 This is Dave Vellante with Jeff Kelley. We're live at the Splunk.conf conference. We're here last year with theCUBE. theCUBE goes out to the events. We extract the signal from the noise. theCUBE is a live mobile studio. We did 27 events last year. We did about 35 this year and continue to grow. Thank you everybody for the support, the tweets, great audience. Really appreciate you guys watching. Dennis Callahan is here. He's a senior analyst at the 451. He focuses on infrastructure. Obviously has an interest in Splunk. Dennis, welcome to theCUBE. Thanks, it's Dave. Good to see you. Thanks for having me. Our pleasure. So what do you think of the Splunk conference? You know, let's start there. Well, getting a lot of good feedback from the end users that I've been talking to. People love Splunk 6. They're really excited about being able to extend more capabilities of Splunk to more users within their organization. Maybe not as much excitement around Splunk Cloud from what I've been told. I think people see it as more, or something that could help Splunk win new customers. But in this iteration, maybe not as useful just yet for the existing customers who've already built pretty extensive infrastructure on Splunk. Yeah, so that's a case, if I understand it correctly. You're talking to existing customers who have decided to go on-premise and you're throwing yet another cloud offering at them and they've decided not to go cloud, so is it your sense that it's more just reticence for the cloud or is it Splunk's cloud is lacking functional capabilities? What's your take on that? Or combination? The feedback I'm getting is, I think it is a little bit of both, but the feedback I'm getting is that in this iteration it's not quite ready for you to actually extend your internal deployment of Splunk into the cloud in a real way just yet. I mean, I think there's going to be some more feature sets coming that will make it easier for people to do that. And how about Hunk? What kind of feedback are you hearing on that? I'm not hearing a whole lot about that. I mean, I'm not really a Hadoop guy in honesty, so I'm not really asking that question just yet. Okay, so there's nothing wrong with Hadoop. Well, now the other thing I've heard from customers is I've learned a lot, of course, people come to conferences like this to learn a lot, and the second thing I've heard is it allows me, it makes me realize that I can use Splunk in a lot more, get a lot more out of it than I am currently. Are you seeing that in the customer base and what would you recommend customers that are trying to take more advantage out of Splunk? Well, I mean, it's a powerful technology. It's been a powerful technology since it first came on the market, which was eight years ago, I think, which is still not that long in time when you stop thinking about it, but what it's gotten better at with every iteration is easier to use, easier to understand, easier to create reports, easier to create queries and get information out of all the reams of data you have in your organization. So I think it's going to require some education for customers, but I do think the barrier of entry is now a lot lower for end users across the organization than it has been on previous releases. Now, your wheelhouse is the infrastructure business. The structure management. So, yeah, infrastructure management. So who are the companies that you're tracking? Let's unpack your space a little bit. So how would you describe that space and who are some of the companies that you see as leaders and thought leaders in that marketplace? Well, I mean, we cover every one of four or five one, but we do love the startups we always had since we were launched back in 2000. And so, you know, Splunk, they were a startup when we first talked to them. They've made it a successful IPO. They're doing great. So they're one of the all-stars. ServiceNow is another company that's very similar, similar trajectory, I would say, and you know, they're in the IT service management space and you know, they're doing a great job there. Companies I'm watching beyond that, AppDynamics, which is out here in our partner pavilion. They're doing very well. New Relic and other company application performance management. ExtraHop, they're here today as well. Boundary, these are all application performance management type companies, you know, that are actually monitoring, measuring your performance of your applications, availability and user experience, that kind of thing. Other companies beyond that, AppTO is a company we're watching very closely. They're kind of like in between IT service management, IT application management, they're focusing more on a financial and business management of IT. Okay, and then these guys are all competing with the whales, right? I mean, so here you got HP, EMC, CA. IBM, yeah, the big four. CompUware, they're here today. They've got, they're a pretty big company. EMC, you know, still mostly storage oriented, but they're somewhat in the performance management space. VMware is a more credible performance management vendor right now, although still probably more for VMware-centric environments. So it feels like you've got this, I've been saying all day, all week here, this sort of renaissance of startup activity. And a lot of the traditional guys, some of the ones you mentioned, VMware's probably doing okay, but a lot of the traditional businesses are declining. You're seeing some real pain in the traditional, let's say, let's take IT service management as an example. You see, you see service now growing like a weed. And he, a lot of it, they're taking share away from a lot of the established vendors. Well, EMC got acquired, taken private because shareholders were not satisfied with the performance of the company. And why weren't they satisfied with the performance of the company? They are facing a lot more credible, competition from the startup space like ServiceNow, even to a certain extent like Splunk, even though they're not a direct competitor. Yeah, now, were you at the ServiceNow Knowledge 13? I was, yes. So, I was there too, we were there with theCUBE. So compare that customer base with this customer base, just in terms of sort of the vibe, enthusiasm, sort of the action that was going on at the event. Well, this conference has gone better, I think logistically than that conference did. So, you know, that could have prejudice some people's views, but they're very similar customer bases actually. They're very enthusiastic about the companies. They want to get their hands on whatever Splunk or ServiceNow is developing. They want to get more users, they want to find more uses for the technology. They want to get more users in their organizations involved with the technology. If you look at ServiceNow, I mean, they want to be more than just a hosted help desk. They want to be your IT system of record. And actually get vendors potentially Splunk to build on their platform. Splunk is trying to get vendors to build on their platform and build extensions to what they're doing, which they've done effectively in the most places I cover, APM, Application Performance Manager. So Dennis, you mentioned, we talked a little bit about cloud a moment ago. I'm curious, what's your take on the importance of Splunk having a real credible cloud presence in the long term? I mean, certainly this is their first iteration of the product. As you mentioned, there'll be a lot more developments. But how critical is having a legitimate, fully functioning cloud component to their portfolio to the long term success, you think, of Splunk? I think it's very critical. I mean, we're seeing a lot of traction around the cloud for log management. If you look at companies like Sumo Logic, they've doubled their customer account the last six months. If you look at Logly, just got a fresh $10 million of funding. Log entries in Ireland, they just got a fresh $10 million of funding. So the VCs obviously see the opportunity here. And the VCs do their homework. Of course, they're talking to people like us, but they're pouring money into this space. They see a lot of opportunity. Splunk has done phenomenally well in the years that they've been in business. But there is still a lot of opportunity out there that Splunk isn't yet getting. I think Splunk Cloud is going to help them to get more of that opportunity that they are missing. Because there's still a lot out there. I mean, VMware entered this space a few months ago and I think they determined that 75% of their customer base had yet to deploy log management, which I was struck by. But if that is the case, there is still a lot of opportunity out there for Splunk and the other vendors. Absolutely. So from again, back to the cloud, is it essentially, is the opportunity going to be among companies that want to deploy strictly in the cloud or what role does kind of hybrid deployments, which I think we're going to see a lot more of, especially in the space that I covered big data, I think as that expands and the whole industrial internet concept, kind of as that emerges, clouds are going to play an important role in that, as you're trying to connect whole industries really. So is that part of the play here where Splunk needs to be able to operate in hybrid environments? Yes, I mean, I think you're going to, you got to give your customers what they want. And I think if you look at Splunk through their history, still relatively short history as a company, they've been, they've done an excellent job at giving their customers what they want, responding to customer needs. And that's the advantage of being, you know, what is still not that big of a company, still a start-up mentality. We hear it all the time from the end users we talk to. You know, I don't want to deal with the HPs, the BNCs. They don't get where I am. They don't, you know, they don't respond as fast to feature requests and updates to software as a start-up would. You know, I have the start-ups here and I think Splunk's done a great job of doing that. So I think they're going to have to, they're going to have to continue to do what they've done well to this point, which is, you know, keep your ear to the glass, right? And listen to what the customer feedback is on Splunk Cloud and see where they can take it so that it is more, you know, it's already, I think, a pretty credible offering for new customers that are new to Splunk, but I think what they are going to need to do is make it a more credible, suitable offering for people who already have a pretty large deployment in-house on Splunk. So I mean, that to me would strike me as one of the challenges Splunk faces as they grow is keeping that focus on the customer. Obviously, that's a challenge when you've got investors, you know, pressure each quarter to deliver numbers. What are some of the other, do you think, key, biggest risks for Splunk going forward in terms of keeping up this momentum, which is really just staggering? I think they're going to be, I think as competition develops, they're going to be under more and more cost pressure. If, when you're talking to Splunk customers and you say, all right, they're not perfect, you got, there's got to be something you don't like about this company. You know, tell us, give us, what are some of the negatives? Cost is almost always the first thing they say. So I think that's going to be something they're going to have to watch, especially as the competition increases in this space and the competition gets more credible in this space. I mean, there's a lot of people with log management offerings out there. None really that I'm aware of have the capabilities of Splunk. None of the legacy log management products, right? You know, so I'm thinking like ArcSight, which is part of HP now, and LogLogic, which is part of Tipco now. I mean, I think Splunk, you know, won that debate already, but it's a start-up you got to watch for. Which I mentioned before, the SumoLogics, LogEntries, LogMatrix, you know, be wary of all these companies that have log in their name. So these guys, so the start-ups generally in Splunk specifically, you would agree have best of breed in this category, right? Is that fair to say? I would consider Splunk best of breed. Yeah, okay, so let's say, let's take Splunk specifically then as best of breed. There's an age-old, you know, debate in our business. Best of breed or fully integrated suite. And you've got this sort of oligopoly of large whales sort of, you know, running the chess table and they seem to just absorb all the innovation and then, you know, wrap it into their cycles. Do you feel like in this space that there's an opportunity for a Splunk, as an example, to break out public company now? Can they become a large, you know, they're certainly disrupting, but they're still relatively small compared to some of the large whales. Is there enough room in the marketplace for a company like a Splunk to break out and thrive as an independent and maintain independent over the long term, over, let's say, a 10-year period or more? I mean, you know, they already have broken out in their space as far as then becoming a larger- Yeah, big player. A broader IT management play. Yeah, I mean, they've made an acquisition, bug sense a few weeks ago. You know, we cover tech M&A pretty closely and we think there's going to be more acquisitions from Splunk in the future. I think they're going to be very strategic about that. And, you know, again, as they grow, as they absorb new technologies, new talent, you know, they're going to have the same challenges that any other company faces in that position. I mean, ServiceNow, they just made their first acquisition a few months ago. They're facing that challenge too. And I think in both cases, I mean, if they are public, I mean, they can't just be in a little box, you know, they can't just be about a log management player. They've got to be a broader IT performance management player, you know, getting more out of your existing IT assets. I mean, that's the kind of things that you're going to be doing with Splunk. Well, you guys, we're talking about, you know, Martin McCarthy and Simon off air, but you guys bet the company 451 on startups largely. You do a really good job. When we launched, we did, yeah. Right? And still, you guys still do a really good job of following startups. Of course, you expand. You got to follow Wales, right? Exactly. There's just so much market being driven by those guys, but it's hard to find an example of a startup that's actually, you know, sustained. I guess Salesforce is a good example, right? I would say so, yeah. They're one. I mean, VMware itself really isn't independent, right? I mean, they're 80% owned by EMC, so it's very difficult for these startups, but we're entering a period of disruption. That's why I sort of was poking at that. We're kind of out of time, but Dennis, I'll leave you with the last word. Things that you want the audience to remember, any research that you're working on or any thoughts about the Splunk conference? Final word. Research, they're working well. I mean, we did bet the company on startups, so to speak, when we started, but lately, we're more betting the company on cloud, and we're seeing so many technologies move to the cloud. I mean, perfect example of the Splunk cloud announcement. I mean, in my space, I mean, ITSM, APM, IT performance management, that's all moving to the cloud. We had a company, Casia, bought Xerion. First thing they did with the technology, network management technology, they put it on the cloud, SAS. Security, you've seen a lot of security move into the cloud. Yeah, even if your enterprise applications aren't quite there, even if your internal infrastructure isn't quite there yet, still the management applications are going there, and that's where we see the space going. That's where we're focusing our research. Awesome, Dennis Callahan, 451 Research. You guys do a great job. I really appreciate you coming on theCUBE. Please send my best of friends down at 451. Thanks for having me. All right, keep it right there, everybody. We'll be right back with our next guest, Jeff Kelly and I, John Furrier and I. This is theCUBE. We're here live at splunk.conf13.