 Okay, we're back everyone. This is the wrap-up of day two of exclusive coverage of SplunkConverse.converse2013. This is theCUBE, our flagship program. We go out to the events, instruct the city from the noise. I'm John Furrier with SiliconANG. I'm joining with my co-host Dave Vellante, and Jeff Kelly has been out scouring the landscape today. Guys, we're going to put a bow on this event. What a great event. Coming down to our final segment here. Let's wrap up the show, Dave. I'll start with you. Observations, I mean, we heard a lot of great guests here. Today, a lot of customers. We had a few Splunk folks come in. We had security. We had the senior vice president of business development. Big smile, spring in his step. Business is good. What's your take on the SplunkCon? Well, I just want to say, John, first of all, I feel really privileged to be able to come to events like this, work with you and work with the CUBE team. We've done three events now this year. They're really, they're small, but they stand out for their passionate customers, their innovation, the vision of their leaders. The ServiceNow Knowledge 13 conference, the Tableau Customer Conference. And now the Splunk.conf. Those three events were unique in that, as I say, they were small and intimate, yet at the same time, the customer base is highly passionate. It's a 10x value proposition. It's very exciting. And it's a privilege to be invited to these shows and have the CUBE here and document them. I think my second point here is, it's not uncommon at these types of events that you hear a lot of talk about product because that's what customers are used to. That's what they want. They want innovation around their products. So we heard about Splunk Enterprise, version six, we heard about a new cloud offering and we heard about HUNK. I think version six is no brainer. That adoption is going to skyrocket and that's Splunk's big opportunity. I think cloud and Hadoop are longer-term plays. There's a lot of experimentation going on there, but I think they're both highly strategic for Splunk. As you were saying earlier, John, Splunk is really starting to spread its wings. It's starting to bump into a lot of adjacent markets. It's going to get really interesting here as they expand their footprint. And I think the third thing is I've said that I think coming out of this show, assuming the government starts up again and October doesn't blow up, I think Splunk's going to have a nice halo effect from this conference. I think the biggest thing I've heard from customers at this conference is, wow, there's a lot more things I should be using Splunk for than I'm currently using Splunk for. That means you're going to see, I think a good calendar Q4 for Splunk. You're going to see a big uptick. I think their fiscal year, they're going to do close to $300 million this year, if not break $300 million in revenue. The thing that I'm watching really is the ecosystem and the channel. I think that Splunk's doing a great job there, reaching out to developers. That to me is the big indicator of success. How much more leverage can Splunk get out of its ecosystem and its channel? Can it get that number, which is 45% of the transactions today going through the channel? Can it over time get that number up to 75%? I believe that's where it has to get. You know, Dave, I do have to agree with you, one, the channel, watching that is key. I want to add to your observation, which I agree 100% with, that the thing that stands out for me at this conference in Splunk is they've cleared the runway with the IPO, the growth, they have that under their belt, they're not looking back, and they're growing. So like clearly that's the business side of it. But the things that stands out and makes Splunk a special company is the people and the products. The people are passionate, they use their own product, they are geeks, they're users as well, and the products that they built are solid. But the thing that I think is going to make them such a killer company, in my opinion, is that they've cut their own path. They're doing it their own way. They're not trying to be a BI company, they're not trying to be in a data warehousing. They're taking their own path. And if you look at history, all great companies have a platform. And these guys have so many use cases being generated by their customers, Dave, we've heard that, that people are making up new use cases all the time and they're not making it up. They're actually delivering solutions and it's not even Splunk. So there's a lot of leverage in that platform. I love what you're saying there. That's the definition of a platform. You're right on there. That's the definition of a platform. And you look at what happens to companies like this. Did Splunk execute amazing competitive strategy? If you look back at it, you say, hey, you know that's amazing competitive strategy. You pick a segment in the market, IT log files and sequenced to a broader market position. That's competitive strategy 101, that's how you grow the market. I think they did it by accident. And if you look at great companies, Dave, great companies like Google, accidents like that happen. The being lucky is about being in the right place at the right time. I think Splunk has a Google feel to it. Whether you call it by accident or just good timing and good luck with big data, Splunk is in that position of a platform. They're enabling a lot of different solutions, driving a lot of revenue, a lot of leverage. If they get the channel right, if they get to go to market and the flywheel and the sales side going, it could be nothing but net for these guys. I would agree with you, John. Sometimes you got to create your own luck. So, I mean, you got to give a lot of credit to the team here, as you said. Some really smart, innovative people. They really stuck to the plan the first few years, focusing on their core mission, machine data, log data analytics and monitoring. And now they're really starting to expand, as you said, and becoming a true platform play. We're seeing customers out there talking to one another. I've had several on today who said the best part of the show is going into some of these other customer sessions and just learning from my fellow Splunkers, Splunk users, I should say, about some of the things they're doing and things I haven't even thought of. So, the ability to land and expand, if you will, and apply the platform to any number of areas is certainly so far a winning strategy for Splunk. Again, something similar to what we see happening at Tableau, but as you said, Dave, as they kind of spread their wings, they are going to start bumping into more competitors. Even Tableau, for instance, there's a little overlap there with the types of data visualizations you can create. So, Dave, I want to ask you a question, because I mentioned this in our last segment. Suck an exhaust, a data exhaust from the market, I call that, I don't want to say the bottom of the barrel, but the food chain clearly is up on the high end with the business value that Splunk is clearly executing on. That's the big leagues. How do you look at that? We talked about it in the last segment. What markets are they jumping into? Does this compete with ServiceNow? They're going to get into the IT service management. They're talking operational analytics, is that IT? Clearly, IT is a focus. What's your take on Splunk? Just cut a path through three, four markets, or who do you see them bumping into? Well, I definitely, I see them bumping into VMware. Basically providing what appears to be a better tool for monitoring VMware than VMware has. I definitely see them bumping into the traditional BI space. No question. I see them, even though I think they're partnering, I see them bumping into the visualization space. They're partnering with guys like Tableau, but you know, there's their visualization, their vis ain't what Tableau has, but you know, it's good enough for a lot of these applications. And now it's going to be really interesting with Hunk to see the adjacencies in Hadoop, because what we heard from Splunk is what they're doing is not just Hunk for Hadoop, that's where it's starting, but they're really driving it into that big data, what Sean was talking about, that big data ecosystem beyond just Hadoop, laying Hunk on top of Hadoop clusters, but also bringing a federated Splunk, if you will, going where the data is. To me, that's the right model. What's, the other one says, oh, Hadoop and big data. Hadoop's not big data. To me, what Hadoop sort of defines the paradigm of big data because it's all about leaving the data where it is and shipping the function to the data. And that's not a use case that works all the time, but for an increasing number of use cases, it's very effective because there's so much data and you don't want to move it. So that's kind of my take on some of the adjacencies. John, anything you'd add to that? Yeah, well I want to add, but yeah, certainly I'm not trying to add to your commentary because it's awesome, but I want to get Jeff's take on the Hadoop piece because before I add on, because what's interesting about Splunk is the challenge is, do they increase the product feature functionality? We ask the VP of product management this, or do they go in and support multiple data sources like Cassandra, you guys brought that up earlier. Jeff, this is clearly big data. They're trending in the big data space. Our CrowdSpots dashboard showing number four trending item in the big data vertical of close to 690,000 people that we're monitoring on our panel. What's your take of Splunk's impact on big data? The big data goes, I'm talking about Apache Software Foundation. We're talking about generic kind of the Hadoop summit, Hadoop World Crowd. Well, so we've done some research at Wikibon and we've found that the return on investment in big data deployments and specifically around Hadoop is not getting to the level where people expected at this point. People, for every dollar invested, they're only seeing a return of around 55 cents according to our research. One of the reasons for that is that they don't have the tools to either build applications that allow them to extract value from the data that you store in Hadoop or they just don't have the off-the-shelf applications available to them. Splunk has an opportunity to parlay what they've done with log data and apply that to the larger big data ecosystem be it Apache, Hadoop, Cassandra, even Mongo. As Dave said, take a federated approach where you're actually allowing developers to build applications across data sources. If they can nail that, that big data market is begging for an application development platform that makes it easy to do that. If they can apply their Splunk platform to these big data sources, they're going to hit a home run. You know, Dave, add on to your comment about my question around what they're bumping into. I mean, this may be contrarian, certainly it's out of the box, but here's my vision on Splunk. I think Splunk is in a unique point in time right now where they are a different animal than no one's ever seen before. I mean, this is a company that has a lot of trends behind their back that is, we're talking about consumerization of IT. This takes the traditional enterprise focus off the table. If you look at search, for instance, you've got Google pure play consumer search. You've got on the enterprise side, you've seen in Deca and a variety of the handful of companies that got exited. They all kind of found their home and information governance, information management, structured data, legacy data sources, you know, pretty boring standard search, enterprise search. I think the new market is not even about any of those. I think it's more like Google, less like an enterprise search. So I think Splunk could use the search leverage, the fact that they have such a great platform and one of their key values of ingesting data and becoming a de facto standard for application developers. They could literally flip the game upside down and become the standard for what we're now talking about this big data application economy that's never shown up. I mean, Mike Olson two years ago predicted that there'd be a tsunami of big data apps. There aren't. That's a fact. It's just analytics and some, you know, efficient visualization outside of those two. There's no killer app. Splunk could be that platform and then essentially use search as a lost leader to get huge market share. So I think that could be, that's a Google-like revenue outlook if you want to go on the high end scenario. It's a great observation. I mean, I think that we were talking earlier to me when Oracle paid up a couple billion dollars plus for InDecca, it was just sort of a signal that search was going to be embedded fundamentally in every application. We were at Oracle Open World last week. We didn't hear one word about InDecca. Nothing. That filled the product hole. That was just nothing. They're making it, you know, fundamental to the app. And what you just described, the potential of Splunk is to, you know, permeate throughout the entire application ecosystem. I think it's a very powerful analogy. I mean, there would be a fabric of IT, right? So, which is now consumerized, right? So if you look at IT with connected phones, I mean, literally it's only like since 2007 since the iPhone hit the scene. So if you go forward, we're still in like, well, you know, diapers relative to the mobile devices. So if you look at the mobile connected and now sensors, you have a completely different paradigm on how the data architecture is moving. We're seeing that with Flash and converging infrastructure. So I think that, you know, Splunk could roll the dice and throw a Hail Mary on first and goal, right? So here's the thing. So here's the thing, we've been talking about these companies for all week here. Guys like ServiceNow, guys like Tableau, guys like Splunk, certainly Workday and some others that you can put into that category. But these relatively small companies that are public, they're growing at between 50 and 80% a year, some even 100% a year. They've got anywhere from, let's say, four to $16 billion market caps, you know, so they're getting substantial. Can they remain independent? Because I mean, I almost cried when three-par got taken out by HP and saw data domain go down. You saw all these acquisitions going. It would just be so great to see these innovative startups, these disruptors, these irreverent companies stay independent for a decade or two decades. We're waiting to see that. Jeff Kelly, do you think that will emerge in this whole big data marketplace? I think there's the potential for two or three of these players to potentially stay independent for at least longer than maybe we thought. And that's the problem, there's potential for the potential, right? But, well, let's look. So some of the big data players that have not gone public yet are probably going to do so in the next two years. Cloudera, Hortonworks, Datastax, and MongoDB, I think are all going down that path. One or two of them will probably get acquired, maybe even before they go public. Two that go public have a potential. One of them probably can probably pull it off, stay public, stay independent. The other, I'm guessing we'll see an acquisition. Maybe an Intel will make an acquisition. Oracle certainly might make an acquisition in this space. Oracle's strategy around big data is just so backwards right now that they don't know how to handle that. So Dave, go back in time, okay, or at the beginning of the year, stock price on the 52 week low is 26. April is 39 and it's up at an all-time high now, trading at the high end of the range. It's down a little bit today, but in the 60s, 62 up there, it's around that number. And so, you talk about only a market cap of six billion. If they continue to roll out and become a standard with the kind of use cases we're seeing, this thing could easily be a $200 billion company. I mean, we're talking, that's a Google-level run. If they can, on the high end of our scenario, if they did, that's a $200 billion company. Look at Facebook, look at some of these other companies. Look at VMware. I mean, look at the market cap of VMware and look at this company. So, with all that leverage, it begs the question. It begs the question, if the game can be flipped around for app developers, just the little conversation we had about MongoDB this week has been interesting, right? Mongo's in the conversation. Internet of Things is in the conversation. So, they're cutting through multiple trend lines here, so. Well, they have a huge opportunity with the whole industrial internet play. I mean, that's all about connecting machines and making sense of that data. I mean, as you said, Splunk could apply the tech there, platform to any number of use cases and emerging markets. Well, I think, again, Splunk, ServiceNow and Tableau, to me, all have the potential. I think all three will be billion-dollar companies. I think they're on that trajectory unless they screw it up. What are their risks? Internal execution, I think it's the big one, obviously. There's competitive risks, and of course, if somebody takes them out, they won't get there. But I think all three have the potential, which is, well, I hope they don't sell out before they get there. And then, of course, what happens is, at some point, their market cap gets so loud, they do become acquisition-proof. And that's where it gets interesting, right? And it's hard for a company, when they're in that range, kind of NetApp went through this, and they're sort of going through that cycle. Again, they're too big to be bought, right? The value's there. I mean, look at what autonomy was bought for by HP. I mean, look at the number. We don't even go there in terms of the conversation, but you're talking about $11 billion, right? I mean, that was what they paid. Now, I'm not saying that HP should buy these guys, but if you're Microsoft, or you're anyone in the IT business, and you just say, man, offer 10 now and help they take it. You know? But they have to keep funding innovation. They have to expand internationally. Here's the deal. Right now, these companies don't have to be profitable. So they can very effectively compete with the likes of Oracle, and IBM, and HP, and EMC, and the others, because these companies don't have to be profitable. They have to throw off a little bit of cash, but they can lose money, and Wall Street will keep rewarding them for growth. As long as you're on that growth trajectory, you have a unique advantage in the marketplace. It's when this growth slows down that the pressure for profits hits. Now, and Jeff Calubin hammering on this for months now, when these companies go public, that's really when, so I'm not worried. Growth is like a heat shield for these companies. It's when the growth slows down, you know, below 50%, 40%, they start growing at 20% per annum. That's when the pressure for profits really starts getting ratcheted up, and then they got to make tough decisions. Do I invest it in R&D? I got to ratchet that down. Do I, can I expand internationally? Were there's huge opportunities? That's when it gets really interesting and really tough, and that gets to be around when they start getting close to, you know, 600, 700 million toward a billion. So it's going to be really fascinating to watch. Absolutely. Okay, well that's a wrap. Any other comments, guys, you want to share? It's going to have time to wrap this up and get back on the road. I'll be going back to Palo Alto, you guys back to Boston. Thanks to everyone. So, let's see, so we should tee up the fall schedule here. Right, our next big event is going to be the end of October, big data NYC, same week as the Duke World. So we are going to be set up at the Warwick Hotel, 59 second walk, literally, from the Hilton. So we got a big cube set up, two and a half days at the Warwick. We got a full lineup going, great guests. We're going to have a party on Tuesday night. We're very excited about that. Yeah, and we also, that's a really big event. Strada, the Duke World will be out there covering that event as part of our big data NYC. Follow the hashtag, pound big data NYC. We're going to start pumping a lot of content on there. Look out for our crowd chats. I want to thank Splunk executives and all their customers allowing us to be here and the team, Alex, Andrew, Mick, Jeff Frick, Jeff Kelly, guys, thanks a lot. It's been a great, great run here. Two days, second year in a row for Splunk Conference. This is the cube. This is a wrap up live. Wrapping up here at Splunk Conference 2013. See you at the next show.