(gentle synth music) (music ends) >> Welcome back to Supercloud 2, an open industry collaboration between technologists, consultants, analysts, and of course practitioners to help shape the future of cloud. At this event, one of the key areas we're exploring is the intersection of cloud and data. And how building value on top of hyperscale clouds and across clouds is evolving, a concept of course we call "Supercloud". And we're pleased to welcome our friends from Enterprise Technology research, Erik Bradley and Darren Brabham. Guys, thanks for joining us, great to see you. we love to bring the data into these conversations. >> Thank you for having us, Dave, I appreciate it. >> Yeah, thanks. >> You bet. And so, let me do the setup on what is Supercloud. It's a concept that we've floated, Before re:Invent 2021, based on the idea that cloud infrastructure is becoming ubiquitous, incredibly powerful, but there's a lack of standards across the big three clouds. That creates friction. So we defined over the period of time, you know, better part of a year, a set of essential elements, deployment models for so-called supercloud, which create this common experience for specific cloud services that, of course, again, span multiple clouds and even on-premise data. So Erik, with that as background, I wonder if you could add your general thoughts on the term supercloud, maybe play proxy for the CIO community, 'cause you do these round tables, you talk to these guys all the time, you gather a lot of amazing information from senior IT DMs that compliment your survey. So what are your thoughts on the term and the concept? >> Yeah, sure. I'll even go back to last year when you and I did our predictions panel, right? And we threw it out there. And to your point, you know, there's some haters. Anytime you throw out a new term, "Is it marketing buzz? Is it worth it? Why are you even doing it?" But you know, from my own perspective, and then also speaking to the IT DMs that we interview on a regular basis, this is just a natural evolution. It's something that's inevitable in enterprise tech, right? The internet was not built for what it has become. It was never intended to be the underlying infrastructure of our daily lives and work. The cloud also was not built to be what it's become. But where we're at now is, we have to figure out what the cloud is and what it needs to be to be scalable, resilient, secure, and have the governance wrapped around it. And to me that's what supercloud is. It's a way to define operantly, what the next generation, the continued iteration and evolution of the cloud and what its needs to be. And that's what the supercloud means to me. And what depends, if you want to call it metacloud, supercloud, it doesn't matter. The point is that we're trying to define the next layer, the next future of work, which is inevitable in enterprise tech. Now, from the IT DM perspective, I have two interesting call outs. One is from basically a senior developer IT architecture and DevSecOps who says he uses the term all the time. And the reason he uses the term, is that because multi-cloud has a stigma attached to it, when he is talking to his business executives. (David chuckles) the stigma is because it's complex and it's expensive. So he switched to supercloud to better explain to his business executives and his CFO and his CIO what he's trying to do. And we can get into more later about what it means to him. But the inverse of that, of course, is a good CSO friend of mine for a very large enterprise says the concern with Supercloud is the reduction of complexity. And I'll explain, he believes anything that takes the requirement of specific expertise out of the equation, even a little bit, as a CSO worries him. So as you said, David, always two sides to the coin, but I do believe supercloud is a relevant term, and it is necessary because the cloud is continuing to be defined. >> You know, that's really interesting too, 'cause you know, Darren, we use Snowflake a lot as an example, sort of early supercloud, and you think from a security standpoint, we've always pushed Amazon and, "Are you ever going to kind of abstract the complexity away from all these primitives?" and their position has always been, "Look, if we produce these primitives, and offer these primitives, we we can move as the market moves. When you abstract, then it becomes harder to peel the layers." But Darren, from a data standpoint, like I say, we use Snowflake a lot. I think of like Tim Burners-Lee when Web 2.0 came out, he said, "Well this is what the internet was always supposed to be." So in a way, you know, supercloud is maybe what multi-cloud was supposed to be. But I mean, you think about data sharing, Darren, across clouds, it's always been a challenge. Snowflake always, you know, obviously trying to solve that problem, as are others. But what are your thoughts on the concept? >> Yeah, I think the concept fits, right? It is reflective of, it's a paradigm shift, right? Things, as a pendulum have swung back and forth between needing to piece together a bunch of different tools that have specific unique use cases and they're best in breed in what they do. And then focusing on the duct tape that holds 'em all together and all the engineering complexity and skill, it shifted from that end of the pendulum all the way back to, "Let's streamline this, let's simplify it. Maybe we have budget crunches and we need to consolidate tools or eliminate tools." And so then you kind of see this back and forth over time. And with data and analytics for instance, a lot of organizations were trying to bring the data closer to the business. That's where we saw self-service analytics coming in. And tools like Snowflake, what they did was they helped point to different databases, they helped unify data, and organize it in a single place that was, you know, in a sense neutral, away from a single cloud vendor or a single database, and allowed the business to kind of be more flexible in how it brought stuff together and provided it out to the business units. So Snowflake was an example of one of those times where we pulled back from the granular, multiple points of the spear, back to a simple way to do things. And I think Snowflake has continued to kind of keep that mantle to a degree, and we see other tools trying to do that, but that's all it is. It's a paradigm shift back to this kind of meta abstraction layer that kind of simplifies what is the reality, that you need a complex multi-use case, multi-region way of doing business. And it sort of reflects the reality of that. >> And you know, to me it's a spectrum. As part of Supercloud 2, we're talking to a number of of practitioners, Ionis Pharmaceuticals, US West, we got Walmart. And it's a spectrum, right? In some cases the practitioner's saying, "You know, the way I solve multi-cloud complexity is mono-cloud, I just do one cloud." (laughs) Others like Walmart are saying, "Hey, you know, we actually are building an abstraction layer ourselves, take advantage of it." So my general question to both of you is, is this a concept, is the lack of standards across clouds, you know, really a problem, you know, or is supercloud a solution looking for a problem? Or do you hear from practitioners that "No, this is really an issue, we have to bring together a set of standards to sort of unify our cloud estates." >> Allow me to answer that at a higher level, and then we're going to hand it over to Dr. Brabham because he is a little bit more detailed on the realtime streaming analytics use cases, which I think is where we're going to get to. But to answer that question, it really depends on the size and the complexity of your business. At the very large enterprise, Dave, Yes, a hundred percent. This needs to happen. There is complexity, there is not only complexity in the compute and actually deploying the applications, but the governance and the security around them. But for lower end or, you know, business use cases, and for smaller businesses, it's a little less necessary. You certainly don't need to have all of these. Some of the things that come into mind from the interviews that Darren and I have done are, you know, financial services, if you're doing real-time trading, anything that has real-time data metrics involved in your transactions, is going to be necessary. And another use case that we hear about is in online travel agencies. So I think it is very relevant, the complexity does need to be solved, and I'll allow Darren to explain a little bit more about how that's used from an analytics perspective. >> Yeah, go for it. >> Yeah, exactly. I mean, I think any modern, you know, multinational company that's going to have a footprint in the US and Europe, in China, or works in different areas like manufacturing, where you're probably going to have on-prem instances that will stay on-prem forever, for various performance reasons. You have these complicated governance and security and regulatory issues. So inherently, I think, large multinational companies and or companies that are in certain areas like finance or in, you know, online e-commerce, or things that need real-time data, they inherently are going to have a very complex environment that's going to need to be managed in some kind of cleaner way. You know, they're looking for one door to open, one pane of glass to look at, one thing to do to manage these multi points. And, streaming's a good example of that. I mean, not every organization has a real-time streaming use case, and may not ever, but a lot of organizations do, a lot of industries do. And so there's this need to use, you know, they want to use open-source tools, they want to use Apache Kafka for instance. They want to use different megacloud vendors offerings, like Google Pub/Sub or you know, Amazon Kinesis Firehose. They have all these different pieces they want to use for different use cases at different stages of maturity or proof of concept, you name it. They're going to have to have this complexity. And I think that's why we're seeing this need, to have sort of this supercloud concept, to juggle all this, to wrangle all of it. 'Cause the reality is, it's complex and you have to simplify it somehow. >> Great, thanks you guys. All right, let's bring up the graphic, and take a look. Anybody who follows the breaking analysis, which is co-branded with ETR Cube Insights powered by ETR, knows we like to bring data to the table. ETR does amazing survey work every quarter, 1200 plus 1500 practitioners that that answer a number of questions. The vertical axis here is net score, which is ETR's proprietary methodology, which is a measure of spending momentum, spending velocity. And the horizontal axis here is overlap, but it's the presence pervasiveness, and the dataset, the ends, that table insert on the bottom right shows you how the dots are plotted, the net score and then the ends in the survey. And what we've done is we've plotted a bunch of the so-called supercloud suspects, let's start in the upper right, the cloud platforms. Without these hyperscale clouds, you can't have a supercloud. And as always, Azure and AWS, up and to the right, it's amazing we're talking about, you know, 80 plus billion dollar company in AWS. Azure's business is, if you just look at the IaaS is in the 50 billion range, I mean it's just amazing to me the net scores here. Anything above 40% we consider highly elevated. And you got Azure and you got Snowflake, Databricks, HashiCorp, we'll get to them. And you got AWS, you know, right up there at that size, it's quite amazing. With really big ends as well, you know, 700 plus ends in the survey. So, you know, kind of half the survey actually has these platforms. So my question to you guys is, what are you seeing in terms of cloud adoption within the big three cloud players? I wonder if you could could comment, maybe Erik, you could start. >> Yeah, sure. Now we're talking data, now I'm happy. So yeah, we'll get into some of it. Right now, the January, 2023 TSIS is approaching 1500 survey respondents. One caveat, it's not closed yet, it will close on Friday, but with an end that big we are over statistically significant. We also recently did a cloud survey, and there's a couple of key points on that I want to get into before we get into individual vendors. What we're seeing here, is that annual spend on cloud infrastructure is expected to grow at almost a 70% CAGR over the next three years. The percentage of those workloads for cloud infrastructure are expected to grow over 70% as three years as well. And as you mentioned, Azure and AWS are still dominant. However, we're seeing some share shift spreading around a little bit. Now to get into the individual vendors you mentioned about, yes, Azure is still number one, AWS is number two. What we're seeing, which is incredibly interesting, CloudFlare is number three. It's actually beating GCP. That's the first time we've seen it. What I do want to state, is this is on net score only, which is our measure of spending intentions. When you talk about actual pervasion in the enterprise, it's not even close. But from a spending velocity intention point of view, CloudFlare is now number three above GCP, and even Salesforce is creeping up to be at GCPs level. So what we're seeing here, is a continued domination by Azure and AWS, but some of these other players that maybe might fit into your moniker. And I definitely want to talk about CloudFlare more in a bit, but I'm going to stop there. But what we're seeing is some of these other players that fit into your Supercloud moniker, are starting to creep up, Dave. >> Yeah, I just want to clarify. So as you also know, we track IaaS and PaaS revenue and we try to extract, so AWS reports in its quarterly earnings, you know, they're just IaaS and PaaS, they don't have a SaaS play, a little bit maybe, whereas Microsoft and Google include their applications and so we extract those out and if you do that, AWS is bigger, but in the surveys, you know, customers, they see cloud, SaaS to them as cloud. So that's one of the reasons why you see, you know, Microsoft as larger in pervasion. If you bring up that survey again, Alex, the survey results, you see them further to the right and they have higher spending momentum, which is consistent with what you see in the earnings calls. Now, interesting about CloudFlare because the CEO of CloudFlare actually, and CloudFlare itself uses the term supercloud basically saying, "Hey, we're building a new type of internet." So what are your thoughts? Do you have additional information on CloudFlare, Erik that you want to share? I mean, you've seen them pop up. I mean this is a really interesting company that is pretty forward thinking and vocal about how it's disrupting the industry. >> Sure, we've been tracking 'em for a long time, and even from the disruption of just a traditional CDN where they took down Akamai and what they're doing. But for me, the definition of a true supercloud provider can't just be one instance. You have to have multiple. So it's not just the cloud, it's networking aspect on top of it, it's also security. And to me, CloudFlare is the only one that has all of it. That they actually have the ability to offer all of those things. Whereas you look at some of the other names, they're still piggybacking on the infrastructure or platform as a service of the hyperscalers. CloudFlare does not need to, they actually have the cloud, the networking, and the security all themselves. So to me that lends credibility to their own internal usage of that moniker Supercloud. And also, again, just what we're seeing right here that their net score is now creeping above AGCP really does state it. And then just one real last thing, one of the other things we do in our surveys is we track adoption and replacement reasoning. And when you look at Cloudflare's adoption rate, which is extremely high, it's based on technical capabilities, the breadth of their feature set, it's also based on what we call the ability to avoid stack alignment. So those are again, really supporting reasons that makes CloudFlare a top candidate for your moniker of supercloud. >> And they've also announced an object store (chuckles) and a database. So, you know, that's going to be, it takes a while as you well know, to get database adoption going, but you know, they're ambitious and going for it. All right, let's bring the chart back up, and I want to focus Darren in on the ecosystem now, and really, we've identified Snowflake and Databricks, it's always fun to talk about those guys, and there are a number of other, you know, data platforms out there, but we use those too as really proxies for leaders. We got a bunch of the backup guys, the data protection folks, Rubric, Cohesity, and Veeam. They're sort of in a cluster, although Rubric, you know, ahead of those guys in terms of spending momentum. And then VMware, Tanzu and Red Hat as sort of the cross cloud platform. But I want to focus, Darren, on the data piece of it. We're seeing a lot of activity around data sharing, governed data sharing. Databricks is using Delta Sharing as their sort of place, Snowflakes is sort of this walled garden like the app store. What are your thoughts on, you know, in the context of Supercloud, cross cloud capabilities for the data platforms? >> Yeah, good question. You know, I think Databricks is an interesting player because they sort of have made some interesting moves, with their Data Lakehouse technology. So they're trying to kind of complicate, or not complicate, they're trying to take away the complications of, you know, the downsides of data warehousing and data lakes, and trying to find that middle ground, where you have the benefits of a managed, governed, you know, data warehouse environment, but you have sort of the lower cost, you know, capability of a data lake. And so, you know, Databricks has become really attractive, especially by data scientists, right? We've been tracking them in the AI machine learning sector for quite some time here at ETR, attractive for a data scientist because it looks and acts like a lake, but can have some managed capabilities like a warehouse. So it's kind of the best of both worlds. So in some ways I think you've seen sort of a data science driver for the adoption of Databricks that has now become a little bit more mainstream across the business. Snowflake, maybe the other direction, you know, it's a cloud data warehouse that you know, is starting to expand its capabilities and add on new things like Streamlit is a good example in the analytics space, with apps. So you see these tools starting to branch and creep out a bit, but they offer that sort of neutrality, right? We heard one IT decision maker we recently interviewed that referred to Snowflake and Databricks as the quote unquote Switzerland of what they do. And so there's this desirability from an organization to find these tools that can solve the complex multi-headed use-case of data and analytics, which every business unit needs in different ways. And figure out a way to do that, an elegant way that's governed and centrally managed, that federated kind of best of both worlds that you get by bringing the data close to the business while having a central governed instance. So these tools are incredibly powerful and I think there's only going to be room for growth, for those two especially. I think they're going to expand and do different things and maybe, you know, join forces with others and a lot of the power of what they do well is trying to define these connections and find these partnerships with other vendors, and try to be seen as the nice add-on to your existing environment that plays nicely with everyone. So I think that's where those two tools are going, but they certainly fit this sort of label of, you know, trying to be that supercloud neutral, you know, layer that unites everything. >> Yeah, and if you bring the graphic back up, please, there's obviously big data plays in each of the cloud platforms, you know, Microsoft, big database player, AWS is, you know, 11, 12, 15, data stores. And of course, you know, BigQuery and other, you know, data platforms within Google. But you know, I'm not sure the big cloud guys are going to go hard after so-called supercloud, cross-cloud services. Although, we see Oracle getting in bed with Microsoft and Azure, with a database service that is cross-cloud, certainly Google with Anthos and you know, you never say never with with AWS. I guess what I would say guys, and I'll I'll leave you with this is that, you know, just like all players today are cloud players, I feel like anybody in the business or most companies are going to be so-called supercloud players. In other words, they're going to have a cross-cloud strategy, they're going to try to build connections if they're coming from on-prem like a Dell or an HPE, you know, or Pure or you know, many of these other companies, Cohesity is another one. They're going to try to connect to their on-premise states, of course, and create a consistent experience. It's natural that they're going to have sort of some consistency across clouds. You know, the big question is, what's that spectrum look like? I think on the one hand you're going to have some, you know, maybe some rudimentary, you know, instances of supercloud or maybe they just run on the individual clouds versus where Snowflake and others and even beyond that are trying to go with a single global instance, basically building out what I would think of as their own cloud, and importantly their own ecosystem. I'll give you guys the last thought. Maybe you could each give us, you know, closing thoughts. Maybe Darren, you could start and Erik, you could bring us home on just this entire topic, the future of cloud and data. >> Yeah, I mean I think, you know, two points to make on that is, this question of these, I guess what we'll call legacy on-prem players. These, mega vendors that have been around a long time, have big on-prem footprints and a lot of people have them for that reason. I think it's foolish to assume that a company, especially a large, mature, multinational company that's been around a long time, it's foolish to think that they can just uproot and leave on-premises entirely full scale. There will almost always be an on-prem footprint from any company that was not, you know, natively born in the cloud after 2010, right? I just don't think that's reasonable anytime soon. I think there's some industries that need on-prem, things like, you know, industrial manufacturing and so on. So I don't think on-prem is going away, and I think vendors that are going to, you know, go very cloud forward, very big on the cloud, if they neglect having at least decent connectors to on-prem legacy vendors, they're going to miss out. So I think that's something that these players need to keep in mind is that they continue to reach back to some of these players that have big footprints on-prem, and make sure that those integrations are seamless and work well, or else their customers will always have a multi-cloud or hybrid experience. And then I think a second point here about the future is, you know, we talk about the three big, you know, cloud providers, the Google, Microsoft, AWS as sort of the opposite of, or different from this new supercloud paradigm that's emerging. But I want to kind of point out that, they will always try to make a play to become that and I think, you know, we'll certainly see someone like Microsoft trying to expand their licensing and expand how they play in order to become that super cloud provider for folks. So also don't want to downplay them. I think you're going to see those three big players continue to move, and take over what players like CloudFlare are doing and try to, you know, cut them off before they get too big. So, keep an eye on them as well. >> Great points, I mean, I think you're right, the first point, if you're Dell, HPE, Cisco, IBM, your strategy should be to make your on-premise state as cloud-like as possible and you know, make those differences as minimal as possible. And you know, if you're a customer, then the business case is going to be low for you to move off of that. And I think you're right. I think the cloud guys, if this is a real problem, the cloud guys are going to play in there, and they're going to make some money at it. Erik, bring us home please. >> Yeah, I'm going to revert back to our data and this on the macro side. So to kind of support this concept of a supercloud right now, you know Dave, you and I know, we check overall spending and what we're seeing right now is total year spent is expected to only be 4.6%. We ended 2022 at 5% even though it began at almost eight and a half. So this is clearly declining and in that environment, we're seeing the top two strategies to reduce spend are actually vendor consolidation with 36% of our respondents saying they're actively seeking a way to reduce their number of vendors, and consolidate into one. That's obviously supporting a supercloud type of play. Number two is reducing excess cloud resources. So when I look at both of those combined, with a drop in the overall spending reduction, I think you're on the right thread here, Dave. You know, the overall macro view that we're seeing in the data supports this happening. And if I can real quick, couple of names we did not touch on that I do think deserve to be in this conversation, one is HashiCorp. HashiCorp is the number one player in our infrastructure sector, with a 56% net score. It does multiple things within infrastructure and it is completely agnostic to your environment. And if we're also speaking about something that's just a singular feature, we would look at Rubric for data, backup, storage, recovery. They're not going to offer you your full cloud or your networking of course, but if you are looking for your backup, recovery, and storage Rubric, also number one in that sector with a 53% net score. Two other names that deserve to be in this conversation as we watch it move and evolve. >> Great, thank you for bringing that up. Yeah, we had both of those guys in the chart and I failed to focus in on HashiCorp. And clearly a Supercloud enabler. All right guys, we got to go. Thank you so much for joining us, appreciate it. Let's keep this conversation going. >> Always enjoy talking to you Dave, thanks. >> Yeah, thanks for having us. >> All right, keep it right there for more content from Supercloud 2. This is Dave Valente for John Ferg and the entire Cube team. We'll be right back. (gentle synth music) (music fades)

(upbeat music beginning) >> From the Cube Studios in Palo Alto and Boston, bringing you data-driven insights from the Cube and ETR, this is "Breaking Analysis" with Dave Vellante. >> Making predictions about the future of enterprise tech is more challenging if you strive to lay down forecasts that are measurable. In other words, if you make a prediction, you should be able to look back a year later and say, with some degree of certainty, whether the prediction came true or not, with evidence to back that up. Hello and welcome to this week's Wikibon Cube Insights, powered by ETR. In this breaking analysis, we aim to do just that, with predictions about the macro IT spending environment, cost optimization, security, lots to talk about there, generative AI, cloud, and of course supercloud, blockchain adoption, data platforms, including commentary on Databricks, snowflake, and other key players, automation, events, and we may even have some bonus predictions around quantum computing, and perhaps some other areas. To make all this happen, we welcome back, for the third year in a row, my colleague and friend Eric Bradley from ETR. Eric, thanks for all you do for the community, and thanks for being part of this program. Again. >> I wouldn't miss it for the world. I always enjoy this one. Dave, good to see you. >> Yeah, so let me bring up this next slide and show you, actually come back to me if you would. I got to show the audience this. These are the inbounds that we got from PR firms starting in October around predictions. They know we do prediction posts. And so they'll send literally thousands and thousands of predictions from hundreds of experts in the industry, technologists, consultants, et cetera. And if you bring up the slide I can show you sort of the pattern that developed here. 40% of these thousands of predictions were from cyber. You had AI and data. If you combine those, it's still not close to cyber. Cost optimization was a big thing. Of course, cloud, some on DevOps, and software. Digital... Digital transformation got, you know, some lip service and SaaS. And then there was other, it's kind of around 2%. So quite remarkable, when you think about the focus on cyber, Eric. >> Yeah, there's two reasons why I think it makes sense, though. One, the cybersecurity companies have a lot of cash, so therefore the PR firms might be working a little bit harder for them than some of their other clients. (laughs) And then secondly, as you know, for multiple years now, when we do our macro survey, we ask, "What's your number one spending priority?" And again, it's security. It just isn't going anywhere. It just stays at the top. So I'm actually not that surprised by that little pie chart there, but I was shocked that SaaS was only 5%. You know, going back 10 years ago, that would've been the only thing anyone was talking about. >> Yeah. So true. All right, let's get into it. First prediction, we always start with kind of tech spending. Number one is tech spending increases between four and 5%. ETR has currently got it at 4.6% coming into 2023. This has been a consistently downward trend all year. We started, you know, much, much higher as we've been reporting. Bottom line is the fed is still in control. They're going to ease up on tightening, is the expectation, they're going to shoot for a soft landing. But you know, my feeling is this slingshot economy is going to continue, and it's going to continue to confound, whether it's supply chains or spending. The, the interesting thing about the ETR data, Eric, and I want you to comment on this, the largest companies are the most aggressive to cut. They're laying off, smaller firms are spending faster. They're actually growing at a much larger, faster rate as are companies in EMEA. And that's a surprise. That's outpacing the US and APAC. Chime in on this, Eric. >> Yeah, I was surprised on all of that. First on the higher level spending, we are definitely seeing it coming down, but the interesting thing here is headlines are making it worse. The huge research shop recently said 0% growth. We're coming in at 4.6%. And just so everyone knows, this is not us guessing, we asked 1,525 IT decision-makers what their budget growth will be, and they came in at 4.6%. Now there's a huge disparity, as you mentioned. The Fortune 500, global 2000, barely at 2% growth, but small, it's at 7%. So we're at a situation right now where the smaller companies are still playing a little bit of catch up on digital transformation, and they're spending money. The largest companies that have the most to lose from a recession are being more trepidatious, obviously. So they're playing a "Wait and see." And I hope we don't talk ourselves into a recession. Certainly the headlines and some of their research shops are helping it along. But another interesting comment here is, you know, energy and utilities used to be called an orphan and widow stock group, right? They are spending more than anyone, more than financials insurance, more than retail consumer. So right now it's being driven by mid, small, and energy and utilities. They're all spending like gangbusters, like nothing's happening. And it's the rest of everyone else that's being very cautious. >> Yeah, so very unpredictable right now. All right, let's go to number two. Cost optimization remains a major theme in 2023. We've been reporting on this. You've, we've shown a chart here. What's the primary method that your organization plans to use? You asked this question of those individuals that cited that they were going to reduce their spend and- >> Mhm. >> consolidating redundant vendors, you know, still leads the way, you know, far behind, cloud optimization is second, but it, but cloud continues to outpace legacy on-prem spending, no doubt. Somebody, it was, the guy's name was Alexander Feiglstorfer from Storyblok, sent in a prediction, said "All in one becomes extinct." Now, generally I would say I disagree with that because, you know, as we know over the years, suites tend to win out over, you know, individual, you know, point products. But I think what's going to happen is all in one is going to remain the norm for these larger companies that are cutting back. They want to consolidate redundant vendors, and the smaller companies are going to stick with that best of breed and be more aggressive and try to compete more effectively. What's your take on that? >> Yeah, I'm seeing much more consolidation in vendors, but also consolidation in functionality. We're seeing people building out new functionality, whether it's, we're going to talk about this later, so I don't want to steal too much of our thunder right now, but data and security also, we're seeing a functionality creep. So I think there's further consolidation happening here. I think niche solutions are going to be less likely, and platform solutions are going to be more likely in a spending environment where you want to reduce your vendors. You want to have one bill to pay, not 10. Another thing on this slide, real quick if I can before I move on, is we had a bunch of people write in and some of the answer options that aren't on this graph but did get cited a lot, unfortunately, is the obvious reduction in staff, hiring freezes, and delaying hardware, were three of the top write-ins. And another one was offshore outsourcing. So in addition to what we're seeing here, there were a lot of write-in options, and I just thought it would be important to state that, but essentially the cost optimization is by and far the highest one, and it's growing. So it's actually increased in our citations over the last year. >> And yeah, specifically consolidating redundant vendors. And so I actually thank you for bringing that other up, 'cause I had asked you, Eric, is there any evidence that repatriation is going on and we don't see it in the numbers, we don't see it even in the other, there was, I think very little or no mention of cloud repatriation, even though it might be happening in this in a smattering. >> Not a single mention, not one single mention. I went through it for you. Yep. Not one write-in. >> All right, let's move on. Number three, security leads M&A in 2023. Now you might say, "Oh, well that's a layup," but let me set this up Eric, because I didn't really do a great job with the slide. I hid the, what you've done, because you basically took, this is from the emerging technology survey with 1,181 responses from November. And what we did is we took Palo Alto and looked at the overlap in Palo Alto Networks accounts with these vendors that were showing on this chart. And Eric, I'm going to ask you to explain why we put a circle around OneTrust, but let me just set it up, and then have you comment on the slide and take, give us more detail. We're seeing private company valuations are off, you know, 10 to 40%. We saw a sneak, do a down round, but pretty good actually only down 12%. We've seen much higher down rounds. Palo Alto Networks we think is going to get busy. Again, they're an inquisitive company, they've been sort of quiet lately, and we think CrowdStrike, Cisco, Microsoft, Zscaler, we're predicting all of those will make some acquisitions and we're thinking that the targets are somewhere in this mess of security taxonomy. Other thing we're predicting AI meets cyber big time in 2023, we're going to probably going to see some acquisitions of those companies that are leaning into AI. We've seen some of that with Palo Alto. And then, you know, your comment to me, Eric, was "The RSA conference is going to be insane, hopping mad, "crazy this April," (Eric laughing) but give us your take on this data, and why the red circle around OneTrust? Take us back to that slide if you would, Alex. >> Sure. There's a few things here. First, let me explain what we're looking at. So because we separate the public companies and the private companies into two separate surveys, this allows us the ability to cross-reference that data. So what we're doing here is in our public survey, the tesis, everyone who cited some spending with Palo Alto, meaning they're a Palo Alto customer, we then cross-reference that with the private tech companies. Who also are they spending with? So what you're seeing here is an overlap. These companies that we have circled are doing the best in Palo Alto's accounts. Now, Palo Alto went and bought Twistlock a few years ago, which this data slide predicted, to be quite honest. And so I don't know if they necessarily are going to go after Snyk. Snyk, sorry. They already have something in that space. What they do need, however, is more on the authentication space. So I'm looking at OneTrust, with a 45% overlap in their overall net sentiment. That is a company that's already existing in their accounts and could be very synergistic to them. BeyondTrust as well, authentication identity. This is something that Palo needs to do to move more down that zero trust path. Now why did I pick Palo first? Because usually they're very inquisitive. They've been a little quiet lately. Secondly, if you look at the backdrop in the markets, the IPO freeze isn't going to last forever. Sooner or later, the IPO markets are going to open up, and some of these private companies are going to tap into public equity. In the meantime, however, cash funding on the private side is drying up. If they need another round, they're not going to get it, and they're certainly not going to get it at the valuations they were getting. So we're seeing valuations maybe come down where they're a touch more attractive, and Palo knows this isn't going to last forever. Cisco knows that, CrowdStrike, Zscaler, all these companies that are trying to make a push to become that vendor that you're consolidating in, around, they have a chance now, they have a window where they need to go make some acquisitions. And that's why I believe leading up to RSA, we're going to see some movement. I think it's going to pretty, a really exciting time in security right now. >> Awesome. Thank you. Great explanation. All right, let's go on the next one. Number four is, it relates to security. Let's stay there. Zero trust moves from hype to reality in 2023. Now again, you might say, "Oh yeah, that's a layup." A lot of these inbounds that we got are very, you know, kind of self-serving, but we always try to put some meat in the bone. So first thing we do is we pull out some commentary from, Eric, your roundtable, your insights roundtable. And we have a CISO from a global hospitality firm says, "For me that's the highest priority." He's talking about zero trust because it's the best ROI, it's the most forward-looking, and it enables a lot of the business transformation activities that we want to do. CISOs tell me that they actually can drive forward transformation projects that have zero trust, and because they can accelerate them, because they don't have to go through the hurdle of, you know, getting, making sure that it's secure. Second comment, zero trust closes that last mile where once you're authenticated, they open up the resource to you in a zero trust way. That's a CISO of a, and a managing director of a cyber risk services enterprise. Your thoughts on this? >> I can be here all day, so I'm going to try to be quick on this one. This is not a fluff piece on this one. There's a couple of other reasons this is happening. One, the board finally gets it. Zero trust at first was just a marketing hype term. Now the board understands it, and that's why CISOs are able to push through it. And what they finally did was redefine what it means. Zero trust simply means moving away from hardware security, moving towards software-defined security, with authentication as its base. The board finally gets that, and now they understand that this is necessary and it's being moved forward. The other reason it's happening now is hybrid work is here to stay. We weren't really sure at first, large companies were still trying to push people back to the office, and it's going to happen. The pendulum will swing back, but hybrid work's not going anywhere. By basically on our own data, we're seeing that 69% of companies expect remote and hybrid to be permanent, with only 30% permanent in office. Zero trust works for a hybrid environment. So all of that is the reason why this is happening right now. And going back to our previous prediction, this is why we're picking Palo, this is why we're picking Zscaler to make these acquisitions. Palo Alto needs to be better on the authentication side, and so does Zscaler. They're both fantastic on zero trust network access, but they need the authentication software defined aspect, and that's why we think this is going to happen. One last thing, in that CISO round table, I also had somebody say, "Listen, Zscaler is incredible. "They're doing incredibly well pervading the enterprise, "but their pricing's getting a little high," and they actually think Palo Alto is well-suited to start taking some of that share, if Palo can make one move. >> Yeah, Palo Alto's consolidation story is very strong. Here's my question and challenge. Do you and me, so I'm always hardcore about, okay, you've got to have evidence. I want to look back at these things a year from now and say, "Did we get it right? Yes or no?" If we got it wrong, we'll tell you we got it wrong. So how are we going to measure this? I'd say a couple things, and you can chime in. One is just the number of vendors talking about it. That's, but the marketing always leads the reality. So the second part of that is we got to get evidence from the buying community. Can you help us with that? >> (laughs) Luckily, that's what I do. I have a data company that asks thousands of IT decision-makers what they're adopting and what they're increasing spend on, as well as what they're decreasing spend on and what they're replacing. So I have snapshots in time over the last 11 years where I can go ahead and compare and contrast whether this adoption is happening or not. So come back to me in 12 months and I'll let you know. >> Now, you know, I will. Okay, let's bring up the next one. Number five, generative AI hits where the Metaverse missed. Of course everybody's talking about ChatGPT, we just wrote last week in a breaking analysis with John Furrier and Sarjeet Joha our take on that. We think 2023 does mark a pivot point as natural language processing really infiltrates enterprise tech just as Amazon turned the data center into an API. We think going forward, you're going to be interacting with technology through natural language, through English commands or other, you know, foreign language commands, and investors are lining up, all the VCs are getting excited about creating something competitive to ChatGPT, according to (indistinct) a hundred million dollars gets you a seat at the table, gets you into the game. (laughing) That's before you have to start doing promotion. But he thinks that's what it takes to actually create a clone or something equivalent. We've seen stuff from, you know, the head of Facebook's, you know, AI saying, "Oh, it's really not that sophisticated, ChatGPT, "it's kind of like IBM Watson, it's great engineering, "but you know, we've got more advanced technology." We know Google's working on some really interesting stuff. But here's the thing. ETR just launched this survey for the February survey. It's in the field now. We circle open AI in this category. They weren't even in the survey, Eric, last quarter. So 52% of the ETR survey respondents indicated a positive sentiment toward open AI. I added up all the sort of different bars, we could double click on that. And then I got this inbound from Scott Stevenson of Deep Graham. He said "AI is recession-proof." I don't know if that's the case, but it's a good quote. So bring this back up and take us through this. Explain this chart for us, if you would. >> First of all, I like Scott's quote better than the Facebook one. I think that's some sour grapes. Meta just spent an insane amount of money on the Metaverse and that's a dud. Microsoft just spent money on open AI and it is hot, undoubtedly hot. We've only been in the field with our current ETS survey for a week. So my caveat is it's preliminary data, but I don't care if it's preliminary data. (laughing) We're getting a sneak peek here at what is the number one net sentiment and mindshare leader in the entire machine-learning AI sector within a week. It's beating Data- >> 600. 600 in. >> It's beating Databricks. And we all know Databricks is a huge established enterprise company, not only in machine-learning AI, but it's in the top 10 in the entire survey. We have over 400 vendors in this survey. It's number eight overall, already. In a week. This is not hype. This is real. And I could go on the NLP stuff for a while. Not only here are we seeing it in open AI and machine-learning and AI, but we're seeing NLP in security. It's huge in email security. It's completely transforming that area. It's one of the reasons I thought Palo might take Abnormal out. They're doing such a great job with NLP in this email side, and also in the data prep tools. NLP is going to take out data prep tools. If we have time, I'll discuss that later. But yeah, this is, to me this is a no-brainer, and we're already seeing it in the data. >> Yeah, John Furrier called, you know, the ChatGPT introduction. He said it reminded him of the Netscape moment, when we all first saw Netscape Navigator and went, "Wow, it really could be transformative." All right, number six, the cloud expands to supercloud as edge computing accelerates and CloudFlare is a big winner in 2023. We've reported obviously on cloud, multi-cloud, supercloud and CloudFlare, basically saying what multi-cloud should have been. We pulled this quote from Atif Kahn, who is the founder and CTO of Alkira, thanks, one of the inbounds, thank you. "In 2023, highly distributed IT environments "will become more the norm "as organizations increasingly deploy hybrid cloud, "multi-cloud and edge settings..." Eric, from one of your round tables, "If my sources from edge computing are coming "from the cloud, that means I have my workloads "running in the cloud. "There is no one better than CloudFlare," That's a senior director of IT architecture at a huge financial firm. And then your analysis shows CloudFlare really growing in pervasion, that sort of market presence in the dataset, dramatically, to near 20%, leading, I think you had told me that they're even ahead of Google Cloud in terms of momentum right now. >> That was probably the biggest shock to me in our January 2023 tesis, which covers the public companies in the cloud computing sector. CloudFlare has now overtaken GCP in overall spending, and I was shocked by that. It's already extremely pervasive in networking, of course, for the edge networking side, and also in security. This is the number one leader in SaaSi, web access firewall, DDoS, bot protection, by your definition of supercloud, which we just did a couple of weeks ago, and I really enjoyed that by the way Dave, I think CloudFlare is the one that fits your definition best, because it's bringing all of these aspects together, and most importantly, it's cloud agnostic. It does not need to rely on Azure or AWS to do this. It has its own cloud. So I just think it's, when we look at your definition of supercloud, CloudFlare is the poster child. >> You know, what's interesting about that too, is a lot of people are poo-pooing CloudFlare, "Ah, it's, you know, really kind of not that sophisticated." "You don't have as many tools," but to your point, you're can have those tools in the cloud, Cloudflare's doing serverless on steroids, trying to keep things really simple, doing a phenomenal job at, you know, various locations around the world. And they're definitely one to watch. Somebody put them on my radar (laughing) a while ago and said, "Dave, you got to do a breaking analysis on CloudFlare." And so I want to thank that person. I can't really name them, 'cause they work inside of a giant hyperscaler. But- (Eric laughing) (Dave chuckling) >> Real quickly, if I can from a competitive perspective too, who else is there? They've already taken share from Akamai, and Fastly is their really only other direct comp, and they're not there. And these guys are in poll position and they're the only game in town right now. I just, I don't see it slowing down. >> I thought one of your comments from your roundtable I was reading, one of the folks said, you know, CloudFlare, if my workloads are in the cloud, they are, you know, dominant, they said not as strong with on-prem. And so Akamai is doing better there. I'm like, "Okay, where would you want to be?" (laughing) >> Yeah, which one of those two would you rather be? >> Right? Anyway, all right, let's move on. Number seven, blockchain continues to look for a home in the enterprise, but devs will slowly begin to adopt in 2023. You know, blockchains have got a lot of buzz, obviously crypto is, you know, the killer app for blockchain. Senior IT architect in financial services from your, one of your insight roundtables said quote, "For enterprises to adopt a new technology, "there have to be proven turnkey solutions. "My experience in talking with my peers are, "blockchain is still an open-source component "where you have to build around it." Now I want to thank Ravi Mayuram, who's the CTO of Couchbase sent in, you know, one of the predictions, he said, "DevOps will adopt blockchain, specifically Ethereum." And he referenced actually in his email to me, Solidity, which is the programming language for Ethereum, "will be in every DevOps pro's playbook, "mirroring the boom in machine-learning. "Newer programming languages like Solidity "will enter the toolkits of devs." His point there, you know, Solidity for those of you don't know, you know, Bitcoin is not programmable. Solidity, you know, came out and that was their whole shtick, and they've been improving that, and so forth. But it, Eric, it's true, it really hasn't found its home despite, you know, the potential for smart contracts. IBM's pushing it, VMware has had announcements, and others, really hasn't found its way in the enterprise yet. >> Yeah, and I got to be honest, I don't think it's going to, either. So when we did our top trends series, this was basically chosen as an anti-prediction, I would guess, that it just continues to not gain hold. And the reason why was that first comment, right? It's very much a niche solution that requires a ton of custom work around it. You can't just plug and play it. And at the end of the day, let's be very real what this technology is, it's a database ledger, and we already have database ledgers in the enterprise. So why is this a priority to move to a different database ledger? It's going to be very niche cases. I like the CTO comment from Couchbase about it being adopted by DevOps. I agree with that, but it has to be a DevOps in a very specific use case, and a very sophisticated use case in financial services, most likely. And that's not across the entire enterprise. So I just think it's still going to struggle to get its foothold for a little bit longer, if ever. >> Great, thanks. Okay, let's move on. Number eight, AWS Databricks, Google Snowflake lead the data charge with Microsoft. Keeping it simple. So let's unpack this a little bit. This is the shared accounts peer position for, I pulled data platforms in for analytics, machine-learning and AI and database. So I could grab all these accounts or these vendors and see how they compare in those three sectors. Analytics, machine-learning and database. Snowflake and Databricks, you know, they're on a crash course, as you and I have talked about. They're battling to be the single source of truth in analytics. They're, there's going to be a big focus. They're already started. It's going to be accelerated in 2023 on open formats. Iceberg, Python, you know, they're all the rage. We heard about Iceberg at Snowflake Summit, last summer or last June. Not a lot of people had heard of it, but of course the Databricks crowd, who knows it well. A lot of other open source tooling. There's a company called DBT Labs, which you're going to talk about in a minute. George Gilbert put them on our radar. We just had Tristan Handy, the CEO of DBT labs, on at supercloud last week. They are a new disruptor in data that's, they're essentially making, they're API-ifying, if you will, KPIs inside the data warehouse and dramatically simplifying that whole data pipeline. So really, you know, the ETL guys should be shaking in their boots with them. Coming back to the slide. Google really remains focused on BigQuery adoption. Customers have complained to me that they would like to use Snowflake with Google's AI tools, but they're being forced to go to BigQuery. I got to ask Google about that. AWS continues to stitch together its bespoke data stores, that's gone down that "Right tool for the right job" path. David Foyer two years ago said, "AWS absolutely is going to have to solve that problem." We saw them start to do it in, at Reinvent, bringing together NoETL between Aurora and Redshift, and really trying to simplify those worlds. There's going to be more of that. And then Microsoft, they're just making it cheap and easy to use their stuff, you know, despite some of the complaints that we hear in the community, you know, about things like Cosmos, but Eric, your take? >> Yeah, my concern here is that Snowflake and Databricks are fighting each other, and it's allowing AWS and Microsoft to kind of catch up against them, and I don't know if that's the right move for either of those two companies individually, Azure and AWS are building out functionality. Are they as good? No they're not. The other thing to remember too is that AWS and Azure get paid anyway, because both Databricks and Snowflake run on top of 'em. So (laughing) they're basically collecting their toll, while these two fight it out with each other, and they build out functionality. I think they need to stop focusing on each other, a little bit, and think about the overall strategy. Now for Databricks, we know they came out first as a machine-learning AI tool. They were known better for that spot, and now they're really trying to play catch-up on that data storage compute spot, and inversely for Snowflake, they were killing it with the compute separation from storage, and now they're trying to get into the MLAI spot. I actually wouldn't be surprised to see them make some sort of acquisition. Frank Slootman has been a little bit quiet, in my opinion there. The other thing to mention is your comment about DBT Labs. If we look at our emerging technology survey, last survey when this came out, DBT labs, number one leader in that data integration space, I'm going to just pull it up real quickly. It looks like they had a 33% overall net sentiment to lead data analytics integration. So they are clearly growing, it's fourth straight survey consecutively that they've grown. The other name we're seeing there a little bit is Cribl, but DBT labs is by far the number one player in this space. >> All right. Okay, cool. Moving on, let's go to number nine. With Automation mixer resurgence in 2023, we're showing again data. The x axis is overlap or presence in the dataset, and the vertical axis is shared net score. Net score is a measure of spending momentum. As always, you've seen UI path and Microsoft Power Automate up until the right, that red line, that 40% line is generally considered elevated. UI path is really separating, creating some distance from Automation Anywhere, they, you know, previous quarters they were much closer. Microsoft Power Automate came on the scene in a big way, they loom large with this "Good enough" approach. I will say this, I, somebody sent me a results of a (indistinct) survey, which showed UiPath actually had more mentions than Power Automate, which was surprising, but I think that's not been the case in the ETR data set. We're definitely seeing a shift from back office to front soft office kind of workloads. Having said that, software testing is emerging as a mainstream use case, we're seeing ML and AI become embedded in end-to-end automations, and low-code is serving the line of business. And so this, we think, is going to increasingly have appeal to organizations in the coming year, who want to automate as much as possible and not necessarily, we've seen a lot of layoffs in tech, and people... You're going to have to fill the gaps with automation. That's a trend that's going to continue. >> Yep, agreed. At first that comment about Microsoft Power Automate having less citations than UiPath, that's shocking to me. I'm looking at my chart right here where Microsoft Power Automate was cited by over 60% of our entire survey takers, and UiPath at around 38%. Now don't get me wrong, 38% pervasion's fantastic, but you know you're not going to beat an entrenched Microsoft. So I don't really know where that comment came from. So UiPath, looking at it alone, it's doing incredibly well. It had a huge rebound in its net score this last survey. It had dropped going through the back half of 2022, but we saw a big spike in the last one. So it's got a net score of over 55%. A lot of people citing adoption and increasing. So that's really what you want to see for a name like this. The problem is that just Microsoft is doing its playbook. At the end of the day, I'm going to do a POC, why am I going to pay more for UiPath, or even take on another separate bill, when we know everyone's consolidating vendors, if my license already includes Microsoft Power Automate? It might not be perfect, it might not be as good, but what I'm hearing all the time is it's good enough, and I really don't want another invoice. >> Right. So how does UiPath, you know, and Automation Anywhere, how do they compete with that? Well, the way they compete with it is they got to have a better product. They got a product that's 10 times better. You know, they- >> Right. >> they're not going to compete based on where the lowest cost, Microsoft's got that locked up, or where the easiest to, you know, Microsoft basically give it away for free, and that's their playbook. So that's, you know, up to UiPath. UiPath brought on Rob Ensslin, I've interviewed him. Very, very capable individual, is now Co-CEO. So he's kind of bringing that adult supervision in, and really tightening up the go to market. So, you know, we know this company has been a rocket ship, and so getting some control on that and really getting focused like a laser, you know, could be good things ahead there for that company. Okay. >> One of the problems, if I could real quick Dave, is what the use cases are. When we first came out with RPA, everyone was super excited about like, "No, UiPath is going to be great for super powerful "projects, use cases." That's not what RPA is being used for. As you mentioned, it's being used for mundane tasks, so it's not automating complex things, which I think UiPath was built for. So if you were going to get UiPath, and choose that over Microsoft, it's going to be 'cause you're doing it for more powerful use case, where it is better. But the problem is that's not where the enterprise is using it. The enterprise are using this for base rote tasks, and simply, Microsoft Power Automate can do that. >> Yeah, it's interesting. I've had people on theCube that are both Microsoft Power Automate customers and UiPath customers, and I've asked them, "Well you know, "how do you differentiate between the two?" And they've said to me, "Look, our users and personal productivity users, "they like Power Automate, "they can use it themselves, and you know, "it doesn't take a lot of, you know, support on our end." The flip side is you could do that with UiPath, but like you said, there's more of a focus now on end-to-end enterprise automation and building out those capabilities. So it's increasingly a value play, and that's going to be obviously the challenge going forward. Okay, my last one, and then I think you've got some bonus ones. Number 10, hybrid events are the new category. Look it, if I can get a thousand inbounds that are largely self-serving, I can do my own here, 'cause we're in the events business. (Eric chuckling) Here's the prediction though, and this is a trend we're seeing, the number of physical events is going to dramatically increase. That might surprise people, but most of the big giant events are going to get smaller. The exception is AWS with Reinvent, I think Snowflake's going to continue to grow. So there are examples of physical events that are growing, but generally, most of the big ones are getting smaller, and there's going to be many more smaller intimate regional events and road shows. These micro-events, they're going to be stitched together. Digital is becoming a first class citizen, so people really got to get their digital acts together, and brands are prioritizing earned media, and they're beginning to build their own news networks, going direct to their customers. And so that's a trend we see, and I, you know, we're right in the middle of it, Eric, so you know we're going to, you mentioned RSA, I think that's perhaps going to be one of those crazy ones that continues to grow. It's shrunk, and then it, you know, 'cause last year- >> Yeah, it did shrink. >> right, it was the last one before the pandemic, and then they sort of made another run at it last year. It was smaller but it was very vibrant, and I think this year's going to be huge. Global World Congress is another one, we're going to be there end of Feb. That's obviously a big big show, but in general, the brands and the technology vendors, even Oracle is going to scale down. I don't know about Salesforce. We'll see. You had a couple of bonus predictions. Quantum and maybe some others? Bring us home. >> Yeah, sure. I got a few more. I think we touched upon one, but I definitely think the data prep tools are facing extinction, unfortunately, you know, the Talons Informatica is some of those names. The problem there is that the BI tools are kind of including data prep into it already. You know, an example of that is Tableau Prep Builder, and then in addition, Advanced NLP is being worked in as well. ThoughtSpot, Intelius, both often say that as their selling point, Tableau has Ask Data, Click has Insight Bot, so you don't have to really be intelligent on data prep anymore. A regular business user can just self-query, using either the search bar, or even just speaking into what it needs, and these tools are kind of doing the data prep for it. I don't think that's a, you know, an out in left field type of prediction, but it's the time is nigh. The other one I would also state is that I think knowledge graphs are going to break through this year. Neo4j in our survey is growing in pervasion in Mindshare. So more and more people are citing it, AWS Neptune's getting its act together, and we're seeing that spending intentions are growing there. Tiger Graph is also growing in our survey sample. I just think that the time is now for knowledge graphs to break through, and if I had to do one more, I'd say real-time streaming analytics moves from the very, very rich big enterprises to downstream, to more people are actually going to be moving towards real-time streaming, again, because the data prep tools and the data pipelines have gotten easier to use, and I think the ROI on real-time streaming is obviously there. So those are three that didn't make the cut, but I thought deserved an honorable mention. >> Yeah, I'm glad you did. Several weeks ago, we did an analyst prediction roundtable, if you will, a cube session power panel with a number of data analysts and that, you know, streaming, real-time streaming was top of mind. So glad you brought that up. Eric, as always, thank you very much. I appreciate the time you put in beforehand. I know it's been crazy, because you guys are wrapping up, you know, the last quarter survey in- >> Been a nuts three weeks for us. (laughing) >> job. I love the fact that you're doing, you know, the ETS survey now, I think it's quarterly now, right? Is that right? >> Yep. >> Yep. So that's phenomenal. >> Four times a year. I'll be happy to jump on with you when we get that done. I know you were really impressed with that last time. >> It's unbelievable. This is so much data at ETR. Okay. Hey, that's a wrap. Thanks again. >> Take care Dave. Good seeing you. >> All right, many thanks to our team here, Alex Myerson as production, he manages the podcast force. Ken Schiffman as well is a critical component of our East Coast studio. Kristen Martin and Cheryl Knight help get the word out on social media and in our newsletters. And Rob Hoof is our editor-in-chief. He's at siliconangle.com. He's just a great editing for us. Thank you all. Remember all these episodes that are available as podcasts, wherever you listen, podcast is doing great. Just search "Breaking analysis podcast." Really appreciate you guys listening. I publish each week on wikibon.com and siliconangle.com, or you can email me directly if you want to get in touch, david.vellante@siliconangle.com. That's how I got all these. I really appreciate it. I went through every single one with a yellow highlighter. It took some time, (laughing) but I appreciate it. You could DM me at dvellante, or comment on our LinkedIn post and please check out etr.ai. Its data is amazing. Best survey data in the enterprise tech business. This is Dave Vellante for theCube Insights, powered by ETR. Thanks for watching, and we'll see you next time on "Breaking Analysis." (upbeat music beginning) (upbeat music ending)

(upbeat music) >> It's theCUBE live in Las Vegas, covering AWS re:Invent 2022. This is the first full day of coverage. We will be here tomorrow and Thursday but we started last night. So hopefully you've caught some of those interviews. Lisa Martin here in Vegas with Paul Gillin. Paul, it's great to be back. We just saw a tweet from a very reliable source saying that there are upwards of 70,000 people here at rei:Invent '22 >> I think there's 70,000 people just in that aisle right there. >> I think so. It's been great so far we've gotten, what are some of the things that you have been excited about today? >> Data, I just see data everywhere, which very much relates to our next guest. Companies realizing the value of data and the strategic value of data, beginning to treat it as an asset rather than just exhaust. I see a lot of focus on app development here and building scalable applications now. Developers have to get over that, have to sort of reorient themselves toward building around the set of cloud native primitives which I think we'll see some amazing applications come out of that. >> Absolutely, we will. We're pleased to welcome back one of our alumni to the program. Shinji Kim joins us, the CEO and founder of Select Star. Welcome back Shinji. It's great to have you. >> Thanks Lisa, great to be back. >> So for the audience who may not know much about Select Star before we start digging into all of the good stuff give us a little overview about what the company does and what differentiates you. >> Sure, so Select Star is an automated data discovery platform. We act like it's Google for data scientists, data analysts and data engineers to help find and understand their data better. Lot of companies today, like what you mentioned, Paul, have 100s and 1000s of database tables now swimming through large volumes of data and variety of data today and it's getting harder and harder for people that wants to utilize data make decisions around data and analyze data to truly have the full context of where this data came from, who do you think that's inside the company or what other analysis might have been done? So Select Star's role in this case is we connect different data warehouses BI tools, wherever the data is actually being used inside the company, bringing out all the usage analytics and the pipeline and the models in one place so anyone can search through what's available and how the data has been created, used and being analyzed within the company. So that's why we call it it's kind of like your Google for data. >> What are some of the biggest challenges to doing that? I mean you've got data squirreled away in lots of corners of the organization, Excel spreadsheets, thumb drives, cloud storage accounts. How granular do you get and what's the difficulty of finding all this data? >> So today we focus primarily on lot of cloud data warehouses and data lakes. So this includes data warehouses like Redshift, Snowflake (indistinct), Databricks, S3 buckets, where a lot of the data from different sources are arriving. Because this is a one area where a lot of analysis are now being done. This is a place where you can join other data sets within the same infrastructural umbrella. And so that is one portion that we always integrate with. The other part that we also integrate a lot with are the BI tools. So whether that's (indistinct) where you are running analysis, building reports, and dashboards. We will pull out how those are, which analysis has been done and which business stakeholders are consuming that data through those tools. So you also mentioned about the differentiation. I would say one of the biggest differentiation that we have in the market today is that we are more in the cloud. So it's very cloud native, fully managed SaaS service and it's really focused on user experience of how easily anyone can really search and understand data through Select Star. In the past, data catalogs as a sector has been primarily focused on inventorizing all your enterprise data which are in many disciplinary forces. So it was more focused on technical aspect of the metadata. At the same time now this enterprise data catalog is important and is needed for even smaller companies because they are dealing with ton of data. Another part that we also see is more of democratization of data. Many different types of users are utilizing data whether they are fully technical or not. So we had basically emphasis around how to make our user interface as intuitive as possible for business users or non-technical users but also bring out as much context as possible from the metadata and the laws that we have access to, to bring out these insights for our customers. >> Got it. What was the impetus or the catalyst to launch the business just a couple of years ago? >> Yeah, so prior to this I had another data startup called Concord Systems. We focused on distributed stream processing framework. I sold the company to Akamai which is now called ... and the product is now called IoT Edge Connect. Through Akamai I started working with a lot of enterprises in automotive and consumer electronics and this is where I saw lot of the issues starting to happen when enterprises are starting to try to use the data. Collection of data, storage of data, processing of data with the help of lot of cloud providers, scaling that is not going to be a challenge as much anymore. At the same time now lot of enterprises, what I realized is a lot of enterprises were sitting on top of ton of data that they may not know how to utilize it or know even how to give the access to because they are not 100% sure what's really inside. And more and more companies, as they are building up their cloud data warehouse infrastructure they're starting to run into the same issue. So this is a part that I felt like was missing gap in the market that I wanted to fulfill and that's why I started the company. >> I'm fascinated with some of the mechanics of doing that. In March of 2020 when lockdowns were happening worldwide you're starting new a company, you have to get funding, you have to hire people, you don't have a team in place presumably. So you have to build that as free to core. How did you do all that? (Shinji laughs) >> Yeah, that was definitely a lot of work just starting from scratch. But I've been brewing this idea, I would say three four months prior. I had a few other ideas. Basically after Akamai I took some time off and then when I decided I wanted to start another company there were a number of ideas that I was toying around with. And so late 2019 I was talking to a lot of different potential customers and users to learn a little bit more about whether my hypothesis around data discovery was true or not. And that kind of led into starting to build prototypes and designs and showing them around to see if there is an interest. So it's only after all those validations and conversations in place that I truly decided that I was going to start another company and it just happened to be at the timing of end of February, early March. So that's kind of how it happened. At the same time, I'm very lucky that I was able to have had number of investors that I kept in touch with and I kept them posted on how this process was going and that's why I think during the pandemic it was definitely not an easy thing to raise our initial seed round but we were able to close it and then move on to really start building the product in 2020. >> Now you were also entering a market that's there's quite a few competitors already in that market. What has been your strategy for getting a foot in the door, getting some name recognition for your company other than being on the queue? >> Yes, this is certainly part of it. So I think there are a few things. One is when I was doing my market research and even today there are a lot of customers out there looking for an easier, faster, time to value solution. >> Yes. >> In the market. Today, existing players and legacy players have a whole suite of platform. However, the implementation time for those platforms take six months or longer and they don't necessarily are built for lot of users to use. They are built for database administrators or more technical people to use so that they end up finding their data governance project not necessarily succeeding or getting as much value out of it as they were hoping for. So this is an area that we really try to fill the gaps in because for us from day one you will be able to see all the usage analysis, how your data models look like, and the analysis right up front. And this is one part that a lot of our customers really like and also some of those customers have moved from the legacy players to Select Star's floor. >> Interesting, so you're actually taking business from some of the legacy guys and girls that may not be able to move as fast and quickly as you can. But I'd love to hear, every company these days has to be a data company, whether it's a grocery store or obviously a bank or a car dealership, there's no choice anymore. As consumers, we have this expectation that we're going to be able to get what we want, self-service. So these companies have to figure out where all the data is, what's the insides, what does it say, how can they act on that quickly? And that's a big challenge to enable organizations to be able to see what it is that they have, where's the value, where's the liability as well. Give me a favorite customer story example that you think really highlights the value of what Select Star is delivering. >> Sure, so one customer that we helped and have been working with closely is Pitney Bowes. It's one of the oldest companies, 100 year old company in logistics and manufacturing. They have ton of IoT data they collect from parcels and all the tracking and all the manufacturing that they run. They have recently, I would say a couple years ago moved to a cloud data warehouse. And this is where their challenge around managing data have really started because they have many different teams accessing the data warehouses but maybe different teams creating different things that might have been created before and it's not clear to the other teams and there is no single source of truth that they could manage. So for them, as they were starting to look into implementing data mesh architecture they adopted Select Star. And they have a, as being a very large and also mature company they have considered a lot of other legacy solutions in the market as well. But they decided to give it a try with select Star mainly because all of the automated version of data modeling and the documentation that we were able to provide upfront. And with all that, with the implementation of Select Star now they claim that they save more than 30 hours a month of every person that they have in the data management team. And we have a case study about that. So this is like one place where we see it save a lot of time for the data team as well as all the consumers that data teams serve. >> I have to ask you this as a successful woman in technology, a field that has not been very inviting to women over the years, what do you think this industry has to do better in terms of bringing along girls and young women, particularly in secondary school to encourage them to pursue careers in science and technology? >> Like what could they do better? >> What could this industry do? What is this industry, these 70,000 people here need to do better? Of which maybe 15% are female. >> Yeah, so actually I do see a lot more women and minority in data analytics field which is always great to see, also like bridging the gap between technology and the business point of view. If anything as a takeaway I feel like just making more opportunities for everyone to participate is always great. I feel like there has been, or you know just like being in the industry, a lot of people tends to congregate with people that they know or more closed groups but having more inclusive open groups that is inviting regardless of the level or gender I think is definitely something that needs to be encouraged more just overall in the industry. >> I agree. I think the inclusivity is so important but it also needs to be intentional. We've done a lot of chatting with women in tech lately and we've been talking about this very topic and that they all talk about the inclusivity, diversity, equity but it needs to be intentional by companies to be able to do that. >> Right, and I think in a way if you were to put it as like women in tech then I feel like that's also making it more explosive. I think it's better when it's focused on the industry problem or like the subject matter, but then intentionally inviting more women and minority to participate so that there's more exchange with more diverse attendees in the AWS. >> That's a great point and I hope to your 0.1 day that we're able to get there, but we don't have to call out women in tech but it is just so much more even playing field. And I hope like you that we're on our way to doing that but it's amazing that Paul brought up that you started the company during the pandemic. Also as a female founder getting funding is incredibly difficult. So kudos to you. >> Thank you. >> For all the successes that you've had. Tell us what's next for Select Star before we get to that last question. >> Yeah, we have a lot of exciting features that have been recently released and also coming up. First and foremost we have an auto documentation feature that we recently released. We have a fairly sophisticated data lineage function that parses through activity log and sequel queries to give you what the data pipeline models look like. This allows you to tell what is the dependency of different tables and dashboards so you can plan what your migration or any changes that might happen in the data warehouse so that nothing breaks whenever these changes happen. We went one step further to that to understand how the data replication actually happens and based on that we are now able to detect which are the duplicated data sets and how each different field might have changed their data values. And if the data actually stays the same then we can also propagate the same documentation as well as tagging. So this is particularly useful if you are doing like a PII tagging, you just mark one thing once and based on the data model we will also have the rest of the PII that it's associated with. So that's one part. The second part is more on the security and data governance front. So we are really seeing policy based access control where you can define who can see what data in the catalog based on their team tags and how you want to define the model. So this allows more enterprises to be able to have different teams to work together. And last one at least we have more integrations that we are releasing. We have an upgraded integration now with Redshift so that there's an easy cloud formation template to get it set up, but we now have not added Databricks, and power BI as well. So there are lots of stuff coming up. >> Man, you have accomplished a lot in two and a half years Shinji, my goodness! Last question for you, describing Select Star in a bumper sticker, what would that bumper sticker say? >> So this is on our website, but yes, automated data catalog in 15 minutes would be what I would call. >> 15 minutes. That's awesome. Thank you so much for joining us back on the program reintroducing our audience to Select Star. And again, congratulations on the successes that you've had. You have to come back because what you're creating is a flywheel and I can't wait to see where it goes. >> Awesome, thanks so much for having me here. >> Oh, our pleasure. Shinji Kim and Paul Gillin, I'm Lisa Martin. You're watching theCUBE, the leader in live enterprise and emerging tech coverage. (upbeat music)

from the cube studios in Palo Alto in Boston bringing you data-driven insights from the cube and ETR this is breaking analysis with Dave vellante over the past decade cloudflare has built a Global Network that has the potential to become the fourth us-based hyperscale class cloud in our view the company is building a durable Revenue model with hooks into many important markets these include the more mature DDOS protection space to other growth sectors such as zero trust a serverless platform for application development and an increasing number of services such as database and object storage and other network services in essence cloudflare could be thought of as a giant distributed supercomputer that can connect multiple clouds and act as a highly efficient scheduling engine at scale its disruptive DNA is increasingly attracting novel startups and established Global firms alike looking for Reliable secure high performance low latency and more cost-effective alternatives to AWS and Legacy infrastructure Solutions hello and welcome to this week's wikibon Cube insights powered by ETR in this breaking analysis we initiate our deeper coverage of cloudflare we'll briefly explain our take on the company and its unique business model we'll then share some peer comparisons with both the financial snapshot and some fresh ETR survey data finally we'll share some examples of how we think cloudflare could be a disruptive force with a super cloud-like offering that in many respects is what multi-cloud should have been cloudflare has been on our peripheral radar Ben Thompson and many others have written about their disruptive business model and recently a breaking analysis follower who will remain anonymous emailed with some excellent insights on cloudflare that prompted us to initiate more detailed coverage let's first take a look at how cloudflare seize the world in terms of its view of a modern stack this is a graphic from cloudflare that shows a simple three-layer Stack comprising Storage and compute the lower level and application layer and the network and their key message is basically that the big four hyperscalers have replaced the on-prem leaders apps have been satisfied and that mess of network that you see and Security in the upper left can now be handled all by cloudflare and the stack can be rented via Opex versus requiring heavy capex investment so okay somewhat of a simplified view is those companies on the the left are you know not standing still and we're going to come back to that but cloudflare has done something quite amazing I mean it's been a while since we've invoked Russ hanneman of Silicon Valley Fame on breaking analysis but remember when he was in a meeting one of his first meetings if not the first with Richard Hendricks it was the whiz kid on the show Silicon Valley and hanneman said something like if you had a blank check and you could build anything in the world what would it be and Richard's answer was basically a new internet and that led to Pied Piper this peer-to-peer Network powered by decentralized devices and and iPhones and this amazing compression algorithm that enabled high-speed data movement and low latency uh up to no low latency access across the network well in a way that's what cloudflare has built its founding premise reimagined how the internet should be built with a consistent set of server infrastructure where each server had lots of cores lots of dram lots of cash fast ssds and plenty of network connectivity and bandwidth and well this picture makes it look like a bunch of dots and points of presence on a map which of course it is there's a software layer that enables cloudflare to efficiently allocate resources across this Global Network the company claims that it's Network utilization is in the 70 percent range and it has used its build out to enter the technology space from the bottoms up offering for example free tiers of services to users with multiple entry points on different services and selling then more services over time to a customer which of course drives up its average contract value and its lifetime value at the same time the company continues to innovate and add new services at a very rapid cloud-like Pace you can think of cloudflare's initial Market entry as like a lightweight Cisco as a service the company's CFO actually he uses that term he calls it that which really must tick off Cisco who of course has a massive portfolio and a dominant Market position now because it owns the network cloudflare is a marginal cost of adding new Services is very small and goes towards zero so it's able to get software like economics at scale despite all this infrastructure that's building out so it doesn't have to constantly face the increasing infrastructure tax snowflake for example doesn't own its own network infrastructure as it grows it relies on AWS or Azure gcp and and while it gives the company obvious advantages it doesn't have to build out its own network it also requires them to constantly pay the tax and negotiate with hyperscalers for better rental rates now as previously mentioned Cloud Fair cloudflare claims that its utilization is very high probably higher than the hyperscalers who can spin up servers that they can charge for underutilized customer capacity cloudflare also has excellent Network traffic data that it can use to its Advantage with its Analytics the company has been rapidly innovating Beyond its original Core Business adding as I said before serverless zero trust offerings it has announced a database it calls its database D1 that's pretty creative and it's announced an object store called R2 that is S3 minus one both from the alphabet and the numeric I.E minus the egress cost saying no egress cost that's their big claim to fame and they've made a lot of marketing noise around about that and of course they've promised in our a D2 database which of course is R2D2 RR they've launched a developer platform cloudflare can be thought of kind of like first of all a modern CDN they've got a simpler security model that's how they compete for example with z-scaler that brings uh they also bring VPN sd-wan and DDOS protection services that are that are part of the network and they're less expensive than AWS that's kind of their sort of go to market and messaging and value proposition and they're positioning themselves as a neutral Network that can connect across multiple clouds now to be clear unlike AWS in particular cloudflare is not well suited to lift and shift your traditional apps like for instance sap Hana you're not going to run that in on cloudflare's platform rather the company started by making websites more secure and faster and it flew under the radar and much in the same way that clay Christensen described the disruption in the steel industry if you've seen that where new entrants picked off the low margin rebar business then moved up the stack we've used that analogy in the semiconductor business with arm and and even China cloudflare is running a similar playbook in the cloud and in the network so in the early part of the last decade as aws's ascendancy was becoming more clear many of us started thinking about how and where firms could compete and add value as AWS is becoming so dominant so for instance take an industry Focus you could do things like data sharing with snowflake eventually you know uh popularized you could build on top of clouds again snowflake is doing that as are others you could build private clouds and of course connect to hybrid clouds but not many had the wherewithal and or the hutzpah to build out a Global Network that could serve as a connecting platform for cloud services cloudflare has traction in the market as it adds new services like zero trust and object store or database its Tam continues to grow here's a quick snapshot of cloudflare's financials relative to Z scalar which is both a competitor and a customer fastly which is a smaller CDN and Akamai a more mature CDN slash Edge platform cloudflare and fastly both reported earnings this past week Cloud Fair Cloud flare surpassed a billion dollar Revenue run rate but they gave tepid guidance and the stock got absolutely crushed today which is Friday but the company's business model is sound it's growing close to 50 annually it has sas-like gross margins in the mid to high 70s and it's it it's got a very strong balance sheet and a 13x revenue run rate multiple in fact it's Financial snapshot is quite close to that of z-scaler which is kind of interesting which zinc sailor of course doesn't own its own network that's a pure play software company fastly is much smaller and growing more slowly than cloudflare hence its lower multiple well Akamai as you can see is a more mature company but it's got a nice business now on its earnings call this week cloudflare announced that its head of sales was stepping down and the company has brought in a new leader to take the firm to five billion dollars in sales I think actually its current sales leader felt like hey you know my work is done here bring on somebody else to take it to the next level the company is promising to be free cash flow positive by the end of the year and is working hard toward its long-term financial model or so working towards sorry it's a long-term financial model with gross margin Targets in the mid 70s it's targeting 20 non-gaap operating margins so so solid you know very solid not like completely off the charts but you know very good and to our knowledge it has not committed to a long-term growth rate but at that sort of operating profit level you would like to see growth be consistently at least in the 20 range so they could at least be a rule of 40 company or perhaps even even five even higher if they're going to continue to command a premium valuation okay let's take a look at the ETR data ETR is very positive on cloudflare and has recently published a report on the company like many companies cloudflare is seeing an across the board slowdown in spending velocity we've reported on this quite extensively using the ETR data to quantify the degree to that Slowdown and on the data set with ETR we see that many customers they're shifting their spend to Flat spend you know plus or minus let's say you know single digits you know two three percent or even zero or in the market we're seeing a shift from paid to free tiers remember cloudflare offers a lot of free services as you're seeing customers maybe turn off the pay for a while and going with the freebie but we're also seeing some larger customers in the data and the fortune 1000 specifically they're actually spending more which was confirmed on cloudflare's earnings call they did say everything across the board was softer but they did also indicate that some of their larger customers are actually growing faster than their smaller customers and their churn is very very low here's a two-dimensional graphic we'd like to share this view a lot it's got Net score or spending momentum on the vertical axis and overlap or pervasiveness in the survey on the horizontal axis and this cut isolates three segments in the etrs taxonomy that cloudflare plays in Cloud security and networking now the table inserted in that upper left there shows the raw data which informs the position of each company in the dots with Net score in the ends listed in that rightmost column the red dotted line indicates a highly elevated Net score and finally we posted the breakdown those colors in the bottom right of cloudflare's Net score the lime green that's new adoptions the forest green is we're spending more six percent or more the gray is flat plus or minus uh five percent and you can see that the majority of customers you can see that's the majority of the customers that gray area the pink is we're spending Less in other words down six percent or worse and the bright red is churn which is minimal one percent very good indicator for for cloudflare what you do to get etr's proprietary Net score and they've done this for many many quarters so we have that time series data you subtract the Reds from the greens and that's Net score cloudflare is at 39 just under that magic red line now note that cloudflare and zscaler are right on top of each other Cisco has a dominant position on the x-axis that cloudflare and others are eyeing AWS is also dominant but note that its Net score is well above the red dotted line it's incredible Palo Alto networks is also very impressive it's got both a strong presence on the horizontal axis and it's got a Net score that's pretty comparable to cloudflare and z-scaler to much smaller companies Akamai is actually well positioned for a reasonably mature company and you can see fastly ATT Juniper and F5 have far less spending momentum on their platforms than does cloudflare but at least they are in positive Net score territory so what's going to be really interesting to see is whether cloudflare can continue to hold this momentum or even accelerate it as we've seen with some other clouds as it scales its Network and keeps adding more and more services cloudflare has a couple of potential strategic vectors that we want to talk about and it'll be going to be interesting to see how that plays out Now One path is to compete more directly as a Cloud Player offering secure access Edge services like firewall as a service and zero Trust Services like data loss prevention email security from its area one acquisition and other zero trust offerings as well as Network Services like routing and network connectivity this is The Sweet Spot of the company load balancing many others and then add in things like Object Store and database Services more Edge services in the future it might be telecom like services such as Network switching for offices so that's one route and cloudflare is clearly on that path more services more cohorts at innovating and and growing the company and bringing in more Revenue increasing acvs and and increasing long-term value and keeping retention high now the other Vector is what we're just going to refer to as super cloud as an enabler of cross-cloud infrastructure this is new value uh relative to the former Vector that we were just talking about now the title of this episode is what multi-cloud should have been meaning cloudflare could be the control plane providing a consistent experience across clouds one that is fast and secure at global scale now to give you Insight on this let's take a look at some of the comments made by Matthew Prince the CEO and co-founder of cloudflare cloudflare put its R2 Object Store into public beta this past May and I believe it's storing around a petabyte of data today I think that's what they said in their call here's what Prince said about that quote we are talking to very large companies about moving more and more of their stored objects to where we can store that with R2 and one of the benefits is not only can we help them save money on the egress fees but it allows them to then use those object stores or objects across any of the different Cloud platforms they're that they're using so by being that neutral third party we can let people adopt a little bit of Amazon a little bit of Microsoft a little bit of Google a little bit of SAS vendors and share that data across all those different places so what's interesting about this in the super cloud context is it suggests that customers could take the best of each Cloud to power their digital businesses I might like AWS for in redshift for my analytic database or I love Google's machine learning Microsoft's collaboration and I'd like a consistent way to connect those resources but of course he's strongly hinting and has made many public statements that aws's egress fees are a blocker to that vision now at a recent investor event Matthew Prince added some color to this concept when he talked about one metric of success being how much R2 capacity was consumed and how much they sold but perhaps a more interesting Benchmark is highlighted by the following statement that he made he said a completely different measure of success for R2 is Andy jassy says I'm sick and tired of these guys meaning cloudflare taking our objects away we're dropping our egress fees to zero I would be so excited because we've then unlocked the ability to be the network that interconnects the cloud together now of course it would be Adam solipski who would be saying that or maybe Andy Jesse you know still watching over AWS and I think it's highly unlikely that that's going to happen anytime soon and that of course but but in theory gets us closer to the super cloud value proposition and to further drive that point home and we're paraphrasing a little bit his comments here he said something the effect of quote customers need one consistent control plane across clouds and we are the neutral Network that can be consistent no matter which Cloud you're using interesting right that Prince sees the world that's similar to if not nearly identical to the concepts that the cube Community has been putting forth around supercloud now this vision is a ways off let's be real Prince even suggested that his initial vision of an application running across multiple clouds you know that's like super cloud Nirvana isn't what customers are doing today that's that's really hard to do and perhaps you know it's never going to happen but there's a little doubt that cloudflare could be and is positioning itself as that cross-cloud control plane it has the network economics and the business model levers to pull it's got an edge up on the competition at the edge pun intended cloudflare is the definition of Edge and it's distributed platform it's decentralized platform is much better suited for Edge workloads than these giant data centers that are you know set up to to try and handle that today the the hyperscalers are building out you know their Edge networks things like outposts you know going out to the edge and other local zones Etc now cloudflare is increasingly competitive to the hyperscalers and those traditional Stacks that it depositioned on an earlier slide that we showed but you know the likes of AWS and Dell and hpe and Cisco and those others they're not sitting in their hands they have a huge huge customer install bases and they are definitely a moving Target they're investing and they're building out their own Super clouds with really robust stacks as well let's face it it's going to take a decade or more for Enterprises to adopt a developer platform or a new database Cloud plus cloudflare's capabilities when compared to incumbent stacks and the hyperscalers is much less robust in these areas and even in storage you know despite all the great conversation that R2 generated and the buzz you take a specialist like Wasabi they're more mature they're more functional and they're way cheaper even than cloudflare so you know it's not a fake a complete that cloudflare is going to win in those markets but we love the disruption and if cloudflare wants to be the fourth us-based hyperscaler or join the the big four as the as the fifth if we put Alibaba in the mix it's got a lot of work to do in the ecosystem by its own admission as much to learn and is part of the value by the way that it sees in its area one acquisition it's email security company that it bought but even in that case much of the emphasis has been on reseller channels compare that to the AWS ecosystem which is not only a channel play but is as much an innovation flywheel filling gaps where companies like snowflake Thrive side by side with aws's data stores as well all the on-prem stacks are building hybrid connections to AWS and other clouds as a means of providing consistent experiences across clouds indeed many of them see what they call cross-cloud services or what we call super cloud hyper cloud or whatever you know Mega Cloud you want to call it we use super cloud they are really eyeing that opportunity so very few companies frankly are not going after that space but we're going to close with this cloudflare is one of those companies that's in a position to wake up each morning and ask who can we disrupt today and very few companies are in a position to disrupt the hyperscalers to the degree that cloudflare is and that my friends is going to be fascinating to watch unfold all right let's call it a wrap I want to thank Alex Meyerson who's on production and manages the podcast as well as Ken schiffman who's our newest addition to the Boston Studio Kristen Martin and Cheryl Knight help us get the word out on social media and in our newsletters and Rob Hof is our editor-in-chief over at silicon angle thank you to all remember all these episodes are available as podcasts wherever you listen all you're going to do is search breaking analysis podcasts I publish each week on wikibon.com and siliconangle.com you can email me at david.velante at siliconangle.com or DM me at divalante if you comment on my LinkedIn posts and please do check out etr.ai they got the best survey data in the Enterprise Tech business this is Dave vellante for the cube insights powered by ETR thank you very much for watching and we'll see you next time on breaking analysis

>> From theCUBE Studios in Palo Alto and Boston, bringing you data driven insights from theCUBE and ETR. This is breaking analysis with Dave Vellante. >> The technology spending outlook is not pretty and very much unpredictable right now. The negative sentiment is of course being driven by the macroeconomic factors in earnings forecasts that have been coming down all year in an environment of rising interest rates. And what's worse, is many people think earnings estimates are still too high. But it's understandable why there's so much uncertainty. I mean, technology is still booming, digital transformations are happening in earnest, leading companies have momentum and they got cash runways. And moreover, the CEOs of these leading companies are still really optimistic. But strong guidance in an environment of uncertainty is somewhat risky. Hello and welcome to this week's Wikibon CUBE Insights Powered by ETR. In this breaking analysis, we share takeaways from ETR'S latest spending survey, which was released to their private clients on October 21st. Today, we're going to review the macro spending data. We're going to share where CIOs think their cloud spend is headed. We're going to look at the actions that organizations are taking to manage uncertainty and then review some of the technology companies that have the most positive and negative outlooks in the ETR data set. Let's first look at the sample makeup from the latest ETR survey. ETR captured more than 1300 respondents in this latest survey. Its highest figure for the year and the quality and seniority of respondents just keeps going up each time we dig into the data. We've got large contributions as you can see here from sea level executives in a broad industry focus. Now the survey is still North America centric with 20% of the respondents coming from overseas and there is a bias toward larger organizations. And nonetheless, we're still talking well over 400 respondents coming from SMBs. Now ETR for those of you who don't know, conducts a quarterly spending intention survey and they also do periodic drilldowns. So just by the way of review, let's take a look at the expectations in the latest drilldown survey for IT spending. Before we look at the broader technology spending intentions survey data, followers of this program know that we reported on this a couple of weeks ago, spending expectations that peaked last December at 8.3% are now down to 5.5% with a slight uptick expected for next year as shown here. Now one CIO in the ETR community said these figures could be understated because of inflation. Now that's an interesting comment. Real GDP in the US is forecast to be around 1.5% in 2022. So these figures are significantly ahead of that. Nominal GDP is forecast to be significantly higher than what is shown in that slide. It was over 9% in June for example. And one would interpret that survey respondents are talking about real dollars which reflects inflationary factors in IT spend. So you might say, well if nominal GDP is in the high single digits this means that IT spending is below GDP which is usually not the case. But the flip side of that is technology tends to be deflationary because prices come down over time on a per unit basis, so this would be a normal and even positive trend. But it's mixed right now with prices on hard to find hardware, they're holding more firms. Software, you know, software tends to be driven by lock in and competition and switching costs. So you have those countervailing factors. Services can be inflationary, especially now as wages rise but certain sectors like laptops and semis and NAND are seeing less demand and maybe even some oversupply. So the way to look at this data is on a relative basis. In other words, IT buyers are reporting 280 basis point drop in spending sentiment from the end of last year. Now, something that we haven't shared from the latest drilldown survey which we will now is how IT bar buyers are thinking about cloud adoption. This chart shows responses from 419 IT execs from that drilldown and depicts the percentage of workloads their organizations have in the cloud today and what the expectation is through years from now. And you can see it's 27% today and it's nearly 50% in three years. Now the nuance is if you look at the question, that ETRS, it's they asked about IaaS and PaaS, which to some could include on-prem. Now, let me come back to that. In particular, financial services, IT, telco and retail and services industry cited expectations for the future for three years out that we're well above the average of the mean adoption levels. Regardless of how you interpret this data there's most certainly plenty of public cloud in the numbers. And whether you believe cloud is an operating environment or a place out there in the cloud, there's plenty of room for workloads to move into a cloud model well beyond mid this decade. So you know, as ho hum as we've been toward recent as-a-service models announced from the likes of HPE with GreenLake and Dell with APEX, the timing of those offerings may be pretty good actually. Now let's expand on some of the data that we showed a couple weeks ago. This chart shows responses from 282 execs on actions their organizations are taking over the next three months. And the Deltas are quite traumatic from the early part of this charter than the left hand side. The brown line is hiring freezes, the black line is freezing IT projects, and the green line is hiring increases and that red line is layoffs. And we put a box around the sort of general area of the isolation economy timeframe. And you can see the wild swings on this chart. By mid last summer, people were kickstarting things and more hiring was going on and the black line shows IT project freezes, you know, came way down. And now, or on the way back up as our hiring freezes. So we're seeing these wild swings in organizational actions and strategies which underscores the lack of predictability. As with supply chains around the world, this is likely due to the fact that organizations, pre pandemic they were optimized for efficiency, not a lot of waste rather than business resilience. Meaning, you know, there's again not a lot of fluff in the system or if there was it got flushed out during the pandemic. And so the need for productivity and automation is becoming increasingly important, especially as actions that solely rely on headcount changes are very, very difficult to manage. Now, let's dig into some of the vendor commentary and take a look at some of the names that have momentum and some of the others possibly facing headwinds. Here's a list of companies that stand out in the ETR survey. Snowflake, once again leads the pack with a positive spending outlook. HashiCorp, CrowdStrike, Databricks, Freshworks and ServiceNow, they round out the top six. Microsoft, they seem to always be in the mix, as do a number of other security and related companies including CyberArk, Zscaler, CloudFlare, Elastic, Datadog, Fortinet, Tenable and to a certain extent Akamai, you can kind of put them sort of in that group. You know, CDN, they got to worry about security. Everybody worries about security, but especially the CDNs. Now the other software names that are highlighted here include Workday and Salesforce. On the negative side, you can see Dynatrace saw some negatives in the latest survey especially around its analytics business. Security is generally holding up better than other sectors but it's still seeing greater levels of pressure than it had previously. So lower spend. And defections relative to its observability peers, that's really for Dynatrace. Now the other one that was somewhat surprising is IBM. You see the IBM was sort of in that negative realm here but IBM reported an outstanding quarter this past week with double digit revenue growth, strong momentum in software, consulting, mainframes and other infrastructure like storage. It's benefiting from the Kyndryl restructuring and it's on track IBM to deliver 10 billion in free cash flow this year. Red Hat is performing exceedingly well and growing in the very high teens. And so look, IBM is in the midst of a major transformation and it seems like a company that is really focused now with hybrid cloud being powered by Red Hat and consulting and a decade plus of AI investments finally paying off. Now the other big thing we'll add is, IBM was once an outstanding acquire of companies and it seems to be really getting its act together on the M&A front. Yes, Red Hat was a big pill to swallow but IBM has done a number of smaller acquisitions, I think seven this year. Like for example, Turbonomic, which is starting to pay off. Arvind Krishna has the company focused once again. And he and Jim J. Kavanaugh, IBM CFO, seem to be very confident on the guidance that they're giving in their business. So that's a real positive in our view for the industry. Okay, the last thing we'd like to do is take 12 of the companies from the previous chart and plot them in context. Now these companies don't necessarily compete with each other, some do. But they are standouts in the ETR survey and in the market. What we're showing here is a view that we like to often show, it's net score or spending velocity on the vertical axis. And it's a measure, that's a measure of the net percentage of customers that are spending more on a particular platform. So ETR asks, are you spending more or less? They subtract less from the mores. I mean I'm simplifying, but that's what net score is. Now in the horizontal axis, that is a measure of overlap which is which measures presence or pervasiveness in the dataset. So bigger the better. We've inserted a table that informs how the dots in the companies are positioned. These companies are all in the green in terms of net score. And that right most column in the table insert is indicative of their presence in the dataset, the end. So higher, again, is better for both columns. Two other notes, the red dotted line there you see at 40%. Anything over that indicates an highly elevated spending momentum for a given platform. And we purposefully took Microsoft out of the mix in this chart because it skews the data due to its large size. Everybody else would cluster on the left and Microsoft would be all alone in the right. So we take them out. Now as we noted earlier, Snowflake once again leads with a net score of 64%, well above the 40% line. Having said that, while adoption rates for Snowflake remains strong the company's spending velocity in the survey has come down to Earth. And many more customers are shifting from where they were last year and the year before in growth mode i.e. spending more year to year with Snowflake to now shifting more toward flat spending. So a plus or minus 5%. So that puts pressure on Snowflake's net score, just based on the math as to how ETR calculates, its proprietary net score methodology. So Snowflake is by no means insulated completely to the macro factors. And this was seen especially in the data in the Fortune 500 cut of the survey for Snowflake. We didn't show that here, just giving you anecdotal commentary from the survey which is backed up by data. So, it showed steeper declines in the Fortune 500 momentum. But overall, Snowflake, very impressive. Now what's more, note the position of Streamlit relative to Databricks. Streamlit is an open source python framework for developing data driven, data science oriented apps. And it's ironic that it's net score and shared in is almost identical to those of data bricks, as the aspirations of Snowflake and Databricks are beginning to collide. Now, however, the Databricks net score has held up very well over the past year and is in the 92nd percentile of its machine learning and AI peers. And while it's seeing some softness, like Snowflake in the Fortune 500, Databricks has steadily moved to the right on the X axis over the last several surveys even though it was unable to get to the public markets and do an IPO during the lockdown tech bubble. Let's come back to the chart. ServiceNow is impressive because it's well above the 40% mark and it has 437 shared in on this cut, the largest of any company that we chose to plot here. The only real negative on ServiceNow is, more large customers are keeping spending levels flat. That's putting a little bit pressure on its net score, but that's just conservatives. It's kind of like Snowflakes, you know, same thing but in a larger scale. But it's defections, the ServiceNow as in Snowflake as well. It's defections remain very, very low, really low churn below 2% for ServiceNow, in fact, within the dataset. Now it's interesting to also see Freshworks hit the list. You can see them as one of the few ITSM vendors that has momentum and can potentially take on ServiceNow. Workday, on this chart, it's the other big app player that's above the 40% line and we're only showing Workday HCM, FYI, in this graphic. It's Workday Financials, that offering, is below the 40% line just for reference. Now let's talk about CrowdStrike. We attended Falcon last month, CrowdStrike's user conference and we're very impressed with the product visio, the company's execution, it's growing partnerships. And you can see in this graphic, the ETR survey data confirms the company's stellar performance with a net score at 50%, well above the 40% mark. And importantly, more than 300 mentions. That's second only to ServiceNow, amongst the 12 companies that we've chosen to highlight here. Only Microsoft, which is not shown here, has a higher net score in the security space than CrowdStrike. And when it comes to presence, CrowdStrike now has caught up to Splunk in terms of pervasion in the survey. Now CyberArk and Zscaler are the other two security firms that are right at that 40% red dotted line. CyberArk for names with over a hundred citations in the security sector, is only behind Microsoft and CrowdStrike. Zscaler for its part in the survey is seeing strong momentum in the Fortune 500, unlike what we said for Snowflake. And its pervasion on the X-axis has been steadily increasing. Again, not that Snowflake and CrowdStrike compete with each other but they're too prominent names and it's just interesting to compare peers and business models. Cloudflare, Elastic and Datadog are slightly below the 40% mark but they made the sort of top 12 that we showed to highlight here and they continue to have positive sentiment in the survey. So, what are the big takeaways from this latest survey, this really quick snapshot that we've taken. As you know, over the next several weeks we're going to dig into it more and more. As we've previously reported, the tide is going out and it's taking virtually all the tech ships with it. But in many ways the current market is a story of heightened expectations coming down to Earth, miscalculations about the economic patterns and the swings and imperfect visibility. Leading Barclays analyst, Ramo Limchao ask the question to guide or not to guide in a recent research note he wrote. His point being, should companies guide or should they be more cautious? Many companies, if not most companies, are actually giving guidance. Indeed, when companies like Oracle and IBM are emphatic about their near term outlook and their visibility, it gives one confidence. On the other hand, reasonable people are asking, will the red hot valuations that we saw over the last two years from the likes of Snowflake, CrowdStrike, MongoDB, Okta, Zscaler, and others. Will they return? Or are we in for a long, drawn out, sideways exercise before we see sustained momentum? And to that uncertainty, we add elections and public policy. It's very hard to predict right now. I'm sorry to be like a two-handed lawyer, you know. On the one hand, on the other hand. But that's just the way it is. Let's just say for our part, we think that once it's clear that interest rates are on their way back down and we'll stabilize it under 4% and we have clarity on the direction of inflation, wages, unemployment and geopolitics, the wild swings and sentiment will subside. But when that happens is anyone's guess. If I had to peg, I'd say 18 months, which puts us at least into the spring of 2024. What's your prediction? You know, it's almost that time of year. Let's hear it. Please keep in touch and let us know what you think. Okay, that's it for now. Many thanks to Alex Myerson. He is on production and he manages the podcast for us. Ken Schiffman as well is our newest addition to the Boston Studio. Kristin Martin and Cheryl Knight, they help get the word out on social media and in our newsletters. And Rob Hoff is our EIC, editor-in-chief over at SiliconANGLE. He does some wonderful editing for us. Thank you all. Remember all these episodes, they are available as podcasts. Wherever you listen, just search breaking analysis podcast. I publish each week on wikibon.com and siliconangle.com. Or you can email me at david.vellante@siliconangle.com or DM me @dvellante. Or feel free to comment on our LinkedIn posts. And please do check out etr.ai. They've got the best survey data in the enterprise tech business. If you haven't checked that out, you should. It'll give you an advantage. This is Dave Vellante for theCUBE Insights Powered by ETR. Thanks for watching. Be well and we'll see you next time on Breaking Analysis. (soft upbeat music)

>>Welcome back to super cloud 22, our inaugural event. It's a pilot event here in the cube studios we're live and streaming virtually until we do it in person. Maybe next year. I'm John fury, host of the cube with Dave Lon two great guests, distinguished engineers managers, CTOs investors. Mariana Tessel is a CTO of Intuit ins Ray founder of vertex ventures. Both have a lot of DNA. Founder allow cloud here with mark Andre and Ben Horowitz, a variety of other great ventures you've done. And now you're an investor. Yep. Maria, you've been a seasoned CTO, VP of engineering, VMware Docker Intuit. Now thanks for joining us. >>Absolutely. >>So super cloud is a, is a thing. And apparently it's got a lot of momentum and you guys got stats over there at, at Intuit in, so you're investing and we were challenged on super cloud. Our initial thesis was you build on the clouds, get all that leverage like snowflake, you get a good differentiation and then you compete and then move to other clouds. Now it's becoming a thing where I can do this. Every enterprise could possibly do it. So I want to get your guys thoughts on what you think of super cloud concept and where are the holes in it, what needs to be defined. And so we'll start with you. You've done a lot of cloud things in your day. What >>Do you think? Yeah, it's the whole cloud journey started with a desire to consolidate and desire to actually provide uniformity and, and standards driven ways of doing things. And I think Amazon was a leader there. They helped kind of teach everybody else. You know, when I was in loud cloud, we were trying to do it with proprietary stacks just wouldn't work. But once everyone standardized upon Unix and you know, the chip sets no longer became as relevant. They did a lot of good things there, but what's happened since then is now you've got competing standards at the API layer at the interface layer no longer at the chip set layer, no longer at the operating system layer. Right? So the evolution of the, the, the battles are still there. When you talk about multicloud and super cloud, though, like one of the big things you have to keep in mind is latency is not free. Latency is very expensive and it's getting even more expensive now with, with multi-cloud. So you have to really understand where the separations of boundaries are between your data, your compute, and, and the network is just there as a facilitator to help binding compute and data. Right? And I think there's a lot of bets being made across different vendors like CloudFlare Akamai, as well as Amazon Google Microsoft in terms of how they think we should take computing either to the edge, from the core or back and forth. >>These, this is structural change. I mean, this is structural, >>It's desired by incumbents, but it's not something that I'm seeing from the consumption. I'd love to hear, hear from our end's per perspective, from a consumption point of view, like how much edge computing really matters. Right. >>Mario. >>So I think there's like, there's kind of a, a story of like two, like it's kind of, you can cut it for both edges. No, no pun intended on one end. It is really simplifying to actually go into like a single cloud and standardize on it and just have everything there. But I think what over time companies find is that they end up in multiple clouds, whether like, you know, through acquisitions or through like needing to use a service in another cloud. So you do find yourself in a situation where you have multi multi-cloud and you have to kind of work through it and understand how to make it all like work and latency is an issue, but also for many, many workloads, you can work around it and you can make it work where you have workloads that actually span multiple vendors and clouds. You know, again, having said that, I would say the world is such, that is still a simplifying assumption. When if you go to a single cloud, it's much easier to just go and, and bet on that >>Easier in terms of everything's integrated, IAS works with SAS, they solve a lot of problems. >>Correct. And you can do like for your developers, you can actually provide an environment that's super homogenous, simple. You can use services easily up and down the stack. And, you know, we, we actually made that deliberate decision. When we started migrating to the cloud at the beginning, it was like, oh, let's do like hybrid we'll, you know, make it, so it work anywhere. It was so complicated. It was not worth it. >>When was the, when did you give up, what was the moment? Was there a flash point where you said, oh, this is terrible. This is >>Dead. Yeah. When, when we started to try to make it interoperable and you just see what it requires to do that and the complexity of the architecture that it just became not worth it for the gains you have. >>So speaking obviously as a SAS provider, right. So it just doesn't, it didn't make business case sense for you guys to do that. So it was super cloud. Then an infrastructure thing we just heard from Ben wa deja VI that they're not, they're going beyond instantiating their, their data cloud. They're actually running, you know, their own little snow grid. They called it. And, and then when I asked him, well, what about latency? He said, well, we copied data over, you know, so, okay. That's you have to do, but that's a singular experience with the same governance or the same security. Just wasn't worth it for you guys is what I'm hearing. >>Correct. But again, like for some workload or for some services that we want to use, we are gonna go there and we are gonna then figure out what is the work around the latency issue, whether it's like copy or, you know, redundancy. >>Well, the question I have Dave on snowflake is maybe the question for you and in the panel is snowflake a tan expansion opportunity, or is there a technical reason to go to other clouds? >>I think they wanted to leverage the hyperscale infrastructure globally. And they said that they're out there, it's a free gift. We're gonna go take it. I, I think it started with we're on AWS. Do you think? And then we're on Azure and then we're on Google. And then they said, why don't we just connect all these and make it a singular experience? And yeah, I guess it's a TA expansion as a differentiator and it's, it adds value. Right. If I can share data across that global network, >>We have customers on Azure now, >>Right? Yeah. Yeah. Of course. >>You guys don't need to go CP. What do you think about that? >>Well, I think Snowflake's in a good position cuz they work mostly with analytical workloads and you have capacity. That's always gonna increase like no one subtracts, their analytical workload like ever, right. So there was just compounded growth is like 50% or 80% for, you know, many enterprises despite their best intentions, not to collect more data, they just can't stop doing it. So it's different than if you're like an Oracle or a transactional database where you don't have those, you know, like kind of infinite growth paths. So Snowflake's gonna continue to expand footprint their customers. They don't mind as long as you, they can figure out the, the lowest cost on denominator for, for that. >>Yeah. So it makes sense to be in all the clouds >>For them, for, for them, for sure. Yeah. >>But, but, but Oracle just announced with Microsoft what I would call super cloud, a, a cross cloud database service running on OCI and Azure with very low latency and a database that looks like a, the singular experience. Yeah. With, with a PAs layers >>That lost me after OCI that's >>Okay. You know, but that's the, that's the, the BS answer for all U VCs. The do nobody develops on Oracle? Well, it's a 240 billion market cap company. Show me who you all want be. >>We're gonna talk about SRDF and em C next, you >>All want Oracle. So there we go. You throw that into, you all want Oracle to buy your companies, your funding, you know, cause, cause we all wanna be like Oracle with that kinda cash flow. But, but anyway, >>Here's, here's one thing that I'm noticing that is gonna be really practical. I think for companies that do run SA is because like, you know, you have all these solutions, whether it's like analytics or like monitoring or logging or whatever. And each one of them is very data hungry and all of them have like SAS solutions that end up copy the data, moving data to their cloud, and then they might charge you by the size of your data. It does become kind of overwhelming for companies to use that many tools and basically maybe have that data kind of charge for it, multiple places because you use it for different purposes or just in general, if you have a lot of data, you know, that that is becoming an issue. So that's something that I've noticed in our, in our own kind of, you know, a world, but it's just something that I think companies need to think about how they solve because eventually a lot of companies will say, I cannot have all these solutions, so there's no way I'm gonna be willing to have so many copies of the data and actually pay for that. >>So many times, just something to think about. >>But one of the criticisms of the super cloud concept is that it's just SAS. If I'm running workload on prem and I, and I've got, you know, a connection to the cloud, which you probably do, that's, that's SAS, what's, what's the big deal and that's not anything new or different. So I'd love to get your thoughts on that. But Goldman Sachs, for instance, just announced the service last reinvent with AWS, connecting their tools, their data, and their software from on-prem to AWS, they're offering it as a service. I'm like, Hmm. Kind of looking like Supercloud, but maybe it's just SAS. >>It could be. And like, what I'm talking about is not so much like, you know, like what you wanna connect your data. But the idea is like a lot of the providers of different services, like in the past and, and like higher layer, they're actually COPI the data. They need the data in their cloud or their solution. And it just becomes complicated and expensive is, is kind of like my point. So yes, connecting it like for you to have the data in one place and then be able to connect to it. I think that is a valid, if, if that's kinda what you think about as a super cloud, that is a valid need, I think that companies will >>Have where developers actually want access to tools that might exist. >>Also the key is developers, right? Yeah. Developers decide all decisions, not database on administrators, not, you know, a hundred percent security engineers, not admins. So what's really interesting is where are the developers going next? If you look at the current winners in the current ecosystem, companies like MongoDB, I mean, they capture the minds of yeah. The JavaScript, you know, no JS developers absolutely very early on. And I started catch base and I could tell you like the difference was that capture motion was so important. So developers are basically used to this game-like experience now where they want to see tools that are free, whether it's open source or not, they actually don't care. They just want, and they want it SAS. They want it SAS delivered on demand. Right. And pay as you go. And so there's a lot of these different frameworks coming out next generation, no code, low code, whether it's Java, JavaScript, rust, you know, whatever, you know, go Lang. And there's a lot of people fighting religious wars about how to develop the next kind of modern pattern design pattern. Okay. And that's where a lot of excitement is how we look at like investment opportunities. Like where are those big bets who are, you know, frustrated developers, who are they frustrated, what's wrong with their current environment? You know, do they really enjoy using Kubernetes or trying to use Kubernetes? Yeah. Right. Like developers have a very different view than operator, >>But you mentioned couch base. I mean, I look at couch base what they're doing with Capellas as a form of Supercloud. I mean, I think that's an excellent, they're bringing that out to the edge. We're gonna hear later on from someone from couch base. That's gonna talk about that now. It's kind of a lightweight, you know, sort of, it's gonna be a, a synchronization, but it's the beginning >>A cool new venture deal that I'm not in, but was like duck DB. I'm like, what's duck DB like, well, it's an Emory database that has like this like remote store thing. I'm like, okay, that sounds interesting. Like let's call Mike Olson cuz that sounds like sleepy cat redone red distributed world. But like it's, it's like there's a lot of people refactoring design patterns that we're all grew up with since the popup days of, you know, typical round. Right? >>Yeah. That's the refactory I think that's the big pattern. So I have to ask you guys, what are you guys investing in? We've got a couple minutes left to chat about that. What are you investing at into it from a, from a, a CTO engineering perspective and what are you investing in that feels super cloud like to you? >>Well, the, the thing that like I'm focused on is to make sure that we have absolutely best in the world development environment for our engineers, where it's modern, it's easy to use and it incorporates as many things as we can into that environment. So the engineers don't have to think about it. Like one big example would be security and how we incorporated that into development environment. So again, the engineers don't have to bother with trying to think through how they secure their workloads and every step of the way their other things that we incorporated, whether it's like rollbacks or monitoring or, you know, like baly enough other things. But I think that's really an investment that has panned off for us. We actually started investing in development environment several years ago. We started measure our development velocity and we, it actually went up by six X justly investing. So >>User experience, developer experience and productivity pretty much right. >>Yeah. AB absolutely. Yeah. That's like a big investment area for us that, you know, cloud cloud >>Sounds like super cloudlike factor and I'm assuming it's you're on AWS. >>We are mostly on AWS. Yes. >>And so what are you investing in that from a VC money doling out standpoint? That feels super cloudlike >>So very similar to what we just touched on a lot of developer tool experiences. We have a company that we've invested in called ops level that the service catalogs it's, it's helping, you know, understand your, where your services live and how they could be accessed and, and you know, enterprise kind of that come with that. And then we have a company called Lugo that helps you do serverless debugging container debugging, cuz it turns out debugging distributed, you know, applications is a real problem right now just you can only do so much by log tracing, right? We have a company haven't announced yet that's in the web assembly space. So we're looking at modernizing the next generation past stack and throwing everything out the window, including Java and all of the, you know, current prebuilt components because turns out 90% of enterprise workloads are actually not used. They're they're just policy code. You compiled with they're sitting there as vulnerabilities that no one's actually accessing, but you still have to compile with all of it. So we have a lot of bloatware happening in the enterprise. So we're thinking about how do you skinny that up with the next generation paths that's enterprise capable with security context and frameworks >>Super pass. >>Well, yeah, super pass. That's a kind of good way to, well, is >>It, is it a consistent developer experience across clouds? >>It is. And, and, and, and web assembly is a very raw standard if you can call it that. I mean it's, but it's supported by every modern browser, every major platform, vendor cloud, and Adobe and others, and are using it for their uses. And it's not just about your edge browser compute. It's really, you can take the same framework and compile it down to server side as well as client site, just like JavaScript was a client side tool before it became node. Right. Right. So we're looking at that as a very interesting opportunity. It's very nascent. Yeah. >>Great patterns. Yeah. Well, thanks so much for spending the time outta your busy day. Ariana. Thanks for your commentary. Appreciate your coming on the cubes first in IGUR super cloud event, pilot. Thanks for, for sharing. Thanks for having, thanks for having us. Okay. More coverage here. Super cloud 2022. I'm Jeff David Alane stay with us. We got our cloud ARA panel coming up next.

foreign greetings from San Francisco thecube is live this is our second day of wall-to-wall coverage of VMware Explorer 2022. Lisa Martin and Dave Nicholson here we're going to be talking with some ladies from Rackspace next please welcome Adriana Bustamante VP of strategic alliances and Hannah Deuce director of strategic alliances from Rackspace it's great to have you on the program thank you so much for having us good afternoon good morning is it lunchtime already almost almost yes and it's great to be back in person we were just talking about the keynote yesterday that we were in and it was standing room only people are ready to be back they're ready to be hearing from VMware it's ecosystem its Partners it's Community yes talk to us Adriana about what Rackspace is doing with Dell and VMware particularly in the healthcare space sure no so for us Partnerships are a big foundation to how we operate as a company and um and I have the privilege of doing it for over over 16 years so we've been looking after the dell and VMware part partnership ourselves personally for the last three years but they've been long-standing partners for for us and and how do we go and drive more meaningful joint Solutions together so Rackspace you know been around since since 98 we've seen such an evolution of coming becoming more of this multi-cloud transformation agile Global partner and we have a lot of customers that fall in lots of different verticals from retail to public sector into Healthcare but we started noticing and what we're trying trying to drive as a company is how do we drive more specialized Solutions and because of the pandemic and because of post-pandemic and everyone really trying to to figure out what the new normal is addressing different clients we saw that need increasing and we wanted to Rally together with our most strategic alliances to do more Hannah talk about obviously the the pandemic created such problems for every industry but but Healthcare being front and center it still is talk about some of the challenges that Healthcare organizations are coming to Rackspace going help yeah common theme that we've heard from some of our large providers Healthcare Providers has been helped me do more with less which we're all trying to do as we navigate The New Normal but in that space we found the opportunity to really leverage some of our expertise long-term expertise and that the talent and the resource pool that we had to really help in a some of the challenges that are being faced at a resource shortage Talent shortage and so Rackspace is able to Leverage What what we've done for many many years and really tailor it to the outcomes that Health Care Providers are needing nowadays that more with less Mantra runs across the gamut but a lot of it's been helped me modernize helped me get to that next phase I can't I can't I don't have the resources to DIY it myself anymore I need to figure out a more robust business continuity program and so helping with business continuity Dr you know third copies of just all all this data that's growing so it's not just covered pandemic driven but it's that's definitely driving the the need and the requirement to modernize so much quicker it's interesting that you mentioned rackspace's history and expertise in doing things and moving that forward and leveraging that pivoting focusing on specific environments to create something net new we've seen a lot of that here if you go back 10 years I don't know if that's the perfect date to go back to but if you go back 10 years ago you think about VMware where would we have expected VMware to be in this era of cloud we may have thought of things very very differently differently Rackspace a Pioneer in creating off-premises hey we will do this for you didn't even really call it Cloud at the time right but it was Cloud yeah and so the ability for entities like Rackspace like VMware we had a NetApp talking to us about stuff they're doing in the cloud 10 years ago if you I would say no they'd be they'll be gone they'll be gone so it's really really cool to see Rackspace making this transition and uh you know being aware of everything that's going on and focusing on the best value proposition moving forward I mean am I am I you know do I sound like somebody who would who would fit into the Rackspace culture right now or do I not get it yes you sound like a rocker we'll make you an honorary record that's what we call a Rackspace employees yes you know what we've noticed too and is budgets are moving those decision makers are moving so again 10 years ago just like you said you would be talking to sometimes a completely different Persona than we do than we do today and we've seen a shift more towards that business value we have a really unique ability to bring business and Technical conversations together I did a lot of work in the past of working with a lot of CMO and and digital transformation companies and so helping bring it and business seeing the same and how healthcare because budgets are living in different places and even across the board with Rackspace people are trying to drive more business outcomes business driven Solutions so the technical becomes the back end and really the ingredients to make all of that all of that happen and that's what we're helping to solve and it's a lot it's very fast paced everyone wants to be agile now and so they're leaning on us more and more to drive more services so if you've seen Rackspace evolve we're driving more of that advisement and those transformation service type discussions where where our original history was DNA was very much always embedded in driving a great experience now they're just wanting more from us more services help us how help us figure out the how Adriana comment on the outcomes that you're helping Healthcare organizations achieve as as we as we it's such a relatable tangible topic Healthcare is Right everybody's everybody's got somebody who's sick or you've been sick or whatnot what are some of those outcomes that we can ex that customers can expect to achieve with Rackspace and VMware oh great great question so very much I can't mentioned earlier it's how do I modernize how do I optimize how do I take the biggest advantage of the budgets and the landscape that I have I want to get to the Cloud we need to help our patients and get access to that data is this ready to go into the cloud is this not ready to go into the cloud you know how do we how do we help make sure we're taking care of our patients we're keeping things secure and accessible you know what else do you think is coming up yeah and one specific one uh sequencing genetic sequencing and so we've had this come up from a few different types of providers whether it's medical devices that they may provide to their end clients and an outcome that they're looking for is how do we get how do we leverage um here's rip here's what we do but now we have so many more people we need to give this access to we need them to be able to have access to the sequencing that all of this is doing all of these different entities are doing and the outcome that they're trying to get to to is more collaboration so so that way we can speed up in the face of a pandemic we can speed up those resolutions we could speed up to you know whether it's a vaccine needed or something that's going to address the next thing that might be coming you know um so that's a specific one I've heard that from a handful of different different um clients that that we work with and so trying to give them a Consolidated not trying to we are able to deliver them a Consolidated place that their application and tooling can run in and then all of these other entities can safely and securely access this data to do what they're going to do in their own spaces and then hopefully it helps the betterment of of of us globally like as humans in the healthcare space we all benefit from this so leveraging the technology to really drive a valuable outcome helps us all so so and by the way I like trying to because it conveys the proper level of humility that we all need to bring to this because it's complicated and anybody who looks you in the eye it pretends like they know exactly how to do it you need to run from those people no it is and and look that's where our partners become so significant we we know we're Best in Class for specific things but we rely on our Partnerships with Dell and VMware to bring their expertise to bring their tried and true technology to help us all together collectively deliver something good technology for good technology for good it is inherently good and it's nice when it's used for goodness it's nice when it's yeah yeah talk about security for a second you know we've seen the threat landscape change dramatically obviously nobody wants to be the next breach ransomware becoming a household term it's now a matter of when we get a head not F where has security gone in terms of conversations with customers going help us ensure that what we're doing is delivering data access to the right folks that need it at the right time in real time in a secure fashion no uh that's another good question in hot and burning so you know I think if we think about past conversations it was that nice Insurance offering that seemed like it came at a high cost if you really need it I've never been breached before um I'll get it when I when I need it but exactly to your point it's the win and not the if so what we're finding and also working with a nice ecosystem of Partners as well from anywhere from Akamai to cloudflare to BT it's how do we help ensure that there is the security as Hannah mentioned that we're delivering the right data access to the right people and permissions you know we're able to help meet multitude of compliance and regulations obviously health care and other regulated space as well we look to make sure that from our side of the house from the infrastructure that we have the right building blocks to help them Reach those compliance needs obviously it's a mutual partnership in maintaining that compliance and that we're able to provide guidance and best practices on to make sure that the data is living in a secure place that the people that need access to it get it when they when they need it and monitor those permissions and back to your complexity comment so more and more complex as we are a global global provider so when you start to talk to our teams in the UK and our our you know clients there specializing um kind of that Sovereign Cloud mentality of hey we need to have um we need to have a cloud that is built for the specific needs that reside within Healthcare by region so it's not just even I mean you know we're we're homegrown out of San Antonio Texas so like we know the U.S and have spent time here but we've been Global for many years so we just get down into the into the nitty-gritty to customize what's needed within each region well Hannah is that part of the Rackspace value proposition at large moving forward because frankly look if I if I want if I want something generic I can I can swipe credit card and and fire up some Services sure um moving forward this is something that is going to more characterize the Rackspace experience and I and I understand that the hesitancy to say hey it's complicated it's like I don't want to hear that I want to hear that it's easy it's like well okay we'll make it easy for you yes but it's still complicated is that okay that's the honest that's that's the honest yeah that's why you need help right that's why we need to talk about that because people people have a legitimate question why Rackspace yep and we don't I don't want to put you on the spot but no yeah but why why Rackspace you've talked a little bit about it already but kind of encapsulate it oh gosh so good good question why Rackspace it's because you can stand up [Laughter] well you can you do it there's many different options out there um and if I had a PowerPoint slide I'd show you this like lovely web of options of directions that you could go and what is Rackspace value it's that we come in and simplify it because we've had experience with this this same use case whatever somebody is bringing forward to us is typically something we've dealt with at numerous times and so we're repeating and speeding up the ability to simplify the complex and to deliver something more simplified well it may be complex within us and we're like working to get it done the outcome that we're delivering is is faster it's less expensive than dedicating all the resources yourself to do it and go invest in all of that that we've already built up and then we're able to deliver it in a more simplified manner it's like the duck analogy the feet below the water yes exactly and a lot of expertise as well yes a lot talk a little bit about the solution that that Dell VMware Rackspace are delivering to customers sure so when we think about um Healthcare clouds or Cloud specific to the healthcare industry you know there's some major players within that space that you think epic we'll just use them as an example this can play out with others but we are building out a custom or we have a custom clouds able to host epic and then provide services up through the Epic help application through partnership so that is broadening the the market for us in the sense that we can tailor what the what that end and with that healthcare provider needs uh do they do they have the expertise to manage the application okay you do that and then we will build out a custom fit Cloud for that application oh and you need all the adjacent things that come with it too so then we have reference architecture you know built out already to to tailor to whatever all those other 40 80 90 hundreds of applications that need to come with that and then and then you start to think about Imaging platforms so we have Imaging platforms available for those specific needs whether it's MRIs and things like that and then the long-term retention that's needed with that so all of these pieces that build out a healthcare ecosystem and those needs we've built those we've built those out and provide those two to our clients yesterday VMware was talking about Cloud chaos yes and and it's true you talk about the complexity and Dave talks about it too like acknowledging yes this is a very complex thing to do yeah there's just so many moving parts so many Dynamics so many people involved or lack thereof people they they then talked about kind of this this the goal of getting customers from cloud chaos to Cloud smart how does that message resonate with Rackspace and how are you helping customers get from simplifying the chaos to eventually get to that cloud smart goal so a lot of it I I believe is with the power of our alliances and I was talking about this earlier we really believe in creating those powerful ecosystems and Jay McBain former for Forester analyst talks about you know the people are going to come ahead really are serve as that orchestration layer of bringing everybody together so if you look at all of that cloud chaos and all of the different logos and the webs and which decisions to make you know the ones that can help simplify that bring it all together like we're going to need a little bit of this like baking a cake in some ways we're going to need a little bit of sugar we'll need this technology this technology and whoever is able to put it together in a clean and seamless way and as Hannah said you know we have specific use cases in different verticals Healthcare specifically and talking from the Imaging and the Epic helping them get hospitals and different you know smaller clinics get to the edge so we have all of the building blocks to get them what they need and we can't do that without Partners but we help simplify those outcomes for those customers yep so there's where they're Cloud smart so then they're like I want I want to be agile I want to work on my cost I want to be able to leverage a multi-cloud fashion because some things may may inherently need to be on Azure some things we inherently need to be on VMware how do we make them feel like they still have that modernized platform and Technology but still give the secure and access that they need right yeah we like to think of it as are you multi-cloud by accident or multi-cloud by Design and help you get to that multi-cloud by Design and leveraging the right yeah the right tools the right places and Dell was talking about that just that at Dell Technologies world just a couple months ago that most most organizations are multi-cloud by default not designed are you seeing any customers that are are able or how are you able to help customers go from that we're here by default for whatever reason acquisition growth.oit line of business and go from that default to a more strategic multi-cloud approach yes it takes planning and commitment you know you really need the business leaders and the technical leaders bought in and saying this is what I'm gonna do because it is a journey because exactly right M A is like inherited four different tools you have databases that kind of look similar but they're a little bit different but they serve four different things so at Rackspace we're able to help assess and we sit down with their teams we have very amazing rock star expertise that will come in and sit with the customers and say what are we trying to drive for it let's get a good assessment of the landscape and let's figure out what are you trying to get towards in your journey and looking at what's the best fit for that application from where it is now to where it is where it wants to be because we saw a lot of customers move to the cloud very quickly you know they went Cloud native very fast some of it made sense retailers who had the spikiness that completely made sense we had some customers though that we've seen move certain workloads they've been in the public Cloud now for a couple years but it was a static website it doesn't make as much sense anymore for certain things so we're able to help navigate all of those choices for them so it's interesting you just you just said something sort of offhand about having experts having them come in so if I am a customer and I have some outcome I want to achieve yes the people that I'm going to be talking to from Rackspace or from Rackspace and the people from Rackspace who are going to be working with the actual people who are deploying infrastructure are also Rackspace people so the interesting contrast there between other circumstances oftentimes is you may have a Global Systems integrator with smart people representing what a cloud provider is doing the perception if they try to make people perceive that okay everybody is working in lockstep but often there are disconnects between what the real capabilities are and what's being advertised so is that I mean I I know it's like a leading question it's like softball get your bats out but I mean isn't that an advantage you've got a single you know the saying used to be uh one throat to show now it's one back to pack because it's kind of Contour friendly yeah yeah but talk about that is that a real Advantage it does it really helps us because again this is our our this is our expertise this is where we where we live we're really close to the infrastructure we're great at the advisement on it we can help with those ongoing and day two management and Opera in operations and what it feels like to grow and scale so we lay this out cleanly and and clearly as possible if this is where we're really good we can we can help you in these areas but we do work with system integrators as well and part of our partner Community because they're working on sometimes the bigger overall Transformations and then we're staying look we understand this multi-cloud but it helps us because in the end we're doing that end to end for for them customer knows this is Rackspace and on hand and we we really strive to be very transparent in what it is that we want to drive and outcomes so sometimes at the time where it's like we're gonna talk about a certain new technology Dell might bring some of their Architects to the table we will say here is Dell with us we're doing that actively in the healthcare space today and it's all coming together but you know at the end of the day this is what Rackspace is going to drive and deliver from an end to end and we tap those people when needed so you don't have to worry about picking up the phone to call Dell or VMware so if I had worded the hard-hitting journalist question the right way it would have elicited the same responses that yeah yeah it drives accountability at the end of the day because what we advised on what we said now we got to go deliver yeah and it's it's all the same the same organization driving accountability so from a customer perspective they're engaging Rackspace who will then bring in dell and VMware as needed as we find the solution exactly we have all of the certification I mean the team the team is great on getting all of the certs because we're getting to handling all of the level one level two level three business they know who to call they have their dedicated account teams they have engagement managers that help them Drive what those bigger conversations are and they don't have to worry about the experts because we either have it on hand or we'll pull them in as needed if it's the bat phone we need to call awesome ladies thank you so much for joining Dave and me today talking about what Rackspace is up to in the partner ecosystem space and specifically what you're doing to help Healthcare organizations transform and modernize we appreciate your insights and your thoughts yeah thank you for having us thank you pleasure for our guests and Dave Nicholson I'm Lisa Martin you're watching thecube live from VMware Explorer 2022 we'll be back after a short break foreign [Music]

>>Hello, everyone. Welcome to the cubes coverage here. New York city for AWS Amazon web services summit 2022. I'm John furrier, host of the cube with Dave ante. My co-host. We are breaking it down, getting an update on the ecosystem. As the GDP drops, inflations up gas prices up the enterprise continues to grow. We're seeing exceptional growth. We're here on the ground floor. Live at the Summit's packed house, 10,000 people. Eric Bradley's here. Chief STR at ETR, one of the premier enterprise research firms out there, partners with the cube and powers are breaking analysis that Dave does check that out as the hottest podcast in enterprise. Eric. Great to have you on the cube. Thanks for coming on. >>Thank you so much, John. I really appreciate the collaboration always. >>Yeah. Great stuff. Your data's amazing ETR folks watching check out ETR. They have a unique formula, very accurate. We love it. It's been moving the market. Congratulations. Let's talk about the market right now. This market is booming. Enterprise is the hottest thing, consumers kind of in the toilet. Okay. I said that all right, back out devices and, and, and consumer enterprise is still growing. And by the way, this first downturn, the history of the world where hyperscalers are on full pumping on all cylinders, which means they're still powering the revolution. >>Yeah, it's true. The hyperscalers were basically at this two sun system when Microsoft and an AWS first came around and everything was orbiting around it. And we're starting to see that sun cool off a little bit, but we're talking about a gradient here, right? When we say cool off, we're not talking to shutdown, it's still burning hot. That's for sure. And I can get it to some of the macro data in a minute, if that's all right. Or do you want me to go right? No, go go. Right. Yeah. So right now we just closed our most recent survey and that's macro and vendor specific. We had 1200 people talk to us on the macro side. And what we're seeing here is a cool down in spending. We originally had about 8.5% increase in budgets. That's cool down is 6.5 now, but I'll say with the doom and gloom and the headlines that we're seeing every day, 6.5% growth coming off of what we just did the last couple of years is still pretty fantastic as a backdrop. >>Okay. So you, you started to see John mentioned consumer. We saw that in Snowflake's earnings. For example, we, we certainly saw, you know, Walmart, other retailers, the FA Facebooks of the world where consumption was being dialed down, certain snowflake customers. Not necessarily, they didn't have mentioned any customers, but they were able to say, all right, we're gonna dial down, consumption this quarter, hold on until we saw some of that in snowflake results and other results. But at the same time, the rest of the industry is booming. But your data is showing softness within the fortune 500 for AWS, >>Not only AWS, but fortune 500 across the board. Okay. So going back to that larger macro data, the biggest drop in spending that we captured is fortune 500, which is surprising. But at the same time, these companies have a better purview into the economy. In general, they tend to see things further in advance. And we often remember they spend a lot of money, so they don't need to play catch up. They'll easily more easily be able to pump the brakes a little bit in the fortune 500. But to your point, when we get into the AWS data, the fortune 500 decrease seems to be hitting them a little bit more than it is Azure and GCP. I >>Mean, we're still talking about a huge business, right? >>I mean, they're catching up. I mean, Amazon has been transforming from owning the developer cloud startup cloud decade ago to really putting a dent on the enterprise as being number one cloud. And I still contest that they're number one by a long ways, but Azure kicking ass and catching up. Okay. You seeing people move to Azure, you got Charlie bell over there, Sean, by former Amazonians, Theresa Carlson, people are going over there, there there's lift over at Azure. >>There certainly is. >>Is there kinks in the arm or for AWS? There's >>A couple of kinks, but I think your point is really good. We need to take a second there. If you're talking about true pass or infrastructure is a service true cloud compute. I think AWS still is the powerhouse. And a lot of times the, the data gets a little muddied because Azure is really a hosted platform for applications. And you're not really sure where that line is drawn. And I think that's an important caveat to make, but based on the data, yes, we are seeing some kinks in the armor for AWS. Yes. Explain. So right now, a first of all caveat, 40% net score, which is our proprietary spending metric across the board. So we're not like raising any alarms here. It's still strong that said there are declines and there are declines pretty much across the board. The only spot we're not seeing a decline at all is in container, spend everything else is coming down specifically. We're seeing it come down in data analytics, data warehousing, and M I, which is a little bit of a concern because that, that rate of decline is not the same with Azure. >>Okay. So I gotta ask macro, I see the headwinds on the macro side, you pointed that out. Is there any insight into any underlying conditions that might be there on AWS or just a chronic kind of situational thing >>Right now? It seems situational. Other than that correlation between their big fortune 500, you know, audience and that being our biggest decline. The other aspect of the macro survey is we ask people, if you are planning to decline spend, how do you plan on doing it? And the number two answer is taking a look at our cloud spend and auditing it. So they're kind say, all right, you know, for the last 10 years it's been drunken, sail or spend, I >>Was gonna use that same line, you know, >>Cloud spend, just spend and we'll figure it out later, who cares? And then right now it's time to tighten the belts a little bit, >>But this is part of the allure of cloud at some point. Yeah. You, you could say, I'm gonna, I'm gonna dial it down. I'm gonna rein it in. So that's part of the reason why people go to the cloud. I want to, I wanna focus in on the data side of things and specifically the database. Let, just to give some context if, and correct me if I'm, I'm a little off here, but snowflake, which hot company, you know, on the planet, their net score was up around 80% consistently. It it's dropped down the last, you know, quarter, last survey to 60%. Yeah. So still highly, highly elevated, but that's relative to where Amazon is much larger, but you're saying they're coming down to the 40% level. Is that right? >>Yeah, they are. And I remember, you know, when I first started doing this 10 years ago, AWS at a 70%, you know, net score as well. So what's gonna happen over time is those adoptions are gonna get less and you're gonna see more flattening of spend, which ultimately is going to lower the score because we're looking for expansion rates. We wanna see adoption and increase. And when you see flattening a spend, it starts to contract a little bit. And you're right. Snowflake also was in the stratosphere that cooled off a little bit, but still, you know, very strong and AWS is coming down. I think the reason why it's so concerning is because a it's within the fortune 500 and their rate of decline is more than Azure right >>Now. Well, and, and one of the big trends you're seeing in database is this idea of converging function. In other words, bringing transaction and analytics right together at snowflake summit, they added the capability to handle transaction data, Mongo DB, which is largely mostly transactions added the capability in June to bring in analytic data. You see data bricks going from data engineering and data science now getting into snowflake space and analytics. So you're seeing that convergence Oracle is converging with my SQL heat wave and their core databases, couch base couch base is doing the same. Maria do virtually all these database companies are, are converging their platforms with the exception of AWS. AWS is still the right tool for the right job. So they've got Aurora, they've got RDS, they've got, you know, a dynamo DV, they've got red, they've got, you know, going on and on and on. And so the question everybody's asking is will that change? Will they start to sort of cross those swim lanes? We haven't seen it thus far. How is that affecting the data >>Performance? I mean, that's fantastic analysis. I think that's why we're seeing it because you have to be in the AWS ecosystem and they're really not playing nicely with others in the sandbox right now that now I will say, oh, Amazon's not playing nicely. Well, no, no. Simply to your point though, that there, the other ones are actually bringing in others at consolidating other different vendor types. And they're really not. You know, if you're in AWS, you need to stay within AWS. Now I will say their tools are fantastic. So if you do stay within AWS, they have a tool for every job they're advanced. And they're incredible. I think sometimes the complexity of their tools hurts them a little bit. Cause to your point earlier, AWS started as a developer-centric type of cloud. They have moved on to enterprise cloud and it's a little bit more business oriented, but their still roots are still DevOps friendly. And unless you're truly trained, AWS can be a little scary. >>So a common use case is I'm gonna be using Aurora for my transaction system and then I'm gonna ETL it into Redshift. Right. And, and I, now I have two data stores and I have two different sets of APIs and primitives two different teams of skills. And so that is probably causing some friction and complexity in the customer base that again, the question is, will they begin to expand some of those platforms to minimize some of that friction? >>Well, yeah, this is the question I wanted to ask on that point. So I've heard from people inside Amazon don't count out Redshift, we're making, we're catching up. I think that's my word, but they were kind of saying that right. Cuz Redshift is good, good database, but they're adding a lot more. So you got snowflake success. I think it's a little bit of a jealousy factor going on there within Redshift team, but then you got Azure synapse with the Synap product synapse. Yep. And then you got big query from Google big >>Query. Yep. >>What's the differentiation. What are you seeing for the data for the data warehouse or the data clouds that are out there for the customers? What's the data say, say to us? >>Yeah, unfortunately the data's showing that they're dropping a little bit whose day AWS is dropping a little bit now of their data products, Redshift and RDS are still the two highest of them, but they are starting to decline. Now I think one of the great data points that we have, we just closed the survey is we took a comparison of the legacy data. Now please forgive me for the word legacy. We're gonna anger a few people, but we Gotter data Oracle on-prem, we've got IBM. Some of those more legacy data warehouse type of names. When we look at our art survey takers that have them where their spend is going, that spends going to snowflake first, and then it's going to Google and then it's going to Microsoft Azure and, and AWS is actually declining in there. So when you talk about who's taking that legacy market share, it's not AWS right now. >>So legacy goes to legacy. So Microsoft, >>So, so let's work through in a little context because Redshift really was the first to take, you know, take the database to the cloud. And they did that by doing a one time license deal with par XL, which was an on-prem database. And then they re-engineered it, they did a fantastic job, but it was still engineered for on-prem. Then you along comes snowflake a couple years later and true cloud native, same thing with big query. Yep. True cloud native architecture. So they get a lot of props. Now what, what Amazon did, they took a page outta of the snowflake, for example, separating compute from storage. Now of course what's what, what Amazon did is actually not really completely separating like snowflake did they couldn't because of the architecture, they created a tearing system that you could dial down the compute. So little nuances like that. I understand. But at the end of the day, what we're seeing from snowflake is the gathering of an ecosystem in this true data cloud, bringing in different data types, they got to the public markets, data bricks was not able to get to the public markets. Yeah. And think is, is struggling >>And a 25 billion evaluation. >>Right. And so that's, that's gonna be dialed down, struggling somewhat from a go to market standpoint where snowflake has no troubles from a go to market. They are the masters at go to market. And so now they've got momentum. We talked to Frank sluman at the snowflake. He basically said, I'm not taking the foot off the gas, no way. Yeah. We, few of our large, you know, consumer customers dialed things down, but we're going balls to the >>Wall. Well, if you look at their show before you get in the numbers, you look at the two shows. Snowflake had their summit in person in Vegas. Data bricks has had their show in San Francisco. And if you compare the two shows, it's clear, who's winning snowflake is blew away from a, from a market standpoint. And we were at snowflake, but we weren't at data bricks, but there was really nothing online. I heard from sources that it was like less than 3000 people. So >>Snowflake was 1900 people in 2019, nearly 10,000. Yeah. In 2020, >>It's gonna be fun to sort of track that as a, as an odd caveat to say, okay, let's see what that growth is. Because in fairness, data, bricks, you know, a little bit younger, Snowflake's had a couple more years. So I'd be curious to see where they are. Their, their Lakehouse paradigm is interesting. >>Yeah. And I think it's >>And their product first company, yes. Their go to market might be a little bit weak from our analysis, but that, but they'll figure it out. >>CEO's pretty smart. But I think it's worth pointing out. It's like two different philosophies, right? It is. Snowflake is come into our data cloud. That's their proprietary environment. They're the, they think of the iPhone, right? End to end. We, we guarantee it's all gonna work. And we're in control. Snowflake is like, Hey, open source, no, bring in data bricks. I mean data bricks, open source, bring in this tool that too, now you are seeing snowflake capitulate a little bit. They announce, for instance, Apache iceberg support at their, at the snowflake summit. So they're tipping their cap to open source. But at the end of the day, they're gonna market and sell the fact that it's gonna run better in native snowflake. Whereas data bricks, they're coming at it from much more of an open source, a mantra. So that's gonna, you know, we'll see who look at, you had windows and you had apple, >>You got, they both want, you got Cal and you got Stanford. >>They both >>Consider, I don't think it's actually there yet. I, I find the more interesting dynamic right now is between AWS and snowflake. It's really a fun tit for tat, right? I mean, AWS has the S three and then, you know, snowflake comes right on top of it and announces R two, we're gonna do one letter, one number better than you. They just seem to have this really interesting dynamic. And I, and it is SLT and no one's betting against him. I mean, this guy's fantastic. So, and he hasn't used his war chest yet. He's still sitting on all that money that he raised to your point, that data bricks five, their timing just was a little off >>5 billion in >>Capital when Slootman hasn't used that money yet. So what's he gonna do? What can he do when he turns that on? He finds the right. >>They're making some acquisitions. They did the stream lit acquisitions stream. >>Fantastic >>Problem. With data bricks, their valuation is underwater. Yes. So they're recruiting and their MNAs. Yes. In the toilet, they cannot make the moves because they don't have the currency until they refactor the multiple, let the, this market settle. I I'm, I'm really nervous that they have to over factor the >>Valuation. Having said that to your point, Eric, the lake house architecture is definitely gaining traction. When you talk to practitioners, they're all saying, yeah, we're building data lakes, we're building lake houses. You know, it's a much, much smaller market than the enterprise data warehouse. But nonetheless, when you talk to practitioners that are actually doing things like self serve data, they're building data lakes and you know, snow. I mean, data bricks is right there. And as a clear leader in, in ML and AI and they're ahead of snowflake, right. >>And I was gonna say, that's the thing with data bricks. You know, you're getting that analytics at M I built into it. >>You know, what's ironic is I remember talking to Matt Carroll, who's CEO of auDA like four or five years ago. He came into the office in ma bro. And we were in temporary space and we were talking about how there's this new workload emerging, which combines AWS for cloud infrastructure, snowflake for the simple data warehouse and data bricks for the ML AI, and then all now all of a sudden you see data bricks yeah. And snowflake going at it. I think, you know, to your point about the competition between AWS and snowflake, here's what I think, I think the Redshift team is, you know, doesn't like snowflake, right. But I think the EC two team loves it. Loves it. Exactly. So, so I think snowflake is driving a lot of, >>Yeah. To John's point, there is plenty to go around. And I think I saw just the other day, I saw somebody say less than 40% of true global 2000 organizations believe that they're at real time data analytics right now. They're not really there yet. Yeah. Think about how much runway is left and how many tools you need to get to real time streaming use cases. It's complex. It's not easy. >>It's gonna be a product value market to me, snowflake in data bricks. They're not going away. Right. They're winning architectures. Yeah. In the cloud, what data bricks did would spark and took over the Haddo market. Yeah. To your point. Now that big data, market's got two players, in my opinion, snow flicking data, bricks converging. Well, Redshift is sitting there behind the curtain, their wild card. Yeah. They're wild card, Dave. >>Okay. I'm gonna give one more wild card, which is the edge. Sure. Okay. And that's something that when you talk about real time analytics and AI referencing at the edge, there aren't a lot of database companies in a position to do that. You know, Amazon trying to put outposts out there. I think it runs RDS. I don't think it runs any other database. Right. Snowflake really doesn't have a strong edge strategy when I'm talking the far edge, the tiny edge. >>I think, I think that's gonna be HPE or Dell's gonna own the outpost market. >>I think you're right. I'll come back to that. Couch base is an interesting company to watch with Capella Mongo. DB really doesn't have a far edge strategy at this point, but couch base does. And that's one to watch. They're doing some really interesting things there. And I think >>That, but they have to leapfrog bongo in my >>Opinion. Yeah. But there's a new architecture emerging at the edge and it's gonna take a number of years to develop, but it could eventually from an economic standpoint, seep back into the enterprise arm base, low end, take a look at what couch base is >>Doing. They hired an Amazon guard system. They have to leapfrog though. They need to, they can't incrementally who's they who >>Couch >>Base needs to needs to make a big move in >>Leap frog. Well, think they're trying to, that's what Capella is all about was not only, you know, their version of Atlas bringing to the cloud couch base, but it's also stretching it out to the edge and bringing converged database analytics >>Real quick on the numbers. Any data on CloudFlare, >>I was, I've been sitting here trying to get the word CloudFlare out my mouth the whole time you guys were talking, >>Is this another that's innovated in the ecosystem. So >>Platform, it was really simple for them early on, right? They're gonna get that edge network out there and they're gonna steal share from Akamai. Then they started doing exactly what Akamai did. We're gonna start rolling out some security. Their security is fantastic. Maybe some practitioners are saying a little bit too much, cuz they're not focused on one thing or another, but they are doing extremely well. And now they're out there in the cloud as well. You >>Got S3 compare. They got two, they got an S3 competitor. >>Exactly. So when I'm listening to you guys talk about, you know, a, a couch base I'm like, wow, those two would just be an absolute fantastic, you know, combination between the two of them. You mean >>CloudFlare >>Couch base. Yeah. >>I mean you got S3 alternative, right? You got a Mongo alternative basically in my >>Opinion. And you're going and you got the edge and you got the edge >>Network with security security, interesting dynamic. This brings up the super cloud date. I wanna talk about Supercloud because we're seeing a trend on we're reporting this since last year that basically people don't have to spend the CapEx to be cloud scale. And you're seeing Amazon enable that, but snowflake has become a super cloud. They're on AWS. Now they're on Azure. Why not tan expansion expand the market? Why not get that? And then it'll be on Google next, all these marketplaces. So the emergence of this super cloud, and then the ability to make that across a substrate across multiple clouds is a strategy we're seeing. What do you, what do you think? >>Well, honestly, I'm gonna be really Frank here. The, everything I know about the super cloud I know from this guy. So I've been following his lead on this and I'm looking forward to you guys doing that conference and that summit coming up from a data perspective. I think what you're saying is spot on though, cuz those are the areas we're seeing expansion in without a doubt. >>I think, you know, when you talk about things like super cloud and you talk about things like metaverse, there's, there's a, there, there look every 15 or 20 years or so this industry reinvents itself and a new disruption comes out and you've got the internet, you've got the cloud, you've got an AI and VR layer. You've got, you've got machine intelligence. You've got now gaming. There's a new matrix, emerging, super cloud. Metaverse there's something happening out there here. That's not just your, your father's SAS or is or pass. Well, >>No, it's also the spend too. Right? So if I'm a company like say capital one or Goldman Sachs, my it spend has traditionally been massive every year. Yes. It's basically like tons of CapEx comes the cloud. It's an operating expense. Wait a minute, Amazon has all the CapEx. So I'm not gonna dial down my budget. I want a competitive advantage. So next thing they know they have a super cloud by default because they just pivoted their, it spend into new capabilities that they then can sell to the market in FinTech makes total sense. >>Right? They're building out a digital platform >>That would, that was not possible. Pre-cloud >>No, it wasn't cause you weren't gonna go put all that money into CapEx expenditure to build that out. Not knowing whether or not the market was there, but the scalability, the ability to spend, reduce and be flexible with it really changes that paradigm entire. >>So we're looking at this market now thinking about, okay, it might be Greenfield in every vertical. It might have a power law where you have a head of the long tail. That's a player like a capital one, an insurance. It could be Liberty mutual or mass mutual that has so much it and capital that they're now gonna scale it into a super cloud >>And they have data >>And they have the data tools >>And the tools. And they're gonna bring that to their constituents. Yes, yes. And scale it using >>Cloud. So that means they can then service the entire vertical as a service provider. >>And the industry cloud is becoming bigger and bigger and bigger. I mean, that's really a way that people are delivering to market. So >>Remember in the early days of cloud, all the banks thought they could build their own cloud. Yeah. Yep. Well actually it's come full circle. They're like, we can actually build a cloud on top of the cloud. >>Right. And by the way, they can have a private cloud in their super cloud. Exactly. >>And you know, it's interesting cause we're talking about financial services insurance, all the people we know spend money in our macro survey. Do you know the, the sector that's spending the most right now? It's gonna shock you energy utilities. Oh yeah. I was gonna, the energy utilities industry right now is the one spending the most money I saw largely cuz they're playing ketchup. But also because they don't have these type of things for their consumers, they need the consumer app. They need to be able to do that delivery. They need to be able to do metrics. And they're the they're, they're the one spending right >>Now it's an arms race, but the, the vector shifts to value creation. So >>It's it just goes back to your post when it was a 2012, the trillion dollar baby. Yeah. It's a multi-trillion dollar baby that they, >>The world was going my chassis post on Forbes, headline trillion dollar baby 2012. You know, I should add it's happening. That's >>On the end. Yeah, exactly. >>Trillions of babies, Eric. Great to have you on the key. >>Thank you so much guys. >>Great to bring the data. Thanks for sharing. Check out ETR. If you're into the enterprise, want to know what's going on. They have a unique approach, very accurate in their survey data. They got a great market basket of, of, of, of, of data questions and people and community. Check it out. Thanks for coming on and sharing with. >>Thank you guys. Always enjoy. >>We'll be back with more coverage here in the cube in New York city live at summit 22. I'm John fur with Dave ante. We'll be right back.

(bright music) >> Welcome back to the Cube. Our continuing coverage of Snowflake Summit 22, day two, lots of content as I've said, coming at you the last couple of days. Dave and I, Dave Vellante, and Lisa Martin are here with you. We have an exciting guest here next to talk with us about data discovery. Please welcome Shinji Kim, the founder and CEO at Select Star. Welcome to the program. >> Thanks for having me. >> Dave: Great to see you. >> Excited to be here. >> Talk to us about Select Star. What do you guys do? And then we're going to uncrack data discovery. >> Yeah, why'd you start the company? (Shinji laughing) >> Sure. So, Select Star is, on fully automated data discovery platform, that helps any company to be able to find, understand and manage their data. I started this company because after I sold my last company, Concord Systems to Akamai, I started working with a lot of global enterprise companies that manages a lot of IOT devices like automakers or consumer electronics companies. And it became very clear to me that companies are not going to stop anytime soon about collecting more data, more often, and trying to utilize them as much as they can. And cloud providers, and all the new technologies like Snowflake has really helped them to achieve that goal. But the challenges that, I've started noticing, from a lot of these enterprises, is that they now have 100s or 1000s of data sets that they have to manage. And when you are trying to use that data it's almost impossible to find which specific field which specific data sets that you should use out of 1000s and 100s of 1000s of data sets you have. So, that's why I felt like this is the next problem and challenge that I would like to solve. Also because, I have a background of working as a software engineer, data scientist, product manager, in the stages of creating data, transforming data and also querying data and trying to make business decisions on data. Having a right context about the data, is so important, for me to use that data. So, for us, we are trying to solve that challenge around finding and understanding data, and we call that data discovery. >> Wow. That's music to my ears here because I can't tell you how many meetings I've been in, where somebody presents some data and I say, okay, what's the source of that data? What are the assumptions used to derive data? I have different data, you know, and then it becomes this waste of time. My data's better than your data, or everybody has an agenda. You cut through that. >> Yeah, so, data discovery, in a nutshell, we defining as finding, understanding, and managing your data. So, in Select Star, we will automatically bring out, all your, like the schema information. Where does data exist? We will also analyze the SQL query logs as well as activity logs that's generated by any applications and BI tools that are connected on top of your data warehouse, so that any time you're looking at a database any particular database table, column or dashboard, we will tell you, where did this data come from? Where did it originate from? How was this transformed? And which reporting table does this exist? Who's using this data the most inside the company? How are they using it? And which are the dashboards and reports that are built on top of this data set? So you don't have to go out and ask everybody else, "Hey, I'm looking for this type of data. "Has anybody worked with this?" This is actually something that I realize a lot of data analysts and data scientists waste their time on. So yeah, that's really the, what we call fully automated data context that we provide to our customers so that you can truly use all the data that you have in your data warehouse. >> And you do this by understanding the metadata? Or is it some kind of scanning? Or using math or code? >> It's both. So, first of all, we do connect and bring out all the metadata. So, that's all the information under information schema. And then, we also look at all the query history. So all your select SQL queries, all your create queries, create table queries, create view queries. And based on that, we will also match the metadata, where it exists inside those queries and logs. And based on that, we will generate first and foremost, what we would call column level data lineage. Data lineage is all about showing you the flow of data from where it was originated, how it was transformed, and where it exists now. And also, what we call popularity. Who's using what data? How are they using it? And in aggregate, you can also find out, which are the most important data sets in our company? Which are the data sets that can be deprecated because it was like a duplicate of other data sets and nobody's using it anymore? And we like put a, like a popularity score for every single data asset that you have in your company so you can see how that's being used. >> How do your customers take action on the information that you provide them? Do they ultimately automate it? Do they go through a process of sort of the human in the loop? >> Well, we do the automation for them. >> Yeah. >> And we do also provide them with a, really easy to use user interface so that they can add any semantic level data on top. So, that's like tags. Like whether you want to market as, this is a analyst approved table, or do not use table or if you want to put a PII classification of data you can do that on a column. And we will automatically either propagate those annotations throughout the platform. We will also automatically propagate any same matching documentation that you might want to use within the data warehouse. And we will also provide you with, more of a rich text documentation that you can also add on top as a business glossary or like a Wiki that business users can, get a better understanding of data concepts and models as well. >> How do they tag the data? Do they use another tool that does that or? >> No, they can tag it within Select Star. Any table or column has a little icon, tag icon, so you can click on it. Or, we can also give you a view of every database page will have all the tables in one place. You can add a keyword and bulk tag. >> So humans tag. >> Yeah. So humans tag. So in the beginning, humans tag, and then we will automate the propagation of that tag. So if you already tagged, let's say SSN field as a PII, then we will find all the other columns that may use the exact same data, and also tag the same, just as an example. >> Okay so you, once the human puts it in there then you automate the downstream. 'Cause humans sometimes aren't great at classifying and tagging and inconsistencies and I would think that you could use math to improve that. >> And we do have some plans to add more automated tagging system. For example, we are already, we don't necessarily tag them, but we give our customers filters on top of their search results to see, which are the data sets that nobody's using anymore? Which are the data sets that's being created very recently? And you can also filter by who created them or who are the owners. So these are some of the aspects of the data or even like when's the last time was this data updated? So these are the aspects of the operational metadata that we are starting to automate to put more automated annotation, I would say is more coming up towards the end of the year. But in terms of semantic level tagging, like is this data set around customers? Is this data set for marketing, sales, customer support? That is something that we are giving a really easy to use interface for the data team to be able to easily organize them. >> How are you helping organizations? We think of the all the privacy regulations and legislations. How is Select Star a facilitator of data privacy for your clients? Is it part of that play? >> So, I would say, one of the main use cases of data discovery, is data governance. So, starting this company and starting to work with a lot of fortune 500 companies, as well as I would say more like recently IPOed companies that have grown very fast in Silicon valley. Some of those customers have told us that they initially adopted Select Star because they needed a good data catalog and search platform for their data team. But as they are starting to use Select Star and starting to see all these insights about their own data warehouse, they are all kicking off their new data governance projects, because they get to see a really good lay of the land, of how the data is being accessed today. So, this is why we have a very easy to use and also programmatic API so that you can add tags, ownership, and set access control through a Select Star. We are actually just releasing a beta version of our, what we call policy based access control where you can use either role based and attribute based access control so that different roles of the users get to see different versions of a Select star when they log in. And this is just the beginning. Like PII is for example, any column that's already marked as PII. We will always strip out the value before it gets fully processed within Select Star. So even if anybody might stumble upon any sequel queries that other analysts have run, those values won't be available in Select Star at all. >> And you started the company right before the lockdown, right? That must have been crazy. >> Yes, March, 2020 is our, my incorporation of Select Star. It was a very interesting time to start the company. And in a way, I'm glad I did. We had a lot of focus time to really, go heads down, build out the product, and work closely with our customer. And today it's really awesome to get to, provide that support to more customers today. >> And so, what are you doing with Snowflake? >> So Snowflake has been a great partner for us. Lot of customers and Snowflake is really great for this. Basically building single source of truth of your data by connecting all your source of, databases, as well as like your ERP, CRM systems, ad systems, marketing systems, SaaS platform, you can connect them now all to Snowflake, that will all dump all the data inside. So that, allows data team to be able to actually join and crossmatch the customer data across so many different applications. And what we see from a lot of Snowflake customers, hence they end up with many different schemas and tens of thousands of tables. And for them now they are requiring or needing more of a better data discovery tool so that they can use and leverage Snowflake data that they have. So, in that regard so we are a snowflake data governance accelerator partner. And as part of that accelerator program, one of the things that we've integrated with Snowflake is, what we call Snowflake Tag Sync. So if you create any tags in Select Star, and you marked it as a PII, we will also replicate the same tag, to Snowflake. >> Yeah. Okay. >> And so everything is synced in there. And on top of that, a lot of our customers really like using our column level lineage, because we will show how all the data tables within Snowflake is connected to another. And actually last but not least, we actually just released this feature today, called the auto generated ER diagram. ER diagram stands for Entity Relationship Diagram. ERD is like a blueprint of your data model. When your engineers and data architects start creating tables in databases, this is a diagram that they will put together, to show how they are translating business logic into data models in the databases. And that includes, which are the fields for primary keys, foreign keys, and how are different like when you look at Star schema, how different tables are joined together. When all these tables gets migrated into Snowflake, a lot of them actually lose the, the relationships of primary keys and foreign keys. So, many analysts, what we found, is that they are starting to guess, how to join different tables, how to use different data sets together. But because we know how other analysts have actually joined and used the tables in the past, we can give them the guidance and really nice diagram that they can refer to. So that is the ERD diagram that we are releasing today. Available for all customers including our free customers, where you can select any tables, and we will show you the relationship that table has, that you can use right away in your sequel queries. >> And that will facilitate, that simplifies doing more complex joins, yes? Which is an Achilles heel of Snowflake. That's not really what they are about, but they have to rely on the ecosystem to help them do that, which has always been their strategy. The company founded in March 2020, amazing. And then relatively small still, yes? Or is it self-funded? I mean, you've raised a little bit of money, but what's your status? >> Yeah, we raised our seed funding when I first started the company. We've also raised another round of bridge round last year and we plan to raise our another venture round of funding soon. >> Great. Awesome. >> And we're going to be making those investments. What are some of the key parts of the business that you're going to use that funding for? >> There's a lot to build. (Shinji laughing) >> Dave: Yeah. Engineering. >> Obviously more automation features, but having, I would say right now, we have now built a really good foundation of data discovery and that includes fully automated data cataloging for metadata, column level lineage, and also building the usage model like popularity, who's using what, all that type of stuff. So, now we are starting to build really exciting features that leverages these fundamental aspects of data discovery, like auto propagation of tags. We also do auto propagation of documentation. So you write one column description once, and it will get replicated and changed everywhere throughout your data model. We have also other things that we have in store especially more for next year, are, package support for specific use cases like data governance, self-service analytics and cloud cost management. >> Nice, lots of work-- >> Dave: Impressive, I'm blown away. >> And you've accomplished this during a pandemic that's even more impressive. Thank you so much Shinji for coming on, talking to us about Select Star. What you're enabling organizations to do, really derive the context from that data taking a lot of manual work away. We appreciate your insights and your time and wish you the best of luck. >> Well, thanks so much for having me here. This has been great. >> Good. Thanks so much. For Dave Vellante, I'm Lisa Martin. You're watching the Cube's coverage of Snowflake Summit 22, day two. Stick around. Dave has an industry analyst panel common up next. You won't want to miss it. (soft music)

from the cube studios in palo alto in boston bringing you data driven insights from the cube and etr this is breaking analysis with dave vellante predictions are all the rage at this time of year now on december 29th 2020 in collaboration with eric porter bradley of enterprise technology research etr we put forth our predictions for 2021 and the focus of our prognostications included tech spending remote work productivity apps cyber security ipos specs m a data architecture cloud hybrid cloud multi-cloud ai containers automation and semiconductors we covered a lot of ground now over the past several weeks we've been inundated with literally thousands of inbound emails pitching us on various predictions and trends in these and other areas here's my predictions folder and this is only a portion of the documents that i've received by email obviously printed them out killed a few trees sorry hello and welcome to this week's wikibon cube insights powered by etr in this breaking analysis we're going to review briefly each of our predictions for this past year 2021 and suggest a grade as to how we did we're going to do this as a little warm up for our 2022 predictions which we'll be doing in the next over the next couple of weeks now before we dig in i want to make an observation many of the predictions that we received they were observations of trends and sometimes not really predictions or you know or not surprising we got a lot of self-serving marketing statements you know predictions in our view they should be measurable so you can look back and say okay did they get it right now granted there are gray areas so that's why we'll use a grading system today now there are also many really well done and thought-provoking predictions and there's an example of one that we received that is strong it's from equinix cio milan waglay who said within the decade data centers will be powered by a hundred percent renewable energy okay so you know that's clear and we can measure that but anyway thanks to all the pr folks who sent along like i said literally thousands of predictions we tried to read them all but the volume over the past week or so was just so overwhelming and we'll try to scan them before we do our 2022 predictions but today we want to do that warm up by evaluating how we did in 2021 so let's get started our first prediction was that tech spending would increase by four percent this year coming off of what we had thought was a contraction in 2020 and depending on which data you look at you know best case maybe was flat we definitely correctly called the continuation into 2022 of the remote work trend and the positive impact it would have on pcs and the like but we underestimated the shape of that rebound that that spend back curve idc has tech spending wrote this year at five and a half percent so we feel like while we called the bounce back it was more pronounced than we had thought in fact you know we think that idc number is probably going to go up even higher and we'll address that in our 2022 predictions so so we'll give ourselves a b minus here okay next prediction was remote worker trends become fossilized settling in at an average of 34 percent by year end 2021. so on average 34 of the workers would be remote by the end of this year now you know we made the call but we missed delta no we missed omacrom we said 34 remote which would be 2x the historical norms now the etr data suggests it was 52 in september and it's probably going to be somewhere in the 40 to 45 range by by the end of this month into december and the thing is 75 of the workforce is probably still working either fully remote or in a hybrid model and hybrid work is probably going to be the dominant trend and we're going to have to revisit that framework or how we think about this whole structure and we'll do that again in our 2022 predictions so we'll give ourselves a c on that one we'll take some credit for the permanence of the trend but the percentage was well off the mark you know thanks to the variance as well as some cultural shifts that whole hybrid notion okay so hey not really a great start for eric and me but we rebound with the next one the productivity increases we said seen in 2020 will lead organizations to double down on the successes and certain productivity apps will benefit so to measure this we said let's take a look at the most recent quarterly earnings and gauge the revenue growth year on year as an indicator docusign was up 42 smartsheet who we also called up was up 46 in revenue twilio up 65 zoom growth was 35 down from 325 confirming our layup call the zoom growth would moderate it had nowhere to go but down and microsoft teams has never been more ubiquitous has never seen greater adoption with hundreds of companies having a hundred thousand or more users and thousands of companies with ten thousand users or more so we really feel like we nailed this one so we're gonna give us give ourselves an a plus okay so now on to cyber it's an area that we've been making calls in for a couple of years now and we're really pleased looking back here we said permanent shifts in cso strategies are going to lead to share shifts in network security now we said to give you more detail maybe that sounds like an easy one but we said specifically identity cloud security and endpoint security would continue to benefit and we specifically named crowdstrike octa zscaler and a few others that are targeting their growth rates now gartner has the security market growing at 11 percent octa and zscaler revenues last quarter grew at 62 percent year over year crowdstrike 63 illumia we also called out they raised 225 million dollars on a 2.75 billion valuation on the strength of its growth that was in september now akamai acquired guardiocor for 600 million dollars another company we called out that they would do it they did that as a ransomware protection play and they paid a huge revenue multiple for the company and it seems the guys listed on the last line are all talking about subscriptions sas arr remaining performance obligations or rpo so we feel very good about this look back we'll take an a on this one no it's not an a plus because we're too conservative on the growth of octa crowdstrike and zscaler topping at 50 they they blew that away by another 10 points or so 10 to 15. but look pretty good call nonetheless okay again the next one you might feel like is a layup but not really so we said the increased tech spend would drive even more ipos spax and m a according to spac analytics ipos were up 109 this year the spac attack continued up 109 percent in 2021 on top of a record 2020 and according to kpmg m a dollar volume was up 19 okay you might say uh that was easy call but there was much more underneath this prediction we called out uipass ipo which was a lock but also said automation anywhere would go public uipath did aa didn't we did correctly call the hashicorp ipo we said they'd either get go ipo or get acquired and cloud flare grew revenue 219 percent last quarter but akamai was not acquired so the degree of difficulty on the overall prediction wasn't high but the automation anywhere in akamai events we made those calls that didn't happen and those were you know obviously tougher calls so we think this still deserves a b grade all right as you know data is one of our favorite subjects and we've reported extensively in the successes and failures of so-called big data we said next in the next prediction that in the 2020s 75 percent of large organizations will re-architect their big data platforms and we said this would occur you know in earnest over the next four to five years now again you may say duh dave but you have to evaluate the prediction based on the underlying comments here the jury is still out on things like snowflakes data cloud but we absolutely believe that it's the right direction but then you have then you have data bricks coming in taking a different approach they're coming at the problem from a data science angle trying to take on traditional bi and then you get snowflake coming from the analytics space and moving into ai and data science and you know we asked at aws aws re invent we asked benoit dejaville on the cube if there needs to be a semantic layer to bring these two worlds together and he said yes and that's what he claims snowflake is building meanwhile you got the big whales like oracle they continue to invest in their capabilities to try to eliminate data movement and then there's aws taking a totally different approach to data where it gives customers maximum optionality of offerings and database and other services and you can't forget microsoft and google so many customers might not take the steps that we predicted because they're comfortable where they are specifically we're talking about here a shift toward domain ownership and data product thinking and the reorganization of hyper-specialized technical teams many of the principles put forth by data mesh and we've said this change is going to take a number of years to play out four to five years so we start noticing in 2021 that that's clearly been the case as we reported on parts of jpmorgan chase uh rethinking its data architecture hellofresh and many others so this is still an incomplete the professor we'll give ourselves an incomplete on this one but we think it's trending in the right direction okay the next one is always fun discussion that's the battle to define hybrid and multi-cloud we said that's going to escalate in 2021 and we'll create bifurcated cio strategies now here we go aws sees the world as bringing its apis and primitives and model to the edge and the data center to aws is just another edge node and the company says that in still believes in the fullness of time that all data will be in the cloud however that's defined and aws awareness would say all this talk about hybrid of connecting on-prem to a cloud they would flat out say adam silipsky told us this that's not cloud is what he said then on the other side of the table you have the likes of cisco dell hpe etc saying hold on cloud is an operating model it's not a place and aws might say yeah and aws along with its customers is defining that operating model and these other guys would say no actually you're not we are with our customers and this battle 100 percent escalated in 2021 with the launch of apex by dell hp e double down on green lake cisco's as the service models and then of course oracle which actually announced a true same same public to on-prem hybrid capability two years before aws announced outpost and of course oracle's executing on that strategy in earnest in 2021 and the other nuance here is a concept that we introduced called super cloud which refers to the notion that look something like for example multi-cloud is not about running within a respective cloud it's not about cloud compatibility rather it's about abstracting the complexity of the underlying cloud primitives and building value on top of those cloud services on top of the investments in capex that the hyperscalers have made now some people didn't like the term super cloud maybe uber cloud would be a better term we're going to continue to use it to describe this capability we think it has meaning and we're seeing new examples like goldman sachs's financial cloud running on top of aws so a super cloud is not as an application or a suite of applications running on a single cloud now if those applications span multiple clouds like like snowflake is trying to do okay that's a service that could span multiple clouds or in the case of goldman sachs it's a portfolio of data tools and software that's made accessible as a service that floats on top of a single or even multiple clouds regardless we feel that this was a correct call given the evidence and we'll give ourselves an a minus taking points off for the somewhat anecdotal and observational measurement system that we apply to look back at this prediction okay the next prediction was we made was cloud containers ai and ml automation uh are gonna power that those big four are gonna power 2021 spending here's a graphic we use to predict that it plots survey data for the various technologies within the etr taxonomy net score or spending momentum on the vertical axis and market share or presence in the data set it's a pervasive measurement on the horizontal axis the one that matters here is the vertical that dotted line of 40 percent anything above that is considered highly elevated and these four areas have held served this year based on recent etr survey data that we're not showing here we'll we'll bring that into our 2022 prediction so this prediction came in correctly for the most recent survey data and that's our measurement system on this one so we're going to take an a for this one too now on the penelope ultimate prediction here we came back to automation saying that the automation mandate accelerates in 2021 uipath and automation anywhere we said would go public but microsoft remains a threat to these pure play rpa vendors well we gave ourselves a b on this one doubling down on automation anywhere going public you know that was wrong but we definitely saw this year companies leaning hard into automation and microsoft despite the fact that it doesn't have as feature rich a product and offering as uipath and automation anywhere microsoft remains a very large presence you know we spoke to a lot of customers at the uipath forward four event in october in las vegas physical event and they confirmed you know this is true but at the same time so they're using power automate from microsoft but also using in this case uipath so they've kind of confirmed that yeah it's not the same we use that for some of our productivity we're an azure customer it's easy for us but they're still leaning heavily and investing heavily into uipath and i think the same can be said for automation anywhere but autom but power automate shows up as a big time leader in the magic gartner magic quadrant so it can't be ignored but clearly the two leaders in rpa have a sizable product advantage relative to the legacy software players now if you look at the comment on pega systems they cooled off a bit as measured by their stock price their revenue grew 13 percent last quarter on a year-on-year basis but perhaps we overestimated the tailwind effect and the company's momentum so we'll take a b on this prediction correct call on the automation trend and the big software vendors piling in ibm et cetera but the chance we took on automation anywhere again was a miss so we'll dig ourselves on that and our last prediction for 2021 was 5g rollouts push new edge iot workloads and necessitate new system architectures now much of this prediction you can see in the underlying bullets here really related to the observation that arm was dominating at the edge it would find its way into the mainstream enterprise workloads and we've been asking a lot of the mainstream you know companies the oems you know what do you what do you see with with arm in the enterprise and they say yeah we don't see it yet but very clearly this came into focus in 2021 is aws announced graviton 3 now and new inference and new training silicon these are different types of workloads that are emerging in the enterprise these are all based on arm microsoft google alibaba oracle and others are now shipping or readying arm-based systems for the enterprise when you look at new storage network and security appliances and other systems they're very offering and often including arm-based processors to assist with the offloads and look intel is definitely under product under pressure as we've predicted many times not just in our predictions post even pat gelsinger has admitted this is a turnaround it's going to take at least five years that's kind of new and recent data that he's made public so we're going to take an a minus on this one we're going to take off some points for the fact that you know 5g rollouts in edge are evolving and this is a longer term trend but the underlying points that we made on this slide are still pretty solid now if we use the following scale where a plus is a hundred out of a hundred a minus is a 90 a b is an 85 a b minus is an 80 and a c is a 75 out of 100 and we exclude that incomplete prediction on data architectures we average out to an 87.8 so that's a solid b plus and so the professor in us said hey little yellow sticky good effort as most of the predictions could be quantified and or you know we tried to object objectively score them there were some layups in there so yeah maybe we'll try to take more risks uh you know or not you know we we we'll see we like winning and so you know you always have to couch some of these things with some obvious ones but but really try to give some detail underneath that's maybe non-obvious um and we'll try to keep it down in the legs we did this year to one or two multi-year predictions so what's next well eric bradley and i were working on our 2022 predictions we're going to release those in the next couple of weeks so stay tuned for that you know what do you think how did we do you know we're grading ourselves here love to know you know for we're off base on base we're too hard on ourselves too easy give us your feedback don't forget these episodes are all available as podcasts wherever you listen all you do is search breaking analysis podcast check out etr's website at etr dot plus remember we also publish a full report every week on wikibon.com and siliconangle.com you can always get in touch with email david.velante at siliconangle.com you can dm me at divalante or comment on our linkedin posts this is dave vellante for the cube insights powered by etr have a great week everybody stay safe be well we'll see you next time [Music] you

>> From theCUBE Studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> Mobile World Congress is alive, theCUBE will be there and we'll certainly let you know if it's alive and well when we get on the ground. Now, as we approach a delayed mobile world congress, it's really appropriate to reflect in the state of the telecoms industry. Let's face it. Telcos have done of really good job of keeping us all connected during the pandemic, supporting work from home and that whole pivot, accommodating the rapid shift to landline traffic, securing the network and keeping it up and running but it doesn't change the underlying fundamental dilemma that Telco has faced. Telco is a slow growth, no growth industry, with revenue expectations in the low single digits. And at the same time network traffic continues to grow at 20% annually. And last year it grew at 40% to 50%. Despite these challenges, Telcos are still investing in the future. For example, the Telco industry collectively is selling out more than a trillion dollars in the first half of this decade on 5G and fiber infrastructure. And it's estimated that there are now more than 200 5G networks worldwide. But a lot of questions remain, not the least of which is, can and should Telcos go beyond connectivity and fiber. Can the Telcos actually monetize 5G or whatever's next beyond 5G? Or is that going to be left to the ecosystem? Now what about the ecosystem? How is that evolving? And very importantly, what role will the Cloud Hyperscalers play in Telco? Are they infrastructure on which the Telcos can build or are they going to suck the value out of the market as they have done in the enterprise? Hello everyone, and welcome to this week's Wiki Bond Cube Insights powered by ETR. In this breaking analysis, it's my pleasure to welcome a long time telecoms industry analyst and colleague, and the founding director of Lewis Insight, Mr. Chris Lewis. Chris, welcome to the program. Thanks for coming on >> Dave, it's a pleasure to be here. Thank you for having me. >> It is really our pleasure. So, we're going to cover a lot of ground today. And first thing, we're going to talk about Mobile World Congress. I've never been, you're an expert at that and what we can expect. And then we're going to review the current state of telecoms infrastructure, where it should go. We're going to dig into transformation. Is it a mandate? Is it aspirational? Can Telcos enter adjacent markets in ways they haven't been able to in the past? And then how about the ecosystem? We're going to talk about that, and then obviously we're going to talk about Cloud as I said, and we'll riff a little bit on the tech landscape. So Chris, let's get into it, Mobile World Congress, it's back on, what's Mobile World Congress typically like? What's your expectation this year for the vibe compared to previous events? >> Well Dave, the issue of Mobile World Congress is always that we go down there for a week into Barcelona. We stress ourselves building a matrix of meetings in 30 minutes slots and we return at the end of it trying to remember what we'd been told all the way through. The great thing is that with the last time we had a live, with around 110,000 people there, you could see anyone and everyone you needed to within the mobile, and increasingly the adjacent industry and ecosystem. So, he gave you that once a year, big download of everything new, obviously because it's the Mobile World Congress, a lot of it around devices, but increasingly over the last few years, we saw many, many stands with cars on them because the connected car became an issue, a lot more software oriented players there, but always the Telcos, always the people providing the network infrastructure. Increasingly in the last few years people provided the software and IT infrastructure, but all of these people contributing to what the network should be in the future, what needs to be connected. But of course the reach of the network has been growing. You mentioned during lockdown about connecting people in their homes, well, of course we've also been extending that connection to connect things whether it's in the home or the different devices, monitoring of doorbells and lights and all that sort of stuff. And in the industry environment, connecting all of the robots and sensors. So, actually the perimeter, the remit of the industry to connect has been expanding, and so is the sort of remit of Mobile World Congress. So, we set an awful lot of different suppliers coming in, trying to attach to this enormous market of roughly $1.5 trillion globally. >> Chris, what's the buzz in the industry in terms of who's going to show up. I know a lot of people have pulled out, I've got the Mobile World Congress app and I can see who's attending. And it looks like quite a few people are going to go but what's your expectation? >> Well, from an analyst point of view, obviously I'm mainly keeping up with my clients and trying to get new clients. I'm looking at it and going most of my clients are not attending in person. Now, of course, we need the DSMA, we need Mobile World Congress for future for the industry interaction. But of course, like many people having adopted and adapted to be online, then they're putting a lot of the keynotes online, a lot of the activities will be online. But of course many of the vendors have also produced their independent content and content to actually deliver to us as analysts. So, I'm not sure who will be there. I like you, but you'll be on the ground. You'll be able to report back and let us know exactly who turned up. But from my point of view, I've had so many pre-briefs already, the difference between this year and previous years, I used to get loads of pre-briefs and then have to go do the briefs as well. So this year I've got the pre-brief so I can sit back, put my feet up and wait for your report to come back as to what's happening on the ground. >> You got it. Okay, let's get into a little bit and talk about Telco infrastructure and the state, where it is today, where it's going, Chris, how would you describe the current state of Telco infrastructure? Where does it need to go? Like, what is the ideal future state look like for Telcos in your view? >> So there's always a bit of an identity crisis when it comes to Telco. I think going forward, the connectivity piece was seen as being table stakes, and then people thought where can we go beyond connectivity? And we'll come back to that later. But actually to the connectivity under the scenario I just described of people, buildings, things, and society, we've got to do a lot more work to make that connectivity extend, to be more reliable, to be more secure. So, the state of the network is that we have been building out infrastructure, which includes fiber to connect households and businesses. It includes that next move to cellular from 4G to 5G. It obviously includes Wi-Fi, wherever we've got that as well. And actually it's been a pretty good state, as you said in your opening comments they've done a pretty good job keeping us all connected during the pandemic, whether we're a fixed centric market like the UK with a lot of mobile on top and like the US, or in many markets in Africa and Asia, where we're very mobile centric. So, the fact is that every country market is different, so we should never make too many assumptions at a very top level, but building out that network, building out the services, focusing on that connectivity and making sure we get that cost of delivery right, because competition is pushing us towards having and not ever increasing prices, because we don't want to pay a lot extra every time. But the big issue for me is how do we bring together the IT and the network parts of this story to make sure that we build that efficiency in, and that brings in many questions that we going to touch upon now around Cloud and Hyperscalers around who plays in the ecosystem. >> Well, as you know, Telco is not my wheelhouse, but hanging around with you, I've learned, you've talked a lot about the infrastructure being fit for purpose. It's easy from an IT perspective. Oh yeah, it's fossilized, it's hardened, and it's not really flexible, but the flip side of that coin is as you're pointing out, it's super reliable. So, the big talk today is, "Okay, we're going to open up the network, open systems, and Open RAN, and open everything and microservices and containers. And so, the question is this, can you mimic that historical reliability in that open platform? >> Well, for me, this is the big trade-off and in my great Telco debate every year, I always try and put people against each other to try and to literally debate the future. And one of the things we looked at was is a more open network against this desire of the Telcos to actually have a smaller supplier roster. And of course, as a major corporation, these are on a national basis, very large companies, not large compared to the Hyperscalers for example, but they're large organizations, and they're trying to slim down their organization, slim down the supplier ecosystem. So actually in some ways, the more open it becomes, the more someone's got to manage and integrate all those pieces together. And that isn't something we want to do necessarily. So, I see a real tension there between giving more and more to the traditional suppliers. The Nokia's, Ericsson's, Huawei's, Amdocs and so on, the Ciscos. And then the people coming in breaking new ground like Mavenir and come in, and the sort of approach that Rakuten and Curve taken in bringing in more open and more malleable pieces of smaller software. So yeah, it's a real challenge. And I think as an industry which is notorious for being slow moving, actually we've begun to move relatively quickly, but not necessarily all the way through the organization. We've got plenty of stuff sitting on major or mainframes still in the back of the organization. But of course, as mobile has come in, we've started to deal much more closely, uninteractively in real time, God forbid, with the customers. So actually, at that front end, we've had to do things a lot more quickly. And that's where we're seeing the quickest adaptation to what you might see in your IT environment as being much more, continuous development, continuous improvement, and that sort of on demand delivery. >> Yeah, and we're going to get to that sort of in the Cloud space, but I want to now touch on Telco transformation which is sort of the main theme of this episode. And there's a lot of discussion on this topic, can Telcos move beyond connectivity and managing fiber? Is this a mandate? Is it a pipe dream that's just aspirational? Can they attack adjacencies to grow beyond the 1% a year? I mean, they haven't been successful historically. What are those adjacencies that might be, an opportunity and how will that ecosystem develop? >> Sure. >> So Chris, can and should Telcos try to move beyond core connectivity? Let's start there. >> I like what you did there by saying pipe dreams. Normally, pipe is a is a negative comment in the telecom world. But pipe dream gives it a real positive feel. So can they move beyond connectivity? Well, first of all, connectivity is growing in terms of the number of things being connected. So, in that sense, the market is growing. What we pay for that connectivity is not necessarily growing. So, therefore the mandate is absolutely to transform the inner workings and reduce the cost of delivery. So, that's the internal perspective. The external perspective is that we've tried in many Telcos around the world to break into those adjacent markets, being around media, being enterprise, being around IOT, and actually for the most part they've failed. And we've seen some very significant recent announcements from AT&T, Verizon, BT, beginning to move away from, owning content and not delivering content, but owning content. And the same as they've struggled often in the enterprise market to really get into that, because it's a well-established channel of delivery bringing all those ecosystem players in. So, actually rather than the old Telco view of we going to move into adjacent markets and control those markets, actually moving into them and enabling fellow ecosystem players to deliver the service is what I think we're beginning to see a lot more of now. And that's the big change, it's actually learning to play with the other people in the ecosystem. I always use a phrase that there's no room for egos in the ecosystem. And I think Telcos went in initially with an ego thinking we're really important, we are on connectivity. But actually now they're beginning to approach the ecosystem things saying, "How can we support partners? How can we support everyone in this ecosystem to deliver the services to consumers, businesses and whomever in this evolving ecosystem?" So, there are opportunities out there, plenty of them, but of course, like any opportunity, you've got to approach it in the right way. You've got to get the right investment in place. You've got to approach it with the right open API so everyone can integrate with your approach, and approach it, do I say with a little bit of humility to say, "Hey, we can bring this to the table, how do we work together? >> Well, it's an enormous market. I think you've shared with me, it's like 1.4 trillion. And I want to stay on these adjacencies for a minute, because one of the obvious things that Telcos will talk about is managed services. And I know we have to be careful of that term in an IT context, that it's different in a, you're talking about managing connectivity, but there's professional services. That's a logical sort of extension of their business and probably a safe adjacency, maybe not even adjacency, but they're not going to get into devices. I mean, they'll resell devices, but they're not going to be, I would presume not go back to trying to make devices, but there's certainly the edge and that's so, it'll define in opaque, but it's huge. If there's 5G, there's the IT component and that's probably a partnership opportunity. And as you pointed out, there's the ecosystem, but I wonder, how do you think about 5G as an adjacency or indoor opportunity? Is it a revenue opportunity for Telcos or is that just something that is really aspirational? >> Oh, absolutely it's a revenue opportunity, but I prefer to think of 5G as being a sort of a metaphor for the whole future of telecom. So, we usually talk, and MWC would normally talk about 5G just as a mobile solution. Of course, what you can get with, you can use this fixed wireless access approach, where the roots that sits in your house or your building. So, it's a potential replacement for some fixed lines. And of course, it's also, gives you the ability to build out, let's say in a manufacturing or a campus environment, a private 5G network. So, many of the early opportunities we're seeing with 5G are actually in that more private network environment addressing those very low latency, and high bandwidth requirements. So yeah, there are plenty of opportunities. Of course, the question here is, is connectivity enough, or especially with your comment around the edge, at the edge we need to manage connectivity, storage, compute, analytics, and of course the applications. So, that's a blend of players. It's not going to be in the hands of one player. So yes, plenty of opportunities but understanding what comes the other way from the customer base, where that's, you and I in our homes or outward as an about, or from a business point of view, an office or a campus environment, that's what should be driving, and not the technology itself. And I think this is the trap that the industry has fallen into many times, is we've got a great new wave of technology coming, how can we possibly deliver it to everybody rather than listening to what the customers really require and delivering it in a way consumable by all those different markets. >> Yeah now, of course all of these topics blend together. We try to keep them separately, but we're going to talk about Cloud, we're going to talk about competition, But one of the areas that we don't have a specific agenda item on is, is data and AI. And of course there's all this data flowing through the network, so presumably it's an opportunity for the Telcos. At the same time, they're not considered AI experts. They do when you talk about Edge, they would appear to have the latency advantage because of the last mile and their proximity, to various end points. But the Cloud is sort of building out as well. How do you think about data and AI as an opportunity for Telco? >> I think the whole data and AI piece for me sits on top of the cake or pie, whatever you want to call it. What we're doing with all this connectivity, what we're doing with all these moving parts and gathering information around it, and building automation into the delivery of the service, and using the analytics, whether you call it ML or AI, it doesn't really matter. But actually using that information to deliver a better service, a better outcome. Now, of course, Telcos have had much of this data for years and years, for decades, but they've never used it. So, I think what's happening is, the Cloud players are beginning to educate many of the Telcos around how valuable this stuff is. And that then brings in that question of how do we partner with people using open APIs to leverage that data. Now, do the Telcos keep hold of all that data? Do they let the Cloud players do all of it? No, it's going to be a combination depending on particular environments, and of course the people owning their devices also have a vested interest in this as well. So, you've always got to look at it end to end and where the data flows are, and where we can analyze it. But I agree that analysis on the device at the Edge, and perhaps less and less going back to the core, which is of course the original sort of mandate of the Cloud. >> Well, we certainly think that most of the Edge is going to be about AI inferencing, and then most of the data is going to stay at the edge. Some will come back for sure. And that is big opportunity for whether you're selling compute or conductivity, or maybe storage as well, but certainly insights at the Edge. >> Everything. >> Yeah. >> Everything, yeah. >> Let's get into the Cloud discussion and talk about the Hyperscalers, the big Hyperscaler elephant in the room. We're going to try to dig into what role the Cloud will play in the transformation of telecoms on Telecom TV at the great Telco debate. You likened the Hyperscalers, Chris, to Dementors from Harry Potter hovering over the industry. So, the question is, are the Cloud players going to suck the value out of the Telcos? Or are they more like Dobby the elf? They're powerful, there's sometimes friendly but they're unpredictable. >> Thank you for extending that analogy. Yes, it got a lot of reaction when I use that, but I think it indicates some of the direction of power shift where, we've got to remember here that Telcos are fundamentally national, and they're restricted by regulation, and the Cloud players are global, perhaps not as global as they'd like be, but some regional restrictions, but the global players, the Hyperscalers, they will use that power and they they will extend their reach, and they are extending their reach. If you think they now command some fantastic global networks, in some ways they've replaced some of the Telco international networks, all the submarine investments that tend to be done primarily for the Hyperscalers. So, they're building that out. So, as soon as you get onto their network, then you suddenly become part of that environment. And that is reducing some of the spend on the longer distances we might have got in the past approaches from the Telcos. Now, does that mean they're going to go all the way down and take over the Telcos? I don't believe so, because it's a fundamentally different business digging fiber in people's streets and delivering to the buildings, and putting antennas up. So, they will be a coexistence. And in fact, what we've already seen with Cloud and the Hyperscalers is that they're working much more close together than people might imagine. Now, you mentioned about data in the previous question, Google probably the best known of the of the AI and ML delivers from the Cloud side, working with many of the Telcos, even in some cases to actually have all the data outsourced into the Google Cloud for analytics purposes. They've got the power, the heavy lifting to do that. And so, we begin to see that, and obviously with shifting of workloads as appropriate within the Telco networking environment, we're seeing that with AWS, and of course with Azure as well. And Azure of course acquired a couple of companies in affirmed and Metro switch, which actually do some of the formal 5G core and the likes there within the connectivity environment. So, it's not clean cuts. And to go back to the analogy, those Dementors are swooping around and looking for opportunities, and we know that they will pick up opportunities, and they will extend their reach as far as they can down to that edge. But of course, the edge is where, as you rightly say, the Telcos have the control, they don't necessarily own the customer. I don't believe anyone owns the customer in this digital environment, because digital allows you to move your allegiance and your custom elsewhere anyway. So, but they do own that access piece, and that's what's important from a national point of view, from an economic point of view. And that's why we've seen some of the geopolitical activity banning Huawei from certain markets, encouraging more innovation through open ecosystem plays. And so, there is a tension there between the local Telco, the local market and the Hyperscaler market, but fundamentally they've got an absolute brilliant way of working together using the best of both worlds to deliver the services that we need as an economy. >> Well, and we've talked about this you and I in the past where the Telcos, portions of the Telco network could move into the Cloud. And there of course the Telcos all run the big data centers, and portions of that IT infrastructure could move into the Cloud. But it's very clear, they're not going to give up the entire family jewels to the Cloud players. Why would they? But there are portions of their IT that they could move into. Particularly, in the front end, they want to build like everybody. They want to build an abstraction layer. They're not going to move their core systems and their backend Oracle databases, they're going to put a brick wall around those, but they wanted abstraction layer, and they want to take advantage of microservices and use that data from those transaction systems. But the web front end stuff makes sense to put into Cloud. So, how do you think about that? >> I think you've hit the nail on the head. So you can't move those big backend systems straight away, gradually over time, you will, but you've got to go for those easy wins. And certainly in the research I've been doing with many of my clients, they're suggested that front end piece, making sure that you can onboard customers more easily, you can get the right mix of services. You can provide the omnichannel interaction from that customer experience that everybody talks about, for which the industry is not very well known at all by the way. So, any improvement on that is going to be good from an MPS point of view. So yeah, leveraging what we might, what we call BSS OSS in the telecom world, and actually putting that into the Cloud, leveraging both the Hyperscalers, but also by the way, many of the traditional players who people think haven't moved Cloud wards, but they are moving Cloud wards and they're embracing microservices and Cloud native. So, what you would have seen if we'd been in person down in Barcelona next week, would be a lot of the vendors who perhaps traditionally seems a bit slow moving, actually have done a lot of work to move their portfolio into the Cloud and into Cloud native environments. And yes, as you say, we can use that front end, we can use the API openness that's developed by people at the TM forum, to actually make sure we don't have to do the backend straight away, do it over time. Because of course the thing that we're not touching upon here, is the revenue stream is a consistent revenue stream. So, just because you don't need to change the backend to keep your revenue stream going, this is on a new, it keeps delivering every month, we keep paying our 50, 40, whatever bucks a month into the Telco pot. That's why it's such a big market, and people aren't going to stop doing that. So, I think the dynamics of the industry, we often spend a lot of time thinking about the inner workings of it and the potential of adjacent markets, whereas actually, we keep paying for this stuff, we keep pushing revenue into the pockets of all the Telcos. So, it's not a bad industry to be in, even if they were just pushed back to be in the access market, it's a great business. We need it more and more. The elasticity of demand is very inelastic, we need it. >> Yeah, it's the mother of old golden geese. We don't have a separate topic on security, and I want to touch on security here, is such an important topic. And it's top of mind obviously for everybody, Telcos, Hyperscalers, the Hyperscalers have this shared responsibility model, you know it well. A lot of times it's really confusing for customers. They don't realize it until there has been a problem. The Telcos are going to be very much tuned into this. How will all this openness, and we're going to talk about technology in a moment, but how will this transformation in your view, in the Cloud, with the shared responsibility model, how will that affect the whole security posture? >> Security is a great subject, and I do not specialize in it. I don't claim to be an expert by any stretch of the imagination, but I would say security for me is a bit like AI and analytics. It's everywhere. It's part of everything. And therefore you cannot think of it as a separate add on issue. So, every aspect, every element, every service you build into your micro services environment has to think about how do you secure that connection, that transaction, how do you secure the customer's data? Obviously, sovereignty plays a role in that as well in terms of where it sits, but at every level of every connection, every hop that we look through, every route to jump, we've got to see that security is built in. And in some ways, it's seen as being a separate part of the industry, but actually, as we collapse parts of the network down, we're talking about bringing optical and rooting together in many environments, security should be talked about in the same breath. So when I talked about Edge, when I talked about connectivity, storage, compute, analytics, I should've said security as well, because I absolutely believe that is fundamental to every chain in the link and let's face it, we've got a lot of links in the chain. >> Yeah, 100%. Okay, let's hit on technologies and competition, we kind of blend those together. What technology should we be paying attention to that are going to accelerate this transformation. We hear a lot about 5G, Open RAN. There's a lot of new tech coming in. What are you watching? Who are the players that we maybe should be paying attention to, some that you really like, that are well positioned? >> We've touched upon it in various of the questions that have proceeded this. So, the sort of Cloudification of the networking environment is obviously really important. The automation of the process we've got to move away from bureaucratic manual processes within these large organizations, because we've got to be more efficient, we've got to be more reliable. So, anything which is related to automation. And then the Open RAN question is really interesting. Once again, you raised this topic of when you go down an Open RAN routes or any open route, it ultimately requires more integration. You've got more moving parts from more suppliers. So, therefore there are potential security issues there, depending on how it's defined, but everybody is entering the Open RAN market. There are some names that you will see regularly next week, being pushed, I'm not going to push them anymore, because some of them just attract the oxygen of attention. But there are plenty out there. The good news is, the key vendors who come from the more traditional side are also absolutely embracing that and accept the openness. But I think the piece which probably excites me more, apart from the whole shift towards Cloud and microservices, is the coming together, the openness between the IT environment and the networking environment. And you see it, for example, in the Open RAN, this thing called the RIC, the RAN Interconnection Controller. We're actually, we're beginning to find people come from the IT side able to control elements within the wireless controller piece. Now that that starts to say to me, we're getting a real handle on it, anybody can manage it. So, more specialization is required, but understanding how the end to end flow works. What we will see of course is announcements about new devices, the big guys like Apple and Samsung do their own thing during the year, and don't interrupt their beat with it with MWC, but you'll see a lot of devices being pushed by many other providers, and you'll see many players trying to break into the different elements of the market. But I think mostly, you'll see the people approaching it from more and more Cloudified angle where things are much more leveraging, that Cloud capability and not relying on the sort of rigid and stodgy infrastructure that we've seen in the past >> Which is kind of interesting because Cloud, a lot of the Clouds are Walled Gardens, at the same time they host a lot of open technologies, and I think as these two worlds collide, IT and the Telco industry, it's going to be interesting to see how the Telco developer ecosystem evolves. And so, that's something that we definitely want to watch. You've got a comment there? >> Yeah, I think the Telco developer they've not traditionally been very big in that area at all, have they? They've had their traditional, if you go back to when you and I were kids, the plain old telephone service was a, they were a one trick pony, and they've moved onto that. In some ways, I'd like them to move on and to have the one trick of plain old broadband that we just get broadband delivered everywhere. So, there are some issues about delivering service to all parts of every country, and obviously the globe, whether we do that through satellite, we might see some interesting satellite stuff coming out during NWC. There's an awful lot of birds flying up there trying to deliver signal back to the ground. Traditionally, that's not been very well received, with the change in generation of satellite might help do that. But we've known traditionally that a lot of developer activity in there, what it does bring to the four though, Dave, is this issue of players like the Ciscos and Junipers, and all these guys of the world who bring a developer community to the table as well. This is where the ecosystem play comes in, because that's where you get the innovation in the application world, working with channels, working with individual applications. And so it's opening up, it's basically building a massive fabric that anybody can tap into, and that's what becomes so exciting. So, the barriers to entry come down, but I think it will see us settling down, a stabilization of relationship between the Telcos and the Hyperscalers, because they need each other as we talked about previously, then the major providers, the Ciscos, Nokias, Ericssons, Huawei's, the way they interact with the Telcos. And then allowing that level of innovation coming in from the smaller players, whether it's on a national or a global basis. So, it's actually a really exciting environment. >> So I want to continue that theme and just talk about Telco in the enterprise. And Chris, on this topic, I want to just touch on some things and bring in some survey data from ETR, Enterprise Technology Research, our partner. And of course the Telcos, they've got lots of data centers. And as we talked about, they're going to be moving certain portions into the Cloud, lots of the front end pieces in particular, but let's look at the momentum of some of the IT players within the ETR dataset, and look at how they compare to some of the Telcos that ETR captures specifically within the Telco industry. So, we filtered this data on the Telco industry. So, this is our X, Y graph that we show you oftentimes on the vertical axis, is net score which measures spending momentum, and in the horizontal axis is market share, which is a measure of pervasiveness in the dataset. Now, this data is for shared accounts just in the Telco sector. So we filtered on certain sectors, like within the technology sectors, Cloud, networking, and so it's narrow, it's a narrow slice of the 1500. It respondents, it represents about 133 shared accounts. And a couple of things to jump right out. Within the Telco industry, it's no surprise, but Azure and AWS have massive presence on the horizontal axis, but what's notable as they score very highly in the vertical axis, with elevated spending velocity on their platforms within Telco. Google Cloud doesn't have as much of a presence, but it's elevated as well. Chris was talking about their data posture before, Arista and Verizon, along with VMware are also elevated, as is Aruba, which is HPEs networking division, but they don't have the presence on the horizontal axis. And you got Red Hat OpenStack is actually quite prominent in Telco as we've reported in previous segments. Is no surprise You see Akamai there. Now remember, this survey is weighted toward enterprise IT, so you have to take that into consideration, but look at Cisco, very strong presence, nicely elevated as is Equinox, both higher than many of the others including Dell, but you could see Dell actually has pretty respectable spending in Telco. It's an area that they're starting to focus on more. And then you got that cluster below, your Juniper, AT&T, Oracle, the rest of HPE TELUM and Lumen which is formerly, century link via IBM. Now again, I'm going to caution you. This is an enterprise IT heavy survey, but the big takeaway is the Cloud players have a major presence inside of firms that say they're in the telecommunications industry. And certain IT players like Cisco, VMware and Red Hat appear to be well positioned inside these accounts. So Chris, I'm not sure if any of this commentary resonates with you, but it seems that the Telcos would love to partner up with traditional IT vendors and Cloud players, and maybe find ways to grow their respective businesses. >> I think some of the data points you brought out there are very important. So yes, we've seen a Microsoft Azure and AWS very strong working with Telcos. We've seen Google Cloud platform actually really aggressively pushed into the market certainly the last 12, 24 months. So yeah, they're well positioned, and they all come from a slightly different background. As I said, the Google with this, perhaps more data centric approach in its analytics, tools very useful, AWS with this outpost reaching out, connecting out, and as you'll, with its knowledge of the the Microsoft business market certainly pushing into private networks as well, by the way. So yeah, and Cisco, of course in there does have, and it's a mass scale division, a lot of activity there, some of the people collapsing, some of that rooting an obstacle together, their big push on Silicon. So, what you've got here is a sort of cross representation of many of the different sorts of suppliers who are active in this market. Now Telcos is a big spenders, the telecom market, as we said, a $1.4 trillion market, they spend a lot, they probably have to double bubble spend at the moment to get over the hump of 5G investment, to build out fiber where they need to build out. So, any anything that relates to that is of course a major spending opportunity, a major market opportunity for players. And we know when you need the infrastructure behind it, whether it's in data centers or in their own data centers or in the Cloud to deliver against it. So, what I do like about this as an analyst, a lot of people would focus on one particular piece of the market. So you specialize on handsets, people specialize on home markets and home gateways. So, I tend to sit back and try and look at the big picture, the whole picture. And I think we're beginning to see some very good momentum where people are, where companies are building upon, of course their core business within the telecom industry, extending it out. But the lines of demarcation are blurring between enterprise, Telco, and indeed moving down into small business. And you think about the SD-WAN Market, which came from nowhere to build a much more flexible solution for connecting people over the wide area network, which has been brilliant during the pandemic, because it's allowed us to extend that to home, but be of course, build a campus ready for the future as well. So there are plenty of opportunities out there. I think the big question in my mind is always about from going into the Telco, as I said, whether they wannna reduce the number of suppliers on the roster. So that puts a question mark against some of the open approaches, and then from the Telco to the end customer, because it goes to the Telcos, 30% of their revenue comes from the enterprise market, 60% from the consumer market. How do they leverage the channel? Which includes all the channels, we talked about security, all of the IT stuff that you've already touched upon and the Cloud. It's going to be a very interesting mix and balancing act between different channels to get the services that the customers want. And I think increasingly, customers are more aware of the opportunities open to them to reach back into this ecosystem and say, "Yeah, I want a piece of humans to Telco, but I want it to come to me through my local integrated channel, because I need a bit of their expertise on security." So, fascinating market, and I think not telecom's no longer considered in isolation, but very much as part of that broader digital ecosystem. >> Chris, it's very hard to compress an analysis of a $1.4 trillion business into 30 or 35 minutes, but you're just the guy to help me do it. So, I got to really thank you for participating today and bringing your knowledge. Awesome. >> Do you know, it's my pleasure. I love looking at this market. Obviously I love analogies like Harry Potter, which makes it bring things to life. But at the end of the day, we as people, we want to be connected, we as business, we want to be connected, in society we want to be connected. So, the fundamental of this industry are unbelievably strong. Let's hope that governments don't mess with it too much. And let's hope that we get the right technology comes through, and help support that world of connectivity going forward. >> All right, Chris, well, I'll be texting you from Mobile World Congress in Barcelona, and many thanks to my colleague, Chris Lewis, he brought some serious knowledge today and thank you. And remember, I publish each week on wikibond.com and siliconangle.com. And these episodes are all available as podcasts. You just got to search for Breaking Analysis podcasts. You can always connect with me on twitter @dvellante or email me at dave.vellante@siliconangle.com. And you can comment on my LinkedIn post, and don't forget to check out etr.plus for all the survey data. This is Dave Vellante, for theCUBE Insights powered by ETR. Be well, and we'll see you next time. (upbeat music)

>> From theCUBE studios in Palo Alto and Boston, bringing you data-driven insights from theCUBE and ETR, this is Breaking Analysis with Dave Vellante. >> In our 2020 predictions post, we said that organizations would begin to operationalize their digital transformation experiments and POCs. We also said that based on spending data that cybersecurity companies like CrowdStrike and Okta were poised to rise above the rest in 2020, and we even said the S&P 500 would surpass 3,700 this year. Little did we know that we'd have a pandemic that would make these predictions a virtual lock, and, of course, COVID did blow us out of the water in some other areas, like our prediction that IT spending would increase plus 4% in 2020, when in reality, we have a dropping by 4%. We made a number of other calls that did pretty well, but I'll let you review last year's predictions at your leisure to see how we did. Hello, everyone. This is Dave Vellante and welcome to this week's Wikibon CUBE Insights powered by ETR. Erik Bradley of ETR is joining me again for this Breaking Analysis, and we're going to lay out our top picks for 2021. Erik, great to see you. Welcome back. Happy to have you on theCUBE, my friend. >> Always great to see you too, Dave. I'm excited about these picks this year. >> Well, let's get right into it. Let's bring up the first prediction here. Tech spending will rebound in 2021. We expect a 4% midpoint increase next year in spending. Erik, there are a number of factors that really support this prediction, which of course is based on ETR's most recent survey work, and we've listed a number of them here in this slide. I wonder if we can talk about that a little bit, the pace of the vaccine rollout. I've called this a forced march to COVID, but I can see people doubling down on things that are working. Productivity improvements are going to go back into the business. People are going to come back to the headquarters and that maybe is going to spur infrastructure on some pent-up demand, and work from home, we're going to talk about that. What are your thoughts on this prediction? >> Well, first of all, you weren't wrong last year. You were just, (laughs) you were just delayed. Just delayed a little bit, that's all. No, very much so. Early on, just three months ago, we were not seeing this optimism. The most recent survey, however, is capturing 4%. I truly believe that still might be a little bit mild. I think it can go even higher, and that's going to be driven by some of the things you've said about. This is a year where a lot of spending was paused on machine learning, on automation, on some of these projects that had to be stopped because of what we all went through. Right now, that is not a nice to have, it's a must have, and that spending is going quickly. There's a rapid pace on that spending, so I do think that's going to push it and, of course, security. We're going to get to this later on so I don't want to bury the lede, but with what's happening right now, every CISO I speak to is not panicked, but they are concerned and there will definitely be increased security spending that might push this 4% even higher. >> Yeah, and as we've reported as well, the survey data shows that there's less freezing of IT, there are fewer layoffs, there's more hiring, we're accelerating IT deployments, so that, I think, 34% last survey, 34% of organizations are accelerating IT deployments over the next three months, so that's great news. >> And also your point too about hiring. I was remiss in not bringing that up because we had layoffs and we had freezes on hiring. Both of that is stopping. As you know, as more head count comes in, whether that be from home or whether that be in your headquarters, both of those require support and require spending. >> All right, let's bring up the next prediction. Remote worker trends are going to become fossilized, settling in at an average of 34% by year-end 2021. Now, I love this chart, you guys. It's been amazingly consistent to me, Erik. We're showing data here from ETR's latest COVID survey. So it shows that prior to the pandemic, about 15 to 16% of employees on average worked remotely. That jumped to where we are today and well into the 70s, and we're going to stay close to that, according to the ETR data, in the first half of 2021, but by the end of the year, it's going to settle in at around 34%. Erik, that's double the pre-pandemic numbers and that's been consistent in your surveys over the past six month, and even within the sub-samples. >> Yeah, super surprised by the consistency, Dave. You're right about that. We were expecting the most recent data to kind of come down, right? We see the vaccines being rolled out. We kind of thought that that number would shift, but it hasn't, it has been dead consistent, and that's just from the data perspective. What we're hearing from the interviews and the feedback is that's not going to change, it really isn't, and there's a main reason for that. Productivity is up, and we'll talk about that in a second, but if you have productivity up and you have employees happy, they're not commuting, they're working more, they're working effectively, there is no reason to rush. And now imagine if you're a company that's trying to hire the best talent and attract the best talent but you're also the only company telling them where they have to live. I mean, good luck with that, right? So even if a few of them decide to make this permanent, that's something where you're going to really have to follow suit to attract talent. >> Yeah, so let's talk about that. Productivity leads us to our next prediction. We can bring that up. Number three is productivity increases are going to lead organizations to double down on the successes of 2020 and productivity apps are going to benefit. Now, of course, I'm always careful to cautious to interpret when you ask somebody by how much did productivity increase. It's a very hard thing to estimate depending on how you measure it. Is it revenue per employee? Is it profit? But nonetheless, the vast majority of people that we talk to are seeing productivity is going up. The productivity apps are really the winners here. Who do you see, Erik, as really benefiting from this trend? This year we saw Zoom, Teams, even Webex benefit, but how do you see this playing out in 2021? >> Well, first of all, the real beneficiaries are the companies themselves because they are getting more productivity, and our data is not only showing more productivity, but that's continuing to increase over time, so that's number one. But you're 100% right that the reason that's happening is because of the support of the applications and what would have been put in place. Now, what we do expect to see here, early on it was a rising tide lifted all boats, even Citrix got pulled up, but over time you realize Citrix is really just about legacy applications. Maybe that's not really the virtualization platform we need or maybe we just don't want to go that route at all. So the ones that we think are going to win longer term are part of this paradigm shift. The easiest one to put out as example is DocuSign. Nobody is going to travel and sit in an office to sign a paper ever again. It's not happening. I don't care if you go back to the office or you go back to headquarters. This is a paradigm shift that is not temporary. It is permanent. Another one that we're seeing is Smartsheet. Early on it started in. I was a little concerned about it 'cause it was a shadow IT type of a company where it was just spreading and spreading and spreading. It's turned out that this, the data on Smartsheet is continuing to be strong. It's an effective tool for project management when you're remotely working, so that's another one I don't see changing anytime. The other one I would call out would be Twilio. Slightly different, yes. It's more about the customer experience, but when you look at how many brick and mortar or how many in-person transactions have moved online and will stay there, companies like Twilio that support that customer experience, I'll throw out a Qualtrics out there as well, not a name we hear about a lot, but that customer experience software is a name that needs to be watched going forward. >> What do you think's going to happen to Zoom and Teams? Certainly Zoom just escalated this year, a huge ascendancy, and Teams I look at a little differently 'cause it's not just video conferencing, and both have done really, really well. How do you interpret the data that you're seeing there? >> There's no way around it, our data is decelerating quickly, really quickly. We were kind of bullish when Zoom first came out on the IPO prospects. It did very well. Obviously what happened in this remote shift turned them into an absolute overnight huge success. I don't see that continuing going forward, and there's a reason. What we're seeing and hearing from our feedback interviews is that now that people recognize this isn't temporary and they're not scrambling and they need to set up for permanency, they're going to consolidate their spend. They don't need to have Teams and Zoom. It's not necessary. They will consolidate where they can. There's always going to be the players that are going to choose Slack and Zoom 'cause they don't want to be on Microsoft architecture. That's fine, but you and I both know that the majority of large enterprises have Microsoft already. It's bundled in in pricing. I just don't see it happening. There's going to be M&A out there, which we can talk about again soon, so maybe Zoom, just like Slack, gets to a point where somebody thinks it's worthwhile, but there's a lot of other video conferencing out there. They're trying to push their telephony. They're trying to push their mobile solutions. There's a lot of companies out there doing it, so we'll see, but the current market cap does not seem to make sense in a permanent remote work situation. >> I think I'm inferring Teams is a little different because it's Microsoft. They've got this huge software estate they can leverage. They can bundle. Now, it's going to be interesting to see how and if Zoom can then expand its TAM, use its recent largesse to really enter potentially new markets. >> It will be, but listen, just the other day there was another headline that one of Zoom's executives out in China was actually blocking content as per directed by the Chinese government. Those are the kind of headlines that just really just get a little bit difficult when you're running a true enterprise size. Zoom is wonderful in the consumer space, but what I do is I research enterprise technology, and it's going to be really, really difficult to make inroads there with Microsoft. >> Yep. I agree. Okay, let's bring up number four, prediction number four. Permanent shifts in CISO strategies lead to measurable share shifts in network security. So the remote work sort of hyper-pivot, we'll call it, it's definitely exposed us. We've seen recent breaches that underscore the need for change. They've been well-publicized. We've talked a lot about identity access management, cloud security, endpoint security, and so as a result, we've seen the upstarts, and just a couple that we called, CrowdStrike, Okta, Zscaler has really benefited and we expect them to continue to show consistent growth, some well over 50% revenue growth. Erik, you really follow this space closely. You've been focused on microsegmentation and other, some of the big players. What are your thoughts here? >> Yeah, first of all, security, number one in spending overall when we started looking and asking people what their priority is going to be. That's not changing, and that was before the SolarWinds breach. I just had a great interview today with a CISO of a global hospitality enterprise to really talk about the implications of this. It is real. Him and his peers are not panicking but pretty close, is the way he put it, so there is spend happening. So first of all, to your point, continued on Okta, continued on identity access. See no reason why that changes. CrowdStrike, continue. What this is going to do is bring in some new areas, like we just mentioned, in network segmentation. Illumio is a pure play in that name that doesn't have a lot of citations, but I have watched over the last week their net spending score go from about 30 to 60%, so I am watching in real time, as this data comes in in the later part of our survey, that it's really happening Forescout is another one that's in there. We're seeing some of the zero trust names really picking up in the last week. Now, to talk about some of the more established names, yeah, Cisco plays in this space and we can talk about Cisco and what they're doing in security forever. They're really reinventing themselves and doing a great job. Palo Alto was in this space as well, but I do believe that network and microsegmentation is going to be something that's going to continue. The other one I'm going to throw out that I'm hearing a lot about lately is user behavior analytics. People need to be able to watch the trends, compare them to past trends, and catch something sooner. Varonis is a name in that space that we're seeing get a lot of adoptions right now. It's early trend, but based on our data, Varonis is a name to watch in that area as well. >> Yeah, and you mentioned Cisco transitioning, reinventing themselves toward a SaaS player. Their subscription, Cisco's security business is a real bright spot for them. Palo Alto, every time I sit in on a VENN, which is ETR's proprietary roundtable, the CISOs, they love Palo Alto. They want to work, many of them, anyway, want to work with Palo Alto. They see them as a thought leader. They seem to be getting their cloud act together. Fortinet has been doing a pretty good job there and especially for mid-market. So we're going to see this equilibrium, best of breed versus the big portfolio companies, and I think 2021 sets up as a really interesting battle for those guys with momentum and those guys with big portfolios. >> I completely agree and you nailed it again. Palo Alto has this perception that they're really thought leaders in the space and people want to work with them, but let's not rule Cisco out. They have a much, much bigger market cap. They are really good at acquisitions. In the past, they maybe didn't integrate them as well, but it seems like they're getting their act together on that. And they're pushing now what they call SecureX, which is sort of like their own full-on platform in the cloud, and they're starting to market that, I'm starting to hear more about it, and I do think Cisco is really changing people's perception of them. We shall see going forward because in the last year, you're 100% right, Palo Alto definitely got a little bit more of the sentiment, of positive sentiment. Now, let's also realize, and we'll talk about this again in a bit, there's a lot of players out there. There will probably be continued consolidation in the security space, that we'll see what happens, but it's an area where spending is increasing, there is a lot of vendors out there to play with, and I do believe we'll see consolidation in that space. >> Yes. No question. A highly fragmented business. A lack of skills is a real challenge. Automation is a big watch word and so I would expect, which brings us, Erik, to prediction number five. Can be hard to do prediction posts without talking about M&A. We see the trend toward increased tech spending driving more IPOs, SPACs and M&A. We've seen some pretty amazing liquidity events this year. Snowflake, obviously a big one. Airbnb, DoorDash, outside of our enterprise tech but still notable. Palantir, JFrog, number of others. UiPath just filed confidentially and their CEO said, "Over the next 12 to 18 months, I would think Automation Anywhere is going to follow suit at some point." Hashicorp was a company we called out in our 2020 predictions as one to watch along with Snowflake and some others, and, Erik, we've seen some real shifts in observability. The ELK Stack gaining prominence with Elastic, ChaosSearch just raised 40 million, and everybody's going after 5G. Lots of M&A opportunities. What are your thoughts? >> I think if we're going to make this a prediction show, I'm going to say that was a great year, but we're going to even have a better year next year. There is a lot of cash on the balance sheet. There are low interest rates. There is a lot of spending momentum in enterprise IT. The three of those set up for a perfect storm of more liquidity events, whether it be continued IPOs, whether it could be M&A, I do expect that to continue. You mentioned a lot of the names. I think you're 100% right. Another one I would throw out there in that observability space, is it's Grafana along with the ELK Stack is really making changes to some of the pure plays in that area. I've been pretty vocal about how I thought Splunk was having some problems. They've already made three acquisitions. They are trying really hard to get back up and keep that growth trajectory and be the great company they always have been, so I think the observability area is certainly one. We have a lot of names in that space that could be taken out. The other one that wasn't mentioned, however, that I'd like to mention is more in the CDN area. Akamai being the grandfather there, and we'll get into it a little bit too, but CloudFlare has a huge market cap, Fastly running a little bit behind that, and then there's Limelight, and there's a few startups in that space and the CDN is really changing. It's not about content delivery as much as it is about edge compute these days, and they would be a real easy takeout for one of these large market cap names that need to get into that spot. >> That's a great call. All right, let's bring up number six, and this is one that's near and dear to my heart. It's more of a longer-term prediction and that prediction is in the 2020s, 75% of large organizations are going to re-architect their big data platforms, and the premise here is we're seeing a rapid shift to cloud database and cross-cloud data sharing and automated governance. And the prediction is that because big data platforms are fundamentally flawed and are not going to be corrected by incremental improvements in data lakes and data warehouses and data hubs, we're going to see a shift toward a domain-centric ownership of the data pipeline where data teams are going to be organized around data product or data service builders and embedded into lines of business. And in this scenario, the technology details and complexity will become abstracted. You've got hyper-specialized data teams today. They serve multiple business owners. There's no domain context. Different data agendas. Those, we think, are going to be subsumed within the business lines, and in the future, the primary metric is going to shift from the cost and the quality of the big data platform outputs to the time it takes to go from idea to revenue generation, and this change is going to take four to five years to coalesce, but it's going to begin in earnest in 2021. Erik, anything you'd add to this? >> I'm going to let you kind of own that one 'cause I completely agree, and for all the listeners out there, that was Dave's original thought and I think it's fantastic and I want to get behind it. One of the things I will say to support that is big data analytics, which is what people are calling it because they got over the hype of machine learning, they're sick of vendors saying machine learning, and I'm hearing more and more people just talk about it as we need big data analytics, we need 'em at the edge, we need 'em faster, we need 'em in real time. That's happening, and what we're seeing more is this is happening with vendor-agnostic tools. This isn't just AWS-aligned. This isn't just GCP-aligned or Azure-aligned. The winners are the Snowflakes. The winners are the Databricks. The winners are the ones that are allowing this interoperability, the portability, which fully supports what you're saying. And then the only other comment I would make, which I really like about your prediction, is about the lines of business owning it 'cause I think this is even bigger. Right now, we track IT spending through the CIO, through the CTO, through IT in general. IT spending is actually becoming more diversified. IT spending is coming under the purview of marketing, it's coming under the purview of sales, so we're seeing more and more IT spending, but it's happening with the business user or the business lines and obviously data first, so I think you're 100% right. >> Yeah, and if you think about it, we've contextualized our operational systems, whether it's the CRM or the supply chain, the logistics, the business lines own their respective data. It's not true for the analytics systems, and we talked about Snowflake and Databricks. I actually see these two companies who were sort of birds of a feather in the early days together, applying Databricks machine learning on top of Snowflake, I actually see them going in diverging places. I see Databricks trying to improve on the data lake. I see Snowflake trying to reinvent the concept of data warehouse to this global mesh, and it's going to be really interesting to see how that shakes out. The data behind Snowflake, obviously very, very exciting. >> Yeah, it's just, real quickly to add on that if we have time, Dave. >> Yeah, sure. >> We all know the valuation of Snowflake, one of the most incredible IPOs I've seen in a long time. The data still supports it. It still supports that growth. Unfortunately for Databricks, their IPO has been a little bit more volatile. If you look at their stock chart every time they report, it's got a little bit of a roller coaster ride going on, and our most recent data for Databricks is actually decelerating, so again, I'm going to use the caveat that we only have about 950 survey responses in. We'll probably get that up to 1,300 or so, so it's not done yet, but right now we are putting Databricks into a category where we're seeing it decelerate a little bit, which is surprising for a company that's just right out of the gate. >> Well, it's interesting because I do see Databricks as more incremental on data lakes and I see Snowflake as more transformative, so at least from a vision standpoint, we'll see if they can execute on that. All right, number seven, let's bring up number seven. This is talking about the cloud, hybrid cloud, multi-cloud. The battle to define hybrid and multi-cloud is going to escalate in 2021. It's already started and it's going to create bifurcated CIO strategies. And, Erik, spending data clearly shows that cloud is continuing its steady margin share gains relative to on-prem, but the definitions of the cloud, they're shifting. Just a couple of years ago, AWS, they never talk about hybrid, just like they don't talk about multi-cloud today, yet AWS continues now to push into on-prem. They treat on-prem as just another node at the edge and they continue to win in the marketplace despite their slower growth rates. Still, they're so large now. 45 billion or so this year. The data is mixed. This ETR data shows that just under 50% of buyers are consolidating workloads, and then a similar, in the cloud workloads, and a similar percentage of customers are spreading evenly across clouds, so really interesting dynamic there. Erik, how do you see it shaking out? >> Yeah, the data is interesting here, and I would actually state that overall spend on the cloud is actually flat from last year, so we're not seeing a huge increase in spend, and coupled with that, we're seeing that the overall market share, which means the amount of responses within our survey, is increasing, certainly increasing. So cloud usage is increasing, but it's happening over an even spectrum. There's no clear winner of that market share increase. So they really, according to our data, the multi-cloud approach is happening and not one particular winner over another. That's just from the data perspective that various do point on AWS. Let's be honest, when they first started, they wanted all the data. They just want to take it from on-prem, put it in their data center. They wanted all of it. They never were interested in actually having interoperability. Then you look at an approach like Google. Google was always about the technology, but not necessarily about the enterprise customer. They come out with Anthos which is allowing you to have interoperability in more cloud. They're not nearly as big, but their growth rate is much higher. Law of numbers, of course. But it really is interesting to see how these cloud players are going to approach this because multi-cloud is happening whether they like it or not. >> Well, I'm glad you brought up multi-cloud in a context of what the data's showing 'cause I would agree we're, and particularly two areas that I would call out in ETR data, VMware Cloud on AWS as well as VM Cloud Foundation are showing real momentum and also OpenStack from Red Hat is showing real progress here and they're making moves. They're putting great solutions inside of AWS, doing some stuff on bare metal, and it's interesting to see. VMware, basically it's the VMware stack. They want to put that everywhere. Whereas Red Hat, similarly, but Red Hat has the developer angle. They're trying to infuse Red Hat in throughout everybody's stack, and so I think Red Hat is going to be really interesting to, especially to the extent that IBM keeps them, sort of lets them do their own thing and doesn't kind of pollute them. So, so far so good there. >> Yeah, I agree with that. I think you brought up the good point about it being developer-friendly. It's a real option as people start kicking a little bit more of new, different developer ways and containers are growing, growing more. They're not testing anymore, but they're real workloads. It is a stack that you could really use. Now, what I would say to caveat that though is I'm not seeing any net new business go to IBM Red Hat. If you were already aligned with that, then yes, you got to love these new tools they're giving you to play with, but I don't see anyone moving to them that wasn't already net new there and I would say the same thing with VMware. Listen, they have a great entrenched base. The longer they can kick that can down the road, that's fantastic, but I don't see net new customers coming onto VMware because of their alignment with AWS. >> Great, thank you for that. That's a good nuance. Number eight, cloud, containers, AI and ML and automation are going to lead 2021 spending velocity, so really is those are the kind of the big four, cloud, containers, AI, automation, And, Erik, this next one's a bit nuanced and it supports our first prediction of a rebound in tech spending next year. We're seeing cloud, containers, AI and automation, in the form of RPA especially, as the areas with the highest net scores or spending momentum, but we put an asterisk around the cloud because you can see in this inserted graphic, which again is preliminary 'cause the survey's still out in the field and it's just a little tidbit here, but cloud is not only above that 40% line of net score, but it has one of the higher sector market shares. Now, as you said, earlier you made a comment that you're not necessarily seeing the kind of growth that you saw before, but it's from a very, very large base. Virtually every sector in the ETR dataset with the exception of outsourcing and IT consulting is seeing meaningful upward spending momentum, and even those two, we're seeing some positive signs. So again, with what we talked about before, with the freezing of the IT projects starting to thaw, things are looking much, much better for 2021. >> I'd agree with that. I'm going to make two quick comments on that, one on the machine learning automation. Without a doubt, that's where we're seeing a lot of the increase right now, and I've had a multiple number of people reach out or in my interviews say to me, "This is very simple. These projects were slated to happen in 2020 and they got paused. It's as simple as that. The business needs to have more machine learning, big data analytics, and it needs to have more automation. This has just been paused and now it's coming back and it's coming back rapidly." Another comment, I'm actually going to post an article on LinkedIn as soon as we're done here. I did an interview with the lead technology director, automation director from Disney, and this guy obviously has a big budget and he was basically saying UiPath and Automation Anywhere dominate RPA, and that on top of it, the COVID crisis greatly accelerated automation, greatly accelerated it because it had to happen, we needed to find a way to get rid of these mundane tasks, we had to put them into real workloads. And another aspect you don't think about, a lot of times with automation, there's people, employees that really have friction. They don't want to adopt it. That went away. So COVID really pushed automation, so we're going to see that happening in machine learning and automation without a doubt. And now for a fun prediction real quick. You brought up the IT outsourcing and consulting. This might be a little bit more out there, the dark horse, but based on our data and what we're seeing and the COVID information about, you said about new projects being unwrapped, new hiring happening, we really do believe that this might be the bottom on IT outsourcing and consulting. >> Great, thank you for that, and then that brings us to number nine here. The automation mandate is accelerating and it will continue to accelerate in 2021. Now, you may say, "Okay, well, this is a lay-up," but not necessarily. UiPath and Automation Anywhere go public and Microsoft remains a threat. Look, UiPath, I've said UiPath and Automation Anywhere, if they were ready to go public, they probably would have already this year, so I think they're still trying to get their proverbial act together, so this is not necessarily a lay-up for them from an operational standpoint. They probably got some things to still clean up, but I think they're going to really try to go for it. If the markets stay positive and tech spending continues to go forward, I think we can see that. And I would say this, automation is going mainstream. The benefits of taking simple RPA tools to automate mundane tasks with software bots, it's both awakened organizations to the possibilities of automation, and combined with COVID, it's caused them to get serious about automation. And we think 2021, we're going to see organizations go beyond implementing point tools, they're going to use the pandemic to restructure their entire business. Erik, how do you see it, and what are the big players like Microsoft that have entered the market? What kind of impact do you see them having? >> Yeah, completely agree with you. This is a year where we go from small workloads into real deployment, and those two are the leader. In our data, UiPath by far the clear leader. We are seeing a lot of adoptions on Automation Anywhere, so they're getting some market sentiment. People are realizing, starting to actually adopt them. And by far, the number one is Microsoft Power Automate. Now, again, we have to be careful because we know Microsoft is entrenched everywhere. We know that they are good at bundling, so if I'm in charge of automation for my enterprise and I'm already a Microsoft customer, I'm going to use it. That doesn't mean it's the best tool to use for the right job. From what I've heard from people, each of these have a certain area where they are better. Some can get more in depth and do heavier lifting. Some are better at doing a lot of projects at once but not in depth, so we're going to see this play out. Right now, according to our data, UiPath is still number one, Automation Anywhere is number two, and Microsoft just by default of being entrenched in all of these enterprises has a lot of market share or mind share. >> And I also want to do a shout out to, or a call out, not really a shout out, but a call out to Pegasystems. We put them in the RPA category. They're covered in the ETR taxonomy. I don't consider them an RPA vendor. They're a business process vendor. They've been around for a long, long time. They've had a great year, done very, very well. The stock has done well. Their spending momentum, the early signs in the latest survey are just becoming, starting to moderate a little bit, but I like what they've done. They're not trying to take UiPath and Automation Anywhere head-on, and so I think there's some possibilities there. You've also got IBM who went to the market, SAP, Infor, and everybody's going to hop on the bandwagon here who's a software player. >> I completely agree, but I do think there's a very strong line in the sand between RPA and business process. I don't know if they're going to be able to make that transition. Now, business process also tends to be extremely costly. RPA came into this with trying to be, prove their ROI, trying to say, "Yeah, we're going to cost a little bit of money, but we're going to make it back." Business process has always been, at least the legacies, the ones you're mentioning, the Pega, the IBMs, really expensive. So again, I'm going to allude to that article I'm about to post. This particular person who's a lead tech automation for a very large company said, "Not only are UiPath and AA dominating RPA, but they're likely going to evolve to take over the business process space as well." So if they are proving what they can do, he's saying there's no real reason they can't turn around and take what Appian's doing, what IBM's doing and what Pega's doing. That's just one man's opinion. Our data is not actually tracking it in that space, so we can't back that, but I did think it was an interesting comment for and an interesting opportunity for UiPath and Automation Anywhere. >> Yeah, it's always great to hear directly from the mouths of the practitioners. All right, brings us to number 10 here. 5G rollouts are going to push new edge IoT workloads and necessitate new system architectures. AI and real-time inferencing, we think, require new thinking, particularly around processor and system design, and the focus is increasingly going to be on efficiency and at much, much lower costs versus what we've known for decades as general purpose workloads accommodating a lot of different use cases. You're seeing alternative processors like Nvidia, certainly the ARM acquisition. You've got companies hitting the market like Fungible with DPAs, and they're dominating these new workloads in the coming decade, we think, and they continue to demonstrate superior price performance metrics. And over the next five years they're going to find their way, we think, into mainstream enterprise workloads and put continued pressure on Intel general purpose microprocessors. Erik, look, we've seen cloud players. They're diversifying their processor suppliers. They're developing their own in-house silicon. This is a multi-year trend that's going to show meaningful progress next year, certainly if you measure it in terms of innovations, announcements and new use cases and funding and M&A activity. Your thoughts? >> Yeah, there's a lot there and I think you're right. It's a big trend that's going to have a wide implication, but right now, it's there's no doubt that the supply and demand is out of whack. You and I might be the only people around who still remember the great chip famine in 1999, but it seems to be happening again and some of that is due to just overwhelming demand, like you mentioned. Things like IoT. Things like 5G. Just the increased power of handheld devices. The remote from work home. All of this is creating a perfect storm, but it also has to do with some of the chip makers themselves kind of misfired, and you probably know the space better than me, so I'll leave you for that on that one. But I also want to talk a little bit, just another aspect of this 5G rollout, in my opinion, is we have to get closer to the edge, we have to get closer to the end consumer, and I do believe the CDN players have an area to play in this. And maybe we can leave that as there and we could do this some other time, but I do believe the CDN players are no longer about content delivery and they're really about edge compute. So as we see IoT and 5G roll out, it's going to have huge implications on the chip supply. No doubt. It's also could have really huge implications for the CDN network. >> All right, there you have it, folks. Erik, it's great working with you. It's been awesome this year. I hope we can do more in 2021. Really been a pleasure. >> Always. Have a great holiday, everybody. Stay safe. >> Yeah, you too. Okay, so look, that's our prediction for 2021 and the coming decade. Remember, all these episodes are available as podcasts. All you got to do is search Breaking Analysis podcast. You'll find it. We publish each week on wikibon.com and siliconangle.com, and you got to check out etr.plus. It's where all the survey action is. Definitely subscribe to their services if you haven't already. You can DM me @dvellante or email me at david.vellante@siliconangle.com. This is Dave Vellante for Erik Bradley for theCUBE Insights powered by ETR. Thanks for watching, everyone. Be well and we'll see you next time. (relaxing music)

(funk music) (funk music) (funk music) (funk music) >> Hello and welcome to theCUBE studios in Palo Alto, California for another CUBE conversation where we go in-depth with thought leaders driving innovation across the tech industry. I'm your host, Peter Burris. Every enterprise is responding to the opportunities of cloud with significant changes in people, process, how they think about technology, how they're going to align technology overall with their business and with their business strategies. Now those changes are affecting virtually every aspect of business but especially every aspect of technology. Especially security. So what does it mean to envision a world in which significant new classes of services are being provided through cloud mechanisms and modes, but you retain and in fact, even enhance the quality of security that your enterprise can utilize. To have that conversation, we're joined today by a great guest, Amit Sinha is president and CTO at Zscaler. Amit, welcome back to theCUBE. >> Thank you Peter, it's a pleasure to be here. >> So before we get into it, what's new at Zscaler? >> Well, at Zscaler our mission is to make the internet and cloud a secure place for businesses and as I engage with our global 2000 customers and prospects, they are going through some of the digital transformation challenges that you just alluded to. Specifically for security, what is happening is that they had a lot of applications that were sitting in a data center or in their headquarters and that center of gravity is now moving to the cloud. They probably adopt their Office 365, and Box, and Salesforce, and these applications have moved out. Now in addition, the users are everywhere. They're accessing those services, not just from offices but also from their mobile devices and home. So if your users have left the building, and your applications are no longer sitting in your data center, that begs that question: Where should the security stack be? You know, it cannot be your legacy security appliances that sat in your DMZ and your IT closets. So that's the challenge that we see out there, and Zscaler is helping these large global organizations transform their security and network for a more mobile and a cloud-first world. >> Distributed world? So let me make sure I got this right. So basically, cause I think I totally agree with you >> Right. >> Just to test it, that many regarded the cloud as a centralization strategy. >> Correct. >> What we really see happening, is we're seeing enterprises more distribute their data, more distribute their processing, but they have not updated how they think about security so the presumption is, "yeah we're going to put more processing data out closer to the action but we're going to backhaul a whole bunch back to our security model," and what I hear you saying is no, you need to push those security services out to where the data is, out to where the process, out to where the user is. Have I got that right? >> You have nailed it, right. Think of it this way, if I'm a large global 2000 organization, I might have thousands of branches. All of those branches, traditionally, have used a hub-and-spoke network model. I might have a branch here in Palo Alto but my headquarters is in New York. So now I have an MPLS circuit connecting this branch to New York. If my Exchange server and applications and SAP systems are all there, then that hub-and-spoke model made sense. I am in this office >> Right. >> I connect to those applications and all my security stack is also there. But fast forward to today, all of those applications are moving and they're not just in one cloud. You know, you might have adopted Salesforce.com for CRM, you might have adopted Workday, you might have adopted Office 365. So these are SaaS services. Now if I'm sitting here in Palo Alto, and if I have to access my email, it makes absolutely no sense for me to VPN back to New York only to exit to the internet right there. What users want is a fast, nimble user experience without security coming in the way. What organizations want is no compromise in their security stack. So what you really need is a security stack that follows the user wherever they are. >> And the data. >> And the data, so my data...you know Microsoft has a front-door service here in Redwood City and if if you are a user here and trying to access that, I should be able to go straight with my entire security stack right next to it. That's what Gartner is calling SASE these days. >> Well, let's get into that in a second. It almost sounds as though what you're suggesting is that the enterprise needs to look at security as a SaaS service itself. >> 100 percent. If your users are everywhere and if your applications are in the cloud, your security better be delivered as a consistent "as-a-service," right next to where the users are and hopefully co-located in the same data center as where the applications are present so the only way to have a pervasive security model is to have it delivered in the cloud, which is what Zscaler has been doing from day one. >> Now, a little spoiler alert for everybody, Zscaler's been talking about this for 10-plus years. >> Right. >> So where are we today in the market place starting to recognize and acknowledge this transformation in the basic security architecture and platform that we're going through? >> I'm very excited to see that the market is really adopting what Zscaler has been talking about for over a decade. In fact, recently, Gartner released a paper titled "SASE," it stands for Secure Access Service Edge and there are, I believe, four principal tenets of SASE. The first one, of course, is that compute and security services have to be right at the edge. And we talked about that. It makes sense. >> For where the service is being delivered. >> You can't backhaul traffic to your data center or you can't backhaul traffic to Google's central data center somewhere. You need to have compute capabilities with things like SSL Interception and all the security services running right at the edge, connecting users to applications in the shortest path, right? So that's sort of principle number one of SASE. The second principle that Gartner talks about, which again you know, has been fundamental to Zscaler's DNA, is to keep your devices and your branch offices light. Don't shove too much complexity from a security perspective on the user devices and your branches. Keep it simple. >> Or the people running those user devices >> Absolutely >> in the branches >> Yeah, so you know, keep your branch offices like a light router, that forwards traffic to the cloud, where the heavy-lifting is done. >> Right. >> The third principle they talk about is to deliver modern security, you need to have a proxy-based architecture and essentially what a proxy architecture allows you to do is to look at content, right? Gone are the days where you could just say, stop a website called "evil.com" and allow a website "good.com," right? It's not like that anymore. You have to look at content, you know. You might get malware from a Google Drive link. You can't block Google now, right? So looking at SSL-encrypted content is needed and firewalls just can't do it. You have to have a proxy architecture that can decrypt SSL connections, look at content, provide malware services, provide policy-based access control services, et cetera and that's kind of the third principle. And finally what Gartner talks about is SASE has to be cloud-native, it has to be, sort of, born and bred in the cloud, a true multitenant, cloud-first architecture. You can't take, sort of, legacy security appliances and shove it in third-party infrastructure like AWS and GCP and deliver a cloud service and the example I use often is, just because you had a great blu-ray player or a DVD player in your home theater, you can't take 100,000 of these and shove it into AWS and become a Netflix. You really need to build that service from the ground up. You know, in a multitenant fashion and that's what we have done for security as a service through the cloud. >> So we are now, the market seems to be kind of converging on some of the principles that Zscaler's been talking about for quite some time. >> Right. >> When we think about 2020, how do you anticipate enterprises are going to respond as a consequence of this convergence in acknowledging that the value proposition and the need are starting to come together? >> Absolutely, I think we see the momentum picking up in the market, we have lots of conversations with CIO's who are going through this digital transformation journey, you know transformation is hard. There's immune response in big organizations >> Sure. >> To change. Not much has changed from a security and network architecture perspective in the last two decades. But we're seeing more and more of that. In fact, over 400 of global 2000 organizations are 100 percent deployed on Zscaler. And so that momentum is picking up and we see a lot of traction with other prospects who are beginning to see the light, as we say it. >> Well as you start to imagine the relationship between security and data, between security and data, one of the things that I find interesting is many respects to cloud, especially as it becomes more distributed, is becoming better acknowledged almost as a network of services. >> Right. >> As opposed to AWS as a data center here and that makes it a cloud data center. >> Right. >> It really is this network of services, which can happen from a lot of different places, big cloud service providers, your own enterprise, partners providing services to you. How does the relationship between Zscaler and kind of an openness >> Hm-mm. >> Going to come together? Hm-mm. >> So that you can provide services from a foreign enterprise to the enterprise's partners, customers, and others that the enterprise needs to work with. >> That's a great question, Peter and I think one of the most important things I tell our customers and prospects is that if you look at a cloud-delivered security architecture, it better embrace some of the SASE principles. One of the first things we did when we built the Zscaler platform was to distribute it across 150 data centers. And why did we do that? We did that because when a user is going to destinations, they need to be able to access any destination. The destination could be on Azure, could be on AWS, could be Salesforce, so by definition, it has to be carrier-neutral, it has to be cloud-neutral. I can't build a service that is designed for all internet traffic in a GCP or AWS, right. So how did we do that? We went and looked at one of the world's best co-location facilities that provide maximum connectivity options in any given region. So in North America, we might be in an Equinix facility and we might use tier one ISPs like GTT and Zayo that provide excellent connectivity to our customers and the destinations they want to visit. When you go to China, there's no GCP there, right so we work with China Unicom and China Telecom. When we are in India, we might work with an Airtel or a Sify, when we are in Australia, we might be working with Telstra. So we work with, you know, world class tier one ISPs in best data centers that provide maximum connectivity options. We invested heavily in internet exchange connectivity. Why? Because once you come to Zscaler, you've solved the physics problem by building the data center close to you, the next thing is, you want quickly go to your application. You don't want security to be in the way >> Right. >> Of application access. So with internet exchange connectivity, we are peered in a settlement-free way or BGP with Microsoft, with Akamai, with Apple, with Yahoo, right. So we can quickly get you to the content while delivering the full security stack, right? So we had to really take no shortcuts, back to your point of the world is very diverse and you cannot operate in a walled garden of one provider anymore and if you really build a cloud platform that is embracing some of the SASE principles we talked about, you have to do it the hard way. By building this one data center at a time. >> Well, you don't want your servicers to fall down because you didn't put the partnerships in place >and hardend them Correct. >> As much as you've hardened some of the other traffic. So as we think about kind of, where this goes, what do you envision Zscaler's, kind of big customer story is going to be in 2020 and beyond? Obviously, the service is going to be everywhere, change the way you think about security, but how, for example, is the relationship between the definition of the edge and the definition of the secure service going to co-evolve? Are people going to think about the edge differently as they start to think more in terms of a secure edge or where the data resides and the secure data, what do you think? >> Let's start off with five years and go back, right? >> We're going forward. >> Work our way back. Well, five years from now, hopefully everyone is on a 5G phone, you know, with blazing-fast internet connections, on devices that you love, your applications are everywhere, so now think of it from an IT perspective. You know, my span of control is becoming thinner and thinner, right? my users are on devices that I barely control. My network is the internet that I really don't control. My applications have moved to the cloud or either hosted in third-party infrastructure or run as a SaaS application, which I really don't control. Now, in this world, how do I provide security? How do I provide user experience? Imagine if you are the CIO and your job is to make all of this work, where will you start, right? So those are some of the big problems that we are helping our customers with. So this-- >> Let me as you a question 'cause here's where I was going with the question. I would start with, if I can't control all these things, I'm going to apply my notion of security >> Hm-mm. >> And say I am going to control that which is within >> Right. >> my security boundaries, not at a perimeter level, not at a device level, but at a service level. >> Absolutely and that's really the crux of the Zscaler platform service. We build this Zero Trust architecture. Our goal is to allow users to quickly come to Zscaler and Zscaler becomes the policy engine that is securely connecting them to all the cloud services that they want to go to. Now in addition, we also allow the same users to connect to internal applications that might have required a traditional VPN. Now think of it this way, Peter. When you connect to Google today, do you VPN to Google's network? To access Gmail? No. Why should you have to VPN to access an internal application? I mean, you get a link on your mobile phone, you click on it and it didn't work because it required a separate form of network access. So with Zscaler Internet Access and Zscaler Private Access, we are delivering a beautiful service that works across 150 data centers. Users connect to the service and the service becomes a policy engine that is securely connecting you to the destinations that you want. Now, in addition, you asked about what's going to happen in a couple of years. The same service can be extended for partners. I'm a business, I have hundreds of partners who want to connect to me. Why should I allow legacy VPN access or private circuits that expose me? I don't even know who's on the other end of the line, right? They come onto my network and you hear about the Target breaches because some HVAC contract that had unrestricted access, you hear about the Airbus breach because another contract that had access. So how do we build a true Zero Trust cloud platform that is securely allowing users, whether it's your employees, to connect to named applications that they should, or your partners that need access to certain applications, without putting them on the network. We're decoupling application access from network access. And there's one final important linchpin in this whole thing. Remember we talked about how powerless organizations >> Right. >> feel in this distributed model? Now imagine, your job is to also ensure that people are having a good user experience. How will you do that, right? What Zscaler is trying to do now is, we've been very successful in providing the secure and policy-based connectivity and our customers are asking us, hey, you're sitting in between all of this, you have visibility into what's happening on the user's device. Clearly you're sitting in the middle in the cloud and you see what's happening on the left-hand side, what's happening on the right-hand side. You know, you have the cloud effect, you can see there's a problem going on with Microsoft's network in the China region, right? Correlate all of that information and give me proactive intelligence around user experience and that's what we launched recently at Zenith Live. We call it Zscaler Digital Experience, >> Hmm. >> So overall the goal of the platform is to securely connect users and entities to named applications with Zero Trust principles. We never want security and user experience to be orthogonal requirements that has traditionally been the case. And we want to provide great user experience and visibility to our customers who've started adopting this platform. >> That's a great story. It's a great story. So, once again, I want to thank you very much for coming in and that's Amit Sinha, who is the president and CTO at Zscaler, focusing a lot on the R&D types of things that Zscaler's doing. Thanks again for being on theCUBE. >> It's my pleasure, Peter. Always enjoy talking to you. >> And thanks for joining us for another CUBE conversation. I'm Peter Burris, see you next time. (funk music) (funk music)

(upbeat music) >> From Santa Clara, in the heart of Silicon Valley, it's the Cube, covering the Churchills, 2019. Brought to you by Silicon Angle Media. >> Welcome back here Jeff Frick here with the Cube. We're at the Chuchill's, it's the 9th annual award celebration put on by the Churchill club and the theme is all about leadership this year. We're really excited to have a very special guest John W. Thompson, chairman of Microsoft, a partner at Lightspeed Ventures, he's been around a long time. He's known and talks to a lot of leaders. So john, great to have you on. >> Nice to be here, thank you very much for having me. >> So leadership is such an interesting topic right? You go everything from, um, West point and trying to train young men to be leaders in a military situation to a start up that starts as some small company that had some interesting idea that grows to a huge corporate thing that's changing the world. Ya know, what are some of your thoughts as Silicon Valley is going through some hiccups right now and when you look, >> [John W. Thompson] We are? >> Just a couple little ones. >> I did recognize any of those. >> Well maybe not looking at the stock market. I don't know when that thing is coming back down. But you know when you think about leaders, what are somethings people maybe don't think about and really more interestingly how should people grow or what do you look for in a board member when you're talking to some CEO of a hot rising company? >> Well I think leadership is is as much about your personality and the business that use chose to go run is anything else. And the skills and experiences that someone might need to run a, pick a business, a business the size of Microsoft are fundamentally different than what you might need to run Rubrik, which is a company whose board I serve on. But that being said, leadership has some core principles that are critical independent of the size of the company or organization you're on. First of which is, integrity, second of which is focus, third of which is follow through and execution. There is lots of things that fundamental do and do well. And those who don't do well, don't become or stay leaders very long, that's for sure. >> It's interesting to look at Microsoft cause, ya know, three big personalities. Obviously Bill got it started as a young kid, I mean he was literally a kid in college. Um, then you had Steve Ballmer come in, completely different personalities and ya know, interesting for Bill to be willing to give up their reigns and then ya know, some tough times at Microsoft little bit stagnant and then Satya came in and just has supercharged and really driven a huge transformation in a giant big company. What are some of the attributes when you look at those three as leaders and you've worked with them, that make them so successful? >> Well, I think each of them brought something fundamentally different to the table when they were in the leadership role. In the case of Bill, he clearly was a visionary. He defined a point of view about the technology industry. That had he not done that, we wouldn't be where we are in the world today. And so, Bills role was unique. In the case of Steve, the company had hit a significant bump in the road all around the anti-trust activity. And candidly, it's my impression that Bill really didn't want to be involved in that, so he turned to Steve and says tag you're it. And Steve had a very fundamental view about execution. He was very much focus on execute, execute, execute. And if you look at the way the company preformed, its revenue grew from roughly ten, fifteen billion to almost eighty billion dollars during his term as CEO. However, the stock did not perform very well. So people weren't very happy with that. Ironically enough Satya come in, Satya had run the search business, had run the cloud business, had even run the enterprise software business. So he had a very fundamental view about of what he thought the company needed to do. And there were two issues, issues number one was strategy around cloud. And on the day of his announcement, he announced mobile first, cloud first are the strategies of Microsoft. And then he quickly, quickly made it clear that the number two issue, for the company, was about its culture. And while I am unbelievably fascinated by how much progress we've made on the product front, I'm even more encouraged by what has happened on the, candidly, on the cultural front. >> Right. So on the cultural front that is, are you a harder thing to impact especially on a large global company with hundreds of thousands of employees distributed all over the world, so what are the secrets that change culture like that? >> Its fundamental, it's about openness and honesty and candor. Um, one of the things that happens here in the valley, often for some companies is when they do their quarterly or monthly employee all hands meetings, guess what? They screen and filter all of the questions. Well, we don't do that at Microsoft office. Satya does not do that. He wants to be open and honest and candid with his employees with what's going on. My gosh! That's what real leaders do. And so I think what he has done is nothing that is unique, it's just consistent. He has been very very consistent and predictable in his execution of what openness, listening rather than talking, all of the things that good leaders are able to do. >> Right, its funny the one word you haven't said since we have been sitting here, you keep saying execution of focus, which I love focus execute and delight the customer. You haven't said strategy one single time. you said vision, but not strategy. Its interesting because I think a lot of people don't put enough emphasis on, its just work, you just got to execute. >> Its one thing to have a strategy, but if you can't execute the strategy, of what value is it? So I have always had a view in my roles as leader that it's about focus and executing. Yes, you have to come up with a vision and yes you have to create ideas that employees, and partners, and customers can become excited about. But ultimately it's about execution day in and day out. 368 days of the years, not 365. >> Alright, final question I know you've got a busy night. As you look as some leaders that you look up to, maybe not of this generation that you've been working with, but maybe of a past generation, who are some of the folks that you look to for your inspiration on the leadership side? >> Well, I would have to say the first one was the former vice chairman of IBM, who I was the chief of staff to many many many years ago. His name was Paul Rizzo. Paul was probably one of the most influential people in the company during that period of time, but you'd never know it. He had a level of humility about himself. He had a level of openness and candor in his interaction with employees at all levels up and down the line. And a company of IBM's size back in those days, it was two, three hundred thousand people big. And so he would be the first leader that comes to my mind as someone who was impactful on me. Another one would have been, a guy who created Akamai. He's on the board of Oracle and he's an awesome awesome friend of mine. He was the guy that ran the America's and gave me my first really really big job. And the fact that he was willing to give a guy like me a job like that, was a pretty important move. George Conrades is his name by the way. And so those two people were very very influential as leaders. As I would look at them and try to determine whether or not can I, can I pattern myself after that? Or are there things that they do and say and execute that I should consider as I think about my evolving leadership. >> Right so important to have people that you can look up to, learn from, and to take care of ya and help you along the way. >> [John W. Thompson] I agree >> John, thanks for spending some time it's always great to sit down with you >> Nice to see you as well. >> And continue success. We'll hopefully see you next time not to long from now. >> Lets hope not. >> Alright, he's John W. Thompson and I'm Jeff Frick. You're watching the Cube, were at the Churchill's in Santa Clara California. Thanks for watching we'll see you next time. (upbeat music)

(light music) >> Hi, I'm Stu Miniman and this is a special CUBE Conversation here in SiliconANGLE Media's, Palo Alto Studio. Happy to bring back to the program Haseeb Budhani who, last time I talked to Haseeb, Haseeb worked at a number of interesting startups, been a Chief Product Officer, had many various roles, and today, is a founder and CEO. So, we always love to have back CUBE alums, especially doing interesting things, getting out there with that entrepreneurial spirit, so, Haseeb, great to see you. Thanks so much for joining us. >> Great to see you and the first time you and I met, the stage was not as nice as this. That was many, many, many years ago. >> You know, we've been growing up a bit, just like the ecosystems around us. You and I talked about things like replication, changing with data and storage and everything else in various roles so, Rafay Systems, tell us a little bit. What was the inspiration? Tell us a little bit about the founding team, the why the company first. >> Sure. As you know, right before Rafay Systems, I started a company called Soha. Soha was acquired by Akamai 18 odd months ago. I think we all, we learn by failing. There was one specific thing we did very poorly at Soha, which was how we ran operations, how we thought about getting closer to our users and so on, that once we left Akamai, so my co-founder from Soha and I are doing this company again together, he was our VP of Attorney there, he's our VP of Attorney here. When we left Akamai after our stint there, we spent time thinking about what kind of applications have, when you kind of think in terms of an application stack, some microservices in an application stack are always going to need to be as close to the end point as possible. So we were trying to figure out who has that problem and how do they solve it. So, here's what we found. Many, many applications have this problem, nobody knows how to solve it well. I mean, if you think Siri, there's an edge that Apple is running for that. If you think eBay, there's transactions happening in region and so on. Or when you think IoT, there are edges being created in the IoT world, and we wanted to come up with a framework or a platform to solve these problems well for all these different application developers. So we came up with the concept that we call the Programmable Edge. The idea is that we want to help our customers run certain microservices, the ones that are latency sensitive, as close to their end points as possible. And an end point could be a car, it could be a phone, it could be a sensor, doesn't matter what it is, but we want to help them get their applications out as quickly as possible. >> Yeah. Before we get into some of the technology, Rafay Systems, Soha Systems, where did the names for these come from? >> Soha is my daughter's name. Rafay is my son's name. We have two kids. I don't know what I'm going to do after this. I need a job. I don't know what I'm going to do after this company. But, actually, our VP Marketing at Soha, he was the one who wanted to use his name. So when we started the previous company, I called it Bubble Wrap, because I thought we were wrapping apps in a bubble, I thought that was really cool. Everybody hated it. (laughs) >> Yeah, there are too many puns on popping the bubble or things like that, it would be challenging. >> I thought it was, I still think it's awesome, but nobody liked it. So, he was looking for a name and we had hired a new agency, they were ready to roll out a new website, we didn't have a name. So, in, like, a four hour window, we had to come up with something. He says, "That's a short enough name "and looks like you own the domain anyway, "let's just use that." Of course, my kids love it. Then once we started the second company, it had to be named after my son. >> Your daughter wasn't a little upset that you sold off the company and now have nothing to do with it? >> It was a pretty healthy outcome so I think she's fine. (both laughing) >> Excellent. Talking about microservices applications around the globe. I was at the Adobe Summit recently and, you're right, it's a very different conversation than, say, ZDNs in the past. But it's, "How many instances do I have? "How do I manage that? "What's their concern?" Networking's always been one of those underlying challenges. Think back to the failed XSPs in the 90s, (Haseeb laughs) and when Cloud started 10 plus years ago, it was like, "Oh, are we going to be able to handle that today?" Think back to Citrix and their NetScaler product is one of those secret sauce things in there that those of us in the networking space really understand it but most people, "Oh, SAS is going to be great "and things will just work anywhere on any device anywhere." But there's some real challenges there. >> Haseeb: Absolutely. >> What's that big gap in the market and are there other companies that are trying to help solve this? >> I used to work in NetScaler a long time ago. I don't know if you brought it up because of that, but I think it's an incredibly amazing product that became the foundation of many things. I think two things are happening in our industry that allow companies like ours to exist, at least from an applications perspective. One is containers, the fact that we are now able to package things not as big, fat VMs, but smaller, essentially, process level things. And then microservices, the fact that we have this notion of loose coupling between services and you can have certain APIs that expose things to each other. And if you at least thematically think about it, if there's a loose coupling it can extend them out so long as I get more value out of doing so. And that, fundamentally, is what we think is an interesting thing happening out there. The fact that there are loose couplings, the fact that applications are no longer monolithic allows us to make better decisions about what needs to run where. The challenge is how do you make that happen? The example I always share with people is, let's say, let's imagine for a second that you have access to 100,000 regions all around the world. You have edges everywhere, 100,000 locations where you can run your code. What do you do next? How do you decide which ones you need? Do you need 5,000? Do you need 80,000? That needs to be solved by the platform. We are at a point now, particularly when it comes to locations, that these are no longer decisions that an Ops Team can make. That has to be driven by the platform and the platform that we are envisioning is going to help our customers, basically, in terms of where the code goes, how they think about performance, et cetera. These are things that will be expressed as a policy to our platform and we help them determine where the location should be and so on. >> Alright. Haseeb, I think many of us lost too many hours fighting in the industry of, what was cloud, What wasn't cloud, various definitions, those ontological discussions, academically they make sense. Heck, when I talk to customers today it's not like, "Well, I'm figuring out my public cloud strategy," or this and that. They have a cloud strategy because there's various pieces in there to connect. Edge is one of those. I haven't heard that people don't like the term, but if I'll talk to seven different companies, Edge means a very different thing to all of them. You and I reconnected actually when we'd both written similar articles that said, "Well, Edge does not kill the public cloud." Peter Levine wrote a very interesting piece with that eye-catching title that was like, "Well, Edge is going to have trillions of devices "and there'll be more data at the Edge than anywhere else." And it's like, okay, yes, yes, yes, but that does not mean that public cloud evaporates tomorrow, right? Nice try, Amazon, good luck on your next business. (laughs) Maybe give us a little bit your definition of Edge, but, more importantly, who are the type of customers that you're talking to and what is the opportunity and challenges of that Edge environment? >> Sure. So let's talk about what Edge means. I think we both agree that the word edge is a misnomer and depends. There are many kinds of edges, if you will. A car for a Tesla, that's an edge, right? Because they are running compute jobs on the car. I use the phrase device edge to describe that thing, the car is a device edge. You're also going to have the car talking to things out there somewhere. If two cars are interacting with each other, you don't want that interaction or the rendezvous point for that interaction being very, very far away, you want to be somewhere close by. I call that the infrastructure edge. Now, infrastructure edge, since you asked, I'm going to go down that rabbit hole, you could be running at the edge of the internet. So think Equanex or Digital or anybody who's got massive pairing presence and so on. So that's the internet edge, as far as infrastructure is concerned. But if you talk to an AT&T, because you said depending on who you talk to their idea is different, in AT&T's mind or Verizon's mind, maybe the base station is the edge, so I call that the wireless edge. Again, infrastructure. So, at a very high level, there is the device edge, there is the infrastructure edge, and then there's a cloud. Applications will span all of these things. It's not one or the other, that doesn't make any sense. Any application will have workloads that are best run in Amazon or, of course, now I think we use Amazon like TiVo, Amazon means public cloud. >> Stu: Like Kleenex. (laughs) >> Like Kleenex. >> Exactly. >> Some things will run in the core, and some things will run in the middle, and then some things will run at the edge. Now in this kind of discussion, I didn't describe another kind of edge which is the IoT edge. Within a factory, or some gas location or some oil and gas facility out there where maybe you don't even have good connectivity back to the internet. They're going to probably have an edge on prem at the factory edge. That too is a necessity. So you have lots of data being generated, they're going to put it in that location. So we should maybe stop thinking in terms of an edge, it just depending on the application that you're targeting, that application's sub-components may need to run in different places, but that makes it so much harder. We couldn't even figure out how to run things in a single region in Amazon, or two, people still have trouble running across availability zones in Amazon. Now we're saying, "Hey, you're going to have four edges, "or five edges, and you're going to have 100 locations," how is this going to work? And that is the challenge. That's, of course, the opportunity as well, because there are applications out there, I talked about the car use case, which seems to be a real use case for many car companies, particularly the ones who are going autonomous with their fleets. They have this challenge. Lots of data being generated and they need to process it as quickly as possible because there's lots of noise on the wire. This data problem, data is gravity, you want to, instead of moving data to a location where there is compute, you want to move compute as close to the data as possible. That's the trend I look for when we're looking for customers. Who has lots of data/traffic being generated at the edge? That could be a sensor company, probably do a number of IoT companies that are pushing data up and it turns out that it's a lot of data or they have compliance challenges, they're going to have PAI come out of a region. So these are some of the use cases we were looking at. These use cases are new use cases, even in older applications, there are needs that can be fulfilled with an edge. Here's an example I tend to use to describe the problem, not that this is a use case. When I talk to OVC and I'm trying to explain to them why an edge matters, at least thematically, I ask the question; if you go to an e-commerce site, how much time do you spend buying versus browsing? What is your answer? >> The buying is a very small piece of it. >> Yeah. >> But it's the most important part. >> 99% of the time is spent looking at read-only stuff. Why do we need to go back to the core if you're not buying? What if the inventory could be pushed to the edge and you can just interact and look at the inventory, and when you make a purchase decision that goes to the core? That's what's possible with the edge. In fact, I believe that some number of years down the line, that's how all applications are going to behave. The things that are read-only, state management, state validation, cookie validation for example, for authentication, these are things that are going to happen at the edge of the internet or wherever the edge happens to be, and then actual purchase decisions or state change decisions will happen in the core. >> Alright. Haseeb, explain to us where in the stack your solution fits. You mentioned everything from the hyper-scale clouds to Equanex out to devices in cars and the like, so where is your layer? Where is your secret sauce? >> So we expect to sit at the internet edge, once the wireless edge is a real thing 5G becomes out there, we expect to sit somewhere there, somewhere between the internet edge. We are, the way we think about this is there are aggregation points, on the internet, in the network, where you have need to put compute so you can make aggregate decisions across multiple devices. That's where we are building our company. In terms of the stack, we are essentially helping our customers run their compute. Think of us as a platform where customers can bring their code, if you will. Because at the end of the day it's computing. Yes, it's about traffic and data but you still need to run compute somewhere, so we are helping our customers run that compute at the internet edge or the wireless edge. >> Okay. Are your customers some of the Telcos, MSPs cloud providers and the enterprise or how does that relationship work? >> The ideal customers for us are SAS companies who are running applications on the internet that generate money. They care about performance. And they will pay money if we can cut their performance by whatever factor it happens to be. Providers, service providers, in our mind, are partners for us. So we're engaged actually with a number of providers out there who are trying to figure out how to, basically, monetize their existing infrastructure investments better. And edge is a new concept that has been introduced to them and they, as you know, a lot of providers already have edge strategies and we're trying to getting involved with them to see how we can bring more SAS companies to engage with service providers. Which is a really hard thing today. >> It sounds like you solve problem for some Fortune 1,000 customers too, though? >> Yes. >> So do they get involved also? >> Yes, look, the best way to build a startup is you come up with a thesis and very quickly go find four or five people who absolutely believe in the same thing, and they work with you. So, we've been fortunate enough to find a few folks who say, "Look, this is a problem we've been thinking "about for a while, "let's partner together to build a better solution." That's been going really well. >> Great. So, the company itself, I believe you just launched a few months ago, so. >> Haseeb: We started a few months ago. >> Where is the product? What's the state of the funding? >> How many people do you have? >> Sure. >> How many customers? >> We raised a seed round in November. Seed rounds have gotten larger as well these days. They're like the ACE from 10 years ago. We are at a point now where we are demonstrating our platform to our early customers and by early summer we expect to have people on the platform. So, things are moving fast, but I think this problem is becoming more and more clear to many people. Sometimes people don't call it edge computing, people have all kinds of phrases for it, but when it comes to helping customers get better performance out of their existing stacks, that is a very promising concept to many people running applications on the internet. So we are approaching it from that perspective. Edge happens to be the way we solve the problem, so I guess we're an edge computing company, but end of the day we're trying to make applications run faster on the internet. >> Okay. Last thing, give us a viewpoint the next year or two out, what do you expect to see in this space and how should we be measuring success for your firm? >> Sure. Things always take longer than we think they will. I never want to forget that lesson I learned many years ago. I think, look, it's still early days for edge computing. I think a lot of companies who have been bruised by the problem, in that they've tried to build up pops, or tried to get their logic as close to their end points as possible, are going to be adopting it sooner than others. I think in terms of broader option where any developers tZero thinking of core plus edge, that's a five year out thing, and we should, I mean, that's just out there somewhere. But there's enough companies out there, there's enough new use cases out there in the next couple of years that allow company like ours to exist. In fact, I am quite confident that there are probably five other smart people, smarter than me doing this already. This is a real problem, it needs to be solved. >> Alright, well, Haseeb Budhani, it's great to catch up. Thank you so much for helping us interact with our community, understand where these emerging trends in Edge and everything that happens. Distributed architecture is absolutely our biggest challenges of our time, and I look forward to seeing where you and your customers go in the future. >> Absolutely. Thank you so much, Stu. Appreciate your time. >> Alright. And thank you for joining us. Of course, check out theCUBE.net for all of the videos. Check out wikibon.com where it is absolutely digging in deep to how edge is impacting architectures. Peter Burris, David Floyer and the team digging in deep to understand that more and always love your feedback so feel free to give us any comments back. I'm Stu Miniman and thank you for watching theCUBE. (light music)