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:
- HPE Storage Day
- Google, NVIDIA, Qualcomm Spar on AI Domination
- IBM Z Goes Rack Mount
- Italy Bans OpenAI
- Dell Announces Qualcomm-Based Laptop
- Intel Announces 13th Gen vPro
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.
Watch the episode here:
Listen to the episode on your favorite streaming platform:
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.
Daniel Newman: Hey everybody, it’s Friday and we are back with another episode of The Six Five podcast. Excited to have everybody here. It’s a Friday. It’s Good Friday. It’s a good Friday. It’s a good Friday and it’s Good Friday. Pat Moorhead, how you doing buddy?
Patrick Moorhead: Man, I’m doing great Dan. And I just stick to my, at least I’m consistent. I mean even if, regardless if it’s 49 degrees out, what the portfolio looks like, how the investments are doing or not doing, I am happy.
Daniel Newman: Pat, do we need to do therapy on the air? Would it help you to just, do you want to do a public confession or keep it all…
Patrick Moorhead: No, listen, I mean, there’s up days and down days and I just remind myself just how freaking blessed I am to even be here. I mean, I could be sitting in a cube somewhere in a sea of cubes going to my 18th training class, being spied on by my corporate overlords. But no, I mean, I’m sitting in my son’s bedroom chatting with my bestie, talking about the great tech out there. I love it.
Daniel Newman: Yeah. That is a lot of fun. And by the way, a lot of people were aware that we’ve bought a few companies over here at Futurum Research, now the Futurum Group. I got to get in a good habit of saying that. But it’s funny, I actually had someone reject an offer by saying they weren’t ready for corporate overlords. It wasn’t you, by the way, but I did get told that by a privy company that I think will do very well that I would’ve loved to have acquired.
But you know what? It’s funny because I don’t consider myself corporate overload, but I guess there is that weird inflection point when you grow a business to a certain size and you go from being kind of like a quick fun, fast start to all of a sudden having a big IT department and VPNs and you’re collecting data and you know what people are looking at on the web and what they’re doing all day. And God, I hope I’m never like that, but truth is in my role, I probably won’t even know when it happens. That will happen. I just, God, I hope I never…
Patrick Moorhead: Hey, for those listeners who don’t even know what the Futurum Group is, what is the Futurum Group?
Daniel Newman: Yeah, thanks for that opportunity. Well it was a big week for us this week, and I don’t typically do this and I know you and I like to do little bits of self-promotion throughout these shows, but the Futurum Group is now a – it’s a compilation of companies. It has Futurum Research was the core business, but then we acquired the Evaluator Group, Wainhouse Research, Dash Network and several other companies that we are putting together. And of course there’s a 50/50 joint venture of The Six Five with Patrick Moorhead, and that’s part of the group as well. By the way, the fastest growing part of the group. I know podcasting, right people? But yeah, so we’re putting this together and we’re building something really special and there’ll be a lot more to come on that, but I won’t bore you with that because we got so much to talk about this week.
So if this is the first time you’ve ever listened to The Six Five podcast, it’s six topics, it’s approximately five minutes each. It’s Pat and I doing deep analysis on the week’s news, but we don’t really give the news, we just kind of give a bit of a background. Then we’re going to give you our opinion on what all of this means. This show is for information and entertainment purposes only. So while we will be talking about publicly traded companies, we ask that you do not take anything we say as investment advice. And if you heard Pat’s intro, definitely don’t want to follow Pat’s investment advice. We’ve got a really great show though this week. We’re going to talk about HPE storage day. Pat flew all the way across the country to land back in Houston after spending a pretty great day, I think with the upcoming keynote opener of our Six Five Summit, Hock Tan, popular character right now. Pat took a great picture.
We never post pictures when we hang out with CEOs except every time, except for every time that we do that. But we’re going to talk about HPE’s Storage Day big day for HPE. We’re going to talk a little bit about Google making a proclamation of its domination around AI and super computing over NVIDIA. Woo. We’re going to talk about IBM Z going rack mount. So you’re talking about the house is now going to fit inside the glove box. We’re going to talk about Italy banning OpenAI. They’re the first, but are they the last? Dell goes Qualcomm – an arm based Dell, Pat? That was something I don’t know we expected. And then of course Intel announces 13th generation vPro. Pat, I don’t ever call my number first. That’s not something I would do. I don’t know anyone that would do that. But why don’t you go ahead because I want to hear from you. Tell me what Storage Day was like. I wasn’t able to be there.
Patrick Moorhead: No, I appreciate that. So yeah, I literally landed in Houston Tuesday morning at about, I don’t know, 1:00 AM and attended a great event that they had at their corporate headquarters in Spring, Texas, which is really close to Houston. And it was really two experiences in one. The first was Antonio Neri, HPE CEO, let us attend his quarterly employee meeting, which I thought was just fantastic. And I’ll admit being out of the corporate world for 12 years, I didn’t enjoy a single quarterly meeting that we had. But I have to tell you, this was different. I mean they had this – I don’t know – this high grade band and I didn’t know if it was Daniel Newman up at the turntable scratching, but this guy was great. And their chief security officer was the emcee for the day. And typically when you think of chief security officer and entertaining, those two don’t normally come hand in hand, but they really brought it.
It was a produced show, not only for the remote employees around the world, but it was really good for people who participated in that. And after that, we went into this big announcement. So HPE let all the analysts attend their event that they broadcasted globally, and it was HPE Storage Day. A couple things going on there. So quickly, they announced the Alletra Storage MP, which could be block or file. So literally one piece of art, typically block and file storage are two separate systems, and this was one that can do both. The way that the technology is working, if you tune and use the right type of storage and have the right type of algorithms, you can actually do that. They also are working with VAST on a scale out file solution and it’s block storage. We don’t know who is going to do the other part of it, but that was cool to see because VAST is an absolute high-flyer out there and I think this adds the highest performance. So think HPC, think AI, in particular. So I thought that was super exciting.
The company also doubled down on GreenLake and by the way, you can get all of this Alletra storage goodness as a service, but they also had HPE GreenLake for backup and recovery, HPE GreenLake for Disaster Recovery, which again, those are – as opposed to – I would call it dumb blob storage or even block or file, these are actually services that 100% make sense. And if you look at the ransomware as a particular element of this coming in, no longer are we looking at security as perimeter. In fact, it’s perimeter, we’re going to try to keep you up, but we know we’re going to get in and we know you’re going to get in and we know you’re going to do damage, so we have to protect our data.
So again, the VAST tie-up was all about high performance. I think that we don’t know yet who they’re going to partner with on the other side of the house, but there’s a lot of stuff going on at HPE. There were some NDA information that was communicated. There was something publicly that Antonio talked about that he had mentioned at its financial analyst conference about getting into essentially GreenLake for high performance computing, which is super exciting. Sometimes people forget that HPE acquired Cray. Cray has some very unique IP, particularly in the interfaces, and they also have the customer relationships to make that happen. HPE has won a bunch of National Labs contracts with varying degrees of success on turning these things on. But I believe that that HPE will be a force in this, let’s call it HPC as-a-service, which includes AI.
Daniel Newman: Yeah, so you hit on a lot of things Pat, and it was a good day for HPE overall. It’s been a good sort of period of time. If you remember the last few quarters, the company’s outperformed pretty significantly and we all know that this pivot to GreenLake has been one of the company’s unique competitive advantages. We are following closely others that are fast following, the likes of Lenovo, Dell, Cisco. And of course we’ve got this sort of battle for the scale up infrastructure that is going to be subscription based right now with this sort of austerity period in the economy where companies are sort of weighing, do we go to public cloud? Do we stay on prem? And GreenLake’s always been really well positioned to be sort of a good compromise for both. And in many cases, many workloads just make more sense to be run on prem.
And so with GreenLake having this kind of scale out services and competitive advantage of being a first mover, they’ve been able to continue to diversify the portfolio and build more comprehensive capabilities. So the big takeaway for me was really all about adding GreenLake subscription-based services to the platform, file block, disaster recovery, backup recovery services, all on GreenLake now. I think that the decision to do file with VAST was really interesting. I think you calling them a high-flyer is really a great term. You and I have been briefed – and I think they’ve publicly come out – and the company’s just really interesting and well run. Renen, the CEO of the company, very impressive, very smart, has built a product that is incredibly profitable, and I think the partnership with HPE could give it a really quick scale. Across the board I think as data continues to be the goldmine of growth for the organization, the ability for the company not only to be storage but to really offer data on demand is going to be a bigger and bigger part of the story.
You mentioned Cray, HPC, the ability for them to tap into that, to start to play a bigger role in this whole AI transformation, this training of large models. This is going to happen with powerful compute and HPE owns one of the most powerful computing platforms for HPC on the planet. Not talked about all that much, but I definitely see that becoming a bigger part of their story as well. So good day for HPE, sad I didn’t make it, glad we were able to cover it here, Pat.
Now on the second one, I’m going to call my own number and let’s talk about a little bit more about HPC. So Google this week basically published some data on one of its artificial intelligence supercomputers, and they came out with a bit of a flash bomb saying it was more powerful and more efficient than competing NVIDIA systems. Just pause there. NVIDIA, 90% of the market. NVIDIA, pretty much the uncontested hardware winner of the generative AI boom, at least declaratively at this state –and a company by the way, that I was recommending on CNBC Squawk in the middle of July or August last year when it was literally down 70%. So I just want to be very upfront. I see the value, I believe in NVIDIA, but I am very interested in this kind of new architecture and posturing that’s going on in the market because right now you’ve got kind of a couple things that are going on.
You’ve got layers of abstraction, which is you’ve got hardware for AI and then you’ve got software for AI. And so nothing has been a more critical layer of abstraction for the mass adoption of powerful conversational generative AI than OpenAI and ChatGPT. This has brought it into the limelight. We’re seeing it embedded into software like Bing. You’ve seen it push the speed of innovation from companies like not only Microsoft, but Google, Adobe, and others at a breakneck pace. Well Pat, you and I love to say you can’t run this sh** on air. Oh no, I sweared. I sweared.
Patrick Moorhead: Oh no, we’re going to get the explicit now. Yes. Okay.
Daniel Newman: I’ve always wanted one of those. Or Connor, we can post prod, bleep that out. But you know what?
Patrick Moorhead: I don’t know. I feel good about myself if I don’t use F five times during an hour long conversation.
Daniel Newman: I’m passionate about this topic. So the bottom line here is what’s going on now is you’ve got a war going on among mega tech. You’ve got a war for who’s leading what. Of course we know, none of this runs without hardware. NVIDIA certainly a player, but companies like Google are developing hardware. Companies like AWS, which I recommended last week on TV as a semiconductor company are making hardware. And then of course you’ve got companies like Intel and AMD that are going to suddenly become very interesting because anytime a company has over 90% of a market, they become exposed, Pat…especially when they start competing with their biggest outlets like a cloud offering that’s going to compete with AWS and what they’re doing rather than working with. That’s a really interesting thing you pointed out and I thought was really interesting. We should talk more about that at some point.
My overall take Pat, this is mostly, this is remember with quantum supremacy and when Google and IBM and all them would kick back and forth, I feel like this is what we’re at right now. I do not feel like this really is that important except for the fact that all these companies want to let the world know and be very declarative that they’re in the game. And after Google got end-rounded by Microsoft a few weeks ago with the OpenAI thing, it absolutely got put on its heels and had to come out with Bard prematurely and that flopped, Google I think came back and said, no way, not again. We are not going to allow all the other companies to quietly be declared the winners of the AI race when there’s probably no company with a better data training set of data than Google.
I would argue there may not be a company that’s spent more on real R&D around AI than Google. And this to me is sort of a shot across the bowel to the whole industry that Google’s here to play. I think this will impact their cloud business. I think this is going to impact their overall business. And I think this is why I call it fluid, google does have a bigger role to play than they’re being given credit for today.
Patrick Moorhead: Yeah, it is fascinating and I think that Google’s move to call out NVIDIA had two planes on it. First of all, there was an investor plane which says, hey Google, if everybody’s using the same hardware as each other, how are you going to differentiate there? How are you going to lower costs? If you look at the entire generative AI revolution, it’s expensive. I think we’re looking at between 100 and 200 times the cost to do a search on GPT versus just standard index-based search. So there are cost elements to that. I think the other element, and I’m waiting for this shoe to drop here, is how that gets integrated into Google Cloud and the enterprise customers, and how does Google differentiate, let’s say, versus Tranium and Inferentia? Out there it looks like Azure is pretty tied up at least today, and not going to do their own inference or training hardware.
The one thing I wanted to point out, and it’s in the Kiron, it pierced Qualcomm, there was an MLPerf test that went out and, lo and behold, who shows up? Qualcomm. And what a great follow-up to our interview with Qualcomm CEO, Cristiano Amon at Mobile World Congress where we interviewed him and he talked about all of the investments that they’re making into Edge AI. And sometimes we forget that there is this Edge where you do inference. I mean, sure you can do that inside of the data center, you can do this on the Edge, but Qualcomm actually beat everybody in some power efficiency tests. So for instance, the amount of images per watt as an example. And if you think about it and the pressure that Boards of Directors are getting for the environmental elements of the business – that has to count for something. And I’m convinced more than ever that we will see Qualcomm in the data center or the data center Edge, and whether it’s the A100, the A200, if it takes 10 years to get into this market, Qualcomm is going to make a move.
And then when you connect that with what they’re doing on the client PC and the move they’re making inside of Windows, I think this clearly puts NVIDIA on the map if there were any doubters that Qualcomm should be put in the mix of potential people who can benefit big time from this. I think everybody knows that when it comes to premium Android smartphones, Qualcomm was going to make a major play here. I mean, they have a very high degree of market share, here. I don’t think that’s going to change anytime soon in the Android market. But when it comes to infrastructure AI, this was quite a move here and I almost, first of all, I was glad that Reuters picked up on this. Steven Ellis is a longtime reporter on chips. I’ve had some good relationships with him. So congrats on Qualcomm and as we always say on this show, competition is good. Competition drives innovation, competition keeps costs at a reasonable point.
Daniel Newman: Yeah, I think we hit that one and good call on adding Qualcomm to the discussion, company that I think will continue to surprise in the space. And we know the Edge is growing and becoming more and more critical, and we’re going to have to do more and more inference on the device. That’s also going to be an interesting inflection for the PCs Pat, in the near future. Let’s talk IBM Z. I mean, while we’re busy going into the future, someone’s got to have all this data safe and protected and run for these critical workloads. And I don’t think any company does more of that than IBM.
Patrick Moorhead: Yeah, I spent nearly a week in Poughkeepsie where it snowed and half the city shut down. It was a really good event. We talked a little bit about this conference, but what we couldn’t talk about was the news, and that was the IBM Z mainframe goes rack. So what does that mean? So since I think 1964, every time that you had to buy an IBM mainframe, it came – you had to buy the entire rack. And that rack was in so-called industry-standard size. Industry standard size, in other words, X86 is 19 inches. And you also came with special power requirements. So you had to buy the rack, and it typically came with IBM networking, came with IBM storage. But for the first time, you can buy a single module with IBM Z to put in the same rack as you put all of your X86 stuff, you can plug it into the same power plane as you do everything else, and this is a big deal.
So first of all, it removes yet another set of objections why people wouldn’t adopt Z. But what you get here is you get seven nines of resiliency, which there’s not a single X86 platform out there that can do this. You get on-system machine learning acceleration with the Telum chip, you get full-time, all the time accelerated and quantum safe cryptography based on these blocks on the Telum chip; sir, you can supersize that with a special card and it runs Linux, Red Hat Linux and containerized applications. And it does all of this with much lower power for certain applications than any flavor of X86 you can get out there. So you can imagine all the X86 players are talking about consolidation, but I think IBM could make a play that is consolidating the consolidators, which I don’t know, I like to crack myself up every day.
What I’d love to see IBM do with this opportunity now is come up with an as-a-service appliance model. So for instance, we all saw literally the order of magnitude improvement with MongoDB. I’d love to see IBM, its partners, take that MongoDB as a service. You don’t even care what the hardware is underneath that. You have SLAs and your developers are doing API-based programs. It doesn’t even matter. And quite frankly, the whole what instruction set is it? is mattering a lot less as we see or what vendor is, as we see A&D make a move. And yes, I know that’s X86, but ARM, ARM being everywhere. ARM being at HPE, ARM being at Amazon, being at Azure, being at Google Cloud. So instruction set is even mattering less and less. And when you package this up as an as-a-service appliance, it means even less, all you care about is the API. I don’t know if IBM’s going to go for this.
The second thing I’d love for them to do is take a stand, unleash this to the reseller community, do it under the LinuxONE brand and most IBM Zs are taken through what I would call very high touch reseller network. What I’m talking about are the resellers who drive tonnage. Then you might bring up, oh, well what about profits? Listen, if you expand the TAM and expand the market and drive Z, I’m not going to say every workload you should throw at this that X86 is currently. But take SAP, take Mongo, take the multiple databases that are out there that scream on this because this is a scale up architecture, not a scale out architecture. But it was good news. Congratulations to Ross Mauri and the team.
Daniel Newman: Yeah, not a lot for me to add on that Pat. I think you did a pretty good job of covering it. I think a lighter weight appliance, broadening the market, creating and expanding the TAM, making the capabilities. The one inflection I would say is in a world where protecting the data and especially in sensitive and highly regulated industries is becoming more and more paramount with a rise of ransomware attacks, a rise of other types of risks for companies, the ability for more companies to take advantage of this platform. And as IBM is hybridizing the platform and enabling Z to integrate in hybrid environments, things like hyper protect and being able to move data safely from the mainframe and still have cloud architecture from an operating model standpoint, the company is going to widen its net, create more revenue opportunities, scale up, and of course everyone knows that you need a lot of space to take advantage of mainframe technology. This creates an opportunity to do this with a smaller footprint.
So, all right buddy, let’s keep moving. I got to call my own number again. Do I got to do this one?
Patrick Moorhead: Got to do it, buddy.
Daniel Newman: So…
Patrick Moorhead: Tee it up baby.
Daniel Newman: Okay, so this is more, again, this is a little bit more of a macro topic and I like these kinds of topics, Pat, but I think you and I can have a little bit of fun. We spend a lot of time talking about chip controls and China and we talk about the Netherlands, but we haven’t talked about too many other places where there’s been significant policy and diplomacy issues. But if you don’t remember or if you hadn’t heard, or if you lived under a rock or you don’t know what ChatGPT is, or you don’t know what generative AI is, last week, Italy became the first country to ban ChatGPT.
Why in the world would a country ban ChatGPT? Now we all know that you can do search and it can be wrong. You can go on Facebook and you can get a whole bunch of disinformation. You can, of course, listen to your Aunt Sally tell you about the political landscape of the world and then repeat her story. So that’s bad. So why in the world is ChatGPT bad? And I think the bottom line of it, well it really isn’t. But the problem when you have a tool like this, and I think there was some news that broke yesterday, by the way, about Samsung. They used ChatGPT for something and it turned out to be wrong, like a big company using it and applying it. And so the moral of this story here is that this stuff’s moving really fast.
This stuff’s moving really, really fast and a country, and there are many countries around the world that have already what I would call fledgling or sensitive, slow-moving risk, at risk economies where you suddenly have something that could take a huge percentage of the knowledge working population and replace it. So there’s a couple things I think is the data breach is kind of the why they did this. The fact is there’s a lot of risk. There’s where’s data coming from? There’s a lot of legal – but I also think there’s a big skilling issue in a country like Italy that probably has significant concerns when all of a sudden most of your middle management tier of workers have significant portions of their work that could be quickly replaced and displaced. So I think there’s a couple of things happening. One, we’re worried about how data’s being collected in order to train this stuff.
Two, they’re worried about how the application of tools like ChatGPT, and then these tools being built into more and more productivity and other kinds of workloads, every day collaboration workloads could impact their workforces. And now they’re effectively saying, you know what? We’re just not going to allow it at all. And that brings questions to not just obviously ChatGPT, cause that’s just one and OpenAI is just one, but you’ve got Bard and you’ve got Firefly. I actually think I put out a think Pat, in just a month there’s been like 60 new generative AI tools that have been developed and gone into market. So I’ll give you a quick thesis and then I’m going to kick this back to you to get your opinion. I think we are at an inflection point right now where the genie is out of the bottle and it’s going to be impossible to put back in. But now that the genie’s come out of the bottle, there are large swaths of the population that are trying to figure out what does this really mean for us?
We saw meaningful transformation with technology. Things like analytics, automation, cloud computing, mobile enter markets over periods of 5, 7, 10 years, social media, where they became truly disruptive. This is something that was because of the proliferation of those other technologies that became disruptive in a matter of weeks to months. With new tools, technologies and capabilities being rolled out on almost a daily basis, it’s going to change the way we work. It’s going to change the way information is disseminated. It’s going to change root of trust, it’s going to change legal basis and it’s also going to change search. I think the whole world is absolutely uncertain of what this means and what this is going to do.
Having said that, I think Italy is completely over their skis. I think there’s no way they’re going to be able to control this. I think it’s a dream. It’s probably as dumb as Elon Musk’s comment about putting a pause on this thing so what, that China could catch up? But having said that, I don’t think this is the last country that’ll try to ban it. It’s just really interesting when you see modern developed countries with democratic policies that aren’t North Korea or China telling people that they can’t use modern technology.
Patrick Moorhead: I got to tell you, I was trying to figure out if this was related to what Musk was talking about in his letter about AI. I think this is more straightforward, which is this didn’t abide by the consumer privacy rules that are part of GDPR. And –
Daniel Newman: That’s what they’re saying. Sure.
Patrick Moorhead: Yeah. And so for instance, I don’t remember getting any prompts, well actually I’m not in a GDPR country right now, so I wouldn’t get these prompts, but I know there are special prompts on what you allow it to use, the information about you and disclose what you’re doing with that information. So I almost think it’s black – it’s almost as black and white as that, but I think that could be just a cover for the, ‘let’s slow this thing down’ conversation.
Germany has made a statement that it could very easily shut it down. I mean, of course it could, it just goes and blocks the IP address. You can’t – good luck stopping that through a VPN. But anyways, anything that I think in society that we’ve tried to stop or slow down, consumers have figured out how to get around it. And in fact, something that’s banned, it makes it even more enticing just using psychology and logic around that. Now, I don’t know. Every country is entitled to do what they want to do. I’m not going to necessarily pass judgment, but I just think this is going to blow up completely in their face. And I don’t know how hard it would be for OpenAI to be GDPR compliant, but notice nobody is having this reaction with Bing or Bard, at this point. So I don’t know what the difference is, but it’s apparent that OpenAI is doing something different.
Daniel Newman: Well, those are just the models that underpin those things. I don’t know, it’s interesting cause like I said, I think it’s more of a…is it a cut the snakes head off thing? Or is it truly a, why go after the big multi-trillion dollar company when you can go after the smaller developer of these large language models that are being implemented? Anyway, something to think about. I don’t know.
Patrick Moorhead: For sure. No, it’s an important conversation and I mean, I remember when they were saying the same thing about Google search and people are talking about self-driving cars. The only difference between automobiles and search is there’s a lot more regulators in transportation than there are in electronics or data or information.
Daniel Newman: Well, there should be more regulators, there just aren’t. Yeah, I mean, I guess with the vehicles it’s a little more binary. People say you either…
Patrick Moorhead: I don’t know, man. Did you just say hope there’s more regulators?
Daniel Newman: Sorry. I hope that there will need to be some regulation and guidelines around AI for sure, and it needs to be consistent. You can’t really do that at a regional level, which is crazy because can you imagine the G20 trying to come together and put together frameworks that we’ll be followed and abided to? Oh my God, no chance. There’s absolutely no chance of that happening. Now, the highway stuff, it’s like, yeah, well if cars crash and kill people, we’re going to stop letting them do that. It’s a little – but like I said, I mean, misinformation kills people too. It’s just harder to make that attribution, whatever, drinking bleach or whatever people do. So anyways, all right, let’s get to something…
Patrick Moorhead: We’re going to be so banned on YouTube on this video, it’s not even funny.
Daniel Newman: We’re going to get banned for saying that? What did I say?
Patrick Moorhead: I don’t know. Bleach, drinking bleach, that…
Daniel Newman: I didn’t recommend it. I mean…
Patrick Moorhead: I know that.
Daniel Newman: I’m suggesting it’s probably a bad idea.
Patrick Moorhead: Oh, it is? Is it bad? I thought it cured – Anyways, let’s move forward here.
Daniel Newman: Don’t say that word. That’ll be the moment that we’ll be banned. All right. So let’s talk about something a little bit more practical. But we came around, we talked a little bit about Qualcomm’s advancements at the Edge for AI, but what about their mega plans to become the next big processor provider to laptops? Up to now, they did not have a Dell SKU. And we all know, I’m pretty sure that Dell kind of leads the market in some places in this space. So having Dell would be kind of important.
Patrick Moorhead: I view this laptop as a pipe cleaner for the big dog that’s going to be coming out afterwards, the Qualcomm Orion. Qualcomm and Dell, I believe, want the Orion platform to drive a ton of volume. It is very differentiated versus anything that Qualcomm has brought out. It has the Nuvia based core, it has some, and I’m hearing some serious AI features in it. So I view this as a pipe cleaner to get this through. And some of the questions that I had – it was interesting. I was trying to find out how to buy this thing. I couldn’t find how to buy this platform. And when I go to the dell.com site, you get to choose from Intel and AMD processors. I didn’t see a Qualcomm processor anywhere. Maybe that’s the sign that it’s sold out. I have no earthly idea and I couldn’t find it on the internet to buy it here in the US.
I do think, and I do know that this is real, and for Dell to do something non-Intel is always amazing to me. They’ve used AMD for a few years but interestingly enough, Qualcomm at Dell isn’t 100% new. Dell had a SKU during the Windows 8 days that had a Qualcomm-based processor in it. Believe it or not, there were three vendors that had ARM-based SOCs for Windows 8 – TI, Qualcomm and NVIDIA. Okay, little fun fact for you many years ago. But anyways, I’m hopeful that the folks at Dell working with the folks at Qualcomm and their channel partners will figure this out because I think it’s very important. I will note too that this SKU is at a very, very competitive price at, gosh, I think, is it $799?
Daniel Newman: Yeah. I’m not in front of it, but Pat.
Patrick Moorhead: Oh sorry, $499. Excuse me.
Daniel Newman: So look, like I was saying the trifecta being AMD, Intel and now Qualcomm makes this whole market a whole lot more interesting. Let’s be very clear. Qualcomm, it’s very early days in terms of market share, but we all know that it starts with design wins. We’ve heard, anyone that’s followed their automotive story knows that the revenue versus the design win portfolio, it tends to have a vast differentiation or delta, and then suddenly that catches up as you go from design wins to building SKUs to shipping product. And Qualcomm with its acquisition of Nuvia made a huge bet, one that’s created a ongoing legal battle with ARM. One that’s probably made our friends at Apple just a little bit nervous because we all know that the Nuvia platform was really designed to be the first PC to really attack that sort of Apple experience.
Right now, that’s really not what we’re getting at this moment from Qualcomm. What we’re getting right now from Qualcomm is signal of intent. Qualcomm took its sort of existing capabilities to build mobile SOCs, especially for the smartphone and then develop them a series of systems that could be utilized in lightweight, low power, efficient mobile devices. And so now what we’ve basically got is a nice solid race towards the next year or two when that Nuvia technology starts to get embedded – I think codename Orion starts to get embedded into the new devices Pat. So getting Dell on board, Dell, Microsoft, HP, not LG, do they have LG? They got Samsung, they’ve got Huawei, and they have Lenovo. So there’s a number of different SKUs now. That SKU is going to be about expanding designs, moving up and downstream. I think the real opportunity for them is going to be the premium tier with the new product. That’s going to be the exciting space. But nevertheless, it’s never a bad idea to say, dude, you’re getting a Dell with a Qualcomm chip in it.
So let’s keep going and let’s finish up here with kind of a tactical one, 13th Gen Intel vPro platform is now featured on the 13th Gen. For those that aren’t all that familiar with what the vPro platform is, it’s basically their integrated, it’s a validated platform from Intel and its purpose is really all about creating a more stable, more manageable and more secure device while maintaining extraordinarily high performance. That’s the way Intel really positions it. This generation and what the company has come out with really focuses largely on security. And a lot of what it’s talking about is that with hybrid work, with more end users out and about, with people not constantly on company networks and having visibility within IT departments, the attack surface continues to grow.
So in the 13th Gen, the company is really focusing on reducing that attack surface. And the company’s come out and said, in this new 13th Generation with vPro, they’re able to reduce it by 70%. And this is covered from one of our analysts – Mike Diamond – did a research note on it coming out so I’m kind of just highlighting some of it. This thing is segmented. So Pat, as you and I talk a lot about when we do some of our advising with them, there is a vPro Enterprise now and a vPro Essentials. So there are some different segmentations, meaning not all of the vPros are exactly the same, which is something I think a lot of us kind of are like, this gets hard. When Intel has a million SKUs. I3, I5, I7, I9, vPro, vPro Essential, vPro Pro. So this is something I’d definitely like to see the company working on, but I think what vPro really does stand for is, hey, these are the key capabilities that a device should have when it’s run by an enterprise with sensitive data on devices that need to be protected.
The big thing that this period two, was that the company included anti-theft technologies on the essentials level, which is more focused on the SMB and adding threat detection capability for that particular audience. So now vPro, even at the essential and SMB level is getting that additional layer, hardened layer of security to reduce theft of data from these devices. Pat, Intel had a great week a couple weeks back, especially on the data center. The company continues to advance, the market is looking to see it not only continued to kind of add features, but as the company that still has the leading market share of PCs, being able to deliver safe, secure, hardened lower threat surfaces for its massive deployments and enterprise clients is critical. So these updates are what I would call sort of tactical sort of incremental, but they’re important for Intel and Intel’s customers.
Patrick Moorhead: Intel not only has the dominant market share in PC processors, but they have an even higher market share when it comes to enterprise managed platforms. And oh by the way, the profitability of this vPro line is a lot higher than the standard Core line, all things equal. So this announcement was not only about expanding the TAM, it was trying to get incenting and giving enterprises an incentive to refresh. Because if you look out there and you have laptops that are four to five years old, they may not – well, they aren’t as secure as this new generation, based on some of the technologies that Intel has put in here. But also the company was making a play that said, ‘your workers can be more productive’ based on what they did. And one thing I really appreciate about this, and I’ve been a little bit critical of Intel on prior vPro announcements is, hey, give me some numbers of tell me how much more I am secure.
And Intel is a very risk averse company, they have a lot to lose when it comes to making claims. They don’t want to be sued for making claims that they can’t go up against, but they came out with some really hardcore numbers, 93% efficacy detecting the top ransomware attacks, 24% better than the software alone. That essentially means Windows 11 on AMD – 26% less breaches, 21% fewer impactful security events, 70% decrease in a tax surface. And I love that stuff. I have been complaining about that for forever and Intel absolutely delivered. The other thing I appreciated was that they came out with, again, some real numbers and real claims about why refresh? And they came out with a, hey, you might refresh, but it’s going to give you 14% lower five year cost of operations for PC.
And listen, I know I was in marketing forever and product management, I know that not everybody takes these claims to the bank, but what it does is it elicits and transfers confidence to me, that Intel is absolutely confident in what it’s doing. I don’t see in this latest wave of PCs the competition doing anything that unseats Intel with vPro. Maybe we’ll see something in the future, maybe we won’t from AMD and Qualcomm aligning itself with Windows and some of the special security features that Microsoft is working on. So congratulations, Intel. Keep the ball rolling. You know when something has a double-digit generational thing, something’s going right and I think this was a really good foot forward.
Daniel Newman: Oh, hey Pat, I’m pretty sure this is the 163rd episode of The Six Five and that’s just our weekly show. That doesn’t count the other 800 interviews and conversations we’ve had. So there we have it buddy. It’s another week in the books. And for everybody out there, thank you so much for tuning in. We really appreciate you. We had a good day, good show, lots to cover. Don’t forget The Six Five Summit’s coming up in June, early June, Pat, and we announced our headline speaker this week, keynote, Hock Tan from Broadcom. Couldn’t be more excited. For this week though, Pat, for this show, it’s time to say goodbye. No more investment advice for all those people out there that wanted to hear from you how to make money. Anyway, all right, we got to go. Hit that subscribe button, join us for all our shows. Join us for our event. We’ll see you later. Adios.