 From Las Vegas, Nevada, it's theCUBE. Covering AWS re-invent 2016. Brought to you by AWS and its ecosystem partners. Now, here are your hosts. Hello everyone, welcome to theCUBE here in Las Vegas for Amazon Web Services AWS re-invent 2016. This is theCUBE SiliconANGLE's flagship program. We go out to the events and extract the sylvanos. I'll be here all week. John Furrier co-founder of SiliconANGLE, my co-host Stu Miniman, and of course, Jeff Frick will sub in as well. And we're kicking off three days of wall-to-wall coverage of AWS re-invent, breaking it down. And our guest analyst is no other than Jerry Chen, CUBE alumni. He's been with us every year. We've been broadcasting, going back four years here at re-invent. Jerry, great to see you. Stu, kicking off AWS. We've got Cloudbeers. Cheers, Cloudbeers. It's good to see you guys. Yeah, have a good week. You know, Jerry, we're talking, there's over 32,000 people here at the shows that Andy Jassy is talking about. You've been here since day one. It's our fourth year doing the CUBE out of the five years of the show. So, first start off, what's changed? What's the same? Who are all these people showing up? It's kind of amazing walking around and just the sheer density of people of what's happened from the first re-invent it went to, the first one you guys broadcast to this one. Somewhere along the line, it went from this insurgent technology cloud thing to the de facto standard of how compute's going to be done for the next 10 years. And so, it went from something people ignored or disregarded to the standard. And it's intriguing to see this evolution from an insurgent to an incumbent. So, I want to talk about the marketplace right now because Amazon, Stu, I want to get your take on this. I know you're under NDA, you've got briefs, so you really can't talk about the announcements. And I know you know, so, we're going to try to pry it out of you. But the cloud game is pretty much won. Jerry, you said four years ago on theCUBE, it's not a winter take, it's a winter take most. Some will argue and I will say that I think the cloud wars are essentially over round one. Sorry, HP kind of tap out, Dell EMC kind of looking more cloud brokering. But we got it down to the top four players, AWS, Microsoft, Google, Oracle, IBM, that's five. So, you got the guys, it's like the NASCAR jockeying clustered up together. Who knows, it's going to slingshot to the finish line but you now have that winter take most formation. Yeah. What's the impact of that? Because you're seeing this show become, as Stu said, the next VMworld, some are calling it the essential industry event. You got a cross-section of entrepreneurs, so the entrepreneurship angle, you got developers, you got corporate. I mean, the game has completely changed. Your thoughts on that whole scene here and the impact of what this show means. I think it's amazing what you see with cloud versus what we have software and on-premise hardware. So before it was one box to roll them all, right? I shipped my server, my storage, my computer, or my CD of bits. But the beauty about cloud is you have this long tail of technology. There's 700 services they launched last year, 500 services they launched a year beforehand. And so what that means is everyone can find what they want on the cloud, be it Amazon, be it Google, be it Azure, or the rest, you can add new services with relatively low cost as an incumbent, Amazon, or Google, or a startup that you can find what you want. So that's how they can outmaneuver the on-premise incumbents. Stu, I want to get your thoughts because you did an intro video with Dave Vellante and your Wikibon off of headquarters in Massachusetts previewing the show. But you laid out some pretty interesting things. I actually borrowed some of your ideas on my Forbes post yesterday and then I saw the angle post where you start to see a new normal. I want to get both your thoughts on this where a new Moore's law kind of thing is developing where you're seeing the cost to zero, which by the way where it's being panned by all the media, turns out that they're running cost to zero but profits are kicking ass. So they're driving cost down and decreasing prices but at an increasing rate, increasing services and features. So this seems to be a new flywheel is developing. It's called a Blitz scaling in the enterprise, developer guys, thoughts on this dynamic because this is kind of a new cloud law that's developing. You call it the cloud law, the Q-Blaw or Chen's law or whatever you want it. The Jackson's law. The number of services being born on the cloud or the number of apps being born on the cloud is probably increasing at a faster rate than Moore's law. So you think about the number of developers that are being cloud native, that's more than doubling every 18 months, right? So if you kind of graph that rate of both services, apps and developers, that's just kind of this exponential curve which means that it's tipping and will continue to tip to be all cloud native pretty soon. Let's do your thoughts because one of the things that's in the competitive landscape, you can say, okay, I can see Amazon's strategy is to increase services faster than the competition but they're doing it faster than the customers can do it. So you now have two dimensions in this. Yeah, John, it's fascinating because how long does it take customers to understand and take advantage of these various pieces that are out there? Amazon keeps adding services. In the interview you did with Andy Jassy, he said, customers wake up every day, there's another three news, you know, significant features or pieces put out there and it's amazing. This customer base at this show, it's why I'm always super excited to come here. I tell everybody to come to this show because the customers are trying, customers are builders. I talked to Adrian Cockroft who was at the, recently joined Amazon. He was at the hackathon yesterday and he said the amount of people there that are doing, you know, creating Lambda functions and that really are embracing and doing this serverless piece, he's like, oh, it's going to be mainstream in 2017. I said, you know, heck, back on the East Coast, I know lots of people that have never heard of serverless but here, you know, they just gave out 25,000 of the dot devices so everybody can go program to them. You know, the sessions on serverless are, you know, packed. So, you know, Jerry said, you know, this is where new computing's coming and Amazon keeps creating these new areas and categories and, you know, keeps innovating. They're okay with, you know, really, you know, taking out chunks of their own business if it helps drive what the customers need going forward. So the question becomes how do you compete, right? As a startup or as Google or Azure? Question one, A, to discovery these services hurt them because now there's so many that you have to, customers can't keep up. So does, it's like finding a new app on the App Store, it's impossible now, to discovery hurt you. And then B, if you're Google or Azure trying to come for number two, number three, or a startup trying to compete, how can you wedge yourself in this kind of increasing doubling of services every year? I want to double down on that. First of all, folks watching, Jerry Chin and Gary Locke with Reed Hop and the team have a great thing on Stanford. Go to Google and YouTube and look at Blitzscaling. You talked about Blitzscaling in the enterprise, not just for consumer. So I want to bring this up about competition because this now has an impact to the, not only the entrepreneur, but to the startup because it's, and my thesis is this, and that's what I'm watching, I want to get your thoughts. I'm usually not a doom and gloom alarmist, but I am really nervous that the startups are going to implode because Microsoft, IBM, Oracle have huge sales forces. So I think we're swinging through the days of startups that have to ramp up their field presence, which is really difficult to do. So you bring up distribution. Is there a flaw in that argument? What's the angle on that? Because if I'm a startup, I would rather align with AWS than Azure or Oracle because unless they're going to carry me along, but you're playing second fiddle, where's the disruption? Can there be a box.net now? Or is that now kind of, is there a ceiling there now? Thoughts? So first, let me break down in three areas. One, you're absolutely right. We talk about product market fit. I talk about product go-to-market fit. And the reason why go-to-market fit matters because distribution as a startup versus incumbents is really all you have is you have better technology. How do you get your app, your solution, your service to the hands of developer customers? So are you trying to build a direct sales force? That's hard. That's expensive, right? You got Amazon that owns a lot of developers on the credit cards. You got a large sales force in the incumbents. How do you navigate between the two? And so as a startup, I think you're going to see a lot of innovation in the go-to-market area. We always see innovation technology. We always see innovation on new products. We're going to see some innovation on go-to-market. Technology is like owning the developer directly. So if you own the developers, you're ahead of Amazon, you're ahead of Google, or ahead of Azure, ahead of the rest, or ahead of VMware. That's kind of a powerful audience. But there's other ways to think about partnering with these guys, right? And use the Judo strategy. How do you use Amazon, or Google, or Azure, Oracle's weight for you to kind of Judo ahead? That's a great point. So let's kind of tease out my own question here. So here's how I see it. So if you go frontal attack on the old guard in their channels, your second fiddle at best. If you think about it differently, kind of the cloud mindset, which I want to drill a few thoughts on, is that you can actually leverage the benefits of all the services. So the argument of bare metal versus the cloud, which is ramping on my Facebook page this past week, is like comparing the BlackBerry to the iPhone. Technically the BlackBerry has all these rich features and you can do all the stuff, but post-2008, I don't think anyone built BlackBerry apps, thoughts. And we have the same dynamic. I mean, maybe the metaphor a little breaks down a bit, but think about it. Is there a new way that's changing the game? So in terms of distribution, for sure, right? I think the BlackBerry versus iPhone analogy is developers stopped developing for the BlackBerry because all the users went to the iPhone, went to iOS, and so you go where the eyeballs are, you go where the users are. And so now your startup, how do you get to go where the customers are? Do you go with Amazon because they have more developers, more apps? Do you go with Azure because they have a lot more enterprise relationships? Do you go with Google because you think they have better technology? And so as a start, you've got to pick your angle and you've got to be best in class. It's not one right answer, John. It's not one right answer, but you've got to be careful like what product are you selling and how's that product going to match or go to market? Yeah, but you guys build at Greylock and this is a plug for Greylock. You look for a billion dollar opportunity. So it's not looking for mom and pop lifestyle business, which if you're a cash flow funded business, you might do well on an ecosystem like Azure and get carried on and rising tide floats, all boats kind of philosophy, but if you want to go in and level a market, You want to work and you wrap together. You've got to think differently. So if I'm an entrepreneur, I'm thinking, okay, I'm probably going to be better off being part of the recreation, the innovation disruption with an Amazon versus a business deal. I mean, so that's kind of where I'm thinking about it. So I mean, let's tease this out, right? When you say you're better part of Amazon, for sure you want to, if you can leverage Amazon's momentum, that's great. But there's also other ways you can find leverage go to market. And leverage go to market is it can be open source, it can be developer self-service, it can be going through an app store, could be OEM deal with a server guy or another cloud guy or software distribution. The reason why people are super excited about cars or self-driving cars and IoT is because those are new nodes to bring software to your end users, right? So not just going through the iPhone, not just through Amazon, you can go through the phone through a smart home, a smart car or connected device. So I believe there'll be new channels of distribution that will appear like VR, like IoT, that'll be great. Jerry, one of the things I'm poking at this week is we were talking about the ecosystem. I mean, we're in the middle of this huge show floor, the diversity of companies that are here. But the question is, can you actually make money with Amazon, you know, the old, you know, Bezos and Jassy always say, you know, your margin is our opportunity. Are you like, you know, swimming with the shark, playing with Amazon? What do you see? What are your companies looking at? Let me ask you guys this, what grade would you give Amazon in terms of the ecosystem compared to like Microsoft in the 90s or Sun and Java in the 90s as well in terms of developing an ecosystem around them? Well, I would break that down into two categories. One is, depending on what year in the 90s you pick. Sure. With Microsoft in particular, they locked the developers down early on. And then the ecosystem kind of, the white space were filled in by the developers. So there was a huge opportunity to make money, not just as a feature, but actually standalone public company, we saw a bunch of those. So to me, I would say right now, if you go on that comparison, I give Amazon an A on the startup side because they have developer traction and they have tools coming out for developers because I could sling APIs and services around rather than building my own and then go in and do that. On the more mature side, I think I give Amazon probably about a C, maybe a C minus because they're a new territory. Yeah. Microsoft really didn't kick in until they had to seek server stuff and a lot of their server technology. So, Stu. Well, it's always, what's the job? You build the ecosystem, then you eat the ecosystem. I mean, Microsoft did that well. The joke we always had is, go show me the largest booth at Reinvent and then go listen to the keynote and go see those people crying in their beer because Amazon just announced some service that's going to eat some of their business. I mean, Jerry, if you look at your old company, VMware, or even look at Docker, as to how do you partner and grow that ecosystem versus how do you monetize and make money? It's a tough balance. So I agree with John. It's a tough balance. Amazon gets mixed grades on this. It's a tough balance, but it's also, I think, an opportunity for startups and an opportunity for Microsoft Azure and Google because it's not a winner-take-all, it could be a winner-take-most. Those two are smaller but growing fast. If they take a more ecosystem-friendly approach, they can actually shift the balance of power to be more favorable towards them versus Amazon because you're right. A bunch of startups out there are worried about who's going to eat their lunch tomorrow. All right, Stu and Jerry, I want to get your take on the technology architecture that's driving cloud and talk about that vis-a-vis the stack wars that are developing. There's been rumors that Azure stacks have some proprietary features in it. You got Amazon leveraging open source, some say not giving back as much as they're taking. You got Google with technology advantage, not a lot of field or any kind of customer relationship experience. So you got these guys, they all want to change the game. They all want to move the goalposts and kind of make the ground a little bit shaky on Amazon. What is going to be the driver? Where's the cold war going on right now in the cloud? Is it Kubernetes? Is it Docker? You're in that with Docker, your core investment. A lot of stuff going on. A lot of posturing, your thoughts on- I actually think it's a battle between data and this Docker app portability ecosystem. First things first, all these companies are open, but kind of not open, right? Because they have their own flavor of these services. Like Lambda is their version of serverless. Once you start programming on Lambda, it's hard to move to Azure or Google Cloud Functions. And vice versa, once you're on someone else's serverless platform, it's hard to move back and forth. So they're open, but you know, open with a wink, wink, nudge, nudge. So I think the stickiest thing is, we're the data store, right? So I think databases, data storage is kind of ground zero of stickiness. So everybody wants your data to be S3 or Aurora. But then the countervailing force against storage and data, which is really, really sticky, we call that data gravity, is things like Docker that creates portability, right? So Docker inherently wants to be a portable application. Your data doesn't want to be portable, it doesn't want to be mobile. And so you have this push and pull, and I think those two have to come together to create a fully portable file. So first of all, Google, Microsoft, and Amazon, they're playing very different games. Like Jerry, I want to follow the data, I don't want to follow the applications. Microsoft has a big bundle of applications that they own. Citrix is a partner that does lots of stuff. Citrix Cloud lives on Azure. The Paz guys are all partnering across the board. They're going to talk to Pivotal a little later. You want Amazon, you want Google, you want Microsoft? Yes, absolutely. Docker's going to help make sure that we can go across all of these environments. Amazon itself, first of all, your comment open source out of Google, Microsoft, and Amazon, Amazon's a far third. They're way behind. They leverage a heck of a lot of open source. And while Andy Jassy says they give meaningful contributions, we don't see it nearly as much as, I mean, Google, you can name off. We wouldn't have Hadoop. We wouldn't have, there's so many things we wouldn't have at one for Google. Microsoft over the last few years, phenomenal what they've done with open source after being Microsoft. So do you think it's going to be an open source revolution? I mean, open source is now tier one. If you take that argument further, Amazon keeps winning. You can see an alternative universe open source that rebels against Amazon. Thoughts, radical idea or not. I wonder, you know, Amazon, the more I hear about what they're doing, it's they leverage open source and they put it in their environments, but, you know, they're building their own, you know, vertical stack for a lot of it and it's all these different tools and they've got APIs for all of them, which makes it easy to leverage and use, but it's not as open. Amazon's track record is to innovate, take what's already built and make it better. If they did it with Hadoop, they're going to probably do it with Kubernetes and other stuff you've seen. If they continue on that track, that is going to essentially bring a real negative sour taste in the open source community. Because that would be a case for revolt. That's my argument. That's my radical view on this. It is, the pendulum was swinging back and forth, right? So I think, if you take your Microsoft analogy from the nineties, with the .NET and Windows ecosystem was too close, people moved towards open source. Look at the browser wars, right? IE was closed and dominated and you know, in that tension came Firefox and Chrome, open source and newer platforms. IE became bloated. If you look at Chrome right now, it's becoming more bloated every day and it's feeling a lot like IE. Guys, we're going to break, but final thoughts, we're getting the hook here. We've got a lot of stuff to get in before six. The James Hamilton talk tonight should be good. Stu will be there. We've got exclusive interview coming up on SiliconANGLE on that. Real quick thoughts on what's changed the most in your mind in the Amazon web services re-invent. You guys, comment on what's the most impactful, relevant change that you'd like to share about this event. I think, well, overall one, clouds become the first thing, the first place to go to, not the second place to go to for technology. And number two, to your last point, I think that the power of cloud and the economics of cloud means that it's not our winter take all, it could be winter take most. And because of the open source, because of new technology, developers will find a way. So I'm an optimist that we will be able to make data applications available throughout the cloud. Stu, outside of the numbers, the growth has been phenomenal from handful of thousand to 32,000. Your thoughts on the most relevant thing about this event? So for the last few years we've been hearing, oh, it's still day one in cloud. I don't think anybody would argue that we haven't crossed the chasm. It's here, the enterprise is definitely embracing a lot of it, I'm sure in the keynotes we're going to see some real big name. I don't know what customers are going to be talking in the keynote, but every year they put up and it was like, wow, here's GE, here's big banks, here's all these companies that are like, I'm getting rid of my data centers and I'm going to public cloud and customers that I talk to, it's a hybrid world, yes. And I think we will hear a developed nuance from Amazon as to how they live in that hybrid world. We haven't met VMware on Amazon is something coming next year. Azure staff, we'll see how that plays in, what's going on, so it's really interesting times and definitely kind of feels like the center of the universe this week here in Vegas. Great job guys, thanks a lot. Of course they're taking the cube law which is pump out more services, more content than the competition. That's Amazon's services model, great stuff, new way to do things, new mindset. Jerry Chen, thanks for joining us on the opening segment. Cheers, here's to cloud beers, hashtag clouds beers. We'll be right back with more after this short break.