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Talking SAP Sapphire, Marvell Acquires Tanzanite, Micron Investor Day, Zoho Marketing Plus – The Six Five Webcast
by Daniel Newman | May 18, 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. IBM and Amazon Web Services Sign Collaboration Agreement
  2. IBM Think2022 Event
  3. SAP Sapphire 2022 Event
  4. Marvell Acquires Tanzanite
  5. Zoho launches Zoho Marketing Plus
  6. Micron Investor Day

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:

Patrick Moorhead: Hi, this is Pat Moorhead with Moor Insights and Strategy, and I am here with my awesome co-host, Daniel Newman, co-founder of Futurum Research and my partner in crime on the Six Five. Daniel, how are you? We are back. I’m back from a six-city, six-day trip. We were in many of the same cities together, my gosh, Orlando, Boston, Armonk, New York. It’s great to be back.

Daniel Newman: It is good to be back, but this is really sort of just a breather before we do it again, right? I think next week is… we’ll be out on the road together, Miami, Sunday for the All In, Besty Festy. I can’t wait to see what Elon has to say, now that he’s maybe not buying Twitter anymore.

Patrick Moorhead: God, it’s so fun. It’s such a negotiation tactic.

Daniel Newman: Oh my God, he needs to bring that price down. The market has taken a big old puke, and he paid too much for, I love Twitter, but let’s face it, it’s not necessarily anybody’s favorite social media network.

Patrick Moorhead: Yeah, the way these deals usually end up is they have a certain, if the price gets reduced type of thing, in fact, we saw the stock deal with AMD, they ended up paying 50% more for Xilinx because it was tagged to a stock, and even though this is a cash deal, I mean, 99 times out of a hundred, they have some sort of thing, but we are not here to talk about Twitter.

Daniel Newman: No, no, no, no, no, we’re not. I was just introducing the week because we were talking-

Patrick Moorhead: I know, man.

Daniel Newman: We are going to hear from the econoclasts, Pat. We’re going to hear from some of the smartest guys, from Shamack and Jaykow and Sachs, and Freeberg, we love that podcast. And by the way, we’re not exactly connoisseurs of tons of podcasts, but it is one of my favorite to get a really good, thoughtful, balanced view on economics, geopolitics, on different industries, on startup venture capital. A lot of fun, so we’re excited to do that. We’re going to be in the crowd instead of doing the content, there’s a lot more doing that’s going to be coming up in our future.

And then we’re jetting across the country, literally, on a basically transatlantic length flight. We’re going to go from Miami to San Jose to sit down with Matt Murphy, CEO of Marvell, because this Six Five Summit is coming fast, so our summit is coming fast. And Pat, I mean, we were just with Arvind Krishna, CEO of IBM, sitting down, some photos out on your Twitter and LinkedIn, as well as mine, of this. We’ll be with Matt next week, CEO of Ericsson the week after, and then we’ve got the CEO of Honeywell as our big name keynote, so it’s coming buddy. It’s coming fast.

Patrick Moorhead: I know, buddy, it’s coming. I’m racking up the miles, we’re both racking up the miles. So hey, if this is your first time listening to the Six Five, I’m sorry for you, because our show’s pretty awesome. But what we do is we cover six topics around five minutes each, we hit the why, and the where, versus the what, but sometimes we have to talk about the what to get in there. And we do talk about publicly traded companies, but don’t take any of this as investment advice. This show is for educational, informational purposes only. So Daniel, let’s dive in. We are talking IBM Think, SAP Sapphire, Marvell acquiring Tanzanite, Micron Investor Day, and Zoho Marketing, plus, ready, go.

Daniel Newman: Go where? Where am I going? You want to start? You want to go first? All right, rock and roll. So, first and foremost, this week was a modified IBM Think, which I think both you and I walked away from saying, this was great. It was a much smaller audience. It was biggest customers, biggest analysts, biggest investors, and it was tons and tons of access to the company’s key executives to really get our arms around the company’s focal points. When you see our interview with Arvind, you’ll really hear about how hybrid cloud and AI are really driving everything in that company. It’s a trimmed down organization, post Kyndryl spinoff, it’s growing faster, its messaging is getting clearer, and the technology its building is more ripe for the next wave of the economy as I see it, so there’s a lot of positives there.

Let’s just talk about one of the biggest announcements, there were several. But one of the biggest announcements, Pat, that caught our attention and we actually had the chance to do a Six Five. Was it on the road? On the show floor? In the booth? Which one is that? It was kind of a hybrid of all of them because it was-

Patrick Moorhead: In their studio.

Daniel Newman: And you’ll see it, with Tom Rosamilia, who leads the software business for all of IBM, but essentially the company made this huge announcement to partner with AWS. So you’re thinking, well, IBM has a cloud, and Amazon has a cloud, why would they be partnering? Well, of course, as many people know, IBM has been super focused on hybrid cloud, on the enterprise, on being able to deliver to this next wave of IT modernization, and we also know that AWS is the largest IS by revenue in the world right now, growing extraordinarily fast, well over 16 billion dollars a quarter, and has a lot of customers and enterprise users that want to run software cloud native in AWS.

So what does IBM do? IBM says, we know we have our own cloud, we know we can run things on our cloud, you can use Red Hat, you can use satellites, and you can do these things to do multi-cloud, but why don’t we take our portfolio of software, whether that’s API Connect, DB2, Observability on Instana, whether that’s Maximo Application Suite, their Security Verify, or Watson Orchestrate and Automation, and let’s have all those apps running cloud native in AWS. And so that was what was announced. AWS takes its partnerships very seriously, IBM takes its partnerships very seriously, they’re going to be dedicating resources, engineering capabilities, and it’s all going to be available on the AWS marketplace.

Pat, I see this as a big deal. I see this as an important move to get IBM democratized, its software more democratized. This company has a lot of software. Most people don’t know it because it’s a lot of middleware, a lot of applications that are being run in enterprises, it’s not necessarily the everyday names that you think of maybe in a CRM space or in a data space, but these are core applications that are part of the business’s ecosystem. I like the idea. I like the partnership. I like the fact that, again, this is an enhancement on the old bring your own license approach, that the company did to make things run cloud native, which, as long as the QA is good, and the ability to run it smoothly and seamlessly, this will be a great build on what they were already doing with OpenShift and ROSA, to being able to run your IBM software in the AWS cloud.

Patrick Moorhead: This is classic Arvind, right? This is the next generation of IBM, right? This is IBM Next. I can clearly say that this was under the leadership of Arvind, Roger Premo, and Tom Rosamilia. This is SaSS-ifying IBM’s key applications here, which I think is a great thing. And what I like about this, it does take a little bit of courage, which says, hey, instead of running this on-prem or in the IBM cloud, you’re going to run it in AWS, because quite frankly, it’s going to require customers to upload their data to AWS, which, once you get your data somewhere, seems like you’re going to kick the tires with a lot of the software that’s up in the AWS marketplace.

But listen, I know Tom Rosamilia pretty well, worked many years with him, advising the mainframe team. He’s a smart guy and he’s very client-centric. So I think he knows that he’s got to keep churning the innovation of that software. So there’s not some simple drop in replacement that AWS is notorious for doing with its partners. To me, this is also an expression of AWS desire to keep growing. I don’t know what market forecast they had, but last week it was Dell Technologies with some ransomware software and backup software and stuff like that, they must see partnering with the, what I’ve heard them call the old guard, as a requirement for their growth. So, all in all, a really good deal.

And the last thing I’ll say is I don’t think this is an AWS exclusive. I think over the next six months to a year, we’ll likely see announcements with Azure and GCP. AWS probably has some short term exclusivity, but we will be covering this on the pod as it moves forward.

The next big announcement that we had from IBM Think was quantum. If you followed IBM quantum for the last five years, you will know that IBM’s ability to hit its quantum roadmap, even though it’s research, they’re hitting at least 90% of their promises that they made back in 2019, and I can’t say that for all the quantum players out there. So what they did here is they rolled out a roadmap that goes beyond 2026, but I think it’s important to focus on this 2023 to 2025. So essentially what they’re doing is they’re adding what I consider semiconductor capabilities, which is first of all, you’ve got dye stacking with TSVs coming through to be able to stack quantum compute units on top of each other.

And then, it’s all about the connectivity, fusing together chips, and Daniel, where have we seen this? And if you can see my mouse here, here’s three of these quantum compute units fused together, and then a high speed backbone to make that happen. And in 2024, these connections are more classical, but in 2025, they are more quantum-like and entangled. And that’s a big deal because essentially you have raw quantum communications between these different modules.

And if it weren’t enough of a flex, Daniel, you can connect multiple of these Kookaburra systems together to get up to, and it’s funny, this was not necessarily in the pre-brief, I think they left this for the event, which was pretty cool, 20, almost 21,000 qubits. Now, to be fair, not all qubits are the same, and I think what IBM will be challenged on is the fidelity of their qubits, or the usable qubits. Some other companies call them algorithmic qubits, and I think IBM is getting ahead of this by them showing this Falcon R10 test device with a radically improved fidelity rate. Because there’s no question on the technique that IBM uses around speed, right? Superconductors are fast, but the big thing that their technique gets hit on is the quality of those qubits.

And if IBM can hit that fidelity, and hit Kookaburra at around 21,000 qubits, it could be the size of a data center floor, but I think there’s could be different instantiations of this, Daniel, if they can hit this, I think they have the potential to really hold on a leadership position on this, which, my gosh, kind of blows me away that we’ve come so far. And we’re going to see some announcements over the next 12 weeks, from other companies out there with different software that can actually utilize the IBM system. So, super exciting stuff, a big leadership opportunity for IBM.

Daniel Newman: Yeah, Pat, you covered a lot of it, and at a technical level, this stuff is extraordinarily complex, and it takes, I don’t know, we need that island that Arvind talked about with a billion physicists, chemical engineers, quantum physicists, scientists. But in all seriousness, one of the things I really appreciated from both Dario and from Arvind is the sort of really honest approach that they’re taking that they’re research heavy, they’re building a very significant ecosystem with partners in government, in higher education, in large enterprise. They’re testing to try to create this high fidelity qubit that can add value, they understand the interdependence that’s going to exist between classical computing and quantum computing to really bring benefit in a commercial space, and they’re also saying, at this time, it is primarily theory. They’re saying that they’re building these things, but it is not, let me be more clear, it is primarily not commercialized at this point.

And Arvind said that very specifically when we talked to them, because there are a little bit of sort of a mix when you go across the spectrum of companies that, the promise of the commercialized quantum machine has kind of hit different phases, because there’s things like Azure quantum, and there’s Bracket, and you say, oh, they’re in the cloud now, quantum is just a widely available thing. But the truth is, is that getting these high fidelity qubits that are sustained with low error rates is going to be extraordinarily important to do the type of computing that’s going to solve everything from engineering, anti-money laundering, applications in drug discovery and compound detection, that’s going to work and coincide with the classical computing space. I like the ecosystem focus that IBM has, they’re building the right set of partners.

And like I said, I like the fact that they’re trying to build something to commercialize over the next few years that’s scalable. You showed the architecture, Pat. I kind of look at it and I’m thinking, with all of what we’re doing with 3D, with chiplet, with stacking, with CXL, which we’ll talk more about, they’re trying to build a way to create higher fidelity and more compute power on a foundation, Qiskit, and what they’re they’re doing across the board, there’s a lot to be impressed by.

But like I said, Pat, you still do need an extraordinary technical understanding to see where they’re at right now, to know that this is evolutionary, it’s going to take a few years. But I do believe, Pat, probably in the next one to two years, we’re going to start to see much more clarity in the commercialization from IBM quantum, and this whole space, which has been nascent, in a lot of ways, in terms of actual in-market technologies. We talked a little bit, like with Continuum, with some of the security applications on SaSS and stuff like that, but it’s still very early. But what I got from Dario is that the research, the R in IBM, that you like to talk about a lot, Pat, is in full effect. The investment is significant, the roadmap is becoming more clear, and that quantum should be realized, Pat, at least in my lifetime, maybe not in yours.

Patrick Moorhead: Yeah, I got to tell you I’m a little bit more bullish than that.

Daniel Newman: I was being funny, but you just took it personally.

Patrick Moorhead: Well, I mean, I could die at 60, right? And that would suck.

Daniel Newman: Or on the way home. I don’t know.

Patrick Moorhead: Exactly, could get hit by a car. Let’s move to the next topic, SAP.

Daniel Newman: I got nothing.

Patrick Moorhead: Well, I talked a lot on that. Let’s move to SAP Sapphire, you and I both made the trek, and actually had a great conversation with Christian Klein when we were there.

Daniel Newman: Yeah, it was great, Pat, there’s some great pictures of you and Christian, and us and Christian, and it was great to have a chance to speak with him. What a young, confident, articulate CEO, it was our first time having a chance to sit down individually with him. Very impressed. I walked away not only impressed, but I felt, I liked him. I mean, I felt the same way with Arvind at IBM, but very contrasting in terms of experiences and communication styles, but it was great. I mean, look, another event, back and live again after a several year hiatus, I think this was my seventh or eighth Sapphire, so it was not my first, and it was much smaller. I think they had about 7,000 total people, which is fraction to the size that the event currently is.

SAP is in the middle of a number of different transformation, and basically they transform as companies transform. Digital, we heard this thematically over the last week, technology is going to solve the problems, the economic problems, the technological, the personnel problems, it’s going to be driven by tech. And companies are all trying to look to their software providers, in many ways, to give them the options. And Pat, by the way, in a study that SAP did with Boston Consulting, the numbers are still not great, 80% of companies are looking at digital to solve their business problems and only 30% feel that they’re actually achieving their, quote unquote, digital transformation. So going back more than half a decade to when I started writing about that, we have a long way to go.

What was the focus here. Well, SAP focused on three or four different things that I thought. Intelligent business networks and supply chain was in focus. They rolled out some new mobile apps, SAP Warehouse Operator, Direct Distribution, so those were some new apps that were made available in their store. They’ve got their new SAP digital manufacturing cloud, we’ve seen this sort of migration towards verticalized cloud technologies. We’ve seen it from SAP, some other companies, Salesforce, Microsoft, Oracle, many of them are doing this. It’s important that companies feel that you understand their business needs, and I think SAP is addressing that.

Another thing, and Pat, we were able to address this with Julia White and with Christian in the Analyst’s Summit, but sustainability, SAP is the kind of company, with hundreds of thousands of customers running their software, their ERP and their backend, and of course, other applications, they’re going to be looked to help solve this sustainability challenge. We’ve been asking more and more of these executives that we’ve been talking to and saying, “Hey, how are you taking all this, quote unquote, talk, and turning it into something meaningful?” Well, SAP did launch what they’re calling the Cloud for Sustainable Enterprises, and an SAP product footprint management, so that companies can better understand the carbon footprint that they’re creating. So these were things that were also rolled out at SAP Sapphire.

And then of course, probably the most important thing, and I’ll just kind of tease into this one, Pat. Well, I’ll tease into two, and maybe I’ll see if you want to pick these up so I can leave a little oxygen in these. But one is, more and more low-code no-code, so you’re seeing more and more low-code no-code coming out of their process, their AI business, their various learning journeys, so that they can get more people, more analysts, more non-developers, to be able to build in SAP.

And then lastly, Pat, we’re really watching what they’re doing with RISE, with their partnerships with RISE, because the market wants to see more and more SAP customers move to the cloud. You’ve said this really well, they’ve been a little bit apologetic about the pace in which they’ve been able to move customers to cloud, but in the long run, they have a massive customer base that have very complex data and ecosystems, architecture, compliance, and regulatory needs, and that they need to move with their customers at pace. The RISE program has been successful so far. I think, from talking to Christian, they want to move that along faster, but that’s going to be one of the keys to its next wave of growth is getting more and more of their customers in the cloud, but good event.

Patrick Moorhead: Yeah, I think I’ll take a different tack here. It’s funny, my relationship with SAP goes to back to 2000, but my relationship with them in terms of analyzing them as an industry analyst is pretty short, it’s recent, in the last year. So, I was really there to get a full dose of Christian, his leadership team, and what does he want the company to become? And I think to understand and appreciate where the company is going, you have to understand where they are today.

So first off, they’re the backbone for the companies that really make the world go around. They service manufacturers of hard goods, and they’re number one in market share in ERP, number one in procurement, number one in SCM, number one in HCM, number one in data management. And if you add Qualtrics, number two in CRM.

The challenge though is, I think at least from an investor point of view, is people look at that number one, number one, number one, and it’s like, “Well, okay then I guess that means that you’ll grow with the tamp.” Well, what you have to understand though, is that a lot of SAP’s customers, because their data and their operations are at the center of the entire company, it’s not that you can just blow that off really quickly. Because a lot of this has to do with the operating system of the company, it’s how business gets done, it’s how PO’s get made, it’s how you order all your cogs and all your materials. I mean, it’s how you manage your people, and you can’t just fire that off the cloud kind of willy-nilly because it’s really not going to do you any good, because you’re just doing a lift and shift.

But, the key here is, SAP is going modular, right? I remember a day, one of the reasons that it’s so hard to upgrade to a new version of SAP is because you had to do an entire roll of the entire software stack, every application that came with that. Like SaSS companies, SAP is going modular. And I think what that means is, hey, if I want to update this module over here without having to do a complete update, it operates more like a SaSS model.

And a very successful program that we’ve talked about on the show here is RISE, and that’s essentially getting people into the cloud, but not just doing a lift and shift. A lot of customers could just throw this into AWS and call it a day, but it’s the business process design and redesign that makes sense. And essentially, RISE is all about doing that business process redesign, which takes a long time, cloud migration, and then once you get a platform that is agile, it’s all about innovating.

And I have to tell you, when I look at the metrics, and again, I’m a relatively newbie at covering the company, their cloud revenue is very respectable. I mean, last quarter it was 25% growth, and then when I look at where they are with S/4HANA momentum, 71% increase in the first quarter. So, when I jump in and check out the company, I’m also looking at growth areas, industry cloud, business process intelligence with Signavio, business network with the Catena-X, and there were some automotive announcements too, essentially get a network of suppliers all on the same page. And this is exactly what the company is trying to do with sustainability.

Let’s say you had a policy that you would only buy from certain suppliers that met a certain sustainability criteria. Because they’re part of the network, you would know exactly who you could go to without having to take them through your laborious process. Heck, Daniel, every time you and I get onboarded with a company, it’s kind of a nightmare, wouldn’t it be nice if we only had to do it maybe one or two times across hundreds of our customers? And we could just do the check box and it was kind of a push button process?

But no, I was very impressed, even the 15 or 20 minutes we spent with Christian was very enlightening. He seemed very open to feedback, maybe some constructive criticism and recommendations, and I think, listen, with the new world out there and new leaders, that’s exactly what you need.

Daniel Newman: Yeah. I mean, you hit it on the head, so no bounce required here. Let’s keep going.

Patrick Moorhead: Yeah, let’s get into a big, an acquisition, a nice tuck in acquisition for Marvell. Marvell acquired a company called Tanzanite. And to understand this acquisition, you have to understand a bus standard called CXL, Compute Express Link, invented by Intel. I would say spearheaded by Intel, but it is a defacto industry standard for high speed, low latency, low power buses. And you’re like, oh my gosh, what a snoozer, well, here’s what that means. Essentially, in its truest form, I mean, certainly it means that you can have faster interaction between GPU’s and the CPU and memory, but you can also share memory. But the super exciting part, to me, is when you get to the third instantiation of it, CXL 3.0, where you can actually create pools of memory.

I’ve talked about this a little bit in relation to Micron, and I’ll wait for that analysis to dive in, but essentially it allows you, today, if you want more storage, you can add more storage without adding more compute. You can put on a SAN or you can put on a NAS, or you can have cloud storage. If you want compute, more compute, you add more compute. But if you want more memory, you essentially have to add more compute, right? Because memory and compute are correlated. So the only thing in the data center that you can’t compose, or have pools of resources on is memory. And CXL 3.0 enables this, and this acquisition enables Marvell to play a very big role in this. And, Tanzanite, many people view them as one of the leaders here. Now from a Marvell standpoint, they do a lot of acceleration, right? Whether it’s network acceleration on the DPU or NIC, or things like that, this gives them a front row seat to, I think, better take advantage of that acceleration.

Daniel Newman: Yeah, the technical background there was really helpful, Pat. I think a lot of people probably don’t really know what CXL is or where it came from. I think the correlation between compute and memory continues to require more, which we’ll talk a little bit about when we talk about Micron in a minute, why they’re so important. It’s like my tweet last night, Pat, right? What’s all the compute in the world without adequate memory? All the cores in the world, it’s pretty much nothing. And so, the ability to provide enough memory to all these cores, all this compute that we’re putting into the data center is going to be critical. And being able to scale this more seamlessly, and more cost effectively, could be a real differentiator. This is something that Marvell is going to be able to take to its enterprise customers, its cloud customers, and this is, by the way, very core to the Marvell business and how it’s been able to pivot, change.

And by the way, Pat, I think when we go to San Jose and we talk to Matt Murphy, this is going to be something we’re going to probably want to talk about. But based on the size of this deal, I think it’s going to go quickly, it’s going to go smoothly. They’re are small company, about 40 headcount, they’re still early days. It’s not revenue at this point, but I like that. I think Marvell is being very intelligent to take advantage of a market where a company like Tanzanite would probably have not had as easy of a time raising capital at past rates. We’re seeing discounting following into that space, but Marvell can take this, it can commercialize it, it can monetize it, it can bring it to its customers, and it can continue to scale its very successful run into this data center and cloud space.

So, good move, Pat, you covered it pretty well. So not a lot, I think, that I had to say, but I do like it, and I think it’s good for strengthening its end to end data infrastructure approach.

Patrick Moorhead: Yeah. Let’s move to the next topic, very different here. Zoho’s Marketing Plus.

Daniel Newman: Yeah, we come around to Zoho every now and again, Pat. I mean really interesting company, builds really on its own infrastructure. The Zoho One platform is basically a single platform to be able to run your entire business, ERP, CRM, marketing, collaboration, optimization, all your apps, they’ve got platform. Heck, the company even does R&D in the semiconductor space, although most people would not realize that, very unique and interesting.

But the middle of the market, Pat, is sort of one of these markets that tends to be sometimes forgotten. Definitely have some players in there, like NetSuite, that are focused on that. But overall, Pat, you kind of have these really small, low end CRM systems that are designed for mini-companies, small companies with a handful of employees, and then you’ve got mega enterprise CRM solutions. And so this mid-market has been really well addressed by Zoho. This is a company that’s built a really large business, they’re private, so they do disclose some data about their size, but you don’t have the exact sizing, but they’ve built this really great Zoho One operating system for business.

And one of the areas that companies tend to struggle is in their marketing stack, there are so many solutions. If you’ve ever seen some of those graphics that are shared about the MarTech stack and all the different solutions that are available for everything from search engine optimization to ad targeting, to social media, to, of course, your marketing, your attribution, your content funnels, you can just absolutely get lost.

So what is Zoho trying to do? Well, they’re trying to help companies deal with brand, product, demand and operations related to marketing. And so what does the Zoho platform really bring? Well, it’s a creation environment, it’s a collaboration environment, and it’s a single suite that allows companies to basically do their marketing within a single platform, and it’s supposed to be designed, and again, I’ve only seen a demo, but I liked it, to make it easier to organize access and use your data for marketing.

It does your analytics, so it does the quantitative, it does performance, it gives heat mapping, scroll mapping. It can give recordings of data and sales interactions, and then all this data can then be tied together to create social posts, email campaigns, ad campaign, surveys, and even events. It does AB testing, so it’s a really pretty complete stack of marketing that companies can use.

It also has some document management, like a repository for being able to create things. So think about, if you’re a small or mid-size company and you want to put your brand standard, you want to put your marketing collateral, this might be somewhere where you would use an enterprise content application, Pat, like a box, or Dropbox, or Google apps or Microsoft OneDrive. Well, if you’re in Zoho, there’s a place here to put that as well.

And then of course, from a collaboration standpoint, the Zoho platform ties together across functionally with sales. And so I think that’s really important because once you do the marketing, how do you then get it through the funnel, create attribution, give dashboards to sales people to say, what has all this marketing created? So I like it, Pat, from a standpoint of planning, content management, experience design, it’s created for this market that Zoho has defined, it has successfully gone after, and it takes a lot of the complexity out of handling marketing in this big stack in saying, “Hey, if you’re a company, we can handle the vast majority of your need. We create the ecosystem, the collaboration in your cross function environments, the tools for development, the attribution and analytics.” So, like it, like I said, early days, want to see more in action, but very interesting launch kind of a comprehensive CDP style. It’s not, quote unquote, a CDP, but it’s kind of that all customer data platform for the Zoho users.

Patrick Moorhead: Yeah, this is classic Zoho, right? Which is, hey, let’s create some killer applications that interoperate at certain levels, cross each other horizontally and vertically, by the way. And now, they’re taking campaigns, social, webinar, analytics, marketing automation, work drive, page sense, survey, backstage and pulling all these together for a much more cohesive type of program. And, Daniel, I actually did marketing for 20 years, and I wish I had a tool like this. They just didn’t exist.

But if you’re looking to have accountability inside the organization, if you want to increase your collaboration, I really think you should give this a shot. Zoho has been incredibly successful in small and medium businesses, that’s what they’re known for. But, I believe that there is an opportunity, a big opportunity, for the company to expand, and it is expanding, into larger companies.

Let’s move to the final topic, and that is Micron Investor Day. For those of you who don’t know, Micron is a leader in memory and storage out there. They’ve had a new CEO installed for the last five years, and I got to tell you, they had an investor day, and well, while you and I are industry analysts, it’s super important that, well, I find it valuable to get a one stop shop to get a great bird’s eye view of a company.

Daniel Newman: I love investor days, Pat. I actually think they consolidate a lot and make it really digestible, usually.

Patrick Moorhead: Well, and marketing, just because they’re under the auspice of the SEC, they can’t stretch too much, otherwise they’re going to get sued. So, what you’re getting is likely a conservative view of it, but here here’s really the upshot here, from a basis. So first of all, memory and storage are moving up the bill of materials for all electronics as a percentage. So if you look all the way out to 2030, there’s going to be a two X growth in the dollar volume, and that seems very reasonable to me, that would mean like a 9% CAGR increase, so that seems very doable. But one of the cool parts though, and let’s get back to CXL, is we haven’t even looked at the potential for the explosion of memory out here using CXL to have these pools of memory.

The storage business was humming along just nicely, and then we hit Storage Area Network, SAN, and NAS, Network Attached Storage, and that business absolutely took off. And this is where I see something that’s not baked into the valuation of the company moving forward. One of the biggest messages that the company made, they said, “Hey, we might be, we’re number one share in DDR five, which is the world’s fastest graphics memory, and we’re rebuilding out the data center and getting bigger with PCs. But, hey, don’t worry about this whole PC potential decline, look at what we’re doing in the data center as a percentage of our growth. And oh, by the way, look at, in auto embedded, look at that growth, not only is there growth in that market, but we are number one market share in auto and also in industrial.” What’s new in the world of mobile? Well, it’s LP DDR4 and LP DDR5. This is some of the magic behind Apple’s M1 processor is that they have tightly linked the memory to the processor. Well, the company is first to market with LP DDR5.

So I guess the final thing I’ll comment on is they talked about, and I need to dig into the details on this, but they’re experimenting with a new pricing model called forward pricing agreements. Essentially, it’s funny, the industry did this already, it looks like a formal program where you can lock in capacity in the future. And the company said they already have a top 10 customer signed to the model at more than half a billion dollars of revenue for a three year agreement. This is one way that you get around supply chains. So a company on the move, memory and storage is more important than it’s ever been before, not about just the explosive growth of it, but the applications like AI and also the memory pooling in the data center. I cannot wait to see what’s next at their big thought leadership conference called Micron Insight. Who knows, Daniel, we might be making an appearance at it, I’m not sure.

Daniel Newman: Yeah, that would be great, I love making appearances at events. Event appearances are, they’re my jam, man.

Patrick Moorhead: Yeah.

Daniel Newman: So Pat, you covered a lot of the ground, the company made some really great commitments over the last several years and have executed. And by the way, that’s something you and I don’t take lightly because companies make a lot of claims and, oftentimes, due to the short memory and the way social media works and the way we forget things, we don’t go back and hold them accountable for what they’ve been able to accomplish. I was reading comment by their Executive Vice President of Global Operations that was shared at the event yesterday, Manisha Tia, and he said, “Micron’s commitment to smart manufacturing has enabled us to drive increased productivity, keeping development of leading edge technologies on track for delivery to customers.”

And by the way, the reason I went to this guy, is I think on the technology side, you covered a lot of it, but one of the things that I thought really resonated with me was just how effectively Micron has been able to execute its supply chain and operate to be able to manage costs. This is the part of the semiconductor industry that probably has the least pricing elasticity. Whereas like in compute, you’ve seen how these companies have been able to flex on pricing. There’s going to be some interesting auditing over the next few years to see how much growth, in this revenue growth, came from the elasticity that these fans had right now with the crazy demand and all. In storage and memory typically don’t have that as much, so they had to be a little bit more sensitive to that. They were able to stay on leading edge, they were able to get their customers the supply they needed.

And by the way, Pat, this is something I keep talking about, but they’re deploying the intelligence in their supply chain automation that is going to be required to avoid further inflation in pricing. And basically, this type of automation can help Micro run more efficiently, deliver more volume, satisfy their customers and take leadership in the markets that they’re focused on.

The other thing I would say is that Micron’s pivot over the past few years to focus more on things like automotive path, data center, is prudent and is proven to be a very important move for the company. I do believe over the next handful of years, what we might see will be some contraction in discretionary, in consumer spending and things like PCs, potentially, maybe a slowing in some mobile device sales, not as much as some people are thinking, but just some slowing as there hasn’t been as much stimulus, people will have less free cash flow.

Companies have done a lot of their upgrade cycles on PCs, and maybe won’t be doing them as regularly over the next couple of years, but what I don’t see slowing down though, Pat, is data center. I don’t see the data center or investments in cloud infrastructure, edge, networking, slowing at all. And as you see, that’s been one of the biggest growth areas for Micron. I felt they really exuded their confidence. They showed clearly that they know what they’re doing there, and that strategy has been prudent and successful. So Pat, just demarking from what you talked about, I like some of their operations strategy, I like some of the direction they’re taking their products, and it was a good day. I felt like I learned a lot, wish I could have been there for the whole thing, but I did have to listen to some of it afterwards, Pat, but congratulations to Micron on a successful investor day.

Patrick Moorhead: Great stuff, Daniel. So here we are, we have come to an end of this show. Gosh, time flies when you’re having fun here, we’ve gone on for 45 minutes, it feels like we’ve been on here for five minutes. But as we talked about beforehand, Daniel and I are getting back on the road next week, we’re going to be at the All In Summit next week in Miami, and then we’re going to go off, and gosh, we’re shooting multiple Six Five videos next week. Gosh, we’ve got Marvell, I’m also shooting Raja Kaduri at Intel, and then I’m flying to Houston to do some HPE stuff, and I will be doing some keynoting at Global Foundries GTS 2022 Program, talking about the growth in key vertical industries and also chatting with the general managers up on stage. It’s going to be fun. Folks, thank you so much for tuning in. We love you. We’ll be back. Hopefully my voice will get back to normal, a little bit horse from doing six cities in six days, but with that, take care and have a 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