In this episode, Daniel Newman and Patrick Moorhead sit down with Jeetu Patel, President and Chief Product Officer at Cisco, to explore the transformative impact of AI on technology and business. Jeetu shares insights into Cisco’s strategic focus on infrastructure, security, and partnerships to drive AI innovation. The handpicked topics for this week are:
- AI and Industry Transformation: Discussion on the seismic shift in technology driven by AI with special guest: Cisco’s Jeetu Patel. Cisco’s role in providing low-latency connectivity and reducing GPU idle time. Strategic investments and partnerships for networking and security infrastructure.
- Microsoft Build Highlights: Comprehensive end-to-end development cycle offerings from Microsoft with a focus on Agentic Web and AI augmentation. Advancements in AI-assisted code development and security measures.
- Google I/O Announcements: Launch of AI mode in search and upgrades to various AI tools. Introduction of real-time translation in meetings. Discussion on Google’s competitiveness in the AI space.
- Market and Economic Updates: Analysis of bond yields and auctions. Impact of potential new tariffs on EU trade. Discussion on Apple’s manufacturing strategy and potential shift to US production.
- Earnings Highlights: Strong results from Palo Alto Networks and Snowflake. Lenovo’s impressive growth, particularly evident in infrastructure solutions. Expectations for NVIDIA’s upcoming earnings report. Indications of strong AI demand and stable CapEx spending.
- The Six Five Summit Preview: Teaser of high-profile speakers and AI-focused content, 100% virtual and free to attend.
The Six Five Summit
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Transcript:
Jeetu Patel: So, Daniel, the way that at least I’ve thought about this is we are in probably one of the most seismic, you know, shifts that have been witnessed by humanity. And I think, you know, all assumptions that we’ve had about how, you know, lives are going to be lived, work is going to be done, are going to be fundamentally different.
Daniel Newman: No matter how many times I hear that, Pat, I can’t get over the whole I think we do comment. It’s like, you know, we do, you know, we do.
Patrick Moorhead: I know. We’re gonna have to talk to our producers about that and get that dubbed. You know, AI can do everything these days, Dan.
Daniel Newman: Yeah, what I want is a legendary CEO, CEO, founder, maybe someone that’s got, you know, 11 or 12 zeros after their name to say something like, hey, Pat and Dan, you guys are killing it. I would love to get something like that on the record. We should work towards that. But we are back for episode 262 and it’s been a heck of a week, Pat. We’ve been on the road, but we are back home. We’re settling in. Actually, you’re not home. I can see that right now. If that’s your home, you’ve. You’ve made a big change. What’s going on? Where are you today?
Patrick Moorhead: Yeah, so typically I’m in an undisclosed bunker, but I can’t tell you that. I’m visiting my dad. He’s almost 90 years old and you know, you gotta, gotta see the parents, right? Gotta check in, see how they’re doing. Right after this podcast, he and I are going to Anytime Fitness. We’re going to hit the weight room. This is kind of the guy he did, you know, until he broke his hip, he was number two in the world and rowing in his age group, so. Which is great to be here. I love the pod. You know, there’s only a few instances that I won’t do this, but here we are.
Daniel Newman: I’m glad you’re here. I’m glad that we got a big show. We got one of those shows where we’re going to have an off the record, on the record type conversation. I’m very excited about our guest. We’ll talk about that in just a minute. Of course, as you know, we’ve got our Six Five Summit coming up. We couldn’t be more excited about that. We hope all of you out there have registered. We’ve got some great speakers. We have confirmed our opening keynote speaker, which is going to be none other than Michael Dell.The list goes on. We will share and continue to share so many more. I think there’s like 10 of the world’s biggest company CEOs and we got presidents. Maybe one will even come on our show today that is going to be part of this very, very exciting stuff. And of course, we had a huge week. I mean, this week we could have been anywhere and everywhere. We only got physically to one place. We had our teams deployed all over the world. And it was a busy media week, it was a busy coverage week, launch week, content week. And then of course, the whole Friday gets screwed up when our president decides to, you know, turn the tariff war back on. I don’t know. But like you and me, it’s like, I guess we’re back to the escalation era. But we will get on with that. We’re going to get into The Decode now. Pat, you ready to get after it?
Patrick Moorhead: Let’s do this, buddy.
Daniel Newman: All right, Pat, we could have been anywhere this week, but where were we? We were sitting at the news desk being the analyst guys for Dell Tech World. We did 16 interviews for The Six Five. It was a busy, busy week. But yeah, I mean, there was so much going on, man, you know, between Dell, Computex, SAP, Google IO, Microsoft Build, and we won’t be able to hit all these things. But what we should do is probably hit the one that we were at this week. So, Pat, why don’t you give the take on Dell tech World?
Patrick Moorhead: Yeah, it was a great place to start. And, you know, one of the things I really enjoy about going to Dell Tech World is meeting with the senior executives. I mean, my team, you know, do more of the details that they do. But I like to stick to getting, you know, the essence of the leadership team. And, you know, we both talked to Michael Dell, Jeff Clarke, Arthur Lewis, Doug Schmidt, Sam Burd to get a good idea from a leadership point of view of what’s going on. So I want to focus on the important stuff and that’s that the gym opened up at 5am.
Daniel Newman: Anyone there? Anyone there?
Patrick Moorhead: Yeah, Michael Dell was there every, every day. Some folks from leadership, from IR, from Alienware, and probably people that I just didn’t know. But yeah, I’m glad we knocked that out. And you know, I do love products, but I think something superseded at the show for me and that was the very straightforward, eloquent and understandable way that Jeff Clark talked about customer zero for AI and how Dell accomplished it and what the payback was. The five use cases support assistant, customer content creation, search design and data creation, and code generation. He went down the list, talked about how they did it and the punchline was three to six months. And also kind of reading between the lines, Daniel, was that it may not have taken as much GPU power to do all of these things on prem as people might think. You don’t need Grace Blackwell to do these first use cases. Now they’re not doing turn by turn reasoning and they’re not doing agents. But this first step of getting stuff done seemed pretty amazing. It was impressive. Listen, you and I, we’ll do, you know, 50 events a year and we’re always grading kind of how, how it is and this, this to me was the most straightforward and understandable about the five use cases. What did you think?
Daniel Newman: Yeah I, first of all, you know, and you’ll hear this out when you guys tune into all 15 or 16 of our interview videos and, and you’ll hear our Michael Dell Summit video. You know, you’ll see that a lot of my focus this year has been about kind of making all this stuff real. And, I appreciate companies right now that are spending a little bit more time on that. You know, there were some profound statements throughout the week that kind of talked about what, you know, what can be done with less compute. That’s AI related, not just at Dell. We’ve heard it across the board, we’ve heard it in a number of different places. I wouldn’t be surprised to hear it again today. It’s that enterprises want to do AI and then it’s about how do we make this stuff real. Of course we’re going to see these massive 747s full of racks that are going to go to Humane, they’re going to go to all the mega cap data centers, but we’re also going to hear about, you know, the rest of the companies. I think Dell was really focused on how companies across every industry, you know, put AI to work and get value? And so that was a big focus here, was, you know, kind of giving and articulating the, hey, here’s a use case that we’re putting to work. Here’s how we’re gaining 20% efficiency in the business. Here’s how we’re optimizing code, here’s how we’re bringing all the relevant data, you know, to compute so that it can be utilized to help companies get more productive. And that was really thematic this week about across the interviews we did, across the keynotes that we heard and I really think that’s what the market needs because otherwise right now there’s only two money makers, there’s the, you know, infrastructure people and the consulting people.
Patrick Moorhead: That’s right. So the highlights for me on the product side, listen, I love products but to me there, the Dell data platform finally came to life for me and, for years Dell was calling storage data. And I get it, you store data on a, you store data on a storage device, but it’s not activating the data. Then their platform is a combination of all their storage stuff, Project Lightning and the Data Lakehouse. And then they have a bunch of partners, people like Cloudera to help activate partners like Glean now to help that happen on, on premises. Strategically. Dell is very differentiated in that they comprehend clients to the cloud and everything in between. And while I didn’t for years, I really didn’t understand the value in that. But deploying models, if you’re an enterprise, you’re going to build models and you’re going to choose where to deploy those models. I think there is value in that, in that combination. Dan, what do you think? Is there value there?
Daniel Newman: Yeah, of course there is. And you know, I think like I said for me on the product side, you know, the edge slash, smaller enterprise servers, big I think workstations that are powered for AI, you know, a lot of that kind of AI work starts on a workstation or even on a powerful laptop. And so I think, you know, making sure we understand how this kind of cloud to edge stuff all comes together and works. There was a ton Pat, there was no way to digest this. I’ll uncover this here in just a few minutes. But it was a lot of good stuff.
Patrick Moorhead: Yeah, I would like to just some stuff that I want to see from Dell in the future, if you don’t mind. Daniel. You know, now that they’re moving up to the stack, to the data layer and automation tools and private cloud, they’re going to start getting compared with the public cloud folks. And that by the way, that’s a positive. But what the public cloud folks have is simplicity. Right? They have, you know, they have one platform that does models, tuning Data and agents. Right. Google has Vertex, AWS has Bedrock and SageMaker. IBM has Watson X and Microsoft has Azure AI. And what Dell needs to show in the future is how their virtual platform pulls that all together with partners. The final thing, final comment is interesting commentary which is, hey, a lot of this stuff, it is not the target, it’s senior leadership. I’ll be interested to see if they’re messaging changes and their marketing changes based on CXOs. Where quite frankly my, my company is probably more, more impactful at that layer than the folks, you know, setting up servers.
Daniel Newman: Yeah, I mean I, I think selling to the CIO companies, that’s their sort of number one target, are going to have to make a pretty meaningful pivot in the AI era because I think this is not a technology conversation, it’s a business conversation. We’ve said that a lot for a long time about different things, but we saw how that sort of stacked up in enterprise software where the real decisions were made, it wasn’t made by IT. And then we’re going to see this here because agentic AI is kind of the next era of enterprise software in many ways. So I do see that evolving. We got a ton to cover. We could probably have done an entire show. But the nice thing is we have 16 videos out there for people that want to hear all about what Dell’s up to. We’ll make sure that show notes that everybody can follow. Pat, you know, as we traveled in on a Sunday because you know much you and I like to work Sundays so that we can also work on Saturdays. You know, we actually, I’m pretty sure I had to go to my room because I did, I did a little broadcast this week as well but like to cover off on Computex. And so Computex went on. We had Ryan Strout from our team there on the ground. You know, that was a trip I wasn’t sad to not make. But it’s always a big event and you know the, the, the hallmark or the sort of big tent moment over the last couple years has been the Jensen Huang keynote. And so you know, to me, Pat, just as, as kind of a note, like there were a lot of announcements, but thematically speaking there were really two things that I saw from the NVIDIA side that were really interesting. One was, you know, the advancements of Groot, which is, you know, Groot and Groot Dream, which is basically now building out the synthetic data and kind of giving the technology to power the development of humanoid robots which we all know, because billions, by the way, are no longer interested. Billions are small. Trillions is the new thing we have to talk about. And this is a multi trillion dollar opportunity in humanoid robots.
And of course, if you are an NVIDIA investor and you’ve been a little bored of, you know, only the next series of black wells and only growing maybe 30 or 40% now instead of 400%, we need a new multi trillion dollar revenue stream. This is going to be it. Lots of controversy on how quickly and how effectively this happens with Dream and how they’re going to build synthetic data because there’s no way we can train at scale, the real world quickly enough with only existing data that we’re pulling in real time. I know we need more data, we need faster. It has to be created synthetically. So there’s quick. The one other quick thing I’ll say from NVIDIA, because I want to hear kind of what your take was, is, you know, the fusion envy link. And fusion was the big thing kind of. It’s not, you know, some people are like, they open the wall garden and it’s like, no, they didn’t quite open the wall garden. They’re still very focused on being very NVIDIA centric. But what they did do is they sort of gently put a peephole in the wall garden where you could potentially use an accelerator or a, you know, a different CPU architecture with NVIDIA at one end or the other and continue to build your NVIDIA world. And as Jensen said, so prophetically, you know, while we would love you to buy everything, we’d be happy if you bought something. And so I think he basically said, we don’t want to become a fully closed walled Apple garden. We want to make sure there’s some way to. This is like the RCS moment on a Samsung where we’ll let you see whether a message has been read. You can kind of do a little bit. So those are the two big things for me were the NVLink fusion and of course the advancements in robotics.
Patrick Moorhead: Yeah. So this has everything to do. I mean, let me jump right into NV Link fusion. Yeah. My example was Apple and their APIs. Right. Apple has been doing all this amazing stuff on the iPhone for two years. They say they’re getting it right and then they open it up to developers. If you sign up for NV Link, you will be guaranteed to be behind a couple years. We can check on that in two years. But listen, I saw this with microchannel I saw this with EISA and how all these other standards worked out. This is not NVIDIA being nice. This is likely getting the regulatory bodies off, off their back. It does raise a lot of questions about UA Link. That was going to be the industry standard version of NV Link. The companies like AMD, I mean, there were 10 companies involved. Broadcom had pulled out at the last minute, probably knowing what NVIDIA was up to. And Broadcom is going to be extending Ethernet here. Do you mind if I bounce to Qualcomm?
Daniel Newman: No, no, let’s hit them all.
Patrick Moorhead: Yeah, so, so highlights for Qualcomm, not as big as last year when they announced it, but they supported in adopting this NVLink Fusion. And Cristiano, the first time we’ve heard him say very clearly what they’re doing in the data center, he said, quote, unquote, qualcomm has entered the data center, end quote. Not many details beyond that, but it was good to hear him say it. I know when Akash said it last week, it’s not like we didn’t believe him, but hearing Cristiano talk about it, I think was important. Finally, Lenovo, uh, brought out the first Snapdragon powered desktop PC. Cristiano hinted at this last year and here it is available in many countries around the world.
Daniel Newman: Yeah, and then, Pat, there were others. I mean, we got advancements from AMD, we got advancements from intel, at least on their AI and workstations. You know, there’s so much to cover off on.
Patrick Moorhead: Yeah, my only commentary on AMD is check out the ROCm stack. Right. So first of all, they scaled it. It was a data center entity, they scaled it to the PC, which is important, particularly when you’re a company and you have to support both. That also brings in a lot more developers into the ROCm stack. And then ROCm, they’re bringing out a new drop every two weeks. And it was, you know, it went from like once a year to once every six months to once every three months to a month to now, you know, even every two weeks. And software compared to NVIDIA has been a challenge for amd. Big improvements. But NVIDIA is making improvements and extensions even, even faster than, than AMD.
Daniel Newman: Yeah, no, that’s, that’s exactly right. And by the way, quietly, I think it was pretty quiet. It didn’t really come out. But, you know, did you see Elon Musk said that he’s going to be using NVIDIA and AMD chips in his next massive cluster build outs. I think it’s a pretty big win for AMD where you know, they’ve definitely had some people questioning, even me as it went away from sort of announcing its instinct, numbers and such. But like, I mean a win like that, in the Middle East, you know, AMD’s cooking, you know, the Middle East is cooking.
Patrick Moorhead: Yeah. You know, I still see financial analysts talking about maybe you know, 3% market share. What you know, compared to NVIDIA. I’d like to see if you’ve done any work along those lines in your forecasts that I think would be, you know, you know, updated for, for what’s going on, the deals they’re cutting with the KSA and Qatar.
Daniel Newman: Yeah, we will do the next update on that I think summertime. So as soon as we have that, we’ll run it back for you. All right. We’ve got two more big ones to hit. You know, try to keep this show under four hours today. Break down the build for me. Microsoft build.
Patrick Moorhead: Yeah. So the way that I will couch this, I mean they made just a colossal amount of announcements across AI, intelligent agents, edge computing, cloud. This is the developer show. Okay. And yeah, we don’t have time to go through all of them but it’s what you would expect, right? Multi agent Copilot studio, tuning Copilot for enterprises, adding foundry capabilities, things like that. But what I want to focus on is something that just dawned on me as I was going through holistically and that’s Microsoft has the possibility, nobody owns the end to end development cycle. But if I look at the holistic all the way going from you know, edge, edge to cloud and everything in between, right now, you know, they’re the front runner for comprehensiveness and really changing, what is built inside of an enterprise and how it is implemented inside of an enterprise. And you know, Google did some great stuff that we’re going to be talking to. But you know which brand is more affiliated with enterprises. Is it, is it Google or is it Microsoft?
Daniel Newman: What do you think?
Patrick Moorhead: I mean, I think it’s Microsoft. Google’s very strong. You know, they own the Android ecosystem which is the market share or smartphones are doing great stuff in Google Cloud. But you know, right now, you know, Microsoft, that’s basically their business, right? They are an enterprise company. Business company. That’s one of the reasons they have challenges in the consumer space. It’s just their mindset and the fact that they have turned the company upside down. I got the chance to chat with Jay Parikh who was on stage with Satya last week and had a really good conversation with him about acceleration and speed and his development approach. Not enough time to cover that here, but it was fascinating and he is already a very powerful person at Microsoft. But I can see him, you know, if he executes and delivers, being potentially Satya’s right hand person.
Daniel Newman: Yeah, it was huge. I mean the theme for me was the agentic Web. That was the theme. I mean there were a lot of sort of parts and pieces and these events. When we talk about IO, it’s the same thing. It’s like announcement, announcement, announcement, announcement. Everybody should be super pumped. But in the end it’s like this kind of idea of an open agentic web. That’s what it’s all about. The ability for it to augment us. That’s what we talk a lot about now again, augment, displace, replace. There’s a lot of different words that could be used. You know, I think there was some quote in a stat that went out, something like Microsoft, about 30% of their code is now being done by AI. Where do you think that’s heading? I mean it’s not heading lower, it will go higher. You know, they’ve announced a ton of tools across, you know, GitHub and Azure and then of course kind of user-sort of assist tools that live inside Windows and Microsoft 365. So those are substantial. But in the end it’s really going to be all about, you know, how do we accelerate code and development, how do we do more of it with AI. And again, there are going to be a lot of questions about what that means for software engineering and software engineers in the future. It’s not zero sum, but it will change and it’s going to change materially and these companies are going to be on top of that. So, you know, the other thing that I think Microsoft did a good job was sort of leaning into taking AI and security because we know security is going to be super important to this. This is also going to make the bad guys smarter. It’s going to make the bad guys more capable and they’re going to be able to do the bad guy things faster. And so Microsoft, technically speaking, I believe is the world’s largest security company by numbers. They don’t often get credit for that because it kind of sits inside of a very, very large business. But you know, I think having tools to make sure that they can know secure agents is going to be really important because eventually these things are operating, you know, autonomously. They’re making decisions and doing things and taking action without supervision. That seems like it’s going to need some serious work. And I mean, should we be afraid? Probably a little bit, until we actually figure out how to get this stuff right.
So, you know, AI’s got to be very human in the loop oriented to begin with, but over time it needs to be more autonomous to really deliver on the 20 or 30 or 40 trillion of market value that we expect it to deliver and the exponential amount of efficiencies that we see it gaining. So Microsoft hit on that a lot. The themes were really, you know, like I said, it’s this open agentic web and you know, let’s bounce over to IO though now. Talk a little bit about Google, Pat, because, you know, it’s funny, I’ve got a bit, I’ve been on a bit of a rampage about Google over the last several months. You know, people kind of keep saying OpenAI is taking it out, ChatGPT is taking market share. Sam Altman now is not only going to take out Apple, he’s going to take out TSMC, he’s going to take out NVIDIA, he’s going to take out Twitter and X.
Patrick Moorhead: Shoot high.
Daniel Newman: What?
Patrick Moorhead: Shoot high.
Daniel Newman: I mean, but you know, and he’s going to take out Google, right? He’s gonna take out search, take out social. He was going to build the world’s Foundry network and then develop all the AI chips and now he’s going to replace iPhones. And I’m being a little tongue in cheek with this, but that’s why, you know, I, I’m just not a huge believer in this joint AI deal. I think he’s just doing too much. I think you should do one thing right. And I think he’s. There’s a bit of a trust vacuum with that guy. Like his stuff is cool, I mean it works really well. But Google on the other hand, it’s like. Everyone keeps saying like they’ve missed it, they missed it, their search is going to get crushed. The search is starting to flatten out. But like, I don’t know about you, but when I use Google search and I still do, I use Open AI. And I use Perplexity. I’m a multi tool user. But when I use Google, I am seeing generative AI in every search. Now I’m seeing it in every interaction that I have with Google. So I also, by the way, we are a Google workspace company, so we use Google. You know, it’s a friendly technology stack for smaller businesses. And by the way, I see AI in all of my work streams and I see generative AI. So like the idea of generative AI and search and all this, it’s like I just don’t see it happening. And there’s kind of all this conflicted data. But I mean what I thought was probably best of this week was it was a bit of a beast mode from Sundar and Team. I mean they launched a ton of stuff. You know, of course they have this AI mode in search, so you’re going to see a lot more chat and generated interfaces. You saw 2.5, got a big upgrade. You have Pro and Flash. You know, there were tools, tons of tools, you know, VO3 which I haven’t used yet. But what it looks like, it’s very, very cool. You’ve got Image Generation With Imagine 4, you’ve got Gemini Live, you’ve got, I’m just kind of trying to get the highlights of all the things that I noted. Oh, and they got real time translation in me and this has been something we’ve heard a lot about, but like, oh, we can only do it on device. Well, they’re doing it in the cloud now. They’re doing real time language translation in meetings in the cloud. So it’s like tons of different things being pushed out. They’re embedding experiences into their whole portfolio. I just think it’s too soon to call Google’s demise.
Patrick Moorhead: No, I mean, they had a rocky start. I mean bard garbage, Gemini 1.0 was garbage. And you know, based on their ELO scores and you know, the leaderboards, I mean they’re doing super, super well. Here’s the bridge that it’s hard for me to cross though, Daniel. I go in, I’m a paid Gemini user and I go in and just try to do basic searches or research, you know, researching this podcast and I just get back a bunch of nonsense. I just don’t understand, I don’t know if it requires a different way to search, a different, you know, I’m not prompting, not holding it correctly. I mean, the numbers speak for themselves, right? 480 trillion monthly tokens, right? Somebody is consuming those. One thing that I do think they have nailed, Daniel, is AI overviews. And for the other 95% of the population who doesn’t care or doesn’t even understand some of these AI tools, it’s right there. And I think that while the quality of the results might not be as good as a perplexity or an OpenAI at this point, for the 95%, it’s probably good enough. And if you think you look at where they make their money, 60%. From ads alone, and that includes YouTube and search and things like that, that’s actually where it matters. The question I have though is when it comes to enterprise APIs and enterprise workflows, where they’re ultimately going to end up versus Microsoft, you got to jump on everybody by leveraging OpenAI and they made the CapEx. The CapEx investments. What I’m super excited about, you knew I’d end up here at some point is 7th generation TPU that is reportedly 10x higher performance than its predecessor. And that’s super exciting if we’re looking at token factories and Google’s ability to make gen AI pervasive across billions of users. And I’m excited to see, right, all of this token madness. The, you know, 400 million active users on Gemini app, the you know, 5x growth in, in developers, the 480 trillion monthly tokens have all come with the previous generation of silicon.
Daniel Newman: Anything else? No, I think that’s enough. Yeah, God, this week was amazing. So much more. Like I said, even the people, even the morning as we try to record this, it was like so much more fodder to talk about, but we can’t, we can’t hit on everything. You know, I love doing The Flip with you, Pat, because I like to win arguments and it’s like my favorite thing to do. But
Patrick Moorhead: Well especially at the end of the week when I’ve cleaned your clock. The end, you know, Monday.
Daniel Newman: Hey, you want a bench press? Because I know one area. I can beat you. I’ll make you a deal. I’ll do it with one arm.
Patrick Moorhead: Oh gosh, you’re on, man. I’ll do it with my right arm, which my shoulder isn’t jacked.
Daniel Newman: No, no, you can.
Patrick Moorhead: The difference is Daniel, it’s percentage improvement, right? Because you can sit there all day long and not have big gains and be happy that you’ve been working out for 20 years. But what’s harder coming out from being a fat slob with no muscles? Really?
Daniel Newman: No one’s impressed by me because I walk around with you and it’s like I’ve been following your journey Pat.
Patrick Moorhead: By the way, what I’m hearing in the back of my head is. Pat, you were a fat slob before. Now you look pretty good.
Daniel Newman: Yeah, you look less crappy. All right, here’s the deal. I did want to debate with you and maybe we’ll do this some other time. I want to debate with you whether or not Apple can actually move their manufacturing to the US but only because that came up this morning. But I also know how you like to work. You actually like to pre read and I just like to make stuff up. So I think we should come back to that debate at an appropriate time. But you know, I’m going to skip The Flip. That’s going to be our quote for weeks when we have a big interview and I’m very excited about it. We’re going to skip The Flip. So we’re going to go off the record now. We’ve got a special guest here to join us today. None other than Jeetu Patel. He’s going off the record. Maybe he had a big update this week.
Jeetu Patel: Gentlemen, I can’t turn on the computer and not see the two of you somewhere on my feed. So congratulations for all that you folks are doing.
Patrick Moorhead: I appreciate that. Appreciate that. And hopefully the, you know, the years before that, before we started doing broadcast, we, we earned our keep.
Jeetu Patel: You sure did. You’ve got some great insights and I, I depend on it.
Daniel Newman: So yeah, we’re gonna make Jeetu say “we’re killing it.” We’re gonna just have that be the thing.
Jeetu Patel: You’re killing it, man. You’re killing it.
Daniel Newman: We’re killing it. Guys are killing it.
Patrick Moorhead: Oh.
Daniel Newman: So listen, I mean I, I have to say back to you, Jeetu, that you are equally as prolific. Anytime I go on LinkedIn. I’m pretty sure I saw a picture of your beautiful bald head and the President of the United States.
Jeetu Patel: It was – so I had the honor of meeting the President and you know, His Highness, His Royal Highness, MBS in, in Saudi. So it was, it was a great event that they had thrown there. So it was fantastic.
Patrick Moorhead: Yeah, yeah. Jeetu While you were there crushing it and cutting deals. Dan and I were sending memes back and forth with each other just like you know, navel gazing here. We are not cutting deals in there. So we absolutely, absolutely had some, some, some FOMO out there. But congratulations on everything and you know, Jeetu, what I’ve really, in the short period that we’ve known each other, I’ve really taken an appreciation for your product centricity. I am a recovering product person as you know, 20 years, 20 years doing this. And to watch you dive in and accelerate what’s going on at Cisco puts a, a huge smile on my face. And you know, it’s good to see Chuck, you know, he, you know, appreciates it, he sees what you’ve done in your team. But it’s been, it’s been really, really spectacular.
Jeetu Patel: Yeah, it’s, it’s, it’s been an honor. And actually, you know, a lot of these, these jobs, Patrick, as you know, like you get an undue amount of credit but you have to have the team underneath go out and execute and we’ve got a hungry team that’s actually working around the clock and I’m so fortunate to be part of it. So, I feel like Cisco has amazing technology, amazing people. It’s, it’s not hard to lead a team like this. It’s, they’re just pretty self generating on amazing innovations on a constant basis.
Daniel Newman: Well, you’re now the President and Chief Product Officer.
Jeetu Patel: They give these jobs to anyone. Patrick, what can I say man?
Daniel Newman: Well, I, I think that that’s humble. I think you’re doing all the right things, giving credit to the team, you know, saying that they’ll give these jobs to anyone. But I would say that, you know, the, the tide has turned. I mean at earnings they look great, the product roadmap, some of the wins and we’ll hit on some of those. But like in this new role, with this new responsibility that’s been, been given to you, you know, what are, you know – talk about a few of your key focuses and key shifts that you’re driving to make sure that Cisco really gets the lion’s share of what it should in this current market market with AI.
Jeetu Patel: So Daniel, the way that at least I’ve, I’ve thought about this is we are in probably one of the most seismic, you know, shifts that has been witnessed by humanity. And I think, you know, all assumptions that we’ve had about how, you know, lives are going to be lived, work is going to be done, are going to be fundamentally different and it’s, it’s actually interesting because we, we normalize to the new normal so fast. You know, like you, I, I always give this example like the first time you go sit in a Waymo, it feels like magic. And the second time you start kind of complaining about ah, the seat’s not comfortable. The third time it’s completely normal and you’re like starting to do email and it, it’s, I think the, the compression of time for humans to start to get adjusted to these things that are really magical. Step function leaps are truly amazing. And so what we have to do as Cisco is – we are an infrastructure company, we are a security company. We have to make sure that we fuel this movement that’s going on with providing our infrastructure on the networking side, on the security side, on the observability side, on the data side of the house. And if we can, if we can continue to innovate to make sure that the momentum remains by build out of data centers, by making sure that you’ve got low latency connectivity. One of the big areas is how do we make sure that you reduce the amount of idle time for a GPU, and that happens when you actually have high speed network connectivity. And that’s where we play. The other big area that’s super important in AI is safety and security and trust. And so keeping AI itself safe and secure is pretty important. And so those tend to be kind of big areas of focus for us. And then what we’ve done is we’ve started constructing partnerships because I believe that this market is going to be all about ecosystems and partnerships. So, whether it be OpenAI or NVIDIA or G42, these are all kind of amazing companies that we want to make sure that we partner with so that we can provide what we are best at to them, so that they can do what they’re best at and we can progress the mission for AI.
Patrick Moorhead: So Jeetu, one of the hardest things as running, running products is balance. You know, whenever I have.
Jeetu Patel: I have none of that right now, man, there’s no balance.
Patrick Moorhead: Yeah, yeah. Definitely not talking about work life balance, talking about the balance between what you’re trying to achieve, let’s say that will pay off in five years versus something that will give you some short term revenue. And maybe there’s not a difference in that, but how do you approach that right now where there’s a ton of investment that needs to be made right now inside of Cisco that might not pay off for a while?
Jeetu Patel: I think the pace is so fast right now that I have to be honest, like a five year window, I’m just not smart enough to look out five years and know what’s going to happen. You know, we are thinking in, you know, and, and the reason for that is because I think scientific progress will have probably compounded a thousand X 10,000X in, in that, that time window. And when you have an exponential curve like the one that we’re going through right now, it’s, it’s very hard to predict long term. But what you have to do is make sure that speed at scale is really, really thought through. So one of the things that we talk about internally is can we operate at the speed of a startup with the scale that we have and if we can do that right, we’ll be in pretty good shape. The thing that we’ve really focused on is can we build great products that actually get out to the industry fast, that get to adoption fast, that get to commercial relevance fast. And that’s the three part goal, is build great products people love that they’re going to, they can’t resist talking to their friends and family about make sure that they get adopted and then make sure that once they’ve been adopted that there’s commercial relevance. And you’re starting to see this now in the way that our financials are starting to look and the way that we’ve actually seen our businesses start to grow. And it’s because there’s this relentless kind of pursuit on excellence around the product. I would say that we are probably about a 24 month window to 36 month window is the outlook that we keep in mind, Patrick. And then beyond that, I think you just have to keep iterating and you have to be nimble enough to make sure that you can adjust and be responsive to market movements but don’t become reactive to them. I think that’s the goal is can you be responsive without being reactive? Because reactive almost is being panicked, whereas responsive is, you know, making sure that you can adjust to those and really use it to your advantage and to the advantage of your customers.
Patrick Moorhead: Makes sense. I love the, love the startup mentality and you know, there was a lot of discussion about hey, is Cisco slowing down? How relevant are they in the age of AI? And I think the last six months of product announcements, to me, have shown that you guys are very much in the AI game. So I appreciate you outlining that.
Jeetu Patel: I’m hoping there’s no longer a debate anymore about the fact that Cisco is slow because I used to hear that all the time. And we have done more in the past 18 months on product innovation than we had done in the decade prior combined. There’s no shortage of ideas still, and we’re just getting warmed up. So I’m, I’m hoping people are seeing it now at this point, because just in the last week, you know, Daniel was making fun of me when I sent over a list of all the things we’ve announced last week. And it’s like, you know, there’s a half a dozen things that we announced last week. Every single day we had a new thing. Starting with on Monday, the Chief Product Officer of OpenAI joined our board. And then from there on out, like, there was, you know, announcement after announcement, our partnership with His Highness, His Royal Highness MBS at Saudi, and then what we’re doing over there with the Humain Group, and then what we did with Abu Dhabi and G42. And just there’s a compounding effect to it.
Daniel Newman: Well, let’s dive into that. I was going to ask you about what the next 20 years of tech look like. Like, but you said you can’t buy, so I’m gonna. I’m gonna get to something that you can talk about. You know, the great thing, by the way, Jeetu, Pat and I have this commitment to making the longer calls because no one ever holds you accountable. So, like, yeah, I’ll bet 30. I’ll make a comment on what I think’s gonna happen in 30 years, because I’m gonna be probably dead.
Patrick Moorhead: So I just like spending other companies money(s), too. Like, I recommended that he. He gets into a business that’s gonna cost him a billion in R&D. But I always practice that with, you know, this isn’t my money, but here you go.
Jeetu Patel: I can see we got to run it like it’s our own money, otherwise it doesn’t work.
Patrick Moorhead: Right?
Daniel Newman: Yeah, you do. And it is. I mean, you’re a shareholder and many people are good company. So let’s talk, because you’ve kind of alluded to this a few times about these partnerships. Let’s dive in, because, you know, I know we only have about 10 more minutes of your precious time. Thank you for that. You’ve done a lot of partnering. Humain was a big one. There’s been some big things with NVIDIA, AIP. I mean, there’s so many things that you’ve been up to talk about kind of. You. You mentioned ecosystem being the future, just kind of break this down a little bit more for us.
Jeetu Patel: So, I mean, at the macro level, what’s happening right now is that you know, there is a huge movement around AI and that you have to then look at what is AI, what’s constraining AI and what’s constraining AI right now? Power, compute, fast infrastructure for networking and then making sure that you’ve got the right level of AI companies actually taking advantage of that and data. So, if we start looking at. And then of course safety and security become big pieces. So what we’ve done is we have had a bunch of partnerships right now, strategic investments as well as partnerships around data center build out. And so Humain was the first project. In fact Tarek, who just got named the CEO of Humain, and works for, you know, his Highness Abdullah, who, who’s on MBS’s staff, one of the kind of thought leaders in AI in, in the Kingdom. You know what was, what’s really interesting is if as you move into this of Agentic AI, what are the things that are going to need to be done? And so you need to make sure that you have massive data center build outs. We partnered with Humain, along with other, you know, chip manufacturers, whether it be NVIDIA, whether it be AMD, to ensure that we can provide low latency, high performance, low energy consumption networking infrastructure for Humain. And then we’ve also partnered with them on the security front. Right. And so there’s, there’s a combination of two. What I was saying was Tarek had built out the geo-infrastructure and we had helped him build out the geo-infrastructure for networking and then he built out the Rakuten infrastructure.
So as a, as a company we’ve had a relationship with him for multiple years and so he’s seen this rodeo before. He knows who to bank on and depend on when you have to build out resilient infrastructure at scale. And so we decided to start talking as he was starting to take this job and here we are and that’s the first big partnership that we announced, which is why I was in you know, in Saudi for, for a couple weeks back to back. And then the other area that’s a powerhouse in, in the Middle Eastern region is Abu Dhabi with UAE. And you know, if you look at what Sheikh Tanoon is doing over there, who’s the AI mastermind and you know, Abu Dhabi has become one of the hubs for AI over there. And so they over there. What we’ve done is we’ve done a partnership on multitude of different levels. The AI infrastructure project is something that Blackrock and MGX have actually come together with. We’ve Made a strategic investment over there. We’re also partnering with, you know, the Stargate project that was just announced yesterday, the Stargate UAE project with Sam Altman and, and Jensen and, and others. Oracle and, and you know, SoftBank. And we will be, you know, we will be providing the networking infrastructure for both hardware and software, security infrastructure, hardware and software and then observability. And so, that’s an area that we’ll actually be partnering. So that was the second big, big area of announcements. We will continue to do more and more kind of infrastructure build outs with, with countries who are going to be, you know, kind of allies of the US and, and so that’s actually been, been really exciting to see and I think this is, this is fantastic in the long term for the US because US tech is going to be used in all these different areas and it’s, it’s going to be something that will only continue to keep, you know, compounding in its importance.
Patrick Moorhead: Yeah, I mean I couldn’t believe the amount of announcements that you’ve done over the past two weeks. And you know, this is good for the country, it’s good for national security because if they’re not going to be buying our technologies, they’re going to be buying China’s technologies. And, and I choose, I choose our technologies over anything. So I want to lighten this up end on a, and I don’t necessarily call it a fun note, it’s related to AI Jeetu, but what are, what are, what’s an AI product or subscription that you just, you cannot live without right now.
Jeetu Patel: I’d say the most used for me right now is OpenAI, you know, on ChatGPT and what they’ve done, I think Google’s done a fantastic job in the past couple of past week as well. I don’t know if you’ve used Veo 3. I mean it’s, it’s mind my first.
Patrick Moorhead: In my first video today and it, it wouldn’t actually let me do it. I wanted Patrick Morehead riding a, riding a motorcycle in the desert and it said nope, can’t do that.
Jeetu Patel: Sorry, that’s, you’re, you’re too cool for AI man. And you know, the other one is, you know, I think we’ve, we’ve made strategic investments in you know, Anthropic. I think Claude’s good. The, the one area that we are investing a lot in right now is look, we’ve got 27,000 engineers. I think they should each be able to produce at least an order of magnitude more in the next couple years than what they do today. And so you know, we are equipping them with Windsurf. We just actually announced a partnership with OpenAI this week as well on with Codex. So Codex is their kind of agentic tool for software engineers where they, you could literally give it a task and it’ll fully autonomously go out and you know, fix a bug, it’ll go build, build a small little, you know, website for you, whatever you wanted to do, it’ll actually do it in a fully agentic form. And so we are, we are the first design partner with OpenAI. And so when you start thinking about the amount of stuff that’s happening both internally and externally, it’s mindbending. And then last week or two weeks ago we announced our own very first AI reasoning model which is going to be open sourced for security. And so I announced that at the RSA keynote. And so I believe that the world is going to get to be very specialized where you’re going to have specialized bespoke models. And so we had an 8-billion parameter model for security that we launched, that believe it or not, is actually performing better than you know, and as good as a 70-billion parameter model with a very, very small amount of data. So you can run that literally on a single A100. And so when you start thinking about the level of drop of cost of compute that can happen for these specialized models, it’s going to have a meaningful impact for organizations where something in the past that would need like a cluster of, you know, four nodes and 32 GPUs that were H100s, now you can run for a fraction of that cost. And that’s going to keep the world safe because it’s going to be around security and safety. So, I feel like answering your question, my, probably the thing that I, I use the most on a daily basis is chat GPT. But even something like Midjourney, like every single one of my keynotes has gotten transformed because of what Midjourney can do.
Patrick Moorhead: You know, that’s exciting. Yeah, I thought you were going to say the, the open AI Jony Ive pin, but that’s, that’s not available yet.
Jeetu Patel: Talk about a partnership of titans. I mean, you know, I know, I know Sam well because of all the stuff that we’re doing right now with OpenAI. But you know, Jony is a legend in this industry and the fact that those two have come together I think is going to do some amazing things. And what, what they’re doing is fundamentally reimagining the entirety of the stack of, of tech which, which I think is going to be really exciting to see.
Patrick Moorhead: For sure.
Daniel Newman: I’ll just come “on the record,” since we’re Off The Record. To say I’m a skeptic. I actually don’t, I don’t see that skeptic. I’m not a skeptic what he’s done. I admire what he’s done. I’m a skeptic of them coming together and out pacing and out clipping and potentially reorder, reordering the hardware ecosystem, which is what it would require to get people to move. But I, again, that’s, you know, sometimes I’m a skeptic, sometimes I’m a believer. I’m a techno optimist. I’d love to see more disruption. You know, nobody could disrupt the BlackBerry until it happened. Maybe no one can disrupt the iOS until it happens. I’m just saying I don’t even think.
Jeetu Patel: I don’t even think it’s going to be that zero sum, you know, Daniel, and I’d love to see what happens and we should have this conversation in a year or two years from now and see if you’re right or wrong. But the reality is, is there’s so much beta, there’s so much risk in any of these projects that go on that by definition most of these projects tend to have a degree of irrationality to it. But that’s what startups are, is they’re irrational by nature. But I do feel like when you get two people with aligned values that have an obsession to go out and do something meaningfully discontinuous in the market, like good things happen from it. On the other hand, I don’t think, like, I’m a big fan of Apple and I think Apple is going to be one of the giants of the industry that we will keep looking to, looking up to and admiring for, for as long as, you know, I’m alive, at least in my lifetime. So I, I do feel like these are, what this does is just becomes additive in nature rather than something getting subtracted as you go forward. But I’ll wager a bet that I think these two will actually do something meaningful and we should, we should come back over here in 12 months and see if you were right or I was right.
Daniel Newman: Well, let’s, let’s make a bet to go out to the beach somewhere and look at awesome cars together and maybe race them at some point, you know, winner take all. But again, you know, the, the world doesn’t go around if there aren’t a whole lot of opinions but we, at least at the, you know, at The Six Five here, try to root them in research, data and facts. But we get a lot of our calls right. And we’ll remind everybody out there of that when we do. And when we get them wrong, we try to buy it.
Jeetu Patel: I want to know, Patrick. Hey, Patrick. What’s your take on it? You think it’s net positive, net negative?
Patrick Moorhead: I think it’s net positive because it bridges the gap between the devices you already have. I don’t think the smartphone will be able. Is not the full instantiation of what people are looking for. What I’m looking for, though, is it truly a pendant or is it something in your ear or your eyes? This is what I’m trying to figure out.
Jeetu Patel: Yeah. What category of device do you think is needed right now?
Patrick Moorhead: Well, right now I think it’s in the ear where, you know, it’s, it’s, it’s integrated. You don’t need a phone. It’ll go with you anywhere. But the, the issue with that is, is it needs visual data. But I just think that people. It will take probably five to 10 years for people not to get creeped out by a camera that’s on all the time. I know that Meta. Meta Ray-Ban has been a good case study, but. And we, when we’ve moved. And I’m also realized that, you know, 20 years ago if we had said that we would tell people online exactly where we are when we’re there, we would have said, no, that’s creepy. But it’s a boiling frog. So to me, it’s just the form factor. I think the form factor will likely be in the ear.
Jeetu Patel: I’ll tell you this. I currently carry a PC, I carry an iPad, I carry a phone, and I know some people that also carry a separate kind of, you know, remarkable notebook. So I think these things get to be additive rather than, you know, subtractive. But it’ll be interesting to see.
Daniel Newman: It’ll be in the eye. Has to be in the eye. We’re too visual. Look like The Flip Pat. I will be right. But, unfortunately we will be dead before we know. Jeetu Patel, I can’t wait to have you at our Six Five Summit. Thank you so much for joining us here today. Looking forward to it. I know you probably have a bunch of other appearances, media, press and new products to launch all today because that’s how fast you move. Let’s have you back soon. We love chatting to you, my friend.
Jeetu Patel: Thank you so much for having me.
Daniel Newman: See you Folks, thank you. You know what, I want to use that, that cut in at some point, Pat. I want it to be like a bear, you know what I mean? Like then a bull.
Patrick Moorhead: Yeah. What show? Yeah, there’s a show that, that might have been inspired by, you know, the ding, ding, ding, ding, ding. Kind of sounds like our guy over at CNBC. You know, Kramer.
Daniel Newman: Kramer
Patrick Moorhead: I think do inverse Kramer.
Daniel Newman: That’s, that’s, that’s, you know, whatever they say, do whatever the opposite is, do the opposite. So busy week in the markets, Pat. Busy week in sort of the macro economy. And these things are heavily tied together. Where do I start? We’re traveling home on Wednesday and the bond yields are just absolutely ripping in the wrong direction, Pat. We may have another implosion going on with the reverse Yen, the reverse carry trade as Japan’s bonds are out of control. The auction, nobody’s buying these bonds. And by the way, we had a 20 year auction here and it’s a little bit nerdy for our audience, I get it. But like people are not buying our bonds. The bonds ripped after this auction, like 5.1% or something on the 30 year and then a 20 year. There was no buyers for them. And that’s because nobody believes we’re willing to make the fiscal responsibilities because we’re going to get this “big beautiful bill” that everybody keeps hearing about. And by the way, Pat, the big beautiful bill for someone like you is big and beautiful because you’re going to get big tax cuts. But for guys like me that barely scraped by and actually have to pay to work at their companies, you could see an actual tax increase. Pretty devastating. Not super.
Patrick Moorhead: I don’t know, Daniel, I’m innovating. I’m getting, getting near you.
Daniel Newman: You are, you’ve made progress in terms of breaking the chains of continued success and cash flow. Good on you. Nobody needs more money than they can spend. Welcome to the party. But also, you know, a pretty big Friday morning as this thing started off. You know, the market took a dump in the morning today after what was pretty steady. And you know, as we were hearing trade deals, we were kind of mostly in this de-escalation phase. China’s progressing, but then President Donald Trump came out and basically said, the EU sucks. They’re not giving us the type of concessions he would expect. These are my words, not his. But his was basically, we need to charge 50% tariffs starting June 1. So in a week we’re going to go after the EU now, because they haven’t made enough progress in the trade deal. Pat, I chalked this up. I seriously, I tweeted something along the lines of this, this is the escalate/de-escalate strategy. Use, use your, you know, your Truth and your X platform to escalate something. Create a whole bunch of chaos to make sure the world knows. And then basically they’re going to come back because EU needs us people like, let’s be very clear. And they’re going to de escalate this and then it’ll cause a little dip and a little rally. I actually call this a nothingburger. The bond stuff scares the crap out of me that nobody wants our bonds, nobody trusts our fiscal responsibility, that we’re adding trillions to the deficit. That DOGE has been pretty much sidelined. I mean that was a thing. Now we’re not hearing anything about actually trying to cut any costs. Oh, and by the way, Trump told, President Trump told Tim Cook he needs to make his iPhones in the US today or he’s going to pay a 25% tariff. Another.
Patrick Moorhead: Yeah, do you mind, do you mind if I do a victory lap on that one?
Daniel Newman: No, no, please. I want to get your take. So go for it.
Patrick Moorhead: I mean, I’ve said twice over the last six weeks, wait until the White House just wait until the White House realizes that all of the iPhone sub assemblies that are final assembled in India are made in China. Right. And I guess Apple thought that, you know, the administration was dumb, and somebody competent at the White House figured this out. So, you know, this didn’t, didn’t hamstring China at all. And while I question, you know, how many years it would take to build an iPhone here in the US you, you have to put together a design that’s more manufacturable by, by robotic manufacturing. This is not about adding jobs. I think this is more along the lines of pulling in all of the sub-assembly vendors into the United States, as opposed to it happening all all over China. So yeah, I, I will do the victory lap and our producers need to have a, whenever we do a victory lap, I think we need to have some sort of an interstitial.
Daniel Newman: So by the way, it was a smart, but not smart enough. Right? I mean that’s what it was is like because it was really clever because India and the US are going to have better relationships. In fact, the announcement came out today that within seven to 10 days we could have an India framework deal. But just sort of like you said, taking 90% of the work still being done in China, then having a China India relationship that has probably Probably a low barrier and then they ship all those things over there. And then basically Apple invests in India to do final assembly in India and then shift it back to the US where there’s probably going to be like a 10% tariff. Right. It looks super smart. Except the fact is, is that the dependency on China wasn’t really shifted at all. We didn’t shift all that stuff like so if I have a feeling that if, if Tim Cook and Apple was going to shift more of that stuff to India, Trump, the front Trump administration may not be quite as negative because I don’t think. But I also don’t think the Trump administration wants to be a situation where India has the same asymmetric power over us in five or ten years under a different leadership or a different regime. We’re now instead of China dependent, we’re India dependent in such a significant way. I think they’re getting smart. What I don’t know, Pat, is look, you know, we’ve seen with Tesla in the gigafactories and what he’s done, he can bring US manufacturing with high automation and make high-end technical products here in the U.S.A. efficiently and competitively. And I’m not comparing phones and cars exactly, but I’m saying the big investments. And by the way, he built those Pat in a year. He built those things in a year. So sometimes I do think there’s a little hyperbole about that. It’s impossible. And they could never.
Patrick Moorhead: It is, it is, Daniel. It is, Daniel.
Daniel Newman: It’s impossible or it’s hyperbole?
Patrick Moorhead: No, no, it’s hyperbole.
Daniel Newman: Thank you. I, I got a little freaked out because I do trust that you’re smart. If you were going to tell me it’s impossible possible, I was going to be crap. I’ve gone on the record at least three places where I’m going to look like an idiot today. But like, I think it’s a little hyperbole. We can do this. And by the way, we need to do this. The one thing it won’t do, Pat, is it’s not going to create that mountain of jobs. We’re going to create highly automated, efficient robotics factories to build the future. And it’s great for the US. It’ll create shovel jobs because we still need people to build those places. But it’s not going to be factories full of people screwing together. iPhones. That’s not happening. Won’t happen. And I think the dream of it is it’s dumber than ethanol. It’s a dumber dream than –
Patrick Moorhead: Best case Mexico, they want to keep similar designs and the reason it’s not in Mexico right now is the sub assembly systems aren’t there. There’s, there are certainly enough people to do that, but even in Mexico you need it to be more robotic than it is in India and shine.
Daniel Newman: So we got a couple of earnings to cover real, real quickly on Pat. You know, I’ll just do the quick headers and then I got one I want you to dive a little bit more into. You know our friends at Palo Alto, CEO will be joining us for summit. They had a strong, a strong result. Security’s hot. They did miss on margins, but they’re investing a lot right now. They’re buying companies, they’re expanding their footprint, building out the platform. That’s not surprising. Surprising, but they beat on earnings and revenue. So honestly, who cares if they have a little bit of cost they’re they’re taking on right now. I know some people care. I don’t care. Snowflake also ripped. Pat, this is going to be the debate of the century. Does all that data on-prem need it or can use basically use most of the new data that’s standing up from you in the near term to build most of your AI because data that’s more than what, a year or two old, how relevant is it in your AI and agentic world? That will be the debate of the future on-premises. And cloud companies are going to make this argument. I think we’re going to have a lot of fun talking about this over the long run. But Snowflake looked really good. But I want to dive deep on one because next week is NVIDIA Week, also Dell and a few others, but it’s in NVIDIA Week, so it’s a national holiday. And what better breadcrumbs than looking at some of the OEMs and what they’ve got going on. Pat, and Lenovo. I know like we talk about Dell, we get a lot of, you know, there’s a lot of talk about Dell in this because that, you know, and Supermicro was too tempted. But Lenovo is another major signal.
Patrick Moorhead: They did pretty well, huh? Yeah, they did. And first off, you know, as I was sorting through all the content, it’s very hard to tell what happened in the quarter. And this has been a challenge with Lenovo for as long as I’ve been covering them, when they come out with their annual results that it’s it. They even the presentation really didn’t talk about the quarter. It talked about it talked about the year, right. Even though the quarter is pretty good. Right. You know and let me go segment by segment here but you know the, the devices group which, which is smartphone plus PC was up 13%. Even though we didn’t do this research, I do believe that their market share in units led smartphone. Right. They outpaced the market by 12 uh 12 points. But the biggest news on, on the second largest businesses side of the company was infrastructure, right. Which was up an eye popping 64%. Now a lot of this growth, I mean Lenovo’s AI servers, they were a little late to market. They made some decisions on that infrastructure that limited their, their market upside but they bridged the gap. And, and now here we are 64% growth, which is, which is pretty, pretty awesome. Which on a percentage business is up up there with the folks like Dell. Now the, the dollar volume of it, right. It was around $3.7 billion dollars, still respectable but smaller when compared to let’s say a Dell and an HPE. SSG Group keeps pumping out double digigit gains, 22% gains on revenue of $2.2 billion. And again they’re focused on not only the break fix stuff or stuff related to a device, but also consulting AI and, and software. They have a couple really interesting solution areas that you would expect which is related to you know, collaboration in a box, desktop as a desktop as a service or device as a service, hybrid cloud services and a lot of the stuff that was released at the last Tech World that you and I attended out in Seattle. A lot of these AI types of services that were very vertically focused or should I say kind of worker profile focused, like Legal as an example, even CRM.
Daniel Newman: Yeah, I think the ISG numbers where everyone really gets super focused. Some great upside on liquid cooling results, some great upside on the overall, you know, CSP number. Huge like almost 100% like 90% something percent. And then of course I also thought it was impressive. They’re making some real headway in SMB. You know the smaller companies, I think they’d like double mid double do a 20% growth there. And you know Lenovo providing AI and infrastructure to that sort of market segment is interesting because it shows that they’re kind of one Lenovo, the services and support it has be all tied together because those companies can’t stand up infrastructure meaningfully on their own. It means they’re, they’re tying the threads together and it probably also is being built off of some of their digital workplace solutions and, and, and devices. So it really is tying the whole company together and bringing new revenue streams, which has been a focus overall. But as I said in my post online, a lot of breadcrumbs there for some possible good news next week. We’ve seen some good results coming out on on a lot of the different sides, but I’ve said along the way the CapEx is stable, AI demand is strong. Nobody’s slowing down because of any of this sort of macro nonsense as it comes to mass scale AI deployments. I’ve heard it in multiple places. You’re going to keep hearing this from me. It’s a, it’s not a bubble. Except there might be some bubbly things inside of it but, but NVIDIA probably will look good and we’ll cover that off in spades next week. Pat, we’ve gone, you know, we’ve gone through the gambit. By the way, we didn’t even hit on like probably five more things. I would have liked to, but you know, again, great conversations. Thanks again to Jeetu Patel, newly minted President and Chief Product Officer at Cisco, for joining us here. The Summit is coming. Six Five Summit. Hope everybody wants to spend some time with us. It’s going to be four great days of mostly Pat flying around the world doing interviews. Pat, thanks so much for doing all that while I took a nice vacay. Just kidding everybody. It’s not how it works. And yes, the bench press competition is coming hit Subscribe. Join us here for all our weekly episodes of the Six Five. We appreciate all you so much, but we got to say goodbye for now. 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.
