On this episode of The Six Five Webcast hosts Patrick Moorhead and Daniel Newman discuss the tech news stories that made headlines this week. The six handpicked topics for this week are:
- Dell Unveils its APEX Portfolio at Dell Technologies World
- IBM Unveils World’s First 2 Nanometer Chip Technology
- Good News for T-Mobile in the Earnings Department
- The Latest Earnings Report from Lattice Semiconductor
- Announcements from the Microsoft Business Applications Summit
- IBM Launches LinuxONE III Express
For a deeper diver into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.
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Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this podcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.
Daniel Newman: Welcome everybody back to The Six Five Podcast. This week, I’m the host, Daniel Newman, principal analyst, founding partner at Futurum Research, joined by my esteemed colleague in crime for our 76th episode of The Six Five Podcast, Mr. Patrick Moorhead. Good morning, sir.
Patrick Moorhead: Daniel, how you doing? It’s Friday morning, and we all know what that means, another exciting installment of The Six Five. It’s going to be a beautiful weekend here and I’m pretty excited.
Daniel Newman: Yeah, no. It’s great. It’s become our thing. At some point, the world may force us to not pod on Friday mornings. But as long as we have this rhythm going and it gives us the week… This way we really do bring you all the biggest analysis from the tech events, the tech news that’ll drop in any given week. But who knows? Maybe we’ll be podding two or three times a week. Maybe soon we’ll be podding from locations that aren’t our home. I mean, we are actually getting out of the house pretty soon to travel to an undisclosed location to do a very fascinating interview with a, well we’ll just say a CEO of a very large technology company, but we can’t say anything more than that. But soon we will.
Let’s do the disclaimer stuff, huh? This show is for information and entertainment purposes only. While we will be talking about publicly-traded companies, please do not take anything we say as investment advice, information and entertainment. Just for anybody out there that has not been listening to the past 75 episodes of The Six Five, we focus the show on breaking down the news with more analysis than news. Just enough news so you know what we are going to be talking about, but not so much news that you could just get it by reading any other publication. We want to break it down. We want to go deep. We want to keep you thinking. And Pat, we got that today because we got a lot to talk about. We’re going to talk about Dell’s big event this week, IBM’s dropped some news, a couple earnings, and of course Microsoft had an event. And Pat, it’s nicer in Texas than it is here in Illinoying. Can’t wait to leave this place.
Patrick Moorhead: So close. I’m going to have the freaking welcome wagon show up for you, maybe some circus animals, clowns, balloons, all that stuff. I cannot wait for you to move to Texas, and that’s T-E-C-H-S-Y-S.
Daniel Newman: Techsys, baby. All right, so let’s break it down. Are you ready to go?
Patrick Moorhead: Let’s do this. Let’s light this candle.
Daniel Newman: Let’s light the candle, Mr. Moorhead. Let’s start off talking about Dell Technology’s world. I’m going to dive in specifically and talk about Project APEX. Now just to start off, another event that used to have a massive sprawl, multiple days, tons of speakers, generally was in Austin for a long time and then moved to Las Vegas, and now it has moved to our home office, or in your case, the offices that you don’t assile in there in downtown Austin, but good event. But this year, the show and all the upfront work that we as analysts did alongside Dell had a lot to do with the company’s migration to consumption-based services. This week, the company rolled out its APEX portfolio. This is a series of as a Service offerings. It started with storage, compute, moving towards things like PC, data processing, SAP, and like we’ve heard from a few other companies, namely HPE. But even if you look at what AWS and Azure are doing, moving towards everything in a consumption based format.
So coming straight out the gate, APEX is really focusing on two things, the two biggest things I’ll say is the data storage, and the cloud services. A couple of other things definitely were interesting, the custom solutions that Dell continues to do, along with the APEX console, which is going to be the portal that is going to be a very important epicenter of the Dell APEX offering. The reason I really point that out is because what we got going on is we’ve got these two converging forces, Pat. It’s basically we’ve got the big public cloud players, migrating more and more and more, you see my hand moving if you’re watching this live, but if you’re listening you can’t see that. Moving more and more towards prem. Then you’ve got all the prem providers, you’ve got the Cisco with their new Cisco Plus, you’ve got HPE, you’ve got now Dell, all kind of saying, “Hey, we understand there are still a lot of workloads that need to go on-prem. We’re going to build a public cloud consumption like offering, we’re going to move it more and more and more and more towards public.
So my take was Dell is off to a good start, it’s a company that you have to take very seriously. It’s got a world-class sales force, it will be able to use that Salesforce and that gigantic customer database to be able to sell these solutions early on. I like the fact that they’re starting small, with a few services, because even if you look at AWS, AWS started off with one thing, storage. And then it went to compute, and that was how it effectively grew its business. Same thing is going to happen here with APEX. I’m going to leave a little oxygen in the room for you Pat.
That’s kind of a running joke on this show for all of our first-time listeners. I just want to say this, Dell is looking at the market in two ways. Dell wants to be seen in the market as a force to be reckoned with in competing with the big public cloud players. I think in time I never would write off Michael Dell and say, “He will not be able to accomplish this.” I will also say they’re very formidable prem-based competitors that are doing this, and have been doing this in some cases with Nouveau, with True Scale, HP with Grid Hype, for years now. They understand a lot of the bumps and bruises, the complexities, what customers want, and Dell needs to get over that hump first.
If Dell can get over that hump, prove its business model, build a control plan that people like, scale it up. Certainly the company knows how to do services, certainly the company has a big backlog of subscription from its financial services business. It’s going to be a road to hoe, I want to hear about it in the earnings. I want to start off hearing about customer wins, and I want to start to see the financial growth, and then eventually I want to see if the company can compete and convince the market that the hybrid environment starts with your IT prem provider, and not your public cloud provider. But in the end path, I think it’s going to end up being a mix of both.
Patrick Moorhead: As a Service for everything is what customers want. Whether you’re a large company, mid-sized or a VSB, a Very Small Business like us. That’s where the market is headed, this is where Dell is taking it. A couple of things to keep in mind on this, things that really came out here. First of all, Dell’s scale. You look at their market share as it relates to servers, storage, networking, HCI, PC’s. It’s gigantic. So the scale at which Dell Tech operates is very different from the scale that some of the other companies are operating at. So they have scale, and they have breadth of product line.
A couple of things that I was really impressed with. So first off, the language that they used was understandable. They used the language of the cloud, of the public cloud, which quite frankly is the language that I don’t want to call it the winning language, but it’s become a language that customers can understand pretty well. What a really interesting thing that I was thinking through here when I stood back. APEX is getting so close to the public cloud, when you look at the deal and what they’re doing with Equinix. So if you’re a Dell Tech customer, and you don’t want to have on-prem infrastructure, you can put it inside of Apex. Guess what? You’re not going to get two bills, you’re going to get one bill, and it’s going to be from Dell Tech. Dell wasn’t the first to use Equinix, but Dell’s the first one to have one throat to choke while using Equinix, and that’s what customers want. When you sign up for AWS, or Azure, or GCP, or IBM or Oracle cloud you get one bill, not two bills, and people pointing their fingers at each other.
It’s be interesting, the other part is the 14-day guarantee, and I think that is mind blowing for something that’s going to be on-prem and new. Now hardware or infrastructure involved, you can essentially tap into that in less than five minutes, at an infrastructure. But the interesting thing I was thinking about, was what if Dell invested CapEx installing hardware and capabilities ahead of when a customer actually asks for it. And you’ve got a single pane of glass, isn’t that kind of like the public cloud now? It absolutely is, but don’t tell anybody Daniel. I don’t think any of these on-prem companies who are putting these as a Service opportunities, want to get there until it just shows up. But I just find that incredibly fascinating, that literally if they pre-bought and put CapEx, and put Infra into Equinix ahead of the curve, then put a credit card and a sign-up, you have the public cloud baby.
Daniel Newman: You really do, it’ll come down to ownership. Who owns the actual infrastructure. If Dell owns it, it basically is a public cloud. If it becomes something that the user ends up owning the infra, like I said you are right. I do think that would be a hard road to go down, it’ll be very competitive. Like I said, I’ve got a lot of confidence in Dell. Everything Michael does is very well thought out. We’ve seen it, a lot of times people might not understand it, but trust me he’s brilliant.
With that Pat, we’ve got to keep moving on. I know that was the big news of the week. By the way, there’s a lot more at Dell Tech World than that, but unfortunately this show is six topics, five minutes each, or eight minutes each sometimes. IBM, we’ve got a couple pieces of news on IBM this week. Quietly, IBM is a very big influencer in the semiconductor space. People don’t always notice that, because it isn’t one of the common names, the Intel, AMD, Nvidia, Qualcomm’s that tend to get called out a lot. But from a research standpoint, the company’s been doing some really interesting things, they had a pretty big breakthrough this week. Pat, I’ll let you start that one out.
Patrick Moorhead: Yeah, so IBM is a huge player in semiconductors, they license their IP to both Intel and Samsung and likely some other unnamed people who want that to be confidential. When I was at AMD, we were licensing a ton of IP from IBM when we had our own Fab’s. This big announcement was the first two nanometer, nano sheet device that was announced. So first of all, for those who aren’t chiplicious people, and don’t love chippery. Essentially the smaller the geometry, or the nanometer, the lower the power, or the higher the performance, you pick one or the other, or a combination both is what you get. So you want your smartphone to last longer? Go to two nanometer. You want to have higher performance at the same wattage? You go a lower nanometer that goes on there, it’s been tested down to one nanometer so far. But these devices are two nanometers. So two big impacts here, first is that IBM will be able to license this technology to both Samsung and Intel, and others who wish to be not named. Secondly, they can use them in their own products, their Power, and also Z. But it’s very cool, IBM is talking about 45% higher performance, as I said. Or 75% lower energy use, than compared to the current seven nanometer mode. So pretty awesome stuff.
Daniel Newman: This is a really interesting one for me Pat. We’ve been watching this industry very close. Just a few weeks ago, Intel made some announcements at their Idea of Two event. One of their four big announcements was about the partnership the company has with IBM Research. Which by the way kind of was quiet, because when you talk about building new foundry service, new fabs, major investments. Sometimes those parts of the announcements can go under the radar. Let’s not forget to share with the market, IBM had some very leading edge type of breakthroughs with seven and five. Was very early to the game there, people like I said don’t remember that, because we think about TSM at the leading edge mostly. Already talking about three nanometer, we think about what Intel is doing.
The other thing Pat that is really interesting. And I think warrants some discussion, I’d love to get your take on this because we haven’t actually talked about it yet. How IBM monetizes and commercializes these breakthroughs. Up to this point, of course IBM has their Z mainframes, it has power, some of their compute that they run on their Linux kernel that they use their chips for. But largely, IBM has not really been front and center in terms of taking this technology and scaling it to market, putting it in foundries, having it used in a lot of different designs or having at least notoriety for its use in a lot of different designs. Do you think this two nanometer breakthrough is an opportunity? Whether it’s on the mobile side, or with someone like a Samsung. A partnership, whether it’s with Intel, to commercialize and further help the market see a growth opportunity for IBM, for its semiconductor success research, and it’s ability to get to market early in terms of the research and development side?
Patrick Moorhead: Yeah, Daniel they’ve been doing this for 25 years, it’s just been under the radar. It made a lot more sense when they had their own fabs. They actually technically do have a test fab still for some of the photonic stuff. They’ve been doing this forever. It’s super high margin, I don’t think it’s revenue that would essentially swing anybody around the room. But I’m continually amazed at how ahead of the curve they are. Really the Intel announcement was breakthrough Daniel, because Intel for 25 years did it alone. It’s nice to see them working with IBM, and I think what we saw in terms of overall Intel IBM 2.0, Intel realizes it can’t go at it alone. It needs more fab partners, it needs more tech partners to make that happen. I don’t see that as a weakness, I see that as a pragmatic, good decision.
Daniel Newman: Yeah, I feel completely the same way. I think it’s just an opportunity. IBM breaks through on a lot of technologies, it doesn’t always commercialize them as well as they could. You could think about Quantum, you can think about Watson, and think about now all of the leading leadership that it’s had in chips over the years. Is there a different go to market approach? Especially now that they’re spinning off Kindrell, their IT Managed Services, and focusing more of course on the hybrid cloud business. But this is a huge business opportunity, and to be at the leading edge, and to be early with these technologies, there’s a possible bigger monetization opportunity that probably warrants some thought. I’m sure IBM is doing it, it’s a massive company, I’m sure they’re looking at this and thinking about it. It would be remiss of us as analysts to not at least look at the opportunity and say, “Hey, could IBM take this to market in a way where they A, get more credit, and B, drive more revenue beyond what they’re doing in their current business today.” But we’re not going to answer that today.
Patrick Moorhead: Sounds like a great analyst project, Daniel.
Daniel Newman: Yes, it sounds like an opportunity. Anybody that might want to talk more about this, and happens to listen to this cast, maybe they should reach out to us. Maybe we should have one of the execs on the show, on our insider edition. All right, let’s keep going Pat. You know my favorite thing to talk about on this show are always the earnings. I love making those ties from earnings to strategy. We do that different, and we think we do it maybe better than most. The thing is earnings are the moment of truth as you always like to say. It’s the most honest a company will ever be about how well its strategy is working out. This week, not nearly as many earnings as last week, but there were a few, and T-Mobile had a very, very good result.
Patrick Moorhead: Yeah, I think the way to characterize is, is T-Mobile tired of winning so much? If you look at the US market, you have AT & T, Verizon, and T-Mobile and others. If you look at Verizon’s strategy, it’s content, and they just realized that buying aged content is not the way to go, and they’re selling that off. You had AT & T who got into everything from HBO, to Disney, to ESPN, and investors don’t like that. Then you have T-Mobile, sticking to their swim lane and just absolutely crushing it. In Q1 what really stuck out for me were the net adds. In this business it’s net adds, 1.4 million. That means they took 1.4 million post-paid away from AT & T and Verizon, and it just continues. Net income. Was almost a billion dollars a quarter. A billion dollars a quarter. One of the reasons I like this story so much, is T-Mobile got no respect about five years, none. The only company that got less respect, was Sprint. And they combined, and a lot of people were like, “Oh, two has-beens combining.” But now they’re kicking AT & T and Verizon’s butt, particularly on consumer side, playing the uncarrier. And it just keeps moving on.
If you look on a 5G basis, basically giving away free 5G phones, and getting that mid-band 5G has been the magic over and above their competitors C-band which isn’t even there yet. And these weak millimeter wave, my gosh, we don’t even have millimeter wave in Austin yet. Austin, Texas with a T-E-C-H. So again, I hate to be blathering on and on here, but is T-Mobile tired of winning yet? Apparently not.
Daniel Newman: Listen, if Texas, my soon to be home could actually do a little work on getting a few more towers up, that would be great. I have less than impressive cell coverage. It’s kind of like when you go to Barcelona, for Bubble World, and you’re supposed to be in one of the tech hubs of the world, and the wi-fi is 2MB up and down.
Patrick Moorhead: Now Austin is an AT & T city when it comes to towers.
Daniel Newman: But T-Mobile needs to figure out a way to draft off that. We know these companies are pretty creative and clever at using and sharing the bandwidth to make sure that… They charge each other. That’s how it’s always been. But Pat, listen, you hit it on the head. The T-Mobile run, over the last five years has really been insane to watch. This company was an afterthought, it was like, “Oh, you can’t afford Verizon? You can’t afford AT & T? Oh sure, you can go with T-Mobile.” I just want to raise my hand and say I’ve been using T-Mobile now for six years here in Chicago. I believed in it, I really loved the no penalty, and the fact that the company had the ambition to start paying people to switch. Why did I love that so much? Well look, in this business this is a recurring revenue stream. Selling the phones, not a big deal. It’s that every single month, that four, or five, or six iPhones, or smart devices in the household, all at $100 or more per person, in perpetuity. Then these companies are adding services, On Demand, they’re adding in-app purchasing, they’re adding different media services to up level the businesses. Of course Verizon actually just spun off most of its media, worth pointing out.
It’s just a really, really smart business. It’s been an interesting transition with the new CEO coming in, because it was such an over the top, on fire kind of brand. Now it seems to be humbling into a little bit more of a we are the leader now, and acting a little bit differently. But man when the company was a disruptor, it was fun to watch it just take market share quarter after quarter.
Patrick Moorhead: Well Daniel, that’s a great observation on it. When you have CEO’s, they’re different personalities, but T-Mobile is very much aggressive guy, he’s not wearing hats during earnings calls yet. But he’s still pretty much orange and upbeat. I think they have to do that to get into the commercial side of the business. T-Mobile launched some really exciting enterprise and commercial services and capabilities, that oh by the way, I’m going to try out. T-Mobile is sending me a 5G hotspot that I’m going to park right outside my window, and that’s very much aligned with all of the CIO conversations that I’m having, and I’m sure you’re having Daniel. But let’s move on here.
Daniel Newman: I know, I know. I get excited, it’s earnings. Last thought, Mike Sievert, doing a great job. John Legere, he was a fire starter. So it was a perfect transition, excited to watch how it continues to emerge and grow this space. All right, Pat. We’re going to circle back, let’s talk about IBM again. Yes, I know. IBM is an old company, but it is new again, and sometimes what’s old is new again. Let’s talk about mainframes, and let’s talk about Linux. Let’s talk about some new technologies that are coming out. This week, IBM announced a couple things. Let’s halfsy this one.
Patrick Moorhead: You got it.
Daniel Newman: They came out with a new Linux box, the LinuxONE III Express Model. I never know how that’s supposed to be said out loud. Then they came out with some new mainframe. Basically on the LinuxONE, it came down to IBM identifying a really interesting opportunity to play a little bit downmarket using its capacity, using it’s economy as a scale, and with this new box they’re basically coming in with a smaller, faster time to market, with all of its baked in services that are in its big Z mainframe, things like Hyper Protect, and Confidential Computing, to be able to address two markets. One, they’re addressing the down-market opportunity of database services. Two, the one that I think is potentially most interesting is coming out with a box that really can address the growing demand for FinTech. You hear so much about crypto and what’s going on in this space. Well one of the big problems is you need this type of technology of what is in the LinuxONE and in the Z mainframes to be able to take advantage of these opportunities. These boxes are expensive, you’re talking about well over a quarter million, in many cases it’s a multiple millions. It’s kind of like the supercomputers of the mainframe world.
A lot of times these startups that are doing a really interesting thing, whether it’s crypto mining, or FinTech services, they don’t have millions and millions of dollars. So they want to do this type of stuff using cloud, but that’s not the opportunistic or ideal place to be doing this stuff. IBM said we’re going to take advantage of economies of scale, and we’re going to build a box that you can get in for just the price of a small house, about $135,000, that would enable you to take advantage of the technology of IBM LinuxONE, and to be able to concurrently use it in deploying your FinTech or some of these database services. Now it’s a big addressable market that IBM has primarily been missing because of their entry point being so high. So that is kind of interesting.
It is from a competitive standpoint Pat, as I see it, probably the biggest disruptor will be IBM and Oracle going toe to toe here on some stuff. Because this really starts to compete with the database appliances, Exadata systems, that have come from Oracle where Oracle has been very successful. What’s more fun than watching IBM and Oracle compete? Two big tech companies that have been around forever, that are still in this business. Overall I think this is a big opportunity. What I look at here is the volume is big, it addresses a new part of the market, the Team Ross Mari, and the team over at IBM systems Azid has been very good, very creative. By the way, this business, we talked about their very profitable power and chips business Pat. This is another real windfall business for IBM. Everybody says what’s old is old, you and I have to agree what’s old is new, and the fact is they’ve identified a market here, it’s a highly profitable part of the business. In the cycles when IBM comes into market with the big Z, the recent being the Z15. With these LinuxONE, it can be the difference sometimes between IBM being able to deliver a quarter of profit, and not being profitable is their mainframe business. So adding to the lineup, expanding down the market, and competing in a space where there’s more volume opportunities was a good move, and something I’m bullish on from IBM.
Patrick Moorhead: Yeah, the same day as the new LinuxONE came out, IBM came out with it’s I like to call it these are my terms, not theirs, Mainframe as a Service. IBM Z like you said was 49% growth, updates had come in, entire systems would have been up in a huge way. But just to set the stage here, so IBM already has a public cloud, it’s primarily X86 based, it does have IBM Z, and I do believe it has some power in there. IBM also has a satellite, which is very similar to let’s say a Google Anthos, and a AWS on-prem infrastructure as well. Hey, what about mainframes? Mainframes almost by definition have always been on-prem, and typically you buy the hardware, and then you license the software. IBM Z already went software by consumption, and I wrote about that on Forbes, and I wrote a new Forbes column where they’re actually using Burst performance as a Service. So IBM is essentially doing Software as a Service, and what I mean as a service I mean licensing, and also the peak hardware. Without getting into some of the names that only IBM Z clients would understand like MLC, MSU, R4HA and SKRT. I’m going to just try to simplify it for the broader audience.
It’s interesting, the only thing that IBM would have to do to go as a Service, is to go as a Service for that initial purchase, which I believe they’re already doing under certain managed contracts. Essentially what we talked with Dell, which is opening that up to more customers. I don’t know… It makes a lot more sense particularly now that you can get IBM Z in standard rack sizes, standard power, where if you wanted to replace a bunch of X86 servers, you can plop one of these, or a Linux one in its place. It does scramble my brains a little bit to think that a mainframe that runs RedHat Linux, that uses containers and can go multi-cloud. It’s basically a giant server, yet we call it a mainframe, yet it’s essentially a giant scale up server. Cool stuff, Ross and his team are just kicking butt over there, and it’s really fun and exciting to watch.
Daniel Newman: Yeah it really is, it goes against the grain like I said. Trying to make a mainframe cool is a really tough job, and I think that’s why you and I are giving it so much credit to that team. Not only has it made it cool, but it’s also been an extremely important part of the underpinnings of that business.
Patrick Moorhead: I like the underdog, I like the underdogs too. It’s like the PC’s dead, the mainframe’s dead, 49% growth, PC, 52% growth. What’s dead again?
Daniel Newman: Well actually right now, anything that needs a chip is alive and well, I don’t care what it is. If it’s a car, if it’s a TV. No one’s going to use a TV because everybody’s got an iPad, right? Well that’s not true either, I got a big old TV in my family room and I like watching it. You can kind of bite me if you think TV’s are going away. Did I say that? I said that.
Patrick Moorhead: Daniel, large screen TV’s are up 40%.
Daniel Newman: I know, I know, but everyone’s like, “No one is going to watch, we’re going to watch on our phone.” It’s like, “No I don’t want to watch TV on this little tiny device, I want to watch it on my 100-inch, 4K, 8K, whatever it is super high-resolution monitor. I just want it to look perfect. Anyway we’ve got to keep rolling.
Patrick Moorhead: Daniel is a millennial and he’s saying this.
Daniel Newman: Yeah, listen to this. I’m a millennial with follicular challenges, I haven’t had hair since my early-20’s. Don’t know why that happened to me, but it is what it is. Pat, let’s get moving here. More earnings, more takes from you. Let’s talk about Lattice Semiconductor, I’ve got a few opinions, but I’m going to let you go first here.
Patrick Moorhead: So first off, if you may not be familiar with Lattice, CEO ex-AMD’er Jim Anderson who made AMD famous with Xen, is CEO and he’s just been crushing it over there. They had a tremendous quarter. Lattice does the lowest power FPGA’s out there. They can replace controllers, they can replace ASIC, you can do an FPG design a year to a year and a half faster than you can do an ASIC, and it’s programmable, which is pretty cool. They’ve been crushing it, they’ve been moving up the food chain, whether it’s in 5G base stations, whether it’s in cars. Pretty much every Intel and AMD server, in a hyper-scaled data center has a Lattice semi security chip. Remember a couple of years ago the spy chip gate that Bloomberg brought out that freaked everybody out? Well essentially the first chip now that powers on on these hyper scale servers is a Lattice semi-chip. Financially Jim Anderson has gotten the company in a great spot here. Cleaned up a bunch, wasn’t tremendous amount of growth, but what he did was he kept growth, but he completely turned the offerings upside down, increased the rate of products by I don’t know, 5X, if I compare it to the prior administration.
Let’s talk about earnings now. Revenue up 19%, gross margin was up, Op Inc was up 2X, net income was up 2X as well. A ton of new products for the quarter, and I think gave a real top of the hat, a metric is they joined the S & P Mid-Cap 400. Which I think is a nice testament to they’re getting bigger, and they’re getting badder. I think Lattice’s big challenge now is, challenge for a company that grew 19%, is to grow even more. They really cleaned up everything, got profitable, got the machine working really well, increasing amount of products. I’m expecting ’21 and ’22 to be growth mode for the company when their new designs, the clutch goes in and they start to see the fruits of their labor.
Daniel Newman: Yeah, next week the company hosts an investor day, I’ll be tuning in among a few other events. What a busy week, we got IBM Think, we got more, we got some events to talk to everybody about in the near future. With commentary, I’ll put some links in the show note. I did a research note on Futurum about Lattice’s result, I also published a piece on MarketWatch today highlighting some underappreciated semiconductor companies where I specifically pointed to Lattice. Which by the way generated over $115 Million in revenue. It’s as Pat has suggested, inside of servers, automobiles, IoT in automation industrial applications, in 5G. Their chips are kind of everywhere, their FPGA’s. The programmability is really a differentiator. They’ve found their niche, they’ve found an identity. The company is leaning into that differentiation and really becoming the best at what it does. If you’re looking at a company and you’re trying to understand an opportunity and a market, sometimes you want the most diversified and the most general purpose. But sometimes you want a company that just says, “We are going to be the best in what we do.” That’s really when I look at Lattice, it’s very steadfast in staying the course, and it’s been able to carve out some real growth. You’re talking in the 20 percentage plus rate in that market.
All right Pat, so we’re down to our last one. We’re going for a land speed record of slowness in terms of getting through our topics. Let’s finish out with Microsoft, this week the company held it’s Biz Apps Summit. This is a annual event for the companies SaaS, prem-based applications. You probably know or heard of Microsoft Dynamics, used to be Great Plains, or Dynamics 365 now which is the cloud-based offering, which is the one that I think is seeing the fastest growth rate, from the 40’s of percentile. There was a lot of news, it was a day and a half. We had an analyst day, a great wine tasting. Then we had the event itself, a mix of pre-recorded and real-time content and interaction. But this was a moment to get with the senior executive, Alyssa Taylor, is it James Phillips I believe is the name, the President of the business. Sorry, just want to make sure I get names right. We hear from them.
There’s two things I took out of it Pat. One is, always great with application SaaS, CRM to hear customer stories. I think the company did a really nice job of talking through the lens of customers, how they’re applying these technologies, and this is in my eyes of why the business is growing. The second thing was some new product solution offerings were rolled out. I kind of leaned into one in particular, and that was around the customer insights business, or the CDP. For those unfamiliar, CDP, Customer Data Platform. This is the next big frontier for many SaaS companies, whether it’s Sales Force, Customer 365 Truth, whether it’s Adobe Experience Platform. All of these companies are moving up to stack CDP. CDP is really all about tying first-party and third-party data, being able to truly understand the full 360 degree customer journey, being able to attach. To get that right offer, in the right channel at the right time. A big part of that is going to be tying advertising engines to the customer first-party data insights.
So Microsoft did that at their event. They basically announced a more sophisticated integration between Dynamics 365 Customer Insights, and Microsoft’s advertising platform. But the important thing too by the way, Microsoft’s ad platform, which is a growing part of the business, because every part of Microsoft is growing by the way. This is being built to not only unify first-party data for advertisers, but it’s also being built to work with other third-party advertising systems. So think to yourself things like Google, Google Ads, Marchetto, MailChimp, SendGrid, AutoPilot, these are all the applications you’ll be able to integrate with. But really what it comes down to is can you access the right data? Can you manage your segments? And can you scale your ads across multiple platforms? So the reason for this is we want to be able to reach the customers in that right channel, and we want to do it at scale. Customers have become pretty good at segmenting their business.
There’s one other big caveat here Pat, that really everybody that’s listening that’s interested in this part of the business needs to pay attention to. That caveat is that effectively with the IB for Apple, and the changes being made to third-party, to make it harder and harder for companies that have long relied on inexpensive access to people’s data without their permission, that’s going away. It means every company needs to get more first-party data, they need to build systems to get customers to opt-in. So the way you get customers to opt-in is by putting the right opportunity to engage them in the right channel where they are opted-in. Whether that’s a Facebook, or a Google platform, get them to come and be part of your first-party ecosystem so you can eventually target them with the right ads. I feel like Microsoft made a good move here, they’re upping the stakes, and again it’s a super competitive space. You heard me mention it, Sales Force, Adobe, SAP, Oracle, all competing, Treasury Data, Segment and Twilio. This is a space where I believe Microsoft is going to be effective, especially with up leveling the business with their existing D365 customers.
Patrick Moorhead: Brother, you talked so much that you lost your voice. Because we’re out of time here. Two things that I noticed, it was nice to see Power BI add this goals function. Which is very key from just looking at the pretty pictures and charts, to know exactly where you are, to that some pretty sophisticated types of capabilities there. I thought the big story for me was Microsoft’s ability to tell customer stories, and tell them very well. I think this is important, it’s a sizeable business, but I think when you’re trying to convince people to leave one company and move to the other, you need a lot of these, “Hey, come in, the water feels great.” Types of things. Microsoft had the best communication on connecting the front-office and the back-office. I would dare to say that I’ve ever seen, literally overlapping worlds coming across and showing the applications and talking about the magic that people can do that. There’s really only three companies at least that I’m tracking right now that can do that. Microsoft, Oracle and ZoHo. I know Sales Force is going to try to get there, and SAP is trying to get there. But those are the three companies that are there already. That seems to be the trend, full-service providers front-end and back-end.
Daniel Newman: Well just like the cloud stack, you’ve got the SaaS stack, and that is taking care of all the functions. That’s your back-office, that’s your human resources, that’s your sales, that’s your marketing. All right, we could talk about that, whole show, own day. See, I left something for you there. You went on for like two minutes. There wasn’t nothing left for you.
Patrick Moorhead: I’m always going to find something to talk about.
Daniel Newman: I never leave you nothing sir. There’s always something for you to talk about. But that is a wrap for this show everybody. I want to say thanks to all of you out there that tune in. We really do appreciate this community, 76, I cannot believe that. Stay tuned, big announcements coming on our Six Five Summit, which is going to be June 14-18. We have an unbelievable lineup, I don’t want to waste this as the first place to talk about it. So I won’t tell you much more right now. But just know in the coming week there will be some breaking information, unbelievable lineup of speakers. But for this episode, I’m just going to say, hit that subscribe button, follow us on Twitter, stay in touch with us, listen to us on Apple or Spotify, pass us along. Watch our videos on YouTube, we love everybody that stays part of this community. Hope you found value in the show, appreciate you for tuning in. Goodbye, we’ll see you later.
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