 line from Las Vegas, Nevada. It's theCUBE, covering AWS re-invent 2016. Brought to you by AWS and its ecosystem partners. Now, here's your host, John Furrier. Hey, welcome back everyone. We are here live in Las Vegas. It's theCUBE's SiliconANGLE's flagship program. We go out to the events and extract the signal from the noise. This is Amazon Web Services AWS re-invent 2016, their annual user developer, now customer conference. It's 32,000 people, it's the center of the universe. Of course, we're here bringing to you live three days of wall-to-wall coverage. I'm John Furrier, co-hosting with me all week. The student minimum, covering at all the angles, getting all the data and joining here for this analysis segment and closing segment. Jeff Frick, general manager of theCUBE, managing behind the scenes and lining up all the production, producing the event. Guys, great event, I got to say. Blown away by not Andy Jazz's keynote, not Andy Jazz's exclusive interview on theCUBE, but the cake that came out for my birthday with the logos on it, and it was a cube on top of it. John, it's really nice of Andy and the team to bring together 32,000 people to wish you a happy birthday. I got to say, it was pretty blown away and I really want to thank Amazon folks for the birthday cake. I'm 51 years old, so I don't really get at the birthdays much anymore, but that was super special from the team. Appreciate it. But guys, speaking of birthdays, Amazon's 10-year birthday was this year, and Stu, what a change, right? I mean, let's just talk about the next 10 years. Do you think the enterprise competitors are going to let them walk into their store in their house and push them around? That's what's going on right now. Yeah, John, it's really interesting. Some of the metadata we heard, I mean, those enterprise guys, they've got big, big buckets of money, you know? We talked about when we led up to this show. AWS makes most of the profit for Amazon, and they're doing great in a $13 billion run rate, but compared to Oracle, Microsoft, IBM, I mean, these guys have war chests and can go to battle, so as you said, Amazon might have won the first round of this, but it's not over. Even Andy himself said, look, there's not going to be one winner, but there's not going to be 30 winners. It's going to be a small number. There's pieces, as I always look, it's like, where's Google really playing analytics? They're great. Microsoft's got their enterprise apps, you know? Amazon, boy, the developers, they love it. You know, it's going to happen. Well, Andy Jess' comment when he was on theCUBE is going to be on YouTube now. He said, talking about the competition, we don't look at the competition as a benchmark like other people do and worry about what they're going to do moves. We do what we do best, and we're going to look straight ahead. Obviously, they're in the leadership position, so if you're not a top dog, Jeff, the view's still the same. So, you know, that hits philosophy, but I got to tell you, they are going to face a significant battle, and you know, we're competitive strategy junkies here on theCUBE, and you don't go frontal attack, classic 101 business strategy, unless you're over-armed. Microsoft and Oracle would love Amazon to move to their territory and kill them with power and resource, but Amazon wants to keep the goalposts moving. But here's the challenge. We had Malcolm Gladwell on a little while ago, and one of the things he commented about is most of your fresh new and innovative ideas come from the bottom. New employees, young people, they look at the world different. Those legacy companies, many of them, are top down. So do they have the culture? What impressed me with part of Andy's keynote was that they obviously have a culture and a system and a process to bubble up innovative ideas, execute them on and move. The fact that the pace of innovation is going faster, even though I don't know how many people are at AWS. 32,000. In the actual company, the fact that they've got a culture to up-bubble innovation, that's going to be the hardest thing for the incumbents, I think. We want to look at it, because here's the thing. Amazon, I believe, has over 300,000 employees and culture starts at the top. When we talked to Andy Jassy, you know, the cultural, the 14 leadership principles on their website, it is ingrained in their culture there. And as we all know, culture eats strategy for breakfast. So those big legacy companies, they are slower than Amazon. When I talked to the people that are working here, there are some tough environments inside Amazon, but they're excited. They said they feel like they still work for a startup here in AWS and that the passion, they are engaged. What you worry about is the dogma, right? You don't want Amazonians to be too arrogant, right? So that's why I asked Jassy, do they get too cocky? Because you don't want to have them in the field not well trained, not throwing their weight around with customers. They got to be a little bit more humble. And well, I shouldn't say a little more humble. Stay humble. Okay, stay hungry, stay humble. But I think my big takeaway was too, is that Amazon's doing things so new. Jassy pointed out is we're pioneers. He didn't say we're inventing the future. They're innovating on the future. So Peter Burris and I were talking yesterday about what's going on at the Wikibon Research Agenda. And we talked about products versus services in the product market in the old days. You ship a product out of how you sold it is the way the old guard does it. And you cared about speeds and feeds. When things are a service, do you really get into the weeds on what the speeds and feeds are? No, does it work? Do I get my electricity? Do I get my water? So just a couple other interesting data points. Jeff from Twilio talked about software as a mindset, not a skill set. Looking at the world from a software perspective, which means iteration, changing, improving constantly. But while you guys were talking to Andy, I talked to a buddy of mine. I used to work with this now at Amazon. I hadn't seen him in years. And I said, how's it working there? You know, sometimes people say it's a little crazy. I talked to a guy in the airplane flying up. First year's a rough adjustment. He goes, not if you've worked at a startup. It's startup pace. It's startup pace at $13 billion scale. It's not hard enough. You come from a place that they don't work. It's startup pace. Maybe it's a little bit more of a challenge. Well, I talked to him about this specifically. So you go to SiliconANGLE.com. I got a three-part series that I posted. Our team put together for Mike Susan, part three talks about the management style. And Stu, you brought this up in your question on theCUBE with Andy. And one thing that he said on my interview that he didn't say on theCUBE is they do a double-down strategy. So if you look at decision tree analysis, Stu, you know the probability theory on possible scenarios. They teach us in business school all the time to all the financial geeks. Their decision-making is peaked around option to abandon, meaning they try aggressive things and they kill early and double-down on what works. Now, from a net present value risk management standpoint, that is the fastest decision-making process. They're doing this at scale. And it's also data-centric. That's the thing my buddy told me. He's like, there's not a lot of BS. You got to bring your numbers. If you bring the numbers and you got the numbers, things are good. If you don't have the numbers, don't bring it. Yeah, you know, it had a sit-down conversation with James Hamilton. And he said, compared to, he'd worked for some big companies. He'd worked for IBM. He'd worked for Microsoft. He said, we don't think that we've always got the perfect answer. Like Andy Jassy said, you know, when we do a design and we do all the custom, you know, there's like eight people that would say, oh, we're going to look at it. And if they give us feedback, we're going to listen. We're going to take that input. And we might do that. So, you know, they are listening to the community. They are learning from that. They iterate so fast. I see James Hamilton, so I'll go over it. James Hamilton is in the house. So James Hamilton is probably one of the most brilliant guys on the planet. His wife's amazing as well. Yeah, he's on it. You're awesome. Come on on. So Stu, back to scale, right? So the scale thing, I worry about only one thing with Amazon. As they grow, the scale thing is going to be a competitive advantage for them. And the numbers that James Hamilton was showing up on the peak Fridays gives them a unique view on the building and infrastructure at scale. And you brought up the question of lowering the cost and lowering the prices. But the value is going to be created on the number of services. They are increasing the services at a faster rate than anyone else, and they're doing it, but not only faster than their competition, but faster than the competitors can do it. So that makes the composability argument an operating system for a customer. You can compose your app as a service. To me, that's a unique thing. John, the gravity of this ecosystem is just pulling everything in. Talked to plenty of companies that were like, Amazon's a competitor. I have to be in the marketplace. You know, we've talked to companies that like, well, I mostly sell on premises, but I've got a little bit there. I've got a booth here at Amazon, because this is where the customers are. That flywheel that we talked about, the more customers and the more services, it just keeps accelerating. The point we really talked to Andy Jassy about, the data is the new flywheel. They've got a lot of data. Stu, talk about that. What about that data angle? Talk about that data. So we're talking to, if you look at our research team, we understand that the future really depends about how you make decisions with data, how you leverage your data. The trope we've used on theCUBE many times, data is the new oil. So the question is, is that going to become a proprietary differentiator for Amazon? That they're just going to have so much data that it gives them such control. Because we all see, you grow the ecosystem, you eat the ecosystem, you implode the ecosystem, Allah, Microsoft, Allah, all these companies. So, they've got a nuance. They're learning, they're growing with their partners. Everything's not perfect, but let's be pretty well. The other thing though, just on the data, is they've got so much, when they showed the AI and the ML demo, they've got all of that data from so many customers, I agree, if you're doing facial recognition software, it's kind of like Facebook or Google. They've got so much more mass on which to build the models that it's just fantastic. Yeah, but I think that was a little bit window dressing. I'm sorry, but the machine learning for face detection and the hot poly and the Lex, that's not really game changing technology. There's open source stuff out there where you can do the same thing, but the issue that they're doing is they're making it as a service. We looked at it. You can't run it against so many, you can't train it like you can with so much mass. I'm just saying that on the face of the tech itself. Yeah, well, John, so here's where you're right, but where I think it might be a little bit wrong. So, yes, does Google have some of these technologies? Microsoft, are they getting lots of companies? You know, voice, everybody's attacking voice as the next interface. The serverless architecture with Lambda is where Amazon has a leadership position here. There's some of the others are moving there, but boy is it moving fast. I talked to a number of practitioners here that were just like, oh my God, I tried out recognition and I set up some calls and I can look at stuff on my TV or set something up. Body cameras on police officers, I can go find missing children. It was something they had at a keynote across the street here. Motorola was partnering with Amazon. That only comes on massive scale. And it's just like, oh my God, it's so easy and cheap to do. So we have two minutes left and I want to just go on that point. With massive scales at Jeff's point, what is possible? Because the analysis that we're doing and then the people in the industry are doing is based on old data, right? So I want to go around the horn and talk about what you think is possible that people aren't seeing that might skew the prospects of Amazon good and bad from where people think it is. I'll start. I think that people are misreading this whole go to market thing. I think that Microsoft and Oracle are playing the playbook that they have and that Amazon has a rabbit they could pull out of their hat and that is with scale, this go to market changes significantly different if they can crack the code. My only open question to Amazon is I don't see that right now. I do not see where they can fight the battle against some of the big luring of the cash from Microsoft into an ecosystem that's predefined with years of experience. Amazon has to change that game and provide real cash value, real value to startups and companies. So to me, I'm watching that. Startups are the canary in the coal mine. If that doesn't pan out well, Stu, the ecosystem could falter. Yeah, John, so there was a superhero theme in Andy's keynotes. I'll riff on that a little bit and say with great scale comes great responsibility. So you look at companies like Walmart, where we're ping for years, how they're treating their workers, how they're doing for green in the environment. Amazon too, they now have a goal to be 100% on renewable energy in the future and they're making great strides. This is really hard stuff, but this can change at a global scale. Look at kind of just the carbon impact of that over 40% on renewables today and James Hamilton's working really hard on this because they're growing so fast that they need to do this. They're working with women who code. They're giving some of these tools that are so cheap as John. The startups, they know that they can start doing some amazing things today for pennies on the dollar. The first year we came to the show, we talked about a company that spun up like the 100,000 supercomputer in a month for $10,000 that would have taken them two or three years to do for $10 million. When we talked about big data, where we take these awesome functionality and just make it available to everyone, so we hope the technology will be used for good. I want to get one more point in. We didn't talk about this, but the public sector, we had Theresa Carlson on Jeff. The public sector is an opportunity. I mean, the government is probably the biggest spender of IoT and surveillance data. The CIA and other smart cities is right around the corner. I mean, Amazon could mop up the IoT market from smart cities all the way down to cyber surveillance, cyber security and whatnot. But to your other question about, you know, what the scale let them do? James, just one little part of James Hamilton's keynote which you can watch, they've got it online, talking about their network infrastructure and their cables running across the oceans. I mean, they've thought through all kinds of stuff, redundancy. You can't get that as a startup. So now for the price of admission, you not only get the infrastructure and the app and the compute, but you get this underlying infrastructure that you could never build on your own, never build on your own. So I think, you know, it's just like what Intel did with PCs, driving, scale to crush it in microprocessors. Amazon is not, Amazon now has scale AWS with all these people participating in their systems that they can run that thing way bigger. And even if they've got the buffer zone, the buffer zone as a percentage of the total is so much smaller than individual buffer zones. So guys, let's wrap this up. Final thoughts on the show. Stu, we'll start with you. All right, so John, you always like a little prediction. 2017, I think we're going to have 50,000 people here and Amazon will continue in press every year. You know, more announcements and not window dressing. I mean, things that are the seeds today that will be game-changing in this industry. We will, you know, talking to some, you know, really good people out here. The things that they are doing today, like you look at the new iPhone that comes out every year and it's like, oh, this is kind of interesting. And then in next 10, right? It's like, oh, that's why they're doing it. The seeds have been set here that we're going to look back and understand the impact as we start going into it. Competition, any comment on prediction on competition? Any shakeouts? Absolutely, you know, there's, you know, it's not something that I hear a lot in the discussion here. You know, Amazon definitely, especially if we talk about infrastructure to service and so many services that they've got here, it's great. It doesn't mean that there's not lots of applications. SAS providers can choose where it makes sense to live. You know, I expect 2017, you know, Google will definitely be part of the conversation more. Microsoft's sure chugging along, but Amazon is still in the pole position. Jeff, your thoughts? To me, I want to see what happens with Google. You know, we went to the Google Cloud platform launch event a couple of years ago, now day and green is there. Everyone has high expectations for what she's going to do. They just announced their next conference and I'm kind of waiting for them to make a more aggressive move. Microsoft clearly has a great position based on their app, their historical position, but I want to see what's Google's next year to drop. And Diane Greene is doing aggressive blocking and tackling to try to get in there and wedge themselves into Amazon customers. Because they've got the scale. My prediction is, my thoughts is 32,000 people up from 19,000. This is the beginning of the kick up of the hockey stick. You always wonder where you are on the inflection point. It's going to kick up. You're going to see, I agree with students, going to be massive growth and you're going to start to see the emergence of a new management style. I think you're going to start to see people talk about the mindset, change how they engineer stuff. And I think the big DevOps movement prediction on this is that you're going to see software engineering go to a whole other level. It's going to be about engineering huge scale and it's more an operating system like mindset. And you're going to see the competition race to catch up and you'll see people faltering, losing share. And I just see Amazon extending their lead. The only wild card in all that is not Oracle in my opinion. It's going to be Microsoft. So I'm going to expect Microsoft to see some competitive juices there. And then just I think Amazon is just going to continue. So we'll be here next year, Amazon re-invent 2017. Make sure you check us out. And thanks for watching.