 This is theCUBE, if it's September and Moscone is red, it's probably Oracle Open World and theCUBE is here. This is our fourth year with theCUBE at Oracle Open World. I'm Dave Vellante with Stu Miniman and Jeff Kelly and we're here. John Furrier is on his way up the Pacific Coast Highway had a drop of sun off at UC Santa Barbara this weekend and he'll be here this afternoon. So we're going to be covering Oracle Open World wall-to-wall for three days. Monday, Tuesday and Wednesday we've got executives, we've got technologists from the ecosystem and we'll be unpacking what's going on at Oracle, Oracle's innovations, their transformation that you're seeing in the last four years, cloud, Oracle 12C engineered systems and how they are competing in the marketplace, how they're adding value, what customers are doing with those capabilities and of course, the new theme, big data which we heard a lot about this morning. Last night in the traditional Sunday night kickoff, Larry Ellison talked to the crowd here, the crowd is claimed to be 60,000 strong. Oracle CEO Larry Ellison talked to the crowd about Oracle 12C, its performance, the cloud, human capital management, Oracle is virtually touching every part of the value chain. Back in 2005, Oracle decided that it was going to change the game. Oracle CEO used to ridicule competitors for writing checks, not code, a reference to the fact that Oracle spent a lot of money on R&D and a lot of its competitors were out buying companies, notably CA and others, IBM as well. In 2005, Oracle changed the game with a blockbuster acquisition of PeopleSoft and it went on an unprecedented acquisition spree to change the nature of the company. Today, Oracle Open World, as they say, is claimed to be 60,000 attendees. Probably half of those attendees are from companies that Oracle acquired. These are companies whose customers were taking chances, taking risks, not taking the safe bet. And now here they are at Oracle. So the question is, can Oracle innovate? Can they continue to push the envelope? Can they attract that customer and maintain that customer that would take a chance? So now they're part of the so-called red stack, which is, of course, a reference to the Oracle integrated systems, engineered systems from microprocessor all the way up through the application. And we're here at theCUBE covering this. Jeff Kelly, we heard this morning it's big day to day and Stu Miniman, we're live inside the QLogic booth. QLogic is a company that makes host bus adapters. They basically are glue between storage and networking. They make stuff run faster. So Stu, let's start with you. We're inside the QLogic booth. Oracle, not known as a hardware company, but in the last couple of years, really been a hardware company. You're a hardware guy. What's your take on what Oracle is doing in this play called Converged Infrastructure? Yeah, Dave, well, I think it goes back to what you talked about. Oracle has been a choir in companies. Of course, the big one from a hardware infrastructure standpoint is still Sun. Sun gave Oracle the compute layer and they've been looking to add to it. A little over a year ago, they bought Zygo, which some called an SDN play but really is more of that Converged Infrastructure play. Oracle even has some networking functionality. Right down the aisle from us is Melanox and Oracle owns 10% of the company there. So Oracle has been adding to its RedStack. There are a couple of sessions here on SDN which was, of course, the buzz at VMworld when we were here a couple of weeks ago and Oracle has its virtualization layer, Oracle VM, trying to compete against VMware. So as we talked about, Oracle really optimizes for their applications that complete up and down the stack. And as David Fleurer, our CTO said, the farther up the stack you go, really the exponentially more value can create. So Oracle arguably has the deepest and fullest stack but they do have lots of competition from likes of IBM, from VCE, EMC, NetApp and the like who are pushing that. So because they can be a more general purpose solution, everybody claims of course to be cheaper. Flash is changing the economics big time, something that we're going to dig into deep here with a lot of the Flash partners of Oracle and also QLogic. QLogic has a nice Flash solution called Fabric Cache which allows server-based Flash to be added to the sand. So interesting technology we'll definitely talk about later during the show. So Oracle has become overnight with the Sun Acquisition, a hardware company. A lot of people, myself included, thought that Oracle would jettison the Sun business. No, Oracle has a completely different strategy. They change the game and really a driving toward what they call engineered systems. That means the entire stack vertically integrated from hardware through software and services and management all bundled together, pre-tested, pre-configured, pre-engineered. Oracle has arguably, actually probably not arguably, the most robust stack. I think only IBM can probably compete in terms of its overall capabilities with how much capabilities is in one vertically integrated company. On the other hand, you have companies like VMware and EMC that are trying to vertically integrate through an ecosystem partnership. EMC, Cisco, VMware, VCE and the like. But this morning, I want to turn the conversation to big data. Back in 2010, when theCUBE was at Hadoop World, we had Mike Olson on who will be on later this week. And Mike Olson said, back in the day, if you had a big data problem, you'd shove all your data into a big Unix box and you buy some Oracle licenses and if you had any money left over, you'd buy some storage and hire some people to analyze that data. Basically, Mike's implication was the world has changed and now you can basically analyze data for much, much less. Well, today we heard from Oracle, things like key value stores and no SQL databases and filtering in the jupe and bringing data into analytics systems. So I want to go to you, Jeff Kelly. What's going on there? Oracle has become a big data company. Indeed, so Oracle is smart. They are seeing the momentum around big data and how much data and analytics is changing the way business has done these days. So they're taking their traditional approach of really integrating systems, as you said, Dave, to make big data and analytics much more simple and accessible for their customers. So when we look at the big data world and this whole movement of big data, it's really focused around open source, scale out commodity hardware, integrating, meeting teams on the ground in your organization to integrate all these pieces together, meeting a team of data scientists to then take all that data, do some analysis, find some insights and then, of course, application developers and others to really productionize those insights into applications that end users, business users, can use to actually drive business decisions. So Oracle is saying, well, look, that's a pretty difficult challenge to actually get all those people on the ground to make that actually happen inside the enterprise. So Oracle is saying, look, let us do the hard work of integrating these systems. They've announced or released a number of products to try to cover the spectrum of big data workloads from their big data appliance, which includes Cloudera's Hadoop software, their Exadata machine for large scale analytics mostly structured data, their Exolitics BI applications and now, of course, they're in memory database which is really focused to compete against SAP HANA and some others, but they're saying, look, let us take all those pieces, integrate it with our hardware, we'll drop it in your organization, make it very easy, there's crunch data, Hanoop, move it over to your Exadata database, surface it with Exolitics, potentially run some workloads in their new in memory database and you don't need that team, really the level of expertise inside your organization to do all that configuration, let us do it for you. We'll take, as Mark Hurd said in his keynote this morning, we'll take all that cost out of the equation for you, we'll put it on our bottom line and we'll do that work for you. So it's an interesting play and of course it fits very well with Oracle's strategy but they've got the proprietary hardware, the proprietary software, it's on the very foundational level, it's different from what we're seeing in the rest of the big data world but they're betting on this integrated system taking away all that complexity will allow people, allow organizations to hit their ROI much faster with big data. So a lot of the big data purists, a lot of the Hadoop startups would poo poo what Oracle's doing because Oracle really doesn't, really didn't talk much about open source today, however I will point out that Mark Hurd in his keynote he had on the CEO of Boeing in a video, he had on a senior executive from Thomson Reuters, he had the CEO of the New York Stock Exchange, all three talked about data, all three talked about how they're getting value from data, all three talked about ROI. So Oracle essentially has co-opted the big data message and the meme, acted like they invented it and are now selling business value to senior executives, application heads, the leaders that are writing the big checks. Well so look obviously Oracle has great relationships with senior executives at their customer base, inside their customer base. As I said they're taking away that complexity and we usually did some research on Wikibon which found that the ROI companies are getting back from their investments in big data is lacking right now. Nearly half of the respondents to our survey said they haven't reached a level of return on investment that they expected at this point in their big data journey so there is a long way to go for a lot of these organizations and what we found is a lot of the challenge that these companies have about making the most of their big data investment is exactly what I was just talking about, the integrating all these different systems together, bringing in data from multiple places, keeping your Hadoop cluster up and running optimally, connecting different data sources and that's exactly what Oracle says, we will take all that out of the equation for you, you don't have to worry about that, you're going to pay us a lot for it but we're betting that the level of innovation that you can now do using your data is going to more than pay for the investment, you're going to have to pay Oracle. So we're here at Oracle OpenWorld 2013, this is theCUBE, we're inside the QLogic booth, we want to thank our friends at QLogic, we have to go under the radar inside of Oracle OpenWorld and QLogic has been so generous with its boot space over the last four years and it's fantastic, we want to thank QLogic, shout out to them, let's break down Oracle, Oracle's a $37 billion company, they got $160 billion roughly market cap and they are a cash flow machine, Oracle threw out $14 billion in free cash flow in the last 12 months, that's almost as much as IBM in the last 12 months. The other thing about Oracle is they are an operating margin machine, they've got 39% operating margins, 45% last quarter. Microsoft operating margins are 39%, VMware and EMCs are 19%, you know, IBMs are probably in the low 20s, 21%. So you're talking Oracle is a substantially more profitable company than most of their peers, so they're throwing off a lot of cash, they're investing that cash in R&D, Oracle spends about $5 billion a year in R&D. The company's growing at about 4%, it's software license revenue grew about 8% last quarter, it's hardware business is down, way down, so they still haven't hit the bottom of the sun acquisition, the hardware business is declining. Now there are some bright spots, one bright spot that Safra Katz talked about on the call was the ZFS appliance, basically in the storage side, it's a sun developed ZFS appliance. Oracle's going after NetApp, NetApp was a big Oracle player, NetApp used to brag that it was number one inside of Oracle, so Oracle essentially has taken that NAS box and going after NetApp, that's the low hanging fruit now, they've made some recent announcements that make it better positioned for analytics workloads, but it's still not positioned well, Oracle's storage is still not positioned well for the core OLTP business that really is dominated by EMC, EMC has 80,000 customers within Oracle, Oracle's own hardware business comprises only about 40,000 customers, so Oracle has a lot of work to do there, but they're making strides, so that's something that we're watching. Oracle shipped 2,000 engineered systems to, in the last six months, how does that compare to, say, a VCE or a NetApp FlexPod or HP? Dave, so Gartner, I'm sorry, if we look at the, from a revenue standpoint, Oracle is right up there with the big guys, so we know VCE, Q4 last year at over 250 million, they're on a billion dollar run rate, NetApp is close behind with their reference architecture is what they're doing, convergence is just growing massively, we're seeing 50 to 100% revenue year over year growth from most of the converged solutions, from the big guys like IBM, HP and EMC, down to some of the startups, even if you look at people like Nimble Storage and Tintry that are starting to partner with Cisco, they're really growing in this space, but Oracle is right with them, it's a little bit tough for me to parse some of the data because of course, since Oracle owns the entire stack, how much of that is hardware, how much of that is software, whereas it's much easier for us to look at HP who's almost all hardware or VCE, which has a very small piece of software in that entire piece of the solution. So you can see we're diving all around the stack here because Oracle has a very wide stack, I mean it starts with, you know, essentially the server-based Spark systems that it has, of course Intel was up today giving a keynote, really the ironic thing about Oracle OpenWorld is you've got partners paying through the nose to give keynotes, you've got Intel up there, you've got Fujitsu up there, EMC Joe Tucci's going to be here, these partners pay to get in front of Oracle 60,000 customers and really pedal their wares and it's really an interesting dynamic. So that just talks to the power that Oracle has in the marketplace, it's got nearly 500,000 customers. I want to talk a little bit about the cloud. Oracle's cloud is comprised of many, many clouds, you've got the Oracle public cloud, you've also got other acquisitions that Oracle has made, like right now, Eloqua, Teleo, these are components of Oracle's cloud strategy whereby it competes with the likes of Salesforce and Workday and others, SAP in particular, and so Oracle has built a collection of clouds, Oracle will claim that it sells more cloud business, it has more cloud revenue than Workday, of course Workday is the new hot company on the marketplace, they are smoking hot, and Workday would of course point out that the Oracle cloud is a collection of all these clouds, so really it's the Workday, all the wood behind one arrow in HR and now finance versus Oracle's bits and pieces that they brought together, so as I said earlier, and we're going to talk to Ray Wang about this, he wrote a piece about this the other day, can Oracle appeal, can it show, demonstrate that it's got innovation, that it can appeal to the customers of those companies that it has acquired, those leading-edge companies, and we're seeing that, of course, Jeff Kelly in big data, let's come back to that, let's come back to what's happened in the big data space, four years ago when we were at Hadoop World, it was like what is Hadoop, what can I do with it, what is it all about, and then it sort of emerged into how do I make it enterprise ready, is Oracle's strategy succeeding in terms of making Hadoop and big data enterprise ready? Well I think they have an opportunity here, I mean I think they're doing what they did with cloud, they waited for some of the early market disruptions to happen, they're seeing how big data is starting to play out, and now they're kind of co-opting the message, and really starting to deliver products that are targeting those workloads in big data that are going to actually drive value, so I think they have an opportunity, certainly, to add some value to their customers around big data. Let's talk a little bit about what Thomas Curian said today, he said we have really three components to our big data strategies to ingest, to store, and analyze, and he talked about their key value store capability, Oracle has announced its own NoSQL database. That's right, it's got its own NoSQL database. So it saw the NoSQL trend, and it said, well, we're not going to get crushed by NoSQL, we're going to develop our own, or we can make NoSQL work with the Oracle stack. Isn't that been their strategy? As well they talked about our integration today, and then they talked about, of course, bringing the data into Exadata, Exolytics, and their engineered systems, which is, again, why Oracle has 45% operating margins last quarter. But the allure of those integrated systems to the CEOs that we heard about is significant. Absolutely, the one of the key reasons that organizations are not realizing the full value of their investment in big data, is that they don't have the staff, the experienced, skilled staff, to integrate these systems themselves, and keep them running optimally. And simply, that is a big stumbling block, and you're seeing Oracle's not the only one going for these kind of converged systems. HP's got their own app system line, which includes basically an appliance for their Vertica database, an appliance for Cladera, Hadoop distribution, even an appliance for SAP's HANA database. IBM's got their pure data line, which includes both essentially what is an appliance of what was, or what used to be called Nathisa. Their big and appliance function format, I should say, around their big insights Hadoop distribution. So they have some competition in this space, and there's clearly, I think, clearly senior executives at these, at customer organizations are realizing, look, if we want to start getting value out of this today, we don't have the wherewithal to hire and train up the level of staff that we're going to need. So they're looking at these pre-engineered systems that they can simply drop into their data centers and start realizing value much quicker. So when you talk about, you hear about the Oracle Key Value Store, you hear about Hadoop, you hear about R integration, and then you hear about engineered systems. You hear about hybrid columnar, smart scan, flash cache, in-memory databases. Oracle really trying to wrap a blanket around that with the engineered systems, the hardware and software engineered together. And their argument is really there's three benefits there. You're essentially shifting the customer testing into Oracle's R&D. The second is you're driving performance. And the third is you're improving the customer experience. There really isn't another company in big data with the exception of IBM that can actually make that claim. And as well, I would argue the likes of VMC and VMware and of course HP as well, playing the ecosystem card. Absolutely. And then if you think about Oracle's other advantage, of course, is there, you know, huge just traditional database installed. Where again, integrating all these existing systems, your existing databases with Oracle, sorry, with big data, with Hadoop, with no SQL databases, can be a challenge. And if you've got an install base with a significant deployment of Oracle, databases, Oracle, enterprise applications, and now Oracle says, well, we can drop in big data capabilities and integrate it cleanly with those systems. Again, that's going to be highly attractive to a lot of CIOs and senior executives. All right, so now let's talk about how companies compete with that strategy, with that red stack strategy. Oracle goes all the way up through the database into the applications with what it calls engineered systems. Other competitors, again, with the exception of IBM, but not even, I mean, I want to get Stu Miniman's feedback on that, but other competitors, generally speaking, stop at the infrastructure. They're basically putting forth a cloud-like infrastructure that can support applications across the portfolio. So Stu, talk about how companies can compete with the Oracle Red Stack approach, that engineered system approach, and what should be the customer's decision points around that? Yeah, Dave, great point, because I wrote two years ago that the further up the stack you go, it's that balance of how do I have a general purpose solution, because that is more economically viable, but I really wanted to work with my specific application. And the challenge that we have is that IT operations are spending way too much time optimizing environments. It really goes against the trend of the hyperscale deployment. If you look at what Facebook does, they can deploy 10,000 servers that are managed by a single person, so they don't overfit the infrastructure to the application, but there is value to make sure that I get the response time and have the infrastructure really work with the application. Flash is really changing the game on this, and some of the other competitors are working at deploying solutions that fit for applications. For example, VCE, who's the market leader in this space, just released a specialized system for high performance databases. So their first environment, of course, is Oracle. We're going to have on VCE later this week to talk about that, and they've really gone to a lot of Flash embedded in the solution because as I put Flash into the environment, it really changes that performance dynamic. So before I really had to over tweak and make sure that everything works, if I really can put in a high performance Flash layer or solution set, I can really remove performance from the overall deployment, and therefore I've got a lot more flexibility, and I can deploy those specialized environments. So Flash is a major theme at this show. Why? Because Oracle databases need to run fast. Flash is a way to improve the performance of the database. We have a guest up next that's never been on theCUBE before, to my knowledge anyway, Sandisk. Sandisk is a major worldwide player in Flash, providing and powering a lot of the Flash systems that you hear about, a lot of brands that you hear about that you may not associate with the Sandisk. So they're the technology provider underneath a lot of these brands. So they're going to be on, we're going to talk about that. So keep it right there, everybody. I'll be back with Stu Miniman and Jeff Kelly throughout the day. John Furrier will be here later. If it's September and Moscone is red, it's Oracle Open World and theCUBE is here. We'll be right back after this word.