 Live from the Moscone Convention Center in San Francisco, California, it's theCUBE at Oracle OpenWorld 2014. Brought to you by headline sponsor Cisco Systems with support from NetApp. And now here are your hosts, John Furrier and Jeff Frick. Okay, welcome back everyone. We are here live day two wrap up of Oracle OpenWorld. This is theCUBE, our flagship program. We go out to the advanced extracted signal from the noise. Wrapping up Oracle OpenWorld, live in San Francisco is what we're going to do. I'm John Furrier, the co-founder of SiliconANGLE Media. I'm here with the other co-founder of SiliconANGLE Media, Dave Vellante, and Jeff Frick, general manager of the CUBE operation, Silicon Valley. Guys, let's wrap this up, we have two CUBEs. So Dave, me miss you for a while. You were at the other booth, other CUBE, the CUBE Logic booth. Go right to you first. Your take from your perspective, we haven't had a chance to cross connect, but at your CUBE, what did you guys do? Well, we talked a lot about Oracle. Oracle is in transition, as you guys well know. I mean this company is, you were talking about a $40 billion company almost with a $170 billion market cap that purchased a hardware company in Sun Microsystems with lower margins, but Oracle was able to get back to that pre-acquisition operating margin. And what has it done, it keeps throwing off cash and it's investing that cash in the transition. Transition of what? The cloud. You know, you look back at history, Oracle, you know, strong marketing. Actually, we've said this a lot, John, in the CUBE. Oracle will co-opt, you know, the marketing, you know, statement du jour. So go back to eight, Oracle eight and Oracle nine. I for internet. 11, G for grid. Grid turned into a cloud. So now it's 12 C, it's all about the cloud. And Oracle is saying, look, we will do infrastructure as a service like Amazon. We'll do platform as a service like Cloud Foundry. Oh, by the way, with database. And middleware and Java. The number one database and the number one programming language in the world. And we're going to do software as a service. And we're going to buy up a zillion software companies. So infrastructure as a service, platform as a service, software as a service, we got it all red stack. And we're going to deliver it to customers. We're going to get more revenue and we're going to lower your cost, win-win. Everything's all good. The catch is it's got to be all Oracle all the time, homogeneous. And that scares some people away, but I will tell you, a lot of the customers that I've talked to around here are really excited about that message. So the strategy is very clear. It's also clear that SafraCats, Mark Heard and Larry Ellison are on the same page. It's not just empty messaging. It's got an R and D roadmap behind it. It's got an acquisition, an M&A strategy behind it. It's got an execution strategy behind it. And, you know, they're not as vulnerable, I think, as a lot of people feel. So, Dave, I got to ask you, we were watching and we had a break here inside the Cisco booth, which is awesome. We had your booth over there. I was watching your interview with the senior vice president, Mike Workman. I believe, Workman? Yep. Mike Workman, senior vice president of the storage. What did he share with you? And can you summarize the essence of that conversation? Because it's very clear in the opening keynote with Larry Ellison, this keynote today, storage is sprinkled throughout this and EMC's not here. So, you know, we saw Mark Benioff kind of leave a million dollars on the stage and do his protest event. He hasn't been back since. Now, he's on the radar as a competitor. Is that, you know, a tea leaf that we could read and say, EMC isn't here? They're going to be a competitive target. It seems that storage, okay, is being sprinkled around everywhere. We've had NetApp on theCUBE. They were, I don't know if they're admitting it or not, but they've got to be worried about the Oracle storage. What's the take? Well, I'll tell you, as you know, John, I spoke to probably four or 500 Oracle practitioners in the first half of this year. Face to face, intimate, you know, settings, sharing, you know, with them my vision of how IT is changing and giving them advice on how they can do things like cut Oracle cost and the like. And when I talked to them about their storage strategy, it came down to this. It was really this simple. Oh, we buy EMC for block for transaction. We buy NetApp for file. Really, that was that simple. I said, okay, that's a reasonable strategy. So, what's Oracle doing post-Sun? So, they buy Sun and they buy Pillar Data, a small little company that nobody has ever heard of, that Larry Ellison invested in years and years and years ago that was sort of like three-part. And he said, okay, here's what we need for the Sun products, the ZFS product, which is NAS. We're going to, here's a roadmap. We're going to go after NetApp. And then he's now brought in the Pillar product and said, here's the roadmap. We're going to go after EMC. Here's a bunch of money. You got two years ago, execute. So, they locked, I said to Mike Workman, you look pretty good for somebody who's been locked in an R&D lab for two years executing on a roadmap. They came out with a product that is, it's a chameleon. It's an all-flash, has all-flash capability and it's got spinning disk capability. You allocate different workloads to different parts of the array and they're going right after the core of EMC. You saw what they did with the EMC comparisons with ExtremeIO. We challenged them on that. There's no latency there. We've got a questionable cost that you use in Ddupe. You know, you got to peel back the onion. We had David Floyer on to really talk about that. But, I will tell you, he impressed me in that they are actually now have a product suite that can go after NetApp in their own base and that can go after EMC in their own base. And I think unquestionably, they're going to gain share over the next five years. So, Dave, we talked a lot about, you know, kind of, as you said, Oracle kind of blessing things the year after everybody else is talking about them and really, they're validating, you know, kind of validating the cloud, right? Well, okay, cloud is good. We like cloud too. And Marie Olson from NetApp talked about it. Really kind of the up-leveling of the conversations here with customers as if Larry's validation now makes it okay to talk to cloud and move the cloud. But my question to you is, in looking at their move towards the cloud, is this a reaction to keep what they have and move it into this new delivery model for the economics or is this net new opportunities you think that people that weren't buying the traditional RedStack? It's both. I think that they look at their existing base and say, look, we don't, we don't want, and they see people running, bringing your own software, bringing your Oracle databases to Amazon. They're saying, well, why should we give Amazon that business? They see what Microsoft's doing. I think they see the writing on the wall, so they say, let's put everything behind cloud. And just like Nadella is doing at Microsoft, I'm impressed with what Satya's doing. But so it became obvious, you know, to Oracle, probably a couple of years ago, that they needed to make this move, but they didn't have the product suite, they didn't have the delivery model. Their cloud business is at a $2 billion run right now. Now you can argue, okay, what's that really? It's real cloud, it's rental, it's deferred revenue. So they are putting everything there. And I think they see incremental opportunity in terms of selling hardware and middleware and applications as a rental model. They see this as a way to make more money. And so they see it as a bigger market opportunity. Now, can they compete with Amazon on cost? They say they're going to price it the same as Amazon. I think Oracle has a shot of actually doing that. Why? Because they own their own hardware and they own the software. Amazon doesn't own the application. So Oracle's margins should be much, much better than Amazon's in the cloud. And they can use infrastructure as a lost leader to provision that. It's absolutely, in my view anyway, the right strategy. Again, caveat emptor. It is the mother of all lock ins. I mean, this is the red stack, you know, taken to the cloud. So you're going to get OVM, you're going to get Oracle database, you're going to get Oracle middleware. Now, Oracle will say, well, no, you can move off-premise, on-premise, whatever you want to do. Yeah, but try to move out of that red stack. That's going to be very, very expensive. So you got to be careful. You really, to me, it's all about Jeff and John, horses for courses. You got to put the right product, the right solution and the right strategic fit. And it's not all Oracle all the time. It's not all EMC all the time. It's not all IBM all the time. And it's certainly not all Amazon all the time. John, what do you think? Well, I mean, here's what I think. I think Oracle is not in trouble. They're not in transitional pain. They're in transitional growth mode. And the show here is testament to that. It's the first Oracle of the five years we've covered it, Dave, where I can honestly say that the buzz is worth it. The feels like the deal's getting done at the entrepreneurial level, the startups finding some space, customers buying, the buyers are here. There feels like there's more money here, not placating Oracle by having a booth, right? Or just being part of the ecosystem and what's Oracle going to do? I think it's real energy, okay, one. Two, I think the cloud message is real and the customers have gotten there. And I think Oracle has woken up to the, we better watch our licensing fees, otherwise we'll have even more pissed off customers. And so you're seeing the virtualization stuff happen where things that Cisco impressed with how they're reducing the license cost. Dave's some innovations with how they're racking Oracle on the rack that knocks your licenses cost down. So I think innovation-wise, I see people now stepping up to Oracle, not being afraid to invest in the Oracle ecosystem. I don't mean like just, you know, hand-holding the Oracle customers and running. I think there's a real investment in the Oracle ecosystem. The lock-in spec is interesting. I don't think we've had that data point where I could see when not to buy Oracle. So right now the engineering system thing is playing well, but I don't see the point where you say, okay, I'm locked in, I don't want to work with Oracle. Maybe the marketing cloud and some of the HCM stuff might be kind of pushing the envelope a little bit over-reaching for Oracle to roll that into a RedStack. But I see customers not minding the RedStack lock-in per se, but I think it's going to be all about how the data fabric gets constructed. The other thing that I'm really impressed about this year is a term we coined yesterday on theCUBE called the engagement cloud. So HCM is all about sales, we were talking about engagement clouds, some of the things we're doing with CrowdChat, Ray Wang validated as well as CSE, CTO, Dan Hutchins. And that is that the crowd, there's a truth in crowds. And Larry talks about this customer experience component. He should call it the engagement cloud, in my opinion, but it's really about listening, social media, and the connected digital transformation that Ray Wang, the research he's doing, is really right on the money. That is going to be the marketing cloud. That's the engagement cloud. So that whole section is going to be a land grab of epic proportions. So if Oracle can get their hands on that, I think that's where the market says, whoa, stop Oracle, no land grabbing on that. So I think that's where you're going to start to see the demarcation of where the hardened top is of the Oracle lock-in for functionality benefits versus openness. So I think we haven't seen that lying yet. And you know, we talk about the lock-in all the time because it's the easiest way to criticize Oracle, but when you talk to Oracle customers, they talk in terms of business value. You know, when it comes up for negotiations, they complain, you know, the threats of the audit. Listen, that's, you got to be smart when you're dealing with Oracle. You got to treat Oracle negotiations like a project that never ends. Now the thing about Oracle is they come in with lawyers and technologists and people who understand the life cycle of their products, their solutions, they understand the deal better than you do. So you have to get smarter about that deal and negotiate smarter. Timing is very important. Everybody thinks, oh, just let's negotiate at the end of the quarter. That's not necessarily the time to negotiate with Oracle. They're too busy closing big deals. There's a lot of things that you can do, bring it in VMware to neutralize things and keep things open. And so, but the point I'm trying to make here is that it's all about the business value to these people. You talk to CIOs, they care about it working in a reliable way, meeting their business objectives, and that's what Oracle's done very well for decades. That's the straight up between functionality and lock-in where you don't have a lot of choice. At some point where the lock-in, you get to a point where it becomes a problem for you, but right now people are fine with, hey, I want an optimized engineered system for moving stuff to the cloud, virtualizing the database tier, and doing things like running Cisco UCS or putting some other big data analyst package into the infrastructure. So to me, the growth is going to be a good time. I think it's going to be a good growth in the market. I think Cisco will benefit that by extracting rents. Now, not the rents that they're going to be getting in the old days. I think they're going to take a haircut on licensing, but they can make that up on other areas. HCM is huge. I think that's going to be a nice grab for them. The M&A activity in the marketing cloud has been pretty good. Aloka was a good deal, and Blue Chi was another acquisition, so I think they're tooling up for this social crowd layer engagement cloud, and they're going to roll that right into the existing workforce. Well, that's the key. They're building that. They're building analytics in. They're building mobile, and they're building the social piece in to their existing product set, and that's critical. So it's all about business outcomes. You talk about that a lot. And the company's throwing off cash. Aloka's thrown off $15 billion in free cash flow in the last four quarters, six and a half billion last quarter alone. So price to earnings ratio and all that stuff, EPS, it's actually a BS metric these days because it's whatever the company says it is. I mean, hell, Amazon break even. I mean, you want to talk about, you want to talk about financial engineering, cash flow's king. I mean, you talk about cash flow, it's all you care about. And you know, Andreessen wrote that article you remember a couple years ago saying, oh, none of my companies, none of my startups use Oracle. Well, wait a minute, do they use Salesforce? That's run on Oracle. Does anybody use in Java? Well, that's not Oracle. Now, may say, okay, we're not starting our company with Oracle. Well, Global 2000 is, and a big question, do the rich get richer in this business? And for the last decade, the rich have gotten richer and guys like digital went away. Well, let's face it, Andreessen's comments needs to be caveat and that is that most startups start on Amazon, right? And look at Twitter, look at Zynga, there's a variety of examples. We started CrowdChat on Amazon, it's still there, but Amazon is a great place to scale. No one's going to in their right mind would pay Oracle a dime if you're a startup. I'd recommend any startup do not pay Oracle a penny. So why would you? Why would you? Because it's a way higher engineer. But you might buy Salesforce as a SaaS. Well, you can buy by the drink, now Oracle has the other tooling and this is where the interesting line about where the D mark is. The value has to come from sales. So if you're a startup, you say, okay, why would I buy a data center? I can go to Amazon for visioning stuff, stand up very quickly. When you get into the, I can stand it up quickly and pay as you go. That's a better deal for startup. But right now, why would I pay Oracle a life for a database when I can get it for free? I get Object Store, I get MySQL, all that stuff's free. And certainly Amazon makes it even better for startup. But at the point that we say, the diminishing return, the diseconomies of scale of Amazon or this free open source might be better off bringing it and tooling it. That's where the Oracle becomes compelling. There's a size threshold where you say, look, we got a provisioning it, we need QOS. I mean, look at Zuckerberg. They changed their quote from move fast, break stuff to move fast, make it reliable. So I thought Sam Palmasano before he retired nailed it. In an interview, the question that you went to him was questioning about HP. Are you worried about HP? And he said, I don't worry at all about HP. I worry about Oracle. Why? Because Oracle spends on R&D. And Oracle is very IBM like without the heavy services. Oracle is a heavy lift, but they let Accenture and Deloitte and Ernie Young build the services around that. They don't have a huge services strategy. IBM services led and they've got the hardware and software behind it. And Oracle in many ways is executing on an IBM like strategy, better than IBM. Now, to your point, what are the blind spots? Is it the born in the cloud, born in the web, mobile first, born big data apps that can sort of eat in at the edge into the core? Yes, I think it is that. And I think there's better economics potentially. But at the core of all this is the Oracle database. And it is the number one database in the world that's viewed as the most reliable and it powers the global 2000. The guy from Brickhouse said it, we're talking about tier one production workloads. We're not talking about tangential stuff. We're not talking about test and dev. He's like, we're talking about tier one production workloads. Well, and these are the ones that are not moving into the Amazon cloud. Will they move into the Oracle cloud? Oracle probably can argue today they already are. They're running a $2 billion run rate for cloud. I mean, a lot of that is going to be their core database stuff. That stuff is not going whole hog into the Amazon cloud. Amazon's having a hard time moving the OLTP stuff into its cloud. So Oracle's got an advantage there. Well, of course it's for them. So guys, so summarized two days here in theCUBE. I just want to say that it's been great to have Cisco and Intel and NetApp fund us to be inside the Cisco booth. I learned a ton about the leadership that Cisco's doing. I mean, I was kind of up to speed I thought on UCS, but there's a lot more goodness there than I thought. I mean, what they're doing with the overlay I think that's differentiating, but also get to hear their version of their stories. We hear HPs, right? So I love to hear the market share. So it's fun, but at the same time they are doing some good work. I got to add, I mean, Cisco really surprised me in service when Cisco announced it's getting into the server business. I didn't get it, but it's because it was my lack of knowledge and understanding the strategy. They've really disrupted that business and changed it with the whole converged infrastructure and the partnerships. It's going to be really interesting to see, John, what happens, you know, if and when it's going to happen eventually Tucci retires. Kind of that came up in the, in the cube queue is what's the succession plan there? You know, what's going to happen when Tucci are they going to give it to Goulden? What's going to happen with the Cisco relationship? What's going to happen to VCE? You know, I can see Cisco going to develop some other partnerships and really expanding his team. You know, it's done a good job of getting a footprint in that compute market. And now I think it's in a very good place. So the Intel thing, by the way, you weren't here, Cloudera was in here with Intel, I mean Cisco, but Intel wasn't. So the Intel, you got the Silicon Valley mafia going on. You got Oracle, you got Cisco, two joint customers from day one. You got Intel, Silicon Valley company, Cloudera, Oracle, Cloudera relationship. So I mean it's all. And what about VMware? That's the other wild card here, right? It's a pressure for EMC to spin off VMware. Can you imagine if Cisco owned VMware instead of EMC? Having EMC, a storage company owned VMware is weird. I mean, I think if Cisco owned VMware, that would be such a fricking game changer. It would be ridiculous. They would be. I mean, on paper, Cisco should own VMware. Well, look how fast Cisco got into the server business. And we were speculating why Intel backed out of their server relationship with the X86. Not until IBM made the same. IBM spun off the Lenovo. Here's why I think, Dave, I want to get your take on this, see if you agree or disagree. I think Steve Mills told us at IBM that they got out of it because of price pressure, margin. Intel's got the inventor tax with that. So they capture that margin on those low end. Cisco is cross-subsidized. Even if Cisco goes break-even and can forge a relationship with Cisco on the X86, they can cross-subsidize their other key assets. That's the edge router, their nested position in the infrastructure, and sequence and being UCS as a unified system, an integrated system. And basically throw the server as a feature. Basically as a cost. Even if they run break-even on servers. I couldn't agree more. I think it was a strategic mistake for IBM to get rid of its X86 for a server business because of that reason. Convergence is going to happen around X86. I mean, Power 8, I love the initiative. I love the effort, the logos, et cetera. I get it. People want an alternative to Intel and these massive data centers. But all the innovation is happening around X86. And guess what, folks? That ain't changing. Intel is not going to give up that ecosystem. It's got a little stranglehold in that ecosystem. There's so much innovation going on there that can value added opportunities around that fabric. And I agree with you. Even if you're losing money on X86 with Flash, with networking coming in, that's where the innovation hub is going to be. It's going to be around at X86. And I love Lenovo now. I mean, Lenovo just got handed a gift by IBM over the commodity manufacturing supply chain to make that work. But by the way, now the flip side of that is it does open up opportunities for Cisco and IBM to start working together. And I would predict you're going to start to see some interesting things between Cisco and IBM. The other thing, David, you weren't in this booth but talking about Cisco is totally different than one big red stack is this intercloud where they're really embracing saying, hey, we're the fabric, right? The network is the computer to steal the old line. And we want you to be able to move your workloads easily between all kinds of clouds, whether it's Azure or AWS or inside or wherever. So really taking this broader support of almost an ecosystem of clouds with pure compute underneath, pretty interesting place. Well, and it's pretty clear to me that what's happening in the cloud is you're going to have multiple clouds. This is, we are stovepipe on premise is moving to stovepipe in the cloud. You're going to have your workday cloud, your Salesforce cloud, your engagement cloud, your engagement cloud, your Oracle cloud, your Amazon cloud, you're going to have a zillion clouds. Well, you said it's for courses, right? It's matching the workload to the appropriate infrastructure easily. So there's opportunities there. CSC is doing some interesting things there with the acquisition of service mesh. Yeah, and we had Dan Hushes on the queue earlier. And the thing that's happening is that I see the channel relay. We had Maria Olsen from NetApp who runs Global Alliances for NetApp. And one thing that's happening is also on the money making side is on the channel partners. People are deploying, not boxes anymore. Used to be deploying boxes and I wrap services around. Yeah, we'll design networks. We'll do some stuff like that. Now you're going to start to see service provider like cable. I think you're going to see the CSC's Ascension Deloits and other specialty integrators and our co-channel partners really bake out some kick ass added value technology on top of say FlexPod, VVlog or other things where they can go in and actually do the service level contracting, hold the hand of the customer. That would produce massive gross profit for those partners and also provide an awesome onboarding of the new tech for the customer. So I see that whole game changing significantly. We're beyond the box. It's not about the box anymore. It's about the solutions and the outcomes. And who the hell integrates this? Well, and we didn't talk about Maria. What powers this is the solution and the outcomes are so transformative for the guys buying this stuff that there's room there to give margin to the providers. All right guys, so let's wrap that up. That's a wrap for day two. I want to just quickly sequence in for our next quick conversation as a pretext preload to our Big Data NYC event. So for the folks watching, we will be down in New York City for Big Data NYC in parallel to the Strata Hadoop World Conference. theCUBE has been in all the Hadoop worlds except for the last few ones that already media has been managing. So we're not part of that show, although we have our own community from our original work in that community. So we'll be there. But we're going to do something completely different Dave. We're going to want to share that with you. We want to get your joint announcement here. The Big Data NYC event is not about the speeds and feeds and the geeks stuff. We'll write this a good decent job there and a good job getting the pub crawl going, getting with all the geeks. We're going to take more of the business aspect of Big Data. We think of Big IPO windows coming out in 2015. We think customers are making big bets on who to go with and quite frankly who will be around. So I think you're going to start to see analysts come from Wall Street. What's the business models? Who's successful with the business models? Is the freemium land and expand versus big enterprise sales approaches? Customers don't want that big enterprise sales. They want to taste it. Cloud gives you a little freemium and or small taste and then you expand on use cases. So we see business model shifting. That's going to be our focus. If you want to add more on terms of the specifics Dave, go ahead. Well, let me just say, so we have three things going on. It's the October 16th, 17th and 18th, right Jeff? Well, let's see the Wednesday, Thursday, Friday. I don't have the dates exactly in my head. But so we're going to be broadcasting on theCUBE all three days. So the normal wall to wall, CUBE, Hadoop world coverage, bringing in practitioners and technologists and analysts, covering big data NYC. Now on Thursday at four o'clock we have the Capital Markets event. It's at the empire room in the fourth floor of the Times Square Hilton. And Jeff Kelly will be presenting results from the recent Wikibon survey on big data and then immediately following that, we have a panel with a CEO of Wendisco, David Richards, Abhi Mehta, who's a former practitioner at B of A. He built the data factory at B of A and now CEO of Trasata, and Peter Goldmacher, who is a former analyst at Cowan and Company. And so we're going to be looking at the future of Oracle, SAP, Teradata, the impact of big data on their business models. Will the rich get richer? Addressing some of the things that we talked about here, and from a Wall Street investment standpoint, how do you play big data? Because yeah, there's Splunk, there's Tableau, but all these other companies, Cloudera, they're raising tons of money, Hortonworks, they're staying private, there's really not a way to play it. So how do you play it? Well, one of the premises that we have is the way you play it is look for guys that are data-driven, that are transforming their industries by using big data. So that's something that we're going to talk about. We're going to put forth the characteristics of that company by industry, and we're going to look at that in depth. And then of course, on Thursday night, we have the CUBE party, our annual CUBE party at Big Data NYC, everybody's invited, all our friends will be there. So it was a fantastic event last year, we had a couple hundred people, and hope to have the same this year. Again, it's at the Times Square Hilton, and that starts again, four o'clock the Capital Markets event, six o'clock is the CUBE party, goes from six to eight, and maybe longer if people hang out. So we're excited about that. Extended last year. And then Friday, more broadcasting on the CUBE. So wall to wall to wall to midnight coverage of Big Data NYC and Hadoop World. Yeah, and we will be breaking down some of the big disruptors around business models, which is, you know, quite frankly, what is going to be the preferred method of customers, how they buy, that's going to impact revenue, that's going to impact IPOs, that's going to impact investment decisions. We're also going to break down the impact of mobile infrastructure, meaning where is the big data innovation? Where will the revenue come from? Where's the technology in Enabler? Because that's where the companies are going to be building around and we're going to be putting that narrative together. It's completely different from, you know, what technology to deploy, Hadoop, HDFS, or SQL on Hadoop. This is going to be more specifically around how to take the big data technologies, analytics, and BI to end, or integrating into applications to actually scale business models for a complete transformation. I personally believe, Dave, this is in the billions and billions of dollars of revenue that will be coming to the table as net new cash for these sluice startups and companies. So, if 2015's the IPO window, we're going to start covering it. So, see us in New York. If you want more information, call Dave Vellante or myself, or contact SiliconANGLE and Wikibon, and happy to follow up. So, guys, great job. Thanks for the wrap. Thank you, John. That's wrap for day two here at Oracle Open World. We'll see you tomorrow.