 From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE and ETR. This is Breaking Analysis with Dave Vellante. Recent survey data from ETR shows that enterprise tech spending is tracking with projected US GDP growth at six to 7% this year. Many markers continue to point the way to a strong recovery, including hiring trends and the loosening of frozen IT project budgets. However, skills shortages are blocking progress at some companies, which bodes well for an increased reliance on external IT services. Moreover, while there's much talk about the rotation out of work from home plays and stocks, such as video conferencing, VDI, and other remote worker tech, we see organizations still trying to figure out the ideal balance between funding headquarter investments that have been neglected and getting hybrid work right. In particular, the talent gap combined with a digital mandate means companies face some tough decisions as to how to fund the future while serving existing customers and transforming culturally. Hello everyone and welcome to this week's Wikibon Cube Insights, powered by ETR. In this Breaking Analysis, we welcome back Eric Porter Bradley of ETR, who will share fresh data, perspectives and insights from the latest survey data. Eric, great to see you, welcome. Thank you very much Dave, always good to see you and happy to be on the show again. Okay, we're going to share some macro data and then we're going to dig into some highlights from ETR's most recent March COVID survey and also the latest April data. So Eric, the first chart that we want to show, it shows CIO and IT buyer responses to expected IT spend for each quarter of 2021 versus 2020. And you can see here a steady quarterly improvement. Eric, what are the key takeaways from your perspective? Sure, well, first of all, for everyone out there, this particular survey had a record setting number of participation. We had 1,500 IT decision makers participate and we had over half of the Fortune 500 and over a fifth of the global 1000. So it was a really good survey. This is the seventh iteration of the COVID impact survey specifically. And this is going to transition to an overall large macro survey going forward so we can continue it. And you're 100% right. What we've been tracking here since March of last year was how is spending being impacted because of COVID? Where is it shifting? And what we're seeing now finally is that there is a real re-acceleration in spend. I know we've been a little bit more cautious than some of the other peers out there that just early on slapped an eight or a 9% number. But what we're seeing is right now, it's at a midpoint of over six, about 6.7% and that is accelerating. So we are still hopeful that that will continue. Really that spending is going to be in the second half of the year. As you can see on the left part of this chart that we're looking at, it was about 1.7% versus 3% for Q1 spending year over year. So that is starting to accelerate through the back half. You know, I think it's prudent to be cautious because normally you'd say, okay, tech is going to grow a couple of points higher than GDP, but it's really so hard to predict this year. Okay, the next chart is here that we want to show you is we asked respondents to indicate what strategies they're employing in the short term as a result of coronavirus. And you can see a few things that I'll call out and then I'll ask Eric to chime in. First, there's been no meaningful change, of course, no surprise in tactics like remote work and halting travel. However, we're seeing very positive trends in other areas, trending downward, like hiring freezes and freezing IT deployments, downward trend in layoffs. And we also see an increase in the acceleration of new IT deployments and in hiring. Eric, what are your key takeaways? Well, first of all, I think it's important to point out here that we're also capturing that people believe remote work productivity is still increasing. Now, the trajectory might be coming down a little bit, but that is really key, I think, to the backdrop of what's happening here. So people have a perception that productivity of remote work is better than hybrid work and that's from the IT decision makers themselves. But what we're seeing here is that, most importantly, these organizations are citing plans to increase hiring and that's something that I think is really important to point out. It's showing a real thawing. And to your point and right in the beginning of the intro, we are seeing deployments stabilize versus prior survey levels, which means early on they had no plans to launch new tech deployments. Then they said, no, we're gonna start and now that's stalling. And I think it's exactly right. What you said is there's an IT skills shortage. So people want to continue to do IT deployments because they have to support work from home and a hybrid back return to the office, but they just don't have the skills to do so. And I think that's really probably the most important takeaway from this chart is that stalling and to really ask why it's stalling. Yeah, so we're gonna get into that for sure. And I think that's a really key point is that accelerating IT deployments, it looks like it's hit a wall in the survey. And so before we get deep into the skills, let's take a look at this next chart. And we're asking people here how a return to the new normal, if you will, and back to offices is going to change spending with on-prem architectures and applications. And so the first two bars, they're cloud friendly. If you add them up at 63% of the respondents say that either they'll stay in the cloud for the most part, or they're going to lower the on-prem spend when they go back to the office. The next three bars are on-prem friendly. If you add those up as 29% of the respondents say their on-prem spend is going to bounce back to pre-COVID levels or actually increase. And of course, 12% of that number, by the way, say they've never altered their on-prem spend. So Eric, no surprise, but this bodes well for cloud, but isn't it also a positive for on-prem? We've had this dual funding premise, meaning cloud continues to grow, but neglected data center spend also gets a boost. What's your thoughts? You know, really it's interesting. People are spending on all fronts. You and I were talking in a prep, it's like, you know, we're in battle and I've got naval, I've got, you know, air, I've got land, I've got a spend on cloud and digital transformation, but I also have to spend for on-prem. The hybrid work is here, it needs to be supported. So this spending is going to increase. You know, when you look at this chart, you're going to see though that roughly 36% of all respondents say that their spending is going to remain mostly on cloud. So this, you know, that is still the clear direction. Digital transformation is still happening. COVID accelerated it greatly. You know, you and I as journalists and researchers already know this is where the puck is going, but spend has always lagged a little bit behind because it just takes some time to get there. You know, inversely 27% said that their on-prem spending will decrease. So when you look at those two, I still think that the trend is the friend for cloud spending, even though, yes, they do have to continue spending on hybrid. Some of it's been neglected. There are refresh cycles coming up. So overall it just points to more and more spending right now. It really does seem to be a very strong backdrop for IT growth. So I want to talk a little bit about the ETR taxonomy before we bring up the next chart. We get a lot of questions about this. And of course when you do a massive survey like you're doing, you have to have consistency for time series. So you have to really think through what the buckets look like, if you will. So this next chart takes a look at the ETR taxonomy and it breaks it down into simple to understand terms. So the green is the portion of spending on a vendor's tech within a category that is accelerating and the red is the portion that is decelerating. So Eric, what are the key messages in this data? Well, first of all, Dave, thank you so much for pointing that out. We used to do just what we call a net score. It's a proprietary formula that we use to determine the overall velocity of spending. Some people found it confusing. Our data scientists decided to break this sector breakdown into what you said, which is really more of a mode analysis. In that sector, how many of the vendors are increasing versus decreasing. So again, I just appreciate you bringing it up and allowing us to explain the reasoning behind our analysis there. But what we're seeing here goes back to something you and I did last year when we did our predictions. And that was that IT services and consulting was going to have a true rebound in 2021. And that's what this is showing right here. So in this chart, you're gonna see that consulting and services are really continuing their recovery. 2020 had a lot of declines and they have the biggest sector year over year acceleration sector wise. The other thing to point out in this which we'll get to again later is that the inverse analysis is true for video conferencing. We will get to that so I'm gonna leave a little bit of ammunition behind for that one. But what we're seeing here is IT consulting services being the real favorable and video conferencing having a little bit more trouble. Great, okay. And then let's take a look at that services piece. And this next chart really is a drill down into that space and emphasizes, Eric, what you were just talking about. And we saw this in IBM's earnings where still more than 60% of IBM's business comes from services and the company beat earnings. You know, in part due to services outperforming expectations, I think it had a somewhat easier compare and some of this pent up demand that we've been talking about bodes well for IBM and other services companies. It's not just IBM, right Eric? No, it's not. But again, I'm gonna point out that you and I did point out IBM in our predictions one we did in late December. So it is nice to see. One of the reasons we don't have a more favorable rating on IBM at the moment is because they are in the process of spinning out this large unit. And so there's a little bit of corporate action there that keeps us off on the sideline. But I would also want to point out here Tata, Infosys and Cognizant because they're seeing year over year acceleration in both IT consulting and outsourced IT services. So we break those down separately. And those are the three names that are seeing acceleration in both of those. So again, if Tata, Infosys and Cognizant are all looking pretty well positioned as well. So we've been talking a little bit about this skill shortage. And this is what's I think so hard for forecasters is that, you know, on the one hand, there's a lot of pent up demand, you know, Scott Gottlieb said it's like Woodstock coming out of the COVID. But on the other hand, if you have a talent gap, you've got to rely on external services. So there's a learning curve there, there's a ramp up. It's an external company. And so it takes time to put those together. So this data that we're going to show you next is really important in my view and ties what we're saying at the top. It asks respondents to comment on their staffing plans. The light blue is, we're increasing staff. The gray is no change in the magenta or whatever, whatever color that is, that sort of purplish color. Anyway, that color is decreasing and the picture is very positive across the board. Full time staff, offshoring, contract employees, outsourced professional services, all uptrending upwards. And this, Eric, is more evidence of the services bounce back. Yeah, it certainly is, David. And what happened is when we caught this trend, we decided to go one level deeper and say, all right, we're seeing this, but we need to know why. And that's what we always try to do here. Data will tell you what's happening. It doesn't always tell you why. And that's one of the things that ETR really tries to dig in with through the insights, interviews, panels, and also going direct with these more custom survey questions. So in this instance, I think the real takeaway is that 30% of the respondents said that their outsourced and managed services are going to increase over the next three months. That's really powerful. That's a large portion of organizations in a very short time period. So we're capturing that this acceleration is happening right now, and it will be happening in real time. And I don't see it slowing down. You and I are speaking about, we have to increase cloud spend, we have to increase hybrid spend. There are refresh cycles coming up and there's just a real skills shortage. So this is a long-term setup that bodes very well for IT services and consulting. You know, Eric, when I came out of college, somebody told me, read, read, read, read as much as you can. And so I would, they said, read the Wall Street Journal every day. And so I did it and I would read the tech magazines and back then it was all paper. And what happens is you begin to connect the dots. And so, recently I bring that up is because I've now been taking a bath in the ETR data for the better part of two years and I'm beginning to be able to connect the dots. You know, the data is not always predictive but many, many times it is. And so this next data gets into the fun stuff where we name names. A lot of times people don't like it because the marketing people in organizations say, well, the data's wrong. Of course that's the first thing they do is attack the data. But you and I know we've made some really great calls. Work from home for sure. You're talking about the services bounce back. We certainly saw the rise of CrowdStrike, Octa, ZScale or well before people were talking about that. Same thing with video conferencing. And so anyway, this is the fun stuff. And it looks at positive versus negative sentiment on companies. So first, how does ETR derive this data and how should we interpret it and what are some of your takeaways? Sure, first of all, how we derive the data are systematic survey responses that we do on a quarterly basis and we standardize those responses to allow for time series analysis. So we can do trend analysis as well. We do find that our data because it's talking about forward looking spending intentions is really more predictive because we're talking about things that might be happening six months, three months in the future. Not things that a lot of other competitors and research peers are looking at things that already happened. They're looking in the past. ETR really likes to look into the future and our surveys are set up to do so. So thank you for that question. It's a enjoyable lead in. But to get to the fun stuff, like you said, what we do here is we put ratings on the data sets. I do wanna put the caveat out there that our spending intentions really only captures top line revenue. It is not indicative of profit margin or any other line items. So this is only to be viewed as what we are rating the data set itself, not the company. That's not what we're in the game of doing. So I think that's very important for the marketing and the vendors out there themselves when they take a look at this. We're just talking about what we can control which is our data. We're gonna talk about a few of the names here on this highlighted vendors list. One, we're gonna go back to that you and I spoke about I guess about six months ago or maybe even earlier, which was the observability space. You and I were noticing that it was getting very crowded. A lot of new entrants. There was a lot of acquisition from more of the legacy or standard players in the space. And that is continuing. So I think in a minute, we're gonna move into that observability space. But what we're seeing there is that it's becoming incredibly crowded and we're possibly seeing signs of them cannibalizing each other. We're also gonna move on a little bit into video conferencing where we're capturing some spend deceleration and then ultimately we're gonna get into a little bit of a storage refresh cycle and talk about that. But yeah, these are the highlighted vendors for April. We usually do this once a quarter and they do change based on the data but they're not usually whipsawed around. The data doesn't move that quickly. Yeah, so you can see some of the big names on the left-hand side, some of the SaaS companies that have momentum. Obviously ServiceNow has been doing very, very well. We've talked a lot about Snowflake, Octa, CrowdStrike, Zscaler, all very positive as well as, several others. I guess I'd add some things. I mean, I think if thinking about the next decade, it's cloud, which is not going to be like the same cloud as last decade. A lot of machine learning and deep learning and AI and the cloud is extending to the edge in the data center. Data, obviously very important and data is decentralized and distributed so data architectures are changing. A lot of opportunities to connect across clouds and actually create abstraction layers and then something that we've been covering a lot is processor performance is actually accelerating relative to Moore's law. It's probably, instead of doubling every two years, it's quadrupling every two years. And so that is a huge factor, especially as it relates to powering AI and AI inferencing at the edge. This is a whole new territory. Custom silicon is really becoming in vogue. And so we're something that we're watching very, very closely. Yeah, I completely agree on that and I do think that the next version of cloud will be very different. Another thing to point out on that too is you can't do anything that you're talking about without collecting the data and organizations are extremely serious about that now. It seems it doesn't matter what industry they're in, every company is a data company. And that also bodes well for the storage call. We do believe that there is going to just be a huge increase in the need for storage. And yes, hopefully that'll become portable across multi-cloud and hybrid as well. Now, as Eric said, the ETR data, it's really focused on that top line spend. So if you look on the right side of that chart, you saw NetApp was very negative, right? But here's a company that's in transformation now. They've lowered expectations and they've recently beat expectations. That's why the stock has been doing better. But at the macro, from a spending standpoint, it's still challenged. You have big footprint companies like NetApp and Oracle is another one. Oracle's stock is at an all-time high, but the spending relative to previous cycles are relative to, for instance, Snowflake, much, much smaller, not as high growth. But they're managing expectations, they're managing their transition, they're managing profitability. Zoom is another one. Zoom looking negative, but Zoom's got to use its market cap now to transform and increase its TAM. And then Splunk is another one we're going to talk about. Splunk is in transition and acquired Signal FX. It just brought on this week, Teresa Carlson, who was the head of AWS Public Sector. She's the president and head of sales. So they've got a go-to-market challenge and they brought in Teresa Carlson to really solve that. But Splunk has been trending downward. We called that several quarters ago, Eric. And so I want to bring up the data on Splunk. And this is Splunk, Eric, in analytics. And it's not trending in the right direction. The green is accelerating spend, the red is, and the bars is decelerating spend. The top blue line is spending velocity or net score. And the yellow line is market share or pervasiveness in the data set. Your thoughts? Yeah, first I want to go back as a great point, Dave, about our data versus a disconnect from an equity analysis perspective. I used to be an equity analyst. That is not what we do here. And the main word you said is expectations, right? Stocks will trade on how they do compared to the expectations that are set, whether that's buy side expectations, sell side expectations or management's guidance themselves. We have no business in tracking any of that. What we are talking about is the top line, acceleration or deceleration. So that was a great point to make. And I do think it's an important one for all of our listeners out there. Now to move to Splunk, yes, I've been capturing a lot of negative commentary on Splunk even before the data turned. So this has been about a year long, our analysis and review on this name. And I'm dating myself here, but I know you and I are both rock and roll fans. So I'm going to point out a Led Zeppelin song and movie and say that the song remains the same for Splunk. We are just seeing recent spending intentions are taking yet another step down, both from prior survey levels, from year ago levels. This we're looking at in the analytics sector and spending intentions are decelerating across every single customer group. If we went to one of our other slide analysis on the ETR plus platform and you do by customer sub-sample in analytics, it's dropping in every single vertical. It doesn't matter which one. It's really not looking good, unfortunately. And you had mentioned, this is an analytics and I do believe the next slide is an information security. Yeah, let's bring that up. And it's unfortunately, it's not doing much better. So this is specifically Fortune 500 accounts and information security. You know, there's deep pockets in the Fortune 500, but from what we're hearing in all the insights and interviews and panels that I personally moderate for ETR, people are upset. They didn't like the strong tactics that Splunk has used on them in the past. They didn't like the ingestion model pricing, the inflexibility and when alternatives came along, people are willing to look at the alternatives and that's what we're seeing in both analytics and big data and also for their SIM and security. Yeah, so I think, again, I point to Teresa Carlson. She's got a big job, but she's very capable. She's going to meet with a lot of customers, go to Market Pro. She's going to have to listen hard and I think you're going to see some changes there. Okay, so there's more, sorry, there's more bad news on Splunk. So they would bring this up is net score for Splunk in elastic accounts. This is for analytics. So there's 106 elastic accounts that in the data set that also have Splunk and it's trending downward for Splunk. That's why it's green for elastic. And Eric, the important call out from ETR here is how Splunk's performance in elastic accounts compares with its performance overall. The Elk stack, which obviously elastic is a big part of that is causing pain for Splunk as his data dog. And you mentioned the pricing issue. Is it just, well, is it pricing in your assessment or is it more fundamental? You know, it's multi-level based on the commentary we get from our ITDMs that take the survey. So yes, you did a great job with this analysis. What we're looking at is the spending within shared accounts. So if I have Splunk already, how am I spending? I'm sorry, if I have elastic already, how is my spending on Splunk? And what you're seeing here is it's down to about a 12% net score, whereas Splunk overall has a 32% net score among all of its customers. So what you're seeing there is there is definitely a drain that's happening where elastic is draining spend from Splunk and usage from them. The reason we used elastic here is because all observabilities, the whole sector seems to be decelerating. Splunk is decelerating the most, but elastic is the only one that's actually showing resiliency. So that's why we decided to choose these two, but you pointed out, yes, it's also data dog. Data dog is cloud native. They're more DevOps oriented. They tend to be viewed as having technological lead as a pair to Splunk. So that's a really good point. Dynatrace also is expanding their abilities and Splunk has been making a lot of acquisitions to push their cloud services. They are also changing their pricing model, right? They're trying to make things a little bit more flexible, moving off ingestion and moving towards consumption. So they are trying and the new hires, I'm not gonna bet against them because the one thing that Splunk has going for them is their market share in our survey, they're still very well entrenched. So they do have a lot of accounts. They have their foothold. So if they can find a way to make these changes, then they will be able to change themselves. But the one thing I gotta say across the whole sector is competition is increasing and it does appear based on commentary and data that they're starting to cannibalize themselves. It really seems pretty hard to get away from that. And you know, there are startups in the observability space too that are going to be even more disruptive. I think I want to key on the pricing for a moment and I've been pretty vocal about this. I think the old SAS pricing model where essentially you essentially lock in for a year or two years or three years, pay up front or maybe pay quarterly if you're lucky. That's a one-way street and I think it's a flawed model. I like what Snowflake's doing, I like what Datadog's doing, look at what Stripe is doing, look what Twilio is doing. These are, you mentioned it, it's consumption-based pricing and if you got a great product, put it out there and you know, dam the torpedoes and I think that is a game changer. I look at, for instance, HPE with Green Lake, I look at Dell with Apex, they're trying to mimic that model. You know, they're and apply it to infrastructure. It's much harder with infrastructure because you got to deploy physical infrastructure but that is a model that I think is going to change and I think all of the traditional SAS pricing is going to come under disruption over the next, you know, better part of the decades. But anyway, let's move on. We've been covering the APM space pretty extensively, application performance management and this chart lines up some of the big players here, comparing net score or spending momentum from the April 20th survey. The gray is, sorry, the gray is the April 20th survey. The blue is GN21 and the yellow is April 21. And not only are Elastic and Datadog doing well relative to Splunk, Eric, but everything is down from last year. So this space, as you point out, is undergoing a transformation. Yeah, the pressures are real and it's, you know, it's sort of that perfect storm where it's not only the data that's telling us that but also the direct feedback we get from the community. Pretty much all the interviews I do, I've done a few panels specifically on this topic for anyone who wants to, you know, dive a little bit deeper. We've had some experts talk about this space and there really is no denying that there is a deceleration in spend and it's happening because that spend is getting spread out among different vendors. People are using, you know, Datadog for certain aspects. They're using Elastic where they can because it's cheaper. They're using Splunk because they have to but because it's so expensive, they're cutting some of the things that they're putting into Splunk, which is dangerous, particularly on the security side. If I have to decide what to put in and what not, that's not really the right way to have security hygiene. So, you know, this space is just getting crowded. There's disruptive vendors coming from the emerging space as well. And what you're seeing here is the only bit of positivity is Elastic on a survey over survey basis with a slight, slight uptick. Everywhere else year over year and survey over survey, it's showing declines. It's just hard to ignore. And then you've got Dynatrace, who based on the interviews you do in the van, you're, you know, one-on-one or one-on-five, you know, the private interviews that I've been invited to, Dynatrace gets very high scores for their roadmap. You've got New Relic, which has been struggling, you know, financially, but they've got a purpose-built, they've got a really good product and a purpose-built database just for this APM space. And then, of course, you've got Cisco with AppD, which is a strong business for them. And then, as you mentioned, you've got startups coming in. You've got Chaos Search, which Ed Walsh is now running, you know, leave the data in place in AWS and really interesting model, Honeycomb. It's going to be really disruptive. Jeremy Burton's company observed. So this space is becoming jump-ball. Yeah, there's a great line that came out of one of them, and that was that the lines are blurring. It used to be that you knew exactly that AppDynamics, what they were doing, it was APM only, or it was logging and monitoring only. And a lot of what I'm hearing from the ITDM experts is that the lines are blurring amongst all of these names. They all have functionality that kind of crosses over each other. And the other interesting thing is it used to be application versus infrastructure monitoring. But as you know, infrastructure is becoming code more and more and more. And as infrastructure becomes code, there's really no difference between application and infrastructure monitoring. So we're seeing a convergence and a blurring of the lines in this space, which really doesn't bode well. And a great point about New Relic, their tech gets good remarks. I just don't know if their enterprise-level service and sales is up to snuff right now. As one of my experts said, the CTO of a very large public online hospitality company essentially said that he would be shocked that within 18 months if all of these players are still standalone, that there needs to be some M&A or convergence in this space. Okay, now we're going to call out some of the data that really has jumped out to ETR in the latest survey and some of the names that are getting the most queries from ETR clients, which are many of which are investor clients. So let's start by having a look at one of the most important and prominent work from home names, Zoom. Let's look at this, Eric. Is the ride over for Zoom? Oh, I've been saying it for a little bit of a time now, actually, I do believe it is. I will get into it, but again, pointing out great, Dave. The reason we're presenting today, Splunk Elastic and Zoom are they are the most viewed on the ETR Plus platform. Trailing behind that only slightly is F5. I decided not to bring F5 to the table today because we don't have a rating on the dataset. So then I went one deep, one below that and it's pure. So the reason we're presenting these to you today is that these are the ones that our clients and our community are most interested in, which is hopefully going to gain interest to your viewers as well. So to get to Zoom, yeah, I call Zoom the pandemic bull market baby. This was really just one that had a meteoric ride. You look back January in 2020, the stock was at $60. And 10 months later, it was like 580. That's in 10 months. That's cooled down a little bit into the mid 300s. And I believe that cooling down should continue. And the reason why is because we are seeing huge deceleration in our spending intentions. They're hitting all-time lows. It's really just a very ugly dataset. More importantly than the spending intentions, for the first time, we're seeing customer growth in our survey flatten. In the past, we knew that the deceleration and spend was happening, but meanwhile their new customer growth was accelerating. So it was kind of hard to really make any call based on that. This is the first time we're seeing flattening customer growth trajectory. And that in tandem with just dominance from Microsoft in every sector they're involved in. I don't care if it's IP telephony, productivity apps or the core video conferencing, Microsoft is just dominating. So there's really just no way to ignore this anymore. The data and the commentary state that Zoom is facing some headwinds. Well, plus you've pointed out to me that a lot of your private conversations with buyers says that, hey, we're using the freebie version of Zoom. You know, we're not paying them. And so in that combined with teams, I mean, it's, I think, you know, look, Zoom has to figure it out. They've got to figure out how to use their elevated market cap to transform and expand their TAM. But let's move on. Here's the data on pure storage. And we've highlighted a number of times this company is showing elevated spending intentions. Pure announcers earnings in May, IBM just announced storage. What, it was way down actually. So sort of pure, more positive, but I'll comment on that in a moment. But what does this data tell you, Eric? Yeah, you know, right now we started seeing this data last survey in January. And that was the first time we really went positive on the data set itself. And it's just really continuing. So we're seeing the strongest year-over-year acceleration in the entire survey, which is a really good spot to be. Pure is also a leading position in the among its sector peers. And the other thing that was pretty interesting from the data set is among all storage players, pure has the highest positive public cloud correlation. So what we can do is we can see which respondents are accelerating their public cloud spend and then cross-reference that with their storage spend. And pure is best positioned. So as you and I both know, digital transformation, cloud spending is increasing, you need to be aligned with that. And among all storage sector peers, pure is best positioned in all of those in spending intentions and adoptions and also public cloud correlation. So yet again, just another really strong data set. And I have an anecdote about why this might be happening because when I saw the data, I started asking in my interviews what's going on here. And there was one particular person, he was a director of cloud operations for a very large public tech company. Now they have hybrid, but their data center is in Kolo. So they don't own and build their own physical building. He pointed out that during COVID, his company wanted to increase storage, but he couldn't get into his Kolo center due to COVID restrictions. They weren't allowed. You had so 250,000 square feet, right? But you're only allowed to have six people in there. So it's pretty hard to get to your rack and get work done. He said he would buy storage, but then the Kolo would say, hey, you got to get it out of here. It's not even allowed to sit here. We don't want it in our facility. So he has all this pent up demand. In tandem with pent up demand, we have a refresh cycle. The SSD depreciation cycle is ending. SSDs are moving on and we're starting to see a new technology in that space, NVME, sorry, technology increasing in that space. So we have pent up demand and we have new technology and that's really leading to a refresh cycle and this particular ITDM that I spoke to and many of his peers think this has a long tailwind that storage could be a good sector for some time to come. That's really interesting. Thank you for that extra metadata and I want to do a little deeper dive on storage. So here's a look at storage in the industry and context and some of the competitive. I mean, it's been a tough market for the reasons that we've highlighted. Cloud has been eating away, that flash headroom. It used to be you'd buy storage to get more spindles, more performance and it was sort of forced to buy more. Flash gave more headroom but it's interesting what you're saying about the depreciation cycle. So that's good news. So ETR combines just for people's benefit here, combines primary and secondary storage into a single category. So you have companies like Pure and NetApp which are really pure play, primary storage companies largely in the sector along with Veeam, Cohesity and Rubrik which are kind of secondary data or data protection. So my quick thoughts here are that Pure is elevated and remains what I call the one-eyed man in the land of the blind but that's positive tailwinds there. So that's good news. Rubrik is very elevated but down. It's big competitor Cohesity is way off its highs and I have to say to me, Veeam is like the steady eddy consistent player here. They just really continue to do well in the data protection business and the highs are steady, the lows are steady. Dell is also notable. They've been struggling in storage. They're ISG business which comprises servers and storage. It's been soft during COVID and during even this new product rollout. So it's notable with this new mid-range they have in particular the uptick in Dell, this survey. Because Dell is so large, a small uptick can be very good for Dell. HPE has a big announcement next month in storage so that might improve based on a product cycle. Of course the Nimble brand continues to do well. IBM as I said just announced a very soft quarter down double digits again and they're in a product cycle shift and NetApp is that looks bad in the ETR data from a spending momentum standpoint but their management team is transforming the company into a cloud play which Eric is why it was interesting that Pure has the greatest momentum in cloud accounts. So that is sort of striking to me. I would have thought it would be NetApp so that's something that we want to pay attention to but I do like a lot of what NetApp is doing and other than Pure they're the only big kind of pure play in primary storage. So long-winded intro there Eric but anything you'd add? No actually I appreciate it was long-winded. I'm going to be honest with you storage is not my best sector as far as a researcher and analyst goes but I actually think a lot of what you said is spot on. We do capture a lot of large organization spend. We don't capture much mid and small so I think when you're talking about these large, large players like NetApp and not looking so good all I would state is that we are capturing really big organization spending intentions so these are names that should be doing better to be quite honest in those accounts and at least according to our data we're not seeing it and it's long-term depression as you can see NetApp now has a negative spending velocity in this analysis. So I can go dig around a little bit more but right now the names that I'm hearing are pure cohesity. I'm hearing a little bit about Hitachi trying to reinvent themselves in the space but I'll take a wait and see approach on that one but pure and cohesity are the ones I'm hearing a lot from our community. So storage is transforming to cloud as a service you're seeing things like Apex and GreenLake from Dell and HPE and container storage so not really a lot of people paying attention to it but Pure bought a company called Portworks which really specializes in container storage many startups there they're trying to really change the way David Flynn has a startup in that space he's the guy who started Fusion IO so a lot of transformations happening here okay I know it's been a long segment we have to summarize and let me go through a summary and then I'll give you the last word Eric. So tech spending appears to be tracking US GDP at six to seven percent this talent shortage could be a blocker to accelerating IT deployments and that's kind of good news actually for services companies. Digital transformation it remains a priority and that bodes well not only for services but automation UI path went public this week we profiled that extensively that went public last Wednesday. Organizations they've said at the top face some tough decisions on how to allocate resources they run in the business grow in the business transforming the business and we're seeing bifurcation of spending in some residual effects on vendors and that remains a theme that we're watching Eric your final thoughts. Yeah I'm going to go back quickly to just the overall macro spending because there's one thing I think is interesting to point out and we're seeing a real acceleration among mid and small so it seems like early on in the COVID recovery or COVID spending it was the deep pockets that moved first right Fortune 500 knew they had to support remote work they started spending first round that in the Fortune 500 we're only seeing about 5% spend but when you get into mid and small organizations that's creeping up to eight nine so I just think it's important to point out that they're playing catch up right now also would point out that this is heavily skewed to North America spending we're seeing laggards in EMEA they just don't seem to be spending as much they're in a very different place in their recovery and I do think that it's important to point that out. Lastly I also want to mention I know you do such a great job on following a lot of the disruptive vendors that you just pointed out pure doing container storage we also have another biannual survey that we do called emerging technology and that's for the private names that's going to be launching in May for everyone out there who's interested and not only the disruptive vendors but also private equity plays keep an eye out for that we do that twice a year and that's growing in its respondents as well and then lastly one comment because you mentioned the UI path IPO it was really hard for us to sit on the sidelines and not put some sort of rating on their data set but ultimately the data was muted unfortunately and when you're seeing this kind of hype into an IPO like we saw with Snowflake the data was resoundingly strong we had no choice but to listen to what the data said for Snowflake despite the hype we didn't see that for UI path and we wanted to and I'm not making a large call there but I do think it's interesting to juxtapose the two that when Snowflake was heading to its IPO the data was resoundingly positive and for UI path we just didn't see that thank you for that and Eric thanks for coming on today it's really a pleasure to have you and so really appreciate the collaboration and look forward to doing more of these we enjoy the partnership greatly Dave we're very happy to have you in the ETR family and looking forward to doing a lot, lot more with you in the future Ditto, okay that's it for today remember these episodes are all available as podcasts where we listen all you have to do is search breaking analysis podcast and please subscribe to the series check out ETR's website it's ETR.plus we also publish a full report every week on wikibon.com and siliconangle.com you can email me David.Valante at siliconangle.com you can DM me on Twitter at Dvalante or comment on our LinkedIn post I could see you in Clubhouse this is Dave Valante for Eric Porter Bradley for theCUBE Insights powered by ETR have a great week stay safe be well and we'll see you next time