 This is Silicon Angles and Wikibon's theCUBE. It's our flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier, the founder of Silicon Angle. Joining my co-host here for the next three days, Dave Vellante. This is our kickoff segment. Really kind of the preview. It's cocktail hour. Everyone schmoozing, doing a little networking. Had the early sessions and talks, the analysts meeting, Dave, we were at. And we'd love to break down the analysis. You're going to hear commentary, opinion, and facts all week. We'll break it down. But I love when we have the analysts on. So Dave Vellante, we have here, Jillian Miranda, an analyst with TBR Research. Welcome to theCUBE. Thank you. So we love the analysts. Let's just get right in. So I got to ask you. So the horse is on the track. You got Amazon, Rackspace, IBM, VMware. Now Pivotal. That's kind of the new school. When you've got Salesforce and a bunch of other guys out there, kind of gen one. What's your take of the horses on the track and cloud? Who's got what advantages and who's in the lead? Sure. I think Amazon Web Services is definitely in the lead in terms of public infrastructure as a service. I think a ton of companies have built a whole business on Amazon. They have a great partner ecosystem, certifications. And they really over the last 18, 24 months have, they've released so many new services around the AWS platform. I think they've really taken the lead technologically as well as revenue-wise. In our cloud benchmark, they've really pulled away from the rest of the vendors. They're growing faster and they're really leaving, you know, leaving their mark. In terms of the second place infrastructure provider, I think that space is open. You know, over the past six months, my view on Rackspace has changed a lot. I thought they were a middle of the road player for a while, but I do think open stack will be very important. And I think they're making a lot of investments there. They're training their partners. They're training their customers. So I think they have a good chance at breaking out as well as, you know, Pivotal's going to be super interesting. Well, so let's talk about your analysis on AWS. You say they're leading the marketplace. They could do four billion this year revenue-wise. You think they can hit four billion? We're estimating around three. Three? I wouldn't be surprised if they hit four. It's hard to tell, right? Because it's in the other category. Yeah. Okay, so in terms of infrastructure service, what percent of the market you think they have? 60, 70% I think it's that high? That's tough. I would say maybe around 40% if I had to guess. Not quite, yeah. Because there are a lot of smaller vendors. They're savage to mention data, software. Sort of depends on what you include in there, maybe pure. Now, you cover software and cloud, that's sort of a broad category. So we were talking off camera, AWS Rackspace. You cover service now, Salesforce, couple hot companies, HP software. And now, when you cover cloud, you cover HP's cloud as well? Yes, I do in conjunction with a few team members. So there's a few of us, there's a hardware analyst, me, another software and cloud analyst, professional services. So we cover companies like HP and IBM, their cloud businesses from a pretty broad angle because they do so much. So what do you make of the whole CIA deal? You saw that, you saw the news came out, the judge's opinion came out. What did you take away from all that? I think if anything, it really helped Amazon's credibility. If one, they won the CIA deal at a more expensive price than Amazon, the CIA noted that, or sorry, that IBM wasn't as flexible as Amazon. It wasn't as secure. This is coming from the CIA, not me. I think if anything, they're winning it in the first place, really made them a player in the space, in the enterprise and the federal world. And then when IBM got started firing back at them, and especially with their new campaign against them, it's just helping Amazon and not making IBM, it's making them look scared. Well, so it's basically IBM saying, hey, we're not going to just let you take our accounts, we're going to fight tooth and nail, right? So, Julian, I got to ask, so Amazon's really doing well, obviously infrastructure's a service, that's kind of their bread and butter. We pegged their market share around 36%, and then about 25 other players are going for about 64% spread amongst them, depending on who you talk to. Okay, that's great. That's usual as a horizon, tariff mark, all the other guys. What about the past market? How do you see the past market from a competitive standpoint? You got everyone kind of coming in there, a lot of education's needed. What's the dynamics and platforms of service? Does that go away? Is that a real market segment, or does it get subsumed between SaaS and past, and infrastructure? I think right now it's a very, very real segment. I think test and dev is a huge workload that companies are moving to the cloud, and we consider that platform. I think eventually, since platform is from the top down and the bottom up, I think in the long run, it'll probably get rolled into either SaaS or infrastructure vendors. What I think is most interesting right now about the past space is API management and mobile backend as a service. So these platforms connecting, if I'm a mobile app developer and I want to connect to all the data, say in Salesforce, I can go through these vendors and connect the backend to the front end and not really have to worry about it. So I do think platform, I think that's going to be the sticky point. I think it's going to be somewhat easy to move from infrastructure to infrastructure if you want. I think the platform and the development and the customization is going to be that sticky layer. So you kind of have like Cloud Plus, which is Amazon IAS Plus, and you kind of got SaaS minus, which is Salesforce. Does the market really need past? I mean, you're essentially saying it's going to evolve into one of those two layers, right? It's going to bifurcate. You really don't, do you need that middle layer of past? I think you need it now, because I think a lot of the SaaS players and a lot of the infrastructure players, you know, their ecosystems are a little behind. So I think acquiring a past vendor, like an Engine Yard, Oracle's invested a ton of money in Engine Yard, still have a few other vendors. I think that the layer is essential. However, I think that yeah, it'll eventually be rolled up. Now we talked to Elizabeth at Oracle OpenWorld, your colleague, and obviously she covers Oracle. Do you cover the Oracle Cloud? Do you have an opinion on the Oracle Cloud? What they're doing? Elizabeth is definitely the one to talk to about that. So that's her category. Okay, but you saw, let me ask you more generically then. You see a lot of cloud washing going on, but people are getting serious about the cloud. I mean, Oracle's an example, certainly HP's cloud, they're getting serious. IBM's acquisition of software. How do you see this all shaking out? It's like Amazon, you know, took a huge lead. They've got the flywheel effect that Andy Jassy talks about. Is there at least sustainable? Do you feel like the traditional enterprise guys are going to hold on to their base? What's your crystal ball say? In my opinion, I think Amazon is very threatening to a lot of the vendors. I think that's why IBM did acquire software. I don't necessarily think that these companies want to be public cloud vendors. I think they need to be cloud vendors because they need to protect that install base. In terms of the long run, HP, Dell, IBM, Microsoft, I think they'll do well. They have the infrastructure in place, the software, a lot of components to let their customers offer cloud to the end users. I think they'll do well, but more in the private and hybrid cloud market. So right now we just completed a private and hybrid cloud study and the large traditional vendors came out ahead. You know, they offer cloud, they offer hybrid, they offer professional services, so there definitely is a play for them there. And I don't necessarily think they want to get into the high volume, low margin business of an Amazon. They're operationally not set up to do that. If they do want to though, they have the distribution channels to quickly roll that out. So let's unpack that a little bit. You guys just did a big study on this. So you said they came out ahead of what startups, ahead of Amazon, ahead based on capabilities. Talk about that a little bit. So what we found was the, in the public cloud market, the Salesforce, Amazon Service Now Workday, they come out ahead. In the private cloud and hybrid cloud studies, we really have found that the more traditional vendors have come out ahead of, well in private it wouldn't matter as much, but for hybrid they came out ahead. And I think that's because vendors trust them more and they just offer it more. Amazon doesn't want to be a private cloud vendor. Right, so now is this based on sort of your customer feedback, your rating system, a combination? Why don't you talk about that a little bit? So it's based on interviewing about a thousand customers. We did survey work, interview work, and we constantly speak with partners in the market. So a lot of angles. So you have this, that's thousands of good number, right? I mean, this is substantial observation space to use a John Furrier team. But you have this sort of bias in the market between the IT guys. You ask an IT person, you know, one thing, you ask a head of marketing, you get another different answer. Help us squint through that schism. What are you seeing there? Sure, so I think a lot of the outcome buyers are going to be line of business. So those are people who want to buy, they want to write a check, they want a service. For IT, I think that Amazon will probably do well in IT. I think ServiceNow, they sell into IT, and then they spread. So I think right now, IT is still the biggest purchaser of cloud. I think that'll change over time as IT. IT is going to change so much because it gives people's outcome. So sales teams 20 years ago didn't have something like a sales force. So I think now that the option is there, they'll buy it. So ServiceNow is a company of follow. I wonder if we can just talk about them for a minute, because we love ServiceNow, we did the Knowledge Conference last year, and we've been tracking them a little bit. They're just cleaning up. I mean, they seem to be such enthusiasm in the base around what they're doing. They are focused on enabling IT, not trying to end run IT. What's your take on ServiceNow? I think ServiceNow is a great company. They started out as a platform, built ITSM, made their customers understand exactly how flexible they were, and now they're permeating the rest of the company. I think the technology is awesome. It's in place. They really service the enterprise. And then I think bringing on Frank Sluman to run the company and run operations was an excellent choice. There's the technology side and the business side, and a lot of companies that are growing that fast, sometimes they need to bring on an outside person who has gone through that to really go to the next level. So I want to bring it back to Amazon. Obviously, we hear it reinvent. A lot of buzz going on. Were you here last year? No, my first year. We weren't here either, but I understand it's probably at least double what it was. So talk about competition again. Amazon, I mean, I don't know if you saw that. Presumably saw the Gartner Magic Quadrant, Amazon in the upper right, CSC was kind of in that same quarter, but nowhere close, 5X more compute power or storage, whatever that metric was. To the extent that you buy that, it was good research. Let's assume that for a second. Why is Amazon running ahead of the pack the way they are? They made the market. They always had to be ahead of the market because they supported Amazon. And I think that what they've done, they can build web services so quickly. They're very agile. They're not worried about their market share or their EPS because it's Amazon. So I think they have really been able to do a lot quickly. And with that, they've taken a lot of cost out and since they're so used to being very low margin, instead of putting that cash in their pocket. And this is me drinking the juice a little bit. I really do think that they've put a lot into the portfolio. And I think they had EC2 and S3 for a while, made smaller innovations. But again, over the last two years, have just rolled out so many products. It just, they can develop them so quickly. They're running really fast. And sure, they're making mistakes, but they're learning a lot quicker than the competition. What's your opinion on, so you're right, they've got this business model where they pour everything back into the business and they get, the deck is stacked in their favor because they're growing so fast, their stock price goes up when they announce a loss or when they announce a little bit of a profit. What happens when the growth slows down? Do they transition to a new business model? Do you foresee that as a potential problem for them? Talk about that a little bit. So right now we see the growth speeding up, which is interesting because they are so big. Yeah, of course, eventually it'll level out. ServiceNow is absolutely leveling out right now. But I think for probably at least the next five years, there is so much opportunity for Amazon because they have multiple business models. So enterprises are moving workloads to Amazon. Startups are building their entire business on Amazon. Partners are building businesses on Amazon. MSPs are building around Amazon. So I think they do have multiple levels. And the most recent one I think will be to help people globally have a global distribution center. So a company like Ramco, they didn't really have the infrastructure to really grow outside of India. And now if they put Ramco on an AWS instance, they can go wherever they want. So I don't think, yeah, growth will slow down, but it's going to be such recurring revenue. Chile, I got to ask you about Salesforce and Dreamforce. So there's some tweets going around about, we're saying, oh, 8,000 people are here and someone was kind of being snarky and said, oh, 110,000 for Salesforce. The question is Salesforce the real, is it really cloud? I mean, is it just SaaS? I mean, some say they're not even cloud. Who says that? Well, they don't have infrastructure as a service and platform as a service. Yeah, but they don't claim to have infrastructure. They're SaaS, right? But to me, they were the original cloud vendor, but they've cobbled together a lot of stuff and the markets changed really quick. It's well known in that they've rewritten a lot of code to get modern. So what's your take on Salesforce? I mean, how do they compare in all this and are they set up to really be a good cloud SaaS player? Yeah, I think they are set up to be a good SaaS player. In my opinion, they're definitely cloud. I might classify them with applications though, so with SAP Oracle as opposed to the smaller cloud vendors because they are so big. I think their platform is good. They just announced the enterprise or the private version. Their business model, in my opinion, I think they'll be changing it over the next couple quarters. To be more SAP Oracle-like? I mean, they're more software, business software. I think they'll start to rely on partners a bit more in the channel. Right now, their sales and marketing costs are just phenomenally high and they've been operating at a loss for quite a while, which in the first few years of a cloud company, yeah, that's going to happen. But I think that Salesforce, they don't need all direct sales and all the marketing they do. I think if they start to decrease that, maybe increase R&D investments, because they also have been acquiring quite a lot of companies, so they need to make sure those work together. They got to tighten up. But yeah, I think they're a great company. Okay, so let's talk about the platform wars. That's our word. I mean, everyone talks about platform wars, but we were at Hadoop World, big data NYC, our event in New York City, which likes Estrada there and Hadoop World. Hadoop data platform from Hortonworks, Cloud Air has a new platform. So everyone's got platforms. So I want to ask you, who do you like in the market, in the cloud space, in the enterprise space, that has invested in modern platforms for IT and cloud? So we were talking about service now. Let's start off and say service now is one we'd like. So talk about service now, and who else do you like, that it really has a good platform with application support and agility. You know, I was going to say service now, so I don't know if I still can, but I- So service now? I think they're set up, since they were built to be a platform from day one, I think they're set up to really be an enterprise platform. So they're going to certify all of their applications. They're only going to let a few partners release on their app store eventually when they get an app store, and then roll it out to the broader audience. That's a totally different approach than a Salesforce and a Google, who let many developers develop on their platforms very quickly, so they get a lot of capabilities. But if you're looking at a real enterprise platform, I think service now. How about Splung? You follow those things? You know, I'm not as familiar with them. Okay. All right, let me get your take on- I've heard great things, though. Let me get your take on, well, yeah, that's another one we'd like, but let me get your take on the developer community. So developers, obviously Amazon, big developers here, we have brought up service now, mainly because they're attracting a new kind of developer, not the IDE guys doing hardcore, like business users, I would say knowledge workers, maybe dangerous enough to write their own Python, but now with scripting languages and now with visualization software, those new citizen developers, or knowledge workers, not certain developers, seems to be a new category. What's your take on that? Are you watching that? Are you seeing that emerge? Yeah, I think the citizen developer is going to be awesome. It's not going to happen for a couple years, I would say, or at least probably a year and a half, because service now is a long, long way to go in developing their ecosystem. I think they're pretty behind in that, so that might really hinder them. But in terms of the developer community, they are so important right now. Everyone is trying to get their business. They're rolling out a lot of API kits and frameworks for the developers. So I think the developers are in a really good place. Now, what will be really interesting is how many of these developers want to support OpenSat, CloudSat, Cloud Foundry, because then they'll have the HP IBM Distribution Channel. Okay, so I got to ask you, we're going to end up on our time here. Great analysis, great work, Julie, I appreciate it. Put the bumper sticker on the car for this show. What does it mean? I'm driving down the street, I look at the car's bumper, and I want to know about what's going on to re-invent 2013, what's the bumper sticker for this event, sum it up in a bumper sticker? That's a tough one. I would say, yeah. Continued innovation, continued investment in innovation and growth, and not slowing down, listening to the customers, really giving people the services they want, and still letting the partners fill in the vertical space. So I guess innovation, if that... Innovation, continuous innovation. Whatever that means. We got some comments on Twitter too. They're self-defying data center in their own mind, in their own infrastructure, as I was saying. So obviously Amazon's doing well. Can great innovation here at Amazon, web services. Julie and Miranda, thanks for coming on theCUBE. You're a tech athlete. Great to have you on, great voice. Love to get the analysts on. Dave and I love to break down and add our opinion as well to the analysis. This is theCUBE. We'll be right back with our next guest. Breaking down all the action here at AWS re-invent. I'm John Furrier with Dave Vellante. This is theCUBE. We'll be right back for day one kickoff.