 Ray Wang of Constellation Research. Ray, welcome back again to theCUBE. Hey, thanks a lot guys, I'm happy to be here. It's another Orca Open Roll then. Equally exciting. Ray, you're a founder of Constellation Group. You've done a lot of things over the past year. One of the things I just want to highlight and get to quick props out there is your Supernova Award. You've recently just put together a categorical list of leaders in the industry. So just one, tell us a little about that. Then I'm going to jump in and talk about the controversial Larry Allison Kino and implications to the industry. So tell us what's up with you. Let's check in with Ray Wang and tell us what's happening. Hey John, thanks for the opportunity. We have searched all over the world for some of the most innovative individuals who've gone out to lead disruptive change. They've been looking at social, mobile, cloud, analytics and some emerging technologies whether they're clean tech or they're looking at government 2.0. So you can look at our website at www.ConstellationRG.com under events, you'll see the Supernova Award winners. We will be announcing this week a contest to take them to the next level. These 29 protostars are going to be now listed as Supernova Award winners. And also we're looking at finalists who are actually going to win access to our research as well as a value of about $120,000 worth of research and activities. So San Francisco, California is where all the action is right now today in tech. Oracle Open World, 45,000 people. The second biggest show some are saying, CES, obviously the monster show. And Enterprise, Oracle, obviously a big 500 pound gorilla in the space. Tell us from your perspective, Ray, what's the vibe here? What are you seeing? What are you hearing? Let's talk about the keynote. Let's just jump right in. What's your angle on this? Well, the really two parallel universes going on. There's the keynote universe which is everybody's groaning about hard words like thanks, we heard about it, it's interesting. And then there's what's really going on in the mini sessions and the sessions that are going throughout the different buildings. Java ones on fire, people are really excited about some of those developments there. People are getting into fusion applications. People are looking at the middleware and some of the development tools. Out in the Marriott, people are really excited about some of the development tools that are going on that are related to social and collaboration and web center. So we see different parts of the event happening. It's just that the keynote is not reflective to what's really going on on the ground here. What about Larry Ellison? What's your review of his keynote? Obviously, you've been on Twitter stream, hashtag 00W11. It's well-documented at this point. I would have to say that I thought last year was probably one of the worst keynotes I've ever seen. This year is probably slightly better because it ended on time. I think the challenge is really that he's trying to tackle a very difficult problem and he's right, right? There's this big data issue that's happening out there. And given the unstructured data, the zettabytes of information that's out there, what is happening in terms of what people are trying to do with social information, machine-to-machine information, we've got a big data problem and throughput is important. And so being an engineered system has a lot of merit. The question is, how do you tell that story to get people excited? How do you share that passion? It's not a lecture in a comp-side class. So I tweeted about a lot of zeros and ones or I said speeds and feeds when people wanted vision. What did you not hear from him? Did you hear any vision? Was there any kind of signals from Larry? Obviously, he's got another keynote coming on Wednesday. What did you not hear? What were you expecting to hear? I was hoping to hear more about the cloud and how it related to business value. I think people were trying to understand the business implications of this. This started turning into more of like a technology education session as to, hey, what's it doing for my business? Now, I'd say it may be for most of Oracle's audience that might make sense, but if you're trying to get newer customers, next-gen CIOs, that isn't the right approach. So Dave and I were just talking about how there's a real lack of mobile conversation here. Obviously, the pavilion has like six people in there. It's the nobodies of mobile except for Verizon. So it was a carrier. SAP, by contrast, was all about mobile. Bill McDermott, the showman himself, talking about the iPad. Schnabe going into the product side. Clean messaging from SAP. Different kind of vibe. Compared to contrast, Sapphire with Oracle Open World. Sapphire did a really good job talking about business value. You got the message that social was important, that mobility was a big part of their strategy. You might not got as much on the cloud side, but you could see that analytics, mobility and social were important. Here at the Oracle event, we know that analytics is important and we know that cloud's important, but we're seriously missing a gap on social and mobile. Dave, what's your angle on that? So Ray, I noticed, you know, we all have these different badges on. I've got a blogger badge on. I'm typically an analyst. You're a financial analyst, I see. And you know, John and I have been talking about, the numbers don't lie. I mean, we can criticize Oracle all we want, but they're just throwing off $12 billion in free cash flow last year. Exadata's going through the roof. 20% growth and new licenses. Is this illusory or is this a real deal here? This is the real deal. What's happening right now is that the consolidation in the market that Oracle led and drove is also driving a consolidation in spend. And so what's happening inside an IT shop today, we've got these four personas of a CIO. You can check it out on hbr.org. But basically what happens is the chief infrastructure officer is in the midst of consolidating their footprint. And Oracle looks like a turnkey provider to them. IBM looks like a turnkey provider. Microsoft looks like a turnkey provider. And basically these big three are dominating these IT decisions. And while they're consolidating, other vendors are going by the wayside. But Oracle, IBM, Microsoft are making the money in the process. And customers are saving money. It's amazing. You hear, when you talk to Oracle customers, a lot of them complain about lock-in. They complain about Oracle pricing. And yet they are so lured into things like Exadata. Now how do you rationalize that? What's your advice to those guys? Well you got to think, there's really three types of Oracle customers. There's the Oracle Die Hard RedStack customer. These people are not leaving. They've borne Red Oracle and they're going all the way. So those customers are app dev folks. They love building on this stuff. They get excited about the Oracle technology. They faint when they see Larry Ellison. There's the Oracle customers by accident or acquisition. And they've got a different point of view. They're worried about lock-in. They've got a big portfolio. They might be doing some custom apps. They bought Best of Breed. And suddenly, Oracle bought all the companies that they bought. Too bad they didn't buy their stocks along the way. But they bought all those companies and now they're trying to figure out, hey, how do I rationalize this portfolio? And that is still happening in the marketplace. And then you've got Greenfield Oracle customers who are looking at this saying, if I got to make a decision, I'm going to choose something all open source or I'm going to bet on one or two providers and Oracle shows up in their vendor selection list. So you mentioned Java one. How about open source? I mean, is Oracle head faking open source? Is it, I mean, it's obviously putting a lot of resource into R&D and variety of different places. But what's your take on open source and Oracle's role there? That's a great question. Like any good technology vendor, basically Oracle is taking advantage of all the effort and all the R&D that's happening in open source, but not necessarily having to deal with all the other baggage around open source. So they'll take advantage of open source until they gain enough market share. And then at some point, they could have the right to close it off if they want to. So that's their purview because they may have that technology lock-in. You know, in this industry, you get into a lot of what I sometimes call urinary Olympics and they obviously see a lot of that. But one of the statements that's often made is these big companies don't innovate, but yet companies like Oracle and IBM spend tons on R&D. In your opinion, does Oracle and or a company like IBM innovate? And if so, how so? Well, there are really two ways to look at renovation, right? One way is, hey, four billion in R&D, that Oracle spending, but the other piece is trying to figure out what you're not good at in making those acquisitions work. And Oracle and IBM have both done an excellent job. If you were to think about in the history of mergers and acquisitions, that's actually a new skill set. And technology vendors who do a really good job with mergers and acquisitions really are helping their customers go forward. Oracle and IBM have done a good job. Are they the two best, in your opinion? They are the two largest and two best at it. What's your take on the database market, the database wars going on? I see Oracle's pushing that hard with performance and with mobility being a big part of it and Hanna was announced at SAP, Sapphire, and they got Exalytics. What's your take on all that mobile data, mobile, mobile database access to the edge? John, that's a great question. What's happening is the database wars are moving on to appliances and they're also moving into the cloud. And part of that is you're right. It's mobile data. How do you surface mobile information? Cloud is the information store. Mobile is the access point. And so when you get that level of efficiency, that's where mobile makes sense and that's where cloud is going to provide that information to mobile device users. What is happening though, is that when you look at where Oracle is on mobile and back to your point on the number of vendors that are there, we haven't seen a very clear story yet. And we haven't seen a vision as to what's being announced. On the SAP side, because of the side-base acquisition and side-base made that shift, probably about five years ago into mobility, they've had a much better story. They've got more products to show. You mentioned to me on Twitter that SAP's got good messaging, agree with that, but then said they got to do some work on the product side. Can you be specific and talk about what SAP's needs to do or what they're lagging behind or whether they're challenges? Could you just address that for the folks out there who are really trying to weigh the horse race between the Oracle horse and the SAP horse? I've been thinking a lot about this and I think it comes down to management style. Oracle has the traditional American benevolent dictatorship. So when Larry says something, it gets done. SAP tends to go into that consensus European model that really doesn't help when you're trying to integrate and get a lot of things built in terms of an engineering. They both have great engineering teams, but here's the problem. If you look at SAP's mobility solution on side-base, if you look at what they do with Bob Jay, what they look at some of the other acquisitions were in place, a lot of the hard engineering work required happens in the middleware side and it's even now happening on the hardware side. That's where we actually seen some of the failures occur where SAP hasn't been able to deliver that light, that tightly integrated integration that's required for a merger to be successful. Oracle has gone back and done the hard work. They put the R&D. They've actually, it's taken them six years to get Fusion apps out, but they've done the rewriting. It's taken them six years or four years to get the BI stuff out, but they've done the rewrite. And if you don't do the rewrite, you don't get the full benefits of that merger and integration. So I wonder if we could go back to cloud for a second and I wanted to ask you specifically about privacy. We had Tim O'Reilly on at Strata and we had a pretty long discussion, John, about privacy. Ray, I wanted to get your take generally on privacy and what you see is Oracle's role in that whole debate and discussion, if any. Well, privacy is becoming a problem, mostly because of Facebook and the consumer's trade-off of convenience for privacy and that data and information. So on the B2C side, I don't see much of Oracle playing that role right away, but on the enterprise side, privacy is important, especially when we're talking about public sector information, healthcare information, financial transactions. All this talk about all this free information and social graphs and the ability to mine this information is great, but I think enterprises are going to want and going to demand a greater level of privacy, especially thinking about securitization of information, compression of poor data results, the residency requirements of data. This is all enterprise class issues that have to be resolved. Who can access information in small groups? What happens in the cloud? What do I do on a mobile device? So identity management, security, digital privacy, they're all going to come back, even though the consumer might say, I'm not interested in that, every enterprise will be, because they're going to be liable for that. We're here with Ray Wang, industry analyst covering the space, Oracle SAP, like Dave Vellanta, he's in the trenches, he's talking to customers, he's talking to companies, Oracle, you name it, all the horses are on the track, and we're going to dig a little deeper. We're here on siliconangle.tv, the Cube at Oracle of the World in San Francisco, live for three days. Ray, my question is the disruption, okay? Oracle, huge company, great financial powerhouse, market power, you mentioned consolidation, consolidation among players, and acquisitions consolidation among budgets, buying power, Oracle's had a lot of leverage there. The question I have for you is a little bit on a startup growing company. Here in the pavilion, there are startups all around us in growing companies, heavily venture backed. What companies are out there that are out there that are disrupting, that are a threat to Oracle, or possibly an acquisition candidate? Could you just give us your horses that you see out there? There are a lot of companies. Let's take the mobile space, for example. There's companies like New Kona, there's companies like Skytech. What they're doing is making it a lot easier to take mobile information on the enterprise and put it on any mobile device. That actually disrupts Oracle, because of Oracle's lack or inability to deliver a mobile application in that space. Doesn't mean Oracle won't go back and acquire those guys once there's enough traction. Take social space, we've got a lot of players in that space, a drive, a lithium, a Yammer, a social cast, a social text. What they're doing is improving collaboration. We're going to see some advancements from WebCenter, hopefully on Wednesday, that they'll be talking about, that are going to drive Oracle into the social realm. But the question is, will they have the same traction? Will it be as easy to use? Is it going to be as simple? Is it going to be as secure? Is it going to be as sexy? In terms of things that are exciting to do from that part. Cloud, same thing, right? If you look at the advancements on the cloud side, a lot of these cloud vendors are really displacing the need for a stack. So why should I go out and buy all the software and hardware from Oracle when I can just go provision it? So we've launched with Alex Williams, the Cyclet Services Angle. We're covering the services business, which spans service providers and the enterprise as consumerization of IT becomes more reality, which it is with mobile, et cetera, and cloud. The question I have for you is, you've been covering the Enterprise 2.0 space. God, that's going back now. I'd say 2005, it kicked up in 2006. You start to see events out there, Enterprise 2.0, kind of playing off the whole web 2.0. Well, Web 2.0 kind of played out its path. Where's Enterprise 2.0 from then, say 2006, 2007 to today? What's changed and what's the forecast for you? The big thing is that we've gone from systems of transaction or transactional applications to systems of engagement or engagement applications. We're in the midst of that trend where actually communications are two-way. I actually believe we're going to go even further in the next three to five years. I don't want to call it Enterprise 3.0, I don't want to give it another dot number, but what I can say is we are moving to systems of experience and systems of fulfillment, and those are transition points that are going to happen over the next three to five years. What I mean by experience, basically the ability to actually create personalized experiences, whether it's at a B2B, a B2C or individual level, that then transcends. So how do you interact with an application? How do you enact with a device? How do you interact with information? That systems of experience is going to happen, and the systems of fulfillment are going to make sure that those are delivered, and that's some of the concepts. For example, if you guys know Doc Searles is talking about with things like Project VRM over at Harvard. Yeah, so how about the system? Okay, I like that systems play. Obviously a messaging here is about systems, parallelism, all that crap that he's putting out there, but seriously, let's get into the reality is what functional components are involved in that system that's driving that, and what's up for grabs? So what's nailed down the solid and what's really the land grab right now? Well, the land grab is going to be on areas that touch on interface and systems that actually figure out context. Those are really important areas, and location-based. Location-based provides context, information that are predictive analytics or algorithms around sentiment. All those are kind of sensing tools that help you sense, and then there's a whole set of category of tools that are about response. How do I serve up an action and workflow? How do I make a suggestion? Those kind of applications are out there. So take a company like Baynote, that's a very interesting company that would make sense when you're looking at commerce, when you're looking at taking an action and bringing it to the next level, which is, hey, what were you thinking about? I think most likely you might be enjoying or you might want to have a suggestion from this application. Ray, amazing insights. Really appreciate you coming on theCUBE. Constellation Research is www.constellationrg.com. Great site, tremendous resources on there. You got a growing community. Congratulations on the launch of the company and you're attracting some great people and contributors. So we're birds of a feather. We're watching you and really excited for you. Love working with you, great stuff. Hey, thanks a lot. I mean, this is really what the new analysis and the new media is going to be. I'm happy that we're actually creating disruptions here against the legacy analyst firms, the legacy media. We're entering a new era, so happy to be here with you guys. Great stuff. Ray Wang, impeccable reputation, great analysts. Great to have you, great to see you on the Twitter stream. It brings a whole another level of the tweet stream when we have real solid players on there adding value, creating content. So great to work with you. Thanks for coming by theCUBE. Hey.