 Hi, I'm Peter Burris and welcome to another Wikibon action item. This week, we're reviewing and highlighting all that we heard in theCUBE at AWS re-invent 2018 in Las Vegas last week. It was an enormous show, 53,000 people showed up. The buzz was significant. AWS has made enormous strides and the enterprise is starting to respond. The cube itself, biggest show we've ever had. We had 102 segments, 99 interviews, over 150 thought leadership guests on the cube. And what we want to do this week is we want to try to compile some of the best information that we got, hearing from Andy Jassy, hearing from other folks within the ecosystem, and as well as the Wikibon analysts. So we've got about 25 minutes of video. And at the end, once again, we're going to run a crowd chat. And this will be your opportunity to raise the issues that you heard or ask questions about what you think are important, engage your peers in the community. So hold off to the end of the video to participate in that crowd chat and let's hear what you have to say. The one overarching theme for me, and there were many, but one that I really want to raise is that it's very clear that the enterprise is getting ready to enter into the cloud in a big way. And if you walk away from nothing else from this highlight session, walk away with this, Amazon is following its customers. All right, let's hear what the highlights are and then let's crowd chat after that. Well, we've been covering the Amazon since its founding, or our founding, eight years ago and seven years they started re-invent, eight years ago, we were seven years, this is our seventh year at re-invent. And so we got to know Jassy. So he invites me every year for a one-on-one. This year, I was in his house, he's got a sports bar in his basement, tricked out sports bar, the great football game was on, bike chiefs against the charges, we watched that. Two and a half hours I spent with him, really kind of getting a feel for it, what's on his mind? How he's thinking about the business because he's having a lot of pinch-me moments where certainly they're winning, they're blowing away the field in my opinion in cloud computing. I think this is really not even a close second place at all, Microsoft's got the chops, they're doing, they're gaining. Google's got the tech and they're nearly pre-positioning. You know, how's he feel? He's humble as they come and he's got the management discipline, but he was really kind of saying to me, hey, you know, great leaders are listening to customers and he was walking back his position on hybrid cloud because clearly they're going to make some big announcements here around hybrid cloud, but I got insight into his mind that he's not done and these guys are not celebrating in the end zone. They're not high-fiving each other. They got a lot of work to do. And still people are not using the cloud like they really are in their mind. I think things like Lambda and the announcements that we expect to see here today is going to set the stage for a new set of apps. And I think there's going to be a renaissance of software development. They recognize it. They recognize that the competition's hotter. They recognize that they got to get better and raise the bar and that's what they're doing. Yeah, well, you know, I think that if you looked at the first several years of AWS, I was always surprised when I would go see enterprises and they would have no idea that Amazon was doing anything in the cloud, even though we had the only cloud offering at the time. So I think if you compare where we were, a few years ago to today, there's gigantic awareness, relatively speaking. But I still think that there are so many, the vast majority of workloads still live on premises. I mean, we have a $27 billion revenue run-rate business. It's grown 46% year-over-year. And yet, we're still at the early stages of the meat of enterprise and public sector adoption in the US. Andy Jassy made a big point this morning and at the private analyst meeting of talking about the context of the cloud market. He's very sensitive to people misinterpreting growth. They're a $26, $27 billion business exclusively focused on infrastructure as a service and they're totally transparent about the size of that business. Everybody else throws in sass. I mean, you've made this point a bunch of times and all these other things, they mix in hosting and you really can't tell what's what. Despite that, Amazon is by far the leader infrastructure as a service with over 50% of the marketplace. Now, they're only growing at 46%, but they're a $26, $27 billion run-rate business growing at 46%. So you see sometimes, like Microsoft growing at whatever, 70%, but they're much, much smaller. So the absolute number in terms of revenue growth is much, much higher for Amazon. So that's sort of point number one. The thing that Jassy doesn't talk about is the profitability of the business. They're transparent about it in their financials. Amazon has 28% operating margins. Now, just to put that into context, software companies like Oracle have 37% operating margins. Microsoft, 32%. AWS, I just mentioned, 28%. Cisco, 25%. VMware is a software company with 22% operating margins. IBM, 15%. Dell, 8.7%. HPE, 7%. This underscores the power of the AWS model at scale where they're driving the marginal cost of new services and deploying new services down to zero and it just keeps getting stronger and stronger and stronger. Amazon used to make it easy for the enterprise players to compete. They had limited sales and service capabilities. They had no open source give back. They were hybrid deniers. Everything's going to go into the public cloud. That's all changed. They're making it much, much more difficult for what they call the old guard to compete. So they're taking away the objection. Yeah, they're removing those barriers, those objections. To simplify, two dimensions. One is the data, exploiting data, better use out of data. And the other is developers and developer tools are making it simpler for developers. Their announcements, the 60 plus announcements that they made, I break them down into five categories. Storage and database services, compute networking and security. Third is ease of use and abstractions, making things simpler. Fourth is machine learning and developer tools. And the fifth is these new growth frontiers. Like you mentioned, satellite as a service and some other things like in hybrid that we're going to talk about. What we're doing, because it's a new field is we've got to innovate at three layers of our stack. So the bottom most layer, as you saw in the keynote earlier, has to do with frameworks and infrastructure. So this is more for the people that fully understand how to deal with machine learning models and like to go in and tweak these models. The middle layer then is for everyday developers and the data scientists. And that's sort of where SageMaker fits in. And finally at the top layer of the stack is where we have our application services. And this is meant for developers that don't want to get into the weeds of machine learning but they still want to use, make use of all of these technologies to make their applications more smarter. I think what this year's re-invent shows is that AWS is doubling down on AI. If you look at the sheer range of innovative AI capabilities they've introduced into their portfolio in terms of their announcements, it's really significant. A, they have optimized TensorFlow for their cloud. B, they now have an automated labeling called ground truth labeling capability that leverages mechanical Turk which has been an Amazon capability for a while. They've also got now the industry's first what's called reinforcement learning plugin to their data science tool chain, in this case SageMaker. Reinforcement learning is becoming so important for robotics and gaming and lots of other applications of AI. And I'm just scratching the surface. Some parts of AWS were doing a lot of open source. Other parts were kind of not really seeing it as a priority. So by talking a lot more about it we kind of get a more uniform acceptance across AWS. Not just there, but Amazon as a whole. We are actually telling the story a much broader story than just AWS. And be able to bring that and get everyone go, oh, I see everyone doing it, so I should be doing that. So it helps create the leadership for more teams to follow. And what we've seen with, it's about really the first year building the team the last year kind of getting the content flowing and getting the processes kind of working to get all of the different events and blog posts and out the outbound part. I was really impressed by Elastic Inference for the same reasons because it very much is a validation of a trend I've been seeing in the AI space for the last several years, which is you can increasingly build AI in your preferred visual declarative environment with Python code. And then the abstraction layers of the AI ecosystem have developed to the point where the ecosystem increasingly will auto compile to TensorFlow or MXNet or PyTorch. And then from there, further auto compile your deployed trained model to the most efficient format for the Edge device, for the GP or whatever, wherever it's going to be executed. That's already a well-established trend. The fact that AWS has productized that with this Elastic Inference in their cloud shows that not only do they get that trend, they're just going to push really hard by making sure that AWS, it becomes in many ways the hub of efficient inferencing for everybody. Which is the Edge. They have completely changed their approach to the Edge. They have put in Neo as part of SageMaker, which allows them to push out inference code and they themselves are pointing out that inference code is 90% of all the compute into all sorts of training. Not the training, the inference code after that, that's 90% of the compute, they're pushing that into the devices at the Edge, all sorts of architectures. That's a major shift in mindset. For us, we don't have some top-down strategy that I think is grandiose, it's just what customers want. And so we have so many customers who have all these devices at the Edge and all these assets at the Edge, and they say to us, well, the first problem I have, I want to get this data into the cloud and then I want to do analytics on it. We say, okay, well, how can we help? They say, well, the first thing is, I don't even know how to translate this data from the device protocol to just being able to operate in the cloud. So that's the first problem we go solve. Well, then people say, okay, now I can get it in, but I actually, I need security. If you look at the amount of security options for these Edge devices, it's a new field. That Dyn attack that took a lot of the internet down a couple of years ago came from a device on the Edge. And so that's why we built a security capability and people say, well, okay, now you've made it so I can run devices, but if I'm going to run thousands of devices, I need a way to manage all those devices at scale. And we built something to manage the devices. And then people say, well, okay, it's great that I can do it in devices big enough that have a CPU, but what about when they don't have a CPU? You know, they have just a microcontroller, and that's why we built the RTOS piece. And the list kind of keeps going. This is great. Now that I get all this data in the cloud, I can take all these analytics actions, but on my device sometimes I don't want to make the round trip to the cloud. So can you give me a way to use the same programming model and pick which triggers I want to take action with cloud versus those that want to take on the device itself, which was what Greengrass was. So all of those pieces is not some kind of top-down master plan as much as we know that customers have all these devices at the Edge that they want to use that data, analyze that data, take action on that data, and send it back in multiple ways. When we began looking at blockchain and blockchain use cases, we really realized there are two things that customers are trying to do. One case is really an immutable record of transactions where, and in a scenario where centralized trust is okay. And for that we have Amazon QLDB, which is an immutable, cryptographically verifiable ledger. And then in scenarios where customers really wanted the decentralized trust and the smart contracts, that's where blockchain frameworks like Hyperledger Fabric and Ethereum play a role, but they're just super complicated to use. And that's why we built Amazon Managed Blockchain to make it easy to stand up scale and monitor these networks so customers can focus on building applications. And in terms of use cases on the decentralized side, it's really quite diverse. I mean, we've got a customer guardian life insurance, so they're looking at Managed Blockchain because they have this distributed network of partners, providers, patients, and customers, and they want to provide decentralized, verifiable records of what's taking place. And it's just a broad set of use cases. Right, we're bringing the world together. And I think one of the things we're seeing is that in the enterprise, enterprise IT is looking at an increasingly heterogeneous data center environment. You know, in the next 12 months, you're going to have data center where one rack is running EC2 in your data center, one rack's running vSphere in your data center, another workload's running on Amazon, another one's running out at the edge. So tying this all together creates some challenges. And this is the problem I think VMware is uniquely suited to solve. And networking is the fabric that connects all these disparate islands and lets them talk to each other, let them talk to each other in an orderly way, right? So networking is about connectivity. It's also about policy enforcement. Those are the two things we focus on with the NSX team at VMware. But I want to talk about a different database trend that we're seeing that is becoming more and more significant and more and more pervasive. And what's happened is that if you look at the last 20 to 30 years, most companies have run most of their workloads using relational databases. And that made sense back in those days when those applications typically were gigabytes of data and occasionally terabytes, so where you needed kind of complex joins and ad hoc queries and the data levels were the levels I just mentioned. Gigabytes, sometimes terabytes. A number of things have changed over the last few years that are impacting people's receptivity to that idea. The first is that people woken up to how useful data is at the same time that the cost of compute and storage has come way down in large part because of the cloud. Which means that most applications today are storing lots of terabytes and petabytes of data instead of gigabytes and occasionally terabytes. And then the expectations for builders as well as end users of those applications is really different. The latency requirements are much lower and they expect to be able to handle millions of transactions per second with many millions of people using the app simultaneously. And then what you've seen over the last few years is that more and more companies are hiring technical talent in-house to take advantage of this huge wave of technology innovation that the cloud is providing. And these builders are building not in these monolithic ways in the past, but with microservices where they compose the different elements together using the right best tool for the right job. David Floyer, Outpost is their on-premises cloud. You've been calling this for I don't know how many years. Three years. Three years. Yeah. And people said, no way, Floyer's wrong. Yeah. No, you get vindication. People in particular in AWS. So you're right. Okay, so you're right. But it's going to be out in a year. Yeah. Will this thing actually make it to the market? And if it does, what is the impact? Who wins and who loses? Well, let's start with, will it get to the market? Absolutely. It is Outpost, AWS Outpost is the name. It is taking AWS in the cloud and putting it on-premise. The same APIs, the same services, it'll be eventually identical between the two. And that has enormous increase in the range and the reach that AWS and the TAM that AWS can go after. It is a major, major impact on the marketplace, puts pressure on a whole number of people, the traditional vendors who are supplying that marketplace at the moment. And in my opinion, it's going to be wildly successful. There's people have been waiting that, wanting that, particularly in the enterprise market. The reasons for it are simple. Latency, low latency, you've got to have the data on the compute very close together. Moving data is very, very expensive over long distances. And the third one is many people want or need to have the data in certain places. So the combination is meeting the requirements. They've taken a long time to get there. I think it's going to be, however, wildly successful. It's going to be coming out in 2019. They'll have their basis in the beginning of it. They'll have some announcements, probably about mid 2019. Everything we build, as you guys know, and we talk about all the time, is driven by what customers want. And so we just started over the last six months. And really by virtue of having this partnership with VMware, where we have a lot of enterprise engagement as they're moving to the cloud, using VMware cloud and AWS, we had a bunch of customers say, it's really great, I'm moving most of my applications to the cloud, but there are some that aren't moving for a while because they've got to be close to selling on-premises. I want to use AWS for this. I don't want a different environment. Can you just find a way to put some services, like compute and storage, on-premises and hardware, but I want to actually use the same control plan I'm going to use for the rest of AWS. And I want it to easily connect with the rest of my applications in AWS. And we didn't like, as you and I talked about a week or two ago, we just have not like the model that's been out there so far to do this because the control plan is different, the APIs are different, the tools are different, the hardware is different, the functionality is different, and customers don't like it, it's why it's not getting much traction and we didn't want to pursue it if we didn't think it was going to be useful. But we had this concept we were working on with a couple of customers where they wanted compute and storage on-premises, but they wanted to have that connect with all the other applications in the AWS cloud. And so we had this idea that maybe this local set of compute and storage would be like a far zone from an availability zone they were using. And we started thinking about that and we thought there was a much more generalized idea which became outpost. And so the thing that I think people are going to love about that is for the applications that can't move easily because they need to be coastline on-premises, you get AWS, like real AWS compute, real AWS storage, analytics, database, SageMaker will be in there as well. But it's the same APIs, the same control plan, the same tools, the same hardware we use in our data centers and it'll easily connect through the same control plan to the rest of AWS, the rest of the services and the rest of their applications there. So, and it provides a platform for a whole host of new services. I think what Amazon now say with their time series database, right, their time stream prediction engine plus their outpost operating with VMware themselves, you're really seeing a combination of IoT and Edge, right? And so the whole idea is one, there's a bunch of use cases for a time series in IoT because sensor data, cameras, self-driving cars, drones, et cetera. There's this more data coming at you that's all in Edge. And Splunk has proven that, take time. Correct, Splunk's a new 18 billion mark cap company all on time series data. But number two, what's happening is it's not necessarily centralized data, right? It's happening to Edge, your self-driving car, your cell phone, et cetera. So outpost is really a way for Amazon to get close to the Edge by pushing their compute towards your data center as remote office branch office and get closer to where the data is. So I think that'll be super interesting. My view on this, and I think Amazon is really pioneering in this front, the data center is becoming an appliance. When you think about it, every enterprise is building their own data center with their own piece parts. That's nuts. It's like every company building their own furniture. Like, yeah, you could do it, but like, really? Like, wouldn't you just rather buy this desk from a furniture maker? And so Amazon has built an incredibly efficient, incredibly powerful, call it an appliance, this hardware infrastructure that works and it works at scale and it's easy to use and you can get it in two days and ships with Amazon Prime. That is super compelling. And I think a huge amount of customers are going to look for that simplicity, that ease of use. What's necessary, you pointed this out, is an abstraction, software abstractions. What VMware does? We create software abstractions to simplify the administration of these, all the bits and bytes, all the electrons that are flowing from A to B, we make that stuff easier to manage with virtualization technology that is abstract. Most of our customers, one of the biggest challenges they have is the fact that whenever you start migrating databases into the cloud, you inadvertently lose some of the controls that you might have on premise. Things like monitoring the data, things like being able to do real-time access monitoring and real-time data monitoring, which is very, very important, regardless of where you are, whether you're in the cloud or on premise. So these are probably really the biggest challenges that we see for customers, and also a point that holds them back a little in terms of being able to move database workloads into the cloud. Listening to Warner Vogels today, Amazon is now the beacon of technology in the industry. He went through the worst day of his life, which is December 12th, 2004, when their Oracle database went down for 12 hours because of a bug in the code, and because they were pushing it beyond its limits. And so he described how they solved that problem over a multi-year effort and really got heavy into the technology of database and recovery, and it was actually quite fascinating, but my takeaway was Amazon is now the company that is setting the technical direction of the industry for the next wave of cloud-based application. The folks at a company like Amazon, and specifically the ones at Amazon I work with, they have the ability obviously to track some of the most amazing talent in the industry, and these people move fast. And they have a lot of choice, and you can either be there with them ahead of them and do the customization and differentiate them and give them what they need, or they're going to leave you in the dust. So I'd like to say we have a great partnership because they've given us the honor over 12 years, and we have so many, from the data center to the edge, the car, the racer car, deep lens, so many things we're doing together, SageMaker, machine and deep learning. But if we slow down even for a bit, we're going to get left behind, and so my job is to just keep running and trying to get ahead of them, and every time I get there, you know, they come, no, but you know, we're working together. So it's a great, challenging partnership, but one that I can guarantee there is better innovation from Intel coming out of it because of getting the opportunity to work with Amazon. We had our first ever, the day before our public sector summit, we had an Earth in Space Day, and where we really brought together all these thought leaders on how do we take advantage of the commercial, cloud services that are out there to help both the programs, research, observatory in any way, shape up, datasets, it went great. We worked with NASA, while we were here, we actually had a little control center with that Tom Soster from NASA JPL, where we literally sat and watched the Mars landing, Mars Insight, which we were part of, and so was Lockheed Martin, and so was Digital Globe. So that was a lot of fun. So you'll see us continue to really expand our efforts in the satellite and space arena around the world with these partnerships. I think Oracle absolutely acts as though they're entitled, and they're bunkering down into their red stack. Now, you know, I've often said, don't bet against Larry Ellison, and I wouldn't make that bet against Larry Ellison, but his tam is confined to Oracle customers. He's not currently going after non-Oracle customers, in my opinion, at least not with a strategy that's obvious to me, and I think that's part of the reason why Thomas Kurian left the company is I think they had a battle about that, at least that's what my sources tell me, I haven't talked to him directly, I actually don't know him, but I know people who know him and have worked with him. HPE, I think HPE is more confused as to what the next step is. When they split the company apart, they kind of gave up on software. They gave up on an integrated supply chain. Michael Dell took the other approach, and thanks to VMware, he's got a winning strategy. So I think today's leading executives realize that they have to change. Look at Ginny Rometti. I mean, IBM was in trouble in my opinion because Watson failed, and their cloud strategy essentially failed. So they just made a $34 billion acquisition, a Red Hat, which is a bold move. And that, again, demonstrated a company who said, okay, hey, it's not working, we have to pivot, and we have to invest and go forward. All those areas that we're continuing to expand into are areas that our customers are asking us to help them with, and where there are huge opportunities for customers, but where it's hard. I mean, if you look at space as an example, if you have to interact with a satellite, it's expensive to have to have all those satellites set up in those ground antennas set up, and then you have to program them, and then you actually have to pay this fixed price instead of on demand. Customers say, why can't you give us access to those satellites the way we consume AWS? And then, if you can have the ground antennas where when the data comes down from the satellite, it's basically on the same premises as your AWS region so we can store the data and process the data, analyze it, and take action, that is very compelling. So that just felt like a natural fit. And the same thing with robotics. I think that robotics is one of the most underrated areas in technology. I think robots will do all kinds of things for us at work and in the home. And the tools out there to make it easy to build robotic applications and to do the simulation and to deploy them and then have them work with the rest of your applications and infrastructure have been pretty primitive. So you just listened to about 25 minutes of a total of perhaps 20 or 24 hours worth of interviews that we conducted at AWS re-invent last week. So go check them out on Q365 and there's a lot of great content up there. But now it's your time to crowd chat. So participate in the crowd chat, ask your questions, share your thoughts. Let's get together as a community. What is the impact of AWS re-invent 2018? Let's crowd chat.