 Live from Silicon Valley, it's theCUBE. Covering Mobile World Congress 2017, brought to you by Intel. Okay, welcome back everyone. We're here live in Palo Alto for SiliconANGLE Media's theCUBE's new studio, 4,500 square feet in Palo Alto. Just moved in less than a month ago and we're bringing you all the in-studio coverage of what's going on in Barcelona, Spain at Mobile World Congress. This is day two of two days of coverage here in the studio. We're bringing people in this in Silicon Valley into the studio, experts, entrepreneurs, venture capitalists, investors, angel investors, and of course, analysts here from our own team and we have Peter Burris with me here. And we're covering all the action. Of course, we have reporters and analysts and friends on the ground doing call ins in Barcelona bringing you all the action and really bringing the big story that's not being told which is AI, IoT and cloud ready, cloud native action is happening. This is the disruptor, the calm before the storm as we were saying earlier yesterday. Peter Burris, great to see you. We were talking yesterday morning on the kickoff. Let's take that to the next level. Cloud native, IoT, really the big story that's not being told at Mobile World Congress this year mainly because it's just in everyone's face right now and people are making sense of it. Your thoughts on this as you are looking at the research looking at the marketplace, this is reality. The IoT is real. Oh, it's very much real, John. Let's start with why cloud and mobile are so important together. In many respects, the thing that made the cloud real is mobility because the minute that you don't know where your device is going to connect where the termination point is going to be then you don't want to have to control and own that network. And so in many respects, the whole concept of mobility catalyzed the need for the cloud because you didn't want to have to utilize a, you didn't want to have to build your own network to support people as they moved around. So the cloud as a front end or as a set of capabilities that supports mobility is really crucial to this whole concept and it's somewhat surprising that it's not more closely tied together at Mobile World Congress. But the most important thing that we could talk about obviously is that this, that IoT is going to have a major impact on all kinds of different factors. It's going to have a major impact on the devices that are manufactured. It's going to have a major impact on what the scale efficiencies that you have in manufacturing, the nature of the sensors, the nature of the microprocessors, how much memory gets put on stuff, how much flash memory is going to be manufactured over the next decade. All these things are going to have a significant impact on the concept of mobility and what it means and the networks that provide it over the course of the next 10 years. Peter, I want to bring up something that you brought up yesterday. I think this is important. That's why I wanted to do a real drill down on what seems to be a major paradigm shift and an inflection point. We've been talking about autonomous vehicles, media entertainment, smart cities, smart homes. Those are all the sexy demos at Mobile World Congress. But the real change that's pointed out by Valperge Tellier, which just came in as CTO, is that the sea changed underneath and you pointed out yesterday the convergence between enterprise and consumers coming together is that this internet of things and people, IOTP or IOTNP, because things can be sensors and devices are changing it. And what's obvious to us and now coming out of Mobile World Congress as it's just starting to be seen by the mainstream press and media and community is that the telcos aren't used to dealing with rapidly provisioning things. They're used to a subscriber who buys a phone, dials up a service, gets provisioned and connected and they have it number and then they try to connect to the base station and get on the internet. That's simple. Those connections we all know fail. But now imagine that multiplied by millions and millions of devices that are gonna be turned on and connected. This is a scale problem. This is a network problem. This is a physics problem. Well, it's a physics problem. Explain your theory. Yeah, it's a physics problem. It's a physics problem at a very, very base level. Just talking about the telcos for a second. You're absolutely right, John. We're talking about, when we talk about the scale problem in the telcos, it's not that they don't know what to do with their networks. It's not that they don't know how to connect devices to their networks. They just don't know how to provide it at a service level. It's going to be demanded by the scale of the devices moving into and out of networks as we think about IoT and P. The telcos have historically thought about, they've thought about the assets that they have in place, the rates that they charge for those assets, the returns they generate, the tariff rules that they work with with governments around the globe. They tend to focus on good or bad 10, 20-year time horizon. And their P is phone, not people. That's right. Oh, their P is absolutely. Their P is phone. You were probably around. I can remember when you could not buy a phone that didn't have, on a particular company's network. You still can't buy a phone on a network today. You're buying a mobile phone and it goes. You're buying a carrier. It's associated with a, that's right. That's exactly right. And so, and that's how telcos want to work. Now, they're hoping that eventually they're going to find themselves in the position to be able to spin up devices very quickly. But the reality is, that's not how provisioning works in the real world. It's one of the reasons why telcos continue to get their lunches eaten by companies that are building out their own networks and doing a much better job of rapid provisioning. So you and I were talking last night off camera about this notion of IoT and P. And of course, we all believe in, of course we're passionate about it. But you made a comment that that was interesting. It was that we're going to look back at this time in history as a moment where before and after kind of, you know, before Christ after Christ, however you want to look at it. I mean, there's always that AD, you know, BC kind of thing going on where before, I always would call it before Steve Jobs and iPhone, before, now it's going to a home of the level with the societal changes from little things like we had a guest on talk about waste disposal efficiency, traffic light management, healthcare, every single digital service. NTT Docamo's investor was on yesterday. She was talking about investing in services and bringing AI as a service, not network services, lifestyle services. So what do you mean by that? This is going to be something that's going, we're going to look back 50 years from now and say this was the moment. Can you expand your? Yeah, absolutely, John. And it's really actually pretty simple. What's, if you take a look at kind of how executives are starting to think, what's happening is for the first time, we're really starting to look at data as an asset. Now, that's a big question, but let me kind of break it down and be a little bit more concise about what I mean by that. When we think about IoT and P, we're thinking about the idea that we can distribute enormous billions of devices that are going to be sources of data. And they're going to be going into the analog world, put into the analog world, they're going to take analog signals and turn them into and trans, transduce them into digital signals. Once those signals become digital, then they hit big data, they hit AI, they hit machine learning. That's what's catalyzing a lot of the social concerns about, well, what does it mean for machines to be more autonomous, to take more responsibility? What's going to happen with business accountability when businesses are increasingly relying on machines that quote, think? So when we think about these big societal changes, we're talking about the ability that IoT is providing, IoT and P is providing, that for the first time, how we're going to capture enormous net new data, how we're going to process that enormous net new data, and then ultimately what we call systems of inaction, how we're going to enact specific events back in the real world as a consequence of what machines say is the right thing to do. That is a demarcation point. It moves from a machine being regarded as a tool, and almost exclusively as a tool, something that performs work better, but having that work be very well described and very well articulated and the concept clear to something that might actually introduce new work or do work differently, take responsibility for how it performs the work. That's a major sea change. And so when we say that it's going to be, we'll look back and say it was before this time and after this time, it's because we are now in the position to economically be able to gather these streams of data, process them in ways that are unprecedented, and then have the results of that processing enact in unpredictable ways. And that's a major change. I don't know if we can talk about some of your research that's coming out. I don't know if can we just touch on some of the points? This has yet to be released research from the Wikibon team, headed up by Peter at SiliconANGLE Media. I want to just point out, because I find this interesting, you say that there's a architectural decision point with an IOTP, a new phrase, hashtag IOTP, if you're interested in working with us, just hit us up at Twitter, but there's really four points you point. Physics, the law, legal, of course everything's legal. Physics, legal, economical, economics, and then authority. What do you mean by those four? Can you just take us through, just conceptually, these are dimensions, they interplay, are they dependencies, are they interdependent, are they all intertwined? What's the rationale behind these architectural forces? Well, when people think about information systems historically, they've been relatively well circumscribed. So I have an employee that I'm going to provide a service to from a network that I control that has latency requirements and aren't that big a problem because at the end of the day, a human being doesn't operate at nanosecond kind of levels. And I got a machine that's mine and I own running an application that I've licensed. That is a very, very tightly bound unit. When we start introducing IoTP and some of these other things, now we're talking about emergent behaviors that may be far away, that we don't control, we're working with partners, et cetera, and the basic architectural challenge of thinking about what do we have to do to get a handle on the requirements of the processing because at the end of the day, these things are still computers and they still have operational characteristics that have to be accommodated. So we think that there's going to be four factors that are going to influence how what we call the edge zone expands or compresses based on the work that needs to be conducted. So one is physics. You're not going to go faster than the speed of light. And in fact, generally speaking, if you look at the distance that you have to travel, you're going to be outside the automation zone. If you're going to be outside the automation zone, if you have to, if light has to travel, at best you're going to be about a 10th of the speed of light. So if you have to, if you're automation zone, if you want your automation zone to be about 100 miles, then it means that from there and back with the speed of light, you're not going to be able to automate anything that takes longer than that. Just for example. So physics is one. And wireless is a great example of physics. And moving packets around. None of this stuff works without physics, right? The second one is legal. That reality is, is that while the laws of physics are relatively immutable, as far as we know, there are also government regulations that are what they are. And that can include privacy, it can include requirements for disclosing things. And so those also borders are going to have an impact on this notion of automation zones or edge zones as we call them. Economics is another one. Costs money to move data from point A to point B. And the question is how much data is going to move? A lot of people think that everything's going to go up to the cloud, it's going to be processed up there. And then some instruction is going to come down for automation. That's probably not the way it's going to work. Our findings are suggest- Well, not only is it the cost of data, I would argue that also the product design criteria will be impacted economically on that decision point. But that's based on how much does it cost to move the data around, right? So the operational characteristics of a product or service or fundamentally a digital product or service are fundamentally tied to the cost of moving data. So we think that 95 plus percent of the data is actually going to stay in the edge. And the last one is authority. And we kind of touched upon this a second ago in that we're now suggesting that machines are going to take actions without human intervention. Not just actions, but they're actually going to change the scope and nature of the actions that are going to be taken. What does that mean? What does it mean for a machine to act on behalf of a brand or on behalf of a person? You know, people use a simple explanation. Does the autonomous car take out the old lady or the Cub Scouts if you've got a problem? Or does it do something else? It's those kinds of things that we don't know the answer to. So a lot of the questions of authority and how we distribute authority and how we codify authority and how we track authority is going to have a major impact on what limits to behavior we put on these things. Well, it's also the security angle alone is another one too. It's just like basic stuff. These are interesting. So you see, and you see these architectural forces. Are we calling them forces, factors, variables? Just factors simply because the concept of factor or you can call it constraints is the idea that your decision has to factor these things. So we're just calling them factors right now. All right, so let's step back now and look at some of the commentary from this week in Mobile World Congress and our interviews here in theCUBE as well as the remotes. Certainly the hallway conversation is the business model of the telcos. Sargillai who's on yesterday brought up a point of, hey, where's the use cases? Show me the use case and I'll say yes. And it's just too complicated. He was not seeing the use cases and he was saying I'd prefer more battery life than more one gigabit wireless right now given that's his current situation. So the balancing of where to get started. It seems to be the number one theme. What do I do next? What's the first step? Is there, will the bridge collapse that I'm trying to cross to this future or I can't see the other side? Is the world flat around? These are kind of more personal feelings that people have around taking that leap of faith into this new world. How do you advise and package that together and assimilate that? I mean, how should people look at that? Well, I think it's a great question and I wasn't part of the conversation yesterday but let's look at that for example. Today, if you're using your phone, you effectively have a relatively simple number of sensors in your phone. Relatively simple number of transducers, right? You have a chip that turns your analog voice into a digital signal so there's that in there. You have some neat stuff that presents the screen so there's that in there. You have a microphone, et cetera, that kind of stuff. But when we start thinking about 5G and what networking could become as we talked about yesterday, it's not so much the absolute bandwidth speeds and it certainly is not going to have any impact on latency for the most part. It really is the number of devices that you can support at one time. So it allows for greater density of sources. So now, without looking at 5G, we can talk about a phone being able to support not just a few generators of few sources of data on that phone, but maybe dozens. So maybe things that, you know, the whole concept of wearables. Again, do I want to get involved in the use case? No, you and I are sitting here being analysts and that's not our business. But are there going to be use cases for more wearable technology? Well, if you're sick, if you have a chronic disease, just for example, yeah, that's a use case that I could see people actually living much higher quality lives because they can support more sensors as a result of 5G with greater security. Again, we go to the autonomous car. There's going to be a lot of sensors in an autonomous car. Now, most of them are going to operate locally, but having said that, it might be nice if we could actually have a very, very fast, low cost network with inside the car itself to handle a lot of that work. So I think that we've, you know, human beings, developers, have always found new use cases when given more compute, more memory, and more networking. I don't think that's going to change. I don't want to see more of that. Peter, what's your thoughts if you had to summarize and encapsulate into a narrative? Mobile World Congress 2017, now looking back at day two, kind of coming to a close. You're seeing what's out there. Well, how do you look at that? How would you tell someone? Here is the story of Mobile World Congress. Tell that story. To me, John, having looked at the stuff come over the transom and a lot of new devices being talked about and generating a little bit of excitement, a lot of new this and a little bit of excitement, I think that the question for me is, are we moving into a period where integration's going to matter again? And I think in many respects, that's going to be kind of the subtext of what's coming out of Mobile World Congress. Is it good enough to have the best of breed device and this and that with a software stack that's doing this and that? Or is there going to be more value to the enterprise and ultimately to the consumer by taking more of an end-to-end perspective? Now, Apple, from a consumer and an experience standpoint, has done that and has 150, what is it? They're worth $150 billion more than any other company on the planet right now or something crazy like that. Don't quote me on that, but I think that's what somebody told me. It's trillions of dollars in cash when we see it, for sure. Yeah, so it's that notion of are we moving back into a world where integration is going to matter because we're going through a period of significant discontinuity. Integration is a great point because I do see that as a thing and in bringing the Apple example, Apple, the way they develop, might be different than, say, what we've seen in open source, for instance. If you look at what Intel is doing and I look at Intel as a bellwether and this is, from my perspective, because they have such a huge long game in play, they have been the leader, in my opinion, in the tech industry, playing the long game and they have to because they make chips and they're looking at the 5G as an ecosystem play and they're admitting and saying it's not one vendor, it's gonna, they don't say take a village but they're basically saying it takes a village to rise to all the tide or float all the boats, if you will. So if you look at what Intel's doing, they're essentially saying that it's an integration game through their own moves, which is ecosystem, playing well together. Now you could fight for best of breed on point solutions whether it's a Snapdragon Qualcomm or Intel processor on the device. At the end of the day, it's, as we were saying, network function virtualization to make those dynamic networks work seem to be the key. Now to play in that, as a society globally, to your four factors, it has to be an integration game. No one company can do those factors. Well, you're absolutely right. Here's how I would say it, to kind of put a slightly different twist on it. The tech industry has moved from a product orientation to a service orientation or is moving from a product orientation to a service orientation. From an orientation where we focus on what's the intrinsic value of what we're buying to what's the utility of what we're using? From, hey, let's spend a lot of money up front and maybe we'll get to some point in time in the future where it's valuable to a let's only pay for what we got. It's difficult to imagine the tech industry moving successfully into that service orientation without taking more of an integration approach to it. Certainly that's what Amazon's trying to do or AWS is trying to do. That's what Google is trying to do. That's what all the companies that are trying to move infrastructure into the cloud are trying to do. So I think that this is a general issue. If we're moving to a service orientation, we have to start taking the integration view on things. Awesome, great Peter. You're watching theCUBE. This is SiliconANGLE Media Inc. and SiliconANGLE Media Inc. Prizes of SiliconANGLE.com led by Rob Hoef. That's our publishing journalism. Wikibon.com led by Peter Barris on the research and theCUBE. Our internet TV led by Jeff Frick and of course CrowdChat is the data brand and the data science. And we'd love to bring you this great content. Peter, I'll give you a quick plug because I know that you've been doing a ton of work building out the research team at Wikibon and expanding the work behind the firewalls. It's a paid subscription. Some freemium that we see on SiliconANGLE.com for the most part. A great body of work on the research. I want to congratulate you but give you an opportunity to share with the folks who are watching. What's going on with research and some of the things that you're working on and why they should potentially reach out to Wikibon. Yeah, so we're focused on a couple of relatively simple things. We're not a huge team so we tend to focus less on products. Again, the idea of let's take a look at the intrinsic value of products and we focus more on the impacts. What does it mean to get utility out of things? How do you get utility out of whatever you buy? So the other thing we focus on is disruption and we talked a lot about what are the disrupting factors? IoT, big data and what we call these systems of inaction all supported by significant change in the infrastructure and new digital business models. So it's kind of a combination of those five things that we are focusing our time and attention on. Ultimately, we want to be in a position to help our clients make decisions that improve the value of their business by better utilizing data through these digital models, digital business models that require these technology changes to go. Great and also this show of Mobile World Congress is about cloud ready. You had a great report on Amazon. We posted on siliconangle.com. What was the summary? Bottom line that big body of work you did with about Amazon that the headline was how big can Amazon be? What was the key findings from your big seminal report on Amazon web services? Yeah and the big finding is Amazon's going to get big but the cloud's also going to get big and we think that Amazon, the simple finding is we think Amazon's going to hold share. Now that may not sound like much but for the most part, most of the value is going to go into SaaS. Most of the value is going to go into the other use cases associated with stuff. That's where a lot of the money's going to go. So Amazon holding share given that they're one of the, in many respects they created this whole thing is actually a pretty stunning statement. So and it all started John because when we went and we looked at our semiannual update to what's going on in the cloud marketplace, the question that kept coming to us was, okay so we think it's going to go this fast. Well what's that going to happen? What's Amazon going to do with that? What's it going to mean to Amazon? How is Amazon's going to grow is going to affect these things? And so we started with that answer. We built our models and talked to a lot of users, built our scenarios and so we think that Amazon's going to continue to grow very fast. We think it's going to be a $40 billion company, $40 billion plus dollar company. In revenue. In revenue, AWS, AWS. Not Amazon, Amazon services. Amazon's a totally different beast. We'll see what Amazon does. But AWS will be about a $40 billion company in four or five years. And still have about eight plus percent market share. And Microsoft has changed their game. They're coming right after Amazon. Microsoft, Oracle, IBM, Google. And when you start talking to nationally Alibaba, there's going to be a dozen companies that create enormous businesses. And there are companies who don't have a cloud that are late to the game and might not have a seat when the music stops in the old musical chair analogy. So certainly we know who they are. What's going to happen to the telcos? Good question. The world, we live in a very exciting times as the saying goes. Peter Burris, great to have you, great commentary. Love what you're doing. I think the research around IoT and the edge is a fundamental architectural shift. You got the four forces laid out. Congratulations, looking forward to doing more where this is totally going to be a game changer. This will impact everything that we live and make the autonomous vehicles and the drones and the AI and smart cities a reality. Thanks for the commentary. More Mobile World Congress coverage here in Palo Alto, bringing it all down. We've got a couple late night call-ins, so stay with us. Hopefully folks will be, you know, sauced up a bit and maybe share some of the news and breaking stories from the hallway. More from theCUBE after the short break. Thanks for watching.