 from Washington DC, it's theCUBE covering Oracle Cloudworld. Brought to you by Oracle. Now your hosts, John Furrier and Dave Vellante. Okay, welcome back everyone. We are live here in Washington DC. This is theCUBE. We are in the nation's capital. I'm John Furrier with Dave Vellante co-hosting theCUBE here covering Oracle Cloudworld. But we're going to do a special CUBE segment. Really, Dave, because we're in the nation's capital. We're live. The government, we've got an election year. Trump is just completely killing the Republican party. My Twitter feed is exploding between Hillary, Bernie, field of burn. So you got a lot of politics going on in DC. But the real politics is the cybersecurity. So let's talk about that. And see, obviously Oracle doing an event in DC on the doorstep with another cloud event we're covering in California, the Google Developer Conference. So their user conference, Google Compute Platform. So it's a cloud war, okay? The cloud wars are here. Oracle's not even mentioned in the top three. CNBC had a chart yesterday, and they weren't even in the top three. It was Amazon, Microsoft, Google. IBM was in there. IBM was in there, yeah, I've got about IBM. So, okay, what does all this mean, right? I mean, what's your take? This industry is going through a significant transformation in the cloud. No brainer, everyone sees it. But now you're hearing things like ERP workload of the cloud, cybersecurity. What's your take? Well, everybody defines the cloud as, you know, an Amazon's model of the cloud, which is infrastructure as a service. And obviously Amazon's done a tremendous job making infrastructure code. Beautiful. Where all the action is in cloud, John, is in software. Everybody's trying to become a software company. Everybody's a SaaS company. Everybody's doing digital. It's SaaS is where it is. Two places, SaaS and developers, right? And that's really where a company like Oracle has to play. Oracle, SAP, Oracle responding to Workday and Salesforce, obviously. But, you know, it's easy to make fun of, poke fun at Oracle. Oh, old stuff, old line, lock in, blah, blah, blah. Oracle is dead serious about the cloud. They spend a lot of money, they throw off 12 and a half billion dollars in the last four quarters and free cash flow. And Larry's pouring that money into cloud. People always laugh at how small the numbers are. Visa, V, Oracle's mean business. When I talked to Mark Hurd on our exclusive interview, he says, John, the numbers are tiny. We're Oracle, we've got this massive number. Of course we're in cloud, we're going to win cloud. But I got to ask you the question, with the narrative in the marketplace, because you and I see it, we have the data, we know the naysayers out there, there is a huge anti-Oracle crowd out there, we call the naysayers, say, oh, it's the same old message from Oracle. You guys just cloud washing, we're hearing from them directly here. What's your take? I mean, is Oracle truly changing as a company from your perspective? I have my opinion, but I want to get yours. What do you think? Well, I think there's no question about it. Company has to change. It has to make a major cultural shift to the cloud. I mean, Oracle are very smart people and they understand that, first of all, they can make a lot more money renting long-term than they can necessarily selling in the old perpetual license model. So that's first and foremost. Now, that transition will cause some pain financially because you go into a ratable model, but Oracle can manage through that. They got so much cash. They got so much cash, they can manage through that. So, listen, how many times have I said on theCUBE, the rich get richer? And Oracle is amongst the richest of the rich. They know how to do acquisitions. They know how to do R&D. They know how to compete. And they have their database license and maintenance business, which throws off tons of cash. So that's my take. John, the linchpin of all this to me is the developer community. That's your kind of wheelhouse. You see it in Silicon Valley. What are you seeing there? Well, first of all, I agree with you. Oracle is the rich. They're the rich guys on the block. Amazon's getting richer, by the way. They're not poor either, by the way. IBM's got some dough. Google's got some serious cash. So- It is as Microsoft. It is as Microsoft. So those are the rich guys on the street. They're the big houses. But the developer community- No wealthiest, one percent. The developers will be the swing vote in all the game because here's what's going to happen. The developers are moving to a full stack developer model. If you're not a full stack developer, you're just a bit player in the overall equation. So you're going to start to see a shift into the developer community where full stack developers will be mandatory requirement. I'm putting aside the designer, UX designers, I think that's specialty in its own, full stack developer wins. The second thing that I'm seeing in Silicon Valley is, and what Oracle's tapping into, that I don't think anyone understands is, the software industry is huge. Oracle has been a big, major player. You don't even hear word SAP anymore from Oracle. They're like it also ran in their mind, right? So all the analysts, the journalists that covered the software business are now on the heels. Then here comes this new game called Cloud, Amazon, right? Schools in there. So the cloud is not software, but yet as you say, software is everything. So if you look at the total addressable market, the TAM, it's software plus cloud is the TAM. That's where Oracle is going to win and that's why they will be in the top three no doubt because when you bundle the software market together with the cloud market, if I make quote, rankings and TAM, it's all going to be one, the numbers will be significantly bigger than public will think. Two, Oracle will be in top three. And Sean Price is, they want to be number one. So like they don't even get credit for the cloud. They're like the Rodney Dangerfield of the cloud. They get no respect. That's just in the cloud world. In the software world, they got a ton of credit, they got a lot of dough. Well, if you want to do a critical analysis of Oracle and Oracle's cloud business, I think it's fair to say that the marketing is definitely ahead of the execution. But as I say, oftentimes, because Oracle spends so much money on R&D, they, like Microsoft, will get it right. So for example, Oracle put up today, I mean, logo slides, very impressive. Here's our HCM cloud customers. Here's our ERP cloud customers. Here's our infrastructure as a service cloud customers. We're talking hundreds and hundreds and hundreds of logos. Okay, if you go inside and look at that, they've purchased a lot of companies. They've acquired a lot of companies. The experience is not seamless across all those logos. It's not seamless across all those software capabilities across all those services. There is a lot of work to be done. The documentation isn't maybe as consistent as could be. So they have some work to do. Of course, it's early. But it is early. They go at the speed of their customers. So they don't have to be as fast, for example, as Amazon at some of this stuff, because they have this huge footprint and real estate of customers that are generally pretty slow. Even the IDC data today showed half the customers are embracing cloud, only half. So it's still early to your point. There's a lot of marketing game going on, but here's my take, right? So this came up today in the interview and we'll tease it out. It's one of the cube insights that I saw today that I took away. And that is, if you want to figure out who's winners and who's losers, because you get the same questions I do. Who should I invest in? Who's going to be the winning company? Who should I work for? What product should I buy? Everyone is looking for some sort of indicator of who's winning. Here's my take on how you tell who's winning. The talent that they have. If you look at the talent that Oracle's putting on the board, logos, customer wins. Okay, they can maybe manage that, install base. So new business. What new customers are they getting? That's one measure in my mind. To the talent, whether you're an enterprise customer or a vendor or whoever, if you have talent that can execute, you're winning. It's a talent game right now. And Oracle is attracting some talent. I mean, Donatelli's over there. This guy we just interviewed from SimpliVity came on. He's a tech guy. Curry and Lure him over. It's not just the cash that's luring them over. They got tech. So to me, that's an indicator of Oracle's momentum. They are getting the talent. And that's a lesson for all the enterprise. I think that's a huge point. I mean, the other thing too is there are a lot of Oracle practitioners inside the Wikibon community that we talk to. And it turns out that Oracle's really good at hard problems at the mission critical, really gnarly, nasty stuff. ERP, OLTP, hardcore database stuff. That has not moved into the Amazon Cloud. Amazon making a lot of noise about Oracle running an Amazon, how they've announced the Oracle killer, their database, Aurora, et cetera, et cetera. That stuff's not moving to the AWS public cloud anytime soon. Oracle has a really strong lock on that. IBM with DB2 as well. But Oracle has a bigger footprint, bigger real estate, does a great job with security, and understands all those enterprise capabilities very well. Their customers trust them. We talk to them all the time. There's no doubt that Amazon has put Oracle on notice. And if you look at Oracle's move, I want to get your thoughts on this. Oracle is going to go blow for blow with Amazon on price. You agree? They're kind of signaling. Yes, but I have a commentary on that. So listen, Allison, so Oracle's strategy is to go frontal competitive with Amazon on price. That means they got to get down and dirty on price and then provide the value for people not to go to Amazon. That engages Amazon directly. What's your thoughts on that competitive strategy? Yeah, so Amazon's response to that, I think it's going to be, okay, fine, bring it on. We're going to be focused on our customers. We're going to move faster. We're going to deliver more services. We're going to do way more volume. We're going to have a greater operational efficiency. And ultimately, I've been arguing for a while that Amazon Web Services is very profitable. We're now seeing the numbers. They're operating margin is 28% much, much higher, for example, than EMCs, which is in the mid to high teams. So Amazon can play that game very effectively where Oracle wins is up the stack in Paz and Database as a service and obviously in applications. That's where they're going to extract their value. All right, let's talk about value. One approach is just to go fast. New product releases good price. It's Amazon. Oracle's going to have value up the stack in the software. Is there enough value for Amazon to match Oracle value for value with their growth strategy? Yeah, it's a trillion dollar market. Volume? Amazon could be 100 billion dollars. Volume, the profitable volume. I mean, Amazon's numbers are incredibly impressive. $8 billion, 70% growth, $1 billion storage business, 28% operating profits. That's a, there's no business like that. So would you say? Red Hat just became a $2 billion company. They're growing at 15%. Amazon's an $8 billion company growing at 70%. Amazon Web Services, Amazon Web Services. It's astounding. All right, so would it be safe to say that Amazon Web Services is a volume play and Oracle Cloud's a value play? Yeah, I think so. Absolutely, and no question about it. And Oracle has the right strategy. Look at VMware and EMC. That is a very difficult play. They have to be an arms dealer. Look at HP. Much, much harder business than what Oracle has. Oracle, massive margins, software-like marginal economics, same with Microsoft. Microsoft is really the interesting competitor here. Yeah. In my view. Well, Microsoft is the only one that matches the similar value that Oracle's playing. Leverage your existing assets and change the game. Move the goalposts, if you will, against the competition. And IBM to a certain extent, but IBM's. What, that's not what I view. Is IBM creating value or are they going head to head against replicating Amazon? Definitely the former. I mean, IBM's all about making acquisitions, creating digital media, new digital services, content distribution networks, Watson, cognitive. I mean, they're pivoting to a whole other set of values. And so, I see Oracle and IBM is a very interesting and somewhat similar. Amazon from a full stack of, sorry, Microsoft from a full stack approach. Now, Amazon, I think, is eventually trying to get there. You see, investing more in database. The question is, what happens to the Amazon marketplace as they keep going up that stack? So, is it winner-take-most market? The question is, they all have different approaches. It's like they all get scattered in the woods and they all get different paths. Who comes out on the other side? Well, I think the market is very segmented like Sean Price says, no, we're going to be number one. Well, in overall cloud, Oracle's not even close to number one, but start looking at the SaaS piece of cloud, the high value piece of cloud. Oracle absolutely can be number one, number two, number three in there. And in infrastructure service, I really don't think Oracle cares about making money in infrastructure as a service. To them, it's a lost leader. It's plumbing. Who cares? It's a means to a higher value end. Isn't the software business just SaaS? It's largely SaaS and it's the tooling around middleware to enable application development. We are in DC, cybersecurity. We haven't heard much about that. Cybersecurity a big deal. Your thoughts? Well, security's changing, right? Most of the investment historically in security has been on protecting the perimeter, but all the actions happen inside. The bad guys are getting inside and they're not getting detected for 300 days on average. So things have to change. Big data analytics has to come to fore. New types of security models have to emerge. The cloud, in my view, can absolutely be more secure because you've got greater consistency and you can make changes faster to the cloud. So I think the cloud is actually going to help address some of the security problems, assuming that the practices can follow the technology. So I think Microsoft is going to have a little bit of a challenge compared to Oracle and even IBM, even though they're winning now. Why do you think that? I don't think Microsoft understands the digital transformation. I haven't- Because they're what? To remove from the customer? I think they're so stuck in their old way, right? The cloud certainly is showing some promise, right? And they're with Satya Nattela, but they're just not a digital company. I mean, I just don't see Microsoft as a digital company. You think that's because they're one step removed from the customer that they're delivering through HP or Dell or- They're a traditional computer vendor and software company in that old model. I mean, they're not as accessible executives. I mean, the way they do their marketing, the way they talk to their customers, the way they talk to developers, it's old antiquated formula. So that's my opinion. They're .NET, that's what you're saying. No, no, just look how they engage. It's like the same old, same old Microsoft. Yeah, the clouds growing because they're doing some work there. IBM, Oracle, they're doing digital assets. They're changing their business. I don't see Microsoft changing their business. Google is all digital, but now they got to have much more of a social presence. So you're seeing them with their conferences, trying to be more open. In a very strong data angle. They're open with their content. They, all the videos are online. So Google's going to be, the issue with Google is, can they go fast enough? Microsoft has to absolutely change their business practices on how they engage the buyer and the buyer's journey. Okay, IBM is definitely there. Oracle's shifting. They heard Sean Price. They're doing things like theCUBE. They got open video conferencing. They're open to their customers. They are becoming digital. They're digitizing. So I like that. So I think the challenge is going to be, how these companies reach the buyer, like their customer's customer. And ultimately that's going to be who wins the big money. Well, and as I say, I mean, Oracle, IBM, very high touch. You know, Microsoft, one step removed is really kind of what you're saying there. But still very, you got to admit, Microsoft's still a strong force in the developer community. They've got a huge footprint, huge real estate, you know, of Microsoft buyers, developers. But I hear what you're saying. They're entrenched in some of the old ways. They are not accessible. They've got heat shields in front of them. Digital transformations about digitizing everything. It's not the freedom of information act inside of Microsoft. That's what you're saying. They're not that social. I mean, just in general, I think they got to get there. I don't think they're anti, just, they're a big machine, right? So, slow to move. All right, this is theCUBE. We're watching theCUBE live. I'm John Furrier, Dave Vellante live and Washington, DC, the nation's capital for exclusive CUBE coverage at Oracle Cloud World in DC. Thanks for watching and look for us next week at Big Data NYC, I mean, Big Data SV, Silicon Valley, and then we've got all the CUBE season coming up. We're going to be in Ireland all over the world. Keep watching SiliconANGLE.tv. Go to Twitter and search CUBE Gems, hashtag CUBE Gems, get all our highlights and of course go to SiliconANGLE.com and wikibon.com for all the great content. Thanks for watching.