 Live from San Francisco, extracting the signal from the noise, it's the Cube, covering Oracle Open World 2015. Brought to you by Oracle. Now your hosts, John Furrier and Stu Miniman. Okay, welcome back everyone. We are here live at Oracle Open World for exclusive coverage from SiliconANGLE's theCUBE, our flagship program. We go out to the events and extract the signal from the noise. I'm John Furrier, the founder of SiliconANGLE. I'm John Furrier with Stu Miniman, the Wikibon analyst for infrastructure and cloud. We are on Howard Street. They closed down San Francisco to 60,000 attendees. This is our sixth year now officially out on the street, down in the exhibit hall that we used to. Now of course we have Cube alumni and great guest there on Ray Wang, who's the principal analyst and CEO of Constellation Research. Ray, welcome back. Great to see you. Hey, thanks a lot man. This is awesome. We are in Howard Street and it is happening. You have been a follower of Oracle. I mean, we were back in our 60 year and you've seen the transformation. And I know we were seeing earlier in the Cube is that you don't see Larry Flinch right off them, but five years ago he looked like a deer in the headlights. He really did. Folded into the same slides from years past and it was like almost a critical moment in his mind. You can see him on stage, almost smoke coming out of his ears like, damn, we better do something. I need a bigger boat. I need a different boat. Whole new games changing. Client servers coming to an end. These are the thoughts, this alter ego that I'm putting words in his head but you've commented on this. This is a new Oracle. And talk about that transformation from that deer in the headlights moment five years ago with Larry Ellison too now. Well, definitely. Fast forward five years. He got the bigger boat. He won the race. You're definitely right there. But no, it's real religion around the cloud. I mean, even just three years ago, right? It was like, oh, we don't need multi-tenancy. Now it's like multi-tenancy database, multi-tenancy storage, multi-tenancy, everything. And so I think he got cloud religion but there are two ways to look at this. The original Oracle customer base, I don't think they were ready for the cloud five years ago. We stew you, me, a whole bunch of other folks. We've been vaginalizing the cloud for 16 years, right? Now it's mainstream. And like in true Oracle fashion, they've jumped in and said, okay, we're all in. And that's what we're seeing right here. So I got to get your take on this, critical analysis on this. Has Oracle done their homework? Because they're trotting out the messaging, hey, we've been here five years. We've done the work. We have product. Mark, he was asked on CNBC by John Ford. Are you determined to get into the cloud business? He's like determined playoffs. We are here, right? I mean, like that is, they're putting up numbers. So they're claiming full cloud offering. Have they done the work? Is it truly cloud? Well, a lot of the components that were required to build fusion were part of the things that you need to do to get to the cloud. The story that Larry was talking about on day zero, on day one, if you look at this day one in the evening keynote was, you know, we started out with apps and we had to build, you know, a way to host those apps and we had to build the infrastructure for those apps. So I think Oracle for the companies that are out there, it's probably one, they have all the tools to get to the cloud. Now the question is, how do you get that to scale up? Yeah, Ray, it was interesting. Some of us heard the message, Mark Hurd said, you know, in the future there's going to be two clouds and Oracle is going to be one of them. And we're left scratching our heads a little. You know, what do you make of the cloud messaging? How does it jive with what you're talking to the customers about? Yeah, so a lot of predictions about how many clouds are going to be out there. We know in the public business, right? It's going to be Amazon, Microsoft, and maybe someone else. And that may be where we see Oracle fit in. But if we're talking about secure clouds and what's actually happening, we once again see IBM, Oracle, Microsoft, and maybe someone else. And so I think there is going to be cloud consolidation. I don't know if we're going to get the two clouds in like five years. I think that's probably bold to say, hey, we're going to be one of them. But for cloud applications, that's a very different thing. If you're looking at suites, right? We saw a whole bunch of companies that were best to breed applications that suddenly their company has become a feature inside a product suite. We've seen product suites that have actually become a piece of a platform. And so that consolidation is definitely happening. And so we see that that's a big piece of actually where an Oracle customer looking at this is saying, okay, here's what's actually happening. The consolidation is happening. I'm betting on the red stack. The red stack is going to carry me through. So it's not a winner take all. It's winner take most. Winner takes most is what's going on here. Yeah, I guess, you know, one thing I look at the cloud, Oracle so long had control over customers with their licensing model. And it sounds like, you know, enterprise cloud has a lot of the same moments. I can't just take it anywhere. It's not just, you know, it's not as flexible as some offerings that I see out there. What do you hear about licensing? And I mean, the cost of the cloud, it's not going to be a cheap story. It's not like, you know, oh, go to the cloud and you're going to save tons of money. There's still a lot there. Well, it really depends on how you look at the pure of the cloud. If you're looking at a five-year cost savings, yes. If you're looking at 10 years, it gets a little dicey. If you're 15 years out, now we're talking that it might be actually better to own. And so you raised a really good point. What we're worried about really is cloud vendor lock-in. Right? We've had the cloud bill of rights for the last, I don't know, eight years. And one of the things that we're afraid of is in the cloud, you don't own anything. Right? And so if there's any place where you're going to see more lock-in, it might happen in the cloud. And that's one of the areas where people get scared of. Now, for Oracle customers, though, it depends what you're doing. Right? A lot of people have just been taking the Oracle instances and basically consolidating the vendors they're working with. So they are getting cost savings. So as the number of vendors disappear, and Oracle goes into a market, they're getting the cost savings space out of it. Is it a lock-in? That gets very dangerous. You mentioned multi-tenors. In memory is a big theme here. Integration is a theme here. Also security and data in motion. Data is the center of the value proposition for Oracle. That's the message. How do you reconcile that? As an analyst out there looking at the other competitors, data is the center. The integrated stack. What's your take on all this from Oracle? Well, data is a big piece, right? But it's not all going to sit in big data warehouses and data centers. Actually what's happening, the integration is going to be key. We think that 60% of all mission-critical data by 2020 is going to be outside your four walls. So the ability to access data very quickly, match that data, take some context, send a recommendation engine up against to make a decision, that's actually what's at play. And so we see a lot of that happening in your other show over in Las Vegas. So I've got to ask you, so I'll say it, I'll be an insight. Dave Vellante is back here. He'll be here tomorrow. So one of the things we're seeing has always been about Oracle, the red stack, but now it's a horizontal play. And I was speculating that Oracle actually could be one of those top three and win it all if they can by going beyond the red stack. We're hearing messages open. We see James Governor from Red Monk here. There's more of an open message here on top of it. So that kind of teases out this enabling platform. So it's not just a vertical application, Oracle, it's a platform where you have, certainly their apps, you know, ERP, CRM, and ACM. But now they're saying, okay, ISVs and startups, Hadoop, whatever. Work on that. So that's a platform play. We talked to about 30 ISVs who are building on top of Oracle. And one of the interesting things we heard from them was, they're partner-friendly, right? I wasn't expecting to hear that. They said they're more partner-friendly than Workday. They're more partner-friendly than Salesforce. They're more partner-friendly than SAP at this point in time. And a lot of the tools they want are in there. And that was something I was not expecting to hear. Do you think Mark Hurds had an impact here? Because we saw, we met with a guy from SuccessFactors. There is basically a forward-looking ... No one's looking in the rear-view mirror. There's a new Oracle. Comment on that. Do you agree? Is this a new Oracle? Is this legit in terms of these feedback? I mean, obviously you're talking to customers. It is. But is that consistent across this new ecosystem? I think we have a different Oracle. I wouldn't say it's a completely new Oracle. On the sales side, yes. What they did, a lot of the salespeople had left. They got into Salesforce. And what they did was, they started from scratch. They brought in a whole bunch of new recruits, trained them, worked them up. And you've got a very, very different Oracle sales team to start with. Then you think about the acquisitions that have occurred across the board. What they've done is, they've actually brought a little bit about what it is to run a best-of-breed organization. And when they brought that back, I think Oracle's slowly been absorbing, saying, hey, this is what we need to change to go after net new customers, as opposed to just keep serving the stack. Let's look at it. Let's drill down on that. Let's talk about the innovation strategy for Oracle for a minute. And let's break it down to organic and inorganic. You mentioned acquisitions. Really good job on the M&A front. They picked best-of-breed. They go after good management teams. Then the integration seemed to go well, certainly marketing cloud seems to be doing really well. So I want to get you to take on other sectors on the M&A. And also the organic. We talked to all the product guys here. There's some mojo there. So look at it. $5 billion in R&D. They're pushing the envelope on that. How do you balance that? How do you share your knowledge on what you've learned and what's your view on organic and inorganic? Yeah. On the organic side, just look at JD Edwards. The new release is out. People are super excited. There's stuff in JD Edwards. People are like, JD Edwards, what do you mean? JD Edwards. I mean, there's all these new features in there. They're adopting anything that you need to digital transformation last mile. I mean, that's JD Edwards. People are like, oh, okay. I didn't realize that. If you think about what's happening in the cloud ERP, we saw massive uptake in cloud ERP and vendor selections. So that's the financials. That's the non-manufacturing aspect. They just announced manufacturing cloud, commerce cloud. I wouldn't be surprised if they announced an ERP that actually addressed manufacturing later down in the year. And so we're seeing that happen on the product development fund. But the interesting thing is really what's actually happening in the middleware and in the stack. A lot of the optimization that was done on the Sun side, a lot of the optimization that's being done on the middleware, the product teams are pushing really hard on the middleware team saying, we can't use what you have. Fix this. You can't use this have. Improve it. And they've been getting a lot of pushback to make that happen. And they also got some innovation under the hood. We got Super Cluster. You got the M7 stuff. I mean, they got encryption on the chip end-to-end. You got John Fowler flexing the sun DNA now in the engineered systems. What's that impact? You look onto software, right? We've seen the commonization of stacks all the time. So if we're to project 20 years out, will we see two clouds? I'd still say three. But I mean, we're getting down to the fact that we're compressing all the innovation down the stack all the way from software down to chip. Think about what Intel was pitching out here on their keynote. So talk about new architectures. IoT is a big area. Your company's focused on this a lot. Oracle's talking about IoT. What do you think about IoT in general? And how do you grade Oracle on what they talked about at IoT? I think we got a lot of early stuff in IoT. And I think Oracle, once again, is taking its time with IoT. I think they've got a lot of projects that kind of show where they can deliver. But there aren't any big announcements in the traditional way. Say, here's IoT. Here's our stack. Here's what we're going to apply. Not like we saw it on Amazon reinvent a few weeks ago. Or GE, right? If you're a predicts. By the way, GE was at both shows. They were at AWS. They're here, too. They're here while they're hiring. They're hiring. They're software companies. You see those TV ads? I mean, GE is really interesting what they're doing. Huge opportunities. No. The interesting thing about GE is that they are going after this market. And they get that because they've been going after machines. They don't sell products or services anymore. They sell an outcome. I'm going to give you 99.99% of time on an engine. I think that's where we're going to see where IoT is playing one role. I think the other place is is Oracle has a lot of opportunities with what they're doing in field service. Inside the field service capability, I want to be able to figure out preventative maintenance. I want to figure out when a machine is going to go down. When a part is actually going to go down maybe six to seven days before it happens. Is GE two-timing or three-timing and playing the field? You got them on re-invent saying that they're a hundred-year partner. They're here on the Kino with Larry Ellison on stage. I mean, how do you make sense of that? I think GE wants to be like the neutral body in IoT, right? Switzerland? It's the industrial internet consortia, right? Okay. So back to IoT. So we're going to get that out of the way. I think GE is trying to do Switzerland. I think they're playing the field. That's my opinion. And I don't blame them for that. I think it's a good call. IoT, the debate is is IoT a platform market or a tool market? No, neither. It's not a platform market or a tool market. It's a marketplace market. I'm brokering information and insights. You know, if you think about IoT you can't look at it like, you know, here's a sensor. Here's a connector. Here's a switch. You have to start saying like it's scenes and settings, right? John, we go to work. I know who you are. Your scene is going to work. Your setting is the car. Your setting is the lobby. You're in the elevator. It says, hey, I know you're on the eighth floor. Your boss is on the tenth floor. Do you want to do a 15-minute meeting? He's wide open. And by the way, you're on the fifth floor. What do you want to do? I'll take the cake. Take the cake. Forget the boss. We'll remember that. The next time this cake, we'll show you the cake first. That's IoT. What we're trying to do is take the sensors and get context delivered and we're brokering those insights. But that doesn't reconcile with the fact that if you have data silos on a platform base, the ingestion has to be somewhere. And fast. Where? What is it? What's your take on that? And that's where the platform wars are going to happen. But the point is the values and the networks not in the platforms. The platforms are going to aggregate that. The networks are going to broker this information for aggregation, for benchmarking, and for actually marketplaces. So this is the data identity issue meets in memory, in line, data in motion. Because as I take the elevator for deciding cake or boss, one system has my cake persona. The other one has my work persona. I mean, I got to pull that out of the two systems. We got to figure out what the systems are. And think about it. It's just simple here. We're in the middle of Howard Street. What would a 10 by 10 booth cost for Howard Street? Well, I got satellite imagery. I got traffic data. I got Verizon cell phone I've got Trilio. Okay. It might be a thousand dollars for the first hour. It might be 1500 by the time we get to noon. It might be 5,000 by evening. So I got to ask you the question. We were saying earlier that Oracle's the Rodney Danger Field of Cloud. They don't get the respect to quote that old line. Do they get the respect? And will they get the respect based on what you hear today? Because some people won't even put an Oracle in the top three or four cloud vendors. So, you know, I'd see them clearly put some mojo out there. What's your take? I think they're definitely top three cloud vendors operationally. If you don't have a developer tool, developer base, your infrastructure as a service is in trouble. If you think about, you know, applications, Oracle has a big market share in applications. Definitely a top three is not top two. And if you think about just mind your own cloud. So you've got 60,000 people here that are looking at where Oracle's going in the cloud. What's your take on Oracle's big bet as we wrap up here? Obviously, Microsoft's a competitor. You've got the Amazon taking shots at Oracle, which makes sense. You always punch up, as they say, but you've got Microsoft kind of sticking to their knitting on their install base. Oracle kind of doing the same thing. Is there something that Oracle is doing that's unique, that's a bet that potentially could win it all or lose it all or fall flat? I think Oracle's been sticking to the same strategy they've done for years. Take the stack, consolidate against the vendors in there, inject innovation along the way at the right time, and then keep delivering on it. Like if you're a customer with Oracle for the last 10 years, you've picked up almost every innovation that's coming through. I mean they just announced what doctor support this is. So doctors are going to show up in Oracle. Do I need to go to a separate vendor on Docker? No. Do I need to go to someone else for SQL and Hadoop? No. That's what they've been trying to do, is get you to be one stop shopping and drive down the cost. What do you hear about their open strategy? Do you think they're going to be open? That is a tough one. I think there's the allure of open and not having to develop the code. And then there's the real thing about how do we make money and how do we behave and open? I think that's going to be a critical massive opportunity. Here's the reason. They've got a developer platform. They're actually investing in this. We're actually seeing a lot of the product teams work closely with the ISVs to get product out the door. Like I said earlier, we talked to 30 ISVs. They're really excited. I haven't seen them this excited about Oracle in a long time. And this is happening at the same time where they're seeing the market actually converge into like four or five players. What's new at Constellation? Share some recent research. Obviously your book has been great. I think you actually might have coined the term. What's up today for the book? Your stuff and research. What's going on? Disrupting Digital is the best seller at Harvard. It's awesome. We've been talking a lot about it. We're doing here at the Leader Circle event. In Constellation, we're going to make a big announcement on the third. We're going to announce the new product. And we also have our event coming. We've got 100 CXOs, 50 executives, and 20 folks that are on the way up, all converging 300 people at Half Moon Bay Ritz. We're going to do a New Clock Speed gigahertz. Great, we'll be coming up on the Cube. Thanks. I'm on the3000 a 32-core ass. We're on a multi-program. So look into the link in the chat box. Go to all the The snippets of the highlights, you probably have some on the web before he even gets off here and the cube. Check those web gems out, search on the hashtag, cube gems. Did I say web gems do cube gems? Sorry, I'm moving my ESPN. Ray, thanks for coming on, I appreciate it. We'll be right back more from Howard Street after this short break.