 Live from San Francisco. It's theCUBE, covering Oracle Open World 2016. Brought to you by Oracle. Now, here's your host, John Furrier and Peter Burris. Hey, welcome back everyone. We're live here in San Francisco at Oracle Open World. This is SiliconANGLE Media's flagship program theCUBE. When we go out to the events and extract the signal from the noise, I'm John Furrier, co-CEO of SiliconANGLE Media with Peter Burris, general manager of Wikibon Research and head of research with SiliconANGLE Media. Our next guest is Cube alumni, Chuck Hollis, Senior Vice President of Infrastructure at Cloud and Storage. Welcome back to theCUBE. Good to see you. It's always a pleasure. I always have a good time when I'm here. So the best part of having you on as you've seen the movie before, you've lived it on other teams. You're now in Oracle, what now? Two and a half years. One year at Oracle. One year at Oracle. One year at Oracle. One year at Oracle. I'm not dead yet. So, I don't think you have. What does that mean? Let's explore that. When will you be dead? Look, you're looking good right now. You actually look like you're working out. No, like you, like you, you know. So is it the country club here at Oracle? I mean, it's pretty chair spinning at five o'clock. I'm up early and too bed late and weekends included, right? Well, certainly Dave Donatelli's here and the team of people really ramping up essentially engineer systems, aka hardware engineered in with the software. So, both in the cloud and on premises, right? In the cloud and on premises. Clear end-to-end Oracle solution, which is will one be optimized to run on Oracle? That's one of the things, yep. So, to give us the update, what's the new announcements today? So, Larry from on stage was very proud to talk about our new Gen 2 infrastructures of service. And our belief is there's a gap in the market. We have people doing public cloud, right? Which basically is start over, Azure, AWS. No chance of an on-prem solution. We have the private cloud guys, basically a VMware shop. Infrastructure only, no pass, no nothing. And certainly not a lot of choices if you want to go to public cloud. We think that Oracle's doing a good job of creating that third option. Here is a combined integrated strategy on premises and in the cloud. Same technology, same set of capabilities aimed at enterprise applications that basically works the way enterprise IT needs it to work. So, this next Gen 2 infrastructures of service is kind of the first peak of this massive investment we've been making, making an entirely new infrastructure cloud that meets the needs of enterprise IT. So, is this a reboot or is this an extension of where you guys were? Some were analysts were saying, not us, but I'm sorry. I would never say that. I'm sorry. Well, they said, I was using their words. Holger at Constellation said, you know, it's a reboot of their other infrastructure service, so they're implying, he didn't want to say a fail, implied a transition. I wouldn't say a fail. It's more like a leapfrog. Explain. Got into this business softwares of service. Rather than standalone SaaS packages, they worked on integrating everything tightly together to unify your company. That was followed by platform as a service aimed at nine million Java developers around the planet and everything they do. Infrastructures of service was just made separately about a year ago. We got into the market, we learned a lot of things, but we also realized that we could actually start over again. If you look at the engineering team, about 400 people who are building this next gen IS, they're all ex-Amazon, all ex-Jure. This is not their first infrastructure cloud. And because they were handed a blank piece of paper and said, you can start over again, it actually is pretty exciting what they've done architecturally. So there's got to be something Oracle's doing that's distinct. So just for any number of differences, Oracle has a lot of existing customers that are running heavy duty enterprise applications. Yeah, the tough stuff. So talk to us about how the tough stuff is going to end up in the cloud. I think you bring up a good point. One way of looking at it now is like the easy stuff is gone. Desktop has gone to Office 365 and those kids from college are playing with AWS. And maybe I've got some generic workload consolidation sitting in the back room with a private cloud. What about those hairy applications, demanding databases, in-memory analytics, the big, new workloads, where they're going to go? Well, what you see with our infrastructure to service is that we're actually providing two capabilities. You can run all of those in our cloud using those exact same technologies that were running on premises. You're probably familiar with products like Exadata. Well, you can buy an Exadata, you can use the Exadata in the Oracle Public Cloud, or you can consume it as a cloud machine, something we call cloud a customer, on premises. And I think that's an important differentiation. A lot of this market is focused on consolidating generic workloads. That's only moderately interesting to us. To your point, what we're really interested are the big hairy ones. As I joke, these are the ones that have vice presidents attached to them, right? Right. Yeah, the ones that people really care about. And typically, eight figures. Depends on the size of the company. Like Mark was interviewing a lot of people, a lot of customers this morning, and some of them were not large shops. But even those partners, those partners that are serving those customers often have eight figures associated with their investment in Oracle as well. So it cascades out through the entire industry. It does, it does. But it's also, I want to ask you this, Chuck, it's also not only the applications that have to be brought forward, but we were talking about ageism, and it's always better if it's new. But there's a lot of skills in the industry, and it's not a question of we want to bring them along. That's still where a lot of the value's being created. So talk about how this third way is going to make not only existing customers and existing apps, but it's also existing skill sets more rapidly develop insight and experience and expertise with these new technologies. Yeah, I think that's very good and important because any IT organization is only as good as their skill set portfolio. And I think anybody who's worked with IT kind of understands that. But by the same token, look at the portfolio. You walk into an average IT shop. Here's the stuff that was built decades ago. Here's the stuff that's kind of modern client server three tier. Here's the new stuff that we're using containers and microservices. If you're going to be an enterprise cloud provider to that IT shop, you got to support the old stuff. You got to support the kind of current stuff. You definitely have to give them a pathway to the new stuff and give them the ability to evolve that portfolio and people skills forward at the same time. This is one of my big arguments with most public cloud providers is, public cloud is easy, just blow everything up and start over in our cloud. Well, as attractive as that might sound, that may not just be a financial reality for the majority of IT organizations. And operationally too, they can't run their business. So let's talk about some of the container stuff. Revello was a new container cloud service. Is that two things? So we have Revello, we have a new container cloud service. So a little quick bit on Revello. So we all know how hypervisors virtualize hardware. Revello virtualizes hypervisors. What it does is it comes in to a vSphere or KVM environment, lifts it up, strips out the hypervisor encapsulates the network, the storage and the compute and then you can actually choose your cloud. Do you want to run on AWS? Do you want to run on Google? Or do you want to run on the world of cloud? And it'll show you the prices for each and you can shop there. So the reason we think that's interesting is nobody really wants to get locked into anybody's cloud. And if we can give people workload portability for VMs, that's great. Well, that's for stuff that we wrapped with virtualization. What about the new containerization? Well, a trick with containers is container management. And today if you want to do container management, you've got to grab some open source stuff and basically build your own. Oracle has done is created an end-to-end container management service that says, all right, if you really would like to build your own, have at it. But in the meantime, here's something that kind of works. We can do that on-premises on our cloud machines. We can do this in the public Oracle cloud. We have this vast burning desire to do this in other people's clouds, just as soon as we get our own stuff sorted out. But it's the same thing. If I'm developing an application, Oracle has to go compete for that infrastructure business. It can't just say, well, you're an Oracle customer, you have to run on our stuff. And it would be the rare IT leader that would accept lock-in at the cloud level. There's no reason to do it today. There's absolutely no reason to do it today. They may choose to go with us, but. But even if they choose to go with you, they want to do so in a way that doesn't force the lock-in. We all flew here. Did you pay attention to the flight attendant, which she showed where the X of rows are and everything? You may not plan on using that, but it's nice to know where they are. It's nice to know where they are. Yeah, it's nice to know where they're there. And it's nice for you to know where they are too. Yes, yes. Because look, you guys have learned that to stay at the vanguard of the industry, you have to be always aware of who's about to eat lunch. And I think the Oracle database did a good job back in the day and still to this day of being portable. You can invest in the database and it can go wherever you want. And we're trying to do the same thing for that application ecosystem. We're trying to do it for all three categories. The old legacy stuff, the somewhat contemporary stuff and the emerging containers, micro-services-based stuff. So talk about your partners, because I know there's something that we've been talking about in the CUBE for a amount this morning. Partners, we got lots of them. Infrastructure partners in particular? Well, Sanctuary has announced it. There's a disco party going on behind us here. There sure is and I'm sure it's Rick. Unfortunately, the CUBE signs in the way, otherwise I could participate in it. I can see. But come back to this notion of a lot of the value that has always been created in the Oracle ecosystem has been created in partners. I have a theory, we have a theory at Wikibon that ultimately there will be more examples of cloud suppliers being created by your customers and your partners. We're already seeing it today. By individual like AWS and Oracle and Microsoft. So Oracle's always had a very rich partner ecosystem, applications, development to infrastructure. And the exciting thing that I'm seeing with our partners is like they're seeing opportunity. So let's say that you have this cool vertical application. Five years ago, you were selling on-prem hardware with all that entailed. Now you can run that in the Oracle Cloud and simply sell a subscription service to your customers. You've evolved your business model forward. Folks that we partner with do application development. They have a platform now for application integration where they have vastly more capabilities as opposed to the old school, got to go build it, got to go assemble it, et cetera, et cetera. The people who are feeling a little threatened by all this, not surprisingly, are the box shifters, right? The guys just move hardware from A to B. And we're working with them. It's like, there's still opportunity there. You just have to look up the stack of it. Your skills are still valid. They're just not assembling hardware together. And you guys have said to your announce that the business crew is taking the infrastructure to service products out. That press release went out today. Covered that. I didn't know if that went out yet, but thanks for confirming. Thank you. Oh, maybe that was embargoed. Oops. We'll censure it now. Roll back, roll back, roll back. But no, it's about in the model, life to be. Accenture, all of these guys, they want to provide more value to their clients. And 10 years ago, that was stitching together hardware. Now it's about teaching them how to intelligently consume cloud. And I think what these partners like about the Oracle offering, it's designed to work the way enterprise IT works. It's not this, hey, here's our model, take it or leave it, it's vertically offering. One more thought on this, that there's a difference between the traditional, as you said, three tier infrastructure. Client server, database, center. Middleware, all that. And some of the new analytics stuff that's on the horizon. Talk about how you guys are specifically focusing on some of the new analytics applications that are on the horizon coming into the cloud. And how you intend to make the two worlds work better together. So I think that's great. Old school analytics, we used to call data warehousing and business intelligence. That hasn't gone away. Look back five years, it was all about big data and mining value. Now we're moving to a phase of real time decisioning. Welcome to in memory analytics, things as fast as they can be. And once you figure out how to monetize data, it's addictive. You just want to do it faster and faster and faster and faster. Also we're talking about relatively exotic infrastructure, right? Multi-terabyte memory spaces, shared NUMA architectures. Pretty hard to go down to Best Buy and find the heart for that and go build that. So as people start pushing the envelope, they're looking more for either on-prem engineered solutions or more often, what can you do for me in the cloud? Interestingly enough, we've talked about this gen two infrastructure service. One of the things that's very good at is having enormous memory spaces and very fast compute and this kind of bare metal compute that we're seeing in real time analytics. I think the other vector on this is internet of things. Forgive me for playing Buzznet Bingo. Buzzword Bingo. The easy part is gathering the data. The real time decisioning and actioning on it, that's heavy. And delivery with control. Yeah, delivering with control. You've got 10 million gas meters. Okay, how do I reason over that in real time, right? That kind of thing. So I got to ask you, we've been hearing about the spark-based Exadata. What's all about, what's that all about? Is that a new product? What's all about? It's got a member in the family. So you guys probably know the headlines on the spark ship. It has a couple of unique talents. It's got 32 encryption processors so it can encrypt in real time, no delay. It has this ability to take queries and run them in silicon. It also has the ability to compress and decompress memory for in-memory analytics. So the Exadata is basically a purpose-built engineered system for database. So by taking our processor technology and putting it in this purpose-built machine, it gets a whole bunch of new talents for no more money. Because again, that's part of our differentiation. The things I've learned since I've been a year at Oracle is it's nice to have your own chips. Sometimes they come in very, very handy as you build differentiated solutions. So I think Exadata customers will have a new option. And I'm sure in the fullness of time it'll be available in our public cloud. It'll be available as a cloud. That speaks up a good point though. Intel was on stage yesterday. They gave the scene a little corporate bitch. Didn't really learn anything new there. But... They have nice slides though. Diane Bryant's awesome. But the thing is that Larry said that I find compelling is now I'd like to get your thoughts on it because it kind of comes back down to the hyper-converged train, which is he said we are going to provide it faster and cheaper. So he's clearly looking at infrastructures and stuff like that. Bring this thing down, cost down to zero if possible while performance he wants to bring up to a home of the level. How are you guys going to do that? What's the strategy? I think Larry and Oracle have the ability to invest like crazy. Don't forget, we build our own hardware. We build our own servers. We build our own data center fabrics. We don't have to buy this stuff from anybody. We build it. So Larry and the team a couple of years ago set this team up on a mission to go compete. Now if you've looked at Amazon AWS margins you know there's a lot of fat there. We're also running on really old stuff. The basic architecture was designed 10, 11 years ago. I don't want to throw dispersions around but you could call it legacy cloud, right? What do you call it? Legacy cloud. Anything 10 years or older? It's got to be legacy. So there's a clear opportunity to go build something new. And that being said, this is a big boy's game. This is not let's round up a couple million dollars at VC and build a new cloud. So if you look at the aggregate spend that Oracle is putting behind this infrastructure service. Well even some of the big boys that are public like Rackspace, they couldn't make it, right? So you're starting to see they were kind of a big boy. I mean, they were reasonable out there. But look at it this way. We've got a national software franchise much like Microsoft does to bring people on. We build our own hardware. We build our own data centers. We actually can become a vertical supplier in this and the argument is efficiencies result. So we're going to see Dave Donatelli on Wednesday after his keynote. I know he's prepping up for that. How's it going with Dave? What's going on with Dave? Dave's having a good time. I mean, we all came to Oracle on the same premise is that the industry was rotating. And I think we've seen that in some of the analyst numbers, less and less on-prem spend, more and more spend in the cloud. A lot of new hires too coming in from industry that we know, non-Oracle, pre-existing players. And if you asked them five years ago if they ever would end up working for Oracle, they might have not said so. But here's the thing. You're being polite. They said, no frigging way. No, I know. Go through your mind and think what of the traditional on-prem IT vendors can transition their customers to the cloud? And it ends up being a very short list. And some of the ones that I- Should we buy the whole cloud broker, Dell Technologies? They don't have a cloud. I think customers want to consume cloud. They don't want to cook- The cloud-air network now has 4,000 cloud providers. All slightly different. All slightly different. All working together with the hypervisor. Yeah. Looks like a big portfolio management company. Is that a chess game or is that just Nail Mary? My personal view, vSphere was designed for the data center. EMC bought them 10 years ago. Architects were out there. It was designed for the data center. And it wasn't designed for a world where people don't want data centers anymore. So I think VMware is very challenged because there's technology and business model is standing up viable public cloud options. The last big one was, oh no, we can't do it. We'll go to IBM. You know, what's your cloud strategy, VMware? Call IBM? That's kind of a rough deal on a sales call. Well, if you put in kinds of the vCloud-air network, you could argue that they're giving up the cloud. I mean, basically, VMworld, they said we're done with the cloud. Look, there's a cloud. They yielded. Don't you agree? I don't think they said that, Joe. They yielded, they weren't going to have their own cloud. Absolutely, they yielded. They yielded on not having their own cloud. Okay. They yielded and- On their own cloud, that's what I mean. Nothing more than kind of a boutique offering. And certainly there's a market for small regional service providers around the world. Right, no argument there. And there's a natural tendency. But, you know, as I look at people going to cloud, the sticking point isn't the hypervisor. The sticking point is the database and the applications in the middleware. This is something Microsoft has done brilliantly with Azure. Microsoft's Larry pointed out on his earnings call. Microsoft's well ahead of Oracle on the migrating their cloud-based apps into their cloud. And at the end of the day, that's what you guys have to figure out how to do as well. We're well along the way. I'm sure you are. But my point is that without that franchise, that's a tough road to hoe, right? Yeah. You know, the infrastructure guys, maybe the application guys are the ones you want to talk to. Well, Peter said I'd like to get your thoughts on the comment Peter made on our intro with Matt Eastwood from IDC. Everything's on the table. Ecosystems, channel partners. So if you have the gravity and Oracle thinks of the world as a suite, which I think is a little bit orthogonal to where the cloud is, but I get the language of Oracle, the suite, is a gravity around the suite. Yeah. It's not a winner take off. Gotta be able to pick off pieces and they have to stand on their own. You can build an ecosystem around that. Oh yeah. An open ecosystem. So that means the new lock-in spec is stickiness or pure performance or not. Am I getting that right? I think Oracle's going to try to play on both sides. If you appreciate the value of the suite, the IIS working with the pass, working with the SaaS, great. We have all those pieces that can choose. Larry made it pretty clear. You want to go head-to-head on IOPS and memory and cores and dollars for whatever. Oracle intends to feed on that as well. So I mean, we're interested to see how this plays out. Nothing like a low price to get an IT buyer. He said on the Oraniz call it was interesting. He was overselling in my opinion. I've heard Larry's call. I can't imagine. Larry was overselling on the Oraniz call. But I don't think the analysts understand the guy. They don't understand the long game. If you look down the 20-mile stair, it just hasn't even started for Oracle. Larry is a master at the long game in ways that I'm just now starting to appreciate. Well, let's be honest. What is the most sticky thing in the industry? Applications, that's the stickiest thing in the industry. After that, the developer ecosystem, and then they get down to the hypervisor and you get down to the person. Yeah, and then you get into the wires that connect it together and all that kind of stuff. That's right, but the most sticky thing is the businesses are still run around some of these core applications. Well, that's why I brought the sweet angle because I think the developer angle is sticky because agility has proven that not everyone can build the killer app. So for instance, with an HCN, there's probably some feature of HCN that is subpar relative to some genius entrepreneur that eats, breeds that one feature, has an app that could be integrated into that feature. But here, yeah, I think that's your point. And with a platform as a service offering, oh, you want to add it and do something different? My point. Yes, exactly. It's all about continuous development, continuous integration, but that continuity still is close to the application. Yeah, ecosystem to me talks about what the developers market, go-to-market strategy is. If that's in place, Oracle can have a very robust... But we're seeing the both the same thing on hardware and software. So hardware, build your own is starting to get out of bow. You know, less and less popular buying servers and storage and knitting together. A lot of guys still buy into that, but that market's going down. I think you're going to see the same thing with software and applications. Rather than starting with a blank piece of paper, one of the big chunks of enterprise functionality that I can grab out of the box and build the thing that I need. Re-existing applications. Yes, yes. Okay, everybody's talking about business capabilities, right? And the idea is that business capability is the activities, the things that I have to do to perform the activities that my business needs. And those activities are people and increasingly software. And being able to grab those capabilities, big parts from the industry, weave them together quickly, continuously sustain the match with the marketplace, to your point. Well, we're going to have Juan Louisa on next and we're going to go deep on this, but I think that... Juan is a great guy. The API economy, if anything, showed us one. Security is foobar and needs to be fixed fast. And the encryption on a chip thing's been downplayed. I don't know why Fowler's not getting more airtime on that. That's a really huge thing. But the API economy has proven that this ability to pull stuff that someone else has already done, not assembling like a junkyard kind of situation. Why build it if someone's got it and can get it through an API? Like you talk about human capital management, right? Well, you know, there's 175 functions. I don't know, some large number of functions there. They're fine. I need this one little thing. So I'm just going to extend it and still do it in such a way that I'm not about it. And a developer who does that becomes a feature in a bigger pie. Eco-sister. Yeah. I mean, he'll make more money. It doesn't go out of business. It doesn't try to go popular. So I wanted to share before we wrapped up, one interesting thought. We all talk about cloud is coming, cloud is coming. I actually got tangible evidence at the beginning of the year that it's here. So a new word was given to me, cloud quotas. Cloud quotas. And it was kind of funny. This is happening mostly in the larger banks. Senior management, executive management. You're a little slow on this cloud thing. Let me help you out. We'll set a strategic objective five years from now how much will the cloud spend. This year, your cloud quota is 15% between cloud and non-cloud spend next year, et cetera. And I think what we're seeing is that kind of like the gears are starting to rub between the business that says, guys, this can't be so hard. Let's get on with it. I'm sure your sales guys have cloud quotas too. Different kind of cloud quota. But on that point, 20 years ago, when it became very popular to pay executives on the basis of Rona in return on their assets, it was right about that time that outsourcing got popular. Shocking. Isn't that? You're a mess for less, right? Hey, sounds like cloud. Okay, bottom line for the folks at home, Oracle's infrastructure, stuff that you were involved in is not new, but it's growing now because it didn't have a lot of nurturing. There's always kind of like that back office, secret sauce. What's the update? Give a quick update. We want to give people a strategy for their enterprise applications for cloud. If they want to consume on-prem, great. Engineered systems, cloud equivalence. You want to consume off-prem, same set of capabilities and more in our public cloud. You want to consume the public cloud in your data center, that's a cloud machine. And it ought to be the technology stack and the set of capabilities. Geographical location, the consumption model really shouldn't matter. And when we put this in front of large IT shops, even smaller ones, they're like, this is great. I can build my architecture. I can build my strategy. I don't have to make a cloud decision now. And if I do make one, I can undo it later. That agility has become very, very attractive. I can invest in options that have a future. Chuck Hollis, Senior Vice President of Structure. Congratulations. And then Larry Ellison kind of got to the end of his keynote, didn't have a lot of time, but there's a lot of meat on the bone in the keynote. Holy, holy. And he kind of, he couldn't hit it. It's like, welcome to the cloud. Too many product announcements. Welcome to Amazon's world. That's Amazon. He's excited. There's a lot of stuff coming down. It was great talking to you guys. Thanks for sharing your insight and the data and the bits here. Here at theCUBE, we're always sending out the packets of content out to the network. Live, original content. I'm John Furrier, Peter Burris. It's looking to angle theCUBE. We'll be right back with more live coverage after this short break.