(upbeat music) >> Welcome back to theCUBE. We're covering Red Hat Summit 2022. We're going to wrap up now, Dave Vellante, Paul Gillin. We want to introduce you to Stephanie Chan, who's our new correspondent. Stephanie, one of your first events, your very first CUBE event. So welcome. >> Thank you. >> Up from NYC. Smaller event, but intimate. You got a chance to meet some folks last night at some of the after parties. What are your overall impressions? What'd you learn this week? >> So this has been my first in-person event in over two years. And even though, like you said, is on the smaller scale, roughly around 1000 attendees, versus it's usual eight to 10,000 attendees. There's so much energy, and excitement, and openness in these events and sessions. Even before and after the sessions people have been mingling and socializing and hanging out. So, I think a lot of people appreciate these in-person events and are really excited to be here. >> Cool. So, you also sat in some of the keynotes, right? Pretty technical, right? Which is kind of new to sort of your genre, right? I mean, I know you got a financial background but, so what'd you think of the keynotes? What'd you think of the format, the theater in the round? Any impressions of that? >> So, I think there's three things that are really consistent in these Red Hat Summit keynotes. There's always a history lesson. There's always, you know, emphasis in the culture of openness. And, there's also inspirational stories about how people utilize open source. And I found a lot of those examples really compelling and interesting. For instance, people use open source in (indistinct), and even in space. So I really enjoyed, you know, learning about all these different people and stories. What about you guys? What do you think were the big takeaways and the best stories that came out of the keynotes? >> Paul, want to start? >> Clearly the Red Hat Enterprise Linux 9 is a major rollout. They do that only about every three years. So that's a big deal to this audience. I think what they did in the area of security, with rolling out sigstore, which is a major new, I think an important new project that was sort of incubated at Red Hat. And they're trying to put in to create an open source ecosystem around that now. And the alliances. I'm usually not that much on partnerships, but the Accenture and the Microsoft partnerships do seem to be significant to the company. And, finally, the GM partnership which I think was maybe kind of the bombshell that they sort of rushed in at the last minute. But I think has the biggest potential impact on Red Hat and its partner ecosystem that is really going to anchor their edge architecture going forward. So I didn't see it so much on the product front, but the sense of Red Hat spreading its wings, and partnering with more companies, and seeing its itself as really the center of an ecosystem indicates that they are, you know, they're in a very solid position in their business. >> Yeah, and also like the pandemic has really forced us into this new normal, right? So customer demand is changing. There has been the shift to remote. There's always going to be a new normal according to Paul, and open source carries us through that. So how do you guys think Red Hat has helped its portfolio through this new normal and the shift? >> I mean, when you think of Red Hat, you think of Linux. I mean, that's where it all started. You think OpenShift which is the application development platforms. Linux is the OS. OpenShift is the application development platform for Kubernetes. And then of course, Ansible is the automation framework. And I agree with you, ecosystem is really the other piece of this. So, I mean, I think you take those three pieces and extend that into the open source community. There's a lot of innovation that's going around each of those, but ecosystems are the key. We heard from Stefanie Chiras, that fundamental, I mean, you can't do this without those gap fillers and those partnerships. And then another thing that's notable here is, you know, this was, I mean, IBM was just another brand, right? I mean, if anything it was probably a sub-brand, I mean, you didn't hear much about IBM. You certainly had no IBM presence, even though they're right across the street running Think. No Arvind present, no keynote from Arvind, no, you know, Big Blue washing. And so, I think that's a testament to Arvind himself. We heard that from Paul Cormier, he said, hey, this guy's been great, he's left us alone. And he's allowed us to continue innovating. It's good news. IBM has not polluted Red Hat. >> Yes, I think that the Red Hat was, I said at the opening, I think Red Hat is kind of the tail wagging the dog right now. And their position seems very solid in the market. Clearly the market has come to them in terms of their evangelism of open source. They've remained true to their business model. And I think that gives them credibility that, you know, a lot of other open source companies have lacked. They have stuck with the plan for over 20 years now and have really not changed it, and it's paying off. I think they're emerging as a company that you can trust to do business with. >> Now I want to throw in something else here. I thought the conversation with IDC analyst, Jim Mercer, was interesting when he said that they surveyed customers and they wanted to get the security from their platform vendor, versus having to buy these bespoke tools. And it makes a lot of sense to me. I don't think that's going to happen, right? Because you're going to have an identity specialist. You're going to have an endpoint specialist. You're going to have a threat detection specialist. And they're going to be best of breed, you know, Red Hat's never going to be all of those things. What they can do is partner with those companies through APIs, through open source integrations, they can add them in as part of the ecosystem and maybe be the steward of that. Maybe that's the answer. They're never going to be the best at all those different security disciplines. There's no way in the world, Red Hat, that's going to happen. But they could be the integration point. And that would be, that would be a simplifying layer to the equation. >> And I think it's smart. You know, they're not pretending to be an identity in access management or an anti-malware company, or even a zero trust company. They are sticking to their knitting, which is operating system and developers. Evangelizing DevSecOps, which is a good thing. And, that's what they're going to do. You know, you have to admire this company. It has never gotten outside of its swim lane. I think it's understood well really what it wants to be good at. And, you know, in the software business knowing what not to do is more important than knowing what to do. Is companies that fail are usually the ones that get overextended, this company has never overextended itself. >> What else do you want to know? >> And a term that kept popping up was multicloud, or otherwise known as metacloud. We know what the cloud is, but- >> Oh, supercloud, metacloud. >> Supercloud, yeah, here we go. We know what the cloud is but, what does metacloud mean to you guys? And why has it been so popular in these conversations? >> I'm going to boot this to Dave, because he's the expert on this. >> Well, expert or not, but I mean, again, we've coined this term supercloud. And the idea behind the supercloud or what Ashesh called metacloud, I like his name, cause it allows Web 3.0 to come into the equation. But the idea is that instead of building on each individual cloud and have compatibility with that cloud, you build a layer across clouds. So you do the hard work as a platform supplier to hide the underlying primitives and APIs from the end customer, or the end developer, they can then add value on top of that. And that abstraction layer spans on-prem, clouds, across clouds, ultimately out to the edge. And it's new, a new value layer that builds on top of the hyperscale infrastructure, or existing data center infrastructure, or emerging edge infrastructure. And the reason why that is important is because it's so damn complicated, number one. Number two, every company's becoming a software company, a technology company. They're bringing their services through digital transformation to their customers. And you've got to have a cloud to do that. You're not going to build your own data center. That's like Charles Wang says, not Charles Wang. (Paul laughing) Charles Phillips. We were just talking about CA. Charles Phillips. Friends don't let friends build data centers. So that supercloud concept, or what Ashesh calls metacloud, is this new layer that's going to be powered by ecosystems and platform companies. And I think it's real. I think it's- >> And OpenShift, OpenShift is a great, you know, key card for them or leverage for them because it is perhaps the best known Kubernetes platform. And you can see here they're really doubling down on adding features to OpenShift, security features, scalability. And they see it as potentially this metacloud, this supercloud abstraction layer. >> And what we said is, in order to have a supercloud you got to have a superpaz layer and OpenShift is that superpaz layer. >> So you had conversations with a lot of people within the past two days. Some people include companies, from Verizon, Intel, Accenture. Which conversation stood out to you the most? >> Which, I'm sorry. >> Which conversation stood out to you the most? (Paul sighs) >> The conversation with Stu Miniman was pretty interesting because we talked about culture. And really, he has a lot of credibility in that area because he's not a Red Hat. You know, he hasn't been a Red Hat forever, he's fairly new to the company. And got a sense from him that the culture there really is what they say it is. It's a culture of openness and that's, you know, that's as important as technology for a company's success. >> I mean, this was really good content. I mean, there were a lot, I mean Stefanie's awesome. Stefanie Chiras, we're talking about the ecosystem. Chris Wright, you know, digging into some of the CTO stuff. Ashesh, who coined metacloud, I love that. The whole in vehicle operating system conversation was great. The security discussion that we just had. You know, the conversations with Accenture were super thoughtful. Of course, Paul Cormier was a highlight. I think that one's going to be a well viewed interview, for sure. And, you know, I think that the customer conversations are great. Red Hat did a really good job of carrying the keynote conversations, which were abbreviated this year, to theCUBE. >> Right. >> I give 'em a lot of kudos for that. And because, theCUBE, it allows us to double click, go deeper, peel the onion a little bit, you know, all the buzz words, and cliches. But it's true. You get to clarify some of the things you heard, which were, you know, the keynotes were, were scripted, but tight. And so we had some good follow up questions. I thought it was super useful. I know I'm leaving somebody out, but- >> We're also able to interview representatives from Intel and Nvidia, which at a software conference you don't typically do. I mean, there's the assimilation, the combination of hardware and software. It's very clear that, and this came out in the keynote, that Red Hat sees hardware as matter. It matters. It's important again. And it's going to be a source of innovation in the future. That came through clearly. >> Yeah. The hardware matters theme, you know, the old days you would have an operating system and the hardware were intrinsically linked. MVS in the mainframe, VAX, VMS in the digital mini computers. DG had its own operating system. Wang had his own operating system. Prime with Prime OS. You remember these days? >> Oh my God. >> Right? (Paul laughs) And then of course Microsoft. >> And then x86, everything got abstracted. >> Right. >> Everything became x86 and now it's all atomizing again. >> Although WinTel, right? I mean, MS-DOS and Windows were intrinsically linked for many, many years with Intel x86. And it wasn't until, you know, well, and then, you know, Sun Solaris, but it wasn't until Linux kind of blew that apart. And the internet is built on the lamp stack. And of course, Linux is the fundamental foundation for Red Hat. So my point is, that the operating system and the hardware have always been very closely tied together. Whether it's security, or IO, or registries and memory management, everything controlled by the OS are very close to the hardware. And so that's why I think you've got an affinity in Red Hat to hardware. >> But Linux is breaking that bond, don't you think? >> Yes, but it still has to understand the underlying hardware. >> Right. >> You heard today, how taking advantage of Nvidia, and the AI capabilities. You're seeing that with ARM, you're seeing that with Intel. How you can optimize the operating system to take advantage of new generations of CPU, and NPU, and CPU, and PU, XPU, you know, across the board. >> Yep. >> Well, I really enjoyed this conference and it really stressed how important open source is to a lot of different industries. >> Great. Well, thanks for coming on. Paul, thank you. Great co-hosting with you. And thank you. >> Always, Dave. >> For watching theCUBE. We'll be on the road, next week we're at KubeCon in Valencia, Spain. We're at VeeamON. We got a ton of stuff going on. Check out thecube.net. Check out siliconangle.com for all the news. Wikibon.com. We publish there weekly, our breaking analysis series. Thanks for watching everybody. Dave Vellante, for Paul Gillin, and Stephanie Chan. Thanks to the crew. Shout out, Andrew, Alex, Sonya. Amazing job, Sonya. Steven, thanks you guys for coming out here. Mark, good job corresponding. Go to SiliconANGLE, Mark's written some great stuff. And thank you for watching. We'll see you next time. (calm music)

>>from the cube studios in Palo alto in boston connecting with thought leaders all around the world. >>This is a cute conversation. Welcome to the cubes coverage of HP discover 2021 I'm lisa martin. I've got three guests with me here. They're going to be talking about the partnership between HP and AMG. Please welcome George hope worldwide Head of partner sales at HP terry, Richardson north american channel chief for AMG and Peter chan, the director of media channel sales at AMG Gentlemen, it's great to have you on the cube. >>Well, thanks for having us lisa. >>All right, >>we're excited to talk to you. We want to start by talking about this partnership terry. Let's go ahead and start with you. H P E and M D have been partners for a very long time, very long history of collaboration. Talk to us about the partnership >>HB named, He do have a rich history of collaboration spinning back to the days of chapter on and then when A M. D brought the first generation AMG equity process department back in 2017, HP was a foundational partner providing valuable engineering and customer insights from day one AmY has a long history of innovation that created a high performance CP roadmap for value partners like HP to leverage in their workload optimized product portfolios, maximizing the synergies between the two companies. We've kicked off initiatives to grow the chain of business together with workload focused solutions and together we define the future. >>Thanks terry George, let's get your perspective as worldwide had a partner sales at HP. Talked to me about H P S perspective of that AMG partnership. >>Yeah, they say it's uh the introduction of the third generation AMG Epic processors, we've we've doubled our A. M. D. Based Pro Lion portfolio. We've even extended it to our follow systems. And with this we have achieved a number of world records across a variety of workloads and are seeing real world results. The third generation am the epic processor delivers strong performance, expand ability and the security our customers need as they continue their digital transformation, We can deliver better outcomes and lay a strong foundation for profitable apartment growth. And we're incorporating unmatched workload optimization and intelligent automation with 360° security. And of course, uh with that as a service experience. >>But as a service experience becoming even more critical as is the security as we've seen some of the groundbreaking numbers and data breaches in 2020 alone. Peter I want to jump over to you now. One of the things that we see H P E and M. D. Talking about our solutions and workloads that are key areas of focus for both companies. Can you explain some of those key solutions and the value that they deliver for your customers? >>Absolutely. It's from computing to HPC to the cloud and everything in between and the young HB have been focused on delivering not just servers but meaningful solutions that can solve customer challenges. For example, we've seen here in India, the DL- 325 has been really powerful for customers that want to deploy video. Hp nmD have worked together with icy partners in the industry to tune the performance and ensure that the user experience is exceptional. Um This just one example of many of course, for instance, the 3 45 with database 3 65 for dense deployments, it's key the 35 That has led the way in big data analytics. Um the Apollo 60 500 breaking new path in terms of AI and Machine learning, quite a trending topic and m D H p are always in the news when it comes to groundbreaking HPC solutions and oh by the way, we're able to do this due to an unyielding commitment to the data center and long term laser focused execution on the M the road map. >>Excellent. Thanks. Peter. Let's talk about the channel expansion a little bit more terry with you. You know, you and the team here. Channel Chief focused on the channel. What is A. M. D. Doing specifically to expand your channel capabilities and support all of the Channel partners that work with Andy >>great question lisa Campbell is investing in so many areas around the channel. Let's start with digital transformation. Our Channel partners consistently provided feedback that customers need to do more with less between A and B and H P. E. We have solutions that increase capabilities and deliver faster time to value for the customer looking to do more with less. We have a tool on our website called the and metrics server virtualization, Tco estimation tool and those who have visually see the savings. We also have lots of other resources such as technical documentation, A and E arena for training and general CPU's departments can take advantage of aside from solution examples, AMG is investing in headcount internally and at our channel part race. I'm actually an example of the investment MD is making to build out the channel. One more thing that I'll mention is the investment that are, you know, lisa su and Andy are making to build out the ecosystem from head Count to code development and is investing to have a more powerful user experience with our software partners in the ecosystem. From my discussions with our channel partners, they're glad to see A and d expanding our our channel through the many initiatives and really bringing that ecosystem. >>Here's another question for you as channel chief. I'm just curious in the last year, speaking and you talked about digital transformation. We've seen so much acceleration of the adoption of that since the last 15 months has presented such challenges. Talk to me a little bit about some of the feedback from your channel partners about what you am, D N H B are doing together to help those customers needed to deliver that fast time to value, >>you know, so really it's all about close collaboration. Um we we work very closely with our counterparts at H P. E just to make sure we understand partner and customer requirements and then we work to craft solutions together from engaging, technically to collaborating on on, you know, when products will be shipped and delivered and also just what are we doing to uh to identify the next key workloads and projects that are going to be engaged in together? So it's it's really brought the companies I think even closer together, >>that's excellent as a covid catalyst. As I say, there's a lot of silver linings that we've seen and it sounds like the collaboration terry that you mentioned has become even stronger George. I want to go to you. Let's HP has been around for a long time. My first job in tech was Hewlett Packard by the way, many years ago. I won't mention how long but talk to me about the partnership with AMG from H P s perspective, is this part of H P S D N A? >>Absolutely. Partnering is our D N A. We've had 80 years of collaboration with an ever expanding ecosystem of partners that that all play a key role in our go to market strategy. We actually design and test our strategic initiatives in close collaboration with our partners so that we can meet their most pressing needs. We do that through like farmer advisory boards and things of that nature. Um but we have we have one of the most profitable partner programs in the industry, 2-3 times higher rebates than most of our competitors. And we continue to invest in the partner experience in creating that expertise so partners can stand out in a highly competitive market. Uh And Andy is in direct alignment with that strategy. We have strong synergies and a common focus between the two companies. >>And I also imagine George one question and one question to that there's tremendous value in it for your end user customers, especially those that have had to everyone pivot so many times in the last year and have talked to me a little bit about George What you're saying from the customer's perspective. >>Well as Antonio Neri said a couple of years back, the world is going to be hybrid and uh, he was right. We continue uh we continue to see that evolution and we continue to deliver solutions around a hybrid digital world with, with Green Lake and the new wave of digital transformation that we refer to now as the age of insight customers want a cloud experience everywhere. And 70% of today's workloads can easily be re factored for the public cloud or they need to stay physically close to the data and other apps at the emerging edge or in polos are in the data centers. So as a result, most organizations are forced to deal with the complexity of having two divergent operating models and they're paying higher cost to maintain them both with Green Lake, we provide one consistent operating model with visibility and control across public clouds and on prem environments. And that applies to all workloads, you know, whether it's cloud native or non cloud native applications. Um we also have other benefits like no cloud block in or no data. Egress charges, so you have to pay a steep price just to move workloads out of the public cloud. And then we're expanding collaboration opportunities within for our partner ecosystem so that we can bring that cloud experience to a faster growing number of customers worldwide. So we've launched new initiatives uh in support of the core strategy as we accelerate our as a service vision and then work with partners to unlock better customer outcomes with Green Lake and of course, hb compute of which I am d is part of is, is the underlying value added technology. >>Can you expand on some of those customer outcomes as we look at, as I mentioned before, this very dynamic market in which we live. It's all about customer outcomes. What are some of those that from a hybrid cloud environment perspective with Green like that you're helping customers achieve? >>Well, at least Greenland has come out with with about 30 different different offerings that package up some solutions. So you're not just buying infrastructure as a service. We have offerings like HPC as a service. We have offerings like uh, V D I as a service, ml, ops as a service. So we're packaging in technology, some are are some are not ours, but into completing some solutions. So that creates the outcome that the customers are looking for. >>Excellent. Thanks, George and Peter, last question to you again with the hybrid cloud environment being something that we're seeing more and more of the benefits that Green Lake is delivering through the channel. What's your perspective from a. M decide? >>Absolutely lisa. So, so I mean I think it's clear with a MD based systems, customers get the benefit of performance, security and fast time to value whether deployed on prem and cloud on a hybrid model. So please come try out our HP system based on name the processors and see how we can accelerate and protect your applications. Thank you lisa. >>Excellent, Peter George terry, thank you for joining me today. I'm sure there's a lot more that folks are going to be able to learn about what AM D and H. P. Are doing together on the virtual show floor. We appreciate your time. Thank you. Yeah, for my guests, I'm lisa martin. You're watching the cubes coverage of HP discover 2021 Yeah.

>> Welcome to theCUBE's coverage of HPE Discover 2021. I'm Lisa Martin. I've got three guests with me here today. They're going to be talking about the partnership between HPE and AMD. Please welcome George Hope, Worldwide Head of Partner Sales at HPE, Terry Richardson, North American Channel Chief for AMD, and Peter Chan, the Director of EMEA Channel Sales at AMD. Gentlemen, it's great to have you on theCUBE. >> George: Well, thanks for having us, Lisa. >> We're excited to talk to you. We want to start by talking about this partnership, Terry let's go ahead and start with you. HPE and AMD have been partners for a very long time very long history of collaboration, talk to us about the partnership. >> HPE and AMD do have a rich history and collaboration spinning back to the days of Opteron and then when AMD bought the first-generation AMD EPYC processors to market back in 2017, HPE was a foundational partner providing valuable engineering and customer insights from day one. AMD has a long history of innovation in creating a high performance CPU roadmap for value partners like HPE to leverage in their workload optimized product portfolios. Maximizing the synergies between the two companies, we've kicked off initiatives to grow the chain of business together with workload focused solutions and together we define the future. >> Thanks Terry, George let's get your perspective as worldwide head of partner sales at HPE. Talk to me about HP's perspective at that AMD partnership. >> Yeah Lisa, the introduction of the third generation AMD EPYC processors, we've doubled our AMD based ProLiant portfolio. We've even extended it to our Apollo systems. And with this, we've achieved a number of world records across a variety of workloads, and I've seen real-world results. The third generation AMD EPYC processor delivers a strong performance, expandability, in the security our customers need as they continue their digital transformation. We can deliver better outcomes and lay a strong foundation for profitable apartment growth. And we're incorporating unmatched workload optimization and intelligent automation with 360 degree security. And of course, with an ASA service experience. >> But ASA service experience, becoming even more critical as is the security, as we've seen some of the groundbreaking numbers in data breaches in 2020 alone, Peter, I want to jump over to you now. One of the things that we see HPE and AMD talking about are solutions and workloads that are key areas of a focus for both companies. Can you explain some of those key solutions and the value that they deliver for your customers? >> Absolutely Lisa, (indistinct) to HPC, to the cloud and everything in between AMD and HPE have been focused on delivering not just servers but meaningful solutions that can solve customer challenges. For example, we see here in EMEA, the DL325 has been really powerful for customers who want to deploy VDI. HPE and AMD have worked together with IC partners in the industry to tune the performance and ensure that the user experience is exceptional. This is just one example of many, of course, for instance, the 345 with database, 365 for density deployment is key (indistinct) that has led the way in big data analytics. The Apollo 6500 breaking new path in terms of AI and machine learning, quite a trending topic and AMD and HPE are always in the news when it comes to groundbreaking HPC solutions. I know by the way, we're able to do these, during commitment to the data center on longterm laser focused execution on the AMD roadmap. >> Excellent. Thanks Peter. Let's talk about the channel expansion a little bit more, Terry with you again, you and the team here channel chief focused on the channel. What is AMD doing specifically to expand your channel capabilities and support all of the channel partners that work with AMD? >> Great question, Lisa. AMD's investing in some areas around the channel. Let's start with digital transformation, Our channel partners consistently provide us feedback that customers need to do more with less. Between AMD and HPE, we have solutions that increase capabilities and deliver faster time to value for the customer looking to do more with less. We have a tool on our website called the AMD EPYC server virtualization TCO estimation tool that allows you to visually see the savings. We also have lots of other resources such as technical documentation, AMD arena for training and demo CPU's that partners can take advantage of. Aside from solution examples, AMD is investing in headcount internally at our channel partners. I'm actually an example of the investment AMD is making to build out the channel. One more thing that I'll mention is the investment that our CEO, Lisa Su and AMD are making to build our ecosystem from headcount to code development, AMD is investing to have a more powerful user experience with our software partners in the ecosystem. From my discussions with our channel partners, I'm glad to see AMD expanding our channel through the many initiatives and really broadening that ecosystem. >> Terry, another question for you, as channel chief I'm just curious in the last year speaking to me, talked about digital transformation we've seen so much acceleration of the adoption of that since the last 15 months has presented such challenges. Talk to me a little bit about some of the feedback from your channel partners about what you, AMD and HP are doing together to help those customers that needed to deliver that fast time to value. >> You know, so really, it's all about close collaboration. We work very closely with our counterparts at HPE just to make sure we understand partner and customer requirements, and then we work to craft a solutions together from engaging technically, to collaborating on my products will be shipped and delivered to also just what are we doing to identify the next key workloads and projects that are going to be engaged in together. So it really brought the companies, I think even closer together. >> That's excellent. There's a COVID catalyst, as I say, there's a lot of silver linings that we've seen and it sounds like the collaboration, Terry that you mentioned has become even stronger. George, I want to go to you, HPE has been around for a long time. My first job in tech was Hewlett Packard by the way, many years ago, I won't mention how long but talk to me about the partnership with AMD from HPE's perspective is this part of HPE's DNA? >> Absolutely, partnering is our DNA. We've had 80 years of collaboration with an ever expanding ecosystem of partners that all play a key role in our go to market strategy. We actually design and test our strategic initiatives in close collaboration with our partners so that we can meet their most pressing needs. We do that through like partner advisory boards and things of that nature, but we have of the most profitable partner programs in the industry, two to three times higher rebates than most of our competitors. And we continue to invest in the partner experience and creating that expertise. So partners can stand out in a highly competitive market. And AMD is in direct alignment with that strategy. We have strong synergies and a common focus between the two companies. >> May I also imagine George one follow on question to that, there's tremendous value in it for your end user customers, especially those that have had to everyone pin it so many times in the last year and talk to me a little bit about George what you're seeing from the customers perspective. >> Well, as Antonio Neri said, a couple of years back the world is going to be hybrid and I think he was right, we continue to see that evolution and we continue to deliver solutions around a hybrid digital world with GreenLake. And the new wave of digital transformation that we refer to now as the age of insight. Customers want a cloud experience everywhere and 70% of today's workloads can't easily be refactored to the public cloud, or they need to stay physically close to the data and other apps at the emerging edge or in colos or in the data centers. So as a result, most organizations are forced to deal with the complexity of having two divergent operating models and they're paying higher costs to maintain them both. With GreenLake, we provide one consistent operating model with visibility and control across public clouds and on-prem environments. And that applies to all workloads. You know, whether it's cloud native or non-cloud native applications. We also have other benefits, like no cloud lock-in or no data egress charges. So you don't have to pay a steep price just to move workloads out of the public cloud. And then we're expanding collaboration opportunities within for our partner ecosystem so that we can bring that cloud experience to a faster growing number of customers worldwide. So we've launched new initiatives in support of the core strategy as we accelerate our as a service vision and then work with partners to unlock better customer outcomes with GreenLake. And of course, HPE compute of which AMD is part of is the underlying value added technology. >> Can you expand on some of those customer outcomes as we look at, as I mentioned before this very dynamic market in which we live, it's all about customer outcomes, what are some of those that from a hybrid cloud environment perspective with GreenLake that you're helping customers achieve? >> Well Lisa, GreenLake has come out with about 30 different offerings that package up some solutions. So you're not just buying infrastructure as a service. We have offerings like HPC as a service, so we have offerings like a VDI as a service, ML ops as a service. So we're packaging in technology, some are ours, some are not ours, but in to completing some solutions. So it create the outcome that they, the customers are looking for. >> Excellent. Thanks, George. And Peter, last question to you. Again, with the hybrid cloud environment being something that we're seeing more and more of, the benefits that GreenLake is delivering through the channel, what's your perspective from AMD side? >> Absolutely, Lisa. So, I mean I think it's clear with AMD based systems 'cause we're getting the benefit of performance, security and fast time to value when they're deployed on-prem and the cloud, on a hybrid model. So please come try out our HPC system based on AMD processors and see how we can accelerate and protect your obligations. Thank you, Lisa. >> Excellent. Peter, George, Terry thank you for joining me today. I'm sure there's a lot more that folks are going to be able to learn about what AMD and HPE are doing together on the virtual show floor. We appreciate your time. For my guests, I'm Lisa Martin. You're watching theCUBE's coverage of HPE discover 2021. (uplifting music)

>> [Announcer] Live, from Silicon Valley, it's The Cube Covering Mobile World Congress 2017. Brought to you by Intel. >> [John] Welcome back, everyone. We are here live in Palo Alto, California for a special two days of Mobile World Congress. We're on day two of wall to wall coverage from eight a.m. to six p.m. Really breaking down what's happening in studio and going to our reporters and analysts in the field. We'll have Pete Injerich coming up next and we're going to get on the ground analysis from the current analysis, now with global data. But next we have a segment where, I had a chance this morning early in the morning my time top of the morning Tuesday in Barcelona which was hours ago, I had a chance to speak with Caroline Chan and Dan Rodriguez. I wanted to get their opinion on what's happening and I asked Caroline Chan, "What's the biggest story coming out of Mobile World Congress?" This is what she had to say: >> [Caroline Chan] So last year this time, the people coming in asked a lot of questions about 5G technology. Is it real? Can we really pull it off? You know, 3G, 4G, it's a little bit ho-hum. But this year, I would say when I look around, not just in Apple, everybody else is good. I'm also hoping to, people talk about it as a faithful, I went to a panel last night with Orange, and AT&T, and Telefonica. I think the conversation switched from will there be a 5G to solutions. So, I look around in our booth and next door in Verizon there's a lot of cars, autonomous driving. We had network 5G enable smart city, it's in our homes, It becomes from technology to solution, and then in the last discussion about this iteration of 5G, there was an announcement about the 5G in our loan, Whole bunch of talk about acceleration. It's really becoming how can we quickly get out there. And then the other thing I've read is about AI. How does AI now because 5G becomes an enigma. AI and the cloud, there's all these analytics, so 5G can actually now be able to bring that into the cloud. So AI becomes a buzzword. I just read the SAT CTO Was all NWC live TV at the venue, I talked about AI and 5G transforming the mobile industry, so it really becomes much more of a solution oriented. >> [Dan] No, I can't agree with Caroline more there. Tremendous amount of excitement around 5G as well as network transformation in the show and the two things are really becoming linked. So Caroline mentioned a few of the use cases out there on 5G, so again, lots of autonomous driving, lots of smart home, lots of smart city. I personally had a great time hanging out in our smart home demonstration earlier, but I think the key linkage of all those use cases is that the network needs to become more intelligent, more flexible, and definitely more agile to be able to support this wide variety of use cases. And we're seeing it being really echoed back by not only operators, but a lot of the OES and telecommunication equipment factors, really rallying behind NSE and truly the path to 5G. >> [John] Take a minute, guys, to explain the 5G revolution and why it's not just an evolution from 4G. What's the difference? What is the key enabler of 5G and what is Intel have that's different now than it was before. >> [Caroline] So you imagined 3G is all about getting better voice and also a little bit of SMS, and 4G is a literal 3G on steroids. Now 4G has all these, you can go on the internet and download all kind of things. 5G takes that to the next level. So 2G, 3G, and 4G is about network building for the masses If you think about it it's like a general network. So when you build it and somebody vertical says I want to make this my private network for my enterprise it's a best effort basis, so either too hot or too cold. So what that means is it operates under a wirenut either giving you way too much, unable to recuperate your investments or if it gives you not enough, you wind up with a bad user experience. 5G fundamentally changes this. Why does it change in the standard itself that's undergoing in the 3G PP. As you have a different type of schedule with them, you must predict the different use cases. For example, if you're doing a mission cryptic IOG versus a massive connector IOG, you get a different protocol. You strip out some of the heavy amount of signaling that is typically needed for mission critical for something that's just there like smart city, like traffic light changes, that kind of information you don't need that to generate a whole bunch of bandwidth. So you see something with a different, natively different in the protocol itself so that's a fundamental shift from the mindset that we always had. So that is technology enabled. And the second thing is that the network today, thanks to all the network transformation journey that everybody is on, it's much softer and flexible, it moves away from a single part purse, a belt, power to something that is much more flexible, such that you can enable something like the network driving So a prize for enhanced mobile program for ARPR would be different from something for autonomous driving. So it makes the network fundamentally different, the interface itself is much more flexible for different types of applications, and then not to mention that we have different types of spectrums on the traditional 3 GHz to 6 And now two millimeter waves we open up a whole swathe of the spectrum to allow for a much, much bigger bandwidth and things like camera applications. It really changed the game. >> [Dan] Thanks, Caroline. So I think at a high level, what Caroline was pointing out is that the wide variety of use cases with 5G will stretch and pull the network in all sorts of directions. Essentially, there will be different use cases that require blatant fact network speed, but maximum amounts of bandwidth, but some use cases also require very low latency. So when you think about all the variety of use cases, the best way to truly insure you're meeting the user experience and also delivering the right economic value for the industry is to move to more intelligent and a flexible network. And as Caroline mentioned, it is going to be software-defined. And when you think about some of the products that we're investing in, and the status in our group for networking of course you think about our Intel Xeon processors. These processors can be found in a number of servers around the globe, and customers are using these for a variety of virtual network functions, really everything ranging from the core network to the access network to newer use cases such as virtual TV. In this bit, we did announce some additional products that will be made available later in the year. This is the Atom C3000 series as well as the Xeon D1500 network series. Both of these are SoC, and when you think about 5G, you do think about the mix of centralized and distributed to plan it, and you think about that network edge becoming smarter, so these types of SoCs are very critical because they provide excellent performance density at the right power level so you can have a very intelligent edge of your network. >> [John] Great point. Just to follow up on that, it's interesting, we had a conversation yesterday in The Cube around millimeter waves, CBMA, all the different types of wireless, and I think what's interesting is you have some use cases where you have a lot of density and some cases where you need low latency, but you also have an internet of things. A car, for example, you could say, we were discussing a car is essentially going to become a data center on wheels, where mobility is going to be very important and might not need precise bandwidth per se, but in more mobility in some cases you'll need more bandwidth. And also as an internet of things comes on, whether they're industrial devices that the notion of a phone being provisioned once and then being used is not the same use case as, say, IOT, which you could have anything connected to a network, these devices are going to come on and offline all the time, so there's a real need for dynamic networks. What is Intel's approach here, because this seems to be the conversation that most people are talking about that's happening under the hood, that's the true enabler around bringing out the real mobile edge. >> [Caroline] The couple things that we're doing, number one we use a concept called flex term, flex core which is a server-based platform that works on a variety of technologies applied to it lots of these real time visualizations, dynamic resource sharing and reconfigurations, we're able to support what you just described and provide a flex support team for different types of scenarios. And then the other thing that builds into the 5G support network Splicing allows you to splice up to the pairs of light resources for a variety of cases, Including the coarse part of it, so for example, HP here in this room is demonstrating what looks a server, walks like a server and is a server and it has the RAM, virtual PC, it has orchestration, it has mobile edge computing, it's really become a network in a box. So the fact is the ultimate freedom to support the service providers and enterprises and to apply all the 5G to different scenarios. >> [John] The final question, guys, is market readiness through partners and collaboration. Intel obviously is the leader, Intel Inside who was the main story we've been hearing at Mobile World Congresses end to end, fortunately a great piece with Intel CEO talking about the end to end value in the underlying architecture, it all runs on Intel, it works better, it brings up the notion of market readiness in the ecosystem. What are you guys doing to make the ecosystem robust and vibrant, because Intel can't do it alone, you're going to need partners. Thoughts on how you guys are accelerating it, and really the market readiness for 5G and just timing in your mind when all the fruit comes off the 5G tree, if you will. >> [Caroline] We started with the trials this year, so 2017 we're going to be able, we're working closely with partners, like Ericsson, Nokia, and Cisco and we should be seeing early performance coming up and I really think the wide spread of commercial publicly is more like 2019, 2020 timeframe because of some of the standardization, would you say? >> [Dan] Yeah, so that's a great summary, Caroline. I think the key thing that we're really seeing at Mobile Congress and things that we're investing in, diverse as you mentioned. It definitely takes a village to pull off this network transformation and the movement to 5G, and I think the great thing is about the network size is the network is becoming much more pliable, more software to find, more resilient, more agile, and it's out there to find. You can really invest in many of these innovations we've been discussing today now. So we're seeing a lot of folks start investing in Flex-Core, Network in a Box, mobilized computing, et cetera, so you transform your network now, utilizing network function virtualization, and then you have a sturdy foundation when all the 5G use cases come online in the next years. >> [John] Guys, final question. What power demos are you showing? You guys usually have great demos on the floor, Mobile World Congress, lot of glam, lot of flair at the show. >> [Dan] Great question. We have a number of super demos here, we have a smart and connected home, which showcases all sorts of intel, wireless technology out of the gateway as well as other devices we're showing a smart city, as you know, with 5G, and its lightening fast speeds to pass the lower latencies. It's truly going to change the urban landscape. And we're also showing augmented virtual reality in a few different demonstrations and one definitely caught my eye and I was pretty excited about it. In our Flex Ren demo, we were showcasing augmented virtual reality, actually viewing a skier going downhill and it was pretty exciting. I had a great time, I can't wait to when, in a few years when 5G is out there and I can use augmented virtual reality to watch a number of sporting events ranging from college football to my favorite sport, which is surfing. >> [John] What's next for 5G? How are you guys going to roll this out, what's the big plans post Mobile World Congress? >> [Caroline] Like I mentioned, we have trial plans with our partners through 2017, and then we're also participating in the Winter Olympics showcase, again through our customers. There's activities happening in China now, so I think we can be in a lot of places. You can see us in 5G. >> [John] Winter Olympics, expect to get the downloads and all the video in real time on 4K screens, thank you very much. (laughs) We expect to see some good bandwidth on the Olympics, I'm sure. >> [Dan] Hey thanks, John, this was great. >> [Caroline] Thanks, bye! >> [John] Thank you. Caroline Chan and Dan Rodriguez, from Barcelona, calling in with all the details, I'm John Furrier, we'll be back with more live coverage from the Mobile World Congress after this short break.

(bright upbeat music) >> Welcome back, everyone, to the "Supercloud 22." I'm John Furrier, host of "The Cube." This is the Cloud-erati panel, the distinguished experts who have been there from day one, watching the cloud grow, from building clouds, and all open source stuff as well. Just great stuff. Good friends of "The Cube," and great to introduce back on "The Cube," Adrian Cockcroft, formerly with Netflix, formerly AWS, retired, now commentating here in "The Cube," as well as other events. Great to see you back out there, Adrian. Lori MacVittie, Cloud Evangelist with F5, also wrote a great blog post on supercloud, as well as Dave Vellante as well, setting up the supercloud conversation, which we're going to get into, and Chris Hoff, who's the CTO and CSO of LastPass who's been building clouds, and we know him from "The Cube" before with security and cloud commentary. Welcome, all, back to "The Cube" and supercloud. >> Thanks, John. >> Hi. >> All right, Lori, we'll start with you to get things going. I want to try to sit back, as you guys are awesome experts, and involved from building, and in the trenches, on the front lines, and Adrian's coming out of retirement, but Lori, you wrote the post setting the table on supercloud. Let's start with you. What is supercloud? What is it evolving into? What is the north star, from your perspective? >> Well, I don't think there's a north star yet. I think that's one of the reasons I wrote it, because I had a clear picture of this in my mind, but over the past, I don't know, three, four years, I keep seeing, in research, my own and others', complexity, multi-cloud. "We can't manage it. They're all different. "We have trouble. What's going on? "We can't do anything right." And so digging into it, you start looking into, "Well, what do you mean by complexity?" Well, security. Migration, visibility, performance. The same old problems we've always had. And so, supercloud is a concept that is supposed to overlay all of the clouds and normalize it. That's really what we're talking about, is yet another abstraction layer that would provide some consistency that would allow you to do the same security and monitor things correctly. Cornell University actually put out a definition way back in 2016. And they said, "It's an architecture that enables migration "across different zones or providers," and I think that's important, "and provides interfaces to everything, "makes it consistent, and normalizes the network," basically brings it all together, but it also extends to private clouds. Sometimes we forget about that piece of it, and I think that's important in this, so that all your clouds look the same. So supercloud, big layer on top, makes everything wonderful. It's unicorns again. >> It's interesting. We had multiple perspectives. (mumbles) was like Snowflake, who built on top of AWS. Jerry Chan, who we heard from earlier today, Greylock Penn's "Castles in the Cloud" saying, "Hey, you can have a moat, "you can build an advantage and have differentiation," so startups are starting to build on clouds, that's the native cloud view, and then, of course, they get success and they go to all the other clouds 'cause they got customers in the ecosystem, but it seems that all the cloud players, Chris, you commented before we came on today, is that they're all fighting for the customer's workloads on their infrastructure. "Come bring your stuff over to here, "and we'll make it run better." And all your developers are going to be good. Is there a problem? I mean, or is this something else happening here? Is there a real problem? >> Well, I think the north star's over there, by the way, Lori. (laughing) >> Oh, there it is. >> Right there. The supercloud north star. So indeed I think there are opportunities. Whether you call them problems or not, John, I think is to be determined. Most companies have, especially if they're a large enterprise, whether or not they've got an investment in private cloud or not, have spent time really trying to optimize their engineering and workload placement on a single cloud. And that, regardless of your choice, as we take the big three, whether it's Amazon, Google, or Microsoft, each of them have their pros and cons for various types of workloads. And so you'll see a lot of folks optimizing for a particular cloud, and it takes a huge effort up and down the stack to just get a single cloud right. That doesn't take into consideration integrations with software as a service, instantiated, oftentimes, on top of infrastructure of the service that you need to supplement where the obstruction layer ends in infrastructure of the service. You've seen most IS players starting to now move up-chain, as we predicted years ago, to platform as a service, but platforms of various types. So I definitely see it as an opportunity. Previous employers have had multiple clouds, but they were very specifically optimized for the types of workloads, for example, in, let's say, AWS versus GCP, based on the need for different types and optimized compute platforms that each of those providers ran. We never, in that particular case, thought about necessarily running the same workloads across both clouds, because they had different pricing models, different security models, et cetera. And so the challenge is really coming down to the fact that, what is the cost benefit analysis of thinking about multi-cloud when you can potentially engineer the resiliency or redundancy, all the in-season "ilities" that you might need to factor into your deployments on a single cloud, if they are investing at the pace in which they are? So I think it's an opportunity, and it's one that continues to evolve, but this just reminds me, your comments remind me, of when we were talking about OpenStack versus AWS. "Oh, if there were only APIs that existed "that everybody could use," and you saw how that went. So I think that the challenge there is, what is the impetus for a singular cloud provider, any of the big three, deciding that they're going to abstract to a single abstraction layer and not be able to differentiate from the competitors? >> Yeah, and that differentiation's going to be big. I mean, assume that the clouds aren't going to stay still like AWS and just not stop innovating. We see the devs are doing great, Adrian, open source is bigger and better than ever, but now that's been commercialized into enterprise. It's an ops problem. So to Chris's point, the cost benefit analysis is interesting, because do companies have to spin up multiple operations teams, each with specialized training and tooling for the clouds that they're using, and does that open up a can of worms, or is that a good thing? I mean, can you design for this? I mean, is there an architecture or taxonomy that makes it work, or is it just the cart before the horse, the solution before the problem? >> Yeah, well, I think that if you look at any large vendor... Sorry, large customer, they've got a bit of everything already. If you're big enough, you've bought something from everybody at some point. So then you're trying to rationalize that, and trying to make it make sense. And I think there's two ways of looking at multi-cloud or supercloud, and one is that the... And practically, people go best of breed. They say, "Okay, I'm going to get my email "from Google or Microsoft. "I'm going to run my applications on AWS. "Maybe I'm going to do some AI machine learning on Google, "'cause those are the strengths of the platforms." So people tend to go where the strength is. So that's multi-cloud, 'cause you're using multiple clouds, and you still have to move data and make sure they're all working together. But then what Lori's talking about is trying to make them all look the same and trying to get all the security architectures to be the same and put this magical layer, this unicorn magical layer that, "Let's make them all look the same." And this is something that the CIOs have wanted for years, and they keep trying to buy it, and you can sell it, but the trouble is it's really hard to deliver. And I think, when I go back to some old friends of ours at Enstratius who had... And back in the early days of cloud, said, "Well, we'll just do an API that abstracts "all the cloud APIs into one layer." Enstratius ended up being sold to Dell a few years ago, and the problem they had was that... They didn't have any problem selling it. The problem they had was, a year later, when it came up for renewal, the developers all done end runs around it were ignoring it, and the CIOs weren't seeing usage. So you can sell it, but can you actually implement it and make it work well enough that it actually becomes part of your core architecture without, from an operations point of view, without having the developers going directly to their favorite APIs around them? And I'm not sure that you can really lock an organization down enough to get them onto a layer like that. So that's the way I see it. >> You just defined- >> You just defined shadow shadow IT. (laughing) That's pretty- (crosstalk) >> Shadow shadow IT, yeah. >> Yeah, shadow shadow it. >> Yeah. >> Yeah. >> I mean, this brings up the question, I mean, is there really a problem? I mean, I guess we'll just jump to it. What is supercloud? If you can have the magic outcome, what is it? Enstratius rendered in with automation? The security issues? Kubernetes is hot. What is the supercloud dream? I guess that's the question. >> I think it's got easier than it was five, 10 years ago. Kubernetes gives you a bunch of APIs that are common across lots of different areas, things like Snowflake or MongoDB Atlas. There are SaaS-based services, which are across multiple clouds from vendors that you've picked. So it's easier to build things which are more portable, but I still don't think it's easy to build this magic API that makes them all look the same. And I think that you're going to have leaky abstractions and security being... Getting the security right's going to be really much more complex than people think. >> What about specialty superclouds, Chris? What's your view on that? >> Yeah, I think what Adrian is alluding to, those leaky abstractions, are interesting, especially from the security perspective, 'cause I think what you see is if you were to happen to be able to thin slice across a set of specific types of workloads, there is a high probability given today that, at least on two of the three major clouds, you could get SaaS providers that sit on those same infrastructure of the service clouds for you, string them together, and have a service that technically is abstracted enough from the things you care about to work on one, two, or three, maybe not all of them, but most SaaS providers in the security space, or identity space, data space, for example, coexist on at least Microsoft and AWS, if not all three, with Google. And so you could technically abstract a service to the point that you let that level of abstract... Like Lori said, no computer science problem could not be... So, no computer science problem can't be solved with more layers of abstraction or misdirection... Or redirection. And in that particular case, if you happen to pick the right vendors that run on all three clouds, you could possibly get close. But then what that really talks about is then, if you built your seven-layer dip model, then you really have specialty superclouds spanning across infrastructure of the service clouds. One for your identity apps, one for data and data layers, to normalize that, one for security, but at what cost? Because you're going to be charged not for that service as a whole, but based on compute resources, based on how these vendors charge across each cloud. So again, that cost-benefit ratio might start being something that is rather imposing from a budgetary perspective. >> Lori, weigh in on this, because the enterprise people love to solve complexity with more complexity. Here, we need to go the other way. It's a commodity. So there has to be a better way. >> I think I'm hearing two fundamental assumptions. One, that a supercloud would force the existing big three to implement some sort of equal API. Don't agree with that. There's no business case for that. There's no reason that could compel them to do that. Otherwise, we would've convinced them to do that, what? 10, 15 years ago when we said we need to be interoperable. So it's not going to happen there. They don't have a good reason to do that. There's no business justification for that. The other presumption, I think, is that we would... That it's more about the services, the differentiated services, that are offered by all of these particular providers, as opposed to treating the core IaaS as the commodity it is. It's compute, it's some storage, it's some networking. Look at that piece. Now, pull those together by... And it's not OpenStack. That's not the answer, it wasn't the answer, it's not the answer now, but something that can actually pull those together and abstract it at a different layer. So cloud providers don't have to change, 'cause they're not going to change, but if someone else were to build that architecture to say, "all right, I'm going to treat all of this compute "so you can run your workloads," as Chris pointed out, "in the best place possible. "And we'll help you do that "by being able to provide those cost benefit analysis, "'What's the best performance, what are you doing,' "And then provide that as a layer." So I think that's really where supercloud is going, 'cause I think that's what a lot of the market actually wants in terms of where they want to run their workloads, because we're seeing that they want to run workloads at the edge, "a lot closer to me," which is yet another factor that we have to consider, and how are you going to be moving individual workloads around? That's the holy grail. Let's move individual workloads to where they're the best performance, the security, cost optimized, and then one layer up. >> Yeah, I think so- >> John Considine, who ultimately ran CloudSwitch, that sold to Verizon, as well as Tom Gillis, who built Bracket, are both rolling in their graves, 'cause what you just described was exactly that. (Lori laughing) Well, they're not even dead yet, so I can't say they're rolling in their graves. Sorry, Tom. Sorry, John. >> Well, how do hyperscalers keep their advantage with all this? I mean, to that point. >> Native services and managed services on top of it. Look how many flavors of managed Kubernetes you have. So you have a choice. Roll your own, or go with a managed service, and then differentiate based on the ability to take away and simplify some of that complexity. Doesn't mean it's more secure necessarily, but I do think we're seeing opportunities where those guys are fighting tooth and nail to keep you on a singular cloud, even though, to Lori's point, I agree, I don't think it's about standardized APIs, 'cause I think that's never going to happen. I do think, though, that SaaS-y supercloud model that we were talking about, layering SaaS that happens to span all the three infrastructure of the service are probably more in line with what Lori was talking about. But I do think that portability of workload is given to you today within lots of ways. But again, how much do you manage, and how much performance do you give up by running additional abstraction layers? And how much security do you give up by having to roll your own and manage that? Because the whole point was, in many cases... Cloud is using other people's computers, so in many cases, I want to manage as little of it as I possibly can. >> I like this whole SaaS angle, because if you had the old days, you're on Amazon Web Services, hey, if you build a SaaS application that runs on Amazon, you're all great, you're born in the cloud, just like that generations of startups. Great. Now when you have this super pass layer, as Dave Vellante was riffing on his analysis, and Lori, you were getting into this pass layer that's kind of like SaaS-y, what's the SaaS equation look like? Because that, to me, sounds like a supercloud version of saying, "I have a workload that runs on all the clouds equally." I just don't think that's ever going to happen. I agree with you, Chris, on that one. But I do see that you can have an abstraction that says, "Hey, I don't really want to get in the weeds. "I don't want to spend a lot of ops time on this. "I just want it to run effectively, and magic happens," or, as you said, some layer there. How does that work? How do you see this super pass layer, if anything, enabling a different SaaS game? >> I think you hit on it there. The last like 10 or so years, we've been all focused on developers and developer productivity, and it's all about the developer experience, and it's got to be good for them, 'cause they're the kings. And I think the next 10 years are going to be very focused on operations, because once you start scaling out, it's not about developers. They can deliver fast or slow, it doesn't matter, but if you can't scale it out, then you've got a real problem. So I think that's an important part of it, is really, what is the ops experience, and what is the best way to get those costs down? And this would serve that purpose if it was done right, which, we can argue about whether that's possible or not, but I don't have to implement it, so I can say it's possible. >> Well, are we going to be getting into infrastructure as code moves into "everything is code," security, data, (laughs) applications is code? I mean, "blank" is code, fill in the blank. (Lori laughing) >> Yeah, we're seeing more of that with things like CDK and Pulumi, where you are actually coding up using a real language rather than the death by YAML or whatever. How much YAML can you take? But actually having a real language so you're not trying to do things in parsing languages. So I think that's an interesting trend. You're getting some interesting templates, and I like what... I mean, the counterexample is that if you just go deep on one vendor, then maybe you can go faster and it is simpler. And one of my favorite vendor... Favorite customers right now that I've been talking to is Liberty Mutual. Went very deep and serverless first on AWS. They're just doing everything there, and they're using CDK Patterns to do it, and they're going extremely fast. There's a book coming out called "The Value Flywheel" by Dave Anderson, it's coming out in a few months, to just detail what they're doing, but that's the counterargument. If you could pick one vendor, you can go faster, you can get that vendor to do more for you, and maybe get a bigger discount so you're not splitting your discounts across vendors. So that's one aspect of it. But I think, fundamentally, you're going to find the CIOs and the ops people generally don't like sitting on one vendor. And if that single vendor is a horizontal platform that's trying to make all the clouds look the same, now you're locked into whatever that platform was. You've still got a platform there. There's still something. So I think that's always going to be something that the CIOs want, but the developers are always going to just pick whatever the best tool for building the thing is. And a analogy here is that the developers are dating and getting married, and then the operations people are running the family and getting divorced. And all the bad parts of that cycle are in the divorce end of it. You're trying to get out of a vendor, there's lawyers, it's just a big mess. >> Who's the lawyer in this example? (crosstalk) >> Well... (laughing) >> Great example. (crosstalk) >> That's why ops people don't like lock-in, because they're the ones trying to unlock. They aren't the ones doing the lock-in. They're the ones unlocking, when developers, if you separate the two, are the ones who are going, picking, having the fun part of it, going, trying a new thing. So they're chasing a shiny object, and then the ops people are trying to untangle themselves from the remains of that shiny object a few years later. So- >> Aren't we- >> One way of fixing that is to push it all together and make it more DevOps-y. >> Yeah, that's right. >> But that's trying to put all the responsibilities in one place, like more continuous improvement, but... >> Chris, what's your reaction to that? Because you're- >> No, that's exactly what I was going to bring up, yeah, John. And 'cause we keep saying "devs," "dev," and "ops" and I've heard somewhere you can glue those two things together. Heck, you could even include "sec" in the middle of it, and "DevSecOps." So what's interesting about what Adrian's saying though, too, is I think this has a lot to do with how you structure your engineering teams and how you think about development versus operations and security. So I'm building out a team now that very much makes use of, thanks to my brilliant VP of Engineering, a "Team Topologies" approach, which is a very streamlined and product oriented way of thinking about, for example, in engineering, if you think about team structures, you might have people that build the front end, build the middle tier, and the back end, and then you have a product that needs to make use of all three components in some form. So just from getting stuff done, their ability then has to tie to three different groups, versus building a team that's streamlined that ends up having front end, middleware, and backend folks that understand and share standards but are able to uncork the velocity that's required to do that. So if you think about that, and not just from an engineering development perspective, but then you couple in operations as a foundational layer that services them with embedded capabilities, we're putting engineers and operations teams embedded in those streamlined teams so that they can run at the velocity that they need to, they can do continuous integration, they can do continuous deployment. And then we added CS, which is continuously secure, continuous security. So instead of having giant, centralized teams, we're thinking there's a core team, for example, a foundational team, that services platform, makes sure all the trains are running on time, that we're doing what we need to do foundationally to make the environments fully dev and operator and security people functional. But then ultimately, we don't have these big, monolithic teams that get into turf wars. So, to Adrian's point about, the operators don't like to be paned in, well, they actually have a say, ultimately, in how they architect, deploy, manage, plan, build, and operate those systems. But at the same point in time, we're all looking at that problem across those teams and go... Like if one streamline team says, "I really want to go run on Azure, "because I like their services better," the reality is the foundational team has a larger vote versus opinion on whether or not, functionally, we can satisfy all of the requirements of the other team. Now, they may make a fantastic business case and we play rock, paper, scissors, and we do that. Right now, that hasn't really happened. We look at the balance of AWS, we are picking SaaS-y, supercloud vendors that will, by the way, happen to run on three platforms, if we so choose to expand there. So we have a similar interface, similar capability, similar processes, but we've made the choice at LastPass to go all in on AWS currently, with respect to how we deliver our products, for all the reasons we just talked about. But I do think that operations model and how you build your teams is extremely important. >> Yeah, and to that point- >> And has the- (crosstalk) >> The vendors themselves need optionality to the customer, what you're saying. So, "I'm going to go fast, "but I need to have that optionality." I guess the question I have for you guys is, what is today's trade-off? So if the decision point today is... First of all, I love the go-fast model on one cloud. I think that's my favorite when I look at all this, and then with the option, knowing that I'm going to have the option to go to multiple clouds. But everybody wants lock-in on the vendor side. Is that scale, is that data advantage? I mean, so the lock-in's a good question, and then also the trade-offs. What do people have to do today to go on a supercloud journey to have an ideal architecture and taxonomy, and what's the right trade-offs today? >> I think that the- Sorry, just put a comment and then let Lori get a word in, but there's a lot of... A lot of the market here is you're building a product, and that product is a SaaS product, and it needs to run somewhere. And the customers that you're going to... To get the full market, you need to go across multiple suppliers, most people doing AWS and Azure, and then with Google occasionally for some people. But that, I think, has become the pattern that most of the large SaaS platforms that you'd want to build out of, 'cause that's the fast way of getting something that's going to be stable at scale, it's got functionality, you'd have to go invest in building it and running it. Those platforms are just multi-cloud platforms, they're running across them. So Snowflake, for example, has to figure out how to make their stuff work on more than one cloud. I mean, they started on one, but they're going across clouds. And I think that that is just the way it's going to be, because you're not going to get a broad enough view into the market, because there isn't a single... AWS doesn't have 100% of the market. It's maybe a bit more than them, but Azure has got a pretty solid set of markets where it is strong, and it's market by market. So in some areas, different people in some places in the world, and different vertical markets, you'll find different preferences. And if you want to be across all of them with your data product, or whatever your SaaS product is, you're just going to have to figure this out. So in some sense, the supercloud story plays best with those SaaS providers like the Snowflakes of this world, I think. >> Lori? >> Yeah, I think the SaaS product... Identity, whatever, you're going to have specialized. SaaS, superclouds. We already see that emerging. Identity is becoming like this big SaaS play that crosses all clouds. It's not just for one. So you get an evolution going on where, yes, I mean, every vendor who provides some kind of specific functionality is going to have to build out and be multi-cloud, as it were. It's got to work equally across them. And the challenge, then, for them is to make it simple for both operators and, if required, dev. And maybe that's the other lesson moving forward. You can build something that is heaven for ops, but if the developers won't use it, well, then you're not going to get it adopted. But if you make it heaven for the developers, the ops team may not be able to keep it secure, keep everything. So maybe we have to start focusing on both, make it friendly for both, at least. Maybe it won't be the perfect experience, but gee, at least make it usable for both sides of the equation so that everyone can actually work in concert, like Chris was saying. A more comprehensive, cohesive approach to delivery and deployment. >> All right, well, wrapping up here, I want to just get one final comment from you guys, if you don't mind. What does supercloud look like in five years? What's the Nirvana, what's the steady state of supercloud in five to 10 years? Or say 10 years, make it easier. (crosstalk) Five to 10 years. Chris, we'll start with you. >> Wow. >> Supercloud, what's it look like? >> Geez. A magic pane, a single pane of glass. (laughs) >> Yeah, I think- >> Single glass of pain. >> Yeah, a single glass of pain. Thank you. You stole my line. Well, not mine, but that's the one I was going to use. Yeah, I think what is really fascinating is ultimately, to answer that question, I would reflect on market consolidation and market dynamics that happens even in the SaaS space. So we will see SaaS companies combining in focal areas to be able to leverage the positions, let's say, in the identity space that somebody has built to provide a set of compelling services that help abstract that identity problem or that security problem or that instrumentation and observability problem. So take your favorite vendors today. I think what we'll end up seeing is more consolidation in SaaS offerings that run on top of infrastructure of the service offerings to where a supercloud might look like something I described before. You have the combination of your favorite interoperable identity, observability, security, orchestration platforms run across them. They're sold as a stack, whether it be co-branded by an enterprise vendor that sells all of that and manages it for you or not. But I do think that... You talked about, I think you said, "Is this an innovator's dilemma?" No, I think it's an integrator's dilemma, as it has always ultimately been. As soon as you get from Genesis to Bespoke Build to product to then commoditization, the cycle starts anew. And I think we've gotten past commoditization, and we're looking at niche areas. So I see just the evolution, not necessarily a revolution, of what we're dealing with today as we see more consolidation in the marketplace. >> Lori, what's your take? Five years, 10 years, what does supercloud look like? >> Part of me wants to take the pie in the sky unicorn approach. "No, it will be beautiful. "One button, and things will happen," but I've seen this cycle many times before, and that's not going to happen. And I think Chris has got it pretty close to what I see already evolving. Those different kinds of super services, basically. And that's really what we're talking about. We call them SaaS, but they're... X is a service. Everything is a service, and it's really a supercloud that can run anywhere, but it presents a different interface, because, well, it's easier. And I think that's where we're going to go, and that's just going to get more refined. And yes, a lot of consolidation, especially on the observability side, but that's also starting to consume the security side, which is really interesting to watch. So that could be a little different supercloud coming on there that's really focused on specific types of security, at least, that we'll layer across, and then we'll just hook them all together. It's an API first world, and it seems like that's going to be our standard for the next while of how we integrate everything. So superclouds or APIs. >> Awesome. Adrian... Adrian, take us home. >> Yeah, sure. >> What's your- I think, and just picking up on Lori's point that these are web services, meaning that you can just call them from anywhere, they don't have to run everything in one place, they can stitch it together, and that's really meant... It's somewhat composable. So in practice, people are going to be composable. Can they compose their applications on multiple platforms? But I think the interesting thing here is what the vendors do, and what I'm seeing is vendors running software on other vendors. So you have Google building platforms that, then, they will support on AWS and Azure and vice versa. You've got AWS's distro of Kubernetes, which they now give you as a distro so you can run it on another platform. So I think that trend's going to continue, and it's going to be, possibly, you pick, say, an AWS or a Google software stack, but you don't run it all on AWS, you run it in multiple places. Yeah, and then the other thing is the third tier, second, third tier vendors, like, I mean, what's IBM doing? I think in five years time, IBM is going to be a SaaS vendor running on the other clouds. I mean, they're already halfway there. To be a bit more controversial, I guess it's always fun to... Like I don't work for a corporate entity now. No one tells me what I can say. >> Bring it on. >> How long can Google keep losing a billion dollars a quarter? They've either got to figure out how to make money out of this thing, or they'll end up basically being a software stack on another cloud platform as their, likely, actual way they can make money on it. Because you've got to... And maybe Oracle, is that a viable cloud platform that... You've got to get to some level of viability. And I think the second, third tier of vendors in five, 10 years are going to be running on the primary platform. And I think, just the other final thing that's really driving this right now. If you try and place an order right now for a piece of equipment for your data center, key pieces of equipment are a year out. It's like trying to buy a new fridge from like Sub-Zero or something like that. And it's like, it's a year. You got to wait for these things. Any high quality piece of equipment. So you go to deploy in your data center, and it's like, "I can't get stuff in my data center. "Like, the key pieces I need, I can't deploy a whole system. "We didn't get bits and pieces of it." So people are going to be cobbling together, or they're going, "No, this is going to cloud, because the cloud vendors "have a much stronger supply chain to just be able "to give you the system you need. "They've got the capacity." So I think we're going to see some pandemic and supply chain induced forced cloud migrations, just because you can't build stuff anymore outside the- >> We got to accelerate supercloud, 'cause they have the supply. They are the chain. >> That's super smart. That's the benefit of going last. So I'm going to scoop in real quick. I can't believe we can call this "Web3 Supercloud," because none of us said "Web3." Don't forget DAO. (crosstalk) (indistinct) You have blockchain, blockchain superclouds. I mean, there's some very interesting distributed computing stuff there, but we'll have to do- >> (crosstalk) We're going to call that the "Cubeverse." The "Cubeverse" is coming. >> Oh, the "Cubeverse." All right. >> We will be... >> That's very meta. >> In the metaverse, Cubeverse soon. >> "Stupor cloud," perhaps. But anyway, great points, Adrian and Lori. Loved it. >> Chris, great to see you. Adrian, Lori, thanks for coming on. We've known each other for a long time. You guys are part of the cloud-erati, the group that has been in there from day one, and watched it evolve, and you get the scar tissue to prove it, and the experience. So thank you so much for sharing your commentary. We'll roll this up and make it open to everybody as additional content. We'll call this the "outtakes," the longer version. But really appreciate your time, thank you. >> Thank you. >> Thanks so much. >> Okay, we'll be back with more "Supercloud 22" right after this. (bright upbeat music)

>> From theCUBE studios in Palo Alto in Boston bringing you data driven insights from theCUBE and ETR. This is breaking analysis with Dave Vellante. >> Despite fears of inflation, supply chain issues skyrocketing energy and home prices and global instability caused by the Ukraine crisis CIOs and IT buyers continue to expect overall spending to increase more than 6% in 2022. Now, while this is lower than our 8% prediction that we made earlier this year in January, it remains in line with last year's roughly six to 7% growth and is holding firm with the expectations reported by tech executives on the ETR surveys last quarter. Hello and welcome to this week's wiki bond cube insights powered by ETR in this breaking analysis, we'll update you on our latest look at tech spending with a preliminary take from ETR's latest macro drill down survey. We'll share some insights to which vendors have shown the biggest change in spending trajectory. And we'll tap our technical analysts to get a read on what they think it means for technology stocks going forward. The IT spending sentiment among IT buyers remains pretty solid. >> In the past two months, we've had conversations with dozens of CIOs, chief digital officers data executives, IT managers, and application developers, and across the board, they've indicated that for now at least their spending levels remain largely unchanged. The latest ETR drill down data which will share shortly, confirms these anecdotal checks. However, the interpretation of this data it's somewhat nuanced. Part of the reason for the spending levels being you know reasonably strong and holding up is inflation. Stuff costs more so spending levels are higher forcing IT managers to prioritize. Now security remains the number one priority and is less susceptible to cuts, cloud migration, productivity initiatives and other data projects remain top priorities. >> So where are CIO's robbing from Peter to pay Paul to focus on these priorities? Well, we've seen a slight uptick in certain speculative. IT projects being put on hold or frozen for a period of time. And according to ETR survey data we've seen some hiring freezes reported and this is especially notable in the healthcare sector. ETR also surveyed its buyer base to find out where they were adjusting their budgets and the strategies and tactics they were using to do so. Consolidating IT vendors was by far the most cited tactic. Now this makes sense as companies in an effort to negotiate better deals will often forego investments in newer so-called best of breed products and services, and negotiate bundles from larger suppliers. You know, even though they might not be as functional, the buyers >> can get a better deal if they bundle together from one of their larger suppliers. Think Microsoft or a Dell or other, you know, large companies. ETR survey respondents also cited cutting the cloud bill where discretionary spending was in play was another strategy or tactic that they were using. We certainly saw this with some of the largest snowflake customers this past quarter. Where even though they were still growing consumption rapidly certain snowflake customers dialed down their consumption and pushed spending off to future quarters. Now remember in the case of snowflake, anyway, customers negotiate consumption rates and their pricing based on a total commitment over a period of time. So while they may consume less in one quarter, over the lifetime of the contract, snowflake, as do many other cloud companies, have good visibility on the lifetime value of a deal. Now this next chart shows the latest ETR spending expectations among more than 900 respondents. The bars represent spending growth expectations from the periods of December, 2021 that's the gray bars, March of 2022 survey in the blue, and the most recent June data, That's the yellow bar. So you can see spending expectations for the quarter is down slightly in the mid 5% range. But overall for the year expectations remain in the mid 6% range. Now it's down from 8%, 8.3% in December where it looked like 2022 was going to really be a breakout year and have more momentum than even last year. Now, remember this was before Russia invaded Ukraine which occurred in mid-February of this year. So expectations were a little higher. So look, generally speaking CIOs have told us that their CFOs and CEOs have lowered their earnings outlooks and communicated that to Wall Street. They've told us that unless and until these revised forecasts appear at risk, they continue to expect their budget levels to remain pretty constant. Now there's still plenty of momentum and spending velocity on specific vendor platforms. Let's take a look at that. >> This chart shows the companies with the greatest spending momentum as measured by ETRs proprietary net score methodology. Net score essentially measures the net percent of customers spending more on a particular platform. That measurement is shown on the Y axis. The red line there that's inserted that red dotted line at 40%, we consider to be a highly elevated mark. And the green dots are companies in the ETR survey that are near or above that line. The X axis measures the presence in the data set, how much, you know sort of pervasiveness, if you will, is in the data. It's kind of a proxy for market presence. Now, of course we all know Kubernetes is not a company, but it remains an area where organizations are spending lots of resources and time particularly to modernize and mobilize applications. Snowflake remains the company which leads all firms in spending velocity, but as you'll see momentarily, despite its highest position relative to everybody else in the survey, it's still down from its previous levels in the high seventies and low 80% range. AWS is incredibly impressive because it has an elevated level but also a big presence in the data set in the survey. Same with Microsoft, same with ServiceNow which also stands out. And you can see the other smaller vendors like HashiCorp which is increasingly being seen as a strategic cross cloud enabler. They're showing, spending momentum. The RPA vendors you see in there automation anywhere and UI path are in the mix with numerous security companies, CrowdStrike, CyberArk, Netskope, Cloudflare, Tenable Okta, Zscaler Palo Alto networks, Sale Point Fortunate. A big number of cybersecurity firms hovering at or above that 40% mark you can see pure storage remains elevated as do PagerDuty and Coupa. So plenty of good news here, despite the recent tech crash. So that was the good, here's the not so good. So >> there is no 40% line on this chart because all these companies are well below that line. Now this doesn't mean these companies are bad companies. They just don't have the spending velocity of the ones we showed earlier. A good example here is Oracle. Look how they stand out on the X axis with a huge market presence. And Oracle remains an incredibly successful company selling to high end customers and really owning that mission critical data and application space. And remember ETR measures spending activity, but not actual spending dollars. So Oracle is skewed as a result because Oracle customers spend big bucks. But the fact is that Oracle has a large legacy install base that pulls down their growth rates. And that does show up in the ETR survey data. Broadcom is another example. They're one of the most successful companies in the industry, and they're not going after growth at all costs at all. They're going after EBITDA and of course ETR doesn't measure EBIT. So just keep that in mind, as you look at this data. Now another way to look at the data and the survey, is exploring the net score movement over the last period amongst companies. So how are they moving? What's happening to the net score over time. And this chart shows the year over year >> net score change for vendors that participate in at least three sectors within the ETR taxonomy. Remember ETR taxonomy has 12, 15 different segments. So the names above or below the gray dotted line are those companies where the net score has increased or decreased meaningfully. So to the earlier chart, it's all relative, right? Look at Oracle. While having lower net scores has also shown a more meaningful improvement in net score than some of the others, as have SAP and Teradata. Now what's impressive to me here is how AWS, Microsoft, and Google are actually holding that dotted line that gray line pretty well despite their size and the other ironically interesting two data points here are Broadcom and Nutanix. Now Broadcom, of course, as we've reported and dug into, is buying VMware and, and of, of course most customers are concerned about getting hit with higher prices. Once Broadcom takes over. Well Nutanix despite its change in net scores, in a good position potentially to capture some of that VMware business. Just yesterday, I talked to a customer who told me he migrated his entire portfolio off VMware using Nutanix AHV, the Acropolis hypervisor. And that was in an effort to avoid the VTEX specifically. Now this was a smaller customer granted and it's not representative of what I feel is Broadcom's ICP the ideal customer profile, but look, Nutanix should benefit from the Broadcom acquisition. If it can position itself to pick up the business that Broadcom really doesn't want. That kind of bottom of the pyramid. One person's trash is another's treasure as they say, okay. And here's that same chart for companies >> that participate in less than three segments. So, two or one of the segments in the ETR taxonomy. Only three names are seeing positive movement year over year in net score. SUSE under the leadership of amazing CEO, Melissa Di Donato. She's making moves. The company went public last year and acquired rancher labs in 2020. Look, we know that red hat is the big dog in Kubernetes but since the IBM acquisition people have looked to SUSE as a possible alternative and it's showing up in the numbers. It's a nice business. It's going to do more than 600 million this year in revenue, SUSE that is. It's got solid double digit growth in kind of the low teens. It's profitability is under pressure but they're definitely a player that is found a niche and is worth watching. The SolarWinds, What can I say there? I mean, maybe it's a dead cat bounce coming off the major breach that we saw a couple years ago. Some of its customers maybe just can't move off the platform. Constant contact we really don't follow and don't really, you know, focus on them. So, not much to say there. Now look at all the high priced earning stocks or infinite PE stocks that have no E and divide by zero or a negative number and boom, you have infinite PE and look at how their net scores have dropped. We've reported extensively on snowflake. They're still number one as we showed you earlier, net score, but big moves off their highs. Okta, Datadog, Zscaler, SentinelOne Dynatrace, big downward moves, and you can see the rest. So this chart really speaks to the change in expectations from the COVID bubble. Despite the fact that many of these companies CFOs would tell you that the pandemic wasn't necessarily a tailwind for them, but it certainly seemed to be the case when you look back in some of the ETR data. But a big question in the community is what's going to happen to these tech stocks, these tech companies in the market? We reached out to both Eric Bradley of ETR who used to be a technical analyst on Wall Street, and the long time trader and breaking analysis contributor, Chip Symington to get a read on what they thought. First, you know the market >> first point of the market has been off 11 out of the past 12 weeks. And bare market rallies like what we're seeing today and yesterday, they happen from time to time and it was kind of expected. Chair Powell's testimony was broadly viewed as a positive by the street because higher interest rates appear to be pushing commodity prices down. And a weaker consumer sentiment may point to a less onerous inflation outlook. That's good for the market. Chip Symington pointed out to breaking analysis a while ago that the NASDAQ has been on a trend line for the past six months where its highs are lower and the lows are lower and that's a bad sign. And we're bumping up against that trend line here. Meaning if it breaks through that trend it could be a buying signal. As he feels that tech stocks are oversold. He pointed to a recent bounce in semiconductors and cited the Qualcomm example. Here's a company trading at 12 times forward earnings with a sustained 14% growth rate over the next couple of years. And their cash flow is able to support their 2.4, 2% annual dividend. So overall Symington feels this rally was absolutely expected. He's cautious because we're still in a bear market but he's beginning to, to turn bullish. And Eric Bradley added that He feels the market is building a base here and he doesn't expect a 1970s or early 1980s year long sideways move because of all the money that's still in the system. You know, but it could bounce around for several months And remember with higher interest rates there are going to be more options other than equities which for many years has not been the case. Obviously inflation and recession. They are like two looming towers that we're all watching closely and will ultimately determine if, when, and how this market turns around. Okay, that's it for today. Thanks to my colleagues, Stephanie Chan, who helps research breaking analysis topics sometimes, and Alex Myerson who is on production in the podcast. Kristin Martin and Cheryl Knight they help get the word out and do all of our newsletters. And Rob Hof is our Editor in Chief over at siliconangle.com and does some wonderful editing for breaking analysis. Thank you. Remember, all these episodes are available as podcasts wherever you listen. All you got to do is search breaking analysis podcasts. I publish each week on wikibon.com and Siliconangle.com. And of course you can reach me by email at david.vellante@siliconangle.com or DM me at DVellante comment on my LinkedIn post and please do check out etr.ai for the best survey data in the enterprise tech business. This is Dave Vellante for the CUBE insights powered by ETR. Stay safe, be well. And we'll see you next time. (soft music)

>> From theCUBE studios in Palo Alto in Boston, bringing you data driven insights from theCUBE and ETR. This is "Breaking Analysis" with Dave Vellante. >> Snowflake Summit 2022 underscored that the ecosystem excitement which was once forming around Hadoop is being reborn, escalated and coalescing around Snowflake's data cloud. What was once seen as a simpler cloud data warehouse and good marketing with the data cloud is evolving rapidly with new workloads of vertical industry focus, data applications, monetization, and more. The question is, will the promise of data be fulfilled this time around, or is it same wine, new bottle? Hello, and welcome to this week's Wikibon CUBE Insights powered by ETR. In this "Breaking Analysis," we'll talk about the event, the announcements that Snowflake made that are of greatest interest, the major themes of the show, what was hype and what was real, the competition, and some concerns that remain in many parts of the ecosystem and pockets of customers. First let's look at the overall event. It was held at Caesars Forum. Not my favorite venue, but I'll tell you it was packed. Fire Marshall Full, as we sometimes say. Nearly 10,000 people attended the event. Here's Snowflake's CMO Denise Persson on theCUBE describing how this event has evolved. >> Yeah, two, three years ago, we were about 1800 people at a Hilton in San Francisco. We had about 40 partners attending. This week we're close to 10,000 attendees here. Almost 10,000 people online as well, and over over 200 partners here on the show floor. >> Now, those numbers from 2019 remind me of the early days of Hadoop World, which was put on by Cloudera but then Cloudera handed off the event to O'Reilly as this article that we've inserted, if you bring back that slide would say. The headline it almost got it right. Hadoop World was a failure, but it didn't have to be. Snowflake has filled the void created by O'Reilly when it first killed Hadoop World, and killed the name and then killed Strata. Now, ironically, the momentum and excitement from Hadoop's early days, it probably could have stayed with Cloudera but the beginning of the end was when they gave the conference over to O'Reilly. We can't imagine Frank Slootman handing the keys to the kingdom to a third party. Serious business was done at this event. I'm talking substantive deals. Salespeople from a host sponsor and the ecosystems that support these events, they love physical. They really don't like virtual because physical belly to belly means relationship building, pipeline, and deals. And that was blatantly obvious at this show. And in fairness, all theCUBE events that we've done year but this one was more vibrant because of its attendance and the action in the ecosystem. Ecosystem is a hallmark of a cloud company, and that's what Snowflake is. We asked Frank Slootman on theCUBE, was this ecosystem evolution by design or did Snowflake just kind of stumble into it? Here's what he said. >> Well, when you are a data clouding, you have data, people want to do things with that data. They don't want just run data operations, populate dashboards, run reports. Pretty soon they want to build applications and after they build applications, they want build businesses on it. So it goes on and on and on. So it drives your development to enable more and more functionality on that data cloud. Didn't start out that way, you know, we were very, very much focused on data operations. Then it becomes application development and then it becomes, hey, we're developing whole businesses on this platform. So similar to what happened to Facebook in many ways. >> So it sounds like it was maybe a little bit of both. The Facebook analogy is interesting because Facebook is a walled garden, as is Snowflake, but when you come into that garden, you have assurances that things are going to work in a very specific way because a set of standards and protocols is being enforced by a steward, i.e. Snowflake. This means things run better inside of Snowflake than if you try to do all the integration yourself. Now, maybe over time, an open source version of that will come out but if you wait for that, you're going to be left behind. That said, Snowflake has made moves to make its platform more accommodating to open source tooling in many of its announcements this week. Now, I'm not going to do a deep dive on the announcements. Matt Sulkins from Monte Carlo wrote a decent summary of the keynotes and a number of analysts like Sanjeev Mohan, Tony Bear and others are posting some deeper analysis on these innovations, and so we'll point to those. I'll say a few things though. Unistore extends the type of data that can live in the Snowflake data cloud. It's enabled by a new feature called hybrid tables, a new table type in Snowflake. One of the big knocks against Snowflake was it couldn't handle and transaction data. Several database companies are creating this notion of a hybrid where both analytic and transactional workloads can live in the same data store. Oracle's doing this for example, with MySQL HeatWave and there are many others. We saw Mongo earlier this month add an analytics capability to its transaction system. Mongo also added sequel, which was kind of interesting. Here's what Constellation Research analyst Doug Henschen said about Snowflake's moves into transaction data. Play the clip. >> Well with Unistore, they're reaching out and trying to bring transactional data in. Hey, don't limit this to analytical information and there's other ways to do that like CDC and streaming but they're very closely tying that again to that marketplace, with the idea of bring your data over here and you can monetize it. Don't just leave it in that transactional database. So another reach to a broader play across a big community that they're building. >> And you're also seeing Snowflake expand its workload types in its unique way and through Snowpark and its stream lit acquisition, enabling Python so that native apps can be built in the data cloud and benefit from all that structure and the features that Snowflake is built in. Hence that Facebook analogy, or maybe the App Store, the Apple App Store as I propose as well. Python support also widens the aperture for machine intelligence workloads. We asked Snowflake senior VP of product, Christian Kleinerman which announcements he thought were the most impactful. And despite the who's your favorite child nature of the question, he did answer. Here's what he said. >> I think the native applications is the one that looks like, eh, I don't know about it on the surface but he has the biggest potential to change everything. That's create an entire ecosystem of solutions for within a company or across companies that I don't know that we know what's possible. >> Snowflake also announced support for Apache Iceberg, which is a new open table format standard that's emerging. So you're seeing Snowflake respond to these concerns about its lack of openness, and they're building optionality into their cloud. They also showed some cost op optimization tools both from Snowflake itself and from the ecosystem, notably Capital One which launched a software business on top of Snowflake focused on optimizing cost and eventually the rollout data management capabilities, and all kinds of features that Snowflake announced that the show around governance, cross cloud, what we call super cloud, a new security workload, and they reemphasize their ability to read non-native on-prem data into Snowflake through partnerships with Dell and Pure and a lot more. Let's hear from some of the analysts that came on theCUBE this week at Snowflake Summit to see what they said about the announcements and their takeaways from the event. This is Dave Menninger, Sanjeev Mohan, and Tony Bear, roll the clip. >> Our research shows that the majority of organizations, the majority of people do not have access to analytics. And so a couple of the things they've announced I think address those or help to address those issues very directly. So Snowpark and support for Python and other languages is a way for organizations to embed analytics into different business processes. And so I think that'll be really beneficial to try and get analytics into more people's hands. And I also think that the native applications as part of the marketplace is another way to get applications into people's hands rather than just analytical tools. Because most people in the organization are not analysts. They're doing some line of business function. They're HR managers, they're marketing people, they're sales people, they're finance people, right? They're not sitting there mucking around in the data, they're doing a job and they need analytics in that job. >> Primarily, I think it is to contract this whole notion that once you move data into Snowflake, it's a proprietary format. So I think that's how it started but it's usually beneficial to the customers, to the users because now if you have large amount of data in paket files you can leave it on S3, but then you using the Apache Iceberg table format in Snowflake, you get all the benefits of Snowflake's optimizer. So for example, you get the micro partitioning, you get the metadata. And in a single query, you can join, you can do select from a Snowflake table union and select from an iceberg table and you can do store procedure, user defined function. So I think what they've done is extremely interesting. Iceberg by itself still does not have multi-table transactional capabilities. So if I'm running a workload, I might be touching 10 different tables. So if I use Apache Iceberg in a raw format, they don't have it, but Snowflake does. So the way I see it is Snowflake is adding more and more capabilities right into the database. So for example, they've gone ahead and added security and privacy. So you can now create policies and do even cell level masking, dynamic masking, but most organizations have more than Snowflake. So what we are starting to see all around here is that there's a whole series of data catalog companies, a bunch of companies that are doing dynamic data masking, security and governance, data observability which is not a space Snowflake has gone into. So there's a whole ecosystem of companies that is mushrooming. Although, you know, so they're using the native capabilities of Snowflake but they are at a level higher. So if you have a data lake and a cloud data warehouse and you have other like relational databases, you can run these cross platform capabilities in that layer. So that way, you know, Snowflake's done a great job of enabling that ecosystem. >> I think it's like the last mile, essentially. In other words, it's like, okay, you have folks that are basically that are very comfortable with Tableau but you do have developers who don't want to have to shell out to a separate tool. And so this is where Snowflake is essentially working to address that constituency. To Sanjeev's point, and I think part of it, this kind of plays into it is what makes this different from the Hadoop era is the fact that all these capabilities, you know, a lot of vendors are taking it very seriously to put this native. Now, obviously Snowflake acquired Streamlit. So we can expect that the Streamlit capabilities are going to be native. >> I want to share a little bit about the higher level thinking at Snowflake, here's a chart from Frank Slootman's keynote. It's his version of the modern data stack, if you will. Now, Snowflake of course, was built on the public cloud. If there were no AWS, there would be no Snowflake. Now, they're all about bringing data and live data and expanding the types of data, including structured, we just heard about that, unstructured, geospatial, and the list is going to continue on and on. Eventually I think it's going to bleed into the edge if we can figure out what to do with that edge data. Executing on new workloads is a big deal. They started with data sharing and they recently added security and they've essentially created a PaaS layer. We call it a SuperPaaS layer, if you will, to attract application developers. Snowflake has a developer-focused event coming up in November and they've extended the marketplace with 1300 native apps listings. And at the top, that's the holy grail, monetization. We always talk about building data products and we saw a lot of that at this event, very, very impressive and unique. Now here's the thing. There's a lot of talk in the press, in the Wall Street and the broader community about consumption-based pricing and concerns over Snowflake's visibility and its forecast and how analytics may be discretionary. But if you're a company building apps in Snowflake and monetizing like Capital One intends to do, and you're now selling in the marketplace, that is not discretionary, unless of course your costs are greater than your revenue for that service, in which case is going to fail anyway. But the point is we're entering a new error where data apps and data products are beginning to be built and Snowflake is attempting to make the data cloud the defacto place as to where you're going to build them. In our view they're well ahead in that journey. Okay, let's talk about some of the bigger themes that we heard at the event. Bringing apps to the data instead of moving the data to the apps, this was a constant refrain and one that certainly makes sense from a physics point of view. But having a single source of data that is discoverable, sharable and governed with increasingly robust ecosystem options, it doesn't have to be moved. Sometimes it may have to be moved if you're going across regions, but that's unique and a differentiator for Snowflake in our view. I mean, I'm yet to see a data ecosystem that is as rich and growing as fast as the Snowflake ecosystem. Monetization, we talked about that, industry clouds, financial services, healthcare, retail, and media, all front and center at the event. My understanding is that Frank Slootman was a major force behind this shift, this development and go to market focus on verticals. It's really an attempt, and he talked about this in his keynote to align with the customer mission ultimately align with their objectives which not surprisingly, are increasingly monetizing with data as a differentiating ingredient. We heard a ton about data mesh, there were numerous presentations about the topic. And I'll say this, if you map the seven pillars Snowflake talks about, Benoit Dageville talked about this in his keynote, but if you map those into Zhamak Dehghani's data mesh framework and the four principles, they align better than most of the data mesh washing that I've seen. The seven pillars, all data, all workloads, global architecture, self-managed, programmable, marketplace and governance. Those are the seven pillars that he talked about in his keynote. All data, well, maybe with hybrid tables that becomes more of a reality. Global architecture means the data is globally distributed. It's not necessarily physically in one place. Self-managed is key. Self-service infrastructure is one of Zhamak's four principles. And then inherent governance. Zhamak talks about computational, what I'll call automated governance, built in. And with all the talk about monetization, that aligns with the second principle which is data as product. So while it's not a pure hit and to its credit, by the way, Snowflake doesn't use data mesh in its messaging anymore. But by the way, its customers do, several customers talked about it. Geico, JPMC, and a number of other customers and partners are using the term and using it pretty closely to the concepts put forth by Zhamak Dehghani. But back to the point, they essentially, Snowflake that is, is building a proprietary system that substantially addresses some, if not many of the goals of data mesh. Okay, back to the list, supercloud, that's our term. We saw lots of examples of clouds on top of clouds that are architected to spin multiple clouds, not just run on individual clouds as separate services. And this includes Snowflake's data cloud itself but a number of ecosystem partners that are headed in a very similar direction. Snowflake still talks about data sharing but now it uses the term collaboration in its high level messaging, which is I think smart. Data sharing is kind of a geeky term. And also this is an attempt by Snowflake to differentiate from everyone else that's saying, hey, we do data sharing too. And finally Snowflake doesn't say data marketplace anymore. It's now marketplace, accounting for its application market. Okay, let's take a quick look at the competitive landscape via this ETR X-Y graph. Vertical access remembers net score or spending momentum and the x-axis is penetration, pervasiveness in the data center. That's what ETR calls overlap. Snowflake continues to lead on the vertical axis. They guide it conservatively last quarter, remember, so I wouldn't be surprised if that lofty height, even though it's well down from its earlier levels but I wouldn't be surprised if it ticks down again a bit in the July survey, which will be in the field shortly. Databricks is a key competitor obviously at a strong spending momentum, as you can see. We didn't draw it here but we usually draw that 40% line or red line at 40%, anything above that is considered elevated. So you can see Databricks is quite elevated. But it doesn't have the market presence of Snowflake. It didn't get to IPO during the bubble and it doesn't have nearly as deep and capable go-to market machinery. Now, they're getting better and they're getting some attention in the market, nonetheless. But as a private company, you just naturally, more people are aware of Snowflake. Some analysts, Tony Bear in particular, believe Mongo and Snowflake are on a bit of a collision course long term. I actually can see his point. You know, I mean, they're both platforms, they're both about data. It's long ways off, but you can see them sort of in a similar path. They talk about kind of similar aspirations and visions even though they're quite in different markets today but they're definitely participating in similar tam. The cloud players are probably the biggest or definitely the biggest partners and probably the biggest competitors to Snowflake. And then there's always Oracle. Doesn't have the spending velocity of the others but it's got strong market presence. It owns a cloud and it knows a thing about data and it definitely is a go-to market machine. Okay, we're going to end on some of the things that we heard in the ecosystem. 'Cause look, we've heard before how particular technology, enterprise data warehouse, data hubs, MDM, data lakes, Hadoop, et cetera. We're going to solve all of our data problems and of course they didn't. And in fact, sometimes they create more problems that allow vendors to push more incremental technology to solve the problems that they created. Like tools and platforms to clean up the no schema on right nature of data lakes or data swamps. But here are some of the things that I heard firsthand from some customers and partners. First thing is, they said to me that they're having a hard time keeping up sometimes with the pace of Snowflake. It reminds me of AWS in 2014, 2015 timeframe. You remember that fire hose of announcements which causes increased complexity for customers and partners. I talked to several customers that said, well, yeah this is all well and good but I still need skilled people to understand all these tools that I'm integrated in the ecosystem, the catalogs, the machine learning observability. A number of customers said, I just can't use one governance tool, I need multiple governance tools and a lot of other technologies as well, and they're concerned that that's going to drive up their cost and their complexity. I heard other concerns from the ecosystem that it used to be sort of clear as to where they could add value you know, when Snowflake was just a better data warehouse. But to point number one, they're either concerned that they'll be left behind or they're concerned that they'll be subsumed. Look, I mean, just like we tell AWS customers and partners, you got to move fast, you got to keep innovating. If you don't, you're going to be left. Either if your customer you're going to be left behind your competitor, or if you're a partner, somebody else is going to get there or AWS is going to solve the problem for you. Okay, and there were a number of skeptical practitioners, really thoughtful and experienced data pros that suggested that they've seen this movie before. That's hence the same wine, new bottle. Well, this time around I certainly hope not given all the energy and investment that is going into this ecosystem. And the fact is Snowflake is unquestionably making it easier to put data to work. They built on AWS so you didn't have to worry about provisioning, compute and storage and networking and scaling. Snowflake is optimizing its platform to take advantage of things like Graviton so you don't have to, and they're doing some of their own optimization tools. The ecosystem is building optimization tools so that's all good. And firm belief is the less expensive it is, the more data will get brought into the data cloud. And they're building a data platform on which their ecosystem can build and run data applications, aka data products without having to worry about all the hard work that needs to get done to make data discoverable, shareable, and governed. And unlike the last 10 years, you don't have to be a keeper and integrate all the animals in the Hadoop zoo. Okay, that's it for today, thanks for watching. Thanks to my colleague, Stephanie Chan who helps research "Breaking Analysis" topics. Sometimes Alex Myerson is on production and manages the podcasts. Kristin Martin and Cheryl Knight help get the word out on social and in our newsletters, and Rob Hof is our editor in chief over at Silicon, and Hailey does some wonderful editing, thanks to all. Remember, all these episodes are available as podcasts wherever you listen. All you got to do is search Breaking Analysis Podcasts. I publish each week on wikibon.com and siliconangle.com and you can email me at David.Vellante@siliconangle.com or DM me @DVellante. If you got something interesting, I'll respond. If you don't, I'm sorry I won't. Or comment on my LinkedIn post. Please check out etr.ai for the 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. (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 ante. >>When Frank sluman took service, now public many people undervalued the company, positioning it as just a better help desk tool. You know, it turns out that the firm actually had a massive Tam expansion opportunity in it. SM customer service, HR, logistics, security marketing, and service management. Generally now stock price followed over the years, the stellar execution under Slootman and CFO, Mike scar Kelly's leadership. Now, when they took the reins at snowflake expectations were already set that they'd repeat the feet, but this time, if anything, the company was overvalued out of the gate, the thing is people didn't really better understand the market opportunity this time around, other than that, it was a bet on Salman's track record of execution and on data, pretty good bets, but folks really didn't appreciate that snowflake. Wasn't just a better data warehouse that it was building what they call a data cloud, and we've turned a data super cloud. >>Hello and welcome to this. Week's Wikibon cube insights powered by ETR in this breaking analysis, we'll do four things. First. We're gonna review the recent narrative and concerns about snowflake and its value. Second, we're gonna share survey data from ETR that will confirm precisely what the company's CFO has been telling anyone who will listen. And third, we're gonna share our view of what snowflake is building IE, trying to become the defacto standard data platform, and four convey our expectations for the upcoming snowflake summit. Next week at Caesar's palace in Las Vegas, Snowflake's most recent quarterly results they've been well covered and well documented. It basically hit its targets, which for snowflake investors was bad news wall street piled on expressing concerns about Snowflake's consumption, pricing model, slowing growth rates, lack of profitability and valuation. Given the, given the current macro market conditions, the stock dropped below its IPO offering price, which you couldn't touch on day one, by the way, as the stock opened well above that and, and certainly closed well above that price of one 20 and folks express concerns about some pretty massive insider selling throughout 2021 and early 2022, all this caused the stock price to drop quite substantially. >>And today it's down around 63% or more year to date, but the only real substantive change in the company's business is that some of its largest consumer facing companies, while still growing dialed back, their consumption this past quarter, the tone of the call was I wouldn't say contentious the earnings call, but Scarelli, I think was getting somewhat annoyed with the implication from some analyst questions that something is fundamentally wrong with Snowflake's business. So let's unpack this a bit first. I wanna talk about the consumption pricing on the earnings call. One of the analysts asked if snowflake would consider more of a subscription based model so that they could better weather such fluctuations and demand before the analyst could even finish the question, CFO Scarelli emphatically interrupted and said, no, <laugh> the analyst might as well have asked, Hey Mike, have you ever considered changing your pricing model and screwing your customers the same way most legacy SaaS companies lock their customers in? >>So you could squeeze more revenue out of them and make my forecasting life a little bit easier. <laugh> consumption pricing is one of the things that makes a company like snowflake so attractive because customers is especially large customers facing fluctuating demand can dial and their end demand can dial down usage for certain workloads that are maybe not yet revenue producing or critical. Now let's jump to insider trading. There were a lot of insider selling going on last year and into 2022 now, I mean a lot sloop and Scarelli Christine Kleinman. Mike SP several board members. They sold stock worth, you know, many, many hundreds of millions of dollars or, or more at prices in the two hundreds and three hundreds and even four hundreds. You remember the company at one point was valued at a hundred billion dollars, surpassing the value of service now, which is this stupid at this point in the company's tenure and the insider's cost basis was very often in the single digit. >>So on the one hand, I can't blame them. You know what a gift the market gave them last year. Now also famed investor, Peter Linsey famously said, insiders sell for many reasons, but they only buy for one. But I have to say there wasn't a lot of insider buying of the stock when it was in the three hundreds and above. And so yeah, this pattern is something to watch our insiders buying. Now, I'm not sure we'll keep watching snowflake. It's pretty generous with stock based compensation and insiders still own plenty of stock. So, you know, maybe not, but we'll see in future disclosures, but the bottom line is Snowflake's business. Hasn't dramatically changed with the exception of these large consumer facing companies. Now, another analyst pointed out that companies like snap, he pointed to company snap, Peloton, Netflix, and face Facebook have been cutting back. >>And Scarelli said, and what was a bit of a surprise to me? Well, I'm not gonna name the customers, but it's not the ones you mentioned. So I, I thought I would've, you know, if I were the analyst I would've follow up with, how about Walmart target visa, Amex, Expedia price line, or Uber? Any of those Mike? I, I doubt he would've answered me anything. Anyway, the one thing that Scarelli did do is update Snowflake's fiscal year 2029 outlook to emphasize the long term opportunity that the company sees. This chart shows a financial snapshot of Snowflake's current business using a combination of quarterly and full year numbers in a model of what the business will look like. According to Scarelli in Dave ante with a little bit of judgment in 2029. So this is essentially based on the company's framework. Snowflake this year will surpass 2 billion in revenues and targeting 10 billion by 2029. >>Its current growth rate is 84% and its target is 30% in the out years, which is pretty impressive. Gross margins are gonna tick up a bit, but remember Snowflake's cost a good sold they're dominated by its cloud cost. So it's got a governor. There has to pay AWS Azure and Google for its infrastructure. But high seventies is a, is a good target. It's not like the historical Microsoft, you know, 80, 90% gross margin. Not that Microsoft is there anymore, but, but snowflake, you know, was gonna be limited by how far it can, how much it can push gross margin because of that factor. It's got a tiny operating margin today and it's targeting 20% in 2029. So that would be 2 billion. And you would certainly expect it's operating leverage in the out years to enable much, much, much lower SGNA than the current 54%. I'm guessing R and D's gonna stay healthy, you know, coming in at 15% or so. >>But the real interesting number to watch is free cash flow, 16% this year for the full fiscal year growing to 25% by 2029. So 2.5 billion in free cash flow in the out years, which I believe is up from previous Scarelli forecast in that 10, you know, out year view 2029 view and expect the net revenue retention, the NRR, it's gonna moderate. It's gonna come down, but it's still gonna be well over a hundred percent. We pegged it at 130% based on some of Mike's guidance. Now today, snowflake and every other stock is well off this morning. The company had a 40 billion value would drop well below that midday, but let's stick with the 40 billion on this, this sad Friday on the stock market, we'll go to 40 billion and who knows what the stock is gonna be valued in 2029? No idea, but let's say between 40 and 200 billion and look, it could get even ugly in the market as interest rates rise. >>And if inflation stays high, you know, until we get a Paul Voker like action, which is gonna be painful from the fed share, you know, let's hope we don't have a repeat of the long drawn out 1970s stagflation, but that is a concern among investors. We're gonna try to keep it positive here and we'll do a little sensitivity analysis of snowflake based on Scarelli and Ante's 2029 projections. What we've done here is we've calculated in this chart. Today's current valuation at about 40 billion and run a CAGR through 2029 with our estimates of valuation at that time. So if it stays at 40 billion valuation, can you imagine snowflake grow into a 10 billion company with no increase in valuation by the end, by by 2029 fiscal 2029, that would be a major bummer and investors would get a, a 0% return at 50 billion, 4% Kager 60 billion, 7%. >>Kegar now 7% market return is historically not bad relative to say the S and P 500, but with that kind of revenue and profitability growth projected by snowflake combined with inflation, that would again be a, a kind of a buzzkill for investors. The picture at 75 billion valuation, isn't much brighter, but it picks up at, at a hundred billion, even with inflation that should outperform the market. And as you get to 200 billion, which would track by the way, revenue growth, you get a 30% plus return, which would be pretty good. Could snowflake beat these projections. Absolutely. Could the market perform at the optimistic end of the spectrum? Sure. It could. It could outperform these levels. Could it not perform at these levels? You bet, but hopefully this gives a little context and framework to what Scarelli was talking about and his framework, not with notwithstanding the market's unpredictability you're you're on your own. >>There. I can't help snowflake looks like it's going to continue either way in amazing run compared to other software companies historically, and whether that's reflected in the stock price. Again, I, I, I can't predict, okay. Let's look at some ETR survey data, which aligns really well with what snowflake is telling the street. This chart shows the breakdown of Snowflake's net score and net score. Remember is ETS proprietary methodology that measures the percent of customers in their survey that are adding the platform new. That's the lime green at 19% existing snowflake customers that are ex spending 6% or more on the platform relative to last year. That's the forest green that's 55%. That's a big number flat spend. That's the gray at 21% decreasing spending. That's the pinkish at 5% and churning that's the red only 1% or, or moving off the platform, tiny, tiny churn, subtract the red from the greens and you get a net score that, that, that nets out to 68%. >>That's an, a very impressive net score by ETR standards. But it's down from the highs of the seventies and mid eighties, where high seventies and mid eighties, where snowflake has been since January of 2019 note that this survey of 1500 or so organizations includes 155 snowflake customers. What was really interesting is when we cut the data by industry sector, two of Snowflake's most important verticals, our finance and healthcare, both of those sectors are holding a net score in the ETR survey at its historic range. 83%. Hasn't really moved off that, you know, 80% plus number really encouraging, but retail consumer showed a dramatic decline. This past survey from 73% in the previous quarter down to 54%, 54% in just three months time. So this data aligns almost perfectly with what CFO Scarelli has been telling the street. So I give a lot of credibility to that narrative. >>Now here's a time series chart for the net score and the provision in the data set, meaning how penetrated snowflake is in the survey. Again, net score measures, spending velocity and a specific platform and provision measures the presence in the data set. You can see the steep downward trend in net score this past quarter. Now for context note, the red dotted line on the vertical axis at 40%, that's a bit of a magic number. Anything above that is best in class in our view, snowflake still a well, well above that line, but the April survey as we reported on May 7th in quite a bit of detail shows a meaningful break in the snowflake trend as shown by ETRS call out on the bottom line. You can see a steady rise in the survey, which is a proxy for Snowflake's overall market penetration. So steadily moving up and up. >>Here's a bit of a different view on that data bringing in some of Snowflake's peers and other data platforms. This XY graph shows net score on the vertical axis and provision on the horizontal with the red dotted line. At 40%, you can see from the ETR callouts again, that snowflake while declining in net score still holds the highest net score in the survey. So of course the highest data platforms while the spending velocity on AWS and Microsoft, uh, data platforms, outperforms that have, uh, sorry, while they're spending velocity on snowflake outperforms, that of AWS and, and Microsoft data platforms, those two are still well above the 40% line with a stronger market presence in the category. That's impressive because of their size. And you can see Google cloud and Mongo DB right around the 40% line. Now we reported on Mongo last week and discussed the commentary on consumption models. >>And we referenced Ray Lenchos what we thought was, was quite thoughtful research, uh, that rewarded Mongo DB for its forecasting transparency and, and accuracy and, and less likelihood of facing consumption headwinds. And, and I'll reiterate what I said last week, that snowflake, while seeing demand fluctuations this past quarter from those large customers is, is not like a data lake where you're just gonna shove data in and figure it out later, no schema on, right. Just throw it into the pond. That's gonna be more discretionary and you can turn that stuff off. More likely. Now you, you bring data into the snowflake data cloud with the intent of driving insights, which leads to actions, which leads to value creation. And as snowflake adds capabilities and expands its platform features and innovations and its ecosystem more and more data products are gonna be developed in the snowflake data cloud and by data products. >>We mean products and services that are conceived by business users. And that can be directly monetized, not just via analytics, but through governed data sharing and direct monetization. Here's a picture of that opportunity as we see it, this is our spin on our snowflake total available market chart that we've published many, many times. The key point here goes back to our opening statements. The snowflake data cloud is evolving well beyond just being a simpler and easier to use and more elastic cloud database snowflake is building what we often refer to as a super cloud. That is an abstraction layer that companies that, that comprises rich features and leverages the underlying primitives and APIs of the cloud providers, but hides all that complexity and adds new value beyond that infrastructure that value is seen in the left example in terms of compressed cycle time, snowflake often uses the example of pharmaceutical companies compressing time to discover a drug by years. >>Great example, there are many others this, and, and then through organic development and ecosystem expansion, snowflake will accelerate feature delivery. Snowflake's data cloud vision is not about vertically integrating all the functionality into its platform. Rather it's about creating a platform and delivering secure governed and facile and powerful analytics and data sharing capabilities to its customers, partners in a broad ecosystem so they can create additional value. On top of that ecosystem is how snowflake fills the gaps in its platform by building the best cloud data platform in the world, in terms of collaboration, security, governance, developer, friendliness, machine intelligence, etcetera, snowflake believes and plans to create a defacto standard. In our view in data platforms, get your data into the data cloud and all these native capabilities will be available to you. Now, is that a walled garden? Some might say it is. It's an interesting question and <laugh>, it's a moving target. >>It's definitely proprietary in the sense that snowflake is building something that is highly differentiatable and is building a moat around it. But the more open snowflake can make its platform. The more open source it uses, the more developer friendly and the great greater likelihood people will gravitate toward snowflake. Now, my new friend Tani, she's the creator of the data mesh concept. She might bristle at this narrative in favor, a more open source version of what snowflake is trying to build, but practically speaking, I think she'd recognize that we're a long ways off from that. And I also think that the benefits of a platform that despite requiring data to be inside of the data cloud can distribute data globally, enable facile governed, and computational data sharing, and to a large degree be a self-service platform for data, product builders. So this is how we see snow, the snowflake data cloud vision evolving question is edge part of that vision on the right hand side. >>Well, again, we think that is going to be a future challenge where the ecosystem is gonna have to come to play to fill those gaps. If snowflake can tap the edge, it'll bring even more clarity as to how it can expand into what we believe is a massive 200 billion Tam. Okay, let's close on next. Week's snowflake summit in Las Vegas. The cube is very excited to be there. I'll be hosting with Lisa Martin and we'll have Frank son as well as Christian Kleinman and several other snowflake experts. Analysts are gonna be there, uh, customers. And we're gonna have a number of ecosystem partners on as well. Here's what we'll be looking for. At least some of the things, evidence that our view of Snowflake's data cloud is actually taking shape and evolving in the way that we showed on the previous chart, where we also wanna figure out where snowflake is with it. >>Streamlet acquisition. Remember streamlet is a data science play and an expansion into data, bricks, territory, data, bricks, and snowflake have been going at it for a while. Streamlet brings an open source Python library and machine learning and kind of developer friendly data science environment. We also expect to hear some discussion, hopefully a lot of discussion about developers. Snowflake has a dedicated developer conference in November. So we expect to hear more about that and how it's gonna be leveraging further leveraging snow park, which it has previously announced, including a public preview of programming for unstructured data and data monetization along the lines of what we suggested earlier that is building data products that have the bells and whistles of native snowflake and can be directly monetized by Snowflake's customers. Snowflake's already announced a new workload this past week in security, and we'll be watching for others. >>And finally, what's happening in the all important ecosystem. One of the things we noted when we covered service now, cause we use service now as, as an example because Frank Lupin and Mike Scarelli and others, you know, DNA were there and they're improving on that service. Now in his post IPO, early adult years had a very slow pace. In our view was often one of our criticism of ecosystem development, you know, ServiceNow. They had some niche SI uh, like cloud Sherpa, and eventually the big guys came in and, and, and began to really lean in. And you had some other innovators kind of circling the mothership, some smaller companies, but generally we see sluman emphasizing the ecosystem growth much, much more than with this previous company. And that is a fundamental requirement in our view of any cloud or modern cloud company now to paraphrase the crazy man, Steve bomber developers, developers, developers, cause he screamed it and ranted and ran around the stage and was sweating <laugh> ecosystem ecosystem ecosystem equals optionality for developers and that's what they want. >>And that's how we see the current and future state of snowflake. Thanks today. If you're in Vegas next week, please stop by and say hello with the cube. Thanks to my colleagues, Stephanie Chan, who sometimes helps research breaking analysis topics. Alex, my is, and OS Myerson is on production. And today Andrew Frick, Sarah hiney, Steven Conti Anderson hill Chuck all and the entire team in Palo Alto, including Christian. Sorry, didn't mean to forget you Christian writer, of course, Kristin Martin and Cheryl Knight, they helped get the word out. And Rob ho is our E IIC over at Silicon angle. Remember, all these episodes are available as podcast, wherever you listen to search breaking analysis podcast, I publish each week on wikibon.com and Silicon angle.com. You can email me directly anytime David dot Valante Silicon angle.com. If you got something interesting, I'll respond. If not, I won't or DM me@deteorcommentonmylinkedinpostsandpleasedocheckoutetr.ai for the best survey data in the enterprise tech business. This is Dave Valante for the insights powered by ETR. Thanks for watching. And we'll see you next week. I hope if not, we'll see you next time on breaking analysis.

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 earnings season has shown a conflicting mix of signals for software companies well virtually all firms are expressing caution over so-called macro headwinds we're talking about ukraine inflation interest rates europe fx headwinds supply chain just overall i.t spend mongodb along with a few other names appeared more sanguine thanks to a beat in the recent quarter and a cautious but upbeat outlook for the near term hello and welcome to this week's wikibon cube insights powered by etr in this breaking analysis ahead of mongodb world 2022 we drill into mongo's business and what etr survey data tells us in the context of overall demand and the patterns that we're seeing from other software companies and we're seeing some distinctly different results from major firms these days we'll talk more about [ __ ] in this session which beat eps by 30 cents in revenue by more than 18 million dollars salesforce had a great quarter and its diversified portfolio is paying off as seen by the stocks noticeable uptick post earnings uipath which had been really beaten down prior to this quarter it's brought in a new co-ceo and it's business is showing a nice rebound with a small three cent eps beat and a nearly 20 million dollar top line beat crowdstrike is showing strength as well meanwhile managements at microsoft workday and snowflake expressed greater caution about the macroeconomic climate and especially on investors minds his concern about consumption pricing models snowflake in particular which had a small top-line beat cited softness and effects from reduced consumption especially from certain consumer-facing customers which has analysts digging more deeply into the predictability of their models in fact barclays analyst ramo lenchow published an especially thoughtful piece on this topic concluding that [ __ ] was less susceptible to consumption headwinds than for example snowflake essentially for a few reasons one because atlas mongo's cloud managed service which is the consumption model comprises only about 60 percent of mongo's revenue second is the premise that [ __ ] is supporting core operational applications that can't be easily dialed down or turned off and three that snowflake customers it sounds like has a more concentrated customer base and due to that fact there's a preponderance of its revenue is consumption driven and would be more sensitive to swings in these consumption patterns now i'll say this first consumption pricing models are here to stay and the much preferred model for customers is consumption the appeal of consumption is i can actually dial down turn off if i need to and stop spending for a while which happened or at least happened to a certain extent this quarter for certain companies but to the point about [ __ ] supporting core applications i do believe that over time you're going to see the increased emergence of data products that will become core monetization drivers in snowflake along with other data platforms is going to feed those data products and services and become over time maybe less susceptible and less sensitive to these consumption patterns it'll always be there but i think increasingly it's going to be tied to operational revenue last two points here in this slide software evaluations have reverted to their historical mean which is a good thing in our view we've taken some air out of the bubble and returned to more normalized valuations was really predicted and looked forward to look we're still in a lousy market for stocks it's really a bear market for tech the market tends to be at least six months ahead of the economy and often not always but often is a good predictor we've had some tough compares relative to the pandemic days in tech and we'll be watching next quarter very closely because the macro headwinds have now been firmly inserted into the guidance of software companies okay let's have a look at how certain names have performed relative to a software index benchmark so far this year here's a year-to-date chart comparing microsoft salesforce [ __ ] and snowflake to the igv software heavy etf which is shown in the darker blue line which by the way it does not own the ctf does not own snowflake or [ __ ] you can see that these big super caps have fared pretty well whereas [ __ ] and especially snowflake those higher growth companies have been much more negatively impacted year to date from a stock price standpoint now let's move on let's take a financial snapshot of [ __ ] and put it next to snowflake so we can compare these two higher growth names what we've done here in this chart has taken the most recent quarters revenue and multiplied it by 4x to get a revenue run rate and we've parenthetically added a projection for the full year revenue [ __ ] as you see will do north of a billion dollars in revenue while snowflake will begin to approach three billion dollars 2.7 and run right through that that four quarter run rate that they just had last quarter and you can see snowflake is growing faster than [ __ ] at 85 percent this past quarter and we took now these most of these profit of these next profitability ratios off the current quarter with one exception both companies have high gross margins of course you'd expect that but as we've discussed not as high as some traditional software companies in part because of their cloud costs but also you know their maturity or lack thereof both [ __ ] and snowflake because they are in high growth mode have thin operating margins they spend nearly half or more than half of their revenue on growth that's the sg a line mostly the s the sales and marketing is really where they're spending money uh and and they're specialists so they spend a fair amount of their revenue on r d but maybe not as high as you might think but a pretty hefty percentage the free cash flow as a percentage of revenue line we calculated off the full year projections because there was a kind of an anomaly this quarter in the in the snowflake numbers and you can see snowflakes free cash flow uh which again was abnormally high this quarter is going to settle in around 16 this year versus mongo's six percent so strong focus by snowflake on free cash flow and its management snowflake is about four billion dollars in cash and marketable securities on its balance sheet with little or no debt whereas [ __ ] has about two billion dollars on its balance sheet with a little bit of longer term debt and you can see snowflakes market cap is about double that of mongos so you're paying for higher growth with snowflake you're paying for the slootman scarpelli execution engine the expectation there a stronger balance sheet etc but snowflake is well off its roughly 100 billion evaluation which it touched during the peak days of tech during the pandemic and just that as an aside [ __ ] has around 33 000 customers about five times the number of customers snowflake has so a bit of a different customer mix and concentration but both companies in our view have no lack of market in terms of tam okay now let's dig a little deeper into mongo's business and bring in some etr data this colorful chart shows the breakdown of mongo's net score net score is etr's proprietary methodology that measures the percent of customers in the etr survey that are adding the platform new that's the lime green at nine percent existing customers that are spending six percent or more on the platform that's the forest green at 37 spending flat that's the gray at 46 percent decreasing spend that's the pinkish at around 5 and churning that's only 3 that's the bright red for [ __ ] subtract the red from the greens and you net out to a 38 which is a very solid net score figure note this is a survey of 1500 or so organizations and it includes 150 mongodb customers which includes by the way 68 global 2000 customers and they show a spending velocity or a net score of 44 so notably higher among the larger clients and while it's a smaller sample only 27 emea's net score for [ __ ] is 33 now that's down from 60 last quarter note that [ __ ] cited softness in its european business on its earning calls so that aligns to the gtr data okay now let's plot [ __ ] relative to some other data platforms these don't all necessarily compete head to head with [ __ ] but they are in data and database platforms in the etr data set and that's what this chart shows it's an xy graph with net score or as we say spending momentum on the vertical axis and overlap or presence or pervasiveness in the data set on the horizontal axis see that red dotted line there at 40 that indicates an elevated level of spending anything above that is highly elevated we've highlighted [ __ ] in that red box which is very close to that 40 percent line it has a pretty strong presence on the x-axis right there with gcp snowflake as we've reported has come down to earth but still well elevated again that aligns with the earnings releases uh aws and microsoft they have many data platforms especially aws so their plot position reflects their broad portfolio massive size on the x-axis um that's the presence and and very impressive on the vertical axis so despite that size they have strong spending momentum and you can see the pack of others including cockroach small on the verdict on the horizontal but elevated on the vertical couch base is creeping up since its ipo redis maria db which was launched the day that oracle bought sun and and got my sequel and some legacy platforms including the leader in database oracle as well as ibm and teradata's both cloud and on-prem platforms now one interesting side note here is on mongo's earning call it clearly cited the advantages of its increasingly all-in-one approach relative to others that offer a portfolio of bespoke or what we some sometimes call horses for courses databases [ __ ] cited the advantages of its simplicity and lower costs as it adds more and more functionality this is an argument often made by oracle and they often target aws as the company with too many databases and of course [ __ ] makes that argument uh as well but they also make the argument that oracle they don't necessarily call them out but they talk about traditional relational databases of course they're talking about oracle and others they say that's more complex less flexible and less appealing to developers than is [ __ ] now oracle of course would retur we retort saying hey we now support a mongodb api so why go anywhere else we're the most robust and the best for mission critical but this gives credence to the fact that if oracle is trying to capture business by offering a [ __ ] api for example that [ __ ] must be doing something right okay let's look at why they buy [ __ ] here's an etr chart that addresses that question it's it's mongo's feature breadth is the number one reason lower cost or better roi is number two integrations and stack alignment is third and mongo's technology lead is fourth those four kind of stand out with notice on the right hand side security and vision much lower there in the right that doesn't necessarily mean that [ __ ] doesn't have good security and and good vision although it has been cited uh security concerns um and and so we keep an eye on that but look [ __ ] has a document database it's become a viable alternative to traditional relational databases meaning you have much more flexibility over your schema um and in fact you know it's kind of schema-less you can pretty much put anything into a document database uh developers seem to love it generally it's fair to say mongo's architecture would favor consistency over availability because it uses a single master architecture as a primary and you can create secondary nodes in the event of a primary failure but you got to think about that and how to architect availability into the platform and got to consider recovery more carefully now now no schema means it's not a tables and rows structure and you can again shove anything you want into the database but you got to think about how to optimize performance um on queries now [ __ ] has been hard at work evolving the platform from the early days when you go back and look at its roadmap it's been you know started as a document database purely it added graph processing time series it's made search you know much much easier and more fundamental it's added atlas that fully managed cloud database uh service which we said now comprises 60 of its revenue it's you know kubernetes integrations and kind of the modern microservices stack and dozens and dozens and dozens of other features mongo's done a really fine job we think of creating a leading database platform today that is loved by customers loved by developers and is highly functional and next week the cube will be at mongodb world and we'll be looking for some of these items that we're showing here and this this chart this always going to be main focus on developers [ __ ] prides itself on being a developer friendly platform we're going to look for new features especially around security and governance and simplification of configurations and cluster management [ __ ] is likely going to continue to advance its all-in-one appeal and add more capabilities that reduce the need to to spin up bespoke platforms and we would expect enhance enhancements to atlas further enhancements there is atlas really is the future you know maybe adding you know more cloud native features and integrations and perhaps simplified ways to migrate to the cloud to atlas and improve access to data sources generally making the lives of developers and data analysts easier that's going to be we think a big theme at the event so these are the main things that we'll be scoping out at the event so please stop by if you're in new york city new york city at mongodb world or tune in to thecube.net okay that's it for today thanks to my colleagues stephanie chan who helps research breaking analysis from time to time alex meyerson is on production as today is as is andrew frick sarah kenney steve conte conte anderson hill and the entire team in palo alto thank you kristen martin and cheryl knight helped get the word out and rob hof is our editor-in-chief over there at siliconangle remember all these episodes are available as podcasts wherever you listen just search breaking analysis podcast we do publish each week on wikibon.com and siliconangle.com want to reach me email me david.velante siliconangle.com or dm me at divalante or a comment on my linkedin post and please do check out etr.ai for the best survey data in the enterprise tech business this is dave vellante for the cube insights powered by etr thanks for watching see you next time [Music] you

>> From theCUBE studios in Palo Alto in Boston, bringing you data driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> In the words of my colleague CTO David Nicholson, Broadcom buys old cars, not to restore them to their original luster and beauty. Nope. They buy classic cars to extract the platinum that's inside the catalytic converter and monetize that. Broadcom's planned 61 billion acquisition of VMware will mark yet another new era and chapter for the virtualization pioneer, a mere seven months after finally getting spun out as an independent company by Dell. For VMware, this means a dramatically different operating model with financial performance and shareholder value creation as the dominant and perhaps the sole agenda item. For customers, it will mean a more focused portfolio, less aspirational vision pitches, and most certainly higher prices. Hello and welcome to this week's Wikibon CUBE Insights powered by ETR. In this Breaking Analysis, we'll share data, opinions and customer insights about this blockbuster deal and forecast the future of VMware, Broadcom and the broader ecosystem. Let's first look at the key deal points, it's been well covered in the press. But just for the record, $61 billion in a 50/50 cash and stock deal, resulting in a blended price of $138 per share, which is a 44% premium to the unaffected price, i.e. prior to the news breaking. Broadcom will assume 8 billion of VMware debt and promises that the acquisition will be immediately accretive and will generate 8.5 billion in EBITDA by year three. That's more than 4 billion in EBITDA relative to VMware's current performance today. In a classic Broadcom M&A approach, the company promises to dilever debt and maintain investment grade ratings. They will rebrand their software business as VMware, which will now comprise about 50% of revenues. There's a 40 day go shop and importantly, Broadcom promises to continue to return 60% of its free cash flow to shareholders in the form of dividends and buybacks. Okay, with that out of the way, we're going to get to the money slide literally in a moment that Broadcom shared on its investor call. Broadcom has more than 20 business units. It's CEO Hock Tan makes it really easy for his business unit managers to understand. Rule number one, you agreed to an operating plan with targets for revenue, growth, EBITDA, et cetera, hit your numbers consistently and we're good. You'll be very well compensated and life will be wonderful for you and your family. Miss the number, and we're going to have a frank and uncomfortable bottom line discussion. You'll four, perhaps five quarters to turn your business around, if you don't, we'll kill it or sell it if we can. Rule number two, refer to rule number one. Hello, VMware, here's the money slide. I'll interpret the bullet points on the left for clarity. Your fiscal year 2022 EBITDA was 4.7 billion. By year three, it will be 8.5 billion. And we Broadcom have four knobs to turn with you, VMware to help you get there. First knob, if it ain't recurring revenue with rubber stamp renewals, we're going to convert that revenue or kill it. Knob number two, we're going to focus R&D in the most profitable areas of the business. AKA expect the R&D budget to be cut. Number three, we're going to spend less on sales and marketing by focusing on existing customers. We're not going to lose money today and try to make it up many years down the road. And number four, we run Broadcom with 1% GNA. You will too. Any questions? Good. Now, just to give you a little sense of how Broadcom runs its business and how well run a company it is, let's do a little simple comparison with this financial snapshot. All we're doing here is taking the most recent quarterly earnings reports from Broadcom and VMware respectively. We take the quarterly revenue and multiply by four X to get the revenue run rate and then we calculate the ratios off of the most recent quarters revenue. It's worth spending some time on this to get a sense of how profitable the Broadcom business actually is and what the spreadsheet gurus at Broadcom are seeing with respect to the possibilities for VMware. So combined, we're talking about a 40 plus billion dollar company. Broadcom is growing at more than 20% per year. Whereas VMware's latest quarter showed a very disappointing 3% growth. Broadcom is mostly a hardware company, but its gross margin is in the high seventies. As a software company of course VMware has higher gross margins, but FYI, Broadcom's software business, the remains of Symantec and what they purchased as CA has 90% gross margin. But the I popper is operating margin. This is all non gap. So it excludes things like stock based compensation, but Broadcom had 61% operating margin last quarter. This is insanely off the charts compared to VMware's 25%. Oracle's non gap operating margin is 47% and Oracle is an incredibly profitable company. Now the red box is where the cuts are going to take place. Broadcom doesn't spend much on marketing. It doesn't have to. It's SG&A is 3% of revenue versus 18% for VMware and R&D spend is almost certainly going to get cut. The other eye popper is free cash flow as a percentage of revenue at 51% for Broadcom and 29% for VMware. 51%. That's incredible. And that my dear friends is why Broadcom a company with just under 30 billion in revenue has a market cap of 230 billion. Let's dig into the VMware portfolio a bit more and identify the possible areas that will be placed under the microscope by Hock Tan and his managers. The data from ETR's latest survey shows the net score or spending momentum across VMware's portfolio in this chart, net score essentially measures the net percent of customers that are spending more on a specific product or vendor. The yellow bar is the most recent survey and compares the April 22 survey data to April 21 and January of 22. Everything is down in the yellow from January, not surprising given the economic outlook and the change in spending patterns that we've reported. VMware Cloud on AWS remains the product in the ETR survey with the most momentum. It's the only offering in the portfolio with spending momentum above the 40% line, a level that we consider highly elevated. Unified Endpoint Management looks more than respectable, but that business is a rock fight with Microsoft. VMware Cloud is things like VMware Cloud foundation, VCF and VMware's cross cloud offerings. NSX came from the Nicira acquisition. Tanzu is not yet pervasive and one wonders if VMware is making any money there. Server is ESX and vSphere and is the bread and butter. That is where Broadcom is going to focus. It's going to look at VSAN and NSX, which is software probably profitable. And of course the other products and see if the investments are paying off, if they are Broadcom will keep, if they are not, you can bet your socks, they will be sold off or killed. Carbon Black is at the far right. VMware paid $2.1 billion for Carbon Black. And it's the lowest performer on this list in terms of net score or spending momentum. And that doesn't mean it's not profitable. It just doesn't have the momentum you'd like to see, so you can bet that is going to get scrutiny. Remember VMware's growth has been under pressure for the last several years. So it's been buying companies, dozens of them. It bought AirWatch, bought Heptio, Carbon Black, Nicira, SaltStack, Datrium, Versedo, Bitnami, and on and on and on. Many of these were to pick up engineering teams. Some of them were to drive new revenue. Now this is definitely going to be scrutinized by Broadcom. So that helps explain why Michael Dell would sell VMware. And where does VMware go from here? It's got great core product. It's an iconic name. It's got an awesome ecosystem, fantastic distribution channel, but its growth is slowing. It's got limited developer chops in a world that developers and cloud native is all the rage. It's got a far flung R&D agenda going at war with a lot of different places. And it's increasingly fighting this multi front war with cloud companies, companies like Cisco, IBM Red Hat, et cetera. VMware's kind of becoming a heavy lift. It's a perfect acquisition target for Broadcom and why the street loves this deal. And we titled this Breaking Analysis taming the VMware beast because VMware is a beast. It's ubiquitous. It's an epic software platform. EMC couldn't control it. Dell used it as a piggy bank, but really didn't change its operating model. Broadcom 100% will. Now one of the things that we get excited about is the future of systems architectures. We published a breaking analysis about a year ago, talking about AWS's secret weapon with Nitro and it's Annapurna custom Silicon efforts. Remember it acquired Annapurna for a measly $350 million. And we talked about how there's a new architecture and a new price performance curve emerging in the enterprise, driven by AWS and being followed by Microsoft, Google, Alibaba, a trend toward custom Silicon with the arm based Nitro and which is AWS's hypervisor and Nick strategy, enabling processor diversity with things like Graviton and Trainium and other diverse processors, really diversifying away from x86 and how this leads to much faster product cycles, faster tape out, lower costs. And our premise was that everyone in the data center is going to competes, is going to need a Nitro to be competitive long term. And customers are going to gravitate toward the most economically favorable platform. And as we describe the landscape with this chart, we've updated this for this Breaking Analysis and we'll come back to nitro in a moment. This is a two dimensional graphic with net score or spending momentum on the vertical axis and overlap formally known as market share or presence within the survey, pervasiveness that's on the horizontal axis. And we plot various companies and products and we've inserted VMware's net score breakdown. The granularity in those colored bars on the bottom right. Net score is essentially the green minus the red and a couple points on that. VMware in the latest survey has 6% new adoption. That's that lime green. It's interesting. The question Broadcom is going to ask is, how much does it cost you to acquire that 6% new. 32% of VMware customers in the survey are increasing spending, meaning they're increasing spending by 6% or more. That's the forest green. And the question Broadcom will dig into is what percent of that increased spend (chuckles) you're capturing is profitable spend? Whatever isn't profitable is going to be cut. Now that 52% gray area flat spending that is ripe for the Broadcom picking, that is the fat middle, and those customers are locked and loaded for future rent extraction via perpetual renewals and price increases. Only 8% of customers are spending less, that's the pinkish color and only 3% are defecting, that's the bright red. So very, very sticky profile. Perfect for Broadcom. Now the rest of the chart lays out some of the other competitor names and we've plotted many of the VMware products so you can see where they fit. They're all pretty respectable on the vertical axis, that's spending momentum. But what Broadcom wants is that core ESX vSphere base where we've superimposed the Broadcom logo. Broadcom doesn't care so much about spending momentum. It cares about profitability potential and then momentum. AWS and Azure, they're setting the pace in this business, in the upper right corner. Cisco very huge presence in the data center, as does Intel, they're not in the ETR survey, but we've superimposed them. Now, Intel of course, is in a dog fight within Nvidia, the Arm ecosystem, AMD, don't forget China. You see a Google cloud platform is in there. Oracle is also on the chart as well, somewhat lower on the vertical axis, but it doesn't have that spending momentum, but it has a big presence. And it owns a cloud as we've talked about many times and it's highly differentiated. It's got a strategy that allows it to differentiate from the pack. It's very financially driven. It knows how to extract lifetime value. Safra Catz operates in many ways, similar to what we're seeing from Hock Tan and company, different from a portfolio standpoint. Oracle's got the full stack, et cetera. So it's a different strategy. But very, very financially savvy. You could see IBM and IBM Red Hat in the mix and then Dell and HP. I want to come back to that momentarily to talk about where value is flowing. And then we plotted Nutanix, which with Acropolis could suck up some V tax avoidance business. Now notice Symantec and CA, relatively speaking in the ETR survey, they have horrible spending momentum. As we said, Broadcom doesn't care. Hock Tan is not going for growth at the expense of profitability. So we fully expect VMware to come down on the vertical axis over time and go up on the profit scale. Of course, ETR doesn't measure the profitability here. Now back to Nitro, VMware has this thing called Project Monterey. It's essentially their version of Nitro and will serve as their future architecture diversifying off x86 and accommodating alternative processors. And a much more efficient performance, price in energy consumption curve. Now, one of the things that we've advocated for, we said this about Dell and others, including VMware to take a page out of AWS and start developing custom Silicon to better integrate hardware and software and accelerate multi-cloud or what we call supercloud. That layer above the cloud, not just running on individual clouds. So this is all about efficiency and simplicity to own this space. And we've challenged organizations to do that because otherwise we feel like the cloud guys are just going to have consistently better costs, not necessarily price, but better cost structures, but it begs the question. What happens to Project Monterey? Hock Tan and Broadcom, they don't invest in something that is unproven and doesn't throw off free cash flow. If it's not going to pay off for years to come, they're probably not going to invest in it. And yet Project Monterey could help secure VMware's future in not only the data center, but at the edge and compete more effectively with cloud economics. So we think either Project Monterey is toast or the VMware team will knock on the door of one of Broadcom's 20 plus business units and say, guys, what if we work together with you to develop a version of Monterey that we can use and sell to everyone, it'd be the arms dealer to everyone and be competitive with the cloud and other players out there and create the de facto standard for data center performance and supercloud. I mean, it's not outrageously expensive to develop custom Silicon. Tesla is doing it for example. And Broadcom obviously is capable of doing it. It's got good relationships with semiconductor fabs. But I think this is going to be a tough sell to Broadcom, unless VMware can hide this in plain site and make it profitable fast, like AWS most likely has with Nitro and Graviton. Then Project Monterey and our pipe dream of alternatives to Nitro in the data center could happen but if it can't, it's going to be toast. Or maybe Intel or Nvidia will take it over or maybe the Monterey team will spin out a VMware and do a Pensando like deal and demonstrate the viability of this concept and then Broadcom will buy it back in 10 years. Here's a double click on that previous data that we put in tabular form. It's how the data on that previous slide was plotted. I just want to give you the background data here. So net score spending momentum is the sorted on the left. So it's sorted by net score in the left hand chart, that was the y-axis in the previous data set and then shared and or presence in the data set is the right hand chart. In other words, it's sorted on the right hand chart, right hand table. That right most column is shared and you can see it's sorted top to bottom, and that was the x-axis on the previous chart. The point is not many on the left hand side are above the 40% line. VMware Cloud on AWS is, it's expensive, so it's probably profitable and it's probably a keeper. We'll see about the rest of VMware's portfolio. Like what happens to Tanzu for example. On the right, we drew a red line, just arbitrarily at those companies and products with more than a hundred mentions in the survey, everything but Tanzu from VMware makes that cut. Again, this is no indication of profitability here, and that's what's going to matter to Broadcom. Now let's take a moment to address the question of Broadcom as a software company. What the heck do they know about software, right. Well, they're not dumb over there and they know how to run a business, but there is a strategic rationale to this move beyond just doing portfolios and extracting rents and cutting R&D, et cetera, et cetera. Why, for example, isn't Broadcom going after coming back to Dell or HPE, it could pick up for a lot less than VMware, and they got way more revenue than VMware. Well, it's obvious, software's more profitable of course, and Broadcom wants to move up the stack, but there's a trend going on, which Broadcom is very much in touch with. First, it sells to Dell and HPE and Cisco and all the OEM. so it's not going to disrupt that. But this chart shows that the value is flowing away from traditional servers and storage and networking to two places, merchant Silicon, which itself is morphing. Broadcom... We focus on the left hand side of this chart. Broadcom correctly believes that the world is shifting from a CPU centric center of gravity to a connectivity centric world. We've talked about this on theCUBE a lot. You should listen to Broadcom COO Charlie Kawwas speak about this. It's all that supporting infrastructure around the CPU where value is flowing, including of course, alternative GPUs and XPUs, and NPUs et cetera, that are sucking the value out of the traditional x86 architecture, offloading some of the security and networking and storage functions that traditionally have been done in x86 which are part of the waste right now in the data center. This is that shifting dynamic of Moore's law. Moore's law, not keeping pace. It's slowing down. It's slower relative to some of the combinatorial factors. When you add up in all the CPU and GPU and NPU and accelerators, et cetera. So we've talked about this a lot in Breaking Analysis episodes. So the value is shifting left within that middle circle. And it's shifting left within that left circle toward components, other than CPU, many of which Broadcom supplies. And then you go back to the middle, value is shifting from that middle section, that traditional data center up into hyperscale clouds, and then to the right toward infrastructure software to manage all that equipment in the data center and across clouds. And look Broadcom is an arms dealer. They simply sell to everyone, locking up key vectors of the value chain, cutting costs and raising prices. It's a pretty straightforward strategy, but not for the fate of heart. And Broadcom has become pretty good at it. Let's close with the customer feedback. I spoke with ETRs Eric Bradley this morning. He and I both reached out to VMware customers that we know and got their input. And here's a little snapshot of what they said. I'll just read this. Broadcom will be looking to invest in the core and divest of any underperforming assets, right on. It's just what we were saying. This doesn't bode well for future innovation, this is a CTO at a large travel company. Next comment, we're a Carbon Black customer. VMware didn't seem to interfere with Carbon Black, but now that we're concerned about short term disruption to their tech roadmap and long term, are they going to split and be sold off like Symantec was, this is a CISO at a large hospitality organization. Third comment, I got directly from a VMware practitioner, an IT director at a manufacturing firm. This individual said, moving off VMware would be very difficult for us. We have over 500 applications running on VMware, and it's really easy to manage. We're not going to move those into the cloud and we're worried Broadcom will raise prices and just extract rents. Last comment, we'll share as, Broadcom sees the cloud data center and IoT is their next revenue source. The VMware acquisition provides them immediate virtualization capabilities to support a lightweight IoT offering. Big concern for customers is what technology they will invest in and innovate, and which will be stripped off and sold. Interesting. I asked David Floyer to give me a back of napkin estimate for the following question. I said, David, if you're running mission critical applications on VMware, how much would it increase your operating cost moving those applications into the cloud? Or how much would it save? And he said, Dave, VMware's really easy to run. It can run any application pretty much anywhere, and you don't need an army of people to manage it. All your processes are tied to VMware, you're locked and loaded. Move that into the cloud and your operating cost would double by his estimates. Well, there you have it. Broadcom will pinpoint the optimal profit maximization strategy and raise prices to the point where customers say, you know what, we're still better off staying with VMware. And sadly, for many practitioners there aren't a lot of choices. You could move to the cloud and increase your cost for a lot of your applications. You could do it yourself with say Zen or OpenStack. Good luck with that. You could tap Nutanix. That will definitely work for some applications, but are you going to move your entire estate, your application portfolio to Nutanix? It's not likely. So you're going to pay more for VMware and that's the price you're going to pay for two decades of better IT. So our advice is get out ahead of this, do an application portfolio assessment. If you can move apps to the cloud for less, and you haven't yet, do it, start immediately. Definitely give Nutanix a call, but going to have to be selective as to what you actually can move, forget porting to OpenStack, or do it yourself Hypervisor, don't even go there. And start building new cloud native apps where it makes sense and let the VMware stuff go into manage decline. Let certain apps just die through attrition, shift your development resources to innovation in the cloud and build a brick wall around the stable apps with VMware. As Paul Maritz, the former CEO of VMware said, "We are building the software mainframe". Now marketing guys got a hold of that and said, Paul, stop saying that, but it's true. And with Broadcom's help that day we'll soon be here. That's it for today. Thanks to Stephanie Chan who helps research our topics for Breaking Analysis. Alex Myerson does the production and he also manages the Breaking Analysis podcast. Kristen Martin and Cheryl Knight help get the word out on social and thanks to Rob Hof, who was our editor in chief at siliconangle.com. Remember, these episodes are all available as podcast, wherever you listen, just search Breaking Analysis podcast. Check out ETRs website at etr.ai for all the survey action. We publish a full report every week on wikibon.com and siliconangle.com. You can email me directly at david.vellante@siliconangle.com. You can DM me at DVellante or comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Have a great week, stay safe, be well. And we'll see you next time. (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. >> Last year, we noted in a breaking analysis that the cloud ecosystem is innovating beyond the idea or notion of multi-cloud. We've said for years that multi-cloud is really not a strategy but rather a symptom of multi-vendor. And we coined this term supercloud to describe an abstraction layer that lives above the hyperscale infrastructure that hides the underlying complexities, the APIs, and the primitives of each of the respective clouds. It interconnects whether it's On-Prem, AWS, Azure, Google, stretching out to the edge and creates a value layer on top of that. So our vision is that supercloud is more than running an individual service in cloud native mode within an individual individual cloud rather it's this new layer that builds on top of the hyperscalers. And does things irrespective of location adds value and we'll get into that in more detail. Now it turns out that we weren't the only ones thinking about this, not surprisingly, the majority of the technology ecosystem has been working towards this vision in various forms, including some examples that actually don't try to hide the underlying primitives. And we'll talk about that, but give a consistent experience across the DevSecOps tool chain. Hello, and welcome to this week's Wikibon, Cube insights powered by ETR. In this breaking analysis, we're going to share some recent examples and direct quotes about supercloud from the many Cube guests that we've had on over the last several weeks and months. And we've been trying to test this concept of supercloud. Is it technically feasible? Is it business rational? Is there business case for it? And we'll also share some recent ETR data to put this into context with some of the players that we think are going after this opportunity and where they are in their supercloud build out. And as you can see I'm not in the studio, everybody's got COVID so the studios shut down temporarily but breaking analysis continues. So here we go. Now, first thing is we uncovered an article from earlier this year by Lori MacVittie, is entitled, Supercloud: The 22 Answer to Multi-Cloud Challenges. What a great title. Of course we love it. Now, what really interested us here is not just the title, but the notion that it really doesn't matter what it's called, who cares? Supercloud, distributed cloud, someone even called it Metacloud recently, and we'll get into that. But Lori is a technologist. She's a developer by background. She works at F-Five and she's partial to the supercloud definition that was put forth by Cornell. You can see it here. That's a cloud architecture that enables application migration as a service across different availability zones or cloud providers, et cetera. And that the supercloud provides interfaces to allocate, migrate and terminate resources... And can span all major public cloud providers as well as private clouds. Now, of course, we would take that as well to the edge. So sure. That sounds about right and provides further confirmation that something new is really happening out there. And that was our initial premise when we put this fourth last year. Now we want to dig deeper and hear from the many Cube guests that we've interviewed recently probing about this topic. We're going to start with Chuck Whitten. He's Dell's new Co-COO and most likely part of the Dell succession plan, many years down the road hopefully. He coined the phrase multi-cloud by default versus multi-cloud by design. And he provides a really good business perspective. He's not a deep technologist. We're going to hear from Chuck a couple of times today including one where John Furrier asks him about leveraging hyperscale CapEx. That's an important concept that's fundamental to supercloud. Now, Ashesh Badani heads products at Red Hat and he talks about what he calls Metacloud. Again, it doesn't matter to us what you call it but it's the ecosystem gathering and innovating and we're going to get his perspective. Now we have a couple of clips from Danny Allan. He is the CTO of Veeam. He's a deep technologist and super into the weeds, which we love. And he talks about how Veeam abstracts the cloud layer. Again, a concept that's fundamental to supercloud and he describes what a supercloud is to him. And we also bring with Danny the edge discussion to the conversation. Now the bottom line from Danny is we want to know is supercloud technically feasible? And is it a thing? And then we have Jeff Clarke. Jeff Clark is the Co-COO and Vice Chairman of Dell super experienced individual. He lays out his vision of supercloud and what John Furrier calls a business operating system. You're going to hear from John a couple times. And he, Jeff Clark has a dropped the mic moment, where he says, if we can do this X, we'll describe what X is, it's game over. Okay. So of course we wanted to then go to HPE, one of Dell's biggest competitors and Patrick Osborne is the vice president of the storage business unit at Hewlett Packet Enterprise. And so given Jeff Clarke's game over strategy, we want to understand how HPE sees supercloud. And the bottom line, according to Patrick Osborne is that it's real. So you'll hear from him. And now Raghu Raghuram is the CEO of VMware. He threw a curve ball at this supercloud concept. And he flat out says, no, we don't want to hide the underlying primitives. We want to give developers access to those. We want to create a consistent developer experience in that DevsSecOps tool chain and Kubernetes runtime environments, and connect all the elements in the application development stack. So that's a really interesting perspective that Raghu brings. And then we end on Itzik Reich. Itzik is a technologist and a technical team leader who's worked as a go between customers and product developers for a number of years. And we asked Itzik, is supercloud technically feasible and will it be a reality? So let's hear from these experts and you can decide for yourselves how real supercloud is today and where it is, run the sizzle >> Operative phrase is multi-cloud by default that's kind of the buzz from your keynote. What do you mean by that? >> Well, look, customers have woken up with multiple clouds, multiple public clouds, On-Premise clouds increasingly as the edge becomes much more a reality for customers clouds at the edge. And so that's what we mean by multi-cloud by default. It's not yet been designed strategically. I think our argument yesterday was, it can be and it should be. It is a very logical place for architecture to land because ultimately customers want the innovation across all of the hyperscale public clouds. They will see workloads and use cases where they want to maintain an On-Premise cloud, On-Premise clouds are not going away, I mentioned edge clouds, so it should be strategic. It's just not today. It doesn't work particularly well today. So when we say multi-cloud by default we mean that's the state of the world today. Our goal is to bring multi-cloud by design as you heard. >> Really great question, actually, since you and I talked, Dave, I've been spending some time noodling just over that. And you're right. There's probably some terminology, something that will get developed either by us or in collaboration with the industry. Where we sort of almost have the next almost like a Metacloud that we're working our way towards. >> So we manage both the snapshots and we convert it into the Veeam portable data format. And here's where the supercloud comes into play. Because if I can convert it into the Veeam portable data format, I can move that OS anywhere. I can move it from physical to virtual, to cloud, to another cloud, back to virtual, I can put it back on physical if I want to. It actually abstracts the cloud layer. There are things that we do when we go between cloud some use BIOS, some use UEFI, but we have the data in backup format, not snapshot format, that's theirs, but we have it in backup format that we can move around and abstract workloads across all of the infrastructure. >> And your catalog is control in control of that. Is that right? Am I thinking about that the right way? >> Yeah it is, 100%. And you know what's interesting about our catalog, Dave, the catalog is inside the backup. Yes. So here's, what's interesting about the edge, two things, on the edge you don't want to have any state, if you can help it. And so containers help with that You can have stateless environments, some persistent data storage But we not not only provide the portability in operating systems, we also do this for containers. And that's true. If you go to the cloud and you're using say EKS with relational database services RDS for the persistent data later, we can pick that up and move it to GKE or move it to OpenShift On-Premises. And so that's why I call this the supercloud, we have all of this data. Actually, I think you termed the term supercloud. >> Yeah. But thank you for... I mean, I'm looking for a confirmation from a technologist that it's technically feasible. >> It is technically feasible and you can do it today. >> You said also technology and business models are tied together and enabler. If you believe that then you have to believe that it's a business operating system that they want. They want to leverage whatever they can. And at the end of the day, they have to differentiate what they do. >> Well, that's exactly right. If I take that in what Dave was saying and I summarize it the following way, if we can take these cloud assets and capabilities, combine them in an orchestrated way to deliver a distributed platform, game over. >> We have a number of platforms that are providing whether it's compute or networking or storage, running those workloads that they plum up into the cloud they have an operational experience in the cloud and they now they have data services that are running in the cloud for us in GreenLake. So it's a reality, we have a number of platforms that support that. We're going to have a a set of big announcements coming up at HPE Discover. So we led with Electra and we have a block service. We have VM backup as a service and DR on top of that. So that's something that we're providing today. GreenLake has over, I think it's actually over 60 services right now that we're providing in the GreenLake platform itself. Everything from security, single sign on, customer IDs, everything. So it's real. We have the proofpoint for it. >> Yeah. So I want to clarify something that you said because this tends to be very commonly confused by customers. I use the word abstraction. And usually when people think of abstraction, they think it hides capabilities of the cloud providers. That's not what we are trying to do. In fact, that's the last thing we are trying to do. What we are trying to do is to provide a consistent developer experience regardless of where you want to build your application. So that you can use the cloud provider services if that's what you want to use. But the DevSecOp tool chain, the runtime environment which turns out to be Kubernetes and how you control the Kubernetes environment, how do you manage and secure and connect all of these things. Those are the places where we are adding the value. And so really the VMware value proposition is you can build on the cloud of your choice but providing these consistent elements, number one, you can make better use of us, your scarce developer or operator resources and expertise. And number two, you can move faster. And number three, you can just spend less as a result of this. So that's really what we are trying to do. We are not... So I just wanted to clarify the word abstraction. In terms of where are we? We are still, I would say, in the early stages. So if you look at what customers are trying to do, they're trying to build these greenfield applications. And there is an entire ecosystem emerging around Kubernetes. There is still, Kubernetes is not a developer platform. The developer experience on top of Kubernetes is highly inconsistent. And so those are some of the areas where we are introducing new innovations with our Tanzu Application Platform. And then if you take enterprise applications, what does it take to have enterprise applications running all the time be entirely secure, et cetera. >> Well, look, the multi-cloud by default today are isolated clouds. They don't work together. Your data is siloed. It's locked up and it is expensive to move and make sense of it. So I think the word you and I were batting around before, this is an interconnected tissue. That's what the world needs. They need the clouds to work together as a single platform. That's the problem that we're trying to solve. And you saw it in some of our announcements here that we're starting to make steps on that journey to make multi-cloud work together much simpler. >> It's interesting, you mentioned the hyperscalers and all that CapEx investments. Why wouldn't you want to take advantage of a cloud and build on the CapEx and then ultimately have the solutions machine learning as one area. You see some specialization with the clouds. But you start to see the rise of superclouds, Dave calls them, and that's where you can innovate on a cloud then go to the multiple clouds. Snowflakes is one, we see a lot of examples of supercloud... >> Project Alpine was another one. I mean, it's early, but it's its clearly where you're going. The technology is just starting to come around. I mean it's real. >> Yeah. I mean, why wouldn't you want to take advantage of all of the cloud innovation out there? >> Is that something that's, that supercloud idea is a reality from a technologist perspective. >> I think it is. So for example Katie Gordon, which I believe you've interviewed earlier this week, was demonstrating the Kubernetes data mobility aspect which is another project. That's exactly part of the it's rationale, the rationale of customers being able to move some of their Kubernetes workloads to the cloud and back and between different clouds. Why are we doing? Because customers wants to have the ability to move between different cloud providers, using a common API that will be able to orchestrate all of those things with a self-service that may be offered via the APEX console itself. So it's all around enabling developers and meeting them where they are today and also meeting them into tomorrow's world where they actually may have changed their mind to do those things. So yes we are walking on all of those different aspects. >> Okay. Let's take a quick look at some of the ETR data. This is an X-Y graph. You've seen it a number of times on breaking analysis, it plots the net score or spending momentum on the Y-axis and overlap or pervasiveness in the ETR dataset on the X-axis, used to be called market share. I think that term was off putting to some people, but anyway it's an indicator of presence in the dataset. Now that red dotted line that's rarefied air where anything above that line is considered highly elevated. Now you can see we've plotted Azure and AWS in the upper right. GCP is in there and Kubernetes. We've done that as reference points. They're not necessarily building supercloud platforms. We'll see if they ever want to do so. And Kubernetes of course not a company, but we put 'em in there for context. And we've cherry picked a few players that we believe are building out or are important for supercloud build out. Let's start with Snowflake. We've talked a lot about this company. You can see they're highly elevated on the vertical axis. We see the data cloud as a supercloud in the making. You've got pure storage in there. They made the public, the early part of its supercloud journey at Accelerate 2019 when it unveiled a hybrid block storage service inside of AWS, it connects its On-Prem to AWS and creates that singular experience for pure customers. We see Hashi, HashiCorp as an enabling infrastructure, as code. So they're enabling infrastructure as code across different clouds and different locations. You see Nutanix. They're embarking on their multi-cloud strategy but it's doing so in a way that we think is supercloud, like now. Now Veeam, we were just at VeeamON. And this company has tied Dell for the number one revenue player in data protection. That's according to IDC. And we don't think it won't be long before it holds that position alone at the top as it's growing faster than in Dell in the space. We'll see, Dell is kind of waking up a little bit and putting more resource on that. But Veeam, they're a pure play vendor in data protection. And you heard their CTO, Danny Allan's view on Supercloud, they're doing it today. And we heard extensive comments as well from Dell that's clearly where they're headed, project Alpine was an early example from Dell technologies world of Supercloud in our view. And HPE with GreenLake. Finally beginning to talk about that cross cloud experience. I think it in initially HPE has been more focused on the private cloud, we'll continue to probe. We'll be at HPE discover later on the spring, actually end of June. And we'll continue to probe to see what HPE is doing specifically with GreenLake. Now, finally, Cisco, we put them on the chart. We don't have direct quotes from recent shows and events but this data really shows you the size of Cisco's footprint within the ETR data set that's on the X-axis. Now the cut of this ETR data includes all sectors across the ETR taxonomy which is not something that we commonly show but you can see the magnitude of Cisco's presence. It's impressive. Now, they had better, Cisco that is, had better be building out a supercloud in our view or they're going to be left behind. And I'm quite certain that they're actually going to do so. So we have a lot of evidence that we're putting forth here and seeing in the marketplace what we said last year, the ecosystem is take taking shape, supercloud is forming and becoming a thing. And really in our view, is the future of cloud. But there are always risks to these predictive scenarios and we want to acknowledge those. So first, look, we could end up with a bunch of bespoke superclouds. Now one supercloud is better than three separate cloud native services that do fundamentally the same thing from the same vendor. One for AWS, one for GCP and one for Azure. So maybe that's not all that bad. But to point number two, we hope there evolves a set of open standards for self-service infrastructure, federated governance, and data sharing that will evolve as a horizontal layer versus a set of proprietary vendor specific tools. Now, maybe a company like Veeam will provide that as a data management layer or some of Veeam's competitors or maybe it'll emerge again as open source. As well, and this next point, we see the potential for edge disruptions, changing the economics of the data center. Edge in fact could evolve on its own, independent of the cloud. In fact, David Floria sees the edge somewhat differently from Danny Allan. Floria says he sees a requirement for distributed stateful environments that are ephemeral where recovery is built in. And I said, David, stateful? Ephemeral? Stateful ephemeral? Isn't that an oxymoron? And he responded that, look, if it's not ephemeral the costs are going to be prohibitive. He said the biggest mistake the companies could make is thinking that the edge is simply an extension of their current cloud strategies. We're seeing that a lot. Dell largely talks about the edge as retail. Now, and Telco is a little bit different, but back to Floria's comments, he feels companies have to completely reimagine an integrated file and recovery system which is much more data efficient. And he believes that the technology will evolve with massive volumes and eventually seep into enterprise cloud and distributed data centers with better economics. In other words, as David Michelle recently wrote, we're about 15 years into the most recent cloud cycle and history shows that every 15 years or so, something new comes along that is a blind spot and highly disruptive to existing leaders. So number four here is really important. Remember, in 2007 before AWS introduced the modern cloud, IBM outpost, sorry, IBM outspent Amazon and Google and RND and CapEx and was really comparable to Microsoft. But instead of inventing cloud, IBM spent hundreds of billions of dollars on stock buybacks and dividends. And so our view is that innovation rewards leaders. And while it's not without risks, it's what powers the technology industry it always has and likely always will. So we'll be watching that very closely, how companies choose to spend their free cash flow. Okay. That's it for now. Thanks for watching this episode of The Cube Insights, powered by ETR. Thanks to Stephanie Chan who does some of the background research? Alex Morrison is on production and is going to compile all this stuff. Thank you, Alex. We're all remote this week. Kristen Nicole and Cheryl Knight do Cube distribution and social distribution and get the word out, so thank you. Robert Hof is our editor in chief. Don't forget the checkout etr.ai for all the survey action. Remember I publish each week on wikibon.com and siliconangle.com and you can check out all the breaking analysis podcasts. All you can do is search breaking analysis podcast so you can pop in the headphones and listen while you're on a walk. You can email me at david.vellante@siliconangle.com. If you want to get in touch or DM me at DVellante, you can always hit me up into a comment on our LinkedIn posts. This is Dave Vellante. Thank you for watching this episode of break analysis, stay safe, be well and we'll see you next time. (upbeat music)

>> From theCUBE Studios in Palo Alto in Boston, bringing you data driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> Cybersecurity stocks have been sending mixed signals as of late, mostly negative like much of tech, but some such as Palo Alto Networks, despite a tough go of it recently have held up better than most tech names. Others like CrowdStrike, had been out performing Broader Tech in March, but then flipped in May. Okta's performance was pretty much tracking along with CrowdStrike for most of the past several months, a little bit below, but then the Okta hack changed the trajectory of that name. Zscaler has crossed the critical billion dollar ARR revenue milestone, and now sees a path to five billion dollars in revenue, but the company stock fell sharply after its last earnings report and has been on a down trend since last November. Meanwhile, CyberArk's recent beat and raise, was encouraging and the stock acted well after its last report. Security remains the number one initiative priority amongst IT organizations and the spending momentum for many high flying cyber names remain strong. So what gives in cyber security? Hello, and welcome to this week's Wikibon CUBE insights powered by ETR. In this breaking analysis, we focus on security and will update you on the latest data from ETR to try to make sense out of the market and read into what this all means in both the near and long term, for some of our favorite names in cyber. First, the news. There's always something happening in security news cycles. The big recent news is new President Rodrigo Chavez declared a national emergency in Costa Rica due to the preponderance of Russian cyber attacks on the country's critical infrastructure. Such measures are normally reserved for natural disasters like earthquakes, but this move speaks to the nature of today's cyber threats. Of no surprise is modern superpower warfare even for a depleted power like Russia almost certainly involves cyber warfare as we continue to see in Ukraine. Privately held Arctic Wolf Networks hired Dustin Williams as its new CFO. Williams has taken three companies to IPO, including Nutanix in 2016, a very successful IPO for that company. Whether AWN chooses to pull the trigger this year or will wait until markets are less choppy or obviously remains to be seen. But it's a pretty clear sign the company is headed to IPO at some point. Now, big point of discussion this week at Red Hat Summit in Boston and the prior week at Dell technologies world was security. In the case of Red Hat, securing the digital supply chain was the main theme. And from Dell building, many security features into its storage arrays and cyber resilience services into its as a service offering called Apex. And we're seeing a trend where buyers want to reduce the number of bespoke tools they use if they, in fact can. Here's IDC's Jim Mercer, sharing data from a recent survey they conducted on the topic. Play the clip. >> Interestingly, we did a survey, I think around last August or something. And one of the questions was around where do you want your security, right? Where do you want to get your DevSecOps security from? Do you want to get it from individual vendors, right? Or do you want to get it from like your platforms that you're using and deploying changes in Kubernetes? >> Great question. What did they say? >> The majority of them, they're hoping they can get it built into the platform. That's really what they want-- >> Now, whether that's actually achievable is debatable because you have so much innovation and investment going on from the likes of startups and for instance, lace work or sneak and security companies that you see even trying to build platforms, you've got CrowdStrike, Okta, Zscaler and many others, trying to build security platforms and put it all under their umbrella. Now the last point will hit here is there was a lot of buzz in the news about Okta. The reaction to what was a relatively benign hack was pretty severe and probably overblown, but Okta's stock is paying the price of what is generally considered a blown communications plan versus a technical failure. Remember, identity is not an easy thing to rip and replace and Okta remains a best-of-breed player and leader in the space. So we're going to look at some ETR data later in this segment to try and make sense of the recent action in the market and certain names. Speaking of which let's take a look at how some of the names in cybersecurity have fared relative to some of the indices and relative indicators that we like to look at. Here's a Google finance comparison for a number of stocks and names in the bottom there you can see we plot the hack ETF which tracks security stocks. This is a year to date view. And so we don't show it here but the tech heavy NASDAQ is off around 26% year to date whereas the cyber ETF that we're showing is down 18%, okay. So cyber holding up a little bit better than broader tech as we've reported earlier, was actually much better and still seems to be a gap there, but the data are mixed. You can see Okta is way off relative to its peers. That's a combination of the breach that we talked about but also the run up in the stock since COVID. CrowdStrike was actually faring better but broke this month, we'll see how it's upcoming earnings announcements are received when it announces on June 2nd after the close. Palo Alto in the light blue has done better than most and until recently was holding up quite well. And of course, Sailpoint is another identity specialist, it is kind of off the charts here because it's going private with the acquisition by Thoma Bravo at nearly seven billion dollars. So you see some mixed signals in cyber these past several months and weeks. And so we're trying to understand what that all means. So let's take a look at the survey data and see how spending momentum is holding up. As we've reported IT spending forecast, at the macro level, they've come off their 8% highs from the end of the year, the ETRS December survey, but robust tech spending is still there. It's expected at nearly seven percent and this is amongst 1200 ETR respondents. Here's a picture from the ETR survey of the cybersecurity landscape. That y-axis that's net score or a measure of spending momentum and that horizontal access is overlap. We used to talk about it as a market share which is a measure of pervasiveness in the data set. That dotted red line at 40% indicates an elevated spending momentum level on the vertical axis and we filter the names and limited to only those with a hundred or more responses in the ETR survey. Then the pictures still pretty crowded as you can see. You got lots of companies above the red dotted line, including Microsoft which is up into the right, they're so far off the chart, it's just amazing. But also Palo Alto and Okta, Auth0, which of course is now owned by Okta, Zscaler, CyberArk is making moves. Sailpoint and Cloudflare, they're all above that magic 40% line. Now, you look at Cisco, it shows a very large presence in the horizontal axis in the data set. And it's got pretty respectable momentum and you see Splunk doing okay, no before and tenable just below that 40% line and a lot of names in the very respectable 20% zone. And we've included some legacy names just for context that fall below the zero percent line with a negative net score. And that means a larger proportion, that negative net score means a larger proportion of their customers in the survey are spending less than those that are spending more. Now, typically for these legacy names you're going to have a huge proportion of customers who have flat spending that kind of fat middle and that's why they sort of don't have that highly elevated score, but they're still viable as they get the recurring revenue each year. But the bottom line is that spending remains robust for some of the top names that we've talked about earlier despite their rocky stock performance. Now, let's filter this data a bit more to make it a little bit easier to read. So to do that, we take out Microsoft because they're just so dominant and we cherry pick some names to make the data more consumable and scannable. The other data point we've added is Okta's net score breakdown, the multicolored rows there, that row in the bottom right. Net score, it measures the percent of customers that are adding the platform new, that's the lime green, at 18% for Okta. The forest green is at 42%. That's the percent of customers in the survey that are spending six percent or more. The gray is flat spending. That's 32% for Okta, this past survey. The pink is customers that are spending less, that's three percent. They're spending six percent or worse in the survey, so only three percent for Okta. And the bright red at three percent is decommissioning the platform. You subtract the reds from the greens and you get a net score, well, into the 50s for Okta and you can see. We highlight Okta here because it's a name that we've been following for quite some time and customers have given us really solid feedback on the technology and up until the hack, they're affinity to Okta, but that seems to be continuing. We'll talk more about that. This recent breach to Okta has caused us to take a closer look. And you may recall, we reported with our ETR colleague, Eric Bradley. The breach was announced right in the middle of ETR collecting data in the last survey. And while we did see a noticeable downtick right after the announcement, the exposure of the hack and Okta's net score just after the breach was disclosed, you can see the combination of Okta and Auth0 remains very strong. I asked Eric Bradley this morning what he thought about Okta, and he pointed out that you can't evaluate this company on its price to earnings ratio. But it's forward sales multiple is now below 7X. And while attractive, these high flyers at some point, Eric says, they got to start making a profit. So you going to hold that thought, we'll come back to that. Now, another cut of the ETR data to look at our four star security names here. A while back we developed a methodology to try and cut through the noise of the crowded security sector using the ETR data to evaluate two key metrics; net score and shared N. Net score again is, spending momentum, the latter is an indicator of presence in the data set which is a proxy for market presence. Okay, we assigned those companies that cracked the top 10 in both net score and shared N, we give them four stars, okay, if they make the top 10. This chart here shows the April survey data for those companies with an N that's greater than, equal to a hundred responses. So again, we're filtering on those with a hundred or more responses. The table on the left that you see there, that's sorted by net score, okay. So we're sorting by spending momentum. And then the one on the right is sorted by shared N, so their presence in the data set. Seven companies hit the top 10 for both categories; Palo Alto Network, Splunk, CrowdStrike Okta, Proofpoint, Fortinet and Zscaler. Now, remember, take a look, Okta excludes Auth0, in this little methodology that we came up with. Auth0 didn't make the cuts but it hits the top 10 for net score. So if you add in Auth0's 112 N there that you see on the right. You add that into Okta, we put Okta in the number two spot in the survey on the right most table with the shared N of 354. Only Cisco has a higher presence in the data set. And you can see Cisco in the left lands just below that red dotted line. That's the top 10 in security. So if we were to combine Okta and Auth0 as one, Cisco would make the cut and earn four stars. Now, some other notables are CyberArk, which is just below the red line on the right most chart with an impressive 177 shared N. Again, if you combine Auth0 and Okta, CyberArk makes the four star grade because it's in the top 10 for net score on the left. And Sailpoint is another notable with a net score above 50% and it's got a shared N of 122, which is respectable. So despite the market's choppy waters, we're seeing some positive signs in the survey data for some of the more prominent names that we've been following for the last couple of years. So what does this mean for the markets going forward? As always, when we see these confusing signs we like to reach out to the network and one of the sharpest traders out there is Chip Simonton. We've quoted him before and we like to share some of his insights. And so we're going to highlight some of that here. So technically, almost every good tech stock is oversold. And as such, he suggested we might see a bounce here. We certainly are seeing that on this Friday, the 13th. But the right call tactically has been to sell into the rally these past several months, so we'll see what happens on Monday. The key issue with the name like Okta and some other momentum names like CrowdStrike and Zscaler is that when money comes back into tech, it's likely going to go to the FAANG stocks, the Facebook, Apple, Amazon, Netflix, Google, and of course, you put Microsoft in there as well. And we'll see about Amazon, by the way, it's kind of out of favor right now, as everyone's focused on the retail side of the business meanwhile it's cloud business is booming and that's where all the profit is. We think that should be the real focus for Amazon. But the point is, for these momentum names in cybersecurity that don't make money, they face real headwinds, as growth is slowing overall and interest rates rise, that makes the net present value of these investments much less attractive. We've talked about that before. But longer term, we agree with Chip Simonton that these are excellent companies and they will weather the storm and we think they're going to lead their respective markets. And in cyber, we would expect continued M&A activity, which could act as a booster shot in the arms of these names. Now in 2019, we saw the ETR data, it pointed to CrowdStrike, Zscaler, Okta and others in the security space. Some of those names that really looked to us like they were moving forward and the pandemic just created a surge in these names and admittedly they got out over their skis. But the data suggests that these leading companies have continued momentum and the potential for stay in power. Unlike the SolarWinds hack, it seems at this point anyway that Okta will recover in the market. For the reasons that we cited, investors, they might stay away for some time but longer term, there's a shift in CSO security strategies that appear to be permanent. They're really valuing cloud-based modern platforms, these platforms will likely continue to gain share and carry their momentum forward. Okay, that's it for now, thanks to Stephanie Chan, who helps with the background research and with social, Kristen Martin and Cheryl Knight help get the word out and do some great work as well. Alex Morrison is on production and handles all of our podcast. Alex, thank you. And Rob Hof is our Editor in Chief at SiliconANGLE. Remember, all these episodes, they're available as podcast, you can pop in the headphones and listen, just search "Breaking Analysis Podcast." I publish each week on wikibon.com and SiliconANGLE.com. Don't forget to check out etr.ai, best in the business for real customer data. It's an awesome platform. You can reach me at dave.vellante@siliconangle.com or @dvellante. You can comment on our LinkedIn posts. This is Dave Vellante for the CUBEinsights powered by ETR. Thanks for watching. And we'll see you next time. (bright upbeat music)

>> From theCUBE Studios in Palo Alto, in Boston bringing you Data Driven Insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> In the pre-cloud era hardware companies would run benchmarks, showing how database and or application performance ran better on their systems relative to competitors or previous generation boxes. And they would make a big deal out of it. And the independent software vendors, you know they'd do a little golf clap if you will, in the form of a joint press release it became a game of leaprog amongst hardware competitors. That was pretty commonplace over the years. The Dell Snowflake Deal underscores that the value proposition between hardware companies and ISVs is changing and has much more to do with distribution channels, volumes and the amount of data that lives On-Prem in various storage platforms. For cloud native ISVs like Snowflake they're realizing that despite their Cloud only dogma they have to grit their teeth and deal with On-premises data or risk getting shut out of evolving architectures. Hello and welcome to this week's Wikibon Cube Insights powered by ETR. In this breaking analysis, we unpack what little is known about the Snowflake announcement from Dell Technologies World and discuss the implications of a changing Cloud landscape. We'll also share some new data for Cloud and Database platforms from ETR that shows Snowflake has actually entered the Earth's orbit when it comes to spending momentum on its platform. Now, before we get into the news I want you to listen to Frank's Slootman's answer to my question as to whether or not Snowflake would ever architect the platform to run On-Prem because it's doable technically, here's what he said, play the clip >> Forget it, this will only work in the Public Cloud. Because it's, this is how the utility model works, right. I think everybody is coming through this realization, right? I mean, excuses are running out at this point. You know, we think that it'll, people will come to the Public Cloud a lot sooner than we will ever come to the Private Cloud. It's not that we can't run a private Cloud. It's just diminishes the potential and the value that we bring. >> So you may be asking yourselves how do you square that circle? Because basically the Dell Snowflake announcement is about bringing Snowflake to the private cloud, right? Or is it let's get into the news and we'll find out. Here's what we know at Dell Technologies World. One of the more buzzy announcements was the, by the way this was a very well attended vet event. I should say about I would say 8,000 people by my estimates. But anyway, one of the more buzzy announcements was Snowflake can now run analytics on Non-native Snowflake data that lives On-prem in a Dell object store Dell's ECS to start with. And eventually it's software defined object store. Here's Snowflake's clark, Snowflake's Clark Patterson describing how it works this past week on theCUBE. Play the clip. The way it works is I can now access Non-native Snowflake data using what materialized views, external tables How does that work? >> Some combination of the, all the above. So we've had in Snowflake, a capability called External Tables, which you refer to, it goes hand in hand with this notion of external stages. Basically there's a through the combination of those two capabilities, it's a metadata layer on data, wherever it resides. So customers have actually used this in Snowflake for data lake data outside of Snowflake in the Cloud, up until this point. So it's effectively an extension of that functionality into the Dell On-Premises world, so that we can tap into those things. So we use the external stages to expose all the metadata about what's in the Dell environment. And then we build external tables in Snowflake. So that data looks like it is in Snowflake. And then the experience for the analyst or whomever it is, is exactly as though that data lives in the Snowflake world. >> So as Clark explained, this capability of External tables has been around in the Cloud for a while, mainly to suck data out of Cloud data lakes. Snowflake External Tables use file level metadata, for instance, the name of the file and the versioning so that it can be queried in a stage. A stage is just an external location outside of Snowflake. It could be an S3 bucket or an Azure Blob and it's soon will be a Dell object store. And in using this feature, the Dell looks like it lives inside of Snowflake and Clark essentially, he's correct to say to an analyst that looks exactly like the data is in Snowflake, but uh, not exactly the data's read only which means you can't do what are called DML operations. DML stands for Data Manipulation Language and allows for things like inserting data into tables or deleting and modifying existing data. But the data can be queried. However, the performance of those queries to External Tables will almost certainly be slower. Now users can build things like materialized views which are going to speed things up a bit, but at the end of the day, it's going to run faster than the Cloud. And you can be almost certain that's where Snowflake wants it to run, but some organizations can't or won't move data into the Cloud for a variety of reasons, data sovereignty, compliance security policies, culture, you know, whatever. So data can remain in place On-prem, or it can be moved into the Public Cloud with this new announcement. Now, the compute today presumably is going to be done in the Public Cloud. I don't know where else it's going to be done. They really didn't talk about the compute side of things. Remember, one of Snowflake's early innovations was to separate compute from storage. And what that gave them is you could more efficiently scale with unlimited resources when you needed them. And you could shut off the compute when you don't need us. You didn't have to buy, and if you need more storage you didn't have to buy more compute and vice versa. So everybody in the industry has copied that including AWS with Redshift, although as we've reported not as elegantly as Snowflake did. RedShift's more of a storage tiering solution which minimizes the compute required but you can't really shut it off. And there are companies like Vertica with Eon Mode that have enabled this capability to be done On-prem, you know, but of course in that instance you don't have unlimited elastic compute scale on-Prem but with solutions like Dell Apex and HPE GreenLake, you can certainly, you can start to simulate that Cloud elasticity On-prem. I mean, it's not unlimited but it's sort of gets you there. According to a Dell Snowflake joint statement, the companies the quote, the companies will pursue product integrations and joint go to market efforts in the second half of 2022. So that's a little vague and kind of benign. It's not really clear when this is going to be available based on that statement from the two first, but, you know, we're left wondering will Dell develop an On-Prem compute capability and enable queries to run locally maybe as part of an extended apex offering? I mean, we don't know really not sure there's even a market for that but it's probably a good bet that again, Snowflake wants that data to land in the Snowflake data Cloud kind of makes you wonder how this deal came about. You heard Sloop on earlier Snowflake has always been pretty dogmatic about getting data into its native snowflake format to enable the best performance as we talked about but also data sharing and governance. But you could imagine that data architects they're building out their data mesh we've reported on this quite extensively and their data fabric and those visions around that. And they're probably telling Snowflake, Hey if you want to be a strategic partner of ours you're going to have to be more inclusive of our data. That for whatever reason we're not putting in your Cloud. So Snowflake had to kind of hold its nose and capitulate. Now the good news is it further opens up Snowflakes Tam the total available market. It's obviously good marketing posture. And ultimately it provides an on ramp to the Cloud. And we're going to come back to that shortly but let's look a little deeper into what's happening with data platforms and to do that we'll bring in some ETR data. Now, let me just say as companies like Dell, IBM, Cisco, HPE, Lenovo, Pure and others build out their hybrid Clouds. The cold hard fact is not only do they have to replicate the Cloud Operating Model. You will hear them talk about that a lot, but they got to do that. So it, and that's critical from a user experience but in order to gain that flywheel momentum they need to build a robust ecosystem that goes beyond their proprietary portfolios. And, you know, honestly they're really not even in the first inning most companies and for the likes of Snowflake to sort of flip this, they've had to recognize that not everything is moving into the Cloud. Now, let's bring up the next slide. One of the big areas of discussion at Dell Tech World was Apex. That's essentially Dell's nascent as a service offering. Apex is infrastructure as a Service Cloud On-prem and obviously has the vision of connecting to the Cloud and across Clouds and out to the Edge. And it's no secret that database is one of the most important ingredients of infrastructure as a service generally in Cloud Infrastructure specifically. So this chart here shows the ETR data for data platforms inside of Dell accounts. So the beauty of ETR platform is you can cut data a million different ways. So we cut it. We said, okay, give us the Cloud platforms inside Dell accounts, how are they performing? Now, this is a two dimensional graphic. You got net score or spending momentum on the vertical axis and what ETR now calls Overlap formally called Market Share which is a measure of pervasiveness in the survey. That's on the horizontal axis that red dotted line at 40% represents highly elevated spending on the Y. The table insert shows the raw data for how the dots are positioned. Now, the first call out here is Snowflake. According to ETR quote, after 13 straight surveys of astounding net scores, Snowflake has finally broken the trend with its net score dropping below the 70% mark among all respondents. Now, as you know, net score is measured by asking customers are you adding the platform new? That's the lime green in the bar that's pointing from Snowflake in the graph and or are you increasing spend by 6% or more? That's the forest green is spending flat that's the gray is you're spend decreasing by 6% or worse. That's the pinkish or are you decommissioning the platform bright red which is essentially zero for Snowflake subtract the reds from the greens and you get a net score. Now, what's somewhat interesting is that snowflakes net score overall in the survey is 68 which is still huge, just under 70%, but it's net score inside the Dell account base drops to the low sixties. Nonetheless, this chart tells you why Snowflake it's highly elevated spending momentum combined with an increasing presence in the market over the past two years makes it a perfect initial data platform partner for Dell. Now and in the Ford versus Ferrari dynamic. That's going on between the likes of Dell's apex and HPE GreenLake database deals are going to become increasingly important beyond what we're seeing with this recent Snowflake deal. Now noticed by the way HPE is positioned on this graph with its acquisition of map R which is now part of HPE Ezmeral. But if these companies want to be taken seriously as Cloud players, they need to further expand their database affinity to compete ideally spinning up databases as part of their super Clouds. We'll come back to that that span multiple Clouds and include Edge data platforms. We're a long ways off from that. But look, there's Mongo, there's Couchbase, MariaDB, Cloudera or Redis. All of those should be on the short list in my view and why not Microsoft? And what about Oracle? Look, that's to be continued on maybe as a future topic in a, in a Breaking Analysis but I'll leave you with this. There are a lot of people like John Furrier who believe that Dell is playing with fire in the Snowflake deal because he sees it as a one way ticket to the Cloud. He calls it a one way door sometimes listen to what he said this past week. >> I would say that that's a dangerous game because we've seen that movie before, VMware and AWS. >> Yeah, but that we've talked about this don't you think that was the right move for VMware? >> At the time, but if you don't nurture the relationship AWS will take all those customers ultimately from VMware. >> Okay, so what does the data say about what John just said? How is VMware actually doing in Cloud after its early missteps and then its subsequent embracing of AWS and other Clouds. Here's that same XY graphic spending momentum on the Y and pervasiveness on the X and the same table insert that plots the dots and the, in the breakdown of Dell's net score granularity. You see that at the bottom of the chart in those colors. So as usual, you see Azure and AWS up and to the right with Google well behind in a distant third, but still in the mix. So very impressive for Microsoft and AWS to have both that market presence in such elevated spending momentum. But the story here in context is that the VMware Cloud on AWS and VMware's On-Prem Cloud like VMware Cloud Foundation VCF they're doing pretty well in the market. Look, at HPE, gaining some traction in Cloud. And remember, you may not think HPE and Dell and VCF are true Cloud but these are customers answering the survey. So their perspective matters more than the purest view. And the bad news is the Dell Cloud is not setting the world on fire from a momentum standpoint on the vertical axis but it's above the line of zero and compared to Dell's overall net score of 20 you could see it's got some work to do. Okay, so overall Dell's got a pretty solid net score to you know, positive 20, as I say their Cloud perception needs to improve. Look, Apex has to be the Dell Cloud brand not Dell reselling VMware. And that requires more maturity of Apex it's feature sets, its selling partners, its compensation models and it's ecosystem. And I think Dell clearly understands that. I think they're pretty open about that. Now this includes partners that go beyond being just sellers has to include more tech offerings in the marketplace. And actually they got to build out a marketplace like Cloud Platform. So they got a lot of work to do there. And look, you've got Oracle coming up. I mean they're actually kind of just below the magic 40% in the line which is pro it's pretty impressive. And we've been telling you for years, you can hate Oracle all you want. You can hate its price, it's closed system all of that it's red stack shore. You can say it's legacy. You can say it's old and outdated, blah, blah, blah. You can say Oracle is irrelevant in trouble. You are dead wrong. When it comes to mission critical workloads. Oracle is the king of the hill. They're a founder led company that knows exactly what it's doing and they're showing Cloud momentum. Okay, the last point is that while Microsoft AWS and Google have major presence as shown on the X axis. VMware and Oracle now have more than a hundred citations in the survey. You can see that on the insert in the right hand, right most column. And IBM had better keep the momentum from last quarter going, or it won't be long before they get passed by Dell and HP in Cloud. So look, John might be right. And I would think Snowflake quietly agrees that this Dell deal is all about access to Dell's customers and their data. So they can Hoover it into the Snowflake Data Cloud but the data right now, anyway doesn't suggest that's happening with VMware. Oh, by the way, we're keeping an eye close eye on NetApp who last September ink, a similar deal to VMware Cloud on AWS to see how that fares. Okay, let's wrap with some closing thoughts on what this deal means. We learned a lot from the Cloud generally in AWS, specifically in two pizza teams, working backwards, customer obsession. We talk about flywheel all the time and we've been talking today about marketplaces. These have all become common parlance and often fundamental narratives within strategic plans investor decks and customer presentations. Cloud ecosystems are different. They take both competition and partnerships to new heights. You know, when I look at Azure service offerings like Apex, GreenLake and similar services and I see the vendor noise or hear the vendor noise that's being made around them. I kind of shake my head and ask, you know which movie were these companies watching last decade? I really wish we would've seen these initiatives start to roll out in 2015, three years before AWS announced Outposts not three years after but Hey, the good news is that not only was Outposts a wake up call for the On-Prem crowd but it's showing how difficult it is to build a platform like Outposts and bring it to On-Premises. I mean, Outpost isn't currently even a rounding era in the marketplace. It really doesn't do much in terms of database support and support of other services. And, you know, it's unclear where that that is going. And I don't think it has much momentum. And so the Hybrid Cloud Vendors they've had time to figure it out. But now it's game on, companies like Dell they're promising a consistent experience between On-Prem into the Cloud, across Clouds and out to the Edge. They call it MultCloud which by the way my view has really been multi-vendor Chuck, Chuck Whitten. Who's the new co-COO of Dell called it Multi-Cloud by default. (laughing) That's really, I think an accurate description of that. I call this new world Super Cloud. To me, it's different than MultiCloud. It's a layer that runs on top of hyperscale infrastructure kind of hides the underlying complexity of the Cloud. It's APIs, it's primitives. And it stretches not only across Clouds but out to the Edge. That's a big vision and that's going to require some seriously intense engineering to build out. It's also going to require partnerships that go beyond the portfolios of companies like Dell like their own proprietary stacks if you will. It's going to have to replicate the Cloud Operating Model and to do that, you're going to need more and more deals like Snowflake and even deeper than Snowflake, not just in database. Sure, you'll need to have a catalog of databases that run in your On-Prem and Hybrid and Super Cloud but also other services that customers can tap. I mean, can you imagine a day when Dell offers and embraces a directly competitive service inside of apex. I have trouble envisioning that, you know not with their historical posture, you think about companies like, you know, Nutanix, you know, or Cisco where they really, you know those relationships cooled quite quickly but you know, look, think about it. That's what AWS does. It offers for instance, Redshift and Snowflake side by side happily and the Redshift guys they probably hate Snowflake. I wouldn't blame them, but the EC Two Folks, they love them. And Adam SloopesKy understands that ISVs like Snowflake are a key part of the Cloud ecosystem. Again, I have a hard time envisioning that occurring with Dell or even HPE, you know maybe less so with HPE, but what does this imply that the Edge will allow companies like Dell to a reach around on the Cloud and somehow create a new type of model that begrudgingly accommodates the Public Cloud but drafts of the new momentum of the Edge, which right now to these companies is kind of mostly telco and retail. It's hard to see that happening. I think it's got to evolve in a more comprehensive and inclusive fashion. What's much more likely is companies like Dell are going to substantially replicate that Cloud Operating Model for the pieces that they own pieces that they control which admittedly are big pieces of the market. But unless they're able to really tap that ecosystem magic they're not going to be able to grow much beyond their existing install bases. You take that lime green we showed you earlier that new adoption metric from ETR as an example, by my estimates, AWS and Azure are capturing new accounts at a rate between three to five times faster than Dell and HPE. And in the more mature US and mere markets it's probably more like 10 X and a major reason is because of the Cloud's robust ecosystem and the optionality and simplicity of transaction that that is bringing to customers. Now, Dell for its part is a hundred billion dollar revenue company. And it has the capability to drive that kind of dynamic. If it can pivot its partner ecosystem mindset from kind of resellers to Cloud services and technology optionality. Okay, that's it for now? Thanks to my colleagues, Stephanie Chan who helped research topics for Breaking Analysis. Alex Myerson is on the production team. Kristen Martin and Cheryl Knight and Rob Hof, on editorial they helped get the word out and thanks to Jordan Anderson for the new Breaking Analysis branding and graphics package. Remember these episodes are all available as podcasts wherever you listen. All you do is search Breaking Analysis podcasts. You could check out ETR website @etr.ai. We publish a full report every week on wikibon.com and siliconangle.com. You want to get in touch. @dave.vellente @siliconangle.com. You can DM me @dvellante. You can make a comment on our LinkedIn posts. This is Dave Vellante for the Cube Insights powered by ETR. Have a great week, stay safe, 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. >> Despite a mixed bag of earnings reports from tech companies, negative GDP growth this past quarter, and rising inflation, the cloud continues its relentless expandtion on the IT landscape. AWS, Microsoft, and Alphabet of all reported earnings, and when you include Alibaba Cloud in the mix, the Big 4 hyperscalers are on track to generate 167 billion in revenue this year based on our projections. But as we said many times on theCUBE, the definition of cloud is expanding and hybrid environments are becoming the norm at major organizations. We're seeing the largest enterprise tech companies focus on solving for hybrid, and every public cloud company now has a strategy to bring their environments closer to where customers workloads live, at data centers, and at the edge. Hello, and welcome to this week's Wikibon CUBE Insights powered by ETR. In this Breaking Analysis will update you on our latest cloud projections and outlook. We'll share some fresh ETR data and commentary on what's happening in the hybrid zone of cloud. Let's start with the market data for the Big 4 hyperscalers. In this chart, we share our Big 4 cloud share for IaaS and PaaS for 2020, 2021, and the first quarter of 2022, and our estimate for 2022 full year and growth. Remember, only AWS and Alibaba report relatively clean IaaS and PaaS figures, whereas Microsoft and Google, they bundled their cloud infrastructure in with their SaaS numbers. We both firms, however, they do give guidance and we use survey data and other tidbits to create an apples to apples comparison, and that's what we show here. For the quarter, the Big 4 approach to 37 billion in revenue as a group. Azure's growth rate is reported by Microsoft but the absolute revenue is not. Azure growth accelerated sequentially by 49% to just over 13 billion in the quarter by our estimates while AWS's growth moderated, sequentially, but revenue still hit 18.4 billion. Azure, by our estimates, now is more than 2/3 the size of AWS's cloud business. Google and Alibaba are fighting for the bronze medal, but well behind the two leaders. Microsoft's Azure acceleration is quite remarkable for such a large revenue base, but it's not unprecedented as we've seen this pattern before with AWS. Nonetheless, the fact that Azure is growing at the same rate as GCP is quite impressive. Now, a couple of other tidbits of information. Amazon, its stock is getting hammered today because of inflation and slowing growth rates at the top line. But AWS continues to beat Wall Street's expectations. A look at Amazon's operating income this quarter tells the story. Amazon overall had operating income of -3.66 billion and AWS's operating income with 6.5 billion. AWS's operating margin grew sequentially from nearly 30% last quarter to 35.3%. That's an astoundingly profitable figure. This is comparable to insanely profitable companies like Oracle and Microsoft. These are software companies with software marginal economics. Is that level of sustainable? Probably not for AWS, but it's eye opening, nonetheless. ETR survey data shows why these companies are doing so well with customers. This chart shows the net score granularity for the Big 4 cloud players. Net score, remember, measures spending momentum by asking customers, are you adopting new? That's the lime green. Increasing spend by 6% or more, that's the forest green. Flats spend is the gray. Spending dropping by 6% or worse is the light pink. And the red is decommissioning the platform. Subtract the reds from the greens and you get a net score which is shown on the right. Anything, by the way, over 40% we consider highly elevated. Now some key points here. Microsoft includes its entire business in this chart, we are including, ETR is including Microsoft's entire business, not just its cloud. Its Azure-only net score is 67%, higher than even AWS's, and that's huge. Google Cloud, on the other hand, while still elevated is well behind the two leaders. Alibaba's data sample in the ETR survey is small and China has had its foot on the neck of Big Tech for a while so we can't read too much into a net score of 26. But notice the replacements in red across the boards single digits for all and low single digits for the two giants, 1% for Amazon and Azure. Very impressive. Now the other really telling reality check is CapEx spending on cloud. CapEx spend tends to be a pretty good indicator of scale. And Charles Fitzgerald who runs the Platformonomics blog spends a fair amount of his time on this topic and we borrowed this chart from a recent post he did, and then we put in some estimates of our own. It shows CapEx spend over time for five cloud companies, the Big 3 US firms that we just talked about, plus IBM and Oracle. And it's always astounding to me to go back to the pre-cloud era and look at IBM. They were in a great position prior to 2006 to really dominate this notion of as a service and the transition to what is now known as cloud. But they really couldn't get their head out of professional services and their outsourcing business. There was some conflicts there as well. And so, you know, IBM you see is that dark blue or black line and spent significantly more than the others way back when, not anymore. Charles is kind of a snark. He loves to make fun of our super cloud concept even though I'm confident it's evolving and is real. But his point above in this chart is right on, the Big 3 US players spend far more on CapEx than IBM and Oracle. He states that Oracle's uptick in CapEx spend puts them past IBM, but the two of them are battling to distance themselves and differentiate from the X-axis. Funny guy, Charles. In its recent earnings report, Amazon stated that around 40% of its CapEx goes to infrastructure and most of that goes to AWS. It expects CapEx to grow this year and around 50% will go toward infrastructure. So we've superimposed our rough estimate of where AWS lands when you subtract out all of Amazon's warehouses for retail. And once again, Microsoft is notable because unlike Amazon, it doesn't have a zillion warehouses to ship products to consumers. And while Google spending is massive, it's mostly on servers to power its ad network. But there's no question that GCP can leverage that infrastructure and the tech behind it, and it does. And by the way, so can everyone else, by the way, leverage all this CapEx spend. We're going to come back to that and talk about super cloud in a moment. Okay, let's close by looking at the ever-expanding cloud landscape. This chart shows a two-dimensional view of the ETR data for cloud computing. On the vertical-axis is net score or spending momentum, and in the horizontal-axis is pervasiveness in the data set. It's like market share within the survey, if you will. The chart insert shows the data for how the dots are plotted on each axis. The red dotted line at 40%, remember, indicates a highly elevated position with net score and significant spending momentum. And the green arrows show the movement for some companies relative to three months ago. Okay, so Microsoft and AWS, they're kind of circled way up in the right-hand corner, very impressive. Just to reduce the clutter, we're not showing AWS Lambda here and some other highly elevated services which would push up, ticked up AWS's net score but it's still really, really good. As is azure, they're both moving solidly to the right relative to last quarters survey. So gaining presence in the data set and presumably in the market as well. Google is, as we've said, well behind and has much work to do. It was announced this past week that the head of sales at Google Cloud, Rob Enslin, is leaving to join UiPath, so some interesting news there. We've highlighted the hybrid zone. Now to the theme of this Breaking Analysis, the ever-expanding cloud, AWS announced that it's completed the launch of 16 local zones in the US and there are 32 more coming across 26 countries. Local zones basically bring cloud infrastructure to regions where there's a lot of IT that isn't going to move. And for proximity and latency reasons, they have to move closer, move the cloud closer, the cloud operating model if you will, closer to the customers. And there's that CapEx build out showing its head again. Now the reason this hybrid zone becomes interesting is you're seeing the large enterprise players finally go after the hybrid cloud in Earnest. It's almost like the AWS outposts announcement in 2018 was a wake up call to infrastructure players like Dell, HPE, and IBM. It took a while, but Oracle is kind of skipping to its own tune, but they're in that hybrid zone as well. IBM had a really good quarter and the Red Hat acquisition seems to be working to support its hybrid cloud strategy. Now VMware several years ago clean up its fuzzy cloud strategy and partnered up with AWS and everyone else. And you see VMware Cloud on AWS doing well as is VMware Cloud, its on-prem offering. Even though it's somewhat lower on the X-axis, based on that green arrow was showing relative to last quarter. It's moving to the right with a greater presence in the data set so that we see that as a positive sign. Now, Dell and HP are interesting. Both companies are going hard after as a service with APEX and GreenLake, respectively. HPE, based on the survey data from ETR, seems to have a lead in spending momentum while Dell has a larger presence in the market, naturally, as a much bigger company. HPE is climbing up on the X-axis, as is Dell, although, not as quickly. And the point we come back to often is the definition of cloud is in the eye of the customer. AWS can say, "No, no that's not cloud." And the on-prem crowd can say, "Ooh, we have cloud too." It really doesn't matter. What matters is what the customer thinks and which platforms they choose to invest. And I'll close by circling back to the idea of super cloud. You are seeing it evolve and you're going to hear more and more about it. Yeah, maybe not the term, many don't like it. We're going to continue to use it as a metaphor for a layer that leverages the CapEx build, the gift that the hyperscalers are providing the industry. This is a real opportunity for the likes of Dell, HPE, IBM, Cisco, and dozens of other companies providing compute and storage infrastructure, networking, security, database, and other parts of the stack. By hiding the underlying complexity of the cloud, dealing with all the API and primitive muck, creating singular experience across on-prem, across clouds, and out to the edge is a definite need from customers. This is a new battle that's shaping up and it's going to be expensive to build and it require an ecosystem cooperating across this API economy, as some like to call it. It's going to have to do that to make it a reality. Now there's a definite, as I say, customer need for this common experience, and in our view, we're seeing it manifest in pockets today and in strategies and in R&D projects, both within startups and established players. Okay, that's it for today. Thanks to Stephanie Chan who helps research Breaking Analysis topics. Alex Myerson is on production and he also manages the Breaking Analysis podcast. Kristen and Martin and Cheryl Knight get the word out on social. Thanks to all, including Rob Hof, our editor in chief at SiliconANGLE. Remember these episodes are all available as podcast wherever you listen. All you got to do is search Breaking Analysis podcast. Check out ETR website at etr.ai. We publish a full report every week on wikibon.com and siliconangle.com. You can email me directly at david.vellante@siliconangle.com, or DM me @dvellante or comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Have a great week, stay safe, be well and we'll see you next time. (upbeat music)

>>Okay, welcome back everyone to San Francisco, live coverage here with the cube 80, be summit 2022. We're back in person. I'm John furry host of the cube. We'll be at the 80 us summit in New York city. This summer, check us out then. But right now, two days in San Francisco, getting all the coverage what's going on in the cloud, we got a cube, alumni and friend of the cube. I dos car CEO, investor, a Sierra, and also an investor and a bunch of startups, angel investor. I'm gonna do great to see you. Thanks for coming on the cube. Good to see you. Good to see. See you, sir. Chris pump. Cool. How are you? >>Good. How are you? >>So congratulations on all your investments. Uh, you've made a lot of great successes over the past couple years and your company raising some good cash as Sarah. So give us the update. How much cash have you guys raised? What's the status of the company product what's going on? >>First of all, thank you for having me. We're back to be business with you never while after. Great to see you. Um, so I, as the company started around four years back, I invested with a few of the investors and now I'm the CEO. Um, we have raised close to a hundred million there. The investors are people like nor west Menlo, true ventures, coast, lo ventures, Ram Shera, and all those people all well known guys, Andy Beel chime Paul Mo Mayard web. So a whole bunch of operating people and, uh, Silicon valley vs are involved >>And has it gone? >>It's going well. We are doing really well. We are going almost 300% year over year. Uh, for last three years, the space ISRA is going after is what I call the applying AI for customer service. It operations, it help desk, uh, the same place I used to work at ServiceNow. We are partners with ServiceNow to take, how can we argument for employees and customers, Salesforce, and service now to take it the next stage? Well >>Of having you on the cube, Dave and I, David ante as well loves having you on too, because you not only bring the entrepreneurial CEO experience, you're an investor. You're like a, you're like a guest analyst. <laugh> >>You know who done? You >>Get the comment, this fun to talk to you though, you >>Get the commentary, you you're your finger on the pulse. Um, so I gotta ask you obviously, AI and machine learning, machine learning AI, or you want to phrase isn't every application. Now, AI first, uh, you're seeing a lot of that going on. You're starting to see companies build the modern applications at the top of the stack. So the cloud scale has hit. We're seeing cloud scale. You predicted that we talked about in the cube many times. Now you have that past layer with a lot more services and cloud native becoming a standard layer. Containerizations growing Docker just raised a hundred million on a 2 billion valuation back from the debt after they pivoted from an enterprise services. So open source developers are booming. Um, where's the action. I mean, is there data control, plane emerging, AI needs data. There's a lot of challenges around this. There's a lot of discussions and a lot of companies being funded, observability there's 10 million observability companies. Data is the key. What's your angle on this? What's your take? Yeah, >>No, look, I think I'll give you the view that I see right from my side. Obviously data is very clear. So the things that system of recorded you and me talked about the next layer is called system of intelligence. That's where the AI will play. Like we talk cloud native, it'll be called AI. Native NATO is a new buzzword and using the AI for customer service it operations. We talk about observability. I call it AI ops, applying ops for good old it operations management, cloud management. So you'll see the AOPs applied for whole list of, uh, application from observability doing the CMDB, predicting the events incidents. So I see a lot of work clicking for AIOps and AI service desk. What used to be help desk with ServiceNow BMC <inaudible> you see a new, a layer emerging as a system of intelligence. Uh, the next would be is applying AI with workflow automation. So that's where you'll see a lot of things called customer workflows, employee workflows. So think of what UI path automation, anywhere ServiceNow are doing, that area will be driven with AI workflows. So you'll see AI going off >>Is RPA a company is AI, is RPA a feed of something bigger? Or can someone have a company on RPA UI pass? One will be at their event this summer? Um, is it a product company? I mean, I mean, RPA is almost, should be embedded in everything. It's a feature. >>It is very good point. Very, very good thing. So one is, it's the category for sure. Like it's a category, it's an area where RPA maybe change the name. I call it much more about automation, workflow automation, but RPA and automation is a category. Um, it's a company also, but that automation should be ed in every area. Yeah. Like we call cloud NATO and AI NATO. It'll become automation. NATO. Yeah. And that's your thinking? So >>It's most interesting me. I think about the, what you're talking about. What's coming to my is I'm kinda having flashbacks to the old software model of middleware. Remember at middleware, it was very easy to understand it was middleware. It sat between two things and then the middle and it was software abstraction. Now you have all kinds of workflows abstractions everywhere. So multiple databases, it's not a monolithic thing. Right? Right. So as you break that down, is this the new modern middleware? Because what you're talking about is data workflows, but they might be siloed. Are they integrated? I mean, these are the challenges. This is crazy. What's the, >>So don't put the database became called polyglot databases. Yeah. I call this one polyglot automation. So you need automation as a layer, as a category, but you also need to put automation in every area like you you're talking about. It should be part of service. Now it should be part of ISRA, like every company, every Salesforce. So that's why you see it. MuleSoft and Salesforce buying RPA companies. So you'll see all the SaaS companies, cloud companies having an automation as a core. So it's like how you have a database and compute and sales and networking. You'll also have an automation as a layer <inaudible> inside every stack. >>All right. So I wanna shift gears a little bit and get your perspective on what's going on behind us. You can see, uh, behind us, you got the expo hall, got, um, we're back to vents, but you got, you know, AMD, Clum, Ove, uh, Dynatrace data, dog, innovative all the companies out here that we know. And we interview them all. They're trying to be suppliers to this growing enterprise market. Right. Okay. But now you also got the entrepreneurial equation. Okay. We're gonna have John Sado on from Deibel later today. He's a former NEA guy and we always talk to Jerry, Jen. We know all the, the VCs. What does the startups look like? What does the, to of the, in your mind, cuz you, I know you invest the entrepreneurial founder situation. Cloud's bigger. Mm-hmm <affirmative> global, right? Data's part of it. You mentioned data's code. Yes. Basically. Data's everything. What's it like for a first an entrepreneur right now who's starting a company. What's the white space. What's the attack plan. How do they get in the market? How do they engineer everything? >>Very good. So I'll give it to two things that I'm seeing out there. Remember days of Amazon created the startups 15 years back, everybody built on Amazon now Azure and GCP. The next layer would be is people don't just build on Amazon. They're going build it on top of snowflake. Companies are snowflake becomes the data platform, right? People will build on snowflake. Right? So I, my old boss Blankman trying to build companies on snowflake. So you don't build it just on Amazon. You build it on Amazon and snowflake. Snowflake will become your data store. Snowflake will become your data layer. Right? So I think that's the next level of <inaudible> trying to do that. So if I'm doing observability AI ops, if I'm doing next level of Splunk SIM, I'm gonna build it on snowflake, on Salesforce, on Amazon, on Azure, et cetera. >>It's interesting. You know, Jerry Chan has it put out a thesis a couple months ago called castles in the cloud where your moat is, what you do in the cloud. Not necessarily in the, in the IP. Um, Dave LAN and I had last reinvent, coined the term super cloud. Right's got a lot of traction and a lot of people throwing, throwing mud at us, but we were, our thesis was, is that what Snowflake's doing? What Goldmans Sachs is doing. You're starting to see these clouds on top of clouds. So Amazon's got this huge CapEx advantage. And guys like Charles Fitzgerald out there who we like was kind of shitting on us saying, Hey, you guys terrible, they didn't get him. Like, yeah, I don't think he gets it, but that's a whole, can't wait to debate him publicly on this. He's cool. Um, but snowflake is on Amazon. Yes. Now they say they're on Azure now. Cause they've got a bigger market and they're public, but ultimately without a AWS snowflake doesn't exist and, and they're reimagining the data warehouse with the cloud, right? That's the billion dollar opportunity. >>It is. It is. They both are very tight. So imagine what Frank has done at snowflake and Amazon. So if I'm a startup today, I want to everything on Amazon where possible whatever is, I cannot build, I'll make the pass layer. Remember the middle layer pass will be snowflake so I can build it on snowflake. I can use them for data layer. If I really need do size, I'll build it on force.com Salesforce. Yeah. Right. So I think that's where you'll. >>So basically the, the, if you're an entrepreneur, the, the north star in terms of the, the outcome is be a super cloud. It is, That's the application on another big CapEx ride, the CapEx of AWS or >>Cloud, and that reduce your product development, your go to market and you get use the snowflake marketplace to drive your engagement. >>Yeah. Yeah. How are, how is Amazon and the clouds dealing with these big whales, the snowflakes of the world? I mean, I know they got a great relationship, uh, but snowflake now has to run a company they're public. Yeah. So, I mean, I'll say, I think they had Redshift. Amazon has got Redshift, um, but snowflakes, a big customer and the they're probably paying AWS, I think bills too. So >>John video it's like whole Netflix is, and Amazon prime Netflix runs on Amazon, but Amazon has Amazon prime that co-optation will be there. So Amazon will have Redshift, but Amazon is also partnering with, uh, snowflake to have native snowflake data warehouses, a data layer. So I think depending on the applic use case, you have to use each of the above. I think snowflake is here for a long term. So if I'm building an application, I want to use snowflake then, right. Think from stats. >>Well, I think that it comes back down to entrepreneurial hustle. Do you have a better product? Right. Product value will ultimately determine it as long as the cloud doesn't, You know, foreclose your value. That's right. With some sort of internal hack. But I think, I think the general question that I have is that I, I think it's okay to have a super cloud like that because the rising tide is still happening. Some point, when does the rising tide stop >>And >>The people shopping up their knives, it gets more competitive or is it just an infinite growth cycle? >>I think it's growth. You call it cloud scale. You invented the word cloud scale. So I think, look, cloud will continually agree, increase. I think there's, as long as there are more movement from on, uh, on-prem to the classical data center, I think there's no reason at this point, the rumor, the old lift and shift that's happening in like my business. I see people lift and shifting from the it operations, it helpless, even the customer service service now and, uh, ticket data from BMCs CAS like Microfocus, all those workloads are shifted to the cloud, right? So ticketing system is happening. Cloud system of record is happening. So I think this train has still a long way to go >>Made. I wanna get your thoughts for the folks watching that are, uh, enterprise buyers or practitioners, not suppliers to the market, feel free to text me or DMing next. Question's really about the buying side, which is if I'm a customer, what's the current, um, appetite for startup products, cuz you know, the big enterprises now and you know, small, medium, large, and large enterprise, they're all buying new companies cuz a startup can go from zero to relevant very quickly. So that means now enterprises are engaging heavily with startups. What's it like what's is there a change in order of magnitude of the relationship between startup selling to, or growing startup selling to an enterprise? Um, have you seen changes there? I mean I'm seeing some stuff, but why don't we get your thoughts on that? What, no, it >>Is. If I remember going back to our 2007 or eight, when I used to talk to you back then and Amazon started very small, right? We an Amazon summit here. So I think enterprises on the average used to spend nothing with startups. It's almost like 0% or one person today. Most companies are already spending 20, 30% with startups. Like if I look at a CIO, a line of business it's gone. Yeah. Can it go more? I think it can double in the next four, five years. Yeah. Spending on the startups. >>Yeah. And check our, uh, AWS startups.com. That's a site that we built for the startup community for buyers and startups. And I want get your reaction because I, I reference the URL cause it's like, there's like a bunch of companies we've been promoting because the solutions that startups have actually are new stuff. Yes. It's bending, it's shifting left for security or using data differently or are um, building tools and platforms for data engineering. Right. Which is a new persona that's emerging. So you know, a lot of good resources there. Um, and goes back now to the data question. Now, getting back to your, what you're working on now is what's your thoughts around this new, um, data engineering persona. You mentioned a AIOps we've been seeing AOPs IOPS blue booming and that's creating a new developer paradigm that's right. Which we call and coin data as code data as code is like infrastructure as code, but it's for data, right? It's developing with data, right? Retraining machine learnings, going back to the data lake, getting data to make, to do analysis, to make the machine learning better post event or post action. So this, this to engineers like an SRE for data, it's a new, scalable role we're seeing. Do you see the same things? Do you agree? Um, do you disagree or can you share >>Yourself? I, no, I have a lot of thoughts that first is I see the AOP solutions in the future should be not looking back. I need to be like we are in San Francisco bay. That means earthquake prediction. Right? I want AOPs to predict when the outages are gonna happen. When there's a performance issue. I don't think most AOPs vendors have not gone through it. Like I spend a lot of time with data dog, Cisco app dynamic, right? Dynatrace, all this solution will go future towards predict to proactive solution with AOPs. But what you bring of a very good point on the data side, I think like we have a Amazon marketplace and for startup, there should be data exchange where you want to create for AOPs and AI service desk customers that give the data, share the data because we thought the data algorithms are useless. I can come the best algorithm, but I gotta train them, modify them, tweak them, make >>Them >>Better, make them better. Yeah. And I think there are a whole data exchange is the industry has not thought through something you and me talk many times. Yeah. Yeah. I think the whole, that data is very important. >>You've always been on, on the Vanguard of data because, uh, it's been really fun. Yeah. >>Going back to big data days back in 2009, you know, >>Look at, look how much data bricks has grown. >>It is double, the >>Key cloud air kinda went private, so good stuff. But what are you working on right now? Give a, give a, um, plug for what you're working on. You'll still invest strength. >>I do still invest, but look, I'm a hundred percent on ISRA right now. I'm the CEO there. Yeah. Okay. >>So >>Right. ISRA is my number one baby right now. So I'm looking at that growing customers and my customers. Some of them you like it's zoom auto desk, MacAfee, uh, grantor. So all the top customers, um, mainly for it help desk customer service ops. Those are three product lines and going after enterprise and commercial deals. >>And when should someone buy your product? What what's their need? What category is it? >>I think the look whenever somebody needs to buy the product is if you need AOP solution to predict, keep your lights on, predict ours one area. If you want to improve employee experience, you are using a slack teams and you want to automate all your workflows. That's another value. Prop. Third is customer service. You don't want to hire more people to do it. Some of the areas where you want to scale your company, grow your company, eliminate the cost customer service. >>Great stuff, man. Great to see you. Thanks for coming on. Congratulations on the success of your company and your investments. Thanks for coming on the key. Okay. I'm John fur here at the cube live in San Francisco for day one of two days of coverage of Aish summit 2022. And we're gonna be at a summit in San, uh, in New York in the summer. So look for that on this calendar, of course, go to Aish startups.com and mention that it's ay for all the hot startups and of course the cube.net and Silicon angle.com. Thanks for watching. We'll be back more coverage after this short break.