>>From the Cube Studios in Palo Alto in Boston, bringing you data driven insights from the cube and etr. This is breaking analysis with Dave Ante. >>Have you ever been driving on the highway and traffic suddenly slows way down and then after a little while it picks up again and you're cruising along and you're thinking, Okay, hey, that was weird. But it's clear sailing now. Off we go, only to find out in a bit that the traffic is building up ahead again, forcing you to pump the brakes as the traffic pattern ebbs and flows well. Welcome to the Seesaw economy. The fed induced fire that prompted an unprecedented rally in tech is being purposefully extinguished now by that same fed. And virtually every sector of the tech industry is having to reset its expectations, including the cloud segment. Hello and welcome to this week's Wikibon Cube Insights powered by etr. In this breaking analysis will review the implications of the earnings announcements from the big three cloud players, Amazon, Microsoft, and Google who announced this week. >>And we'll update you on our quarterly IAS forecast and share the latest from ETR with a focus on cloud computing. Now, before we get into the new data, we wanna review something we shared with you on October 14th, just a couple weeks back, this is sort of a, we told you it was coming slide. It's an XY graph that shows ET R'S proprietary net score methodology on the vertical axis. That's a measure of spending momentum, spending velocity, and an overlap or presence in the dataset that's on the X axis. That's really a measure of pervasiveness. In the survey, the table, you see that table insert there that shows Wiki Bond's Q2 estimates of IAS revenue for the big four hyperscalers with their year on year growth rates. Now we told you at the time, this is data from the July TW 22 ETR survey and the ETR hadn't released its October survey results at that time. >>This was just a couple weeks ago. And while we couldn't share the specific data from the October survey, we were able to get a glimpse and we depicted the slowdown that we saw in the October data with those dotted arrows kind of down into the right, we said at the time that we were seeing and across the board slowdown even for the big three cloud vendors. Now, fast forward to this past week and we saw earnings releases from Alphabet, Microsoft, and just last night Amazon. Now you may be thinking, okay, big deal. The ETR survey data didn't really tell us anything we didn't already know. But judging from the negative reaction in the stock market to these earnings announcements, the degree of softness surprised a lot of investors. Now, at the time we didn't update our forecast, it doesn't make sense for us to do that when we're that close to earning season. >>And now that all the big three ha with all the big four with the exception of Alibaba have announced we've, we've updated. And so here's that data. This chart lays out our view of the IS and PAs worldwide revenue. Basically it's cloud infrastructure with an attempt to exclude any SaaS revenue so we can make an apples to apples comparison across all the clouds. Now the reason that actual is in quotes is because Microsoft and Google don't report IAS revenue, but they do give us clues and kind of directional commentary, which we then triangulate with other data that we have from the channel and ETR surveys and just our own intelligence. Now the second column there after the vendor name shows our previous estimates for q3, and then next to that we show our actuals. Same with the growth rates. And then we round out the chart with that lighter blue color highlights, the full year estimates for revenue and growth. >>So the key takeaways are that we shaved about $4 billion in revenue and roughly 300 basis points of growth off of our full year estimates. AWS had a strong July but exited Q3 in the mid 20% growth rate year over year. So we're using that guidance, you know, for our Q4 estimates. Azure came in below our earlier estimates, but Google actually exceeded our expectations. Now the compression in the numbers is in our view of function of the macro demand climate, we've made every attempt to adjust for constant currency. So FX should not be a factor in this data, but it's sure you know that that ma the the, the currency effects are weighing on those companies income statements. And so look, this is the fundamental dynamic of a cloud model where you can dial down consumption when you need to and dial it up when you need to. >>Now you may be thinking that many big cloud customers have a committed level of spending in order to get better discounts. And that's true. But what's happening we think is they'll reallocate that spend toward, let's say for example, lower cost storage tiers or they may take advantage of better price performance processors like Graviton for example. That is a clear trend that we're seeing and smaller companies that were perhaps paying by the drink just on demand, they're moving to reserve instance models to lower their monthly bill. So instead of taking the easy way out and just spending more companies are reallocating their reserve capacity toward lower cost. So those sort of lower cost services, so they're spending time and effort optimizing to get more for, for less whereas, or get more for the same is really how we should, should, should phrase it. Whereas during the pandemic, many companies were, you know, they perhaps were not as focused on doing that because business was booming and they had a response. >>So they just, you know, spend more dial it up. So in general, as they say, customers are are doing more with, with the same. Now let's look at the growth dynamic and spend some time on that. I think this is important. This data shows worldwide quarterly revenue growth rates back to Q1 2019 for the big four. So a couple of interesting things. The data tells us during the pandemic, you saw both AWS and Azure, but the law of large numbers and actually accelerate growth. AWS especially saw progressively increasing growth rates throughout 2021 for each quarter. Now that trend, as you can see is reversed in 2022 for aws. Now we saw Azure come down a bit, but it's still in the low forties in terms of percentage growth. While Google actually saw an uptick in growth this last quarter for GCP by our estimates as GCP is becoming an increasingly large portion of Google's overall cloud business. >>Now, unfortunately Google Cloud continues to lose north of 850 million per quarter, whereas AWS and Azure are profitable cloud businesses even though Alibaba is suffering its woes from China. And we'll see how they come in when they report in mid-November. The overall hyperscale market grew at 32% in Q3 in terms of worldwide revenue. So the slowdown isn't due to the repatriation or competition from on-prem vendors in our view, it's a macro related trend. And cloud will continue to significantly outperform other sectors despite its massive size. You know, on the repatriation point, it just still doesn't show up in the data. The A 16 Z article from Sarah Wong and Martin Martin Kasa claiming that repatriation was inevitable as a means to lower cost of good sold for SaaS companies. You know, while that was thought provoking, it hasn't shown up in the numbers. And if you read the financial statements of both AWS and its partners like Snowflake and you dig into the, to the, to the quarterly reports, you'll see little notes and comments with their ongoing negotiations to lower cloud costs for customers. >>AWS and no doubt execs at Azure and GCP understand that the lifetime value of a customer is worth much more than near term gross margin. And you can expect the cloud vendors to strike a balance between profitability, near term profitability anyway and customer attention. Now, even though Google Cloud platform saw accelerated growth, we need to put that in context for you. So GCP, by our estimate, has now crossed over the $3 billion for quarter market actually did so last quarter, but its growth rate accelerated to 42% this quarter. And so that's a good sign in our view. But let's do a quick little comparison with when AWS and Azure crossed the $3 billion mark and compare their growth rates at the time. So if you go back to to Q2 2016, as we're showing in this chart, that's around the time that AWS hit 3 billion per quarter and at the same time was growing at 58%. >>Azure by our estimates crossed that mark in Q4 2018 and at that time was growing at 67%. Again, compare that to Google's 42%. So one would expect Google's growth rate would be higher than its competitors at this point in the MO in the maturity of its cloud, which it's, you know, it's really not when you compared to to Azure. I mean they're kind of con, you know, comparable now but today, but, but you'll go back, you know, to that $3 billion mark. But more so looking at history, you'd like to see its growth rate at this point of a maturity model at least over 50%, which we don't believe it is. And one other point on this topic, you know, my business friend Matt Baker from Dell often says it's not a zero sum game, meaning there's plenty of opportunity exists to build value on top of hyperscalers. >>And I would totally agree it's not a dollar for dollar swap if you can continue to innovate. But history will show that the first company in makes the most money. Number two can do really well and number three tends to break even. Now maybe cloud is different because you have Microsoft software estate and the power behind that and that's driving its IAS business and Google ads are funding technology buildouts for, for for Google and gcp. So you know, we'll see how that plays out. But right now by this one measurement, Google is four years behind Microsoft in six years behind aws. Now to the point that cloud will continue to outpace other markets, let's, let's break this down a bit in spending terms and see why this claim holds water. This is data from ET r's latest October survey that shows the granularity of its net score or spending velocity metric. >>The lime green is new adoptions, so they're adding the platform, the forest green is spending more 6% or more. The gray bars spending is flat plus or minus, you know, 5%. The pinkish colors represent spending less down 6% or worse. And the bright red shows defections or churn of the platform. You subtract the reds from the greens and you get what's called net score, which is that blue dot that you can see on each of the bars. So what you see in the table insert is that all three have net scores above 40%, which is a highly elevated measure. Microsoft's net scores above 60% AWS well into the fifties and GCP in the mid forties. So all good. Now what's happening with all three is more customers are keep keeping their spending flat. So a higher percentage of customers are saying, our spending is now flat than it was in previous quarters and that's what's accounting for the compression. >>But the churn of all three, even gcp, which we reported, you know, last quarter from last quarter survey was was five x. The other two is actually very low in the single digits. So that might have been an anomaly. So that's a very good sign in our view. You know, again, customers aren't repatriating in droves, it's just not a trend that we would bet on, maybe makes for a FUD or you know, good marketing head, but it's just not a big deal. And you can't help but be impressed with both Microsoft and AWS's performance in the survey. And as we mentioned before, these companies aren't going to give up customers to try and preserve a little bit of gross margin. They'll do what it takes to keep people on their platforms cuz they'll make up for it over time with added services and improved offerings. >>Now, once these companies acquire a customer, they'll be very aggressive about keeping them. So customers take note, you have negotiating leverage, so use it. Okay, let's look at another cut at the cloud market from the ETR data set. Here's the two dimensional view, again, it's back, it's one of our favorites. Net score or spending momentum plotted against presence. And the data set, that's the x axis net score on the, on the vertical axis, this is a view of et r's cloud computing sector sector. You can see we put that magic 40% dotted red line in the table showing and, and then that the table inserts shows how the data are plotted with net score against presence. I e n in the survey, notably only the big three are above the 40% line of the names that we're showing here. The oth there, there are others. >>I mean if you put Snowflake on there, it'd be higher than any of these names, but we'll dig into that name in a later breaking analysis episode. Now this is just another way of quantifying the dominance of AWS and Azure, not only relative to Google, but the other cloud platforms out there. So we've, we've taken the opportunity here to plot IBM and Oracle, which both own a public cloud. Their performance is largely a reflection of them migrating their install bases to their respective public clouds and or hybrid clouds. And you know, that's fine, they're in the game. That's a point that we've made, you know, a number of times they're able to make it through the cloud, not whole and they at least have one, but they simply don't have the business momentum of AWS and Azure, which is actually quite impressive because AWS and Azure are now as large or larger than IBM and Oracle. >>And to show this type of continued growth that that that Azure and AWS show at their size is quite remarkable and customers are starting to recognize the viability of on-prem hi, you know, hybrid clouds like HPE GreenLake and Dell's apex. You know, you may say, well that's not cloud, but if the customer thinks it is and it was reporting in the survey that it is, we're gonna continue to report this view. You know, I don't know what's happening with H P E, They had a big down tick this quarter and I, and I don't read too much into that because their end is still pretty small at 53. So big fluctuations are not uncommon with those types of smaller ends, but it's over 50. So, you know, we did notice a a a negative within a giant public and private sector, which is often a, a bellwether giant public private is big public companies and large private companies like, like a Mars for example. >>So it, you know, it looks like for HPE it could be an outlier. We saw within the Fortune 1000 HPE E'S cloud looked actually really good and it had good spending momentum in that sector. When you di dig into the industry data within ETR dataset, obviously we're not showing that here, but we'll continue to monitor that. Okay, so where's this Leave us. Well look, this is really a tactical story of currency and macro headwinds as you can see. You know, we've laid out some of the points on this slide. The action in the stock market today, which is Friday after some of the soft earnings reports is really robust. You know, we'll see how it ends up in the day. So maybe this is a sign that the worst is over, but we don't think so. The visibility from tech companies is murky right now as most are guiding down, which indicates that their conservative outlook last quarter was still too optimistic. >>But as it relates to cloud, that platform is not going anywhere anytime soon. Sure, there are potential disruptors on the horizon, especially at the edge, but we're still a long ways off from, from the possibility that a new economic model emerges from the edge to disrupt the cloud and the opportunities in the cloud remain strong. I mean, what other path is there? Really private cloud. It was kind of a bandaid until the on-prem guys could get their a as a service models rolled out, which is just now happening. The hybrid thing is real, but it's, you know, defensive for the incumbents until they can get their super cloud investments going. Super cloud implying, capturing value above the hyperscaler CapEx, you know, call it what you want multi what multi-cloud should have been, the metacloud, the Uber cloud, whatever you like. But there are opportunities to play offense and that's clearly happening in the cloud ecosystem with the likes of Snowflake, Mongo, Hashi Corp. >>Hammer Spaces is a startup in this area. Aviatrix, CrowdStrike, Zeke Scaler, Okta, many, many more. And even the projects we see coming out of enterprise players like Dell, like with Project Alpine and what Pure Storage is doing along with a number of other of the backup vendors. So Q4 should be really interesting, but the real story is the investments that that companies are making now to leverage the cloud for digital transformations will be paying off down the road. This is not 1999. We had, you know, May might have had some good ideas and admittedly at a lot of bad ones too, but you didn't have the infrastructure to service customers at a low enough cost like you do today. The cloud is that infrastructure and so far it's been transformative, but it's likely the best is yet to come. Okay, let's call this a rap. >>Many thanks to Alex Morrison who does production and manages the podcast. Also Can Schiffman is our newest edition to the Boston Studio. Kristin Martin and Cheryl Knight helped get the word out on social media and in our newsletters. And Rob Ho is our editor in chief over@siliconangle.com, who does some wonderful editing for us. Thank you. Remember, all these episodes are available as podcasts. Wherever you listen, just search breaking analysis podcast. I publish each week on wiki bond.com at silicon angle.com. And you can email me at David dot valante@siliconangle.com or DM me at Dante or comment on my LinkedIn posts. And please do checkout etr.ai. They got the best survey data in the enterprise tech business. This is Dave Valante for the Cube Insights powered by etr. Thanks for watching and we'll see you next time on breaking analysis.

>>Well, hello everybody. I'm John Walls here with the cube, and we're very happy to continue our coverage here of a splunk.com 21. And today we're going to talk about cyber security. Uh, obviously everybody is well aware of a number of, uh, breaches that have happened around the globe, but you might say there's been a surge in trying to prevent those from happening down the road. And I'm going to let our guests explain that Ryan Covar, who is the security strategist at Splunk. Ryan. Good to see you with, uh, with us here on the cube. Glad you could join us today. >>Thank you very much. I've wished we could have been doing this in person, but such as the time of life we live. >>Yeah. We have learned to live on zoom that's for sure. And, uh, it's the next best thing to being there. So, uh, again, thanks for that. Um, well, let's talk about surge, if you will. Um, uh, I know obviously Splunk and data security go hand in hand that is a high priority with the, with the company, but now you have a new initiative that you're just now rolling out to take that to an even higher level. Tell us about that. >>Yeah, something I'm extremely excited to announce. Uh, it's the first time we're really talking about it is that.com 21, which is wonderful. And it's kind of the culmination of my seven years here at Splunk. Uh, before I came to Splunk, I did about 20 years of cyber security research and defense and nation state hunting and threat intelligence and policy and compliance, and just about everything, uh, public sector in the U S and the UK private sector, a couple of different places. So I've kind of been around the block. And one of the things I've found that I'm really passionate about is just being a network defender or a blue teamer. And a lot of my time here at Splunk has been around that. It's been speaking at conferences, doing research, um, coming up with ways to basically defend organizations, but the tools they have at hand and something that we say Alon is, uh, we, we work on the problems of today and tomorrow, not the distant future, right? >>The really practical things. And we had an, you know, there was a little bit of a thing called solar winds. You might've heard of it. Um, that happened earlier in December and we were able to stand up kind of on an ad hoc ragtag group of Splunkers around the world, uh, in a matter of hours. And we worked about 24 hours for panning over to Australia, into a Mia, and then back over to America and able to publish really helpful work to, for our customers to detect or defend or mitigate against what we knew at the time around solar winds, the attack. And then as time went on, we were continuing to write and create material, but we didn't have a group that was focused on it. We were all kind of chipping in after hours or, you know, deep deprecating, other bits of work. >>And I said, you know, we really need to focus on this. This is a big deal. And how can we actually surge up to meet these needs if you will, uh, the play on the punter. So we created an idea of a small team, a dedicated to current events and also doing security research around the problems that are facing around the world insecurity who use Splunk and maybe even those who don't. And that's where the idea of this team was formed. And we've been working all summer. We're releasing our first research project, excuse me, uh, at.com, which is around supply chain, compromise using jaw three Zeke and Splunk, uh, author by myself and primarily Marcus law era. And we have other research projects coming out every quarter, along with doing this work around, just helping people with any sort of immediate cybersecurity threat that we're able to assist with. >>So what are you hoping that security teams can get out of this work? Obviously you're investing a lot of resources and doing the research, I assume, diversifying, you know, the areas and to which you're, um, exploring, um, ultimately what would be the takeaway if I was on the other end, if I was on the client and what would you hope that I would be, uh, extracting from this work? >>Sure. We want to get you promoted. I mean, that's kind of the, the joke of it, but we, we talk a lot. I want to make everyone in the world who use a Splunk or cybersecurity, looked into their bosses and defend their company as fast and quickly as possible. So one of the big, mandates for my team is creating consumable, actionable work and research. So we, you know, we joke a lot that, you know, I have a pretty thick beard here. One might even call it a neck beard and a lot of people in our community, we create things for what I would call wizards, cybersecurity wizards, and we go to conferences and we talk from wizard to wizard, and we kind of sit on our ivory tower on stage and kind of proclaim out how to do things. And I've sat on the other side and sometimes those sound great, but they're not actually helping people with their job today. And so the takeaway for me, what I hope people are able to take away is we're here for you. We're here for the little guys, the network defenders, we're creating things that we're hoping you can immediately take home and implement and do and make better detections and really find the things that are immediate threats to your network and not necessarily having to, you know, create a whole new environment or apply magic. So >>Is there a difference then in terms of say enterprise threats, as opposed to, if I'm a small business or of a medium sized business, maybe I have four or 500 employees as opposed to four or 5,000 or 40,000. Um, what about, you know, finding that ground where you can address both of those levels of, of business and of concern, >>You know, 20 years ago or 10 years ago? I would've answered that question very differently and I fully acknowledge I have a bias in nation state threats. That's what I'm primarily trained in, however, in the last five years, uh, thanks or not. Thanks to ransomware. What we're seeing is the same threats that are affecting and impacting fortune 100 fortune 10 companies. The entire federal government of the United States are the exact same threats that are actually impacting and causing havoc on smaller organizations and businesses. So the reality is in today's threat landscape. I do believe actually the threat is the same to each, but it is not the same level of capabilities for a 100% or 500 person company to a company, the size of Splunk or a fortune 100 company. Um, and that's something that we are actually focusing on is how do we create things to help every size of that business, >>Giving me the tools, right, exactly. >>Which is giving you the power to fight that battle yourself as much as possible, because you may never be able to have the head count of a fortune 100 company, but thanks to the power of software and tools and things like the cloud, you might have some force multipliers that we're hoping to create for you in a much more package consumable method. >>Yeah. Let's go back to the research that you mentioned. Um, how did you pick the first topic? I mean, because this is your, your splash and, and I'm sure there was a lot of thought put into where do we want to dive in >>First? You know, I'd love to say there was a lot of thought put into it because it would make me sound smarter, but it was something we all just immediately knew was a gap. Um, you know, solar winds, which was a supply chain, compromise attack really revealed to many of us something that, um, you know, reporters had been talking about for years, but we never really saw come to fruition was a real actionable threat. And when we started looking at our library of offerings and what we could actually help customers with, I talked over 175 federal and private sector companies around the world in a month and a half after solar winds. And a lot of times the answer was, yeah, we can't really help you with this specific part of the problem. We can help you around all sorts of other places, but like, gosh, how do you actually detect this? >>And there's not a great answer. And that really bothered me. And to be perfectly honest, that was part of the reason that we founded the team. So it was a very obvious next step was, well, this is why we're creating the team. Then our first product should probably be around this problem. And then you say, okay, supply chain, that's really big. That's a huge chunk of work. So the first question is like, well, what can we actually affect change on without talking about things like quantum computing, right? Which are all things that are, you know, blockchain, quantum computing, these are all solutions that are actually possible to solve or mitigate supply chain compromise, but it's not happening today. And it sure as heck isn't even happening tomorrow. So how do we create something that's digestible today? And so what Marcus did, and one of his true skillsets is really refining the problem down, down, down, down. >>And where can we get to the point of, Hey, this is data that we think most organizations have a chance of collecting. These are methodologies that we think people can do and how can they actually implement them with success in their network. And then we test that and then we kind of keep doing a huge fan of the concept of OODA loop, orient, orient, observe, decide, and act. And we do that through our hypothesizing. We kind of keep looking at that and iterating over and over and over again, until we're able to come up with a solution that seems to be applicable for the personas that we're trying to help. And that's where we got out with this research of, Hey, collect network data, use a tool like Splunk and some of our built-in statistical analysis functions and come out the other side. And I'll be honest, we're not solving the problem. >>We're helping you with the problem. And I think that's a key differentiator of what we're saying is there is no silver bullet and frankly, anyone that tells you they can solve supply chain, uh, let me know, cause I want to join that hot new startup. Um, the reality is we can help you go from a field of haystacks to a single haystack and inside that single haystack, there's a needle, right? And there's actually a lot of value in that because before the PR problem was unapproachable, and now we've gotten it down to saying like, Hey, use your traditional tools, use your traditional analytic craft on a much smaller set of data where we've pretty much verified that there's something here, but look right here. And that's where we kind of focused. >>You talked about, you know, and we all know about the importance and really the emphasis that's put on data protection, right? Um, at the same time, can you use data to help you protect? I mean, is there information or insight that could be gleaned from, from data that whether it's behavior or whatever the case might be, that, that not only, uh, is something that you can operationalize and it's a good thing for your business, but you could also put it into practice in terms of your security practices to >>A hundred percent. The, the undervalued aspect of cybersecurity in my opinion, is elbow grease. Um, you can buy a lot of tools, uh, but the reality is to get value immediately. Usually the easiest place to start is just doing the hard detail oriented work. And so when you ask, is there data that can help you immediately data analytics? Actually, I go to, um, knowing what you have in your network, knowing what you have, that you're actually trying to protect asset and inventory, CMDB, things like this, which is not attractive. It's not something people want to talk about, but it's actually the basis of all good security. How do you possibly defend something if you don't know what you're defending and where it is. And something that we found in our research was in order to detect and find anomalous behavior of systems communicating outbound, um, it's too much. >>So what you have to do is limit the scope down to those critical assets that you're most concerned about and a perfect example of critical asset. And there's no, no shame or victim blaming here, put on solar winds. Uh, it's just that, that is an example of an appliance server that has massive impact on the organization as we saw in 2020. And how can you actually find that if you don't know where it is? So really that first step is taking the data that you already have and saying, let's find all the systems that we're trying to protect. And what's often known as a crown jewels approach, and then applying these advanced analytics on top of those crown jewel approaches to limit the data scope and really get it to just what you're trying to protect. And once you're positive that you have that fairly well defended, then you go out to the next tier and the next tier in next year. And that's a great approach, take things you're already doing today and applying them and getting better results tomorrow. >>No, before I let you go, um, I I'd like to just have you put a, uh, a bow on surge, if you will, on that package, why is this a big deal to you? It's been a long time in the making. I know you're very happy about the rollout of this week. Um, you know, what's the impact you want to have? Why is it important? >>We did a lot of literature review. I have a very analytical background. My time working at DARPA taught me a lot about doing research and development and on laying out the value of failure, um, and how much sometimes even failing as long as you talk about it and talk about your approach and methodology and share that is important. And the other part of this is I see a lot of work done by many other wonderful organizations, uh, but they're really solving for a problem further down the road or they're creating solutions that not everyone can implement. And so what I think is so important and what's different about our team is we're not only thinking differently, we're hiring differently. You know, we have people who have a threat intelligence background from the white house. We have another researcher who did 10 years at DARPA insecurity, research and development. >>Uh, we've recently hired a, a former journalist who she's made a career pivot into cybersecurity, and she's helping us really review the data and what people are facing and come up with a real connection to make sure we are tackling the right problems. And so to me, what I'm most excited about is we're not only trying to solve different problems. And I think what most of the world is looking at for cybersecurity research, we've staffed it to be different, think different and come up with things that are probably a little less, um, normal than everyone's seen before. And I'm excited about that. >>Well, and, and rightly so, uh, Ryan, thanks for the time, a pleasure to have you here on the cube and, uh, the information again, the initiative is Serge, check it out, uh, spunk very much active in the cyber security protection business. And so we have certainly appreciate that effort. Thank you, Ryan. >>Well, thank you very much, John. You bet Ryan, >>Covar joining us here on our cube coverage. We continue our coverage of.com for 21.

>> live from Boston, Massachusetts. It's the Cube covering A W s reinforce 2019 brought to you by Amazon Web service is and its ecosystem partners. >> Okay, welcome back. Everyone keeps live coverage here in Boston. Messages of AWS reinforce That's Amazon. Webster's his first inaugural commerce around cloud security on John Kerry with David Lantz. One of the top stories here, the announced being announced here reinforced is the VPC traffic nearing and we wanted to bring in alumni and friend Mike Banner was the VP of marketing at a Vectra who specializes in networking. Welcome to the Q. We go way back. HP networking got a hot start up here so wanted to really bring you in to help unpack this VPC traffic mirroring product is probably medias announcement of everything on stage. That other stuff was general availability of security have which is great great product, Absolutely. And guard guard duty. Well, all this other stuff have it. But the VPC traffic nearing is a killer feature for a lot of reasons, absolutely. But it brings some challenges and some opportunities that might be downstream. I don't get the thoughts on what is your take on the BBC traffic nearing >> a tte. The highest level brings a lot of value because it allows you get visibility and something that's really opaque, which is the traffic within the cloud. And in the past, the way people were solving this was they had to put an agent on the workload, and nobody wants that one. It's hard to manage. You don't want dozens to hundreds or thousands of agents, and also it's going to slow things down. On third, it could be subverted. You get the advanced attacker in there. He knows how to get below that level and operated on in a way where he can hide his communication and and his behavior isn't seen. With traffic nearing that, we're getting a copy of the packet from below. The hyper visor cannot be subverted, and so we're seeing everything, and we're also not slowing down the traffic in the virtual private cloud. So it allows us to extract just the right data for a security application, which is our case, metadata and enrich it with information that's necessary for detecting threats and also of performing an investigation. >> Yeah, it was definitely the announcement that everybody has been talking about has the buzz. So from a from a partner perspective, how do you guys tie into that? What do you do? Was the value that you bring to the customer, >> So the value that we're bringing really stems from what you can do with our platform. There's two things everybody is looking to do with him at the highest level, which is detect threats and respond to threats. On the detection side, we could take the metadata that we've extracted and we've enriched. We're running through machine learning algorithms, and from there we not only get a detection, but we can correlated to the workers we're seeing it on. And so we could present much more of an incident report rather than just a security alert, saying, Hey, something bad happened over there. It's not just something bad happened, but these four bad things happen and they happen in this time sequence over this period of time, and it involved these other work looks. We can give you a sense of what the attack campaign looks like. So you get a sense of like with cancer, such as you have bad cells in your liver, but they've metastasized to these other places. Way also will keep that metadata in something we call cognito recall, which is in AWS. And it has pre built analytics and save searches so that once you get that early warning signal from cognito detect, you know exactly where to start looking for. You can peel back all the unrelated metadata, and you can look specifically at what's happened during the time of that incident. In order, perform your threat investigation and respond rapidly to that threat. >> So you guys do have a lot of machine intelligence. OK, ay, ay chops. How close are we to be able to use that guy to really identify? Detect, but begin to automate responses? We there yet eyes. It's something that people want don't want. >> We're getting close to being there. It's answer your first question, and people are sure that they want it yet. And here's some of the rationale behind it. You know, like we generally say that Aria is pretty smart, but security operations people are still the brains of the operation. There's so much human intelligence, so much contextual knowledge that a security operations person can apply to the threats that we detect. They can look at something and say, Oh, yeah, I see the user account. The service is being turned on from, you know, this particular workload. I know exactly what's happening with that. They add so much value. So we look at what we're doing is augmenting the security operations team. We're reducing their workload by taking all the mundane work and automating that and putting the right details at their fingertips so they could take action. Now there's some things that are highly repeatable that they do like to use playbooks for So we partner with companies like Phantom, which got bought by spunk, and to Mr which Palazzo Networks acquired. They've built some really good playbooks for some of those well defying situations. And there was a couple presentations on the floor that talked about those use >> cases. Fan of fan was pretty good. Solid product was built in the security hub. Suit helps nice product, but I'll get back to the VPC traffic, not smearing. It makes so much sense. It's about time. Yes, Finally they got it done. This make any sense? It wasn't done before, but I gotta ask first with the analytics, you and you said on the Q. Before network doesn't lie, >> the network is no line >> they were doesn't lie with subversion pieces of key piece. It's better be the lowest level possible. That's a great spot for the data. So totally agree. Where do you guys create Valley? Because now that everyone's got available BBC traffic mirroring How do you guys take advantage of that? What's next for you guys is that Where's the differentiation come from? Where's the value go next? >> Yeah, there's really three things that I tend to focus on. One is we enrich the metadata that we're extracting with a lot of important data that makes it. It really accelerates the threat investigation. So things like directionality, things like building a notion of what's the identity of the workload or when you're running us on prem. The device, because I P addresses changed. There's dynamic things in there, so having a sense of of consistency over a period of time is extremely valuable for performing a threat investigation so that information gets put in tow. Recall for the metadata store. If people have a data leak that they wanna have ascended to, whether it's elastic or spawn, Kafka then that is included in what we send to them and Zeke formatting use. Others eat tooling so they're not wasting any money there. And in the second piece is around the way that we build analytics. There's always, ah, a pairing of somebody from security research with the data scientist. This is the security researcher explains the tools, the tactics, the techniques of the attacker. So that way, the data scientist isn't being completely random about what features do they want to find in the network traffic. They're being really specific to what features are gonna actually pair to that tool, tactic and technique. So that way, the efficacy of the algorithm is better. We've been doing this for five plus years, and history speaks for something because some of the learning we've had is all right. In the beginning, there were maybe a couple different supervised techniques to apply. Well, now we're applying those supervised techniques with some deep learning techniques. So that way, the performance of the algorithm is actually 90% more effective than it was five years ago. >> Appreciating with software. Get the data extract the data, which the metadata, Yes, you're doing. Anyway. Now, It's more efficient, correct, low speed, No, no problems with informants in the agents you mentioned earlier. Now it's better data impact the customers. What's the What's the revelation here For the end of the day, your customer and Amazons customers through you? What do they get out of it? What's the benefit to them? >> So it's all about reducing the time to detect in the time to respond. Way had one of our fortune to 50 customers present last week at the Gardener Security Summit. Still on stage. Gentlemen from Parker Hannifin talked about how they had an incident that they got an urgent alert from from Cognito. It told him about an attack campaign. He was immediately alerted the 45 different machines that were sending data to the cloud. He automatically knew about what were the patterns of data, the volume of data. They immediately know exactly what the service is that were being used with in the cloud. They were able to respond to this and get it all under control. Listen 24 hours, but it's because they had the right data at their fingertips to make rapid decisions before there was any risk. You know what they ended up finding was it was actually a new application, but somebody had actually not followed the procedures of the organization that keeps them compliant with so many of their end users. In the end, it's saved tremendous time and money, and if that was a real breach, it would have actually prevented them from losing proprietary information. >> Well, historically, it would take 250 days to even find out that there was a breach, right? And then by then who knows what What's been exfiltrate ID? >> Yeah, we had a couple. We had a couple of firms that run Red team exercises for a living come by and they said, I said to them, Do you know who we are? And they said, Of course we know where you are. There's one tool out there, then finds us. It's victory. That's >> a That's a kind of historical on Prem. So what do you do for on Pramuk? This is all running any ws. Is it cloud only? >> It's actually both, so we know that there's a lot of companies that come here that have never owned a server, and everything's been in AWS from day one and for I t. Exactly. And for them waken run everything. We have the sensor attached to the VPC traffic nearing in AWS. We could have the brain of the cognitive platform in eight of us, you know. So for them they don't need anything on prime. There's a lot of people that are in the lift and shift mode. It can be on Prem and in eight of us, eh? So they can choose where they want the brain. And they could have sensors in both places. And we have people that are coming to this event that their hybrid cloud, they've got I t infrastructure in Azure. But they have production in eight of us and they have stuff that's on Prem. And we could meet that need to because we work with the V Top from Azure and so that we're not religious about that. It's all about giving the right data right place, reducing the time to detective respond, >> Mike, Thanks for coming and sharing the insights on the VP. Your perspective on the vpc traffic mirror appreciated. Give a quick plug for the company. What you guys working on? What's the key focus? You hiring. Just got some big funding news. Take a minute to get the plug in for electric. >> Yeah, So we've gone through several years of consecutive more than doubling in. Not in a recurring revenue. I've been really fortunate to have to be earning a lot of customer business from the largest enterprises in the world. Recently had funding $100,000,000 led by T C V out of Menlo Park. Total capitalization is over to 22 right now on the path to continue that doubling. But, you know, we've been really focusing on moving where the you know already being where the puck is going to by working with Amazon. Advance on the traffic nearing. And, you know, we know that today people are using containers in the V M environment. We know that you know where they want to go. Is more serverless on, you know, leveraging containers more. You know, we're already going in that direction. So >> great to see congratulates we've known each other for many, many years is our 10th anniversary of the Q. You were on year one. Great to know you. And congratulations. Successive victor and great announcement. Amazon gives you a tailwind. >> Thanks a lot. It's great to see your growth as well. Congratulations. >> Thanks, Mike. Mike Banning unpacking the relevance of the VPC traffic mirroring feature. >> This is kind >> of conversation we're having here. Deep conversation around stuff that matters around security and cloud security. Of course, the cubes bring any coverage from the inaugural event it reinforced for me. Ws will be right back after this short break.

>> Live from Orlando, Florida It's the Cube covering Enterprise Connect twenty nineteen brought to you by five nine. >> Hello from Orlando. We are at Enterprise Connect twenty nineteen, and we're being very graciously hosted by five nine, which is the intelligent Cloud Contact center. We had a great few days, two minute minute myself talking with customers, partners, vendors on this massive change and enterprise, communication and collaboration. We're excited to welcome back to the key one of our alumni, Zs Caravella, the founder and principal analyst at Zeke Research. These It's great to have you here, >> Dawson. To me. Here >> you are. You should have the i p status at Enterprise Connect because you have been to this event some twenty times. >> I believe it's my twentieth. >> Can't imagine. So they didn't They should have rolled out the red carpet. Maybe we'll put a note >> in next year, >> but Yeah. There you go. I >> want to get my own booth. >> There you go. But I can't imagine how much this event has changed. And just your perspectives on Day three here of e. C nineteen and some of the vendors that you're like, Wow. A few years ago, you would never have seen a so and so here. >> Yeah, the shows massive compared to what it used to be the Remember when I first started coming to the show floor was maybe if I was a quarter the size, I mean generous, and it was really dominated by just a handful of companies. But since then, it's gone through several transitions the i p to software to the cloud on. That's gotten a lot more companies interested. And I think also, finally, businesses starting understand that if you're going to transform digitally right, communications has to be part of that fact. If you look at any piece of research right that I know there's a walker study throwing around saying by twenty twenty customer experience to be the number one brand differentiator, that's that's already happening. It's already the number one brand differentiator. And so because of that, more and more companies are now interested in communications. So, you know, ten years ago, fifteen years ago, we didn't have Amazon here. We didn't have Microsoft here. We didn't have Oracle here, but it's been a great thing for the show to see all these other companies that really have really great presidents validate what we've been saying for a long time, and it's a much different show today than it was. >> Yeah, it's really interesting that the thing that opened my eye is some of the companies that air here. I wish I knew which brand used these technologies so that if and when I do have an issue, I'm not gonna have that horrible customer experience that you know we've had in the past. It's like, you know, if I wanted to make a call, it's like, Can I even make a call? And, you know, do I actually get through the I V R. Things like that? I like how you set it up there. Some of these pendulums swings some of these waves of technology. Um, let's talk a little bit about voice because this used to be called Voice Khan, and it went through a rebranding because, you know, voice was in a little bit of kind. But, you know, we know voices. It's still very important. How does that fit in the hall >> when I went through that rebound, Frankly, voice wasn't sexy anymore. Everyone is talking about unified communications. No one was going to call anybody ever again. We're just gonna message or social each other to death and what's happened is voice is kind of important, right? And I think one of the undersea and friends to look at is that voice is becoming simultaneously less important and more important. What I mean by that is that they sound like a little bit of an oxymoron. But if you look across all age demographics right there, everybody has a prefered mode of communications, and it's rarely voice to start a conversation with the company. You message them your social, um, send them an e mail. But somewhere in there, you you eventually want to talk to somebody, and a that moment s o to start the conversation voices less important. But at that moment, you now want to have a conversation with uneducated agent who knows what your problem is and can help you quickly. And so now voices Mohr important than it's ever been before where, but I think the buried entry wasn't all that high, but voices, you know, it's it's important, it's sexy, and especially when people are dealing with emotional issues, they're dealing with money problems right in front of get a refund. If I'm trying to check on the status of my health, I want to talk to somebody. But when I want to talk to somebody, I want to get that conversation with over. It's possible. I think the bar's been raised as you mentioned to. You used to think that the dreaded Ivy are. If you have a dread and ivy are experience, you just want to business that company anymore, right? And so the stakes are higher than the bar's been raised on. What voices >> are you saying that the customers that you were talking to are now starting to get much more prescriptive in terms of understanding their customer journeys and their preferences? You know, before they used to go, we assume we're talking to millennials. They only want they only want ASA Master. Our company's starting to get more focused on. Alright, let's actually do analysis and determine if a voice only one of the next channels that we need to enable, >> uh, well, I wish they were. I think we're really in the early early innings that I think the best companies in the world are doing that. If you look at companies with very high, uh, NPS scores and customer SAT scores there doing that thing already and I think it's a good lesson for the rest of the industry. If you're not doing that, you're gonna fall behind pretty quickly. And I think that is driving companies more to the Saami Channel experience Where, uh, from, uh, from an analytic standpoint, you really have to understand your customer, not at the demographic level, but almost at a custom level because everyone's different, right? I think that's, uh, that's never been possible before. But today, because we've got bigger data sets. Things were in the cloud rise of artificial intelligence. It's made all the stuff possible. So companies like I said, the best cos the world to taken advantage of and they're having a, you know, big differences. That's why there's been such a huge swings in the market leadership right there cos we never heard of before. Market leaders and brands we trusted loved before they're gone. >> Yeah, I'm glad you brought that up, because every company we talked to this week that that CX is at the center of what they're talking about. So, in your research, what is differentiating though those new leaders and, you know, causing some of those swings in the market place hot out of the customer. Look at these and help differentiate and and ever changing marketplace. >> Well, it's what's going on today. It's really about being more contextual, having a deeper understanding a wire. Customers calling, uh, how you could help him faster understanding maybe what products they own. You know what? What are some of the adjacent ones? Ah, no. I think that's going very quickly, become table stakes. And I think where we're moving to is we're going to shift customer service from being largely inbound, driven and reactive. And that's where they I can help react faster to being Mohr, outbound driven and pearl active. Right? So, for instance, let's say I buy a connected refrigerator and my water filter needs changing. Well, right now, I still have to recognize that. And maybe I call that refrigerator company and they can proactively help me because they understand what I have. And they've got a great arm, the Channel contact center. But ultimately that should be a reverse. They should contact me, maybe through a text message saying, Hey, you're we noticed your water filter needs changing. Can we send you one? Yes, it comes and then maybe I call the agent and say, Can you help me install it? Right? So I think within the next three, four years, we're going to see a lot of customer service, Uh, where contextual is the table stakes and then the ability to predict what your customer wants. That's going to be the differentiator. And frankly, that's really exciting. I mean, if you think we've seen change of this industry as you mentioned in the last five years, wait for the next five. >> When you're talking with customers or even doing research and and other venues, it's to mention CX. We talk. We've been talking about it all week, but I get curious when I hear the customer experience and the agent experience just think, How are they not how they separate because of the Asian isn't empowered to be able to, whether it's no the right channel. But I want to be communicated with or have the information where the context about why I'm calling, then the customer experience, right? >> Yeah, well, they're very tightly linked together. You can't have a good customer experience that a good agent experience and you may have the best trained agents in the world that are the most empathetic that are incredibly sensitive with what people want. But if they don't have the data, you're going frustrate your customer. And everybody's been through that situation where you get transferred to somebody else and you gotta start that whole conversation over again and eventually you just hang up and say, I don't want ever to business. So I think you're right. Agent experience Customer experience are very tightly interwoven, and they're they're really dependent on one another. You can't you can't do without the data. And again, that's where all these friends of a I come into play because they're able to send better information to the agents faster, really, through an assistive technology versus replacement. Right? >> So when we came into this show, we knew that the wave of cloud had made a big transformation. We're starting to hear a I is the next wave everybody's talking about. I believe I read something that that you had written that was talking about, you know, whether that is something just internal the company build in versus how it interacts with the customer. Where do you see I having the biggest impact kind of in the short term, and nowhere is that more long. >> It's a great question because I ask my customers all the time. Should we be using intelligence bots? Or if you saw the Google Duplex Nemo, where they have on a I call in order pizza I think it was or something like that. So is a I ready to talk to people? And I think if you think of the entire world of interactions on a two by two grid is an analyst would like to buy two grids, right? And you put complexity of conversation on one axis and frequency of interactions if it's hiking, or if it's low complexity, high frequency, that might be okay to try and automate through a But other than that, everything should flipped. Agent. And I think right now we're very early in the cycle, and so is a business. I'm not sure I trust today. I tow always have the right answer, but it makes a great assistant technology to recommend to the agent. This is what you should say, and the great thing about that is, if the agent says no, that's stupid and says that wasn't helpful. That becomes the input to the learning mechanism for the A I so overtime will get smarter and smarter. But if you if you want to think about just the role of it now, I always use the analogy is like a self driving car. I'm not sure if either one of you would want to jump in a car that has no driver, no steering wheel, no controls. But there's a lot of great aye aye technology in a car like lane change assist, parallel parking assist things like that that can make you a better driver. So let's make our agents better drivers by giving him those assistive technologies. And that's the the short term vision long term. Who knows? But I But I think oh, if company's heir to aggressively they II, they're actually gonna create a nod. The opposite effect, where they hurt customer experience. It's the people that make a difference, so let's make those people better. >> That's one of the things that we've heard consistently throughout this event is the empathy factor machines can't bring. That's really got to be the humans with the A I to deliver on idea, hopefully optimal experience, too. Whatever customer has whatever issue on the back end. >> Yeah, in fact, Roman always talks about that as well. The CEO of five nine and I think he's right from that. Regarded is about having the knowledge of the customer in the empathy to understand. Put yourself in the customer's position and this to your point. Lisa, about CX. In Asian experience, we tied a couple together. If the Asian distressed because they don't have the right information and they're trying a message, this person, or look something up in the database, that frustration is going to come through to the customer. And that further frustrates the customer, right? So of the agents, armed with the right information, they can spend more time focused on the customer and less time trying to find the data that, frankly, they should have at their fingertips all the time. >> So speaking of five nine, you recently attended their analyst event. >> I did >> on. We've had the executives on the team. You know, Jonathan on earlier this week, you know, rock star background. We're goingto throwing on a little bit later. We know him from his Cisco days without breaking any India's, you know, give us a little bit of the insight as to, you know, five nine. You know, what have they been doing? Well, what's what's the new team driving them forward towards? >> Well, I mean, if you look at their stock price from Roland joined, it's it's more than doubled. So obviously there's, um, some good growth there. I think. What? I've always believed that it's very difficult to compete on product alone, right? And if you believe this whole world of it is this customer experience, that's what they do really well, the customers, their customers have a great experience here with five nine, they have a great service organization that makes sure that when you buy five nine, you have a good on boarding experience that set up the way you want it, and that services business makes a big difference. Now they've always had that. Now, where I think the new executive team has made a difference is helping the company understand the scale, move upmarket, more enterprises because the needs their different than down market. And so I think you know, they're gonna have a big impact on the future of five nine. Frankly, I think a lot of what you've seen for growth in the last year has been stuff that was put in place. But I know they're working on a lot of the AI capabilities. We're not breaking in the NBA's. I can tell you that the demonstrations that Jonathan Rosenberg, who's in there incredibly smart guy, I mean he might be the smartest guy in this industry was giving around. How a I can impact customer experience was the best set of concrete examples that I've seen today because it's really easy to give me a pie in the sky hypothetical things. But he really boiled it down in a very grand your level of this possible. This is possible and I'm expecting over the next year, five nine customers will see those things. >> They've done really well in the enterprise market. I think last year in twenty eighteen, they closed very, very strongly. Also, a lot of growth in there. Custom enterprise customers with a Million and Ahrar plus What are you seeing, though, in terms of some of the smaller businesses that probably are facing a lot of the same challenges that enterprises are? Is this an area where they can also leverage five nine two really dial up and deliver Great CX, >> Yeah, but the line has moved up right of people interested in cloud services that used to be too small businesses, and now it's all kinds. But I think for a small business, you can look like a much larger business. I think there's a lot of companies people sometimes think that's a little risky deal the small company. But five nine is a very, very valuable tool because by having that information right away that agents fingertips, they're able to actually replicates, uh, large company experience and on almost validate that the customer made the right decision using them. So I think up and down the stack it for five nine. They provide value tow companies of all sizes. Today, one of them, you know, the interesting aspects of what I've seen two is everybody talks about this twenty four billion dollars tam for Contact Center. I know I've been in that eye, and may I say that because that twenty four billion dollars tam is based on giving contact, Senator people contact center tools, but what I've been noticing over the last years, when people buy five nine, often it's not contact center people using that using it. It's sales people in marketing people, field service. Anybody that needs customer info is using it. And I'll give an example. One of the customers that was at the five nine day I can't see you. They say who they are. They migrated all fifty contacts and regions five nine. And since then they've added one hundred mohr sales people using the tools. So now we've got one hundred fifty people using five nine when there was only fifty contacts. Generations you can see the value is starting to spread across the company, and I think that's a pretty exciting thing. >> It's been interesting we've seen at the show. And in some of the interviews, that line between kind of unified communications and contact center seems to be blurring. It seems to be that >> well, everybody needs that data on the customer info. I actually cameras closer to forty. Forty five billion. To be frank, really, every anybody who uses a serum tool should have five nine capabilities. >> Zia's Thank you so much for sharing your insights and your energy on Day three. If Enterprise connect nineteen, we appreciate your time Thank you. First two minute, man. I'm Lisa Martin. You're watching the Cube?