 Live from Silicon Valley, it's theCUBE. Covering Mobile World Congress 2017, brought to you by Intel. Okay, welcome back everyone. We are here live in Palo Alto, the CUBE studios, our new 4,500 square foot studio just moved in in January. Covering Mobile World Congress for two days, 8 a.m. to six every day, today Monday the 27th and Tuesday the 28th. That's specific standard time of course. Barcelona's ending their day. People are at their dinners right now going to the after-hour parties, really getting into the evening festivities, the business development, and we're going to break down all the news with that. We have Tom Joyce here for Reaction. But first, my talking point for this segment, Tom, I want to get your reaction to this, is Mobile World Congress is going through a massive change as a show. CES became an automotive show. You saw that show. Mobile World Congress used to be a telco show, device show. Now you're seeing internet of things and internet things and people as Peter Burris from Wikibon pointed out on our opening today, where people are now the device, the phone, and the watches and the wearables. And the things are sensors, cars, cities, towns, homes, devices. Now you have this new connected internet that goes to an extreme edge to wherever there's a digital signal and connection. Powered by 5G. 5G is the big story at Mobile World Congress. Certainly the glam is the devices, but those devices becoming more powerful with chips from Intel and Qualcomm and others. And as those devices become more powerful, the connected device thing or people become much more powerful equation. The data behind it is a tsunami. And this to me is a step up in a game-changing wealth creation, a value creation opportunity for the society and around the world and for companies. So the question is, can this be the kind of change significantly impacting the world similar to the iPhone in 2007, of which when Steve Jobs announced the iPhone, it changed the entire mobile landscape. Even Blackberry's making a comeback and they were decimated by the iPhone. Can this 5G, this internet of things, internet of things of people change the game and what will happen? We believe it'll be massive. Tom, your reaction to this new change. Well, you know, I think you hit on a lot of it. I think we, I come at it from a different perspective, right? I spent 30 years in infrastructure systems and software. So when you're coming at it from that side of it, and you see this mobile world exploding and internet of things starting to take off and changes in terms of how the connectivity at the edge works and this massive evolution, you can think about it in one or two ways. You know, on one level, you can be terrified, you know, because it's all going away. All the stuff we built is going away. And on the other hand, it creates a tremendous number of new opportunities. And I think we're only really just starting to see the creativity come out of the enterprise side in terms of not adapting to this change in mobile, but actually starting to invent things that will enable it and make internet of things possible. And, you know, new approaches to how silicon should be developed for those applications, new applications altogether. You know, I spent a lot of time recently looking at a number of different storage companies. And, you know, something fundamentally needs to change there in order for that technology to adapt. And guess what? It's now starting to really, really come forward. So, yeah, I think that what we're starting to see is the big engines, the big historical engines of innovation starting to catch up to this big trend. And it's only, you know, the very beginning. We have Tom Joyce who's an industry executive in the infrastructure area. I worked at EMC back in the early days and then HPE and a variety of other companies. Tom, you're an expert in infrastructure. And this is what's interesting to me as a technical person. You have the glam and the flair of mobile, you know, the devices and the awesome screen capabilities, the size of the devices, the role of the tablet that's now changing where it's going to become an entertainment device in home and a companion to mobile. That's what people see. They see the virtual reality, they see the augmented reality, the coolness of some of this awesome software that needs all that 5G bandwidth. But there's an under the hood kind of engine on the infrastructure side that's going through a transformation. It's called network transformation because you have networks that move the data around. You have the compute power, the cloud that computes on things, the data and the storage and storage at all. It's getting better on the device side, the handset, but also the stuff going on in the cloud. So I got to get your take. Why is now the time for the key network transformation? What is the, what are the key things happening now that really make this concept of network transformation so compelling? Well, you know, again, I'll take it from kind of a non-technical perspective looking at it from an infrastructure guy standpoint, right? What we've been looking at is in the transformation of the compute platform from inside your data center to the cloud, you know, all the things we've known kind of changing and going away, but the parts the cloud hasn't really touched yet or really transformed yet are the piece between the cloud itself and that end user or that remote office, you know, if you've got offices in far off lands or, you know, small cities, you know, getting the connectivity to be able to enable those, that new infrastructure platform is a challenge. And so, you know, for a couple of years, there's been a lot of work done in network virtualization and then network functions virtualization for ways to kind of break the stranglehold that a lot of these old proprietary technologies have had on that problem. And now we're starting to see new approaches to how you do, do, do WAN management across that, that those especially long distances. And I think that, especially with the growth in capacity demand from things like 5G from things like internet of things from the many different kinds of mobile devices we now have, it creates a forcing function on IT managers and especially on telcos to say, geez, you know, we can't keep doing it with T1s. You know, we can't wait 90 days to put in a T1 every time we open up a new building. We can't, you know, use the same old hardware because the cost model needs to change. And so, there are, you know, quite a few companies and by my count about a dozen of them that are looking at completely virtualized software ways to break that down, do it flexibly, you know, nine minutes instead of 90 days, a lot more performance. And so, you know, it's the demand that is creating the opportunity but now you're starting to see innovators adapt and deliver new stuff to solve this problem. Tom, for the folks watching, I'll share some props for you. You've obviously been an executive in the infrastructure, but also at HPE prior to your role, after your role they did some other things, but at HPE you were doing some mergers and acquisitions with Meg Whitman. So you have a view of looking at the entrepreneurial landscape. So kind of with that kind of focus and also the infrastructure knowledge, what are some of the opportunities that the service providers and these telcos have? Because the network transformation that's happening with 5G and the software can give them a business model opportunity now that they have to seize on. This is the time. It seems like now the acceleration for those guys. And you can also apply it to, say, the enterprises as well, but there are opportunities out there. What are those opportunities for these service providers? Well, I think if you're in a established business, there's a trade-off between the burden in the hand and something that's disruptive, but I might have to do anyway. And so I think some of these opportunities actually could potentially degrade profitability in the short term. And that's, I think, where these guys kind of figure out, do I hold onto the old vine or do I swing to the new vine? And it's a tough set of problems. But I think there is clearly opportunity to go completely software-based, virtualized, or on how you managed wide area networking traffic. And I think some customers are starting to kind of force the telco providers to do that. By saying for... Andy Groh was the one in the term, eat your own before the competition does, but that's the dilemma, the innovative dilemmas that these telcos have in the service providers is that if they don't reinvent the future and hold onto the past, they'll get disrupted. They'll be extincted. They'll be extincted. So that's interesting. So I got to get your take. With that premise, it's pretty obvious what's happening. Faster networks are happening. You want low latency, faster bandwidth on wireless that's happening. What does this mean for the new kind of networks? Because that seems to be a theme coming out of Mobile World Congress on day one that's going to probably be big tomorrow in the news is this network transformation, this new kind of network where you have to have fast storage. You got to have low latency data flying around. Yep. I think there are many different parts of it and you could talk all afternoon about it. But on that one part we were just talking about and I don't know this company very deeply, but a company like Viptela, right? Viptela is going up against those big T1 sales models and saying we're going to do it a different way. And it's about speed, it's about performance, about capacity, latency cost. It's also about flexibility. Like what if I could kind of totally re-engineer how everything's wired up right now on Tuesday and do it differently on Wednesday? You know, what if I could set up entirely new business models on the fly as opposed to having to plan it months and months in advance. And that, you know, the word agility is overused, that's what that is. And so I think as you move more and more into software for every one of these functions in the network, it brings with it this benefit of agility. And I think that's under-measured in terms of how people value that. You know, the velocity of being able to change your business is a lot more than what the gear cost, what the depreciation was, you know, what the pipe cost. And so I think as folks make those moves and they can go faster and do more than their competition, it's a game changer. You know, there's a big discussion about the, you mentioned the compute layer and the storage layer the kinds of storage systems you need if you're going to deploy services as a service provider, whether it's a telco or a small var that's acting like a service provider. If you're going to compete there, you need stuff that's a lot more flexible, again, a lot more agile than the traditional storage systems. Now, I think the notion of software defined storage has been around for a while. You know, figuring out how you make money at that, that's still a work in progress. But as folks move towards more of a service model for their business, it's not going to look like the traditional terabyte. So it sounds like what you're saying is the first wave of that is from a table stakes standpoint is speed and scale are kind of the first foundational thing that the storage guys have to get going. Yeah, I think in storage it's still the same. It has to be cost per, you know, cost per megabyte, gigabyte, terabyte. You need to have low latency, high IO. Those are like the three things. Then the additional things are the services. Is it resilient? Can I replicate? Now we're in a point where I think agility matters more than ever, right? If I can reconfigure everything and build a new service and I can do it today versus planned for months, that the benefit and the dollars around that are game changing and the people they're game changing for are the service providers. So I want to ask you a question from the mind of the average consumer out there and we all have the relatives ask, hey, what's going on in your tech business? Break it down for us. What, you know, when people say, hey, why can't my phone just go faster? Why can't I have better bandwidth? They might not understand the complexities of what it takes to make all this stuff happen. What's holding back the acceleration in your mind? Is it the technology? Is it the personnel? Is there any kind of area out there that wants that straw, you know, breaks the camel's back? What is that straw that breaks the camel's back to accelerate this production of great tech? Yeah, I mean, look, I'm actually one of those grandparents that's asking, how come it's not going faster? So I may not have the complete answer, but you know, I'm that frustrated person. I will say that, you know, we're in an interesting period of time in terms of how investments get made in new technology. And, you know, if you kind of, somebody very smart said to me the other day, try to think of the pure innovations that came out of large established companies in the last 10 years. And I've worked for a couple of them, right? But the pure ground up innovations that became big. And you can't come up with a very long list, right? It's been really driven through the venture community, certainly in Silicon Valley, you know, it's been an engine for decades now, but that's where it comes from. And we've kind of been in a limbo cycle where folks have invested a lot of money in some areas that haven't paid off. So I think we're in a little bit of a gap where there are, there's a lot of money going into obvious spaces. One of those obvious spaces is security. You know, before that it was all these apps that we use for social, but there hasn't been enough engineering and core hard tech Silicon to drive these new apps. There hasn't been enough hard engineering and building entirely new storage platforms and software that scale at service provider levels because that's going to cost a lot of money. So I think we're starting to see the beginnings of that, but it takes time to play it all out. Yeah, it's interesting, the whole digital life thing is coming into the transformation. And one of the, Rue Cohen who was on earlier said, Snapchat IPO is the big story, but if you look at it, like say Snapchat, what they're doing, they're both a media company and a platform, look at fake news from the Facebook platform in the previous election. Are you seeing these platforms delivering the kind of value that they weren't really intended, the unintended consequences for these platforms is that they become other things too, and digital, like a media company when they weren't really trying to be that, and media companies are trying to be platforms. So there seems to be a platform war going on around who is going to control the platforms. And the question that I always ask is, okay, has this worked in a multi-company environment where composability is much more of the new development philosophy than owning a stack, owning technology? Well, I agree with you, and I think that, you know, again, if you look at it from the standpoint of a customer that's going to buy a lot of their services from the cloud and a lot of their services from other service providers, you know, you have to hit the price points and the performance and the reliability. After that, it's how fast can you turn me on, how fast can you change? It's back to that software-based reconfiguration on the fly, if you can then bring to bear the ability to do that with different qualities of service and, you know, more automated control of those changes. That's gold, right? But I don't think we have seen that actually implemented yet at scale in ways that people can consume. So, again, I think you're seeing a wave of investment by the VC folks in a number of areas. One of them is new kinds of silicon, new kinds of, you know, the next generation flash technologies and things like that. I think you're seeing, you know, service provider scale storage technology starting to emerge, you're starting to see fundamental changes in how wide area networks are managed, all in software, right? So I think you play that through the next year or two. The demand from mobile usage, but especially from internet of things and its related demand for data is gonna create a new market, new market opportunities. And who will win? I don't know, but there's a lot of smart investors making bets there. So certainly you see a lot of the old guard out there and which are transformed like Intel, for instance, sponsored this program, gave us the ability to do the programming thanks to Intel and also SAP contributed a little bit. But you got HPE out there, you see IBM, all these guys are out there, these traditional suppliers. What's the one thing that you can point to that in this new era of supplying technology to the new guard of winners, whether they're telcos or providers or enterprises, the game certainly changed with cloud. What's the blind spot for some of these guys and where should they be looking for M&A activity? If you're the CEO of a big company and you're like, hey, I got a pivot, I got to fill my product lines, where's the order of operations from a focused standpoint? Okay, well you take a couple of those companies and I'd say that I've both observed and been guilty of some of what's not working now, right? And the instinct if you're in one of those places is to say, look, we've got all this technology, we've got servers, storage, networking. What if we just bundle up what we've got and point it at this new set of applications? And I think you can make some ground up there, you can do some stuff, but at the end of the day, the new requirements require new technology. And I think the larger companies haven't been successful at investing in new stuff in their own, like Memrister, some of these new technologies pokes have talked about, the machine, they get announced, they come, they go, why? Because they're expensive, they're really hard. It takes years. It takes real R&D. Yeah, years are real R&D. And it's difficult in the economic environment that we're in to sustain that. So the reality is, I think there needs to be a lot more aggressive focus on identifying hard technology that can feed the supply chain for some of those solutions. And that's why I think, you know, I'm not actually... That's what a startup opportunity is too. Startup opportunity is exactly. Those guys are gonna fill that void because they're doing the R&D. But the startups that are gonna succeed in the future that relate to this problem, they're not the guy building an app. That's not where it is. It's technology that's actually hard, you know? That's why I think you see things like NVIDIA. Why is that stock so hot? Well, they developed unique silicone, the silicone that was applicable to a whole bunch more areas than folks realized, right? So the difference is, if I hear what you're saying is there's two approaches. Technology looking for a problem and then a problem that's solved by technology. Kind of, there's a different kind of mindset. Yeah, exactly right. And I think that, you know, if you take Tesla as a very well-known example, the amount of demand for analytics data is just extraordinary there, right? And that will lead to more requirements to say, no, no, no, I can't use your old stuff. I can't, you can bundle up the crap you have. You need to give me something that's tuned for the scale I'm talking about now and next. And I think that we're starting to see the venture community, and certainly my travels around the valley here over the last couple of months, saying we're probably gonna have to get in earlier and we're probably gonna have to invest more and longer because the payoffs there, but these problems are big and require real hard technology. Well, Tom Joyce, thanks for coming in and for sharing the commentary and reaction to Mobile Congress real quick. What are you up to these days? I know you're looking at a bunch of CEO opportunities. You've been talking to a lot of the VC firms in the valley. What are you poking at? What's getting your attention these days? Well, you know, part of what I was just talking about and is, it's exciting. You know, there's a bunch of new things out there that some young people that are investing in the next wave of infrastructure. And so I'm looking at some of those things and you know, I may do a CEO thing. I've had a few opportunities like that and I may focus more on the business development side and the investing side because I've got a lot of experience. But you're looking for technology plays? Yeah. Not necessarily a me too kind of thing. I want to do something fun and big and new. You know, something that has potential for super growth and so there are a lot of those here now. So it's... Well, I think you made a good observation and I think that applies to Mobile World Congress. It's kind of turning into an app show on one level because apps are at the top of the stack. That's where the action is, whether it's an IoT app or a car or something. But then there's the hard problems under the hood. I think that's right. And I think that's where a lot of the money's going to be. Yeah. And Intel certainly is doing a great job. We just, we're on the ground with Intel. We're going to have some more call-ins to analysts and our reporters on the ground at Mobile World Congress. Stay with us here at theCUBE in Palo Alto Live in studio coverage of Mobile World Congress. We're going to be doing call-ins, folks hitting the party. Certainly hope they're a little bit looser from a couple of cocktails and tapas later in the night. Hopefully have them calling in and get all the dirt and all the stories from Mobile World Congress. We'll be right back with more of this story. Thanks to Tom Joyce for coming. Appreciate it. Thank you too. Thank you for the time. We'll be back.