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Talking Computex, SAP, Cisco, NVIDIA & Microsoft & OpenAI, Lenovo, Lattice Semi

Talking Computex, SAP, Cisco, NVIDIA & Microsoft & OpenAI, Lenovo, Lattice Semi

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 handpicked topics for this week are:

  1. Computex 2024
  2. Cisco Live 2024
  3. SAP Sapphire Orlando 2024
  4. US Investigates NVIDIA, Microsoft, OpenAI
  5. CEO Change at Lattice Semi
  6. Senior Leadership Change at Lenovo

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.

Transcript:

Daniel Newman: We are back, The Six Five. It is episode 219. We’ve been gone now a couple of Fridays. Some people even missed us, at least that’s what the Twitter’s told us. It was hard, Pat, to be away. I got to be honest. I wasn’t totally feeling my full self when I got midday into Friday and I hadn’t potted with my bestie yet. But having said that, “We all need a little time to get away,” I heard someone say. I think that was a Peter Cetera song. I’m not quite sure. But buddy, good to see you. Good to be back. Huge week this week. Where are you? You look like you’re back home. Are you back, back? Are you back, back?

Patrick Moorhead: Buddy, I am back, back. And let me just come right out and thank you, the audience, for being so patient. I was out on a vacation. It’s been about 15 years since I took a proper vacation. 15 years ago I was a corporate executive and you could do stuff like that. But when you are a business owner, a multi-business co-owner, you really need to watch those things. There’s never time to take a good vacation, but I took one. I am back. And bestie, thank you so much for covering for me. I will make it up to you some way, shape, or form. And by the way, we’re competing with the WWDC right now, that just kicked off about 14 minutes ago, so we’ll see who has the better draw.

Daniel Newman: Yeah. Yeah, I get a bad feeling, Pat, we’re not going to be super stoked about the results. Although, I don’t mind if we do draw more than them. I can tell you, I’ve been talking to a lot of press today about Apple. I’m sure you typically would. I don’t know if you’ve fully immersed yourself back in the seat yet, but yeah, look, it’s a big day. NVIDIA split its stock, which actually fundamentally means nothing, except for the fact that there’s now 10 times more shares issued. But it is a cool thing. If they can get back to 1,000, they’ll be worth 30 trillion. Why not? Gosh, let that baby run.

I’d say there’s a little bit at stake over at Apple today, Pat. And I know that’s not one of our topics, we’ll probably hit that next week when we’ve heard everything that’s happened. But I’d say there’s a little bit at stake that they get it right today, that they leave the world convinced that they actually have some plan to monetize and to deliver as an innovator in the AI space, other than dropping Google and OpenAI stuff into their platform. But we’ll razzle them later. Look, we had what? You and I were brainstorming, it was 75, 5, 7-5 topics. We’ve tried to boil this down to six.

And by the way, everybody, I can’t help, and you’re going to get a little bit of this from me today, but it is the day before the start of The Six Five Summit. Tomorrow morning it begins. We’ve got an amazing lineup, over 60 speakers, over 40 companies. I’m going to maybe tout that a couple times, Pat, throughout this day. And I’m sure you will too. It’s going to be amazing. But that’s not why we’re back. That’s not why we’re here. We’re here because, frankly, we miss you. We miss the audience.

There was a lot to talk about. We had, what? We had Computex, Cisco Live, SAP Sapphire. We had a big probe in FTC Probe now into AI. I wrote a piece about that on MarketWatch months before it happened. I read the tea leaves. We had a big CEO change at one of the semiconductor companies that we’ve worked pretty closely with. And another senior leadership change that actually fundamentally structurally changed our Six Five Summit. It did. It was not timely. But you know what? It turns out that businesses do not make leadership change decisions around The Six Five Summit yet. Maybe one day we can get there, Pat.

Patrick Moorhead: Hey, did you tell everybody where you are? Or did I just miss that.

Daniel Newman: I don’t like to talk about myself that much.

Patrick Moorhead: Oh, yes you do. Go, go. Where are you?

Daniel Newman: I am in a bunker.

Patrick Moorhead: Are you in a bunker?

Daniel Newman: In a bunker. Literally looks like a bunker. It’s not a great shot. There’s something about Europe and really small hotel rooms with really small desks, and really minimal amounts of things. I go to other places around the world, I find shelves and stools and things. And I prop up these setups, they look awesome. When I get here, I’ve got nothing. I’m angling up, you’re looking up my nose. I’m shining two really bright incandescent lights right in my face right now just because it’s either in the dark or you got windows out to some ugly apartment building.

But I’m in Malaga. Futurum Group is the global research partner for the Digital Enterprise Show that convenes here every year.Yeah. And so, we’re doing that at the same time as doing The Six Five Summit, at the same time as being at our firms at Infocom, and PegaWorld, and SAP Europe. And we’re all over the world kicking ass, taking names. That’s what we do. But there’s also just a ton to cover. The real quick disclaimer here for everybody, is this show is for information, entertainment purposes only. And while we’ll be talking about publicly traded companies today, please do not take anything we say as investment advice.

All right, Pat, it looks like I’m actually going to do what I never do. Because you can tell I didn’t set this up. But I’m going to call my own number on the first topic. Pat, you had the luxury of not having to spend 14 hours sweating on a jet between San Francisco and Taiwan twice in a 72-hour period. But having said that, I think I did have the opportunity to attend what will be the most formidable Computex possibly in my lifetime. There’s a lot to cover. It started off with-

Patrick Moorhead: … so much to cover. I mean, so much to cover.

Daniel Newman: Yeah, I’m going to pick a couple things, because we got to move. I got a hard stop. I got real work to do, you got to work. Listen, it started with a non-keynote of Computex, but it was the biggest keynote of Computex. And what do I mean by that? Well, Jensen Huang went out to the market. He riled up the town, he rented out the NTU gym, the stadium, whatever you want to call it. And did a 4,000 person, what I would say, a modified version of the keynote that he gave at GTC. There wasn’t a ton of new there. I’m going to be candid about that. But I think in Taiwan there’s one thing that became immensely evident. Jensen also has… His pseudonym is David Lee Roth. He is also the David Lee Roth of AI.

And that was even more evident when he started signing the chest area of women on video. And that got out there, that was a super interesting moment. But overall, he’s a rock star. I think he had a bigger detail and more bodyguards and people running around with him in Taiwan than any star. I think he’s like Ronaldo here. I think he’s like the Ronaldo of AI now. I’m trying to think of what Dan Ives would say other than the Godfather. Because he likes to do that stuff. But you know what, Pat, this show wasn’t really a data center show, in my opinion. Yes, there was data center technology, but this show was the amalgamation of a January keynote that you gave with six or seven of the biggest OEMs on the same stage at CES, and said the super cycle for AI PCs, now known as the Copilot+ PC, is coming.

And let’s just be clear, that’s what this show was all about. It was all about leapfrogging and hurdles. Qualcomm came out with a bang, followed on the build release. Satya Nadella giving them the backing that they were the Copilot+ PC partner. Built on their architecture following their Nuvia acquisition, Orion architecture, some really, really positive designs. But this show was all about Intel coming out and saying, “Wait, wait, wait, we’ve got something too.” And then AMD coming out and saying, “Wait a minute, we’ve got something too.”

And what it really became was a really exciting competitive situation in which AMD, Intel, and Qualcomm. And then you could say there was a little bit of a standing ovation for the arm MediaTek and NVIDIA on their own little end of the spectrum, all talking about what the future looks like. Do AI PC, Copilot+ PC experiences look like. And we, of course, had The Six Five there doing a bunch of exclusive coverage.

Patrick Moorhead: Very jealous, man. Watching you and Ryan replace me. And I got to tell you, man, I-

Daniel Newman: Yeah, it was comfortable.

Patrick Moorhead: I almost jumped on a plane.

Daniel Newman: Jumped. I’m going to stop there. Because like I said, I could talk for two hours about this. The net/net TLDR, as I like to say in my tweets. The TLDR is effectively, this was the moment, this was the coming out. This was all about client. Commercial client, consumer client, but about this next generation of mobile PCs powered by AI experiences. Call it what you want. That was my big takeaway.

Patrick Moorhead: I’m going to do very quickly, probably one comment per company. NVIDIA, a pretty good job segmenting their AI PC play. It’s different from the Copilot+ PCs, but I like the way they segmented light AI, heavy AI, and CloudScale AI. They did come in with RTX AI laptops. And let’s not forget that NVIDIA was the first company to introduce accelerated AI on any PC platform, which the market needs to give them a little credit for. But does NVIDIA really need any more credit? They also introduced a developer toolkit called the RTX AI Toolkit, to outline how ISVs would leverage all this goodness. And by the way, you’re looking at 1,300 TOPS on the highest end NVIDIA GPU compared to 45 TOPS battery-powered, super-duper optimized. I can’t wait to see what actually pops out of the hatch. Can’t run recall on it yet, but we’ll see.

Qualcomm was really a reaffirmation, blew my mind. I’ve been in the industry going on 34 years, my gosh, almost to the day. I’ve never seen a company land this hard, this fast, with a new class of notebook processors. AMD, again, I’m focusing on the client stuff here. Zen 5 made showing, 16% IPC. IPC means everything when it comes down… Almost everything when it comes down to doing CPUs. AMD got back in the game with its Zen architecture, and then has been making some incremental improvements to that.

Now, what I do want to see is the crawl chart though, to show where those advances come from. And again, IPC, it’s not about clock speed, so it’s instructions per clock. Ryzen AI 300, classic AMD by providing more. That’s 50 TOPS. That’s what AMD does, they give more for the same. Very rarely do they give… Well, sometimes they give more for less. But classic AI move, really interested to see the efficiency of those 58 TOPS.

Daniel Newman: That was the hot topic, Pat, was great performance. But everybody, every press person I talked to, how efficient? What is power per watt?

Patrick Moorhead: And it’s not that people don’t believe it, but the numbers are big and impressive. I cannot wait. I’m hoping Signal65, a sister company of ours, does do the testing on it. Intel, Lunar Lake, Pat Gelsinger came out guns a blazing. Basically said, “Lunar Lake running in our labs today outperforms the ex-elite,” that’s Qualcomm’s, “on the CPU and the GPU and an AI performance. Delivering a stunning 120 TOPS of total platform experience.”

Again, can’t wait to see the power testing, can’t wait to see the efficiency testing. Ryan Shrout, if you’re listening, you probably aren’t. You’re probably watching Apple. But if you are, let’s get one of those into your labs. And I love Pat Gelsinger coming out and just going after it. He had a comment about Jensen and Moore’s law as well. Finally ARM, Rene Haas came out and said basically there’s no reason that he couldn’t see getting 50% PC market share in five years.

Man, I love… I don’t know if you’re too young to know this, but GOBOSH, go big or stay home. I don’t know if millennials use that, but it was big for us gen Xers. Not to be confused with boomers. But anyways, I appreciated that. And the other thing that ARM came out and talked about was the claim of 100 plus billion ARM devices ready for AI from the cloud to the edge by 2025. Makes a lot of sense, given that most AI is done on the CPU. But anyways, whether it’s ARM, Intel, NVIDIA, AMD, Qualcomm, it was just an absolutely chip extravaganza.

Daniel Newman: Yeah, it really was, Pat. And by the way, our newest intelligence actually came to this really interesting conflicted data point because it talks about how much Intel is being used in AI. When we talked to the decision-makers about where AI is going to run, and the workload volume was still super high. And I was looking at it, I’m like, you share this and you don’t contextualize it, most people won’t believe it. Because I think you and I and three other people on the planet are talking about the fact that AI is still being done on a lot of traditional CPUs. We’ve gotten super caught up in everything being on a GPU, which is great, but it’s not really the case. It’s kind of interesting just because I think it’s going to take time, but it also shows how much market there is left to be had in terms of the pivot that’s going on. Pat-

Patrick Moorhead: Well listen, it totally makes sense. I mean CPU, GPU, NPU, FPGA, they all have different roles. And I can’t ever imagine the CPU just becoming a dumb controller, or something to move data around like the memory controller. I just don’t see that happening. It is so easy to program.

Daniel Newman: Does it become the hierarchy of need? Meaning, depending on the type of compute and the workload. I think it’s also extremely wasteful. But, I don’t know. Remember, Pat, CEO math. The more you buy, the more you save. So we buy GPUs, buddy. All right, let’s move on. Let’s talk about the next thing. There was a bunch of other events, despite the fact that Computex was raging. NVIDIA was, Pat, by the way, we didn’t even mention this, 3 trillion past Apple. It’s bigger than Apple for a minute last week.

Patrick Moorhead: I know, it’s crazy.

Daniel Newman: Mind blown. Cisco Live though, Pat, we weren’t there, but you had people there on the ground, I had people there on the ground. What were your big takeaways?

Patrick Moorhead: Yeah, so very similar of what we’ve seen for infrastructure and software companies. The big event is all about how AI gets integrated into everything. And Cisco Live 2024, it was exactly that. AI integrated into what they call the digital experience, into security and into observability. A good example of this was AI power ThousandEyes and AI integration into Cisco network and cloud. The company also came out with the announcement of Cisco Hypershield. Basically, a new architecture that it’s a distributed security architecture that goes across the hybrid multi-cloud, and that includes SaaS, that includes infrastructure, it includes cloud, colo.

And Dan, you know I love these hybrid multi-cloud combinations, because essentially means you can make money regardless of where any of the compute or the storage is happening. So a really interesting alliance between Cisco and NVIDIA too, called Nexus HyperFabric AI cluster. It’s essentially NVIDIA showing how they can play in this networking game like we’ve seen with the likes of Broadcom and also Marvell. And heck, they might even be powering that. But I am sure there is some integration of Cisco’s own Silicon as well.

Daniel Newman: Yeah. Look, a couple things. One is a partnership with NVIDIA should never be a surprise to anyone at any point at this particular juncture. It’s a-

Patrick Moorhead: Come on, Dan, it’s novel. Nobody’s doing that.

Daniel Newman: It’s actually key to survival at this point. There’s a survival consideration that some CEOs are now aware of about being able to align with a company with that kind of momentum. You can’t make that up. But the overall space is, look, there’s about 20 to 25% of that spend on AI infrastructure is going to fall into networking. That’s a significant opportunity for Cisco. Over the past couple of earnings, you and I have went on to the fact that Cisco is a company in transition. By the way, a lot of people have enjoyed laying over the Cisco chart.

Patrick Moorhead: Yes.

Daniel Newman: Have you seen that all over the internet?

Patrick Moorhead: I brought that up. Dude, I brought that up 18 months ago. Cisco was the builder of the internet.

Daniel Newman: Yep. And now we’re building an AI internet. But the point is, is that you got to route the data, move the data, and Cisco still has a pretty strong position. Cisco’s battling an emboldened Arista that’s been on a pretty big growth terror, and is fighting for market share. It’s been battling by pivoting to more software, more services, more recurring revenue. Cisco’s done a really good job in its strategy to get what? Over 50% of its revenue is now software, and the significance of its ARR is becoming palpable. Hasn’t really impacted the company’s valuation as much as I think it would like it to, but I think that required pivot has been made. And I think Chuck’s getting some mileage out of that.

The early close on Splunk has been good. That was an important transition, it got a lot of attention there. When we have all this data across the network, the ability to observe it and act on it quickly was always part of the vision. I thought getting that done, having that out and being able to really lean into that at Cisco Live was important as well. The overall state of Cisco, it has a big role to play, Pat. It has a big role to play across this transition that’s going on to AI. The network is going to be palpable. The network at the edge is going to be substantial. We’ve definitely got the opportunity for Cisco to gain momentum and attach to this particular trend line, and it’s doing it through diversification. So it was an overall solid Cisco Live, Pat. Hopefully, you and I and the calendars will allow us to be… I’d like to get back next year.

Patrick Moorhead: Totally.

Daniel Newman: Like I said, our team was there, appreciated all the great coverage from the folks across our teams that were there. And like I said, keep an eye on this one. We need to see that attach to AI revenue growth, and that’s what the market’s going to be looking for. Let’s bounce on to SAP Sapphire, Pat. I’m actually going to bounce over to the SAP Sapphire here in Europe this week. I’m going to sit down with the CFO, Dominik Asam, and we’re going to talk a little bit about what’s going on over there. Very interesting guy. And I had a call with him just recently. SAP really, right now, I feel like under the leadership of Christian Klein is very focused on making sure the market doesn’t think that it’s going to be passed by. This will be the focus of Jorgen Moller’s conversation at this Six Five Summit. He’s the CTO, part of the executive board of SAP. And he actually joined me to talk about how SAP is attaching to others. And that was another big trend line of this year’s Sapphire, the attachment partnerships with Microsoft.

The partnership ecosystem, OpenAI, others that is basically open to LLMs, it’s building on top of it. Joule is the smart technology inside of SAP, but they’re not trying to be the one-stop control everything. They’re partnering with Copilot. Basically, they’re BTP, they’re business technology platform is very focused on enabling businesses to, A, run SAP in the cloud. B, run the most recent and most powerful AI workloads. And C, partner with the other innovations across technology providers in a very streamlined manner.

Pat, I think the market wants to see wins. The market wants to hear wins. I think it has done a good job in terms of growth of its business in the cloud. I do think SAP has some proving to do. And I think it’s doing it, but it has some proving to do on AI. I do think the biggest risk that all these software providers… I wrote a long diatribe about this yesterday, is that there’s only so many layers of abstraction for using AI in your software, where people are going to want less panes of glass. You’ll hear CEOs talking about this a lot. If you’re running Workday, you’re running Salesforce, you’re running SAP, you’re running maybe Fusion.

A lot of companies have all these different things. In the future, people are going to want to simplify. What remains as a database? What ends up becoming your front end? What becomes your CX level? Which part do customers interact with? And then, how does AI play in? Is it a higher abstraction where it can oversee everything, or is it going to be an AI in each application? Which, I think that’s what the app providers would like. I’m not sure that’s what the customer experience that people want would look like.

But SAP’s growth has been directionally good. Moving people to the cloud is really, really important. They’ve made a big focus of that with RISE. Also, check out our CIO practice leader, Dion Hinchcliffe, wrote a really extensive piece. I’ll put that in the show notes. A piece that was so juicy, so good, and so in-depth that even Christian Klein liked it.

Patrick Moorhead: Love it.

Daniel Newman: You know when they get the attention, but what CIOs need to be thinking about here, because that SAP is a CIO/CTO platform that runs businesses every day.

Patrick Moorhead: Pat, congrats on that Dion grab.

Daniel Newman: Yeah, it was great. He did a great job. Like I said, he did a breakdown of SAP Sapphire, what CIOs need to know. And it was just this great one-pager. If you’re a CIO out there, I’ll make sure to share it out with all you in the notes.

Patrick Moorhead: Yeah, very similar to Cisco Live, SAP Sapphire was putting generative AI into more SAP products. Joule first came out in SuccessFactors, and that’s their HRM/HCM platform now integrated into S/4HANA, cloud, SAP Build, SAP Integration Suite. And they talked about even more coming into Ariba and Analytics Cloud. It’s interesting, I really don’t post a bunch of stuff from the news site, but I thought SAP did a great job showing how enterprises can take advantage of AI from a wide variety of use cases.

And that’s whether it’s HRM with SuccessFactor, is it Fieldglass, SCM via SAP Business AI, and Ariba, finance, procurement service sales and marketing and commerce. I thought it was a really good, one of the most thoughtful and compressed things that if you are a CIO and you’re looking for ways to take advantage of it, I could actually recommend it. The other thing is we saw a lot of partnerships. Surprise, surprise. We saw NVIDIA in SAP, we saw Mistral AI in SAP.

We saw Accenture in SAP, we saw AWS in SAP. And then finally, which I thought was super interesting, we saw Joule and how it integrates into Microsoft Copilot to better unify those experiences. And Dan, I think that’s what you were hitting on before, it was good to see. I’m super interested to see how these two Copilots chase each other. Okay, we lost Dan there, and I’m sure we will be getting him back soon. With that said, while we are waiting for Dan, I am going to jump into the US investigating NVIDIA, Microsoft, and OpenAI. Here are the facts. The US government has initiated antitrust investigations into all three of them, NVIDIA, Microsoft, and OpenAI. Welcome back, Daniel. I’m just pretending like you never left and just-

Daniel Newman: I didn’t leave, my heart was with you.

Patrick Moorhead: No, no, I know that. Here’s how the government’s splitting up the work here. DOJ is focusing on NVIDIA, looking at its dominant position in supplying high-end semiconductors for AI. And if you aren’t aware of this dominant position, you must be sleeping under a freaking rock. FTC is going to take on Microsoft and OpenAI, looking at the deployment and development of these AI technologies like LLMs, like GTP 4.0 that we talked about before.

Now, this one’s super interesting. We talked about this notion of, I think I called it pre-crime before, and that’s essentially getting so far ahead of it where before any crime has been committed. My goodness, we’ve discussed what it takes to have a proper… Actually, do we even know what a proper government case is against a tech company is anymore? Which is, there should be some damage. There has been going on for a long time, and you are stifling competition.

And we literally haven’t seen any of those at this point. There hasn’t even been mudslinging from Intel and AMD talking about what companies like NVIDIA… This is pre, pre-crime. But like you said at the beginning, Dan, totally expected. Knew this was going to happen given the current administration. But man, how do you do pre, pre-crime? I have no idea.

Daniel Newman: Yeah. I think Matrix math, the ability for algorithms to detect patterns, eventually it starts to see a pattern. It’s like, I know Pat is going to connect the back to the front. I know Dan is going to go on some unnecessary rampage about the market when it’s totally inappropriate. These things we do. We do these things. Patterns can be identified. All you need is more GPUs, Pat. By the way, let’s just say that more GPUs, that’s be our new show. More GPUs is all so-

Patrick Moorhead: The more you buy, the more you save. Right? That’s what you said. Didn’t Pat Gelsinger come in and say an offshoot of that, which was like the less you spend, the more you save?

Daniel Newman: I don’t even know. What I’ll tell you, I like CEO math, it’s my favorite type of math. All right, listen, let’s move on to something a little bit more fun. Let’s talk about FTC, DOJ probes.

Patrick Moorhead: Dude, I just talked about that for seven minutes.

Daniel Newman: Did you?

Patrick Moorhead: Yes, and that’s what you were talking about. But anyways.

Daniel Newman: No, no, no. All right, we got to cut this one out. This is jet lag here. It’s in full effect. Did I change the topic or did you just run into the next topic when I was like-

Patrick Moorhead: No, no, I just ran into the next topic.

Daniel Newman: Oh my God, dude, I apologize. I came back in the room and I just missed that you’d actually changed the topic.

Patrick Moorhead: It’s okay.

Daniel Newman: Yeah, we’ll get this edited out. Look at all these people watching. They’re like, “What are these guys doing?” Hey, listen, part of the jet lag effect is that you periodically leave the world, but I came back here. Okay, let me just give them a real quick take on this one, Pat, on what’s going on. When a company grows this fast, gets this big, and becomes this market dominant in a short period of time, it is obviously and emphatically going to get attention of regulators. Remember, less than two years ago it was under a trillion in market cap. If you look at the runs that it’s taken a Microsoft or an Apple to achieve these kinds of market valuations, it’s taken decades. It’s happened on a steady yet up into the right path, but one that you could ski back down like on a bunny slope.

This one looks like a straight jump off of K2, you have your parachute. And so what goes up that fast often in markets does come down that fast. The difference here is this doesn’t feel that way. This doesn’t feel like GameStop or AMC. This isn’t a meme stock. There’s no roaring kitty. The whole world is now roaring kitty. They’re all in love with this stock, and it’s because it’s got all the right moats. It’s got margin, it’s got differentiation, it’s got stickiness inside of its user community, it’s got software stickiness. And of course it’s got all the right customers. And so, what are they going to investigate? Pat, I’m going to give you a really, really good TLDR since I zoned out and I’m zoning back in here.

Patrick Moorhead: Okay.

Daniel Newman: Zone in here is that, Pat, it’s too darn soon. It’s just too soon to make this call. We cannot possibly call a monopoly on something that’s been really a market that was created duly by a company. He created this market. There’s been GPUs, but not for what he created them for. The vision around the future of accelerated computing and Omniverse, these are new markets. Jensen said it so much, he says, “I don’t take market, I create markets.” And I love that. I really respect that a lot. Now, you do have real entrants and real competition. And this is what I said in my op-ed, I said, you have Intel and AMD both competing. So the two largest chip makers in the world… Sorry, the largest chip maker in the world, two of the largest chip makers in the world are competing with NVIDIA in this particular space.

You also have what? Every hyperscale cloud provider building an AI chip now. They’re all developing a chip. And that’s been democratized and made possible thanks to design partnerships and where we’re at with Silicon and the scale. And so you have dozens, if not more. And then you got startups, Grok and SambaNova, and these other companies building platforms. And then you’ve got traditional compute AI. I think that it’s just really early. And so, while NVIDIA… Nobody seems to have a product that can compete with them holistically, software, hardware, frameworks.

I think we need three years. I think we need three years. Now the problem is, I know regulators are going to say, Pat, is in three years their market moat and advantage could be so big and so deep and it would be impossible to turn the tide. But do you think there’s anything a regulator could do right now to turn this tide and change this direction?

Patrick Moorhead: No. No. And I think this is probably just them trying to slow the jets. Europe has put the kibosh on their innovating and regulation, US is getting jealous and they need to move forward. I’m sure that AMD and Intel are pretty happy about this, as is AWS, and maybe even Google. But it does seem just awful, awful early out there to be doing this. But as we’ve learned, it comes from market definition, and potentially the timing goes back to machine learning, which was very much a thing starting about seven or eight years ago with acceleration. But the fact that Microsoft and OpenAI got lumped in leads me to believe this is the generative AI crapshoot here.

Daniel Newman: Well, I think it’s market power. It’s the fact that they have so much market power. Microsoft’s getting looked at for more than just the size of market they have, they’re getting looked at for that inflection deal they did and how they did it. You and I talked about that at the time. We said, “I don’t know how this is going to survive scrutiny,” but maybe the hope was there wouldn’t be scrutiny. But yeah, Pat, look, there’s a lot going on here. I think everyone’s always got to be careful how much regulation they wish for though, because right now it’s NVIDIA, it’s Microsoft, it’s OpenAI, but next it could be Google. It could be Amazon. But as of right now it’ll be an interesting one to watch.

All right, we’ve got about 10 minutes left here, Pat. Let’s talk about a couple of news items in the leadership realms of a few different companies, Pat. The first was a surprising update that we got that our friend, regular Six Five Summit appearance. Another one that we, by the way, had to move from the summit because he was planning to be there. Jim Anderson left Lattice Semi, went over to Coherent. And he’s now the CEO over there. But more importantly, someone that we’ve gotten to know very well, Esam is now the CEO. And Esam has been on our show, gosh, probably 5, 6, 7 different times. And more importantly, I’ve raced cars with Esam. I think you were there too, right?

Not only do I think he is going to be successful in being able to drive Lattice, which has been on a very good run, they’ve been very highly evaluated for their low end to mid-market, FPGAs, the software they’re building. And they are another company that’s attached to the AI trend. But I think not only does he drive pretty fast, but he’s going to be in a good position to drive this company forward, Pat. And I think it’s a good company in a good position that was left in good hands. And while it’s sad to see Jim go, I’m really interested in seeing Esam in this leadership role. And I wonder, I know it’s interim, but I think he could be the right guy to take this forward. He’s always been a really good balance of strategy, marketing, and vision. And I’ve always really enjoyed our interactions.

Patrick Moorhead: Yeah. Hey, why don’t we move to the next topic, Lattice CEO change?

Daniel Newman: You’re just fucking with me.

Patrick Moorhead: I am. Just getting –

Daniel Newman: Now we got to put the little “censored” on this one, by the way. I’ve worked hard to put that into one of these. But if someone’s going to watch me totally chew and then fall into the mosh pit in the last one. God, telling you, I’m blaming it on leaving the room and not hear you –

Patrick Moorhead: Buddy, props to you, you’re a better man than I, I decided not to do it when I was in Europe. And here you are, you just came off a fricking plane. Literally just rolled in. No, no, listen-

Daniel Newman: Let’s talk about the fourth topic real quick. The US is investigating… Oh, nevermind. Come on, man, I just rambled on about a Lattice. Talk to me about-

Patrick Moorhead: Yeah, yeah, yeah. I pulled up some numbers here. And Jim Anderson, was he good for Lattice? Well, he grew revenue 1.8X. Gross margin grew 1,300 basis points. EPS grew 6X, and market cap grew 10X. I think Jim Anderson did a lot of good for Lattice Semi. And who was his wingman? It was Esam Elashmawi. And I got to tell you, I have met a lot of strategy guys and marketing guys and business guys before who couldn’t actually do the big role. But I think Esam would be a great guy.

And I am hoping, for the sake of investors, and I think even internal employees, that they do a very hard look at Esam, who is currently the person in there temporarily. The interim CEO. Jim went off to Coherent, hope to start researching that company. But yeah, big changes, man.

Daniel Newman: Another deep technical company, quantizing and clocking. And I was reading up on, not one that I’ve tracked super closely, but-

Patrick Moorhead: A little birdie told me that this company is very much engaged in ultra ethernet. And by the way, if you look at Jim Anderson’s background, he was at Broadcom, via an acquisition.

Daniel Newman: Oh, yeah. Oh, yeah. Yeah. I think both will do well. And I think we’re, in both cases, eager to watch this transition. All right, one topic left. Okay, Pat, I want to talk about Computex. We haven’t hit –

Patrick Moorhead: No, we didn’t hit FTC, dude.

Daniel Newman: Dude, I’m going to have to put a disclaimer on this one. First of all, six topics, some talked about twice. At one point completely lost focus on the conversation.

Patrick Moorhead: I love you, man. I miss you. When’s the last time I freaking saw you? It’s been two weeks.

Daniel Newman: You can swear, I already blew it.

Patrick Moorhead: The least you could have done is come by the condo and give me a hug on the way out. What the heck?

Daniel Newman: I know, I know. My bad, my bad. I should have made more time for you while you were away.

Patrick Moorhead: It’s all about me.

Daniel Newman: All right, so the phone rang, I was on my way the next day to record with our friend Kirk Skaugen, longtime president of Lenovo’s infrastructure business, ISG. And we found out that there’s a transition there. Not a lot of details at this point, but what we do know for sure is that Kirk is no longer leading that role. Pat, what’s your take there?

Patrick Moorhead: Yeah. First off, just like I did for Jim Anderson, I pulled some numbers up about Kirk Skaugen. Basically-

Daniel Newman: Thanks for doing that, by the way.

Patrick Moorhead: You got it, man. It’s what you can do when you’re home and not on an airplane. Rough numbers, Kirk took the business from 4 billion in revenue to around 10. That’s 140% improvement, which by the way, that’s a 50 point premium to the market. While growing operating profit over $500 million. Some people might say, “Oh, it’s because you reduced the reliability and the quality.” Well, they were still at least based on their third party research, not ours or yours.

Number one in x86 reliability. High performance computing, which Lenovo is number one. They went from 80 positions on the top 500, to 165. They are now, according to that other company, IDC, rank number three in AI servers up from six. Storage, people didn’t even know that Lenovo sold storage. They went from 4% to 37% since the first quarter of 2018. That brings them going from… Sorry, that was low end storage to level four storage. ODM Plus didn’t even exist. And ODM Plus is where you are operating as an ODM plus an OEM too, where they’re doing their own PCA, they’re doing PCB, doing their own chip shooting. And by the way, Lenovo, they don’t talk about it a lot, but they have supplied eight of the top 10 hyperscaler cloud with millions of units.

Well, it was great getting to know Kirk at Lenovo. I got to know him very well at Intel. And wherever he is off to, it’s going to be great to reconnect. I can see a lot of companies, Kirk could totally go in and do the CEO role if he wanted to. He could do the number two role. Really, whatever is out there. But the show must go on. Lenovo data center keeps moving, they’re on a roll. And I look forward to tracking that. But I got to tell you, it was tough to lose Kirk from The Six Five Summit just like it was Jim Anderson.

Daniel Newman: Yeah. Look, that was probably one of the more disappointing moments in the whole run-up to the summit. But Pat, look, Kirk’s got a bright future anywhere he goes. I’m absolutely sure. We’ve had the chance to spend time, break bread. He’s one of those people that can be very explicit in how he thinks about things and how he’s thought about the business. He’s been very strategic. He’s really helped Lenovo’s reputation in data center. Think about the complexity of a company of Chinese origin that has managed to win hearts and minds of enterprises around the world in the West, and has been competitive.

And it’s created a really strong diversification that, frankly, had a lot of important value to Lenovo over the last few years when cycles have cycled in and out of devices. So wherever he lands, I think he’ll do well. I expect that we’ll be back in touch. And meanwhile, I hope he’s off in the mountains somewhere catching some wind or some air, whatever it is. Sailing, skiing, whatever it is that you do, Kirk. Wishing you all the best, buddy. And Pat, what were you going to say?

Patrick Moorhead: No, I’m going to say nothing. I’m just-

Daniel Newman: I know you came back from vacation, you’re reflecting now. You got me thinking about a vacation. I don’t know.

Patrick Moorhead: Buddy, you-

Daniel Newman: A vacation in the middle of the show.

Patrick Moorhead: It’s been a 12-week run for you that, I got to be honest, just seems unhealthy to me. And best to you, you need to watch yourself. You are a young whippersnapper, a young man. I am an old boomer. But you need to watch yourself.

Daniel Newman: You’re a thin old boomer, my man. And anybody that’s been watching our show for a while that’s right now looking at Pat and going, he’s half the man he used to be. It’s only his size. He’s got twice the brains now. Because instead of thinking about hamburgers, he’s thinking about Silicon.

Patrick Moorhead: Totally. No, hey, I hit a milestone today. I’ve lost 50 pounds in about a year. That was my big milestone today. I have no idea if that’s water weight that I hit. Very rarely do people lose weight when they go on vacation, but I managed to do it. One hypothesis I have is I could be dehydrated, but the other one says that it’s clean food, clean living. I did partake in more alcohol than I normally do. I’m no longer a Pat that likes Cheetos. I may be good for one drink, maybe half a drink. But I enjoyed myself when I was there.

Daniel Newman: Hey, listen, it’s okay to get a little joy in life, wherever it is you find it, buddy. And I’m glad you took some time. I’m a grown-up now, so there’s no score keeping where I live. Tomorrow is the beginning of The Six Five Summit. So everybody out there, really appreciate you being part of it. We’re running it on a new event platform. It looks awesome. It’s going to be kicked off by ServiceNow CEO, Bill McDermott, in a conversation. And we got Mark Mader, CEO of Smartsheet joining us.

And then we’ve got a whole day, and then two more days of just fantastic content from chips to SaaS, to automotive, to security, to sustainability, and more. Pat, we left no rock unturned. But for this show, Pat, I’m going to say goodbye now. Is that okay? Can I say goodbye to everybody?

Patrick Moorhead: Yeah. Good night, bestie.

Daniel Newman: We forgot to talk about the Lattice CEO appointment.

Patrick Moorhead: No, no, no. We just decided to skip that one.

Daniel Newman: You skipped that one. Okay.

Patrick Moorhead: And by the way, I’m cogent and awake here, but I forgot to move the Chiron in that last one. Oh, well.

Daniel Newman: Gosh, what the heck is wrong with us? Hey, listen, everybody, if you can’t enjoy the podcast because of the Chiron mistakes, then you don’t deserve us. I’m sorry, you don’t. Unsubscribe. I don’t care. Whatever. Get on with it. Join our Six Five Summit, we appreciate all of you. And look for our takes on Worldwide Developer Conference, I’m sure we’re going to have some, mine will surely be snarky. Will Apple manage to not eff this up? God, I hope so. I really do. I really actually want a good story. I want a good story, Pat. I want to be a techno optimist.

Patrick Moorhead: Listen, I said Apple could, if they don’t screw it up, create the AI super cycle for smartphones, in addition to what Qualcomm is doing. But Qualcomm is reliant on Android for that super cycle. But let’s see what they do. Thanks everybody. Take care.

Daniel Newman: See you all later.

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.

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