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:
- Alphabet Earnings
- Earnings from Microsoft
- AMD Earnings
- Earnings Report from Amazon
- IntelON Developer Event
- Cisco Expands Webex Ecosystem
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.
Daniel Newman: Hey, everybody. Welcome to another edition of The Six Five podcast, our weekly show, episode number 100. Yep, it is true, Pat. Mind blown. Actually, this is our 100th organic weekly not interview, not summit, just our 100th show. Buddy, what a run it has been. I still remember just before COVID started when we were like, “I know we’re not the same company. I know we’re kind of almost competitors, but we’re also really good friends and we have really great discussions. You want to start a podcast?”
Patrick Moorhead: I know. It was your idea, I’ll give it all to you. It didn’t take me a lot to get convinced though to jump on that. I was doing a podcast with Ryan Shrout when he was in the game before he went to Intel, so it’s not that I wasn’t podcasting. I just wasn’t podcasting with the Daniel Newman.
Daniel Newman: Well, you know what? It made sense. It’s been a great run. I could not be more excited. I heard, Pat, you’re going to give away one of your various condos. Is it the south of France or is it the one that you have in Santiago, Chile? Which one is it? I know you have condos all over the world, like what? 40 or… no, I’m kidding.
Patrick Moorhead: Can’t I just give away the mega yacht that I keep in the south of France?
Daniel Newman: I love it. I love it, buddy. Hey, listen. This was a really interesting week, a big earnings week, a couple of great events week. Pat, this doesn’t quite qualify as Earnings Palooza because we actually aren’t only going to talk about earnings, but it was the big week for earnings. It felt like 100 companies reporting, some that we pay a lot of attention to. We’re going to talk about those today. We’re going to talk about Alphabet, Microsoft, AMD, Amazon, but we know Apple, Service Now, what else? A whole bunch of other tech, Facebook, Twitter, all of them reported in the week. Facebook changed its name to stupid, I mean Meta. What a dumb, dumb, dumb idea. I just want to get that on the record, I think that’s a dumb idea. We’ll come back to that sometime, probably not today. All right, we’ve got a great list.
We’re also going to talk about Intel’s Innovation or Intel On, the developer event… a lot to unpack there. Then, of course, CISCO had a big event unveiling some innovation around its WebEx One platform. We’ll wrap up on that note. Now, quick disclaimer, this show is for information and entertainment purposes only. While we will be talking to and about publicly traded companies, please do not take anything I say or Pat says as investment advice. All right, rock and roll. Patrick Moorhead, I’m going to let you go first. Let’s kick it off with Alphabet, Google earnings.
Patrick Moorhead: Is it Google? That’s always confusing. Anyways, let’s dive in. As industry analysts… well, I’ll speak for me because I know you take earnings to the next level. But as an industry analyst, it’s really this quarterly check-in to see if the company has done what they said they were going to do. For me, as opposed to looking at it… let’s say, necessarily as an investment device. But Google had a very good quarter, and kind of shocking when you look at how Amazon and Apple came in and kind of bit the dust… but, more in line with how Microsoft did and how AMD did. They did well. The thing that I focus on the most, and I’m definitely going to leave you some oxygen on this one, Daniel… is I really focused in on Google Cloud. It’s not that the rest of the business isn’t interesting, it is. But it just more aligns with the research that I think we did. Google Cloud is doing great, 44% increase in revenue, which I think is fantastic. They’re no longer this small entity that… you can say big percentage gains, small number.
They did nearly five billion dollars in Cloud revenue. Now, their Cloud revenue is cut across ISPs and SaaS. They have a very robust workspace, but they also have a very robust IS business down. In their last conference, they rolled out not just Cloud native companies, but they rolled out people like GE, who I can say with confidence is not a tech company or born in the Cloud. They also narrowed their Cloud loss by 50% year-on-year, previously they lost 1.2 billion and they lost around 600 million for the third quarter. If I kind of optic back, and you know I love to do this, and do some comparisons… is they are much bigger than Adobe now, which if you think about it is incredible. Now, they’re in different businesses and you can argue that Adobe is narrower in scope, but Adobe’s been around forever. It’s pretty sure that they’re on everybody’s desktop, even if it’s just for a PDF. Then, I’m curious, what’s the next step? Is the next step, they’re going to come after Salesforce in terms of size. Good quarter overall for Google and again, Google Cloud really doing well.
Daniel Newman: I attended Adobe MAX this week, and I think it really depends on what you’re looking at when you speak to Adobe because it’s business is different. It’s focused on analytics, it’s focused on creative, it’s focused on documents. It’s not really focused on IS at any level at all. It’s focused on, really, helping companies deliver these experiences on the web and then being able to analyze them and digitize them. But yes, we’ll have to talk about them another time because this is not a segment on Adobe. But since you brought it up, I could not help myself and it was timely that was another event, by the way, that I spent time at this week. Good Lord, Pat… look, you hit the Google cloud thing on the head. The revenue is bigger. It is a smorgasbord of inputs that creates that five billion.
The IS number is growing, the losses are narrowing, and the company is looking that its investments could at some point pay off. The funny thing, though, is its Cloud business is such a small percentage of its overall business at this point. It’s not even 10% at this juncture and it’s not contributing profit, which is sort of an inverse of what you got going on at AWS, where it feeds the profit. In fact, I believe… and we’ll talk about Amazon later. Amazon only made a profit this quarter because of AWS. You got this kind of inverse thing that everyone’s looking at, why can’t Google make any money on the Cloud and what’s it going to take to get them there? But the beauty is when you’re creating $28 a share in income, you can take some risks. That’s what they’ve been doing with Cloud, it’s a long game for them. One of the things that is worth pointing out, and it’s a little bit off our typical… we’re not ad people.
We don’t do a lot of work in the ad space, but we do get asked quite regularly to opine to the media about the social environment. We use it very voraciously… is everyone thought that the Apple ID, if changes were going to just crush all the advertisers. For Google, it’s not really impacted them at all. I said that it’s because all of the people that use Google provide the data directly to Google. Apple, where they really were hammering users was when it was people using different applications that required those third party, those cookies, to be able to track and trace your activity across the internet. Well, Google gets people on its own platforms providing their own data, so it hasn’t affected then. In fact, their revenues are growing. Their advertising overall has been strong, slight increase in traffic acquisition. But like I said, their overall revenue has been very robust.
Good quarter for Alphabet… frankly, Pat, when they came out early in the week, along with Microsoft having done so well, I would’ve thought the rest of the week was going to go better than it actually did. But Alphabet’s on the right track. Google Cloud is one to watch, although I’m still not sure their IS business is bigger than Oracle’s.
Patrick Moorhead: No, I don’t think it is either. Daniel, it’s interesting, I was wondering when… Google having its own big platforms would kick in because the whole mobile boom and the other folks who got hit by the Apple advertising key. Google owns the browser with Chrome, and quite frankly, they own the smartphone with Android when you look at a global basis, even though there’s a lot more ad dollars in the United States.
Daniel Newman: Absolutely. Let’s move towards another company that out-sized the market, absolutely crushed it. This is just another quarter after another quarter of having tremendous results. Microsoft. I don’t even know what to say, Pat. My bullish sentiment here could not be more validated by this particular quarter’s result. Satya Nadella is absolutely crushing it at every corner, getting everything right. I’ve got one, maybe hiccup, caveat, question mark in their entire business right now, 22% year-on-year. This quarter, everybody sort of felt that with inflation, with supply chain, with labor shortages, with a return to normal that these earnings were going to not be as good. Microsoft is diversified as it is, it’s got a mix of enterprise and consumer, it’s got Cloud. It is unfazed, biggest growth in three years after last quarter’s biggest growth in three years, 22% on the top line. It beat on earnings it’s Azure business, again, over 50%. I keep saying 50%, eventually it’s going to have to fall. It had a momentary blip where it dipped into the mid 40s and then the last two quarters back over 50%. Azure is on fire.
Then, you’ve got the Productivity business, Pat, you got Office, LinkedIn is growing at a breakneck pace. By the way, kind of an unsung hero of Microsoft is that LinkedIn and that gold mine of data that they have acquired. Everyone forgets that Microsoft is a social company. You’ve got the social developer community in GitHub, you’ve got the social business community in LinkedIn. Sure, they don’t have an outrage platform for political discourse, but in terms of actual meaningful mined data for enterprise, Microsoft is an absolute rockstar right now. Across its different segments, it had growth. It was green in every area except for, I believe, in the last quarter in the Windows OEM and Xbox content had a slight decline. The Xbox stuff was maybe a little more surprising, but supply chain’s holding it down a little bit. Windows OEM is supply constraints, that was actually going to do it. But you had areas like Search growing 48%. You had Office and Commercial… Office 365, 25, Dynamics, 33.
I believe Dynamics ERP, the Cloud version’s in the 40s so it’s actually growing at about twice the rate of the CRM and service Clouds of Salesforce… big numbers there, Pat. I’ll take it home here. I don’t know what I have left, but my only beef has been… I don’t understand why Surface has done so poorly throughout the whole pandemic. This quarter actually kind of made sense because of what happened with supply, but it had another double digit decline and it didn’t grow as much during the pandemic. Pat, I use Surface, I love the product. Why are they not able to grow more? You work a lot closer with that team, so maybe you can even answer that with your response.
Patrick Moorhead: First off, they’re barely in the top 10 of unit volume just because they’re Microsoft. The other thing I’ll say is that Xbox is not necessarily high volume compared to PC. They might do really well with Xbox and have some volumes there, but the biggest volumes is in the PC market. If you’re barely in the top 10, you are going to get scraps even if your name is Microsoft. That is the reason. Companies like Dell and Lenovo have just run rampant across the entire supply chain when it has come to PCs. Who comes into earnings the last six weeks and doesn’t even…? It’s funny, they talk about supply chain and their earnings, but it was the additional 10% they could have sold, not the 25% growth they had before. That is the reason. Surface has the most competitive line I’ve ever seen for Surface, ever. It’s been over a decade that they’ve been in business, but they just can’t get the goods.
They’re not being held up by leading edge Silicon, they’re being held up by things… USB controllers and stuff like that. But, let me dial out. It’s interesting, Daniel, your conversation juggled some things in my brain. Essentially, Microsoft is taking advantage of the biggest things in the marketplace today. If you look at Cloud, and I put it in air quotes, up 36%. Azure plus, this is the new one that I need to get underneath, Azure plus other Cloud services… I don’t know what that is, at over 50% growth. That 50% is obscene. I think on a percentage basis, not only is it higher in number, but the growth dollar I think may have been higher than anybody. SaaS is hot. Dynamics 365 and all its capabilities, 48%. Listen, you and I are always impressed with how NetSuite’s doing, how Fusion Apps are doing on SaaS, that 30% growth rate, but 48% is just absolutely obscene. I was a little disappointed with Office 365 coming in at 17% growth, isn’t that funny? Disappointed at 17% SaaS growth, maybe they’re starting to peak on Office.
Who knows? We’re going to have to see. What’s the other trend? Everybody quitting their jobs. Where do most people in the west go to go start looking for a job? LinkedIn up 42%, pretty crazy. By the way, to your whole Microsoft is social, the one thing you didn’t talk about because you were talking about Enterprise is Xbox Live is one of the biggest social platforms, albeit, for gaming on the planet. They’re very much a social, even though they’re not stirring up political ire with the type of platforms that they have. I’m going to end this on Xbox hardware up 166%. We’re not even before the holidays here, folks. That is absolutely insane. I don’t think that’s just channel fill, either. I think there’s some real end user poll. I don’t think it’s the million Xbox’s sitting out on a barge out in the San Francisco Bay or something, but overall just crushing it. I think if I dial out and look at everybody and how they did, if I had to pick a winner, it’d probably be how Microsoft did this go around.
Daniel Newman: Microsoft had just a fantastic quarter, Pat. Another company that outperformed, did well, raises some question marks about the whole chip shortage and supply chain, the PC space… not the growth it’s had the past few quarters, but still a really remarkable growth comes from AMD. Lisa Su, watched her on CMBC the other day. I had a chance to talk about them on Bloomberg Tech early in the week, Pat, but I always like getting your take on this company, as one of the early AMD execs. You watch them so closely and always have great input.
Patrick Moorhead: I appreciate that. I kind of looked smart years ago and everybody was saying that AMD was going to go out of business. By the way, my take then was, you know what they could. They needed two things to come in. They needed Intel to have major issues, that was the first thing. The second thing that they needed to do was flawlessly execute. Actually, there was a third thing, which is bring something monumentally different. We know what happened. Intel had stumbles, AMD flawlessly executed, and they brought a disaggregated design to the table, which was super risky, but they absolutely pulled it off and the rest of the industry is following them on that. They just got to it first. AMD did exactly what you would expect. If I were to put a description on this earnings it’d be, isn’t growth mode fun?
Revenue up 54%, gross margin up 70%, gross margin percent up 450 basis points. Op Inc up 111%. Net income, 137%. Those are gap numbers, not non-gap, but you get the idea. They were very close. The why is, it’s very simple, they doubled the size of their data center market… that’s EPYC plus Instinct. AMDs being still a little bit cagey, not breaking out EPYC and not breaking out Instinct and not even breaking out Graphics. I don’t think it’s a story they want to tell at this point, to be honest. They’ve had growth, but not growth like in Invidia. CCG, which is essentially CPUs and GPUs for the client, 44%. They increased their ASPs, which is great. I’m pretty sure they gained revenue share. They probably lost some unit share, though, to the folks over at Intel. ESC division, which is a combination of EPYC and Semi-Custom up 69%. That is the reason that the gross margin was up so high because the gross margin on EPYC is just monumental.
A cautionary tale though, AMD needs to be very careful in how they move forward. You have Intel architecturally who is adopting what AMD did in a more distributed. We’ve got 3D packaging that AMD hasn’t… maybe they’ve shown one of their cards so far and I’m convinced until otherwise that Intel is in the lead on this. If the market shifts like that, we could see AMD having trouble getting 54% quarterly growth in the next couple years.
Daniel Newman: There’s always an end to every great run and there’s always a turning point. Overall, AMD seems to still have the momentum them as Intel continues to redesign its entire existence, but in a way that I think the market is increasingly starting to get their arms around. We’re going to talk about that more later when we talk about Intel On, Pat, but it’s hard to not look at what the company was able to accomplish this quarter and say, “Wow, this is a really good result.” I think we’re going to be very interested when Mercury and some of the other market size numbers, market share numbers start to come out to see exactly what happened. Like I said, I think the time for AMD to grab market is starting to come to an end, though. It’s been very easy for the past, seemingly, eight to 12 quarters, and it’s not going to be as easy anymore.
Intel’s got a much clearer path. Of course NVIDIA’s very competitive and the Arm acquisition’s still out there lingering and we’re seeing more interest in that particular tie up and what that could mean for the business. But like I said, Lisa Su is just an impressive leader, she just seems to get things right that need to be right. They are benefiting from being much smaller overall revenue than Intel, so you don’t need to have as much to grow. But watching into the next few quarters, seeing if they can sustain this level of growth is going to be what everyone’s eyes are on. Then obviously, Design Link’s tie up. Does that get approval? It’s still out there, it’s lingering. It’s a big deal for the company, FPGAs, ASICs, new architectures, all high interest. It was a big commitment, big dollars. The market’s waiting now. Is this going to get over the line with all the attention on semiconductors, shortages? I believe it will, Pat. My instinct is this deal will get done. It has a higher probability in my eyes than the Arm deal getting done, although I think both are still possibilities.
Let’s keep moving, Pat, to our last earnings. This one we will talk about Amazon. Pat, where do we start here? The headline from CMBC was “Amazon badly misses on earnings and revenue gives disappointing fourth quarter guidance”. Now, we both, I would say, are fans of CNBC. We watch it, we hop on from time to time and talk on various shows. I felt that was a little bit of an overstated… especially considering I think they came in… when you say badly misses on earnings and revenue. A bad miss is 110.8 billion versus 111.6. I guess 800 million is a big gap, but you’re talking about $110 billion in revenue in a single quarter, 15% growth year over year, by the way. They’re still growing. People were pounding on Apple, apple had high 20% year over year growth. I don’t know what the market has come to expect. I think we’ve absolutely lost our minds in terms of what we’re expecting from companies. Now, on the earnings side, Andy Jassy has had the difficult two quarter in a row since taking over the helm of actually having to explain misses.
The company didn’t miss for three years and then he comes in… I guess Jeff’s like, “I’m out of here. Andy, good luck with these. We’re going to come up short for the next couple of periods.” But, they came in at 612 verses 892. Now, Amazon is a massive business. You know what we talked about with Google or Alphabet that we talked more about the Cloud? With Amazon, we have a diverse set of coverage areas from the kind of corporate affairs looking at ESG efforts and more of the company’s broad E-commerce growth to obviously looking at the AWS business very closely. On the commerce side, it’s one of these juggernauts. AWS is the profit hound of this company. AWS, 39% growths, 16 billion… basically, it’s the only reason that Amazon made money this quarter. But at the same time, you’ve got a company that… and I can’t understand this. We want to regulate this company. Everybody complains about this company, but yet they hire hundreds of thousands of people, they have 275,000 more planned hires. I think their average wages have jumped to $18 now, so they’re pushing the wage barrier.
They’re offering free tuition. They’re doing all this upskilling work. They’ve spent billions of dollars on sustainability and ESG. Concurrently while all this is going on and they’re doing all these things, small business in the billions of dollars… we want to complain about the platform. We want to complain about them not paying enough taxes. We want to complain about that they’re not good enough corporate citizens. I’m puzzled, I’m actually puzzled. Jassy said, “We’re basically going to do the right thing. We’re going to grow. We’re going to sacrifice our earnings temporarily to make sure that we can continue to build these massive fulfillment centers, that they can pay people enough wages.” Yes, Pat, when you’re this big and you’re this large, you’re always going to have things you can do better. I saw some stories about people’s benefits and being able to get benefits correctly.
If you have 1.3 million employees, there’s going to be growth challenges. But Pat, I got to say, yes, the company missed. They’ve got 130 to 140 billion guided for the holiday season this year and people are complaining about that, they’re selling off the stock. Jim Cramer, who changed the acronym from FAANG to MAMAA last night, now we have Meta. Meta’s stupid. Did I say that earlier? I still think it. Anyways, he said, “Never bet against these companies”, while I don’t always agree with Jim and every assessment he makes, I think he’s right about that. I think a company that’s doing 130 to 140 billion in the holiday season, they are on the right track, they’re growing in the right areas. They do need to obviously find ways to be profitable in their commerce business without AWS because God forbid, if the regulators ever split the business, it would be scary to say that this massive E-commerce business can’t make money.
I think they’re figuring it out, but they are a scale first company, that’s how Andy’s led it forever. He had years they didn’t make money. Sometimes when you’re ready to hit that next phase of growth, you have to take some risks against your earnings and that’s the risk they’re taking. I support it… just can’t get behind all this negativity.
Patrick Moorhead: Well, Daniel, you left me absolutely nothing.
Daniel Newman: You’ve always got something, dude. You’ve always got something that you could pull out.
Patrick Moorhead: Literally, I can probably only add two things. The first thing is they actually made over 100% of the companies operating income. I’m just adding that because you said they made 100%, they actually made over 100% of the operating income by a smidge. That’s not a correction, Daniel, it’s just me trying to say something smart out here. Now, the other thing that I’ll add is that they increased their growth. You look at prior year on year, it was 31% growth. This was when everybody was panicking for AWS, and now we’re at 39%. Think about that. What I’m trying to piece together is that standard IAS growth… but let’s not forget some of the biggest SaaS plays sit on AWS. If they have growth, AWS certainly has growth. Heck, a lot of Salesforce sits on top of AWS and they split it between AWS and Azure, so I need to kind of piece together.
But, I think IAS is coming back, projects are coming back. That is my instinct that I’m getting and I got that from a couple interviews I did over at Microsoft, that strategic projects are coming back, actual enterprises doing the development as opposed to going into a SaaS app. I’m glad you brought up the fact that Amazon ran for a loss for years. I remember trying to compete with Amazon in what was it? 1999 at shopping.com, which was part of Alta Vista. The stupid thing is, even as a startup we were trying to make money and Amazon was investing in warehouses. I was thinking, “God, that’s dumb. Just do it through the distributors”, kind of like we were doing it. But they had the long view, and that I think is what Amazon does. Now, even with what they knew was going to be lousy earnings, they kept the pedal to the metal. They had Amazon Career Day, a million people from 170 countries participated in that.
Another cool part, again, I guess it wasn’t the month dish on Amazon or something, but they also announced this quarter, this funding full college tuition, diplomas, GEDs, English as a second language, which is just crazy. This is a $1.2 billion investment into upskilling. Amazon calls it Amazon Upskilling 2025. With all of that, and I made this point in a tweet that I think it’s pretty amazing that Amazon kept the pedal to the metal on all the ESG and all the employee and all the small business stuff at a time when they knew they were going into crummy earnings. I have to tell you, every company I’ve ever worked for, NCR AT&T, Alta Vista, AMD would’ve cut expenses back to meet it and cut off arms to be able to [inaudible] to the street. It was a good thing they didn’t. Now, out of the other side of my mouth I will say, if you’re a Best Buy, if you’re a Walmart, if you’re a Target, you’re going to look at this and you’re going to take to the regulators and try to make something of it, which says, “Isn’t this great?”
We have two different businesses. My guess is they’ll try to really push the narrative that the company is using monopolistic practices or one side of the business to feed another business at a loss. It will happen, just waiting for it.
Daniel Newman: I will pivot on that, though, that with all the regulators complaining, the company’s actually under-sizing, underperforming the market, missing earnings in the wake of continuing to invest in employees and initiatives like the climate pledge. It’s kind of a double standard, you want them or you don’t want them. Pat, we’ve got about 15 minutes left and we’ve got two event topics. Let’s stop talking about earnings… god, earnings.
Patrick Moorhead: I know, boring.
Daniel Newman: Let’s talk about a couple of cool events. Let’s geek out for a minute, especially the geekiest event. Anything that Pat Gelsinger hosts is going to be super geeky and that’s his core, man. He loves talking about the tech and the vision and the roadmap. Intel, the Innovation Event or the ON Developer event did not disappoint… some serious announcements really widely across the portfolio, Pat. Hog this one, take it as far as you want to take it and I’ll try to find the scraps.
Patrick Moorhead: Well, listen, I’m actually not going to hit the announcements one by one, there were like 40 of them. I think what I want to do is just set the table on why something like this is even relevant. If you look back over the last five years, Intel has lost revenue and unit share to folks like AMD. Compute has broadened, and Invidia, from a training perspective has gobbled it up. PC gaming Intel has benefited from, but only from the CPU side and not the GPU side. Then, you have Apple who ejected full out stage left. You had AWS who didn’t eject, I would say maybe five, maybe 10% of their CPUs or their own CPUs. They’re leveraging at Intel big time, and not just for CPUs, but also for Havana training. That is what Intel goes into.
Bob replaced… terrible I can’t remember the CEO before Bob.
Daniel Newman: BK.
Patrick Moorhead: Yes. BK got pretty much walked to the door because of a prior relationship with an employee. Bob comes in, the CFO, likely taking the company down a path that was to get out of some of its fabs at least, that didn’t work. Street didn’t like that and they brought in Pat Gelsinger. The first thing Pat Gelsinger said to me when I talked to him when he became CEO… he didn’t understand why Intel’s developer forum, IDF, was no longer because… heck, this is going to just totally show that I’m a Midwesterner at heart. You couldn’t swing a cat in the last five years without hitting a developer event, whether it’s AWS, whether it’s Samsung, whether it’s Apple. Who doesn’t have a developer event? Intel, one of the largest platforms and ecosystems on the planet, so a little bizarre. The first thing Gelsinger says when he gets on stage is, “The geek is back”. It’s not the first time he said it. Some people said, “I don’t like… come on. That’s cheesy.” But it’s so funny, coming from him, to me, it makes a difference.
I think if you are a developer, if you are an engineer and you know Pat G, he didn’t just spend time at Intel before, he was CEO of VMware for I think eight years, correct me if I’m wrong. You have this combination of credibility, which is… I have a software guy who runs a chip company, he must know something for developers. I think this was a good step forward. I want to mention that they did this event live, not live taped and broadcasted, it was live. Gosh, kudos to all of them. Some people are saying, “You made a mistake here”, it’s like, this is live, folks. This is live right now, this is Six Five live television. We take it as it is, and quite frankly, that’s what people want. They’re sick of talk. I’ll end here. I left you a little bit.
Daniel Newman: Yes, you did.
Patrick Moorhead: What is the developer proposition? It’s absolute data center, it’s carrier, it’s edge, it’s PC. It’s an extended definition of compute, it’s GPU compute. It’s PC gaming, it’s workstation graphics, and then training… Habana with data center training, ZEON with data center inference. Their portfolio of offerings that they provide to developers, I would say, has tripled, quadrupled over the last three years. I’ll turn it back over to you, I left you a big one.
Daniel Newman: Well, I’m not sure which one you left me because I got a whole list, but the company had some really great partnership announcements. It had some forward looking, not guidance, but announcements on things that… where it’s taken delays and turned them into wins like it’s Aurora supercomputer that was actually, they were able to deliver… what was it? Twice the performance that they had expected while it was slightly delayed. I walked away, Pat, thinking if the market doesn’t get it by now, then I’m sorry. But Pat has done a tremendous job of explaining everything from the architecture, meaning changing this nanometer and transistor discussion that you and I have had several times on this show, to really just leaning into the fact that the company is not going to run away from its heritage. He started out doing the whole 50 years of, and he had a really interesting conversation about that.
The past is not always an indication of the future, but when you take your heritage and what made you successful and you build on that, it often can be a great indicator. I think that’s really what Pat is doing at his core. Just a couple things I want to touch on. Moore’s law is back, Pat, and he was very… you can hold your breath, but in the eyes of Pat Gelsinger, he said, “Moore’s law is not only back”, but he said, “They’re going to actually accelerate it”. Sorry, we have not realized this ambition yet, but what he’s actually saying is from two years to less than two years using the company’s new RibbonFET framework. That was a big point. Then, the other big side of it is they’re going right after Invidia with oneAPI. Look, and you did leave that there for me, you strung it out there for me.
This is an area where if you talk to the folks at almost anywhere that’s not Invidia, they’ll tell you there is a clamoring out there because Invidia’s been so successful. It’s grown so quickly and has had so much, basically, control of this developer ecosystem that people are interested in knowing what alternatives exist. OneAPI is really being built in such a way where people that are looking for choice, they’re looking to develop for the future, heterogeneous compute, they can build it on oneAPI. This has been the promise. We’ve said, Pat, and you and I have been pretty critical of its AI strategy, but you’re starting to see the pieces come together, whether it’s been discreet GPUs, whether now it’s oneAPI, whether… it’s having a vast developer ecosystem that people can build on, Pat. I think they’re prioritizing data science, meaning they’re not just looking at it from an AI standpoint, but they’re looking at that developer community and what that developer community can do.
The other thing too, Pat, is things that caught my attention… sorry, it’s almost hard to stay on topic because there were so many different announcements. But the partnerships with Microsoft and then the partnerships with Google. You’ve got an IPU, you’ve got Mount Evans and you’ve got partnering with Google, clearly trying to compete with everything from Nitro to Marvell and Invidia’s DPU strategy. That’s a big one. That’s obviously taking compute and taking resources and making sure that they’re applied to network security, storage, and general purpose computing correctly… big move, big partnership with Google. That’s going to be important for Google Cloud, by the way, which we circle back to be able to compete with AWS is doing with Nitro. Then, Pat, you and I had the chance to talk with Panos Panay and Gregory Brian, GB as he affectionately is called too. By the way, they’re really building a partnership around oneAPI to compete with the M-One developer ecosystem.
They want to be able to bring products together running on Windows, running on Intel that are going to excite the market and compete with the Arm based architecture of M-One. I’m looking at my 1600 word breakdown and I’m thinking through this, there is so much here, Pat. This could have almost been an episode in itself if we really wanted to get into the techno specs.
Patrick Moorhead: But, it’s not.
Daniel Newman: Thank you for reminding me of that. Let’s take this home with something that’s a little less technical, but a topic of general, great interest in the market, and that was CISCO’s WebEx One event. Pat, you and I, for a couple of days… we work across the spectrum with teams, WebEx teams. We work with Zoom, obviously Poly, which reported earnings, had a decent growth quarter, by the way, just throwing that in there real quickly. But, you know what this event was really in my eyes all about was WebEx really touting its wears that we are here to compete. Oftentimes, when you listen to the broad media, main media, mainstream media, they’re all about Zoom and Teams. That seems to be the comparison. But at the same time, WebEx has had massive growth. They’ve got their new devices, they’ve got a whole set of new features that they announced… I wrote a whole piece and you can click into this because I don’t have time like we do with Intel to go through everything.
But, they’re building on AI in a big way. They’re enhancing their camera intelligence. They’re adding insights and analytics that help better understand user behavior. They’re trying to basically create an asynchronous platform that can minimize meetings. Then like I said, they came out with some great new hardware, the Desk Mini. You and I use the Desk Pro, we call it the back phone. They got a new whiteboard technology. They, really, across the board announced a whole bunch of things. Then, of course, Pat, something we talked about with Poly at one time, they are really trying to work on the whole inclusivity and wellbeing, not necessarily in the standpoint of DEI and the overall, but the fact that in so many meetings, not everybody participates. Every company right now seems to be raising the stakes and saying, “We’re going to have hybrid work. People are going to be everywhere. We need to use analytics, use technology to make it possible that everyone that’s taking the time to be in a meeting is adding value to that meeting.”
It was a good couple of days. It was great to hear from WebEx. Overall, a good event, lots of announcements, Pat, but because we are running to the end of the show, I think that’s a great place… at least I’ll leave it to you to wrap some thoughts around WebEx One. Again, we have it in our show notes, Pat, we have a bunch of different tweets, articles, and thoughts that people who want to get more from us can get it.
Patrick Moorhead: To be competitive in this space, you literally need to do monthly updates, you need to be pulling in your roadmap, otherwise you’re going to be uncompetitive, particularly on the services side. We’ve seen just a plethora… I think there’s been 1000 feature updates in the past 12 months. For the service itself, this was really more of a hardware launch. I know just like software’s eating the world, but what is it going to run on? Services might be eating the world, but it has to run on something, particularly if you are a company who thinks you want to put the best experience together, you really do have to have hardware and software put together. We see it with Apple, we see it with Surface and Microsoft. Google is trying to go down that with Pixel. The one-two punch is really what CISCO is doing. I do think they have overall control of security as well, which I think is key.
The biggest device that they brought to the table I thought was the WebEx Desk Mini. Imagine, this really is a… I see it as a home solution. Could it be a small group, a small conference room? It absolutely could, but this is the announcement where I think CISCO can claim it has a device for every room in the home and every type of room in the business. That’s a huge investment. The development cost of the mini, and I spent 10 years in hardware, is just tens of millions of dollars. These are not small investments. The interesting thing about the Desk Mini, it reminded me of the device that Facebook has that follows you around and looks at you. But, I want to get my hands on it, I don’t want to comment on the experience. One of the things that… They also brought out B&O collaboration, Bang and Olufsen 980 headset. Now, again, I don’t know how good it is for business communications, but certainly for a choose-your-own-device list, people are going to glam onto this.
Executives who are complaining about maybe the pedestrian headsets that they have, I can see the facilities or the IT people saying, “How about B&O? How does that work for you?” It’s so funny. My wife has two B&O headsets and it looks literally exactly like that, maybe a little bit bigger to go more around the ear. But I can’t say if it’s going to sound good, I’ll be honest with you for business communications I’ve been pretty underwhelmed with consumer headsets. B&O is a consumer play, but we’ll see if CISCO was able to bring some of the mojo. My final comment is on interoperability. All of these devices have 100%, well, not 100%. I would say 95% interoperability with Google UC services with the exception of end-to-end encryption, which is important because that’s just not possible with Google yet and CISCO equipment. The one thing I need to research, Daniel, this is kind of a TBD is Teams interoperability. Through certain video standards, you can claim interoperability with anything as long as you’ve got the right video standards. But the question is, can you truly have a collaboration interoperability?
Daniel Newman: Absolutely. 323 all day long, buddy. Let’s just throw out some 264, 265, let’s just geek out. What was that? Mr. Mom? 220, 221, whatever it takes.
Patrick Moorhead: Whatever it takes.
Daniel Newman: By the way, everybody out there, 220, 221, whatever it takes. But for Patrick and I, we’re happy to have had you here for our 100th episode. Put in that raffle ticket, get that south of France pad that Pat is giving away to our audience, but we appreciate…
Patrick Moorhead: Daniel’s giving away an Aventador.
Daniel Newman: Thank you so much to all of you who have made this show, this community, this event so special. We really do appreciate every single one of you. We’ll be back next week for the boring 101st episode, but for now, for myself, for Patrick Moorhead, for The Six Five, it’s time to say goodbye. Happy Friday. We’ll see you next time.
Patrick Moorhead: Thanks everybody. Appreciate you. Love you.