 From the globe, it's theCUBE with digital coverage of AWS re-invent 2020, sponsored by Intel, AWS, and our community partners. Everyone, welcome back to theCUBE's virtual coverage of AWS re-invent 2020. Virtual, I'm John Furrier, your host. Got a great segment here with two analysts, Dave Vellante and Zia Cervella, who's the head principal of ZKresearch.com. Guys, great to see you. AWS keynote. Thanks for coming here. Nice to be back on theCUBE. Welcome back. Great to see you. Guys, I want to give you thoughts. Zia, it's mainly you because we talk with the enterprise a lot. You are a leading analyst. You cover a broad range from networking all the way up to the C-suite for enterprise buyers and technology trends. Andy Jassy laid down, in my opinion, what was directionally his next 20-mile steer, the next conquest for Amazon. And that is global IT spend. They locked in infrastructure as a service, pass, kick an ass there, check, check. Hello, enterprise, different ball game. What's your thoughts? Yeah, they've been doing a bunch of different areas. Obviously, they have dominated cloud instances, right? They have more compute, storage, memory instances than anybody, but you can see them spreading their wings now. I think one of the more interesting announcements was actually what they're doing with Amazon Connect. And that's their context in our platform. And this is something that I think even last year, a lot of people weren't even sure if they'd be in that long for marrying the pocket. People about this market, they were asking, it's like, do you really think Amazon's in this state or is this just something they're experimenting with? But they're here to stay. And I think one of the interesting things that they bring to market is almost unprecedented scale with their cloud platform as well as all their machine learning algorithms. I think if you believe that machine learning and artificial intelligence is changing IT forever, and that's everything from the infrastructure, to the network, to the applications, then they have an inherent advantage because they have all those machine learning algorithms built into the stuff that they do. And so they can constantly look at these different markets and disrupt and disrupt and disrupt and take more and more share. And that's what they've done. I think that's, you know, the context in our announcements were a great example that they're not doing the telephony things and, you know, they're kind of bare table stakes. They do that pretty well, but they've just unloaded a whole bunch of AI-based data. Dave, what's your take on this contact center because it's not just call centers. I mean, there was a whole industry around call centers, unified communications, that whole world. This is about the contact. It's about the person. This is not just a nuance thing like telephony or, you know, PBXs in the old days, remember those days? This is not about the call. It's about the contact. This is what Jazzy's saying. I think that as we had Dianne or on earlier, and I said, I like the fact that there, AWS specifically is going after these solutions because several years ago was just sort of here's a bunch of tools, go figure it out. I think the contact center is, I mean, everybody can relate to the pains of going through, getting rerouted, having to restate all your credentials, not knowing who you are. And so between machine learning, Alexa, natural language processing, better workflows. I mean, there's this huge opportunity to reinvent the whole call center, contact center. So I think you called it, John. It's a no-brainer for AWS to really disrupt that business. Well, it also puts them in a position, you know, news is breaking on the day of the end of Jazzy's keynote here at Reinvent that you got Salesforce buying Slack for 27, close to $28 billion. That's a 55% premium over when they announced it. And that's like a 30X or 50X on revenue, massive number, that's a message board software. I mean, so if Amazon can come in and get the contact center model, which is not just voice, it's chat, it's machine learning, it's bots and the innovation to create a step function kind of brings it back into the, that integration of user network compute. I just think that it feels very edgy in the sense of edge computing. Cause if I'm a person, I'm mobile. If I'm a person, I'm at work or at home. So there's a whole redefinition. Z, what's your take on this edge play from Amazon in context to the enterprise software landscape that seems to be, you know, focused on buying companies like Salesforce? Well, I think edge is really the next big for you for computing. If one of the things Andy Jackson talked about in this keynote was that the compute, the unit of compute has gotten smaller and smaller, right? We went from data centers to servers to virtual machines to virtual machines and clouds. Now we're talking about containers and containers on edges. And this requires, if you believe in the world of distributed computing, where we're going to have more containers running in more places on more edges, right? The value proposition with companies is now they can move their data closer to the customer. They can move data closer to their user. And so if I'm a retailer and I'm trying to understand what a customer is doing, I can do that in the store. If I'm Tesla and I'm trying to understand what a driver's doing, I can do that in car, right? If I'm a cellular provider, I can do it by cellular edge. So the edge I think is where a lot of the innovation is going to be at. Amazon has the luxury of this massive global network. They just announced a number of other local nodes including Boston and a few other places. So they've got the footprint in place. And this is what makes Amazon so difficult to compete with. They built this massive network and all these nodes out for their e-commerce business. And now they're leveraging that to deliver IT services. You can't just go build this from the ground up for IT, right? You have to be able to monetize it another way. And they've been doing that with e-commerce for a long time. And so it makes them, it makes it very, very difficult for them to capture. Google could with cloud, they haven't figured out the IT model yet. So could Microsoft possibly, but I think that the more distributed compute becomes the more it favors Amazon. Yeah. I would add to that if I could, John. I mean, look at the prevailing way in which many of the infrastructure, the old guard, as Andy and Jesse calls them, companies have pursued the edge. They've essentially taken X86 boxes and maybe made them rugged and thrown them over the fence to the edge. And that really is not going to play. The edge is not, there's not one edge. I mean, there's very highly specific use cases and factories and windmills and maybe it's small retail organizations or whatever it is. And those are going to be really unique situations. And I think the idea of putting a programmable infrastructure at the edge is going to win. I also think that the edge architecture is going to be different. It's going to require much more efficient processing to do AI inferencing. A lot of the data is going to stay at the edge. A lot of it's not going to be persisted. Some of it's going to come back to the cloud, but I think most of it is actually going to either not be persisted or stay at the edge and be affected in real time when you think of autonomous vehicles. So totally different programming model. Well, I think that's the point of what I was saying earlier. What Zeus was talking about is that the edge is just different. I mean, you got purpose-built stuff. I mean, they would talk, by the way, they have Snowball, so they have a hard edge device and they got outpost now in multiple flavors and sizes. But they also, we're talking about computer vision and machine learning. We're going to gather for that, the panoramic appliance, I think it was, where there's all these different cases to your point, Dave, where it's just different at the edge. You had the zones for 5G. I mean, if you go to a 5G tower, that's essentially an edge. There's equipment up there. There's radios. There's transceivers and other backhaul equipment. So when you look at the totality of what it is, the diversity, I think that's why this whole idea of Lambda and containers is interesting to, as Zeus, when you were saying about the compute size is being small, because if you can put compute at the edge on small pieces to match the form factor, that becomes interesting. And I think that's why this Lambda container announcement I found interesting because I see that playing directly into that. Your reaction to that. Yeah, and it actually makes, if not done correctly, it could make IT much more complex because containers are interesting because they're not like virtual machines where it's living in perpetuity. Containers, they're very ephemeral, right? You spin them up for 30 seconds. You spin them up for a couple of minutes then you deprecate them. So at any given point in time, you could have thousands of containers, a handful of containers, millions of containers, right? But it necessitates a common management underlay that can be used to visualize where these containers are, what's running on them. And that's what AWS provides, all the stuff to do with Lambda and EKS and things like that, that lends itself to that. So a customer can then go and almost create a container architecture that spans all their clouds, edges, even on-prem now, when Amazon has, but still be able to manage it and simplify it. I think companies that try and do it themselves are going to find that the complexity almost becomes untenable unless you have an IT organization the size of Amazon. I think most companies don't. So we're going to hear from Deepak Singh in a few sessions. He did the EKS anywhere. That's essentially Kubernetes service on the data center. But if look at what they did with EKS anywhere and then ECS, which has a common control plane to your point, that's compelling. And so, if you're a developer or you're an enterprise, you might not have, if you want to go into this IT world, we talked about this earlier, Zios, before you came on in our last segment, most IT is not that built out in terms of capabilities. So learning new stuff is hard. So operating Amazon might be foreign to most IT shops. This is a challenge. Do you agree with that or how do you see that? Well, a lot of Amazon we use obviously just to interview us in numbers and reflect that, right? But I think the concept of being in a world where you have that common operating layer that stands, it's no longer geographically limited to a data center or to a server. It's now distributed across your entire multi cloud or distributed cloud environment. And so one of the important things for IT people to remember is the world's becoming more dynamic and more distributed. And your IT strategy has to follow that. If you're doing things that are challenging to that, you're not only standing still, you're actually going backwards. And so what Amazon is doing is they're allowing companies to be as dynamic and distributed as they need to be but be able to maintain that common operating layer that actually makes it manageable, goes without it. You just, you'd wind up in a situation like I said, that's untenable. There's a lot of comfortable facing that today. And that's why there's this big divergence, right? Is cloud-native companies are going to move fast and legacy companies that can? Guys, I want to spend the next 10 minutes we have getting into more of the business side from this keynote because, excuse, I know your research on digital transformation. First of all, I know you know the networking side up and down the stack and all that good stuff. But you've been doing a lot of research around the digital transformation with the cloud. Dave, you just put out a great, great breaking analysis, I think your 55th episode on digital transformation with the cloud. It's very clear that Jassy is basically preaching, saying, hey, Clay Christensen is former professor who passed away. He brought up this whole innovative dilemma kind of theme and saying, hey, if you don't get the reality that you're in, you better wake up and smell the coffee. It's a wake up call. That's what he's basically saying. That's my takeaway. This is real. This business management lesson leadership thinking is super important. And I know we've talked about people process technology, let's COVIDize this real quick. Bottom line, what is the playbook? Do you agree with Jassy's point of view here? He's pretty hard core. He's literally saying adapt or die in his own way. What's your guys' thoughts on this? This is a true forcing function, this COVID reality. I mean, if you talk about the business transformation, digital transformation, business transformation, what does that mean? I said earlier that the last 10 years is about IT transformation. I think the next 10 is going to be about business transformation, organizational industry transformation. And I think what that means is the entire operational stack is going to get digitized. So your sales, your marketing, your customer support, your logistics, you're going to have one interface to the customer, as opposed to fragmented stovepipe, siloed data sets all over the place. And that is a major change. And I think that's ultimately what AWS is trying to affect with its model and has obviously big challenges in doing so. But that to me is what digital transformation is ultimately all about. And I think you're going to see it unfold very rapidly over the next several years. Zia, what's your reaction? And what's your view on the, on Jassy's point of view? I think Andy talked about this. He gave us eight steps to re-invention. And I think what digital transformation to me is the willingness to reinvent the thing, disrupt your own business, even in the face that it might look horrible for your business, right? But understanding, he said something that I think is true at a lot of business leaders don't fully buy this, that if something is good for your customer, they're going to do it. And you can either make it happen or you can watch it happen and then have that market taking away from you. Because in a lot of cases, you look at how slow, a lot of the banks operated until a lot of these cloud native money exchanges came around like PayPal and Venmo and things like that, right? Even retailers, Amazon completely disrupted that model. You can say that Amazon killed a Toys R Us, but Toys R Us killed Toys R Us, right? And I think there's got to be this hard willingness to look at your business model and be willing to disrupt yourself. And what COVID did, John, I think it's a promise of lesson that you have to be prepared for anything, right? Because nobody saw this coming, and sure you can, and a lot of companies thrive out of this and a lot of them have gone away, but that the ability to be agile has never been more important. You're only as agile as IT lets you be. And that's what AWS is going to sell us. The ability to do anything you want with your business, but up to stack, you have to have the business because they're willing to do that. You know, that's a great point. That's so smart. That's worth calling out. And we were talking before we came on live about our business with theCUBE. There's no virtual, there's no floor anymore, so we had to go virtual. If we weren't in the cloud, if we weren't doing R&D and tinkering with some software and having our studio, we'd be out of business, Dave. And everyone knows it. We have theCUBE virtual, we have some software, we're positioned. And this kind of speaks directly to what Andy Jassy said. He said, quote, if you're not in the process of figuring out as a company how you're going to reinvent your customer experience and your product and reinvent who you are, you are starting to unwind, you may not realize it, but you are. What he's saying is you better wake up and smell the coffee. And I want to get your guys' reactions, particularly you around your experience and research. I've noticed that some customers that had cloud going on did well with COVID, and said ones that didn't are still struggling now to catch up. So you get some companies that were on the wave, maybe kind of figuring it out, that were in good position, and some that were flat-footed and are desperate. Seems to be a trend. Do you agree with that? And what's your view on this idea of being ready? What does that even mean to have a readiness? Or- Oh yeah. Go ahead. Well, you don't get the data points that Andy threw up there, right? That 50% of the companies that were the global, the Fortune 500, $2,000 are no longer here, right? That's pretty shocking statistic. And that does come, you know, from the willingness to disrupt your business. And if you're right, that companies that had a good solid cloud strategy in place were able to adapt their business very quickly. You look at retailers. Some had a very strong online presence. They had online customer service setup. Those companies did fine. Other ones were really forced to try and figure out how to let people in the store out of mimic, you know, the in-store experience, you know, through some port interfacial, whatever. Those are the ones that really struggled. So you're right. I think companies that were on the offensive cloud with Dover, companies that were fully in the cloud really accelerated their business. And the ones that didn't buy into it, I think are struggling to survive and a lot of them are gone. Yeah, and I'll add, John, when Zias was talking about, you know, his view of digital transformation, I was just writing down some of the examples to your point, the folks that were sort of had, were cloud ready, COVID ready, if you will, and those that weren't, but think about automobiles. You know, there's Tesla, even a manufacturer of automobiles or they're a software company. Personal health has completely changed over the last nine months with remote, you know, and telehealth. Automated manufacturing, think about digital cash. E-commerce and retail is completely, you know, accelerated obviously to online. Think about kids in college and kids in high school and remote learning, farming. You know, we've done a great job in terms of monocrops and actually creating a lot of food, but now I think the next 10 years is going to be, how do we get more nutritious food to people? And so virtually every industry is ripe for disruption and the cloud is the underpinning of that disruption. All right, guys, we've got a few more minutes left. I want to get your thoughts quickly on the keynote, what it means for the customers that we're watching. Again, this is not a sales and marketing conference as they talk about, but if you're sitting in the audience, you guys were watching and we were virtual. Did it hit home with you if you're a customer? What did he, give us, give the grades? Where do you, where do you hit a home run? Where do you miss? Did he leave anything out? What's your take? Zias, we'll start with you. I thought it was actually a really good keynote. I thought you did a good job of making the KSRA AWS as he talked about in the opening. They have more instances than anybody. So you can do almost any kind of compute in their cloud. I think one of the important lessons for IT too is the importance. You can't just do everything with software, right? Hardware is still important, silicon is still important. And to meet the needs of very specialty needs for things like machine learning and AI, Amazon's actually spending their own silicon, very much like Apple is doing with their computers. And so if you are going to be a customer service focused company, you need to think of the IT stack, mean everything from the silicon, through the hardware, through the software and build that integrated experience. So Amazon's giving you the tools to do that now. I do, I would like to see Amazon be a little more as opposed to cloud competitive friends. The one thing I hear from customers all the time is they love the Amazon tools, they love the optimization capabilities. But, you know, if they are adopting some kind of multi-cloud strategy, the Amazon tools don't work in Azure and the Azure tools don't work in Amazon to be doing. Same with Google. And it would be well within the best interests of those three companies to find a way to get together and allow their common framework to work across clouds. Amazon's already got such a big lead that they could do that. And I don't think it's give or be, but that is something I think that's still missing from this world is, they make it very difficult for customers to move to multi-cloud. Well, some would say, some people are saying that they're number one in the cloud. I mean, we've got cloud wars, Bob Evans over there saying Microsoft is dominating number one position over everyone else, multiple quarters in a row. Now he's looking at revenue and granted you got a lot of propping up there. You got, you know, Windows server and SQL. You got a bunch of professional services, but clearly the IaaS and past side of the market, Microsoft is like way behind. So, yeah, they got the numbers, little legacy in there. Microsoft should, and they got a little base. If I'm Amazon, I'm not, I'm worried about Microsoft more than anybody. I think, you know, I looking at the civil war between the Seattle forces. I mean, this is real. And Microsoft's got a great install base and they can flip that license deals. And the cloud is good enough. I mean, it's Microsoft's doing very, very well with its classic Microsoft. You know, it's not perfect. Take your point, Microsoft is the king of good enough. Right? They put out features, and they market heavily to the IT Pro, and they put out licensing packages. So you're almost foolish to not at least fry their products. And then they do roll it out. So it's good enough. And then you live with it for a while. But ultimately, whatever people use Microsoft, they do have an alternative vendor in there for very specialty use cases. But they're, I don't want to... The king of good enough. That's a great line. I love that. I'm going to use that. But this Babelfish thing for Aurora, that is a huge dagger potentially. It's an escape valve for customers they want to leave Microsoft. But clearly, if I'm Microsoft, are you going to get penalized by running your license on Amazon? I mean, if I were a CIO or an IT, you know, CTI, I'd say, okay, I definitely want to do business with Amazon. That's what I heard today from Jassy. And I would want to hedge my bets either with Microsoft, especially if I'm a Microsoft shop or with Google, from analytics heavy. Unquestionably, I'd want to hedge my bets and have some kind of 70, 30, 80, 20 mix. Look, and if you're Andy Jassy, and he's told me in my interviews or directly, I asked him this question. He was very forthright. He doesn't hide from the fact that customers have multiple clouds, but they have a primary and a secondary, but they're not going to have like five or six major clouds. Yeah, it's hard to get these teams trained at the beginning with. So there's a hedge, there's a supplier leverage. I get that. He totally gets that. But if you're Amazon, you're going to have your annual conference. You really don't want to be in the business of talking about the other guy's cloud, right? You say hybrid, right? It's like, it's not my show, you know, like, you're competing. There's definitely competition between Microsoft and AWS. So yeah, you got to respect that. But yeah, of course there's multiple clouds called hybrid, EKS everywhere, container service. I mean- Especially when you go global, right? Different cloud providers have different strengths in different regions. You know, Microsoft is very strong in the Gulf. AWS isn't, you know, so if you're a global company, you know, then you almost, by default, have to go multi-cloud, multiple cloud vendors because of geographic differences. Obviously China has its own set of cloud providers. So, you know, smaller mid-sized businesses can get away with one, but as soon as you become global, you have to use multiple. Well, I'm a big fan of distributed computing. I love the large scale concept of distributed computing. You got regions, now you got local zones. You got IoT Edge. You got cloud going on-prem edge. It's really an edge game at this point. Great announcement. Hyper distributed. Hyper, put hyper next to anything. Hyper cloud, sounds better. Hyper cube. And the opportunity for the cloud providers in Amazon, you know, certainly is leading this, is the ability to take this complex hyper distributed world and use their management tools to create a normalized operating system to simplify what would be an overly complex world about it. Okay, we got a break. Just quick plug. There's a big Salesforce event coming up on December 10th. Check it out on the Amazon site. Get that plug in. You watching theCUBE? Stay tuned for more coverage on this break.