustained above that 40% line consistently throughout the pandemic and even before. Now the impressive thing about cloud of course is it has both spending momentum on the vertical axis and a very large market share or presence in the data set. The point is RPA is nascent still. It has an affinity with AI as a means of more intelligently identifying and streamlining process improvements. And so we expect those two to remain elevated and grow to the right together. UiPath pegs its TAM, total available market at 60 billion. And the reality is that could be understated. Okay, as we reported from the UiPath S1 analysis we did pre IPO, the company at that time had an ARR annual recurring revenue of $580 million and it was growing at 65% annually. And nearly 8000 customers at the time, a 1000 of which had an ARR in excess of a 100k. And the net revenue retention the company had was over 145%. So let's take a look at the pictures 6 months forward. We mentioned the $60 billion TAM, ARR now up over $726.5 million on its way to a billion ARR holding pretty steady at 60% growth as is NRR, net revenue retention and more then a 1000 new customers and 200 more with over a 100000 in ARR and a small operating profit which by the way exceeded the consensuses pretty substantially. Profitability is not shown here and no one seems to care anyway these days. It's all about growing into that TAM. Well that's a pretty good looking picture, isn't it? The company had a beat and a raise for the quarter earlier this month, so looking good right. Well you ask how come the stock is not doing better. That's an interesting question. So let's first look at the stocks performance on a relative basis. Here we show UiPath performance against Pega systems and blue prism, the other two publicly traded automation. Pure plays sort of in the case of Pega. So UiPath outperformed post its IPO but since the early summer Pega is been the big winner while UiPath slowly decelerated. You see Blue prism was at the lag until it was announced that it was in an acquisition talks with a couple of PE firms and the prospects of a bidding war sent that yellow line up as you can see. UiPath as you can see on the inset, has a much higher valuation than Pega and way higher than blue Prism. Pega interestingly is growing revenues nicely at around 40%. And I think what's happening is that the street simply wants more. Even though UiPath beat and raised, Wallstreet is still getting comfortable with management which is new to the public market game and the company just needs to demonstrate a track record and build trust. There's also some education around billings and multi-year contracts that the company addressed on its last earnings call. But the street was concerned about ARR for new logos. It appears to be slowing down sequentially and a notable decline in billings momentum which UiPath CFO addressed on the earnings call saying look they don't need the trade margin for prepaid multi year deals, given the strong cash position. Why give anything up. And even though I said nobody cares about profitability well, I guess that's true until you guide for an operating loss when you've been showing small profit in recent quarters what UiPath did. Then, obviously people start to care. So UiPath is in bit of an unknown territory to the street and it has a valuation, it's pretty rich. Very rich actually at 30 times revenue multiple or greater than 30 times revenue multiple. So that's why in my view, investors are being cautious. But I want to address a dynamic that we have seen with this high growth rocket chip companies. Something we talked about Snowflake and I think you are seeing some of that here with UiPath. Different model in the sense that Snowflake is pure cloud but I'm talking about concerns around ARR and from new logos and that growth in a sequential basis. And here's what's happening in my view with UiPath. You have a company that started within departments with a smaller average contract size, ACV maybe 25000, may be 50000 but not deep six figure deals. That wasn't UiPath's play. And because the company focused so heavily on simplicity and made it really easy to adapt, customers saw really fast ROI. I mean break-even in months. So we very quickly saw expansion into other departments. So when ACV started to rise and installations expanded within each customer, UiPath realized it had to move beyond a point product and it started thing about a platform and making acquisitions like Processgold and others and this marked a much deeper expansion into the customer base. And you can see that here in this UiPath chart that they shared at their investor deck, customers that bought in 2016 and 2017 expanded their spend 13, 15, 18, 20x So the LTV, life time value of the customer is growing dramatically and because UiPath is focused on simplicity, and has a very facile premium model much easier to try before you buy than its competitors it's CAC, Customer acquisition cost are likely much lower than some of its peers. And that's a key dynamic. So don't get freaked out by some of those concerns that we raised earlier because just like Snowflake what's happening is that the company for sure is gaining new customers, may be just not at the same rate but don't miss the forest through the trees I.e getting more money from their existing customers which means retention, loyalty and growth. Now speaking of forest, this chart is the dynamic I'm talking about, its an ETR graphic that shows the components of net score against spending momentum. Net score breaks down into 5 areas. That lime green at the top is new additions. Okay, so that's only 11% of the customer mentions. By the way we are talking about more than a 125 responses for UiPath. So it's meaningful, it's actually larger in this survey or certainly comparable to Microsoft. So that's just something right there. The next bar is the forest green. Forest green is what I want you to focus. That's customer spending 6% or more in the second half of the year relative to the first half. The gray is flat spending which is quite large. The pink or light red, that's spending customers spending 6% or worse, that's a 4% number. But look at the bottom bar. There is no bar, that's churn. 0% of the responders in the survey are churning. And Churn is the silent killer of SaaS companies. 0% defections. So you've got 46% spending more, nobody leaving. That's the dynamic powering UiPath right now and I would take this picture any day over a larger lime green and a smaller forest green and a bigger churn number. Okay, it's pretty good, not Snowflake good but it's solid. So how does this picture compare to UiPath's peers. Let's take a look at that. So this is ETR data, same data showing the granularity net score for Microsoft power automate, UiPath automation anywhere, Blue Prism and Pega. So as we said before, Microsoft is ubiquitous. What can we say about that. But UiPath is right there with a more robust platform. Not to overlook Microsoft, you can't but UiPath will you that the don't compete head to head for enterprise automation deals with Microsoft and may be they will over time. They do however compete head to head with automation anywhere. And their picture is quite strong as you can see here. You know as is Blue Prism's picture and even Pega. Although Blue Prism automation anywhere UiPtah and power automate all have net scores on this chart as you can see the tables in the upper right over 40%, Pega does not. But you can see Pega as a pure play RPA vendor it's a little bit of sort of apples and oranges there but they do sell RPA and ETR captures in their taxonomy so why not include them. Also note that UiPath has as I said before more mentions in the survey than power automate which is actually quite interesting given the ubiquity of Microsoft. Now, one other notable note is the bright red that's defections and only UiPath is showing zero defections Everybody else has at least little of the slims on defections. Okay, so take that as you will but its another data point, the one that is powerful nit only for UiPath but really for the entire sector. Now the last ETR data point that we want to share is the famous two dimensional view. Like the sector chart we showed earlier, this graphic shows the net score on the vertical axis that's against spending velocity and market share or pervasiveness on the horizontal axis. So as we said earlier, UiPath actually has a greater presence in the survey than the ever present Microsoft. Remember, this is the July survey. We don't have full results from the September-October survey yet and we can't release them until ETR is out of its quiet period but I expect the entire sector, like everything is going to be slightly down because as reported last week tech spending is moderated slightly in the second half of this year. But we don't expect the picture to change dramatically UiPath and power automate we think are going to lead in market presence and those two plus automation anywhere is going to show the strength in spending momentum as will most of the sector. We'll see who comes in above the 40% line. Okay, what to watch at Forward IV. So in summary I'll be looking for a few things. One, UiPath has hinted toward a big platform announcement that will deepen its capabilities to beyond being an RPA point tool into much more of an enterprise automation platform, rewriting a lot of the code Linux, cloud, better automation of the UI, you are going to hear all kind of new product announcements that are coming so I'll be listening for those details. I want to hear more from customers that further confirm what I've been hearing from them over the last couple of years and get more data especially on their ROI, on their land and expand, I want to understand that dynamic and that true enterprise automation. It's going to be good to get an update face to face and test some of our assumptions here and see where the gaps are and where UiPath can improve. Third, I want to talk to ecosystem players to see where they are in participating in the value chain here. What kind of partner has UiPath become since its IPO, are they investing more in the ecosystem, how do partners fit into that flywheel. Fourth, I want to hear from UiPath management Daniel Dines and other UiPath leaders, their exiting toddler wheel and coming into an adolescence phase or early adulthood. And what does that progression look like, how does it feel, what's the vibe at the show. And finally I'm very excited to participate in a live in-person event to see what's working, to see how hybrid events are evolving, we got to good glimpse at Mobile congress and this week in DC at public sector summit. As you know theCube is doing hybrid events for years and we intend to continue to lead in this regard and bring you the best real time information as possible. Okay, that's it for today. Remember these episodes are all available as podcasts wherever you listen, all you do is search breaking analysis podcast. We publish each week on Wikibound.com and Siliconangle.com and you can always connect on twitter @dvellante or email me at David.vellante@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 theCube insights powered by ETR. Be well and will see you next time. (upbeat music)

>>on the globe. It's the Cube with digital coverage of AWS reinvent 2020 sponsored by Intel, AWS and our community partners. Hello and welcome back to the Cubes Live coverage Cube live here in Palo Alto, California, with the Virtual Cube this year because we can't be there in person. I'm your host, John Fairy year. We're kicking off Day two of the three weeks of reinvent a lot of great leadership sessions to review, obviously still buzzing from the Andy Jassy three. Our keynote, which had so many storylines, is really hard to impact. We're gonna dig that into into into that today with Jerry Chan, who has been a Cube alumni since the beginning of our AWS coverage. Going back to 2013, Jerry was wandering the hallways as a um, in between. You were in between vm ware and V C. And then we saw you there. You've been on the Cube every year at reinvent with us. So special commentary from you. Thanks for coming on. >>Hey, John, Thanks for having me and a belated happy birthday as well. If everyone out there John's birthday was yesterday. So and hardest. Howard's working man in technology he spent his entire birthday doing live coverage of Amazon re events. Happy birthday, buddy. >>Well, I love my work. I love doing this. And reinvent is the biggest event of the year because it really is. It's become a bellwether and eso super excited to have you on. We've had great conversations by looking back at our conversations over the Thanksgiving weekend. Jerry, the stuff we were talking about it was very proposed that Jassy is leaning in with this whole messaging around change and horizontal scalability. He didn't really say that, but he was saying you could disrupt in these industries and still use machine learning. This was some of the early conversations we were having on the Cube. Now fast forward, more mainstream than ever before. So big, big part of the theme there. >>Yeah, it z you Amazon reinvent Amazon evolution to your point, right, because it's both reinventing what countries are using with the cloud. But also what Amazon's done is is they're evolving year after year with their services. So they start a simple infrastructure, you know, s three and e c. Two. And now they're building basically a lot of what Andy said you actually deconstructed crm? Ah, lot of stuff they're doing around the call centers, almost going after Salesforce with kind of a deconstructed CRM services, which is super interesting. But the day you know, Amazon announces all those technologies, not to mention the AI stuff, the seminar stuff you have slack and inquired by Salesforce for $27.7 billion. So ah, lot of stuff going on in the cloud world these days, and it's funny part of it, >>you know, it really is interesting. You look up the slack acquisition by, um, by Salesforce. It's interesting, you know, That kind of takes slack out of the play here. I mean, they were doing really well again. Message board service turns into, um, or collaboration software. They hit the mainstream. They have great revenue. Is that going to really change the landscape of the industry for Salesforce? They've got to acquire it. It opens the door up from, or innovation. And it's funny you mention the contact Center because I was pressing Jassy on my exclusive one on one with him. Like they said, Andy, my my daughter and my sons, they don't use the phone. They're not gonna call. What's this? Is it a call center deal? And he goes, No, it's the It's about the contact. So think about that notion of the contact. It's not about the call center. It's the point of contact. Okay, Linked in is with Microsoft. You got slack and Salesforce Contact driven collaboration. Interesting kind of play for Microsoft to use voice and their data. What's your take on that? >>I think it's, um you know, I have this framework. As you know, I talked my friend systems of engagement over systems intelligence and systems record. Right? And so you could argue voice email slack because we're all different systems of engagement, and they sit on top of system of record like CRM customer support ticketing HR. Something like that. Now what sells first did by buying slack is they now own a system engagement, right? Not on Lee is slack. A system engagement for CRM, but also system engagement for E. R. P Service. Now is how you interact with a bunch of applications. And so if you think about sales for strategy in the space, compete against Marcus Soft or serves now or other large AARP's now they own slack of system engagement, that super powerful way to actually compete against rival SAS companies. Because if you own the layer engagement layer, you can now just intermediate what's in the background. Likewise, the context center its own voice. Email, chat messaging, right? You can just inter mediate this stuff in the back, and so they're trying to own the system engagement. And then, likewise, Facebook just bought that company customer a week ago for a billion dollars, which also Omni Channel support because it is chat messaging voice. It's again the system engagement between End User, which could be a customer or could be employees. >>You know, this really gonna make Cit's enterprise has been so much fun over the past 10 years, I gotta say, in the past five, you know, it's been even more fun, has become or the new fun area, you know, And the impact to enterprise has been interesting because and we're talking about just engaging system of record. This is now the new challenge for the enterprise. So I wanna get your thoughts, Jerry, because how you see the Sea, X O's and CSOs and the architects out there trying to reinvent the enterprise. Jassy saying Look and find the truth. Be on the right side of history here. Certainly he's got himself service interest there, but there is a true band eight with Cove it and with digital acceleration for the enterprise to change. Um, given all these new opportunities Thio, revolutionize or disrupt or radically improve, what's the C. C X's do? What's your take on? How do you see that? >>It's increasingly messy for the CXS, and I don't I don't envy them, right? Because back in the day they kind of controlled all the I t spend and kind of they had a standard of what technologies they use in the company. And then along came Amazon in cloud all of sudden, like your developers and Dio Hey, let me swipe my credit card and I'm gonna access to a bunch of a P I s around computing stories. Likewise. Now they could swipe the credit card and you strike for billing, right? There's a whole bunch of services now, so it becomes incumbent upon CSOs. They need Thio new set of management tools, right? So not only just like, um, security tools they need, they need also observe ability, tools, understanding what services are being used by the customers, when and how. And I would say the following John like CSOs is both a challenge for them. But I think if I was a C X, so I'll be pretty excited because now I have a bunch of other weapons and other bunch of services I could offer. My end users, my developers, my employees, my customers and, you know it's exciting for them is not only could they do different things, but they also changed how their business being done. And so I think both interact with their end users. Be a chat like slack or be a phone like a contact center or instagram for your for your for your kids. It's actually a new challenge if I were sick. So it's it's time to build again, you know, I think Cove it has said it is time to build again. You can build >>to kind of take that phrase from the movie Shawshank Redemption. Get busy building or get busy dying. Kinda rephrase it there. And that's kind of the theme I'm seeing here because covert kind of forced people saying, Look, this things like work at home. Who would have thought 100% people would be working at home? Who would have thought that now the workloads gonna change differently? So it's an opportunity to deconstruct or distant intermediate these services. And I think, you know, in all the trends that I've seen over my career, it's been those inflection points where breaking the monolith or breaking the proprietary piece of it has always been an opportunity for for entrepreneur. So you know, and and for companies, whether you're CEO or startup by decomposing and you can come in and create value E I think to me, snowflake going public on the back of Amazon. Basically, this is interesting. I mean, so you don't have to be. You could kill one feature and nail it and go big. >>I think we talked to the past like it's Amazon or Google or Microsoft Gonna win. Everything is winner take all winner take most, and you could argue that it's hard to find oxygen as a start up in a broad platform play. But we think Snowflake and other companies have done and comes like mongo DB, for example, elastic have shown that if you can pick a service or a problem space and either developed like I p. That's super deep or own developer audience. You can actually fight the big guys. The Big Three cloud vendors be Amazon, Google or or market soft in different markets. And I think if you're a startup founder, you should not be afraid of competing with the big cloud vendors because there there are success patterns and how you can win and you know and create a lot of value. So I have found Investor. I'm super excited by that because, you know, I don't think you're gonna find a company takedown Amazon completely because they're just the scale and the network effects is too large. But you can create a lot of value and build Valuable comes like snowflake in and around the Amazon. Google Microsoft Ecosystem. >>Yeah, I want to get your thoughts. You have one portfolio we've covered rock rock set, which does a lot of sequel. Um, one of your investments. Interesting part of the Kino yesterday was Andy Jassy kind of going after Microsoft saying Windows sequel server um, they're targeting that with this new, uh, tool, but, you know, sucks in the database of it is called the Babel Fish for Aurora for post Chris sequel. Um, well, how was your take on that? I mean, obviously Microsoft big. Their enterprise sales tactics are looking like more like Oracle, which he was kind of hinting at and commenting on. But sequel is Lingua Franca for data >>correct. I think we went to, like, kind of a no sequel phase, which was kind of a trendy thing for a while and that no sequel still around, not only sequel like mongo DB Document TV. Kind of that interface still holds true, but your point. The world speaks sequel. All your applications be sequel, right? So if you want backwards, compatibility to your applications speaks equal. If you want your tire installed base of employees that no sequel, we gotta speak sequel. So, Rock said, when the first public conversations about what they're building was on on the key with you and Me and vent hat, the founder. And what Rock said is doing their building real time. Snowflake Thio, Lack of better term. It's a real time sequel database in the cloud that's super elastic, just like Snowflake is. But unlike snowflake, which is a data warehouse mostly for dashboards and analytics. Rock set is like millisecond queries for real time applications, and so think of them is the evolution of where cloud databases air going is not only elastic like snowflake in the cloud like Snowflake. We're talking 10 15 millisecond queries versus one or two second queries, and I think what any Jassy did and Amazon with bowel officials say, Hey, Sequels, Legal frank of the cloud. There's a large installed base of sequel server developers out there and applications, and we're gonna use Babel fish to kind of move those applications from on premise the cloud or from old workload to the new workloads. And, I think, the name of the game. For for cloud vendors across the board, big and small startups thio Google markets, often Amazon is how do you reduce friction like, How do you reduce friction to try a new service to get your data in the cloud to move your data from one place to the next? And so you know, Amazon is trying to reduce friction by using Babel fish, and I think it is a great move by them. >>Yeah, by the way. Not only is it for Aurora Post Chris equal, they're also open sourcing it. So that's gonna be something that is gonna be interesting to play out. Because once they open source it essentially, that's an escape valve for locking. I mean, if you're a Microsoft customer, I mean, it ultimately is. Could be that Gateway drug. It's like it is ultimately like, Hey, if you don't like the licensing, come here. Now there's gonna be some questions on the translations. Um, Vince, um, scuttlebutt about that. But we'll see it's open source. We'll see what goes on. Um great stuff on on rocks that great. Great. Start up next. Next, uh, talk track I wanna get with you is You know, over the years, you know, we've talked about your history. We're gonna vm Where, uh, now being a venture capitalist. Successful, wanted Greylock. You've seen the waves, and I would call it the two ways pre cloud Early days of cloud. And now, with co vid, we're kind of in the, you know, not just born in the cloud Total cloud scale cloud operations. This is kind of what jazz he was going after. E think I tweeted Cloud is eating the world and on premise and the edges. What it's hungry for. It kind of goof on mark injuries since quote a software eating the world. This is where it's going. So it's a whole another chapter coming. You saw the pre cloud you saw Cloud. Now we've got basically global I t everything else >>It's cloud only I would say, You know, we saw pre cloud right the VM ware days and before that he called like, you know, data centers. I would say Amazon lawns of what, 6 4007, the Web services. So the past 14 15 years have been what I've been calling cloud transition, right? And so you had cos technologies that were either doing on migration from on premise and cloud or hybrid on premise off premise. And now you're seeing a generation of technologies and companies. Their cloud only John to your point. And so you could argue that this 15 year transitions were like, you know, Thio use a bad metaphor like amphibians. You're half in the water, half on land, you know, And like, you know, you're not You're not purely cloud. You're not purely on premise, but you can do both ways, and that's great. That's great, because that's a that's a dominant architecture today. But come just like rock set and snowflake, your cloud only right? They're born in the cloud, they're built on the cloud And now we're seeing a generation Startups and technology companies that are cloud only. And so, you know, unlike you have this transitionary evolution of like amphibians, land and sea. Now we have ah, no mammals, whatever that are Onley in the cloud Onley on land. And because of that, you can take advantage of a whole different set of constraints that are their cloud. Only that could build different services that you can't have going backwards. And so I think for 2021 forward, we're going to see a bunch of companies or cloud only, and they're gonna look very, very different than the previous set of companies the past 15 years. And as an investor, as you covering as analysts, is gonna be super interesting to see the difference. And if anything, the cloud only companies will accelerate the move of I t spending the move of mawr developers to the cloud because the cloud only technologies are gonna be so much more compelling than than the amphibians, if you will. >>Yeah, insisting to see your point. And you saw the news announcement had a ton of news, a ton of stage making right calls, kind of the democratization layer. We'll look at some of the insights that Amazon's getting just as the monster that they are in terms of size. The scope of what? Their observation spaces. They're seeing all these workloads. They have the Dev Ops guru. They launched that Dev Ops Guru thing I found interesting. They got data acquisition, right? So when you think about these new the new data paradigm with cloud on Lee, it opens up new things. Um, new patterns. Um, S o. I think I think to me. I think that's to me. I see where this notion of agility moves to a whole nother level, where it's it's not just moving fast, it's new capabilities. So how do you How do you see that happening? Because this is where I think the new generation is gonna come in and be like servers. Lambs. I like you guys actually provisioned E c. Two instances before I was servers on data centers. Now you got ec2. What? Lambda. So you're starting to see smaller compute? Um, new learnings, All these historical data insights feeding into the development process and to the application. >>I think it's interesting. So I think if you really want to take the next evolution, how do you make the cloud programmable for everybody? Right. And I think you mentioned stage maker machine learning data scientists, the sage maker user. The data scientists, for example, does not on provisioned containers and, you know, kodama files and understand communities, right? Like just like the developed today. Don't wanna rack servers like Oh, my God, Jerry, you had Iraq servers and data center and install VM ware. The generation beyond us doesn't want to think about the underlying infrastructure. You wanna think about it? How do you just program my app and program? The cloud writ large. And so I think where you can see going forward is two things. One people who call themselves developers. That definition has expanded the past 10, 15 years. It's on Lee growing, so everyone is gonna be developed right now from your white collar knowledge worker to your hard core infrastructure developer. But the populist developers expanding especially around machine learning and kind of the sage maker audience, for sure. And then what's gonna happen is, ah, law. This audience doesn't want to care about the stuff you just mentioned, John in terms of the online plumbing. So what Amazon Google on Azure will do is make that stuff easy, right? Or a starved could make it easy. And I think that the move towards land and services that moved specifically that don't think about the underlying plumbing. We're gonna make it easy for you. Just program your app and then either a startup, well, abstract away, all the all the underlying, um, infrastructure bits or the big three cloud vendors to say, you know, all this stuff would do in a serverless fashion. So I think serverless as, ah paradigm and have, quite frankly, a battlefront for the Big Three clouds and for startups is probably one in the front lines of the next generation. Whoever owns this kind of program will cloud model programming the Internet program. The cloud will be maybe the next platform the next 10 or 15 years. I still have two up for grabs. >>Yeah, I think that is so insightful. I think that's worth calling out. I think that's gonna be a multi year, um, effort. I mean, look at just how containers now, with ks anywhere and you've got the container Service of control plane built in, you got, you know, real time analytics coming in from rock set. And Amazon. You have pinned Pandora Panorama appliance that does machine learning and computer vision with sensors. I mean, this is just a whole new level of purpose built stuff software powered software operated. So you have this notion of Dev ops going to hand in the glove software and operations? Kind of. How do you operate this stuff? So I think the whole new next question was Okay, this is all great. But Amazon's always had this problem. It's just so hard. Like there's so much good stuff. Like, who do you hired operate it? It is not yet programmable. This has been a big problem for them. Your thoughts on that, >>um e think that the data illusion around Dev ops etcetera is the solution. So also that you're gonna have information from Amazon from startups. They're gonna automate a bunch of the operations. And so, you know, I'm involved to come to Kronos Fear that we talked about the past team kind of uber the Bilson called m three. That's basically next generation data dog. Next generation of visibility platform. They're gonna collect all the data from the applications. And once they have their your data, they're gonna know how to operate and automate scaling up, scaling down and the basic remediation for you. So you're going to see a bunch of tools, take the information from running your application infrastructure and automate exactly how to scale and manager your app. And so AI and machine learning where large John is gonna be, say, make a lot of plumbing go away or maybe not completely, but lets you scale better. So you, as a single system admin are used. A single SRE site reliability engineer can scale and manage a bigger application, and it's all gonna be around automation and and to your point, you said earlier, if you have the data, that's a powerful situations. Once have the data can build models on it and can start building solutions on the data. And so I think What happens is when Bill this program of cloud for for your, you know, broad development population automating all this stuff becomes important. So that's why I say service or this, You know, automation of infrastructure is the next battleground for the cloud because whoever does that for you is gonna be your virtualized back and virtualized data center virtualized SRE. And if whoever owns that, it's gonna be a very, very strategic position. >>Yeah, it's great stuff. This is back to the theme of this notion of virtualization is now gone beyond server virtualization. It's, you know, media virtualization with the Cube. My big joke here with the Q virtual. But it's to your point. It's everything can now be replicated in software and scale the cloud scale. So it's super big opportunity for entrepreneurs and companies. Thio, pivot and differentiate. Uh, the question I have for you next is on that thread Huge edge discussion going on, right. So, you know, I think I said it two years ago or three years ago. The data center is just a edges just a big fat edge. Jassy kind of said that in his keynote Hey, looks at that is just a Nedum point with his from his standpoint. But you have data center. You have re alleges you've got five G with wavelength. This local zone concept, which is, you know, Amazon in these metro areas reminds me the old wireless point of presence kind of vibe. And then you've got just purpose built devices like cameras and factory. So huge industrial innovation, robotics, meet software. I mean, whole huge edge development exploding, Which what's your view of this? And how do you look at that from? Is an investor in industry, >>I think edges both the opportunity for start ups and companies as well as a threat to Amazon, right to the reason why they have outposts and all the stuff the edges if you think about, you know, decentralizing your application and moving into the eggs from my wearable to my home to my car to my my city block edges access Super interesting. And so a couple things. One companies like Cloudflare Fastly company I'm involved with called Kato Networks that does. SAS is secure access service edge write their names and the edges In the category definition sassy is about How do you like get compute to the edge securely for your developers, for your customers, for your workers, for end users and what you know comes like Cloudflare and Kate have done is they built out a network of pops across the world, their their own infrastructure So they're not dependent upon. You know, the big cloud providers, the telco providers, you know, they're partnering with Big Cloud, their parting with the telcos. But they have their own kind of system, our own kind of platform to get to the edge. And so companies like Kato Networks in Cloud Player that have, ah, presence on the edge and their own infrastructure more or less, I think, are gonna be in a strategic position. And so Kate was seen benefits in the past year of Of of Cove it and locked down because more remote access more developers, Um, I think edge is gonna be a super great area development going forward. I think if you're Amazon, you're pushing to the edge aggressively without post. I think you're a developer startup. You know, creating your own infrastructure and riding this edge wave could be a great way to build a moat against a big cloud guy. So I'm super excited. You think edge in this whole idea of your own infrastructure. Like what Kato has done, it is gonna be super useful going forward. And you're going to see more and more companies. Um, spend the money to try to copy kind of, ah, Cloudflare Kato presence around the world. Because once you own your own kind of, um, infrastructure instead of pops and you're less depend upon them a cloud provider, you're you're in a good position because there's the Amazon outage last week and I think like twilio and a bunch of services went down for for a few hours. If you own your own set of pops, your independent that it is actually really, really secure >>if you and if they go down to the it's on you. But that was the kinesis outage that they had, uh, they before Thanksgiving. Um, yeah, that that's a problem. So on this on. So I guess the question for you on that is that Is it better to partner with Amazon or try to get a position on the edge? Have them either by you or computer, create value or coexist? How do you see that that strategy move. Do you coexist? Do you play with them? >>E think you have to co exist? I think that the partner coexist, right? I think like all things you compete with Amazon. Amazon is so broad that will be part of Amazon and you're gonna compete with and that's that's fair game, you know, like so Snowflake competes against red shift, but they also part of Amazon's. They're running Amazon. So I think if you're a startup trying to find the edge, you have to coexist in Amazon because they're so big. Big cloud, right, The Big three cloud Amazon, Google, Azure. They're not going anywhere. So if you're a startup founder, you definitely coexist. Leverage the good things of cloud. But then you gotta invest in your own edge. Both both figure early what? Your edge and literally the edge. Right. And I think you know you complement your edge presence be it the home, the car, the city block, the zip code with, you know, using Amazon strategically because Amazon is gonna help you get two different countries, different regions. You know you can't build a company without touching Amazon in some form of fashion these days. But if you're a star found or doing strategically, how use Amazon and picking how you differentiate is gonna be key. And if the differentiation might be small, John. But it could be super valuable, right? So maybe only 10 or 15%. But that could be ah Holton of value that you're building on top of it. >>Yeah, and there's a little bit of growth hack to with Amazon if you you know how it works. If you compete directly against the core building blocks like a C two has three, you're gonna get killed, right? They're gonna kill you if the the white space is interest. In the old days in Microsoft, you had a white space. They give it to you or they would roll you over and level you out. Amazon. If you're a customer and you're in a white space and do better than them, they're cool with that. They're like, basically like, Hey, if you could innovate on behalf of the customer, they let you do that as long as you have a big bill. Yeah. Snowflakes paying a lot of money to Amazon. Sure, but they also are doing a good job. So again, Amazon has been very clear on that. If you do a better job than us for, the customer will do it. But if they want Amazon Red Shift, they want Amazon Onley. They can choose that eso kind of the playbook. >>I think it is absolutely right, John is it sets from any jassy and that the Amazon culture of the customer comes first, right? And so whatever is best for the customer that's like their their mission statement. So whatever they do, they do for the customer. And if you build value for the customer and you're on top of Amazon, they'll be happy. You might compete with some Amazon services, which, no, the GM of that business may not be happy, but overall. Net Net. Amazon's getting a share of those dollars that you're that you're charging the customer getting a share of the value you're creating. They're happy, right? Because you know what? The line rising tide floats all the boats. So the Mork cloud usage is gonna only benefit the Big Three cloud providers Amazon, particularly because they're the biggest of the three. But more and more dollars go the cloud. If you're helping move more. Absolute cloud helping build more solutions in the cloud. Amazon is gonna be happy because they know that regardless of what you're doing, you will get a fraction of those dollars. Now, the key for a startup founder and what I'm looking for is how do we get mawr than you know? A sliver of the dollars. How to get a bigger slice of the pie, if you will. So I think edge and surveillance or two areas I'm thinking about because I think there are two areas where you can actually invest, own some I p owned some surface area and capture more of the value, um, to use a startup founder and, you know, are built last t to Amazon. >>Yeah. Great. Great thesis. Jerry has always been great. You've been with the Cube since the beginning on our first reinvented 2013. Um, and so we're now on our eighth year. Great to see your success. Great investment. You make your world class investor to great firm Greylock. Um great to have you on from your perspective. Final take on this year. What's your view of Jackie's keynote? Just in general, What's the vibe. What's the quick, um, soundbite >>from you? First, I'm so impressed and you can do you feel like a three Archy? No more or less by himself. Right then, that is, that is, um, that's a one man show, and I'm All of that is I don't think I could pull that off. Number one. Number two It's, um, the ability to for for Amazon to execute at so many different levels of stack from semiconductors. Right there, there there ai chips to high level services around healthcare solutions and legit solutions. It's amazing. So I would say both. I'm impressed by Amazon's ability. Thio go so broad up and down the stack. But also, I think the theme from From From Andy Jassy is like It's just acceleration. It's, you know now that we will have things unique to the cloud, and that could be just a I chips unique to the cloud or the services that are cloud only you're going to see a tipping point. We saw acceleration in the past 15 years, John. He called like this cloud transition. But you know, I think you know, we're talking about 2021 beyond you'll see a tipping point where now you can only get certain things in the cloud. Right? And that could be the underlying inference. Instances are training instances, the Amazons giving. So all of a sudden you as a founder or developer, says, Look, I guess so much more in the cloud there's there's no reason for me to do this hybrid thing. You know, Khyber is not gonna go away on Prem is not going away. But for sure. We're going to see, uh, increasing celebration off cloud only services. Um, our edge only services or things. They're only on functions that serve like serverless. That'll be defined the next 10 years of compute. And so that for you and I was gonna be a space and watch >>Jerry Chen always pleasure. Great insight. Great to have you on the Cube again. Great to see you. Thanks for coming on. >>Congrats to you guys in the Cube. Seven years growing. It's amazing to see all the content put on. So you think it isn't? Just Last point is you see the growth of the curve growth curves of the cloud. I'd be curious Johnson, The growth curve of the cube content You know, I would say you guys are also going exponential as well. So super impressed with what you guys have dealt. Congratulations. >>Thank you so much. Cute. Virtual. We've been virtualized. Virtualization is coming here, or Cubans were not in person this year because of the pandemic. But we'll be hybrid soon as events come back. I'm John for a year. Host for AWS reinvent coverage with the Cube. Thanks for watching. Stay tuned for more coverage all day. Next three weeks. Stay with us from around the globe. It's the Cube with digital coverage of aws reinvent 2020 sponsored by Intel >>and AWS. Welcome back here to our coverage here on the Cube of AWS.

>>Fly from San Francisco. It's the cube covering RSA conference, 2020 San Francisco brought to you by Silicon angle media. >>Hi everyone. Welcome back to the cubes coverage here at in San Francisco, the Moscone center for RSA conference 2020 I'm job for your host. We are the very special guests, the COO of VMware, Sanjay Poonen, cube alumni. When you talk about security, talk about the modern enterprise as it transforms new use cases, new problems emerge. New opportunities exist here to break it down. Sanjay, welcome back. Thank you John. Always a pleasure to be on your show and I think it's my first time at RSA. We've talked a number of times, but nice to see you here. Well, it's a security guard. Well, this is really why I wanted you to talk, talk to you because operations is become now the big conversation around security. So you know, security was once part of it. It comes out and part of the board conversation, but when you look at security, all the conversations that we're seeing that are the most important conversations are almost a business model conversation. >>Almost like if you're the CEO of the company, you've got HR people, HR, organizational behavior, collaboration, technology, stack compliance and risk management. So the threat of cyber has to cut across now multiple operational functions of the business. It's no longer one thing, it's everything. So this is really kind of makes it the pressure of the business owners to be mindful of a bigger picture. And the attack velocity is happening so much faster, more volume of attacks, milliseconds and nanosecond attacks. So this is a huge, huge problem. I need you to break it down for me. >> Good. But then wonderful intro. No, I would say you're absolutely right. First off, security is a boardroom topic. Uh, audit committees are asking, you know, the CIO so often, you know, reports a report directly, sometimes, often not even to the CIO, to the head of legal or finance and often to the audit. >>So it's a boardroom topic then. You're right, every department right now cares about security because they've got both threat and security of nation state, all malicious, organized crime trying to come at them. But they've also got physical security mind. I mean, listen, growing a virus is a serious threat to our physical security. And we're really concerned about employees and the idea of a cyber security and physical security. We've put at VMware, cybersecurity and, and um, um, physical security. One guy, the CIO. So he actually runs vote. So I think you're absolutely right and if you're a head of HR, you care about your employees. If you're care ahead of communications, you care about your reputation and marketing the same way. If you're a finance, you care about your accounting systems and having all of the it systems that are. So we certainly think that holistic approach does, deserves a different approach to security, which is it can't be silo, silo, silo. >>It has to be intrinsic. And I've talked on your show about why intrinsic and how differentiated that intrinsic security, what I talked about this morning in my keynote. >> Well, and then again, the connect the dots there. It's not just security, it's the applications that are being built on mobile. For instance, I've got a mobile app. I have milliseconds, serious bond to whether something's yes or no. That's the app on mobile. But still the security threat is still over here and I've got the app over here. This is now the reality. And again, AirWatch was a big acquisition that you did. I also had some security. Carbon black was a $2 billion acquisition that VMware made. That's a security practice. How's it all coming together? Can you think of any questions? Blame the VMware because it's not just security, it's what's around it. >> Yeah. I think we began to see over the course of the last several years that there were certain control points and security that could help, you know, bring order to this chaos of 5,000 security vendors. >>They're all legitimate. They're all here at the show. They're good vendors. But you cannot, if you are trying to say healthy, go to a doctor and expect the doctor to tell you, eat 5,000 tablets and sailed. He just is not sustainable. It has to be baked into your diet. You eat your proteins, your vegetables, your fruit, your drink, your water. The same way we believe security needs to become intrinsically deeper parts, the platform. So what were the key platforms and control points? We decided to focus on the network, the endpoint, and you could think of endpoint as to both client and workload identity, cloud analytics. You take a few of those and network. We've been laboring the last seven years to build a definitive networking company and now a networking security company where we can do everything from data center networking, Dell firewalls to load balancing to SDN in this NSX platform. >>You remember where you bought an nice syrup. The industry woke up like what's VM ever doing in networking? We've now built on that 13,000 customers really good growing revenue business in networking and and now doing that working security. That space is fragmented across Cisco, Palo Alto, FIU, NetScaler, checkpoint Riverbed, VMware cleans that up. You get to the end point side. We saw the same thing. You know you had an endpoint management now workspace one the sequel of what AirWatch was, but endpoint security again, fragmented. You had Symantec McAfee, now CrowdStrike, tenable Qualis, you know, I mean just so many fragmented IOM. We felt like we could come in now and clean that up too, so I have to worry about to do >> well basically explaining that, but I want to get now to the next conversation point that I'm interested in operational impact because when you have all these things to operationalize, you saw that with dev ops and cloud now hybrid, you got to operationalize this stuff. >>You guys have been in the operations side of the business for our VMware. That's what you're known for and the developers and now on the horizon I gotta operationalize all the security. What do I do? I'm the CSO. I think it's really important that in understanding operations of the infrastructure, we have that control point called vSphere and we're now going to take carbon black and make it agentless on the silverside workloads, which has never been done before. That's operationalizing it at the infrastructure level. At the end point we're going to unify carbon black and workspace one into a unified agent, never been done before. That's operationalizing it on the client side. And then on the container and the dev ops site, you're going to start bringing security into the container world. We actually happened in our grade point of view in containers. You've seen us do stuff with Tansu and Kubernetes and pivotal. >>Bringing that together and data security is a very logical thing that we will add there. So we have a very good view of where the infrastructure and operations parts that we know well, a vSphere, NSX workspace one containers with 10 Xu, we're going to bring security to all of them and then bake it more and more in so it's not feeling like it's a point tool. The same platform, carbon black will be able to handle the security of all of those use cases. One platform, several use cases. Are you happy with the carbon black acquisition? Listen, you know, you stay humble and hungry. Uh, John for a fundamental reason, I've been involved with number of acquisitions from my SAP VMware days, billion dollar plus. We've done talking to us. The Harvard business review had an article several years ago, which Carney called acquisitions and majority of them fail and they feel not because of process of product they feel because good people leave. >>One of the things that we have as a recipe does acquisition. We applied that to AirWatch, we apply the deny Sera. There is usually some brain trust. You remember in the days of nice area, it was my team Cosato and the case of AirWatch. It was John Marshall and that team. We want to preserve that team to help incubate this and then what breve EV brings a scale, so I'm delighted about Patrick earlier. I want to have him on your show next time because he's now the head of our security business unit. He's culturally a fit for the mr. humble, hungry. He wants to see just, we were billion dollar business now with security across networking endpoint and then he wants to take just he's piece of it, right? The common black piece of it, make it a billion dollar business while the overall security business goes from three to five. >>And I think we're going to count them for many years to come to really be a key part of VMware's fabric, a great leader. So we're successful. If he's successful, what's my job then? He reports to me is to get all the obstacles out of the way. Get every one of my core reps to sell carbon black. Every one of the partners like Dell to sell carbon black. So one of the deals we did within a month is Dell has now announced that their preferred solution on at Dell laptops, this carbon bike, they will work in the past with silence and crowd CrowdStrike. Now it's common black every day laptop now as a default option. That's called blank. So as we do these, John, the way we roll is one on here to basically come in and occupy that acquisition, get the obstacles out of the way, and that let Patrick scaled us the same way. >>Martine Casado or jumbo. So we have a playbook. We're gonna apply that playbook. Stay humble and hungry. And you ask me that question every year. How are we doing a carbon black? I will be saying, I love you putting a check on you. It will be checking in when we've done an AirWatch. What do you think? Pretty good. Very good. I think good. Stayed line to the radar. Kept growing. It's top right. Known every magic quadrant. That business is significant. Bigger than the 100 million while nice here. How do we do a nice hero? NSX? It's evolved quite a bit. It's evolved. So this is back to the point. VMware makes bets. So unlike other acquisitions where they're big numbers, still big numbers, billions or billions, but they're bets. AirWatch was a good bet. Turned out okay. That the betting, you're being conservative today anyway. That's it. You're making now. >>How would you classify those bets? What are the big bets that you're making right now? Listen, >> I think there's, um, a handful of them. I like to think of things as no more than three to five. We're making a big bet. A multi-cloud. Okay. The world is going to be private, public edge. You and us have talked a lot about VMware. AWS expanded now to Azure and others. We've a big future that private cloud, public cloud edge number two, we're making a big bet on AB motorization with the container level 10 zoos. I think number three, we're making a big bet in virtual cloud networking cause we think longterm there's going to be only two networking companies in matter, VMware and Cisco. Number four, we're making a big bet in the digital workspace and build on what we've done with AirWatch and other technologies. Number five, and make it a big bet security. >>So these five we think of what can take the company from 10 to 20 billion. So we, you know, uh, we, we've talked about the $10 billion Mark. Um, and the next big milestone for the company is a 20 billion ball Mark. And you have to ask yourself, can you see this company with these five bets going from where they are about a 10 billion revenue company to 20. Boom. We hope again, >> Dave, a lot that's doing a braking and now he might've already shipped the piece this morning on multi-cloud. Um, he and I were commenting that, well, I said it's the third wave of cloud computing, public cloud, hybrid multi-cloud and hybrids, the first step towards multi-cloud. Everyone kind of knows that. Um, but I want to ask you, because I told Dave and we kind of talked about this is a multi-decade growth opportunity, wealth creation, innovation, growth, new opportunity multicloud for the generation. >>Take the, this industry the next level. How do you see that multicloud wave? Do you agree on the multigenerational and if so, what specifically do you see that unfolding into this? And I'm deeply inspired by what Andy Jassy, Satya Nadella, you know, the past leading up to Thomas Korea and these folks are creating big cloud businesses. Amazon's the biggest, uh, in the iOS pass world. Azure is second, Google is third, and just market shares. These folks collectively are growing, growing really well. In some senses, VM-ware gets to feed off that ecosystem in the public cloud. So we are firm believers in what you're described. Hybrid cloud is the pot to the multicloud. We coined that term hybrid thought. In fact, the first incantation of eco there was called via cloud hybrid service. So we coined the term hybrid cloud, but the world is not multi-cloud. The the, the key though is that I don't think you're gonna walk away from those three clouds I mentioned have deep pockets. >>Then none of them are going away and they're going to compete hard with each other. The market shares may stay the same. Our odd goal is to be a Switzerland player that can help our customers take VM or workloads, optimize them in the private cloud first. Okay? When a bank of America says on their earnings caller, Brian Warren and said, I can run a private cloud better than a public cloud and I can save 2 billion doing that, okay? It turns off any of the banks are actually running on VMware. That's their goal. But there are other companies like Freddie Mac, we're going all in with Amazon. We want to ride the best of both worlds. If you're a private cloud, we're going to make you the most efficient private cloud, VMware software, well public cloud, and going to Amazon like a Freddie Mac will help you ride your apps into that through VMware. >>So sometimes history can be a predictor of future behavior. And just to kind of rewind the computer industry clock, if you looked at mainframe mini-computers, inter networking, internet proprietary network operating systems dominated it, but you saw the shift and it was driven by choice for customers, multiple vendors, interoperability. So to me, I think cloud multicloud is going to come down to the best choice for the workload and then the environment of the business. And that's going to be a spectrum. But the key in that is multi-vendor, multi, a friend choice, multi-vendor, interoperability. This is going to be the next equation in the modern error. It's not gonna look the same as mainframe mini's networking, but it'll create the next Cisco, the create the next new brand that may or may not be out there yet that might be competing with you or you might be that next brand. >>So interoperability, multi-vendor choice has been a theme in open systems for a long time. Your reactions, I think it's absolutely right, John, you're onto something there. Listen, the multicloud world is almost a replay of the multi hardware system world. 20 years ago, if you asked who was a multi hardware player before, it was Dell, HP at the time, IBM, now, Lenovo, EMC, NetApp, so and so forth and Silva storage, networking. The multicloud world today is Amazon, Azure, Google. If you go to China, Alibaba, so on and so forth. A Motiva somebody has to be a Switzerland player that can serve the old hardware economy and the new hardware economy, which is the, which is the cloud and then of course, don't forget the device economy of Apple, Google, Microsoft, there too. I think that if you have some fundamental first principles, you expressed one of them. >>Listen where open source exists, embrace it. That's why we're going big on Kubernetes. If there are multiple clouds, embrace it. Do what's right for the customer, abstract away. That's what virtualization is. Managed common infrastructure across Ahmed, which is what our management principles are, secure things. At the point of every device and every workload. So those are the principles. Now the engineering of it changes. The way in which we're doing virtualization today in 2020 is slightly different from when Diane started the company and around the year 2020 years ago. But the principals are saying, we're just not working just with the hardware vendors working toward the cloud vendors. So using choices where it's at, the choice is what they want. Absolutely, absolutely. And you're right. It's choice because it was the big workloads. We see, for example, Amazon having a headstart in the public cloud markets, but there's some use cases where Azure is applicable. >>Some use his word, Google's applicable, and to us, if the entire world was only one hardware player or only one cloud player, only one device player, you don't need VMware. We thrive in heterogeneity. It's awesome. I love that word. No heterogeneity provides not 3000 vendors. There's almost three, three of every kind, three silver vendors, three storage vendors, three networking vendors, three cloud vendors, three device vendors. We was the middle of all of it. And yeah, there may be other companies who tried to do that too. If they are, we should learn from them, do it better than them. And competition even to us is a good thing. All right. My final question for you is in the, yeah, the Dell technologies family of which VMware is a part of, although big part of it, the crown jewel as we've been calling them the cube, they announced RSA is being sold to a private equity company. >>What's the general reaction amongst VMware folks and the, and the Dell technology family? Good move, no impact. What we support Dell and you know, all the moves that they've made. Um, and from our perspective, you know, if we're not owning it, we're going to partner it. So I see no overlap with RSA. We partner with them. They've got three core pillars, secure ID, net witness and Archer. We partnered with them very well. We have no aspirations to get into those aspects of governance. Risk and compliance or security has been, so it's a partner. So whoever's running it, Rohit runs on very well. He also owns the events conference. We have a great relationship and then we'll keep doing that. Well, we are focused in the areas I described, network, endpoint security. And I think what Michael has done brilliantly through the course of the last few years is set up a hardware and systems company in Dell and allow the software company called Vima to continue to operate. >>And I think, you know, the movement of some of these assets between the companies like pivotal to us and so on and so forth, cleans it up so that now you've got both these companies doing well. Dell has gone public, we Hammer's gone public and he has said on the record, what's good for Dell is good, what's good for VMware and vice versa and good for the customer. And I think the key is there's no visibility on what cloud native looks like. Hybrid, public, multi, multi, not so much. But you get almost, it's an easy bridge to get across and get there. AI, cyber are all big clear trends. They're waves. Sasha. Great. Thank you. Thanks for coming on. Um, your thoughts on the security show here. Uh, what's your, what's your take to, uh, definitive security shows? I hope it stays that way. Even with the change of where RSA is. >>Ownership goes is this conference in black hat and we play in both, uh, Amazon's conference. I was totally starting to, uh, reinforce, reinforce cloud security will show up there too. Uh, but we, we think, listen, there's what, 30,000 people here. So it's a force. It's a little bit like VMworld. We will play here. We'll play a big, we've got, you know, it just so happens because the acquisition happened before we told them, but we have two big presences here. We were at carbon black, um, and it's an important business for us. And I said, like I said, we have $1 billion business and security today by 30,000 customers using us in a security network, endpoints cloud. I want to take that to be a multi, multiple times that size. And I think there's a pot to do that because it's an adjacent us and security. So we have our own kind of selfish motives here in terms of getting more Mindshare and security. >>We did a keynote this morning, which was well received with Southwest airlines. She did a great job. Carrie Miller, she was a fantastic speaker and it was our way of showing in 20 minutes, not just to our point of view, because you don't want to be self serving a practitioner's point of view. And that's what's really important. Well finally on a personal note, um, you know, I always use the term tech athlete, which I think you are one, you really work hard and smart, but I got to get your thoughts. But then I saw you're not on Twitter. I'm on. When IBM announced a new CEO, Arvin, um, fishnet Indian American, another CEO, this is a pattern. We're starting to see Indian American CEOs running cup American companies because this is the leadership and it's really a great thing in my mind, I think is one of the most successful stories of meritocracy of all time. >>You're quick. I'm a big fan of oven, big fan of Shantanu, Sundar Pichai, something that Ellen, many of them are close friends of mine. Uh, many of them have grown up in Southern India. We're a different ages. Some of them are older than me and in many cases, you know, we were falling behind other great players like Vino Cosla who came even 10 to 15 years prior. And you know, it's hard for an immigrant in this country. You know, um, when I first got here and I came as an immigrant to Dartmouth college, there may have been five or 10 Brown skin people in the town of Hanover, New Hampshire. I don't know if you've been to New Hampshire. I've been there, there's not many at that time. And then the late 1980s, now of course, there's much more, uh, so, you know, uh, we stay humble and hungry. >>There's a part of our culture in India that's really valued education and hard work and people like Arvin and some of these other people are products. I look up to them, the things I learned from them. And um, you know, it's true of India. It's a really good thing to see these people be successful at name brand American companies, whether it's IBM or Microsoft or Google or Adobe or MasterCard. So we're, we're, I'm in that fan club and there's a lot I learned from that. I just love being around people who love entrepreneurship, love innovation, love technology, and work hard. So congratulations. Thank you so much for your success. Great to see you again soon as you put in the COO of VM-ware here on the ground floor here at RSA conference at Moscone, sharing his insight into the security practice that is now carbon black and VMware. All the good things that are going on there. Thanks for watching.

>> Announcer: Live from San Diego, California, it's theCUBE, covering Kubecon and CloudNativeCon brought to you by Redhat, a CloudNative computing foundation and its ecosystem partners. >> Welcome back to theCUBE, we are here in San Diego where we are keeping CloudNative classy. I'm Stu Miniman, and my cohost is John Troyer, and we are happy to welcome back to the program, our host, Dan Kohn, who is the executive director of the CloudNative computing foundation, or the CNCF. Dan, thank you so much for having us. >> Thrilled to be back again. >> All right, and, yeah, so our fourth year doing this show, the big shows-- >> Dan: Nothing's really changed. You just tear right along the same level. One year to the next, you can just confuse them pretty easily.. >> So, you know, Dan, we actually did a prediction show yesterday, and I said, maybe it's my math background, but I look back two years ago, it was four thousand, then eight thousand, now twelve thousand, so I predict Boston must be sixteen thousand because I was used to those standardized tests, but with the growth, you never know, and it is very difficult, you know, we talk about planning, we've talked, this facility was booked before-- >> Dan: Two years ago. >> --the curve really started taking off. So, help us set the stage a little bit, we're getting towards the end of the event, but you know, tons of day zero things, so many sessions, so many people, there were pre-show events I heard that started like the end of last week, so, it's a small city in this community in so many pieces, and the CNCF helps enable all of it. >> It does, and what's fun for us is just that, the community is out there adopting these technologies and contributing to it and growing, and being able to come together, this is always our biggest event in North America but also in Europe and China. It's just a really nice snapshot of the point of time, in saying, okay, where are things, how many companies are interested in having sponsor booths, how many developers are there, how many track, but, I think maybe my favorite anecdote from Kubecon CloudNativeCon San Diego is that there was a, so we offer, a CFP track, a call for proposals that's extremely competitive, only 12% of the talks get accepted. And then we have a maintainer track, where the different providers can have either an intro, a deep-dive, or both. So the deep dive for the project Helm, which is not even a graduated project yet, I mean, it's very widely used, package manager for Kubernetes, but the deep dive for Helm had more than 1600 people inside their session, which is more than we had at all of attending Kubecon 2015 and 2016 combined. >> So, Dan, one of the words that gets mentioned a lot in this space, and it has lots of different meanings, is "scale". You know, we talk about Kubernetes built for big scale, we're talking about Edge computing which goes to small scale. This event, you look at the ecosystem. There's a thirty foot banner with all of the logos there, you look at the landscape-- >> Dan: They're not that big, either. >> --there are so many logos on there. Actually, I really thought you had an enjoyable yet useful analogy in your opening keynote. You talk about Minecraft. I've got a boy, he plays Xbox, I've seen Minecraft, so when he pulls up the little chart and there's like, you know, all of these little things on the side, my son can tell you how they're used and what you can build with them, I would be completely daunted looking at that, much like many of the people coming to this show, and they look around and they're like, I don't even know where to start. >> And that was fun keynote for me to put together, because I did need to make sure, both on the Minecraft part, that all the formulas were correct, I didn't want anyone... But then I drew the analogy to Kubernetes and how it is based on a set of building blocks, hundreds of them, that have evolved over time, and for that, I actually did some software archeology of reaching out to the people who created the original IPFW, Linux firewall 20 years ago based on PSD and then the evolution since then, made sure that they were comfortable with my description of it. But now, bringing it out to Kubecon, CNCF, we have a lot of projects now, so we're up to 43. When we met in Seattle four years ago, it was 2. And so it's definitely incumbent on CNCF to do a good job, and we can probably do an even better one on trying to draw this trail map, this recommended path through understanding the technologies, deciding on which ones people might want to adopt. >> Yeah, I think that would be really interesting. In fact, the words trail map kind of came up on Twitter, today, I saw. And one of the things that struck me was how the first rule of Kubecon is, well, Kubernetes is not maybe in the center of everything, it's underneath everything, but, like you said, 42 projects in the CNCF, many more projects, open-source projects, of course, from different vendors, from different coalitions, that you can see here on the show floor as well, if not in a session, so, without giving a maybe a CNCF 101, what does the path forward look like in terms of that, the growth of projects within the CNCF umbrella, the prominence of Kubecon, are we headed towards CloudNativeCon? >> Well, we've always been calling it Kubecon CloudNativeCon, and we could reverse the names, but I don't see any particular drive to do that. But I would really emphasize, and give credit to Craig McLuckie and some of the other people who originally set up CNCF, where Google had this technology, if they'd come to the Linux Foundation and said, we want to call it the Kubernetes Foundation, we probably would've said yes to that. But the impact, then, would be that all of these other technologies and approaches would have come in and said, we need to become part of the Kubernetes project, and instead, there was a vision of an ecosystem, and the reality is that Kubernetes is still by far the largest project. I mean, if you look at the total number of contributors, I believe it's approximately the same between Kubernetes and our other 42 projects combined. So, and of course, there's overlap. But in that sense, in some ways, Kubernetes sort of represents the sun, and the other projects are orbiting around it, but from the beginning, the whole idea was to say that we wanted to allow a diversity of different approaches, and CNCF has had this very clear philosophy that we're not king makers, that if you look at our landscape document, where we look at different functions like key management or container run times or databases or others, there can be multiple CNCF hosted projects in each box. And so far at least, that approach seems to be working quite well. >> Yeah, Dan, having been to a number of these, the maturity and progress is obvious. Something we've said is Kubernetes is really table sticks at this point, no matter where I go, there is going to be Kubernetes, and therefore, I've seen it some over the last year or so, but very prominent on this show, we're talking about work loads, we're talking about applications, you know, it's defining and explaining that CloudNative piece of it, and the tough thing is, you know, modern applications and building applications and that AppDev community. So, you know, speak a little bit-- You've got a very diverse audience here, talk about the personas you have to communicate with, and who you're attracting to this. I know they put out lots of metrics as to the surveys and who's coming and who's participating. >> Well, we do, and we'll be publishing those, and I love the fact. I think some people misunderstand in the thinking that Kubecon CloudNativeCon is all infrastructure engineers, and something like a third or more of the attendees are application developers, and so I do think there's this natural move, particularly towards AppDev. The difference is that on the infrastructure side, there's just a really strong consensus about Kubernetes, as you're saying, where on the application development side, it's still very early days. And I mean, if anything, I think really the only area that there is consensus on is that the abstractions that Kubernetes provides are not the ones that we want to have regular application developers at most enterprises working with, that they shouldn't actually need to build their own container and then write the YAML in order to configure it. Brian Liles hit that point nicely with his keynote today around Rails. But so we can agree that what we have isn't the right outcome, we can agree that whatever are the winning solutions are very likely underneath going to be building those containers and writing the YAML. But there are so many different approaches right now, at a high layer on what that right interface is. >> Yeah, I mean, just, one example I have, I had the opportunity to interview Bloomberg for the second time. And a year ago, we had talked very much about the infrastructure, and this year we talked about really, they've built internally that PaaS layer, so that their AppDevs, they might know that there's Kubernetes, but they don't have to interface with that at all. I've had a number of the CNCF end user members participate, maybe, speak to that, the community of end users participating, and end user usage overall. >> Yeah, so when we first met in Seattle four years ago, we had three members of our end user community. We appreciated them joining early, but that was a tough call. But to be up to 124 now, representing almost every industry, all around the world, just a huge number of brand names, has been fantastic. What is interesting is, if you go talk to them, almost all of them are using Kubernetes as the underlying layer for their own internal PaaS, and so the regular developers in their organizations can often just want to type get push, and then have the continuous integration run and the things built and then deployed out and everything. But it's somewhat surprising there hasn't yet been a level of consensus on what that sort of common PaaS, the common set of abstractions on top should be. There's a ton of our members and developers and others are all working to sort of build that winning solution, but I don't have a prediction for you yet. >> And of course, skill interoperability and skill transferability is going to be key in growing this ecosystem, but I thought the stats on you know, the searches you can do on the number of job openings for Kubernetes is incredible. >> Yeah, so on the interoperability, we were very pleased to announce Tuesday that we've now passed 100 certified vendors, and of all the things that CNCF does, probably even including Kubecon, I might say that that certified Kubernetes program is the one that's had the biggest impact. To have implementations from over 100 different organizations that you can take the same workloads and move them across and have the confidence, those APIs will be supported, it's just a huge accomplishment, and in some ways, up there with WiFi or Bluetooth or some of the best interoperability standards. And then you mentioned the job support, which is another-- >> Yeah, I want to transfer engineers too, as well as workloads. >> --area that we're thrilled, and we just launched that, but we now have a couple hundred jobs listed on it and a bunch of people applying, and it's just a perfect example of the kind of ecosystem development that we're thrilled to do, and in particular the fact that we're not charging either the employers or the applicants, so it's jobs.CNCF.io to get access to that. >> Great. Dan, you also mentioned in your keynote, Kubernetes has crossed the chasm. That changes the challenges that you have when you start talking about you know, the early or mid majority environment, so I know you've been flying around the globe, there's not only the three big events, but many small events, talk about how CNCF6 mission helps you know, educate and push, I guess not push, but educate and further innovation. >> Yeah, and just enable. So, one of the other programs we have is the Kubernetes Certified service provider, these are organizations, essentially consulting firms, that have a deep expertise that have had at least three of their engineers pass our certified Kubernetes administrator exam, and it is amazing now that we've passed 100 of those, but they're in over 30 different countries. So we're just thrilled to see businesses all around the world be able to take advantage of that. And I do get to go to a lot of events around the world; we're actually, CNCF is hosting our first ever events in Seoul and in Sydney in two weeks, that I'm quite excited for, and then in February, we're going to be back in India, and we're going to be in Bengaluru, where we had a very successful event in March. We'll be there in February 2020 and then our first one in New Delhi, those are both in the third week of February. And I think it does just speak to the number of people who are really eager for these to soak this up, but one of the cool things about it is we're combining both local experts, half of our speakers are local, half are international, and then we do a beginner track and an advanced track. >> Yeah, Dan, you know, I'd just love a little bit of insight from you as to, there's a little bit of uncontrolled chaos when you talk about open source. Many of the things that we're talking about this year, a year ago, we would've been, oh my gosh, I would've never thought of that. So give us what it's like to be kind of at the eye of the hurricane, if you would. >> A lot of criticism, to be honest. An amazing number of people like to point out the things that we're not quite doing correctly. But you know, the huge challenge for an organization like CNCF, where, we're a non-profit, these events are actually spinning off money that we're then able to reinvest directly into the projects, so doing things like a quarter million dollars for a security audit for Kubernetes that we were able to publish. Or a Jepson testing for NCD, or improving documentation and such. So a big part of it is trying to create those positive feedback loops, and have that, and then another huge part is just, given all the different competing interests and the fact that we literally have every big technology company in the world on our board and then all of the, I mean, hundreds of start ups that tend to be very competitive, it's just really important that we treat organizations similarly. So that all of our platinum members are treated the same, all our gold, all our silver, and then within the projects, that all the graduated projects are treated similarly, incubating, sandbox, and people really notice. I have kids, and it's a little bit there, where they're sort of always believing that the other kid is getting extra attention. >> Yeah, right, you can't be the king maker, if it will, you're letting it out. Look out a little bit, Dan, and you know, we still have more growth to go in the community, obviously the event has room for growth. What do you see looking forward to 2020 and beyond? >> Yeah, I would love to predict some sort of amazing discontinuity where everyone adopts these technologies and then CNCF is not necessary anymore, something like that. But the reality is, I mean, I love that crossing the chasm metaphor, and I do think it's very powerful, and we really do say 2018 was the year that Kubernetes crossed the chasm from the early adopters to the early majority, but I would emphasize the fact that it's only the early majority. We haven't reached in to the entire second half of the curve, the late majority and the laggards. And so there are a ton of organizations here at the event who are just getting up to speed on this and realizing, oh, we really need to invest and start understanding it. And so, I mean, I don't, we also talk about there will be some point of peak Kubecon, just like peak Loyal, and I don't yet see any signs of it being 2019 or 2020, but it's something that we're very cognizant of and working hard to try and ensure that the event remains useful for people and that they're seeing value from it. I mean, there was a real question when we went from one thousand Seattle four years ago to four thousand in Austin three years ago, oh, is this event even still useful, can developers still interact, do you still have conversations, is the hallway track still valuable? And thankfully, I'm able to chat with a lot of the core developers, where this is their fifth North American Kubecon and they're saying, no, I'm still getting value out of it. Now, what we tend to hear from them is, "but I didn't get to go to any sessions," or "I have so many hallway tracks and private meetings and interactions and such," but the great thing there is that we actually get all of these sessions up on YouTube within 48 or 72 hours, and so, people ask me, "oh, there's 18 different tracks, how do I decide which one to go to?" And I always say, "go to the one where you want to interact with the speaker afterwards, or ask a question," because the other ones, you can watch later. But there isn't really a substitute for being here on the ground. >> Well, there's so much content there, Dan, I think if they start watching now, by the time you get to Amsterdam, they'll have dented a little bit. >> I'll give a quick pitch for my favorite Chrome extension, it's called Video Speed Player. And you can speed people up to 120, 125%, get a little bit of that time back. >> Yeah, absolutely, we have at the backend of ours, there is YouTube, so you can adjust the speed and it does help most of the time, and you can back up a few seconds if needed. Dan, look, congratulations, we know you have a tough role, you and the CNCF, we really appreciate the partnership. We love our community, it has had a phenomenal time this week at the show, and look forward to 2020 and beyond. >> I do as well, I really want to thank you for being with us through this whole way, and I think it is just an important part of the ecosystem. >> And I know John Furrier also says thank you and looks forward to seeing you next year. >> Oh, absolutely. >> Dan, thank you so much. John Troyer, I'm Stu Miniman, getting towards the end of our three days, wall-to-wall coverage here in sunny San Diego, California, thanks for watching theCUBE.

>>From San Francisco. It's the cube covering PagerDuty summit 2019 brought to you by PagerDuty. >>Hey, welcome back everybody. Jeff Frick here with the Q. We're a PagerDuty summit. It's the fourth year of the show. He's been here for three years. It's amazing to watch it grow. I think it's finally outgrown the Western Saint Francis here in lovely downtown San Francisco and we're really excited to be joined by our next guest. He's Alex Solomon, the co founder, co founder and CTO PagerDuty. Been at this over 10 years. Alex, first off, congratulations. And what a fantastic event. Thank you very much and thank you for having me on your show. So things have changed a lot since we had you on a year ago, this little thing called an IPO. So I'm just curious, you know, we have a lot of entrepreneurs. I watch a show as a founder and kind of go through this whole journey. What was that like? What are some of the things you'd like to share from that whole experience? >>Yeah, it was, it was incredible. I I, the word I like to use is surreal. Like just kind of going through it, not believing that it's real in a way. And adjoining by my, my lovely wife who came, came along for this festivities and just being able to celebrate that moment. I know it is just a moment in time and it's not, it's not the end of the journey certainly, but it is a big milestone for us and uh, being able to celebrate. We invited a lot of our customers, our early customers have been with us for years to join us in that, a celebration. Our investors who have believed in us from back in 2010. Right, right. We were just getting going and we just, we just had a great time. I love it. I love 10 year overnight success. 10 years in the making. >>One of my favorite expressions, and it was actually interesting when Jenn pulled up some of the statistics around kind of what the internet was, what the volume of traffic was, what the complexity in the systems are. And it's really changed a lot since you guys began this journey 10 years ago. Oh, it has. I mean back then, like the most popular monitoring tool is Nagios and new Relic was around but just barely. And now it's like Datadog has kind of taken over the world and the world has changed. We're talking about not just a microservices by containers and serverless and the cloud basically. Right. That's the kind of recurring theme that's changed over the last 10 years. But you guys made some early bets. You made bets on cloud. He made bets on dev ops. He made bets on automation. Yeah, those were pretty good. >>Uh, those, those turn out to be pretty good places to put your chips. Oh yeah. Right place, right time and um, you know, some, some experiential stuff and some just some raw luck. Right. All right, well let's get into it. On top of some of the product announcements that are happening today, what are some of the things you're excited to finally get to showcase to the world? Yeah, so one of the big ones is, uh, related to our event intelligence release. Uh, we launched the product last year, um, a few months before summit and this year we're making a big upgrade and we're announcing a big upgrade to the product where we have, uh, related incidents. So if you're debugging a problem and you have an incident that you're looking at, the question you're gonna ask is, uh, is it just my service or is there a bigger widespread problem happening at the same time? >>So we'll show you that very quickly. We'll show you are there other teams, uh, impacted by the same issue and we'll, we, we actually leveraged machine learning to draw those relationships between ongoing incidents. Right. I want to unpack a little bit kind of how you play with all these other tools. We, you know, we're just at Sumo logic a week or so ago. They're going to be on later their partner and people T I think it's confusing. There's like all these different types of tools. And do you guys partner with them all? I mean, the integration lists that you guys have built. Um, I wrote it down in service now. It's Splunk, it's Zendesk, it goes on and on. And on. Yeah. So explain to folks, how does the PagerDuty piece work within all these other systems? Sure. So, um, I would say we're really strong in terms of integrating with monitoring tools. >>So any sort of tool that's monitoring something and we'll admit an alert, uh, when something goes down or over an event when something's changed, we integrate and we have a very wide set of coverage with all, all of those tools. I think your like Datadog, uh, app dynamics, new Relic, even old school Nagios. Right. Um, and then we've also built a suite of integrations around all the ticketing systems out there. So service now a JIRA, JIRA service desk, um, a remedy as well. Uh, we also now have built a suite of integrations around the customer support side of things. So there'll be Zendesk and Salesforce. That's interesting. Jen. Megan had a good example in the keynote and kind of in this multi system world, you know, where's the system of record? Cause he used to be, you want it, everybody wanted it to be that system of record. >>They wanted to be the single player in the class. But it turns out that's not really the answer. There's different places for different solutions to add value within the journey within those other applications. Yeah, absolutely. I, I think the single pane of glass vision is something that a lot of companies have been chasing, but it's, it's, it's really hard to do because like for example, NewRelic, they started an APM and they got really good at that and that's kind of their specialty. Datadog's really good at metrics and they're all trying to converge and do everything and become the one monitoring solution to the Rooney rule them all right. But they're still the strongest in one area. Like Splunk for logs, new Relic and AppDynamics for APM and Datadog for metrics. And, um, I don't know where the world's going to take us. Like, are they, is there going to be one single monitoring tool or are, are you going to use four or five different tools? >>Right. My best guess is your, we're going to live in a world where you're still gonna use multiple tools. They each can do something really well, but it's about the integration. It's about building, bringing all that data together, right? That's from early days. We've called pager duty, the Switzerland monitoring, cause we're friends with everyone when we're partners with everyone and we sit on top right a work with all of these different roles. I thought her example, she gave him the keynote was pretty, it's kind of illustrative to me. She's talking about, you know, say your cables down and you know, you call Comcast and it's a Zendesk ticket. But >>you know then that integrates potentially with the PagerDuty piece that says, Hey we're, you know, we're working on a problem, you know, a backhoe clipped the cable down your street. And so to take kind of that triage and fix information and still pump that through to the Zen desk person who's engaging with the customer to actually give them a lot more information. So the two are different tracks, but they're really complimentary. >>Absolutely. And that's part of the incident life cycle is, is letting your customers know and helping them through customer support so that the support reps understand what's going on with the systems and can have an intelligent conversation with the customer. So that they're not surprised like a customer calls and says you're down. Oh, good to know. No, you want to know about that urge, which I think most people find out. Oh yeah. Another thing >>that struck me was this, this study that you guys have put together about unplanned work, the human impact of always on world. And you know, we talk a lot in tech about unplanned maintenance and unplanned downtime of machines, whether it's a, a computer or a military jet, you know, unplanned maintenance as a really destructive thing. I don't think I've ever heard anyone frame it for people and really to think about kind of the unplanned work that gets caused by an alert and notification that is so disruptive. And I thought that was a really interesting way to frame the problem and thinking of it from an employee centric point of view to, to reduce the nastiness of unplanned work. >>Absolutely. And that's, that V is very related to that journey of going from being reactive and just reacting to these situations to becoming proactive and being able to predict and, and, uh, address things before they impact the customer. Uh, I would say it's anywhere between 20 to 40 or even higher percent of your time. Maybe looking at software engineers is spent on the some plant work. So what you want to do is you want to minimize that. You want to make sure that, uh, there's a lot of automation in the process that you know what's going on, that you have visibility and that the easy things, the, the repetitive things are easy to automate and the system could just do it for you so that you, you focus on innovating and not on fixing fires. Right? Or if you did to fix the fire, you at least >>to get the fire to the right person who's got the right tone to fix the type. So why don't we just, you know, we see that all the time in incidents, especially at early days for triage. You know, what's happening? Who did it, you know, who's the right people to work on this problem. And you guys are putting a lot of the effort into AI and modeling and your 10 years of data history to get ahead of the curve in assigning that alerted that triage when it comes across the, the, uh, the trans though. >>Yeah, absolutely. And that's, that's another issues. Uh, not having the right ownership, get it, getting people, um, notified when they don't own it and there's nothing they can do about it. Like the old ways of, of uh, sending the alert to everyone and having a hundred people on a call bridge that just doesn't work anymore because they're just sitting there and they're not going to be productive the next day I work cause they're sitting there all night just kind of waiting for, for something to happen. And uh, that's kinda the, the old way of lack of ownership just blasted out to everyone and we have to be a lot more target and understand who owns what and what's, what, which systems are being impacted and they only let getting the right people on the auto call as quickly as possible. The other thing that came up, which I thought, you know, probably a lot of people are thinking of, they only think of the fixing guy that has to wear the pager. >>Sure. But there's a whole lot of other people that might need to be informed, be informed. We talked about in the Comcast example that people interacting with the customer, ABC senior executives need to be in for maybe people that are, you know, on the hook for the SLA on some of the softer things. So the assembly that team goes in need, who needs to know what goes well beyond just the two or three people that are the fixing people? Right. And that's, that's actually tied to one of our announcements, uh, at summit a business, our business response product. So it's all about, um, yes, we notify the people who are on call and are responsible for fixing the problem. You know, the hands on keyboard folks, the technical folks. But we've expanded our workflow solution to also Lupin stakeholders. So think like executives, business owners, people who, um, maybe they run a division but they're not going to go on call to fix the problem themselves, but they need to know what's going on. >>They need to know what the impact is. They need to know is there a revenue impact? Is there a customer impact? Is there a reputational brand impact to, to the business they're running. Which is another thing you guys have brought up, which is so important. It's not just about fixing, fixing the stuck server, it's, it is what is the brand impact, what is the business impact is a much broader conversation, which is interesting to pull it out of just the, just the poor guy in the pager waiting for it to buzz versus now the whole company really being engaged to what's going on. Absolutely. Like connecting the technical, what's happening with the technical services and, and uh, infrastructure to what is the, the impact on the business if something goes wrong. And how much, like are you actually losing revenue? There's certain businesses like e-commerce where you could actually measure your revenue loss on a per minute or per five minute basis. >>Right. And pretty important. Yeah. All right Alex. So you talked about the IPO is a milestone. It's, it's fading, it's fading in the rear view mirror. Now you're on the 90 day shot clock. So right. You gotta keep moving forward. So as you look forward now for your CTO role, what are some of your priorities over the next year or so that you kind of want to drive this shit? Absolutely. So, um, I think just focusing on making the system smarter and make it, uh, so that you can get to that predictive Holy grail where we can know that you're going to have a big incident before it impacts our customers. So you can actually prevent it and get ahead of it based on the leading indicators. So if we've seen this pattern before and last time it causes like an hour of downtime, let's try to catch it early this time and so that you can address it before it impacts for customers. >>So that's one big area of investment for us. And the other one I would say is more on the, uh, the realtime work outside of managing software systems. So, uh, security, customer support. There's all of these other use cases where people need to know, like, signals are, are being generated by machines. People need to know what's going on with those signals. And you want to be proactive and preventative around there. Like think a, a factory with lots and lots of sensors. You don't want to be surprised by something breaking. You want to like get proactive about the maintenance of those systems. If they don't have that, uh, you know, like say a multi-day outage in a factory, it can cost maybe millions of dollars. Right. >>All right, well, Alex, thanks a lot. Again, congratulations on the journey. We, uh, we're enjoying watching it and we'll continue to watch it evolve. So thank you for coming on. Alright, he's Alex. I'm Jeff. You're watching the cube. We're at PagerDuty summit 2019 in downtown San Francisco. Thanks for watching. We'll see you next time.

>> Hey, welcome back, everybody. Jefe Rick here with the Cube were at Oracle Park, and they're moving a bunch of dirt downstairs, but we're happy to be her. Anyway. We're here to really cool thing called Sports Tech Tokyo World Demo Day. And we're excited to have our next guest. He's heavier. Altamirano, the director of innovation for sport Radar of your Nice to see you. >> Hi. Nice to see you, Jeff. Thank you for having me. >> So for people aren't familiar with sport radar. What you guys all about? >> Yes, the world all about sports date on day and fan engagement. So whenever you want to place a a safe ah, bad Latina market, that's biddings. Regulated are mostly in Europe, for example. Ah, you would use ultimately our data also, whenever you're looking for first time Ah, stat line coming out or you're one to power your fantasy game. That data ultimately comes from us. So >> we talked about before we turn the cameras on. There's lots of sources of data, but your guy's unique value proposition, speed and accuracy is all right. >> Absolutely, Absolutely. You want to think >> of sports data like the same us? Your ticker from the stock market, right? You want to have it fast and reliable as possible. We've been doing that for almost two decades. We have experience, keys and experience in many different ways of collecting. Collecting data from around the world were 2000 people strong 30 offices around the world, dedicated just to collect and into into work with data and evolve and change the narrative of how people talk about sports. >> Okay. Were you guys base? Where's headquarters, >> eh? So we're ahead course in St Gallen, Switzerland, and in the US we have offices in San Francisco in a Minneapolis, uh, New York and endless magazines. All >> right, cool. So we're here in sports Tech? Tokyo will Demo day. What do you doing here? What does this event all about for you? >> Absolutely. This is >> Ah, great events. The grain. And they were shot out to Michael Pearlman and scram Ventures, and they're putting together this ecosystem, right? They want to bring all the best technology, the best sports technology that's out there in the world. Uh, you know, with Japan having all these events leading up to the Olympics next year, bowl so all the way through 2026 what they do, Jeff. They come up and they bring all of those large, great companies that they have conglomerates. And they make you make all of this, um, big opportunity for everyone who's due in something with sports technology in some way, shape or form. And then there's a lot of collaboration. There's investment. There's a lot of things happening there. We we definitely would certainly fit in, especially with our accelerator program. >> Okay. And then, are you guys already in the market in Japan, or is this just kind of a new boost? Into what? What you've already got? >> Things definitely knew boost >> for us. Uh, Asia? Absolutely. Ah, A future focus of also pressing and future focus of us. There's great things happening there, for sure. >> Okay, Now you're director of innovation. So you're actually looking for Toby to be opportunities to take your technology in some different directions, tell us a little bit more about what you're working on? >> Absolutely. Um, I leave the accelerate our program where we provide our data to Some early stage companies were doing something innovative with sports data, so that allows us to a keep tabs on, keep a pulse on innovation that's happening outside of our walls s Oh, that's our external innovation initiatives. But that allows early stage companies to get data and to use their funds into product or marketing or what have you so that they can really develop it and really, you know, uh, deliver something that which we think they can >> write. And you said, you have a couple of partner companies that are here today, correct? >> Absolutely. Absolutely. Yeah, we have two companies who made it to the finalists were absolutely, very, very proud of those that Edison and also a really So So the guy's a shock. It ah, Edison and Colin and steam, Really, they're great people, and I'm really in a really happy and on really proud to to see them here. >> Good. So what are they doing with your data that's unique in it? Different? >> Absolutely. So what? Edison? What is Zoom with our data's? Our data allows him to better tag and better identify each player that's showing on on the screen. Edison's technology allows for a personalization that its unique you and I could be watching the same game. Let's say we're watching European soccer and your run all the fun, and I'm a messy fun. So you would see targeted messaging and targeted information on Mass. And I will see targeted information on Ronaldo even though we're both watching the same game. That's what, uh, their technology allows an hour. Data propels >> them coming through the lower thirds and the graphics. And how is that house that >> excited zone over late? So it's overlays. >> Html overlays that they can. They provide. So especially for O. T t providers. >> Okay, because obviously I need to have the apse. They know it's me watching and not you for for >> what, exactly that allows for personalization. It's all about personalization, and that's that's definitely something We're very interested in a sport. Reiter. We believe that's the future personalization of the experience watching and engaging with sports. >> It's interesting, though, gives so much of the sports is the communal effect, right? I mean, so much of so much of the greatness of sports is that, you know, two people from different sides of the city can come together and stand shoulder to shoulder and root for their team. So I don't know. Is there some some downside to >> the civilization >> because they kind of or does. It doesn't support the community, because now I hang out with a bunch of other messy A fans and you hang out with their own, although family curious, kind of where personalization fits with community in kind of engaging >> with think baseball park, you know, putting the move to send that and a nice curveball, But definitely you, maybe you you have a >> lot of massive fans who, you know, But they may not be watching the game with you, right? So when you're watching at home, then you're gonna have that experience, and that can allow them for more communication with other people who like the same things that you like, right. But really, personalization is out there in and it's everywhere, right? Like you're everything that you're getting it more and more targeted and we want to avoid you was one of always spam, right? So if anything, a message, that is, if somebody wants to sell your allow those shirt while you're ah, big messy fund, you're probably not gonna like seeing that ad right. So and neither the advertiser will want to advertise you something that you? Definitely not like so that's exactly >> yeah. No, it's interesting. One of my favorite lines about Big Data, right is when it's done well, it's magic. And when it's done poorly, it's creepy. Definitely. Make sure you're gonna tell me the right jersey and other wrong. Absolutely. Alright. Well, Javier. Well, thanks for taking a few minutes. And good luck to your to your two. Ah, entrance into the finals. >> Absolutely. I Thank you so >> much for the opportunity, Jeff. And you're looking forward to seeing the finals >> here. All right. He saw me have Jeff, You're watching. The Cube were in Oracle Park on the shores of McCovey Cove. Thanks for watching. We'll see you next time.

>> Live from San Francisco, it's theCUBE! Covering IBM Think 2019, brought to you by IBM. >> Welcome back to intermittently sunny San Francisco, this is theCUBE, the leader in live tech coverage. We're here at day four at IBM Think. My name is Dave Vellante. I am here with Stu Miniman. John Furrier is also here. Wall to wall coverage Stu. The second Think, first big show really of the year at Moscone. The new Moscone, Armando Ortiz is here. He is the vice president and partner from Mobile & Extended Reality Leader at IBM iX. An interesting part of IBM that you may not know about. Armando, welcome to theCUBE, thanks for coming on. >> Thanks for having me. >> So tell us a little bit about iX. >> So IBM iX is a part of IBM services. We focus on user experiences, whether it's a consumer experience or an employee experience. And the we look at user experience it really kind of sticks together and allow you to unlock the value of all the technology investments that companies are making. >> So, you guys are not making headsets, or are you? >> No we don't make hardware, we just put hardware to work. >> So talk a little bit about the sort of state of whether its augmented reality or extended reality. Lay out the terminology for us if you would. >> Sure, sure. As part of the role I have I lead our mobile practice as well as the extended reality practice and this kind of all related together. We use the term extended reality to kind of encompass all of the different technologies along that spectrum from augmented reality to mixed reality to virtual reality. Of course there are a lot of technologies whether it's the glasses on your face like the wearables or it's in your hand as a lot of mobile platforms today like Apple's ARKit and Google's ARCore allow you to have AR experienced within your mobile apps. >> Yeah, I wonder if you can expand a little bit on that? We're all ready for the role out of 5G and that's going, holds the promise at least for a lot more band width and a lot more applications and that's one of the lynch pins we understand kind of make your world more of a reality. When do we see that role out? What devices are going to happen? You got a preview of the next iPhone for us? >> I certainly don't have a preview of the next iPhone, even though I do lead the Apple partnership for us in North America, the Apple IBM partnership. When you look at 5G, obviously some of the use cases for extended reality in enterprise are around field services and 5G will have an amazing impact on the ability. Not only because of the band width but also the low latency that you have for 5G. So we're excited to see that role out in the different markets around the world and you know the pilots and things that are starting this year. There are going to be a lot of great devices and I think for handsets all the way to the wearables. It'll really allow us to put more use cases on these devices. >> Can you walk us through some of those use cases? Any specific customer examples you have that may make our audience understand a little bit more what's really available today. Sure, I mean in the XR space or in the extended reality space there's a lot that we learned through what we've done in mobile for years. I mean, even our Apple partnership for the past five years and things we've done across the 16 industries we work on. But the initial sort of wave one use cases that we're really seeing today kind of follow along these categories of work related use cases that are like in field services, training related use cases that go all the way from virtual reality immersive training like teaching someone how to do something in a dangerous situation where you want to simulate that. All the way to on the job sort of training and step-by-step guidance that you can get with AR. Step one attach the cable here. Step two, check this over here. Those kind of use cases and then into use cases related to shopping and retail. If you look at what augmented reality is going to do for shopping and retail allow people to assess sort of fit and purpose of something they want to buy. Does it fit in my home? Does it fit in my life? And then also even in the stores as people in retail sort of navigate a store they can use AR to help understand. Add all that metadata to the in store experience that we're gotten used to in our online experiences. And the last broad category we sort of call it share ideas or sharing of ideas, which kind of expands the game from collaboration to even having AR brochures and augmented realty tools to help people understand a product or a service that you're offering. Imagine that we can just kind of expand a piece of equipment here on the table, walk through it and help understand how that piece of equipment is going to help your business. >> You're giving me flashbacks. I remember IBM had a huge initiative in like Second Life and it was like come build an island and we're going to do recruiting and things like that. So, tell us why this generation is, going to be better for business and not have everyone put some money in and have it stolen by you know. >> Not as goofy. >> It's funny you should ask that, the Second Life topic actually came up with someone I was speaking to yesterday. It's come up before. I think there is a significant difference between what Second Life was trying to be and what extended reality is going to be and it already is. I mean when you look at extended reality today, I think one important thing to think about this is not future tech, this is not some sort of dream of sort of Ready Player One type of situation. But more, it's looking at real enterprise use cases that are already driving a value; time savings on inspections, productivity enhancements for people assembling, consistency and increase safety. All the key performance indicators and value drivers we have for mobile. So there's a real path to business value and the uses are much clearer than it might have been in the days of Second Life. >> Less mistakes, less rework. Armando, what kind of infrastructure would a consumer need? You gave the example of retail for instance, what kind of infrastructure would I need? Am I just, is it just my mobile home? Am I going to wear headsets, what does that look like? >> So when we talk about extended reality, we tend to keep one foot in today and one foot in the future cause its changing so fast. When you talk about retail there is a sale associate side of things that might be helping you decide an automotive. Maybe you're looking at configuring a car right in front of you or in a retail store maybe you're looking to look at a piece of furniture or something that's not on the show room floor. Now those experiences can start today with tablets and iPhones and other devices. But we see also as well devices that people be wearing wearables that are available today and that trend moving that glass kind of from your hand to your face is going to be something that is really going to be accelerated. >> So, this is maybe how a piece of clothing will fit or what a couch might look like in a particular room, is that right? >> Yeah. >> And you would envision that people will purchase this infrastructure for a variety of uses. Not only to see how things look but maybe there's gaming. So it's a multi-use kind of environment or not necessarily? Is it more specialized to use it? >> No absolutely, it's important, it's a good thing that you brought up sort of gaming as well. Because, obviously we all know that gaming has been kind of at the fore front for virtual reality but when you look at gaming and entertainment those are also going to include many use cases. When we look at the enterprise side we're kind of focused on those other wave one use cases. But I also expect in the sort of share ideas category I spoke of marketing and sales activities will also include AR experienced to help people understand the product or service that you're positioning. >> What's the state of adoption? We always joke about google glass. Remember the movie The Jerk with the Opti-Grab and the guy was cross-eyed? So that didn't take off but what's the state of hardware and hardware adoption today? >> So I think what's unique about this technology and what's happening now, the technology we already all have in our hands on our mobile phones is already there and that's where you're going to see it happen first. I think the numbers by next year are like 3.4 billion phones will have an AR capability so the technology is already with us. The next sort of technology set that we're talking about is getting to the wearables and of course we see things today in the VR space that's much more available in the consumer side, things like the oculus go. In the enterprise space you also have headsets from many manufacturers that maybe grew up doing things in the military that are now more commercially available. Things like someone trying to repair something that needs to be hand free. We're seeing those technologies readily available in the enterprise. >> Tell about how AI fits into this new world? >> That's a great question. If you think about it its really kind of a really great combination. You take XR, extended reality, so whether its AR or VR and you add AI to it you can kind of give AI the ability to kind of enter the 3D space. So as you think about AI solutions that we had in the mobile world where you might be using AI to solve a problem, diagnose a problem, visual diagnostics, acoustic detection AI can kind of give sort of super powers to an employee. At the same time we see that the experiences that we have in the extended reality space get really enhanced because you now have the ability to democratize expertize with AI. You take all of the expertize of your organization and that one technician whose only been there for 10 days now has the power of your entire collective knowledge. >> What about privacy? Anytime you hear some of these and I think about you can have wearables out there, there is concern about you know with facial recognition is going to be everywhere my privacy is going to be invaded. What's IBM positioning? Where does that fit in this whole environment? >> Of course we take privacy very seriously. When we talk about our AI and Watson you know your data is your data. If you look at some of the things, I mean, you'll make decisions, enterprises will make decisions on the same way they do with mobile devices. Is it okay to have a camera in this environment? And if I do have a camera in this environment, what's my cloud strategy and where am I going to host this data to make sure that I have not just privacy but also IP concerns, considered? All of the same things we've learned in the mobile world are going to apply to this and it'll get even a little more important as you think of the different types of sensors that are required to make these experiences happen. >> I wonder if you could help us understand about the pre-requisites to do things like technician actually trouble shooting a problem. Many of us have seen, we put on the glasses you walk around a show floor and you look at a new system or something and its really very cool. You can look inside and inspect the different layers. What has to be done, I'm inferring from what you're saying that a technician would be able to inspect live, real time a device and identify problems on that device. So what has be done? It has to be instrumented? It has to have cameras installed? What does the infrastructure build out look like? >> Sure, when you look at. Lets take the technician scenario for a moment and unpack that. When you look at that there are a couple of things that are already happening like a lot of major pieces of equipment are instrumented. So you have the internet of things data, sort of the data streams coming off of that. How do you make that available to that technician in the moment, sort of the vital signs of that piece of equipment that you might be operating on? So, having all that information like temperature and all the things from an IOT perspective, that's one angle of it. The other side of it really is when you think of failure of equipment usually at some point there's a situation that technician may not have encountered before but maybe someone else has. Maybe you've already had a bunch of closed tickets on that three years ago. So having all that information available and using cognitive processing to kind of navigate that unstructured data, that will let you navigate that. Voice will be part of this interface as well. I think voice is an important part because you're going to be hands free and you're going to be having a dialogue with Watson, let's say to help diagnose a problem. >> How about healthcare? It's not something we've really talked about a lot. Just in terms of applications, whether its for the operating room of the future, remote guidance from doctor, training. Do you see those kind of use cases emerging? >> Yeah absolutely, all the way from training through execution of surgery and other things. This is where the 5G topic really comes into play because low latency is really required if you're talking about surgery and things like that. >> Give me a few minutes. >> You get that round trip of that signal going back and forth. I think when you think about the VR side of things for training is immensely powerful. The AR side for during execution of procedures will also be powerful as well and it comes back to that general theme od democratizing expertize. One expert that's physically on this part of the world can serve many people that need their services around the world. >> It sounds like there are a lot of uncertainties in terms of how this is going to evolve. First of all od the a fair statement? Given that, not withstanding that can you give us a sense of expectations for how it will evolve and the adoption levels that you expect over the next two to five years. >> Five years is a long horizon for this technology. >> Too long, too long perhaps so what's more fair, 18 months? >> Lets talk more immediate. I think when you look at, there may be some uncertainty in terms of which use cases will drive the most value but there are already many use cases that companies are probably sharing information out. Like some companies, especially inspection use cases, you know there is a company that published 96% savings on time because really you are using AR to document. Okay inspect this point, this point, this point, this point. Assembly use cases, diagnostics with AI and AR are working together. All of these are already happening, so what I think is going to happen is enterprises are going to be able to more and more easily justify the spend to make these investments because the RY is rapid. Just like the RY in mobile was rapid for enterprise, the RY in XR will be extremely rapid. >> Armando for people who didn't come to IBM Think, give them a little taste of what they missed from an iX stand point. Some of the conversations that you've been having. >> Yeah, when we look at, I mean iX across the IBM Think we've had a lot of conversations and a lot of sessions around how experience is really driving the business value and also around marketing technologies and marketing services and all of the things that relate to experience on the consumer side and the employee side. We're really enjoyed some great show casing of our client stories and the works we've done. Everything from mobile to commerce to marketing platforms to sales floors across everything we do in the IBM services part that we're in. >> How long has this been around? >> IBM iX? >> Yeah. >> IBM iX has been a part of IBM originally since the 96 Olympics in Atlanta. I've been with IBM about 25 years and this space is kind of like really evolved in terms of the position of user experience and design. IBM has become really a design focused company and you look at enterprise design thinking in everything we do so this is really a part of our business that's really become focal point as companies start thinking more about design. >> Wow, it's been a long time but it's certainly not mature but it's a revenue generating business obviously. >> Yeah and a very high growth part of the company. >> Awesome, well Armando thanks so much for sharing this part of IBM that's not well known. Really exciting futures and I really appreciate you coming on theCUBE. >> Thank you very much, I appreciate being here. >> Alright, keep it right there everyone. Stu and I will be back. Day four, IBM Think, we're at Moscone. Stop by, we're at Moscone North. I'm Dave Vellante, Stu Miniman and John Furrier is here. We'll be right back, you're watching theCUBE. (techno music)

>> Hi, I'm Peter Burris and once again, welcome to a Wikibon Action Item. (lively electronic music) We are again broadcasting from the beautiful theCUBE Studios here in Palo Alto, California, and we're joined today by a relatively larger group. So, let me take everybody through who's here in the studio with us. David Floyer, George Gilbert, once again, we've been joined by John Furrier, who's one of the key CUBE hosts, and on the remote system is Jim Kobielus, Neil Raden, and another CUBE host, Dave Vellante. Hey guys. >> Hi there. >> Good to be here. >> Hey. >> So, one of the things we're, one of the reasons why we have a little bit larger group here is because we're going to be talking about a community gathering that's taking place in the big data universe in a couple of weeks. Large numbers of big data professionals are going to be descending upon Strata for the purposes of better understanding what's going on within the big data universe. Now we have run a CUBE show next to that event, in which we get the best thought leaders that are possible at Strata, bring them in onto theCUBE, and really to help separate the signal from the noise that Strata has historically represented. We want to use this show to preview what we think that signal's going to be, so that we can help the community better understand what to look for, where to go, what kinds of things to be talking about with each other so that it can get more out of that important event. Now, George, with that in mind, what are kind of the top level thing? If it was one thing that we'd identify as something that was different two years ago or a year ago, and it's going to be different from this show, what would we say it would be? >> Well, I think the big realization that's here is that we're starting with the end in mind. We know the modern operational analytic applications that we want to build, that anticipate or influence a user interaction or inform or automate a business transaction. And for several years, we were experimenting with big data infrastructure, but that was, it wasn't solution-centric, it was technology-centric. And we kind of realized that the do it yourself, assemble your own kit, opensource big data infrastructure created too big a burden on admins. Now we're at the point where we're beginning to see a more converged set of offerings take place. And by converged, I mean an end to end analytic pipeline that is uniform for developers, uniform for admins, and because it's pre-integrated, is lower latency. It helps you put more data through one single analytic latency budget. That's what we think people should look for. Right now, though, the hottest new tech-centric activity is around Machine Learning, and I think the big thing we have to do is recognize that we're sort of at the same maturity level as we were with big data several years ago. And people should, if they're going to work with it, start with the knowledge, for the most part, that they're going to be experimenting, 'cause the tooling isn't quite mature enough, we don't have enough data scientists for people to be building all these pipelines bespoke. And the third-party applications, we don't have a high volume of them where this is embedded yet. >> So if I can kind of summarize what you're saying, we're seeing bifurcation occur within the ecosystem associated with big data that's driving toward simplification on the infrastructure side, which increasingly is being associated with the term big data, and new technologies that can apply that infrastructure and that data to new applications, including things like AI, ML, DL, where we think about modeling and services, and a new way of building value. Now that suggests that one or the other is more or less hot, but Neil Raden, I think the practical reality is that here in Silicon Valley, we got to be careful about getting too far out in front of our skis. At the end of the day, there's still a lot of work to be done inside how you simply do things like move data from one place to the other in a lot of big enterprises. Would you agree with that? >> Oh absolutely. I've been talking to a lot clients this week and, you know, we don't talk about the fact that they're still running their business on what we would call legacy systems, and they don't know how to, you know, get out of them or transform from them. So they're still starting to plan for this, but the problem is, you know, it's like talking about the 27 rocket engines on the whatever it was that he launched into space, launching a Tesla into space. But you can talk about the engineering of those engines and that's great, but what about all the other things you're going to have to do to get that (laughs) car into space? And it's the same thing. A year ago, we were talking about Hadoop and big data and, to a certain extent, Machine Learning, maybe more data science. But now people are really starting to say, How do we actually do this, how do we secure it, how do we govern it, how do we get some sort of metadata or semantics on the data we're working with so people know what they're using. I think that's where we are in a lot of companies. >> Great, so that's great feedback, Neil. So as we look forward, Jim Kobielus, the challenges associated with what it means to better improve the facilities of your infrastructure, but also use that as a basis for increasing your capability on some of the new applications services, what are we looking for, what should folks be looking for as they explore the show in the next couple of weeks on the ML side? What new technologies, what new approaches? Going back to what George said, we're in experimentation mode. What are going to be the experiments that are going to generate greatest results over the course of the next year? >> Yeah, for the data scientists, who flock to Strata and similar conferences, automation of the Machine Learning pipeline is super hot in terms of investments by the solution providers. Everybody from Google to IBM to AWS, and others, are investing very heavily in automation of, not just the data engine, that problem's been had a long time ago. It's automation of more of the feature engineering and the trending. These very manual, often labor intensive, jobs have to be sped up and automated to a great degree to enable the magic of productivity by the data scientists in the new generation of app developers. So look for automation of Machine Learning to be a super hot focus. Related to that is, look for a new generation of development suites that focus on DevOps, speeding the Machine Learning in DL and AI from modeling through training and evaluation deployment in iteration. We've seen a fair upswing in the number of such toolkits on the market from a variety of startup vendors, like the DataRobots of the world. But also coming to say, AWS with SageMaker, for example, that's hot. Also, look for development toolkits that automate more of the cogeneration, you know, a low-code tools, but the new generation of low-code tools, as highlighted in a recent Wikibons study, use ML to drive more of the actual production of fairly decent, good enough code, as a first rough prototype for a broad range of applications. And finally we're seeing a fair amount of ML-generated code generation inside of things like robotic process automation, RPA, which I believe will probably be a super hot theme at Strata and other shows this year going forward. So there's a, you mentioned the idea of better tooling for DevOps and the relationship between big data and ML, and what not, and DevOps. One of the key things that we've been seeing over the course of the last few years, and it's consistent with the trends that we're talking about, is increasing specialization in a lot of the perspectives associated with changes within this marketplace, so we've seen other shows that have emerged that have been very, very important, that we, for example, are participating in. Places like Splunk, for example, that is the vanguard, in many respects, of a lot of these trends in big data and how big data can applied to business problems. Dave Vellante, I know you've been associated with a number of, participating in these shows, how does this notion of specialization inform what's going to happen in San Jose, and what kind of advice and counsel should we tell people to continue to explore beyond just what's going to happen in San Jose in a couple weeks? >> Well, you mentioned Splunk as an example, a very sort of narrow and specialized company that solves a particular problem and has a very enthusiastic ecosystem and customer base around that problem. LAN files to solve security problems, for example. I would say Tableau is another example, you know, heavily focused on Viz. So what you're seeing is these specialized skillsets that go deep within a particular domain. I think the thing to think about, especially when we're in San Jose next week, is as we talk about digital disruption, what are the skillsets required beyond just the domain expertise. So you're sort of seeing this bifurcated skillsets really coming into vogue, where if somebody understands, for example, traditional marketing, but they also need to understand digital marketing in great depth, and the skills that go around it, so there's sort of a two-tool player. We talk about five-tool player in baseball. At least a multidimensional skillset in digital. >> And that's likely to occur not just in a place like marketing, but across the board. David Floyer, as folks go to the show and start to look more specifically about this notion of convergence, are there particular things that they should think about that, to come back to the notion of, well, you know, hardware is going to make things more or less difficult for what the software can do, and software is going to be created that will fill up the capabilities of hardware. What are some of the underlying hardware realities that folks going to the show need to keep in mind as they evaluate, especially the infrastructure side, these different infrastructure technologies that are getting more specialized? >> Well, if we look historically at the big data area, the solution has been to put in very low cost equipment as nodes, lots of different nodes, and move the data to those nodes so that you get a parallelization of the, of the data handling. That is not the only way of doing it. There are good ways now where you can, in fact, have a single version of that data in one place in very high speed storage, on flash storage, for example, and where you can allow very fast communication from all of the nodes directly to that data. And that makes things a lot simpler from an operational point of view. So using current Batch Automation techniques that are in existence, and looking at those from a new perspective, which is I do IUs apply these to big data, how do I automate these things, can make a huge difference in just the practicality in the elapsed time for some of these large training things, for example. >> Yeah, I was going to say that to many respects, what you're talking about is bringing things like training under a more traditional >> David: Operational, yeah. >> approach and operational set of disciplines. >> David: Yes, that's right. >> Very, very important. So John Furrier, I want to come back to you, or I want to come to you, and say that there are some other technologies that, while they're the bright shiny objects and people think that they're going to be the new kind of Harry Potter technologies of magic everywhere, Blockchain is certainly going to become folded into this big data concept, because Blockchain describes how contracts, ownership, authority ultimately get distributed. What should folks look for as the, as Blockchain starts to become part of these conversations? >> That's a good point, Peter. My summary of the preview for BigData SV Silicon Valley, which includes the Strata show, is two things: Blockchain points to the future and GDPR points to the present. GDPR is probably the most, one of the most fundamental impacts to the big data market in a long time. People have been working on it for a year. It is a nightmare. The technical underpinnings of what companies have to do to comply with GDPR is a moving train, and it's complete BS. There's no real solutions out there, so if I was going to tell everyone to think about that and what to look for: What is happening with GDPR, what's the impact of the databases, what's the impact of the architectures? Everyone is faking it 'til they make it. No one really has anything, in my opinion from what I can see, so it's a technical nightmare. Where was that database? So it's going to impact how you store the data, and the sovereignty issue is another issue. So the Blockchain then points to the sovereignty issue of the data, both in terms of the company, the country, and the user. These things are going to impact software development, application development, and, ultimately, cloud choice and the IoT. So to me, GDPR is not just a one and done thing and Blockchain is kind of a future thing to look at. So I would look out of those two lenses and say, Do you have a direction or a narrative that supports me today with what GDPR will impact throughout the organization. And then, what's going on with this new decentralized infrastructure and the role of data, and the sovereignty of that data, with respect to company, country, and user. So to me, that's the big issue. >> So George Gilbert, if we think about this question of these fundamental technologies that are going to become increasingly important here, database managers are not dead as a technology. We've seen a relative explosion over the last few years in at least invention, even if it hasn't been followed with, as Neil talked about, very practical ways of bringing new types of disciplines into a lot of enterprises. What's going to happen with the database world, and what should people be looking for in a couple of weeks to better understand how some of these data management technologies are going to converge and, or involve? >> It's a topic that will be of intense interest and relevance to IT professionals, because it's become the common foundation of all modern apps. But I think what we can do is we can see, for instance, a leading indicator of what's going to happen with the legacy vendors, where we have in-memory technologies from both transaction processing and analytics, and we have more advanced analytics embedded in the database engine, including Machine Learning, the model training, as well as model serving. But the, what happened in the big data community is that we disassembled the DBMS into the data manipulation language, which is an analytic language, like, could be Spark, could be Flink, even Hive. We had the Catalog, which I think Jim has talked about or will be talking about, where we're not looking, it's not just a dictionary of what's in one DBMS, but it's a whole way of tracking and governing data across many stores. And then there's the Storage Manager, could be the file system, an object store, could be just something like Kudu, which is a MPP way of, in parallel, performing a bunch of operations on data that's stored. The reason I bring all this up is, following on David's comment about the evolution of hardware, databases are fundamentally meant to expose capabilities in the hardware and to mediate access to data, using these hardware capabilities. And now that we have this, what's emerging as this unigrid, with memory-intensive architectures and super low latency to get from any point or node on that cluster to any other node, like with only a five microsecond lag, relative to previous architectures. We can now build databases that scale up with the same knowledge base that we built databases... I'm sorry, that scale out, that we used to build databases that scale up. In other words, it democratizes the ability to build databases of enormous scale, and that means that we can have analytics and the transactions working together at very low latency. >> Without binding them. Alright, so I think it's time for the action items. We got a lot to do, so guys, keep it really tight, really simple. David Floyer, let me start with you. Action item. >> So action item on big data should be focus on technologies that are going to reduce the elapse time of solutions in the data center, and those are many and many of them, but it's a production problem, it's becoming a production problem, treat it as a production problem, and put it in the fundamental procedures and technologies to succeed. >> And look for vendors >> Who can do that, yes. >> that do that. George Gilbert, action item. >> So I talked about convergence before. The converged platform now is shifting, it's center of gravity is shifting to continuous processing, where the data lake is a reference data repository that helps inform the creation of models, but then you run the models against the streaming continuous data for the freshest insights-- >> Okay, Jim Kobielus, action item. >> Yeah, focus on developer productivity in this new era of big data analytics. Specifically focus on the next generation of developers, who are data scientists, and specifically focus on automating most of what they do, so they can focus on solving problems and sifting through data. Put all the grunt work or training, and all that stuff, take and carry it by the infrastructure, the tooling. >> Peter: Neil Raden, action item. >> Well, one thing I learned this week is that everything we're talking about is about the analytical problem, which is how do you make better decisions and take action? But companies still run on transactions, and it seems like we're running on two different tracks and no one's talking about the transactions anymore. We're like the tail wagging the dog. >> Okay, John Furrier, action item. >> Action item is dig into GDPR. It is a really big issue. If you're not proactive, it could be a nightmare. It's going to have implications that are going to be far-reaching in the technical infrastructure, and it's the Sarbanes-Oxley, what they did for public companies, this is going to be a nightmare. And evaluate the impact of Blockchains. Two things. >> David Vellante, action item. >> So we often say that digital is data, and just because your industry hasn't been upended by digital transformations, don't think it's not coming. So it's maybe comfortable to sit back and say, Well, we're going to wait and see. Don't sit back and wait and see. All industries are susceptible to digital transformation. >> Alright, so I'll give the action item for the team. We've talked a lot about what to look for in the community gathering that's taking place next week in Silicon Valley around strata. Our observations as the community, it descends upon us, and what to look for is, number one, we're seeing a bifurcation in the marketplace, in the thought leadership, and in the tooling. One set of group, one group is going more after the infrastructure, where it's focused more on simplification, convergence; another group is going more after the developer, AI, ML, where it's focused more on how to create models, training those models, and building applications with the services associated with those models. Look for that. Don't, you know, be careful about vendors who say that they do it all. Be careful about vendors that say that they don't have to participate in a converged approach to doing this. The second thing I think we need to look for, very importantly, is that the role of data is evolving, and data is becoming an asset. And the tooling for driving velocity of data through systems and applications is going to become increasingly important, and the discipline that is necessary to ensure that the business can successfully do that with a high degree of predictability, bringing new production systems are also very important. A third area that we take a look at is that, ultimately, the impact of this notion of data as an asset is going to really come home to roost in 2018 through things like GDPR. As you scan the show, ask a simple question: Who here is going to help me get up to compliance and sustain compliance, as the understanding of privacy, ownership, etc. of data, in a big data context, starts to evolve, because there's going to be a lot of specialization over the next few years. And there's a final one that we might add: When you go to the show, do not just focus on your favorite brands. There's a lot of new technology out there, including things like Blockchain. They're going to have an enormous impact, ultimately, on how this marketplace unfolds. The kind of miasma that's occurred in big data is starting to specialize, it's starting to break down, and that's creating new niches and new opportunities for new sources of technology, while at the same time, reducing the focus that we currently have on things like Hadoop as a centerpiece. A lot of convergence is going to create a lot of new niches, and that's going to require new partnerships, new practices, new business models. Once again, guys, I want to thank you very much for joining me on Action Item today. This is Peter Burris from our beautiful Palo Alto theCUBE Studio. This has been Action Item. (lively electronic music)

live from las vegas it's the cube covering discover 2016 las vegas brought to you by Hewlett Packard Enterprise now you're your host John furrier and Dave vellante okay welcome back here and we are here live in Las Vegas for HP discover 2016 exclusive coverage from SiliconANGLE media's two cubes our flagship program we go out to the events and extract the signal noise i'm john / with my co-host dave allante and our next guest is Bobby Patrick CMO of the cloud enterprise group at HPE and Michael Loomis head of sales of global enterprise that at nuage networks pardon now part of Nokia that's right welcome back to the cube welcome for the first time thank you very much may the cube alumni club that's right it's bro my cabin I leave I gotta get a platinum membership now no VIP Thompson after six times you got we people want have a cube alumni event at these events so it's be fun next year like that we'll look at that yeah Bobby I want to get touch base on the cloud you also you'd run in the cloud group I Nokia's customer of you guys obviously HP everyone knows the history had the public cloud they kind of pivoted over and now you guys found your swim lane alright you to just take a minute right to clarify Andrey amplify what we talked about last and right I'm in London around HP's cloud strategy it's not like it's not define you guys have a clear line of sight right take a minute to just share your vision and the specifically the company's cloud strategy yeah thanks John it's great to be here again you know cloud is the catalyst for our customers transformation and our partners and got 24 here at discover onstage showcasing he lien at healing at work it up I've been there two years now and our cloud strategy couldn't be any more on fire and working this three prongs to it the first one is we want to help customers in a multi cloud world source manager consume cloud services across traditional IT private managed in public rightly so the azure partnership before we have dropbox now as well and others so we're demonstrating that second one is we want to partner with the leading technology so you mentioned the public cloud we used to have in the past now we're focused on that part of the right mix of our customers cloud strategy on public cloud partnerships so you see that Microsoft Azure specialty clouds like enter links around document collaboration you know doc Dropbox so all examples of demonstrating around partner clouds and the third one is we want to integrate our solutions with those clouds as well so managing that multi-cloud world is complex working with becomes like Nokia we're taking healing and healing OpenStack is giving Cloud Foundry we're layering on it called cloud orchestration which we now bundle as our healing Cloud suite today and we pull in public cloud we pull in manage private and traditional IT into one single solution for our customers so you mentioned as your and there's nothing in the announcements this morning that mention as yours that's the previous relationship right we announced our partners with as your last discover this one there's a number of announcements just showing it at work right our managed cloud broker offering cloud brokerage is a really big deal now for CIOs trying to manage a multi-cloud world now extends to azure so there's a lot of those announcements are going to see throughout discover with Azure and there's gonna be some other cloud announcements as well well we'll get to the eucalyptus AWS relationship kind of late if I wanted to ask you specifically around the strategy and how you see the cloud enabling delivery and on the opening i mentioned dave was asking about my views on HP's growth and I kind of use the story of back in the old days of the many computers this little laserjet attachment to walang system was a major growth engine for HP and the rest is history so we're kind of looking at the cloud and saying okay is IOT that bolt onto the cloud that is going to lift up where cloud becomes also pervasive like many computers and then distributed computing did how are you guys enabling things like IOT right because now the hybrid cloud public private data center right is integrating together right do you see that as an integration into the cloud and you enabling those kinds of things there's actually two big kind of growth axes that I think a report right one is you mentioned IOT so the number of devices connected the amount of data just huge orders of magnitude growth you got to actually drive costs down and things as well be part of that and so that's a big deal i would say universal platform that we announced as well healing is a back-end for that so massive scale on OpenStack on our cloud line service or other so you get that Maxim economics with new wash another spreading across multiple data centers for availability we have that platform for IOT but I think from a growth in March we look at the new hpe now right the lighter nimbler stronger when i layer on our security product security's number one concern our customers have going to go into cloud you know arcsight being able to do threat detection across a hybrid cloud right right the ability to do encryption with our data secure product right bringing in our big data products like Vertica for the column data store in our in our work around Hadoop or distributed are right when you get to bring those pieces into the fold right you begin to have the ability to add on top high-value software and services more of the stack you know obviously infrastructure across the bottom so what I see is us growing share of wallet growing our strategic relevance by both by both handling the massive amounts of data that's being generated supporting the connected world but also security managing that data big data fast data and providing that full stack on top and we're bringing all those pieces together but the past HP kind of have these siloed be use in a way right not anymore all these pieces are coming together and that's a big part of my my organization responsibility so Michael talked about where nuage fits in what's the relationship where do you guys add value so nuage is a what we call a software-defined networking product it's born out of some routing technology that we've had for a number of years we started our router products back in 2001 and we're number one or number two depending on the category and service provider edge routers and when you look at the the problem of scale out and flexibility in the cloud you need some complex network constructs that may not be ready of readily available in some of those cloud tools and obviously you can't go throw an expensive service provider edge router at that problem so what we did is we took that software use that as a SDN controller to manage the forwarding tables of the virtual switches or the namespace in the case of linux container integrated that into the distribution or a cloud system like Keely on and there you go you've got a stack that can scale out at the network layer and at the composite VMware killer yeah as a solution Kyle singer always talking about network and he's so proud of his acquisition of the stn player and the sierra which is a part of the vmware but dave and i always saw always saw that the network was the bottom that you seeing a rube out there yes pacifically talk about where the network piece fits in and why that's so important right now with cloud you mentioned some technical things but is it is it really the DevOps enable or is it about the containers is it about the micro services all the above what's the key will issue network is important for scale anytime you want to go multi data center or hybrid or you want to secure your applications you got to have an advanced networking solution or an SDN solution what's driving that scale you know we approach private cloud a few years back we had the stack we were putting it together we got nice production pilots up in the customers and then we found that a lot of the applications weren't built to consume the flexibility and the scale out that we delivered with that private cloud so these enterprises are going back and they've got new applications that are coming on that are micro services oriented architectures cloud native applications and they can consume this architecture and they're starting to it's not just IOT it's lots of applications that are relooking at how to take advantage of this infrastructure it's being built and that spreads across multiple data centers and part of the hybrid cloud which is why solid networking solutions important it's absolutely critical have good networking let's get to the DevOps question I'll see the big process workloads one of the things you guys have talked about in your announcements morning was obviously workload management having the ability of flexibility by poseable infrastructure yadda yadda yeah I got it Michael you that you're developing this stuff and the thing that Dave and I here and Wikibon community from customers is make it easier for me the total cost of ownership is out of control it's super hard to do this how does this get easier how are people managing through the complexity to make it simpler and how are they managing the total cost of ownership keeley on so that's just why it's important for us because we come in and we have a lot of great networking technology but people are not going to consume that networking technology in and of themselves they need a integrated complete stack that's supported installs quickly and as an orchestration layer on top that's going to allow it to scale the staples an example this I just say annealing what specifically about helium makes it simpler lower costs so when you look at healing on one great tool set they built together is an installer tool set and so there's nice scripting that's going to take when you look at a cloud you've got OpenStack components you've got your Cloud Foundry components you got your networking components storage components and to have all of that stuff install and deploy seamlessly and scale out as demand is required that doesn't come off the shelf if you're going to self integrate some of these open source projects so that the support and service that's added with helium and then if you look at the sea a slate layer on top to manage all the components and integrate in with some of the public clouds that's what takes the technology stack from being a great set of standards and a great set of open-source products that can now be consumed well dude some installation was the biggest barrier openstax had for a long time now how complex it was to install it scale right so i think that the contract and it takes it from a stack of technology to something that actually solves a business so that business problem is IT labor right right that's right non differentiated provisioning or patching or talk about the shift that's going on within that sort of labor pool from stuff that gives you no competitive advantage out to where we are today or where we're headed we used to go into proof of concepts and the customer would one or two types they either have an OpenStack expert in there someone who had lived and breathe it and was part of the original community and they would work with us to get the initial stack up and running a guy a guy or we would have to bring that guy to the table and they get somebody that was trying to be that person we'd help them stand up OpenStack at the same time we'd go in with nuage we knew that wasn't going to work so that's when we started partnering strongly with partners like healing on who can come in and make that work for the enterprise and if you're in a CIOs position you don't want to be dependent on one or two OpenStack experts that you've got to make sure stay or you gotta hire an army of OpenStack engineers what you want is a private cloud that works in a trusted partner to deliver it for you but you want the openness and the standards-based attributes of a product like Helion so you can plug other pieces of the environment in so that's it's really important Dave just you know the average the average customer that we have today has one engineer for every 240 virtual machines with helium staccato 40 which were rolling out has we believe we can get that to 12 500 and that's because you've got a universal control plane where you've got a single pane of glass basically across all the clouds but as your AWS openstack-based clouds maybe even some vmware stack clouds as well and and you could through one see the workloads deploy them that's how you really get a continuous delivery pipeline going it's api's for developers but a single pane of glass for IT and scale what's key it's working now so it brought up VMware VMware killer when you mention it so I'll bring up the VMware question so back in the day VMware ecosystem was really robust yeah some are saying it's on the decline will see that what's the update our vmworld the cube will be there again this year but they made for every one of their partners they made ten dollars for every dollar VMware book so they threw up a lot of cash which is great but the ecosystem you know feeds the feeds that feeds the beast if you will how are you guys Bobby doing that with your partners and now do you see docker for instance enabling things like that and how does that all you have to do some sort of economic advantage for your partners can you share some insight into what you got yeah yeah yeah so in addition to you know that the terms around helping it be attractive to skill up and and transfer our partners transforming as well most of them in resellers you know they want to climb the stack now they would be more relevant to their customers the skilling up does have come with cost and one of the big things we're doing is working on go to market with them actually bringing them bringing them opportunities bringing them in the deals in the case of like with with with Nokia right the ability to to go in with them work on accounts together these are major really large significant IT transformations with our other partners as well skilling them up getting bringing them away wrapping services around their monetization services wrappers yeah they're actually building hostess back up as a service other kinds of service offerings that they build and run themselves that we will actually sell to our go-to-market channels or they'll deploy on site that you know most of our business you know seventy percent goes through the channel right was there a number can you share a number ten dollars I don't have the number by the number how do stuff how does the ecosystem build around and how they make money with helion's the services is that the apps we deploy we sell software licenses so as Helion scales out we get more workloads on the system then we're going to sell more software licenses but the ecosystem is critical for us because when you're talking about building a private cloud and you're talking about building an open private cloud which is getting away from the vendor lock that exists today which is why people are driving to some of these open source products it means that a lot of products have to come together and work well together and so it usually it's the it's the OpenStack distribution that's that's like healing on that's leading that ecosystem we're a part of that and then we get interaction with a lot of other components as a part of that ecosystem that helps build an end solution to the customer we have 360 now cloud builder partners we had 30 18 months ago will have 3018 more months right we're transforming them and they're building new businesses hire marketing services and grow in their bodies how do you see the CSC Spinco whatever we're going to call that affecting is you had basically a built-in consumer right of you know your stuff there one of the Cantonian area's biggest customers right how will that shake out you think and of course CS he has a strong relationship with AWS that's goodness but yeah yeah I think I think it's about focuses meg always says writes about it's about having companies i can really focus on their best thing right so you know we have a growth high growth a growth company focus on software and hardware and infrastucture and services I think outsourcing they're coming together with CSC they're building a be a big partner of ours but we're also part with Accenture and others as well so I think it's hella everybody to be the best of what they do we'll have relationships contractual and partnership relationships but it will allow maybe a bit more complete competition probably very very healthy you feel Alfie with the sis the big power s eyes you guys in good shape with those guys yeah in Price Waterhouse Coopers just received a partner of the year for cloud they're here in a big way accenture is here yeah I think they're they're big as well but you know our enterprise services and and they're here in a big way too and I think that will continue some of the influences out there last question wants to know about the update on equal lyptus AWS that relation down can give an update yeah so our strategy is to partner with public cloud providers many of them eucalyptus has a great story you know where obviously you go to reinvent or a big part of that you know I think there will be you'll see more to come on the public cloud partnership partnership face but will be at reinvent no to the cube watch a movie at dr. Khan as well coming up very quickly I think next week or the week after thank you okay let me avenge coming up guys thanks so much appreciate it thanks for spending the time yeah thank you i'll be Patrick Michael Loomis here on the cube this is a cube we'll be right back after this short break

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