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We are LIVE! talking Cisco, Amazon, Lenovo, Splunk, Oracle, Qualcomm – The Six Five Webcast
by Daniel Newman | June 29, 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. The Recent Cisco Live! Event
  2. Amazon re:MARS
  3. The Splunk .conf
  4. Lenovo ISG Analyst Conference
  5. Qualcomm Acquires Cellwize
  6. Oracle Earnings Report

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 we are here for another Six Five Podcast. Both Daniel and I are videoing here from an undisclosed location.

Daniel Newman: Bunker.

Patrick Moorhead: Yeah, maybe. I mean, mine might have something to do with horses, and I might be in Florida. Daniel, how about you? You must be in a five-star hotel or something?

Daniel Newman: I’m in a hotel that has a star. Let’s just put it that way, and it’s not five.

Patrick Moorhead: Well, listen, two stars is better than one. Three is better than two. I had a pretty good night’s sleep. Gosh, been on the road for, I think, three weeks now, and I’m a little tired. You and I went to a couple shows together. That was pretty nice. But we’re back, man. Took a little bit of a break, right? Took a week-long break, but we’re back, and we’re bad. And by the way, if this is the first time you’re joining us, we cover six topics, run about 40 minutes. But we’re all opinion, a little bit of news. Anyway, it’s great to see you, buddy.

Daniel Newman: We did the Summit, and that was a killer run. And then we actually did our weekly pod the week of the Summit. And then due to some travel the week after, we had to take a Friday off. Came back this week. No slow down, no rest for the weary, whatever you want to call it. But we’re hauling. We’re cranking. And there’s just so much to talk about in tech. Quick disclosure: This show is for information and entertainment purposes only. While we are talking about publicly traded companies, please don’t take anything that Patrick or I say as investment advice. We just want to always make sure we get that out of the way. And I’ll revert back hosting duties now, but we’ve got a good show.

Patrick Moorhead: Yeah, it’s great. Yeah, we’re going to be talking Cisco, Amazon, Lenovo, Splunk, Qualcomm, and a little bit of Oracle. Daniel, it just seems like the news has just come out like a fire hose. It’s pretty crazy. But hey, let’s jump into Cisco Live, a show that you attended. Unfortunately, I had to do it virtually, but a lot of great stuff coming out of it.

Daniel Newman: Yeah, Pat, absolutely. So Cisco Live was another big week. It had a lot of topics, a lot of introductions, whether it was the remote-work revolution, security, application monitoring. This was a show where, first of all, Chuck Robbins got on stage, very excited to basically be back in a physical space with people. I thought they did a pretty good job of trying to keep everybody safe, but at the same time, getting a large group. That was the largest group I’d been with yet, Pat. We did IBM Think with 500 people. This was probably more like 5,000 people. So a big room, a big stage, a lot of things being focused on.

A couple things I thought was really interesting about the company is, one is you got a full sense that the remote/hybrid work is going to be at the epicenter of Cisco. But the hybrid work discourse or conversation or debate or whatever we want to call it is shifting, because in the beginning, hybrid work was all about collaboration apps. It was just about basically how do we get people on video. But what Cisco, I think, has identified as an opportunity, and you’re seeing this through that whole stack of things they’re working on, endpoint security, observability, the Webex integration updates, is they’re trying to really think about how do we tie together a hybrid work experience that takes into consideration connectivity, networking, application performance, runtime, and uptime, takes into consideration the branch office and how people stay connected. So there was a lot of focus on innovations at Cisco Live that enabled that.

Also, another thing I thought was pretty interesting was their updates to the U Learning Platform. Anybody that knows much about Cisco’s history knows how important the CCIE and the different certifications were early on in creating this extraordinary dedication between Cisco’s consumers, meaning the enterprises that bought Cisco, and the brand. Well, over time as the consumption has changed, as public cloud has grown up, as people have moved from being Cisco certified to being AWS and Azure and other certifications that have become in vogue, that the weight of the Cisco certification has fallen a little bit. So the company’s been focusing on trying to turn that around, and their U Learning Platform is really about accelerating, about creating a bigger stream of inbound and skilled professionals that are going to learn to build on Cisco.

And I think that’s going to be something that’s really important for the company because getting that kind of loyalty back… They’re seeing their business model change, Pat. For instance, we all knew the attached maintenance on every piece of Cisco hardware had been a great model for Cisco for a long time. But in the consumption economy, that model is shifting, and companies don’t want to pay an extra maintenance on every piece of hardware that they’re purchasing. Cisco’s reinventing. It’s rethinking its business model. It’s something that’s going to be a continuation.

But I guess I’ll say one other thing, because I know… I saw your article on the Webex stuff, so I’m not going to take too much of that platform because I want to leave you some oxygen on that one. But I did think the Cisco… Liz and Tony and the leadership at Cisco really made a clear statement that they’re going all in on observability. We’ll talk more about Splunk later because I was also at .conf this last week. But they almost bought Splunk. That was in the news because it was a real thing. They didn’t buy Splunk, but with their portfolio, with AppD, with a number of their different application monitoring services, Cisco is going all in on a full-scale observability suite.

And that’s something that, with the AppDynamics Cloud, with their ThousandEyes, basically putting this all together, they’re offering what’s called AppDynamics Cloud solution. And I think taking full telemetry, full data, offering full stack observability is going to be a hot topic. It still needs a lot of definition, Pat, but that was something that the company definitely leaned into. So like I said, across the board, there’s that. The other biggest thing is hybrid work and the Webex offerings, but I’m going to hand that to you.

Patrick Moorhead: I appreciate that. So first off, I appreciated Chuck reinforcing basically the four things you should be focusing on, which by the way, were the same things they talked about the last two years. So it’s good to see consistency. And when it comes to the enterprise, I think strategic consistency is important, but let me hit some highlights. Jeetu came in. He runs not only Webex, but also security. And he suggested this vision where you separate security and networking from everything else and brought up this idea of a security cloud. Was interesting, was new… It’s hard for me to poke holes in it, but I think, in the end, probably good for customers and obviously good for Cisco.

Then Todd Nightingale, the highlights from his talk is really, for lack of a better term, Merakifying Catalyst, right? So in the Cisco world, you had Meraki, which is cloud, right? They’re number one in cloud managed networks. Then you have Cisco Catalyst, which is number one in networking. But the challenge with Catalyst, quite frankly, it’s hard to use. It requires special training. And by putting this together, it really put an exclamation point on where Todd started, where he says, “Hey, for years, we delivered powerful capabilities, but it was just way too hard, way too complex.” And I did appreciate Todd acknowledging that Cisco had delivered complex systems, because that’s exactly what they’ve done. They’ve been powerful, but they have been very complex.

And kind of with an exclamation point on ThousandEyes, “Listen, observability is paramount, and every enterprise needs to be jumping into it.” And whether you want to call it full-stack observability, end-to-end, the amount of complexity is increasing. The bifurcation of ownership of all the different points that drive an application need to be monitored. And then you can imagine the next step on here is the AI capability to make changes before something goes wrong. That really is the kind of Holy Grail, and I like to call that the autonomous enterprise. So net net, a lot of stuff to… a lot of interesting stuff coming out of Cisco Live.

Daniel, let’s move on to the next topic, which is Amazon re:MARS. You and I spent, gosh, two and a half days there, which is a pretty big commitment. And what an exciting show! I mean, what does MARS stand for? First of all, this show is put on by Amazon and AWS, and MARS is essentially machine learning, automation and AI. The R is robotics, and the S is space. I can’t think of two more exciting topics to get into. But Daniel, it was just a cornucopia of geek. We got the chance to talk to the leaders from pretty much, I think, every one of the groups except for robotics. And you can read my stuff on Forbes. I cranked out another article last night about it. You can read my tweet stream. But I want to look at more of the bigger picture.

Daniel Newman: Also, our pods, man.

Patrick Moorhead: Oh yeah. Oh my gosh. Yeah, we’ll have four pods coming out as soon as our editors can get it out. But net net, MARS, this is the next generation of technology. I think it’s very clear to say that Amazon is the leader in digital e-commerce with amazon.com. They are the number-one market-share leader in IaaS and PaaS for the cloud. But it’s like what’s next, right? And to me, this is an expression to investors. This is an expression to potentially people who they can hire. This is their way of getting in on the next-generation opportunities out there. And also, I think, in many ways, it can be good for society, right? We saw technologies like BCI that can help people who don’t know how to communicate to communicate, people who can’t walk learn how to walk. In space, the ability to have data and process it, by the way, inside of the ISS, that can help people know when there’s a forest fire within three minutes of it happening in Brazil, to be able to stamp that out. So a lot of content, a great show, Daniel. Yeah. What’d you think about it?

Daniel Newman: Yeah, you hit it on the head, Pat. I couldn’t help the shameless plug for our shows, Six Five on the Road at re:MARS. We had a lot of fun talking… Pat, by the way, what I loved most about re:MARS is it just let us talk about things at a different level, call it maybe a different altitude, which is appropriate, than how we typically talk about it. Like, putting a Snowcone in space. We talk about Edge a lot. We talk about connectivity, IoT networking, but the idea that basically you’re going to build a cloud in space that’s going to look and feel a lot like the cloud we’ve built here on Earth is pretty neat. It’s pretty unique. Or the idea of how AI and ML is used in collaboration with neuroscience to create a brain-computer interface that allows someone that deals with severe paralysis and is no longer able to speak or communicate using traditional methods to now be able to communicate with the world.

I mean, it’s pretty mind boggling. I mean, an inch away from telepathy, right? The idea that our brains can still function, communicate, and that there’s people working on these really hard problems, these really interesting and hard challenges that our society face, and not just hyper focusing on some of the day-to-day things that, by the way, I love, but I like to sometimes get out of my comfort zone. So learning about lower-Earth-orbit space exploration, and the fact that Amazon Blue Origin is already working on developing and, by the way, pre-selling the ability for people that want to get to space. I mean, space is kind of becoming cool again. It’s certainly controversial, but it’s becoming cool again.

But I like they talked about things like extinction events, and I know that nobody wants to talk about that because it’s negative. But the idea that we want to talk about sustainability all the time and climate, but we don’t want to really talk about the fact that we continue to populate at a somewhat breakneck pace and we don’t really know what the capacity of our world is. You’ve got a company like these that… Not just Amazon, but the companies that they’re working with, looking to actually try to solve where do we put people when we’ve hit the edge of the resources that this particular planet can offer? And I think the question during that first keynote, Pat, was is it 15 billion people? I think we have seven, eight on the earth right now. Is it 10? How far are we away from the point where there is no more capacity?

So these are the things that, like I said, for me, I don’t know, as an avid and continuous learner, someone that never wants to be at the end of my rope, that I really enjoy the sit-downs that we had. And then by the way, some of just the pragmatic launches. You had some great shares this week, Pat, on LinkedIn about some of the coding capabilities that AWS announced.

Patrick Moorhead: Hey, let’s do a shameless plug for this interview that we did with Clint Crosier.

Daniel Newman: Oh, so good.

Patrick Moorhead: Yeah. I’m really excited about all four of the pods that we did there. But this is Clint, who runs AWS’s Space and Satellite business, him holding an AWS Snowcone, which by the way, we couldn’t say the day of, but the day after we were allowed to say that, “Hey, along with Axiom, this is an actual picture of a Snowcone being used inside of the International Space Station.” And I can’t think of anything more impressive and that defines edge computing than something like this. But yeah, sorry for the interruption there, though, but a real highlight there and…

Daniel Newman: Yeah, no. I mean, I was even thinking about our conversation with Broughton about just the abilities to… You know, how everybody right now when we’re using, whether it’s Google or Microsoft Word, and we can have our sentences fit. Well, now we’re doing that for coding. AWS is doing that for machine learning, where you can actually help coders code faster by using machine learning to train coders and train code to move quicker. Just a lot of cool things. So we could talk about a lot more, Pat, but there’s some very practical things.

Patrick Moorhead: Oh, yeah. Talk about practical, I mean, Michael MacKenzie, the interview. He’s AWS GM of Industrial IoT and Edge. His grasp of what it’s going to take to accelerate the industrial IoT, 100% spot on, so much that they’re actually building hardware modules at AWS to put on engine parts to help do predictive maintenance. So anyways, exciting stuff, exciting stuff, Daniel. Anything else you wanted to add to re:MARS?

Daniel Newman: No. Basically, keep your head in the clouds and, you know, always good.

Patrick Moorhead: Yeah. Kind of stay tuned. Our videos should be out hopefully on Monday. So super excited about that. So Daniel, let’s move to the next topic. Splunk had their big annual conference called .conf, which is pretty cool. Same week as Cisco Live in the same city. I wasn’t there for Cisco Live, and I wasn’t there for Splunk. So why don’t you kick this one off?

Daniel Newman: Well, you were there in heart. You were there in heart, because I sat down with CEO Gary Steele at their news desk, and it was a Six Five on the Road. And every once in a while, the bestie crew. We’re like the other besties, the better besties. We’re the better besties.

Patrick Moorhead: I don’t know, man. I don’t think it was a Six Five on the Road, baby. I think you went solo. I think it was a…

Daniel Newman: It was kind of like… It was supposed to be you and I, and it was very last minute. And then it wasn’t, and then it was. But my point was, it was sort of marketed that way. It just isn’t. It was kind of like at MWC when I was laying flat horizontal on my back with whatever virus that goes around every year. Sometimes we cover for each other. But the point that I was making is they wanted the Six Five there. Let’s just put it that way. Doesn’t everybody, Pat, want the Six Five?

Patrick Moorhead: Well, I think that’s our goal. My gosh, I mean, we cooked this idea up three years ago. The third year of the conference, I mean, 75 speakers, 25 CEOs. I mean…

Daniel Newman: Out of this world, buddy, straight out to Mars. But no, the fact is I had a great chance to sit down with their new CEO, Gary Steele, who’s really getting acclimated to the role, into the chair. Interesting moment for splunk.com, because over the last couple of years, Splunk has been in what I would consider to be a major business transformation. You’re talking about a company that had moved all of its efforts from a traditional ingestion-based monitoring and for IT SecOps and ITOps to a full-stack observability focused 100% on recurring revenue and moving and migrating customers to the cloud. So that’s been the company’s multi-year goal. They’ve also had a pretty significant leadership transition. Not only has Gary Steele came in for Doug Merritt as CEO, but we saw major roles pretty much across the entire senior management has changed. So that’s what I would say is a company in transition.

What’s interesting, though, is despite a lot of uncertainty, transition, new leadership, and having some decent competition… IBM’s investing in observability, acquired Instana. You saw what Cisco’s doing around observability. All the public cloud providers are offering varying levels of observability, application performance management. Splunk is actually… And by the way, you spoke at a LogicMonitor event. They’re doing some interesting things in this space. But somehow Splunk has sort of kept itself as a kind of uniquely best of breed, as seen as for their observability. They have almost the entire Fortune using their products. Their growth of million-dollar customers, subscription customers, is growing extremely quickly, and they’ve been able to keep that reputation.

But at the same time, you also saw some vulnerabilities. I mean, like I said, they almost… I believe… No one knows for sure, but I believe there was almost a deal to be done, and Splunk was almost taken into another company during this kind of interesting market time. So at the event itself, though… I guess the reason I kind of point all these external factors out is it wasn’t a big announcement event, which is historically what .conf has been. It’s been announcements. This event was more what I call a reassurance event. It was the opportunity after multi years of not getting face to face with customers to have a heavy-duty dose of in-person interactions with this new leadership team, with this new business model, to reconnect and create confidence in the market that this Splunk strategy is, in fact, going to work.

So having spent some time with Gary Steele learning about the business and also having spent time… By the way, he spoke at our Six Five Summit. I’m starting to see this guy gets it. He comes from a background of working with companies that are in a similar size, taking them public. He’s also been in the process of taking companies private. I don’t get the sense that that’s what Splunk’s looking to do here, but obviously, everything’s on the table if market dynamics get weird enough.

In terms of the big focus, though, there was basically one, and that was really this general availability of this Splunk Enterprise 9.0. So if I turn the direction just to kind of on the product side, that was the big thing. That’s the big focus. It’s the 9.0 release. And it’s really getting people to the Splunk platform. And if you don’t hear this word platform enough, they… Just like every other company on the planet gets, you don’t win business by selling features. You don’t win business by selling software in a vacuum. You have to have an extensible platform.

Pat, I feel like you and I had a conversation the other night. I can’t even remember what it was exactly about, but I remember we talked about essentially the difference between features that became companies during this last wave of growth. And companies that are going to grow and become successful in the long term are the companies that figured out how to grow from having one kind of killer app or one thing that people are buying to having a platform that people are building on. So that’s the big opportunity for Splunk. That’s also the big question. Release 9.0, their cloud migration, and their subscription consumption model gives them more depth there. But I see a lot of competition coming, and they’ve got a lot of work to do to stay seen as the leader in the observability space.

Patrick Moorhead: Listen, observability is hot, hot, and more hot. And the reason is, is because the complexity and the bifurcation of every piece of an application is spread all over the place, right? It’s not just the good old days, where you had on-prem, and then you built your application, and then people came in. Now you have resources: IaaS, PaaS, SaaS, different APIs, multiple APIs. You need to figure out what the heck is going on. Then you’ve got devices, right? You have multiple devices that are out there. You have smartphones. You have tablets. You have PCs, and you have to be monitoring your infrastructure. So it is a complex world, and I think all I’m doing there is establishing the market case for observability. But listen, there is an incredible amount of competition there. And I do think that Splunk is at a crossroads, where what got them to the game is not necessarily what’s going to take them to that next step.

CEO Gary Steele, he hasn’t been in the chair long enough, I think, for him to bring the tablets off there. But listen, there’s a reason he’s in that space and that there was a CEO change. The board was obviously looking for something different. So there is change coming. The conference just wasn’t the place to do it. But I mean, you have companies like LogicMonitor. You have New Relic. You have Startup Observe that’s sitting on the back of Snowflake. You have some of the more traditional companies, like Dynatrace, out there. There are a lot of people coming for this company.

One of the benefits that I see from a value standpoint, Daniel, is some of the traditional on-prem infrastructure folks, the HPEs, the Dells, folks like that, I see a huge opportunity for acquisition of some of these observation companies. Why? It gets them into the game of monetizing the public cloud and SaaS, where they really weren’t doing that before. But listen, I look forward to actually meeting Gary. You’ve got the jump on me on that, and I’d love to go to one of their events coming up.

Daniel Newman: We’re working on it. We’re working on it. We’re going to get the Six Five in there and truly the Six Five, which isn’t ever really a thing if it’s not the both of us, buddy. So listen, I’m on it. This is on me, but this is an interesting space.

Patrick Moorhead: It is for sure. Speaking of interesting, let’s move to Lenovo, a company that absolutely is crushing it from a growth standpoint. So years ago, Lenovo bought the assets of IBM’s server and networking business and a little bit of storage that was in there. And Kirk Skaugen, an ex-Intel leader, has been there for nearly six years, which I just consider a complete turnaround. I mean, some highlights, they were actually profitable after years of losing money. Growth was at 13%, which, by the way, for hardcore infrastructure is pretty amazing.

And some of the things that Lenovo has been able to do that none of the other infrastructure players have been able to do is they are actually a huge provider to the hyperscale community, tier one and tier two. They’ve been able to do this through an ODM+ model. And essentially, they bridge the gap between ODM and OEM, managed to push out, push a lot of folks, traditional vendors out of the market. They’re even taking market share from ODMs. So it’s hugely unique and innovative.

One of the ways they’re doing it is, unlike most traditional stuff, they actually have their own factories, 22 million square feet of factories. They do SMT lines. They do final production. One of the largest manufacturers in Mexico. And news flash: Lenovo is not just China business. They’re about a third, a third, a third, North America, Western Europe, and Asia. So they’re not even remotely comparable to somebody like a Huawei. By the way, I can’t talk… They gave us roadmaps. They gave us their future strategy. I’m actually looking at it right now. I’d like to rattle it off, but I signed an NDA going in there. But super impressed with what they’re doing.

I’ve met with Ken Wong on the ISG side for services. He runs the other division. He’s a peer with Kirk. You combine ISG with SSG, the services group, and I think it’s going to be a killer combination coming up. Watch Lenovo in storage, folks. They’re crushing it on the server side. Just wait till what you see in storage.

Daniel Newman: Yeah. Pat, you got to use your NDA as a cheat sheet to not have to say too much, but to tease everybody that there’s a lot going on. What I like about Lenovo is that they’re in so many different things, but it’s like they are not ever “me too.” Yet at the same time, they’re extraordinarily good at finding their niche. I had a really interesting conversation with a journalist yesterday about their TruScale, for instance.

Some companies right now that are trying to build out these on-prem cloud… I just feel weird when I say it… but these consumption-based, on-prem services for the future of hybrid cloud, they’re really building this super vertical and horizontal software-based thing that’s basically putting their users in a position where they’re choosing like, “Do I want to build on AWS, or do I want to build on this container software, or do I want to use this centralized platform for a control plane?” Because as we see hybrid cloud come together, all these pieces, software has always ruled the roost. This is where VMware’s had such a great advantage for such a long time, for instance, is VMware has handled all the virtualization for basically every enterprise on the planet for the longest time. And even though Tanzu’s been a mediocre product from… And again, this is more of what I’m hearing. I don’t use it every day. That’s opened the door for things like OpenShift. VMware’s been able to be very sticky there.

Well, if you look at TruScale by Lenovo, the way they’re thinking about it is we’re not going to try to really compete at that software layer. We’re going to compete on the fact that companies need to get their workloads into these hybrid cloud environments, and they want to pay for it in a consumption modality. They want a consumption mechanism to pay for this stuff, and we’re going to make it super easy with the software that these people are already using.

So it’s slightly different, yet it competes entirely. And yet they’re able to carve out a niche, because across this Lenovo portfolio, they have so many customers that are using their stuff, whether it’s on the infrastructure side or it’s on the PC side, that they’re able to kind of create a stickiness. It kind of reminds me a little bit of how Dell has been so successful over the years, by the way, of just having this really great force of being able to attach more and more and more to every customer that uses their product.

I think the company’s getting more and more innovative. I think it’s becoming more and more confident. I think it’s starting to find its legs and its story as a higher-value, higher-service organization, because I do think they’ve sort of done a really good job in that middle-to-lower opportunity of being differentiated, of being aggressive, of winning deals. Obviously, their margins are always a little smaller. Huge top-line numbers. The margins aren’t always as big. But as their service portfolio grows, you’re seeing that margin expand, and they’ve had some record numbers. I mean, the last few quarters… We’ve done the earnings here. You can go back and look at our earnings commentary, Pat.

But I guess all I’m saying is, as you sort of tie it together, I just continue to be impressed that Lenovo just knows how to find where it fits in all these different markets and gets really good at it. And I give credit to people like Kirk, like Matt Zielinski, like Vlad, who we work with. We get to work with a lot of their top executives. And they’re finding their way, and they’re creating more and more relevancy for Lenovo, and by the way, dealing with any of the connotations with China in a really positive way, where the company continues to grow, gain strength, gain confidence in the market, and compete not just abroad, but here in the US very strongly. I wasn’t there, by the way, so I’m just riffing because I have an opinion about everything. But we did have our analyst team there, and what I can say is I do continue to be impressed by Lenovo.

Patrick Moorhead: Yeah. Susan Blocker is really knocking it out there as well. The final thing that I want to just add on this is they really strike me as a company that they have an awareness problem. Wait, Lenovo makes storage? Oh, they do? Well, if you’re in Asia, you probably know. If you’re in North America, you probably don’t. So that’s a marketer’s dream, when the more you know me, the more you’re going to love me. That means you have an awareness issue. And once you get the awareness taken care of, you can move them down the funnel. But overall, a great event. Daniel, let’s move into an acquisition that Qualcomm made. I mean, gosh, company on the move here.

Daniel Newman: By the way, I love that you said that, just what you said about the more you know me. You almost sounded like Bill McDermott in the recent interview I did with him. He said almost the same thing. The only problem he has is if everyone knew him, the business would be this big. Not everyone knows us. Yeah. So Qualcomm continues to expand. The number-one focus of the organization has been on getting clear market buy-in to its diversification strategy. CEO Cristiano Amon, I think, is very confident that the company’s device business, its high-end and premium-tier, 5G, Snapdragon and technologies and licensing are all pretty robust, solid, and well-entrenched. But what he’s pretty continuously articulated in all of his market commentary is he doesn’t feel that what is fully appreciated is the business’s diversification, which is the new routes to market, whether that’s PCs, automobile, automotive, IoT.

So the company continues to make acquisitions that are extending sort of the way the company goes to market. And that’s what made this Qualcomm acquisition of Cellwize, because it is in their space. It’s in the RAN space. Basically, Cellwize is in the space of 5G network deployment, automation, management software. And essentially what Qualcomm is looking to do is to utilize Cellwize to help with multi-vendor RAN automation and management and tying it together to what Qualcomm already offers as a leading 5G RAN platform. So as I see it, this is an interesting new go-to-market modality for Qualcomm because they’re getting closer and closer to having to work and actually have the operators as customers buying.

Typically, their market was the ODMs, and there would be kind of this circular relationship that would exist. Qualcommm would help the ODMs build devices. Those device makers would then work with the operators to make sure they were certified. But as Qualcomm becomes more integral to the actual network itself, to the RAN layer itself, these customers start to have to come to Qualcomm more and more. And they’re feeding off of that relationship directly with Qualcomm, which I don’t think should surprise anyone. It’s kind of like building the semiconductors that are going to create the automobile. It used to be done by OEMs that were kind of these Tier Ones that lived in between the car makers and the chip makers. And now the chip makers are just working directly with all the car makers. This is kind of the same thing that’s happening. Qualcomm is going to be working much more closely directly with the operators to be able to help them deploy private and public 5G networks at the pace that the market is expecting.

So as I talked to Derga Malladi, who runs the business… And there’s a pod, and I’ll put it in the show notes, that we did. The long and the short was that this is all about enabling the mobile network operators and enterprises to monetize 5G. There’s a lot more there, but you know what, Pat? There’s just a lot to cover, and I know we only have a few minutes left. So I’ll pause there because I know you probably want to bounce back a few things. But it was a good strategic acquisition that’s going to expand the company’s business, and it’s going to expand the depths of its role in 5G.

Patrick Moorhead: You sucked a lot of the oxygen out of the room, but you did get the interview with Derga, so congrats. What really struck me on this is this isn’t hardware. This is automation and orchestration. This is very different for a Qualcomm to get in this. In fact, I’m unaware of any application or any type of capability that even comes close to this. So it’s one thing to be into hardware. It’s another thing to be into software. Qualcomm’s clearly creating a, I would say, a half-stack platform, right? The reason I call it half stack is you have to add the applications to be a full stack, but still impressive nonetheless.

And I think what we’ve learned is that customers buy into solutions as opposed to a bag of parts, and this is one step closer to that solution. So a big part of Qualcomm’s diversification strategy. It’s interesting. We’re seeing the company not only hit the edge, but start to come in off the edge, right? So consider you have chips, you have smartphones, you have RF that’s going to be connecting to the base station, that’s going to be connected to the RAN, and now an open RAN. So there we go. Going to be watching this a lot.

So Daniel, let’s get into our last topic, and this is Oracle earnings. I mean, basically they crushed it, right? They crushed expectations. Maybe the expectations were low. Maybe they just crushed it. But listen, they beat on the top pretty well and substantially beat on the bottom. The day that they closed, they were up 12%. And while a 5% boost in overall revenue isn’t something to necessarily write home about, or a decline of 6% in net income, what people were really excited about was the continued march of cloud.

And whether you want to… If your definition of cloud is IaaS plus PaaS, like Gartner, they had 19% growth. IaaS, which AWS is known the most for, 36%, folks. Okay? That is nuts. And just to close out the IaaS and PaaS, you look at SaaS. You had Fusion ERP at 20%, NetSuite ERP at 27%. A clear shot across the bow to SAP out there. Notice, probably the last eight or nine quarters, Daniel, they keep focusing on ERP when it comes to Fusion and NetSuite.

And then probably in the biggest array of customers I’ve seen them roll out, they rolled out 2K studies for financial cloud. 24 customers they rolled out for OCI, and 43 customers they rolled out for SaaS apps. And I really do appreciate this part, this type of openness that Oracle provides in their earnings. I’ve got to tell you, this is absolutely no longer a fluke. Am I surprised at their strength in SaaS? No. Am I surprised in their strength in PaaS? Eh, maybe. Right? When it comes to API, if it’s something storage and database, I get it. But IaaS? Really? I mean, Oracle, the company that started off as a database company, had 36% growth in IaaS. It blows me away, Daniel.

Daniel Newman: Yeah. I mean, the company’s got a 10-plus-billion-dollar cloud business now. And a lot of people were critical of Larry Ellison’s overtures about where he was going to take that business. But at some point, you have to say, “That’s pretty good.” I mean, it’s pretty good. Not to mention you’ve got 74% recurring subscription to your main core business that generates tons of profit. And in a market of instability…

When I wrote my MarketWatch piece about companies that are going to basically be your best bets during this risk period, Oracle’s like a perfect example. They’ve got a growth engine, double digits in their SaaS and now IaaS space. They’ve got products that are evolving and meaningfully improving, which you and I both said Gen One stunk. Gen Two has been fantastic. The autonomous products, database, that stuff has been very, very good. The NetSuite, that portfolio, all good.

Pat, the other thing we’re not really acknowledging, though, is that growth rate actually puts them on a very similar clip to Google Cloud and the recent growth from AWS. It means they’re not actually losing ground anymore. They’re not necessarily gaining any ground against those bigger players, but they’re actually keeping pace, which means when we always talk about that kind of overall outsized market growth, they are keeping pace of growth with the bigger cloud space. They’re a player. That’s, I think, where we’re at right now. Are they number three? Are they number four? I think that’s to be determined. But you can’t continue to say, just because the old Oracle isn’t cool, that you don’t like them.

Remember, and I tell people this every day, Pat, but six, seven years ago, Microsoft wasn’t cool either. There was a time when that was different. So is this the beginning of that kind of transformation to Oracle becoming a hot, cool, savvy company? I don’t know if the landscape will open the door to that, but they’re doing a lot of things right. The growth is legit. The customers they’re winning are real customers. And 10-plus billion in cloud revenue, I’ll take a piece of that.

Patrick Moorhead: Absolutely. Absolutely. Yeah, it is amazing. When Oracle said they were going to be big and hyperscale, I was just like, “There’s just no way.” But congrats. Hats off to them. It’d be great to see a strong number three, number four, number five. So I think right now they’re sitting about four. You put in SaaS into that, they’re even bigger than that.

So Daniel, great show, man. It’s great to see you from our undisclosed locations. Folks, not the best visual here, although I hope you do appreciate the jumping horse over my right shoulder here. So with that, I’m going to bid adieu. Have a great weekend. Thanks for tuning in. And by the way, we took all of these Six Five Summit videos and put them on YouTube. They’re unbridled. Hit Twitter or LinkedIn to get the deets on that. But I think you’re going to really love them.

Daniel Newman: And we’ll be sharing them on Spotify and iTunes and Apple or wherever, Apple Podcasts. Wherever they’re shared, we’ll be dripping those out over the next several months as well. So can’t get enough, buddy. Can’t get enough.

Patrick Moorhead: Take care, everybody.

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