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Reduction in Force, NRF Analytics, Amazon Ambient Tech, Lenovo Net Zero, HP DragonFly & More – The Six Five Webcast
by Daniel Newman | January 24, 2023

On this week’s episode of The Six Five, hosts Daniel Newman and Patrick Moorhead get together to discuss:

  1. Tech Outlook as Reduction In Force Goes Viral
  2. NRF Impressions with Microsoft and More
  3. Amazon Ambient Experience Drives Alexa
  4. Lenovo Net Zero by 2050
  5. HP Dragonfly with AMD Custom Technology
  6. Repatriation Back in the News – 37 Signals

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.

Watch the episode here:

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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:

Patrick Moorhead: Hi, this is Pat Moorhead with Moor Insights & Strategy, and we’re here for another incredible Six Five Podcast, the original. There are seven versions of the Six Five now, but we like this one most of all.

Daniel, how are you? You’re looking chipper, like you’ve been up at 5:00, you’ve been to the gym.

Daniel Newman: All that and more has happened this morning. It’s a good morning. There’s something about Fridays, and I’m so glad that we chose- We did do one this week on Tuesday, it was a catch-up pod, and I’m glad everybody tuned in with us, but there’s just something about starting your last day of your work week, for those that work five-day work weeks, with a pod with my bestie. And anyone else saw, we were out together last night at dinner. It’s just like 24 hours of Dan and Pat, which actually isn’t all that rare.

Patrick Moorhead: It’s funny, it’s rare in Austin, but not rare when we’re at some show or something like that. But if your new to the Six Five, we cover six topics, five to 10 minutes each, depending on how good they are, and how clear our brains are on a Friday. But Dan and I, we take some of tech’s largest topics, break them down. We know you can read the news, so we’re trying to analyze the news. And today we have what I think is a great lineup of topics.

We’re going to be talking about the tech layoffs, we’re going to be talking a little bit about NRF. I think Dan’s going to dive a little bit into what Microsoft did there. We’re going to talk about ambient computing with Amazon, and its support for the Matter of Fact, now the Matter standard for interoperability. Talking about HP’s latest Dragonfly with some special optimizations, working with AMD. And, one of our favorite topics, cloud repatriation. A lot of people talking about it, not a lot of people doing it, but a very large company in fact did, and we’re going to talk about. The folks over at Hey.

But hey, let’s dive in, and I’m going to call my own number here, and that is about reduction in force. I think the way we’ll split this up, Dan, is I’m going to talk about my advice, wisdom, for anybody who has been laid off in there-

Daniel Newman: I loved it by the way. Best LinkedIn post I think you’ve ever put out, buddy. It was pretty heartfelt.

Patrick Moorhead: I appreciate that. It really was heartfelt. And listen, I have been laid off multiple times, typically by either a business going down the tubes, or heck, at NCR they got out of the entire PC business. And I went along with it.

So some advice, if you’re on here and you did get laid off out there, I just want to let you know, I feel you. It is very hurtful out there. It stings, and probably the hardest thing to do is to tell your family that you had been laid off. You pretty much feel like you’re a loser, and the entire world is coming in to get you. Feel that way for 12 hours, but quite frankly, you all have an amazing opportunity in front of you.

My own personal story, like I said, I’ve been laid off at almost every job I’ve ever had, and every subsequent job that I had, I ended up getting a better job.

By the way, when I got laid off, it wasn’t that they didn’t make me some offer in some other division. My two layoffs were, A, a company literally had six months of cash, you can probably guess who that is, and they were getting rid of every senior executive who wasn’t an engineer or a salesperson. One layoff was a complete shutting of a division, one that I was part of. I did get an offer inside of another division, but that division was crusty and sucked, so I didn’t take that. And another one was a relocation from Southern California to Palo Alto, and I did not want to live in Northern California.

Anyway, if I can get laid off and have a certain degree of success, I think that you can too. It really is a numbers game. This is not about performance. There’s two kinds of numbers games. There’s a heads, where it’s like, “We’ve got to get rid of 5,000 heads.” Or, it’s an expense target that they’re hitting. But it’s all for Wall Street, and it’s all for hunkering down for the future.

So when you get laid off, don’t immediately … I mean allow yourself to wallow in your grief, because it truly is a horrible feeling, especially if you’re the primary breadwinner, or this notion of maybe having to move out of the city that you love and that your family is in, but take a little time to really think about what you want for a job, and what do you want in life. My guess is you got a severance passage that’s going to take you six to nine months out there, and I would take that full time to figure out what you actually want to do.

Also, realize that if you’re re-looking at your career, know that high tech is not a dead end, in fact it’s still growing. Bigger than any other industry that is out there. Not on a percentage basis, but on a people basis.

And finally, I’m always looking for great analysts with a background in product management, product marketing and strategy, and if you are one of those and like to share opinion and fact-based evidence to your clients, or to the public on social media, like Daniel and I, drop me a link in social media.

Daniel Newman: Buddy, I love your take on this. And like I said, not necessarily the typical starter for us, it’s a little bit more ephemeral of a topic, but a lot of friends out there, a lot of people going through things, and I think this is one of those times where the network is everything. A little encouragement is also a good thing.

I think there was another interesting side of this story though, that I’ve been talking about for a little while. It was the almost over-hiring and rapid growth that tech experienced during the pandemic, is causing a bit of a normalization. And this normalization, unfortunately, has a lot of unintended consequences.

A year ago we heard about just the bidding wars, and the ridiculously overpriced hiring decisions that were being made as companies were basically adding at all costs. So a little bit of what happened was, there was a manipulation by the market of how much we were truly digitally transforming, versus how much companies were throwing lots and lots of head count at every single thing to get things done, just to deal with this rapid growth of demand. We will say this normalized. And as sad as it is, as soon as it starts to normalize, and the Fed starts to see the unemployment rate jump a little bit, we’re going to start to see rates go down, we’re going to see tech go back into another growth cycle, and there will be more opportunities created.

But that over-exuberance, that overpaying, that overspending, I’m looking at our friend John Fortt’s Twitter right now, and he actually did a little rundown for his tech chat talking about Google. In the end of 2019, Google had 118,000 employees, end of ’20 they had 135,000 employees, end of ’21 they had 156,000 employees, and the end ’22, they had 186,000 employees. They grew by 30,000 employees. So as you said, the 12,000 cut is less than six months worth of hiring for Google.

So there are some really hard decisions being made. The managers that are making these decisions, I can almost assure you, hate this. I can tell you from being CEO of numerous companies with head counts and full-time employees, even letting go of one person caused me sleepless nights. It’s an incredibly hard thing for anyone that has any humanity in them to go through this process.

Patrick Moorhead: Good point, Daniel. I didn’t bring that up. I laid off more people at AMD than … Dude, I would increase my resources by 50%, and in 18 months I had to get rid of all those people. It was tragic.

Daniel Newman: It absolutely is. And in the end, we are seeing a bit of a revolution in technology, where a lot of the tech and systems and transformations that we’ve been saying have happened during the pandemic are going to start happening, so it’s going to be a time for upskilling. This is a great moment to reflect on how you do your networking, and make sure you build a strong and robust network long-term. Because frankly, that is going to be the future of how we connect, how we find jobs, how we find people. And same as Patrick, if we know each other, if we have a relationship, my LinkedIn messages are open, so are my Twitter DMs. Hope to hear from you.

Patrick Moorhead: By the way, just a note out there, if you’re on LinkedIn, I received 150 messages on, “I’m looking for a job,” which I do appreciate. Please give me patience as I go through there, I’m doing some job recs and kind of sifting again, I’m looking for people who worked inside of tech companies and product management, product marketing and strategy, as opposed to folks who’ve been in the industry analyst realm. But if you’re an industry analyst and you have that background too, I’m interested.

Dan, sage words, and it’s fun to think that you are a 20-something-X-year-old CEO. I really love that.

Daniel Newman: Yeah, I’m just an older version of myself now. But I did put out a LinkedIn post, Pat, that kind of said, “When should I change my profile picture?” I have a 10-year-old LinkedIn profile picture, and I got a lot of feedback that I still look exactly the same. So that felt kind of good.

Patrick Moorhead: Listen, you work out six days a week and that’s what you get. Live a clean life like you do, and there you go.

Daniel Newman: And I’m an unbearably cool dad.

Patrick Moorhead: Dan, last week we talked a little bit about NRF, which is the nation’s largest retail technology trade show. Talked a little bit about what Google was doing in there, and if you want to chance that, just check YouTube or Twitter for that. But what else happened? You actually went to the event, Dan, as I experienced NRF from the comfort of my home.

Daniel Newman: Yeah. Don’t rub it in. Honestly, it was great, and that’s exactly how I want to broach this. I mentioned Microsoft, we did a huge resilient retail report for Microsoft that got launched at the event. Shelly Bransten, the corporate VP that basically runs Consumer Goods Industries, basically nominated to the board of NRF, presented our research as part of one of the keynotes at the event. So I’m very proud of that.

What we were focusing on this year was, how does retail stay strong between supply chain issues, between ecommerce and how digital is changing the buyer’s journey? Let me just tell you that, as I walked the floor of NRF, there’s two major observations.

One, it was in New York and the thing was packed. So I really do believe we’re at the end of the whole virtual and hybrid. People that are part of important events are going back and being in person at events. This was a thousand percent busier than it was a year ago. So we saw it with CES, we saw it with NRF.

On the actual vendor side, the exhibitor side, NRF is a tech show. Pat, I walk in the door at the top level of this thing, and I walk through SAP, Microsoft, Cisco, IBM, Oracle, Salesforce, and you just name it, go down the line. Adobe, every major tech company is in a booth there. So if you go to NRF, it looks like a major enterprise tech show.

The bottom line is this, that the main theme I’m seeing here is that analytics are going to take the retail industry by storm in a new way. And let me explain what I mean by that. Historically speaking, ecommerce has been the analytics-friendly consumer retail vehicle. Why, because it’s very easy to track behavior online.

Retail’s been a lot harder. Ecommerce was supposed to eliminate retail. Eventually we were never going to go to a store again, Pat. We were just going to spend all our days on our couches ordering stuff from Amazon. Based on Amazon’s growth, some of that is true. But I think when you buy things, whether it’s a new Moncler sweater, or it’s a vehicle, or you want to go shopping for your home, or your recreation, you want to buy a new bicycle, I actually think retail is great.

And by the way, simple things too, like grocery shopping. I don’t know about you, I did a lot of that curbside stuff during the pandemic, but I don’t really like getting the defunct produce, and the most likely to expire bread. When they come and bring the groceries out to you, you always get the worst stuff. I like going in and picking my avocados.

So the bottom line is, people like retailers, but for retailers to grow in a meaningful way, they have to get better analytics. What Microsoft and Salesforce and Oracles and a lot of these companies are showing are these very industry-rich cloud capabilities, plus these next-generation, frictionless, analytics-driven sales experiences, can use things, things like AI, sensors, IOT, camera technology.

We’ve all heard about Amazon and their just-walk-out technology. Well that’s going to go to scale pretty soon. Microsoft has showed some displays of this in their booth, the ability to walk in, using low-end cameras and sensors, to be able to have people do that whole just-walk-out technology. So now, rather than just being proprietary to the Amazon stores, every major grocer chain is going to be able to start looking at stores.

They showed one example in Poland of a store, they’re opening thousands of these small retail shops where people can walk in with their ID, or a credit card, fill up their baskets, and walk out. These stores require one human to manage five stores. And if you see in the future, with the camera technology now, they’re able to look at where we’re looking on the shelf, to be able to determine the positioning, how to sell to Frito Lay, how much Frito Lay pays to have something at eye level versus a lower level. We’re starting to be able to get that rich analytic subset of data that we’ve been able to get from ecommerce for a long time, bringing omnichannel experiences much closer.

This is what big tech is really doing to drive the future of retail. And this whole resilient retail is going to come down to using better technology, which is what our study found, and it’s going to be all about having better visibility into the supply chains of the future, which is going to be driven all by technology.

I could talk a lot more, but it was a really great event, had I think 20-something meetings in 12 hours. Just awesome. And so many of our clients were there, so many of the tech gins. It’s great to see technology helping to revive the retail industry.

Patrick Moorhead: Yeah, there’s never been any doubt that you could talk more on a subject, Dan, and I don’t know if our listeners need that either.

Daniel Newman: I’ll take my lumps there. I mean I had 20 meetings, I talked about like two things. But I tried to boil it down to a theme, Pat, because otherwise I wasn’t going to give fair attention.

Patrick Moorhead: In fact, Mel says resiliency report was great, Dan. Definitely the word for 2023 in every industry. Hey Mel, how are you doing? How are you? We should have you on the show some time.

Daniel Newman: Mel, from Moor Insight & Strategy, and one of your new analysts.

Patrick Moorhead: That’s right. And Fizal says high too.

Daniel Newman: Hi Fizal.

Patrick Moorhead: What’s up. All right, we love our fans. Kate, good breakdown of the content here. Let’s do something a little bit slightly different, and that is related to what Amazon announced at CES, which is pretty cool.

First off, there is a standard that is called Matter, and Matter is an industry standard that runs across multiple smart home vendors. So the setup and interoperability improved, and actually a standard setup for smart home devices, along with interoperability. So you could buy an Apple device that interoperates with an Amazon device. And let’s say you’re trying to set up an entire smart home; you don’t have to worry about just buying devices from one vendor. This took years to put together, and our IOT analyst Bill Curtis, who was the Vice President of IOT strategy at ARM for a while, when he was at ARM, actually was helping to put this standard together, and it took years to finally get this out the door. And at CES, Amazon came out with their new developer kit that supports Matter, so it will be able to have interoperability with other Matter-based devices.

I think this is a real breakthrough. Some people look at this as, if you have a powerful position in the smart home, why would you lean into interoperability? Dan, it would kind of- I talk about the magic API that AWS will never bring out, to have interoperability with Azure and Google cloud. But Matter is this magic … It’s not technically an API, it’s a set of processes and a technical specification to have lower latency. But imagine if you’re on your TV, and you have a Samsung based TV that supports Matter; hypothetically you could be able to control your entire smart home on that Samsung TV, or on your Apple watch, or your Apple phone. It also limits the amount of applications that you might need. And Amazon, who is the smart home leader, this is a really big deal.

So check out the Forbes article that I wrote along with Jacob Framen, and then also Bill’s research paper on Matter. And again, he was the guy that helped the industry put that together.

Daniel Newman: Pat, you matter, buddy. You matter.

Patrick Moorhead: Aw!

Daniel Newman: Actually it’s been really great to watch the growth of Matter. I had the chance to speak on stage at the big Silicon Labs event here, and Silicon Labs is one of the companies that works behind the scenes with one of the leading companies, including Amazon, on some of the technology, and Matter is the standard that’s really going to drive faster connectivity. But the idea of the smart home has been a dream, but it’s been a dumb one for a long time. Everybody going to have a smartphone-

Patrick Moorhead: And it’s not the idea that’s dumb, right, it’s the execution.

Daniel Newman: Sorry. The idea that everyone can have a smartphone has been a dream, but it’s been a dumb one. Dumb Zigbee stuff, and just some of the garbage that’s come out.

Patrick Moorhead: Oh, dumb, okay.

Daniel Newman: Dumb, dumb, dumb.

Patrick Moorhead: I got you.

Daniel Newman: Like, we’ve got 19 remotes, still to this day. What I really love is the idea of what Amazon’s trying to do to democratize a smarter and more intelligent experience in the home. And by the way, this can translate into the office, and I have a feeling some of it will. Obviously security will be important at some layer, but your TV is one of the things that I’m pretty sure, in every house on the planet, every fluid household on the planet has at least a smart TV at this point. It’s like $100 now for like a 40-inch flat panel. Building some intelligence into these, it comes down to, we have the Alexa, we’ve learned how to talk to our devices, we’ve learned how to interact with content.

In the future we’re going to be able to walk into our home, even if it’s a small apartment in Manhattan, or a giant house in the mountains in Summit County or wherever it is, and you’re going to be able to say, “Alexa,” or whatever your smart system is, “Turn my lights on. Close my drapes. Play me this song. Order me this pizza.” Whatever it is. And the idea of needing a Crestron control system, and needing a Lutron lighting and shade system, and needing a big camera muck system, that is basically what is going to be displaced in some way by Matter, and by Amazon and what they’re doing.

Again, you’re going to probably end up with 15 Alexas, and they’re going to end up with an incredible amount of data to understand how you live your life, but I want to be very clear even about that. We’ve already acquiesced our data, we’ve already given up, we would all trade, largely, our data for better experiences. And that’s really what they’re saying. You can walk in, play the music you want, show and display the artwork or pictures of your family, be able to set and connect in the future to more smart and intelligent nominee-like experiences. And that’s what I really like about what Amazon is doing. And by the way, doing so at a price that is achievable in more and more households.

You look at some of these 65, 75 inch Fire TVs, Pat, they’re several thousand dollars. Again, that’s not cheap, but these are large, 4K displays with really great intelligence that can be used for content, and for smart home connectivity. So good stuff, Amazon, keep going.

Patrick Moorhead: The cool part that I didn’t bring up here is that you can standardize on one intelligent agent. So for instance, what this enables you to do, if you’re a complete Amazon household, if the Apple smart home devices would support Matter, you could use Amazon to control your Apple, and vice versa. If you’re a Siri person on your smartphone, which most Americans are, but you are an Amazon smart home, you can use Siri to control all your Amazon stuff. And it’s going to be a lot easier in the future.

One of the downsides, or a thing that’s not in Matter, it doesn’t support cameras or security systems yet. And I think I understand some of the important nuances, that’s an oxymoron there, or a malapropism, it’s not there yet. And cameras are already most confusing to me. I probably have 36 different cameras that I’m monitoring across multiple sites.

But good stuff. Let’s go to the next topic here. Lenovo Net Zero proclamation by 2050 in Davos at the World Economic Forum. I saw YY in his parka there, looked like he was freezing his tail off, but bringing the ecological joy to the world.

Daniel Newman: You and I are not by any means pure-on super fans of all these sustainability SG. We’re looking at practical and meaningful ESGF first. We want companies that are doing things that are truly measurable, that are adding value, that enable companies to continue to be market competitive. At the same time, being thoughtful about mother earth, and the process, and achieving goals that can-

Patrick Moorhead: Did you say mother earth?

Daniel Newman: I was having a little fun-

Patrick Moorhead: Are you one of those mother earth people?

Daniel Newman: Hold on, mother earth, I was having a little fun with this. Let me go. Let me go.

Patrick Moorhead: Okay, dude, just checking. I’m just checking.

Daniel Newman: Dude, let me go, man.

Patrick Moorhead: All right.

Daniel Newman: Dude, these socks I’m wearing are actually recyclable.

Patrick Moorhead: Dude, I don’t even wear socks. I just put a paper bag over them. A recycled paper bag.

Daniel Newman: All right, come on. But you and I both agree, I think we can say we both agree that it’s not that sustainability has a problem. There was too much greenwashing. And now what we’re really saying is that we want companies that are executors, that are going to do meaningful things that can be measured and show that these sustainability efforts are good for both the earth and for business. Because companies that are out of business aren’t going to be able to employ people. They’re not going to be able to enable and meaningfully contribute to things like this.

So what I liked about it is very simple, Pat. As far as my experience shows, Lenovo is a very high on the say-do ratio. I like that. Very high in terms of executing things they say. Lenovo doesn’t tend to do a lot of things, in my opinion, that are just sort of marketing for the sake of marketing. I think Lenovo really saw this as an opportunity to show some market leadership. They did a 2050 goal here, they want to reach Net Zero, they got this approved by the Science-Based Targets initiative, which is a UN and worldwide fund for nature partnership. But they were the first PC and smartphone maker, according to this, and they’re one of only 139 companies that have their plan that’s been validated by these science-based targets.

As I said, and kind of started out with this thing Pat, is, I don’t like companies doing green for green. It’s not a posturing thing. And I think there was way too much of that that’s happened over the last couple of years. But like I said about Lenovo, what I like is that they are an executor. They are not a company that does a lot of what I would call flashy marketing. They do a lot of practical marketing. I think that based on the leadership group that we know, including Kirk and YY, Ken, and others that we’ve talked to over there, this is not something that they’re getting involved in purely just for the illusion of, “Hey, we’re green.” This is something I think they believe.

Between the materials, between the emissions and carbon footprint, that they’re going to be able to show some leadership, in doing this in a way that is practical, sustainable, and still good for their enterprise. This is a company that has tough margins. This is not a high margin business. The device side of their business is their largest revenue stream, and it’s not a high margin business. But I think in their mind, they’re going to be able to probably provide some example of how this gets done, and again, meets those practical and pragmatic lines that I’m looking for from these companies.

The only thing I would kind of throw back at is, I get a little frustrated, Pat, at times about the 2050 number. I do understand you have to set horizons in the distance to try to get from where we are today to something as much as a zero, or net zero. I’m hoping to hear from them, and other companies that are making commitments that are 20-plus years into the future, about ways that they can provide us updates, data-driven, that their efforts are being met in a way, again, that’s practical and meaningful. Because it’s kind of like you and I saying we’re going to be the biggest analyst firms in the world by 2050. We can make that prognostication, and it’ll be very hard for anybody to tell us it’s not the truth, because a lot can change in 27 years.

So I think as we make these longer term targets, companies are going to need to be very aggressive, to say, “Here’s what we’re going to do in the next five years, 10 years, 15 yrs,” so that people like us, that are looking at more practical, analytic-driven ESG efforts, can feel confident that it isn’t just a marketing kind of posturing that’s being done.

Patrick Moorhead: I would like to see holistic approaches to this that actually incorporate some of the downstream downsides. Sometimes, I think especially for folks who, I don’t know, may be younger, or idealism over things, they’re not being fed the information on what the potential downside is.

For instance, western Europe outsourced its energy policy to a 16-year-old girl, Greta Thunberg, and made some decisions that essentially put western Europe in the hands of Russia, and energy with natural gas. And had the US not swooped in and saved western Europe0- by the way, western Europe bought most of its natural gas from Russia, and now it buys most of it from the United States. It gets boated in, not kidding, from the United States. And that was kind of a bullet dodged. Then Russia has signed a deal with China to sell its excess energy to them for a lot cheaper. So bullet dodged, but we’ve got instances of countries like Sri Lanka, who had a coup on the government, a complete overthrow. They had a 98% ESG score by the World Bank, but they got overthrown because they banned pesticides. And when you ban pesticides and you don’t come up with the alternative, you can’t make food, and Sri Lanka ran out of food.

So there are these downstream impacts that I don’t feel like we’re completely looking at. I’m with you on 2050 or a 2040, you have to set a goal, but we have to get smarter about what we’re going to do downstream. I’m appalled that we haven’t completely put our arms around nuclear energy. I’m optimistic about what we will be able to do with fusion, but I put fusion up there with quantum computing. Which is, I love the theory, a lot of amazing experiments, I couldn’t tell you the year that it’s actually going to be out there and spun up.

I really understand Darius Dominczak, I appreciated his comments, CEO at Honeywell. He is a huge provider of technology to energy producers. And let’s do it understanding the downstream effects, and also the overall cost and benefit analysis. I’m in 100%. With that said, congratulations, Lenovo, on the gutsy hatchet you threw out into the sea.

One thing you said, Daniel, was spot on, which is, Lenovo’s a company that actually has something to do with it. They actually do their own PCBs, do their own PCAs in certain industries, and they do a lot of their own final assembly. So they actually have factories, not companies like Apple who don’t own factories, and who don’t actually manufacture, and go through other entities to do it. So Lenovo has the ability to truly, not just leverage their suppliers; guess what, they’re part of the supplier and some of their vertically integrated businesses. So hats off, Lenovo, good job.

Daniel Newman: Yeah. By the way, just one quick note, there is a 2030 set of shorter term goals out there that you’re supposed to be complying to. To my point of shorter-term goals, those will be important to watch.

Patrick Moorhead: Yeah, for sure. Good comments here. What’s going on? I don’t know who LinkedIn User is, probably somebody we’re not connected to. By the way, LinkedIn User, that’s a smart comment here, but you’re going to have to follow the Six Five to be able to see your name up there.

Daniel Newman: Yeah, I like LinkedIn User. Hey LinkedIn User.

Patrick Moorhead: Hey LinkedIn User.

Daniel Newman: One user, or several that don’t follow? Either way, we appreciate you-

Patrick Moorhead: I don’t know, just follow the Six Five and get your name up there.

Daniel Newman: All right buddy, let’s talk.

Patrick Moorhead: Okay, let’s move forward. So HP Dragonfly- first of all, HP has a lot of different subbrands, and Dragonfly is this super light, very portable, typically comes with LTE or 5G, it’s the pinnacle of experience for HP. And what the company did is, they made an announcement at CES that they partnered with AMD to do a custom implementation. And I’m very cautious not to use the word custom chip, but what I would say is, it’s a custom technology. I do think that, inside of TSMC, AMD changed some nods, either in binning, either to benefit performance or raw performance or battery life.

But I think the more important thing, were the optimizations that was done between the two companies on firmware. This was a big deal, as you may know if you were at CES. Lisa had the opening keynote, and you had HP’s CEO actually get on stage. I think that’s a pretty big deal. We also saw Panos get up there, and in a way, say that, from a Windows perspective, and its support for AI, it was a good bet.

I got the chance at CES to dig in on this with Alex Cho, we’ve had him on the Six Five before, and he talked about something that I didn’t know at the time, which was, this platform has a multitude of sensors. I think he said it had over 50 sensors, and I didn’t get all the details out of him. I’m going to be patient and wait for it, but a lot of these sensors, they improve the experience for the user and improve the experience for the OEM, or the service provider, and as-a-service environment.

I’ve been harping a lot to Daniel about, the reason that, I think one reason that the as-a-service hasn’t taken off in the PC industry is because they’re the same devices. When the hyperscalers did as-a-service, IAS, PAS, or SAS, they fundamentally changed infrastructure. They didn’t show up with the old enterprise gear, they completely redid it. So I am looking to anticipation to see how these sensors will leverage as-a-service for the company. Like, what is it actually tracking to send back to the mothership, or send back to the enterprise to be aggregated? Check out the Forbes article that I did along with Jacob, and hopefully you will be as impressed as I am.

Daniel Newman: I didn’t know the benefit to test this thing, so I’m kind of going off of your take here, and I look forward to maybe having a chance to play, if anybody out there that can help that happen. By the way, I found out who LinkedIn User is. Should I announce it publicly?

Patrick Moorhead: Yes.

Daniel Newman: LinkedIn User is our dear friend Brien Madden from AMD. But for whatever reason, he’s just shown up. I get a message, like an LOL… hey Brien, thanks for chiming in and joining the show. You came in just in time. Did you know we were going to talk about AMD?

Patrick Moorhead: By the way, Brien, it was fun staying out till 1:00 in the morning with you in Vegas. That was fun. My liver doesn’t like you, but the other Pat does.

Daniel Newman: We’ll put some photos in the show notes from that night. Not going to happen. Anyways, I’m not going to have a lot here. What I’m going to say is, you asked an interesting question in your piece, and you said, “My question for HP is, why take the chance with AMD?” Provocative, right. And I thought it was a thoughtful statement. But look, we are seeing a movement towards more diversity of SKUs, the utilization of AMD’s technology by many of the OEMs, as they’re looking to, A, take advantage of AMD’s progress, and their successful innovation that they’ve been able to show across silicon, both in the data center and in the PC space.

Of course availability has been a thing throughout the pandemic as well, which drove more companies to diversity their SKUs. But AMD’s doing a lot of very exciting and innovative stuff in the PC, a lot of the Aion chip. I’m encouraged by what they’re doing, and I think that’s why companies like HB have made bigger bets and gone more aggressively. The challenges of Intel are well documented, so I don’t think we really need to talk about that here, but we can say, sometimes one company’s challenge doesn’t necessarily mean another company shouldn’t be recognized for their success and their innovation. So I think it’s more of a indication of AMD’s success in driving innovative products than anything to do with Intel. And of course, the success of a product like this will be the final arbiter of truth as to just how good both A, the technology is, and B, the marketing is.

Patrick Moorhead: Good cover. I don’t remember saying the risk, but maybe I did. I’ll have to go back and look at that.

Daniel Newman: Actually the line item: my question for HP is, why take a chance with AMD when Intel is already building out- so, I’m just reading out of your thing.

Patrick Moorhead: Oh, that was Jacob, not me. No, I’m just kidding. No, I’m just kidding. I try to be a little bit provocative in these articles, but it’ll be interesting to see if HP leans more into AMD in lieu of Qualcomm coming up. That’s an interesting thing.

Daniel Newman: That would be a hot, hot, hot- hold on.

Patrick Moorhead: Yeah, it’s going to be an interesting one. We will have to see.
So hey, let’s go into our final topic here, I know you need to fly-

Daniel Newman: Hold on, I don’t know if I did it. I did it. All right, there we go.

Patrick Moorhead: Yeah, let’s get into our next topic here. Final topic, repatriation back in the news. 37 signals, home to Hey and a couple project management companies as well. What’s going on? Is this the end of the public cloud, Dan?

Daniel Newman: Like I said, we started and finished with a little bit more ephemeral topics, but sometimes these are actually the funnest conversations, so if we take the last five minutes [inaudible] talk about this. You and I have been hybrid cloud, slash multi-cloud, advocates for a long time.a and even though the market at one time said everything was going to the public cloud, we were very quick to say, no it’s not. Then obviously at some point, there was a bit of hype from some folks at other analyst firms, like IDC, that everything’s going to get repatriated. We were also like no, not really, that’s not going to happen either.

Patrick Moorhead: Exactly.

Daniel Newman: What happened here, though, was an interesting article by one of the heads of technology and operations at 37 Signals. Basecamp was probably their most well known product, and it came out why they’re leaving the cloud. And this is a company that’s spending millions of dollars on the cloud, and they decided to take everything back on prem. So to give some credit to the repatriators, this is one case where repatriation seems to be working out.

What was really interesting about this was, their coming out about leaving the cloud led the company to actually posting a full breakdown of their spend in cloud, and how their spend had grown. It’s all in AWS. Where they’re spending money in the cloud. This was like, they’ve spent this much on RDS, this much on open search, this much on EKS. And it was probably the most specificity that I’d ever seen in terms of how a cloud company-

I think back to the a16Z post from last year that talked a little bit about cloud companies. This is a great example. And this was a very specific example. So they’re trying to take like a five plus million dollar spend down to 3.2, and they believe they’re going to be able to do this by moving out of the public cloud entirely. Immediately saw this and I said, “Is this an aberration or is this the beginning of a more meaningful and longer term trend?” Aberrition? Oh my gosh, one of those days. It’s that. I’m telling you, it’s more that than the other.

I do think it’s very interesting, as we’re starting to see the rise of these sort of on prem cloud services, companies that are offering an expanded portfolio of data, relational AI, ML, that can be all done on prem, could lead companies to slowing their migration to the cloud. But having said that, there are still a lot of benefits to public cloud.

This also brings up kind of a really interesting point about companies like AWS, Azure, Google cloud, and Oracle, that have all spent a lot of time and money to do more hybrid services, meaning they’re making hybrid cloud a bigger part of their portfolio. Let’s be clear, this isn’t for no reason. They understand that there is a requirement to make sure that some workload, some data, minimizing certain egress, the edge in IOT and all the sensor data that’s going to come off, is going to create huge costs to keep data moving, and that not every workload is appropriate for the public cloud.

Having said that, I believe in the end, long-term here, as this is an extremely interesting debate, my opinion, though, is that for every company like a 37 Signals it’s going to go fully back on prem. What you’re going to end up having is a lot of companies being careful, considerate, and using multicloud services to basically decide which workload needs to be on prem, which needs to be in the cloud, how to keep data moving more efficiently. And I do think this is going to provide some level of challenge for big cloud providers to make sure that they’re balancing pricing in such a way that the companies don’t feel that there is a significant benefit to keeping services on prem, as they’re going to want to see data end up in the public cloud.

What I really loved about this was the visibility, the transparency, and the facts is, this is a discussion that is not over. But my call as an analyst is that, in the end, hybrid will win out, and public cloud will not slow significantly even as they try to save costs, in this practical austerity year we’re in.

Patrick Moorhead: The cloud started in 2004, the AWS’s simple queue, and then in 2006 it was simple storage best three. It had basically a decade head start on the hybrid cloud. So therefore the momentum of the public cloud was just chugging. And I would say that bullet proof hybrid solutions have maybe been available for the last two or three years, but they’re very fragmented. There’s not a stack that does everything you need today to work across multiple clouds and have a data mesh, an app mesh, security and networking mesh. Those are being put together. I do think this is the tip of the iceberg for some repatriation, but I still believe, though the net, net workloads, there’ll be a lot more going to the public cloud than being repatriated.

And by the way, I’ve always said that the public cloud was more expensive. This is not a revelation, folks. Everybody knew it. You don’t go to the public cloud to save money. You go to the public cloud to be quicker. To simplify. to redo everything. So am I surprised at the huge cost savings? No. Could everybody do this? No. But I think more people, once the tools from VMware and Red Hat and Cloudera and HPE, with what they’re doing in Greenlake, as we move forward I think there will be more people who will be rethinking this equation. Which, by the way, moving everything out of the public cloud, almost an impossibility for most folks. It’s going to be a blend of public, of private, and everything in between.

Daniel Newman: Multiple public clouds. I think multi’s going to get hot. There’s a prediction, buddy.

Patrick Moorhead: That’s like a throwaway prediction, dude. We all know that’s going to happen.

Daniel Newman: AI is going to be hot in 2023.

Patrick Moorhead: Yeah, anyways, at some point I do want to take you through the history of the cloud, what AWS was saying about public cloud pluses, public cloud challenges, hybrid cloud good, says AWS. AWS has the most hybrid services of any other. Here’s what Walmart is doing, here’s how they did it. Here’s the Andreessen Horowitz piece that you hit. And here are the folks that are building out hybrid multicloud. So okay, I didn’t actually get the full presentation, but I did get my slides in. If anybody’s interested in this discussion, let me know.

Daniel Newman: We’ll have Pat come do a keno. But dude, I’ve got to run. We’ve got to man, we’ve got to go.

Patrick Moorhead: I know, you’ve got to run, more important – it was a great show, thanks for everybody, we had a great talk. Like what you heard, hit that subscribe button. If you want to reach out and touch Daniel and I, figuratively, you know where to find us on social media. We spend way too much time on there. Take care, peace out, we love y’all.

About the Author

Daniel Newman is the Principal Analyst of Futurum Research and the CEO of Broadsuite Media 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. Read Full Bio