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 despite all the chatter about cloud repatriation and the exorbitant cost of cloud computing customer spending momentum continues to accelerate in the post-isolation economy if the pandemic was good for the cloud it seems that the benefits of cloud migration remain lasting in the late stages of covid and beyond and we believe this stickiness is going to continue for quite some time we expect i asked revenue for the big four hyperscalers to surpass 115 billion dollars in 2021 moreover the strength of aws specifically as well as microsoft azure remain notable such large organizations showing elevated spending momentum as shown in the etr survey results is perhaps unprecedented in the technology sector hello everyone and welcome to this week's wikibon cube insights powered by etr in this breaking analysis we'll share some some fresh july survey data that indicates accelerating momentum for the largest cloud computing firms importantly not only is the momentum broad-based but it's also notable in key strategic sectors namely ai and database there seems to be no stopping the cloud momentum there's certainly plenty of buzz about the cloud tax so-called cloud tax but other than wildly assumptive valuation models and some pockets of anecdotal evidence you don't really see the supposed backlash impacting cloud momentum our forecast calls for the big four hyperscalers aws azure alibaba and gcp to surpass 115 billion as we said in is revenue this year the latest etr survey results show that aws lambda has retaken the lead among all major cloud services tracked in the data set as measured in spending momentum this is the service with the most elevated scores azure overall azure functions vmware cloud on aws and aws overall also demonstrate very highly elevated performance all above that of gcp now impressively aws momentum in the all-important fortune 500 where it has always showed strength is also accelerating one concern in the most recent survey data is that the on-prem clouds and so-called hybrid platforms which we had previously reported as showing an upward spending trajectory seem to have cooled off a bit but the data is mixed and it's a little bit too early to draw firm conclusions nonetheless while hyperscalers are holding steady the spending data appears to be somewhat tepid for the on-prem players you know particularly for their cloud we'll study that further after etr drops its full results on july 23rd now turning our attention back to aws the aws cloud is showing strength across its entire portfolio and we're going to show you that shortly in particular we see notable strength relative to others in analytics ai and the all-important database category aurora and redshift are particularly strong but several other aws database services are showing elevated spending velocity which we'll quantify in a moment all that said snowflake continues to lead all database suppliers in spending momentum by a wide margin which again will quantify in this episode but before we dig into the survey let's take a look at our latest projections for the big four hyperscalers in is as you know we track quarterly revenues for the hyperscalers remember aws and alibaba ias data is pretty clean and reported in their respective earnings reports azure and gcp we have to extrapolate and strip out all a lot of the the apps and other certain revenue to make an apples-to-apples comparison with aws and alibaba and as you can see we have the 2021 market exceeding 115 billion dollars worldwide that's a torrid 35 growth rate on top of 41 in 2020 relative to 2019. aggressive yes but the data continues to point us in this direction until we see some clearer headwinds for the cloud players this is the call we're making aws is perhaps losing a sharepoint or so but it's also is so large that its annual incremental revenue is comparable to alibaba's and google's respective cloud business in total is business in total the big three u.s cloud companies all report at the end of july while alibaba is mid mid-august so we'll update these figures at that time okay let's move on and dig into the survey data we don't have the data yet on alibaba and we're limited as to what we can share until etr drops its research update on on the 23rd but here's a look at the net score timeline in the fortune 500 specifically so we filter the fortune 500 for cloud computing you got azure and the yellow aws and the black and gcp in blue so two points here stand out first is that aws and microsoft are converging and remember the customers who respond to the survey they probably include a fair amount of application software spending in their cloud answers so it favors microsoft in that respect and gcp second point is showing notable deceleration relative to the two leaders and the green call out is because this cut is from an aws point of view so in other words gcp declines are a positive for aws so that's how it should be interpreted now let's take a moment to better understand the idea of net score this is one of the fundamental metrics of the etr methodology here's the data for aws so we use that as a as a reference point net score is calculated by asking customers if they're adding a platform new that's the lime green bar that you see here in the current survey they're asking are you spending six percent or more in the second half relative to the first half of the year that's the forest green they're also asking is spending flat that's the gray or are you spending less that's the pink or are you replacing the platform i.e repatriating so not much spending going on in replacements now in fairness one percent of aws is half a billion dollars so i can see where some folks would get excited about that but in the grand scheme of things it's a sliver so again we don't see repatriation in the numbers okay back to net score subtract the reds from the greens and you get net score which in the case of aws is 61 now just for reference my personal subjective elevated net score level is 40 so anything above that is really impressive based on my experience and to have a company of this size be so elevated is meaningful same for microsoft by the way which is consistently well above the 50 mark in net score in the etr surveys so that's you can think about it that's even more impressive perhaps than aws because it's triple the revenue okay let's stay with aws and take a look at the portfolio and the strength across the board this chart shows net score for the past three surveys serverless is on fire by the way not just aws but azure and gcp functions as well but look at the aws portfolio every category is well above the 40 percent elevated red line the only exception is chime and even chime is showing an uptick and chime is meh if you've ever used chime every other category is well above 50 percent next net score very very strong for aws now as we've frequently reported ai is one of the four biggest focus areas from a spending standpoint along with cloud containers and rpa so it stands to reason that the company with the best ai and ml and the greatest momentum in that space has an advantage because ai is being embedded into apps data processes machines everywhere this chart compares the ai players on two dimensions net score on the vertical axis and market share or presence in the data set on the horizontal axis for companies with more than 15 citations in the survey aws has the highest net score and what's notable is the presence on the horizontal axis databricks is a company where high on also shows elevated scores above both google and microsoft who are showing strength in their own right and then you can see data iq data robot anaconda and salesforce with einstein all above that 40 percent mark and then below you can see the position of sap with leonardo ibm watson and oracle which is well below the 40 line all right let's look at at the all-important database category for a moment and we'll first take a look at the aws database portfolio this chart shows the database services in aws's arsenal and breaks down the net score components with the total net score superimposed on top of the bars point one is aurora is highly elevated with a net score above 70 percent that's due to heavy new adoptions redshift is also very strong as are virtually all aws database offerings with the exception of neptune which is the graph database rds dynamodb elastic document db time stream and quantum ledger database all show momentum above that all important 40 line so while a lot of people criticize the fragmentation of the aws data portfolio and their right tool for the right job approach the spending spending metrics tell a story and that that the strategy is working now let's take a look at the microsoft database portfolio there's a story here similar similar to that of aws azure sql and cosmos db microsoft's nosql distributed database are both very highly elevated as are azure database for mysql and mariadb azure cash for redis and azure for cassandra also microsoft is giving look at microsoft's giving customers a lot of options which is kind of interesting you know we've often said that oracle's strategy because we think about oracle they're building the oracle database cloud we've said oracle strategy should be to not just be the cloud for oracle databases but be the cloud for all databases i mean oracle's got a lot of specialty capability there but it looks like microsoft is beating oracle to that punch not that oracle is necessarily going there but we think it should to expand the appeal of its cloud okay last data chart that we'll show and then and then this one looks at database disruption the chart shows how the cloud database companies are doing in ibm oracle teradata in cloudera accounts the bars show the net score granularity as we described earlier and the etr callouts are interesting so first remember this is an aws this is in an aws context so with 47 responses etr rightly indicates that aws is very well positioned in these accounts with the 68 net score but look at snowflake it has an 81 percent net score which is just incredible and you can see google database is also very strong and the high 50 percent range while microsoft even though it's above the 40 percent mark is noticeably lower than the others as is mongodb with presumably atlas which is surprisingly low frankly but back to snowflake so the etr callout stresses that snowflake doesn't have a strong as strong a presence in the legacy database vendor accounts yet now i'm not sure i would put cloudair in the legacy database category but okay whatever cloudera they're positioning cdp is a hybrid platform as are all the on-prem players with their respective products and platforms but it's going to be interesting to see because snowflake has flat out said it's not straddling the cloud and on-prem rather it's all in on cloud but there is a big opportunity to connect on-prem to the cloud and across clouds which snowflake is pursuing that that ladder the cross-cloud the multi-cloud and snowflake is betting on incremental use cases that involve data sharing and federated governance while traditional players they're protecting their turf at the same time trying to compete in cloud native and of course across cloud i think there's room for both but clearly as we've shown cloud has the spending velocity and a tailwind at its back and aws along with microsoft seem to be getting stronger especially in the all-important categories related to machine intelligence ai and database now to be an essential infrastructure technology player in the data era it would seem obvious that you have to have database and or data management intellectual property in your portfolio or you're going to be less valuable to customers and investors okay we're going to leave it there for today remember these episodes they're all available as podcasts wherever you listen all you do is search breaking analysis podcast and please subscribe to the series check out etr's website at etr dot plus plus etr plus we also publish a full report every week on wikibon.com and siliconangle.com you can get in touch with me david.velante at siliconangle.com you can dm me at d vallante or you can hit hit me up on our linkedin post 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 you

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 recent survey data from etr shows that enterprise tech spending is tracking with projected u.s gdp growth at six to seven percent this year many markers continue to point the way to a strong recovery including hiring trends and the loosening of frozen it project budgets however skills shortages are blocking progress at some companies which bodes well for an increased reliance on external i.t services moreover while there's much to talk about well there's much talk about the rotation out of work from home plays and stocks such as video conferencing vdi and other remote worker tech we see organizations still trying to figure out the ideal balance between funding headquarter investments that have been neglected and getting hybrid work right in particular the talent gap combined with a digital mandate means companies face some tough decisions as to how to fund the future while serving existing customers and transforming culturally hello everyone and welcome to this week's wikibon cube insights powered by etr in this breaking analysis we welcome back eric porter bradley of etr who will share fresh data perspectives and insights from the latest survey data eric great to see you welcome thank you very much dave always good to see you and happy to be on the show again okay we're going to share some macro data and then we're going to dig into some highlights from etr's most recent march covid survey and also the latest april data so eric the first chart that we want to show it shows cio and it buyer responses to expected i.t spend for each quarter of 2021 versus 2020. and you can see here a steady quarterly improvement eric what are the key takeaways from your perspective sure well first of all for everyone out there this particular survey had a record-setting number of uh participation we had uh 1 500 i.t decision makers participate and we had over half of the fortune 500 and over a fifth of the global 1000. so it was a really good survey this is the seventh iteration of the covet impact survey specifically and this is going to transition to an over large macro survey going forward so we could continue it and you're 100 right what we've been tracking here since uh march of last year was how is spending being impacted because of covid where is it shifting and what we're seeing now finally is that there is a real re-acceleration in spend i know we've been a little bit more cautious than some of the other peers out there that just early on slapped an eight or a nine percent number but what we're seeing is right now it's at a midpoint of over six uh about six point seven percent and that is accelerating so uh we are still hopeful that that will continue uh really that spending is going to be in the second half of the year as you can see on the left part of this chart that we're looking at uh it was about 1.7 versus 3 for q1 spending year over year so that is starting to accelerate through the back half you know i think it's prudent to be be cautious relative because normally you'd say okay tech is going to grow a couple of points higher than gdp but it's it's really so hard to predict this year okay the next chart is here that we want to show you is we ask respondents to indicate what strategies they're employing in the short term as a result of coronavirus and you can see a few things that i'll call out and then i'll ask eric to chime in first there's been no meaningful change of course no surprise in tactics like remote work and halting travel however we're seeing very positive trends in other areas trending downward like hiring freezes and freezing i.t deployments downward trend in layoffs and we also see an increase in the acceleration of new i.t deployments and in hiring eric what are your key takeaways well first of all i think it's important to point out here that uh we're also capturing that people believe remote work productivity is still increasing now the trajectory might be coming down a little bit but that is really key i think to the backdrop of what's happening here so people have a perception that productivity of remote work is better than hybrid work and that's from the i.t decision makers themselves um but what we're seeing here is that uh most importantly these organizations are citing plans to increase hiring and that's something that i think is really important to point out it's showing a real thawing and to your point in right in the beginning of the intro uh we are seeing deployments stabilize versus prior survey levels which means early on they had no plans to launch new tech deployments then they said nope we're going to start and now that's stalling and i think it's exactly right what you said is there's an i.t skills shortage so people want to continue to do i.t deployments because they have to support work from home and a hybrid back return to the office but they just don't have the skills to do so and i think that's really probably the most important takeaway from this chart um is that stalling and to really ask why it's stalling yeah so we're going to get into that for sure and and i think that's a really key point is that that that accelerating it deployments is some it looks like it's hit a wall in the survey and so but before before we get deep into the skills let's let's take a look at this next chart and we're asking people here how a return to the new normal if you will and back to offices is going to change spending with on-prem architectures and applications and so the first two bars they're cloud-friendly if you add them up at 63 percent of the respondents say that either they'll stay in the cloud for the most part or they're going to lower the on-prem spend when they go back to the office the next three bars are on-prem friendly if you add those up as 29 percent of the respondents say their on-prem spend is going to bounce back to pre-covert levels or actually increase and of course 12 percent of that number by the way say they they've never altered their on-prem spend so eric no surprise but this bodes well for cloud but but it it isn't it also a positive for on-prem this we've had this dual funding premise meaning cloud continues to grow but neglected data center spend also gets a boost what's your thoughts you know really it's interesting it's people are spending on all fronts you and i were talking in a prep it's like you know we're we're in battle and i've got naval i've got you know air i've got land uh i've got to spend on cloud and digital transformation but i also have to spend for on-prem uh the hybrid work is here and it needs to be supported so this spending is going to increase you know when you look at this chart you're going to see though that roughly 36 percent of all respondents say that their spending is going to remain mostly on cloud so this you know that is still the clear direction uh digital transformation is still happening covid accelerated it greatly um you know you and i as journalists and researchers already know this is where the puck is going uh but spend has always lagged a little bit behind because it just takes some time to get there you know inversely 27 said that their on-prem spending will decrease so when you look at those two i still think that the trend is the friend for cloud spending uh even though yes they do have to continue spending on hybrid some of it's been neglected there are refresh cycles coming up so overall it just points to more and more spending right now it really does seem to be a very strong backdrop for it growth so i want to talk a little bit about the etr taxonomy before we bring up the next chart we get a lot of questions about this and of course when you do a massive survey like you're doing you have to have consistency for time series so you have to really think through what that what the buckets look like if you will so this next chart takes a look at the etr taxonomy and it breaks it down into simple to understand terms so the green is the portion of spending on a vendor's tech within a category that is accelerating and the red is the portion that is decelerating so eric what are the key messages in this data well first of all dave thank you so much for pointing that out we used to do uh just what we call a next a net score it's a proprietary formula that we use to determine the overall velocity of spending some people found it confusing um our data scientists decided to break this sector breakdown into what you said which is really more of a mode analysis in that sector how many of the vendors are increasing versus decreasing so again i just appreciate you bringing that up and allowing us to explain the the the reasoning behind our analysis there but what we're seeing here uh goes back to something you and i did last year when we did our predictions and that was that it services and consulting was going to have a true rebound in 2021 and that's what this is showing right here so in this chart you're going to see that consulting and services are really continuing their recovery uh 2020 had a lot of declines and they have the biggest sector over year-over-year acceleration sector-wise the other thing to point out in this which we'll get to again later is that the inverse analysis is true for video conferencing uh we will get to that so i'm going to leave a little bit of ammunition behind for that one but what we're seeing here is it consulting services being the real favorable and video conferencing uh having a little bit more trouble great okay and then let's let's take a look at that services piece and this next chart really is a drill down into that space and emphasizes eric what you were just talking about and we saw this in ibm's earnings where still more than 60 percent of ibm's business comes from services and the company beat earnings you know in part due to services outperforming expectations i think it had a somewhat easier compare and some of this pen-up demand that we've been talking about bodes well for ibm and in other services companies it's not just ibm right eric no it's not but again i'm going to point out that you and i did point out ibm in our in our predictions one we did in late december so it is nice to see one of the reasons we don't have a more favorable rating on ibm at the moment is because they are in the the process of spinning out uh this large unit and so there's a little bit of you know corporate action there that keeps us off on the sideline but i would also want to point out here uh tata infosys and cognizant because they're seeing year-over-year acceleration in both it consulting and outsourced i t services so we break those down separately and those are the three names that are seeing acceleration in both of those so again a tata emphasis and cognizant are all looking pretty well positioned as well so we've been talking a little bit about this skill shortage and this is what's i think so hard for for forecasters um is that you know on the one hand there's a lot of pent up demand you know it's like scott gottlieb said it's like woodstock coming out of the covid uh but on the other hand if you have a talent gap you've got to rely on external services so there's a learning curve there's a ramp up it's an external company and so it takes time to put those together so so this data that we're going to show you next uh is is really important in my view and ties what we're saying we're saying at the top it asks respondents to comment on their staffing plans the light blue is we're increasing staff the gray is no change in the magenta or whatever whatever color that is that sort of purplish color anyway that color is is decreasing and the picture is very positive across the board full-time staff offshoring contract employees outsourced professional services all up trending upwards and this eric is more evidence of the services bounce back yeah it certainly is david and what happened is when we caught this trend we decided to go one level deeper and say all right we're seeing this but we need to know why and that's what we always try to do here data will tell you what's happening it doesn't always tell you why and that's one of the things that etr really tries to dig in with through the insights interviews panels and also going direct with these more custom survey questions uh so in this instance i think the real takeaway is that 30 of the respondents said that their outsourced and managed services are going to increase over the next three months that's really powerful that's a large portion of organizations in a very short time period so we're capturing that this acceleration is happening right now and it will be happening in real time and i don't see it slowing down you and i are speaking about we have to you know increase cloud spend we have to increase hybrid spend there are refresh cycles coming up and there's just a real skill shortage so this is a long-term setup that bodes very well for it services and consulting you know eric when i came out of college i somebody told me read read read read as much as you can and and so i would and they said read the wall street journal every day and i so i did it and i would read the tech magazines and back then it was all paper and what happens is you begin to connect the dots and so the reason i bring that up is because i've now been had taken a bath in the etr data for the better part of two years and i'm beginning to be able to connect the dots you know the data is not always predictive but many many times it is and so this next data gets into the fun stuff where we name names a lot of times people don't like it because the marketing people and organizations say well the data's wrong of course that's the first thing they do is attack the data but you and i know we've made some really great calls work from home for sure you're talking about the services bounce back uh we certainly saw the rise of crowdstrike octa zscaler well before people were talking about that same thing with video conferencing and so so anyway this is the fun stuff and it looks at positive versus negative sentiment on on companies so first how does etr derive this data and how should we interpret it and what are some of your takeaways [Music] sure first of all how we derive the data or systematic um survey responses that we do on a quarterly basis and we standardize those responses to allow for time series analysis so we can do trend analysis as well we do find that our data because it's talking about forward-looking spending intentions is really more predictive because we're talking about things that might be happening six months three months in the future not things that a lot of other competitors and research peers are looking at things that already happened uh they're looking in the past etr really likes to look into the future and our surveys are set up to do so so thank you for that question it's an enjoyable lead-in but to get to the fun stuff like you said uh what we do here is we put ratings on the data sets i do want to put the caveat out there that our spending intentions really only captures top-line revenue it is not indicative of profit margin or any other line items so this is only going to be viewed as what we are rating the data set itself not the company um you know that's not what we're in the game of doing so i think that's very important for the marketing and the vendors out there themselves when they when they take a look at this we're just talking about what we can control which is our data we're going to talk about a few of the names here on this highlighted vendors list one we're going to go back to that you and i spoke about i guess about six months ago or maybe even earlier which was the observability space um you and i were noticing that it was getting very crowded a lot of new entrants um there was a lot of acquisition from more of the legacy or standard entrance players in the space and that is continuing so i think in a minute we're going to move into that observability space but what we're seeing there is that it's becoming incredibly crowded and we're possibly seeing signs of them cannibalizing each other uh we're also going to move on a little bit into video conferencing where we're capturing some spend deceleration and then ultimately we're going to get into a little bit of a storage refresh cycle and talk about that but yeah these are the highlighted vendors for april um we usually do this once a quarter and they do change based on the data but they're not usually whipsawed around the data doesn't move that quickly yeah so you can see the some of the big names on the left-hand side some of the sas companies that have momentum obviously servicenow has been doing very very well we've talked a lot about snowflake octa crowdstrike z scalar in all very positive as well as you know several others i i guess i'd add some some things i mean i think if thinking about the next decade it's it's cloud which is not going to be like the same cloud as last decade a lot of machine learning and deep learning and ai and the cloud is extending to the edge in the data center data obviously very important data is decentralized and distributed so data architectures are changing a lot of opportunities to connect across clouds and actually create abstraction layers and then something that we've been covering a lot is processor performance is actually accelerating relative to moore's law it's probably instead of doubling every two years it's quadrupling every two years and so that is a huge factor especially as it relates to powering ai and ai inferencing at the edge this is a whole new territory custom silicon is is really becoming in vogue uh and so we're something that we're watching very very closely yeah i completely completely agree on that and i do think that the the next version of cloud will be very different another thing to point out on that too is you can't do anything that you're talking about without collecting the data and and organizations are extremely serious about that now it seems it doesn't matter what industry they're in every company is a data company and that also bodes well for the storage call we do believe that there is going to just be a huge increase in the need for storage um and yes hopefully that'll become portable across multi-cloud and hybrid as well now as eric said the the etr data's it's it's really focused on that top line spend so if you look at the uh on on the right side of that chart you saw you know netapp was kind of negative was very negative right but there's a company that's in in transformation now they've lowered expectations and they've recently beat expectations that's why the stock has been doing better but but at the macro from a spending standpoint it's still challenged so you have big footprint companies like netapp and oracle is another one oracle's stock is at an all-time high but the spending relative to sort of previous cycles or relative to you know like for instance snowflake much much smaller not as high growth but they're managing expectations they're managing their transition they're managing profitability zoom is another one zoom looking looking negative but you know zoom's got to use its market cap now to to transform and increase its tam uh and then splunk is another one we're going to talk about splunk is in transition it acquired signal fx it just brought on this week teresa carlson who was the head of aws public sector she's the president and head of sales so they've got a go to market challenge and they brought in teresa carlson to really solve that but but splunk has been trending downward we called that you know several quarters ago eric and so i want to bring up the data on splunk and this is splunk eric in analytics and it's not trending in the right direction the green is accelerating span the red is and the bars is decelerating spend the top blue line is spending velocity or net score and the yellow line is market share or pervasiveness in the data set your thoughts yeah first i want to go back is a great point dave about our data versus a disconnect from an equity analysis perspective i used to be an equity analyst that is not what we do here and you you may the main word you said is expectations right stocks will trade on how they do compared to the expectations that are set uh whether that's buy side expectations sell side expectations or management's guidance themselves we have no business in tracking any of that what we are talking about is top line acceleration or deceleration so uh that was a great point to make and i do think it's an important one for all of our listeners out there now uh to move to splunk yes i've been capturing a lot of negative commentary on splunk even before the data turned so this has been about a year-long uh you know our analysis and review on this name and i'm dating myself here but i know you and i are both rock and roll fans so i'm gonna point out a led zeppelin song and movie and say that the song remains the same for splunk we are just seeing uh you know recent spending intentions are taking yet another step down both from prior survey levels from year ago levels uh this we're looking at in the analytics sector and spending intentions are decelerating across every single customer group if we went to one of our other slide analysis um on the etr plus platform and you do by customer sub sample in analytics it's dropping in every single vertical it doesn't matter which one uh it's really not looking good unfortunately and you had mentioned this as an analytics and i do believe the next slide is an information security yeah let's bring that up and it's unfortunately it's not doing much better so this is specifically fortune 500 accounts and information security uh you know there's deep pockets in the fortune 500 but from what we're hearing in all the insights and interviews and panels that i personally moderate for etr people are upset they didn't like the the strong tactics that splunk has used on them in the past they didn't like the ingestion model pricing the inflexibility and when alternatives came along people are willing to look at the alternatives and that's what we're seeing in both analytics and big data and also for their sim in security yeah so i think again i i point to teresa carlson she's got a big job but she's very capable she's gonna she's gonna meet with a lot of customers she's a go to market pro she's gonna have to listen hard and i think you're gonna you're gonna see some changes there um okay so there's more sorry there's more bad news on splunk so bring this up is is is net score for splunk in elastic accounts uh this is for analytics so there's 106 elastic accounts that uh in the data set that also have splunk and it's trending downward for splunk that's why it's green for elastic and eric the important call out from etr here is how splunk's performance in elastic accounts compares with its performance overall the elk stack which obviously elastic is a big part of that is causing pain for splunk as is data dog and you mentioned the pricing issue uh is it is it just well is it pricing in your assessment or is it more fundamental you know it's multi-level based on the commentary we get from our itdms that take the survey so yes you did a great job with this analysis what we're looking at is uh the spending within shared accounts so if i have splunk already how am i spending i'm sorry if i have elastic already how is my spending on splunk and what you're seeing here is it's down to about a 12 net score whereas splunk overall has a 32 net score among all of its customers so what you're seeing there is there is definitely a drain that's happening where elastic is draining spend from splunk and usage from them uh the reason we used elastic here is because all observabilities the whole sector seems to be decelerating splunk is decelerating the most but elastic is the only one that's actually showing resiliency so that's why we decided to choose these two but you pointed out yes it's also datadog datadog is cloud native uh they're more devops oriented they tend to be viewed as having technological lead as compared to splunk so that's a really good point a dynatrace also is expanding their abilities and splunk has been making a lot of acquisitions to push their cloud services they are also changing their pricing model right they're they're trying to make things a little bit more flexible moving off ingestion um and moving towards uh you know consumption so they are trying and the new hires you know i'm not gonna bet against them because the one thing that splunk has going for them is their market share in our survey they're still very well entrenched so they do have a lot of accounts they have their foothold so if they can find a way to make these changes then they you know will be able to change themselves but the one thing i got to say across the whole sector is competition is increasing and it does appear based on commentary and data that they're starting to cannibalize themselves it really seems pretty hard to get away from that and you know there are startups in the observability space too that are going to be you know even more disruptive i think i think i want to key on the pricing for a moment and i've been pretty vocal about this i think the the old sas pricing model where essentially you essentially lock in for a year or two years or three years pay up front or maybe pay quarterly if you're lucky that's a one-way street and i think it's it's a flawed model i like what snowflake's doing i like what datadog's doing look at what stripe is doing look what twilio is doing these are cons you mentioned it because it's consumption based pricing and if you've got a great product put it out there and you know damn the torpedoes and i think that is a game changer i i look at for instance hpe with green lake i look at dell with apex they're trying to mimic that model you know they're there and apply it to to infrastructure it's much harder with infrastructure because you got to deploy physical infrastructure but but that is a model that i think is going to change and i think all of the traditional sas pricing is going to is going to come under disruption over the next you know better part of the decades but anyway uh let's move on we've we've been covering the the apm space uh pretty extensively application performance management and this chart lines up some of the big players here comparing net score or spending momentum from the april 20th survey the gray is is um is sorry the the the gray is the april 20th survey the blue is jan 21 and the yellow is april 21. and not only are elastic and data dog doing well relative to splunk eric but everything is down from last year so this space as you point out is undergoing a transformation yeah the pressures are real and it's you know it's sort of that perfect storm where it's not only the data that's telling us that but also the direct feedback we get from the community uh pretty much all the interviews i do i've done a few panels specifically on this topic for anyone who wants to you know dive a little bit deeper we've had some experts talk about this space and there really is no denying that there is a deceleration in spend and it's happening because that spend is getting spread out among different vendors people are using you know a data dog for certain aspects they're using elastic where they can because it's cheaper they're using splunk because they have to but because it's so expensive they're cutting some of the things that they're putting into splunk which is dangerous particularly on the security side if i have to decide what to put in and whatnot that's not really the right way to have security hygiene um so you know this space is just getting crowded there's disruptive vendors coming from the emerging space as well and what you're seeing here is the only bit of positivity is elastic on a survey over survey basis with a slight slight uptick everywhere else year over year and survey over survey it's showing declines it's just hard to ignore and then you've got dynatrace who based on the the interviews you do in the venn you're you know one on one or one on five you know the private interviews that i've been invited to dynatrace gets very high scores uh for their road map you've got new relic which has been struggling you know financially but they've got a purpose built they've got a really good product and a purpose-built database just for this apm space and then of course you've got cisco with appd which is a strong business for them and then as you mentioned you've got startups coming in you've got chaos search which ed walsh is now running you know leave the data in place in aws and really interesting model honeycomb it's going to be really disruptive jeremy burton's company observed so this space is it's becoming jump ball yeah there's a great line that came out of one of them and that was that the lines are blurring it used to be that you knew exactly that app dynamics what they were doing it was apm only or it was logging and monitoring only and a lot of what i'm hearing from the itdm experts is that the lines are blurring amongst all of these names they all have functionality that kind of crosses over each other and the other interesting thing is it used to be application versus infrastructure monitoring but as you know infrastructure is becoming code more and more and more and as infrastructure becomes code there's really no difference between application and infrastructure monitoring so we're seeing a convergence and a blurring of the lines in this space which really doesn't bode well and a great point about new relic their tech gets good remarks uh i just don't know if their enterprise level service and sales is up to snuff right now um as one of my experts said a cto of a very large public online hospitality company essentially said that he would be shocked that within 18 months if all of these players are still uh standalone that there needs to be some m a or convergence in this space okay now we're going to call out some of the data that that really has jumped out to etr in the latest survey and some of the names that are getting the most queries from etr clients which are many of which are investor clients so let's start by having a look at one of the most important and prominent work from home names zoom uh let's let's look at this eric is the ride over for zoom oh i've been saying it for a little bit of a time now actually i do believe it is um i will get into it but again pointing out great dave uh the reason we're presenting today splunk elastic and zoom are they are the most viewed on the etr plus platform uh trailing behind that only slightly is f5 i decided not to bring f5 to the table today because we don't have a rating on the data set um so then i went one deep one below that and it's pure so the reason we're presenting these to you today is that these are the ones that our clients and our community are most interested in which is hopefully going to gain interest to your viewers as well so to get to zoom um yeah i call zoom the pandec pandemic bull market baby uh this was really just one that had a meteoric ride you look back january in 2020 the stock was at 60 and 10 months later it was like like 580. that's in 10 months um that's cooled down a little bit uh into the mid 300s and i believe that cooling down should continue and the reason why is because we are seeing a huge deceleration in our spending intentions uh they're hitting all-time lows it's really just a very ugly data set um more importantly than the spending intentions for the first time we're seeing customer growth in our survey flattened in the past we could we knew that the the deceleration and spend was happening but meanwhile their new customer growth was accelerating so it was kind of hard to really make any call based on that this is the first time we're seeing flattening customer growth trajectory and that uh in tandem with just dominance from microsoft in every sector they're involved in i don't care if it's ip telephony productivity apps or the core video conferencing microsoft is just dominating so there's really just no way to ignore this anymore the data and the commentary state that zoom is facing some headwinds well plus you've pointed out to me that a lot of your private conversations with buyers says that hey we're we're using the freebie version of zoom you know we're not paying them and so in that combined with teams i mean it's it's uh it's i think you know look zoom has to figure it out they they've got to they've got to figure out how to use their elevated market cap to transform and expand their tan um but let's let's move on here's the data on pure storage and we've highlighted a number of times this company is showing elevated spending intentions um pure announces earnings in in may ibm uh just announced storage what uh it was way down actually so sort of still pure more positive but i'll comment on a moment but what does this data tell you eric yeah you know right now we started seeing this data last survey in january and that was the first time we really went positive on the data set itself and it's just really uh continuing so we're seeing the strongest year-over-year acceleration in the entire survey um which is a really good spot to be pure is also a leading position in among its sector peers and the other thing that was pretty interesting from the data set is among all storage players pure has the highest positive public cloud correlation so what we can do is we can see which respondents are accelerating their public cloud spend and then cross-reference that with their storage spend and pure is best positioned so as you and i both know uh you know digital transformation cloud spending is increasing you need to be aligned with that and among all storage uh sector peers uh pure is best positioned in all of those in spending intentions and uh adoptions and also public cloud correlation so yet again just another really strong data set and i have an anecdote about why this might be happening because when i saw the date i started asking in my interviews what's going on here and there was one particular person he was a director of cloud operations for a very large public tech company now they have hybrid um but their data center is in colo so they don't own and build their own physical building he pointed out that doran kovid his company wanted to increase storage but he couldn't get into his colo center due to covert restrictions they weren't allowed you had so 250 000 square feet right but you're only allowed to have six people in there so it's pretty hard to get to your rack and get work done he said he would buy storage but then the cola would say hey you got to get it out of here it's not even allowed to sit here we don't want it in our facility so he has all this pent up demand in tandem with pent up demand we have a refresh cycle the ssd you know depreciation uh you know cycle is ending uh you know ssds are moving on and we're starting to see uh new technology in that space nvme sorry for technology increasing in that space so we have pent up demand and we have new technology and that's really leading to a refresh cycle and this particular itdm that i spoke to and many of his peers think this has a long tailwind that uh storage could be a good sector for some time to come that's really interesting thank you for that that extra metadata and i want to do a little deeper dive on on storage so here's a look at storage in the the industry in context and some of the competitive i mean it's been a tough market for the reasons that we've highlighted cloud has been eating away that flash headroom it used to be you'd buy storage to get you know more spindles and more performance and you were sort of forced to buy more flash gave more headroom but it's interesting what you're saying about the depreciation cycle so that's good news so etr combines just for people's benefit here combines primary and secondary storage into a single category so you have companies like pure and netapp which are really pure play you know primary storage companies largely in the sector along with veeam cohesity and rubric which are kind of secondary data or data protection so my my quick thoughts here are that pure is elevated and remains what i call the one-eyed man in the land of the blind but that's positive tailwinds there so that's good news rubric is very elevated but down it's a big it's big competitor cohesity is way off its highs and i have to say to me veeam is like the steady eddy consistent player here they just really continue to do well in the data protection business and and the highs are steady the lows are steady dell is also notable they've been struggling in storage their isg business which comprises service and storage it's been soft during covid and and during even you know this new product rollout so it's notable with this new mid-range they have in particular the uptick in dell this survey because dell so large a small uptick can be very good for dell hpe has a big announcement next month in storage so that might improve based on a product cycle of course the nimble brand continues to do well ibm as i said just announced a very soft quarter you know down double digits again uh and there in a product cycle shift and netapp is that looks bad in the etr data from a spending momentum standpoint but their management team is transforming the company into a cloud play which eric is why it was interesting that pure has the greatest momentum in in cloud accounts so that is sort of striking to me i would have thought it would be netapp so that's something that we want to pay attention to but i do like a lot of what netapp is doing uh and other than pure they're the only big kind of pure play in primary storage so long winded uh uh intro there eric but anything you'd add no actually i appreciate it was long winded i i'm going to be honest with you storage is not my uh my best sector as far as a researcher and analyst goes uh but i actually think a lot of what you said is spot on um you know we do capture a lot of large organizations spend uh we don't capture much mid and small so i think when you're talking about these large large players like netapp and um you know not looking so good all i would state is that we are capturing really big organizations spending attention so these are names that should be doing better to be quite honest uh in those accounts and you know at least according to our data we're not seeing it and it's long-term depression as you can see uh you know netapp now has a negative spending velocity in this analysis so you know i can go dig around a little bit more but right now the names that i'm hearing are pure cohesity uh um i'm hearing a little bit about hitachi trying to reinvent themselves in the space but you know i'll take a wait-and-see approach on that one but uh pure and cohesity are the ones i'm hearing a lot from our community so storage is transforming to cloud as a service you're seeing things like apex and in green lake from dell and hpe and container storage little so not really a lot of people paying attention to it but pure about a company called portworx which really specializes in container storage and there's many startups there they're trying to really change the way david flynn has a startup in that space he's the guy who started fusion i o so a lot a lot of transformations happening here okay i know it's been a long segment we have to summarize and then let me go through a summary and then i'll give you the last word eric so tech spending appears to be tracking us gdp at six to seven percent this talent shortage could be a blocker to accelerating i.t deployments and that's kind of good news actually for for services companies digital transformation you know it's it remains a priority and that bodes well not only for services but automation uipath went public this week we we profiled that you know extensively that went public last wednesday um organizations they've i said at the top face some tough decisions on how to allocate resources you know running the business growing the business transforming the business and we're seeing a bifurcation of spending and some residual effects on vendors and that remains a theme that we're watching eric your final thoughts yeah i'm going to go back quickly to just the overall macro spending because there's one thing i think is interesting to point out and we're seeing a real acceleration among mid and small so it seems like early on in the covid recovery or kovitz spending it was the deep pockets that moved first right fortune 500 knew they had to support remote work they started spending first round that in the fortune 500 we're only seeing about five percent spent but when you get into mid and small organizations that's creeping up to eight nine so i just think it's important to point out that they're playing catch-up right now uh also would point out that this is heavily skewed to north america spending we're seeing laggards in emea they just don't seem to be spending as much they're in a very different place in their recovery and uh you know i do think that it's important to point that out um lastly i also want to mention i know you do such a great job on following a lot of the disruptive vendors that you just pointed out pure doing container storage we also have another bi-annual survey that we do called emerging technology and that's for the private names that's going to be launching in may for everyone out there who's interested in not only the disruptive vendors but also private equity players uh keep an eye out for that we do that twice a year and that's growing in its respondents as well and then lastly one comment because you mentioned the uipath ipo it was really hard for us to sit on the sidelines and not put some sort of rating on their data set but ultimately um the data was muted unfortunately and when you're seeing this kind of hype into an ipo like we saw with snowflake the data was resoundingly strong we had no choice but to listen to what the data said for snowflake despite the hype um we didn't see that for uipath and we wanted to and i'm not making a large call there but i do think it's interesting to juxtapose the two that when snowflake was heading to its ipo the data was resoundingly positive and for uipath we just didn't see that thank you for that and eric thanks for coming on today it's really a pleasure to have you and uh so really appreciate the the uh collaboration and look forward to doing more of these we enjoy the partnership greatly dave we're very very happy to have you in the etr family and looking forward to doing a lot lot more with you in the future ditto okay that's it for today remember these episodes are all available as podcasts wherever you listen all you got to do is search breaking analysis podcast and please subscribe to the series check out etr's website it's etr dot plus we also publish a full report every week on wikibon.com at siliconangle.com you can email me david.velante at siliconangle.com you can dm me on twitter at dvalante or comment on our linkedin post i could see you in clubhouse this is dave vellante for eric porter bradley for the cube insights powered by etr have a great week stay safe be well and we'll see you next time

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 as we watch an historic election unfold before our eyes we look back at the early days of the millennium with the memorable presidential race of 2000 that decade of course was defined by 911 which permanently reshaped our thinking and we exited that decade at the tail end of a massive financial crisis only to enter the 2010s with the hope and the momentum of fiscal stimulus a flat globe job growth and very importantly the ascendancy of the cloud cloud computing unquestionably powered the innovation engine over the last 10 years and the pandemic marks a new era where adoption of cloud data and ai have been accelerated by at least two to three years and that's what's going to shape the future of the technology industry and frankly all businesses and organizations hello everyone and welcome to this week's episode of thecube insights powered by etr in this breaking analysis we're going to update you on our latest cloud market share and dig in to some fresh october survey data from our partners over at etr let me start just with a brief summary of the latest action that's going on in cloud now quite interestingly each of the big three cloud players they showed nearly identical year-on-year growth rates in q3 as they did in q2 now we're going to dig into that in a moment but our data suggests that these three companies combined will account for more than 75 billion dollars in infrastructure as a service and platform as a service revenue in 2020 and they're potentially on track to hit 100 billion in 2021. customer survey data indicates that cio's top two infrastructure priorities remain security and cloud migration now that said as we previously reported the cloud it's not immune to the pandemic the remote worker pivot well it's a positive for cloud hasn't completely eradicated certain headwinds now what i mean here is that because the cloud vendors are now so large they're somewhat exposed to the softness in the overall i.t spending climate and also industries that have been hit hardest by the pandemic now would the cloud growth have been better if the pandemic didn't hit we'll never know for sure but our data suggests no covet has definitely been a benefactor to cloud in our view cloud will remain at the center of technological innovation for the foreseeable future the economics of cloud are becoming so compelling that we think the power of the big cloud companies will only increase this decade now importantly we're talking about the costs of running hyper-distributed systems we're not commenting here on what they charge customers that's a different story we believe the cost structure for the hyperscalers is superior to alternative approaches and we believe this advantage will only accelerate over the next several years we also believe that competition is going to continue to drive competitive pricing and innovation all right let's look at our latest market share numbers for the big three this chart shows our estimates of aws azure and the google cloud platform now viewers of this program know that these are is and pass figures and you also know that aws is the only company that provides clean numbers on that sector whereas azure and gcp are estimates that we make based on tidbits of guidance that the companies give us and survey data that we capture and other modeling that we do now as we've said we'll end this year it's about 75 billion in revenue or maybe even a little bit more note that for these three note that we've we've slightly restated some of our earlier estimates for azure to reconcile some differences that we had between constant currency and actual growth we try to keep things in constant currency where possible sorry for that but sometimes that happens azure according to our estimates as we reported last week is now 18 of microsoft's overall revenue number we had it at 19 that last week but when i dug in we made some adjustments so we toned it down a bit aws represents a much smaller percentage of course of amazon's revenues at about 12 percent but it represents 56 percent of amazon's profits gcp on the other hand accounts for less than five percent of google's overall revenue which as we've stated a few weeks ago needs more attention from google but look at the growth rates for these three platforms and the respective size of their is and pass businesses hear all this talk about repatriation i.e that what i mean by that is people go to the cloud but they're unhappy or the bill is too high it's too expensive so then they come back on prem well you just don't see that in the numbers so you gotta be careful when vendor a vendor tries to sell you on that trend i don't buy it except for selective situations now let's bring in some of the etr data and compare the spending momentum for each of the big three you've seen these wheel graphs before they show the breakdown of net score for aws microsoft and google now one note these figures represent these three companies overall within the etr technology taxonomy so for example they don't include amazon's retail business of course but they do include for example microsoft's entire tech portfolio not just the cloud the green portion of the wheel represents increases in spending via new adoptions and increased spending whereas the red sections show decreases via lower spending and defections net score which i've highlighted in the orange is calculated by subtracting the two reds from the two true greens in other words adoptions and increase minus decrease and replacements the takeaway here is these are all pretty strong with aws leading the pack microsoft is exceptionally strong as we pointed out last last week because they're so huge and they still have net scores comparable to aws which is a pure play gcp is a laggard and is showing softness in the data despite a sanguine outlook that we had back in 2019 based on survey data i don't know perhaps google's smaller presence muted their customers ability to take advantage of the platform the thinking there is the customers maybe needed to pivot to the cloud so quickly and aws and azure were the incumbents and that was maybe the most expedient path hence the higher increases in the spend more category but you do see gcp um they had 13 new adoptions which is pretty good so we'll keep looking at that regardless again these are not pure play cloud comparisons but they give a good indication of spending momentum i'd also note that all three show very low defections well each is showing solid increases in new adoptions especially google as i mentioned so that's kind of interesting to see but again google much much smaller you would expect that now i want to turn our attention to one of the hottest areas in cloud which is serverless and this is a pure play comparison so serverless let me start there it's a strange term because it's not really accurate but it's stuck serverless computing is a model where the cloud platform dynamically delivers services as the application requires so so you don't have to configure the compute and the containers for example rather when an application needs resources it goes and gets them and you only pay for when the services are actually invoked and in use so it's really good for workloads that spin up and spin down very frequently it kind of reminds me in concept anyway of the component tree that we saw in the days of soa if you remember that services oriented architecture but now this is cloud it's cloud native it's a whole new world and it's increasingly a popular model and as we'll show in a moment there's a lot of spending momentum in this area but before we do that i want to share some comments made by andy jassy a while back about serverless take a listen it's a good question and you know i really the comment i made was really about um directionally what amazon would do you know in this in the very earliest days of aws jeff used to say a lot if i were starting amazon today i'd have built it on top of aws we didn't have all the capability and all the functionality at that very moment but he knew what was coming and he saw what people were still able to accomplish even with where the services were at that point i think the same thing is true here with lambda which is i think if amazon were starting today it's a given they would build it on the cloud and i think with a lot of the applications that comprise amazon's consumer business we would build those on on our serverless capabilities now now lambda of course jesse referring to lambda that's amazon's serverless offering and if you think about amazon's retail business and take for example the frequent spin up and spin down of resources for something like black monday serverless would be a much more cost effective approach same for a managed data warehouse service for example where you know you don't want to pay for the compute if it's idle the app just calls for the compute when it's needed so it's a very popular model and it's got increased momentum today and you see that in this slide it shows the net score breakdown for serverless for azure aws is lambda which is again is their serverless offering and google cloud functions again you're shipping functions to the application that's why it's called functions look at the net scores azure functions nearly 70 aws at 65 google again lagging and that's a bit of a concern because this is a really really hot space all right let's move on and look at the competitive landscape as we like to do often and update you on that this xy graph is one of our favorites and it shows net score or spending momentum on the vertical axis and market share on the horizontal market share is a measure of pervasiveness in the data set in the upper right you also see a table that ranks each vendor my net score and it includes the shared n in other words the number of mentions in this sector for each vendor now you can you can see up top in the middle i've selected on the cloud computing category so this represents only the cloud businesses for each of these players there's a little bit of nuance here and that we've selected on microsoft azure there's a category in the etr taxonomy for that and we're comparing that with aws overall so there's there are things in the aws overall number that fit into the other parts of the taxonomy like maybe ai collaboration etc whereas azures and gcp are just the cloud segments so i i know it's a bit strange because aws is all cloud but don't get caught up in the taxonomical nuance the point is it's good to be azure in aws it's shown there when you look at the upper right of the chart here they stand out and they stand alone in cloud leadership google cloud is they have nice elevated levels but they're much much smaller they don't have the presence in the market now look at that hybrid cloud zone emerging we've talked about this sometimes in the past and and i want to call it vmware cloud on aws red hat open shift and vmware cloud itself like vmware cloud foundation and their other cloud services all of these appear to be gaining traction and you can see in the number of occurrences in the upper right that shared end that i talked about we're starting to see real numbers that are meaningful in this space vmware cloud on aws for example has a net score of 53 percent with 116 accounts within that total respondent sample that you see there in the middle left of 1438 that's how many cios and technology buyers responded to the etr survey in october you look at open shift at 45 net score and that's with 82 accounts now openshift is in beta with what looked to be some really strong offerings on aws and you can see for context i've added dell emc's cloud offerings hpe's cloud offerings and the oracle cloud and ibm cloud and also rackspace dell actually pretty strong with a net score of 20 and 185 shared accounts much much higher than dell overall which is kind of in the red zone oracle ibm you see those rackspace you know organizing not killing it rackspace is kind of in the big negative so that's a concern but anyway we'd like for these guys we'd like to see the data match the marketing rhetoric for the the guys that are in the red and look alibaba is starting to to show up in the server there's only 26 shared ends but we thought we'd we'd put it in there those three key points again aws and microsoft keep on trucking google needs to do better hybrid is becoming real and that bodes well for multi-cloud and the legacy on-prem guys they got a lot of work to do they're under a lot of pressure the pivot to cloud has not been easy for them uh and it's still a case where they're i've talked about this a lot they're they're declines in their on-premises offerings they're not being offset by the new stuff the cloud momentum all right i want to close out by sharing some of the conversations and thoughts that we've had in the community around sas and its impact on cloud we really have been focusing on ias and pass of the sas layer obviously up the stack so let me first share that there's a lot of talk around and has been for years about aws they're slowing growth rates and whether or not they'll have to enter the sas market to expand their total available market and i've said consistently while i never say never about aws i don't think so at least not yet this chart plots the big three cloud players note aws is a bigger piece of this pie now that i've turned off the cloud computing filter and i know more nuances but the data wonks will will find you know see this and they'll ask me about it this is all of aws portfolio and again it's only the microsoft azure portfolio so you see it aws now overtakes azure on the x-axis i.e market share now we've plotted some of the major sas vendors and you can see servicenow and salesforce both very large and they have really strong spending momentum and servicenow's you know pushing 100 billion dollars in market value they've surpassed workday quite some time ago workday's got less presence but they've got really really solid net score and i got to say i'm impressed with sap despite some of the earnings challenges that they've been having they're right up there with splunk and tableau splunk has softened in recent surveys and i've i've also plotted in there netsuite and oracle fusion which are just okay and that is i think for now anyway aws is going to position as the best place and the most friendly and highest quality cloud in which to run your sas for example workday runs on aws aws is salesforce's preferred infrastructure platform so my premise here is just like retail companies might want not want to run on aws a number of sas companies that compete with microsoft they might think twice about running on azure so aws would be better off for now trying to attract those sas players and drive their services and sticking to infrastructure and the pass layer snowflake is actually kind of interesting and i've added them for context because their netscore is always kind of a bellwether it's really off the charts and they're an isv running on the cloud they're different from some of the other sas players and the snowflake is a database okay and most of snowflake's business runs on aws and aws competes with snowflake with redshift but aws has the best cloud and drives a lot of business for snowflake and vice versa so it's kind of interesting snow snowflake to redshift and a much smaller example is kind of like netflix to amazon prime video to compete they both thrive so i think aws is going to continue to grow by attracting sas players as the preferred platform and they'll also attract developers and try to disrupt sas players like servicenow which runs on its own cloud i remember years ago david floyer and i said that servicenow was it was awesome but at some point its infrastructure cost structure its infrastructure cost structure is going to be less competitive than those companies that are running on hyperscale clouds certainly the hyperscale clouds themselves and servicenow they have this multi-instance architecture which just can't easily port over to the cloud but it can charge a lot which it does now at some point some sharp developers are going to look at all this and say whoa see that service now i can build this for less and they'll attack servicenow and their seat base license model maybe with the consumption pricing model and a platform that's perhaps or a set of services that are perhaps less expensive you're seeing this to a you know a certain degree with like elastic inside the application performance management space so there's some some things to watch there but there are those who firmly believe that aws will and must enter the sas space directly we talked last week about how beneficial microsoft's application business is for azure and what a flywheel that is but for me i think we're not there yet let's give it some time i think maybe four to five years before aws may even start to think about filling some of the space up the stack now maybe they'll find some unique opportunities to do that for instance at the edge but i think that's way off okay so bottom line it's good to be in tech these days it's even better to be in the cloud and it's best if you're aws and microsoft and i don't see that changing for a while now remember these episodes are all available as podcasts wherever you listen i publish each week on wikibon.com and siliconangle.com you can get in touch with me through email it's david at siliconangle.com feel free to dm me on twitter at d vallante i post on linkedin love your comments there thank you and don't forget to check out etr plus for all the survey action thanks for watching this episode of thecube insights powered by etr this is dave vellante stay safe stay sane and we'll see you next time 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