 On the Ground. Presented by theCUBE, here's your host, John Furrier. Hello everyone, we are here on the ground in San Francisco for our special On the Ground, CUBE interviews. We go out to the action and find out all the information, extract the signals. I'm John Furrier, the founder of SiliconANGLE, co-host of theCUBE with Dave Vellante. Our next guest here at the Dell IoT Influencer Press, analyst around here, Rob Enderley, Enderley Research. Great to see you. He's a veteran in the tech industry. Welcome to On the Ground. Thank you for having me. So, one of the things that we were just talking about, you've been around the block many times. We've seen these cycles before. We've seen the movie. What movie is IoT? Can we look at this and say, okay, obviously it's hyped up. We know that. We're both critical of that. But also it's transformational. What movie is this? It's got a lot of potential, but this is kind of the third sequel of a bad movie. So you kind of hope that this time it's going to come together. The elements that need to be in place have to take us from, excuse the term, a techno-weeney environment to where our spouses could use it and not hate us. So that's where we have to go. We have to get to the solution part and away from the components part. So should we just throw the movie away and just kick ass trailer and work on the trailer and then write the script or is it, how bad is it? I mean, just work on the ending or what is? So the story is good. It's like one of those things where you really love the story but nobody can seem to pull a movie out of it. That's it. The story is really good. You could have something that was fully automated where the office would configure itself when you went in where your home could do what you wanted to do when you went in where your power was optimized, your water was out. That's all a good story except somebody has to do it end to end. So when you walk in, it's all automatic. You don't have to program it yourself. You don't have to worry about security. It just simply works and we're not quite there yet. We're getting closer but in every iteration we get a little closer but we're still not there. It's a classic IT joke. The demo version and he's in hell. I thought the demo version. That was a demo version. It only worked. So the point here about the trailer and the movie we're in really isn't pretty intoxicating. The transformation opportunity. But it's really complicated. What's your take on that? Because there's networks. There's devices. There's software. And it's not just shifting software that was written for the data center and moving it over there. It's complicated. Is that the bottleneck? Is it just security or is it just lack of education? Well, we've got a lot of bottlenecks. One of the big problems is a lot of companies have already done an awful lot of internal automation but they didn't think about, not only didn't they think about wanting to connect to each other, they didn't want to connect to each other because they used their isolated networks as a competitive advantage. It's very hard to display someone's there in a shop. So that makes it incredibly hard to connect all these separate systems into a solution that's intelligent and does what you want. And so you have to step back and say, okay, what do we have to do to fix this? It's almost the case where you might take a place like, oh, an emerging market like India or whatever might get it first because they don't have those ecosystems in place that you have to redo. The baggage. Or the baggage, yes. It's the difference between marrying somebody who's been married three times before and marrying somebody for the first time. There's no baggage. So the end result is that that's where we gotta do. We have to get rid of the baggage and we have to get people to focus on what's the user experience and making that user experience almost magical. I mean, we kind of need what Apple would do here. It's what I'm trying to say. Yeah, complete game changer. Really, complete game changer. Just level the playing field. Just say, we're going this way. I totally agree. The baggage, AKA legacy, is a problem. And as you mentioned, India, great example. Greenfield, if you will, with wireless and new devices. But there's also another problem I want to get your thoughts on because you cover this all the time. I've been following your career for many, many years, going back decades since you were writing. I think we feel really old. IT used to be the nirvana. If you were in IT, you were a rockstar. And then it went through a decade or so of total cutting to the bone. Outsourcing, offshoring. IT was anemic, consolidate. And then all of a sudden, within the past five years, they got to do everything. So now I'm an IT guy. I got to do IoT now. Just another rock on my back. This is the general center. Is IT ready for this? No. But the fact of the matter is, IoT has been really driven by IT yet. I mean, it's one of the issues that where it exists, it exists in ops, it exists in manufacturing. It exists in the line organizations. They're the ones that have been driving these efforts so far. That's really where most of it is. IT's been asked to kind of start pulling this stuff together. It's often the case. They cut the hell out of IT and then say, okay, we've got a problem. You guys come in and fix it. You go, I don't have any staff. Well, that's what causes this cycle where you've got this feast and famine trend at IT. Where they cut it, because it's the problem of being a staff organization. When you're a staff organization, you're always going to get cut. You got to figure out a way to be operational. So that's where all the money's been is in operations and the line organizations and the people that have to get things done. But when you get to a particular critical mass, then IT has to step in and say, let's put it together. Let's get synergies across groups and start showing some real value. Are they ready for that? Because now if I'm an IT, you can't say no to the future. Oh, of course we got this covered. So it reminds me of the mainframe days. It's like, okay, I got it covered, but they're not really going to execute. What I'm hearing is similar like, they're not moving too fast. Are you hearing the same thing? Well, they don't have the budget for it. I mean, the thing is, is what often happens is that given the responsibility and then somebody figures out it's failing and so they finally get the budget. Same thing here. They're being pushed to responsibility, but no place has their budget been relieved so they've got the headcount. You know, that's why they, for so long, dodge mobile devices. They said, you're not giving us any money. We're sure as hell not going to support it, but they got dragged kicking and screaming and managing these mobile devices. They'll get fired if they get, of course they'll get fired if it has a security breach. But they don't have any budget. But remember how we deal with these security breaches, we wait until there's a really big one. A whole bunch of people get fired. The CEOs go crap, I've got to free up a bunch of budget dollars so we fix it. So I'm not the next guy that gets fired and then we get it fixed. We're waiting for that kind of an event here, I think. All right, so what's your outlook? Obviously you're, I mean, you do a lot of critical analysis. I joke and say you're a skeptic, but you know, you put people's feet to the fire, but reality-wise, obviously we're early. Are you bullish on the direction, the arc of the future of IoT? What's your thoughts and what do you need to see in your mind for this to be kind of really getting some traction? Well, I need to see some kind of a quintessential event and we may have just had it. The US government has put in place a set of GSA requirements that will require an awful lot of these systems to be connected and to be secured. Otherwise, you not only can't supply the government, but you can't supply the people that supply the government and that kind of thing could force a level of connection in interoperability we haven't had before, but customers are going to say, unless we've got this, we can't sell to our major customers, so you vendors fix it, or we're going to fix it ourselves and that's the kind of thing that could drive change. So one of the things here at the Dell IoT event was all like, oh, great stuff happening, but one thing that didn't come up, and I didn't want to say it, I didn't want to really put a downer in the room, was compliance. You already did it. Compliance. No, it was provocative, you were provocative. But the downer in all of this is compliance. You mentioned more regulation, I mean, come on. Punch me again with more regulation. IT guys don't want that, CIOs don't want it. It might be a forcing function, but compliance is a problem. What's your take on the current state of compliance relative to big data and the IoT, this whole thing? It's not ready for a compliance model yet, but as I say, the GSA is going to try to force it and they've got enough money to make that happen. The realization is, as soon as nation states got into the business of going on and attacking people's cybersecurity, we needed to bring up everybody very rapidly. We haven't done it yet, but the government's coming around to the idea that we don't, we're going to lose an awful lot of infrastructure. And you know, if we go to war and we can't actually get the people to build tanks, we're going to be in a lot of trouble. So they get that there's a problem, it's still going to take us a while to fix it. That's great insight, Robin. I'll just throw out the security as a conversation here, but one thing that didn't come up is data sovereignty. Data centers are all regional now by country, certainly Amazon, Oracle, IBM, they're moving like the wind to put out these regional country data centers. Well, they had to after Snowden. So after Snowden came out and made it very clear that the US government was looking at all this data, then the data centers had to go regional because there's no way in hell Europe or Japan or China are going to put their data on a US property. And of course, US is not going to ship their data overseas because they're just as distrusting. So suddenly we've regionalized everything. So Larry Ellison's pushing encryption down the chip. There's now actually cycles to actually have the horsepower to handle the overhead. But to your point, if I have different sovereignty states, do I have to decrypt and uncrypt data in and out of countries like passport? I mean, this becomes a cluster. I mean, this is a nightmare. What's your date? It's an absolute nightmare and more important, they're trying to put laws on the books to give the US government a key to all the encryption that's produced here which will pretty much ship all that business overseas. But you've got to figure if the US does it, every other major geography is going to do it. So maybe our encryption software comes from the Cayman Islands after this. It's the most insane thing I've ever seen. So international, global, the world is flat. How much of an impact is that to your customers that you're advising, some of the discussions that you're in? Well, it creates panic moments because what do we do? It's all in flux. But lately with regard to security, it's all in flux because none of these guys want to have a situation where a foreign government can look at their data or where any of their customers believe that the government can look at their data because that means their customers are going to move to somebody else. So yeah, it's kind of a mess and there's no way they can really deal with it because it's a lobbying effort and you've got to actually roll against your own government to try to keep your business in place. Great conversation here with an influencer and an analyst who's actually had so much experience who's seen the movies before who's on the front lines right now with us and I got to throw this out to you because I've been thinking about this, I've been talking about it publicly a little bit. It's kind of hearsay in the Silicon Valley community is I think we're going to see a swing back to commercial applications because I think there's so much complexity customers like screw open source unless it's totally vetted. I don't, I want vertically integrated. I want bulletproof end to end. That's a swing back to the 80s. It really is. And you think about it, if you've got to certify everybody that worked on a piece of software, how do you do that with an open source project? This is the new game changer. So vertical integration, horizontal integration, data, final question. What's going on with data? Is it going to be horizontal? It's going to be stovepipe, what's your thoughts? Well, it's going to be both, depending on the application. The thing is for long while we focus too much in data, not enough on the analytics, it's really not collecting data. In fact, if you look at the big problem with the government right now, they want to collect more and more data. They haven't been able to analyze the stuff that they've got creating. You know, we can't do it with a little bit. You don't want to get a whole bunch more stuff until you actually are successful with a little bit. So that's been the mess. We focused on big data. We didn't focus on analyzing it first. So our quality of suffering is a result of quantity. Businesses have to deal the data. Otherwise they'll choke on it. Final question, software. What is going to happen with software? Are people going to build their own? Is there going to be some new companies coming out of this? What's your thoughts and what's the relationship with enterprises and the compliance stuff, the new GSA stuff, do you mention what's happening? Well, so I think we're going to have a swing back to larger companies and a lot of the software because they can meet the compliance requirements. We still have a lot of startups going off and we've got things like Indiegogo and a lot of funding models that are breaking out these smaller firms. But at least for the short term, while we've got security in the front of our minds, at least with regard to enterprise activity, I think we're going to favor the bigger firms. Amazon's in a beautiful position at the moment to kind of take the market. They could run the table. Rob Enderleys, internet celebrity, analyst, experienced person, friend of the cube. Thanks for joining us. It's theCUBE on the ground here at Silicon Valley in San Francisco. Thanks for watching.