 Live from the Moscone Convention Center in San Francisco, California, it's The Cube at Oracle Open World 2014. Brought to you by headline sponsor Q-Logic with support from HGST, Violin Memory, and MarkLogic. And now here are your hosts, Dave Vellante and Stu Miniman. We're back to wrap up day two, Dave and Stu and David are here, David Floor is going to join us. So let's see, a lot of infrastructure talk today. Yesterday was really about cloud and applications and from human capital management to ERP to enterprise performance management to the bevy of applications Oracle has. We heard yesterday really about the three layers of cloud and Oracle is going after the infrastructure as a service layer, the platform as a service layer and the SaaS pieces, massive, massive collection of software and the portfolio. As we know, Stu and David, software leads infrastructure so Oracle's in a strong position from that standpoint. Having said that, it's like everybody keeps saying, you know, you walk, oh, Oracle's got to change its business model, Oracle's in trouble, Oracle's this, Oracle's that. In a way, Oracle is changing its business model. Not in a way, Oracle is changing its business model. It's driving, you know, huge effort in the cloud. It spends money on R&D. It's acquired a zillion companies. It's organized those companies in a way, you know, through its fusion initiatives. It's integrated hardware and software together. It's integrating sun microsystems, you know, product portfolio. It's cutting the sort of dead wood, low margin products, focusing on higher margin products. It's achieved operating profits pre-sun acquisition. It's not growing as fast as it wants to grow. It's new license revenue is down. It's hardware revenue is down, so it's got some challenges there, but it's throwing off cash like crazy. So, David Fleur, I'll start with you. Oracle is changing its business model. Why do people feel as though they're in trouble? Well, they have a fundamentally very sound business and it's the applications. So, starting from the top, they have applications that people want. They want to implement them. They have the databases underneath that. They have middleware underneath that. And they have a stack below that. And the cost, to me, the key thing that they're doing is one of two things. First of all, they're making it easier to consume for the person who buys the application. They're making it easier to put in because the person buying the application doesn't buy infrastructure. He buys the application and the rest is overhead and it's cost to him of the maintenance and everything else. So, if you can find ways, and the cloud is clearly one way of doing that, if you can find ways that you can reduce the cost of running that whole stack by, for example, having a single platform and lowering the cost of the maintenance of it. And if you can find ways that you can produce value quicker so that you can decrease the cycle time of getting that new application out or a new version of that application out, that's going to keep your revenue fine. So, you'll be able to at least keep still and grow the value you're creating to your customers and from that continue to make good profits. Stu, when we come to these shows, we get inundated with messaging. I mean, it's just, sometimes it's overwhelming. And, you know, the world looks to us to sort of peel back the veneer of those messages, squint through that and sort of come up with the truth. We heard, you know, we had Mike Workman on today and you challenged him, you know, rightly so. And he said, yeah, yeah, hybrid arrays are just a bolt on to existing spinning disk. And we said, well, wait a minute, there are people, and David, you talked about this as well, that are designed hybrid arrays like a Tintree or a Ted Gile or a Nimble, you know, from the ground up. You know, properly, let's say. Not that it's improper to throw flash into an existing array, it makes sense to do that, but you kind of run out of controller band with it at some point. So, my question to you is, on a scale of one to 10, how much of what we hear at Oracle OpenWorld is sort of real, you know, versus marketing versus things that will ultimately be delivered? You know, what's your report card on Oracle? Yeah, so Dave, one of the things I would give Oracle credit for is, I don't hear a lot of what I usually call blue sky marketing. It's like, here's where the future's going to be and we're going to take it there. As we talked about in the intro, in many ways, where Oracle gets dinged is, you know, this cloud and big data stuff is exciting and interesting and we're all saying, yeah, welcome to the party. You know, we've all been talking about this for a while. So, when Oracle's bringing things out, it reminds me of, you know, many of the enterprise vendors that, you know, they have it shipping in customer sites before they're talking about it all that often. So, you know, I give my engineering hat on, you know, I like that. From a customer standpoint though, you know, what's the vision of the future? You know, how are you going to help me deliver my applications faster, as David was saying? And, you know, I didn't get a chance to see Larry's keynote this afternoon, but, you know, in many ways, the messaging's a little bit old to me. Well, I mean, they have a clear vision of the way the world should be. You know, let's try to summarize that. It's the red stack, so it's Oracle hardware, Oracle's applications, Oracle middleware, Oracle infrastructure, all connected together. Larry talked Sunday about, you know, his walks with Steve Jobs and how they used to talk about, he said one of the things we agreed on, he used to be agreed on a lot of things, but one of the things we vehemently agreed on, I guess, is this notion of hardware and software being engineered together, you know, something like this, like an iPhone, and it, you know, is more reliable. He even said, if you've got a problem, if you have a bug, everybody gets that bug. That's a challenge, but it's easier to fix. And that's kind of what the cloud model gives you. I guess, I remember, and you guys may as well, when Bill Gates said basically, we're going to churn the company, Microsoft, and go after the internet. I feel like we're seeing a similar moment inside of Oracle where they've said, we're going all in on cloud, we're not going to let the work days and the sales forces, even though sales force has been obviously very successful, it's not like sales force just came yesterday, but work day starts to hit at the heart of Oracle. So, you see Oracle, we've got the sales cloud, we've got the marketing cloud, we've got the HCM cloud, everything's now cloud, cloud, cloud, cloud. And a lot of that is marketing, but they're putting, the difference about Oracle is they put a lot of R&D behind it. And they have very clear R&D roadmaps, and they incent their people to hit them. There's carrot and stick, it's very clear. Guys like Mike Workman were under a lot of pressure to hit targets, even though he may not have hit them all from a timing standpoint. And that's the thing about Ellison, he's a CTO, so he knows how difficult technology is. It took six, seven, eight years to get fusion right. So I'm not saying Oracle has patient R&D, I think it's actually quite impatient, but there's also a deep understanding of technology generally from the microprocessor all the way up to the application. Right, David, what's the advantage of that? I mean, what other companies can say that? I mean, IBM can say that, I guess, but in some ways, Oracle's becoming as impressive if not more. I wonder if you could talk about that. You were at IBM on a stay day. I was at IBM, yeah. So you know what I'm talking about? Sand in, business value out. Yep. Sand in to make semiconductors, right? Business value out. Well, and it's code pads in and business value out as well. And when you come back to the statement I made that the value comes from the applications and the rest, you can deliver the rest any way you want to. And the quicker you can deliver it and the cheaper you can deliver it, the less it gets in the way, the better from an application point of view. And they start from that premise that they have an application to deliver and they are finding better ways of doing it. And if they can find better, faster ways of doing it then they're going to automatically drive things correctly. They're towards that very clear objective of better, faster, more value for the applications delivered. IBM never had, it has very strong areas, some very strong areas. It has very strong infrastructure areas and development areas. And it has some application areas where it's strong. But it doesn't have the same level of high level applications that really run the business. That the CEO has been a part of deciding that that application is going. They're not an ERP vendor, for example. They're not an ERP vendor. There's no IBM financials. And the only other company that's anywhere near the same enterprise is SAP and Microsoft, those two. Yeah, but even Microsoft, in terms of enterprise apps. Well, if you think about exchange and SharePoint and Link and their database. It's got a infrastructure, right? Well, well. I don't really think of those as apps. I guess e-mail, e-mail, is an app. As they have now in ERP systems, they're getting a lot of traction on. So not quite as much as Oracle, I agree. But still way up, way ahead. So Infor, Infor claims that it's number three enterprise app vendor, it's a $2.8 billion company. Yeah, you would think with exchange that Microsoft is bigger if you include exchange. It's about the same, yes. It's a bit bigger than that. Into that. Yeah, but they, again, ERP, yeah, I guess there's some Microsoft financials, Microsoft human capital management, right? I mean. No, those aren't the ones. But what I'm saying is they do have a whole platform in terms of the original Microsoft Windows desktop, at least, and they have a whole lot of applications that build on that. So they have an entree in there. But you're right. Oracle is way ahead and SAP is next, and then Microsoft defined that. Infor is in a great place. So if they can do the same sort of thing that Oracle is doing, and put the same sort of resources behind it, and do it in that micro vertical way that they're doing it, they have a tremendous potential as well. Well, I think Infor's got to go public. Yeah. I mean, they have to, because that's like, the Infor is the best marketing event that you can do, and they need, I think it's the tapping private equity for their R&D, but they need more marketing, more resources, more get the word out on what they're doing. So Dave, I've got a question for you. Sure. We saw when Microsoft handed the reins over to Satya Nadella, first non-founder that's the CEO of Microsoft, it's really reinvigorated the enterprise business. Here in the Valley, I think Microsoft's had a lot more relevance than we've seen in many years, a lot of excitement brewing. So what's your take on everything going on Oracle? I know you're on the record of saying that even though Larry is no longer the CEO, he's still chairman of the board and he's CTO, running development and still running a lot of the show. So what's going on? I totally believe, Safra Katz and Mark Herb, when they say nothing's going to change. And I mean, think about it, Ellison, essentially what they did is they split the chairman and the CEO roles, which is good. Large companies like this should split the chairman and CEO roles. I'm all for that. I think the idea that, I think Bill Belichick should split his role. Get somebody to do- Let's not go there. General manager and somebody else to do with coaching himself, whatever. So I mean, I think there's, they're both full-time jobs, but Ellison's got a legacy and he's not going anywhere by choice anyway. And so, I mean, basically the way he operates the company, my understanding is they come in the morning and the three of them meet and maybe call in other people to the meeting and the meeting doesn't end until it ends and they go through, I mean, you can see how detailed Ellison is. I mean, he's extremely detailed oriented. I think Safra's the same way and Herb is the same way. So they have a huge appetite for detail. Larry's always run technology. That's the thing about Ellison. He was one of the original guys developing the Oracle database. So that's increasingly unique in this business. Andy Grove, long gone, bomber, okay. You mentioned Satya Nutella. Watson's with IBM. Yeah, yeah, yeah. Watson's back. That's interesting. IBM's actually had that unique ability that lost its way there in the sort of early to mid 90s. But IBM actually, because of IBM research, I really believe IBM research and its sales culture has always been able to maintain that cultural ethos. I think EMC similarly is one of those companies that has done that, SAP as well. Hasso is guiding for us. But it's increasingly rare to find that. So Oracle has that unique culture. As I said before, last year we got a glimpse of what Oracle's going to be like without Ellison. A lot more boring. And this is why I've said I'd love to see Mark Benioff come in and take over. Merge Salesforce into Oracle. Look at a true pass. And although Oracle doesn't seem to need it. They've got, they're building that out. They're going in a different direction so that media wish may never happen. I guess, you know, get big question I have and we're going to answer this at our capital markets event. Do the rich keep getting richer in this scenario? We've got an oligop, we've got an industry where there's an oligopoly, I've said it for years. You got five, six, seven players that control the chess board. They make moves, they all got cash. Oracle's got, you know, a lot of cash. Microsoft, Google and Amazon are in the mix. That's kind of interesting. That to me is the big disruptor is Google and Amazon. And frankly, I like what Nadella's doing. I guess you got to give Bomber some of that credit, I guess. But it just felt, I felt like Bomber never made the bold moves that needed to be made and something that Nadella came in and, you know, really went right into it. He went off to the markets that were going away. Yeah, he really, he kept after, you know, desktop applications, windows, you know, all the core stuff and just, I felt like there was, Microsoft sort of lost its innovative edge and became less relevant. I think Nadella is almost overnight made, Nadella has made Microsoft more relevant. Cube alum, by the way, Satya Nadella came on at one of the shows and we were like, who is this guy? Jeff Kelly pulled the short straw and got to interview the CEO. I wasn't at the show, but, and did a good job. So I look at Microsoft as a company that's really in a good position to compete, I think. And Amazon as well, but you know, I hear Oracle and to me it all starts with Oracle strategy because Oracle has proven it can execute. It can execute on M&A, it can execute on its roadmap. Sometimes it takes longer, but it executes, it delivers on its, it gets a return for its R&D. So when Ellison and Safra and Herd stand up and they're all saying the same thing, you know, it's clear they're coordinated. It's not just pure messaging, it's strategy. They deeply understand and believe in their strategy. Whether you believe it or not, they believe it. And so they're going to, sometimes it's better to execute on a strategy that maybe nobody else around you believes, but you execute on it and you can win. You know, just because everybody doesn't agree with it, you know, I mean, I don't like it a lot when I, as an advocate for customers and they're just getting pounded with Oracle, you know, licensing and maintenance and you try to help them negotiate, you know, through that, you know, you have empathy for those customers, but at the same time, if I had to flip my hat and say, okay, I'm in Oracle's position, what would you do differently if you were running Oracle? What would you be doing differently? Well, the big difference in Oracle, for example, and CA who bought up all of these companies is that the value created by those companies, he has actually invested in them and increased the value they've created as opposed to ripping out all the development, ripping out all the R and D and just living off the maintenance of things that people had to have because it would cost so much to change it. So he has kept the value flowing as opposed to- I mean, Oracle is emphasizing social, they're emphasizing the customer experience, so I can't say they're not doing that. I guess I, I mean, maybe I'd like to see more of that but there's a lot of it, there's increasingly more of that. In the last two years, last 12 months has been a lot of emphasis on customer experience, user experience, cloud, marketing cloud, still a lot of heavy lifting with Oracle. I'm not sure there's an answer to reduce that. But Stu, take converged infrastructure, a topic that you know very well. What would you be doing differently if you were Oracle? Don't you think Oracle has the right strategy with its hardware and software engineered together? Yeah, no, absolutely, David. We talked about this earlier, building the whole RedStack from the application down, as David said, is the right way to do it. What, the challenge is that it still in many ways leaves people with a silo and they need to have something else to be able to, you know, finish off the rest of the solution. But that way customers aren't completely locked in with Oracle, they've got other partners that they're going to bring in. There's actually not a bad ecosystem when it comes to the server and storage partners here. Despite that, when Oracle bought Sun, the question was, how much are they going to drive that? And the business that we knew as Sun before doesn't really exist, it only exists in the RedStack solution. So, David, you're nodding your head. Do you want to comment on that? Oh, absolutely, they have been so getting rid of stuff they don't need and they focus on that stack. It's from suit to nuts. And one of the things which is interesting to me, if you take their super cluster, which is a very big, very expensive piece of hardware, if you look at the core value, the core value is that they can deliver each quarter one update from suit to nuts and they can install it and they get all of the highest value of the application all the way down. You compare that to the previous generation of stacks, it would take two, three years before the application could actually be put in on top of all the other changes that had to be made. And they're going to reduce that from three months to two months to one month. Yeah, it's a great point, David, as you said, the customer only needs to focus on the application itself where if you take other converged infrastructure solutions, it's great that I can remove the silos and say, let me update this converged infrastructure platform, but I still have the application on top of it. And even if I make it invisible, it's still two pieces and Oracle puts that down to a single managed entity, which is what you've been beating the drum on for the last year or so. So the big, you know, Andreessen, Mark Andreessen came up with an article a couple years ago now I think said, you know, none of my startup companies buy Oracle software or SAP software or buy from EMC. And while that's true, it's kind of not true because they probably a lot of them use Salesforce. Exactly, yeah. Which is powered by Oracle. Oracle claims 19 of the top 20 SaaS players run on Oracle. Workday does not. IBM has a lot of SaaS, I don't know. I don't think IBM's running on Oracle. They have the Oracle in there, of course they do. Yes, they both, both software. A lot of companies that are running on Oracle, so that's probably true, right, why change that. So in fact, they may be doing business. So to me, the big blind spot could be to the extent that industries are transforming with born in the cloud, born data driven, mobile first applications that bubble up on the edge. You know, that disruptor from the low end that we talked about with CEO of Scality. That is a potential blind spot. But that, you know, it's got to seep into the global 2000. Oracle owns the global 2000. And it's got a great database, it's that simple. It works, yes. The strategy of, hey, you own the database, you're going to own everything around it. A little way around the application, yes. And that was a vision set forth. Maybe that's what, maybe that's a very many, maybe it made a promise to himself 30 years ago that I'm going to basically get a toe hole with the database and then I'm going to own the world. He did, he went broke, didn't he? Very, very close to getting broke. Right at the beginning. Very, very close indeed within a few months. But one of the other, you talked about the bottom up area. The internet of things, that's changing, that's going to be a huge volume increase of data coming in and that again is something that Oracle have got to look at because that's going to become increasingly important and I'm sure that's affecting their strategic thinking is that they've got to be in the cloud, they've got to be close to where that data is going to come in if they're going to intercept it in some sort of way or be close to it. So, all of these things, they are actually positioning themselves to be able to take advantage of. To me that's one of the biggest, there's so many big changes going on. That huge influx of data coming in there is going to change the way that companies organize how they get data because most of the data internally at the moment comes from themselves is going to increasingly come from outside and move towards the cloud. So, Oracle has to change, Info has to change or all the people have to change to be closer to where the data is coming from. Yeah, so that internet of things is another potential blind spot. It has architectural implications and market formation, tectonic shift implications. But again, it's happening fast, I guess, and it's happening with some new players, but not at a pace that Oracle can't say, all right, this is what we need to do. The other thing Oracle's doing is it's buying industries. One of Info's unique advantages is that last mile, the micro industry targeting. Micro verticals. Micro verticals. But I see Oracle grabbing some of those industry specializations within whether it's telco, manufacturing, et cetera. So, it's everywhere, it's in hardware, it's in software, it's claiming pass and the get. The true pass guys are going to say, well, it's not really pass. Excuse me. Pleasure. But that's like it's saying, oh, it's not really cloud. Okay, well, if the guy buys it, it's right. All right, I think that's a wrap guys. Last thoughts too, any closing thoughts on day two? Yeah, Dave, as you said, Paz is something that we expected to hear a little bit more about. So, some good progress on some of the cloud pieces, whether or not it's all that cloudy, I think that was a good comment if customers buy it and Oracle just extends the RedStack out and they've got plenty of customers, some good excitement here at the show, especially when they've got some good giveaways. But, it's always an interesting show for me because it's 65,000 people, but in many ways, it's so many little pieces all over the place. Spread out all over San Francisco, I mean, there's no way you can get a hotel room if you didn't book it months ahead of time. But, very important show, but it's not like Docker that's heating up the world and everybody's buzzing about it. But, throwing off a lot of cash as you always said and driving a lot of things forward. Yeah, it's kind of like the Patriots used to be still. You know what I mean? They got, initially people were rooting for them and then they got good and it became over and over, too good and then everybody said, ah, I'm rooting against the favorite. Yeah, Dave, is the database market like the Patriots because even though the Patriots are the Patriots this year, their division stinks. So, they're probably going to win the division and then get knocked out. So, after last night's due, I'm not so sure they're going to win anything. That was embarrassing. That was bad, so. But, I think you made the comment earlier on. The rich are getting richer, they're throwing off cash. What's happening in the world is fewer and fewer people are part of that decision making, part of that process. And it's, as you say, the placing bets where they own the money and the money is coming back to them is where the world is going in high tech. The only interesting thing to me about that scenario is, is that money going to be US money? Or have Snowden so besmirched the reputation of the US that we're going to see clones appearing in other parts of the world in China or in Australia or in Europe? Well, I think China's a lot. You're already seeing that. I think you're seeing that with Alibaba and others. But China in particular is proving out, particularly with social and now retail, that it can sort of replicate. And the balance of the world, NSA has the biggest data center in the world, I'll just leave it at that. All right, we're a wrap on day two. Thanks for watching everybody. Let's see, we will be back at the CubeCube tomorrow. Briefly, we got a kickoff that Stu's doing and we also at the CubeC and the Cisco booth pretty much all day tomorrow. So, check out siliconangle.tv for the schedules, check out live.siliconangle.tv, always check out wikibon.org, we got some new research up there on Oracle just today and check out siliconangle.com for all the news. We're at crowdchat, crowdchat.net, slash O O W 14 is the crowd chat. Thanks for watching everybody. We'll see you next time.