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 theCUBE studios in Palo Alto and Boston, Bringing you data-driven insights from theCUBE and ETR. This is "Breaking Analysis" with Dave Vellante. >> Recent survey data from ETR shows that enterprise tech spending is tracking with projected US GDP growth at six to 7% 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 IT services. Moreover, while 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's Insights powered by ETR. In this "Breaking Analysis", we welcome back Erik Porter Bradley of ETR who will share fresh data, perspectives and insights from the latest survey data. Erik, 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 Erik, the first chart that we want to show, it shows CIO and IT buyer responses to expected IT spend for each quarter of 2021 versus 2020, and you can see here a steady quarterly improvement. Erik, 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 participation. We had a 1,500 IT 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 seventh iteration of the COVID Impact Survey specifically, and this is going to transition to an overlarge macro survey going forward so we can continue it. And you're 100% right, what we've been tracking here since 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 9% number, but what we're seeing is right now, it's at a midpoint of over six, about 6.7% and that is accelerating. So, we are still hopeful that that will continue, and 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, it was about 1.7% versus 3% for Q1 spending year-over-year. So that is starting to accelerate through the back half. >> I think it's prudent to be cautious (indistinct) 'cause normally you'd say, okay, tech is going to grow a couple of points higher than GDP, but it's really so hard to predict this year. Okay, the next chart here that we want to show you is we asked 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 Erik to chime in. First, there's been no meaningful change of course, no surprise in tactics like remote work and holding travel, however, we're seeing very positive trends in other areas trending downward, like hiring freezes and freezing IT deployments, a downward trend in layoffs, and we also see an increase in the acceleration of new IT deployments and in hiring. Erik, what are your key takeaways? >> Well, first of all, I think it's important to point out here that 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 IT decision makers themselves, but what we're seeing here is that, 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 following, and to your point right in the beginning of the intro, 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 stalling, and I think it's exactly right, what you said, is there's an IT skills shortage. So people want to continue to do IT deployments 'cause 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, is that stalling and to really ask why it's stalling. >> Yeah, so we're going to get into that for sure, and I think that's a really key point, is that accelerating IT deployments, it looks like it's hit a wall in the survey, but before we get deep into the skills, let's take a look at this next chart, and we're asking people here how our 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, it's 63% of the respondents, say that either they'll stay in the Cloud for the most part, or they're going to lower their on-prem spend when they go back to the office. The next three bars are on-prem friendly. If you add those up it's 29% of the respondents say their on-prem spend is going to bounce back to pre-COVID levels or actually increase, and of course, 12% of that number, by the way, say they've never altered their on-prem spend. So Erik, no surprise, but this bodes well for Cloud, but isn't it also a positive for on-prem? 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? >> Really, it's interesting. It's people are spending on all fronts. You and I were talking in the prep, it's like we're in battle and I've got naval, I've got air, I've got land, I've got to spend on Cloud and digital transformation, but I also have to spend for on-prem. The hybrid work is here and it needs to be supported. So this is spending is going to increase. When you look at this chart, you're going to see though, that roughly 36% of all respondents say that their spending is going to remain mostly on Cloud. So that is still the clear direction, digital transformation is still happening, COVID accelerated it greatly, you and I, as journalists and researchers already know this is where the puck is going, but spend has always lagged a little bit behind 'cause it just takes some time to get there. 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, 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 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 Erik, 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, just what we call a Net score. It's a proprietary formula that we use to determine the overall velocity of spending. Some people found it confusing. Our data scientists decided to break this sector, break down 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 reasoning behind our analysis there. But what we're seeing here 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, 2020 had a lot of the clients and they have the biggest sector year-over-year acceleration sector wise. The other thing to point out on this, which we'll get to again later, is that the inverse analysis is true for video conferencing. 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 having a little bit more trouble. >> Great, okay, and then let's take a look at that services piece, and this next chart really is a drill down into that space and emphasizes, Erik, what you were just talking about. And we saw this in IBM's earnings, where still more than 60% of IBM's business comes from services and the company beat earnings, in part, due to services outperforming expectations, I think it had a somewhat easier compare and some of this pent-up demand that we've been talking about bodes well for IBM and other services companies, it's not just IBM, right, Erik? >> No, it's not, but again, I'm going to point out that you and I did point out IBM in our predictions when 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 process of spinning out this large unit, and so there's a little bit of a corporate action there that keeps us off on the sideline. But I would also want to point out here, Tata, Infosys and Cognizant 'cause they're seeing year-over-year acceleration in both IT consulting and outsourced IT services. So we break those down separately and those are the three names that are seeing acceleration in both of those. So again, at the Tata, Infosys and Cognizant are all looking pretty well positioned as well. >> So we've been talking a little bit about this skills shortage, and this is what's, I think, so hard for forecasters, is that in the one hand, There's a lot of pent up demand, Scott Gottlieb said it's like Woodstock coming out of the COVID, 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 this data that we're going to show you next, is really important in my view and ties what we were 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" and the magenta or whatever, whatever color that is that sort of purplish color, anyway, that color 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 Erik is more evidence of the services bounce back. >> Yeah, it's certainly, yes, 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. 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 increase Cloud spend, we have to increase hybrid spend, there are refresh cycles coming up, and there's just a real skills shortage. So this is a long-term setup that bodes very well for IT services and consulting. >> You know, Erik, when I came out of college, somebody told me, "Read, read, read, read as much as you can." And then they said, "Read the Wall Street Journal every day." and 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 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. 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 they're either marketing people at organizations, say, "Well, data's wrong." because 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. We certainly saw the rise of CrowdStrike, Okta, Zscaler, well before people were talking about that, same thing with video conferencing. And so, anyway, this is the fun stuff and it looks at positive versus negative sentiment on companies. So first, how does ETR derive this data and how should we interpret it, and what are some of your takeaways? >> Sure, first of all, how we derive the data, are systematic 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, 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 a enjoyable lead in, but to get to the fun stuff, like you said, what we do here is we put ratings on the datasets. 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 to be viewed as what we are rating the data set itself, not the company, 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 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. You and I were noticing that it was getting very crowded, a lot of new entrants, there was a lot of acquisition from more of the legacy or standard 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. 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, 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 some of the big names in 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, Okta, CrowdStrike, Zscaler, all very positive, as well as several others. I guess I'd add some things. I mean, I think if thinking about the next decade, it's Cloud, which is not going to be like the same Cloud as the last decade, a lot of machine learning and deep learning and AI and the Cloud is extending to the edge and 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 really becoming in vogue and so something that we're watching very, very closely. >> Yeah, I completely, agree on that and I do think that 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 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 goal. We do believe that there is going to just be a huge increase in the need for storage, and yes, hopefully that'll become portable across multi-Cloud and hybrid as well. >> Now, as Erik said, the ETR data, it's really focused on that top-line spend. So if you look on the right side of that chart, you saw NetApp was kind of negative, was very negative, right? But it is a company that's in transformation now, they've lowered expectations and they've recently beat expectations, that's why the stock has been doing better, but at the macro, from a spending standpoint, it's still stout 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 are relative to, 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 negative, but Zoom's got to use its market cap now to transform and increase its TAM. And then Splunk is another one we're going to talk about. Splunk is in transition, it acquired SignalFX, 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 Splunk has been trending downward, we called that several quarters ago, Erik, and so I want to bring up the data on Splunk, and this is Splunk, Erik, in analytics, and it's not trending in the right direction. The green is accelerating spend, the red is in 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 dataset. Your thoughts. >> Yeah, first I want to go back. There's 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 the main word you said is expectations, right? Stocks will trade on how they do compare to the expectations that are set, 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 the top-line acceleration or deceleration. So, that was a great point to make, and I do think it's an important one for all of our listeners out there. Now, to move to Splunk, yes, I've been capturing a lot of negative commentary on Splunk even before the data turns. So this has been a about a year-long, 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 going to point out a Led Zeppelin song and movie, and say that the song remains the same for Splunk. We are just seeing recent spending attentions are taking yet another step down, both from prior survey levels, from year ago levels. This, we're looking at in the analytics sector and spending intentions are decelerating across every single group, and we went to one of our other slide analysis on the ETR+ platform, and you do by customer sub-sample, in analytics, it's dropping in every single vertical. It doesn't matter which one. it's really not looking good, unfortunately, and you had mentioned this is an analytics and I do believe the next slide is an information security. >> Yeah, let's bring that up. >> And unfortunately it's not doing much better. So this is specifically Fortune 500 accounts and information security. 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, that they didn't like 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 and security. >> Yeah, so I think again, I pointed Teresa Carlson. She's got a big job, but she's very capable. She's going to meet with a lot of customers, she's a go-to-market pro, she's going to to have to listen hard, and I think you're going to see some changes there. Okay, so sorry, there's more bad news on Splunk. So (indistinct) bring this up is Net score for Splunk and Elastic accounts. This is for analytics, so there's 106 Elastic accounts in the dataset that also have Splunk and it's trending downward for Splunk, that's why it's green for Elastic. And Erik, 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 Datadog, and you mentioned the pricing issue, well, is it pricing in your assessment or is it more fundamental? >> It's multi-level based on the commentary we get from our ITDMs teams that take the survey. So yes, you did a great job with this analysis. What we're looking at is the spending within shared accounts. So if I have Splunk already, how am I spending? I'm sorry if I have Elastic already, how am I 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. 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. They're more dev ops-oriented. They tend to be viewed as having technological lead as compared to Splunk. So a really good point. 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 trying to make things a little bit more flexible, moving off ingestion and moving towards consumption. So they are trying, and the new hires, I'm not going to 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 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 even more disruptive. >> I think I want to key on the pricing for a moment, and I've been pretty vocal about this. I think the old SAS pricing model where 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 a flawed model. I like what Snowflake's doing, I like what Datadog's doing, look at what Stripe is doing, look at what Twilio is doing, you mentioned it, it's consumption-based pricing, and if you've got a great product, put it out there and damn, the torpedoes, and I think that is a game changer. I look at, for instance, HPE with GreenLake, I look at Dell with Apex, they're trying to mimic that model and apply it to infrastructure, it's much harder with infrastructure 'cause you've got to deploy physical infrastructure, but that is a model that I think is going to change, and I think all of the traditional SAS pricing is going to come under disruption over the next better part of the decades, but anyway, let's move on. We've been covering the APM space 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, sorry, the gray is the April 20th survey, the blue is Jan 21 and the yellow is April 21, and not only are Elastic and Datadog doing well relative to Splunk, Erik, 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 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. Pretty much all the interviews I do, I've done a few panels specifically on this topic, for anyone who wants to 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 a Datadog for certain aspects, they are using Elastic where they can 'cause 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. So 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 interviews you do in the (indistinct), one-on-one, or one-on-five, the private interviews that I've been invited to, Dynatrace gets very high scores for their roadmap. You've got New Relic, which has been struggling financially, but 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 got ChaosSearch, which Ed Walsh is now running, leave the data in place in AWS and really interesting model, Honeycomb is getting really disruptive, Jeremy Burton's company, Observed. So this space is it's becoming jumped 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 AppDynamics, 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. I just don't know if their enterprise level service and sales is up to snuff right now. 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 standalone, that there needs to be some M and A or convergence in this space. >> Okay, now we're going to call out some of the data 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, 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. Let's look at this. Erik is the ride over for Zoom? >> Ah, I've been saying it for a little bit of a time now actually. I do believe it is, and we'll get into it, but again, pointing out, great, Dave, the reason we're presenting today Splunk, Elastic and Zoom, they are the most viewed on the ETR+ platform. Trailing behind that only slightly is F5, I decided not to bring F5 to the table today 'cause we don't have a rating on the data set. 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, yeah, I call Zoom the pandemic bull market baby. 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 580, that's in 10 months. That's cooled down a little bit into the mid-300s, and I believe that cooling down should continue, and the reason why is because we are seeing huge deceleration in our spending intentions. They're hitting all-time lows, it's really just a very ugly dataset. More importantly than the spending intentions, for the first time, we're seeing customer growth in our survey flatten. In the past, we knew that the deceleration of 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 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, and we're not paying them." And that combined with Teams, I mean, it's... I think, look, Zoom, they've got to figure out how to use their elevated market cap to transform and expand their TAM, but 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. Pure announced it's earnings in May, IBM just announced storage, it was way down actually. So still, Pure, more positive, but I'll on that comment in a moment, but what does this data tell you, Erik? >> Yeah, 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 continuing. So we're seeing the strongest year-over-year acceleration in the entire survey, which is a really good spot to be. Pure is also a leading position 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, digital transformation Cloud spending is increasing, you need to be aligned with that. And among all storage sector peers, Pure is best positioned in all of those, in spending intentions and adoptions and also public Cloud correlation. So yet again, to start another really strong dataset, and I have an anecdote about why this might be happening, because when I saw the data, 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, but their data center is in colo, So they don't own and build their own physical building. He pointed out that during COVID, his company wanted to increase storage, but he couldn't get into his colo center due to COVID restrictions. They weren't allowed. You had 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 colo 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 depreciation cycle is ending. SSDs are moving on and we're starting to see a new technology in that space, NVMe sorry, 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 storage could be a good sector for some time to come. >> That's really interesting, thank you for that extra metadata. And I want to do a little deeper dive on storage. So here's a look at storage in 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 more spindles and more performance and we're 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 primary storage companies, largely in the sector, along with Veeam, Cohesity and Rubrik, which are kind of secondary data or data protection. So my quick thoughts here 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. Rubrik is very elevated but down, 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 the highs are steady, the lows are steady. Dell is also notable, they've been struggling in storage. Their ISG business, which comprises servers and storage, it's been softer in COVID, and during even 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 is 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, down double digits again, and they're in a product cycle shift. And NetApp, it looks bad in the ETR data from a spending momentum standpoint, but their management team is transforming the company into a Cloud play, which Erik is why it was interesting that Pure has the greatest momentum 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, and other than Pure, they're the only big kind of pure play in primary storage. So long-winded, intro there, Erik, but anything you'd add? >> No, actually I appreciate it as long-winded. I'm going to be honest with you, storage is not my best sector as far as a researcher and analyst goes, but I actually think that a lot of what you said is spot on. We do capture a lot of large organizations spend, we don't capture much mid and small, so I think when you're talking about these large, large players like NetApp not looking so good, all I would state is that we are capturing really big organization spending attention, so these are names that should be doing better to be quite honest, in those accounts, and at least according to our data, we're not seeing it in. It's longterm depression, as you can see, NetApp now has a negative spending velocity in this analysis. So, I can go dig around a little bit more, but right now the names that I'm hearing are Pure, Cohesity. I'm hearing a little bit about Hitachi trying to reinvent themselves in the space, but I'll take a wait-and-see approach on that one, but pure Cohesity are the ones I'm hearing a lot from our community. >> So storage is transforming to Cloud as a service. You've seen things like Apex in GreenLake from Dell and HPE and container storage. A little, so not really a lot of people paying attention to it, but Pure bought 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-io. So a lot of transformations happening here. Okay, I know it's been a long segment, we have to summarize, and let me go through a summary and then I'll give you the last word, Erik. So tech spending appears to be tracking US GDP at 6 to 7%. This talent shortage could be a blocker to accelerating IT deployments, so that's kind of good news actually for services companies. Digital transformation, it remains a priority, and that bodes, well, not only for services, but automation. UiPath went public this week, we profiled that extensively, that went public last Wednesday. Organizations that sit at the top face some tough decisions on how to allocate resources. They're 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. Erik, your final thoughts. >> Yeah, I'm going to go back quickly to just the overall macro spending, 'cause 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 COVID spending, it was the deep pockets that moved first, right? Fortune 500 knew they had to support remote work, they started spending first. Around that in the Fortune 500, we're only seeing about 5% spend, 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. I 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 I do think that it's important to point that out. 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, with 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. 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 dataset, but ultimately, 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. 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 Erik, thanks for coming on today. It's really a pleasure to have you, and so really appreciate the collaboration and look forward to doing more of these. >> Yeah, we enjoy the partnership greatly, Dave. We're very happy to have you on 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 have to do is search "Breaking Analysis" podcast, and please subscribe to the series. Check out ETR website it's etr.plus. We also publish a full report every week on wikibon.com and siliconangle.com. You can email me, david.vellante@siliconangle.com, you can DM me on Twitter @dvellante or comment on our LinkedIn posts. I could see you in Clubhouse. This is Dave Vellante for Erik Porter Bradley for the CUBE Insights powered by ETR. Have a great week, stay safe, be well and we'll see you next time. (bright music)