 Welcome back, we're here live in Las Vegas. This is Silicon Anglin, Wikibon's theCUBE, our flagship program. We go out to the events, extract a signal from the noise. We are live in Las Vegas at Amazon Web Services, re-invent conference about developers, large-scale cloud, big data, the future. I'm John Furrier, the founder of Silicon Anglin. I'm joined by co-host Dave Vellante, co-founder of wikibon.org. And our guest is James Hamilton, VP and distinguished engineer at Amazon Web Services. Welcome to theCUBE. No, thank you very much. You're a tech athlete, certainly in our book is with term weak coins. We love to use sports analogies. You know, you're kind of the cutting edge. You've been the business and technology innovating for many years, going back to the database days at IBM, Microsoft, and now Amazon. You gave a great presentation at the analyst briefing. Very impressive. So I got to ask you the first question. When did you first get addicted to the notion of what Amazon could be? When did you first taste the Kool-Aid? Super good question. Couple different instances. One is I was general manager of exchange coaching services and we were doing a decent job. But what I noticed was customers were loving it. We're expanding like mad. And I saw opportunity to improve by at least a factor of two, I'm sorry, 10. Just amazing. So that was the first hint that this is really important for customers. The second one was S3 was announced and the storage price pretty much froze the whole industry. I've worked in storage all my life. I think I know what's possible in storage and S3 was not possible. It was just like, what is this? And so I started writing apps against it. I was just blowing away. It's super reliable, unbelievably priced. I wrote a fairly substantial app. I got a bill for $7. Wow, so that's really the beginnings of where I knew this was going to change the world. And I've been just, as you said, addicted to it since. So you also mentioned some stats there. We'll break it down because we love to talk about the Software Defined Data Center which is basically not even at the hype stage yet. It's just like, it's still undefined. But, you know, software virtualization, network virtualization really is, you know, pushing that movement of the software focus and that's essentially what you guys are doing. You're talking about notifications and basically it's a large scale systems problem. You guys are building a global operating system as Andy Jassy would say. Well, he didn't say that directly. He said the internet operating system. But if you believe that APIs are critical services. So I got to ask you that question around this notion of a data center. I mean, come on. I was not really going to give up their data center. It might change significantly. But you pointed out the data center costs are in the top three orders, servers, power circulation systems, or cooling circulation, and then actual power itself. Is that right? Did I get that right? Pretty close. Pretty close. Servers dominate and then after servers, if you look at data centers together, that's power, cooling, and the building and the facility itself. That is the number two cost and the actual power itself is number three. So that's a huge issue. When we talk to CIO, it's like, can you please take the facility's budget off my back? Totally. For many reasons. One, it's going to be written off soon, maybe. There's all kinds of financial issues around it. A lot of them don't see it though, which is a problem. That is a problem. That is a problem. Real estate sees it. Yeah, right. And they go, that's not my problem. So money just flies out the window. So that's obviously a cost improvement for you. So what are you guys doing in that area? And what's your big a-ha for the customers who walk in the door and say, look, we have this cloud, we have this system, and all those headaches can be not shifted, but or relieved, if you will, the big aspirin for them. What's the communication like? What do you talk to them about? Really, it depends a lot on who it is. I mean, different people care about different things. What gets me excited is, I know that this is the dominant cost of offering a service is all of this muck. It's all of this complexity. It's all of this high capital cost upfront. Facility will run 200 million before there's servers in it. It's just big money. And so from my perspective, taking that away from most companies is one contribution. Second contribution is, if you build a lot of data centers, you get good at it. And so as a consequence of that, I think we're building very good facilities. They're very reliable and the costs are plummeting fast. That's a second contribution. Third contribution is, because we're making capacity available to customers, it means they don't have to predict two years in advance what they're going to need. And that means there's less wastage. And that's just good for the industry as a whole. So we get some questions on our crowd chat applications. If you want to ask a question, ask him anything, it's kind of like Reddit, go to crowdchat.net slash reinvent. The first question came in was, James, when do you think ARM will be in the data center? That's a great question. Many people know that I'm super excited about ARM. It's early days. The reason why I'm excited is partly because I love seeing lots of players. I love seeing lots of innovation. I think that's what's making our industry so exciting right now. So that's one contribution that ARM brings. Another is, if you look at the history of server side computing, most of the innovation comes from the volume driven, usually on clients first. The reason why X86 ended up in such a strong position is so many desktops were running X86 processors. And as a consequence, it became a great server processor. High R&D flow into it. ARM is in just about every device that everyone's carrying around. It's almost every disk drive. It's just super broadly deployed. And whenever you see a broadly deployed processor, it means there's an opportunity to do something special for customers. I think it's good for the industry. But in a precise answer to your question, I really don't have one right now. It's something that we're deeply interested in and investigating deeply. But at this point, it hasn't happened yet. But I'm excited by it. Do you think that, and I want to, two lines of questioning here. One is things that are applicable to AWS. Others just your knowledge of the industry and what you think. We talked about that yesterday with OCP, right? Not if right fit for us, but you applaud the effort. We should talk about that too. But does splitting workloads up into little itty bitty processors change the utilization factor and change the need for things like virtualization? What do you think? Yeah, that's a good question. I first got excited about the price performance of microservers back in 2007. And at that time, it was pretty easy to produce a win by going to a lower powered processor. At that point, memory bandwidth wasn't as good as it could be. It was actually hard on some workloads to fully use a processor. Intel's a very smart company. They've done great work on improving the memory bandwidth. And so today it's actually harder to produce a win. And so you kind of have workloads in classes at the very, very high end. At the very high end, we've got database workloads. They really love single threaded performance and performance really is king. But there are lots of highly parallel workloads where there's an opportunity for a big gain. I still think virtualization is probably something where the industry is going to want to be there just because it brings so many operational advantages. So I got to ask the question. Yesterday we had Jason Stow on CEO of Cycle Computing. You bet. And he had an amazing thing that he did. You guys are, I'm sorry. Trumping it out as a case study, but it's not new to you, but it was new to us. He basically created a supercomputer and spun up hundreds of thousands of cores in 30 minutes, which is like insane. But he did it for like 30 grand, which would have cost, if you tried to provision it, did a TUCO calculator, whatever your model be. Months and years, maybe in years. But the thing that he said, I want to get your point on, and I don't know, I ask you a question specifically on is, spot instances were critical for him to do that. And the creativity of solutions, so I got to ask you, did you see spot pricing instances being a big deal? And what impact has that done to AWS's vision of large scale? I'm super excited by spot. In fact, it's one of the reasons I joined Amazon. I went through a day of interviews. I met a bunch of really smart people doing interesting work. Someone probably shouldn't have talked to me about spot because it hadn't been announced yet. And I just went, this is brilliant. This is absolutely brilliant. It's taking the ideas from financial markets where you've got high value assets and saying, why don't we actually sell it off and make a market on the basis of that and sell it off? And so two things happen that make spot interesting. The first is an observation upfront that poor utilization is basically the elephant in the room. Most folks can't use more than 12 to 15% of their overall server capacity. And so all the rest ends up being wasted. You said yesterday, 30% is outstanding. 30% means... It's like have a party. 30% probably means you're not measuring it well. You're lying. It's real good, basically. So that means 70% or more is wasted, it's a crime. And so the first thing that says is that's one of the most powerful advertisements for cloud computing is if you bring a large number of non-correlated workloads together, what happens is when you're supporting a workload, you've got to have enough capacity to support the peak, but you only get to monetize the average. And so as the peak to average gets further apart, you're wasting more. So when you bring a large number of non-correlated workloads together, what happens is it flattens out just by itself. Just without doing anything, it flattens out. But there's still some ups and downs. And the spot market is a way of filling in those ups and downs so we get as close to 100%. Is there certain workloads that fit the spot? Obviously certain workloads might fit it, but what workloads don't fit the spot price? I mean, it makes total sense. I mean, say arbitrage, opportunity, or excess capacity laying around, and it's priced based on usage. So is there a workload? Is it going to be torn up, torn down? I mean, what's the use cases there? Workloads that don't operate well in an interrupted environment, they're very time critical. Those workloads shouldn't be run as spot. It's just not what the resource is designed for. But workloads like the one that we were talking to with Cycle Computing are awesome, where you need large numbers of resources. If the workload needs to restart, that's absolutely fine. And prices is really the focus. Okay, question from CrowdChat. Ask James, what are his thoughts on commodity networking and merchant silicon? I think an awful lot about that. I know you. Who is that from? It's your family. Yeah, exactly. They're watching. No, network commoditization is a phenomenal thing. The whole industry has needed that for 15 years. We've got a vertical ecosystem, it's kind of frozen in time, vertically integrated ecosystem, kind of frozen in time. Costs everywhere are falling, except in networking. We've just got to do something. And so it's happening. I'm real excited by that. It's really changing the Amazon business and what we can do for customers. Let's talk a little bit about server design, because I was fascinated yesterday listening to you talk about how you've come full circle. Over the last decade, right? You started with, it's got to be stripped down, basic commodity, and now you're of a different mindset. So describe that, and then I have some follow up questions for you. Yeah, it's a good, I know what you're alluding to, is years ago, I used to argue, you don't want hardware specialization. It's crazy. It's the magic in software. You want to have general, you want to specialize software running on general purpose processors. And that's because there was a very small number of servers out there, and it really, I felt like it was the most nimble way to run. However, today, in AWS, when we're running tens of thousands of copies of a single type of server, hardware optimizations are absolutely vital. You end up getting a power performance advantage of 10X. You can get a price performance advantage substantial. And so I've kind of gone full circle, where now we're pulling more and more down into the hardware and starting to do hardware optimizations for our customers. So heat density is a huge problem in data centers and server design. You showed a picture of a Quanta package yesterday. You didn't show us your server. You said, I can't show you ours. But you said, but we blow this away. And this is really good, right? So, but you described that you're able to get around a lot of those problems by the, because of the way you design data centers. Can you talk about that a little bit? Sure, sure, sure. One of the problems when you're building a server, it could end up anywhere. It could end up in a beautiful data center that's super well engineered. It could end up in the end of a row on a very badly run data center. Or in a closet. Or in a closet. The air is recirculating. And so the servers have to be designed with huge headroom on cooling requirements. And they have to be able to operate in any of those environments without driving warranty costs for the vendors. We take a different approach. We say, we're not going to build terrible data centers. We're going to build really good data centers. And we're going to build servers that exploit the fact those data centers are good. And what happens is more value. We don't have to waste as much because we know that we don't have to operate in the closet. We got some more questions coming here, by the way. This is awesome. They just asked me anything. Crowd chat thing is going great. We got someone who, he's from Newtonix. So he's a geek who's been following your career for many years. I got to ask you about kind of the future of large scale. So Spot, his comment, David's comment. Spot instances prove that solutions like VMware's distributed power management are not valuable. Don't power off the most expensive asset. So, okay, that brings up an interesting point. I don't want to slam on VMware right now, but I just want to bring into the next logical question, which is, this is a paradigm shift. That's a buzzword, but really a lot's happening that's new and innovative. And you guys are doing it and leading. What's next in the large scale paradigm of computing and computer science? On the science side, you mentioned merchant silicon, obviously that's the genie down at the bottom there, but what's around the corner? Is it the notifications, the scheduling? What, is it virtualization? Is it compiler design? What are some of the things that you see out on the horizon that you've got your eyes on? That's interesting. I mean, I've got, you name your area and I'll tell you some interesting things happening in the area. And it's one of the cool things of being in the industry right now is that 10 years ago, we had a relatively static, kind of slow pace. You really didn't have to look very far ahead because if anything was coming, you'd see it coming for five years. Now, if you ask me about power distribution, we've got tons of work going on in power distribution. We're researching different power distribution topologies. We're researching higher voltage distribution, direct current distribution. Haven't taken any of those steps yet, but we're working in that. We've got a ton going on in networking. You'll see an announcement tomorrow of a new instance type that is, got some interesting characteristics from a networking perspective. There's a lot going on. It's pre-announced? No. The area's over there. How about database? How about database? I mean, 10 years ago, John always says, database is kind of boring. You go to a party and say, I work in the database business. Oh yeah, I see it. 25 years ago was really interesting. Oh yeah, you go to a party and you're just like, hey, yeah, what is this? Right, it's all, it's a whole new ball game. You guys are participating. Google Spanner is this crazy thing, right? So what are your thoughts on the state of the database business today? No, it's beautiful. I did a keynote at SIGMOT a few years ago, and what I said is that 10 years ago, Bruce Lindsay, I used to work with in the database world, Bruce Lindsay called it polishing the round ball. It's just, we're making everything a little tiny bit better, and now it's fundamentally different. I mean, what's happening right now is the database world every year, it's, if you stepped out for a year, you wouldn't recognize it. Yeah, right. It's just, yeah, it's amazing. And DynamoDB has had rapid success. Gosh, yes. We're big users of that. We actually built this app, the CrowdChat app that people are using on Hadoop and HBase, and we immediately moved it to DynamoDB and your stack was just so much faster and scalable. So I got to ask you the- And less labor. Yeah, yeah. Right, that was a big factor. So it's just been very reliable and all the other goodness of the, you know, elastic beanstalk and SQS, all the other good stuff we're working with Node, et cetera. So I got to ask you the area that I want to add to your opinion around the corner is versioning control. So at large scale, one of the challenges that we have is, as we're pushing new code, making sure that the integrated stack is completely updated and synchronized with open source projects. So what does that fit into the scaling up? Because at large scale, versioning control used to be easy to manage downloading software and putting in patches, but now you guys handle all that at scale. So I'm assuming there's some automation involved, some real tech involved, but how are you guys handling the future of making sure the code is all updated in the stack? It's a great question. It's super important from a security perspective that the code be up to date and current. It's super important from a customer perspective and you need to make sure that these upgrades are just non-disruptive. One customer, the best answer I heard was yesterday from a customer on a panel, they were asked how to deal with Amazon's upgrades. And what she said is, I don't even know when they're happening. I can't tell when they're happening. Exactly the right answer. It's exactly our goal. We monitor the heck out of all of our systems and our goal, and boy we take it seriously, is we need to know any issue before a customer knows it. And if you fail on that promise, you'll meet Andy really quick. So some other paradigm questions coming in. Floyd asks, ask James what is opinion of cloud brokerage companies such as Jam Cracker or Graviton? Do they have a place or is it wrong thinking? From my perspective, the bigger and richer the ecosystem, the happier our customers all are, it's all goodness. It's Darwinism. That's the answer. The fit shall survive. Now I think that brings up this new marketplace, spot pricing came out of the woodwork. It's a paradigm that exists in other industries applied to cloud. So a brokering of cloud might be something, especially with regional and geographical focuses, you can imagine a world of brokering. I mean, I don't know. I'm not qualified to answer that. Our goal honestly is to provide enough diversity of services that we completely satisfy customers' requirements. And that's what we intend to, that's what we can intend to do. How do you guys think about the make versus buy? You had a point now where you say, you know what, we can make this stuff for our specific requirements better than we can get it off the shelf. Or is that not the case? It changes every few minutes. It really does. So what are the parameters? Years ago when I joined the company, we were buying servers from OEM suppliers and they were doing some tailoring for our uses. It's gotten to the point now where that's not the right model, we have our own custom designs that are being built. We've now gotten to the point where some of the components and servers are being customized for us, partly because we're driving sufficient volume that it's justified, and partly because the partners, the component suppliers, are happy to work with us directly and they want input from us. And so every year it's a little bit more specialized and that line's moving. So it's shifting towards specialization pretty quickly. So I'm going to be replaced by the crowd that's getting great questions. I'm going to be off the lead. No earbud, I got it right here. So the question is more of a fun one probably for you to answer or just kind of lean back and kind of pull your hair out. But how the heck does AWS add so much infrastructure per day? How do you do it? It's a really interesting question. I kind of know how much infrastructure, or I know abstractly how much infrastructure we put out every day. But when you actually think about this number in context, it's mind-boggling. So here's the number. Here's the number. Every day we deploy enough servers to support Amazon when it was a $7 billion company. You think if how many servers, a $7 billion e-commerce company would actually require, every day we deploy that many servers. And it's shocking to me to think that the servers are in the logistics chain, they're being built, they're delivered to the appropriate data centers, there's back positions there, there's networking there, there's power there. I'm actually, every day I'm amazed to be quite honest. It's mind-boggling. It is. And then for a while I was like, okay, wait a minute, would it be Moore's Law? No, not even ridiculous, because you said every day. Every day. Not every year. Yeah, it really is. It's a shocking number and one, my definition of scale changes almost every day, where if you look at the number of customers that are trusting us with their workloads today, that's what's driving that growth. It's phenomenal. Well, we got to get wrapped up, but I got to ask the Hadoop world SQL over Hadoop question solution. So obviously Hadoop is great, great for store and stuff, but now you see hybrids come out. Again, this comes back down to the data, you can't recognize the database world anymore if you were asleep for a year. So what's your take on that, on that ecosystem? You guys have Elastic MapReduce and a bunch of other things. There's some big data stuff going on. How do you, from a database perspective, how do you look at Hadoop and SQL over Hadoop? I mean. I personally love them both and I love the diversity that's happening in the database world. There's some people that kind of have a religion and think it's crazy to do anything else. I think it's a good thing. MapReduce is particularly, I think is a good thing, because it takes, the first time I saw a MapReduce being used, it was actually a Google advertising engineer. And what I loved about it, I was actually talking to him about it and what I loved is he had no idea how many servers he was using. If you ask me or anyone in the technology how many servers they're using, they know and the beautiful thing is he's running multi-thousand node applications and he doesn't know. He doesn't care. He's solving advertising problems. And so I think it's good. I think there's a place for everything. Well, my final question is, I've asked all the guests this show, put the bumper sticker on the car, leaving Reinvent this year. What's it say? What does the bumper sticker say on the car? Summarize for the folks. What is the tagline this year, the vibe and the focus? Yeah, for me, this was the year. I mean, the business has been growing, but this is the year where suddenly I'm seeing huge companies 100% dependent upon AWS or on track to be 100% dependent upon AWS. This is no longer an experiment, something people want to learn about. This is real and this is happening. This is running real businesses. So it's real, baby. It's real, baby, that's the best puppy. James, distinguished guests. Now, CUBE alum for us. Thanks for coming on, you're a tech athlete. Great to have, you can great success. Sounds like you got a lot of exciting things you're working on and that's always fun. Obviously Amazon is killing it, as we say in Silicon Valley. You guys are doing great. We love the products. We've been using it for crowd chats. Great stuff. Thanks for coming on theCUBE. Thank you. We'll be back with our next guest after this short break. This is live exclusive coverage from SiliconANGLE theCUBE. We'll be right back.