(bright upbeat music) >> Announcer: From theCUBE studios in Palo Alto in Boston, connecting with thought leaders around the globe, these are Cloud Native Insights. >> Hi, I'm Stu Miniman, the host of Cloud Native Insights. We talk about cloud native, we're talking about how customers can take advantage of the innovation and agility that's out there in the clouds, one of the undercurrents, not so hidden if you've been watching the program so far. We've talked a bit about serverless, say something that's helping remove the friction, allowed developers to take advantage of technology and definitely move really fast. So I'm really happy to welcome to the program, for coming from Fauna. First of all, I have the CTO and Co-founder, who's Evan Weaver. And also joining him is the new CEO Eric Berg. They said, both from Fauna, talking serverless, talking data as an API and talking the modern database. So first of all, thank you both for joining us. >> Thanks for having us Stu. >> Hi, good to be here. >> All right, so Evan, we're going to start with you. I love talking to founders always. If you could take us back a little bit, Fauna as a project first before it was a company, you of course were an early employee at Twitter. So if you could just bring us back a little bit, what created the Fauna project and bring us through a brief history if you would. >> So I was employee 15 and Twitter, I joined in 2008. And I had a database background, I was sort of a performance analyst and worked on Ruby on Rails sites at CNET networks with the team that went on to found GitHub actually. Now I went to Twitter 'cause I wanted Twitter the product to stay alive. And for no greater ambition than that. And I ended up running the back end engineering team there and building out all the distributed storage for the core business objects, tweets, timelines, the social graph, image storage, the cache, that kind of thing. And this was early in the cloud era. API's were new and weird. You couldn't get Amazon EC2 off the shelf easily. We were racking hardware and code ancient center. And there were no databases or platforms for data of any kind. They really let us the Twitter engineering team focus on building the product. And we did a lot of open source work there. Some of which has influenced Fauna, originally, Twitter's open source was hosted on the Fauna GitHub account, which predated Twitter like you mentioned. And I was there for four years build out the team, basically scaled the site, especially scaled the Twitter.com API. And we just never found a platform which was suitable for what we were trying to accomplish. Like a lot of what Twitter did was itself a platform. We had developers all over the world using the Twitter API to interact with tweets. And we're frustrated that we basically had to become specialists in data systems because there wasn't a data API, we can just build the product on. And ultimately, then data API that we wished we had, is now Fauna. >> Well, it's a story we've loved hearing. And it's fascinating one, is that the marketplace wasn't doing what we needed. Often open source is a piece of that, how do we scale that out? How do we build that? Realized that the problem that you have is what others have. And hey, maybe there's a company. So could you give us that transition, Fauna as a product, as a company, where was it understood that, hey, there's a lot of other people that can take advantage from some of the same tools that you needed before. >> I mean, we saw it in the developers working with the Twitter platform. We weren't like, your traditional database experiences, either manage cloud or on-prem, you have to administrate the machine, and you're responsible for its security and its availability and its location and backups and all that kind of thing. People building against Twitter's API weren't doing that. They're just using the web interface that we provided to them. It was our responsibility as a platform provider. We saw lots of successful companies being built on the API, but obviously, it was limited specifically to interacting with tweets. And we also saw peers from Twitter who went on to found companies, other people we knew in the startup scene, struggling to just get something out the door, because they had to do all this undifferentiated heavy lifting, which didn't contribute to their product at all, if they did succeed and they struggled with scalability problems and security problems and that kind of thing. And I think it's been a drag on the market overall, we're essentially, in cloud services. We're more or less built for the enterprise for mature and mid market and enterprise companies that already had resources to put behind these things, then wasn't sort of the cloud equivalent of the web, where individuals, people with fewer resources, people starting new projects, people doing more speculative work, which is what we originally and Jack was doing at Twitter, it just get going and build dynamic web applications. So I think the move to cloud kind of left this gap, which ultimately was starting to be filled with serverless, in particular, that we sort of backtracked from the productivity of the '90s with the lamp era, you can do everything on a single machine, nobody bothered you, you didn't have to pay anyone, just RPM install and you're good to go. To this Kubernetes, containers, cloud, multi site, multi region world where it's just too hard to get a basic product out the door and now serverless is sort of brought that around full circle, we see people building those products again, because the tools have probably matured. >> Well, Evan, I really appreciate you helping set the table. I think you've clearly articulated some of the big challenges we're seeing in the industry right now. Eric, I want to bring you into the conversation. So you relatively recently brought in as CEO, came from Okta a company that is also doing quite well. So give us if you could really the business opportunity here, serverless is not exactly the most mature market, there's a lot of interest excitement, we've been tracking it for years and see some good growth. But what brought you in and what do you see is that big opportunity. >> Yeah, absolutely, so the first thing I'll comment on is what, when I was looking for my next opportunity, what was really important is to, I think you can build some of the most interesting businesses and companies when there are significant technological shifts happening. Okta, which you mentioned, took advantage of the fact of SaaS application, really being adopted by enterprise, which back in 2009, wasn't an exactly a known thing. And similarly, when I look at Fauna, the move that Evan talked about, which is really the maturation of serverless. And therefore, that as an underpinning for a new type of applications is really just starting to take hold. And so then there creates opportunities that for a variety of different people in that stack that to build interesting businesses and obviously, the databases is an incredibly important part of that. And the other thing I've mentioned is that, a lot of people don't know this but there's a very good chunk of Okta's business, which is what they call their customer identity business, which is basically, servicing of identity is a set of API's that people can integrate into their applications. And you see a lot of enterprises using this as a part of their digital transformation effort. And so I was very familiar with that model and how prevalent, how much investment, how much aid was out there for customers, as every company becoming a software company and needing to rethink their business and build applications. And so you put those two trends together and you just see that serverless is going to be able to meet the needs of a lot of those companies. And as Evan mentioned, databases in general and traditionally have come with a lot of complexity from an operational perspective. And so when you look at the technology and some of the problems that Fauna has solved, in terms of really removing all of that operational burden when it comes to starting with and scaling a database, not only locally but globally. It's sort of a new, no brainer, everybody would love to have a database that scales, that is reliable and secure that they don't have to manage. >> Yeah, Eric, one follow up question for you. I think back a few years ago, you talked to companies and it's like, okay, database is the center of my business. It's a big expense. I have a team that works on it. There have been dealt so much change in the database market than most customers I talked to, is I have lots of solutions out there. I'm using Mongo, I've got Snowflake, Amazon has flavors of things I'm looking at. Snowflake just filed for their IPO, so we see the growth in the space. So maybe if you could just obviously serverless is a differentiation. There's a couple of solutions out there, like from Amazon or whether Aurora serverless solution but how does Fauna look to differentiate. Could you give us a little bit of kind of compared to the market out there? >> Sure, yeah, so at the high level, just to clarify, at the super high level for databases, there tends to be two types operational databases and then data warehouse which Snowflake is an example of a data warehouse. And as you probably already know, the former CEO of Snowflake is actually a chairman of Fauna. So Bob Muglia. So we have a lot of good insight into that business. But Fauna is very much on the operational database side. So the other half of that market, if you will, so really focused on being the core operational store for your application. And I think Evan mentioned it a little bit, there's been a lot of the transformation that's happened if we rewind all the way back to the early '90s, when it was Oracle, and Microsoft SQL Server were kind of the big players there. And then as those architectures basically hit limits, when it came to applications moving to the web, you had this whole rise in a lot of different no SQL solutions, but those solutions sort of gave up on some of the promises of a relational database in order to achieve some of the ability to scale in the performance required at the web. But we required then a little bit more sophistication, intelligence, in order to be able to basically create logic in your application that could make up for the fact that those databases didn't actually deliver on the promises of traditional relational databases. And so, enter Fauna and it's really sort of a combination of those two things, which is providing the trust, the security and reliability of a traditional relational database, but offering it as serverless, as we talked about, at the scale that you need it for a web application. And so it's a very interesting combination of those capabilities that we think, as Evan was talking about, allows people who don't have large DevOps teams or very sophisticated developers who can code around some of the limitations of these other databases, to really be able to use a database for what they're looking for. What I write to it is what I'm going to read from it and that we maintain that commitment and make that super easy. >> Yeah, it's important to know that the part of the reason that operational database, the database for mission critical business data has remained a cost center is because the conventional wisdom was that something like Fauna was impossible to build. People said, you literally cannot in information science create a global API for data which is transactional and consistent and suitable for relying on, for mission critical, user login, banking payments, user generated content, social graphs, internal IT data, anything that's irreplaceable. People said, there can be no general service that can do this ubiquitously a global internet scale, you have to do it specifically. So it's sort of like, we had no power company. Instead, you could call up Amazon, they drive a truck with a generator to your house and hook you up. And you're like, right on, I didn't have to like, install the generator myself. But like, it's not a good experience. It's still a pain in the neck, it's still specific to the location you're at. It's not getting utility computing from the cloud the way, it's been a dream for many decades that we get all our services through brokers and API's and the web and it's finally real with serverless. I want to emphasize that the Fauna it technology is new and novel. And based on and inspired by our experience at Twitter and also academic research with some of our advisors like Dr. Daniel Abadi. It's one of the things that attracted us, Snowflake chairman to our company that we'd solve groundbreaking problems in information science in the cloud, just the way Snowflakes had. >> Yeah, well and Evan, yeah please go on Eric. >> Yeah, I'm just going to have one thing to that, which is, in addition, I think when you think about Fauna and you mentioned MongoDB, I think they're one of a great examples of database companies over the last decade, who's been able to build a standalone business. And if you look at it from a business model perspective, the thing that was really successful for them is they didn't go into try to necessarily like, rip and replace in big database migrations, they started evolving with a new class of developers and new applications that were being developed and then rode that obviously into sort of a land and expand model into enterprises over time. And so when you think about Fauna from your business value proposition is harnessing the technological innovation that Evan talked about. And then combining this with a product that bottoms up developer first business motion that kind of rides this technological shift into you creating a presence in the database market over time. >> Well, Evan, I just want to go back to that, it's impossible comment that you made, a lot of people they learn about a technology and they feel that that's the way the technology works. Serverless is obviously often misunderstood from the name itself, too. We had a conversation with Andy Jassy, the CEO of AWS a couple years ago, and he said, "If I could rebuild AWS from the ground up today, "it would be using all serverless," that doesn't mean only lambda, but they're rebuilding a lot of their pieces underneath it. So I've looked at the container world and we're only starting the last year or so, talking about people using databases with Kubernetes and containers, so what is it that allows you to be able to have as you said, there's the consistency. So we're talking about acid there, not worry about things like cold starts, which are thing lots of people are concerned about when it comes to serverless and help us understand a little bit that what you do and the underlying technologies that you leverage. >> Yeah, databases are always the last to evolve because they're the riskiest to change and the hardest to build. And basically, through the cloud era, we've done this lift and shift of existing on premises solutions, especially with databases into cloud machines, but it's still the metaphor of the physical computer, which is the overriding unit of granularity mental concept, everything like you mentioned, containers, like we had machines then we had Vms, now we have containers, it's still a computer. And the database goes in that one computer, in one spot and it sits there and you got to talk to it. Wherever that is in the world, no matter how far away it is from you. And people said, well, the relational database is great. You can use locks within a single machine to make sure that you're not conflicting your data when you update it, you going to have transactionality, you can have serialize ability. What do you do, if you want to make that experience highly available at global scale? We went through a series of evolutions as an industry. From initially that the on-prem RDBMS to things like Google's percolator scheme, which essentially scales that up to data center scale and puts different parts of the traditional database on different physical machines on low latency links, but otherwise doesn't change the consistency properties, then to things like Google Spanner, which rely on synchronized atomic clocks to guarantee consistency. Well, not everyone has synchronized atomic clocks just lying around. And they're also, their issues with noisy neighbors and tenancy and things because you have to make sure that you can always read the clock in a consistent amount of time, not just have the time accurate in the first place. And Fauna is based on and inspired and evolved from an algorithm called Calvin, which came out of a buddy's lab at Yale. And what Calvin does is invert the traditional database relationship and say, instead of doing a bunch of work on the disk and then figuring out which transactions won by seeing what time it is, we will create a global pre determined order of transactions which is arbitrary by journaling them and replicating them. And then we will use that to essentially derive the time from the transactions which have already been committed to disk. And then once we know the order, we can say which one's won and didn't win and which happened before, happen after and present the appearance of consistency to all possible observers. And when this paper came out, it came out about a decade ago now I think, it was very opaque. There's a lot of kind of hand waving exercises left to the reader. Some scary statements about how wasn't suitable for things that in particular SQL requires. We met, my co-founder and I met as Fauna chief architect, he worked on my team at Twitter, at one of the database groups. We were building Fauna we were doing our market discovery or prototyping and we knew we needed to be a global API. We knew we needed low latency, high performance at global scale. We looked at Spanner and Spanner couldn't do it. But we found that this paper proposed a way that could and we can see based on our experience at Twitter that you could overcome all these obstacles which had made the paper overall being neglected by industry and it took us quite a while to implement it at industrial quality and scale, to qualify it with analysts and others, prove to the world that it was real. And Eric mentioned Mongo, we did a lot of work with Cassandra as well at Twitter, we're early in the Cassandra community. Like I wrote, the first tutorial for Cassandra where data stacks was founded. These vendors were telling people that you could not have transactionality and scale at the same time, and it was literally impossible. Then we had this incrementalism like things with Spanner. And it wasn't till Fauna that anyone had proved to the world that that just wasn't true. There was more marketing around their failure to solve the information science problem, than something fundamental. >> Eric, I'm wondering if you're able to share just order of magnitude, how many customers you have out there from a partnership standpoint, we'd like to understand a little bit how you work or fit into the public cloud ecosystems out there. I noticed that Alphabets General Venture Fund was one of the contributors to the last raise. And obviously, there's some underlying Google technology there. So if you could just customers and ecosystem. >> Yeah, so as I mentioned, we've had a very aggressive product lead developer go to market. And so we have 10s of thousands of people now on the service, using Fauna at different levels. And now we're focused on, how do we continue to build that momentum, again, going back to the model of focus on a developer lead model, really what we're focused on there is taking everything that Evan just talked about, which is real and very differentiated in terms of the real core tech in the back end and then combining that with a developer experience that makes it extremely easy to use and really, we think that's the magic in terms of what Fauna is bringing, so we got 10s of thousands of users and we got more signing up every day, coming to the service, we have an aggressive free plan there and then they can migrate up to higher paying plans as they consume over time. And the ecosystem, we're aggressively playing in the broader serverless ecosystem. So what we're looking at is as Evan mentioned, sometimes the databases is the last thing to change, it's also not necessarily the first thing that a developer starts from when they think about building their application or their website. And so we're plugging into the larger serverless ecosystem where people are making their choices about potentially their compute platform or maybe a development platform like I know you've talked to the folks over at JAMstack, sorry at Netlify and Purcell, who are big in the JAMstack community and providing really great workflows for new web and application developers on these platforms. And then at the compute layer, obviously, our Amazon, Google, Microsoft all have a serverless compute solution. CloudFlare is doing some really interesting things out at the edge. And so there's a variety of people up and down that stack, if you will, when people are thinking about this new generation of applications that we're plugging into to make sure that the Fauna is that the default database of choice. >> Wonderful, last question, Evan if I could, I love what I got somebody with your background. Talk about just so many different technologies maturing, give us a little bit as to some of the challenges you see serverless ecosystem, what's being attacked, what do we still need to work on? >> I mean, serverless is in the same place that Lamp was in the in the early '90s. We have the old conservatives ecosystem with the JAMstack players that Eric mentioned. We have closed proprietary ecosystems like the AWS stack or the Google Firebase stack. As to your point, Google has also invested in us so they're placing their bets widely. But it's seeing the same kind of criticism. That Lamp, the Linux, Apache, MySQL, PHP, Perl, it's not mature, it's a toy, no one will ever use this for real business. We can't switch from like DV2 or mumps to MySQL, like no one is doing that. The movement and the momentum in serverless is real. And the challenge now is for all the vendors in collaboration with the community of developers to mature the tools as those the products and applications being built on the new more productive stack also mature, so we have to keep ahead of our audience and make sure we start delivering and this is partly why Eric is here. Those those mid market and ultimately enterprise requirements so that business is built on top of Fauna today, can grow like Twitter did from small to giant. >> Yeah, I'd add on to that, this is reminiscent for me, back in 2009 at Okta, we were one of the early ISVs that built on in relied 100% on AWS. At that time there was still, it was very commonplace for people racking and stacking their own boxes and using Colo and we used to have conversations about I wonder how long it's going to be before we exceed the cost of this AWS thing and we go and run our own data centers. And that would be laughable to even consider today, right, no one would ever even think about that. And I think serverless is in a similar situation where the consumption model is very attractive to get started, some people sitting there, is it going to be too expensive as I scale. And as Evan mentioned, when we think about if you fast forward to kind of what the innovation that we can anticipate both technologically and economically it's just going to be the default model that people are going to wonder why they used to spend all these time managing these machines, if they don't have to. >> Evan and Eric, thank you so much, is great to hear the progress that you've made and big supporters, the serverless ecosystem, so excited to watch the progress there. Thanks so much. >> Thanks Stu. >> Thanks for having us Stu. >> All right and I'm Stu Miniman. Stay tuned. Every week we are putting out the Cloud Native Insights. Appreciate. Thank you for watching. (bright upbeat music)

>> Hey welcome back everybody. Jeff Frick, with the Cube. We're at Node Summit 2017 in downtown San Francisco. About 800 people, developers talking about Node and Node GS. And really the crazy adoption of Node as a development platform. Enterprise adoption. Everything's up and to the right. Some crazy good stories. And we're excited to have somebody coming right off his keynote. It's James Bellenger. He is an engineer at Twitter. James, welcome. >> Thank you, thank you for having me. >> Yeah, absolutely. So you just got off stage and you were talking all about Twitter Lite. What is Twitter Lite? I like Twitter as it is. >> Ah, so Twitter Lite is an optimized, it's a mobile web app. So if you pull up your phone, open up the web browser and go to twitter.com, in your smart phone web browser, you get a Twitter experience that we're calling Twitter Lite. >> Okay. >> And it used to be a little bit out of date. But we've been able to update it using a lot of new exciting web technologies. And so now we have this thing that feels very much like a native web app. >> Okay. >> They call them progressive web apps these days. And so we're using that as sort of a way to sort of compete in areas and markets where maybe a native apps are less able to compete. Where you know, people don't want to download a 200 megabyte iOS app. They want something that fits under 600 kilobytes. >> Okay. So you had the Twitter Lite app before. And then this was really a re-deployment? Or am I getting it wrong? >> I think, well we had We had a web app at mobile.twitter.com. >> Okay. >> And it was just sort of the mobile web app. >> Okay. >> But you know we sort of really rewrote everything. And that includes the back end on Node. And then we're now sort of pushing that and calling it Twitter Lite. >> Okay. And when did that go live or GA? >> About three months ago. >> Three months ago, okay. Super. So obviously you're here at Node. You just spoke at Node. You know, how was the experience using a Node tool set versus whatever you had it built on before? >> It's definitely faster in every way. Well, I mean, >> Faster in every way. That's a good thing. >> So well, let me Let me catch that. Be more specific. It is ... >> It's those benchmarking people. We need them back over here. >> It is very fast for how we apply it. It's really fast for development speed. And perhaps the biggest win is that on both sort of areas of our stack whether it's the part of the application that runs on the browser or it's the part of the application that runs inside the Twitter data center. We have one language and technology. So when a problem comes up and an engineer needs to like go and find the problem and fix it they don't need to sort of "Oh, well that's server code. "I don't know how it works. "And it's written in this language I don't understand." We really just have one application and it happens to run in both places. And so it really improves engineering efficiency. >> And you saw that in the development process, QA and the ongoing. >> Yeah. >> Yeah. And was it more ... So it's more like the guys that were more front end that now have access to the back end and then the other way around. Is that correct? Yeah, it's a little bit of both. >> Okay. >> You know, I think before I think there's people that they really like Scala. And they only want to work in Scala. Or there's people that really don't like it. So you end up, I think, having engineers kind of get bulkanized by their technology choices, and their preferred systems. But I think it really sort of tears down a couple walls. And so it makes, it improves engineering efficiency that way. But we found also that some of the tool sets and the tool chains that we're using allow engineers to just sort of like move faster. >> Right. >> So you know, whether that's like recompiling the service in like one second. Instead of having to wait for multiple minutes. There's just sort of less time spent waiting. >> Right. And in terms of don't share anything you're not supposed to share but in terms of, you know, frequency of releases and ongoing maintenance and kind of the development of the I won't say the app, not the app. I guess it is the app. Going forward, you know, how has that been impacted by moving to this platform? >> I think it might be too early to say. >> Okay. >> We've, you know, right now we've got about 12 to 15 engineers and we're ramping up. And it, I think it might, we're kind of looking to finish around 25 engineers, by the end of the year. >> Okay. >> So the sort of team and contributor base of the kind of like core team that are working on the app is growing. But you know, otherwise there's, you know, we're releasing every day. We're, you know, we try to you know, we're always pushing code. We're running experiments a lot. >> Right. I don't know if that answers your question but. >> So it sounds like it's a little easier but you're still doing everything you were doing before but now it just feels like it's easier because of this. >> Well, you know, talk to me in a couple months. >> Okay. >> Then maybe we'll have some better answers for you. >> Okay. So the other thing I want, if I talk to you in a couple months, I talk to you a year from now, just in terms of as you look down the road, you know, what this opens up. You know, kind of what are some of your priorities now that you've got it out. You said you've been out there for three months. What's kind of next on your roadmap, your horizon? >> So far, I think we've been really encouraged by the success of using this stack for development. So we're looking to kind of double down on that. >> Okay. >> So that means looking at some of the other Twitter web apps. Oh, sorry, Twitter apps in general. The other ways people use Twitter. And to sort of look at how they were built. And to see, because we're using React, and because we're using, I think technologies that make it very easy to you know, be responsive and you know, either be have a wide layout or a very narrow layout, or work offline. We have a lot of potential to sort of cannibalize or replace and also update some of the existing apps >> Right. >> That maybe don't get the attention that they need. >> Right. >> So there's some of that. And then I think Twitter Lite as a product I think that we're going, you know, we're looking to really expand it's reach. And make a big push in some of the developing areas. >> Yeah. Because the other thing people don't know, I mean, Twitter's acquired a bunch of companies, you know, over the years. So we've heard some examples earlier today, where that's a use case when you do have the opportunity to maybe redo an acquired application. You know, that those are kind of natural opportunities to look to redo them with this method. >> Yeah. Sure. >> All right. Cool. Well, James, thanks for taking a few minutes. >> Thank you. >> Congratulations on the talk. And I'll think of you next time I go to Twitter Lite. >> Yeah. Thank you so much. >> All righty. He's James Bellenger from Twitter. I'm Jeff Frick. You're watching the Cube from Node Summit 2017. Thanks for watching. (techno music)

>> Announcer: Live from Las Vegas, it's the CUBE covering HPE Discover 2017. Brought to you by Hewlett Packard Enterprise. >> Hello, everyone, and welcome to the CUBE's special presentation of HPE Hewlett Packard Enterprise Discover 2017. I'm John Furrier and my cohost Dave Vellante. For three days of wall to wall coverage. This is our intro section of our three days of Hewlett Packard Enterprises transformation and coverage. This is our seventh year covering HPE Discover, formerly HP Discover after the split. Lot of commentary today. We have seen HP over the years transform. We've been watching this, sort of a front row seat to HP, now HPE, really getting hammered in stock market their last earnings again didn't meet expectations, but this is not a quick turn around. I mean, this is a market place that's shifting. HP's had their plan now for multiple years. We're going to cover it for three days. But interesting. The world is turning. You had tweeted this morning on a Twitter storm you put together @dvellante, twitter.com. So it's Dvellante. Everyone should check it out. But it really highlights it. True private cloud, or private cloud, cloud has impacted everything. HP's kind of shifted their cloud strategy. It's becoming clear what they're doing, but private cloud, true private cloud, is legit. It's a 250 plus billion dollar market opportunity, as you guys have put it out on wikibond. Hybrid cloud is very relevant, and on the horizon is multi-cloud, the ability for customers to use multiple clouds. And on top of that we have machine learning, AI, and a myriad of things. Marketplace is shifting significantly, HP has been transforming significantly over the past five plus years. Your thoughts this year at HPE Discover and marketplace conditions and are they poised for success? >> Well, John, we're in the fifth year now of the turnaround that Meg Whitman initiated, and I think it's the light at the end of the tunnel year. HPE-- We've said many times at theCUBE that HP has the strength to grow. Well, it's certainly shrunk. They're about a 50 billion dollar company with a 26 billion dollar market cap, and there's a way to eek out some growth. If you separate all-- Call it Remain Co. Like the remaining company. Take out the software, take out EDS, take out actually tier one, tier one customer who's-- who's not buying as many servers as possible, or as they had previously, and the company grew about one percent. So what you're seeing, John, is some quarters HP grows a little bit, some companies it shrinks a little bit, but essentially it's facing what most legacy hardware companies are facing. Legacy hardware's down, everybody's scrambling to what we call true private cloud, which is essentially hybrid IT, trying to mimic the public cloud. And then HP adds in a dose of IOT at the edge, and then, really importantly, services. Services have never been more important for this company, and that is what I called earlier Remain Co. The remaining HP. Once it jettisons the software business this fall, that's what will be left, basically a 50 billion dollar company with about 55,000 employees. >> I was looking at a-- some IOT stories just last night, and a Business Insider article came up. It was an image, and it had listed the companies that-- by average age. And you had, obviously, Facebook, average age like 28. HP was at the highest end, like 39. And I want to bring up this notion of changing market because HP has always been customer focused, so the question is, if they are truly customer focused, as is Amazon, for instance, we talked to Andy Chasey, he talks about that all the time. And the context of where you've been and where you're going, historical legacy, declining markets, say servers for instance. And where you're going. It brings up an interesting point. And notable is recently Amazon web services hired Gosling, the founder of Java, which had a big conversation on the internet around age. A lot of the winners are older systems guys. So what's interesting is I actually look at that Business Insider article and saying actually age is a wisdom point now, because right now HP's got to solve customer problems. In addition to transforming themselves, they're looking at a customer base that's changing their requirements, so having experience is actually a good thing, as pointed out by some of the big leaders right now in hyperscale are old m systems guys. This is an opportunity for HP, and I think that's where I want to get your thoughts on. Are they customer focused in your mind, and if they are going to be, continue to be, what should their customer focus be? >> Let's talk about what customers are doing. So, first and foremost, customers are deinvesting in non-differentiated, you know, hardware maintenance and provisioning, okay. So they're shifting IT labor from provisioning luns and servers into digital transformation initiatives, so that's sort of one piece. The other pieces there as they're shifting those resources in places up the value stack. So it's applications; it's, as you say, digital transformation services; it's new IOT activity. So they're only investing-- from the HP standpoint, HP's an infrastructure company. They're only investing in infrastructure that looks like public cloud and can focus on hybrid. So are they customer focused? Yes. And what are they doing there? So they're investing in MMA, they're doing some MMA tuck ins. They're focused on develop-- delivering platforms with an API that are essentially programmable infrastructure. And very importantly, they're in a low margin business now. It's sort of low 30 percent gross margin business. So they have to get volume. How do they get volume? How do they reach those customers? Partners. So you are seeing a new partner emphasis. You know, are they customer focused? Yes, but they're really right now partner focused to reach those customers and increase their scale and coverage. That is a critical difference between the new HP, not that they always didn't have partners, now partners are critical to their success. >> One of the things that's the theme here is simplifying hybrid IT and I think from a customer standpoint, simplifying that is going to be critical. At the same time, creating new services opportunities. So I want to get your thoughts on the top story, at least from my perspective, here at the show at HPE Discover, and that is, is it better to be big or small? And HP has a strategy of a collection of small, nimble, agile business units. Dell EMC, for instance, has a strategy of being big and using leverage and supply chain and what not. Two different strategies. We pointed that out on the web. Certainly we've heard a lot of different approaches. Your thoughts on HP's strategy vis a vis bigger and better, or smaller and nimbler is better. >> Well, HP's not small. Hewlett Packard Enterprises is still big. I mean, it's a, it's a company that's twice the size, or more, than EMC was at its peak. So it's still a very, very large company. The difference is, John, I think they're focused. So they really are focused on hardware and infrastructure, the support, you know, the digital transformation, whatever you want to call it. The big question I have, John, is now that HP is getting rid of its software business, its outsourcing and EDS business, what is HP going to do with regard to software and services. So, they reinvented the whole services organization. The big question mark for me is software. Will they get into this, what you call inter-clouding business? Software to manage multiple clouds. It's a wide open space, everybody's going after it, and I haven't heard much from HP there. So what is their software strategy? Now, the other thing I'll add, is the good thing about being smaller is that it's going to generate cash for them. So they're going to get, going to get cash out of the spin merge with CSC. They're going to get cash out of the spin merge with MicroFocus. And you've already seen HP become more aquisitive with the Simplivity acquisition, certainly with Nimble recently, previously the Aruba acquisition, and some other tuck ins. That's critical in order for HP to reposition and continue to grow. >> Yeah, and my take on HP right now is they got to be more assertive. Their voice in the marketplace, at an industry level, has to be very assertive and relevant. I think that's something you've got to put the stake in the ground and hammer that home. I think we got the piece parts, and I think the spin merge is not a "they're getting out of that business." They're just decoupling from the monolithic entity that was HPE and creating kind of cohesive entities. And I think there's a strategy, in my opinion, that looks really strong there in the sense that, hey, at the end of the day, it's going to be a services game. And if you look at the IOT Edge, to me that's the tell sign of the marketplace. As the value shifts from IT-- So, simplifying IT, having true private cloud, having some hybrid pathways for IT, maybe a declining market from a service perspective, but simplifying that and operationalizing that and shifting the value to the Edge with services is a huge opportunity for HP. This is something that not a lot of people on Wall Street are kind of rocking at this point. But the value shift from IT, centralized IT, to a distributed kind of network effect is a really interesting play. And I think this a bet I think HP's making from my standpoint, and that's where the intelligent Edge piece comes in. If they could nail that, and layer on the services, and bring real value paths for customers with outcomes that are, not pie in the sky-- Sure, they throw some AI in there, machine learning, it's all relevant. Getting into open source. Taking that labs machine and memster technology and bringing that out at an appropriate timing. With the services in place. I think that's a good strategy for HP. >> Well, you mentioned Wall Street. Look, Wall Street is very tactically focused on the quarter and the margin decline, and, you know, D-Ram prices doubled in January, okay? So a company like HPE is going to get hurt by that. So that's head winds for these guys, these currency head winds. The stock, the price will go up and down. But the point I want to make, John, is there's a new competitive reality. CIOs have woken up to open source and cloud. And as a result, we've emerged into a new competitive dynamic where HPE is competing with Dell. It's competing with China, and it's competing with AWS. And it's one different-- Two differentiable advantages or services, you know, clearly HP's doubling down on services. I'll actually add a third. The second is partnerships, and the third big one, which is green field, is an ecosystem around IOT and what they call the intelligent edge. >> Well, Dave, great commentary. My, again, my feeling is customer focus at an industry level, having the right product mix that's relevant in the, for the solutions customers want. And also their partners. Leveraging that partner network. Really going to be a two pivot points for me. I see that as great leverage for HP. At the end of the day, everyone talking about declining market of servers and storage. I actually don't see that. There's more computers available now, more storage available. The key is can that shift to true private cloud, which again is a 250 billion dollar market, partly declining. And hybrid cloud is certainly growing. So, declining and growing, I mean they're all different perspectives, and I think HP's messaging here-- Come the end of the show, we're going to look at that and understand and impact and unpack that, that analysis. So, I'm Jeff Furrier, Dave Vellante. Day one of coverage, of three days of wall to wall coverage at HPE Discover 2017. More live coverage after this short break. (upbeat music)