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We are LIVE! Talking Best of 2022 and a Look into 2023 – The Six Five Webcast
by Daniel Newman | January 5, 2023

On this week’s episode of The Six Five, hosts Daniel Newman and Patrick Moorhead reflect on 2022.

  1. Best Event of 2022
  2. Best Announcement of 2022
  3. Best Tech Performer – Hardware and Infrastructure of 2022
  4. Best Tech Performer – Back to Front Award of 2022
  5. Best Flop (Worst) of 2022
  6. Twitter

For a deeper look into each topic, please click on the links above. Be sure to subscribe to The Six Five Webcast so you never miss an episode.

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Disclaimer: The Six Five Webcast is for information and entertainment purposes only. Over the course of this webcast, we may talk about companies that are publicly traded and we may even reference that fact and their equity share price, but please do not take anything that we say as a recommendation about what you should do with your investment dollars. We are not investment advisors and we do not ask that you treat us as such.

Transcript:

Daniel Newman: Hey, everyone. Welcome back to another episode of the Six Five Podcast. We are back, first time in 2023. If you missed us, that’s because it was the longest break I think Patrick and I have taken since the first inaugural episode back in 2019.

Patrick, after a three-week hiatus, a couple of flights, some cancellations, some cold mountain time, but some good skiing and weather, we are back, baby. Ready?

Patrick Moorhead: I am so ready, Dan. It’s funny, I was so excited to go on vacation and then I enjoyed vacation.

But as you know, from knowing me, what I do for myself, how long have you been known each other, seven years, eight years?

Daniel Newman: Since 2014 so that’s we’re going on nine years, buddy.

Patrick Moorhead: Yeah. You know how I’ll take a great situation and I’ll completely muck it up with something different. That’s what I do. Sure enough, I got myself into some things at the end of the year that are good things.

Properties and figuring out taxes, and trying to find out ways to give more to the federal government and stuff like that.

Daniel Newman: You say how to give more? Is that what you were working on?

Patrick Moorhead: Well, you know me, I’m just trying to be funny and sarcastic, but no, we’re back and I’m feeling really good. I think there’s one person in the office floor that I’m in right now.

I’m wondering if I maybe did something wrong or something like that. But we’re here, we’re doing what we love to do, which is my business model’s very simple. We advise and we educate, and this is the education part of it, so we back, we back.

Daniel Newman: Let me tell you why you’re alone in your office because this is one of the weird years where all the holidays, because the Christmas, New Year’s always a week apart, they fell on the weekend. In order to make sure that all worker folk got a full day off, they made the following Monday a federal holiday. Now, we are getting an extra day off and for a lot of people that is really nice. But as business owners, and when you’ve been out for a while, sometimes this new year brings this blended feeling of rejoice of, “Hey, we finished another year and holy crap, we have to get going again.”

It’s getting those revs back up and the motor going. I don’t know about you, Pat, but after New Year it’s like, “Okay, I’m good. I’ve had some quiet time, I’m ready to go. I’m ready to hear from customers again. I’m ready to talk to people, I’m ready to talk to our teams and get the year started.” Then you get this one more day where it’s like, “Crap, no one’s working.” I’m just writing emails and firing them off in every direction. I’m sure the team really appreciates that.

Patrick Moorhead: Yeah, they always do. I always really appreciate it when my boss would send me emails over vacation. I come in it’s like 12 feet deep.

Daniel Newman: Yeah. They don’t actually appreciate that. Listen, we’re going to do something a little different today. You and I talked over break and at the end of the year, our show the Six Five, is always about six topics around five minutes each. Biggest stories in tech, little news, lots of analysis, lots of opinion. Of course, our opinions get stronger as time goes on, but at the end of the year there aren’t a ton of announcements. We all know CES is coming and you and I will be there, and we’ll be covering it fast and furious.

But we said, “What about a reflection moment here?” A lot of us write our trends pieces, or we’ll write predictions or we’ll write what were the big things. But on this, we haven’t historically done a show in the past, Pat, where we say, “Well, what happened in the last year and maybe a little look forward?” We decided let’s do a best of ’22 and a look ahead to ’23, but we would just do a quick down the line. It would be best events, best announcements.

Best we did a hardware award, we’re going to do a software award, we’re going to do a flop because we love to talk flops. Then we’re going to make a few 2023 prediction. We’ll get started in a minute. Really quickly beforehand, just a reminder for everybody, this show is for information and entertainment purposes only. While Patrick and I are regularly cited and all over the media for our opinions about tech companies, sometimes even our opinions about stocks and markets, and performance, don’t take anything we say as investment advice.

We are industry analysts. We look at the tech space, and we provide our best thoughts and analysis on what’s happening. Pat, let’s start off with something that we’re about to get back to. We’re about to get back on the road, back on an airplane, back in a hotel. You and I are professional event attendees. Over 2022, who was your award winner for best event and why?

Patrick Moorhead: Yeah. I sometimes joke that we are industry analysts or professional event attenders, and I think I spent 42 weeks on the road this year. We attended a lot of events and this is a tough one.

Of course, I want to say, “Hey, the Six Five Summit is the best event that I ever went to.” Hey, there’s Bill. Bill just came in. How about that? Bill Huff. Huh?

Daniel Newman: I said hey, Bill.

Patrick Moorhead: What’s up, Bill? Thanks for coming, buddy. I’ll see you tomorrow on the plane. But best event, it’s a tough one. Qualcomm had some really good events. The one in New York, the one in Hawaii. Heck, IBM Think, best small event that I went to when events came back. But I got to tell you, I’m going with Cisco Partner Summit and the reason that I gave it that was first off, senior executive accessibility is big for my determinations on technology and companies. It’s just the way that I roll.

Literally, nearly every senior executive staff member was just at the cocktail hour. I think Chuck was the only person on the staff who didn’t show up, but he came in and talked to the analysts and I got to chit-chat with him. That’s absolutely huge for me, so I got to hand it to the folks at Cisco. Good job on that event. Here’s the funny part, Dan, and maybe it’s because I wasn’t expecting it to be a good event, because I like tech and I like announcements and they rehashed a lot, but it got me center lined.

But you know me and execs, I like the senior exec thing. I can smoke them out after a 15-minute conversation. I do respect the products and everything coming out, but I get what I need from the senior execs.

Daniel Newman: Absolutely. I didn’t attend that one, but I do remember you coming back. I even think on one of our episodes here you were glowing about it. Again, as professional event attendees, we really do get a sense of what’s good and not.

It’s hard to streamline it down to one. You actually already gave my pick away, but before I give my pick, I did want to give a little bit of context.

Patrick Moorhead: I didn’t give your pick away.

Daniel Newman: Well, you mentioned who I picked when you discussed the ones that you liked. The criteria, I think, is different for overall best. I guess it’s a little bit of all these things. You mentioned one thing, I do think executive access and either one-on-one or small group time is very important. I think time value is super important. How many days do we have to spend to get what we need? Because when you’re in as many events as we are, there’s a combination of this nice to be back in person.

But there’s also this other side of like, “Hey, let me get the info and get onto my next thing.” One other is location. Where are you doing the event? You mentioned Hawaii, obviously great event. Of course, the downside is it takes a full day, day and a half to get to and from. If you can feel good about sacrificing the time, waking up in Hawaii is never a bad thing. Of course, there’s other parts around the world that we go to events that are really great.

Another thing, Pat, you didn’t mention that I really weigh heavily is treatment of us as analysts. Huge thing for me is certain events you’re basically treated no different than any other attendee, which again is fine. But when you do as many events as us, I think having a little extra love, good meals, having a lot of coffee available, making sure that people are handling you, getting you to your meetings. There were some great events like that. For instance, Salesforce, Oracle will do great jobs of that kind of stuff.

But my pick, IBM Think, you mentioned it. I fell in love with this smaller event this year. I fell in love with smaller, more intimate events. I really enjoyed AWS re:Invent, Pat, and doing all that, but the size of that event creates stress for me. When you can do an event that was in a small location, a small place, get access to a ton of executives, get in and get out together, I think that was the perfect storm of activity, time, executive access and handling of us that I just would love to see more events like that.

I don’t know that companies can get a good return at scale doing events that small, but for analysts it was perfect. Pat goes with Cisco Partner Summit and I go with IBM Think. Let’s go on to announcements best of 2022. Pat, ’21 brought a ton of strain on the supply chain, and nothing was more touted as a problem for the supply chain than the chip shortage. Vehicles, PCs, servers, gaming consoles, refrigerators, ovens, basically you name it, you could not get it.

That was because we had a massive problem with our chip manufacturing. Over the course of the year, the semiconductor industry, the CEOs of many of our clients, customers, policymakers had all come together to basically try to put a bill forward. Pat, as much as it seemed obvious for the sake of national defense, for the supply chain resiliency, for technology leadership, there was a period of time where it really didn’t look certain that we were going to get this bill passed.

The CHIPS and Science Act, over $50 billion plus another couple 100 billion potentially for other innovation, R&D. We talk a lot about lack of the research part of research and development, to help the United States build a greater resiliency in the semiconductor space, finally passed. Now, this was the great news. I’m going to be a little bit of a Debbie Downer on my best of, and just say sadly the passage was really the beginning, not the end. There’s so much work left to be done.

I expect Intel to step up in a big way to add to the manufacturing capacity. But of course, Intel has had a tough couple of years and the market is not as bullish on Intel as it might want to be. We see TSM, we see Samsung, we see a number of fabulous all with hands out looking for money. We’ve got the likes of IBM global foundries. But in the end, the passage is the beginning. It was a great start. I’m very excited. We need to make more chips here and more chips outside of Asia. What’s going on in Taiwan and China is scary. You should be afraid of what’s going on.

Don’t be distracted by Russia and Ukraine. The real scariest conflict in our world right now is in China, but the passage of the act is the beginning. We’re two to three years away from really seeing a benefit. We do want to see the money go to companies that will keep it here domestically in safe parts of the world. That will add real resiliency to both leading and lagging edge. Because a lot of our continued delays are actually 14 nanometer and higher, but we really haven’t solved that problem yet at scale. Pat, what’s your best announcement?

Patrick Moorhead: Yeah. First off, we didn’t collaborate on this going in, so I didn’t know what you were going to pick until, I don’t know, a few hours ago.

Daniel Newman: That was the fun.

Patrick Moorhead: That was a really good one. I almost wish I would’ve chosen it. But you know me, I’m a product person so I thought product announcement, like what products were announced.

Daniel Newman: Yeah. Yeah. Yeah. Maybe I was cheating. I came up with something that was easy, fun and broad.

Patrick Moorhead: No, no, no, no, no, it’s good. For a second, I thought you were going to pick TSMC’s disaster Arizona announcement event that they did out there. They got hijacked by POTUS for his union talk but anyways, no, I chose a different one. I always say one of the things I enjoy most about being an industry analyst, is I get to do what I really enjoyed a lot and a lot more when I was in the business. That’s participate and be part of a bunch of announcements.

That can either be part of an advisory role up front or a market education role outbound in outside voice. I really liked IBM’s Quantum roadmap at Think. Well, wait a second, Pat. That’s like not reality or blah, blah, blah, but best announcement to me, it uncovers things that I was always wondering about the company or about the technology. IBM has chosen a technology on Quantum that people are like, “Hey, how do I scale this thing? That’s a challenge. And B, how do I increase the quality of the qubits?”

Quite frankly, they answer both of those questions. It was just an aha moment. They talked about the research on increasing the quality of the qubits, which I think has been a challenge for IBM, particularly for scaling. Because if you don’t have the quality of the qubits, then you have to create a bajillion more qubits to get there. The other thing and answered for me was on scalability. That’s not only scalability inside of the, I don’t know if you want to call it a trap or something like that, but it’s more of the chip.

Whether it was Flamingo, Kookaburra or something like that, Heron and Crossbill, they showed not only how you could scale on a smaller version. I’ll call it the semiconductor version, but also connecting multiple systems together. That’s why I choose IBM’s Quantum announcement that they did at Think for my best announcement of 2022.

Daniel Newman: Hey, and listen, Pat, bringing some real world and real life to Quantum is a big deal. In ’21, it felt like there was a lot of Quantum bullshit. Uh oh, now we got the advisory sticker beep. Anyways, but there was a lot of like we’re going to go all.

But in ’22, I think as the market gets more practical, getting more practical matters. It was a really big announcement. I think don’t undersell it because Quantum is going to become a very important part of our world in the next two to 35 years. Pat?

Patrick Moorhead: I caught that. I caught that.

Daniel Newman: I was making sure, wakey-wakey. Let’s go into something. Let’s go into our best tech performers. We’re going to have two, we’re going to have one on hardware and infrastructure and one on more software. Let’s start with hardware. You get the first shot at this one.

Patrick Moorhead: Yeah, this one’s so hard. Isn’t it funny? Nobody wants to say that they’re a hardware company anymore, we’re infrastructure. Every hardware company seems to want to call itself a solutions company. The only companies who still take pride in the iron are chip companies so this one was a hard one. You’ve seen what IBM has done, EMD, HPE, Ampere, Ventana Micro. Foray systems on the CPU and cooling side, but I had to pick AWS for this and you and I might be in alignment.

I don’t want to steal anybody’s thunder, but here’s why I picked it is in a world where people think that infrastructure doesn’t matter, AWS pounds it’s chest and is very proud of it. Not only is it horizontally integrated in how it connects different services together, service storage, network security, everything horizontally, but also vertically when it comes to chips. Even chips, they have homegrown CPUs, they have homegrown network and security offload.

They have Inferentia with inference, they have Tranium with training in AI. You want to go all the way down to the fricking bare metal on something, you can. I know this isn’t part of the infrastructure part, but you want to go all the way to the top and abstract all the goo with that application, they can offer that as well. The other thing that I appreciate is even though they do all their homegrown chips, they also have these amazing relationships with the folks like Intel, and EMD and Nvidia. You might ask, “How can somebody do that?”

They’re competing with them. Why? Because AWS has such a commanding lead inside of cloud infrastructure, you have to work with them. You want to work with them because they’re so big. Unlike Azure, whose biggest customer is itself, and Google whose biggest customer is itself with its SaaS properties, that’s not the case with AWS. That is hardcore infrastructure as a service 24 by seven, 365 days a year.

Daniel Newman: Yeah. This is one of those rare moments, Pat, where with no preplanned alignment, we landed in the same place. By the way, for me, it wasn’t close. I don’t want anyone else out there to take this personally, it’s just AWS continues to set the pace for the infrastructure as a service layer. Of course, they’re getting more and more compelling every notch up that stack. But the other parts are where I feel the other cloud providers are more competitive when you get to the platform software and services.

But the infrastructure, and to be clear, something we’ve talked a lot about is the desire to commoditize the infrastructure versus the reality of infrastructure is not commoditized is probably one of the most missed things. You mentioned all the great partnerships, all the varying instances, all the homegrown silicon, all the different offerings that AWS has been able to roll out. It’s just incredibly compelling. That doesn’t mean I don’t continue to believe that the Google’s, the IBM plus Red Hats, the Broadcom VMware plus any cloud isn’t going to make, again, some of these will work right with AWS.

But AWS as a complete holistic offering for infrastructure, just continues to set the pace. By the way, it’s a $20 billion a quarter business now. It continues to grow at mid-double digits, rolling out more and more compelling offerings every quarter. The list of stuff this company is rolling out on a quarterly basis, it should impress anybody. It wasn’t actually hard for me. Again, you and I, we struggle sometimes to give one because we have so many children and we love them all, I joke.

But in this case, Pat, I think you and I can agree and there really isn’t much more to say. I hope AWS continues to set a pace that continues to bring up these other cloud providers, Oracle, IBM, Google, Microsoft. Because the world will need more cloud in the future so congrats, AWS.

Patrick Moorhead: AWS does have risks, which you and I have talked about. This multi-cloud thing, I think, could be a risk if they don’t address it, at least the messaging part of it.

On-prem cloud from the likes of HPE and Lenovo, and IBM I think are threats too. But 20 billion a quarter at just ridiculous margins, ridiculous in a good way.

Daniel Newman: Yeah. No, Pat, I think there’s a reason we both picked it, no consultation between us. That’s a pretty safe indicator that it landed. The next one is a special award, it’s called the Back to the Front Award, which is Pat and I’s inside joke about how we talk about software systems that connect the back-end of an operation to the front-end. It’s the ERP to the CX. While we’re not necessarily only talking ERP and CX here, it is our best tech performer in the software space.

I’ve been talking relentlessly about deflationary technology. With our economy heading into recession, I thought Bill McDermott’s guest of our Making Markets pod did a tremendous job with ServiceNow. I picked them as my best back to front award, because this is a company that is building the technology that allows companies to both with existing and new cloud instances, to automate so many of their workflows. As companies are trying to figure out how to right-size their ships.

Patrick Moorhead: Right-size their what?

Daniel Newman: Right-size their ships.

Patrick Moorhead: Oh, I thought you said something else.

Daniel Newman: Well, probably for some of the businesses that’s what it is. They right-size their organizations. They threw a lot of bodies at problems temporarily. A lot of people gave credit to companies when making these massive digital transformation, when really it was just lots and lots of worker bees doing a lot of things to meet this relentless demand.

Now that demand is falling off, companies are going to need to figure out how to get the most from their infrastructure, most from their software, most from their cloud, most from their edge deployments, most from their data.

In order to do that, they’re going to need to build automations, they’re going to need to use artificial intelligence and machine learning. They’re going to need to build workflow automations. They’re going to want to do it without having to completely lift and shift all of their software and systems. ServiceNow is just one of those companies that has built a very compelling set of software capabilities, to enable companies to layer cloud-like capabilities on top of both prem and true cloud instances. And get more by automating workflows, taking your data, maximizing it, and getting more from the investments that you’ve already made.

For me, it was a pretty easy pick. There are a lot of good software providers, but the company’s continued growth close to the rule of 50 plus, even 60 at times throughout a difficult pandemic, has really impressed me. I don’t see any other company coming up quite as clearly and able to compete in this exact space. Not only do I think it’s going to be a best of ’22, but I think it has a real shot of winning this award in a year.

Patrick Moorhead: Wow.

Daniel Newman: I said a shot. I’m not saying they’re going to win, I’m saying it has a shot.

Patrick Moorhead: Well, it’s funny. ServiceNow wasn’t even on my radar screen, which this conversation might get them on there. But this one was tough and you know me, I took you a little bit literally on the back to front award, because you had to pick somebody who could connect the front to the back. There’s only tough competition out there. There’s Microsoft, there’s Zoho and there’s Oracle that are connecting the front-end to the back-end that have front-end CX piece, but also that ERP piece on the back-end.

Heck, I went with Oracle. Not only do they have one offering that does this, which are the fusion apps that are in a SaaS model, they also have NetSuite. For small businesses that are about to go public and for the bigger businesses, you have fusion. I think the only criticism that you might be able to cast on Oracle is the strength of its CX in marketing. But as we’ve seen, even Salesforce has had its challenges in some of those areas.

By the way, let me read off some of the, I know this isn’t a financial discussion, but last quarter, fiscal ’23 second quarter, Q2 cloud application SaaS revenue, up 40% in US dollars, as a lot of folks were choking on 14%, 12% growth and we don’t pick a lot just for that. Heck, ERP rocking in at, you’ve come to appreciate from NetSuite, 25% growth. I give mine to Oracle and this is another one that could potentially, I think, could parlay this into 2023. We’re going to have to see.

Daniel Newman: Yeah. That’s a good pick, Pat. Oracle had a great year and like I said, they’ve really what, now a $10 plus billion dollar cloud business, solid growth? I did Squawk Picks last week while you were in Aspen. By the way, when you get west of the central, Squawk Box, it’s a night show, not a morning show because it’s so early. But I actually picked Oracle on my list too.

One of the reasons I picked is because beyond the 75 or so percent of their business that’s all recurring, the company’s just done a good job. It has done a very solid job with its SaaS cloud and apps business so I think that’s a good pick. By the way, a better by the letter of the law back to front, but what I would say is the automations I was looking at can connect the back and front of any system. That’s what ServiceNow can do.

Patrick Moorhead: No, it’s good. This conversation might get me to pay attention a little bit to ServiceNow, we’ll see.

Daniel Newman: Let’s have some fun, Pat. You and I both like to make some rips where we can and I didn’t even know how to make this a best, so I called it the best flop. What is our worst of 2022?

By the way, there are many to choose from, some horrible picks, some horrible media coverage, some horrible opinions out there. What is the most horrible of tech for you this year, Pat?

Patrick Moorhead: This is hard, and I hate to say this. When I was in my 20s and I looked at industry analysts, I always said I don’t want to be them. I don’t want to be these people who just have bad attitudes all the time. But I do like to talk about flops because it keeps us honest and it keeps us pure, and there were so many. My gosh, whether it’s FTX, whether it’s TSMC’s Arizona event that turned into a union event and squeezed out all our design customers. There was the All-In Summit that was just a complete bummer as well.

But my best flop for the worst of 2022 is how Apple treated its iPhone workers in China in Xinjiang, and whether it was security guards beating them with metal rods. We thought it was bad at a Foxconn facility when they had anti-suicide nets and there was some investigation on that. Then there was investigation of child labor that was in this. But my biggest flaw is a combination of the delta between what you think of a company and when you think of Apple, and how they pretend that they make no mistakes. They’re for the end user.

Power to the end user, as opposed to power of the most valuable company on the planet, putting your suppliers out of business. It’s just an ugly, ugly company. Not paying your suppliers to the point where they have to lay people off and impacts family lives, but this one takes the bill and I don’t think I’ll forget these workers getting beaten. I thought they were just plastic rods, which is a pretty well-known technique in China to keep people in order, but these were metal rods that they got beaten with. That’s my worst stuff. Congratulations, Apple. I knew you could do it.

Daniel Newman: I had no doubt that you would find some sanctity in picking something Apple did that was just gratuitously horrible. Yeah, gross is a good word. It’s partly, Pat, because I try to stay away from things that are too polarizing. I tend to play these lines well and you know that, but this is one of those areas I struggle to not speak up. I really struggle because it’s amazing the things that people put forward as violations of human wellness and rights, but yet somehow we can have workers indentured slaves.

God, I loved watching the World Cup, but man, there was some horrific human atrocities in the process of building that stadium. It’s like all good. I guess whatever reason with Americans, as long as they keep slapping those iPhones together, nobody cares how it actually happened. Which to me is why I realize we never will solve our biggest issues when it comes to taking care of other humans, because it’s only when it conveniences us that we seem to take notes. That’s a good call out.

Mine is less horrifying and sad, but it is actually something where I can look back and say I missed. When I pick trends, I guess the market was already capitulating end of last year, but I still thought the metaverse had this momentum that was going to see through. But boy, did we see companies pull back on their metaverse talk in 2022. By the second half of it, it became nothing more than digital twins and maybe a little bit of VR gaming was all that’s left.

After endless crypto, blockchain, Web 3.0 disaggregation, decentralization, websites were going to be decentralized, banks were going to be decentralized. There was going to be no more cash, only crypto. Then you had Bernie Madoff 2.0 come out with Sam Bateman-Fried, that’s pretty horrific. Meta, that company literally took a hard right pivot right to the toilet. It was like, “Hi, we’re at the penthouse suite. Can you find me a toilet where we can flush ourselves?”

Because that’s what Mark Zuckerberg’s strategy was, completely disjointed from what was going on in the real world to decide in the middle of what looked like rate raising environment, high inflation. Let’s pivot the business away from what we do well and where we make profits, and go down a path that we have no idea if anybody’s going to buy into at the cost of what I think we’ve lost like $6 trillion now? Not just Meta, but in terms of market cap because of what happened in the economy.

Meta basically just put its foot on the gas and said, “How much faster can we lose shareholder value?” They were down 70 plus percent. This was a name that people’s retirements were in, their 401ks were in. This is not a name of a high-risk, low-profit growth stock, but this was a company that took on its own leisure, got lazy, overhired, didn’t make cuts. Then pivoted off of its core business after Apple had already destroyed its market valuation on its own accord.

I give the award to Meta, but I further give the award to we have 10 years of effort to build this Web 3.0 idea, got set back by 20 because of all the bad actors, all the bad policy, and of course, the lack of real practical applications for the metaverse, so screw you, Meta.

Patrick Moorhead: Hey, I got a question for you. Do you put metaverse and crypto in the same place?

Daniel Newman: Blockchain, most of a lot of crypto exchanges or a lot of decentralization, a lot of projects that are on crypto are run on blockchains. Things like Render where you got disaggregated networks of GPUs that are being distributed over a blockchain. These are a crypto project running on blockchains all part of this Web 3.0 decentralization.

Yes. Yes, Pat, the metaverse itself still has some apps. You and I both like things like what Nvidia is doing with digital twins, autonomous training that can be done for vehicles. There are applications, but this stuff all got coupled together and was supposed to change the world. Most of what we got in 2022 was a heaping pile of shit.

Patrick Moorhead: It’s funny. I’m wondering, I have this notion that all of this hype was just to get people to invest and to get startups to pull the trigger. Man, I never thought we were close. It’s weird, never.

Daniel Newman: Yeah, I don’t know. I don’t know. I’m a bit disillusioned. You can hear in my cussing and pouting that I might have lost some money in crypto this year.

Patrick Moorhead: I remember you telling me too, “Hey, every week, baby. I’m in.”

Daniel Newman: I’m still doing it, by the way. I’ll make a fun, let’s flip to our 2023 predictions. This is not my prediction, but I will make one for sports coming out of all my whining about Web 3.0 crypto and metaverse, Bitcoin has not seen its all-time high yet. That is my fun but not my real prediction.

Patrick Moorhead: Come on, man.

Daniel Newman: You go first on that 2023.

Patrick Moorhead: You can’t do that because you’ll get credit if it happens. Then you won’t get punished, if it doesn’t.

Daniel Newman: I never get punished if it doesn’t. Do you think I’m ever going to refer back to any of my wrong predictions?

Patrick Moorhead: Oh, that’s so good and so honest. I appreciate you.

Daniel Newman: I’ve made so many.

Patrick Moorhead: You want me to jump in here?

Daniel Newman: Yeah.

Patrick Moorhead: You gave your… Hey, I’ll give a throwaway one first. Broadcom will acquire VMware, so that’s my throwaway.

Daniel Newman: We can do a rundown.

Patrick Moorhead: Then Twitter, I think Twitter is going to rise from the ashes. But no, overall, my big prediction is this whole notion of practical innovation, ESG and let’s throw DEI in there if we want. We had essentially for gosh, eight, seven years near zero interest rates and money was free. We had the pandemic that hit, which we shut down, but shut down people’s ability to work and create stuff for the most part, if you were in the tangible world. Those of us in the non-tangible world, non-factory, we could work from home.

Then we poured trillions of dollars we gave away for free. We printed more money and here we are paying for it. We have high interest rates driven by the Fed activity that was in there to lower inflation, that was driven by all the free money that we give out. Heck, I think there were three million US workers who just decided I’m not even going to go back to work. Either they were comfortable in their parents’ basement, or they had enough money to ride through that, or they just decided to give up.

Where I’m at now is growth isn’t in vogue, EBITDA is. I think that’s true for startups, but I also think that’s going to be even more true for bigger companies out there. I think even the biggest companies, the trillion-dollar companies, are going to get away from innovation for the sake of growth into practical innovations. You’re going to see some projects that are going to get cut. You’re already seeing these big companies get rid of it.

Practical innovation that has a clear line of sight, probably going to get rid of some of the riskier types of ventures. I also think you’re sitting there, board of directors, let’s bring in some ESG action. Now, first of all, I just want to say that love it or hate it, the pressure is on board of directors to hit their ESG targets. I don’t want to debate those targets and whether they’re going to save the planet or not. All I’m going to say is that they’re real.

What I do know is that if you are hitting your ESG goals and not hitting your financial goals, you will be tossed. This practical ESG I think will come in. I think we’ve talked, Dan, you and I have talked to some, I think, very insightful CEOs like Darius Adamczyk and Arvind Krishna that quite frankly supply a lot of the companies in manufacturing and warehousing. I think that this notion of ESG for ESG’s sake, is not going to be in vogue next year.

But good for the environment, good for the business, I think is going to work so that’s where I think we are moving. By the way, I hope we’re going to see some big breakthroughs in fusion, energy. That would be amazing. Mini nukes, that would be great.

Daniel Newman: Yeah. Maybe that, maybe a little crisper in the process. We’re going to do a bonus Twitter section at the end here, but I want to finish with a more noncontroversial 2023 prediction.

By the way, I liked yours a lot because I’ve been using the words economical or practical ESG for some time. I couldn’t agree with you more, Pat.

Patrick Moorhead: Did I just lift, did I just steal your and not give you credit? Is that what you’re saying?

Daniel Newman: You know how it works though. I come up with quips that have no solid backing. You actually give all the backing and then we come out of meetings, and I get all the credit because I gave the one-liner.

Patrick Moorhead: By the way, for the record, there was something, a call we were on in the last week of the year where I [inaudible].

Daniel Newman: Did you hit the quip home run? Did you hit the quip home run?

Patrick Moorhead: I got the home run.

Daniel Newman: All right. All right. All right. All right. Better together, buddy. We know this.

Patrick Moorhead: I know I do.

Daniel Newman: I call it, it’s the year of hashtag better together. It’s the year of iteration over innovation, or iteration of innovation. In a down economy with all the things that you talked about, high interest rates, high inflation, job cutting, economic uncertainty. Arvind Krishna, who you mentioned, said that he thinks IT is the most protected line item in any budget, but budgets are still smaller. You have a 20% smaller budget, it may be protected, but you’re still going to see that 20% cut across the organization.

Companies are going to try to get more out of the technology they’ve already bought. I’ve mentioned this a few times on this pod. I mentioned this last week on a few different interviews I did on TV, but I like names like IBM, Cisco, Dell Infrastructure, HPE, Oracle, SAP, just as a few names that will do really well. That’s because companies are going to need to do more with their current infrastructure, with their servers, their storage. They’re going to need to do more with their data. They’re going to want to do more with their existing software deployments.

They’re going to want to do more to secure their environments. These core IT companies, they were less cool. They didn’t go up a ton, they never saw their PE ratios swell up to 60, or 100 or 200. Most of them saw very conservative growth. But you saw IBM reach an all-time high late in this year, or sorry, 52-week high. I’m not sure if it was all-time, 52-week high. We’ve seen companies like Cisco, Dell’s Infrastructure has done really well. HPE’s GreenLake keeps growing. We saw you mentioned Oracle’s solid growth and SAP’s cloud growth.

This is because companies are going to be like, “Well, we were going to lift and shift. We were going to make a big strategic move, but you know what, we’re going to wait a year, we’re going to wait two.” That means double for these companies because one, it means the budget shift from whatever that new project was back to them. Two, it gives these companies more years to stay sticky, and to keep those customers in the longer term as they continue to innovate on the technologies they have, even as new and exciting data and cloud providers come into the fray.

I think in ’23 until we see some really clear signs that we’re going to return to growth, we’re going to return to near or very low interest rates. You’re going to start to see that slingshot for those kinds of companies. It’s going to be these solid day in, day out companies that are going to do really well. One more, let’s do one more little outro prediction set here, Pat. You did mention Broadcom VMware, so I’m going to say the Microsoft Activision deal will get done too. I think you and I agreed on that one. Let’s just talk about Twitter.

Okay. You and I are probably not going to make a ton of friends here, but I listened to the All-In pod this week. I don’t know about you. Then guess who showed up? Because obviously, David Sachs and Elon Musk are clearly close. I think David was in the Twitter building when he did this, but I started listening and stepping out from all the emotional response that we’re getting. All the emotional and the anger about Elon, and just listen to the product story.

Whether it’s been the ability to start to link personal and business accounts together, whether you’re starting to see the ability for it to track. By the way, I love the data and sometimes I hate it, because when my tweets get a lot of action and I see great numbers, I love it. When they just pass through the stream without much engagement, I’m sad and bitter that people can see how poorly my tweet has performed. I’m looking at some of the infrastructure things he’s been able to do.

Because by the way, to get realtime stats, he said it was something like three million operations per second or something that needs, so his ability to update product features, infrastructure and Twitter’s humming. I know everybody’s really pissed, but Mastodon’s not going to be a thing. I’m just going to tell you that. Elon Musk may actually… God, I know everyone, people hate him right now and I know it’s all political, but he’s good at product. I think Twitter might actually be better in 2023. What’s your thoughts, Pat?

Patrick Moorhead: I think that Elon was looked at as a savior for saving the planet with its Tesla cars. He was given accolades and he was on the front cover of magazines. But now that he comes in and shows that he is more of a centrist, he’s getting attacked, which doesn’t surprise me a bit. The challenge though is it’s going over to the attitudes of Twitter. There’s nothing that Elon Musk said about what to expect from Twitter, that’s not actually happening.

In fact, he went out of his way to say we’re going to be making a lot of changes. We’re going to screw up some things. Okay, give us a little bit of grace on that. He outed what people said weren’t happening. In fact, Jack up on Capitol Hill said that shadow banning wasn’t happening, but in fact, it was happening. That really is irritating a bunch of the folks who tend to lean left. Here’s the guidance that I’m giving on Twitter to brands, which is go where your users are.

If your users are getting out of Twitter, then the importance for you to be on there is going down. If they’re still on Twitter, I don’t know half of them, three quarters of them, you need to stay on Twitter because your competitors likely will. What are you going to do? Take your thing to a Mastodon that gosh, if I hear whether it’s on the right or on the left, “Hey, we’re going to build this new.” What is that, like the Truth Social or something? That’s not doing very well.

Daniel Newman: Let’s build platforms, Pat, to make sure that there’s never any discourse. Let’s only just build echo chambers now.

Patrick Moorhead: No, I think that sounds terrible. If you’re a brand, I mean get off at your own. Beware, what are you going to go to? Something that is run by the Chinese that you have an even less percent of chance of probably getting what you want.
Anyways, be careful out there. I think at the end of 2023, Twitter will be looked at, it’ll be so boring because it will be successful, and people will come back to the platform that we won’t even be talking about it.

Daniel Newman: If I could just say one more thing. This is a little out of school for me, but maybe ’23 will be a new year for me. When you’re reading these files, the things that have been released, and I know a lot of people. To me, isn’t there a point where we all have to look at ourselves and say it’s possible that two things are happening, both of which I agree or disagree with and they can be politically opposite. For instance, you could say Donald Trump, Trump played a part of inciting a coup or a hostel, or whatever you want to call it, an insurrection.

You could actually look at the media, look at the news, look at the story, look at the data and say that happened. You could also look at these files about COVID that have come out, and say that’s scary that they went to such lengths to try to hide potential information from the population that was being provided by real credible experts in the field because it simply didn’t go along. What I’m saying is it’s weird how you can’t, and in this case see both things.

That’s to me feels like how we arrive at the center, is at some point you have to be able to realize that people on the right and the left do things both right and wrong. It’s not always just one side. People will completely, we talked about it with the Apple and China, Pat, because people want their iPhones. They right now happen to maybe see a different dictator as the problematic one, we completely give a pass to the other. My point is, can’t we see both as bad or good, or one is good, you know what I mean?

But I don’t know, it’s very interesting to me that we’ve lost the ability for nuance, lost the ability for subjectivity in these kinds of things. When I see both of these in both of those examples as problematic.

Patrick Moorhead: Yeah, that would be great. I did grow up in a world where thank goodness, that there was nuance and there was discussion. There was common belief and common view on something that brought the country together. I am hoping that will come in 2023, but quite frankly, I think there’s like a 0% of that happening. There have been, if you look historically over 500 years in society’s abilities to gel, it either comes at a huge weather event, a war or a sickness event.

We took COVID and we actually turned that into a way to bifurcate even more than we were before. The two other, the war thing is just too awful to think about because it would likely be a conflict with China or a nuclear war with Russia. Anyways, I am going to try to do what I can do to be as balanced as I possibly can, and look at it from all sides critically with fact and history, and things like that. I’ll admit, sometimes I get sucked in multiple directions at the same time, but Dan, this is a great kickoff to 2023. Let’s not end on nuclear war.

Daniel Newman: Let’s talk about something exciting, Pat. We are off, there’s our guy, Connor Canyon, big things. We are off tomorrow to CES, you and I, where the Six Five will be live on the road.

We’ll be doing a number of different episodes. We’ll share more from our accounts over the next few days. Falcom, Luminar, who else we got, Pat? Any others that we’ll be in the booth?

Patrick Moorhead: Yeah. We’ve got Micron as well, which I’m excited about.

Daniel Newman: We’ll be also doing maybe some daily shorts. You and I hopping on doing some videos with our puts and takes on everything that we’re seeing and saw. Look, 2023 is going to be a great year. We’ve got the Six Five Summit back in June. Back, baby. We’ve got CES, we’ve got Mobile World Congress coming up. We’ve got a slate of events and shows. We’ve got some go big partners that are going to be seeing a lot more of us at a lot more events. Pat, there’s some other really big things in our universes that are going on.

We want to share more with all of you very shortly. However, for this episode, for the first and the best of 2022 and a look at ’23, it’s time to say goodbye to y’all. Hope you hit that subscribe button, stick with us, be our friends. Look at all those impressions Pat’s driving on his tweets, on his Twitter @PatrickMoorhead, and retweet mine so I get those same numbers as well. But for this episode, time to say goodbye. We’ll see you later. Happy New Year, everybody. Welcome to 2023.

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