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Talking AMD Financial Analyst Day, Apple, Pure Storage, Cloudera, Quantinuum, Oracle-Cerner – The Six Five Webcast
by Daniel Newman | June 16, 2022

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:

  1. AMD Financial Analyst Day
  2. The Apple WWDC Event
  3. Pure Storage’s Updated Portfolio
  4. Cloudera Data Platform
  5. Quantinuum Announces InQuanto
  6. Oracle and Cerner Deal is a Go

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 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, everybody. Welcome to this week’s edition of the Six Five Podcast. We are live. We are back. We are exhausted. It may not look that way. It may not look like we are tired, but we are because I don’t know about you, but we had a little event this week, 70 some odd speakers, 21 CEOs, the Six Five Summit 2022 was superb. Patrick Morehead, we are running on proverbial fumes. And by the way, fumes are expensive right now, according to the inflation data, but we are running and we are back and we’re not making anybody wait a week because what am I going to say? We love you guys. So anyways, Pat, good morning. How are you, my friend?

Patrick Moorhead: Doing well, in the pre-meeting Conner asked me how many, Conner Kenyon, that is, asked me how many coffees I had. I had to really think about that. I think if you look at true cups, 1, 2, 3, 4, 5, 6? Already?

Daniel Newman: Like the little cups, like if you were sitting there like a normal person.

Patrick Moorhead: Exactly. So let’s say three and a half cups for what we call a cup today. No, no, I’m lit. And I got to tell you, this is my favorite part of the week, sitting here with my bestie, who has been just so busy with stuff, but you know, we’ve been busy together and I feel great that the summit is out and I can’t wait to start planning 2023, ’cause we’re always trying to make it better for the audience.

Daniel Newman: Yeah, what’s amazing is that we actually were able to somewhat keep up with the tech news of the week. ‘Cause there were some things that happened this week, right? I mean there were events, RSA was this week, MongoDB had an event. AMD had their investor day. What else? Apple had a little event, you know.

Patrick Moorhead: Pure had their TechFest.

Daniel Newman: Pure, had a, so there’s other things and we’ll go through what we’re going to talk about here. But I’m saying like there were other things, but according to us, I don’t think anything besides the Six Five Summit happened. And by the way, we got a note, Pat, you and I from someone that we like, respect. I won’t name names only because I don’t want to throw anyone under the bus, but basically said our event had the best lineup in tech bar none, no questions asked. So Davos, can I say bite me? No, I’m just kidding.

Patrick Moorhead: Yeah, no, no. We are the remote Davos for tech and best speakers, best content. So bring it anybody else who wants to come in there and get our lineup, you’re more than welcome to do this, but we’d probably rather partner with you.

Daniel Newman: Good luck to try. I will make one last plug since this isn’t the review show, but I do want to use a minute of our time since it was a pretty big week. Go to thesixfivesummit.com, www dot six five summit dot com. We’ll put in the show notes, but all of the sessions will be made available on demand over the next couple of weeks. If you follow the Six Five Summit hashtag on Twitter, you can see all the sessions you can link. You can sign up, it’s free for everybody to watch. It is done by us and in partnership with our vendor partners, clients, and ecosystem. And you will get a ton of benefit. I mean, gosh, Arvind Krishna, CEO of IBM, Matt Murphy of Marvell. You had Nicholas, the CEO of Erickson North America, who was fantastic. And then Darius Adamczyk, CEO of Honeywell.

Those were just our day openers. And then we had a ton more great speakers. Check it out. I won’t do any more of that right now, but we will put it in the show notes. And we do want to thank those of you that are listening to this that also attended our event for making it great. Millions of people viewed it last year. We’re hoping more millions of people view it this year. We appreciate your partnership. So without further ado, just as a reminder, the Six Five show, this one that we do each and every week, it’s six topics. The idea was about five minutes each. It’s usually longer than that because Pat and I are, well, we’re analysts, pundits, thought leaders and we have a lot of opinions and just say, it’s become like the Six Twelve.

Patrick Moorhead: We’re not. And we’re not going to rename it either.

Daniel Newman: No, never. This is a franchise, dude. This is like license plate worthy kind of stuff that’s going on here. And so other thing is this show is for information and entertainment purposes only. And although we will talk about publicly traded companies, please do not take anything that we say as investment advice. Inflation is high, stocks going lower, just sadly, that’s just the thing. So onwards, upwards. Pat, rock and roll. Lisa Sue kicked off AMD investor day and God, I like to sometimes be critical of AMD, but couldn’t find much. I’ll let you run with this one.

Patrick Moorhead: Yeah. So I have been attending their financial analyst days. I’ve probably been to 15 of them over the last 20 years, part of it as an employee of AMD and part of it as an industry analyst. And what I really liked is the way that Lisa kicked it off, essentially saying, Hey, you know that strategy we gave all of you in 2020? It’s the same strategy with some minor twists on how we execute it, right? In 2020, it was all about high performance computing. And they’ve somewhat modified it for adaptive computing. Even though you might be able to say, well, with GPUs, you had adaptive computing. Well, now with Xilinx, they, they truly have adaptive computing all the way down to reprogrammable hardware and high end data center SoCs. Started off with some huge victory laps, data center. I mean, first exaFLOP, top 10 hyperscalers, PC leaders in performance and battery life.

But you know, pointed out, Lisa said, hey, we’re still underrepresented though. And that’s really about revenue share, I think related to commercial PCs. Gaming, right? Happy with our performance per watt. They have the broadest lineup of GPUs out there, but revenue, every financial metric you can think of. Gross margins going from 43 to 48%. Operating margin, 12 to 25%. EPS from 64 cents to $2.79. FCF, 300 million to 3.2 billion. This is all in three years. So that’s nice and dandy, but what about the future? The biggest thing that Lisa talked about was the TAM increase. So in 2020, the TAM was 79 billion. When they connected with Xilinx, it was 135 billion. They came out with a rocking 300 billion dollar TAM, which is eerily similar to Intel’s. And a lot of that increase came from the embedded automotive communications in the data center, big, big growth in the data center.

So this is the bullish that I’ve, AMD’s typically conservative, but this is the most bullish that I’ve ever heard the company. And I’ll end with Lisa Sue talking about what she called an ambitious long term financial model. First off, I’m going to say one of the challenges was, I didn’t know what does long term mean? There was a footnote called one and two, but I didn’t know what that means. And essentially 20% CAGR over 57% gross margin, which is outstanding. Operating margin, mid thirties and FCF margin over 25%. So just an absolute. Now I want to also talk, I want to end with some challenges that I think that AMD has to look at. First of all, while AMD was struggling for survival a decade ago, Invidia was building out Kuda and workload specific libraries optimized for its hardware.

The industry wants something like this from AMD, but how do they catch up? Do they need to catch up? What is the judo strategy that requires them not to necessarily catch up? I would say I would’ve liked to have seen AMD pair up with Intel and have a software platform that the two companies can go at it against Invidia. And whether it’s AMD adopting one API, whether it’s the two coming together, I don’t know if that’s collusion and they couldn’t do that. Maybe open sourcing it to get out of the collusion part. Second risk for AMD. It’s the first time the company has ever made an acquisition of this size. AMD has no experience at this. The only close thing was ATI, who on staff has the experience to make this work inside of the company.

And the third one. And this is always a challenge when you have a company that’s feast or famine, and that is the story of AMD over the last 30 years. Can AMD keep up the hunger? How many executives inside of AMD are sitting on 50 million in value of their stock? Some people get, can continue to get super motivated about that, even when they’re rich like that, to that capacity. And some don’t. Some want to go fishing. Heck, when ex-AMD CEO, Dirk Meyer left the company with 20 million dollars, he never went back to work. He went fishing. So you just never know what the motivators are, but all in all a very good event, but I have questions.

Daniel Newman: So after our event, I think fishing could be good. Although I expect that most highly motivated, successful people probably fish for a week or two, and then be like, all right, time to do something else, because I think that’s how people that are uber successful tend to be wired. But yes, occasionally. Occasionally you discover the fishing and you go, eh, I think this is good enough. You know, tuning in yesterday, you did hit on a lot of the high points. And I appreciate that with your history on AMD, I tend to allow you to go even further than normal in terms of our oxygen sucking tendencies on different topics, Pat, but probably the most interesting provocative moment was when Lisa expressed that she’s going to grow even at potentially cost of margin, meaning the margins are very good, but she does see the opportunity and she wants to lean into growth.

And she made a comment along the lines of they’re going to pursue revenue opportunities that may not be as margin friendly. And part of getting to that 300 billion TAM is going to mean you’re going to have to go after it. And so that to me was one of the things that really stood out that she said, it sounds to me like she wants to turn the knob to 11 as it comes to top line growth. I think she’s proven to the market that execution, getting the right products in market will in fact enable the company to grow, to increase EPS. It’s multiple, besides the pullback in the market has come down because the earnings have grown. The actual earnings per share have grown, so the multiple has gotten less outsized in terms of the price that it’s compared to how it was a year or two ago when I was looking at 40, 80 times, depending on where we were in that market condition.

I guess I’d say the only other thing that really caught my attention was I think that the company’s incredibly confident. I think they’re at a point now where that it’s very confident in where they are, how they sit in the market. We’re going to hear from Intel soon. There was announcements that came out from Intel this week about some hiring freezes. You didn’t get any of that from Lisa yesterday. You didn’t sense any pause. And so that to me in the X86 world is an incredibly bullish sentiment. Now, last thing I’ll leave. And you did mention some concerns, Pat, is Arm is probably got to be on her mind. You know, there isn’t really a play there. So Intel has the foundry business to potentially maximize Arm, as it takes more market share.

What really is AMD’s play if Arm continues to gain strength in the cloud scale, data center, and some of these areas, ’cause of course, there’s the market as a whole expanding, I’ve said this for a long time. And then there’s the opportunity to take market, which AMD has been doing somewhat effectively, but they can’t take market from a product that’s complete, it’s going to be harder to take market from the Arm ecosystem, which seems to be ramping up. So that’s kind of my big question walking away is are they going to address that more? Is that something that’s going to be in focus? If, do you have any boomerangs or can I?

Patrick Moorhead: Yeah, yeah, yeah. Just a quick boomerang. I went back and read the transcript that I took and Lisa said they are ISA agnostic. And she mentioned all, so all of Xilinx’s data center SoCs are Arm based and she went out of her way to say we’re ISA agnostic. And to me that really left that door open that could do that.

Here’s the thing though. And I’ve reiterated this on many of our shows, there is nothing unique about an ISA, whether it’s risk five, whether it’s related to power and performance. There is a big correlation, you have to look at the ecosystem of things you can connect to that ISA. And that’s where Arm is really, really ramping up. Reality is there’s only two X86 companies. That’s Intel and AMD. There are thousands upon thousands of Arm folks in that ecosystem. And there, they have started to build out data center class things. And Lisa’s very pragmatic. If she can get a boost out of going into Arm, she’s going to do that. In fact years ago, gosh, was it a decade ago? They did have a strategy that had Arm server CPUs, and then they bridged all the IO with their own stuff. So yes, stay tuned. There, that’s the boomerang.

Daniel Newman: Good add there. I didn’t necessarily cover the Xilinx part, which by the way, is a huge deal. And obviously warrants additional consideration as that did add a diversification play to that company. So good stuff there. I did look back at my quote. Lisa S. was clear that revenue will expand faster than margin. That was the note I took away. So just reiterating where I got that from.

All right. Let’s move on to the next topic, Pat. Let’s talk about Worldwide Developer Conference. So unfortunately you and I were in the thick of the Six Five Summit when this was going on. So I had to watch back and sort of consume this in bits, but of course my social feeds were lit up with WWDC content. Let’s just quickly touch on what happened, right? So what did happen and then maybe what didn’t happen.

What did happen was as everyone expected, we got a new operating system. We got the new M2 chip. What some people I think expected that did happen too, was the MacBook air got updated. There were some pretty cool features. There was a new watch OS. I don’t, I’m not a watch wearer, perhaps I’ll let you talk about if that matters. You know, there were some cool features. Some of the, I really thought the text stuff was cool about being able to unsend messages. You know, that way, if you’re super hot and heated, you can, Pat sends me a message.

Dan, you were completely wrong, you idiot. And then five minutes later, he’d be like, oh, he hasn’t read that yet. I’m going to unsend that before he sees that. I thought, you know, I thought that was clever, more because all that stuff’s going to be tracked and logged because that’s internal. So it’s not a discovery or legal thing. I think some people are trying to make that into, you will be able to get that data back in discovery, I’m pretty sure. The reason that’s important is how many times have you sent the message to the wrong person? You’re like, oh crap.

Patrick Moorhead: The problem is you can only send, you can only delete it or edit it for 15 minutes.

Daniel Newman: Yeah. But I mean, that’s a good start because a lot of the time you send it immediately, you’re like, oh, I didn’t mean to send it to that person. You know what I mean? Right away. But yeah, you’re right. It’s not perfect, but it’s better. It’s kind of like the edit button on Twitter. It’d be good if we could edit for five minutes, even if you wouldn’t be able to permanently edit, because I constantly tag things and misspell things and I’m like, crap, got to delete it. Do it again. Anyways, this is about Apple, not about Twitter. Those are the things that sort of caught my attention. You know, one thing that didn’t happen though, again, was there was some thought that the augmented reality next wave was coming at this developer conference. And yet again, nothing. There is nothing happening there. Apple is, the Metaverse is, it’s weird because this is something you would’ve absolutely expected Apple to be on top of.

And for the longest time, I remember the Globalizer putting out tweets about the clear iPhone that was going to be futuristic and you’re going to be minting NFTs that we’re going to be popping out of the sky off of your new iPhone. And we’re literally five generations in. I think this is a Tim Cook symptom. Tim Cook is a, he’s an implementer. He is a profit extractor. He is going to suck every dollar out of every resale. He’s going to be as iterative as possible from generation to generation. And he’s going to, especially when it comes to the iPhones and the advancement in that particular category. I’ll give him one prop though, Pat. And this goes back to the Arm conversation, that server and data center, which we were talking more about on that last segment, but that M2 chip what I’m reading and what I’m looking at, it looks compelling. I’m, you and I were both very skeptical during M1. We were overtly critical and by the way, early M1 stunk. It was terrible.

Patrick Moorhead: It was incompatible.

Daniel Newman: It was incompatible with most of the things that people use. And that’s a problem. We’re now at a year and a half. I’m trying to think about the exact date about since that debut of the M1, and it looks like what’s coming down the line in here with the M2 is compelling, Pat. And I don’t know if you’ve looked at it. I don’t know if you’ve read about it, but I am at-

Patrick Moorhead: I have a slightly different viewpoint on it.

Daniel Newman: I was going to say, they’re figuring it out. You’ve got high resolution. You’ve got an eight core CPU, a 10 core GPU, two terabytes of SSD. You got up to 24 gigabytes of memory. You’ve got high color, 1080P cameras. You know, you’ve got 8K video playback on these things, and it’s 1200 bucks. Now, if you’re trying to buy a cheap PC for the household three or $400 off of a pile at Walmart, that’s not going to be your thing. But if you’re looking for a pretty high quality, $1200 PC, that’s great. And the last thing I’m going to leave on this is there’s more indication here about the ecosystem becoming connected, iPad, iPhone, Mac on the Arm instruction set. We’re going to get to a point where your mobile device and your Mac are going to become increasingly compatible in terms of the experience, the ability to simulate the apps from device to device and create more continuity. I think that’s going to be a very strong and sticky thing for Apple. And of course they love sticky because they are the most anti-competitive company I’ve ever seen in my life.

Patrick Moorhead: There we go. I think that’s a great place to end. So I’m going to rattle off my thoughts real quick. So a lot of the changes inside of iOS basically remind me of Android, right? I use both phones. I use a Mini for iMessage with my family, and then I use this S22 Ultra from Samsung to do my real work and my real play. And essentially they lifted a lot of the personalization things from Android. But hey, if you’re an iPhone user, I think you’re going to enjoy them. Company took a different stab at the smart home, which Apple has been a category failure in this market with their stuff. They added Matter support, which I think is good. They didn’t add, gosh, when’s the last time you’ve seen a smart home device, completely missed the wave of smart speakers out there. CarPlay. CarPlay is going full dash. You probably saw the mock ups by the way, didn’t cite a single car maker at all.

Daniel Newman: So nobody’s going to use it. Huh?

Patrick Moorhead: Well, I thought about, hey, is this just timing because it’s WWDC? But when does Apple come out with something brand new like this without having partners? Right? So it’s funny, there’s been a lot of people who have wondered, hey, what’s Apple’s end game on this? Is it a smart car or is it a smart dashboard that they can license out for the experience? I think they’re hedging their bets. I think they’re still working on a full smart car here, but in the end they want Apple to be the experience for the self-driving car because that environment’s going to be our future living room, our future office, and in some way shape or form, our future bedroom.

On watch, the big thing for me was the medication app, right? It tracks what you take. You can scan your meds in, gives you a drug to drug negative interactions. What you shouldn’t be taking with alcohol. By the way, this stuff scares the crap out of me for a potential breach and not because, necessarily, I think of even my situation where I’m taking all of these drugs. No, I’m just kidding.

Daniel Newman: Just a few.

Patrick Moorhead: Sorry.

Daniel Newman: And they’re mostly legal.

Patrick Moorhead: No, but it just, it seems pretty, I don’t know, pretty ridiculous to me, but we’ll see. They have a secure platform, but is it secure enough of somebody who is motivated? Let’s talk M2, Daniel. Gosh, 25% bigger and they said it gives 18% performance improvement on multi core. So first of all, I’ll take that as no single core improvement. So IPC stayed the same. Well, what the heck did they do to this thing? ‘Cause they added a bunch of stuff. They added up to 24 gigs of memory. It’s an eight core four, four, so no single core improvement. And that means no improvement in performance on things that are single core and most things are single core. And Daniel, does it pass your smell test that 25% bigger, 25% more transistors and 18% higher performance?

That sounds like a step back to me. And then when I compare it to what happened before, 50% improvement, 60% improvement. So I don’t know, I’m disappointed. My guess is that this was initially targeted at TSMC’s fake three nanometer process or N3, and N3 just didn’t make it. So they had to backport to a second generation fake five nanometer apart. New MacBook Air. They fixed a lot of the things they broke prior. They added MagSafe in 25% brighter, 1080P camera, fan list, fast charge, nothing that is over and above any of the windows premium devices from Dell, HP, or Lenovo or Service. New MacBook Pro added M2, but who cares about M2? I mean M2 versus M1 is an absolute yawner in my opinion. That’s it. That’s it. That’s WWDC for me.

Daniel Newman: So we’re at odds a little bit on that one. I’m a power user of the premium devices, but I do use an M1. I do find it to be a pretty good experience. I do think it provides. Again, I like the universal opportunity to create seamless experiences from mobile to desktop. That is something I, the Windows ecosystem needs to improve.

Patrick Moorhead: Oh yeah. I wish I had that.

Daniel Newman: You know what I’m saying? That’s what I feel that Apple’s going towards. Having said that, you are absolutely right on some of the specs. Good call outs. And like I said, this show is always better when we’re not a hundred percent in agreement on every single topic.

Patrick Moorhead: I agree.

Daniel Newman: Let’s keep moving. We’ve gone really long on these first two, but the good news is I think these next few topics are going to be a little bit faster, but some big news coming out of Pure, Pure Storage that is

Patrick Moorhead: Yeah. So Pure had their first onsite event for years. It was called Accelerate Tech Fest. It was out of Los Angeles. Our storage and data analyst, Steve McDowell actually get attended the event and some pretty big announcements. So first of all, Pure is growing faster than any. I mean they had 50% growth last quarter, as other people were talking about their supply chain woes. Now they don’t cover as wide a swath of storage. Let’s say like a Dell technologies. They don’t have entry level. They don’t have mid range. They don’t have mainframe. Right? Which is, but they’re in an area that’s super high growth driven by the insatiable need to store, act on, and move data for analytics, databases, and machine learning and AI. So that they’re in a sweet spot of the market. So they brought out a new FlashBlade S and they introduced QLC, which is a less expensive version of the core memory.

But what Pure did is they increased the reliability and they put a cashing mechanism in there. So it would have all the performance of it. So pretty, pretty brilliant stuff. I urge you to read Steve’s Forbes article about this. The other thing, you might have gotten it, FlashBlade, it’s bladed. So if you want to upgrade, you don’t have to replace the entire chassis. You just take out the blade and you stick the new blade in that you want. The second thing they did is they really simplify their messaging around Evergreen. So Evergreen is essentially the ability to have this perpetual upgrade of hardware and software. And it’s kind of like a subscription service. And what they did is they combined Pure as a service and Evergreen into the same offering. You know, they have Evergreen goal program as Evergreen forever.

So new to Evergreen is this one called Evergreen Flex, which adds both a CapEx and an OPEX model. So simplification, but also I think pointing out, I would say Pure’s leadership in this as a service and upgraded area.

The final thing, right? We talk about, I think you brought this up on our earnings analysis, which was Portworx. And don’t think about Portworx as adding containers to everything. Meaning you’re going to put your ERP on it. You’re not. Right? This is all about getting them into more into the data management and whether it’s database, data service, one click database environments with Pure’s high degree of availability and security and you know, new solution, right? And supports Cassandra, Kafka, Postgres SQL, RabbitMQ, Reddit. And of course Zookeeper, which is my favorite. I just kidding. I actually have no idea what Zookeeper is. I need to go look that up, but you get the idea. So Pure Net net expanding their capabilities to being as CEO Charlie G. Carlos says, he’s bored with storage, but he loves data. So, and that’s exactly what the company has done.

Daniel Newman: Yeah. I think the Portworx is going to be a surprisingly influential play in the company’s growth future. As storage becomes increasingly commoditized, the company’s leading into A, data management and B, we talked about this as well on earnings, customer experience. We got to differentiate and make it better because everybody has sort of known that storage in many ways has become commoditized and you need to make storage and data more symbiotic. You need to make the relationship, because storage in itself has no value to the application, but storage when it’s managed correctly and the data becomes accessible and it becomes flexible, then it becomes usable in the applications. And that’s what they’re trying to do. Very important.

Pat, you covered a lot. I think there was it wasn’t huge big news, but look, this company’s on fire. How do you end up talking about Pure Storage twice in three weeks? And it’s because they’re doing good things. I mean, the earnings were great. They’re outpacing the market. They’re a company to keep an eye on. They’re diversifying the business model. And like I said, they’re continuing to create a premium product. And in tougher economies, premium products do better. Period. Commodities always get hit. So good stuff from Pure Storage.

Pat, let’s keep moving onto another sort of what I would call small shift that warrants a significant bit of coverage here. And that’s Cloudera. Pat, as we know, Cloudera’s had some changes in leadership. Dave Moxie has taken over as the CMO of the company. You know, we had Bob Robert Barden, keynote at the Six Five Summit. You talked to him. Cloudera’s in an interesting predicament, but this week David Moxie wrote a piece on Cloudera’s blog that basically said we are all in on hybrid data.

Now why I thought this was warranted, kind of just a discussion. It kind of actually is a nice continuation of the topic we just had, is that you have companies that sort of had a product and they became known for a product. And in case of Cloudera with the acquisition of Hortonworks, they were the Hadoop company. And Hadoop from a database standpoint, one of the most utilized by enterprises on the planet, mostly in on-prem solution. So over the past couple of years, Cloudera and their CDP, not customer data, Cloudera data platform. Never really liked that. I complained about it frequently, but I understand what they’re trying to do. And the thing is while Cloudera is named Cloudera, Cloudera has mostly been historically OnPrem. They’re trying to create a fabric, a lake house, a data warehouse that is connected in a hybrid manner to the cloud, the way all the applications that we talk about are, to be able to run the modernization path that companies are taking. Having said that, you got to deal with companies now like snowflakes, eh, snowflakes, Snowflake. They’re not frosted flakes, Snowflake.

Patrick Moorhead: I like yours better by the way.

Daniel Newman: Oh, I like to eat them. Snowflake and Databricks and companies that are building AI, ML, data solutions, cloud native, born on cloud, forever cloud. And you know, they’re saying to companies, hey, just do it from day one in the cloud. By the way, just like the cloud itself, enterprise workloads are not going that fast in that direction. It is taking some time, but Cloudera has suffered a little bit of a perception of being legacy. And now, you got the Mongo DBS. And I mentioned the born on cloud that are all offering solutions that say, hey, let’s take your legacy on-prem, let’s move it to the public cloud. And essentially Cloudera has settled in on the fact that they’re going to be a hybrid data company. That’s going to build a solution. That’s going to be a fabric that is going to connect the prem and the cloud.

So think of it as the past in the future. And I think they’re making a declaration, and I don’t think there’s much more to say here than this. They’re making a declaration that they are a company that needs to be part of the consideration process in that migration, and they’re moving at a pace that really mirrors what most enterprises are doing when it comes to trying to get their data, make the data accessible, in application, utilized at scale. And that they don’t want to be considered yesterday’s data solution. That’s what David Moxy came out and said this week, I wrote a blog on it. I check out a research note. You can check it out, pat, like I said, not a huge piece of news that needs a ton of coverage, but a piece of warrants, because I think this has got to be the pivotal moment that Cloudera changes its direction. It has to start convincing customers it is the data platform of the future, not a data platform of the past.

Patrick Moorhead: Man. That was a great analysis. I don’t even know where to start other than that.

Daniel Newman: It was quick though. It was about three minutes.

Patrick Moorhead: Other than to do the golf clap. No, listen, I have always seen Cloudera as a hybrid data capability. So this didn’t surprise me at all. So this was more about how to talk about the company as opposed to what the company was actually doing. And I, this is as you said, a blog from their new CMO, this is a marketing thing. So it came out from the CMO. But I do think it sends a good message.

Now what I find, what I also like is that it’s moving away from the words hybrid cloud to hybrid data, right? And it’s funny, you have a lot of cloud companies and storage companies who, who pretend to be data companies that aren’t, but Cloudera is a real data company. Right? And you know, this, you know, hybrid data encompasses on-prem, the edge, Colo, public cloud, and even pulling in data from enterprise SAS environments. So I like it, and this is what they’re doing. So, it’s funny. And I managed very, some very large marketing teams before, and we had some immutable laws of marketing and one of them at the end, the last one was it has to be true. And I always get a big laugh from my marketing staff on that. But no, I mean, it’s true. So anyways, I’ll give you the other four. If anybody’s interested, hit me up on Twitter.

Daniel Newman: Sorry. I got to pause there. Wait, marketing has to tell the truth?

Patrick Moorhead: I know. And the other statement I had that I would get people to crack up is it’s like, I just want to tell you, we’re not the reality department. We’re called the marketing department for a reason. If you want the real, you want to work for the reality department? Go work in engineering or operations or something.

Daniel Newman: Woo.

Patrick Moorhead: Clacking my soul club, baby.

Daniel Newman: All right. Go back to playing whack-a-mole people. All right. So we got two more items. Gosh, Pat, we spent like 28 minutes on the first two topics. We are, we were on fire today.

Patrick Moorhead: That’s why we put them on. That’s why we put them on top. I mean, it was two companies.

Daniel Newman: They, they were big, they were big, they were big. They were big.

Patrick Moorhead: The first time AMD had this event in three years, dude.

Daniel Newman: I know. I was supposed to be there. You were supposed to be there, but God, I’m actually kind of glad I slept in my bed last night. Let’s jump in, Quantinuum. So Tony Utley, the president of Quantinuum also spoke at the Six Five Summit. God, that was a great event. All right, anyway. And they had some news about in quantum talk about it.

Patrick Moorhead: Yeah. So first off, just a reminder on what Quantinuum is, it was a company founded by the merger of Honeywell Quantum Solutions, which was Quantum hardware with Cambridge quantum computing and that’s quantum software. So by the way, try to say this five times fast. Quantinuum in quantum, Quantinuum in quantum, Quantinuum in quantum. Actually, it’s easier than I thought. So what is it? Well, it’s a Python based quantum chemical software platforms. It performs chemistry algorithms on current quantum hardware. And this was following some big announcements that talked about some record quantum volume numbers and an upgrade to Quantum NLP.

So Quantinuum is on a roll. So this offering is specifically targeted at chemistry. Okay. And there are seven or eight core chemistry algorithms. I’m not going to bore you with them now, but you can read the article that our principal analyst, Paul Smith Goodson wrote up on Forbes.

But essentially this is in place not because we’ve hit quantum superiority of classical better than quantum, but there are things that you can do in quantum and the way that those algorithms work that you fundamentally can’t do on classical computing, even a super computer that can perform over 500,000 trillion floating point operations per second, can’t compute a precise solution. So, unless a new classical computing tech emerges, only quantum computing has the potential to handle computations like this. So what does this mean? Why bring this platform out before their superiority today? That’s to get experience on it because we are going to hit the quantum volume that we need in whether you want to debate three or five years, it’s going to be here. So this is to let’s get started on the workflow. And you know, whether it’s input in quantization, different methods, quantum computation, cranking out the results, you’re going to be ready for this as a chemical scientist.

Daniel Newman: Yeah. You hit on a lot of the high notes. This is geeky stuff, man, but it’s important. We had a quantum track. We spent a lot of time talking about the practical versus the sort of ambitions. And you know, when it comes to quantum, we have two schools. You’ve got the school of big engineering geeks competing to be the biggest geeks possible. And then you’ve got the actual, how is quantum going to coexist with classical computing to drive real important results? So in quantum, what I like about what Quantinuum is doing as a whole is they are really trying to do some limited and general availability products in market that are quantum, that people can actually try and utilize. So, this is just another example. I see what they’re doing in terms of quantum chemistry, we know that healthcare drug compounds are a huge opportunity, Pat.

And so this is a good move. It’s a step forward. It’s just a notch in the belt of making quantum real for the market. So for the sake of time, I will probably know more and I’ll keep us going. ‘Cause we have one more topic, which is a really big topic. And it’s big in terms of numbers. It’s big in terms of industry impact. It’s not necessarily new information, but it’s been approved. And that was the Oracle purchase of Cerner. So, while Lina Khan is busy, trying to fight with everybody about whether or not you can self preference products or whether or not you need to have open or closed ecosystems, strong companies with big stable balance sheets are able to continue to make acquisitions of big size and enter new markets successfully. By the way, no real anti-competitive that I can see here.

I’m just saying that because this deal was huge and it went really fast, but yet we’re scrutinizing the heck out of smaller deals right now because everybody thinks that big tech is evil. I think that the entrance into a deeper healthcare offering, I kind of like it, Pat. So Oracle’s got this whole, it’s got the Oracle, it’s got the OCI, it’s got cloud products, it’s got the platform itself. It’s got, of course, all their apps in that CX business and their business applications. NetSuite. What I like here is everyone that knows this particular business of healthcare knows that the epic, Cerner, they suck. That it’s old, it’s legacy. A lot of it is HIPAA related. It’s not all because these companies don’t build good products. Companies build good products, but the compliance and regulation has made it incredibly difficult for them to build more user friendly technology experiences.

With Oracle, probably handling the data for a vast majority or a huge percentage of the healthcare industry. You would think that there’s an opportunity to vertically integrate and then horizontally build an ecosystem that could create a better healthcare experience while maintaining HIPAA compliance, while maintaining data sovereignty, while maintaining fluidity and experiences that people will like better. So, you’re talking about a 28 billion dollar deal. You’re talking about a nice net add to the top line for Oracle, a huge entry. Now compared to every other company, we talk about these other companies, other companies have healthcare clouds. Oracle literally has one of the healthcare clouds now. I mean, they have the opportunity with Cerner to revolutionize healthcare. So it’s pretty exciting. Of course, the doubts are, do they have the domain expertise? Are they specialized enough in healthcare to add a lot of value through this acquisition? I think that’s what we’re going to wait and see.

But I think Larry Ellison, they’re pretty methodical. I don’t get the take that they’re going to make a deal this big if they didn’t feel very confident that they would be able to implement this in a way that was going to be growth driven and that somehow integrates in Larry’s vision of being, not just the third cloud or the fourth cloud, which is where they’re sort of generally considered by revenue, but taking the business potentially up to the first cloud. So who knows maybe the whole Cerner number rolls into that cloud number. I’m kind of kidding, but you know, all of a sudden that cloud number gets really big. So anyways, strong deal, good to see a deal move this quickly and get closed and good to see the tech industry trying to get really big and aggressive on investing in vertical.

Patrick Moorhead: Great analysis, Daniel. And I might do a one liner and then do just a mic drop. Some companies talk about vertical industry solutions and some make 30 billion investments to drive them forward. And that’s exactly what Oracle has done here. They want to go big in healthcare. We’re going to go where all the data is and that’s, Cerner doesn’t own the entire market, but their market share is deep double digits on what they do. And that’s going to put Oracle front and center and add a layer on top of their database and data layer, which is on top of their OCI layer. And this is yet another step in the full stack capabilities of Oracle. And you know, Daniel, three years ago I wrote some pretty, pretty accurate, but negative things about Oracle. I mean, OCI gen one, did they have any customers?

Maybe. They did. Their SAS stuff wasn’t necessarily taking off. In fact, they were in the process of rebuilding their applications for the cloud. And to their credit, they brought out OCI gen two is very competitive and very cost effective. Their fully rewritten enterprise SAS stack. And whether it’s ERP, CRM, sales, whatever is very competitive to the point where they’re taking business away from Salesforce or taking business away from SAP. And this is just, I’m expecting, Daniel, some more acquisitions like a Cerner in some of their other important verticals. Could be some very interesting stuff in the future. Obviously I’m speculating. But aside from your great analysis, that’s what I’m left with.

Daniel Newman: Are they going to buy Temenos next, so they can take banking on? Or I don’t know. It’s interesting though, where it could go, but we talk about verticals and then we talk about verticals. This is big on vertical. This is not a vertical facade. This is you just bought a major player in the software vertical. It’s pretty cool. Pretty crazy. Pat. We did it. We almost did it. We’re a few minutes over our expected time. But after those first two, I didn’t know if we would be done today. So, coming back, Pat, I guess let’s wrap up. Great show. Where are you heading next week?

Patrick Moorhead: Yeah. So I’m going to catch Cisco Live and Splunk’s .conf remote. I have some stuff I have to do. Then I’m going to jet off to Lenovo’s ISG Analyst Summit in Raleigh, North Carolina.

Daniel Newman: And I’m heading to the conferences that you’re heading to virtually. And then I’m heading overseas to speak at an event. And how are you getting there, Pat? No, I’m just kidding.

Patrick Moorhead: Oh. Yeah, yeah, yeah. Yeah. I decided to, I started to drive down there.

Daniel Newman: Oh my gosh. That’s going to be a long drive. So Pat, everybody, is going to be starting his drive today so we can get to the Lenovo Summit by next week. All right, everybody. Great show. Check out the show notes. Lots of links to the details of what we talked about. Check out thesixfivesummit.com and we appreciate you. Stay with us. Hit that subscribe button, negative feedback to Pat, praises to me. We’ll see you all soon.

Patrick Moorhead: Great weekend.

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