 Live from Las Vegas, it's theCUBE, covering AWS re-invent 2017 presented by AWS, Intel, and our ecosystem of partners. Hello everyone, welcome to theCUBE here live in Las Vegas for Amazon Web Services, AWS annual conference re-invent 2017. I'm John Furrier, the co-founder of SiliconANGLE Media, co-host of theCUBE. We are here for our fifth year in a row as Amazon Web Services continues to go on a thundering pace of product announcements and massive growth. And we're here with two live sets, we're growing so much, there's so much action. There's two cubes, double barrel shotgun of innovation and data we're sharing with you. Go to SiliconANGLE.com, check out all the stories, all the news, and we're here kicking it off with an analysis, getting ready for tomorrow, the big day. Today's officially the partner day, Sunday night, they had Midnight Madness, their first ever event for Amazon, where they usually kind of the March Madness, kind of copied Cube Madness, if you follow theCUBE, and they do a little preview. I'm here with Justin Warren and Keith Townsend, two great analysts in the community, guys and co-hosts this week at theCUBE. First of all, thanks for co-hosting theCUBE this week and thanks for coming by. It's a pleasure. Nice being here with my 50,000 closest friends. It's so good to have you guys here, one, the hosting, but more importantly, but we've been watching this evolution. Both when Amazon started, I know you both have been involved in the game, in the cloud watching it and participating, but watching just the tipping point, you're starting to see that moment where people calling this the VMworld 2008 moment, where it's like, oh my God, it's kind of gone mainstream, but it's still got a community. Can they keep that alive? Meanwhile, everybody is just getting blown away by Amazon, no matter what is being said. There's clearly the leader in cloud, Microsoft pedaling as fast as they can, cobbling together their legacy cloud to try to keep up, Google a new guard company, looking really good with developers, but not international, not a lot of things there yet, but certainly looking great. And then you got everybody else. Yep. Yeah, is there anybody else really? Yeah, as Dave Vellante would say, what horses are on the track? Yeah, there's lots of smaller players who are calling themselves cloud. They're much more like managed service providers and co-location kind of things. It's not really cloud, the way you would think of it from the AWS kind of perspective, what do you reckon? Yeah, so I've been talking to a lot of Fortune 500s lately and all of their internal customers, when they describe what they want, they're describing AWS, Azure, and Google Compute, and everything else is just not even part of the discussion. Yeah, it needs to look like AWS. That's like the benchmark for this is what it is. This is what it is. The gold standard, the bellwether. All right, let's talk about Amazon, because I was writing a post on Forbes I posted about kind of trying to tell the story in a way that was kind of understood by the mainstream. Still not really truly understood, but they're changing the game. They're just kind of mining their knitting. They're just all steam ahead. Why look in the rearview mirror when you're the top dog? Why do that? But the game is changing. They're constantly introducing new stuff. Serverless is the hot trend that we've been tracking. You're seeing it here. You're seeing real developer-centric, customer-centric announcements. I mean, even during the analysts meeting, I heard rumblings like we can't even keep up with all the news that's so massive. So just a thundering pace of announcements. Where's the innovation? What's Amazon doing now? What do they got to do to distance themselves from the field? That's interesting. I reckon the competitors to Amazon are actually distancing themselves from AWS. They're trying to find their own way of doing things because you can't add AWS, AWS. Yeah, Rackspace learned that a couple of years ago, right? Yeah. Trying to compete head-on, you're going to lose. So we see Google is pushing really, really hard into machine learning and AI-type systems. A lot of people are using them for that big data and genomics-type research. Microsoft is all about Office 365 and the traditional enterprise applications that all of their customers today, they know and love. Yeah, so Microsoft is doing what Microsoft does, which is taking care of their enterprise customers. And I think this is where AWS needs to innovate in. And it's not maybe a technical innovation more than the operating and sales approach to how they treat enterprise customers. Enterprise customers still, I think, are struggling to this date on how to interact with AWS. And AWS is still trying to figure out how do they sell and help manage enterprise accounts. All right, so let's separate IT because obviously two factions are emerging. The CXO, which is traditional IT, which we're all familiar with, and a new kind of developer model is emerging. And I will say it's developer speeds and fees, developer programs, where developers are shaping the agenda. It used to be CXOs have the cash, they drive everything. And now you've got this developer mojo and I can see early signs of a cult here, where all the innovation that's come in the field is from customers saying, screw it. I don't need that big dog telling me to do the old guard, the old CIO up there. I'm just going to go do it, get out of my way, three feet in the cloud of dust, get a prototype up and running. So you guys see that dynamic with this cultural shift. Yeah. What's your thoughts? Cloud is a state of mind. It's a way of operating the business. It's not so much about the infrastructure. It's not so much about the services that live on top of it. It's how you use them. And that way of doing things that the developers like is that they get to pick and choose their favorite tools from what they think is the best solution. And a lot of the time that's been AWS. And then they blend them together and they kind of, they just stitch this system together based on the favorite tools that they have. And that just lives in a completely different level of abstraction than what we've seen before. Yeah, and the speed too. I mean, that's changing the game too, right? I mean, right. Well, you can do that a lot faster than waiting to raise a PO, wait for three months for someone to rack and stack a whole bunch of gear, wait for everything to clear through purchasing and then you get access to the enterprise anointed correct thing. So we saw it the same with Salesforce where people with sales guys would just go with a credit card and just say, yes, I'll have some of that. Thanks. And it is much more than the credit card. You know, VMware with their recloud air service a couple of years had where I can take a credit card, build a data center. My son, a developer in college, I gave him that solution. He looked at it. He was like, what's a load balancer? Why do I need to configure a firewall? I just want to build an application, man. I just want to build, I just want to code. And AWS has figured that out. How to get developers back to what they love to do, which is solving problems via code. And you see it, even before the start of the show, there's a lot of hoodies and shorts at this conference compared to the culture that we see at a lot of other. I find it inspirational. So a couple of key points. So I asked Andy Jassette, an exclusive one on one with him last Monday and I asked him, you know, talking and he made a comment to me and I'll tell you the story here. He says, you know, we have a conversation inside Amazon, this is Andy talking about if we were going to start Amazon all over again, because he tells a story about the scar tissue and all the pain they went through with S3. He says, if we were going to do it all over again, we would use Lambda. And the serverless trend is interesting because now that speaks to your son's objective. Get this, I don't need routers. I don't need load balancers. I don't need gear. Maybe how many CPUs I need? I don't know. What's a patch? You told me, all right, yeah. Linux, what's Linux? So, okay, that's the norm. The driver has to be a new programming methodology, not agile. We're talking about composability at a level where no one says, oh, I need Oracle for that or I need Mongo for that. This is just databases. So a whole new things happening where this choice that used to be the religious war between vendor A or B, serverless could change the game on this. We're just going to end up with a new religious war, I think. It's going to be instead of Vim versus Emacs, it's going to be should I use Amazon Lambda or should I use Google Cloud Functions? It's going to be one of those. Which programming language is the best? Okay, old guard, new guard. This is the term that Jassy uses. I like it because I'm old, so maybe I'm old guard trying to be a new guard. Old guard means legacy. He's really talking about Oracle, IBM, it's some extent Microsoft. So, we'll be putting them in that bucket. So, new guard players clearly Amazon are seeing their new guard, but Google's new guard in cloud. They're not really trying to do anything, legacy, they have legacy infrastructure, but they're approaching a market from a new guard perspective. What's your guys take on old guard, new guard, and do you agree with that statement and what are the old guards guys have to do to be cool with the new school? So, theCUBE has been at almost every major conference this year. Take an example of what some of the old guard is trying to do. NetApp is trying to get into the cloud conversation. Google has none of that legacy concern of needing to sell boxes. You look at a solution like Kubernetes. Kubernetes has come on and taken over the container orchestration conversation because Google doesn't need to make money off of Kubernetes. They don't need it to sell more boxes. There's a bit of freedom. Great way to move some workloads off Amazon. What'd you think? It's a great way to move workloads out of Amazon. AWS has joined the CNCF because they no longer have a choice in the matter. Kubernetes has won the containers war. So, because of that, these new school competitors can compete in ways that a HPE, a Dell EMC, et cetera, simply can't. Justin, I got to ask you this because I agree with what he's saying. I'll take it one step further. The old guard is trying to slow the game down, move the goalposts as an expression. They got to try to kind of slow this freight train down because otherwise they could be less than it does. And they have leverage. It got customers, they have market power, even Oracle, I would say, is in that category. So they got to kind of slow the game down. But is the scale and the unprecedented amount of announcements, the differentiator, as more services come on, their thesis here at Amazon is, as I release more services faster, more available capability, that's more total addressable markets available. Do you buy those two things, slowing down and services being the advantage? That's interesting. I think it's more of a scattergun approach in a way. It's like, you know, fail far. So if we throw enough services out there, throw enough stuff at the wall, we'll just find the ones that work and concentrate on those. As someone who tries to keep up with what Amazon is doing, and this happens with developers as well, when you release 800 new services in a year, name them all. As a human, that's really, really difficult to manage. So I think in some ways it's a little bit like, I have four kids, I can't even name them all. I get them all confused. It's a little bit like Microsoft Word. It's got 800 billion different features, but for any given customer, they only use maybe 10% of them. And yet, all of them are there because different customers use a different 10%. I think that's a little bit what Amazon is going for kind of ubiquitous market coverage of as much market as it can possibly get. It's a lot like its retail strategy. We want to be in everything, where some of the competitors are being a little bit more focused about saying, well, you know what, rather than just being a generic service that covers everything, we're going to focus on particular areas that we think have enough value in that for it to be worth that time. Okay, I want to ask you guys a question about value creation. Entrepreneurial startups, companies that are trying to grow, you're kind of seeing certainly in Silicon Valley where I live, startups are getting pumbled. If they were born before 2012, they're really going, not trying, they try to go big, but they're mostly going home. Barracuda Networks just announced this week that they're going to go private. Okay, private equities scabbling up all these companies that have pretty good sizeable funding. $100 million invested from Andreisa Horowitz, a Greylock, Sequoia, big names folding tent and being acquired, which is code words for we can't go public. And even big public companies that don't have a cloud player kind of retooling. So the question is, are we at a point now where scale and speed of the game is causing some havoc in the marketplace? Well, look no further than what's going on in Europe now. And theCUBE is at HPE re-event. I mean, HPE's discovered in Europe and HPE is a completely different company than it was three years ago as a direct result of what Amazon has done in the cloud space and gobbling up all of these smaller accounts and new opportunity. HPE, you mentioned it earlier, HPE is still HPE. HPE is going to get that interview or session with the CIO, you know, Meg makes the call. She's going to get a, someone's going to pick up to the line. Now, Antonio. You're now Antonio. But AWS has been changing that story impacting and taking the air out. HPE chose an interesting approach to get smaller, to become more agile. Dell chose the opposite route of getting bigger to compete. We'll see which one plays out. In the meantime, $18 billion run rate and no sign of slowing down. So $18 billion run rate with 40% growth on that baseline is pretty significant. I think they might even be doing better than that next quarter, but that speaks to the traction. It's not just startups. Those numbers aren't just startups. Airbnb is a big company now, but they start out small. We use Amazon, a lot of people use Amazon. They're winning big enterprise deals. Why? What do you guys think? What's the reason why? You know what? Go a little bit intuitive here. Look at VMware on AWS. I've been kind of critical of that solution, but it is a easy win. If VMware made the exact same announcement on IBM the year before at VMworld, in the Fortune 500s I talked to, don't consider that cloud. The exact same solution in AWS is cloud. That's the cloud checkbox. AWS has, they do a much better job controlling their brand and Kleenex, but they are the Kleenex. They are the Xerox of cloud. You don't have cloud unless you have AWS from an enterprise perspective. That's what Azure, Google Compute, and all the other cloud providers have to compete against. It's, in my opinion- First of all, those guys are incomplete in their cloud. And that's just on a feature by feature basis. I do agree. It's kind of like outlook or word. I like outlook because it's more bloated than word, but less useful. But my point is, that's the name of the game. Getting functional value creation. So final question for you guys is, as we look at re-invent this week, obviously I looked at the industry day yesterday on the board, a lot of Alexa repeats. So you can see which sessions are repeating. So that's an indicator of popularity. So Alexa's got traction. Serverless with Lambda has traction. What do you guys see as the big so far early show buzz? I've hearing a lot about containers. Containers, and like you say, things like Lambda and Alexa. Anything that has AI machine learning in it, that's very hot at the moment. Whether or not it's just hype and the bubble on that will pop in a few years. I personally think that that is mostly hype and hot air. But it'll settle down and there'll be some real value in there. That's where I'm seeing the noise. So over at the area they have the container kind of show, it's a show within a show. And I'm hearing similarly with containers, but not just containers, see your point, serverless. It was a term that we struggled with a couple of years ago. Now it's generally accepted. You know what, I can just write code and that code can be executed without regard to infrastructure operations that has proved to be insanely popular right now. Okay, final question, I'll start it. We're going to end this on this last segment. I know I want to get one more in. That's the buzz. I want to ask you guys, what tea leaves are you reading? What signals are you looking for? Because remember, Amazon is very scripted up right now. You can see them on message and I'm trying to poke holes in the, and which tea leaves smell on it and put in my ear, ear to the ground. So think about that question. My view is, I'm looking at, is this developer trend a cultural shift and to what extent is that developer traction in terms of mind share and love of the brand of the Kleenex, the cloud, the real cloud and how much will that tip the CXO conversation? Where's that power shift? So to me, I'm trying to read the tea leaves to saying, if this developer tipping point happens at this scale, developers can really be to the driver's seat. Not just, oh, developers are in charge. I'm talking about really making the decisions on all big deployments. That's my tea leaf read. What are you looking at? So I'm talking to a lot of vendors. They're number one reason for being at AWS. And when I say vendors, vendors that we see at traditional infrastructure shows, they're here to talk to new audiences, to that developer audience that you mentioned. And what I want to know from them are more than just interest. Do these developers have money? One of those challenges that all of these cloudy type companies have faced is that they, developers fall in love with them. Docker is a great example. Developers fell in love with Docker. Millions of downloads. However, that doesn't translate to POs and purchases. Do these guys actually have the buying power to see through that initial contact all the way to the field? It was the buying decisions in IT. Exactly. Thoughts? You made the same comment I think earlier about 2008 VM world. It has a very similar vibe to me here. I'm seeing that this is now the crossover between where it was developers, where it was all hoodies and track suits and pink hair. I'm seeing a lot of suits, seeing a lot of money floating around this conference. So I'm starting to think that this is the point where AWS is starting its transition from being the new guard to the old guard. They would love to be IBM. IBM made a lot of money. Yeah, turning it into an old guard is very good financially. It makes you a lot of money. So I'm looking to see where on that transition are we and how long can AWS maintain that momentum of being a new guard company? And if they can hold the line on new guard, they win everything as long as they could. That's the goal. In my opinion. All right, I'm John Furrier here with Justin Warren, Keith Townsend kicking off the first day of three days of wall-to-wall coverage here at AWS re-invent. Stay tuned for more analysis, opinion, commentary. Of course, go to Siliconangle.com for all the exclusive interviews with Andy Jazz and all the top executives of Amazon. We'll be back with more after this short break.