 Live from San Francisco, it's theCUBE. Covering Google Cloud Next 2018. Brought to you by Google Cloud and its ecosystem partners. Okay, welcome back everyone. This is theCUBE's live coverage in San Francisco for Google Cloud's big event, Google Next 2018. Hashtag Google Next 18. We're wrapping up day two and we decided to put together an influencer panel of thought leaders, journalists, reporters. Of course, I'm John Furrier and Dave Vellante. Mark Alberson on the ground reporting for Silicon Angle with Rob Hope who's in a meeting right now, getting more stories ear to the ground. Ray Wang, founder of the Constellation Group who's been in and out of meetings, the analysts, he's brief, he's under non-disclosure in many areas. Good group of people to really extract kind of, squint through the noise, squint through the announcements and take a shortcut to the truth. That's the purpose of this segment. Ray, Mark, thanks for joining us. Mark, I want to start with you. You're out, did a lot of pre-briefings. You were pre-briefed on some NDA and Bargo News. Been here multiple days reporting. What's the takeaway? What's the vibe? What's the scent? What's going on here? Certainly Google's pumped up. This looks a lot better than two years ago. What's your take? Absolutely. I think there's talk of the Google being at a 6% market share. Anybody that's been here the last couple of days wouldn't believe that for a second. I think they're clearly putting in place some key pieces that are paying dividends now and they're going to pay dividends later and we're seeing that already. Yeah, Dave and I were talking, Mark, great point. Ray, I want to get your thoughts on this because I've been very vocal on this. Not because I have any proof, but I just kind of, I can smell the rat somewhere in this all this, market share calculations. We're number one in the cloud with this market share. All the revenue, there's a lot of sandbagging going on. What is cloud? I mean, you guys cover it deeply. The Holger's been quoted many times on SiliconANGLE, infrastructure as a service, platform as a service, software as a service. All kind of evolving as the stack modernizes, but actually no one has a clue on how to put a scoreboard together on who has what share. And even the magic quadrants kind of are obliterated by horizontally scalable category. So, Microsoft bundles office revenue. I mean, put G Suite, put AdWords in. They'd be number one in the cloud. I mean, billions of dollars revenue going up. So, Ray, I mean, are the sandbagging is causing a mismanage? Wall Street doesn't know what to look at. I look at the customers. What's your take? I mean, how do you make sense of that? How do you talk about this whole market share issue? You know, I think this market share issue has been bullshit. The problem is everybody's counting the wrong things, sandbagging just exactly who's talking about. The only number that's going to matter in the next three to five years is compute power. Who's consuming the most compute power with their customers? Everything else? Just a time. I don't care how you can calculate it. Whoever has the most compute power is winning the cloud because the cloud powers AI-driven apps. And then we heard this too, Dave. We talked about this AI and the data sandwich. Compute AI and data, he's raised right. Compute is a great metric because compute, you need compute for AI. You need compute for storage. We can all agree. I think there's any debate that Google is a cloud company. Google has a hundred billion dollars on the balance sheet. End of story. But I think your point, right? Customers see this, right? We are seeing a lot of customers move off of Amazon. They're not publicly saying it. They're starting their Google instance. They're also on Microsoft Azure, but they're moving. And we're seeing a lot of them come here. And the reason they're coming here is they're afraid that in one case, the cloud partner might be a competitor in the future. In the other case, there's an embracement of open source that's so important to them because they're trying to drive down the cost structure. And then of course, security is a big deal. And of course, having an AI-driven background is really important. And they want access to the source code as the open source. It's not only cost, it's that they want to make changes. They could get to market faster and align to their business. All right, I haven't heard any blockchain. AI certainly two years ago was the hype word. You bolt blockchain onto anything, the stock goes up. No blockchain, maybe because Google's stock went up 35 points yesterday, but they don't need it. Blockchain is the valley missing blockchain. Is blockchain being relevant? It's decentralized, it's got storage, it's got security. And then developer community around decentralized applications emerging, that if the Canary in the coal mine is going to be saying anything, Ray, it's that the application market's moving and there's tell signs. It's not a, yeah, there's some scans on the ICOs out there in every market, but as that kind of gets through the system, you can't ignore the infrastructure impact of blockchain. You can't ignore the emergence of a new kind of software called decentralized applications. It just doesn't seem like it's Silicon Valley sitting the boat on this thing. So take the Russian FSB female agents posing as blockchain experts at all these events, take that out of it. We're in 1996 of the internet, right? We're just at the beginning. The standards aren't there, but the valley's completely missed blockchain. The VCs, they're kind of shy. They're not as aggressive as they used to be. It's the individual investors. It's the private equity folks. They're going into blockchain wholeheartedly because they see the future. It is going to decentralize and it's actually going to disrupt the valley, which is why the valley's a little bit afraid of blockchain at the moment. Now, transactions per second are slow, right? 700, that's not going to solve the problem, but we were just at Microsoft last weekend. They're working on some things that actually get transactions to move faster. EOS already has numbers that are off the charts in terms of milliseconds. I like to think, I think the VCs are a little bit gun-shy, however, we just heard from NetApp, the founder of NetApp, lean into what you're afraid of and you come out better. But I think that's one thing that I think they should do and I don't think they're doing it. I haven't met anyone in Silicon Valley that has the chops to do blockchain. We've been covering it. But I think it's more than that. I think New York is playing an upper hand over Silicon Valley with blockchain. New York, London, Switzerland, they're all ahead in blockchain. Estonia. Estonia. I mean, the Zug is like exactly where it's all happening. But here's the thing. I think Google was supposed to have a blockchain announcement. I'm not sure where it is. It kind of got leaked on Monday at the Fortune CEO event. I don't know where it is, I'm waiting for it because apparently it is really good. Well, and also I covered distributed 2018 here in San Francisco last week. And there was an interesting dynamic between all these companies moving ahead with blockchain initiatives and some of them are really interesting out there. And yet there's this regulatory wave sitting there and everyone is kind of nervously chewing their fingernails about, well, what's the government going to do? Are they going to do anything? And so you've got countries like Malta and others that are moving forward very aggressively and creating those initiatives. The killer app is money and what's going on in the US is the SEC is ruining everything because they're putting the fear of God in Silicon Valley. And by the way, this ain't the first time back dating stock options, Sarbanes, Oxleys. I mean, the Valley, the law firms, they're gun shy, they're advising, go slow. Meanwhile, you go to Malta, you go to Lichtenstein, you go to Panama, their money is flowing. Hundreds of millions of dollars for raising money. But the Valley might not just be money, but it's not just blockchain. It's the cryptocurrency, crypto economy. And we're at IBM think, remember, they didn't want to talk about cryptocurrency. We're talking about blockchain. Don't talk about cryptocurrency. That's where I think they're missing the boat because the crypto economy is allowing developers to actually get paid for developing core protocols for the new internet. It is funding the innovation, but I actually don't think it's in the money or in the financial side of the cryptocurrency. The value is when we take data privacy and allow data privacy to become a human right and a property right. When it becomes a property right, we now have a value exchange mechanism that's going to allow people to sell their data or say, no, don't touch my data. And right now people are getting away with making money on everybody else's data. But it does come back to the economics because if I can fund the development of that technology and I can incent users to participate in a marketplace and charge for their services, everybody's aligned and investors, private equity, old money, new money, VCs, if they're smart, will get in and take advantage of the increase in price in that coin. We need a business model. No, he's talking about asset. Asset class is a major home run. You nailed it. Ray, you nailed it. Dave, you're talking about token economics. They work hand in hand. They're converging. They're converging. Token economics. And this is where I think the VCs are missing in Silicon Valley. The token economics, you look at the ICOs, the good ones, is a new liquidity pattern. And this is going to be where they'll miss the money-making vote. And they might be looking at their chops saying, damn, why didn't I get in? Cut out of the action. I can get liquid on virtually any asset that's locked up in whatever. The VCs have become the middleman and they are cut out of the action. And when you have a business model that's in place that's built on smart contracts and identity, I can tokenize it. There's a great company. Check it out. It's called hu-m-a-n-i-t-y.co. Humani.co. They're taking that piece on data privacy, turning it into a property right and enabling people to transact on it first in healthcare. And remember, the Cubecoin's coming soon. So look for that. Our own token's coming on the Cube. And we're going to give you tokens for watching. All that great stuff. I see it on Telegram already. It's coming. Mark, you've been reporting on the industry. Blockchain certainly renailed the asset class. I think he's absolutely right. This is going to certainly be for physical goods. There's a distributed ledger. It's decentralized and immutable. The token economics over the top is going to fund how values transferred on these assets, whether they're intangible or physical. Now, the crypto side of it is more of a disrupter. You're reporting on this. What is the big threshold? I'll see in the US, security token, utility token. SEC put the kibosh on utility. But now security tokens are back. You're starting to see people get behind the notion of a security token, which sounds like preferred financing. What's your reporting saying? What I've been hearing for a long time, everyone gets caught up in the Bitcoin hype. What's the price? What's everybody just frothing at the mouth about? It's really about the blockchain. It's the distributed ledger that enterprises are looking at and that businesses are building some real products around. And that's where the action is going to be. Well, we're going to have to keep this stellar panel pun intended on this because we're going to have to continue this. Blockchain creates, takes inefficiencies and makes them efficient. That's where we're seeing a lot of value. VCs, some will say middleman and inefficient. Or was that the trend, Ray? It might be. I mean, if we can decentralize, if we can decentralize these financing structures, which is what blockchain is allowing, we can actually get to innovation faster. And so if we can eliminate a lot of this and get more money in more people's hands earlier and more money in more people's hands who are building innovation, we have a shot. So do you think that traditional banks will lose control of the payment systems? I don't know. I don't know what payment is. Whoever gets the fiat currency first. If, you know, one cool thing maybe to buy an airline's airplane mile system, take Air Canada, take them over, buy their airplane miles and use that as the basis for fiat currency. That would be crazy if someone did it. Oh wait, Singapore Airlines did that with Chris Miles. But you're going to see this. Well, Digital Bits does that. We still got a company out there called Fuse Chain doing it. What about the U.S. government? You think they'll do Fedcoin? Fedcoin. I don't know, back by the full faith of the... U.S. Defense Department. Yes, by the DOD. The trend, I'm going to end this segment, but the trend we're watching is a concept called stablecoin because there's a lot of instability going on. Keep an eye out on stablecoin. Look at EOS, a lot of private chain solutions coming out. I think it's going to be a hybrid world, public, private chains and hybrid. It sounds like cloud computing. So back to cloud computing. And given the venture trends, I want to get you guys' reaction on this. I said some outlandish things this week, the past two days. One of them, I said, is IT operations categorically will be decimated with AI. If you look at the trends out there, AI, AI SaaS cloud, IT ops, AI ops, auto ML. These are technologies with cloud that essentially could replace categorically the industry of ITSM, ITOM. These are categories. What happens there? What's your thoughts? John, that's not going away. You're completely right. With auto ML, all these categories of dev ops that we love today, we're going to train these systems to be better than how we are. That's going away. It's completely obliterated. So companies like ServiceNow should be focusing on the experience. Actually, Google should buy ServiceNow. But companies like Google are going to be able to decimate all these categories and augment humanity. Do you really want to sit there and go through that standup every day the way that we do it today? That's horrible. I don't want to do that. I want to think about great products, new strategy, great ideas. Put that in the market. So this is about being on the right side of history at this point. If you're a vendor and you're out there looking and you're in the IT operations business, ITOM, ITIL, ITSM, if that's your business, I mean, you better start thinking of moving to the other side of the street because a crater's coming down and it'll take you out. Well, even in a vertical like healthcare, in a session yesterday with Jeff Dean, he talked about the use of auto ML and how that's being starting to be adopted now in the healthcare industry and how businesses and companies are going to look at that and that's going to make a big difference. Healthcare, financial service, these are industries that have not been really disrupted but need to be. Look, we talked to Neil Gomes. He's the chief digital officer at Thomas Jefferson and Jefferson University. I mean, they've been doing great stuff with auto ML and being able to take visual things. I mean, just on images and be able to change patient experiences, all those things that are manual task, as soon as they get digitized, AI is going to change the world. AI, service management, AI operations, that's coming down. I totally agree with you. Okay, guys, let's talk. Cyber security, of course. Well, that has to happen. That's like table stakes. All right, let's talk big M&A. If you look at some of the big mergers, Broadcom buying CA, where the hell did that come from? BMC with KKR, it's happening. The rich are getting richer. Dave, you said the rich are getting richer. Broadcom trying to do an Apple, go from chip to app? What's your- Do y'all go in public? I want to- Michael. Guys, Ray, Dave, what's your thoughts? I mean, you got these big mega mergers. What's going on? I got to give Guigua a lot of credit. He spent $2 billion and literally only generated a couple hundred million in revenue and exited on seven billion. That's probably the best financial transaction I've seen in years. So he gets kudos for that. But for Broadcom, right? It's, what else am I going to do? Return on profit, return on assets. Like the hardware infrastructure market is just about margins and EBITDA. There's no growth there. You've got to get into software or something else in order to grow. And so it's a logical choice since they couldn't buy that other company. Well, and I got, I said Michael Dell. I mean, look at the EMC acquisition. Michael Dell and Silver Lake put in four billion in cash. They're going to turn that four billion into 30, 35, maybe 40 billion. I interviewed Naveen from Mayfield Ventures. We had a conversation on theCUBE. He said, Silicon's back, the old Valley's back, the media Valley's changing because Broadcom has Silicon. We hear from Google, the chip. I'm checking the boot drive from Malware. Maybe chips are an advantage. Move to the high margin up the stack. Or is it just, I want to buy this because it's off the market. The CA thing's very interesting. Software and chip, software and networks, they're all going to be power of this. Software is powering those future pieces. That's all the point of software defined. You guys talk about this all the time. Yeah, well, and that's always been a gate in the semiconductor industry is software. So really interesting move. Okay, so final question to aim the segment. Let's give Google Cloud a grade on their event. We were there two years ago. We've seen before Diane Greene and we've seen now two years in. Certainly she knows the enterprise, found her VMware. The difference between VMware and having no competition like she had being a first mover, I think she come in. I thought, I think my takeaway, I think she came into Google Cloud. This is going to be a piece of cake. I'm going to come in. I got the enterprise shops. I'll bring in my people. I'm going to move things around. Whoa, Amazon. Hello, Microsoft. Hello, competition. Ray, competition is on her doorstep. She has competition and she's not in the number one position. This is not what she had at VMware. It's a very, very different market. I mean, I give Diane Greene a lot of credit of making Google more enterprise. Took three years ago. It was like, oh my God, there's 50 people. It's an enterprise. Really? Come on. So they've definitely improved for there. They get enterprise. Here are biggest challenges. She's got a one to 100 ratio from go to market to engineering. She needs more marketing people, more sales people, more people that know how to do support, people that do partner account management. If she gets that part, they're in a really good position because we're in a situation where the product is good. The product, well, the engineers are there, but the marketing, the finesse, the last piece of getting an enterprise story, that still needs to be baked in. And so I give them a C plus because, I mean, it was a D minus the first year. It was definitely a C the second year. And I think C plus, B minus. I might be a little more generous. I would go with a B and I'm basing that in part on what I heard in the partner discussion round table this afternoon. One of their partners said when they get in deal flows with the three big ones, Google Cloud is holding their own. I mean, they're holding their own. That doesn't sound like 6% market share to me. Well, Google's hungry, right? They're hungry. They want to be the best to raise point. They need more, they need more bodies, right? More than they've been hiring like crazy. I think the ecosystem point mark in your article, I think you said 13,000 partners, right? You know, Amazon's got 100,000 partners. Azure, 70,000 partners. But you walk around the floor here, a lot of the big guys, we like to say Deloitte, et cetera. They like to eat at the trough and they're starting to. And they've beefed up their partner team at Google Cloud. Which would make a difference. I have to say, because of this set, I got to give this set, you know. Oh no, look, this is today. The technicals are amazing. The sets are amazing. Guys, the cube is here. It's definitely an A plus. I was going to do a scorecard next time. It'd be like a boxing ring, you know, like self-awareness. I give them an A plus, okay? Google has turned the corner on self-awareness. They have gotten an A on that. They now are not by Google, because we're Google and we're great. They now have, with Diane Greene, they're still cocky, they're still in a good way. I think cocky and a bit arrogant. And I think that's positive, because they're engineers, they have good stuff. A plus on being aware that they need to do more in the enterprise. And they're moving hard, they're hiring the right people. I got to give very high marks for the contribution of women to the content agenda. Oh yeah. Probably the best. Who are now mammals. Probably the best I've ever seen. Yeah, I mean, A plus on women in tech and diversity. Their inclusion and diversity is awesome here. I want to see more of Reese, right? The guy that did the IoT event. I mean, be Google. Don't try to be Microsoft. Don't try to be Amazon. Don't try to, you know, put up MBAs there. Get the engineers there who can tell the story, tell it authentically. That was an awesome keynote that he was doing with the IoT, with the thing in the pocket and the chip. That was amazing. You need a lot more of that. I think Google's being Google in the ninja. I like that. I think that gave him high marks for that. Where are they really? And so I'm giving them AA, A, B, B plus. Where they lose still, in my mind, is on the product side. They're way behind Amazon. I think Microsoft is kind of- They're way behind Microsoft on teams. And even Microsoft, although they're wiring stuff together to have some pre-existing cloud, because they've been in that business more B to B. Where Google does have product, it's kick ass. But still on a feature to feature basis, they still got some things to do to catch up. So I give them a C on that one. But overall, I'd give them a good B plus on the event. And they're so, but they're so not panicked about it. They're in the long game. They got a long game, they got a hundred billion dollars in the balance sheet. They got unbelievable tech, and they're like, you know, we're getting there. The recognition of hybrid, three, four years ago was like, no, no, no, no, no. No hybrid. It's all going about- Give it to customers, don't buy. Amazon's kind of still there by the way. Well, Amazon wins statistically on the feature set, but their products are good enough, while they're winning deals, because they have enough great cloud that there are use cases that are pretty obvious that Google has a fit for. There are some clouds that they don't have a fit for. That's where they got to fill in the gap. I think that's where they got to do the work. But I think this is well beyond where they were with App Engine two years ago. That's all they had, the OG. And then their message is engineers, getting to that audience, and what they can do with data. And that's resonating. You guys sent it this event. They're betting on data. They're betting on scale and speed. If that bet comes home, they're going to lap the field. And if Cisco can sell for them with their relationship, that's going to be very interesting. They said something in the analyst Q&A, Dr. Fei-Fei Lee said something in the analyst Q&A I thought was amazing about trust. They said, take your data, put in our ML Engine. We give you some preceded information to start. It's your data, it's your model. We don't even look at it. We're going to keep that pure. It's your expertise. And I haven't heard that from any other cloud vendor. And I thought that was important. And they're pretty strong on statements about security. So that's a good sign. Guys, overall, great progress. Thanks for coming on and sharing the perspective. Mark, thanks for the great reporting. Ray, great work you're doing at Constellation. And thanks for all your guys for being able to be quoted on SiliconANG. We always love to have the expertise. Dave, that's a great thing for your great commentary. It's theCUBE day two wrap up here at Google Cloud and Moscone live in San Francisco. Stay with us all day tomorrow for day three of the CUBE coverage of Google Next. Thanks for watching.