 Welcome back everyone to SuperCloud 4, winding down day two. This is the wrap up. I'm John Furrier with Dave Vellante, my co-host of theCUBE. Dave, theCUBE's getting bigger. SiliconANGLE's getting bigger. CUBE Research, renamed from Wikibon, growing. This event, our fourth installment, getting bigger. I mean, I'm really excited by the SuperCloud events because it's a live stage event and the content we just saw was amazing. You just saw a combination of diverse experts, leading the GenAI movement from startup, seed-funded startups to full executive suite from the big hyperscalers, Microsoft, Google, Salesforce, AWS, and everything in between. And I mean, it is the selection, in my opinion, of the market basket of people making this happen and it's all right there. So, super excited, great program. I'm really glad we put this together and we're going to do this every quarter. Every quarter we're going to have a live stage event in Palo Alto and do this and bring our community together and unpack everything and do it on camera, do it live. We'll stream some records in there. The people who can't make it, we had some remote live remotes come in, all cool. Using whatever tools we have to get the story, Dave. And I think if you look at the data from this past two days, it's clear. GenAI is the wave we've been talking about bigger than anything we've ever seen before, probably bigger than the combination of all the waves combined, PC, web, mobile, and now this. And with Cloud Next Gen, if you remember our re-invent scoop with Adam Silevsky, we were kind of focused on this Next Gen Cloud with the ecosystem, introducing the super cloud concept, understanding it, it's happening. This idea of the super structures of data, the super apps that are coming out of AI, like you said on opening today, it's going to scale labor and reduce the costs and increase the creative intellect. AI scales intellect and scales data. So this is a generational movement. It's a revolution in my opinion. So if you look at the data from the events, what's the takeaway besides the fact that it's happening? I mean, I just, I think that just like the internet, you know, everybody was able to take advantage of that. That's what super cloud is all about. It's this, we've now got this cloud infrastructure that's out there, that's proven, it's resilient, it's secure. And you could build on top of that. You can build value on top of that and the whole world is doing that. The entire world, that's what it's digital transformation meets cloud, meets super cloud, meets AI. And it is happening and it's really exciting. And the other thing is, I'm so proud of our entire team with super cloud because we're serving an audience. We're bringing people in from the community with all these different perspectives. You know, it's the power of many versus just one company's you know, brain and by having a community, by bringing people into this setting and in, as you say, into the prerecords, we get such great content, some diverse perspectives, even huge companies like Walmart, all three cloud companies. You know, companies like Dell where Jeff Woodrow was talking about the organizational structures and the need for a chief AI data officer. If you guys wouldn't mind queuing the power law again. The power law to me is so descriptive because it just talks about, to your point, John, this is a biggest opportunity. And we heard from SEMA AI that that telco edge, which we've been talking about in researching the impact that that's going to have potentially on the enterprise. That's a wild card that nobody is really talking about its impact on the enterprise, but it's happening before our eyes. Consumer markets are driving that innovation and it always brings back the economic disruption into the enterprise. And this is just, this is a multi-trillion dollar opportunity that we're staring at. And that's this power law, by the way, great output from theCUBE research, which we mentioned on the open is the new brand that's going to replace Wikibon and that's expanding with more analysts. You and Rob Streche leading that effort with more analysts coming on. This is great research and this has got also going to be a living document. If you look at this, that red line that's shifting up, that's come up in from the Intel executives and some of the senior executives, that's going to fill up with these proprietary or data sets that are going to be specialized AI kind of systems and what's going to happen with the infrastructure behind that to support it. As Rob Streche pointed out on our opening, our lead CUBE analyst, it's a picks and shovels market. And we heard from Alice Steinglass from Salesforce platform. She just got hired to do the platform and Box's CTO Ben Coose. These companies are taking advantage of AI and you take Salesforce, okay? That conversation was really about their platform. Think about what AI does for a Salesforce which has been criticized for doing the whole acquisition, a lot of different companies, Slack and acquiring stuff and Salesforce is their core product. AI gives them an abstraction layer, a super cloud substrate to make that product completely different and integrated together. So, you know, Alice pointed out some really high-end concepts there that are very super cloud like where AI will transform Salesforce from a, I won't say clunky or klugey kind of set of different products, which kind of it is. I mean, take Slack and Salesforce, we use Salesforce, we're a customer. It's a great product. It can be better with AI. So now we can have things like, get me that report. We interviewed Juan.ai, that startup from Israel. These enterprise AI chatbots or assistants could be, give me the pipeline churn. Like just voice-activated commands, AI will just do that. So I think like the Salesforce is the box company, they have pre-existing products that are going to be transformed. So there's so much innovation going on not just in the industry, but in every vertical. So I see this AI wave coming massive and the data is clear. Snowflake commented. You mentioned Sima Walmarts on there. We had the panel of experts. This AI is going to change the game. It already has. And this is going to put pressure on the leaders like AWS with seeing them, I won't say flinch a little bit, but they're definitely a code red going on there, David, at AWS because of open AI. You know, I love horse racing. There was a horse, Triple Crown winner, Seattle Slough in the 70s. He would always be on the front. Just like AWS, always on the lead. Other horses like Secretariat, they would come back from the back, right? So now Amazon, we're testing, can that horse rate itself? Rating mean you play back a little bit and then you pick your spot, you know, you try to save ground on the rail and then boom, you try to run past everybody. You use the NASCAR analogy before the slingshot approach, right? So that's a really interesting dynamic, one that we've never seen before with Amazon. What do you think? What do you think they're playing? You think they got caught from behind or they naturally kind of stayed dropped back and observed? Anybody who says we didn't get caught off guard by chat GPT is full of it. Even Microsoft said they absolutely couldn't predict what happened and so yes, I think they did get caught off guard. It's interesting because when you did your sit down with Andy last year, I'm not with Adam last year, Adam Salipski, I was on the phone remotely. He was talking about large language models. This was the month before chat GPT was announced. So it's not like they didn't have LLMs. It's not like they weren't playing around with them but there's no question they got caught off guard and I think you're hearing it now in their PR and they're sort of scrambling to say, hey, we got a long way to go. We're a leader in AI. By the way, that's all. They had the finger on the pulse. I think if I had to be critical of Amazon, I would say that they, the senior executives got bad advice. They had their finger on the pulse of LLMs. Adam was talking about it. I didn't double click on that because we were focused on more of the next gen ecosystem impact. I didn't really see that coming as well. I was caught off guard at chat GPT. I thought it was going to be very cool. I thought it was going to bake a little bit longer and come out slowly rise next year. But the way it just splashed was amazing and never stopped. And I think what came out of SuperCloud 4 these past two days is the consumerization of AI was to me the moment, and this is what's come out of all the conversations, is the magic of this movement right now is that chat GPT created the consumerization of AI in the hands of the normal people. They get it. It's a format change like mobile was, I get what this is. I like it. It's magical. Yeah, there's hallucinations in there. I've never seen it before. I can see this helping my life. I love this co-pilot. Chat bots are now better than just, say that again, repeat the question, type in strings of words, misspell something. It doesn't have any reasoning. So I think that aspect of consumer seeing it has put everybody on notice. If your applications do not address the consumer expectation of some sort of assistance or augmentation or benefit, you're done. I mean, it's clear to me that if you don't have that AI in there, you're done as a company and as product. So you've got to, all the people working this year has all been changing the product. We heard from the startups were pivoting. Amazon's now pivoting. All you hear from Andy Jassy is AI, AI, AI. I'm sure Adam's going to come out with a big AI everywhere message. So this is what's going on. As you said, they get the last word. I will say this. So just as Amazon, Amazon turned the data center into an API. But it was somewhat complicated. You had to have somebody who understood how to, you know, a developer who could program to APIs. And so it took some time for the cloud to get adopted. To your other point, much of the AI is just going to be embedded into software. And the new interface to technology is natural language. So anybody can use it. I mean, how many times, I used to be an Excel power user and then Excel went way beyond and I stopped kind of using it every day. When I go in a cell now, I'm trying to figure out, how do I do the double Y axis again? I have to Google it. I have to watch a video. It takes like 20 minutes to figure it all out and get it right. I just want to talk to- And using Google Sheets too. Yeah, well right. And Google Sheets has so many flaws in it and errors. Half the time it's simple sum function doesn't work but nonetheless, same thing. You got to figure out, okay, how do I get the graphic to look like I want? I want to talk to the application and just tell it what I want and have it build it. And that is going to happen. A lot of people ask me, Dave, because of our deep research and knowledge of AWS and the clouds, the CUBE research, formerly Wikibon, what happened with Amazon? Why did they, what happened? Why did they lose to Microsoft in this opening battle of AI? And I want to get your thoughts but I'll just share what I think happened and I want you to react. Amazon grew so fast, we chronicleized the rise since the 10th year, 10 years anniversary of AWS re-invent with theCUBE. We watched them grow and they went from a nobody, only game in town to the best and then they started getting competition. They started getting bigger, adding more services every year. Then they became an enterprise provider, which is hard, not in their DNA. So they had to learn how to serve the enterprise. Huge growing ecosystem. Everything's pumping on all cylinders. Stocks up into the right for Amazon. Great profits. And then enter their next chapter, ecosystem, enterprise solutions, marketplace. They were on a cadence to dominate the enterprise and match Microsoft and these other companies that have chops in the enterprise. And then boom, open AI comes to the table. Microsoft, who is an expert in the enterprise, selling to the enterprise, servicing the enterprise. You can question their products but one thing you can't question with Microsoft is that they know the enterprise. They've been in it for years. That's their heritage. They've got it installed base, their ecosystem, not as good as AWS but their enterprise presence, world-class supplier, you would agree. So AI comes in. They just integrated it in and then now they own the enterprise. They used AI to move the goalposts and now in midstream of AWS' trajectory, AI comes in and they're flat-footed. Now they have to stop the cadence of enterprise build out. Microsoft just got stronger with AI and Amazon's got a retool with AI. So to me, what happens at re-invent will be very telling. Are they going to be more enterprise-like with AI? Are they going to be more startup-like with AI? Because Google's going at the startups. Microsoft, not so much. What does Amazon do? It's an innovator's dilemma, Dave. Well, first of all, I would say my forecast for Amazon says they'll do 91 billion this year in IS and PAS and they'll grow it, let's call it 13%. So that is a winner right there. I mean, they're going to be almost as large as Dell this year and Dell's like nearly a $100 billion company. So they are winning, but I think several things happen. You've laid it out very well where they got caught off guard. There was somewhat of a brain drain out of AWS, right? They had to sort of change the whole compensation structure. You saw a number of people leave. So that had to have an effect. And I think, you know, Adam's coming in and he's evolving the culture and they got to find their ways. These things happen, right? You can't just continue to grow in that straight line. Markets are ugly. So this is a real test for Amazon, but I would say this. So first of all, you look at how profitable Amazon is relative to Google. Google made a couple hundred million in profit, Google Cloud, 3% operating margin. Amazon is between 15 and 25% for years. The thing about Microsoft is they have such a huge software estate in a captive market. It's just this inbuilt, you know, the system is rigged for Microsoft. They can't lose, right? Because they have such a huge software estate that throws off so much cash and they're just running all their software in Azure and they have an amazing flywheel. And he used to talk about the flywheel. Nobody's got a better flywheel than Microsoft. On the enterprise, software side and the install base. Yeah, and in the collaboration software and in security. I mean, Microsoft is ubiquitous. I mean, they make everybody else look like mice nuts. Okay, so what is Amazon? You use a technical term. I appreciate that. What's Microsoft's move in your opinion? What do you think they're looking at? And obviously, I think they've, I think they've definitely rallied the troops from what I can see in some of my reporting is that there's been kind of like, I won't say a virtual huddle. We saw them go back to work. They're going to be hardcore about three days in the office. Amazons, they definitely are kind of calling a call code red. You see everywhere AI now. They're on point. Everyone's pumping on the AI direction. What do you think their strategy is going to be? What do you think? Amazon or Microsoft? Amazon, I'm sure. Amazon's got to continue. AWS. It has to continue to expand its time, right? In order to go, so everybody's always said, when is Amazon going to go upmarket? We've seen some examples of that, like Contact Center and other integrated services, certainly some stuff in Telcom. But I think they've got to enable, their bet has always been, we're going to enable developers to go out and create software to compete with the great software companies. The sales forces who, by the way, are running on AWS. The ServiceNows, the Snowflakes, they're all running on AWS. So they're betting on that ecosystem strategy. And, but they have to expand their TAM. I mean, they're at almost a hundred billion. So they got to find new markets. And so I think they have to reinvent the Telco industry. I think they have to reinvent healthcare. And I think that's where they're going to see the future growth of Amazon bringing in AI and reforming those industries. I would agree with you. I think they have the nice trajectory and the economies of scale with the IaaS layer, I think, getting that nailed down. And also the data sets. I think Bedrock and SageMaker can be a nice, Google calls it a model garden, but a place for people to bring their AI to the cloud and also work on the on premise. So I think obviously this hybrid world is a steady state for IT, the new IT. So I think it's interesting. And Amazon always plays the long game. And so the question is, what's the long game for them? Like as they look at competition, new generation of developers, still they got an ecosystem. Is the ecosystem truly happy day of these days? That's going to be a test. What's the status of the ecosystem? We saw VMware go through this, great momentum in the ecosystem. And then you can have a moment where it's like, it's a good question. I would say the ecosystem is happier than it is unhappy, right? I mean, it's always that sort of balance, but the ecosystem makes a lot of money through Amazon. So Amazon kind of has- CrowdStrike just announced a billion dollars through the marketplace. That's incredible. You can't not be on Amazon, but I do think that Amazon has an advantage, I think in semiconductors, not withstanding the sort of GPU thing, but what they're doing with Graviton and Anapurna, I think it's going to pay off. They got to figure out the edge strategy because I think the edge is truly a disruptive force. But I think Amazon with its custom silicon can take advantage of that. Like some others, they may be ahead there. And we saw what Max right now, Sovereign Cloud, they're using the term Sovereign Cloud. What does that tell you about Amazon strategy? You can never say never with Amazon, right? They kind of messed up outposts, right? They struggled with that, they learned from that. And you saw like HPE with GreenLake and Dell with Apex, they gave those companies time to catch up. Lenovo was well, Cisco to a lesser extent, a different market. Outpost was more of an experiment. It was, but they learned from that. And so now they've got to take, they have to take the cloud to the edge. That's what they're doing with local zones. They're a leader in robotics with what they're doing in Amazon and warehouses. I mean, I think the robotics, the intelligent edge is going to be enormous. And there's no reason that Amazon can't play there. Well, we're going to be sitting down with Adam Sileski in November prior to reinvent for exclusive one-on-one. If you're watching this DM me, if you want me to ask him any questions specifically, we're going to have a good list of questions for him. Dave, cloud next gen's here. Oh, Gen AI, let's wrap up this event. What's the big takeaway from SuperCloud 4? Gen AI focus, probably might have to do SuperCloud 5, Gen AI gets so much demand for this content. What's your big takeaway? Like I said, at the top of today's analysis, I think it's playing out so far the way we thought it would play out, massive wave, but it's going to take some time to adopt. Everybody is experimenting with generative AI. So that's the real positive, more so than anything I've ever seen before. In other words, it used to be a lot of hype, but not a lot of spend. People are definitely allocating budget to generative AI and they're stealing from other budgets. I think the big takeaway for me is we're in a really good position to show ROI. And if we don't start showing ROI as we exit 2023 and into 2024, then I think people are going to take a pause. My personal bet is we are going to start to see ROI and we're going to start to see that uptake and that's going to fuel and fund other IT initiatives. And I think we will have not withstanding all the geopolitics and the uncertainties around rates and recession, take that aside for a second. Assume there's no friction in that market. I think AI will be a self-funding mechanism and power the next wave of tech spending. Awesome, I mean, I might take it as clear that this next wave is legit and the fact that the consumerization expectations from the people that are using AI is going to force every single company to have an experience for those users. That means product changes with AI in every single company, every single product. And the big surprise here is that the developer community on an end-to-end basis was super important to understand this new workflows, how they're pipeline and their content. And the change of how data will be managed is going to be a radical shift. Everything we know about data, data warehouses, data management, all that stuff in the next three to five years will be completely transformed into something completely different. And the power law, if we pull that up one final time to close out the show, this is going to be what we're going to watch. How these models just change over time and that's going to be the interaction between them. So the data's absolutely in the new IP. And what's going to come out of this, Dave, is what's truthful? What is real? This is going to be the question, what apps are going to take advantage of AI, every single one of them? The data equation is going to be flipped upside down and radically transformed. And then people are going to look at new kinds of content and understanding what's real, what's not. Will be a big thing. So, you know, super cloud forward, great success. I think the point about consumerization, by the way, is right on consumer markets drive innovation. It's always starts with the consumer. Just like the web, we're going to see everyone, everybody take advantage of it. Why wouldn't you have a co-pilot? Why wouldn't you have a personal assistant? It's coming, it's here. We're bringing it to you. I want to say thanks to the team here, thanks to the community we had, an amazing community panel led by Howie Shoe. We're going to do more of that, more contribution. If you're watching, ping us, let us know what you think. Thanks to the team, Dave. Thanks for all the collaboration and thanks for the super cloud for event. Thanks for watching.