 Live from San Francisco, it's the Cube. Covering Google Cloud Next 2018. Brought to you by Google Cloud and its ecosystem partners. Hello everyone, welcome back to our day two of live coverage here in San Francisco, California for Google Next, this conference called Next 2018. Google Next 2018 is the hashtag. I'm John Furrier, Dave Vellante. We're kicking off day two. We just heard the keynotes are finishing up. Most of the meat of the keynote is out there, so we're going to just dive in and start the analysis. Got a tight schedule again, great guests. We've got all the cloud native folks to mount from Google. We've got to hear from customers and from partners. We're going to hear all the action. I'm going to break it down for you. But first we want to do kind of a breakdown on the keynote. Do analyze it and give some critical analysis and also things we think Google's doing great. Dave, day two, got three days of wall-to-wall coverage. Go to silkenangle.com for special journalism, cloud series, a lot of articles hitting, a lot of cube videos, go to cube.net. Check out those videos. That's our site, where all the videos are. Dave, day one, we had a great close yesterday. I thought it was phenomenal. I thought we nailed it at day two. And one of the things we were talking about in the first day close editorially was saying, hey, you know, this AI is super important today in the keynote, more AI, more under the covers, more speed of announcements. Google kind of taking a playbook out of Amazon. You know, let's get some announcements out there. I wouldn't say that the pace of announcements meets AWS in terms of the announcements, but the focus is on a very few core things. AI, roll of data, cloud-native, cloud functions, cloud service platform. This is the Google. If they're lifting the curtain, we're starting to see some action. Your thoughts on the keynote. Well, I think you're absolutely right. I mean, I think Google realizes that it's got to compete with Amazon from the keynote standpoint, demonstrating innovations, putting out a lot of function. I have to say this, maybe it doesn't match Amazon's pace of innovation and announcements, but when you compare what these cloud guys do with the traditional enterprise shows that we go to, I mean, there's no comparison. I mean, even this morning, keynote day two was drinking from a fire hose. I mean, there are dozens of announcements that Google made today. I would say just a couple of things, you know, critical analysis. Google, I mean, everything is very scripted, as is all these shows, Amazon's very scripted as well, but they're reading everything, which I don't like. I would rather see them have a little bit more teleprompter friendly sort of presentation. So that's just sort of a little side comment, but the content is very good. The big themes I took away today, even though they didn't use this term, is really they're treating infrastructure as code. You know, they're deploying infrastructure and microservices from, you know, code as developers. So that was a theme that cut through the entire morning. Big announcement was the GA of cloud functions. It's been in beta. Now it's serverless. It's been in beta for a long time. And then a number of other announcements that we're going to go through and talk about, but those were some of the big highlights, but auto ML, I want to talk about that a little bit. Talk a lot about developer agility throughout a couple of examples of customers. We heard from Chevron. We heard from Twitter. So they're starting to give examples. Again, not as many as Amazon, but starting real customers in the enterprise. Customers like MasterCard. So they're dropping some names. And so you're starting to see their belief manifest into actual adoption. But I'd like to ask you, John, what's your sense of the adoption bell curve and the maturity curve of the Google customer? Great question. I mean, I think for me, just kind of squinting through all the noise and looking at the announcement specifically and how they're lading them and how the portfolio of the show's going, it's very clear that Google is saying, we are here to play. We're here to win. We're going to take the long game on this cloud business. We have a ton to bring to the table. I call it the, bring out the Howitzers, the big guns. And they're doing that. They're bringing major technology, big query, big table spanner, and a variety of other things from the core Google business, bringing it out there and making it consumable. Said that yesterday. Today, if you look at what's going on, you're seeing AI within G Suite. Leading by example, by demonstrating, look, this is how we use AI. You could use it too, but not jamming AI and G Suite down the throats of the customer. AI and big table, I thought was pretty significant because you can now bring machine learning and artificial intelligence, so to speak, into a data warehouse-like environment where it's not a lot of data movement, data prep, it just happens. And then the cloud service provider platform, I mean, the cloud services platform, the CSP, that Al Menor, the vice president of engineering rolled out, I found interesting. And the key move there was cloud functions. They now need to have serverless up and running. Obviously, Lambda is AWS. The uptake on the enterprise with Lambda has been significant more than they thought. We heard that from Amazon. So I expect that cloud functions and having this foundational layer with Kubernetes doubling down. The Kubernetes, Istio and these cloud functions represent that foundation. The Knative open source project, again, another arrow in their quiver around their open source contribution. This is Google. They're bringing the goods to the party and the open source party. This is an underappreciated value proposition, in my opinion. I think a lot of people don't understand the implications of what's going to go on with this, but this upstream contribution and the downstream benefits that's going to come from their contrary open source is highly strategic. We used to call in the old days, Kool-Aid Injection. That's the way you ingratiate into the communities with your software. Ultimately, the best software should win. There's not a lot of politics in open source as it was once was. So I think that's fine. Now to the question of migration, Google Cloud is showing some customers up there, but I don't think they're going to, they're a long ways away from winning the enterprises. What you see Google winning now is the Alpha Tech East. The guys who are in gals who know tech, they know scale and they can come in and appreciate the goodness of Google. They can appreciate the 10X advantages we heard from Danielle with Spanner. These are what I call people with massive tech chops. They understand the tech. They've had problems. They need an aspirin. They need a steroid and they need a growth hormone, right? So they don't just need a painkiller. They need solutions. These guys can make it happen. They jump in, take the machinery and make that scale. The second level in the trajectory of their growth and adoption curve is what I call smart SMB, smart enterprises. These are enterprises that have really strong technical people where the internal conversations is not if we should go to cloud, it's how should we go to cloud and the DNA of the makeup of the technical people will decide the cloud they go with. And if it's engineering led, meaning they have strong network operations, strong dev team, then they have people who know what they're doing, they gravitate to Google cloud. The third phase I think is not yet attainable, although aspirational for Google is the classic enterprise. Man, I've been buying IT for years. Oh my God. I'm like a straight jacket of innovation. Nothing's happening. And they're like, we got to go to the cloud. How do we do it? It's a groping for a strategy, right? So Amazon gets those guys because there's some things that shadow IT that Amazon can deliver in more options than what Google has. So I think, I don't see Google knocking that down in the short term anytime soon. They can do plenty of business. Again, this is a trajectory that has an economy of scale to it, there's an advantage, it's competitive advantage by doing that. If Google tries to beat, become Amazon and meet their trajectory, the diseconomies of scale plays against Google. This is critical. Google does not want to do that and they're not doing it. So I think the strategy of Google is right on the money, nail the early adopters, the alpha geeks, hit the engineering teams within the smartest companies or small businesses and then wait to hit that mainstream market two, three years from now. So I think there's a multi-year journey for Google. Again, diseconomies of scale is not what they want. They have tons of leverage in the tech and the data in the IA. So to me, they're right on track. They're now getting into the phase two. Smart. I give them credit for that. Let me pick up on a couple of things you said and tie it into the keynotes from this morning. But I want to start with some of the conversations that you and I had last night and around the show with some of the GCP users. So we've been asking them, okay, well, how do you like GCP? What do you like? What don't you like? How does it compare with Azure? How does it compare with Amazon? And the feedback has been consistent. Tech is great. A lot of confidence in the tech. Obviously what Google's doing is they're using the tech internally and then they're pointing it to the external world, comes out in beta and then they harden it like they did today with serverless and go GA. The tech's great. Documentation has a little bit to be desired. We heard that as a consistent theme. Functionality not as rich in the infrastructure side as AWS and not as enterprise app friendly as Azure but very, very solid capabilities. And this comes from people in financial services, people in healthcare, people from oil and gas. So it's been consistent feedback that we've heard across the user base. You mentioned Knative. Knative is a new open source project that brings serverless to Kubernetes and it was brought forth by Pivotal, IBM, Red Hat, SAP, obviously Google and others. Again, a big theme of the keynotes this morning was developer agility, bringing microservices and services and things like Kubernetes to the developer community. Now, I want to talk about another example of a customer Chevron. Is Google like crushing it in traditional enterprise IT in the cloud? Well, no, you're bringing up that point that they're not but what they are doing is doing well in places where people are solving big data oriented business problems with technology. Is that IT? It's not traditional IT, but it's technology. Let me give you an example. Chevron was up on stage today and they gave an example of they have thousands and thousands of docs of topographical data points and they use this thing called AutoML to ingest all the data into a model that they built and visualize that data to identify high probability drilling zones and sites in the Gulf of Mexico. Dramatically compress the time that it would have taken. In fact, they wouldn't have been able to do this. So they ingested the data, auto categorized all the data to simplify it, put it into buckets and then mapped it into their model which was tuned over time and identified the high probability of sites for drilling. That's using tech to solve a business problem, drive productivity. Google crushes it with those type of data applications. Really good example. And AutoML drives that and this is where again, machine learning, AutoML, AI operations, we mentioned that yesterday, the IT operations sector is going to be decimated but I think the big tell sign for me is when I look at the cloud shows, Amazon definitely has competition with Google. So if anyone who says Google's way far back in the market share, which you know I think is bastardized, I think those market share numbers don't mean anything because there's so much sandbagging going on. I mean, I can look at anyone and say Microsoft you're sandbagging the numbers. I mean, Amazon not really, if Amazon could probably sandbag the numbers even more by putting revenue from their partner ecosystem. Google throws G Suite in there but they could throw AdWords in there and say technically that's running on their cloud and be the number one cloud. So what is a good cloud? When you have a cloud, if you can make a situation where you can take a customer and get them on the cloud easily, okay, in a simplified accelerated way, that is a success formula. And what you heard on stage, they was kind of not, I won't say underplay, they certainly played it up and got some applause is Velostrada and these services. They bought a company called Velostrada in May of this past year and what they do is essentially the migration. We had a guest on a user yesterday migrating from Oracle to Spanner, 10X value, a major reduction in price. They didn't say 10X but it was significant. We'll try to get those numbers. She wouldn't say but what Velostrada does is it allows you to migrate existing apps in a very easy non-disruptive way from on-prem to the cloud. This is the killer app for the leading clouds. They need tools to move workloads and databases to their cloud because as clients and enterprises start to do taste tests, kick the tires in cloud, they're going to want to know what's better cloud. So the sales model is simply go try it before you buy it. It's cloud, you can rent it. This is the value of the cloud. So Amazon's done an extremely awesome job at this. Google has to step up and I think Velostrada is one of many. I think the Kubernetes piece is critical around managing legacy workloads and adding new cloud native. So between Velostrada and the Knative and the cloud functions, I think Google's shoring up their offerings and it makes them a formidable competitor for certain workloads and those early adopters and that stage two small, medium, or smart enterprise as a foundational element. I think that is a tell sign and I got to give them props for that. And again, you can get an Oracle database into cloud. You're going to win a lot of business. You can get an app workload running on Google Cloud seamlessly in a very easy, meaningful way. Well, let's talk about that. It's just going to rain money. So let's talk about, we just talked about how Google's not, you know, crushing it in traditional enterprise apps, so let's talk about some of the things we heard today. Let's talk about some of the things we heard today where they're trying to get into that space. So they announced today support on GCP for Oracle Rack, real application clusters, and Exadata, and then SAP via a partnership with Accenture. Okay, so Accenture does crush it with Oracle and SAP. Now here's the problem. Oracle will play its licensing games. We've seen this with Amazon where essentially Oracle's license costs are double. In AWS, they'll do the same thing for Google to guarantee it than they are in Oracle's cloud. So 2x, and it's already incredibly expensive. So Oracle's going to use its pricing strategy to lock out competitors. So that's a big deal. But we also saw some stuff on security. Cloud Armor automatically defending against DDoS attacks. That's a big deal. We heard about shielded VMs, so secure VMs within GCP. These are things that traditional enterprises is going to resonate with traditional enterprises. Yeah, but here's the thing. With one final point, I know we're going to run over a little bit of time here, but I want to get it out there. You mentioned Oracle and the licenses. It's not just about Oracle and their costs and that disadvantage that could have for a lot of people. And what cloud clearly has some benefits on a lot of costs. Here's the problem. Like any mafia business day, we always talk about the cloud mafias and the on-premise mafias. Oracle has an ecosystem of people who make a boatload of money around these licenses. So you have a lot of perverse incentives around keeping the old stuff around, okay? So as the global SIs, you mentioned Accenture, Deloitte and others, those guys may salute the Google Cloud flag and the ecosystem, but at the end of the day, it's going to come down to money for them. So if the perverse incentive is to stay in the old way, it's like, hey, okay, if you keep the license in there, I get more better billing hours and I can roll out more deployments. Because what Cloud's doing, what Google's actually enabling is enabling for the automation of those systems and those services. So you're going to see a future very quickly where half of the work that Accenture and Deloitte get paid on is going to be gone from weeks to minutes, months to weeks to minutes. This is not a good monetization playbook for Accenture and those guys. So Google has to shift a ecosystem strategy that's smart and makes people money. At the end of the day, that's going to be a healthy ecosystem. For every dollar of Google spend, it has to be at least five to 15x ecosystem dollars. I just don't see it right now. The big consultancies love to eat at the trough, as we like to say. But let's talk about the ecosystem because you and I, we've walked the floor a couple of times now. We mentioned Accenture, Cognizant is here, Red Hat is here, KPMG, Salesforce, Marketo, Tata. I mean, everybody's here. UiPath, a startup and RPA, Cohesities here, Rubrik's here, Intel's here. Everybody's here, I mean, except AWS is in here. And Microsoft's not here. The other point that I think it's worth mentioning is again, big theme here is internally tested then we pointed at the market. Chevron, Auto Trader, Mastercard, you're starting to see these names trickle out. Other traditional enterprise, they announced today a partnership with NetApp for file sharing, for NFS workloads. So you're seeing NetApp lean in to the cloud in a big way, NetApp's back. You were seeing that. You saw Twitter on the Google Cloud. So you're seeing more and more examples of real companies, real business. I'll just end the segment by saying one thing quickly. The high IQ people in the industry, whether it's customers, partners, or vendors, are going to have to increase their 3D chess game because as the money shifts around, it's a zero sum game in my mind. It's going to shift to the value. Things are going to get automated away and that could be core businesses. So the innovator dilemma is in play for many, many people. You've got to be smart and you've got to land in a position, you've got to know where the puck is going to be, you have to skate to where the puck is going to be. And it's going to require the highest IQ, tech IQ, and also business IQ to make sure that you are making money as the world turns because those dollars are up for grabs. The dollars are shifting as the new ecosystem rolls out. If you're relying on old ways to make money, you are in for a world of hurt if you now have a plan. So to me, that's the big story, I think in the cloud that Google's driving. Google's driving massive acceleration, massive value creation, massive ecosystem opportunities, but it's not your grandfather's ecosystem. It's different. So we're going to see, we're going to test people, we're going to challenge it, we're going to have conversations here in theCUBE. For day two of three days of live coverage, I'm John Furrier with Dave Vellante. Stay with us as we kick off day two. We'll be right back.