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:
- Musk Call to End AI
- HP Amplify Event
- Intel DCAI Day
- Luminar Investor Letter
- Alibaba Big Split
- Google Data Cloud and AI Summit
For a deeper dive 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 ask that you do not treat us as such.
Patrick Moorhead: Hi, this is Pat Moorhead with Moor Insights & Strategy and we are here for another Six Five podcast. It’s Friday, around 9:00 AM Central. I’m here with my bestie, Daniel Newman. How you doing, my friend?
Daniel Newman: Hey buddy. One of these days, the Six Five is going to be so big you’re going to be like, “Hi, this is Patrick Moorhead with the Six Five, also sometimes an analyst.” Just kidding. It’s Friday. We’re excited. And buddy, I’m going to tell you not the best week I’ve ever had, but this is like… Some people go to a spa, some people will throw axes, I podcast. And I don’t know about you, but the best way to get me out of a bad mood is a podcast with you.
Patrick Moorhead: I appreciate that buddy. And some people they want to watch Axe on billions, so maybe they’re going to have to wait till next season. I hear he is making a comeback. But anyways, we are the Six Five. If it’s your first time, you need to ask yourself what your problem is and get over it-.
Daniel Newman: Where’ve you been?
Patrick Moorhead: But Dan and I cover six topics, five to 10 minutes each. We hit the top news stories and discussions out there. We don’t spend a lot of time on the news. What we’re trying to do is bring you analysis, pithy analysis and opinions. That’s what industry analysts get paid for, and here it is. We’re giving it to you for free. And we are going to talk about some publicly traded companies. Don’t take it as investment device. I always say to do the opposite, seek out a professional. But we feel like we have an incredible show for you today.
We’re hitting Musk’s call to end AI. We’re going to hit the HP Amplify event; Intel DCAI group did an Investor Day. Luminar sent out an unprecedented letter to their shareholders. Can’t wait to dig into that one. And Google had – I think this is the fifth annual AI and data summit that I tried to participate in but hey, I’ve been on the road for three weeks it’s been tough. I’ve been Austin to Ocala, to New York, to Ocala, to Chicago, to Ocala, back to Austin. But it is great to be on the ground here. I almost kissed this fine Texas land.
So Dan, I’m going to call your number first. Elon Musk, a user of AI, calling for an end or a pause to AI. What the heck is going on here? Is this protectionism? Is this crazy Elon? What’s happening?
Daniel Newman: I think there’s a little bit of all that, Pat. I think we should probably take a quick step back and just say the AI advancements in the last four to twelve weeks have been unprecedented. And I think if you could go back to just before Sam Altman sort of brought ChatGPT out to market in a little more availability to the broader user audience, AI was advancing at a pace where we were seeing things happen. We were seeing things happening. It was the way we would render our video games. It would be maybe some natural language processing or Google’s email was starting to fill in some sentences for us. You could talk to your Alexa and maybe it was a little bit smarter than the average bear. I don’t think Siri ever did anything that really reflected AI. But we were starting to – I’m kidding. I’m kidding. Down all you Apple people. We were seeing smart vehicles, Elon Musk included, using AI and its technology to make vehicles safer and more efficient and a lot of things.
But what we hadn’t seen is this generative thing, and this generative thing just came on so fast. All of a sudden we went from basically Google search being the penultimate way to discover, to having a new way using something like Bing and generative AI that completely disrupted the entire business model of search. And then you had something like generative AI added to Dynamics 365 and then added to Teams and then added to Office where it’s writing our articles, it’s generating press releases, it’s creating PowerPoint presentations.
And by the way, it’s also opened a whole commode to the black hats to figure out ways to break these large language models. You’ve got some other side stories developing. You’ve got sustainability issues with all the additional compute and capacity that’s going to be required to run these models at any scale. And then you’ve got an upskilling issue when you have millions of white collar jobs that you could say, “Yeah, it’s a co-pilot,” but it does 99% of the work for you.
So just a quick backstory. So what’s going on with Elon Musk is I think we have a little bit of a who should control the narrative thing going on. You got a little bit of what do we do when there is zero regulation? So Pat, we talked about the automobile. The automobile, there’s the National Highway Traffic and Highway Safety Board that actually will prevent a company from putting driverless vehicles on the road without very strict guardrails for how these things are going out in testing. With this stuff, it just gets launched. There’s no way to prevent it. There’s no stop. There’s no, “Hey, what if it’s wrong? What if it’s usefully wrong? What if it’s really just straight up wrong?” We don’t know.
And like I said, as companies right now, we’ve already seen it with Musk himself at Twitter basically saying, “I can cut 75% of my staff and still run a business at near the same efficiency.” Well, what happens when all those people that are creating your PowerPoints, that are writing your copy and content, that are designing your graphics, building out your websites, creating e-commerce experiences, doing customer service, has all been completely automated? By the way, if there was a book called Human Machine, I would’ve written it about this very topic.
So I think what’s going on is we’re saying, “Hey, this is going at an unprecedented pace. We need to look at the risks. We need to look at the ethics. We need to look at social responsibility. We need to look at the sustainability impacts.” And we also need to look at the potential black hat issues, the risk factors. I think Musk shared a joke on Twitter yesterday about all the advanced technologists building AI in order to figure out if there is indeed a God, and now he has a little Twitter joke about that where he says in the end, “You do now”, where we’ve built this machine that basically supersedes humanity. Is that true? Is it going to take over humanity? I don’t know.
I actually shared a graphic on this, Pat, on Twitter that I found that showed that anywhere from about 10 to 25% of the broader populations of the world think that AI will eventually take over for the human, take over the human race. We’ve seen I Robot. I know we’ve seen these movies. Is that stuff real? I think that’s the most extreme to the right, but just to the left is how fast we’re moving, how much it impacts jobs, how much our capacity to actually implement this technology, the sustainability issues. These are all things that we have nobody talking about at any real level. And of course the big tech companies are going to win big by getting this out to market first, companies will immediately become more productive, blah, blah, blah. I’ve said a lot. I could run on this topic for another 20 minutes. I’m going to pass it to you because I’d love to get your-
Patrick Moorhead: I mean, you could just form your own podcast called the Five.
Daniel Newman: No, you do have one about enterprise data center and I think it’s called the Seven Six.
Patrick Moorhead: Yeah. I can’t even swing a cat without hitting one of your 17 branded podcasts.
Anyways, no, let’s move forward. So my first reaction to all the spooky, spooky technology is going to destroy the world always gets me. You know I like to read books, typically history books, and if you look at over the last 150 years, I mean whether it was the wheat thresher, the radio, TV and car, it was going to destroy society. And so far it hasn’t. But we keep bouncing back. But I don’t want to be lazy here and put it under that. I went in and actually read some papers that were cited by the Future of Life organization that Elon Musk is part of and on the board of and that’s where this letter came from. And it posed some, I thought, some pretty good questions. Should we let machines flood our information channels with propaganda and untruth? Should we automate away all the jobs, including the fulfilling ones? You hit on that one. Should we develop non-human minds and eventually outnumber, outsmart, obsolete, and replace us? Should we risk loss of control of our civilizations?
Now here’s where it gets into the punchline. It says, “Such decisions must not be delegated to unelected tech leaders.” By the way, I agree with that. But I also think there’s a lot of people who question the trust of administrators and government so I don’t know if a pause… I mean I don’t know what a six-month pause would do. Who would step up and fill that? Do we trust our federal, state, and local governments to do the right thing? What I’ve seen is that unfortunately our country is in a politicization nightmare where the government is making a lot of decisions based on politics, not necessarily what is good for the majority of citizens. Dan, what do you think is going to happen when we pause for six months?
Daniel Newman: China.
Patrick Moorhead: Exactly.
Daniel Newman: China.
Patrick Moorhead: Exactly.
Daniel Newman: It’s not a universal pause, is it? It’s not going to happen like that?
Patrick Moorhead: Right. I mean that that’s just not going to happen. So I would hate clearly the United – well let’s say clearly the U.S. – I would say applied AI is – China is better than we are. I think its ability to do video surveillance is next – I mean they’re the leaders at that. Some people would say that England is the best at that with all the cameras that are in the city center based on the troubles that that country had back in the ’70s. But TikTok, I think it is very well understood that TikTok has the best algorithm. So the Chinese are not the best at AI hardware, but I believe they’re the best at the application. So I would hate for there to be a pause that could lead to either uncompetitiveness or some challenge to our defense. Now at the other side of mouth they’ll say there might be a pause, but there’s no way DARPA is going to pause or defense related company.
Daniel Newman: It’s not universal, Pat.
Patrick Moorhead: Exactly.
Daniel Newman: No, I was going to ask you though, because one of the things I was thinking about is obviously besides the fact that Musk has a lot of interest in China; it is a huge market for him. The sales restrictions on all the advanced chips, would China, in your opinion – because I’m thinking I know they’ll gray market stuff, but they won’t be able to get everything as quickly right now because of all those limitations on some of these specific advances.
Patrick Moorhead: It’s funny though. I mean, it’s not the H100 but it’s the H800. And guess what? You find the right way to network those together in a big enough data center and you can get the same type of performance in aggregate by stringing more of them together. So that was a clever, clever move by NVIDIA, but I highly doubt that China is having a problem creating these generative AI models.
Daniel Newman: I tend to agree, but I just felt it was appropriate to say, hey, I guess maybe if we don’t give them ASML, eventually they’ll run out.
Patrick Moorhead: Yeah, that’s going to be an issue. They’re at seven nanometer right now with SMIC. It’s not using EUV. So they have the right geometry, they just don’t have the ability to do – they have to double pattern to get there, which is less efficient and more expensive.
Daniel Newman: You’re going nerdy.
Patrick Moorhead: I know. So nerdy. Get me going. Hey, let’s move to the next topic. You and I both attended the HP Amplify event and I think we should talk about that.
So HP has not had an in-person international event, I think they said for four years, so this was a real treat for a lot of the folks there. It was kind of funny though, I’m thinking I’ve been doing international trips for two and a half years, this is not new to me. So the element of being the first event, I did not capture that excitement. But I’m sure particularly the folks who are out of Asia that literally they’re still wearing masks in certain part of Asia, really enjoyed that.
So there were a tremendous amount of announcements on the product side. Well, what was most interesting to me was the strategy that was laid out by CEO and President Enrique Lores. And I think it was important to bring this out more than motherhood and apple pie, but there are people, including analysts that I go on my clown show with that are questioning HP’s viability as a PC company because their market share went down, their supply chain, quite frankly, was broken. When you look at what Lenovo and Dell did related to supply chain, they did not get as hurt as HP did. Now we’ve seen on a market share basis HP bounce back and I think that was a positive, but I saw this as a reset.
So Enrique got up and he talked about the vision of the company, he talked about the critical trends that they’re trying to address but here’s the strategy, first thing was modernizing the core. And what that means is, hey, the PC user model is changing; we need to modernize along with that. If nothing else, and looking at new use cases like hybrid work, we literally for a decade didn’t care about the camera. I mean it was probably a $2.50 camera that went into notebooks. That’s woefully inadequate when you’re trying to operate business and use it as a substitution for being face-to-face.
He also talked about services and he did – I think Dave Shull got up there and recognized, “Hey, we’ve been talking about getting into services forever. What’s different this time?” I did appreciate the focus on lifetime value of the customers and I do appreciate that end users are more open than ever to having things like paying a monthly subscription fee, all you can eat service, set up, and help desk.
That’s a slow role right now, but I think it’s an inevitable future when I look at people’s comfort of using services for IaaS, PaaS and SaaS and quite frankly the consumerization of as-a-service as well. He talked about expanding into adjacencies, gaming, hybrid work. And I loved the factoid that says 90 million rooms out there, only 10% are video-enabled. And by the way, in the conference rooms I’ve been in, the 10% that were enabled had crappy cameras that couldn’t separate people to give the remote worker a good idea, a much more fulfilling experience at the workplace.
He hit on new categories, industrial print, 3D printing, and he cited metal as one of the big breakthroughs where you could imagine making short-order car parts. Maybe not fixing Bluetooth, Daniel, but doing the basic hard to find metric bolts based on different type of metal. He talked a lot about, he called it innovate with purpose, which is shorthand for ESG and DEI. The company in this executive Q&A we had with a few other analysts, they were very clear they believed that the company can differentiate and win business and actually cited $3 billion of business they won based on their superior environmental posture. And I’m a little bit, I’d say, suspect of that, but I want to see the data myself. I can see that absolutely happening in the Nordic countries. I don’t know how widespread it is.
Talked about operations, future-ready operations. I was glad that they spent a lot of time on this, talking about operations and supply chain because it was just a huge area. They’re looking at ERP consolidation, they’re looking at quote to cash – I think they said was 2X faster than it was last year.
And then finally future-ready teams. They talked about keeping a trustworthy company, being transparent with the negatives, which I like. And they really put a ribbon around the whole theme that I saw three of the two business leaders and Enrique said we’re going on offense. To me that was shorthand for, “Hey, we’ve got our supply chain challenges fixed, we’ve got the right team. We are doubling down on innovation, particularly innovation that is our full solutions” as opposed to just point hardware products. And I’m a really big fan of memory X and the Poly acquisition. I want to give it a little bit more time before I can say that they did it and they’re done. I mean you’re never done. But my biggest question that I had was, hey, how do you know this is working – these acquisitions and these solutions? How do you know that they wouldn’t have been just as good if they were kept alone, standalone and best of breed? So I’ll leave it at that. It was a wild 24 hours and it was good to go to a show, with my bestie.
Daniel Newman: Yeah, it was good to get out there. It had been a few years since HP had had an event in person and it was really nice that the leadership team waited for you and I to arrive late to have their little executive Q&A for the analysts.
They had a lot of different focuses. I think they were focused in on growth, focused on supply chain. I think they said a few things that jarred some of the analysts and even the partners about not seeing growth. I remember one of the medias was how Enrique had forecasted out that they may not grow this year, and everybody was like, “Whoa, what do you mean you’re not going to grow this year?” But I mean I think everybody knows personal systems and print are going to be… Their next big boom cycle is probably a year or two out after the huge cycle that was driven by the pandemic.
I thought it was very generous of them to spend time – and I asked them a question about sustainability and differentiation. I thought it was good that the company was able to truly put together a metric-driven response to the impact of its policies on driving revenue for the company. I’d love to see exactly how that was configured, figured and analyzed. But truth is, Pat, you and I have endlessly, on this show, said we’re not anti-sustainability or climate, we’re just anti-greenwashing. We’re anti coming up with just numbers or policies that are 20 or 30 years out into the future that no one’s going to ever hold you accountable for. So I actually really found that to be refreshing.
I think a couple other things that I really took away, besides just enjoying a skyline view of my old city, was, A) the market for the personal system is really pretty large and robust. And for a company like HP that’s ceded some market, there’s an opportunity to recapture some of that market. They flashed a $560 billion TAM for personal systems next year. So that’s a very large number if the company can execute and start building. With all the focus on hybrid work, the acquisition of Poly, some of the hybrid work technology and systems, they need to get that right. They need to be able to basically walk in and say this acquisition, the integration of all these tools, the ability to deliver hybrid work.
And I thought the company did some good work around the hybrid experience even just in the general sessions, Pat. They brought Adena Friedman on, the CEO of Nasdaq, and did it as a hybrid interview with one person on stage, one person on… And that’s not a new thing, but the ability to do it in a way that felt really engaging and immersive while not having someone live was pretty impressive. I also thought the company did a nice job of sort of featuring its various partner ecosystem. Of course it was great to see Dr. Lisa Sue go on stage. She always makes her great interview, very direct, very to the point. I imagine working for her is one of the most no-BS experiences you’ll ever get.
Patrick Moorhead: Man, I love that. I loved the nuances that she had. Maybe this is just because, I mean I’ve known Lisa, I worked with Lisa when I was at AMD – really came out strong. I agree.
Daniel Newman: Absolutely. And I really enjoyed both the Lisa Sue and the Adena Friedman interviews, the CEO of NASDAQ. I tweeted something that she talked about with leadership that really hit home with me and it actually has gone with me.
Probably the one other thing, Pat, that really was worth chatting about was just – and you kind of alluded to this – was just the massive opportunity around meeting spaces. I feel like because of things like Zoom and Teams, WebEx, we’ve gotten to this sort of place in our minds that we think every room is now a meeting room. And to some extent it is, but when you put 10 people in a room, you can’t have 10 people all on different Zooms. So the individual experience opportunity is such a big one to fill, and that’s something I think that Poly acquisition put – because only 10% of rooms at this point worldwide. They think there’s about 90 million. And our team at Wainhouse, one of the acquisitions I made has confirmed this with our market sizing data, there’s only about 10% that are actually outfitted, and that means there’s a massive – that’s something like 81 million rooms that could potentially be outfitted with more advanced technology to create more human, high quality, equitable conversations that could be driven for future workspaces.
By the way, those spaces are going to have to work that way in the future because I can assure you one thing, while we have gone back to 120% of our events, Pat, we’re only going to go back to probably about 50, 60% of office and full-time office utilization. I think we’re going to make people go back more frequently, but the way they go back will be different. So I’ll call it there because we got a lot more to cover and we’ve gone… Pat, we’re doing the 13 Five today. We are on it.
Patrick Moorhead: Six 13. Yes. Regarding hybrid work, MJ from Intel was on and that’s what she exclusively talked about, her and Alex Cho about leadership-
Daniel Newman: Hybrid interview.
Patrick Moorhead: Yeah, yeah, it was hybrid interview, was also leadership and how we need to have different leaderships and management styles or, at least, understanding, and I enjoyed that as well. Speaking of Intel, Intel had their data center and AI Investor day where they cranked out various pieces of news. Dan, what did they talk about there?
Daniel Newman: There’s a ton to cover here, so I’ll lead off and I’ll punt it back to you. While MJ was talking to us at HP Amplify, SVP Sandra Rivera that leads the DCAI business, GM of that business, was talking to investors, and I actually was part of that day. I did a generative AI webinar that went out on the same day. I know it was where I talked to Hugging Face and some of Intel’s leadership on the future silicon that’s going to drive this generative AI movement.
But I think first of all, like we say, Pat, this is not investment advice, but this was an investor event. It really focused on a couple of things, in my opinion. One is reassuring and reiterating the opportunity for silicon in the data center and AI market in the larger TAM opportunity. And then of course, Intel really trying to reiterate how well it’s doing with its IDM 2.0 and its overall strategy and hitting its timelines.
Pat, I’ve been steadfast in saying that Intel’s saying a lot of the right things, however its ability to deliver has been suspect at times and that has caused a lot of derision and frustration among this investor community. And I think the company had a really marquis day. First of all, it focused in on what’s driving the TAM and the growth and the heterogeneous computing growth and of course overall, the sort of growth in AI network security, all these different workloads that are going to require more compute. We’ve talked a ton about this with generative AI, Pat. So we’re seeing a 40 billion or so TAM for all the chip sets in the data center that’s going to go something like two and a half times, almost 110 billion by 2027. So just that alone, huge TAM expansion. Even if Intel merely can protect its market share, that’s a ton of growth. And of course plenty of companies gunning after them, both accelerator companies entering the market with specialty chips and of course AMD and NVIDIA have been fierce competitors in both of those particular spaces.
The other big trend they really focused on is just the overall growth in cores. That’s expanding for Intel. It’s expanding not as fast as it’s going to for AMD, but that is a trend line that is going to expand the overall utilization. The company leaned into its diverse portfolio that they have in the business and wanted to let the market remember that hey, yes, X86 CPUs, but they’re more than that. Discreet GPUs, accelerators and connectivity technologies are both currently here and on the road map, and that of course is going to drive growth overall, margin expansion.
And I think an interesting opportunity for Intel to compete with a company like an NVIDIA that’s got 90% almost uncontested market share in the GPU space, there’s going to be questions coming up in the near future about pricing power. Could somebody come in and really disrupt with aggressive pricing? We’ve seen it a little bit with AMD on the gaming side, how much that kind of gaming leapfrog could go between the two companies. We haven’t really seen anyone put a lot of pressure on NVIDIA yet on the GPUs for the data center with the huge cost, huge volume and the sustainability issues that are going to be related to using the – they’re kind of hogs. At scale, there’s going to be an opportunity for some cost efficiency there.
And then of course looking at the road map, Pat, and I’m going to just start here a little bit with the road map and maybe let you talk about it too, we saw Sapphire Rapids get to scale. This was a big thing. It’s not done, there’s more designs coming around Sapphire Rapids. But where the company I think created some excitement with some of its announcements about being able to pull forward – so 5th gen, which is Emerald Rapids, I believe it’s the followed by Granite Rapids and then even Sierra Forest. These names, they just make my head spin. But the bottom line is the company is quickly moving through its paces, what was it, five and four or four and three? Which one was it, Pat?
Patrick Moorhead: Five and four. I get it wrong. I got it wrong about 27 times and I finally hit it.
Daniel Newman: I feel bad about it sometimes but then I remember that there’s absolutely no way I can remember all this stuff. But you’re basically seeing the company pushing through its paces, it’s being able to pull timeline forward, showing its evolution and putting it on a timeline. And right now it’s looking like between now and 2025, it’s going to hit multiple generations. It’s going to hit an E-core. So its efficiency cores are going to come into market. It’s got discreet GPUs, dedicated accelerators and advancements in its FPGAs. I mean if you look at that alone, and then of course you look at the accelerated compute opportunity, both its acceleration on software and then acceleration on silicon, the company showed a really promising day.
Now Pat, Intel has every wall that can be put up being put up in front of it by the investor community. This has not been an easy run for Pat, but I felt like this was a really interesting sort of watershed moment for the company where it finally got to come out and not just say, “Hey, we’ve got a plan.” But it was a little bit more like, “Hey, we’ve got a plan and we are hitting our goals. Actually, we’re not only hitting them, we’re beating them.” If nothing else, Pat, if they can push forward the goal to only land where they originally said, that would be a remarkable improvement from Intel.
Having said that, if they can actually hit this accelerated timeline and some of these augmented technologies that are, like I said, FPGAs, accelerators, discreet graphics that they’re doing, you can’t not be excited when you see a $70 billion TAM growth over five years and say this is very promising for the company. So I thought it was a great day for Sandra and her team. Execution, that will always be in my mind, at least until the company’s done it a few times with no misses, the big question mark. But there was a lot of promise in what she said. And this is one of those where you have to say congrats because you’ve had a lot of headwinds, but this sounds like a good moment for the company.
Patrick Moorhead: Yeah, there’s a couple things going on here. So the company showed up and said, “Hey, we want to talk about future generation of Intel Xeon.” I think everybody expected for there to be a slip, but surprisingly, and I think the stock had a bump on this, Sierra Forest was sooner than I think people had expected. And I think it was not just about Sierra Forest, but that it was the fact that Sierra Forest is the first CPU based on Intel 3. So it basically said the five nodes in four years is on track. So I think it was less about specifically Sierra four, it’s probably more about it being Intel 3.
And also very clear, I mean in writing, this is on schedule, first samples are already out the door. It was a big deal. I think if nothing else, when it comes to CPU core to CPU core, this is going to help Intel a lot. Should it help specifically in the arm space? Because Sierra Forest is targeted as E-cores versus P-core.
One thing that I wish the company would invest a little bit more into is really talking about when they’re talking about, let’s say these data center SOCs like a Sapphire Rapids, that there is actually discreet functionality on that SOC that is 100% dedicated to AI, and in this case, it’s what’s called AMX. But I still don’t think it’s getting through because I think people think that this is just a CPU, not a SOC with a bunch of accelerators on that. And that makes a big deal because when it comes to very heavily latency-related type of inference, you want these discreet blocks. And by the way, very similar to the discreet blocks that are on an H100 or an A100; they’re just smaller. So I wish the company would get into that a little bit more.
I did like the disclosure on software because at the end of the day, I mean, I 100% believe that both AMD and Intel can create a piece of hardware that is competitive with NVIDIA for training. But it’s not just about that, it’s about the lower level software and the programming model. NVIDIA had such a first mover advantage with CUDA, and OpenCL didn’t move quickly enough to fill the gap that everybody could have used so now everybody’s bifurcated doing their own thing. Intel is doing OpenAI, AMD is doing their own thing that leverages their FPGAs, their accelerators and their CPUs.
But I did like that Greg Lavender came out and talked about what is open in democratizing AI, and I do believe that people need to consider this. Do we want one vendor to own everything? What are the byproducts of that? So open programmability, choice and compatibility, and trust and inference at the edge. And Intel is really driving this notion of SYCL, which is open programmability. And I think the claim was that it could address, 90% of CUDA code is migrated automatically to SYCL, and I think that that is a very positive step. I wish AMD and Intel would work together on training to come up with their own programming model, maybe get…even companies like a Groq or a Tenstorrent or somebody looking at-
Daniel Newman: What about the Groq compiler, Pat? The compiler that could then take these large models and move them quickly, efficiently?
Patrick Moorhead: Totally. If what NVIDIA brought out at GTC wasn’t a call for some sort of cooperation collaboration I don’t know what is. So net-net with DCAI from Intel is just by virtue of the momentum and size and scale, I think they’re going to do pretty well. I mean they didn’t slip on anything. Zippo.
Now, granted Sapphire Rapids is arguably two years late, but there’s nothing Intel can do about that. The only thing that Pat and the team can do is to look to the future. There were even some decisions that were made even before Pat came on core architecture that there could be some challenges with down the line, but I’ve heard full steam ahead for the group. I didn’t hear of any slips. I didn’t hear anything that definitively told me that Intel is going to be challenging Intel in training. I saw a strategy that I understand, but I’m not going to say again that it is finished until we see some more evidence of what can happen in the future.
So let’s move on to a very different topic here, and that is Luminar, the premier LIDAR system provider for autonomous driving and safety systems, wrote an investor letter. By the way, very rarely do companies come out and write a letter, but if you saw the run-up on the stock that was in February that was driven by all these multi-billion dollar deal expansions with Mercedes-Benz and Polestar, and then you see the stock basically come down like a rock, you got to ask, “Hey, what’s going on?”
So part of this shareholder letter, it addressed a couple things. So first thing it did is, there was some rumor going around and one of their competitors saying that Luminar ripped off their technology because of a graphic that was used in the slides. And the company was very clear to say, “Listen, that is just expected, we’re in the lead. We did not rip off any intellectual property and this company that is coming after us is just trying to basically create a monetization opportunity for themselves. Literally a thumbnail of a generic graphic,” and I’m reading this right from the letter, “of a photonic-integrated circuit on one of the slides in the 165-page presentation.” So they replaced it with an actual photo of their integrated circuit.
By the way, I consider that noise, but it wouldn’t have been noise if a certain research analyst… And by the way, if I look at…I forget what service this comes out of. There is 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12 brokers who follow Luminar, one out of 12 gives it a sell category. Most of them are buy category, which leads you to believe, hey, what is this one broker? Well, this other brokerage company actually has a major push campaign going on in another LIDAR competitor. Now I’m not saying this is the case. I just find it very interesting that one out of 12 is so far out of whack from these folks. So that analyst is either going to be looking like a genius or a total fool.
By the way, it wasn’t really even about the so-called ripped off IP. It was the talk about two things, how long can Luminar keep up these prices? And second of all, the valuation premium on the company. And I liked the company’s response that was essentially, “Yeah, we’re 50 to 100% higher than our key competitors,” because when it comes to safety, companies like Mercedes, like Volvo, and like Polestar don’t want to take any chances and they have hardened contracts with these folks and quite frankly, they’re early to market. So again, I’m not a financial analyst, I’m an industry analyst, so don’t take any of this as investment advice but I just find this unprecedented letter to shareholders pretty interesting.
Daniel Newman: Yeah. So by the way, I’m running a little late here we’re going to have to haul ass. So Pat, long story short is I think, one, it’s always interesting when there’s conflicts of interest that for whatever reason analysts that rate stocks and rate pricings don’t have to call it out. Two is Luminar has actual sales and all these other companies are really just conceptuals in most cases, very little sales, very little design wins. So I really de-market right there straightforward, to the point. It’s a huge amount of spend going to one company and then the other companies are basically disproportionately upset. They think it’s premium, but the premium is being proven in the fact that one’s selling stuff the other isn’t. The ratings thing, I’ve never really understood it.
Patrick Moorhead: Well, let’s move on to the next topic then. With that, let’s move on to Alibaba’s big split. What the heck’s going on here, Dan?
Daniel Newman: Yeah, so let’s talk a little bit about that. Alibaba, a fairly big company, looks a little bit like Amazon overseas, is basically splitting its business into six that can all go out and get their own funding and potentially all go public on their own. You know the Alibaba cloud, they’ve got their e-commerce business, they’ve got local services, they’ve got logistics, they’ve got a digital commerce business and then they have an entertainment business. So again, Alibaba, a little bit like the global Amazon is doing something that’s going to really, I think, raise some interesting question marks on a global scale because we’ve heard a lot about Amazon and AWS… I’m not saying it, but I’m saying this could be a really interesting inflection for a huge global company.
It also shows a little bit of warming up from Beijing towards big companies again and then maybe looking at how to maximize big companies. Because it’s not about splitting six into six small, it’s about taking six and turning them into six as big as the whole Alibaba group is now. This is not a GE move. They’re not doing this because there are parts of the business that are getting crushed. I really see this as a very strategic move for the company, looking at markets, looking at how the company can then be able to inject investments into different parts of the business that are seen as valuable and allow different investors of different classes to participate in investing in Alibaba because some are more focused maybe on e-commerce businesses, some might be more focused on cloud, some may be more interested in investing in things like entertainment or logistics.
So my take, and I’m going pretty fast because I’ve hit my call time, but Pat is that this is a huge opportunity and I think they’re doing it right now because the company’s had hundreds of billions of value wiped off of its valuation during this downfall and I think a lot of companies are starting to see a run in the near future to growth. So you put all these things together and you push it forward and this makes for a really interesting opportunity for Alibaba.
Patrick Moorhead: Yeah, I view this as China continuing their attack on large tech companies in China. They want them to split up. To me, the Chinese government can better control six small units that are a publicly traded company have their own IP than actually controlling a large entity. And this is 100% about the stock price as well from an investor point of view. In fact, Alibaba’s statement said, “Hey, this is designed to unlock shareholder value and foster market competitiveness.” So China and the shareholders seem to get a benefit here.
Let’s move into our final topic, and that’s Google Cloud and AI and Data Summit. And what I want to do is hit on one announcement in particular, and that is some changes that were made to BigQuery. So first of all, BigQuery is a fully managed data warehouse that is SQL based, that is realtime using large data sets. There’s also an element called BigQuery Omni that goes across – it is a multi-cloud offering that goes across AWS and Microsoft Azure that I think is pretty big. But what the company did is they introduced essentially what is called BigQuery editions. What they brought out was three different versions of this moving away from an all you can eat option, set the standard, they have Enterprise and Enterprise Plus. Standard is better for ad hoc development, test workloads. Enterprise is for more production workloads, for security governance, machine learning and data management integrated. And then the Plus is really about high mission-critical workloads demand the highest uptime availability and recovery in highly complex regulatory needs.
This to me indicates a maturation of Google Cloud, and I love it. Anytime you see somebody do segmentation, it is that they recognize that the business is so big we cannot peanut butter spread this. Adding the potential complexity of three different versions optimizes profits and gives customers what they want to pay for. And if you look at the pricing, the Enterprise Plus is two and a half times the expense of standard. And that makes sense when you’re developing ad hoc testing workloads, you don’t need all the bell and whistles that Enterprise Plus provides you.
They also added things like auto-scaling, which is nice, which is essentially nothing more than you only pay for what you get. And I really liked the way that the company outlined who could use this – retailers having these spiky workloads, maybe scaling a few hours a few times a year. Always use retail as a really good use case, particularly on the transaction side, based on that workload. Analysts compiling quarterly reports, startups managing unpredictable needs at the beginning, digital natives putting in variable demand, healthcare during seasonal outbreaks – so hats off to Google Cloud and their data day. They had two or three more announcements, but I thought that this was the most important one out there. And if nothing else, we’ve seen Google use data as a land and expand into more of the pedestrian type of workloads.
Daniel Newman: Well, if it says anything, Pat, I plan to stand up our data warehouse on BigQuery at Futurum and the Futurum Group.
Patrick Moorhead: So you made that decision?
Daniel Newman: I have.
Patrick Moorhead: Wow.
Daniel Newman: I made that decision. So the company does a lot of things right and when it sort of gets disproportionate attribution and credit for what it’s been able to do for AI and analytics, that stands true. And our new CTO agreed that that’s the right platform.
I thought some of the interesting announcements came around Looker. I thought driving its business intelligence… It was a small acquisition for Google at 2.6 billion, but the continued advancement in that particular area, it’s not just about being able to warehouse the data, it’s about being able to visualize the data. And also just the general auto-scaling capabilities I thought were really impressive. I think it’s interesting this week, I don’t know if you heard Pat, but Google went out and made some claims about Microsoft, feeling that there’s some anti-trust and interesting… And while that’s not specific to this Data and AI Summit, it is kind of interesting. It is kind of related right now that one company feels like it’s playing a little bit more fair and the other one is playing a little bit less fair. I haven’t read into it too much yet, but what I will say is I feel like Google’s been very, very focused on advancing its product, advancing its technology, being focused on giving customers what they need, being price competitive. And I think that while Thomas Kurian needs to get this thing to profitability I think he’s got some runway left to do that, but I also think building the best moats for certain capabilities and – I mean, what better place to be right now Pat than AI?
So I don’t have a ton of time, I’ve got a meeting that started eight minutes ago, but I did not want to leave early because I wanted to make sure our fans got their show today, Pat, and I’m so happy actually that we did this. I’m feeling in a much better mood now.
Patrick Moorhead: Yeah, I appreciate everybody showing up and give us feedback on social media. I’m going to be traveling, doing advisory in San Jose on Monday and then I’m going to be in Houston for HPE Storage Day. All over the map, a lot of travel, good stuff. It’s good to go out and talk to customers. But thanks for tuning in. Have a great weekend. Connect with us back here next week, 9:00 AM Central, wherever we are on Twitter, LinkedIn, Facebook and on YouTube. Have a great weekend. Take care.