 Live from San Francisco. It's theCUBE, covering Oracle Open World 2016. Brought to you by Oracle. Now, here's your host, John Furrier and Peter Burris. Welcome back, everyone. We are here live in San Francisco for Oracle Open World 2016. This is theCUBE, SiliconANGLE Media's flagship program. We go out to the events and strike the signal of noise. I'm John Furrier, the co-CEO of SiliconANGLE Media. With Peter Burris, my co-host, who's the head of research for SiliconANGLE Media, as well as the general manager of Wikibon Research. Our next guest is Dave Donatelli, Executive Vice President of Cloud and Converged Systems and Infrastructure at Oracle. Keep alumni always coming on. Great to see you. Thanks for spending really valuable time to come and share your insights with us. Great to see you guys again. It's always a pleasure. So you did the keynote today. Obviously, the forces in the industry around cloud. Oracle's got the whole story now. They got the IaaS V2, they're calling it. And now you have up and down the stack pass and SaaS. Under the covers, under the hood is the power, hardware. Of the infrastructure, yeah. Very disruptive. And we chatted and we wrote a story that's looking also on Forbes about the disruption to the existing incumbents. So with that in mind, how did the keynote go from your perspective? What was your key themes and how does that relate to some of the disruption in the landscape of the industry? Okay. Well, as a self-rainer, I'd say the keynote went very well. But what I really talked about was Oracle offers people three deployment models and I gave them kind of five journeys to take to the cloud. The three models are public cloud, broad-based public cloud. Second thing is traditional enterprise, which is the business we've been in for so long. And then a new category is what we call cloud of customer, taking our public cloud and making that available to customers. And then the second thing I did in the keynote is talk about five journeys people could take to our public cloud. And it's everything from optimizing what they currently have in their legacy environment to running hybrid cloud to running this cloud of customer to running private cloud. And the fifth one is just in what you're doing, you know, in the current way and move all public cloud. So on the five journey, that's just to drill down on that. Five different paths the customer could take from their current position to a cloud end game, if you will. Yes. And which one do you think is the most dominant right now in terms of your view? Because obviously there was, we'll go through those, but of the ones that on-prem, which ones has the most relevance today in terms of customers that you hear from? Well, I'd say two things. What I see and what I've seen the last year is the acceleration of movement to the public cloud in literally since the start of the year has been massive. And what's really changed about a lot of it's coming top down. So you see CEOs, board of directors, CFOs saying, we're going to go to the cloud. Even some companies have given their IT department specific requirements. You'll have 40% of our applications in the cloud by 2000. So big acceleration there. And in saying that, what most customers are doing is something in the middle. They have their legacy that they've always been running. We look at it app by app by app. What's the most likely to transform to the cloud? Which ones are probably just going to go away? Which one should we just redesign and build net new in the cloud? And so that means to me that hybrid is really, you know, the one that we see most often. People are running on-premise. They're running in the cloud. They'll have a mix for some time until the on-premise continues to go away. What's the concept we heard from Chuck Hollis yesterday around this notion of cloud quote is he's seeing customers being kind of mandated to get to the cloud almost like a quote, hey, where are you with your cloud migration? So there's pressure certainly coming in. But you introduced cloud insurance. Yes. Is that not actually insurance, but it's a concept? I mean, just explain what you meant by that. Sure. So what we mean by that is this, is that as we just talked about, most enterprises, you know, if you look at most of the data out there, says only 5% of applications have moved to the cloud so far. So that means a lot is still running in their data centers. But now you're going to go to your boss and you're going to say, hey, you know, I need to buy some new infrastructure. And if you're a regular company, that's going to take three to five years to depreciate. So you go to your boss, say, hey, give me $10 million. I got this great idea. I'm going to put this new infrastructure in. Well, what if two years from now, your boss comes and says, guess what? We now need to move to the public cloud. With traditional infrastructure, or with infrastructure designed by companies who don't have a public cloud, you now have a boat anchor, right? And you know, I run big businesses myself. And the last thing you want is equipment on your books depreciating that has no technical value. What we need by cloud insurance is that everything we sell customers on-premise also has a public cloud equivalency. Think of Exadata. You can use Exadata on-premise. We have an Exadata cloud service you can subscribe to in the cloud. So if you buy an Exadata on-premise today and they say we want to start moving to cloud, you say, great, I'll do things like test dev in the cloud with my equivalent Exadata service. They're fully compatible. It's got the same management. It's one push button to move data from on-premise to the public cloud. No one else can do that. So you're really selling them a cloud option. Whatever you buy, you are also buying a cloud option. Yeah, what I say is I'm giving them assurance and insurance. The assurance is you're buying something today that you know will have a useful life going forward in the go-forward architecture. And if you want to exercise that option today, you can do so. If you want to exercise it in three years, you can do so. Exactly. No financial penalty to you. Exactly. And what most competitors are saying is, hey, by the way, you always did it. And guess what? You don't have that option. Sure, I said. So one of the things, I love the idea of the five paths. But paths are going to be influenced by workloads. So as you think about the characteristics of workloads, not big companies, small company region, those are also going to be important. Sophistication and maturity at the shop. But as you think about workloads, going back to John's question, what types of workloads do you see coming in first? For example, we're seeing a lot of on-premise big data happening, but not as fast as it might because of complexity. We're starting to see more of that move into options that are more simply packaged, easier to use, like in the cloud. What kind of workloads do you think are going to pull customers forward first? Sure. Well, first, remember, we play in SaaS, PaaS, and infrastructure. Sure. And what we've seen, if you look at our financials, is huge growth in SaaS. And that's where people are saying, I am taking G here as an example. GE has taken their ERP, Big Global Company. They're putting that in the public cloud. HBC was here. Same story, big financial institution. They're putting that in the cloud first. And the reason why they're doing it is they think it gives them more flexibility and makes them more efficient, saves them money. Then what's really changed, and what we've evolved to, is with our new infrastructure cloud, now we can do anything. This is to your question. Anything that runs on an x86 server or a Spark-based server, whether it's an Oracle application or not, you can either migrate it, run it in our cloud. You can reimagine it using our PaaS to redesign it and move it to the cloud. It's everything. And we're seeing increasing rates of people walking through app by app in their environment, and doing just what we said. What stays? What moves? What do we transform in the process? You've seen a lot of the movie at EMC, certainly your history, your career at EMC, and then HP. A lot of the industry had changed while you're in those shops now here at Oracle. So I've got to ask you now with the Oracle advantage that you guys are pushing from the silicon to the app. However, I forget how they word it, but it's silicon to the app. To the app. Yeah, end to end kind of thing. What's different from a design standpoint, from a technical, as the product development teams build it, what's the unique thing that's changed that has that render itself to impacting the customer? Okay, that's a great question. So let me give you the customer benefit first, and I'll tell you why it occurs. What I said today from stage is that to run our, I'll use an example with our software. To run our software, there's no better place on earth than our infrastructure. And compared to their most likely alternative, which is their self-built, then buying an x86 server, then buying their own networking, then buying storage, we give people better performance, better end user experience, easier to manage, and most importantly, it costs them less money. So knocking down Oracle on Oracle, boom. That's a baseline. Versus you going to buy a server online at Dell and trying to put together yourself. The way we do it is the fact that we have insights, which we have designed, all the way into our software, as well as into our products. So depending on which product you're talking about, for instance, in Spark, we embed in the silicon itself accelerators for things like encryption, for de-encryption, for the ability to compress, to decompress, all kinds of things that matter in speed. At the same time, we make a lot of changes to our software itself to make that run better with our hardware. It's RIP, it takes a lot of engineering to do that, but simply put, if you don't have the software stack, you know, if you're someone who just builds hardware, you can't see the software, you can't make those changes. Well, you have the advantage, obviously, you have software that Oracle writes, you have systems that are engineered for Oracle software. Clear advantage, so you're saying, I'm going to equivocally, you blow everyone away. From a pure technical perspective, it is an unfair fight. We will win every time. Okay, so I buy that, so you win those rounds. Curveball is multi-vendor. Sure. Now we're into a multi-vendor, because a lot of people have that technical debt now on the books, if you will, that isn't the right term, technical debt, but they have legacy, it might be Dell EMC, it might be HP and all this stuff. How do those shops deal with this Oracle infrastructure cloud and non-Oracle software? Okay, so two ways, so if you look at it on premise, we make products that run both Oracle software, engineered systems, that run both Oracle software and non-Oracle software in the same machine. So you get all the accrued benefits we talked about, but you can also host your applications that might not necessarily be Oracle with us. In the cloud itself, I think you heard, I thought Larry gave an excellent presentation yesterday, and very clearly walking through what we do that's different than alternatives. And as we said- He was very aggressive on Amazon. But I thought he was very, I thought he was very fair in how he did it, right? He walked through it just the facts, this is what they do, this is what we do, this is why it's technically different. He didn't just come out and say, hey, we're better than Amazon. He gave specific reasons why. He did that and he did that, he did both. But if you look at it, so even on just running a generic app that's non-Oracle on our infrastructure as a service, what we said very clearly is, we have an infrastructure by the way it is architected that has less noise, meaning so you get less performance disruption, so it runs faster. It's built with newer hardware. And at the same time in doing so, because of our architecture, we can offer that to people at a lower price than they'd otherwise get. And again, I think those were very straightforward, very well articulated points that show the value. And that opens up the whole world to us. As you know, the X86 market is almost a $40 billion market on premise. What we're saying now at Oracle is, we can do a better job for you in the public cloud running any of those workloads. That's right now. I think that the other thing that came out, we've talked about it here, is that the stream of innovation that's going to unload itself on the industry over the next few years, someone still has to do the integration of all of these different piece parts that are going to be improved upon. And that integration cost is real. And so you can look at it from a CIO's perspective, they can look at it and say, do I want to put my time into the integration? Do I want to put my time into the application that's going to have a differential effect in my business? Right. So you guys seem to be coming pretty strongly on, we've got the baseline we need to do, we've got the stuff that we need to bring the innovation in an integrated way into our packaging. That's correct. And I think very well said, I believe we are the easiest company to work with in bringing people from, in essence, their old architecture to the new. And that is because we've already done that integration work. We offer those architectures on both sides of the equation, current, on-premise, into the public cloud, and give you one management software structure to manage both. Anybody else is only going to work with you on one extreme or another. It's either, hey, I only do cloud or only do on-prem, how you work with the other one, you as a customer are stuck with that burden to figure out. David, I know you've got to go to another meeting, but I want to get the final question to you to elaborate on what you're most proud of now in your tenure at Oracle. Some of the things that have worked for you in the organization, product-wise, successes you've had, you want to highlight a few. And what's your priorities going forward? You now are running the cloud group as well as a converge infrastructure kind of coming together. What are you most proud of? Could be people, things like ZDLRA, I know is doing really one Louisa was saying, it's a smashing success, and we're not hearing anything about that. We heard about it yesterday. So what are you most proud of and then what's your priorities going forward? What I'm most proud about being at Oracle is we're an organization investing for our customers' future. So we're spending $5.2 billion this year on R&D and it's all about bringing out these products that fit the future for our customers and protecting their investments along the way. I'm very proud to be part of a company. Because as you know, in these big transitions, companies don't make it. Think of DEC, right? They're a leader. Didn't make it through to the new transition. And we're one of these companies that's leading the new transition, even though we also participated in the prior architecture. I think from a product perspective, I would say ZDLRA is a great one you bought up. It stands for Zero Data Loss Recovery Appliance. It is designed by our database engineers to fully back up and recover, as it says, with zero data loss, our database. And we've had a number of customers here. We had customers at the keynote today, very major enterprises at the keynote today was General Electric, who talked about how it enables them now to sleep, that don't get woken up at three in the morning. It gives them certainty in terms of how they recover. And most importantly, it saves them money. And you're in the hardware business, but you're not in the box business. You actually have the software. It's, again, software enabled. Congratulations. I know you're attracting a lot of good talent as well. You're doing a great job, and it's been fun to watch your success at Oracle. And we're proud to cover you guys. We have some little points we would disagree with you. We've got more time. We can go into a little detail. But thanks for spending the time and sharing it on theCUBE. All right, a pleasure. Always great to see you guys. Live in San Francisco for Oracle over the world, this is theCUBE. I'm John Furrier, Peter Burris. We'll be back with more after this short break.