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 (plus one bonus) for this week are:
- Announcements out of Microsoft Inspire
- Oracle Updates Fusion Cloud ERP And EPM
- T-Mobile Announces Las Vegas SD Taxi Service
- Zoho Advanced BI and Analytics Platform
- The Snapdragon Insiders Smartphone
- Intel is Exploring a Potential Purchase of GlobalFoundries
- Daniel Moves to Austin, Techsys
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 podcast, 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.
Patrick Moorhead: Hi, this is Pat Moorhead with Moor Insights & Strategy, and we are here for another episode of The Six Five Podcast. And I am here with my incredible co-host Daniel Newman, who is in the middle of moving from Chi-Town to Austin. How are you, my friend?
Daniel Newman: I’m doing good, my friend. It’s Friday morning. Last day here in the Chi-Town suburbs. Tomorrow morning, we load the truck. We are heading south, 17 hours over two days. But when it’s all said and done, I will be a Texan in Texas, as I like to say. So I’m very excited to get this move behind me and get our new life started down. I’m getting my 10-gallon hat and my cowboy boots and then get this party started.
Patrick Moorhead: Yeah. Can’t wait to meet up with you when we’re both in Texas. I am currently in a bunker in Colorado, getting out of the Austin heat. But hey, let’s dive in here. And we are going to talk more about, I think people are wondering why Daniel is moving from Chicago, or as you say, the suburbs of Chicago to the suburbs of Austin. But hey, for those of you who are joining us for the first time, we’re The Six Five podcast. We named it because we do six topics five minutes each, sometimes 10 minutes each, depending on how we’re feeling.
Daniel Newman: It’s our show. We do what we want.
Patrick Moorhead: Exactly. It’s our show. We do what we want. We talk about something until there is nothing left to talk about, and we don’t necessarily do news, but we talk about, we analyze the news to get underneath it. And sure, we talk about what it is, but it’s really about diving in deep.
And just as a reminder, we will talk about publicly-traded companies, but don’t take anything that we say as investment advice, just for educational entertainment purposes only. Daniel, let’s dive into our first topic, which is Microsoft Inspire announcements. There’s two ones we’re going to focus on. Daniel, if I could take the Windows 365, and you can take the Dynamics 365 and Teams data integration, I’d appreciate that.
Windows 365 is essentially remote desktop in the Azure cloud. That’s it. That’s the tweet, okay? And the big deal here is that it’s Microsoft who, as you know, happens to own the Windows operating system as well and a very healthy IaaS and PaaS inside of Azure. The concept of remote desktop is not new. In fact, I think the first time that I did it was almost, yeah, 21 years ago. When I was at AMD, I had to remote desktop in for certain enterprise applications, and I had an old version of Windows there and an old version of Internet Explorer.
Now, this is very different, and by the way, AWS offers this with WorkSpaces. You have Citrix offerings. You have VMware offerings, even FRAME and NetApp offer these types of things. Now, by me saying there are other offerings, that doesn’t mean that it’s boring and old. I like a couple things that they did.
So first of all, Microsoft is going to have a cost advantage because it has the operating system. Nobody’s going to talk about that, but that is the absolute truth, and it does come in because on all these other services, you have to pay for a license or you have to bring your own license. From what I gather from Microsoft, customers will have to pay for two licenses if they have a regular PC and if they want to go on vacation and use their iPad and not bring their Windows PC. This is for Windows 10, and it’s for Windows 11.
One of the cool parts is that security and management are integrated into the devices. So if you have an iPad or Android tablet or an old PC or you’ve lost your PC and you’re on a trip to Europe and all you have access to is the company hotel, with a browser you can essentially get that.
One real unique thing that Microsoft told me but wasn’t in writing anywhere that I could find is they’re working on an offline mode.
So all other remote desktop solutions, if you get cut off, you’re done. You can’t work anymore. Microsoft is working on a method where, if you get disconnected from the internet, which by the way that’s the backbone and one of the biggest challenges of remote desktops, it will actually save the state in a container. You’ll be able to continue your work. I don’t have details around that, but I think that’s super exciting because it helps fix an issue that’s been around for 25 years with all types of remote desktops.
I haven’t heard partners squeal yet, and there are ways for partners to get involved here. But with Microsoft having the operating system, they 100% have a leg up on everybody out there. I want to jump in and use this thing immediately, if nothing else, some sort of a fail-safe, that if I lose my device, I’m off doing something, I can get access to it. Even though I’m syncing with OneDrive, OneNote on Office 365, I like the notion of having a desktop there when I need it to use on an iPad or an Android tablet.
Daniel Newman: Yeah. There’s a lot of flexibility that can be added about how you reach your desktop, where, on what device and the use cases. It’s as interesting as it will be useful to get some case studies and examples of where this really helps users day-to-day, this remote workforce that we’re dealing with that are really able to benefit from this new solution. Like you said, it isn’t a new idea, but it’s, let’s just say, an improvement on an idea that has long been in the market. Man, I remember some remote desktop that I’ve used, and it’s never been a great experience. So anything we can do to make this better would be super important.
And speaking of remote work and Teams, one of the other big announcements that Microsoft made that I leaned in on pretty heavily was this new Teams Plus Dynamics 365 integration, and we’ve been hearing about this for a while. Over the last few months we’ve heard Mark Benny, all talking about this operating system for remote work. And it’s not going to be our email anymore. It’s going to be in our collaboration platform. It’s going to be in chat.
So with Benny, talking about Slack being their future, Microsoft has already driven over 145 million users onto its Teams platform. But it’s all about connecting the way we work, the systems of record and the data, reaching our customers, and that’s where taking Teams and connecting it to Dynamics 365 is such a big deal.
So it starts with the fact that just everybody that’s trying to synthesize this needs to understand is Teams is going to be the epicenter of business. That’s what Microsoft, that’s the narrative that’s being pushed. That’s the idea. Not everybody knows how to use an ERP. Not everybody wants to use a CRM, but everybody is using that collaboration platform.
So you think about what’s going on here. Well, now with Teams and D365 working together, you can basically take workloads, carry them forward, make important updates without someone having to access the actual systems of record in the Dynamics 365 platform. This is a convenience from a licensing standpoint because you used to have to actually give licensing or some sort of limited licensing to every user that you wanted to be able to have access. There’s a lot of expense associated with that, and some people aren’t doing very much in the platform.
So now, for instance, a service rep, they can update a case record where they’ve added troubleshooting steps. You have financial teams, they basically can share a purchase order and the details right in Teams without having to go into D365. Field technicians, that’s a great one because it’s not just knowledge workers, it can also be … You’ve heard Teams talk about field work. A cable technician can be onsite, flagging end-of-life on product, and they could notify a salesperson right through Teams that there’s an opportunity to upsell a customer. So these are the kind of things that serve as the use cases right now.
In the end, Pat, what I like about it is I feel like it enables work to be done in a more comfortable, forgiving environment. It’s got great tracking, notification and management, and they’ve incorporated automation to make all that possible. So I think these are some nice touches. I am very interested in hearing about adoption, use case. But if you’re out there, figure whatever your chat platform is right now, it is going to increasingly become the epicenter of your everyday work.
Microsoft is making this very clear and is, I believe, the leader by use with 145 million, they’re going to drive a lot of what we see next. You’re going to see the Cisco web access through integrations follow. You’re going to see the Slack Salesforce story follow. Pretty solid announcements. I expect to see more integrations from the whole staff, whether that’s business intelligence, Power Platform, whether that’s Azure integrations, it’s just going to be more and more that Teams will be the epicenter.
Patrick Moorhead: Yeah. It is amazing how Microsoft turned Team, everybody thought it was just going to be a chat platform to compete with Slack, and then it turned out to be the epicenter for collaboration, integrating Power Platform, D365, literally everything. Pretty impressive. Let’s move to the next topic here. So Oracle has an enterprise SaaS suite called Fusion, and they do quarterly updates, and they updated ERP and EPM and took the advantage to take a few more swipes at SAP and some customer takeouts.
Daniel Newman: Yeah. Well, as we know, Oracle is never shy about calling out the competition. It starts at the top. Larry Ellison never misses a chance to claim a victory. It’s something that I find to be entertaining. We always talk about it here, competition drives innovation. We all have different ways. Some of us are the humble type. Some of us are the more outspoken types. But yeah, so each quarter, and I’ve really enjoyed this, Steve Miranda, the EVP that runs the Fusion and basically all the apps businesses for Oracle comes out and talks about what’s new.
So this week there was a series of meetings, and somewhere in between me packing my house and moving, I was able to attend and listen in. So as you know, there’s Fusion, there’s NetSuite, there’s Oracle Cloud, there’s lot of pieces. This particular go-around though, what I felt that Steve’s focus was really on was Oracle’s ML and AI efforts. This is a big topic. It’s happening across the board. There was a series of announcements, a new AI-driven interface called the Oracle Digital Assistant. Basically, when you’re working in these tools, there’s so much data, so many systems and records, so many screens.
Remember the little Microsoft paperclip, the Digital Assistant? Well, just imagine now having that kind of capability within your systems of record to be able to find what you need to find quickly using natural language processing. For instance, I’m just going to ask the question, and it’s going to work.
They also made a series of other announcements, an intelligent performance management platform, a risk management platform, a project management update, and of course, what Oracle does best, provided a series of customer wins and gave us the access to hear from these customers about what was going on. I’m not going to report on the whole thing. Again, Six Five, it’s about analysis, not about reporting.
But here’s the long and the short of what’s going on with Oracle. Oracle’s migration to a SaaS platform is enabling a faster scale of the business. This is where growth is coming. You can listen to any of their quarterly earnings, 20 to 30+% growth is coming out of their cloud applications business. They’re continuing to update it to add it. They’re making more and more ties from back office to front office. You love talking about that, Pat. I swear I said it first, but you said it better. But we’re bringing together the ERP, the CRM, the customer data platforms, the supply chain management tools. They’ve got all these things, and this layer of AI and ML is going to be a very important step for the company.
They’re not necessarily being credited with the same level as, say, a Salesforce or a Microsoft or some of the other players for the amount of investment and deployment of AI and ML capabilities, but with all this flexibility with SaaS, with Oracle Cloud, with that full vertical integration, borrowing a productivity collaboration suite, Oracle, they’re really moving toward that full staff, and they are moving towards a system that can be quickly updated that can have overlays of AI and ML capabilities.
And by the way, it’s just ripe for a acquisition of some type that’s going to focus on this area of AI and ML, but they’re building it, they’re integrating it, they’re adding it into their suite across their product platform. And I thought that was the most positive takeaway was they’re not just idling by. This is going to be an important part of their business going forward.
Patrick Moorhead: Yeah. A lot of this conversation reminded me too about … I was thinking, “What the heck is Salesforce going to do?” Oracle seems to be having a tremendous amount of success out there. And by the way, we’ll put the caveat on the SAP stuff. SAP usually comes out a week later and says, “Hey, here are the customers we took away from Oracle.” So getting to the bottom of all this is interesting. What is it? 30% growth that we’re seeing in many of these applications I think is proof positive that Oracle is making a dent in this.
And the full stack capability, it’s funny, I’ve been in tech over 30 years, and it’s almost like an accordion. You have aggregation, and you have disaggregation, where disaggregation or where best parts that are integrated together is the way to go. And then the industry goes integration, where it’s hard to differentiate on the piece parts, and it’s a lot more valuable to put those together with security or in the same place.
You’ve got all these point security products, but there’s so much integration that enterprises have to do that sometimes they’re two or three steps behind what the best in class software was, and that’s why the security industry is going to more of an integration point, and companies like Microsoft and Cisco are taking advantage of that. I’m sorry to digress, but you did a really good job capturing the news itself.
Daniel Newman: You’re entitled, sir.
Patrick Moorhead: But hey, let’s dive into something dramatically different here, and that is T-Mobile and a company called Halo announced a autonomous taxi service. Now, it’s different than what you might think from an autonomous vehicle. You call it on your app like an Uber, and it would automatically take you there. With this system, first of all, all of the connectivity goes through 5G, whether that’s mapping, real-time mapping, whether that’s any type of communication that the riders have to have with the service itself. But it’s a half-step.
So we’re at Vegas CES, and we call Halo. We put our app, and a Halo car comes, but we actually drive the car. But it comes with no driver in it. And I know that that’s a half-step, but Halo’s premises is that sure, the technology is there, but the social issues and the government mandates aren’t there to get us there.
And actually, they have a decent point. Other than China, there are no robo-taxis that even exist out there, even though autonomous vehicles statistically are better drivers than humans, because they can drive better at night. And they don’t drink and drive, they don’t look at texts, they aren’t distracted, they didn’t drop their lipstick or their phone on the floor and then they reach for it and then they have an accident. So it’s a half-step. It’s an interesting one. I thought the 5G connectivity was interesting. And I’ll leave that there.
What I did want to talk about, I wanted to add, is the Ookla US statistics came out yesterday and clearly showed what I knew what happened is that T-Mobile and Qualcomm related that US 5G would be on top. So every statistic except for one on 5G, and T-Mobile was maybe 1% away from Verizon, which was 5G consistency. T-Mobile won. It won on speed. It won on latency. And Qualcomm, by the way, it was a sweep. Qualcomm won on the chip set for all the top 10 phones out there. I’m not surprised. Nobody’d be surprised, but it should be affirmation.
And I want to do a victory lap and a pat on the back to Will Townsend, who is our 5G carrier analyst, where I guess it was two-and-a-half years ago. We had picked the carrier who was going to win the 5G race. We picked T-Mobile, and everybody’s heads exploded. Verizon wasn’t happy. AT&T wasn’t happy. But we stuck to our guns because we saw the combination between Sprint and T-Mobile with the three levels of bands. Sprint brought mid-band. T-Mobile brought high-band and low-band, and it ended up being true. So every once in a while, you’ve got to do the victory lap. But congratulations to T-Mobile on Halo and also pretty much sweeping the US 5G.
Daniel Newman: 30 seconds. One is I haven’t followed the Halo thing all that closely, so it sounds like a human-out-of-the- loop, human-in-the-loop situation where when the car’s coming to you, it’s empty. So if something happens, no risk. It can come to you fully autonomously, but when it gets to you, now the risk is that there’s a human inside. They don’t want to take that risk. Now you as the human take the machine back. Kind of a cool hybrid situation there, Pat. Regarding the T-Mobile thing, that’s solid of T-Mobile. You know I’m a Qualcomm bull, absolutely no surprise whatsoever. I don’t even think there’s a competitor. I know there are competitors, but not really, not at the high end, not at the high end.
Patrick Moorhead: Well, the interesting thing about it is that the sweep was about the actual chip set as opposed to the modem. What I would have expected that at least of one of those phones would have been an iPhone with a Qualcomm modem. But the whole sweep. So there is some magic that Qualcomm is doing in there. And oh, by the way, Apple doesn’t use Qualcomm’s RF solution. They’re piece-parting together a Skyworks and a Broadcom and I think-
Daniel Newman: Qorvo.
Patrick Moorhead: Yeah, Qorvo solution. So, interesting what you can see through the data.
Daniel Newman: Well, congratulations to all of them. You’re the host. Keep us moving, buddy.
Patrick Moorhead: Yeah, yeah. Let’s move forward. Okay. In other enterprise SaaS announcements, Zoho came out with a pretty exciting self-service VI. And why don’t you take this one, Daniel?
Daniel Newman: Yeah, no problem at all. I think what was really interesting about this, Zoho is the operating system. Zoho won the operating system for business, 50 apps in a single set of tools. It really has a sweet spot in that small mid-market. Of course, has found its way up the market into larger and larger enterprises. And this is just one more add. And the company was really excited about it, and I had the chance to get demo-ed and briefed in advance on this thing and seeing how it works.
And I’ll tell you this. The first thing, if you ever want validation from an analyst, I was watching them demonstrate how their self-serve VI platform worked, and the first thing I said to the guy was like, “I need this. I need to try this for my own business,” because it just looked so usable. And that’s the one thing. In a lot of mid-market and smaller organizations, you don’t have the manpower, the personnel. You don’t have all the systems of record, the ability to use dozens, if not hundreds of APIs, whether it’s your QuickBooks all the way up to a full integrated stack with something like a Zendesk. So to bring in all this data, to be able to visualize data, make decisions and employ and deploy technology.
So this self-serve VI is really all about the low-code, no-code space that we’re in of giving more power and more democratization to more users that are business-minded that aren’t necessarily technologically minded to be able to pull from the vast systems of record and datasets and be able to create meaningful visualization that you can use in your business decision-making.
Zoho, once again, is simplifying the process, building key integrations. It’s got marketplace integrations with this thing, everything from Shopify to ServiceNow and the Zendesk, Microsoft, MailChimp, Stripe, whatever you’re using. And I like that too, because that really goes back to that story of being able to support a small company all the way up to a large enterprise. That’s a private company, don’t get a lot of visibility into specific revenues and growth, but their analytics business is growing in that 30 to 40% range. That is something they were willing to share.
And overall, I just continue to be impressed. They’re quietly yet visible in coming out and addressing a massive gap in the market, giving that end-to-end toolset that companies need and, like I said, making it usable, achievable, and implementable inside of companies of various sizes with various technical resources. So good on Zoho. Congratulations on the launch. I’m impressed. I’ll continue to watch them. And by the way, I intend to put this to the test. So I’ll have to come back and let you know how that goes.
Patrick Moorhead: Ooh, I love it. I love it. That’s interesting. Yeah, it’s funny. I hadn’t heard of Zoho up until three or four years ago, which I’m a little embarrassed about. I had really been focusing on some of the larger US folks. But what I find just ironic is that Zoho is running the play that everybody wants to run right now. They did it before Microsoft. They did it before Oracle. They did it before Salesforce, which is essentially a full-stack offering all the way down to the hardware, which by the way, unless Salesforce ends up buying an IaaS provider, will never get there.
And the ability to tweak up and down, and some people think that Zoho doesn’t do a lot of business in the US and Western Europe. In fact, they do more business in the US and in Western Europe than they do anywhere else. They’re just focused more on the mid-market and small businesses. What I wish I could talk about was some of the NDA slides that were provided that showed companies with big brands, by the way, that leverage Zoho’s platform, and they white label it, brands that Americans would know. And I’m dying to tell you which one of these brands in specific, but super impressive.
If the company would do a huge marketing push, I think it’d be scary to see what they can do. But they’re very happy with the methodical way that they’re doing this. They’re doing a lot of smart digital marketing. They’re not going out and leveraging an F1 or something like that, but they really let the product and their method and their culture speak for itself.
By the way, they’re an Austin company. Just might want to add that as you’re moving here to Austin. Hopefully we can both spend more time with them now that we’re post-pandemic. But Daniel, let’s move to the next topic, and that is the Qualcomm Snapdragon Insider phone. Qualcomm took a little bit of heat about bringing this phone out. I feel like people were confused, so I’m going to try to clarify here.
So first off, Qualcomm has a one-to-one consumer marketing program called Qualcomm Insiders. And sometimes we don’t fully understand because we’re in the US and people have iPhone on the brain. But Android is at least 75% of the global smartphone market, and that’s not just because they’re cheaper. But in other countries other than the US appreciate more what brands like Samsung, Oppo and folks like that can bring to the table.
And with that said, Qualcomm is getting out there and extending a program, and insiders get inside news before other people get it and insights. And I’ve got to tell you, I can tell you from having a marketing inside of China, they love that stuff. And you’ll get crowds of tens of thousands of people out there lining up for stuff just because it’s a Snapdragon. And we can’t fully grok that here in the US. I understand that.
And the other part of it is bringing out special deals and special products. So Qualcomm partnered with Asus on a phone which basically doesn’t actually have a name to it, but I think the first thing is people did is they vaulted the price, which is $1,500. Now what this phone brings is the latest and greatest technology from Qualcomm plus the best audio solution in the market and these killer headphones to connect to it. So it has the best in connectivity. It has nearly the best in computer. It has the latest in Quick Charge, with Quick Charge 5.0.
The only feature that I wish it would have had would have been the under-display fingerprint reader, but quite frankly, it didn’t match up with the display, I am told, and I totally understand. But let me step back here. They took a lot of heat because of the specs. It doesn’t have the plus processor in there, and there were a couple other nits out there. I think that’s completely missing the point. This is for insiders and not the general public.
So I wrote a pretty feisty, I would call it a response piece, out there on Forbes, but really tried to set the record straight. So if you’re interested, check that out, but good luck. And I appreciate Qualcomm trying to go direct with some of its customers. And no, it’s not getting into the smartphone business folks. Don’t be confused. It needs its OEMs and ODMs for this. This is just part of some kudos and special insider opportunities.
Daniel Newman: Yeah. The long and short is simple here, Pat. Snapdragon is an immensely flexible and leading capability platform, and vendors and OEMs and ODMs do make selections on the feature specs that they put into devices. Qualcomm, in the spirit of partnership, probably guides but does not dictate, nor should they. That would be problematic. But this is an opportunity for the company to try to work to show the market what could be done if you took advantage of all the features, all the spec, all the capabilities of our most advanced chip sets.
So it’s an interesting concept, Pat, and since Qualcomm really has very little consumer recognition, it’s a chance for people to reach out that are influential at that consumer level to really talk about the fact that, going back to your T-Mobile commentary, if Qualcomm, when incorporated into the OEM and ODM devices that we know, creates a device that we like to use better. It’s actually quite simple. The program will need to continue to evolve. This may not be the perfect application of it, but it’s a starting point, and I expect to see more in the future.
Patrick Moorhead: So hey, let’s get to our next topic here, and that is wow, the rumor. I’m sitting at dinner here in Colorado, and Intel possibly acquiring GlobalFoundries? What in the world is going on here? No, it was super interesting. In fact, I got called out on Twitter for not being out on Twitter quickly enough, which I found fascinating. It was by a journalist who I respect a lot, and that was pretty fun. But there is a rumor that came out in the Wall Street Journal that Intel would be acquiring GlobalFoundries for $30 billion, which I find fascinating. And let’s split this topic up.
One thing I’m going to explain is that Intel does things differently than GlobalFoundries. And also, if you look at the global semiconductor market, even the leading edge, like five nanometer, seven nanometer, three nanometer get all the pages because of the big investment, that is not where most of silicon is produced. In fact, most silicon produced is 28 nanometer and below.
And the reason we can’t ship cars and Chromebooks and PCs is less about leading edge and more about I can’t ship PC because my USB controller chip is 28 nanometer. I couldn’t ship. Or that one PMIC, that power management integrated circuit, which is done on 32 nanometer, couldn’t ship. So we’ve got to clear this up.
And what GlobalFoundries does is they focus on those low-power areas, like 5G RF that needs specialty technologies to be able to operate. Needs a material called FDSOI, silicon on insulator, to get that increased low power for IOT. They do silicon photonics. And yeah, I get Intel does it, but I guess my main point here is that GlobalFoundries does what Intel does not do and does it, quite frankly, in a better way. This has never been Intel’s target market to do these types of technologies. TSMC is in here, and ON Semiconductor is with their own fabs, for sure, but not Intel. So it’s definitely additive if this is true.
Daniel Newman: That’s great analysis, Pat, and I always love when you dig into the geeky, nerdy stuff. Let’s dive into photonics a little further. No, I’m kidding. Here’s the thing. Let’s talk about this from a market and a perception standpoint since you talked about the technology. Immediately, the number came out about 30 billion as a possible price. Now, if you’re not familiar with GlobalFoundries, they are a privately-held company, but they’re part of, I believe it’s pronounced Mubadala Investment Co, Mubadala, Mubadala Investment Co, based in Abu Dhabi. They do disclose some of their financials, so it’s not completely private and withheld. But it’s not the same transparency of financial data that you might get if they were acquiring another US corp. Kind of similar to the ARM and Nvidia deal, where you’re part of SoftBank’s fund. So you’re getting some of the data, but it’s a little bit different.
The $30 billion is being looked at. I believe 5.7 billion was the 2020 revenue number for GlobalFoundries, actually down a little bit over the last few years. But as we know, there’s a lot of things impacting the supply in the chip space. So is it all down because of demand, or is it down because of everything in the substrates and supplies and availability? Question marks all the way around. But I don’t think the deal is being looked at through the lens of traditional multiple-on-earnings or a traditional multiple-on-revenue. I think the deal here is being looked at through a synergy.
So you hit this on the head, Pat. What does this enable Intel to do that Intel couldn’t do before a deal like this would be completed? We heard Pat Gelsinger come out during IBM 2.0. One of his big four announcements was IFS was the foundry service and the expansion. You’ve heard about multiple paths being built across the US, Europe. We’re dealing with not just a need for more chips. We’re dealing with a need for more chips to be manufactured not in Asia.
And so while GlobalFoundries does have a presence and is expanding its footprint in Singapore with, I believe, a $4 billion investment they recently made into fab, it has presence in the US, it has presence in Europe, and it has presence in the Middle East. It’s got the capacity to manufacture the chips that, by the way, are causing inflation right now, that are causing supply chain delays right now.
You mentioned cars, Pat. It’s not just about not getting cars. It’s about not being able to afford cars. We saw, I think, automotive jump by a double-digit percentage multiple months back-to-back with no end in sight to this. Does this deal fix that? Not entirely. Not like this’ll get done quickly. You and I both called out regulatory scrutiny.
I think there’s a really interesting parallel here while the ARM Nvidia deal and the Intel GlobalFoundries deals have nothing to do with each other specifically, they have everything to do with each other. I really wonder if one could pass and not the other if both deals that are formed and if one deal was given the go-ahead and one wasn’t, what kind of turmoil that would cause within the antitrust and regulatory environment.
And the last thing, Pat, I just want to point as a fascinating factoid is GlobalFoundries was AMD’s fab foundry business that was spun off, what was that, around 2008? Was that before or after you left, by the way?
Patrick Moorhead: No. It was when I was there. I was running corporate marketing when we did that.
Daniel Newman: So that was spun off, but AMD is still a really big customer of GlobalFoundries. I believe they just signed a $1.6 billion multi-year deal, and so I just have to wonder how AMD would feel about sourcing from Intel in the event that this deal was to be completed. Lots of question marks. But for Intel, I’ll leave it on this, Pat. For Intel, this would be a really good deal. Now with all of the other flags that go up and have to be looked at, that’s going to be the question mark. But if Intel can get this deal done in that price range, it seems like it would be a winner for its long-term prospect in competing in that whole stack in which it’s been called out for not playing in in recent times.
Patrick Moorhead: Yeah. The AMD is a good question, but every month the percentage of AMD out of GlobalFoundries goes down. They do some interconnects, and they do legacy APUs for them, but all the future-forward stuff in the last two generations of product has been primarily TSMC, with the exception of that bridge chip that they use to connect their chiplets together. Some of that’s from GlobalFoundries, and some of that’s from TSMC.
Great thoughts there. I’ve got to tell you, I don’t see it happening. I see the IPO hitting, and I think this is probably some back channeling going on. But I’ve got to tell you, there’s no better awareness creator than an acquisition rumor out there. So Daniel, let’s go to our final topic here, which isn’t an official topic, but-
Daniel Newman: Seven Five.
Patrick Moorhead: Yeah. The Seven Five. You are moving literally today from the suburbs of Chicago, not to be confused with Chicago, you’re going to have to explain why you explain it like that, to Austin, that it’s no secret is having some challenges on its own. It’s bringing in other famous people like you, like Joe Lonsdale, Elon Musk, Joe Rogan. But talk to us about this.
Daniel Newman: Yeah. So you and I, we’ve talked about it a little bit here and there. We’ve teased it here and there. Long and short, amidst the pandemic, being settled in one place for a long time, we used to travel 47 weeks. You would be in and out. You were almost a visitor in your own home at different times. When you spend a year-and-a-half almost completely in one place, it raises some questions about where do you want to be. I’ve been in Illinois for 40 years. It’s been a good run, but I want to be where the action is.
And so we’ve heard a lot about migration, and if you want to be where the action is in tech, there’s several choices domestically. There’s, of course, San Jose-San Francisco. There’s Seattle. There’s Austin. There’s RDU, Raleigh-Durham, and then recently there’s Miami. Planting roots, where are they headquartering, where are CEOs, and venture is something you’ve got to keep an eye on too. Where are the VCs going? Because those are what actually stem the next wave of growth. And of course, where are your friends, something to weigh in heavily too.
But after a lot of weighing for some time, me and the family decided that the right place for us to be as a high-tech research advisory consulting to the biggest tech companies on the planet and talking start-ups tech and opining is Austin, Texas. So great tax environment. Property taxes are a little high, but anyone that’s been to Illinois knows property taxes are a little high here. But you get the no state income tax. It’s a business-friendly environment, tons of customers. I can’t even tell you, Pat, how many customers have reached out to me already when they found out I was moving.
I’ve got multiple in-person meetings within the first few weeks. You know how many physical customers that I have that are domiciled in Chicago that have an office other than a few remote workers? Zero. Not one customer that we do business with or we work on projects with are in Chicago. So while I do expect travel to pick up and events to come back, I want to be somewhere where it’s not just an event or getting on a plane and going and seeing 5,000 tech people at once. I want to be able to have lunch with people in the space. I want to be where the action is, and Austin is arguably, if not the place where the tech action today and going forward.
Patrick Moorhead: Well, I’m glad you’re coming, and I know it’s a really hard decision to move. I grew up in the Midwest. I grew up in Cleveland, Ohio, and I’ve been outside of Ohio for, God, 25 years now. And I spent most of that in Texas. And I think you’ll be happy with it, particularly where you’re moving into the suburbs, where Austin City Council and the mayor have a lot less influence. You have your own police force.
So it’s a great place. As we’ve talked, I did the opposite. I’m downtown now, and I’m regretting it a little bit. But I’ve got a place that I can hide at near a lake that I’m blessed to have and the family needs, because sometimes we’ve just got to get out of downtown. But no, I’m really excited for you to come in. And who knows what trouble we can get into while we are here, and who knows-
Daniel Newman: The good kind, Pat, the good kind.
Patrick Moorhead: No, of course, and I’m wondering if maybe The Six Five, we’re actually in the same room together.
Daniel Newman: We’ll have fun, my friend. So great show though, buddy. Appreciate it. Appreciate the chance to share this with the world, and I appreciate all of you.
Patrick Moorhead: Absolutely. And it’s imitating life. Most of the people who left San Francisco came to Austin, Texas.
Daniel Newman: I’ll see them all there.
Patrick Moorhead: So with that, we are now The Seven Five. Now we’re going to rename the show. No. I appreciate everybody sticking with us. If you liked what you heard, you want to hear it all the time, hit that notification button. And go on there and hit always, and you will be alerted on YouTube when a new video comes through. We are also available, if you’re listening by audio, on all of the popular podcast distribution out there.
So we really appreciate you. If you like what you heard, you can hit me up on Twitter. If you don’t like what you heard, you can hit Daniel up on Twitter, and we can try to hit your needs. So with that, thanks a lot, and have a incredible weekend.