On this episode of The Six Five Webcast, leading global tech analysts Daniel Newman and Patrick Moorhead analyze the tech industry’s biggest news each and every week.
On this week’s show we will be discussing:
- Apple Event: iPhone, Watch, Airpods
- Apple Leverages Qualcomm for Satellite SOS
- VMware Explore Event
- Apple Plans to Double its Advertising Workforce
- Intel Cuts Ribbon on Ohio Fab
- Azure Goes GA on Ampere VMs
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.
Daniel Newman: Hey, everybody. Welcome to another episode of the Six Five Podcast. Hosting today, Daniel Newman, founding partner, principal analyst at Futurum Research. Joined by my always esteemed, always handsome, happy Friday go lucky, Mr. Patrick Moorhead. How are you doing buddy?
Patrick Moorhead: Ah, happy go lucky I’m not. Scrambling on a Friday, I’m trying to take some time off next week. And you know how it is running your own company.
Daniel Newman: I kick you when you’re down. I rub it in that you’re actually in a terrible mood. But I’m going to pretend like you’re in a good mood.
Patrick Moorhead: I don’t know, man. You didn’t exactly tell me you were in a great mood this morning, so maybe we’re just…
Daniel Newman: I am in a terrible…
Patrick Moorhead: Happy Friday go lucky Mr. Patrick.
Daniel Newman: Oh my God. I was trying to share.
Patrick Moorhead: How are you doing buddy?
Daniel Newman: Ah, happy…
Patrick Moorhead: Dude, what are you doing?
Daniel Newman: I go to LinkedIn to actually share and get this thing out to everybody so they can join us. Anyways, I broke it, starting early, starting late. I’m in a terrible mood. You’re in a terrible mood. We’re smiling here because this is the best thing that happens to us each week. The Friday podcast, and we got kind of a light week this week, Pat. I mean we’ve got things to talk about. We’re going to talk about the Apple event and then we’re going to talk about Apple. And then we’re going to talk some more about Apple. And we’re going to talk about Qualcomm, VMware. We have more which happened a little while ago, but we’re going to get to it finally. Big news for Intel this week. They broke ground in Columbus. We’re going to put a little assessment around that and then some Azure news with going GA on their new Ampere offering. But first and foremost, let me get to the background.
For those of you that have never sat in on our show before, the Six Five is six handpicked topics, deep analysis, little bit of news. And our hope is that we’re getting you the insights that you don’t get from reading that every day news. We really appreciate our community, appreciate you joining. So after you listen in, hit that subscribe button, stick with us. This is the best show on turf. NFL started yesterday, and that’s a reference to the St. Louis Rams in case you are over 40 because you probably have to be to know what I’m talking about. All right, this show is for information and entertainment purposes only. So while we will be talking about publicly traded companies, please do not take anything we say as investment advice.
Pat, I don’t even know what to say. I screwed this up already. I had the LinkedIn thing double talking, so that’s going to probably mess up the video. But we’re going to keep going anyways because this is a live show. We love our audience, and we don’t mess with you. You want to get started with this or what do you want to do?
Patrick Moorhead: Let’s get started. Let’s jump in feet first. Let’s do this.
Daniel Newman: All right, I’m the host.
Patrick Moorhead: Where do you want to start, host?
Daniel Newman: First time. Let’s jump in and talk about the Apple event. I think my best tweet, I tweeted like 40 times during the Apple event. The best tweet was the one about 35 minutes into the watches where I said, I’m bored. Can we please get to the iPhone 14? That was the one that got the most engagement. I had a bunch of tweets about the watches, the Ultra Watch, the Pro Watch, the Watch eight. I watched and then fell asleep while they talked about watches. Now listen, I’m a mechanical watch guy. I like real watches. I do appreciate some of the technology. I definitely like some of the health wellness. And I know, Pat, you’re an Apple watch wearer, so I’m not knocking it. I just felt there was a little bit too much time spent on the watch. I’m not sure about that category overall, but it was a pretty big reveal in terms of volume. I think it was a somewhat meh reveal in terms of the next iPhone if I’m being totally honest with you.
Patrick Moorhead: That’s all we ask for is honesty.
Daniel Newman: You know how we are. We tend to be a little nicer to Apple than we should be on this show.
Patrick Moorhead: Yes, true.
Daniel Newman: Now if you see the irony in what I’m saying, the truth is we actually are a little nicer than we should be because it just wasn’t that interesting to me. Now if you’re an adventurer, cool the Ultra, that new watch, pretty cool for the rugged where if I start running in the Sahara Desert, I’m going to be very excited. I don’t run, period. So not going to happen for me. If you’re looking for the SE, which I call the, what do I call it? The Playskool version, P-L-A Y-S-K-O-O-L version of the Apple Watch. So now for $300 you can get most of the functions and features that you got in the one that was $400. I don’t know. I think that’s just more different and not necessarily better, but Apple does that really well, and then they sell a whole bunch of them. And probably with the SE, you have to buy a charger separate. Does it even come with one? I can’t remember that fact, Pat.
Patrick Moorhead: No, endurant being environmentally friendly.
Daniel Newman: Oh, and that’s why they don’t come with one?
Patrick Moorhead: Exactly.
Daniel Newman: Because you might already have one.
Patrick Moorhead: Right. They decided to remove the $5 bomb cost to them as well.
Daniel Newman: Yeah, so anyways, it’s probably Qualcomm’s fault. That’s what I’ve heard in the past. But anyway, so that’s what’s going on in the watches. There’s some interesting news about satellites but we’re going to kind of cover that separately in a few minutes. So I guess I’ll talk about the iPhone 14 and 14 Pro. That’s where everybody really cared about. 14 as far as I could tell, didn’t have too much going on. Still has the A 15, still has a notch. What I thought was kind of cool was the Plus model coming in at 6.7. Now I use Apple, just for everybody to know, I do talk a little smack, but I am a customer. I’m actually on an Apple machine right in front of me right now. I run the ARM Mac right now too. So I feel like that gives me credence to complain about things.
But what I can’t understand is the thousand-dollar phone and by the time you really put the memory in it that we need, I don’t know about you, but my kids come to me about every three months and tell me their iPhones are over memory because the way people use them with all the video, the starter device is a nonstarter. Can we just acknowledge that the starters, unless you’re a really efficient cloud user and you’re okay with all your stuff always having to be accessed in the cloud, it’s not really efficient with the on device storage. So by the time you get the device you really probably need, you’re spending well over a thousand dollars. The question mark that I had is for over a thousand dollars, what are you getting with the 14 that you didn’t get with the 13 if you have the 13, and I really couldn’t figure much.
I do like the bigger screen. I’m a big guy. My jeans are big, my pockets are big. I can use a bigger device. So I’ll probably upgrade it at some point, but I’m not upgrading it with any expectations of getting any real benefit. The last thing I’ll just say about it, because I know there were a bunch of other announcements. There were some cool health tracking and stuff like that. That’s a path they’re on. I think it’s talked about a lot. Nothing got me super excited. You could know when your car crashes, you could know if you fall over. And I know they’re doing period tracking now, which I’m sure is going to be very controversial in the women’s community. It’s something that’s going to certainly stir a debate because it’s just more data being captured.
But back to the 14, Pat, the notchless design, not quite sure I get it though because the notchless design is great, but now you just have the little rim of screen above where the camera is. Is that any better? Can’t figure that out. To me, it just kind of feels like more of the same, little bit larger, slightly better camera. I know we’re Snapdragon aficionados, Pat, but isn’t this going to be about equal to the last iteration of the Qualcomm Snapdragon camera? So you’re not getting a lot new. Yet sadly, I’m still going to probably buy it.
Patrick Moorhead: Yeah. I could tell you this was one of the most boring Apple events that I’ve ever personally watched. And not that I don’t use Apple. I mean, I have an Apple Watch, which means I have an Apple phone, but this is my main gear right here, which is the Samsun Fold 4 as my go-to phone. But the way as a research analyst I measure these is by black and white. What is it that I can do now with iPhone, Watch and AirPods that I couldn’t do before? So what we’re talking about is a shade of gray. And iPhone as an example, where’s the 10 x zoom lens for super closeups? It’s not there.
I mean, once again for the camera, we’re talking about being able to take better night pictures. Not that there’s not value, but there’s really nothing to swing you around the room. And in fairness, you have to compare the 14 to the 11, which is where most people would upgrade from. And there are some demonstrable black and white things. But even the new Watch Series eight, I mean you add temperature sensors. I mean great, I’ve had that on this ring for years. And again, I know everybody doesn’t have one of these or Oura rings, but there’s just really nothing new even the watch Ultra.
Daniel Newman: Less than the watch, Pat. The ring.
Patrick Moorhead: What?
Daniel Newman: It’s less than the watch, the ring.
Patrick Moorhead: Yes, it is. It is much less. And if you look at the Apple Watch Ultra, which bigger face, but there’s nothing black and white that this can do versus a high end exercise watch from Garmin. This is really who I think they’re going after, which is underwater dives, long hikes, and things like that. And we’ll get into this later. Even the SOS capability was announced by SpaceX and T-Mobile. So really nothing brand new but that doesn’t mean that people won’t buy it, doesn’t mean that I won’t buy it. But I just thought it lacked black and white demonstrable things. I mean, when are we going to get to the point where the Apple Watch can test glucose? So you essentially have the triad of sleep, exercise, movement, and caloric intake. That would be fricking amazing.
Daniel Newman: What about some sort of deep regenerative scan that can tell you if you have a likely condition? I don’t know. I want some sort of genetic testing in this watch. I mean, at least in the aero made version of it, we should get something more. It should be able to tell me if I’m going to die in the next 20 years and how it’s going to happen. I want a little more. I want a little more, Pat. I want more inference out of this thing. I mean, I’m joking.
Patrick Moorhead: Well, you’re half joking. I mean, no, I think we want more. It’s just like, so What? Tell me something that is either not blatantly obvious or that you couldn’t tell me multiple generations ago. I can’t even tell you what generation this watch is as there’s no new features that I feel are relevant. So anyways, I thought it was a pretty big, pretty big snoozer.
Daniel Newman: Well, glad we spent so much time on it. You and me, we can’t resist though a little bit. I really did say what’s up with the… So is the SE like the Casio version of the watch?
Patrick Moorhead: Yeah.
Daniel Newman: And you got that Pro is the Arrow made. I mean honestly, I want the Audemars or maybe a Patek Philippe version so they can charge like 35,000 for a version that has a band that has a little logo on it or something. You know what? People will pay it, Pat. And that is why they do it. So to their credit, that’s why they do it. All right, let’s talk a little bit more about Apple. I mentioned the satellites thing. You and I kind of teased this out a little bit last week because there’s been a bunch of news related to this. I think T-Mobile had some news. Bottom line is our devices are now going to have new ways to connect to basically like our cars with OnStar, but now it’s going to be on our phone, Pat. And so Apple’s leveraging Qualcomm.
Patrick Moorhead: Yeah, so the day before the announcement, I did a tweet storm showing the correlation. Well, I said two things. I said first off, I think this is going to be Globalstar is going to be the satellite provider, and also that it’s going to be the X 65 modem that’s going to be the key driver of this satellite capability. And essentially, it ended up being true. Apple talked about some proprietary type of chips that they’re using. We reached out to the company, actually OnShore yesterday, didn’t get any answers on exactly what that was. But what we do know is that it’s using the X 65 Qualcomm modem that leverages the N 53 band. And then I did a little bit more digging, and it was interesting. Globalstar, the satellite company was a joint venture between Qualcomm and Loral back in 1991. In 1999, were you in third grade then?
Daniel Newman: That’s the year I graduated high school.
Patrick Moorhead: There we go. And then in ’99, Qualcomm actually had a phone that they introduced that you could talk and do a little bit of data on Global Star. And it used a CDMA technology that Qualcomm invented. And here we go. Qualcomm CEO Steve Mollenkopf actually was a contributor to the Global Star project. In 2015, Qualcomm funded the OneWeb constellation, which was essentially the back haul for data across satellites. And if we go to 2021, Global Star announced that Qualcomm was supporting its N 53 band and that’s 2.48 gigahertz, 2.495 gigahertz, which pretty much made an easy linkage. So the day after, sorry, the day of launch, right, Global Star’s stock went up 25%. And then in their eight K they said Apple was this mystery investor, which I also called the day before. So interesting stuff. Apple didn’t talk about Qualcomm. Apple didn’t give any credit to Global Star or Qualcomm. But we now know based on all of this evidence that the technology behind this SOS feature is Qualcomm and Global Star, which Qualcomm created, helped create. Like Apple just can’t get away from Qualcomm.
Daniel Newman: Entire history of existence. Is Apple ever given credit to another company for its contributions to building products for Apple?
Patrick Moorhead: I’m thinking. I’m thinking only ISVs, that’s it.
Daniel Newman: Okay. So in the app side of things, there’s a little bit of credit being given, but it’s just not in the company’s DNA. It’s just not. Even, most of its acquisitions, they die the minute they show up on Apple’s doorstep. I think maybe the most popular I can remember in current history is maybe Beats by Dre was a brand at one time that Apple has kept a brand to some extent. But I think almost universally, and of course its technology partners tend to never get much credit unless they’re being sued for doing something wrong because God forbid the margin erosion of that $20 licensing agreement they pay in every phone. Anyways, I can’t. This is one path that I guess you could kind of look at it two ways. It’s just not Apple’s DNA to ever give credit so we shouldn’t be surprised. But it’s important I think that the world knows that there’s innovative companies and innovative developers and innovative technology that is behind the implementer. And this goes back to the cases of innovators and implementers.
And it has a lot to do with patents and licensing and protections and intellectual property law. And we talk about this a lot. And the reason that we need to strengthen our IP laws because there are companies like Apple that will tend to make the world believe they’re building everything that they’re using. And then the companies that actually spend five, 10, 15 years and spend real money on research and then put the technology behind a company like Apple into market don’t get credit. And then when those companies aren’t popular, a company like Apple can then go sue them or try to actually pay them less or hold out all together, which is what happened in that most recent case between the two companies.
But we also know in the end when there’s a symbiotic relationship and the technology helps the innovators and implementers both, they find ways to work together. So you hit that on the head, you told them the story. I’m just talking a little bit about antitrust and intellectual property protection laws because in the era of the CHIPS Act and everything else, it’s not just about the implementers, it’s also about the innovators.
Patrick Moorhead: I’m kind of surprised. I got to tell you, I’m a little disappointed that the press didn’t pick up even after the announcement was made. I just did a search iPhone 14 Qualcomm satellite, and almost nobody cited Qualcomm as a contributor.
Daniel Newman: They all want to go on campus to watch a video.
Patrick Moorhead: No, I guess so. It was kind of weird.
Daniel Newman: But they won’t get invited back to come on campus and watch a video.
Patrick Moorhead: I know. I used to be invited to those announcements, and they were on stage. And then I got off script apparently, Daniel, and started to provide some constructive criticism about Apple and what it was doing and leveraging its monopoly power. And can you believe that I didn’t get invited back?
Daniel Newman: Divergence, by divergence. You’ve diverted from the pack. You are to the ground, and you are running against the grain. Not okay. I’m not even sure I can hang out with you anymore.
Patrick Moorhead: I know.
Daniel Newman: I think our bestie story has to end here.
Patrick Moorhead: Bestie festie is done.
Daniel Newman: You’re testing the besting over Apple. But in all seriousness, I think we agree more than we don’t. All right, speaking of boring, can we talk about VM? I’m sorry.
Patrick Moorhead: Let’s dive into VMware Explore, Daniel.
Daniel Newman: So did you go?
Patrick Moorhead: I did not go. I was invited, but unfortunately I could not go because we had the AMD event that we had locked into earlier.
Daniel Newman: Which we couldn’t say because it was a redacted event at a redacted location talking to redacted technology.
Patrick Moorhead: Exactly.
Daniel Newman: But now it’s mostly unredacted, although there’s some stuff still redacted, but it’ll be unredacted soon. Okay, can I say this? I put a tweet out this week. I said, unpopular opinion VMware will grow faster after the acquisition by Broadcom. And I stand by this. Look, I did not go. We did send one of our analysts to the event, and I kind of ran down the announcements. I liked VMware with Dell. I don’t like VMware alone. I like VMware with Broadcom. And I just want to say I effectively think it’s more and more becoming a feature than a company. And I know that’s probably harsh, but in this multi-cloud era, basically the VMware stack are effectively a bunch of services that are offered by hyperscalers. At this point, multi-cloud management, virtualization services, they’re either offered in the partner store or they’re offered directly by the companies.
And you can be sure that over time they’re all going to build more and more products to solve the multi-cloud challenges. I look down. What are the big announcements? A lot of more partnerships, Pat. VMware on AWS, VMware and 95 IBM, VMware and NetApp, VMware and Microsoft. So half of their biggest news were just partnerships expand. By the way, all important because they have to build their solutions to run on multiple clouds. The Aria platform was probably one of the more interesting things. The end to end managing of cost, performance, configuration, and delivery of infrastructure for cloud native. That one was probably one of the more interesting ones. They launched a new version of vSphere. So there’s a lot of launches here, Pat, but here’s my biggest problem. And here’s what I think Broadcom’s going to help with is the company actually is too technical. And I think you and I have talked about this, but their story is seeming to run into the end where they’re very well received by the IT folk.
But I think their kind of popularity among the broader tech industry and people that are looking at tech growth has sort of hit a bit of a wall. The excitement for the native cloud providers, the public cloud providers is much more of a hockey stick. You always do this backwards on camera. Anyways, but the excitement has definitely started to dwindle. And the competitiveness of the product has started to come under question with Tanzu versus other container based solutions for Kubernetes. Is the VMware offering the most competitive? Is it the most innovative? And I’m starting to get the sense that it is not. And this is, like I said, you and I are not deployers. We are analysts. So we listen to the market. We listen to CIOs. We listen to the competitive presentations, and I think Broadcom is actually going to inject some excitement and enthusiasm.
And again, it’s kind of their historical DNA as they strip everything out, they reduce operating expense, they push up op ink, and they are beloved by Wall Street. But I get the feeling that they understand that this is a bit of a pivot moment. You’ve heard that the Broadcom software group was going to possibly be renamed VMware. This is going to be the epicenter of that sort of business unit. They talked about that. I’m not sure how that’ll end up, but I actually think they understand that in order to play meaningfully in the future of a hybrid and multi-cloud universe that VMware is going to be a great tool for them. I believe that they understand the need to invest in multi-cloud, and I think they’re going to do it. Now they’ll do it Hawk’s way. So don’t for a minute think I’m sitting here saying that Hawk is going to suddenly become a wild and R&D…
Patrick Moorhead: Big investor, big R&D, baby.
Daniel Newman: But if you kind of look, and we’ve worked pretty closely with the Broadcom mainframe software group, I think they’ve actually invigorated what was CA. It’s actually performing better. And so with the right leadership, the right investment behind it, I do see growth. And remember VMware in the last quarter grew 3%. And I think that was with constant currency. And my point is like 3%, Pat, for a cloud play in multi-cloud is anemic. It’s anemic at this point when Oracle, IBM, Dell, Cisco every company that has a cloud or hybrid cloud or on-prem cloud play is growing at double digits and most of them multiple double digits up. So lots of things launched. I realized I kind of quickly fell off the wagon of talking about VM world wasn’t there so I’m kind of just reading the news, Pat, a little bit here. But my analysis is I’m excited about the Broadcom acquisition. I actually think it’s going to invigorate VMware. And I know that’s not a popular opinion, but…
Patrick Moorhead: It’s not a popular opinion. I’m not with you. And maybe if I get to know the Broadcom folks a little bit better, I would have a much more comfortable feeling about it. I mean, up to this date, Broadcom really hasn’t reached out to my firm on anything except the mainframe stuff. So maybe if I get to know them, I’ll get more comfortable with them. Maybe my prior experience watching Hawk and what he tried to do with Qualcomm and some of his other software acquisitions, I might change my mind. But on VMware I’m going to do kind of the pluses and the minuses. I think the pluses are that VMware is one of the few companies that is enabling a cloud like experience on prem, hybrid, and multi-cloud, right? I thought they did a really good job in their keynote talking about the three different phases of what enterprises are experiencing.
CloudFirst really was about public cloud, single cloud, and this phase two of being cloud chaos, where you have now three public clouds. You have on prem. You have four Dev Ops teams that do things completely different, your data spread. And then there’s this end state, nirvana state called cloud smart, which is kind of the long term destination that they mapped out. And I thought this was really good. And I think this is exactly why only 25% of applications are in the public cloud and the remaining 75% are still on prem. Mission critical applications are not a slam dunk in the public cloud. And even if it’s old style kind of monolithic type of IT on prem, it takes time to refactor those applications to run in a hybrid multi-cloud environment. So I did like you, I liked VMware Aria, which is a multi-cloud management solution across all the popular clouds out there.
It introduced a cost element that’s powered by cloud health, and I’ve been really impressed by that acquisition and what the company has done with it. They’re hitting with network offload that all the hyperscalers have. They’re bringing that to on-prem infrastructure with support for the DPU and then going from DPU offload to DPU security with this new project called Project North Star. And typically, real products come from a project within one to two years. They also introduced this thing called Project Trinidad, which is an API, VMware API for security so again, really focusing on the right stuff here. I pay a little bit less attention to the client virtualization application. They introduced some new automation tools that I thought were really good. And that’s the good.
I think the bad is, and I just think they have one way to talk and that’s to this super duper technical audience. And if there’s anything that the company can do in the future to be more relevant to more people is talk in a way that the lines of businesses can appreciate because right now they’re getting fed from SaaS companies and public cloud companies in a much less technical way. And I think that they’re going to get their lunch eaten if they don’t figure this out soon.
Daniel Newman: Yeah, I love that, Pat, and good assessment and way to round me out a little bit. I realize I was a little harsh, wasn’t meaning to be, just being pretty straightforward about the way I see it, what I’m hearing, how I feel about it. We’ll see if you or I are right, and hopefully in the end, I’m rooting for, I always root for tech. I think we both do. We always root for it. We just want them to do the right thing. That’s our job. All right, let’s hammer into the next topic here, Pat. We have Apple. Apple. Jesus, Apple.
Patrick Moorhead: I know. Imagine.
Daniel Newman: I was trying to figure out. Go ahead. You know what I’m on top of, advertising. Geez.
Patrick Moorhead: Yeah, yeah. So there was an article in Financial Times. I have a big, from Patrick McGee, I’ve talked to him a few times. And essentially, he reported that iPhone, sorry, Apple was essentially doubling its workforce in advertising. And they are definitely not saying that’s not going to happen, and you rarely expect Apple to do that. But what really struck me though was again, getting back to the irony of Apple, who’s going to create this huge advertising business. I mean, step one, Apple convinced everybody that advertising was bad, and that they cared about privacy. And they instituted some pretty good user controls about how they did it.
And then they removed the tracking cookie capability, which drove the businesses like Facebook and Snapchat, just decimated their capabilities and revenues, essentially, the ability to tee up more higher CPM based advertising that users could connect to, and they could charge more for. And then after this, they’re building this giant ad business. And I think that the irony in the… I don’t think my pessimism is unwarranted here. I just think that the company needs to be called out in what it did. And quite frankly, I admire it, the Apple power move here.
Daniel Newman: Is that it?
Patrick Moorhead: That’s it.
Daniel Newman: That’s it. All right. Well, yeah, we need to get a little faster. Anyway, so I’m glad you did. Look, I’ve had a number of conversations. I actually was cited in one of Patrick’s articles last month talking about this. The long and the short of it is Apple has sort of leveraged. And we’ve talked about it in the show, they’ve leveraged their kind of privacy first strategy to push out other companies that have aggressively utilized cookies and data tracking to get more target in advertising. And now they’ve sort of monopolized, which surprised the ability to track and cookie and collect data so they can better advertise.
The fact is that what’s most on oculus about the whole thing though to me is that I think regulators, because they all use Apple, they just don’t say anything about it. I don’t know what it is. I don’t want my experience to get messed up. And by the way, this is where I always talk about, Pat, the decoupling of consumer harm and competition is that consumers are happy with it. They’re like, that’s great, I’ll just do everything with Apple. They’re okay with it. But the problem is eventually we’re going to have no competition left.
Patrick Moorhead: Well, dude, and then you’ve got Tim Cook, basically the friendly grandpa who wears nice grandfather clothes. He’s hip, he’s clean, he’s shaven, gray hair, talks about protecting consumers and everything like that. But let’s not talk about the giant ad business. Let’s talk about not paying your suppliers. Let’s not talk about crushing your suppliers. Let’s not talk about using slave labor in China to put phones together. Every woke statement that comes out of Apple, and they don’t talk about the yumegears it’s just fricking mind blowing to me.
Daniel Newman: Yeah. Can we just move on? Because only because only the number of the amount of hater-ade you can serve in a single session.
Patrick Moorhead: I never heard that before. Oh my gosh, hater-ade, that is so good. Yeah, buddy.
Daniel Newman: Yeah, I don’t know where it came from, but I’m feeling… Do you feel better though? I’m in a better mood than I was in the beginning of the show. Now the show’s going to end soon. Then we’re going to be back in our grump moods. But I mean, the show always brings me to life. So this next one I think we can hit on pretty quickly, but it’s a big moment. President Joseph Biden has attended the ribbon cutting ceremony in Ohio just outside Columbus where Intel is going to start. It’s breaking ground on its mega fab. And that’s today. And so while we’ve had a…
Patrick Moorhead: People are lining up right now as we speak.
Daniel Newman: Yeah, speaking of speak, I’m a little sad, I wasn’t invited. I feel like you and I were quite active in communicating the critical nature of this moment for our country. I think I did 100 TV appearances on chips, semis, supply chains. You probably did billion articles, quotes and your own TV appearances. And we were out there kind of trying to tell the world like, hey, this is kind of important. Not saying that I entirely agree with the final legislation. I’m not sure I’m entirely happy with all of what passed. But what I do agree with 100% is 100% of our leading edge chips should not be manufactured in an area that’s sitting on the brink of war at any given time. We all agree on this. There’s semantics where the money goes, how it gets distributed, which companies should be. I think Intel stepped up though. And I think I’ve been pretty vocal about that.
Look, I understand some people think maybe it’s corporate welfare, but the bottom line is we need to build these fabs. And there is a private public partnership. This is not a new thing. It has always existed. And if you don’t understand the critical nature that semiconductors play in our life by this point, go climb back under the rock that you came from. And don’t ever come back to my show again.
Patrick Moorhead: Man, the hater-ade.
Daniel Newman: Am I serving it up? I thought I was all out of hater-ade. That’s my last little bit. But the point is, this is important stuff. Again, there’s always going to be debate on how it gets deployed, whether we execute it well enough. And of course, Intel needs to be executing on its boundary, on its process. It needs to return to leadership. I read an article on MarketWatch the other day that said, if there’s one company in the world you should be rooting for in the US, it should probably be Intel. And the point is that we’ve got a lot of fabulous innovators. We’ve got a lot of innovation in chips. Everything we’re doing, including this podcast, is hyper dependent on semiconductors because semiconductors, software does not run on air. So I’m happy for Intel. This is a good moment for the US. I guess with the Queen and everything, it’s kind of a solemn day for some. But for the US in a multi-year fight to try to get some progress on our own technology leadership is a good day.
Patrick Moorhead: I’ve had my criticisms of the Biden administration, but I am a reasonable person, and I have to give them credit. The Trump administration could not punch this through. And it was decoupled from the ridiculous $3 trillion spending act. And kudos to Biden and the administration for making this happen. But I got to tell you, kudos to Intel and Pat Gelsinger. He spent probably more time in DC than he did on the West Coast at Intel, essentially, trying to secure Intel’s future for the next decade. And also consequentially will help with our national security. It’s appalling the amount of leading and bleeding edge that we do in South Korea and Taiwan. You’ve got Chinese warships circling Taiwan. You have missiles that are being shot over South Korea into the sea. I mean it’s nuts. Forget about how we got in here. This ribbon cutting is a great example of the future of semiconductors. Congratulations, Ohio. I am in Ohioan, and I admit it.
Daniel Newman: Wait. What?
Patrick Moorhead: Yeah, man. I was born in Columbus, Ohio. My mom lived in Columbus, Ohio.
Daniel Newman: Did you spend any time in Cleveland?
Patrick Moorhead: I grew up in Cleveland, and I admit it.
Daniel Newman: All I can think about is that Daniel Tosh bit where he says, if you’ve never been to Cleveland, congratulations.
Patrick Moorhead: No, listen. In 1968, the Cuyahoga River caught on fire because a big gasoline tanker ruptured. And literally, the lake was on fire. And that’s where the Cleveland as a mistake on the lake moniker occurred. Anyway, that’s it.
Daniel Newman: You get history from Mr. Moorhead and hater-ade from Mr. Newman.
Patrick Moorhead: Oh dude, you’re on fire.
Daniel Newman: I am. Well, I thought that was the clear… I thought that was the river. All right buddy, let’s end on something a little more tame. I think our opinions here can be a little bit more straightforward. Let’s, speaking of continuing boring… No, I’m joking. This one’s pretty interesting. We’re live. We’re live. Another homegrown this time with Azure.
Patrick Moorhead: That’s right. So Ampere is the leading Arm server processor provider to hyperscalers. AWS, right, came out first with their own homegrown, but it’s only available on Azure. Ampere is now available on Azure, almost available, almost GA on Google Cloud. Also available on Oracle Cloud and Alibaba Cloud. So this company is really making a move. And Arm infrastructure overall between server and clients is very, very strategic to Microsoft. So not only are they re-rolling all their tools and all their applications and operating systems on the server side, but they’re also doing this on the client side. And we’ve seen the Surface Team embrace Qualcomm Arm based processors in their own product line. So a couple surprises for me with this is, first of all, more regions than I thought, 10 regions, VMs, and containers. They’re supporting four different operating systems. They had some really good quotes from folks like Ansys, Avanade, Datadog, Elastic.
I know there have to be more because they do need to, what’s the right word? If you made a web application, you don’t have to worry about doing much work. Only, let’s say if you wrote something in C++, would you have to recompile. But I hear stories of it taking five minutes to get your application ready to move from X 86 over to arm, multiple languages for development, Java 11, Java 17 open Java. Native.net six, and gosh, Visual Studio 22 if you’re looking for an IDE to help you to develop something for C++, C# web applications, and multiple different VMs with different types of processing memory and storage capabilities. So NetNet for me, Microsoft announced more than I had expected. And Ampere is a company that quite frankly I didn’t pay much attention to before, but I think everybody needs to because the next step in what they’re doing is they’re going to essentially create custom CPUs and more custom silicon to surround that.
Daniel Newman: This is the trend line, Pat. This is the trend line Arm Ampere, hyperscale cloud providers, building their own homegrown. You’re going to see it. Accelerator, CPUs, VMs, this is how they’re going to increase operating INK, op INK and margins. It’s how they’re going to define and differentiate offerings. I think the key and the question is the impact to the traditional CPU providers and the traditional server providers, and what that impact is going to be. X 86 of course is going to be the big question mark. We just talked about Intel. The good news is compute is going to grow as a whole. So the question is, what’s the distribution of a percentage of TAM on these homegrown versions versus the off shelf? And so that’s going to be what you and I always say, there’s got to be three plus more competition the better. I’m going to quote you. And I think more competition better.
There’s going to be workloads that are going to make sense to run on X 86. There’s going to be workloads that are going to be built and built to run. We talk a lot about cloud scale. We talk a lot about silicon design for certain workloads. That’s going to continue to happen too. Microsoft’s aggressive. Microsoft’s growth is aggressive. I expect this to continue. We are at time though, so I’m going to keep that one short. I know we talked about this more at length when it got announced, so we could try to find that link and put in the show notes. I probably won’t though, because I’ll forget, and we’ll just get it published because we’re always in a hurry.
But this show was a lot of fun. I am in a better mood. And like I said, I will be in a bad mood again, but for the last 44 minutes and 24 seconds, I’ve been smiling. And so thank you, buddy, for making this show fun like it is every week. Thank you everybody out there. We appreciate our community. Send your goodness to me and everything else to Mr. Moorhead. We appreciate you very much. Hit that subscribe button. Stay in our community. We are out.
Patrick Moorhead: Take care everybody.
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