 Live from San Jose in the heart of Silicon Valley. It's theCUBE, covering AWS Summit 2016. Hey, welcome back everybody. Jeff Frick here on theCUBE. We're wrapping up a full day here at AWS Summit in Santa Clara. I've been going wall to wall since this morning. These are these great regional events that used to be kind of small and now they're like 4,000 people. So we're going to wrap up the day. It's been a great day, but returning back to the set John Furrier and of course Lisa Martin, her first really kind of Cube gig. So first off, Lisa, I'll go to you. Kind of how did you enjoy the day? What did you learn? What did you, what were you surprised at today? It was fantastic. I think the momentum here was palpable from the morning. It's still palpable now. There's tremendous momentum that AWS is generating but also all of the ecosystem partners that we talked to today are exhibiting really a symbiotic relationship in terms of innovation, spurting innovation. So I think that was one of the most exciting themes that I saw today, as well as just the pure passion from the AWS folks, from the partners. There's so much potential. The cloud market is massive, it's untapped and things are moving at an amazing speed, giving so much opportunity to customers from startups that are born in the cloud to enterprises and it's only continuing to innovate. And John, we're coming to the end of the first half of 2016, a really busy year. We've covered all the hot trends. We've been to Docker. We've done the data bricks and spark. We've been at EMC World HP Discover. We've covered them all, but really it's hard to argue that there's much more catalysts in the marketplace than AWS. Give me your impressions kind of with those things and then being here today right now. Well Jeff, the show here is just a testament to Amazon's growth there. A year ago, the marketplace didn't understand. Wall Street certainly didn't understand how Amazon broke out their business. Now it's clear it's over $10 billion. Wikibon and Silicon Angle and theCUBE. We predicted that over two years ago that would be $10 billion. We were right. Everyone thought it was a race to zero and it wasn't. It's actually a $10 billion business. Storage business alone is two to three billion. That's literally putting everybody like EMC and everyone else on their heels. That's just storage. You get into compute, HP and Dell box sellers are shifting their business. So Amazon has certainly, it's been validated, has certainly leveled the industry in terms of being disruptive. Amazon's show here at AWS Summit was a very giggy learning environment which is now turning into a full blown satellite event off their main show, Reinvent, which is the big show which will have theCUBE there. So again, all that in totality really means that Amazon is unstoppable. Amazon is on a run rate right now. They say well over $10 billion, which means $20 billion and that means the trajectory is up to the right. It is hockey stick growth and it's really going to change the game. And I'm blown away because the industry finally now understands that the competitive strategy is open source, having a strong developer ecosystem and actually releasing products at scale on a cadence that I call Andy Jassy's Law or Jassy's Law. Jassy's Law is release products on a cadence that just surpasses anything anyone's ever seen. Here they announced new stuff at Reinvent. They always drop a truckload of new technology so all that together, it's a scale game. It may look like a price to zero in terms of lowering and lowering the price but ultimately the scale they make leverage on and they make a lot of money so to me that's clear. In terms of themes, Jeff, we can't go anywhere in the industry without seeing IoT. The IoT ecosystem is whatever one is talking about because it's undefined, it's really uncharted territory and it's really an IT centric IoT, not a just offline machines being connected to some siloed computers. How do you connect devices into IT? This has not been the case ever and HP really was the first ones to point that out. The digital transformation is now in the dialect of Amazon Web Services culture. You're hearing conversations and this is the first for AWS, the digital transformation message. That means to the next point, hybrid cloud architectures are absolutely at the center of what Amazon's going after and what they want to do is win it one inch at a time. They already won the long game with the public cloud. They're coming into the enterprise winning yard by yard till they get to that goal line which is winning the enterprise and that is winning the hybrid cloud and the announcements here that highlight that is the DS, DMS which is a database migration service. It's a continuous replication that supports SSL encrypted endpoints for SQL server, Postgres, SQL, Amazon Aurora, MySQL, MariaDB and now SAP, ASE which is a formerly the side base. So basically the strategy is clear. Win the data, they win the enterprise. That is ultimately in my opinion the Amazon playbook right now, vis-a-vis the marketplace. Yeah, my takeaway is something we joke about all the time with the office, right? Keep matriculating the ball down in the field. Guys, they just keep executing and they execute again such a broad front and innovating across that is really tough, really tough to compete and we're seeing it. I mean, we talk about it but then we see it. The latest announcement, you know, Seagate just announced that they've got some head count reduction coming up. So you're seeing it in the infrastructure players. The other thing that we talked about is the efficiency in which they run and they've always run very efficient kind of a low margin business. You know, they happen to be in the same town as Costco which has built a very nice business on keeping margins low but being efficient. It's really tough to compete and the thing that surprised me most today was with Stefan Gardner from Corp Info talking about mass migrations, shutting down data centers. This isn't moving Greenfield projects. This isn't test dev. This isn't some little thing. This is the CIO saying, I don't want to be in the data center business anymore. The undifferentiated heavy lifting, right? The data center consolidation which looks like on paper is not consolidating. It's just shifting to the clouds. That's the key thing. The layoffs on Seagate is interesting and Lisa, we were talking about this on some of the examples that you were asking on the proof points. The layoffs at Seagate is a leading indicator that the old guard is dying, okay? And that is a proof point when they should be expanding their reducing. Siloed, pure play vendors or suppliers, two enterprises have to have an integrated approach. And one thing that came out of some of the interviews here was some validation on a concept we've been talking about on theCUBE is the most successful companies have one pattern in common. They flip the model around. All the winners are horizontally doing things that used to be done vertically. The stack, the technology and the business models. So the technology is changing how they deploy. It's horizontally scaling and the business models are the same way. So all the successful people are doing it the opposite way than it was done before. It's flipped at the head upside down. Application data from New Relic is dictating policy to infrastructure. That wasn't the way it worked. It used to be the infrastructure with dictate policy. This is how you use me. And you was stuck within that with that limitation. That now is completely over. That's just one example of many and there's a zillion of them out there. And that is a new model. This is the new normal. So again, if you nod out in front of this next wave, you're driftwood. Another thing along those lines that Corp Info even talked about and we talked about it earlier today I think and several of the sequences. The digital transformation and the cultural shift that predicates it. It's not possible without that. When we talk about mass migration, you just talked about a complete flip. It's a complete 180, but it's the C-suite that's really driving this. Taking that decision-making role out of the hands of IT. Talk to us about some of the things that you've heard today and also in your past experience with how corporations evoke that digital transformation by shifting the role of the buying decision and really becoming more business driven. Yeah, I mean, I think one of the things that's come out of the past couple of CUBE interviews and also here is two things. One, scale and then also economics, right? So the economics is from the C-suite, the CXO, whether it's CEO, CIO, CDO or whatever, CTO is to drive revenue earnings and that pressure is a top line business driver. Not to consolidate the data centers. That's an economic cut your costs but the buyers want revenue. Whether you're e-commerce, retail or whatever, the applications to front end to driving revenue. So the C-suite is mandating revenue growth. That right now is fundamental industry driver. What that means now is the real action that you're hearing from Lee, from New Relic who pointed it out, is that now IT and the people handling technology have to look at architecting, again, this horizontally scalable yet vertically focused differentiation on the applications. That to me means that the game to win this cloud war is win the architects, not just the developers. You got to win the cloud architects because there is no magic quadrant from Gartner that explains what it is. The world is now completely integrating. It's going to be a completely different DevOps-like workflow and I think that to me is the big aha moment for me is saying this is now the main target audience for everyone here trying to figure out the future. You got to get to the chief architects. You got to get to the solution architects. You got to get to the people trying to figure out end to end, how data, how scale, compute, cloud, all work together on-prem, off-prem, whatever that is, has to work that way. So business model revenue, technology architecture. And really just this kind of confluence of events between big data and cloud and the democratization of the data itself which then democratizes the access to the data, the tools to the data, and I just keep going back to the data scientists. You know, there aren't enough data scientists going back to there was not enough buggy whip, buggy whip manufacturers either. So this car thing's not going to work so well. You know, and most exciting really is the business outcomes and the Illumino guy Alex Dickinson from the keynote today talking about the effort that it used to do human genome sequencing is going to soon be like going to get your hair cut at the university barber shop. And the amount of change and real progress that we can make when this combined of resources for compute, resources for store, and more importantly, opening that up to a broader set of people who can apply different points of view perspectives to really solve some big problems. And the one he was talking about is cancer because cancer's kind of a funky thing and they want to really diagnose it and treat it at the individual level. It's not about getting your Starbucks order when you happen to come around the corner. This is a really big thing. This is why the IOT is interesting. This ties to Lisa's cultural question, which is, if you think about electricity, if imagine every company having a substation attached to their building, they don't have that. The substation's out there. That's what basically Amazon has done. They've established a substation like utility with computing, but yet there's so many other things that provide value, so you're not pricing the substation costs and value electricity, it's the value that electricity provides. So this always shifts to the outcome. Back to the cultural mindset. It's interesting because there's two schools of thoughts in this marketplace right now and the people here are of school one, which is they talk in a certain way. There's a certain code. There's a new way of doing things. It's a new flipped upside on its head, 180 view. That's a language, that's a language issue, how they talk and the cloud native speak, if you will. And then there's people say, what the hell are you talking about? So there's always been pioneers and settlers in the new market development. The people who don't understand the language better be looking for a job or figuring out what their business will be because this new language, this new approach, the new mindset is really about agile. It's not compromising service level agreements or delivery kind of operations. It's how do you execute an architect? That's a new language. And so the funny conversation I had in the hallway here was folks saying, hey, our sales motions are very easy. We talk to the customer and we say, are you sick and tired of doing things the old way? And if the answer is yes, they go forward. If the answer is no, they're a settler. So that's essentially the number one thing I'm seeing, Jeff, is that are you sick and tired of the old way or not? That's really the dialect going on here. That to me is really obvious. That's going mainstream. If the cultural mindset is, I'm sick and tired of doing things the old way, whether it's economic pressure or technical results, perfect candidate to shift the mindset to be more split the applications, go horizontal, move into the cloud. Those are the ones where I think those enterprises will win. But I do agree with Lee from New Relic. It's not a technology issue. It's a cultural issue. Right, so what do you think in terms of some of the legacy players? Cause we've seen some changes at the top, right? Satya Nadella came in to Microsoft a couple of years ago. Really seems to have made a dramatic change, you know, so they're trying to make their move. We just had to change at the top at Cisco. Now we've got the change going on with Dell going public and buying EMC. So we are seeing some attempts by some of the bigger players to shift the mindset either with new leadership, invigorated leadership. You know, Larry, you know, Larry said it's all cloud right now, you know, you talk to her. So as you look at the landscape of the legacy players, who's got a shot to make the change and who's dead man walking? Well, there's a couple of different things. If people who aren't doing anything, they're the ones with the blind spot in my opinion. Then you have like Cisco. You got to give them credit for trying, right? I was watching Cisco live on the web and I saw some periscopes with Chuck Phillips, the CEO. Okay, yeah, you did some periscopes. It doesn't make you a new company just because you did a few periscopes. You have to change the culture of the delivery of the product to the customer. So I think Cisco's under a lot of pressure to bring that open source. Lauren Cooney who we spoke with at DockerCon as Brent and Lou Tucker in the OpenStack community. These are the new leaders of Cisco that are bringing in the open source ethos. For Cisco, it's about open source adoption. If they're looking at open source, it's probably a winner. So I think Cisco is going to be good. I don't think they're going to be in trouble. Got to give them credit for trying but they're on a transition. Oracle is completely under siege by Amazon. Amazon is a direct threat to Oracle. Oracle, database, the Aurora was positioned as a killer. That's going to be challenging. Microsoft's interesting. They're playing with everybody. It's a love fest with Microsoft, right? So Satya Nutella was on stage this past week at the Worldwide Partner Conference in Toronto and he's up there with Jeff Emel to cube alum and did a panel with him and GE's betting the company on Azure. Just last year at Amazon re-invent, GE was on stage with Andy Jassy and said, we're betting the company on Amazon. Who are you betting the company with? Amazon or Azure? So there's a love fest going on in the big cloud players. And so I think that's a sign of multiple clouds coming out. So I think the big players are adjusting. I think they're running rapidly to go to their customer base and say, no, no, we're cloud ready, we're cloud enabled. So I think that is the key. Lock and specs are going to be more network based than indoor or other things. So if you can't move from one cloud to the other, it's still a lock and spec in my opinion. So as we talk about culture, I just kind of want to follow up on that a bit and looking at when Amazon announced the Elastic File System last year, direct target against the traditional incumbent storage manager. That's why we talked about some of them today. When we look at things where culture is concerned and the fundamental changes that have to happen for businesses to change their model, how much does an AWS have in terms of advantage over the incumbents who are monolithic and how challenging is it going to be to change a culture at Cisco or at EMC, for example? And where can Amazon take that as leverage? I think Amazon's biggest leverage is also potentially weakness. So let's start with the advantage. Shadow IT was a term that was coined because of Amazon. The ability to put your credit card down and start a project. And that is why IBM lost the CIA contract because they had the sales approach and locked in the account in the ivory tower at the C-suite. But some, you know, prototype was built on Amazon by someone promoting a project. That serviced out as an alternative and that gets into the mix. That kind of agility is really what Amazon strengthened. So Amazon is a death by 1,000 paper cuts in winning these big accounts. They can come in and provide that kind of nimbleness where you can have a point solution or something in an enterprise. That can really grow and provide instant value and that begs the question, why didn't we do this before? Why don't we do more of this? This is the psychology of this new model. That puts the incumbents directly under siege, that concept, because now there's proof points. That's the ethos of agile. Get some proof points, build on for it. So that's Amazon's biggest strength. Their weakness also comes from that. By not having that relationship-oriented sales approach and that kind of account reliability, they could fall into trouble, in my opinion, of not being seen as a partner. Not being a good geek partner, having a lot of features is one thing, but being a business partner will be something that Amazon has to bring into their DNA. Can they do it? Certainly. Is it their core strength today? No, their core strength is low-cost, high-volume, high-value technology enablement. So that's kind of like my take on that, so. It's going to be crazy and we're going to be documenting every step of the way. It's been a great first half. We've been running like crazy. You can see everything at SiliconANGLE.tv. You can see all the interviews. Also, our YouTube channel at youtube.com slash SiliconANGLE, we've bought podcasts going up. So we're out, we're talking to the folks. We're getting you the insight. We're sitting down having basically a kitchen table conversation with all the leaders of the industry. They're not up on the stage. They're not going through their prepared notes. We're having a conversation. Because this is, as a few people said today, the most transformative period of time in recent history around compute and IT. And now moving into OT as Dr. Tom likes to say in the marriage of IoT, you read about it every day. It's a really exciting time. The Cube's going to be there, so. Re-invent's coming up. Re-invent will be there in September, October. They're saying 35,000 people, book your room now or you'll be staying at the stratosphere. Circus, circus, circus, circus, circus. But we're going to take a little break at the Cube. We've got a couple of weeks here. We're going to do some studio shows, some on the grounds. We really, you know, the whole kind of industry takes a deep breath before we get ready for the fall tour. So keep an eye on the calendar. We'll be out there and about. John, thanks again for great first half. We've been banging it out. Lisa, welcome to the team. Really appreciate you pitching in today. Oh, thanks for having me. I love it. All right. So with John Furrier, Lisa Martin, I'm Jeff Frick. You're watching the Cube. We're signing off from AWS Summit Santa Clara. We'll see you next time. Thanks for watching.