 From San Francisco, extracting the signal from the noise. It's theCUBE, covering Oracle OpenWorld 2015. Brought to you by Oracle. Now your hosts, John Furrier and Brian Grace Lee. Okay, welcome back everyone. We are here live for day two of theCUBE's exclusive coverage of Oracle OpenWorld. This is SiliconANGLE's flagship program theCUBE, where we go out to the events and extract the similar noise. We are in San Francisco post game coverage, if you will, of Mark Hurd's keynote. Again, day two, a lot more keynotes coming on tomorrow. We got some big keynotes. That's the big one tomorrow. Larry is referencing that last night. I'm John Furrier, the founder of SiliconANGLE. Join my co-host, Brian Grace Lee. He's our cloud and infrastructure analyst at wikibon.com, SiliconANGLE's research team. Brian, great to see you this morning. Things were rocking and rolling last night on their opening reception, Larry's keynote. Mark Hurd's keynote today really set the tone. And I think what I saw up there was, he was kind of chilling out out there. He's on the anchor desk, which is kind of like a good grade for practice for theCUBE next time he comes on theCUBE. So, but in reality, he's trotting out the customers. And the message is pretty clear from Mark Hurd. They are in the cloud business today. The numbers and the performance on the business side are growing, pipeline is strong, and also the technologies in place, which Larry Ellison pointed out yesterday. Your thoughts on Mark Hurd's keynote. Well, I think Mark, last night Larry was talking about vision. He was taking punches at the competition. And Mark was essentially trying to say, look, he was trying to establish two things. Number one, there's a lot of hype around cloud. Some of the numbers in terms of the big cloud providers, whether it's Amazon or Azure, put him in perspective. He was saying, look, their sub $10 billion businesses were a $100 billion business, put things in perspective. And then he was trying to build a timeline for people so that those enterprise customers that might be considering the cloud, might be considering migrating into the cloud don't feel like they're behind. He was trying to say, look, this is a 10 year game. We've been in this for a long time. We've been making investments, and we got you covered. That was the message he was trying to get across. Yeah, the decade long transition and shift is what I heard as a key message. The most notable thing from the crowd that came out of Twitter on the keynote was, of all the comments, the one that really struck the court, most with the people out on the internet was, Mark Hurd says 30% of IT is testing today, that they're not testing, that they're testing cloud today, 30% of IT customers today. By 2025, 100% will be moving their data to the cloud. So that is remarkable that he can put that stat out there. 2025, pretty much conviction, Stu Miniman and Wikibon wrote a piece just yesterday saying it's in the stores as we know it. This is essentially connecting that dot with Stu Miniman and Wikibon. No, I think that's a fair prediction. I think 10 years from now, people are going to get comfortable with this idea of when I need resources for short periods of time, or if I need resources for a lot of variability, why in the world am I making capital investments for that? And if you stretch that out a little bit, that has huge ramifications across our industry. We've got lots of on-premise vendors who sell you a lot of capacity. They're going to sell you double, triple capacity so you feel comfortable. Economically, that's hard to support. Guys like Oracle are trying to say, look, bring it to me. Yeah, we just saw AIG up on stage, huge company. I mean, big IT, these guys aren't cloud native right now, I honestly have a lot of legacy. What I found interesting was the note that he said, they're going to start offering drone insurance. And he brought up this notion of self-driving cars and drone, this is the future. Self-driving cars are literally right on our doorstep. They're happening right now in Silicon Valley. We've seen the Google cars driving around, but this talks about the shift. And Oracle is in the business today with Larry Ellison said last night what Mark Hurd was reiterating today is, they're not determined to be in the cloud. They are in the cloud today. They're pipelines growing. They've made the investment in the software, replatforming of Oracle software on-prem and on the cloud to offer a comprehensive platform. That was Mark's business message today. Larry's technical message yesterday would say, hey, we got it all across the board. Question is, will customers see it that way? Your thoughts? Well, I think it's going to be a little bit bifurcated for a while. I think for a while we're going to see customers who are going to move. We heard this from GE, the GE's CIO. He said, look, I've got a ton of undifferentiated applications. I'm going to move those to SaaS applications. HR, in some cases, marketing. A lot of these ERP applications, they're realizing they're undifferentiated. Those are going to move to SaaS applications. What I don't think Oracle's in best position for today, but they're trying to get there, is these cloud-native applications. So you talk about the drone thing. You talk about being able to do, what does the new analytics model look like to be able to build an insurance business around self-driving cars? Nobody knows what that looks like yet. Those are going to be the cloud-native applications, and I'm not sure they laid out as good a vision for cloud-native applications yet as maybe they want to be. But right now, they're great for business applications. We were talking yesterday here about the disadvantage of scale, to try to replicate Oracle's model. Amazon's obviously got a clean sheet of paper. They got a green field, so to speak, in the public cloud. Mark heard this morning, talking right here on the pavilion, was saying that people have tried to copy Oracle over and over again, essentially reiterating our message around the disadvantage of scales. It is really hard. There have been people trying to copy Oracle for decades. Question is, can Oracle co-op the cloud, which they're doing, basically, and offer and move the ball down the field? And the question is, it's beyond Oracle. Oracle used to be a very nice product in the stack that it was in, ERP, database, really solid middleware. That's Oracle. And there's other stuff going on on the IT enterprise. Now, everything has to be integrated. So the integrated message really implies openness. Can they work beyond the red stack? What does Oracle need to do to do that, and are they doing that in your opinion? Well, the big question with integrated always becomes, is integrated mean slow and heavy, or does it mean microservices? We talked yesterday about middleware and how they're trying to push around microservices. If I can build my marketing cloud and be flexible and tie in things like Twitter and social and things like that, that's great. If I have to be able to do my marketing cloud and it has to tie into HCM and it has to tie into ERP, that's not flexible enough. So that's going to be the interesting thing. Can I do these SaaS applications as microservices, or is it have to be the full suite of things? That's where the real innovation and real agility is going to come from. Another thing that the conversations this morning talked about is the new set of competitors. It teases out what Larry Ellison said last night. Mark heard, really didn't talk about it much on the keynote really more about trotting out the customer, showing the success traction and whatnot. But Larry Ellison brought it up yesterday. This is a new set of customers. It's not IBM, SAP, EMC, and Dell, and HP anymore. It's Amazon, it's Salesforce. And that means they have two sets of competitors. They're fighting a two-war front right now on the competitive landscape. Coming down from the top of the stack and the SaaS vendors, a lot of Salesforce and others work day, whatnot. And then from the bottom up, from the infrastructure, that's Amazon. And it's a collision in the middle, right? And Oracle's got a fortified position there. How do you think they're going to defend this? How do they defend and extend their leadership? What do they need to do? Well, I mean, look, they've got a number of great assets. They've got very good technology. They've got embedded tech, database technology of all the things, very, very sticky, right? Number two, tons of cash, you know? And we know this from, you know, looking at what the cloud scale has, it's a billion dollar or quarter investment to be in the cloud game. Oracle can do that, right? How fast they'll ramp that. They've done it, they've done it already. Do they have the scale to do it? We're not sure because we're hearing they're hiring teams of people that have this cloud scale expertise versus what they've built so far. So that's yet to be seen, but tons of cash. And the thing is, they're very good about not putting their head in the sand and realizing who's beating them, right? They realize they need a market cloud. They went out and bought Teleo. They're trying to compete with Salesforce. I think they've got much more situational awareness that a lot of companies do. Our inside joke here in theCUBE is we always try to weave in a sailing metaphor if we can to give Oracle props with their boat. But we always talk about the data lake is the data old data warehouse. And I've been on record saying I hate that term. I like data ocean because data ocean is much more fluid, dynamic, a lot of changes in real time, different currents, different streams. But the cloud right now is dynamic. I mean it is, it's a shifting tide. The winds are changing. It is fast moving, right? So if you're that boat in Oracle, you have fortified position in the middle air. Now the question is how can they be competitive? The same conditions exist for the competition who are really trying to replicate and meet a trajectory that Oracle has which is going to be very, very difficult as Marker pointed out. So to me that's the conditions of the landscape. What's the competition going to do? What are your thoughts on the competition vis-a-vis Oracle? Well, I think if you look at this, we talked earlier, Microsoft we think has a very strong position. They've got a strong app portfolio. They've also got an install base that they can drive cash out of. It's on premise. AWS I think they're in a very good position as the 800 pound gorilla in cloud so far, but they've got to figure out how to get in the enterprise. They're making steps. I don't know that they've totally gotten into that yet. The one thing that we all talk about is competition. The big competition for all these guys is status quo in IT. Status quo in IT plays to Oracle's hands. It doesn't play into Amazon's hands. Amazon's got to convince people to change. Oracle's trying to say, stay the course, let the boat fly, you know, you know, kind of sales stream. So that's really where it is. It's they're all competing against IT status quo. And to a certain extent that some startup doesn't come in and take out their business. It's interesting on the cloud game. People talk about it as a three horse race. It's interesting. Most people don't even factor Oracle in it, but they're the big player. They say it's Amazon, Microsoft, and Google. Oracle's got a bigger cloud than all those guys as they're pointing out here today. But really the question comes down to, what do they do, right? I mean, ultimately, look at Amazon. They own the public cloud. Microsoft's playing Microsoft's game. And in fact, Oracle and Microsoft are playing the same playbook. Knock down your install base and move fast with your existing assets and create leverage around that. Microsoft is doing extremely well with their cloud game. Going to their install base. This is the battlefield. So I think when they say not enough, they don't see the same competitors. I got a disagree with Larry Ellison and Mark Hurd there. Microsoft is there. I mean, they're knocking on the doorstep. Your thoughts on Microsoft. Right. I think Microsoft, I mean, you got to look at Microsoft in two-fold. Number one, like you said, huge install base, but number two, completely changing culture. I think if this was a game that they were fighting against Steve Ballmer, I think Larry'd feel really good about that. What Satya Nadella's doing is he's changing the culture. He's open to more technology. We've seen 25, 30% of Azure cloud is on Linux. We're seeing them moving to new spaces. Microsoft is going to be a big player. We think Oracle, Microsoft, Google, Amazon, and Azure are going to be those big five or five or six clouds. Yeah, and for the second tier or non-tier one, as you pointed out, if that's the tier one, it's HP, Dell, EMC. These guys are all trying to do cloud. Got Bert just dreaming out there with the EMC thing. But as Mark Hurd pointed out this morning, as we were talking, is that it's going to take nine months to figure out how to even operationalize that act, never mind have a go to market. So, they're very interesting dynamic there. HP just got out of the public cloud business. So, that's going to be a partner situation going on. Does HP partner with Amazon? Does HP partner with Oracle? Does Oracle buy HP? There's going to be a lot of CIOs that are maybe rethinking who their big partners are going to be. Who am I going to partner more with Oracle? Am I going to partner more with Amazon? Do I look more at Microsoft? A lot of dynamics going on. Mark Hurd was asked directly on CNBC by John Ford. Will Oracle buy HP? Now, a big smile on his face. He said, no, we're not going to do that. He didn't comment on that at all and it doesn't come out on M&A. But in general, that was a flat out no from Mark. I mean, I don't think that's a good move for those guys. I wouldn't want to buy them if I was wrong. But I think Amazon might be interesting buying HP. Or HP partnering with Amazon. So... I can't see Amazon. Here's the thing. There was a big article in the Wall Street Journal today. One of the biggest reasons why Amazon didn't, HP didn't succeed in public cloud. They've got so much conflict in their sales force of do I keep trying to sell on-premise, get a big commission check, sell CapEx? Amazon doesn't have that. It's all off-ex, there's a straight sales model. It's a very clean model. I can't see them trying to get into a legacy business. Yeah, this is why I think Oracle has an interesting opportunity. Their sales motion, their sales force is a huge opportunity for them. And that's where I see the big advantage over Amazon Web Services. To me, that's a home run opportunity for Oracle. They can continue the momentum on that front. They will do extremely well. I agree. I agree. Look, it's a huge install base with a lot of money. The enterprise, it's Fortune 500, it's service providers. They'll sustain that business. And I think the interesting thing is, when we look at where they're trying to go, they're moving towards SaaS applications that are undifferentiated, but they're undifferentiated cash cows, essentially. If they can drive more and more H, HCM, ERP, CRM into SaaS applications, that's recurring revenue that's going to drive a lot of other parts of their business. So hitting gem in all the Oracle Open World content so far that I like, that I'm kind of, I look for the little signals in there that kind of give me some indication of where this is going. I think John Fallow's interview yesterday, it's up now on the network, watch that interview because he actually teases out the announcement that's going to happen on Wednesday and tomorrow. This is around the M7 security. I think whoever can have the security game will win everything, because he's talking about end-to-end encryption in the cloud from premise through hybrid to public. That is a significant game changer. And it's a hard nut to crack. There's a lot of technology involved, but if you can crack that nut, that's a home run. Security is a huge deal. And it's kind of like talked about as a killer thing, but no one really talks about it. Is that a reason, because no one has an answer? Is it because cloud's too difficult to have security? Security, I mean security and agility are always sort of at odds with each other, right? So that's the thing. Yeah, absolutely, in the Unix space and trying to move off of power from an IBM, it's a huge play. It was interesting they had Intel on, kind of trying to tell a similar story with their trying to do security at the chip level with Intel. One comment that Larry made that was very interesting last night, he said, look, we sell security to all of our customers. Very few of them turn it on. It'll be interesting as they begin to move customers to the cloud. How much more security becomes part of that conversation? Because, again, security and agility are always kind of at odds with each other and very much at odds with what developers like to do in terms of all that. I just want to share with the folks out there, something I've seen coming from our analytics here at Silicon Angles, theCUBE analytics. Mark Hurd is having a conversation online, tweet to Mark Hurd, if you want any questions at 2.30 Pacific Time, he's taking questions online, tweet to Mark Hurd's Twitter handle and ask him some questions. He's going to be fielding those. This is theCUBE's Silicon Angles flagship program. Go to siliconangle.tv, get all the videos, go to wikibond.conf.com for some great research and join the conversation on our engagement application, crowdchat.net, slash O-O-W-15. Brian, final thoughts. We're going to kick off a long day today. We're going to do 48 interviews throughout theCUBE here at Oracle Open World, exclusive coverage. Mark Hurd has a swagger that's quite different than Larry, right? I mean, he's up there at the anchor desk. Like I said, you know, joking aside, he'd make a great CUBE guest. He's very playful. He's got a little bit of dry humor there, but he's not slashing the competitions as much as Larry is. Larry likes to go right at the competition and really lay it out. Mark Hurd really knocks down the buttoned up business questions, cost of goods sold, sales motion, pipeline, revenue, sunk cost of investments, filling up the cloud with more customers. Your thoughts on his performance. Well, I mean, he's known as a sales and operational genius. I think he conveys that level of consistency that people want to hear from. I mean, customers here are looking for consistency. They're looking for 10-year visions. They're looking for 10-year roadmaps. I think he comes across and says, look, I'm the guy that's going to deliver that. I'm going to put customers on stage. We're going to talk to names that you've heard of. That's his job, and this Larry's is to go and throw punches and haymakers and so forth. All right, we are here live in San Francisco, wrapping up the keynote post game coverage. 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