 Live from the Moscone Convention Center in San Francisco, California, it's The Cube at Oracle Open World 2014. Brought to you by headline sponsor Q-Logic with support from HGST. violin memory and Mark logic. And now here are your hosts, Dave Vellante and Jeff Kelly. Welcome back to San Francisco everybody. We are here inside the Q-Logic booth. This is the fifth year we've done at Oracle Open World inside the Q-Logic booth. So thank you to our host Q-Logic that gives us a large portion of its Oracle Open World booth. It's been a great partnership that we've had with them for the last five years. And so, Jeff, I want to talk about the premise that we're putting forth for our capital markets event at Hadoop World 2014. So we are going to be down in October 16th, 17th and 18th or 17th, 18th and 19th middle of October. We have the Cube at Hadoop World. We're at the New York Hilton. We're putting together a three day event, wall-to-wall coverage of Hadoop World, the guests at Hadoop World and we have our own capital markets event which I want to talk about. And also, we will be having the Cube party similar to what we did last year. thanking our community and just giving back a little bit and having some fun. But the premise of the capital markets event really is about three big guys. Oracle, SAP, Teradata. And you could throw in Microsoft. You could even throw in guys like EMC, HP, maybe even IBM a little bit, maybe not so much IBM but certainly EMC and HP that have been just recently building up their software businesses. And most certainly Oracle, SAP and Teradata. Question, the degree to which big data and Hadoop disrupts their main business. Because what you're seeing now is all three of those companies are either making acquisitions, they're making marketing moves, they're co-opting a lot of the marketing messages within the big data community and putting forth a value proposition to customers that says, well, we do this too. We can integrate unstructured data, we can do real-time analysis. You heard Larry Ellison talking about sentiment analysis, bringing in the marketing, all putting it all in the cloud, all the stuff that everybody's been talking about, bits and pieces, saying, we do it all. We do it all today. Yeah, maybe it's a little bit expensive. What do you say to that? Well, I think the question is not whether they can do some of the things they say they can do. The question is, can they survive from a revenue perspective? Can they thrive from a revenue perspective in a big data world that is predicated on a number of foundational factors that are really the antithesis of what these companies have built their businesses on. So what do you think about the new open-source model of big data? It's around open-source software. It's about scale-out commodity hardware. It's about scale-out, not scale-out. It's about community. It's about developing open-source projects. Now you think about what Oracle, for example, here at Oracle Open World, what they're all about are really expensive, proprietary scale-up boxes, proprietary hardware, proprietary software, million-dollar-plus boxes. And what we're seeing is, when you couple that with the frustration that customers are expressing, now quite vocally around feeling like they're getting gouged on maintenance fees from some of the mainstream incumbent software vendors. The frustration they're having around not being able to adapt fast enough in this new world where you've got to make real-time decisions. You've got to be able to analyze all your data. You've got to be able to do that quickly. You've got to be able to do that in a way that's flexible. And it just doesn't fit with the way the incumbent software players have developed over the years. And so the question is, well, can they co-opt some of the technology, sure, to some degree they can, but can they do it in a way that doesn't completely decimate their traditional revenue line? It's going to be very challenging. I mean, think about something like Oracle. This goes to the heart of their business model. Hadoop, NoSQL, it's database, really, is what we're talking about. And it goes to the heart of their business, which is about really expensive boxes versus the open-source Hadoop and NoSQL market and technology approach, which is very different. Okay, so you say it's all about, so the NoSQL, scale out, commodity hardware, open-source, it's hard to argue with that. That's kind of where all the action is. But I could see a company like IBM and Oracle saying, hmm, yeah, maybe, but that's the plumbing underneath. Don't worry about that. CIO, CMO, CEO, don't worry about it, but we got that covered. That good plumbing. It's about the business outcomes. So what data do you have that suggests that it will attenuate, might attenuate, it's beginning to disrupt? What can you share with us? Well, in terms of that Hadoop and NoSQL are starting to disrupt this market? Yeah. Well, as you know, we've done some survey work, and what we found already is a lot of interest around, let's take Hadoop, for example, out of our survey sample, over a third of our survey respondents were already using Hadoop, and of those, over 60% have already transferred one workload or another from a traditional data warehouse or even a mainframe to Hadoop. Now, why are they doing that? They're doing that one because it's a 10th of the cost of doing those workloads in a traditional, expensive database. It provides more flexibility. Once you've got the data over there, you can do other things with it. But I would say, I think what's going to happen, I think what's going to happen is you're going to see certainly some of those use cases where they're moving applications over, but really the majority of the use cases for Hadoop and NoSQL are going to be net new applications. So, you're going to see net new analytic applications in the Hadoop environment. You're going to see more operational, transactional environments and applications in the NoSQL space. You're going to see interesting things. We talked to Mark Lodrick just a few moments ago. They're kind of straddling that line, trying to do some operational analytics in the same space. So I think you're going to see a lot of net new applications in those two environments. So it's not going to necessarily take a huge chunk out of Oracle. I mean, if you think about the size of Oracle, SAP, Teradata, et cetera, compared to the overall Hadoop and NoSQL market, it's very small, the Hadoop and NoSQL market. But that's going to grow rapidly and you're already starting to see companies like Oracle missing earnings. Their new license revenue is stagnating, particularly in the database space. And we think that's going to continue for the long term. And whether they can, Oracle's got their own Hadoop offering with their big data appliance, which they bring in the cladera distribution. They've got their own NoSQL database that they bundle into that. If they were to start selling a lot more of those at the expense of their traditional database, they're going to take a big revenue hit. So I don't expect them to do that. They're going to try to deposition Hadoop and NoSQL as kind of niche components that will have a role to play. But really, all the important work happens in Oracle. Jeff, if the Hadoop piece, that so-called pure play big data piece, is not so large, why do you feel like it's caused an effect? In other words, if the revenue being generated from the new stuff is tiny, why do you connect the dot and say that in fact could be, you didn't say it was, but it could be implied. It could be having an effect on the traditional suppliers revenue basis. And stock prices. Because it's the new applications are going to be built in these new environments. We fundamentally believe that. People are going to build new applications. They're going to start looking to things like NoSQL for more transactional operational applications before they look at a traditional Oracle database or traditional database from SAP or side base, one of those players. So while I don't think you're going to see a lot of current applications being moved over to these new environments, it's these new applications, people are going to start looking at these new areas first. And I think over the long haul, that is going to impact the growth potential of some of the traditional players. Do you think there's a lot of confusion in the market right now? Do you think that could be another factor in terms of spend? In other words, when there's uncertainty, people tend not to spend. They'll tend to sit on their hands. Do you think that could be a factor? I certainly think it can be a factor in this market especially. The Hadoop NoSQL market is full of, I mean, there's so many startups that are hard to count. And then you're seeing kind of the big data washing happening at some of the more traditional software vendors, such as the one we're at today. Is Oracle big data washing in your opinion? I would say yes, I think so. Is SAP? SAP has fine tuned their messaging a little bit. I think they were two years ago. I think they're making, they're more nuanced about how they positioned HANA for example. How about Teradata? They've made acquisitions in the big data space. Pure play big data. Teradata in my opinion probably is the most challenged of the more incumbent vendors in this space because they are really a, they are the data warehouse company. You think about an Oracle, you think about an IBM, they've got other lines of business that can help make up some of the revenue stagnations they're going to see in their database business. Teradata is a data warehouse company. So they are in a really interesting position where they're starting to see Hadoop encroach on their territory. And they've had to make, this was a couple of years ago, they had to make a decision, what are we going to do? Are we going to ignore it? Are we going to try to co-opt it? How are we going to position this? And what they decided to do into their credit is they jumped in with both feet. They partnered very closely with Hortonworks. They're partnering with some of the other players as well. And they're playing a very delicate balancing act here where they're trying to position Teradata, the traditional data warehouse appliance that they sell as a very complimentary to Hadoop. The problem is is the two areas start to overlap more in terms of use cases and applications and capabilities. The challenge is going to be from Teradata's perspective, how do we stop that from eating into our revenue stream for our traditional database business? Now, you think about the relationship they have with Hortonworks. One of the biggest challenges there, it's a reseller arrangement in addition to the technical integration. The reseller arrangement, you've got to think about a Teradata salesperson out in the field. They've got an account, they've got the possibility of selling a Teradata box for a couple million or reselling HTTP for a 10th that and getting only a percentage of that 10th for some of the capabilities that are similar. Well, if you're that salesperson, what are you going to do? So the challenge they're going to have is to incent their salespeople properly. And this is a challenge for Teradata specifically, but also, if you think, just turn it around a little bit, you think about Hortonworks. A big part of their strategy is are these reseller arrangements with Teradata, with SAP, with Microsoft. So it's very important for Hortonworks, long-term growth prospects, if they get that right, because if they don't, that's going to be an important part of their revenue stream that's going to be challenged. You say it's a classic innovator's dilemma for the incumbent guys, but let's take Oracle. So Oracle threw out $15 billion in free cash flow in the last 12 months. Enormous numbers. Why can't Oracle just live off its maintenance base? Okay, and sort of ride the tide while the big data stuff gets big enough. Buy, build, organic, inorganic. Well, I think they keep bumping along, pounding the cloud, and then eventually, you know, wipe out the upstarts. Like Vertica got, I'm going to say wiped out. You know, not wiped out, but acquired. Green Plum got acquired, RSL. I mean, all these MPP databases that were going to kill Oracle. None of them killed Oracle. Not even close. No, but I would say you can buy the, Oracle could try to buy their way out of this problem, but the underlying principles of this kind of emerging big data approach don't change. And that's the fundamentals, the fundamental approach, which is going to be the challenge. And there are going to be others out there that are going to be challenging Oracle, but to answer your question, I think they will, the maintenance revenue, they don't call it lock-in for nothing. They're going to do just fine in terms of that maintenance revenue. I think you're going to see, as I said though, their database revenue in particular is going to stagnate. Their overall growth is stagnating already. Where I think companies like Oracle and Teradata for that matter need to start thinking about, Oracle is already in this space obviously, they're a big applications company, but for Teradata, I think they need to start thinking about moving up the stack, and where can they add value with all their analytic heritage? Where can they add value, higher up the stack? Whether that's application development, whether that's package applications, I mean they've already got a suite of marketing analytic applications that they sell out of the box. To me, I think that's where they need to move longer term. And what is going to be interesting to watch is if they do go that way, how do they steward that transition? It's going to be a very delicate balance. But if you can add value up the stack, I think there's a lot of opportunity there, because ultimately, and as we've talked about on theCUBE many times, where's the real value of big data in the end? It's applications that actually do something, or put insightful data in front of an end user who can then make an action, or it's automating a process through an application. So what's the premise? Are we going to see a billion dollar company emerge out of this big data space unlike the MPP space? Since then we saw no, did we see any public companies emerge out of that? No, they all got acquired. Not a one, not a one. Okay. Maybe they were just too early, maybe they didn't have the technology right. What gives you confidence that the no SQL Hadoop crowd has it right? Well, I think they've got it right from a technology perspective. Like is Google and Facebook are doing it? Well, to some extent, because they weren't putting in MPP data, but that's not true. That's not true, Facebook is a very true customer. But they're not fundamentally running their business on it, right? They're doing a certain task. Yeah, and well here's a couple. We need the low data. So a couple things. I think what the MPP analytic databases are doing is a really important use case, but when you look at the, I mean, if you look at the market as you've got the transactional database, RDBMS and then you've got the data warehouse space in kind of the old world, that kind of maps to some degree to the no SQL and Hadoop in the new world. Where does the MPP analytic database fit? It's kind of somewhere in between those. So it was a little bit of a niche, a very valuable one to a lot of companies, but it was still a little bit of a niche. All right, so come back to my previous question. Are we going to see a billion dollar company come out of one of these two markets? I think it's going to take some time and I think it's going to take longer for any one company to reach that mark, because if you think about part of the benefit or part of the value to end users, to customers, to enterprises, is that this is a more affordable approach. You're talking about Hadoop, at the cost of a traditional data warehouse, they're abouts. So it fundamentally changes the economics. So it's going to take longer for any one company to reach that point. And then of course there's always the risk of, as we just talked about, an Oracle, somebody coming in and swooping in and trying to buy out some of those companies. We saw Intel make a huge investment in Cladera earlier this year, which essentially, you can say whether that was essentially an IPO moment, or at least laying the groundwork for Intel to finish that acquisition at some point. Here was maybe the non-IPO moment. The anti-IPO moment. Exactly, that was their moment. Well, when I say IPO moment there, their moment for some of the early Cladera, the guys that started the company, to get a bit of a return. Now, will we see a billion dollar company? I think we will. Well, because people took money off the table. I think some took money off the table. There's some question about- And some of the VCs took money off the table. VCs took some money out. Some question- There wasn't a blockbuster. I mean, what did they take out of that deal? I mean, I don't know the number, 150, 200 million? Somewhere along those lines. Out of the, remember they did about a $900 million raise, just amazing, between Intel and one other deal. Right, so a couple hundred million dollar pre-exit-exit. I mean, it's nice, but it's just like in Valley we're talking about here. That's not- Chump change. Yeah, I can't say what it's not. It's not polite to use that language, but my point being, I believe there will be a couple billion dollar companies- More than one. More than one. But I think we'll hold on, but where we're really going to see the billion dollar companies, we've already seen them. Google, Facebook, Amazon for that matter. These are, at their heart, big data companies. It's the practitioners that are going to drive the most value. It's clearly an area where there's so much potential value sitting in that data that people are collecting, and it's going to take some smart entrepreneurs come up with some really smart ideas to build new businesses. It's going to be some long-time existing businesses. Think about General Electric, what they're trying to do, what their industrial internet initiatives, building out a whole new business around software. To me, that's where you're going to see billion dollar companies. Can you talk about this at the big data event in New York City? I think we'll talk about it a little bit, yeah. I mean, the whole idea for the big data NYC event and the capital markets event, we've been getting a lot of inquiries from Wall Street, both sell-side and buy-side analysts. Really want to understand this market a little bit better. So the idea is we're going to go in and we're going to talk about some of these dynamics. Obviously, they want to know how this is going to impact the incumbents. We just talked about that a little bit. We're going to cover that in a little bit more depth. We're going to talk about our Hadoop NoSQL market forecast, which we're going to release in conjunction with that event. We're going to talk a little bit about, again, who are going to be the winners, who are going to be the losers, which vendors are best positioned to adapt in this new world. And really, ultimately, if you're an investor, one of the things you're looking for in potential companies you might want to invest in in terms of their big data practices, their use of data to drive competitive advantage. So that's really what the panel's going to be, or sorry, the presentation's going to be about and that's going to be followed up by a panel discussion. We're going to flesh these ideas out with a few other panel members, both CEOs of big data companies, Abhi Meded from Trasada, former Bank of America, Hadoop Guru. We've got David Richards from WAN Disco, CEO of one of the few big data, public big data companies. We've got Peter Goldmacher, which is really interesting, a former Wall Street analyst himself. Recently with MongoDB, he's going to come in and give his perspective as well. So it's going to be an interesting panel, and then, of course, we're following that up with the CUBE party, our second big data NYC CUBE party, so it'll be a lot of fun. Last question, I want you to kind of work it into your premise. The schism between how IT measures success in data-oriented projects and how the business measures success. Do you have any data on that? What can you share with us? We do have a little bit of data on that, so we asked in our most recent big data adoption survey for survey respondents to essentially rate the relative success of their big data projects, admittedly a subjective question, but we thought it could provide some useful insights, and really would have broke down the numbers, excuse me. The IT side of the house, the IT practitioners who answered our survey were much happier with the outcomes of their big data projects, felt like they had gotten the value of their investment in big data technology. The way we framed the question, over 50% of IT practitioners said they felt like they got the full value of their investments. On the business side, these are line of business folks, these are business users, to some extent these could be data scientists doing the analytics, much lower percentage felt like they were getting the value of this investment, below 20%. So there's definitely a big schism, as you say, between these two sides, and I think part of the reason for that is the way these two groups decide, or I should say, what they look at in terms of success. From my IT perspective, that I get the system up and running, is it fault tolerant? Do I have it standing up and running? Whereas, the business side, they want answers from their data. Two different problems, two different challenges, obviously closely related, but different ways of looking at the problems. So, to us, it really says, we're still fairly early in this market, it's still a pretty technology-oriented conversation, and we've got to shift the conversation to more business outcomes. Okay, Oracle Open World, big sort of thrust last night today, I'm sure you heard more about it tomorrow and throughout the week. Cloud, cloud, cloud, cloud, cloud. Big focus on cloud. 12C, C stands for cloud. 11G, G used to stand for grid, which is another name for cloud. Eight, nine, I stood for internet. I wonder what the next- No, the name for the next server. All right. Maybe BD, Oracle BD. Well, there's not quite as much, cloud is every other word here, but every maybe fourth word, there is big data. There is a little bit of a big data thing going on around there. Oracle basically laying out the strategy, saying we're all in on cloud. Criticism's coming in from the Twitter sphere, they're late, late to the party. So what? All the incumbents are going to be late, by definition there. I mean, yeah, I guess, I don't see that as a negative or positive, as long as they recognize that, it's like when Bill Gates said, we got to go all in on the internet, and they did, and they wiped out Netscape, Microsoft that is. I'm not sure Obama ever had that moment, but it looks like Satya Nadella is having that moment with cloud. Do I see Microsoft going through a similar transition? Ginny Rometti, similar transition at IBM. Now, IBM's a lot of kitchen sink cloud, but it's cloud. It's not on premise. It's SaaS, it's past, it's infrastructure as a service, it's rental, it's revenue recognition that's deferred, it's a lot of cloud attributes. Well, some of it is. To me, that's one of the biggest components of cloud. If you want to be a true cloud, you've got to have that elasticity. Okay, there are degrees of elasticity, there are degrees of openness, elasticity, openness, it's all sort of in the eyes of the beholder. That's true. And it kind of depends. It's Horses for Courses, as David Florey likes to say. But Oracle strategy is to own that cloud stack, infrastructure as a service, database and platform as a service, including Java and middleware. Software as a service with eight gazillion. I mean, it's mind-boggling. Your eyes like roll in the back of your head when you look at how many SaaS applications Oracle has. We were at Infor last week, two weeks ago. Two weeks ago. Losing track of time, but yeah, I was doing this again. We're in for a totally different strategy. We're going to partner with Amazon. We're not going to own our own cloud. We're not going to manage hardware. Very different focus. We are going to go deep into verticals. Oracle's going deep into verticals, by the way. Hello, making acquisitions, Telco, making multi-billion dollar acquisitions in different verticals. So, Oracle gets that really interesting. But so, zillion apps all in the cloud and then hardware and software engineered together. Hardware pieces going after EMC. We heard today, Larry last night, Mike Workman today, Hammer and EMC on its performance, Oracle's performance relative to EMC. Some missing pieces there that I want to dig into with Mike Workman tomorrow, like latency, that's a big component of performance that Oracle's not talking about. So we'll ask Mike about that tomorrow. But all in all, it's sort of, the more things change, the more they stay the same, Jeff. And we'll be covering again tomorrow. Yeah, I mean, I want to ask you though, from the cloud perspective, it's been said, if you didn't start your cloud five years ago, it's too late, how is Oracle going to compete from a scale perspective with Amazon, with even Microsoft at this point? Google, are they too late? Well, so Oracle's not, in my view, going to be able to compete with those guys on scale. I think, you know, my rap on the economics of infrastructure as a service in particular, where it doesn't apply for software. I mean, it doesn't, it doesn't. Software's already proven out. Oracle's achieved software marginal economics. What it hasn't achieved, what nobody has achieved, except really Amazon, Google, and Microsoft, to a certain extent, are taking outsourcing economics and tracking those along a software marginal economics line. That's very powerful. Sort of academic, but mark my words. If the cost of provisioning services in Amazon is dramatically, and I'm talking dramatically less at volume than everybody else, there's going to be a tipping point. And I'm not sure Oracle's going to be able to hit that tipping point. I don't know how many servers it has in its data center, but it doesn't have as many as Amazon, and Google, and Microsoft. Will it? I doubt it. I doubt it, I think. Now, does that mean they're cooked? No, what they do is what IBM does, sell business value, sell business outcomes. They wrap a red blanket, IBM has a blue blanket, wrapped around the customer. They deliver reliability, high availability, security. That's their wrap. Now, can Amazon do that? Maybe, can they do it in the red stack approach? Can they be the iPhone? Look, iPhone ships less than Android, right? But who would you rather be? So the idea is that they potentially be a lot smaller, but it's going to be a lot higher value per customer. They're not going to miss out. Yeah, I think that's the strategy, and I think, I mean, as much as I love to hammer Oracle, I think it's going to work. They're really smart people. They're transitioning to the cloud model, they're transitioning to a rental model. They got the financials figured out on that model. Will they keep missing on EPS? Yeah, but EPS is a BS metric anyway. I mean, I look at top line revenue growth. That's not, you know, hard to lie about that unless you're, you know, I mean, even then actually you can play games, but the very top line, you know, it is what it is. And cash flow, free cash flow and operating cash flow of these companies is enormous like Oracle and SAP. And Oracle's balance sheet very, very strong. And so they'll be able to weather a pretty significant storm in my view. Will they be able to, you know, compete really with Amazon, Brian, because he said it's not about price. It is ultimately about economics when it comes to infrastructure as a service. If Amazon is two thirds cheaper than everybody else, then that's going to be huge. Now, of course, you got to factor in total cost of ownership, et cetera, but that initial cost is symbolically very important just as it was in PCs with Microsoft and Microsoft software. So I see Amazon, I'm, you know, very bullish on their future in infrastructure service. I don't think to your question that Oracle's going to be able to compete on volume at the cost, but they don't necessarily have to uniquely. I think IBM and Oracle uniquely don't have to. I think HP does. And that's something that HP's got to work on. HP needs more software, Mojo. We've talked about that a lot. Autonomy's nice, but it doesn't do it. It needs applications. It needs middleware. It needs developers, so. Okay, we got to wrap. Listen, if you go to live.siliconangle.tv, you'll see we're running a simulcast, John Furrier and Jeff Frick at the Cisco booth. They are running until 6 p.m. Pacific time. Let's see, tomorrow we kick off the keynotes at 8 a.m. Pacific time, and we go live at 10 a.m. So go to live.siliconangle.tv. You'll see two channels there. Pick on the one you want to watch. We get the schedules up, so just scroll through and you'll find the guests there that are most relevant to you. Tweet us at D-Velante, at Jeffrey F. Kelly, at theCUBE, at SiliconANGLE, at Wikibon. We'll do our best to respond. So thanks for watching everybody. Day one is the wrap. We're live here at Moscone. We'll see you again tomorrow. Thanks for watching. This is theCUBE. Talk to you later.