AI Demand, Rising Memory Prices & NBA Betting Scandals | TSG Ep. 954

Hey folks, are we paying an AI tax without realizing you're watching Textron? Hey, folks, welcome to the latest text drawing gang edition. We have our, some of our usual lineup for Tuesday, JP Morgenthal, Steven fst, and Mitch Ashley.

Alan, of course, is out and licking his wounds from those pit star Steelers lost to the Packers. And well, you know, times are tough. Anyway, let's jump right in.

Apparently, memory prices for DRAM and all kinds of other memory are stirring the skyrocket because, well, all the chip fab people switched gears and started building higher end chips for ai, and now suddenly we have a shortage for all the stuff that we do every day, and it's getting much more expensive, and it looks like it will stay that way for quite a while. Mitch, what's your take on all of this? How do I handle this if I'm an IT person trying to figure out what my costs are gonna be, because well, suddenly we're all paying the freight for ai.

Well, you mentioned, uh, the Steelers in football, so this is like student body, left student body, right? You know, statue of Liberty play. What are we doing here?

We're, we're, we're chasing the AI chip football, if you will. So certainly that's what's happening. I mean, the manufacturers are going where they think the micro the market is going, where the demand is going.

And that definitely can create shortages on chips. Now, if you're a hardware manufacturer, you know, integrator, um, uh, doing your own, uh, doing your own assembly or creating your own products out of other people's chips, then you have a supply chain issue. If you're the manufacturer of these chips, then you also have, uh, where do you put your bets?

Where do you put your markers for the next three to six to 12 months? So it, it, it's a challenge, but it's not one we haven't seen before. You know, there've been shortages on hard, remember memory shortages because of tsunami in Japan.

I mean, there's all, there are situations where we run into this, we tend to survive 'em just fine. Mm-hmm. Jp, do you have any tricks to use for this?

I noticed that in this article some folks are double ordering, which can't really help the situation. 'cause now they're basically increasing demand artificially. Well, I mean, that was mentioned in the article that the, there's some oversubscribing going on, which forces a, uh, pressure on the market, looks like it's an artificial supply, uh, di you know, limit, right?

That it looks like the market is, isn't able to fully suppli the demand. It's, uh, and, uh, and so there, there's this, uh, vacuum and, and of course the manufacturers then go and, and produce to fill that. But what happens is that these, uh, the vendors that are, uh, oversubscribing are gonna store these in their warehouse.

And so now you end up basically with, uh, you know, the effect that all the all buying, all demand dries up after that because, um, they're, they, they have the stuff at the warehouse and the inventory. And so until that's consumed, it really affects the manufacturers in a bad way. Um, and it, it affects their ability to plan and in, you know, the delivery and manufacturing of these components in a very timely and consistent manner.

And, uh, it, it, it, but, but if you look at it from the perspective of a Adele or an Oracle or even a, a, you know, AWS right? Who's pulling these, who rely on these memory chips, right? They, um, well, I, I liken it to the way I treat toilet paper.

I, I'm one of these guys that need to go to Costco. I'll always have the backup toilet paper pack once I open that one. Next one's gotta be bought.

It's just, it's comfort, right? I am not going to see, I'm not gonna allow my manufacturing to be impacted, right? So, uh, it, it, it's not good for the manufacturers.

It, it, it presents an artificial, uh, demand, demand curve. And then, uh, it, it changes the whole dynamics of the market when that dries up. And on top of that, we have the, what if there's a hiccup in the AI market, and, uh, and people aren't using the services as much, and it's not being consumed at the rate that the, uh, LLM providers, the hyperscale of providers that are delivering that infrastructure, consuming at the rate that they believe that they will be, then what happens, right?

That they're just gonna, there's no return on these things. They're just gonna sit in inventory even longer. Mm-hmm.

Steven, do you think there might be a little price gouging going on here? I dunno about price gouging. Um, everything I'm hearing is that the, uh, the margins are actually fairly slim.

Um, I, I would say that this is, uh, almost on an automatic, uh, effect of the supply and demand that happens in our industry that companies are gonna chase, uh, wherever demand is. And if, uh, you know, the, the, we know, we certainly see it with the big, uh, OEMs. We're seeing it with the chip makers.

No surprise that we would see it with the chip suppliers as well. If there is a lot of, if there are a lot of customers coming in with, uh, AI related orders, uh, they're gonna pivot toward in that direction. And frankly, uh, that unfortunately leaves the rest of the industry.

Uh, I don't wanna say high and dry, but a little bit off on the sidelines, because frankly, they're not as compelling. I, I do know that, um, I, I, I'm familiar with some folks who are working on various non-AI, uh, projects and they've had trouble getting orders filled for, um, you know, memory, uh, support ships and so on, because it's just hard to get a lot of these things right now because so much of the industry is focused on ai. But, you know, I don't really blame anybody for that.

I feel like, um, you know, that's where the orders are. I, I, I, I see that's where the, the suppliers are gonna go. I, I was watch, I, well, I was watching Micron from a stock perspective in the past three months.

'cause they actually just recently had an earnings announcement. And that was a big part of the, the Micron story, uh, among investors, is that there is gonna be this, uh, re as AI becomes more popular, there's gonna be a pressure on the market to require more and more physical memory in order to, uh, to support the, the needs of, uh, larger and larger models. And Micron stock, uh, shot up significantly over the past couple of months, I would say.

You know, I, I'm, I'm thinking it's close to a hundred points that, that, that move now it's reached the saturation point. So the market's kind of saying, okay, this is fair market value, 200 and some odd dollars for Micron stock right now. Right?

And, and it's actually down a little, but it hasn't jumped since I, I, it's just, it's just an a, a another indicator of where Wall Street sees what is fair market value based upon what's happening in the demand. Um, and just another point for us to kind of bring back into, you know, is this real, is, is the supply chain issue going to affect the market or not? Mm-hmm.

Steven, is there an opportunity for some other suppliers to jump into this? Or is it just take too long to kind of ramp up that kind of memory production? But, you know, I'm hoping maybe Intel's got something to do here.

Yeah, that's the challenge, right? Um, it's takes a huge amount of time, resources, and money, and with every, uh, advance in process node, it takes, um, more, I don't wanna say exponentially more because that's probably not mathematically correct, but it is, um, a significant multiplier more for every advanced process node, which it, it does increase the, the time, the money, the effort, uh, required to compete in these spaces. Um, but that being said, uh, the native, uh, Chinese, uh, chip making industry has been advancing rapidly, especially due to the fact that the, uh, US embargo makes their products more attractive to other, uh, domestic Chinese chip makers.

And so I suspect that there is increased capacity that can take up some of these orders if people will allow it, if they'll allow themselves to buy products that are, uh, manufactured, uh, solely, uh, within China as opposed to the standard global supply chain. You know, where Mike, were just talking about the chips part of it too. And what, what Steven's hinting at is sort of the OEM and beyond, right?

It's, there's a ripple effect of shortages in, in the supply. Also, there's a ripple effect on sort of the Colette that happens at the end of this. And people are oversubscribing over buying or over ordering and actually don't need that amount.

So there's a bit of a whiplash that goes with this until things settle out. It's the bull whip. Mitch, Mitch, speaking of that whiplash, right?

So when I was a kid, I could always tell the state of the economy, 'cause I would notice that my father would start yelling at me about turning out the lights. The stock work equivalent of that is they start yelling at you to be more efficient with the CPUs and the processors, and suddenly they look at developers and say, stop being so wasteful. So is that what we're gonna see?

This too shall pass, just like your dad yelling at you about the lights. I mean, yeah. Are you gonna student body left, tell all your developers write more efficient code?

Probably not. I mean, yes, there may be some optimization if you really have some heavy duty applications that you have to just squeeze out a little bit better use of the memory. But I doubt that's gonna affect a lot of people changing how they develop software.

There will be more memory soon. Uh, so Steven, you, you, uh, track also the storage market and a big part of storage is moved towards, um, ram, uh, you know, versus physical dis right? Flash.

Yeah. Yep. So flash ram, right?

Um, are they affected by this? Uh, are, are they the, I know they're different types of chips, but are they lumped in with the overall production of memory chips and, and, uh, for, for the flash round? That, that's actually a really, uh, in insightful question, I think.

Um, and, and yeah, the, the, there's nuance there, as you said in that, um, the production of SSD production of RAM and production of, um, sort of C-P-U-G-P-U do use different, uh, process, different processes. It's not like, uh, you know, Tuesday is flash day and Wednesday is RAM day. That that's not how these things work at all.

They're basically different factories. Um, but that being said, uh, I think whether it is RAM or flash or standard, you know, CPU kind of style chips, uh, they're all affected by this same pattern. Um, certainly most of the storage companies are focused on delivering, uh, all flash arrays into the AI training market, just like all of the GPU and CPU and ram and everything is getting poured in there as well.

So the answer is no, necessarily, but yes, in reality that storage is just as affected by this as the rest of the industry. Mm-hmm. Steven, are there, I don't know, advances in memory technologies that you're looking forward to down the road that might help mitigate some of this?

Or are we stuck? Um, anything that's gonna advance in memory technology is probably gonna get sucked up into the AI world. And so I feel like, um, pretty much anything that's gonna happen is gonna get stuck.

Um, you know, the good thing about memory is for a long time memory was able to be manufactured on sort of older repurposed, uh, processes. Uh, that's not the case as much anymore. Um, and so I do worry that basically anything else that we invent is gonna get in the, into the same cycle.

So from my perspective, I don't think so. Yeah, jp, does that mean that people are gonna be, you know, recycling memory out of their existing systems and kind of hoarding that and there'll be a whole secondary market? Seems to be good.

I, I think the, I I, you know, there, I, from what I understand, there is a, been a major shift, uh, technologically in memory. So memory has speed, and I don't think that the newer equipment can use the lower speed memory. So it, they really are on the hook to get more modern chips to support the, the, uh, the new physical, you know, uh, infrastructure that, that they're running.

The, the, the RAM chips have to operate at a higher speed. Um, what do they call 'em? V they're six and five and six, now they use DD RAM four, and now they're five and six, right?

So you can't stick a a four in a machine that requires a a five or a six. It just won't operate. It's too slow.

You know, that, that's, there's another interesting angle to that though, jp. Um, again, thanks for, thanks for bringing that up. Um, one of the coolest technologies out there that I've seen has been the arrival of CXL based memory expansion that uses older memory in newer systems.

To Mike's point, it is possible to use older DDR memory in modern systems over the CXL bus. And this has, uh, been a, a really intriguing possibility. Essentially, you could, um, kit bash the RAM out of your old last generation server, slap it into one of these CXL expansion, um, bays, and put that in your latest and greatest server, and have tiered memory.

Uh, a lot of companies are working on that. You know, I haven't seen it happen in practice. I haven't seen a lot of, um, a lot of, of, uh, people talking about it.

But if you go to supercomputing or if you go to any of the other HPC shows, uh, there certainly is a lot of interest in that. And, and I wonder if, if maybe that might finally take hold. Maybe.

I think it will. And then, jp, let me ask you another question. Will CFOs look at this and say, well, the price of PCs and servers and infrastructure and everything's gonna go up, so we're just gonna sweat the existing assets longer.

And they'll say, you know, I don't wanna lay out that kind of cash, so we'll just make everybody kind of work with what they got as long as we can. Well, you know, there's always been a, in my opinion, a discrepancy between, um, the, uh, buyers and the technologists, right? And in many cases, and not the derogatorily, but CIOs just really aren't technologists.

They, uh, they tend to be more technology, uh, licensing, like they manage the use of technology within an organization versus truly understanding the nuances of memory. So what did it mean? That means they gotta go to somebody in the organization for an answer.

And the answer of the engineering team is always more, better, faster, right? I, I, I, we need it, we need it, we need it. Um, we've seen that on the software side, and we've seen it on the hardware side.

And so you get to a point where if, if, you know, if the CFO is really questioning, uh, costs, I think they're gonna have to go to outside resources and bring them in to do an analysis in order to get a fair and accurate understanding of, of their spend versus relying on their people inside to tell them whether they need it or donated. Mitch, JP just said, your people are gluttons. Can you confirm that More?

More? Tell me more. Give me more.

Yes, yes. We, Hey, we're never gonna refuse it, right? Well, well, no, I mean, my experience comes from like the whole area where, you know, we went through with, uh, and we're still going through right now the distributed computing infrastructure, right?

And rise of things like Kubernetes. And, you know, uh, we had something years ago that was Cloud Foundry. It was phenomenal for 99% of organizations to build scalable apps, made it really easy, um, um, reduced the requirement overhead of, of the engineering team and have to have to, uh, bit twiddle in order to get things working.

It was really very much equivalent to like, uh, the, the, the v the V block type architectures on the infrastructure side, right? The, the rack mounted complete. You, you get your, your copper rack switch, your, uh, your compute and your storage all in one complete device.

That's was the equivalent of Cloud Foundry. And then, but engineers decided, no, I want to go with this other thing that's cost more to operate, harder to operate, very fragile to operate, because that, that's better for my career, right? And who can argue with them?

Who in the organization has the pushback to say, whoa, whoa, what's this costing me? Because they don't look at the cost, they don't look at the costs of the organization long term. When they make these decisions, they do what's best for them.

And typically over, over history, nobody's ever pushed back from the executive office to say, what's this gonna cost me long term? Um, and that piece is still missing any organization in my opinion. And this, this isn't just another example of that, right?

If you, you know, Thesys cloud, just cloud, cloud, okay, but which cloud can I go? Is there a better cloud or should I, is everything just gonna be AWS 'cause you never got fired for, you know, buying IBM and now you don't get fired for buying AWS, right? Um, but is there, is is for what I do, digital ocean good, right?

You know, those questions, they don't do the analyses. Steven's gonna answer that question shortly, but I'm gonna give Steven one last question here, and then we'll wrap this up. Are we in danger or maybe we having a, I don't know, ration memory?

I, I, I wouldn't worry about that as much as I would worry about. Um, I, as JP said, what happens if there's a hiccup in this, uh, purchasing, uh, conga line of, uh, basically anything that's being produced immediately gets sucked up into the AI machine. Um, you know, what if the technology changes slightly?

What if somebody develops something that doesn't need quite as much memory? What if it turns out that, um, you know, production AI applications can run on a different type of, uh, of compute? What if we don't end up keeping accelerating this mo this machine, I almost said monster, um, that is, uh, eating up all of the world's production.

Um, you know, one of the things that you learn after you've been in the semi world for a long time is that these things tend to have cycles. And these cycles tend to be incredibly damaging. Um, because when the, uh, demand falls, and this happens more in ram and flash than it does in processing, because historically in processing, there's always been somebody who wants, you know, A-A-C-P-U made on the latest process nodes or whatever.

But, um, in, in, in flash and in ram, historically, there's been cycles of boom and bust, and the bust cycles hurt, and they hurt a lot. And if those bus cycle was to hit everything, well, that's probably gonna hurt the economy quite a lot. Well, and, and haven't we seen this already starting to happen where Vigo is?

Well, deep seeq, we've seen take large models and produce them as quantized, and yet very effective. Uh, and now I believe OpenAI open sourced one of their mainstream models in a quantized version seven D it runs on, you know, 16 gigabits of, uh, of ram. So we are seeing the, uh, effective and high quality inference engines being released, uh, on lower memory requirements.

That is a, a clearly a basis for potential hiccup in this whole memory production scheme. All right, folks, I'm gonna leave in here. But the cost of it is rising, at least in the short term, and you should plan accordingly.

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It's convincing you that your personal life isn't at risk. Black cloak, digital executive protection, defending the new attack surface your personal life. Hey, folks, we're back and we're gonna have a little chat about the cloud because Steven and his crew at the tech field day had a, an event around the cloud last week.

And I, I just wanna put to bed a rumor, though. So the whole AWS outage, Steven had nothing to do with it. He did not deliberately make that outage happen, just to have a lot of people pay more attention to his tech field day.

I know that rumor's going around, but Steven, walk us through what you guys were talking about, and it was very timely. Well, you know, I'm a believer that you should deny, deny, deny everything, and, um, try to promote your own worldview as an alternative. So, no, we had nothing to do with the A AWS outage promised, I promise it.

Um, uh, it was actually Tom Hollingsworth that caused the AWS outage. Don't tell anyone. Yeah.

So this was Cloud Field Day. And, you know, we have a joke going on inside the Tech Field Day organization, um, that, uh, every event is actually just, you add AI in front of the name. So you got networking Field day is AI networking, field day, security Field day ai, security Field day, um, you know, infrastructure.

We did actually rename it AI infrastructure and frankly, cloud field, a AI cloud field, a well happily, wasn't all about ai. Um, a lot of the conversation did have to do with, remember the, um, the olden days when we talked about running applications that were, you know, sort of standard deterministic webscale applications that did things instead of, you know, AI models. Well, there's still a lot of that happening.

I know it comes as a surprise to folks, but that's actually where all the revenue in the industry is as well. Uh, so there are a lot of companies that are working on building better cloud infrastructure. And from Cloud Field Day, um, we did get a couple of key takeaways.

Alistair Cook, who led that event for the tech Field Day crew, uh, says that basically his big three takeaways, number one was keep your data close and keep your cloud closer. In other words, companies are very much looking at, uh, bringing data, bringing cloud infrastructure, bringing cloud platforms back into the fold, trying to make sure that even if they are, uh, outsourced, even if they are as a service, that it's treated as, you know, their own infrastructure. Uh, the second thing that he noticed, uh, from a lot of the presentations was talking about, uh, how scale can change risks.

In other words, if you, it's easy to take a risk, uh, at, at small, uh, at a small scale with a small application. But when you're bidding the whole company on something, you really wanna make sure that those risks are going to be, uh, met with the proper level of management. And number three, that there is constant innovation happening, and that is causing new areas of exposure.

Specifically, there was a lot of talk, I'm sorry, I know ai, there was a lot of talk about the impact of ai, and specifically the impact of what's called model context protocol, MCP, which is the standard way to expose, uh, services, to expose tools to agents, AI agents that are running out there. Now, I will say that I feel like MCP could actually be extremely useful beyond the world of AI agents, because it's a standard specification for services, for capabilities, for data, and a standard way for these things to plug in together. So I actually think that it's not all gonna be ai, but that being said, um, it, it does, uh, open the door to new areas of exposure.

Because if you're, if you're saying, Hey, you know, agents, you know, here's some corporate data, here's the things we can do, here's the services we can provide, um, who's to say that those AI agents aren't gonna do something unexpected with that? So these three takeaways, uh, I think are really insightful. And it's the kind of thing that happens, frankly, behind the scenes.

Uh, at field day when the cameras are off and the companies aren't presenting. Uh, there's a lot of brainstorming that happens. What does all this mean?

What does it mean for the industry and what does it mean for us? And I think we can all see that, uh, well, there, there's a lot of change coming, even outside the AI space. Mm-hmm.

Jp, what is the current state of the cloud in your mind? Because I'm having a hard time figuring out where it begins and ends. It used to be like it was in the cloud, was on these other data centers, managed services, hosting, wherever, and now it seems like just about everything we refer to now is managed as a cloud.

So everything's a cloud. Is there a cloud, or is it just kind of the new style of computing? And that's what we do.

It, it is a very much a, become a style. The term encompasses style of computing, in my opinion. I think that's a, an accurate statement.

I, I also believe that, uh, the, you know, there, the cloud indicates more of a opex versus CapEx approach to, uh, computing, uh, the, uh, the ability, the pay for what you consume versus, um, long-term, uh, depreciated assets on your books. Uh, you know, these are all indicative of cloud. Now, can you really do that?

If it's your stuff? Are you, and you're running it as a shared service for your organization? No, you're a shared service.

You're still an IT organization. You're, you can run it in the style of cloud, but you're not a cloud. And then we have this other term that I, I don't know when it was introduced, and it caught me off guard the first time I heard it hyperscaler.

And that is the term that they now use for Amazon and Google and Microsoft. They're hyperscalers. We used to call them the cloud, remember?

And now we talk, call them hyperscale is, and I think the reason why was exactly the point you made is to differentiate style of cloud from actual cloud service provider. Mm-hmm. Steven, was anybody talking about repatriation and workloads in the cloud and I don't know what to run where and, and why?

Um, absolutely. And that is one of those things where people are increasingly concerned, uh, that there's exposure, frankly, uh, if they're not, uh, careful about what data that they place outside the data center. You know, it's funny, it, this is a, a story that we've been hearing for a long, long time.

I mean, those of us who've been in it for a long time, been following the cloud for a long time, uh, you know, this sounds very, very familiar, but, you know, I think that people are really facing this challenge, especially now that there are so many compelling on-prem, uh, cloud capabilities. Um, you know, one of the companies that presented at Field Day, for example, uh, was, uh, oxide, which is always a crowd favorite because they make a big honk in private cloud software and hardware that you can set up inside your own, um, premises and own and, and literally have your own not just, um, scalable platform, but really hyperscale platform with all the bells and whistles and all the services that that implies. When do you use that?

What do you use that for? And that is, I think, one of the key questions that people are facing. And, and similarly, you know, we heard a lot of the same kind of con conversation from, uh, pure Storage, which offers storage from on-prem as well as native cloud storage.

And their customers are asking the same question, do I want this out there? Do I want this in here? And, and ultimately, you know, I think that what happens is there's a lot of conservatism in it, and a lot of people saying, you know what?

I'm a little nervous. I'm a little nervous that maybe I will be a small fish in a big pond if my stuff is running in one of the hyperscalers. Uh, I'm a little nervous, uh, that there could be an outage caused by, oh, I don't know, let's say DNS that causes the me to, you know, my whole infrastructure to fall over.

Uh, maybe it's better if I have some of this stuff on-prem. And, um, you know, and then of course there's the AI factor. You know, if, uh, if companies are looking to spend a ton of money on AI infrastructure and new AI applications, maybe they're gonna think about, you know, repatriating to save costs, not because they want to in intrinsically save costs, but because they wanna reallocate budget.

And in that case, they may be indeed looking to bring stuff OnPrem rather than continuing to run it on these, um, you know, blue chip clouds. Min, what should developers be thinking about here? Because, um, a lot of the times they write stuff and they get pretty deep into the weeds of an API, and then we can do what Steven just said, and we wanna do.

I think there's a couple of factors to consider. One is, if you look at the data of what the mix of cloud on-prem and hybrid, it's about 46% of what organizations say they run is in the cloud. 22% or so is, is on, on, on-prem, and in a mix of hybrid across that.

So a lot of times applications can live in one oth, one environment or the other. And though we are trying to make the private data center look like a cloud just for efficiency, and same, same standard operating procedures that we use in the cloud, we're not quite there yet. So I think it's all about where you deploy it, where you're planning on, uh, putting it, if you're going to be putting it in the cloud, then how closely do you align with the services that are available in that particular cloud?

Or do you run your own database? So do you use Dynamo DB or some of the, so services tied to the provider, or do you say, no, we're an Oracle shop, so we're gonna put an instance of Oracle up there, or maybe we're running some other database that we'll, we'll manage. So it, it kind of has layers sort of like this onion of, yes, it's location's one part of the decision, but oftentimes it's what you're gonna be running will drive where you're gonna put this as well as availability and, and the access for your end users and customers.

Jp, how much of this is now just driven by where's the data in the first place? Uh, it's a good question. Uh, data gravity is a real issue.

Uh, you know, I think it is, uh, a big part of how the, how people are thinking architecturally about what services to consume and not to consume. Uh, and also, you know, where do I wanna consume those services? I, I think that that plays a, a cons, a considerable role.

However, um, seemingly less and less, uh, I see a lot of redundancy. I see people being less concerned, uh, about data, uh, being or or com parts of their data sets being moved to where processing is, uh, is, is happening, right? So especially around ai, sorry to say, but it's true.

Um, there is a, a lot of, uh, people or businesses that are now, um, starting to leverage data, uh, lakes, data lakes, uh, things like Databricks and Snowflake and things like that, that have, uh, built in, uh, AI capabilities and, and functionality, and they're not moving all their data there. They're moving a subset of data there relative to the analytics that they wanna perform. Um, so, you know, I think those are two key indicators or, or two key metrics that need to be evaluated as to where, you know, where do you wanna run this?

And, uh, you know, and what do you need there? Just wanna jump in a little bit too. There's just kinda back up.

What you're saying is that we, our data sh shows that it's a big influence of where the data is located. It's not the only thing, but, um, you know, some of our data shows that organizations say half of them say that most of our data's on-prem versus what's in the cloud. So I think it's gonna make a big difference.

What's, what is located where, from the data standpoint, just, just as it is, which services that you're going to use. And some for some people, you can't put that data in the cloud. So that really dictates where things are run.

Well, it, so you raise this really, I mean, this is an architecture that I've now dealt with with a few different clients. And I, it's really interesting because we had the conversation, I've had the conversation with my clients small language model deployed locally or a large language model, uh, up in the cloud. And, you know, a big part of using the large language model is that they have to provide the data in some way, shape or form to the LLM.

And that need that could be done as, you know, uh, a, a, a tool, you know, like something like MCP or you can provide it as part of the prompt, but regardless of how you look at it, data is moving to the l to the, to the LLM in order to do that processing, right? And they like the idea of keeping it on-prem and taking advantage of local network speeds in order to, you know, but then they're like, well, then I need people who are skilled at, uh, managing, deploying, and operating this small language model in my, in my organization. And that's not a skill that you can just go out there and readily find on the market right now.

Yeah, that's actually interesting because that's the where, uh, HPE came in with, uh, at Cloud Field Day. They brought in kaza as a partner who we've talked about here on the gang in the past. And, and it's exactly that same question, jp, that, you know, these, these, these companies realize that, um, many enterprises need help in how to run AI applications, where to run ai, AI applications.

They want something that is more of a platform, uh, you know, more of a, I don't know, VMware for AI than what they've been able to have previously. And frankly, that's where companies like, you know, this partnership with HP and ZA are, are coming in, I think, to help to answer that question and to make these things a little bit more practical. And then on the, on the security side as well, we also saw Fortinet coming in there.

Um, we've talked a little bit here about, uh, prompt engineering and, uh, jailbreaking AI and so on. Well, Fortinet is trying to attack that as well. Uh, they're trying to figure out how to, uh, remember spy versus Spy in MAD Magazine.

Well, they're, it's AI versus AI now. And, um, and they're very much, uh, cognizant of the fact that their primary competitor in the security space is no longer, um, the proverbial hacker, but an LLM. Mm-hmm.

Well, I find the whole thing ironic. I think when we were all much younger, the mantra was always bring the compute to the data, and then we spent 10 years moving all the data into the cloud, and now we wanna process and analyze data at the point where it's being created and consumed, and now we're processing more at the edge. And hey, guess what?

We're back to on premise. So I think maybe we're gonna land in the middle somewhere, finally, but it's kind of just kind of silly to watch. And it's a joy to be in this industry.

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Well, sometimes truth is stranger than fiction. And if you've been watching this whole or following the NBA scandal, it comes in two flavors. One is, uh, feels like traditional shaving points kind of thing.

And the other one involved having players entice high stake gamblers to games that were offsite, that were rigged because somebody was using technology to, um, maybe use X-rays to see what carts players had or, and, and all kinds of fun stuff was going on. But jp um, I was kind of impressed with the technological prowess that went into this whole thing. What's your take?

I found the entire, um, scenario extremely, uh, interesting from so many, many factors. One, um, I I think the most interesting is the article mentioned the Cosa Nostra. I, I mean, in all honesty, I I have heard them come up anywhere in years.

I, I exactly. I, I actually thought the Russian mob took care of all of them. I thought they were rubbed out.

Russian mob owned everything. So the fact that they're still out there, uh, playing in their old tricks and I, and making headway, that's great. I mean, uh, Lord knows I'm, I'm re actually rewatching the Sopranos right now, right?

It's funny pumping down schemes and, you know, uh, rigged machines that this is, this is, this is old school. Um, and yet new school, so it's old school, meet new meets new school, right? Uh, I, I, I think it's, I mean, we, we laugh because we're not the victims.

I think what they did was awful. I mean, just, first of all, I, I, I, I do go, you know, I, when I'm in Vegas, I'll go to the casino and when I'm on a ship, I'll go to the casino. And I don't like those shuffler.

I have never trusted them. And I know that they claim, you know, the legitimate ones that, hey, we had the machines checked out. But the truth of the matter is, every one of those machines, whether used for improper purposes or not, has the ability to read every card in that shuffler and know where it is, and knows where it will end up on the table.

Um, and that, that's why they have those little panels off to the left and everybody gets registered, um, because there's a computer that's computing every outcome. Now, you know, a legitimate casino hopefully isn't using that information to hinder or change in outcome. But you know, when Royal Flush comes up, they know immediately.

Yep. You know, they know who had it. You know, they play their games, they do their camera stuff every, show me all the cards that there's no hokey put, guess what?

You, they, that's just, that's I eye candy. They knew, they knew before that hand was even finished, that who had the royal flush. Um, because that ca that shuffler is feeding the data, okay?

And so turn somebody turning it on. And then you, if you watch poker tournaments, right? These in these cameras that tell, you know that no, they need those, right?

That's how they do the TV presentation. They can show everybody's hand and what their down card is relative to what the, you know, playing the community, right? So these, these, this, this is technology that's been in use for a while, they, but to employ it without letting, you know, without anyone knowing.

Um, but I think the bigger part of it is that, uh, under the hood is still this, uh, uh, subtle, you know, um, Paul Newman and Robert Redford sting operation where, you know, like, oh, you know, playing with the chips, you know, okay. And sending signals to one another by, uh, you know, physical si, you know, physical a attributes. Uh, I, I, the mix of it all is just bewildering.

Um, but it's awful. I mean, it, it's, it's, it's, it's a fundamental breach of trust at the worst levels. And to see that people in the NBA were involved in this.

I mean, for years there's been big money games in big cities and sports players and actors, and they love to get involved. Ben Aleka is known actor who plays in and does this. And, you know, uh, I, there were a couple of well-known baseball players who've been about legit games, so to speak.

Um, no rake, right? We learned that from Molly's game. If you don't take a rake, it's not illegal.

It's just a bunch of people having fun. It's when the house takes a rake without it being legitimate, uh, casino, that, that's illegal. And the person who's taken the rake is the one who's breaking the law.

So as a player, you, you know, you did nothing wrong. Very, very interesting. So many attributes should be a movie, you know, I definitely would love to see the, uh, oceans 14 or 22, you know, this is, this is, this is how they play.

But yeah, it's, uh, they, it's not ai. So very interesting, right? The next, the next version of this will be, you know, AI determining, uh, you know how to read the cards.

Oh, we forgot about the glasses with the mark cards. That's another, that was another grand scheme, right? Somebody actually, you know, that's another thing you think about in the casino.

They're always opening new decks and the decks are coming right from the manufacturer, right? These guys are using mark decks. So really, really, uh, e everything old school meets new school.

Uh, I think it makes for a great script. Somebody's probably out there writing it. Yeah.

Hopefully Michael Lewis is writing the next book about this thing, right? Like the Moneyball guy. Um, I would really like to read that, that novel.

Um, but you're, you know, you're right, jp, the thing that kills me about this story is that it is, it is the same as it ever was. And high tech, you know what I mean? We've got in the same sentence, we've got the Cosa Nostra and marked cards and private gambling cheats and, uh, USB Dongles and Raspberry Pie and um, you know, apps, you know, smartphone apps and everything.

It's wild what's going on here. But, um, you know, I think that the, you're right too, that the thing that that that kills me about this story is that so many of the people that are being charged are actually probably somewhat victims in themselves. You know, a lot of these, it seems like a lot of these sports guys, uh, they got pulled into gambling, they raked up, you know, huge gambling debts.

And the way that they thought that they could get out of it was to, um, become, you know, basically part of the scheme. And I think that that's probably why they were targeted to start with. Um, you know, maybe these guys were, were pulled into gambling, um, you know, poker and so on, uh, intentionally to try to help, you know, basically have them be the bait to get people to these high stakes private poker games.

Um, you know, I don't wanna absolve them of responsibility 'cause it sounds pretty crazy. Some of the things that they're saying, these guys did, you know, active NBA coach, you know, texting someone, you know, Hey, it looks like LeBron's gonna sit like pretty soon. He is, he looks pretty tired, you know, bet against the team, you know, that kind of thing.

That's, that's, that's some wild stuff right there, because it's just so, just, he knew it was wrong. He knew what he was doing is wrong, you know? And, and, and the same with some of the players.

You know, Hey, I was just in the, in the locker room and, um, and boy, these guys look tired, or, you know, hey, I, I hear this team's gonna tank, so if they get a better position in the draft, you know, the, the coaches said that they were gonna do that. So, you know, I mean, that's like Black Sox scandal stuff, right? You know?

Yeah. Incredible. No, the, the bookies, the bookmakers, even the legit ones in Vegas have always had their inside people in on the team, uh, you know, an equipment person or somebody that they call, how's the team looking today?

Uh, you know, what do you hear in the, in the clubhouse? Because, you know, without that inside information, you know, you, you're, you're at risk, right? You have to minimize your risk as a bookmaker.

But I re my, one of my favorite recent episodes, you know, of the, of the Sopranos was Robert Patrick, Terminator guy, the liquid Terminator guy, right? In, in one of the rare roles you ever see him in, especially if you watch Peacemaker now, but he, uh, friend of Tony's from school, owned a sporting store, you know, does one of these big games and, and loses, you know, he is in for like 80, 80 grand. Um, so they basically, you know, take his store and they're liquidating everything.

They're using it, they're just abusing every, all, all the store. They're taking loans, they're getting their money back wherever they can. And he looks at 'em and he's crying and Tony is like, why'd you let me play?

And Tony's like, scorpion, scorpion and the Frog, You know, Mike, Mike, I have a, I have a little different view on this, and what, what surprises me about this particular situation is how surprised everybody is shocking. There's gambling going on. Well, that never happens in sport.

Let, let's, if you'll cheat at Monopoly, you'll cheat, you'll cheat at real money type games, whether it's Pete Rose, or you can name, you can name dozens of instances in just in the last 10 years when there's a lot of money involved in a support in sports or in other areas too. And for every measure there are countermeasures. So you put a gaming commission in place, right?

To, to try to make it fair, to make sure that the people, the casinos are not cheating customers. Well, then one of the commissioners is on the take for something, right? It just, it's, it's humans.

And we're also dealing with something is that's an addiction. So that even drives it further because you can take advantage of people. So I Why are you surprised?

I think it's, it's, you, you have to have a way of being able to report when there are issues and investigate those and, you know, and try to, try to rein it in. But it is, you, you can't squeeze that balloon and not have it come out other places. I throw what I'm trying to figure out, trying to figure out if Lata now has made members who have degrees in computer science, or did they just outsource this one?

No, They, they hire those two. They've had this three come on, this goes back to the Sopranos. They had got, they, first of all, they had, uh, uh, Chris, he take, take his serious se he had to go take, well, he didn't take the series.

They paid somebody to take the series seven exam from him so he could be, he could be running a, uh, a boiler room with the, uh, with the stocks, right? So he had to have his, his legit, yes, they've been hiring people for hacking for years. This is not new.

But, uh, again, from a gambling perspective and somebody who, you know, does gamble, I, I think one of the biggest concerns that this raises is those shuffler. 'cause every gambler I know, anytime I've ever sat on a table, we always have the conversation. They don't, and especially when things aren't going out, like they, I don't trust those shuffler, right?

They, they are, we don't know if they're legit. And so this just raises the whole spectrum on the whole industry. Are they, are, are, are these machines legitimate?

Right? I think it has rippling effect. It's gonna have a wide rippling effect through the gambling industry.

I think there's, I think it's gonna be just as much going on, if not more. I don't think this is gonna curb it at all. Yeah.

Because they're, they Disrespect jp. But this is, this Is, no, no, no, I'm just, I, I, I, I, again, the people who do gamble are, and, you know, be very, they're already suspicious. I think that the, like you're, like you said, the, the gambling commissions will have to step it up and make a very public appearance that we're doing more.

And we, as you said, you know, how legit are those people? We don't know. I agree.

I would, I'm gonna end this here, but I would say, you know, on the next poker game I play is gonna be in a Faraday cage. That's how it's gonna play With a, with a, with cards, cards, cards, Walmart. It doesn't help when the server and the wireless router are in the room with you.

There you go. There you Go. Excuse.

There's always a counter measure. Hey guys, I wanna thank everybody for sharing their knowledge and their insights, especially JP who shared some of his, uh, personal pastimes. So that was great to get that level of insight.

And I wanna thank you all for watching the latest Textron TV series and also stay tuned for what's coming up next behind us, because, well, it's gonna be another awesome week of content. And this is just the first day of the week. Well, actually it's Tuesday, so second day of the week.

But, And, and that's if I can jump in there tomorrow and, and, and, and, and Thursday we've got, uh, AI Field Day. So, you know, I mean, it's, uh, gonna be live streaming here on Text Strong TV right after the show. So, uh, stay tuned for a busy couple of days of, of AI presentations.

And also next Tuesday we'll be talking about what happened at Text Strong AI Field Day. So please join us then for that as well. Hey, thanks everybody.

See you soon.