 Live from the Oracle Conference Center in Redwood Shores, California, it's The Cube, at the Next Generation Engineered Systems Launch Event. Brought to you by headline sponsor, Oracle. Hello everyone, welcome back. This is Silicon Angles The Cube, our flagship program. We go out to the events, extract the signal from the noise. I'm John Furrier with Dave Vellante, Breaking Down, Oracle's big announcement. We're covering live here in Silicon Valley. Larry Ellison and his senior vice presidents are outlying the new strategy for Oracle. We're in between breaks right now. We've got a few minutes, we're going to break that down. Dave Vellante, chief analyst at Wikibon Research. Dave, what'd you take? Larry Ellison came out here, swagger. The new strategy is what he said. Old strategy, new strategy with a little bit of twist. Give us your take. Well, I think you're seeing the results of Oracle R&D, but Ellison pointed out correctly that Teradata was actually the first to come out with this exadata or exadata-like appliance approach where everything was integrated, network storage and compute. I would say that exadata was the first sort of modern, not that Teradata is not modern, but sort of the next wave. And Oracle's acquisition of Sanjohn really is starting to come into very clear focus. Now, the little curveball that he threw today, that Ellison threw today, was the focus on lowest cost, the cheapest, the cheapest price. Now, to me that makes perfect sense. A lot of people on Twitter are saying, wow, that's nothing new, it's a race to the bottom. For Oracle, it's not a race to the bottom. Here's why. Oracle can commoditize the hardware and sell software, database, middleware and applications on top of it and make tons of money. And you see this in the financials, John. You see the old Sanjohn hardware business, which was in decline. It's still relatively, you know, it's still much smaller than it was, but it's throwing off all kinds of value for investors. Many, many times, what's what Oracle paid for Sanjohn? What do you think? Dave, I love this because it's a lot of theater here. First of all, Larry Ellison, it's always awesome to watch him up there. I mean, I've seen him give speeches when he was a young executive CEO, but now he's the CTO. This is a big game to him and he's the long game player, as John Fowler said, but here's what I like. Britain squinting through all the, you know, the press releases and the theater on stage is a powerful engine with Sun Microsystems. Sun Microsystems products are blossoming. The investment of buying Sun is now fully integrated into Oracle and what they have is with their software advantage is they have the ability to go in and price subsidize the low end server market. They could come in and essentially go into the high end general purpose computing market and actually torch the competition by basically coming out claiming the word's lowest cost. They even use the words cheap. I mean, Larry Ellison's no idiot. He knows to use the word inexpensive. You never say cheap, cheap means not valuable, but the word cheap is designed on purpose because he's calling them cheap, right? So he's in a way saying everyone else is cheap and way too expensive, so we will be the lowest cost cheapest at the highest performance. That's subsidized in the low end market. That is going to then focus the demand curve to move into engineering systems. Absolutely clear to me that that is the play that they're going down. You know, and three or four years ago, John, at Oracle Open World, we talked about, I think you were the first one to mention this, that Oracle's building the iPhone at the data center. That's exactly what's happening now. The other thing I'd observe is, and we talked about this to John Fowler, we're talking about a systems company, and that systems expertise used to really reside on the East Coast, it's on the West Coast now. It used to be digital, you know, it certainly exists at EMC, IBM, sort of exiting lots of pieces, many pieces of the hardware business, Oracle diving in hard. Yeah, I mean, we see Larry Ellison was the locomotive delivering the big punch, highest performance, lowest cost, really highlighting essentially the engineering systems. Going after the competition, IBM and EMC, and really going after the EMC, actually by playing to the words, EMC's discounted price, when they have to really drop their drawers to get the deals is they are a third lower cost than EMC's discounted price at list. That was a huge attack on EMC, and then finally the caboose of this train and here leaving the station is the Exadata, and that was Juan's deal, we'll interview him later. Exadata is their flagship Dave, so you can see the pieces coming together. This launch, to me, is a telegraph of something new. Nobody's safe when Ellison talks, but it's flattering if he's going after you, means you're doing well. So be aware of the Cisco, EMC, IBM, Data Domain, Teradata, a little bit of HP, and so as I say, that's sort of a badge of honor. The other thing I've seen on Twitter is a lot of comments about, oh, nothing new here. We just heard Juan was talk about Infiniband, virtualize Infiniband, JSON types directly to offload in the system into the database. So actually a lot going on in the software side that is exploiting the hardware, so. Yeah, I mean Dave, this is clearly what's happening. I mean, they even brought in all the meat and potatoes around zero loss, data protection. You heard a lot of this stuff integrated in. They had to sprinkle that in because that's a lucrative market that even compared to Data Domain. Competitive focus, that's a key thing. What's your take on their claims against the best EMC offers? Well, first of all, you're seeing appliance creep. That's unbelievable. Oracle's got an appliance for every possible scenario. I don't know if in fact those claims are true. I need to look into it. I've been pinging, you know, floyer on that. I think there's some truth to it, but you would expect that Oracle would have the lowest cost day of announcement. Now it's just a leapfrog race. So they were talking price performance, we're talking actual cost, but the competition never sits still in this industry, John. So you would expect that day of an announcement, a company would have the best, the fastest, the lowest cost. So obviously the message here is lowest cost, but also to talk about one click and you're done kind of deal, you know, integrate once, done forever, you know, that's kind of their theme. Ease of use, around deployment, that's the key message, and obviously economics and the cost. Bundling in virtualization, and we heard actually from the city of San Francisco that if Oracle's deficient anywhere, it's really in that sort of virtualization management. That's where VMware is still king. You know, Oracle's got a long way to go, but Oracle's trying to mask that by bundling it in to the package. My favorite highlight was Larry Ellison when he said, our new strategy. Love that, our new strategy. But he, this was a nuance, right? He said our old strategy was to be the highest performance and cost leader, meaning not the lowest cost, but price performance, right? So value, value, value proposition. The new strategy is lowest cost, highest performance, lowest cost, and better value. So he's not really changing the strategy, all he's doing is using that price advantage, and my guess is part of the software-defined data center strategy that they're coming in. Again, marginal economics going to zero, going happening in our front of our eyes. And it's spot on, because as I said, like we've talked about the Amazon, relatively the Amazon Cloud, they can layer in database middleware applications and make massive margins on that. That's why Oracle has five X revenue multiples on their valuation, and everybody else in this business has anywhere from point seven to maybe one and a half to two X. So that's not about software. I mean, obviously it did not come out into the keynote because the messaging was kind of teed up for economics low cost. They keep on banging the point home. But let's talk about Solaris. John Fallott brought it up, let's bring it up here. Underneath all of this is the software advantage. What's your take? I mean, this looks like a big leverage point for Oracle. Oracle is doing way more with Solaris, with storage, with ZFS, than Sun was ever able to do. And it's a matter of focus, it's a matter of vision. It's the advantage of having the full stack, and it's a leader who's got a CTO title. That kills me, I love it. Larry gets up, chairman, executive chairman, CTO. All right, so what's your take of the overall event in the room? Very intimate, very packed house, top analysts, all the top press corps and Silicon Valley's here. What's your take on the event here? Well, Larry can pack them in, no question. And of course, as soon as he finished speaking, dozens of writers and journalists bolted. But all the analysts stayed and many, many other journalists have stayed. So, I mean, it's a great event. I mean, he's definitely an icon in the industry. He's a celebrity. He's a celebrity, but he's also, he's got his hands on the wheel and this is like a big ship. Financial performance of Oracle's up significant. If you look up there 10 year, even go back to .com, post.com bubble, their stock price is trading right at the same levels. So performance wise, you're seeing the economics. Well, it's, there's no question. You roll your eyes. It's not, it's not quite true, but it's got a ways to go to get back to 99 levels. Post.com bubble first. Ah, oh, so I misunderstood. Okay, yeah, yeah, absolutely. So I think that generally, you know, Ellison, when he speaks, people listen, you know, the old saying there. And I've observed this man for many, many decades now. He always has something to say that's, that's worthy. And that's not always the case with CEO. So I just got a peek outside. I was checking out the social media team, looking at the crowd chat results and all the stuff we're doing and having some fun. I see Larry's car parked out there. There was no parking sign. So I think he just ignored it. Just kind of rolled up in parks right there. You know, securities are all watching. What's he driving? I don't want to give it away because it's probably privacy issues. But he's in it, it was a sports car, right? So you get the boat out front. Okay, here at Oracle. This is an engineering culture. This is a guy who says to John Fowler, we want to build the best engineering systems. I are the best engineers. I mean, do you buy that? Or do you think he's living? Oh no, 100% I buy that. There's no question about it. He wants to have the best products. He even said to John Fowler, John Fowler says, why would you ever fire an engineer? I mean, maybe if he's not a good engineer, she's not a good engineer fire, but why would you ever lay off an engineer? And he was referring to a lot of the sun cutbacks. And Fowler was like, well, that's what I had to do. But Larry's philosophy is I would never do that. Why would you ever cut back on engineering? Love it. It's like Google, very engineering culture. So, you know, that's a very interesting. Sam Palmisano said it in an interview with the New York Times. He said, I don't worry about HP. They don't invest. This is back when heard ironically he was running the company. I worry about Oracle because they invest in R&D. They play the long game. So there's a hashtag that's trending on CrowdChat and Twitter called Everyone Knows That. So essentially that was kind of the theme, you know, buy once integration is key. Do you think their integration story hangs together and there's enough value for customers? Yeah, Oracle's always had a very clean story. You know, you could argue about their posture with respect to supporting, you know, VMware. You can argue about their pricing strategies. You can criticize Oracle for a lot of things, but their strategy has always been- David, it looks like you started that meme. Crystal clear. Look at the data. I think you tweeted that. Well Larry said though, Sequel stands for not only Sequel, not no Sequel. I said yes, of course everybody knows that. I think I wrote, I think I tweeted 15% off on your car insurance. So anyway, the point is very clear strategy. Oracle's got a clear cloud strategy. They've got a clear integration strategy. That's never been in question. That's never really, in my mind anyway, been a source of criticism to Oracle. There's many ways you can criticize Oracle, but clarity of vision ain't one of them. So we're going to be here live for the rest of the afternoon for more interviews. So stay tuned to theCUBE. Stay close here. There's more sessions to be streamed live. We'll be back at four o'clock with more live interviews with Oracle executives. To really get the scoop, we're going to do a drill down. Right now the show's over. Larry did his keynote. They wrapped it up with the Exadata flagship and everything in between. So this is theCUBE. We are live at the Oracle headquarters conference center. We'll be right back with more live coverage after this short break. Stay tuned for more of the sessions. You will see panels from all the executives here inside the Oracle headquarters. We'll be right back after this short break.