On this week’s episode of The Six Five, hosts Daniel Newman and Patrick Moorhead get together to discuss:
- Microsoft AI Announcements
- Google AI Announcements
- IBM AI Cloud Supercomputer Announcement
- Zoho Trident
- GlobalFoundries Partnership with GM
- Elon Finally Breaks Twitter?
For a deeper look 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 webcast, 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.
Transcript:
Daniel Newman: Hey everyone, it’s Friday, and we are back with another episode of The Six Five Podcast. I’m flying this plane today alongside my co-host, Mr. Patrick Moorhead, Moorhead. You know, I almost forgot your name right now. Actually, that’s a good start with my always esteemed, always super smart and wisdom-filled analyst in residence, Patrick Moorhead. How are you, buddy?
Patrick Moorhead: Dan, doing great. It’s been a crazy two weeks. I mean, on the road all last week, on the road two days. Did not expect to be on the road this week, but was on the road, back on the saddle. And Dan, I really don’t care if you forget my name, just don’t forget my wire transfer number. That’s all I really care about.
Daniel Newman: Oh my God. Are you still sending those emails that are like, “Hey, dear customer, here’s my idea and here’s my wire number”?
Patrick Moorhead: I mean, I do put the wire information on every even proposal, so yeah, I mean, why not? I mean, what I strive to get to is where I just put the wire number. And then if they want me to do work, then I’ll do that. So I don’t know.
Daniel Newman: Oh boy. This could become a commercial for somebody. It might be for you or it might be for your competition, but this could be used. Oh, goodness gracious. But yeah, it was a big week this week. We moved quickly. We went to Austin, to San Diego, to Seattle, and back. It was sort of like stealthy super secret events until they were no longer super secret anymore, and then they weren’t secret at all. But yeah, we were a very, very limited cohort of people that went up to Seattle. We’ll talk about that, Redmond actually, to be part of a pretty big announcement that kind of stole all the headlines this week. But pretty much stole all the headlines, drove some real competitive movements, and we’ll talk about those as well. If you haven’t tuned into The Six Five before, and this is your first time, I’m going to ask you where the heck you’ve been and why you haven’t been here.
And once we get over that, I’m going to tell you, well, The Six Five is six topics, approximately five minutes each. And let’s be honest, they’re never five minutes each. But over the next 45, 50, 55 minutes, Patrick and I are going to cover the six biggest tech stories of the week. Little news, lots of analysis. That’s what we do. We break it down for you here on The Six Five, and we appreciate all of you that tune in with us. Now, as a reminder, this show is for information and entertainment purposes only. And so while we will be talking about publicly traded companies, we just want to remind you, please don’t take anything we say as investment advice. Patrick likes to say do the opposite, I just say don’t take any of it, don’t do anything with it, just enjoy it. Have a little fun. We are definitely two opinionated analysts, and we always have a view on everything that’s going on.
And today, we’re going to have views on a few different topics. We’re going to talk about what we saw up at Microsoft, we’re going to then talk about how Google reacted to it, and then another company, IBM, that stealthily came out with some news that maybe plays a role in this whole space. And then we’re going to talk about a big launch from an apps company, Zoho, that we’ve talked about on this show a few times, a company everybody should be watching. We had some big chips news and as a couple of chip-loving guys, we’re going to talk about GlobalFoundries’ big announcements with GM this week. And then we’re going to end with what Pat and I like to call we topic, something we just want to talk about. And that’s going to be about Elon Musk, and did he break Twitter? Was he moving too fast? Were you affected by it? I don’t know.
So Pat, I don’t know if we can preamble this thing any any more than I already have. I’ve made this lengthy and long and I hope everyone out there’s having fun, settled in and grabbed their popcorn, and joining up for the show. But let’s get down to business. I’m calling your number, I’m calling your number. It’s going to be a halfback dive between the tackles on Microsoft. What happened this week?
Patrick Moorhead: So first off, incredible event, stealthy, not stealthy. I think we got the go-ahead to even acknowledge we were going to Seattle when we were on a plane headed there. And what a beautiful view. If you’d like to see our pictures, just hit our Twitter. But no, most importantly, this was the big announcement for what I would call the consumer elements of leveraging generative AI and ChatGPT. And we learned a bunch of things.
So first of all, the positioning of this, which I think is key, is a co-pilot for the new Bing search and the Microsoft Edge browser sidebar. And what that does is I think that’s setting the stage that says AI is not in charge, it’s helping you. And I think, Dan, you’ve written books on this, I have not. And again…
Daniel Newman: You were busy, you were busy, you didn’t have time to write a book.
Patrick Moorhead: Then again, do people really write their own books? I mean, does anybody write their own books?
Daniel Newman: Oh, now we’re going to do that. Now, I’m going to have to-
Patrick Moorhead: No, no, no, no, no, no. I mean, listen, nobody writes anything. But anyways, I think co-pilot…
Daniel Newman: I use ChatGPT.
Patrick Moorhead: There we go.
Daniel Newman: I said, “Write a book in my voice about digital transformation.”
Patrick Moorhead: Oh, I think that’s cool. I prefer analog transformation, so let’s just get that out there. Anyways, come on, Daniel, let’s get serious here. So this is not just slapping a logo on OpenAI. So first off, this is not just slapping a logo on OpenAI and ChatGPT, Microsoft has what’s called the Prometheus Model, which enables it to not make up stuff, that is, I think, what we’ve seen from OpenAI and all that good stuff, has a tendency to ghost and drift. There’s also the Microsoft version of responsible AI that’s in there that is unique. On Bing, there’s also a brand new core search index, which isn’t necessarily 100% related to Prometheus or the new AI capabilities, but what it does, is it does pull up a prompt when it does feel like it is a good moment, good Prometheus moment.
We saw a lot of examples of planning trips, we saw creativity examples, where you’re going right into the search bar, we saw some cool Bing travel search. I thought the most powerful example was using the Bing sidebar where it had a PDF of, I think it was Gap earnings and essentially says summarize it, and it summarized it. I tried it on my own and a couple other ones. It’s not perfect, but the ability to summarize documents, and you can imagine this ability put into Teams, which I think there is actually a new version of Teams that enables transcription and netting out exactly what happened. Sam Altman, co-founder and CEO of OpenAI, showed up for a hot minute. He flew in, I’d never actually heard him talk, he reminds me a lot of Elon Musk, short and sweet, very intelligent and to the point. The company did a lot of drill-downs on responsible AI and how it has been architected from the grounds up architecturally. They showed a three-layer cake using models, safety systems and applications of how they do that.
And you can just imagine the types of things, all the way from politics to race and nefarious instructions of how to hack stuff, you can imagine what those layers of intelligence need to put out there. Net net, the company, they scored points. Anytime, Bing, when you’re the 7% market share player and you can get mentioned as taking out the top search engine that’s been out there for over 20 years, Google, you’ve scored the points. Now, is that a three-minute, three-hour, three-day, three-week, three-month, three-year advantage? I have no idea, but we’re going to explore a little bit of that when we talked about what Google announced the day after. Today, there is a testable new Edge with the Bing sidebar and the new Bing. So that was available to a limited audience, which, as we will talk about when we hit Google, is a very different approach. And quite frankly, Microsoft is first to market with this to the public.
Daniel Newman: Yeah, I think you hit a lot of things on the head there, Pat. First of all, it was really interesting to go up there not knowing exactly what was coming. Was it ChatGPT-4? Well, not exactly, but it is more than ChatGPT-3. And let’s be candid, this was one of the best worst-kept secrets ever. Microsoft had already made the big investment, had already announced its intent to start incorporating generative AI into more and more of its portfolio and that’s where it’s heading. And this was the first iteration. Why search? Maybe is a good question to stop and ask here. Why search and not something else?
Patrick Moorhead: Well, Dan, you had a really good tweet out there during the financial.
Daniel Newman: I did. I was proud of that and apparently it made a few ripples and waves, but I mean, just in fairness, it wasn’t really great analysis, I was just rehashing something that got shared. And real simple math, Bing has around 7% of the search market or less, 7% or less of the search market, and Google has the rest. And so I’m not going to talk about Google now because we’re going to come back to Google, but what I’ll say is they did an economic estimate of the value of Microsoft taking 1% of search. And right now, based upon the current market size, every 1% of search is $2 billion of annual revenue. So in a market where, first of all, we’re in a challenging macro. So if you’re Satya Nadella and you’re saying, “How do I grow during this tough macro?” Well, where can you take market? That’s the first place you should probably think about investing is where can you take market? Well, every 1%, so if Microsoft can make a Bing in the market or a ding in the market, by the way, check my Forbes article, best title ever.
Patrick Moorhead: I don’t know, ours was pretty good too.
Daniel Newman: Sorry, dude. I usually give you props.
Patrick Moorhead: Call your own number.
Daniel Newman: This one’s going to me. But in all serious, make a ding, 10% is $20 billion of annual revenue. Let’s talk about the technology itself is great. We had the chance to beta it. It’s not yet great in everything, there’s still a lot of learning and training to do. When I asked it the question of, “Who’s a better analyst, Dan Newman or Patrick Moorhead?” I didn’t think the answer was as good as it could have been, kind of a joke. But it does seem that certain parts of the model have been more refined and probably because of the way it’s been tested, the way it’s been utilized. And then, of course, based upon all the publicly available data on the market. And a lot of the power that’s going to come long term behind ChatGPT and behind a new Bing and a new Edge is going to be as companies are expanding to having more, what I would say, unique data.
And that’s where it’s going to start to be in the apps, meaning in the app ecosystem, in Teams, when it starts to get behind the company’s firewall and into the company’s own data sets where it can tap the public data and tap the ERP data, tap the human resources data, tap the BI data and start to incorporate that with, that’s when it starts to get really smart and really interesting, especially for companies that have treasure troves of unique data about their customers or competition or markets, et cetera. So a very interesting pathway, that’s what I see here, a path. The pathway isn’t just about being in Edge, it was very logical, first place to take market, and obviously a place where the company has long been seen as a distant second to the current front-runner. I guess I’ll wrap up there with the overall impression that I have is that this is going to take some time.
And despite the fact that we used it, we liked it, it looks good, it’s exciting, and it’s definitely a watershed moment, I think we can perfectly segue into Google by saying this isn’t going to be an overnight shift of massive amounts of market share, but what I can say is they’ve changed the game and the players all have to come back on the field. Shall we run over to Google? I guess I can. Let’s talk about Google. I want to talk about it through the lens of competition before I actually talk about what they announced. A lot of the press that we talked to, Pat, and you talked to a lot of press, I talked to a lot of press about this announcement, it was kind of like, “Is Google screwed here? Is this game over for Google?” So we all know Google’s gotten into cloud and we know Google has some big bets, but Google’s revenue largely comes from search. Its search on Google, its search on YouTube, its advertising.
And make no mistake about it, the advertising model of yesterday is going to be disrupted significantly. And I’ll make it really easy. When you try the new Bing, there’s going to be a left side and a right side, okay? The left side is basically going to look like the search of yester year. Now, for Bing, this was a big watershed moment because Bing search on the left side, I don’t know about you, Pat, I know we want to be diplomatic here, but I use Edge browser, but I go to Google for search. I just don’t find the Bing searches to historically have been very good. Now, with this new model, it’s already better. So I already noticed straight away the searches are closer in quality to Google. That’s a big thing. Again, this is my early readout. I haven’t spent a ton of time with it, but my early readout is the traditional search has improved from where it was. The right side of the screen is the generative AI.
The right side of the screen is where it’ll prompt, it’ll fill things in, or you scroll up and you get to the natural language processing where you actually add the chat function to actually query that way by searching using questions and then prompting additional questions and seeing multi-term conversational AI where you’re getting more data and more insights. And that’s really interesting, and that’s going to change everything. And this is what Google really has to answer to is the history was display ads, the history was you search something, you’d find results, and they could populate ads around it so that you could target some sort of commercial activity, whether that’s buying a product or clicking on a link that somebody has set up to pay per click to a website. The generative AI does a lot of abstracting and summation.
So I asked the question, “Help me set up a vacation, a five-day vacation for Mexico.” And basically, they showed this example and give me an itinerary. This thing literally draws out a five-day itinerary. And then the example was, “Well, then help me write a letter that I could share with my family that explains the trip to everybody.” So in that whole generative process, it ends up creating a flow of content that historically you would’ve had to click through, you would’ve clicked through to a Travelzoo website, you would’ve clicked through to an Expedia website, you would’ve clicked through, and you would’ve had to aggregate all this. Well, it’s done this for you. So it begs a question about the business model ’cause right now Google gets paid by all those companies every time you ended up clicking on one of those sites. What’s Microsoft’s plan?
Meaning that they say, “Well, we still think people are going to click.” I’m saying, “I’m not so sure.” I’m not sure people are going to click and I’m certain they’re going to click less. So this is what Google is up against too, is if people can go to Bing and you can get a letter written, you can get an itinerary planned, and you can get it all generated in AI in a single readable window, it doesn’t require clicking down, how do you replace the economic value? And so even in Microsoft’s $2 billion per percent question, this needs to be answered because if people aren’t clicking on the display ads, where does the money come from? I do think there’s going to be an interesting opportunity from a model standpoint, Pat, for people to basically pay to be prioritized in the model. Meaning it’s going to be different where you generatively come up by priority. ‘Cause Pat, if there’s 10,000 travel articles, how does ChatGPT decide which ones get prioritized? Really interesting question.
Can you build a training in to train to prioritize certain models based upon pay? I think so, I think that’s possible. So long story short, I’ll get here on Bard, I’ll make it a minute and I’m going to hand that over to you to talk more about, Pat. But Bard is going to do similar things. Google didn’t really tell us much about what it is, they basically said this is in dispute and we have something coming and it’s going to be very exciting. My guess personally was they had no intention of rolling it out this soon, they were forced to move everything forward. I also want to say though, as an advocate of Google, is I don’t see the business changing as much as people think.
I do see Microsoft picking up a couple of points of market share near term because there will be a lot of enthusiasm and excitement about this. But if Google can land quickly, they have a couple massive advantages. One is search on mobile, every Android device defaults to Google. And honestly, right now, I think Apple too, it defaults to Google, even when you search in Safari. So right now, the fact that the whole mobile ecosystem leads with Google is still going to be a massive hurdle for Microsoft. So there’s a lot more I want to say about that, but I’ve talked a lot straight in a row, so I want to hand it back to you and let you cover the rest of this one.
Patrick Moorhead: Listen, this needs a lot more effort than 5 to 10 minutes. I am glad you brought up the cost piece ’cause even for Microsoft, the cost per transaction is troubling. It’s only troubling because there wasn’t a thesis provided. I did appreciate, on Microsoft’s analyst call, that they did get in into what I thought was a profit dollar, which is, “Listen, we’re not part of this market share right now. It’s all accretive, so don’t even worry about how much this costs if we can make a ton of money on it.” I completely understand that. So Google stock, I think declined, in total, what, 10, 15% in two days, lost over $100 billion in value. And I understand why. I got up at 7:30 AM, I guess 5:30 AM Pacific to watch Google’s AI event. And essentially the key message is they talked about Google’s supremacy in AI today, across Photo, Translate, Lens. And I think it has a really good point. I mean, these are all products that I use, less Lens, more Photos and Translate and some of the interesting stuff that they infuse into Gmail.
But they do have the consumer lead today, no doubt. And on the commercial side, on the cloud side, they use AI pretty effectively as a land and expand tool. The other key message was, “Hey, these LLMs, large language models, are not new to us. Essentially, we rewrote the book on it in 2017,” which they went out of their way. Then they went into Bard. But it’s super light, and I think what got everybody excited was that the answer was wrong. I think it could be debatable if it was wrong, but by the way, all the searches I’ve done on the new AI-infused Bing, they’re not always right. But when you’re doing a demo, you darn better get it right.
The examples that Microsoft used on stage, I videoed many of them and so did you, they were perfect. The video cut off early. I mean, you could see on my Twitter feed, the video went private for me before the entire event was over. That does not imbue confidence. One of the bigger mistakes I think Google made was they said, this is literally, I don’t know, 12 hours after Microsoft opens up these new features to millions of people, Google says that Bard is now with trusted testers. And sometimes “I’ve been accused of saying that the world revolves around me, Pat, or you think the world revolves around me,” but essentially Dan, have you received your invite as a trusted tester for Bard?
Daniel Newman: No.
Patrick Moorhead: Yeah, so unless-
Daniel Newman: Unless I missed an email.
Patrick Moorhead: Yeah, so I haven’t either and therefore you and I are not trusted, and I think that is an absolute mistake and they should have thought through how they used those words. What I think they were trying to communicate is that generative AI is scary, okay? And we can’t just unleash it onto the world. They didn’t stick that one at all and their stock was down and they got clobber. Now, I’m going to talk out of the other side of my mouth, or what might seem like that, and say this is a very long game. You do not replace somebody who’s number one overnight. Even when we saw the fascination of what were brand new social media sites like Twitter and Instagram, it didn’t just make Facebook go away. So the ball though is certainly in Google’s court by judging in what happened to the stock price, which I think a lot was fueled by what Microsoft CEO Satya Nadella said in interviews, essentially saying the profit margin of the advertising industry is going to get a radical reconstruction. Those weren’t his exact words, those were my takeaways. I totally get what’s going to happen.
So if I’m Google moving forward, I would go out and get a lot of feedback, not pretend like sometimes I think Google sometimes appears to me that, “Hey, we don’t need to talk to anybody or ask anybody’s input ’cause we’re the smartest people in the room.” I think that’s a mistake right now. And I think they should be asking, if they’re not already, their trusted stakeholders, smart people, on what they think their next steps should be.
Daniel Newman: Yeah, there’s a lot more, Pat. This saga, saga is not over yet, and I think we’re going to need to make some time to talk about this more in depth. Maybe we can get some folks from Google and Microsoft onto the pod. We’ll have to see if we can arrange that in the near future because I think it’d be good to have this debate and keep this debate alive. Pat, on a much less directly competitive note, but on a yet relevant competitive note, IBM made some announcements that were like, hey, are they tossing their hat in the ring here? What’s going on?
Patrick Moorhead: Yeah, it is interesting, Dan. Microsoft had its event, I totally understood the context of Google’s event, and then this week, IBM unveils that they have had an AI supercomputer called Vela or Vela that has been out there using x86 processors, Nvidia GPU, ethernet, so aka industry standard, to train what it calls foundational AI models. And then you’re like, “I don’t think I’ve ever heard the term foundational AI models,” maybe the AI experts out there. But what happened is essentially foundational models, one example is GPT-3 is called by some foundational AI models. I wish that IBM would’ve just used terms that I think people were familiar with ’cause I don’t think they fully got their pound of flesh out of there. But the cool part is this supercomputer has been online since May of 2022.
So in other words, this may have been a PR reaction, or not a reaction, maybe an intelligent way to take advantage of the flow. But this has been online for a long time. I, for one, am super interested to see what IBM can do with this ’cause quite frankly, it’s one thing to learn how to do a kid’s recipe, or where I should go on a trip, like we saw with both Bard and the new Bing, it’s a whole other thing to figure out how you get business value out of this new phase of AI. So looking forward to it.
Daniel Newman: Yeah, IBM has been on a really good trajectory. The company has stabilized during what was a tough macro year. That’s because their business really is focused now serving the enterprise. Really two things are in focus every day for IBM and Arvind Krishna, and that’s hybrid cloud and AI. That’s the focus, that’s what the company’s been leaning into, and that’s what I expect the company to continue to lean into in the future. To me, this was a little bit of newsjacking in the sense of, “Hey, let’s go ahead and put some PR out there this week amidst a lot of interest in what big tech companies are doing around AI.” But there’s also some real meat here. And the first is the transparency to explain because transparency right now is one of the things that people are really looking for, whether that’s Microsoft talking about responsible AI, or IBM just explaining its infrastructure decisions of how it’s building this super computer and why this is going to eventually matter.
Having this infrastructure built out correctly is going to be really important long term for not just R&D but for the ability to deliver value. IBM makes its money by delivering customer value. It does it for the enterprise, and enterprises are saying, “Hey, how do we get more from our data?” So in order to get more from your data, you are going to need models like what IBM is building, on hardware like IBM is building, to be able to deliver it at scale.
So the company is kind of saying, “Hey, we want to make sure the world knows that we’re doing interesting things too.” And yes, on the consumer and everyday use case, something like OpenAI and something like Bard are going to change the way we search and change the way we browse the internet, but for IBM, they’re saying, “Hey, when you’re using your business intelligence tools, when you’re running your supply chain management offerings, when you’re trying to optimize ERP, we’re building tools that you could use advanced AI capabilities on our AIU, our hardware and infrastructure, and we’re going to be able to help you optimize it.
So IBM really is more of a partner to all this in my opinion. They’re going to align on the back, Pat. What do you say about connecting the back to the front, and then adding really important AI tools? That’s the story they’re trying to tell. I believe that the company is doing some really progressive things, that’s why their revenues have been screaming in the right direction. They’re software focused, they’re AI focused, they’re hybrid infrastructure focused, and that’s how the enterprise is architecting itself to be able to take advantage of large language models, take advantage of the next generation of AI. So IBM is doing some things, it kind of aligns in the moment. I don’t think it was totally directly competitive, but I do see overlapping features and this type of AI, the application of it in the enterprise, will be material.
Patrick Moorhead: Yeah, and in fact, I saw it closer to Azure’s announcement of ChatGPT and OpenAI capabilities on Azure cloud than anything else.
Daniel Newman: So let’s talk about Zoho a little bit. Zoho launched Trident this week. It’s a new app that’s designed to be central communications, organizational hub. It’s trying to centralize access to email, messaging, phone, video, and also optimizing task management, calendaring. It’s becoming a bit of a trend in the industry to see these apps companies consolidate. I think, in many ways, Zoho and Trident is the company’s answer to a little bit of what Teams is doing, a little bit of what Salesforce and Slack is doing, and it’s the opportunity to really execute across its Zoho One strategy to say, “We’re going to give you an all-in-one set of tools that can enable a company to handle your UC, your project management, your marketing, pulling it all together and scaling the business.” Interestingly, Trident sits on top of the Workplace, which has been a really big growth engine for Zoho.
Yeah, I think they were growing, I think they’re saying something around 30% right now, Pat, 16 million users. And again, really designed to be a central work hub. Zoho is going upmarket. And so as you and I know, when we first started advising and working alongside Zoho, they were really focused on an SM market. And now what we’re seeing is the SM and ME, and moving more and more into handling middle-size and larger enterprises. The company really is trying to say, “Hey, we can be the one-stop set of solutions,” whether that’s you need a Slack-like solution, whether you need a Project-like solution, whether you need a Meet-like solution, and they’re really pushing that along. They’re offering a bunch of new and advanced productivity tools. They’ve got Zoho Webinar now, they’ve got their voice platform now they’ve got Cliq, which is their answer to what you’d call Teams or Slack.
We’ve been using Meeting for a while, Pat, but to me, it’s the continued evolution of what I would say a really reasonably priced full suite of solutions for enterprises that are looking to really centralize everything, from finance to ERP, to collaboration to applications. And by the way, Pat, pricing is probably worth noting. I mean their most expensive professional plan on this whole Workplace is $6 a user. And that gives the entire suite of products with 100 GB of mail and similar drive space. And you can go down to as little as a buck a month if you’re looking at the mail-only tier. It’s in public beta right now, Pat, so it’s something that people can start to use. But my take on the whole thing it’s a consolidation play, it’s a centralization play for companies that are looking for a single solution, reasonably priced, to really bring together all of its comms, collab, meeting, as well as the ability to connect easily to CRM, Project and ERP. Zoho is a really interesting play if you’re looking in that particular mix.
And I think what they’ve built with Zoho Workplace is an interesting competition, especially to that smaller enterprise company that’s looking for either an alternative to a Salesforce or Teams type of integration at scale. And so good announcement, Zoho continues to plot along great growth, and that’s because I think it’s really reasonable and a very complete solution.
Patrick Moorhead: Yeah, it’s interesting Dan, I agree with many of the things that you said. I will characterize something different though in that Zoho was at the lead in terms of unified suite. They were there before Microsoft, they were there before Google, they were definitely there before Salesforce, who is just starting to create a full stack. So technically, I would say that everybody’s following Zoho. Now, in terms of market share and notoriety, absolutely not. And the funny thing about Trident, and you can hit both our articles on Forbes, is that you can imagine how easy this was for Zoho, because they have a full stack, not only of the software, but also in their core infrastructure. And essentially, what they did is they integrated, and again, people always think that software is easy, but I guess what I’m saying is, is that they integrated products that were based on these same core architecture on the same core infrastructure.
So their ability to do this is a heck of a lot easier than, let’s say, a Salesforce that might have four or five different kinds of code that it has to integrate. Even Oracle went through about six or seven years of integration, and then they put the Redwood UI on top as a nice cherry on top. But these things take time. So I think then it gets into the integrations that they did for Trident, and I think they make sense. Communication, chat, video, email, in one place if you want it, I think is the one that I could see being used probably most of all. And then the other part I think that is nice is that you don’t have to use every single one of Zoho’s modules. They do have integration of Zoom, Slack, Dropbox, Box, even Google Workspace. So it’s kind of like you have your cake and eat it too. If you don’t like one of the modules that come in Trident and you want to use something else on Workplace, you can use what you might consider best of breed.
I do think it’s a super interesting time for the company also, and I had a great conversation with their CEO, did a video with him a couple of weeks back, how SaaS multiples have gone down so much. And Zoho is a bootstrapped company, and therefore their ability to invest hasn’t changed at all. And with the economic downturn, people are looking for packages that are fully integrated that, let’s say, again, I’m not denigrating anything in Zoho, but let’s say it brings 90% of the features to the table for half the price. That is a really freaking good value proposition and everybody’s looking at consolidation plays during this time, including Microsoft, Google, I haven’t seen anything from Salesforce yet. Again, congratulations to Zoho on the announcement.
Daniel Newman: Yeah, it was a good one, pat. And it was a good point about two things, calling it out early, that they’ve been in the lead in terms of building a unified workspace. I think these advancements are taking it to a much more user-friendly. And the other thing that you called out I think that’s really worth double-clicking on is that people can continue to use preferred apps while integrating here, meaning you don’t have to give up Zoom or other tools that you actually enjoy in order to get the benefit of that unified workspace. So let’s talk about chips. You and I like to talk about chips. Let’s snack a little bit. So GlobalFoundries made a big announcement with GM. It kind of hits on four or five different things, Pat. I’m going to let you go first, but bunch of angles here.
Patrick Moorhead: So yeah, GF has really been on the move for the past couple years, and quite frankly, they didn’t get the credit they deserved until we saw the chip downturn. People’s brains seem to be fixated on bleeding edge digital with the latest processors and GPUs. But what we learned with the pandemic and the supply chain challenges is, you know, can’t ship that $50,000 car without that $2 analog part to either help drive the RF of that 5G or 4G modem, or power conditioning. Power conditioning is an analog function, and every electric car out there literally has thousands of these power conditioners to be able to have the most effective performance, so-called performance per watt, mile per watt outcome. And those are just a few of the things that GF brings to the table. They’re also industry leader in silicon photonics related to, compared to companies like TSMC.
And then finally, you have the China challenge or the Balkanization of the semiconductor market, where GF clearly plays actually on all continents. So they’re almost a safe bet even for the Chinese. So what’s new? As we saw, we had cars that couldn’t be shipped because people couldn’t get a 50 cent semiconductor, you had car companies that were shipping units without radios, odd little weird types of things. And what we’ve seen, and we’ve seen GF sign up a couple of automakers now, but General Motors signed up a long-term direct supply chain agreement for the US-produced chips for them. And again, not to say we’ve seen this before, but no, we’ve seen this before, and it’s just smart and I think it’s a testament to GlobalFoundries that they didn’t pick either Tower or TSMC.
Daniel Newman: Yeah, so I think there’s some really interesting things that this also insinuates. The timing of this announcement with CHIPS Act money at stake has to be considered right now. I’ve written a few pieces, as have you, Pat, I wrote a MarketWatch piece saying, “Where’s the CHIPS Act money going to go?” And I believe it’s going to disproportionately go to Intel. Intel’s stepped up, raised its hand, and they’re building the massive Columbus superfab. They’re going to win on the, “We’re going to be the leading edge.” But let’s be candid, you said this really well, a lot of the delays, a lot of the problems, and by the way, one of the parts of the market that has not caught up even still has been the automotive space, meaning where we have a glut of chips to build PCs and smartphones and data center servers, we’re still catching up from what’s gone on in the automotive space. Inventory supplies are still down.
The second thing, Pat, was the streamlining of parts, where they’re going to basically work with GM so that a single part bin can handle more of the needs, so different sensors or different controllers can be basically multifaceted and used for different purposes in a vehicle. So instead of having to have, say, you have 100 semis in a vehicle and having 17 different parts to do it, now they have 100 semis and maybe they’ll have 5 parts. And so if they can manufacture more volume, they would be able to deliver more successfully for the customers. A third of this is being done in Upstate New York. In fact, that’s why I really point out the CHIPS Act thing, was the commitment is to do with the manufacturing in Upstate New York, which means it’s good for the US.
So with GlobalFoundries always being one of these companies that’s like, are they US based or are they not US-based? They were backed by a sovereign fund in the Middle East and there’s always a little bit of question as to where do they stand? They are US-listed company with a US-based CEO that runs the company here in the US, and they are bringing more manufacturing and more jobs to the US. So I think this could be a real plus for their sort of positioning to get additional funds in the CHIPS Act as well. I mean, what’s more apple pie than GM, in terms of a US-based company that’s making a bigger commitment to using this US manufacturing to try to sway the policymaker? So was that intentional? I can’t speak to that, but what I can say is very good timing given where we’re at with appropriations. And of course, a very good strategic move to streamline the parts, streamline the manufacturing and bring more of it home.
US has always been better on the lagging than the leading. So our problems longer term, to solve leading edge manufacturing, are still a real challenge. But GlobalFoundries fills a really important need with these, Pat, what’d you call them? 50 cent part bin, that are the difference between cars being manufactured and cars not being manufactured. So good partnership, good announcement for GlobalFoundries. And by the way, GM is a winner here too. Let’s go on to our final topic because we’re at that five-minute warning before we’ve got a sprint off and do the thing we do after we do this thing. By the way, my favorite part of the day. Pat, Elon Musk broke Twitter, the press loved it, they wrote all about it, for what, was it was about an hour, an hour and a half, people, some customers were struggling to tweet and send DMs, and basically the question came is he moving too fast? Is he breaking stuff?
And so Elon Musk basically has moved and advanced and improved and I think a lot of foundational movement in terms of the infrastructure of Twitter. And he’s done it with, what, 70% less staff. So going down for an hour, I mean, some of the technical questions, I don’t think we got a certain answer to what it was, but people were back, people were moving again. By the way, Twitter has had plenty of downtime in its history. So while everybody wants to lob a grenade and blame this on Elon, I’ve had more than a few fail whales in my life. So Pat, did he break Twitter, I mean, or is this a free app, or mostly free app that consumers use and it had a little downtime?
Patrick Moorhead: Yeah, so here’s what I noticed. I follow a lot of the press in my Twitter feeds, and a lot of press, particularly the ones that, I don’t know, that say that they’re also on Mastodon and really tried to get people off and said they were quitting, came back on Twitter, as you and I predicted, and they came out of the woodwork. I saw some person had 10 tweets about the challenge that I think lasted maybe an hour and a half.
What happened recently was people got a rate limit error so they could schedule tweets, but they wouldn’t automatically come out. And that is absolutely a fail. But the amount of press that I saw come out and the amount of articles, they were literally, my impression was they were just so happy that something finally happened. Now, forget the fact that it’s been months since Elon literally went from 7,000 people to 1,000 people and 500 engineers.
Okay, think about this for a second. And didn’t skip a beat, they did add features, there were some momentary issues with Blue, but you can tell who is egging on and who is definitely looking for a reason to shit talk Elon Musk. And I actually think it’s incredibly amazing that he got rid of 6,000 people, got down to 500 engineers, and that we even have Twitter. And I’ll end with you and I predicted at the end of 2022 that these were momentary issues, advertisers would come back, and users would come back. I don’t know exact users, I think the recent meeting in the last two days is Elon is firing somebody because he doesn’t get enough interaction on his posts, yet another way to just denigrate.
And overall, I think it’s more of a personal thing about Elon, they don’t like his personality and what he does, and might even question his political leanings. But here we are. I think you and I have been proven right so far, it’s only February 10th, on what’s going on with Twitter. But so far we look pretty good. And I’ll key off what you said I think on a call yesterday, which is, “Hey, as analysts we only talk about the predictions that we got right,” and I think so far you and I got this right.
Daniel Newman: Yeah, I think you’re absolutely right, Pat. I think it’s working well. I talked to The Wall Street Journal about it this week, and I think there’s a lot to be desired for building a feature set that people will pay for, yet the subscription part I think lags a little bit in terms of what people would pay the eight bucks. An edit button’s kind of cool, but I’m not sure what that’s worth to everybody. But I do think this stuff works, it’s robust, there’s been very little disruption. By the way, all the hype about all the advertisers leaving, that came and went. I’m not saying people are and aren’t, we don’t know, it’s a private company and they really no longer need to disclose that. But I do think that it just seemed like it was a temporary, it was a weather pattern, it stormed over, and now it’s moved on.
Most people don’t even know, they don’t pay attention. And by the way, Pat, I’ve turned off some of all, I just don’t do as much doom scrolling and rage scrolling as I used to do. And to me, Twitter just feels like Twitter. So I don’t know. It doesn’t really feel any different to me now than it felt to me a year ago. So I don’t know if that’s good or bad, but I always loved Twitter and I still love Twitter. So for what it’s worth, I think Elon will probably end up doing just fine. I don’t think he’s really ever had a business that didn’t do just fine. And usually it’s some orders of magnitude better than that. So, hey buddy, that was a good show. We did it. We did it.
Patrick Moorhead: We did, we did. Let’s get on to our day. I’m back to back until six, and I’m sure you are as well.
Daniel Newman: I am going to be twiddling my thumbs because that’s what I do all day. I do one pod a week and then I twiddle my thumbs. But no, in all serious, busy day ahead, it’s probably a time for both of us to start a call. So everyone out there, hit that subscribe button, we love having you as part of The Six Five community. We love all of our followers, all of our friends, all the people that watch the show, of course, all of our partners. Six Five Summit coming up in June. If you haven’t signed up, we hope you will soon, as soon as we make that available. And all of you who are out there, so many more shows, so much more to come. We will be of to Mobile World Congress in Spain, where we will be doing a bunch of content end of the month, but that’s a few weeks away. So we can talk more about that later. For Patrick, for myself, got to go. Adios, see you later, bye-bye.
Author Information
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
