 Live from Munich, Germany. It's theCUBE. Covering DataWorks Summit Europe 2017. Brought to you by Hortonworks. Okay, welcome back everyone. We are live in Munich, Germany for DataWorks 2017. Formally known as Hadoop Summit. This is theCUBE's special coverage of the big data world I'm John Furrier, my co-host Dave Vellante. Two days of live coverage, day one wrapping up now. Dave just kind of reviewing the scene here. First of all, Europe is a different vibe. But the game is still the same. It's about big data involving from Hadoop to full open source penetration. Help is now public in markets, Hortonworks, Cloudera filing an S1, Mielesoft, Talon, variety of other public companies. Alterics. Hadoop is not dead, not dying. It's certainly going to have a position within the industry but the big data conversation is front and center. And one thing that's striking to me is that in Europe, more than in the North America, is IoT is more centrally themed in this event. Europe is on the internet of things because of the manufacturing, smart cities. So this is a lot of IoT happening here. And I think this is a big discovery. Certainly Hortonworks event is much more of a community event than Strata Hadoop, which is much more about making money and monetization. And this show's got a lot more engagement with real conversations and developers sessions. Very engaging audience. But again, it's Europe. So you get a little bit different smaller show than in North America. But to me, IoT internet of things is bringing together the cloud world with big data. That's the forcing function. And real time data is the center of the action. And I think this is going to be a continuing theme as we move forward. So in 2010, John, it was all about what is Hadoop? The middle part of that decade was all about Hadoop's got to go into the enterprise. It's gone mainstream into the enterprise. And now it's sort of what's next? This same wine new bottle. But I will say this, Hadoop, as you pointed out, is not dead. And I liken it to the early web. Web 1.0 was profound. It was a new paradigm. The profundity of Hadoop was that you could ship five megabytes of code to a petabyte of data. And that was the new model. And that spawned, that catalyzed, the big data movement. And that is with us now, and it's entrenched. And now you're seeing layers of innovation on top of that. Yeah, and I would just reiterate and reinforce that point by saying that Cloudera, the founders of this industry, if you will, with Hadoop, the first company to be commercially funded to do Hadoop. Hortonworks came in after the fact out of Yahoo. Came out of the web-scale world. So you have the cloud-native DevOps culture. Amar Awadal is at Yahoo. Mike Olson, Jeff Humberbacher, Christophe Assili. These guys were hardcore, large-scale data guys. So this is, again, a continuation of evolution. And I think nothing has changed in that regard because those pioneers have set the stage for now the commercialization and now the conversation on operationalizing this with cloud is big and having Alan Nanson, practitioner, rockstar, talking about radical deployments that can trap a billion dollars at a cost savings to the bottom line. This is the kind of conversations we're going to see more of. This is going to change the game from, you know, hey, I'm a CFO, buyer or CIO doing IT to an operational CEO, chief operating officer-level conversation. That operational model of cloud is now coming into the view what ERP did in software, those kinds of mega trends. This is happening right now. Well, so as we talked about the open, the people are going to make the real money on big data or the practitioners, those people applying it. You talked about Alan Nanson's example of, you know, a billion dollar, half a billion dollar, cost savings, revenue opportunities. That's where the money's being made. It's not being made yet anyway with these public companies. You're seeing it Splunk, Tableau, now Cloudera, Hortonworks, MapR, is MapR even here? I haven't seen them, no. Yeah, I haven't seen MapR. They used to have a pretty prominent, you know, just play at the show. You brought up, you brought up a point I want to get back to this relates to those guys which is profitless prosperity, a term used for open source. I think there's a trend happening and I can't put my finger on it, but I can kind of feel it. That is the ecosystems of open source are now going to a dimension where they're not yet valued in the sense, in the classic sense. Most people that build platforms value ecosystems. That's where developers came from. Developer ecosystems fuel open source. But if you look at enterprise transformations over the decades, you'd see the successful companies have ecosystems of channel partners, ecosystems of indirect sales, if you will. We're seeing the formation, at least I can start seeing the formation of an indirect engine of value creation vis-a-vis this organic developer community where the people are building businesses and companies. Sean Connolly pointed to FinTech as an example, where these startups became financial services, businesses that became FinTech suppliers to banks. They're not in the banking business per se, but they're becoming as important as banks because they're the providers in FinTech, FinTech being financial tech. So you start to see this ecosystem of not channel partners resale my equipment or software in the classic sense as we know them or as they're called channel partners. But if this continues to develop the thousand flower blooming strategy, you could argue that Hortonworks is undervalued as a company because they're not realizing those gains yet or those gains can't be measured. So if you're an MBA or an investment banker, you've got to be looking at the market saying, wow, is there a net present value to an ecosystem? It begs the question, Dave. So this is a wealth creation, rising tide floats all boats. In that rising tide is an ecosystem value number there. No one has their hands on that. No one's talked about that. That is the upshot in my mind, the silver lining to what some are saying is the consolidation of Hadoop. Some are saying Cloudera is going to get a huge haircut up there, 4.1 billion dollar value, which some say they gained a lose two to three billion in value in the IPO, post-IPO, which would put them in line with Hortonworks based on the numbers. So is that good or bad? I don't think it's bad because the value shifts to the ecosystem, both Cloudera and Hortonworks both play open source. So you can be glass half full on one hand on the haircut, upcoming for Cloudera to saying no, the glass half full because yeah, it's a haircut in the short term, maybe if that happens. I mean, some say pure storage is going to get a haircut. They never really did, Dave. So again, no one yet has pegged the valuation of an ecosystem. Well, and I think that's a great point. Personally, I think I've been sort of racking my brain is will this big data hype be realized? Like the internet, you remember the internet hyped up and it crashed, nobody wanted to own any of these companies but it actually lived up to the hype. It actually exceeded the hype. You can get pet food online now. It's called Amazon. Yeah, I mean, all the e-commerce played out. And so, right, e-commerce played out. And I think you're right, but everybody's expecting sort of, or was expecting a similar type of cycle. Oh, this will replace that. And that's not what's going to happen. What's going to happen is the ecosystem is going to create a flywheel effect is really what you're saying. And there will be huge valuations that emerge out of this. But today, the guys that we know and love, the Hortonworks, the Clouderas, et cetera, haven't, aren't really on the winners list. I mean, some of their founders maybe are. But who are the winners? I mean, the customers, because they saw a big drop in cost. Apache's a big winner here. When you say, Apache's looking pretty good. Apache Foundation. I would say AWS is a pretty big winner. They're drafting off of this. How about Microsoft and IBM? Are they, I mean, I feel in a way, IBM has sort of co-opted this big data meme and said, okay, cognitive. And layered all of its stuff on top of it, bought the weather company, repositioned the company. Now it hasn't translated into growth, but certainly has profitability implications. Well, I think IBM plays well here. I'll tell you why. They're very big and open source, so that's positive. Two, they have huge track record and staff dealing with professional services in the enterprise. So if transformation is the journey conversation, IBM's right there. Okay, you can't ignore IBM on this one. Now the stack might be different, but again, beauty's in the eye of the beholder because depending on what workloads you have, it depends. IBM's not going to leave you high and dry because they have everything you need for what they could do with their customers. Where people are going to get blindsided, in my opinion, the IBM's in the oracles of the world, and even Microsoft is what Alan Nance was talking about, that the radical transformation around the operating model is going to force people to figure out when to start cannibalizing their own stacks. That's going to be a tell sign for winners and losers in the big game because if IBM can shift quickly and co-opt the mega trends, make it their own, get out in front of that next wave, as Pat Gelsing would say, they could surf that wave and then tweak and get out in front of it. If they don't get behind that next wave, they're driftwood, right? So it really is all about where you are on the spectrum. And analytics is one of those things in data where you've got to have a cohesive horizontal strategy. You've got to be horizontally scalable with data. You've got to make data freely available. You have to have an abstraction layer of software that will allow free movement of data across systems. That's the number one thing that comes out I've seen in the Hortonworks data platform, for instance. Sean Connolly calls it connective tissue. Cloudera is the same thing. They have to start figuring out ways to be better at the data across the horizontal view. Now, Cloudera, like IBM, has an opportunity as well to get out in front of the next wave. And I think you can see that with AI and machine learning. Clearly, they're going to go after that. Well, and just to finish off on the winners and losers, I mean, the other winner is systems integrators, the services companies. But I like what you said about cannibalizing stacks as an indicator of what's happening. So let's talk about that. Oracle clearly cannibalizing its stacks saying, okay, we're going to take the red stack to the cloud. Go. Microsoft has made that decision to do that. IBM, to a large degree, is cannibalizing its stack. HPE sold off its stack. It said, we don't want to cannibalize our stack. We want to sell it and try to retool. So your question, point? So haven't they already begun to do that? The big legacy companies? Well, they're doing, they're tweaking the co-op in the mall, giving an example. So at Oracle Open World and IBM Interconnect, all the shows, except for Amazon, because they're pure, pure cloud, all are taking a unique differentiation approach to their own stuff. IBM is putting stuff that's related to IBM in their cloud. Oracle differentiates on their stack. For instance, I have no problem with Oracle because they have a huge database business. And you're high as a kite if you think Oracle's going to lose that database business when data is the number one asset in the world. So what Oracle's doing that's, I think, quite brilliant in Oracle's part is saying, hey, if you want to run on premise with hardware, we got sun. And oh, by the way, our database is the fastest on our stuff, check, win. Oh, if you want to move to the cloud, come to the Oracle cloud. Our database runs the fastest in our cloud, which is their stuff in the cloud. So you're an Oracle customer, you just can't lose there. So they've created an inevitability around their own database. So does that mean that they're going to win the new database war? Maybe not, but they can coexist as a system of record, so that's a win. Microsoft Office 365, tightly coupling that with Azure is a brilliant move. Why wouldn't they do that? They're going to migrate their customer base to their own clouds. Oracle and Microsoft are going to migrate their customers to their own cloud, differentiate and give their customers a gateway to the cloud. VMware is partnering with Amazon. Brilliant move, and they just sold VCloud Air, which we reported on SiliconANGLE last night to a French company recently. So VCloud Air's gone. So now that puts VMware clearly in bed with Amazon web services. Great move for VMware. Benefit to AWS. That's the differentiation for VMware. Somebody bought VCloud Air? I think you missed that last night because you were traveling. Yes, VCloud Air. That's tongue in cheek. I mean, what did they get for VCloud Air, right? I mean, it's OVH bottom, French company. More delevering by Michael. Well, inter-clouding, right? I mean, well, deleveraging with focus, right? So OVH, French company, has a very much What they pay? strategy that's undisclosed. Yeah, well, why? Because it wasn't a big number. This is my point. Back to the other cloud players, Google. I think Google's differentiating on their technology. Great move, smart move. They just got to get as someone has been following them and you know, you and I both have a lot of enterprise experience. They got to speak the enterprise language and execute the language. Not throw 19 year olds and interns or recent smart college grads out and say, we're instantly enterprise. There's a diseconomies of scale for trying to ramp up and trying to be too heavy on the enterprise. Amazon's got the same problem. You can't hire sales guys fast enough. And oh, by the way, find me a sales guy that has 10, 15 years executive selling experience to a complex strategic sales like the enterprise where you now have stakeholders that are in multiple roles and changing roles, as Alan Nance pointed out. So the enterprise game is very difficult. Yeah. Very, very difficult. Well, and I think these Hadoop startups are seeing that. Right? None of them are making money. Sean Connolly basically said, hey, it used to be growth. They would pay for growth, but now they're punishing you if you don't have growth plus profitability. By the way, that's not real, totally true. Amazon makes no money. It's stock price goes to the roof. There is no self service. Service now saying. There is no self service business model for digital transformation for enterprise customers today. It doesn't exist. The value proposition doesn't resonate with customers. It works good for shadow IT. And if you want to roll out G Suite in some pockets of your organization, but an ad sends sales force doesn't work in the enterprise. Everyone's finding that out right now because they're basically transforming their enterprise. I think Google's going to solve that problem. I think Google has to solve that problem. I mean, I think they will. I mean, to me, buy a company. This zillion companies out there that they could buy tomorrow that are prior to that have like 300 sales people that are senior people. Pay the box, buy a sales force, roll your stuff out and start speaking the language. I think Diane Greene gets this. So I think we expect, I expect to see Google do some things in the area. Totally, and I think to your point, I've always said the rich get richer. The traditional legacy companies, they're holding serve in this. They waited, they waited, they waited and they said, okay, now we're going to go put our chips on the table. Oracle made its bets. IBM made its bets. HP, I mean, betting on hardware, okay, fine. Cisco, Microsoft, they may all make in their bets. I mean, it's all about bets on technology and profitability. This is what I'm looking at right now, Dave. We talked about it on our intro and Sean Connolly, who's in charge of strategy, Hortonworks clarified it, that clearly revenue, losing money is not going to solve the problem for credibility. Profitability matters. This comes back to the point we've said on theCUBE multiple years ago, and even just as recently as last year, that the world's flipping back down to credibility. Customers in the enterprise want to see credibility and track record, and they're going to evaluate the suppliers based upon key fundamentals in their business. Can they make money? Can they deliver SLAs? These are going to be key requirements, not the shiny new toy from Silicon Valley or the cool machine learning algorithm. It has to apply to their product, their value, and they're going to look to companies on the score bar and say, are you profitable as a proxy for relevance? Well, I want to give, but I do want to, we've been kind of critical of some of the Hadoop players, you know, Ploudera and Hortonworks specifically, but I want to give them props because you remember well, John, when the legacy enterprise guys started coming into the Hadoop market, they all said that they have the same messaging. We're going to make Hadoop enterprise ready. You remember that well. And I have to say that Hortonworks, Cloudera, I would say MapR as well, and the ecosystem have done a pretty good job of making Hadoop and big data enterprise ready. They were already working on it very hard and I think they took it seriously and I think that that's why they are in the mix and they are growing as they are. Sean Connelly talked about them being operating cash flow positive, eking out, you know, some plus cash on the next earnings call, pressure's on, but we want to see, you know, rocket ship. That's not good. I mean, I think they've done a good job. I mean, I don't think anyone's been sleep at the switch at all, enterprise ready. The question has always been, can they get there fast enough? I think everyone's recognized that it costs the ownerships down. We saw this on the OpenStack ecosystem and that they move right to the value purposes. So we'll keep an eye on it. So tomorrow we'll be checking in. We've got a great day tomorrow. Live coverage here in Munich, Germany for DataWorks 2017. More coverage tomorrow. Stay with us. I'm John Furrier with Dave Vellante. We'll be right back with more tomorrow, day two. Keep following us.