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

>> From theCUBE studios in Palo Alto in Boston, bringing you data driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> In the words of my colleague CTO David Nicholson, Broadcom buys old cars, not to restore them to their original luster and beauty. Nope. They buy classic cars to extract the platinum that's inside the catalytic converter and monetize that. Broadcom's planned 61 billion acquisition of VMware will mark yet another new era and chapter for the virtualization pioneer, a mere seven months after finally getting spun out as an independent company by Dell. For VMware, this means a dramatically different operating model with financial performance and shareholder value creation as the dominant and perhaps the sole agenda item. For customers, it will mean a more focused portfolio, less aspirational vision pitches, and most certainly higher prices. Hello and welcome to this week's Wikibon CUBE Insights powered by ETR. In this Breaking Analysis, we'll share data, opinions and customer insights about this blockbuster deal and forecast the future of VMware, Broadcom and the broader ecosystem. Let's first look at the key deal points, it's been well covered in the press. But just for the record, $61 billion in a 50/50 cash and stock deal, resulting in a blended price of $138 per share, which is a 44% premium to the unaffected price, i.e. prior to the news breaking. Broadcom will assume 8 billion of VMware debt and promises that the acquisition will be immediately accretive and will generate 8.5 billion in EBITDA by year three. That's more than 4 billion in EBITDA relative to VMware's current performance today. In a classic Broadcom M&A approach, the company promises to dilever debt and maintain investment grade ratings. They will rebrand their software business as VMware, which will now comprise about 50% of revenues. There's a 40 day go shop and importantly, Broadcom promises to continue to return 60% of its free cash flow to shareholders in the form of dividends and buybacks. Okay, with that out of the way, we're going to get to the money slide literally in a moment that Broadcom shared on its investor call. Broadcom has more than 20 business units. It's CEO Hock Tan makes it really easy for his business unit managers to understand. Rule number one, you agreed to an operating plan with targets for revenue, growth, EBITDA, et cetera, hit your numbers consistently and we're good. You'll be very well compensated and life will be wonderful for you and your family. Miss the number, and we're going to have a frank and uncomfortable bottom line discussion. You'll four, perhaps five quarters to turn your business around, if you don't, we'll kill it or sell it if we can. Rule number two, refer to rule number one. Hello, VMware, here's the money slide. I'll interpret the bullet points on the left for clarity. Your fiscal year 2022 EBITDA was 4.7 billion. By year three, it will be 8.5 billion. And we Broadcom have four knobs to turn with you, VMware to help you get there. First knob, if it ain't recurring revenue with rubber stamp renewals, we're going to convert that revenue or kill it. Knob number two, we're going to focus R&D in the most profitable areas of the business. AKA expect the R&D budget to be cut. Number three, we're going to spend less on sales and marketing by focusing on existing customers. We're not going to lose money today and try to make it up many years down the road. And number four, we run Broadcom with 1% GNA. You will too. Any questions? Good. Now, just to give you a little sense of how Broadcom runs its business and how well run a company it is, let's do a little simple comparison with this financial snapshot. All we're doing here is taking the most recent quarterly earnings reports from Broadcom and VMware respectively. We take the quarterly revenue and multiply by four X to get the revenue run rate and then we calculate the ratios off of the most recent quarters revenue. It's worth spending some time on this to get a sense of how profitable the Broadcom business actually is and what the spreadsheet gurus at Broadcom are seeing with respect to the possibilities for VMware. So combined, we're talking about a 40 plus billion dollar company. Broadcom is growing at more than 20% per year. Whereas VMware's latest quarter showed a very disappointing 3% growth. Broadcom is mostly a hardware company, but its gross margin is in the high seventies. As a software company of course VMware has higher gross margins, but FYI, Broadcom's software business, the remains of Symantec and what they purchased as CA has 90% gross margin. But the I popper is operating margin. This is all non gap. So it excludes things like stock based compensation, but Broadcom had 61% operating margin last quarter. This is insanely off the charts compared to VMware's 25%. Oracle's non gap operating margin is 47% and Oracle is an incredibly profitable company. Now the red box is where the cuts are going to take place. Broadcom doesn't spend much on marketing. It doesn't have to. It's SG&A is 3% of revenue versus 18% for VMware and R&D spend is almost certainly going to get cut. The other eye popper is free cash flow as a percentage of revenue at 51% for Broadcom and 29% for VMware. 51%. That's incredible. And that my dear friends is why Broadcom a company with just under 30 billion in revenue has a market cap of 230 billion. Let's dig into the VMware portfolio a bit more and identify the possible areas that will be placed under the microscope by Hock Tan and his managers. The data from ETR's latest survey shows the net score or spending momentum across VMware's portfolio in this chart, net score essentially measures the net percent of customers that are spending more on a specific product or vendor. The yellow bar is the most recent survey and compares the April 22 survey data to April 21 and January of 22. Everything is down in the yellow from January, not surprising given the economic outlook and the change in spending patterns that we've reported. VMware Cloud on AWS remains the product in the ETR survey with the most momentum. It's the only offering in the portfolio with spending momentum above the 40% line, a level that we consider highly elevated. Unified Endpoint Management looks more than respectable, but that business is a rock fight with Microsoft. VMware Cloud is things like VMware Cloud foundation, VCF and VMware's cross cloud offerings. NSX came from the Nicira acquisition. Tanzu is not yet pervasive and one wonders if VMware is making any money there. Server is ESX and vSphere and is the bread and butter. That is where Broadcom is going to focus. It's going to look at VSAN and NSX, which is software probably profitable. And of course the other products and see if the investments are paying off, if they are Broadcom will keep, if they are not, you can bet your socks, they will be sold off or killed. Carbon Black is at the far right. VMware paid $2.1 billion for Carbon Black. And it's the lowest performer on this list in terms of net score or spending momentum. And that doesn't mean it's not profitable. It just doesn't have the momentum you'd like to see, so you can bet that is going to get scrutiny. Remember VMware's growth has been under pressure for the last several years. So it's been buying companies, dozens of them. It bought AirWatch, bought Heptio, Carbon Black, Nicira, SaltStack, Datrium, Versedo, Bitnami, and on and on and on. Many of these were to pick up engineering teams. Some of them were to drive new revenue. Now this is definitely going to be scrutinized by Broadcom. So that helps explain why Michael Dell would sell VMware. And where does VMware go from here? It's got great core product. It's an iconic name. It's got an awesome ecosystem, fantastic distribution channel, but its growth is slowing. It's got limited developer chops in a world that developers and cloud native is all the rage. It's got a far flung R&D agenda going at war with a lot of different places. And it's increasingly fighting this multi front war with cloud companies, companies like Cisco, IBM Red Hat, et cetera. VMware's kind of becoming a heavy lift. It's a perfect acquisition target for Broadcom and why the street loves this deal. And we titled this Breaking Analysis taming the VMware beast because VMware is a beast. It's ubiquitous. It's an epic software platform. EMC couldn't control it. Dell used it as a piggy bank, but really didn't change its operating model. Broadcom 100% will. Now one of the things that we get excited about is the future of systems architectures. We published a breaking analysis about a year ago, talking about AWS's secret weapon with Nitro and it's Annapurna custom Silicon efforts. Remember it acquired Annapurna for a measly $350 million. And we talked about how there's a new architecture and a new price performance curve emerging in the enterprise, driven by AWS and being followed by Microsoft, Google, Alibaba, a trend toward custom Silicon with the arm based Nitro and which is AWS's hypervisor and Nick strategy, enabling processor diversity with things like Graviton and Trainium and other diverse processors, really diversifying away from x86 and how this leads to much faster product cycles, faster tape out, lower costs. And our premise was that everyone in the data center is going to competes, is going to need a Nitro to be competitive long term. And customers are going to gravitate toward the most economically favorable platform. And as we describe the landscape with this chart, we've updated this for this Breaking Analysis and we'll come back to nitro in a moment. This is a two dimensional graphic with net score or spending momentum on the vertical axis and overlap formally known as market share or presence within the survey, pervasiveness that's on the horizontal axis. And we plot various companies and products and we've inserted VMware's net score breakdown. The granularity in those colored bars on the bottom right. Net score is essentially the green minus the red and a couple points on that. VMware in the latest survey has 6% new adoption. That's that lime green. It's interesting. The question Broadcom is going to ask is, how much does it cost you to acquire that 6% new. 32% of VMware customers in the survey are increasing spending, meaning they're increasing spending by 6% or more. That's the forest green. And the question Broadcom will dig into is what percent of that increased spend (chuckles) you're capturing is profitable spend? Whatever isn't profitable is going to be cut. Now that 52% gray area flat spending that is ripe for the Broadcom picking, that is the fat middle, and those customers are locked and loaded for future rent extraction via perpetual renewals and price increases. Only 8% of customers are spending less, that's the pinkish color and only 3% are defecting, that's the bright red. So very, very sticky profile. Perfect for Broadcom. Now the rest of the chart lays out some of the other competitor names and we've plotted many of the VMware products so you can see where they fit. They're all pretty respectable on the vertical axis, that's spending momentum. But what Broadcom wants is that core ESX vSphere base where we've superimposed the Broadcom logo. Broadcom doesn't care so much about spending momentum. It cares about profitability potential and then momentum. AWS and Azure, they're setting the pace in this business, in the upper right corner. Cisco very huge presence in the data center, as does Intel, they're not in the ETR survey, but we've superimposed them. Now, Intel of course, is in a dog fight within Nvidia, the Arm ecosystem, AMD, don't forget China. You see a Google cloud platform is in there. Oracle is also on the chart as well, somewhat lower on the vertical axis, but it doesn't have that spending momentum, but it has a big presence. And it owns a cloud as we've talked about many times and it's highly differentiated. It's got a strategy that allows it to differentiate from the pack. It's very financially driven. It knows how to extract lifetime value. Safra Catz operates in many ways, similar to what we're seeing from Hock Tan and company, different from a portfolio standpoint. Oracle's got the full stack, et cetera. So it's a different strategy. But very, very financially savvy. You could see IBM and IBM Red Hat in the mix and then Dell and HP. I want to come back to that momentarily to talk about where value is flowing. And then we plotted Nutanix, which with Acropolis could suck up some V tax avoidance business. Now notice Symantec and CA, relatively speaking in the ETR survey, they have horrible spending momentum. As we said, Broadcom doesn't care. Hock Tan is not going for growth at the expense of profitability. So we fully expect VMware to come down on the vertical axis over time and go up on the profit scale. Of course, ETR doesn't measure the profitability here. Now back to Nitro, VMware has this thing called Project Monterey. It's essentially their version of Nitro and will serve as their future architecture diversifying off x86 and accommodating alternative processors. And a much more efficient performance, price in energy consumption curve. Now, one of the things that we've advocated for, we said this about Dell and others, including VMware to take a page out of AWS and start developing custom Silicon to better integrate hardware and software and accelerate multi-cloud or what we call supercloud. That layer above the cloud, not just running on individual clouds. So this is all about efficiency and simplicity to own this space. And we've challenged organizations to do that because otherwise we feel like the cloud guys are just going to have consistently better costs, not necessarily price, but better cost structures, but it begs the question. What happens to Project Monterey? Hock Tan and Broadcom, they don't invest in something that is unproven and doesn't throw off free cash flow. If it's not going to pay off for years to come, they're probably not going to invest in it. And yet Project Monterey could help secure VMware's future in not only the data center, but at the edge and compete more effectively with cloud economics. So we think either Project Monterey is toast or the VMware team will knock on the door of one of Broadcom's 20 plus business units and say, guys, what if we work together with you to develop a version of Monterey that we can use and sell to everyone, it'd be the arms dealer to everyone and be competitive with the cloud and other players out there and create the de facto standard for data center performance and supercloud. I mean, it's not outrageously expensive to develop custom Silicon. Tesla is doing it for example. And Broadcom obviously is capable of doing it. It's got good relationships with semiconductor fabs. But I think this is going to be a tough sell to Broadcom, unless VMware can hide this in plain site and make it profitable fast, like AWS most likely has with Nitro and Graviton. Then Project Monterey and our pipe dream of alternatives to Nitro in the data center could happen but if it can't, it's going to be toast. Or maybe Intel or Nvidia will take it over or maybe the Monterey team will spin out a VMware and do a Pensando like deal and demonstrate the viability of this concept and then Broadcom will buy it back in 10 years. Here's a double click on that previous data that we put in tabular form. It's how the data on that previous slide was plotted. I just want to give you the background data here. So net score spending momentum is the sorted on the left. So it's sorted by net score in the left hand chart, that was the y-axis in the previous data set and then shared and or presence in the data set is the right hand chart. In other words, it's sorted on the right hand chart, right hand table. That right most column is shared and you can see it's sorted top to bottom, and that was the x-axis on the previous chart. The point is not many on the left hand side are above the 40% line. VMware Cloud on AWS is, it's expensive, so it's probably profitable and it's probably a keeper. We'll see about the rest of VMware's portfolio. Like what happens to Tanzu for example. On the right, we drew a red line, just arbitrarily at those companies and products with more than a hundred mentions in the survey, everything but Tanzu from VMware makes that cut. Again, this is no indication of profitability here, and that's what's going to matter to Broadcom. Now let's take a moment to address the question of Broadcom as a software company. What the heck do they know about software, right. Well, they're not dumb over there and they know how to run a business, but there is a strategic rationale to this move beyond just doing portfolios and extracting rents and cutting R&D, et cetera, et cetera. Why, for example, isn't Broadcom going after coming back to Dell or HPE, it could pick up for a lot less than VMware, and they got way more revenue than VMware. Well, it's obvious, software's more profitable of course, and Broadcom wants to move up the stack, but there's a trend going on, which Broadcom is very much in touch with. First, it sells to Dell and HPE and Cisco and all the OEM. so it's not going to disrupt that. But this chart shows that the value is flowing away from traditional servers and storage and networking to two places, merchant Silicon, which itself is morphing. Broadcom... We focus on the left hand side of this chart. Broadcom correctly believes that the world is shifting from a CPU centric center of gravity to a connectivity centric world. We've talked about this on theCUBE a lot. You should listen to Broadcom COO Charlie Kawwas speak about this. It's all that supporting infrastructure around the CPU where value is flowing, including of course, alternative GPUs and XPUs, and NPUs et cetera, that are sucking the value out of the traditional x86 architecture, offloading some of the security and networking and storage functions that traditionally have been done in x86 which are part of the waste right now in the data center. This is that shifting dynamic of Moore's law. Moore's law, not keeping pace. It's slowing down. It's slower relative to some of the combinatorial factors. When you add up in all the CPU and GPU and NPU and accelerators, et cetera. So we've talked about this a lot in Breaking Analysis episodes. So the value is shifting left within that middle circle. And it's shifting left within that left circle toward components, other than CPU, many of which Broadcom supplies. And then you go back to the middle, value is shifting from that middle section, that traditional data center up into hyperscale clouds, and then to the right toward infrastructure software to manage all that equipment in the data center and across clouds. And look Broadcom is an arms dealer. They simply sell to everyone, locking up key vectors of the value chain, cutting costs and raising prices. It's a pretty straightforward strategy, but not for the fate of heart. And Broadcom has become pretty good at it. Let's close with the customer feedback. I spoke with ETRs Eric Bradley this morning. He and I both reached out to VMware customers that we know and got their input. And here's a little snapshot of what they said. I'll just read this. Broadcom will be looking to invest in the core and divest of any underperforming assets, right on. It's just what we were saying. This doesn't bode well for future innovation, this is a CTO at a large travel company. Next comment, we're a Carbon Black customer. VMware didn't seem to interfere with Carbon Black, but now that we're concerned about short term disruption to their tech roadmap and long term, are they going to split and be sold off like Symantec was, this is a CISO at a large hospitality organization. Third comment, I got directly from a VMware practitioner, an IT director at a manufacturing firm. This individual said, moving off VMware would be very difficult for us. We have over 500 applications running on VMware, and it's really easy to manage. We're not going to move those into the cloud and we're worried Broadcom will raise prices and just extract rents. Last comment, we'll share as, Broadcom sees the cloud data center and IoT is their next revenue source. The VMware acquisition provides them immediate virtualization capabilities to support a lightweight IoT offering. Big concern for customers is what technology they will invest in and innovate, and which will be stripped off and sold. Interesting. I asked David Floyer to give me a back of napkin estimate for the following question. I said, David, if you're running mission critical applications on VMware, how much would it increase your operating cost moving those applications into the cloud? Or how much would it save? And he said, Dave, VMware's really easy to run. It can run any application pretty much anywhere, and you don't need an army of people to manage it. All your processes are tied to VMware, you're locked and loaded. Move that into the cloud and your operating cost would double by his estimates. Well, there you have it. Broadcom will pinpoint the optimal profit maximization strategy and raise prices to the point where customers say, you know what, we're still better off staying with VMware. And sadly, for many practitioners there aren't a lot of choices. You could move to the cloud and increase your cost for a lot of your applications. You could do it yourself with say Zen or OpenStack. Good luck with that. You could tap Nutanix. That will definitely work for some applications, but are you going to move your entire estate, your application portfolio to Nutanix? It's not likely. So you're going to pay more for VMware and that's the price you're going to pay for two decades of better IT. So our advice is get out ahead of this, do an application portfolio assessment. If you can move apps to the cloud for less, and you haven't yet, do it, start immediately. Definitely give Nutanix a call, but going to have to be selective as to what you actually can move, forget porting to OpenStack, or do it yourself Hypervisor, don't even go there. And start building new cloud native apps where it makes sense and let the VMware stuff go into manage decline. Let certain apps just die through attrition, shift your development resources to innovation in the cloud and build a brick wall around the stable apps with VMware. As Paul Maritz, the former CEO of VMware said, "We are building the software mainframe". Now marketing guys got a hold of that and said, Paul, stop saying that, but it's true. And with Broadcom's help that day we'll soon be here. That's it for today. Thanks to Stephanie Chan who helps research our topics for Breaking Analysis. Alex Myerson does the production and he also manages the Breaking Analysis podcast. Kristen Martin and Cheryl Knight help get the word out on social and thanks to Rob Hof, who was our editor in chief at siliconangle.com. Remember, these episodes are all available as podcast, wherever you listen, just search Breaking Analysis podcast. Check out ETRs website at etr.ai for all the survey action. We publish a full report every week on wikibon.com and siliconangle.com. You can email me directly at david.vellante@siliconangle.com. You can DM me at DVellante or comment on our LinkedIn posts. This is Dave Vellante for theCUBE Insights powered by ETR. Have a great week, stay safe, be well. And we'll see you next time. (upbeat music)

>> From theCUBE Studios in Palo Alto in Boston, bringing you data driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. >> New data from ETR's soon to be released April survey, shows a clear deceleration in spending and a more cautious posture from technology buyers. Just this week, we saw sell side downgrades in hardware companies like Dell and HP and revised guidance from high flyer UiPath, citing exposures to Russia, Europe and certain sales execution challenges, but these headlines, we think are a canary in the coal mine. According to ETR analysis and channel checks in theCUBE, the real story is these issues are not isolated. Rather we're seeing signs of caution from buyers across the board in enterprise tech. Hello and welcome to this week's Wikibon CUBE insights powered by ETR. In this Breaking Analysis, we are the bearers of bad news. Don't shoot the messenger. We'll share a first look at fresh data that suggests a tightening in tech spending calling for 6% growth this year which is below our January prediction of 8% for 2022. Now, unfortunately the party may be coming to an end at least for a while. You know, it's really not surprising, right? We've had a two year record run in tech spending and meteoric rises in high flying technology stocks. Hybrid work, equipping and securing remote workers. The forced march to digital that we talk about sometimes. These were all significant tailwinds for tech companies. The NASDAQ peaked late last year and then as you can see in this chart, bottomed in mid-March of 2022, and it made a nice run up through the 29th of last month, but the mini rally appears to be in jeopardy with FED rate hikes, Russia, supply chain challenges. There's a lot of uncertainty so we should expect the C-suite to be saying, hey, wait slow down. Now we don't think the concerns are confined to companies with exposure to Russia and Europe. We think it's more broad based than that and we're seeing caution from technology companies and tech buyers that we think is prudent, given the conditions. You know, looks like the two year party has ended and as my ETR colleague Erik Bradley said, a little hangover shouldn't be a surprise to anybody. So let's get right to the new spending data. I'm limited to what I can share with you today because ETR is in its quiet period and hasn't released full results yet outside of its client base. But, they did put out an alert today and I can share this slide. It shows the expectation on spending growth from more than a thousand CIOs and IT buyers who responded in the most recent survey. It measures their expectations for spending. The key focus areas that I want you to pay attention to in this data are the yellow bars. The most recent survey is the yellow compared to the blue and the gray bars, which are the December and September '21 surveys respectively. And you can see a steep drop from last year in Q1, lowered expectations for Q2 in the far right, a drop from nearly 9% last September to around 6% today. Now you may think a 200 basis point downgrade from our prediction in January of 8% seems somewhat benign, but in a $4 trillion IT market, that's 80 billion coming off the income statements of some tech companies. Now the good news is that 6% growth is still very healthy and higher than pre pandemic spending levels. And the buyers we've talked to this week are saying, look, we're still spending money. We just have to be more circumspect about where and how fast. Now, there were a few other callouts in the ETR data and in my discussions today with Erik Bradley on this. First, it looks like in response to expected supply chain constraints that buyers pulled forward their orders late last year and earlier this year. You remember when we couldn't buy toilet paper, people started the stockpile and it created this rubber banding effect. So we see clear signs of receding momentum in the PC and laptop market. But as we said, this is not isolated to PCs, UiPath's earning guidance confirm this but the story doesn't end there. This isn't isolated to UiPath in our view, rather it's a more based slowdown. The other big sign is spending in outsourced IT which is showing a meaningful deceleration in the last survey, showing a net score drop from 13% in January to 6% today. Net score remember is a measure of the net percentage of customers in the survey that on balance are spending more than last survey. It's derived by subtracting the percent of customers spending less from those spending more. And there's a, that's a 700 basis point drop in three months. This isn't a market where you can't hire enough people. The percent of companies hiring has gone from 10% during the pandemic to 50% today according to recent data from ETR. And we know there's still an acute skills shortage. So you would expect more IT outsourcing, but you don't see that in the data, it's down. And as this quote from Erik Bradley explains, historically, when outsourced IT drops like this, especially in a tight labor market, it's not good news for IT spending. All right, now, the other interesting callout from ETR were some specific company names that appear to be seeing the biggest change in spending momentum. Here's the list of those companies that all have meaningful exposure to Europe. That's really where the focus was. SAP has big exposure to on-premises installations and of course, Europe as well. ServiceNow has European exposure and also broad based exposure in IT in across the globe, especially in the US. Zoom didn't go to the moon, no surprise there given the quasi return to work and Zoom fatigue. McAfee is a bit of a concern because security seemed to be one of those areas, when you look at some of the other data, that is per actually insulated from all the spending caution. Of course we saw the Okta hack and we're going to cover that next week with hopefully some new data from ETR, but generally security's been holding up pretty well. You look at CrowdStrike, you look at Zscaler in particular. Adobe's another company that's had a nice bounce in the last couple of weeks. Accenture, again, speaks to that outsourcing headwinds that we mentioned earlier. And now the Google Cloud platform is a bit of a concern. It's still elevated overall, you know but down and well down in Europe. Under that magic, you know we often show that magic 40% dotted line, that red dotted line of net score anything above that we cite as elevated. Well, some important callouts to hear that you see companies that have Euro exposure. And again, we see this as just not confined to Europe and this is something we're going to pay close attention to and continue to report on in the next several weeks and months. All right, so what should we expect from here? The Ark investment stocks of Cathie Wood fame have been tracking in a downward trend since last November, meaning, you know, these high PE stocks are making lower lows and higher, sorry, lower highs and lower lows since then, right? The trend is not their friend. Investors I talk to are being much more cautious about buying the dip. They're raising cash and being a little bit more patient. You know, traders can trade in this environment but unless you can pay attention to in a minute by minute you're going to get whipsawed. Investors tell me that they're still eyeing big tech even though Apple has been on a recent tear and has some exposure with supply change challenges, they're looking for maybe entry points in, within that chop for Apple, Amazon, Microsoft, and Alphabet. And look, as I've been stressing, 6% spending growth is still very solid. It's a case of resetting the outlook relative to previous expectations. So when you zoom out and look at the growth in data, getting digital right, security investments, automation, cloud, AI containers, all the fundamentals are really strong and they have not changed. They're all powering this new digital economy and we believe it's just prudence versus a shift in the importance of IT. Now, one point of caution is there's a lot of discussion around a shift in global economies. Supply chain uncertainty, persistent semiconductor shortages especially in areas like, you know driver ICs and boring things like parts for displays and analog and micro controllers and power regulators. Stuff that's, you know, just not playing nice these days and wreaking havoc. And this creates uncertainty, which sometimes can pick up momentum in a snowballing effect. And that's something that we're watching closely and we're going to be vigilant reporting to you when we see changes in the data and in our forecast even when we think our forecast are wrong. Okay, that's it for today. Thanks to Alex Merson who does the production and podcasts for Breaking Analysis and Stephanie Chan who provides background research. Kristen Martin and Cheryl Knight, and all theCUBE writers they help get the word out, and thanks to Rob Hof, our EIC over at SiliconANGLE. Remember I publish weekly on wikibon.com and siliconangle.com. These episodes are all available as podcasts wherever you listen. All you got to do is search Breaking Analysis podcasts. etr.ai that's where you can get access to all this survey data and make your own cuts. It's awesome, check that out. Keep in touch with me. You can email me at dave.vellante@siliconangle.com. You can hit me up on LinkedIn. This is Dave Vellante for theCUBE insights powered by ETR. Be safe, stay well, and we'll see you next time. (gentle music)

(upbeat music) >> Hello everyone, welcome to the special CUBE presentation of the AWS Partner Showcase season one, episode two. I'm John Furrier, your host of theCUBE. We've got two great guest here. Douglas Ko, Director of product marketing at Cohesity and Sabina Joseph General Manager of AWS, Amazon Web Services. Welcome to the show. >> Thank you for having us. >> Great to see you Sabina and Douglas. Great to see you, congratulations at Cohesity. Loved the shirt, got the colors wearing there on Cohesity, Always good I can't miss your booth at the shows, can't wait to get back in person, but thanks for coming in remotely. I got to say it's super excited to chat with you, appreciate it. >> Yeah, pleasure to be here. >> What are the trends you're seeing in the market when it comes to ransomware threats right now. You guys are in the middle of it right now more than ever. I was hearing more and more about security, cloud scale, cloud refactoring. You guys are in the middle of it. What's the latest trends in ransomware? >> Yeah, I have to say John, it's a pleasure to be here but on the other hand, when you asked me about ransomware, right? The data and the statistics are pretty sobering right now. If we look at what just happened in 2020 to 2021, we saw a tenfold increase in a ransomware attacks. We also saw the prediction of a ransomware attack happening every 11 seconds meaning by the time I finished this sentence there's going to be another company falling victim to ransomware. And it's also expected by 2031 that the global impact of ransomware across businesses will be over $260 billion, right? So, that's huge. And even at Cohesisity, right, what we saw, we did our own survey, and this one actually directly to end users and consumers. And what we found was over 70% of them would reconsider doing business with a company that paid a ransom. So all these things are pretty alarming and pretty big problems that we face today in our industry. >> Yeah, there's so many dimensions to it. I mean, you guys at Cohesity have been doing a while. It's being baked in from day one, security in the cloud and backup recovery, all that is kind of all in one thing now. So to protect against ransomware and other threats is huge Sabina, I got to ask you Amazon's view of ransomware is serious. You guys take it very seriously. What's the posture and specifically, what is AWS doing to protect customers from this threat? >> Yeah, so as Doug mentioned, right, there's no industry that's immune to ransomware attacks. And just as so we all level set, right? What it means is somebody taking control over and locking your data as an individual or as a company, and then demanding a ransom for it, right? According to the NIST, the National Institute of Standards and Technology cybersecurity framework, there are basically five main functions which are needed in order to plan and manage these kind of cybersecurity ransomware attacks. They go across identifying what do you need to protect, actually implementing the things that you need in order to protect yourself, detecting things if there is an attack that's going on, then also responding, how do you get out of this attack? And then bringing things, recovery, right? Bringing things back to where they were before the attack. As we all know, AWS takes security very seriously. We want to make sure that our customer's data is always protected. We have a number of native security solutions, but we are also looking to see how we can work with partners. And this is in fact when in the fall of 2019, the Cohesity CEO, Mohit Aron, myself and a couple of us, we met and we brainstorm, what could we do something that is differentiated in the market? When we built this data management as a service native solution on top of AWS, it's a first of a kind solution, John. It doesn't exist anywhere else in the market, even to even today. And we really focused on using the well architected review, the five pillars of security, reliability, operational excellence, performance, and cost optimization. And we built this differentiated solution together, and it was launched in April, 2020. And then of course from a customer viewpoint, they should use a comprehensive set of solutions. And going back to that security, that cyber security framework that I mentioned, the Cohesity data management as a service solution really falls into that recovery, that last area that I mentioned and solution actually provides, granular management of data, protection of data. Customers can spin up things very quickly and really scale their solution across the globe. And ensure that there is compliance, no matter how many times we do data changes, ads and so on across the world. >> Yeah, Sabina, that's a great point about that because a lot of the ransomware actually got bad actors, but also customers can misconfigure things. They don't follow the best practice. So having that native solutions are super important. So that's a great call out. Douglas, I got to go back to you because you're on the Cohesity side and a the partner of AWS. They have all these best practices that for the good actors, got to pay attention to the best practices and the bad actors also trying to get in creates a two, challenge an opportunity. So how do organizations protect their data against these attacks? And also how do they maintain their best practices? Because that's half the battle too, is the best practices to make sure you're following the guidelines on AWS side, as well as protecting the attacks. What's your thoughts? >> Yeah, absolutely. First and foremost, right? As an organization, you need to understand how ransomware operates and how it's evolved over the years. And when you first look at it, Sabina already mentioned it, they started with consumers, small businesses, attacking their data, right? And some of these, consumers or businesses didn't have any backup. So the first step is just to make sure your data is backed up, but then the criminals kind of went up market, right? They understood that big organizations had big pocket and purses. So they went after them and the larger organizations do have backup and recovery solutions in place. So the criminals knew that they had to go deeper, right? And what they did was they went after the backup systems themselves and went to attack, delete, tamper with those backup systems and make it difficult or impossible to recover. And that really highlighted some solutions is out there that had some vulnerabilities with their data immutability and capabilities around WORM. And those are areas we suggest customers look at, that have immutability and WORM. And more recently again, given the way attacks have happened now is really to add another layer of defense and protection. And that includes, traditionally what we used to call, the 3-2-1 rule. And that basically means, three copies of data on two different sets of media with one piece of that data offsite, right? And in today's world and the cloud, right? That's a great opportunity to kind of modernize your environment. I wish that was all that ransomware guys we're doing right now and the criminals were doing, but unfortunately that's not the case. And what we've seen is over the past two years specifically, we've seen a huge increase in what you would call data theft or data exfiltration. And that essentially is them taking that data, a specific sense of the data and they're threatening to expose it to the dark web or selling it to the highest bidder. So in this situation it's honestly very difficult to manage. And the biggest thing you could do is obviously harden your security systems, but also you need a good understanding about your data, right? Where all that sensitive information is, who has access to it and what are the potential risks of that data being exposed. So that takes another step in terms of leveraging a bunch of technologies to help with that problem set. >> What can businesses do from an architectural standpoint and platform standpoint that you guys see there's key guiding principles around how their mindset should be? What's the examples of other approaches- >> Yeah. >> Approach here? >> No, I think they are both us at Cohesity and I'll speak for Sabina, AWS, we believe in a platform approach. And the reason for that is this a very complicated problem and the more tools and more things you have in there, you add risk of complexity, even potential new attack surfaces that the criminals can go after. So we believe the architecture approach should kind of have some key elements. One is around data resiliency, right? And that again comes from things like data encryption, your own data is encrypted by your own keys, that the data is immutable and has that, right, want to read many or WORM capabilities, so the bad guys can't temper with your data, right? That's just step one. Step two is really understanding and having the right access controls within your environment, right? And that means having multi factor authentication, quorum, meaning having two keys for the closet before you can actually have access to it. But it's got to go beyond there as well too. We got to leverage some newer technologies like AI and machine learning. And that can help you with detection and analysis of both where all your sensitive information is, right? As well as understanding potential anomalies that could signify attack or threat in progress. So, those are all key elements. And the last one of course is I think it takes a village, right? To fight the ransomware war. So we know we can't do it alone so, that's why we partner with people like AWS. That's why we also partner with other people in the security space to ensure you really have a full ecosystem support to manage all those things around that framework. >> That's awesome. Before I get to Sabina, I want to get into the relationship real quick, but I want to come back and highlight what you said about the data management as a service. This is a joint collaboration. This is some of the innovation that Cohesity and AWS are bringing to the market to combat ransomware. Can you elaborate more on that piece 'cause this is important. It's a collaboration that we're going to gather. So it's a partner and you guys were going to take us through what that means for the customer and to you guys. I mean, that's a compelling offering. >> So when we start to work with partners, right? we want to make sure that we are solving a customer problem. That's the whole working backwards from a customer. We are adding something more that the customer could not do. That's why when either my team or me, we start to either work on a new partnership or a new solution, it's always focused on, okay, is this solution enabling our customer to do something that they couldn't do before? And this approach has really helped us, John, in enabling majority of the fortune 500 companies and 90% of the fortune 100 companies use partner solutions successfully. But it's not just focused on innovation and technology, it's also focused on the business side. How are we helping partners grow their business? And we've been scaling our field teams, our AWS sales teams globally. But what we realized is through partner feedback, in fact, that we were not doing a great job in helping our partners close those opportunities and also bring net new opportunities. So in our field, we actually introduced a new role called the ISV Success Manager, ISMs that are embedded in our field to help partners either close existing opportunities, but also bring net new opportunities to them. And then at re:Invent 2020, we also launched the ISB accelerate program, which enables our field teams, the AWS field teams to get incentive to work with our partners. Cohesity, of course, participates in all of these programs and has access to all of these resources. And they've done a great job in leveraging and bringing our field teams together, which has resulted in hundreds of wins for this data management as a service solution that was launched. >> So you're bringing customers to Cohesity. >> Absolutely. >> Okay, I got to get the side. So they're helping you, how's this relationship going? Could you talk about the relationship on the customer side? How's that going? Douglas, what's your take on that? >> Yeah, absolutely. I mean, it's going great. That's why we chose to partner with AWS and to be quite honest, as Sabina mentioned, we really only launched data management and service back in 2020, late 2020. And at that time we launched with just one service then, right, when we first launched with backup as a service. Now about 15 months later, right? We're on the brink of launching four services that are running on AWS cloud. So, without the level of support, both from a go to market standpoint that Sabina mentioned as well as the engineering and the available technology services that are on the AWS Cloud, right? There's no way we would've been able to spin up new services in such a short period of time. >> Is that Fort Knox and Data Govern, those are the services you're talking about Or is that- >> Yeah, so let me walk you through it. Yeah, so we have Cohesity DataProtect, which is our backup as a service solution. And that helps customers back their data to the cloud, on-prem, SaaS, cloud data like AWS, all in a single service and allows you to recover from ransomware, right? But a couple months ago we also announced a couple new services that you're alluding to John. And that is around Fort Knox and DataGovern. And basically Fort Knox, it is basically our SaaS solution for data isolation to a vaulted copy in the AWS cloud. And the goal of that is to really make it very simple for customers, not only to provide data immutability, but also that extra layer of protection by moving that data offsite and keeping it secure and vaulted away from cyber criminals and ransomware. And what we're doing is simplifying the whole process that normally is manual, right? You either do it manually with tapes or you'll manually replicate data to another data center or even to the cloud, but we're providing it as a service model, basically providing a modern 3-2-1 approach, right? For the cloud era. So, that's what's cool about Fort Knox, DataGovern, right? That's also a new service that we announced a few months ago and that really provides data governance and user behavior analytics services that leverages a lot that AI machine learning that everybody's so excited about. But really the application of that is to automate the discovery of sensitive data. So that could be your credit card numbers, healthcare records, a personal information of customers. So understanding where all that data is, is very important because that's the data that the criminals are going to go after and hold you host. So that's kind of step one. And then step two is again, leveraging machine learning, actually looking at how users are accessing and managing that data is also super important because that's going to help you identify potential anomalies, such as people sharing that data externally, which could be a threat. It could be in improper vault permissions, or other suspicious behaviors that could potentially signify data exfiltration or ransomware attack in progress. >> That's some great innovation. You got the data resiliency, of course, the control mechanism, but the AI piece machine learning is awesome. So congratulations on that innovation. Sabina, I'm listening to conversation and hear you talk. And it reminds me of our chat at re:Invent. And the whole theme of the conference was about the innovation and rapid innovations and how companies are refactoring with the cloud and this NextGen kind of journey. This is a fundamental pillar of AWS's rapid innovation concept with your partners. And I won't say it's new, but it's highly accelerated. How are you guys helping partners be with this rapid innovation, 'cause you're seeing benefits can come faster now, Agile is here. What are some of the programs that you're doing? How are you helping customers take advantage of the rapid innovation with the secret sauce of AWS? >> Yeah, so we have a number of leadership principles, John, and one of them, of course, is customer obsession. We are very focused on making sure we are developing things that our customers need. And we look for these very same qualities when we work with partners such as Cohesity. We want to make sure that it's a win-win approach for both sides because that's what will make the partnership durable over time. And this John, our leadership team at AWS, right from our CEO down believes that partners are critical to our success and as partners lean in, we lean in further. And that's why we signed the strategic collaboration agreement with Cohesity in April, 2020, where data management as a service solution was launch as part of that agreement. And for us, we've launched this solution now and as Doug said, what are the next things we could be doing, right? And just to go back a little bit when Cohesity was developing this solution with us, they used a number of our programs. Especially on the technical side, they used our SaaS factory program, which really helped them build this differentiated solution, especially focused around security compliance and cost optimizing the solution. Now that we've launched this solution, just like Doug mentioned, we are now focused on leveraging other services like security, AIML, and also our analytic services. And the reason for that is Cohesity, as we all know, protects, manages this data for the customer, but we want to make sure that the customer is extracting value from this data. That is why we continue to look, what can we do to continue to differentiate this solution in this market. >> That's awesome. You guys did a great job. I got to say, as it gets more scale, there's more needs for this rapid, I won't say prototyping, but rapid innovation and the Cohesity side does was you guys have been always on point on the back and recovery and now with security and the new modern application development, you guys are in the front row seats of all the action. So, I'll give you the final worry what's going on at Cohesity, give an update on what you guys are doing. What's it like over there these days? How's life give a quick plug for Cohesity. >> Yeah, Cohesity is doing great, right? We're always adding folks to the team, on our team, we have a few open racks open both on the marketing side, as well as the technology advocacy side. And of course, some of our other departments too, and engineering and sales and also our partner teams as well, working with AWS partners such as that. So, in our mind, the data delusion and growth is not going to slow down, right? So in this case, I think all tides raises all the boats here and we're glad to be innovative leader in this space and really looking to be really, the new wave of NextGen data management providers out there that leverages things like AI that leverages cybersecurity at the core and has an ecosystem of partners that we're working with, like AWS, that we're building out to help customers better manage their data. >> It's all great. Data is in the mid center of the value proposition. Sabina, great to see you again, thanks for sharing. And Douglas, great to see you too. Thanks for sharing this experience here in theCUBE. >> Thanks, John. >> Okay, this is theCUBE's AWS Partner Showcase special presentation, speeding innovation with AWS. I'm John Furrier your host of theCUBE. Thanks for watching. (upbeat music)

from the cube studios in palo alto in boston bringing you data-driven insights from the cube and etr this is breaking analysis with dave vellante you know we've often said that the next 10 years in cloud computing won't be like the last ten cloud has firmly planted its footprint on the other side of the chasm with the momentum of the entire multi-trillion dollar tech business behind it both sellers and buyers are leaning in by adopting cloud technologies and many are building their own value layers on top of cloud in the coming years we expect innovation will continue to coalesce around the three big u.s clouds plus alibaba in apac with the ecosystem building value on top of the hardware saw tooling provided by the hyperscalers now importantly we don't see this as a race to the bottom rather our expectation is that the large public cloud players will continue to take cost out of their platforms through innovation automation and integration while other cloud providers and the ecosystem including traditional companies that buy it mine opportunities in their respective markets as matt baker of dell is fond of saying this is not a zero sum game welcome to this week's wikibon cube insights powered by etr in this breaking analysis we'll update you on our latest projections in the cloud market we'll share some new etr survey data with some surprising nuggets and drill into this the important cloud database landscape first we want to take a look at what people are talking about in cloud and what's been in the recent news with the exception of alibaba all the large cloud players have reported earnings google continues to focus on growth at the expense of its profitability google reported that it's cloud business which includes applications like google workspace grew 45 percent to five and a half billion dollars but it had an operating loss of 890 billion now since thomas curion joined google to run its cloud business google has increased head count in its cloud business from 25 000 25 000 people now it's up to 40 000 in an effort to catch up to the two leaders but playing catch up is expensive now to put this into perspective let's go back to aws's revenue in q1 2018 when the company did 5.4 billion so almost exactly the same size as google's current total cloud business and aws is growing faster at the time at 49 don't forget google includes in its cloud numbers a big chunk of high margin software aws at the time had an operating profit of 1.4 billion that quarter around 26 of its revenues so it was a highly profitable business about as profitable as cisco's overall business which again is a great business this is what happens when you're number three and didn't get your head out of your ads fast enough now in fairness google still gets high marks on the quality of its technology according to corey quinn of the duck bill group amazon and google cloud are what he called neck and neck with regard to reliability with microsoft azure trailing because of significant disruptions in the past these comments were made last week in a bloomberg article despite some recent high-profile outages on aws not surprisingly a microsoft spokesperson said that the company's cloud offers industry-leading reliability and that gives customers payment credits after some outages thank you turning to microsoft and cloud news microsoft's overall cloud business surpassed 22 billion in the december quarter up 32 percent year on year like google microsoft includes application software and sas offerings in its cloud numbers and gives little nuggets of guidance on its azure infrastructure as a service business by the way we estimate that azure comprises about 45 percent of microsoft's overall cloud business which we think hit a 40 billion run rate last quarter microsoft guided in its earning call that recent declines in the azure growth rates will reverse in q1 and that implies sequential growth for azure and finally it was announced that the ftc not the doj will review microsoft's announced 75 billion acquisition of activision blizzard it appears ftc chair lena khan wants to take this one on herself she of course has been very outspoken about the power of big tech companies and in recent a recent cnbc interview suggested that the u.s government's actions were a meaningful contributor back then to curbing microsoft's power in the 90s i personally found that dubious just ask netscape wordperfect novell lotus and spc the maker of harvard presentation graphics how effective the government was in curbing microsoft power generally my take is that the u s government has had a dismal record regulating tech companies most notably ibm and microsoft and it was market forces company hubris complacency and self-inflicted wounds not government intervention these were far more effective than the government now of course if companies are breaking the law they should be punished but the u.s government hasn't been very productive in its actions and the unintended consequences of regulation could be detrimental to the u.s competitiveness in the race with china but i digress lastly in the news amazon announced earnings thursday and the company's value increased by 191 billion dollars on friday that's a record valuation gain for u.s stocks aws amazon's profit engine grew 40 percent year on year for the quarter it closed the year at 62 billion dollars in revenue and at a 71 billion dollar revenue run rate aws is now larger than ibm which without kindrel is at a 67 billion dollar run rate just for context ibm's revenue in 2011 was 107 billion dollars now there's a conversation going on in the media and social that in order to continue this growth and compete with microsoft that aws has to get into the sas business and offer applications we don't think that's the right strategy for amp from for amazon in the near future rather we see them enabling developers to compete in that business finally amazon disclosed that 48 of its top 50 customers are using graviton 2 instances why is this important because aws is well ahead of the competition in custom silicon chips is and is on a price performance curve that is far better than alternatives especially those based on x86 this is one of the reasons why we think this business is not a race to the bottom aws is being followed by google microsoft and alibaba in terms of developing custom silicon and will continue to drive down their internal cost structures and deliver price performance equal to or better than the historical moore's law curves so that's the recent news for the big u.s cloud providers let's now take a look at how the year ended for the big four hyperscalers and look ahead to next year here's a table we've shown this view before it shows the revenue estimates for worldwide is and paths generated by aws microsoft alibaba and google now remember amazon and alibaba they share clean eye ass figures whereas microsoft and alphabet only give us these nuggets that we have to interpret and we correlate those tidbits with other data that we gather we're one of the few outlets that actually attempts to make these apples to apples comparisons there's a company called synergy research there's another firm that does this but i really can't map to their numbers their gcp figures look far too high and azure appears somewhat overestimated and they do include other stuff like hosted private cloud services but it's another data point that you can use okay back to the table we've slightly adjusted our gcp figures down based on interpreting some of alphabet's statements and other survey data only alibaba has yet to announce earnings so we'll stick to a 2021 market size of about 120 billion dollars that's a 41 growth rate relative to 2020 and we expect that figure to increase by 38 percent to 166 billion in 2022 now we'll discuss this a bit later but these four companies have created an opportunity for the ecosystem to build what we're calling super clouds on top of this infrastructure and we're seeing it happen it was increasingly obvious at aws re invent last year and we feel it will pick up momentum in the coming months and years a little bit more on that later now here's a graphical view of the quarterly revenue shares for these four companies notice that aws has reversed its share erosion and is trending up slightly aws has accelerated its growth rate four quarters in a row now it accounted for 52 percent of the big four hyperscaler revenue last year and that figure was nearly 54 in the fourth quarter azure finished the year with 32 percent of the hyper scale revenue in 2021 which dropped to 30 percent in q4 and you can see gcp and alibaba they're neck and neck fighting for the bronze medal by the way in our recent 2022 predictions post we said google cloud platform would surpass alibaba this year but given the recent trimming of our numbers google's got some work to do for that prediction to be correct okay just to put a bow on the wikibon market data let's look at the quarterly growth rates and you'll see the compression trends there this data tracks quarterly revenue growth rates back to 20 q1 2019 and you can see the steady downward trajectory and the reversal that aws experienced in q1 of last year now remember microsoft guided for sequential growth and azure so that orange line should trend back up and given gcp's much smaller and big go to market investments that we talked about we'd like to see an acceleration there as well the thing about aws is just remarkable that it's able to accelerate growth at a 71 billion run rate business and alibaba you know is a bit more opaque and likely still reeling from the crackdown of the chinese government we're admittedly not as close to the china market but we'll continue to watch from afar as that steep decline in growth rate is somewhat of a concern okay let's get into the survey data from etr and to do so we're going to take some time series views on some of the select cloud platforms that are showing spending momentum in the etr data set you know etr uses a metric we talked about this a lot called net score to measure that spending velocity of products and services netscore basically asks customers are you spending more less or the same on a platform and a vendor and then it subtracts the lesses from the moors and that yields a net score this chart shows net score for five cloud platforms going back to january 2020. note in the table that the table we've inserted inside that chart shows the net score and shared n the latter metric indicates the number of mentions in the data set and all the platforms we've listed here show strong presence in the survey that red dotted line at 40 percent that indicates spending is at an elevated level and you can see azure and aws and vmware cloud on aws as well as gcp are all nicely elevated and bounding off their october figures indicating continued cloud momentum overall but the big surprise in these figures is the steady climb and the steep bounce up from oracle which came in just under the 40 mark now one quarter is not necessarily a trend but going back to january 2020 the oracle peaks keep getting higher and higher so we definitely want to keep watching this now here's a look at some of the other cloud platforms in the etr survey the chart here shows the same time series and we've now brought in some of the big hybrid players notably vmware cloud which is vcf and other on-prem solutions red hat openstack which as we've reported in the past is still popular in telcos who want to build their own cloud we're also starting to see hpe with green lake and dell with apex show up more and ibm which years ago acquired soft layer which was really essentially a bare metal hosting company and over the years ibm cobbled together its own public cloud ibm is now racing after hybrid cloud using red hat openshift as the linchpin to that strategy now what this data tells us first of all these platforms they don't have the same presence in the data set as do the previous players vmware is the one possible exception but other than vmware these players don't have the spending velocity shown in the previous chart and most are below the red line hpe and dell are interesting and notable in that they're transitioning their early private cloud businesses to dell gr sorry hpe green lake and dell apex respectively and finally after years of kind of staring at their respective navels in in cloud and milking their legacy on-prem models they're finally building out cloud-like infrastructure for their customers they're leaning into cloud and marketing it in a more sensible and attractive fashion for customers so we would expect these figures are going to bounce around for a little while for those two as they settle into a groove and we'll watch that closely now ibm is in the process of a complete do-over arvin krishna inherited three generations of leadership with a professional services mindset now in the post gerschner gerstner era both sam palmisano and ginny rometty held on far too long to ibm's service heritage and protected the past from the future they missed the cloud opportunity and they forced the acquisition of red hat to position the company for the hybrid cloud remedy tried to shrink to grow but never got there krishna is moving faster and with the kindred spin is promising mid-single-digit growth which would be a welcome change ibm is a lot of work to do and we would expect its net score figures as well to bounce around as customers transition to the future all right let's take a look at all these different players in context these are all the clouds that we just talked about in a two-dimensional view the vertical axis is net score or spending momentum and the horizontal axis is market share or presence or pervasiveness in the data set a couple of call-outs that we'd like to make here first the data confirms what we've been saying what everybody's been saying aws and microsoft stand alone with a huge presence many tens of billions of dollars in revenue yet they are both well above the 40 line and show spending momentum and they're well ahead of gcp on both dimensions second vmware while much smaller is showing legitimate momentum which correlates to its public statements alibaba the alibaba in this survey really doesn't have enough sample to make hardcore conclusions um you can see hpe and dell and ibm you know similarly they got a little bit more presence in the data set but they clearly have some work to do what you're seeing there is their transitioning their legacy install bases oracle's the big surprise look what oracle was in the january survey and how they've shot up recently now we'll see if this this holds up let's posit some possibilities as to why it really starts with the fact that oracle is the king of mission critical apps now if you haven't seen video on twitter you have to check it out it's it's hilarious we're not going to run the video here but the link will be in our post but i'll give you the short version some really creative person they overlaid a data migration narrative on top of this one tooth guy who speaks in spanish gibberish but the setup is he's a pm he's a he's a a project manager at a bank and aws came into the bank this of course all hypothetical and said we can move all your apps to the cloud in 12 months and the guy says but wait we're running mission critical apps on exadata and aws says there's nothing special about exadata and he starts howling and slapping his knee and laughing and giggling and talking about the 23 year old senior engineer who says we're going to do this with microservices and he could tell he was he was 23 because he was wearing expensive sneakers and what a nightmare they encountered migrating their environment very very very funny video and anyone who's ever gone through a major migration of mission critical systems this is gonna hit home it's funny not funny the point is it's really painful to move off of oracle and oracle for all its haters and its faults is really the best environment for mission critical systems and customers know it so what's happening is oracle's building out the best cloud for oracle database and it has a lot of really profitable customers running on-prem that the company is migrating to oracle cloud infrastructure oci it's a safer bet than ripping it and putting it into somebody else's cloud that doesn't have all the specialized hardware and oracle knowledge because you can get the same integrated exadata hardware and software to run your database in the oracle cloud it's frankly an easier and much more logical migration path for a lot of customers and that's possibly what's happening here not to mention oracle jacks up the license price nearly doubles the license price if you run on other clouds so not only is oracle investing to optimize its cloud infrastructure it spends money on r d we've always talked about that really focused on mission critical applications but it's making it more cost effective by penalizing customers that run oracle elsewhere so this possibly explains why when the gartner magic quadrant for cloud databases comes out it's got oracle so well positioned you can see it there for yourself oracle's position is right there with aws and microsoft and ahead of google on the right-hand side is gartner's critical capabilities ratings for dbms and oracle leads in virtually all of the categories gartner track this is for operational dvms so it's kind of a narrow view it's like the red stack sweet spot now this graph it shows traditional transactions but gartner has oracle ahead of all vendors in stream processing operational intelligence real-time augmented transactions now you know gartner they're like old name framers and i say that lovingly so maybe they're a bit biased and they might be missing some of the emerging opportunities that for example like snowflake is pioneering but it's hard to deny that oracle for its business is making the right moves in cloud by optimizing for the red stack there's little question in our view when it comes to mission critical we think gartner's analysis is correct however there's this other really exciting landscape emerging in cloud data and we don't want it to be a blind spot snowflake calls it the data cloud jamactagani calls it data mesh others are using the term data fabric databricks calls it data lake house so so does oracle by the way and look the terminology is going to evolve and most of the action action that's happening is in the cloud quite frankly and this chart shows a select group of database and data warehouse companies and we've filtered the data for aws azure and gcp customers accounts so how are these accounts or companies that were showing how these vendors were showing doing in aws azure and gcp accounts and to make the cut you had to have a minimum of 50 mentions in the etr survey so unfortunately data bricks didn't make it just not enough presence in the data set quite quite yet but just to give you a sense snowflake is represented in this cut with 131 accounts aws 240 google 108 microsoft 407 huge [ __ ] 117 cloudera 52 just made the cut ibm 92 and oracle 208. again these are shared accounts filtered by customers running aws azure or gcp the chart shows a net score lime green is new ads forest green is spending more gray is flat spending the pink is spending less and the bright red is defection again you subtract the red from the green and you get net score and you can see that snowflake as we reported last week is tops in the data set with a net score in the 80s and virtually no red and even by the way single digit flat spend aws google and microsoft are all prominent in the data set as is [ __ ] and snowflake as i just mentioned and they're all elevated over the 40 mark cloudera yeah what can we say once they were a high flyer they're really not in the news anymore with anything compelling other than they just you know took the company private so maybe they can re-emerge at some point with a stronger story i hope so because as you can see they actually have some new additions and spending momentum in the green just a lot of customers holding steady and a bit too much red but they're in the positive territory at least with uh plus 17 percent unlike ibm and oracle and this is the flip side of the coin ibm they're knee-deep really chest deep in the middle of a major transformation we've said before arvind krishna's strategy and vision is at least achievable prune the portfolio i.e spin out kindrel sell watson health hold serve with the mainframe and deal with those product cycles shift the mix to software and use red hat to win the day in hybrid red hat is working for ibm's growing well into the double digits unfortunately it's not showing up in this chart with little database momentum in aws azure and gcp accounts zero new ads not enough acceleration and spending a big gray middle in nearly a quarter of the base in the red ibm's data and ai business only grew three percent this last quarter and the word database wasn't even mentioned once on ibm's earnings call this has to be a concern as you can see how important database is to aws microsoft google and the momentum it's giving companies like snowflake and [ __ ] and others which brings us to oracle with a net score of minus 12. so how do you square the momentum in oracle cloud spending and the strong ratings and databases from gartner with this picture good question and i would say the following first look at the profile people aren't adding oracle new a large portion of the base 25 is reducing spend by 6 or worse and there's a decent percentage of the base migrating off oracle with a big fat middle that's flat and this accounts for the poor net score overall but what etr doesn't track is how much is being spent rather it's an account based model and oracle is heavily weighted toward big spenders running mission critical applications and databases oracle's non-gaap operating margins are comparable to ibm's gross margins on a percentage basis so a very profitable company with a big license and maintenance in stall basin oracle has focused its r d investments into cloud erp database automation they've got vertical sas and they've got this integrated hardware and software story and this drives differentiation for the company but as you can see in this chart it has a legacy install base that is constantly trying to minimize its license costs okay here's a little bit of different view on the same data we expand the picture with the two dimensions of net score on the y-axis and market share or pervasiveness on the horizontal axis and the table insert is how the data gets plotted y and x respectively not much to add here other than to say the picture continues to look strong for those companies above the 40 line that are focused and their focus and have figured out a clear cloud strategy and aren't necessarily dealing with a big install base the exception of course is is microsoft and the ones below the line definitely have parts of their portfolio which have solid momentum but they're fighting the inertia of a large install base that moves very slowly again microsoft had the advantage of really azure and migrating those customers very quickly okay so let's wrap it up starting with the big three cloud players aws is accelerating and innovating great example is custom silicon with nitro and graviton and other chips that will help the company address concerns related to the race to the bottom it's not a race to zero aws we believe will let its developers go after the sas business and for the most part aws will offer solutions that address large vertical markets think call centers the edge remains a wild card for aws and all the cloud players really aws believes that in the fullness of time all workloads will run in the public cloud now it's hard for us to imagine the tesla autonomous vehicles running in the public cloud but maybe aws will redefine what it means by its cloud microsoft well they're everywhere and they're expanding further now into gaming and the metaverse when he became ceo in 2014 many people said that satya should ditch xbox just as an aside the joke among many oracle employees at the time was that safra katz would buy her kids and her nieces and her nephews and her kids friends everybody xbox game consoles for the holidays because microsoft lost money for everyone that they shipped well nadella has stuck with it and he sees an opportunity to expand through online gaming communities one of his first deals as ceo was minecraft now the acquisition of activision will make microsoft the world's number three gaming company by revenue behind only 10 cent and sony all this will be powered by azure and drive more compute storage ai and tooling now google for its part is battling to stay relevant in the conversation luckily it can afford the massive losses it endures in cloud because the company's advertising business is so profitable don't expect as many have speculated that google is going to bail on cloud that would be a huge mistake as the market is more than large enough for three players which brings us to the rest of the pack cloud ecosystems generally and aws specifically are exploding the idea of super cloud that is a layer of value that spans multiple clouds hides the underlying complexity and brings new value that the cloud players aren't delivering that's starting to bubble to the top and legacy players are staying close to their customers and fighting to keep them spending and it's working dell hpe cisco and smaller predominantly on-plan prem players like pure storage they continue to do pretty well they're just not as sexy as the big cloud players the real interesting activity it's really happening in the ecosystem of companies and firms within industries that are transforming to create their own digital businesses virtually all of them are running a portion of their offerings on the public cloud but often connecting to on-premises workloads and data think goldman sachs making that work and creating a great experience across all environments is a big opportunity and we're seeing it form right before our eyes don't miss it okay that's it for now thanks to my colleague stephanie chan who helped research this week's topics remember these episodes are all available as podcasts wherever you listen just search breaking analysis podcast check out etr's website at etr dot ai and also we publish a full report every week on wikibon.com and siliconangle.com you can get in touch with me email me at david.velante siliconangle.com you can dm me at divalante or comment on my linkedin post this is dave vellante for the cube insights powered by etr have a great week stay safe be well and we'll see you next time [Music] you

>>From the cube studios in Palo Alto, in Boston, bringing you data-driven insights from the cube and ETR. This is breaking analysis with Dave Vellante >>UI path has always been an unconventional company. You know, it started with humble beginnings. It was essentially a software development shop. And then it caught lightning in a bottle with its computer vision technology. And it's really it's simplification mantra. And it created a very easy to deploy software robot system for bespoke departments. So they could automate mundane tasks. You know, you know, the story, the company grew rapidly was able to go public early this year. Now consistent with its out of the ordinary approach. While other firms are shutting down travel and physical events, UI path is moving ahead with forward for its annual user conference next week with a live audience there at the Bellagio in Las Vegas, it's also fast-forwarding as a company determined to lead the charge beyond RPA and execute on a more all encompassing enterprise automation agenda. Hello everyone. And welcome to this week's Wiki bond Cuban sites powered by ETR in this breaking analysis and a head of forward four we'll update you in the RPA market. >>The progress that UI path has made since its IPO and bringing some ETR customer survey data to contextualize the company's position in the overall market and relative to the competition. Here's a quick rundown of today's agenda. First, I want to tell you the cube is going to be at forward for, at the Bellagio next week, UI paths. This is their big customer event. It's live. It's a physical event. It's primarily outdoors. You have to be vaccinated to attend. Now it's not completely out of the ordinary John furrier and the cube. We're at AWS public sector this past week. And we were at mobile world Congress and one of the first big hybrid events of the year at Barcelona. And we thought that event would kick off the fall event season live event in earnest, but the COVID crisis has caused many tech firms. Most tech firms actually to hit the pause button, not UI path. >>They're moving ahead, they're going forward. And we see a growing trend for smaller VIP events with a virtual component topic, maybe for another day. Now we've talked extensively about the productivity challenges and the automation mandate. The pandemic has thrust upon us. Now we've seen pretty dramatic productivity improvements as remote work kicked in, but it's brought new stresses. For example, according to Qualtrics, 32% of working moms said their mental health has declined since the pandemic hit. 15% of working dads said the same by the way. So one has to question the sustainability of this perpetual Workday, and we're seeing a continuum of automation solutions emerging. And we'll talk about that today. We're seeing tons of MNA, M and a as well, but now in that continuum on the left side of the spectrum, there's Microsoft who in some ways they stand alone and that Azure is becoming ubiquitous as a SAS cloud collaboration and productivity platform. >>Microsoft is everywhere and in virtually every market with their video conferencing security database, cloud CRM, analytics, you name it, Microsoft is pretty much there. And RPA is no different with the acquisition of soft emotive. Last year, Microsoft entered the RTA market in earnest and is penetrating very deeply into the space, particularly as it pertains to personal approach, personal productivity building on its software state. Now in the middle of that spectrum, if you will, we're seeing more M and a, and that's defined really by the big software giants. Think of this domain as integrated software plays SAP, they acquired contexture, uh, uh, they also acquired a company called process insight service now acquired Intella bought Salesforce service trace. We see in for entering the fray. And I, I would put even Pega Pega systems in this camp, software companies focused on integrating RPA into their broader workflows into their software platforms. >>And this is important because these platforms are entrenched. They're walled gardens of sorts and complicated with lots of touchpoints and integration points. And frankly, they're much harder to automate because of their entrenched legacy. Now on the far side of that, spectrum are the horizontal automation players and that's being led by UI path with automate automation anywhere as the number two player in this domain. And I didn't even put blue prism prism in there more M and a recently announced, uh, that Vista is going to acquire them. Vista also owns TIBCO. They're going to merge those two companies, you know, tip goes kind of an integration play. And so again, I'm, I might, I would put them in that, you know, horizontal piece of the spectrum. So with that as background, we're going to look at how UI path has performed since we last covered them at IPO. >>And then we'll bring in some ETR survey data to get the spending view from customers. And then we'll wrap up now just to emphasize the importance of, of automation and the automation mandate mandate. We talk about it all the time in this program, we use this ETR chart. It's a two dimensional view with net score, which is a measure of spending momentum on the vertical axis and market share, which is a proxy for pervasiveness in the dataset. That's on the horizontal axis. Now note that red dotted line at signifies companies with an elevated position on the net score, vertical axis, anything over that is considered pretty good, very good. Now this shows every spending segment within the ETR taxonomy and the four spending categories with the greatest velocity are AI cloud containers and RPA. And they've topped the charts for quite a while. Now they're the only four categories which have sustained above that 40% line consistently throughout the pandemic. >>And even before now, the impressive thing about cloud of course, is it has a spending has both spending momentum on the vertical axis at a very large share of the, of the market share of presence in the dataset. The point is RPA is nascent still. It has an affinity with AI as a means of more intelligently identifying and streamlining process improvements. And so we expect those to, to remain elevated and grow to the right together, UI path pegs it's Tam, total available market at 60 billion. And the reality is that could be understated. Okay. As we reported from the UI path S one analysis, we did pre IPO. The company at that time had an AR annual recurring revenue of $580 million and was growing at 65% annually at nearly 8,000 customers at the time, a thousand of which had an ARR in excess of a hundred K and a net revenue retention, the company had with 145%. >>So let's take a look at the picture six months forward. We mentioned the $60 billion Tam ARR now up over 725 million on its way to a billion ARR holding pretty steady at 60% growth as is an RR net revenue retention, and more than a thousand new customers in 200 more with over a hundred thousand in ARR and a small operating profit, which by the way, exceeded the consensus pretty substantially. Profitability is not shown here and no one seems to care anyway, these days it's all about growing into that Tam. Well, that's a pretty good looking picture. Isn't it? The company had a beat and a raise for the quarter early this month. So looking good, right? Well, you ask how come the stock's not doing better. That's an interesting question. So let's first look at the stocks performance on a relative basis. Here, we show you I pass performance against Pega systems and blue prism. >>The other two publicly traded automation, pure plays, you know, sort of in the case of Pega. So UI path outperformed post its IPO, but since the early summer Pega has been the big winner. Well, UI path slowly decelerated, you see blue prism was the laggard until it was announced. It was in an acquisition talks with a couple of PE firms and the prospects of a bidding war sent that yellow line up. As you can see UI path, as you can see on the inset has a much higher valuation than Pega and way higher than blue prison. Pega. Interestingly is growing revenues nicely at around 40%. And I think what's happening is the street simply wants more, even though UI path beat and raised wall street, still getting comfortable with which is new to the public market game. And the company just needs to demonstrate a track record and build trust. >>There's also some education around billings and multi-year contracts that the company addressed on its last earnings call, but the street was concerned about ARR from new logos. It appears to be slowing down sequentially in a notable decline in billings momentum, which UI pass CEO, CFO addressed on the earnings call saying, look, they don't need to trade margin for prepaid multi-year deals, given the strong cash position while I give anything up. And even though I said, nobody cares about profitability. Well, I guess that's true until you guide for an operating loss. When you've been showing a small profit in recent recent quarters, which you AIPAC did, then all of a sudden people care. So UI path, isn't a bit of an unknown territory to the street and it has a valuation that's pretty rich, very rich, actually at 30 times, a revenue multiple greater than 30 times revenue, multiple. >>So that's why in, in my view, investors are being cautious, but I want to address a dynamic that we've seen with these high growth rocket ship companies, something we talked about with snowflake. And I think you're seeing some of that here with UI paths, different model in the sense that snowflake is pure cloud, but I'm talking about concerns around ARR from new logos and in that growth on a sequential basis. And here's what's happening in my view with UI path, you have a company that started within departments with a small average contract size in ACV, maybe 25,000, maybe 50,000, but not deep six figure deals that wasn't UI paths play it because the company focused so heavily on simplicity and made it really easy to adopt customer saw really fast ROI. I mean breakeven in months. So you very quickly saw expansion into other departments. >>So when ACV started to rise and installations expanded within each customer UI path realized it had to move beyond being a point product. And it started thinking about a platform and making acquisitions like process gold and others, and this marked a much deeper expansion into the customer base. And you can see that here in this UI path, a chart that they shared at their investor deck customers that bought in 2016 and 2017 expanded their they've expanded their spend 15, 13, 15, 18 20 X. So the LTV, the lifetime value of the customer is growing dramatically. And because UI path has focused on simplicity, it has a very facile freemium model, much easier to try before you buy than its competitors. It's CAC, it's customer acquisition costs are likely much lower than some of its peers. And that's a key dynamic. So don't get freaked out by some of those concerns that we raised earlier, because just like snowflake what's happening is the company for sure is gaining new customers. >>Maybe just not at the same rate, but don't miss the forest through the trees. I E they're getting more money from their existing customers, which means retention, loyalty and growth. Speaking of forests, this chart is the dynamic I'm talking about. It's an ETR graphic that shows the components of net score or against spending momentum net score breaks down into five areas that lime green at the top is new additions. Okay? So that's only 11% of the customer mentions by the way, we're talking about more than 125 responses for UI path. So it's meaningful. It's, it's actually larger in this survey, uh, or certainly comparable to Microsoft. So that says something right there. The next bar is the forest green forest. Green is where I want you to focus. That's customer spending 6% or more in the second half of the year, relative to the first half. >>The gray is flat spending, which is quite large, the pink or light red that's spending customer spending 6% or worse. That's a 4% number, but look at the bottom bar. There is no bar that's churn. 0% of the respondents in the survey are churning and churn is the silent killer of SAS companies, 0% defections. So you've got 46% spending, more nobody leaving. That's the dynamic that is powering UI path right now. And I would take this picture any day over a larger lime green and a smaller forest green and a bigger churn number. Okay. So it's pretty good. It's not snowflake good, but it's solid. So how does this picture compare to UI pass peers? Well, let's take a look at that. So this is ETR data, same data showing the granularity net score for Microsoft power, automate UI path automation, anywhere blue prism and Pega. >>So as we said before, Microsoft is ubiquitous. What can we say about that? But UI path is right there with a more robust platform, not to overlook Microsoft. You can't, but UI path, it'll tell you that they don't compete head to head for enterprise automation deals with Microsoft. Now, maybe they will over time. They do however, compete head to head with automation anywhere. And their picture is quite strong. As you can see here, it has this blue Prism's picture and even Pega, although blue prism, automation, anywhere UI path and power automate all have net scores on this chart. As you can see the table in the upper right over 40% Pega does not. But again, we don't see Pega as a pure play RPA vendor. It's a little bit of sort of apples and oranges there, but they do sell RPA and ETR captures in their taxonomy. >>So why not include them also note that UI path has, as I said before, more mentions in the survey than power automate, which is actually quite interesting, given the ubiquity of Microsoft. Now, one other notable notable note is the bright red that's defections and only UI path is showing zero defections. Everybody else has at least even of the slim, some defections. Okay. So take that as you will, but it's another data 0.1. That's powerful, not only for UI path, but really for the entire sector. Now, the last ETR data point that we want to share is our famous two dimensional view. Like the sector chart we showed earlier, this graphic shows net score on the vertical axis. That's against spending velocity and market share or pervasiveness on the horizontal axis. So as we said earlier, UI path actually has greater presence in the survey than the ever-present Microsoft. >>Remember, this is the July survey. We don't have full results from the September, October survey yet. And we can't release them until ETR is out of its quiet period. But I expect the entire sector, like everything is going to be slightly down because as we reported last week, tech spending is moderated slightly in the second half of this year, but we don't expect the picture to change dramatically. UI path and power automate, we think are going to lead and market presence in those two plus automation anywhere are going to show strength and spending momentum as well. Most of the sector. And we'll see who comes in above the 40% line. Okay. What to watch at forward four. So in summary, I'll be looking for a few things. One UI path has hinted toward a big platform announcement that will deepen its capabilities to go beyond being an RPA point tool into much more of an enterprise automation platform rewriting a lot of the code Linux cloud, better automation of the UI. >>You're going to hear all kinds of new product announcements that are coming. So I'll be listening for those details. I want to hear more from customers to further confirm what I've been hearing from them over the last couple of years and get more data, especially on that ROI on that land and expand. I want to understand that dynamic and that true enterprise automation. It's going to be good to get an update face to face and test some of our assumptions here and see where the gaps are and where UI path can improve. Third. I want to talk to ecosystem players to see where they are in participating in the value chain here. What kind of partner has UI path become since it's IPO? Are they investing more in the ecosystem? How to partners fit into that flywheel fourth, I want to hear from UI path management, Daniel DNAs, and other UI path leaders, they're exiting toddler Ville and coming into an adolescent phase or early adulthood. >>And what does that progression look like? How does it feel? What's the vibe at the show. And finally, I'm very excited to participate in a live in-person event to see what's working, see how a hybrid events are evolving. We got a good glimpse at mobile world Congress and this week, and, uh, in DC and public sector summit, here's, you know, the cube has been doing hybrid events for years, and we intend to continue to lead in this regard and bring you the best, real time information as possible. Okay. That's it for today. Remember, these episodes are all available as podcasts, wherever you listen. All you do is search braking analysis podcast. We publish each week on Wiki bond.com and siliconangle.com. And you can always connect on twitter@devolanteoremailmeatdaviddotvolanteatsiliconangle.com. Appreciate the comments on LinkedIn. And don't forget to check out E T r.plus for all the survey data. This is Dave Volante for the cube insights powered by ETR be well, and we'll see you next time.

>> From The Cube studios in Palo Alto in Boston, bringing you data driven insights from The Cube and ETR, this is Breaking Analysis with Dave Vellante. >> UiPath has always been an unconventional company. You know it started with humble beginnings. It's essentially a software development shop. Then it caught lightning in a bottle with its computer vision technology. It's really, it's simplification mantra and it created a very easy to deploy software robot system for bespoke departments so they could automate mundane tasks. You know the story. The company grew rapidly, was able to go public early this year. Now consistent with its out-of-the-ordinary approach, while other firms are shutting down travel and physical events, UiPath is moving ahead with Forward IV, it's annual user conference next week with a live audience there at the Bellagio in Las Vegas. It's also fast forwarding as a company, determined to lead the charge beyond RPA and execute on a more all-encompassing Enterprise automation agenda. Hello everyone and welcome to this week's Wikibond Cube Insights powered by ETR. In this breaking analysis and ahead of Forward IV, we'll update you in the RPA market the progress that UiPath has made since its IPO and bringing some ETR customer survey data that's contextualized the company's position in the overall market and relative to the competition. Here's a quick rundown of today's agenda. First I want to tell you theCube is going to be at Forward IV at the Bellagio next week. UiPath, this is their big customer event. It's live, it's a physical event. It's primarily outdoors. You have to be vaccinated to attend. Now, this not completely out of the ordinary. John Furrier and theCube were at AWS Public Sector this past week and we were at Mobile World Congress in one of the first big hybrid events of the year at Barcelona. We thought that event would kick of the fall event season, live event in earnest but the COVID crisis has caused many tech firms, most tech firms actually, to hit pause button. Not UiPath, they're moving ahead. They're going forward and we see a growing trend for smaller VIP events with a virtual component, topic maybe for another day. Now we've talked extensively about the productivity challenges and the automation mandate the pandemic has thrust upon us. Now, we've seen pretty dramatic productivity improvements as remote work kicked in but its brought new stresses. For example, according to Qualtrics, 32% of working moms said their mental health has declined since the pandemic hit. 15% of working dads said the same by the way. So, one has to question the sustainability of this perpetual workday. And we're seeing a continuum of automation solutions emerging and we'll talk about that today. We're seeing tons of M&A as well but now, in that continuum, on the left-side of the spectrum, there's Microsoft who in some ways, they stand alone and their Azure is becoming ubiquitous as a SaaS-Cloud collaboration and productivity platform. Microsoft is everywhere and in virtually every market, whether video conferencing, security, database, cloud, CRM, analytics, you name it. Microsoft is pretty much there and RPA is no different. With the acquisition of Softomotive last year, Microsoft entered the RTA market in earnest and is penetrating very deeply into the space, particularly as it pertains to personal productivity building on its software stake. Now in the middle of that spectrum if you will, we're seeing more M&A and that's defined really by the big software giants. Think of this domain as integrated software place. SAP, they acquired Contextere. They also acquired a company called Process Insights, Service now acquired Inttellebot. Salesforce acquired Servicetrace, we see Infor entering the frame and I would put even Pega, Pega systems in this camp. Software companies focused on integrating RPA into their broader workflows, into their software platforms and this is important because these platforms are entrenched Their well guardants of thoughts and complicated with lots of touchpoints and integration points and frankly they are much harder to automate because of their entrenched legacy. Now, on the far side of that spectrum, are the horizontal automation players and that's been let by UiPath with automation anywhere as the number two player in this domain. And I even put a blue prism in there more M&A recently announced that Vista is going to acquire them Vista also owns Tibco, they are going to merge those two companies. You know Tibco is come up with the integration play. So again I would put them in that you know, horizontal piece of the spectrum. So with that as background, we're going to look at how UiPath has performed since we last covered them and IPO and I'm going to bring in some ETR survey data to get the spending view from customers and we'll wrap up. Now, just to emphasize the importance of automation and the automation mandate, we talk about it all the time in this program. We use this ETR chart. It's a two dimensional view with net score which is the measure of spending momentum on the vertical axis and market share which is a proxy for pervasiveness in the data set that's on the horizontal axis. Now note that red dotted line, it signifies companies within elevated position on the net score vertical axis anything over that is considered pretty good. Very good. Now this shows every spending segment within the ETR taxonomy. And the four spending categories with the greatest velocity are AI, cloud, containers and RPA. And they have topped the charts for quite a while now. They are the only 4 categories which have sustained above that 40% line consistently throughout the pandemic and even before. Now the impressive thing about cloud of course is it has both spending momentum on the vertical axis and a very large market share or presence in the data set. The point is RPA is nascent still. It has an affinity with AI as a means of more intelligently identifying and streamlining process improvements. And so we expect those two to remain elevated and grow to the right together. UiPath pegs its TAM, total available market at 60 billion. And the reality is that could be understated. Okay, as we reported from the UiPath S1 analysis we did pre IPO, the company at that time had an ARR annual recurring revenue of $580 million and it was growing at 65% annually. And nearly 8000 customers at the time, a 1000 of which had an ARR in excess of a 100k. And the net revenue retention the company had was over 145%. So let's take a look at the pictures 6 months forward. We mentioned the $60 billion TAM, ARR now up over $726.5 million on its way to a billion ARR holding pretty steady at 60% growth as is NRR, net revenue retention and more then a 1000 new customers and 200 more with over a 100000 in ARR and a small operating profit which by the way exceeded the consensuses pretty substantially. Profitability is not shown here and no one seems to care anyway these days. It's all about growing into that TAM. Well that's a pretty good looking picture, isn't it? The company had a beat and a raise for the quarter earlier this month, so looking good right. Well you ask how come the stock is not doing better. That's an interesting question. So let's first look at the stocks performance on a relative basis. Here we show UiPath performance against Pega systems and blue prism, the other two publicly traded automation. Pure plays sort of in the case of Pega. So UiPath outperformed post its IPO but since the early summer Pega is been the big winner while UiPath slowly decelerated. You see Blue prism was at the lag until it was announced that it was in an acquisition talks with a couple of PE firms and the prospects of a bidding war sent that yellow line up as you can see. UiPath as you can see on the inset, has a much higher valuation than Pega and way higher than blue Prism. Pega interestingly is growing revenues nicely at around 40%. And I think what's happening is that the street simply wants more. Even though UiPath beat and raised, Wallstreet is still getting comfortable with management which is new to the public market game and the company just needs to demonstrate a track record and build trust. There's also some education around billings and multi-year contracts that the company addressed on its last earnings call. But the street was concerned about ARR for new logos. It appears to be slowing down sequentially and a notable decline in billings momentum which UiPath CFO addressed on the earnings call saying look they don't need the trade margin for prepaid multi year deals, given the strong cash position. Why give anything up. And even though I said nobody cares about profitability well, I guess that's true until you guide for an operating loss when you've been showing small profit in recent quarters what UiPath did. Then, obviously people start to care. So UiPath is in bit of an unknown territory to the street and it has a valuation, it's pretty rich. Very rich actually at 30 times revenue multiple or greater than 30 times revenue multiple. So that's why in my view, investors are being cautious. But I want to address a dynamic that we have seen with this high growth rocket chip companies. Something we talked about Snowflake and I think you are seeing some of that here with UiPath. Different model in the sense that Snowflake is pure cloud but I'm talking about concerns around ARR and from new logos and that growth in a sequential basis. And here's what's happening in my view with UiPath. You have a company that started within departments with a smaller average contract size, ACV maybe 25000, may be 50000 but not deep six figure deals. That wasn't UiPath's play. And because the company focused so heavily on simplicity and made it really easy to adapt, customers saw really fast ROI. I mean break-even in months. So we very quickly saw expansion into other departments. So when ACV started to rise and installations expanded within each customer, UiPath realized it had to move beyond a point product and it started thing about a platform and making acquisitions like Processgold and others and this marked a much deeper expansion into the customer base. And you can see that here in this UiPath chart that they shared at their investor deck, customers that bought in 2016 and 2017 expanded their spend 13, 15, 18, 20x So the LTV, life time value of the customer is growing dramatically and because UiPath is focused on simplicity, and has a very facile premium model much easier to try before you buy than its competitors it's CAC, Customer acquisition cost are likely much lower than some of its peers. And that's a key dynamic. So don't get freaked out by some of those concerns that we raised earlier because just like Snowflake what's happening is that the company for sure is gaining new customers, may be just not at the same rate but don't miss the forest through the trees I.e getting more money from their existing customers which means retention, loyalty and growth. Now speaking of forest, this chart is the dynamic I'm talking about, its an ETR graphic that shows the components of net score against spending momentum. Net score breaks down into 5 areas. That lime green at the top is new additions. Okay, so that's only 11% of the customer mentions. By the way we are talking about more than a 125 responses for UiPath. So it's meaningful, it's actually larger in this survey or certainly comparable to Microsoft. So that's just something right there. The next bar is the forest green. Forest green is what I want you to focus. That's customer spending 6% or more in the second half of the year relative to the first half. The gray is flat spending which is quite large. The pink or light red, that's spending customers spending 6% or worse, that's a 4% number. But look at the bottom bar. There is no bar, that's churn. 0% of the responders in the survey are churning. And Churn is the silent killer of SaaS companies. 0% defections. So you've got 46% spending more, nobody leaving. That's the dynamic powering UiPath right now and I would take this picture any day over a larger lime green and a smaller forest green and a bigger churn number. Okay, it's pretty good, not Snowflake good but it's solid. So how does this picture compare to UiPath's peers. Let's take a look at that. So this is ETR data, same data showing the granularity net score for Microsoft power automate, UiPath automation anywhere, Blue Prism and Pega. So as we said before, Microsoft is ubiquitous. What can we say about that. But UiPath is right there with a more robust platform. Not to overlook Microsoft, you can't but UiPath will you that the don't compete head to head for enterprise automation deals with Microsoft and may be they will over time. They do however compete head to head with automation anywhere. And their picture is quite strong as you can see here. You know as is Blue Prism's picture and even Pega. Although Blue Prism automation anywhere UiPtah and power automate all have net scores on this chart as you can see the tables in the upper right over 40%, Pega does not. But you can see Pega as a pure play RPA vendor it's a little bit of sort of apples and oranges there but they do sell RPA and ETR captures in their taxonomy so why not include them. Also note that UiPath has as I said before more mentions in the survey than power automate which is actually quite interesting given the ubiquity of Microsoft. Now, one other notable note is the bright red that's defections and only UiPath is showing zero defections Everybody else has at least little of the slims on defections. Okay, so take that as you will but its another data point, the one that is powerful nit only for UiPath but really for the entire sector. Now the last ETR data point that we want to share is the famous two dimensional view. Like the sector chart we showed earlier, this graphic shows the net score on the vertical axis that's against spending velocity and market share or pervasiveness on the horizontal axis. So as we said earlier, UiPath actually has a greater presence in the survey than the ever present Microsoft. Remember, this is the July survey. We don't have full results from the September-October survey yet and we can't release them until ETR is out of its quiet period but I expect the entire sector, like everything is going to be slightly down because as reported last week tech spending is moderated slightly in the second half of this year. But we don't expect the picture to change dramatically UiPath and power automate we think are going to lead in market presence and those two plus automation anywhere is going to show the strength in spending momentum as will most of the sector. We'll see who comes in above the 40% line. Okay, what to watch at Forward IV. So in summary I'll be looking for a few things. One, UiPath has hinted toward a big platform announcement that will deepen its capabilities to beyond being an RPA point tool into much more of an enterprise automation platform, rewriting a lot of the code Linux, cloud, better automation of the UI, you are going to hear all kind of new product announcements that are coming so I'll be listening for those details. I want to hear more from customers that further confirm what I've been hearing from them over the last couple of years and get more data especially on their ROI, on their land and expand, I want to understand that dynamic and that true enterprise automation. It's going to be good to get an update face to face and test some of our assumptions here and see where the gaps are and where UiPath can improve. Third, I want to talk to ecosystem players to see where they are in participating in the value chain here. What kind of partner has UiPath become since its IPO, are they investing more in the ecosystem, how do partners fit into that flywheel. Fourth, I want to hear from UiPath management Daniel Dines and other UiPath leaders, their exiting toddler wheel and coming into an adolescence phase or early adulthood. And what does that progression look like, how does it feel, what's the vibe at the show. And finally I'm very excited to participate in a live in-person event to see what's working, to see how hybrid events are evolving, we got to good glimpse at Mobile congress and this week in DC at public sector summit. As you know theCube is doing hybrid events for years and we intend to continue to lead in this regard and bring you the best real time information as possible. Okay, that's it for today. Remember these episodes are all available as podcasts wherever you listen, all you do is search breaking analysis podcast. We publish each week on Wikibound.com and Siliconangle.com and you can always connect on twitter @dvellante or email me at David.vellante@siliconangle.com Appreciate the comments on LinkedIn and don't forget to check out ETR.plus for all the survey data. This is Dave Vellante for theCube insights powered by ETR. Be well and will see you next time. (upbeat music)

>>mhm. Here live in Washington D. C. For two days of wall to wall coverage. I'm john for your host of the cube. Got two great guests here, constant Thompson V. P. Of diversity equity inclusion program at a core american council of renewable energy and Blair Anderson, director of public policy industries at AWS. Thanks for coming on the cube. Thanks for having us. So first of all, big announcement on stage max Peterson, head of public sector announced some big news with a core. Tell us what it >>is. Well we are going to be partnered with amazon to do a supply chain study on how we can best diversify the renewable energy supply chain. So we're actually gonna have baseline data on where we should start to be able to create a program that's going to be a model for the renewable energy industry on how to develop and support the success of black women and bipac owned um firms. So >>this program that you're running accelerate accelerate your programs and membership tell more has it worked? And why the successes having, what is amazon's relationship with it Besides funding? Is there other things you can talk about? >>Yeah. So accelerate wouldn't have been possible if it wasn't for people like Shannon Kellogg with a W. S. Um who about a year ago after the George Floyd murders said, you know, what are we doing as a core? He sits on our board um in this area and we had to say nothing. So um Shannon. And a group of leaders got together and workshop this idea. Let's create a membership program for women and minority owned businesses so that they can be successful in renewable energy. Let's pick a cohort and let's do whether it takes to make them successful. Everything from introducing them to business connects, to mentoring them to even legal services for them. >>Well, yeah, this is like an interesting dynamic. Remember Andy Jassy was on stage when he was the ceo of a W S a year ago, I kind of was preaching, you hate that, I said that word, but preaching to the audience build, build, build, there's an entrepreneurship, public sector vibe going on right now, very entrepreneurial across every industry. I mean, this is a real thing that's going on. >>Yeah, so we're super excited about this opportunity, the work that core has done to lead on this program for the last year, especially with Constance coming in, becoming the leader has kind of been able to take this idea that she mentioned that AWS was kind of a founding member at the genesis of it about a year ago. She's taking this idea that many of these folks put on paper And been able to turn it into a really hard substantive efforts to move it forward. So we've been able to have great conversations with many of these 15 companies that have been brought into the program and start building a relationship with them. I think, as you have seen around a WS like we believe strongly in innovation and creativity. the renewable energy industry is very similarly there is a lot of kind of thinking big and innovative spirit that needs to take place in that space and having the diversity at all levels of these companies is kind of an important component to be able to move that entrepreneurship forward. >>You know, cost is one of the things that we've been reporting on until getting on the cube is right in the wheelhouse of what you're doing is a cultural change happening. And that cultural change with amazon and cloud computing is causing structural changes which are opportunities like radical structural changes. So that means old incumbent, the old guard as you guys call it, this can be replaced not because people hate them because they're inadequate. So you start to see this kind of mindset shift, entrepreneurial, impact oriented I can make a change but actually I can level up pretty quick because the people in charge don't know cloud, I mean I hate to put it bluntly like that, but if you're not on that edge, if you're not not on that wave, your driftwood. >>Yeah. You know it's funny you say that I like to call it, our members are making systemic disruptions to the system in a very equitable way, meaning our members are in communities like Chicago Jackson Tennessee there in the north end of texas, they are in um everywhere and they're in the communities, making these systemic disruptions to the way things happen, the way we talk about renewable energy to the way we deploy solar, they're making those kind of changes. So to your point they're doing it, we have to catch up to them because they're already out there, they're moving their entrepreneurial, >>it's like, it's like there's a class of entrepreneurship and evolving and it's like everyone's got the pedigree, this or that knowledge is knowledge and you can apply it in software, you could be shrink wrapped software you put on the shelves called shelf where no successful inventory, give it back cloud computing. If you're not successful. Like right now it's not working. So if you don't have results, no one bought it, it must not work. So it's easy to identify what's working. Yes, so that eliminates a lot of dogma, a lot of weird blocking. It's true, this is a democratization of >>absolutely, I think you're talking about transparency and transparency is one of the tenets of inclusion. If you're truly doing things to be inclusive, transparent and that's where you see the changes, that's exactly what you're talking >>about data driven. That's one thing I love about this data world data is now part of like how apps are built, it's not like a database, then you go fetch a file data is now transparently available. If you know what to look for it if it's available. So the whole old silo mentality, this is one of the amazon strength blair you guys are doing. So I have to ask how is this translating out in the public policy world because you know, when you can make this kind of change quicker, you're gonna have some wins under your belt. Yeah, you gotta double down on those. I >>think, I think there's a lot of transformation we're talking about in this conversation. You take kind of one of the missions we're talking about here, which is around clean energy and the expansion of clean energy, Aws and Amazon. We have procured 10 gigawatts of renewable power and making us the largest corporate procure globally, to kind of put that in maybe a little bit more approachable context, that's the equivalent of powering 2.5 million homes. Um and there's still farther to go to be able to meet that kind of think big that is happening in the industry right now, you have to have a broad, diverse industry to be able to reach all those communities to be, have kind of all types of different leaders in it, because we need everybody at the table both for the industry, but also for the communities that are being served. >>What does sustainability mean to you? Because this is a core focus, I know the energy things huge, but it's not obvious to some people, but it's getting better. What are the what's the core 10ets behind the sustainability strategy? >>Yeah, no, I think there's a lot of different ways you can take a stab at that for us. It's uh probably most uh out there in the public that people talk about is our climate pledge. This is kind of a um goal that we've set to be uh net zero carbon by 2040 which is 10, 10 years ahead of the paris Climate change within that. There are components of that that are related to electric vehicles, clean energy, renewable energy procurement, carbon offset programs around the world. I think throughout all of that is kind of coming back to, as you said, with sustainability and approaching climate change as a as an issue that needs a comprehensive holistic approach to talk >>about some of the stories and the members that you have because is the recruiting strategy climate change? Or is there another like how do you because renewable energy could be a no brainer, but how to get people excited? Like save the world. What's the what's the what's the, what are people aligning with then? What's their reaction? So, >>You know, it's very simply the way we see with our members, most of our members, 87% of them are in the solar area. Many of them when we talk about sustainability, how can people live their lives in a way where they save money on their energy bills? How can communities understand how they can harness their own renewable energy, make a little money from that, but also live their lives in a very peaceful, sustainable, peaceful, sustainable way. Right, so that's part of it as an example, a couple of examples is that we have um 548 capital is a member company. And keep in mind that these are early startup companies. 5 48 capital is in Chicago and their models started off with we want all homes in our communities and these are places in the hood, some of them um son text works with people, it works with spanish speaking customers solely in texas where they explain to them the benefits of renewable energy. They explain the benefits of a sustainability and what it is. I mean that's so that's kind of what we're looking >>at here is just kind of show up and just kind of telling the truth >>exactly and show them the benefits that they've kind of not been leading on. Actually. The other thing is that this is about economics. So this renewable energy movement that we're going through is about economics. It is a it's our next wave of being able to ensure americans are able to live lives in a in a way that's meaningful economic. >>Well you've got visibility on the unit economics event good energy. There's also a community angle. >>Yes, absolutely. >>About some of those stories around the community response to this idea, wow this actually is gettable. Yeah, we >>solar is one of our members and it's owned by the first female community solar own company out of. She's out of Baltimore but she has a solar farm here in D. C. And what she did was was engaged churches in how can you get involved in this renewable energy movement? How can you save money? How can you create a community around around this work? We sold as an example of that um son text, I have to mention them again. They speak with they work with only spanish speaking customers who had no clue about this and who are now making having their lives live better because of it, >>you know, affecting change is hard now you've got a tailwind with structural change in systemic opportunities there. What are the blockers? What are the blockers right now? Is an awareness, is it participation community? >>I'm sorry, it's your show and I've >>interrupted, you know, >>we talk about entrepreneurs in the space, particularly women and those from bipod communities. The first thing that you'll hear is they'll say we don't have access to capital people. The terms around getting capital to start up are tough and their barriers there's so that's one the second is awareness and that's awareness of introducing them to companies that might want to do business with them. So that's something that's a benefit for a core occurs. Members are all people who touch every renewable energy transaction from the finances to the developers to the to the buyers. So this is what makes it unique. So what we're doing with accelerate is breaking down the barriers of access to capital by introducing them to people who can potentially support their work but also introducing them to companies that can help them be a part of their supply chain, which is why the study that max announced is amazing because we're going to be able to have baseline data on what, what are the demographics of the supply chain in the renewable energy and what can we do about it? And we're gonna scale accelerate to be a model for the industry >>and that's the transparency angle. Get the baseline, understand this is classic Amazonian thinking, get the baseline, raise the bar, >>you can see why you get >>so OK, so a lot of great stories, how do people get involved? Obviously amazon is taking the lead leadership role here. What can people do to get involved? >>So if you want to support the program as amazon is a corn dot org accelerate or Thompson at a core dot org. That's my email address. If you'd like to become a member company and accelerate program will be opening up applications towards the latter part of this year november december again a core dot org slash accelerate >>renewable energy. What's the coolest thing you've seen so far in your programme around neutral energy um, could be story, it could be people story could be tech story. What's the coolest thing you've seen spot there? Yeah, you really did. You >>know, I think we have a company called clear look, that's a member there out of Jackson Tennessee and they're actually working with retailers are renewable energy credits to create, to create renewable energy farms in their area. And I, what I think is so cool is that she's disrupting the way that you go about using renewable energy credits. Clear loop dot org. Look them >>up in the new york times. Had a story. I'm just reading California other areas. We have a high density of electric vehicles, it's training the power grid. So this idea of coming in, come back is what it's not sure yet. It's not, this is kind of where it's going. So okay, what's the cool thing you've seen? >>No, for me, I've just enjoyed kind of, I've enjoyed the journey. I think the moment for me where I could see that this was real and this was going to be a impactful program constants organized. It's called a speed dating, a virtual speed dating for us with about eight different companies and it was fascinating to get on, spend some time being able to interact with eight different companies. Um, who we probably would not have ever had kind of introduction to before in the past either. They didn't know how to get in touch with us. We didn't know how to get in touch with them and it kind of opens your eyes to all the different ways. People are approaching this problem and starts the executives who I had in these colors. You can see their wheels spinning the ideas sparking of oh there's some cool ideas here. There's something new that we could do. We should explore further. Nothing I can announce at the moment but lots of lots of good uh I'm >>sure the baseline max got baseline studies. I'm sure there will be a lot of doubling down opportunities on success or not success because you want to have the data, you know what to work on. Its true cause a great mission. I'm really impressed. Congratulations. Thank you announcement and love the programme. Thank you. Take a minute to give a plug anyone or public >>thanks Shannon Kellogg. Shannon was really behind it. He's a member of our board represents a W. S. And was really behind, we gotta do something. It's got to be unique and it's got to be something intentional. And here we are today I want to give a >>great opportunity. Thanks for coming in, appreciate it. Thank you for having more cube coverage here from Washington D. C. Amazon web services, public Sector summit. An event in person where people are face to face. This is great stuff is the cube right back after this short break. Mhm. Mhm. Mhm

>>mhm >>Hello welcome to this cube conversation here in Palo alto California and john for with the cube we had a great conversation around the rise of the cloud and the massive opportunities and challenges around analytics data ai suggestion. Air ceo of thought spot is here with me for conversation. Great to see you. Welcome back to the cube. How are you? >>Well john it is so good to be back. I wish that we could do one of those massive set up that you have and do this face to face but zoom is not bad. >>You guys are doing very well. We have been covering you guys been covering the progress um great technology enabled business. You're on the wave of this cloud analytics you're seeing, we've seen massive changes and structural changes for the better. It's a tailwind for anyone in the cloud data business. And you also on the backdrop of all that the Covid and now the covid is looking at coming out of covid with growth strategies. People are building modern or modernizing their infrastructure and data is not just a department, it's everywhere. You guys are in the middle of this. Take us through what's the update on thought spot. What are you guys doing? What do you see the market right now? Honestly, delta variants coming coming strong but we think will be out of this soon. Where where are >>we look I think it all starts with the users like you said the consumers are demanding more and more from the business they are interacting with. You're no longer happy with being served like uh I'm gonna put you all in a bucket and then Delaware services to you. Everyone's like look look at me, I have likes and dislikes that is probably going to be different from someone that you think are similar to me. So unless you get to know me and deliver bespoke services to me, I'm gonna go somewhere else who does that And the call that the way you do that is through the data that I'm giving to you. So the worst thing you can do is to take my data and still treat me like an average and numbers and what's happening with the cloud is that it is now possible and it wasn't okay. So I grew up in India where newspapers will always have stock market summary on like one full page full of takers and prices and the way it used to work is that you wake up in the morning you look at the newspaper, I don't know if you have had the same thing and then you call your broker is based on in place of that. Can you imagine doing that now? I mean the information is at your fingertips. Hurricane IDa either is actually going to enter in Louisiana somewhere. What good is it? Yesterday morning state on this morning state if I'm trying to make a decision on whether I should pack my stuff and move away or you know finding to from home depot supply chain manager. I shouldn't figure out what should I be doing for Louisiana in the next two days, this is all about the information that's available to you. If you plan to use it and deliver better services for your consumer cloud makes it possible. >>You know, it's interesting you mentioned that the old way things were it seems so slow, then you got the 15 minute quotes, then there's now a real time. Everything has to be real time. And clearly there's two major things happening at the same time which makes exciting the business model and the competitive advantages for leaders and business to use data is critical but also on the developer side where apps are being developed if you don't have the data access, the machine learning won't work well. So as machine learning becomes really courted driving ai this modern analytics cloud product that you guys announced brings to bear kind of two major lifts the developer app modernization as well as competitive advantage for the companies that need to deploy this. So you guys have announced this modern approach analytics cloud, so to speak. What are some of the challenges that companies are having? Because you gotta, if you hit both of those you're gonna right a lot of value. What are some of the challenges for people who want to do this modern cloud? >>I think the challenge is basically all inside in the company. If you ask companies why are they failing to modernize? They will point to what's inside, it's not outside the technology is there the stack is the vendors are there, It is sometimes lack of courage at the leadership level which is a huge problem. I'll give an example. Uh, we have recently announced what we call thoughts part everywhere, which is our way of looking at how to modernize and bring the data inside that you're looking forward to where you are because Lord knows we all have enough apps on our Octa or a single sign on. The last thing you need is one more how no matter how good it is, they don't want to log into yet under their tool, whether it's thought spot or not. But the insights that you are talking about needs to be there when you need. And the difference is uh, the fundamental approach of data analytics was built on embedded model. You know what we are proposing is what we call data apps. So the difference between data apps and the typical dashboard being embedded into your analytics model is sort of like think of it. Uh newspapers telephones and the gap in between. So there is newspapers radio that is walkie talkie and telephone. They're all different and newspapers get printed and it comes to you and you read in the morning, you can talk back to it, you can drag and drop, you can change it right walkie talkies on the other hand, you know, you could have one conversation then come back to that. Whereas phone, you can have true direction conversation? They're all different if you think of embedding it is sort of like the newspaper, the information that you can't talk back. So somebody resembling something that came out monday, you're going to a board meeting on Wednesday and you look at that and make decisions. That is not enough in the new world, you just can't do that. It's not about what a lot of tools can actually answer what the real magic the real value for customers are unlocked when you ask three subsequent questions and answer them and they will come down to when you hear what you have to know. So what? Right and then what if and then the last is what next Imagine you can answer those three questions every business person every time no matter how powerful the dashboard is, they will always have the next question. What? So what? Okay the business customers are turning so what is it good, is it bad? Is it normal or the next question is like now what what do I do with it two, the ability to take all these three questions so what and what a fun. Now what? That requires true interactivity, you know, start with an intent and with an action and that is what we are actually proposing with the data apps which is only possible if you're sitting on top of a snowflake or red shift kind of really powerful and massive cloud data warehouse where the data comes and moves with agility. >>So how has this cloud data model rewritten the rules of business? Because what you're bringing up is essentially now full interactivity really getting in, getting questions that are iterating and building on context to each other. But with all this massive cloud data, people are really excited by this. How is it changing business than the rules of business? >>Yeah. So think about, I mean topical things like there is a hurricane able to enter, hit the cost of the United States. It's a moving target. No one knows exactly where it is going to be. There is only 15 models from here. 10, 10 models from Europe that's going to predict which way it's going to take every millimeter change in that map is going to have significant consequences for lives and resources and money. Right. This is true for every business. What cloud does this? Uh you have your proprietary data for example, let's say you're a bank and you have proprietary data, you're launching a new product And the propriety data was 2025 extremely valuable. But what what's not proprietary but what is available to you? Which could make that data so much more relevant if you layer them on top census data, this was a census here. The census data is updated. Do you not want that vaccination leader? We clearly know that purchasing power parity will vary based on vaccinations and county by county. But is that enough? You need to have street by street is county data enough. If you're going to open startup, Mr Starbucks? No, you probably want to know much more granular data. You wanna know traffic. Is the traffic picking up business usually an office space where people are not coming to office or is it more of a shopping mall where people are still showing all of these data is out there for you? What cloud is making it possible? Unlike the old era where you know, your data is an SFP oracle or carry later in your data center, it's available for you with a matter of clicks. What thought sport modern analytics. Cloud is a simple thing. We are the front end to bring all of this data and make sense of it. You can sit on top of any cloud data and then interact with a complete sort of freedom without compromising on security, compliance or relevance. And what happens is the analysts, the people who are responsible for bringing the data and then making sure that it is secure and delivered. They are no longer doing incremental in chart updates and dashboard updates. What they're doing is solving business problems, business people there freely interacting and making bigger decisions. That actually adds value to their consumers. This is what your customers are looking for, your users are looking for and if you're not doing it, your competitor will do that. So this is why cloud is not a choice for you. It's not an option for you. It is the only way and if you fail to take that back the other way is taking the world out of a cliff. >>Yeah, that's I love it. But I want to get this uh topic of thoughts about anywhere, but I want to just close out on this whole idea of modern cloud scale analytics. What technology under the hood do you guys see that customers should pay attention to with thought spot and in general because the scale there. So is it just machine learning? We hear data lakes, you know, you know different configurations of that. Machine learning is always thrown around like a buzzword. What new technology capability should every executive by your customer look for when it comes to really doing analytics, modern in the cloud >>analytics has to be near real time, Which means what two things speed at scale, make sure it's complex, it can deal with complexity in data structure. Data complexity is a huge problem. Now imagine doing that at scale and then delivering with performance. That means you have to rethink Look Tableau grew out of excellent worksheets that is the market leader, it is a $40 billion dollar market with the largest company having only a billion dollars in revenue. This is a massive place where the problems need to be solved differently. So the underlying technology to me are like I said, these three things, number one cannot handle the cloud scale, you will have hundreds of billions of rows of data that you brought. But when you talk about social media sentiment of customers, analysis of traffic and weather patterns, all of these publicly available valuable data. We're talking trillions of rows of data. So that is scale. Now imagine complexity. So financial sector for example, there is health care where you know some data is visible, some data is not visible, some some is public assumption not or you have to take credit data and let it on top of your marketing data. So it becomes more complex. And the last is when you answer ask a question, can you deliver with absolute confidence that you're giving the right answer With extremely high performance and to do that you have to rebuild the entire staff. You cannot take your, you know, stack that was built in 1990s and so now we can do search So search that is built for these three things with the machine learning and ai essentially helping at every step of the way so that you're not throwing all this inside directly to a human, throw it to a i engine and the ai engine curates what is relevant to you, showing it to you. And then based on your interaction with that inside, I improve my own logic so that the next interaction, the next situation is going to be significantly better. My point is you cannot take a triple a map and then try to act like this google maps. One is built presuming and zoom out and learn from you. The other one is built to give you rich information but doesn't talk back. So the staff has to be fundamentally rebuilt for the club. That's what he's doing. >>I love I love to buy direction. I love the interactivity. This topic of thought spot everywhere, which you mentioned at the beginning of this conversation, you mentioned data apps which by the way I love that concept. I want to do a drill down on that. Uh I saw data marketplace is coming somewhat working but I think it's going to get it better. I love that idea of an app um, and using as developers but you also mentioned embedded analytics. You made a comment about that. So I gotta ask you what's the difference between data apps and embedded analytics? >>Embedded analytics means that uh you know the dashboards that you love but the one that doesn't talk back to you is going to be available inside the app that you built for your other So if a supply chain app that was built by let's say accenture inside that you haven't had your dashboard without logging into tablet. Great. But what you do, what's the big deal? It is the same thing. My point is like I said every time a business user sees a chart. The questions are going to come up. The next 10 question is where the values on earth for example on Yelp imagine if you will piece about I'm hungry. I want to find a restaurant and it says go to this burrito place. It doesn't work like that. It's not good enough. The reason why yell towards is because I start with an intent. I'm hungry. Okay show me all restaurants. Okay I haven't had about it for a while. Let me see the photos. Let me read the reviews. Let me see if my friends have eaten, let me see some menu. Can I walk there? I do all of this but just what underneath it. There is a rich set of data that probably helped have their own secret source and reviews and then you have google map powering some of them. But I don't care all of that is coming together to deliver a seamless experience that satisfies my hunger. Which will be very different from if you use the same map at the same place you might go to an italian place. I go to bed right. That is the power of a data app in business people are still sitting with this. I am hungry. I gotta eat burrito. That's not how it should be in the new world. A business user should have the freedom to add exactly what the customers require looking for and solve that problem without delay. That means every application should be power and enriched with the data where you can interact and customized. That is not something that enterprise customers are actually used to and to do that you need like I said a I and search powering like the google map underneath it, but you need an app like a yelp like app, that's what we deliver. So for example, uh just last week we delivered a service now app on snowflake. You know, it just changes the game. You are thinking about customer cases. You're a large company, you have support coming from Philippines and India some places the quality is good. Some places bad dashboards are not good enough saying that okay, 17% of our customers are unhappy but we are good. That's not the world we live in. That is the tyranny of >>average, >>17% were unhappy. You got to solve for them. >>You mentioned snowflake and they had their earnings. David and I were commenting about how some of the analysts got it all wrong. And you bring up a really good point that kind of highlights the real trend. Not so much how many new customers they got. But there do what customers are doing more. Right? So, so what's happening is that you're starting to see with data apps, it does imply Softwares in there because it's it's application. So the software wrapping around data. This is interesting because people that are using the snowflakes of the world and thought spot your software and your platform, they're doing more with data. So it's not so much. I use snowflake, I use snowflake now I'm going to do more with it. That's the scale kicking. So this is an opportunity to look at that more equation. How do you talk >>with >>when you see that? Because that's the real thing is like, okay, that's I bought software as a service. But what's the more that's happening? What do you see >>that is such an important point? Even I haven't thought about it that john but you're absolutely right. That is sometimes people think of snowflake is taking care of it and no. Yeah, yes, Sarah later used to store once and zeros and they're moving it into club. That is not the point. Like I said, marketplace as an example when you are opening it up for for example, bringing the entire world's data with one click accessible to you securely. That is something you couldn't do on number two. You can have like 100 suppliers and all of a sudden you can now take a single copy of data and then make it available to all of them without actually creating multiple copies and control it differently. That's not something without cloudy, potentially could do. So things like that are fundamentally different. It is much more than like one plus one equals two. It is one plus one is 33. Like our view is that when you are re platform ng like that, you have to think from customer first. What does the customer do? The customer care that you meant from Entre into cloud or event from Teradata snowflake. No, they will care if their lives are better. Are they able to get better services are able to get it faster. That's what it is. So to me it is very simple. The destiny of an insight or data information is action, right? Imagine you're driving a car and if your car updates the gas tank every monday morning, imagine how you know, stressful your life will be for the whole week. I have to wait until next monday wanting to figure out what, whether I have enough gas or not, that's not the new world, that information is there, you need to have it real time and act on it. If you go through the Tesla you realize now that you know, I'm never worried about mileage because it is going to take me to the supercharger because it knows what I need to get to, it knows how long it is going to be, how bad the traffic is. It is synthesizing all of that to give me peace of mind. >>So this is a great >>conversation. That's a >>great question. It's a great conversation because it's really kind of brings in kind of what's happening, you see successful companies that are working with cloud scale and data like you're talking about, it's you get in there, you get the data, the data apps and all of a sudden you hit it, you hit the value equation and it's like almost like discovering oil all of a sudden you have a gusher and then people just see massive increase in value. It's not like the outcome, it's kind of there, you've got to kind of get in there and this is the scale piece and you see people having strategies to do that, they say okay we're gonna get in there, we're going to use the data to iterate but also watch the data learn where's that value, This is that more trend and and there's a successful of the developing. So I have to ask you when you, when you talk about people and culture, um that's not the way it used to be, used to be like okay I'm buying an outcome. I deployed some software mechanisms and at the end of the day there's some value there. Maybe I write it off maybe I, you know, overtime charges and some accounting thing. All changed the culture and the people in charge now are transforming the management techniques. What do you see as a successful mindset for a customer as they managed through these new paradigms and new new success formulas. >>I see a fork in leadership when it comes to courage. There are people with the spine and there are people without the spine and the ones with the spine are absolutely killing it. They are unafraid. They are not saying, look, I'm just going to stick with the incumbents that I've known for the last 20 years. Look, I used to drive a Toyota forever because I love the Toyota. And then you know after Nutanix IPO went to Lexus still Toyota because it's reliable. I don't, I'm not a huge card person. It works. But guess what? I knew they were missing Patrick and I care about the environment. I don't want to keep pushing hydrocarbons out there. It's not politics. I just don't like burning stuff into the earth atmosphere. So when Tesla came out, it's not like I love the quality I don't personally like alone mask, you know after that Thailand fiasco of cave rescue and all of that. But I can clearly see that Toyota is not going to catch up to Tesla in the next 10 years. And guess what? My loyalty is much more to doing the right thing for my family and to the world. And I switched this is what business leaders need to know. They can't simply say, well, tabloid as search to. They're not as good as thought sports. We'll just stick with them because they have done with us. That's what weak leaders do and customers suffer for that. What I see like the last two weeks ago when I was in new york. I met with them. A business leader for one of the largest banks in the world with 25,000 people reporting to him. The person walks into the room wearing shorts and t shirts uh, and was so full of energy and so full of excitement. I thought I'm going to learn from him and he was asking questions about how we do our business in bed and learning from me. I was humbled, I was flawed and I realized that's what a modern business leader looks like. Even if it is one of the largest and oldest banks in the world, that's the kind of people are making big difference and it doesn't matter how all the companies, how old their data is they have mainframes or not. I hear this excuses all the type of er, mainframes, we can't move, we have COBOL going on. And guess what? You keep talking about that and hear leaders like him are going to transform those companies And next thing you know, there are some of the most modern companies in the world. >>Well certainly they, we know that they don't have any innovation strategy or any kind of R and D or anything going on that could be caught flat footed in the companies that didn't have that going on, didn't have the spine or the, the, the vision to, to at least try the cloud before Covid when Covid hit, those companies are really either going out of business or they're hurting the people who were in the cloud really move their teams into the cloud quicker to take advantage of uh, the environment that they had to. So this became a skill issue. So, so this is a big deal. This is a big deal. And having the right skills are people skilled, it will be a, I both be running everything for them. What is your take on that? >>This is an important question. You can't just say you got to do more things or new things and not take care of all things. You know, there's only 89, 10 hours so you can work in their uh, analysts in the Atlantic species constantly if your analysts are sitting there and making incremental dashboards and reports change every day and then backlog is growing for 56 days and the users are unhappy because you're not getting answers and then you ask them to go to new things. It's just not going to be enough and you can hire your way out of it. You have to make sure that if you say that I have 20 100 x product already, I don't want 21st guess what? Sometimes to be five products, you need to probably go to 21 you got to do new things to actually take away the gunk off the old and in that context, the re skilling starts with unburdening, unburdening of menial task, unburned routine task. There is nothing more frustrating than making reports and dashboards that people don't even use And 90% of the time analysts, they're amazing experiences completely wasted when they're making incremental change to tabloid reports. I kind of believe thought spot and self service on top of cloud data takes away all of that without compromising security and then you invest the experienced people. Business experience is so critical. So don't just go and hire university students and say, okay, they'll go come and quote everything the experience that they have in knowing what the business is about and what it matters to their users, that domain experience and then uplevel them res kill them and then bring fresh energy to challenge that and then make sure there is a culture that allows that to happen. These three things. That's why I said leadership is not just about hiring event of firing another, it's about cultivating a culture and living that value by saying, look if I am wrong, call me, call me out in public because I want to show you how I deal with conflict. So this is I love this thing because when I see these large companies where they're making these massive changes so fast, it inspires you to say you know what if they can do it, anyone can do it. But then I also see if the top leadership is not aligned to that. They are just trying to retire without the stock tanking too much and let me just get through two more years. The entire company suffers. >>So that's great to chat with you got great energy, love your business, love the energy, love the focus. Um it's a new wave you're on. It's a big wave um and it's it's relevant, it's cool and relevant and it's the modern way and people have to have a spine to be successful if not for the faint of heart, but the rewards are there if you get this right. This is what I I love about this new environment. Um so I gotta ask you just to kind of close it out. How would you plug the company for the folks watching that might want to engage with you guys. What's the elevator pitch? What's the positioning? How would you describe thought spot in a bumper sticker or in a positioning statement. Take a minute to talk about that. >>Remember martin Anderson said that software is eating the world, I think it is now time to update that data is eating everything including software. If you don't have a way to turn data into bespoke action for your customers. Guess what? Your customers are gonna go somewhere where they that's happening right? You may not be in the data business but the data company is going to take your business. Thought spot is very simple. We want to be the friend tent for all cloud data when it comes to structured because that's where business value numbers is world satisfaction and dissatisfaction for reduces allying it is important to move data to action and thought Spot is the pioneer in doing that through search and I >>I really think you guys want something very powerful. Looking forward to chatting with you at the upcoming eight of a startup showcase. I think data is a developer mindset. It's an app, it's part of everything. It will. Everyone's a data company, everyone is a media company. Data is everything you guys are on something really big and people got a program it with it, make experiences whether it's simple scripts, point and click. That is a new kind of developer out there. You guys are tapping into it. Great stuff. Thank >>you for coming on. Thank you john it's good to talk to you. >>Okay. It's a cube conversation here in Palo alto California were remote. We're virtual. That's the cube virtual. I'm sean for your host. Thanks for watching. Mhm. Mhm

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 cios in the most recent september etr spending survey tell us that they expect a slight sequential improvement in q4 spending relative to q3 but still down four percent from q4 2019 so this picture is still not pretty but it's not bleak either to whit firms are adjusting to the new abnormal and are taking positive actions that can be described as a slow thawing of the deep freeze hello everyone this is dave vellante and welcome to this week's wikibon cube insights powered by etr in this breaking analysis we're going to review fresh survey data from etr and provide our outlook for both q4 of 2020 and into 2021. now we're still holding at our four to five percent decline in tech spending for 2020 but we do see light at the end of the tunnel with some cautions specifically more than a thousand cios and it buyers have we've surveyed expect tech spending to show a slight upward trend of roughly two percent in 2021. this is off of a q4 decline of 4 relative to q4 2019 but i would put it this way a slightly less worse decline sequentially from q3 last quarter we saw a 5 decline in spending okay so generally more of the same but things seem to be improving again with caveats now in particular we'll show data that suggests technology project freezes are slowly coming back and we see remote workers returning at a fairly significant rate however executives expect nearly double the percentage of employees working remotely in the midterm and even long term than they did pre-covert that suggests that the work from home trend is not cyclical but showing signs of permanence and why not cios report that on balance productivity has been maintained or even improved during covit now of course this all has to be framed in the context of the unknowns like the fall and even winter surge what about fiscal policy there's uncertainty in the election social unrest all right so let's dig into some of the specifics of the etr data now i mentioned uh the number of respondents at over a thousand i have to say this was predominantly a us-based survey so it's it's 80 sort of bias to the u.s and but it's also weighted to the big spenders in larger organizations with a nice representation across industries so it's good data here now you can see here the slow progression of improvement relative to q3 which as i said was down five percent year-on-year with the four percent decline expected in q4 now etr is calling for a roughly four percent decline for the year you know i've been consistently in the four to five percent decline range and agree with that outlook and you can see cios are planning for a two percent uptick in 2021 as we said at the open now in our view this represents some prudent caution and i think there's probably some upside but it's a good planning assumption for the market overall in my view now let's look at some of the actions that organizations are taking and how that's changed over time you can see here that organizations they're slowly releasing that grip on tech spending overall you know still no material change in employees working from home or traveling we can see that hiring freezes are down that's that's positive in the green as our new i.t deployment freezes and a slight uptick in acceleration of new deployments now as well you see fewer companies are planning layoffs and while small the percent of companies adding head count has doubled from last quarter's you know minimal number all right so this is based on survey data at the end of the summer so it reflects that end of summer sentiment so we got to be a little bit cautious here and i think cios are you know by nature cautious on their projections of two percent up in 2021. now importantly remember this does not get us back to 20 20 19 spending levels so we may be seeing a kind of a long slow climb out of this you know tepid market maybe 2022 gets back over 2019 before we start to see sustained growth again and remember these recoveries are rarely smooth they're not straight lines so you got to expect some choppiness with you know some pockets of opportunity which we'll discuss here in this slide we're showing the top areas that respondents cited as spending priorities for q4 and into 2021 so the chart shows the ratings based on a seven-point scale and these are the top spending initiatives heading into the year end now as we've been saying for the better part of a decade cyber security is a do-over and i've joked you know if it ain't broke don't fix it well coven broke everything and cyber is an area that's seeing long-term change in my opinion endpoint security identity access management cloud security security as a service these are all trends that we're seeing as really major waves as a result of covid now it's coming at the expense of large install bases of things like traditional hardware-based firewalls and we've talked about this a lot in previous segments cloud migration is interesting and i really think it needs some interpretation i mean nobody likes to do migrations so i would suggest this includes things like i have a bunch of people answering phones and offices or i had and then overnight boom the offices are closed so i needed a cloud-based solution i didn't just lift and ship my shift my entire phone routing system you know from the office into the cloud but i probably pivoted to a cloud solution to support those work from home employees now my guess is i think that would be included in these responses i mean i do know an example of an insurance company that did migrate its claims application to the cloud during coven but this was something that they were you know planning to do pre-covered and i guess the point here is twofold again like i said migrations are hairy nobody wants to do them and i think this category really means i'm increasing my use of the cloud so i'm kind of migrating my my operations over time to the cloud all right look at collaboration no shocker here we've pounded you know zoom and webex to death analytics is really interesting we have talked extensively uh and have been covering snowflake and we pointed out that there's a new workload that has emerged in the cloud it's not just snowflake you know there are others aws redshift google with bigquery and and others but snowflake is the off the charts you know hot ipo and so we we talk a lot about it but it relates to this easy setup and access to a data layer with having you know requisite security and governance and this market is exploding adding ai on top and really doing this in the cloud so you can scale it up or down and really only pay for what you need that's a real benefit to people compare that to the traditional edw snake swallowing a basketball i got to get every new intel chip you're not dialing up down down you're over provisioning and half the time you're not using you know half most of the time you're not utilizing what you've paid for all right look at networking you know traffic patterns changed overnight with covet ddos attacks are up 25 to 40 percent uh since coven cyber attacks overall are up 400 percent this year so these all have impacts on the network machine learning and ai i talked about a little bit earlier about that but organizations are realizing that infusing ai into the application portfolio it's becoming really an imperative much more important as the automation mandate that we've talked about becomes more acute people you can't scale humans at this at the pace of technology so automation becomes much more important that of course leads us to rpa now you might think rpa should be a higher priority but i think what's happening here is i t organizations they were scrambling to plug holes in the dike rpa is somewhat more strategic and planful our data suggests that rpa remains one of the most elevated spending categories in terms of net score etr's measure of spending momentum so this means way more people are spending more than spending less in the rpa category so it really has a lot of legs in fact with the exception of container orchestration i think rpa is a sector that has the highest net score i think you'll see that in the upcoming surveys it's as high or even higher than ai i think it's higher than cloud it's just that it remember this is an it survey and a lot of the rpa stuff is going on at the business level but it had to keep the ship afloat when coveted hit which somewhat shifted priorities but but rpa remains strong now let's go back uh to the work from home trend for a moment i know it's been been played out and kind of beat on really heavily covered but i got to tell you etr was the very first on this trend it was way back in march and the data here is instructive it shows that the percentage of employees working from home prior to cor covid currently working from home the percent expected in six months and then those expected essentially permanently and this is primarily work from home versus yeah i don't work a day or two per week it's really the the five day a week i i work remotely as you can see only 16 percent of employees were working from home pre pandemic whereas more than 70 percent are at home today and cios they actually see a meaningful decline in that number over the next six months you know we'll see based on how covid comes back and you know this fall and winter surge and how will that will affect these plans but look what it does long term it settles in at like 34 percent that's double pre-covet so really a meaningful and permanent impact is expected from the isolation economy that we're in today and again why not look at this data it shows the distribution of productivity improvements so that while 23 of respondents said work from home productivity impacts were neutral nearly half i think it was 48 if you add up those bars on the right nearly half are seeing productivity improvements well less than 30 percent see a decline in productivity and you can see the etr quants they peg the average gain at between three and five percent that's pretty significant now of course not everyone can work from home if you're working at a restaurant you really you know unless you're in finance you really can't work from home but we're seeing in this digital economy with cloud and other technologies that we actually can work from pretty much anywhere in the world and many employees are going to look at work from home options as a benefit you know it was just a couple years ago remember that we were talking about companies like ibm and yahoo who mandated coming into the office i mean that was like 2017 2018 time frame well that trend is over now let me give you a quick preview of some of the other things that we're seeing and what the etr data shows now let me also say i'm just scratching the surface here etr has deep deep data cuts they have the sas platform allows you to look at the data all different ways and if you're not working with them you should be because the data gets updated so frequently every quarter there's new data there's drill down surveys and it's forward-looking so you know a lot of the survey data or a lot of the data that we use market share data and other data are sort of looking back you know you use your sales data your sales forecast that's obviously forward-looking but but the etr survey data can actually give an observation space outside of your sales force and no i'm not getting paid by etr but but it's been such a valuable resource i want to make it available and make the community aware of it all right so let's do a little speed round on on some of the the vendors of interest that we've talked about in the last several segments last couple years actually many years decade anyway start with aws aws continues to be strong but they they have less momentum than microsoft this is sort of a recurring pattern here but aws churn is low low low not a lot of people leaving the aws platform despite what we hear about this repatriation trend data warehousing is a little bit soft whereas we see snowflake very very strong but aws share is really strong inside of large companies so cloud and teams and security are strong from microsoft whereas data warehouse and ai aren't as robust as we've seen before but but microsoft azure cloud continues to see a little bit more momentum than aws so we'll watch that next quarter for aws earnings call now google has good momentum and they're steady especially in cloud database ai and analytics we've talked a lot about how google's behind the big two but nonetheless they're showing good good momentum servicenow very low churn but they're kind of hitting the law of large numbers still super strong in large accounts but not the same red hot hat red hot momentum as we've seen in the past octa is showing continued momentum they're holding you know close to number one or that top spot in security that we talked about last time no surprise given the increased importance of identity access management that we've been talking about so much crowdstrike last survey in july they showed some softness despite a good quarter and and we we're seeing continued to sell it to deceleration in the survey now that's from extremely elevated levels but it's significantly down from where crowdstrike was at the height of the lockdown i mean we like the sector of endpoint security and crowdstrike is definitely a leader there and you know well-managed company company but you know maybe they got hit with uh with you know a quick covet injection with with a step up function that's maybe moderating somewhat you know maybe there's some competition you know vmware freezing the market with carbon black i i really don't see that i think it's it's it's you know maybe there's some survey data isn't reflective of of what what crowdstrike is seeing we're going to see in the upcoming earnings release but it's something that we're watching very closely you know two survey snapshots with crowdstrike being a little bit softer it doesn't make a sustained trend but we would have liked to seen you know a little bit stronger this this quarter the data's still coming in so we'll see sale point is one we focused on recently and we see very little negative in their numbers so they're holding solid z scalar showing pretty strong momentum and while there was some concern last survey within large organizations it seemed that might have been a survey anomaly because z scalar they had a strong quarter a good outlook and we're seeing a strong recovery in the most recent data so it also looks like z z scaler is pressuring some of palo alto network's dominance and momentum heading into the quarter so we'll pay close attention to that we've said we like palo alto networks but they're so big uh they've got some exposures but they can offset those you know and they're doing a better job in cloud with their pricing models and sort of leaning into some of the the market waves uh sale point appears to be holding serve you know heading into the fourth quarter snowflake i mean what can we say it continues to show some of the strongest spending momentum going into q4 and into 2021 no signs of slowing down they're going to have their first earnings reports coming up you know in a few months so i i got to believe they got it together and and they're going to be strong reports uipath and momentum is is slowing down a bit but existing customers keep spending with ui path and there's very few defections so it looks like their land and expand is working pretty well automation anywhere continues to be strong despite comments about the sector earlier which showed you know maybe it wasn't as high a priority some other sectors but as i said you know it's still really really strong strong in terms of momentum and automation anywhere in uipath they continue to battle it out for the the top spot within the data set within the automation data set well i should say within rpa i mean companies like pega systems have a broader automation agenda and we really like their strategy and their execution databricks you know hot company once a hot company and still hot but we're seeing a little bit of a deceleration in the survey even though new customer acquisition is quite strong put it this way databricks is strong but not the off the chart outperformer that it used to be this is how etr frame that their analysis so i want to obviously credit that to them datadog showing the most strength in the application performance management or monitoring sector whichever you prefer but generally the the net scores in that sector as we talked about last week they're not great as a sector when you compare it to other leading sectors like cloud or automation rpa as an example container orchestration you know apm is kind of you know significantly lower it's not it's not as low as some of the on-prem on-prem infrastructure or some of the on-prem software but you know given datadog's high valuation it's somewhat of a concern so keep an eye on that mongodb you know they got virtually no customer churn but they're losing some momentum in terms of net score in the survey which is something we're keeping an eye on and a big downtick in in large organization acquisitions within the data so in other words they had a lot of new acquisitions within large companies but that's down now again that could be anomalies in the data i don't want to you know go to the bank on that necessarily but that's something to watch zoom they keep growing but etr data cites a churn of actually up to seven percent due to some security concerns so that was widely reported in the press and somewhere slower velocity for zoom overall due to possible competition from microsoft teams but i tell you it has an amazing stat that etr threw out pre-cove at zoom penetration in the education vertical was 15 today it's over 80 percent wowza cisco cisco's core is weak as we've said you've seen that in their earnings numbers it's it's there's softness there but security meraki those are two areas that remain strong same kind of similar story to last quarter survey pure storage you know they're the the high flyer they're like the one-eyed man in the land of the the storage blind so storage you know not a great market we've talked about that we've seen some softness in the the data set from uh in pure storage and really often sympathy with the generally back burner storage market you know again they they still outperforming their peers but we've seen slower growth rates there in the in in the survey and that's been reflected in their earnings uh so we've been talking about that for a while really keeping an eye on on on pure they made some acquisitions trying to expand their market enough said about that rubric rubric's interesting they kind of were off the charts in a couple surveys ago and they really come off of those highs you know anecdotally we're hearing some concerns in in the market it's hard to tell the private company cohesity has overtaken rubric and spending momentum now for the second quarter in a row you know they're still not as prevalent in the data set we'd like to see more ends from cohesity remember this is sort of a random sample across multiple industries we let the or etr lets the the respondents tell them what they're buying and what they're spending on you know but because cohesity has the highest net score relative to to compares like rubric like veeam you know i even threw in when i looked at nutanix pure dell emcs vxrail those are not direct competitors but they're you know kind of quasi compares if you will new relic they're showing some concerning trends on churn and the company is way off its 2018 momentum highs in the survey and we talked about this last week some of the challenges new relic is facing but we like their tech the nrdb is purpose-built for monitoring and performance management and we feel like you know they can retain their leadership if they can can pull it together we talked about elliott management being in there so that's something that we're watching red hat is showing strength in open shift really really strong ibm you know services exposure uh it's it's not the greatest business in the world right now at the same time there's there's crosswinds there at the same time people you know need some services and they need some help there but the certainly the outsourcing business so there's you know countervailing you know crosswinds uh within ibm but openshift bright spot i i think you know when i look at at the the red hat acquisition yeah 34 billion but but it's it's pretty obvious why ibm made that move um but anyway ibm's core business continues to be under under pressure that's why red hat is such an important component which brings me to vmware vmware has been an execution machine they had vmworld this past week uh we talked last month about the strength of vmware cloud on aws and it's still strong and and vmware cloud portfolio with vmware cloud foundation and other offerings but other than tanzu vmware is in this october survey of the first first look shows some deceleration really across the board you know one potential saving grace etr shared with me is that the fortune 500 spending for vmware is stronger so maybe on a spend basis when i say stronger stronger stronger than the mean so maybe on a spend basis vmware is okay but there seems to be some potential exposure there you know we won't know for sure until late next year uh how the dell reshuffle is going to affect them but it's going to be interesting to see how dell restructures vmware's balance sheet to get its own house in order and remember dell wants to get to investment grade for its own balance sheet yet at the same time it wants to keep vmware at investment grade but the interesting thing to watch is what impact that's going to have on vmware's ability to fund its future and we're not going to know that for a long long time but you know we'll keep an eye on on those developments now dell for its part showing strength and work from home and also strengthen giant public and privates which is a bellwether in the etr data set uh you know these are huge private companies for example uh koch industries would be one you know massive private companies mars would be another example not necessarily that they're the ones responding although my guess is they are it's it's anonymous but actually etr actually knows and they can identify who those bell weathers are and it's been a it's been a predictor of performance for the last you know better part of a decade so we'll see vxrail is strong um you know servers and storage they're they're still muted relative to last year but not really down from july so you know holding on dell holding on to it to to a tepid spending outlook they got such huge exposure on-prem you know so on balance i wouldn't expect you know a barn burner out of dell you know but they got a big portfolio and they've got a lot of a lot of options there and remember they still have the the still have they have a pc uh business unlike hpe which i'll talk about in in in a moment talk about now aruba is the bright spot for hpe but servers and storage those seem to be off you know similar to dell uh but but but maybe even down further i think you know dell is kind of holding relative to last quarter survey you know down from earlier this year and certainly down from from last year uh but hpe seems to be on a steeper downward trajectory uh in storage and service from the survey you know we'll see again you know one one snapshot quarter this is not a trend to make uh but again storage looks particularly soft which is a bit of a concern and we saw that you know in hpe's numbers you know last quarter um customer acquisition is strong for nutanix but overall spending is decelerating versus a year ago levels uh we know about the 750 million dollar injection uh from from bain capital basically you know in talking to bain what essentially they're doing is they they're betting on upside in the hyper-converged marketplace it's true that from a penetration standpoint there's a long long way to go and it's also true that nutanix is shifting from a you know perpetual model you know boom by the the capex to a in an annual occurring revenue model and they kind of need a bridge of cash to sort of soften that blow we've seen companies like tableau make that transition adobe successfully made that transition splunk is in that transition now and it's you know kind of funky for them but at any rate you know within that infrastructure software and virtualization sectors you know nutanix is showing some softness but in things like storage actually nutanix looking pretty strong very strong actually so again this theme of of these crosswinds uh supporting some companies whereas they're exposed in other areas you certainly see that with large companies and and nutanix looks like it's got some momentum in some areas and you know challenges in in others okay so that's just a quick speed dating round with some of the vendor previews for the upcoming survey so i just want to summarize now and we'll wrap so we see overall tech spending off four to five percent in 2020 with a slightly less bad slightly less bad q4 sequentially relative to q3 all this is relative to last year so we see continued headwinds coming into 2021 expect low single-digit spending growth next year let's call it two percent and there are some clear pockets of growth taking advantage of what we see is a more secular work from home trend particularly in security although we're watching some of the leaders shift positions cloud despite the commentary earlier remains very very strong aws azure google red hat open shift serverless kubernetes analytic cloud databases all very very strong automation also stands out as as a a priority in what we think is the coming decade with an automation mandate and some of the themes we've talked about for a long time particularly the impact of cloud relative to on-prem you know we don't see this so-called repatriation as much of a trend as it is a bunch of fun from on-prem vendors that don't own a public cloud so just you just don't see it i mean i'm sure there are examples of oh we did something in the cloud we lifted and shifted it didn't work out we didn't change our operating model okay but the the number of successes in cloud is like many orders of magnitude you know greater than the numbers of failures on the plus side however the for the on-prem guys the hybrid and multi-cloud spaces are increasingly becoming strategic for customers so that's something that i've said for a long time particularly with multi-cloud we've kind of been waiting it's been a lot of vendor power points but that really we talked to customers now they're hedging their bets in cloud they're they're putting horses for courses in terms of workloads they're they're they're not betting their business necessarily on a single cloud and as a result they need security and governance and performance and management across clouds that's consistent so that's actually a a really reasonable and significant opportunity for a lot of the on-prem vendors and as we've said before they're probably not necessarily going to trust the cloud players the public cloud players to deliver that they're going to want somebody that's cloud agnostic okay that's it for this week remember all these episodes are available as podcasts wherever you listen so please subscribe i publish weekly on wikibon.com and siliconangle.com and don't forget to check out etr.plus for all the survey action and the analytics these guys are amazing i always appreciate the comments on my linkedin posts thank you very much you can dm me at d vallante or email me at david.volante at siliconangle.com and this is dave vellante thanks for watching this episode of cube insights powered by etr be well and we'll see you next time you

>>Hi, everyone. This is L. A from Visa Research today. I would like to tell you about my work with Salim. Earlier. Took from Boston University about how to construct group with invisible inversion from heart problems on ice Arjuna graphs over I say model E eso Let me start this talk by tell you, uh, what is a group with invisible inversion? A group was invisible Inversion is defined by Hulkenberg and Mona In 2003 It says a representation off a group should satisfy two properties. The first is literally that inversion. It's heart. Namely that giving an including off group element X computing Uh, the including off its inverse his heart. The second is that the composition is still easy, namely given the including off X and Y computing the including off X plus y is easy here we're seeing. Plus, is the group operation. So let me explain this definition by going through our favorite example where discreet log it's hard, namely in the Multiplicity group of finance field. We include a group element A as G today, namely, put it into the exponents and more, uh, cute. So given G energy today finding a it's hard. So this group representation at least satisfy one way, as you mean this great look. It's hard. So let's look at at whether this a group satisfied group was invisible inversion. So it turns out it is not because given due to the A finding G to the minus A, it's still easy. So if we say this is the representation off the universe, then computing this reputation is simple. So this is a no example. Off group was invisible invasion. So the work off Falkenburg and Mona started by looking. How can we find group was invisible inversion? And what are the applications off such a group? Representation, >>It turns out, in their sisters. They did not find any group reputation representation that satisfy this property. But instead they find out that if you can find such a group and then they they have >>a cryptographic applications, namely building direct directed transitive signatures a year later in the work off Iraq at or they also find that if you can have this kind of group with invisible inversion there, you can also construct broadcast encryption with a small overhead, and this is before we know how to construct the broadcast encryption with small overhead over Terry's elliptic curve. Paris. So let's look at another attempt off constructing group with invisible inversion. So instead off defining. Still, let's look at a group where we put >>the including in the exponents and instead of defining due to the minus A as the inversion Let's define due to the one over a as the the inverse off do today. So it turns out you can also define that. And it happens that in many groups, minimally, if you more, uh, some special value a que then given G energy to the A, then competing due to the one over A is also conjectured to be hard. But if you define the group element in the experiment in that way, then multiplication in >>the group exponents is also hard, and so we cannot compose. So this is another no example where group inversion is actually difficult to compute. But composition is difficult to compute, uh, either. So for this kind of group, they cannot use this to build directly transitive signatures or broadcast encryption. So now let's make this attempt, uh, visible by allowing thio. So so thio have ability to compute composition. Namely, we represent the including off A as the follows. So first we help you today >>and then we also give an office Kate the circuit which contains a and n such that I take a group element X, and it can output due to the to a model end. So it turns out giving this circuit you have a feasibility off doing composition and in the work off yamakawa at all to show that if and that the underlying off station is io and assuming and it's an R s a moderately then Thistle >>is actually a good construction off group with invisible university. So technically, assuming I oh, we have already know candidates for group was in physical inversion. Uh, but that work still leaves the open problem off constructing group with invisible inversion without using general purpose sophistication. And in this talk, I would like to talk to tell you about a group was inversion candidate from some new certainly problems And the brief logic off this talk is the following. So elliptical insurgencies can be represented by graph, uh, and the graphs has a ship off volcanoes. For example, this one if you look imagine you're looking for a volcano from top to down and this is the Creator, and this is like the direction off going down the volcano. And arguably this is the reason which attracts me to looking to. I certainly problems, and also I certainly graphs can be an I certainly can be used to represent a group called Idea Class Group >>and then eventually we will find some group >>problems on this graph, which we conjecture to be hard. And they use map thes harness to the harness off inverting group elements in the ideal classroom. So this will be the high level overview off this talk. >>So what are a little bit curve? Assertiveness? So to talk about elliptic curve, I certainly okay spend the whole day talking about its mathematical definition and the many backgrounds off elliptic curve. But today we only have 15 minutes. So instead, let me just to give you a highlight help have overview off what I certain this and I certainly is a mapping from when a little bit of curve to another, and I certainly is an interesting equivalence relation between elliptic curves. It's interesting in its mathematical theory, over a finite field and elliptic curve can be identified by its J environment. And later, >>when we talk about elliptic, curve will think about their represented by their environment, which is a number in the finance field >>and given to elliptic curves and namely, given their environments, we can efficiently decide whether these two groups assertiveness, namely in polynomial time. And given these backgrounds, let me now jump to the exciting volcanoes. So it turns out >>the relation among I certainly occurred. Assertiveness curbs can be represented by the I certainly graphs, which looks like volcanoes. So let's first look at the graph on the left and let's fix a degree for that. I certainly so I certainly has different degrees. So let's for simplicity. Think about their crimes. So let's fix a degree Air say equals 23 >>and we will let each of the note in the graph to represent a different elliptic curve, namely a different Jane environment, and each is represent an air degree by certainly so if you fix the degree ill and I certainly is their religions, uh, they just look like what I said, like what kind of going from top to bottom and if, let's say, fix all the >>elliptic curve on the creator or, in general, all the elliptic curves on the same layer off the volcano, Then you allowed to have different degrees. So this is degree L and this is degree M, etcetera, etcetera. And then the graph actually looks like it's almost fully connected. Eso imagine all of them are connected by different degrees. And the graph structure is actually described not too long ago in the pH. Diseases off Davico Hell in 1996 and later it gets popularized in a paper in 2002 because they say, Hey, this looks like a volcano. So now the I certainly will. Kind of is they used in many reference by according the graph. >>So let me tell you a little bit more about the relation off. I certainly and the idea class group. So the short story is, if you fix a layer on the uncertainty graph, say the creator. So actually, all the notes has a 1 to 1 mapping to the group element in an ideal >>class group. The foremost Siri is the ideal class group acts on the, uh, set off a surgeon is which have the same in the more it is a Marine. But we will not go into their, uh in the talk today. So let me give you a simple example. So this is, ah, concrete representation off an ideal class group off seven group elements. And if we fix a J zero j environment off one off the grade curve, let's say this guy represents the identity in the idea class group. And then we let J one to represent one off the class group elements. Then it's inverse is just going one step back from the origin in the opposite direction S O. This is a very important picture we will use exactly the J environments to represent and the idea class group elements eso This is exactly the reputation we're gonna take, except we're gonna work with over the icy modeling. So after giving some mathematical background off elliptical by certainly in a certain graph now, let's talk about competition of problems >>and before jumping into I say model E, let me start from the, uh, more traditionally studied. I certainly problems over the finite field. The first problem is if I fix a degree, air and I give you a J environment off elliptic curve. Ast one off the note. That's first. Take an easy question. Is it easy to find all off? >>It's certainly neighbors off degree will say there is a polynomial. >>The answer is yes. And the technically there are two different ways. Uh, I will not go to the details off what they are, but what we need to know is they require serving, uh, polynomial off degree or air squares. Let's look at another problem that so imagine I select to random >>curves from an I certainly graph. So think about this. Uncertainty graph is defined over a large field, and they are super polynomial limited graphs off them. I'm choosing to random curves. >>The question is, can you find out an explicit I Certainly between them naming and Emily passed from one to the other. It turns out this >>problem is conjecture to be hard even for quantum computers, and this is exactly what was used in the post to quantum key exchange proposals in those works. So they have different structures could aside the seaside. They're just a different types off in the book is a Marine off the question is off the same nature finding and passed from one curve to the other. So these are not relevant to our work. But I would like to introduce them for for some background, off the history off. I certainly problems, >>So you have a work we need to >>study. I certainly problems over in, I say endogenous. And so the first question is even how to define. And I certainly, uh oh, and I certainly graph over the ring like, uh, over and I say modular. Same. So >>there is a general way off defining it in the special case. So in this talk, I will just talk about the special case because this is easier to understand. So think about I have the have the ability off peaking too. I certainly volcan als over multi and multi cube. That has exactly the same structure. And then I just use a C a c r T composition to stick them together. So namely a J >>zero. The value is the CRT off the J zero over. They're over the small fields P and the Cube and the N S equals to P times Q. And by the way, thes gene variants will be exactly the way to represent an ideal class group off such a size in this example is the ideal class group off, uh, with discriminate minus 250 bucks. Okay, so now let's look at what this magical over this representation. So let's look at back to the problem we start from namely, finding all the insurgents neighbors at this time over. And I see model E eso. I give you the J environment off easier and ask you to find a one off the its neighbors finding the J environment off one off its neighbors. So it turns out, even this problem is hard. And actually, we can prove this problem is as hard as factory and naive. Way off. Explaining off What's going on is that the two methods that work over the finite field that doesn't work anymore, since they both required to solve high degree polynomial model end, and that this is hard where when end is in, I certainly I say modelers. So to be useful for constructing a group off invisible inversion, we actually need to look at this called a joint neighbors. Such problems, namely, if I give you a curve zero, which represents the identity, then another crib, which represents a the group element. Your task is to find its inverse namely one off the E two candidate beneath zero. Yeah, eso it turns out this problem. We also conjectured to it to be hard and we don't know how to base it on how this a factoring, uh, again, the not even reason is the way to solve it over the finite field doesn't work because they both required to solve polynomial off degree higher than one over in i. C model is. And this is exactly the reason that we believe the group inversion is hard over deserve visitation Now. Finally, we also would like to remind the readers that for death according to the definition off group with invisible inversion, we would also like the group elements to be easy to compose. No, that's not. Make another observation that over. If you're finding the joint neighbor off, I certainly off different degree. Say, if I give you a J invent off Iwan and Jane Barrett off you to ask you to find the J environment off the three and they happened to off co prime degree I. Certainly then there is a way to find their joint neighbor because they're cold prime. And there's only one solution to solving the modular polynomial that I haven't defined out. But this is the way we make sure that composition is easy. Normally we output, including that are a cold prime so that they can be composed to summarize that we propose a group candidate group with invisible inversion from any particular I. Certainly it requires a chapter because you need to know the prime factors off. I seem odd early to set up the whole system and generated the including in our me assumption is that certain joint neighbors such problem on the I certainly graphs defined over S a moderately it's hard again group within physical inversion has the application of constructing broadcasting, corruption directed transitive signatures, and it's a very interesting problem to explore

>> Paige: Hello everybody and thank you for joining us today for the virtual Vertica BDC 2020. Today's breakout session is entitled Vertica in Eon Mode past, present and future. I'm Paige Roberts, open source relations manager at Vertica and I'll be your host for this session. Joining me is Vertica engineer, Yuanzhe Bei and Vertica Product Manager, David Sprogis. Before we begin, I encourage you to submit questions or comments during the virtual session. You don't have to wait till the end. Just type your question or comment as you think of it in the question box, below the slides and click Submit. Q&A session at the end of the presentation. We'll answer as many of your questions as we're able to during that time, and any questions that we don't address, we'll do our best to answer offline. If you wish after the presentation, you can visit the Vertica forums to post your questions there and our engineering team is planning to join the forums to keep the conversation going, just like a Dev Lounge at a normal in person, BDC. So, as a reminder, you can maximize your screen by clicking the double arrow button in the lower right corner of the slides, if you want to see them bigger. And yes, before you ask, this virtual session is being recorded and will be available to view on demand this week. We are supposed to send you a notification as soon as it's ready. All right, let's get started. Over to you, Dave. >> David: Thanks, Paige. Hey, everybody. Let's start with a timeline of the life of Eon Mode. About two years ago, a little bit less than two years ago, we introduced Eon Mode on AWS. Pretty specifically for the purpose of rapid scaling to meet the cloud economics promise. It wasn't long after that we realized that workload isolation, a byproduct of the architecture was very important to our users and going to the third tick, you can see that the importance of that workload isolation was manifest in Eon Mode being made available on-premise using Pure Storage FlashBlade. Moving to the fourth tick mark, we took steps to improve workload isolation, with a new type of subcluster which Yuanzhe will go through and to the fifth tick mark, the introduction of secondary subclusters for faster scaling and other improvements which we will cover in the slides to come. Getting started with, why we created Eon Mode in the first place. Let's imagine that your database is this pie, the pecan pie and we're loading pecan data in through the ETL cutting board in the upper left hand corner. We have a couple of free floating pecans, which we might imagine to be data supporting external tables. As you know, the Vertica has a query engine capability as well which we call external tables. And so if we imagine this pie, we want to serve it with a number of servers. Well, let's say we wanted to serve it with three servers, three nodes, we would need to slice that pie into three segments and we would serve each one of those segments from one of our nodes. Now because the data is important to us and we don't want to lose it, we're going to be saving that data on some kind of raid storage or redundant storage. In case one of the drives goes bad, the data remains available because of the durability of raid. Imagine also, that we care about the availability of the overall database. Imagine that a node goes down, perhaps the second node goes down, we still want to be able to query our data and through nodes one and three, we still have all three shards covered and we can do this because of buddy projections. Each neighbor, each nodes neighbor contains a copy of the data from the node next to it. And so in this case, node one is sharing its segment with node two. So node two can cover node one, node three can cover node two and node one back to node three. Adding a little bit more complexity, we might store the data in different copies, each copy sorted for a different kind of query. We call this projections in Vertica and for each projection, we have another copy of the data sorted differently. Now it gets complex. What happens when we want to add a node? Well, if we wanted to add a fourth node here, what we would have to do, is figure out how to re-slice all of the data in all of the copies that we have. In effect, what we want to do is take our three slices and slice it into four, which means taking a portion of each of our existing thirds and re-segmenting into quarters. Now that looks simple in the graphic here, but when it comes to moving data around, it becomes quite complex because for each copy of each segment we need to replace it and move that data on to the new node. What's more, the fourth node can't have a copy of itself that would be problematic in case it went down. Instead, what we need is we need that buddy to be sitting on another node, a neighboring node. So we need to re-orient the buddies as well. All of this takes a lot of time, it can take 12, 24 or even 36 hours in a period when you do not want your database under high demand. In fact, you may want to stop loading data altogether in order to speed it up. This is a planned event and your applications should probably be down during this period, which makes it difficult. With the advent of cloud computing, we saw that services were coming up and down faster and we determined to re-architect Vertica in a way to accommodate that rapid scaling. Let's see how we did it. So let's start with four nodes now and we've got our four nodes database. Let's add communal storage and move each of the segments of data into communal storage. Now that's the separation that we're talking about. What happens if we run queries against it? Well, it turns out that the communal storage is not necessarily performing and so the IO would be slow, which would make the overall queries slow. In order to compensate for the low performance of communal storage, we need to add back local storage, now it doesn't have to be raid because this is just an ephemeral copy but with the data files, local to the node, the queries will run much faster. In AWS, communal storage really does mean an S3 bucket and here's a simplified version of the diagram. Now, do we need to store all of the data from the segment in the depot? The answer is no and the graphics inside the bucket has changed to reflect that. It looks more like a bullseye, showing just a segment of the data being copied to the cache or to the depot, as we call it on each one of the nodes. How much data do you store on the node? Well, it would be the active data set, the last 30 days, the last 30 minutes or the last. Whatever period of time you're working with. The active working set is the hot data and that's how large you want to size your depot. By architecting this way, when you scale up, you're not re-segmenting the database. What you're doing, is you're adding more compute and more subscriptions to the existing shards of the existing database. So in this case, we've added a complete set of four nodes. So we've doubled our capacity and we've doubled our subscriptions, which means that now, the two nodes can serve the yellow shard, two nodes can serve the red shard and so on. In this way, we're able to run twice as many queries in the same amount of time. So you're doubling the concurrency. How high can you scale? Well, can you scale to 3X, 5X? We tested this in the graphics on the right, which shows concurrent users in the X axis by the number of queries executed in a minute along the Y axis. We've grouped execution in runs of 10 users, 30 users, 50, 70 up to 150 users. Now focusing on any one of these groups, particularly up around 150. You can see through the three bars, starting with the bright purple bar, three nodes and three segments. That as you add nodes to the middle purple bar, six nodes and three segments, you've almost doubled your throughput up to the dark purple bar which is nine nodes and three segments and our tests show that you can go to 5X with pretty linear performance increase. Beyond that, you do continue to get an increase in performance but your incremental performance begins to fall off. Eon architecture does something else for us and that is it provides high availability because each of the nodes can be thought of as ephemeral and in fact, each node has a buddy subscription in a way similar to the prior architecture. So if we lose node four, we're losing the node responsible for the red shard and now node one has to pick up responsibility for the red shard while that node is down. When a query comes in, and let's say it comes into one and one is the initiator then one will look for participants, it'll find a blue shard and a green shard but when it's looking for the red, it finds itself and so the node number one will be doing double duty. This means that your performance will be cut in half approximately, for the query. This is acceptable until you are able to restore the node. Once you restore it and once the depot becomes rehydrated, then your performance goes back to normal. So this is a much simpler way to recover nodes in the event of node failure. By comparison, Enterprise Mode the older architecture. When we lose the fourth node, node one takes over responsibility for the first shard and the yellow shard and the red shard. But it also is responsible for rehydrating the entire data segment of the red shard to node four, this can be very time consuming and imposes even more stress on the first node. So performance will go down even further. Eon Mode has another feature and that is you can scale down completely to zero. We call this hibernation, you shut down your database and your database will maintain full consistency in a rest state in your S3 bucket and then when you need access to your database again, you simply recreate your cluster and revive your database and you can access your database once again. That concludes the rapid scaling portion of, why we created Eon Mode. To take us through workload isolation is Yuanzhe Bei, Yuanzhe. >> Yuanzhe: Thanks Dave, for presenting how Eon works in general. In the next section, I will show you another important capability of Vertica Eon Mode, the workload isolation. Dave used a pecan pie as an example of database. Now let's say it's time for the main course. Does anyone still have a problem with food touching on their plates. Parents know that it's a common problem for kids. Well, we have a similar problem in database as well. So there could be multiple different workloads accessing your database at the same time. Say you have ETL jobs running regularly. While at the same time, there are dashboards running short queries against your data. You may also have the end of month report running and their can be ad hoc data scientists, connect to the database and do whatever the data analysis they want to do and so on. How to make these mixed workload requests not interfere with each other is a real challenge for many DBAs. Vertica Eon Mode provides you the solution. I'm very excited here to introduce to you to the important concept in Eon Mode called subclusters. In Eon Mode, nodes they belong to the predefined subclusters rather than the whole cluster. DBAs can define different subcluster for different kinds of workloads and it redirects those workloads to the specific subclusters. For example, you can have an ETL subcluster, dashboard subcluster, report subcluster and the analytic machine learning subcluster. Vertica Eon subcluster is designed to achieve the three main goals. First of all, strong workload isolation. That means any operation in one subcluster should not affect or be affected by other subclusters. For example, say the subcluster running the report is quite overloaded and already there can be, the data scienctists running crazy analytic jobs, machine learning jobs on the analytics subcluster and making it very slow, even stuck or crash or whatever. In such scenario, your ETL and dashboards subcluster should not be or at least very minimum be impacted by this crisis and which means your ETL job which should not lag behind and dashboard should respond timely. We have done a lot of improvements as of 10.0 release and will continue to deliver improvements in this category. Secondly, fully customized subcluster settings. That means any subcluster can be set up and tuned for very different workloads without affecting other subclusters. Users should be able to tune up, tune down, certain parameters based on the actual needs of the individual subcluster workload requirements. As of today, Vertica already supports few settings that can be done at the subcluster level for example, the depot pinning policy and then we will continue extending more that is like resource pools (mumbles) in the near future. Lastly, Vertica subclusters should be easy to operate and cost efficient. What it means is that the subcluster should be able to turn on, turn off, add or remove or should be available for use according to rapid changing workloads. Let's say in this case, you want to spin up more dashboard subclusters because we need higher scores report, we can do that. You might need to run several report subclusters because you might want to run multiple reports at the same time. While on the other hand, you can shut down your analytic machine learning subcluster because no data scientists need to use it at this moment. So we made automate a lot of change, the improvements in this category, which I'll explain in detail later and one of the ultimate goal is to support auto scaling To sum up, what we really want to deliver for subcluster is very simple. You just need to remember that accessing subclusters should be just like accessing individual clusters. Well, these subclusters do share the same catalog. So you don't have to work out the stale data and don't need to worry about data synchronization. That'd be a nice goal, Vertica upcoming 10.0 release is certainly a milestone towards that goal, which will deliver a large part of the capability in this direction and then we will continue to improve it after 10.0 release. In the next couple of slides, I will highlight some issues about workload isolation in the initial Eon release and show you how we resolve these issues. First issue when we initially released our first or so called subcluster mode, it was implemented using fault groups. Well, fault groups and the subcluster have something in common. Yes, they are both defined as a set of nodes. However, they are very different in all the other ways. So, that was very confusing in the first place, when we implement this. As of 9.3.0 version, we decided to detach subcluster definition from the fault groups, which enabled us to further extend the capability of subclusters. Fault groups in the pre 9.3.0 versions will be converted into subclusters during the upgrade and this was a very important step that enabled us to provide all the amazing, following improvements on subclusters. The second issue in the past was that it's hard to control the execution groups for different types of workloads. There are two types of problems here and I will use some example to explain. The first issue is about control group size. There you allocate six nodes for your dashboard subcluster and what you really want is on the left, the three pairs of nodes as three execution groups, and each pair of nodes will need to subscribe to all the four shards. However, that's not really what you get. What you really get is there on the right side that the first four nodes subscribed to one shard each and the rest two nodes subscribed to two dangling shards. So you won't really get three execusion groups but instead only get one and two extra nodes have no value at all. The solution is to use subclusters. So instead of having a subcluster with six nodes, you can split it up into three smaller ones. Each subcluster will guarantee to subscribe to all the shards and you can further handle this three subcluster using load balancer across them. In this way you achieve the three real exclusion groups. The second issue is that the session participation is non-deterministic. Any session will just pick four random nodes from the subcluster as long as this covers one shard each. In other words, you don't really know which set of nodes will make up your execution group. What's the problem? So in this case, the fourth node will be doubled booked by two concurrent sessions. And you can imagine that the resource usage will be imbalanced and both queries performance will suffer. What is even worse is that these queries of the two concurrent sessions target different table They will cause the issue, that depot efficiency will be reduced, because both session will try to fetch the files on to two tables into the same depot and if your depot is not large enough, they will evict each other, which will be very bad. To solve this the same way, you can solve this by declaring subclusters, in this case, two subclusters and a load balancer group across them. The reason it solved the problem is because the session participation would not go across the boundary. So there won't be a case that any node is double booked and in terms of the depot and if you use the subcluster and avoid using a load balancer group, and carefully send the first workload to the first subcluster and the second to the second subcluster and then the result is that depot isolation is achieved. The first subcluster will maintain the data files for the first query and you don't need to worry about the file being evicted by the second kind of session. Here comes the next issue, it's the scaling down. In the old way of defining subclusters, you may have several execution groups in the subcluster. You want to shut it down, one or two execution groups to save cost. Well, here comes the pain, because you don't know which nodes may be used by which session at any point, it is hard to find the right timing to hit the shutdown button of any of the instances. And if you do and get unlucky, say in this case, you pull the first four nodes, one of the session will fail because it's participating in the node two and node four at that point. User of that session will notice because their query fails and we know that for many business this is critical problem and not acceptable. Again, with subclusters this problem is resolved. Same reason, session cannot go across the subcluster boundary. So all you need to do is just first prevent query sent to the first subcluster and then you can shut down the instances in that subcluster. You are guaranteed to not break any running sessions. Now, you're happy and you want to shut down more subclusters then you hit the issue four, the whole cluster will go down, why? Because the cluster loses quorum. As a distributed system, you need to have at least more than half of a node to be up in order to commit and keep the cluster up. This is to prevent the catalog diversion from happening, which is important. But do you still want to shut down those nodes? Because what's the point of keeping those nodes up and if you are not using them and let them cost you money right. So Vertica has a solution, you can define a subcluster as secondary to allow them to shut down without worrying about quorum. In this case, you can define the first three subclusters as secondary and the fourth one as primary. By doing so, this secondary subclusters will not be counted towards the quorum because we changed the rule. Now instead of requiring more than half of node to be up, it only require more than half of the primary node to be up. Now you can shut down your second subcluster and even shut down your third subcluster as well and keep the remaining primary subcluster to be still running healthily. There are actually more benefits by defining secondary subcluster in addition to the quorum concern, because the secondary subclusters no longer have the voting power, they don't need to persist catalog anymore. This means those nodes are faster to deploy, and can be dropped and re-added. Without the worry about the catalog persistency. For the most the subcluster that only need to read only query, it's the best practice to define them as secondary. The commit will be faster on this secondary subcluster as well, so running this query on the secondary subcluster will have less spikes. Primary subcluster as usual handle everything is responsible for consistency, the background tasks will be running. So DBAs should make sure that the primary subcluster is stable and assume is running all the time. Of course, you need to at least one primary subcluster in your database. Now with the secondary subcluster, user can start and stop as they need, which is very convenient and this further brings up another issue is that if there's an ETL transaction running and in the middle, a subcluster starting and it become up. In older versions, there is no catalog resync mechanism to keep the new subcluster up to date. So Vertica rolls back to ETL session to keep the data consistency. This is actually quite disruptive because real world ETL workloads can sometimes take hours and rolling back at the end means, a large waste of resources. We resolved this issue in 9.3.1 version by introducing a catalog resync mechanism when such situation happens. ETL transactions will not roll back anymore, but instead will take some time to resync the catalog and commit and the problem is resolved. And last issue I would like to talk about is the subscription. Especially for large subcluster when you start it, the startup time is quite long, because the subscription commit used to be serialized. In one of the in our internal testing with large catalogs committing a subscription, you can imagine it takes five minutes. Secondary subcluster is better, because it doesn't need to persist the catalog during the commit but still take about two seconds to commit. So what's the problem here? Let's do the math and look at this chart. The X axis is the time in the minutes and the Y axis is the number of nodes to be subscribed. The dark blues represents your primary subcluster and light blue represents the secondary subcluster. Let's say the subcluster have 16 nodes in total and if you start a secondary subcluster, it will spend about 30 seconds in total, because the 2 seconds times 16 is 32. It's not actually that long time. but if you imagine that starting secondary subcluster, you expect it to be super fast to react to the fast changing workload and 30 seconds is no longer trivial anymore and what is even worse is on the primary subcluster side. Because the commit is much longer than five minutes let's assume, then at the point, you are committing to six nodes subscription all other nodes already waited for 30 minutes for GCLX or we know the global catalog lock, and the Vertica will crash the nodes, if any node cannot get the GCLX for 30 minutes. So the end result is that your whole database crashed. That's a serious problem and we know that and that's why we are already planning for the fix, for the 10.0, so that all the subscription will be batched up and all the nodes will commit at the same time concurrently. And by doing that, you can imagine the primary subcluster can finish commiting in five minutes instead of crashing and the secondary subcluster can be finished even in seconds. That summarizes the highlights for the improvements we have done as of 10.0, and I hope you already get excited about Emerging Eon Deployment Pattern that's shown here. A primary subcluster that handles data loading, ETL jobs and tuple mover jobs is the backbone of the database and you keep it running all the time. At the same time defining different secondary subcluster for different workloads and provision them when the workload requirement arrives and then de-provision them when the workload is done to save the operational cost. So can't wait to play with the subcluster. Here as are some Admin Tools command you can start using. And for more details, check out our Eon subcluster documentation for more details. And thanks everyone for listening and I'll head back to Dave to talk about the Eon on-prem. >> David: Thanks Yuanzhe. At the same time that Yuanzhe and the rest of the dev team were working on the improvements that Yuanzhe described in and other improvements. This guy, John Yovanovich, stood on stage and told us about his deployment at at&t where he was running Eon Mode on-prem. Now this was only six months after we had launched Eon Mode on AWS. So when he told us that he was putting it into production on-prem, we nearly fell out of our chairs. How is this possible? We took a look back at Eon and determined that the workload isolation and the improvement to the operations for restoring nodes and other things had sufficient value that John wanted to run it on-prem. And he was running it on the Pure Storage FlashBlade. Taking a second look at the FlashBlade we thought alright well, does it have the performance? Yes, it does. The FlashBlade is a collection of individual blades, each one of them with NVMe storage on it, which is not only performance but it's scalable and so, we then asked is it durable? The answer is yes. The data safety is implemented with the N+2 redundancy which means that up to two blades can fail and the data remains available. And so with this we realized DBAs can sleep well at night, knowing that their data is safe, after all Eon Mode outsources the durability to the communal storage data store. Does FlashBlade have the capacity for growth? Well, yes it does. You can start as low as 120 terabytes and grow as high as about eight petabytes. So it certainly covers the range for most enterprise usages. And operationally, it couldn't be easier to use. When you want to grow your database. You can simply pop new blades into the FlashBlade unit, and you can do that hot. If one goes bad, you can pull it out and replace it hot. So you don't have to take your data store down and therefore you don't have to take Vertica down. Knowing all of these things we got behind Pure Storage and partnered with them to implement the first version of Eon on-premise. That changed our roadmap a little bit. We were imagining it would start with Amazon and then go to Google and then to Azure and at some point to Alibaba cloud, but as you can see from the left column, we started with Amazon and went to Pure Storage. And then from Pure Storage, we went to Minio and we launched Eon Mode on Minio at the end of last year. Minio is a little bit different than Pure Storage. It's software only, so you can run it on pretty much any x86 servers and you can cluster them with storage to serve up an S3 bucket. It's a great solution for up to about 120 terabytes Beyond that, we're not sure about performance implications cause we haven't tested it but for your dev environments or small production environments, we think it's great. With Vertica 10, we're introducing Eon Mode on Google Cloud. This means not only running Eon Mode in the cloud, but also being able to launch it from the marketplace. We're also offering Eon Mode on HDFS with version 10. If you have a Hadoop environment, and you want to breathe new fresh life into it with the high performance of Vertica, you can do that starting with version 10. Looking forward we'll be moving Eon mode to Microsoft Azure. We expect to have something breathing in the fall and offering it to select customers for beta testing and then we expect to release it sometime in 2021 Following that, further on horizon is Alibaba cloud. Now, to be clear we will be putting, Vertica in Enterprise Mode on Alibaba cloud in 2020 but Eon Mode is going to trail behind whether it lands in 2021 or not, we're not quite sure at this point. Our goal is to deliver Eon Mode anywhere you want to run it, on-prem or in the cloud, or both because that is one of the great value propositions of Vertica is the hybrid capability, the ability to run in both your on prem environment and in the cloud. What's next, I've got three priority and roadmap slides. This is the first of the three. We're going to start with improvements to the core of Vertica. Starting with query crunching, which allows you to run long running queries faster by getting nodes to collaborate, you'll see that coming very soon. We'll be making improvements to large clusters and specifically large cluster mode. The management of large clusters over 60 nodes can be tedious. We intend to improve that. In part, by creating a third network channel to offload some of the communication that we're now loading onto our spread or agreement protocol. We'll be improving depot efficiency. We'll be pushing down more controls to the subcluster level, allowing you to control your resource pools at the subcluster level and we'll be pairing tuple moving with data loading. From an operational flexibility perspective, we want to make it very easy to shut down and revive primaries and secondaries on-prem and in the cloud. Right now, it's a little bit tedious, very doable. We want to make it as easy as a walk in the park. We also want to allow you to be able to revive into a different size subcluster and last but not least, in fact, probably the most important, the ability to change shard count. This has been a sticking point for a lot of people and it puts a lot of pressure on the early decision of how many shards should my database be? Whether it's in 2020 or 2021. We know it's important to you so it's important to us. Ease of use is also important to us and we're making big investments in the management console, to improve managing subclusters, as well as to help you manage your load balancer groups. We also intend to grow and extend Eon Mode to new environments. Now we'll take questions and answers

>> Announcer: From theCUBE studios in Palo Alto in Boston, connecting with thought leaders all around the world, this is a CUBE Conversation. >> Hello everybody, welcome to this special CUBE Conversation. You know, as the COVID-19 pandemic grips the world, our friends at Enterprise Technology Research have been hard at work to really try to understand and quantify the impact on IT spending, and with me is Sagar Kadakia, who is the director of research at ETR. Sagar, great to see you again, thanks for coming on. >> Great to see you too, Dave, yeah, great to see you, Dave, thank you so much for having me on. >> So you guys just dropped your first look at the latest survey, and you specifically went out and asked about the impact of coronavirus on spending. Can you share with our audience your working thesis? >> Yeah, no problem. And just to give some context, there was so much internal interest, so much interest from clients, not to just understand how many organizations were being impacted, but what are going to be the budget impacts on 2020, when you think about IT, and so that's really how we structured the drill down, that, and really getting to the bottom of why are these budgets changing. And so our thesis right now and what we're seeing based on the data is that budgets have come down to about 0% or flat, for 2020. I think coming into the year, Incentis was right around 4%, so you've seen a retraction from that, and if the environment continues to go south, if we continue to see actions taken at the federal and state level, where more people are going to be quarantined, working from home, I think technology spend will inevitably continue to come down. But there is some positives that we are seeing, but right now we're right around 0%. >> And we should explain, so this is, currently a little over 1000 respondents, and you'll continue to collect data for the next several days, or even weeks, correct? >> That's right, exactly, so we launched a survey on Wednesday, and right now we've got about 1100 CIOs, IT executives, it's a really global sample, the goal was, across different job titles, across different regions, across different verticals, ones that are being impacted significantly, ones that are being impacted less. Let's try to gauge overall what's going on, with IT budgets, and why people are making the decisions they are making right now. And so that was really the focus of this study. >> Okay, so there's obviously some negatives in the data, and there's a high degree of uncertainty, but there are some bright spots that we see, particularly the shift to work from home, and I want to ask you about a chart that you guys put out. It showed a large portion of the survey, about 40% of the respondents, indicated really no impact to spending, and another, 20% are actually accelerating their spend, as a result of COVID-19, can you add some color to that? >> Yeah, I think the positive spend, or the no change in spend, I think that is what a lot of the market right now is missing, and I haven't seen a lot of research on that, 'cause no one else has really been able to quantify how budgets are changing, and so, as you noted, we're actually seeing people accelerate spend because of COVID-19, and the reason is, they're trying to avoid a catastrophe in productivity. They are ramping up all this work from home infrastructure, not just collaboration tools, virtualization infrastructure, increasing VPN networking bandwidth, mobile devices, laptops, security, desktop support, right? You're a Fortune 500 organization, and you have 40, 50, 60,000 employees working from home all of a sudden, you have to be able to support those employees, and as a result, you're actually seeing a large number of organizations accelerating spend, and even the ones that are being hurt by the broken supply chains, the demand coming down, they're seeing some of their spend acceleration being offset by spending a little bit more on what we're calling this work from home infrastructure. >> Yeah, so in the chart you put out, there's a lot of red, but there's also quite a bit of green, and then a big midpoint of no change. The midpoint average is a negative 3.8%, can you explain what that means, how we should interpret that? >> Yeah, I think the easiest way I think about it is, consensus expectations coming into the year were that there was going to be a growth of roughly 4% in global IT spend. What we're seeing at the midpoint average right now is roughly a 4% pullback, and so that's how we're getting back to effectively flat, or 0% growth, and I think a lot of organizations, a lot of clients that we've been talking to, their expectations were, it was going to be a lot worse, just if you're following what's going on in the news, the markets and stuff like that, and rightfully so. But I think a lot of people are missing the fact that there is some of this offset that is occurring from people who are not changing their spend, because even though on one side they are reducing IT budgets, and they're having to accelerate their work from home infrastructure, and of course, the bucket of organizations where, "Look, I'm not being as impacted "by the broken supply chains or the demand, "but because I have so many employees working from home, "I need to be able to allow them to be productive." >> Sagar, you know, we've been working with ETR now for the better part of six or seven months, and what I look for in the data is I try to identify some of the macro trends that I see when we talk to theCUBE guests, and try to see if your data confirms that, and the other data point you put out was anticipated IT budget growth rate, and this chart to me was amazing, because it started in early to mid March, early March 12th, sort of the starting point, and then you can see the sentiment that just declines, to almost exactly the way in which, just daily, you saw coronavirus news just really impact the markets, and so, can you just explain what you're seeing here in terms of the growth rate of that IT spend, in terms of how people were responding, over the course of March? >> Yeah, one of the things we knew going into, before we launched this drill down was, this is going to be a very dynamic environment. Even before we launched the study last Wednesday, every single day another shoe is dropping in terms of government actions being taken, what people were doing, and so we made the decision up front that when we launch this drill down, we need to be able to track the daily impact over the next three to four weeks, because we don't frankly know how it's going to change, and so in that chart, what you're seeing is, when we launched the survey just last Wednesday, you did see a little bit of a retraction, I think maybe five or 600 CIOs had taken just in the first day or so, you saw about a 2% retraction in annual budget growth, and just over a few days, by last Thursday, Friday, where they really, everyone was working from home, they put a lot of different mandates in place, again, at the state and federal level. You can see that was dropping almost daily, and so I think our thesis again is, right now we're at 0%, and again, some of that, the reason we're not more negative is because there is some offset occurring from the rampant work from home infrastructure, but ultimately if the environment continues to sour, we expect growth rates to continue coming down, and ultimately to be a decline in spend versus last year. >> And you made the point that is somewhat counterintuitive, but like you said before, I've not seen any other research on this, certainly not as fresh as the ETR data, the other thing that I really like about your data set is that you can drill into the industries and try to identify what's going on within sectors, within industries, certainly you can drill down with the specific vendors within those industries, but what are you seeing in terms of industries that are being affected, obviously those that are exposed to the supply chain are susceptible, but can you share with our audience what your findings are there? >> Yeah, industrials, materials, manufacturing, retail, consumer, healthcare, pharma, those are the verticals from a supply chain perspective that are indicating elevated levels of broken supply chains, and what's actually interesting is we, in this survey we actually asked, not only whether your supply chains were broken today, but do you anticipate continuing experiencing broken supply chains in three months from now, and those percentages were up, and I think that really tells us that this is not a one or two month type of recovery, we're going to see supply chains and demand continuing to be broken, continuing to come down over the next three, four months, that, I think, is probably one of the biggest takeaways from the drill down study. >> Now, one of the things that struck me, and if you think about the post-9/11 world, we've seen permanent changes as a result of 9/11, and many people are thinking that COVID-19 will also cause some permanent changes. Perhaps people find that work from home actually drives some additional benefits, and it really reframes their thinking. Do you have any thoughts on that? >> I think based on the data that we're seeing so far, a lot of CIOs did indicate, I think it was right around 70% of the 1000 CIOs that took the survey, did indicate that the budget changes that they indicated were going to be temporary, and I think that's actually a pretty positive takeaway. Again, I think everything is very dynamic right now. Organizations are scaling their work from home infrastructure, that is priority number one, that's taking away from other IT projects, so we do expect emerging and next-generation vendors to get impacted, we're moving towards a keep the lights on strategy right now. And so when we look at it, I think, the changes that are being made are temporary, but if things continue to worsen, I think you may see organizations start going into those contingency plans and making some of these budget reductions permanent, so yes, there are some parallels to 9/11, but this one, we don't quite know how things are going to end up, because every week, we find something different out in the news, we don't really know how this virus is going to impact us moving forward, and there's a lot of lack of testing and things of that nature, so I think in the next few weeks, we should get a better idea of whether or not these budget reductions are going to become permanent, more so than we're seeing right now. >> Yeah, I think you're right, I mean there is, the watch word is uncertainty, which makes it all that much more important that you keep a pulse on the market, and thank goodness you guys are doing that. I'm interested in, if you have any data on the focus on productivity, how organizations are finding their ability to adapt, and really of course they want to drive that productivity, but are they able to scale it? >> I think that's one of the other big issues that the media hasn't addressed yet. Imagine again, you're a Fortune 100, Fortune 500 organization, you're not used to having 50, 60, 100,000 employees working from home. Forget the infrastructure component, just the productivity, the collaboration, a lot of the commentary that we got from CIOs was, "We're not ready to scale an entire workforce from home." You're seeing a lot of IT companies that rely on very large conferences to generate revenue, that rely on client meetings to generate revenue. You're seeing a lot of business trips getting canceled, I think something around 70 or 80% of organizations, out of 1000 indicated that they are canceling business trips, so the productivity is coming down, because organizations are just not capable, many of them, of scaling a work from home type of infrastructure. And so, you are going to see productivity come down, and I think that probably has the most relevant impact when you think about GDP growth, right? Organizations are coming forward and saying "We're not going to be able to produce or service as much, "and we're not going to be able to prospect, "or maintain client relationships as much, "because of travel." And so I think those are going to be some of the bigger impacts that we end up seeing. Some business can work from home, and look, if you're in manufacturing, or you have employees that work on a rig, there's no work from home option for that, and so, I think in the next few months we are going to start seeing some of the declines on those ends. >> You noted in your analysis that things would likely worsen over the next three months, that's not surprising. Financial experts, we're seeing a variety of scenarios, some are saying it's a self-fulfilling recession, and others are actually calling for V-shaped recovery, but nobody really knows, and so just to make sure we understand ETR's thinking, you're calling right now for 0% IT budget growth this year, declines offset by some of the investment in work from home, that's kind of the summary on the outlook today, and we know that can change. >> That's right, and I think it's important to state the work from home infrastructure, it is not a one for one offset on IT budget declines. That rate is definitely going down faster, which is why we went from 4% to what we're forecasting now at 0%. If things continue to worsen, which based on the data that we collected, the next three months, we don't see a recovery in the next three months, because more organizations indicated, more broken supply chains, less demand on the consumer or the business side, and so it's tough to say what's going to happen six to 12 months from now, but at the very least, we do know for the next three months, things are going to continue worsening, and if we continue taking very strict actions just across the board, we would expect that 0% number to go into a decline, and so that's really what we're looking for now, is because this model is dynamic, because we do continue, we do want to continue polling individuals for the next four to six to eight weeks, as to how their budgets are changing, we should have a better idea, 'cause I think right now, everyone's watching, are we going back to work in the next week or two, or are we working from home, and the longer we are quarantined, the less meetings, the less that we're getting on flights, the more that's going to add to technology spend coming down, and eventually, as I mentioned earlier, organizations, they're going to go into contingency plans, those temporary changes that they're making right now, those are going to become permanent changes, because now they're going to have issues where they're just not generating enough revenue because of productivity, there's a downturn, layoffs, and then you kind of see everything spiral out of control. >> I meant to ask you, when you talked about infrastructure, and we were talking about work from home, cybersecurity was another area that is showing some momentum, is that because people are trying to adjust their work from home infrastructure and secure that? >> That's exactly it. You're an organization, let's say again, same example, Fortune 100, Fortune 500 organization. The number of endpoints you now have, all these employees are accessing data, emails, applications from home, mobile devices, laptops, right? iPads, things that they may have not used historically, and so yes, organizations are more exposed, and I think a lot of organizations are worried about employees working from home, just from a security perspective, so you are going to see, and we're already seeing this in the data as we're looking at some individual companies and things of that nature, endpoints, access points, those areas are critical, and you are going to see more spend in those areas, no question. >> So let's share with our audience what they can expect in the coming weeks and months, so folks, just so you understand, so ETR has a dataset based on a panel of about 4500 CIOs and IT buyers, about 1000, more than 1000 every quarter answer, ETR, very consistent survey, so you can do time series analysis, and what happens is, ETR clients get access to the data, early access, and then ETR drops a webcast, each quarter, where it updates its clients on the results. So where are we at in that process, you guys go into a self-imposed quiet period, and then you release to the markets, can you explain that a little bit, and what we can expect over the next couple of weeks. >> Yeah, sure, so we launched a survey last Wednesday, we're already at about 1100 CIOs and IT executives. Now it's interesting, we're actually doing this COVID drill down, as well as our technology spending intention survey. That survey captures spending intent on about 350 vendors across about 28 or 29 different technology sectors, so security, networking, storage. So, all that data is coming through, in the next few days we're actually going to release what we call thoughts in the field. It's kind of short narratives, think like a sentence or two, on each vendor, how they're trending, and what we're doing uniquely this time is stating which vendors are being impacted the most positively and negatively, by COVID-19, and so expect that in the next few days, and then around, probably around April first or so, we will close the survey, again, we're expecting like you said 13, 14, 1500 CIOs, IT executives globally, to take the survey. We'll really go into the trenches at that point, the entire team, we'll spend a solid week going through all the data, and then mid-April, before companies, or a large number of companies start reporting on the IT side, we will release a large amount of research, we'll have some final COVID takeaways, though that will continue being dynamic for the next three to six months, but at least we'll try to take a balance sheet type of look at it and say "Look, here's where we are, "here's where the impact is, whether we're at a decline "or growth or whatever it is," so we'll have a better picture in a few weeks on that as well, and then we'll really be able to dive into the sectors and vendors that we think are best positioned for the rest of 2020. >> Yeah, we're barely scratching the surface here, as I said, this is a first look. So check out, it's ETR.plus is where you can get updates on what's going on here, and we'll obviously keep you updated as well, Sagar, thanks so much for coming on theCUBE and sharing this very important information. >> Yeah, thanks Dave, I really appreciate having me on. >> All right, stay safe my friend, we'll talk to you, and thank you for watching everybody. This is Dave Vellante for theCUBE, and we will see you next time. (calm music)

from the silicon angle media office in Boston Massachusetts it's the queue now here's your host David on tape hello everyone and welcome to this week's wiki bond cube insights powered by ETR in this breaking analysis we want to dig into the so called multi-cloud arena some of the questions we're getting from our community are what is a multi cloud did we really need it what problems does multi-cloud solve and importantly what problems does it create how is this thing called multi cloud likely to evolve and who are some of the key players to watch how do they stack up relative to each other you know recently I got a couple of interesting questions from a customer that says I have all this AI action going on and doing sophisticated modeling and this data lives and oh clouds all over the place how do I cross connect to the data and the workloads that are running on these clouds with the consistence this consistent experience of what our other customers doing another question came up in the community today is there a financial advantage to multi cloud or is it just about avoiding lock-in so I'm gonna take a stab at addressing these questions so first of all let's look at some of the noise that's going on in the marketplace and try to extract a little signal every vendor especially the ones who don't own a cloud are touting this thing called multi cloud and they tell us that customers want to avoid lock-in and organizations want seamless integration across clouds and they say we the vendor are uniquely qualified to deliver that capability although as you can see here in for a not everybody agrees because some feel that multi cloud is less secure more complicated in higher cost now the reality is that one two and three are true as is for a to a certain degree but generally I would say that multi cloud to date is more of a symptom of multi vendor then a clear strategy but that's beginning to change and there's a substantial opportunity out there for anyone to win so let's explore this a little bit and an exclusive sit-down with aunty Jessie prior to reinvent 2019 John Fourier got Jessie to talk about this trend here's what he said we have a large number of companies who have gone all-in on AWS and that's growing but there's gonna be other companies who decide that they're going to use multiple clouds for different reasons you wouldn't have to say that the vast majority of organizations pursuing cloud tend to pick a predominant provider that it's not a 50/50 scenario it's rather it's more like a 70/30 or 8020 or even a 90/10 faria went on to write somewhat paraphrasing I think Jesse in my view it's not hard to find the reasons for using multiple clouds right is M&A there's shadow IT there's developer preference but it's really not multi cloud by design it's just more of the same Enterprise IT mishmash that we've seen for decades so I generally have to say I agree with that but it is changing and I want to dig into that a bit so first let me recap the basic premise that we work off of first cloud is winning in the marketplace we know this building data centers is not the best use of capital unless you're a data center operator or a hyper scaler or you know maybe a SAS provider maybe so more and more work is going to continue to move to the cloud this was pretty much the first wave of cloud if you will a cloud of remote infrastructure services for very obvious workloads like web test dev analytics and certain SAS offerings the second wave of cloud which we've been talking about for 15 years was or should I say is a hybrid connecting remote cloud services to on-prem workloads and the third wave which is really hitting somewhat in parallel is this thing that we call multi cloud now it's not a perfect analogy but these multi generational waves remind us of the early days of networking now some of you may remember that years ago the industry was comprised of multiple dominant vendors that control their own proprietary network stacks for example IBM had SN a digital or deck had decnet all the many computer vendors had their own proprietary nets now in the early to mid-1980s the OSI model emerged with the objective of creating interoperability amongst all these different communication systems and the idea was we're going to standardize on protocols and the model had seven layers all the way from the physical layer through the application but really in reality was a pipe dream because we were way too complicated and and it sort of assumed that customers are gonna rip and replace their existing networks and then standardize on the OSI model now in reality that was never gonna happen however what it did is it open the door for new companies and you saw firms like Cisco and 3com emerged with tcp/ip and Ethernet becoming standardized and enabling connections between these systems and it totally changed the industry as we now know it so what does this have to do with multi-cloud well today you kind of have a similar situation with dominant public cloud leaders like AWS and azure and in this analogy they are the proprietary siloed networks of the past like IBM and digital they're more open obviously but still ultimately customers are going to put workloads on the right cloud for the right job and that includes putting work on Prem and connecting it to the public cloud with call it a substantially similar and ideally identical experience that's what we call hybrid now that's today's big wave and you're seeing it with Amazon's outposts and VMware and Amazon and Azure stack etc so while all this hybrid action is getting wired up customers are putting work into AWS and Azure and certainly Google and IBM cloud and the Oracle cloud and so forth now customers are wanting to connect across clouds with a substantially similar experience because that reduces cost and of course it speeds business outcomes that's what we call multi cloud now I'm not by any means suggesting that Amazon and Microsoft are gonna go the way of the mini computer vendors I don't believe that I think leaders today are much more savvy and tuned into how to surf the waves they're more paranoid and they're frankly just smarter than back in the 70s and 80s but it's not a rite of passage if they ignore the trends they will face challenges that could become driftwood so you're seeing the emergence of some of the moves from the vendor crowd the big whales connecting their infrastructure like AWS and VMware and Microsoft and Oracle quite interesting and IBM Red Hat with everybody cisco Dell HPE with everyone Google with anthos and a lot of other players all are trying to stake a claim in this hybrid and multi cloud world but you also have these emerging players that are innovators companies like CrowdStrike in security cumulant in the backup space and many dozens of well-funded players looking to grab a share of this multi cloud pie and it's worth pointing out that they're all kind of going gaga over kubernetes now of course this makes sense because kubernetes has emerged as a standard it's certainly very popular with developers why because it enables portability and allows them to package applications and of course all they're related to tendencies around those applications and then hand that app off for testing or deployment and it's gonna behave in the exact same way as when they ran it locally this we've seen and we know this but I want to share something I had a great conversation with Bernard golden yesterday and he made an excellent point about well you know kubernetes and containers he said this portability is a necessary but insufficient condition for multi cloud to succeed you still have to have an integrated management approach to security ID management monitoring performance reporting and end get into cross-training of people and skills etc ok I want to shift gears and as always I want to dig into these segments and bring in the et our perspective now pretty sure ETR is a lot of data on multi cloud from their ven meetings and other surveys but what I've done today is pulled some data that I'm using is indicators or proxies for multi cloud so I can't go out and buy me some multi cloud today it doesn't really exist in that form so what we have to do is highlight some of the trends in the data and draw some inferences from that so let's take a look at this chart what it shows is the relative position of a number of companies that my view are participating in the multi cloud arena the chart plots these companies showing net score or remember spending momentum on the y-axis and we've just opposed that to what's called market share on the x-axis market share is a measure of pervasiveness in the data set and what we've done is we've filtered on three sectors cloud container orchestration and container platforms using that as a proxy for multi cloud so these are buyers 791 of them as you can see by the end who are spenders in these three areas and we're isolating on select group of names and as a last filter we selected only companies with 50 or more results in the data set from this survey and we're using this as a multi cloud sector proxy so let me make a couple of comments here first I know kubernetes is not a company but ETR captures spending on kubernetes it's one of the hottest areas in the data set with a nearly 82% net score so we're capturing that as a reference point the next thing I want to say is you can see the big cloud players Azure and AWS and once again as in previous breaking analysis segments we see those two look they're leaders they're out the lead both companies showing very very strong momentum from a net score standpoint now AWS you might say why are you including a diversity if they don't explicitly have a multi cloud offering but in my view you cannot talk about multi cloud without including the leading cloud supplier you also see Google not so much in the market share of the big two but Google's showing strong net score we've talked about that before and they're very well positioned in multi cloud with anthos there behind their playing cloud agnostic to try to catch up again remember this is a proxy that we are running it's not necessarily a reflection of firms specific multi cloud offerings it's an indicator based on the filters that we've run now let's take a look at some of the others rubric the data protection specialists and CrowdStrike was a security darling they show some real strengths both have multi cloud offerings and they have strategies around their look at how she Corp they stand out as an important player in our view as they provide developer tooling to run secure and and deploy applications across clouds VMware cloud is I believe it's a vfc VMware cloud foundation and it's right there in the mix and you can also see fortunate in there as well executing from a security position I talked about them last week in my braking analysis they have a nice cloud portfolio and they're benefiting from execution strong execution let me call your attention to IBM in Red Hat Red Hat OpenShift look at their respective positions on this chart IBM spending velocity or net score is low but Red Hat has quite strong spending velocity and this is CEO Arvind Krishna's opportunity leverage IBM's large install based presence shown here as market share or pervasiveness and bring red hat to the right and leverage open shifts coolness to increase IBM's relevance and elevate it elevated spending velocity if arvind can make the kind of progress that i'm showing here in this picture he'll end up being CEO of the decade but that really is IBM's opportunity you can also see I put Oracle in the chart as well because of their multi cloud relationship with Microsoft which which I actually think has great potential for running mission-critical Oracle databases as I've noted many times I've you know IBM and Oracle both have clouds they're in the cloud game there are hyper scalar clouds but they have very large installed software franchises why is that important because it insulates them from the I ass ix knife fight and the pricing pressures that are putting forth by the hyper scalars the finally I have to mention Cisco I've said many times comes at multi cloud from a position of strength and networking and of course security they've got a huge market presence and not without challenges but they clearly are a player here ok now let's go on and look at some similar proxy data basically the same cut isolated on a few big players participating in multi cloud so again same cut as before but this is this shows a time series isolating on some of those Biggie's showing their net score or spending momentum in cloud and container related sectors that I talked about you got Azure leading GCP showing momentum IBM Red Hat with open shift and VMware all with solid net scores that are in the green cisco not as strong from a net score or spending velocity standpoint but it's shared in or presence in the data set is significant in this cut so two takeaways here really are one this is a wide-open race it's jump ball you really can't pick a winner yet and to each is gonna come at this from their own unique position of strength which brings me to how we see this space evolving this simple chart here really shows how we see the multi cloud infrastructure stack emerging starting at the bottom we show in the stack networking you gotta have networking to cross connect clouds and this is where cisco you has to win the day not optional for them some big players are going after the control plane including Microsoft arc Google with anthos VMware with tans ooh IBM Red Hat and we think eventually AWS is a possibility to enter that game on the data plane you got some big whales like Dell EMC you got NetApp you've got HPE at IBM the big storage players as well you have specialists like pure who's doing some interesting things in block in the cloud and cumulonimbus mention you have a bunch of companies like Veritas cohesive the rubric vMac TIFIA is gonna be in there CommVault I mentioned Klum EO before IBM is another one you got a whole bunch of folks in networking big portfolio plays from the likes of Cisco I said to network I met security from Cisco Palo Alto fortunate along with many of the security specialists we've highlighted in the past like CrowdStrike and there are many many others now on the leftmost side of this chart is really interesting we showed the full stack interconnects here we're referring to the direct cloud to cloud connections in functions up and down the entire stack examples here are AWS VMware yes that hybrid but also emerging at the edge and Microsoft and Oracle so the bottom line is we're seeing a battle brewing between the big companies with larger appetites gobbling up major portions of the market with integrated suites that are playing out within each layer of the stack competing with smaller and nimble players that are delivering best to breed function along those stack layers all right let me summarize so here are the questions that I said I would answer let's see how I did what the heck is multi cloud well let me first say it feels like everything in IT is additive what do I mean by that well we never get rid of stuff you keep things forever think about it the typical enterprise has multiple data centers they get many SAS providers more likely they have you know more than one Iast provider and they're starting to think about what should I do with the edge there is no standard for hybrid or multi cloud deployments you talk to 100 customers and you're gonna hear 120 or 150 or 300 different environments and several orders of magnitude of challenges that they face do we really need multi-cloud not an ideal world no we wouldn't need multi cloud but we talked about how we got here earlier how real is it how real is multi cloud now look companies use multiple clouds it's is it easy to do things across scope these clouds no so it's one of these problems that the industry is created that it can now make money fixing it's a vicious cycle I know but so goes the enterprise IT business what problems does it does multi-cloud solve and create look the goal of multi cloud should be that it creates more value than just the sum of the individual parts and that is clearly not happening yet in my opinion moving data around is a problem so ultimately the value comes from being able to bring cloud services to data that resides all over the place and as Bernard golden implied even with kubernetes the experience is far from seamless so we understand that technology created this problem and IT people processes and technology will be asked to clean up the crime scene as I often say it's a common story in enterprise tech we talked about how multi-cloud will evolve along a stack that it comprises specialists and big companies with very big appetites my opinion is that multi-cloud will evolve as a mishmash and vendor relationships the right tools for the right job the edge IT and OT tensions mergers and acquisitions these are gonna create even a bigger mess down the road we have well-funded companies that are exceedingly capable in this business and the leaders are gonna get their fair share cloud is a trillion-dollar market opportunity and there will not be in my opinion a winner-take-all and multi cloud so who wins like I've tried to lay out some of the leaders within different parts of the stack but there's way more to this story I do believe that the cloud players are well positioned why cuz they're they invented cloud EWS and others who followed right now Microsoft and Google are playing actively in that market but I definitely think AWS will I that space but I think VMware Red Hat IBM Cisco etc some of this from the respective positions of strength and I've sort of they have the added benefit of being cloud semi agnostic because generally they're not wed to a hyper scale cloud you know IBM as a cloud oracle as a cloud but it's on a hyper scale cloud and as always there's specialists that are gonna solve problems that are too small initially for the big whales to see so they get a leader lead bleed to market advantage but those opportunities can grow over time and allow these guys to reach escape velocity now so I'll say multi-cloud in and of itself is I believe an opportunity one that will be attacked from a position of strength within the stack and there are opportunities to be specialists up and down that stack the Akashi Corp alright this is Dave Volante for wiki bonds cube insights powered by ETR thanks for watching this breaking analysis and remember these episodes are available as podcasts you can check it out as you're driving your car wherever you listen to two podcasts you can connect with me at David Villante at Silicon angle calm or at D Volante on Twitter or please comment on my LinkedIn posts thanks for watching everyone we'll see you next time [Music]