Unknown Speaker  0:00  
There's no zitz and I said pop up those lips a little bit. Insane zits.

Steve McDowell  0:15  
So, Matt, we took a week off of the podcast. Did you enjoy your? Did you enjoy the inaugural celebrations? Lady Gaga and Garth Brooks. I felt overwhelmed. But I got a little chaotic and wore my USA scarf and my Stars and Stripes underwear. I was pretty patriotic. How about you? Um, it was good. Feeling good. Yeah. Excellent. Let's talk about so and since we've had our last podcast with Intel and AMD have released earnings. Yeah. And, you know, we're data center guys, we focus on kind of the enterprise data center side of that there were some interesting things that are going on. It was a Dickens novel, it was the best it was the worst of times. It was the worst of times, although, you know, expectations for Intel are pretty low. My favorite headline of the week was something like, I didn't write it down. But it was something like Intel data center grew out as bad as we thought it would be. The Intel overall bang, I mean, into overall beat their beat their numbers, right? They beat x, they beat the street. Their client was terrible. Their server the client was great. Server was terrible. So why did 20 billion but I mean, the data center group, I'm looking at it now. I'm trying to pull it up on my screen. Yeah. Data Center group they did they were down. year over year and slightly up. I'm sorry.

Unknown Speaker  1:51  
They work their way down year over year and in virtually every area platform down 20%. Cloud down 15. Enterprise down 25. It was not a good, it was not a good quarter for their their operating numbers operating revenues up. But they're

Steve McDowell  2:10  
they're toppling down considerably. I've got the right slide up. Now. I had to zoom in my eyes now that I'm pushing 40. Yeah, the platform group was down 20%. They still delivered $7.2 billion on the platform group. That's not just CPUs, right. That also includes motherboards and chipsets and all the things that go around that. Yes. Which one of the analysis I read, called that out because revenue was down 15%. But their profits were down. 40%? Correct? Well, yes. Yes. Operating Income year over year was down. 40%. Yeah. Yeah.

Unknown Speaker  2:56  
Yeah, it was. It was, you know, I know they killed it on client. It was it was a rough was a rough year. And data center.

Steve McDowell  3:05  
So so well, let me let me say a couple things that rough year in data center. And during my earnings during the during the call during the earnings call, I'm a Gaussian or one of the others talked about, you know, the hyper scalars are not buying what they need to be buying right now. Right? They made it sound like there was some seasonality with the hyper scalars. But then, you know, three days later, we get AMD who turns around and has record earnings on epic, and they they, you know, call out the hyper scalars I think Intel might be losing some share in the cloud market, not just Intel, but also the Graviton. In these AMD is 170 676 year over year. Now that includes embedded semi custom gaming consoles and baked into that

Unknown Speaker  3:50  
they're still way up year over year. And they're up 13%, quarter over quarter. And so that q4 number does not

Steve McDowell  4:00  
the semi customers really big q2, and q3, and semi customers are game consoles, yeah, gaming consoles and stuff like that. So that q4 number really is more strongly epic, and they're getting better. And so they were still up 30% quarter over quarter. So, you know, if there's a softness, I think the softness that that Intel's experiencing is a softness for their heart. Expensive or expensive. That's right. If you if you look at the highlights that AMD threw out, Lisa Sue talked about. There's 28 new epic processor, instance types across three cloud providers Alibaba, AWS and Oracle or Azure. Azure, right. It does not say Azure. I'm reading right off her slide. Which is interesting to go after this podcast and look at this because Alibaba was 100% Intel last time I checked so they launched new epic instances. That's brand new. Yeah. There was growth of AMD powered servers and bolted on all of Dell, HP and Lenovo. Yep. Got some supercomputer stuff going on Milan, it they said it's tracking to launch in March. Right and more with more design wins. When is it? Yeah. And so talk to me, Matt about Milan vs icelake likes like is the newest Zeon processor. Is it the Is it the same kind of difference between the current generations?

Unknown Speaker  5:36  
Yeah, yeah, Milan is, if you think about Tick tock, right, Milan is kind of talk ish to Rome's tech, if that makes sense.

Steve McDowell  5:48  
But compared to to Zeon, you know, it's still a huge core count advantage, that manufacturing process, you know that the nodal advantage, they're still down, and still memory advantages and security advantages. Now Zeon, Intel talked about a lot of improvements they've made to security in icelake. And, you know, those bairro

Unknown Speaker  6:12  
the way they're telling the story, they'll there'll be some parity with with AMD, but as of right now, we haven't seen it so.

Steve McDowell  6:19  
And so during the call. During the call on the Intel side, they indicated the 10 nanometre icelake xeons. This is their, this is their first PCIe Gen four, right? Yeah, yeah. So their production ramp is going to be late q1. So what they say so we should start seeing servers man, late q2, and q3 mid year. Yet, the

Unknown Speaker  6:42  
one thing that makes me feel good about Intel with that is they tend to do a lot of seeding ahead of time. So by the time icelake, actually ships,

Steve McDowell  6:51  
it'll already be all over the cloud data centers, right, and they've already started started using so they're already hitting ramp, which is good for them. Okay. And AMD is doing ramp as well, they started shipping, Milan, Lisa said in December or in q4, and continue in full launch in March. Everybody's going to be taking building systems around you as well as what she says she said, this should increase the footprint for AMD across all the server vendors. Yeah, I will tell you, I think AMD is hitting, you know, call it exit velocity with epic. You know, they're, like 176% 13%, quarter over quarter in a in a COVID driven market, right, where the server market overall has been soft,

Unknown Speaker  7:44  
is impressive. So you know that they're hitting their stride? What's your prediction?

Steve McDowell  7:51  
I don't we did a predictions podcast last time as a server market gonna remain soft in 2021. I think it stays soft. I think it's gonna be 2022. Before late 21, late 22 or early 2010, before you start to see it, findings. And I do think to what Intel saying I do think there's some seasonality if you will, to the to the cloud buying cycles, without a doubt, and I think it's going to extend even longer. But you know, I also, with that said, I do think COVID is driving more business, I know COVID driving, you know, greater adoption of cloud within a lot of companies and things like ml, you know, some of the HPC things you can do in the cloud and advanced analytics, you'll see companies take more advantage of that, and 21. So maybe it slows down but the higher the higher performing instances, you see consumption increase. That's my that's your prediction, Intel shipping accelerators in the cloud as well for they talked about on their on their call the Ababa gauti ai training accelerator, which I guess is to compete with GPU based training. be interesting to see if they get traction. See. They announced they've announced some instances on a CPU over an Amazon AWS. I was gonna ask you where they were, where they were, you're saying? Yeah, but that's the market dominated by dominated by Nvidia right now. Amazon put in so we talked about this before, but Amazon put in some AMD GPUs as well, but they're not positioning those per machine learning. So this isn't. Yeah, that's just they're just using us from real workstation, I believe. But AWS has its own accelerator that AWS has their own accelerator, as does Google. And then Xilinx is also selling into there and at some point this year, right Xilinx is going to become part of AMD. V mountain, not in the not too distant future, right. I thought it was like February or something like that that was being announced. And I honestly I'm not tracking it closely. out. So I don't know what it takes to what it takes to close that whose approval they need. Unlike, you know, Nvidia arm which needs, you know, three different governments to say yes. Yeah, that's an ugly one. See a great quarter for, for AMD on the server in the data center and server front. outlook is pretty incredible.

Unknown Speaker  10:23  
You know, Intel. I know, they killed it in q4 with their number, but, you know, it has to event client driven because as I look at data center, they did not over perform, that's for sure. Yeah. And again,

Steve McDowell  10:36  
this is not a market where there's a lot of growth. So, you know, for Intel to remain relatively flat. Not necessarily a bad thing for Intel. And AMD is upside. Right. It's coming into this constrained market right now. What do you what do you make of kelsier? as the, as the next sees going home? Right, he's always wanted this job. I think everyone's talked about him in this role, you know, for as long as we've been aware of pat Gill center. You know, it's it's it's all indications are right, what we're reading, what we're hearing is, it's already making kind of a cultural difference. And he's not even, you know, showing up every day yet. Yes, I think the the, the folks at Intel, whatever they call themselves, clearly wanted some new leadership and some fresh blood. Feeding. It's a good a good move. I think that's a good fit. Right? I mean, Pat, I think Pat will do great in there already understands the technologies and engineer. He certainly understands the enterprise business. He's been at VMware now for eight years, nine years. You know, he understands the business side. You know, going off and running. VMware had to be like CEO school. For a job like VMware, I don't know who else I'm sorry, your job like Intel? Yeah. I don't know where else until we've gone for a CEO. Honestly. Yeah. I mean, I think it makes sense. And, you know, as I said, He's already making noise about, you know, how he's going to fix the fab issues, you know, we're not going to be 100% outsourced to tsmc in 2023. You know, despite all the rumors to the contrary, so he's, he's playing strong offense, at least from a messaging perspective, what do you think? I think we're gonna do great. And you know, one of the things you and I really do, for a long time, a lot of people moving back and forth. And one of the things I heard about the culture at Intel was they had this, this, this notion of what they call constructive confrontation. You go into meetings, and you beat the heck out of each other. And you just kind of end it to the point of sometimes it being abusive, and that was supposed to stir, iron sharpens iron kind of thing, right. And I'll tell you, as an analyst covering them, you can see some of that come out in the interactions with them,

Unknown Speaker  13:00  
perhaps a different kind of kind of cat writing, and I mean, a positive way. He's a very calming influence. Outwardly looking at the outside, very calming influence. He's got that pastoral kind of way about him. super smart. He can hold his own technically, but he's not a certainly not a hothead, not a. So I think he I think he's going to do very good things. And I say all that because I think it tells biggest issues event more cultural than any, you go, you get the smartest people on the planet, that company, you know, they've got amazing IP, they've got amazing potential. I think somebody needs to fix the cultural stuff here. I

Steve McDowell  13:40  
think that's a cultural thing. And the other part of the equation and, you know, it's hard to feel bad for large global corporation, but they don't always get treated fairly by the by the people that comment on them, right. People love to beat up on Intel's big easy target. And, you know, I see this with large companies all the time. But you're right, I mean, their IP that, you know, they still leave the world and microprocessor design. Yeah. From a systems level down. Now, you know, the CPU, the CPU, or the Intel's m, or AMD has got some serious skin in the game. But AMD doesn't have that holistic view of the market. They didn't tell us. Right.

Unknown Speaker  14:18  
Right. But they made the view they don't have the portfolio. Right, right. That's what I mean, just. But you're right. And that's the that's the thing. You're right. It's kind of like, as a Red Sox fan. It's kind of like Yankees and Red Sox, right? Everybody hates the Yankees. I always beating up on my team. My team started to beat them, and I didn't hate them quite as much. Right. I think that's kind of how Intel viewed you. Right? It's easy to take shots at that.

Steve McDowell  14:48  
It is but I think the press is, you know, much like we've seen with our presidential transition a little bit right. The President immediately before the guys even showed up in the office talks about how he's changed the culture. Yeah, you Engineers out of retirement and all this other stuff. I mean, the truth of the matter is he can come in and, you know, put a stake down and define what Intel's culture is going to look like, or to the degree that a CEO can. But the reality is the decisions he makes, you know, this is a big boat, and it takes three years to build a CPU. So, you know, from from how do we fix our bad situation to two, what are we doing, you know, competitively against, you know, epic and arm. That's going to take a while to shake out, right, short term he could do as executive orders and, you know, make it a better place to be, and lay out a roadmap.

Unknown Speaker  15:41  
So, you know, it's funny you say that, because there are a couple of things that have been in the back of my head. Just waiting on. And you're right. I mean, it's a good three years from kind of concept to delivery. But you know, there was this guy that went to Intel three years ago by the name of Jim Keller. I wonder what the fruits of his labor are going to be if there are any. There's also a guy that went there by the name of Raja kaduri. Right, that is up in GQ. I'm kind of curious to see if anything comes out of because they're both really smart guys. And both,

Steve McDowell  16:15  
you know, you look at epic, and that is that's true color through and through. Right. kind of curious to see if there's anything that what he left behind when he left and what Russia, you know, what's coming up from Russia? Is it just I don't know. But you know, is it really going to be is it three years from the time Pat steps in? Or maybe, maybe not? Maybe the bomb? I'm talking about Gil scenes of influence, not necessarily killers, right. Yeah. I'm kind of curious, kind of curious to see what happens. It'll be interesting. Yeah, we'll keep watching them. As we do. Yeah. What else you want to talk about that? I'm scrolling through my list. What

Unknown Speaker  17:03  
else you got?

Steve McDowell  17:05  
What else I got some Microsoft also announced their earnings yesterday. Yesterday, as we record this, they read the word. Microsoft also announced their earnings this week. And just zoom in on kind of intelligent cloud. So nobody I think that, you know, as an analyst, I hate that Amazon doesn't break out AWS revenue. And Microsoft doesn't break out Azure, right. they bury it all in here with everything they do server related.

Unknown Speaker  17:32  
Yeah.

Steve McDowell  17:34  
But they there is some some some news here. They said that the Azure revenue grew 50%. Yep. 42 expected? Yeah. Server products. And yeah, you can look at Microsoft server revenue is, you know, another, another metric on how the server market's doing. But server products revenue grew 4%. They also talk about weakness in the market, the same weakness that Intel talked about.

Unknown Speaker  18:06  
We're gonna go a little bit now I hate to say it, you know, it used to be that Microsoft was the bellwether of of, of where the server market was, but you know, in today's world,

Steve McDowell  18:18  
it's all Linux. All Linux, man. Yeah. It's crazy, you know, right. Right. Yeah. But yeah, you're the server analysts. I don't know that. I don't know the split. But what is the Linux, Linux? Windows Server split?

Unknown Speaker  18:32  
I don't have that number. But I know that open source in general is I think it accounts for like, 65% of data center deployments. Now.

Steve McDowell  18:42  
That is crazy. But then, of course, yeah, more Microsoft shows up when people are hosting things like, you know, SQL Server still has a giant footprint. And there's a full server version for Linux now. Right. So and then you also have, you know, things like SharePoint and all the infrastructure around office. Yeah, right. But those are those are, you know, that's one server in my enterprise. Hundreds or 1000s? Yeah, yeah. It is a it's funny, and I was just talking to someone the other day, it's crazy. I remember when I was in it, and state of Oregon. And this was 2005. In my, my IT director, my CIO rather not he was my CIO. I forget his name. There's this older gentleman. He's like me, I am now he walked around and Birkenstocks and you know, suit pants and a shirt and tie.

Unknown Speaker  19:36  
He was like a hippie, clean, clean cut hippie. But you know, he was pushing this 2005 pushing for

Steve McDowell  19:45  
open source with her adoption from the state. And the big concern was, you know, it's all skunkworks stuff and it wasn't mature enough. It wasn't codified, if you will, right and supported. And now, it's like, his vision. I just pictured him in his, you know, being happily retired somewhere in his Birkenstocks and looking at the legacy created. But it's it's everywhere now. I mean, I don't I don't talk to anybody that's deploying Windows Server anymore.

Unknown Speaker  20:18  
No, no.

Steve McDowell  20:21  
Yeah. I'm looking, I'm scrolling through Microsoft. Why do you ask me a question?

I don't know that I have anything else to say about Microsoft? I mean, it's interesting. It's good, you know? All right. I don't, I don't pay a lot of attention to them on a day to day basis outside their cloud efforts to just be completely transparent. I don't either, you know, it's it's funny, and I'm the likes of Microsoft, Oracle, the big the big enterprise guys years past. Not that they're not relevant, but they're not relevant in the same way anymore. Now, right. And when I look at, you know, I look at the data center world, right, the software I'm paying attention to, or, you know, folks like Nutanix. And VMware certainly talked about this 100 times on the podcast, right, VMware. And we look at them the way we looked at Microsoft 1820 years ago, for sure. Or even 10 years ago, a little bit, right. Yeah. It's always hard to keep up with, you know, who is relevant in the data center. Now, the thing with open source, right, it's made, or there's so many, so many variants, and so many ways you can go so many options available to the enterprise, you know, outside of Red Hat and su se or, you know, there are a few that want to but beyond that, right? One that I do want to point out. So, Gil center is currently CEO was until a few weeks ago, at VMware. And he left and he said in his statement that I wasn't looking to leave VMware. Right. But you know, it's kind of like Intel's calling me home. Three months ago, or two months ago, they also lost their chief operating officer, he went and took on a CEO role at Nutanix. VMware suing him over that. And then one of their commercial clouds use left and went to become the chief sales Officer of Pure Storage. So a lot of defections at VMware. But I think everything that we see, as we look at VMware is it's a good company, it's a healthy company, their execution is on target. The people at VMware seem to like working at VMware. So I don't think that there's an institutional problem. I think that all of these guys saw an opportunity. Right. And, yeah, like it aligned with kind of their personal or where they wanted to go with their careers. I think you're right. I mean, a lot of times, yeah. When you see those, those defections, you're like, oh, defections? Yeah. But you know, it sounds bad. When people leave, you know, like that. You think, oh, what's going on? But this is all coincidence. I don't think it's, I mean, you know, back back in November, when Rajiv decided to leave the clo and go take on Nutanix, the CEO, you probably thought that he topped out in VMware, not knowing that gelsey was gonna leave in a month. Yeah. And you were in who wouldn't want to go run? Nutanix? Right, looking for a CEO job? Yeah, I agree. I mean, look, you look at VMware, and where they are from a product perspective, they are so well positioned, wherever the puck is going, right. When I talk about container and container management, got it, you want to talk about cloud and hybrid cloud, multi cloud got it, one to one on prem management and and, you know, on prem got it, I mean, they are so well, they are Microsoft back in 1995 or so they know it's a good place to be. It is. And with that I'm out of things to say and we're starting to bore me. So I was bored from above. And you're like, Alright, let's stop this thing and let everybody go home.