 I'm John Furrier, the founder of Silicon Angle, this is Open Compute Summit, we are live in Silicon Valley. I'm Joe, my co-host Dave O'Loughlin for a full day of wall-to-wall coverage here at What Is a Revolution in Hardware, Open Compute Summit, we're on Twitter, we're on CrowdChat, CrowdChat.net slash OCP Summit V for five, the fifth summit. Again, great event, I'm my co-host Dave Vellante-Dave, welcome back, we're all live on the Cube again, kicking off our fourth season of the Cube. Look at the gray hairs coming in, but you look younger than ever, you know? Well, it's great to be with you again, John. It's our first gig together this January, although we've done a few in the East Coast, we've done some in the West Coast, so the Cube is back on the road again. It's a great way to start here at the heart of innovation at Silicon Valley. You've moved the way that you phrased it, I talked about it on my panel today. An under-the-hood engineering reset that you talked about taking place here in Silicon Valley, what did you mean by that? Well, Dave, here's what's happening in Silicon Valley right now. We are seeing a sea change out of the Cube for our fourth year, three years. We've been being chronicles of the data. We've been streaming the knowledge from Cube alumni, experts, entrepreneurs, CEOs, venture capitalists, and the message has always been the same. The convergence of infrastructure, the convergence of software. We saw it in the original VMworld 2010, that big software mainframe you call it, I think, which was Paul Moritz's vision. We've talked to Joe too. We've talked to all these people for convergence. The iPhone tsunami that's hit. Now Samsung ships more mobile devices as it came out again today. Record iPhones. iPhone can keep up with demand. The application market is driving the change, and this is causing a cloud to take center stage. So this is the year of the cloud. And I say that because in a hype way, because the hype's over. We had the drop of disillusionment now. The meat on the bone, as we always say, this is the year of the cloud. And what's going on under the hood is the technology change around the hardware. I was at the Mac 30th birthday party event this past weekend. All the guys who originally did the Mac, they were talking about 60 bytes they stole from the Finder application that killed Mac campaigns, which is the first app. They were coding at such a level hardware excellence. This is the new paradigm that's happening now. If you see what's happening in Silicon Valley, this is what the modern homebrew computer club would look like, except it's not computers, it's data centers. And data centers are powering the cloud. Software-defined innovation. Software-defined data center. Software-defined innovation is the future. You know, John, the year of the cloud, 2014, it was underscored and really crystallized to me at AWS Reinvent. I likened it to the downsizing days when all the applications that should be off the mainframe came off the mainframe, and the same thing is happening with the cloud. Well, the applications that should be in the cloud are going to go to the cloud. Now, certainly there'll be some holdout, some of the harder to move, online transaction processing applications, but the web workloads are clearly going. I think this year I'll make a prediction that more workloads will reside in the cloud. This is a unit number, not necessarily a revenue number, but more workloads will reside in the cloud than on-premise. So I think we're going to see that crossover point this year. Now, we heard the gentleman, Jim Lyons, from Merck, talk about, he's really enthusiastic about new workloads like analytics moving to the cloud, not so enthusiastic about the rip and replacing the existing stuff, but I think what's going to happen, John, is the growth of new is going to, you know, exceed 40% per year over the next five years where the on-premise piece is going to grow in the low single digits and ultimately it will become the market. The theme of this morning, Dave, was a packed house. First of all, I am in utter shock and fell out of my chair when I saw the total number of people this year. Last year, same sign of size here in terms of the venue, but it wasn't as packed. This year it's packed. You see the revolution happening. You see the hardware geeks, okay? This is where it gets interesting and I brought up the Mac comparison about the Mac 30th birthday party. You know, there's hardware guys and there's software guys and what you have here is the confluence in the intersection of hardware excellence and engineering and you have software engineering kind of coming together. You're going to hear Mark Andreessen, who is big-time Silicon Valley VC pioneer himself, creator of the browser. He's going to be making things happen. Andy Bechelstein, Martin Casado. We had, obviously, Frank, who was running the open compute. These are the alpha geeks. It is a community of people, Dave, and I think that's why I call it the modern-day version of what the homebrew computer club would be doing because these guys are geeks. They're tinkerers. They're engineers. They're software guys all coming together and when that happened in our previous generation, the Mac was born and the rest is history. I predict this is a similar dynamic. You look at the kind of people involved and it speaks for itself. So Frank Frankowski, who came out to ZZ Top music. He has big beard. I thought maybe he was a Red Sox fan, but I thought that was better than Duck Dynasty, but he said that he talked about proprietary BS and then I commented on the panel that that converged infrastructure is a $400 billion market, so it's very lucrative market and that's the market that OCP and this community is essentially aiming at to really democratize that. Dave, I want to ask you about the panel. Obviously you're up there in the panel. Were you like shocked when you saw how many people were in the audience? One, two, tell us about the panel. What did you guys talk about? It was the highlight keynote panel of the event. Tell us about what you saw and the audience and what the panel is about. Well, the room was, you know, not fire marshal packed, but it was really a large room and a lot of people here, I think you said 2,500, so I'm actually very surprised at that number. That's pretty good because we're talking about, you know, the underlying hardware. The panel that we had really had so the voice of the customer, which is Tim Lyons from Merck, and we had the standards, what I called the cat herders, Cole Crawford from OCP and of course George Slesman and the innovator from IO. And really what we're talking about, George laid out, said, hey, essentially the existing paradigm is broken. Here's what it needs to look like. George Slesman actually pulled up his iPhone and did a demo or a live demo of deploying data center infrastructure on his iPhone. He said it should be that easy. He got a round of applause from the crowd. Tim Lyons of Merck, as I said, was not as enthusiastic about RIP and replacing, but he's focusing on the momentum of the new applications and workloads like analytics. And of course Cole Crawford's coming on in a minute and he's really excited about the innovation and the crowd sourcing, if you will, of OCP. So we're going to dig into that. So Dave, I want to also add your perspective because to me what I like about this event and again I get my hair standing up on the back of my neck when I think about it is the genius of Silicon Valley and there's a lot of things in the press recently. You saw our venture capitalist kind of go out and prepare this whole one percent, the Google busts are being, you know, stoned by people in San Francisco. So there's a change going on culturally in the Bay Area and we are in Silicon Valley, although San Francisco is not really Silicon Valley, it's now becoming part of Silicon Valley because so much is happening up there, but you're seeing the gentrification of San Francisco, there's a backlash against it and what I think this represents is that inflection point where you put all the politics and BS aside, you have a community of people in the future and the future is a physical reset of the hardware and you look at Amazon.com, they are the leader in my opinion of how they architected their cloud by accident kind of on purpose as we say with Amazon web services and their leadership is second to none, they're commoditizing and innovating at the same time, they're disrupting, you mentioned some market figures about the proprietary vendors, it's pretty lucrative, but that's what's going to be disrupted. So you have a disruption of a community coming together that are going to engineer the future, there's kind of an honor system going on and how they're engineering this and a lot of people are participating because the rewards are great, so I want to ask you the question, given the market TAM for the total adjustable market in the proprietary world, the incumbents, what is the opportunity from a disruption standpoint that do you see? So two things, John, I think the opportunity for disruption is absolutely enormous, but I will tell you this, I think conventional wisdom says that things like initiatives like OCP and the cloud are going to eat into that TAM and they're going to shrink that TAM and I think that's flawed thinking, I think what happens is you've got proprietary infrastructure is a barrier to growth and what's going to happen is we've seen this for decades and decades of tracking these markets, as markets are elastic, as the price drops people buy more and it creates new innovation so I'm predicting a renaissance in IT and IT infrastructure and I think that essentially value is going to shift as it has been for the last several decades from the infrastructure up the stack to the software but there's still a lot of money to be made in infrastructure. Let's bring in David Floyd I want to get more of an analyst perspective obviously Dave's the key analyst here riffing on some of his ideas and what his thoughts are but we want to go into the weeds I want to ask some specific questions because there's a lot of nuances going on around what is available for example there's a huge threat to Intel they're here, huge opportunity as well so there's a challenge and opportunity for the big guys the new incumbent player that's kind of broke out here at the show already is IO.com they're filed for their IPO so they've declined to come on the cube but they had a huge demonstration with the iPhone basically demoing how to provision massive scale on iPhone pretty impressive they have over 600 customers as Frank came on the stage those guys got this IO cloud how to go full scale enterprise cloud enterprise cloud is all the rage David Floyd I want to bring you in get your perspective why is enterprise cloud hot and two how does that compare in contrast to the research that you've done over the past four years around IO centric infrastructure hyper scale hyper scale to the enterprise Gary Ornstein from Fusion IO is saying is it going to bleed over is it going to happen will we see hyper scale for the enterprise thanks for inviting me on the cube and that's a very very good question what I see is a convergence of a whole number of trends that have been happening very strongly over the last two years so there's been the trend obviously towards the cloud processing outsourcing things you don't need to be expert on there's the trend of convergence of making things more cost effective because you can create what I call single manageable entities SMEs so by pulling together the hardware, the software and eventually the application into a single manageable entity you reduce the cost and the work that we've done at Wikibon about how much that cost reduces every time you add on an SME you are approximately double the cost of management of that infrastructure and that essentially is converged infrastructure is it not? I mean Frank was talking sort of the rating converged infrastructure this morning but essentially OCP is developing converged infrastructure it's just not with all the proprietary PS locking absolutely you have got to have a single SME between the software in this case particular OpenStack and the hardware in this case OCP and by having those standards and by creating that single SME for the hardware and infrastructure software you can then go on up the stack and then add on the middleware the databases and the applications to create smaller numbers but get economies of scale by having single SMEs as high up the stack as you can and drive out costs and drive a lot of innovation in all the different ways that you can provide those new services So what's the advice for CIOs I think you hit it right on with Jim Lyons from Merck was saying he wasn't enthusiastic about ripping and replacing no CIO is but essentially he was our interpretation of what he was saying was don't worry about the ripping replace you know that'll take care of itself you have to care and feed for that but worry about the new innovative applications put those on the modern infrastructure cloud OCP like capabilities I think there are several things that CIOs really have to step up for the first is that building your own data center is a wasted money anything to your existing footprint is wasted money overtime as rapidly as possible you should be moving that out into the mega data centers and the reason for that is two fold first of all you want efficient running of that and you'll get that in the mega data center and the second is you want to be close you want your data to be close to the increasingly important amount of data from the cloud and the cloud providers are going to be in the mega data centers and you want to be able to move your data closer to that cloud and over the next 10 years there's going to be a huge increase in the amount of external data from the internet of things from the cloud, from social media that is where the increase in volume is going to be of data that you want to explore, exploit in order to drive your own innovation and new ways of marketing to try and solve it there's a tsunami of data coming obviously that's been a threat we've been pounding on good observation, I want to ask you one final question before we go to our first guest Colin from the foundation also with Alvin Opestak as well what's your perspective David on what to look for here not from a CIO perspective you just talked about that from an industry perspective the homebrew computer club changed the game we saw integrated circuit the PC revolution Apple, that's the storied movie now and all the luminaries I'm talking about it what here are you looking at that gets your attention that you're focusing on is it the fact that elements are now being retooled, smaller components what are you looking for, what are the key things that catches your eye here at Open Compute Summit I think the excitement is that it's going away from lots of mini little SMEs that are like of computer storage network of all of the software all of those mini fiefdoms that exist at the moment inside organization and inside industry and people have to learn industry has to learn the people in those industries have to learn how to come together and make it win-win how to be part of an open step how to be part of these standards, open standards like OCP, like OpenStep and contribute to them positively and add your value to the staff as a whole by contributing in that way you're going to add value you're going to increase the rate of growth of IT the increase of importance of IT and that's such a different way of doing it so there's going to be the need for new leadership in industry to take on a new way of doing it David, thanks so much for coming on, I appreciate it Dave, this reminds me of some of the commentary we said in the past around car buffs, right we always want to know what the latest car is or whatever and using that analogy we are talking about a significant under the hood re-engineering going on where the impact of this new engine is a significant disruption to the marketplace performance, software the components, the instrumentation what's your take and what are you looking for here at OpenCompute Summit just overall from a Dave Vellante perspective my angle here as I'm interested in how fast this all can bleed into the enterprise because the enterprise data centers have been a constraint to growth for decades and that has to change and in order for IT to have this renaissance that I've predicted in the infrastructure everybody's talking about the software to find data center, let's start with the data center itself and work up the stack from there and to me what I'm looking for Dave is I'm looking for that magic that sparked the homebrew computer club because this is exactly the kind of perfect storm you're seeing, you're seeing innovation you're seeing disruption targets that are sitting there waiting to be disrupted you're seeing innovation you're seeing people coming together and not just for the sake of coming together it's not like kumbaya, there is real business innovation, so you see a beautiful balance in a great community environment I think this is a new kind of open source we've never seen before it's not the same as Linux, not the same as Apache it's a new kind of openness at a hardware level where there's some real technology engineering going on it really is a magical place and that's what I'm looking for where's the magic, who's doing what who's got the real deal, where's the meat on the bone this is theCUBE, we'll be right back with our next guest here all day live at the Open Compute Summit 5 www.OpenCompute.com